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Huw Irranca-Davies rose—

Mr. Letwin: No, I am not going to give way; I am going to continue this rather amusing sequence—amusing to me. So we asked the DTI, and for once we got a parliamentary answer from that Department. I do congratulate any DTI Minister who may see this set of remarks in Hansard on the fact that we got an answer—a very unusual thing to get from the DTI. And what did it tell us? It told us that there were six of the 147 or 159 that it would like to name. Unfortunately, five of the six were not in the list of 147 or 159. But one was—the Price Marking Order 2004. We went to look at it, and we got the regulatory impact assessment relating to it. What did it show? It showed very clearly that this measure increased the costs on business by £20 million; it did not reduce them at all.

If there is a problem about mentioning regulations that are for abolition, the problem lies with the Chancellor. From 1998 up to the end of 2003, the Government have passed 23,322 new regulations. I admit that in this one respect the motion is insufficiently generous to the Government, because that translates into 70 per week or 15 per working day, which is an increase of 53 per cent. on the figures for 1979 to 1996.

Huw Irranca-Davies rose—

Mr. Foulkes rose—

Mr. Letwin: I will not give way for the moment; I intend to make progress.

The fact is that the Government have produced these dismal figures on productivity, competitiveness and growth in very large part because they have over-regulated our economy. They have overtaxed our economy, with 66 tax rises including many on business. The CBI, which has assessed the annual business tax bill at £54 billion in the year 2005-06 on current trends, points out that this is a rise of £7.6 billion from 1997, and adds that to the cost of the additional regulations to show that this Chancellor, who prides himself on being a friend of business, has actually added £15 billion a year of costs through extra regulation and extra tax on business.

There is somebody who is not one of the Prime Minister's advisers, and never was one of the Prime Minister's advisers, who had something to say about this problem of excessive tax and regulation on business. He said:

That was not one of the Prime Minister's advisers; that was the Prime Minister, in 1994.

The fact is, of course, that the Chancellor does not like listening to the Prime Minister and he did not listen to him about that. This is the Chancellor who has imposed tax and regulation on business.

Mr. Foulkes rose—

Mr. Letwin: But it is not just by regulating and taxing that the Chancellor has undermined the foundations of
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our economy. The tale is even worse when it comes to savings and pensions. Next to the Chancellor sits the new Secretary of State for Work and Pensions, and he prides himself no doubt on presiding over some kind of miracle of savings and pensions. That is not the view of the right hon. Member for Birkenhead (Mr. Field), who very rightly pointed out that in 1997, just as we had the best inheritance of any Chancellor in living memory, we had the best system of savings and pensions in western Europe, and now, in the right hon. Gentleman's memorable phrase, we have "one of the worst".

Our savings ratio has dropped by a third; it is now half the EU average. We have a massive imbalance in the economy, with a low propensity to save and a high propensity to borrow, and about £1 trillion of household indebtedness. We all know what has happened. There is the £5 billion a year raid on the pension funds, there is the reduction of the tax advantages of saving in individual savings accounts compared with tax exempt special savings accounts and personal equity plans, and there is the vast expansion of means-testing, which has provided a huge disincentive to saving for people coming up to pensionable age—the three hammer-blows that the Chancellor administered to the already brittle glass of longevity and persistent low inflation. Finally—

Mr. Foulkes: Will the right hon. Gentleman give way?

Mr. Letwin: No. The right hon. Gentleman is dying to speak and he will have an opportunity to do so.

The Chancellor has blocked every effort at radical reform of the public services to try to overcome the vast productivity gap there. He destroyed foundation hospitals. He destroyed them so much that he even led to the removal, by his own will, of the then Secretary of State for Health. What does the Chancellor do about this? He tries to deal with the figures rather than the facts. The broad fact is that we have had a 25 per cent. increase in spending on our hospitals in real terms, and only a 5 per cent. increase in the number of treatments or finished consultant episodes. And what happens as a result? The national statistician is called in, and he is asked to redo the productivity figures for the health service; and he calls in Sir Tony Atkinson. What does Sir Tony Atkinson do? He tries to create 10 different measures by which he could prove that the productivity of the national health service has not gone down. And what emerges as a result? On every one of the 10 measures, the productivity of the national health service is shown to have gone down.

