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3.49 pm

Mr. Michael Jack (Fylde): It is interesting to follow the hon. Member for Glasgow, Baillieston (Mr. Wray) and to hear somebody speaking on a platform of compassionate socialism. He is right to speak about his constituency and Scotland, and to remind us of some of the real problems that have beset post-war Governments for a long time. I take issue with his suggestion, however, that the Conservative Government cared nothing for the national health service. Our rate of real-terms increase in health spending was ahead of that of the early years of this Labour Government.

The hon. Gentleman was right to alert the House to the scourge of drugs. As a former Home Office Minister responsible for drugs policy I can tell him that we took that matter just as seriously as do this Government. Our expenditure of £500 million a year was an effort to tackle the problem. I share his concern that Governments of recent times have not yet got to grips with this scourge on society and, more importantly, on the individual. The effect on criminality and crime is there for all to see. I join him in wishing this Government and Ministers well in their endeavours to fight this scourge of modern living.

In the Budget there is some discussion about further measures to help the inner city. I applaud that and support anything that helps to clear up the mess that still exists in some of our great urban centres. I remind the hon. Gentleman that it was the last Conservative Government who maintained a high level of investment in Scotland. That is why Scottish industry is restructured, and Scotland has the benefits of silicon glen and the high levels of employment that go with it. It is fair to criticise the Conservative Government just as we criticise the present Government, but to say that we did not care is utterly to ignore the facts of the matter.

I was delighted to be here to listen to the Secretary of State's opening comments and his announcement of help for working families who work anti-social hours, particularly lone parents. At long last some help will be given through the various tax credit mechanisms. I am sorry that he could not announce today what that help would be. I have letters going back over the past 12 months to the Treasury and the Department for Education and Employment on this very subject. I wish him well, but ask him to speed up the consultation on his announcement. I have constituents working, for example, in the care homes sector who would much appreciate child care help during what are termed anti-social hours and who would be interested to know the outcome of the consultation exercise.

I also welcome the measures to assist families in general and small businesses in particular, especially with reference to the completion of their tax returns. I will return to the theme of tax simplification.

So far much has been made of the contrast between the good economic situation that is seen from the Government Benches and the difficulties that pervaded part of the premiership of my right hon. Friend the Member for

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Huntingdon (Mr. Major) and his Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). The Secretary of State for Trade and Industry did not pay as much attention as he should have done to the natural economic cycle. All Governments hit difficulties from time to time. I commend to him the historic data in the Red Book which show what a mess previous Labour Governments made of their situation and the problem that the Conservative Government had in clearing up their mess before we could make progress. Yes, we had difficulties in the early 1990s, but prior to that we had got borrowing down to a very low level. We exercised properly fiscal control and imposed monetary disciplines. My right hon. and learned Friend again did that once we had the economy back in hand.

It is interesting that the Financial Times review of the Budget points out the relative luck that this Chancellor has had in having a benevolent economic situation. It points to:

"A seven-year run of output growth averaging 2.9 per cent a year, combined with low inflation."

The Chancellor could not have had the low inflationary levels which he enjoys had it not been for the work done by my right hon. and learned Friend to put in place the foundations to give us a low inflation economy. It is said that interest rate decisions take about 18 months to come through. We hit the inflation target set by my right hon. and learned Friend at 2.5 per cent. on the nail on the month, and it is noteworthy that in this Budget this Chancellor has sustained my right hon. and learned Friend's inflation target. Equally, we have had a seven-year run of output growth, so by definition three of those years were ours. I contend that much of the benefit that the Government have put before the House in the Budget was due to my right hon. and learned Friend's prudence. Part of the benefit that this Government have enjoyed in terms of their record on public expenditure comes from the fact that they took over the former Government's spending plans and went one better: they were even meaner and did not spend the money which we had left in place. Then they turned round and criticised those plans for not providing the resources which should have been spent.

Mr. Andrew Miller (Ellesmere Port and Neston): I appreciate the honesty and integrity of the right hon. Gentleman's remarks. Is he pressing for a change in the shadow Chancellor to bring back the sanity of the right hon. and learned Member for Rushcliffe (Mr. Clarke)?

