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That is extremely good news, and I do not see why the Opposition should be blind to it. I delight in the fact that in my constituency and in my country, Wales, there is now a spirit of entrepreneurship that did not exist historically. In the past, Wales has seen itself as a country of employees rather than of employers—a country with the branch factory rather than the headquarters.
Let me give just one example of a company in my constituency that is firmly rooted in Newport and Wales. It is a firm with enormous promise named Lifeforce, which has world patents on a process for parking the immune system—that is, extracting the white cells from blood transfusions and placing them in three different locations, to be stored for a lifetime if necessary. They can then be brought out for use if the person’s immune system is under attack or has been damaged by chemotherapy or by a disease such as AIDS. The white cells can then be used to re-infuse the healthy immune system into the body. This is an exciting development. It would have enormous repercussions for our health if we could re-infuse a healthy immune system into the body when it comes under attack.
The Nobel prize was won by Martin Evans at the university of Cardiff. He is a specialist in mammalian genetics. That, too, has great promise for the future of science and our health. We need to capitalise on those developments. Lifeforce, the firm that I mentioned earlier, already has a link with the Bill Gates Institution and with a firm in America and another in Germany. Its procedure is now a practical proposition that has been approved by the Medicines and Healthcare products Regulatory Agency in this country and by the Food and Drug Administration in America. Those two regulatory bodies have given their approval to its science, which could be of great benefit to our future life expectancy, and it has commercial prospects as well.
I should like to suggest a way in which the Government could raise money through the Budget. Sadly, the proposal is not in this one, although I have suggested it in the past. They could raise a good £2 billion in a manner that would be painless as well as popular and just. It involves the national insurance scheme, which is very unfair at the moment. People like me, who are in the happy position of having reached retirement age but are still working, pay no national insurance contributions. However, people in this happy situation have reached a time of life at which we could certainly afford to do so, but those of us in that position pay nil per cent. Most hon. Members pay about 1 per cent., because our earnings are high, but people at the bottom end of the pay scale can pay up to 10 per cent. of their income in national insurance contributions. It is a hugely unfair tax.
If they wished, the Government could change the law so that those who were still enjoying the pleasures of a working life after reaching retirement age would continue to pay national insurance contributions. Indeed, they are receiving some of the benefits of the national insurance scheme that others might not live long enough to enjoy. That would be a just measure, and it would raise the sum of £2 billion. Those fortunate enough to be in that happy position would find such a tax acceptable.
The national insurance scheme is in a bizarre situation, because it has been building up huge surpluses. The actuaries insist that there should be a surplus of about £17 billion, to allow for a serious increase in unemployment. However, we have built up a surplus that is way beyond that amount in each year over recent years, and we now have a surplus of about £48 billion. If we were to continue in that way, by 2013 we would have a surplus in the national insurance scheme that could fund a rescue in another Northern Rock crisis, if there was one.
The current situation is unfair because the money is being used as though it were ordinary taxation revenue. It is being used in the same way as other taxes are used, but it has been raised unjustly, because it is a tax that falls more heavily on the poor and the low paid than on those who are very well off. I would like those on my Front Bench to consider my proposal and to change the whole nature of the national insurance scheme so that we no longer build up those surpluses.
A great deal has been made by the Leader of the Opposition of last year’s UNICEF report that was critical of the progress that had been made on tackling child poverty in this country. It is a great shame that the same people who exaggerated the effect of that report did not look at UNICEF’s report from 2004. It came from the same body from the same source—the Innocenti centre in the Piazza della Santissima Annunziata in Florence—and said that of the 25 richest countries in the world, the country that had achieved most in reducing child poverty was Great Britain. That report was totally ignored by the press. I tried to get some attention drawn to it in an early-day motion, because it had had no coverage whatever, as positive news tends to be something that people do not want to hear. We do not see headlines in the papers about that sort of thing, but it gave impressive recognition of all that the Government had done to take children out of poverty. It is, of course, the negative news that gets the attention.
The leader of the Conservative party recently wondered how we could allow child poverty to happen and how we could have got ourselves into such a position, but given the extent of child poverty under the 18 years of Tory Government from 1979 to 1997, he should be more careful in his remarks. When the Tories came into office, by the same measure, one in seven children were in poverty; but by the time they left office, it was one in three. That is a terrible record of indifference to the relative poverty of those at the bottom end of the scale.
