Sir George speaks on Budget Debate
21 Mar 2005
In a wide ranging speech on the Budget, Sir George touched on school meals, family tax credits, the health service in Hampshire and workforce remodelling for schools.

This is the text of the speech Sir George made in the House:

Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow the hon. Member for Coventry, South (Mr. Cunningham), who spoke movingly about the problems that confront his city following the decision by Peugeot on the Ryton plant. We hope the dialogue to which he referred has a productive outcome.
The hon. Gentleman was slightly less than fair on the actions of the previous Administration, who worked closely with Coventry city council on inner-city regeneration, housing renewal and other schemes that helped the ethnic minorities in his city, so I hope he is prepared to put a little on the other side of the scale, alongside the rather disparaging remarks he made about the Administration.
Mr. Jim Cunningham: I give the right hon. Gentleman credit. I remember that he and I had discussions about the Muslim resource centre in Coventry and the Indian community centre. Indeed, he was the Minister at the time.
Sir George Young: I am grateful. That is generous of the hon. Gentleman.
I shall make a brief contribution to the Budget debate. We have had the weekend to reflect on the Budget. We have had time to talk to our constituents. I was in Liverpool, Wrexham and Andover over the weekend, and in all three places I found a rather muted response to the Budget. I am not sure that it has had huge political impact. It certainly has not kick-started the Government's flagging re-election campaign back into life, as many Labour Members may have hoped.
There are a number of reasons for that. The Budget lacked what I would call bullet points. In my constituency, as in many in the south-east, the stamp duty changes will have little impact. Petrol duty has been frozen, but only for the time being. The council tax help is welcome, but it is only for one year and it is less than that promised by my party. Other parts of the Budget were too complicated. I shall return to that.
In the old days there was one highly visible budgetary thermometer—the standard rate of income tax. That told us something about the Budget and about the Government. Everybody knew how to read that thermometer. By and large, under the Tories it went down and under the Labour party it went up. Nowadays there is no single thermometer by which we can judge the Budget. Instead, there are hundreds of little sensors all over the body politic, all giving out slightly different signals. That makes the Budget much more difficult to interpret.
I do not say that as a criticism of the budgetary measures, but I do think that the move away from changing the rate, doing something significant about the allowances and focusing instead on micro-measures makes it more difficult for the public to read a new Labour Budget and come to a judgment about it.
Mr. Hopkins: The right hon. Gentleman is correct to say that the Budget is more complex these days, but perhaps it still represents a statement about the fiscal stance. The present Budget reflects a slight tightening of the fiscal stance.
Sir George Young: Indeed, and I shall come to that in a moment. It was the right thing to do, in view of the changing fortunes of the Government finances.
Over the weekend I detected some fatigue following the exchange of fire last week about public expenditure totals and who will spend how much. My heart sank when the Secretary of State for Education and Skills introduced the debate this afternoon with a sentence about £35 billion, which I suspect, every special adviser now writes into every Secretary of State's speech. My view, which I fear will not be shared, is that the Easter recess would be a useful time to have a ceasefire and spare the public a little of the warfare that is raging. There is real election fatigue out there. I remember reading that in the first world war, on Christmas day the soldiers stopped shooting and played football in no-man's-land. That might be a useful way of spending our Easter, but I suspect that all three parties have major political onslaughts planned for the Easter recess.
Peter Bottomley: Would it not be a good idea to return to what used to happen, when Ministers told special advisers what to do, rather than special advisers telling Ministers what to do?
Sir George Young: Yes. I hope that no Secretary of State who is to speak in the rest of the debate will repeat the £35 billion figure. The public are fed up. The more Ministers go on about it, the more damage they do themselves.
The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis) rose—
Sir George Young: I hope that the Minister is not about to defend the constant propaganda that we have been hearing over the past week, which is wholly counter-productive.
Mr. Lewis: Perhaps I can help the right hon. Gentleman with three bullet points, and ask him to comment: low interest rates, low inflation and low unemployment. That is the barometer by which a Budget is usually judged. On spending, is it his party's position to match the Government's spending on schools, or on education? Massive sums of money are spent beyond the school system.
Sir George Young: I am not sure whether the Minister was in the Chamber when my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) introduced the debate. He made our policy absolutely clear and it is in Hansard. I welcome low inflation and low unemployment. As a Treasury Minister some 10 years ago, I am prepared to take some of the credit for the financial position that the Government inherited in 1997.
As I listened to the Chancellor of the Exchequer last Wednesday describe how well things are going—in many cases they are going well, and I welcome that—I had to ask myself why, if things are going so well, the Chancellor has to borrow so much more than he thought, and has to borrow quite so much at this point in the economic cycle. That question has not been satisfactorily answered. Perhaps the Minister who winds up the debate will answer it. I respectfully agree with outside commentators who say that if Ministers, notwithstanding all the assertions that we have heard from them, want to sustain their planned level of spending, they will have to raise taxes in order to do so.
Incidentally, the actual level of Government borrowing is far higher than that stated by the Government. Who, for example, would lend to Network Rail after the debacle of Railtrack if the Department for Transport did not stand behind those loans? Now that the Strategic Rail Authority is
disappearing, the Department for Transport stands behind those loans, but miraculously that liability does not show up on the Government's balance sheet. Indeed, if one followed the National Audit Office's interpretation of liability, the Government's golden rule would have been shattered several months ago.
