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12 Feb 2003 : Column 875—continued

Mr. Tom Harris (Glasgow, Cathcart) rose—

Mr. Howard: I am afraid that Labour Members will have to listen to this for a while longer.

The IFS does not think that the Chancellor is on course to meet his so-called golden rule in the next economic cycle. It says that he will have to raise taxes from April 2005 by another £11 billion if he wants to meet his rule with his—allegedly—planned level of caution. That was the golden rule that was meant to be rock solid—the lynchpin of his entire approach. What would he say to the Labour-dominated Select

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Committee, which now does not even trust him to determine the economic cycle on which his rules depend? It says:

It wants an external body, such as the National Audit Office, to "validate the decisions." Does not that speak volumes about the Chancellor's downgraded reputation and fiscal rules?

Gareth Thomas (Clwyd, West): The right hon. and learned Gentleman is a fair man. Will he give credit where it is due? Is not it true that, in a difficult global climate, the British economy continues to grow faster than that of any other G7 country?

Mr. Howard: No, it is not. The Chancellor has had stewardship of the economy for nearly six years. In that time, it has grown more slowly than that of the United States. It has also grown more slowly than in the last five years of the Conservative Government. The hon. Gentleman should bear that in mind before asking such a question.

Geraint Davies (Croydon, Central): Will the right hon. and learned Gentleman give way on that point?

Mr. Howard: No, I want to deal with the Chancellor's rules. I have spoken about his golden rule and I want to move on to his sustainable investment rule.

The Treasury Committee also called for all the Government's contingent liabilities to be recorded in the Red Book. If the Chancellor had not put more than £100 billion of his potential liabilities off balance sheet, Enron-style, public sector debt would already have reached his rule's 40 per cent. limit.

The further tax rises that the Institute for Fiscal Studies predicted would be on top of those that are already on course for April. The Chancellor's response to the anxieties of business and investors about the burdens that he has imposed on them is to add to them. There have been 53 tax rises since 1997. In 53 days, on 6 April, national insurance rates will increase for employees and employers. That is a tax on pay and on jobs.

The Chancellor imposes a tax on pay at a time when people are feeling nervous about the future, exposed and under pressure. For example, the nurse consultant on £34,000 a year will be £26 a month worse off. The police inspector on £37,000 a year will be £30 a month worse off. The Chancellor imposes a tax on jobs at a time of growing economic uncertainty. Does he recall that after the 2000 Budget he issued a press release that said that lower national insurance contributions would "promote employment opportunities"? What does he believe that higher contributions will do?

The increase in national insurance contributions is a damaging tax that is imposed in the wrong way for the wrong reasons at the wrong time. For many people, it will be the ultimate injustice. People already have to pay out of their own pockets, on top of taxes, because of failing public services. Two hundred and fifty thousand people a year, who are not covered by an insurance

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scheme, pay for their operations because the Government are not providing the improvements that they promised in the national health service.

Every year, the Government promise better public services in return for higher taxes, but we get only the higher taxes. In the Chancellor's parallel world, public services are improving wonderfully. He told the Social Market Foundation that the Government had set out a "modern model" for the NHS. However, in the real world, a 22 per cent. increase in health spending in two years led to an increase of less than 2 per cent. in the number of people receiving hospital treatment. What sort of modern model is that?

What sort of modern model has more than 1 million people on waiting lists, and accident and emergency departments where patients have to wait hours, first to be seen and then to be admitted? We were told yesterday that patients are kept in ambulances for hours to fiddle the Government's figures. Does a modern model for schools lead to one in every four children leaving primary school unable to read, write or count properly, and mean that an increasing number of children in inner cities leave school without a single GCSE? In a modern model, do violent assaults on teachers quadruple, teacher vacancies double and fewer than 50 per cent. of teacher trainees still teach three years later?

Does a modern model for transport mean increasing congestion and the longest commuter travelling times in Europe? Rail delays have doubled under Labour, with one in five trains running late.

Several hon. Members rose—

Mr. Howard: In the Chancellor's parallel universe, none of that matters—[Interruption.]

Mr. Speaker: Order. The shadow Chancellor has indicated that he is not giving way.

Mr. Howard: The Chancellor says that there is nothing to worry about because his public service agreements will sort everything out. In his parallel universe, they are a great success. He believes that they are a shining beacon of reform for the rest of the world to admire. At the Social Market Foundation, he spoke about clear objectives, well-defined targets, consistency, accountability, equity and flexibility.

In the world that the rest of the country inhabits, the Chancellor's ludicrous targets are objects of scorn. People now know about the Chancellor's vague and ill-defined targets, and his targets to set targets. They know about stifling local initiative, diverting time and energy from front-line services and redefining trolleys as "beds on wheels" so that the Chancellor's targets can be achieved.

Have not the Chancellor and his colleagues used targets as a substitute for genuine, decentralising reform? More than a year has passed since the Chancellor said:

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Throughout their time in office, the Government refused to introduce genuine reform. Its absence explains their cycle of ever-higher taxes and declining public services. Their only answer is higher taxation. When that fails, they impose even higher taxes.

Mr. Bob Blizzard (Waveney): Will the right hon. and learned Gentleman give way?

Mr. Howard: No, I want the hon. Gentleman to pay special attention to my point.

From April, Government spending will race ahead for the first time at more than 50 mph—million pounds per hour. The Chancellor boasts about April's tax on pay and his tax on jobs. He treats ever-higher taxes as a badge of honour. However, they are a sign of his failure and that of his Administration.

Reforming public services is the only way to break the vicious circle. It is the key to everything that we want to achieve. The need for it is urgent and pressing. Only through genuine reform will we obtain the first-class public services for which our people cry out. It is vital to achieve that goal for parents, patients and passengers. It is vital for business and for millions of hard-pressed taxpayers.

The Chancellor promised no more boom and bust. He has managed to provide both at the same time. He promised prudence with a purpose, but he has been neither prudent in handling the nation's finances nor purposeful in reforming public services. He has presided over missed growth forecasts, halved productivity growth, a pensions crisis and increasing Government debt.

The Chancellor excelled in soundbites, but they are now turning to ashes in his mouth. Colleagues, past and present, are queueing up to criticise him. Only yesterday, the Secretary of State for Health and the Secretary of State for Education and Skills held a press conference at which they rubbished the basis of his Social Market Foundation speech. Mo Mowlam calls for him to be moved. Andrew Rawnsley asks in The Observer whether his next Budget might be his last. Peter Preston writes in The Guardian—[Interruption.] Labour Members may find that they dismiss The Guardian at their peril.

Peter Preston said:

The saddest song of all, however, is that of the British people. They do not live in the Chancellor's parallel universe; they know all too well the reality of the Government's broken promises. Daily they must pay the price of his failure, and more and more and louder and louder they find themselves saying of the Chancellor and of this Government "Enough is enough."

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