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Mr. Brooks Newmark (Braintree) (Con): He will lose his seat as well.

Mr. Osborne: Yes, the hon. Gentleman will lose his seat at the election. However, he is right: we have a record tax burden, higher than at any time in our
 
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history. It is higher than the last time we had a Labour Government, when half the country was on strike. Instead of following the advice of the right hon. Member for Darlington and reducing taxes, the Budget increases taxes still further. Some £4 billion of taxes on businesses and North sea oil were pre-announced in the pre-Budget report, the zero per cent. corporation tax rate that the Chancellor himself trumpeted in his 2002 Budget has been abolished, and there are iniquitous retrospective changes to inheritance tax. All those tax changes, and 25 others, were absent from the Budget speech, as my right hon. Friend the Member for North-West Hampshire pointed out, but they will all add to the complexity of the tax system.

Despite that considerable tightening, to which my right hon. and learned Friend the Member for Rushcliffe drew our attention, the Chancellor is still running a budget deficit. It is an extraordinary achievement to have record taxes but still run a budget deficit—and it is getting worse. In the Budget, the Chancellor doubled his estimate for next year's budget deficit from the one that he made just three months ago. He confirmed that he is set to borrow £175 billion over the next six years. He has mortgaged not just today's taxpayers but tomorrow's, too.

Ed Balls (Normanton) (Lab) rose—

Hon. Members: No!

Madam Deputy Speaker (Sylvia Heal): Order. It is for the hon. Member for Tatton (Mr. Osborne) to decide whether to accept an intervention.

Mr. Osborne: I am afraid that the hon. Member for Normanton (Ed Balls) has not attended today's debate, and he has not given a speech in the Budget debate. I will accept an intervention from the organ grinder, but I will not take one from the monkey.

Hon. Members: Hurrah!

Madam Deputy Speaker: Order. May I remind all hon. Members, before they become overexcited, that good temper and moderation are the hallmarks of parliamentary language?

Mr. Osborne: No one doubts that the Chancellor has spent a great deal of other people's money, but the question is: where has the money gone? The Chancellor may not have wanted to talk about the NHS on Budget day, but the rest of the country was doing so. On the same day as he delivered the Budget, the Royal Free hospital announced 500 job losses; the day after, Darlington hospitals announced another 700 job losses. A total of 4,000 NHS job cuts have been announced in just three weeks. In public the Chancellor blames just a few bad mangers, but everyone knows that in private he and his cabal blame the Health Secretary.

Ed Balls rose—

Mr. Osborne: If the hon. Gentleman will confirm that point I will happily give way to him.

Ed Balls rose—

Hon. Members: Answer!

Madam Deputy Speaker: Order. Perhaps the hon. Gentleman can reply.
 
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Ed Balls: Can the hon. Member for Tatton (Mr.   Osborne) confirm that he proposed to undermine the independence of the Bank of England and of the Governor by making Bank of England executives a minority on the Monetary Policy Committee? Why would he undermine the Governor of the Bank of England?

Mr. Osborne: I support Bank of England independence and, like the Chancellor, I am looking at ways to entrench it still further. I enjoyed the New Statesman interview with the hon. Member for Normanton, in which he described himself as a socialist. He said that the finances of the Secretary of State for Culture, Media and Sport were baffling, and that the Secretary of State for Education and Skills had not handled the Education and Inspections Bill very well. I suggest that he spend more time trying to win friends among those on the Labour Benches than trying to intervene on us.

The situation in the NHS is not the fault of the Secretary of State for Health. The fault lies at the Treasury. The Chancellor of the Exchequer provided the money, but he blocked the reform that would have made the money count. NHS productivity has fallen year on year. Three quarters of the money has disappeared in cost pressures. Now we have close to £1 billion of deficit and thousands of job losses.

The NHS is not the only thing missing from the Budget. There is not a word on the pensions crisis brought about by the Chancellor's £5 billion pension tax and his extension of means-testing. I hope that he reads the speech made yesterday by the right hon. Member for North Tyneside, who said in the House:

Does the Chancellor agree with his former Chief Secretary? We do not know.

