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11 Apr 2003 : Column 570—continued
1.26 pm
Mr. Bill Wiggin (Leominster): As with all other public services, the Government have failed in this Budget to take stock of what really needs to be done to reform and improve the public sector. Unfortunately, they have instead inflicted a twofold punishment on taxpayers and workers alike, punishing staff with cumbersome, unnecessary and distracting targets, and punishing the taxpayer with ever-increasing demands for cash to burn.
I shall start with local government and conclude with education. This year, we are to witness the most phenomenal council tax increases imaginable. In this year's Budget, the Chancellor has yet again excelled himself in his ability to tax ordinary hard-working people into the ground. The Government are quite simply robbing hard-earned savings from middle England, and snatching money from well-run councils to give to their cronies on badly run councils. The recent report by the Audit Commission proved that higher taxes and higher spending do not make for better councils. Conservative councils with lower taxes and lower spending were deemed better run and more popular than their Labour and Liberal Democrat counterparts.
The Chancellor has ignored the implications of this extremely revealing report, however, and his obsession with spending is going to present the average family with a four-figure council tax bill this year. It will reach more than £1,000 in band D for the first time. This Government are effectively indulging in a policy of blackmail. They have rigged local funding, forcing councils either to ramp up council tax or to cut local public services. In my opinion, this is the ultimate stealth tax—engineered by the Government, but with local councillors taking the blame.
The Government do not stop there. Even more changes are planned to rig funding yet further, via a new system of grant distribution, new council tax bands and council tax revaluation. Taxpayers will witness their council tax bills soaring above the rate of inflation yet again, and hard-working families, particularly those on middle incomes, will be the hardest hit. It is perhaps worth mentioning that since 1997, average council tax bills have increased by more than 60 per cent., which is the equivalent of a 2 per cent. rise in income tax.
Yet again we see the Chancellor operating by stealth. Detailed figures in the pre-Budget report indicate that he plans to increase revenue from council tax by £3 billion more than he admitted in his 2002 Budget. While the last pre-Budget report declared that council tax revenues would be £16.6 billion for 2002–03 and £17.8 billion for 2003–04, the 2002 Budget had said that council tax revenues would be £14.9 billion and £16.1 billion respectively. It seems that this Chancellor simply cannot get his sums right. Indeed, while his estimate of £16.6 billion for 2002–03 was confirmed in Wednesday's Budget, the estimate for 2003–04 council tax receipts was increased further to £18.6 billion—a £2 billion rise
on the 2002–03 estimate. I wonder by just how much those figures will rise again when the Chancellor makes his pre-Budget report in six months.This year's dramatic council tax rise is the highest since it replaced the poll tax in 1993, and this is the sixth year in a row that it has risen by more than three times inflation. I look forward earnestly to the local council elections on 1 May, when I believe that the ordinary, hard-working people of this country, who are simply fed up with stealth taxes, will rebut Government policy through their ballot papers.
On Wednesday, the Budget revealed another important factor that will have dire consequences for ordinary, hard-working people—in this example, the youngest. Stamp duty hits hardest at the low end of the age spectrum, particularly according to the Council of Mortgage Lenders, whose spokesman said:
- "House prices have more than doubled in the last decade but the threshold for stamp duty has remained unchanged at £60,000. This places a disproportionately heavy burden on first-time buyers because they tend to buy cheaper properties and might expect to be exempt to a higher level than £60,000."
Julie Westby, president of the National Association of Estate Agents, commented:
- "The idea that the Chancellor has been benign in freezing stamp duty on house sales is nonsense. The last time you could find a property for £60,000 was in mid 2002 in Yorkshire and Humberside according to the Nationwide Building Society. Currently the average UK house price is £120,000 and hasn't been £60,000 since the middle of 1997."
Albert Owen: The hon. Gentleman talks about first-time buyers, but does he not acknowledge that the low mortgage interest rate is helping them? I recall that some 20 years ago, when I purchased my first property, I was paying either 14 or 16 per cent., depending on what month it was.
Mr. Wiggin: I am extremely grateful to the hon. Gentleman, who represents Anglesey, or Ynys Môn, as I should say in the spirit of bilingualism. It is a pleasure to have him intervene, because it is particularly important to recognise that if the Government want credit for low interest rates, they should stop trying to take credit for making the Bank of England independent. They cannot have it both ways: either make the bank independent and live with the results or take credit for the low interest rates. This Government would always want to have it both ways. Indeed, the very purpose of my speech is to show that they cannot have it both ways. They have tried that on council tax.
