| Previous Section | Index | Home Page |
Mr. Christopher Leslie (Shipley) rose--
Mr. Heathcoat-Amory: I shall not give way. I am ending my remarks now. I hope that the hon. Gentleman will catch your eye, Mr. Deputy Speaker, if he has something original to say--which would be very unusual.
I wish to end on the following point. The fuel duties--
Jacqui Smith:
Will the right hon. Gentleman give way?
Mr. Deputy Speaker (Mr. Michael J. Martin):
Order. The right hon. Gentleman has indicated that he is not going to give way.
Mr. Deputy Speaker:
Order. I do not care what he promised the hon. Lady.
Mr. Heathcoat-Amory:
I ask the hon. Members for Redditch (Jacqui Smith) and for Shipley (Mr. Leslie) to forgive me. I usually give way generously, but I am aware that time is moving on.
What the Government are doing on fuel duties is symptomatic of their approach to taxation. Before the Budget, the Prime Minister said that he had
Mr. Giles Radice (North Durham):
I welcome this Finance Bill, which enacts an excellent Budget that has provided help for most families and for business, and also useful tax cuts and public spending increases, all within a highly prudent fiscal framework.
The Opposition have quoted what various people think about the Budget. It might be worth quoting Mr. Samuel Brittan in the Financial Times. He says:
It is an excellent procedural device that the report of the Select Committee on the Treasury is discussed with the Second Reading of the Finance Bill. It is right that it should be, because we examine the economic background to the Budget and some of the issues that arise from it. I want to refer to both approaches. First, I think that the report reflects the fact that on our Select Committee there is broad support for the Government's economic and fiscal strategy. I shall quote from one of our expert witnesses, Mr. Gavyn Davies, who described quite well the dilemma facing the Government when they took office. He said:
Basically, we now know that the aim of fiscal policy is to provide stability on the ground that, if we can secure that stability, growth will to some extent look after itself. I think that that is a sensible economic policy. It is one that has the support, by and large, of the Treasury Committee irrespective of party. If we study the figures, it seems that the Treasury forecast of 1 to 1.5 per cent. growth in 1999--that is predicting a soft landing rather than a hard one--is now quite a possibility, in a way that we would not have thought six months ago, for example. It seems that we shall have a successful slowdown without recession.
Of course, there are potential problems.
Mr. Tyrie:
Will the hon. Gentleman give way?
Mr. Radice:
I shall finish this part of my speech.
There is the international economic situation, the United States and the level of the pound and what that might do for the British economy. We conclude in our report that the Treasury forecasts are not unrealistic.
Mr. Tyrie:
The hon. Gentleman has partly covered the point that I wanted to make. However, does he not think that, if there is to be a soft landing, that will have far more to do with the fact that there has been a global slowdown--I think particularly of the collapse in Russia and the attendant
Mr. Radice:
I understand what the hon. Gentleman is saying. However, the Russian experience might have produced a hard landing or a recession rather than a soft landing. I think that the pick-up in consumer confidence that we are now seeing and the impact that that is beginning to have on output give us some hope at least that growth will be resumed. That is extremely good news. We did not hear anything of that from those on the Opposition Front Bench.
Two possible suggestions for this change were put to us on the Select Committee. There was, in a sense, an unholy alliance between Patrick Minford and Gavyn Davies, who both said that beneficial structural changes in the labour market had made it possible for the economy to be run at an unemployment rate substantially below that which had previously been consistent with stable inflation. If that is so, it is good news for the economy, as it means that the equilibrium or sustainable level of unemployment will be much lower than we previously thought. That background has enabled the Bank of England to implement the 225 basis points cut, which has helped the economy.
The second suggestion--here I come to the Chancellor and the Government's policy--is that so far the co-ordination in macro-policy between fiscal and monetary measures has been effective. We comment on that in our report, and it receives support from all quarters of our Committee.
A year ago, there was criticism of the Chancellor for failing to tighten fiscal policy sufficiently. However, it is now clear that, because of the tight control over public spending, and also because of tax increases, there has been a 3 per cent. tightening of gross domestic product since 1997. That is fairly substantial, and it is the Goldman Sachs definition, which is not challenged nowadays.
There is no doubt that, in the present Budget, despite some marginal fiscal stimulus, that tightening has continued. That has enabled the Monetary Policy Committee to cut faster and further than it otherwise would have been able to do. That vindicates the Chancellor's decision to give operational independence to the MPC to run interest rates. It has also shown that it is possible at the same time to co-ordinate monetary policy with fiscal policy. The Chancellor has tightened, and that has enabled the Bank to reduce interest rates. So far, that has worked successfully to produce not the recession that people feared six months ago, but, hopefully, a soft landing.
We comment on those matters, but we also examine some of the controversial issues about which we have been hearing this afternoon. What is the fiscal stance, and what about the tax burden? Of course, truth is many sided. We heard one aspect of the truth from the right hon. Member for Wells.
"no plans to increase taxation at all".
The Government have broken that promise repeatedly and deliberately and, by a mixture of stealth taxes, cooked statistics and sheer ignorance, they are putting at risk the golden economic legacy that we left them. Conservative Members will expose and oppose them. I ask all my right hon. and hon. Friends to join in that endeavour.
4.38 pm
"Mr. Brown has removed two obsolete and harmful reliefs--that for mortgage interest and the so-called married couples allowance. He has improved the national insurance progression to increase incentives and lower the poverty tax. He has also undertaken desirable measures of redistribution towards families with children, where much of today's poverty tends to be found, and to provide top-up benefits for those who prefer to work for modest pay rather
20 Apr 1999 : Column 718than try to claim the dole. He has moreover made a good start on his declared aim of integrating tax and social security into what might eventually be called a negative income tax."
That is the opinion of someone who is not a member of the Labour party. That is Samuel Brittan speaking about the Budget. We did not hear much of that from the right hon. Member for Wells (Mr. Heathcoat-Amory), the Opposition spokesman.
"When the present Government took office two years ago, the economy was in the midst of an intense consumer led boom, and the key issue for the new Chancellor was whether he could control this boom without inducing a hard landing, with sharp increases in unemployment. Past history was not encouraging in this regard--without exception, all previous consumer booms of this type in the post-war period had been followed by a period of negative growth in real GDP, usually accompanied by new peaks in unemployment."
When we think about post-war history, there was the Maudling dash for growth, the Barber boom, the Lawson boom and the Clarke boomlet. I was a supporter of the right hon. and learned Member for Rushcliffe (Mr. Clarke), who I thought was an excellent Chancellor, but at the end of his period in office he allowed the economy to get slightly out of control. I accept that the Labour party has shared in some of that history. I can remember standing unsuccessfully for election to this place in 1964 on the promise that we would manage to increase growth.
| Next Section
| Index | Home Page |