Previous SectionIndexHome Page

Mr. Deputy Speaker: Under Standing Order No. 51, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate.

17 Apr 2002 : Column 593

Provisional Collection of Taxes

Motion made, and Question,

put forthwith, pursuant to Standing Order No. 51 (Ways and means motions), and agreed to.

Mr. Deputy Speaker: I shall now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week, and they will then be decided without debate.

17 Apr 2002 : Column 594

Budget Resolutions


Motion made, and Question proposed,

(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) Subject to paragraph (3) below, this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
(3) Paragraph (2) above does not exclude the making of amendments with respect to value added tax providing for relief on the acquisition from another member State of any goods in relation to which, if they were imported from a place outside the member States, relief would be given by an order under section 37 of the Value Added Tax Act 1994.—[Mr. Gordon Brown.]

4.31 pm

Mr. Iain Duncan Smith (Chingford and Woodford Green): May I begin by congratulating the Chancellor on delivering his Budget in his usual manner? As ever, what he omitted to tell the House is as instructive as his statement.

I must start by welcoming one announcement: his taking up of a Conservative proposal that he has rubbished over the past two years on a Brit disc for commercial transport. We are always willing to welcome a sinner that repenteth, even if it is at the eleventh hour.

However, there is a real issue here and things in the Red Book that he did not mention. First, this country is now running a deficit for the first time in four years. [Interruption.] Well, Labour Members have not read the Red Book; there is no question but that they do not know what they are talking about. The Chancellor did not mention that public investment dropped by £1 billion last year compared with his estimate at the time of the pre-Budget report. He promised a lot about manufacturing and said that it would return to growth, but he did not say that manufacturing output is forecast in the Red Book to contract this year—it states that

so those were empty comments from the Chancellor. Neither did he mention that, as the Red Book shows, Britain's export performance is falling behind yet again. Whereas in the Red Book world trade is set to grow by 2.25 per cent. this year, the Treasury figures show Britain's exports rising by only 1.75 per cent.

The Chancellor did not bother to tell us any of that. That is why we will have to look very carefully at his proposals for corporation and capital gains tax, and his new research and development credit.

Unlike the markets, the Chancellor's past record is a very good guide to his performance. This is the Chancellor who has turned small print into a fine art. Everyone on the Opposition Benches, and I hope, on the other side of the House, remembers his IR35 tax on the

17 Apr 2002 : Column 595

self-employed, which he never announced, and his abolition of the married couples allowance, in respect of which he failed to tell anyone that there would be a year when all married couples received no tax relief at all. It is amazing to hear him criticise the tax system for not recognising children, when he was the one who abolished the last such recognition in earlier Budgets. We will study this Red Book very carefully. [Interruption.] One thing we do know is that the Chancellor—[Interruption.]

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. It is customary that the Leader of the Opposition's reply to the Budget statement is heard with the same respectful silence as that which is given to the Chancellor.

Mr. Duncan Smith: After today's Budget, they are scared stiff about what will be reported in tomorrow's papers.

One thing that we learned from the Chancellor today is that he has already broken one major election promise by putting up national insurance, which is a tax on income. He has previously said:

Only 10 months ago, during the election, he and the Prime Minister assured the country that they were not going to raise national insurance. [Interruption.] Oh yes they did. At the last election, he denied as smears the charge that he would raise national insurance, but today he has raised £6 billion a year by adding 1 per cent. to national insurance for every employee and employer in Britain. This Government said that they would not raise income taxes at all—they do not like being reminded of that, but it is the truth—but everyone knows that this is a tax on income. The Chancellor has added a penny in the pound to income tax, and he has broken his promise to the British people.

The Chancellor also claims today to have reduced corporation tax, but in fact his increase in national insurance contributions for employers is equivalent to a rise of 3 per cent. in corporation tax. That dwarfs everything else that he has previously done. Now, someone on average earnings will be £15 worse off every month, a nurse-consultant earning £34,000 will be £24 worse off every month, and a police inspector earning £37,000 will be £27 worse off every month. So much for the Chancellor's great help for all those employed in the public services who are trying hard. Frankly, after this no one will ever believe another word that he says.

To listen to the Chancellor, one would think that this is the first time he has ever raised taxes. In fact, he has spent the past five years and six Budgets raising taxes, yet all the time public services are getting worse. He has simply opened people's wallets, while closing his own mind to change and reform. British people and British businesses are already paying £100 billion more a year in tax than they were in 1997, when Labour took over. Each of his first five Budgets raised taxes, save one. That was—surprise, surprise—the Budget before the last election. I wonder why?

