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Peter Bottomley: It might, but I was not trying to go into detail. I just wanted to make the point [ Interruption. ] I am not going to answer that. The point that I was trying to raise for discussion was the need for local government to have a variety of buoyant sources of income, and I shall leave it at that. If the hon. Gentleman catches your eye, Mr. Deputy Speaker, he can make his own speech on that issue, or any others that he wants to raise.
I want to move on to the subject of housing investment. It is clear that the amount available for new social housing is inadequate, as are the sources of income for investment in it. I have made the point beforeand hope to go on making it for as long as I am a Memberthat the sort of investment funds held for people such as me by our trade union, insurance company or pension provider do not go into social housing, for homes for people whether or not they can work. Until we have an investment regime and a housing system that gets a good chunk of money from peoples savingsif I may put it like thatwe shall have to rely far too much on the taxpayer and on Government decisions.
I should like changes in the tax rules, alongside possible changes in forms of housing tenure, so that it would be normal for a trade union to report in its annual accounts that, for example, 20 per cent. of its members funds were invested in housingnot necessarily housing for union members. Unions could receive rental income from such homes, and that should be a decent class of investment. The same could apply to insurance companies and pension funds, and, for that matter, to private individuals. I do not see why one should not get the same welcome and proper advantages from providing homes for people who need them, or from maintaining the standard of ones own home in the last 20 or 30 years of life without the complication of equity release, as one does from investing in venture capital or small private businesses. I am not against equity release or private equity; all I am saying is that we should try to find a public purpose for some of the investment funds we hope to accumulate, rather than just chasing up the value of shares on the stock market.
Occasionally, we should consider the contribution that we in this place can make to reducing the burden on the public purse. I do not want my speech to be inordinately lengthy so I shall finish on this point. We have had some debates on House of Lords reform. I declare a sort of interest: I live with someone who is a member of the other placebut the remarks that I am about to make are not personal, either about her or about me.
We ought to ring-fence the budgets for Parliament. Any changes in the cost of the House of Lords should be offset by reductions in the cost of the House of Commons. For example, if we are going to have a number of people who get fuller remuneration or allowances in the House of Lords, either the rate of pay or the allowances for Members of the House of Commons should be reduced, or the numbers here should be reduced. The first bid that I have put in is that over the next 10 to 15 years, we ought to aim to cut the number of Members of this House from about 650 to about 450.
Peter Bottomley: Decisions could be made by lottery, according to merit or by popular vote. One day I shall welcome the Minister to my Denis Thatcher Societyfor those of us who are married to women who are more important than we are.
By reducing the number of Members of this House by about a third, we would have constituencies of about 100,000. In fact, we could set a rule saying that the population of the Isle of Wight will set the number of target voters in each constituency. As the population of the Isle of Wight grows, we would reduce the number of Members of this House. That would be a good way of cutting down on costs.
Lastly, although MPs pay this year is not controversial, because the increase is, I think, only 0.6 per cent., when our pay is readjusted, we will face the same problem in the future that we have faced in the pastthat MPs are on a final salary pension scheme. The House should decide to go on to an average salary pension scheme and our rates of pay during our service should be taken into account in setting our pension, rather than having MPs who retire five or 10 year later getting a dramatically higher pension than people with the same amount of service who retired five or 10 years before. We need to make some kind of contribution to a rational system that would be applicable to others in different circumstances, rather than saying to them, Well leave you to rot, or to suffer, and well go on looking after ourselves.
Stephen Hesford (Wirral, West) (Lab): I congratulate my right hon. Friend the Chancellor on his 11th, and what is categorised as his last, Budget speech. It may be that it was his greatest Budget speechI will come back to why in a moment. It is perhaps a few hours since Members dispersed from the Chamber after the main speeches. I just want to reflect on the alacrity with which Opposition Members dispersed from their Benches. I wonder whether that was because, on the back of what my right hon. Friend said, they all realised, severally and collectively, that they will face another six or seven years of opposition.
I suspect that, after listening to Budgets like this over the last 10 years, Members left to make sure that we got our hands on the Red Book so that we
could read the small detail to find out what was in the Budget, not just what the Chancellor said at the Dispatch Box.
