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Mr. Barry Legg (Milton Keynes, South-West): Will the hon. Gentleman give way?

Mr. Darling: No.

It is no wonder that the Select Committee and others have expressed so much concern about the foundations that the Government invite us to believe are sound. Investment is growing more slowly in this recovery than in any recovery this century. People lack the education and skills that they need and we are 42nd in the world skills league. One in five families are without work, a higher proportion than in Germany, France or the United States, and our national and individual wealth continues to fall.

We need a platform of stability that is based on tough rules on spending and borrowing. We need a programme that will help to get the young unemployed and the long-term unemployed back to work. We must increase

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our education standards and opportunities, encourage longer-term business investment and reduce the barriers that face people who leave benefit and enter work.

Our amendment and our published policy set out our approach, which is economic stability, a commitment to low inflation and sound public finances. People want stability and they look to the Government whom they elect to act on their behalf to ensure the right conditions for high investment. People want the Government to provide an education service that will benefit everyone and not just the few. They want people to be equipped with the new skills and training that they will need in future because in a world in which capital is increasingly mobile, our skills and training will mark Britain as a place to invest.

People want a Government who are prepared to overhaul and modernise the welfare state and bring about conditions that will increase investment in our infrastructure and end the scandal and waste of long-term unemployment. They want a Government who will prepare the country for the future and end the economic and political drift of the past few years. They want a Government with strong leadership and a clear sense of purpose and direction who will deliver on their promises. That is what people will get with a new Labour Government.

4.51 pm

Mr. David Willetts (Havant): I welcome this opportunity to support the Bill from the Back Benches. I congratulate my right hon. and learned Friend the Chancellor and the Treasury team on their overall Budget judgment. The Budget has delivered not just the fifth year of a growth rate that exceeds that of Germany and France, but the prospect of continuing to improve on that performance. We can carry on beating the over-regulated, over-taxed and over-subsidised economies of the continent.

Despite what the Opposition say, our sound control of public finances has enabled us to hold down taxation. The figures in the Red Book are clear: the proportion of GDP paid in taxes in 1991-92 was 36.25 per cent. and it will be the same in 1997-98. The proportion of family income in tax and national insurance contributions was 20.7 per cent. in 1991-92 and it will be the same in 1997-98. Meanwhile, we have lowered the basic tax rate, reduced tax on savings and taken many families out of tax altogether.

Mr. MacShane: The hon. Gentleman is in want of a little information. Is he aware that in France a family with two children has to earn about £15,000 a year before it starts to pay tax? That is why family stability in that country is stronger than in our family-unfriendly country. On what income does a United Kingdom family with two children start to pay tax?

Mr. Willetts: I shall return to the subject of family taxation if time permits. I should like to deal with the underlying control of public expenditure which enables us to hold down taxation and deliver the economic conditions that are described in the Red Book. Low taxes and continuing growth can be achieved only by holding down public expenditure.

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During my brief period as Paymaster General, I discovered that one of the responsibilities of the post is signing the cheques. Such responsibilities for actually disbursing public expenditure still fall by statute on the Paymaster General. I understand that his signature appears on about 17 million cheques a year. People used to come to me in my constituency or at parties and say, "Thank you for the cheque." The average Opposition Front-Bench Member imagines that that is what being a Minister is all about, or at least it is what he or she thinks it should be about--signing cheques and handing them over in the hope that they will be warmly welcomed. In reality, a Government can deliver the low taxation that we now enjoy and our current rate of growth only by prudent public expenditure control.

At Prime Minister's Question Time today, we saw how Labour approaches the issue of public expenditure control. In the health service and in education, Labour assumes that the solution to every problem is more public expenditure. We have costed Labour's public expenditure pledges at more than £30 billion. When we published that figure, Labour immediately produced what it called a rapid rebuttal and denied the 89 public expenditure pledges that we had identified, not from dog-eared Labour documents but from specific statements by the Leader of the Opposition and the shadow Chancellor.

In its rapid rebuttal, Labour said most of the time that its public expenditure pledges would be met from existing resources. That may be rapid, but it is not a rebuttal. People cannot say that they will give sabbaticals to teachers for a term every 10 years but that there is no need to worry because it will be financed from existing resources. That is not a responsible approach to the control of public finances and, without such an approach, there will be no prospect of continuing to deliver low taxation and sustained economic growth.

Mr. Darling: People follow our proceedings, and it must be put on the record that the document produced by the Conservative party about alleged spending commitments was utter rubbish. Each of the allegations made against us was refuted. The hon. Gentleman is an honourable man. He and I have had many conversations and we disagree on some issues. I do not want to be rude to him, but I caution him against repeating things that he must know to be untrue.

Mr. Willetts: The hon. Gentleman knows that many of these so-called rebuttals by the Labour party consisted of assuring us that the expensive spending pledges--I gave a specific example--could be met from existing resources. I invite the hon. Gentleman and his fellow Opposition Treasury team members to explain how they seriously imagine that the expenditure pledges that they have put before the electorate in the past few years could be met from existing resources.

Dame Elaine Kellett-Bowman (Lancaster): Does my hon. Friend recall that Labour spelled out precisely how it would pay for one pledge? It said that school classes of 30 would be paid for by abolishing assisted places. That would give one teacher per seven schools.

Mr. Willetts: My hon. Friend is correct.

I should like to deal with some of the specific measures in the Bill which I welcome. The first of those is the approach to environmental taxes. In an earlier Budget,

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there was an imaginative approach to the problem of landfill sites which, as we all know, are often the bane of neighbourhoods because of the pollution they generate. In this Budget, the imaginative measures on vehicle excise duty and the taxation of hydrocarbons will mean that the particulates which are emitted, especially from diesel engines, will be reduced by a further 10 per cent. That is a good example of exactly how we can use the power of the tax system to deliver policy objectives that I am sure are shared throughout the House.

The second welcome measure in the Bill is an apparently obscure item on the depreciation of long-life assets. The philosophy on which the proposal rests is that, whenever possible, we should try to align the rules of the tax system with the accounting rules under which companies describe their financial affairs. As we all know, the 25 per cent. capital allowance in corporation tax for some investment is much more generous than the rate of depreciation that accountants, in preparing companies' accounts, would regard as appropriate for some particularly long-lived assets. I therefore welcome the proposal to reduce capital allowances on long-life assets from 25 to 6 per cent.

The measure has one interesting side effect. Some of the companies that will be paying the higher rate of corporation tax, because they have a particularly large number of such long-life assets, are utilities. In the past, some of the utilities have benefited from a clear distortion in the corporation tax regime, because they were allowed to depreciate their assets for corporation tax purposes at a much better rate than any sensible accountant would have expected them to depreciate in the accounts.

Mr. Sheldon: The hon. Gentleman is right: an argument can be made for ensuring that tax rates follow true rates of depreciation. I believe that there should be some incentive to invest. However, even on the basis of tax rates following the true rates of depreciation, does he not understand that the 25 per cent. rate on many items of machinery and, particularly, of plant does not provide such an incentive? Few articles of plant and machinery are worth 75 per cent. of the price after the first year and, in some cases, 25 per cent. represents the commission that a salesman might receive. Therefore, true depreciation is much greater than the depreciation allowed by tax.

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