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6.7 pm
Mr. John Townend (East Yorkshire): As could be expected from this Chancellor, we have had a Budget with a high degree of spin. He naturally claimed how well the economy was doing and, on that, he has been supported by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). However, as my hon. Friend the Member for Havant (Mr. Willetts) pointed out, the Chancellor did not highlight the balance of payments deficit, which is forecast to rise to no less than £28.25 billion, that growth in business investment is set to fall from 7.75 to 2.5 per cent., that growth in productivity is slowing, that manufacturing industry is struggling because of high interest rates and the high pound, that savings are falling and that the tax burden is rising.
The Prime Minister and the Chancellor have told us on numerous occasions that this is a pro-business Government. In the short time that I have available, I want to deal with that myth and to identify the areas in the Budget that are bad for business. The benefits for business, once one calculates what they are worth, do not add up to a row of beans.
First, I wish to refer to the increased tax on DERV. Despite this country having the highest taxes on DERV in the European Union and pump prices being forced up by rising oil prices, the Chancellor has increased the tax by an extra 1.89p per litre. Therefore, the differential between what French hauliers pay in Calais and British hauliers pay here has become even greater. The burden of transport costs hits all industries, but it particularly hits struggling manufacturers and it forces up costs. The small reduction in vehicle excise duty still leaves a massive gap between British and French rates--Britain's rates are no fewer than eight times greater than those in France. Is it any wonder that the British haulage industry is in the doldrums?
Despite the fact that, before the Budget, petrol tax was the highest in Europe, the Government have increased the duty, which will affect all businesses, large and small. It will particularly affect workers who live in country areas such as my constituency of East Yorkshire and who have no alternative but to use a car to get to work and to take their children to school. Is it not incredible that 80 per cent. of every pound that one pays the garage owner goes to the Government?
The increase in taxation on company cars is also bad for business, and will hit representatives who do a high mileage. I find it incredible that the people who will
benefit from these changes are those who do a low mileage and who have a company car as a perk. If the Government think that representatives can do an efficient job using public transport, that confirms how ignorant are the vast majority of Labour Members about running a business.The Budget considerably increased the burden of taxation on business, and mainly did so stealthily. The climate change levy is in a mess, and it would not have been necessary to impose any burden on business at all if the Government had not prevented the building of new gas-fired power stations, which would have enabled us easily to meet the worldwide regulations on emissions.
New tax rules will cost multinational companies billions of pounds and could well drive some company head offices overseas. The Government do not seem to know how much that will cost industry. Their estimate and that of PricewaterhouseCoopers are very different. We learn that insurance companies will have to pay billions more in tax due to changing rules for that industry. That follows the Revenue losing a case before the tax commissioners. That fact has had to be dug out of the papers; it was not mentioned in the House.
The oil industry is annoyed that it will have to pay an extra penny a litre in tax because last year's tax was based not on inflation but on estimated inflation. The change in stamp duty will probably affect businesses more than it will affect householders because most commercial and industrial property sales are for properties costing over £500,000 and will now incur 4 per cent. tax. A small point, but one that demonstrates the Government's attitude to business, is that they have increased airport tax for business travellers, specifically to hit business men.
The Government have talked a lot about the additional tax allowance to help the computer industry, but that is more than offset by the stealth tax of IR35, which is already causing a brain drain and will undermine the e-commerce enterprise culture.
One would have thought that, with the decline in manufacturing industry and the rise in income from service industries, the Government would do everything possible to keep the City competitive. Yet stamp duty on share transfers is higher here than in many of our competitor countries. I know that many people were hoping for a reduction, but they did not get one.
I have been in the brewing industry all my life, and I have declared that interest. Despite the enormous amount of smuggling, instead of beginning to reduce the differential between duty rates in the UK and France, the Government have increased beer duty again by a penny a pint. That will only make smuggling more profitable.
The Chancellor did not put up the duties on spirits, but he did not reduce the differential. He said in his Budget speech that duty on wine will rise only by inflation--by 4p a bottle. I checked at the beginning of his speech, and he said that
- inflation is 2.2 per cent.--[Official Report, 21 March 2000; Vol. 346, c. 858.]
The Chancellor has done nothing to reduce the differential between wine and sparkling wine, and there is absolutely no justification for that differential. Sparkling wine is smuggled more than ordinary wine. He will never deal with smuggling unless he reduces the duty differential by about 50 per cent., as Denmark had to do.
A 25p increase in the price of cigarettes will also be a tremendous boost to the profits of smugglers, who now make more money from smuggling tobacco than from smuggling drugs, and will encourage under-age smoking. I find that policy incredible because it hits poor people, who spend more on cigarettes and who cannot go over to the continent in a large car every three or four months and fill up with supplies of cigarettes at a knockdown price.
Agriculture is on its knees, and the Government have done nothing for the industry in the Budget. They have only imposed more burdens in the form of fuel duties, the climate change levy and stamp duty on the sale of farms. What help does the Budget give to the fishing industry? None at all. What help is there for small businesses? Very little. What progress has been made in reducing the burden of regulations? Virtually none.
