Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 6:43 pm on 17 March 1983.

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Photo of Mr Andrew Bennett Mr Andrew Bennett , Stockport North 6:43, 17 March 1983

Of nine hon. Members who have contributed to the debate, only one has really given the Budget wholehearted support. I suppose that one can hardly expect the Minister to be critical. The odds seem fairly well stacked, as I look around the Chamber, that there is perhaps only one other hon. Member present, besides the Minister, who will have given the Budget an enthusiastic welcome by 10 pm. That seems odd for a Budget that was heralded as a give-away Budget. The truth is that it was probably an opportunity given away rather than a give-away Budget.

I am pleased to be able to address the House on the Budget, although I have considerable regrets on two grounds that I am not able to be present in my constituency today. The first is that one of my constituents Miss Mary Crabtree, is celebrating her 100th birthday. I would have liked to be able to congratulate her. My second regret is that the Secretary of State for the Environment is visiting my constituency. I would have liked to show the right hon. Gentleman some of the conditions that I shall be describing to the House to emphasise that action should be taken. I am sure, however, that Stockport council will be lobbying the Secretary of State pretty hard on some of the worst problems in the borough.

The most damning criticism of the Government is that their first Budget was designed to give away a considerable amount of money to the well-off in tax relief in order to stimulate investment. It was necessary, according to the Government, for everyone else, particularly the poor, to make sacrifices. In the first Budget, the tax concessions to the well-off amounted to about £1·5 billion. That has been repeated each year. It is also unfortunate that the granting of those concessions involved cuts in the pension and unemployment benefit under the Social Security Acts of 1980 and 1981 of about £1·5 billion—almost exactly the same amount—taken from the less well off in society. I do not wish to take up the time of the House listing all the cuts. They are listed in early-day motion No. 368—"The less well off and the Budget".

I suppose that I would have been just about prepared to accept this approach as justified if the Government's strategy had worked. It has not worked. The tax concessions have not stimulated industry or investment in my constituency. The 3 million to 4 million unemployed emphasise that the concessions have not worked. It is possible that the concessions stimulated investment abroad. They did not stimulate it in this country. Trade union officials in Stockport can point to examples of failure to invest. Bernard Reagan, the AUEW district secretary, has supplied Stockport Members with a list of 47 firms that closed or declared major redundancies between January 1980 and January 1983. I shall not read them out. They are listed in early-day motion No. 235 relating to the effect of Government policies on Stockport. The number since January has gone well over the 50 mark. In all instances, there was a loss of skilled workers and of major opportunities for training apprentices.

It has not only been a matter of lost jobs. There have also been some interesting features about the closures. Many were supposed to be the result of so-called rationalisation. An interesting example is Bredbury Steel where steel making operations were to cease and manufacture of bright steel concentrated on the midlands. It was then discovered that the rolling mills part of the operation was to be exported to South Africa to permit railway lines to be manufactured in that country. So we were not only losing jobs in Stockport through the closure, but seeing equipment exported to another country to be reestablished there and presumably take away further opportunities for British industry. The Government's whole strategy in trying to attract investment to areas such as Stockport has failed.

Another element of the first Budget was the announcement of the phasing out of intermediate status for areas such as Stockport. Not only did the Government fail to attract investment as a result of their concessions for the rich, but they removed an incentive for people to invest in areas like Stockport.

There is great bitterness in the north-west over the lack of any Government strategy for regional policy or regional investment. It is particularly bad when we see on television in the north-west of England advertisements for Warrington new town, for example. Such places are trying to pinch industry from areas such as Stockport. That creates great bitterness. We do not want a big scramble for what little business there is. We want Government investment to encourage industry to develop in these areas. Intermediate status should be returned to them so that they are not forced to compete on unequal terms with other parts of the country. Stockport is attractive, but it can be developed only if it gets investment, particularly from the Government. One way in which the Government could help would be to return intermediate status to Stockport.

Not only must the Government encourage investment in industry, but they must reflate the economy by spending on the environment, particularly on housing. Stockport has many old private dwellings which desperately need improvement grant work done on them. During the last three years the Government have had a stop-go attitude almost all the time to improvement grant work. In January and February I had letters from constituents in which they hold me that they applied to the local council for an improvement grant but the council regretted it could not proceed with a grant because there might not be enough money.

As a result of lobbying, the Government have announced that the ceiling on grants will be removed. For the next 12 months there will be more money available for improvement and repair grants. The local council, however, still has the uncertainty about what will happen in the following year. This discourages people from going ahead with grant work. One moment they are told that they should apply, and the next they are told that there is a lack of money. So they think about a foreign holiday or something else rather than getting on with the improvement work. As soon as they have changed their commitments, they are told that the grant will be available. If the Government want old housing property to be improved, they must have a firm five or six-year programme and they must make it clear to local authorities that over that period they can spend on improvement grants as much as they have got.

