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Mr. John Swinney (North Tayside): The right hon. Member for Coatbridge and Chryston (Mr. Clarke) called the Chancellor the first e-Chancellor. I wondered whether that was a casual remark that reflected the internal politics of the Labour party. Perhaps it was a suggestion that he might be a virtual Chancellor or virtually a Chancellor, but it was certainly an interesting assessment of what the Budget has produced.
My first reaction to the Budget was that never has a Chancellor had so much and given away so little. As the days have passed, my view has not changed. The Budget represents a missed opportunity, and that will become more apparent to members of the public as the issues are debated. If I judge the public mood in Scotland just now, voters want substantial investment in key policy areas--health, education and poverty--and they have made it clear that they want substantial new resources to be invested to counter 20 years of under-investment.
I do not judge the public mood to be enthusiasm for income tax cuts at the expense of valuable investment in our public services, and I want briefly to consider the tax structure. The Government are stretching and moving the balance of taxation so that it is much more in favour of indirect taxation. The Institute for Fiscal Studies says that the Chancellor has made about 40 per cent. of the changes to indirect taxation, which is regressive as it hits those on lower incomes disproportionately harder. What he gives with one hand, such as child benefit increases, he takes away with the other in indirect taxation.
I ask the Chancellor to consider reversing that trend in future Budgets and to make the structure of taxation fairer and more transparent. The grudging way in which the Government have at last confirmed that the tax burden has increased--they were forced to do so--makes a compelling case for greater transparency in the system. With a £60 billion war chest at his disposal over the next five years, he could have achieved so much more investment in our public infrastructure, but has failed to do so.
Aspects of the Budget are to be welcomed, particularly any measures to improve the living standards of those on lower incomes who have children. Measures that make
people better off in work rather than on benefits are to be encouraged. We recognise that encouraging work is one the best routes out of poverty and have argued that case, but unemployment is still a major factor. It increased in Scotland in the last quarter, and rates of more than 10 per cent. are common in several Scottish constituencies. The Government's economic strategy must address the issue of getting people into work before they can take advantage of initiatives such as the working families tax credit.The fact that the Chancellor has left the Scottish economy in a sterling straitjacket is one reason for those pockets of higher unemployment in Scotland. Since the Government came to power, 22,000 manufacturing jobs have been lost in Scotland and a further 600 losses were announced only last Thursday. The pound has appreciated against the euro by a massive 35 per cent. since 1996, crippling manufacturing industry and exporters in Scotland. I was struck by the powerful speech of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who argued for Monetary Policy Committee decisions to take much greater account of the economic conditions in areas of the United Kingdom outwith the south-east of England. They are increasingly putting home-grown businesses in Scotland at a competitive disadvantage in relation to a number of our European competitors.
The Chancellor has to be asked, what was in the Budget for jobs in Scotland and for high-quality, sustainable employment? We need investment. Where were the initiatives to encourage growth in manufacturing? Where was the encouragement for research and development in our traditional industries? Although we appreciate and support interest in encouraging e-commerce, a sea change in telecoms pricing, regulation and infrastructure--much more than the package of measures announced in the Budget--is needed to make that possible.
I have commented on low-income families and the measures taken to support people in those circumstances, but we must also address the challenges facing pensioners, who are among the poorest in our society. Measures to reduce fuel poverty through the winter allowance are welcome, but other measures such as the minimum income guarantee for pensioners are unproven in respect of securing the type of income that pensioners truly require. The hon. Member for Northavon (Mr. Webb) amply showed why the Government have failed to get across the importance of the minimum income guarantee and what it does to compensate pensioners, who have been given a wholly unsatisfactory 73p increase in their pension.
I want to comment on the public spending commitments announced in the Budget. The Chancellor is good at using headline-grabbing numbers in his Budget statements, but I want to examine some of the detail of the figures, beginning with health spending. All hon. Members will welcome any increase in investment in the national health service, which is required after 20 years of neglect, but the increase will not deliver health spending on a par with the European average, as the Prime Minister promised on 16 January. The Institute for Fiscal Studies has calculated that UK health spending must increase by 8.5 per cent. to reach the European average in five years. There is still some way to go.
I want to consider the additional £2 billion available next year and how that will translate into health spending in Scotland. According to a statement from the Secretary
of State for Scotland, the Scottish public will benefit to the tune of £173.3 million. That should be considered against the reality that Scottish hospitals are expected to be £50 million in deficit by the end of this financial year and all trusts are expected to miss their waiting list targets for next year. Furthermore, above inflation and well- deserved pay increases are already stretching NHS budgets. That suggests that the additional resources provided by the Chancellor could allow the health service in Scotland to stand still rather than take any stride forward.The 6.1 per cent. increase in health expenditure in the United Kingdom as a whole will not translate into a 6.1 per cent. increase in Scotland because of the Barnett squeeze. Scotland will have slower growth in health expenditure than the rest of the United Kingdom. However, the health of the Scottish public is not improving at a faster rate than that of people in the rest of the United Kingdom. Recent research by the university of Bristol shows the incidence of cancer among men in Scotland to be higher than among men in England. It is also higher among women in Scotland. The Barnett mechanism represents a loss of hundreds of millions of pounds to the NHS in Scotland over the coming five years.
On education spending, Scotland will receive £86.6 million from the additional £1 billion announced by the Chancellor, according to the Secretary of State. Putting that into the context of the cuts made at local authority level by the Labour party shows the damage that has been done to our core educational services. Next year, local authority education funding will be £540 million lower in real terms than it was in the last year of the Conservative Government, when none of us believed that we could go any closer to the bottom. The Chancellor did not mention the long-term position of education funding beyond this financial year.