The speech that I wanted to make nearly hit the buffers in the sense that the wind was taken out of my sails. However, I want to place on the record my thanks to the right hon. Member for Wokingham (Mr. Redwood) for making it relevant. One of the traditional knockabouts in these debateswhich I thought was going to go missing, but which, certainly from my point of view, has come back into playconsists of the doom and gloom that Opposition Members put about and the talk about black holes. Other colleagues mentioned all that sort of stuff. In preparation for that, I looked at the financial press with a little care over the past six weeks or so to see what was being said in the run-up to the Budget. It is often said in this place that much of the press is not necessarily friendly to the Labour party [Laughter.] I hear laughter from Conservative Members. I am not sure which papers they readI see that no one wants to intervene to tell me.
If, as the right hon. Member for Wokingham would have us believe, the Chancellor has got it so wrong in his Budgets over 10 years, let us, almost counter-intuitively, consider the situation in the City of London, which is traditionally thought of as not looked after efficiently or well by the Labour party. A reputable broadsheet that is not always favourable to the Labour party published some figures on the City of London in the past few weeks. It showed that 4.6 million people were employed in London, which is 15 per cent. of the UK total. The number of people employed in the City is 340,000, while up to 1 million are involved in support services. Some 9 per cent. of our gross domestic product is produced from financial services, which is up from 7 per cent. 10 years ago. The City of Londons share of the global foreign equity market is 43 per cent., and it accounts for 36 per cent. of global derivates. The City accounts for 31 per cent. of world currency trading, which is more than New York and Tokyo combined.
Stewart Hosie (Dundee, East) (SNP): I am sure that the list that the hon. Gentleman is reading would be very interesting in other circumstances. He talks about the success of the financial sector and the City, but surely he is aware that hon. Members representing every party in the House support the FSA and the fact that it should have a general framework that is light-touch, risk-based and principle-based. The financial sector has been driven forward by that common agreement, not simply the actions of the Chancellor.
The final statistic that I will cite is that the London commodity markets share of world trade in metals is 90 per cent. That piece of financial journalism thus, perhaps counter-intuitively, supports the framework and environment that my right hon. Friend the Chancellor has set up.
I have in front of me a copy of the 4 March edition of The Sunday Times, which includes a column by David Smith. Those who have followed the journalistic career of David Smith will know that he is not necessarily a friend of this Government. Indeed, I recall that during the couple of years before we took power in 1997, part of his advice to those who wanted to make investments around the world was that they should leave the country, which shows his pedigree. His piece in The Sunday Times was calledthis is a description of the economyThese are the best years of our lives. How did such a respected journalist, who is independent of the Government, come to that view if what Conservative Members often say is true?
as good as it gets
It is hard to think of a better ... period in Britains modern economic history.
The average growth rate has been 2.8 per cent. better than Britains ... long-run average of 2.5 per cent. ... The economy is nearly 5 per cent. larger than it would have been.
Inflation since 1992 has averaged 2.6 per cent.
which is low in any historical circumstances. We still have that kind of average inflation rate. He also talks about stability, which I would say has been a key economic driver, and I am sure that Members in many quarters of the House would agree.
Important though inflation is, we should also take note of the surrounding absence of volatility. In previous economic cycles, and in the 18 years before the Labour Government, there was a trade-off between growth and inflation, but the volatility has come down sharply. In David Smiths words,
It hasnt just been a case of no more boom-and-bust. There have also been no more wild swings in inflation.
Britains performance in terms of stability has gone from being the worst in the advanced world to something near the best
We should not just take David Smiths word for it. He cast around for other unlikely sources of support to offer an objective view of the Governments record, and he quotes Professor Tim Congdon. Those who have followed the area of policy that we are discussing for a number of years know that Professor Tim Congdon is not acknowledged to be a Labour supporter. In fact, as David Smith says, Congdon was
given a CBE by the Tories, but not necessarily for services rendered, but we will not go there. Congdon says that after
two decades of boom-and-bust
The improvement on...inflation...has not been at the expense of the so-called real economy.
In other words, there is a firm basis for the belief that what we see as the proceeds of successinvestment in our public servicesare based on reality, contrary to what Opposition Members would have us believe.