We should also look at certain enterprises that the Government have entered into and we should become more critical of the Chancellor’s involvement in the nuclear industry. An extraordinary answer was given to my hon. Friend the Member for Blaenau Gwent (Mr. Davies) a fortnight ago. It revealed that an enterprise that had been opposed by hon. Members in speeches and in early-day motions and by environmental groups such as Greenpeace and Friends of the Earth nevertheless had the support of every party in the House. The amount of money spent on that flawed proposal, on an evidence-free and unscientific basis, was £473 million.
There was no great mystery behind the opposition, because everyone who opposed it said clearly that the
cause was impossible: it could not work; it was impractical and it had no rational basis. It was intended that the mixed oxide plant at Sellafield would produce 120 tonnes of uranium fuel every year. It has been in full production for five years now, yet it has produced only 5 tonnes—a monumental failure. It is difficult to go back through our industrial history and find an investment that has failed as spectacularly as that, yet we still put this faith in nuclear power—mainly, I think, because most Ministers and others involved in the enterprise feel themselves to be scientifically semi-literate or illiterate and do not question the claims made by the nuclear power lobby. We already know that the bill for clearing up the mess from nuclear power over the long term is something in the order of £73 billion.
The affair reveals the extraordinary gullibility of the House. This is not ancient history either; it happened over the past eight years. It was in the year 2000 that the great debates about the mixed oxide plant were taking place in this House. Every one of the arguments put forward by the environmentalists and others in the House turned out to be justified, and the arguments supported by those on the Front Benches of all parties turned out to be false.
The Lib Dem spokesman mentioned the farming industry earlier, and I would like to make another point about it. There is lobbying at the moment about problems in the farming industry, particularly in pig farming. Almost ignored, however, is the enormous amount of money being made by the grain industry, whose profits went up 70 per cent. one year and nearly 50 per cent. the next year. Those are huge sums. When we talk about additional burdens on the farming industry because of the price of grain, why do we leave out the fact that there have been those huge increases in the incomes of grain farmers on account of that? That is not mentioned—we do not get a morning chorus of whingeing on the “Farming Today” programme about the huge windfall profit enjoyed by grain farmers. If sections of the farming industry are doing exceptionally well, there should be a virement to those sections that are under pressure. We should not continue uncritically to support the whole farming industry as we have in the past. The traditional subsidies are no longer supported, particularly given their effect on the developing world countries. Sadly, one man’s subsidy is another man’s poverty in another part of the world.
Opposition Members have mentioned the Office for National Statistics. An official launch will be held by Michael Scholar to celebrate the ONS’s new independence. It was suggested that the Act that introduced that independence was of great importance, which it is, given the cynicism about national statistics. Under that Act, the full independence of the ONS will be guaranteed. The office is located in my constituency, and I remember being approached many years ago by statisticians who felt that their work and their integrity were being undermined by a previous Prime Minister, who was moving the ONS from one Department to another, and who had a vested interest in seeing that the figures might be fiddled in some way. I had a letter from Margaret Thatcher at the time, saying what an
unworthy thought that would be. But there was that possibility and suspicion throughout that time. I look forward to the fact that when we debate these issues in future, we will know that the statistics provided by the ONS are genuinely independent and objective.
9.7 pm
Peter Bottomley (Worthing, West) (Con): I shall not speak for long.
Labour Members have been talking about employment and employment rates. Much to most people’s surprise, I spent six years as a junior Minister ending in 1990, when the employment rate was higher than it is now—that is my guess from the charts in the Red Book. I shall speak mainly, however, about trying to get more consistency into the Red Book.
Will Ministers discuss with the Statistics Commission whether it is appropriate to have such odd runs of years in its figures? Obviously, figures on projections for population growth over the next 30 years are rather different from those on the balance of payments over the past 30 years. However, I shall give some illustrative examples, which will not be very exciting.
On page 11, in charts 1.1 and 1.2, on Government expenditure by function and Government receipts, it would be useful to have a run showing percentages, to illuminate how we are letting Government spend money. On page 18, chart 2.1 on inflation performance and expectations from 1990 to 2008 gives an 18-year run of years. Incidentally, in some of the graphs, it would be useful to have a log projection, rather than just a linear one, when the figures have changed significantly.
