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8.33 pm
Mr. Philip Dunne (Ludlow) (Con): It is a pleasure to follow the hon. Member for Stroud (Mr. Drew), and it is a slight shame that he was cut short by Mr. Speaker's instruction, given the paucity of Members on his side of the Chamber who are willing to support the Minister in the debate.
Sir Patrick Cormack (South Staffordshire) (Con): Look at them all!
Mr. Dunne: I can count only one, including the hon. Member for Stroud.
Mr. Drew: There are not many on your side either.
Mr. Dunne: Thank you, Madam Deputy Speaker. I was going to say that it is a pleasure to participate in a debate in which so many of the Members who are retiring from the House have spoken. I am sure that the hon. Member for Stroud will not be voluntarily retiring. If he did so involuntarily, the House would lose one of its more regular attenders, especially of these end-of-evening sittings, which would be a disappointment.
I would like to raise a couple of macro-economic points before focusing on specific ways in which the Budget creates particular challenges for companies operating through the recession. First, however, I shall focus on the state of the economy. The hon. Member for Stroud was quite right to refer to the economic mess in which the country finds itself, but he and other Labour Members have not acknowledged that the financial services community's role in the cause of the original economic crisis now bears little relation to the state of the public finances. The financial services crisis of two years ago that resulted in the Government having to bail out the banks is now part of this country's economic history, but the structural deficit with which we have to deal, which will be the Government's legacy, has little direct relationship to that crisis. Although there are clearly indirect consequences, the structural deficit has ballooned under this Government, irrespective of the bail-out that funded the resurrection of the banks nearly two years ago. Labour Members do not acknowledge that fact, but it needs to be acknowledged so that we can recognise the measures that are required to start to bring the deficit down.
Throughout their Budget projections, the Government rely on their measure of economic growth, but I would like the House to consider the plausibility of their projection. The Treasury has a track record of forecasting economic growth that any schoolboy economist would find somewhat embarrassing. It has rarely, if ever, got it right, and it has tended to veer on the side of optimism in each Budget presentation that I have heard while I have been a Member-last week's was no exception. The Chancellor admitted that economic growth was likely to come down, but only by 0.25 per cent. The reduction was from 3.5 per cent. to somewhere between 3 and 3.5 per cent., so if we are charitable and take the average, it looks like a reduction to 3.25 per cent. However, that projection remains above all external forecasts, or the average of them, and above the forecasts for all other major industrialised economies. It is also
substantially above this country's trend growth during the Government's tenure in charge of the economy, and above trend growth for the 31-year period of this Government and their predecessor. It is surprising that the Government base the largest component of their recovery programme on an estimated increase in this country's activity for the next four years, and specifically for the coming year, that is significantly above their track record and what other forecasters think is likely.
I am not trying to talk down the strength of the economy and I would, of course, like the economy to grow and rebound rapidly. I merely question the validity of the Government's forecasting methodology, which has also been questioned by the National Audit Office in its review of the figures.
The Financial Secretary to the Treasury (Mr. Stephen Timms): Will the hon. Gentleman reflect on the fact that although our forecast in last year's Budget for the coming financial year was criticised in much the terms that he is using today, pretty much everyone now agrees that last year's forecast of 1 to 1.5 per cent. in the coming financial year will be right?
Mr. Dunne: We will have to see, will we not? That is another forecast. I concede that the Treasury has had the benefit of a slight upgrade to the figures for the last quarter of 2009 but, looking forward, I would not like to place much confidence in what it is saying.
The situation raises questions whether the public debt will come down in the manner that the Government anticipate. We are looking at £167 billion of debt in the current year. That is a very difficult figure for ordinary people-and Members of the House-to get their minds around. It means, if my maths is correct, that the Government are borrowing £317,723 per minute of every day and every night this year. That figure is substantially greater than the average price of a home in this country, and when I give that figure on the doorsteps in my constituency, people find it quite astonishing that we could be borrowing at that level. Of course, it is completely unsustainable and that borrowing must come down.
The Government have come up with very few plans to get that debt under control. That will wait until we have had a general election. Whichever party is in power thereafter will have to take the tough decisions that are necessary if we are to get a grip on the public debt and get the economy moving once more.
The two specific points that I wish to make relate to Budget proposals where the Government have been short on detail, and which they have not described with enough frankness. The first has to do with the freezing of personal income tax allowances. In his Budget speech, the Chancellor did not make a single mention of the measure that will affect more people than any other-freezing personal allowances at £6,475. Some 30 million people will be affected by that. With inflation having hit the somewhat giddy and unedifying heights of 3.7 per cent., there is direct erosion on the value of real, take-home pay for those in work. For all those taxpayers, freezing personal allowances will have a significant impact on their disposable income, yet the measure was not mentioned by the Chancellor.
