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Mrs. Beckett: The Secretary of State draws to my attention the word "hope"--and no doubt also the word "aim". I believe that it is clear to all of us that words in the mouth of Ministers in the present Government mean nothing, and that is one of many examples--as is the word "promise".
However, one thing that is also clear is that that further impost on the Post Office, taking as much from it in the next three years as the Government have taken in the past 10, will have two effects. First, it makes an early increase in postal charges almost inevitable--a Tory stamp tax on the ordinary people and the businesses of the country. Secondly, it means that much-needed investment in the Post Office will have to be shelved. It also probably renders the Post Office open to competition from elsewhere in the European Union.
Most commentators say that this year's was a neutral Budget. Some give the Chancellor a feeble cheer for not going more blatantly for cosmetic tax cuts, but it was a cheer that he did not deserve. We know that, on the latest Red Book forecasts, the total tax burden as a proportion of gross domestic product continues to be planned to increase until the end of the century. We all know that in April next year a typical family will continue to pay £670 a year more in tax than it did when the Conservatives were re-elected in 1992 on a platform that promised overall tax cuts. They did not aim, they did not hope, they promised tax cuts, and then delivered 21 tax increases, equivalent, as the Chancellor has acknowledged, to 7p in the pound on the basic rate of tax.
It is forecast that the public sector borrowing requirement, the deficit in the Government's finances, will be down to about £22 billion next year. Last year, the Chancellor said that it would be below that by now. Growth was forecast to reach 2.75 per cent. this year and 3 per cent. next year. Last year, the Chancellor promised that it would be higher than that by now. Meanwhile, back in the real world, year-on-year growth is running at around a meagre 2 per cent. Last year, the Chancellor forecast investment growth at 5.75 per cent.; now he says that it will be 1 per cent. Growth is down on his forecast, and so is investment. What is up on his forecast? Inflation, the trade deficit, the balance of payments deficit and the deficit in public finances--the public sector borrowing requirement. That is all part of the Government's record.
What are the Government's present intentions? Before the Budget, the CBI said that we needed a Budget for investment--a Budget to promote investment in industry, and to sustain investment in education and training. It also
said that what we did not need was a Budget in which cuts in income tax were offered at the expense of investment in infrastructure.
Mr. Tim Smith:
The CBI welcomed the Budget.
Mrs. Beckett:
The hon. Gentleman says--from a sedentary position, no doubt exercising due caution--that the CBI welcomed the Budget. Indeed, the CBI put out a very balanced press release. I think the Secretary of State said that it had given the Budget a warm welcome; that is going a bit over the top, although it does use the words
"we welcome". It also says:
The Minister for Trade (Mr. Anthony Nelson):
What are the Opposition's proposals?
Mrs. Beckett:
I would be grateful if the Minister for Trade would be quiet. He knows perfectly well what our proposals are; in fact, the Secretary of State spent some time attacking them in his speech.
Mr. Lang:
The right hon. Lady has missed out one or two points in the CBI's press release. It welcomed
Mrs. Beckett:
The Secretary of State is unduly defensive--perhaps revealingly defensive. I made the very point that this was a balanced press release that welcomed many elements in the Budget; I then drew attention to the reservations expressed by the CBI. The right hon. Gentleman knows perfectly well which are the most important points. I am dealing with the measures that the CBI called for--and the right hon. Gentleman is well aware that it was given none of those measures.
Last year, bodies such as the CBI, the chambers of commerce and the Engineering Employers Federation called on the Chancellor for significant capital allowances to stimulate investment in new plant and machinery. This
year, those bodies called on him again for such capital investment. They got zilch. The Secretary of State was too busy telling the CBI that it was its duty to come to the rescue of the Conservative party--to remember whose side it was on, as he so gracefully put it--to worry about helping it to come to the rescue of a faltering economy.
Both the Chancellor and the President of the Board of Trade are fond of quoting figures to the effect that investment has increased substantially over the past year; but that one-year increase is quoted to disguise how low is the level to which investment has been flattened under the present Government. In fact, total investment in 1994 was more than 10 per cent. below its level in 1989, before the recession.
The share of the economy taken by investment has fallen for six years in a row. The average level of investment between 1979 and 1993 as a share of the economy has been the lowest in all the 18 countries of the G7 and the European Community. As the Bank of England pointed out this summer, investment is 20 per cent. below the level that it reached in previous recoveries. I refer to investment in general, to support for investment of the kind sought by the CBI and to investment in education. The Budget told us that funding for education would be as much as local authorities are spending this year, and that there would be cuts in funding for further and higher education and training, including funds for training and education councils.
Nor have the Government protected investment in infrastructure, as the CBI requested. They have savagely cut their own investment, public sector capital spending, with cuts amounting to £3.9 billion by 1997-98. With typical sleight of hand, they have implied that the private finance initiative will fill the gap. It has not so far, and unfortunately it probably will not do so in the future. The Government have already cut their own investment by about £2 billion, and over the same period the private finance initiative has raised only about £500 million. Already, we have a net reduction of £1.5 billion in investment in infrastructure.
Mr. Nigel Forman (Carshalton and Wallington):
It seems a long time ago, but I seem to remember that the right hon. Lady was a Minister in the last Labour Government. I believe that she was there at the time when the Labour Government cut various forms of public sector capital expenditure by more than any other post-war Government. Does she repent?
Mrs. Beckett:
The hon. Gentleman was clearly not awake when I gave the figures for the investment funds that have been available to the present Government. Yes, I do regret the fact that the last Labour Government could not proceed with all their capital spending programmes-- although what the Government say about that, like so much of what they say, is often completely untrue. The Secretary of State said, for example, that investment in water had been cut. That is not true. The plans that we hoped to implement were not entirely fulfilled, but investment was not cut; indeed, it rose under the last Labour Government. I suggest that the hon. Member for Carshalton and Wallington (Mr. Forman) check his facts.
"Public borrowing is higher than we had hoped for . . . We will need to see the details to assess this"--
the public capital expenditure cut, that is--
"in full."
The CBI also says:
"it is vital that the resources available for . . . transport . . . education and training and export support are at least maintained . . . the Private Finance Initiative is coming on stream too slowly to make up for the cuts in public capital spending in the Government's present plans."
I would not call that a warm welcome.
"the fact that the Government has broadly stuck to the prudent economic line"
that it had recommended. It was
"pleased that the Chancellor appears to have limited tax cuts to reductions in spending and resisted the temptation to go for excessive tax cuts."
As for public borrowing, the CBI was
"satisfied that it still appears to be on a downward path."
It welcomed
"the priority the Chancellor gave to education spending".
In the tax reductions, it was
"pleased to see some specific measures such as help given to small businesses".
As for personal taxation, it stated:
"we welcome the raising of thresholds and the broadening of the 20 per cent. band."
I think that that is a pretty warm welcome.
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