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The Chancellor has shown that, although he is cautious, he is a safe pair of hands. He has spurned the idea of any kind of giveaway, and he has not played to the gallery in managing this Budget. People can respect him as a man who will continue to handle the economy effectively-even if it is not in as bold or as fair a way as
I would like-and they will need to contrast that with the alternative. The Conservatives have always argued against the very measures that have seen us through this difficult time.
The Conservatives are now calling for faster spending cuts, but we can already see a huge drop in public spending equal to 1.6 per cent. of GDP between now and the next financial year, because of the end of the fiscal stimulus. That is a huge amount for one year, and not enough has been said about that. We are the only G20 country besides Argentina to have withdrawn the fiscal stimulus so rapidly, and perhaps we need to look at that. We need to reduce our spending, but I would also like to see some of the infrastructure projects that we sorely need coming to fruition after the election. I also want to see our spending on research and development reinstated. Those decisions would not counter the recovery or our ability to reduce our structural deficit; I believe that they would assist in that aim.
It has been a great pleasure to be a Member of this House over the past 18 years. Like other Members who are retiring, I thank my constituents for giving me the opportunity to represent them here and to experience things in which I would never have had the chance to participate had I not been a Member of Parliament. I have met people from all walks of life, both humble and highly elevated, and that has been a great honour.
The House and parliamentarians are held in quite low esteem at the moment, to put it mildly. There is a common view out there that we are all the same, but I emphatically challenge that. We are not all the same; there are differences between the parties and within them. I hope that more people will take the opportunity to vote in this election than have done so in the recent past, and that when they come to put their cross against a name, they will not only consider which party they want to lead us into the future-or whether to vote tactically, if they want a hung Parliament-but look at the individual candidates.
If people want to know what their MP has been up to, they can now visit an excellent website called theyworkforyou.com. I can claim some credit for setting up that website, although I am not sure whether Members will thank me for it. The people behind the website became aware of some important parliamentary questions I had asked about a man called Jose Bustani, the general secretary of an organisation for the prevention of chemical weapons, who was sacked-
Madam Deputy Speaker (Sylvia Heal): Order. I hesitate to interrupt the hon. Lady, but I know that she is well aware that this afternoon's debate is about the Budget.
Lynne Jones: Thank you, Madam Deputy Speaker. I am going somewhat off the subject.
John Hemming (Birmingham, Yardley) (LD): I have been one of the hon. Lady's constituents since 1982 when she defeated me in Kings Norton ward on Birmingham city council. Although I have never voted for her, I want to put it on record that she has been an excellent constituency Member of Parliament.
Lynne Jones: I know of at least one other parliamentary colleague who is my constituent. It is a wonderfully diverse constituency as currently composed.
To finish my contribution, the website I mentioned is important because it allows our constituents to see what we are doing generally and what we are talking about today as we debate the Budget. It was set up because much of what we say here is not reported and is not easily accessible; on the website it is, and every constituent can see what we have been up to while we have been in Parliament and judge us on our performance. They will see that MPs are very different in what they say and what they do, as well as in how much they say and how much they do. I hope that people will take into account the quality of the individual candidate as well as the party they want to see elected.
Madam Deputy Speaker: Order. I have allowed the hon. Lady some latitude, but I know that a number of other Members are waiting to contribute to the debate. I hope that she will therefore continue, if she wishes to, and address her comments to the Budget.
Lynne Jones: Thank you, Madam Deputy Speaker. I was drawing my remarks to a close. I look forward to hearing a response from the Treasury Bench on my concerns about capital investment and inequality.
5.37 pm
Mr. David Heath (Somerton and Frome) (LD): This afternoon's debate has had a somewhat timeless quality about it-inevitably, given that respected Members of all parties are probably addressing the House for the last time. I wish them all well in their future careers or in retirement.
The hon. Member for Birmingham, Selly Oak (Lynne Jones) said that the Chancellor of the Exchequer had not played to the Gallery today; well, she can say that again. This Budget was a disappointment, but a very predictable one. I waited throughout for the rabbit to be pulled out of the hat. Normally, there is a rabbit; I predicted that this time it would be a rather scrawny, emaciated or half-skinned rabbit, but I thought there would be one. In fact, there was none. This was a holding statement of a Budget to get to the other side of the election.
What worries me about this Budget is that the British public expected and hoped for three things from it. The first, as touched on by other Members, is honesty about the dire position the country is in and how we are going to put it right by providing the deficit reduction that we all know has to be undertaken. It is absolute nonsense for the parties to pretend that one is committed to cuts while the other is committed to investment. We are going to have to make reductions in public expenditure; the question is how we do that without affecting front-line services or our constituents in ways that are deleterious either to the economy or to their personal prospects. If we simply deny the fact that that has to be done and that the national debt is increasing by £450 million each day, we will not ring true to our constituents. They know the problems and they know that the country has to face up to them.
