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HOUSE OF COMMONS COMMISSION
The hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, was asked--
Staff Costs (Late Sittings)
50. Fiona Mactaggart (Slough): To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what has been the cost this Session of staff of the House remaining on duty as a result of sittings after midnight. [114063]
Mr. Archy Kirkwood (on behalf of the House of Commons Commission): This Session, the total cost of staff remaining on duty for sittings that continued after
midnight has been approximately £35,000. Overtime costs for police and security staff, due to sittings after midnight, totalled £64,000.
Fiona Mactaggart: Has the House of Commons Commission made any assessment of the impact of those usually unannounced late-night sittings on the morale of the people who work in this institution? Such sittings make Members of the House do their job less well. I am confident that they make the people who work in the cafes, the Library and so on do their jobs less well. Will he consider their impact on the recruitment and retention of the staff who serve us so well?
Mr. Kirkwood: The House of Commons Commission is always considerate of the needs and demands of staff, especially as regards late-night sittings. However, I assure the hon. Lady that such sittings are well-established parts of contracts of employment. The people who work in the House know exactly the conditions that apply. I assure her that if Members have at heart the long-term interests of the staff who have to work late, they will not vote to sit after 10 pm.
ROYAL ASSENT
Madam Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Orders of the Day
WAYS AND MEANS
Budget Statement
Mr. Deputy Speaker (Sir Alan Haselhurst): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, copies of the Budget resolutions will be available to hon. Members in the Vote Office.
3.31 pm
The Chancellor of the Exchequer (Mr. Gordon Brown): A year ago the Government forecast the British economy would grow at 1 to 1.5 per cent.
Today, I can report that in 1999, instead of the recession that many forecast, the British economy grew by 2 per cent.
And Britain has been growing steadily while meeting our inflation target.
Today inflation is 2.2 per cent.
For the third year running inflation is in line with our target. And the target of 2.5 per cent.--which I reaffirm today--will be met this year, next year and the year after that.
Because of the action we took in 1997 to stop inflation getting out of control, inflation in Britain has now been lower for longer than at any time since the 1960s.
For almost 30 years, Britain's long-term interest rates were, on average, 3 per cent. higher than those of Germany. Now British long-term rates are down to the levels of Germany and today they are lower than those of the USA.
Amid the risks of an unstable and often uncertain global economy, we are determined to maintain our disciplined approach: determined not to make the old British mistakes of paying ourselves too much today at the cost of higher interest rates and fewer jobs tomorrow, determined not to make the old mistakes of putting consumption before investment, the short term before the long term. Britain does not want a return to boom and bust.
That is why the Bank of England has been right to take pre-emptive action on interest rates and to be vigilant on wage inflation.
It is because the foundations on which we build are strong that the economy can both meet our inflation target and achieve steady growth.
Our forecast is that growth this year will rise to 2.75 to 3.25 per cent., and next year and the year after that it is forecast to be 2.25 to 2.75 per cent.--in line with our view of trend growth. Manufacturing is growing by 1.75 to 2.25 per cent. this year and next year.
And business investment grew by 7.7 per cent. last year to 14.5 per cent. of our national income, since 1998 Britain for the first time investing more of our national income than our major European competitors, even more invested as a proportion of national income than America.
This budget is built on the realities of the new economy--that we will meet and master a new tide of technological change by continuing to remove the old barriers to investment and enterprise and by continuing to expand employment opportunity for hard-working families.
I can report that unemployment today is at its lowest for 20 years, that there are 800,000 more people in work since 1997 and that there are 1 million vacancies on offer.
Take-home pay is rising--by next year, for the typical family, a real-terms rise in living standards of 10 per cent. since 1997.
Britain's economic success depends not only on monetary stability but on fiscal stability.
Today, I can report that because of tough decisions to cut the deficit in our first two years and lower long-term interest rates, debt interest payments will be £4 billion a year lower.
Because of the welfare-to-work reforms that have cut unemployment, social security spending on economic failure this year is a total of £3 billion less than the plans we inherited.
