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Mr. Richards : The hon. Lady referred to public spending. Does she believe that the national health service
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is underfunded ? If so, will she say by how much ? If the Labour party was in office, how much would it spend in addition to the current budget ?Ms Harman : We believe that there is a lack of investment, particularly capital investment, in the national health service. That has been charted by the all-party Select Committee. We think that since capital investment in the health service has fallen, now is not the time to cut it. The Government are cutting capital investment on health, education and transport because they have messed up the economy and they are now telling us that we cannot afford that expenditure.
The Government said in their election manifesto that no cuts would be necessary. The Chief Secretary to the Treasury said that his vision was
"of a society prosperous enough to provide for those in need and invest in public services."
That was before the election. They were all clear promises which have now been broken. The Budget cuts public spending below present levels next year and the year after, despite those election promises. The Budget reduces public sector investment.
The cuts in investment announced in the Budget last week will further undermine our economic infrastructure and further weaken the already weak economy. On transport, in the 1992 election manifesto, the Conservative party said :
"Over the next three years we are committed to the biggest investment in Britain's transport infrastructure in our history." Those are bold words. They have now cut the transport budget by 8.3 per cent. in real terms. The Tories said :
"We believe that the railways can play a bigger part in responding to Britian's growing transport needs and we are investing accordingly."
In the Budget they have cut British Rail's external financing limit by 20 per cent. next year, 24 per cent. the year after and 25 per cent. the year after that.
What about London Underground? As my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) reminded us, two weeks ago 20,000 people were trapped for hours in dark tunnels underground when ancient cabling failed. Millions of pounds worth of business in London was lost as a result. Two days earlier, the Secretary of State for the Environment had issued a questionnaire to all of us who live and work in London. He asked us what we most appreciate about London and he gave a list of suggestions. One of his suggestions for what we most appreciate about London was the London Underground. The Government's role is not to issue barmy questionnaires, but to modernise the London Underground.
Before the election the Government promised that London Transport would be allowed to invest £1.2 billion. We are now told that the figure is to be cut to £900 million--a cut of a quarter. According to the chairman of London Underground, the Government are providing only half what it needs to create what he calls, "a decently modern metro."
In its Budget submission to the Chancellor the CBI said that public investment must be maintained and that
"a substantial increase in UK investment is needed to provide the basis for sustained growth."
We agree with the CBI, yet the Budget makes the investment deficit worse. Public investment in housing has fallen dramatically during the past 10 years, yet it is to be
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cut again next year by £500 million, with £300 million being cut from housing associations. That will mean more jobs lost in the ailing construction industry and fewer homes for the homeless. Capital spending on the health service is falling. In the Budget it is to be cut again by £144 million, at a time when the NHS faces an outstanding repairs and maintenance bill of £2.2 billion. The Government's support for local authorities has been cut by 1.8 per cent. in real terms. That will cut services, particularly schools. The Secretary of State for the Environment has confirmed that council tax bills are set to rise by 7 per cent. or more. The hallmark of the Budget and of the Government is that one pays more and one gets less.Mr. John Townend : The hon. Lady is giving us a great list of the items on which she objects to the Government trying to save money. Throughout the debate, the Opposition have opposed cuts in public spending and increases in taxation. How would the hon. Lady's party deal with the deficit?
Ms Harman : We want the Government to cut spending on unemployment and on income support. We want a nation that is at work and is not on benefits.
The story of the public sector borrowing requirement is one of low growth and of high unemployment. Despite that, the employment budget has been cut by 3 per cent. at a time when improved training for the whole work force is more necessary than ever. All those cuts will worsen public services and will undermine our economy.
Mr. Richards : Will the hon. Lady give way?
Ms Harman : I have given way to the hon. Gentleman already.
Mr. Stephen Milligan (Eastleigh) : The hon. Lady has made it clear many times that her policy is to reduce unemployment. Will she explain how she would do that, other than by higher public borrowing?
Ms Harman : We have set out measures, many of which have been supported by the CBI and by other employers' organisations, which would deal with the fundamental problems of high unemployment and of low growth in the economy.