The tragedy is that we have not heard from the Government the details of what they would do if they were in government after the election. Nor have we heard from the Conservatives what they would do if they were in a position to do it after the election. We know that serious reductions in expenditure will have to be made, which will mean difficult choices, and we need to have that grown-up debate.
The second thing I believe people wanted from the Budget was a sense of fairness-the fairness referred to by the hon. Member for Birmingham, Selly Oak. I wanted to see a move towards a fairer taxation system, but I did not see one. I find it almost impossible to believe that after 13 years of a Labour Government, we have increased the inequality to which the hon. Lady referred-that we have a system that taxes the lowest paid proportionately more than the most well-off in our society. Increasing the threshold would have been the right way of dealing with that in the short term, but we heard nothing at all. There is stasis in the allowances, which means an even more regressive taxation system next year than the one we have had this year.
I wanted to see fairness in public-sector pay, but we heard that there was to be a flat-rate 1 per cent. cap on it. That is not fair. It is not fair to the people at the bottom of the heap, for whom 1 per cent. is a pittance, although I am sure it is very fair to the chief executives on their £200,000-a-year salaries. They will be very happy with a 1 per cent. increase, because it will buy them many more things than it will buy the home help who receives the same 1 per cent. A flat-rate cash increase across the public sector would have been much fairer than a percentage increase.
I wanted to hear about fairness in public services, and a reduction of the inequalities in those services. I still cannot explain to my constituents why a child in a school in Somerset receives, on average, £700 a year less for his or her education than the average child in England, and thousands of pounds less than a child in a leafy London suburb. That cannot be right. It is simply unfair, and it is time that it changed.
Barry Gardiner: Will the hon. Gentleman give way?
Mr. Heath: I will, very briefly. I do not want to speak for as long as some other Members have.
Barry Gardiner: I am grateful to the hon. Gentleman. Let me offer him an explanation. In the schools in my constituency, 130 different languages are spoken by the children. In one class in one of my schools a couple of years ago, 29 reception-class children had 21 first languages. The learning support needs of classes such as that require those children to receive more per capita than the children in the hon. Gentleman's constituency.
Mr. Heath: I am sure that there are also middle-class, articulate children in those schools who are receiving the same premium. That is the problem. If the premium followed the individual child so that those with needs received the extra money, there would be fairness across the system, but that is not what happens at present. We currently have a crude formula that rewards some parts of the country at the expense of others.
The issue of fairness applies to housing as well. It is simply not fair that some people can never afford to be housed in the area in which they grew up because there is no rented sector left and no affordable houses for them to buy, and they are priced out of the market. There will not be fairness in the system until we have fairness in housing.
Mr. Heath: I can tell that the more I speak, the more interventions I shall take and the longer other speakers will be excluded. However, I will give way briefly.
Stewart Hosie: The Chancellor has removed stamp duty from homes costing less than £250,000 for first-time buyers. Does the hon. Gentleman know of any first-time buyers in his constituency who could possibly raise the £25,000 to £50,000 deposit that a first-time buyer would need to buy a house at that price?
Mr. Heath: That is precisely the point. In my area, although perhaps not in the hon. Gentleman's, the ratio in respect of average earnings and average house prices is the highest in the country. People are trying to buy into a market that is determined by people from other parts of the country with far more money than they have, which is simply not fair.
The third element of the Budget that I would have liked to see is a real emphasis on reconstruction: reconstruction of industry, reconstruction of green investment-to be fair, the Chancellor did indicate that he was moving towards that, but I should like to see it actually happen-and reconstruction of the financial sector. Why are we so timid about dealing with the problems of the banks? Why are we so timid about recognising the value of the mutual sector and revitalising it? Why are we so timid about recognising that we cannot expect a retail bank and a casino bank to co-exist in the same organisation and work effectively together? It worries me that we have banks that are too big to fail. "Too big to fail" is anathema to me, because it means they are holding this country to ransom. They assume that the taxpayer will prop them up, and they will continue to assume that until they are cut down to size, which is what we need to do.
Let us look at the Chancellor's boasts. He says that he has got more income than he expected from the tax on bankers' bonuses; he has attracted £2 billion, which is twice as much as he had thought. The reason for that is that the banks have been paying out £4 billion in bonuses because there is a 50 per cent. tax rate. What a failure of policy! A policy that was supposed to restrict the high rollers from paying out these extraordinary bonuses has actually resulted in their being doubled in order to pay the tax bill. It is not a successful strategy, therefore.
We have seen the effect of the recession on businesses. I hope we are coming out of the recession, but I see the scars left behind: the shop closures in the high streets of the small towns and villages in my constituency. Some of those retail premises-in particular those in villages-will never reopen. The 6 per cent. shrinkage in the economy has had a dramatic effect on a lot of small businesses, and we now need the processes of local investment. Although we need the banks to be lending money, of course, we also need to find ways of localising, rather than nationalising, investment and providing opportunities. I would like there to be local stock exchanges, for instance, as they would provide investment income at a regional level. I would also like us to do something effective and long term about the business rates, which still cripple a lot of businesses.
