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Mr. Heathcoat-Amory: Thank you, Mr. Deputy Speaker. Labour Members may not like these facts, but they are going to listen to them because they are all based on the truth--either the figures in the Government's own document or comments by respected independent outsiders.

Mr. Andrew Smith: A few minutes ago, the right hon. Gentleman plucked out of the air the figure of £99 billion. Does that mean that he will cut £99 billion, or will he keep the cuts to the £16 billion that we have identified so far?

Mr. Heathcoat-Amory: I shall discuss the question of the year 2004, but before I discuss the expenditure that we shall be undertaking in that year, I shall discuss what the Government have been spending and taxing in the last three years. Let us look at the record; let us read the book before we attempt the crystal ball.

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What we do know, beyond dispute, is that it is the taxpayer, particularly the poor taxpayer, who will have to end up paying for all this. How do we know that? Because it has all happened already, despite all the pre-election promises. We remember the Prime Minister saying that he had no plans to increase taxes at all. That is what he said before the election. It was never disputed, it was never contradicted and it was never corrected at the time. Despite all that, we have since had four Budgets, all of which have put taxes up. Road transport, savings, marriage and housing--they have all gone up, and in the Finance Bill, which the House debated last night, there is a new tax, the energy tax, which will be paid by all businesses from April next year.

What is really scandalous about this series of tax increases is that they are very often targeted on the poorest people in the country. In 1997, the Government abolished dividend tax credits. It is bad enough that that means taking £5 billion out of pension funds every year, which has led to a collapse in the savings ratio--which the Government do not dispute.

However, the terrible effect has been on some individuals--but not higher rate taxpayers, who were all protected against that particular tax increase. It is the non-taxpayers--the non-taxpayers relying on small savings--who now get no repayment. The Chief Secretary obviously finds that amusing. I invite him to do what I have done, which is to talk to one of my constituents, a Mrs. Pratt, who has written to me from Glastonbury. She has described how, last year, she received a tax repayment of £583; this year, she is not eligible for that. She actually has to make a tax payment.

Mrs. Pratt is 87 years old; she is blind and she is disabled. She has asked me to ask the Government why they are doing this to her. If the right hon. Gentleman wants me to debate mythical expenditure cuts in four years' time, I will go down to Glastonbury with him to tell Mrs. Pratt about our expenditure plans--if he guarantees to explain to her why he has taken £600 out of her income. That is the deal that I offer.

I also have a letter--I cannot be alone in having been written to by many constituents suffering in this way--[Hon. Members: "You are not."] We have the example of Mr. Brian Speakman, who says that he wrote to the Chancellor--he has not had a reply, of course--asking how he had


He explained how he would lose approximately £20 a month from his small pension. He finished:

in future. Those are real examples from real people.

Mr. Bercow: Do not both the record of the Government to date and their plans for the future underline the wisdom of what Lord Hattersley wrote in The Guardian on 13 March 1995? He observed:

Mr. Heathcoat-Amory: My hon. Friend is absolutely right, and the Labour party, when it does not find taxing

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poor people in this way funny, is in denial about it. The fact is--I am grateful to the Library for this figure--that the typical working family in this country is now paying an extra £670 a year. That is the record; so before we speculate about the future, let the Government admit that that is what they have done to working people in this country. After four Budgets in which the Government have done that, we may now be in an election year, so the Chancellor has gone on a spending spree.

Mr. Geraint Davies: Is the right hon. Gentleman aware of the regular Institute for Fiscal Studies reports after each Budget which show the distributional impact of each Budget? Is he aware that they show consistently for every Budget, and on aggregate for all the Budgets, that the bottom deciles of the population are consistently better off? Does he agree that when one looks at the distribution, it becomes clear that the bottom fifth in particular are much better off, and in fact no one is worse off? That has consistently been the shape of the distribution. That is in sharp contrast to the sort of things that have been thrown around in this Chamber in the last few days.

Mr. Heathcoat-Amory: That is flatly untrue. The bottom decile has actually had the biggest tax increases. On the question of figures, why have the Government dropped the previous Government's practice of publishing on Budget day the impact of all the taxes, direct and indirect, on typical households? We did that, and they dropped it. The Select Committee on the Treasury drew that to the Government's attention, without result.

