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Peter Viggers (Gosport) (Con): It is a truism in Treasury circles that it is very difficult to work out at first hearing the true shape of a Budget, but this Budget is more difficult than most. With this Chancellor, of course, one has to wade through the glutinous self-congratulation with which he always surrounds himself before one can work out what he has actually done.
One thing is already clear—that the expenditure that he has announced is enormous, and that borrowings will be vast. Over the next few days, the provenance of that borrowing and how the money will be raised will be the subject of much scrutiny. The hon. Member for Wolverhampton, South-West (Rob Marris) mentioned PFI schemes, and said that any such approach in the hospital and NHS sector would be an investment. I do not agree: the original idea behind PFI was created some years ago by the previous Conservative Government to bring the skills of the private sector into investment. This Government have lost the thread in respect of PFIs, and instead use such schemes purely for the purposes of off-balance sheet accounting.
One of the first things that one learns in the Treasury is that it does not distinguish between capital and income. A lot of work remains to be done before we know exactly where this Budget will lead us. However, I believe that this Chancellor has done three things right—he has not joined the euro, he has created the Monetary Policy Committee to control interest and inflation rates, and for a couple of years he followed the guidelines set out by the former Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke).
The announcement that the Chancellor made today about giving some measure of independence to the Office for National Statistics may need to be added to the list of the three things that he has done right. In future years, I may well admit that he has done four things right. However, I maintain that he has done everything else wrong. How can that be? He has done it wrong because he is a socialist, his basic philosophy is flawed and he cannot resist social engineering. He does not understand business at all.
Does that matter? I will tell hon. Members a short story. I saw a cartoon once that showed two Egyptians in the desert looking at an architectural drawing of a pyramid. One Egyptian was saying to the other, "I know it may exactly agree with the plans, but I've got a funny feeling that there's something wrong with it somehow." What is wrong is that the pyramid is standing on its apex—it is upside down. We can think of the whole of
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the top of that upside-down pyramid—that huge structure—as being the non-productive parts of the economy. Those parts may be very valuable, and the people may be nice people doing useful jobs, but they are not productive. I am talking about all pensioners, all children, the armed forces, the civil service, Members of Parliament—all non-productive. At the apex—the tiny triangle at the very bottom of the pyramid—are the people who are actually producing for this country. Those are the areas in the private sector. The private sector should be cherished. It is crucial, unique and essential. The present Chancellor of the Exchequer and the present Government do not understand the need to cherish the private sector.
Mr. Ivan Lewis: Will the hon. Gentleman confirm that he just said that the armed forces and the civil service, per se, are not productive? Will he confirm that the business community said for years that the one thing that it wanted more than anything else was a stable environment in which to do business? Is it not true that this Government have created the most stable year-on-year environment almost in the history of our economy?
Peter Viggers: I will not allow the Minister to put me in the position of criticising the armed forces.
Peter Viggers: Absolutely not. I yield to no one in my admiration for the armed forces, in which I have served, unlike most members of the Government. The fact is that the armed forces are not producing an extra benefit—they are not creating wealth for this country. All the people who are serving with great courage in Iraq and elsewhere are not producing wealth for the country. That is the critical point.
Mr. Kevan Jones: I am listening very carefully to the hon. Gentleman. Is he really saying that if a part of the economy is not productive, it does not make any contribution? I have to totally disagree with him in terms of the armed forces. Surely by trying to protect the security situation in different parts of the world, they are helping the economy not just of this country, but of the parts of the world in which they are serving?
Peter Viggers: My point—I am sure that the hon. Gentleman will try to drive me away from it, but I will not let that happen—is that it is the private sector that enhances the wealth of this country, which other sectors do not do. One simply cannot say that service sectors, or those working for the Government, are enhancing and increasing public wealth.
Peter Viggers:
I will not give way again, because the point is quite clear. Some Members may not like it, but the fact is that the private sector enhances the wealth of the nation, which other parts of the economy do not do in the same way. This Government and this Chancellor of the Exchequer have done the opposite of cherishing the private sector. That is not surprising, I suppose: they are an array of barristers, lecturers, social workers, research assistants, charity workers and a Marxist
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lecturer, who, of course, is at defence. They have all been dependent on the state and the public sector all their lives.