The same argument can be made about improving council houses. The Government must give councils the opportunity to make long-term plans instead of allowing the money to be spent on a piecemeal basis.

Government strategy was that the poor were asked to make sacrifices so that investment could be made. If the Budget was to be a give-away measure, the Government should have improved the position for some of the least well off. If there was any give-away element in the Budget, it has not been in favour of the least well off. For example, the Government are claiming great credit for putting up child benefit by 65p. All that means is that in real terms child benefit will be about 5p more than it was when the Government took office. Yet the whole strategy intended for child benefit was that in real terms it would be increased significantly.

Why have the Government not dealt with child benefit in the same way as tax concessions? The tax thresholds are being raised by 14 per cent., but child benefit is being increased by only 11 per cent. If the Government are committed to a family policy, why do they not do at least as much for child benefit as for tax levels? If they had made a larger increase in child benefit, it would have meant more for the low paid, many of whom do not pay tax and therefore cannot benefit from a tax concession.

The Government seem at long last to have been forced by pressure from their own Back Benchers to give back the 5 per cent. abatement to the unemployed. As was pointed out earlier, it is not being given back to those who lost it previously; instead, it will go to next year's unemployed. Those who will have been unemployed for 16 months and who have been charged tax on their unemployment benefit will not get back the 5 per cent. because, if they are not working again, they will have exhausted their unemployment benefit and will be receiving supplementary benefit. Those people have lost the 5 per cent. for ever. Why could not the Government have restored the 5 per cent. in June, the anniversary of when they took it into taxation? Why will the next group have to wait until November to benefit?

I welcome the Government's decision to give the long-term benefit concession to people over 60. Why do they not also give it to families who have to live on supplementary benefit? The shoe pinches much harder for families on supplementary benefit. If the husband or the wife is signing on for work, he or she is unable ever to get on to the long-term rate. It would cost only £150 million. I should have thought that if the Government wanted to have a give-away Budget, that would be one of the first areas for a concession.

What a fiddle and what a twister the new uprating method is turning out to be. The Government seem deliberately to have chosen the one month in the year when inflation will be at its lowest. Why have they not chosen April? It would have been much easier administratively, because they would have had an extra month to do the uprating. It appears that the April figure is likely to be higher than the May figure. Because of the new method of uprating, retirement pensioners will be 1·05 per week worse off over the next 12 months. The relevant figure for an unemployed couple is £1·30 and, for the lone parent with two young children, 1·05. It is a very mean measure. The Government ought to think again about it.

The effect on supplementary benefit raises a major problem. I was able to intervene briefly when the Minister was speaking. I hope that at the end of the debate there will be more explanation about what is to happen to supplementary benefit. Last November the system for uprating supplementary benefit was changed. It was no longer to be uprated in line with the general retail prices index, but in line with the retail prices index minus the housing element. Whereas other people were supposed to have got a so-called overpayment last November, those in receipt of supplementary benefit had a 0·4 per cent. underpayment.

Will that 0·4 per cent. underpayment be restored? What will happen about the retail prices index minus the housing element in May? As I understand it, one of the elements that is bringing down the retail prices index in May is the considerable reduction in the mortgage rate since last year. If, for supplementary benefit purposes, we take out the mortgage element, the inflation rate will be that much higher. I hope it will be confirmed that supplementary benefit will be increased by the higher rate. I should also like to hear that the 0·4 per cent., which was lost last November, will be restored.

Because the supplementary benefit rate will be increased slightly more than the pension rate, the implication is that more pensioners will have to get supplementary benefit. Administratively, that is difficult. Many pensioners already qualify for only small amounts of supplementary benefit. The Government should increase pensions by the same amount as supplementary benefit to avoid a rise in the number of pensioners who will be entitled to, but sadly often fail to claim, small amounts of supplementary benefit.

The newspapers have said a great deal about the impact of the Budget on a family with two children and average or just below average earnings, but they have said very little about the way in which the new housing benefit legislation will operate for people receiving rebates and the fact that almost 1 million people will lose about 70p per week as a result. If we take those losses into account, as well as the changes in the Budget, it is clear that a large number of people will not benefit at all. I hope that the Government will make it clear that in uprating the amount payable under the housing benefit scheme under the same legislation, with the changes in the benefit rules, they will take account of the need to eliminate those losses. Many of the people involved will lose more than 70p, because they will also face rent increases as a result of other aspects of Government policy.

The Budget is extremely disappointing. It is clear that the Government's strategy of stimulating investment by tax concessions to the well off has not worked. The least well off have been asked to make unfair sacrifices. Now, in a give-away Budget, the Government are doing nothing for them, and they remain a neglected group.