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[Relevant document: European Community Document No. 9002/96, concerning the Council Recommendation to the United Kingdom with a view to bringing an end to the situation of an excessive government deficit in the United Kingdom, prepared in accordance with Article 104c(7) of the Treaty establishing the European Community.]
Given the enormous size of the social security budget, which accounts for nearly a third of total expenditure and more than 40 per cent. of central Government spending, it is right that we should devote a day of the Budget debate to that subject and I welcome the new format this year. Throughout the 50 years since the welfare state was established, spending on social security has grown at a rate of 5 per cent. a year compound, or almost twice as fast as the economy. It has taken an ever rising share of national income and it has been the main cause of rising taxes and increasing burdens on business and employment. Indeed, the cost of welfare has risen to a level at which it contributes to the burdens on business, destroying jobs and putting people on to welfare. From being the cure, it has become through its cost part of the cause of unemployment. But as the result of the reforms in this and previous Budgets, we have turned that position round.
Social security is now set to take a declining share of national income, leaving scope for reducing taxes and burdens on employers, creating a more dynamic economy, generating more jobs, and getting people off welfare and into work. That is a tremendous achievement and the major contribution to that achievement has been our success in getting people off welfare and into work. Unemployment is down by nearly 1 million from its peak. It is now lower than in any major European country and it is falling. There are now 750,000 more people in jobs than four years ago. A higher proportion of our adult population is in work than in any other major European country, and the figure is rising. That success is the direct consequence of our welfare-to-work measures and our economic reforms.
But there are still upward pressures on my budget including, above all, the result of more people happily living longer than expected and more generous benefits for disabled people. I have to tell the hon. Member for Peckham (Ms Harman), the Labour party's spokesman for social security, that when she describes the continued growth in social security spending—as she did the other day—as
the result of social and economic failure",
she is in effect insulting millions of elderly and disabled people, whose only fault is to live longer than expected. We count their long lives a success and we count our record, in giving four times as much help to sick and disabled people as Labour ever did, as a source of pride.
The hon. Gentleman may not mind the elderly and disabled, but I do and I think that it is monstrous to describe increased spending on them as the result of social and economic failure. As for children living in poverty, the hon. Gentleman knows that the biggest single contribution to that is the breakdown of family life, which is an issue to which I shall return later in my remarks.
As I told the House on Monday, if we are to maintain a decent level of provision for those in genuine need—as the Government are determined to do—we must maintain the momentum of our reforms, and that is what my right hon. and learned Friend the Chancellor's Budget statement does. I shall not go through the figures in detail, but they show that we are protecting the real value of all major benefits. Uprating in line with inflation will alone cost £1.7 billion next year, so Department of Social Security spending next year will reach £93 billion. In round figures, despite unforeseen pressures, that is actually the same figure that I announced a year ago and a year before that. As a result of our reforms, we expect in subsequent years to keep growth down to about 1½ per cent. in real terms. That moderate growth reflects the beneficial impact of the measures taken under the programme of reform that I initiated four years ago.
I have introduced a total of 12 Bills—including two in this Session—reforming sickness benefits, incapacity benefits, child support, pensions and jobseeker's benefits. The Budget contains a number of further measures to maintain the momentum of reform. They will help curb fraud, improve efficiency and increase fairness.
In addition to the new powers that we are seeking in the Social Security Administration (Fraud) Bill, Tuesday's Budget measures propose a further spend-to-save package on fraud. We will invest £470 million over three years in tackling fraud. That will finance 1.3 million more home visits to new claimants and 300,000 extra visits to existing claimants next year.
It is true that there were 3.5 million home visits during first half of the 1980s. They were an intrinsic feature of supplementary benefit and entirely different from the sort of visits that we will initiate. They were not for the purpose of establishing fraud, but to establish entitlement to benefit under a system that had many special needs payments on heating, rent—which was paid out of supplementary benefit—extra clothing and so on. Visits were necessary for all those payments. We also had one-off, exceptional needs payments and visits were usually required in those circumstances. There was also a welfare provision in supplementary benefit that required visits for welfare purposes, often as frequently as every six weeks, to families who were incapable of managing their budget or if there was a danger of neglect of children. Those visits duplicated the work of social services and were better undertaken by them. The need for that type of visit disappeared with the simplification of the system when we changed from supplementary benefit to income support, replaced single payments with the social fund and replaced the complex array of different entitlements with a much simpler structure of income support and housing benefit.
The sort of visits that we will introduce now are designed to establish that people are genuinely entitled to benefit and that their circumstances are what they say they are. That is an important measure to cut out fraud and abuse.
We are also taking strenuous action to reduce the running costs of my Department. Much unnecessary work arises from incomplete, erroneous and late claims. The CHANGE programme has revealed that a high proportion—60 per cent.—of applications for income support are incomplete or incorrect and some 30 per cent. of our work involves chasing up information. So we propose to put the onus on claimants to furnish the evidence that can be reasonably required before their claim is assessed and we, in turn, will make it as clear as possible what information is required.
Late claims and backdating are especially costly, not least because the rules are so complex. I also propose, therefore, to reduce the confusing and inconsistent set of rules covering backdating of benefits to just two basic rules for most benefits. In future, if a claim is late, we will backdate the payment date by up to three months, provided—in the case of income-related benefits—that the claimant has good reason for making a late claim. If the claimant is already on benefit, we will backdate a claimed change in circumstances for up to one month.
I also propose to clarify the boundary between disability living allowance and attendance allowance. DLA is intended for people who suffer disabilities during their working life and so have less opportunity to earn and save. Attendance allowance is for those who come to need care in retirement. We intend to remove the current concession that allows a claim for DLA to be made for a year after the age of 65 and that change will come in from October 1997.
In the longer term, once it is possible to make further changes to the computer system from April 1999, people will have to wait seven days before receiving jobseeker's allowance, rather than the three days now. Waiting days have always been a feature of social security. Unemployment benefit was not designed to provide cover for moving between jobs, or for brief spells of unemployment. Other countries have similar waiting periods—Ireland's vary between three and 18 days, even Sweden's period is five days and New Zealand has the same seven-day wait as we propose.
Apart from the main growth areas of age and disability which I mentioned, spending is still growing in two other areas. The first is benefits for lone parents. Total spending is now about £10 billion on benefits for lone parents, which is equivalent to 5p on income tax. That is a problem that we have to face.
For decades politicians would not talk about the issue. Tax and benefit policy was squeezed to help single parents so that single parents gained more help than two parents. That policy has got to be reversed.
Those are not my words, but those of the hon. Member for Birkenhead (Mr. Field), the Chairman of the Select Committee on Social Security.
The hon. Gentleman went on to point out, rightly, that the Labour Government
introduced One-Parent Benefit—never part of any strategy, merely an attempt at a quick fix.
He was quite right.
The right hon. Gentleman seems to be arguing that until the Budget, which proposes to "equalise"—I think that was the Chancellor's word—lone parents' access to benefit with that of married couples, there was an "incentive" for women to become lone parents. How does that square with the fact that lone parents have much lower incomes than married couples? For example, 40 per cent. of lone parents have to live on less than £100 a week, whereas only 4 per cent. of married couples have to do so. How can that be an incentive to become a lone parent?
I did not present the matter in that way. To make the structure of benefits more generous to lone parents than to couples is certainly an odd signal to send out. However, no one pretends that that difference has been the primary factor in the growth of lone parenthood—although obviously it has helped to underwrite it.
I was telling the House that the hon. Member for Birkenhead had rightly described the history of one-parent benefit as essentially a short-term fix by the Labour party. The then Secretary of State, Barbara Castle, told the House:
there is to be an interim benefit … for the one-parent family … until the child benefit scheme comes into effect.
Later she added:
the benefit is purely a temporary one."—[Official Report, 13 May 1975; Vol. 892, c. 337, 339.]
But as the French say, nothing lasts like the provisional.
Does not the Secretary of State consider that one of the best ways of reducing the welfare bill for lone parents would be to help them back into work? Yet he proposes to cut the one-parent benefit, which is not taxed, and has acted as a good bridge to help lone parents back into work. Why is the right hon. Gentleman cutting that, when it seems to be one of the most important ways of cutting the welfare bill?
We shall provide the same structure and level of benefits for lone parents as for couples, which will still leave virtually the same margin between their position in and out of work. As I shall explain later, we have considerably improved the position of lone parents where it really matters—in help with child care.
As I was saying, one-parent benefit lingered on and on, and was duly mirrored by the lone-parent premium in income-related benefits. Yet the only identifiable extra cost that lone parents face is the cost of child care when they return to work.
I shall make a little progress first, if I may.
That is why I, with the help of my right hon. Friend the Secretary of State for Education and Employment, introduced the recognition of child care costs in family credit. We increased the figure last year, so that up to £57 a week is now allowed. We are also encouraging the expansion of child care out of school hours and during holidays. The Department for Education and Employment initiative has created 72,000 places, and the Department is now investing a further £20 million, bringing the total to £64 million, to expand that initiative further.
We are also offering, through Parent Plus, help for up to 100,000 lone parents to return to work.
I shall complete this section first, and the hon. Lady may find her question answered, if it has not been answered already.
The net result of the changes that we have introduced, plus the temporary measures introduced by the Labour Government, has been that couples who are out of work or on low incomes receive less money relative to their needs than do lone parents. That cannot be right. It sends out a strange signal when the state discriminates against married couples.
That is why we intend new lone parents who claim benefit after April 1998 to receive the same family premium and child benefit as married couples do. We shall protect existing lone parents, who will retain their present higher benefits.
That does not reflect any punitive attitude towards lone parents on our part.
As I said in my famous 1993 party conference speech—although I made the mistake of putting it in prose rather than doggerel, so it is not remembered by the hon. Lady, or quoted so frequently by the BBC:
Many find themselves lone parents against their will. Widows, divorced and separated people struggle alone, but often successfully, to bring their children up well. They deserve not blame but support.
That is our attitude. Extra help has been given, but the best form of help is to help people find work and to help them in work, to help with child care and to help people obtain maintenance.
In those days we did not have any extra help for getting back to work, through help with child care or through the Parent Plus scheme. We did not have the other measures that I reported to the House, either. According to most surveys, most single parents want help to get back to work, and I think it right to devote resources to helping them by offering that help, and meanwhile to provide the same structure of benefits for them as for married couples who are out of work.
I personally don't agree with them doing that.
If that is not a condemnation, how does the right hon. Gentleman go about praising people?
Apart from expenditure on lone parents, the other area of expenditure that is increasing significantly is expenditure on housing benefit and council tax benefit. That is set to rise by 7 per cent. ahead of inflation over the next three years.
It would be irresponsible to allow that growth to continue unchecked. Obviously it is in part a reflection of the rising number of new households, which is growing faster than the population—so much so that it is projected that there could be 4.4 million more households in 2016 than there were in 1991. Nearly 80 per cent. of that growth will represent one-person households.
It cannot be right to allow the benefits system to exacerbate that process. So I propose to restrict housing benefit for single people under 60 to the average rent for single non-self-contained rooms in each location. I also intend to limit further the sums that can be paid to tenants in the private deregulated sector.
Since January that group has received a maximum housing benefit that pays up to half the difference between the local average and the actual rent. The change will mean that from next October, claimants who choose to live in properties whose rents are above the average for that type of property in that area will have to meet the excess themselves, or negotiate a better rent with their landlords.
I also propose to align the treatment of council tax benefit for higher-band properties with the benefit treatment of mortgages. Currently, someone living in a band H property, which in England will be one valued at more than £320,000, can still have the entire council tax paid if he or she is on income support. That cannot be right.
I shall therefore bring the council tax benefit rules into line with those on mortgage interest. Benefit does not pay the full interest on loans of more than £100,000, and neither should benefit pay the full council tax for those whose properties are above the top of band E. In England that means properties worth about £120,000. I intend to implement this change in April 1998. It will affect about 65,000 people and save about £15 million in the first year.
In a press release put out on Tuesday by the hon. Member for Peckham, the Leader of the Opposition—[Interruption.] Sorry. I am promoting her—but only prematurely, I am sure. The hon. Lady, the Opposition spokesman on social security, claimed that
Tories failed on welfare because they have failed on work.
Quite frankly, she has ceased to engage with reality, and she simply ignores the huge falls in unemployment and the huge growth in the number of people in work in this country.
Let us compare Britain with France. The populations and economies of our two countries are roughly similar in size, but unemployment in France is more than 3 million and rising, whereas in this country it is 2 million and falling. If that is not due to the social chapter and the minimum wage, can the hon. Member for Peckham—or any Opposition Front Bencher—tell us which factors cause unemployment to be higher in France than in the United Kingdom? I shall be happy to give way to her. [Interruption.] Ah—she will deal with it when she has thought of the answer.
If the hon. Lady were to provide an answer to my question, I would give way. But as I fear she will not, perhaps she can wait until I have finished this point.
High unemployment is the result of measures such as the minimum wage, the social chapter and greater union power—precisely the measures advocated by the hon. Member for Peckham. But if she wants to know the answer, she does not need to wait until she has found it and put it in her speech. She can go straight to the OECD, which recently reported that the reason why we have a relatively superior performance in our labour market and in unemployment to countries on the continent is our structural reforms, such as privatisation, lower tax and deregulation—every one of which she has opposed.
Is the Secretary of State aware that only 41 per cent. of lone mothers in Britain work, but that 82 per cent. of lone mothers in France work? Is that because they are less workshy in France, or does it have something to do with the French state system of work availability?
It may have something to do with work requirements in those countries, but it is due above all to differences in the age of children. A recent study compared the position in this country with that in other countries, and the biggest single reason why this country differs from the others is that we have had a large increase in lone parenthood. A large part of that increase has been made up of never-married mothers, who typically have much younger children than those who become lone parents through divorce. Those with children under five tend not to work in most countries, and we have a higher proportion of those children than other countries.
The Secretary of State has been scathing about the minimum wage. How does he justify his policy of not only permitting but encouraging employers to pay wages below subsistence levels, and then requiring the taxpayer to eke out the difference in a spiralling benefits bill? Has he not, in effect, nationalised the minimum wage?
When he sat on this side of the House, no one was more enthusiastic about helping people into work through in-work benefits than the hon. Member for Stratford-on-Avon (Mr. Howarth). Now that he sits on the Labour Benches, he has abandoned his reasonable and sensible attitude that wages are determined by the ability of people to contribute value to the process of production, and not by the virtue or evil of employers. Therefore, wages are not affected by changing laws but by improving the productivity and the economic performance of the country. That is what we are doing and why we are successful in creating jobs.
The hon. Gentleman has had the opportunity to discuss this question on both sides of the House, and I do not intend to allow him to give both sides of the question again.
My right hon. Friend has given an impressive elucidation of why we are creating jobs and other countries, such as France, are not. May I point out that a number of young people have come to my constituency from northern France to get jobs? They have all told me that they do not have a hope of getting a job in northern France because of socialist policies.
My hon. Friend makes a potent point, and he is absolutely right.
The one concrete proposal that the Opposition have put forward to help with unemployment is to finance, by means of a one-off windfall tax, the creation of 250,000 artificial jobs for young people for one year only. It is a temporary scheme which, by some unexplained miracle, is supposed to produce a permanent solution to youth unemployment. It is incumbent upon the Opposition to tell us what will happen after that one-year windfall tax money runs out. Can the hon. Member for Peckham give me a single example from anywhere in the world where a one-off scheme for one year has created permanent jobs and solved the unemployment problem? She cannot, because there is no such example. Any serious measures to reduce unemployment must be financed and sustained on a durable basis.
The other success area that enables us to keep down the growth of social security while maintaining decent provision for our people is in the sphere of pensions. On average, pensioners' incomes are now about 50 per cent. higher than they were in 1979. We have achieved that partly through our success in encouraging people to provide for their own retirement. Britain now has £600 billion in funded private pension schemes—more than all the money invested to meet the costs of future pensions in all the other countries in the European Union put together.
Recently, the Select Committee on Social Security suggested that we might come under pressure to help pay for unfunded pensions on the continent. I can promise the House that we will not let our assets be combined with continental liabilities. But Labour has always said that it will never allow itself to be isolated in Europe, so if other countries pressurise Britain to help bail them out, Labour will put feckless foreigners before thrifty Brits.
Labour also poses a threat to the basic state pension, and it has said that it will cut the pension to pay for allowing people to draw it from the age of 60. The Government Actuary says that Labour's policy would result in the pension being £20 a week lower for the rest of people's lives. Can the hon. Member for Peckham confirm what she said in a letter to me—that she does anticipate a lower basic state pension? She wrote to me in confidence, but I have given that opinion wider circulation. She will not confirm it to the House, and that speaks volumes for the openness that Labour intends to display to the electorate.
Over the past three years, Labour has criticised every reform that I have introduced. Collectively, those reforms will save £6 billion during the next Parliament. That is an extra £6 billion that taxpayers would have had to find had Labour's opposition been successful. But Labour has not just opposed our saving measures—it has proposed extra spending of its own. My right hon. Friend the Chief Secretary to the Treasury has set out more than £5 billion of additional spending proposals on social security which have been made by the Labour party and costed by us. So that is £6 billion plus £5 billion to make a total of £11 billion a year. That is the cost of letting new Labour loose on social security.
The measures announced this week will produce savings of more than £1 billion a year by the end of the century, in addition to those previously announced. They will maintain the real level of benefits, protect the most vulnerable, make treatment of couples and lone parents fairer, tackle fraud and curb the main areas of growth. Britain is better placed than almost any other country in Europe to face the future. After rising for 50 years, social security should grow within the growth of the economy and take a declining share of our national income, enabling us to support the needy without burdening the economy.
On Tuesday, we heard a last gasp Budget from a failed and discredited Government; 22 Tory tax increases will have cost the typical British family £2,125 more in tax by the time of the next general election. Ordinary families have to pay more of their hard-earned money in taxes to pay for the Government's failure. Nowhere is that failure clearer than in the welfare state.
The cost to the public purse has risen, and life for those on benefits is becoming harder and more degrading. The Tories are hitting the taxpayer and, far from protecting the poor, they are hitting them, too; they failed on welfare because they failed on work. The Government have failed to tackle poverty and unemployment and there are now almost 14 million people in poverty, compared with only 5 million in 1979.
Children in particular have suffered. Official Government figures show that one in three children is now born into poverty.
Is not the simple point that the hon. Lady is trying to make that the Labour Government were so mean in 1979 that they would not pay benefits to a decent number of people, who therefore did not have colour television sets and material goods? We have broadened the system of benefits so that many more people have much better opportunities to obtain material goods.
Then, we had a nation at work, not a nation on benefits. Now, increasingly, we have a nation on benefits—[Interruption.]
Thank you, Mr. Deputy Speaker.
One in five non-pensioner households now has no one in work. The Government have failed the unemployed, especially the long-term unemployed. We know that the longer people are out of work, the harder it is for them to get a job; 400,000 people have been jobless for more than two years. It costs the public purse £9,000 a year to keep someone trapped in unemployment. The total cost of long-term unemployment is £3.6 billion a year.
That is why we have asked for extra help for the long-term unemployed; for a national insurance holiday for employers who hire people who have been unemployed for more than two years; for a relaxation of the 16-hour rule, to help the long-term unemployed to get the skills that they need to get the jobs that are available; and for a national minimum wage, to end the low-pay economy with wages spiralling down and to provide wages that enable people to move from benefit to work and make it pay.
In the Budget, the Tories have done nothing to help the long-term unemployed off benefit and into work.
In a moment.
The Tories have failed the young unemployed. It is a tragedy that so many of our young people feel that they have been thrown on the scrap heap before they have even begun; 600,000 people under 25 are unemployed—one in six. In some inner-city estates, half the people under 25 are out of work, and in London 60 per cent. of young black men are unemployed.
The hon. Gentleman says that that is not correct, but the figure comes from an answer to a parliamentary question that I tabled. Of the black men under 25 in London, 60 per cent. are registered as unemployed. The total cost of youth unemployment to the taxpayer in benefits, lost taxes and crime is £10 billion a year.
We have called for a windfall levy on the unfair excess profits of the privatised utilities so that we can use the money to get those 250,000 under 25-year-olds off benefit and into work or training.
On trying to get young people back into work, does the hon. Lady accept that the minimum wage would mean increasing some salaries, and that one man's increase is another man's job loss? Far from achieving its objective, Labour would cheat people of jobs.
There has to be a floor under wages—a national minimum—partly because of the spiralling benefit bill: one person's low pay is another person's tax increase. We cannot have a spiralling down of pay and employers expecting the taxpayer to pick up the bill.
On the windfall profits levy, does my hon. Friend realise that, today, United Utilities declared its half-year profits and that it is making £845 a minute, representing an increase of 34 per cent.? Does not that justify the measures that the Labour party has sensibly suggested?
My hon. Friend is absolutely right. Some of that money, which, after all, has come from the public via gas, water and electricity bills, should be ploughed back to deal with the urgent problem that is fracturing our society of a growing number of young people with no work, no training, no nothing, who feel that they have been thrown on the scrap heap. The Budget has done nothing to get them off benefit and into work.
I want to press on for a moment. I shall give way later.
The real map of poverty and unemployment stretches far beyond the official unemployment statistics. Among the poorest are those who are hidden from view because they are not in the official statistics, especially the lone mothers bringing up their children on the bread line.
The number of families headed by lone mothers is growing, and has reached 1.6 million. They are among the people who are dependent on benefits the longest. There are not only financial costs: such people bring up children who have never seen the world of work. Married women are increasingly going out to work, but lone mothers are falling out of the labour market. The proportion of married mothers in employment, whatever the age of their children, has increased since 1979, but the proportion of lone mothers in work has fallen.
