Tourism is also about supporting the small and medium-sized business. It is about the tax break on the furnished holiday let, the cost of the visa to enter this country, the
price of air passenger duty and the scale of the red tape that faces the B and B. What can tourism do for the country? It has low barriers of entry-it is easy to get into tourism. There are favourable exchange rates, and a Deloitte & Touche report, which was produced not long ago, proved that for every pound VisitBritain spends abroad, it brings in around £25 to this country. That is not a bad investment. How many Departments can one give money to and then make more money from?
Iceland is not a place that one might think of as a tourist destination-it is certainly not a place where one would want to invest one's money anymore-but as a result of what has happened to its finances, it is turning to tourism to mend its economy. It is trying to bring foreign exchange in by promoting and marketing itself in a way that it has not done before, and there are lessons for us to learn from that.
It may shock you to learn that the House last debated tourism legislation in 1969, Mr. Deputy Speaker, and it is high time that such legislation was debated again. The tourism deficit is the difference between the amount of money that we spend abroad and the money that is brought here by overseas visitors. In 1997, the deficit was £4 billion, but that has escalated to £18 billion today. We are losing out: not enough money or people are coming to this country from abroad and we are not attracting people from this country to stay and holiday here. We need to address that so that we can keep that money in this country.
The Department for Culture, Media and Sport budget actually increased by 60 per cent. in the past 10 years, but the tourism budget remained stagnant at £35 million. In fact, in the recent spending round by 20 per cent. What a shame, given that it is one of the few Government operations that can actually make money, as I said.
Let us look at the Budget and how it ties in with tourism. As I mentioned earlier, national insurance has not helped at all. My hon. Friend the Member for Tatton illustrated the problems with the models that are proposed in the Budget to support small and medium-sized business. Business rates will be increasing as a consequence of the Budget, as will the small companies tax rate. There will be a fourfold increase in charges on businesses. In addition, as has been mentioned, the increase in tax on cider does not tackle the underlying problem of binge drinking, nor does it provide the support that is needed for responsible pubs up and down the country. The increase is like using a hammer to break a nut. It is not targeted, and once again, there is not enough discussion between the Treasury, the DCMS and the industry, and not enough understanding of how taxation can work to influence behaviour.
To give another example, I met officials of the Tourism Alliance this week and a group representing caravan parks, which are a big part of the tourism industry. They told me that caravan parks are now required to have an alcohol licence in their flower shops, because some bunches of flowers come with a bottle of champagne, so that people can celebrate events. They need a liquor licence for that, which seems to be absolute madness-there is no sense at all. That needs looking at.
On bingo and gaming duties, we have again seen a massive hammer coming down on the industry, which does not help seaside towns in any way. One hundred and ninety arcades around the country have closed in the last year alone thanks to the lack of support from
the Government. They have tweaked the number of B3 gaming machines that are allowed, which has made arcades unprofitable, which is why so many are closing. Once they are closed, the boards go up, which has a ripple effect on the problems that seaside towns face.
That brings me to the point of order that I made before the debate. I had the opportunity to grab the Minister outside the Chamber to ask him whether he was aware of the announcement made on Radio 4 today that the Government will give £5 million to support seaside towns. I have just checked, and there is still no more information on that in the Vote Office, yet the announcement was made on the radio. I plead to you, Mr. Deputy Speaker, and to the Minister that surely, if we are going to respect this House and if we are going to be allowed to debate those matters properly, we need to share information with hon. Members so that we can understand what is happening. I have no idea where this £5 million is coming from. I have a suspicion that it is actually regurgitated money, as is often the case-an old announcement conveniently re-announced-but I simply do not know. DCMS is none the wiser, and the Treasury Minister did not know anything about it, which suggests that it is a regurgitated announcement.
