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The Committee picked up on the Government’s failure to transfer tax from “goods” and employment on to “bads” for the environment, which they had originally promised to do:

The pattern is becoming set, and we look each year for some hope and some chance of change.

As for the 2003 pre-Budget report, the EAC—still dominated by Labour Members—found that the Chancellor, though definitely Brown, was far from green. Many articles have been written in newspapers—for instance, by Stephen Tindale of Greenpeace—on the question, “Is the Chancellor green?” The truth is that Brown may be the new Black—Conrad—but definitely not the new green. The EAC stated that

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On the 2004 pre-Budget report, it stated:

In 2005, the EAC came out again to say— [Interruption.] It is worth putting on record the reports of a Committee dominated by Labour Members, because they paint a picture of the Chancellor’s total failure to deliver on the environment. I understand why those on the Government Front Bench do not want to hear it. It said:

Mr. Charles Walker (Broxbourne) (Con): Surely there must be some good news somewhere. It cannot really be this grim, can it?

Mr. Stuart: I recognise that my speech is dirge-like in flavour.

In 2006, the EAC again stated:

I would love to say that the Labour Members on the Committee had some positive news, but I am afraid that they did not. They said:

According to the Labour-dominated EAC, the Chancellor’s history on the environment is one of failure after failure. He has not delivered as he originally promised when he said that it would be the most important measure for the Government.

Mr. Stewart Jackson (Peterborough) (Con): I agree with my hon. Friend that the Chancellor only goes green when he sees his poll ratings. Does he agree, however, that our right hon. Friend the Member for Witney (Mr. Cameron) has set the agenda on the environment, and that the Chancellor failed to make a single substantive speech on the environment in the 10 years prior to the end of last year?

Mr. Stuart: I am grateful to my hon. Friend for mentioning that. There have never been more than two references to climate in pre-Budget reports and Budgets in the past 10 years. In 1997, there was none, and there were only one or two every year until the appointment of my right hon. Friend the Member for Witney (Mr. Cameron) as Leader of the Opposition. Suddenly, in 2006, the Chancellor’s two major speeches had 16 mentions of climate between them. Suffice it to say that last week’s Budget speech alone contained 14 references to climate.

Julia Goldsworthy (Falmouth and Camborne) (LD): Does the hon. Gentleman admit that the Conservatives are Johnny-come-latelies to the argument for the need for environmental action? Will he comment on whether the proposals that we have heard floated are policy commitments or beliefs? What impact does he think that those measures, if they are adopted as Conservative policies, will have on climate change?

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Mr. Stuart: As the hon. Lady well knows, the Conservative Government signed Kyoto— [Interruption.] The noble Baroness Thatcher made the original commitment before it was later signed. She was the first of this country’s major leaders to put the focus on climate change. As we can see from the figures revealing the attention that the Chancellor has paid to the issue over many years, the Conservative leadership, particularly that of my right hon. Friend the Member for Witney, has changed the Government’s approach and attitude, after the Chancellor’s long tale of failure. Does my hon. Friend the Member for Broxbourne (Mr. Walker) wish to make a contribution? I was looking forward to another helpful intervention.

Why has the Chancellor suddenly undergone this Damascene conversion to the environmental cause? It has happened because of the arrival of my right hon. Friend the Member for Witney as the new Leader of the Opposition. Last week’s Budget was designed not only to give a false impression of tax cuts, which has been demonstrably torn apart by Conservative Members, but to give the impression that the Chancellor will simplify the tax system—that he is a straightforward Chancellor who can be trusted, and who can tackle the allegations made against him. As we know from a leaked Treasury staffing report, staff who work for the Chancellor recognise his character as being anything but that. More than half of those who left the Treasury cited dissatisfaction with the job as the reason for doing so and almost a third mentioned low morale or cited boredom. The truth is that the Chancellor’s character is one of the central issues of the political debate as we move towards having a new leader of the Labour party. Even more than the details of the Budget, it is the Chancellor’s character that has been brought into the greatest relief since the announcement of the Budget last week.

In terms of the environment, we need only turn to what has been said by Labour party sympathisers and ex-activists, such as Stephen Tindale of Greenpeace, who used to work for the Labour party. He said that in 2000:

What does this Chancellor do when someone does not speak out loudly enough in support of him or the Government? Stephen Tindale tells us. He said:

That shows the character of the Chancellor: as a Chancellor, he has failed to deliver for the environment on every occasion.

Let us go through some of the details of the Budget. Road fuel duty has been increased by 2p per litre. It was said in the pre-Budget report of 1999 that

Does that promise still hold? Will the money raised from the fuel duty rise go towards improving the transport network? I should like the answer to that when the Chief Secretary winds up the debate.

