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8.22 pm
Michael Fabricant (Lichfield): In her peroration, the Secretary of State said that new Labour means that all people should be treated equally. In the Budget, it did just that with the national insurance increase of 1 per cent. for every person and every employer.
Michael Fabricant: The hon. Member for Rhondda (Mr. Bryant) does not have a background in industry. If he did, he would know that that increase will cost jobs. I shall come back to that later.
Mr. Bryant: Will the hon. Gentleman give way?
Michael Fabricant: I shall give way as I named the hon. Gentleman.
Mr. Bryant: I should point out that I was self-employed for the last three years of my employment.
Michael Fabricant: At one point in his life, the hon. Gentleman was a vicar. On his small income as a vicar, would he have wanted to pay a further 1 per cent? I suspect not. Can the Church of England afford to pay a further 1 per cent? I shall not dwell on that issue in too much detail.
My hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) talked about the issues that were not addressed in the Chancellor's speech, for example, the climate change levy. He said that nothing had been done to cut red tape, which costs firms between £12 billion and £15 billion each year. As a debutee—if not a debutante—of the use of the internet, I can certainly say that the suggestion made by the Secretary of State for Trade and Industry will not save much time for business.
Some 617,000 hours are spent filling in forms for the Government. Last year, new legislation was introduced every 26 minutes of the working day. That legislation must be understood by people working in industry. While they are trying to understand it and fill in the forms resulting from it, they are not out there getting the jobs and the business that we need to keep small firms running well.
I was disappointed that there were no new initiatives or incentives to improve the rollout of broadband. Much has been said about broadband. I have said many times in the Chamber that, when the Government speak about broadband, other Governments would say that they are comparatively narrow band. If broadband is to be
extended into rural areas—I know that the hon. Member for Rhondda is keen for that to happen in his constituency, and he is right—there need to be tax incentives. The Budget included nothing on that.Nothing was said either about profit-related pay. Some 40,000 people are employed by the John Lewis Partnership. Time and again, year after year, the Labour party promised that it would restore profit-related pay for non-share options. The people who work for the John Lewis Partnership, Unipart and Baxi Boilers are real stakeholders. They are part of co-operatives, and one would think that the Labour party would welcome that, but not so. The word "socialism" is not allowed to be used any more. Labour is renowned for not keeping its promises, and it has not.
To return to the subject of national insurance, as I said in an intervention on my hon. Friend the Member for Maldon and East Chelmsford, the increase in national insurance will prove to be a double whammy—mark my words. From 2003, people will have to spend another 1 per cent. of their incomes on employees' national insurance, firms will have to pay a further 1 per cent. on employers' national insurance, and council tax will inevitably rise, because the vast expense incurred by councils is primarily on their wages bills. Even a small district council such as Lichfield will suffer a £78,000 rise in its wages bill, and the bill in Staffordshire will increase eightfold. That is a double whammy.
When council taxes go up, Labour Members with marginal seats—I am not referring to the hon. Member for Rhondda—will know why. It will be because of this Budget. In the first Budget of the last Parliament—I shall not dwell on this subject for long, Mr. Deputy Speaker, or I will be out of order—there was a huge windfall tax on pensions. Pensions have failed to reach their expected target and suffered badly.
The care home sector is in crisis. Something in the order of 50,000 care beds have closed in the past couple of years, and I think that that number will increase. The care home sector is very labour intensive, and so it should be. The increase in national insurance contributions will be an additional 1 per cent. cost.
Mr. Kevan Jones: Will the hon. Gentleman give way?
Michael Fabricant: If the hon. Gentleman is quick and concise, I will give way.
Mr. Jones: Does the hon. Gentleman agree that the reason why many care homes have closed is that they cannot meet the new care standards? Is he suggesting that we should do away with those care standards, which are aimed at improving the quality of life of our elderly in those homes?
Michael Fabricant: It is far better to be in a care home than to be bed blocking. The Government set impractical guidelines without providing the financial resources to enable care homes to carry them out. That is why they are closing. The hon. Gentleman is wrong.
Another sector that is closing is the automotive industry. We have already seen the closure of the Dagenham car plant and the closure of Vauxhall in Luton. In the west midlands, where Lichfield lies, we have not only factories but many automotive suppliers. Yes, even
in the leafy lanes of Lichfield, people work in the automotive industry and they are operating on a knife edge. That additional 1 per cent. national insurance contribution will be a major extra burden.I am waiting for some smart Alec to say, "Ah, but corporation tax has been cut," but that will not assist small firms in the automotive industry that are not making a profit. As has already been said, a firm cannot pay corporation tax unless it makes a profit in the first place. Nor will anyone making more than £1.5 million gain; they will suffer and there will be a major crisis.
