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Helen Goodman (Bishop Auckland) (Lab): Surely the hon. Gentleman appreciates that, if there are concerns that tax reliefs are being abused and it is necessary to withdraw them because they are being used for avoidance purposes, it would be totally inappropriate to consult on those occasions.
Dr. Cable: Surely the obvious answer is that it is best to think those things through in advance.
That is not the only example. The film subsidy tax relief scheme had exactly the same problem. Before that, there was company tax incorporation, which had to be reversed, and reversed back again. There is a fundamental lack of thought about the practicalities of many of the schemes, which is ultimately very wasteful.
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The main taxation measures that the Government introduced were in relation to the environment. The Liberal Democrats certainly support the principle of environmental taxation and would like to see more active use made of it. However, it was striking that on the day before the Budget, the Environmental Audit Committee, which is an all-party Committee, criticised the Government for allowing environmental taxation to fall as a share of gross domestic product. That is at a time when, as we were reminded this morning, carbon emissions targets are not being met.
Of the specific measures, we support the very modest increase in the taxation of what are called Chelsea tractors. Frankly, the research of the RAC, for example, suggests that, in order to have an impact and to change behaviour, the differential needs to be about £1,000 rather than £200. None the less, the measure is a move in the right direction. We welcome, in principle, the increase in the climate change levy. It is a clumsy tax, based simply on the manufacturing sector. We have argued for a more broadly based carbon taxation system, but since we support the principle of environmental taxation, we do not disagree with what the Government are trying to do.
Given that the Government claim to be really using environmental taxation, I am perplexed about why there is nothing whatever in the Budget on the aviation sector. Interestingly, air passenger duty, which is the one tax mechanism that the Government have, has been frozen. Why is that? There are many ways in which the Government could do something, through environmental taxation, to curb emissions in the aviation sector, but they have done absolutely nothing. The question is, why?
The major weakness of the Budget relates to the big opportunities that were missed. One question—this is a slightly technical point that I raised with the Chancellor in Treasury questions—is why the Chancellor missed the opportunity of the lowest real interest rates for 300 years to refinance large parts of the Government debt. The Government have rolled out a programme—they describe it in the Budget—for more active use of the gilts markets, but reputable economic advisers and former members of the Monetary Policy Committee have pointed out that billions could have been saved if the Treasury had been quicker off the mark in taking advantage of the market opportunities.
A more fundamental point is that there is absolutely no indication of where the Government are heading in terms of the long-term reform of local government finance. That is important because, as we all know, council tax is highly regressive. That completely undermines the basic objective that the Chancellor is trying to achieve: greater fairness and equity throughout the tax system. There is a lot of anger among pensioners about the loss of the £200 rebate, but that, in itself, is a symptom of a bigger problem. The tax is not perceived as fair or legitimate, and it needs to be reformed so that it is linked to people's ability to pay. Moreover, the local government tax system produces only 25 per cent. of local revenue, which is not consistent with the approach of local decentralisation of which the Government claim to be in favour. We have had no indication of where the Government are heading.
The Chancellor also missed the big opportunity of giving us an indication of where the Government are heading on pensions policy. There was a report in the
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Financial Times on the day before the Budget of a blazing row about the matter that was supposed to have taken place between the Prime Minister and the Chancellor. I do not believe everything that I read in newspapers, but the article seemed singularly plausible because it argued that the Prime Minister had asked the Chancellor what he was doing about the Turner report. The Turner report's key recommendation was on how to create a system with a decent level of state pension to get away from mass means-testing, which has all the disincentive effects at which the right hon. Member for Darlington hinted. Turner offered a way forward, but we know that the Chancellor is passionately opposed to it. There is a fundamental division in the Government on not just pensions policy, but the fundamental question of the best way of dealing with poverty and redistribution. There is a question whether we should use complex benefits, or general measures such as those proposed by Turner on pensions.
I do not doubt the Chancellor's commitment to social justice because he clearly believes in it passionately. However, he has created a highly complex system of benefits that causes big disincentives. At the end of the day, the system has proved to be wholly ineffective because all the evidence about income and wealth distribution suggests that that problem is getting worse and certainly no better.
