Budget Statement

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Mr. Evans: That was hugely amusing. However, someone sitting at home watching that on television in Swansea, who has been waiting for nine years to go into Morriston hospital for an operation, or someone like the hon. Member for Cardiff, Central, who went to one of his local hospitals and saw the condition of some of the toilets, would say that there are genuine problems. [Interruption.] No, I do not think that we will continue with the Swedish model. I know that the story is gripping the tabloids at the moment, but goodness me, are not there more important things for our papers to write about, such as the state of our health service, street crime, and the lack of investment in manufacturing industry?

I know that other hon. Members want to speak, so I shall make my contribution relatively short, and shall move straight from the national health service to the economy. I make no excuses for that because only from a growing and prosperous economy can we get the money that we need to invest in our public services to improve them. I found it interesting that right at the end of the Chancellor's speech, he announced that the 1 one per cent. increase in tax would fall on jobs and those in jobs. The average wage of the self-employed in Wales is dramatically lower that that of the employed, so that one per cent. falls disproportionately upon the self-employed.

The Secretary of State for Wales entertained us with his rather, let us say, clipped version of today's business section of the Western Mail. He talked about the increase in optimism revealed by the Confederation of British Industry's survey. If he had bothered to cast his eyes further towards the bottom of that article, he would have read that the director of the CBI in Wales, Mr. Rosser, said that it was important to point out that

    ''the survey period was completed prior to the Budget, which added to employment costs for business of all sectors and sizes . . . We cannot be sure that recorded optimism would have bounced back in this way, had manufacturers known what was in store.''

That is absolutely right. We have already heard from members of Plaid Cymru that manufacturing unemployment has increased by 40,000 in four years. That unemployment is certainly not getting better, and I do not believe that putting 1 per cent. on national insurance will help. The CBI in Wales said that it was

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    ''extremely disappointing to see a rise of 1 per cent. in National Insurance Contributions in this Budget. Adding to the business cost base in this way at a time when profitability and competitiveness are under pressure—and effectively penalising employment—is unjustifiable.''

The Institute of Directors expressed concern about the increase in taxation on business. It is especially concerned about the increase in employer national insurance contributions, which is a tax on jobs. It says that the huge increases in national health spending are

    ''a gamble that resources will achieve results and a gamble that the economy will be strong enough to generate resources.

    The rising tax burden can only damage economic competitiveness. Just as the rest of Europe is trying to reduce the tax burden, the UK is attempting to push it up.''

The Secretary of State mentioned how important small businesses are to Wales. As I am sure every hon. Member here knows, I am the owner of a convenience store in Swansea and I employ eight people. The vast majority of businesses are small. The Federation of Small Businesses says:

    ''It is a tragedy that the Chancellor has decided that the self-employed will also pay higher National Insurance Contributions. The average income from self employment is just £13,890 compared to an average income from employment of £21,842 per annum. This undermines any attempts that the Chancellor has made to help the low paid.''

Mr. David: The hon. Gentleman is very good at selective quotations. Does he note that Institute of Directors also said that it welcomes the measures to help small businesses, such as reductions in corporation tax and measures to reduce bureaucracy and simplify the VAT regime?

Mr. Evans: As I said at the beginning, in parts of his speech, the Chancellor waxed lyrical about what he was doing, which was tweaking at the edges of certain measures. He did so for 57 minutes. As we have heard, the vast majority of businesses in Wales are small and unincorporated and do not pay corporation tax, so the provision on corporation tax was of no help to them. Overall, the advantages to businesses that came from the tweaking of the measures were completely undone by that 1 per cent. increase in the national insurance contribution. We should be worried about that. The minimum wage was mentioned earlier. Many people who pay national insurance and tax on that may find that the 10p given with one hand in October is clawed back.

Mr. Murphy: Not at all.

Mr. Evans: The Secretary of State says ''not at all'', but giving it with one hand and clawing it back a few months later is hardly generous.

During questions, I mentioned council tax. There is an onus on the Government, and I look forward to the Secretary of State's letter clarifying his point about taxation being lower here than in our European Union neighbour countries. Whether that included stealth taxes—council tax is one of the more regressive stealth taxes—

Mr. Murphy: It is a tax.

