---

Budget Resolutions and Economic Situation

I agree with my hon. Friend about the contradiction and thank him for the extra time. It is a privilege to speak in the Budget debate. I watched many Budget debates before I became a Member of Parliament, and it is a privilege to speak in the same debate as the right hon. and learned Member for Rushcliffe (Mr. Clarke), the former Chancellor. I may not agree with everything that he said but he spoke with great authority and expertise. The Budget comes at the same stage of the political cycle—when the Government are nine years into office and the Opposition are, I hope, destined to lose another two general elections—as the 1988 Budget delivered by Lord Lawson. I believe that this year’s Budget avoids the macro-economic mistakes of Lord Lawson’s 1988 Budget, and we can draw an interesting contrast between them. The 1988 Budget was based on three underlying assumptions: tax cuts were the best route to economic success; poverty, which was not even mentioned, could be solved by economic growth—the rising tide would lift all boats—and neglect of the public realm was an inevitable price that would have to be paid for private affluence. In place of those assumptions, the 2006 Budget proposes three alternatives. First, public investment is not a drain on the good economy but a pre-condition of it. Secondly, Government have a specific responsibility to use the proceeds of growth to tackle poverty and not simply let the distribution of wealth and income fall where it may. Thirdly, public splendour, not public squalor should be the counterpart of private affluence in the fourth richest country in the world.