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Mr. Hendrick: Does the hon. Gentleman accept that the gradual increase in the rate of unemployment in the
towns that he mentioned is due to the nature of the industries in those towns—high-tech industries, which have been greatly affected by the downturn in the high-tech sector in America?
Mr. Hunter: Of course that is right. I briefly pointed out that the downturn in the American economy is a significant contributing factor, but there are also other factors. My general point is that the UK is becoming a less attractive place for inward investment, which has consequences for employment in areas such as those that I have mentioned.
On trade, we keep reminding the Government that the UK's share of world exports has fallen and continues to fall. Our balance of trade has been in deficit every month for the past four years. I make those points simply to counter the Government's assertions about the strength and stability of our economy. Although I do not substantially disagree, I am saying that those factors are not the only picture, because there are other growing areas of concern that are relevant to the Budget, as I shall explain. The experience of my constituents is that, over the past five years, taxes have increased; public services have generally become worse; and business has borne the brunt of increased taxation. The essential point that I want to make is that from the point of view of business, the tragedy of the Budget is that some of its positive features are wholly negated by the increases in national insurance contributions.
The positive features are commendable. One of them relates to payroll burdens and the Government's response to the findings of the Carter report. They have responded, albeit modestly, and acknowledged that businesses have been hit severely by payroll burdens in the past four years. Nowadays, businesses are acting as unpaid tax collectors and administrators for the Treasury with regard to the working families tax credit, stakeholder pensions and student loan repayments, and no doubt in other respects. The Budget's payroll burden measure goes some way towards addressing the issue.
On the extension to large companies of the research and development tax credit scheme, I think that we are entitled to remain agnostic until we know the precise details and have seen the measure in practice. It is right that the Government should encourage companies to invest in research and development, but as a general rule, they can best do so by creating a climate that is favourable to the growth of business. That climate will consist to a significant degree of low taxes and fewer regulations, rather than a tax credit scheme that is burdensome to operate.
Mr. Hendrick: Will the hon. Gentleman give way?
Mr. Hunter: I hope that the hon. Gentleman will forgive me, but I wish to accelerate my remarks so that other hon. Members may contribute.
We know about the measures that the Chancellor has announced with regard to corporation tax and capital gains tax, but they are all very small fry. They account for virtually nothing and fade into insignificance in comparison with the increases in national insurance contributions, which represent a £4 billion-a-year tax on jobs starting next year—the equivalent of an increase of almost 3.5 per cent. in corporation tax. The impact will
vary from company to company, but every company, and also the self-employed, will be hit. As has been pointed out in this debate and earlier during questions on the statement, the largest employer in this country is the national health service.So it is happening again: for virtually every business, the overall tax burden will increase. Digby Jones, director general of the CBI, said yesterday that the Budget brings a net increase of £2.5 billion in the cost of doing business in the United Kingdom.
Most commentators are saying today that the Government have taken an enormous gamble, and I am sure that that is an accurate assessment. There was media speculation, not supported by my own observations, that some Labour Members had the jitters earlier this week when a national opinion poll stated that 70 per. cent of the population remain unconvinced by the argument that higher taxation is the way forward for public services. Irrespective of whether that is so, I am certain that we will see jitters in the years to come.
5.45 pm
Gillian Merron (Lincoln): I very much welcome the Budget, not least because of the greater security that it gives to jobs in the city of Lincoln, where unemployment is just two fifths of what it was in 1997. In an already increasingly vibrant economy, the reduction in red tape for small businesses will be greatly welcomed by the local branch of the Federation of Small Businesses. The tax cuts for more than 1,600 businesses in Lincoln will also help to continue the positive local developments.
Engineering has received a great boost from the exemption from the climate change levy that has been given to the combined heat and power industry. I have worked for some time on behalf of Alstom, the largest private employer in my constituency, which makes gas turbines. Following its representations, I led an all-party group of MPs to meet my right hon. Friend the Financial Secretary to press for an exemption from the climate change levy. In an attempt to hold him to ransom, I reminded him that the heat and light that was being provided to Whitehall through a combined heat and power system was driven by a Lincoln-made gas turbine. Clearly my attempts were successful, and there was no need to get Lincoln to pull the plug on Whitehall.
