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Mr. Rammell: I think that I heard the hon. Gentleman call for an across-the-board increase in teachers' pay. If that is the policy of the Liberal Democrats, why is it not costed in their alternative Budget?

Mr. Taylor: If the hon. Gentleman had bothered to look at our alternative Budget--I have my doubts about whether he did--he would have seen that our health proposals include a specific £600 million pledge of an average of £1,000 extra for every low-paid doctor, nurse and health professional in the NHS. Moreover, under our proposals trainee teachers would be paid for the first time. At present they come into the profession and work as teachers work, but without a proper salary.

So there it is: money for teachers, money for doctors, money for nurses and money for health professionals, funded according to our specific costed proposals.

Mr. Rammell rose--

Mr. Taylor: The hon. Gentleman may not like this, but if he has asked a straight question and been given a straight answer it is probably time for him to sit down and stop talking.

Mr. Rammell: On a point of order, Mr. Deputy Speaker. Is it in order, when I have asked a specific question about an across-the-board increase in teachers' pay, for the answer--

Mr. Deputy Speaker: Order. I think the hon. Gentleman has been here long enough to know a bogus point of order from a real one, and that point of order is bogus.

Mr. Taylor: Labour party loyalists do not find this an easy issue to address, because they know that on the ground spending has gone down, waiting lists have lengthened, class sizes have increased and police numbers have fallen. I realise that it is difficult to reconcile that with the Chancellor's propaganda, but it is easy enough to work out how truthful he has been according to the number of years that he lumps together in his spending plans.

Last year, when the Chancellor was making some real spending increases in the comprehensive spending review, he gave us the figures for one year. This year--the bogus year--when he wanted to pretend to his Back Benchers that he was doing something to meet their concerns while actually trying to deal with Conservative attacks about

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taxes by making tax cuts that were much larger than any spending increases that he planned, he lumped three years together.

Back in 1998, when the Government were undershooting Conservative spending plans that the last Chancellor described as eye-wateringly tight and would never have met himself in any case, the Chancellor not only lumped three years together but bunged in inflation, multiplied it several times and hoped that no one would notice. People did notice, of course, because down on the ground things were getting worse.

That is the history of this Parliament. Labour cannot go into the next election simply on the basis of promising jam tomorrow; it has been in office for four years, and it must explain its record. Its record is this: less of our national wealth has gone to pensioners, which is why they received just 75p last year; less of our national wealth has gone to the health service, which is why waiting lists are at record levels; and less of our national wealth has gone to schools, which is why most pupils are in larger classes than ever, and why students are having to pay tuition fees--the tax on learning.

We know that the Government understand that really, whatever the spin and whatever the ability to churn out headlines on Budget day. We know that they know because, when we cut through the nonsense, the real figures are there in the Red Book. The real figures were there when the Chief Secretary was challenged on "Newsnight". There he was, talking about all the extra money for health and boiling it down to

Jeremy Paxman asked,

The Chief Secretary replied:

Jeremy Paxman suggested that it was

The Chief Secretary responded:

The truth is that it is a tiny amount--less than half of 1 per cent. It is less than 50p for every £100 already spent on the health service.

This was not a Budget for health and education; it was a wrestling match with the Conservatives, in an attempt to outbid them on tax cuts. It contained more than six times as much in tax cuts as would be invested in public spending, at a time when the public are crying out for teachers, doctors, nurses and police officers whom they had thought that Labour would deliver.

Labour seems to believe opinion pollsters and pundits who argue that people who say they will support increased spending secretly want tax cuts. Accordingly, Labour says that it will deliver public spending, and secretly sticks the money in voters' back pockets.

The Government want to ensure that, come April, everyone feels a little better off. They want to salve their conscience on spending, yet to tackle the Tory party by outbidding it in tax cuts. We have two parties that want to deliver stealth cuts in services. They are not seeking to fulfil the electorate's demand for proper funding for the NHS, pensions, police and schools.

At the next general election, only one party, the Liberal Democrats, will be going to the electorate offering genuine and substantial improvement and investment in

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those public services--to guarantee lower class sizes, shorter waiting lists, more police on the beat, and, at last, a decent deal for pensioners who fought for this country and were told that they would have a state pension in old age on which they could rely, but which has been torn away from them by successive Conservative and Labour Governments.

5.30 pm

Mr. Giles Radice (North Durham): We have just heard a very eloquent speech from the Liberal Democrat spokesman, the hon. Member for Truro and St. Austell (Mr. Taylor). However, there were two problems with his speech. First, although it is true that there were two tight spending years under this Government--I am on the Treasury Committee and we examine the spending issue every year--Liberal Democrat Members will have to say what they would have done in the same circumstances. They have never answered that question.

Mr. Taylor: Will the right hon. Gentleman give way?

Mr. Radice: No, I should like to finish my point.

Secondly, public spending is now increasing faster than growth, as has been pointed out by the Institute for Fiscal Studies and by various other bodies. Specifically, considerable extra resources are being provided for education and health. As I understand it, that spending is having an impact even in Cornwall, where there are more nurses now than there were in 1997--

Mr. Ben Bradshaw (Exeter): There are 200 more nurses.

Mr. Radice: Yes. I believe that police numbers in Cornwall also are higher now than they were in 1997.

I did not hear any facts in the speech by the hon. Member for Truro and St. Austell, but I heard many promises. Although I realise that we are in a pre-election phase, I should like to stand back a little and consider the issues if the hon. Gentleman does not mind. This is the Chancellor's fifth Budget, and it provides us with a good perspective from which to consider his policies and measures. If the general election is in May, as the hon. Gentleman seemed to be suggesting, this may be my last speech--certainly my last economic speech--in the House.

I read history at Oxford, although later I learned some economics at the London school of economics. I think most of my economics has been picked up in my 40 years of Chancellor-watching--28 of them spent as an hon. Member, including 14 on the Treasury Committee, four of them as its Chairman.

A long time ago, when I was young, I believed that the first objective of economic policy was to speed up the rate of economic growth, and that that could be achieved by promoting a higher level of demand. I was an enthusiastic supporter of the Wilson Government's national plan--which perhaps only a few of us remember. I used to think that the plan failed because of the decision not to devalue. Although I still think that that was a mistake, I am now highly sceptical about whether it is possible, other than in the very short term, for Governments to promote growth by boosting demand. The failure of the Maudling and Barber dash for growth was therefore inevitable.

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The Lawson chancellorship had its moments. However, in 1987-88, when he allowed the economy to overheat, the consequences were almost inevitable: the brakes were slammed on and there was what the then Governor of the Bank of England described as a "domestically generated" recession.

It was the Lawson experience, above all, that convinced me that the prime objective of policy should be monetary and fiscal stability. I believe that economic growth can be achieved and that businesses can prosper and grow only against such a background of stability. That is why, in the latter 1980s and in the 1990s, a little before it became fashionable in the Labour party, I supported the idea of disciplined fiscal policy, with monetary policy controlled by the Bank of England.

In my typically non-partisan way, I am prepared to acknowledge that the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), made a contribution. He began the process of cutting the very large deficits bequeathed by the Chancellors who preceded him. He also published the minutes of the meetings he held with the Governor of the Bank of England to decide on interest rates. That was a movement forward, although the right hon. and learned Gentleman spoiled his record before the 1997 election with a bit of a pre-election spending spree. He also cut interest rates in the run-up to the election, as he should not have done.

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