The problem with the Government is not that they do not know what the solutions are. The problem is that they think that they have no role in the economy and that they can leave it to the markets. The tragedy is that that has flattened the economy. That is why we have high public spending on unemployment and why manufacturing industry has suffered.
Mr. Richards : Will the hon. Lady give way?
Ms Harman : I am not giving way to the hon. Gentleman--I have given way to him once.
The Government have once again signalled that their vision of Britain is limited to a low-investment, low-growth, low-wage and low-skilled economy. There is nothing in the Budget to improve the prospect of the public- private partnership, which could play a part in modernising our infrastructure. My right hon. Friend the Member for Ashton-under-Lyme (Mr. Sheldon) said that, at the previous autumn statement, the Government boasted about the public-private finance initiative, yet the record since then has been one of ignominious failure.
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The CBI has said, politely, that progress has been painfully slow. Even the Chancellor had to admit that the flow of projects had been "disappointingly small". This is not some unfortunate accident, as the Government would have us believe. It is a direct result of the Government's prejudice against any kind of public sector investment, even when it involves private investment working together with it. The Chancellor gave the game away in his recent speech to the CBI, when he said that the public-private finance initiative was a way of privatising the process of capital investment in our key public services. It is clear that that initiative is not about partnership. It is about the Government abandoning their responsibility to modernise our economy and our infrastructure and it is about them passing the buck to the private sector.Mr. Bates : The Labour party manifesto of last year says on page 10 :
"We will allow British Rail to proceed with a leasing scheme of 188 new Networker trains on the North Kent line--the first step in securing private investment to help modernise Britain's railways". Is that still the hon. Lady's policy?
Ms Harman : We believe that public and private capital working together can have a role to play in improving our infrastructure. The problem is that it will not work unless there is a partnership, and this Government will not be involved in a partnership. They just pass the buck to the private sector--that is why it will not work. In his Budget the Chancellor proudly told us that the Government were giving the go-ahead to three substantial new transport projects, under the private finance initiative. He cited the extension of the docklands light railway to Lewisham-- [Interruption.] It might have been the first time that the right hon. and learned Gentleman mentioned it, but the project was first proposed eight years ago. The legislation passed its Second Reading as long ago as 1991, but there is still no commitment of public or private sector investment. Tendering will begin only next year and there is still no firm start date for the project. So it is not new and it certainly does not have the go-ahead.
The Chancellor's second announcement was the go-ahead for the modernisation of the west coast main line. BR has been calling for this investment for years, but the competition for the franchise will take place only late next year and there is no firm start date. Once again, it is not new and there is no go-ahead.
The Chancellor's third announcement was the go-ahead for a new air traffic control centre for Scotland. There has been no public sector commitment to invest in it and the Treasury will not even hazard a guess at what the start date might be. This project, I concede, might be new, but it certainly does not have the go-ahead--
Mr. Riddick rose --
Ms Harman : The truth is that the Government's private finance initiative is just an excuse for their refusal to invest in our infrastructure. We have heard announcements and reannouncements, but no action. The problem has been described very well by the Chief Secretary, whose philosophy is that if business wants something, business will pay for it ; and if business does not want something, it will not pay for it, so it does not matter. That is why we have no channel tunnel rail link. It is why in France, where the French understand about investment in infrastructure,
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their industry has the opportunity of a modern rail link taking goods to the rest of Europe. It is why, when the channel tunnel opens next year, British industry will find that it is serviced only by ageing Network SouthEast trains.Mr. Riddick rose --
Ms Harman : This was not just a Budget that undermined our economy and made everyone pay the price of Conservative economic failure. No ; the Tories are cynically using the crisis in our public finances as an excuse for their ideological mission to end the welfare state. Unemployment benefit is to be cut ; so is invalidity benefit. Sick pay is to be pushed on to employers and we know only too well that that is just the start.
The contrast between Labour and the Tories could not be clearer : we engage in an open debate about the future of the welfare state ; Tory Ministers plot its destruction behind closed doors. We look at analysis and at facts ; the Tories refer only to bigotry and prejudice. We look at how Government can enable people to help themselves ; the Tories think that any action--in particular, the Chief Secretary thinks that any action--by Government can only diminish individual responsibility. We ask what is fairest, what is the best way of meeting the need. The Tories reply : public bad, private good. We want to modernise and improve the welfare state ; the Tories want to end it. It is because the welfare state needs to change to meet changes in society that we need a Labour Government. The Tories cannot be trusted with the welfare state. They will not change it for the better ; they will just destroy it. That is the real story of this unified Budget. It is designed to unify the Tory party, but to deepen divisions in the country.
