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Over the past week or two, there have been a number of programmes on the TV about how alienated white working class people feel in this country. That is a valid point, but it is not only white people. Ordinary working class people in this country feel disengaged from the political process and that they are being overlooked. I believe that our Government should look to the future.
I have three practical cases that we could pursue to bring back those people who feel that they have been left out. First, I suggest that we consider introducing free school meals for every child in this country. It would at a stroke reduce the stigma for those who have free school meals at the moment. It would obviously increase uptake. It would develop healthy eating habits. It would, I hope, give children a more educated outlook about what food is and the importance of a balanced diet. It might also mean that some children would get at least one good meal a day.
I also suggest that we should consider keeping children in schools at lunchtime. It might not be popular with children, but it would certainly be popular with local people because it would reduce antisocial behaviour and litter. It would also give teachers more time to spend with the children and encourage them to develop the children as human beings. There will be a cost, but I believe that the benefits will outweigh the cost. Obviously, some parents would gain financially if they no longer had to pay, but the long-term health benefits and the importance of a healthy diet should outweigh that.
The second issue that I ask the Treasury to consider is the fact that for more than 30 years we have been committed to equal pay for men and women, but for more than 30 years we have failed to address the problem properly. Last year, one in five employment tribunals were about equal pay. Unison and GMB between them have 60,000 cases lodged at employment tribunals against the NHS and local authorities. Some negotiations have seen some success, but ultimately the lack of resources from national Government has prevented real movement. Even the most successful cases, which have been negotiated, are being unravelled by no win, no fee lawyers. The Government and employers have a duty to ensure that pay audits are performed and that they deliver equality. Only real Government support can address the issue.
We have put this off for 30 years. It is 11 years since the single status agreement was agreed in local authorities. It is nearly five years since the agenda for change was agreed in the NHS. If we as a Government do not find the resources to give to public authorities, the probability is that the employment tribunals and the courts will make it their responsibility. Neither the NHS nor local authorities will be capable of funding the bills that they will be landed with. Again, as well as doing the right thing we will make working people know that we are on their side.
Finally, I want to put forward a policy that my party and my Government are committed to, at least on paper: the development of a real role for councils in the provision of social housing. Some 2.5 million people have rejected the privatisation of their homes under various ballots for arm’s length companies, or arm’s length management organisations—you name it. Many more left in-house provision because they were given little, if any, real alternative. In Sunderland, for example, they were told, “Your houses need an investment of £250 million. If you don’t vote for it, you won’t get any investment, but your rents’ll go up £5 a week.” Obviously, people did what they thought they had to do.
The truth is that policy debates, political promises and procrastination have been the hallmark of the past few years. While we sit and talk about it, 1.6 million
people are on local authority waiting lists. It is the biggest issue that I face in my constituency, and we have decent council housing. My surgery, postbag and phone calls every day bring cases of people with housing issues: they cannot get a house, they cannot get the house they want, they want to be out of the one they are in or the one they are in needs upgrading and they are waiting for it to be upgraded. I am not saying that we have not done anything about that—we have. The truth is that if we want to be faithful to the working backbone of this country, we must give local authorities the tools they need to deliver good social housing.
The official impact assessment that accompanied the new Housing and Regeneration Bill suggests that councils will be allowed to build only 2,500 houses a year, yet the Government have committed to build 3 million. Do we not trust councils? Do we not think that they can deliver? Do we not have faith in them? We should have—they are our people. They are democratically elected to do the job that ordinary working people have asked them to do. We should tell them to get on and do it.
If we do that, I believe that ordinary working people in this country will say yet again, “Yes, the Labour party and the Labour Government speak for us. They believe in what we do.” We have aspirations. I do not believe that “aspirations” is a word that can be used by only one side or another of this House. We should all have aspirations to make this world a better place for the people we represent, no matter what their background.
In my community, no one has yet said to me, “Dave, how much extra inheritance tax will I leave to my children?” We have some decent houses where I live. We have people who will leave £1 million and more. The issues that working people in my constituency bring to me are those that affect them day in, day out. I spoke yesterday to a gentleman who runs a local pub, and he said, “What on earth are you doing? Are you trying to drive us out of business?” An increase of 4p on a pint of beer might not sound like much, but the smoking ban—whether we like it or not, and I think we made the right decision when we imposed it—has had an impact on pubs. People can go down the street and buy 24 litres of beer for £16. If the guy who runs the pub wanted to sell 24 litres of beer, he would have to charge £100, which would give the Government and the country a lot of VAT that they would not get from the supermarkets, so we lose in every sense of the word.
