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8.56 pm

Mr. Alistair Darling (Edinburgh, Central): I am grateful to my hon. Friend the Member for Newham, North-East (Mr. Timms), who delivered a typically thoughtful speech. I shall return to one or two of his comments later.

As many hon. Members, at least those from the Opposition, have observed, today has been another Conservative Opposition day. Two weeks ago, we had the Prime Minister debating our policies on the constitution--a debate in which we were happy to join--and this week it is public spending. Next week, we were to debate another Opposition policy, that on pensions. It is an indictment of the Government that, rather than debate their policies, their record or their proposals if they were to secure a fifth term, in the dying days of this Parliament and possibly the dying days of this Government, they are reduced to debating our policies.

The fact that the Deputy Prime Minister opened the debate speaks volumes about the Government's current negative approach to politics. One might have thought that the Chancellor would expound the Government's position on public spending, but we got the Deputy Prime Minister instead. A good proportion of Ministers was with him--not in their Departments running the country or preparing for the future, but as part of a crowd scene, a large doughnut for a tired and uninspiring performance.

It is no surprise that, over the past few months, the nation has been treated to the sight of a tired lion lying down on a poster: clearly, the picture was taken in Conservative party central office where the lion had listened to what was going on and, having drawn its own conclusions, was simply waiting for the Conservatives to fade into opposition. They have given up and are fading away.

The contribution of the right hon. Member for Epsom and Ewell (Sir A. Hamilton), who is sadly no longer here, was perhaps typical of the Conservatives' attitude: they simply deny the past and deny their record. Perhaps the right hon. Gentleman took his lead from an article that the Prime Minister wrote in the Financial Times about 10 days ago. The article was not by a Tory Back Bencher or a junior member of the Government, but by the Prime Minister, no less, yet it simply denied the past and the Government's record to try to claw back some ground.

The Prime Minister said that we had a low-tax environment, even though the Government have increased taxes on 22 occasions since the last general election. He had the gall to say that he had broken the trend towards big government, yet, as we have heard many times this evening, the share of Government spending has remained remarkably constant over the past 18 years at 42 per cent. of gross domestic product. He went on to say that he had put the growth of social security benefits on a downward path, yet they have increased by 88 per cent. since the

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Government took office. He said that the debt burden was under control, yet he has doubled debt since becoming Prime Minister.

The Prime Minister then repeated the same old bogus Conservative allegations about our proposals and said that we had not denied or withdrawn them. He knows full well, as does the Chief Secretary, that the bogus allegations about our policies have been denied right from the start, because they are nonsense, and the Tory party knows it.

My understanding is that the Tories' starting point was to get a figure that they could use against us and then to look around for a way of validating it. That is typical of the way in which they attack us. Last November, they had a figure of £30 billion; it dropped to £12 billion 10 days ago; and now it is back up to £30 billion. Their attacks have no credibility and their entire credibility is flawed because no one believes what they say on tax or about their own spending record. It is not surprising that no one believes the Conservatives when they attack our record.

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said in an excellent speech that we do not have to use our imaginations or to fantasise because we know the Conservatives' record. To use his phrase, a load of facts are there for everyone to see. Let us compare what the Government said in the past about public expenditure with their record.

In 1979, the Conservative election manifesto said:

The share that the state takes today is 42.5 per cent. and it was 42.25 per cent. when we left office.

In 1996, the present Chancellor pledged that he would get public spending down. He should examine his record: he has never achieved that aim. The only time that the Government reduced the share of public expenditure was during the three years of the unsustainable Lawson boom of the late 1980s.

In a rare moment of candour--I understand that it was a semi-private occasion--the Prime Minister said in Chelmsford last October that the

that concerned him was

    "the size of the fiscal deficit. That is a problem."

Indeed, it is a problem. All the evidence shows that to be true. The under-performance of the economy has pushed up the cost of social security and other public spending programmes associated with economic failure. That is why the share of public spending is almost exactly the same as it was 18 years ago.

As my hon. Friend the Member for Newham, North-East said, public investment programmes, which are essential to underpin a successful economy, have been cut to stave off an even worse deterioration in the public finances. The private finance initiative--the partnership between the public and private sectors, which I and my right hon. Friend the deputy leader of the Labour party so warmly endorse--has not effected a reduction in public spending because of the Government's failure to manage the programme.

The result of that failure has been that the tax burden has grown. On present plans, it is set to rise up to the end of the decade. The surge of borrowing in the 1990s over

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which the Prime Minister has presided has left us with a legacy of vastly increased debt service costs. My right hon. Friend the Member for Ashton-under-Lyne, during his excellent chairmanship of the Public Accounts Committee, has drawn attention not only to economic failure, because of the failure of Government policies, but to a legacy of Tory waste.

My right hon. Friend gave some examples, and I want to draw the attention of the House to one or two about which we did not hear much from the Deputy Prime Minister. The BSE crisis cost the taxpayer £3.5 billion. The poll tax cost nearly £4 billion in administration alone. The Chief Secretary to the Treasury has something to say about that. I understand that one of the ways in which he worked himself back into favour with Lady Thatcher was by being one of two Ministers who were willing to write out on the back of an envelope a replacement for the rates system. We got the poll tax.

The British public had to pay for those failures, whether in agriculture, taxation or the cones hotline, which perhaps sums up the Prime Minister and will be his enduring contribution. That is a testament to the failure of the Prime Minister and to the inability of the Conservatives to control public spending or manage it appropriately. Imagine, a cones hotline that resulted in each telephone call costing £5,000; what an indictment of the Government.

Capital spending also suffered. It is worth reflecting that, under the last Labour Government, £1 in every £6 was spent on investment. Under the Tories, investment has accounted for only £1 in £13. That is an indictment of the Government, because public sector capital spending is one way in which Government can assist economic activity. In 1992, the former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), claimed that he was protecting capital programmes, despite cuts in other expenditures. However, the Government's record shows that he did not live up to his promises. Publicly sponsored capital expenditure will be 12 per cent. in real terms, below its peak in 1992 and 1993.

The Government have broken their promises on investment and we are paying a heavy price for it, because the cost of economic failure has to be met by higher taxation and higher borrowing. The Government have no positive proposals on that. Instead, in the brief moments that we touched on our proposals to get people off welfare and back into work, which must be good economically and socially, the Government would not engage in the debate. They are not interested; they are prepared to write off a generation and pay the cost of that failure; or rather they expect the British people to pay it.

The cost to the country has been dear. Our borrowing has increased substantially. As my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said, it is worth bearing it in mind that the Government have had to borrow £66 billion more than they promised to borrow at the time of the last general election. In each year since that election, the Government have failed miserably to meet their borrowing targets. No wonder people do not believe their promises on borrowing, taxation or spending. That is a testament to failure.

I admire the right hon. Member for City of London and Westminster, South (Mr. Brooke) for his loyalty, which is no more than one would expect from a senior Member of

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his stature. However, if he cared to look at the Government's record over the past few years, he would see that we are paying a heavy price for the failure of their economic policies. The interest on Britain's debt means that we are spending more on servicing debt than on defence. What an indictment of a Conservative Government.

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