As my right hon. Friend the Member for North-West Hampshire pointed out so powerfully, there was no mention in the Budget speech or the Red Book of the decision to cancel the £200 council tax rebate. My right hon. Friend is right. The Chancellor talks about restoring trust in politics and gives speeches on the subject. How much more dishonest can one get than announcing before an election that pensioners will get a £200 cheque, then withdrawing it without a word of explanation after the election? I guess it is just the Chancellor's own special way of helping the Prime Minister with his local election campaign.

The Chancellor should at least tell Labour councillors what he is up to. This weekend, after the Budget speech, the leader of the Labour group on Lambeth council wrote to a Mr. Patrick McLoughlin of Kennington Park road, London. A copy of the letter has mysteriously fallen into my hands. It comes with a glossy leaflet—it is interesting that the Prime Minister's picture does not appear on such leaflets any more. Under the heading "What will Labour do?" it states:


 
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No doubt the leaflets are being pulped as we speak. Labour says one thing in the Chamber and another thing outside. It makes the Liberal Democrats look like amateurs—which is not very difficult with the new leader of the Liberal Democrats.

Of course, the Chancellor did mention education. It is striking that hardly a single Labour Member who spoke today mentioned the great pledge to raise state school spending to private school levels. That was supposed to be the centrepiece of the Budget, but where is the timetable? How much will it cost? Over what level is spending to be increased? The Chancellor never told us that the Prime Minister made exactly the same pledge five years ago. There we have it—the first great statement of what a Brown premiership would do, and it turns out to be a reheated broken promise from the high days of the Blair premiership. I have a depressing feeling that this is the shape of things to come.

Mr. Ian Austin (Dudley, North) (Lab): I noticed that in the interviews that the hon. Gentleman gave, responding to the Budget last week, he refused to say whether he would support our pledge to increase spending on the state education sector. Does he agree with the shadow Chief Secretary, who admitted on Budget day that the Conservative spending plans would "certainly" mean spending less than Labour, and that more spending is not the answer?

Mr. Osborne: If the hon. Gentleman is going to take a hand-out question, he should pick a better one.

The Chancellor does not understand that education is about not only additional money, but reform. [Interruption.] We have matched the additional spending next year, and we have matched the capital spending, which is nothing like the £34 billion figure that the Chancellor has mentioned; according to the Institute for Fiscal Studies, the figure is more like £1 billion. We want to see education reform, and we now know that it can be delivered only with the support of this side of the House.

While we are on the subject of education, why did the Chancellor not tell us more about his youth national community service scheme? For some reason, he did not find time during his one hour at the Dispatch Box to mention the fact that he has just appointed a new chairman of the scheme, so I shall make the announcement for him. The new chairman is a Mr. Rod Aldridge—a well-connected individual. In fact, he is so keen to get on with the job that he resigned from Capita the very next day.

Six years ago, the Chancellor embarked on his great experiment of abandoning prudence. He decided to increase public sector spending hugely, while blocking the reforms that were necessary to make sure that the money got to the front line. Six years later, if you want to see the result of what has happened, Mr. Deputy Speaker, listen to the Prime Minister's own special adviser on public services, who has worked at the heart of No. 10. When he was on "Panorama" two weeks ago, he said this:


 
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That is the next door neighbours' verdict on the record of No. 11—which is, of course, the subtext to the whole Budget.

This is a battle over who is in charge of Labour's sinking ship. We have a Prime Minister on the other side of the world who admits that he was wrong to say that he was going, and we have a Chancellor who hardly dares leave the country in case he misses his chance again. So the Chancellor sits there reannouncing old promises on education, taxing more and spending more, painfully aware that so much money has been wasted.

We are told that, unlike the Prime Minister, the Chancellor and his cabal are keen on establishing clear dividing lines with their opponents. Well, those dividing lines are emerging. We have a Chancellor who is addicted to taxation, and a growing consensus—which includes the right hon. Member for Darlington (Mr. Milburn)—that higher taxes undermine aspiration and damage Britain's ability to compete. We have a Chancellor whose answer to everything is to spend, and a growing consensus that money alone is not the answer. We have a Chancellor who opposes reform, and an alliance in this House that will vote reform through. We have a Chancellor who describes himself as "a socialist", and a country that knows that a return to tax and spend socialism would bring this country to its knees. This Budget should have prepared Britain for the new global economy. Instead, we have a Chancellor who is stuck in the thinking of the past, when the country needs a modern, compassionate Conservative party, changing to meet the challenges of the future.

9.38 pm


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