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Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The Gracious Speech contains a massive number of Bills32 in all: thank goodness most of them will not see the light of day before the next general election.
I cannot sum up the Queen's Speech any better than Anatole Kaletsky, who said that it is a rag-bag of unfortunate measures. It is one of the most illiberal Queen's Speeches for a long time. On identity cards, I walked past eight policemen this morning. That is the most I have seen in many towns in my constituency in the 12 years that I have been a Member of Parliament. Each one could have stopped me and asked for my
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identity card. Had they done so, I would have been late to make my speech. That shows what an ID card could do to the relationship between this country's citizens and the police.
The Queen's Speech is set against a world environment in which two particularly important things have happened. One is the general situation in the middle east, which has severe consequences. It has led not only to a huge oil price spike but to a significant cost, both here and in the USA, of keeping our troops in Iraq. That, of course, has led to the special provision by the Chancellor. The second is the substantial decline of the dollar, which has now reached a rate of almost 50p. That is because other world uncertainties have led commentators and others to concentrate on the very large twin deficits in the States and here.
The Chancellor has had an extremely lucky tenure since he has been at No. 11 because of the stable world environment. From what I said, it is clear that I believe that that might, sadly, become less stable. That will give him even greater problems in meeting his fiscal and monetary targets. In tribute to him, but in concert with many other central banks around the world, central banks have become much better at managing the macro-economy, injecting liquidity into an economy when it is needed, but also engaging in monetary tightening when economies are starting to overheat. That has led to a much more stable economic cycle.
Angela Eagle: I do not recognise the description of a stable world environment. We had the Asian contagion, which the British economy managed to work its way through because of our economic policies, and the aftermath of 9/11.
Mr. Clifton-Brown: My comments on the stability of central banks include the Chinese and other Asian central banks. In particular, the United States Federal Reserve and Alan Greenspan's work, and the Governor of the Bank of England, have led us to manage the macro-economy in a much more stable way. That has been helpful.
The decline of the dollar will be important to both the American economy and our own and could well lead to a slowdown in world demand and growth. I hope that the same will not happen here, but there is no doubt that imports to the American economy will now be more expensive. America has been living on its huge fiscal deficit and on cheap imports, principally from China and India, but the US deficit and the huge Chinese economic surplus will have to be addressed in the not-too-distant future.
Mr. Peter Pike (Burnley) (Lab): Does the hon. Gentleman agree that one of this country's industries that operate in a dollar market is aerospace? A weak dollar could cause problems to the aerospace industry, which is important in my constituency in the north-west and in many other parts of the country.
The hon. Gentleman is entirely right, but aerospace is not the only industry for which the weak dollar might cause difficultiesthere are
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several others. It is something that concerns us all. I hope that in the coming months the central banks of America and Europe will pay greater attention to the problem and see whether the dollar's further decline can be prevented.
Under present policy, over the next Parliament taxes set by the Chancellor will rise to their highest level for 24 years. The UK public sector has undergone a period of dramatic expansion and taxes are now rising to pay for it. They will have to rise even further after the next election, to pay for the Chancellor's black hole. Many people predict that next year the fiscal deficit will rise massively to about £20 billionthe equivalent of 8p on income tax. My right hon. Friend the shadow Chancellor of the Exchequer has set up the James committee, of which the Gershon committeeto which, as usual, the Government gave very limited terms of referenceis a pale imitation. The James committee has real teeth and I understand that it has identified savings of approximately £20 billion. The message for the British people is simple: under the Chancellor's proposals, there will be a £20-billion black hole and their taxes are likely to go up by the equivalent of 8p on income tax; under my right hon. Friend's proposals, taxes will stay the same for the same level of public services. The choice at the next election will be clear.
Paul Farrelly: How does the hon. Gentleman explain the fact that the ratio of what used to be called the Government deficit to the national debt now stands at 32.7 per cent., compared with the 43.6 per cent. ratio that Labour inherited in 1997?
Mr. Clifton-Brown: The difference is that we were at a different stage of the economic cycle. At that point, we were on a rising part of the cycle; the Chancellor is in difficulty because now we are on a declining part of the cycle. He will have great difficulty filling the black hole; the only way he can do it is by putting up taxes.
In 200001, the Government were spending about £1 billion a day, whereas it is estimated that by 200607, they will be spending about £1.5 billion a daya 50 per cent. increase in public expenditure in five years. That is not sustainable, but even if it was, we would have to ask whether it is buying results. As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said, measured internationally, that is very inefficient public expenditure.
I wish to mention specifically one or two stealth taxes that have crept in. The first was highlighted in a fairly sharp exchange about the savings ratio. One of the nasty stealth taxes that have appeared in the Government's fiscal policy is the measure to cut ISAs in 2006, so that ISAs in equities will be cut from £7,000 to £5,000 and ISAs in cash from £3,000 to £2,000. Given that some of our lowest tax payers derive great benefit from ISAs, that is a spiteful measure.
The change by which Business Link will no longer be able to recover VAT will mean that millions of pounds that had been available to help small companies with tax
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and employment advice will go straight to the Chancellor. It is a small and mean-minded measure. Stephen Alambritis of the Federation of Small Businesses said in relation to this measure:
There is also the disaster of pension credit, which was mentioned by the hon. Member for Leyton and Wanstead (Mr. Cohen), whom I am pleased to follow. Pension credit was introduced by the Department for Work and Pensions, which, incidentally, now has more employees than all our armed forces put together. Pension credit, introduced by the Department in October last year, guaranteed an income of £105.45 a week. That is good for anyone over 60. It guarantees £160.95 for couples. However, effectively it taxes savings of £6,000, which is only £120 a week, at more than 40 per cent. If the full indexation rules remain the samethe pensioners' withdrawal taxexperts estimate that as much as 80 per cent. of the pensioner population will eventually qualify for means-tested benefit. That is a situation that Mr. Adair Turner of the CBI has rightly described as unsustainable. It is wrong that pensioners who have a small amount of pension are taxed on that small amount and are often worse off, or no better off, than someone who has managed to organise their lives to claim the maximum amount of benefits. I know that my hon. Friends on the Opposition Front Bench have proposals to deal with this problem.
Mr. Prisk: My hon. Friend is making an excellent point. Does he agree that there is also the human question for pensioners? Is it not humiliating for the oldest members of our community to have to give to strangers their personal financial details through this disgraceful process?
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