Turning to matters affecting individuals, I have already touched on tax allowances, but the council tax continues to increase. The hon. Member for Birmingham, Selly Oak says she is supportive of council tax, but I say that it is an unfair tax because it is not related to the ability to pay, and because it increases every year, causing real problems for people on low or fixed incomes, including pensioners. Even the way it is administered is unfair.
Lynne Jones: Will the hon. Gentleman give way?
On council tax, let me quickly mention a case involving a constituent of mine, as I find the way he has been treated by Mendip district council extraordinary. This chap is being pursued for a council tax debt that was occasioned not by him, but by a former flatmate whom he had no reason to suppose had not paid and to whom he was not related. They defaulted and cannot now be found, and as a consequence my constituent has an attachment of earnings against his very limited income: £3.30 a week for a chap who is on £40 a week, for a debt he did not incur and for which he should have no responsibility, from a council that can afford to waive it. That is outrageous and immoral, and I hope we can change the way such cases are handled.
Council tax impacts on pensioners in particular, and I am worried that we still have not got the earnings link for the basic state pension. After all these years of promising, it is still something for tomorrow-although at present I do not want it to come tomorrow, because I want it to be introduced when earnings are rising significantly so that pensions also rise significantly. It is time that we restored that link, however. It is also disgraceful that the state earnings-related pension scheme-SERPS-and additional pensions have been frozen this year. We should be doing much more to provide fairness for pensioners.
It also worries me that one of the effects of this recession is to produce a cohort of young people who leave school and university with very limited prospects of finding employment. They will be overtaken by their successors unless we are prepared to do something about that. I applaud what the Chancellor had to say about extending the guarantee scheme, but I wish he would reduce the time requirement for trying to find training and employment from six to three months, as some of us have advocated, because six months is a long time in a young person's life.
I hear what is said about extra university places, but I look at the figures and they do not seem to add up. According to my back-of-the-envelope calculations, the figures seem to account for only about half the cost of those university places, so I do not know how they will be afforded. However, I do not honestly think that university places are necessarily where the investment should be made anyway. Further education is where we are seeing a starvation of funds and a lack of the right sort of skills training, which will be essential in producing the tradesmen and artisans of the future-the people we desperately need to run the economy.
I want to touch on two or three issues that affect my constituency directly. The first is the hike in fuel duty. It has been staged, but it is still there. We will still have a 1p rise, then another, and then another again, with an extra 3p on fuel duty by the end of the year. For people
living in rural areas-we cannot say this often enough, can we?-having personal transport, in the form or a car, is not a luxury; it is a necessity, because they cannot go to work, go to the shops or live their lives without one. I always mention the fact that my village has one bus a week. How could anyone live their life in that village if they did not have access to private transport? Yet every time the petrol bill goes up, those who rely on their cars become one penny poorer. We need to address the issue and find alternative ways of raising revenue without continually using fuel duty.
Lembit Öpik (Montgomeryshire) (LD): I applaud my hon. Friend for his erudite and insightful observations. Does he agree that the injustice is compounded by the fact that fuel is cheaper in cities than in rural areas? That means that the people who need private transport the most pay the most for it.
Mr. Heath: That is absolutely the case. [ Interruption. ] I hear the hon. Member for Wolverhampton, South-West (Rob Marris)-sotto voce and from a sedentary position-saying, "Very green." However, there are green alternatives, such as a road pricing solution, which would dissuade people from using private cars where there were proper public transport alternatives, but not penalise people who rely on their cars because they have no alternative. That is the sort of scheme I would like to see.
While I am on the subject of fuel, I have an awful lot of hauliers in my constituency whose businesses are facing straitened circumstances. They are constantly under attack, in competitive terms, from hauliers from continental Europe, who pay a great deal less for their fuel. There is an easy solution to that, one I advocate and would have liked to hear today: to restrict the amount of fuel that can be brought into this country in a lorry, which, incidentally, would also have a safety bonus. Doing that would mean that hauliers from continental Europe working in this country would have to pay our price for diesel, not a continental price. At the moment they nip over with a full tank, do their business in Britain, undercutting our hauliers, and then go back and fill up on the other side of the channel. That cannot be a proper competitive practice.
Mr. Heath: This will be the very last intervention.
Barry Gardiner: I only mean to assist the hon. Gentleman. Does he agree that one thing that would go a long way to resolving the situation would be for the UK to introduce a vignette for hauliers from the continent?
Mr. Heath: There is a lot to be said for that, but we are not there yet. I am suggesting a cheap and easy solution that could be instituted immediately, and I would love to see that happen.
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