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9 Apr 2003 : Column 328—continued
4.5 pm
Tony Baldry (Banbury): In reference to the last comment from the hon. Member for Wolverhampton, South-West (Rob Marris), a number of other supposed initiatives in relation to training were announced in today's Budget, but I am interested to know how many employers in his constituency have had any contact from the Learning and Skills Council. The Government
keep introducing more and more initiatives in these areas, but that is no satisfactory replacement for action and delivery on the ground.
Rob Marris: Will the hon. Gentleman give way?
Tony Baldry: No, no. I have only just started.
Rob Marris: The hon. Gentleman asked me a question.
Tony Baldry: I responded to make it clear that I listened to what the hon. Gentleman had to say and to observe the courtesies of the House.
I offer a limited welcome to but one part of the Budget—that which relates to international development—and everyone concerned with it would welcome the Government's further contributions to humanitarian aid and reconstruction in Iraq as well as the Chancellor's commitment to the international financing facility in the hope that it will lever in $50 billion a year to finance development. I also welcome his comments on the need to reform the European Union's development budget. However, I express these cautions to him on each of those items.
On the money for Iraq, we have seen with Afghanistan that the amount required for humanitarian needs has far outstripped earlier estimates. Much of the money pledged by the international community at the Tokyo conference for funding reconstruction in Afghanistan has simply gone on meeting basic humanitarian needs. I suspect that the demands for humanitarian assistance and for reconstructing Iraq are far greater than anyone, including the Chancellor, has contemplated.
Indeed, during the Select Committee's visit to New York the other day, the United Nations announced a $2.2 billion request for food and non-food aid for Iraq just to get that country through the next six months. That is the largest request ever made by the UN in that regard, and that is before one gets to any question of reconstruction in Iraq. Those who think that that country may be oil rich and that it can meet all those costs itself should remember that, because of the policies of Saddam Hussein and others, Iraq is substantially in debt. So, the Chancellor and the Government must recognise the fact that if Iraq's needs are to be met, that will require the united efforts of the whole international community. I suspect that those efforts would be better harnessed through the co-operation and endorsement of the UN.
The international financing facility is a brave initiative by the Chancellor, and he is to be congratulated. I genuinely think that he has committed himself to supporting international development, but I caution him that he has yet to persuade many in the G7 and the World Bank that the initiative will work and that it is not just a well-meaning project that will rob Peter to pay Paul. I hope that, this coming weekend, he can convince G7 colleagues not only that the initiative is worth supporting, but that it will work. Unless he can do
so, it will simply be worked up and used as a line to take, thereby giving the impression that something is being done when things are not being done.
Lynne Jones: Of course, I agree with the hon. Gentleman that everything that is done to increase investment in developing countries is to be applauded, but has he made an assessment of the international loan facility and how that may differ if rich countries increased the amount of aid that they give to developing countries to the 0.7 per cent. of GDP target?
Tony Baldry: I do not want to turn this into a debate on financing for development. The reason why the Chancellor made the suggestion is that, as a consequence of the financing for development conference at Monterey, the international community, primarily the United States and the European Union, are committing an extra $12 billion a year for international development. It is welcome as far as it goes but clearly it is not enough and the Chancellor is seeking ways to plug the gap. Even that which is pledged from the United States under the millennium challenge account is pretty conditional. Under good governance rules, not even countries such as India will qualify. The Chancellor's proposal is a worthwhile initiative but the test will come when he tries to convince his colleagues that it is workable. Unless he can convince them that it is, it is simply an initiative, a line to take that gives the impression of doing something but does not deliver. We will have to see this weekend.
If I were given £1 every time I heard Ministers talking about reforming the common agricultural policy and reforming European Union development policy, I would be a very wealthy man. I continually hear the Secretary of State for International Development and other Ministers, including the Chancellor, talking about reform of European Union development assistance. It is a disgrace that more money goes to a single eastern European country such as Hungary under EU development assistance than goes to the whole of Asia under EU development assistance. It is fine the Chancellor and other Ministers continually mouthing this but there needs to be action. Otherwise, it simply becomes a rather boring catechism.
It is a Budget of blame, of borrowing, of failed forecasts, of high taxes today and higher borrowing tomorrow. Higher borrowing tomorrow will inevitably lead to even higher taxes the day after tomorrow. The Chancellor tended to blame the military conflict for the UK economy's performance. He seemed to blame quite a lot of people, yet United States companies such as the General Electric Company, which are a barometer for economic performance and Borders, which has many outlets in the UK, suggest that blaming events elsewhere only masks deeper economic problems here. The problem is demonstrated by the Chancellor making up this country's difficulties by more and more borrowing.
