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Mr. Edward Leigh (Gainsborough and Horncastle): Will the right hon. Gentleman, as deputy leader of the Labour party, match the Government's commitment to increase spending on health in real terms every year?
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Mr. Prescott: Anyone who has read the Budget debate so far will know that that commitment is a contestable point. If it is a promise, I am bound to say that the Government's record on keeping their promises and on predictions of the public sector borrowing requirement and future expenditure is woefully inadequate. I would not believe anything a Tory Government told me about anything. I have to accept statements made in the House, but do not expect me to believe Tory promises--they told us that they would not increase VAT, but they are doing it again. Anyone who looks at the proportion of expenditure that goes to the health service will know that resources have not increased at all.
Let me turn to a measure in which, no doubt, the Deputy Prime Minister played a part--spend to save. That is an interesting term and, from a man who spent a lot of time telling people to delay paying their debts, it is a good term. It is a subject with which the right hon. Gentleman is extremely conversant--spend to save and keep the money going longer.
My right hon. Friend the Member for Dunfermline, East (Mr. Brown) was ridiculed when he argued in favour of closing tax loopholes. Does not spend to save mean the same as closing tax loopholes? The Chancellor called it the politics of "Alice in Wonderland". He said that he was not Santa Claus, but now he is Alice in Wonderland--looking at him now, I have to say that that requires some imagination. The Government have pinched a relevant Labour idea because they are desperately trying to balance the books--something that they have constantly failed to achieve, year after year. I shall come to the public sector borrowing requirement in a second.
Of course, there are doubts about whether it is possible to raise £6.5 billion, which is the figure that the commentators have been writing about. At the end of the day, it all comes down to predictions on public finances, on which the Government's record is poor.
Let us take the public sector borrowing requirement, which is always used when the Government are stating their desire to balance the Budget. In 1992, before the election, they said that the PSBR would be £32 billion in the year to follow; in fact, it was £45 billion. They said that it would be £25 billion in 1993, but it was actually £36 billion. This year, it was supposed to be £6 billion, but it has turned out to be £26.5 billion. The Government may not be especially successful at balancing the Budget, but they are much worse at making predictions--their accuracy is deplorable.
There is a growing fear that the Chancellor will be forced by the markets to raise interest rates to meet his implied inflation figure. The real test of the Budget must be its effect on the real economy.
The Chancellor of the Exchequer (Mr. Kenneth Clarke):
The right hon. Gentleman is criticising our record on the public sector borrowing requirement and referring to the Red Book. Is the Labour party committed to keeping to the spending totals for Departments set out in the Red Book? Is Labour forswearing increasing any of those spending totals, given the right hon. Gentleman's concern about our record on public sector borrowing?
Mr. Prescott:
The proper reply would be to say that the answer to that question will be made clear at the beginning of next year. The Chancellor has made a fair
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Every Chancellor has done the same. I must tell the right hon. and learned Gentleman that what he does is not unique. It is almost what has caused the boom and bust in the British economy, as Chancellors have geared themselves to the electoral cycle rather than to the needs of the nation. That is evident from most of the figures in the Red Book.
Mr. Campbell-Savours:
Does my right hon. Friend recall the promises made in the autumn statement of 1991--promises that were reversed the following June? A series of promises, covering all Departments, was made, but every commitment on public expenditure made before the election was withdrawn after the campaign was over. We remember.
Mr. Prescott:
Yes, I remember. That was the former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), who fought me in an election in Kingston upon Hull in the 1970s. People in Hull did not believe him then, and we should not have believed his projections when he was Chancellor of the Exchequer, either. No doubt the present Chancellor has learnt all those techniques, and means to deploy them.
Mr. Kenneth Clarke:
They are not techniques. If the Labour party wishes to do better than the Government on public sector borrowing, it must either take public sector spending down or put taxation up. It does not even have a commitment to keep public spending down to where it is now. Will taxation be put up, so as to improve our performance on public sector borrowing?
Mr. Prescott:
That is certainly a question posed by the right hon. and learned Gentleman's Budget. It is a question that he would face if he were Chancellor after the election, but we do not think that he will be.
There is another option, and we have it here. It is called a utility tax. We can impose a tax on obscene profits and use the resources to put people back to work. We would not have to pay so much to keep people on the unemployment register, and there would be a different order of priorities within public expenditure. I call that the virtuous circle, although it is not what the Government mean by that term.
Mr. John Townend (Bridlington):
The right hon. Gentleman talks about a utility tax. Will he answer a question that the right hon. Member for Derby, South (Mrs. Beckett) refused to answer yesterday? Will he give a copper-bottomed guarantee that the "utility tax" will apply only to companies that have been privatised? If not, does it mean that, if I bought half a million pounds, worth of claret and the price doubled, I would have to pay a windfall tax?
Mr. Prescott:
I know that, as an accountant, the hon. Gentleman would like to be accurate about what he thinks
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The idea is not new. I must remind the hon. Gentleman that the 1981 Budget included the banks tax. I think that he was in the House then, and voted in favour. When he voted for that tax he did not ask what it would apply to, or at what rate. He simply agreed to tax an obscene profit--although he would not say that, because Tories would not use those words. He probably said "excess profits". I believe that the Government's description at the time was "fixed fiscal rectitude" or something similar.
None the less, the tax was the same sort of thing. It was a tax on profits. The hon. Gentleman did not ask questions; he simply voted in the Lobby, without knowing. Yet now he is asking us to define something that was not defined when a Conservative Chancellor proposed the bank tax. I shall talk about the utilities tax in a minute.
The important factor in strengthening our economy is increasing the skills of our work force. Everybody agrees that training and education are vital to a modern economy, yet what does the Budget do? The Chancellor has cut the budget for nursery education, for TECs and for capital spending on higher education.
Investment has fallen from 15.5 of GDP in 1990 to 13 per cent. today. Despite all the claims of the Deputy Prime Minister, manufacturing output is still only 2 per cent. higher than in 1990. Productivity has stalled. That is a record not of success but of incompetence--if the Government wish to claim to have had any influence over what has happened.
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