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Mr. Hoban: I am sorry. It will be amended in the Bill. Interestingly, when the relief was initially suggested in 1997, the estimated cost was some £20 million over two years. Remarkably, the saving to the taxpayer from the restriction of the relief is £500 million over two years. That shows how reliefs can be manipulated.
Mr. Iain Luke (Dundee, East): Although my contribution comes late in the night, I am sure that you, Madam Deputy Speaker, will appreciate that it will be a quality contribution with more light than heat.
The hon. Member for Cities of London and Westminster (Mr. Field) is no longer in his place, but I agree with his estimation of the stature of the current Chancellor of the Exchequer. The hon. Gentleman made the point that my right hon. Friend was one of the best Chancellors that we have had. The quality of the Budget that we are discussing provides clear evidence of that.
The outcome of this Budget process is to raise money to ensure that finance is available to meet the objectives of the Government's spending plans that have been set to satisfy the needs of the people. It is therefore right that the major point of these proposals is the need to provide funds to put Britain's public services, especially health, on a sound footing.
It is clearly evident from the public's reaction to the Budget and to the national insurance contribution increases to be introduced next year that the Bill faces up squarely to the top priorities of the British electorate. Last week's opinion polls clearly indicated widespread support for the proposals, with 74 per cent. of those sampled giving support for the increase in national graduated contributions that aims to brings this country's health expenditure up to the levels enjoyed in Europe and to satisfy consumer and customer expectations.
Public support for the Government's proposals to protect and enhance public services was clearly underlined by someone who is one of the Government's severest critics and one of the strongest supporters of public service provision. John Edmonds, who is not often kind to the Government, pointed out last week that we had witnessed:
This Government cater and care for the many; Opposition Members care only for those who can care for themselves. The Conservative partywhich in the past created such a hue and cry about Labour's so-called stealth taxesnow cries wolf again at the people's health tax, a tax increase brought forward as part of a balanced and carefully constructed series of initiatives to maintain the UK's impressive economic performance and to safeguard continued growth in the economy and the UK's long-term prosperity.
At the recent meeting we held with the members of the Scottish chambers of commerce, the Scottish growth rate, which is significantly lower than the growth rate for the United Kingdom, and manufacturing gave rise to concern. However, their representatives told us that consumer spending in Scotland was on the up, house prices were increasing and there was an improved uptake of tourism. Although the Scottish economy is perhaps not performing as well as the UK economy, they are clear indicators that there are significant grounds for optimism. Those aspects of the Budget which I welcomed last week will certainly increase the efforts of Scottish manufacturing and assist Scottish growth, but I am sure that we will return to that later.
At the end of the day, there has been a lot of criticism of the Budget proposals. Industry's response has been a cranking-up of the campaign in which it claims that despite tax benefits to improve productivity and encourage investment, the increases in national insurance will undermine confidence, destroy jobs and damage future growth prospects. I understand its concerns, but its Cassandra-like prophecies of doom are vaguely familiar. Were those arguments not used in opposition to the minimum wage? Were we not told by the Opposition that British business could not afford the minimum wage, which would destroy jobs, ruin the economy and stifle growth? However, in fact, growth has continued to increase and jobs have continued to be created.
It was heartening to read the speech that Mr. Mervyn King, the Deputy Governor of the Bank of England, delivered to the British chambers of commerce last week. He argued that the increase in national insurance would help to moderate consumer spending and house price inflation. If that step dampens down consumption and has a deflationary impact on housing prices, it may deal with the problem of the Nationwide figures in today's papers which show house prices at record highs, even in Scotland, so we may not have to face up to an early rise in interest rates, a point reinforced by The Daily Telegraph in a headline to a report of Mr. King's speech"Tax Rises Good for Growth, Bank Argues".
While business has signalled its opposition to the Budget proposals in the round, and is clearly upset at having to pay its share for a better health servicea social costsurely it must see their economic logic if they help to avoid dearer money and keep interest rates at the historically low levels achieved by successive interest rate cuts last year. In building his Budget, the Chancellor has
I should like briefly to address two areas of the Budget relevant to my constituency which have been mentioned by other Members this evening: the new levy on North sea oil introduced by the Chancellor and the new research and development tax credit for larger companies. I commend my hon. Friend the Member for Waveney (Mr. Blizzard) on his contribution, in which he expressed concerns about the oil levy. I am a member of the all-party offshore oil and gas industry group and represent a coastal community which was mentioned by my hon. Friend and which missed out on the biggest boom in the oil industry as it is at the margins of the business, primarily innovation and supply.
The current oil price of $26 has been sustained over the past few years, as was said in a debate last week with the chief executive of BP. Given the current production costs of $8 a barrel, the levy is acceptable in the short term. However, to ensure the long-term viability of British operations, I join Members who have urged the Treasury to engage with industry to ensure a long-term productive future.
I warmly welcome the research and development tax credit for larger companies. The future of British and Scottish industry, as well as manufacturing jobs, can be secured only through investment. I speak as a Member representing a constituency whose economic history is littered with industries that have suffered and disappeared through lack of investment. I can also cite glowing examples of companies in my area that have to their credit invested heavily in research and development, as evidenced by their continued profitable existence.
NCR recently opened a large R and D facility in Dundee to help plan and promote the automated cash machines that will be used globally in years to come. The Michelin tyre company's investment in machinery and its work force has enabled it to survive and prosper in a hugely competitive market, producing high-quality products at a distance from their market. In both instances, high-quality, well-paid jobs have been sustained to fuel the local economy, which would be much poorer without such jobs.
I believe firmly that the Government's economic strategy has been correct over the past five years, although that has often been hidden by the stormy squalls of political debate in the Chamber and in the pages of a steamed-up press. The strategy was clear: first, get the economy right; secondly, ensure that the structures needed to build a fair society are in place; and lastly, be brave enough to raise taxes when required and spend the money on the programmes necessary to bring relief and succour, to provide jobs and credible incentives to work, and to sustain a flexible work force on which the long-term prosperity of the UK and Scotland depends.
In conclusion, as the Chancellor made clear in his Budget statement, we are perceived as being at a crossroads in the life of this country. It is now time to make fundamental long-term choices as to whether the national consensus that has existed for half a century in regard to our public services is to be renewed for the years ahead. It is clear that the national consensus supported by
The issue of the national insurance increases highlights the bankruptcy of the major Opposition party, whose vision for public serviceswhether transport, education, housing or healthis a vision of services provided by the private sector, paid for by increased charges and private insurance. The Budget proposals and the Finance Bill put clear blue water between the Government and the Opposition, a situation that I welcome. There is a clear choice between my partya Government who believe in public services and are willing to put money to good use to sustain and enhance themand the Opposition, who are seeking to revive and renew the old Thatcherite agenda, which would dismantle them.