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8.9 pm

Mr. Alan Duncan (Rutland and Melton): The beginning of the debate was enlivened by the barnstorming performance of my right hon. Friend the Secretary of State for Health and I congratulate him on routing his opponent.

The danger of any debate on the Budget is that one tends to go goggle-eyed on the details. It is important not merely to bandy figures about, but to remember the direction in which we want to go and to ask whether the Budget fits in with that. As I have always argued in Budget debates, in the long term I want a smaller state, with less Government spending and lower tax. That is inevitably a gradual process, but we are getting there and it is essential for economic prosperity that we should do so.

I came into politics because, during the 1960s and 1970s, I was angered by this country's continuing economic decline. If it were not for successive

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Conservative Governments, we would be declining still. The Thatcher years did much to arrest and, indeed, to reverse that decline and the early 1980s saw the building of solid foundations.

As I have said before, in the late 1980s we made some mistakes. We shadowed the deutschmark and lost control of the money supply at the same time as we deregulated the City. The boom that followed, when added to the problems caused by the world recession, turned into bust. At every stage, the Labour party's demands would have made the situation worse and compounded the difficulties. Nevertheless, we made some mistakes. It is abundantly clear that we have learned from them and I applaud the Chancellor's policy that we shall have no return to boom and bust.

Our economy is better than that of Germany. The hon. Member for Sheffield, Attercliffe (Mr. Betts) referred to that fact, but refused to admit it. That is what we have been striving to achieve since the war and the risk is that it all could be thrown away. The issue is: just when the policy is right, will democracy support it? In the past, Governments have been tempted to buy votes and debase the coinage to do so, but we are not doing that and at this crucial stage, we deserve support and recognition.

The only problem is that the Labour party has debased the debate. The Opposition double-pledge everything, talking about financing mass unemployment as if stopping unemployment pay would suddenly put everyone in a job. They talk about stopping assisted places and raising standards in primary schools, forgetting that those pupils in assisted places would have to be educated in the state sector. They talk about a windfall tax as a one-off tax that would have to support payments for a continuing flow of services. One of the first lessons that one learns in economics is the difference between stocks and flows. In contrast, this Budget deserves support because it is virtuous.

Good Budgets are rarely exciting. Removing Labour's excessive taxes in the 1980s was exciting. Removing exchange controls was exciting. Most Budgets, however, are boring accountancy and, like grandmother's footsteps, they just edge forward.

I confess that there is one excitement that I should like to have seen in the Budget--the total abolition of inheritance tax for 1998-99. The hon. Member for Sunderland, North (Mr. Etherington) said that only 14,000 people pay inheritance tax. The rich do not pay it because they have schemes to help them escape it and the poor do not pay it because they do not break through the threshold. Only middle England, middle-income earners and the middle classes pay the tax. It is inequitable and has become archaic and I look forward to the day when the Government can deliver on their policy and abolish it.

The main parts of the Budget were measured steps forward: income tax down to 23p, fine; thresholds raised above the rate of inflation to help the lower-income earner, fine; and borrowing continuing its measured decline, fine. I particularly welcome the fact that we are aiming towards a figure of below 40 per cent. of gross domestic product for spending.

The structure of the Budget is a fairly fine judgment call. On the macro side, there is a risk of some pressure on interest rates in the months ahead, but not because of the price of sterling, as it is rising. House prices in the

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south-east increased by 6 per cent. in the last quarter, so certain pressures are working through and we must beware an excessive consumer boom.

On the micro side, we have done some things that will help people. The rent-a-room allowance has increased from £3,500 to £4,500 and that is an especially good measure for the increased number of students in higher education who are looking for accommodation during term time. The single parent allowance has been removed. My right hon. Friend the Member for Selby (Mr. Alison) welcomed that. Increasingly, the maintenance payments of the Child Support Agency have taken on the purpose of that allowance.

We have made a significant change in the taxation of long-life assets. Instead of giving a 25 per cent. break, assets that will last more than 25 years are now given only 6 per cent. That has effectively introduced a new tax regime for the utilities, which are a completely new industrial sector that was previously nationalised. The change is not retroactive, but looks only forward and is, therefore, fair. It makes the Opposition's windfall tax an absolute impossibility, however. The shadow Chancellor will have to come up with new schemes, explanations and, perhaps for the first time, some real figures to explain what that tax would really mean.

