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Lord Higgins: My Lords, before the Minister leaves that point, I do not recall referring to a sum of £10 billion. I quoted the CBI figure of £12.5 billion. On top of that they complained about the increase of some £5 billion a year in taxation. If the Minister looks at the other matters, of course, what he says is true. There are two separate matters: one is the changes that have been made on various provisions in regard to the minimum wage and so on; but on top of that there is the provision of administrative costs and genuine red tape that we have debated time and time again on the welfare bill. That is certainly the case.
Lord Sainsbury of Turville: My Lords, I listened carefully to the points that the noble Lord made in his speech. He talked of the £10 billion to £12 billion. Is there any conceivable way in which one can add up the basic figures--the regulatory impact studies concerning the administration of any of our legislation--and arrive at any figure that is remotely comparable to that? The idea that £12 billion is the cost of introducing the new regulations is impossible.
Lord Higgins: My Lords, I thought I made it clear a moment ago that they are two separate things. For example, the CBI complains about the additional cost of various changes the Government made as being £12.5 billion. I do not suggest that that is the figure for the red tape. The red tape is on top of that and there are a whole series of ways in which the Government are imposing extra burdens. I cannot intervene at great length, but if the Minister looks at the news release from the CBI he will see that the effect on lost profit margins is in reduced staff and relocation of business outside the UK.
Lord Sainsbury of Turville: My Lords, that is during a period when there has been greater inward investment than ever before during our history. If the noble Lord is saying that the figure of £10 billion is not the cost of the red tape but consists largely of benefits, I accept what he says. I accept too the point that if we
I move on to taxation, the other subject which arose a number of times during the debate. This Government believe that hard-working families should receive all the help they need. We have cut the burden of taxation. By April 2001 households will, on average, be £460 a year better off. Families with children will be on average £850 a year better off while the direct tax burden on a single-earner family will be at its lowest level since 1972. In short, the tax burden was lower last year, is lower this year, and will be lower next year than under the previous government's plans.
This Government will not repeat the mistakes of boom and bust. Unfortunately, all the signs are that the party opposite has not learnt that lesson. As we were reminded, the Leader of the Opposition announced recently a plan for an uncosted £8 billion worth of tax cuts. The noble Lord, Lord Skidelsky, described it as a mouse dressed up as a mountain. I say it is not even a mouse; it is a dead mouse in that he set out to say how the party opposite would achieve the first £5 billion worth of savings. In his speech Mr. Hague grandly declared, "We have looked at the books and found billions of pounds of unnecessary spending". But the figures look to me not so much as being based on hard hours of looking at the figures, but rather like the sort of figures put together by young researchers in a pub after a few drinks.
The Conservative Party wants to privatise the industrial injuries benefit. That means that the cost will be transferred to industry. It will abolish the Best Value in Local Government Scheme, which is delivering savings to local authorities throughout the country. It hopes to save £1.8 billion in government costs by not replacing anyone who leaves the Civil Service. Last year that would have meant a 10 per cent cut in Benefits Agency staff; 2,800 fewer staff in the Prison Service; and nearly 6,000 less personnel in the Ministry of Defence and agencies. It will slash the New Deal, which has cut youth unemployment by 70 per cent and saved millions in benefits payments. And best, and my favourite, it hopes to save £205 million by abolishing regional assemblies which do not even exist. Those are not sensible, carefully worked-out savings in government expenditure. Of course we still have the other £3 billion worth that must be found--presumably more poring over the figures at night or during another visit to the pub.
Other interventions came from the noble Lords, Lord Harris of High Cross and Lord Skidelsky. They seemed to adopt essentially a theological position on the amounts of taxation and the amount the public sector should take from the economy. We should look at what people want from public service and the money needed effectively to provide it. That includes looking at the cost of achieving social justice.
As my noble friend Lord Haskel said, we want to achieve both social justice and prosperity. Prosperity achieved on the basis of the impoverishment of some is intolerable, just as the achievement of equality, if it leads to economic stagnation, is not desirable. We totally agree with the noble Lord, Lord Roll, about the difficulty of reducing poverty and the role that education can play in that.
I turn to two points made by the noble Lord, Lord Higgins. The first concerns the social security fraud Bill. We have taken powers in previous Bills to tackle fraud but need to do more. That is why the matter has been referred to previously in government pronouncements and is referred to again. We tackled fraud on our first day in office, and we have registered the first fall in fraud levels since regular measurement began.
The noble Lord, Lord Higgins, also made a point about means testing. The problem in that regard is that inequality grew so severely under the last government that flat-rate increases--for example, pensions for all--mean that three-quarters of those who do not need it receive it, and the quarter that does, does not receive enough. That is why we need to target while at the same time removing stigma and hence fraud.
The noble Earl, Lord Russell, raised the issue of lone parents and the question of substitution. Research on the New Deal for lone parents has shown, even including possible substitution, that an effective difference has been made. The noble Earl believes that the right to public benefit is a private right and private choice, without recognising the responsibility that goes with it. He believes it is wrong to encourage lone parents into work, even though all the research shows that it is in the long-term benefit of children.
Lord Sainsbury of Turville: My Lords, I may have misunderstood the noble Earl. I believe he said that it was not the position of the state to "encourage" lone parents into work. If he believes it is the state's position, then I withdraw my remarks. But I believe the noble Earl said it was not the state's role to do that.
