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Mr. John Prescott (Kingston upon Hull, East): We initiated it.
Mr. Blair: It should not be manipulated to cook the books of public finance.
Some of the capital spending that is all to be transferred to the PFI will not be replaced--there can be no guarantee of that. The PFI is a concept about financing, it is not a commitment to finance projects.
If the Government want to do something for the housing and construction industries, they could take up our proposals and phase the release of the capital receipts in local authority accounts to get some houses built for the people.
The PFI may save a capital sum this year if that capital money is removed from the Government's account, but in future years the taxpayer will face a recurring liability. That is why it is a classic example of giving with one hand and taking with the other. [Hon. Members: "That is not true."] Hon Members may deny it, but that is precisely what will happen.
The Government envisage that, instead of the public sector financing the construction of a hospital or a prison, the private sector will build it. It will then lease it back to the public sector, but, at the end of that period, recurring charges will be levied on the project. The same could be said about the married quarters held by the Ministry of
Defence. The transfer of those assets gives the Government the appearance of having taken tough decisions, but a cost and liability will fall on the public sector in future years.
We will not support anything in the national health service that is a back-door route to privatising clinical services. If the Government want to get health spending down, they should reduce the bureaucracy that they have created in the NHS.
Welfare bills are the true bills that have risen. There has been remarkably little change in the overall level of spending, but there has been a remarkable change in the composition of it. We now spend about as much on housing benefit as we once spent on housing investment. One in three families are dependent on welfare; one in five non-pensioner households have no working member; and young people, who will often be roaming the streets with nothing to do but crime and mischief, have never worked--some at the age of 25. If we are to deal with those issues, we need to take firm action.
The Chancellor has opposed a windfall levy on the privatised utilities for one simple reason--they are the vested interests of the Tory party, and the Government dare not challenge them. Excess profits have been made. A few days ago, the National Grid was sold. It was worth
£5 billion, but it was sold for £1 billion. Half the water companies pay no mainstream corporation tax. The electricity companies have made record profits, even at the height of the recession.
The case for taking on those vested interests and funding a decent education and employment programme for our young people was overwhelming, and it should have been adopted. If that had been done, we could have made a real attack on the root causes of higher welfare bills under the Conservative Government--higher unemployment, higher social decay and higher social breakdown. Many of those young people who have been in that situation for years looked for something from the Budget, and got nothing.
Mr. Tony Marlow (Northampton, North):
Will the right hon. Gentleman give way?
Mr. Blair indicated dissent.
Mr. Deputy Speaker:
Order. It is quite clear that the Leader of the Opposition is not giving way. While I am on my feet, may I say that I would be grateful if the hon. Member for Gravesham (Mr. Arnold) would desist from making sedentary interventions.
Mr. Blair:
There were three aims that the Budget had to fulfil. If it was to succeed and to be anything more than a makeshift in the days of a dying and decaying Government, it had to tackle those fundamental problems of the British economy. It had to raise investment and skills, and it had to tackle the problems of social division and the lack of social cohesion that have so harmed this country over the past 16 years. Nothing of that sort was proposed.
The only anxiety ever betrayed by Conservative Members was when the Chancellor spoke about taxes. That was the only time they showed any interest, and the only time even a flicker of concern for anything more than themselves came across their faces--except, of
course, that that concern was not for anything more than themselves, because it was their own skins they were interested in.
What was extraordinary about the Budget speech was that it gave no sense of a great strategic vision for the country's future. There was nothing--no all-encompassing horizon of achievement for this nation. The Government have given up trying to steer the ship of state, and are simply looking for the nearest lifeboat to climb into. Government Members have truly had enough of power; they cannot exercise it in the public interest any more--people know that.
Mr. Paddy Ashdown (Yeovil):
Unless my judgment is wrong--and it is shared by all my right hon. and hon. Friends--one of the curious aspects of the Chancellor's Budget was that it received more welcome for some of its smaller measures from the Opposition than it did, overall, from Conservative Members. That is a measure of the Budget overall.
Even what the Chancellor did in terms of cutting some taxes was done--as he well knows--at the risk of gambling irresponsibly in the long term with the country's economy. The tax cuts that he gave--particularly the basic cut in income tax--were done by a simple sleight of hand. He achieved those cuts by extending the borrowing, which he knows is sensible and right for this country, over the long term. I shall return to that subject.
It should have been a Budget to save our schools but, instead, it was designed to save seats for the Conservative party. We have heard the last shot in the Tory party's locker. That is it--there is nothing more. The Government's message in the Budget was simple and brutally clear: "Please can we buy your vote for a 1p cut in income tax? We have nothing further to offer you, but we believe that that will be enough to fool you into voting for us again."
In deciding how to respond to that offer from the Government, the people of this country might do well to remind themselves of an old Russian proverb which is clearly borne out in this Budget: free cheese comes only in mousetraps. The Chancellor of the Exchequer has just made that offer to the country.
The Government seem to think that they can fool the people of this country once again, just as they have done in the past. They think that we are fools and will not notice that they said last year that the economy was so bad that they would have to make record tax rises, but,
although it is even worse this year, we can now have tax cuts. They think that we are fools, and will not remember that they pulled that trick last time.
The Government produce tax cuts to buy votes before the election; after the election there will be job losses, home repossessions, higher mortgages and broken businesses, as the British people have to pay for the tax promise. The Government think that we are fools, and will not notice that the lower taxes that we are given today are but a fraction of the higher taxes that they have taken off us in the past two years.
