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Mr. Nigel Forman (Carshalton and Wallington): The hon. Gentleman is right to say that we paid attention to inflation in the Select Committee report, but the amendment that stands in his name also refers to


What does that mean to the Labour party, in precise terms?

Mr. Darling: It means precisely what it says. We believe that it is essential for the country to maintain low inflation, something that has not been possible over the past 20, 30 or 40 years. If there is a political consensus on that, I think that it will be welcomed by most people outside carrying on their day-to-day business, such as pensioners and those on low incomes. But the point that I am making--one of the points that comes across from the Select Committee report--is that there is some doubt about whether that is likely to happen under the present Government's policy. We have seen higher interest rates, and there is the threat of more to come. Despite what the Chief Secretary said, there have been higher mortgage rates: they have already been announced, at the end of last year and the beginning of this year. People want stability.

Mr. Nicholas Budgen (Wolverhampton, South-West): Will the hon. Gentleman give way?

Mr. Darling: No, I must make some progress. I will certainly give way to the hon. Gentleman later.

The idea that this is the only country in Europe with low inflation is simply not true. We are 11th out of 15 in the European inflation league. Only Greece, Italy, Portugal and Spain are behind us. It is a perfectly legitimate point to make because we are always being told that Britain is the enterprise centre of Europe. Indeed, in its report presented last night, the Select Committee expressed concern about the output gap.

The Chancellor forecasts that inflation will fall from 3 per cent. to 2.5 per cent. Is that credible when, in each of the past few years, the Government's forecast has not been met? The Bank of England is still expressing doubts and concerns, yet we are asked to believe the Chancellor. His whole strategy depends on inflation being down to 2.5 per cent. or less. His costings depend on it. Having regard to his record, can we believe him on that?

As I said, if we consider long-term interest rates, which are a good indicator of international expectations, we find that UK long-term interest rates are higher than those of any other OECD country. Surely that should tell the Government something. It tells us that not only in Britain and in the Labour party, but in the markets, people do not believe the Government or trust them on inflation because they know that the Government have delivered two of the worst recessions since the war, which has hit home owners, businesses and all taxpayers alike. It is essential that we deal with that fundamental weakness in our economy and the causes of the long-term inflation, and

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that the long-term culture and long-term outlook is achieved not just in business--which all of us keep calling for--but by politicians and Chancellors.

Mr. Budgen: The hon. Gentleman talks about the need for stability in interest rates, so will he explain whether the Labour party is against any increase in interest rates between now and, say, 1 May?

Mr. Darling: We have always made it clear that the appropriate action must be taken to ensure stability. The hon. Gentleman might want to direct that question to the Chancellor to find out what he has to say on the matter.

The Chief Secretary told us that unemployment was coming down and of course the number of people entitled to claim benefit is falling. We certainly welcome people leaving benefit and going into work. People know of course that there have been 32 changes to the way in which the Government calculate unemployment. We know that one in three people who disappear from the register disappear completely. There are 1 million fewer jobs since the Prime Minister took office in 1990. It is no wonder that people do not feel good about the economy. Nor do they believe his claim that living standards are up.

There have been tax rises. In 1994 and 1995-96, living standards fell, as the Chief Secretary had to admit last year. Of course, when living standards fall, it is always someone else's fault, yet when people's circumstances begin to improve, through their own hard work and efforts, the Tories try to claim credit for it. The fact is that in Britain we have an overlay of job insecurity, which is causing immense social and economic problems. The Secretary of State for Trade and Industry may say that job insecurity is "a state of mind", but it is a reality for millions of people and a problem for all of us.

The Chief Secretary says that we have a fast growth rate. The average growth rate since 1979 has been the slowest of the G7 countries and slower than that of any other major European country. Over that period, the annual growth rate was only 1.9 per cent. Under the last Labour Government, it was just over 2 per cent. Far from being the enterprise capital of Europe, Britain is ninth in the European prosperity league.

There is an interesting statistic on inward investment. In 1995, 60 per cent. of inward investment was in the form of takeovers of UK companies and, in the same year, a fifth of the total was accounted for by the fact that two privatised utilities had been taken over by American companies, so when the Government tell us that this is the capital of inward investment, we must consider those figures closely. In doing so, we realise that, to a large extent, they are due to the fact that there has been much takeover activity because the Government sold off the assets at knockdown prices.

