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5.18 pm
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): It is a pleasure to follow the hon. Member for Hemel Hempstead (Mr. McWalter). I was interested to hear that he was about to give up, as I am sure the Conservative prospective parliamentary candidate in his constituency, Mike Penning, will be interested. His comment was really just a confirmation of what the rest of the House, particularly Opposition Members, knew already.
It is a characteristic of Chancellors that they claim credit for everything that goes right and blame everyone else for everything that goes wrong. This Budget went in for fiscal tightening and monetary loosening, but that state of affairs cannot go on indefinitely. I suspect that it was arrived at bearing in mind the date at which the British people will be able to give their verdict on it. That is why it would be useful to point out to them why we believe that it is unsustainable in the long run.
Certain aspects of the Budget are to be warmly welcomed. I give the Chancellor credit for achieving his predicted growth rate this year—contrary to the predictions of many well informed economic commentators, and, indeed, to my own forecast. I suppose that it was that, alongside the relatively full employment of which the Chancellor made much, that allowed him to proceed with what I believe to be his unsustainable expenditure increases. Indeed, were it not for those two factors, I suspect that those expenditure increases would become reckless rather than unsustainable.
Other aspects of the Budget are to be welcomed. Many Members have paid tribute to the £100 one-off payment to pensioners, but it is a bit mean giving with one hand and taking more away with the other. We have
all seen the considerable increases in council tax this year, and there were even bigger increases last year. I am sure that we have all had difficult cases in our surgeries. For example, a man told me in my surgery the other day that his small occupational pension takes his income above all benefit entitlements, but that the increase in his occupational pension and state pension this year is much less than the increase in the council tax. It is because of the increase in council tax, therefore, that his standard of living will be reduced. That is unsustainable and unsatisfactory, and we must consider how the money raised locally in council tax reflects more accurately local government functions. One main reason why council tax has got out of control is that the Government keep giving local authorities more and more duties and responsibilities without providing the proper funding.I want to comment on the fiscal side of the Budget, and then on the monetary side. As I said, this is a fiscal-tightening Budget, which is due largely to not indexing the relief on most taxes, as table A3.1 on page 210 of the Red Book shows. As a result, we will have fiscal tightening of about £750 million which, taking into account enforcement and compliance, will total about £1 billion. Those are fairly small figures in historical terms for this Government, because the previous economic situation must be taken into account. They have already introduced 60 extra taxes, which is a doubling of the rate of tax take, costing the average family some £5,000. I am sure that, when it comes to the next general election, the British public will not be slow to take on board those tax increases.
The only exception to the indexing of relief was small: relief on inheritance tax was raised from £255,000 to £263,000. That is small beer for many families. In many cases, particularly in the south of England, and especially in a constituency such as mine, the value of the house alone will use up nearly all inheritance tax relief. Nevertheless, the rise was welcome.
That is completely overshadowed by the many other forms of relief that the Government have not indexed over seven years, such as stamp duty. When we left office in 1997, stamp duty raised a few hundred million pounds in revenue; today, it raises several billion pounds. That is because seven years ago the relief of £60,000 used to buy a reasonable, small house, but today, in most constituencies in the south of England, it would be impossible to buy much more than a box for £60,000. The stamp duty imposed by this Government is becoming a significant cost to many people who have to move house for their job.
I want to comment on strip stamps, which are not what some hon. Members might suppose, but are related to the fraud and evasion of tax on spirits. I declare an interest as the chairman of the all-party wine group. I have made a spirited speech on this subject in Westminster Hall. The Government—I spoke to the Economic Secretary last night on the subject, and I am grateful to him for offering to talk further to members of the trade—say that £600 million a year is lost in fraud, and that strip stamps, which are duty-paid stamps to be put over corks or caps of bottles of spirits, will cost only £50 million to introduce. That is an overestimate followed by an underestimate. The trade reckons that roughly £250 million in revenue is lost, and that the
measure could cost as much as £150 million to implement. The Government therefore still have a lot of thinking to do on strip stamps.
Sir Robert Smith: It is clear from evidence given by Customs and Excise to the Scottish Affairs Committee that it has not got to grips with the current ways of trying to tackle fraud before imposing a bureaucratic nightmare that could, in fact, open the door to other forms of fraud.
Mr. Clifton-Brown: I agree. The all-party wine group went to Dover to observe the work of Her Majesty's Customs and Excise, and found that what I have called on the Government to do in the Finance Bill for seven years has now been done. Customs and Excise has installed a large machine that can X-ray an entire heavy goods vehicle in one go, and more customs officers have been employed. When the Government came to power, they said that they would cut the number of customs officers.
All those are helpful enforcement measures, but I think that the Government should consider all possible means of enforcement rather than imposing a bureaucratic burden on the spirits industry. I do not even think that it will necessarily work, because the strip stamp system is inherently open to fraud. It has not worked in Poland, or in other countries.
