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Mr. Fallon: The Chancellor keeps getting them wrong.
Mr. Mitchell: As my hon. Friend says, the Chancellor keeps getting them wrong.
Given the ferocious increase in the amount of tax taken, what do we get for the subsequent expenditure? In Sutton Coldfield, only 4 per cent. of those who responded to my business survey considered that their taxes were being spent well. That figure was substantially lower than was the case last year, when the figures also showed a decrease on the year before.
We have heard today that an expenditure increase of around 40 per cent. in the NHS has been matched by an increase in patient episodes of only 5 per cent. The Government often talk the right language about reforming the NHS, but what happened with the Bill to introduce foundation hospitals is typical. To win the support of Back-Bench Labour Members, it had to be watered down so much that many of the potential gains that it promised have not been realised. The same thing has happened with other legislative proposals and, as a result, the original purpose has not been achieved.
I do not oppose the principle of tax credits. I think that John Nott was going to introduce them during the 1970 to 1974 Conservative Government, but I warn the Government that the pension credit, with its massive increase in means-testing, will come back to haunt them. Soon, nearly 80 per cent. of pensioners will be means-tested, yet recent figures from the Department for Work and Pensions show that the pension credit is not getting through to anything like enough of the poorest pensioners—that is, those who account for the bottom 20 per cent. in income terms. The pension credit is proving to be a very inefficient way of dealing with poverty.
I turn now to savings. I had hoped that the Budget would make a real contribution in that regard, but I was staggered when the hon. Member for Warwick and Leamington (Mr. Plaskitt) said that there was no savings crisis in this country. The newspapers every day show just how big that crisis is. The savings ratio has halved since 1997, but private saving levels and the privately funded pensions sector have also both declined.
Although raids on the sector of £5 billion per annum have not helped, the situation has been made worse by the fact that the Government have not made it a priority to ensure the stability that allows independent financial advisers to give good advice. I cannot imagine how an independent financial adviser can advise someone on average wages on how they should save for their old age. I was amazed that there was nothing in the Budget about ISAs or stakeholder pensions to give further encouragement to an area to which, sadly, the Government pay lip service but on which they do not deliver. It would have been easy to reverse the reduction to £5,000 per annum for ISAs that will take effect from April next year, but the Government did not even announce that, let alone an improvement to stakeholder pensions.
I want to say a word or two about red tape and regulations. Small businesses are the engine of our economy and do not have the capacity to handle extra red tape and regulation. Nothing could more clearly demonstrate the lip service that the Government pay to enterprise than the Chancellor of the Exchequer's belief that if one sets up a conference on enterprise one is somehow doing something to help. An enterprise conference with loads of waffle from well-meaning people about the importance of fostering enterprise is not the way to foster enterprise. Enterprise is fostered by low tax and minimal regulation.
I was interested to see that The Sunday Times business section asked a cross-section of business men how they thought that the Government were doing on regulation and, more generally, in supporting business. One of the respondents stated:
- "Far from making life easier for entrepreneurs, Brown has been strangling enterprise."
- "My company employs 120 people and we have had to add the equivalent of one full-time person to deal with the plethora of demands for reports, returns, health and safety issues and so on."
The result is that we are now prejudicing many of the supply side reforms and gains of the Thatcher years. In 2003 alone, there were 4,000 new regulations. During
the six years of this Labour Government, there have been nearly 23,500 new regulations at a cost of around £30 billion. The British Chambers of Commerce summed up the situation very well, saying:
- "The bottom line is that the sheer quantity of red tape on business is damaging our economy and stifling enterprise, job creation and economic growth."