Mr. Jack: No, my right hon. Friend the shadow Chancellor has shown in his recent remarks a proper line of intellectual activity to probe the question of the level of the inflation rate. It is right to test existing assumptions, even if at the end of the day one concludes that the existing assumptions are correct. If we are to sustain a low inflation economy, it is right to look at the underlying implications. Now is not the time to have a debate about that, but if the hon. Gentleman cares to have one in Westminster Hall, I would gladly attend.

The Financial Times article goes on to provide a further interesting insight. It states:

"Mr. Brown has guided the economy well in a sunny period. But he cannot control the weather--even if he would like to imply as much in the euphoria of a pre-election period."

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That gives us an important perspective on the Budget and the substantial increase in public expenditure which is included in the Red Book. The article reminds us that

"total departmental expenditure limits are set to rise at an annual rate of 8 per cent a year between 1999-00 and 2003-04."

If the sun shines those numbers can be sustained, but the true test of any Chancellor--and of this one if he is lucky enough still to be in office after the general election--is how he deals with the situation when the going gets tough. Any Chancellor can look good with lots of cash coming in, a self-imposed corset on public expenditure and some rather nice numbers on borrowing. Previous Conservative Chancellors have shown their metal in getting the economy back on the rails after a period of difficulty.

The Financial Times is interesting in its analysis. It states:

"Mr. Brown ducks the question whether such a rate of expansion is sustainable, even assuming steady economic growth. Of course it cannot be over the long term, unless taxes are to be raised."

The article then rather teasingly says:

"That is a problem for another Budget in another parliament."

It is not, in the sense that the nation is likely to have to go to the polls before another Budget. Therefore, the question of the sustainability of the Chancellor's much proffered public expenditure position is not for the next Parliament, but for here and now.

Mr. Breed: If the right hon. Gentleman is saying that the last five years of the Conservative Administration and the first four of the Labour Administration are two parts of the same economic cycle, would he have repaid £34 billion of the original debt that was run up during the Conservative period?

Mr. Jack: I counsel the hon. Gentleman to go back through the historic data in the Red Book. He will observe that towards the end of the 1980s we paid back debt because public finances were good. Whether paying back £30 billion odd is the right thing to do with the money is an interesting point. There is some conjecture. It could have been used to do more to help with savings.

The most that the Budget did for savings was to leave in place the current levels in the complex individual savings account system. Instead of examining ways to encourage improvements in the saving ratio in the way that my right hon. Friend the shadow Chancellor has done, the Chancellor ducked the issue. He ducked the issue as to whether he could have used creatively some of the fiscal surplus to encourage more private investment, in particular, in new activity in the economy. That is sad, given the amount of money that the Chancellor had and the things that he could have done with it.

In The Daily Telegraph, Ian Cowie, its personal finance editor, wrote an article under the headline, "Don't be misled, the main winner will be the taxman". He points out the massive increase in tax take that has occurred as a result of the Chancellor's activities. Since the Government took over, they have received a further £43 billion of extra receipts of one sort or another. As my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) said yesterday, that is effectively the equivalent of 10p up and 1p down.

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It is a very small people's dividend for the hard work of the hard-working families of Britain to have such a scant reward, because no Chancellor can deliver all that he claims. Given the sum total of the parts of the British economy, the people's dividend is very limited.

I went back to look at the Red Book that I signed off when I was in the Treasury. In the years 2001-02, we pencilled in Government receipts of £370 billion, but the projection in the current Red Book for the same period is just short of £400 billion. That again shows the increase in the tax take that has occurred.

The result was even more fascinating when I searched for the table in the current Red Book to see how the Government were dealing with the increase in the personal tax burden. "Put up taxes" are the words that the Chancellor hates to utter. I looked in our Red Book for the figures for the year 2001-02 and I noted that the figure for income tax as a percentage of gross domestic product that we had pencilled in was 9.8 per cent. The current Red Book shows that that figure has gone up to 11.3 per cent. of GDP, but what is missing is the comparator with last year's Red Book. Here the Government look seriously embarrassed. The telling point is that, for the period 2001-02, last year's predicted figure for income tax as a percentage of gross domestic product was 10.8 per cent. The burden of income tax is rising whatever those on the Treasury Bench may say.

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