May I offer, with respect, a word of caution to the Government regarding their boasts about public services, particularly the NHS? Many hospital trusts and primary care trusts in the south-east, especially in Hampshire, are running large deficits and are having to introduce financial recovery plans in order to balance the books. The Mid Hampshire NHS Primary Care Trust is looking at spending reductions of some £14 million. It has to save £9.5 million to deal with a recurrent deficit and £4.5 million to deal with non-recurrent savings. It is looking at fewer staff, has not ruled out redundancies and is planning to reduce beds. That local debate, which I suspect is being reproduced elsewhere in the south-east, provides a rather discordant background to the harmonious noises that we have been hearing from Ministers about record investment in the health service. Once one nets off the impact of higher drug prices, reduced working hours for doctors and the high cost of recruiting temporary staff, the extra cash gets eaten into. Some of it is ring-fenced. Services that are not ring-fenced are the ones that are exposed to reductions in investment. NHS dentists, in Hampshire as in other parts of the country, are increasingly difficult to find.
Mr. Love: Can the right hon. Gentleman tell us what contribution would be made by the patient's passport that his party wishes to introduce, which would probably take in excess of £1 billion out of the national health service?
Sir George Young: It would have been welcomed by poor pensioners in my constituency who were unable to wait for the NHS to treat them and dug into their modest savings to pay for private treatment. If I may say so, Labour Members are wrong to assert that the only people who would benefit from that policy are the very well-off; that is simply not the case.
The Chancellor decided against raising tax allowances above inflation and is instead putting the money into tax credits. The House should pause and consider the practical and philosophical issues behind his decision, which I do not find easy to endorse. In the briefing that we all have today, Age Concern tells us that nearly one third of pensioners eligible for pensioner credit fail to claim it. This is not a new benefit, and there has been time for the take-up campaigns to kick in, but there is still a very low take-up, coupled with the horrendous complexity of filling in the forms and then operating the system. In today's post, I received a typical letter from the Inland Revenue. I quote:
"I am sorry to hear of the difficulties that Mrs W has experienced with her tax credit claim. Having looked into her claim, I can confirm that we have issued Additional Tax Credit Payments to the sum of £269.92 on Feb 22nd in order to prevent any further hardship."
We all have letters like that from the Inland Revenue about tax credit cases in our constituency. Of course, the claimant will have to pay back that money in the years
ahead. The regime that the Chancellor keeps on developing has become so complicated and top-heavy that it is time to stand back and have a look at it.
When the Inland Revenue makes a mistake, it will ask the person to pay it back if they have not spotted it. How many of us who fill in our own returns will check the Inland Revenue's calculations line for line? Most of us will assume that it is a professional department and that having given it the correct information, it will provide the correct assessment. But what about the single parent who has filled in the form correctly, gets incorrectly assessed as an overpaid, and is then told that she should have spotted the overpayment and that the money must be repaid? Then the payments stop, she cannot pay the childminder and has to give up the job, and is back where she started. The House should have a serious debate about the alternative of raising the allowances, reducing the interface and streamlining and simplifying the system rather than piling extra resources into an increasingly complex scheme.
One or two Members mentioned council tax. Here we have another one-off payment to council tax payers alongside the one-off increase in grant of £1 billion to local authorities that was announced last December. What will happen next year, when the council tax payer will not get the £200 and when the £1 billion to local authorities is not repeated? It strikes me that the approach to local government finance is hardly joined up or coherent—it seems to be a rather ramshackle and unstable structure.
I want to say a word about the emergency action that the Chancellor took in the Budget. Of course, from time to time the Chancellor has to act quickly to stop an abuse, and I have no quarrel with that. However, the withdrawal, without notice, of stamp duty for commercial property in disadvantaged areas struck me as odd. The Chancellor introduced that with a great fanfare in 2003, and such inner-city initiatives take time to bed down and get taken up. The wards that the scheme applied to were chosen by the Chancellor, and there may be developers who were induced to invest and develop and now find themselves some 4 per cent. out of pocket. I hope that that does not damage the credibility of the Government's initiatives, which depend on trust and genuine partnerships with the private sector.
I want to end with three brief points on education. First, on school meals, I cannot be the only Member who has been e-mailed and written to over the weekend following the Channel 4 programmes with Jamie Oliver. There has been a very good response, and it may be that those programmes have the same impact on school meals as "Cathy Come Home" had on housing policy some 20 or 30 years ago. I was a little disappointed with the Secretary of State's response and delighted to hear my hon. Friend the Member for Westmorland and Lonsdale say that my party's response to the challenge of a policy on school meals will come out shortly and will be more imaginative than that of the Government.
Secondly, the Chancellor made a big play about deregulation in his Budget, but we heard nothing from the Education Secretary about deregulation in education. There is a real appetite on the part of teachers for less regulation and a more streamlined approach so that they can use their skills on the interface with children.

My third point on education has not been mentioned—it concerns work force remodelling. That is an initiative due to be introduced this autumn whereby 10 per cent. of teaching time is made available to teachers for preparation, so that for one half-day per week they will no longer have to take classes. I have no difficulty with that policy, but there is real concern that insufficient resources have been given to schools to enable them to pay other people to take over the classes that the teachers will no longer operate. I read in the press a few days ago that although head teachers had initially supported the policy, they were having second thoughts because it was under-resourced. I hope that the Government will take that seriously. It is a small cloud on the horizon, but if they do not get it right, there will be serious disruption in schools later this year.
The Budget is unsustainable economically and has been unsuccessful politically. I therefore look forward to a Finance Bill introduced by my right hon. and hon. Friends in a few weeks' time which will do both tricks.

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Copyright Sir George Young Bt. 2015