5.38 pm
Rob Marris (Wolverhampton, South-West) (Lab): I shall begin by counterpoising the phrases used by my right hon. Friend the Chancellor and the Leader of the Opposition—they both used their catch phrases twice. The Chancellor of the Exchequer referred to "a Budget for excellence in education, science and enterprise". The Leader of the Opposition characterised the Budget in what he obviously thought would be a suitable soundbite—I have not seen the media, so perhaps he succeeded—as "a borrow now, tax later Budget from a borrow now, tax later Chancellor". What a negative way to look at things. One can counterpoise the positive approach of the Chancellor and the negative approach of the Leader of the Opposition. Since the Molineux stadium in Wolverhampton became all-seater, I have attended football matches there on a season ticket. Before that I just used to go along with my mates. A gang of us all sit together, but some of them are like Opposition Members. On those rare occasions when Wolves go ahead in a Premiership match—
Rob Marris: Well, it's not so bad at home. On those rare occasions, I think, "Oh great, we are 1-0 up, we can win this." Some of the other supporters are in fits of gloom. They think, "Oh dear, now we have something to lose." When we go two ahead, it is even worse for them. It is extraordinary to me, but many football fans are like that, and that is the attitude of several Conservative Members who have spoken today. They characterise the economic performance of my right hon. Friend the Chancellor and the Government as football fans would. They say, "Things can't be so good. We must look for the holes in the Budget." I appreciate that the role of the Opposition is to look for the negative as well as the positive, and indeed some of the remarks from the hon. Member for Sutton Coldfield (Mr. Mitchell) were positive. He balanced his speech by mentioning some of the positive aspects before he went on to the negative aspects. That is a mature way in which to conduct a public debate about our economy. It is also how he and I used to conduct debate when we were on the Work and Pensions Committee together, and we had an enjoyable time before he was elevated and had to leave the Committee.
Attitudes to any Chancellor or Government should be like attitudes to the stock market—informed by warnings that past performance does not guarantee
future results. Although there is no crystal ball, past performance does provide some indication. I shall try not to fill my speech with statistics because I am not an economist. I picked up an economics A-level many years ago, although I did not do very well—and those who know me well will understand why. Statistics can be very dry. They are important for our country, but for politicians like me economics and the Budget are about people. Some of the borrowing statistics none the less repay examination.The Leader of the Opposition talked about a borrow now, tax later Budget. But what was the performance of the Conservative Government in their 18 years in office? They doubled the national debt. It went up to 44 per cent. of GDP, and that was a poor performance. They now criticise my right hon. Friend the Chancellor for the national debt rising somewhat over a few years. However, the economic cycle is balanced and even. On my right hon. Friend's figures, the national debt will not be more than 36 per cent. of GDP. Borrowing by this Government will, for one year, go above 3.4 per cent. on the forecast between now and 2008–09. By then it will be 1.6 per cent. It is not only the Chancellor who says so. Barclays' economic briefing gives a handy little graph, in which all the big bits above the line were under the Tories and the bits under the line—showing the public finances in surplus—were under a Labour Government. The briefing states:
- "However, public borrowing was much higher in the last cycle . . . we are not facing a crisis."
I do not wish to get bogged down in statistics because for me the Budget is about people, and one of its themes was education. The amount spent per pupil in schools in England—the figures for Scotland, Wales and Northern Ireland are issued separately—for the 11-year period between 1997 and 2008 will go up from £2,500 per annum to £5,500. Some of that increase needs to be adjusted for inflation, but that is a massive increase. It is also a massive increase in the quality of people's lives, not only while they are still at school but in their whole life experience, because they have had a better start in life. For me, that is what economics and figures are about.
The Chancellor announced support for a new deal for skills. It is vital that we continue to upskill, not only for economic performance, important as it is—no one in this country should be starving and people should have a good standard of living—but also for quality of life. Whether people exercise their skills to make a living or as a hobby, having skills will enhance the quality of life for many of them. Investing in skills is certainly vital for the economy, but it is also vital for the quality of life in our society; it is a people thing.
The arguments are similar on science. The amount for NHS-associated research and development will be £1.2 billion. That is important not only in economic terms, but because the NHS has an effect on the quality of life; for some people, NHS research and development or the new medical research funding announced in the Budget will affect whether they live or die. That is not just dry economics.