Lone mothers want to work; they do not want to depend on benefit. The Government's policy for the past 17 years has been, "Here's your giro, come back when your youngest child is 16," and the taxpayer has had to pick up the bill. It is no wonder that the cost of keeping lone mothers and their children on benefit has reached £10 billion a year.
I am grateful to the hon. Lady. Can she point to one piece of reputable research that suggests that introducing a national minimum wage would make it easier for poor people to find jobs or reduce demands on the benefit system?
We cannot use in-work benefits as a bridge for those who are out of work to go into work, as we should, if there is no floor under wages. Without such a system, the pay bill is simply transferred to the tax bill. I should have thought that hon. Gentleman would have understood that under the Government, the subsidy for low pay through in-work benefits has risen to more than £2 billion. That is one reason why he should agree with us about the minimum wage.
The way to get lone mothers out of poverty and cut spending on benefits for them is not by cutting the amount on which they have to live year by year and plunging them further into poverty.
I have already given way to the hon. Lady.
The Secretary of State mentioned Europe. We need to help get lone mothers into work, as happens in the rest of Europe. In France, 82 per cent. of young mothers are in work; in Britain only 41 per cent. are. Only half of young mothers are in work; the rest have to depend on benefits. In all other European countries, lone mothers work and support their children, and do not have to depend on the taxpayer. In Britain, they are stuck bringing up their children on the breadline.
We believe that the best form of welfare for people of working age is work. That is why we have set out a package of measures to tear down the barriers that prevent lone mothers from moving off benefit and dependence on the taxpayer and into work and self-sufficiency. They need a benefit transfer scheme, a personalised job and training system such that in Australia and a network of after-school clubs. Having never talked about them before, the Secretary of State, as the seconds count away to the general election, has suddenly mentioned them.
Only one in 80 children has access to an after-school club. One of the biggest problems for mothers of school-age children who want to get back to work is the difficulty of matching work responsibilities with school hours, INSET—in-service training—days, half-terms and holidays.
I welcome the Secretary of State as a new recruit to the enthusiasm that I have long had for after-school clubs. I look forward to his question on them.
The scheme to encourage out-of-school places was initiated by my right hon. Friend the Secretary of State for Education and Employment; it is she who has been trumpeting it most loudly. It is very successful, and an extra £20 million is to be put into it—making a total of some £64 million. Can the hon. Lady say whether she intends to give an extra penny to out-of-school clubs?
We have set out our plans for financing a network of after-school clubs. We want to use benefit transfer and lottery money and charge those mothers who can afford it. We want to use public-private partnership. With a little help from government, the huge demand for such clubs means that they will spring up. It is no good the right hon. Gentleman saying that the Secretary of State for Education and Employment knows about them. I have read all his speeches and press statements and he has not mentioned child care or after-school clubs. He only criticises lone mothers, and not until the eleventh hour did he recognise their aspirations to work. They do not want to be on the benefits that he has so grudgingly handed out.
I shall not at the moment because I want to finish discussing our proposals to enable lone mothers to go to work—as they do everywhere else in Europe.
We need targets for training and enterprise councils to train lone mothers. We need lifelong learning through individual learning accounts to help lone mothers get hack into work. Instead of helping lone mothers get off benefit and into work, the Budget simply makes them poorer by cutting the value of one-parent benefit and lone-parent premium and eventually abolishing those benefits. The Secretary of State said in his press statement that the cut in benefits to lone mothers is part of his approach of being fairer to families, but it is not fair to the families of women who bring up children on their own. They will be worse off. If that is what he thinks is a family policy, he does not understand how families work. The cut in benefits to lone mothers will not cut the divorce rate or keep one family together. It will not prevent one divorce or separation—but it will make hundreds of thousands of the poorest children worse off.
The Secretary of State says that he is cutting benefits to lone mothers because they are at an advantage compared with married couples. The truth is that they are at a disadvantage. Perhaps he does not realise that when people move from being in a couple to being a lone mother, they become worse, not better, off. My hon. Friend the Member for Wallasey (Ms Eagle) was right. Some 47 per cent. of lone mothers live on less than £100 a week, compared with only 4 per cent. of couples.
The proposals to cut the benefits of lone parents while giving them no help to get out to work are wrong, and we will oppose them. In government, we will have a welfare-to-work approach for lone parents. We cannot sort out the 10 billion benefit bill for lone parents by shaving their benefits bit by bit. We must help them back into work.
Lone parents are some of the poorest people in Britain. They face additional costs in bringing up their children alone. The Secretary of State thinks that child care is the only problem; if lone parents get into work, they can get child care disregard. He does not understand. Lone mothers not only do not have their partners' income; they do not have their partners' time. With two parents, when a child has a school open evening, one parent will go to it while the other will stay at home to look after the child. Lone mothers have to pay someone to look after their children if they want to go to open evenings. Time is money for parents. Two-parent families have more time to look around the shops to get the bargain rather than having to buy the first thing available. They have more time to do that fifth repair on clothes rather than having to buy a new item of clothing.
In reality, it is more expensive to raise children alone, as the 1985 Government Green Paper recognised. The White Paper that followed it called for the
continued recognition of the need for specific further help for lone parents.
The research has not changed; nor has common sense. People know what it is like to bring up children alone. All that has changed is that the Secretary of State has failed on welfare because he has failed on work. He is determined to make lone mothers—the softest target—pay the price. There are now more lone parent families trapped on benefit bringing up families in poverty because the Government have failed to get them off benefit and into work.
The Budget has not helped anyone off benefit and into work. Its benefit cuts will deepen disincentives to work. From October 1997, single people under the age of 60 will be able to claim housing benefit only for rooms in shared homes. How will that work in practice?
I shall explain. Perhaps the hon. Lady will then defend how it will work in practice. If people have a job and they lose it, they could lose their home. If people are looking for work and see a temporary job advertised, they will think, "I had better not take it because if I go off housing benefit and the job ultimately falls through, I could lose my home."
The woman who has lived with her husband in a private rented home will find that, if he dies, she will lose her home because she will have to move into a shared flat or house. She will not be able to stay in her one-bedroom house or flat after he dies. She will have to move into shared accommodation—so it is lose your husband, lose your home.
When the young man in his 30s living in a one-bedroom flat loses his job, he will lose his home because he will have to move into a shared flat or house—so it is lose your job, lose your home.
The woman in her 50s who has spent most of her adult life caring for her sick mother will find that, when her mother dies, she will lose her home. She will not be able to stay in a one-bedroom house or flat. So, after a lifetime of caring for her mother, it will be lose your home.
The Government seek to save £100 million a year ultimately by this measure. That contrasts starkly with the Department of Social Security's expenditure of more than £100 million on a new headquarters, Quarry house, which the Public Accounts Committee yesterday condemned. It published a report containing a devastating indictment of the spending on Quarry house. If the Secretary of State has not read it yet, I suggest that he does so right away.
Yesterday's Budget failed to get help to pensioners. It is a scandal that, after a lifetime of work or caring for their family, pensioners are some of the poorest people in Britain today. Pensioners have been hit hard by the Government. The Government broke their promise and put VAT on gas and electricity. We called in this Budget for VAT on fuel to be cut to 5 per cent., but the Government failed to do that. The Government refused, so thousands of pensioners throughout the country will, as winter approaches, have to choose between heating and eating.
Almost 1 million pensioners do not claim the income support to which they are entitled. I have raised the matter on a number of occasions and, fortunately, there is now a growing awareness that many people who are entitled to benefits are not receiving them. Almost 1 million pensioners do not claim the income support to which they are entitled. They lose an average of £14 a week—more than £700 a year. Of those pensioners, 800,000 are women living on their own. They have no state earnings-related pension scheme, no occupational pension, no savings, no nothing.
So what has this Budget done for Britain's pensioners? It has made the situation worse. The existing income support form already deters almost 1 million pensioners from claiming their entitlement and, under the heading of simplification, the Secretary of State has announced that yet more obstacles will be put in the way of people who intend to claim income support by requiring more evidence to support their claim. The Secretary of State's proposals will deter thousands more.
The Secretary of State is oblivious. He says that the only reason why the poorest pensioners do not claim about £700 a year to which they are entitled is that they choose not to claim it; that they do not want it. He says in his fascinating letter to me:
The claiming of benefit is of course a matter of personal choice and there will always be those who choose not to make a claim.
One million of them are exercising their personal choice to be £700 worse off every year. It is unacceptable for the Secretary of State to adopt that attitude, because the truth is very different. The message to pensioners from the Government has been clear. It has been, "If you claim benefit, you are a scrounger. If you are a pensioner, you are a burden." The message to pensioners has been loud and clear, and it is why 1 million of them do not claim and so suffer hardship.
We have argued that the proposals in the Government's anti-fraud Bill for cross-matching data should be used to help get the income that they need to the poorest pensioners who do not claim, but the Government have refused. They are prepared to cross-match data to combat fraud, but they will not do it to help the poorest pensioners because they think that pensioners do not claim as a matter of choice.
Pensioners are worse off under the Tories. The Tories have cut the value of the basic state pension by £20 a week by imposing VAT on fuel. Pensioners are worse off because the Tories have cut the value of SERPS in half and undermined occupational pensions. The Secretary of State boasted about second-tier and occupational pensions. His attempt to expand personal pensions has been a shambles. There is now a great lack of confidence in the financial services industry. We have had the scandal of mis-selling. There are now fewer people every year in occupational pension schemes. Pensioners fear that they will have to sell their homes to pay for long-term care.
I want to take this opportunity to challenge the Secretary of State on his plans for the basic state pension. Will he deny the reports in the newspapers that he plans to do away with the basic state pension? Will he deny reports that he plans to means test the basic state pension? Will he deny reports that he plans to privatise SERPS and force people into poor-value, risky personal pensions?
Yes, I will deny all three things. Now will the hon. Lady answer my question? Does she or does she not intend what she said in her letter to me—to introduce a lower basic state pension for those retiring at 60?
I will deal with the hon. Gentleman's question—[HON. MEMBERS: "Ah."] I will deal in 30 seconds with the Secretary of State's questions about the flexible decade of retirement. He has denied that he intends to do away with the basic state pension, that he will means test it or that he will scrap SERPS. The trouble is that there is a pattern here. This is exactly what happened before the last general election on VAT on gas and electricity. Rumours abounded, denials were categorical. The Tories won the election and immediately put VAT on gas and electricity. One thing that pensioners know is that they simply cannot trust the Tory Government.
Not only do the Tories wholly misrepresent their own plans, they misrepresent ours. Let me take this opportunity to say something about the flexible decade of retirement—as the Secretary of State mentioned it. In the past few years, a change has happened, and people now choose to retire at different ages. There has been a change in the old system whereby people got a job and worked full time for their entire working life from 15, when they left school, until they retired at 65 if they were men and received the basic state pension. Many people now want to retire earlier. All that we are saying is that if flexibility on the basic state pension means that individuals who have savings or a good occupational pension can choose to draw down their pension early at no cost to the public purse and can be certain that they will not fall back on the state later, why should they not exercise that personal choice? Why should we have a one-size-fit-all welfare state?
The Secretary of State has bounced from saying that our proposal would cost everyone £13 billion—
He said that it would cost everyone £15 billion immediately and that it would mean a cut of £20 a week in everyone's pension. All that we are saying is that there should be more flexibility and choice. The Government should accept that instead of trying to rubbish it.
What greater flexibility is the hon. Lady proposing to introduce than exists at present? Anyone who defers taking the pension by a year receives an increment of 7.4 per cent. for the rest of their life, twice that if they defer for two years, and so on. We have that built into the present system. The only difference between the hon. Lady's proposals and ours is that she would let everyone retire at 60 rather than 65, but people would have to do so on a basic pension which was £20 a week less for the rest of their life.
The Secretary of State understands that we are not forcing anybody to retire early. He has recognised the flexibility in being able to retire after the pivotal age of 65. If people postpone their retirement until after 65 or 60, they can draw down their pension at a higher rate. All we are saying is that there should be a bit of flexibility and choice for those who want to retire earlier and draw down their pension at a lower rate. The Secretary of State is making a big mistake in giving plenty of publicity and exposure to our proposal for a more flexible welfare state that meets modern patterns of employment. When people discover our proposal, thanks to the right hon. Gentleman, it will be popular with them.
Between now and 2010, when the arrangements change, the pensionable retirement age for women will be 60. Is the hon. Lady seriously saying that, between now and 2010, she would cut women's pensions by £20 a week?
Conservative Members are becoming more desperate and advancing ever more ludicrous, complex and unrealistic suggestions. The point is simple: the pivotal age is 65 and will be for both men and women. All we are saying is that there should be flexibility before the pivotal age, as there is after it. I shall move on, because I do not think that Conservative Members understand even that simple point.
The cost of the Government's failure to tackle poverty and unemployment is borne not only by those who claim benefits, but by the taxpayer. As this is the last Budget before the general election, today's debate provides an opportunity to review the Secretary of State's record, about which he boasted at the start of his speech.
When the right hon. Gentleman became Secretary of State, he claimed that he would cut the social security budget, but he has not. During his years as Secretary of State for Social Security, the budget has increased by more than £14 billion a year. That is his record.
The Secretary of State claimed again today that he has at least cut the growth in social security spending to less than the growth in GDP, so that the economy now grows faster than the social security budget. That is, however, what always happens when an economy begins to move out of recession. To the extent that that has happened, it is nothing to do with him, but is entirely cyclical.
The right hon. Gentleman claimed again today that it is the cost of universal benefits, particularly pensions, that has driven up the social security bill, but it is not. Two thirds of the increase in spending on social security is due to the growth of income-related benefits, which is the direct result of poverty and unemployment. It is not demography that is pushing up the social security budget, but poverty. It is not the elderly who are pushing up the social security budget, but this Secretary of State.
The consequence of the Government's failure on work is that, under the Tories, Britain has become divided as never before. The Government have created a fractured society, with a gaping chasm between those who are okay and those who are at the absolute bottom. Under the Tories, the welfare state is losing popular support: those who have to depend on it resent it and those who have to pay for it resent it. One of the reasons why a growing number of people resent the welfare state is that they do not want their hard-earned money being ripped off by fraud.
No matter where fraud is committed on the public purse, it must be stamped out. The welfare state must, at all times, remain vigilant in the battle against fraud. However, although the Secretary of State has claimed that he will save billions on fraud, he will not take the tough measures that are required to clamp down on fraud. In particular, he will not tackle organised landlord fraud—which has partly caused the spiralling benefit bill—because he is in the pocket of the private landlords.
I shall not give way until I have asked the right hon. Gentleman this: if he is serious about fraud, in addition to checking up on individual claimants, why will he not introduce a tough new offence for landlords that is backed by tough new penalties, or allow councils to stop paying money to landlords and pay it instead to tenants? Why will he not do that? All his assertions are worthless if he does not.
The hon. Lady knows that we have done that. I ask her to withdraw her statement that I am in the pocket of the landlords. It is untrue and dishonourable.
His party—[HON. MEMBERS: "Withdraw."] I shall rephrase my assertion and see whether we can come to an agreement about the situation.
On a point of order, Mr. Deputy Speaker. Is it in order to ascribe to any hon. Member a pecuniary relationship with people with whom they do not have such a relationship, or to say that they are in the pocket of an interest group when they are not and when they certainly do not take money from trade unions?
I was talking about the Government at large and about a political relationship, not a pecuniary relationship. The record of this Government is that they have stood idly by while the public purse has been ripped off because they have not been prepared to take action against landlords who are making themselves millionaires at the expense of the public purse. If the Secretary of State wants to show that he is prepared to take action to protect the public purse, without fear or favour, he will adopt our recommendations in respect of the Social Security Administration (Fraud) Bill.
The welfare state has an important role to play as part not only of an efficient economy, but of a just society. There have been huge social and economic changes since Beveridge created the welfare state in 1945. Those years have seen more women working, more lone mothers because of family breakdown, the end of the family wage with the fall in manufacturing, the end of the job for life, the end of skills that last a lifetime, a massive rise in economic activity; and an aging population as people live longer.
Those are challenges that the welfare state can meet, but it needs to be renewed so as to move ahead of economic and social change, not lag behind it; and to have the flexibility to respond to the diversity of people's lives, including the flexible decade of retirement. It must accompany a dynamic economy—it cannot be an alternative to work. It must bind our fractured society and be a force for social cohesion. The welfare state must develop a new balance of rights and responsibilities between the individual and the state. Welfare to work is the way forward, and it is the path that will be taken by Labour in government.
For hon. Members who are not standing at the next election, its approach leaves us in the same position as that of the opera singer who is making a final appearance for the 99th time. One makes a final appearance at the Queen's Speech debate, at one's mayor's banquet, at one's association dinner and, now, at the Budget debate. The experience makes me feel rather like Frank Sinatra.
It is normal on these occasions to sing one's most popular song and I want to repeat the point that I made during the debate on the Queen's Speech, which is that I still have grave reservations about the concept of a unified Budget. I have deployed the arguments on previous occasions, but I want to emphasise that there is a real problem in relation to timing.
After the summer recess, we have a brief spillover in which the Queen's Speech debate takes place and then the debate on the Budget. Then we have Christmas, after which Treasury Ministers and officials can go on holiday until the next summer recess. That is not a satisfactory arrangement. If we are not going to move the Budget from this time of the year—I understand that the Chancellor and the Treasury are rather in favour of keeping it at this time—there is at least a strong case for moving the Queen's Speech debate to the spring. I hope that hon. Members on both sides of the House will consider that carefully.
I congratulate the Chancellor on not only what I regard as a prudent Budget that takes due account of the balance between monetary and fiscal policy, but on creating the situation that the economy is in. As he rightly pointed out in his Budget statement:
The British economy is in its fifth successive year of steady. healthy economic growth, with falling unemployment and low inflation."—[Official Report, 26 November 1996; Vol. 286. c. 154.]
That has been accompanied by the best inflation performance for nearly 50 years and restrained growth of earnings, which is good news for jobs, and the current account is in the best overall trading performance for 10 years. That is a remarkable achievement and it provides a firm basis for further progress.
Does the right hon. Gentleman regard it as a mark of prudence when the Chancellor, in his last Budget before the general election, tells the House that, in the year to come, consumer spending, which is anticipated to rise by 4.5 per cent. in the next year, will be the driving force of the economy, and when he adds fuel to the flames by cutting direct taxation? Is that really prudent economics?
I shall deal with the whole area of policy in my main remarks.
I shall pick up on the speech made by the hon. Member for Peckham (Ms Harman). I am sad that the level of debate has been depressed to the stage where we have soundbites about 22 tax increases when the list itself is unbelievably ill-defined and does not really justify the claim at all. To lower the debate to that standard seems quite extraordinary and I would not wish to pursue that line.
I want to take up a point that the hon. Lady made about flexible retirement, because she was very careful with her words. She said, "It's all right if there is flexible retirement providing that the people who are exercising their discretion in that respect don't subsequently become a charge on the state." That passage cannot have been chucked in as a throwaway line, unless it was a straight slip of the tongue. It is worth examining exactly what that meant. I look forward to some elucidation, perhaps in the winding-up speech. The wording that she employed is interesting.
Is not the key point about introducing flexibility for retirement the fact that the vast majority of people are likely to take that option, and that brings forward the point at which their state retirement package becomes a liability on the state and is a significant net increase in public expenditure, which is yet another uncosted promise by the Opposition?
There are a considerable number of those. I understand very well the point that my hon. Friend rightly makes.
I have, after 33 year in the House, lost count of how many Budgets we have had, but it is worth reminding people that, under Labour, we not infrequently had more than one Budget in a year. We should bear that in mind, although I am always hesitant to hark back to the previous Labour Government, because a large number of people who will vote at the next election were not born at that time.
One thing on which I do reflect, however, is the way in which taxes come and go. I am afraid that we are probably stuck with income tax, but the Government have made it clear that the sell-by date for capital gains tax and inheritance tax is rapidly approaching, and I welcome that. It is also the case that, over the years, taxes have changed. I well remember a former Chief Secretary of the Labour Government being quite clear that the selective employment tax that he had introduced would last for ever. In fact, when I was at the Treasury, we abolished both that and purchase tax. We introduced value added tax. I feel bold to say that VAT will probably continue. The Labour party's proposal for a windfall tax is certainly not something that I would ever wish to support.
I intervened in the debate yesterday and asked the shadow Chancellor whether the windfall tax would raise more or less than £2 billion. I got no answer, of course, but he went on to say, in a quite extraordinary statement:
The windfall tax is not a tax on ordinary families."—[Official Report, 27 November 1996; Vol. 286, c. 366.]
We need to examine carefully where the money is coming from. For a number of the privatised industries, there is a system of regulators.
No, I have given way twice already. I do not want to take up too much time.
The proposal is that Labour will tax the windfall profits—the excess profits. Either the regulators for those industries are doing their job—in which case there will be no excess profits to tax—or they are not. It seems that the Labour party's expectation is that the regulators will not be doing their jobs, and if that is so, the Labour party is positively encouraging higher prices in many of the public utilities—many of which provide services that are very important for people on low incomes—which they will then tax. The reality is that the tax will be paid by ordinary people. Ultimately, that is where the money will come from. For that reason, it is not a tax of which we should approve.
I did not express any view on that. I said that one of two things will happen: either the regulators—I shall come to another point about competition—will keep profits down, or the profits will be excessive, and at the end of the day it is the consumer who will pay. Instead of discouraging that, the hon. Lady wants to tax, to take away excess profits and give them to the Treasury, when in fact they are being paid ultimately by consumers.
