House of Commons Hansard Debates for 6 Mar 1997 (pt 29)

Mr. Brooke: Will the hon. Gentleman give way?

Mr. Darling: In a moment. Perhaps the right hon. Gentleman will attend to this question as he faces the electorate, as I believe that he intends to. How will he explain to electors that each household in his constituency is paying, on average, more than £1,100 to service the debt that his colleagues have run up over the past few years?

Mr. Brooke: Given the comparison that the hon. Gentleman made between debt and defence, does he recall that, under the last Labour Government, more people were employed by the Inland Revenue than by the Royal Navy?

Mr. Prescott: That is even truer now.

Mr. Darling: As my right hon. Friend says, that is probably truer now, especially as the largest cuts in the defence budget were made by the Conservatives. Despite everything that they have said about defence being safe in their hands, rather like the national health service, they have sliced into the defence programme.

The right hon. Member for City of London and Westminster, South must know that probably the second largest demonstrations in the past 18 years--the largest were those against the poll tax in places such as Tunbridge Wells--were those against the cuts in the regiments. I particularly remember those in north-east Scotland. He did not answer my point about debt. The Government's failure to keep their promises on spending has resulted in increasing borrowing, increased debt servicing costs and, of course, a major increase in taxation.

In the old days--when I first became a Member of the House and, I am sure, when my right hon. Friend the Member for Kingston upon Hull, East became a Member--whenever a debate took place on the economy, the one thing about which every Conservative Member spoke was tax. We have not heard a word about it tonight. No wonder, because taxation has become rather an awkward subject for the Conservative party.

In 1992, the Prime Minister said that the difference between the two parties was clear; the Conservatives would cut direct taxes. That did not happen. He said, in a memorable phrase:

"We have no plans and no need to increase the impact of VAT",

but VAT has now been imposed on domestic gas and electricity. No wonder people around the country take with a large pinch of salt the Government's claim that they do not want to extend VAT to food or anything else. At the last election, they said that they would not extend VAT, yet they did.

The Prime Minister said that he did not see any need to increase the burden of taxation. Yet the House will recall that he admitted the day after the election to his

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closest circle of colleagues that, within 12 months, the Tory Government would be deeply unpopular. He knew it because he knew that the prospectus on which the Government had fought the election would not stand up. He knew that they would have to put up taxes. Yet the Government did not tell people that that was what they proposed to do.

The Government's own Red Book confirms that the burden of taxation has risen since 1979 when they took office from 35 per cent. to 36.25 per cent. this year. Indeed, most people earning less than £70,000 a year will be paying more tax under the Tories. The tax bombshell that the Tories were proud to warn about at the last election has blown up in their faces. That is one of the reasons why they are losing by-elections and heading for defeat at the next election. They stood explicitly on a platform of cutting taxes, yet they increased taxes. More tax on income, more tax on spending and more tax in total. After 22 Tory tax rises, a typical family is paying more than £2,000 more in tax.

Mr. Bernard Jenkin (Colchester, North): Will the hon. Gentleman give way?

Mr. Darling: The hon. Gentleman has not been in all night. As he has taken the trouble to come in for the closing speeches, perhaps he would like to get his name in the credits.

Mr. Jenkin: Does the hon. Gentleman support the European social democratic model?

Mr. Darling: My right hon. Friend the Member for Kingston upon Hull, East made the important point that if one compares Britain's growth record in the past 18 years with that of other countries in Europe, one sees that many of our competitor countries have done much better than us. As my right hon. Friend acknowledged, France and Germany have particular difficulties at the moment. We had particular difficulties four or five years ago. What people in Britain find dispiriting and depressing is how much Conservative Members now gloat about the difficulties that other European countries have.

I remind those Conservative Members who are still here that we trade with the rest of Europe. It is not in the interests of Britain to see Europe remain in recession. The sooner it recovers, the better it will be for Britain. What sort of a Government are so torn by internal fighting within their ranks that they invite the British people to delight in the misfortunes of other countries? What sort of outward-looking country is that?

Let us return to tax. Those of my colleagues who served on the Standing Committee which considered the Finance Bill will recall that we were deeply disappointed that the Chief Secretary to the Treasury did not see fit to join us this year. As I did not see him around the House and found that he was not included by the Tory party chairman in the line-up at press conferences called to denounce us, I took the trouble to smoke him out. I went to his constituency to try to find him. He was not there. They were all crying out, "Where's Wally?" There was no sign of the Chief Secretary.

I did find something. I found the last copy of the Chief Secretary's manifesto from the last election. It is a collector's item. It is so valuable that I have brought only

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a copy into the Chamber. The original is now in a safe. There is only one copy because he has retrieved them all. I know why he did that, because his comments at the last election typify the difficulty that the Tory party has got itself into. The House will recall that, then, all the Conservatives said that they would cut taxes, but the Chief Secretary went a little bit further than that. He said not only that tax would be cut but that it would be cut

"with 5 pence more to come".

How wrong can one get it? The Government put taxes up by 7p, so to get tax down by 5p more, they would have to make cuts for many a year. That typifies the Government's attitude--promises lightly given, with no intention of delivering them.

Although the right hon. Member for Epsom and Ewell referred to the high penal rates of taxation over which Governments of the past of both political colours have presided--very much in the past--he had little to say about the high penal rates of effective taxation that face people coming off benefit into work. Is there not a contrast between the unfunded pledge of the Tory party to abolish capital gains tax and inheritance tax at a cost of £4.5 billion, with half the gain going to fewer than 5,000 people--that is the Government's promise to the British people--and our objective to lower the starting rate of income tax to reduce the barriers in order to get people off benefit into work? That is good for them and extremely good for public finances because people will stop claiming benefit, and start paying tax. That makes for a better and more efficient country.

The costs of economic failure are substantial. The deep feeling of insecurity which permeates all levels of society, no matter how people are placed and no matter what their earnings, is having economic as well as political effects. Nearly 11 million people have had a spell of unemployment since 1990. People know that they should worry about their future, partly because the Government are simply drifting along with no clear sense of where they are going or what their role is, let alone the role of the country in the future.

Of course people are quite right to be worried about the Government and what they would do if they carried on creating economic failure. Before Christmas, the Chief Secretary and I took part in a television programme when the right hon. Gentleman said:

"There's no secret that the Conservatives, right back to 1979"--

have preferred to raise tax through indirect taxation. The lessons are quite clear.