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PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,

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) Rates of duty on wine and made-wine (motion No. 4);


(d) Amusement machine licence duty (rates) (motion No. 17).—[Mr. Gordon Brown]

put forthwith, pursuant to Standing Order No. 51 (Ways and means motions), and agreed to.

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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.]

1.27 pm

Mr. Michael Howard (Folkestone and Hythe) (Con): May I congratulate the Chancellor on the delivery of his Budget? He has chosen to deliver his Budget on St. Patrick's day. St. Patrick famously described himself as "the most humble-minded man". That is not an accolade for which the Chancellor is a contender. His Budget begged the central question that goes to the heart of his performance: if everything is going so well, why does he have to borrow so much?

The Chancellor made great play of the fact that the Budget controls the growth of spending and borrowing, but let us look in some detail at what he means by that. Three years ago, in his 2001 Budget, he forecast borrowing over five years at £30 billion. By 2002—just a year later—that forecast had risen to £72 billion. Today, he is predicting borrowing of over £140 billion, and he is on course to borrow this year alone almost four times as much as he forecast at the time of the last election—and this at a time when he claims that the economy is doing well! How much would this Chancellor be borrowing if the economy went into a downturn? That is the response to all his rigmarole about balanced Budgets.

The truth is that this is a credit-card Budget from a credit-card Chancellor; and a "borrow now, tax later" Budget from a "borrow now, tax later" Chancellor. If he has his way, the country will pay for it later in Labour's third-term tax rises.

Under this Chancellor, we know the importance of looking at the small print. Page 232 of the Red Book, just published, shows that the amount people save has fallen from 10 per cent. of their income in 1997 to just 5 per cent. this year—and that from a party that promised a savings culture. As a senior manager at one of Britain's biggest investment companies said only two weeks ago:

"The Government's policy on savings is a mess and it will take years to repair the damage."

The Chancellor talked about enterprise, as he does every year. Page 225 of the Red Book shows, however, that business investment has fallen for two years in a row. Page 237 shows that our trade deficit is at the highest level since the 17th century; and page 240 makes it clear that manufacturing output, in common with manufacturing investment, is lower than it was in 1997

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and that the number of people employed in manufacturing is falling by 6,000 a month. All that from a Chancellor who promised

"an industrial policy so that our manufacturing industries can grow again".

There are, of course, some things in the Budget that we welcome. We welcome, as I am sure does the whole House, the fact that the Chancellor is increasing the resources available to combat terrorism. We also welcome the potential savings that could arise from merging the Inland Revenue with Customs and Excise, but can the Chancellor guarantee that there will be no political interference in the enforcement of tax law? After the debacle that followed the transfer of responsibility for tax credits to the Inland Revenue, can he assure us that disruption on a similar scale is not likely to happen again?

The Chancellor has also published the Barker report into housing supply, and we shall scrutinise with care the implications of the proposals for that sector. So far, all that the Government have achieved is to hold the record for the lowest number of new houses built in peacetime since 1924.

We welcome the announcement of increases for pensioners over 70, but those pensioners should be warned: what this Chancellor gives, this Chancellor takes away.

We particularly welcome the Chancellor's announcement that Britain will not be joining the euro—though to save the blushes of his right hon. Friend the Prime Minister, he did not put it quite like that. So much for his claim in June that there has been "significant progress" in achieving "cyclical convergence"! Last year, he promised that we were "within the Maastricht criteria" on deficits. We now know that he failed to keep that promise: he was not within the criteria then, and he is certainly not within them now. He has broken the rules and he has not even joined the club.

It would be churlish not to congratulate the Chancellor on getting one growth forecast right, but the growth is fuelled by a public sector boom paid for by a public sector Chancellor—and, of course, growth forecasts were not the only forecasts that he made. In last year's Budget, his forecasts for revenue were wrong; his forecasts for the deficit were wrong; and his forecasts for borrowing were wrong. None of the Chancellor's bluster can disguise the fact that this Government have increased taxes and increased borrowing, and the borrowing that he announced today is simply unsustainable.

This Budget has made it clear that if Labour gets a third term, tax rises are inevitable. When in opposition, the Prime Minister said that he had no plans to increase tax at all. At the weekend, the former Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson), told us why. They did discuss tax rises privately two years before the election, but, as he explained:

"It's very difficult to win an election if you go out there saying 'look, if you elect me I promise you I'm going to absolutely smash you with taxes you've never heard of'".

