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9.20 pm

Mr. Michael Portillo (Kensington and Chelsea): I begin by welcoming the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) back to the House.

I congratulate the Chancellor of the Exchequer. There is no denying that he is a clever fellow, but I congratulate him in particular on his luck: he is a lucky Chancellor. He did not invent the British recovery. The economy has been growing since 1992. Unemployment has been falling since 1993. He did not invent either the fantastic performance of the American economy. Nor did he invent the recovery in Europe.

When we listen to the Chancellor deliver any Budget, we see that he is well aware that he is clever, but it is not apparent that he is aware that he is lucky. He repeats the phrase "boom and bust" so often that I am afraid that he believes that he has abolished the economic cycle. Hubris comes before nemesis. Pride comes before a fall. Any Chancellor who thinks that he has abolished economic cycles has lost touch with the real world. That is when Chancellors make mistakes. No Labour Chancellor's career has ended in success. I do not suppose that his will end in success, either. Perhaps the Budget is the beginning of the end for the reasons that my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) and my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) gave.

The Chancellor is never too old to perform new tricks. This year, he raised tax allowances and duties by the rate of inflation. That sounded even-handed, but it turns out that tax allowances that reduce the tax that we pay rose by a measure of inflation that was calculated as 1.1 per cent. The duty on petrol was raised by a different measure of inflation that came out at 3.2 per cent. The difference between the two raised £500 million in extra taxes for the Chancellor. Anyone watching, or any taxpayer who used such a trick when filling out a tax return, would receive a visit from the Inland Revenue before he could say, "Geoffrey Robinson."

When the Chancellor describes the Budget as "Prudent for a Purpose", people will have every right to ask what he means by that: how prudent is it and what is the purpose? This is the Chancellor who has attacked prudence whenever the British people have shown prudence. He attacks people who save. He has scrapped the married couples allowance and so attacked people who marry. Starting next month, couples will lose £200 a year. By scrapping mortgage interest relief, he has attacked those people who wanted to own their own homes and is costing them £225 a year.

Then the Chancellor attacked people who wanted to make provision for themselves in pensions. The average 30-year-old will have to invest £200 extra a year to make up just for the tax that the Chancellor has taken out of people's pension funds.

The Chancellor said that this would be a Budget for hard-working families. However, new figures--independent figures--from the Library released today

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show that a typical working family is already paying £670 extra a year under Labour. As the hon. Member for North Tayside (Mr. Swinney) said, that includes the punitive tax on petrol. Yet, Labour Members still have the gall to pretend that working families are paying less tax than at any time since the Government of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), who is in the Chamber.

The Chancellor repeated that ludicrous claim on Sunday, on the "Breakfast with Frost" programme. The only family that is like that--the mythical Brown family--is a family that does not smoke, does not drink, is not married, does not drive a car and does not even have a local council. The Chancellor's claim to be cutting tax on families is pathetic. No one believes it, and he should at least come clean and admit that it is absolutely bogus.

If the Chancellor is out of touch with families, he is out of touch with the new economy, too. In the global economy, highly mobile individuals and highly skilled people will seek out the low-tax environment and the low-tax Finance Ministers wherever they can find them on the face of this globe.

Mr. Derek Twigg (Halton): Will the right hon. Gentleman give way?

Mr. Portillo: Not on this point; sit down.

The Chancellor has become wholly insular.

Mr. Twigg: Will the right hon. Gentleman give way?

Mr. Deputy Speaker: Order. The right hon. Gentleman has stated that he is not giving way, and that should be enough.

Mr. Portillo: The Chancellor has become a Canute-type figure, wishing away the tide of global competition and closing his eyes to the threat to the London stock exchange that is posed by the lower rates of stamp duty in other markets. He ignored the threat to gambling revenue from internet gaming. He failed to see that higher tobacco might reduce revenue and boost smuggling, but he has pressed on regardless.