Mr. David Ruffley (Bury St. Edmunds): Does my right hon. Friend agree that the hon. Member for Croydon, Central (Mr. Davies) has completely misrepresented and distorted the IFS figures? The IFS makes it perfectly clear that the bottom decile figures to which he referred exclude housing benefit. Does my right hon. Friend agree with that?

Mr. Heathcoat-Amory: Yes. We are just hearing more of the fiddled figures, and I am disappointed that the hon. Member for Croydon, Central (Mr. Davies) has fallen for his own propaganda on these matters.

Mr. Alan W. Williams (East Carmarthen and Dinefwr): We heard earlier about the lady from Glastonbury, and of course we all know that in our constituencies there are individual examples of gainers and losers. However, will the right hon. Gentleman say generally for elderly people how many losers there are, and will he compare that figure with the number of elderly people who now qualify for the minimum income guarantee and the number of working families who now qualify for the working families tax credit? I believe that something in the order of more than 1 million now qualify for the working families tax credit.

Mr. Heathcoat-Amory: The elderly lady who is my constituent is not at all unusual. What is more, the hon. Gentleman had an opportunity to help her, because we specifically raised that issue during consideration of the relevant Finance Bill when the dividend tax credit measure was taken through, and we gave the hon. Gentleman an opportunity to vote against it, which he failed to do. That is one of the points that I shall be making to Mrs. Pratt. The governing party just does not

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care. It has taken £600 a year away from her, and all that the hon. Gentleman says is that other people are better off. That is not the way that she sees it, down in Glastonbury.

In assessing the comprehensive spending review that the Chancellor announced on Tuesday, we are entitled to look back at the other spending review--the one that the Government announced in July 1998, two years ago. We recall that the Chancellor promised an extra £19 billion for education and an extra £21 billion for health--an extra £40 billion in all. We know now that that has not worked. We have longer waiting lists, larger classes in secondary schools and fewer policemen. I think that the Government are learning that it is easy to tax. Indeed, that is the easy part of politics, and that is what the Government are good at. It is difficult, however, to turn people's money into the services that they want. That is a skill that the Government have yet to master.

It is hardly surprising that that observation is shared on the Opposition Benches and by the Chancellor's constituents. ICM conducted a poll of the right hon. Gentleman's constituents on Tuesday night. It revealed that 72 per cent. of his constituents said that they did not believe the spending figure that he promised for the future, the reason being that 79 per cent. of them said that public services were not improving. They have seen tax increases, but not an improvement in public services.

Mr. Christopher Leslie (Shipley): When will the right hon. Gentleman tell us about his guarantees?

Mr. Heathcoat-Amory: In answer to the Chief Secretary, I said that I would describe what we might be doing in office in four years' time. I shall start by sharing with the hon. Member for Shipley (Mr. Leslie) the Government's record over the past three years. I can tell that he does not like it, but he voted for it and he must live with it.

We all agree that some things have increased since 1998 in the most recent expenditure review. For example, crime has increased. The number of political advisers employed by the Government has increased; in fact, it has doubled. It is probably double the number of leaks coming out of Downing street. The cost of central government is eloquent on Labour's priorities in office.

I refer the House to another Government publication in April entitled "Public Expenditure", which shows that the cost of running central government Departments, which was static or slightly falling in the years of the previous Conservative Government, has increased since then by more than £2 billion. There is the example of the Inland Revenue, which is in a bit of trouble for having wiped off its computer 5 million tax records. We do not know what has happened to them. Rather lamely, the Inland Revenue says

However, it cannot retrieve them.

That is the same Department that has employed an extra 12,500 civil servants. That is not explained by the new responsibilities that it has taken over from the Department of Social Security. The net increase in employees in all Revenue departments is thousands. From the point of

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view of the taxpayer, that is entirely unproductive. The size and wealth of the state is increasing, but the wealth of businesses and taxpayers is not.

In addition, there is all the wastage, all the quangocracy, all the regional assemblies, the cultural consortiums, the taskforces and the bogus consultation exercises that the Government set up and then ignore. However, there are some things that are not in the comprehensive spending review documents. Where is the cost of converting to the euro? We know that the Government are committed to it, but where is it in their estimates?

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