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7 pm
Mr. Piers Merchant (Beckenham): This year, the hype and hot air that are part of the build-up to the Budget reached record proportions. Alongside that, there has been the increased drama that has accompanied Budget statements in recent years as a result of simultaneous television and radio transmissions and the almost neurotic scramble of the various media organisations to be the first to judge and to comment on the Budget, even before my right hon. and learned Friend has sat down. It is, perhaps, not surprising that the initial analysis of the Budget is hardly balanced, fair or logical; indeed, that has been the case this year.
Nearly a week after the Budget statement, we are in a much better position to judge the Budget's real impact on ordinary people. While the hon. Member for Peckham (Ms Harman) no doubt spent the weekend feverishly working out her great fictional piece on the health service, to which she treated us this afternoon, I, like most of my hon. Friends, was in my constituency meeting and talking to ordinary constituents to see what they felt about the Budget and what impact it had on them.
I started my weekend by attending a meeting of the Abbeyfield Society which looks after older people. Most of the people there were pensioners and I talked to them at some length. There was universal praise for the Budget among those people and some real enthusiasm. They will gain from tax cuts, and their standard of living and their security will improve. The Opposition may be surprised to know that those people were talking not about the national health service deflator or about macro-economic policy but about how they would be affected by the Budget.
I talked to one elderly lady who was a retired teacher-- not a fat cat or a person who had huge inherited wealth but someone who was past the age at which she felt she could live on her own in her home and who had sold it and moved into residential care. That lady had invested the proceeds from her house sale in a building society and was using the interest to pay for her care. She told me that she had calculated that she would be £550 a year better off as a result of the Budget.
The Budget had made a great deal of difference to her, because it had made it possible for her not only to pay for her residential care but to have money left over to enable her to have a relaxed style of life. It also enabled her to know that she would have the security of such a life as long as she wished. She knew that, when she eventually passed on, she would be able to leave money to her next of kin, which made her happy.
Ms Eagle:
Does the hon. Gentleman think that his constituent will be happy when interest rates go down in the next few days? There are always checks and balances in these issues.
Mr. Merchant:
I am glad that the hon. Lady is so confident that interest rates will come down; I hope they will, because that will benefit the economy. However, my constituent's tax savings will outstrip the likely reduction in interest rates, so the hon. Lady's point is a bogus diversion from the real benefits that people will have.
I also talked to an elderly couple who were still living in their own home. They were benefiting by more than £1,000 a year from the Budget and they, too, were very pleased. However, they were concerned about what might happen if one of them had the misfortune to fall ill and to require long-term nursing care, a problem that affects many elderly people. It is as much the worry of that possibility, with its financial consequences, as the actuality that upsets people. That possibility worries not just elderly people but younger people who see it as a possibility for their later years, and those who have elderly relatives and who are concerned about their future care.
The people to whom I talked were pleased and optimistic about the changes that have come from the Budget, such as the tripling of the basic threshold below which they will face no charge for their long-term care, however long it is, and the doubling to £16,000 of the figure under which they will have to contribute only a small amount. People with average savings of £14,000 would previously have had to pay some charge for an average-priced nursing home and would have expected their capital to be reduced by £280 or £290 a week. Now their capital will not be reduced, which means a great deal to them. The Opposition, far from rubbishing the changes, should recognise that they will help many people, and should welcome them for that reason.
Elderly people will also welcome the raising of the age allowance by £280 and the reduction in the basic rate of tax by 1 per cent. They will welcome the extension of the inheritance tax threshold to £200,000, which will benefit many who hold property. All those measures will help elderly people, so I was not surprised to hear so many people expressing pleasure at the Budget and its implications for them.
People's concern about moving into residential care is exaggerated by many. There is a myth that, if one has to move into long-term nursing care, one automatically loses one's house. It is often said that people will lose their house even if they have a spouse living there. That is entirely incorrect, because as long as a spouse remains in the family home, it cannot be treated as an asset in the calculation. There are other cases in which the house will not be lost even if only one person lives in it and then moves into nursing home care. It is advisable for people in that situation, their relatives or their advisers to take good financial advice in advance. They will then find that the impact of the charges is far less than many mischievously suggest.
