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Mr. Andrew Miller (Ellesmere Port and Neston): This is a hustings speech.

The Deputy Prime Minister: These are the hustings--let us have no illusion about it. As I have said before, "You have heard nothing yet."

Mrs. Ann Taylor (Dewsbury): Turn round.

The Deputy Prime Minister: If the hon. Lady wants it full frontal, she is very welcome.

What is the way out for the Labour party? It has said that there will be no increase in direct tax rates. It has said that it will stick to the Red Book, but it is so screwed to the floorboards by that commitment that it cannot meet its genuine ambitions. The shadow Chancellor has therefore come up with the oldest trick in the world. He is going to audit the books. There has never been a new, amateur chairman for the most browbeaten company who did not say when taking over the job of the outgoing chairman, "I am going to open the books and have an audit." Five minutes later, he sucks his teeth and says, "Oh, I never knew how bad it is. I can't believe it is that bad. They never told me. They never warned me."

The fact is that the books are open. We have not had to change our policies once we have set the public expenditure figure. Year after year, the only reason for changing policies is if one wants to cut something or raise more taxes. The excuse will be to try to blame the outgoing Government. That is as stark a threat as any that could be conceived. We stick to our policies and our Red Book forecasts, and there is no need for a new Budget at any time in the next 12 months.

The right hon. Member for Kingston upon Hull, East is sometimes helpful, but he should try a little harder. He has said:

Has the House got that?--

    "to give any indication of what tax rates might be."

If I were out there trying to win power in a general election campaign and I intended to cut the rates and put taxes down, it would not be stupid to tell people. It would be sensible to let them in on the secret and share the good news. It would be stupid to tell them only if the tax rates were going to go up.

The right hon. Gentleman carried on being helpful, when he said:

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    It may be proper for him, but unfortunately it seems improper for his colleagues. The right hon. Member for Dunfermline, East (Mr. Brown) told us that there would be no increase in income tax rates. When the hon. Member for Oldham, West (Mr. Meacher) heard that, he was most helpful and he said of the shadow Chancellor:

    "He was careful to exclude other forms of tax".

Mr. Nicholas Winterton (Macclesfield): National insurance.

The Deputy Prime Minister: I have not come to that one yet. The hon. Member for Oldham, West continued:

Labour's deputy Chief Whip has been extremely helpful. He said:

    "Gordon has made the position completely clear on the rates."

We understand that. The rates are apparently going to be fixed, but the deputy Chief Whip did not want anyone to get too depressed. He continued:

    "There are something like 200 different allowances and he is not going to go through them all, setting them before coming into Government. He has got to have some room for manoeuvre."

That is what he said.

Mr. D. N. Campbell-Savours (Workington): Will the right hon. Gentleman give way on that point?

The Deputy Prime Minister: I will not give way, because I have only one more point to make. The country has been clearly warned by the Government and it has been warned by independent commentators, but last night, Lord Barnett added his voice and his experience, as a former Chief Secretary in a Labour Government. He has been through it. He has lived through the experience and he knows what the Labour party is all about. When he warns the country that he does not believe that another Labour Government could stick to the tax levels and achieve their policies, I tell the country, "Listen, before it is too late."

5.34 pm

Mr. John Prescott (Kingston upon Hull, East): The Deputy Prime Minister made it clear what this debate and the series of Adjournment debates initiated by the Government are about. They are the hustings and the preparation for a general election. Presumably, that is why he spent so little time talking about the Government's record and so much on the Opposition's case. We will enter the debate, because public expenditure is important.

We thank the Government for the third Opposition debate that they have initiated, following the debates on the windfall levy--which the Deputy Prime Minister mentioned--and on constitutional reform. We are debating public expenditure now, and I understand that we shall have a debate on pensions next week. All those critically important issues will be at the heart of the political debate up to the general election. Therefore, it is right and proper to have those debates in the House.

While it is good practice to have the debates and rehearse our election arguments, I am not sure that it is a good practice for the Deputy Prime Minister, in view of

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the Government's record. Given their record on taxation, it was a bit much for the Deputy Prime Minister to talk about cons in relation to the Opposition's proposals. The Prime Minister and the then Chancellor said in 1992 that they did not want to see VAT increased or to increase the overall burden of taxation. I will not give the exact quotations, but I have them here.

Those commitments were given at the time of the election in 1992, and if anyone was conned, the electorate were conned by the Government's statements on taxation. We have seen 22 increases in taxation and an increase in VAT, even though the Government promised the electorate that that would not happen. They lied to the electorate, and the verdict given in the Wirral is a clear indication of how people feel about believing what Ministers say.

Mr. William Cash (Stafford): The right hon. Gentleman knows perfectly well that one of the reasons why taxation increased, including VAT on gas and fuel, was the mistake--which has now been openly admitted--over the exchange rate mechanism. Will he and the Labour party now state that they will never enter the exchange rate mechanism, which brought such terrible tragedy to the British nation?

