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14 Apr 2003 : Column 709—continued

Mr. Howard: I am afraid that that is not what they say at all. I have already cited the economies that were growing faster than ours last year and are likely to grow faster this year, too.

The independent forecasters are saying the same thing again about the forecast that the Chancellor gave the House last Wednesday. On the very day of the Budget, the IMF—to which the hon. Member for Brent, North (Mr. Gardiner) gives so much credence—published its forecasts, predicting lower growth for our economy next year than did the Chancellor. Other independent forecasters also believe that the Chancellor is being too optimistic. Robert Chote of the Institute for Fiscal Studies says:

"Hope in the Treasury clearly springs eternal."

Martin Weale of the National Institute of Economic and Social Research says that the Chancellor has

"continued the tradition of ignoring the biggest risks to his fiscal projections."

The economists at Lehman Brothers say:

"There is now practically no-one in the same ball park as him".

Rob Marris (Wolverhampton, South-West): The right hon. and learned Gentleman talks about forecasts, so can he enlighten the House about some others? The hon. Member for North Wiltshire (Mr. Gray) has said:

"We propose a cut in taxation. At no stage have we proposed a cut in public spending."—[Official Report, Fourth Standing Committee on Delegated Legislation, 3 April 2003; c. 9-10.]

The hon. Member for Arundel and South Downs (Mr. Flight) said that

"the figure of 20 per cent. referred to the scope to cut waste in government".—[Official Report, 9 April 2003; Vol. 403, c. 324.]

And the right hon. Member for Wokingham (Mr. Redwood) said that

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"20 per cent. off the overhead is not enough." —[Official Report, 9 April 2003; Vol. 403, c. 306.]

Will the right hon. and learned Gentleman tell the House how much his side would cut?

Mr. Howard: What a pathetic attempt to divert attention from the Chancellor's failures. That is a Labour party lie. Labour's claims about our policies on public services are untrue. We are not proposing cuts in frontline services.

Rob Marris: On a point of order, Mr. Deputy Speaker, the right hon. and learned Gentleman has intimated that I have been lying to the House, but I was quoting from Hansard.

Mr. Deputy Speaker: No such accusation has been made, because that would have caught the attention of the Chair.

Mr. Howard: Is anyone in doubt that huge sums of taxpayers' money are being wasted on bureaucracy? We are seeking ways to save that money because taxpayers expect nothing less, and we make no apology for saying so.

I shall return to the Chancellor and his forecasts. This is a Chancellor who used to boast about his caution and preen himself on his prudence. His chief economic adviser and permanent secretary spent six pages of their book warning that policy makers should err on the side of caution in making their forecasts. The Chancellor has long abandoned that approach, and the country will pay the price.

Let us look at the Chancellor's figures on borrowing. At the last election, this Chancellor said that it was by cutting debt interest payments that he was able to fund health and education, and that

"any policies that would raise debt interest payments . . . would put that at risk."

But look at him now! Two years ago in the 2001 Budget, the Chancellor forecast borrowing over five years at £30 billion. Last year, the forecast went up to £72 billion, and last week up to £118 billion—a fourfold increase in two years. Independent forecasters are queuing up to say that that is yet another underestimate. How can anyone have confidence in his figures after that? If the Chancellor had not put so many of his liabilities off balance sheet—Enron-style—public sector debt would be higher still and he might well have already reached the 40 per cent. limit in his sustainable investment rule. So much for reducing debt, for prudence and for all those broken promises.

What about the Chancellor's promises to business? This is the Chancellor who promised:

"We will not impose burdensome regulations on business because we understand that successful businesses must keep costs down."

This is the Chancellor who tells us every year that he has delivered a Budget for enterprise. Now, however, he is being judged by his performance, not his promises. That performance has added costs to business in tax and red tape, estimated by the CBI at up to £15 billion a year. That performance has led to an average 15 new regulations every working day, a figure that is 50 per

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cent. up on 1997. His performance has led to Britain falling out of the top 10 in the world competitiveness league.

Mr. Tom Harris: Before the right hon. and learned Gentleman moves on, can he name three regulations introduced by the Government that a Conservative Government will abolish?

Mr. Howard: The hon. Gentleman has asked me that before, and I have answered it before. I suggest that he have a look at the regulation I mentioned then, under which will be set up an extraordinary scheme called—believe it or not—the fenestration self-assessment scheme, or Fensa for short. People will have to apply on forms in triplicate if they want to change the windows in their houses. The hon. Gentleman should read the answer I gave him when last he asked me that question.

