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9 Apr 2003 : Column 288—continued
Provisional Collection of Taxes
- That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Rates of tobacco products duty (motion No. 2);
(b) Rate of duty on beer (motion No. 3);
(c) Rate of duty on wine and made-wine (motion No. 4);
(d) Hydrocarbon oil duties (rebates) (motion No. 6);
(e) Vehicle excise duty (tractive units) (motion No. 12);
(f) Value added tax (requirement of evidence or security) (motion No. 13);
(g) Joint and several liability for unpaid VAT of another trader (motion No. 14);
(h) Value added tax (face-value vouchers) (motion No. 15);
(i) Employment income (provision of services through intermediary) (motion No. 28);
(j) Personal pension schemes (limits on contributions) (motion No. 45).—[Mr. Gordon Brown.]
Budget Resolutions
AMENDMENT OF THE LAW
Motion made, and Question proposed,
- (1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.—[Mr. Gordon Brown.]
1.32 pm
Mr. Iain Duncan Smith (Chingford and Woodford Green): On behalf of the House, I start by congratulating the Chancellor of the Exchequer and his wife, Sarah, on their happy announcement this weekend. I can assure him that children are a great blessing despite some of the trials.
I welcome some of the measures in the right hon. Gentleman's Budget, particularly those to counter terrorism and to combat world poverty and poor education in deprived areas. We shall certainly give them welcome and support in as far as we possibly can.
During the past six years we have come to learn that the Chancellor's Budget speeches are characterised as much by what they conceal as by what they disclose. The right hon. Gentleman has made it clear that he prefers to let the damaging detail—the fine print—leak out over the days and weeks that follow his Budgets. Today, despite all the Chancellor's bombast and bravado, we learned a great deal.
We learned that the Chancellor has got his forecasts wrong again, we learned from the Red Book that his borrowing is up again, and we learned that taxes are up and will stay up. From this week, a typical family will be another £568 a year worse off. We also learned that the Chancellor has no intention of being candid with the House or with the British people.
Let us consider some of the figures that have been announced already in the Chancellor's Red Book. On page 235, we see that the savings ratio this year is forecast to be even lower than it was last year. On page 241, we see that manufacturing output fell last year by 4 per cent., and that the Chancellor's forecast for this year has been slashed as well. On page 238, we see that business investment, forecast last April by the right hon. Gentleman to grow this year by up to 6 per cent., is now forecast to fall. We did not get any of those details from the right hon. Gentleman's speech today. This is a Chancellor who promised us prudence, but has now given us higher borrowing and higher taxes at the same time.
The Chancellor's message to the British people is clear: higher taxes, which is pain today, and higher borrowing, which is more pain tomorrow. The Chancellor has increased taxes on pay, jobs, homes,
home owners, mortgages, marriages, petrol and pensions. The Government are taking an extra £5,500 per household per year. That is an extra £44 per week for every man, woman and child. The Chancellor's great excuse was that this money would make our public services world class. Instead, we have a million people on hospital waiting lists, a crime is committed every five seconds, and thousands of children are leaving school without one GCSE to their name. It is the same old story: more tax, more spend and more waste. That is the sum of the Chancellor's approach.That is from the Government who promised:
- "We have no plans to increase tax at all."
- "Our proposals do not involve raising taxes."
- "We want people to pay lower taxes."
Just as he has broken his promises to individuals, so he has broken his promises to business. In 1998, the Chancellor promised major changes to help business. In 1999, he promised tax cuts for business. In 2000, he promised incentives for business. In 2001, he promised more good news for business. Today, he even promised new help for business.
Today, we also see what the Chancellor's promises are worth. There will be an £8 billion tax on jobs. That is the cost of national insurance, which he has raised. That is hitting business, and it will hit it hard. The British chambers of commerce say that it will hit it so hard that one in five firms will cut jobs directly as a result of the Chancellor's new tax. The Chancellor has been so hard on business that, since 1997, he has taken an extra £47 billion from it in tax. No wonder that the right hon. Gentleman did not tell the House today about the real cost of his policies.
