Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 6:20 pm on 10th March 1999.

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Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee 6:20 pm, 10th March 1999

Yesterday's Budget has done more to help relieve family poverty than probably any other Budget in the past 30 years. The Budget offers, for the first time in many years, a clear chance to those who are in low-paid jobs, or who have no job at all. It is little wonder that the Child Poverty Action Group said that the Government are genuine in their commitment to reducing family poverty, and that the Budget will take about 700,000 children out of the poverty trap, once and for all.

Such praise for a Labour Government from the Child Poverty Action Group is rich praise indeed. In the past 25 years, that organisation has been among the best-focused critics of Government, regardless of colour. I also well remember the problems that my right hon. Friend the Member for Birkenhead (Mr. Field) caused previous Labour Governments, in the 1960s, through his analysis of how those Governments tried to attack family poverty.

In discussing working people and their life chances, we should start by acknowledging that this Budget will make a bigger difference to them than any other Budget in many years. Certainly in my own constituency of Ochil, the Budget will benefit 10,000 families. The living standards of many pensioner families in my constituency will also improve.

The right hon. Member for South Norfolk (Mr. MacGregor) said—at least I think that he said—that the way in which the money had been allocated to pensioners to help them with heating—the £100 instead of the £20—could have been improved. We are aware of the problems—perhaps he knows about the problems better than most of us do. As I recall, he had occasionally to stand at the Dispatch Box to try to defend schemes that helped some parts of the country, but not others, or helped some people, but not others. We know that, from start to finish, those attempts were a shambles.

We realise also that if we are to deal with an issue such as providing winter fuel payments, it makes a lot more sense to make the benefit universal. The 11,616 pensioners in my constituency who will benefit from the Budget's generous treatment will realise that it is much simpler simply to get the money in hand. Better-off pensioners may do whatever they want with the money— they might even wish to give it to charity. They might choose simply to benefit from the Government's generous provision. However, for the poor pensioners in my constituency, who have been frightened to heat their homes, the prospect of receiving an additional £100 is one not to be missed. I think that most hon. Members appreciate that.

Many hon. Members have already said, quite correctly, that the Budget is about enterprise, work and employment creation. In the past month, my constituency has suffered just over 300 jobs in the textile industry. Although the losses—40 here, 30 there or 25 elsewhere—have been in various companies, the case of one company, Coats Viyella, is perhaps worth mentioning. It supplied Marks and Spencer. Once the contract between the two had been settled, it was assumed that—for a long time to come, if quality was maintained—Marks would buy the blouses that the women at Coats Viyella made.

We know the saga of Marks and Spencer. We are aware of its boardroom battles, and the drop in its share price. We know that it has lost its direction as a company. We know also that it is no longer sufficient for Marks and Spencer to try the old trick of sending back all the stock if there is one flaw in one garment—which was how it used to exercise stock control and get the stock burden off its back. Marks and Spencer now realises that that practice alone is not enough if it wishes to compete with the other high street retailers which import large quantities of stock. Marks and Spencer is therefore going elsewhere for its business.

I am not attacking or criticising Marks and Spencer's investment policy, or making a severe criticism of the wages that employees at Coats Viyella are being paid— although those employees are not overpaid, and some of them could probably benefit from introduction of the national minimum wage. Nevertheless, the fact remains that Marks and Spencer—because of the mess that it is in—is forcing textile jobs out of Britain. Those jobs would have been forced out regardless of which party was in power.

Other textile companies, including those that are operating at the upper end of the market, look not only to the United States, France and Germany as potential customers, but to Taiwan and the countries of east and south-east Asia. The Japanese are not buying a new cashmere sweater, or any other sweater, every time they plan a trip to the golf course. They are not spending money as they were. The situation in those countries is part of the reality in the downturn in demand for United Kingdom textiles.

