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8.7 pm
Mr. Ian Bruce (South Dorset): I am grateful to have been called to speak in the debate. I suspect that this is the first time that I have spoken in a debate on a Finance Bill. When I came into the Chamber, I thought that I had little to say but, the more I read of the Bill, the more issues I find on which I want to comment seriously.
I am pleased that some Labour Members are starting break away from their Trappist tendencies, or from the sycophancy whereby they say nothing bad. The one issue that appears to unite hon. Members on both sides--even though some would deny it--is the fuel duty escalator. When a Conservative Chancellor introduced the escalator, he did not do so without taking a good deal of criticism from Conservative Members. Therefore, although I doubt that I shall be a member of the Standing Committee on the Bill, I am sure that, if the hon. Members for Dudley, South (Mr. Pearson) and for Barnsley, Central (Mr. Illsley) are on that Committee and they get together with the Opposition, we shall be able to table an amendment that will be passed with support from both sides of the Committee. I should not make such suggestions while the Whips are listening.
It was with the support of hon. Members on both sides of the House that the previous Conservative Administration moved toward having a unified Budget, so I am concerned that, although the Government have carried out their comprehensive spending review and decided what is to be spent over the next three years, this Budget has again split the two processes of taxation and spending. However good their crystal ball, I cannot believe that any Government can state their spending totals for the next three years and be absolutely certain of achieving them.
The Government can set targets and try to achieve them, but unexpected issues always arise--for example, Kosovo will have increased defence costs and aid spending. There is considerable pressure to be far more generous in paying nurses and teachers, but proper analysis of the increased funding for the national health service and education shows that that pay pressure will continue, because the money is not there even to pay what has already been promised to those two groups of people.
It is a tradition in such debates to say something positive. I must declare an interest as I am an adviser to the Telecommunication Managers Association, and I welcome without reservation the removal of the tax on mobile phones. The tax was introduced by a Conservative Chancellor who thought that he made a rather good joke about being disturbed in restaurants by mobile phones. That joke was not appreciated by anybody in business. It was completely wrong to tax an individual because he owned a mobile phone and could be contacted by his employer at any time of the day or night. Many mobile phones are now equipped with vibrators and messages appear on the screen to identify the caller. One may be contacted by telephone even in the Chamber. I am surprised that no one has decided to tax pagers, but I am grateful that that decision has not been taken.
Unfortunately, I have no more praise for the Bill. Many clauses of Finance Bills have gone down in infamy, and clause 31, which abolishes the right of widows to receive bereavement allowance, might be the infamous clause in this case. That is one of the very few benefits--probably the only one--that a married woman receives when her husband dies prematurely. At present, it is a non-means-tested benefit that is paid for by national insurance contributions--I understand that the size of those contributions may decrease, but that does not matter to individuals who are now in their 50s and who have paid contributions all their working lives so that, if they die, their wives may benefit.
No matter what their level of income, it is always more expensive for people to carry on alone. Many women who have chosen to be home makers will be forced back into work and perhaps into low-paid jobs because they lack workplace skills. Perhaps even more serious is the plight of the woman who is in work when her husband dies. Under the non-means-tested benefit system, that woman was able to stay in work because she also received the widows benefit. The removal of that allowance is most appalling. I asked the Prime Minister during Question Time whether he was proud to be the Labour Prime Minister who abolished the widows pension. He gave me a fair answer: he said that it was a matter of balance and that we must decide which direction to take. I think it is totally wrong for a Labour Government to introduce means testing of the widows pension.
Many Conservative Governments signalled their desire to abolish stamp duties and we had almost reached that point, but duties have now been cranked up again. It is a wholly wrong-headed tax. For example, someone who moves house every few years because of his job--perhaps he is in the armed forces--must pay a tax for occupying exactly the same size house as someone who remains in one place in the same dwelling. Stamp duty will hit people hard and hinder labour flexibility. It is a particularly strange imposition because this Budget is supposed to help people back into work.
I am particularly worried about economic policy. The Government claim constantly that they have a stable economic policy, but stability may be defined as zero growth. I do not think that Labour Ministers, even in their wildest dreams or nightmares, would aspire to zero growth. I think they want an economy that is growing at a steady rate, with no sudden moves up or down. That sounds wonderful: we would all love to see it. However, what has happened? We have moved from the ideal position of 3 per cent. growth to 1 per cent. growth or lower and a near-recessionary situation, yet the Government claim that they have achieved stability and moved away from Tory boom and bust. We may have a soft landing, but the economy that was growing so well has gone bust.
