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Mr. Laws : I can confirm those figures in the round, but the same tables—showing how the total tax burden
has changed since 1996–97—reveal that the two groups who have lost out particularly, in terms of paying more tax, are the poorest two deciles. That is because the Government have tended to raise indirect taxes, which are more aggressive than direct taxes.
Mr. Plaskitt: The hon. Gentleman should also look at the tables that show the impact of direct tax changes, and the introduction of tax credit in particular. He will then see that the distribution of benefit resulting from my right hon. Friend's eight Budgets has been more advantageous to the lower deciles than to any other group.
Back in 1996–97, a family on exactly median earnings with two children paid 17.8 per cent. of their income in direct tax. That has fallen to 12.9 per cent. Even for those on double average earnings, the figure was 24.6 per cent. That figure remains the same.
Despite all those different ways of assessing the tax burden, it is very difficult to produce evidence that it has increased as much as the Conservatives suggest.
Public services benefit most from the economic stability that the Government have secured. Here we see the stability dividend—the chance, at last, to invest properly in our public services and to sustain that investment.
The national indicators on the NHS show what we are getting for the 7 per cent. a year real terms growth in investment: a record hospital-building programme; NHS Direct; improved heart and cancer care; an increase of 20 per cent. in admissions; 50 per cent. more heart operations; 200,000 people off the hospital waiting lists; and those waiting more than a year down from 30,000 to just 36.
That is also borne out locally in my constituency. Maximum waiting times in my local district hospital in Warwick have come down from 18 months to nine, and are on course to be six months next year. Average waiting times are already down to three months, and outpatient average waiting times down from 39 to 17 weeks. That has all been achieved by the additional investment that has given us 169 more nurses and 47 more doctors and consultants, and a 39 per cent. increase in activity levels.
The same is true in education. Again, the national picture is confirmed locally. We now have 3,000 more nursery places in Warwickshire than back in 1997, with improved results at every key stage throughout the county. Five good GCSEs were achieved by 45 per cent. in Warwickshire in 1997. The figure is now 54 per cent. In my constituency alone, £10 million has been invested in our local schools over the past seven years. Spending per pupil in Warwickshire has risen from £1,770 to £2,840.
That is all evidence of the stability dividend. We now have one of the best economies in the world, steadily rising living standards and the means to invest in improving public services. All of that can happen only because we have a platform of economic stability, sound finances, low inflation and sensible fiscal and monetary rules. The Chancellor has strengthened that platform today, and I commend the Budget to the House.
5.17 pm
Mr. Andrew Mitchell (Sutton Coldfield) (Con): It is a pleasure to follow the hon. Member for Warwick and Leamington (Mr. Plaskitt), whose constituency is at least in the same region as mine. It is also a pleasure to catch your eye, Mr. Deputy Speaker, on the first day of the Budget debate. I was fortunate enough to do so last year, and I see waiting to catch your eye two other habitual contributors on the first day, the hon. Members for Wolverhampton, South-West (Rob Marris) and for Nottingham, South (Alan Simpson). I am sure that they will make original contributions, which will be a refreshing change from the hon. Member for Brent, North (Mr. Gardiner), who did his traditional imitation of a Government Whips Office glove puppet.
On this first day, we have the opportunity to consider the Budget before we have studied the small print. With this Chancellor, it is always advisable to examine that in great detail, because it normally changes the way in which the Budget is perceived within 24 hours.
In the interests of unity, let me list the points on which I agree with the Budget, which is a good one in a number of limited respects, but before I do so, I draw attention to my entry in the Register of Members' Interests.
What the Chancellor continues to do in respect of third-world poverty and debt relief is advantageous and important. He is always good enough to make it clear that he is continuing a tradition started by one of his predecessors, John Major. The Government have done laudable work in that respect.
It may not come as a surprise to the hon. Member for Wolverhampton, South-West that I praise the fact of the limit of £1.5 million for the lifetime amount going into a pension and the increase to £1.8 million. That is a good thing. In most areas, I have nothing but horror to register at the Government's pensions policy, but on this specific matter, they have found an elegant way of cutting through the appalling complexity governing pension arrangements for people who increasingly change jobs during their lifetime of work. In that regard, the Government's decision was a very good one indeed. The making of direct payments to schools is also an extremely good idea. Such an approach should be more beneficial to schools than the previous arrangements.
Some of my hon. Friends may be surprised to discover that I want to register my support for what the Chancellor said about tax avoidance. He is absolutely right on this issue, and I want to explain why. It is clearly the right of all citizens to organise their affairs in a tax-efficient way, and I hope that none of us would quibble with that. But in recent years, certain obscene schemes that should not be allowed have been peddled, by Ernst and Young, for example. Indeed, I tabled some questions to the Prime Minister on this issue last year. I hope that today's announcement by the Chancellor will presage an end to such schemes.
One such scheme, which was peddled around a number of banks in the City, was designed to avoid paying any employer's national insurance, and to enable employees to reduce their level of taxation from 40 to 25 per cent. It is disgraceful that anyone should try to perpetrate such a scheme. These people should pay the right amount of employer's national insurance. Individuals from other parts of the world who earn their
living in London and who may need to use our emergency services—if they are unfortunate enough to have a heart attack, for example—should pay national insurance and tax at the same rate as others. The peddling of such schemes is morally corrosive, and one effect is that if one or two institutions accept them, great pressure is put on other, competitor institutions to go down the same route. We all have hard-working doctors and lawyers, for example, in our constituencies who pay their 40 per cent. tax on the nail. It is wrong that others should get away with not doing so.Other developments are also welcome, as some hon. Members have pointed out. I listened with great care and interest to what was said about Kate Barker's report on the housing market, and I was pleased to learn that the Deputy Prime Minister will consult on the issue. However, I was alarmed to discover that each region will have a body responsible for planning, and I hope that we can tease out the details during the consultation. This is an extremely important issue to my constituents, because a place such as Sutton Coldfield depends greatly on the quality of its local environment and its attractive features. People aspire to live there, and once they have arrived they want to stay.