We have to realise that we are alienating the people who we would say were our core supporters. We need to look at things like the fact that not only are we putting 4p on beer but we are committed to put it up by 2p plus inflation over the next period. That will not impact on binge drinking or disorder. People are not going to stop going out and getting smashed just because we have put 4p on a pint of beer, but that increase might close community locals where people are just hanging on by their teeth. Surely that is in nobody’s interest.
Finally, I want to say a word or two about the people who keep this country ticking over—the police, prison officers, nurses and everyone who works in our public and civil services. Over the past year, they have asked us time and again, “What are you doing to us? Why are you not paying us what we are worth? Why are you cutting our jobs and starting to pay us regional pay?”
Tens of thousands of civil service jobs have been lost, and it has been announced that another 12,000 jobs in the Department for Work and Pensions are to go. We ask fewer staff to do more work for less pay, so it is no wonder that they ask, “Where is our Government going?” It is our responsibility to look after them, because they carry out the work that we decide must be done. If we do not look after them properly, how can we expect them to look after our people properly?
I hope that this Budget, and the one next year, will give us a chance to resolve some of the problems that I have outlined. I am saying not that we should ignore middle England but that we should give priority to the issues that ordinary working people feel are not being addressed—their pay and conditions, their sense of equality, the houses that they live in and the homes that they are proud to have been brought up in. Those homes have been denigrated in this House, and people who live in social housing sometimes feel like second-class citizens. That is not how the Labour party and a Labour Government should behave.
I do not believe that the Conservative party will stand up for this country’s ordinary working people. No one knows what the Liberal Democrats would do if they were in charge but, if we do not get our act together and start looking after our working people, we might find out.
8.11 pm
Mr. Mark Prisk (Hertford and Stortford) (Con): It is a pleasure to follow the hon. Member for Blaydon (Mr. Anderson), who spoke powerfully and sincerely about the matters that concern people in his constituency. I hope that the Minister was listening. I suspect that politically, there are things that will divide us, but the hon. Gentleman made a very powerful point about aspiration. That is a subject that has not been mentioned much in the debate, although I hope to talk about it in a moment.
I was also interested to note that the hon. Member for Blaydon was the fourth Labour Member to speak negatively about the effect of the proposed beer tax changes on small businesses, pubs, clubs and local community groups. Again, I hope that the Minister was listening carefully.
Last Wednesday, the attention of British business and economic commentators was focused on what might be in the Chancellor’s Budget statement to the House, but in the long term, it would probably have been better if it had been focused on events in New York. While we focused on the contents of the Red Book, the fate of Bear Stearns—Wall street’s fifth largest investment bank—was beginning to unravel. This debate has been going on since last Wednesday, and in that time Bear Stearns has been sold off, for a price that represents just 6 per cent. of what its value was last week. Last week most of us may not have been intimately familiar with Bear Stearns, but its fate has repercussions for us all. Many hon. Members have mentioned the credit crunch, but the fate of Bear Stearns shows that, far from being over, the crunch has merely embarked on its next phase.
Sadly, as various hon. Members have noted, this country is not well placed to cope with the coming financial storm. Indeed, we are more vulnerable than many of our competitors. Higher personal debt, low
private savings and a record balance of payments deficit have left this country exposed, because we rely so much on other people’s money.
However, the debate has made it clear that it is the level of Government borrowing that is exposing us to the worst of the bad economic weather. We have had 15 years of steady global growth. Over that period, any sensible Government—like any sensible business—would have taken the opportunity to build up their position and put something in reserve. Not this Government, though: instead of entering the downturn with a healthy surplus, they have built up a huge deficit. At 3 per cent. of GDP, our budget deficit is worse than that of all our major competitors—unless, of course, the Government now wish to count the Egyptian economy as a major competitor.
