Budget Resolutions and Economic Situation

Part of Amendment of the Law – in the House of Commons at 7:25 pm on 26 March 2007.

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Photo of Greg Hands Greg Hands Conservative, Hammersmith and Fulham 7:25, 26 March 2007

It is a great pleasure to follow Kelvin Hopkins. He and I agree a great deal on things such as the European Union and other foreign policy matters, but regrettably we do not agree about much, if anything, on the economy and taxation.

Emily Thornberry, who is a fellow inner-London MP and a member of the Select Committee on Communities and Local Government, did her cause a poor service by not giving way for interventions. She does not have exclusive knowledge of inner-London problems. She mentioned that her constituency is the sixth poorest in the country. At least until recently, the index of local deprivation said that my borough was the 18th poorest, although I represent some areas of wealth, too. That does not give me an exclusive right to talk about poverty and deprivation either.

It is certainly not for me to defend the Liberal Democrat council in Islington, but I noticed the hon. Lady's opposition to choice-based lettings. It is worth noting that it is mainly Labour rather than Lib Dem councils in London that promote choice-based lettings, so I am intrigued by her opposition. It is of course always worth mentioning that this Government are building less social housing than the Conservatives built in the 1990s.

This has been an excellent Budget debate so far, and fascinating to follow from its beginning at 12.31 pm last Wednesday. The fascination has been not so much with the Budget itself, but with the way in which it has been assessed and reported. Every year under this Chancellor, the initial positive coverage has given way to a more considered assessment. This year was no different—only that the Budget unravelled even quicker than usual. We saw the initial cheering on the Labour Benches behind the Chancellor, but by the opening of today's debate three Labour Back Benchers were present. At one point we were down to two; we went up to a maximum of five; and it looks like we are back down to four at the moment. It seems that the Chancellor gave his incomplete view of the tax changes merely to put the Leader of the Opposition on the wrong foot, and to gain a cheer from his own side. If so, that is an absurd way to run the finances of the world's fourth largest economy.

The Chancellor's speech gave us only half the story, and the whole Budget took me back to my childhood in the 1970s when we had a black and white television of dubious quality with a grossly distorted picture. The distortions on the TV were amazing—people had elongated foreheads, and I remember thinking that the poor bald man who presented the cricket in those days looked like a cucumber. The most tragic thing for me was at 4:45 pm each Saturday, when "Final Score" came on, and the far right-hand side of what should have been on the screen was not visible at all. One could see the home team score and one could cheer if one's team had scored three goals, but I had to wait until the next day's newspapers to find out the complete score, and realise that one's team had lost 3-4.

It was very much like this Budget. I shared with Government Members an initial cheer when I heard the 2p cut in the basic rate of income tax, but it turned to dismay when I learned that it was more than made up for by the abolition of the 10p rate and the increase in national insurance contributions. In fact, the cut in the basic rate cost £8 billion, but the other increases will raise about £8.4 billion.

Away from the big picture, I wanted to address four specific issues faced by my constituents that have not been raised in the debate in any detail. The first is stamp duty, or more precisely, stamp duty land tax. According to Her Majesty's Revenue and Customs, the stamp duty yield from residential property throughout the UK has gone up sevenfold under Labour, from £675 million in 1996-97, to £4.6 billion in the last financial year. In London, during the past 10 years, there has been an eightfold increase. Five times as much of that tax is raised from London as from Scotland, and 16 times as much in London as from the whole of the north-east.