Hon. Members may argue about the way in which we share the cake, but, unless the economy is growing--hopefully at a steady rate, but perhaps by fits and starts--we will not be able to pay for additional services for our constituents. We might argue about the size of allocations to the health service or to defence, but, if the cake is not growing, we are fooling ourselves, because we cannot achieve anything. I do not see where that steady growth will come from in this Budget. It provides penny packet assistance for companies, but will not, for example, compensate for the massive increase in fuel duty, which will deflate the economy and retard growth.
The Government have produced all sorts of glossy brochures which do not say anything in an attempt to persuade people that they are either preparing the economy to join the euro or at least preparing to put the membership question to the people. Nothing in the Bill suggests how those outcomes will be achieved. What has happened to the euro since the Government's strategy began? I do not know whether the euro has devalued by 7 or 8 per cent. against the pound, but it has had enormous effects on the United Kingdom economy.
I do not blame the Labour Government: the European central bank must take much of the responsibility for that devaluation. After all, it suggested to the world that the euro would be a stable reserve currency. It is stable for the 11 countries in economic and monetary union, but it is certainly not stable for anyone else. At one point, there was a 1 per cent. devaluation every week. If that had continued for a year, the euro's value would have halved and it would have been worth as little as the rouble.
The Chancellor can no longer knock on the door of the Bank of England and say, "Excuse me, Governor, but I think that you have got interest rates wrong." However, unlike the ll EMU member countries, the Chancellor can knock on the door of the president of the European central bank and tell him to do something about the euro. The devaluation of the euro will cause all sorts of problems for our economy, and therefore the Government's Budget. When we take off 0.25 per cent.,
euroland takes off 0.5 per cent. We must address that problem if this economy is to work and if the gross domestic product figures in the Budget are to be achieved. Everything depends on it; the Government must not be pushed off course.
A few months after losing office, former Chancellors will usually admit that Treasury forecasts are never right. One can bet one's shirt on it. That is understandable because the Treasury does not have a reliable forecasting mechanism: it has only a crystal ball.
I shall deal now with one of the main issues in the Bill. My right hon. Friend the Member for Fylde (Mr. Jack), who has had much experience in trying to achieve simplification of tax, referred earlier to the previous Government's attempts at that and said that all hon. Members, including Labour Members, had signed up to that aim. We are moving towards increased complexity, which is not what we want. I used to work out wages for the companies that I worked for, and I know how much time and effort go into that task when there are multiple tax rates. Having a single tax rate for the vast majority of people and raising the upper tax rate out of the reach of many people were good moves.
The previous Conservative Government set themselves a target. They could not reduce the basic tax rate to 20p overnight, so they said--their proposal was complex, but it was at least a development--that they would introduce a lower rate of 20p and try gradually to bring down the standard rate to 20p. This Government have said, "We shall have a 10p rate because we promised one and it sounded really good." That is paid for by abolishing the 20p rate, but is anybody suggesting that the standard 23p rate of income tax will, over the next five or 10 years, go down to 10p? Layers are being introduced to the income rate structure which will become permanent.
People jump up and down with joy and say that lower tax rates will benefit the low-paid, but those rates will be the accountants' delight because they allow people to move income around. I have always wanted national insurance rates to be close to tax rates, and I welcome the move towards that, but I caution the Government that many households can move income around, and they will start to do so.
It has always been advantageous for a man who is in business for himself and whose wife is a home maker and looks after the children to say that she does the books or answers the phone once in a while, so that he can pay her up to the national insurance minimum. That practice is widespread, and I am not giving away any secrets. By increasing the national insurance limit, the Government have introduced a greater incentive for wealthy people who run their own limited company to indulge in that practice. Treasury Ministers say that they want to close loopholes, but they might well find that they have just widened a loophole, and that will create difficulties for them.
Some people might say that the introduction of the working families tax credit is a generous move. There is certainly a case for saying to individuals who are at home, "We shall give you an incentive to get back to work." That proposal is more complicated than previous measures. If the Government wanted to give people more help through income support or other means, they could
have done so more simply. In addition to dealing with all the different tax rates, employers must now work out the working families tax credit. It is a negative income tax, and this is the first time that we have had such a tax.
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