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My second, brief point is that I notice in the detail of the Budget papers that aggregate tax has gone up by 10p again. Aggregate tax was theoretically intended to be an environmental tax, but it has never acted as one. It has never prevented the use of primary aggregates; all it has done is increase their cost. Part of the justification was that the money would be recycled into quarrying areas such as the east Mendips, where it could mitigate
some of the environmental effects of quarrying, but that money has now been taken away. Now, this money is spread out in an amorphous way across any body that thinks it might have a useful purpose for it. We are not even getting the direct benefit of the aggregates levy, and it is time the policy was revisited.
My main bone of contention-[Hon. Members: "Cider!"] I make no apologies for being a clichéd Somerset Member-I am going to stand up for the cider makers and apple growers of my constituency, because if I do not, who will? To increase cider duty by 10 per cent., as has been suggested, and for the leader of the Conservative party to stand up and boast that it was his idea, which the Government had filched, are things I find very difficult to take.
I do not know what the Chancellor of the Exchequer means by saying that there is anomaly when it comes to cider. The anomaly can be found in the fact that people have work, jobs and livelihoods in my part of the country, where this is a significant industry, and that the direct result of this change today will be to reverse the expansion of the industry over the past few years, to put people out of work, to close down cider makers and to grub up orchards. That is a disastrous consequence of an ill thought through policy.
If the Government's intention was to deal with the sort of high-strength industrial alcohol that has barely seen an apple in its lifetime-that has only seen a little bit of concentrate-they should have done that. Let them deal with the stuff that is sold in the supermarkets too cheaply. However, what they have done instead will affect the artisan traditional cider maker. It will put them out of business. It could have been avoided if there had been a quota or a volume limit, so that the tax did not apply if production was below a certain volume. They decided not to do that; they did not listen. They do not understand that cider orchards take a long time to plant and to bring into production, and that the return and yield on the capital takes time to mature. All of that has been put at risk by what the Government have decided today.
I have precedence on my side. In my constituency, near Curry Rivel, there is a monument called the Burton Pynsent monument. It was erected by William Pitt in thanks to Sir William Pynsent, who had given over the estate to William Pitt as a thank you for opposing cider tax back in the 18th century-
Rob Marris: Is that what you're up to?
Mr. Heath: I am not saying that I want another monument-what I want is equity and fairness for the cider makers and apple growers in my constituency. If I succeed and they want to put up another monument in Curry Rivel, I shall be delighted.
This is a retrogressive step that I bitterly oppose, and I know that it will be enormously resented by people in the west country. They will simply say that this is vindictive, that the Labour Government do not understand the west country and that they think, "Cider? Who cares about cider? We will have a go at them." For the Government to have colluded with the leader of the Conservative party in doing this is a disgrace. I, for one,
will remain a revolting peasant and stand up for the people in my constituency who will be affected by this and who will lose their jobs. I shall say no.
5.58 pm
Barry Gardiner (Brent, North) (Lab): It is a pleasure to follow the hon. Member for Somerton and Frome (Mr. Heath). I cannot say that I wish to see a monument erected to him as a result of his speech, but I understand that he is championing the cause of his constituents.
The debate on the Budget is always exceedingly good on the first day, because people arrive and they have to respond to what has gone on. I have learned a great deal from many of the hon. Members who have spoken in the Chamber today. I particularly wanted to highlight the remarks made by the hon. Member for Esher and Walton (Mr. Taylor), who is retiring from this House. He spoke with his customary balance and internationalism and the House is certainly losing a considerable Member.
I also learned a great deal from the right hon. Member for Fylde (Mr. Jack), who is also leaving the House. I thought that his remarks were particularly perceptive. I must say that for the first time ever I agreed with some of the things that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said, too. I shall try to get to that in my remarks, which I shall keep brief as I appreciate that many other Members want to speak.
