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Budget Resolutions and Economic Situation

I was pondering that point not only while I was crafting my remarks but while I was listening to the opening speeches this afternoon. One would certainly have expected that, and one would also have expected the Chancellor to admit to the House yesterday that, in growth terms, Britain comes in at 22nd out of the EU’s 27 members. Instead, he referred only to the G7. We need strong savings, and the Chancellor is especially culpable in that regard. In opposition, he told pensioners:"““I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved: the end of the means test for our elderly people.””" So what happened to means testing? When we left office, 37 per cent. of pensioners were means tested; now, the proportion is 45 per cent., and climbing. What happened to saving? Since 1997, the personal savings ratio, as set out on page 255 of the Red Book, has fallen by half. No wonder the right hon. Member for Birkenhead (Mr. Field) has said:"““When Labour came to office we had one of the strongest pension provisions in Europe and now probably we have some of the weakest.””" Above all, as so many Conservative Members have said, we need value for money in our public services. We do not dispute that we have had the spending: an extra £175 billion since 1997. Money has been poured into the health and education budgets, but where has it all gone? Staggeringly, and according to the Treasury’s public finances databank, out of every £10 that the Chancellor has spent, only £1 has gone on investment. Let us take the NHS. The Chancellor scarcely mentioned it yesterday, and he certainly did not announce his comprehensive spending plans for it, so I shall do so today. As my hon. Friend the Member for Billericay said, only a quarter of the Chancellor’s NHS spending has gone on improving front-line services. Productivity in the NHS has fallen during each year since 1997."““Given the record levels of public investment, our public services should now be reaching world-class levels—we shouldn’t be seeing only incremental changes.””" Those are not my words: they are the words of another of the Chancellor’s close friends, the right hon. Member for North Tyneside (Mr. Byers). So after 11 Budgets, the Chancellor has given us competitiveness that is not better, but worse; productivity growth that is not higher, but lower; a tax burden that is not lower, but higher; borrowing forecasts that are discredited, and a golden rule that is now completely derided. Above all, his mania for means-testing has delivered lower savings, with over £100 billion missing from pension funds since his raid on them during his Budget of 1997, 10 long years ago. The Chancellor would have hoped, 10 years on, to present this Budget ahead in the polls. Instead, he is behind in the polls. So what does he do? Well, with his borrowing forecasts missed, his spending out of control, his tax burden rising and his popularity falling, he has been forced to take a last, desperate gamble. The Chancellor hopes that, if he says that he will cut one income tax after raising over 100 others, he will fool the voters into thinking that he has somehow been transformed from Stalin into Milton Friedman—that he has somehow turned into a tax-cutter. However, as we all know only too well, what this Chancellor gives away with one hand—I will not say one ““clunking fist””, as that is the Prime Minister’s language—he grabs back with the other. There will be a cut in the standard rate—if it happens—next year, but there will also be a stealth tax on lower earners as the Chancellor scraps the 10p band and leads them deeper and deeper into the tax credit maze. There will be the raising of the top tax threshold, but also a hit on professionals, such as doctors, as a result of the rise in the national insurance ceiling. The Chancellor got the media headlines on Budget day, but a hangover the day after as it emerged, as my hon. Friend the Member for Tatton noted earlier, that 3.5 million families will lose out. He hopes that people will notice the tax cut but not the tax rise. We feel that that approach is—to borrow another term from 10 Downing street—““psychologically flawed””. For the truth is that the British people have seen through this Budget already. It was not a tax cut Budget, but a tax con Budget. Perhaps we should not complain. After all, in his final Budget, the Macavity of Downing street is paying us the ultimate compliment. He has no option. If he is to rein in his spending and borrowing, he has no choice but to tread the path that we have already marked out for him. We told him to remove the VAT restriction on academies. Only a few weeks afterwards, in the Budget he was forced to follow our lead—Conservative policy.