Let me now say something about the Government's monetary policy. Table C1 on page 244 of the Red Book shows that the Government are borrowing £37.5 billion this year, and the amount is rising. It also tells us that gross gilt sales this year will amount to £49.8 billion. If those amounts continue to rise, they will become unsustainable—and we should take into account not just the figures above the line, which are shown in the Red Book, but those accumulating below the line, which are not. I am thinking of, for example, the £20 billion debt accumulated by the Strategic Rail Authority. The Government hardly bought a rail, hardly opened a new station, to build up that debt. The money was largely spent on consultants and lawyers in the process of putting Railtrack into administration—a shocking mismanagement of Government funds.
There are several hundred billion pounds in the private finance initiative. My hon. Friend the Member for Gainsborough (Mr. Leigh) referred to the PFI, which we, the Conservative Government, introduced. It was an excellent idea, and the Government are taking great credit—the Chancellor did it again in the Budget statement—for building a tremendous number of new hospitals through it. The problem is that many of the contracts are let inadequately by the Government. My hon. Friend mentioned some of the problems, prompted by an intervention from me. The Government must become much smarter in letting those contracts and in wording them, so that some of the risk really is passed to the private sector. Otherwise they could borrow the money more cheaply themselves, and might as well fund projects directly.
On page 271 of the Red Book, the Government say all the right things. They say that the public sector contracts to buy services from the private sector
- "so as to take advantage of private sector management skills incentivised by having private finance at risk."
- "With PFI, the public sector defines what is required to meet public needs and ensures, by contract, delivery of the outputs it sets. It has rights under those contracts to change the output required from time to time."
As for the Government's so-called efficiency savings, there were great headlines in the press on Thursday morning suggesting that the Chancellor had somehow shot the Conservative fox. That was nonsense. The Government have taken on 390,000 civil servants, and will secure efficiency savings by making 40,000 redundant. They have been taking on civil servants at a rate of 511 a week for the past year. They are far too timid. They are doing too little too late. In any case, as always, they are adopting Conservative policies without having the necessary reasons or philosophy to follow them through.
In the past, the Government and indeed the Chancellor have made great play of public service agreements. The Chief Secretary grins; he may wish to consider this carefully, as he has negotiated public service agreements in the past. The Chancellor abolished 130 of them in the Budget. Having taken great trouble to negotiate with Secretaries of State for other Departments, he finds that they cannot live up to the agreements and has to abolish them. I praise the Government for at least beginning to think about efficiency savings. It is too little, too late, but perhaps it is a good start.
Others wish to speak, so I shall not take long. The Government are beginning at long last to consider outputs rather than inputs. Whenever the Prime Minister hears a criticism during Prime Minister's Question Time of the malfunction or dysfunction of any Department, his only answer is that the Government are spending so many more hundreds of millions or billions on the problem. He does not say that the money buys, for example, so many more operations. In recent years, expenditure on the health service has increased by 37.5 per cent., but in the same period, output in terms of operations has increased by only 4.8 per cent. Those figures clearly demonstrate that expenditure in Departments is not as good as it should be.
Let us consider the social security budget. We are spending approximately £60 billion to £70 billion on the NHS, but it is predicted that we shall spend £150 billion on social security by 2005–06. In 2000–01, that budget broke the £100 billion mark for the first time. It has increased by 50 per cent. in five years. One does not begrudge giving people a hand up rather than a handout when they need it, but we must ascertain whether the money is being spent wisely.
Until last week, I was a housing spokesman for our party. When in an official capacity, I join the ranks of the silent ones, but when I am on the Back Benches, I can make speeches. It is a shocking indictment of the Government—[Interruption.] If the Chief Secretary would listen to me instead of gesticulating amusingly, he might like to take account of this shocking statistic. After seven years of a Labour Government, the Select
Committee on the Office of the Deputy Prime Minister has confirmed that we have the highest number of homeless families that the country has ever experienced. That is a shocking indictment of the Government. I intervened on my hon. Friend the Member for Wycombe (Mr. Goodman) to emphasise that the hard facts in those global statistics are that the number of homeless families with children has increased and the number of those living in bed-and-breakfast accommodation has more than doubled from 4,500 to more than 10,000. Putting people in bed and breakfast is a huge waste of human and financial resources. They have a miserable life.We were building almost double the amount of social housing when we left office in 1997—some 35,000 houses compared with approximately 20,000 that the Government are building today. They are not building enough social and affordable houses. We have suggested extending the right to buy and using the proceeds to fund a considerable increase in affordable and social housing without any cost to the taxpayer.
Table C13 on page 269 of the Red Book shows that the ODPM's capital budget will increase from £1.5 billion to only £2.4 billion. How will the Government start to solve some of the housing problems, let alone fund the huge sustainable communities plans under which they have committed themselves to spending a great deal? The Prime Minister chairs the Cabinet Committee that deals with the Thames gateway community project. It is called Misc 22 and likes to remain secret because it produces neither a sustainable plan nor communities worthy of the name. It certainly has not managed to attract the very large amount of private finance that it will need to attract to build the infrastructure to accompany the 140,000 houses that are predicted for the Thames gateway over the next 12 to 14 years.
The Government have a problem with their housing policy. They have a problem with their communities plans. They are putting the wrong houses in the wrong places. We do not have joined-up government. They are not committing themselves to the infrastructure that is needed for the communities plans. There is much to be done. Although, as always with this Chancellor, the Budget glittered on the day, once one starts to get into the detail, one begins to see a number of black holes.
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