Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 8:08 pm on 10th July 1997.

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Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley 8:08 pm, 10th July 1997

I support the Finance Bill and last week's statement by the Chancellor of the Exchequer. However, before explain my support in detail and why I think that the Bill will be extremely good for my constituents in Manchester, Blackley, I should like to make an observation on Opposition Members' criticisms of the Budget.

I have listened to Opposition Members' speeches—some of which contained some pointed and detailed analysis, which I shall not deal with in detail—and much of their criticism contained words such as "profligate" and "socialist". Some Opposition Members even said that it is a "traditional Labour Budget". Simultaneously, however, other Opposition Members criticised the Budget because it does not impose sufficient taxation. The Opposition's arguments are in direct conflict with each other.

I have come across opponents in other contexts who have used two completely conflicting arguments, the most recent case being that of the second runway at Manchester airport. Until 1 June, I chaired the company involved in that project. Like the Conservative Opposition now, the opposition in that instance wanted it both ways: they were opposed to the second runway because it would make the airport too large, but they also said that the second runway was not needed as no one would fly there. When conflicting arguments are being used by the same people, it means that the opposition have no coherent view or objective.

It is therefore not surprising that some of the difficulties that the economy is experiencing at the moment were caused not only because the Conservatives' analysis of what was happening was schizophrenic, but because the Conservative party is wholly split. The previous Chancellor did not make, or refused to make, the decisions that should have been made earlier this year because he was in a minority in his party and because his party and the Government were split. That is one reason why the Bank of England is now raising interest rates.

I do not agree with everything that my hon. Friend the Member for Brent, East (Mr. Livingstone) said in the debate on the Budget last week, but I agree with his basic analysis. Even if my right hon. Friend the Chancellor had not made a speech at all, the situation would still have been considerably better than what has happened in the past 18 years. However, the Chancellor did make a speech, and it contained a number of important commitments that take us in a completely different direction in comparison to previous Budgets. The welfare-to-work programme, the provision of training for people to look after children, and the commitments given to the long-term unemployed will go to the heart of many problems in my constituency.

In the past 18 years, we have experienced a cycle of boom and bust. At times, some of the population have done extremely well, while others have not. While the economy in parts of the south-east has done well, there has been an increasing differential between people who live in the inner city—in, for example, Manchester, Blackley—and those who do not. The measures that the Chancellor has introduced will start to alleviate many of the problems, but it will be a difficult task, as there have been 18 years of problems.

As has been explained, not everyone who is unemployed is in the same position. Not only have Conservative Budgets done nothing for people in the inner cities, such as those whom I represent, but the Conservatives introduced a battery of legislation, which has made the position considerably worse. Members of some families in my constituency, who were children in the recession in the early 1970s during the oil crisis, have not worked. They left school, but did not go into employment as their parents had done. They have had children and those children have now gone through school. They have not managed to find employment and now have children themselves. There is a cycle of deprivation. Those people have been hurt not only by the normal economic cycles, but by the battery of previous legislation.

I shall cite three examples of legislation that has impacted differently on people who live in the inner cities and those who live outside, especially in the south-east of England. When the poll tax was introduced, 80 per cent. of residents in my constituency ended up paying more than they had under the rating system—and they were some of the poorest people in the country. Legislation adversely affected people who had managed to get themselves off benefit and out of unemployment.

Another example of such legislation was directed at local government and included the requirement to introduce compulsory competitive tendering. That policy attacked people's wages, and the competition from outside companies has often been unfair. For example, companies contracted to clean buildings sometimes paid half the wages that the council had paid. There are many discussions about the minimum wage and, whatever figure is finally arrived at, many councils—Manchester city council in this case, but the same applies to many large councils around the country—are not too much out of line with what might be considered. In any event, the new requirement meant that people either became unemployed or saw a drop in their standard of living.

Legislation to ring fence housing finance was introduced at the same time as the poll tax. In Manchester, it meant a 30 per cent. increase in rents, even though that was quite contrary to what the then Minister said. The Government refused to take into account the fact that in previous years repairs had been capitalised, so they assumed that the subsidy was much less than it was.

People living in the inner city have had a difficult time. I greatly welcome the welfare-to-work proposals, but it will not be easy for young people leaving school to take up employment. The culture of employment has disappeared in many families. Now, the third generation of some families will find it even more difficult to take up employment because they have left it a long way behind.

The official statistics show that the economy has been improving for five years. Whether or not one accepts the absolute nature of those figures, there is no doubt that more people are employed now than were employed five years ago. However, what has been masked is the fact that most of the growth in the economy has left behind many people in the inner city. It is only by targeting training and getting those people into employment that we shall stop the cycle of deprivation. I welcome the Budget. It will be hard work getting people back into employment, but the Budget is a start.

I wish to examine three taxes, one in detail and in response to the hon. Member for Twickenham (Dr. Cable). I welcome the fact that the Chancellor has been cautious on green taxes. There is no doubt that we as a party are committed to improving the environment and reducing the greenhouse gases that will have consequences for us all if we do not do something about them. However, we have to be very cautious, more cautious than many Liberal Democrat manifestos have been. If one wants to introduce green taxes, the simplest and easiest thing to do is tax the poorest people. It is the nature of many green taxes that they are regressive. I welcome the cautious start that has been made, so that when we take further action on the environment, we are more likely to get it right.

I also want to talk about duty on tobacco and, in more detail, duty on alcohol. The Chancellor said that he would put those taxes up by the rate of inflation, but that there would be a review. I welcome that review of alcohol duties. When I was selected for Manchester, Blackley, because of the boundary changes, it took me a little while to realise that I had gained two breweries and a prison.

Employment in the prison is fairly secure—although one might wish that it did not have to be. However, there is an increasing employment problem in breweries because of unfair competition, which the Chancellor recognised. The problem is not just individuals going across the channel, but businesses employing people to go and bring back duty-free beer and wine to sell unlawfully in unlicensed premises. We might expect that to affect employment in Dover, on the south coast or near ports, but it is also affecting employment in the retail industry elsewhere. One pub near my constituency has had to close because of the competition from an illegal seller of liquor brought from across the channel.

Something has to be done about that. I do not criticise the police for not putting all their resources into chasing those who have brought over liquor for retail rather than for personal consumption. If the police know about it, they will do something about it, but they have other priorities and I cannot ask them to make that the top priority. However, the review announced by my right hon. Friend is welcome because there is a long-term difficulty. The amount of taxation on cigarettes that is lost is estimated at more than £1 billion. I suspect that the figure for alcohol is not dissimilar.

Like many Labour Members, I have argued for a long time that it is better to tax pleasant consumption such as alcohol rather than to tax people directly. However, if that tax is inefficient and if keeping it high is putting people out of work here in favour of employment on the French coast, the problem needs to be examined in detail. In the increasingly global economy in which the transportation of people and goods is ever easier, there will be more examples in future than just tobacco and alcohol.

I welcome my right hon. Friend's Budget and support the Bill. It is excellent news for people in the inner-city areas and the other parts of my constituency.