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4.30 pm
Mr. John Townend (East Yorkshire): Yesterday's Budget was clearly a Budget for an election, so it is reasonable to ask how the Chancellor has arrived at the current position since taking office.
It is fair to say--one tries to be fair--that the Chancellor inherited a golden legacy from the previous Government: a growing economy, falling interest rates, falling unemployment and a falling deficit. As my right hon. Friend the Member for Wells (Mr. Heathcoat- Amory) said, the last Red Book of the Conservative Government, produced by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), showed that by 2001-02 the deficit on the public sector borrowing
requirement would be eliminated and we would have a £2 billion surplus. When we ask how the Chancellor has managed to pay off so much debt and applaud his wonderful and clever performance, we should remember how lucky he was in receiving no less than £22.5 billion from the auction for the third generation of mobile phones. That had nothing to do with the Government--it was pure luck for them. The sum was so high because telecommunications companies throughout the world suffered a fit of madness, which they now regret.From the start, the Labour Administration's cynical use of stealth taxes while pretending to keep taxes down has led to a large increase in the overall burden of taxation, which has risen from 35.2 per cent. of gross domestic product at the last election to 37.5 per cent. That does not take account of the fiddling of the figures whereby family income support was changed from expenditure into a tax credit and treated as though it were a reduction in taxation. If that were taken into account, the taxation burden would rise by a further 0.5 per cent. to 38 per cent. of GDP.
As a result of all that, this country has less and less the low-tax environment of the United States--a country that the Chancellor is supposed to admire--and more the tax environment seen in Europe, which is overtaxed and uncompetitive. It is fair to ask whether that is part of convergence policy, whereby we enable ourselves to join the euro by getting our taxes up to European levels.
The section of the community that bears the burden of that taxation is middle England. Pensioners who have saved and contributed to occupational pension schemes have had £20 billion of extra tax taken from them since the Labour Government came to power. It is inevitable that their future pensions and future contributions will be affected by that. At a time when we have a waiting list to get on a waiting list for hospital treatment and when young people are often given preference, the Government have been mean-minded enough to remove tax relief from pensioners' private health insurance. There is nothing in the Budget for the pensioners of middle England.
No action has been taken in respect of the ridiculous regulation that forces pensioners, on reaching the age of 75, to invest the money in their private pension in an annuity, so that if they drop dead six months later, none of the money goes to their children; it goes to the insurance company instead. I was hoping that the Chancellor would have seen the problem and in this year's Budget either abolished that rule or raised the age threshold to, say, 80.
Motorists have faced massive increases in petrol tax--we have the highest in Europe. Almost 80 per cent. of the pump price is made up of taxes. Such high fuel tax rates hit small businesses and rural areas, such as my constituency, especially hard. Since the election, increases in duty and VAT on those increases amount to no less than 15p per litre, so the 2p that the Chancellor has given back in the Budget is pretty mean compared with what he has taken away.
Another attack on middle England takes the form of the swingeing tax increases on company cars. Whenever the Chancellor increases expenditure or makes a concession to the taxpayer, he announces it and reannounces it and often double-counts, but in this year's Budget statement he did not announce that the next 12 months hold a further
swingeing increase in the taxation of company car drivers. That measure was announced last year, but the Chancellor did not announce it again yesterday.Married couples have borne the brunt of tax increases. Last year, the Chancellor abolished the married couple's allowance. He said that it would be replaced by the children's tax credit, but there was a year-long gap in which even people with children were worse off and paid more tax. Furthermore, the tax credit is means-tested, so there is nothing for couples whose families have grown up, couples with no children, or couples with children if one of them earns about £35,000 a year. Middle England has been hit again.
The home owner has lost his mortgage tax relief and has had higher stamp duty imposed on him. That punishes middle managers--the people who have ambition and on whom we depend for economic expansion. They are hit whenever they change job and move to a different area.
By not uprating the starting thresholds for higher taxes, the Chancellor has put 30 per cent. more people into the higher tax bracket. That does not mean that there are 30 per cent. more wealthy people in this country; it is merely the result of fiscal drag. He has not raised the starting threshold for higher rates even in line with inflation, and certainly not in line with the increase in earnings. Again, the section of the community that suffers is middle England.
It is clear that the Government are no longer new Labour, but old Labour in disguise. They are a high-tax Government. That is the most outrageous breach of promises and commitments that they made at the last election. In August 1996, the right hon. Member for Sedgefield (Mr. Blair) said:
- "Our proposals do not involve raising taxes";
- "We want people to pay lower taxes";
- "The programme of the Labour party does not imply any tax increases".
