Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 7:10 pm on 21 March 1990.

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Photo of Eric Martlew Eric Martlew , Carlisle 7:10, 21 March 1990

I should like to put the Budget in the context of the real world—not the world of the stockbroker who is delighted that stamp duty has been removed from share dealings, or the world of the multi-millionaire who, on a whim, may give £5 million to charity. I want to put it in the context of the people who come to see me in my surgery every week. They are worried about the bills that drop through their letter boxes—the increasing size of the electricity, water and gas bills, and now the poll tax. Then there is the letter from the building society. In the last two years they have had seven, or perhaps eight, such letters. My authority is Labour controlled. The poll tax will be £365. If the Conservatives had been in control, it would have been £350. The amount would not have been all that much different, but if the Conservatives were in control there would be some nasty cuts.

In a typical family, the husband works full-time. He is a skilled worker. His wife works part-time. They have two children and they live in a semi-detached house. They left the Labour party in 1979 and voted Conservative and they have returned the Conservatives to power ever since. If they had come to me last Saturday, I should have said, "Don't worry; the Chancellor will help you next week. He will solve the economic problems and give you the help you need. That's why you voted Conservative last time. He's supposed to help people like you."

If they come to see me next weekend, what shall I say to them? Will I say, "You're lucky, as top rate taxpayers; your tax rate has not been increased"? A typical family earning £16,000 a year is never likely to pay the top rate of income tax. Will I tell them that they are lucky not to have a company car and that therefore they will not have to pay the extra 20 per cent? Will I say to them, "With independent taxation you will have two capital gains tax exemptions of £5,000 each, so you can sell one of your valuable assets and realise a tax-free profit of £10,000"? But their only asset which is worth over £10,000 is their home, which they may have to sell because of increased mortgage repayments. But in any case their house is exempt from capital gains tax. So they will not be very happy if I tell them that.

I could say to them, "Why don't you look on the bright side? Think of all the benefits you will get as a saver. You'll be able to open your own TESSA account. You'll be able to invest £150 a month for five years and the interest will be tax-free." I can imagine the reply: "For the last two years we've been unable to save anything. In fact, we've had to take out a second mortgage to make ends meet." It would be useless to tell them that they can increase the amount that they invest in a personal equity plan from £4,800 to £6,000 a year. I know what they would say about that.

I could say, "The answer to all your problems is that the composite rate tax on savings has been abolished," but I am sure that that would not help them. I could say to them, "The Chancellor abolished stamp duty on share dealings, didn't he? That will help you." They would say, "Yes, we used to have some shares in British Gas but we had to sell them six months ago to pay the gas bill." I could also say, "You'll get tax relief on workplace nurseries." Their answer would be, "That's all very fine, but there are no workplace nurseries." Mrs. Typical is not too keen on workplace nurseries. They are an extension of the tied cottage principle—once in, one cannot get out. The only employers with workplace nurseries are banks. Few of my constituents work in banks.

The only Budget change that the typical family can see that will help them relates to charities. The husband is thinking of having his children registered as charities so that they can go begging round stately homes and board rooms for money.

The typical family will suffer as a result of the Budget. Duty on cigarettes and petrol is to be increased. That will increase inflation. The Chancellor has predicted a 1 per cent. growth in the economy. That will mean unemployment. Mr. Typical could soon be out of a job because of the Budget. If we accept that industrial productivity must grow by at least 4 per cent., growth at only I per cent. means that three out of every 100 employees will be made redundant next year. This is a Budget for unemployment.

My constituents are typical of many others throughout the country, from Finchley to Mid-Staffordshire. The Budget has been billed as a Budget for savers. It will do little to encourage spenders to become savers. It will only benefit existing savers. Disposable income will be eroded by high interest rates, inflation will continue, the rich will become richer, and the poor will pay for it.

To anyone who has been prepared to listen to him, the Chancellor has said, "Don't panic." It reminded me of a television series: we have a shell-shocked Chancellor in a "Dad's Army" Government. The sooner they surrender the better it will be for Britain.