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9 Apr 2003 : Column 343—continued
5 pm
Sir Archy Kirkwood (Roxburgh and Berwickshire): I am keen to keep within the 15-minute deadline. The debate has been interesting, but we need to pick up the pace if all those hon. Members who wish to speak are to be able to do so.
I am pleased to follow the hon. Member for Hayes and Harlington (John McDonnell) whose comments relate to the first of three points that I will make. The budgetary process—how we explain what is going on and what we want to achieve—gets lost in the charade and showbiz circus that follows Budget presentations. I have felt for some time that these annual jamborees do more harm than good. We should have a statement of income tax rates followed by a more measured series of debates, separating out some of the more technical aspects for the Treasury anoraks to address. That would allow the rest of us to discuss those things that ordinary people can properly understand.
I enjoyed the hon. Gentleman's speech because he took the time to explain what he wanted to do and how he was going to raise the money. More of us should take the time to argue a case when additional resources are needed. We should have the courage of our convictions and argue with the public for that change to substantiate and support our policy proposals. If we did that, politics would be held in better regard.
My first point is that there is a gap between the reality of the experience of my constituents and what we have heard today. I think that the Chancellor has been
relatively successful. Much of what he has done has promoted positive change. The hon. Member for Wolverhampton, South-West (Rob Marris) was right to say that we in the UK have enjoyed, on average, household income increases. They have been beneficial and were hard won. The first two years after the Chancellor came into office in 1997 were particularly difficult.There are, however, wider dimensions to the argument than personal household income. Collectively, public services have not received the expenditure and capital investment that we would all want. I am in favour of politicians having ambitious targets, but talking about the economy in grand terms, as if everything is either a total success or total gloom, does not match the reality of our constituents. I know intellectually that £6 billion has been put into the pension system, but the hon. Member for Hayes and Harlington is right: we all meet pensioners all the time who feel hard pressed. Council tax increases are part of that. We have to bridge the gap between the way in which people live and their everyday experiences in the high streets and in their homes with what we are talking about and trying to achieve in this place.
I have been an MP for 20 years—although it feels longer—and I am desperately worried about the increasing level of alienation in our society. That is apparent even in my constituency, which is very different from Wolverhampton and Hayes. People are becoming turned off from public policy making and the political process. We should all be concerned about that because it leads to divided communities. Regional economies are vastly different, north and south. That is true in Scotland and it must true in places such as Wolverhampton when compared with the home counties. The policy does not always appear to address that. I support the Chancellor in saying that we need to examine regional policy post-2006 when the European Union structural funds regime changes. I support the decentralisation of the promotion of regional policy, which is important, and, incidentally, I agree with the Jobcentre Plus discretion being devolved.
All those initiatives are helpful, but we have a serious problem. I was struck by a figure produced by the Institute for Public Policy Research, which I read about in The Independent yesterday, in relation to the assets gap that has emerged over the last 10 to 15 years. It reminded us that between 1988 and 1999,
- "the top 1 per cent of the population increased its share of personal wealth from 17 to 23 per cent."
- "The richest 2.4 million households control wealth of about £1,300bn, while the combined wealth of the poorest 12 million households is about £150m."
Secondly, on social policy—I do not have time to develop these points as much as I would like—I am concerned about the increasing complexity of our social support systems. Experts struggle to understand them. I try to specialise in the area, and I struggle to understand the interrelationship between certain policy areas. The Inland Revenue has now taken over responsibility for the administration of the new tax credits, and I can see the validity of the change in principle. I am receiving worrying reports, however, about the inability of the computer systems available to the Inland Revenue to deal with current demand. I am worried about the apparent inability to get to grips with some of these complicated computer systems.
I am also concerned about housing benefit payments being turned into flat rate housing tax credits and added to the list, and anyone who thinks that the working tax credit is complicated will understand why that is. The hon. Member for Hayes and Harlington will be among the first to learn about it, as it will hit people in London much harder than it will anywhere else. A flat rate housing tax credit for public sector and social rented housing causes me real concern. We will need to return to such issues in more detail in the immediate future.
I am also worried about the extent of the increase in the informal economy, which I now detect, mainly in urban, deprived areas. The Grabiner report, commissioned by the Inland Revenue in 2000, did sensible work, but it has been gathering dust. Estimates at the time were that a £50 billion to £80 billion informal economy existed. One of the consequences of the increasing complexity of the welfare support system is that people slip out of it: they do not want anything to do with it, as it is too complicated for them. What they therefore do is to work "on the side". That is not in anyone's interests. What we should do is have an amnesty: the Inland Revenue should say that, for the next six months, it will come to some arrangement with anyone who comes clean and declares what they have been doing. We would therefore be able to get those people on board, take them into the system, and have them paying taxes like the rest of us. That is a growing problem, the extent of which is underestimated. There is a lot of entrepreneurial activity in urban centres below the line, which is a real concern.
