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5.55 pm
Rob Marris (Wolverhampton, South-West) (Lab): The Budget takes place in difficult circumstances, given what has gone on in the world. I shall not repeat what has been said and, unusually for me, but because of time constraints and many preceding lengthy speeches, I will take no interventions.
We all know about the turbulence in the world economy, affecting banking, fuel, especially the price of oil, the price of food—for example, the price of wheat has increased by 118 per cent. in the past year—and commodity prices, which have increased hugely, driven especially by demand from countries such as China and India. That is the difficult background to the Budget. The Chancellor has done a good job, in a steady-as-she-goes Budget, in trying to act positively in the face of the challenges of globalisation and economic turbulence in the world.
The Budget was also announced against the backdrop of the Government’s other policies to cope with the challenges of globalisation, such as the Leitch review of skills and the Sainsbury review of science to enable us to foster innovation here. The Government have also taken positive steps to protect intellectual property rights in this country, in the European Union under the treaty of Lisbon, and internationally. They have also increased spending on the NHS in recent years. A company such as General Motors is nearly bankrupt through the health payments that it has to make to its retired workers as well as its current work force because the USA does not have a national health system. Spending taxpayers’ money on the NHS is, therefore, good for the economy. It is an investment, which helps business. Similarly, the Government have invested in education to increase skills.
I did not notice any measures on research and development in the Budget, and I wonder whether the Government have conducted any research on the effect of the tax breaks that they have introduced in recent years on research and development. I did not notice any measures on manufacturing, which is especially concerning for me, as a west midlands Member of Parliament. My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) spoke about that. I intervened on my right hon. Friend the Member for West Dunbartonshire (John McFall) about insider trading because I believe
that the Government need to do much more about that, and make the FSA and the Serious Fraud Office get their act together.
On a parochial matter, before I move on to some sniping, the headquarters of Marston’s brewery, one of the major brewers in the country, is based in my constituency. The site of the third largest pub chain in the UK, run by Marston’s, is also there. I am therefore disappointed about the differentials on alcohol duties in the Budget. I am especially disappointed that not only has beer duty increased by 4p a pint, but the duty on a litre of still cider has increased by only 3p. Still cider, bought cheaply from off-licences, causes problems with drunkenness in my constituency and, I suspect, many others. It is unfortunate that the Budget has increased the price of beer through excise duties much more than that of cider, which poses a greater problem.
Let me consider the speech of the Liberal Democrat leader, the right hon. Member for Sheffield, Hallam (Mr. Clegg). What a vacuous response to the Budget. He presented almost no policies. He proposed a green tax con, which we have discussed previously in the House when considering green taxes that are revenue-neutral. The problem with green taxes is changing behaviour. If the behaviour changes, one cannot have a revenue-neutral tax unless one increases other taxes or ratchets up the green taxes. Neither of those options is desirable.
The right hon. Member for Sheffield, Hallam also tried to steal the amendment that I, not the Liberal Democrats, was the first in the House to bring forward, to increase massively the vehicle excise duty on the most polluting cars. In case the 4x4 fraternity get on to me, I have repeatedly said in the House that nine of the top 10 most polluting vehicles sold in the United Kingdom are not 4x4s, but cars such as Bentleys, Maseratis and Lamborghinis. The first-time duty of £950 on the most polluting vehicles in the Budget is a step forward, but I wish that the Chancellor had gone much further, by doubling that rate and imposing an annual rate, which would change behaviour, because the second-hand value of those vehicles would plummet. That is where we will hit the market.
The right hon. Gentleman seemed to have no understanding of non-dom taxation, which caused great hilarity in the House, and talked about poor non-doms. I am in favour of helping poor non-doms, through the Gangmasters (Licensing) Act 2004 and so on, but that is not the group that we mean when we talk about the taxation of non-domiciles. We are talking about the rich, not the poor non-doms, who will not make so much money that they will have to pay the £30,000 levy or whatever it is. The right hon. Gentleman completely misunderstood that.
Things got worse with the Conservatives. It is like “Groundhog Day” with them. I have sat through seven Budget debates and the Conservative party is like a clock that has stopped: every 24 hours it is right twice. I concede the possibility that the Conservatives might be right this year, with the doom and gloom that we hear from them every year. However, they have not been right for the past 11 years, and the betting is that they will not be right this year. If the Conservatives are right, it will only be because the 12 hours have come round and, with their doom and gloom, the clock is briefly showing the right time again.
