---

Stephen Hesford rose—

Mr. Goodman: I shall certainly give way to the hon. Gentleman. Perhaps he would like to explain why some of the money handed out to pensioners last year to help them with their council tax is not available this year.

Stephen Hesford: The hon. Gentleman is talking rather rapidly and becoming excited. He glossed over
 
23 Mar 2006 : Column 506
 
the issue of climate change, but I urge him to deal with the facts. Do the Opposition support the climate change levy in principle, and do they support the inflation rise applied to it?

Mr. Goodman: If I am excited, I can assure the hon. Gentleman that that has nothing to do with the contents of his speech. On the climate change levy, we will introduce proposals at the next election. There are problems with it. That, I think, deals with him.

Page 188 of this year's Red Book contains the equivalent table. The section headed "Building a fairer society" has shrunk to five measures. Perhaps the Chancellor has given up on building a fairer society. He has certainly given up on helping pensioners with their council tax. In that table an extension of the £800 million is nowhere to be seen. Could the withdrawal of special council tax help for pensioners have any connection with the fact that there was a general election last year?

My right hon. and hon. Friends will no doubt argue that the withdrawal of help reveals last year's offer of help to be a cold, cynical, calculating pre-election bribe. I will not quarrel with that assessment, although my suspicion is that the withdrawal of that help is also the Chancellor's personal contribution to the Prime Minister's election campaign in May. Those elections will provide an opportunity for millions of disillusioned and angry pensioners to give their verdict on the Government's decision at the ballot box.

I want to step back from the Budget and examine the seriousness and starkness of the economic challenge that confronts Britain's future.

Keith Vaz: Will the hon. Gentleman give way?

Mr. Goodman: No, I must make progress and let the Paymaster General in.

In 2050, China's share of world trade is estimated to rise to 24 per cent. North America's is estimated to fall by 2 per cent. to 23 per cent. The EU's share is set to fall by almost half to a mere 12 per cent., so the choice is clear. Even to maintain our position—to keep up with North American rather than European Union growth rates—we must compete to prosper. If we are to meet the challenge of the 21st century, the economy must travel in the right direction.

We all know, or should know, what that means—high growth rates, improved competitiveness, better productivity, internationally competitive tax rates, light touch regulation, strong savings and investment with reform. Last year our growth was 1.8 per cent. It was not growth at North American levels. It was not even growth at EU levels. A 1.8 per cent. growth rate was below the EU average—indeed, I can tell the hon. Member for Normanton (Ed Balls) that we were 19th out of 25—below the Organisation for Economic Co-operation and Development average and below the world average, but the Budget will do little to take our growth, compared with that of our competitors, in the right direction.

We need improved competitiveness. According to the World Economic Forum, as we heard, since 1997 we have dropped from fourth place in the competitiveness league table to 13th. In 1997 our share of world trade
 
23 Mar 2006 : Column 507
 
was 5.7 per cent.; last year it had fallen to 3.8 per cent. The Budget will do little to take our competitiveness in the right direction.

We need improved productivity, as my hon. Friend the Member for Beverley and Holderness said. He pointed out that year on year growth in productivity is at its lowest since 1990, at 0.4 per cent. From 1992 to 1997, as he said, the improvement was 2.6 per cent. Under the Labour Government it fell to 1.3 per cent. The Budget contains little to take our productivity in the right direction.

We need tax rates that are internationally competitive, but far from going in the right direction, our tax burden is going in the wrong direction. In 1997, our tax as a share of gross domestic product was just under 35 per cent. The falling line of tax as a percentage of GDP in Germany is about to cross the rising line of tax as a percentage of GDP in the UK. Page 266 of the Red Book confirms that tax as a percentage of GDP next year is expected to rise to 38 per cent., the highest rate for about 20 years.

The USA, Canada, Australia and Ireland, as the hon. Member for Belfast, North (Mr. Dodds) pointed out, are following the same competitive path. In 2000, our business taxes were 10th from the OECD lowest; now, they are 10th from the OECD highest. The Budget will do nothing to make our tax rates more competitive or to make our tax burden go down rather than up. The Chancellor could not bring himself to admit yesterday that the Budget adds another £5.5 billion over three years to the nation's tax bill, already the highest since records began.

