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"The UK rebate will remain and we will not negotiate it away. Period."-[ Official Report, 8 June 2005; Vol. 434, c. 1234.]
What we needed was a Budget for the future. We needed a Budget that took tough decisions, rather than shirking them, such as the decision to start reducing the deficit in 2010 with a credible plan to eliminate the bulk of the structural deficit over the lifetime of the next Parliament. We needed a Budget that answered the critics in the markets, in the business community and among overseas investors who have repeatedly condemned the Government's plans as inadequate, incomplete and incredible.
When the family budget gets tight, people have to think about what they can afford. When the national finances are in this kind of crisis, we as a nation have to think about what we can afford. It is clear that Britain cannot afford five more years of this-five more years of Labour's debt, waste and taxes. That would bring a risk of interest rate rises choking growth, mortgage rates soaring for millions of families and the UK's credit rating in play. It would mean five more years of a Labour Government who were elected on a bogus promise to carry on spending, which they know they cannot keep.
It is time for a change and for a new Government with the vigour, the commitment and the energy to sort out the mess this country is in and to get us back on the
path of sustainable economic growth, securing both private prosperity and high-quality public services for future generations. Let us do that now. Let us stop Labour's waste so that we can stop Labour's tax rises. Let us tackle the debt, not talk about it. Let us put this discredited Parliament and this discredited Government behind us. Let us vote for the change that Britain needs.
Miss McIntosh: On a point of order, Mr. Deputy Speaker. I was present at the start of the debate and it was notable that the right hon. Gentleman was not. I wonder on what basis he is going to reply to the debate given that he has not been present to witness or participate in it.
Mr. Deputy Speaker (Sir Alan Haselhurst): I say to the hon. Lady that the matter has been taken up, perhaps when she was temporarily not in the House herself. It has been dealt with, and I think that we should now complete the Budget debate.
I was about start on a note of consensus, by agreeing with the shadow Chief Secretary that we have had four days of full and frank debate about the Budget. I should like to begin my words of congratulation with a tribute to my right hon. Friend the Member for West Dunbartonshire (John McFall). He is not in his place at the moment, but he has made a significant contribution, just as he has contributed to economic debates in this House over the last 22 years-and not least during the eight years in which has chaired the Treasury Committee.
My right hon. Friend outlined the importance of the Budget's measures to support small business, and he endorsed the view that to end Government support for small business now would be nothing short of inviting disaster. I know that all Members of the House will join me in wishing him a long and enjoyable retirement.
Over the course of these debates, some hon. Members have argued for a faster pace of deficit reduction. We heard contributions on that from the right hon. and learned Member for Devizes (Mr. Ancram), and from the hon. Members for Stratford-on-Avon (Mr. Maples), for Gainsborough (Mr. Leigh), for Stone (Mr. Cash) and for Bournemouth, East (Mr. Ellwood). We also heard this afternoon from the hon. Member for South Staffordshire (Sir Patrick Cormack), who was making his last contribution in this place, and he was echoed by the hon. Member for Daventry (Mr. Boswell).Others, on the other hand, argued that the stimulus provided in the Budget was insufficient. That was the argument as set out by the right hon. Member for Banff and Buchan (Mr. Salmond) in his final contribution to debates in this House.
Others, however, have welcomed this Budget for its help for manufacturing and business, and for its investment in their communities. My right hon. Friends the Members for Sheffield, Central (Mr. Caborn) and for Barrow and Furness (Mr. Hutton), as well as the hon. Member for
Teignbridge (Richard Younger-Ross), my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) and the hon. Member for Upper Bann (David Simpson), echoed that point. This afternoon, my hon. Friend the Member for Thurrock (Andrew Mackinlay) made the same point in his valedictory speech, as did my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase).
Others welcomed the Budget's investment in infrastructure such as Thameslink, which was the point made by my hon. Friend the Member for Crawley (Laura Moffatt), while others welcomed the investment in schools, the point made by my right hon. Friend the Member for Rother Valley (Mr. Barron). The hon. Member for Leominster (Bill Wiggin) made a powerful argument in support of the cider industry, and this afternoon the hon. Member for Northampton, South (Mr. Binley) flagged the impact on pubs.
This morning, the Office for National Statistics confirmed that the British economy grew not by 0.1 per cent., or indeed 0.3 per cent., at the end of last year, but by 0.4 per cent., which is faster than Germany, Italy and across the European area. We must, of course, remain cautious, but it is fresh and welcome evidence that the action taken by my right hon. Friend the Chancellor has worked.
