| Previous Section | Index | Home Page |
Mr. Gordon Brown indicated assent.
Mr. Hague: What happens if they do not agree? Who will arbitrate? Will Ministers decide which member of the family receives the benefit? Will the Chancellor personally decide who will receive the benefit?
When people have read the details, they will discover that the scheme is a burden on business and demands that businesses keep records of family circumstances. They will discover also that, if the Chancellor changes the tapers and more gently withdraws benefit from some people, the Government will be spreading means testing higher up the earnings scale. They will discover that that will produce higher marginal rates of taxation and benefit withdrawal for those on middle incomes. They will discover that his scheme will extend the problem of benefit withdrawal up the income scale, from one-earner families to two-earner couples, and that, consequently, it will hit women on modest earnings, who are particularly sensitive to such disincentives.
We do not object to the Government
There has been a report on a very similar system that now prevails in Canada, by a Mr. Mendelson--I hope that no Ministers are moonlighting. On the Canadian scheme, Mr. Mendelson writes that if, in Canada,
Although changing from family credit to tax creditdoes not in itself alter family income by a penny, the Government's policy looks at first sight--from what
the Chancellor has said today--as if it will cost the taxpayer a great deal more, will be a disincentive to work for thousands of people, and will mean that hundreds of thousands of women will see more than £50 a week taken from their purse and placed into their partner's wallet.
Introducing that reform makes an incomplete job of welfare reform, at considerable cost to the taxpayer. It means that the Chancellor has done a botched DIY job on welfare reform, at a price that the Lord Chancellor's decorators would have been proud of.
The Chancellor's spin doctors like to claim that they came into office with a carefully worked out programme for government; so how embarrassing it must be, once again, to postpone the 10p income tax rate. Never has a policy been more frequently announced than the 10p income tax rate to which the Chancellor says that he is committed. He announced it before the election, he announced it during the election, and he announced it after the election. He has announced again today, but still no one is going to enjoy a 10p tax rate.
When will the Chancellor actually implement it? Let him be in no doubt; if he wants to cut taxes, we will support him. We will certainly join him in the Lobby to vote for lower taxes, but let him now produce the 10p tax rate to which he is committed.
We are pleased that the Chancellor accepts the need to reform national insurance contributions, and we will support smoothing them out and reducing the burdens on employing lower-paid people. However, instead of reducing burdens, he has decided to redistribute them.
Before the Budget, even those employing workers on more than £210 a week were paying only 10 per cent. Now even those paying £81 a week will carry a marginal employers' national insurance tax of 12.2 per cent. instead of 10 per cent. As a result, although the Chancellor did not refer to this in his speech, he has increased the burden of employing many quite low-paid people. If he was going to make such reforms, he should have done it by cutting tax, not shifting it on to someone else. If he admits that reducing the cost of low-paid staff is a vital job-creating measure, why does he support a minimum wage? Exactly the same arguments that he proudly deployed today in favour of his reforms devastate his case on that.
The Chancellor has also introduced measures on child care. The Opposition welcome much of that. That is why we introduced child care disregard into family credit during the last Parliament. It is not clear that what he has announced today is anything more than switching our policy on family credit into his new tax credit system. By itself, today's measure helps only lone parents and two-earner couples who use registered child minders and clubs. What about people who stay at home to look after their own children? A proper child care package would be aimed at least equally at them.
It is crazy that, on first analysis, it seems that, after the Budget, two neighbours may be better off looking after each other's children than looking after their own. We will not agree with that policy. We want a policy that supports people who look after their own children, as well as those who look after the children of other people. At least the right hon. Gentleman was self-sacrificing and did not introduce a special tax relief for looking after children for the duration of a photo call. We are pleased about that.
The decision to tax child benefit for upper-rate taxpayers poses more questions than it answers. Why leave untaxed the wife of a millionaire who does not work, while taxing the head teacher who does? Why take away a cash benefit and spend it on unspecified Government programmes, when the real aim is to reduce the size of the welfare state? The Chancellor has some time, because of his review--yet another review--to find the answers to those questions. We will judge him and his reforms of child benefit by his answers over the next year.
The Government have got themselves into a hole on welfare reform. After messing about with a bucket and spade for a few months, the Chancellor has came along today with a huge mechanical digger, but the reforms that are intended to make work pay will for many people make hard workers pay. Welfare bills that the Government vowed would go down will instead go up, and the dependency that they pledged to reduce will instead increase.
The Chancellor announced some spending increases. We welcome the use of money not spent elsewhere for education and health. What is remarkable about the increases in the health budget is not that the Government are putting more resources into the health service but that it would have been a national scandal if they had not. They came to office with a pledge to reduce waiting lists, yet, step by step, month by month, they have betrayed that promise. Waiting lists have risen relentlessly, up by almost 100,000 in the 10 months that they have been in office. Far from being more generous to the health service as they promised, over the past year they have dramatically cut the rate of increase in spending on our health service.
