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Mr. Hopkins: Was it not the hon. Gentleman's party that put the uniform business rate in the hands of central Government? Would not handing it back to local authorities be one way of achieving what he wants?
Peter Bottomley: There may or may not be arguments in favour of that, but it would certainly not provide a buoyant system of revenue for local government. Buoyant revenues are income tax, fuel duty, penalty taxes on cigarettes and alcohol and so on. VAT, for that matter, is a buoyant source of revenue; but the business rate on its own is not.
Peter Bottomley: Yes. Let me also say that Margaret Thatcher and the Conservatives could not have saved the country in 1979 if there had been many more than 11 Liberal Members of Parliament. The politics are very simple, as are the arguments about council tax. There were too many Labour Members of Parliament. If we ask when people last voted Liberal as an answer to any serious national problem, the generous answer is 1906. As for the Conservatives, we are at our best the national interest partythat is, part international, part national, part local. I shall be happy to debate the details of council tax for the next three weeks, if the election is going to happen when it is expected.
I could say much more, but, as well as praising the schools in my constituencythe sixth-form college, the further and higher education colleges, Worthing and Northbrook colleges, and the high schools, middle schools and first schoolsI want to say a little about general economics. Under this Government, the household saving ratio is less than 6 per cent., yet when the Conservatives were in government it was 9 or 10 per cent. Saving is even more important than people's assets rising simply because of house price inflation. I look forward to the day when a Chancellor will say, "I have been successful in encouraging people to save voluntarily and in increasing the savings ratio to 10 per cent. or more."
I am not saying that we should strive for the levels achieved in Germany, but I do believe that we should get voluntary saving back to its previous level, because that is one way in which to encourage people to be self-reliant. Encouraging more people to be self-reliant not only provides economic benefits but enables us to
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give more help to those who need it. We cannot help everybody all the time; rather, we need to persuade more people to be more independent more often. That way, we can give generous help to people when they need it.
Mr. Andrew Love (Edmonton) (Lab/Co-op): I begin by saying how much I enjoyed the speech of the hon. Member for Worthing, West (Peter Bottomley), and I want to pay him a compliment, although he may not look on it in that way. If I had listened to his speech on the radio, I would have found it very difficult to decide which side of the political divide he is on; long may that continue. I should also like to endorse what he said about the Woodcraft Folk. As he rightly says, the Government should revisit that decision.
Of course, being on the Labour side of the political divide, I greatly welcome the Budget, and for several reasons, the first of which is the promise that it holds out for a number of key groups in our society, including pensioners, savers, single parentsthey have not been mentioned much today; indeed, they rarely get a mentionand first-time buyers, who have been referred to consistently throughout. Secondly, as Members of all parties have pointed out, and as it is important to stress, the Budget provides a modest fiscal tightening, which is characteristic of this Chancellor. It is a prudent Budget and stability is at its very centre. That is key to what we are trying to achieve, but we also want economic growth and to improve living standards for the people of this country.
I want to address some of the criticisms that I have heard from the Opposition not just today but in the past few days' discussion of the Budget. Although it has been rather grudgingly admitted that the Budgets between 1997 and 2001 were good, it has been argued that, miraculously, those between 2001 and now were comprehensively bad. I want to examine the impact of all those Budgets on the real economy, because that is what affects our constituents. Employment has been much commented on today, and we should note that we have the highest employment rate on record. The current employment rate is nearly 75 per cent., which is one of the highest figures internationally. That is a major success story for this Chancellor and for the past eight Budgets. Of course, we also have the lowest unemployment rate for some 30 years.
According to the new measure, inflation is running at 1.6 per cent., and it will drift up slowly to the target figure of 2 per cent. by 2006. Of course, the fact that that is the lowest figure for 30 years endorses the decision taken very early on by this Government to make the Bank of England independent. That decision has also resulted in the lowest interest rates for 35 years, from which this country's 18 million home owners have directly benefited.
