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4.55 pm
Mr. Jeremy Browne (Taunton) (LD): I am grateful to have this opportunity to speak on behalf of my party on the Budget on the final day of our deliberations on that subject. This was a Budget with a big hole in the middle—a Polo mint Budget. Its central feature, which will be experienced by all our constituents from next month, was the proposal to cut the basic rate of income tax by 2p in the pound and to double, rather than abolish, the 10p rate. That will have a profound effect on many of our constituents when it comes into effect next month. It is overwhelmingly the biggest change that people will experience.
The Prime Minister, in his characteristically uncollegiate way, took the central feature of this year’s Budget and announced it as the central feature of his final Budget as Chancellor of the Exchequer last year, thereby leaving his successor with a relatively small number of measures to pad out the 50 or so minutes that he managed to spend on his Budget speech last week.
The central feature—the doubling of the 10p rate and the reduction in the basic rate—is a hugely regressive measure that will impact adversely on more than 5 million households across the United Kingdom. They will be worse off as a result of the proposals, announced by the then Chancellor last year, that will come into effect next month. It is simply unbelievable that a Labour Government should choose to alter the income tax structure in a way that is most disadvantageous to people on low and middle incomes.
That feature was announced in last year’s Budget, however, so let us look at what was announced by the Chancellor of the Exchequer last Wednesday. I think that it was Barack Obama, in the presidential contest in the United States, who observed that the tragedy of politics at the moment is that just as the issues are getting bigger—he was referring to issues such as climate change and globalisation—the political discourse seems to be getting smaller. I was reminded of that observation as I listened to the Chancellor on Wednesday, because his proposals were so timid, so meek and so lacking in purpose.
I cast my mind back to the genuinely formidable Chancellors whom I can recall. Nigel Lawson, for example, was second only to Margaret Thatcher as the politician who shaped the 1980s. Many would argue that the present Prime Minister was not second in stature to, but parallel with, Tony Blair in shaping the politics of the past decade. These were politicians who, for good or for ill, had a big view of the kind of society that they wished to mould. They painted on a broad canvas. It was therefore somewhat demeaning to see the Chancellor of the Exchequer of one of the world’s largest economies rising to his full height to announce not only that he was minded to introduce a policy on plastic carrier bags, but that if the supermarkets did not implement it in two years’ time, at that point he would really, really do something.
We can look back at those considerable figures, but I also see one in the Chamber now. The right hon. and learned Member for Rushcliffe (Mr. Clarke) was the last Conservative Chancellor of the Exchequer—possibly the last ever, certainly the last for the time being. He was undoubtedly a big political figure, and he remains one today. I cannot believe that he would
have wished his legacy to be a threatened plastic bag levy two years in the future. This Budget reminded me of a 1950s Budget. It was full of good housekeeping, reminiscent of the days when Chancellors of the Exchequer often dealt in millions rather than billions of pounds.
Let us go through some of the measures mentioned when the Chancellor spoke about his priorities for our country. We should remember that this Government are spending £1,700 million every day; that is the scale of public spending nowadays. When the Chancellor rose on his annual opportunity to speak for three quarters of an hour, he found time and space to accommodate the following announcements into his Budget: £10 million over five years for science; £26 million—slightly less than a pound per UK household by my calculations—for home insulation; and £12.5 million for women entrepreneurs, which we have discussed this afternoon. I have never before heard a Chancellor announcing in his main Budget statement items of expenditure to the nearest £500,000. Those are all laudable objectives, but the scale is so small and humiliating that it is indicative of a Chancellor and a Government who have lost the ability to shape the bigger picture.
Tony Baldry: But was it not the intention behind all those pages of Budget coverage with lots of little boxes for various initiatives to detract from the main story of the collapse of the Chancellor’s overall financial competence?
Mr. Browne: The implication of that intervention is that financial competence existed in the first place, so in that respect the hon. Gentleman displays his characteristic generosity. He is clearly more of a details man than I if he went through all those little boxes in the Budget supplements, which go on for page after page. I am not sure, however, that they win as many votes for the Government as people would like to think when they cook up these ideas in the Treasury.
What, then, of the alternatives put before us? I was intrigued and bewildered over the weekend to read the centrepiece of the new tax policy by the hon. Member for Runnymede and Weybridge (Mr. Hammond), the Conservative shadow Chief Secretary to the Treasury. As far as I understood it, it said that there was a possibility of the Conservative party cutting taxes by 2015. That, Mr. Deputy Speaker, is seven years away— [Interruption.] We fought and won the whole second world war more quickly than the hon. Gentleman believes he might be able to introduce some modest tax proposals. I think it was Harold Wilson who said—although perhaps not in these exact words—that seven days was a long time in politics. I do not know how long the Conservatives think seven years is, but it seems an awfully long time to be thinking up some ideas for tax cuts.