It is clear that some privatised industries do not have regulators, but they are competing elsewhere in the economy. It is not at all clear in those circumstances, because we are simply not told how wide the scope of the windfall tax will be, whether the tax will extend to the competitors of the former privatised industries as well as the former privatised industries themselves. The fact is that either the tax has not been thought through, which may well be the case, or the Labour party is simply not prepared to spell out what it really involves. That is much more likely to be the case.
I make a final comment—this is perhaps the last occasion on which I shall have the chance to do so—about local authority taxation, which has been fairly disastrous over the years. We had the rates system, which caused endless problems, the poll tax, which perhaps was not a wild success, and we now have the council tax. My own feeling is that there is a strong argument for transferring the cost of local services entirely to the Exchequer. The argument, "He who pays the piper calls the tune," has long since been invalid, because a high proportion of local government expenditure is financed from the central Exchequer anyway, and we had only to hear the statement from the Secretary of State for the Environment yesterday to realise that. I hope that, in the next Conservative Government, the costs of local government will be transferred to the central Exchequer and that there will be a block grant, leaving local councillors with an important role to play in allocation of resources.
The economy is reaching a critical stage, because whenever one is recovering from a recession, the crucial point arises as to the stage at which the Chancellor should appropriately damp down the level of increase in aggregate demand. The answer that I gave to the hon. Member for Stratford-on-Avon (Mr. Howarth), who intervened earlier, was that, given the stage that we are at in the recovery, the balance that the Chancellor has struck is entirely appropriate and prudent. It is a difficult decision, however, as we have found in the past. It was certainly difficult at the time of what has become known as the Barber boom: it was hard to judge when to slow down the growth in aggregate demand—although I feel bound to point out that the background was one of horrendous increases in world commodity prices and entirely different industrial relations. There were similar problems in 1990. It is important for the Chancellor to get it right this time.
Table 3.10 of the Red Book, on page 54, gives figures of 2.5, 2.5, 3.5 and 3 per cent. for growth in GDP in 1995, 1996, 1997 and 1998 respectively. That must be related to what is happening to the productive potential of the economy. In an interesting passage, the Red Book comments:
While productive capacity probably grows fairly steadily, actual output growth varies more.
That is certainly the case. The passage continues:
Output fell well below its trend level in the early 1990s recession. Growth was probably significantly faster than trend during 1993 and 1994, and the output gap therefore began to narrow. However, growth was slower in 1995 and the first half of 1996, and the output gap is unlikely to have narrowed much further over this period.
The Red Book concludes:
there is still a negative output gap of between 0 and 3 per cent. of GDP.
In those circumstances, I think it entirely appropriate that the Chancellor should plan the increase to which I have referred over the next three years; but I also think it important for him to make it clear that the rate of growth that he forecasts will not continue indefinitely. As we approach the productive potential ceiling, aggregate demand should go up only at the same rate as that productive potential. I very much hope that the Chancellor
will bear that in mind.
On page 88 of the Red Book, a table shows the percentage of GDP taken in total taxes and national insurance contributions. All the other forecasts cover a relatively short period up to the first half of 1998, but, to my surprise, this table goes as far as 2001–02. Perhaps, when she replies to the debate, my hon. Friend the Economic Secretary to the Treasury will explain why we have projected the figures so far ahead. My strong feeling is that the assumptions on which that forecast must be based, with regard to economic growth, unemployment and taxation, must be very uncertain, and I am doubtful about the virtues of extending economic forecasts as far ahead as 2001–02. I am also not at all clear about the extent to which the forecast makes allowance for the Government's spend-and-save programme, which is obviously very important. I hope that that can be clarified, but, as I have said, I consider the present overall position extremely satisfactory.
I hope that the Treasury Select Committee will look intensively into the contents of the Red Book. There has been considerable confusion over the past two days, and it is important for the Committee to clarify a number of aspects—and, as on previous occasions, improve Government accountability. It must clarify the precise content of the Chancellor's speech, so that in due course we can debate it on Second Reading of the Finance Bill.
Over the centuries, the House of Commons has been based on the control of money—both the right to raise taxation and the right to spend the proceeds of that taxation. Not only the power but the procedures of the House have been built on that. I do not want to anticipate the debate that we shall have on the documents that proved so controversial earlier in the week, but for that reason I find it difficult to comprehend why, if we are to have a so-called stabilisation pact, it is appropriate to introduce a system in which that is enforced by fines on a sovereign country. We should have regard to the basis on which the House has been established.
I do not for a moment dispute the Chancellor's point that, if there is to be what I would prefer to call a core rather than a single currency, there must be a degree of conformity between the member states that decide to participate in that core currency. Nevertheless, I doubt very much whether it is appropriate for such an arrangement to be enforced rather than agreed, in the manner proposed in those documents.
I am grateful for the opportunity to speak in the debate. I congratulate the Chancellor again, and wish him well—as, indeed, I wish the next Conservative Government well.
The right hon. Member for Worthing (Sir T. Higgins) suddenly struck a chord with me: I am now tempted to talk about budgetary reform, which I was not going to do.
I am pleased to say that I advocated a unified autumn Budget and resource accounting to the Procedure Committee in 1969. I have found in the past that my public accounting proposals take about 25 years to come to fruition, like some suggestions I used to make about state audit; but I must give credit where it is due. My party has always completely ignored my proposals, although I except my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon).
The Budget scheme and format, especially as regards public expenditure, is now far more informative than it was when I first came to the House, except for the performance indicators. Some of the performance indicators that the Government attach to spending programmes are completely pointless, and I hope that the Treasury will try to improve them.
I want to talk about some aspects of poverty, but before I do I must make a constituency point. In his speech, the Chancellor referred triumphantly to the £190 million private finance initiative project for the Norfolk and Norwich hospital. He did not acknowledge that using the PFI route has incurred not only considerable cost but a delay of at least three years in the provision of a hospital for which we have been waiting for more than 20 years. Nor did he tell us what would be the extra cost of building and running a hospital whose contractor will have to borrow money at a higher cost than the NHS would ever incur, and will also have to show a profit for its shareholders.
I am familiar with the Government's argument that anything private is run more efficiently than anything public, but I spent more than 20 years professionally measuring productivity, and it never struck me that that was the case. I believe that there is a correlation between productivity and size, but not between productivity and the form of ownership—but I digress.
The Chancellor was not to know that the new hospital will be in the wrong location, that it will be hard to get to and that it will have only 800 beds to replace the 1,400 in the existing two hospitals in the city centre, access to which is easy, and which will have to close.
The increase in health funding for the election year will be followed by deep cuts in health expenditure. Prescription charges will rise again—the Chancellor did not mention that at all—as will the maximum dental charge, for those who can find an NHS dentist. It is extremely difficult to find one in my constituency. Capital funding for health care is being cut, and, even if we allow for the reliance that is being placed on the PFI—which, to my knowledge, has produced only one hospital so far—the total cash for hospital building is falling by nearly 10 per cent. In total, real-terms spending on health care is flat for the next two years, and will fall after that.
The background economic judgment is that there should be a pre-election consumer boom, so consumer spending is to rise by the amazing figure of 4.25 per cent. If we add rising house prices and a £20 billion handout from building societies next spring, we have a stoked-up boom that can end only in a post-election bust. The forecast is for some rise in capital investment, which is currently contracting, and for a rapid increase in export volume. It is difficult to see why there should be an increase in export volume, given the rising pound.
We learnt from the Secretary of State for the Environment the other day that we will require 4.4 million new homes in the next few years. So what do the Government do? They cut the Housing Corporation's budget from £1 billion this year to £650 million next year, whereas three years ago it was £1.8 billion. That and local authority cuts will mean that only 30,000 new homes for rent will be built each year, which is half the Government's stated target.
The Chartered Institute of Housing said that the Government do not care about housing—I think that that is true. The cut in housing will lead to 5,500 fewer jobs in the construction industry. In the six counties of eastern England, including Norfolk, housing starts will drop to 1,563, which is a drop of 2,196. In Norwich this year, housing associations will produce 119 homes. A proportional reduction will mean that 77 new homes will be built in 1997–98, 20 of which will not be newly built or rehabilitated units, but either shared ownership properties or existing tenancies released as a result of incentive schemes. We will probably build about 70 houses to cover approximately 2,500 households on Norwich city council's waiting list.
In other local government areas, the Government allowance is due to rise by 1.5 per cent. Most local authorities have little in their reserves to add to that. This year, the county of Norfolk has been able to maintain its services only by taking £7 million from balances. Allowing for inflation and other cost increases, the county will require a rise in spending of more than 7 per cent., which will not be funded by Government. Norfolk county council's annual spend would have to rise by £23 million to bring it up to the average per head of English counties.
The Government are simply switching taxation from central Government to local authorities: 1p comes off income tax, and the council tax is increased by 6 per cent. What does the Budget do for our fellow citizens who are in poverty? The 250,000 single tenants suffer sweeping cuts in housing benefit to raise a mere £100 million. Future single parents will lose £6.30 a week in one-parent benefit, and those on income support lose a lone parent premium of £5.20. Existing single parents have their benefits frozen.
In the 16 years up to 1995, the number of children living in poverty tripled to just under 3 million, with more than one fifth of families on income support. The number of children living on what used to be called national assistance has risen from 272,000 in 1948 and 920,000 in 1979 to 2.9 million in 1995. I was raised on national assistance, and I remember it well.
National statistics show that 25 per cent. of our children live below the poverty line, which is defined by the European Union as less than half the national average income. A survey by the National Children's Home revealed that, for 1.5 million families, basic social security provision is not enough to pay for the diet prescribed as the minimum for a child in a workhouse in Bethnal Green in 1876.
A Rowntree Foundation report last June showed that, as a result of breaking the link between average earnings and benefits, families were £6 a week short of being able to provide "minimum essential" items for a child under two, and £11 short for each child between two and 11.
The United Nations human development report of 1996 cited Britain as one of the most unequal countries in the world—more unequal than the United States, and as bad as Nigeria. Against that background, the Chancellor stokes up a consumer boom, which depends on the well-heeled furiously spending their tax reliefs.
Let us look at the real needs of the country, such as capital investment in plant and equipment and infrastructure. The Government's capital spend will fall from £10 billion to £6.5 billion in three years. Their estimate that the gap will be made up by the private finance initiative raising £10 billion in three years is hopelessly optimistic—look at its record so far. On education and skills, we are 42nd in the world skills league. One in five families has no one in work. Since 1979, we have fallen from 13th to 18th in the world prosperity league.
As the Financial Times pointed out, the Budget is particularly hard on women, because of the loss of single parent benefit, the small tax relief for the low paid, 70 per cent. of whom are women, and the freezing of child benefit.
The Government will be lucky to avoid raising interest rates before the general election. The Chancellor has taken that gamble. The whole Budget is a gamble, and offers nothing for the growing army of the poor.
I shall deal with two aspects of the Budget. First, when the measures on low-sulphur diesel fuel were announced, many people were left wondering what they were all about. On 17 April this year, I initiated a debate on air pollution. During the debate, I outlined clearly the effects on the health of the nation of particulate matter blowing into the atmosphere. About 4 million adults and 1 million children suffer from respiratory problems. There is a real need to address that problem.
I appreciate the fact that we are spending another £1.6 billion on health this year. It is more important to prevent some of the problems than to deal with them once they arise. I appreciate what the Treasury has done in that respect.
The Chancellor mentioned black smoke. Black smoke is made up of fine particles. The average London bus pushes out 1.5 tonnes of soot every year, as do large lorries. That dust is carcinogenic: it is dangerous stuff. We all breathe it in, so we must address the problem.
Low-sulphur diesel is just one step. It reduces sulphur and other pollutants in the atmosphere. More important, it enables technology to introduce continuously regenerating traps into the exhaust system to take all the dust pollutants out of that exhaust. I commend Westminster city council for insisting that that system is fitted to all council dustcarts that operate around the House.
Indeed, Johnson Matthey has pioneered that technology. It costs about £3,500 to fit a bus or other vehicle with that equipment. The £500 a year reduction in the road fund licence that will be offered for vehicles that conform is a real fiscal measure to encourage bus and lorry operators to be more environmentally friendly. That will have a huge impact in London and in any urban environment, including the constituency of the hon. Member for Norwich, South (Mr. Garrett). We cannot escape pollution in an urban area, so I applaud that measure.
I was not privy to the leak that most people saw the day before the Budget statement, so I was amazed at how spot on the Chancellor was, because he provided everything for which I had asked in April.
The Chancellor proposes a reduction of 25 per cent. in the duty on liquid petroleum gas and compressed natural gas. A vehicle can use natural gas—it is available to anyone through the normal gas system by means of a compressor operation that one can recharge. I am delighted that the Department of Trade and Industry has a couple of cars running on that fuel. It is the purest form of fuel and does not pollute the atmosphere at all.
That reduction is another fiscal measure that will encourage development. I have had several meetings with Shires, the bus operator in my constituency. It readily admits that natural gas is back on the agenda and that it will probably be viable. For me, an asthmatic who has been campaigning for that, the measure is very welcome. I offer my right hon. and learned Friend the Chancellor my thanks and the thanks of fellow sufferers and the medical profession for recognising the problem and for dealing with it in such a way. I am delighted to flag up that point, which otherwise might have been overlooked.
Luton is very much a microcosm of the economy. I take a great interest in what is going on and why. The environment that the Government have created encourages business to invest; it has certainly generated the growth from which we are now benefiting. The Budget will keep that successful economic environment running; indeed, it is the most important thing that the Budget will do.
Luton is an exception in the south-east in having a well-balanced local economy with many manufacturing and technology-based companies. It has world-class companies such as Vauxhall, Monarch, Britannia and Whitbread. It also has hundreds of successful small and medium-sized companies. I am sure that when my hon. Friend the Member for Colchester, North (Mr. Jenkin) speaks later, he will agree with me that it is excellent news that the Government are dealing with the problem of rates and intend to freeze rates for small companies. That is extremely important if we are to help small businesses grow into large businesses, as then they can employ more people.
Luton has been at the forefront in adapting to the challenges of the next millennium and encouraging the development both of its businesses for the future and of the associated skills required by the work force. Luton's record in generating exports is second to none. I take my hat off to the chamber of commerce for the way in which it has encouraged exports.
It should come as no surprise that recent surveys have shown that businesses in Luton report higher order books, more investment and higher levels of confidence, which is obviously good news for all who live and work in that town. It is living proof that the Government's economic policies are working. However, if I have a criticism of Government policy—and I occasionally have a little criticism—it is that because Luton is so successful in taking advantage of the current favourable economic climate, it suffers in comparison with comparable areas in other parts of the United Kingdom when it comes to grants.
I know that we have received £4 million for the Luton and Dunstable regeneration scheme, but that is a small amount compared with grants received by many similar towns in the north, the midlands, Wales and Scotland. Just because Luton is in the south does not mean that it does not need help. I am not convinced that there is a level playing field—indeed, I know that there is not—in the assessment of which areas receive Government help. I should like that corrected.
I shall illustrate the problem. Vauxhall has been in this country for many years and in Luton since the 1920s. During recent years, it has invested £450 million in its plant in Luton, which produces the successful Vectra. That contributes enormously to our balance of trade—
The cars are fitted with catalytic converters.
Some 80 per cent. of the new estate car production is exported. However, Vauxhall has received no help, whereas Nissan, Toyota and other car manufacturers have received help. That does not help to persuade companies such as Vauxhall to stay put; indeed, it may make it want to move. That is not good news for Luton and that concerns me.
I am talking about keeping manufacturing jobs in the south-east. I represent Luton, not the north-east. I am proud to represent Luton and I will continue to represent it for many more years.
Luton is the economic dynamo for Bedfordshire and beyond. It is set to consolidate its current successes and to develop new opportunities for businesses and jobs, because it has all the main ingredients for future success. It has an excellent transport infrastructure. More and more passengers, especially business passengers, are choosing to use our airport. There is access to the M1 and the M25. There is an excellent rail service—and I am looking forward to its being privatised as I am sure that that will improve it even further.
Despite all that, there is much more to come. Luton airport is continuing to develop its services. It will be greatly assisted when the new Parkway station is built. It is to be the new interchange in Luton, financed by the private finance initiative. It will be a huge generator of employment in the area and it will be a magnet for businesses—not only airport-related businesses, but the corporate headquarters that are moving to towns such as Luton. That is good news and it illustrates the stage that Luton has reached and how we are financing our success.
It is not just the excellent transport system that is receiving huge amounts of investment. Prudential Insurance has invested millions of pounds in refurbishing the Arndale centre, which is the main shopping centre. I am pleased to say that it is in the centre of the town, not out of town. That refurbishment has increased the centre's attractiveness to shoppers and has led to new retail outlets setting up there. It is a real success story of private investment.
As I said, Vauxhall has invested its money in Luton, preferring to stay there rather than move to other European locations. The hon. Member for Norwich, South pointed out what was happening in the north of England; I am worried about what is on the other side of the channel. I want to ensure that Luton is an attractive environment. Britain is attracting almost half of all inward investment and I want to ensure that we keep it that way. Companies come to Britain not because they like it, but because it has the right economic environment. That is the only reason why they come here.
Much of our success has been achieved not by the interventionist approach favoured by Labour Members, but through the sort of private investment that is leading Luton into the next century. That private investment is there only because of the climate of enterprise that the Government have generated. Low tax, low inflation, low interest rates, sound public finances, reducing the burdens on business and ensuring high education standards and skill levels—those are the reasons why so many companies are investing in Luton. It is a microcosm of the rest of the country.
Those Government policies have created an economic climate in which businesses can thrive. Successful business means more jobs and more jobs mean better standards of living, both for the people of Luton and for people throughout the rest of the United Kingdom. Luton will play a major part in ensuring that this country becomes the enterprise centre of Europe—and it will do so only because of the Government's successful economic policies, which will continue as a result of the Budget announcements. I congratulate my right hon. and learned Friend the Chancellor on this year's Budget measures. They will build on the solid foundations that have been laid in the past 17 years of Conservative government. The measures lay out the strategy for a prosperous future for all who live in Luton and in the rest of the UK. They should be supported enthusiastically by the House.
It is important that we discuss, among other things, social security uprating, but we must also talk about the many people who are not receiving the benefits to which they are entitled. Last week's Department of Social Security estimates of the take-up of income-related benefit, particularly those for pensioners, were extremely depressing. I make no apology for mentioning that, even though I mentioned it in Monday's debate. One million pensioners are not receiving the income-related benefits to which they are entitled and the take-up rate for pensioners is deteriorating.
We need a national advertising campaign to ensure that those pensioners realise what they are entitled to. We have an advertising campaign for the benefit fraud hotline and for the Child Support Agency in Greater Manchester. If we can have such campaigns for those things, why cannot we have an advertising campaign to let pensioners and other people know what they are entitled to? It is not good enough just to send out leaflets, although those are welcome. We need to ensure that pensioners will take up those income-related benefits.
On the details of the social security uprating, do the Government honestly believe that the existence of lone-parent benefits encourages marriages to break up, because that seems to be what the Secretary of State for Social Security is saying? Where is the evidence for that? Where is the evidence that it encourages people to leave their husbands and to set up as a lone-parent family?
Lone parents are rarely better off. The hon. Members for Wallasey (Ms Eagle) and for Peckham (Ms Harman), the Opposition spokeswoman, said that 40 per cent. of one-parent families have an income of less than £100. That compares with the fact that 4 per cent. of two-parent families have an income of less than £100.
In my intervention, I told the Secretary of State that the lone-parent premium was introduced in 1988 by this Government to recognise the extra costs of lone parents bringing up a child or children. I do not honestly believe that he answered the question why in 1988 there were extra costs, but why, this year or next year, there will be no extra costs for such parents. As the Secretary of State has admitted, the largest group of lone parents are divorced and separated women. They are not going to be encouraged to leave their husband just for these benefits.
The Secretary of State cannot honestly believe that a happy couple will split up, just so that the wife can receive the extra benefit of £5.20 a week or £6.30 a week. It is ludicrous, but that is what the Government are suggesting.
Will the hon. Lady explain and justify to a married couple on benefit why a single parent should effectively be better off than a married couple on benefit in identical circumstances?
The hon. Gentleman should have put that question to the Secretary of State for Social Security in 1988, when the lone-parent premium was introduced. The Government recognised the extra cost then. There are extra costs for lone parents bringing up a child. Everyone knows that. It is an established fact, or the Government, in their wisdom, would not have introduced the premium in 1988.
The Government have already admitted that 90 per cent. of lone parents want to work. We should be helping lone parents back into work. To do that, we need much more help with child care costs. With respect, the £60 disregard is not enough. It is paid only on family credit. It will not help many of those lone parents, for the simple reason that they cannot find child care at £60 a week.
I am appalled that the Government are abolishing the one-parent benefit. They talk about getting lone parents back into work. The benefit helps such parents in work and it is not cost-effective to abolish it.
I am concerned again that the Government have not uprated the social fund maternity payment in line with inflation. I am pleased that they have uprated child benefit, but we need to know what will happen. At the previous general election, they guaranteed that child benefit would be uprated year on year in line with inflation. I hope that, in her reply, the Economic Secretary to the Treasury will give an assurance that that will occur year on year from now on, and that that will be a strong general election commitment. It is important, because the Labour party has decided to scrap child benefit for 17 and 18-year-olds in education.