Growththe usual measure of economic successwas 3.1 per cent. in 2004, despite the fact that almost every single independent forecaster predicted that it would be much lower. This year, the figure will be 3 to 3.5 per cent., and next year it will be 2.5 to 3 per cent. Each of those figures is above the economy's trend growth rate and better than other comparable European countries' growth rates. Indeed, our economy even grew during the international recession of 200102. Ours is
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therefore a record to compare with anyone's. The icing on the cake is the fact that living standards in this country since 1997 have improved by 50 per cent. on average. By anybody's judgment, that must be a record to be proud of.
The Tories claim that all this is the result of the prudent measures implemented by former Conservative Chancellors; indeed, one Member even claimed his small share of the credit for the benign economy this afternoon. I am surprised that even the hon. Member for Twickenham (Dr. Cable)he is not with us this afternoonhas not laid claim to some of the credit for the benefits that the economy has delivered. It is natural that the Tories would want to claim part of the glory, but they cannot then continually take great delight in telling us, "You've been in government for eight years. You have to accept responsibility for the decisions taken during that time." We do: we accept responsibility for the good economy, as is right and proper. It is also right and proper to point out that the mid-1990sduring which time two Conservative Chancellors introduced new policiessignalled the end of a very deep recession, so growth was almost certain to happen at that stage. The unique trick of this Chancellor and this Government in the past eight years has been to sustain growth, stability and improvement in the real economy. That has to be recognised.
I share the view of my hon. Friend the Member for Luton, North (Mr. Hopkins) that there has been a lot of alarmist talk about the economy, not just from the official Opposition but from both Opposition parties. They have taken great delight in highlighting the most pessimistic forecasts of the so-called independent forecasters, even though they have been consistently inferior to the Treasury's. There is also the myth of the so-called black hole, which, according to the Opposition, has existed for many years. However, it looks almost certain that when the current economic cycle comes to an end, the Chancellor will easily meet his fiscal rules.
The negative impact of increased interest rates has been focused on, yet it is clear that there is significant international confidence in the UK economy. Money continues to flow into our economy, perhaps partly because of the malaise in the eurozone and the difficulties currently experienced by Japan. The American economy is obviously doing well in attracting significant funding, but the UK economy continues to enjoy the confidence of the international community. There is no reason to think that that will change.
What really stuck in the Opposition's craw was having to give credit to the Chancellor and the Treasury for the fact that their forecasts have continuously and significantly outperformed those of the so-called independent research bodies. Everyone, including the Chancellor, would have to accept that forecasting anything further than a year or two into the future is a very shaky business. Of course, we have annual Budgets and a pre-Budget statement in order to be able to take into account any difficulties that might emerge in the national or international economy, and that is what we would do, should those circumstances arise.
I congratulate the Chancellor on a number of the announcements in his Budget. He told us that the
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Gershon review, which will cut out waste and bureaucracy and redirect investment to the front line, has now started. According to the Budget statement, £2 billion has been saved through value-for-money studies and another £2 billion through improvements in procurement. Several posts have disappeared and are now being reallocated to front-line services. However, the Gershon review is predicated on the view that delivery at the front line should not be put at risk. That differs from the so-called James review, which Conservative Members mentioned. When Gershon was asked about the figures in the James review, he raised the question of whether it would be able to deliver on front-line services. I ask the same question again this evening: will it deliver?
The other key question is where the £35 billion-worth of cuts will come from. We already know that the Tories are going to pinch the Gershon review's £21 billion or so savings and redirect them into front-line services, but that still leaves £14 billion unaccounted for. We know that the Conservativessupposedly members of a party that proclaims itself a great supporter of small businessare prepared to cut the Small Business Service. They are also prepared to cut the new deal. We all know that they do not care about youth unemployment; frankly, they do not care about unemployment at all. As a former Tory Chancellor said, unemployment is a price well worth paying.
Added to that £14 billion under the James review, the shadow Chancellor announced a further £35 billion-worth of cuts for the future. We have absolutely no idea where those cuts will come from. It was argued earlier that £11 billion or £12 billion was an enormous amount, so we should remember that £35 billion-worth of cuts, even if spread over a number of years, would have an enormous impact on our economy. If we do not find out where those cuts will fall, we shall have to assume that front-line services such as education and health will be affected.
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