There has, however, been a distressing trend in recent years. When widows or widowers, for example, move from large houses with mature gardens, developers buy such properties and blocks of flats are put up in their place. Technically, such developments take place on brownfield land. None of us would regard a delightful house with a mature garden as a property on brownfield land, but such houses do fall within that definition. Indeed, blocks of 32 or more flats are being built where only one house stood before. Such developments might not have a significant impact individually, but Members will realise their effect when taken together: one wakes up one morning to discover that the whole area has changed. The impact on the footfall to doctors' surgeries and schools, and on parking and the number of cars, can change such an area out of all recognition.
The Government's view that we should increase the number of houses being built each year from the current figure of 175,000 is admirable, but I hope that we will proceed with the greatest possible care. Areas such as mine are peculiarly vulnerable to a development and planning system that does not recognise the need for much more significant input from local residents in order to stop vexatious developments.
Mr. David Drew (Stroud) (Lab/Co-op): I concur with the hon. Gentleman that the Government must be very careful about how they define brownfield land, but does he agree that part of the problem is that we are now getting unbalanced development? The market towns in semi-rural areas such as mine are the areas where the real pressure is coming from. We need much more balanced development across the country, and we must make the developers more accountable to the local population. That is where the biggest problems lie.
Mr. Mitchell: I agree with the hon. Gentleman that we must make the planning system more accountable to local people living in an area who are most affected by planning decisions. I hope that we can make some progress on that. He is also right that we need a more careful series of developments across the country, and I
hope that the consultation process will allow for that. I have asked the Minister for Housing and Planning to come with me on a journey from Sutton Coldfield to the middle of Birmingham. If he does, he will see what we regard as brownfield sites, which should not be confused with the areas that I described earlier.I want to make some specific points about the Budget. I thought that one of the most revealing statements made by the Chancellor today was when he said that the success of some of his policies had been the result of "difficult decisions" that were taken in 1997. That is indeed a revealing statement, because one of those difficult decisions was to stand by the spending plans of the previous Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke).
Many Conservative Members would say that if the present Chancellor had stuck to those spending plans and other measures put in place by my right hon. and learned Friend, we would not need to divide up his chancellorship—as so many of us do—between the first two or three years and the rest. In the earlier period, his very sensible achievements included granting independence to the Bank of England Monetary Policy Committee to fix interest rates, controlling public expenditure and the degree of prudence—a word of which the Chancellor remains fond—that he displayed. Sadly, in the following three or four years, the position has been very different.
I judge today's Budget against the background of a business survey that I carried out in my constituency—as other hon. Members do—to find out what local business people think. My extensive survey was widely responded to and the most important finding was the strong and rising resentment of tax increases in Sutton Coldfield. It is also strongly felt that the money raised is not being well spent. That shows the generous spirit of my constituents who do not necessarily mind the increases so long as the money is well spent, but they do not believe that it is. There is an increasing feeling that they are overtaxed and they worry about the growth of regulation. That is what emerged from my survey and I agree with those responses. Having listened to the Budget speech today, it seems to me that they remain the most important areas of concern.
I am pleased at the growing trend towards companies publishing in their report and accounts the full extent of the tax that they pay. When the Royal Bank of Scotland announced its very significant profits, it made clear the extent to which they have been earned overseas. It published exactly how much tax it had paid—through its employees' PAYE and as a company—and it was possible to see the contribution that that enormous amount of tax had made towards the building of hospitals and the funding of education. It is right that people can see the massive contribution that such companies make.
As some of my hon. Friends have already observed, the extent of the tax rises is truly extraordinary. The figures speak for themselves. In 2002, tax receipts at £350 billion were up £90 billion from 1997 levels, and represented a rate of £1,500 for every man, woman and child in the country. More and more people are being drawn into tax, as has been noted already. There has been an increase in national insurance contributions, and a massive rise of about 60 per cent. for band D council tax payers.
The hon. Member for Twickenham (Dr. Cable) was quick to criticise the council tax system, yet the problem is not the structure of local tax but the increasing burdens that central Government impose on local government. Those burdens are not covered by central Government subvention. No local government tax will ever be popular or easy, and the present structure is probably as good as we are going to get. However, it clearly creaks at the seams when the amount that people have to pay rises as much as has been the case under this Government.
The Government have reached the point where everything that can be taxed is taxed. They do not focus on how little they can take away from hard-working families, but on how much they can get away with as they fund inflexible and ever rising expenditure totals. I understand that tax freedom day will fall on 7 June this year: next year, it will fall on 9 June.
The counterpart to high taxation is the level of borrowing, which has been much discussed this afternoon. As my right hon. and learned Friend the Leader of the Opposition said, we started off with a target of £30 billion. That has risen to £72 billion, and then to £140 billion—five times as much as the Chancellor originally forecast. The figures underline our lack of confidence in his forecasts.
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