Mr. Philip Dunne (Ludlow) (Con): I remind the House of my declaration in the Register of Members' Interests. I also apologise to you, Madam Deputy Speaker, for being unable to attend the entire debate, because I had Select Committee and other parliamentary duties this evening.
I welcome the Chief Secretary back to the Chamber, and would like to pick up on three of the issues on which he spoke at the start of the debate: the focus of the Bill on productivity, fairness and anti-avoidance. He will not be surprised to learn that I will take an approach somewhat different from his.
Several of my hon. Friends, not least my right hon. Friend the Member for Wokingham (Mr. Redwood), spoke about productivity. I raised the issue in last month's debate on the Budget and pointed out that despite the Chancellor's claims, productivity growth in this country is clearly on a declining trend. Over the past 12 months it has grown by a mere 0.4 per cent., which is substantially below the trend under this Government, and even more substantially below that under the previous Government. It is not clear from my reading of the Bill how productivity will be enhanced. It will certainly not be enhanced in the oil industry, which is being clobbered by extra taxation measures, in the financial services industry, where the trust sector is being clobbered, or in the public sector.
The former BBC economics correspondent Jeff Randall wrote a rather interesting article in The Daily Telegraph immediately after the Budget. He commented:
"With government spending, as a percentage of Britain's output, rising from 37.5 per cent. in 2000 to a forecast 45.7 per cent. in 2007, there has been a tidal shift of resources into the low-productivity public sector."
That is evident, and the article is a graphic description of what has gone on under this Government. It is a rather sad legacy of our Prime Minister that NHS productivity may well rise in the coming year as a result of the substantial job losses about which we read every day in the press. The Royal College of Nursing predicted a 13,000 increase in unemployment in the NHS, which will probably have the perverse effect of increasing productivity in that segment of the public sector.
Let me turn to the subject of fairness. I was struck by the Chief Secretary's use of the fairness argument to justify several of the more controversial measures in the Bill. He specifically cited fairness as a reason for introducing IT access for the elderly. He used as an example the Department for Work and Pensions measures to improve such access. I presume that he was referring to access to benefits and pensions. I ask him, or the Paymaster General in her winding-up speech, to inform the House how the Government reconcile that with the fact that in 2003 the DWP introduced the Post Office card account, providing technology to replace the physical pension book-a good thing-yet now, barely three years later, it is deciding to terminate that account, which has proved so popular that more than 4.3 million people, many of them pensioners, have one.
Clause 61, which has been touched on by many Members, deals with the home computing initiative. The withdrawal of this initiative, too, was described by the Chief Secretary as fair. The initiative was a very welcome and well-received Government tax relief measure-no great surprise, then, that it is being scrapped by the Bill. It helped households on low incomes, it helped those who were out of work gain access to work, and it helped those in rural areas such as my constituency to gain access to jobs remote from home. The success of the initiative in my area is shown by the fact that last year Shropshire was declared the leading county in the country for home working, in part thanks to that Government initiative, which is now being scrapped.
Fairness was also used as an argument to justify the proposed inheritance tax changes to trusts in clause 157 and schedule 20, but the retrospective nature of those changes is contrary to fairness. The reduction from 25 to 18 in the age limit for accumulation and maintenance trusts has nothing to do with fairness at all, and everything to do with the politics of envy, I regret to say. The financial literacy of 18-year-olds is not the same as that of 25-year-olds. Some commentators have described the measure as a charter for drug dealers. That may be pushing things a bit far, but removing prudent financial oversight from young people, some of whom in their maturing post-school years may fall easy prey to those who seek their wealth, does not seem to me to be an act of fairness.
It is also claimed that this is an anti-avoidance measure, as though the trusts concerned had been set up explicitly to avoid paying tax. In many cases-the vast majority, I would argue-that is not the case. As many commentators have pointed out, the Government seem to have little understanding of the extent or purpose of these trusts. The Chairman of the Treasury Committee rather helpfully pointed that out in the report published earlier today, quoting the letter that the Paymaster General, no less, was rushed into publishing in The Times in a panicky response to the general public outcry about this aspect of the Budget. Paragraph 106 of the report refers to the Paymaster General arguing that the new rules would affect only a small number of trusts, saying:
"We estimate that there are about 100,000 discretionary trusts and only a small minority of those are accumulation and maintenance trusts of the kind that are caught by this Budget measure. Of that small minority of accumulation and maintenance trusts, only those containing assets above the inheritance tax threshold will be caught, so it is a minority of a minority."
Since that letter was written, most commentators of whom I am aware have rather graphically illustrated the fact that the problems posed by the measure range much more widely than the Government seem to understand.
We heard earlier from my hon. Friend the Member for Gosport (Peter Viggers), who practised as a solicitor for many years, that most wills are written in trust. Husbands and wives, in both pre-nuptial and divorce situations, find their assets written in trust. Orphans have their assets written in trust. Recipients of compensation also have their assets written in trust. We have heard this evening about the life insurance sector.
