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Rob Marris: Is the hon. Gentleman seriously suggesting that we should emulate the USA economy, with its huge federal deficit spiralling out of control? Is he, in fact, suggesting that we should return to the policies that his Government espoused between 1992 and 1997 when they doubled the national debt? If he is, my constituents would like to know about it.
Mr. Baron: Not at all. After all, the Chancellor's debt is already big enough; we do not need to add to it. The point that I am making is that there is a causal link between lower taxation and higher growth. Tax freedom day is one way of illustrating that. If we compare what is happening in the eurozone with what is happening in the United States, there is no doubt that growth rates are higher in the US, in large part because taxes there are lower. That link cannot be denied. If we keep increasing taxes, over the longer term we shall stifle our prosperity and our ability to help those who are most in need.
Mr. Baron: May I make some progress? I shall allow the hon. Gentleman to intervene if I make sufficient progress, but I am conscious that at least one other hon. Member wishes to speak before we finish.
My other concern about the Budget is that the Chancellor is committing himself to ever higher spending on essentially unreformed public services. The fact that they are largely unreformed is a key reason why taxpayers have seen too little benefit for their public services, considering the extent of the increase in spending. For example, recorded crime figures in Essex show that crime in general has risen by about 40 per cent. during the course of the past five years, while violent crime has soared by 150 per cent. Meanwhile, too many parentscertainly in my constituency, and I suspect in otherscannot get their children into their first choice school.
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For me, the aspect that perhaps causes most concern is the health service. Despite the hard work and dedication of staffI accept that there have been some improvementsthe performance of the NHS falls well short of what could so easily be achieved if the Government just stepped back, stopped interfering and allowed the medical professionals to get on with the job.
The Department of Health's own figures, for example, show that average waiting times, despite all the money that has been put into the NHS, have lengthened by five days since 1998. The increase is from 90 days to 95. Those figures cannot be disputed, because they are the Department of Health's own.
The problem is not a shortage of money, but the fact that not a lot of the money has reached front-line services. The reason for that is that the Government have bombarded the NHS with hundreds of targets, which not only can and do distort clinical priorities, but soak up a lot of the new money because they need monitoring. Again, it is no coincidence that the Department of Health's own figures show that the number of managers has increased at three times the rate of the number of new doctors and nurses. That is not to deny that we have new doctors and nurses, but that rate of increase for managers is a key reason why a lot of the money does not reach front-line services.
We would replace those targets with a set of clinical guidelines and entitlements drawn up by the National Institute for Clinical Excellence for all conditions. That would ensure that, for the first time, all patients were treated according to their clinical condition, not whether they were on a targeted list of some sort. One advantage of that would be that those suffering from long-term conditions would no longer be considered second-class citizens.
I said at the beginning of my speech that no Budgets are all bad. There are some good elements in this Budget, but too few, I am afraid. One thing that I welcome, as do all Conservative Members, is the additional help for pensioners, although I must concur with my hon. Friend the Member for Ribble Valley (Mr. Evans): given that council tax increases have soaked up at least a third of the state pension increases over the last five or six years, and about 50 per cent. of all pensioners are on a means-tested benefit of some sort, while 1.5 million pensioners are not even claiming the pension credit to which they are entitled, the promised one-off payment of £200 is derisory.
That promise falls well short of our promise to halve the council tax bill up to a maximum of £500 and, perhaps most importantly for pensioners, to re-link the state pension to earnings and break the link with inflation, which, over the longer term, will be far more beneficial to those pensioners than one-offs such as the Chancellor has given today.
The Budget is a missed opportunity to reverse the many tax increases of recent years and ensure that taxpayers' money is wisely spent on our public services. Therefore, it is a missed opportunity for the Government. I certainly believe that taxpayers across the country are increasingly getting irritated by the extent of the tax increases and the fact that they are not seeing enough improvement in their public services for the money that is being spent. I think they will realise
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very quickly that, because of those frustrations and missed opportunities, this is a vote now, pay later Budget.
Mr. Andrew Tyrie (Chichester) (Con): On a point of order, Madam Deputy Speaker. I have before me a copy of the Evening Standard, which was bought at middaywell before the Chancellor stood up to make his Budget speech. It contains a large chunk of the Budget, with a large number of measures apparently having been leaked. This is the latest in a long line of discourtesies to the House, but, far worse, it is also a serious breach of Treasury confidentiality before a Budget.
I can only hope that this is unintentional. If it were planned, of course, it would be a very grave matter indeed: a previous Labour Chancellor resigned after he leaked the Budget. Given the apparent seriousness of this matter, are you prepared to allow a Treasury Ministerthere are some on the Treasury Benchto make a statement immediately to say what action will be taken to explain how this happened?
Mr. David Laws (Yeovil) (LD): Further to that point of order, Madam Deputy Speaker. I have seen the same article in the Evening Standard, and the hon. Gentleman is right that it pre-announced a number of items announced in the Budget that could not possibly have been known to anyone outside the Treasury. That is in the context of an article that claims to have an exclusive interview with the Chancellor of the Exchequer, today, I presume. This is a serious matter, and it has been taken seriously by the House previously when Chancellors have, on occasion, resigned for leaking Budget secrets. Would it be appropriate for you to ask the Leader of the House to make a statement on this issue tomorrow?
