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Mr. Andrew Miller (Ellesmere Port and Neston): I am grateful to my hon. Friend the Member for Hemsworth (Mr. Trickett) for his courtesy.
I want to make four points about the Budget, thinking ahead to the next term and the term after that, to which my hon. Friend has just referred, and I do so against the background of incredibly positive events in my constituency.
For example, the hon. Member for Macclesfield (Mr. Winterton), who knows my area well, will know the Cheshire Oaks complex. When that was granted planning consent under the previous Government, no one in the House or outside would have believed that it would attract 7 million day visitors a year. That is a sign of the economy's success and of the free capital that there is in the community to be spent on quality goods in companies that are supplied by many of the quality firms to which my hon. Friend referred.
Alongside that are other successes. Despite all the difficulties of General Motors internationally, Vauxhall created 1,000 new jobs last year. Hon. Members might want to go into the Tea Room and have a weightwatchers sandwich made by Gibsons, a bakery in my constituency, which now employs 300 people to supply a national market that was not there a few years ago.
More importantly, hon. Members should consider the success of Brookside school, which I visited the other day. The school is situated inside an education action zone and has brilliant architecture, excited and enthused teachers and well-equipped information technology facilities. That all happened because of our policy on education action zones.
As for my four points, first, although the proposed research and development tax allowances for larger businesses are a superb idea, I remind Ministers that we must use them in our discussions with businesses to attract R and D back to our shores. For far too long, we have lost laboratories and research centres involved in the production of pharmaceuticals, vehicle building and other industries. We have the expertise; one only has to look around the M25 belt to see the fantastic support in Formula 1 and at the top end of the vehicle-building industry. However, most of the R and D in the manufacturing sector has disappeared from this country. That has begun to happen in the pharmaceutical industry also and we must make the new policy work for such industries.
Secondly, we must deal with vehicle taxation in its broadest sense. I made rather belated representations to my hon. Friend the Financial Secretary about liquid petroleum gas, as it struck me that it would have been nice to introduce LPG incentives to create some encouragement for companies that are equipping their car fleets. A tax deduction could be made for drivers, who are currently carrying the extra £1,500 capital value of LPG vehicles. That is a disincentive for people whose company offers them a choice. Unless we tweak that regime, they are unlikely to opt for LPG.
I should like to go a little further. I want the Treasury to take a long-term look at what is happening to vehicle engines. Within five years, fuel cell technology and better quality electrically powered vehicles will be on our roads and there will be more use of gas, so we need a much longer-term vision of how to tax vehicles in their entirety
and not merely in respect of purchase, excise duty or fuel. The matter has to be considered in the long term, so I suggest that we develop some serious modelling, and work with the industry and consumers to consider the best way of creating the positive incentives that are needed to encourage people to use more environmentally friendly vehicles. Of course, we should also not forget that the Treasury needs to raise funds for all the good things that the Government do with their money. An earlier speaker seemed almost to suggest that the Chancellor raises funds for himself. It is not his money, but that of the nation, and it is the Government's job to ensure that it is spent wisely and in the nation's interests. That is why we should take a long-term look at the very complicated issues involved in vehicle taxation.Thirdly, I have a more specific point for my hon. Friend the Paymaster General about an anomaly of which she is already aware. As far as I can see, there is not yet a solution in terms of the various child credits and child support mechanisms. Hon. Members on both sides of the House have demanded an increase in the number of nurses in our hospitals. If nurses who are going to Chester college on a £6,000 bursary decide instead to work for Sainsbury's down the road--I say this with the greatest respect to nurses--they will be considerably better off, as the bursary is not considered to be a wage.
If an apprentice goes to work while training, we would not expect him to do so without pay or without being treated as a normal employee by the taxation system. Trainee nurses have to go on the wards, where they undertake proper work while learning how to be nurses. Like apprentices, they are under a lot of supervision, but not treating them as employees is anomalous. I urge my hon. Friend the Paymaster General to consider that carefully. A single parent in my constituency launched herself on a nursing career through sheer determination. She is at a significant disadvantage, especially as she has three small children.