Every man, woman and child in this country is paying £1,600 more in tax since the Chancellor delivered his first Budget. He thought nothing of taxing pension savings by £25 billion, and he has hobbled British business with

17 Apr 2002 : Column 596

£6 billion a year in extra taxes. Of course, the Labour party does not like hearing about the extra tax on pension savings because it is opposed to savings on pensions and always has been.

Today's measures for business are very small compensation. They are like taking £10 from someone's wallet, giving a pound back and saying, "You should be grateful." Grateful for what? What do people have to show for all these tax increases? The Chancellor says that he needs to tax more and to spend more to make public services better, but violent crime and street crime are reaching epidemic proportions. Teacher vacancies doubled last year and truancy is rising. The trains have descended into chaos. Welfare bills are increasing faster than money is going into schools and hospitals, and they will continue to do so even after today. Perhaps the Prime Minister does not remember his promise to cut the bills of social failure to pay for rises in health and education spending. He has not cut them.

All that is bad enough, but the saddest and most acute failure is the state of our national health service. In the past five years, the Chancellor has increased NHS spending by almost a third. so where has all the money gone? Waiting lists are rising, accident and emergency waits have grown longer and hospital beds are blocked because care home beds have been lost. Regardless of what he announced today, in terms of that loss the real problem is, as we have heard, the extra regulation that he has imposed on care homes.

The odds of surviving cancer in Britain are among the worst in Europe. Worst of all, the Government's failure is forcing patients to go to other countries for treatment. Their health service is letting people down, especially the elderly and the vulnerable.

Last year, as a result of the Chancellor's mismanagement, 250,000 patients had to pay for their operations out of their own pockets. More people than ever before have had to do that under this Government. People should not have to use their life savings—[Interruption.] No, they should not have to use their life savings to save their own lives, regardless of what the Chancellor says. We had hoped for a little humility and, better still, a more imaginative approach to the problems of the NHS, but today his Budget missed that opportunity.

All the right hon. Gentleman is offering is more of the same—more talk, more tax—but that will not save the NHS from failure. He failed to recognise that although Scotland spends as much as Australia and Holland on health and that Wales and Northern Ireland spend as much as France, the treatment of patients here is far worse. Waiting times are increasing and all the Chancellor can suggest is more tax and no change.

Britain is further away from the ideals of the NHS than at any other time in the history of the health service. The NHS should, as we all agree, offer people the best treatment, regardless of their ability to pay. The Chancellor's NHS, however, does not do that. It is a two-tier service, and more people pay for their treatment than ever before.

No other advanced country runs its health service the way we do. If the Chancellor had bothered to visit some other countries, he might have seen that for himself. Germany has no national waiting list and Danish patients have a legal right to treatment within four weeks of seeing

17 Apr 2002 : Column 597

their general practitioner. The Chancellor cannot be bothered to go to such countries; we have, and he should read what we have written about the matter.

Britain needs to spend more on the health service, but it is not enough to spend money to keep the NHS running the way it is today. By raising all the money that it will ever need simply from higher and higher taxes will not give this country the standard it has a right to expect. The NHS needs change as much as it needs money. All the people who work in the health service know that and they have told the Chancellor that. The public know that and the Conservative party knows that. The only person who does not know that is the Chancellor.

The right hon. Gentleman has closed his mind to the idea that he could learn anything from those beyond the channel tunnel. He commissioned Derek Wanless—oh yes, the Wanless report—to conduct a study of future health care and the financing of health plans, but he had already told him what to say. The Chancellor has finally seen fit to publish that report today, on precisely the same day that he announces his conclusions. He said, "We must have a national debate on the NHS." Apparently, that opened at 9.30 this morning and closed at 3.30 this afternoon. Perhaps he can tell us whether that debate extended as far as 10 Downing street, which I doubt; or did it exist only in the mirror of his home at 11 Downing street?

There is no third way, only one way—the Chancellor's way—and today we know what that amounts to: more talk, more taxes and more failure. He not only refuses to take lessons from abroad about how to make public services better, but refuses to acknowledge that competitor nations are lowering their taxes at a time when he is raising ours. That is why Budget day is the only day on which Labour MPs really smile, because it lets them do the only thing they enjoy—raising taxes.

Some people will like the Chancellor's Budget, but they are all sitting on the Labour Benches. We can see them loving every minute of it. Countless millions of British people will end up paying for it by using public services that are getting worse and by paying higher taxes. He is planning to spend public money faster than the nation can earn it over the next four years. The fact is that not only has he raised taxes in his first five Budgets and again today, but now taxes will go up next year, the year after that and the year after that. The truth is simple: the sun goes down, the tide goes out, and Labour raises taxes. British people deserve much better. They deserve better than the increase of nearly £300 in council tax that the Chancellor has imposed on them. They deserve far better than his proposals, which add up to more talk, more tax and more failure.

