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Mr. Michael Portillo (Kensington and Chelsea): As usual, I draw attention to my entry in the Register of Members' Interests. [Hon. Members: "Ah!"] At least I am honest about it.

I believe that:

I was quoting from the Labour party manifesto. [Interruption.] Labour Members roar. It is in there. That is the basis, that is the commitment, on which the Chancellor of the Exchequer fought the last election campaign. Was the Chancellor being insincere with us then, or is he kidding us all now? Either way, who can believe a word that he says now?

Does the Chancellor recall promising, two years ago, £40 billion to transform health and education and to tackle crime? If Labour Members believe that the £40 billion that he has announced today will save their seats, they should remember that the previous £40 billion did not improve public services. This £40 billion will not improve public services, because Labour's spending is not working. Today the Chancellor announced lots more targets. The history of the Government is that they have dumped the targets that they cannot meet.

Another gem in the Labour manifesto was its commitment that the Labour Government would be

Now, that is all turned around. Now they are going to be big spenders, not wise spenders, because we are all paying for their failure to reform welfare. We are all paying for their distortion of the clinical priorities in the national health service--distorted by a Government obsessed with spin. We are paying for their failed policies of interference in education. Here is the Chancellor today offering titbits directly to schools. Why does he not give the vast majority of the money directly to schools, as we propose to do? We are still paying for the dome. Is it any wonder that the Labour Government--[Interruption.] Oh yes we are. Is it any wonder that the Labour Government tax more and deliver less?

Does the Chancellor remember that the last time he spoke to us, he said:

Well, people have suffered. Their taxes have gone up, but public services have got no better. Hospital waiting lists are up. Class sizes are bigger. [Interruption.]

Madam Speaker: Order. I would be obliged if the House would come to order. The House was not always in good order for the Chancellor, but it was for most of the time. I expect the same for the Opposition spokesman.

Mr. Portillo: Hospital waiting lists are up. Class sizes are bigger. Today the Government have released the most appalling figures for violent crime. How can they spend so much, and spend it so badly?

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Today the Chancellor tells us that spending will be tied to output. If that is the case, what has he been doing in the past? There is never any danger of this Chancellor "underspinning", as he said today. Having broken all his promises before, does he really think that the solution is to make promises again?

The Labour party fought four general elections on a policy of tax and spend. Those are the four general elections that it lost. The only time that Labour won an election was when it committed itself--or appeared to commit itself--to Tory prudence.

Let me remind the House why the Chancellor has so much money in his election war chest today. [Interruption.] Labour Members do not want to hear about that. Is it not because he has taken £5 billion a year out of people's pension funds? This is a Chancellor of the Exchequer who, for his own glorification, is prepared to spend today at the cost of impoverishing generations of pensioners tomorrow.

Does not the Chancellor have the money today only because he has relentlessly increased taxes? Petrol has now reached £4 a gallon, and council tax has increased four times faster than inflation. Tax relief for mortgages has gone, and tax relief for marriage has gone. The additional age relief for pensioners has gone, too. Does not the Chancellor realise that, for families and pensioners, the tax increases that he has imposed are reality today, and that all the fine words that we have heard from him are merely promises for tomorrow?

Did the Chancellor really think that people would not notice that they were being taxed? Did he really think that he could put an extra £670 of tax on average working families in this country and they would not notice? For many families, that is the difference between living comfortably, and life on the edge. It is the difference between getting on and getting into debt--[Interruption.] That is the real world. How out of touch can the Prime Minister and the Chancellor of the Exchequer be?

Is it not true that those who can least afford it have been taxed and taxed until the pips squeak, with taxes on alcohol, taxes on cigarettes and taxes on petrol--the most regressive taxes of all? [Interruption.] Labour Back Benchers know what has happened, and they know that a Labour Chancellor who taxes the poor is no socialist hero. I believe that hard-working families and pensioners should pay less tax than they do now, because Governments--[Interruption.]

Madam Speaker: Order. Many of the people of this country will be watching us, and many will certainly be listening. Tomorrow, I shall get many telephone calls and letters about the extremely poor behaviour in this Chamber.

Mr. Portillo: I believe that hard-working families and pensioners in this country should pay less tax, because Governments often waste their money. I do not believe that it is morally superior for the Government to take money away from parents--money that they might have spent on their children, or on putting a better meal on the table.

A Conservative Government will cut taxes for those people, because families need lower taxes and businesses need lower taxes. When Governments all over the world are cutting taxes, how else is Britain going to compete?

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Despite the revisions that the Chancellor announced today, can he confirm that he still assumes that national income will increase by 2¼ per cent. a year, yet commits himself to increase overall national spending by 3.3 per cent. a year? Would any family in the land plan to go on increasing their spending, year after year, by more than the increases in their income?

Is not the Chancellor's plan just a spending splurge? He will increase spending by almost 1½ per cent. of national income, which is the equivalent of £600 of extra tax for every taxpayer. Is it not true that the budget surplus can be spent only once, and that when we have spent that surplus, we are back on the road to higher taxes?

What happens if the future is not quite as rosy as the Chancellor thinks it will be? Is he committed to all the numbers that he has just given us, whatever may happen to the economy four years from now?