I am sorry that nothing has been done in the social security uprating to restore benefit for 16 to 17-year-olds. Many of those people are not in jobs and are not receiving benefit. More than 120,000 was the last count—the precise figure is 120,300. Do the Government know what has happened to those young people? I will tell them what has happened to some of them. Some are out on the street. Some have gone into prostitution. Some have gone into crime.
When that happens, there is a knock-on effect for this and every Government. There is a knock-on effect for the Home Office budget, because the crime figures and prostitution rise. There is also a knock-on effect for the Department of Health because, once they are homeless, people's health suffers. It is not cost-effective to cut benefit for 16 to 17-year-olds, as the Government have done. They should restore those benefits.
Many of those young people leave home because they cannot cope at home. I know about the provision that, if a young person has been abused, he can report it and could receive benefit, but many of those young people do not want to say that they have been either sexually or physically abused. They are too embarrassed to do so. They leave home, they cannot get employment and cannot receive benefit.
We need to ensure that those people have proper training places. The Government say that they can easily gain a training place, but the figures show that that is not correct. There are not enough training places for young people. Many of them are not equipped to take up one of those places.
To get people back into work, we need a proper benefit transfer scheme to ensure that, if someone has been unemployed for more than a year, his benefit is given to an employer to take him on. The Government should consider that and I hope that they do so.
To return to pensioners, the cold-weather payment rules are strict. The temperature must be below zero for seven days. I should like that to be reduced to three days. Seven days is far too long and the wind-chill factor is not taken into account. I hope that all Conservative Members will support the modest Bill that the hon. Member for Preston (Mrs. Wise) is introducing as a private Member's Bill, which takes the wind-chill factor into account. I am privileged to be co-sponsoring that Bill.
On the Christmas bonus, there is not much there for pensioners. It has been frozen yet again at £10—a miserly amount for Christmas. If it had gone up in line with inflation since 1972, it would be worth £67. I want the Government to make a commitment that, in the first week of December, they will pay double the pension to those pensioners. At least the Government have not abolished the bonus, as the Labour party did when it was in power.
Another hon. Member brought that up in another debate. If the hon. Gentleman considers the facts, he will find that there was no Lib-Lab pact when the bonus was abolished. He should consider the timing of it. After the previous debate, I looked it up and I wanted an opportunity to tell Conservative Members that they were wrong. The hon. Gentleman should check his facts before he makes seated interventions. Yes, the Labour party cancelled the bonus, but what have the Government done? They are miserly to pay pensioners £10 as a Christmas bonus. What can £10 buy? It would barely buy a frozen turkey.
If the hon. Gentleman had been listening, he would know that I suggested that, in the first week of December, there should be a double pension for every household: a double single person's pension and a double couples' pension. He really must pay attention instead of making seated interventions when I have already told him the facts. At least the Government did not cancel the bonuses.
Turning to housing benefit, earlier this year the draconian rule was introduced for people under 25 whereby they had either to find accommodation in a multi-occupancy house or not receive housing benefit. That rule has now been extended to those under 60. I hope that the Government have done their research properly and determined whether sufficient bed-sit accommodation is available, because I know that there certainly is not enough such accommodation in Rochdale, and there is not enough in other areas.
Over the years, landlords have been persuaded by the Government to offer self-contained accommodation—which means with a bathroom and a kitchen included. What are landlords now supposed to do—rip out those facilities and put in shared bathrooms and kitchens so that they can get tenants? That is what will have to happen, because people will not be able to find that type of accommodation.
What about 55-year-olds who are thrown out of work and who have lived in a property all their lives, until they were made redundant? They had rented it—probably a one-bedroom flat, or perhaps a one or two-bedroom house—because they knew that they could afford it, and they could not find another job because they were too old. They took on that accommodation because they were able to afford it, but now they will be thrown out. They will be made homeless if they cannot find bed-sit accommodation. That is my fear. We shall see not only 16 and 17-year-olds and under 25-year-olds on the street; we shall see under-60s on the streets, and that will have an absolutely devastating effect on the country.
I can understand why the Secretary of State has changed the qualification rules on the jobseeker's allowance, so that people will have to be unemployed for seven instead of three days to qualify. However, he will have to appreciate the fact that—although we hope that a person who is newly out of work will try in the first week to find work, go for interviews, make those telephone calls and write those letters—they need extra money then, if we want to get them back into jobs quickly. It would be cost-effective to let them have that extra money then and not to extend the qualifying time to seven days.
To sum up, the Budget and social security uprating have done nothing for pensioners. It was an absolute insult that pensioners were not mentioned by the Government—although they have frozen the Christmas bonus. The Government have done a tremendous amount for single parents—they are destroying single parents' lives. They are also destroying the lives of single people under 60 who will be thrown out on the street.
It is a miserly Budget, and all that it will do for the Government in the short term—because it will not save money in the long term—is perhaps save them a bit of money. It will certainly not help the most vulnerable in society.
I am most grateful to have caught your eye this early in the debate, Mr. Deputy Speaker. I must apologise to the House in advance that I will not be able to stay for the conclusion of the debate, as I shall be attending to other duties, but I crave its indulgence.
I am most grateful to have the opportunity to follow, as I sometimes do, the hon. Member for Rochdale (Ms Lynne) in debates on social security. I should like briefly to make a comparison between her speech and that of the hon. Member for Peckham (Ms Harman). There seems to be a race between the two Opposition parties in which can promise the most, make the most spending commitments and produce the glossiest promises to try to seduce some of the most vulnerable electors in our constituencies to vote for them.
I have some news for both hon. Members: this is not a race in which Conservative Members intend to participate. If we did, not only would we be participating in a fraud upon the electors—because the Opposition cannot possibly keep those promises—but we would be giving up the credibility that we possess and they lack on the fundamental issue at the heart of the Budget judgment: the levels of public expenditure, borrowing and taxation.
It is absolutely amazing that the hon. Gentleman says that he will not participate in the race to protect the most vulnerable in society. That is what he is saying: that those vulnerable people can be left at the bottom of the heap. If he would like to examine our alternative Budget, he will find a fully costed programme. We have said how we will raise money and how we will spend it.
I am very glad that I gave way to the hon. Lady, because it gives me an opportunity to clarify her misunderstanding of what I said. I said that we will not participate in the race to produce big and glossy promises that we know we would not be able to fulfil. The important aspect of the Government's promises on spending is that we not only make promises but we keep them.
On credibility and promises, the hon. Gentleman, during the most recent general election, gave his constituents 10 good reasons to vote Conservative. Those were his promises. No. 4 in his personal election address was lower taxes. What price his promises and what price his credibility to his electorate now?
It is a basic tax rate that is now 23p—which is 10p lower than when the Labour party was last in office. I am most grateful to the hon. Gentleman for drawing attention to my promise to my electors, which we have been able to keep.
As I said, the key concern in the Budget was the level of public borrowing. There is no doubt that there is disappointment that borrowing has remained so stubbornly high. It is instructive, referring to paragraph 1.06 of the Red Book, to make a comparison between the projected borrowing figures in this year's and last year's Budgets. This year's outturn was meant to be 3 per cent. of GDP, and it is 3.5 per cent.; next year's was meant to be 2 per cent., and it is 2.5 per cent. We do not achieve balance until 2001.
Against that background, my right hon. and learned Friend the Chancellor of the Exchequer had a most difficult Budget judgment to deliver, and I congratulate him on what he has achieved. The higher borrowing is due to sluggish tax rates. Therefore, I utterly applaud his initiatives to do his best to collect taxes that people are due to pay. The spend-and-save initiative aims to improve the Government's efficiency, not only in reducing social security fraud—which is possibly the main thrust of this debate—but in improving the efficiency of Customs and Excise and the Inland Revenue, to ensure that businesses and individuals pay the taxes that they are due to pay.
The Budget was also delivered against the background of an extremely successful economy. We have only to look at the key outputs. We are in our fifth successive year of growth. The graphs show that industrial investment is rising above its trend levels. There is also good news about jobs. It is ridiculous for the Opposition to pretend that the economy is somehow on its uppers and that 17 years of Conservative Government have been wasted when unemployment in the United Kingdom has fallen by more than 1 million in the past few years, while our European competitors who have not dealt with their structural and other difficulties are still experiencing sharp rises in unemployment. The fact is that unemployment in the United Kingdom is 7.5 per cent. when it is more than 11 per cent. in France and more than 25 per cent. in Spain.
If the Government deliver one pledge to the electorate it is that people should have the best possible opportunity to get a job. When I intervened in the speech of the hon. Member for Peckham and asked her to produce evidence that a minimum wage would not destroy jobs, she was completely unable to do so. The right hon. Member for Kingston upon Hull, East (Mr. Prescott) has also admitted that the introduction of a national minimum wage would destroy jobs. How would that help the most vulnerable people in society? How can people make the transition from welfare dependency into work if we create an even higher barrier for them to surmount?
If the hon. Gentleman is interested in studying the academic evidence that demonstrates that a minimum wage, sensibly conceived, not only would not destroy jobs, but would enhance job creation, may I refer him to the work of Professor Card of Princeton university.
I have not studied that particular piece of evidence, but I refer the hon. Gentleman to the OECD surveys on the national minimum wage that are absolutely clear that a minimum wage would cost jobs. Closer inspection of the operation of the minimum wage in countries that Opposition Members describe as exemplary reveals that the relevant legislation is often either ineffective or so decentralised that it does not constitute a national minimum wage. The only concrete example is France, where unemployment is high.
I particularly welcome the following comment in my right hon. and learned Friend's Budget speech:
I realise that the current system of business rates bears particularly hard on smaller businesses, for which it represents a much bigger proportion of total costs compared with their large competitors."—[Official Report, 26 November 1996; Vol. 286, c. 169.]
He pledged to address that inequality in his next Budget, and I very much look forward to that.
That comment reflects the work that I carried out in the summer along with my colleagues on the Conservative Back Bench committee on smaller businesses to produce a pamphlet entitled "Fairer Business Rates". It showed that the distribution of business rates lent heavily on smaller businesses and represented a far higher proportion of their overall costs. Businesses with a turnover of between £50,000 and £100,000 were paying business rates of up to 14 per cent. of their overheads, whereas larger companies were paying only 2 or 3 per cent. It is therefore not surprising that shops and smaller high street businesses are struggling to compete with out-of-town supermarkets, which pay only a tiny proportion of overall costs in business rates. I very much welcome my right hon. and learned Friend's promise to address that problem. I appreciate that a radical redistribution of the business rate burden may be required so that larger businesses pay just a little more in order to provide relief for the thousands of small businesses that have made representations to us.
I welcome the increase in key programmes that reflect our priorities. My local health authority will receive a 2.6 per cent. rise in its budget in real terms, lifting North Essex health authority expenditure to £370 million. That above-average increase reflects the continuing trend of redistribution of health resources according to capitation funding, redressing an imbalance in funding towards conurbations, particularly London.
I am grateful for the increase in funding for schools. We hope that local authorities—particularly in Essex, which is not under Conservative control—pass that increase on to the schools that need the money. I am also pleased that an extra £280 million has been allocated to higher education. It represents a much-needed cash injection for the hard-pressed universities that are eagerly awaiting the outcome of the Dearing review on higher education funding. I hope that the system will be restructured to enable substantial growth in higher education funding in future. We all know that the rise in the number of students has not been matched by increases in resources to universities. Perhaps a move to genuine capitation funding for higher education would be beneficial.
Finally, the police will receive a 3.7 per cent. increase in funding, providing 2,000 more officers in England and Wales against the background of a 10 per. cent reduction in crime over the past three years. I am particularly pleased that the Essex police force will receive a 3.9 per cent. increase in spending power and an extra 55 officers.
The spending priorities of the Opposition parties are revealed all too dramatically by their major complaints about the Budget. It is clear that they are most worried about their friends in local government. If they were seriously concerned that local government might be underfunded, they would vote against the tax cuts that we are giving the British people rather than suggesting that expenditure should be reallocated—away from the police, education or the health service—in order to support local government. The Opposition should see the mote in their own eye before criticising the Government's efforts to streamline the national health service. They always say that we should get rid of administrators in the NHS, but never complain about the number of administrators in the town halls—there are often far too many of them.
No doubt the Liberal Democrats are planning a 1p increase in the basic rate of tax in order to fund their education promises. I hope that the hon. Member for Rochdale will have noticed that schools are getting extra money and the British people are getting a penny off the basic rate of tax. The Conservative Government can provide such double benefits time and again.
The hon. Gentleman must appreciate that the council tax payer will have to pay for the Government's education commitments. Liberal Democrats will vote against the reduction in income tax as we believe the money should go into education and training. I wish that the official Opposition would join us in the Lobby.
I certainly agree with the hon. Lady that it would be a good deal more honest for the official Opposition to do as she suggests.
The underlying concern of the Budget must be the rise in monetary growth. My right hon. and learned Friend said very little about monetary policy and did not refer to the key economic indicators of M4 and M0. The Red Book informs us that those monetary indicators are outside the monitoring range.
I shall draw attention to the strong correlation between money supply indicators and future inflationary pressure. The Library has kindly produced a graph showing M4, M0 and inflation over the past 20 years. It is striking how the peaks in monetary growth precede the peaks in inflation.
I draw particular attention to a comment made by Professor Tim Congdon, one of the wise men, the day after my right hon. and learned Friend delivered his Budget. The advice sent to his gilts clients was headed:
Mr. Clarke silent on high money growth. Cautious fiscal stance disguises monetary laxity.
I am acutely aware of Professor Congdon's unnerving credibility for forecasting inflation. He wrote an article in June 1987, long before most people were worried about the overheating of the British economy, called, "Mr. Lawson's secret inflation". In it he said:
The growth of credit and money is too high, the economy is expanding too quickly and interest rates are too low to prevent the return of inflationary pressures.
I do not for a moment suggest that we are approaching any such difficulties in the economy, but it is clear that Professor Congdon is sending out warning signals and that his feelings are shared by others. The "Economic Viewpoint" written by Samuel Brittan in the Financial Times—no anti-single currency monetarist he—says:
there are many signs of inflationary pressures in the pipeline.
Those pressures may not be showing up in the more solid leading indicators yet, but we must be ever vigilant of the dangers of returning to inflation.
I therefore very much welcome the report in The Times today that my right hon. and learned Friend the Chancellor
pledged to raise interest rates if necessary".
I will do whatever is necessary, but we have at the moment a lack of inflationary pressures. As soon as they show signs of growing, I will act.
It is commendable that my right hon. and learned Friend is keeping a firm eye on inflation to ensure that there is no danger of returning to boom and bust.
As my right hon. Friend the Member for Worthing (Sir T. Higgins) said, the Budget judgment is fundamental to the character and purpose of the House. As we look to the future, we must hope and pray that the Government will stick to their pledges—as I am sure that they will—that there will be no fudging of the Maastricht convergence criteria. If they do so, there is no prospect that that role will be stolen from us.
It was nice to hear the hon. Member for Colchester, North (Mr. Jenkin) espousing the old creed of unalloyed monetarism, quoting M0, M4 and other similar numbers and measures of the money supply. We do not often hear the old faith quoted in here. Of course, it is as wrong now as it was when it was first adopted, as any look at the effectiveness of monetary policy in the early 1980s demonstrates.
The income tax reductions in the Budget are offset by indirect tax increases. The Budget gives with one hand and takes back with the other. We have one new tax— VAT at 17.5 per cent. on some insurance—and seven tax increases: council taxes going up by £4 billion; insurance premium tax up by 1.5 per cent.; a doubling of air passenger tax; the abolition of tax relief on profit-related pay, which threatens some serious reductions in income when it comes into effect—which, mercifully for the Government, will be after the general election; prescription charges up by 15p; fuel duties up by 5 per cent. above inflation; and tobacco duties up by 3 per cent. above inflation. Conservative spending commitments dissolve before our eyes when we look at the details.
However, I praise the Chancellor for having done something that I have found useful—releasing the Budget details on floppy disk so that we can put them into our computers and have them readily accessible. That is a good innovation. I hope that there will be a CD-ROM with fanfares, trumpets and sound effects at some stage in the future. Releasing the information on disk is a good start and I hope that we shall pursue it. I hope that that innovation was not responsible for the leaking of the Budget. I suspect that it was the privatisation of Her Majesty's Stationery Office, but time will tell where the leaks came from, when MI5 has done its job.
The spending commitments in the Red Book and the accompanying press releases are phantom. The Government claim a £1.6 billion increase for the NHS, but a 0.7 per cent. real-terms cut in the resources allocated to the health service is forecast for the year after the election. The 16 per cent. cut in capital expenditure has not been replaced by private finance initiative commitments. We have heard today that only one of the PFI commitments promised at the last election has been delivered in the past year.
The Government claim an increase of £875 million in the resources available for education, but if the Government's total spending figure was applied, £73 million less would be available for education than is currently spent. That is yet another phantom spending commitment.
Most of the £450 million claimed as extra spending to tackle crime will go on building new prison places, not on preventing crime. We need to go to the causes of crime to prevent it, rather than spending ever-increasing amounts on building prisons all over the country. We need to deal with the problems of social breakdown caused by inequality and poverty, which are the legacy of the Government.
The Budget is already unravelling. There is scepticism on where many of the revenue claims will come from in reality. The spend and save plan is causing commentators particular problems and there is outrage at some of the more blatant examples of what might generously be called creative accounting which are coming to light as we take a more careful trawl through the complex series of documents released on Budget day.
Various comments have been made by economists in the past couple of days. Adam Cole of the City brokers James Capel said:
I am staggered by it. It incorporates fiddles which would make the French blush.
The £7 billion savings from loopholes and avoidance are especially disbelieved. David Mackie from the investment bank J. P. Morgan said:
This is the kind of thing the Italians put in their Budgets. It is not at all clear that the plans on paper can ever be delivered.
Economists have been particularly outraged by a convenient but unhighlighted change in the conventions for presenting spending plans to the House which has allowed the Treasury to claim that the control total will be £2 billion lower than would have been the case without the change. That has been achieved by subtracting the receipts from the sale of the student loan book and the privatisation of the Ministry of Defence housing stock from departmental spending totals rather than entering the revenue as a privatisation receipt, as has been the case in the past. If those factors are added back in, departmental spending plans are £3 billion higher than the Budget documents claim. That means that we do not have as tight a public expenditure round as the Chancellor claimed. It is looser.
The Treasury also incorporates assumptions about falling unemployment benefit spending, which it has never done before. The Government have made a big assumption about the numbers due to come off unemployment benefit, allowing them to deduct several hundred million pounds more from their spending plans.
A windfall tax, by another name, has been introduced. We spent an entire day debating the Opposition's plans for a one-off windfall profits levy on the privatised utilities, but a closer look at the Budget documents reveal that the Chancellor has imposed his own version of it in his changes to capital allowances for infrastructure and pipes. The Opposition are proposing a one-off levy, but the Chancellor has introduced a continuing and cumulative levy, which the utilities calculate will cost as much as Labour's £5 billion receipts from the windfall tax.
There is much sleight of hand in the Budget. There are many claims and much crossing of fingers, whistling in the dark and hoping that the £7 billion savings will accumulate. The Government do not believe that they will be in power after the next election, so they are not really interested in how to get out of the mess next year.
The hon. Lady says that the proposed windfall tax is a one-off. Could she direct me to a specific assurance on that from a senior Opposition spokesman? On the point that she made in her intervention on my speech, is she not hoping that there will be excess profits so that the Labour party can tax them? That would lead to higher prices, which consumers would have to pay. She said in particular that shareholders would be taxed. If she wants to tax them, she should say clearly that it will be a shareholders' tax, and not try to achieve it by a windfall tax.
No, because I have a limited amount of time. The hon. Gentleman's speech took nearly 20 minutes.
I want to talk about the Budget's effect on women. In 1995, the Government signed up to the Platform for Action at the fourth world conference on women in Beijing. Much of what they signed up to was directly contradicted by their actions in the Budget. Sadly, they have done it again this year. One of the things hoped at the conference was that there would be gender assessment of Budgets and other Government policies to enable us to look more closely at the differential effects of them on men and women. It is impossible to assess the direct impact on women because the Government have failed to publish such a gender impact study and—
No, I do not have much time left and want to carry on.
Australia, Canada and South Africa all publish such studies. Why does not the United Kingdom? Such studies are an essential initial tool in the struggle to analyse the differential impact of fiscal policy and the structure of the benefits system on men and women. At the moment, there is a myth in the Treasury that there is an equal effect on people regardless of gender. Of course, that is not true; it is complete nonsense, as the Fawcett Society and the Women's Budget group continue to point out.
Although it was nice that the Chancellor mentioned women in his 75-minute Budget speech, there was only one such mention, and that was to announce a petty and vindictive measure that will drive close to 1 million women of working age further into poverty.
No, I am not giving way.
The freezing and the subsequent abolition of allowances for lone parents picks them out as this Budget's scapegoat, as they were last year. The plan to phase out the lone-parent premium, which is worth £5.20 a week, and lone-parent child benefit, which would be worth £6.30 a week by 1998, hits hardest the poorest members of society who are of working age.
No, I will not give way.
The abolition of the allowances saves a mere £290 million a year, yet, as the Women's Budget group pointed out, the percentage of lone parents living in poverty has risen from 19 per cent. in 1979 to 59 per cent. today.
It is a myth that there are no extra costs to bringing up children alone. We all know that there are. As the hon. Member for Rochdale (Ms Lynne) said, the Government's Green Paper on reform of social security in 1985 stated that one-parent benefit would continue
as a contribution to the additional costs faced by lone parents in bringing up children alone.