On unemployment figures, we should look at the group of people who are classed as economically inactive. I welcome the Government's changes to incapacity benefit and the pilots that will take place in the autumn, as that is a problem area that we do need to address. Useful work is being done in trying to get people into welfare-to-work programmes, which I support. The Grabiner report, however, deserves further study, and we should consider implementing its conclusions rather quickly. Knowing the Chancellor as well as I do, I recognise that he is infatuated, if that is not too strong a word, with American systems, of which
there are some good examples in the world of social enterprise. Companies get tax breaks and people promote mutual activity, almost old-fashioned co-operative activity along the lines of the New Lanark mills and so on. Social enterprise could be much more aggressively promoted, supported by tax breaks, to help deprived communities work their way out of multiple deprivation.I shall deal quickly with two other social policy issues. The Government's child poverty targets are ambitious. The Chancellor of the Exchequer skated over it, but the report by the Institute for Fiscal Studies on the green budget suggests that we need another £1 billion to be sure of reaching the target of reducing child poverty by a quarter by 2004. I was interested to learn that all that the Chancellor is doing in the hope of achieving that target is leaving the per-child element of the child tax credit at £27.75, indexing it with earnings for the rest of this Parliament. The IFS report thinks that that will leave the Government £1 billion short of the target—a £3 a week increase in the per child element of child tax credit would be needed to achieve that. I noticed that the Chancellor did not say anything about that.
I do not have time to develop this argument but, briefly, the question of pensions, which other hon. Members have raised, is one to which the House will need to return as it will cause major long-term problems. The Government have genuinely, and in good faith, tried to address pensioner poverty, but there are longer-term questions about means testing, which is more pernicious than people may imagine. One of the main indicators in the indexes of multiple deprivation by which funding allocations are made is means-tested benefit take-up. If people are not getting a benefit, not only do they not receive that assistance but their areas do not get the benefit of the multiple deprivation index subventions. We need to be extremely careful about that possibility of double jeopardy.
On pensions, the problem it is not just the state retirement pension or pension provision but the whole policy on ageing. Government Departments across the board need to turn their attention now to demographic changes that will take place between 2020 and 2050. They need to look at the change in the age profile of the working population compared with the current age profile of people who, hopefully, will have retired by then. The Government are not spending enough time on that issue or giving it enough priority.
In the final three minutes available to me, I shall make one or two points about local issues that are worth making as they have a wider salience. I was pleased that the biofuels issue was addressed, but we still have not gone far enough. Biofuels have a double benefit—they are something that our agricultural community can grow which might make them a welcome profit for a change, and they reduce carbon emissions. This afternoon's announcement would introduce changes by 1 January 2005, but by that time other European Union countries will be well ahead of us in the biofuels department. I accept that the Chancellor did not want to introduce change immediately—because we do not have capacity nationally, biofuels would have to come in from outside. I understand why there is some delay, but
I do not understand why we are not going further and faster in trying to level the playing field and get the 4.5 p per litre that the biofuel generating industry thinks is a necessary incentive to make the initiative profitable.I shall conclude with the problems of public insurance liability, which was mentioned earlier. Some businesses in my constituency have been subject to 500 and 600 per cent. increases in public liability insurance, which do not fairly reflect the risks that they face. They are, for example, small steel construction companies with a flawless safety record. They are family businesses; they have had no trouble and are very careful about how they conduct their business, yet they are now struggling to find insurance cover of any kind. It would be perverse in the extreme if such high-quality businesses were put out of business and their profitability extinguished simply because of the changes in the insurance industry. I know that the Department for Work and Pensions is conducting a review on this matter. That review needs to reach its conclusions very quickly—before the summer—and I hope that it will come up with recommendations that the Government will quickly and urgently implement to take some of the pressure off those businesses, because if they do not, those businesses will disappear in very short order.
The manufacturing sector in my constituency is taking a real pounding. We have lost £29 million in exports from the Scottish Borders in the last year, mainly in textiles but also in electronics. Manufacturing is taking a real hammering there. Knowing the Chancellor as I do—and knowing his provenance as a politician—I am surprised that he is not spending much more time and energy on this issue. That makes it sound as though I am his best buddy. I am not really, but I sometimes meet him in aeroplanes at 37,000 ft without his advisers. That is a really good opportunity to talk to him, and I have been known to spoil his breakfast. I get the impression, however, that manufacturing is just another issue for him, and that he is not as focused on it as I think that he should be. The announcement of 100 per cent. capital allowance for information technology equipment is very welcome, but some of our manufacturing industries, such as textiles, are competing against huge global market pressures, and they need further consideration of that kind.
I heard some warm words from the Chancellor on apprenticeships, although he spoke them at such a rate that I could not properly understand them. I am finding it very difficult to get small family businesses to take on joiners as apprentices, because the construction industry training board regulations mean that the apprentices have to go off for 20 weeks before they can come back. A small business in a place such as Kelso or Hawick in south-east Scotland simply cannot carry that cost and responsibility. There is an endless amount of work available, with very good rates of pay. We could encourage lots of young people to come into the industry, and they want to do so, but the businesses just cannot carry the on-cost. I understand that we need excellent standards, and that we do not want gas fitters going round causing explosions all over the country, but we seriously need to do something to get better provision for small-scale businesses so that they can take on and train skilled journeymen.
This is a high-risk Budget. The Chancellor is taking a gamble on growth rates if he thinks that those forecasts are going to be robust. I wish him luck; he has been lucky in the past, but it will be a very good trick if he can do it.
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