Debate on the Address

Since 1878. So a little more humility from the hon. Gentleman would be appropriate. To add to our woes, not only are the nation's finances out of control, but unemployment is also increasing; in the past year, it has risen faster in Britain than anywhere else in the western world. Real unemployment—the number of people out of work and on benefits—is now at more than 5 million. Last week, the Sapa group, one of the UK's biggest aluminium producers, announced that it is to close its plant in Banbury, with the loss of 337 jobs. That is a tragedy for every person who will lose their job; it is also a particularly sad time for Banbury, as the Alcan site has been part of the town's soul ever since the aldermen of the borough of Banbury raised the money to buy the original land to attract Northern Aluminium to the town early last century. As companies such as Sapa struggle with increased competition from low-wage economies such as China and Malaysia, what is the Chancellor doing? He is adding to the burdens of business. After 15 years of global growth, we should be running a surplus; instead, we are entering what the Chancellor himself admits are difficult times—the Government's borrowing is out of control and they are having to raise ever more taxes. Next year, the Chancellor wants to raise a further £2.5 billion in taxes. According to a rule of thumb, £1 billion is about equivalent to a penny in income tax. How is the Chancellor raising that extra tax? He is doing so by hammering businesses, particularly small and medium-sized businesses, and by increasing council taxes. There is an effective 80 per cent. rise in capital gains tax for smaller business—little surprise that the Federation of Small Businesses said that the pre-Budget report was"““bad news for small business, adding to the tax burden. The chancellor's statement is a huge disappointment for most small businesses still reeling from the increase in corporation tax announced in the last budget.””" The rise in CGT hits particularly hard the owners of the 4.5 million UK firms that employ fewer than 20 staff and contribute half the nation's GDP. Little wonder that the Minister for Trade Promotion and Investment, Lord Jones of Birmingham—[Interruption.] The hon. Member for North-West Leicestershire (David Taylor) may scoff, but the Prime Minister brought Lord Jones into the Government's ““big tent””. I should be interested in running a sweepstake with the hon. Gentleman on how long Lord Jones remains a member of this Government. I wager that not many months into next year he will resign or find it difficult to keep up collective responsibility, given the Government's economic policies. Little wonder that Lord Jones acknowledged that companies regarded the new capital gains tax changes as terrible. He should know, because as the head of the CBI, he warned the Government; as a newspaper article headlined it, ““CBI warns Brown: do not tax your way out of slump””. However, that is exactly what the Government appear to be doing. What a pity that the Government did not take Lord Jones's advice, given all his experience of business. Even the Chancellor now realises that he has cocked up on CGT and he is trying to think of ways to sweeten the pill. As Richard Lambert, the CBI director general, has observed:"““There are many other businesses and investors who need help as a result of these ill-thought out pre-budget changes.””" The Government's changes to CGT attack business and enterprise. As the Institute of Chartered Accountants in its parliamentary briefing says:"““This change will create a considerable number of winners and losers. The losers are businesses…The winners appear to be holders of non-business assets, for example second homes, and particularly those who have held non-business assets for a short period””." So there is a crazy situation, in which the Government are hitting business and those who create jobs and employment and rewarding those who have held non-business assets for a short period. The businesses in my constituency being hit with more tax still have to cope with the ever-increasing burdens of pointless red tape. I hope that the Government will pay careful attention to the Public Accounts Committee's recent report, which demonstrates, for example, how ridiculous it is that owners of new businesses are badgered by numerous different parts of Her Majesty's Revenue and Customs all wanting the same bits of information. It is not surprising that the rate of new business start-ups has fallen since 1997. What is the point in the Queen's Speech of the Government saying:"““A Bill will be introduced to reduce regulatory burdens on business””," when the Public Accounts Committee clearly shows in its report that they are stifling business with ever more red tape? The other group hit by the Government in getting more taxes are council tax payers. This is all pretty cynical on the Government's part. In short, the Government give local councils less grant knowing that they will have to put up council taxes as a consequence; they then hope that local councils and councillors will be blamed, not them. I do not think that people will be conned—they will understand that their local council has been short-changed by the Treasury. Local government has had the worst settlement from the Government in a decade, and that is bound to lead to above-inflation increases in council tax bills.