Madam Deputy Speaker (Sylvia Heal): The matter that has been brought to my attention is obviously one of concern, but I cannot immediately do anything about it. Members of the Treasury Bench are present, it has been brought to their attention, and it will be brought to the attention of Mr. Speaker.
John McDonnell: Indeed. The debate has considered the long-term prospects of the global economic system, the environment and a range of other matters. In the limited time that I have, I want to concentrate on the next few weeks.
Today's Budget contains much that is to be welcomed. The statement included commitments to the eradication of poverty, which the Chancellor has taken
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to the next stage by introducing additional benefits, especially for pensioners, such as the winter fuel allowance and council tax refund, and the welcome development of free bus travel for pensioners.
My concern is that if this Budget is intended to motivate Labour voters to come out and vote for the Government, which I hope that it is and I welcome it in that respect, it does not go far enough. We need to go further to make clear to the traditional supporters of this Government what is needed and what a Labour Government can do to represent their interests. We are faced with an election in which the lowest turnout in the political history of this country is a prospect, and traditional Labour supporters might comprise the largest stay-at-home element. From pensioners to students, to the low-paid, to public sector workers, large sections of Labour's traditional heartland and base have been alienated from the electoral process, such as workers who have lost their pensions as a result of activities under the previous Government. My view is that we need to mobilise those latent Labour supporters before the election, and we should do it with a real Labour Budget.
I therefore want to set out some of the things that we should be doing to build on the Chancellor's stated aims. In expenditure terms, we should raise the state pension to the guaranteed credit level£105 for a single pensioner and £160 for a couple. We should restore the link with earnings. The total costing for that is £7.3 billion, increasing over the next few years to more than £9 billion.
Because of those people who have lost their pension security, because of the exploitation, I think, of the private pensions industry, and because many employers have mismanaged schemes over the years and taken pension holidays, resulting in schemes that can no longer support the pension promised to those workers, we need to strengthen the financial assistance scheme that the Government introduced, which was a superb measure to which we committed ourselves at the previous election. We now know, however, that the £400 million set aside to protect and compensate those workers is insufficient. On current estimates, if we are to protect workers who have lost their pensions as a result of insolvency, the cost could be in the region of £2.5 billion. In the run-up to the general election, we should make the commitment to cover that cost. We should also promise students that we will abolish tuition fees and restore the maintenance grantat a cost of what? At a cost of £1.3 billion. The total of that expenditure is £11.1 billion.We could go further in tackling poverty if we increased the minimum wage to the level requested by the TUC£6.60which is not exactly extravagant compared with what some of our constituents earn.
We are asked how we will pay for all this. My view is fairly straightforward. We could introduce a package of measures which I think would be popular. First, we could introduce a windfall tax on bank and oil profits. So far this year, the banks have reported global annual profits of £28.6 billion, and estimated annual profits of £19.1 billion subject to UK corporation tax. The oil companies have reported profits of £38.3 billion globally, and £10.6 billion subject to UK corporation tax. A total profit of £29.7 billion has been made this year by banks and oil companies. A windfall tax of, say,
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£2.5 billion would cover the cost of a one-off cash injection into the financial assistance scheme for pensioners. We could go further, and increase it to cover any future costs resulting from further insolvencies. A new tax band at 50 per cent. for incomes above £100,000 would bring in £5.2 billion, covering the cost of the abolition of tuition fees and the restoration of maintenance grants.
We should also consider where expenditure has been growing. In recent years, there has been a massive increase in defence expenditure. By 200708, we shall be spending £7.2 billion more on defence than we did in 2002, in real terms. We are doubling our defence expenditure under this Government. What we need to do now is at least return to the levels of 2002. If we did that, we would save £3.5 billion. Those measures alone would cover the costs of the raising of the pension, the restoring of the pensions link, the one-off cash injection, the abolition of tuition fees and the restoration of the maintenance grant.
I welcome the Chancellor's reforms. I welcome the measures to tackle poverty, especially those targeted at children and pensioners. What we also need, however, is a Budget that motivates Labour supporters and fills them with enthusiasm to vote for the return of a Labour Government. That requires a real Labour Budget, based on tackling poverty and securing peace rather than expenditure on weapons, and benefits that are readily available rather than those which, unfortunately plunge more and more people into means tests and increase the costs of their administration.
Some of today's debate has seemed not to be part of the real world that we inhabit in our constituencies. Over the past seven or eight years, the Government have lifted many families out of poverty. We have tackled unemployment. Many of us remember the early 1990s, when in street after street houses were repossessed because people were in negative equity. In many of our constituencies, unemployment reached 20 or 25 per cent. Poverty was rife. I compliment the Chancellor on the progress that he has made; but there is a long way to gowhich, I believe, means focusing our energies on securing peace, investing in tackling poverty among pensioners and investing in our education system. We must remove any disincentive for students to stay on at university, and that means the abolition of tuition fees and the restoration of the maintenance grant.
We need to consider other elements of public expenditure. The money wasted on privatisation proposals means that we are not gaining the best from the money being invested in our public services overall. Debate after debateon the probation and prison services, the railway industry or whatevermeans that we are wasting resources on privatisation rather than direct investment. I therefore urge the Government not to listen to the arguments put forward about Gershon reviews and so on and the cutting of 100,000 civil service jobs, but to recognise that civil servants are delivering our manifesto commitments with dedication and commitment, and that they deserve our support.
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