I will not go through the whole list, although I would if I had more time. The chart on meeting the golden rule has a 14-year run of years, and the chart on protecting investment has a 33-year run of years, I think, unless I have misread my own figures. On page 29, the chart on meeting the sustainable investment rule has a 16-year run of years. So it goes on. I could go through a whole series.
I suggest that Ministers ask whether those different runs of years were put in because they asked for them, or because the officials suggested them. I suspect that political advisers said before Ministers saw them, “I don’t think the Minister would want people to see that. If you don’t show the Minister, they can deny that they were the ones who made the decision.” I ask for an explanation of the run of years, preferably in advance of the Red Book coming out.
Instead of just having a list of tables and charts at the back of the Red Book, it would also be useful to have a list of boxes. I should like to see an index, and in particular I should like to see the cost of the Red Book reduced from £45 to about £20. We do not need the photographs, although it is nice to see ethnic balance. Of the 10 people pictured, five are not white, five are, and there is one random hand floating around—but we do not need that kind of thing, however balanced it may be.
Perhaps Ministers could ask an archivist to show them a Red Book produced, say, 30 years ago, and ask what the cost would be of printing it in that format. They would find that it would be substantially lower, which would reduce the costs incurred by those who want to see what we are doing.
I should like to know whether a chart is available to Ministers showing where the economic cycle starts each year. We know that there have been changes, so why not provide the information? I also wish that the Government had managed to include a chart explaining the retail prices index. The consumer prices index is a separate thing: we know perfectly well that it is at 2.5 per cent., although it would have been at 2.2 per cent. if the methodology had been different. The retail prices index is at 4.1 per cent., which matters more to my constituents. The information that the price of strawberries went down in February is not much use to them, nor is information about the drop in the price of hobbies and games. They are interested in the real prices of real things, and the retail prices index matters to them.
9.11 pm
Greg Clark (Tunbridge Wells) (Con): It is a pleasure to follow my hon. Friend the Member for Worthing, West (Peter Bottomley), whose speech was admirably concise. I am grateful to him for that.
I want to say something about child poverty, which has featured in speeches by Members on both sides of the House since the beginning of the Budget debate. On Thursday, a source of contention between the two Front Benches was how Government and Opposition could aspire to reach the 2010 as well as the 2020 target. I think it both possible and desirable to eradicate child poverty in a way that fulfils the Government’s commitment. If we define 60 per cent. of median earnings as the poverty threshold, it is entirely possible to raise people from below that level to above it.
There are two ways of doing that. First, there is what I would call the sustainable way. That involves creating circumstances in which people’s earnings carry them from below the threshold to above it. The second way is to regard child poverty as an entirely fiscal phenomenon and to make financial transfers from one group to another, thus topping up poorer people’s incomes and raising them above the threshold. That is not a sustainable method, and I think we should draw a distinction between the two. Our ambition to eradicate child poverty should go hand in hand with enabling people to stand on their own two feet, and to earn enough from the product of their labours to sustain themselves and their families.
I find it slightly depressing that in recent weeks the debate about child poverty has concentrated purely on the fiscal transfer, as if that were the only possible way of addressing the problem. If, through a wave of the Chancellor’s magic wand in subsequent Budgets, we were to increase the contribution of state benefits to take everyone who is currently below the 60 per cent. level above it—so that, technically, poverty would have been abolished—would we see an absence of all the social problems that we associate with poverty? Absolutely not. Many of them would continue to exist. The speech made today by the right hon. Member for Darlington (Mr. Milburn) made it clear that poverty is as much a symptom of other social problems as it is a self-contained phenomenon to be abolished. We need a more sophisticated understanding of it.
No one has captured that point better than my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith). He identified a range of
contributors to child poverty, from poor housing through poor education and dependence on drugs to family breakdown. Those are the issues that we must tackle if we are to make a sustainable dent in child poverty and, ultimately, eradicate it.
This should not be an issue of contention between both sides. One of the remarkable contributions of the right hon. Member for Darlington today was to suggest that we take a broader view. In that, he is consistent. I was struck by a speech he made recently in which, like today, he quoted Professor Amartya Sen, the Nobel prize-winning economist who has noted that social equality is best tackled if we tackle the root causes not the symptoms. The right hon. Gentleman said that that must mean moving beyond simply correcting low wages and family poverty after the event towards policies that spread opportunity and help people realise their own aspirations for progress. Correcting low wages after the event should not be enough. It might be a temporary palliative, but we should have higher ambitions.
