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Mr. Willetts: The difference is the difference between a growth rate of 5 per cent. under Labour and of 4 per cent. under us. The difference is that under us public expenditure will grow by £145 billion and under Labour's plans it will grow by £180 billion, so there is a very substantial increase in public expenditure under us, but it is not as enormous as the growth of public expenditure under the Chancellor.
The plans were set out clearly last year, but we have observed with some fascination that the Government have made heavy weather of working out what they are. On 9 November, we had a Labour denunciation of a Conservative plan for an immediate £20 billion cut in spending on vital public services. By 1 December, the Chancellor was saying:
"If a Conservative Administration were in power tomorrow, they would be looking for a total of £70 billion of efficiency savings."—[Official Report, 1 December 2004; Vol. 428, c. 654.]
By 2 December, the Labour party website was announcing that it would be publishing analysis showing that the Tories were planning cuts of "a
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massive £50 billion." By 16 December, it was down to £35 billion. They have changed their rebuttal of our spending plans so often, one wonders whether the exercise was managed by the Chancellor of the Duchy of Lancaster. There is a gap of £35 billion between the increases that we plan in public spending by 2011–12 and those planned by the Government.
Mr. Darling: The hon. Gentleman referred to the plans that were published by the shadow Chancellor last November. Will he confirm that apart from health and education those plans also included a cash freeze in all other departmental expenditure?
Mr. Willetts: No, they did not include a cash freeze in every other Department. Those were not the plans, although it is true that we have fully protected health and education. The right hon. Gentleman is welcome to intervene again on this point, but we have observed three different things that the Government say about our economic plans. They cannot all be true. One thing they say is that there is no black hole in their public finances; there is no problem and no deficit to be plugged. The second is that the Conservatives are going to deliver horrifying reductions in public expenditure. The third is that the Conservatives are not going to cut taxes. Not all three can be true, and they have to decide what they are accusing us of. If the Secretary of State would like to illuminate us about the central critique, we would find that very helpful.
Mr. Darling: I will expand on those matters at some length later, but I am looking at the announcement made by the shadow Chancellor in the autumn when he said that there would be zero per cent. growth in the first two years followed by 2 per cent growth for the remaining years for the period covered by the strategy. That sounds to me like a cash freeze. Does the hon. Gentleman agree with the shadow Chancellor?
Mr. Willetts: The shadow Chancellor was referring to the envelope within which total public expenditure outside of health and education would be managed. It was not a Department by Department cash freeze. That was never intended—
Mr. Willetts: If I can just finish my sentence, I will give way to the Jack-in-the-box opposite. We never intended it to be Department by Department—we were referring to the envelope within which public spending would be made.
Mr. Darling: I am most grateful to the hon. Gentleman; I think that we are making progress. For the sake of completeness, I should quote the entire paragraph. The shadow Chancellor said:
"I have agreed with my shadow Cabinet colleagues that the baseline for spending across all of these departmental budgets—
outside the NHS and schools budgets—
To me, zero per cent. sounds something like a freeze.
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Mr. Willetts: My right hon. Friend did not mean that. He meant the total, and not Department by Department. That is the difference between us. He was referring to the totality within which public expenditure is found.
I agree with the Secretary of State that we are indeed making progress. We are planning increases in public expenditure; he is planning even greater increases. By 2011, the gap between the two will be £35 billion. We are planning increases of £145 billion and he is planning increases of £180 billion. He cannot maintain that this is equivalent to the end of civilisation as we know it, as he is trying to imply.
Let me turn to the specific decisions of the Budget, on which I wish to ask some questions. If the Secretary of State cannot respond to those specific questions immediately, perhaps the Paymaster General will do so when she winds up.
On saving, there was an extraordinary moment when the Chancellor boasted that the household savings ratio is now 5.6 per cent., four times that of the United States of America and Canada. Despite his taste for long historical sweeps when it comes to economic statistics—we have heard about the 50 quarters of growth and about growth since 1701—he did not say that he is expecting the longest period of low saving that Britain has seen for at least 45 years. He expects the savings ratio to stay below 6 per cent. from 2004 until 2007. As always with these statistics, they are at the back; it is on page 232. We have never previously had a period in which the savings ratio has been below 6 per cent. for more than two years back to back. We are heading for a low-saving society, but a society that will depend on high levels of welfare.
The reasons why we are saving so little are complicated, but we would be grateful if Treasury Ministers explained in detail the announcement in Inland Revenue press release 21 yesterday, which has caused considerable concern among life insurance companies, and appeared to confirm that the Treasury will be imposing a corporation tax rate on all the with-profits funds run by life insurance companies. It would be helpful if Treasury Ministers explained that.
We would like to hear more from Ministers about what is happening to rates of employment. We have young people still suffering high rates of economic inactivity. When the Government came to office there were 1.082 million young people neither working nor studying nor training—a scandalous figure. The latest figures, out this week, show that the figure is now 1.108 million. The number of young people neither working nor studying nor training is higher than it was when Labour came to office. That is simply not good enough, and we would like to hear what Ministers are doing about it.
As always with this Government, they have set a target— an "ambitious target", as they describe it—of an employment rate of 80 per cent. It is indeed ambitious. The Secretary of State for Work and Pensions said the other day that their aspiration was to increase the 75 per cent. employment rate to a record 80 per cent. The only trouble is that the Government have not decided how they will measure the target, as they say that they need to consider whether the current definition of the employment rate will remain the
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most appropriate for the future. Some employment rate will be at 80 per cent., but they do not know which one. Perhaps the Secretary of State could explain that to us.
We heard a lot about pensioners in the Budget. Despite the Chancellor's so-called assistance for pensioners with their council tax, we see on page 186 that that is financed for only one year. There is £800 million of expenditure in 2005–06, with nothing in subsequent years. We will have the extraordinary position of pensioners seeing their benefit incomes falling in 2006–07 compared with 2005–06. I should be grateful if the Secretary of State or the Chancellor confirmed the following figures. In 2005–06, pensioners under 80 will have a winter fuel payment of £200 and a council tax refund of £200, adding up to £400 in 2005–06, which may just be an election year. In 2006–07, there is a winter fuel payment of £150, not £200, and a council tax refund of nothing. That adds up to £150 in 2006–07 as against £400 in 2005–06. If I may say so, that amounts to a £250 cut in the annual income of pensioners, which is equal to a fall of £5 per week. Is that what the Chancellor is proposing—a fall in benefits for pensioners of £5 per week in the year after the election? On what basis—
The Chancellor of the Exchequer (Mr. Gordon Brown): What of Tory cuts?
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