The Chancellor said last week that business investment has fallen around the world. CBI research shows that the fall in business investment was much sharper here in the UK than it was in the United States, in Canada, in Spain, in Italy, in France, in the Netherlands and in Belgium. It was sharper here than it was even in Germany and Japan. Does the Chancellor not realise how degrading it is to his office and to himself to violate the facts in that way?

The Chancellor said last week that progress had been made on productivity, but productivity growth has almost halved since he became Chancellor. An editorial writer on the Financial Times described the Chancellor's claim on productivity as

"a classic in its selective use of statistics, its use of inconsistent time periods and its exploitation of irrelevant data revisions. It was thoroughly misleading".

Does the Chancellor not realise how degrading it is to his office and to himself to make such misleading claims? Is it any wonder that what he says about business and enterprise is no longer believed?

The Chancellor promised last week to tackle red tape, yet seven out of 10 companies surveyed by PricewaterhouseCoopers did not think that his promises would make any difference. The business editor of The Independent said:

"As for being a Budget for business that . . . is so much poppycock".

In the light of all that, how does the Chancellor think business feels when people read that Treasury officials were "directing" journalists to a recent piece by Polly Toynbee in The Guardian headed "British Business is not Burdened but Pampered"? That piece concluded that

"the business world is . . . ignorant and ungrateful for its low tax status".

Is that what the Chancellor thinks? Is it any wonder that only 1.9 per cent. of business leaders believe that the Government have a thorough understanding of their needs?

This is the Chancellor who said, hand on heart:

"I want tax cuts for business not tax rises."

Now he is being judged by his performance, not his promises.

Last April, the Chancellor was warned that his rise in national insurance contributions was a tax on jobs. He was warned that it would cause companies to move jobs

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abroad. When I raised those concerns in the House a year ago, he described them, from a sedentary position, as "nonsense". Now there are reports of companies doing exactly what the Chancellor then described as "nonsense". The British Chambers of Commerce says that one firm in five is thinking about laying people off as a result of the rise in national insurance contributions. Does the Chancellor not realise how degrading it is to his office and to himself to disregard the facts of economic life in such a cavalier way?

What about the Chancellor's promises on pensions? In 1993, he told the Labour party conference:

"I want the next Labour Government to achieve . . . the end of the means test for our elderly people."

Now he is being judged by his performance, not his promises. Almost six in 10 pensioners will soon be subject to the means test as a direct result of the changes that the Chancellor has introduced. In all, up to 25 million people could be in households on means-tested benefits from 2003–04. The Chancellor is determined to make us a means-tested nation, to create a dependency culture in which, all the way up the income scale to £66,000 a year, people become dependent on the Chancellor's largesse. Does not the rise in means-testing send out loud and clear the signal, "The more you save, the less you get"? Is it any wonder that the savings ratio has halved since Labour came to power, as last week's Budget shows?

What of the damage to savings caused by the Chancellor's pensions tax—a tax that has cost 12 million people an average of £400 a year? A typical pension saver now retires on just half what he or she would have received five years ago. That is partly because of the effect of the pensions tax on British stock markets, which, since 1 May 1997, have substantially underperformed compared with those of the United States and France.

Help the Aged says:

"With pensions and savings in freefall this Budget was the Chancellor's opportunity to take decisive action . . . but it appears that the Government's approach to financial security for pensioners is to cross its fingers."

Last week, the Chancellor spoke of there being "a case in principle" for adopting a new inflation index—the harmonised index of consumer prices, or HICP, pronounced "hiccup" for short. What he did not say was whether it would apply also to the upratings of pensions and benefits. Will the Chancellor confirm that, on the basis of his own inflation forecast, pensioners would find themselves almost £1 a week worse off in 2006–07 if he were to make such a change? Will he rule out that change now? Will he instruct the Chief Secretary to rule out that change when he replies to this debate in a few minutes' time?

What of the other tax rises? The Labour manifesto in 1997 said:

"New Labour is not about high taxes on ordinary families."

The Prime Minister said:

"We've no plans to increase tax at all."

I must say that, as my hon. Friend the Member for Chichester (Mr. Tyrie) pointed out this afternoon, it must have been cold comfort to the Syrians to hear the Prime Minister use exactly the same formulation this afternoon when he said that there were no plans to invade Syria.

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The Chancellor said:

"My approach is not to tax and spend."