The British people will not be conned by the Budget. It is a Budget not for Britain's future, but for the Conservative party's survival, and it will not work. It is not a Budget for securing the country's long-term future, but for saving Conservatives' skin. We know that from no better source than the Chancellor himself, who in this House last July said:
Mr. Kenneth Clarke indicated assent.
Mr. Ashdown:
The Chancellor was right, and I see that he assents to that proposition now. But last year, borrowing was only £1 billion above the Government's target; this year, it is £9 billion above the Government's target, according to the Chancellor's estimates. Those estimates have always been wrong in the past, and I bet that the figure will actually be higher in the outturn. If, according to the Chancellor, borrowing is taxation deferred, the Budget is taxation deferred until after the next election.
The Budget combines cynicism with irresponsibility. The Tory party has shown itself to be the party not only of devaluation and high borrowing, but of economic irresponsibility. The Chancellor's figures show that the economy is now growing at half the rate that it was last year. Inflation is growing outside the targets. Borrowing has long ago bust the Government's set targets. It is worse: the Chancellor has extended the borrowing targets for next year and the year after, in order to have money for tax cuts this year. The Chancellor's proposition to the country is to live now and pay later.
Last year, the Chancellor said that the PSBR for next year would be £13 billion. In fact, it is going to be
£22.5 billion. Last year, the Government predicted that the PSBR for 1997-98 would be £5 billion. The Chancellor's figures show that it will be £15 billion. But, despite that, the Chancellor of the Exchequer is prepared to gamble his own reputation and the sound management of the nation's finances simply to purchase Tory votes at the ballot box.
For what? The Government have nothing further to offer the country, and nothing further to say to the people of this country. They have exhausted their ideas and energy, and they long ago exhausted the patience and trust of the people of Britain. If they gained power again, they would not have a clue what to use it for, except for themselves.
The Chancellor knows perfectly well the Budget that he should have introduced today; he knows what he should have said. He should have introduced a Budget for education and for the country's long-term future. He would have done himself and his party much more good if he had the courage to introduce such a Budget.
The Budget should have said to Britain: "We want lower taxes, and we want you to have them, but lower taxes must be earned, and Britain has not yet earned them." The Budget should also have said, "This year, low interest rates and investment in our future are more important than low taxes. Therefore, this year we shall invest in people's skills for long-term economic success, and we shall cut borrowing and interest rates to sustain recovery and create more jobs."
Above all, this should have been a Budget for education; but it was not. Last year's Budget led to cuts in schools amounting to more than £700 million--£50 less in education expenditure for every primary school pupil, and
£200 less for every secondary school pupil. As a result, 5,000 teachers were sacked, there was a one-third increase in classes of over 40 pupils, and thousands of schools used up their last precious reserves. One in eight of our further education colleges is now severely in debt, and the long-term survival of many may be threatened.
The figures will show that this year the Government have not even restored last year's cuts. Of the £870 million,
£500 million will go on inflation alone. Another
£120 million will go on doubling the assisted places scheme, and another £100 million on the Government's misguided and misplaced voucher schemes. The money is gone--and that does not even account for how it will be generated. Will it be the Government's money, or local authorities' money? I predict that this Budget will do nothing to improve the dangerous, devastating condition of schools and education.
It is, above all, our children who will pay the price of the tax cuts. It is their future that will suffer, so that the Tories can dangle a tax bribe before an electorate whom they believe to be stupid and gullible.
It was with some sadness that I heard the comments of the leader of the Labour party, who said that the Liberal Democrats could not be trusted in taxation matters. Year after year--and this year--we have produced an alternative Budget: we have said how we would pay for what we wanted to be done. Labour has never done that.
This year, Labour Members have been full of comments, attacks and criticism, but they have not said what they would do. They have come up with no alternative Queen's Speech, and no alternative Budget. That is not the way in which to win the trust of the people. It is easy to criticise the Government, but the time for
"oppositionism" has passed; the Opposition should be saying what they stand for.
Moreover, it appears from what the leader of the Labour party told us today--although he dealt with this item rather quickly--that Labour will abstain in the vote on the 1p cut in income tax. Is that the best that Labour can do? Why will its members abstain? Over the weekend, the leader of the Labour party said that the Budget must pass four tests: honesty, sustainability, employment opportunities and fairness. As his own speech demonstrated, it did not pass one of those tests. What is the right hon. Gentleman waiting for?
How can the Labour party claim to be strong enough to look to the country's long-term interest if it cannot find the strength to vote against a tax cut that is designed for the short-term interests of the Conservative party? How can Labour Members say that they would put education first if they were in government, when they are not prepared to do so in opposition? If Labour will not vote
against a tax cut that puts the Tory party before the country, why should we not conclude that it would put the Labour party before the country if it were in government?
I have a good deal of personal admiration for the Leader of the Opposition, and a great respect for the things that he has done. He is not in his place at present, but let me tell him that, if his party joins the Tories in this crazy competition, this auction of fantasy tax promises--
"anything you can tax, I can tax lower"--the people who will suffer most are the poor, the deprived and the dispossessed, and the thing that will suffer most is the cause of progressive politics. We have seen the depth of the Government's cynicism today, and the depth of their irresponsibility; but the way in which Labour will vote will tell us about the depth of its timidity in the face of a general election that is only a year away.
In 1988, my party voted against tax cuts introduced by the then Mr. Lawson. My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who was then our Treasury spokesman, was alone in warning that those tax cuts were irresponsible, that they would damage the country's finances, and that they would have to be paid for by ordinary people in the end. He warned that the Budget was "unfair and unsound". That was not a popular or an easy position to take, but it was the right position.
"borrowing is actually taxation deferred."--[Official Report, 12 July 1995; Vol. 263, c. 979.]
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