Mr. Ivan Lewis: He just insulted charity workers.
Peter Viggers: Dependency is the key to this Government's—[Interruption.]
Mr. Deputy Speaker: Order. We must not have these comments from a sedentary position, which do not contribute to the debate at all.
Peter Viggers: Labour Members may not like the points that I am making, but they are true. The Conservatives recognise the unique significance of the private sector, whereas the Government are united in the belief that socialism and the public sector can solve every problem.
Rob Marris: Will the hon. Gentleman give way?
Peter Viggers: No, I will not give way.
Under this Government, regulation and controls have increased. The size of the public sector has increased dramatically and many of my constituents point out that the advertisements for public sector jobs are offensive—including obesity advisers and five-a-day co-ordinators. The jobs section of The Guardian paints a very sad picture of the way in which public money is being spent, not all of it wisely.
Mr. Ivan Lewis: Will the hon. Gentleman clarify his remarks? Does he value in any way the contribution that public services make to the well-being of our society and the strength of our economy? He attacked a range of people and said that we were a collection of charity workers, as though working for a charity is making a negative contribution to society. Whom does he value in our society?
Peter Viggers: I understand why the Minister is trying to blow me off the point, but the fact remains that there is a complete difference between those who do not enhance the wealth of the country and those who do. That does not mean that those in the non-wealth producing sector are less valuable as individuals. Of course they are not. To say so would be to talk down ourselves, nurses, doctors, the armed forces and teachers, all of whom are among the most worthy people in our community, but they are not the wealth-creating members of it. The Minister and his colleagues are proving my point and demonstrating that they do not accept that there is a special virtue in the wealth-creating part of the economy. I shall move on.
Under this Government, the tax burden, excluding North sea oil revenues, will be 37.6 per cent. of GDP this year, 37.8 per cent. next year and 38.1 per cent. the following year, which will be the highest rate ever for taxation. Yes, there were 83 per cent. income tax rates under previous Labour Governments, but that does not mean that the rate of taxation overall then was higher than the rate of taxation now. We are being taxed on
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taxed income. The Cardiff Business School says that as a result a basic rate taxpayer is paying £48.50 per £100 of income in tax and a higher rate taxpayer is paying £57.10 per £100 of income. Each individual receives an income, on which he pays income tax and national insurance. With the net amount of his taxed income, he then pays sales taxes, VAT, fuel duty and excise duties. Out of his taxed income, he also has to pay fixed charges such as the council tax and television licence. Eventually, if he prospers sufficiently, his next of kin will pay inheritance tax of 40 per cent. on his estate. We are taxed on taxed income, and that is why the tax rates are so high.
High tax rates bring their own problems. We have heard reference to the Chancellor's impost on pension funds, and I have declared an interest in relation to pension funds. He taxed pension funds some £5 billion a year—I expect that he would maintain that it is £3 billion net—in his first Budget in 1997, and that has led indirectly, and together with other factors, such as increased longevity and the weakness of the stock exchange, to the closure of final salary schemes and the crisis in the pensions industry. The Chancellor caused—or, at least, contributed to—that problem.
Similarly, the increased taxes of £6 billion on North sea oil will, in due course, lead to higher prices at the petrol pump. During evidence to the Treasury Committee, the Chancellor denied that his duty on North sea oil will have the direct result of higher prices at the petrol pump, but it is true. His taxation of pension funds has affected pensions, and his taxation of North sea oil will affect petrol prices. The Chancellor does not actually believe that his increased taxation will have an impact on petrol prices at the pump or on pensions; he does not realise the implications of his actions.
The Chancellor is guilty not only of high taxation, but also of fiddling—he loves fiddling with people's lives. The tax credit system, which is much vaunted by the Labour Government, has done enormous damage, as well as good. The Government do not realise that although a family in modest circumstances will be grateful for a tax credit of £500 or £1,000, if the Government try to take back that amount it causes a major crisis in the family. The benefit of giving families money is far outweighed by the damage done when the Government try to recover it.
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