As for the Conservative party’s spending policies as an alternative to the Budget, the hon. Member for Cities of London and Westminster (Mr. Field) asked about the £10.5 billion spending spree. I can give him some figures on that: cutting the corporation tax rate to 27 per cent. will cost £1.75 billion; the transferable marriage tax allowance will cost £3.2 billion; the increase in the working tax credit will cost £3 billion; the increase in the inheritance tax threshold to £1 million will cost £2 billion; and raising the stamp duty threshold for first-time buyers will cost £400 million.
On top of that, we have heard all kinds of wonderful commitments: more funding for the armed forces; more anti-MRSA funding; additional drugs for thousands of stroke patients; high-speed rail pilot schemes; billions of pounds more for the NHS, according to the shadow NHS spokesman, the hon. Member for South Cambridgeshire (Mr. Lansley); the national school leaver’s programme that is so beloved of the right hon. Member for Witney (Mr. Cameron); his demand for a larger Army; and extensions to light rail. All those are worthy, but what did he say about raising taxes in his speech on the Budget? He talked about raising taxes on binge drinking.
Raising taxes on binge drinking might be worth while, but if it works, it will be like green taxes—it will be revenue-neutral, because people will drink less. That was the right hon. Gentleman’s only tax-raising measure to pay for the long shopping list that I have read out, which will cost considerably more than £10 billion. Binge drinking taxes alone is not a good way to go. On sharing the proceeds of growth, the right hon. Gentleman talked about cutting capital gains tax, taxes on family businesses and corporation taxes, saving loads of post offices and every maternity hospital in the country, and more spending commitments. That is an even bigger black hole when all he is doing is putting up binge drinking taxes.
So what is the right hon. Gentleman going to do? He is going to borrow loads of money. What is the form for that? The form is the previous Conservative Government, who doubled the national debt. They did not want to put up taxes, but they had to get the money from somewhere, because they did not have the guts to cut the programmes—thank goodness for the working class in the United Kingdom—so they borrowed the money and left us to take over, with a big financial hangover. Despite what the Conservatives say, the Government have paid off quite a lot of that debt. National debt is now far lower as a proportion of GDP than when we took over in 1997. The Conservatives are going nowhere.
The other idea that the right hon. Gentleman put forward was that green taxes should go into a family fund. Again, that is the kind of revenue-neutral nonsense that we heard from the Liberal Democrats. The proposal will not work, because although it is very desirable if people or companies change their behaviour and stop acting in such a polluting way, the tax take will drop. If we had green taxes going into a family fund, as the right hon. Gentleman suggested, that would do nothing and be just another tax rise.
Both Opposition parties have put forward vacuous policies, if policies at all, and wild, unfunded spending commitments. It will not do. At least the Chancellor has put forward a considered package in difficult economic times, which I think will work.
6.5 pm
Mr. Nigel Evans (Ribble Valley) (Con): I should like to declare an interest, in that I am the owner of a small retail convenience store in Swansea, and something that I say in the 10 minutes to which I shall restrict myself might relate to that. In the spirit of the greenness that we all talk about these days, I am also thinking about doing a carbon offset on this speech. I shall read it tomorrow, and I shall offset anything that I feel has not added to the day—if the Chancellor will do the same. If he did that we would be quids in, because his was possibly one of the most boring Budget speeches that I have heard in my 16 years as a Member of Parliament. I was waiting for the big idea, and I still am. I know that we are not allowed refreshments in the Chamber, but there is an exception, in that the Chancellor is traditionally allowed a sip of whisky while he makes his Budget speech. If the right hon. Gentleman is still Chancellor at the time of the next Budget, perhaps everyone in the Chamber might be allowed a double espresso to keep them awake. His speech sounded to me much as the shipping forecast would sound to a lettuce picker in Mexico; it was that dire.
I hope that over the course of this week’s debates, Treasury Ministers will talk about the inflation rate. The 2 per cent. rate is mentioned time and again, and the Chancellor referred to it today. It is not an inflation rate that I recognise. That is not simply because of petrol prices or agricultural prices going through the roof. It is also to do with council tax, and the Government have even imposed an increase in prescription charges that is greater than 2 per cent. Everyone knows that the real inflation rate is much higher than 2 per cent. Stating that it is not might allow the Chancellor to ensure that public sector salary increases—and pension increases—are kept low, but we all know that it is much higher.
