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Mr. Worthington: The hon. Gentleman wrote those remarks beforehand. When will he reply to the debate?
Mr. Flight: The hon. Gentleman clearly was not looking as I was scribbling away, taking notes. I have deliberately woven into my speech the remarks of various Members and I shall get to his comments, for which I have considerable support, in a moment.
For business, the little string of positive measures will not do much to reduce the £10 billion of extra costs and red tape. As my right hon. Friend the Member for Wells pointed out, the Confederation of British Industry and the whole of manufacturing industry are disgusted with the Government for proceeding with the foolish climate change levy. The levy will damage agriculture, horticulture and manufacturing in particular--the most vulnerable sections of our economy.
Really worrying is the worsening of the country's underlying competitive position. Much of what has been introduced and what has happened over the past four years has chipped away at that position. Sadly, our reputation internationally is no longer substantiated domestically.
The fuel tax reductions are welcome, but our hauliers are in a poor position, and they have serious problems with foreign competition.
I shall deal now with charities and VAT. We welcome the fact that the Chancellor has honoured by means of rebates what he had promised to churches in respect of repairs. The hon. Member for Clydebank and Milngavie (Mr. Worthington) asked about hospices and charities such as the Leonard Cheshire Foundation. Charities are burdened with a gamut of arbitrary and unfair VAT liabilities that need to be redressed and corrected. I also support what the hon. Gentleman said about Chester Street Insurance Holdings, and I trust that the Government and the FSA will address that matter.
The Government have imposed higher taxation on charities than any Government in the past. When the advance corporation tax recovery on dividend incomes runs out in 2004, charities will be hit with increased taxation of £500 million a year. That used to trickle down to all other charitable activities, so more than pension funds will suffer from the loss of ACT recovery.
My right hon. Friend the Member for North-West Hampshire (Sir G. Young) correctly said that nothing has been done to increase funding for social services. They have been starved of funds for the four years of this Government.
In summary, the Chancellor has performed the oldest trick in the book. He increased tax in the first three years of the Parliament, then aimed to bribe the electorate in election year. He was very successful in achieving his first target, but more lacklustre when it came to his second target. His proposals are far too complicated and pernickety. They wrap us in red tape--as my right hon. Friend the Member for North-West Hampshire said, a Kafkaesque system of benefits is developing in this country. A psychiatrist friend of mine told me that such obsession with complication reflects the mentality of the anally retentive. As a nation, we are being tied up in an unnecessarily complicated system of taxation.
- "The fact is that, in terms of manipulating the Budget to boost Government popularity, he"--
- "has done exactly what he claimed he would never do.
In his first two years, he controlled spending and put up taxes and so moved the public finances into surplus. By contrast, in the 18 months leading up to the General Election, he has announced big increases in spending and an expensive assortment of tax cuts.
The lurch from puritan fiscal restraint to cavalier tax-and-spend abandon is far more pronounced than under the Conservatives in their 18 years of rule up to 1997.
Mr. Brown may be able to kid himself his fiscal policies have been impressively stable and prudent, but it would be a shame if he is also able to kid the electorate."
6.44 pm
The Paymaster General (Dawn Primarolo): Yesterday's Budget was a Budget for the future. It set out the best economic conditions for a generation and built on them. It was a Budget for growth and stability. It is our commitment to stability that gives us the lowest inflation for 30 years, the lowest long-term interest rates for
35 years and the lowest unemployment rate since 1975, with more people in work than ever before, as well as sound public finances.The hon. Member for Macclesfield (Mr. Winterton), who cannot be in the Chamber for the closing speeches, pointed out that many excellent speeches have been made in the Budget debate of the past two days. Those speeches have come from both sides of the House and some have been extremely considered.
Before I deal with the speeches, however, I must point out one thing to the hon. Member for Arundel and South Downs (Mr. Flight), who repeated an allegation that was made in the Chamber yesterday by the Leader of the Opposition about the imposition of value added tax on spectacles. I make it clear to the House that that measure is not a result of this or any previous Budget. In fact, it is the consequence of a decision that was taken in 1990, under the previous Government, to pursue a highly complex and long-running insurance court case, which eventually led to a House of Lords appeal hearing in January that was lost. I will be more than happy to write to the hon. Gentleman about that issue so that he can understand its consequences.
Mr. Flight: Will the Paymaster General confirm the Opposition view that the House of Lords decision results from a European Union judgment that pertains to the imposition of VAT, which takes us into wholly different territory? Why did the Government not announce the fact that VAT would increase? I did not say that the increase was in the Budget; I said that the Government had failed to announce it.
Dawn Primarolo: I have explained that the increase was the result of a court judgment following action taken by the previous Government. It is not connected with this Budget and I will be happy to write to the hon. Gentleman with the details.
The hon. Member for East Yorkshire (Mr. Townend) made a spirited and wide-ranging speech. There was much in it with which I did not agree, but the hon. Member for Buckingham (Mr. Bercow) pointed out that the hon. Gentleman would not be seeking re-election to the House. I believe that he was first elected in 1970. I presume that his contribution was a final "getting everything off his chest" on every subject under the sun. I wish him a happy retirement. I think that I can say without fear of contradiction that we will all miss him--even hon. Members who did not agree with what he said.
The hon. Member for South-East Cornwall (Mr. Breed) mentioned a tax on pesticides in 2002. He, too, offered his apologies as he could not be here for the closing speeches--I do not know what I have done to offend all these hon. Gentlemen. The Government have welcomed the crop protection industry's voluntary package of about 20 measures aimed at reducing the environmental impact of pesticide use. We are pleased that the measures have the support of the National Farmers Union. We hope that the package will be implemented in full from 1 April and that it will deliver the environmental benefits that have been identified.