Furnished holiday lets are those homes that are given over to the tourism market to provide an alternative to staying in a hotel. If the tax breaks that have applied until now are removed in April, as the Government intend, 10 per cent. of the market could be lost, which would lead to the loss of 2,400 jobs and a potential reduction in tourism spend of more than £200 million. I do not think that the Treasury has looked at this carefully enough and I ask the Minister to reconsider it. We have made it clear that we are likely to shift the rules so that the occupancy rate will have to be 20 weeks a year, rather than 10. The Government are running scared of EU legislation, but I ask them to listen to the tourism industry, realise how important this issue is for people from Cornwall to Scotland and get the legislation sorted out.
There are many aspects of Conservative policy on tourism that I would be happy for the Government to copy. Thankfully, a general election is coming up so we do not have to wait much longer. Only £37 of every £100 we spend on holidays is spent in the UK, which means that £63 is spent abroad. A little effort by this Government to promote Britain to encourage us to celebrate what we have here would shift that balance and more money would stay in the UK. Corporation tax should go down, not up, and business rate relief should be automatic, not accessed only after a lot of red tape. The Budget did not contain any new tax breaks for new companies, but we have promised that every new company with fewer than 10 employees will not have to pay national insurance for the first year. The Secretary of State asked for evidence of what the Tories would do, and that policy is a great example of how we would help SMEs get the support that they need.
The Government also need to look at the issue of visas. I urge them to consider a Schengen-plus bind-on to allow those Oriental visitors who want to come here to do so. France and Germany have 500,000 visitors from China every year, but the UK gets only 100,000. That is because Chinese tourists look at the cost of the UK visa and the cost of the Schengen visa, and they
turn their nose up at the British offer because it allows entry into just one country. Biometrics must have reached the point at which the two systems could work together and that would be a step towards helping the British tourism industry.
The Chancellor spoke for more than an hour, after which we knew little more than we had done before. After three terms of this Government, we still do not know what they have actually done. We head towards the general election none the wiser about how Labour would cut spending in real terms, how small business would get more support or how the cuts of £24 billion would affect the public services. After a decade of Labour, we see that the boom was wasted. The Government have failed to carry out the radical reforms to public services that new Labour promised us back in 1997 with such fanfare. Those reforms promised to change lives, but our pension systems remain a mess and our health and education systems hardly reflect the doubling of the budgets that they have received.
This Budget, days away from a general election, should have provided the economic argument for Labour's appeal for a fourth term. Instead, it shied away from the big questions. It postponed the big issues and attempted to hoodwink the British people into thinking that Labour has weathered the economic storm. It has exposed the absence of a plan or any vision for the future. Britain can do better, and thankfully the nation will decide whether this Government should have a fourth term. They may well ask what on earth was achieved in the last three terms.
Mr. Christopher Chope (Christchurch) (Con): It is a great pleasure to follow my constituency neighbour, my hon. Friend the Member for Bournemouth, East (Mr. Ellwood). He made some points that were extremely pertinent not just generally but to my constituency in particular, which relies heavily on the tourism industry. Obviously, many people who go and stay in Bournemouth will spend quite a lot of their time in Christchurch, and vice versa.
It is a great privilege to speak in this debate. I will begin with a similar point to the one made by my hon. Friend the Member for Tatton (Mr. Osborne) when he opened the debate this afternoon. He talked about the Government's sleight of hand in not allowing an increase in personal allowances this year, which will affect 30 million people in employment. Is it not a surprise that the Government did not want to give that a fanfare and spell it out in the first few words of the Budget statement. I suppose that they are hoping that people will not notice until later in the year.
That brings me to the issue of personal allowances. In my view, the concept of a personal allowance is this: every person should have a starting point for tax, enabling them to keep enough money to live a normal life, without extravagances or anything like that, and to meet their basic needs, before they have to start paying taxation-before the Government say, "We need a contribution from you!" Back in 1952-you and I, Mr. Deputy Speaker, may just recall the situation then-income tax came into effect only when a person's income reached 103 per cent. of average earnings. Today, however, when average earnings are £23,500 a year-taking the public sector average in December of £457 a week and
relating it to the private sector average in December of £448 a week-the personal allowance is £6,475. In my submission, that is far too low, because nobody can live on £6,475.
