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Mr. Duncan Smith: Is not that the main point? My hon. Friend is making the point from his position in the Select Committee. However, if, as the Minister said, the Chancellor clearly intended to take such action, why was it not structured in the Red Book? Why did not the Chancellor announce in this year's Budget that everything would start from April next year? In this case, such action is not even mentioned in the Red Book, other than to say that it would not be done.

Mr. Davies: I could not agree more. Once the Chancellor had decided to promise further measures eliminating class I national insurance contributions below £81 a week, and decided to make no provision for that proposal in the Red Book, he was caught both ways. He was coming before the House either to make a proposal that was not costed, which was a serious failure for a Chancellor of the Exchequer, or to make a promise that he knew perfectly well was completely bogus. Arguably, that was an even greater failure--certainly a greater moral failure, if not a greater failure of competence. Clearly, he was guilty of one or the other.

I can only imagine that the reason for the Chancellor's committing that colossal error was that he underestimated the intelligence of the public and of Conservative Members. He will live to regret that, among many other things.

Mr. Clifton-Brown: I wonder whether there is a more sinister point to all of this--disagreement within the Labour party about its social security policy. Perhaps the Minister for Welfare Reform, who has genuinely campaigned in the House for years to look after the low-paid and the disadvantaged, wanted that measure,

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but was restrained by the Chancellor from bringing it about. When the Budget statement was produced, Labour Members did not know who would win.

Mr. Davies: I agree with my hon. Friend. Clearly, in this matter, as in others, the Government do not know whether they are coming or going. They do not know whether it is Tuesday or Saturday. We have been waiting for more than six months for a White Paper on stakeholder pensions. My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) reminded me that we had a White Paper on welfare reform at the end of March. It was long on questions and platitudes, but extremely short on answers and solutions. It said that any reforms would be carried out over 10 or 20 years. I suppose that that is the Chancellor's definition of "future", and that everything will now be deferred until after the next and subsequent elections. That is the nature of the Labour Government and how they deal with urgent national problems.

I have not finished dealing with the way in which the Minister presented Government policies. There is a third way in which he was less than absolutely clear with the House and the British public in presenting the effects of the national insurance changes. He said that it was unambiguously good news for employers, or at least for all employers with employees earning less than £500 a week. He must know--in which case he should make it clear--that that is not the position. The provision does not have a straight-line effect.

If the Minister looks at page 47 of the Red Book--I sometimes wonder whether Ministers in this Government bother to read it--he will see chart 3.3, which is very peculiar and compares the effect of the introduction of the new rates of employer national insurance contribution with the current regime. We know that, in respect of employees on more than £500 a week, employers will pay more class II contributions, but some employers will pay more on modest earnings of between £100 and £200 a week. The table is clear: an employer will pay more than under the old regime for an employee earning £150 or £160 a week. However, the employer will pay less for an employee earning £170 or £180 a week.

7.30 pm

The anomalies are extraordinary. It is not true that the measures are unambiguously good news for employers and reduce the burden of national insurance contributions at low levels of income, only to be compensated by an increase at higher levels of employee incomes. There is one message in ministerial rhetoric and in the handout from Walworth road, and another reality in the detail of the Treasury documents.

You, Mr. Deputy Speaker, may think that I have been harsh on the Under-Secretary--after all, he has come to the House only to do his master's bidding--but I have been extremely kind to him, compared with what it is necessary to say about the Chancellor of the Exchequer. The Chancellor may simply have made a mistake. He said "further" when he meant to say "future". In the spirit of generosity that is part of the tradition of the House,

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we not only take account of that as a theoretical possibility, but hope that it ultimately proves to be the correct hypothesis.

Mr. Duncan Smith: I do not think so.

Mr. Davies: My hon. Friend does not think so, but perhaps he is less generous minded than I am.

Mr. Letwin: Is my hon. Friend neglecting the gyroscopic spinning of the Chancellor's servants? If the Chancellor had made such a mistake, would not Mr. Whelan have been informing the press of the catastrophe in 25 minutes, let alone 24 hours, and asserting that it was merely a slip of the stenographer's hand?

Mr. Davies: I agree with my hon. Friend that that is part of the evidence that there was not a simple mistake. A serious issue is before us, because there are only two possibilities: either the Chancellor made a mistake or he deliberately spoke with forked tongue. It would be extremely serious if a Chancellor of the Exchequer of the United Kingdom had deliberately spoken with forked tongue. That goes way beyond the economic significance of tax changes, issues of mere competence or the attractions and costs of different political programmes to the heart of the integrity of the House, and the integrity of government.

I want fully to consider the possibility that there was a mistake. I am the first to acknowledge that we can all make mistakes or slips of the tongue. I am no less likely to make such mistakes than anyone else, but there is a simple remedy in this place: an hon. Member simply apologises to the House. That is extremely easy to do, and the tradition of this place is that, once an hon. Member has apologised, no further sanctions are called for and the matter is at an end. That has been the basis of the honour of the House of Commons for centuries, as you, Mr. Deputy Speaker, know as well as--indeed, better than--anyone.

The Chancellor never took that opportunity. Instead, he did something extremely serious which, sadly, can only confirm his serious guilt in the matter. He said something in the House and, to cover himself when it became clear that there was a fundamental contradiction between what he had said in the Budget speech and the Red Book, which was issued after it, he had the Treasury put out a completely false version of the text.

We are familiar with Governments in the past--not, I am glad to say, in this country--who have adopted the Orwellian method of retrospectively changing the text of speeches, but I did not expect that in this country in my political lifetime. I have in my hands the text of a press release put out by the Treasury after the Budget speech and after the row had begun. It is identical to the Budget speech in Hansard and is headed "check against delivery". We must check carefully when a speech by the Chancellor is delivered or committed to paper. It says:

"Chancellor of the Exchequer Budget speech, 17 March 1998".

I read the speech, and the text corresponded exactly to Hansard, until I reached page 13, which states:

"Future reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings."

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I thought that I must have made a mistake, had a brainstorm or imagined something; indeed, if I had had a dream, it would have been a nightmare.

I looked again at Hansard, and the speech refers not to future reforms, but, as we all heard the Chancellor say, to "Further reforms". That is a very serious matter. Although the incident is a credit to the integrity of Hansard, the Government, unlike some totalitarian regimes, are notin a position retrospectively to doctor Hansard. Nevertheless, the Treasury saw fit to put out a document purporting to be an exact text of the Budget speech. One key word had been changed, which, I fear, is evidence that there was no mistake made in good faith, but a deliberate attempt to disguise reality--to speak with forked tongue. I am being very careful, Mr. Deputy Speaker, not to use an unparliamentary expression.

Mr. Deputy Speaker: Order. The hon. Member for Grantham and Stamford (Mr. Davies) is being very careful. I shall not ask him to withdraw the words "forked tongue", but I ask him to be careful in choosing his words.

Mr. Davies: If hon. Members have not got the point by now, they never will.

The Government can do only one thing to undo the damage that they have done to their credibility by behaving in such a way. They must, even at this late date, make a full and grovelling apology for this attempt to pull the wool over the eyes of the British public. It was doomed to failure, because they misunderstood and underestimated the intelligence of the British people, and the fact that the Opposition were wide awake and would not let them get away with it.

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