I am sure that hon. Members would agree that it is sensible to review the package as soon as possible--preferably in the run-up to the next Budget.
Mr. Lembit Öpik (Montgomeryshire): On behalf of my hon. Friend the Member for South-East Cornwall (Mr. Breed), may I ask the hon. Lady about the time scale for that review? Will it take place within one year or within a few years?
Dawn Primarolo: I thought that I said that the review would take place before the next Budget. I assume that there will be another Budget within a year--as is normal.
The hon. Member for South-East Cornwall also said that landfill tax causes fly tipping. However, there is no evidence of that. A survey carried out by the Tidy Britain Group in 1999 showed that most fly tipping is of household waste, and of course households do not directly pay the landfill tax. However, I am sure that every Member of the House would agree with his comments on fly tipping. The illegal disposal of waste is taken seriously by the Government; a number of penalties can be and are imposed on those who are prosecuted for such offences. I understand that the Environment Agency has a 24-hour hotline that people can use to report fly tipping.
Like other hon. Members, the hon. Gentleman referred to the pressures currently experienced by the farming industry. The House will continue to discuss many aspects of that matter over the coming months. I remind the House that the Government have paid farmers £750 million more during this Parliament--on top of existing subsidies. I certainly do not want to tell the House that we do not take the position of the farming industry extremely seriously. Clearly, the work of my right hon. Friend the Minister of Agriculture, Fisheries and Food in dealing with the current pressures will inform our future decisions.
My hon. Friend the Member for Glasgow, Baillieston (Mr. Wray), who is also no longer in the Chamber, made a spirited speech on unemployment and house repossession. He concentrated on the scourge of poverty and his experience in his constituency. He made some policy suggestions that are not immediately attractive to the Government, but he made them with great sincerity and conviction and I promise to read them carefully.
The right hon. Member for Fylde (Mr. Jack), who is an experienced Member of the House and a former Financial Secretary, raised several issues. He made suggestions as to what the Government should be doing to tackle and reduce compliance costs for business. I agree with him about setting objectives, but I am sure that we shall probably disagree on the measures for their achievement. In the press releases on the Budget, we announced that there would be consultation on a radical new look at the treatment of tax for small businesses--aimed at reducing the regulatory burdens, through, for instance, broadly aligning their profits for tax purposes with those reported in the accounts.
I know that the right hon. Gentleman continues to take an active interest, both inside and outside the House, in tax simplification questions. I am sure that he will want to participate actively in that consultation with business. I shall ensure that he receives the documentation and that he is kept informed of developments. The Budget announced a range of measures on VAT; that will be of
specific help in the reduction of burdens on small businesses. There is a commitment to consider a flat rate of VAT for small businesses, although he will appreciate that such a scheme would be incredibly complicated. That is why we need to consult businesses on its design and operation, in order to avoid what the right hon. Gentleman described--starting off with good intentions but ending up by making matters worse, without giving them proper consideration. I am sure that he will welcome that.The right hon. Gentleman commented on the Government's intention, announced in the Budget press releases, to extend child care provision, so that carers can look after children in their own homes. He must understand that the child care industry was not regulated before. We must ensure the quality and safety of the care provided to those children and make sure that it is regulated properly. I am talking not about a massive scheme, but about Government money being used to support a home child carers regime. We are consulting on that matter and if he is actively interested in it, I am happy to keep him informed. If I fail to do so, I am sure that he will jog my memory.
The right hon. Gentleman suggested that we should increase the basic tax rate threshold to £33,000. That would cost an estimated £1.4 billion, and it is the Government's judgment that it would not benefit those in most need. As he will see from our Budget, targeting tax cuts and investing in public services represents the way forward. I shall not add that sum to the running total of all the commitments that the Conservative party has made this evening to cutting tax while increasing expenditure, because the right hon. Gentleman offered that suggestion to explore how our tax limits operate.
My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington)--who is here--started with a succinctly and well-made point, with which I cannot believe any hon. Member would disagree. He said that if we impoverish our children, we are impoverished as a community. Our children, their skills and the contribution that they make to our future society are important. He will see from the Budget that we are attempting to provide such help with the children's tax credit, the introduction of the new baby credit, the increases in the working families tax credit and in the child care element.
My hon. Friend made some important points about the Government's regeneration package. Unfortunately for me, he settled on the vexed problem of VAT. I absolutely share his admiration for the hospice movement, as all hon. Members would. I am sure that even the right hon. Member for Bromley and Chislehurst (Mr. Forth) would not disagree with that. My hon. Friend will understand that the Government have carried out a charity review, in which we considered the imposition of VAT on some of the activities that charities undertake. The cost of relieving the charities of that VAT would be £400 million, which the hon. Member for Arundel and South Downs committed the Conservative party to spending.
I need to look very carefully at the issues that my hon. Friend raises about the hospice in his constituency. Clearly, we need to balance the independence of the hospice movement, which wants to be independent from the national health service, and its charitable status with the sensible operation of the tax system.
My hon. Friend the Member for Clydebank and Milngavie, and several other hon. Members, referred to Chester Street Insurance Holdings. Of course the
Government understand the position of those involved. I am sure that he is aware that, as a consequence of the insolvency of Chester Street, provisional liquidators were appointed on 9 January this year. At a meeting on 5 February, a scheme of arrangement was agreed with the creditors. The Government expect the Policyholders Protection Board to work closely with the provisional liquidators to ensure that claims are processed promptly. The PPB will ensure that the provisions of the Policy Holders Protection Act 1975 are implemented fully. Her Majesty's Treasury is monitoring the position by keeping in close touch with other Departments and the Financial Services Authority, and my hon. Friend the Economic Secretary is pursuing the matter--It being Seven o'clock, the debate stood adjourned.
Debate to be resumed on Monday next.
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