However, the Government are now being judged on their performance, not their promises. Before the Budget, there had been 53 tax rises under Labour. Last week, seven more were added to the list. They included a 38 per cent. rise in red diesel duty for farmers and an extension of the Chancellor's IR35 stealth tax. There was also confirmation that council tax revenues are up 12 per cent. this year. There have therefore now been 60 tax rises under Labour.

The Government will be taking £405 billion in tax this year. That is 50 per cent. up on 1997 and the equivalent of £44 a week more in tax for every man, woman and child in the country. This month alone, the Institute for Fiscal Studies estimates that well over 4 million householders will lose more than £10 a week from the Chancellor's tax rises. When council tax rises are included, a typical family in a band D house will be £568 a year worse off. And there are more tax rises to come.

The Red Book shows taxes rising as a share of national income until almost the end of the decade. No longer is there any pretence of jam tomorrow. We are now on the road to higher taxes for the duration of this Government—however long or short a period that may be. By 2007–08, the Chancellor intends that 38.2 per cent. of national income will be taken in tax, compared with 34.9 per cent. in 1996–97. He plans to raise an extra £251 billion in taxes in 2007–08 compared with 1996–97. That is an extra £4,272 a year for every man, woman and child in the country. As my right hon. Friend the Leader of the Opposition said in his response on Wednesday, with this Chancellor and this Government it is pain today and pain tomorrow. How does the Chancellor ever expect people to trust him on tax again?

What of the right hon. Gentleman's promises to link spending with reform of the public services to ensure that those services improve? We have heard a lot about that from many contributors to the debate. In 1997, the Labour manifesto stated:

"The level of public spending is no longer the best measure of the effectiveness of government action."

In fact, from this month the Government will be spending more than £50 million an hour. The Chancellor promised that not a penny more would be spent on the health service until the Government had introduced the changes that would

"let us make reforms and carry out the modernisation the Health Service needs".

The Chancellor said that 18 months ago. What has happened since? As my hon. Friend the Member for Tunbridge Wells (Mr. Norman) said, over two years we have seen a 20 per cent. rise in spending on the NHS matched by an increase of only 1.6 per cent. in the number of hospital treatments in the same period.

Last year, 300,000 people without insurance paid for their own treatments because they could not rely on the NHS—three times as many as when Labour came to office. Last year, 30,000 of our children left school without a single GCSE. There was a 20 per cent. increase in violent crime.

Who is to blame for the millions of pounds of taxpayers' money simply wasted by the Government? Who is to blame for the £350 million-plus spent on

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refurbishing Departments in the four years to February 2002; for the increase of £3.5 billion, or more than 25 per cent., in the cost of running Departments; and for the fact that there are more bureaucrats than beds in the NHS?

When we last debated those issues, in February, the Chancellor endeared himself to some of my constituents—[Interruption.] The right hon. Gentleman will want to listen to this. He revealed himself to be an avid reader of the Folkestone Herald, and especially of the weekly column that I write in that august publication, but he also revealed more than he meant to about his approach to the problems our country faces. In one of those articles, I had criticised the fact that my constituency—alas, like many other constituencies—has fewer GPs than it should have. The Chancellor said that I was asking for yet more money. He did not seem to know that he had already provided the money, as the local primary care trust confirmed. The problem is not the money but the difficulty in recruiting and retaining GPs.

In another article, I had called for more social housing. The Chancellor castigated me for that, too. Yet again, he said that I was asking for more money. He did not seem to know that he had provided the extra money—money that, in July 1998 the Deputy Prime Minister described as a

"significant additional investment in housing".

Since 1997, however, the number of newly built social houses has fallen by a third, despite the extra money, while the number of homeless households having to live in bed and breakfast accommodation has trebled.

What hope is there for our country when we have a Chancellor who does not even know that he has provided the money for those programmes, and who assumes that if there has been a lack of delivery the only answer is yet more money? What hope is there for our country when we have a Chancellor whose only remedy for all the problems that we face is to tax and spend and fail?

Is it any wonder that the Secretary of State for Health, who was not allowed to take part in the debate, has warned of

"one hell of a lather about taxes rising"?

He said that many people would conclude that the Government have already tried that approach,

"but actually it isn't working".

People want a different approach, a different way. They want a Government who trust the good nature and commonsense instincts of the British people to get on with their own lives without being tied up in red tape and regulations. They want a Government who reward hard work instead of penalising it, and who encourage saving instead of punishing it. They want a Government who will spend their money wisely. They want a Government who will introduce real reform to our public services. They will never get that from this Government who know only how to tax, how to spend and how to fail.

The Budget is yet another futile chapter in that litany of failure. That is why we shall vote against it tonight.

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