Lord Sainsbury of Turville: My Lords, that is simply playing with words. If one encourages, one takes a view to persuade people to do something. That is different from saying it is up to the individual to make the choice. One is taking a more active role.
The same is true as regards the long-term benefit of children and disabled people who as a result of personal capacity assessment have an ability to do some work. We disagree with the position the noble Earl takes. We believe that rights and responsibilities run together. Both groups need help and support from personal adviser systems if they are to rejoin the market.
The noble Earl asked a specific question about the social security fraud Bill. It will provide for a mandatory withdrawal or reduction of certain benefits when someone is twice convicted of benefits fraud. The sanction will last for 13 weeks. During the period special payments will be available to prevent hardship for those with no other means. These payments will be at the same level as is already available to those whose benefit has been reduced for failing to take up available work.
The noble Baroness, Lady Gardner of Parkes, asked about identity cards. It is a large subject which involves a great deal of emotion so I shall make only two comments. First, any move towards a national identity card would need careful consideration so as to avoid the problems we see in the cards issued by some of our European neighbours. Staff in some of our social security offices, through bitter experience, have had to become expert in the many ways in which such documents can be forged or counterfeited. Secondly, I hope that it will give the noble Baroness comfort to learn that, like Australia, we have a tax and benefit number; it is the national insurance number. One of the changes we made to prevent fraud was to insist on the production of that number before benefit was paid. That is a move in the right direction.
I turn to the point made by the noble Lord, Lord Newby, about the Universal Bank. Its services are intended to address financial exclusion head on, providing a range of products with broad appeal. Negotiations are now taking place and therefore it would not be appropriate for me to discuss their details.
The noble Lord also asked about the working families' tax credit. That is central to the Government's policy of enhancing work incentives and supporting working families. Any extra work for employers has been kept to a minimum thanks to consultation with employers and payroll software developments since May 1998. But fundamental to that scheme is paying benefits for low-paid workers when they go into work rather than as a family credit.
Finally, I turn to the remarks made by the noble Lord, Lord Saatchi, about pensions. In April they will rise by £5 and £8 for a couple, which is far more than IPI and the earnings link and is the biggest increase since 1975.
The noble Lord also asked about the level of taxation. I am not sure where the figures quoted by the noble Lord, Lord Skidelsky, come from, but the Pre-Budget Report shows 36.9 per cent for 1999-2000, which is a fall from the 37 per cent in the previous year. On current costings, allowing for tax changes, subject to consultation the tax burden will not rise next year and will fall thereafter. The increase this year reflects rising income tax as a result of higher employment and earnings growth, higher oil prices and higher stamp duty receipts. All those levels are lower than they would have been under the plans published by the previous government. There is no secret that the last Budget of the previous government was constructed to have the lowest tax charge prior to the Budget and the tax increases were planned to come into effect after the Budget. That was a shrewd and clever move, but one should have no doubt that that was what was done.
In conclusion, in May 1997 the country was heavily in debt. We were spending more on interest payments than we were on our entire schools programme. Inflation was returning. Business confidence had been battered by the recession. The productivity gap with our competitors was growing and hard-working families had been hurt by high interest rates, unemployment and house repossessions.
We took action to lock in low inflation and to cut government debt, introducing new fiscal spending rules which keep government to tight financial discipline. We made the Bank of England independent to ensure that interest rate decisions are taken in the best long-term interests of the economy, not for short-term political considerations.
The deficit has been eliminated. Government borrowing has been reduced by £44 billion in total since the election. Inflation is at its lowest level for 30 years. We have a higher level of business investment as a share of our economy than at any time in 40 years. Long-term interest rates are around the lowest for 30 years.
There are more than 1.1 million more men and women in work than in 1997. Claimant unemployment is now at its lowest rate since October 1975. We have helped people get back to work through the New Deal. This is the most ambitious programme of employment and retraining ever. We have now reached our target of getting 250,000 young people into work through the New Deal.
When we came into office in 1997, 42p of every pound went on repaying interest on the national debt, unemployment and social security spending. Today, for every pound of public expenditure just 17p goes to fund debt interest, unemployment benefit and social security spending. We have achieved this by putting public finances on a sound footing and by helping people off benefit and into work. As a result of that, with the Comprehensive Spending Review plans announced in July, we are now making the largest investment in Britain's public services for more than 20 years.
That is also why we are able to take action to tackle child poverty. The Government's additional help for families with children will reach around £6 billion extra in the last year of this Parliament. And while child support for a family on average earnings with two children fell by 5 per cent in real terms between 1979 and 1997, it will rise by 50 per cent this Parliament.
Instead of the vicious circle of rising inflation and unemployment which dogged much of Britain's post-war history, we are now in a virtuous circle where rising employment is cutting the costs of economic failure, freeing up public money for investment in the infrastructure and services which this country so badly needs. This means that we can invest without risking the stability that we have built. We do not proclaim that we have achieved economic miracles but we believe that we have made a start in the right direction, on which we shall continue to build, to raise growth and living standards further in every part of the country, to eradicate child poverty and to provide opportunity and security for everyone. This Queen's Speech shows a Labour Government
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