We shall study the Chancellor's remarks very carefully. Although he claimed to be "underspinning" today, he will have to admit that every previous statement he has made included double and triple counting, and many hidden surprises. Now, the Prime Minister's notorious leaked memo has displayed the cynicism deep at the heart of this Government. When people trust them so little, who knows what we shall find in the small print?

We shall find out what constitutes genuine investment in our future, and what, on the other hand, risks being wasted by a Government who are now spending £11,700 every second. I trust that we shall find many things to be welcomed, just as we welcomed the extra money for the health service that the Chancellor announced in the Budget statement.

The Chancellor has taken time to prepare his plans, and we shall take time to prepare ours. However, our framework is more prudent than his. We can and we should increase spending in real terms on the things that really matter to people, but we should do that at a sustainable rate. Steady increases above inflation and within the growth in the economy can be combined with tax cuts for hard-working families and for pensioners. Are these not now the dividing lines?

We will fight the next election as the low-tax party. Labour has been exposed as the high-tax party. What Britain needs is not a splurge of taxpayer's money from a Government whom people do not trust, but a sustainable policy for the long term. Labour Governments always end up with tax and spend. A Conservative Government would tax less and spend better. A Conservative Government would show common sense and prudence.

Mr. Gordon Brown: I take it that the right hon. Gentleman is against our spending plans. I think that the most relieved man in the House this afternoon is the Leader of the Opposition--except for the fact that he has had landed on him the policies of the shadow Chancellor.

This afternoon we have heard an extraordinary statement from the shadow Chancellor, because he has refused to match any of our spending commitments. He has refused to match the £11 billion extra that we are spending on education, so in every constituency in the country Opposition Members will have to answer to parents, teachers and others about the Tory education spending cuts guarantee.

The right hon. Gentleman has refused to match the £8 billion extra for public and private improvements in transport, so Conservative Members will have to answer

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for their transport cuts guarantee to all the road users, all the car owners and all the people who depend on public transport. The shadow Chancellor has even refused to match my right hon. Friend the Home Secretary's spending on combating crime, so they will have to answer for a guarantee of spending cuts on law and order, as well.

When the shadow Chancellor went round the television studios at the weekend and said that our spending was unsustainable and, as he repeated today, that it was a "splurge", that Labour was a party that could not be afforded, and that the rate of spending in this country should be 2 per cent. not 3.3 per cent., he was actually saying that public spending should be cut by £16 billion by year four. He cannot escape from that, try as he might. Throughout the country he will have to say which school, which hospital, how many teachers and how many nurses would be affected by his proposals. When Conservative Members go back to their constituencies this weekend, they will have to give the answers.

There is another point. In 1992 the shadow Chancellor imposed 22 tax rises. He is now threatening £16 billion in cuts. I am happy to have our record compared with his when he was at the Treasury. He talks about taxation, but the biggest tax rises took place when he was there. There were 22 tax rises, including VAT on fuel, the rise in national insurance, the airports tax, and the reductions in mortgage tax relief and the married couples allowance. He is not the answer to the Conservatives' problems on tax; he is their problem on tax.

The shadow Chancellor says that he will be prudent. We have reduced the national debt. When he was Chief Secretary the national debt rose by £80 billion. It rose by the fastest rate in years, as the Conservatives doubled the national debt. The right hon. Gentleman says that he does not want to borrow, but when he was at the Treasury borrowing rose from £20 billion to £50 billion--and we have had to sort out the difficulties. We take no lectures from the Conservative shadow Chancellor given that he was responsible not only for tax rises but for borrowing at record levels and doubling the national debt.

There is another reason why we will not take lectures from the right hon. Gentleman this afternoon. In the 1980s the Conservative Government of whom he was a member refused to invest in our country--in education and infrastructure--and blew the privatisation of North sea oil revenues, which led us to the underinvestment and the problems that emerged with boom and bust in the early 1990s. The Conservative party cannot now tell us that it has a solution to the problems of this country, while the Labour Government are having to deal with their legacy of underinvestment to sort out those problems.

Only a few weeks ago, the shadow Chancellor's tax guarantee--it was a guarantee, then--was the issue of the moment, and he was trying to prove that resources were available. Instead of saying that the economy was running into ruin, that it was unsustainable and that things were getting out of control, he said on the Jimmy Young show:

In another speech, he praised us for an "absolutely reliable anti-inflation strategy". How is it that immediately after the Budget, with exactly the same figures for the framework for public spending, he could praise us for our anti-inflation strategy and say that the economy was doing well--but today he comes to the House to predict doom and gloom?

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As we have seen in the seven days since its spending announcement, the Conservative party has resorted to its old ways. It is not prepared to finance education. It is not prepared to finance health as it should be financed. It is not prepared to finance our social services. When the shadow Chancellor left the House of Commons, he said that the Conservative party was identified as uncaring, harsh and not concerned about unemployment, poverty or social conditions--yet it is a return to that Thatcherite policy that he is presuming today.

The shadow Chancellor lost the last election with 22 tax rises. He will lose the next election with £16 billion of public spending cuts.

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