The Chancellor's record speaks more eloquently than his rhetoric ever can. We always know where we are with one of his Budgets. He never listens and he never learns. He centralises everything. Civil servants, administrators and public service workers know that the way to get on is to follow orders from Whitehall rather than to trust their own judgment. That is why they are demoralised and leaving in droves. That is why so much of the money that has been taken in tax over the past five years never gets to where it is meant to go. That is why billions of pounds are wasted and left unspent each year. Through his public service agreements, the Chancellor tries to be the head teacher of every school, the manager of every hospital and the desk sergeant in every police station.

17 Apr 2002 : Column 598

Through his complicated tax credits, the Chancellor wants to tell every family how to live their lives. More complication is proposed today. Many children will not get any of his tax credit because of the complicated forms that he insists on making them fill out. That is a further waste of their time.

The Chancellor thinks that life would be so much better if we all lived our lives like he does. That is why his whole agenda of reform begins and ends at his office. As early as March 1998 he promised:

But he did not reform; he centralised. In March 2000, he said that

There is no reform, only centralisation. At the time of his pre-Budget report last November, he said:

And today we have had his great soundbite "enterprise and fairness". But no one believes him any more. No one will ever believe him, because saying the words does not make them true.

The Chancellor has centralised our services and closed his mind to all ideas except his own. He will not let anybody else try a different formula or idea. "Investment and reform" has just become old-style tax and spend once more, and, one way or another, everyone in the country will pay the price. They are paying for more talk, more tax and more failure. Even after his announcements today, the corporate tax burden on British business—something that he did not want to tell us about—is among the highest of our industrial competitors, which threatens jobs.

More complicated tax structures are putting up taxes at the very moment when other countries in Europe are reducing theirs. Over the last five years, Britain's ability to compete in the world has slumped, as we will find in the Red Book. What the Chancellor did not say is that our productivity growth used to be faster than that of the United States; now it is slower. Five years after Labour came to power, the USA is overtaking us again.

UK businesses groan under more and more regulations, to the point at which some spend as much as one and a half working days each week filling in forms. What the Chancellor also did not tell us—among myriad other things—is that our share of world exports has fallen. Not only has our balance of trade been in deficit every month for the last four years, but it has actually been widening in 2001.

Over the past five years, this Chancellor has also punished people as they try to prepare for their retirement. He did not want to tell us too much about what he has done, but Conservative Members thought he had a cheek to talk today about occupational pensions, when he is the one who raided them with a tax of £5 billion a year. More than a third of our largest companies have closed their final salary schemes to new members, thanks to the measures that he introduced.

The stakeholder pension is also a mess. Only one in 10 of those whom the Chancellor targeted has taken it up. Millions will therefore be disappointed that he has failed to abolish the annuities rule. They will have absolutely no flexibility in retirement and they will be punished twice.

17 Apr 2002 : Column 599

The Chancellor also failed to inform us that the Red Book shows that family income put aside for savings has collapsed since 1997 from 9.5 per cent. to a projected 3.75 per cent. in 2002. Savings are collapsing and people's futures are being destroyed by a Chancellor who does not care. Next year, two out of every five families in Britain will depend on means-tested benefits.

More talk and more tax will not prepare this country for the challenges that lie ahead. Today people are more worried about their prospects for retirement than they have ever been before.

The Chancellor would have us believe that raising taxes is the same as reforming public services. If that is so, why have the Government both raised taxes and reduced the quality of our public services? Our taxes continue to rise, and he is undoing the things on which business success is built. The money to pay for quality public services depends on successful business. Not only will his course of action not work, but it is ultimately self-defeating. In his hands, "investment and reform" has become Labour-speak for old-style tax and spend.

So what is new Labour for? When the history of this Government is written, the dominant theme will be the unprecedented opportunities that they wasted. They had it all: the best economic legacy ever left by a predecessor; massive Commons majorities; the trust of the British people; the promise of reform; and a mandate for change. Yet in the space of five years and six Budgets, they have frittered it all away.

If the Chancellor had listened to the people, if he had visited other countries and if he had opened his mind to change, as we have, this could have been a very different Budget—one that offered genuine hope to the millions who rely on the NHS and need it to improve. Instead, his closed mind and refusal to change have condemned the British people to second-class public services. They deserve better.

Next Section

IndexHome Page