Another group of my constituents who are concerned about the impact of the Budget are those at the Wellcome research laboratories in Beckenham who, unfortunately, are facing redundancy following the takeover of Wellcome by Glaxo. They were extremely concerned in the run-up to the Budget because it was suggested that those receiving redundancy pay would have to pay tax on the first £30,000 of it, which had not previously been the case. I was sure that that would not happen and my right hon. and learned Friend the Chancellor made it perfectly clear in his Budget statement not only that it would not happen but that it had never been contemplated. In other words, those people were quite unnecessarily alarmed by a rumour that had no basis.
I understand, however, that a small matter affecting redundancy pay is still being considered. It does not, I believe, affect any of my constituents, but it has affected some people in other parts of country. It involves a redundancy payment being made and the person concerned signing an agreement either to do or not to do something--for example, not to work for a rival company--as part of the redundancy deal. Some tax inspectors in some parts of the country who have narrowly interpreted the law have suggested that, in those cases, the whole of the £30,000 that is, at present, tax-free would be taxed. I understand that that matter is being examined by the Treasury, but I would be grateful if my hon. Friend the Minister would refer to it when he sums up, so that further reassurance can be given.
Those constituents who are facing redundancy are also intimately concerned with the region's future economic health and with other possibilities that might come their way, so the Budget measures affecting small businesses are of particular interest both to them and to me. My constituency is perhaps unusual in that, other than the Wellcome research laboratories, it has no major employer, but it has an extraordinary number of small employers. There are literally hundreds of retail outlets on dozens of streets and in small shopping areas. Alongside those, there are many small businesses running service industries and some small manufacturing and engineering companies. They will all benefit from the reduction in small companies tax to 24 per cent., down from 42 per cent. in 1979.
Those companies will benefit too from the reduction to 10 per cent. in employers' national insurance contributions. As an added incentive to those people, who often work extremely long hours and hard in the early part of their lives, they have the prospect of retiring at the lower age of 50 and of obtaining capital gains tax exemption when they pass their business on to others. Some will be able to benefit from the extension of inheritance tax relief to non-quoted shares.
Business, especially small business, will therefore benefit considerably from the Budget, which will do all those firms in my constituency--employers and employees-- a great deal of good, but the effects of Budget will also flow through to people who wish to set up in business, who will be encouraged by the extra incentives that are included.
Over the weekend, I met a group of my constituents who are vintage car enthusiasts. That is a surprisingly widespread hobby and an attractive one. In the past, I have
attended vintage car rallies. Those people were not only extremely delighted that the original Green Paper proposals for continuous licensing had been effectively withdrawn as a result of the Government's listening to their representations--and to my representations as well, as I had strongly supported them--but delighted and surprised that continuous licensing would be operated in a way that produced no charge for those who were not using their cars on the road. For anyone owning a car that was more than 20 years old, there was also the added and surprising bonanza that no vehicle excise duty had to be paid.
I am on the verge of declaring an interest in that matter, as the car that I own and run is more than 20 years old and I may benefit from that measure in three or four years, if my car lasts that long. I sincerely hope that it will. If it does not, I intend to show my appreciation for that Budget measure by buying a car that is even older. Some of my constituents will benefit, however, and are genuinely pleased about that Budget measure, which I welcome.
I should like to move on to four sectors of expenditure that affect my constituency. Much has been said today about the health service. Much of it, however, has been theoretical and a great deal of it has been fictional or fantastic. The truth is that real resources for my constituents who need the health service will increase by more than 2.5 per cent. as some £3 million extra money flows to Bromley health authority. That will trickle down to the vital facilities that are offered to my constituents.
I expect Bromley health authority to make good use of that money to reduce waiting lists still further, on top of its great successes in the past 12 to 18 months. I also expect that that will work through to a further improvement in accident and emergency services locally. The casualty service at Bromley hospital needs improving, but a great deal has already been done, to which I pay tribute. That money will enable more to be done, and I look to forward to that happening.
I, too, welcome the private finance initiative. It will especially benefit my region, as Bromley Hospitals NHS, trust has advanced plans to build a new district general hospital that is needed in the region. For historic reasons, the present structure is haphazard and inefficient. Doctors and clinicians working in the hospitals, Bromley health authority and local people want a new district general hospital to provide a better, more efficient and more up-to-date service. I look forward to that materialising with the help of the measures announced in the Budget.
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