The Chancellor did not say, for example—although the figures are now clear—that insolvencies are at their worst level for a decade, or that analysts say that 70,000 firms will go bust over the next three years. He did not say that manufacturing has lost 300 jobs every day since Labour has been in power, or that manufacturing output and investment are now lower than when he delivered his first Budget in 1997.
Just as the Chancellor has broken his promises to business, so he has broken his promises to hard-working families. Since 1997, council tax has increased by 60 per cent., adding more than £400 to a typical bill. Just look at the Red Book—council tax is up by £8 billion since Labour came to power. Stamp duty increases have added £5,000 to the cost of purchasing an average home in the south-east. The abolition of mortgage tax relief has cost home owners £200 a year. The abolition of the married couples' allowance has cost families £300 a year. Higher petrol taxes have cost the average motorist about £300 extra every year. In short, the Government's tax take has risen by more than 50 per cent. since the right hon. Gentleman became the Chancellor.
Of all those who have been hit by the Chancellor, there is one group that will be hurt more than most. The savers of today are the pensioners of tomorrow. [Interruption.] Labour Members may laugh, but they are laughing at those who are saving for their futures, whom they are damaging. They laugh while the Chancellor is busy blighting those people's old age by damaging their retirement. It is worth reminding all of them who want to laugh that in 1997 he said that he would "encourage personal savings". In 2001, he said that he would
- "reward savers, pensioners and hard-working families".—[Official Report, 7 March 2001; Vol. 364, c. 307.]
When Labour took office in 1997, the savings ratio was 10 per cent. Today, it has fallen to 4¾ per cent. It is all there in the Red Book. The Chancellor is destroying savings, and his so-called pension reforms include a pension tax, worth £5 billion a year, which has hit every single future pensioner. He has also created a pensions crisis. Someone retiring today will retire on half the income that they would have retired on in 1997. He should apologise to all those people whose lives he has damaged.
The Chancellor has not only let down those who wish to retire in the future. He is the man who promised the end to the means test for pensioners, but, under him, the proportion of pensioner households subject to a means test has risen by 50 per cent. Every single one will remember his words. Today, after two years and three consultations, reannouncements and re-reannouncements, the Chancellor decided to announce his child trust fund again. We have more overcomplicated proposals that will do little to help future long-term saving, but they will extend means-testing to even more people. There is only one thing to say about this little scheme of the Chancellor's—[Interruption.]— if the Home Secretary will keep quiet for a second: all the money that the Chancellor is offering to those children will have to go towards paying their tuition fees or their top-up fees.
I come now to the financial impact of the war with Iraq. We support the Government in their waging of this war, and we naturally support its full and proper funding, so, as I said earlier, and I repeat, we welcome the extra money that the Chancellor has announced today. But he should be warned; he cannot get away with using the war to get him off the hook for his long-term mismanagement of the economy. Nor can he get away with blaming Europe for all his problems. He just cannot blame all his flawed forecasts on world events.
Last April, the Chancellor delivered his forecasts to the House for the coming year, and he got them wrong. He got his forecasts for growth wrong. He got his forecasts for tax revenues wrong. He got his forecasts for borrowing wrong. So, in November, he admitted that his central growth forecast for 2002—2¼ per cent.—was wrong. He conceded that tax revenues had failed to meet his projections, and he announced that borrowing would have to rise by £20 billion in just two years. Then, he went on to blame all that on the fact that world trade and world gross domestic product growth had not been as fast as he had forecast.
The Chancellor's excuse, in other words, was not that he had failed Britain, but that the world had failed him. That is a serious charge to make, so I went back to last year's Red Book to check how those figures stack up. We find that when he delivered his pre-Budget report in November, the only forecasts that he got right were those for world trade and world growth. He blames the world, not himself, for getting it wrong, and we heard it again today, although he sits there grimacing. He blamed the world one more time: it is the world's fault that growth is running in such a way.