That action has kept unemployment in this country down. It is 2 per cent. lower than across Europe, and 2 per cent. lower than America. The Chancellor's action has worked to keep the rates of repossessions and business failures at half of what we saw in the 1990s. So the central argument set out in the Budget has to do with how we build on that action, lock in recovery over the months and years to come, and secure growth.
That is why the Budget puts up public spending for the year ahead, rather than cuts it. That is why it widens the help for business cash flow, and why we are taking sweeping measures to increase lending to small and medium-sized businesses. It is why we are extending the offer of a job to every young person out of work for six months, and why we are bringing together £4 billion of new investment in small businesses. It is why we are creating a £2 billion green investment bank, doubling entrepreneurs' relief to £2 million, and investing £250 million more in our transport infrastructure. We will not leave recovery to chance, and we will not leave the jobs of tomorrow to the vicissitudes of the marketplace.
The Budget puts £2.5 billion towards supporting the jobs of the future-what a contrast to the Opposition! The Leader of the Opposition is fond of saying that his party's evolution is something of a journey. It would be a good aphorism for his economic policy, as it is a journey that has gone round in circles. Back in 2006, the shadow Chancellor said that stability and not tax cuts was his priority. In 2007, he dropped stability and said that tax cuts were all that mattered. Then he said that he would stick with our spending plans, and then that he would not. Then he said that he would prioritise the deficit, and now he is back to tax cuts.
It was no surprise to hear the hon. Member for Runnymede and Weybridge (Mr. Hammond) tell the BBC, "Of course there is no plan." He was not kidding. First he got it wrong on regulation, then on banks, then on saving jobs, and now he has got it wrong on helping business.
"be at the expense of businesses that are investing heavily in the UK."
The international tax adviser to General Electric said it was a "real own goal". The Engineering Employers Federation-a body not known for its slavish adherence to Labour party orthodoxy-has said that abolishing those allowances
"would be a disaster. Any business would have to think twice about investing in the UK."
"seduced by the arguments of losers."
With policy brains such as that at work, it is scarcely a surprise that the right hon. and learned Member for Rushcliffe (Mr. Clarke) has been manoeuvred in to help. As I was casually looking at my favourite new blog, order-order.com, I was surprised to read that at Tory central office the shadow Chancellor's desk is now listed as "George Osborne/Hotdesk". Are they trying to send him a message? May I comfort him with the news that we have strengthened protection for temporary workers?
The truth is that Conservative Front Benchers are auditioning for the same job without a script. That is the only explanation for why one day the right hon. Member for Witney (Mr. Cameron) says that Greece represents
"the scale of the problem we could face",
"nobody is suggesting that we are going to follow Greece".
"Of course there is a danger if you do too much too early, you could choke off demand."
The next day, the shadow Chief Secretary says, "We've got to make a start in 2010." The IMF, the IFS, UBS, the CBI, two Nobel laureates and, greater still, the hon. Member for Twickenham (Dr. Cable) say that now is not the time to slam on the brakes, as do 186 members of the IMF. Only North Korea and Iran disagree.
"If you go too quickly then there is a risk that the recovery will be snuffed out".
Alongside our plan to secure recovery and growth, the Chancellor set out our plan to halve the deficit. It is the most ambitious plan in the G7. The forecasts set out by the Chancellor show that debt over the next few years will be £100 billion lower than forecast. That means that borrowing will fall by £78 billion over the next four years: £19 billion will come from increased taxes and £38 billion from cuts in public spending, with the rest coming from a return to growth in the economy.
Difficult decisions will be demanded of us, but we will approach that challenge determined to protect vital front-line services-in health, education and police numbers-while we bring borrowing down. Because we
blunted the force of the recession, our tax receipts are better than expected. Borrowing this year is £11 billion lower, but our plan to halve the deficit will continue at the same pace.
We have already announced tax increases that make up £19 billion in tax by 2013-14. In this Budget, we set out, Department by Department, £16 billion in cuts and efficiencies by 2012-13, on top of which will come £4.5 billion in savings by holding down public sector pay and reforming public sector pensions, as well as £300 million more in welfare reform savings.