We need strong savings, and it is here that the Chancellor is perhaps most culpable. My right hon. Friend the Member for West Dorset (Mr. Letwin) earlier quoted the Prime Minister in opposition. The Chancellor said in opposition:

"I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved: the end of the means-test for our elderly people".

What has happened to means-testing under the Government? When we left office, the percentage of pensioners who were means-tested was 37 per cent., whereas now it is 46 per cent. and climbing.

What has happened to saving? Since 1997, the personal savings ratio has fallen by half. This Budget will do nothing to take savings in the right direction, any more than it will restore the £45 billion that the Chancellor has plundered from pension funds since 1997. Yesterday, the Chancellor could not even bring himself to admit that he expects the savings ratio to fall yet again next year, any more than he could bring himself to mention—I will be interested to see whether the Paymaster General can manage this—the words "Lord" and "Turner" in the same sentence.

Above all, we need investment with reform. We have had the spending—money has been poured into hospitals, schools and child care—but we have not had the reform. Yesterday, the Chancellor had scarcely a
 
23 Mar 2006 : Column 508
 
word to say about, and no action to take, on the NHS. I concede that the Chancellor had plenty of words and an action plan for education, but it was an action plan with no timetable.

Ed Balls: Will the hon. Gentleman give way?

Mr. Goodman: The hon. Gentleman has not been here for the whole debate, but if he will tell me whether he wrote the jokes in yesterday's Budget speech and what the timetable is for bringing public sector schools up to the standard of private sector schools, I shall give way.

Ed Balls: The hon. Gentleman has referred to the importance of tackling the challenge of globalisation through investing in productivity, and education and skills are particularly important. Does his party support our goal to raise the level of state spending in schools up to the level of private schools? Does he support that goal—yes or no?

Mr. Goodman: The hon. Gentleman must be really slow. Of course we support the goal, but we want a timetable, which he did not give us. It is no wonder that when the Prime Minister needs support for real education reform—reform with a Conservative direction of travel—he has to rely on Conservative votes to get it through the House of Commons. The Chancellor will be pleased to hear that if the Prime Minister introduces real NHS reform with the same Conservative direction of travel, he will again be able to rely on our support to get it through, even if he cannot rely on Labour Back Benchers.

As for child care, the House will be aware of rising complaints from private, voluntary and independent providers that the Government are driving them out of business because of the lack of a level playing field in child care, and today I can provide the House with new figures. According to Laing and Buisson's day nursery market report 2006, in the year to January 2006, 40,030 places provided by local authorities opened, but in the same year 17,715 day nursery places provided by the private sector closed, which is very serious. That is the first time that I have seen figures showing a decisive tilt from the private sector to the public sector, and that figure throws into question the Government's commitment to a mixed market in child care. Perhaps the Paymaster General will say what the Budget will do to provide a more level playing field in child care between the public sector and the private sector.

The Budget will do nothing to deliver investment with reform, because we will not have investment with reform while we have a Chancellor who is the roadblock to reform. The vigour, creativity and strength of British business—strength largely achieved despite Government policy, not because of Government policy—are to some degree masking all those moves in the wrong direction. There is so much that is good in the British economy, but the economy could and should be even better. The great challenge presented to the Chancellor and to this Budget was the challenge of 21st-century change. There is no global pension fund waiting to be raided by countries that have run out of incomes to tax by stealth, and there is no international tax credit system waiting to bale out Governments who get into
 
23 Mar 2006 : Column 509
 
trouble. However, there is a global golden rule—that we must compete to survive—and it is a golden rule that even this Chancellor and this Budget cannot fiddle.

The Budget should and could have put stability first by making the assessment of the Chancellor's fiscal rules independent. It could have sent Britain in the right direction, but it did not do so, because this is an old-fashioned, tax-and-spend Chancellor who has run out of ideas and who is running out of time. Yesterday, he ran away from using his Budget to tackle the crisis in our health service. He is a Chancellor who is preparing himself for the premiership and not preparing Britain for the future. This is a Budget for Brown, not a Budget for Britain.

5.39 pm

---