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Mr. Love: I thank the hon. Gentleman for giving way. When I tried to get on to the Conservative party James review website, I got a wonderful picture of Mr. James and nothing else. Can the hon. Gentleman please tell us where the cuts will hit in the £35 billion, because the website does not?
Mr. Francois: Those plans have been on the website for several weeks, and I am sorry if the hon. Gentleman had trouble getting through to it today. If he is having trouble with websites, he might want to have a quiet word with the hon. Member for Rhondda (Chris Bryant), because he knows quite a bit about that sort of thing. I am sure he could advise the hon. Gentleman on how to do it.
Moving on, we heard from my hon. Friend the Member for Upminster (Angela Watkinson), who spoke knowledgeably about children's centres and how they have been changing in the past couple of years. She also highlighted problems in relation to the administration of tax credits. Ministers know that we have had lively debates about that over the past couple of months, not least when we were discussing the proposed merger of the Inland Revenue and Her Majesty's Customs and Excise.
There is still a definite problem in the administration of tax credits and child tax credits, and my hon. Friend is right to raise it. There is considerable frustration out there in the country over this matter, and she will be delighted to have it reiterated that our policy is to declare an amnesty for the overpayment of those credits in the current financial year so that we can audit the system completely and move on into the new financial year with a fresh start.
That will remove the misery, which many people have experienced, of getting two letters on the same dayone saying there has been no overpayment and one saying there has and demanding that that money be paid back. People clearly deserve better than that from any Government, and I hope that that advice is reassuring to my hon. Friend and her constituents.
We then heard from my hon. Friend the Member for Fareham (Mr. Hoban), who went through a forensic analysis of the Government's system of public service agreement targets. I know from experience that he is a good man to have read a document in fine detail, and he has proved that again in the House this evening. I look forward to finding out whether Ministers have anything to say in reply to the charges he put to them.
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One of the most worrying aspects of the Budget is that it fails to address the serious black hole in the public finances. Despite all the brave words about never taking chances with them, the Red Book represents a fiscal tightening of just over £250 million, which does virtually nothing to plug the black hole that persists at the heart of the Chancellor's finances.
Almost all the major independent economic forecastersthe Organisation for Economic Co-operation and Development, the International Monetary Fund, the Institute for Fiscal Studies, the National Institute of Economic and Social Research and the ITEM Club, which uses the independent Treasury economic modelagree, and all concur that the black hole exists to the point that, if Labour was somehow to be re-elected, the inevitable consequence would be major tax rises to try to fill that hole.
"For Brown, part of the aim of last week's budget was political, though mostly it was to focus attention on the long-term challenges facing Britain. But he also hoped to bury doubts about the public finances and switch the spotlight to Tory plans. In that respect the Budget was a failure".
The Chancellor and his allies like to claim that he has an impressive record for forecasting. That is half wrong and half right. His growth forecasts have indeed tended to be accurate, but his deficit forecasts have been just the opposite, and have increased by some £6 billion since the last Budget alone. The Chancellor is now projected to run a Budget deficit of some £34 billion this year, and over the next six years combined that amounts to an eye-watering £168 billion of expenditure over revenue, even without including all the off balance sheet debt. Therefore, whatever his record on forecasting growth might be, the emperor has no clothes when it comes to forecasting accurately the state of the public finances.
Another thing that we have learned about the Chancellor's Budgets is that we always need to read the small print. When we do so, it provides some fascinating information. For instance, his council tax discount applies only for one year. Page 187 of the Red Book shows clearly that it applies in 200506, but the corresponding figures for 200607 and 200708 are zero. It is therefore a one-off bribe designed purely to get Labour through the election, whereas our discount of 50 per cent. off a household bill up to a maximum of £500 per household is for multiple years, not just one. No wonder The Sun responded to the Chancellor's Budget the following morning with the headline, "Beware the bribes of March".
He neglected to mention, however, that that applied only to off-peak travel, and that it already exists in several major parts of the United Kingdom, including
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Scotland, Wales and London. In addition, as confirmed in the Red Book, the measure only comes into operation from April 2006. Therefore, for those who live in Scotland, Wales or London, for those who want to travel early in the morning or for those whose journey is so urgent that they need to make it before April 2006, it is not quite the election sweetener that they might have been led to believe. I now give way to the hon. Gentleman, but only on the condition that when he asks his question he also slips in an explanation of the operation of post neoclassical endogenous growth theory in a mixed economy in the 21st century.
Dr. Turner: I do not give the hon. Gentleman that promise. I simply want to ask him why he thinks that Gordon's offer of a £200 discount to pensioners in respect of council tax is a bribe, whereas the Conservatives' offer of a £500 discount is not a bribe.
Mr. Francois: Obviously, the hon. Gentleman is on first name terms with the Chancellor of the Exchequer. The difference is that Labour's proposal is for one year only to get it through the election, whereas ours is a multi-year commitment, and not a bribe but a rolling programme. That is the answer to his question.
The British people have been offered a vote now, pay later Budget. They can vote if they wish for a high-taxing Labour Government who would almost certainly have to raise taxes, were they to win the general election, in order to address the black hole. In contrast, nothing in the Budget makes any difference to our tax and spending plans. We will implement the changes announced in the Budget, including the council tax payment to pensioners, free off-peak bus travel and increasing the stamp duty and inheritance tax thresholds. The British people can vote now and pay later with Labour, or vote Tory and avoid having to pay more. That is the choice to carry into the general election campaign, and as our leader said directly to the Prime Minister, "Bring it on."
The Economic Secretary to the Treasury (John Healey): This has been a good debate. I have counted 19 Members who have contributed, including the hon. Member for Rayleigh (Mr. Francois), and I will pass on his kind comments about the Chief Secretary to him.
At the heart of this Budget statement has been the Chancellor's confirmation that the UK is enjoying the longest period of economic growth and stability since records began. While every other major developed country experienced at least one quarter of negative growth in the recent world downturn, Britain did not. Instead, Britain is the only G7 economy to have grown in every quarter since 1997. In 2004, we saw the economy grow by more than 3 per cent. for the second year running. That was exactly in line with the forecast that we first made two years ago. We entered 2005 with the same growth forecast of between 3 and 3.5 per cent. On Thursday, the hon. Member for Havant (Mr. Willetts) paid tribute to the Chancellor's forecasting accuracy, saying
Stability is not just a concern for economistsit helps families, it helps business, it helps Governments to plan for the future. It also reduces costs, because it leads to lower inflation and lower interest rates. Britain has simply not been used to the stability that we have seen in the economy since 1997. Between 1979 and 1997 Britain was the least stable and most volatilerather than the most stable and least volatileeconomy in the G7. During those 18 years under the Tories, the inflation rate was double the rate since 1997. Interest rates had doubled, millions were consigned to negative equity, and unemployment hit 3 million not once but twice. Since 1997 inflation has been the lowest for 30 years, interest rates are the lowest for 35 years, employment is the highest ever, and living standards have risen by an average of 3 per cent. every year in the last eight years under a Labour Government.
A strong economy is the basis for sound public finances. Since 1997, no G7 country has had lower debts and deficits than the United Kingdom. We have established and are meeting strict fiscal rules, and the Budget sees no relaxation in that fiscal discipline. Since the pre-Budget report in December public finances have strengthened, as we expected. Tax receipts are on forecast and unemployment costs continue to be low, as do Government debt and the interest rate on it. For the remainder of this economic cycle and the next, while continuing to invest in public services and infrastructure we will also continue to observe our fiscal rules.
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