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Amendment of the Law

Part of Budget Resolutions and Economic Situation – in the House of Commons at 5:43 pm on 21st March 2000.

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Photo of David Maclean David Maclean Conservative, Penrith and The Border 5:43 pm, 21st March 2000

I am grateful to my hon. Friend, who, in his usual erudite way, has made an important point. The Opposition have a problem—[Interruption.] I mean the Government, although they are my opposition and my constituents' opposition. The Government have a problem. The Prime Minister made solemn promises about income tax, which have clearly been broken. He has been informing the House for three years about a situation that, it turns out, is no longer correct—I choose my words carefully. The Government either have to say that the Prime Minister got it wrong or did not mean what he said, or they have to admit properly that taxation has risen and that the Prime Minister got it wrong and, for three years, every week, inadvertently misled the House.

The Government had better realise that those promises by the Prime Minister will come back to haunt them. They do not have to take my word for it; they can look at the growing number of independent surveys that show that the tax burden is rising. Figures published in late 1999 by the Organisation for Economic Co-operation and Development show that Britain has the fastest rising tax burden in Europe and now pays more tax than Germany, for the first time in a generation. The increase in this country is also greater than in any other developed country. While the international trend is towards lower taxes, the first full year of a Labour Government saw the biggest annual rise in taxation for 16 years.

In addition to the OECD report, the Office for National Statistics published figures on 18 November that showed that the tax burden had increased since the 1997 general election. In the second quarter of 1997, the tax burden in the UK was 35.6 per cent. of GDP and in the second quarter of 1999, it was 37.7 per cent. The OECD and the ONS both used longstanding and internationally accepted methods of measuring the tax burden and their figures are irrefutable. They are not Conservative propaganda dreamed up out of thin air.

A March 2000 analysis by the accountancy firm PricewaterhouseCoopers has predicted that the cumulative increase of discretionary taxes imposed since Labour took power will be £10.8 billion by the end of the Parliament. Although net changes in personal taxation will be negligible, the report said that the extra revenues had been generated through a mixture of higher taxes on companies and institutions, and increased levels of expenditure. It beggars belief that the Chancellor could stand at the Dispatch Box today and start boasting about the Government's tax record. Taxes are rising under this Government. They have gone up by 9p in the pound and have come down by 1p in the pound, as my right hon. Friend the Leader of the Opposition said earlier.

The Chancellor made a big play about pensioners. Ministers like to boast that they have given £1.6 billion to pensioners, but they have failed to say how much they have taken away from them, such as the £5 billion a year tax on pension funds. Future pensioners will be worse off because the Chancellor has loaded £5 billion a year of tax on to pension funds. To make matters worse, the most popular savings vehicles of all time—TESSAs and PEPs—have been abolished and the amount of money that people can save tax free each year for their future has been halved.

The Chancellor did not mention the abolition of dividend tax credits, which means that 300,000 pensioners whose income is so low that they do not even pay income tax will have to pay, on average, an extra £75 a year in tax. He did not mention today the scrapping of the married couples allowance in the 1999 Budget. He gave the impression that pensioners would retain the MCA, but the small print revealed—as we always discover with this Chancellor, after all his rhetoric at the Dispatch Box—that those turning 65 after next April will not be able to claim the allowance, which will cost them an extra £500 a year in tax. Those people had neither expected nor planned for that increase, and constituents have come to see me and have written to me on that point. A £500 extra tax bill is a tremendous blow to people who have budgeted carefully for their old age.

Neither did the Chancellor mention the scrapping of the widows bereavement allowance. Labour has abolished the allowance granted to widows aged 60 to 65 following the husband's death and replaced it with a payment that will be available only to widows under pension age. That was worth £285 a year to people. It may be small beer to the champagne socialist party opposite, but it is a lot of money to those people who counted on it. Labour's first Budget in 1997 also abolished tax relief on private medical insurance for the over-65s, so we do not need to hear more rhetoric from the Chancellor on how well he is looking after pensioners. The record of what the Government have taken away from pensioners speaks for itself.