Mr. Riddick : Will the hon. Lady give way?
Ms Harman : I will give way because I have reached my points on taxation. I hope that the Government will give us answers on taxation.
Mr. Riddick : My question is, indeed, about taxation. From the comments made by the Leader of the Opposition at Question Time today it appears that the Labour party would like an opportunity to vote tonight on VAT on fuel. Can the hon. Lady tell the House why the Opposition did not table an amendment to the Budget resolution on the Order Paper, as the House would allow?
Ms Harman : The first vote at the conclusion of tonight's debate will give us the chance to vote down VAT on gas and electricity. Mr. Riddick rose--
Ms Harman : If the hon. Gentleman wants to--
Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. I expect the Front Bench to set an example. I am having great difficulty hearing the hon. Lady, as I am sure is the rest of the House. We will hear the rest of the debate in reasonable quietness.
Ms Harman : The hon. Gentleman's constituents will not be interested in his procedural nit-picking. They will want him to vote consistently with his promises to end VAT on gas and electricity.
Mr. Riddick : On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker : I hope that it is a point of order.
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Mr. Riddick : You have just heard the hon. Lady say that the first vote tonight will be on VAT on domestic fuel, Mr. Deputy Speaker. At Question Time the Leader of the Opposition said that we were not being allowed an opportunity--
Mr. Deputy Speaker : Order. That is not a point of order for me.
Mr. Deputy Speaker : Order. Obviously, my appeal of a few seconds ago fell on deaf ears. I expect the debate to be heard in reasonable quietness, so that Members of all parties have a chance to be heard.
Ms Harman : On taxation, too, the ground is littered with broken promises. The Conservative manifesto said that the Conservative party was
"the only party that understands the need for low taxation." Yet, as my hon. Friend the Member for Durham, North (Mr. Radice) pointed out, in this Budget we have the largest tax rise in history. Some £24 billion will be taken in tax over the next three years. From next year, the typical family will pay an extra £10 a week and from 1995 an extra £16 a week.
On income tax, the Prime Minister told us :
"we will make further reductions in the rate of taxation we will be able to make reductions year on year."
Yet this Budget imposes three separate increases in income tax this year and next. Personal allowances are to be frozen for two years running. The married couple's allowance will be reduced in 1994 and again in 1995. Mortgage interest tax relief will be reduced in 1994 and again in 1995.
On national insurance, the Prime Minister said :
"I have no plans to raise the level of national insurance contributions."
Yet from April next year, national insurance will be increased by 1 per cent.
On VAT, the Prime Minister said :
"I've made the pledge in the past I have made it clear we have no plans and no need to extend the scope of VAT."
We have not been able to believe any of those promises. We all know what happened to them. Despite the compensation scheme, everyone, even the poorest, will have to pay some of this tax. What nauseating hypocrisy we have heard from the Tories about helping people with their fuel bills. They are not helping people with their fuel bills ; they are putting tax on people's fuel bills and for some people they are rebating some of it. Everyone is being taxed on their fuel bills.
The Budget imposed three new taxes. For two of them, the Chancellor targeted the one area in which growth has been at record levels under the Conservatives. He has targeted the one area where the figures have risen constantly and the one area where the United Kingdom is near the very top of the league. What area is that? Crime. Crime has more than doubled since 1979 and now there is an attack on its victims. There is also a tax on holidays.
Any group of villains know that when they are up to no good the most important thing to do is to get the story straight, use the same alibi, to spin the same yarn and perhaps they will get away with it. Treasury Ministers have failed to learn that lesson. When interviewed separately about broken promises, they have all given different alibis. The Financial Secretary to the Treasury--I hope that he is listening because he may wish to retract it--has protested his innocence about broken promises. On the BBC
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programme "Question Time" on 11 November, he was asked by my hon. Friend the Member for Durham North-West (Ms Armstrong) :"Why did you say that you would not raise or have to extend VAT?" The Financial Secretary replied : "We didn't". My hon. Friend said :
"Well the Prime Minister did",
and the Financial Secretary replied :
"The Prime Minister didn't either. Labour have been saying this since the March Budget, but have failed to produce any single piece of written evidence to support the assertion."