Those additional costs have not disappeared, and there are many more women bringing up children alone today than there were when that Green Paper was published. The Government simply have not done nearly enough to help lone parents. Instead, they have punished them in two Budgets on the trot and given no justification for driving them into serious hardship.
The average weekly income of a one-parent family is £134, which is 38 per cent. of that of a two-parent family, which stands at £340 per week. Why on earth did the Government in the Budget take away the small amount of help that has allowed many women to stay above the bread line? It is particularly insulting that the Chancellor chose to present the punitive measure as an equalisation measure. In fact, it was a quite unprecedented attack on many women who are doing their best to raise children in very difficult circumstances.
We should remember when we consider such punitive measures that driving single parents into ever more extreme poverty merely impoverishes the next generation. Many of our children are living in poor conditions and are having to try to grow up in them. The Government argue that current benefit arrangements encourage family breakdown. That is absurd and insulting. Why should we punish today's children? We must do our best to support them and ensure that they turn into decent, productive members of our society, which I am glad to say the vast majority of them do.
Very few of the 1.6 million lone-parent families match the caricature of the teenage, unmarried mother that the Conservative party insists on touting. The vast majority of lone women did not start out that way and never intended to end up that way. They are divorced, abandoned or widowed, and it is our duty in this House when we consider Budget measures to think very carefully about the message that we are sending to those women. We should think about the fact that we are willing, as a House of Commons, where so far only 9 per cent. of Members are women, to drive lone women into ever more serious poverty.
We must help lone parents by allowing them to work. That means providing affordable, high-quality child care, a policy which will quickly pay for itself. It means training and education to equip them for the labour market. Many women have been away a long time from the labour market and need to be reintroduced to it in a sensible and practical way. Helping them means welfare-to-work measures to encourage them to go out to work. Yet, what is in the Budget—a £56 million cut in the nursery education budget, a £34 million cut in the training and enterprise councils' training budget and a £20 million cut in capital spending on higher education?
The Budget is not a Budget for women; it is not a Budget for children or the poor; it is not a Budget for fairness; it is not a Budget to prepare this country for the future; it is a last-gasp Budget of a bankrupt Government.
I am very pleased to be able to participate in this part of the Budget debate. I do not want to follow the negativism of the hon. Member for Wallasey (Ms Eagle), whose speech was very like that of her hon. Friend the Member for Peckham (Ms Harman)—a lot of waffle but not a lot of distinct, definite and different policies. Nor do I want to follow the hon. Member for Rochdale (Ms Lynne), who is about to leave the Chamber, although to her credit she did want to spend, spend, spend and she put forward some policies. Unfortunately, we on the Conservative Benches could not support them because they would involve increasing taxation.
At least, as my hon. Friend says, she was honest, unlike the Opposition, who have not been honest in the course of debate this week about what they would do. There has been much rhetoric and waffle but not many costed policies, ideas or definite proposals. I know that the electorate will take that into account when they make their judgment.
The Budget is one that I strongly support and endorse and it will be warmly welcomed in my borough of Bexley. It is a Budget for prosperity and, in particular, the long-term prosperity of people in London and across the rest of the country. It is a moderate and balanced Budget, in both fiscal and monetary terms, and I welcome that. The fact that the Government are back to a tax-cutting agenda will be received as good news across the country. The majority of people in my constituency, and in the constituencies of my hon. Friends, want lower taxes. They know that Labour—should a Labour Government be elected, which we do not believe will happen—will be a high-taxing party. It always puts up taxes when in government. It believes in higher public expenditure and higher taxation.
People in my constituency work hard, pay their taxes and save for the future and they would not trust Labour in power. They share the Conservative agenda that was reaffirmed by my right hon. and learned Friend the Chancellor of the Exchequer on Tuesday afternoon. They know only too well that the Government have no money of their own, only what they take from taxing those who work or who have savings invested. Of course, the people want good public services. We are all in politics to provide good public services for all our citizens. We want a good education system, a good national health service and an effective and well-equipped police force.
My constituents will be delighted, therefore, by the increased expenditure that the Chancellor announced, especially the real increase in resources for the NHS. They want more money to pay for medical treatment for those in need. They want good health provision, free at the point of delivery. The Government have delivered on the health service. The Government have pledged more money every year above the rate of inflation and they have delivered that. They propose, over the next five years, to continue to increase resources for the NHS.
What do the Opposition say? They say nothing. They do not match our commitment, nor do they come up with any other figures for what they would spend on the NHS. My hon. Friends and, I believe, the majority of people welcome the Government's spending priorities. They will also approve the reduction of 1p in the basic rate of income tax to 23p and will strongly support the increase in personal allowances that my right hon. and learned Friend unveiled on Tuesday afternoon.
I wish to record my thanks to the Chancellor for listening to the many representations from my hon. Friends about increasing the married couple's allowance by the level of inflation. At long last, our party, which has always been the party of the family, has made a start in redressing the way in which the tax and benefit system has discriminated against married people with children. The increase is a small step, but it is in the right direction and will be welcomed. We look forward to the next Conservative Budget in a year's time when perhaps more will be done on that front.
Before my comments on the benefit system, I wish to endorse what my hon. Friend the Member for Colchester, North (Mr. Jenkin) said about inflation. Inflation is a great evil. It destroys people's savings and it destroys jobs. We must be tough on inflation and my right hon. and learned Friend endorsed that in his Budget. We know that there are inflationary pressures in the system, as my hon. Friend mentioned, and I welcome my right hon. and learned Friend the Chancellor saying that he will take whatever measures are necessary and prudent to ensure that we do not return, ever again under a Conservative Government, to high inflation.
I welcome what my right hon. Friend the Secretary of State for Social Security said this afternoon about the benefit system and its place in public expenditure. In the country, and certainly in my constituency, there is much unhappiness and disquiet about the benefit system. The perception is that it is unfair. Does the money go to those really in need? Is the huge benefits bill of £93 billion too much? Can we afford it? Should we he spending that much money on benefits? How is it that hard-working people in my constituency and elsewhere are often no better off by being in work than many who do not work?
We have falling unemployment levels nationally and locally in London. In particular, unemployment has fallen by more than 20 per cent. in Erith and Crayford since the last general election and by 34 per cent. in the neighbouring constituency of Bexleyheath. That is a real achievement. It is very welcome to see people getting back into jobs, because that is what we passionately and desperately want. We want well-trained workers who are able to take new jobs when they unfortunately lose their old jobs. Why then does the social security budget continue to rise? That is the question that my constituents ask when they raise their serious concerns about the social security budget with me.
I wish to put on record my praise and strong support for my right hon. Friend the Secretary of State for Social Security for the reforms of the past few years. In particular, I support his crackdown on waste and fraud in the benefit system. My constituents welcome that approach and they also welcome the measures that are proposed for further improvements in the system. Those improvements will not only crack down on fraud and abuse, but will make the system more efficient and effective, so that it provides, for those who need the benefit system, a first-rate service.
We welcome too the reduction in the overall growth of social security expenditure. It will be 1½ per cent. instead of around the 4 per cent. it would have been if my right hon. Friend the Secretary of State had not imposed his reforms. Therefore, we have a social security budget that is targeted on those in real need and that is doing the job that it was set up to do. The Opposition seem only to want to spend more and more money and to distribute benefits universally, rather than targeting them. We Conservatives passionately believe in targeting.
Labour does not really have a policy on benefits, just as it does not have a policy on tax or public expenditure. If it does have any policies, we look forward to the hon. Member for North Warwickshire (Mr. O'Brien), when he winds up, giving us some information about what he and his party will do. His party is negative and critical and it will not put flesh on the bones of its policies. The electorate will not be fooled and, when the election comes, they will look carefully at what the Government have done on tax and benefits and what the Opposition say they might do. I think that they will vote for the policies that have been so well thought through and implemented.
It is annoying me that the hon. Gentleman says that we have policies to spend lots of money and also says that we have no policies. That sort of argument is intellectually idle. If he can say what he is charging us with, I can answer him.
The hon. Gentleman has fallen straight into the trap. The Opposition say that of course they will spend more, because we are not spending enough on health, education or whatever, but on the other hand they say that they will make no spending commitments. He has answered his question, because he has not given us the answers. He is riding two horses in different directions and hoping that the electorate will not notice. I notice that the hon. Gentleman is grinning—
The television cameras should perhaps show the hon. Gentleman. He knows that he cannot ride two horses, as do all the Opposition Front Benchers. They cannot and will not get away with that because the electorate will see through it.
I strongly support the commitment by my right hon. Friend the Secretary of State for Social Security to improve the social security system and to ensure that the Government's commitments—to pensioners and the people in need, who need benefits—are kept.
We believe in the uprating of pensions and in increasing benefits for those who are really in need, and the taxation and benefit policies that the Government have set out will be beneficial to those in real need. The jobseeker's allowance has been necessary, and it is effective. The housing and council tax benefit reforms proposed will mean more effective use of the money that is available to spend on the system.
Many people who come to my constituency surgeries need benefits but do not get them. Yet we know that many people work in the black economy and get benefit when they should not. The reforms are part of a comprehensive package to make the system more efficient and effective, so that it targets those in need.
I was amazed by the statistics given by the Department of Social Security, which show that 300,000 more people were receiving housing benefit in 1995 than were receiving it in 1991. I strongly question that staggering figure.
I believe that the benefit and tax systems that the Budget and the public expenditure round are producing are good. I have always believed that tax and benefits should help married people rather than discriminate against them. Of course, no Conservative Member wants people in real want not to get the benefits that they need, or the training that they need to get back into employment and become part of a working society.
I believe that when they lose their jobs, most people, including most people with young families, want to get back to work. Of course they do, and we must help them. What we have heard this week represents a move towards helping them even more.
There must be a fair and reasonable Budget and public expenditure round. I believe—and in the spring the electorate will endorse my belief—that we have a credible economic policy, a distinctive policy that has been successful. The Opposition do not like success, because it stops them trailing round misery and failure, as they like to do.
We now have an effective and efficient benefit system to help those in need, simplification of the administration of the system, and lower taxes. That is the way forward, the way that this country needs to go to maintain economic prosperity, and the way that the people of this country want us to go. I strongly commend the Budget.
I have been listening carefully to the contributions by Conservative Members, and much of what they have said has had no relevance whatever to social security upratings. In the few relevant comments that they have made they merely complained about the cost. We have heard the ritual expressions of sympathy with people in need, yet there is a total refusal to accept the fact that the decisions being made by the Government are throwing people who are already poor into greater poverty.
The hon. Member for Luton, South (Sir G. Bright) talked about respiratory problems. I agree that some such problems are related to transport in our cities, but the hon. Gentleman failed to mention that many children suffer respiratory problems because they live in housing that is damp and cold, and their parents do not have enough money to heat it.
The Secretary of State said that the new measures would save £6 billion. I would like to know how much of that money will be taken from the purses of single mothers—or more accurately, from the mouths of their children. There are 1.5 million lone-parent families in Great Britain, and 47 per cent. of them live on less than £100 per week, which only 4 per cent. of married couples have to do.
That statistic answers a point that has been made by several Conservative Members. Only 4 per cent. of married couples have to live on such a low income. Of course those people should be assisted, but that is no reason for failing to help the 47 per cent. of lone-parent families who live on less than £100 a week.
We know that 71 per cent. of lone mothers are dependent on benefits, and that six out of 10 children in lone-parent families are being brought up in poverty. One-parent families account for almost one quarter of all families in Scotland. The average weekly income of one-parent families is only 36 per cent.—not much more than one third—of the average income of two-parent families.
In Scotland, 75 per cent. of lone parents claim income support, and 38 per cent of children—440,000 of them—live below the poverty line. Yet the Government are now making an already bad situation worse for such families.
Only 41 per cent. of lone mothers in Britain work, and in Scotland the figure is only 30 per cent. It has already been pointed out that in France the figure is 82 per cent., and in Sweden 70 per cent. The Secretary of State said that that was because of recent big increases in the number of lone parents in Britain, which meant that younger children were involved. However, he did not respond to my hon. Friend the Member for Peckham (Ms Harman) when she pointed out that the figures showed that there were jobs in France for lone parents to take.
Surveys have shown that 90 per cent. of lone mothers want to work, but they need ways in which to move off benefit and into work, not punishment for being on benefit.
No, I will not. If the hon. Lady's hon. Friends had not gone on at such great length making irrelevant speeches that had nothing to do with social security, I would have given way. But my time is limited and I intend to say what I have to say. If, and only if, I have time at the end of my speech I shall give way.
Single mothers need not punishment but help to get off benefits and into work. Yet the Government are making it harder for them to do that. For example, they have cut local authorities' budgets and made it harder for them to provide child care through voluntary schemes and other such projects with local authority and urban aid funding.
The Secretary of State said that it would be unfair to pay extra benefits to lone parents because the only extra expenses that they had were the costs of child care. That comment could come only from a comfortably-off Member of Parliament who is male and does not know much about running a household or looking after children.
I wonder whether the right hon. Gentleman has any idea of what it is like to live on a low income—for example, when two or more children need shoes, but the parent has to spread her budget so thinly that she has only enough money to buy one pair of shoes at a time. Does he know what it is like to have to traipse in the wind and rain with children perhaps with a pram or pushchair to the shops with the lowest prices?
In general, Members of Parliament escape their fair share of family responsibilities. That is a bad enough state of affairs even when the family has the good income that Members of Parliament receive. But when a family consists of one parent living on an extremely low income, that parent has all the responsibility on her shoulders. Conservative Members show no sympathy for or understanding of the kind of problems that those people face.
The Secretary of State talked about the introduction of help with child care costs through family credit. However, as One Parent Families Scotland has pointed out, that help—an earnings disregard of £42 a week for single parents who work—has failed. Fewer than 2 per cent. of lone parents have taken it up to help them to return to work.
That is not because lone parents are workshy, but because of the severe limitations that affect the usefulness of the disregard. If the family is on maximum family credit the disregard does not apply, only one child counts, and it stops when the child is 11. The scheme has helped only a fraction of those whom the Government claimed that it would help.
We are supposed to be discussing social security cuts tonight, although Conservative Members have talked about every Budget-related subject under the sun except that subject. One-parent benefit, which is worth £6.30 a week, and lone-parent premium, which is worth £5.20 a week, are to be cut.
There will also be a cut in the child allowances paid with means-tested benefits, because the increases due when children reach 11 and 16 years of age will not now be paid until the September following the child's birthday. That is another mean little cut.
We have already discussed the housing benefit cuts. In addition to all the other cuts, the Child Support Agency benefit penalty for non-co-operation has now risen to £19.16 a week. Moreover, it will last for three years and will be renewable.
Such cuts will lead to a massive reduction in the income available to spend on food for children. Earlier today the House discussed the outbreak of a strain of E. coli in Lanarkshire. Poverty is relevant to that matter, because when a family has an extremely low income any money spent on food has to be stretched thinly. It is more of a disaster if one is on a low income to be told that some of the food one has bought is unusable. Yet nothing is being done to help those people overcome that problem. A mother has told me that she lived on nothing but bread, margarine and tea for a weekend last winter to ensure that her children were adequately fed, and I can only imagine that that mother's current winter will be worse.
Lone parents are being attacked for being lone parents, but the Government cannot starve women back into failed marriages. No one will break up a happy marriage for the delights of living on the lone parent benefit, but if a marriage is at an end and it is impossible for the couple to continue, the Government will not succeed in starving them back into it. This policy is supposedly about sustaining families, but the Government seem to be trying to force women back into marriages that should be broken up. Lone parents are as dedicated as two parents to creating a warm, loving and morally responsible home, and are no worse and no better than married parents in that respect. They vary, and most of them are extremely capable and worthwhile mothers. But they carry a double responsibility, and that is why these benefits ought to help them.
Thankfully, the Government are going, and going soon. The right hon. Member for Worthing (Sir T. Higgins) referred earlier to his "final, final, final" speeches, and compared himself to Frank Sinatra. Let me remind him that a popular hit of Frank Sinatra refers to "the final curtain", and that is what is coming down on this Government. The next Parliament will include more women Members of Parliament—largely on the Labour side—who will have experience of motherhood and of lone motherhood. When that happens, decisions made in this House are likely to be saner.
Before referring to the details of the Budget, I wish to say—in as non-partisan a way as I can—that I was rather disappointed by the speech of the hon. Member for Peckham (Ms Harman). I am not complaining about the fact that she made a vigorous speech, which she did, because the differences between the Opposition and the Government are sharp on the subject of social security, but she presented us with one of the most exaggerated cases that I have heard for a long time. I jotted down some of her words and phrases, such as "fractured society" and "breadline". She suggested that the Secretary of State is in the pocket of somebody. Many of us will look carefully at Hansard tomorrow to study that particular allegation, and the exaggeration of her case did not elevate her contribution to the debate in any way.
I strongly support the Budget, as I did last year's Budget. I was correct to do so then, Mr. Deputy Speaker, was I not? There were no giveaways in the Budget, despite all the speculation beforehand—particularly by the Opposition. It was a sensible Budget. There were tax cuts, but in no way, shape or form were they excessive. There were cuts in public spending and, my goodness, we needed them. We need more of them and, following this Budget, we will get them; but at the same time there was more money for the priority services such as the NHS, education and crime, as my hon. Friends—particularly my hon. Friend the Member for Erith and Crayford (Mr. Evennett)—have already mentioned.
All this, and inflation is under control. For me, that is a winning combination. This is the fifth year of economic growth, as was recognised by Opposition Members on Budget day. Opposition Back Benchers sat there with poker faces all afternoon. We heard nothing at all from them. That suggested a great deal. It would be expected that I would not think much of the speech of the Leader of the Opposition, but I have to say that it was very vigorous. However, the Leader of the Liberal Democrats, the right hon. Member for Yeovil (Mr. Ashdown)—who, presumably, is more impartial than me—called it an "attacking speech without content." That was absolutely right.
The Labour party is touchy and evasive about details, as my hon. Friends have exposed precisely this evening. In fact, Labour has no details of its economic policy. We were told that we would get the details of Labour's spending plans just after the Budget. Now, I understand that that announcement has been postponed until January next year. I venture to suggest that we will hear nothing about what Labour would spend in the unlikely event of its getting into government. An economic health warning is needed on the front of Labour's economic policy, and the electorate must beware.
The electorate are clearly alarmed already. I received a letter from the chief executive of Yorkshire Electricity, Malcolm Chatwin, on the windfall tax, about which we have heard one or two rather facile observations from Opposition Members. Opposition Members obviously have not received a similar letter—or are they just not quoting from it? Mr. Chatwin said that, for his company, the windfall tax would
undermine our ability to sustain the current level of investment",
which seems very serious to me,
increase prices to our customers in the longer term … reduce the dividend income for our shareholders"—
but the Opposition do not mind that—and
reduce pensioners' income as many of our large shareholders are pension funds.
That is a fairly major privatised utility telling us what would happen if we were to have a windfall tax.
Industrialists are not the only ones who are concerned. A number of my constituents have sent me Inland Revenue leaflet FAI 1979. I was sent it because leopards do not change their spots; Labour Members are taxers by nature and, just as they did it before, they will do it again. The leaflet sets out the 12 tax bands that the last Labour Government used to leach money out of other people's pockets—25 per cent., 30 per cent., 33 per cent., 40 per cent., 45 per cent., 50 per cent., 55 per cent., 60 per cent., 65 per cent., 70 per cent., 75 per cent. and 83 per cent. If Labour regains power, it will have as many different bands as it can get into the system to get as much money as possible out of electors' pockets. Frankly, Labour cannot help it.
On the back of the leaflet is the Labour party's old friend, the investment income surcharge. The Opposition do not like investment income—they did not then and they do not now. At that time, there was a 15 per cent. surcharge, and I would bet a lot of money—and I am a canny Scotsman—that that will be repeated next time, if there is a next time. An industrialist from Yorkshire Electricity and many of my constituents are becoming alarmed.
The Chancellor's decisions delighted me, as they did last year. First, I welcome—as did my hon. Friend the Member for Erith and Crayford—the 1p cut in the standard rate. It was not meant to be dramatic; it is a stage in the plan to reduce the rate to 20p in the pound. If I had my way, it would be somewhat lower. My right hon. and learned Friend was correct not to go the whole way and reduce tax by 2p, and he was absolutely correct to raise personal allowances and to widen the 20p band. He was also right to raise the threshold for 40 per cent. taxpayers—a much-misunderstood bunch of people who are currently being pursued by the Inland Revenue for more revenue.
I am also pleased about the movement on inheritance tax. It is, as I said last year, a shameful tax. Every year, the capital earned interest, it paid tax, and then the Chancellor gets the last cut out of it when the individual dies. I have never understood it, and I am delighted that the Prime Minister made the commitment that he did. It would be niggardly of me to say that I did not think that the Chancellor moved far enough this year; I must be grateful that there has been a considerable move over two years.
There are two prerequisites to cutting tax. The first is that a Government should spend less. In my view, all Governments spend too much, although Labour Governments spend a great deal more than Conservative ones. They try to do everything, and bend to every demand so that spending programmes grow like Topsy. That said, the Government must be commended not only for what they have done up to now to cut public expenditure, but for their commitment to cut it by £7 billion over the next three years.
I believe that it was my right hon. Friend the Chief Secretary who said on television about a year ago that public expenditure should be 40 per cent. or less of national income. That warmed my heart, and I was absolutely delighted to hear the Chancellor recommitting the Government to that aim. My right hon. Friend will understand when I say, "More effort, please" on the spending front. I dislike extending the tax base, because it merely encourages spending Ministers; with more money around, we get more public expenditure. I therefore say to my right hon. Friend, "Eight out of 10 up to now, but could do better."
