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Mr. Hugh Dykes (Harrow, East): Before that exchange on the NHS, my right hon. and learned Friend referred to the extremely encouraging signs of a reduction in the deficit and the rise in tax revenues, but he said that the rise in those revenues was somewhat slower than expected. Is it not even more encouraging that, by the end of the fourth quarter this year, the rise in tax revenues will accelerate, so the deficit will come down even faster?
Mr. Clarke: That should happen, but we have to set policy just to ensure that we deliver sound public finances, because that is necessary to ensure the continued growth of the economy and the healthy state of affairs I have described. Of course, if those revenues accelerate the recovery, we will be able to keep our commitments to the great public services--that we Conservatives ensure that the real economy creates the wealth first and then we devote it to those great public services.
The revenues are rising, although our intention is to lower taxation because we believe that that, too, is essential to the growth of the real economy.
Mr. Gordon Brown:
Those are exactly the statements that the Chancellor and his colleagues made in the early 1980s. Can he now explain to us why it is that the share of national income for public spending is exactly what it was in 1979, and why people are paying a higher share of their income in tax than in 1979? Why, with all the right hon. and learned Gentleman's great statements, has the action been exactly the opposite of what he and his colleagues have said?
Mr. Clarke:
The proportion of GDP is almost exactly the same in both cases, as the right hon. Gentleman has said, but as my hon. Friend the Member for Dover has already said, when Labour left office there was a huge unsustainable level of Government borrowing on top of taxation, which we had to tackle. That is why taxation reached its peak in 1981, as we sorted out the mess that Labour had left. Now, the level of taxation and that of public spending is far below those of 1981. We have maintained those levels, whereas they have risen much higher in the rest of western Europe, both as a proportion of spending and as a proportion of taxation taken by the state.
We have a Government who are plainly on course to reduce the burden of spending and the burden of taxation and we have clear, measurable commitments to do so. We
are faced with the threat of a return to a Labour Government of high spending, high taxation, high public borrowing and pressures upon them, of which we have just heard from the hon. Member for Renfrew, West and Inverclyde, which will ensure that they will take us right back to the kind of mess we had in the late 1970s.
Mr. Brown:
If all the problems were caused in the 1970s, why is it that, since 1992, we have had the biggest peacetime rises in taxation in our history?
Mr. Clarke:
What we have had since 1992 is the fastest growth in western Europe, a huge fall in unemployment and a recovery that is combined--[Interruption.] The right hon. Member for Dunfermline, East may wish to wave away the measures that created the current economic conditions. It is true that we have got where we are today with no thanks to the Labour party, which has fought every essential measure that we have taken to take this country from recession to recovery. As far as I can see, the Opposition would fight them still and would take us back to recession again.
We are committed to our 20p standard rate of taxation on income tax and people believe us. We are committed to the abolition of the inheritance tax and capital gains tax. People trust us to deliver that because they see our record. The Labour party, certainly on the strength of the speech we have heard today, is not capable of being trusted with any of those measures.
I keep challenging the Opposition, and I have had some success this afternoon, to come clean and to level with the people. Labour should have a serious debate with us about Labour's tax plans, Labour's inflation targets and Labour's views on interest rates other than just responding to the day's news. How about some openness? How about some honesty from the Labour party about precisely what its approach would be to the real economy if it got into government?
Mr. Terry Lewis (Worsley):
Honesty?
Mr. Clarke:
Well, it is no good the Leader of the Opposition talking all his empty pious phrases at the Labour party conference. The one memorable thing I can recall from the right hon. Gentleman's conference speech was his amazing phrase about a covenant with the British people. That strikes me as a bit of a crib from Newt Gingrich for a change--the contract with America put into slightly more Scottish language. It is a rather odd time to switch from cribbing from Bill Clinton to cribbing from Newt Gingrich. Instead of tub-thumping sermons from us, one gets decisions today. Instead of messianic waffle, one gets the results that I have described, and that speak for themselves, and they are not challenged by what the right hon. Member for Sedgefield (Mr. Blair) said.
The threat to our position lies with the right hon. Member for Dunfermline, East and his friends. Labour needs to tax more as night follows day. It needs to tax more to pay for the new spending to which it is now committed.
Let me quote from the conference speech of the right hon. Gentleman. In the course of one speech--not one he has repeated here yet--he promised nursery education for all and universal education for all after the age of 16 and he said that he would make available accessible and
affordable child care. He said that the benefit tapers must be addressed. He said that the Labour party would implement the social chapter. He talked about creating regional development agencies and introducing, by law, a statutory minimum wage. They are only some of the things that he promised in his speech in front of his party's supporters.
The right hon. Gentleman would not be tough on public spending--he is a soft touch on public spending faced by lobbies from the Labour party. What chance is there that he will control his colleagues when he cannot even resist the temptation to make expensive promises himself? He is like every other Labour politician: they go into politics to spend more, that is what they do, and it is in their blood.
Today, we have had enough of the Opposition's changing policy on VAT and fuel. What about the 10p starting rate of income tax about which the right hon. Gentleman has not risen to answer any questions? At the time, it struck me as sheer desperation--an attempt to outbid a tax-cutting Government with a totally incredible and wildly expensive commitment of his own--£9 billion-worth of desperate electioneering promise. The right hon. Gentleman may shake his head. I accept that he was helpful a few moments ago, although I do not remember any particular answer to any question we asked about the windfall tax, much as my hon. Friend the Member for Dover and I tried.
Let me try the right hon. Gentleman on the 10p rate. They are straightforward questions, and he might have thought about just some of them already. Will it apply to everyone paying tax at the 20p rate now? That is a quarter of all taxpayers. If not, will it apply to half those who are paying the 20p tax? [Hon. Members: "Come on, answer."] Will it apply to the first £1,000 of income liable to tax? There is no point in the right hon. Gentleman making taxation pledges and then being utterly unable to answer questions about a proposition that would cost billions of pounds.
There is only one 10p tax that we know for certain the people would get from Labour. It is the extra 10p on the top rate of tax that the right hon. Gentleman and his colleagues want and which the right hon. Member for Sedgefield will not allow them to talk about. Who will pay the 50p rate and at what level will it start? Who does Labour regard as the wealthy who will make this contribution to its spending plans? The right hon. Gentleman is supposed to be disagreeing with his colleagues on these matters, but I do not understand how they can have disagreements when they have no policies or when no details have been worked out. How have they moved to that elevated state if none of these points can be answered?
We have had a go at the tax on utilities, the so-called windfall levy. [Interruption.] There is no point in laughing. What is difficult about a question as to whether it will apply to telecommunications or to Scottish water as well as to English water?
Mr. Gordon Brown:
Scottish water?
Mr. Clarke:
They are all privatised, but not Scottish water. Scottish electricity generation is privatised. The right hon. Gentleman has said that he will not impose the levy on non-privatised Scottish water. That is good. Let
What about the London tax? A new Greater London authority is to come back with tax-raising powers. Are the people of London to have a referendum on that? Will they be told how much it might cost? What about the telecommunications tax to pay for the network? The Labour Front-Bench spokesman was careful in describing that because he said that it was not a tax but would be a modest percentage paid by subscribers to the telephone network. If they pay that modest percentage without a choice at the demand of a Labour Government, it will be a tax, and it will be paid on top of whatever amount the windfall levy produces.
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