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9.29 pm
Mr. Alistair Darling (Edinburgh, Central): I thought that the Chancellor had a legal background, as indeed do I. I was interested in what the hon. Member for Blackpool, South (Mr. Hawkins) said in praise of the Budget. If he is so confident about the Government's position, one wonders why he is, as I understand, on the lookout for a safer seat, and is joining many of his colleagues on the chicken run. Clearly he does not believe that the Chancellor or the Government have done enough to make it likely that the people of Blackpool, South will return him to the House at the next election.
It was the Conservatives, not us, who said that the Budget was designed to kick-start their political recovery. But the muted cheer when the Chancellor sat down, and the look of despair on the faces of Conservative Members, told us the real story. They knew that if that was the objective of the Budget, it had failed.
I was interested to read in the Independent on Saturday something attributed to the hon. Member for Bridlington (Mr. Townend). I am sorry that the hon. Gentleman is not in his place now, but I expect that he will return. Talking about the amount of money that the Chancellor should give away, he was quoted as saying:
It is obvious what has happened today. Conservative Members have had to change their tune. They were led to believe that there would be huge tax hand-outs yesterday, so today they have had to make different speeches, in praise of alleged prudence on the part of the Chancellor.
The Chancellor has not revived the Conservatives' fortunes, because he cannot. In particular, he has failed to revive the country's long-term economic prospects. I was amused, as I suspect others were, when the right hon. and learned Gentleman said that he had half thought of entitling his Budget, "A Budget for lasting prosperity"-- but of course, we have all come to admire his sense of humour.
After 17 relaunches, the Tory party is still searching for a solution, and the Budget, like the Queen's Speech, has proved something of a damp squib. As my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) said, the Queen's Speech was supposed to smoke us out, but instead people saw the bankruptcy of the Conservative party's policies and position.
The Budget is no different. It was supposed to be designed for political purposes and to breathe life into the Conservative party, but it failed to do so. As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, the Conservatives are prisoners of their own political and economic failure. After 16 years they are running out of ideas and have no sense of direction.
The flagship of the Budget was supposed to be a dramatic cut in income tax, but when it came it was just one penny. The best that the Chief Secretary to the Treasury could say was that it was "plausible". That is
not much in the way of praise. Indeed, the right hon. Gentleman's contribution was notable for the fact that he said little about the Budget, contenting himself with making several allegations about our position, which he then had to withdraw.
There we have it--a cut of only one penny, after everything that the Government have said. Seven pence up since 1992, one penny down in 1995. And that comes from a Government who have given us 21 different tax rises since 1992. I notice that over the past three years there has been no word about the money that was taken away in tax belonging to the taxpayers. Today, apparently, only the one penny belongs to the taxpayers, not the six pence that has also been taken from them since 1992.
At the general election the Government promised to reduce taxes year on year. And they promised a recovery that would start the day after the election. No wonder people do not trust the Government, or believe a word that they say. Even after the Budget an average family is about £670 worse off than it was at the last election. What the Government give with one hand they take away with the other, and people know that. They know income tax is down by one penny, and they will welcome that partial relief, but they also know about the increased charges, the increased rail fares caused by the privatisation of British Rail and, as my hon. Friend the Member for Coventry, South-East (Mr. Cunningham) said, increased council tax.
Mr. John Townend:
The hon. Gentleman talks about an increase in taxes "equivalent" to 7p in the pound, then compares it with a reduction in the standard rate of 1p in the pound. To be consistent, if he is talking about equivalent tax reductions he should compare them with equivalent tax increases. The figures are not 7p and 1p, but 7p and 2½p.
Mr. Darling:
I am surprised at the hon. Gentleman. I thought that he was going to help clarify what he was reported as saying in the Independent on Saturday. I will not repeat it, because he obviously knows what he said to Colin Brown, the paper's chief political correspondent.
Before the Budget, and indeed in the House on many occasions, the hon. Member for Bridlington has made the point that he has felt let down by the Government putting up taxes. The 7p figure did not originate with us. We do not claim authorship of it. It came from the Chancellor of the Exchequer himself. The public know that since the election taxes have risen by the equivalent of 7p in the pound, so the Conservatives cannot really expect gratitude for giving back 1p in the pound in the meantime. [Interruption.]