The second prerequisite is control of borrowing. The trend has been downward for the past three years, and it has halved as a proportion of gross domestic product, but it will still be £26.5 billion this year and £19 billion next year. I cannot wait for the year 1999–2000 when, I am delighted to say, we will be in balance and will have eliminated that, in my view, excessive borrowing. If I may again address my remarks directly to my right hon. Friend the Chief Secretary, I merely say, "No slippage, please." That is what Conservative Members want.
My right hon. and learned Friend the Chancellor said that the Maastricht debt or deficit criteria would be met in 1997. That is marvellous, not because it will lead us to a single currency, but simply because it is good housekeeping. I commend the Chancellor, because he framed the Budget for British national self-interest. National self-interest did not die with Parliament's acceptance of the Maastricht treaty, and it did not die yesterday evening at 6.30; it is the concept that should govern the formulation of policy in this country. I want no repetition here of what is happening in France, whose economy is being skewed to reach a single currency, or in Italy, which is attempting to get into the exchange rate mechanism, which I have never liked.
Consideration of the single currency is best left until after the general election. Although I thought that the controversy over the stability pact, which spilled over into the Chamber, could have been better timed, I entirely agreed with what my right hon. and hon. Friends said about the pact's desirability or otherwise.
There is no ambiguity about my position on a single currency. I do not have to wait to take a decision: I am root and branch opposed to it for many economic reasons that I shall outline on another occasion, if I am called—which is not easy these days. For me, it is also a constitutional issue. If the single currency ever sees the light of day here, my response will be no surprise.
We cannot spend on everything, and it is clear that pennies are dropping in Treasuries throughout the globe. The Chancellor was absolutely correct to prioritise spending on health, crime and education. That will be welcomed in my constituency. On health, a problem is developing about emergency cases, which are increasing dramatically.
East Riding health authority wrote to me as follows:
The main cause is the growth in activity and cost arising from an increase in the number of emergency cases which, if they continue as at present, will exceed the contracted level by a further 7 per cent., over and above the 7 per cent. increase last year. This compares with a national growth of 10 per cent. over 5 years
We therefore have a problem, so I am delighted that the Chancellor is making available additional resources—£1.6 billion next year, I believe—for the national health service.
Perhaps I should say this not to the Chief Secretary but to someone else, but as he is here, I hope that he will hear me when I say that we in the East Riding need our slice of that £1.6 billion and that I shall be knocking on an awful lot of doors to get it. Of course, if the money were not there, I would have no opportunity to ask for my slice. I am delighted that I shall be able to ask for it.
I am a fan of the private finance initiative, particularly in relation to the NHS. How could I be otherwise? There is no question about the value of yet another innovation by the Government. It is clearly working for Norfolk and Norwich, and the Chancellor spoke about the £200 million hospital that would be built, but we are not doing quite so well in East Riding.
Two schemes with a local hospital trust are bogged down because additional information is required, there have been rule changes throughout the period of discussion, and no decisions have been taken. One of the schemes has been on hold for a year, so I wish that the Chief Secretary would kick someone somewhere to make them understand that interest will be lost in the smaller schemes if we cannot learn quickly—I accept that we are on a learning curve—and get reasonably quick decisions.
I was also extremely pleased about the £50 million—I believe that that is the figure—for more capital spending on education. We have a problem in East Riding because of the poor fabric of some schools, and far too many temporary classrooms. I am almost tempted to say that more than £50 million is needed, but my logic prevents me from doing that, as I have been saying throughout my speech that we should cut spending, so I shall not fall into that trap, but merely ask for my slice.
Our economic policy is clearly working: the previous Budget worked, and this one is working. On 6 November 1996, that wonderful chronicle, the Hull Daily Mail, carried the headline, "Bouncing back from recession". It is a bit late, but a good headline none the less. The article says:
Business in the area is bouncing back from recession, according to a key economic survey.
But while sales and orders continue to increase, the partners behind the report warn against overconfidence.
My goodness gracious me, when last did we have to be warned against over-confidence, especially in east Yorkshire? The senior partner of Price Waterhouse, who compiled the report, welcomed
what he sees as evidence of long-term recovery.
If the Opposition heard that from the Chief Secretary or the Chancellor, they might be entitled not to believe it, but it came from an impartial witness. He, I and my constituents can see the recovery. My constituents are beginning to communicate the feel-good factor to me. I say well done to the Chief Secretary and the Chancellor. I give them nine out of 10; I am improving their score. We need more of the same in the next Budget.
The Budget is imprudent, implausible and unjust. It is imprudent in that the Chancellor has poured fuel on the flames by adding direct personal tax cuts to a consumer boom that is running ahead powerfully and with the money supply running way beyond where it should be. We are back, tragically, to the pattern of boom and bust. The Chancellor says that he is staying ahead of the game, but the game will catch up with him. The interesting political question is whether it will do so before or after next April. Assuredly, it will before long, and that will be painful not only for the Conservative party but for the country.
It is especially regrettable that the Budget does not provide for the investment that we need—perhaps above all in education. There is no more important investment that we can make, both for people's individual opportunities and for our economic competitiveness. The increase in spending that the Government countenance for local education authorities amounts to less than the authorities are spending now.
It is especially sad that the Government have not responded more adequately to the crisis in the universities. They have given some extra resources to the universities and, to that extent, the decisions in the Budget are welcome. Our universities are among our greatest assets and the staff who research and teach in them have well-nigh achieved miracles in maintaining standards against the squeeze in their resources. We all look forward to the recommendations of Sir Ron Dearing; there is no one wiser or more widely respected in the field than he. However, the crisis is urgent and the Government should have done more to enable our universities to improve their obsolescent laboratories and anachronistic libraries.
The cuts in training are also foolish. The Government justify them on the grounds that the unemployment count is falling. The count of the long-term unemployed has not been falling. It is not sensible to add to the planned cuts in training for work or to divert money to project work, the only proven effect of which is to take people off the unemployment register. That is attractive to the Government but there is no evidence that the scheme gets more people into work.
The Budget neglects the interests of the poorest in society. We were all pleased that the widening gap between rich and poor in Britain had stopped widening; that, according to recent figures, the trend of so many years seemed to have been halted. It is as if the Government are now determined that that baleful trend should be resumed. They have lifted the threshold for the higher rate of personal taxation by £600 but widened the band for the lower rate by only £200. The richest 10 per cent. will enjoy a third of the tax cuts; the poorest, less than 10 per cent. of them. People who are earning too little to pay income tax will suffer from the increases in indirect taxation. Unemployed couples will be worse off. The fiscal tightening of the overall Budget judgment will lead to job losses, not least in the construction industry.
As chair of the all-party parliamentary group on charities and the voluntary sector, I am disappointed that the Chancellor has not seen fit to recompense charities for the £13 million loss caused by the 1p reduction in the basic rate and the additional costs of petrol and diesel. The Government do not take a coherent view of the role of charities in social provision, nor of their responsibility to charities. They only ask charities endlessly to do more. With the higher unemployment and the cuts in local authority and training and enterprise council budgets that will flow from the Budget, the work load of charities will increase yet again. Charities appreciate the concession that will enable their trading subsidiaries to gain early tax relief from covenanting profits to the parent charity but how regrettable that the Treasury has again not found it possible to do anything to compensate them for the £1 million a day that service-delivering charities pay in irrecoverable VAT.
Earlier this year, we debated the freeze on one parent benefit and lone parent premium that the Government introduced in the previous Budget and have repeated in this one. I will not dwell on that, therefore, especially as my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) spoke with equal passion and knowledge about the sad problems that that policy will induce. Conservative Members asked why lone parents should receive larger benefits than do couples with children. It is because it is not appropriate to consider benefits in isolation. We should consider people's overall income position. If we take proper account of the poverty in which so many lone parents and their children live, it is plainly right that lone parents should have higher benefits. It is wrong and foolish to pursue the Government's policy towards lone parent families.
The new rules on benefit claims and the limits on backdating and reviews will prevent many claimants from getting the benefits that they should have. The benefits system is nothing if not highly complex and difficult for claimants to understand. The Government have abolished the freeline that helped 750,000 people each year. It will now be yet harder for people to make their claims fully and accurately in the time required.
The Secretary of State defended the policy of extending the waiting time for jobseeker's allowance to seven days. I think that he said that there were waiting days under unemployment benefit. It is also true—he will correct me if I am wrong—that there were no waiting days for income support paid to the unemployed. In his press release, he vaguely and lamely said:
many people receive some sort of final payment which will cover them for the first week.
How many? He should not introduce the policy without knowing the proportion of people so fortunate. People who lose part-time or casual jobs, who are laid off or who have worked out a period of notice, will lose a full week's jobseeker's allowance, which may be worth well over £100. That will cause them severe difficulty. As the jobseeker's allowance is paid two weeks in arrears, many people will receive no income for three whole weeks. That is wrong.
The cuts in the housing programme are probably the largest proportionate cuts ever to social housing provision. It is peculiar that, in a week in which the Secretary of State for the Environment told the House that England will have 4.4 million more households by 2016, there should be drastic reductions in the public funds allocated to housing provision. Shelter has estimated that of the 4.4 million households, 2.5 million will need low-cost rented housing, but it will not be there.
The measures will be devastating for homeless people. The Government defended their policy in the debates on the Housing Act 1996, which is to be implemented on 20 January, by saying that homeless people would be at no significant disadvantage; the majority of them would reach the top of the list in two years. I fear that the cut in housing provision will make their promises look very hollow. If that policy seems deeply misguided, the further cuts in housing benefit are yet more distressing.
I understand that the Government simply cannot accept an endless explosion in the cost of housing benefit, but rent control through impoverishing tenants is no way to address the problem. By cutting out the support for half the difference between average and actual rent, the Secretary of State will seriously impoverish significant numbers of people. Many people already top up the cost of their rent from their low pay, jobseeker's allowance or income support. Income support is not even set at a decent subsistence level and should not have to be used to pay the rent.
The Government have decided that single people aged between 25 and 60 should, like people under 25, be systematically disadvantaged, if not stigmatised—and all for the sake of £100 million. Single people already face great difficulties in the search for housing. They are on an endless waiting list if they hope to get public authority housing. The priorities of housing associations have naturally had to be to attend to those to whom they have statutory obligations, mainly families with dependent children and pensioners. Houses that are designed and intended for single people may well go to a lone parent with a young child.
Of the 4.4 million new households, we have to expect some 80 per cent., as the Government note, to be single people. The Government argue that they should not endorse that, but it is not right to punish single people and perhaps particularly those who are separated or divorced.
The Secretary of State has said that people on housing benefit will have the choice of paying from their own income for more expensive accommodation, trying to negotiate their rent down, or moving into a home that they and the taxpayer can afford. The Secretary of State has departed from the real world in making those suggestions. The Rowntree new index of private rents shows that in the second quarter of 1996 the average rent in Britain for a self-contained, one-bedroom flat was £87 for a furnished flat and £80 for an unfurnished flat, whereas the average rent for one room in a shared house was £47. That makes a difference of £40 for furnished accommodation. There can be no question of tenants negotiating their rent down by £40 or anything remotely like it.
In any case, single people will not be able to find that accommodation. There are probably five times as many young people under 25 as there are single rooms available in the rented market. It is a landlord's market and it is particularly so, as I know from my constituency in south Warwickshire, in rural areas, where there simply are not single rooms to be found for rent. My observation is endorsed by the recently published research by the Country Landowners Association and the Joseph Rowntree Foundation. In any case, landlords often do not wish to let to tenants on housing benefit. As the Department of the Environment's survey "Private Landlords in England" told us three months ago, some 53 per cent. of landlords prefer not to let to tenants on housing benefit.
I hope that the Government will consider how people will be affected in practice. It will be bad enough as it is for people under 25, but for people over that age who for a large part of their adult life, perhaps 35 years, are trying to make a home and live a settled life, this is a cruel policy. Consider the interaction of the policy with labour market conditions. There are more and more temporary and insecure jobs in our economy. If people take a job that does not work out and lose the job, they will lose housing benefit at the old rate and lose their home. If single people, conscious of that hazard, do not take the job, they will forfeit JSA. That might be described as Lilley's fork.
If someone has to move to smaller accommodation, will they be required to sell their furniture? I know that Ministers do not wish to be unkind, but they have been unimaginative in making the proposals. Consider the position of people—unhappily, numerous and becoming more numerous in our society—who are separated or divorced. Many people divorce when their children have grown up. One partner loses the married home. The other may find herself unable to keep up with the mortgage. That is already an unhappy situation. The parents are trying to maintain a relationship with their children and to provide somewhere decent, private and stable which their children can visit and where they can stay. Why should such people be pressurised into living in shared accommodation?
Let us consider the thousands of single women who work in the caring professions such as nursing or residential care. They have been content to accept earnings that never gave them any prospect of buying their own home. Do they deserve from us the indignity and distress of being required to move into shared accommodation? Think of the loss of self-esteem for them. Their home has been their haven, and having their private home has perhaps been the condition of their ability to make and sustain relationships.
Consider—this is not a fanciful or sensational suggestion—the predicament of a single woman pressurised by her landlord to offer sexual favours in lieu of rent that she is unable to afford. Consider the position of disabled people who are not so severely disabled as to qualify for incapacity benefits but are not fit enough to fulfil the availability for work and actively seeking work conditions of JSA. With reduced housing benefit, they are now, in addition to their other problems, to lose their home, privacy, dignity and hope.
The policy will drive people into houses in multiple occupation. In 1985, the Department of the Environment conducted a survey which found that 85 per cent. of HMOs were unsatisfactory, in poor condition and perhaps unsafe. There is no reason to suppose that the situation has significantly improved since that time. The Government refused to meet the pleas of voluntary organisations and the Labour party to accept an amendment to the Housing Bill this year to introduce a mandatory licensing scheme for HMOs.
Why should poor people be driven to share with strangers while the wealthy enjoy greater tax cuts, with the promise from the Conservative party to abolish inheritance tax and capital gains tax? The Conservative party makes much of the importance of home and family values, but not, it seems, for the poor. The poor do not deserve to enjoy that happiness in life. They are to be driven into ghettos of squalid, dangerous housing without privacy or stability.
It is interesting and important that the Government have embraced the principle of spend to save. They propose to spend £470 million on an additional attack on fraud and look forward to a return of five times as much as they spend. That is an interesting departure of principle. My right hon. Friend the Member for Dunfermline, East (Mr. Brown) has not, to my knowledge, countenanced in his policy making that the Labour party embrace such a principle. I should like, however, to suggest to the House that the same principle could be applied to welfare-to-work. A sum of £470 million could be spent usefully and constructively. For the same amount, thousands of claimants could be helped to move back to work.
I have tabled a number of parliamentary questions in recent months on this subject. Let me say how grateful I am to the officials who take so much trouble to do the computations.
Instead of removing their special benefits, some help could have been given to lone parents to overcome the barriers to employment. For only £20 million, the Secretary of State could have helped 45,000 lone parents by allowing them to earn up to £25 a week without loss of benefit. Another £10 million only could have tackled the barrier of the cost of child care by offsetting work-related child care expenses for lone parents on income support. For £150 million, the barrier faced by those leaving income support, who lose help to pay for school meals, could be ended by giving entitlement to free school meals with family credit.
Instead of restricting housing benefit, the Secretary of State could have given some constructive help to people trying to go back to work. For only £90 million, he could have helped claimants of income support and housing benefit to travel to a part-time job by offsetting travelling expenses.
Perhaps even more desirable, with half as many disabled people in work as in the general population, the Secretary of State could have considered how to help more people on incapacity benefits to try out work. He could have extended the linking rule from eight weeks to two years. His officials have estimated that that would cost little or nothing.
We are running out of time and other hon. Members are waiting to speak.
The Secretary of State could have publicised the possibility of undertaking therapeutic paid and voluntary work while receiving benefit. For just £5 million, he could have helped disabled people on income support by raising the disregard in line with earnings. For another £70 million, he could have reduced the housing benefit taper for disabled people to 50p in the pound.
The Government could have focused more resources on the types of help available from the Employment Service. For just over £14 million, Ministers could have extended the jobfinder's grant to people on incapacity benefits. By spending just £2 million, he could have helped 5,000 disabled people who are starting work to receive extended housing benefit payments.
The Secretary of State could have started to tackle the failure of disability working allowance, which is currently claimed by only one in five of those eligible for it. He could have removed the unfair exclusion from disability working allowance of certain people, just because they have a working partner. A disregard of a partner's income, which would have helped disabled women in particular, would have cost £40 million and doubled the number of current claimants. A minor but worthwhile change would have been to raise the lower savings limit, at a cost of £1 million.
That leaves £68 million with which to use the Secretary of State's piloting powers first to consider how to open access to disability working allowance by changing the qualifying benefit rules and secondly, to examine the prospects for a partial capacity allowance better to reflect the spectrum between capacity and incapacity for work.
That would have been a different approach—humane, constructive and responsible in the long term. Sadly, it is not the Government's approach, but it will, I trust, be the approach taken by a future Labour Government.
I give a warm welcome to the Budget. It was positive, balanced, calm and, above all, it reflected the healthy economy that needs to be sustained and nurtured. It was absolutely right that my right hon. and learned Friend the Chancellor should feel confident about the future, because things have been moving so powerfully in our direction.
Looking at my own experiences down in Sutton, I believe that it is significant that, in the past month alone, unemployment figures moved down by 7 per cent. Indeed, they have now reached the lowest level in five years. That reflects what has been happening nationally. Unemployment has been falling by 450 people a day. That is excellent news. We now have the lowest unemployment rate in Europe. That is a far cry from France, Spain and Germany.
More people in jobs means that more people have money to spend. When I was recently out on the doorsteps of Sutton, several people in a single morning told me, "I've just moved into my new house." The property market is on the move. People are feeling confident—they are spending money on doing up their houses and putting money out into the economy. It is interesting that prices are reflecting that confidence. Gazumping has returned and we have not seen that for a long time. Prices have now risen by between 5 per cent. and 10 per cent. I also welcome the fact that businesses are on the move. Small businesses that I saw struggling to get off the ground only four years ago are now expanding and taking on staff.
Despite all that good news, my right hon. and learned Friend the Chancellor has to be congratulated on not turning the Budget into a cheap election bid. He took no notice of the cartoon, published in The Times on Tuesday, which depicted a man in his pyjamas, kneeling beside his bed and saying his prayers. He said, "And please, let Mr. Clarke make a squalid, cynical bid for my vote." Despite temptation, the Chancellor made no such bid and writers for the leading newspapers had to scour their minds for suitable headlines.
On page 1 of its Budget special, The Independent had a banner headline, "Shockingly responsible". Another of its headlines was, "Dangerously sensible". The Financial Times wrote,
A display of sturdy common sense
Clarke praised for his prudence".
Indeed, The Independent capped that by saying,
Meanwhile, the economy ticks towards a boom".
Michael Brunson, the political editor of ITN, said that the Budget would "spread a warm glow".
That warm glow means the lowest direct taxes in 60 years, with the equivalent of 2p off in the pound. That will go down well with my constituents in Sutton, who are hard-working, uncomplaining and get-on-with-it people. They will greatly appreciate the fact that the average family will be £1,100 richer next year than five years ago.
Yet, despite all that, my right hon. and learned Friend has been able to make sure that we have money available for essential services and plenty left for health. I welcome the fact that £1.6 billion has been set aside for it. I have no doubt at all that St. Helier hospital in Sutton will benefit. Schools will benefit by £875 million, which will help us in our drive to raise standards. It is absolutely appropriate that we should pay due attention to people's sense of security by giving more support to the police and the Prison Service.
My constituents appreciate the fact that small businesses will benefit, because they make up a large proportion of my local enterprises. They will undoubtedly value the fact that corporation tax is down. They will certainly appreciate the fact that business rates are being frozen and, indeed, that the VAT threshold has been increased by £1,000 to £48,000.
The big philosophical difference between ourselves and Labour—one that will never be bridged, matched or copied—is that we believe that the taxpayer should decide how he spends what he earns. We believe that hard work should be rewarded and that he should be allowed to make his own decisions. Labour Members, by contrast, feel that they know better and will make the spending decisions for him. If the taxpayer does not believe that, he should study the 89 firm spending pledges that Labour has already made which will involve increases in public spending—adding up to a whopping £30 billion or £1,200 a year more in taxation—and compare that with our commitment to reduce tax.
Last year, when I spoke in the Budget debate, I focused on the effect that that Budget would have on the family. If you will excuse me, Madam Deputy Speaker, I make no apologies for developing those themes today. As a keen supporter of the traditional family, who have, for years, felt penalised for their responsible behaviour—marrying first and being committed to one another before having children—I give a special cheer that their plight has, at last, been recognised.
It has always been iniquitous that responsible parenting, within marriage, should be given less financial support than the profligate never-marrieds whose numbers are recorded to have doubled in the five years to 1992. The never-marrieds and, indeed, other lone parents—I accept that that category includes women who are not lone by choice but who have been widowed, divorced or abandoned—have put an unacceptable pressure on the social security budget.
No, we are tight on time, otherwise I would.
The increase in total spending on lone parents leapt from £1.7 billion in 1979 to £9.4 billion in 1996—nearly half our defence expenditure. In simple terms, that adds up to about £1,500 a year on the tax of a family who are supporting their own children. I believe that the time has come to be more judgmental. The current system has been too tolerant. The current benefit system encourages lone parenthood over the traditional family with two married parents, by making the former more financially worth while.
