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7.59 pm
Rob Marris (Wolverhampton, South-West): I welcome this Budget. Ending poverty and improving public services in this country calls for bold action. Before 1979, there was a measure of consensus between the parties. That consensus was broken by a Conservative Government, who argued that wealth should trickle down to the poor. That dishonest cant hit the real impact of that Government's tax and benefit changes. The very poor faced tax increases—which included VAT being whacked up to 17.5 per cent—and falling incomes, while the very rich enjoyed almost unbelievable benefits.
In their first term, the Conservatives' single-minded dedication to shadowing the money supply needlessly pushed unemployment beyond 3 million and devastated British manufacturing, particularly in the west midlands, which I am proud to represent. In their second term they massacred the housing budget, cutting it nearly in half. They removed rent controls, and trapped hundreds of thousands of council tenants on housing benefit—they could not take jobs because they would not be able to pay the new higher rents. In their third term, that Government froze child benefit again. They also introduced the poll tax, the most regressive tax in the history of the United Kingdom.
During the 13 years between 1979 and 1992, the incomes of the bottom 10 per cent. in our society fell by 17 per cent. in real terms, not just in relation to the incomes of the rest of society. Between 1992 and 1997, the national debt doubled.
Many of our constituencies contain disadvantaged estates, but they did not appear magically, whether in 1997 or in 2001. Those estates fell into poverty in the 1980s and 1990s, when many people—particularly in my area in the west midlands—were thrown out of their jobs by the Conservative party's monetary policy. That was a direct result of the unnecessary viciousness of the party's economic and housing policies—policies from which the poor on those estates suffered for 20 years.
So what is the situation now, five years into a Labour Government? I have to say that it is very hard for the official Opposition. We have magnificent figures on inflation, which is at its lowest for about 40 years. We have magnificent figures on interest rates, also at their lowest for about 40 years. Unemployment has come tumbling down, and is now lower than it is in the United
States and Japan—and, as the Chancellor said in his statement, lower than the European Union average. As he pointed out, in the past year growth in the United Kingdom has been faster than that in any other G7 country. The national debt has come tumbling down as well.
Mr. Boris Johnson (Henley): Does the hon. Gentleman accept that those excellent statistics obtained in large measure at the time of the 1997 election?
Rob Marris: No. It is not possible to say, as I have just said, that we have the lowest inflation for 40 years and then to say that it was just as low in 1997. That is clearly not the case. If the hon. Gentleman is trying to suggest, as some of his colleagues have, that the figures are simply the result of some golden legacy from the Conservative Government, I will gladly deal with that point.
Mr. Swire: While the hon. Gentleman is conducting his tour of the history of the latter half of the 20th century, may I ask him why Britain was considered to be the sick man of Europe in 1979, and 15 years later was attracting record inward investment?
Rob Marris: I did not set out to conduct a tour of the second half of the 20th century, as the hon. Gentleman well knows, and I shall continue with what I am saying.
In 1997, the national debt was 44 per cent. of gross domestic product. It is now less than 31 per cent. of GDP, and is projected to remain so until about 2007. That will mean a tremendous change in the legacy that we shall leave to our children and grandchildren, and to future generations.
I shall leave it to others to talk, as some already have, of the measures to assist families and pensioners. Let me say something about the measures—which I support—to help the environment. I am thinking of changes in vehicle excise duty for motor cycles and vans, measures to promote cleaner vans, the freezing of vehicle excise duty for buses, and new rates for low-carbon cars. The most efficient cars will attract £100 a year less in vehicle excise duty than the least efficient, which is a great step forward.
Further support for business will be provided by exemption from the climate change levy for electricity generated by good-quality combined heat and power stations, and from coal mine methane. We should do more to encourage such moves, which are beneficial to our environment. The same applies to the fuel duty differential that will apply to sulphur-free petrol and diesel from next year.
