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11 Apr 2003 : Column 541—continued
11.36 am
Mr. Alistair Carmichael (Orkney and Shetland): May I start with an apology, in anticipation, to the Minister who will reply and to the Conservative Front-Bench spokesman because, unfortunately, I have an important constituency engagement this evening? I hope that hon. Members will understand that logistics of travel
between my constituency and the House are among the most involved of any. I shall read their comments in Hansard with some interest, however.Like the hon. Member for Luton, North (Mr. Hopkins), I, too, had hoped to contribute to yesterday's debate, although I am not convinced that my remarks would have been any more relevant to the Front-Bench contributions of yesterday than to those of today. I will raise issues of importance to my constituents, however, and I shall do my best to accentuate what I consider to be the positive aspects of this Budget. In fairness, this Budget was not the most inspiring or radical that the House has ever heard, but there was a smattering of the good and some of the not-too-damaging, about which I shall do my best to be positive, regardless of any barracking that I may receive from Labour Members.
First, may I conform to a national stereotype and give a particularly warm welcome to the decision to freeze the duty on spirits announced by the Chancellor? That will be particularly welcome in my constituency—many hon. Members know that I have a strong interest in the spirits industry, if only a political and academic one. My constituency includes the Highland Park distillery, which is a major plant in Orkney's local manufacturing base, and in Shetland, a company is currently trying to establish a whisky, vodka and gin distillery. I am sure that the freeze on duty, which is another step towards improving the historic position whereby we tax spirits, which we produce, more severely than wine, of which we do not produce much, will be warmly welcomed.
In continuing the duty regime as the Chancellor has done, however, he is slightly optimistic if he thinks that he will recoup the predicted £4 billion to £5 billion in duty by cracking down on alcohol and tobacco trafficking across frontiers. If that is to be an achievable target, I suggest that more front-line Customs staff will be needed. That will mean reinstating Customs officers to some of the more remote posts that suffered cuts throughout the 1980s and 1990s. I have told the House before that there are three full-time Customs officers in Shetland and none in Orkney, compared to a figure of 30 in the early 1980s.
I also welcome the abolition of the petroleum revenue tax. I hope that, as the Chancellor said, that will promote investment in the offshore oil and gas industry, which is of supreme importance to Orkney and Shetland. The measure will, at best, repair some of the damage done last year to oil and gas profits by the unexpected rise in corporation tax. It will provide cold comfort to many in the north-east of Scotland and in my constituency who have seen their jobs go with the downturn in the exploration and development sector offshore.
I welcome also the decision to defer the revalorisation increase in petrol duty. I note that the Chancellor said that if the international uncertainty continued, he might be minded not to proceed with the change at all.
Albert Owen: The hon. Gentleman mentions the tax savings that companies will make in areas such as the North sea. Is it not a little disingenuous for those companies to pass on big rises at the petrol pumps? Would it not be helpful for them to withhold any such rises for a period, rather than blaming the Chancellor?
Mr. Carmichael: I wish life were that simple. I would suggest to the hon. Gentleman that there is a lot more
that goes through the petrol pumps than that which comes out of the North sea. The economics of the oil industry are fairly complex—
Albert Owen: I used to work in the industry.
Mr. Carmichael: The hon. Gentleman knows the situation; he may have been mischievous in suggesting that it was as simple as he made out.
I am disappointed that there has been no recognition of the difficulties caused in remote and island communities, where we constantly pay 15p a litre extra at the pumps for our petrol. For much of my constituency, public transport simply will never be a feasible option, leading to an increased dependence on the private car.
It is curious that the Chancellor, having gone to the trouble of announcing what he was not going to do with regard to fuel duty, did not feel it necessary to tell the House what he was doing. I refer to red diesel, rebated fuels for agricultural use and heating fuel oils. The Customs and Excise Budget note CE 31 indicates, as was confirmed in the Red Book, that there is to be a rise of 1p immediately, as of Budget day, over and above the revalorisation rise. I should add that that is Budget note number 31, adding to the series of 28 that the Government produced on Budget day. In fact, it was only yesterday that this was placed in the Vote Office and I had to get my copy from the Customs and Excise website.
