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18 Nov 2002 : Column 404—continued

Rob Marris (Wolverhampton, South-West): Will the right hon. and learned Gentleman give way?

Mr. Howard: The hon. Gentleman should take heed before he rises to his feet. Those are not my words: they are the words of the director general of the Confederation of British Industry. That organisation has estimated that the combined cost of the burdens on business over the past five years—taxes and red tape—could be as high as #15 billion a year.

Rob Marris: The right hon. and learned Gentleman talks about rising taxes. Does he think that that is a more undesirable way to proceed than doubling the national debt, which is what happened when he was in government?

Mr. Howard: I fear that the people of this country are much more interested in what is happening today and in the damage that the Government are doing to our economy than in the hon. Gentleman's mistaken and misleading history lesson.

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In its pre-Budget report submission today, the British Chambers of Commerce talked of the

Far from acknowledging the concerns of business, still less doing anything about them, the Government's reaction is to spend their time rubbishing them. The Chief Secretary, that renowned authority on these matters, informed the CBI that its figures on tax were Xwrong and misleading". He said that Britain is doing better on tax than our competitors. That is despite the fact that Britain has overtaken Germany in the high tax league.

The Secretary of State for Trade and Industry has gone one better. I am sorry not to see in her place, although she was here earlier. Not content with telling Britain's business leaders that they are wrong, she has informed them that they are incompetent too. She said:

that accounts for Britain's low productivity. Apparently, she believes that the quality of management has declined in the past five years, and that that is what has gone wrong with productivity. Meanwhile, her colleague Lord Macdonald thinks that the way to increase his productivity is to write press articles defending the 4,642 new regulations brought in by the Government last year. That is a record number: one for ever 26 minutes of the working day.

I referred earlier to Labour's statement in opposition. In its business manifesto in 1997, the Chancellor said:

Can any promise have been broken more comprehensively than that?

Mr. Tom Harris (Glasgow, Cathcart): Will the right hon. and learned Gentleman give way?

Mr. Howard: I hope that the hon. Gentleman will answer that question.

Mr. Harris: The right hon. and learned Gentleman mentioned that business is now over-regulated. Can he name three regulations that he thinks should be removed from the shoulders of industry?

Mr. Howard: The question that the hon. Gentleman poses completely misses the point. [Laughter.] I shall answer his question in a moment. It is the cumulative consequence of 4,642 regulations that is so damaging. He asks for an example, and I shall give him one. I suggest that he look at new part L building regulations, statutory instrument 2002, No. 440. He may not know what that does; it forces building firms and traders to pay new charges to be allowed to install windows, conservatories, roof lights, roof windows and doors. If the installer is not registered, building regulation consent and a fee to the council is required, which costs a minimum of #150 for new windows. I suggest that the hon. Gentleman ask small builders in his constituency what they think of that regulation.

The Chancellor said two weeks ago that enterprise would be the theme of the pre-Budget report, but enterprise was supposed to be the theme last year, too.

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In fact, it seems to have been the theme every year but, every year, his policies damage enterprise. Only this week, a study by the London business school reported that the interest shown by would-be entrepreneurs in starting new businesses dropped by 31 per cent. last year. Strangely enough, the London business school did not blame this on the failure of managers. Paul Reynolds, its professor of entrepreneurship, said that the Government were

Mr. John Bercow (Buckingham): My right hon. and learned Friend is rightly highlighting the impact of costly and damaging regulation. However, will he confirm, for the balance of the argument and the completeness of the record, that we in the Conservative party have no intention whatever of abolishing the national minimum wage and that the logic of the existence of such a wage is that it will be periodically and affordably increased?

Mr. Howard: My hon. Friend knows that we have made it clear that we would not abolish the minimum wage, and I am happy to confirm that again this afternoon.

No one is denying that some of the decisions that the Government have taken on the economy—notably their reforms to the Bank of England—were the right ones. I have fully acknowledged that on a number of occasions. The Government inherited a golden legacy—[Interruption.] Labour Members who doubt that should wait for just a moment. Thankfully, unemployment, inflation and mortgage rates are still low. But, now, clouds of uncertainty are gathering and it is when times are less good that the foundations of the economy will be tested.

