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Mr. Radice: It is the Government's Red Book.

Mr. Clarke: Our Red Book, used properly, is an extremely informative book, which should strike some concern into the Opposition, and remind them why they will stay in opposition.

The one figure that the Opposition have not been able to shake, or attempted to shake, is our assertion that the average family is £20 a week better off, after all tax changes both up and down over the past four years, and after inflation. That is not the result only of individual Budget measures, Budget after Budget, but of a combination of policies: the way in which we have handled the public finances and the control of inflation, and created a climate for an enterprise economy.

It is the success of British industry and commerce, and the men and women who work in them, and the climate that we have created, that have made people £20 each week better off in today's money than they were before the last general election. The British public know that we will continue to build on that as long they stick with the economic management that the Government are providing and can look forward to at least five more years of Conservative Budgets, and keep out of power people who produce speeches on that prospect that are merely combinations of sound bites, peculiar statistical extractions and fantasy league tables.

Mr. Rhodri Morgan (Cardiff, West): If the Chancellor wants his measure to be taken seriously, he must say what is the bite of the increase in the tax burden, and consider the difference between people's earnings gross, before stoppages. The only comparable measure would be that for the same stage in the previous trade cycle. If he could produce his £20-a-week-better-off statistic in relation to the same stage of the previous trade cycle, it would be a fair point, but he cannot. I can see that he does not even understand what the trade cycle is. That is his problem. If he did, he could be taken seriously.

Mr. Clarke: The idea that all the improvements of the past few years are purely cyclical and that the Government have stood aside and allowed things to happen is preposterous. I defy the hon. Gentleman to find a time in any stage of any previous trade cycle when the average family was better off than it is now. [Interruption.] I am making comparisons with the equivalent time before the last general election, which are frequently made by the Labour party. With all its statistics, it cannot wriggle away from the fact that the average family is £20 a week better off. The hon. Member for Cardiff, West (Mr. Morgan) should have a word with his Front-Bench colleagues on the trade cycle.

I shall not waste too much time on league tables, because I have little time left. It has been pointed out repeatedly that one of the ways in which the Opposition fiddle even the more credible league tables they produce

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is by taking 1979 as a base year--a year in which we went into recession. If we take figures from peak to peak and from trough to trough, we do not get the sort of league tables that the Opposition use against us.

Let us take other things that have never been challenged by the Labour party throughout the debates on the economy and the Budget. The economy is well into its fifth successive year of economic growth; that is incontrovertible. I have forecast 2.5 per cent. growth this year and 3.5 per cent. in 1997. I pray in aid the fact that the International Monetary Fund and the Organisation for Economic Co-operation and Development expect the United Kingdom to be the fastest growing major European economy both this year and next.

As the hon. Member for Banff and Buchan (Mr. Salmond) said, I am comparing Britain with similar major economies in western Europe that we are outstripping. That basic, important assertion has never been addressed or denied. The Opposition have never posed an alternative. The extraordinary footnote searching that they have gone in for is designed to obscure that undeniable fact, which is supported by the OECD and the IMF.

Mr. Gerald Bermingham (St. Helens, South): Does the Chancellor agree that honesty in fiscal matters is terribly important? Does not the Government's decision on 19 July--I declare an interest--to cut to three years the period in which one can claim for overpayment of VAT contravene the European Court ruling? We should bear in mind the comments of the Advocate General. Is that not another example of the Government being cheapskate and taking money that they should repay to ordinary taxpayers?

Mr. Clarke: Had the hon. Gentleman rejoined our discussions only about an hour earlier, he would have heard the hon. Member for Banff and Buchan make exactly the same point. First, as far as I understand it, everyone welcomes my decision to make three years the period for reclaiming tax, both for Customs and for the taxpayer.

I assure both hon. Gentlemen that the proposals do not breach European law. We have looked into it, and we are satisfied that they do not. They have been modified to take account of industry's views. We have met the points in both the Advocate General's opinion and the Walbraeck opinions, which I think is what the hon. Gentlemen were referring to.

Lawyers may challenge the measures if they wish, but we are satisfied that we are within the law. The measures protect many millions of pounds of revenue, and they should be welcomed by the House. They reinforce the credibility of the figures in the Red Book on borrowing and revenue on which Opposition Members try to cast doubt.

Mr. Radice: The Chancellor's Red Book gives the taxes and national insurance contributions as 34.25 per cent. of GDP for 1992-93 after the Lamont Budget and 36.25 per cent. for 1997-98. That is an increase in tax take.