I referred earlier to what commentators are saying about the state of the economy and its relationship to past performance, and I want to quote from some of those outside observers to discuss where the initiatives on enterprise announced by the Chancellor are likely to take us. In February, NTC Research, an economics research outfit based in Henley, stated that its leading indicator, which provides a pointer to growth over the next nine months, rose in January 2004 to its highest level since March 1997. That is pretty positive. That indicator had enjoyed its fourth successive monthly improvement.
Kate Barker has understandably been cited today in relation to the housing report. She has also been a member of the Bank of England Monetary Policy Committee for the past three years. When the housing report was announced, she said that the last time there had been as much optimism on economic outlook was in 1995.
In January, the CBI's quarterly distributive trades survey of retailers reported that business was above average for that time of year. The CBI's chief economic adviser said that consumer spending remained resilient. That is not just dry economic statistics; people with the traditional pound in their pocket are spending it on goods that they can use, and although that will not necessarily increase the quality of their lives, it is likely to do so.
Earlier this month, the Chartered Institute of Purchasing and Supply said that its activity index was a substantial 59.5 in February, marginally lower than the 59.8 of a month earlier. Any reading over 50 indicates growth. Those figures are well above 50, so that indicates optimism about growth in the economy. Thirty per cent. of the institute's survey panel had experienced an increase in business activity: "Panel firms . . . remain optimistic".
The economy is buoyant in many sectors, but, as was said earlier, there are difficulties for productivity—again, it is a people thing. I think the right hon. Member for Fylde (Mr. Jack) quoted from box 3.1 on page 49 of the Red Book; uncharacteristically, from my experience of the right hon. Gentleman in the last two Finance Bill Committees, he was quoting somewhat selectively from that section of the Red Book—a point on which my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) picked him up.
You will tell me if I go too far, Mr. Deputy Speaker, but with your indulgence I shall quote some of the points about productivity from the Red Book, because of the people angle. It notes that
- "UK workers on average produce as much as German workers, and the productivity gap with France has fallen by seven percentage points".
- "This measure indicates how effectively an economy includes all of its potential workers in productive employment. It shows that UK performance is significantly better than Germany, at a similar level to France, and around 25 per cent behind the US."
These statistics are important because of the quality of people's lives. In my experience, most people—I would not say everybody; indeed I could not say that—are happier when they have a job. I accept that that is not always the position. For example, some people may have a job that they do not like. However, employment is to do with dignity, self-respect and looking after one's family. Most people tend to be happier in those circumstances. It is a significant achievement that the Government, led in this area by my right hon. Friend the Chancellor and the Treasury team, have enabled so many more people to be in work.
We forget at our peril that there were 3 million, 4 million and, on some measures, 5 million people unemployed under the previous Conservative Government. We should not forget the human misery that that led to for those involved—regardless of whether it was the fault of the Conservative Government or the result of a macro-economic global cycle. Personally, I think the Conservative Government had much to answer for, but I leave those politics aside. There was a great deal of misery, and there is less misery now. That is a significant advance for our society. My right hon. Friend the Chancellor deserves quite a bit of credit for that. It was not just a happenstance. It was not serendipitous. It happened because of tough economic decisions, taken by the Chancellor, that led to 1.8 million more people being in employment. We are talking of record numbers of people in employment.
I think the hon. Member for Sevenoaks (Mr. Fallon) talked about the report on NHS productivity. Again, this is a people thing. By getting bogged down in dry statistics, there is a tendency to overlook the quality-of-life argument—the people argument. If, for example, a GP decides that he or she will spend eight minutes with each patient instead of six minutes, on the face of it productivity will decrease by 25 per cent. However, many Members, particularly Labour Members, would see it as it a good thing if a doctor could do that.
