---

The Budget

The hon. Lady makes a good point, and I will shortly come to something in a similar vein, but a spike in fuel prices cannot be dealt with overnight. Long-term agreement is needed with the European Union, and that cannot be done immediately. I went out on a limb on a television programme on the Sunday before the Budget to ask for a cut in fuel tax, which is a good way of addressing the problem. That was achievable, and was done. The child care voucher scheme is important—my son and daughter-in-law make use of it—and it is highly tax efficient. There was criticism that it benefited those on higher tax rates instead of those on lower rates, but figures show that 85% or 90% of all recipients are on the basic rate of tax. The money that the Government provide goes to child care, so there is no issue about its being used for other purposes. A quirk of the system, however, is that self-employed people cannot benefit from it, and that is a disincentive for people going into self-employment—even into full employment, but particularly self-employment. Extending the child care voucher scheme to self-employed people would dismantle at least one hurdle that could discourage people from going into employment. If more people were in employment, more taxation would be generated and the scheme could be almost self-funding. A second small matter that I would like the Minister to take to the Treasury is one that Opposition Members have raised. Changing the rate of VAT on certain products is entirely possible, but requires long-term planning. The Budget set out the principles of the green deal, and I am sure that it is a common cause in this Chamber today, and indeed the House, that we want more of our houses to be brought up to a decent state of heat and thermal efficiency. The green deal will address that, and I am sure that many people will support it and the Government’s approach to it. However, it depends on encouraging people into the scheme, and I have had representations that we should be looking at the headline interest rate that will be used. One issue that could be addressed more easily is that certain products used in the green deal—for example, insulation and services such as installing that insulation— attract a VAT rate of 5%, whereas other materials, such as double glazing, attract the full rate of VAT at 20%. That is not an incentive for people to become involved in the green deal. If the 5% VAT rate applied to all the materials that could be used in the green deal, not only would that encourage people to enter the scheme, but the money made available for it would go further and we could treat more houses. Certain products other than insulation attract the 5% rate. One is low-energy light bulbs and the other is contraceptives—I am not sure whether there is a link between those products. I am not suggesting that contraceptives should be part of the green deal, but there is an opportunity for the Government to do something rather small to improve a scheme that will be very successful. I turn now not so much to the macro-economics, but to a couple of points made by my hon. Friends about the role of public sector money in Wales. I have argued in the past that although the Barnett formula delivers more money per head for the people of Wales, there is a good case, as some of the published reports confirm, for saying that it has passed its sell-by date and that we should have a needs-based rather than a population-based formula. In the past, Wales has received not only more money per head than England, but more investment than many areas in England through two tranches of European money.