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8.46 pm
Mr. Tony Colman (Putney): After the rather mealy-mouthed comments of the hon. Member for Epping Forest (Mrs. Laing), may I say that on the streets of Putney and Roehampton there was a great welcome for the Budget, particularly for the new money for education and the health service, and we are seen to be delivering on our election promises.
My constituents want us to be elected for a second term, and they want to ensure that, unlike the Tories, who appear to be committed to reducing spending on the NHS with their so-called guarantee of tax cuts, we are committed to increasing health service spending. Indeed, we are the only party with that commitment. Money for the health service is particularly important to my constituents, who want to ensure that the new community hospital at Queen Mary's university hospital in Roehampton is completed. That will happen only if there is a Labour Government.
I want to draw to the attention of the House the Budget's strengths in wealth creation. I support the measures that will encourage enterprise in the British economy; this is very much a Budget for enterprise. I state an interest in that I am chair of the Share Issues Group--I hasten to add that the position is unpaid--which has met the Financial Secretary to the Treasury several times to discuss issues concerning share options. I am particularly drawn to those matters because in my time as a managing director I took great advantage of the available share options schemes. It is important to reward people at all levels within a business, and the initiatives in the Budget are excellent ways to ensure that we will do so.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Colman: No, I am afraid that I do not have time.
I draw the attention of the House to the new enterprise management incentives scheme, and the increase from 10 to 15 in the number of employees in small companies
who are eligible to join the scheme. That will help in the recruitment and retention of key employees by small higher risk companies.
Mr. Colman: I shall not take interventions because we are very short of time.
The access to tax advantage share options of up to £100,000 is obviously important to ensure that those who take the risk of getting involved in start-ups are able to benefit.
Warming to my theme, I am particularly concerned about the all-employee share plan schemes, which the Budget has made attractive to companies of all sizes and much easier to operate. I was particularly pleased that the save-as-you-earn share save scheme remains in the armoury of available options. That has been the bedrock of saving by employees because it ensures that they are all able to save in a building society on a failsafe basis and purchase shares at a pre-agreed price. More than 1,200 companies currently have an SAYE share save scheme and 1.75 million employees are in those schemes. A second scheme that will continue under the Budget is the company share option scheme. Currently, 3,570 companies are part of the scheme, covering 450,000 employees.
Most important is the confirmation provided in the Budget that we are going ahead with the new all employee share plan, the details of which are set out in Inland Revenue REV3. I shall outline the advantages of the new scheme. Employers can give employees shares worth up to £3,000 each year, free of tax and national insurance. Out of their pre-tax salary, employees can buy partnership shares up to a maximum value of £1,500 a year, again free of tax and national insurance. Employers can match those partnership shares by giving employees up to two free shares for each partnership share that they buy. That is an extremely important means of encouraging share ownership.
Initial indications are that 350 employers in the United Kingdom are expected to set up such a scheme in the coming months, as it comes into operation. The result will be that an additional 500,000 employees in the UK will, for the first time, own shares in the company for which they work. That number is expected to grow to about 2.5 million over the next three years. I hope that hon. Members on both sides of the House applaud such an increase in employee share ownership--in fact, I see the Opposition spokesman, the hon. Member for Arundel and South Downs (Mr. Flight), nod in agreement. It is nice to see Opposition support for the Budget.
A cause of concern that has been the subject of a meeting I had with Treasury representatives is national insurance charges and unapproved share option gains. It should cause the whole House concern, as it does the Government. I remind the House that the concern centres on dot.com companies, which often encourage employees who have scarce skills to join them, not by paying high wages, which they cannot afford, but by offering large unapproved share option gains. I applaud such a means of tackling the scarcity of skilled individuals, for if we do not solve that problem, such companies will move abroad, especially to the United States.
The Government have proposed a consultation on three options to resolve the problems. The proposals would allow
- a voluntary agreement between employer and employee that:
All the employer's NICs liability on unapproved share option gains will be met by the employee, or
Part of the employer's liability on these gains, or the excess above a predetermined amount, will be met by the employee, or
The employer's NICs liability is to be met by the employee but, by mutual agreement, the employer could take on the statutory liability at the time it is incurred.
Labour Members might be surprised by my paean of praise for share options, but it is important to realise that share options can spread wealth to everyone who works in industry and commerce. In California, even those who have played only a modest role in a dot.com start-up--perhaps as a cleaner or a secretary--can become dollar millionaires through the success of the company in which they have invested their time and effort. It is not enough to own shares in a pension fund, at arm's length; we need the hands-on experience of share ownership in the company for which we work, so that we get behind it.
One of the great problems of capitalism is that there are not enough capitalists. I was in Atlanta recently and picked up a book by one Jeff Gates, called "The Ownership Solution--Towards a Shared Capitalism for the Twenty-First Century". I recommend it to the House. The author argues that we need to ensure that there is more share ownership across the entire community.
James Wolfensohn, the president of the World bank, has said:
- "Ownership is the sine qua non of sustainable development.
- "The community we all long for can't be realised with only 6 per cent. of the population owning shares. This has to change.
8.55 pm
Mr. Tim Collins (Westmorland and Lonsdale): The hon. Member for Putney (Mr. Colman) will forgive me if I do not follow his interesting remarks on share ownership, given the lack of time available. I entirely agree with him as to objective, although there will inevitably be some differences between us about the method of achieving that objective.
I shall make some general observations about the Budget, before turning to specific constituency points. The hon. Member for Bexleyheath and Crayford (Mr. Beard) said earlier that he would speak about a ghost at the feast. There seem to me to be three or four ghosts at this feast, of which the first and perhaps most worrying is the collapse in the savings ratio.
