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It is always a pleasure to listen to the Chancellor on these occasions, and it was genuinely interesting to hear what he had to say, for example, about the housing market and child care, which we shall all study in detail. But why is it that, so often, some of the most interesting bits of the Chancellor's pre-Budget reports never make it into his speeches? Why did he not tell us that table A5 on page 190 shows that the savings ratio has halved? Why, I wonder, did he not choose to tell us anything about the tax receipt figures or about the public spending figures in the report? Does he think that those figures are less important than stamping whisky bottles? We have learned that, with this Chancellor, one needs to look at the small print. I very much doubt, though, that even the small print will say that private sector employment fell last year, that we had a record trade deficit in the last three months or that household debt is now only slightly below our entire annual GDP.
The Chancellor has congratulated himself, with characteristic modesty, on the state of the economy and on meeting his growth forecastit is indeed a remarkable event when the Chancellor meets one of his own forecastsbut the great question is, if the economy is doing so well, why is he borrowing so much? At the time of the last election, the Chancellor said that he would borrow £10 billion this year. Since then, in a series of reports, he has raised that projection to £15 billion, £24 billion and £27 billion. Today, he has finally admitted that he will have to borrow £37 billion this year. We will have to see whether that forecast proves any more accurate than its inaccurate predecessors.
The Chancellor will have been warned about families who borrow a huge amount on their credit cards, but he is doing the same on the nation's credit card. Why is he doing all this borrowing? Is it because, as the Chancellor is fond of saying, there has been a world economic downturn? No, it cannot be, because the borrowing of £120 billion, which he has just announced, between 2002 and 2006 is taking place after the worst of the downturn, against the background of world economy upturn.
The Chancellor cannot blame the rest of the world for his own borrowing, so what reason is there for the borrowing? Is it because he is not taxing enough? The pre-Budget report tells us that the Government are taking about 50 per cent. more in tax than in 1997. The Prime Minister's promise not to increase tax at all has not stopped the Chancellor raising the equivalent of £16,500 from every household in Britain. We have had 60 stealth taxes: taxes on jobs; taxes on families; taxes on homes; taxes on pensions; taxes on savings; taxes on drivers; taxes on businesses; and of coursethe biggest stealth tax of them alla huge rise in council tax. I grant that his tax revenues have not kept pace with his over-optimistic forecasts, but that is just about the only thing that they have not kept pace with.
In the past seven years, the Chancellor has allowed spending on Whitehall bureaucracy to grow by almost 50 per cent. That is £6.7 billion a year of additional spending on administration. By the time of the next election, the right hon. Gentleman's open-wallet policy on bureaucracy will have cost the equivalent of about £1,500 in extra tax for each household in Britain. Even he knows that he has a problem. That is why he today, and his spin doctors all week, have been busy making noises about his so-called efficiency review, which is intended to cut back on the extra bureaucracy that he has created.
There is an even more serious problem, however. As my right hon. Friend the Leader of the Opposition has repeatedly told the House, the Chancellor is taxing and spending and failing. We have been promised reform of the public services for years but the reform simply has not happened. Why do the latest official figures show that since 1997 spending by the Government on goods and services has risen by 59 per cent. while outputs have risen by only 14 per cent? Why has 37 per cent. more spending on the NHS produced only 5 per cent. more hospital treatments? Why has the Chancellor been hiring managers in the NHS at three times the rate at which he has been hiring doctors and nurses? Why is inflation in the public sector running five times as fast as inflation in the household sector? Does the Chancellor really think that those figures represent value for money?
The Chancellor should have used this statement to announce a new direction for public services, with choice and responsibility transferred from bureaucrats in Whitehall to parents, patients and professionals. Instead, he has been proceeding on the basis that the only answer to failing public services is more bureaucracy, more targets, more plans, more performance monitoring and more taxes, and when that fails, borrowing today and more taxes tomorrowexcept, of course, on amateur sports clubs.
The Chancellor's best defence against the accusation that he has taxed, spent and failed is that he has counter-balanced that with success in monetary policy. The Chancellor has built his reputation on the framework for monetary policy that he put in place in 1997. I have congratulated him on that in the past, and I do so again today. But I hope[Interruption.]
Mr. Letwin: I hope, however, that the Chancellor is not putting that well-deserved reputation at risk by the way in which, and the time at which, he is changing the inflation index, which is at the heart of that framework. He did not explain satisfactorily why he is changing the index now, when he knows that the harmonised index is
Can the Chancellor tell us what other implications the change in the index will have? He says that pensions, benefits and gilts will continue to be uprated in the same way as now. I suspect that those words were carefully chosen. What about tax allowances? What about indirect taxes? What about tax credits? I hope very much for all our sakes that the monetary framework will remain robust. It is not only the Chancellor's reputation that relies on that. Both the prosperity of the country and our own ambitious plans for public sector reform depend on a stable anti-inflationary environment.
But micro-economic policythe policy that sets the framework for the economic decisions of individuals and businessesmatters, too. The Chancellor has talked today about savings and pensions. I note that he has not talked about his £5 billion a year raid on pension fundsor about the Prime Minister's explanation that that was fine because the stock market was in such good shape. I note that he has not talked either about the fact that his vast expansion of means-testing is making more than 50 per cent of pensionersand will in due course make more than 75 per cent. of pensionersdependent on means-tested benefits. I note that he did not mention that a newly retired couple in rented accommodation now need to have saved more than £180,000 to avoid losing between 40p and 85p in the pound in reduced benefits at some time during their retirement. I note that he did not link this misguided, means-tested approach to the fact that the savings ratio has halved. I note that he did not tell us why his forecasts about the number of people who will be affected by his new cap on pensions differ so markedly from independent forecasts. I note, in short, that he did not tell us very much at all about how he is going to make good the damage that he has done to the culture of individual and family saving in Britain. If we are to avoid more and more people becoming more and more dependent on Government handouts in retirement, that culture of saving needs to be rebuilt.
What about the Chancellor's policies announced today for British industry? When the Chancellor addressed the Labour party conference this autumnin a speech that the Prime Minister will rememberthe Chancellor said that he would be using the pre-Budget report to promote "modern manufacturing strength". We will certainly want to look carefully at the measures that the pre-Budget report contains for manufacturers. But the Chancellor has made that kind of promise before. He told another Labour conference in 1995 that he would
In this pre-Budget report, we should have had announcements on public service reform. Instead, we have unreformed public services from an unreformed Chancellor, who has taxed and spent and failed. The taxpayer is paying now for the Chancellor's spending and will pay more later for his borrowingbut the money is not buying anything like the services that it should be buying, because the Chancellor has placed his faith in a bureaucracy which, instead of exercising effective control, is itself out of control.
In this pre-Budget report we should have had serious measures to reduce the regulatory burden on British business. Instead, business is paying now and is set to continue paying in lost productivity and lost competitiveness as a result of the Chancellor's suffocating blanket of stealth taxes and red tape.
The people of Britain do not want the Government to borrow more on their behalf or to tax them more later to repay that borrowing. What the people of Britain want, and what our families, our pensioners and our businesses want is the prospect of some relief from the ever-increasing burden of tax and regulation. Instead, what this pre-Budget report offers them is the prospect of paying now and paying more later.