If hard-pressed workers in the NHS did not have to rush as much and nurses and auxiliary nurses, for example—they do a wonderful job—could spend a bit more time with patients to reassure them, and so on, it could be said that on a scale productivity would be shown to have decreased. The nurses would not be looking after so many patients. However, the quality of life of those patients—the public service offered—might well have increased. There may be dry economic-type figures about what has happened to productivity in the NHS, and we should not overlook them. We need to be aware of the figures and they must be monitored, but they do not tell the whole story about the bang for the buck that the taxpayer is getting in terms of the money that is going into the NHS. We must have regard to the experience of the individual who needs NHS treatment and help. Those factors must come into the equation.
Like the hon. Member for Sutton Coldfield (Mr. Mitchell), I am a west midlands Member. Manufacturing is the lifeblood of the west midlands. Indeed, it represents 30 per cent. of the economy in the region, as against 18 or 19 per cent. in the rest of the United Kingdom.
We have a real difficulty with manufacturing. If we were all to be honest on both sides of the House, I think that we would find that no one knows what to do about manufacturing. I certainly do not. We should pay more attention to manufacturing, and it is to the Government's credit that in the past two or three years they have started to do so. That was a bit of a long time coming. Manufacturing is a huge problem in the western world, but the problem is greater in the United Kingdom because of what has happened in terms of our export markets, for example. For all the criticisms about regulations and the European Union, for example, and for all the alleged rigidities and inflexibilities of manufacturing in Germany, Italy or France, the manufacturing sectors of those economies trade at a surplus whereas ours do not.
I am a member of the Transport and General Workers Union, which is affiliated to the TUC. I am grateful for the pre-Budget briefing provided by the TUC, in which it points out that in
- "the past year . . . investment across engineering fell by 36 per cent. in real terms."
One difficulty is persuading people with capital to invest in manufacturing on the basis that they will get an adequate return. Historically, that is a long-term problem in the United Kingdom, and has not just developed under this Government or the previous one. A number of world-beating inventions have originated in the United Kingdom, but we have not been able to develop innovations such as fibre optics or magnetic resonance imaging scanners, which were invented in Leicester. We cannot market them profitably, so people in other countries start to do so and make money from them. We have a great background of science and invention. The hon. Member for Sutton Coldfield will be interested to learn that, a few years ago, I read that the majority of patents in the United Kingdom are taken out by people with an address within a 35-mile radius of Birmingham city centre, which covers both our constituencies.
The west midlands is arguably the centre of innovation in the United Kingdom, but we are not as good at getting the stuff to market. I am not sure that, despite all the help that the Chancellor has offered in this Budget and previous Budgets with research and development tax credits—initially incentives such as the 125 per cent. write-off applied to small businesses but were extended to larger businesses last year—we have done as much as we can to bolster manufacturing and encourage investment. The Department of Trade and Industry has just produced a report on innovation, and
I went to a talk on the subject yesterday, but it did not address the problem of how to move from innovation to the marketplace. I am not suggesting that we always fail to tackle the issue. The bloke who invented Dyson vacuum cleaners, for example, also invented the little wheelbarrow with the ball on the front instead of a wheel—the Financial Secretary is too young to remember that, but perhaps you do, Mr. Deputy Speaker. Dyson made a fortune out of that invention when he was based in Corsham near Bath. There are people who have brought their inventions to market in the United Kingdom and made money out of them, but in general the Government need to do more to encourage investment in manufacturing.Positive steps have been taken in the past two years, both by the DTI and the Chancellor, but no one is sure what else to do about manufacturing, which leaves me wringing my hands in frustration. As a Member of Parliament I might be described as self-opinionated—if I was not, I would not stand for election—but I often have bright ideas that may be completely wrong. I do not have many bright ideas about manufacturing, and do not encounter many people who do or who say, "If only we did this there would be a revival in British manufacturing and we could stop the haemorrhaging of jobs, restore investment and get innovations to market. We would all be making more money and we would all be happier." Above all, we should be careful in economics not to overlook people and their happiness.
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