There was another matter that the Chancellor failed to mention. When referring to fuel duty increases, he said with some pleasure that he would defer the escalator for this coming year, so that the rises will be made in three, equal tranches, and said also that he was therefore reducing the increase scheduled for April to 1p per litre. What he did not disclose is that he will increase duty in April not only by the equivalent of 1p through the escalator, but by a further 1.35p through the elimination of the biofuels duty rebate. When the VAT element is included, that means that petrol prices will go up by a further 2.35 per cent. from the beginning of next week. That, of course, will affect every motorist-all those who rely on vehicles to drive themselves around. As the costs of motoring go up, there will be knock-on effects throughout the economy on the delivery of goods and on commerce. That was more sleight of hand from the Chancellor, and it was regrettable.
The reason why I focus on fuel is the fact that, as my hon. Friend the Member for Meriden (Mrs. Spelman) said, since the Government introduced the business rates revaluation, I have been campaigning actively to try to correct some of the anomalies that are clearly apparent in the revaluation methodology that the Government have used-anomalies that they have sought to blame on the assiduity of the Valuation Office Agency. In particular, I have been looking at the retail of petrol at filling stations. One third of the 9,000-odd forecourts trading in this country face an increase in their business rateable value of more than 50 per cent., and 1,500 of them are looking at their rateable values at least doubling. Many of them will face the prospect of ceasing to sell fuel when the increases come through in full, because that will be the logical thing for them to do, economically. Most of them operate with very low margins on the sale of their fuel.
The Government seem to think that because fuel stems from oil and the oil industry is making significant profits, that must flow through the vertical chain and down to the petrol pump. However, I must tell the Ministers present, as I have told other Ministers on the Treasury Bench, that such thinking betrays a lack of understanding of how that market works. As a result, the VOA itself is telling fuel station operators in my constituency that it would be in their economic interest to cease selling fuel, because if they do so the rateable value of the convenience store on their filling station site will then be calculated on the same basis as other retail premises-that is, on the square footage that they occupy, rather than on their turnover. Some operators would see a tenfold reduction in their rates bills.
That increase by the VOA is completely unjustifiable, and I urge Ministers at this very late stage-bills are being sent out with effect from 1 April-to rethink the measure and review the methodology. I also urge that on my Front-Bench colleagues, and I am hopeful that a new Government will look favourably on it. We have already heard my hon. Friend the Member for Meriden say that we intend to review the revaluation, and I hope that such a rethink will take place as a consequence of that review.
While I am on business rates revaluations, I cannot finish without bemoaning the fact that many pubs in rural constituencies face colossal increases. The Boyne Arms in my constituency is looking at an almost fivefold
increase-from £4,000 to £19,000, with no change in circumstances other than that flawed revaluation methodology.
8.46 pm
Christopher Fraser (South-West Norfolk) (Con): It is a great pleasure to follow my hon. Friend the Member for Ludlow (Mr. Dunne), who is an assiduous scrutineer of Government policy.
More needs to be done to help the millions of families throughout the country. Under this Government, the gap between rich and poor has increased, and social mobility has decreased. Never before have so many young people faced what can only be described as a bleak future-carrying the burden of the national debt, failing academic standards, increased demand for higher education places and a job market that causes only despair.
Thousands of families cannot afford child care. In a YouGov survey, 28 per cent. of parents with children under 18 and a net income of under £15,000 said that they had been unable to get a job or continue with an existing job because the cost of child care was too great. The Government herald each opening of a Sure Start centre-which, incidentally, the Opposition fully support, contrary to what is sometimes reported in this place-but, as Ofsted says, half of all Sure Start centres are not reaching out to the most vulnerable families.
Conservatives support Sure Start children's centres and believe that they will play a crucial role in making Britain one of the most family-friendly countries in Europe. Child care is deteriorating in poorer areas, however. In Britain's poorest neighbourhoods, the proportion of nurseries that inspectors judge inadequate increased by more than one quarter in 2008, from 8.5 to 10.8 per cent.
Why is so little being done to help those who need it most? We have already announced how a Conservative Government will strengthen Sure Start through a universal Sure Start health visitor service, which will be funded with money from health and from extra money that the Government have already set aside to strengthen outreach work to vulnerable families. The UK has more broken homes than almost anywhere in Europe, by far the highest proportion of lone parents in Europe and one of the highest rates of family breakdown.
We have also become a country that penalises people who want to stay together and provide a loving and stable environment for their children. Of course we must help single parents, who undoubtedly have one of the toughest jobs in the world, particularly given that many are alone through no decision or fault of their own, but that should not be at the expense of, or instead of, married couples or cohabiting couples. A Conservative Government will recognise marriage in the tax system. Taxes and benefits should encourage families to stay together, unlike the current system, which encourages couples to live apart.