They have been stealth taxing and, once again, trying to blame the councils. That applies to council tax, stamp duty and interest rates.I must make a little progress. This year's Budget reads exactly the same as the old Labour story: more tax and yet less delivery. Is there no end in sight to this reckless Chancellor's desire to tax British business and the British taxpayer into the ground? After six years of a Labour Government, we have witnessed 53 tax rises, an increase in tax revenue of 50 per cent. in real terms, a dramatic increase in borrowing and the equivalent of an extra £44 a week in tax for every man, woman and child in the United Kingdom compared with the situation under the Conservative Government.
Perhaps the most astonishing figure of all is that showing that the cost to the nation for employing this Government has risen from the equivalent of £11,000 a year in tax terms to £16,500 a year per household—a £5,500 increase. That from a party whose leader pledged in 1995:
- "We've no plans to increase tax at all".
On Wednesday, the Chancellor spoke of building a Britain based on "economic strength". We see those words written everywhere: in every dossier, report, press release and bit of paperwork with which the Chancellor has felt it necessary to complement the Budget. I wonder how he intends to create such a strong economic base for a country whose business leaders feel that, as a result of this Government's fiscal policies, they have never been in a worse position in their lives.
Regulation and red tape for business continue unabated, driving the British spirit of enterprise further and further into the ground. The CBI, the Institute of Directors and The Economist have all criticised the Chancellor's tax-and-spend policies. The CBI estimates that the total cost to business of tax and red tape since 1997 could be up to £15 billion a year. On average, 15 new regulations have been introduced every working day, and that, combined with excessive fiscal policies such as the hike in national insurance, has meant almost a halving of productivity growth.
Less than two weeks ago, one of our most informed and respected business leaders, Digby Jones, said:
- "The UK's reputation as the place to do business has never been under greater threat."
The 2003 Budget confirms that this Government are both reckless and irresponsible when it comes to spending. The cost of running Government bureaucracy, the inevitable partner of such massive taxation, will reach £18 billion this year—£4.5 billion more than the cost when the Government came to power in 1997. Not only is the British taxpayer's money being thrown mercilessly at futile attempts to improve public services; it is being used to fund the nuts and bolts of a Government machine that continues to swindle and cheat the people of this country.
1.36 pm
David Wright (Telford): This morning's debate has been very interesting. A number of Opposition speakers have demanded more spending in their constituencies,
while also looking for tax reductions. They seem to be pursuing a "Don't breathe, stay alive" strategy. I shall say more about that shortly.Many people tell me nowadays that there is very little difference between the two main political parties—that their agendas are fairly similar. The Budget debate, however, shows that the divide has never been greater. The difference between the two parties is indeed stark: a party of investment on this side, and a party of cuts on the other.
I thought we would take a bit of a canter down memory lane. Under the Conservatives, Britain was not well placed to withstand a global economic downturn. It was the first to experience difficulties and the last to emerge from recession, and it suffered deeper recessions than most countries. Let us remember the Conservatives' record in office. During their tenure, Britain suffered two of the deepest and longest recessions since the second world war. Unemployment rose to 3 million, and areas such as the west midlands—which contains my constituency—experienced a decimation of manufacturing and engineering industry. Inflation rose to nearly 10 per cent. Interest rates hit 15 per cent. for a whole year, and were in double figures for three years in the late 1980s and early 1990s. Negative equity was suffered by 1.5 million home owners.
Families, home owners, businesses and public services paid the price of the Tories' economic mismanagement as investment was cut. The costs of unemployment and benefit soared, and debt and interest rates paid for failure rather than investment in success.
The Tories' record since 1997 has been no better. Most of their responses to the Government's proposals, including Budgets, have opposed all that we have done to achieve long-term economic stability. They opposed Bank of England independence, and opposed our tough fiscal rules. They opposed the new deal, and continue to do so. They oppose the national minimum wage, and the tax credit system which helps people into work and makes work pay. Their record on trying to achieve growth in the economy and to support working people and working families is abysmal. They have opposed every spending review announcing investment in public services, including investment in the NHS through rises in national insurance. The rise in national insurance about which we have heard so much in recent days is purely to fund the national health service. The wealth of our nation depends on the health of our nation. It is important that all of us—individuals and business alike—contribute to ensuring that we have a successful and healthy work force.
Health care costs are rising around the world. In the United States, the average cost of health care cover rose by 13 per cent. last year. The hon. Member for Sevenoaks (Mr. Fallon) talked about the successes of the US economy. One of the things that the US does not have, of course, is a national health service. If we were to move to a system where we relied on insurance to cover the costs of health care, costs for individuals and working families in this country would go through the roof. Those are the most dangerous proposals emanating from the Opposition.
We have heard this morning that we can find new investment through reducing waste and bureaucracy. Frankly, that is ridiculous. The question confronting the modern Conservative party is this: does it want extra doctors, extra nurses, new hospitals, new schools and more operations carried out in our hospitals? The Conservatives are proposing a 20 per cent. cut in public spending. They refused point blank to rule it out. I can say that with some—
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