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I am following closely the hon. Gentleman's carefully thought-out speech. Does he agree that there is a further medical dimensionnamely, the enhanced opportunity for international
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disease development and transmissionif we do not get on top of global warming? We need a thorough and rapid economic appraisal of the costs of dealing with that dimension, together will all the other things that he mentions, as far as the UK, European and world economies are concerned.
Alan Simpson: I accept that and thank the right hon. Gentleman for raising that issue in the Environment, Food and Rural Affairs Committee. We may well need to factor that into our view of Britain's role in the global economy, specifically in relation to our commitments to the developing world. In some respects, there may be more mileage in that than he thinks. Today's announcement that the World Bank will be led by Paul Wolfowitz may seriously complicate what the Chancellor said about his plans for debt cancellation and poverty relief. Mr. Wolfowitz's record is such that he is more likely to cancel the poor than the poverty. We must recognise that we might need to look for a different leadership role in addressing the same challenges that we and the developing world will face, which brings me on to my next point.
We will also need a different contract with ourselves. Longevity will force us to go back and consider the fact that most of the tax that we pay in our lifetime is a redistribution from us to ourselves. It comes back to us in our old age and perhaps we pass it across to our children, in the way that our parents passed their taxes across to us in our childhood.
In solidarity with ourselves throughout a longer lifespan, we have to ask how we pay more in our working years for the longer period that we hope to enjoy in our later lives, certainly in our retirement or older years. We need to have a more grown-up debate about that, not a cross-party slanging match, but a recognition of the real challenges for a society that expects to live longer. My only observations on that are cautionary ones about how we address the poverty challenge.
On the Labour Benches and in Downing street policies, a lot of reliance is placed on tax credits. The difficult thing about tax credits is that they rely heavily on a bureaucracy of means-testing that creates its own complications. I doubt that there is a Member of the House who has not had constituents coming to them with real problems and complications because they say that the Inland Revenue has got its calculations wrong on the tax credits that they were entitled to. They face bills for repayment to the Inland Revenue when they have no savings. So the tax credit system is a fragile approach, particularly to those who either have no savings or are in insecure and variable employment. We need to be careful about how much reliance we place on it.
Tax credits and means-testing are good at directing benefits to the poorest of the poor, but they also create anger and resentment at the injustice of tax on the margins. I invite the Chancellor to look at an additional principle, a golden rule, about our approaches to taxation and poverty. It would be a huge advantage if we were able to say, as a matter of principle, that we, as a Labour Government, will not tax the poor more heavily than we tax the rich. Att the margins of entitlement in the tax credits and benefits system, the clawback is about 80 per cent. and above. It is the resentment that
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people acquire at those margins of clawback that divides neighbour from neighbour, street from street, and parents from grandparents and from their children. The consequence, even in pragmatic terms, is that it is very hard to get any political credit from tax credits. The credits, if there are any, tend to go to the Inland Revenue, but the blame almost certainly goes to the Government.
If we want to rebuild a sense of social solidarity, it will be much easier to do so, and certainly less bureaucratic, if we return to the principles of universal entitlement. Certainly, those marginal tax rates that affect the poor make the suggestion that we should have a top tax rate of 50 per cent. on those earning more than £100,000 seem quite modest. If that were to raise the predicted £6 billion extra revenue stream for the Chancellor, and if he were to earmark the entirety of it to meet the cost of restoring the value of pensions and the earnings link, many on the Labour Benches would rise up and celebrate.
Many of us would also be perfectly happy if the additional £5.6 billion that could be raised simply by removing the ceiling on national insurance was earmarked, not just to meet tomorrow's pension requirements but to repay the pension entitlements of those who thought they had been saving throughout their lives and paying it into their pension funds, only to find that their pensions had been stolen by the collapse and theft of those funds. If we want to convince today's generations of young people that it is sensible and safe to save in pension schemes, at the very least we have to find ways of repaying those who have done precisely that only to find that their pensions have been stolen from them.
Finally, I welcome the Chancellor's direct investments in schools and health. We all know that sizeable costs will have to be paid in the years to come that will be top-sliced as a result of going down the path of funding some of the investment through private finance initiatives and public-private partnerships. They are extremely expensive ways to lock us into long-term debt, before a single nurse, teacher, cleaner and so on begins to be employed. It would be much better to look again at our approach to pension savings and the use of those funds. In 1962, 51 per cent. of pension funds were put into Government gilts or public bonds. When the 2002 crash happened and £250 billion was wiped off the value of pension funds, only 17 per cent. of those funds were in public bonds. We should put the public back into public investment. We must find ways of allowing and encouraging pension funds to become the source of direct public investment; public saving in public investments that will secure public pensionspensions that would not disappear in the bursting of a dotcom bubble, but would deliver an annual bonus not only in cash terms, but in terms of the quality of life that we in this country are able to enjoy.