Mr. Clarke: The hon. Gentleman has to be careful when using the Red Book on his feet. He had to choose

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the right figures in the right places. I saw his finger moving up and down the page to choose the correct base year. We have chosen comparable base years--the year before the last election and the year before the next election. In so far as the hon. Gentleman detects an increase in the overall tax and NICs, it is because there are fewer people unemployed and more people in work. People are earning more and going into higher tax brackets.

When Opposition Members suddenly get hold of the Red Book and look at the years ahead, they should bear it in mind that they will see that pattern in all the Red Books if they look at the years ahead before any tax adjustments are made in the subsequent Budget. Sometimes it is called fiscal drift. It is the fact that one assumes that, in years ahead, present tax levels will be merely indexed; that wages will go up faster than inflation, which they undoubtedly are doing; that unemployment will fall; that the number of people in work will increase; that the amount they earn will go up. So one shows projections of increases in the tax and NIC take.

It is prosperity that Labour Members are describing as an increase in the tax burden. It happens to be the case that people pay more when they earn more. I repeat, because Opposition Members do not like it, that, after people have paid all their taxes and had all the benefits of the tax cuts and all the burden of the tax increases, the overall effect is that they have £20 each week more in their pockets if they are a family.

I do not know what interests the electors in North Durham, but I know that what interests people in Nottinghamshire and Rushcliffe is the overall effect of economic policy on their family's well-being. They are not impressed by crawling through the footnotes in the Red Book and trying to prove that what they know is a very prosperous country in which they are doing better is somehow being damaged by the Government.

Mr. Salmond: It's the way the Chancellor tells them. Is it not reasonable to suppose that, even if by some enormous mischance the Government were to win the election, the Chancellor would not be long for that Dispatch Box? I watched the faces of those behind him. They put up with him now because they cannot afford not to. Is it not the case that, whether the Conservatives win or lose the election, the Chancellor will pay the price of his pro-European views? Is it not true that he will be cast away like an old pair of hush puppies?

Mr. Clarke: I warn Labour Members: listen to the Scottish National party already predicting the first Conservative reshuffle after the election. We will take our chances on the reshuffle--it will not be in the hands of the hon. Member for Banff and Buchan, but, because of our improving economic position, nor will it be in the hands of the Labour party.

From the exchange of statistics that has bewildered the British public for the past week, let me extract another incontrovertible fact--the fall in unemployment. I have heard the occasional Labour Member saying that somehow there is something wrong with the figures, but they tend to retreat when the realise that we are talking as much about the labour force survey figures as about the claimant count. The fact is that unemployment has fallen

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to its lowest level for more than five and a half years. It has fallen by nearly 1 million since December 1992; it will shortly drop through the 2 million mark; and it will go on falling.

We have had five or six days in which no Labour Member has commented on those unemployment figures. They have merely expressed mild queries about our assumption of continued falls in unemployment over the next two or three years. That is the reality of economic performance--it is what this Budget will help Britain to produce, and it is more relevant to the considerations of people in the real world outside.

Consumer confidence is at its highest level for more than eight years. Is any Labour Member prepared to gainsay that? Is any Labour Member prepared to deny that it shows a feeling of growing confidence in improving family incomes? I have stated my expectations--I have said that consumer spending will rise by 3 per cent. this year and by 4.25 per cent. in 1997. I have heard no alternative--I have heard no one say that those figures are over-estimates. How can that be, if Labour Members are trying to persuade us that people out there are crushed by a burden of growing taxation that is making them £2,000 worse off than they were in 1992?

That is not even the right allegation. It was the cliche that the hon. Member for Edinburgh, Central got wrong. It is a peculiar conglomeration of apparently aggregate sums of extra tax paid over the four years since 1992, taking account of rising wages--as though that is some extra penalty--but somehow indexing the tax levels that we had in 1992.

Business investment is increasing. It is expected to rise by 6 per cent. in 1996 and by more than 9 per cent. next year. In ways as yet undescribed, the Labour party occasionally hints that that might improve, if we had a Labour Government--but I have heard little to convince me of that.

Let me lay to rest a few myths about Britain's investment performance, because it is our current investment performance that gives us hope for the continued growth with rising prosperity that we expect. Since 1979, whole-economy investment has grown faster here than in any other major European country. For the benefit of the hon. Member for Cardiff, West, over the past economic cycle it has grown three times as fast as it grew in the 1970s.

As any business man knows, the quality of investment is just as important as the quantity. If we were only bothered about the quantity of investment, the economy of the former Soviet Union would now be one the triumphs of the world; but in Britain, not only do we have a greater quantity of investment than we used to have, but its quality is infinitely better.

The OECD has said that Britain is the only major industrial country where business investment has become more productive since 1979. Our exports are rising strongly, and contributing to our best overall trading performance for nearly 10 years. That is what we should have heard about, and I do not believe that slogans and selective statistics are any answer to that.

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