Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 9:07 pm on 10th March 1999.

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Photo of Owen Paterson Owen Paterson Conservative, North Shropshire 9:07 pm, 10th March 1999

The background to the debate is that there are three levels of taxation in the world. One, in the United States, has created 13 million jobs in the past six years. Here in the UK, we have created 2.5 million jobs. In the euro zone, there has been a net loss of 699,000 jobs.

The Budget shows that we are on the cusp of moving away from a free-enterprise, low-tax economy towards a higher-tax economy. It was breathtaking for the Prime Minister to state today that the Budget would lower tax. The Government came into power with the level of tax at 38.1 per cent. of GDP. Page 154 of the Red Book clearly states that that will go up to 39.7 per cent., as projected for 2003–04. The level of tax was £315 billion in 1997; it is projected to be £425 billion in 2003–04.

Another lesson from the United States is that we should have fewer regulations and less intervention in business. The huge growth in jobs in America is because of micro-businesses. Businesses with a turnover of less than $500,000 are exempt from the minimum wage and all sorts of discriminatory legislation. In contrast, since the Government came to power, there have been 2,000 new directives. Ian Fletcher, of the British Chambers of Commerce, has calculated that they will cost £500 million to set up and £500 million a year to administer.

There are signs in the Red Book that the cost of the Budget will be in increased unemployment. In the west midlands, unemployment is nudging up from 4.6 to 4.9 per cent. In my two boroughs, it is rising from 4.1 to 4.5 per cent., and from 2.5 to 2.8 per cent. Regrettably, the Red Book states that social security benefits will march away. In 1998–98, the figure will be £93.5 billion, rising to a projected £106.4 billion in 2001–02.

In my constituency—a rural one—the last census referred to manufacturing and a large agricultural element, but distribution and storage are major industries and employers in Shropshire. There is nothing in Shropshire that does not move by diesel-powered truck: it is estimated that 97 per cent. of freight moves by road in rural areas. In that regard, I thank my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) for her generous comments earlier. Haulage is being savaged by the Government. That is an extraordinary feature of their taxation policies, because it is one area of policy which remains 100 per cent. in the Government's hands.