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I congratulate the hon. Member for Northampton, North (Ms Keeble) on being the first hon. Member to mention measure 5.112, which is the £35 million a year tax relief on sanitary products. Sanitary towels and tampons are significant. I have calculated that people will save about £3.30 a year because there will be a 10 per cent. drop in price as a consequence of the much greater drop in VAT.
That measure is the result of a successful campaign over many years, and it is right that the Chancellor has acknowledged that campaign. It would have been slightly more impressive if he had not tucked away the press notice on that measure right at the back of the bundle, because many people will have spent some time trying to find it.
It is curious that in No. 19 of the notes for editors in press notice HMT/DETR 1 we hear about 44-tonne lorries being approved for use in this country. That proves my old rule: "Read the notes for editors and you will find the interesting points that the Minister doesn't want to say in public." I shall spare the House the greatest excitement, which is in example 3 in the annexe to Inland Revenue press notice BN2A; it is probably indescribable, and I am not surprised that the Chancellor did not mention it in his speech.
Page 176 of what is commonly referred to as the Red Book—not that it has been red for some years—details the forecast issues and risks. There is an interesting overall question about what has happened and what will happen to household disposable incomes, household spending and the savings ratio. What I am about to say is qualified by the fact that we do not know what will be the impact of stakeholder pensions. The forecasts suggest that the cost of stakeholder pensions to the public revenues will be about £650 million a year, and that implies a fair amount of extra saving for retirement, which will be welcome.
The Treasury, looking back at the last year and forward at the next two or three years, has rightly said that household incomes grew more slowly than expected, but household spending rose faster than expected, and that is the explanation for the savings ratio dropping from about 10 per cent. to about 5 per cent. Projections show that the savings ratio may increase to 6 per cent., but that is a vulnerable figure. If we had continued to have a savings ratio of about 10 per cent., that would have had a greater impact on people's retirement incomes. We need to watch those figures.
We need to be aware also that the way in which the Chancellor dealt with the alterations to self-assessment taxpaying led to a significant increase in the amount of tax paid by many people during the transition period, and that increase is now slowing down. Such hiccups tend to be ignored by the commentators, because they require a reading of the Budget 2000 book, rather than simply reading the press notices, the Chancellor's speech or these debates.
When we are discussing health we always praise the people who work in the health service—in hospitals, in the community and in GPs' surgeries—and in praising the Chancellor's delivery of his speech, let alone the content, we ought to acknowledge the efforts of people not only in the Treasury and the Revenue, but throughout Whitehall. It is quite an achievement to get the product out on the day that the Chancellor makes his speech, so I pay tribute to those people.
I move on to measures that I wish had been in the Budget. I have not yet noticed the Government facing up to the problem of annuities. If there is to be a transformation in the Government's repayment of debt and we will still require people to turn their personal pension pot into an annuity, the reduction in the amount of available Government debt that will match the annuity payments will mean that the returns on annuities will drop. Unless there has been a consultation exercise or taskforce that I have not noticed, the Government should be far more open and consult about how to deal with that. There has been independent sector work on the matter.
I have many constituents who are above retirement age. Many of them have private pension pots and have put off turning them into annuities on the assumption—which I hope is correct—that the Government will take action. It is wrong to require people to wipe out capital, even though it has been built up tax free, on a rate of return that is lower than they get from many other forms of investment that do not wipe out their capital. That is not only anomalous but unacceptable. Will Ministers find a way to discuss that problem out into the open and find a solution within the next 18 months to two years? The solution may be a transitional set of changes, but one is required.
I move on to another issue that affects retired people. In my constituency, 45 per cent. of people are above retirement age, and these issues matter to them. Married couples in which neither partner will be over 65 by the end of the tax year will lose an estimated £500 a year because their birthdays are in the wrong month. On the type of calculation used by the Government, that will mean a loss of £5,000 over 10 years—because of a birthday. Frankly, that is a bad decision by the Government, and it is wrong that it was endorsed by Parliament in previous Budgets.