My fourth point deals with the six welcome tax measures that are aimed at deprived areas. The selection of those areas should be linked to associated Government policies. For example, areas that have education action zones, or benefit from the single regeneration budget, sure start and so on should be considered. We should try to ensure that the support systems that are being introduced are managed under a unified structure. I am worried about multiple management of the new initiatives in some parts of the community.
A special set of circumstances pertains in my constituency. Many people live in the deprived part of the community, in five wards that are cheek by jowl with the petrochemical industry. A large piece of brownfield land, which is currently owned by Shell, would be ideal for attracting support under the new mechanism. The Treasury can count my comments as an early bid. I hope that Ministers will listen carefully.
There are important considerations in petrochemical areas. No one who moves into the area would choose to live in the housing adjacent to the industry, yet those houses were built because of it. That phenomenon occurs in petrochemical towns throughout the western world. How do we balance the interests of industry with that of communities? The Treasury has found a potentially wonderful solution through the combination of its policies on tax support and on VAT on empty properties.
How do we create an incentive to attract modern industry to those sites? The six tax proposals do that. How do we create uplift in areas where there are large numbers of vacant private sector properties? The VAT regime and proposals for flats above shops might create a viable package. I hope that my hon. Friend the Paymaster General will consider joined-up schemes. It is vital that we do not simply establish another industrial development site in deprived housing areas; we must ensure that our actions raise the standard of living of those who live cheek by jowl with the chemical sector. People need to get something out of that relationship, which is important and well understood in the community. The Budget presents ideal opportunities to find imaginative solutions.
I had no premonition of the Budget's contents, but I contacted the Government office of the north-west and Shell last week and told them that it was time for people to get their heads together to devise imaginative proposals for using the waste land productively, while ensuring that we work with the community to improve housing in that area.
This Budget presents the possibility of real solutions to the long-term endemic problems that my constituents have faced. I welcome the Chancellor's Budget proposals and I know that the people of Ellesmere Port and Neston will also do so.
6.30 pm
Mr. Howard Flight (Arundel and South Downs): The Secretary of State for Trade and Industry began by echoing the Chancellor's boastful claims of achievement over the past four years, seeking to take credit for the positive economic up-cycle that has, in reality, been in place since 1992. Indeed, as my right hon. Friend the Member for Fylde (Mr. Jack) pointed out, economic growth in the past four years has been almost exactly in line with the projections in the 1996 Budget, except that inflation has been slightly higher and the tax take has been £28 billion per annum higher.
The United Kingdom has under-performed over the past four years on almost all counts. Growth has averaged about 2.4 per cent. a year, compared with 3.1 per cent. a year during the last five years of the previous Conservative Government and 4.6 per cent. a year in the United States. We have even under-performed in comparison to euroland. Investment in new ventures has run at only about 27 per cent. of the level of the United States, pro rata to the size of the economy. There are 14 economies in the Organisation for Economic Co-operation and Development with lower unemployment than us, and there has been a marked slow down in the rate of new jobs over the past four years.
As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) pointed out, the productivity growth figures have been disastrous: down to 1.4 per cent. a year in the past three years, compared with 2.4 per cent. between 1992 and 1997, and less than half the level in the US. Those figures are some 60 per cent. worse than they were under the previous Conservative Government.
Savings have collapsed from 11 per cent. to 4.75 per cent. The Chancellor boasts that he has reduced Government debt by £30 billion, but I must remind him that he has created a rise in personal debt of more than
double that amount--about £60 billion. Part of the reason for that has been the disastrous decline in the rise of disposable incomes. Growth is down to 1.6 per cent. a year, compared with 2.75 per cent. a year until 1997. Disposable income growth is now approximately zero.There is similarly bad news on investment, which has fallen from an increase of 7.75 per cent. in 1997 to only 2 per cent. now. The Chancellor also forgot to mention that the trade deficit has doubled to £29 billion in the past four years, reflecting the vulnerable position of many manufacturers in this country. My hon. Friend the Member for Macclesfield (Mr. Winterton) pointed out that we have standstill Britain as far as transport is concerned. In agriculture, as the hon. Member for South-East Cornwall (Mr. Breed) pointed out, the Government are presiding over the worst depression for the past 70 years, and all that they have to offer are free tax discs for tractors.