The hon. Member for Runnymede and Weybridge expanded on his policy by saying in a very touching way—I am pleased to see him in his place to hear this—that the Conservatives were going to create a pot of money to fund tax cuts. When his Back Benchers display their thirst for Thatcherite economics, my assumption has always been that they did not want to return to the household budgeting of the Roberts family between the wars, but desired something a little
more robust. Instead, we have the worst savings scheme in history—a pot of money tied up for seven years with a 0 per cent. return in interest and requiring two Conservative election victories before people get their money back. That makes Northern Rock look like a model of realistic business practice!
Frank Dobson (Holborn and St. Pancras) (Lab): The hon. Gentleman really ought to give proper credit to the Tory party and put its long-term thinking on taxation in perspective. The Conservatives were, after all, the party that introduced income tax as a temporary measure.
Mr. Browne: I am grateful for that intervention, which brings me neatly on to my next point.
I have been trying to work out what the Conservative critique of the Budget really is. As far as I can work out, the Conservatives have two policies: the first is that taxes and spending are much too high under Labour; and the second is that taxes and spending will be identical under the Conservative party. We are left in a very strange position: we know that the Conservatives oppose every tax rise that the Chancellor announced last Wednesday, so they must have secret mystery alternative tax rises to make up the difference. We have not yet heard what secret taxes they propose to put in place instead, but we look forward to hearing about them later in our debate.
Mr. Bernard Jenkin (North Essex) (Con): Is it inconceivable that a future Conservative Government would follow policies, which have been followed in many other countries, to restrain public spending a bit and keep taxes lower, but bring in tax revenues that were actually higher? Tax rates would be lower, but revenues for the public services would be higher, reflecting higher economic growth as a consequence. Does the hon. Gentleman not recognise that the steep increases in public spending and taxation are beginning to suppress the rate of economic growth, so that tax revenues consistently come in below forecast, as they have over the past seven years?
Mr. Browne: There were so many “highers” and “lowers” in that contribution that I will call it the Bruce Forsyth doctrine. I shall recommend it to the hon. Gentleman’s Front-Bench colleagues.
So far, I have come up with four Conservative suggestions on tax. Let us consider them, as they might inform the Chancellor’s next Budget. The first was a supermarket car parking tax—a policy dreamt up by an adviser to the Conservative party whose chauffeur drives around the block while he is inside the supermarket not collecting any plastic bags. That proposal appears to have been dropped.
As far as I can work out, the second policy is that “normal people” should be allowed only one short-haul flight a year. I have not heard whether that was confirmed by the right hon. Member for Witney (Mr. Cameron) in connection with his recent holiday in South Africa, but no doubt those on the Conservative Front Bench will enlighten us on that subject.
The third policy of which I am aware—which ties in with the previous speech— is that the price of a pint of beer should be increased by 7p over and above the
Budget proposals. It says something about the career of the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) that that is considered his finest achievement in politics—to have put forward a policy that is universally unpopular in my constituency.
As for the final area, public spending, the Conservative health spokesman made the big announcement a couple of weeks ago that NHS expenditure would increase massively under the Conservative party. I was as intrigued by that proposal as many other right hon. and hon. Members must have been. I read the blog of the political editor of the Daily Mail, and under the headline “From Untouchable to Unmentionable”, he described how the proposal had gone down in the ranks of the Conservative party:
“I'm told that in the days following Mr Lansley's reckless assertion about health spending, Mr Osborne hit the roof and one Shad Cab heavyweight”—
that narrows the field, unless we include the hon. Member for Brentwood and Ongar (Mr. Pickles)—
“even put Mr Lansley against a wall and pummelled him verbally into admitting his crime”,
which was to envisage extra spending on the national health service. It is no wonder that The Daily Telegraph, the newspaper generally considered sympathetic to the Conservative party, ran the headline yesterday, “Tories mired in confusion over policy on tax cuts”. No doubt we will have some clarification later.
To assist the hon. Member for Rutland and Melton (Alan Duncan), let me make one modest proposal for how he might reduce public spending to fund some of his reckless plans. In recent months, the Conservative party has been shedding Members of Parliament at an alarming rate. As I understand it, the hon. Member for Croydon, Central (Mr. Pelling), the hon. Member for Old Bexley and Sidcup (Derek Conway) and, just last week, the hon. Member for Castle Point (Bob Spink) have all left the Conservative ranks, which were already smaller than those that Michael Foot managed to achieve during his electoral triumph in 1983. I venture that there must be some substantial savings to be made from reviewing the Short money claimed by the remainder of the Conservative party. That could go into funding some of the exciting new proposals on which I have touched.
The truth is that the Budget took place against an extremely worrying economic backdrop. An explosion of consumer debt has been secured on the rising value of house prices. The bubble, if it has not burst, is certainly deflating rapidly. As the hon. Member for Rutland and Melton pointed out, the Government’s growth forecasts have been revised downwards and public finances are struggling. In the next financial year, the Government will borrow £7 billion more than they envisaged only last year.
