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Sir Menzies Campbell (North-East Fife) (LD): It is a fearsome task to follow such a constructive contribution as the one we have just heard, but I must begin by congratulating the Chancellor on the presentation of his 10th Budget. That he did so with great enthusiasm is hardly surprising, as he has a particular affinity for the number 10.

Let us look at the Chancellor's legacy. Levels of inequality are worse than under Mrs. Thatcher. Our pensions system is in crisis, and consumer debt is at £1 trillion. In spite of what the right hon. Gentleman has said today, there is complacency about the threat to the environment, and he presides over a Treasury that cannot manage even its own tax credit system.

Of course we welcome the changes in child tax credit and acknowledge the stability in inflation and employment, but we are entitled to remind the Chancellor that that stability is based on the independence of the Bank of England. The right hon.
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Gentleman derided that policy throughout the 1997 general election campaign, but he implemented it within 48 hours of entering the Treasury. Against that background, there is no room for complacency or time to tread water.

I return to the issue of inequality, to which our mutual friend John Smith would have attached the highest priority. The wealthiest 1 per cent. in this country owns 23 per cent. of the assets—more than in 1997—while the poorest 50 per cent. own only 6 per cent.—less than in 1997. The top 20 per cent. of earners pay less of their income in tax than the bottom 20 per cent., while the tax system remains unfair and complicated.

Why does the Treasury tinker with a tax system that is so fundamentally unfair and requires such radical reform? Every time that it does so, it adds layer upon layer of complexity and creates an incitement to, and opportunity for, fraud.

The most unfair and regressive tax of all remains the council tax. Having read the Red Book, we can confirm that it contains no provision for the £200 rebate made available last year. If there is to be no council tax rebate, we know that some of the most vulnerable will suffer. They will ask why they deserved help immediately before a general election, but not a year later.

The lack of reform to the council tax is not the Chancellor's only failure to act. Under this Government, green taxes have fallen as a share of overall taxation. The measures announced today will make little impact on that. If the Chancellor needs any external reference, he need only examine yesterday's report from the Environmental Audit Committee.

We need simplicity in environmental taxation, and a proper system of green economic incentives that encourages people to change their habits and the way that they live. Such a system should express and implement the principle that the polluter should pay. It was notable that, in the course of his observations about the environment, the Chancellor made no reference to the impact made by aviation, nor to the crying need to address the problems of continued expansion in the aviation industry.

The fact is that CO 2 emissions are higher now than in 1997. The additional vehicle excise duty to be paid by drivers of 4x4 vehicles applies only to new vehicles. By my reckoning, it is rather less than the cost of half filling the petrol tank. That is hardly likely to operate as a disincentive for people sufficiently well off economically to be able to afford such vehicles.

As for public spending, the Chancellor prepared the ground well in his pre-Budget report. He conceded the error in his growth predictions, changed the economic cycle, pointed out that he was going to raise taxes and acknowledged the slowdown in public spending. He got a lot of cheers today when his speech seemed to foreshadow increases in public expenditure. What many of those who cheered did not realise is that the spending plans pencilled into the pre-Budget report will mean that there will be announcements of real-terms cuts in many Government Departments next year.

Despite all the extra investment, public spending is still not reaching the front line. Treasury targets have led to NHS trusts, and to the drive to reduce waiting lists at all costs that has meant that care in other areas has been cut.
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Of course, tough choices have to be made and spending prioritised. For example, the industrial subsidies that the DTI has been giving to the nuclear power industry could be cut, and the money going to what is colloquially described as the baby bond scheme—on which the Chancellor enlarged today—would be much better spent on early-years education now than on a bond in the future. In addition, the right hon. Gentleman could decide not to proceed with spending millions and perhaps billions of pounds on an identity card scheme that is unnecessary and unworkable.

The British people want better public services and are willing to pay for them. What they do not understand is how so much can have been spent with so little to show for it. Operations have been cancelled, wards closed, local hospitals threatened and nurses have even been made redundant.

It is clear that trust in fiscal policy must be restored. That could have been achieved by widening the remit of the National Audit Office so that it can provide transparent and independent scrutiny of all Budget assumptions and forecasts. Some progress has been made today in respect of statistics, but that is not enough. The Chancellor has a good record of listening to our advice, rejecting it, and then accepting it. Perhaps, on this occasion, we will once again prevail.

I welcome what the Chancellor said about housing and the shared equity fund. The question is whether any of that represents new money. We have to address the issue of those who simply cannot afford to make the contribution that is necessary to participate in a shared equity purchase of a house.

I declare a retrospective interest in the Chancellor's provisions for the Olympic games. It is essential that those games are a success for London and the whole of the United Kingdom. He will have universal support for what he announced in that regard. However, it is not true to say, as has been rumoured, that my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) is already positioning herself to make a bid for the British team.

One issue that the Chancellor said nothing at all about was that of personal debt. Consumer debt is now approaching £1.2 trillion—practically identical to the gross domestic product of the United Kingdom as a whole. Of course, consumer debt has underpinned the economic boom, but the legacy for many families will be disaster. Nearly a fifth of all income is being used to service debt. That means that it is back to the level that it was at when the economy crashed under the Conservatives in the early 1990s. The immediate signs of that stress are clear: rising bankruptcies and rising repossessions.

The other side of that is the poor recent record of private business investment. Under its current leadership, the CBI has been a great deal more supportive of the Government than in previous years, but I suspect that it will react to this Budget more in sadness than in anger—sadness at the way in which regulation and tax complexity are squeezing British business. The Budget does nothing to deal with that. Enlightened British companies understand the need to pay taxes for investment in education and infrastructure; what they do not understand is why those taxes do not deliver the goods.
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The Budget failed to deal with the most glaring issue before us today: the crisis in pensions. Last week we learned—the Leader of the Opposition already referred to this—that the Government would not follow the ombudsman's recommendations and compensate those who were foolish enough to believe in Government information. The ombudsman said that the Government had provided information that was

if I may jog the Chancellor's memory. If an independent report had made a similar judgment about the actions of the Tory Government when the Chancellor was in opposition, his wrath would have been wondrous to behold.

We know that there is a broad consensus of agreement around the recent report by Adair Turner and that there is an existing blueprint for pensions reform that is available and capable of implementation. It seems that it is only the Treasury that stands in the way. Of course, chairmen of commissions cannot expect automatic acceptance, but Adair Turner is entitled to a real sense of grievance. The problem of pensions is set to get worse as the demographic balance of this country changes.

The Budget was an opportunity. In a period of relative stability, with low inflation and stable employment, the Chancellor had an opportunity to show his worth. He could have tackled the unfair tax system; he could have made the environment a priority; he could have faced up to the pensions crisis; and he could have addressed the problem of personal debt. He has declined to do any of those things. This a legacy from which it will be difficult for him to escape. [Interruption.]

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