That is recognised by those who support the national minimum wage. It was announced in the Budget papers that the national minimum wage will increase in the autumn. That means that somebody on the national minimum wage working 40 hours a week will receive more than £12,000. Why, if they are getting the minimum wage, should they have to pay tax on £5,500 of that money?
Mr. Chope: I shall take an intervention from the hon. Gentleman, whom I presume will tell me about the Liberal Democrat policy. No doubt it will seem attractive in isolation; I just hope that he will tell me how it will be paid for.
Simon Hughes: The hon. Gentleman anticipates my intervention slightly. Does he support the policy that we have made no secret about and which we think is central to the taxation system? That policy is to take everybody with an income of £10,000, however derived, out of the taxation system altogether. It would be paid for by the people who have very high incomes and by reducing the advantages that they get, for example, in pension relief and so on. It would be balanced and paid for elsewhere, but would benefit 3.5 million people, or more, a year.
Mr. Chope: The argument for taking a lot of people out of tax is very strong, but I do not think that the solution of trying to pay for it by further penalising those who constitute the most productive parts of the economy will do anything other than drive increasing numbers of people overseas. They will take their income and abilities overseas. I have met many people in my constituency who have done just that over the past couple of years, and I have met even more in recent days who have said that they are thinking of doing just that, unless we have a Conservative Government that will introduce common-sense policies.
Mr. Cash: I agree with my hon. Friend that the kind of grandmother's footsteps that the Liberal Democrats and others would engage in, which would be just fiddling around with the tax regime, is not the answer. What we need are sound Conservative principles. We want competitiveness, enterprise and growth. We want small businesses to be given the opportunity to pay for whatever is reasonable in the way of public expenditure. My hon. Friend is absolutely right in all the arguments that he is putting forward.
Mr. Chope: I am grateful to my hon. Friend. It is a colloquialism, but we often talk about the direction of travel. My point is that freezing personal allowances is completely the wrong direction of travel. I hope that an incoming Conservative Government will start increasing personal allowances, giving people more money to spend, so that they can meet their basic needs. With the Government's announcement, income tax will now start to be paid on 27 per cent. of national average earnings, which is far too low a figure.
My next, brief point is this. I have been doing a bit of bedtime reading, and I was recently looking at "The Right Approach to the Economy: Outline of an Economic Strategy for the next Conservative Government", which was produced in 1977. Among its authors were the noble Lords Howe and Howell, and it was edited by the father of my right hon. Friend the Member for Horsham (Mr. Maude), who is playing a key role in ensuring that we are well prepared for government. It is an historic document, and, interestingly, it reminds us that we have been here before. Back in 1951, at the end of a Labour Government, we found ourselves in an enormous crisis. In 1977, when "The Right Approach to the Economy" was written, we were also in an enormous crisis, and on both occasions, the crisis was largely contributed to by a Labour Government having had runaway expenditure in previous years and having built up an enormous deficit. One of the big problems that we are now suffering from is that during the period before the global financial crisis, the Government were running a deficit of £34 billion, when we should have had a surplus. That is symptomatic of the recklessness with which they were managing the economy, and we are now reaping the whirlwind.
"Lower personal taxation to restore work incentives...An enterprise package of measures to stimulate business growth...Stronger encouragement to personal savings and capital building on the widest possible scale,"
and "Simplification of the system." Those four recipes are as relevant today as they were in 1977. Indeed, one of the papers over the weekend referred to the fact that Finance Bills are now about 10 times the size that they used to be. The system is grossly complex. Think of how much money is wasted just in administering it, Mr. Deputy Speaker.
