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Obviously, I am the first to say that we must have the right balance between levels of taxation and spending, and given the economic conditions that we have been through, it is hardly surprising that we are not in balance-we are a considerable way away. However, we
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have been through extraordinary times that have called for vital additional public support for the economy, especially the banking sector. That is why I am worried about the 50 per cent. higher rate of income tax. Labour Members must emphasise that that is a temporary measure, because it is unhelpful and wrong to send people the signal that the state will claw back more than half their earnings. There is an argument that the rate can be justified in the short term, but it cannot be a defensible long-term position. There are no votes in it, and no moral high ground can be occupied by adopting a taxation policy with punitive elements.

When we announced the 1 per cent. increase in national insurance a year or so ago, we rightly emphasised that it would be a temporary measure, and we must get back to that argument. It would be bad to load the increase into the long term. We should not be putting a tax on jobs, and although there is an argument for the approach in the short term, it is not sustainable and we must get beyond it.

When one looks at all the numbers flying around in relation to the Conservative proposals set out today, one detects that there has been a huge dose of double counting. The arithmetic that has been set out to justify the changes does not stack up-it would blow up in our face-and would risk increasing the deficit, not reducing it. The Conservative party has picked up the bad habits that we learned in opposition, as the joy of opposition is being able to spend the same pound several times over. Those in government only get to spend that pound once, and the Conservative numbers do not add up. We can only spend the money once and my right hon. Friend the Chancellor has, essentially, already spent it.

I want to make two points before I shut up for the last time in this place. We have all heard the arguments about efficiencies in public services, and those of us who have held ministerial office have carried out the tough job of trying to extract them from spending Departments that do not like to give up any resource. Getting the savings out is always harder than anticipated. I think that there should be more outsourcing, and there will need to be a much tougher approach on procurement and streamlining back offices. That is common ground between both Front-Bench teams, which is fine, but it will be harder than people think. That is why I conclude that the only way we can be confident that we can reduce the public deficit as quickly as possible without compromising the quality of public services is fundamentally to change the basic delivery model for some of the public services.

For example, the health service consumes more than £120 billion of public resources, but we spend a large dollop of that money completely inefficiently by providing bad pathways of care, especially for people with long-term and chronic diseases. Those people end up being treated inappropriately in the most high-cost settings and they are not provided with especially good care. We must change all that, but it will be difficult and will require strong leadership from politicians. It fills me with regret that Conservative Members will go around the country saying that we cannot change this or that part of the health service, because it has to change if we are to save money without compromising quality and to deliver better outcomes for our constituents.

My final point relates to better regulation, which was not something for which I thought that I would have ministerial responsibility. The subject has disappointed
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many Ministers who, like me, have struggled with the brief, such as my right hon. Friend the Minister for Business, Innovation and Skills-a fine Minister who is currently sitting on the Front Bench. We and the previous Government passed legislation in that regard, but better regulation is not about legislation. This place can pass umpteen Bills, but they will not make a ha'p'orth of difference unless the Government change the culture of how they set about imposing new burdens on business. I am a fan of regulatory budgets, and I hope that the next Government-if they are a Labour Government, I hope that my Government will do this-will, for the first time, put a real cap on the additional cost burdens that we ask businesses, and especially small businesses, to accept in our pursuit of public policy goals. There must be a limit, and 19th-century regulatory approaches cannot meet the needs of a modern 21st-century economy, so we need to do more.

This is my last speech in the House of Commons. Many people will say, "Thank God for that." It has been a great honour to serve my constituents and I have had a fantastic time in doing so. Our constituents probably feel disappointed by all of us in this Parliament, so we owe it to them to do a job of work to rebuild their trust. This is a great country and we believe in some great things. I hope that Members of Parliament in the next House of Commons will stand up for those great values that have made Britain such a great country in the world.

6.6 pm

Mr. David Curry (Skipton and Ripon) (Con): Since we are having a succession of valedictories, I shall try not to be sentimental, maudlin or moralistic. We are talking about the Budget, however, so perhaps I may begin by talking about the two great elephants in the room that have not been raised: the great debate about the value of the renminbi that is taking place in the United States and China, and Germany's role in assisting the European economy. Those two things will have more impact on growth in the United Kingdom than anything mentioned in the Budget, and we should occasionally put our decisions in the context of those wider questions.

I want to talk about public services because I note that one of the Government's super-pledges relates to safeguarding public services. My party uses similar terminology, but my problem is that I do not know what that means. What a wonderful word "safeguard" is; it is rather like the word "appropriate" because it can mean anything. At best the word is misleading, and at worst it is probably mendacious, because no public services will be safeguarded in the sense that they will be immune from pressure over the next few years.

The crunch for local government will come not this year but in 2011-12 and 2012-13, because the comprehensive spending review takes care of the present year. However, if there is a cut in grant of something like 5 per cent., which is not an unreasonable assumption, given the pressures that we are under and the fact that local government is not one of the "safeguarded" services, serious decisions will have to be taken and there will be serious consequences. Recession drives up demand. It drives up demand for free school meals. It drives up demand from self-carers who fall back on welfare because they can no longer finance their care, and it drives up the cost of home-school transport. Those are only three areas in which recession inevitably pushes up costs.

