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Mr. D. N. Campbell-Savours (Workington): Will the Chief Secretary give way on that matter?
Mr. Waldegrave: The hon. Gentleman always says, "on that matter", and then goes off in quite another direction, but I cannot do other than give way to his charm.
Mr. Campbell-Savours: I wish to ask about the 1992 election and the prospectus that the Government put before the British people. I was reading an interesting document this morning--the supplement to the Red Book for that period. It shows that the Government were projecting for this financial year a public sector borrowing requirement of £7 billion, when in fact the PSBR for this year will be £26.7 billion. In other words, they are £20 billion adrift from the prospectus that they put before the British people at the previous general election. How can they possibly have any credibility next time, when their figures have been so blatantly wrong?
Mr. Waldegrave: It is no secret that there was a recession of far greater depth than was predicted by the Government or by the Opposition. The hon. Gentleman's credibility problem is that he went into the previous election loyally fighting for an economic programme that was put forward by the present Transport Commissioner in Europe and the late John Smith. It was a completely clear policy and, as far as we know, was different from what is now being proposed by Labour. Labour put forward a coherent policy, and the hon. Gentleman supported it. There is no coherent policy now, so he is unable to say exactly what he supports--as are his Front-Bench colleagues.
The Budget that my right hon. and learned Friend the Chancellor proposed on 26 November and which the Finance Bill accompanies was a Budget not just for the next few months, but for the next five years. It was a Budget for lasting prosperity, combining sustained economic growth with low inflation, so that living standards go on rising year after year. The measures announced by the Chancellor address several objectives. They enable people to keep more of what they earn. They finance high-quality public services--spending more on the services that people care most about, including the health service. At Prime Minister's Question Time, we heard again Labour's technique, which is to raise anxieties about health. But Labour has not even matched our spending pledge on health, let alone committed any more money. That is the technique that it uses right across the board, day in, day out, and it is fundamentally disreputable.
Mr. Denis MacShane (Rotherham):
Does the Chief Secretary recognise the real anxiety of every exporting company in Britain about the astronomic growth in the value of the pound sterling? In my constituency, that growth has led to British Steel--a successful company--laying off people and to Guest and Chrimes laying off 70 only last week. In addition, every manufacturing and
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Mr. Waldegrave:
I think that it was the hon. Gentleman who intervened at an early stage in my speech in this very debate last year--it may have been the economic debate just before Christmas--to criticise the Government because the pound was then going down. If Labour has an exchange rate target or policy, it will be the first that it has had. The hon. Gentleman is at least an honest believer in joining a single European currency. He has a policy, but his right hon. and hon. Friends on the Front Bench do not necessarily agree with it--or rather, on Tuesdays and Thursdays they do, but on Wednesdays and Fridays they do not.
Mr. Michael Stephen (Shoreham):
Day after day, we hear Opposition Members demanding more and more spending on public services and complaining about increased taxes, but if one does not borrow and one does not increase taxes for all the public expenditure, how does one fund it? Would the Labour party have done it by printing money, and what would the consequences have been?
Mr. Waldegrave:
As Aneurin Bevan said, we do not need to look in the crystal ball when we can read the book. The Labour party taxed higher, borrowed more and ended up with a combination of higher taxes, broken pledges, higher borrowing and chaos in the country. That is what happens under Labour Governments.
The Bill will protect the ordinary taxpayer by taking further significant steps in the fight against social security fraud, tax evasion, smuggling and other fraud. It also closes some further tax loopholes. In a different direction, it levels the playing field for ordinary taxpayers by phasing out some special reliefs and allowances. They may be convenient and popular for those who enjoy them, but they are often unfair to those who do not, and in our view it is better to have low tax rates, as we do for business and personal taxes in this country, and to diminish special allowances.
Mr. John Greenway (Ryedale):
My right hon. Friend mentioned measures to close loopholes. Will he confirm that the proposal for a 17.5 per cent. rate of insurance premium tax is directed only at abuse and that it is not intended to apply to policies that are genuinely arranged and transacted by insurance companies?
Mr. Waldegrave:
As my hon. Friend may know, the abuse that is targeted is that of the profit margin being put on the insurance policy, which had a lower rate of tax, and, allegedly, lower prices being offered for the associated goods; that seemed to be merely a way of avoiding tax. There is no intention of getting into the territory about which my hon. Friend warns. Those matters will no doubt be discussed in detail in Committee.
Mr. Alistair Darling (Edinburgh, Central):
On that point, can the Chief Secretary give us an assurance that
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Mr. Waldegrave:
That will depend on the Committee of Selection. The hon. Gentleman must wait and see. I am deeply touched that he thinks that no Committee can proceed properly without me. That is a flattering judgment and, as always, I am most grateful to the hon. Gentleman for his support.
The Bill maintains a responsible fiscal position by keeping firm control of public spending and reinforcing the downward path of borrowing. It tightens fiscal policy, reducing the public sector borrowing requirement by nearly £2 billion in 1997-98 and by considerably more in later years. Compared with previous plans, the Budget measures take £750 million off tax and £2 billion off spending, and the measures to reduce tax leakage, blocking loopholes and boosting the fight against fraud, should contribute another £500 million.
Mr. Stephen Timms (Newham, North-East):
Will the Chief Secretary give way on that point?
Mr. Waldegrave:
No, I must proceed.
By 1999-2000, the Budget measures are expected to reduce the PSBR by more than £5 billion. Under this Government, the national debt has been lower as a share of national income than in any year under the previous Labour Government. The Leader of the Opposition has a particularly silly argument that my right hon. Friend the Prime Minister has doubled the national debt since 1990. Why 1990-91? Because that was the year when the national debt was lower than at any time since the second world war.
The United Kingdom has one of the lowest overall debt burdens of the big countries in the European Union, whereas in 1979 it had one of the highest. If Labour had stayed in power and continued to borrow, as it is reasonable to assume would have been the case, at the same average annual rate, the national debt would be almost exactly twice what it is, at about 90 per cent. of gross domestic product.
Part of the Labour party's current campaign is to try to argue that the public finances are in a dire state. We know perfectly well why that is so. It is not because the finances are genuinely in a dire state, and the figures that I have given prove that. Even without appealing to our extremely strong position in relation to funded pensions, thanks to action taken by the Government over the years, we know why Labour Members make that argument: if they came to power, they would want an alibi for the tax rises that followed. They would say, "The books have shown all sorts of mysterious things and we have to put taxes up." That is what the Opposition are preparing the ground for, but we intend not to give them the opportunity to use that alibi, by keeping them firmly on the Benches on which they now sit.
The Finance Bill, which implements the Budget tax measures, is central to its aims. It starts with a clause that will, I think, receive support from both sides. I see no members of the Scottish National party with us temporarily, but I am sure that even they would welcome the clause. Last year, my right hon. and learned Friend the Chancellor cut whisky duty for the first time for
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The Bill contains a number of significant measures to protect the tax base. It is important that people pay the amount of tax that Parliament intended them to pay, that reliefs are not subverted and that people do not find over-ingenious ways of reducing their tax liabilities. The Government have long held that a successful tax system is one with low rates and a broad base, so we can cut tax rates only if that base is sound. Part III of the Bill introduces a further package of powerful measures to block value added tax loopholes.
I expect that Labour will claim, with its usual Morton's fork argument, that, first, all those measures are its idea--I see that the hon. Member for Edinburgh, Central (Mr. Darling) nods--and, secondly, they are all new Tory taxes. Labour sticks up silly posters saying that all these loophole closures are new taxes, but also claims that they were Labour's idea in the first place.
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