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Budget Resolutions and Economic Situation

I did not, but the BBC’s economics editor made that point in a BBC broadcast in which I participated, because he was searching for the information at the time. It is extraordinary that economic commentators, our research teams and the Library will all have to spend the next two or three days discovering information already held in the Treasury about who the winners and losers are. It looks as though single people will be losers from the changes announced yesterday. Young, professional single people—perhaps working in the public services—may find that they are worse off, not better off, as a result of what was announced yesterday. I want to consider the economic position in respect of the public finances. The Chancellor did not quite have time in his speech to apologise for the fact that he has yet again overestimated the amount of tax revenue that he was supposed to gather in. I think that this is the sixth year running when he has wrongly forecast the tax revenues on the wrong side. As a result, the deficit is widening and he will have to borrow more than he originally forecast. The public finances have worsened. In the private sector, the economic stability about which the Chancellor boasts depends very much on who one is. The stable economic framework that he claims to have created is not particularly attractive to a potential first-time buyer, struggling for a foothold on the housing ladder, or to a pensioner, struggling to make ends meet on a fixed income and confronted with retail prices inflation which is much higher for the pensioner community than the 2 per cent. figure the Chancellor talks about. We have a very lop-sided economy now, in which home owners—those already on the housing ladder—enjoy year-by-year huge rises in their capital assets, while those outside the housing market find life harder and harder. I would suggest to my hon. Friend the Member for Wycombe (Mr. Goodman), who is participating in our work on policy formation, that we need to look again at the housing market and perhaps find new ways of helping young couples. If we do not, home ownership will slowly and steadily become predominated by the wealthy and the middle aged. Secondly, we need to do more to protect pensioners from council tax increases that well exceed the money that they are paid through various fixed incomes. At the moment, the Chancellor tries to protect them by one-off measures—pre-election bribes—that are introduced one year, then withdrawn the next. We need to look again at our council tax system. An increase of 5 per cent. in one year may be sustainable, but year after year, for a pensioner on a fixed income facing high utility costs, it is a very serious matter indeed. I would like to deal now with the tax burden, and the element that I particularly want to concentrate on is the business tax burden. The Library tells me that of all the taxes garnered in 2005-06, business taxes account for some 27 per cent. of the total burden. I have to say that a corporation tax rate of even 28 per cent. still looks very high compared to our Organisation for Economic Co-operation and Development competitors. We are now slipping into the bottom half of that table, as we see other competitor countries—sometimes neighbouring countries such as Ireland—with much more attractive rates. My right hon. Friend the Member for Wokingham (Mr. Redwood) mentioned yesterday that we are seeing the slow but regular movement of multinational headquarters away from London. As I understand it, there are no statistical tables available yet to provide the evidence, but there is a worrying trickle of members of the Institute of Chartered Accountants and the CBI reporting in their surveys that firms with headquarters in London are now assessing every couple of years whether they should retain their headquarters here in London. HSBC, for example, conducts such an assessment every two years. In 1993, the answer was a categorical yes—London was the place to do business. Now, it is reported, the answer is much less clear cut. That is extremely important, because 1993 was the year in which HSBC chose to move to London. It could have chosen elsewhere. That is a reminder that, if we are to continue to attract and retain in London the headquarters of these larger companies, we need to get the tax and regulatory regimes right.