The Financial Secretary knows that the Prime Minister's promises on VAT are a matter of record in the Official Report and also in the newspapers. He knows that there is written evidence of those promises. I will give way to the Financial Secretary so that he can retract his statement that there was never any policy to put VAT on gas and electricity. That particular villain is claiming the right to silence. He has nothing to say. The Financial Secretary is guilty and the British people know it.
The Chief Secretary to the Treasury tells a different story. He is more artful and admits that the Government broke the promise on taxes, but he says that they were only little promises and that the really big promise was to deliver sound public finance. In his election address, the Chief Secretary mentioned that little promise on tax not once, not twice, but 10 times. However, the big promise of sound public finance was not mentioned once. He has only told us now. As for the Chancellor, he is the leader of the gang and the most hardened of all those offenders. He did not deny it. He admits that he did it, but said that it did not matter. Who cares? Promises do not count if they are made "on a wet night in Dudley".
Those promises matter. The British people believed them. In the case of those offenders, it is time to understand a little less and to condemn a little more.
We have a Budget for low investment. We have a Budget for low growth, which will make our economic problems worse. We have seen an unfair Budget which fails to end tax abuses by the richest and which makes ordinary families pay the price of the Government's economic mismanagement. Above all, we have seen a Budget that breaks election promises and demonstrates contempt for democracy.
The promise on public spending has been broken. The promise on transport investment--broken. The promise on protecting those in need--broken. The promise on taxation--broken. [Laughter.] Conservative Members may laugh. The people in the country do not think that it is funny to have a Government who have no integrity. The promise on inc The Conservatives told us that their economics could deliver low taxation, sound finance, a competitive economy and good public services. They have destroyed our manufacturing base. They have created mass unemployment. They have run down our public services. They have created a record trade deficit and a record level of Government borrowing.
The record of the total failure of the Conservatives' economic policy has now forced them to claw back all the tax cuts of the 1980s. The central Conservative claim has collapsed ; the promise of low taxes now lies in tatters. All
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the excuses have run out. All the promises are broken and the country will never trust the Conservatives again. We will vote against the Budget tonight.9.30 pm
The Chancellor of the Exchequer (Mr. Kenneth Clarke) : I believe that if the hon. Member for Peckham (Ms Harman) is really to be the left's answer to my right hon. Friend the Chief Secretary, she will need something better than the hon. Member for Knowsley, North (Mr. Howarth) trying to lead a clapping ovation for her at the end. The Labour party showed itself to be still so disunited that it could not clap or shout in unison at the right points in the hon. Lady's speech.
The hon. Member for Peckham sat down on the one clear note of intention that I got from her speech. She said that she would vote against the Budget. I shall begin by exploring precisely why we are not having a vote against VAT on fuel after the scandalous campaign that was run throughout the summer.
I have been puzzled, because I had expected a vote on VAT on fuel. I thought that the Labour party, the Liberal Democrats or others of our critics would raise the matter. At various times, I have discussed with my hon. Friend the Member for Berkshire, East (Mr. MacKay) and with my right hon. Friend the Chief Whip the position on that vote. I am glad to say that I satisfied myself that just as we won the vote in the previous Session, we would win it comfortably again.
But no vote has been called. We have reached the end of the argument about VAT on fuel after an extremely irresponsible campaign, which has caused genuine fear and alarm for many poor and elderly people.
I thought that we should have some explanation of why there would not be a vote. We had an explanation this afternoon from the Leader of the Opposition, who rather puzzled my right hon. Friend the Prime Minister--he certainly puzzled me--by saying that we had so tabled the Budget resolutions that we had robbed the Labour party of an opportunity to vote. He obviously realised that his hon. Friends had chosen not to table the usual amendment to the Budget resolutions which would have paved the way for the discussion of the Finance Bill, which we all thought would happen.