Now we come to the infamous IR35. In this Budget, the Chancellor doubled his estimate of how much that tax would raise--and so we must now double our estimate of how bad will be the brain drain and how bad will be the damage to Britain. IR35 is one of the taxes that this Chancellor of the Exchequer never even announced in the House of Commons. This year, he showed at least some consistency by not announcing another stealth tax that also is aimed at the new economy and that also sounds like a character from "Star Wars". This year's IR35 is called BN2J. BN2J is the Chancellor's stealth tax on British world-beating companies and an attack on double taxation relief.

The world's largest accountancy firm said that BN2J will make the United Kingdom one of the least attractive locations for international companies. [Interruption.] All that Labour Members can do is to jeer at the world's largest accountancy firm. They jeer because the Government do not realise that, in the new economy, the choice will not be between lower taxes and better public services. In the long run, taxes must be low enough to

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attract investment from all around the world, so that we can fund better public services. The Government are taxing more and regulating more, and Britain is headed in the wrong direction.

As for the Budget speech, I say, as my hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) said: the Chancellor devoted so much work to the things that did not appear in his speech. If he had announced the taxes clearly in his Budget speech, he would have been forced to admit that taxes have increased by a net 8p under this Government--a 9p up, 1p down Budget. We know that this is a Chancellor who dispenses with tradition. However, now he has dispensed with the ultimate tradition of announcing Budget tax rises in his Budget speech. Moreover, all those tax rises have been introduced by a party whose Prime Minister promised not to increase taxes "at all".

Mr. Barry Gardiner (Brent, North): I am grateful to the right hon. Gentleman for giving way, particularly on that point about not increasing taxes. He and his leader have guaranteed that they would give away £15 billion in tax cuts to the richest members of society. What effect would that have on public services?

Mr. Portillo: We have made no such pledge. I do not know what the hon. Gentleman is talking about.

The tax rises were introduced despite the fact that we had been promised no tax rises. Labour Members now like to claim that the Prime Minister never said that, but they should reflect on the fact that they would not even be in the House today if he had not told the British people that. He has not fulfilled his promise.

There are many other prime ministerial promises that he has not fulfilled either. He said that class sizes would be smaller, but they are larger today. He said that waiting lists would fall, but the waiting list to get on the waiting list is double today. He said that he would be tough on crime but, for the first time in six years, crime is rising again in this country. [Interruption.]

Mr. Deputy Speaker: Order. I must plead with the House to come to order. The right hon. Gentleman is addressing the House and there should be no private conversations. [Interruption.] Order. That goes for Mr. Bercow as well.

Mr. Portillo: We have heard promises, promises, promises from the Government. For three years they have been a promising Government, but those promises look pretty pale and washed out today.

It turns out that the Chancellor is not so much clever as too clever by half. The press and the public now do not believe a word of his Budget. Even the BBC chose to advertise their Budget coverage by saying that it would be

an analysis of everything the Chancellor won't be saying.

The Sun newspaper said that it was a Budget that would need the seven-day test before judgment could be passed. It has indeed been a seven-day wonder. Today, on the seventh day, let us review where we have got to: day 1, the CBI said that this was not the Budget that they had been hoping for; day 2, a double taxation measure in the Budget's small print was exposed as costing British business billions of pounds; day 3, more small print was exposed, with a massive hike in company car tax; day 4,

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contrary to what the Chancellor said in his Budget speech, figures showed that the net increase in the Budget was £1.4 billion of extra taxation; day 5, we had the revelation that different rates of inflation had been used for computing allowances that benefit people from those used for duties that people have to pay; day 6, the Health Secretary admitted that the 10,000 new nurses announced by the Chancellor were not 10,000 new nurses at all, but a reannouncement; day 7, which is today, new figures have shown that the average burden of taxation on a typical family is £670 extra a year under Labour. The Budget has unravelled. It is not so much a seven-day wonder as another demonstration that a week is a long time in politics.

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