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Mr. Nick Gibb (Bognor Regis and Littlehampton): Where in the Labour manifesto did it say that the Labour Government would raise taxes to the tune of £40 billion over the lifetime of this Parliament? Where did it say that
newly retired couples who will reach the age of 65 after next April will lose £500 of income that they had expected to have at retirement?
Mr. Milburn: I will come to that £40 billion in a moment because the hon. Gentleman, before he was moved on, helped contribute to the £40 billion black hole in the Tories' spending plans. The Bill and previous measures will help to cut taxes and will ensure that tax plans for this year, next year and the year after are all lower than if the Conservative party had been returned to power at the last general election.
By reversing policies that are designed to make work pay, the Opposition would reinvent the spiral of benefit dependency that they now say they want to eradicate. However, the Opposition have revealed something else, too, during the passage of the Bill. They have revealed that they cannot be trusted with our country's public finances or with our country's key public services.
In the last two years, the state of the public finances has been transformed. We have cut public sector borrowing by some £32 billion. The approach that we have taken has been prudent and disciplined, and this Finance Bill continues that process. It locks in the stability that we have been creating by keeping the public finances under control.
Over the next five years, there will be a current budget surplus of £34 billion. The Government are now living within our means, and yet we have been able to invest extra money in our key public services--an extra £40 billion for our schools and hospitals alone over the next three years.
Mr. Milburn:
When the right hon. Gentleman comes to the Dispatch Box, perhaps he will say how he intends to match those plans.
Mr. Maude:
I shall say for the umpteenth time that we support those increases in health and education spending. However, let the Chief Secretary answer this. Before the last election, the Prime Minister said in clear terms that Labour had no plans to increase taxes at all. What does the Chief Secretary think that he meant by that?
Mr. Milburn:
What we said before the general election is contained in our manifesto. We said that we would not increase income tax rates, and we have not; indeed, we have reduced them. We said that we would not extend VAT to children's clothes, food, books and newspapers and public transport fares, and we have not. We said that we would introduce a 10p rate of income tax, and we have.
If the shadow Chancellor wants to compare and contrast the tax promises that we made at the general election with those that his party manifesto made at the 1992 election, I am happy to go through that charade. He might have come to the Dispatch Box and explained how it is that one moment he describes our spending plans as reckless--and the Leader of the Opposition accuses my right hon. Friend the Chancellor of embarking on a spending spree--and the next he says that he wants to match our spending on health and education.
It is no good willing the end without being prepared to will the means. The Conservatives have failed to put their money where their mouth is. Worse, they have tabled proposals that would take money away from the very services that they say they support.
Mr. Maude:
As the Chief Secretary seems unwilling to defend the Prime Minister on his clear statement before the general election, will he say what he understood the Prime Minister to mean when he said just after the election that the Government would cut social security bills? Did he believe that the Prime Minister meant that he would increase those bills by £38 billion?
Mr. Milburn:
The right hon. Gentleman must be aware of what has happened under this Government as compared to what happened under the previous Government. He must know that social security spending is rising at half the rate under this Government, so we will take no lectures from him.
During our proceedings on the Bill, the Conservative party tabled amendments that would rob the public purse of almost £25 billion over the next three years and Conservative amendments to last year's Finance Bill would add another £15 billion to that total. [Interruption.] If the shadow Chancellor would stop chuntering and start listening, he might learn something. His party lost the trust of the British people at the general election because it broke its promises and it continues to make promises that it cannot keep.
Our proceedings have highlighted all too clearly the contrast between the Government and the Opposition: £40 billion extra for our key public services with the Government or £40 billion less with the Conservatives; more help for families with the Government or less with the Opposition; more help to get people into work and to help them to stay there with the Government or less for both with the Conservatives; economic stability with the Government or a return to stop-go, boom-bust with the Conservatives.
Mr. Heathcoat-Amory:
In March, the Chancellor introduced a tax-raising Budget, followed in short order by a tax-raising Finance Bill. Even more recently, we have been faced with a tax-raising Report stage. Unusually--it is certainly unprecedented in my experience--the Government only yesterday tabled eight additional money resolutions, each of which was, by definition, tax-raising. We have had a series of Budgets, each of them tax-raising, and a series of provisions this year whose object has also been to raise taxation.
This is a bad Bill. However, in the debates during its progress through the House, we have managed topuncture the Chancellor's self-satisfied arrogance and complacency. Instead of strengthening the British economy, as the Chief Secretary claimed, he has put at risk the golden economic legacy that he inherited from the previous Conservative Government at the general election.
The Chief Secretary made the truly remarkable claim that social security expenditure was rising less sharply now than under the previous Government. That is flatly untrue, as statistics from the ever-helpful House of Commons Library show. In the three yearsto 1998-99--in other words, the Conservative Government's last year of office and the years for which Conservative planning was taken over by the Labour Government--social security spending fell by 0.2 per cent. per year, in real terms. Conversely, the Library figures show that, from 1998-99 onwards, when the Labour Government have been on their own, social security spending is set to rise by 3.2 per cent. each year, in real terms.
That is a graphic illustration of how the Government have turned a satisfactory plateau of real-terms social security expenditure into a steep rise. That is where the money is being spent. Instead of taking money from the social security budget and spending it on other desirable areas of social expenditure, the Government are wasting it on an acceleration of social security expenditure. That is documented in the figures that I have given.
Mr. Leslie:
Will the right hon. Gentleman give way?
Mr. Heathcoat-Amory:
No. I am correcting the facts and figures misrepresented to the House only a few moments ago by the Chief Secretary.
The Bill, and the Budget before it, contain some gimmicky handouts. Interestingly, however, some of the handouts announced in the Budget speech are not to be found in the Bill. For example, in his Budget speech, the Chancellor proudly announced research and development tax credits. Business looked forward to them, but the Bill says nothing about them. The proposal is a fraud. Conversely, the Bill contains some tax increases that were not announced in the Budget speech. That is all so appropriate for a stealth-tax Government.
On Budget day, the Government published a leaflet called "Budget '99", which purports to be a summary of the Budget measures. In the section entitled "Raising Productivity", the research and development tax credit is said to be an item that will be "delivered" in the 1999 Budget. Yet, as I have explained, it was not delivered, in either the Budget or the Bill.
The leaflet does not mention something that is in the Bill--the sharp and damaging increase in stamp duty. That is set to raise £300 million a year, mostly from the business sector. The research and development tax credit may come into effect in the year 2001, and will benefit business by a maximum of £100 million.
The leaflet is nothing short of state-sponsored propaganda. It is biased, partial and a disgrace. The taxpayer was expected to finance a leaflet--at a cost of more than £100,000--that gives a distorted and misleading account of the Budget measures.
The Finance Bill has been criticised for making the system more complicated. Every Finance Bill introduces more rates, more tax bands and more complex relief. Last year, the capital gains tax system--again unreformed this year--set up all sorts of perverse incentives, additional rates and multiple allowances. The Government say that they are trying to make the tax system simpler to aid self-assessment, but it is becoming more difficult for individual taxpayers and more expensive for businesses. The Government have begun a regulation drive to make everything more complicated and expensive, and that--just as surely as tax increases--is undermining the competitiveness of the British economy.
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