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Budget Resolutions and Economic Situation

I draw the attention of the House to my entry in the Register of Members’ Interests. I have not missed many Budgets, if any, since I entered the House, and I have never heard a Budget that had less content than the Budget that was delivered last week. It has already vanished from the newspapers, it contained very few measures, and it did not seem to attract the attention of the Chancellor of the Exchequer very much. He is plainly bored by the job that he holds, which he has held for a long time. He is impatient, we all know, to go to another. The Chancellor can be a considerable and effective parliamentary debater, but I have never heard him put less effort into delivering a speech, so he gave a very boring speech. As the hon. Member for Twickenham (Dr. Cable) remarked, searching through it for what we used to regard as Budget measures produces a thin harvest. The Chancellor could not afford to do anything in the Budget, and did not particularly wish to do anything, so there was very little in it. I am one of those who believe that we need an annual Budget. It is a strange performance that we go through, but the House debates economic policy so infrequently on the Floor that it is valuable to have a five-day annual debate. I do not want to go back to Budget speeches that used to be long, impenetrable, detailed expositions of fiscal and monetary measures, macro-economic indicators and the outlook for the economy, but we need more fact than the political presentation that we get from the Chancellor, and from his colleagues in subsequent days. It would be nice to have a statement of fiscal policy, a description of all the fiscal measures being introduced that day, including the ones in the press releases, and a more dispassionate outlook as to where the economy is going. Because many of the financial commentators in the newspapers just take the Treasury briefing, if we have a Budget of the kind delivered by the Chancellor last week, we often have a debate about economic policy in the United Kingdom that is not based on a sound factual footing. I shall try to fill the gap. I have spent a few days trying to work out where we are and what the Chancellor is doing. He deliberately took content out of the Budget by moving the difficult things out. Let me begin with fiscal policy. The Chancellor is raising taxation rapidly and increasing the tax burden, which is going up to levels that we have not seen since the 1980s. He is preparing to restrain spending growth drastically; he just did not want to say so in his Budget statement. The Chancellor got rid of the specific tax measures in the pre-Budget November statement. He got over the humiliation of finally admitting that his growth forecasts were all wrong, but more importantly, he imposed yet more tax burdens on the oil industry, which will raise £2 billion in a full year, and he floated the idea of a development land tax, about which we will no doubt hear more in due course. In the Budget, the Chancellor has relied on his old weapon of fiscal drag—not raising the thresholds for each level of tax in line with inflation, so as to produce more and more income. That leaves all our constituents baffled about why they feel they are paying more tax, although the Chancellor has not announced any increase in taxation. All Chancellors use it; the present Chancellor uses it every year, and he is using it heavily. The Red Book forecasts that by 2010, compared with the present, another 1 per cent. of national gross domestic product will be taken by income tax and national insurance. As has already been pointed out, corporation tax thresholds have not been raised at all—not in line with inflation, not at all—so corporation tax take increases as well. The Chancellor is raising his revenue rapidly. He needs to; I shall return to that. He has put off—I do not regret it—the comprehensive spending review a little. I do not know why. It will be completed by mid-2007. He gave us hints of the beginning of that with what has already been described for Her Majesty’s Revenue and Customs, the Treasury, the Department of Work and Pensions and the Cabinet Office. Their baseline will be taken down by 5 per cent. per annum in real terms, compared with their baseline for 2007–08. I imagine that the Ministers responsible will think of nothing else, because we have been given no idea how it will be achieved. The Chancellor forecasts that public spending as a whole will increase by 1.9 per cent. each year between 2008 and 2010, which is less than half the level of recent growth and less than the likely growth rate of the economy. We have no idea where those cuts will be made, and we have no idea how the public services will cope when some of them are in crisis even following the ridiculous largesse since 2000. Unless reform is initiated, this will be a tight public spending round.