One point that is raised, almost like a kiddies scare story, is the subject of debt. It is often said that we are in a kind of overblown bubble and have a debt-ridden economy. Congdon has a view on that. On the idea that we are drowning in a sea of debt, he says that there is probably more nonsense talked on that issue than on anything else. He says that it is consistent with a grown-up economy that people should have control over their own lives, and that included their making decisions on debt. He goes on to say:
Generally, people have a far better understanding of their own particular financial circumstances than anyone in Westminster, Whitehall or the London-based media.
Unsecured debt is just 3 per cent.-4 per cent. of household wealth. All household debt is about 1Â1/2 times annual income, but the net wealth of the sector is seven times income. The surprise is not that debt has risen but, given the low-interest-rate environment, it has not risen more.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): The hon. Gentleman is quoting with approbation the words of an economist who would like Britain among other things, to, withdraw from the European Union, so we need to be careful when weighing up the merits of his argument. Is the hon. Gentleman really saying that personal debt totalling £1.3 trillion is something that we should not worry about too much? Does that not reflect the fact that one element of the Governments record to which he has not referred is the widening of the gap between the richest and the poorest in society, and is that not a legacy of which Labour Members should be ashamed?
Stephen Hesford: The hon. Gentleman has only just come into the Chamber, but if he had followed the debate he might have had something more apposite to say. He misunderstands entirely the point that I was making. I was not quoting Congdon verbatim to demonstrate his absolute support; I wanted to show that someone on that side of the economic debate supports the notion that we have achieved stability. He says that the economy is not the scare story that Conservative Members would have the public believe.
The economy is in good shape, despite the list of questions posed by the hon. Member for Worthing, West (Peter Bottomley), who would not allow me to intervene. I do not know what my hon. Friend the Economic Secretary will say in due course, but it is not for me to answer those questions. My constituents are not professional economists or London-based financial journalists, but they share the genuine concerns of
hard-working families in constituencies throughout the country. Given the climate, which is sometimes exaggerated, mums and dads in my constituency have some worries, but it is important to set them against the background of stability. People are worried, even though the economy is doing well, so we must find out the disconnect. This winter, some of my constituents were worried about utility prices, but British Gas and other major utilities have dropped their prices considerably, which I welcome. People are worried about council tax, but I am pleased that my local authority will introduce a council rise below the national average. There have been three interest rate rises in the past six to nine months, which is worrying for people with mortgages.
Nonsense is talked by Opposition Members about the state of the NHS, and they do so to create uncertainty and worry. That is the climate that my constituents have experienced for the past six to nine months. It is counter-intuitive but, unbelievably, the latest polling evidence suggests that the Tories are favoured for their handling of the economy. I was genuinely looking forward to the Budget, as I hoped that it would answer those concerns and worries. My hon. Friends may agree that in the past six to nine months we have failed to construct a narrative or connect with our constituents to enable them to understand where the Government are going. There was therefore a big ask for the Chancellor, as we wanted him to try to answer those serious concerns.
Like every constituency, mine is composed of different sectors of society, and about 20 per cent. of the electoratethat is one of the highest percentages in the countryare pensioners. What did the Chancellor do with respect to pensioners? What I am about to say deals with a sector of the pensioner public who have missed out on our previous efforts to tackle pensioner povertythose who are just above the pensioner poverty line and sometimes complain that they do not have access to some of the benefits. Since 1997 the Chancellor will almost have doubled the tax-exempt income of pensioners who pay income tax. That will be a significant benefit for a considerable number of my pensioners. The other item that I warmly welcome is the raising of the level of pension credit, which will help the middle sector of my pensioner population.
By far the largest part of my population, as is probably the case in most constituencies, are hard-working families with children. The Chancellor has gone a long way towards settling their worries. First, tax credits for a typical family with two children will effectively wipe out income tax liability on an income of £450 a week. That will be extremely helpful to many of my hard-working families. Secondly, child benefit will rise to £20 for the first child by 2010. That works out at more than £1,000 a year. The House should reflect that, when we came to power, the Major Government had been chipping away with a view to abolishing the child benefit. That was the climate as I recall it.
Stephen Hesford: The final piece of assistance for families with children was progress towards equalising the amount spent per pupil in the state sector and in the private sector. That will be widely welcomed by my hard-working families.
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