We will look forward to ascertaining in Committee precisely how the Government intend to exclude life insurance policies from the proposed legislation. All these measures could catch many people. This is an attack not on a small minority of a minority, but on the vulnerable and aspirational, and it is happening at a time when inheritance tax is being abolished in many of our competitor economies. This is not the time to seek, through some rather vindictive measures, to tighten the net under the guise of anti-avoidance while seeking to spread the net much more widely than ever before.
I shall speak briefly about some of the green proposals in the Budget, which the Chancellor of the Exchequer has chosen to trumpet throughout the globe. I would like to bring to the attention of the House one specific example, which illustrates the Government's incompetence in implementing some of their proposals. One of my constituents, Mr. David Luckhurst, runs his own small business, which is called Solar Dawn Renewables, of Lydbury North in my constituency. It installs heating systems with solar power generation on a domestic scale. Mr. Luckhurst was developing his business well under the Clear Skies renewable energy grants system, which the Government set in place. He hoped that it would be replaced in an orderly and efficient manner by the low-carbon buildings programmes grants, which had yet to be launched. They were announced in November 2005, allocating a further £30 million over three years, which was a welcome development, if modest.
At that time, before the moneys were allocated between householders, communities and manufacturers, £1.5 million of the £30 million was taken out of the fund to make up a shortfall in the predecessor Clear Skies programme. When the remaining Budget was allocated, £10.5 million was given to what is known as stream 1: householders-domestic users-and non-profit community organisations such as registered charities, community groups and schools, which received the balance of £4 million. Another £18 million was allocated to larger-scale projects known as stream 2. That included £6 million for retrofit and £12 million for new build and refurbishment of businesses, building developers, energy service companies and public sector entities.
In the Budget, in March, the Chancellor of the Exchequer announced a further £50 million for the low-carbon buildings programme,
"with the aim of encouraging manufacture at a higher scale leading to lower costs. This will help fund the installation of microgeneration technologies in a range of buildings including schools, social and local authority housing, businesses and public buildings"-
all very noble.
There are still no details of exactly how the £50 million is to be allocated. All the indicators are that businesses will be the main beneficiaries. Yet there are small accredited firms, such as that run by my constituent, which are more or less entirely dependent on the custom of householders, and the so far patchy grants system has been making their survival in business extremely difficult, although both the Government and the Opposition have been trying to encourage such activity to improve energy efficiency and reduce reliance on fossil fuels.
Applications were deferred, on the basis that Clear Skies was to be replaced. Then the new programme was delayed. Now the DTI is saying that householders can register for application forms from today-more than a month after the Budget announcement. It seems that none of the applications will be processed until the beginning of next month-a month and a half after the Budget announcement.
To add to the complexity-the Government do not like to do anything simple if they can complicate things-there are now strings attached to grant applications. Householders are eligible for a grant only if they have previously installed other energy-efficiency measures, including loft and cavity wall insulation, low-energy light bulbs and heating controls. Those are all useful measures, but they should have been made criteria before now, so that householders knew what contract they were expected to enter into before they received the grant.
Small businesses that produce the microgeneration technologies that everyone in the House wants to expand throughout the country rely on the grant funding for their businesses to flourish, but they have become increasingly vulnerable following a downturn in orders as a result of the Government's stop-start policy making. I hope that the Paymaster General, if she is paying attention, will be able to provide reassurance that the grants under the new low-carbon buildings programme will be processed as quickly as possible to prevent small businesses in that sector, such as the one owned by my constituent, from being pushed further into the red, as they are the very organisations that the Government should encourage if they are serious in their commitment to reduce carbon emissions.
9.31 pm
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OTHER CONTRIBUTIONS TO THIS DEBATE
Mr. Philip Dunne (Ludlow) (Con): The hon. Gentleman's catalogue of achievements since 1997 prompts me to ask who he thinks is responsible for the increase in the unemployment count by close to 100,000 over the past 12 months. Is it the Chancellor of the Exchequer or is it someone else?
Mr. Henderson: There are cyclical trends within a pattern. Over the past 12 months, there has still been an increase in the number of jobs. Some of them have been filled, as my right hon. Friend the Member for West Dunbartonshire said, by migrants who have come to this country. That has meant that some people have lost out. I do not want to dwell on that. I am the rapporteur for one of the Council of Europe Committees that deals with these issues, and I will be happy in another debate to discuss the rights and wrongs of this filling of jobs and the implications that ensue.
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Mr. Dunne: In view of the hon. Gentleman's valiant attempt to use excise duties as a means to introduce his specialist subject, the health service, does he agree that it was a considerable disappointment and surprise that the Chancellor, in his Budget speech, did not once mention the NHS?
Stephen Hesford: If we are trading cheap remarks, I suppose that I could say to the hon. Gentleman that he has only just come into the Chamber and has not had the courtesy to take part in the debate. [Interruption.] Well, I must be blind then, because I have been sitting here.