I cannot—time is against me. Other hon. Members want to speak. I wish I could give way, but I cannot. Please forgive me.
There has certainly been no fear of the consequences on the part of lone parents, who are firm in their belief that the state should take care. That is now about to change and the changes will mark the beginning of a gradual social revolution that will pay greater regard to the traditional family and recognise the benefits that families bestow on society as a whole.
I therefore welcome the decision to end the extra £6.30 a week one-parent benefit given to nearly 1 million lone mothers who, between them, are responsible for one third of all births. That will cease to be available to any new claimant in April 1998. Likewise, at the same time, single parents claiming income support will lose the £5.20 a week premium on benefit payments, which will save the taxpayer about £270 million a year.
In future, lone parents and married couples who are also on benefit will be given even-handed treatment. That is enormously significant and it is the right way forward. I rather regret that the hon. Member for Peckham (Ms Harman) gave the impression that she did not feel that married couples should have equal treatment with lone parents. Indeed, I got the impression that she felt that they should be disadvantaged because they are taking responsibility for their own lives.
It should be noted that the timing of the ending of the benefit is significant. Seventeen months' notice is ample time for a woman to think again before she comes pregnant. The choice is hers. Nowadays, accidents do not have to happen. Unwanted pregnancies are entirely preventable, and single women who fancy the idea of having a baby should think carefully. The question that a single woman should ask herself, and, indeed, her "partner", is: "Which is more fair to the child who cannot protest about the conditions into which he is born—to be born to a mother alone in the world with no means to give him the secure upbringing that he deserves, or to be born into the home with two married and committed parents?"
I believe that the mother should focus less on her own desires and wishes and more on the needs of the child. I also believe that it is time for society to expect and demand more of fathers. This is no time to be tolerant of feckless fathers, for they have, after all, played a key role in the future of their offspring.
Study after study has shown that the life chances of a child born within marriage are considerably greater than those of a child born outside marriage. A child born and raised alone by a never-married mother or divorced parents outside the traditional family is more than likely to suffer abuse, to experience mental and physical health problems and to perform poorly at school, and is less likely as a consequence to get a job later on. There is also a greater likelihood that he or she will become involved in drugs and crime. The largely low-achieving girls are more likely to repeat the cycle and become pregnant themselves.
It has to be said that the problem is exacerbated by creating a generation who turn to the state for help; the dependent welfare culture, encouraged thanks to the non-judgmental politically correct attitudes of the day. The swift handout, the "ask no questions" culture is, in the end, less caring than one that probes carefully and sets clear benchmarks on what is acceptable behaviour.
For the sake of our children, we have no choice but to start tackling those problems head on. By the same token, I look forward to seeing a full restoration of the married couple's allowance. I accept that there has been a modest increase in the Budget this year in line with inflation. I very much hope that when the Conservative Government introduce the Budget next year, they will improve on that. While we cannot force couples to be more loving and affectionate, one can create a climate whereby it is in their interest and that of their families to stay together.
The cost of a full married couple's allowance matching that on the continent would be offset by children growing up in a more stable home and with less likelihood or necessity to call on the state for help. Indeed, in that regard, we should study the experiences of France, Germany, Italy, Spain, Switzerland and even Japan, where families are rewarded by favourable allowances and tax deductions. Generous tax breaks will in the end be less draining on the state than allowing a system to grow that provides little incentive for people to plan carefully how and when to start their families.
The moves put forward by the Budget, to start restructuring the family, are infinitely more profound than the attention that they have received. Over the past three decades, the biggest change on the social landscape has been the changing forms of family on the basis that there is an acceptable choice between marriage and cohabitation, and, indeed, making the treatment of the two choices of equal merit. Indeed, there had been fears that to do otherwise was simply too judgmental.
In the end, we have found that the price has been unacceptably high. There are real differences between marriage and cohabitation and between children born within marriage and those born outside it. Marriages are more stable than informal arrangements. Despite increasingly high levels of divorce, a married couple is more likely to stay together than a cohabiting one. Those who attempt to defend the increasing birth rate outside marriage point out that, at present, half the children born out of wedlock live with two unmarried parents. But cohabitation is no substitute for marriage. Only 16 per cent. of cohabitations last more than five years. That compares with the 10-year average for marriages that end in divorce.
For all those reasons, it is entirely appropriate and consistent with Conservative philosophy that we should be brave and bold in our support for traditional marriage. At a time when so much is changing so fast, the family remains for many a source of stability. Most ordinary families have not lost their bearings. They want to live by the familiar civilised rules. What has broken down are the official structures to support them, with the consequent burdens on the state.
The measures proposed by my right hon. and learned Friend the Chancellor might seem harsh to the young woman who decides to go it alone and have her baby outside marriage, but in the end it is infinitely kinder to that child to discourage those free-wheeling arrangements, ensuring that he has a greater chance of being born into a traditional family who are willing and able to care fully for him.
The Budget is worth while. It is significant. It is yet another step on our road of economic success and prosperity. I have absolutely no doubt that, come the general election, my constituents will have no hesitation in ensuring that they give their support to the Tory Government, in whom they have complete confidence for a secure financial future.
I have the privilege of being a neighbour of the Chancellor, which gives me the opportunity to watch him deliver his Budget—both the style and substance of it—in Nottingham and London. I have the opportunity to see him play both at home and away, and, like all football teams, one changes one's tactics, and the Chancellor certainly does. Last year, he told the local paper, the Nottingham Evening Post, that the Budget was
a cash bonanza for Nottinghamshire".
The reality was different. The Queen's Medical Centre in Nottingham, a hospital of international renown, will not carry out any elective surgery this month or the next, and will announce redundancies before Christmas. A survey of Nottinghamshire schools has shown that the number of classes with more than 30 children has trebled in the past year. It is quite clear that people are paying for the 22 tax rises since the last election.
This year, according to last night's Nottingham Evening Post, the Chancellor has taken a different approach.
Puffing a cigar (up 7p a packet) and sharing his Scotch (down 26p a bottle) Chancellor Kenneth Clarke was in buoyant mood when he spoke to the Evening Post … in the library at No. 11 Downing Street.
I contrast that buoyant approach with the attitude of the hon. Member for Sutton and Cheam (Lady Olga Maitland). Some people are well housed and can smoke cigars and drink whisky; but others do not have much and, in all good faith, we should try to help them.
Is this a buoyant Budget for Nottingham and the nation? The theme of today's debate has been social security, so let me start there. In the run-up to this Budget round, considerable pressure has been put on the Secretary of State for Social Security to take account of chronic bronchitis and emphysema, and to extend the range of industrial injuries to acceptance of the recommendations of the Industrial Injuries Advisory Council. I am grateful for the fact that the Secretary of State has done that. The cost has been £20 million in the first year, plus £5 million in administrative costs. The benefit will start on 1 April next year.
Last week, I had an opportunity to go to the Department to argue the case for retrospection. I will continue to press that case. I know that it will cost £70 million, but I think that a debt is owed to men who have given their health and, in some cases, their lives to giving coal and comfort to all of us. If the criteria are right on 1 April, there is a strong argument for backdating the benefit to 1993. The matter will have to come before Parliament, and new regulations must be passed, but the Secretary of State can be sure that the campaign will continue. Miners in Nottinghamshire, and in coalfield communities throughout England, Wales and Scotland, have argued the case for better benefits; the campaign will not go away now, and I am pleased that the Secretary of State has heard its case.
Let me now refer to another issue that affects people with disabilities, in Nottinghamshire and nationally. The Budget increased the special tax allowance for blind people by more than the rate of inflation. I welcome that, but I wonder whether the Secretary of State will consider extending the provision to other disabled people, if only to mitigate the worst effects of the early taxation of incapacity benefit. The Disablement Income Group wrote to the Chancellor, who, in January 1996, replied that the blind person's allowance was anomalous, and was always
regarded very much as a special case confined to a section of the community who command considerable public sympathy and who are readily identifiable.
He went on to reject the idea of extending the benefit.
There is a strong case for re-examining that issue, and looking at a range of people with disabilities. I hope that the Secretary of State will at least agree to listen to the representations of the Disablement Income Group. I feel that people who are in work with real disabilities often need extra help, and that one way of helping them is the granting of tax allowances rather than benefits.
An aspect of the Budget that has received considerable attention is the issue of local government finance, and, in particular, education spending. The Chancellor commented on the toughness of the public spending round, saying:
we had to keep the rest of public spending within the tightest possible limits".—[Official Report, 26 November 1996; Vol. 286, c. 158.]
The consequences of that statement are now becoming clear to local councils in Nottinghamshire and throughout the country.
Only yesterday, the Secretary of State for the Environment also accepted how difficult things would be. In a press release, he said:
Even in the climate of a tight settlement, the provision for next year will allow them"—
to meet priority needs across the range of their functions".
I stress the words "priority needs". That constitutes a recognition of the fact that not everything can be done—that hard choices must be made, and that some services will have to be cut.
The problem springs directly from a reduction in the amount of external finance that the Government are making available to councils. The Red Book makes it clear that, between now and 31 March 2000, councils will lose £4 billion. As a consequence, council tax will have to rise. There is nothing new in that; it is a direct result of planned Government policy. The Government's stated intention is to switch the burden of local taxation from central Government back to local government.
Given the large reduction in grant, it is clear that the council tax is set to rise by 20 per cent. in the next three years. It has been suggested that that is equivalent to 2p on income tax. The Chancellor gives with one hand and takes away with the other. I believe that the council tax will rise next year by 6 per cent. The Government set the level of expenditure for local councils, they can cap each council and they provide 80 per cent. of the funding, so if council tax rises by more than double the rate of inflation, in all fairness the finger of blame should be pointed at them, because they hold all the strings.
Ministers argued that it is important to give schools priority in any budget settlement. Indeed, the Budget allows an extra £633 million to be spent on education—a 3.6 per cent. rise. Many local authorities will passport that through to schools, because they accept that schools are a priority. As the Chancellor and I know, Nottinghamshire has announced that it will give schools priority, as it did last year. That is important.
Class sizes are rising. I undertook a survey in north Nottinghamshire earlier this year, which showed that half the classes had more than 30 pupils, and eight out of 10 schools have class sizes of more than 30. The extra money will not, by itself, reduce class sizes. Individual schools have used balances to keep class sizes down. Those balances have now gone, and, on top of that, pupil numbers are rising.
As a consequence of giving priority to education, other council services will be cut. The 2 per cent. cap increase for most county councils, including Nottinghamshire, is tight and restrictive. Nottinghamshire will be allowed to spend £13.5 million. It will spend £10.9 million of that on schools, which will leave £2.5 million for all other services. That implies a 5 per cent. cut in the other services provided by the county council.
I do not believe that that cut can be covered by efficiency savings alone. Efficiency savings have been made year after year, but ultimately there will be no more to be made. I expect that highway maintenance will be reduced, day centres for the elderly will close, meals-on-wheels will be reduced, the fire brigade will be put at risk, libraries will reduce their opening hours and adult education and discretionary awards to students will become virtually non-existent.
The Budget provides an extra £500 million capital for education. Let me put that in context. To repair Nottinghamshire schools would cost £110 million. In Rushcliffe, the Chancellor's constituency, there is £6.7 million-worth of outstanding repairs. The school closest to his home, Rushcliffe comprehensive, has £1.5 million-worth of outstanding repairs.
In Nottinghamshire, services will be cut and the council tax will increase. It is the same old story: we have to pay more for fewer services. Should the Chancellor be so buoyant about the Budget? It is all very well to drink whisky and smoke cigars at No. 11, but what about the consequences of the rest of the Budget? It gives with one hand and takes away with another. It takes 1p off income tax, but insurance premiums are up, air passenger tax is up and council tax will go up.
What highlights the Budget for me is the increase in the threshold for inheritance tax from £200,000 to £215,000. It shows what an unequal society we have. One could buy a house in Newstead, Nottinghamshire, for £15,000. We are a divided society, racked by insecurity. It is a society in which many, including single parents, need new homes, but the Budget does not provide those new homes. What we need is new life, new hope and a new Labour Government for Britain.
I am delighted to be called to speak in the debate this evening, Madam Deputy Speaker. When I first entered the House I spoke in the Budget debates for the first two years; I am delighted to reconvene the habit. Like my right hon. Friend the Chief Secretary in his expenditure target, I am being squeezed, so I shall just make a few brief remarks from what I had intended to be a much longer speech.
I am delighted that my right hon. and learned Friend the Chancellor has come back into the Chamber. I have a few words of praise for him. This is a welcome and restrained Budget, building on five years of successive growth—which is no mean achievement after the deep recession at the beginning of the 1990s. It is a cautious Budget. My right hon. and learned Friend could well have been tempted to produce a Budget with a huge bribe to the electorate in the hope of winning the next election. However, he has had a successful tenure of office building a sound enterprise economy for jobs and growth and it is important to continue on a sound path of growth so that there is more money in the economy to spend on the services that are needed most. I am delighted to note that Britain has one of the highest growth rates in the European Union—2.5 per cent. compared with an EU average of 1.5 per cent. That is no mean tribute to my right hon. and learned Friend.
My right hon. and learned Friend's speech was in marked contrast with that of the Leader of the Opposition, who spent his entire speech criticising our policies, but not saying one word about Opposition policies nor giving one figure for the cost of any of their policies. Are they committed to their stated aspiration of a lower tax rate of 10p? What will that cost? I understand that it might cost up to £8 billion, but we have not been told. As we move towards the next election, the Opposition's policy of non-speak will become less and less credible—they will have to come clean with their policies.
There are many positive policies in the Budget. In particular, I welcome the help for businesses. The freeze on the uniform business rate will be very welcome to small businesses in Gloucester, Cirencester and Tewkesbury. What a contrast that is with a future Labour Government. The Opposition have already expressed a wish to repatriate business tax to local authorities, and we know what happened in the past when local authorities taxed the job-creating small business sector out of existence. There are now many, many more small businesses than there were in 1979, employing 1 million more people. That is precisely the sort of economy that I want in Britain.
Cirencester has an unemployment rate of, staggeringly, below 7 per cent. The local radio said the other day that Cirencester could become the first town in England technically to have no unemployment. That would be unbelievable. The rate is falling month on month. Come the next election, the national unemployment figure will be below 2 million. That is a very creditable performance.
No. I have very little time—in fact, precisely eight minutes.
My right hon. and learned Friend the Chancellor has built on his success as an environmentally friendly Chancellor. As a member of the Environment Select Committee, I welcome that very much. Fiscal instruments are a good way of promoting environmentally friendly behaviour—for example, the successful switch by the public to unleaded petrol. My right hon. and learned Friend built on that, among other measures, by reducing vehicle excise duty for low-emission lorries and reducing duty for ultra-low sulphur diesel. I welcome those measures, which build on his landfill tax last year, which is already causing many of my constituents to consider how to recycle their household waste. We must go on introducing such measures if we are to look after our planet's health for our children.
In his Budget, my right hon. and learned Friend announced other welcome fiscal measures. In particular, I welcome his renewed commitment to abolish capital gains tax and inheritance tax. That is a worthwhile long-term project. I hope that, in his next Budget, he will be able to produce a long-term and a short-term capital gain because that is a much more satisfactory way in which gradually to abolish capital gains tax.
Perhaps my right hon. and learned Friend might even consider a new base year of 1997. All pooled share purchases might be abolished after that date and every batch of shares purchased would then be indexed in its own right. We could have a short and long-term gain for the assets. I favour a tapering rate. Those that were held only for a year or two should be taxed nearly at the marginal rate of income tax, so that people who make short-term gains are still taxed almost as if it were income, but people who had held gains for five years or more would have to pay no capital gains tax.
I am nearly certain that inheritance tax will be a target for a possible incoming Labour Government. One of the ways in which they will radically alter the tax is to abolish the so-called PETS—partially exempt taxable transfers. That would return us to the bad old days of capital transfer tax and Denis Healey taxing the rich until the pips squeak. We all know what happened: the assets simply went offshore and were not there to be taxed. Nowadays, we do not have the exchange controls of the 1960s and 1970s, so that money would disappear offshore all the quicker.
Time is moving on, but I should like to mention the expenditure side of the Budget. A warm tribute must be paid to my right hon. Friend the Chief Secretary. To cut £1.7 billion off the expenditure total was no mean achievement. It needs to be warmly welcomed.
My only note of caution is that more than half the projected increase is to be spent on social security. This year, a staggering £80 billion will be spent on social security. That increase should have been distributed a little more evenly, particularly on to education and health. It is interesting that it is the Conservative party that is able to promise a year-on-year real increase in health expenditure, yet we cannot obtain such a simple commitment from the Labour party. I wonder how much it really is committed to our caring services.
In line with other hon. Members, I should like to comment on expenditure as a proportion of GDP. My hon. Friend the Member for Beverley (Mr. Cran) mentioned that. My right hon. and learned Friend has committed himself in the longer term to getting the rate below 40 per cent., which is to be warmly welcomed. The Red Book shows that, in 1975, under the last socialist Government, the figure rose to a staggering 47.25 per cent. Whenever we have taken over from a socialist Government, we have always had to sort out the economic inheritance that they have left behind. I do not want to have to face my electorate in five years' time with a dreadful economic position. Therefore, I hope—and am confident—that we will be able to continue with a Conservative Government.
Returning to expenditure, I believe that we can and should do something about social security expenditure. Recently, I have written a paper, published in conjunction with the Bow Group, on how to privatise the state pension. It is possible to have a privately funded pension for every person in the land, whether they are working, are housewives or are out of work. When they retired, they would have a decent standard of living and would be empowered to live their lives properly, because they would have a private pension behind them.
That is no fly-by-night idea. It has been proposed by the Chilean Government, and it is in operation in Chile, Australia and elsewhere. Each person would be allowed—indeed, compelled—to make a small pay-as-you-earn contribution into a privately funded pension. For those starting work, the contribution need be only £6 a week, which is a very small sum to establish a properly funded state pension that is equivalent to today's state pension. Due to the efficiency of the private sector, it is more than likely—it happened in Chile—that such pensions would be worth considerably more at the end of a 40-year working life.
As the Chileans discovered in the five years after the scheme was introduced, the huge funds invested in the pension funds enabled the doubling of the growth rate of the Chilean economy. I believe that the same could happen here. There was a recent leak about the state earnings-related pension scheme becoming a funded pension. I have no idea whether there was any substance to the leak, but I urge the Government, as a first step, to consider that proposal.
I have been able to make only a few remarks in the debate, but I welcome this Budget. It is a Budget for growth, for jobs and for prosperity. Above all, it is a Budget on which my right hon. and learned Friend can build—in his next appearance with the red briefcase—an even more prosperous society.
May I begin with a brief tribute to the right hon. Member for Worthing (Sir T. Higgins)—he is not in the Chamber—who said that today's speech was probably his last in a Budget debate. In his many years in the House, he has always taken a very keen interest in Treasury issues, both in the Chamber and in the Treasury Select Committee. His analysis has always been rigorous, if not always right, and we shall miss his contributions to future Budget debates. However, perhaps there is a bright side for us in his leaving—I see that he is returning to the Chamber—because I am sure that he would have become a stern critic of the Government after the general election.
The right hon. Gentleman need not worry; I was not suggesting that he was one of the Back Benchers to whom the Chancellor referred today on the Jimmy Young show, when he mentioned disloyal Tories on the Back Benches. The right hon. and learned Gentleman said that
the problem lies with some of those people on the Back Benches in the Conservative party in Parliament. You can lead a party, John can lead a party, but there are sometimes parties that are simply not capable of being led. And if the Back Benches of the Conservative party would only come to their senses and stop writing rubbish like that in Tribune we could beat this … Labour Party".
What a blast against his own Back Benchers—by a Chancellor who expects them to troop through the Lobby in support of his tax-raising Budget!
I suppose that the Chancellor no longer minds saying such things. Perhaps he knows that Tuesday's Budget was the last throw of the dice by an increasingly discredited Government. He attempted to disguise the Tories' string of broken promises on tax—the legacy of 17 years of Tory rule. It was a Budget not for the future of Britain but for the short-term interests of the Tory party.
We have heard it all before, have we not? In 1992, just before the general election, we heard the Tories' promises of tax cuts, promises of more for schools and health and promises of an economic miracle—promises, promises everywhere, and every one of them was broken. After the election, there were 22 Tory tax rises, an increased tax burden and VAT on fuel—with an attempt to double it. Conservative Members all trooped through the Lobby then, voting for higher taxes.
This is another tax-raising Budget. The Budget Red Book shows that, overall, in 1997–98—between this year and next—£350 million more will be raised in tax. The overall tax burden will rise from 35¾ per cent. of GDP this year to 36¼ per cent. next year. This was a give-with-one-hand-and-take-with-another Budget. Seven taxes were increased and a new tax was introduced extending VAT at 17.5 per cent. to travel insurance, car hire insurance and other insurance.
The hon. Member for Luton, South (Sir G. Bright) mentioned that insurance companies were coming to his constituency. I bet that they are not praising him for supporting higher insurance taxes.
There have been seven tax increases. Council tax rose by £4 billion. Tax on insurance premiums rose from 2.5 per cent. to 4 per cent. Air passenger tax has doubled, meaning that a mum, dad and two kids taking a trip abroad could pay £80 in tax on their holiday. The abolition of tax relief on profit-related pay is possibly the equivalent of up to 8p on the basic rate of income tax for someone on average wages, affecting 3.75 million people in the long term. Prescription charges were increased, fuel duties rose by 5 per cent. above inflation and, as the Chancellor said yesterday, tobacco duties rose by 3 per cent. above inflation.