Peter Bottomley: I am sure that the right hon. Member for Darlington (Mr. Milburn) is right to say that we need to go beyond trying to make sure that when people start having children, when their incomes are low and their needs high, money helps, but is not it odd that a Nobel prize winner can be quoted with approval yet when Keith Joseph said roughly the same thing, the whole of the media and the Labour party jumped on him?
Greg Clark: As my hon. Friend points out, times change. I welcome the conversion of the right hon. Member for Darlington to the cause. At the moment, the debate is all about precisely what the right hon. Gentleman suggests we avoid doing: correcting low incomes after the event, rather than tackling the root causes. Last year 2.6 million families received tax credits, excluding the family element of the child tax credit. The number of people receiving this element of tax credit is double what it was in 2001 and treble what it was in 1997. The consequence is that 1 million children are above the poverty line by less than they receive in tax credits. Everyone must be relieved and grateful that they have been put above the poverty line and that their circumstances are improved, but do not let us pretend for one moment that the problem of child poverty has been solved. It has been masked or disguised. Those 1 million children are effectively in poverty and the state is intervening to drag them above the line. That is not a sustainable recipe. They need tax credits to escape poverty, so poverty has not diminished in that sense.
The Chancellor has a golden rule and a sustainable investment rule—a golden rule suggesting that we borrow only to invest, backed by a sustainable investment rule that makes sure that borrowing does not reach such a high proportion of national income that it dominates it. In tackling child poverty, we should have a rule that says that we must eradicate child poverty, but that the means of doing so should come from income and the ability of people to earn for themselves. That is the only true sustainable means of tackling child poverty. That makes economic and personal sense for the people concerned. It makes economic
sense, because if we are to compete internationally the idea that we permanently have a sub-optimal equilibrium of a payment running into many billions of pounds that we have to sustain to keep society together is not acceptable.
That is the equivalent of the losses of the nationalised industries during the 1970s, when we accepted that companies such as British Steel and British Leyland could not possibly earn enough in their markets to sustain themselves and had to be given a permanent subvention from the Government. It is the equivalent today of the common agricultural policy, where rather than just protecting the incomes of farmers in times of volatility, it is permanently acting as a tax on every taxpayer in the EU and on the consumers of agricultural products.
These are measures that were meant to be temporary but have become permanent, and they all cost. If we are to be competitive, we must not get back into the way of thinking that these permanent drains on our resources are somehow acceptable. They should be temporary. Our ambition must be to get people back into jobs by equipping them with skills, incentives and motivation so that we regard it as a failure if, having eradicated child poverty in 10 years’ time, we have not also made sure that that was down to the sustainable abilities of people to earn their income, rather than transfers from the state.
9.19 pm
Mr. Philip Hammond (Runnymede and Weybridge) (Con): This has been an interesting debate, although it has not been particularly well attended by Labour Back Benchers. We started with 11 of them when the Secretary of State stood up, and at the low point of his speech we were down to six. He took what might be regarded as a sensible approach in the circumstances: he adopted the micro-economic approach to analysing the Budget. He focused on the enterprise White Paper, which some in the business community might think of as being akin to fiddling while Rome burns. He spent 20 minutes explaining the details of the well-meaning but rather small-scale proposals in the White Paper, when most of his audience were more concerned about the macro-economic backdrop, which seems to be deteriorating by the hour. Interestingly, he told us that the Government wanted to ensure access to finance for entrepreneurs, but then supported the slapping of an 80 per cent. tax increase on business angels. We know that he fought the cause internally, but ultimately the clunking fist won.
My hon. Friend the Member for Rutland and Melton (Alan Duncan) countered the Secretary of State’s narrow approach by focusing on the macro-economic backdrop to the Budget. He also reminded the House that following the Budget 73 per cent. of people believe that it will contribute to a downturn in the UK economy—perhaps showing us that the man in the street has a better grasp than the man in the Treasury, and also perhaps accounting for the recently published opinion poll showing that Labour’s standing on economic competence has fallen from 7 per cent. before the Budget to minus 8 per cent.—in other words, there is an 8 per cent. Conservative lead following the Budget.
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