We also heard a lot about things that will happen in 2010, 2012, 2015 or even 2020. Well, most of my mates—although perhaps not all of them—live in 2008, and that is what we want the Budget to be about. We want to know what is happening now, not 20 or 30 years in the future.
Mr. David Evennett (Bexleyheath and Crayford) (Con): My hon. Friend is making his usual robust and impressive contribution. Does he agree that this is a bad news Budget that will increase the tax bill for all the families in my constituency and across Britain? Other countries are cutting taxes, but this Government continue to increase them.
Mr. Evans: I agree with my hon. Friend; that is exactly what is happening. It has been estimated that the tax take for families will increase by about £110.
We have learned enough from past Budgets to know that we need to read through all the details. I have here all the details that we are supposed to look through to find out exactly what is happening. For future Budgets, if we are going to be green, perhaps we could reduce the amount of garbage that we have to pick up from the Vote Office. We could put most of it on the internet. We need only the small section that shows us the increases and decreases; we could go to the net for all the other changes.
My hon. Friend’s point about tax increases is absolutely right. Tax freedom day is the day of the year on which we finally start earning money for ourselves, and it is now 1 June. Only after that date can we start to earn money for ourselves. We have to work for the Government from 1 January to 1 June. That period has increased by a whole week over the past four years. We now have to work a whole week longer for the Government instead of earning money for ourselves. Given the sensibilities and constraints within which a future Conservative Government will have to operate—we shall obviously have to clear up the mess left by this Government—I hope that when we can, we shall roll back tax freedom day so that people can earn more money for themselves and spend it on whatever they think is in the best interests of themselves and their families.
The hon. Member for Wolverhampton, South-West (Rob Marris) mentioned brewing, and I shall do the same, as I am the vice-chairman of the all-party parliamentary group on beer. Some rubbish has been talked today. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) was absolutely right to say that the increases are being dressed up as measures to tackle binge drinking. When we see where they are targeted, we realise that they will not help to tackle binge drinking at all. There was no mention in the Budget of strong cider or of alcopops. The 4p increase on beer will not do anything to dissuade binge drinkers. I suspect that most of the problem is not caused by beer in any event. Other alcohols are at the root of the problem.
In its representation to the Government before the budget, the British Beer and Pub Association said:
“The current closure rate”
“is seven times faster than in 2006 and 14 times faster than in 2005.”
Last year, 1,409 pubs closed. The pub closure rate is now accelerating towards 30 a week. I am sure that we will all know of pubs in our constituencies—rural or urban—that have closed with no chance of reopening. Pubs are part of the social fabric of our society, particularly in villages where there is only one pub. In one village in my constituency, the pub is closed and we are waiting to see whether it will reopen. There are real problems, and the increase announced today will only accelerate the pub closures in this country. That will mean not only job losses but damage to the fabric of society. Pubs are a place where people meet and talk—they are a great British tradition, for goodness’ sake—and we do not want to lose them.
Pubs are, of course, places where people drink communally. Part of the problem with binge drinking is that people can go into supermarkets, pick up cans of strong lager or whatever else and drink not in a licensed and supervised area but in the streets, at home or in other places. If the Government want to tackle the problem of binge drinking, they must do it in a far more targeted way than they have. This measure is everything to do with revenue raising, but it has been dressed up as an attack on binge drinking. The Government are wide of the mark, and will have to think again.
Mr. Russell Brown: Will the hon. Gentleman give way?
Mr. Evans: No, I shall not, because I have only four minutes left.
I was with the chief executive of the Taxpayers Alliance, Matthew Elliot, last night. He is a tremendous guy who is doing an awful lot to expose how taxpayers’ money is wasted. Part of the problem is that we have seen a huge increase in stealth taxes over the past 10 or 11 years, and this Budget will be no different.
I want a future Government—even this Government, if they are brave enough—to ensure that on every product on which tax is paid, that tax is made visible and transparent so that people know when they buy a pint of beer that 73p of the price goes on taxation, or when they buy a litre of petrol that three quarters of the price is taxation. That would mean that people knew know exactly how much they were paying in stealth taxes. If people knew the level to which they pay taxes, they would think long and hard about how much money is raised from them and their families, and would take more care about how that money was spent.