I approve of the private finance initiative. I like the idea of private industry financing extra projects that the state would not perhaps want to take on. I have one slight word of caution. We have to watch its scope. Where the Government remain the long-term source of revenue for a privately funded project, it is more of a mortgage than a new source of finance.

I looked with some puzzlement at the plans to turn half of the Treasury building into office or hotel accommodation. I am slightly puzzled by the economics and I hope that I will be allowed to retain a scrutiny reserve on those plans.

I am tempted to speak at some length and in some depth about the convergence criteria, but I will resist the temptation. Suffice it to say that they are a good thing because they are orthodox and sensible economic discipline. I welcome them for that reason, but that reason alone.

I studied carefully and watched and listened to Opposition Members speaking in the debate. The Leader of the Opposition said:

That was a fatuous observation. The right hon. Gentleman offered no solutions. He pretends to want to cut welfare spending, but implies to interest groups that he would spend more on them. Of course, the more that one spends, the more people become dependent on what one spends.

The remark compares with those of the right hon. Member for Yeovil (Mr. Ashdown), the leader of the Liberal Democrats, who said:

That strikes me as being a part of the battle of insults. We have all become tired of the Liberal Democrat leader setting rules and standards for others that he is not prepared to meet himself.

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The hon. Member for Newport, East (Mr. Hughes) said

I assume that he was talking just about men, but even if he were talking about men and women, it was an interesting observation, because I have asked the Opposition spokesmen whether the Labour party would revise the method of calculating the number of unemployed. If the hon. Member for Bolsover (Mr. Skinner) says that there are 4 million people unemployed, are we to take it that if a Labour Government came to power, they would immediately announce that there were 4 million unemployed people in Britain? I doubt it somehow, but unless they said that they would do that, their charge is inconsistent with their own thinking.

The hon. Member for Falkirk, West (Mr. Canavan) said that he wanted spending on education to go up from 5.1 per cent. of gross national product to 5.4 per cent. He said that it was 5.4 per cent. under the previous Labour Government. At least the current education budget is 5.1 per cent. of a growing economy; in 1978, 5.4 per cent. of a collapsing economy was not up to very much. As Alan Fisher, a Trades Union Congress leader once said at a TUC conference during a debate on pay norms for the low-paid:

they used that word then--

    "5 per cent. of nothing is"--



In fact, he did not say "damn", but I will spare your blushes, Mr. Deputy Speaker. The fact is that a smaller share of a bigger cake can amount to a lot more than a bigger share of a smaller cake.

The hon. Member for Bradford, South (Mr. Sutcliffe) said that he wanted to spend money on regional development agencies. He complained about cuts in the road programme and called for a minimum increase of £2.3 billion to local authorities. He also called for greater spending on community care. The hon. Member for Alyn and Deeside (Mr. Jones) wanted more money for county councils in Wales and called for more spending on the construction industry and on council houses. The hon. Member for Birmingham, Selly Oak (Dr. Jones) said that she wanted more spending--she used the word "investment" but spending it is--on health, education and law and order. The hon. Member for York (Mr. Bayley) wanted spending to be directed to school security, not assisted places. As I have said already, and someone ought to tell him, the shadow Chancellor has already spent the money that will be saved from assisted places. In fact, he has already spent it twice, so now the Labour party is spending a budget not twice, but three times.

The hon. Member for Coventry, South-East (Mr. Cunningham) implied that more should be spent on the universal state pension and he demanded what he called "new money" for schools. At least the hon. Member for Walthamstow (Mr. Gerrard) was honest when he said:

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    At last some honesty from a Labour Member.

The hon. Member for Newham, North-East (Mr. Timms) wanted to restore the budget for public sector capital investment. I have a long list of spending demands made by Labour Members simply in the course of the past three days' Budget debate. They were made by the hon. Members for Bristol, South (Ms Primarolo), for Peckham (Ms Harman), for Norwich, South (Mr. Garrett), for Wallasey (Ms Eagle), for Glasgow, Maryhill (Mrs. Fyfe) and for Stratford-on-Avon (Mr. Howarth). All of those Labour Members have demanded more spending, and they claim to be responsible on tax.

In the course of this Parliament, we have priced spending pledges and spending demands made by the Labour party at £30 billion.

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