Manufacturing industry is dear to my heart, as I represent Wolverhampton, an industrial town—or city, as I should say now—in the west midlands. I welcome the changes in corporation tax, especially those affecting small business. They represent a major step forward, as I hope Opposition Members will be big enough to accept. I refer to the cut from 20 to 19 per cent., and the cut in the initial rate from 10 per cent. to zero.
I particularly welcome the £400 million for research and development that has been announced as a result, partly, of representations made by a joint—I stress the word "joint"—CBI-TUC productivity working group. Research and development has been lacking in this country, although it has started to pick up recently. I also
welcome the £30 million provided for small firms to attain "investor in people" status. A community such as mine, where GDP per capita is about 82 per cent. of the national average, must welcome the community investment tax credit and the launch of the £40 million community development venture fund in May. They will be of real help to my constituency, which still suffers from the history of the Tory years.Conservative Members bang on about regulations, and the way in which business is tied up in regulations. They have done it again today. I sympathise, but when I have asked them what regulations they would get rid of—as I have done here, and in the Standing Committee considering the Employment Bill—I have received no answers. The hon. Member for Banbury (Tony Baldry) mentioned the climate change levy, but it is not a regulation. It is a tax, and one that I support.
I hope that in future Budgets the Chancellor will provide more help for research and development. I would like him not just to assist the development of the green technology which, as he said, represents a growing world market, but to encourage the development of medical equipment technology. That too represents a growing world market. Moreover, it is not price-sensitive. We in the west midlands could do very well in that regard, given our history of innovation, working with metals, research, and building machinery. That is high-tech stuff.
I was disappointed by the lack of any announced increase in finance for education and, in particular, the further education sector. Wolverhampton college is partly in my constituency. Nor was there any announcement of the abolition of higher education student tuition fees. Wolverhampton university is the fifth largest university in the country; it is even larger than the one mentioned by my hon. Friend the Member for Preston (Mr. Hendrick). It needs such action so that it can continue its great work in tackling social disadvantage. It has the best intake figures in the country in that context. That is, indeed, a Government priority, and I wish that there had been more announcements about HE funding in the Budget. Such funding would push us, as other measures in the Budget will, towards the high-wage, high-skill economy that I hope all Members want. I hope that the measures I have mentioned will feature in next year's Budget.
Sadly, there was no announcement that we would move substantially nearer to fulfilling the United Nations target for international aid to constitute 0.7 per cent. of GDP. During the past five years of the present Government, we have seen big increases. I hope that they will continue, but I wish we could move closer to that target.
As for the reply given by the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), perhaps he has been reading The Guardian. The paper said this morning that the Budget was to do with how much it would cost to fix Britain's creaking public services. I do not accept that proposition—I do not accept that our public services are creaking. I do not accept what was said by the Leader of the Opposition and some of his hon. Friends, who suggested that public services were getting worse all the time. "More talk, more taxes and more failure", the right hon. Gentleman said. That might describe the Government he served as a Back Bencher, the Government who were in power from 1979 and so on, but I do not accept that the paradigm exists now.
I do not think all public services are getting worse. Of course we need to improve them, but they are not getting worse. When I travel around my constituency, I see things improving. Naturally I would like them to improve more, but they are already improving visibly. School roofs are not leaking as they used to in 1997, for instance, and we have a new accident and emergency department for children. A £44 million cardiac centre is to come on-stream, as is a £13 million state-of-the-art radiology centre. Some of those changes are still in the pipeline, and others have already happened. I do not accept that public services are getting worse—the official Opposition are completely wrong about that.
The Leader of the Opposition is wrong to say that the Labour party was opposed to savings for pensioners. Labour in government has introduced the pension credit to reward thrifty pensioners and to encourage future pensioners to save. The right hon. Gentleman said that investment and reform is old-style tax and spend, but it will not surprise the House to hear that I do not accept that; nor do I accept the pejorative use of the phrase "tax and spend". How on earth are a responsible Government to spend unless they tax? The answer lies in part in the fact that the national debt doubled between 1992 and 1997. Conservative Governments before 1992 had flogged a lot of the family silver, so that was no longer an option; instead, the Conservative Government bumped up the national debt and spent. They refused to behave responsibly and increase taxes, as the Labour Government and this Budget have done.
