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David Taylor (North-West Leicestershire) (Lab/Co-op): Will the hon. Gentleman give way?

Mr. Leigh: I am afraid that I cannot because I have had my two strikes. It is a ridiculous way to run such debates but I cannot give way now.

Middle class families pay a ridiculous amount for care homes. The amount of public money spent in Scotland is far more generous. We subsidise that. The average cost of a care home for an elderly relative is
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approximately £800 a week. People are forced to sell their homes to pay for that and we should examine the matter because it increasingly causes resentment, especially when people realise that there are more generous arrangements in other parts of the United Kingdom. There is, therefore, a sea change in public opinion.

I welcome aspects of the Education and Inspections Bill and some parts of the Prime Minister's objectives as he shepherds a reluctant party into the 21st century, because the only way forward should be based on choice and competition. One cannot achieve one's aims simply by setting new targets and more central direction. In 1999, there were 24,000 managers in the NHS. In 2004, there were 37,000—an increase of 55 per cent. We have reached the limit of what we can achieve through central targeting and Government diktat. In health, funding, directed by the GP, should follow the patient into any hospital in the private and public sector. In education, funding should follow the pupil into any school in the public and private sector. That is my personal view and not yet the view of my hon. Friends on the Opposition Front Bench but I seek to persuade them and I will not waver from that.

In the next 12 months, as my party conducts its policy review, it must provide a careful and rigorous explanation of how it will achieve efficiency savings. It must identify one or two matters, such as inheritance tax, about which there are obvious anomalies. It must base its approach on what the right hon. Member for Darlington (Mr. Milburn) described as an asset-owning democracy. He has left his place, but that aspect of his speech was wonderful. Why do we believe in an asset-owning and property-owning democracy—the great crusade of the 1950s—if we do not apply that to health, education and pensions? The challenge that faces my party is devising realistic policies to achieve that asset-owning democracy.

6.24 pm

Edward Miliband (Doncaster, North) (Lab): It is a great privilege to follow the hon. Member for Gainsborough (Mr. Leigh), who had interesting advice for the Labour party and Conservative Front Benchers. I am not sure whether we or the shadow Chancellor enjoyed it more.

David Taylor: I am keen to make the point that I would have made if the hon. Member for Gainsborough (Mr. Leigh) had given way to me. Did my hon. Friend detect some contradiction between two closely linked remarks? The hon. Gentleman said that inheritance tax raised a small or tiny amount of money but also described it as a swingeing imposition on the middle class. It cannot be both.

Edward Miliband: I agree with my hon. Friend about the contradiction and thank him for the extra time.

It is a privilege to speak in the Budget debate. I watched many Budget debates before I became a Member of Parliament, and it is a privilege to speak in the same debate as the right hon. and learned Member for Rushcliffe (Mr. Clarke), the former Chancellor. I may not agree with everything that he said but he spoke with great authority and expertise.
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The Budget comes at the same stage of the political cycle—when the Government are nine years into office and the Opposition are, I hope, destined to lose another two general elections—as the 1988 Budget delivered by Lord Lawson. I believe that this year's Budget avoids the macro-economic mistakes of Lord Lawson's 1988 Budget, and we can draw an interesting contrast between them.

The 1988 Budget was based on three underlying assumptions: tax cuts were the best route to economic success; poverty, which was not even mentioned, could be solved by economic growth—the rising tide would lift all boats—and neglect of the public realm was an inevitable price that would have to be paid for private affluence.

In place of those assumptions, the 2006 Budget proposes three alternatives. First, public investment is not a drain on the good economy but a pre-condition of it. Secondly, Government have a specific responsibility to use the proceeds of growth to tackle poverty and not simply let the distribution of wealth and income fall where it may. Thirdly, public splendour, not public squalor should be the counterpart of private affluence in the fourth richest country in the world.

Mr. Stewart Jackson: Will the hon. Gentleman give way?

Edward Miliband: I shall give way later, but I want to make some progress first.

I want to say a little about each premise. First, there is a genuinely interesting argument about the right response to globalisation and the balance between tax cuts and public investment. The question is simple: should it be a rule of economic policy that public spending must fall as a proportion of national income to provide room for a falling tax burden? The Budget, with its emphasis on the Chancellor's long-term ambition for education, rejects that premise because Labour Members believe that the right sort of public spending can contribute to economic growth and will not hinder it.

To put the problem in the context of today's global economy, there is what might be called a "race to the bottom" model of economic development, whereby we should try to cut taxes as much as we can to be competitive. The problem with that model is that it cannot answer some basic questions about our country and our economy. For example, business makes representations about transport investment at every Budget. A skilled work force—not only in higher education and schools but level 2 and 3 work force skills—is important, and I welcome the extra money for schools in the Budget. The science base is an essential driver of innovation and enterprise. Again, I welcome the extra resources for science teaching in the Budget. The right policies for welfare to work, as well as child care and parental leave, are vital. I believe that there is now cross-party consensus that the good economy must be about gender equality, too, and that those policies are important.

Mr. Jackson: Will the hon. Gentleman give way?

Edward Miliband: I will give way later, but I want to make some progress first.
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We do not need to gaze into a crystal ball to see the effects of saying that public spending must fall as a proportion of national income, because that is precisely what we saw in the late 1980s and early 1990s, including under the stewardship of the right hon. and learned Member for Rushcliffe. By 1996–97, net public investment was just 0.7 per cent. of gross domestic product—£6.9 billion at today's prices, compared with the £27.5 billion proposed for next year. That is the lesson of British economic history. It is public investment that gets cut when a squeeze in public spending happens, because that is where the easy and less noticeable cuts can be made. We end up paying for that in our economy, which will do badly in public infrastructure and basic education, as ours has done for many years. It is completely unclear to me how a small country such as ours—as opposed to the United States—can compete on that basis. That is why the right kind of public investment must be at the heart of our remaining competitive in the years ahead.

Mr. Jackson: The debate seems to be coalescing around how we can achieve social justice. As we are getting into a history lesson, has the hon. Gentleman ever pondered the fact that his party voted against the greatest transfers of capital to working people in modern times, namely privatisation and the sale of council houses? Has he ever thought that one through?

Edward Miliband: I personally think that that was a mistake, yes, although there was a legitimate issue about the replacement of council and social housing stock, and it remains an issue today.

The second premise set out in my right hon. Friend's Budget was that poverty will not be solved simply by economic growth, and that it needs specific action. Given the increasing returns to skills and qualifications, the global economy has tendencies towards greater inequality. Our choice is either to accept this or to take action. The child poverty figures got a lot of publicity a couple of weeks ago because the Government missed their target of taking 1 million children out of poverty. That is true and it is a matter of regret. It is why we must do more. That is why I welcome the new measures announced in the Budget last week, including the decision to index the child tax credit to earnings.

I appeal for candour, particularly to the shadow Chancellor when he winds up the debate, if we are genuinely to tackle child poverty. The only reason why we have achieved what we have is because, in Budget after Budget, my right hon. Friend has taken specific measures to tackle child poverty. How do I know that? Because the figures show that by relying solely on the proceeds of economic growth and without his measures on tax credits, the number of children in poverty would have gone up by 1.5 million. Instead, as a result of the measures that we have taken, the figure has gone down by 700,000. Child poverty is at it lowest point for nearly 20 years. But hon. Members need not take my word for that. In a recent document published after the latest figures came out, the Institute for Fiscal Studies concluded:

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That is, it is the most sustained fall in child poverty for 45 years. But where are the Opposition on all this?

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