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Mr. Portillo: I do not believe that people will be grateful to the Chancellor for what he has done today. People will remember that he was the cause of the problems. He caused the fuel problem by overtaxing the British people; he caused the pensions problem by insulting our pensioners with the 75p increase. Today he has merely returned a little bit of the people's surplus, but he still plans to take it back through higher taxes if he wins the next election.
When the Chancellor stood up today, Britain had the most expensive petrol in Europe. Now that the Chancellor has sat down, Britain still has the most expensive petrol in Europe. That will be the verdict of the majority. The statement revealed a Chancellor in full retreat, blown about by public opinion, but still a man, who, even in those circumstances, could not come to the House and say, "I'm sorry."
Mr. Brown: I shall answer in detail every point that the right hon. Member for Kensington and Chelsea (Mr. Portillo) made. If he wants to compare our respective records, let us remember what happened when he was at the Treasury: 22 tax rises, interest rates at 15 per cent. for a year, interest rates above 10 per cent. for four years and the exchange rate mechanism debacle. He was the Minister who introduced the fuel escalator, put VAT on fuel, and introduced the airports tax and the insurance tax. He was even one of the brains behind the poll tax.
When the shadow Chancellor says that spending in this country should increase by 2 per cent., not 3.4 per cent; that the gap must be bridged by spending cuts; and that anything more than 2 per cent. is unsustainable and would lead to recession, he has a duty to tell the House how many nurses and doctors, and which schools, hospitals, public services and constituencies, including those of Conservative Members, would suffer as a result of the cuts. And he has no credibility when he says to the House that he will give tax cuts to the people of this country if he will not tell the country where those spending cuts will be made.
The right hon. Gentleman said that he supports some of our measures on pensions, but let us remember that Conservative policy is to abolish not only the winter allowance and the free television licence, which is now going out to several million pensioners, but the Christmas bonus. In 1987, when the shadow Chancellor was the Minister responsible for the Christmas bonus, he said: "Pensioners budgeting for Christmas need the assurance of that contribution to their expenses which this payment provides. The bonus is something to which the majority of the elderly look forward very much. What other people call fringe benefits are of substantial help to the poorest groups in our society."
I thought that Christmas was a time for giving but, under the Conservatives, it would be a time for taking. I can imagine the Conservative pledge card during the election campaign. It would say: "Abolish the new deal. Abolish the working families tax credit. Abolish free television licences. Abolish the winter allowance. And abolish the pensioners' Christmas bonus." The Conservatives would abolish good will for Christmas.
When the shadow Chancellor moved on to the question of the economy, I began to see the wisdom of the words of Lady Thatcher, who said, only a few days ago: "He"--that is, Portillo--"has become very confused. He no longer understands his beliefs." On 18 September, the shadow Chancellor was asked about the effect of public spending commitments on the economy, although today he has not lived up to his promise. He said, "We have to show how all the sums would add up. We have to make sure we have a coherent programme for reducing taxes--how we would save the money necessary to reduce taxes. We want to present that in detail and show how it all adds up together." Today, what did we hear from him? No specifics, no detail, no promises--not even an analysis.
When the shadow Chancellor imagines that he can go into the general election and promise tax cuts year after year on the basis of a year or two's surplus, he is making exactly the mistake--the fatal flaw--that the Conservatives made during the 1980s. His economic policies would return us to stop-go boom-bust. There were four fatal flaws in the Conservative policies of the 1980s, each of which are also flaws in his approach. There are no fiscal rules, so there is
The shadow Chancellor told us that he would have tax cuts instead of investment, but the neglect of investment produced the problems in our supply side that meant that we could not sustain a consumer boom because there had been no investment during the 1980s. He has no inflation target--not even our symmetrical inflation target--and he even doubts whether he would keep the Bank of England independent if, as he put it, he could judge it to be incompetent. Most people have that view of him and his economic policies. In all those areas, the Conservative party's economic policy, by its sheer recklessness and irresponsibility, points to the fact that it has learned nothing and forgotten nothing. The Conservatives are ready to take this country back to boom and bust.