Today, Mr. Deputy Speaker, the state of the public finances is sound.
In 1997 we inherited a current deficit exceeding £20 billion.
A year ago I estimated that this year's current surplus would be £2.5 billion.
I can report today that we have not only balanced the current budget but our current surplus this year is forecast to be £17 billion.
We have met and we will continue to meet, even on the most cautious of cases, our first rule of fiscal prudence, the golden rule.
And we are also meeting our second rule, the sustainable investment rule.
This year debt as a share of national income will fall well below the 44 per cent. we inherited--to 37.1 per cent.
Last year we forecast that the overall budget would be in deficit for this financial year--that public sector net borrowing would be £3 billion.
I can now report that due to the performance of the economy and to prudent management, the budget is not in deficit by £3 billion but in surplus by £12 billion.
We inherited a deficit of £28 billion. This year we will make a debt repayment of £12 billion.
Too often in the past, at the first sign of a surplus, Governments have fallen back into imprudent ways.
It is because we have learned from the mistakes of the last 40 years that this Government will maintain their prudent and responsible approach. The figures I am announcing today show that we will meet our fiscal rules over the economic cycle. We will meet our fiscal rules even in the most cautious case, on the most cautious assumptions, including the most cautious view of trend growth at 2.25 per cent.
And Mr. Deputy Speaker, I can announce today that I have decided to lock in a greater fiscal tightening next year and the year after than we promised in last year's Budget and pre-Budget report.
After the measures I announce today, our projection is for a current surplus next year of £14 billion and for the years after that surpluses of plus 16, plus 13, plus 8 and plus 8.
Debt to GDP, which was 44 per cent. in 1997, will fall to 35 per cent. next year, then 34 per cent. and then 33 per cent. in each of the next three years.
Net borrowing will be minus £6.5 billion next year, that is, we will make a debt repayment next year of £6.5 billion.
Then net borrowing in 2001-02 will be minus 5, a debt repayment of £5 billion, with net borrowing for the years after 2002-03 of plus 3, plus 11, plus 13, well within our fiscal rules.
So from this stable platform of sound finances I am able to set out today our prudent and responsible approach for future years. Having met all of our fiscal rules, having paid off £18 billion of debt this year and next, and locked in a greater fiscal tightening, we are able both to set a new envelope for public spending and investment for the years from 2001 and to cut taxes for hard-working families.
I can report that our fiscal rules enable us to increase current public spending by 2.5 per cent. a year in real terms for the three years from 2001 and double net public investment as a share of national income from 0.9 per cent. next year to 1.8 per cent. in 2004.
Mr. Deputy Speaker, I have always said that our prudence is for a purpose.
And in this Budget, because of our continuing prudence, we can now take the next steps towards that purpose--a Britain of opportunity and security not just for a few but for all: with stability locked in and enterprise growing, we can meet our prosperity goal--to close the productivity gap; with 800,000 more people in jobs and the work ethic being restored in every community, our full employment goal--employment opportunity for all; with 50,000 more students already and standards rising, our education goal--50 per cent. of young people in higher education by 2010; with 800,000 children already lifted out of poverty and Britain's civic society renewing itself, we can meet our anti-poverty goal--to halve child poverty by 2010, on the way to ending it by 2020.
First, I announce major reforms today to reward enterprise and entrepreneurship, to open up competition in banking, to promote new and growing businesses and e-commerce, and to promote balanced growth across all the regions and nations of the United Kingdom.
To remove more of the old barriers to new investment, I have decided on radical reforms of capital gains tax, beyond the tax cuts that I set out in the pre-Budget report. When we came into government and cut the long-term rate of capital gains tax for business assets held for 10 years or more, capital gains tax had been fixed at 40 per cent. for nearly 10 years. I have now decided that, to promote enterprise, we should radically cut these rates.
I am announcing that from 6 April this year, the new capital gains tax rates for business assets will be cut from 40 per cent. to 35 per cent. after one year, to 30 per cent. after two years, to 20 per cent. after three years, and down to 10 per cent. after four years.