Furthermore, no one has actually worked out the cost to the national health service of the extra 1 per cent. on the employer's contribution—or, indeed, the cost to schools. They operate their own budgets and they, too, will have to find that extra 1 per cent. from their own funding. I am sure that all hon. Members have visited schools in their constituency, so they will know that employment costs comprise about 85 per cent.—perhaps even 90 per cent.—of the running costs of schools. Those costs will rise by 1 per cent., with no additional money promised by the Government.
Of course, the Government justify all that extra taxation. As the hon. Member for Birmingham, Erdington (Mr. Simon) rightly pointed out, it is not a stealth tax; it is so obviously an additional tax—we are so obviously going back to the tax and spend of old Labour days—that it is far from stealthy. The Government's whole raison d'être is to improve the national health service. Well, the acid test is: will Burntwood hospital remain open? Just before the last general election, the fact emerged—it certainly was not announced—that that hospital was to close. That was confirmed two days after the election. It is also likely that the maternity unit in Lichfield will close. There will be no more Dr. Johnsons and no more David Garricks born in Lichfield. Under a Labour Government nobody will be born in Lichfield because the maternity unit will close. We wait with great interest to see whether the NHS will reverse that decision, made under a Labour Government, but I know damn well that that will certainly not be the case.
Having had the third way, we have returned to the old ways of Labour and another tax and spend Labour Government. We have seen taxes go up and the standard of services fall. I would like to think that the NHS will improve as a consequence of the Budget, but watch this space! I do not think that it will. All that will happen is that although in the past the Government have managed to achieve reasonably low unemployment—that is also true in other parts of the EU—this Budget will mark the time when we see unemployment start to rise. The care homes sector, schools and the NHS will suffer as a consequence.
8.33 pm
Mr. Wayne David (Caerphilly): This Budget, based on promoting the proper funding and modernisation of the national health service, has been warmly received in my constituency and, indeed, across the whole of south Wales. In my constituency, we very much hope that it will help to bring a little closer the new hospital that we have wanted for many years.
I am sure that Aneurin Bevan would have warmly welcomed the Budget. He would certainly have welcomed the fact that major improvements in the health service are being paid for by increases in national insurance contributions.
As has been said many times, the Budget is about creating a fairer and more just Britain. It is also about creating a more enterprising Britain. It is important to remember that those two aims are not contradictory but complementary. That is shown clearly when we consider unemployment—or worklessness—which is one of the main causes of poverty and social exclusion in our country. It still blights the lives of far too many individuals, but it is also a major impediment to Britain's economic growth and continuing prosperity.
We all know that unemployment has dropped dramatically: it is at an all-time low and is also low compared with many countries in the European Union. Above all else, it is worth remembering that in the mid-1980s about 350,000 young people had been unemployed for more than one year. At present, only 4,700 young people are in that position. By any standard, that is a profound and dramatic change. However, there are pockets of unemployment that is far too high—unacceptably so.
For example, there are areas of acute deprivation throughout the whole of south Wales. In my constituency, unemployment is unacceptably high in communities such as Graig y Rhacca, the Aber valley and Bargoed. The problem is especially acute further up the valleys: in the heads of the valleys, unemployment is a major social problem. That is why I am extremely pleased that the Budget includes specific measures to promote enterprise and encourage employability.
There are proposals to extend the new deal 25-plus to jobseekers who have been unemployed for 18 months, on an "off and on" basis, and to introduce a gateway to work process for all jobseekers on new deal 25-plus in four areas—London, Manchester, Dundee and Swansea. There are other measures to help unemployed people but those two schemes will make a positive and significant difference.
In the extension of new deal 25-plus, about 5,000 unemployed people who have difficulty in holding down a job—whether seasonal or other work—will be given real life chances. There will be tailor-made job preparation courses for those on new deal 25-plus in the four cities that I mentioned. At first, they will only be pilot schemes but I believe that they will be successful and will be extended to other parts of the country.
Those two measures offer a new approach to dealing with the problem of long-term unemployment. They are about empowerment. They are about giving responsibility to individuals. They are about helping to take people off benefit and putting them into work.
The measures outlined in the Budget, as well as other measures pursued by the Government, are extremely positive. They will give people new hope for the future and ensure that they have a real stake in our developing society. For example, I especially welcome, as a complement to the Budget proposals, the recent announcement of the extension of employment zones and the creation of Jobcentre Plus, which will bring the Employment Service and the Benefits Agency together in a new comprehensive support system.
Those measures will make a significant contribution to the creation of a fairer society and a more enterprising country. The Budget takes us much, much closer to the creation of a society based on full employment. That has
historically been a goal for the Labour movement; it is now close to becoming a tangible reality. For that reason, above all else, we should warmly welcome the Budget.
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