5.31 pm
Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): Since 1997, the Government's objective has been to build a strong economy and a fairer society with opportunity and security for all. That has been the backdrop of every single Budget that the Chancellor has delivered, including last Wednesday's. I have heard all of them, and before the hon. Member for Rutland and Melton (Mr. Duncan) leaves the Chamber, may I also say that I heard a number of Conservative Budgets before them? The hon. Gentleman seemed to suggest that there is little difference in the mind of the public, but that is not the perception of my constituents. They recall this Chancellor's contribution and contrast that with Black Wednesday, which, the Treasury estimated, cost £3.3 billion. The then Chancellor, Norman Lamont, raised interest rates during the day from 10 per cent. to 12 per cent. and then to 15 per cent. and authorised the spending of billions in an effort to keep the pound in the range allowed by the exchange rate mechanism. I am not complaining about the hon. Member for Rutland and Melton leaving the Chamber; I am sure that he will read my speech as carefully as I listened to his.
I want to be positive today and highlight the benefits to the economy and my constituents of the past nine years and the measures in the Budget. Inflation is set to remain low and stable. We are entering the 10th year of real growth under this Government, who are the only Government in British history to be on course to maintain 10 consecutive years of uninterrupted economic growth.
The economy has generated 2.3 million additional jobs since 1997. Britain has 75 per cent. of adults in work—a higher rate than those in America and the euro area. There are 170,000 more people in work than a year ago. In Coatbridge, Chryston and Bellshill the number
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of people out of work is 1,738, and 38,100 people are in work. What a remarkable transformation of employment opportunities! We could only dream of such figures during the years of the Conservative Government. However, even unemployment statistics can mask the personal misery endured by families torn apart and left with no dignity or future, as we saw when unemployment continued in an upward spiral and grew substantially in the '80s. Unemployment has been tackled most successfully, and the Government are now addressing the issue of incapacity benefit claimants.
My constituency is ranked No. 10 in the list of those claiming the most incapacity benefit. The top locations include Lanarkshire and Liverpool, and six of them stretch across south Wales. That should come as no surprise, because those were the heartlands of heavy industry, employing miners, steelworkers, shipbuilders and foundry workers—all doing heavy, dirty and often dangerous employment. In the case of the mineworkers, the Government have almost completed the largest personal injury compensation scheme in the world, yielding £1.8 billion for respiratory disease and £1.2 billion for vibration white finger.
However, the Department for Work and Pensions pathways to work project needs to be sensitive to that historical background and the enormous contribution that many workers from those communities have made to the wealth-creating industries. On Monday 10 October 2005, the Secretary of State for Work and Pensions published the Department's principles of welfare reform, which contain the values and principles that shape the Government's vision of the future welfare state. There can be no quarrel with that considered approach, provided that the principles are maintained and advisers treat incapacity benefit claimants with respect and dignity. It is also crucial to provide skills. A high-skill economy will help to deliver faster productivity and growth and ensure that the UK is well placed to prosper in the global economy. That is our response to globalisation.
The national minimum wage is an important cornerstone of Government strategy, aimed at providing employees with decent minimum standards and fairness in the workplace. Decency and dignity for all employees has replaced the old Dutch auction of employers competing against each other on the basis of who can pay the least to the fewest, which has no place in a fairer, modern Britain. The wealth we were promised in those days never did trickle down, but now we have the Low Pay Commission recommendations in place for the adult rate of the national minimum wage to rise to £5.35p from October 2006. I welcome that.
On health, the NHS budget has doubled since 1997, and will have almost trebled by 2008. The Red Book refers to admirable progress in accident and emergency units. Governments have their responsibilities; so do health authorities. Monklands accident and emergency unit, which serves my constituents, is earmarked for closure. I wholeheartedly support the retention of that vital health service facility. I congratulate my local newspaper, the Airdrie and Coatbridge Advertiser, on its outstanding role in promoting the retention of that unit. Praise is also due to the Kirkintilloch Herald, which has established a reputation second to none for campaigning on health issues. None the less, they also recognise the unprecedented investment in health made by the Chancellor.
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The pretentious fury about the Chancellor's speech exhibited by the Conservative Front Bench team was about playing the man, not the ball. The Chancellor's consistent support of the national health service simply proves that actions speak louder than words. The administrators responsible for the provision of our health service have a difficult job—but heavens, how much more money do they want to provide the range of services that we need? The Chancellor has responded, so it is their responsibility to act. [Interruption.] I told the hon. Member for Rutland and Melton that he would enjoy what I said, and I am sorry that the hon. Member for Rayleigh (Mr. Francois), too, will only have the pleasure of reading my speech.
Trusts should be able to live within their budget allocation and they should accept that priorities are just as important to patients as they are to consultants.
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