I believe that the important thing is that the Budget should be about confidence. Ultimately, there are key elements in the Budget, and key problems facing the country, that need to be tackled. I shall highlight five things, and speak to one or two in particular.
My first two points link confidence and bond yields. The key issue that has hung over the debate right from the beginning has been the level of Government debt. There was an exchange earlier in our proceedings about Government bonds, bond yields, and the effect of Government debt on confidence and therefore on those bonds and yields. Ultimately, all that has an effect on interest rates and inflation, and subsequently on debt again. However, I believe that there is more to be said about that circle, which is very much at the heart of the balancing act that the Chancellor had to engage in this afternoon. Right at the centre of that circle is this issue of confidence.
There are three other issues that I think are critical, and this is where I want to pick up on the remarks made by the right hon. Member for Hitchin and Harpenden. He was one the few Members to speak about productivity this afternoon, and I believe that he was absolutely right to highlight that.
I believe that, essentially, the issue of productivity is a problem of management, in both the public and private sectors. The management culture in our country is not adequate, and it is not capable of producing the levels of productivity that we need if we are to compete with our competitor countries.
Earlier this month, I tabled a written question to each Government Department. It asked the Secretary of State in each
"how many (a) disciplinary and (b) capability procedures have been initiated how many (a) disciplinary and (b) capability procedures have been (i) initiated and (ii) completed in his Department in each of the last five years; how much time on average was taken to complete each type of procedure in each such year; how many
and what proportion of his Department's staff were subject to each type of procedure in each such year; and how many and what proportion of each type of procedure resulted in the dismissal of the member of staff."-[ Official Report, 17 March 2010; Vol. 507, c. 860W.]
I have not yet got a full set of responses, but I do have a very thick pile of them. What is astonishing to me is that it is clear that one's chance of being deemed in need of a capability procedure is less than 1:100; in fact, the odds are less than 1:1,000 that action will be taken on such a procedure and result in a dismissal.
I do not claim to be a great statistician, but I know that there is something called a bell curve. I also know that many Departments returned a nil figure for those subject to capability procedures. I believe that there is a profound failure of management in the public sector, the civil service and Government Departments, and that it extends to industry as well. That failure is partly responsible for the failure of productivity in industry and in Government.
Let me say that I believe that that failure is compounded by the fact that we do something that we-and Labour Members in particular-are quite proud of. We say that in any situation where cuts are being made we should seek voluntary redundancies first, with compulsory redundancies only as a last resort. I understand why that seems like a good thing and the drive to achieve it. However, one must appreciate that it means that people who work in a Department or industry who know that they can go elsewhere and walk into a job do so. They take the redundancy package and pocket several thousands pounds, which is very nice, say, "Thank you very much," and then walk into a job elsewhere. That means that the people who know that they cannot walk into a job elsewhere stay in the Department, which means that the Department becomes progressively less competent and productive.
That problem plagues not only the public sector, to which I am referring, but industry and the private sector, but I believe that it is compounded in Government Departments by the stress that is constantly put on outputs and activity. The focus is always on saying, "We've spent this much money, launched these initiatives and done these good things," and not on outcomes and achievements. They do not ask, "How have we advanced our key performance indicators? How many people have not died as a result of our intervention? How many gains have we made in the areas where we need to make them?" The civil service is always keen to push outputs and activity rather than be held to account in terms of outcomes and achievement. Unless we grapple with those management issues in the public sector, we will not achieve the advances in productivity that we need. Frankly, if cuts in public spending simply mean more voluntary redundancies, they may actually result in less efficient Departments that achieve less for the Government, albeit spending less at the same time.
There is a challenge for the Government and the public sector, but those points also apply to the private sector. Unless the management bodies in this country, including the CBI and the Institute of Directors, begin to take good management seriously, and unless we rigorously enforce that throughout the public sector, we are not going to achieve the gains for the public purse that I believe we would all wish to see.
