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9.10 pm
Mr. George Osborne (Tatton): I draw the House's attention to the interests that I have registered. With a father who sells wallpaper and a mother who runs a food shop, I am living testimony to the fact that we are a nation of shopkeepers, although anyone who reads the "Society" section of The Guardian might think we are becoming a nation of public sector administrators.
I have listened with interest to the debate. This is the first Finance Bill in which I shall be involved, and the Standing Committee will be the first Finance Bill Committee on which I will sit. My right hon. Friend the Member for Fylde (Mr. Jack), I thought, did a brilliant job of demolishing parts of the Bill, and I look forward to hearing what he has to say in Committee. I was not so impressed with the hon. Member for Wimbledon (Roger Casale) who gave us a bit of a Whip's attack-the-Tories handout. I am not sure whether he is on the Committee, but I hope that he is not so that I do not have to listen to that sort of rubbish for four weeks.
In preparing for the Committee, I went on Friday to see some small businesses in my constituency. In the village of Over Peover, a gentleman named Reg Lawrence took me on a tour, as he has done, he says, for every Member for the area, notorious and less so, since the 1960s. He introduced me to small businesses that are struggling to make a living. Small business people there would have listened with incredulity to what the Chief Secretary said about what the Government have done to make life easier for them. To a person, they told me that they are struggling under a mound of red tape, extra regulations and taxation. They simply would not accept the rosy picture that the Chief Secretary sought to paint in his lengthy speech.
For example, I talked to Frank Rudd, a tomato grower in Over Peover, who has several acres under greenhouses. Anyone who wants to grow tomatoes commercially has to heat the greenhouses. As a result, Mr. Rudd has been stung by the climate change levy, which has cost him hundreds of pounds. When the rebate ends, his bill will go up further. That levy does nothing to protect the environment or reduce his heating bill. All it means is that supermarkets in Britain are more likely to buy tomatoes from countries that do not have a climate change levy. It undermines Mr. Rudd's ability to employ people in my constituency, and it has done nothing for its stated purpose.
Incidentally, my constituency also contains Britain's largest consultancy on nuclear power stations, which employs 1,000 people and has built every nuclear power station in the country. It regularly points out to me that if the levy really were a climate change levy, it would not be applied to the nuclear power industry. Whether one likes or hates that industry, one has to agree that it does not produce the greenhouse gases that the levy is supposed to tackle.
Reg Lawrence took me to his flower-growing business. He produces 5 million chrysanthemums a year, and Members may have given some of his flowers to their loved ones. It is an impressive business, but he is being hit by extra taxation, new environmental regulations on the use of compost and other such things. Now, regulations and taxes may, in themselves, be good things. The hon. Member for Sheffield, Heeley (Ms Munn), who is no longer in her place, said as much in her
speech. The regulations that we impose on business may, individually, deliver socially desirable things, and the hon. Lady talked about paternity and maternity leave and so on, which we all think are good things. I am about to be a father myself and am looking forward to the paternity leave that the Whips will doubtless give me when the time comes.We must accept, however, that those things come at a cost to business. Like many Members of Parliament, I sent a survey before the Budget to all the businesses in my constituency, large and small. I asked them what they felt about what was going to be in the Budget, what they wanted in the Budget, and what they felt about what the Government had done. The results were startling. Of the hundreds of businesses that responded, 88 per cent. say that they now spend more time dealing with Government regulation than they did five years ago. Not a single business said that it spent less time dealing with regulation now than it did five years ago.
I noticed that, in the Budget, the Chancellor announced yet another, in effect, deregulation taskforce. He said that he was going to get outside experts to look at regulation and that he was going to hold Government Departments to account for their regulation. However, I think that we need to judge this Chancellor by his record. In the last full year, 2002, the Government introduced 3,839 new regulations.
Mr. Boateng indicated dissent.
Mr. Osborne: The Chief Secretary shakes his head. Those figures were provided by the Library.
Mr. Laws: I am pleased to hear that the hon. Gentleman has been keeping in close contact with his local businesses. What are the three main regulations that he would like the Government to abolish?
Mr. Osborne: This parliamentary business is not time limited, so here we go. This is a classic example. I serve on the Public Accounts Committee, and a permanent secretary at the Department of Trade and Industry appeared before us the other day. He told us about something called the warm fuel regulation.