Two years of Conservative restraint on spending and then large Labour tax increases meant that a large surplus was inevitable. That will rapidly disappear and turn into a deficit as a result of the Chancellor's spending spree, which is set to last for the foreseeable future. The Labour party is reverting to type and it will end its first term as a tax-and-spend Government.
Mr. Miller: We are going to win again.
Mr. Townend: It is arrogant to judge in advance what the public will do. We shall wait and see. If Labour wins, it will do so having built up troubles for itself. The International Monetary Fund--not the Tory party--thinks that the Labour Government's plans are so worrying that it has published a warning that they could eventually push interest rates higher and keep sterling overvalued.
I should like to turn now to public spending and value for money. The Government do not seem to realise that it is not just the amount of spending that matters, but what
the spending produces. More does not always mean better. Judged on that criterion, the Government have been a failure in many areas. I want to point out where money is being wasted or is not delivering the goods. In some cases, additional savings that could be made should be added to the list that has already been spelled out by Conservative Front Benchers. I have to say, however, that that list is a little modest.Take education. At the last election, we heard "education, education, education." We were told that class sizes would be reduced. However, those were just words. Overall, class sizes have increased. I accept that the size of primary school classes has been reduced, but that has been more than offset by the growth in the size of secondary school classes. Examination results may, on the face of it, be better. However, if one talks to any university professor, he will say that grades are easier to achieve and standards are lower. Once again, there is spin and no delivery on education.
Mr. Worthington: The hon. Gentleman said that if one talks to any university professor, he will say that. Can he name some?
Mr. Townend: I am not going to name individuals, but I shall give an example. Only last week, on "Question Time" on television, a university professor said exactly that. To be honest, he blamed the previous Government as well as this one, and said that grants were increased for those universities that gave out more first-class degrees. The pressure in his university--against which he had fought, but failed--was thus to increase the number of first-class degrees so as to get more grants.
Mr. Shaw: Will the hon. Gentleman give way?
Mr. Townend: No, other Members want to speak, and I want to move on to the health service, which is important.
At the last election, the Prime Minister promised that the NHS would improve to the highest standard in the European Union. We are not even near the average standard. Where waiting lists have gone down, as they have in some cases, they have been replaced by waiting lists to get on waiting lists, which are getting longer and longer. Regrettably, our health service is one of the worst in the EU, but that is not because we spend less. We spend more from the public purse on our health service than practically any other country in Europe. The difference is that, in this country, Governments have discouraged expenditure by the private sector, so far less private sector money goes into our health service than into those of continental countries such as France.
After four years, people know that the Government have not delivered on health. All of us must now look for radical change. One of the problems of the NHS is that it is the largest organisation in Europe; it is the largest employer in Europe. We shall probably have to accept that we will never have as efficient a health service as we need without radical change. In my view, it is unwieldy and too big to manage. We need a radical rethink.
On crime, higher spending does not seem to have produced a safer society. Crime was coming down when we left office and it continued to come down. Now, regrettably, there is a significant increase in violent crime.
We were told that the Government would spend more money and that there would be more policemen. In the House, members of the Government said that there were more policemen. Today, I checked with the Library and found that, at the last election, there were 125,051 police in this country; the last time figures were taken, there were 122,230, which is 2,821 fewer police.The police are spending too much time and money on being politically correct. Since the Macpherson report, many chief constables have become obsessed with race. Take the case of Constable Pentry, a policeman with 13 years' exemplary service, who, in a moment of anger, lost his temper and was then accused of calling another officer a wog--not to his face, but to another policeman in a dispute about shifts. He was suspended and dismissed. He appealed, but the dismissal was approved by the chief constable. There was a public outcry, which was led by many members of the ethnic communities. To the Home Secretary's credit, after a year there was another inquiry and Constable Pentry was reinstated.
If I treated my staff like that--if one of them called somebody a black bastard, which is equally offensive, and I sacked him on the spot--I would be taken to an industrial tribunal. Under the law, I would have to give my employee an oral warning; if he repeated the offence, I would have to give him a written warning and, to be safe, I would have to give him a second written warning too; otherwise, I would be taken to an industrial tribunal, which would probably cost me about £10,000.
One area to which the next Conservative Government must attend--I do not think that this Government will, but they ought to--is the way in which ours is becoming a rights and compensation society. The emphasis on rights, particularly the incorporation of the European convention on human rights in British law, is encouraging a vast increase in compensation mentality and is costing the country billions of pounds. That is happening not only in the private sector, but in the public sector too. Every day one picks up the paper and sees that somebody is asking for compensation. A policeman who was at Hillsborough got--
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