Why is the agricultural sector being treated differently from other users of hydrocarbons? The profit margins under which farmers and crofters in my constituency operate—if there is any profit at all—are very tight. There is a suspicious voice at the back of my mind that says that revenge being a dish best eaten cold, the Chancellor is taking some revenge for the role that farmers played in the fuel tax protests of September 2000. [Hon. Members: "Never."] Perhaps I am being unnecessarily cynical.
On fuel, I shall give perhaps two cheers to the favourable rate of duty for bioethanols that the Chancellor announced. That is significant in the development of what will be an important substitute for hydrocarbons, and particularly in meeting our targets for carbon dioxide emissions. The operative date that the Chancellor put on that is 1 January 2005, which suggests that while the Government attach some importance to it, they do not see it as a matter of the greatest urgency. It is worth noting that although the Chancellor announced that the rate is to be set some 20p per litre lower than sulphur-free petrol, the Biofuels Alliance remains of the view that what was needed was something between 26p and 30p extra. That would not be a massive difference in relation to what has been offered.
It is significant that, as has been quoted in the press, some 20,000 jobs, more than £50 million of investments and markets for 1.2 million tonnes of bioethanol product are there for the asking if, in the view of the Biofuels Alliance, the Treasury had been prepared to provide that extra 6p to 10p needed to stimulate investment in development.
That leaves the lingering doubt that the Chancellor's primary consideration is how much take can be made for the Treasury, rather than the good of the
environment and meeting our carbon dioxide emission targets. The fear is that for a ha'porth of tar, the ship is going to be spoilt.Like many in this House and beyond, I had a feeling of unease listening to the Chancellor. While the whole picture may be fairly healthy, we have a boom in consumer confidence that stems in no small part from the buoyancy of the housing market. As one who practised as a solicitor before entering this House, I know that that is an exceptionally fragile basis for such confidence. I also know that when that confidence goes, it goes overnight.
The Budget seemed to do little for manufacturing, where we remain in recession. Very little is being done to stimulate the necessary growth to bring us out of that. It seems to me that the Chancellor took a deep breath, crossed his fingers and went for it. I hope that he is right and successful. If he is wrong, in the long term we will all suffer. The longer we go on without addressing the underlying problems, the harder will be the fall when the bubble eventually bursts.
11.48 am
Jon Cruddas (Dagenham): There are two reasons why I want to speak today. First, I want to register my support for the Budget. Secondly, I want to make a few points about the growing discrepancy between the national and local debates on public services. Since I was elected, I have been learning the job at a local level for the past 21 months, which has been most instructive.
In Westminster, the Opposition talk about failing expenditure, black holes, irresponsibility, waste and spending on public services that will make no difference. Locally, the reality is one of profound change in the delivery of public services. I want to discuss the Budget and the Government's strategy in relation to my community of Dagenham.
The needs of my community are immense. It is the lowest-wage economy in Greater London and one of the most deprived communities. In education, 10 years ago my community was ranked as the worst performing local education authority in the country. Today, adult numeracy is the second lowest in the country; adult literacy is the fourth worst. The proportion of residents with higher education qualifications is the lowest in the country.
On health, heart and lung disease, infant mortality and life expectancy are among the worst in the capital. On the fight against crime, the fear of crime dominates all community surveys, and when I was elected there was acute concern about the number of police on the streets and their public profile. On transport, it has been generally acknowledged that road access, river crossings and rail networks in east London in general and Dagenham in particular are pretty much under-resourced. As I said, the overall public service needs of the community are immense.
Whatever our political bent or persuasion, the Government's general strategy vis-à-vis public services is pretty clear cut, as, indeed, are their general anti-poverty and anti-unemployment strategies. First, we have the search for efficient macro-economic management. To repeat some of the outcomes that we have heard already this week, we have the lowest interest rates for some 40 years, the lowest mortgage rates since
the 1950s, the lowest inflation rates since the 1960s and structural debt estimates of between 31 and 33 per cent. until 2007–08—a very healthy situation.Secondly, we have the strategy of reducing unemployment. We have an active labour market policy and a system of work subsidies. Thirdly, we have the strategy of attacking poverty, reincentivising work, helping pensioners, especially poorer ones, and helping young families. Fourthly—the subject of today's debate—we are refinancing public services by a strategy of debt repayment.
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