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Mr. George Osborne (Tatton) (Con): Let me begin by welcoming the measures that the Chancellor announced on trade justice, the international finance facility and debt relief for the poorest nations, which we support. We also support the new measures on youth projects and the extension of shared equity schemesa policy that, as he well knows, we proposed at the last general election. We will study the proposals on planning, but we believe that decisions on planning should be taken by local communities, not by unelected, unaccountable and unwanted regional assemblies.
The real story from today's report is that the Chancellor's deficit has gone up to £10 billion. He is borrowing £151 billion over the next five years£17 billion more than he predicted. He has just announced that growth this year is half what he predicted before the general electionhe did not linger on it, but I understand that to be his announcementand his forecast for next year is also lower. [Interruption.] His golden rule is now tarnished and discredited; productivity growth has slumped; business investment has collapsed; and this year, Britain's economic growth is among the weakest in the developed world. [Interruption.]
The Chancellor was supposed to come to the House to deliver an accurate report on the state of the British economy; instead, his speech sounded more like tractor production figures from the old Soviet Union. This is a tragic story of a Chancellor who has been forced to wait so long to get into No. 10 that his reputation in charge of No. 11 is crumbling. This is the iron Chancellor, who has single-handedly destroyed the public finances; the prudent Chancellor, whose means-testing has devastated pension savings; the business-friendly Chancellor, who is presiding over the lowest rate of investment in business since records began; the progressive Chancellor, whose own shambolic tax credit scheme has left families relying on food parcels; the long-serving Chancellor, who is now presiding over a long-term decline in this economy's ability to compete. No wonder he looks so gloomy. The longer he stays at the Treasury, the more his chickens are coming home to roost. For this is a Chancellor who is the roadblock to reform; a Chancellor who is now holding Britain back.
Let us look at those growth forecasts. In March, the Chancellor told us that the economy would grow by 3.5 per cent. In September, he downgraded that to 2.5 per cent. and todayin case you missed it, Mr. Speaker, because he rushed through that bithe downgraded the growth forecast again, to 1.75 per cent. He also downgraded it for next year. I do not remember him telling the electorate before the general election that the economy was facing a tough and challenging year. What he told the country at the time of the election about the state of the economy was not true, and it is difficult to believe that he did not know it at the time.
When the Chancellor was comparing us with other countries in his statement, why did he not want to tell us that this year our economy is growing more slowly than
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18 of the 25 members of the European Unionslower, to date, than Germany, Ireland and Spain? Why did he not tell us that our growth in the last quarter was slower than every major economy in the world except Italy?
The Chancellor blames the high price of oil, but that hardly explains why our oil-exporting economy is growing slower than other oil-importing competitors. He blames weak overseas markets, but almost every other developed economy is growing faster. The Governor of the Bank of England told us the true cause last month. He said that a "sharp rise" in taxes has caused a "sharp slowing" of household incomes and economic growth. But what is the Chancellor's response today? It is more stealth taxes, including a doubling of the supplementary tax rate on oil companies[Hon. Members: "Hooray!"] He can go back to Scotland and tell them about that. We also heard about a new land development taxa tax on affordable homeswhich is something that all Labour Governments do when they run out of money.
With all the Chancellor's extra taxes, it is amazing that he still has a budget deficit. But he doesand that is another forecast that he got wrong. First, he told us that there would be an £8 billion surplus this year. Then in March he changed that to a £6 billion deficit. Today, the deficit has gone up again. Why was he in such a rush to go through his borrowing figures? He should have slowed down. He should have told us that he plans to borrow £37 billion, £34 billion, £31 billion, £26 billion, £23 billion and £22 billion, or £151 billion over the next five years.
The fiscal rules were supposed to keep the deficit and the debt under control. The Chancellor was meant to have fixed his spending to fit his golden rule. Instead, he fixed his golden rule to fit his spending. I congratulate the Chancellor on finally adopting our policy of making Government statistics independent, so that he cannot fiddle with the nation's balance sheet anymore. Why does not he also set up an independent body to monitor the golden rule? That way, he will not be able to claim that an entire economic cycle began without anybody else noticing.
The Chancellor talks about the great challenge that Britain faces from China and India, but with falling research and development, falling productivity growth and falling business investment, his policies are simply not rising to that challenge. They are holding Britain back. In 1998, he said that
Does he remember saying that? Well, he did. So let us use his own yardstick. In 1998, productivity growth averaged 2.75 per cent. Today, it is 0.5 per cent., or one fifth of the rate that he inherited. If productivity was his fundamental yardstick, he has failed fundamentally on his very own measure.
Unreformed public services are holding Britain back, too. The Prime Minister will remember telling his party conference that each time he had tried to reform the public services he wished that he had gone further. Well, who stopped him? Who frustrated him? It was the Chancellor of the Exchequer, the roadblock to reform. He blocked health reform. He blocked education reform. He blocked welfare reform. Now he is blocking pension reform, too.
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With all the talk of reports in the pre-Budget statement, why did not the Chancellor mention the Turner report more than once? The fact is that he sabotaged the Turner report, even though it is his means-testing and his pensions tax that has destroyed savings. The man who created the pensions crisis is the very same man who is standing in the way of providing a solution. No wonder Lord Turner describes the Chancellor's position as
I have no doubt that when the Chancellor gets up, he will deliver in public all those one-liners that he normally reserves for the Prime Minister in private, but let him answer these simple questions. Why were his growth forecasts so wrong? Why is the deficit so high? Why is productivity so weak? Why is investment in business down? Why is red tape up? Why is bureaucracy up? Why are taxes on the rise? Why did he sabotage Turner? Why does he block every real attempt to reform public services? Let us hear his answers. Let us hear why he is holding Britain back.
The Chancellor could have used today's report to prepare our economy for the future, to set out the reforms this country so desperately needs, but he did not. Instead, this is a Chancellor forced into the humiliation of admitting that he got it all wrong. This is a Chancellor who is past his sell-by date. This is a Chancellor who is holding Britain back.
Mr. Brown: Why does[Hon. Members: "Answer."] I will answer each question, but why does the shadow Chancellor not have the courage to come to the House and say to the House what he has been saying outside it. I have the article he has written
Then he says that Labour has improved the macro-economic management of the UK economy and that Labour has established "economic credibility". He then says that there is "public confidence" in Labour's
The reason why the hon. Gentleman cannot acknowledge that we have the longest period of sustained growth, the lowest inflation, the lowest
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interest rates for 30 years and the highest employment ever is that he knows that at no point under a Conservative Government would that ever have been possible to deliver.
In the Financial Times on Saturday, the hon. Gentleman complained that I had been "too brutal" with him in the last three months, but having heard his speeches I am afraid that I have not been brutal enough. They say that the Conservatives are about to skip one generation. Perhaps it is time that they skipped another one as well.
On forecasts, the only party in this country in the last 30 years that has forecast growth and given us recession is not the Labour party, it is the Conservative party. On productivity, which the hon. Gentleman mentioned, the only party that has had negative productivity growth in this country in the last 30 years is the Conservative party. On manufacturing, the only party that has had negative manufacturing growth is the Conservative party. On child tax credits, I think the whole country will resent the fact that the shadow Chancellor suggests that somehow the Labour Government are putting children into poverty when it was the Conservative opposition to child tax credits and to child benefit that put so many children into poverty.
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