Further bad news is that the tax take has increased by about 3 per cent. of GDP, up from 35.2 per cent. to 38.2 per cent. As my hon. Friend the Member for East Yorkshire (Mr. Townend) pointed out, that is, in principle, bad for an economy. Our economy needs to get closer to the US tax take of 30 per cent., rather than rise to 40 per cent., if we are to have the growth that will pay for the health care and education that we all want.
There is a further crucial point, on which I am not sure where the Government stand. If they think that they are going to maintain the increase in public spending at a rate of 3.7 per cent. a year--which they are proud to boast that they are now planning--it must result in higher taxation and the squeezing out of growth in the private sector. They also run a severe risk of increasing inflation, as the International Monetary Fund has warned the Chancellor, much to his displeasure. Alternatively, there could be a massive increase in Government borrowing. Indeed, a £58 billion increase in Government borrowing is already projected. Interestingly, the IMF recommends that the Government prune back their plans for extra spending by about £10 billion, which is very much in line with Conservative policy.
My right hon. Friend the Member for Wells drew attention to a practice that is becoming increasingly objectionable to the country as a whole, which is the use of propagandist and devious tactics in presenting figures. We have got used to projections that deliberately lead us to think that taxation will not go up as much as it does. Now we see that forecast spending turns out to be much higher than the reality. Often, it is the poorer members of society who do not get the benefits that the Government claim to be laying on for them.
Right across the board, such misrepresentations rear their head. Yesterday, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the leader of the Conservative party, pointed out the failure to mention VAT being imposed on spectacles and other optical aids. Indeed, Customs and Excise has been told to advise opticians very quietly of that, because the Government do not want the embarrassment of making an announcement.
Perhaps no one noticed that the Red Book shows no increase in the threshold levels of corporation tax. Indeed, that follows several years of no increase in such thresholds, which, over time, is one of the main causes of rising taxation on companies. As my hon. Friend the Member for East Yorkshire pointed out, middle England
is being hit in all manner of ways. Income tax is now paid by 20.8 million people. The rise in the national insurance ceiling to £575 a week means that many people at that marginal income level will pay out a lot more than the 75p a week they will get as a result of the wider band of lower taxation. Those who have to move for their jobs will be hit with double the level of stamp. As we all know, the alleged substitution of means-tested child care for the universal married allowance has left a gap of a year with nothing.The hon. Member for Corby (Mr. Hope) said that, because the £7,000 limit is being retained, the ISA regime will be more tax generous than the old PEP and TESSA regime, referring to its costs. However, £10,500 a year could be saved in a mixture of PEPs and TESSAs, so the ISA regime is significantly less generous. The landfill tax is being increased without any national insurance compensation, which will increase illegal tipping. The Government have accepted some of our proposals for making the enterprise management incentive scheme slightly less inflexible, but the Chancellor failed to mention that the Government have imposed taxation of 47.32 per cent. on all unapproved options when employees exercise those options, making them completely unattractive and useless as a mechanism for smaller businesses to attract talent.
What about annuities? There is some guff in the notes about further consultation, but the reality is that people who retire with money purchase pension schemes are being exploited by the Government. They are being forced to lend too cheaply when they buy their annuities, which have to invest in gilts. The Governor of the Bank of England said last week that he is deeply concerned that these distortions in our economy will result in long-term interest rates being artificially low because of the reduction in supply and the increase in demand from annuity purchases.
We all welcome the Myners report and the ending of the minimum funding requirement regime, but what have the Government to say about the European Union proposal to put in place a measure that will be infinitely worse?
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