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John Thurso : Let me tell the hon. Gentleman that I had the honour of steering that legislation through the other place on behalf of my party, and I supported the minimum wage from the moment of its introduction to the moment of its arrival in law. I have always felt that it is a good piece of legislation.

Mr. Jones: That is another good example of the Liberal Democrats doing one thing in one place and another thing in another place. I do not question the hon. Gentleman's recollection of events, but the Liberals clearly opposed the minimum wage, as they opposed the new deal. Those policies have made a real difference in constituencies such as mine. I believe that the Liberal Democrats are trying to make inroads in the City of Durham constituency, so we will be reminding its low-paid workers that the Liberal Democrats opposed the minimum wage. We need to remind people of what the Liberal Democrats do in this House. Those Members should not be allowed to say one thing in this place and something quite different when they express themselves in their "Focus" leaflets, issued in different parts of the country.

I shall end on that point. As the hon. Member for Cities of London and Westminster said, there may not be much intelligent debate on the intricacies of the economy over the next few weeks, but the important thing is to remind the people of this country—I shall certainly be doing so in North Durham—that the Government have delivered a stable economy. That is why we have been able to put extra investment into public services, which has made a real difference. I am proud to support the proposals in this year's Budget.

5.32 pm

Mr. Andrew Tyrie (Chichester) (Con) I draw attention to my entry in the Register of Members' Interests.

The hon. Member for North Durham (Mr. Jones) described the great improvements that have occurred in the north-east over the past few years. I once fought a parliamentary seat near his but, unsurprisingly, did not win it. I think that he would agree that the improvements predate 1997, beginning in the early 1990s and clearly evident through that decade. The arrival of Nissan in Sunderland is one example. He also made an important point about the improvement in the standard of living of a good number of pensioners on low incomes.

The hon. Member for Ochil (Mr. O'Neill), who looks relaxed in his place, gave a characteristically measured and reflective speech, though I take issue with several of his points. He said that we should accept at face value the figures provided in the Red Book. I wish that we could, but the working families tax credit was misclassified and there is the curious accounting regarding the private finance initiative, not to mention
 
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serious flaws in the forecast of tax revenue estimates and many other curiosities. The recent road maintenance reclassification is another example. I shall deal with those problems in more detail.

The hon. Gentleman also said that stealth tax and even council tax increases sometimes need to be mitigated—that, I believe, was the word that he used, and I agree with him. I regret that the mitigation announced in the Budget would, if the Government were re-elected, last only for one year.

My hon. Friend the Member for Sevenoaks (Mr. Fallon) made an interesting and typically forceful speech, in which he alerted us to the shortcomings of the Government's arrangements for auditing the cycle. He also mentioned the crucial role that changing the culture will play if we are to bring downward pressure to bear on regulation when we get back into government.

My hon. Friend the Member for Cities of London and Westminster (Mr. Field) made a wide-ranging speech based, among other things, on his trips to China and India. I am envious of his trip to China. He was right to say that that is where the future lies—not so much working out how to sort out our competitiveness within Europe, but thinking about how to sort out Europe's competitiveness globally.

My right hon. Friend the Member for Horsham (Mr. Maude) also gave an interesting speech and made a powerful point when he noted the shrinkage of discussion on productivity in the Red Book—compared with previous years, it does not seem to be going so well—and the importance of understanding what really creates growth in an economy. It certainly is not micro-management and the micro-tinkering that we have had from the Chancellor in recent years.

My hon. Friend the Member for Tunbridge Wells (Mr. Norman), who is a good friend of mine, will be a great loss to the House. I am very sorry that he is going. It is rare to have someone who is so successful in another walk of life bringing his experience to this place. His points about the Hampton and Arculus reports were well made and he spoke with authority about the regulatory burdens on businesses. Whoever wins the election, that is something that needs to be addressed.

My hon. Friend the Member for Mid-Worcestershire (Mr. Luff) spoke with passion about education, among other issues. He mentioned the school starting age and bribing people to stay on at school, as he put it, which prompted a learned debate about academic evidence on the value of playtime in Scandinavia. I do not know the answer to the question—I am just not qualified to comment—but I noted what was said.

I acknowledge the success of the UK economy in recent years and agree that the Chancellor has taken one or two good decisions, such as giving the Bank of England full independence, which I had long supported in principle. I regret that the Chancellor cannot bring himself to give credit where credit is due. He talked about 50 successive quarters of growth, 19 of which came in a Conservative period, and it is only reasonable to say, too, that another nine or 10 after that were largely, and very directly, to do with that legacy, not least because the Government's monetary and fiscal stance were both largely set by the previous Administration.
 
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The central issue in the Budget is whether the public finances will be sustainable in the long term. The key question, therefore, is whether taxes will have to rise afterwards. The fact that we are even asking that question after 50 successive quarters of economic growth tells us that the Chancellor has taken a risk with the public finances: for five years in a row, with more to come, he has been increasing public spending by more than the economy has been growing, and hoping that taxes will grow fast enough to pay for it.

