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Mr. Forth: Before my hon. Friend even thinks about finishing, will he answer a brief question? Does he agree that in his brief resume of potential savings--not least on the sub-state of Scotland--he may already have identified savings well in excess of the modest ones to which my right hon. Friend the shadow Chancellor referred? Has he given his list to my right hon. Friend? If so, will he encourage him to build on it and to produce even greater savings for the people of this country, to be delivered in a few weeks' time?

Mr. Townend: Earlier, I said that I hoped that Conservative Front Benchers would take notice of some of the things that I had said. I have known the shadow Chancellor for some time, so I can assure my right hon. Friend that he became well aware of the views that I have expressed when he was Chief Secretary to the Treasury. Indeed, he was keen for my support as chairman of the

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Conservative Back-Bench finance committee in trying to persuade other high-spending Ministers to curtail their avarice.

I have spoken in every Budget debate except one since I have been in the House, and this will be my last such speech. I think also that I have a reasonable grasp of finances, since I trained as a chartered accountant. In the past couple of years, however, I have had great difficulty in finding the information that I want from the Budget documents. When we used to have the Red Book and a White Paper on public expenditure, it seemed very easy. Today, I had to get the Library's help to obtain some information that I could not find. I told the chap there, "I think it's a good job I'm retiring. I must be too old, as I can't seem to get a grip of this." He replied, "I have to tell you, sir, that neither can we or most other Members. It takes us far more time to deal with queries than ever before." I appeal to Treasury Ministers to try to bring back a little more simplicity and order into the Budget documents, so that they can be understood not only by chartered accountants, but by ordinary Members.

This is not a Budget for all the people. It is a means-test Budget. There is very little for middle England; the main thing for it is an increase in the 10p band, but taking inflation into account, that is worth only about £40 a year. There is also very little for savers. Certainly, there are nothing like the measures that would have been introduced if the Conservative proposals to exempt tax on savings had been accepted. There is nothing to compensate occupational pensioners for the £20 billion rape of their pension funds. As the Government had such a massive surplus, they could have done something for the pensioners. There is also little for the countryside. The tuppence off petrol sales pales into insignificance when compared with the rise of 15p a litre since the election.

This is a pre-election Budget. The Chancellor has been a very clever politician. He built up his war chest by taxing the hell out of the country and keeping expenditure down for the first three years. He has now started a spending spree, but has given a pittance back to the taxpayer, who has paid more than he should have done. The taxpayer now deserves a significant rebate, but he has not got it.

I believe that the country needs a deregulated and competitive enterprise economy, with low taxes. The most efficient economy in the world is that of the USA, and we should move our tax burden towards USA levels. We should move down towards 30 per cent. of GDP, rather than up to 40 per cent., as we are currently doing. I believe that my party has been too reluctant in recent years to propagate the benefits of lower taxation for the people of this country and I hope that it will take on board some of my suggestions. I would like the Conservative party to have a 10-year programme to reduce the tax burden to 30 per cent. of GDP. That might sound like a large reduction, but such a level would be only 3 per cent. less than when we took over in 1979.

As often happens when a Budget is cheered to the rafters by the Chancellor's supporters, things will turn out differently as time goes on. There are shadows on the horizon. We do not know the extent to which we will be affected by the American downturn or how long it will last. The Chancellor did not mention one of our biggest problems: the growing deficit on our balance of trade. The economy has been growing as a result of the enterprise

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economy started by Mrs. Thatcher, but the growing burden of regulations and taxes on small and medium- sized businesses will progressively take effect.

The Budget is designed for an election; to please the country now and pay later. It is the Budget of a Chancellor who believes that he can spend people's money better than they can: the Budget of a tax-and-spend Government.

5.4 pm

Mr. Phil Hope (Corby): The hon. Member for East Yorkshire (Mr. Townend) said that the Budget was a pre-election measure, but he made a pre-election speech, even though he is not standing for re-election. If whistling in the dark was ever a strategy for victory, we have just heard a mournful tune, and had a brief tour d'horizon of the Tory prejudices and failures of the past 20 years.

I welcome the Budget as a boost for families and pensioners in Corby and east Northamptonshire, and for schools, health services and businesses in my constituency. Other speakers have drawn attention to the Budget's help for families and pensioners. In Corby and east Northamptonshire, more than 12,000 families will be significantly better off, and more than 15,000 pensioners will receive a real increase in their incomes.

Motorists, especially those in rural east Northamptonshire, and the distribution industry, which employs so many people in Corby, will welcome the cut in taxes on cleaner petrol and diesel, and the cash help from the reduction in vehicle excise duty for lorries, businesses and cars with engines of up 1500 cc.

I know from my meetings with representatives of local businesses that there will be a genuine welcome for the measures to reduce the impact of VAT on small businesses and for the tax credit for research and development by larger companies.