So they said that they had no plans to increase tax at all, and ever since then they have indeed been smashing people with taxes that they had never heard of. There

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have been more than 60 tax rises, and we are paying half as much tax again as in 1997. Last year, the real value of people's take-home pay actually fell, and after another inflation-busting rise in council tax, average bills have now risen by 70 per cent. since 1997.

Business is paying more tax, too. The Chancellor has burdened it with £15 billion a year in extra taxes and red tape. As the chief executive of Tesco told the Chancellor at one of his intimate gatherings:

"Like a tide the level of taxes seems to be forever rising. The water is now above our waist".

As David Frost, director general of the British Chambers of Commerce, says:

"British business cannot compete with a £30 billion millstone around its neck".

Yet despite all those taxes, the Chancellor still has to borrow more and more. This is a Chancellor who said in 1996 that we could not build

"the new Jerusalem on a mountain of debt".

A mountain of debt is exactly what he is creating today.

That is why independent commentators say that third-term tax rises are inevitable under Labour. The ITEM Club, which uses use the Treasury's own model, says that the public finances "continue to deteriorate alarmingly". The Organisation for Economic Co-operation and Development warns of a possible "sizeable structural deficit". The Financial Times says that the Chancellor should be preparing options for a tax rise after the election. After today's Budget, that black hole is still there. That is what happens if you have a "borrow now, tax later" Budget from a "borrow now, tax later" Chancellor.

It is not as though the money that the Chancellor has borrowed to spend has been spent wisely. After all the years when the Government said that they were spending our money really well, we now learn that their own adviser has revealed £15 billion a year of waste. This is the Chancellor who said that not "one penny more" would be spent on the health service until he secured the changes to allow the reforms necessary to "carry out the modernisation" that it needs. This is the Chancellor who said that extra money spent on public services was dependent on the release of efficiency savings. He said that in his 1998 spending review, in his 2000 spending review, in his 2002 spending review—and he is saying it again today. This is the Chancellor who said that he was "determined to get value" for "every penny we spend" to give people the public services that they want. He makes that promise every time, and he breaks it every time.

The annual cost of running central Government is up by nearly £7 billion under the Chancellor's stewardship. An extra 511 civil servants were hired every week last year, and now we discover from the Gershon report that the Government secretly plan to hire more than 300,000 extra public sector workers over the next three years—after taking into account the reductions that the Chancellor has announced today.

What has really been achieved? The number of children playing truant is up by 22 per cent.—[Interruption.] I should have thought that Government Members might be a little worried about the number of

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children playing truant from our schools. What hope is there for the future if, under the present Government, children do not even go to school?

NHS waiting times are getting longer and violent crime is at its highest level ever. A 37 per cent. increase in spending on the NHS has led to only a 5 per cent. rise in the number of hospital treatments. The OECD says:

"In the health sector there are few indicators showing unambiguous improvements in outcomes over and above trend improvements that were already apparent before the surge in spending".

It goes on to say—[Interruption.] The Chancellor is fond of quoting the OECD, so he should listen to this. It states that, in some areas,

"such as numbers of patients treated and average waiting times, performance has actually deteriorated".

As the Minister for Energy, E-Commerce and Postal Services told a conference in America, in a speech mysteriously missing from the Government website:

"Too often a lot of money has been spent but very little seems to have been achieved . . . In a year or so we're going to have an election in the UK, when people will say, 'We've paid a lot of taxes, but what has really been achieved with all that money?'"

He was telling the truth. I am afraid that his prospects of survival in this Government cannot be high.

A year before he became Chancellor, the right hon. Gentleman said:

"I want our Labour Government to be remembered not as a big spender but as a wise spender."

However, it was not long before the tax and spending habit kicked in.

Very soon, the nation will face a choice. We on this side of the House want to give patients, parents and professionals more control. We want to bring in real reform. That is the way to end the cycle of tax and spend and fail. This Government will never deliver real reform of the public services. All they offer is more of the same: higher spending, higher borrowing, and higher taxes.

This Budget will go down in history as the "borrow now, tax later" Budget, the Chancellor will go down in history as the "borrow now, tax later" Chancellor, and the Government will go into oblivion as the "borrow now, tax later" Government. And the sooner they go, the better it will be for our country.

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