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Mr. Deputy Speaker: Order. The hon. Gentleman's time is up.
4.38 pm
Mr. Gareth Thomas (Clwyd, West): I welcome the Government's broad strategic approach, which is consistent with their desire to create a society that is both enterprising and fair.
I want to concentrate on two issues. I want to discuss what the Budget does for pensioners, and its ground-breaking efforts to promote environmental objectives through the tax system. I shall make particular reference to the climate change levy, which represents a radical departure.
My constituency contains more pensioners than any other Welsh constituency, and is among the top 20 in the United Kingdom in that regard. The announcement of a substantial increase in the winter fuel payment to
£100 has met with universal acclaim. It is indeed a generous measure. Pensioners may look forward to a warmer winter, thanks to that increase.
The Budget has improved the position of the poorest pensioners with the introduction of a minimum guarantee on tax, and the minimum income guarantee, which introduces an above-inflation increase. A commitment has also been made to link the minimum income guarantee to earnings. Those measures are very welcome.
The Chancellor has agreed to extend the new deal to the over-50s. I agree with Age Concern that the measure is
More needs to be done to tackle the plight of pensioners in poverty. I should have liked the Government to say more about the need to tackle fuel poverty. There should be a cross-departmental integrated strategy to deal with the scandal of fuel poverty. According to objective research, no fewer than 8 million households in the United Kingdom cannot afford to heat their homes properly. Perhaps we may look forward to future announcements in that regard, because something needs to be done.
The climate change levy on the business use of energy is a radical measure. It conforms with the recommendations of the Marshall report on using economic instruments to promote environmental protection. It shifts the burden from economic goods, such as jobs, to environmental bads--pollution, waste and inefficient use of energy. Significantly, the proposal is revenue-neutral in so far as it has been offset by savings in employers' national insurance contributions.
I agree with the Chancellor that this important measure will improve energy efficiency. It will enable the United Kingdom to meet its crucial international commitments in combating climate change and it will encourage employment opportunities, especially in sectors dealing with the new environmental technologies. Crucially, it will do so without affecting UK firms' competitiveness. I congratulate the Chancellor on having squared that circle, and on having achieved a balance between the need to maintain economic competitiveness and the need to take significant strides towards environmental sustainability.
I welcome the reform of company car taxation, the reduction in vehicle excise duty for small cars and the increase in landfill tax to promote sustainable waste management. Money raised by the landfill tax is of special advantage to many people in my constituency. One scheme, in Old Colwyn, is known as the "Fairy Glen". Money from the landfill tax has been used to improve the environment in that locality, by improving amenities such as footpaths; that work is to be welcomed. I congratulate the people involved in that scheme.
Mr. Roy Beggs (East Antrim):
Will the hon. Gentleman give way?
Mr. Thomas:
I am afraid that I will not because, with respect, I am coming to the end of my speech.
Sir Peter Lloyd (Fareham):
I am grateful to you for calling me, Mr. Deputy Speaker. I am afraid that I did not manage to hear the two opening speakers in today's debate. As they are not present to hear me, I suppose that honour is in some ways satisfied, but I apologise to the House.
Naturally, I heard the Chancellor make his Budget address. He has been very fortunate. He inherited an inflation rate on target, in a world where inflationary pressures were subsiding fast. He had the sense to continue, for his first two years, with sound Conservative spending policies and reap the benefit. But, behind the screen of election promises not to raise personal taxation, he has, since 1997, contrived systematically to increase a battery of other taxes and imposed, in the process, heavy extra costs on industry and commerce, in no way offset by the decrease in corporation tax.
The Prime Minister was wrong to say, in the House yesterday, that this was a tax-cutting Government, not a tax-raising Government. The way in which the Government have chosen to raise the extra money has reduced the ability of industry and commerce to invest and create jobs. What is worse, by abolishing dividend tax credits for pension funds they have diminished savings and future pensions.
The Chancellor has with some ruthlessness--and, as my right hon. and hon. Friends like to say, with stealth--built up a very tidy balance, a part of which he is giving back in this Budget. To give credit where it is due, he gave it back last Tuesday with such a commanding flourish that, at the time, hardly anyone appeared to notice that they were being treated with their own money--and with only a part of it at that, and a good part of that part filched from their future pensions.