The measures that the Chancellor set out will build on the record amount of investment in local schools and hospitals. The £3 million Corby education action zone and the £3 million sure start initiative are helping to give children in my constituency a better start in life. The extra cash for schools that the Chancellor announced yesterday will give teachers, head teachers and governors additional resources to buy new equipment such as computers and to invest in new facilities for learning, which will help to raise education standards in the town, thereby reflecting and fulfilling our policy of education, education and, yes, education.

What a contrast yesterday's Budget made with those that we endured for more than 18 years under the previous Government. There were more than 18 Budgets because various rescue Budgets had to be announced in between the annual Budgets. What effect would Tory cuts of £16 billion have on rural areas? How many families and pensioners in rural areas would lose out? What about schools? Three thousand rural schools closed under the Conservative regime; such schools would be under threat again.

Department of Trade and Industry investment in post offices would be threatened, as would rate relief for village shops. The £900,000 subsidy for rural transport that will go to Northamptonshire would also be vulnerable. Let us consider rural policing. The ring-fenced

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sum of £30 million for Northamptonshire would be under threat, as would support for farmers. Agrimonetary compensation and the pig outgoers and ongoers schemes would be threatened by a Tory Budget.

Earlier, I drew attention to the rural White Paper, which provides a comprehensive strategy for a living, working and sustainable countryside. I do not underestimate the problems. Foot and mouth disease is a genuine crisis, and we must face up to it. However, we have done much to support rural areas. We have to do a great deal more, but there would be a lot to lose from a Tory Budget.

I want to concentrate on the importance of building a long-term, sustainable future for the constituency through a new approach to personal and community assets. Let me begin with physical regeneration. The Budget contains several new measures, which Opposition Members have welcomed, that are targeted on the physical and economic regeneration of run-down areas, especially support for urban regeneration companies. My hon. Friend the Minister knows that Corby launched the first urban regeneration company after the publication of the urban White Paper in December. I was delighted that my right hon. Friend the Deputy Prime Minister was able to visit Corby in February to launch the new partnership for regeneration between local businesses, local authorities, the East Midlands development agency, English Partnerships and local community and voluntary groups.

The Corby regeneration company that will be established over the coming weeks will attract major investment into Corby, and provide an opportunity for the borough to grow and prosper. It will create new jobs in industry and help to create a future of high-skill and high-wage employment in Corby. It will help to bring about the much needed redevelopment of our town centre, improve the leisure and community facilities in the town, restore--we hope--a main-line passenger railway station providing links down to London and up to Sheffield, and build thousands of new homes to attract many more people to what is becoming a successful and dynamic town in the north of Northamptonshire.

I regret that the Conservatives have chosen to oppose the regeneration company. The right hon. Member for Wokingham (Mr. Redwood), a Conservative spokesperson on the environment, has made it clear in our local press that they do not want to see Corby grow, develop and prosper. That is a pity because other right hon. and hon. Members--the right hon. Member for Fylde (Mr. Jack), for example--earlier supported measures for regeneration in run-down areas, and I hope that we shall receive cross-party support for the initiative. Furthermore, the £1 billion package of regeneration measures in the Budget will be of enormous benefit to Corby's regeneration.

I am keen to see further corporation tax relief for firms investing in urban regeneration companies, because that would be a major boost for the company that we have established in Corby. The accelerated tax relief--at 150 per cent.--for the cleaning up of contaminated land will be of particular benefit to Corby, which still has substantial areas of former British Steel land that was quarried for the extraction of iron ore.

We are also keen to make the most of the new community investment tax credit, which is to be introduced alongside the first community development venture fund, itself a partnership between the

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Government, financial institutions and the charitable sector. As chair of the all-party parliamentary group for charities and the voluntary sector, I am delighted at the various new measures for tax incentives to encourage giving and investment in the sector, which will help to build active communities.

A few weeks ago, the Chancellor announced about £60 million of extra money for investment in the voluntary sector's infrastructure, about £70 million for the children's fund to develop local community projects in the most disadvantaged areas, £50 million for community chests to be developed and £120 million to support volunteering in public services, particularly among older people. A total of £300 million will, therefore, be available over the next three years to support voluntary sector and volunteering activities. That is very important. Those and other Government initiatives will help in the development of the new Corby community trust that we are trying to establish, which will be an endowment fund to provide financial help in the form of small grants for local community groups and voluntary organisations in the town.

I shall move on from the Budget's help in building the physical asset base of our communities to my second theme, that of building the financial asset base of individuals and families to provide greater security and a platform for personal development for individuals.

Measures to encourage personal savings were at the heart of the Chancellor's Budget speech. Policies encouraging financial wealth and the ownership of assets are not new. They have shaped British politics over the past 20 years. I am sure that the Conservatives would want to remind us of their introduction of the right to buy for council tenants, and the various privatisations that tapped into people's aspirations for independence, freedom and ownership. However, I regret to say that those assets policies were in no way egalitarian, and had scant regard for social justice and social inclusion. The number of households with no financial wealth increased from 5 per cent. in 1979 to 10 per cent. in 1996. As much as 50 per cent. of the population are now asset-poor, with less than £500 in savings.

