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Mr. Bercow: Given that the Government's resource allocation formula is the vehicle through which they are effectively draining resources from the south-east of England in order to prop up their feckless and profligate friends in the north, does that not underline the importance of the ten-minute Bill that my hon. Friend

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himself introduced to ensure that, in future, there is an independent body whose function it will be to allocate resources to local authorities across the country?

Tony Baldry: I was very grateful to my hon. Friend for his support for that Bill, and for the support of many other Members of Parliament with constituencies in Oxfordshire, Buckinghamshire and elsewhere. The fact is that it is not us who are saying that money is being taken away and given to Labour's friends in the north. Organisations such as the Chartered Institute of Public Finance and Accountancy, by simply looking at the funds for this year's grant allocation, can see that local authorities in the south of England are being raided, and that the money is going elsewhere.

The Chancellor has given us a lot of froth today about assistance for pensioners, but pensioners in my constituency are not concerned about his latest gimmick; they are concerned about how they are going to pay the increase in their council tax bills. [Interruption.] Labour Members may scoff, but pensioners in my constituency are much more concerned about the bills that land on their doormats today than about the Chancellor's promises of benefits tomorrow, because bills on the doormat are the reality. People have now rumbled the fact that the increase in council tax bills is a consequence of this Government's fiddled figures and unfair treatment of the local government finance settlement.

Top of the list of the suggestions in The Sunday Times is:

"Reduce your National Insurance Bill".

It is not surprising that people should consider how to reduce their national insurance bills. Given the higher national insurance contributions that came into effect on 6 April, people are now faced with the triple whammy of frozen personal allowances, frozen national insurance thresholds, and the 1p/10 per cent. increase in the rate of NICs. The Sunday Times advised:

"You can cut your NICs through 'salary sacrifice' whereby you give up some of your salary and your employer increases your pension contributions by the same amount . . . However, you can only sacrifice future increases".

However, future increases do not account for the higher cost of living that today's Budget will create for many people. They will not reduce council tax burdens, which have to be paid now. Nor do they equate with the pensions crisis, which has caused a yearly £5 billion hole in pension provision, and has led Age Concern to point out that Government proposals on pensions require

"fairness, security, clarity and flexibility".

After today's announcements, elderly people in my constituency will be faced by 23 means-tested benefits, which are so opaque that many pensioners will end up not claiming them. All that elderly people want is a simple and straightforward pension.

Indeed, everyone wants a straightforward pension system, but the Labour Government have made the benefit system much more complex and the Chancellor's meddling with tax credits has made the system impossible even for experts to understand. Coupled with that, changes to the payments system in April have been poorly promoted and the Government need to do much

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more to ensure that people get the benefits to which they are entitled. I am not surprised that the Chancellor feels it necessary to write to pensioners about the increase in the winter fuel allowance, but I wish he would write to them all in an endeavour to ensure that they all receive every penny to which they are entitled.

Mr. Bill Tynan (Hamilton, South): Does the hon. Gentleman accept that the constant reference to means-tested benefits affects pensioners' attitudes to the minimum income guarantee, which is a right and is not means-tested? If we continue to talk about means-tested benefits, it will detract from people's ability to benefit from the minimum income guarantee and the pension tax credit.

Tony Baldry: I have no quarrel with the hon. Gentleman, but the fact of the matter is that those benefits are means-tested. I hope that every Member of Parliament wants to ensure that every pensioner receives every penny of benefit to which they are entitled. However, year on year, the Chancellor makes the system more complicated, more difficult and harder for people to understand. Today's Budget provides yet a further example.

To return to the article, under the heading "Offset your Savings", people are advised to

"combine mortgages—and sometimes credit cards and personal loans—and savings schemes. They deduct your savings from your debts and only charge interest on the balance . . . but you need sizeable savings to really benefit".

What about my constituents who do not have sizeable savings because of the high house prices encouraged by the Chancellor's Budget? What of those who do not have such savings because the Chancellor has encouraged low interest rates, which have partly resulted in higher credit card bills and personal loans? And what about those who simply do not have the capacity to play piggy banks and would benefit much more from straightforward and direct measures that help people to save their money, but are penalised by the Budget?

The final piece of advice in the article is to "Claim your Tax Credits". The Chancellor has made a lot of noise today about new tax credits, but, as with the minimum income guarantee for the elderly, they prove more elusive when people try to claim them. Nevertheless, The Sunday Times notes:

"If you have children you can offset some of the increase in National Insurance by claiming the new child tax credit".

But not everyone in my constituency has children—[Interruption.] Well, it is an important observation. Some people can benefit in certain ways, but we should recognise that much of the credit will be clawed back in national insurance contributions—the Budget's biggest caveat. Some of today's initiatives—we have had a lot of them—may look good, but few people qualify for them. Every year, the Chancellor introduces more gimmicks in a great wodge of paper, but on further analysis the next day—or even the same day—one recognises that not many people will benefit.

Other initiatives may seem helpful, but they have to be viewed in relation to all the Treasury's taxes. Most will be too late to help businesses raise productivity, but a rise is needed now. Of course more help for research

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and development is helpful and the proposals for the British small business investment companies are worth investigating, but they are not what business wants. Businesses in my constituency are concerned about increases in national insurance contributions, further burdens in taxation such as the increase in petrol duty in recent years, and increasing amounts of red tape.

It may come as a surprise that, for 2003–04, a Treasury document claims that the Government will be able to

"raise the rate of sustainable growth and achieve rising prosperity and a better quality of life, with economic and employment opportunities for all."

But that does not seem to chime with what is happening in my area, which I suspect is one of the more prosperous in the United Kingdom.

I will turn to the Budget's impact on productivity in a moment, but I wish to refer to the assertion of opportunities for all. Many who will have a chance of concentrating on today's Budget, and on previous announcements that start to impact today, will see it as an attack on middle England. They can hardly be wrong when almost 1 million more people have been dragged into paying tax at the 40 per cent. top rate following the Chancellor's 26 alterations to the tax system since 1997, changes that have cost these taxpayers more than £47 million.

No one in my constituency, whatever their tax bracket, benefits from higher council taxes, higher stamp duty or higher house prices. No one is helped by insecure pensions, which the Budget—like last year's—fails to address.

On productivity, there is simply not a scrap of evidence that the UK is experiencing sustainable growth. No one benefits from low productivity. Business productivity is low simply because the so-called initiatives by the Chancellor that were meant to avoid low productivity are overly complicated, irrelevant or counter-productive. That was the central concern of the local business community when I conducted a survey of the small and medium-sized businesses in my constituency last year. They were concerned about corporation tax, capital gains tax, the petrol tax, stamp duty and national insurance contributions. These were the measures that were of concern to them, as were business rates. It is difficult to see what the Chancellor has done today that helps in any of those areas, or significantly addresses productivity.

Mr. Flight: On productivity, does my hon. Friend accept that one of the key problems has been that productivity in the public sector is, if anything, negative and the more resources shift from the private to the public sector, the lower our productivity growth becomes? Indeed, it has halved in comparison with what it was before 1997. Moreover, the consensus view of economists is that the overall growth rate—the achievable sustainable level—has been reduced to about 2 per cent. as a result of the same factors.

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