Like other Tory tax Bills, this Bill is about tax raising. The Government's credibility depends on the central promise that they broke. It is worth reflecting--because those promises will be made again and again--what the Prime Minister told the Los Angeles Times about a year after he won the election. He said:


Why did he say that on that Friday, the day after the election? The same Government had told the rest of Britain that, if people voted Conservative in 1992,

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the recovery would begin on the Friday. On the same day as the Conservatives were telling the people that the recovery would begin, the Prime Minister in private was telling his Conservative party cronies that they would be the most unpopular Government in a long time. That is an example of a Prime Minister who is condemned by his own words. Why should we believe him this time when he said that in 1992?

In 1992, the Prime Minister told us:


That is what he is saying in 1997, but we know the truth of what happened in 1992: he said one thing in public and another in private, which is exactly what will happen this time.

Mr. Den Dover (Chorley): Will the hon. Gentleman give way?

Mr. Darling: I will for the last time.

Mr. Dover: Does the hon. Gentleman accept the official statistics, which show that growth in the economy started in the third quarter of 1992, showing that the Prime Minister was absolutely right? The recovery started almost immediately after the general election.

Mr. Darling: The reason why the Prime Minister said that the Government were going to be unpopular was that he knew full well that they had made promises that they could not have kept. Here are some of them. On 22 March 1992, he said:


The proportion of people paying indirect taxes has gone up. He said the next day:


    "We do not see any need to increase the tax burden."

The tax burden has gone up. The Chief Secretary had to admit to me in a parliamentary answer that since 1992-93 direct tax had gone up. He has also had to admit that indirect tax--taxes on spending--has gone up, so there we have it: under the Tories, there is more tax on income, more tax on spending and more tax in total. There have been 22 Tory tax rises. No wonder no one believes them at all.

It is the same with VAT. The Chancellor may say that he has no recollection of having made a promise, but the Prime Minister did. He said that he had


He said that there would be no VAT increase and that the Conservatives had


    "no plans and no need to extend the scope of VAT",

yet he broke that promise. That has also happened with insurance premium tax, airport tax and other taxes. They have gone up under the Conservative party.

There is a clear pattern as we approach the Tory party's bid to win a fifth term. Not only is tax going up on income, but it is shifting to more and more taxes on spending--they are both going up. There is a clear

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strategy to pay for reductions of one particular tax--the basic rate of income tax. Indirect and hidden taxes will go up.

Lord Howe said in his first Budget in 1979, when he doubled VAT--despite having promised not to do so--that that was his strategy. The present Chancellor said:


The Chief Secretary said in his interview with Mr. Dimbleby on 1 December last year:


    "what we're saying, and it's true"--

so it must be--


    "is that our first priority, as we can return overall to . . . a position where we can begin to look again at tax cuts, is to relieve the pressure on income tax. There's no secret that the Conservatives, right back to 1979, have always said, 'We prefer to take tax off, direct taxation off income tax and to put it--if you have to have it--on indirect . . . all other taxes'".

There we have it. The Conservative strategy is to increase taxes such as VAT. We are entitled to ask: where are they going next? What will they do to win a fifth term? Is VAT going to go on food or clothes? They said last time that VAT would not go on gas and electricity, yet they broke that promise.

It is the same with national insurance. The Prime Minister said:


so he put it up. The former Tory party chairman, Chris Patten, perhaps the next leader of the Tory party, said:


    "Raising National Insurance contributions would be a back-door stealth tax."

The Leader of the House said that national insurance


    "is, in fact, simply a disguised tax."

Perhaps that was an expression of hope, but whatever the Conservatives say on tax, people do not believe them. Nor do they believe their promises on spending, whether on the health service, on education or on borrowing. In each case, the Conservatives break their promises.

On borrowing, the Chief Secretary asked why we pick 1990. He may like to forget this, but that was when the Prime Minister was elected to office by the Conservative party. Despite what the Chief Secretary said, the national debt has doubled.


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