The Chancellor wants us to believe that the world economy has experienced the most rapid slowdown for 30 years. In the early 1990s, we had three years of world growth averaging just 1 per cent. Last year, according to the European Commission report, in which he places so much credit, world growth was 2.9 per cent. This year, the same group forecasts growth of 3.2 per cent. So, the Chancellor is inventing a series of problems that do not exist.
Today, the Chancellor has to admit one more time that he got his growth forecasts wrong again. They are down by 0.5 per cent., so they are wrong and his assumptions on tax revenues are wrong as well. The result is that his borrowing projections are also wrong. He sprinted through his borrowing figures, so let me recap. Last April, he predicted that he would have to borrow £13 billion this financial year. Today, he admitted that he would have to borrow £27 billion. That takes us only to the end of the financial year.
Just two Budgets ago, the Chancellor told the House that he would need to borrow £35 billion between 2002 and 2006. Today, he admitted that the true figure for borrowing over the period is not £35 billion, but £98 billion. In just two years, his medium-term borrowing requirement has risen by £63 billion. That is not just invented money; it amounts to £2,600 extra for every single household in Britain. He cannot borrow indefinitely, however. Surely even he, with his fiddled figures, understands that. More and more borrowing will mean higher and higher taxes.
Independent forecasters have long been warning the Chancellor that he was being far too optimistic. They questioned his revised predictions. Some called them "overly optimistic" and "rose tinted". We know what the independent experts think now: 78 per cent. think that by 2006 the Chancellor will have to raise taxes by between £5 billion and £8 billion, and those are the experts who sit on his own Treasury panel, although we do not hear any of that from the Chancellor.
The point is that the Chancellor's broken promises and missed forecasts might have been palatable if we were seeing real reform of our public services, but the facts speak for themselves. Take health: 1 million people are on NHS waiting lists, hospital admissions are down, not up, and last year 300,000 people were forced to pay for their own operations—a figure that has trebled since 1997.
On education, 50,000 children play truant every day, one in four leaves primary school unable to read, write or count properly, and every year more than 30,000 children leave school without a single qualification. This Government have tested to destruction the theory that more and more money alone can transform our public services. They have talked about reform, but delivered
none. Six years of spin and spending cannot hide the fact that our public services are just not good enough. They need not simply more money, which is the Chancellor's prescription, but a new approach altogether. Our public services need an approach based on giving power back to people so that they are in control of their own lives, whether they are nurses, doctors, teachers, patients or parents.The Chancellor has delivered his seventh Budget: six years, seven speeches and all promises, promises, promises. He promised prudent Budgets, fair Budgets, Budgets for enterprise and Budgets for the public services, but he has not delivered any of it. He has got it wrong, because he puts systems and initiatives, targets and schemes, in which he has great faith, before real people and real results. He has got it wrong because he thinks that he knows better than the British people how they should be living their lives. He has also got it wrong because he is driven not by the facts, which are staring him in the face, but by an ideology that has gripped him and will not let go. His sole mission in this Parliament is to prove that the old ways still work—never mind the evidence, never mind the consequences, just more failing policies and more downgraded forecasts from a discredited Chancellor.
Last week, before it was too late, the Chancellor could have scrapped his tax on jobs and pay. He could have stopped punishing people who work hard and save hard. Today, he could have delivered security and independence for the young, for the old, for hard-working families and individuals, for those who create jobs and those who need them, for those who pay for public services and those who rely on them. He could have delivered a fair deal for all those people, but he did not and he never will. It is the British people who will pay the price: more taxes, more spending and public services that simply are not good enough. The message of the Budget is clear for the British people—it is pain today from the Chancellor and, as borrowing spirals and he blocks any real reform, more pain tomorrow.
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