We do not salivate at the prospect of making those savings. We will do them carefully as we preserve our commitment to protecting front-line spending on the NHS, Sure Start, schools and police numbers. Conservative Members have attacked the clarity of the Budget, but the truth is that this week we have learned a lot about the plans of the Conservative party. Last week, the shadow Chief Secretary said to me that it was impossible to deliver £11 billion in efficiencies in two years' time. Yesterday, the shadow Chancellor said he could do it in two weeks' time. We are now being invited to believe that he can save £12 billion from Government budgets, although he cannot say which ones-not to pay down debt, but to pay for a tax cut.
Even the shadow Chancellor has said that that will cost £5.6 billion, but the Treasury has now costed those increases in national insurance thresholds at £6 billion in 2011-12, £6.3 billion in 2012-13 and 2013-14, and £6.7 billion in 2014-15. Once again he has got his sums wrong. This policy is not a U-turn; it is more of a handbrake turn. Only the right hon. and learned Member for Rushcliffe had the honesty to say that only in the Budget after the election will we know if the national insurance tax cut is affordable. This policy from a shadow Chancellor who told us
"if you want to cut taxes you can't simply rely on more buoyant tax revenues, you can't simply rely on cutting red tape".
The Conservative party now has something of the order of £34 billion of unfunded tax and spending commitments-and counting. Just to meet those promises alone, let alone cut the deficit faster, it will need new tax rises or deeper cuts to front-line public spending. It is a huge credibility gap, which, frankly, it cannot fill. Despite this spiralling loss of control, it persists with the argument that it can cut the deficit further and faster. But it will not say which Departments it will cut next year. It will not say what it will cut next year. It will not say when it will halve the deficit. It will not say how much further it will cut the structural deficit.
The shadow Chief Secretary is fond of saying that he will take out the bulk of the structural deficit during the next Parliament. Labour's plans already take out two thirds. Why will not the Conservatives tell us what "bulk" means. What does it look like? How would we recognise it if we saw it? Why do they insist on it being a secret? Why is this bulk being hidden away from us? After all of these debates, we are none the wiser.
The Chancellor's Budget set out an argument for fairness. This Budget was a Budget for the many, not the few. That is why the greatest burden will be carried by those with the broadest shoulders. In our deficit reduction plan, 60 per cent. of the £19 billion in new taxes that we need to secure will be paid for by the top 5 per cent. of earners. What a contrast to the Conservative
party, which has said that it will cut child tax credits and child trust funds for families on modest incomes, all to pay for a £200,000 tax break for the 3,000 richest estates in Britain.
Our Budget seeks to extend help where it is needed and to support aspiration, hard work and families. That is why, for those families seeking to buy their first home, the Budget includes a two-year stamp duty holiday for those first-time buyers of properties of up to £250,000 in value. It helps with targeted support for children. The new child tax credit of £4 a week will help families with children aged one and two from April 2012-a point made by the right hon. Member for Maidstone and The Weald (Miss Widdecombe) earlier. It will extend extra help for Britain's 12 million pensioners, with a 2.5 per cent. increase in the basic state pension from April 2010, and extra help again for winter fuel payments.
What a contrast that is to the policies of the Conservative party. It is not a party of change because it has not changed its party. Five years of rebranding cannot hide its attempt to destroy child tax credits. Just to save the £400 million, it needs to make its own sums add up. It would have to cut credits for people earning as little as £16,000 a year. Its plans to cut child trust funds would rip the heart out of the scheme, taking away a scheme that encourages parents and grandparents to save for a child's future-all to pay for a £200,000 tax cut for the 3,000 richest estates in Britain.
The truth is, this was a policy authored by the shadow Chancellor. Some shadow Chancellors lack experience and some lack judgment, but this shadow Chancellor lacks both. The truth is that these debates have revealed the Tory party as risky, wrong and unfair. Find me the parent on a modest income who says, "Please scrap my child tax credit. Those 3,000 richest estates desperately need an inheritance tax cut." Our plan is for securing the recovery and renewing our country, and I commend the Budget to the House.
(1) It is expedient to amend the law with respect to the National Debt and the public
revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so
as to provide-
(a) for zero-rating or exempting a supply, acquisition or importation,
(b) for refunding an amount of tax,
(c) for any relief, other than a relief that-
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
Mr. Deputy Speaker: Instead of reading out each motion in full, I propose to follow the procedure used in recent years-that is to say I will first state the title of the motion and then put simply the Question that the motion be agreed to.
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