Briefly, my last point concerns the amount of debt interest. The pie chart on page 11 of the Red Book shows that debt interest payments stand at £43 billion. The most hated tax in my constituency is council tax. The income from council tax is only £26 billion, so if we were not paying so much debt interest, we could abolish council tax. That is the extent to which we have got ourselves into a problem of overhanging debt, produced by this Government, for which we are all paying dearly. There are obviously various other ways in which one could carve that figure up, but the big thing missing from that pie chart on Government spending by function is anything about waste. The amount of Government spending that is wasted is significant, and it should be included in a pie chart, with a figure for the billions of pounds that are wasted. That chart needs to be improved. I hope that an incoming Conservative Government will include a figure for waste, so that we can see over the course of that Government how the figure will decline.
The Government suggested, with a bit of smoke and mirrors, that they could do away with our problems by making a few economies in individual Departments, but my hon. Friend the Member for Tatton, speaking from the Front Bench, was absolutely brilliant when he quoted directly from the people on the front line in those Departments. Let us hope that we have similar frankness from those people when we get into government. Then we can have a real campaign to show exactly what an awful inheritance we are going to have.
Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to respond to the debate, and I should like to thank my many hon. Friends who have participated in it, starting with my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton), who made his final speech to the House today. In a long and distinguished career here, he has never been frightened of controversy or of defying his Front Bench. Not only has he not been frightened, I think that he has rather enjoyed it-
Mr. Gauke: That is not for me to say, but he has been consistent in his advocacy of manufacturing, and he argued today for a rebalanced economy and greater savings. I suspect that he has been reading some of the work on the new economic model by my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor-
My hon. Friend the Member for Macclesfield's industry and independence have been well respected by his constituents and by hon. Members-and by those who fall into both categories-in his long career. I do not know whether he will be pleased to discover that he became a Member of Parliament eight days before I was born. He probably will not, but I congratulate him on his long and distinguished career none the less.
I also thank my hon. Friend the Member for Sevenoaks (Mr. Fallon) for his excellent speech, in which he highlighted his concerns about youth unemployment, the budget deficit, and the need for an office for budget responsibility. He also used a telling phrase when he described the Budget as a "mock Budget". My hon. Friend the Member for Uxbridge (Mr. Randall) provided the House with a business perspective, and with details of how businesses such as Randall's of Uxbridge had suffered under Labour Governments through the generations. This Government have been no exception.
I should also like to thank my hon. Friend the Member for Leominster (Bill Wiggin) for highlighting the Budget's attack on cider. He rightly said that, although the Government sometimes copy our policies, they frequently fail to get them quite right. This is just such an occasion, as they have raised the tax on all cider rather than targeting the super-strength ciders. That is most unfortunate and will cause great difficulty in his constituency-a fine constituency that I know well, and I know that you do, too, Mr. Deputy Speaker.
I also want to thank my hon. Friend the Member for Broxbourne (Mr. Walker), who started with the statement, which has been widely denied, that when he first came to this place, he was not a nice person. I knew him when he arrived here, and would just like to say that he was a very nice person. He was perhaps a little chubbier than he is now, but he was certainly very nice.
My hon. Friend the Member for Stone (Mr. Cash), following the example of my hon. Friend the Member for Macclesfield in being consistent in focusing on
certain issues, highlighted over-regulation, immigration and Europe in his speech. My hon. Friend the Member for Bournemouth, East (Mr. Ellwood), who is a great advocate for the tourism industry, highlighted our party's policy on the difficulties with furnished holiday lettings. My hon. Friend the Member for Christchurch (Mr. Chope) mentioned the fact that Labour Governments always leave the economy and the public finances in a mess.
I also want to thank the right hon. Member for Rother Valley (Mr. Barron), who spoke well about his constituency, and the hon. Member for Luton, North (Kelvin Hopkins), who, rather to everyone's surprise, praised Lord Mandelson. The hon. Member for Leyton and Wanstead (Harry Cohen) revealed that he was a leading intellectual influence on Government policy and the return of Keynesianism. He also spoke of the need for greater transparency to prevent people from being ripped off. The hon. Member for Glasgow, North-East (Mr. Bain) spoke in his first Budget debate, and I suspect that it will not be his last.