What a wasted opportunity it has been. Having inherited a golden legacy, Labour could have—should have—used the past decade to invest for the long term and prepare for the downturn. What have we had instead? The Government have not taken the long, strategic view; rather, we have had a decade of petty tinkering and meddling, of petty targets and stealth taxes. I suppose it was no surprise that last Wednesday, with the global financial markets in turmoil, the Chancellor dithered over whether we should have a ban on plastic carrier bags. That was the extent of the vision in the Budget.
One result of the Government’s obsession with fiscal tinkering is that this country now has the longest and most complex tax code of any major economy. Since 1997 “Tolley’s Tax Guide”—the principal compendium of all our tax regulations—has doubled in size and is now nearly 10,000 pages long. Ministers claim that they want to simplify the tax system, but their policies are achieving the reverse.
The Red Book—I shall carry on calling it that, although my hon. Friend the Member for North Essex (Mr. Jenkin) was right to say that both its colour and its purpose have changed—contains all the principal measures in the Budget. Two pages are devoted to tax simplification, but they are accompanied by tax law explanatory notes 270 pages long. Indeed, the explanatory notes on all the changes are longer than the entire Red Book itself. By tinkering and meddling with dozens of taxes, rates and thresholds the Chancellor—and inevitably, of course, the Prime Minister before him—has created a hideously complex system that wastes the time and money of every taxpayer and business in the land.
That leads me to the Government’s peculiar approach to so-called tax abuse. I am sorry that the right hon. Member for Oldham, West and Royton (Mr. Meacher) is not in the Chamber at present, as he gave us a fascinating description of how he thinks we should clamp down on anyone who is successful. Hon. Members will know that until 1997 there was tax avoidance and there was tax evasion; one was legal, the other was not. The Prime Minister, when he was Chancellor, rejected that approach. He believed that too many people were abusing the system and not paying what he thought that they should. He therefore devised the new notion of tax abuse, which sits somewhere between evasion and avoidance and, peculiarly, straddles both legal and illegal activity.
For example, the IR35 rules were brought in to tackle freelancers who the Prime Minister, when he was Chancellor, thought were abusing the system. We were told that millions of pounds of taxpayers’ money would be recovered, but the reality is very different. For example, of the 1,400 cases taken out against freelance members of the Professional Contractors Group—a body that represents just one part of the marketplace—only three have been prosecuted successfully by the taxman.
The same misguided thinking can be seen in the so-called “income shifting” proposals. Over the last few years, Her Majesty’s Revenue and Customs—sanctioned by Ministers—has spent nearly £500,000 on a single vindictive case against Mr. and Mrs. Jones of the Arctic Corporation, over an alleged liability of only £40,000. There was a good use of public money: spending £500,000 on a case to reclaim a £40,000 alleged irregularity. Ministers lost the case, both on appeal and in the High Court, so what did they do? They decided to change the law, with the result that they now seek to interfere in every family business and to decide the value of what different owners bring to that business.
Mr. Jeremy Browne: Does the hon. Gentleman share my grave concern that if the family business is a farm, it is very difficult to quantify what each member brings to it? There is the farmer, and his wife may help with bread and breakfast, while his son, daughter or son-in-law may help with mending farm machinery or with the harvest at the appropriate time of year. The Government have deferred implementing the proposal for a year, but they have not scrapped it altogether. The problem is that it will be massively intrusive, and will lead to a huge rise in bureaucracy for small businesses.
Mr. Prisk: I agree with my hon. Friend—I mean with the hon. Member for Taunton (Mr. Browne), although he has been present in this debate for so long that he is becoming a friend to those of us on the Conservative Benches. The hon. Gentleman is right: how will the Government implement that proposal, other than by using clipboards and intruding unnecessarily into every family business?
I welcome the decision by the Chancellor to delay the proposals by a year, but it would be far better if common sense prevailed and they were dropped altogether. The perceived abuse is smaller than Ministers have been told, and as the hon. Member for Taunton suggested, the costs of trying to resolve the problem—economically and, if I may say so to the Chief Secretary, politically—will prove far greater than the benefits the Government seek. Rather than creating a vicious circle by creating new laws and then trying to clamp down on the changes that are made as a result, Ministers should make our tax laws simple, clear and constant. By doing that, they would tackle the root of the problem; they would remove the desire and the opportunity to evade one’s obligations. A simpler and fairer tax system is what the UK needs, and I am pleased to say that that is what my party is proposing.