We know that the increase in vehicle excise duty on so-called Chelsea tractors will impact on people in rural areas, such as those who need such vehicles for
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farming. There was an opportunity to introduce a new tax category for people who have to use those vehicles for work, which would have made a tremendous difference to those in rural areas who are currently struggling to survive economically, but it was not taken. There was also an opportunity to increase VED to an extent that would lead to a genuine transfer from more gas-guzzling cars to more efficient ones.

Julia Goldsworthy: May I draw the hon. Gentleman’s attention to last year’s Finance Bill and point out that the Liberal Democrats tabled amendments to address rural-proofing the VED increases, and that we also tabled amendments to try to introduce VED at such a level that it would have an impact on behaviour?

Mr. Stuart: Yes, and we all look forward to having a Liberal Government that will actually introduce those changes, of course.

There has been no real movement on VED, but there has been movement in the Budget on waste. The landfill tax escalator has been increased from £3 to £8 a year from April 2008, but why is there not a lower rate of landfill tax for waste that has been biologically treated before landfill? Some waste cannot be dealt with otherwise, and it should attract a lower level of landfill tax. There was also an opportunity to deal with incinerators, which are springing up all over the country—that development is driven by the Government. There should be an incineration tax to maximise the use of greener ways of dealing with waste. Also, what do we find in the Budget on energy efficiency, which is the most critical, and the easiest, means through which to make genuine improvement and change? Absolutely nothing.

The Budget mentions zero stamp duty for new homes that meet the zero carbon standard, which appears to send a signal to the building industry to invest in zero-carbon homes for the future, but no. The Chancellor has put a five-year limit on that zero duty. It will end in 2012, so the likelihood of builders changing the way that they build homes is small to non-existent. [ Interruption. ] Indeed; it is truly a zero-rated Budget. The Government’s record in this Budget and the previous 10 is one of failure to put the environment at the heart of their policy, and it is in direct contradiction of the promises made when they came to power.

I turn from the environment to the other issues that most concern my constituents. The last Labour party manifesto promised that the share of national wealth spent on education would increase by the end of this Parliament. I should be interested to hear the Minister confirm or deny that. The truth is that, at 2.5 per cent., it is growing at less than the predicted rate of growth of the economy. [Interruption.] Does the Economic Secretary want to intervene?

The Economic Secretary to the Treasury (Ed Balls): I can confirm that, entirely consistent with our manifesto commitment, the share of education spending as a percentage of gross domestic product will rise over the course of this Parliament.

Mr. Stuart: I am happy to agree that if the hon. Gentleman and the Government can deliver that, they will have met their manifesto commitment. Of course, all this depends on the rate of growth of the economy.
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Bearing in mind the powerful speech of my hon. Friend the Member for Northampton, South on the impact on small businesses, the likelihood of the Government’s increasing the share of education spending as a percentage of GDP is probably greater, given that they will reduce the rate of economic growth through the measures that they introduced in the Budget.

Ed Balls: It is still going up.

Mr. Stuart: That very much depends on the size of the economy at the end of the Parliament, but it would appear that over the next few years, the plan will produce a lower increase in education spending than the rate of growth of the economy overall.

David Taylor: The hon. Gentleman was in the Chamber, as I was, when we first heard the Chairman of the Public Accounts Committee articulate what will in future years be known as the “Gainsborough doctrine”. That doctrine moves on from sharing the proceeds of growth to confiscating or hypothecating them: to transferring all those proceeds into tax cuts, thereby denuding public services. Was the hon. Gentleman attracted by that innovation?

Mr. Stuart: I am grateful for that intervention. The vision of removing all those on low pay—I think that my hon. Friend the Member for Gainsborough (Mr. Leigh) suggested the figure of £15,000—from the labyrinthine attentions of the tax credit system, in which half the payments made are wrong and are dragged back from those who have least, is an attractive one. I doubt whether the time frame of five years or one Parliament that my hon. Friend suggested can be met, but I agree with him that when the Conservatives return to power in 2009 or 2010, over the following 15 or 20 years we will see those on low pay removed from that system, a transformation of people’s economic activity and, therefore, an eventual increase in the tax take. We could fulfil the vision, which my hon. Friend did not entirely detail, of more investment in public services, while lifting the low-paid out of paying tax. [Interruption.] The hon. Member for City of Durham (Dr. Blackman-Woods) is bouncing up and down; does she want to intervene?

Dr. Blackman-Woods: I am grateful to the hon. Gentleman for giving way. Does he accept that the table on page 158 of the Red Book not only outlines total projected spending on education until 2010-11 but the proportion of GDP, demonstrating that it will grow until 2010-11?

