Budget Resolutions — Amendment of the Law

Part of the debate – in the House of Commons at 4:17 pm on 22nd March 2006.

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Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 4:17 pm, 22nd March 2006

Mental health care issues clearly impact on homelessness. I have some involvement in dealing with those matters in my constituency. I compliment the Government, because for the first time in a long time we have had significant investment in mental health care in my area. Mr. Randall and I have opened new units in our constituencies. However, the key issue is not mental health but housing supply, repair and renovation. Unless we have a significant housing programme, we will not be able to tackle such matters, and they will have an impact—whether on mental health, families in poverty or children trying to get a decent education.

In response to a recent parliamentary question, the Minister for Housing and Planning said that it would cost £7 billion to bring all local authority homes up to the Government's decency standard. That would represent one of the best and wisest investments that the Government could make in tackling the housing nightmare that so many of our constituents daily face.

The Chancellor of the Exchequer today announced a new housing programme, which I welcome, but I have to say that it is not on a scale that will tackle the size of the need or the desperation. I urge hon. Members to examine the Shelter housing programme, which sets out the targets that the Government should be meeting year on year to tackle the plight in which many of our constituents find themselves.

To return to the point made by my hon. Friend David Taylor, success in delivery of housing improvements and building programmes can be achieved only if the Government work in partnership with local authorities, adopt the Labour party conference option 4 policy, end the discrimination against local authorities and invest directly in a large-scale council house building programme. I can find no other vehicle that could undertake the scale of investment and delivery that we need in this housing crisis.

Finally, on the expenditure side of my Budget equation, I suggest that the Government acknowledge the £800 million deficit that the NHS is facing. My primary care trust is facing a deficit of £30 million, which is unmanageable. No matter how good the management, we will not be able to tackle that in the next 12 months. It is clear from my experience that that has arisen from the rigidity and dominance of the national target setting approach to service improvement, which has undermined local management and local decision making. Therefore, central Government need to review not only local management but the central Government role. In addition, we need to recognise that the £800 million gap is not bridgeable in one year. My proposal would be to write it off and to allow the PCTs to start again in partnership with central Government.

The sum total of those Budget proposals is about £35.37 billion, give or take the odd £100 million. I mention that because my hon. Friend Rob Marris intervened on me last year to see whether the addition was correct—I hope it was.

Turning briefly to how we should raise the revenue to fund this programme, I welcome today's statements by the Chancellor of the Exchequer that we will start looking at tax avoidance. I regret that in the merger of the Inland Revenue and Customs we lost 3,000 staff, but I compliment the new department's work on corporate tax avoidance. Let us consider the proposal made by the Tax Justice Network. Corporate tax avoidance on a scale of £9.2 billion could be tackled, and could reap an income to be invested in the future of public services and in reducing poverty.

I am delighted that a number of years ago the Chancellor introduced windfall taxes to tackle obscene profits in certain sectors of the economy. I urge him to revisit that policy and look at two particular proposals. First, a windfall tax could be imposed on the bonuses given before Christmas to many people who work in the City. We have heard that the stock market is having a difficult year, but national account data show that output in the financial sector has recently increased by 5 per cent. year on year. It is just shy of the 5.3 per cent. that is the highest recorded increase since the 1990 boom under the Lamont chancellorship. The bonus pool for investment bankers is estimated to be £7.5 billion, and some of those profits were distributed before Christmas on a scale not previously seen. Indeed, it is believed that 3,000 mangers could receive a £1 million handout. A windfall tax on 50 per cent. of a City bonus is therefore justified, and would bring in £3.75 billion.

Secondly, we must look at banks and oil, and we could impose a windfall tax on the incredible profits that energy companies have reaped recently. BP, for instance, had a profit of £11 billion or 25 per cent; Shell, 30 per cent.; and Centrica, 11 per cent. Of the banks, Barclays had a profit of £5.28 billion or 15 per cent.; Lloyds TSB, 10 per cent.; and the Royal Bank of Scotland, 21 per cent. The Chancellor has introduced windfall taxes before, and he should do so again on the same scale. The level of profits that triggered the previous windfall tax has been exceeded by those companies, and a new windfall tax could bring in £6.10 billion.