Mr. Prescott: The hon. Gentleman makes an interesting point, because it was the Prime Minister who said that he had no intention of devaluing or of leaving the exchange rate mechanism. The Tories were the party of non-devaluation. We were supposed to be the party of devaluation, if one listened to the Tories' rhetoric. Of course they devalued, despite all their promises, and at great cost. The cost was £15 billion, with an overall net cost of £2 billion for the taxpayer.

We have made our position clear on the single currency and the exchange rate. When the decision on the single currency has to be made, we will allow the people to make a decision. I believe that that is the Government's position, although they are divided on the issue. There are many Ministers on the Government Front Bench. The Foreign Secretary is not here, but the Secretary of State for Health is in his place. He told us that he had a confusion of thought about the matter. Clearly there are many different views in the Government and they are now paying the price with the electorate for that confusion.

Today we are debating the important subject of public expenditure. The size of public expenditure and its priorities determine security and progress in our society. Debates about those priorities are the essence of a democratic society. How we raise that money and spend it forms the basis of general elections. But the big political question is how to obtain the right balance. That is the matter to which the Deputy Prime Minister was addressing himself. He had his view of the correct balance, but the Opposition are more concerned about social justice, which is relevant to the arguments on a minimum wage. There are clear differences between us.

Eighteen years of a Tory Government have thrown the public finances into turmoil. We are not yet sure of the full extent of that turmoil and whether we are out of the woods. This year the public sector borrowing requirement is £26 billion, and the party that considers itself to be the guardian of the national debt has doubled it since 1990. Those are not my figures: they are the

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results of the Government's public expenditure priorities. Interest payments on that debt alone cost each taxpayer £1,100 a year.

Not only is the nature of that expenditure a matter for concern, but we have witnessed its terrible cost to our communities in the breakdown of social cohesion. We are clearly not a nation at ease with itself, although that might have been one of the declared aims in the early stages of the Government. It is a matter of fact that we have a record level of homelessness, that education and health standards have declined and that crime has doubled. [Interruption.] That is not in doubt, is it? I can understand that hon. Members do not want to believe such figures, but they are Government figures which I want to use for the purposes of this debate.

Poverty has doubled and there is mass unemployment in Britain today. [Interruption.] More than 1 million is mass unemployment, 2 million is worse and 3 million--the Government's record--is an indictment of a Government who say that they are concerned about unemployment. Mass unemployment is millions out of work, which has been the Government's record in their 18 years in office. I am astounded that, despite all their fiddling of the figures, the Government cannot accept that what we have today is still mass unemployment however it is defined.

That mass unemployment has caused massive problems in the public finances because of the cost of welfare expenditure, unemployment pay and social security payments. That is why we have difficulties in our public finances today. They are not the result of economic success, but the result of the failure to achieve the kind of economic growth and prosperity that could result in lower unemployment.

The Labour party's argument is that after 18 years there can be no excuses, no blaming a Labour Government of 1979. What we are asked to judge today is the Government's record. The responsibility lies fairly and squarely with this Tory Government.

This week we have had vivid reminders of the importance of public expenditure. What is important is not just how much is spent but how wisely and how fairly it is spent. Today we have seen in the newspapers alone issues that considerably affect public expenditure and reflect the Government's priorities.

I take as one small example Gulf war syndrome, which was clearly due to public expenditure on insecticides to protect our soldiers. [Interruption.] Yes, that was the judgment at that time, although the truth of the matter has been concealed by the Ministry of Defence. But the Government's treatment of those soldiers has been influenced more by the public expenditure consideration of the cost of compensation for the victims of Gulf war syndrome than by a judgment of what is fair. [Interruption.] Yes, that is at the heart of it.

We have debated in the House the beef scandal, about which we have heard more this afternoon. We put some of the blame for that on the Government's deregulation policy. That beef crisis alone has cost us £3.5 billion of public expenditure.

The Deputy Prime Minister also referred to local government finances. The Government's treatment of local authority finances has been deplorable. The Government have shifted the financial burden of public expenditure on to local authorities. In 1979 the

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Government carried 61 per cent. of that cost; today it is 52 per cent. The real effect of that on people's lives has been to force up the council tax and threaten local services. Moreover, the share-out between the councils has lacked any consideration of fairness. If the Government had given every council the same grant per head as Westminster, 94 per cent. of councils would be charging no council tax. That has more to do with party political considerations than social justice.

That is the issue, and it goes a long way to explaining why the number of councils under Tory control has gone down from 235 in 1979 to 13 now. That is the result of decisions taken by the electorate. I presume that the electorate made their judgment on the basis of the Government's role in providing their local services. So definite was their rejection of the Government at national and local level that the Tories now control only 13 councils, allowing the Liberal Democrats to claim that they are second in local authority representation.

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