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Ms Keeble: Perhaps I can help the hon. Gentleman. I said, first, that the figures initially showed a reduction, but later showed an increase. Yes, the projected figures went down for a while, but the figures last year showed a rise. Secondly, there is a major issue in relation to families who have no assets. The publication by the IPPR shows the significance of that, and it is one of the issues that the Government are addressing.
Sir Michael Spicer: The hon. Lady has forgotten the end of the Mexican wave, when the figures went down again. Those figures are in the Red Book, where she can examine them.
The other figure which the hon. Lady may have been told wrongly by her Whip was the figure for productivity rates. It has been the Government's message for a long time that productivity rates are stable and rising. As has been shown again today, however, the rates have been falling since 1997. That is a great indictment of the Government, to which I should like to address much of my speech.
In the light of the explosive nature of the Government's spending plans, which, contrary to what the Liberals are saying, are massive, many commentators--most recently, the International Monetary Fund--said that it would not be prudent of the Chancellor to cut taxes at all in the Budget.
While I am on that subject, I have a question for the Minister of State. If he can answer it now, I shall be grateful. Will it be feasible or even legal under European arrangements to carry out what the Chancellor has announced in respect of VAT on derelict land? I think that a similar scheme was proposed a year ago for churches--my memory may be wrong--but that the European Commission refused permission. I imagine that that is why the arrangement announced today for churches is based on a grant rather than on VAT reduction. Is it not likely that the same European Commission ruling will apply to the reduction of VAT in respect of derelict land, and also to excise reductions?
The Minister of State, Foreign and Commonwealth Office (Mr. John Battle): I seem to recall that we heard the same noises about VAT on fuel before the last election. The then Conservative Government kept telling us that we could not reduce VAT on fuel, but we did so.
Sir Michael Spicer: Perhaps I should slightly rephrase my question. Does the Chancellor have the European Commission's permission? Has he been to Brussels to check with his masters there that he is allowed to reduce VAT in respect of derelict land? Surely the Minister accepts that that is exactly what happened last year with regard to a VAT reduction for church renovation and that permission was not given. Will he admit that that is why assistance had to be introduced in another form?
Mr. Bercow: Does my hon. Friend agree that it is unfortunate that the right hand does not know what the left hand is doing? The Minister of State is obviously oblivious of something that is well known to the parliamentary spokesman for the Church Commissioners, the hon. Member for Middlesbrough (Mr. Bell), who has made the matter clear. [Interruption.] The Minister can chunter from a sedentary position, but the hon. Member for Middlesbrough made it clear that the European Commission did not give approval to the VAT reduction for church repairs. If he did not know that, it is about time that he did. [Interruption.]
Sir Michael Spicer: I hear the Minister thanking my hon. Friend.
Mr. Battle: I was not thanking him; I was informing him.
Sir Michael Spicer: The Minister appears to be getting excited. Does he accept that I have described correctly the position regarding the attempt to reduce VAT on church renovations? A Minister went to Brussels, permission was refused and help has now been introduced in another manner. Surely it is worth asking whether permission has been sought in advance for the announcement of a VAT reduction in respect of derelict land, which has been presented as a certainty.
Mr. Mark Hendrick (Preston): I think that the confusion was about whether churches could be included in the scope of suitability for VAT reductions. The 5 per cent. level at which the grant is aimed does not contravene any European Union legislation.
Sir Michael Spicer: I am not saying that any laws have been broken. I am suggesting merely that permission was not given for the reduction of VAT on church renovation, which had been announced previously. I was asking a simple and rather innocent question about whether such permission had been granted in advance in relation to the arrangement announced today, which has been presented as a fact and entered into the Budget calculation. I hope that the answer will be yes and that the Chancellor has permission. If not, the Government may look a little foolish on that matter as well.
The effect of today's speech must be that the Monetary Policy Committee will be unlikely to reduce interest rates in the near future, especially with the current tightness of labour markets. The distinction that the Chancellor makes between current spending and capital spending in his so-called golden rule appears less and less credible. As the International Monetary Fund has repeatedly said, especially recently, the growth of private finance initiative arrangements renders almost meaningless the distinction between capital and current spending. Making such a distinction is dangerous for managing the economy.
Public spending is at the centre of the debate on not only the Budget but the Government's entire economic strategy. Current public spending was planned to increase by some £77 billion in the next five years: from £370 billion in 2001-02 to £447 billion in 2005-06. If my calculations are right--Ministers are entitled to intervene and say that they are wrong--we must add another £10 billion to the £77 billion. That means a total increase on current public spending of £87 billion or approximately 25 per cent. in the next five years.
Like all socialist Governments, the Government have embarked in the past few years on a massive programme of public expenditure. That has already led to much higher taxes.
Mr. Ken Purchase (Wolverhampton, North-East): Does the hon. Gentleman accept that even on his projected figures for future capital expenditure--
Sir Michael Spicer: Current expenditure.
Mr. Purchase: I am sorry, I thought that the hon. Gentleman said capital expenditure. However, the same point applies. Debt repayment has made room for lowering year-on-year recurrent expenditure.
Sir Michael Spicer: Surpluses, if one believes in them, rely heavily on fiscal drag. They prove my point about the vast increases in taxation: they do not appear from nowhere. There is no dispute between us about the fact that public expenditure is rising fast. For a surplus to exist on top of that expenditure, there must be an even greater increase in taxation.
Mr. Patrick McLoughlin (West Derbyshire): On a point of order, Mr. Deputy Speaker. I wonder whether we can have some protection from the Chair? Several documents, to which the press notices for the Budget refer and which, according to normal practice and procedure, should be made available in the Vote Office, have not been provided. We have been told that they are not likely to be made available. They are: REV BN 6, REV BN 8, REV BN 12, REV BN 13, REV BN 17, REV BN 18, REV BN 19, BN 63/01 and BN 73/01. That is a serious matter. Much of the detail of the Budget statement is hidden in the press notices. It is essential that hon. Members have an opportunity to study them.
Mr. Deputy Speaker: I am sure that the hon. Gentleman understands that I cannot give him an immediate answer. I have no means of knowing why documents are not available, if that is the case. However,
Government Front-Bench Members will have heard the hon. Gentleman's comments, and I am sure that Mr. Speaker will want to ascertain what has happened so that the matter can be remedied as quickly as possible.
Sir Michael Spicer: The Government are engaged on a massive expenditure programme, which is accompanied by a massive taxation increase, higher interest rates than would otherwise be necessary and, as the Red Book establishes, falling personal savings and productivity. Perhaps the missing documents would further confirm that.
The long-term effects are likely to be profound. Earlier this year, a fascinating but deeply disturbing study was produced on public expenditure in the 14 most economically advanced countries. The work was published in a book entitled "Public Spending in the 20th Century: A Global Perspective". The main work was done by two economists: Vito Tanzi, who has been director of the fiscal affairs department of the International Monetary Fund since 1981, and Ludger Schuknecht, the principal economist in the fiscal policies division of the European central bank in Frankfurt.
I want to develop for the House the analysis that those economists undertook. They began by showing that public expenditure throughout the 14 western countries rose fairly gradually during the first half of the 20th century. The massive explosion in spending started throughout those countries in the mid-1960s. For example, table 1.1 shows that the average rate of public spending in 1960 was 28 per cent. of gross national product, and that by 1980 it had risen to 41.9 per cent., which is close to a 100 per cent. increase. By the late 1990s, the rate had gone up to close to 50 per cent. That is a massive increase.
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