There can be no doubt about the matter. I cannot believe that a mistake has been made by the shadow Treasury team. I believe that there was a conscious decision that this issue, having been given a whirl in the autumn, should now be withdrawn, as it has in effect been withdrawn by the decision this evening.
I wrote to the shadow Chancellor, so it is no good his looking embarrassed. He knows the position perfectly well. I wrote to him the usual explanatory note on the Ways and Means resolutions, which made the position quite clear. He had only to get to paragraph 2 to see that he had to table an amendment to the first resolution if he was to pave the way for the discussion of the Finance Bill which he wanted.
Mr. Gordon Brown : Will the Chancellor, with his expertise in detail, tell us the effect of voting against the first resolution this evening, as we are pledged to do?
Mr. Clarke : What exactly did the Leader of the Opposition have in mind when he said that we had
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obscured the resolution? The amendment, as he knows, has no practical effect on the law. It is the paving amendment for the whole general debate on the Budget.The hon. Gentleman has taken part in many Budget debates, and he knows that whenever a resolution of this kind is tabled--which seeks to exclude further amendments on VAT--amendments have been tabled to pave the way for VAT discussions in the Finance Bill that the Opposition told us that we were not going to have. They have not tabled such a resolution this time-- possibly because they know that we would win, as we did in the previous Parliament. They sought to pretend that there was some procedural reason why they could not do that, when the truth is that they are embarrassed by the public statements of their colleagues, not least the hon. Member for Glasgow, Garscadden (Mr. Dewar).
Mr. Dewar : Will the right hon. and learned Gentleman give way?
Mr. Clarke : I will give way in a moment.
Let us not exclude all discussion. The hon. Member for Garscadden comes forward with a tortured look. We have had a number of tortuous discussions about this throughout the debate. I am not questioning the hon. Gentleman's honour--I have never known him to be untruthful in his dealings with me. I have received his letter, and I accept his explanation of what occurred.
If the hon. Gentleman is also fair, there is absolutely no doubt that he found himself grossly misquoted, if his account is true--as I accept it is- -by Mr. Nigel Nelson in The People . There is no doubt what the original cutting means. The colour put on it by Mr. Nelson a fortnight later does not bear the slightest examination. There is a picture of the hon. Member for Garscadden, with the heading "Cash Call" underneath. It refers to VAT on fuel, and says :
" The Government has to add something on to take account of that and they could do it with an extra 50p on pensions.' "
The hon. Gentleman now comes forward with his explanation of how he came to say that, which he did not volunteer until after the Budget. He left that explanation as it was.
There is no doubt what readers of The People believed, including several of my hon. Friends--I almost said, the more eclectic and eccentric of my hon. Friends. There is no doubt what any reader of The People would believe, because the term "cash call" is quoted alongside the article. Because the hon. Gentleman believed other newspaper reports, he did not believe that we would come forward with compensation on such a scale, and he has been trying to get out of it ever since.
The hon. Member for Garscadden knows that the package that we have come forward with is worth far more than 50p a week to pensioners. In the first year, certainly, the package will be worth 50p a week to a single pensioner and 70p a week to a couple. The same again on top will be offered the year after that, and the year after that. The uprating, which includes the VAT on fuel, will be almost £2 a week for a pensioner by 1996, by which time large numbers of pensioners will be fully compensated for any change in their fuel bills, including VAT. That is why Labour's great campaign is fizzling out in such ignominious confusion.
Mr. Dewar : The essence of the charge that the Conservative party has made against me--[ Hon. Members-- : "Guilty."] No. The charge against me is that I
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indicated to The People that 50p for pensioners would be adequate compensation for the imposition of VAT on fuel. I am grateful to the Chancellor for what I think I detect, among all the verbiage, is an acceptance that I never said that.The Chancellor knows that, since the matter was brought to my attention, I have maintained that position, as has the journalist concerned. The journalist has told the Chancellor that, and has said in his copy that the Prime Minister's and Chancellor's attempts to put their interpretation on my words was a load of cobblers. I recognise that many people are used to hearing a load of cobblers from the Government. I am grateful to the Chancellor for accepting my word. I have been totally and maliciously misinterpreted during the past few days.
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