Taxes will increase slightly, and I support that. Page 218 of the Red Book shows that, on an accruals basis, the proportion of GDP accounted for by current taxation receipts in the tax year just started is 38.7 per cent.; in the years following it will be 39.9 per cent., 40.2 per cent. and 40.4 per cent.; and in 2006–07 it will be 40.5 per cent. In that five-year period, taxes will rise by about 2 per cent. In the same period, NHS spending is projected to increase 43 per cent. in real terms—a 43 per cent. increase off a 2.5 per cent. overall increase in the tax take. That is responsible service delivery. The key issue facing us all is delivery of public services, and the Government are taking great steps. Of course more could be done—that is always true—but we are moving in the right direction. Consideration is being given to management issues, whether in the health service or education, or even transport.
I do not accept the Leader of the Opposition's assertion that the corporation tax burden in this country is among the highest in the group containing us and our competitors. Let me cite some figures from the Trades Union Congress brief, which itself quotes figures from other sources. The CBI business submission in respect of the budget talks of "taxes affecting business behaviour". The briefing gives figures for various countries: France 15 per cent., Netherlands 9.5 per cent., Germany 9.4 per cent., United Kingdom 8.9 per cent., and the United States 7.5 per cent. The figure for the UK is only 1.4 per cent. higher than that for the US, and we get better public services.
Looking at the figures for the share of corporate income tax and employer social security in GDP, we see that the UK is way down the list of OECD countries. In 1999, the Czech Republic topped the list with a figure of 15.1 per
cent. The figure for the UK was 7.3 per cent., and a host of our European Union competitors appeared above us in the list, with higher shares. The figure for the United States, which Conservative Members will no doubt want to know, is 5.9 per cent.In the list of top corporate tax rates in the OECD, the UK figure is 31 per cent., but that is only the top rate. We have learned today that the starting rate is to fall to zero—it was 10 per cent.—and the rate for small businesses is to fall from 20 to 19 per cent. Let us compare our top rate with that of other countries. The top rate in Germany—one of our major competitors—is 54 per cent. In both Canada and Japan—fellow G7 countries—it is 46 per cent. We are way down the table with a rate of 31 per cent.
The figures for employer social security contributions are found in a table from the US Bureau of Labour Statistics. The UK figure is 13 per cent., less than half the figure for France, which tops the table at 32 per cent. The figure for Belgium is 30 per cent.. The United States figure is 21 per cent. The Office for National Statistics Economic Trends figures on international profitability—that is, the rate of return—are 12 per cent. for the UK, 17 per cent. for Finland, 8.4 per cent. for Canada, 3.6 per cent. for Germany, and 9.2 per cent. for the United States.
ONS figures on UK corporate profit records for five or 10-year periods from 1965 onwards show a figure of 12. 3 per cent. for all companies for the period 1997 to 2001, whereas for the period 1965 to 1971 it was 11.6 per cent.; for 1972 to 1981, 8.3 per cent.; for 1982 to 1991, 11.3 per cent; and for 1992 to 2001, 11.9 per cent. Under the Labour Government, that figure has increased to 12.3 per cent. I repeat: I do not accept the Leader of the Opposition's assertion about the UK corporate tax burden. It is simply not true.
The truth is that despite their investigations, research, travels abroad and other endeavours, the official Opposition do not like the NHS and they do not like Government spending. That is why they use "tax and spend" as a pejorative expression. They would prefer either to borrow money on the sly and let future generations pay, or not to have the services at all. As the shadow Chancellor, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), said on 7 October, slightly more than six months ago:
- "The lower we can get public spending as a proportion of GDP the better."
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