I do not want to detain the House for long this afternoon, because other Members, some of whom will
leave the House soon, want to speak. However, the third issue I wanted to raise is the green and high-tech stimulus. Although I welcome the £1 billion high-tech start-up investment fund that was set up-an excellent initiative-I want to point out our record regarding our stimulus and growth package directly to those on the Treasury Bench. According to the UN or the HSBC, between 6 and 16 per cent. of our package is green stimulus; but the same sources record South Korea's stimulus and growth package as between 69 and 80 per cent. green stimulus.
Let us have our £1 billion growth fund and our investment in high-tech and green technologies-that absolutely represents the way and the jobs of the future-but let us not kid ourselves that we have been doing that effectively when the levels of green investment in our stimulus and growth package are so pathetic. The Treasury absolutely has to sort that out. That is important because we need young people to get training, skills and qualifications in those sectors, where the jobs of the future will be.
That brings me to the final issue on which I want to focus-the importance of youth skills. The hon. Member for Somerton and Frome touched on this issue, and I absolutely agree with him. I welcome the extension of the youth guarantee, which is important and is one feature of the Budget that should be welcomed across the House. It is important to look at the differential support that is being given to higher and further education. The sector that is really suffering is further education, but much of the noise in the media has been captured by those very articulate chancellors and vice-chancellors of universities who are able to make a big noise. If one is honest about it, much of that has been about laying down markers for the future.
It is absolutely essential that we reconsider the package of measures that we have to provide young people with skills and training in certain industries. It is important to create avenues through which they can take apprenticeships, be encouraged to set up starter businesses out of universities, so that growth units come out of universities, and to develop the new technologies that will create the jobs of the future and gradually bring our economy through the recession.
In drawing my remarks to a close, let me say simply that the Government need to look much more carefully at the incentives they offer to the private sector to encourage productivity, because they have not been developed. We have heard about the roll-over of the capital allowances scheme for a further year to encourage investment in businesses-something else that should be welcomed by both sides of the House. However, I want much more innovative thinking on giving rewards through the tax structure for productivity in the private sector. We should be incentivising and rewarding companies for increasing their per capita output, for example, and it is a failure of this House and the Treasury that we have not been able to do so.
6.13 pm
Stewart Hosie (Dundee, East) (SNP):
It has been a pleasure to hear some of today's valedictory speeches. It has also been a pleasure to follow the hon. Member for Brent, North (Barry Gardiner), who mentioned the fiscal stimulus. The hon. Member for Birmingham,
Selly Oak (Lynne Jones) also mentioned the fiscal stimulus. Indeed, one of the few times that she praised the Government was when she said that they had taken a lead in some of their work to tackle the difficulties of the recession, but the UK's fiscal stimulus package, which relates directly to the Budget, came after the first stimulus package in the United States. It also came after the packages introduced by the French, with their 100,000 subsidised work contracts, by the Spanish and by the Japanese, who provided $20 billion simply to help households with mortgages. That is almost as much as the total UK fiscal stimulus package. Our package even came after Germany's first $50 billion stimulus-so although I agree with many of the things that have been done, the idea that the UK took the lead is false.
The hon. Lady was correct, however, when she quoted the International Monetary Fund later in her speech in relation to the suggestion that the UK is the only G7 economy, and one of only two in the G20, fully to withdraw its fiscal stimulus package in 2010. She was also right to be critical about investment, and this relates directly to growth. If we look at investment in productive assets for the future-in gross fixed capital formation- since the Government came to power, we find that on the OECD 12 list, the UK beat Russia for the first three years after 1997, and Turkey for the next two, but was beaten by everyone else, and has been bottom of the pile every year since then. Even on the wider G20 scoring for the last full year, the UK's investment was larger than only Argentina's and Brazil's, and of course our investment in gross fixed capital formation has been below the EU average in every year since the Government came to power.