Under Conservative Governments over 18 years, the average increase in health spending was 3.1 per cent. in real terms. This year, under a Labour Government, it has risen by 1.2 per cent. in real terms. That is the background against which the Chancellor's announcement must be judged.
For the majority of the 50 years of the health service, it has been managed, expanded and turned into a success by a partnership between Conservative Governments and the doctors, nurses and others who work in our national health service. Before the Chancellor takes a pat on the head from the old rebels and new robots on the Back Benches, perhaps he will spare a thought for the thousands more people who must this year wait for operations who did not have to wait before this Government came to power.
The best way to tackle welfare dependency is for people to find it easier to get a job. The Chancellor talks a good game on welfare to work; it is a shame that he does not play one. The Government are pursuing employment policies that are likely to destroy jobs rather than create them. How does he think that many companies will pay for the £22 billion of new business taxes that the CBI has identified? By cutting back on their work forces, of course. How does he think that they will pay for the minimum wage? By employing fewer people, of course. The Institute of Fiscal Studies is only the latest in a long line of expert organisations to argue that a minimum wage risks
Last November, the green Budget accepted that the Government had a responsibility to promote a flexible and adaptable labour market and encourage investment in skills. Against that test, huge new business taxes, the minimum wage, the social chapter and the student fees scheme are the height of irresponsibility. The Chancellor might talk about welfare to work, but the policies of this Government could force many people out of work and into welfare. It is yet another step in the step-by-step betrayal of many people in this country by the Government.
The Chancellor mentioned environmental policies. The increase in petrol duty that he announced today is another step in the Government's step-by-step betrayal of motorists. In the past, we increased petrol duties above the rate of inflation on environmental grounds, but in the past two Budgets he has taken that policy too far. An extra 4.4p on a litre of fuel means that the tax has gone up by 20 per cent. in the past two Budgets--twice the rate of increase under the previous Government. Introducing the rise from today, rather than the normal November rate, will cost motorists hundreds of millions of pounds extra. That sleight of hand is yet another of the underhand stealth taxes that the Chancellor likes to introduce.
The Chancellor announced his gimmick of £50 million on rural transport, which will not remotely pay for the extra cost faced by rural motorists because of other policies. Let us hope that that policy is more successful than some other cosmetic announcements and some announcements in the previous Budget. When he announced extra winter fuel payments, it turned out that most people had to wait until the end of winter to receive them. Let us hope that this Budget is implemented more successfully.
Every day, step by step, it is clear this is the Government of the nanny state. This is the Government who tell people how to live. We see it again in the Budget. They tell people, "Don't drink, don't smoke, don't hunt, don't have a pension, don't eat beef on the bone, don't save, don't drive a car; if you drive a car, don't park it." The Prime Minister preaches to people about what they should and should not do. This Budget and the last one represent the collection plate being passed around after the sermon.
The Chancellor's next betrayal was in his so-called crusade against tax avoidance. We notice that the Paymaster General could not bear to be here to listen to the announcements. This is the Government who appointed as the Minister responsible for offshore tax trusts and tax avoidance a man with offshore tax trusts who influences them and is presumably in charge of implementing today's changes to them.
That is breathtaking hypocrisy. We shall judge today's changes in tax law against this simple test--the Robinson test. Will the Paymaster General continue to escape tax after today's changes? Will the Minister for tax avoidance continue to avoid tax? We suspect that he may, and that, despite all the pre-election rhetoric and the Chancellor's reforms today, the Swiss bank family Robinson will stay in business and out of tax. That is another step in the step-by-step betrayal of Britain.
"running its own neck into the noose, but we object when it is taking millions of poor working families with it."--[Official Report, Standing Committee B, 18 March 1986; c. 942.]
[Interruption.] The Deputy Prime Minister says no. Those are the words of the current President of the Board of Trade, when the scheme was floated by a previous Government, in 1986. She was objecting to the scheme in 1986. The difference is that, whereas we withdrew the scheme when the problems became clear, the Chancellor has pressed on with it, hoping that, the more problems and chaos he causes, the more radical his reform will seem to be.
"the working income supplement"--
which is the comparable scheme--has proven a false start,
"there is reason to suspect that the British experience"--
should it attempt to establish a UK earned income tax credit
"may turn out to be more like Canada's"
than that of the United States. So we suspect that the Chancellor is making a great mistake.
"generating significant levels of unemployment amongst young people".
17 Mar 1998 : Column 1119
How can the Chancellor introduce such policies and say that in his Budget he is breaking away from dogma? How does he think that companies will absorb the extra social costs of signing the social chapter? How does he think that companies will find people with the skills and training they need if they are going to compete in the next century, when his Government have introduced student fees and abolished the maintenance grant in such a way that applications to universities and colleges have fallen dramatically? The answer, of course, is that they will not.
| Next Section
| Index | Home Page |