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4.54 pm
Mr. Dominic Grieve (Beaconsfield): I have found the debate fascinating, especially the speech by the hon. Member for Brent, North (Mr. Gardiner), who started by making some sensible points and then disappeared into a peroration designed to beat the clock, and was unwilling to participate in a debate. However, he made a compelling point. He said that those who pay taxes want to know, above all, that the money will be spent wisely. It was noteworthy that he did not say that one of the aims of prudent taxation is to so engineer the matter, if it is humanly possible, as to enable wealth creation to continue, so that funds are made available for the better provision of money to the Government in subsequent years. The Government consistently fail on that. Indeed, a succession of Governments have shown themselves unable to deal with the issue.
One of the problems that faces a Labour Government is that they cannot get away from the belief that those people who may have money are not justified in having it and that the Government can make better use of it. All the evidence suggests that those who have money are the best redistributors of wealth, because they make use of it to better their fellow men by investing it in business--their own or other people's.
What are we to make of what the Government have done? I shall take just one example, because I want to have time to move to another topic. We are told that stamp duty will be raising £340 million per annum by 2001. It is an easy tax, but it is a straightforward capital tax. It started under previous Governments as a modest charge on the conveyancing of property and leases, but it is rapidly being transformed by the Chancellor into a substantial fiscal instrument.
Those who carry out business will suffer the most. As my hon. Friend the Member for Guildford (Mr. St. Aubyn) rightly said earlier, those who have the most need of houses as capital assets are those who conduct small business. It is a particular disaster that they will suffer the most when they are unable to use such assets easily as collateral, by which they run their businesses. If ever one wanted an example of a form of
taxation that was easy and tempting to the Chancellor, but bad and nefarious in its effects, raising stamp duty as he has done fits the bill. When I see such policies, I start to view with considerable suspicion the entirety of what the Chancellor had to say.
In one respect, I awaited the Budget with some excitement. I am a member of the Select Committee on Environmental Audit and I am mindful of the fact that fiscal instruments are one method by which we may achieve changes in people's behaviour to promote environmental goods and prevent what are commonly called environmental bads. However, one has to be careful. If we start inhibiting wealth creation, we have to ask seriously whether we are getting the balance right and succeeding in securing environmental benefit rather than simply putting an extra burden on those who are being taxed. The proposals in the Budget are, I suppose, intended to put the environment at the heart of government, as the Government promised, but the results are exceptionally disappointing.
I commend the Government on the climate change levy. It is a difficult matter, but if the Government get it right--we shall have to wait and see whether they do--they will have taken an important step towards promoting the efficient use of energy in industry and preventing wastefulness. I am happy to welcome that and to congratulate the Government on introducing it. However--I hope that hon. Members will excuse my cynicism--I see that the Government have said that the measure will be fiscally neutral and that there will be no extra burden on benefits by the cutting of national insurance charges. A 5 per cent. cut has been suggested. I am not in a position to judge whether that will be sufficient to balance out the impact of the levy, but the measure had better be fiscally neutral, because otherwise business will see it as a betrayal. Subject to that caveat, I am happy to welcome the measure.
The picture is far less happy on the other instruments that are designed to achieve environmental improvements. Let us consider the levy on fuel. There is absolutely no evidence that raising fuel taxation is having any impact on diminishing motor car use. The reasons are simple. Motor cars are ubiquitous, they are essential in modern society and for millions of people there are no reasonable alternatives to their use. The point has been made about rural areas, but the same applies in many urban settings.
Viewed as a separate item, the decision to raise taxes on petrol appears to be simply a device for raising money. I do not believe that it will create any of the environmental good that the Government say they desire. We are told that it will be balanced by a reform of vehicle excise duty, but it does not require much intelligence to see that if raising petrol taxes has no impact on motor car use, reducing vehicle excise duty as a compensation is nonsense. The truth of the matter is that unless one is using one's car on a limited basis, a reduction in vehicle excise duty will come nowhere near removing the extra burden that the fuel escalator will place on individuals. There is no point in putting escalators in place and encouraging people to climb higher and higher in their transport costs if there are no proven environmental benefits in doing so. Only when the Minister can persuade me that there are will I be willing to consider that measure, but there is no evidence that it works, and on that basis it is seriously flawed.
Similarly, I have some anxieties about the landfill tax. It is not that I disagree with the principle of trying to reduce landfill--heaven knows, landfill takes up a major part of the acreage of my constituency and anything to reduce it would be welcome. However, the evidence from my constituency is that fly tipping is increasing. I also find it difficult to see that landfill is in less demand. The reason for that is that the Government do not have a strategy for waste disposal. It is all very well to raise the landfill tax to discourage people from landfilling, but landfilling remains the easiest way of disposing of waste. Until the Government produce concrete suggestions and say whether they support the growth of waste incineration on a grand scale, for example, increasing tax does nothing except raise money to go into the Chancellor's pocket. That brings me to my final conclusions on the matter.
Mr. Robert Syms (Poole):
Having listened to the Budget debate this afternoon, it is a pleasure to contribute to one of the most important debates of the year. It provides an opportunity to discuss matters about which our constituents care deeply.
Let me start with inheritance--the Government's inheritance from the previous Administration, which was a golden legacy in terms of the economic management of the country. In 1992 the economy emerged from recession. It grew consistently year on year and when the present Government took office, they inherited a growing economy, falling unemployment, stable inflation and a situation that most Governments since the war would have considered well blessed.
As a result, our economic outlook and ability to withstand shocks are far better today than 10 years ago, or 20 years ago, before the Thatcher Government. The previous Government took many tough decisions that were not popular but were for the national benefit. That is reflected in the fact that we are now the world's fifth largest economy.
From the moment they came to office, the Government started raising taxation: an extra £40.7 billion in this Parliament. One of the major areas of increase was in advance corporation tax and dividend tax credit, hitting pension funds. One of the previous Government's greatest achievements was the development of private pensions and private responsibility. At the end of that Government, there were more private sector pension funds here than in all the other European countries put together; but one of the first acts of the Labour Government was an act of political vandalism, taxing many of those funds and taking £5 billion a year out of them.
The changes in dividend tax credit have hit many pensioners. I have had letters from pensioners, many of them too poor to pay tax, not believing that the
Government, as a deliberate policy, had changed the tax system so that their income was cut. I am afraid, as the hon. Member for Dudley, South (Mr. Pearson) said in an interesting speech, that the Government have not addressed that problem, and that many thousands of poorer pensioners are struggling because of the changes to the tax system.
We have heard about the Government's stealth tax. This year, an extra £7.2 billion will be raised in taxation; next year, £10.5 billion; and the year after, £9.3 billion. There are certain matters for which collective action and raising money through taxation for the common good are justified, but as a general principle, taxing people, families and businesses takes choice out of their hands and says that Whitehall or the council chamber spends money better.
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