I will make further tax cuts to remove the barriers that hold small and growing businesses back. Today, business investors who own between 5 per cent. and 25 per cent.
of a new and growing business do not benefit from the 10p rate. I will now cut their rate to 10 per cent. for all investments above 5 per cent. held for four or more years.
I will make a further radical change, this time for Britain's unquoted companies. All investments held for four years in them will benefit from the 10 per cent. rate.
With both the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax rates for long-term investors, Britain is now the place for companies to start, to invest, to grow and to expand.
I have a decision about one other tax on capital--inheritance tax. The threshold for inheritance tax is £231,000. I will raise it next year to £234,000--96 per cent. of people will be exempt from inheritance tax.
I have one further cut in capital gains tax to be introduced from 6 April. So that millions more hard-working people have a stake in the businesses whose wealth they create, we will remove the old barriers to a share-owning democracy. The all-employee shareholding scheme, with the best tax incentives on offer, which starts on 6 April this year, has one defining requirement: that shareholding should be open to all employees.
I can confirm that the 1.7 million people now in the save-as-you-earn scheme will continue to enjoy its benefits.
I have also decided that high-tech firms recruiting essential personnel will be able to offer share option incentives of £100,000 for up to 15 employees.
The Financial Secretary will now consult on a technical solution to the tax treatment of share options in unapproved schemes.
I can go further. In future, all employee shareholders will secure all the benefits of the 10 per cent. capital gains tax rate.
Taken together, these measures are the biggest boost for employee shareholding that our country has ever seen. It is the next step on our road to a wealth-owning democracy.
Yesterday, in response to the Cruickshank report, my right hon. Friend the Secretary of State for Trade and Industry and I referred small business banking to the Competition Commission. Mr. Cruickshank estimated that competition could reduce banking costs and charges by up to 10 per cent., or between £3 billion and £5 billion a year.
The money transmission system affects every cheque, every credit card and every debit transaction. It reaches from every local cash dispenser to every corporate inter-bank transfer. Today I am announcing that we will legislate to ensure that the UK payments system is open to new competition.
The international competitiveness of the bond market in the City of London depends upon a level playing field. That is why today I am announcing that from April 2001 we will abolish the withholding tax on the interest paid on international bonds. We will legislate so that we can proceed on the basis of exchange of information nationally and internationally. This change should be widely welcomed in all parts of the House. There is no clearer indication of our determination to stand up for what is right for Britain.
Since 1997, the number of small businesses in Britain has risen from 1.2 million to 1.3 million--a 100,000 increase.
Today I want to continue to remove the old barriers to small business growth.
Having already cut small business corporation tax from 23 per cent. to 20 per cent. and, for the first £10,000 of their profits, to just 10 per cent, I am today making a further tax reduction. For all small and medium-sized businesses the 40 per cent. capital allowances--which I introduced in the 1997 Budget--will be made permanent.
This will be of special help to manufacturing companies.
Half manufacturing employment is in small and medium-sized firms, so manufacturing will derive further benefit from the £150 million I am allocating to our new research and development tax credit, which will be introduced on 6 April, to finance 30 per cent. of the research and development costs of small firms.
I also want to make Britain the best environment for e-commerce and for us to catch up with America as swiftly as possible.
To encourage 1 million small businesses to go on line, we will introduce a special tax reduction. For the next three years, any small business buying computers, or investing in e-commerce and new information technologies, will be able immediately to write off against tax the full 100 per cent. of the cost in the year of purchase.
Side by side with this incentive, the Small Business Service will offer consultancy, advice and planning to help small businesses get on line and become e-companies--and with the additional resources that my right hon. Friend the Secretary of State for Education and Employment is providing for the university for industry, which starts this autumn, it will be able to offer small business employees training on the internet.
We are determined to lead in e-commerce and the internet. Today we are introducing new rules for work permits in areas of highly skilled information technology where there is a global shortage.
To promote the use of the internet we will legislate for other tax cuts--a £100 tax cut for electronic filing of tax and VAT returns, and a further £50 tax cut for electronic filing for those paying the working families tax credit.
