House of Commons Hansard Debates for 26 Nov 1996 (pt 12)

Mr. Robert Atkins (South Ribble): Labour authorities.

26 Nov 1996 : Column 177

Mr. Blair: It was nothing to do with that. [Hon. Members: "Yes, it was."] No, it was not. Because local authorities were already spending £800 million above their limit, the real increase was less than inflation. That again was just a Tory trick.

Here are some more facts the House should know. According to our figures--if the Government want to dispute them afterwards, I am happy for them to do so--the Government's planned expansion of nursery education has been cut. There is a £56 million cut in the money allocated for the introduction of the voucher scheme. The training and enterprise council budgets--the training and skills budgets--will be cut in cash terms by £34 million.

The Chancellor boasted about the money that will go to universities. They, apparently, will get a capital spending cut next year of £20 million. As for the Chancellor's spending pledges on crime and the police, the Government have not yet made good the pledge they made at the last election to put matters right. Their problem is not just the trade gap, the investment gap or the skills gap: it is a credibility gap.

Most extraordinary of all, days before the last election, the Prime Minister said--it has some echoes of what we have heard today--

"Vote Tory and the recovery starts on Friday."

"The economy is transformed", he said.

"What do we offer? A strong economy, free from the threat of inflation, in which taxes can fall."

But within months, taxes went up, borrowing went through the roof and the pound was devalued by 20 per cent.

However, the most remarkable quote of all from the Prime Minister comes after the election, not before it. He was interviewed, about a year later, by the Los Angeles Times and this question was put to him:

"a year later, you find yourself under fire. What happened?"

He answered:

"Fiddle-de-dee!"

I do not know why he said that, but he did. [Laughter.] It is a somewhat unusual sound bite. He continued--this is the important point--

"I said . . . the day after we won the election, with a number of people around me: 'Within the next 12 months the government will be the most unpopular we have seen for a long time!'"

The Prime Minister said that he said that the day after the election. I do not understand that. If the recovery was to start the day after the election, if taxes were going to come down, if the public debt was to be halved, if industry was to boom, why were the Government going to be so unpopular? I will tell the House why the Prime Minister said that the Government were going to be unpopular--because he knew the truth; but it was not told at the election.

Of course, the final point the Tories make is the one they always make before every election. We hear it every time--that we are now living through an economic miracle. I remember them saying that in 1987 and in 1992, but they are not running on the record of a few months and the figures before an election--they are running on the record of 17 years.

Over those years, we have had one of the lowest rates of growth of any major European country. We rank today ninth in the prosperity league. Even now, with the same

26 Nov 1996 : Column 178

population and all the problems they have, the French economy is a third bigger than ours. We have fallen from 13th to 18th in the league table of living standards. Why? Because the Tories have never paid attention to the fundamental weaknesses that remain. They say they have learnt from past mistakes, but the recent inflation figures and interest rate rises show otherwise. We are now 11th out of 15 for interest rates and inflation. That is the old stop-go disease and the Tory boom and bust that we all recall.

We lack the investment we need to make recovery last, and our manufacturing base is still too weak. The Chancellor did not tell us that, according to the figures, manufacturing investment is some 14 per cent. down on a year ago. Nor did he tell us that he has had to revise his figures down from 2.5 per cent. to 0.25 per cent. Productivity still lags behind that of our main competitors, and the trade deficit, according to the figures published today, is due to worsen. We still have a lot of ground to make up.

We are not equipped for the future in education and skills. We are now 42nd in the education and skills league and that is not good enough. Cuts in the training budget will not help us to do better.

The Government boast of their record in falling unemployment, but if we measure not those claiming benefit--of course, there have been 32 changes to the way that is calculated--but the number of homes with people of working age in which no one is working, the figure is one in five, or 20 per cent. That is worse than many of our main competitors. The Chancellor chose a very good time for him on the job statistics. Since the Prime Minister came to power, the number of jobs in the economy has fallen. Last year, which is supposed to be the year that the Government boast most about, the number of full-time male jobs fell.

Nothing in the Budget tackles those fundamental problems. The Conservatives cut training, do nothing but provide a few make-work schemes for the long-term unemployed, make cuts in infrastructure, and give no help to investment. Without measures for the long term to increase investment, boost education and tackle structural unemployment, we will never have a recovery or prosperity that will last. That is why we say the Conservatives have failed.

The Chancellor mentioned welfare dependency, but the Government have doubled welfare dependency in this country. That is their failure. They spend money and the welfare bills are up, but investment is down. They have had the colossal bonus of North sea oil and asset sales--£200 billion--and squandered it. The tax burden is up--except, of course, for the most wealthy. Why? Because they have always thought that, if they looked after a few at the top, the many would prosper.

The Government thought that it did not matter how divided, fractured or unequal our society became. They thought that, if they satisfied the short term, the long term would look after itself. But it does not work like that. An under-educated people will never make a prosperous country. A society marked with gross inequality simply spends money cleaning up the consequences of it. If we do not invest now, we will never reap the reward for the future, and a nation run for the few will never be fit for the many. Those are the fundamental questions that the Budget does not answer.