The Government recognise the power of people's aspirations for asset accumulation but, unlike the Conservatives, we believe that aspirations for individual ownership must go hand in hand with social renewal. A progressive asset-based welfare policy can lead to fundamental increases in opportunity for all, allowing everyone to realise their potential. That is why it is right that we are helping pensioners by spending an extra £4.5 billion a year on pensions and, in particular, helping those who have saved hard all their lives, through the pensions tax credit. If a person has worked hard and saved hard all their life, they should enjoy security in retirement.

The Budget also encourages savings by allowing people to save up to £7,000 a year tax free in individual savings accounts. About 8.5 million people have opened ISAs and, by 2006. According to the figures in the Red Book, that will represent a cost to the Exchequer of £2.85 billion, which is £800 million more than was projected if we had stuck with TESSAs and PEPs.

Those two measures represent the asset development that I want to happen, but I have a particular concern for a group of people who are not part of that system--the young. How can we ensure that young people, as they

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move from childhood to adulthood, have access to the financial help that they need to cope with what I call lumpy items of expenditure, such as setting up on their own, getting a job, gaining qualifications or even setting up a business?

At certain times, young people do not have the financial backing that they need, perhaps because they have just left home. However, middle and higher income families with savings take it for granted that they will help their children out with finding somewhere to live, buying new clothes for a job interview, getting transport or buying furniture.

Why should young people from lower income families not have access to such resources? If young people could develop their own financial asset base as they were growing up, they would be able to draw on it when they needed it most--around the ages of 18 to 25, as they leave home and begin to make their own way in the world.

Asset-based welfare represents a new approach to welfare policy. Such an agenda would build on the popular ISAs by encouraging low-income households to accumulate financial assets for long-term economic security and investment. Such accounts would be based on a contract between the individual and the Government. For example, the state could make matched contributions: for every pound an individual deposited towards the future, they could deposit another.

Targeted incentives to save money would ensure a fairer distribution of assets. The key objective would be to ensure that all people live their lives knowing that they will have a sum of money to invest in their own futures and aspirations. Encouraging saving by low-income groups would be positive for three reasons. First, the process of saving and accumulating financial assets empowers people. It has positive psychological effects and enables them to think and plan for the future while developing financial literacy and confidence.

Secondly, holding financial wealth gives people the benefits of greater economic security. Thirdly, spending that financial wealth opens up a huge range of potential advantages. People could invest in their futures or use their assets to overcome difficult lifetime events that might otherwise trigger their return to poverty.

An assets-based policy could come in several forms. One example would be to build on the development in the United States of individual development accounts, which are a highly targeted version of the policy that concentrate on specific communities. We in the UK could explore that option through credit unions, which could be used as delivery vehicles for highly local policies aimed at developing the financial assets of excluded communities. It might even be possible to pool individual assets in communities so that people could collectively invest in their futures and aspirations.

Another option to which I am especially attracted is a universal child-centred version of the policy. It has been labelled a form of baby bond, although the Institute for Public Policy Research, which has developed the idea in the UK, calls it an opportunity account. Such an account would be universal and inclusive, and one would be opened for every child. The state could deposit an initial capital endowment--perhaps of £250--in every account at birth. All accounts would benefit from favourable tax treatment to encourage saving for all children. If we wanted to reap the benefits earlier, the policy could start

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with 11-year-olds and an account could be opened for everyone. There are lots of possible variations on the theme.

There could also be a targeted element whereby the Government would match contributions from individuals on low incomes, using a pound-for-pound ratio. That policy would support savings for all children, but would also give extra help, through a means-test, to people on low incomes. The funds would not be accessed until age 18 and restrictions might have to apply to their use, perhaps alongside the provision of financial advisers and linking the process to the school curriculum.

Public policy could specify how such funds might be used--for example, on education, home ownership or entrepreneurship. That would ensure that every child had a pot of financial capital to invest in opportunities denied them at present. The policy has been researched and there is enthusiasm for it. One respondent summed up the positive reaction by saying that

Given that time is short, I shall not elaborate on that proposal. I hope that it will be developed from the policies on people's savings opportunities that were at the core of yesterday's Budget statement. The Government have established that sound economic policies and social justice are two sides of the same coin. Similarly, personal aspiration and social justice are part of the agenda of opportunity for all.

The Budget's investment in public services and its support for pensioners and families will be greatly welcomed in my constituency. The measures to promote physical regeneration are of huge importance to Corby, and are very welcome. However, I have argued today that that is just the start, and that we need to build on the measures to encourage saving.

When my hon. Friend the Paymaster General winds up the debate, I hope that she will say that the Government agree with me. I believe that adopting a radical assets policy will give us a real opportunity to change fundamentally the lives of ordinary people in the United Kingdom.

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