It was the supply-side reforms of the previous Government that led to what the Financial Secretary described, in a radio interview just a few weeks ago, as

How right she was. Those Xgood times" did not happen by chance, but the solid foundations on which they were built are being weakened little by little with every new regulation and burden that the Government introduce; each one seemingly harmless and defensible but, cumulatively, causing untold damage. Is it any wonder that the director general of the CBI has said that we are Xsleepwalking to decline"?

The Government do not want to face that reality. After more than five years in office, business is getting fed up with Labour, fed up with Labour's red tape and regulations, fed up with Labour's new business taxes and fed up with Labour's inability to improve public services such as health, transport and education that are vital to a first world economy.

Of course it was not just on business that the Chancellor made promises against which he will be judged. Five years ago, he criticised our low level of national saving and announced new measures that he said would

So what has been the result of the Chancellor's new measures? The savings ratio is forecast to fall this year to the lowest level ever recorded. Meanwhile, borrowing has risen, with household debt at record levels.

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Far from alleviating this problem and encouraging people to save, the Chancellor has done precisely the opposite. It was the Chancellor who brought in the #5 billion a year pensions tax. So far, that has taken #25 billion from our pension funds. Some #400 is removed in tax every year from every single contributing member of a pension scheme. Another #130 is taken every year through the miserly uprating of the contracted-out rebates. When the Chancellor introduced the pensions tax in July 1997, he tried to justify it by saying that pension funds were in surplus and companies were enjoying pension holidays. In June this year, the Prime Minister defended the policy by claiming that the stock market was Xup massively" on where it was five years ago. Alas, the pension funds are no longer in surplus and, unlike the American stock market, our stock market value is now lower than when the Government came to office, yet the tax continues to drain money from our pensions at the rate of #5 billion a year.

Nor have the Chancellor's other measures encouraged savings. The replacement of personal equity plans and tax-exempt special savings accounts with individual savings accounts was complicated and unnecessary. The last pensions Green Paper said that stakeholder pensions were likely to be taken up by Xmany people" but they have been such a dreadful flop. Help the Aged has said that pensions have faced

with the pensions credit creating

The Government still have not acted on the proposal in last year's Budget to abolish the minimum funding requirement, yet the Chancellor is having to bring in another pensions Green Paper to clear up the mess that his first Green Paper made worse. What about the effect on savings of his tax and pensions credits and the growth in means-testing, which send the message loud and clear that the more people save, the less they get? So much for the Chancellor's promises to cut means-testing.

The Chancellor also promised a transparent system. Indeed, that was the first of his five so-called Xprinciples of fiscal management". In December 1998, Parliament approved his code for fiscal stability, which said that there would be

Four years later, the Government are financing, off balance sheet, some #100 billion of public sector capital spending through the private finance initiative alone. On top of that, they are guaranteeing through letters of comfort and similar schemes some #50 billion in public-private partnership deals with London Underground, London and Continental Railways and the not-for-profit structure of Network Rail.

Those deals do not feature in the accounts at all, not even as a note in the Red Book. They would send the Chancellor's debt ratio closer to 40 per cent. than the 30 per cent. of which he frequently boasts. Indeed, if we took the PFI liabilities into account, it would be well above 40 per cent.—so much for transparency in the publication of the public accounts.

The Government have said that their treatment of those items in the national accounts conforms with all accounting rules. Perhaps they are not aware that the

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executives at Enron said very much the same thing. Is it any wonder that the wannabe iron Chancellor is in danger of becoming the Enron Chancellor?

Next week, the Chancellor will deliver his pre-Budget report. We look forward to hearing what he has to say about his growth forecasts and revenue forecasts but most of all we look forward to how he responds to the concerns of taxpayers and of business. Will he start to mitigate their burdens? Will he start to address the economic imbalances that his policies have exacerbated? Will he change direction on the public services or will he continue his policy of spending without reform? Will spending continue to grow faster than the economy year after year? Will taxes continue to go up and up? Will he carry on taxing and spending and failing?

Those are the questions that the Chancellor must start to answer: questions about the long-term effects of his policies, about the sustainability of his approach to taxes and spending, about the way in which we are sleepwalking to decline. After five and a half years, it is time to start judging the Chancellor and his colleagues against the promises they made. That is the basis on which we and the nation will hold them to account.

Several hon. Members rose—

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