Tax cuts since 1997 are now worth £1 billion a year for small businesses alone.
After today's measures, Britain now has the lowest small business corporation taxes we have ever had, the lowest in the industrialised world. Since 1997, for small companies there has been an average tax cut of almost 25 per cent.
To encourage the next generation of entrepreneurs, we are forming a partnership with the CBI, the Institute of Directors and the chambers of commerce to encourage enterprise in all communities. Two new enterprise funds will target business loans and management scholarships to high unemployment areas.
Stage by stage we are moving from the Britain where enterprise was a closed circle for the few, to a Britain where enterprise will be open to all.
We must also remove the old barriers of under-investment and neglect that for too long have held our regions back.
Working with the new regional development agencies and the Small Business Service, our aim is balanced economic development across all the regions and nations
of the United Kingdom, with a modern regional policy supporting local innovation, investment and improved infrastructure.
To finance a network of regional venture capital investment funds, we are today announcing a partnership with the European investment bank and the private sector--with a target of £1 billion for new economic development for our regions and nations.
The regional targets will be £85 million for the south-west, £120 million for the north-west, £130 million for the north-east and Yorkshire, £250 million for the midlands and the east, and £250 million for London and the south-east. Scotland, Wales and Northern Ireland will have their own funds.
To promote further a modern regional policy, the Secretary of State for Trade and Industry will be announcing a regional innovation fund to facilitate the formation of local clusters in high-tech industries.
For years, Britain has lagged behind America in business access to venture capital investment. It is only half as much per head here as in the United States.
I am grateful to Mr. Paul Myners, who has agreed to head a review of institutional investment, to report to me in time for the next Budget.
Our goal for the whole of the United Kingdom is to remove the old barriers to full employment.
We know that greater opportunity for all means greater prosperity for all.
Since 1997 the number of unemployed on benefits has fallen by 30 per cent.
Youth unemployment is down 70 per cent. and nearly 200,000 more young people have now found jobs.
Long-term youth unemployment, which in the mid-1980s was 500,000, and even in 1997 was as high as 200,000, is already down to 50,000.
The new deal demonstrates how false was the old choice between enterprise and fairness, between efficiency and equality. By delivering employment opportunity for all, we are making Britain more enterprising and more fair, to the benefit not just of the high unemployment areas, but the whole country.
And because we have succeeded in this Parliament in removing the old barriers to employing the young, I can announce that starting from April next year we will extend the opportunities and the obligations of the new deal to the long-term adult unemployed with four options: work, work-based training, work experience including in the voluntary sector, and self-employment--but no fifth option, no staying at home on benefit doing nothing.
The relationship we are forging between rights and responsibilities is firmly rooted in both economic opportunity and individual responsibility.
Instead of being left to draw benefit at a social security office, the unemployed who are able to work will sign on to seek work, with the long-term unemployed offered the help of a personal employment adviser.
To ease the transition back to work, the Government will introduce a new job grant for long-term unemployed starting at £100 and help with rent or mortgage.
Instead of benefits paying more than work, work will pay. And we will extend the principle of the working families tax credit.
From 1 April, as a first stage, all long-term unemployed over 50 who want to return to work will be guaranteed a minimum income for their first year back--for wages of up to £15,000 a year, an extra payment of £60 a week.
And building on the forthcoming rise in the national minimum wage, I am today also increasing the working families tax credit. It is already being paid to 1 million families in our country. And with today's family tax cut, the minimum family income will rise next April from £200 a week by 7 per cent. to £214 a week.
Full employment is not just about the right to work, but, where there are jobs, the responsibility and the requirement to do so.
We will implement the report of Lord Grabiner QC.
Starting in May, a confidential phone line will advise claimants on how to move from the hidden economy and end fraudulent benefit or tax claims, and how to get work, register as a business, or become self-employed. After six months, from 1 January, for those who fail to respond, tougher rules and penalties will be imposed.
From October, in the 20 highest unemployment areas of Britain covering 120,000 unemployed, local special action teams will be set up to help local unemployed people into nearby vacancies.