Mr. Evans: It is a tax. In Wales, four years ago, when the Government came to power, the average council tax was £495. Today, it is £710. The worst area in Wales is Neath Port Talbot, where, when the

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Labour party came to power, it was £619. Today it is £884. That is an increase of £265. Do the people of Neath Port Talbot believe that they are getting better services for their money? I doubt it.

Mr. Murphy: The hon. Gentleman talks a great deal about stealth taxes. There is nothing stealthy about council tax. As he well knows, the council tax is one of the most open taxes in terms of people understanding how it is spent. He talks a great deal about taxation, but Conservative Members have already said that they want the amount that the Chancellor has given the United Kingdom and Wales to spend on the health service over the next several years to be retained. They agree with that spending and that we should spend billions of pounds more. Does he agree with that? If so, how would he pay for it?

Mr. Evans: The Secretary of State for Wales knows that our shadow Secretary of State has gone around the world looking at how health services operate in other countries. As I said earlier, we want a world-class health service here—

Mr. Murphy: Do we?

Mr. Evans: Yes, we do.

Last year, 250,000 people paid out of their own pockets for operations that they could not have on the national health service. Is that not damning? It is a damning statistic that last year, 250,000 people dipped into their life savings in some areas, simply because they could not have the service that they needed on the national health service. Things are not right. It is a question not merely of putting in that money but of ensuring that it is more effectively spent, which is what we want. Extra money without the proper reforms will be useless. The reforms that the Welsh Assembly suggests will do damage rather than improve the circumstances in Wales.

I shall briefly discuss two other aspects of the Budget. As has already been mentioned, there was little in the Budget to help the rural economy. Indeed, there was nothing for tourism and agriculture. We were all upset to hear the news of the outbreak of bovine tuberculosis in Wales and hope that it can be contained and eradicated. Agriculture in Britain, including Wales, has experienced the most torrid time over the past few years. Foot and mouth was a body blow not merely to agriculture but to tourism. The regional director of the south and west Wales Country Landowners Association, Jonathan Andrews, said of the Budget:

    ''The chancellor has effectively excluded the rural economy from his 'community of entrepreneurship' because his reforms affect only corporate business''.

That situation needs to be improved.

We know how important agriculture is to Wales from the point of view of not merely food but tourism and the environment. Anyone who has taken only scant notice of anything that I have said over the past 10 years will know that I am not the biggest enthusiast for the European Union in the House of Commons. However, it is shocking and scandalous that we must rely on the EU to have an independent inquiry into the outbreak of foot and mouth. Something should have been done about that.

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Earlier, we discussed money, resources and output. How that money is spent is important. In Wales, as we all know, the Welsh Assembly plays an important part in determining that. And, my goodness, would it not send the right signal—indeed, this might be the first popular thing that it has done, other than establishing the Children's Commissioner for Wales, for which I give it credit—if it were to scrap its proposals for the Welsh Assembly building and plough all the money into more consultants, or doctors and nurses? Surely hardly any members of the Committee think that building a new palace for politicians, as opposed to spending it for the benefit of the people, is an effective use of the money. The Welsh Assembly should reconsider that proposal.

Time has passed, and I will bring my remarks to a close because others wish to make a contribution. Slowly, after five years of a Labour Government, some Labour Members are trying to break free. They now feel able to criticise their Government when they think that that Government are wrong. There will be no public services in Wales if Labour Members stand up one after another, pat the Government on the back and say how wonderful the Budget is, when they know that there are deep-rooted problems in Wales—in the NHS, manufacturing industry, regional transport and businesses.

We face real problems in trying to open Wales up to get more people to come in. I ask Labour Members not to look at this and previous Budgets through rose-tinted spectacles. They must tell the Government whenever they see that the Government have got it wrong—and on national insurance contributions, clearly, the Government have got it wrong.

Part of the problem with Welsh politics, certainly in Westminster, is the competition between parties. Plaid Cymru wants taxes to go up even further and has its own agenda for an independent Wales—which is not joined-up thinking. The Liberal Democrats ask for a 1 per cent. increase on income tax to pay for the NHS. When they get it, they say they did not want it to go on employers. Then they vote for it—their policies are all over the place. The Government have shot their fox. Is there any need for Liberal Democrats in Wales?

We need a new realism and common sense about taxation in Wales. The Government should think again. Let us encourage businesses to grow and thrive and not saddle them with extra taxation. Let them create profits, and out of those profits we will create a world-class health service and world-class public services.

12.47 pm

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