It comes a bit rich for a Europhobe, such as the right hon. Member for Wokingham (Mr. Redwood), to criticise the Government's approach to the negotiations on bananas or the cashmere industry. Certainly, both in Scotland and elsewhere, there is frustration and impatience about the plight of textile workers as a consequence of the banana negotiations. However, let us not forget that the Conservative Government brought the original banana appeal.

There is no disagreement on the banana negotiations between us and the French. There is no disagreement on it between the United Kingdom, France and even Ecuador— which, although it is one of the mainland Latin American banana producers, is not one of Chiquita's customers. Ecuador is just as much under the cosh as the African, Caribbean and Pacific countries are. It is a complicated issue, and it does not do to simplify it, to try to make a party issue of it in the House.

Perhaps the current Administration have a better relationship with the Clinton Administration than the previous Administration had. Although it would not be difficult to improve on the previous Administration's relationship with the United States Administration, we should realise that other forces are also at work. I think that, in a Budget debate on trade and industry, it is harmful to dwell unduly long on the issue.

The Government have been attacked because we have not given away enough money—only £1 billion—and should have given away more. If more money had been given away—I ask Opposition Members to consider this—what would have been the reaction of the Monetary Policy Committee, at its next meeting, when it considers reducing interest rates? Would an interest rate reduction be the consequence of massive fiscal largesse? In today's press, Adair Turner made a reasonable point when he said: We asked for a boring budget and this is not a bad result. The fiscal balance is reasonable. The Monetary Policy Committee has made successive interest rate reductions, to give the country an injection of confidence. In the past month, the MPC's message has been quite clear: "We are not going to cut interest rates this month, but will let the Government take on the responsibility of increasing business confidence."

When one examines not only the Red Book fine print but the proposals announced today by my right hon. Friend the Secretary of State for Trade and Industry, one begins to see from where new businesses will come, and where Government assistance will be available.

Hon. Members have mentioned the new tax rate for small businesses. Let us face it: the majority of businesses that collapse are fledgling businesses. We have to do two things in the United Kingdom: first, help fledgling businesses through the very tough period when they are starting and profits are not very great; and, secondly, remove the stigma of failure from businesses and business people who fail. We have to make people realise that they should get back into business at the earliest possible moment and give them access to the maximum financial support.

I was interested in the point made by the right hon. Member for South Norfolk about the number of names that have been given to small business support organisations. However, we now have a plethora of organisations, something which we did not have when the right hon. Gentleman had responsibility for the issue. Previously, there was the Small Firms Service and nothing else; there was not the support system that we have now. There were occasional bits of support from the chambers of commerce and there was a wee bit from the DTI, but not much else. Nowadays, we have business links, about which we do not disagree across the Chamber.

We need a formal structure that can directly advise Government of the needs of small businesses. I am happy to welcome the establishment of the Small Business Service—I acknowledge that it is another agency, but it is one which is worthy of our support. It will be able to provide small amounts of money and appropriate advice. For businesses beyond the early stages of growth, it will be able to provide appropriate managerial skills supported by funding from outside. Companies that need experienced hands during a worrying period will have access to people who are used to running bigger businesses.

I could go through the whole Budget, but, in the short time at my disposal, I will not abuse the courtesy of the House, so I will touch on one important area. Much is made of our attempts to meet the Rio and Kyoto targets. The carbon taxes are probably a more sensitive way of meeting them than a blank energy target such as the multiplier. The Marshall report was a model of lucidity and fairness.

The Government have picked up the points on fiscal neutrality and they have nodded in the direction of the Institute for Public Policy and Research report, which suggested that if there was a reduction in national insurance contributions from employers, something like a quarter of a million jobs could be created. The Government's proposals strike a reasonable balance between the carrot and the stick. I hope that if the Government's proposals are successful, we can see some easing of the problems facing the road haulage industry.

Most of us who have been in the House for any time know that the road hauliers are the biggest crowd of whingers under the sun. We are largely inured to their pleas and complaints. However, I am almost concerned by what they are saying now. The imposition of tax on fuel is affecting some small hauliers such as those in my constituency who take goods down to England and bring loads back to Scotland.