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9.23 pm

Mr. Richard Ottaway (Croydon, South): This has been an interesting and quite prolonged debate. The opening speeches highlighted the contrast between the parties. My hon. Friend the Member for Maidenhead (Mrs. May) made an incisive, constructive speech which showed her free thinking, in complete contrast with the wooden, inflexible speech of the Secretary of State for Education and Employment, who has done so much to induce initiative fatigue in those of us who have to listen to him.

This was a unique day. We heard no fewer than four valedictory speeches from colleagues on the Opposition Benches--unfortunately only one of them is still in the Chamber. The first was made by my right hon. Friend the

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Member for Huntingdon (Mr. Major), who drew attention to the Government's and the Chancellor's assault on middle England. He drew attention to the boom in tax raising and the bust in manufacturing.

In truth, the Chancellor has much for which to thank my right hon. Friend, who laid the foundations for the Budget. The tough decisions on which the Chancellor has based his Budget were taken in the Budgets of Lord Lamont and of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). As my right hon. Friend the Member for Huntingdon looks back at his career, I pay him the compliment of summing it up in this phrase: he made a difference and I pay tribute to him.

The second valedictory speech came from my right hon. Friend the Member for South Norfolk (Mr. MacGregor), who, as a former Chief Secretary to the Treasury, had his finger on the button. He rightly said that the Budget was patchy, with little bits for everybody, and that the increase in the tax burden was caused by fiscal drag. With his unique knowledge of the pensions industry, he drew attention to the problems with annuities.

The third valedictory speech was made by my hon. Friend the Member for South-West Bedfordshire (Sir D. Madel), who incisively exposed the flaws in the Budget. He drew particular attention to the mess caused by IR35, giving an example that highlighted that problem.

My right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) pointed out most effectively and clinically how the Budget and its predecessors were eroding Britain's competitive position.

The fourth valedictory speech was made by my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke), who really is my friend. He and I soldiered through the proceedings of the Greater London Authority Act 1999 together, so I know what a support he can be for those less experienced than him.

My right hon. Friend pointed out that as the Member for the City of London, he would have won a bronze medal and as Member for Westminster he would have taken fourth place. In the affection of Members on the Conservative Benches today, he certainly takes first place. His speeches never fail to illuminate and lift whatever forum he chooses to speak in. To include the Venerable Bede, Margot Asquith and C.S. Lewis in one speech is unique and is unlikely to be heard again.

My hon. Friend the Member for Sevenoaks (Mr. Fallon) also made an incisive speech. He pointed out that in two years, the Government will be borrowing and that the IMF has noted the negative consequences of the Government's present monetary and fiscal stance.

What is most remarkable, however, is that although the Government have 417 seats in the House--a majority greater than the total number of Conservative seats--there were fewer Members on their Benches throughout the day than on the Opposition Benches. That shows how little interest Labour Members have in the serious consequences of the Budget that we are debating.

I shall deal with some of the wilder misrepresentations of Conservative tax and spending policies on education. The Chancellor announced an extra £1 billion for education over the next three years. He has used that technique before. Every year, he seems to produce a new three-year plan of some sort. A future Conservative Government will match that extra expenditure. However, somehow the inference has been made that that affects our projected tax and spend policies.

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Before the Budget, the Chancellor had projected that public expenditure would be £442 billion in 2003-04, and we had set out how we intended to spend £8 billion less than that. After the Budget, the Chancellor still proposes to spend £442 billion in 2003-04, which includes the extra funding for education. We still intend to reduce that figure by £8 billion, but as none of that sum touches the education budget, we can match the Government's education proposals without affecting our overall policy.

The mystery, if there is one, is how the Government can spend an extra £1 billion without increasing the spending total. In an excellent speech, my hon. Friend the Member for Maidenhead showed the manipulation in the figures and seriously brought into question whether an extra £1 billion existed at all. In fact, it looks more like an extra £200 million by 2003-04.

Our education policy would have fundamentally differed from that in the Budget in one way--our plan to endow the universities, to which my right hon. Friend the Member for Cities of London and Westminster referred. Before the Budget we had already announced that we would use the surpluses from future privatisations and spectrum sales to endow universities for the future. The universities will then invest the money and fund themselves through the income raised.

In the Budget, the Government propose to repay £32 billion of the national debt from the surpluses that they have accumulated during the past four years. In our judgment, much of that money could be better used to endow the universities, allowing them to receive substantial sums, which they could invest to fund themselves through the income. We will put our great universities on a standing with Stanford, Yale and Harvard, which revel in their independence.

Our policies will free the universities from excessive control and interference, allowing them to forge links with business and harness funding from the private sector without affecting their grant. They will decide the salary structures and how many students to take. That policy will remove the uncertainty about university funding, and it will be fiscally neutral.

That imaginative proposal stands in stark contrast to the Labour party's manifesto commitment in 1997, when it undertook to raise the proportion of national income spent on education. Under the previous Government, the average figure was 5 per cent.; under this Government it is 4.7 per cent.--another broken pledge.

Dr. Gibson: Does the hon. Gentleman understand the difference between a permanent endowment fund and an endowment fund? Could he explain which fund would operate under the Conservative party's policy?

Mr. Ottaway: The fund will be perfectly straightforward; the money will be given as a grant to the universities, thus removing the need for the Government to give them their grant, which is why the policy will be fiscally neutral.

We acknowledge that the Budget's foundations were laid in the 1990s. We acknowledge the current stable, monetary position, the reasonable growth in the economy, low inflation and falling unemployment, but, as many hon. Members have said today, the growth in the economy started in 1993, when unemployment started to fall, as did inflation shortly thereafter. Yet despite the Chancellor's

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achievement in not messing up the golden legacy that we handed him, the fall in unemployment is slowing down under this Labour Government. Between 1994 and 1997, unemployment fell by 27 per cent.; since 1997, it has fallen by only 24 per cent.

The Labour party said in its 1997 election manifesto that it would get 250,000 under-25-year-olds off benefit and into work, but according to the National Institute of Economic and Social Research, youth employment has risen by only 13,000 in the past two years. So it is clear that the new deal has been an expensive failure and one of the least effective job creation schemes in history. The next Conservative Government will replace the new deal with "Britain works", a scheme modelled on the highly successful "America works". It will save about £400 million of public expenditure and it has a greater likelihood of success.

Despite the relative stability of the economy, what the Chancellor is doing with it is alarming people across the length and breadth of the country. Whatever the Government's protestations and whatever phrase or spin they choose to put on the situation, there is absolutely no argument that the tax burden has risen under this Government. They may talk about a couple of pence off petrol or an increase in the children's tax credit, but the remorseless, indisputable truth is that, in 1997, the tax burden was 35.3 per cent. of gross domestic product and, today, it is 37.7 per cent. Britain is paying more; Labour has taxed by stealth.

Mr. Geoffrey Clifton-Brown (Cotswold): Does my hon. Friend agree that not only did the Government inherit a benign set of circumstances from the previous Government, but they inherited a benign set of world economic circumstances, particularly in north America? North America still has a very much lower tax burden as a percentage of GDP than the Government are currently imposing. Does my hon. Friend agree that, to become competitive in world terms, we still need to have a lower tax burden?

Mr. Ottaway: My hon. Friend is absolutely right. I intend to deal with the position of the United States shortly.

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