There are a lot of independent petrol retailers in the country. In the old days, a few years ago, the tanker would turn up and the independent petrol retailer would undo the top and put in the dip-stick to see how much petrol he had been given from the refinery, and that is how much he would pay for. Now, under new regulations, it has been decided that lifting the top off the petrol tank releases gas fumes into the environment and causes environmental damage—nothing like any motorway service station on a busy day, nothing like the hundreds of thousands of cars that fill up every day, but it has been decided that independent petrol retailers cannot open the top of their petrol tank and they cannot put the dip-stick in. That means that because petrol shrinks as it cools down on the journey from the refinery, they pay over the odds because they are charged for the amount that leaves the refinery rather than the amount that reaches them, and believe it or not,
according to the DTI, the cost of that to the independent petrol retailing industry is £90 million, which is putting a huge number of independent petrol retailers out of business.When the permanent secretary was before the Public Accounts Committee, I asked to see the documents that were produced when this environmental regulation was proposed and I asked for documents showing whether any assessment was made of its impact on the independent petrol retailing industry. Those documents were eventually produced. Of course those involved did not have a clue that the regulations would cost the industry £90 million, and they have no plans to get rid of them.
That is an example of one regulation off the top of my head. Would the hon. Gentleman like two more?
Mr. Osborne: As Ministers say, I will write to the hon. Gentleman with two other examples. However, I am glad that I have got off my chest the warm petrol regulations, which are typical of the kind of thing that the Government do, and I do not mean that in a partisan sense. Regulations come out of the bowels of Government Departments and people have no idea in Whitehall of the impact that they will have.
The Government have regulated an enormous amount and I have detailed how business people in my constituency feel about that. Of course, the Government have also increased taxation by a huge amount. Again this Finance Bill will introduce more taxation. It is not a blockbusting, tax-increasing Finance Bill of the kind that we have seen before from this Government, but the stealth taxes are there if one looks carefully enough.
Clause 130 freezes personal allowances for income tax for people under 65. It is a classic stealth tax trick and of course will increase the tax burden for families. Clause 14 contains an above-inflation increase in vehicle excise duty. The duty on red diesel, which of course will hit the agricultural sector—one of the worst affected sectors of the economy in the past few years—is increasing by 38 per cent.
I was particularly interested to hear what my hon. Friend the Member for Boston and Skegness (Mr. Simmonds) was telling me about the reforms to stamp duty on leases, because if he is right, there will be a huge tax increase on many businesses: high street retailers such as Dixons—
Mr. Osborne: And B & Q, and Borders. I understand that the Treasury says that that is tax neutral, yet the industry says that the cost will be £450 million, so someone is right and someone is wrong, and, no doubt, we will find out.
Of course, the Finance Bill comes at a time when we are also being hit by the national insurance increase. Again, in my survey of businesses, I found that 15 per cent. of businesses in my constituency said that the national insurance increase would lead to redundancies in their businesses and 47 per cent. said that it would
lead to a slow-down in their recruitment. People should be aware that such taxes have a direct impact on employment in our constituencies.I note in passing that the CBI issued a warning today that, if current trends continue, up to 86,000 jobs will be lost in manufacturing industry in the first half of this year alone. That is particularly worrying for my constituents, as the CBI says that many of the jobs will be lost in the north-west.
It strikes me that, in the 1980s, the Labour party did not really understand macro-economics. Indeed, I listened to the speech made by the hon. Member for Bexleyheath and Crayford (Mr. Beard), and, as far as I can work out, he still blames the gnomes of Zurich for the problems that the Wilson and Callaghan Governments ran into. He has not learned the proper lessons of macro-economics.
The single greatest achievement of this Labour Government was to put the levers of macro-economic power out of their reach by giving the Bank of England independence, and it was a jolly good thing that they did. The problem now, however, is that the Labour party does not understand micro-economics. Labour Members do not understand what it takes to run a successful business. They do not understand that regulation and taxation undermine the ability of companies to compete.
The Chancellor lamented in his Budget the fact that Britain and Europe still had a productivity gap of 20 to 30 per cent. with the US economy. He said that we need to learn from America about innovation, competition and enterprise. I very much agree with him, but, frankly, with billions of pounds in extra taxes, thousands of extra regulations and a Budget that makes it more and more difficult for British businesses to compete, the Chancellor does not seem to want to learn the lesson.
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