I congratulate the right hon. Member for Edinburgh, Central (Mr. Darling) on his appointment as Chief Secretary to the Treasury. I wish him well in his post. He will shortly respond to the debate and will have a number of questions to answer. I should like to summarise if I can some of the questions that have been posed in the debate by my right hon. and hon. Friends. I should also like to pick up on one or two comments made by Labour Members.
The main feature of the debate is that we have finally got near the truth of what the Chancellor of the Exchequer announced last week. It was a massive, unnecessary, tax-raising Budget—new Labour in presentation certainly, but old Labour in all its effects.
The Chancellor said that it was a Budget for the long term. He was right in one sense, because it hit the long-term plans and aspirations of millions of savers and pensioners. The damage caused by the. Budget will indeed be long term.
The Budget was also completely unnecessary: the Government have a golden inheritance. They have taken over the strongest economy in Europe, which has been brought about because of structural reforms, privatisations, deregulation and reform of trade union law, all of which were opposed all the time by all of the Labour party. It was our reforms, however, that not only transformed the output of the economy, but, combined with the strict control on public expenditure that we managed, delivered the steady reduction in unemployment which was far more effective and far more secure in dealing with the problems of long-term and youth unemployment than the present Government's attempts through their welfare-to-work programme. Again, those supply-side reforms were opposed day in and day out, night after night, by all the Labour party, including hon. Members who are now on the Government Front Bench.
Old Labour attitudes broke out once or twice in today's debate, but, nevertheless. I sincerely congratulate the hon. Members for Bury, South (Mr. Lewis), for Dumfries (Mr. Brown), for North-West Norfolk (Dr. Turner) and for Oldham, East and Saddleworth (Mr. Woolas) all of whom made confident and fluent maiden speeches. We very much appreciated their tributes to their immediate predecessors, all too many of whom used to sit on the Benches behind the Treasury Bench.
The debate has not, however, answered why the Government are forcing through a tax-raising Budget of this scale. The PSBR last year was £3.3 billion better than expected. That rate of improvement in the public finances is set to continue all the way through the current financial year and into the future, due mainly to buoyant tax revenues. The reason for this huge, tax-raising Budget is no clearer if we examine exactly who has been hit and how.
The Chancellor increased the duty on road fuel. He also increased, from the day of the Budget statement itself, duty on heating oil. As was shrewdly spotted by my right hon. Friend the Member for South Norfolk (Mr. MacGregor), the Chancellor has raised this additional revenue by putting up these duties five months earlier than we planned in our Budget statement last November. In addition, he increased road fuel duties by more than we had planned—by a full 6 per cent. above inflation. My hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) rightly pointed out the burden that this imposes on a rural constituency. That point was also made by the hon. Member for North Tayside (Mr. Swinney), who also represents a large rural area.
With the additional increase in hydrocarbon duty, and by bringing it forward a full five months, the Chancellor has on his hands a real and genuine windfall. It is far greater than the cost of the 3 per cent. cut in VAT on heating oil. It adds up to an additional £735 million this year. That was not altogether clear from his Budget statement.
The Budget represents an enormous additional burden not just on the driving public, but, because he has put up the duty on heating oil, on the people who rely on that form of heating in their homes, outweighing by far the benefit of the cost of reducing VAT on domestic heating.
My right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke) reminded the House that when we increased VAT on domestic heating to 8 per cent. we fully compensated pensioners. Indeed, it is now clear from a written parliamentary answer that a single retirement pensioner was no worse off by the increase in VAT on fuel because of the uprating in the pension and the other benefits that we increased at the same time. A retirement pensioner couple were made better off by the increase in VAT on fuel.
The consumer and the home owner were directly hit by the Budget, but the great burden of tax fell on the corporate sector. How comforting that sounded to Labour Members on Budget day; what a shock it was to them to find that the subterfuge lasted less than 24 hours. The immediate and total abolition of dividend tax credits for pension funds is, in truth, a savage blow, not to City directors, but to millions of ordinary savers and employees.