The number of lone parents on income support has fallen by almost 100,000 since 1997.
But the employment rate among lone parents in Britain is still only 45 per cent., far below the 70 per cent. to 80 per cent. rates of America, France and Scandinavia.
In this Budget we also remove old barriers to work and I can today announce an extension of the new deal in a new way to half a million lone parents.
Piloted from this autumn, and starting nationally from next April, lone parents with children over five will be invited to work-focused interviews and encouraged to take up new choices: the choice to train for work with a new cash payment of £15 a week on top of benefits for training; the choice of a few hours work a week, with the first £20 of earnings allowed with no reduction in benefit; the choice of part-time work with a guaranteed £155 for 16 hours of work, or the choice of full-time work on a guaranteed £214 a week; and on every rung of this ladder of opportunity there will be help with back-to-work costs and with child care.
Just as we remove old barriers to lone parents working when their children go to school, so we will help mothers who want to be at home in the first months of their child's life.
Today, too many children are born into poverty because the family income drops when the mother stops work. Yet this is the time when many mothers feel they need to be at home with their young child.
The Secretary for Trade is announcing today he will review what improvements can be made in maternity pay and parental leave to improve family friendly employment.
Today I can announce immediate decisions which recognise the extra costs families face when a child is born.
For all low-income mothers who meet the basic requirement of health check-ups for their young child, we will increase the maternity grant from £200 to £300--helping over 200,000 low-income mothers.
Mothers on paid maternity leave who would otherwise fall into income support will now stay on working families tax credit.
Families receiving the credit where the mother wants to stay at home will no longer have to wait as long as six months for additional support after the child is born and this support will be worth up to £30 pounds a week for a mother.
I have examined the alternative that has been put to me of a transferable tax allowance for husbands and wives when mothers stay at home.
Under this system, a family with two children on £15,000 a year would receive £965 a year. The working families tax credit is far better. With the improvements in it announced today the same couple would receive not £965 a year but £2,200 a year.
The Prime Minister has set a national goal for our country--to abolish child poverty in 20 years, and to halve it by 2010.
A sure start for all Britain's children is not only right but it is the best anti-crime, the best anti-drugs, the best anti-unemployment and the best anti-dependency policy for this country's future.
Our strategy starts from the foundation of universal child benefit for all 7 million families with children.
When we came to office, child benefit was just £11.05 for the first child.
Child benefit will now be £15.50 from April 2001, 40 per cent. more than in 1997.
For young children in the poorest families, weekly support in 1997 was just £28.
We have raised that in every Budget and today the Social Security Secretary is announcing a further increase for the poorest children of £4.35 a week.
So maximum support is up from the £28 of 1997 to up to £50 a week next year.
As a result of all our measures, the poorest two-child family on income support will be £1,500 a year better off. The low-paid family with two children on a wage of £10,000 will now be £2,700 a year better off.
This is what we mean by tackling child poverty and making work pay.
I can now report that the numbers of children lifted out of poverty this year will rise beyond 1 million, and next year reach 1.2 million children--it is the greatest reduction in child poverty in 50 years and our country is now at last fulfilling this generation's obligations to the next.
As we move forward to take the second million children out of poverty, I can confirm that the Social Security Secretary and I have agreed on the next major reform.
Over the next three years, building on the foundation of universal child benefit, we will create an integrated and seamless system of support for children paid to the mother.
The war against child poverty needs more than finance and it needs more than the efforts of government alone.
It can only be won by the combined efforts of private, voluntary, charitable and public sectors all working together.
After consultation with charities and voluntary organisations, we will proceed to set up, in every region of our country, and with cash allocated in our spending review, not just one children's fund but a network of local and regional children's funds to support work by the voluntary sector in meeting the needs of children.
A strong civic society is built not by rights alone but by rights and responsibilities and by the shared pursuit of the common good--which every year in this country enlists the energies and realises the idealism of more than 22 million citizens.
It is time for government to do more to extend and encourage this civic patriotism.
All voluntary organisations and charities will benefit from the tax reforms we are announcing to make it easier to give money and to give time.