The Chancellor and the Prime Minister are fond of speaking about the fact that the Budget and their economic management have laid the ground for strength
and economic stability in the future, but nothing could more clearly indicate the way in which they are storing up trouble for the future than the fact that the savings ration has halved since 1997.That was in direct response to the outright declaration of war against the pension funds, which the Government launched in their first Budget, with the £5 billion a year raid on pension funds; the abolition of PEPs and TESSAs--working systems--and their replacement with what can generously be described as an imperfect and untried ISA system, which is much less generous in its tax treatment; and a reform of the social security system, if it can be graced with that noun, which has resulted in a situation in which, I am told, unless one can be sure to retire with a pension fund worth £100,000, it is not worth saving at all through one's working life. That is the situation that the Government have produced.
The second ghost at the feast is the issue of economic growth. Why is it that as far ahead as the Red Book can project, economic growth under the Blair-Brown economic miracle is not expected to return to the level at which it was in the last year of the previous Conservative Government? Not for as far ahead as the Government can foresee do they foresee economic growth getting up to the level at which it was when there was a Conservative Administration in charge.
The third ghost at the feast is the Government's projection of a doubling of the balance of payments deficit--hardly an indication of a strong economy, soundly based for the future. In that context, I refer to the remarks that a Downing street spokesman--no doubt Mr. Alastair Campbell--is supposed to have made today about Sellafield in Cumbria. Whatever one's views about nuclear processing, that happens to be the single greatest generator of foreign exchange, bar none, in this country.
The spokesman said that it was now up to Sellafield to make its own case. That was an abdication of responsibility, an insult to more than 10,000 extremely skilled workers in Cumbria and an indication of a somewhat flippant attitude towards a very important generator of foreign exchange.
A filling station owner in my constituency told me recently that he takes in £1.8 million a year at his filling station, of which £1.7 million a year goes straight off to the tax man. He says that he might as well take down the BP sign and put up a sign reading "HM Inland Revenue".
The Budget contained yet another increase in petrol prices. We see an urban-based Government who have no recognition of the impact on my constituents and those of some of my hon. Friends, for whom the car is not a luxury or an option, but a necessity. In my constituency, some of the poorest people are two-car families. Both cars may be ramshackle, but that is the only way in which those families can access even the modicum of public services available in rural areas. In that respect, the Budget was extremely disappointing for people in south Cumbria.
Before I deal with other constituency points, I shall take up the charge that has been made by several Labour Members, that Conservatives can never advocate greater spending in their own constituencies because there is no such thing as waste under the Government. It is impossible to reallocate priorities and inconceivable that one could identify savings. Perhaps I can give the odd example of possibly being able to find a penny or two to spend more wisely elsewhere.
Let us consider the £1 billion a year extra that is being spent simply on administering government. The Chief Secretary, who is present, is the guardian of the public purse. Why not establish a rule that if three Cabinet Ministers travel from this country to the same meeting, they must travel on the same aeroplane rather than having one aeroplane each? That might save some money for more worthy causes.
What about the hundreds of millions of pounds that are wasted through the Government's mismanagement of asylum seekers? Huge amounts of public money are spent unnecessarily because the Home Secretary has lost his grip on his Department.
Police officers in my constituency, to whom I spoke on Friday, are greatly worried about the reports that the cost of the inquiry into the events on Bloody Sunday 28 years ago could escalate to £100 million. For 2 per cent. of that sum, Cumbria constabulary could be removed from its current predicament of having to sack police officers, shut police stations and withdraw services from people across that rural county. I do not believe that a historical inquiry needs to spend 50 times more than the amount of money that would relieve the policing problems of my constituents and the county of Cumbria.
It is a question of priorities. My hon. Friend the Member for Eastbourne (Mr. Waterson) referred to the saga of a bypass in his constituency. It was postponed by the Government, although it was ready to roll when they came to office. He said that £5 million had been paid to a contractor so that he would not build the bypass. The bypass will fortunately be built.
However, in my constituency, we still await the completion of the A590 High Newton and Low Newton bypass. Sadly, that bypass, which is the Barrow- in-Furness industrial area's only link to the rest of the country and passes through two stone farm buildings, despite being a dual carriageway for the remainder of its length, is needed to avoid a death trap. Only 10 days ago, someone was again killed on that stretch of road because the Government postponed the construction of a bypass that is desperately needed. Yet again, the Government make false economies, and believe that they save money while they rack up costs in lives and public expenditure by not spending wisely.
Let us consider the national health service. The tentacles of the Inland Revenue reach Cumbria, and plenty of money is siphoned out of south Cumbria. Sadly, less of it is recycled. The Westmorland Gazette has run an excellent campaign called Heart Line, which draws attention to the fact that the number of people who wait for more than a year for heart bypass operations has more than doubled in south Cumbria since the Government were elected. One gentleman, Mr. Gordon Graham, who fortunately had his operation last week, had to wait almost 18 months for a life-saving operation, yet the Government boast about the billions of pounds that they announced last week for the NHS.
Six months ago, £50 million was announced for heart care, but none has yet been allocated to the north-west, even though the region has the worst heart problems in the country. We do not want announcements; we want to know that the money will be transferred from the sticky fingers of the Whitehall bureaucrats to the people who need to spend it.
I want to quote from a copy of a constituent's letter to the Prime Minister. The Chancellor is present, and he ought to hear it. My constituent lives in Grange over Sands. Her letter to me states:
- Find enclosed photocopies of my tax forms and pay slips. The most recent tax forms show that I will be thousands of pounds down in the taxable allowances I would normally get, starting in the tax year April 2000.
This is . . . a result of decisions made by your government.
The Chancellor should note these words:
- I voted for a Labour Government for all the years the Conservatives were in power and so far I have never been poorer . . . I will never vote Labour again. You are simply a bunch of liars.
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