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Mr. Robert Sheldon (Ashton-under-Lyne): I grant the achievement of the right hon. and learned Member for Rushcliffe (Mr. Clarke), but four years have been added to the period from 1993 to 1997. Has the right hon. Gentleman ever known eight years of such stability in the post-war years?
Mr. Portillo: It was the 18 years drubbing that the Labour party took in opposition that at last convinced it that it had to commit itself to sustainable economic development and the control of inflation. However, I am about to come to the right hon. Gentleman's point, as I think that it is not sufficient for the Chancellor of the Exchequer or the right hon. Gentleman to say that we have had growth for a long period and that that has not happened before.
We are in a new world and it is not sufficient to say that we are growing. What matters is whether we are growing by comparison with our competitors and the answer to that question is that we are not; we are under-performing the competition. The Chancellor and the right hon. Gentleman need to bring themselves up to date. We may have longer economic cycles, but that is no reason for complacency. This country must benchmark itself against the performance of other countries.
If they have proved anything, the past four years have proved that the spending plans of the previous Government were economically sound. The Secretary of State for International Development claimed last week that the Government had been prudent for the first two years, thereby betraying the fact that they had ceased to be prudent now. The Chancellor stuck to the Conservative spending plans for two years and, sure enough, he has got his reward for doing so. We do not yet know--we cannot
know it because it is too early--what will be the economic cost of the rapid acceleration in Government spending that started last year: the return to Labour's tax and spend policies.In answer to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the long period of growth that Britain has experienced should not be a reason for complacency. What matters is how well we are doing by comparison with our competitors. During this period of Labour Government, our rate of growth has been half that of the United States and lower than the average rate of the eurozone. Our productivity is growing at half the United States rate; the rate of growth was 50 per cent. higher under the previous Conservative Government. Unemployment has fallen, but 14 OECD countries have had a better record on unemployment during the period that the Labour Government have been in office.
We have rapidly lost our share of world trade, which went down from 5.1 per cent. to 4.5 per cent. in only three years. Our balance of payments shows an £18 billion deficit and the Chancellor expects to double that during the coming years--I have every confidence that this Chancellor of the Exchequer will do so.
It is true that during the 1980s and 1990s, Britain developed a reputation for being competitive. That reputation was based on maintaining lower taxation in this country than in Europe and on creating flexible labour markets. British companies succeeded and inward investment flowed. During the past four years, however, the Labour Government have begun to reverse those hard-won gains. The Red Book shows that the burden of taxation has risen by 3 per cent. of national income. Under the Labour Government, since the Chancellor came to office the tax burden has risen by £28 billion. None the less, the Prime Minister takes every opportunity to tell the House that the tax burden is not rising, but falling--something he could accomplish only by holding the graph upside down.
Mr. Michael Fabricant (Lichfield): My right hon. Friend describes the balance of payments problem that this country is encountering and the increased tax burden we face. Is he aware that the OECD has said that since 1997, because of the increased tax burden and regulation imposed by the Labour Government, our competitiveness has fallen from fourth to ninth place in the world league?
Mr. Portillo: My hon. Friend is right. Those are new figures. When the Government came to office, we were in fourth place in the competitiveness league. By 1999, we had fallen to eighth place and figures that have just been published show that we have fallen to ninth place. That is hardly surprising, not only because of the relentless increase in taxation and regulation under the Labour Government, but because other Governments are moving in the opposite direction. That is why we are losing competitiveness.
Mr. Bercow: Does my right hon. Friend recall that, for 15 successive years, the previous Conservative Government published an assessment of the impact of both direct and indirect taxes on the average family and on families in other income deciles? Is it not a disgrace that the current Chancellor has refused to continue that sensible practice? Was it not, therefore, entirely appropriate that, in March 2000, the Select Committee on
the Treasury published a report that criticised the Chancellor for his failure in that regard, denouncing him with particular severity at paragraph 35?
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before the right hon. Member for Kensington and Chelsea (Mr. Portillo) replies, may I point out to the hon. Member for Buckingham (Mr. Bercow) that he needs to practise brevity? He has had a great deal of opportunity--I am looking at the length of his interventions.
Mr. Portillo: My hon. Friend the Member for Buckingham (Mr. Bercow) was right on both counts. It is indeed a disgrace that the Chancellor suppressed information in that way and he was criticised by the Select Committee. However, I am not sure that it makes much difference whether the information is published. Information on the tax burden is published, but we cannot get the Chancellor or the Prime Minister to admit to the House what it says--that the tax burden is rising. They simply refuse to admit the truth. They are capable of any amount of wriggling in order to avoid addressing the fact that the tax burden has risen under the Labour Government.
Mr. Bill Rammell (Harlow): Does the right hon. Gentleman recall that the Red Book for the last Budget delivered by the right hon. and learned Member for Rushcliffe (Mr. Clarke) predicted that the tax burden would rise during every year from 1997 to 2002? Why did the Conservatives propose that rise?
Mr. Portillo: I recall clearly that the tax burden fell by 2 per cent. when I was at the Treasury--[Hon. Members: "Ooh!"] Hon. Members are hopelessly ignorant. I was at the Treasury with my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). The tax burden fell by 2 per cent; it was 5 per cent. lower than at present. I just want the House to focus on that fact. The tax burden has risen by 5 percentage points from where it was under the last Conservative Government. That is an extraordinary change in the tax burden.
Our competitive advantage is being whittled away. PricewaterhouseCoopers estimates that two thirds of the competitive advantage that Britain enjoyed in the mid-1990s has been frittered away. As the Government remorselessly impose taxes on business and impose regulation, other countries are cutting their taxes. The Labour Government are swimming against a global tide, blunting Britain's competitive edge while other countries are busy sharpening theirs. The CBI estimates that the extra burden of tax on business is £5 billion a year, and the Institute of Directors estimates that the extra burden of regulation on business is £5 billion a year, yet the Secretary of State for Trade and Industry just haughtily dismisses all the worries of business.
In this election Budget, the Government have added a higher minimum wage and have extended paternity leave, without--
The Chancellor of the Exchequer (Mr. Gordon Brown): Maternity leave.
Mr. Portillo: So, the Chancellor of the Exchequer can listen sometimes. That is very revealing. I am so sorry; I thought that the Chancellor of the Exchequer was
involved in a much more interesting conversation. I did not think that he would be listening to me, but I am very pleased that he has been.The Chancellor should, however, have listened to the end of the sentence. The Government have added a higher minimum wage and have extended maternity leave, without any commitment to make offsetting reductions in the administrative burden elsewhere. The Government should, for example, commit themselves to remove from employers their responsibility to pay the working families tax credit. That is something that should be paid by the Government to parents, who have responsibility for the children.
The Red Book reveals that the Government's receipts from corporation tax are to rise by £5.7 billion in the coming year. The Chancellor of the Exchequer never indexes the thresholds for corporation tax; he just gets a windfall every year from business. After all, business does not have votes, so what does it matter to the Chancellor of the Exchequer? Surely those windfall gains should have prompted the Chancellor to do something for the businesses that are in difficulty at the moment; for manufacturing, which Labour Members are meant to represent; for small businesses everywhere; and for farming. Instead, he used this Budget as another opportunity to demonstrate his complete indifference to the suffering of those sorts of business.
Many Labour Members know that people in the countryside are deeply dismayed that the Budget offered absolutely nothing to them in their hour of need.
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