As far as I know, there is only one instance in the post-war period in which the threats to the public finances of a major western economy were increasing at the end of such a long period of growth: it was the United States in the late 1960s, and of course, the threat to its public finances was caused by the Vietnam war. I worry that we could be heading for a serious financial threat to our fiscal position—it is not yet clear, and I am not making a prediction, but I certainly worry about it. It is certainly extremely worrying that we should be facing that threat at this point in the cycle, with a rising deficit.

Since the Chancellor's pre-election giveaway of £4 billion in 2001, there have been forecasts every year for the public finances that have repeatedly been over-optimistic, particularly on corporate revenues. The Chancellor now forecasts a current budget deficit of more than £16 billion—£6 billion up on his forecast the previous year. It is worth noting what the Institute for Fiscal Studies said about that this morning. It said:

"the key question confronting whoever is Chancellor after the election remains the same . . . is it plausible to expect the current budget balance to improve by 2.2 per cent. of national income . . . by 2009–10? . . . is it prudent to expect revenues to go up by £27 billion over the same 5-year period without fresh tax raising announcements?"      

That is the key economic question ahead of the election. The IFS has done the House a favour by supplying an answer. It states:

"We think that to achieve these forecasts requires the Chancellor to raise taxes or cut spending by £11 billion a year."

Other commentators, such as PricewaterhouseCoopers, have said much the same thing.

There have been large increases in taxation that amount to a massive breach in trust, given that the Prime Minister said that the Government had no plans to raise taxes at all. The further increases already mapped out have hardly been mentioned in the debate. Page 255 of the Red Book shows the clear rise in the tax burden that is taking place. The economy is growing, but the share being taken in taxation is already forecast to rise. We are left to hope that, if Labour wins the next election, people will experience the curve flattening out towards the end of the next Parliament. Even those increases in the tax burden will not be enough to fill the black hole in the accounts identified by outside commentators.

How does the Chancellor think that he would fill that gap? He was asked that question on the "Today" programme this morning. I paraphrase him only slightly, but he replied, "Don't worry. We're going to carry on growing above trend growth for another year yet, and that will plug the gap."

I shall not second-guess that prediction, although almost all outside commentators have done so already and concluded that the Chancellor is being over-
 
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optimistic. However, does the right hon. Gentleman really believe his own forecast? This year, under its rolling review programme, the National Audit Office was due to audit the Chancellor's growth assumption, but tucked away in the Red Book is the admission that he has instructed the NAO not to audit the growth forecast this year.

That admission destroys the last vestiges of credibility in the Chancellor's claims that he was putting the Budget assumptions out to independent audit. What credibility can an audit have when the person being audited can tell the auditors what to look at and what to ignore? That strikes me as absolutely extraordinary and it reveals the promise to put the forecasts out to the NAO for audit to be the political and confidence-tricking gesture that it really was.

The Red Book is full of smoke and mirrors. Just over a year ago, the Prime Minister said that the cost of administering the public sector was falling as a proportion of total spending. Last year's Red Book contained a bar chart that purported to show that fall. When Opposition Members were finally able to get hold of the statistical series behind that chart, we found that the first half contained figures on expenditure for the UK as a whole but that, to achieve the downward slope that backed up the Prime Minister's claim, the second half of the chart contained the figures for England alone. In other words, it was what amounted to a falsified chart.

I wanted to know, therefore, whether the chart had reappeared this year. As far as I can tell, it has not: on show in 2004, it was scrapped in 2005, and has disappeared altogether. The truth is that administration costs are higher than in 1997. The Prime Minister did not tell us what was really going on. Unusually, perhaps, the Chancellor tried to cover that up in the Red Book for a while, but has now decided not to bother any more.

How many other charts, tables and so-called facts in the Red Book are constructed on similar lines? I do not know. What I do know is that the Conservatives will do something about the problem when we come to power. We will bring some trustworthiness back to the Red Book, which will be shorter and much more honest. We will make the Office for National Statistics truly independent, so that no Government can fiddle the figures in the way that many allege that the Government have done recently.

We will create a fiscal projection committee that will assume sole responsibility for official fiscal projections, supervised by the Comptroller and Auditor General of the NAO. When he wants to audit the growth assumption, he will be able to do so. Unlike this Government, who stand him down from that when it suits the Chancellor, the Conservatives will make sure that he is responsible for ensuring that the fiscal committee has done its work properly.

There are three things for which the Budget will be remembered. First, the Chancellor, despite himself, had to confirm that there was and is a black hole in the accounts. Secondly, he confirmed that there will be further increases in taxation if Labour is re-elected. That is what the chart on the tax burden says on page 255. The combination of those two factors means that there will almost certainly have to be further tax rises to fill that gap—the black hole—that will remain in the accounts.
 
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The third thing for which the Budget will be remembered is the most blatant piece of electioneering in a pre-election Budget. We have had a hand-out to pensioners to relieve them of some of the burden of council tax bills, but for one year only. What a re-run of 2001 that is: modest cuts in taxation followed by tax rises immediately afterwards, except far worse this time because they will fall on a vulnerable group—pensioners. I hope that the electorate see through that. I think that pensioners will see through it. It is our duty to ensure that they do.

5.46 pm

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