Every month, more and more regulations are imposed on small businesses by the EU and the Government. They include the working time directive, packaging waste regulations, the social chapter, trade union rights, maternity rights and paternity rights, all of which are causing chaos for small businesses. Now we hear that the Government are considering allowing people who have had a baby to tell their employer that they will return not to their full-time job but to a part-time job. How will a small firm with one accountant get two people to do one job? That is a nonsense, as is paternity pay. If the Government introduce paternity pay, how can a small business let one of its key people go for 13 weeks? That is ridiculous.
One other aspect of the Budget that I find reprehensible is that it confirms that the Government do not believe in supporting the institution of marriage. They are more concerned with the rights of unmarried mothers and homosexuals. That is confirmed by the abolition of the married person's tax allowance and the Government's intention to repeal section 28 of the Local Government Act 1988. Other attacks on the taxpayer which particularly affect the family are the repeal of mortgage tax relief and the increase in stamp duty.
6.18 pm
Mr. Tom Clarke (Coatbridge and Chryston): In my constituency, as in most, jobs are of the utmost importance. In the short time available, I shall concentrate on the Budget's impact on the objective of full employment, the need for effective training and the importance of small businesses.
I was delighted to hear the Chancellor use the term "full employment", which was endorsed again by the Prime Minister today. Full employment, designed as opportunity for all, is an objective that I very much welcome. I want to look at what has been happening to my constituency since the new Government were elected. The picture is impressive, although I do not urge complacency; my constituents would not allow me to do so, and they would be right.
Since the election, unemployment in Coatbridge and Chryston has fallen by 21 per cent. to 6.1 per cent., which is the lowest level that anybody of my generation can
remember. That is still too high, and I continue to make the plea for a reduction. Long-term unemployment has fallen by 59 per cent. Youth unemployment, which I thought so important that I made it the main subject of my maiden speech in 1982, is down by 65 per cent.As I listen to criticisms of the Government, I am reminded of the fall of the Callaghan Government, when, throughout the country, there were huge posters saying "Labour isn't working". I do not blame the shadow Chancellor for that influential poster, because he was probably advertising Ribena at the time, but we are entitled to compare today's figures for my constituency with the figures that the Government inherited. Under the Conservatives, our oil revenues were squandered on propping up 3 million unemployed people. The huge dissatisfaction that accompanied such levels of unemployment tore our society apart. I am glad that we are improving our employment figures. Judging by the comments of my right hon. Friend the Prime Minister today, we are inspiring other European countries to do the same.
Training is of vital importance. I accept that the definition of a job has changed. Some people argue that the excellent figures we are now seeing hide certain facts, and I concede that not everyone who leaves the dole queue goes into work. However, that argument misses the point. Many people have entered training and education schemes, but such training is essential in the globalised society in which Great Britain is attempting to function. Foreign investors tell us repeatedly that our skills base is utterly inadequate. The most recent "Regional Trends" survey tells us about our skills stocks, and two statistics stand out: only 13 per cent. of the population in any given region of the UK have a university degree, and 18 per cent. have no formal qualifications whatever. Many firms do not take training seriously enough. I cannot believe that people in constituencies such as mine, which once boasted huge skills in engineering, shipbuilding and metallurgy, are incapable of responding to the challenge of training. We must recognise that the lack of commitment displayed by some employers--not all--represents the tightest possible bottleneck around employment growth in Britain.
Opposition Members have spoken of the crucial importance of small businesses and the vital role that they play in job creation. As my right hon. Friend the Chancellor rightly pointed out, the burden of future job creation will fall on small businesses, which now account for nearly 40 per cent. of national turnover, compared with less than 20 per cent. less than a generation ago. That does not sound like complacency. In the past two years, a further 100,000 small businesses have registered in the United Kingdom, which is a tribute both to the general culture of entrepreneurship fostered by the Government and to the Microsoft revolution, which has given companies the capability easily to use modern software to enter markets at minimal cost. The boost given to internet firms by my right hon. Friend, whom history will probably acknowledge as the first e-Chancellor, is extremely welcome in a modern, competitive society.
However, we cannot be complacent. Although we are increasing the number of technology-based dot.com companies, we still have too many "Dot Cotton" companies: well-meaning old things that are poorly
equipped to adjust to the challenges of cyberspace and globalisation. Sometimes, I think that too many people who run businesses think that Intel Pentium is a Romanian footballer. We have to change that. It is vital to future employment that we do not shirk the challenges of globalisation, but that we shape and mould the future for the benefit of all of our people.My great concern, which is reflected in the main thrust of the Budget, is that an economy in which a significant proportion of the population is unable to fulfil its potential is far poorer and far less productive than others. Real hope lies in providing real opportunities through training schemes such as the new deal to all who want--indeed, need--to work. In that spirit, I believe that the Budget truly helps those who have been left out of too many Budgets for far too long, especially families who seek, but who have been unable to find, work and the children of the poorest families--not least in my constituency--who represent the future. I have examined the Budget and I welcome this comprehensive debate. One day, the Opposition might apologise for that long-gone poster, because, after a little less than three years in government, the evidence suggests that Labour is working.
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