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Sir Peter Tapsell: How is it possible to argue that this Budget is tightening the fiscal position and, simultaneously, to announce huge extra expenditure?
Mr. Smith: The answer is that we cut the debt interest payments that were costing this country £4 billion a year under the Conservative Government's incompetent and profligate management. Conservative Members might like to contrast what we are doing with the public finances in surplus, with the debt of £50 billion that the previous Conservative Government ran up. That allowed debt as a share of national income to rise to 44 per cent. of GDP. We have cut it to 37 per cent., and the Red Book shows that it will fall further, to one third.
I turn to the contribution from my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), whom I too am very pleased to see back in the Chamber in such good health. My right hon. Friend praised the Budget's provisions for the national health service, as did all Labour Members and a number of Opposition Members.
My right hon. Friend also raised the needs of manufacturing, as did several other hon. Members. Our measures on capital allowances, on capital gains tax and on research and development credit; the £1 billion venture capital fund; and the small business and clusters measures that were welcomed by my hon. Friend the Member for Coventry, South (Mr. Cunningham) will all help manufacturing. However, the most important thing that we can do is to continue to deliver the essential foundation for lasting success and macro-economic stability so that manufacturers--like other businesses--can plan ahead against a backdrop of low and stable inflation, sound public finances and steady growth. That is the way to continue prosperity in this country.
I now turn to the comments of the shadow Chancellor. One might have thought that, in his first speech to the House as shadow Chancellor, we would have heard from him a vision of how the economy, or Britain, would have fared under a Conservative Government--perhaps that is optimistic, but some people would have expected it. Instead, we heard the usual mix of contradiction, confusion and extremism that is the current Tory party.
We heard a lecture on honesty from the man who drove through the 22 Tory tax increases that broke all their promises. We heard demands for a recognition of marriage in the tax system from the man who, when in office, made the deepest cuts in the married couples allowance. We heard a homily on low taxation from the man who, as Chief Secretary, increased the tax burden by the largest amount in history.
The truth is that the right hon. Gentleman and his hon. Friends would return us to the dismal days of the previous Tory Government, in which he played a part. All would be driven by their only economic policy: the irresponsible, incredible, uncosted and unfair tax cuts for the few to which they are committed through their so-called tax guarantee.
By contrast, we are building economic stability, with 800,000 more people in work, and take-home pay up by 10 per cent. during this Parliament. Their irresponsible
guarantee to cut taxes irrespective of economic circumstances would, as the shadow Chancellor must know, risk driving up the deficit and returning us to the Tory boom and bust of the Major years. That was when 1 million businesses went under and tens of thousands of families were in negative equity, or losing their homes. By contrast, we are cutting taxes for hard-working families; we are introducing the 10p rate; the 22p basic rate; the working families tax credit, which the Tories would scrap; and the children's tax credit.The Tories' tax guarantee would mean tax cuts only for the privileged few. We know that from the shadow Chancellor's own words in his list of commitments. This month, he confirmed the Tory policy of transferable tax allowances. That would cost about--[Interruption.] Does the right hon. Gentleman deny that is his policy? It seems that he does. I shall go on to the next commitment.
The right hon. Gentleman said that he wants tax relief for private medical insurance at a cost of at least--[Interruption.] Does he deny that that is his policy? I am tempted to ask him which of our policies he disagrees with, but I shall carry on with my list.
The right hon. Gentleman also said that he supported the abolition of capital gains tax. Does he still do so? [Interruption.] The Tory document of last October offers top tax rate cuts--[Interruption.]
Mr. Portillo: As the Chief Secretary has made three outrageous claims, will he please produce the sources for all of them?
Mr. Smith: If the right hon. Gentleman is now saying that he does not believe what he was previously on record as saying, we accept that he has done a U-turn and has changed his mind.
Mr. Portillo: Why will the right hon. Gentleman not give us the sources?
Mr. Smith: I cited the Tory document of October 1999 offering top tax rate cuts--£600 million for every 1p off.
Mr. Portillo: No, that will not do. The right hon. Gentleman quoted me. Give me the sources.
Mr. Smith: They are the 1997 manifesto, the right hon. Gentleman's personal manifesto the year before last and the Tory document of last October. I shall send him chapter and verse on every one of these claims. He cannot seek so easily to resile from the pledges that he has made.
The right hon. Gentleman and the Conservative party are committed to the few and not the many in this country. The Opposition's tax commitments would deprive the national health service of the resources that the Government have committed over the next four years. The Tory commitments mean that they cannot match the four years of funding that we have announced. The right hon. Gentleman--I suppose that he will challenge this--said:
- Gordon Brown can either reduce taxes or he can increase public spending. What I would recommend is that he use that money to reduce taxes.
It is clear what the Opposition's policies would mean for the NHS. In place of a publicly funded NHS, they would have a privatised system where the care received would depend on the amount of money that the individual pays. Whereas Labour is investing to build a modern NHS, the Tories would reduce the NHS to a second-rate safety net.
Only last week the shadow Chancellor said:
- I do believe that in the long term you've got to create some new sources of finance, you know, may be companies can help with insurance schemes.
Mr. Smith: The right hon. Gentleman asks for the source, and it is his interview on 19 March during GMTV's "The Sunday Programme".
It is as a result of our sound stewardship of the economy and public finances that we are securing rising living standards, reduced borrowing, lower taxes for hard-working families, extra support for pensioners and substantial investment in health, education and other public services. The increasingly clear choice before the British people is between a Government who are delivering a strong economy and a strong society and an Opposition who are wedded to irresponsible pledges and plans which simply do not add up. In contrast, our priority has been to cut taxes for hard-working families and ensure strong public services for the many, whereas Conservative Members peddle reckless tax cuts for the few.
It is a choice between a Government who keep our promises and an Opposition who could not keep theirs. In this debate Conservative Members have confirmed themselves as the incoherent in pursuit of the undeliverable. Our Budget is indeed prudence for a purpose. It is a Budget for the whole country. It is the Budget that people voted for when they voted Labour and a Budget of which we can all be proud. I commend it to the House.
- That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide--
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for varying any rate at which that tax is at any time chargeable; or
(d) for any relief, other than a relief which--
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
2. Beer (rate of duty)
Motion made, and Question put,
- That--
(1) In section 36(1) of the Alcoholic Liquor Duties Act 1979 for "£11.50" there shall be substituted "£11.89".
(2) This Resolution shall have effect on and after 1st April 2000.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
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