Last Wednesday the Chancellor announced not just the Budget but, as we heard from the Secretary of State earlier, the Government’s latest enterprise White Paper. Like his predecessor, the Chancellor talked glowingly
about the importance of small businesses and highlighted a number of policies that he obviously hopes will begin to restore their confidence in him. Well, if I were him I would not hold my breath.
After the last year small businesses have lost whatever faith they may have had in the Government. First came the increase in small company corporation tax, then rising business rates, then an extra £10 billion in new regulatory costs and finally the £900 million capital gains tax bombshell. The result of all that is that from April—in just a few weeks—the tax bills of small businesses will rise by £1,000 million per annum, and from April 2009 they will rise by £1,500 million per annum. Given the economic downturn, why increase tax bills for 99 per cent. of businesses? Given that small businesses employ more than 10 million people, why make their finances worse, just when the economy needs all the help it can get?
As I said, the Budget was accompanied by a White Paper on enterprise. Ministers describe it as a “strategy” but in fact it is the usual new Labour hotch-potch of warm words, photo opportunities and good intentions. To be fair, there are some good points in it—on procurement and invoice finance, for example. I am pleased that the Government finally accept that some small businesses should be exempted from some regulations. For the past seven years, since I have been a Member, Ministers have fought tooth and nail against that principle, but now that they have accepted it we shall see whether they mean what they say.
On female entrepreneurship, we heard from the Secretary of State earlier that it is important to increase the proportion of women who start and run their own firms. I entirely agree. It is a sad truth that British women are only half as likely to run their own firm as their counterparts in America. However, we have heard that language from Ministers before. In the 2005 Budget the Prime Minister, who was then the Chancellor, announced a new women’s enterprise task force. We were told that it would turn things round in three years and make demonstrable progress, yet 11 months after the announcement Ministers had not even appointed a chairwoman to run it. With less than 12 months left to undertake the earlier initiative, we have another announcement and another initiative. The truth is that such Whitehall-led, top-down initiatives rarely work, and those that show promise are never given the long-term commitment needed to make a real difference.
In his opening remarks, the Secretary of State for Business, Enterprise and Regulatory Reform proudly pointed to the rise in the number of small companies as a sign that our entrepreneurial culture is increasing. However what he did not say is that the increase has been slower than the growth in our population. The start-up rate has actually fallen, from 3.2 per 1,000 people in 1997, to only three per 1,000 last year. The other critical measure of that activity—total entrepreneurial activity—has also dropped, from 7.7 per cent. in 2001 to 5.8 per cent. in 2006. Despite what the Secretary of State claims—and, I suspect, hopes—the culture of entrepreneurship is reaching a smaller and smaller proportion of the country; it is a culture that is shrinking, not spreading.
Similarly, small firms are growing more slowly. All the leading independent statistics show that the proportion of small firms achieving turnover at the critical figure of £1 million after five years has fallen—from 48 per cent. in 1997 to only 16 per cent. in 2006. In fact, in the UK it now takes an average of 14 years for a company to reach a £5 million turnover.
Of equal concern is the fact that fewer small businesses employ people than 10 years ago. The most recent statistics show that the figure has fallen to only 28 per cent. of SMEs. In other words, after 10 years of Labour Government, seven in 10 small firms no longer employ people. When Ministers produce whatever their next set of employment regulations may be, they might just want to reflect carefully on why fewer businesses want to employ people.
The Chancellor and other Ministers talk about promoting small businesses, but their policies are holding them back. While DBERR—the Department for business—is publishing its enterprise White Paper, the Treasury is simultaneously raising small firms’ bills by £1 billion. The sad conclusion, which I hear all the time from the business community, is that DBERR Ministers—business Ministers—are increasingly irrelevant. Last year, when asked about corporation tax rises, the Secretary of State for business merely referred people to the Treasury. He said that he had nothing to say. When the Chancellor announced the capital gains tax rise he did not even consult the Secretary of State for business. What use is a Secretary of State for business and enterprise who is completely overlooked by the Treasury when business taxes rise?
Over the coming months our economy faces a stern test, but I am sorry to say that it is one for which the Government have left us ill-prepared. I want business to prosper and entrepreneurs to thrive, but I fear that with the current incumbents in Downing street—at No. 10 and No. 11—British business and British entrepreneurs will have to compete with one hand tied firmly behind their back.
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