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AMENDMENT OF THE LAW

I concede that I am somewhat greedy and that I want more growth, but growth is growth and that record is much better than that of many, if not all, of the Chancellor’s predecessors. Things are difficult for the Opposition. The most recent Organisation for Economic Co-operation and Development economic survey described the United Kingdom as a"““paragon of stability””." It expects us in 2007 to be the second-fastest growing G7 economy, the fastest being Canada with a growth rate of 2.7 per cent. as against 2.6 per cent. for the UK. I know a little about Canada’s economy and, as there is massive development at the tar sands at Fort McMurray and external investment is pouring in, it does not surprise me that Canada has a higher growth rate than us. Also, its proportional population growth is higher each year than ours. However, it is still only slightly ahead of us in terms of the growth forecast not of our Government but of the OECD. We need to consider the robustness of the economic figures that we are given. The National Audit Office ““Audit of Assumptions for Budget 2007”” was ordered to be printed today. In that, the NAO looked at some—but not all—of the Budget assumptions. The report is only about 30 pages long, and I would not expect it to look at every Budget assumption, but it has looked at four of them. Its conclusions underline the robustness of the Treasury’s model, assumptions and forecasts. Paragraph 80 of the 2007 report states of the Budget 2004 direct tax and national insurance contributions compliance and enforcement package that there would be"““an estimated yield greater than the revised forecast, and it was therefore cautious on this basis.””" I want the Treasury to be cautious—not too cautious, obviously, because that can mislead people and it does not wish to do that—and it was suitably cautious on direct tax and national insurance contributions, albeit in the Budget 2004 as the NAO can look into such matters only in hindsight. The 2007 report also studied what it calls the VAT gap assumption. I confess that I do not know exactly what that is, but I might have done if I had had time to read the whole report. Paragraph 82 states:"““The use of the VAT gap assumption over the Rolling Review period from 2003 resulted in forecasts which were cautious in three of the four years and over the Rolling Review period as a whole, underforecasting of overall VAT receipts.””" Therefore, it is not the case that the Treasury was wildly optimistic in terms of the figures forecast in previous Budgets. The NAO looked at them ex post facto to see whether they were or not, and they were not. Tobacco revenues are even more difficult for the Treasury to forecast than VAT because of matters such as tobacco smuggling. The NAO report states at paragraph 89:"““The assumed rate of 3 per cent. per year decline in underlying duty paid consumption is consistent with the recent available data””." However, the Comptroller and Auditor General states at paragraph 90:"““I recommend that the Treasury and HMRC closely monitor trends in the monthly data””." Factor income shares are addressed at paragraph 91:"““The assumption of broadly constant factor shares was a reasonable one over the three year Rolling Review period””." Debt interest is addressed at paragraph 92:"““I am satisfied that the calculations of debt interest payments were consistent with forecasts for central government’s net financing requirement and with current financing policy at the time of each forecast made since Budget 2004, and are for Budget 2007.””" The NAO looked at only a few aspects of Treasury forecasting, but income tax, national insurance and VAT are big aspects. It found that Treasury forecasting is pretty robust—those are my words. That gives me, as a Labour Member, confidence that the forecasts of the Treasury and the Chancellor today are likely to come true; the evidence of the past supports that. That gives me some hope about where our economy and society are heading.