26 Nov 1996 : Column 179

The problem is not only that the Chancellor was wrong on many of his figures or that he has concealed many of the facts, but that, when those fundamental questions are met and have to be answered, the Conservative party has no vision for the future that can answer them.

This is the last-gasp Budget of a Government whose time is up, who cannot be trusted with the future and who cannot make amends for the past. We have heard all their promises before. We heard them at the last election, and we did not believe them. The difference this time is that the country now does not believe them either. They cannot be trusted on tax. They cannot be trusted on the economy. They cannot be trusted on the health service. They cannot be trusted on education. They cannot be trusted with our future. The truth is that, after 17 or 18 years of one Government, there are no excuses left. There is nothing left for them to do, except go--and the sooner the better.

5.9 pm

Sir David Knox (Staffordshire, Moorlands): In the past, when Neil Kinnock or the late John Smith was Leader of the Opposition, one could expect a reasonable and reasoned response to the Chancellor's Budget. Today, we have heard no more and no less than a shambling rant. The right hon. Member for Sedgefield (Mr. Blair) will have to do better if he is ever to become Prime Minister of this country. The right hon. Gentleman complained that the Chancellor gave with one hand and took with the other. Some of us remember Labour Governments: they took with both hands and gave nothing back.

I congratulate my right hon. and learned Friend on his fourth Budget speech. Like his previous ones, it was well constructed, well delivered and commendably brief--especially in view of the fact that it was a unified Budget. I recall some long speeches from previous Chancellors who were dealing only with the revenue aspects of the Budget. Today, my right hon. and learned Friend has maintained the high standards that he established with his previous Budget speeches. Of course, he had a good story to tell. Since spring 1993, he has managed the economy with skill and sound judgment, and has proved himself to be one of the most successful Chancellors in the post-war era.

I give a general welcome to the Budget and the measures it contains, but I must confess that I am more enthusiastic about some than about others. On the positive side, I feel that the Chancellor has got the balance between public expenditure and taxation about right. He has been wise to resist the silly suggestions from some quarters that he should introduce substantial tax cuts. That could have been done only if public expenditure had been cut significantly, or if he had gone on an irresponsible borrowing spree. He has done neither, and he was right to do neither.

Instead, although he has kept overall public spending under tight control, he has been able to increase spending on health, education and the police in real terms in the coming year. At the same time, he has generously increased tax allowances, broadened the 20p band and reduced the standard rate of income tax. To my mind, the public want more spent on health, education and the police, and, when possible, they want a little relief from the burden of taxation. Like me, they will conclude that the Chancellor got it right today.

26 Nov 1996 : Column 180

I am pleased that my right hon. and learned Friend has managed, once again, not to increase the duty on beer and wine, and that--more important in my view--he has reduced the duty on spirits, particularly whisky. As he did last year, he has faced up to the problem of cross-border shopping in the European Union, and he has attempted to bring some sense to the issue. I want to see uniform duties throughout the European Union, and the best way to achieve that is if we were to continue to reduce duty, and the other EU countries put theirs up.

I welcome the relief on non-domestic rates. Small businesses in my constituency and elsewhere find that non-domestic rates place a heavy burden on their finances. They will all be pleased to learn of the relief, and I am sure that it will enable them to maintain better finances and be more prosperous.

I am glad that my right hon. and learned Friend is to plug loopholes in the tax system, wherever they occur, because they undoubtedly cause much resentment. A great deal of highly paid accountants' time is spent trying to discover such loopholes. I do not know whether plugging them will make any difference to that activity, but one would like to think it will.

I have some reservations about the increase in petrol duty. I represent a widespread rural constituency, where local people are highly dependent on motor cars. The continual increases in duty place a heavy burden on people who live in rural areas, and many such people are not especially well off. I understand the environmental arguments, but there is a balance to be struck. I hope that the practice of increasing petrol duty by 5 per cent. plus the rate of inflation will not continue indefinitely.

In the modern world, the Budget is but one of the means by which the Chancellor tries to control the economy. There is a time lag of between 12 and 18 months--perhaps even longer--before measures announced in the Budget affect the economy. The consequences for the economy of today's Budget therefore will not become apparent for some time. By then, we will also be feeling the effects of those external factors over which the Chancellor has little or no influence, far less control, and which he can only try to anticipate at this stage.

I wish that some of the Europhobes would remember that. They should recognise that we do not have complete sovereignty over our own economy and that we might have greater sovereignty if we were participating fully within the European Union.

Although my right hon. and learned Friend's Budget judgment is about right, we shall not know for certain for about 18 months. What is certain is that he has been able to introduce his Budget in more favourable circumstances than any of his post-war predecessors was able to. That was also the case last year, and in 1994. All the economic indicators are today pointing in the right direction: we have steady economic growth, low inflation, falling unemployment and a satisfactory balance of payments. I emphasise that last factor, because, up until the last couple of years, our balance of payments position was weak, and we ran an excessively high deficit on the current account for a long time.

All those favourable factors are a great tribute to my right hon. and learned Friend, who has managed the economy with great skill, caution and prudence over the past three and a half years, and who--unlike so many of