Mr. Stuart: I think that the Economic Secretary has already dealt with that issue . The Budget did not touch on the NHS, which is the predominant issue in the minds of my constituents, as the local primary care trust, appointed by the Government, is setting about closing every NHS bed in my constituency. My constituents are also concerned about social care, about which we heard nothing in the Budget. Social care is a mushrooming problem, as recognised across the House, and it is a pity that the Budget did not take up that issue.

We need a change in the comprehensive spending review and more investment in transport, to provide a
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fairer allocation of transport investment across the country. It is not fairly allocated to Yorkshire and that has an impact on issues such as the Humber bridge tolls, which remain in place and inhibit economic growth, the improvements to the A1079 in my constituency, and the possibility of the return of a rail link between Beverley and York.

10.31 pm

Mr. Philip Dunne (Ludlow) (Con): I remind the House of my entry in the register of Member’s interests.

It is, as always, a great pleasure to follow my hon. Friend the Member for Beverley and Holderness (Mr. Stuart), who spoke with his customary passion, especially about the lack of detail in the Chancellor’s statement about the NHS. Indeed, he hardly mentioned it.

I intend to talk mostly about small business and to echo some of the comments made by my hon. Friend the Member for Northampton, South (Mr. Binley), and I shall finish on the environment. However, I wish to introduce my remarks by commenting on the tone of the Chancellor’s speech. It was an undeniably political speech, which is no surprise to anyone on this side of the House and probably not to anyone on his own side, given his ambitions, which he obviously hopes will be realised sooner rather than later.

The initial reaction from Labour Back Benchers was positive and the Budget was well received in the Chamber. However, as hon. Members have had more time to reflect on what was said—and, perhaps more importantly, what was not said, but appeared in the detail of the Red Book and the supporting documents—the reaction has been markedly less positive. Indeed, the glee of many Labour Members has started to dissipate.

It was the right hon. Member for Birkenhead (Mr. Field) who pointed out the logical difficulty for the Chancellor in criticising, in future, the policy of my right hon. Friend the Member for Witney (Mr. Cameron) and the shadow Chancellor in relation to sharing the proceeds of growth—a point to which I shall return. This evening, we heard from the Chancellor’s great friend and former Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson), in a devastating speech that damned the Chancellor with faint praise. The hon. Gentleman called the Chancellor “fundamentally sane”—as opposed to completely sane—which suggests that a large part of him may not be sane. The hon. Gentleman went on to criticise two flagship policies. He criticised the scrapping of the 10p starting rate of income tax—I suspect that he introduced that himself, although I am not familiar with the history of his involvement with the Government—as an inappropriate move for a Labour Chancellor. He also highlighted the problems that will be caused for small businesses by the increase in the rates of corporation tax. It was not exactly a ringing endorsement from one of the Chancellor’s closest political friends.

I would characterise the Chancellor’s speech as one in which he blew smoke in order to hide—or to use the
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colloquial term, to bury—bad news. He put up a mirror in an attempt to reflect the policies of my right hon. Friend the Member for Witney and steal his clothes.

Bob Spink (Castle Point) (Con): My hon. Friend talks about smoke, and he said that the Chancellor was scrapping the 10p rate of income tax. In fact, he is doing no such thing: instead, he is doubling the 10p rate to 20p.

Mr. Dunne: I am grateful to my hon. Friend for pointing out the reality of what the Chancellor has done. The Budget was camouflaged as one that would cut taxes for all levels of income, but we understand now that that is not so.

The income tax cut so dramatically flourished at the end of the Chancellor’s remarks hid the impact of increasing the starting rate for the poorest members of society, especially those who do not have children. That is an astonishing redistribution from the poor to middle Britain, given that it comes from a Labour Chancellor who has sought to do the reverse during his tenure in office.

I come now to the Chancellor’s track record with the public finances over the past 10 years. The chief executive of the Forum of Private Business has talked about “smoke and mirrors” in respect of the Budget, and that metaphor is appropriate. We have heard this evening about the public debt and the Chancellor’s stewardship of public borrowing. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) eloquently highlighted the problem with the Chancellor’s forecasting skills. This is the seventh year in a row that the Budget forecasts for public sector borrowing have had to be increased. In fact, the Chancellor managed to get those numbers right only when they had been set by my right hon. and learned Friend—that is, when the right hon. Gentleman was following the spending plans of the previous Chancellor—and we heard last week that there would be a further £8 billion increase in public borrowing over the next few years.

Tucked away in about four words in the Chancellor’s statement was an announcement that although future spending increases had been set out for almost every Department of state—but not for the NHS, as that is still to come—the right hon. Gentleman had decided to delay publication of the comprehensive spending review until October. Why? The political tone of the Chancellor’s endeavours suggests to me that he wants to make sure that it will be his hand on the tiller, and not the current Prime Minister’s, when the CSR is eventually published. That means that he will be seeking to tie the hands of the Chancellor who succeeds him.

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