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8.2 pm
Mr. John Grogan (Selby): We have rightly heard much in recent days about the people's Budget, the people's priorities, the people's money and the people's Chancellor. I shall change the focus slightly for a few minutes by examining the effects of the Budget on what the Conservative Prime Minister, Lord Liverpool, referred to in the last century as the people's pleasures. Early in the 19th century he warned his party not to get too involved in the strictures of Calvinism and to leave the people's pleasures well alone. Fortunately, many of the people's pleasures that he sought to conserve are still with us today, and very robust they are--namely, beer and gambling.
I have boasted in the House before that I have more coal mines in my constituency, Selby, than there are in any other constituency in the country. I shall go a step further today and say that there is a greater concentration of breweries in my constituency than anywhere else. In the small market town of Tadcaster, there are three: Sam Smith's, John Smith's and Bass. There are no fewer than 1,700 businesses in my constituency. I have had a chance to visit only 40 so far, but by some miracle of fate I have managed to fit in visits to all three breweries.
Beer brewing and the associated pub trade employ almost 1 million people. The industry can play a crucial role for the Government in helping to implement the new deal. The increase in beer prices by 1p a pint effectively index-links beer duty in line with inflation. That has no doubt been done to protect Government revenues, and if the UK were a closed market, there would be much merit in that. However, what is obviously regarded as a catching-up measure for the Treasury further increases the differential in tax rates between ourselves and France, and produces an even greater incentive for fraud and smuggling.
The 6:1 beer duty differential, which has been increasing throughout the 1990s, is a denial of the European single market. UK duty on a typical pint is now 38p including VAT. The French equivalent is 6p--a difference of 32p a pint. Every day more than 1.4 million pints of beer are coming into Britain duty free from France. That daily invasion is equal to the weekly beer sales of 1,000 small pubs and adds up to a tax loss to the Treasury of more than £235 million.
The Chancellor referred in his speech to the review by Customs and Excise of fraud and beer smuggling. I await with interest the publication of that report, but the plain fact is that fraud and smuggling are rife. Her Majesty's Customs and Excise reports that there is evidence of organised networks that employ mules, or runners, to make several journeys each day to France to buy amounts of beer up to the level of 110 litres. Once back in Dover, the beer is transferred to other vehicles and transmitted onward all over the country.
A recent "Dispatches" programme on Channel 4 suggested that Yorkshire, my home county, is a centre for the bootlegging business. One of the key characters involved is apparently known colloquially as the Slug. As a Government we promised to be tough on the causes of crime. In the Slug's case the cause of crime may well have involved a deeply unhappy childhood, but it almost certainly also involves the massive differential in duty.
Before the election the Prime Minister, in an interview with The Licensee, discussed the merits of an independent investigation into the issue. That was a good idea then
and it is a good idea now. Certain economic models indicate that a cut in beer duty would increase revenues to the Government, because of the effect that it would have on the brewing industry.
As my right hon. and hon. Friends have pointed out, the Budget was historic, recasting the relationship between the tax and benefits systems, making work pay for all income levels and transforming the relationship between Labour and the business community. My right hon. Friend the Chancellor is assured of his place in history, but we on the Labour Back Benches have greater ambitions for him than that. We want him to be up there with the truly great Chancellors, so on top of what he has already achieved, if he could find it in himself to cut the price of beer in the next Budget, there would be no stopping him.
I shall say a word about buses, trains and rural transport. The Budget allocated £50 million forrural public transport and £500 million for public transport generally. That is welcome, but we must recognise that for 30 or 40 years or more, public transport subsidies have been largely weighted towards the urban areas, as opposed to the rural areas. The Tories ruthlessly cut the budgets, particularly in England, of the six passenger transport authorities in the urban areas. Even so, the authorities' budgets dwarfed support for public transport in rural areas.
In an urban area, for example, West Yorkshire passenger transport authority will spend almost £100 million next year on supporting public transport. In neighbouring North Yorkshire, the figure is just £1.6 million. Fares and concessions are much more generous in urban Britain than in rural Britain. That has some perverse effects.
For example, there are seven stations in my constituency of Selby. Instead of getting on a train at one of those stations, some commuters who live in the constituency drive across the border into West Yorkshire every morning, with all the impact that that has on the environment, and get on a train there to make a significant cost saving. Some pensioners retire to the market town of Wetherby, which is just outside my constituency in West Yorkshire, rather than to the market town of Tadcaster in my constituency, simply because of the public transport concessions. The Chancellor's statement was a welcome first step, but there are tremendous challenges ahead for the Deputy Prime Minister when he makes his statement on integrated public transport.
Finally, I shall say a word about the people's money and the exchange rate. The best thing that the Government could do to ease the pressure on the pound is to do everything in their power to make sure that the single currency and EMU are a success for the countries that join in the first wave. As holders of the presidency of the European Union, we have a crucial role to play in the coming weeks. I was delighted to see the positive efforts that were made during this weekend's ECOFIN summit in York.
If the single currency works, interest rates will fall across Europe, output will be boosted and the pressure on the pound and British interest rates will ease. Conversely, if the single currency runs into difficulties, there could be increased speculative pressure on the pound. I hope that
before too long Britain can join the exchange rate mechanism in preparation for a decision on the single currency early in the next century.
I think that the Budget will be remembered ultimately for two things: first, for a rejection of trickle-down economics, or the trickle-down theory, that dominated the previous Government for 20 years. They took the view that to help the poorest 20 per cent. in society we had only to wait for wealth and income to trickle down. The Budget is a rejection of that approach. Secondly, it is a recasting of the relationship between business and the political parties. Now Labour is the party of enterprise and business.
I am delighted that the right hon. Member for Wokingham (Mr. Redwood) is embarking on business breakfasts and lunches. Every English breakfast that the right hon. Gentleman has and every continental breakfast that he rejects will tell the business community that it is now only the Labour party and the Labour Government whom it can trust with this country's economic future. I think that that will be the legacy of the Budget.
Mr. Deputy Speaker:
Order. I have no right to impose a time limit, but I would advise hon. Members to adopt a self-imposed rule of eight minutes apiece. If that is adopted, it will be possible to call almost every Member who wishes to contribute to the debate. I am in the hands of hon. Members.
Mr. Ian Bruce (South Dorset):
Thank you for calling me, Mr. Deputy Speaker. In the light of your advice, I shall have to speak that much quicker.
I am grateful to be able to take up the remarks by the hon. Member for Selby (Mr. Grogan), who made an extremely good speech. If I may say so--the Government Whip probably noticed this--the hon. Gentleman was somewhat critical of the Budget. However, he spoilt it all by doing the usual bit at the end, showing how sycophantic he is.
I have an opportunity to demonstrate my gratitude to the Labour party. Apparently it sent about 400 people to my constituency to have a south-west regional conference over the weekend. I understand that some Ministers and Labour Back-Bench Members attended it. As none of them wrote to tell me that he or she would be there, I was unable to write to welcome them and to tell them what they should be looking out for.
8.11 pm
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