The Chancellor has also blamed the eurozone countries' slower economic growth for today's substantial additions to public borrowing, yet UK productivity is falling further behind not only the United States but Germany and France. Since the Government came to office in 1997, annual growth in productivity as measured by output per worker has averaged just 1.3 per cent., whereas between 1979 and 1997 it averaged 2 per cent.—almost double.
The Chancellor's Budgets downgrade forecasts time and again. His forecast on UK GDP growth for 2003 was downgraded today for the second time in less than five months. He predicted growth of 3 to 3.5 per cent. in last year's Budget, 2.5 to 3 per cent. in November's pre-Budget report and today it is down to 2 to 2.5 per cent. His central forecast is therefore down by nearly a third from the central 2002 Budget forecast.
Again, business investment forecasts have been downgraded. In last year's Budget, the Chancellor said that business investment would grow by 5.5 to 6.25 per cent. in 2003. Today the same forecast has been revised down and stands at minus 1.5 per cent. to minus 1 per cent. Today's Budget also confirms that business investment fell by 8 per cent. in 2002. Those figures are all clearly in the Budget statement.
Manufacturing output has been downgraded again. In last year's Budget statement, the Chancellor said that it would increase by between 2¼ and 2¾ per cent. in 2003. Today the forecast has been revised downwards to between a quarter and three quarters of 1 per cent. The Budget also confirms that manufacturing output fell by 4 per cent. in 2002.
What we see is the Chancellor seeking to blame others, and a number of failed forecasts. In fact I do not think my constituents, or indeed people anywhere in the country, are particularly interested in who is to blame, and I do not think they now place any trust in the Chancellor's or the Government's forecasts. They rely on what is happening currently. They are concerned about who will help them through the effects of the United Kingdom's increasingly poor productivity and economic performance—and today's Budget does not suggest that it will be the Chancellor.
Last week The Sunday Times featured an article entitled "Ten ways to safeguard your finances from future attack". We were told
- "Savers are suffering because of the low level of interest rates: even house prices are beginning to look shaky. Today's rise in National Insurance contributions from 10 per cent. to 11 per cent. could not have come at a worse time. The National Insurance bill for someone earning £30,000 a year will rise by £253.72 a year to £2,790.92 . . . The average Council Tax bill has also risen nearly 13 per cent., taking the typical annual cost above £1,000 for the first time."
The consequences are considerable in terms of the delivery of public services, and the impact on those working in the public sector—nurses, teachers and police officers. Many public-sector and low-paid people in north Oxfordshire find it extremely difficult to afford homes, and, ironically, those who have been able to buy them cannot afford even a slight fall in house prices if
they are not to find themselves with negative equity—especially when low interest rates have provided neither group with substantial savings.The Budget talks of local pay negotiations in the public sector and the civil service. We shall just have to see how that works out. For years, along with other Oxfordshire Members, I have called for sensible local cost-of-living allowances for public-sector workers. The test will be how much real help the Budget gives nurses, teachers and police officers when it comes to local pay negotiations.
There was talk in the Budget of 80,000 more nurses. If true, that is welcome news. The Chancellor has made much of investment in the national health service, but I can describe the reality of the NHS in Oxfordshire. The main hospital trust, the Oxford Radcliffe NHS trust—which includes the John Radcliffe in Oxford and the Horton hospital in my constituency—is so overdrawn that it will not admit to the figure, but it is somewhere between £22 million and £50 million this year. Why? Largely because of the cost of employing agency nurses at the John Radcliffe. Nurses cannot afford to work for the NHS in Oxford, and the only way in which the John Radcliffe can recruit them is through agencies. The only way that nurses can afford to work in hospitals is to be employed by agencies. Increasingly, groups of nurses are setting up their own freelance agencies simply so that they can be paid higher rates.
The result is not better treatment at the John Radcliffe or through the Oxford Radcliffe NHS trust, but the hospital's continually having to dip into the red to afford the nurses that it currently has. I shall be extremely interested to discover how many of these 80,000 so-called extra nurses the Chancellor is able to deliver to hospitals in Oxfordshire in the next few years. However, whether he achieves that will largely depend on whether he has at last woken up to the fact that in counties such as Oxfordshire, where it is expensive to live, a sensible cost-of-living increment is required if people such as nurses, teachers and police officers are to be attracted.
Not only are people being hit by higher taxes and difficulties with house prices; homeowners and tenants alike are having to pay 12.8 per cent. more in council tax in Oxfordshire, or an extra £100 for a band D house in Cherwell because of a stitched-up local government finance settlement. It could have been worse for residents if Oxfordshire county councillors had not cut investment in roads, transport, fire engine replacement and training budgets.
This is the background to the Chancellor's Budget—a background against which the article in The Sunday Times to which I have referred proceeded to give people advice on how to prevent their pockets from being drained even further by today's Budget. Each of its 10 tips, however, has caveats that are reinforced by the Chancellor's announcements. I should like to look at three of them.
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