No one in my constituency or elsewhere recognises the rosy picture of the economy that the Government are painting. The measure of inflation, for example, is totally detached from reality. It is possible that the price of the iPod that the Prime Minister uses to listen to the Arctic Monkeys in the gym in the mornings has fallen in recent months, but pensioners in my constituency see rising fuel costs and soaring shopping bills, and their biggest outlay of all, the council tax bill—about which the Chancellor had nothing at all to say in his Budget statement—has virtually doubled
since Labour came to power. Replacing the council tax could have been the great centrepiece of a Budget dedicated to a fairer and greener Britain, but there was no urgency and no big-picture analysis.
According to a United Nations report published at the weekend, glaciers are melting at an unprecedented rate. The signs are all around us, but the Chancellor fiddles while the world gets closer to burning. My party believes that we need a proper green tax switch with serious measures to combat pollution, but—and it is a crucial but—that every pound raised in environmental taxation should be returned, in the form of income tax cuts, to the people on low and middle incomes who are struggling the most in the current difficult economic circumstances. It is simply not good enough to give green taxes a bad name and a bad reputation by using them to introduce, through the back door, extra revenue-raising measures to plug black holes in the Treasury’s own finances.
Stewart Hosie (Dundee, East) (SNP): Will the hon. Gentleman be supporting the £1.2 billion tax take resulting from changes in vehicle excise duty, which are clearly predicated on no behavioural change, given that the money is not to be returned to the hard-pressed taxpayer?
Mr. Browne: We have made our policies entirely clear. Let me be uncharacteristically boastful, and point out that the whole drive for differential vehicle excise duties was a Liberal Democrat policy. Like many of our good policies, it has found its way into the wider body politic and become more universally popular. We will continue to present popular policies for others to consider in the future.
We proposed that the council tax should be replaced by a fairer system. We could have had a Budget that painted a big picture of a fairer, greener, better Britain—a Budget that really went for the issue of climate change and global warming, took it seriously and understood the urgency of the system. The Budget could have replaced the council tax with a fairer system for our constituents, a system that reduced the basic rate of income tax further as a consequence of environmental taxation, but instead we are piling extra tax on the households that are feeling the squeeze most.
As for child poverty, on which the Government are asking to be judged, the biggest single announcement in the Budget statement told us that only a quarter of the money needed to meet the Government’s own target had been found. Unless there is a dramatic change in next year’s Budget, they will fail to meet that target.
I looked far and wide for a respected impartial figure who supported the Budget, and found only one. It is a sign of the smallness of politics, which I described earlier, that that commentator was the BBC’s new Budget commentator, Jade Goody. Never let it be said that public service broadcasting is failing to make a unique contribution to our national life, for the insights of Jade Goody can be found on the BBC website. We know of her antipathy to Indians, but on this occasion she was the only respected economic observer to endorse the cowboys in Government. She said:
“I’m fed up with boozy Britain, so I’d like the Chancellor to increase taxes on cheap booze and clamp down on most people selling cheap alcohol to underage children”.
That was her policy, which was as close as I could find to an endorsement of any of the proposals made by the Chancellor on Wednesday. It might have been a Budget for Goody, but it was not a good Budget. Where there should have been vision, there was a black hole. Where there should have been drive and direction, there was a soporific lack of ambition. It made one wonder why the Chancellor and the Prime Minister ever bothered to get elected to Parliament in the first place. It was a Budget from a Government who have run out of ideas, and will soon be run out of office.
5.15 pm
Mr. Alan Milburn (Darlington) (Lab): It is a great pleasure to follow the hon. Member for Taunton (Mr. Browne), who let himself down slightly at the end, but made what was a very good speech that indicated that the “Orange Book” tendency is alive and well and thriving inside the Liberal Democrats. I will leave it to his hon. Friends to judge whether that is a good or bad thing.
It is also a great pleasure to follow my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform, who today proved once again that he is what it says on the tin, so to speak—a champion for business and enterprise, not just inside the Government but in the wider world.
There are many things to welcome in the Budget, not least the extra help for pensioners and the further progress that the Government intend to make on tackling child poverty. Of course it is a truism that mid-term Budgets are never easy affairs. They have to contain difficult judgments without upsetting confidence either in markets or in politics. They have to show that the Government are sticking to a course without stealing the thunder of later, possibly pre-election, Budgets. They have to make the right long-term policy judgments and yet produce the necessary short-term corrections that the immediate circumstances demand.
On many of these grounds, my right hon. Friend the Chancellor got the balance about right and did so against the background of what all right hon. and hon. Members agree are perhaps the most difficult economic circumstances that we have faced in many years. That is a testimony to his calm approach and steady hand.
It is hard to be anything other than concerned about the current global economic situation and the turmoil in the global markets. As the recent turbulence demonstrates, it is all too easy for that concern to tip into panic. Fear in the markets will certainly not be helped if it is followed by pessimism in politics about the underlying state of the British economy. Of course the situation is serious, as we have seen during the last 24 hours, but I also believe that concern should not be allowed to crowd out confidence about what I believe at least to be the underlying resilience of the British economy.
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