As a result of the Tory tax changes since 1992, a typical family will have paid more than £2,120 extra tax by the time of the next general election. The tax burden is forecast to rise next year and every year until the year 2000 and beyond. So much for promises.
The hon. Member for Colchester, North (Mr. Jenkin), in his own personal manifesto at the last general election, set out
Ten good reasons to vote Conservative.
No. 4 was "lower taxes". After the election, he voted for the biggest peacetime tax increases in British political history. When I raised the matter with him, he claimed that he was referring only to income tax. However, he did not say that in his election address; he referred simply to lower taxes.
The hon. Member for Sutton and Cheam (Lady Olga Maitland) told her electorate:
The Conservatives arc pledged to low taxation".
Again she made no distinction between direct and indirect taxes. After the election, she voted for Britain's highest ever tax increases. She claims to be the champion of families, but she voted for VAT on fuel at 8 per cent. and tried to double it to 17.5 per cent. She pledged low taxation, but all that happened was a shift from direct to indirect taxation, leaving the burden on families.
The Economic Secretary to the Treasury pledged to her electorate, "We want lower taxes". That is not exactly a pledge, but she made no distinction between direct and indirect tax. A tax raiser too since 1992, perhaps she can explain her pledge to the electorate in her reply to the debate.
The hon. Member for Rochdale (Ms Lynne) cannot get away with it either. She made promises without responsibility, including double pensions at Christmas. The hon. Lady seemed to be spending her penny more than once. Does that mean that the 1p on income tax to pay for the Liberal Democrat education budget will have to be cut? I doubt it. Promises come cheap when they do not have to be delivered.
No doubt the hon. Gentleman saw our alternative Budget and he will be aware that we costed it. We shall also cost our general election manifesto. Just because the hon. Gentleman is upset that his party will not join us in the Lobby and vote against the cut in income tax or make any commitment on spending, he has to attack a party that will.
Yes. The Liberal Democrats are in the business of putting a higher tax burden on ordinary families. Do they not understand that we already have the highest taxing Government in British political history? The Liberal Democrats seek to raise taxes even beyond those of Britain's highest taxing Government ever. Is that a record of which to be proud? I think not.
Let us not forget the hon. Member for Beverley (Mr. Cran), who is not concentrating on the debate. He read out a letter from a Mr. Chatwin, pleading not to impose a windfall tax on the privatised utilities. I bet he did not read out constituents' letters when they asked him not to put VAT on fuel at 8 per cent. or when they asked him not to increase it to 17.5 per cent. The privilege of having a letter read out went to the director of a privatised utility, not his constituents protesting against VAT on fuel as he voted for that.
My hon. Friend the Member for Peckham (Ms Harman) described VAT on fuel as the unkindest tax of all. The Tories introduced it at 8 per cent. and tried to double it to 17.5 per cent. but we stopped them. We shall cut VAT on fuel from 8 per cent. to 5 per cent.—as low as possible. It will be a manifesto commitment. Labour will cut that tax which the Tories imposed on the British people. Before the last election, the Prime Minister promised no extension of VAT. Once he was elected, that promise was broken. The Tories cannot be trusted on taxes. The difference between the parties is that Labour promises to cut VAT on fuel and we will deliver on it.
Seventeen years ago, the Conservative party took office committed to getting the state off people's backs, lowering taxes and creating greater prosperity. Over the years, the corruption of power held for too long has led them to betray every ideal that they ever had. Those who rule in the name of Conservatism now have accrued power to themselves in Whitehall, undermining local democracy and local councils and concentrating decision making in the hands of central Government. They have voted through the biggest tax rises in British political history, including 22 rises since the last election. They have presided over the two worst economic recessions since the war, including allowing Britain to fall from 13th to 18th place in the international prosperity league. We shall not forget to keep reminding people of that.
Besides betraying the people of Britain, the Government have also betrayed themselves, their ideals and the constituency workers who have knocked on doors on their behalf. The Chancellor delivered the Budget with all the panache of a second-hand car salesman selling a dodgy motor. The rhetoric was grand, but the economy that he was selling had real problems that have not been dealt with. Despite all the rhetoric, the Budget increased taxes. The penny off income tax and the other allowance measures were more than offset by increases in indirect taxation.
The price of their economic failure is not just the betrayal of the voters on tax. That price is also being paid by the disadvantaged in this country. The Conservatives claim to care, but by their acts we know them. Today we have heard about cuts in some benefits, particularly those to lone parents.
It is a great personal tragedy when a healthy man or woman who wants to work cannot find a job and support their family, as my hon. Friend the Member for Norwich, South (Mr. Garrett) said so well in his contribution to tonight's debate. Unemployment can strip a person of dignity, self-respect and hope. It can make them lose faith in the future.
In recent years, we have seen a growing group of people in this country becoming bereft of that hope. They are the millions who have been left behind and show no signs of catching up—the casualties who huddle in the centre of London and our other cities. They are Britain's shame because they are our fellow citizens. We ought to create a society in which we can give them hope and a stake in the future. No nation can afford to waste its citizens or assign a group of people to the margins of existence. Only when the conditions of misery and injustice that breed hatred and despair are challenged can we achieve anything like a better society.
Today, the Government have made life even more difficult for the forgotten poor of the Tory years—the unemployed and lone parents. While the Government have spent the past year defending the abuses of the highly paid directors in the privatised utilities—the Sir Desmond Pitchers of this world, whose share options were worth £453,000, and the 40 executive directors who made more than £100,000 in share options in the past year—and have been prepared to reduce the capital gains tax payable by the utility directors, who will gain millions of pounds on share options, they announced today that they would cut benefits for the unemployed, the poor and lone parents. It is a bizarre morality that claims that society needs to provide incentives for the rich by paying them more and incentives for the poor by cutting their meagre income.
Today, we listened to the words of the Secretary of State for Social Security. They were the cold antiseptic words of a privileged man from a warm office, calculating without compassion that the underprivileged can make do with less. For lone parents he offers not the chance of a job, but the certainty of a cut in their standard of living that will hit their child as well as themselves.
In a powerful contribution, my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) told the House that lone parent families constituted one family in four in Scotland. She graphically told us the high price that today's families will pay for the Secretary of State's announcements.
My hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) also told us in an effective contribution that families in his constituency—in my county—would be hit hard by today's announcements. Likewise, my hon. Friend the Member for Sherwood (Mr. Tipping) set out the impact of Government policy in his area—a mining area like my own. At a time when we have just heard that one third of the children in this country live in poverty, the cold antiseptic voice of the Secretary of State for Social Security delivered greater poverty for the children of lone parents.
As my hon. Friend the Member for Peckham said in her excellent speech, one in three children in this country are born into poverty. In 1979, it was one in 10. A national survey by the Health Visitors Association found widespread child malnutrition and poor living conditions. Nearly one third of health visitors found tuberculosis among their clients last year. Two thirds encountered iron deficiency, 93 per cent. had to deal with gastroenteritis and 4 per cent. dealt with reported rickets. They also found a high number of households where gas, electricity, telephone and water were cut off—the majority of those households included children. This is the international year for the eradication of poverty, and today, the Secretary of State for Social Security has contributed to the growth of poverty.
We should not be surprised by all this because Tory Britain has one of the highest proportions of workless households in the developed world. Under the Tories, one in five households of working age are without work and 11 million people have suffered a period of unemployment since the Prime Minister took office—one in four of the working population. There are still twice as many people unemployed now as there were in 1979, despite 32 changes to the statistics. The rate of job creation in Britain since 1979 ranks eleventh out of the 15 European countries. Half the work force have experienced part-time, temporary or insecure work or unemployment. Despite that, one of the Ministers with responsibility for employment has described job insecurity as a myth and the President of the Board of Trade has described it as a state of mind.
If the Tories really want to cut the cost of benefits, they should realise that the best way of doing so is to put people back to work. That would make all of us better off by cutting the cost of welfare. That is why a Labour Government will concentrate on putting the unemployed back to work, taking the initiative and acting to improve opportunities. That is why the Tories simply blame the unemployed for their plight.
Instead of offering hope to 250,000 young people without jobs, the Secretary of State for Social Security offers them the despair of lower income and reduced opportunities. While Labour proposes ladders of opportunity for lone parents and job opportunities for the young and unemployed, the Conservatives prefer to perpetuate the prejudices of their most uncaring Members of Parliament against the poor.
The choice in this tax-raising Budget is the same choice as we will face in the general election, because the Budget was really all about the election. The choice is clear. It is between perpetuating a Government of cynics, diluted by non-entities, and making a new start for Britain under Labour. It is between seeking the low-wage, low-skill economy proposed by the present clique in office, and investing in the skills, technology and innovation that will open for us a future route to competitiveness. It is a choice between the short-term economics of Tory boom and bust and the stability of fiscal prudence, which are the precondition for growth in the 21st century and offered by Labour.
The choice is between the Conservatives, who see advantages in increasing inequality in the name of free enterprise, and Labour, which will fight growing inequality as an economic imperative. Only those societies in which all can have a stake in the future can succeed. The choice is between the Tories, who talk more and more of reducing ties with Europe—with the exception, perhaps, of the Chancellor—and Labour, which sees our future economic success being closely tied to our European partners.
The aim of the Budget, of course, is to portray it as something different—as a choice between those who will give tax cuts for the future and those who will not. That is a false choice for two reasons. First, due to their record on taxes, the Tories will never be trusted again on that issue by the British people. Secondly, it is a false choice because Labour is not and never has been the party that would impose high taxes on ordinary people. For Labour, public spending is not an end in itself; it is a means. The real end is improving the quality of life of ordinary people. No one can argue that imposing VAT at 17.5 per cent. on fuel—a policy proposed by the Conservatives—would benefit ordinary people. Few would argue that 22 tax rises—the price of the Tory Government's economic failure—have benefited the people. They have left the people with the highest taxes in history.
We are living in the dying days of a morally bankrupt, intellectually incoherent and internally divided Government. For more than a year, the whole purpose of Government business has been to try to lay traps for the Opposition. They have nothing to say on the important issues facing the country. The Budget is not about the future of Britain; it is about the future of a small clique of politicians gathered around the Prime Minister. The sooner the Government go the better. Then Britain can have a new start under a new Labour Government. There is now a great urgency for that change and the people want the election to come sooner rather than later. The budget has demonstrated the enormity of Tory failure. While they dawdle in the same old ruts, the people are looking forward to charting a new course. Labour will give them that opportunity. Let the election be called now so that we can give Britain hope again.
I must tell the hon. Member for North Warwickshire (Mr. O'Brien) that that was a dreadful rant. My hon. Friends will have noticed that the hon. Gentleman shouted that all our taxes are too high, but he had another line when he dropped his voice lower and, in hushed tones, he intoned that spending was too low and benefits were too low. Well, one or other is bogus and the hon. Gentleman and his party must learn to be honest. The Opposition must learn to say what it is that they mean to do and, if they are so frightened that they are not prepared to cost their pledges, I can assure him and his colleagues that we will cost them and ensure that everybody knows.
I am grateful to my hon. Friends for their excellent contributions in this debate. I shall say a few words to them in reverse order. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) made some thoughtful comments on pensions and I have read his booklet with interest. My hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland) made some useful remarks on the family and her concerns for the family are well known. I wish to apologise to my hon. Friend the Member for Beverley (Mr. Cran) for missing his speech, but I was speaking to my children on the telephone at the time. I watched him on the television and his speech was, as normal, entertaining. I was pleased to hear that the Budget improved during his remarks from eight out of 10 to nine out of 10 by the end. My hon. Friend the Member for Erith and Crayford (Mr. Evennett) made his normal vigorous speech and I thank him for it. My hon. Friend the Member for Colchester, North (Mr. Jenkin) gave his customary intellectual and, indeed, probing contribution, as did my hon. Friend the Member for Luton, South (Sir G. Bright).
My right hon. Friend the Member for Worthing (Sir T. Higgins) said that this was his last aria in the Budget debate. I believe that nothing is over until the fat lady sings, but I am not sure that that expression is appropriate to our slim-line colleague. My right hon. Friend asked me why there were so many forecasts for such a long way ahead in the Red Book and he referred me to table 4A.9. The answer that I have found out for him is that table 4A.9 is not a forecast, it is a projection. The difference between a projection and a forecast is apparently not only semantics. Projections are broader and more illustrative, thus output and inflation projections are the same for 1999–2000, 2000–2001 and 2001–2002. The reality of the answer is probably that the Treasury do it that way because it has always done it that way. I suggest to my right hon. Friend that perhaps he should come up and see me some time, to borrow a well-known phrase, so that we can discuss it.
This Budget reinforces the growing confidence that we have seen in recent months. It takes no risks but concentrates on sustained economic growth, which is the best guarantee of higher living standards. It increases public spending on the services people care about—hospitals, doctors, schools and police—and it keeps spending under firm control. It fights the social security cheats and other fraud, it takes another step towards the basic 20p income tax rate and it helps small businesses. I make no apology for the fact that we took the difficult decisions when we had to. Some were politically unpopular, but if we had not taken them we would not have the stable, secure and growing economy that we have today.
The Opposition opposed the very measures that have brought about this country's economic success. Last year, when we brought down the basic rate of taxation, what did Labour Members do? They huffed and they puffed, they agonised and they squirmed, and eventually they came to an amazingly brave decision: they abstained. What a decisive party the hon. Member for North Warwickshire belongs to.
The hon. Gentleman and his hon. Friends have ranted on about their mantra of the 22 tax increases. That is juvenile economics—the economics of the kindergarten. Their list includes some increases in fuel duties, which are good both fiscally and environmentally, and it counts one tax, insurance premium tax, four times.
The hon. Gentleman criticised air passenger duty and said that it would cost mum, dad and two kids rather more to take a holiday abroad. When the Labour party was in power, if people could afford to go on holiday abroad at all, it was probably for 10 days in Benidorm, and all that they could take with them was 20 or 30 quid, because of the state of the British economy. I am delighted to say that mums, dads and kids throughout the country can now go to many different destinations. What is more, they can take with them as much money as they want, because our economy is sound and so is our currency.
We have made 25 Tory tax cuts. Interestingly, the Opposition never want to talk about those. For example, in last year's Budget personal allowances went up, as did the lower rate band and the basic rate limit, and the basic rate of income tax was reduced to 24 per cent. Those changes reduced taxation and the tax burden on people. Indeed, this year's Budget has brought the basic rate of income tax down again.
At the general election I said to my electorate that we wanted lower taxes. That is why I am delighted that we have brought income tax down from 33p to 23p in the pound. I am delighted, on my constituents' behalf, that we have a large 20p band into which more than one quarter of earners fall. I am also delighted that people are better off by £370 as a consequence of this year's Budget, and by £1,100 since 1992. That is an excellent record.
The hon. Member for North Warwickshire talked about the tax burden, but I must tell him that the tax burden increases because of buoyancy in the economy, and because of measures to block tax loopholes. It increases because we have intensified the drive against tax evasion, which means that tax due will become tax paid. The hon. Gentleman should try to learn a bit more about economics.
I draw the hon. Gentleman's attention, and that of every other hon. Member, to some of the charts in the Red Book, which has been so extensively quoted. For example, table 2.1 shows how high inflation was at the end of the 1970s, and how low it is now. I refer the hon. Gentleman to page 29, which shows how the total wealth of everybody in this country is increasing, and to page 132, which shows the swingeing taxes on individuals that we have reduced.
We have an excellent record, and the British economy is now well into its fifth year of sustained growth. We have already enjoyed a stronger, longer and steadier recovery than any other major European country. Independent forecasters expect Britain to be the fastest growing major European economy both this year and next.
We are looking forward to the prospect of six years in which Britain will have outperformed Germany and France. People are experiencing a good economy. Even the Hull Daily Mail and the Long Eaton Advertiser agree. We are feeling it in every town and village in the country.
Moreover, inflation has stayed low, which in many previous recoveries did not happen. My hon. Friend the Member for Erith and Crayford rightly pointed out the necessity to ensure that inflation is low. Inflation has been below 4 per cent. for more than four years—the longest run of low inflation in almost half a century. That has allowed interest rates to fall to historically low levels, and mortgage rates are at their lowest for a generation. That is another set of excellent statistics, and another good record.
I am not hung up or obsessed with league tables, as seems to be the case with the Opposition. Contrary to the stories we often hear, Britain is outperforming its main competitors and climbing up the international league tables that really matter. Japan was the only major G7 industrial country to achieve faster growth in GDP per person over the past international cycle. The United Kingdom is the No. 1 destination for inward investment, and we have received as much inward investment as Germany, France and Italy put together. We have the lion's share of Europe's most successful companies. Over the past international cycle, investment growth was more than in any other major European country. We have climbed from the bottom to the top of the manufacturing productivity growth league.
Because I have heard enough rubbish from Opposition Members. I am tired of hearing them talk down this country and paint an untrue picture. Scarcely a week goes by without another international company deciding to set up in Britain.
Opposition Members go around the country giving the nod and the wink to every group. They have offered long-serving teachers a year's sabbatical—the lion. Member for Sheffield, Brightside (Mr. Blunkett) has said it, the National Union of Teachers believes it and that is why we have costed it at £1.3 billion. Labour cannot deny that. During yesterday's debate, Opposition Members spent most of their time talking about the need for their local authorities to spend more money. They are committed to lifting capping, and it is worth saying that a 1 per cent. increase in spending by local authorities will cost more than £1 billion. Opposition Members are all asking for that extra money to be spent, but spending that money will cost every individual in the country. I have a—
I do not have a vision. [HON. MEMBERS: "Oh!"] I have a considerable concern. If—just if—the Labour party was ever in No. 10, the union tanks would roll up Downing street with their guns pointed towards the door. The unions would ask for those nods and winks—what Labour calls "aspirations" but what those to whom they promised them call "spending pledges". What does one think would happen? Every person in the country knows that Labour would agree to what was being demanded, with the consequence that economic growth would halt, people would no longer be better off, inflation would rise and jobs would be lost. That is the reality of what the Labour party has been saying during this and every other debate.
The hon. Member for North Warwickshire and his colleagues waxed lyrical about a windfall tax, and he apparently believes that such a tax will hurt nobody and is somehow morally sound. No doubt next week a windfall tax will cure tooth decay, too. The reality is that a windfall tax will cost investment and jobs, and it will cost pensioners because many pension funds invested in the privatised utilities. Labour Members have waxed hysterical about VAT on fuel and power, but the hon. Member for Edinburgh, Central (Mr. Darling)—an Opposition Front-Bench spokesman—has said that reducing VAT from 8 per cent. to 5 per cent would be a
cynical ploy from a desperate party".—[Official Report, 23 January 1995; Vol. 253, c. 49.]
My right hon. Friend the Secretary of State spoke with great feeling about social security and rightly pointed out that we have an aging population that will cause pressures on the social security budget. A baby girl today has a life expectancy of 80. That is excellent: if that is the average, think what the maximum could be. It is a tribute to good food, a good environment, increasing prosperity, a social security network, a high standard of living, an excellent health service and a Conservative Government.
I am delighted about the measures that have been outlined for the "spend to save" initiative on fraud. I am sure that many people will agree that the hon. Member for Peckham (Ms Harman) spoke mostly drivel; when she was not talking drivel, she came out with a series of scare points. For example, I did not hear her say that Labour would restore the lone parent premium. I did not hear any Labour Members say that they would honour the expensive list of promises from the hon. Member for Stratford-on-Avon (Mr. Howarth).
What Labour Members promised was a national minimum wage, which they said would not cause job losses. What a lot of rubbish. The majority of research, both here and abroad, supports the Government's view that it would lead to considerable job losses, especially among young and unskilled workers; the only issue in dispute is the size of the losses. We believe in creating jobs, not in putting people out of work with such promises and proposals.
On the single room rent scare, an individual who loses a job has 13 weeks' protection, which is not what the hon. Member for Peckham said. Someone who becomes single as a consequence of death has 52 weeks' protection, which is again not what she said. There is a fallback discretionary fund that will be operated by the local authority to help hardship cases.
The hon. Lady made extraordinary personalised allegations against my right hon. Friend the Secretary of State about landlord fraud. Several important steps have been taken against landlord fraud, and she knows that he introduced them. By not withdrawing her allegations, she has shown that, in every sense of the word, she is not a gentleman.
The hon. Member for Rochdale (Ms Lynne) had a list of promises as long as not only her arm but both arms. She said that the Liberal party had a costed programme in its alternative Budget. The costed programme makes wonderful reading. It refers to spending cuts of £670 million, but does not say where from, and to savings on tax evasion and avoidance of £320 million, but again does not say where from. The only point on which I agree with the hon. Member for North Warwickshire is that the penny has been spent not once on education, but four or five times.
Our proposals will help to create jobs. Many hon. Members mentioned lone parents, and our commitment to families is an important element of our overall approach, which is why we have announced our intention to move gradually towards more even-handed treatment of one and two-parent families.
We have a series of important, useful and effective ways of helping individuals back into jobs. Easily the best way to help people, lone parents or otherwise, is to get them back into work. Project work, work skills, parent plus, the child maintenance bonus, earnings top-up and other programmes are in place.
We have an excellent record on jobs. Employment has risen by nearly 800,000 since the recovery began. We have more people in work than any other major European country. That has all happened against a background of change. All developed economies face the twin challenges of technological development and the expansion of global trade. The changes affect Britain as they do other countries. They affect us whether we work in heavy industry, the high street, services or manufacturing. The question is not whether we face change but how we deal with it. We have dealt with it in Britain in a way which has meant—