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We must also consider demographic demand-we do not need to go into the familiar argument of what an ageing population means-and the fact that recession leads to income being constrained from things such as tourism, and car parking and planning charges. Many local authorities depend heavily on those charges to maintain a relatively modest council tax, or at least to mitigate its impact. However, the council tax is not a buoyant tax. We have already heard about house building, and a low level of house building means that there is no buoyancy in the council tax. Local government will therefore face a huge problem, even with the best will in the world.

If one then looks at the longer term, however, and considers the three big factors driving costs, the situation becomes much more difficult. First, there are the consequences of what we might call the baby P issue. Whenever there is one of these ghastly episodes where a child has suffered appalling mistreatment and has died, the impact on the reactions of social services departments is bound to come through, in the sense of them playing safe and not taking risks, and that enhances demand-and rightly so; one understands that. Secondly, there is the demographic time bomb of adult care, plus the special demands of high-dependency cases, which will now impact much more severely. Thirdly, there is the old question of the waste and landfill targets; as they are winched up, the costs for local government get higher and higher.

Those are three huge, emotional, high-volume and high-cost issues. Add that to the recession and we see that local government is facing the perfect storm. We can talk until we are blue in the face about safeguarding public services, but they will not be safeguarded. Nobody can, and nobody will, safeguard them. Some services can be hit harder than others, but even then we have to be careful, because there is no point in saying, "We're going to make a special case of the health service" if the consequence is that social services get particularly badly hit. So many of the outcomes in health depend on effective social services. They have to be treated together. If we dislocate the pair of them, what is gained on the swings will be lost on the roundabout. It is easy enough to talk about co-operation between health and social services; it is easy to talk about primary care trusts and social services working together, and there are some outstandingly good places where that has happened, such as Hertfordshire, but it is much easier to talk about it than to deliver it everywhere.

I was a Local Government Minister, and was regarded as a rather benign and tolerant one, compared with what came after. It is wonderful how, in retrospect, one gains an aura of tolerance. I hope that that continues throughout one's career. As we are in a reflective mood, I should like to make two points about which I feel very strongly indeed. First, we must not let the whole notion of devolution slide under the pressure of the recession and the recovery. The pressure on Government is always to try to keep control-to say that other people cannot be relied on to exercise the same sort of control that the Government can. Given the volume of local government expenditure as a proportion of gross domestic product, it is understandable that that instinct seems to burn deeply in the heart of Government, but there are very good arguments against it. The main one is not ideological; it is that Britain is now the most centralised state in western Europe, and it does not work very well. It is an efficiency argument.

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If one sits on the Public Accounts Committee, as I have for a number of years, one sees, week after week, a parade of catastrophically bad spending by the state. It is all very well talking about the active state, or the benign state, but it is a jolly inefficient state most of the time. We need to look hard at passing that power down to elected representatives-to representative government. We should be careful about empowering non-representative groups, because there can be tyranny on a small scale, just as there can on a big scale. Those on the receiving end do not care whether the tyrant is big or little; the fact is that the actions are tyrannical. Let us pass power down to representative government.

I hope that when my party comes to look at regional structures, it will do what I think is a very conservative thing: invite local government to bid, with a price, for the powers that we want to remove from other organisations. Groups should get together and say, "Yes, we could deliver the competences of the regional development agency," or "We could deliver the competence in training and skills." I never understood why the RDAs were not given the competence of training and skills, given that economic development is supposed to be at the core of their purpose. Let us trust local government to bid for those powers, to say how it will deliver them, and to say how much that will cost. We should then let it get on and do that. That is an accountable system.

My second reflection is perhaps somewhat more controversial. One of the reasons I came into politics was a feeling that my generation had inherited a country that was in rapid transformation and, in many ways, had not come to terms with it. Britain was the sick man of Europe in my youth, when I was at university. When I was 18, in 1962, Dean Acheson, the American Secretary of State, made a speech in which he said:

I am leaving this House 48 years after Dean Acheson made that speech, and I believe that that dilemma for the United Kingdom remains unresolved.

We cling to an increasingly asymmetric relationship with the United States. I would not want us not to have a particular relationship with the United States, but increasingly we cannot sustain it on the basis of that old idea that something very special is at its heart. The current President has less interest in that idea than some-perhaps less than any other-of his predecessors whose roots went back to Europe.

We are perennially reluctant Europeans, yet no sane party has come up with a plan B on Europe. I look forward to seeing, from the perspective of my greenhouse, the changed reaction towards Europe of Conservative Back Benchers if they sit on the Government Benches, as opposed to the Opposition Benches, given my party leadership's decision to have constructive engagement on Europe, and its extraordinarily elegant and, from my point of view, extremely welcome climbdown on the referendum pledge.