Today's Budget speech was a pretty miserable epitaph after 13 years, coming at a time when unemployment is higher than it was under the Tories when Labour came to power in 1997. The speech confirmed that the deficit, even at £167 billion, will still be some 12 per cent. of GDP. It confirmed a national debt of £1 trillion, and £1.1 trillion next year, and that that will rise on the Treasury calculation to just shy of 90 per cent. of GDP in a few years.
Of course, the Budget also confirmed the cut to the Scottish budget in the coming year. The budget was forecast in the 2008 pre-Budget report at £30 billion-£3.5 billion of capital and £26.5 billion of revenue-but today's figures for 2010-11 are £3.2 billion and £26.2 billion, or a total of £29.4 billion, which represents a cut in the anticipated budget of at least £500 million.
The Chancellor also confirmed that no matter what the Government say, their approach to tackling the problems, and especially the deficit, remains one of deep and savage cuts. It is still expected that £57 billion will be taken out of consumption-taken out of the economy-in 2013-14. That is made up of nearly £20 billion in tax rises and nearly £40 billion in cuts, and I ask the Government how they can conclude that taking the equivalent of 3 per cent. of GDP in consumption out of the economy in a single year will do anything other than tip the economy back into recession, especially when the GDP forecasts are based on growth rates of 3.25 per cent. in four of the next five years. We have already heard that that would be at least a point above trend growth, and we are coming from a difficult situation in
which a great deal of capacity and output has been lost. I suspect that few believe those growth rates, but if we do not have growth of 3.25 per cent. in four of the next five years, and the Government stick to the plan in the Fiscal Responsibility Bill, the cuts will need to be even deeper. We will then run the risk that if we hit a downturn, we will not have the flexibility to use even the automatic stabilisers, let alone a fiscal stimulus, if we thought that that was required.
The Chancellor suggested that he wanted a Budget for growth, but he instead delivered a recipe for disaster, not least because although he restructured the fuel duty increase-we are now getting three 1p increases over the next year-that will add to the three increases in December 2008, April 2009 and September 2009. Those six fuel duty increases in the space of barely two years will represent something close to a 16 per cent. rise in fuel duty, which is massively above inflation, and that will put more pressure on hauliers and families, as well as being an inflationary measure in its own right.
I am indebted to Alliance Trust for its most recent inflation report, which tells us that real inflation for people between the ages of 50 and 64 is 4.5 per cent.-some 50 per cent. higher than the official rate. That means that with national insurance going up, which was barely mentioned today, and tax allowances frozen, which was possibly not mentioned at all today, plus the rises in fuel duty, we are seeing a very real cut in the living standards of ordinary people. The bankers still got their bonuses, and the banks, not the bankers, paid the tax-but again under this Government it is ordinary people who will pay the price.
What the Budget failed to do, and the Chancellor ought to have done, is to recognise that recovery remains fragile and deliver a continued fiscal stimulus to ensure sustainable recovery. Instead, as I said, he confirmed, in effect, that the UK is the only G7 economy fully to withdraw its fiscal stimulus package this year. The fact that total managed expenditure is down £2.7 billion on the forecast given in the PBR late last year tells its own story.
If we were serious about rebalancing the economy to make up for the 1 million manufacturing jobs lost before the recession and the many lost during it, we would have had far more information about the various incentives for growth. I genuinely hope that the equity and venture capital fund for growth works. I hope that RBS and Lloyds will lend money, and that that was not simply an assertion-although when we hear about the actuality that followed the rhetoric of the past year, I am not so sure.
I hope the Government are telling the truth when they say that they will introduce a system for the video games industry similar to that used for the film industry; that is dreadfully important in Dundee. Yet the Red Book tells us that in terms of assistance for video games, there will be no cost to the Exchequer in 2010-11. That means no action in 2010-11. Another industry sector will have to wait down the line while its competitors in Canada and other countries are racing ahead with incentives and looking to take the work and the contracts away from the UK.
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