I have one more plea for a future Budget, which is about youngsters who go to school and have a badged uniform. Such uniforms are exempt from VAT only for sizes up to the age of 13. We know that another problem in this country is obesity and that some youngsters tend to be larger than others. Perhaps the Government could consider the problem of VAT charged to those who are large for their age, particularly as they have raised the school leaving age to 18. The VAT for those who go to institutions with badged uniforms should at least be reduced to 5 per cent. That would cost only £4 million. The Government love to make big announcements that do not cost much money; this is perfect for them, and would help many families throughout the UK afford to buy badged uniforms for the schools that their children go to without being ripped off by VAT.
6.14 pm
Mr. David Kidney (Stafford) (Lab): “Congratulations, Mr. Chancellor, I am pleased to tell you that you have passed your test and can now throw away the L-plates.” It was a test taken in very difficult conditions, with storm clouds overhead, inconsiderate drivers ahead and traffic lights changing against the Chancellor all the way. To put it another way, this was a Budget drawn up in the very difficult international circumstances, following the collapse of the housing market in America, of a global credit crunch. We have recently heard that America is now probably in recession, so around the world people are downgrading their estimates for growth in their own countries, hoping that the old saying “When America sneezes, the rest of the world catches a cold” is no longer true. I hope so, too.
This was always going to be a difficult Budget for the Chancellor to be able to use to say something of interest to us. With such limited room for manoeuvre, I was interested to see what his priorities for making change would be. I was pleased to hear at the beginning of his Budget speech that the values guiding his choice of priorities were fairness and opportunity. Those are my values and, I believe, the values of the Labour party. When I made my own Budget representations before today, with those values in mind, I kept my requests to two: would the Chancellor help pensioners in poverty, and children in poverty? I am pleased to see that those priorities emerged today.
The increase in the winter fuel allowance for pensioners will help. I hear what people say about the fact that it was announced as a one-off payment, but if people want to join a campaign to get it incorporated into the winter fuel allowance for future years, I would be glad to be at the head of such a campaign, and to seek further increases in the future. This is a Labour Government, and although it is relatively late to do it, they are going to restore the link between increases in pensions and earnings. Again, if people want to join a campaign for that decision to be taken sooner rather than later, I would be pleased to head it.
When people called, as I did, for something to be done to reduce the number of children in poverty, we did not quite have the same loud voices in support of our calls as the non-doms, in their corner, did. I am pleased that the Chancellor listened to us, however, and took a decision that will lead to still more children being drawn out of poverty. Back in 1997, we inherited a position where more than 3 million children were in poverty, but through the steps taken so far we have drawn 600,000 of them out of poverty—and the steps announced today will reduce the number still further.
The Chancellor was right to focus on helping parents who are in work. Recent research has shown that more than half the children still living in poverty have at least one parent who is in work. It is right to concentrate on raising the national minimum wage, which will happen again in October; it is right to raise the tax credit for children, as the Chancellor announced today; and it will be right next year to raise child benefit by much more than the rate of inflation. I was also pleased to hear that next year, for the first time ever, child benefit will be disregarded in certain circumstances when parents go back to work and claim housing benefit and council tax benefit. All the right decisions have been made there.
I want to say a few words about green taxes. I think that The Guardian said yesterday that this was set to be the greenest Labour Budget yet. I have to say that I think not. Nevertheless, I believe that the Chancellor was right to postpone this year’s increase in fuel duty. If one of the reasons for putting that duty up is to try to change motorists’ behaviour, encouraging them to use their vehicles less, I would have thought that massive increases in the world price of oil are doing exactly the same job for us. While the price is so high, I think the Chancellor is right to wait.
The Chancellor briefly mentioned the climate change levy, which is going up only in line with inflation this year. The levy has, however, been a staggering success over the 10 years of the Labour Government. By 2010, something like 20 million tonnes of carbon dioxide will have been taken out of the atmosphere because of that levy, and about a third of it through voluntary agreements with intensive energy users. That is a great success. Following on from last year’s announcement about having zero-carbon domestic properties by 2016, I hope that today’s additional target for building zero- carbon non-domestic properties will make a real difference to future house and property building.
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