So I return to my original question—what is the reality behind the myth? The reality is this. The stability that the Chancellor is so proud of is due exclusively to his allowing other people to determine his fiscal policy in the first two years and his monetary policy throughout. Underneath the stability, he has failed on productivity, failed on competitiveness—

Mr. Foulkes rose—[Interruption.]

Mr. Speaker: Order. The right hon. Gentleman has indicated that he is not giving way. The Government Back Benches are far too noisy. [Interruption.] Order.
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Mr. Foulkes rose—

Mr. Speaker: Order. This is a debate and I know what debates are like.

Mr. Letwin: I am sure that Labour Members will have their opportunity to be less noisy and more coherent in due course, Mr. Speaker.

The Chancellor has failed—failed on productivity, failed on competitiveness, failed on growth. Why? Because he has over-regulated and overtaxed. Why? Because he is funding a vast and wasteful bureaucracy which will be the subject of tomorrow's statement and our debate following it, and he has destroyed or all but destroyed the savings culture in this country. The radical reform of public services has been blocked. He has presided not over the economic miracle that is his mythology, but over the gradual erosion of our economic fundamentals.

It is not just we who have noticed these things. Mr. Scott, to whom I referred at the beginning of my remarks, noticed them. The Prime Minister, whom I have quoted, has noticed them, and that is probably why we now have the bizarre situation of having two Chancellors—the Chancellor of the Exchequer and the Chancellor of the Duchy of Lancaster. It is a sort of mediaeval joust, made even more bizarre by fact that the former Financial Secretary to the Treasury, who once reported to this Chancellor, now reports to the other Chancellor, and this Chancellor has to report to her as Minister for the Cabinet Office The message from No. 10 is clear: time's up, time to head to the Foreign Office—not a moment too soon for the British economy.

12.58 pm

The Chancellor of the Exchequer (Mr. Gordon Brown): I will come to all of the shadow Chancellor's claims later in the debate, but is it not remarkable, in a debate about the economy, that he will not concede that we have the lowest inflation for 40 years, that we have the lowest interest rates for 40 years, that we have the highest ever recorded employment in our country's history, and that standards of living have been rising by over 3 per cent. a year—far higher than under the Major Administration?

I know that the shadow Chancellor may yearn for the good old days of the early 1990s—the good old days when we had 15 per cent. interest rates, the good old days when, under his economic advice, there were 3 million unemployed, the good old days when there were 1¼ million people with negative equity—but any comparison between the record of his Government and the record of ours shows us the facts. On inflation, consumer prices are averaging just 1.3 per cent. on the new index, 2.4 per cent. on the old index, contrasted with 6 per cent. average under the Conservative years. And inflation peaked at 21 per cent. under the party that he represents.

Interest rates have averaged 5.3 per cent. under Labour. They averaged more than 10 per cent. under the Conservative Government. The mortgage rate—what people have to pay to own their homes—has been 6.1 per cent. under Labour and 11.4 per cent. under the Conservatives. Debt has fallen to just under a third of GDP under Labour. It was 45 per cent. under the Conservatives. We are happy to draw a contrast
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between the Labour party and the Conservative party: we are the party of sustained growth; they are the party of the two worst recessions since the war.

The shadow Chancellor has the nerve to give the impression that the good record of the Labour Government exists because we adopted his policies. It is because we refused to adopt his policies that we have a good record. When we froze spending in the first two years of the Labour Government, the last Conservative Chancellor said that he would never have gone through with it.

As for the independence of the Bank of England, I hope that the shadow Chancellor will have the good grace to apologise to the House because on 11 November 1997 he voted against the Second Reading of the Bill to grant it independence. Not only did he vote against it, but so did the current Leader of the Opposition, who said:

That was not a party that wanted to give the impression, either in private or in public, that it supported the major decision on monetary policy that was taken by Labour.

I am glad that the shadow deregulation Minister has returned to the shadow Cabinet so that it has a more moderate image and looks more centrist, and therefore appeals to the middle ground. As recently as 30 October 2004 he said about the previous Conservative Government:

That is the indictment of the Conservative party, and that is what would happen if it came back into power. I am happy to give way to the shadow deregulation Minister if he wishes to correct that.

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