I know that Europe has huge problems. In a sense, its bluff is being called: how can one create an economic union without the political union that goes with it? But the ability of the Europeans to cobble something together that works is absolutely astonishing. In a sense, there
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is something rather British about being able to put something together on an improvised basis that manages to carry on.

We talk about punching above our weight, but a person can only punch above their weight for a certain number of rounds, and then they get flattened. I do not want us to punch above our weight. I want us to work out what our weight is and punch at it. I do not want to go a gram above our weight. We send our young soldiers to die in Iraq and Afghanistan, but we do not have the means to sustain over a long term the total support that means that we can carry through those missions with complete success. If we are honest, we ended up in Iraq, in Basra, not in a glorious episode, but in a somewhat humiliating one. When it comes to the intervention in Afghanistan, I want to be able to say that we will see things through, so that I can say that those young people did not die in vain. If we cannot sustain those operations in the long term, we should not embark on them.

I would say to an incoming Government: look hard at the UK. Look at us from the outside as well as from the inside. Turn the telescope around sometimes, and look through both ends. What can we really do? What is it reasonable to ask our citizens to sustain? What is the effective power or weight of the United Kingdom in the modern world, where we spend all our time talking about the impact of globalisation? In the end, of course things boil down to budgets and economic performance, but we need to look honestly in the mirror of our national identity and national capability. If we do that, the next Government will perhaps be able to answer the challenge that Dean Acheson set 48 years ago, which, in many ways, has governed my political life.

6.18 pm

Mr. David Clelland (Tyne Bridge) (Lab): It is a great honour, indeed a privilege, to follow the right hon. Member for Skipton and Ripon (Mr. Curry). He represents the acceptable face of conservatism in this House, particularly on issues of local government. He has proved one of Parliament's most effective speakers, and he will be greatly missed. Like him and colleagues who have preceded me in this debate, I, too, will be leaving at the general election. This is my 25th Budget, and my last speech in a major debate in the House of Commons.

I spoke to some of my constituents over the weekend about the Budget, and although they did not feel that it was the most exciting one they had ever seen, they accepted it as sensible and right in the circumstances. It is a Budget for the economic times in which we live. It is responsible and designed to aid the recovery.

It will also be the last Budget before the general election, and the 14th Budget of a Labour Government. There have been many memorable Budgets from this Government, including those that heralded the winter fuel allowance, family and pensioner tax credits, and free bus travel-Budgets that have helped my constituency of Tyne Bridge, and the good people who live there: unemployment has tumbled since 1997; health services have improved; new schools and colleges have been built; educational standards and opportunities have improved for our young people; and housing has been modernised, and new houses provided. Although much more needs to be done, the Government have shown what can be done, given the opportunity, and what they will do in future.

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Only last Friday I attended the launch of the redevelopment of Newcastle's west end, the scene of street riots in the early 1980s, where hundreds of new homes and community facilities will be provided thanks to a Labour Government. The redevelopment of Gateshead quays has seen an influx of new jobs and opportunities -a cultural revolution that has seen a town once described as

rise to become internationally renowned for sport and recreation, and its arts and cultural development. All that has taken place under a Labour council and a Labour Government. With the Government's help, hundreds of new homes will be provided on the site of a former freight yard near Gateshead town centre, which itself is being cleared to make way for new shops and housing. Indeed, the only famous-perhaps, infamous-building left to view is the "Get Carter" car park, which still stands, but not for much longer.

That story can be repeated right across the north-east, where the decline of heavy engineering and coal mining under the previous Conservative Government is being replaced with new opportunities. There are new industries, such as that of Nissan in Sunderland, which will soon develop the first generation of mass-produced electric cars. The production of offshore wind generators will, I hope, soon be boosted by Siemens, which plans a new manufacturing facility that would provide hundreds of new jobs. There is also the potential for clean coal technology and other innovative ideas, such as solid-state lighting systems, green technologies and so on, which are emerging in the region.

One NorthEast, our regional development agency, is at the centre of that, working with our businesses to develop the north-east's economy. The hon. Member for Meriden (Mrs. Spelman) confirmed that a Conservative Government would abolish One NorthEast, but Conservative candidates on the ground in the north-east do not take that attitude, because they know about the RDA's popularity and tell us that, if the region wants it to remain, it will remain. They have not said how they will decide on that, or whether they would have a referendum, but from candidates in the constituencies we hear a different story from that told by Opposition Front Benchers.

There is still a lot more to do, and all that needs to be added is the candid recognition that there is always a lot more to do. Indeed, if there is one thing that we can rely on Governments to do, it is not enough. However, economic recovery and future progress will rely on the public and private sectors working together. That is what Labour has promoted and, to a large degree, achieved: public and private sectors working in harmony and, sometimes, in partnership to provide the services and the prosperity that we all want. First, however, we have to tackle the deficit that has built up during the crisis that we have come through, and it is right that the banks, which sparked the crisis, should now do more to help the recovery by ensuring that small businesses can survive and grow. It is right also that important public services are protected, and that the public sector is not expected to pay for the mistakes of the private sector.

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