There have been two years of unrelenting damage to the combined heat and power industry, and I hope that the exemption will be part of a mix of measures that are needed to deliver the Government's target of doubling combined heat and power output by 2010. I urge the Government to continue to take action and give support. Nevertheless, this step is extremely welcome and greatly increases job security at Alstom.
I turn now to the health service. Over the next five years, the Government will spend nearly half as much again as they are spending now. I know how warmly that is welcomed in Lincoln, where people have demanded—and, indeed, deserve—a better health service. The extra money that my right hon. Friend announced yesterday is extremely welcome. It gives the health service a financial footing that mirrors its place in people's lives and affections.
However, as has been acknowledged, extra money is just part of the solution. I want to press for a shift in approach, because we have the opportunity to do that.
Disease prevention must be much higher up the agenda than it is currently. The funding for the NHS is long term and, as I am sure hon. Members agree, prevention is better than cure. Not only will prevention save the NHS billions of pounds in the long term, but it will improve the quality of life that people can enjoy.In 1996, coronary heart disease—the single leading cause of death in this country—cost the health service £1.6 billion, yet only 1 per cent. of that money was spent on prevention. Diabetes and its associated complications account for just under one tenth of the whole NHS budget. The incidence of adult obesity has tripled in the past 20 years, so that one in five adults is dangerously overweight, as is one in 10 children under the age of four—twice as many as 20 years ago. Obesity carries a tremendous cost—£500 million per annum for the health service, but also a personal cost in sickness, and, sadly, premature death for many thousands each year. This is a serious matter that needs serious and dedicated action.
The Budget is about much more than extra money for the health service. It also covers reform and independent inspection of standards. However, we must plan carefully to ensure that we move from having a national poor health service to a national good health service. Sport and exercise is proven to improve mental and physical health and to tackle many life-threatening conditions; I have mentioned some of them.
The Government should take positive action to encourage people of all ages and backgrounds to take part in more sport and exercise. I am sure that the film "Bend It Like Beckham" will do a tremendous amount for women's football—that is not lost on Lincoln City Ladies—and especially for Asian women's football. However, we need a plan to improve the uptake of exercise and sport as part of a national health service strategy. I shall make some specific suggestions.
First, the Government should ensure that primary care trusts and groups, doctors and nurses better understand the role that sport and exercise can play in promoting healthy living. We should set national physical activity targets, as already happens in Scotland. We should ensure that health improvement modernisation plans include specific guidance on physical activity. General practitioner exercise referral schemes need long-term funding. They currently receive only short-term funding, the provision is patchy, and the Department of Health does not keep statistics on them. We must move beyond that.
Secondly, the Government could consider amending planning law to ensure that private developers pay a business contribution towards improving sport and recreation facilities. In Lincoln, the Ruston Marconi sports ground was recently acquired by Ashtenne Holdings for development. I share and have expressed the tremendous local anxiety about the provision for sport and recreation in that part of the city. We need better, not worse facilities. A change in the law would assist the local community in bringing pressure to bear to ensure that we have better facilities.
Thirdly, we should promote and quantify local authorities' role in sport and recreation. We expect local councils to provide facilities and a number, including Lincoln, find that such provision is under extreme
financial pressure. It is difficult for councils to make the provision that they would like. I urge the Government to ensure that the review of local government finance takes account of our expectations and funds them accordingly. We must make a decision about the role of local authorities. I believe that they play a strong role in making local provision as part of a national health strategy.As sponsor of a ten-minute Bill that advocated tax relief to community amateur sports clubs, I welcome that move in the Budget. I know that the Lincoln canoe club and Lincoln Wellington athletics club, which has offered to help me train for next year's London marathon after my first appearance in the Lincoln 10 km run this year, will welcome that support as well as the £20 million to renovate and improve community sports facilities.
I would like to finish by referring to the Wanless report, and to its conclusions and recommendations, which state:
- "The Review has concluded that the UK must expect to devote a significantly larger share of its national income to health care over the next 20 years."
- "more success in public health".
There is something for everyone in this Budget—we have the framework and the resources; I hope that we can make it work for the benefit of people in this country.
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