A number of hon. Members across the political spectrum referred to petrol prices. I have had to make this point in every Budget debate since I was elected to the House to represent a large rural constituency in Scotland. The price of petrol has risen by 25 per cent. since the Labour party came to office in 1997. In our rural communities, car transport is the fundamental brick on which every aspect of activity is built, so is it any wonder that people are feeling the strain of the punitive taxation being applied to the economy of rural areas? That is made even more surreal and nonsensical by the fact that Scotland is the largest oil-producing country in Europe.
The Chancellor will argue that any larger increases in spending would not be in line with fiscal and monetary policy, and would put pressure on the Bank of England to raise interest rates further. That is yet another example of economic policy being led by the overheating of the economy in the south of England and the issues connected with house price inflation. For too long, the Treasury orthodoxy has been high interest rates and a high pound due to overheating in the south of England. The price for that is being paid in the economy of Scotland, where enormous damage has been done to the competitiveness of our key industries--our exporters, who trade on our behalf. Unless we have economic conditions that are in tune and in line with the circumstances that are required
in Scotland, and not those that pervade in the south of England, continued damage will be done to the economy of the people of Scotland.7.12 pm
Mr. Colin Burgon (Elmet): Over the past few days, hon. Members will have listened to their constituents' views on the Budget. It is good that those views are reflected in the Chamber. The first subject that I should like to cover has probably not had much of a mention in the Budget debate so far. It is the Government's decision to introduce an aggregates levy of £1.60 per tonne, which will come into effect in April 2002--not soon enough for many of us.
The Government have made it clear that the extraction and transportation of aggregates impose real costs on local communities, in the form of noise and vibration, dust, loss of biodiversity and amenity and visual intrusion. My constituency boundary is made up of the river Wharfe to the north and the river Aire to the south. Both rivers have extensive mineral workings in the proximity. The Aire valley in particular has suffered from decades of mineral extraction, and many local people in such places as Methley and Allerton Bywater now want environmental regeneration of the area.
I sincerely hope that the new levy will help in that process. By ensuring that the environmental impact of sand and gravel extraction is more fully reflected in prices, I hope that we will encourage a shift in demand away from virgin aggregates towards alternative materials, such as recycled aggregate.
I am delighted to praise Leeds city council on the recent demolition of its civic hall annexe, which was a vivid illustration of how building materials can be recycled and our environment protected. In my inquiries about the work done by the council, I was told:
- If normal demolition practices were followed the site would have needed a substantial amount of fill material to raise the ground levels to make the site safe.
The hard materials would have been removed to a land fill site for disposal, both of which have a considerable cost implication--
- The process of crushing the hard material on site and using it as fill material to raise the levels, saved on the purchase of fill materials and the costs of tipping . . .
The project started by hand stripping and salvaging as much materials as possible, this included all timber, the roof covering, glazing and non structural metal work. The structural metal frames were then removed for recycling and the remaining concrete structure crushed to be used as fill materials over the site.
The second item I want to address is education. In discussions that I had with head teachers in my constituency last week, the Chancellor's policy of extra payments of between £3,000 and £9,000 for primary schools and between £30,000 and £50,000 for secondary schools met with universal support. The heads were doubly delighted that the money will go straight to them. Projects that they were looking to fund from this additional money included general refurbishment work in the schools, expansion of information and communication technology, extra help for special needs children, extra
help to develop reading skills, and staff training and development, which is vital given all the changes taking place in education.Head teachers also told me that they hoped that they would be allowed a fair degree of discretion on spending this extra money. As I cannot envisage many of them either buying a new car or going on an exotic holiday with this money, I hope that we can allow these hard-working professionals to spend that money wisely and effectively. There was also a plaintiff plea that this money should be paid every year. I promised to pass that request on to the Chancellor.
In Wetherby over the weekend I met people involved in Church Action for Poverty. They gave a general welcome to the Budget, but cautioned me that much more remains to be done to achieve the Government's goal of eradicating child poverty within 20 years. They welcomed the fact that the Budget will lift 1.2 million children out of poverty by the end of 2001, but more than 2.5 million children remain trapped in poverty. That is a sobering thought, and shows what a huge task the Government have set themselves.
Those people also welcomed further measures to tackle fuel poverty among the elderly, with the boost in the winter fuel allowance to £150 a year. The minimum income guarantee was also welcomed. I share the general concern that, as last year, almost 1 million pensioners are not claiming their entitlement. I was hoping that the Government would soon launch an effective, high-profile benefits take-up campaign targeted at that group. Hon. Members can imagine my delight when I heard the Secretary of State say that that would start this Wednesday, and I look forward to that.
I am aware that the Government are spending an additional £6.5 billion on our pensioners over the lifetime of this Parliament. However, many of us believe that we still have some distance to travel to address all the concerns of our pensioners, who never lose an opportunity to let us know their thoughts on this subject, and long many they continue to do so.
I was pleased to hear from pensioners and others that there has been widespread welcome for the extra £2 billion for the NHS. It is clear that that step, combined with organisational reform of the health service, commands tremendous support among the electorate.
There is also a recognition that the Labour Government are delivering a platform of stability and steady growth, with low inflation and sound public finances. Their aim of delivering security and opportunity for all commands the support that will enable the Chancellor to continue as the great helmsman of the economy. I commend the Chancellor and all his excellent work.
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