I hope that the Government will hear my plea and reverse that decision. If, for some reason, they have to eliminate the married pensioners tax allowance, they should do so by reducing it by 10 per cent. a year over several years, so that it is not a cliff-edge change. There is no justification for that sudden change. It may require a reversal of policy by the Government and may look to outsiders as though they are admitting that they have made a mistake, but I am asking for fairness.
I hope that if the Conservatives table an amendment on that, the Government will take it seriously, and I hope that it can be debated on the Floor of the House, rather in the Committee upstairs, because the issue affects people in every constituency. That is the only example that I have come across of a cliff-edge change, and I have gone back through Budget changes in most of the 24 years that I have served in the House.
Many other issues are of interest to my constituents, but it would not be right to deal with too many of them. One that matters to Worthing, West, which is a seaside constituency, is the change in Customs and Excise press notice 1, which abolishes betting duty on amusement machines with prizes, where the stake is 10p or less. That saving of £645 a year, or £450 a year in non-profit clubs, will be welcome. It is not desperately important to overall finances, but it will be a significant advantage to people who provide low-cost, low-return entertainment in Worthing and elsewhere. I say that although I have not had a major contribution from Connaught Leisure in my constituency. However, its owner worked with me in Battersea funfair, back when I was in my teens and trying to fund my education, or at least my debts.
I move on to energy saving and home security, on which VAT is coming down to 5 per cent. There is an ambiguity in Customs and Excise press notice 6. The VAT reduction is not applicable to DIY installation. It is not clear whether that applies only to home security devices or to energy saving materials as well. I do not expect that to be clarified today, but perhaps we could have an answer later. The notes to editors do not make the position clear, but it would be of interest to the trade press and those who do DIY work.
Inland Revenue press notice 8 deals with the installation of new boilers and radiators in social housing owned by councils or registered social landowners, where there is provision for leased boilers and radiators. To many people, this may sound trivial, but if tenants buy homes from their registered social landlord or council that contain radiators and boilers leased from other companies, will that lead to a conveyancing nightmare?
The fact that the boilers and radiators are leased presumably does not require them to be taken out if the house changes ownership. This could be a matter of great importance to people who want to buy the home in which they have been living, rather than being forced to move elsewhere because they cannot afford the lawyers to work out the complications involved.
On charities, I do not remember in which year I first suggested that the Treasury, or rather the Inland Revenue, ought to recognise that if money is given to charities other than through the Charities Aid Foundation, Gift Aid or Give As You Earn, it comes in the main from people who have taxable income or from people below the taxable threshold. Rather like the old system of MIRAS—mortgage interest relief at source—which eventually imputed to all payments of mortgage interest the notion that it came from taxed income or from income below the tax threshold, so that the tax relief could come back to everyone, it would be far simpler if donations to charities were presumed to come from taxed income or from income below the tax threshold.
The only accounting for such donations should relate to those paying the higher rates of tax. That is roughly the case with earnings from dividends and savings, where the tax credit applies to the ordinary rate of tax, and only the higher rate requires a complicated paper transaction. Getting rid of paper matters.
My last point, as I do not want to prevent others from speaking, concerns small employers and small employees—not necessarily in size, but in terms of work. I do not think that the situation has changed from the time 13 or 14 years ago when I was on a ministerial group looking into the reduction of bureaucracy. Suppose I employed someone on relatively low earnings—say, a part-timer for household assistance of one kind or another—and I wanted to pay that person a certain amount of money after tax. If I wanted the person to have £120 a week, there ought to be a simple system whereby I could sign a single sheet of paper, instead of dealing with two offices. Obviously, amalgamating tax and national insurance helps, but the last time that I raised the issue, there were at least two offices involved and the guides were extremely complicated.
Up to a certain amount of money, and for one or two employees, if people want to be straight and want their employee to be straight, it would be a good idea to work out a rough and ready system that produces justice and brings people into the white economy, rather than having them not provide employment or go off the books because the alternative is too complicated. Being open and simple worked if one had a single lodger in one's home up to a certain limit, and the same ought to apply to such simple employment.