I want to reply to the many points that were made in the short time available. One point, in respect of-- [Interruption.]
Madam Deputy Speaker:
Order. There are too many seated interventions.
Mr. Darling:
I think that the hon. Gentleman was one of those shouting from a sedentary position. I may give way to him later if I have time, but not at the moment.
I want to deal with a point made by the right hon. Member for South Norfolk (Mr. MacGregor). He was good enough to write to me to say that he could not stay for the entire debate. No doubt he will read what is said. He made the point, as have other Conservative Members, that a number of my Back-Bench colleagues have said things that might be interpreted as a call for further expenditure. He did that having just asked for further expenditure on the roads programme in East Anglia.
The right hon. Member for South Norfolk made that statement quite properly as the Member for an East Anglian constituency. Government Members and the chairman of the Conservative party should think long and hard about the implications of what they are doing. Are they saying that Back-Bench constituency Members cannot make constituency points in support of their constituents' position, advocating certain courses of action, such as the hon. Member for Brighton, Kemptown (Sir A. Bowden), who said that he wanted to do something with VAT on energy efficiency, like the hon. Member for Bridlington, who suggested an increase in VAT--
Mr. Townend
indicated dissent.
Mr. Darling:
Yes he did; earlier this evening he suggested an increase of 1 per cent.
Such points are legitimately made by Back-Bench Members of Parliament and it really is disingenuous for the Conservative party to interpret them as being the position that a party might take at a general election, any more than Labour Members would be correct to say that just because one Tory Back-Bencher said something, whether on the Clive Anderson show or in this place, somehow the whole weight of the party is thrown behind it. The right hon. Member for South Norfolk, who is an intelligent man, might want to reflect on the implications of what he said.
Sir Andrew Bowden:
Will the hon. Gentleman give way?
Mr. Darling:
Yes, but it will have to be the last intervention because I do not want to spoil the Minister's winding-up speech.
Sir Andrew Bowden:
Does the hon. Gentleman agree that there is a difference between an individual Back Bencher presenting a case that might have a constituency connotation or a special interest, and an impression given by an Opposition Front-Bench spokesman--without saying so but implying it quite clearly so that the public assume it--that if his party wins, it will spend more money in a particular area?
Mr. Darling:
The right hon. Member for Peterborough (Dr. Mawhinney), the Conservative party chairman, has been attributing commitments to the Labour party by listening to Back Benchers. I am sure that the Government would not claim that what the hon. Gentleman said this evening, or indeed what the right hon. Member for South Norfolk said, was Government policy. Unless we expect Members of Parliament no longer to advocate the interests of their constituents in this place--where after all they ought to do it--we should think long and hard about the consequences of the comments of the right hon. Member for South Norfolk.
As my hon. Friends have said, the Government's Budget was no surprise. The Chancellor's room for manoeuvre was restricted. Public borrowing is higher than forecast--this year it is £29 billion and forecast to move upwards in the next three years. There is slower growth and the Chancellor tells us that he thinks that there will be growth of some 3 per cent. in future. No wonder he is straining credibility.
Of course a great deal is perilled on this high growth. If next year the Chancellor is going to be able to mount a giveaway Budget--there will be pressure from Conservative Members on him to do so--that promised growth will have to be delivered. However, the record does not suggest that he is likely to be successful. The Chancellor wants us to believe that next year will somehow be different from past years. We have had higher inflation than the Chancellor predicted and the current account deficit is worse this year than he predicted.
Investment--the future for long-term sustainable economic growth--has of course been cut. There are some things that we do welcome, such as the move to simplify tax, but we think that the Government should do more to prevent tax evasion and to close tax loopholes.
I welcome the Chancellor's move to clarify and improve the position with regard to share ownership. We believe that employees should be encouraged to have a stake in their firm and that such a stake should be open to everyone from the boardroom to the shop floor. However, shares and options should be given as a reward for success. They should not be granted in anticipation of success that may never come, and they should encourage saving.
We shall have to see what provisions there are in the Finance Bill, but it would be wrong for us not to welcome the fact that the Government have moved in a direction that we have advocated for much of the last 12 months. I am only sorry that the Government have done nothing about the abuses that are happening in the boardrooms of the privatised utilities.