We would also help parents by introducing flexible working for all parents with children under 18. That would be achieved via secondary legislation so as not to overburden businesses with more complex regulation. Flexible working means not only flexible or part-time hours, but a raft of ways to improve the work-life balance of parents, including compressed hours, flexitime,
term-time working, working from home, job-sharing or changes to shift patterns or work location. We must ensure that parents are available to drop off and collect their children from school if they wish-an essential choice that they should have.
More should be done to help grandparents, who, in today's society, are taking on a greater role. They are often the unpaid childminder, cook or taxi driver, being the only available resource left for parents who cannot find affordable child care. There are also the hundreds of thousands of people who act as carers, without whom the state and the NHS could not cope. The Conservative party has already announced several measures in support of carers that we will implement when we reach government. First, we shall ensure that every person who cares for someone else has the right to request flexible working so that they can manage their career and caring responsibilities in the best way possible. We have also outlined our plans to encourage regular, planned respite care. We will ensure that everyone who wishes to have an individual budget and direct payments can do so to ensure that they can get the support and assistance that they need and want instead of being forced to fit around the provision of the local authority.
Thirteen years ago, this Government were elected on the promise, "Education, education, education". Thirteen years on, more than 50 per cent. of pupils are still not obtaining five good GCSEs including English and maths. Given that those pupils have only ever been educated under a Labour Government, will the Government accept that their policies have failed, and that head teachers and teachers must be given the trust and freedom to raise standards? This year's key stage 2 results were the clearest indication yet that the Government's policies for primary education have not only stalled but failed. Only 61 per cent. of pupils managed to reach the required standard in their key stage 2 tests in English, maths and reading, and 39 per cent. of pupils could not pass all three subjects to an adequate level.
Only in the past week, figures have been published showing that truancy has risen by an incredible 44 per cent. since 1997, despite the Government's having spent more than £1 billion on combating it. One child in 10 misses at least four weeks' school a year. Pupils on free school meals are three times as likely to be persistent truants, and truancy is six times higher in poor areas than rich. It is essential that we address the underlying causes of that. The Conservative party is committed to improving behaviour in schools and giving teachers the powers that they need to deal with disruptive pupils. We also need schools to insist on enforceable home-school contracts so that parents play their part in ensuring that their children go to school.
It is so important for the health and the future of this country that we support the family unit. As you know, Madam Deputy Speaker, I have taken a decision to put my family before my career. This has been a very difficult and painful couple of years for my wife and her health issues. It has put enormous pressure on my family, my children and me. At this time, they need my love and support, and I have decided not to stand at the next election.
It has been a privilege and an honour to serve the people of South-West Norfolk in the House. I thank you, Madam Deputy Speaker, and your office for the faith that you put in me to serve on the Chairmen's
Panel. I would also like to thank my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack), under whom I serve on the Northern Ireland Affairs Committee. Finally, I would like to say to my colleagues from across the House a heartfelt thanks for the encouragement and support that they have given me, and the messages of good will and well-being for my wife that they have sent.
I would also like to put on record my gratitude for the work that the staff of the House do to serve us in this Chamber. Without them, this place would not function. Without us debating difficult issues involving our priorities, be it in a Budget debate or any other debate, this country would not function properly either. At a very difficult time for me and for any other Member of Parliament who is leaving, I would like to put on record my gratitude for the time I have spent here, and I thank you.
8.55 pm
Mr. Greg Hands (Hammersmith and Fulham) (Con): This has been a very fine debate, and possibly the best Budget Monday debate for some time, not least because of the number of final speeches from many retiring Members who, in most cases, have been here many more years than I.
On the subject of final speeches, the hon. Member for Taunton (Mr. Browne) made no mention of where his leader's "savage cuts" would come from. We agree with the hon. Gentleman's comments on cider, but it is unfortunate that last year he called for a freeze in duty on spirits but not on cider. Indeed, he said in last year's debate, undermining his own case:
"Cider is not as widely drunk in my constituency as it once was".-[ Official Report, 12 May 2009; Vol. 492, c. 778.]
The Conservatives strongly support cider making in this country, and we oppose the RPI plus 10 per cent. rise in duty across the board.
Mr. Soames: Will my hon. Friend acknowledge the admirable work done by our hon. Friend the Member for Uxbridge (Mr. Randall), who is also a staunch supporter of the cider business?
Mr. Hands: I certainly will, and I thank my hon. Friend for the intervention. I also acknowledge the work of my hon. Friend the Member for Leominster (Bill Wiggin), who made some very strong points about cider at Environment, Food and Rural Affairs questions last Thursday. The voice from across the Conservative party has been unanimous in condemning the rise in duty. We should target strong, mass-produced products that, as they have such a low apple content, are barely cider at all. That is the Conservative approach.
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