Those are challenges that can be tackled only by a Labour Chancellor. I would not even offer them to the Conservatives, because if they understood them, they would probably try to sell them. They are, however, challenges that we will have to face in the next Parliament. My plea to the Chancellor and his Front-Bench colleagues is this. There is no prospect of the Conservatives being able to make a claim that this is a
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profligate Budget by a Labour Chancellor stand up; its stability, consistency and inclusiveness make it anything but profligate. What is less clear is whether we have been profligate with an opportunity to use this Budget to meet the challenges of the coming decades. If we duck that for long, our children, our grandchildren and the whole of society will have much to criticise us for.
Mr. Nigel Evans (Ribble Valley) (Con): It is always a delight to follow the hon. Member for Nottingham, South (Alan Simpson). His was a thoughtful contribution. He is passionate about his politics and after eight years of new Labour it was refreshing to hear a little socialism creeping through. Even though he did not utter the words, "Let's tax the rich," that was the ethos reflected towards the end of his speech.
I enjoyed the hon. Gentleman's comments on environmental matters, especially in the emerging countries of China and India. All hon. Members want to ensure that the poor people who live in those great countries are able to enjoy the fruits of the prosperity that has lately come to both areas. When I first visited China in 1992, while wandering around Beijing I saw oxen in the streets pulling coal carts; when I last visited a couple of years ago, one had to travel further into the rural hinterland to see such scenes. Prosperity is certainly coming to cities such as Beijing and Shanghai and to central China. I visited a place called Chongqing, which I had never heard of before my visit, and found that a staggering 35 million people live there.
It is important that prosperity comes to those countries and reaches into their rural areas, but we must recognise that it will bring with it the challenges relating to energy and water needs that the hon. Gentleman described. To ensure that we all adhere to the Kyoto protocol and reach our climate change-related targets, the emerging countries, which have huge growth rates compared to ours, will have to play their part. If the hon. Gentleman is right about the number of coal-fired power plants being built500, which is a staggering numberthat has to be fed into the equation. We live in a global village and we must ensure that we have the right policiesright for us and right for the world. There will have to be a great deal of discussion and negotiation about how we in the developed world can use the technologies that we possess to help developing countries to acquire the clean energy technologies that they will need.
The right hon. Member for Airdrie and Shotts (Mrs. Liddell) is, no doubt, packing her bags as I speak. She has made a great contribution to the House in her years as a Member of Parliament. We are all rather envious of her, but we wish her well in her new job as high commissioner to Australia. She is taking over the position from Alastair Goodlad, whom we all remember from his time in this place. Australia is a tremendous country: it always seems to be sunny; the people are warm; and the natural landscape is wonderful. There are two reasons why I am especially jealous that the right hon. Lady is going to AustraliaAustralia has a Conservative Government and its Prime Minister's surname is Howard. How good can it get? We all understand why the right hon. Lady has got a big smile on her face as she looks forward to her new job.
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Before I comment on the Budget, I comment on the staggering fact that page 2 of this morning's Daily Mail told me that the excise duty allowance before one must go through the red channel would increase to £1,000. If that is a prediction, it is pretty accuratefrankly, it is so accurate that it is a leak by any other name. I hope that the Financial Secretary will examine today's Daily Mailit also mentioned the monument to the Queen Mother, which I do not regard as a Budget leakbecause the £1,000 figure is very specific. I also hope that he will tell me that an investigation will take place, because I remember the days when Ministers resigned if they were caught leaking such information.
This is the current Chancellor's ninth Budget. When I was a kid, Budgets were incredibly exciting, and I could not wait to find out in the newspapers and on the evening news what the Chancellor had decided. We used to listen to the excitement of the Budget on the radiothe wirelessbefore television allowed us to see the excitement, and now I am here listening. Halfway through the Budget, however, one of my hon. Friends said, "Gosh, this is boring," to which I replied, "It is not that good."
Some hon. Members have said that the Budget contains pre-election sweeteners, but I do not think that the British public are that gullible. The Budget contains a bit of icing, but there is no cake, and it will not take the public long to work out that a little bit of icing has been sprinkled around and that there is no cake. The public have been bitten before by previous pre-election Budgets, and they will not be taken in by today's.
It is incredibly inequitable that stamp duty has not been raised for such a long period. In Clitheroe, for example, one would be incredibly lucky to find a house for less than £60,000as far as I understand it, it is impossible to find a house in Clitheroe for less than £60,000. The increase to £120,000 is a step in the right direction, but it does not match house price inflation since 1997, so I cannot even raise three cheers for that. Stamp duty is forecast to raise £9.4 billion in 200405, and today's announcement will hand back £250 million of that £9.4 billion. The revenue from stamp duty has increased dramatically since 1997.
The announcements on inheritance tax are pathetic. I have heard other hon. Members discussing scrapping the whole wretched business of inheritance tax. I do not care about the percentage of people who pay inheritance tax. Given current house prices, an increasing number of people will fall into that category, and inheritance tax loads yet more misery on to people when they are already incredibly vulnerable after a death.
I enjoyed certain parts of the Budget speech. I enjoyed the Chancellor of the Exchequer's smile as he announced that the criteria on the euro will not be reviewedit was probably the biggest smile of the afternoon when he came out with that one. I did not see the expression on the Prime Minister's face, but there we gowe know that there is a slight difference between them.
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