Despite the Chancellor's prudence in hanging on to so much of that money, the growth forecasts on which his Budget is based look very optimistic. He expects lower growth in the coming year, but his figure is higher than most informed commentators expect and he predicts a rapid bounce back to trend in the following year.
With Asia in recession, Japan stuck fast, Europe struggling and the world kept going by a dazzling performance in the United States--which surely cannot be sustained at that level indefinitely--it is difficult to see how the United Kingdom can be expected to be so buoyant while the pound is so high and we are so dependent upon exports. I hope that the Chancellor is right, but the Budget speech would have been a good place to justify his confidence, as it is essential to his whole Budget strategy. Perhaps one of the Ministers winding up today or on Monday will do so before the Budget debates end.
It is very difficult to see what the Chancellor has actually done in the Budget, especially from his speech. He constantly uses figures for one year, two years or three years; cumulative figures or figures for the period of the whole Parliament; last year's tax changes are sometimes included and sometimes not; and sometimes next year's changes are included. It depends on what point the Chancellor is trying to make. The aim is presentation, not
clarification. That is not setting the Budget in context, as the hon. Member for North-West Norfolk (Dr. Turner) suggested. It is not a contribution to open government and serious debate. It is too often a public relations exercise in obfuscation and spin.
It is possible to get near the truth from public documents, but that takes time. No doubt by the time the objective position is laid bare, the Budget debate will be over, the headlines will have been written, and public attention will have moved on to other matters. However, I expect that the minds of more people than the Chancellor cares to admit will return to those headlines when they look with disappointment at the various stoppages that continue to be made in their pay cheques. I also suspect that a good many pensioners who caught the words "increased in line with earnings" will be a little downcast when they find that their pension increase continues to be in line with inflation.
Similarly, it is difficult to weigh up the merits and the real effects of the multitude of tax changes that the Chancellor has proposed. Despite the green Budget discussions and the leaks--which would have obliged Hugh Dalton to resign 50 times over--most of the changes have not been properly weighed and discussed. Now that the Chancellor has nailed them to his mast, they will no doubt eventually arrive on the statute book, whatever their merits. It would be good to hear from the Minister in her winding-up speech that, if effective argument is deployed against any of the proposals, the Government will not feel unmanned by dropping or changing the measure in question.
I welcome the ending of MIRAS--although not all my hon. Friends do. It has served its Conservative purpose most triumphantly by creating a property-owning democracy. It had been much reduced by Conservative Chancellors in the interests of simplicity and neutrality in the tax system, and it is time that it went.
Unlike even more of my hon. Friends, I also welcome the end of the married couples allowance. It did absolutely nothing to sustain marriage. It is absurd to argue that a husband or wife are kept out of the divorce court and away from the warm embrace of the Child Support Agency, or were originally propelled into church, by the lure of a £200 tax advantage. One cannot buy a sound marriage in that way, and it demeans such marriages to pretend that one can. Indeed, if it is possible to bribe a family unit to stay together--which it is not--child tax credits might be more effective. Therefore, I guardedly welcome their appearance in the Budget, although it seems that they are being introduced with a built-in anomaly in the taper, which means that, unlike child benefit, they will disadvantage the many families in which the wife chooses to stay at home and look after the children.
Too many of the other changes look like window dressing. There will be a 10p tax band: how much better if the threshold had been raised and more people had been taken out of tax altogether. No doubt the scheme for tax-free purchase of shares by employees is well-intended, but it is not a good idea for people to put much of their savings in the company on which their livelihood depends. It would have been much better if the Chancellor had left PEPs alone and had sought to devise workplace schemes to promote them.
I do not have the time to mention other changes, but I fear that it will be accountants who will prosper from many of them, while management will find them a time-consuming distraction, and the intended benefits will not materialise.
"a welcome recognition of the particular problems experienced by many in this age group".
However, I concur with many groups involved with older people that it is important to tackle age discrimination and make job opportunities available to older people. Older people are an increasingly powerful force in society. They represent an increasing percentage of the population; it is highly significant that the Budget acknowledges that.
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