Who said that the Conservatives had made a mess during the 1980s? It was none other than the shadow Chancellor himself, who said, "Of course the Conservative party should be apologetic for mismanaging the economy."
The economy's growth rate is higher than under the Conservatives. We are tackling the productivity gap and this country's under-investment, and we are getting people back to work. We will not allow the new deal to be abolished, as the Conservatives plan to do. They have no policies for the economy's future. Their party would take this country back to boom and bust. Sixteen billion pounds of spending cuts and a return to boom and bust: the choice for this country has never been clearer.
Mr. Giles Radice (North Durham): Is my right hon. Friend aware that the Treasury Committee will want to question him in detail about the pre-Budget report? From what my right hon. Friend said this afternoon, it is clear that he has managed to combine very welcome increases in pensions with well-targeted help on fuel and sustained investment in education and health, and that he has done that without putting at risk the great prize that we have achieved of economic stability. Will my right hon. Friend confirm that he will maintain fiscal discipline and that he will not put any strain on Britain's very successful monetary policy?
Mr. Brown: I accept what my right hon. Friend said. He is Chairman of the Treasury Committee and I look forward to discussing these matters with him. Of course, the balance between monetary and fiscal policy decides the strength and growth rate of the economy. As the figures show today, we are running a surplus, repaying £28 billion of debt, and the fiscal stance is tighter or as tight in every year for the next few years, as set out in the Budget.
Of course, the Bank of England must make its own monetary policy decisions, and I look forward to hearing what it says when it makes the decisions tomorrow. The important thing is that by combining a tough fiscal policy with an independent monetary policy, we have moved this country from a permanent relapse in every cycle into boom and bust to a cycle that is capable of greater stability. I hope that even Conservative Back-Bench Members support what we have done to strengthen monetary policy in this country--as some do, I believe.
The iron Chancellor has buckled in the face of protests from pensioners, Liberal Democrat Members and, indeed, some Labour Back Benchers, who said that he was wrong. The shadow Chancellor is wrong to ask for an apology for the fuel tax increases that his own party introduced. He should have asked for an apology for the measly mean-minded 75p on pensions that the Chancellor introduced only a matter of months ago. Today, the Chancellor has effectively had to admit that he was wrong to do that.
The Chancellor has left even more pensioners reduced to having to claim on the means test. For all the real pension increases that he announced today, which we welcome, he will leave millions of pensioners to the indignity of means tests. His so-called transitional announcement amounts to two years in which pensioners will get above-inflation pension increases only to go back to 75p inflation-based increases thereafter. That is the reality of the policy announced today, which is a policy of more means tests. Do not pensioners need real investment in long-term pension increases?
On fuel, the Chancellor must be aware that the policies that he introduced today are, lock, stock and barrel, those that we have been urging on him and his Conservative predecessors for nearly eight years. We have to wonder why those changes are coming now that the Chancellor faces a general election and fuel protests, rather than as part of a long-term strategy. He is not an iron Chancellor, but a Chancellor who buckles in the face of politics. That is no wonder, as the real hat that he is wearing today is the hat of the chairman of Labour's general election campaign.
Of course, some of the measures for business are welcome, but it is odd that there is total silence on the one issue that is really causing a crisis in British manufacturing and British farming--the high level of the pound. There was not a policy or a promise to help either of them.
Even after all the hype about this pre-Budget report--which was announced to the press 72 hours in advance and rolled out in the House of Commons as an afterthought--the Chancellor will still have spent in this Parliament less of the national cake on education and health than the Conservatives did, and will leave more pensioners reduced to the indignity of the means test. He has not had the guts to admit that his policy on pensions was wrong. Even today when he reversed it, he did not have the guts to apologise.