We welcome the promotion of saving and what the Chancellor had to say on that. I listened to the Chancellor yesterday and I thought that I was listening to my hon. Friend the Member for Dunfermline, East, who made exactly the same point some weeks ago. We wish to build on the PEPs experience and to create specific instruments that will encourage people to save in the medium and the long term.
We welcome what the Chancellor has done with regard to the excise duty on Scotch whisky. It is, however, to investment and the private finance initiative that I want to return since the Government have set so much store by it. The fact is that the PFI has never taken off. We have always supported the principle of the PFI. The deputy leader of the Labour party, my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), was the first to float that idea before the last general election. He was denounced at the time, and then the Government promptly accepted much of what he had said.
There are two problems with the PFI. First, it has been strangled by bureaucracy and by red tape. Every capital project has been channelled through the system, which has clogged it up. Secondly, the Government have never set a list of priorities. In 1992, the Government published a list that included 78 projects, ranging from the west coast main line upgrading to the car park at Eastbourne hospital. The private sector had no idea where the Government's priorities lay.
Two things are striking about the Government press release that was issued yesterday. First, the Government have accepted that there must be some degree of prioritisation and said that they will publish an illustrative list. In fact, 1,400 projects have appeared today with an A or a B against them. The Government have to do more to indicate their priorities as between projects that have a major strategic interest and those that have a lesser interest in relation to a national strategy. The private sector has told us and anyone who is prepared to listen that the great difficulty is that it has no idea which projects the Government are likely to favour and which they are not.
The Government's attachment to right-wing dogma has meant that they have privatised the decision-making process. It is for the Government to give a lead and then invite the private sector to contribute. If they did that, there would be a better chance of seeing more projects get off the ground and under way. Once we saw some projects get off the ground, more would follow.
The second interesting thing about the Government's press release yesterday is that they promised a further
£14 billion of investment by 1998-99. Of course, that includes the £5 billion promised last year. Little of that
£5 billion has found its way into agreed projects which have started. We are entitled to take with a degree of scepticism the Government's commitment that the PFI can take the place of public investment. It is planned that Government investment in the public sector will fall by almost 18 per cent. between this year and 1999. That is on top of a cut of 7.2 per cent. in real terms in the past three years.
Government direct investment in the national health service will be cut in real terms by 27 per cent. in three years. Given the lack of progress in the PFI, people are entitled to ask how the Government expect it to take the place of public investment. When the PFI was originally launched, it was suggested that it would represent additional investment. The clear lesson of what has happened in the past few years is that the PFI is not additional investment but a substitute for public sector investment. It is not even that, because little of it is getting off the ground. If the Government prioritised the projects that they would like to see get off the ground and broke down some of the bureaucracy and red tape that is created, some real progress would be made.
Indeed, anyone wanting a clue as to what is going wrong need look no further than a press release put out by the Secretary of State for Education and Employment which said that "too few people" knew how to exploit the initiative to its full advantage. That was why, the release continued, the right hon. Lady's Department had
"established a hotline" on the matter. So, the people
who brought you the coneline now bring you a new hotline to try to get the project off the ground. The Government really need to do more.
The projects are a matter of choice. In health, the Government are spending £1 billion a year on bureaucrats, and not on front-line care. Why does a hospital need a press officer? In education, the Government have chosen to double the assisted places scheme instead of using the money to cap class sizes below 30.
The hon. Member for Gordon (Mr. Bruce) is not in his place, but it would be wrong of me not to reply to his point about his party's position on the Government's reduction in income tax and how that relates to education. I take with a great big pinch of salt what the Liberal Democrats have to say on this, as in all other matters. They are the people who said that the top tax rate should be 60p, and then said a week later that it should be 50p. They said that a penny should be put on tax for education, but then said that they would consult about it. They later said that they would make that tax increase if it was necessary.
"At £10 billion I think that we would win the next election, at about £6 billion we could be in with a chance, but if it is only
£2 billion or £3 billion we can forget it."
Right on cue, the hon. Member for Bridlington has walked back into the Chamber.
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