Today, the Chancellor tried to make the most of the fact that he was not putting up fuel duty by more than the rate of inflation. That simply means 8p a gallon extra on fuel and diesel duty tonight. We should be grateful, because it was 17p a gallon last year. However, that still means that our fuel and diesel costs are a third more than the highest priced diesel of any of our competitors on the continent. Refuelling a lorry with a 1,000-litre tank would cost £443 in Italy, £417 in France and £401 in Denmark—and they are the most expensive countries in Europe. In the cheapest countries, it would cost much less—£293 in Portugal, for example. If we take the most expensive countries, it would cost about £420 on average to fill that tank with diesel. In this country, it costs £663 to fill that lorry with diesel, and after the Budget it will cost another £20, bringing the cost to £683. That is almost £700 to fill the tank in the UK compared with £400 in France and Germany, which are competitor countries. Is it any wonder that our road haulage industry is being crucified?

Let us take vehicle excise duty and the nearest countries to us, which are Belgium, Denmark, France, Germany and Ireland. In Ireland, it is £1,278 for a 40-tonne vehicle; in Belgium, it is £860; in Denmark it is £462; and in France and Germany it is £450 and £1,700 respectively. It is £1,800 in Sweden. Germany is a good example, because it is one of the most expensive VED countries in Europe. That is, until we come to the charge in Britain, which is £5,750.

If my constituency in the Lake district in north Cumbria does not have good transport links, it will die. The way in which the Government are clobbering transport through vehicle excise duty and fuel duty is crucifying the road haulage industry in my area and increasing the costs of every other industry that requires goods and commodities moved round the country.

I remind the House briefly of some of the other points in the Budget. Of course, the Chancellor made much of national health service expenditure. I wonder how many times that money has been triple counted already, and how many times it will be triple counted in the next few days. The extra £21 billion is now being claimed to be another £50 billion. By the general election, it will no doubt be an extra £150 billion.

Did we not see in last week's "Panorama", a programme that is not usually critical of a Labour Government, doctors, leaders, nurses and other experts in the NHS complaining that, in their view, the Government had lied about the figures? They talked about the Government having taken credit for the extra doctors coming out of training school when those doctors were in the system in any event and due to leave training school. They talked about how the Government have triple counted the money going into the NHS.

When listening to the Chancellor this afternoon, we could only think, "Good, there will be extra expenditure on the health service." No doubt when we read the small print we shall find that it is nothing like the expenditure that the Chancellor has claimed, and that the Government will still have failed to tackle the real problems of the health service.

We heard nothing from the Chancellor about the Home Secretary making a statement in a couple of days about more funding for law-and-order issues. If the Government are allocating less than £300 million for such issues, that will not deal with the huge cuts in police numbers that we have seen under the Government and will see in future. They have boasted about an extra 5,000 officers, but they will not be extra officers. They will be the officers who will be recruited in any event to try to fill the gaps that will be left by the 10,000 officers leaving the police service or retiring from it.

We have had a great deal of spin from the Chancellor, but we have had nothing from him that gives me any satisfaction that the real problems of rural deprivation in the far north of England will be dealt with. A dying agricultural economy and severe transport problems have an effect on all rural areas. We cannot have social inclusion, which the right hon. Member for Alyn and Deeside (Mr. Jones) was talking about and of which the Government were boasting, if thousands of pensioners in rural areas cannot afford to drive to towns and villages. They cannot afford to go out because the cost of motoring has increased under the Government. They have never had bus services in sparsely populated rural areas, and they never will have. It is not social inclusion to exclude those people, and there is nothing in the Budget to help them.

I suspect from what I have heard today that there is nothing to cheer for in the Budget. I am certain that, as more of the fine print dribbles and leaks out from Inland Revenue and Customs and Excise press releases over the next few weeks, as details are winkled out in Committee as the Finance Bill is considered, and as the Chancellor is forced to make clarifications, we shall have nothing to cheer about. We shall find that the stealth taxes are continuing and that the 1p that the Chancellor is giving us back in the rate of income tax is in reality 10p more in the pound, and not the 9p in the pound that my right hon. Friend the Leader of the Opposition talked about.