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AMENDMENT OF THE LAW

The hon. Gentleman might say that, but I think that my colleagues were being critical of the fact that the Chancellor mentioned Wales on only one occasion in the Budget statement. I think that he mentioned Scotland twice. That is about average for the past 10 Budgets. The Chancellor said last year that inflation had been virtually halved to 2 per cent., and that long-term interest rates were at their lowest for 40 years at just 4 per cent. Over the past few months, the consumer prices index reached 3 per cent. in December and 2.7 per cent. in January, and the retail prices index hit 4.4 per cent., moving down to 4.2 per cent. In January, however, The Scotsman, quoting the Capital Economics consultancy, identified that pensioner inflation was actually running at 9 per cent., and that real inflation for households on a modest income was hitting 4.6 per cent. We know that today the RPI has hit 4.6 per cent. and that the CPI has hit 2.8 per cent. I am troubled that, when the Chancellor is looking at pension increases and forecasts, he is basing those rises on inflation rates of 2.8 per cent.—or 4.6 per cent. if we are lucky—when real inflation, especially for pensioners, is certainly hitting 9 per cent. No Budget would be complete without the repetition of the assertion that there have now been 59 quarters of unbroken economic growth, and no Budget would be complete without me saying, ““Except in Scotland.”” In Scotland, under this Chancellor, there have been four quarters of falling growth, a full-blown manufacturing recession and only six quarters in which growth outstripped that of the UK. To look at that another way, since the second quarter of 1999 and the start of 2006, manufacturing GVA—gross value added—in Scotland has fallen by 12 per cent. against a modest rise in the UK. The Chancellor also said, as usual, that the UK was doing very well economically. I think that he said that its economy was growing faster than those of the EU and the G7. However, information published today says that the economies of the UK, the G7 and the eurozone all grew by 2.75 per cent. in 2006; so, at best, the UK is marking time; it is not powering ahead as the Chancellor would have us believe. The Chancellor also talked a lot about his various golden rules and fiscal rules, and in particular about keeping debt below 40 per cent. of GDP over the economic cycle. The problem is that the debt is being hidden. In particular, the Government’s private finance initiative debt is off balance sheet. We know that there are 48 major private finance initiative and public-private partnership projects, with a capital value of £2.7 billion, in Scotland. The Edinburgh royal infirmary project had a capital cost of £184 million, but a repayment of £1.26 billion over its lifetime. We also know about the spectacular failure, in terms of value for money, that led to the Inverness airport terminal—with a capital cost of £9.6 million—being bought out with taxpayers’ money to the tune of £36 million. The problem with PPP/PFI is that the cost of borrowing—at rates of between 2.5 and 4 per cent. above public borrowing rates—costs the Scottish taxpayer about £110 million a year extra, which is enough to fund about £2 billion worth of new public investment. The UK position is even worse. The 2006 pre-Budget report showed total outstanding PFI payments, over 30 years or so, of £158 billion, which is up 11 per cent. from the £142 billion reported nine months earlier in the 2006 Budget. The cumulative effect today is that payments of £169 billion are to be made up to 2032. These are huge, frightening numbers. The Chancellor repeated his claims of improving research and development in business, and I welcome the extra £100 million for R and D tax credits. I have raised this issue on a number of occasions and I am glad that that extra money is being put in. It is worth noting, however, that the rates of spend on R and D as a proportion of GDP still pale into insignificance compared with those in our major competitor countries. The Chancellor also made great play of those who are in work, but it is worth reminding ourselves that, in Scotland, we have lost 90,000 manufacturing jobs since Labour came to power. The figure is about 1 million in the UK.