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Budget Resolutions and Economic Situation

Thank you, Mr. Deputy Speaker. The Budget also addressed the challenge of climate change and the increasing pressure on natural resources. I wish to highlight the international aspects of the Budget statement. There will be a new international environmental transformation fund, with a first allocation to tackle deforestation in the Congo rainforest, and we intend to host an international conference this year on global carbon trading, at which we will want to build on London’s pre-eminence in that area. Taken together, the Budget will deliver 6 million tonnes of carbon savings while strengthening UK leadership in the very important international decisions on climate change. The Budget will equip the UK for future challenges with new investment. The hon. Member for Chipping Barnet (Mrs. Villiers) was unwilling to commit her party to match our public spending projections set out in the Red Book. [Interruption.] Yes, we have; the total envelope of projections was set out in the Red Book. The hon. Lady has declined to match that, and I will return to that point. The Opposition have said that the Budget is all smoke and mirrors; that point was made in tonight’s debate. I am pleased to be able to say that the public have seen through that false claim. What the Budget does is clear, so it is no surprise that a poll in The Independent tomorrow morning shows a precipitate decline in the Tory party’s lead. Of course, the context for the Budget—the reason why it was possible—is the remarkable transformation that there has been in the UK economy over the past decade. Before 1997, we had the least stable economy in the G7 on the inflation measure. Since then, we have been the most stable on every single measure. UK gross domestic product per capita used to be the lowest in the G7; now it is the second highest. This year, growth is forecast to be higher in the UK than in any other G7 country, and employment in Britain is now above 29 million for the first time ever. It is not necessary just to take my word for all of that. Let us look at what the International Monetary Fund said in its report last month on the UK economy. It referred to a"““decade-long record of strong and steady macroeconomic performance””," and it pointed out that"““growth of real GDP per capita was higher and less volatile than in any other G7 country””." Such comments were never made when the Conservative party was in charge. Locking that stability in, avoiding any risks to it and sticking to our fiscal rules are immovable constraints around which the Budget has been constructed. I am pleased that we have had the opportunity to address sharing the proceeds of growth—although I thought that more Conservative Members would talk about that. The first thing that we need to say about their proposed third fiscal rule is that the renewal of public services that we have witnessed over the past decade would have been completely impossible had it been in place. To insist that, whatever the circumstances, public spending must always and irrevocably fall as a share of GDP is utter folly. That was the policy of the Tory party in 1992. Its manifesto said:"““We believe that government should not gobble up all the proceeds of growth…our policy is therefore to reduce the share of national income taken by the public sector.””" It is the same policy now as then—I do not know whether the shadow Chancellor wrote it—and one would think that the Tories would have learned from the failure of their policy in the early 1990s. It put public services on their knees, and it would do the same again if it were tried once more. The leader of the Conservatives has indicated that he envisages the proceeds of growth being split 50:50. That would mean reducing spending in 2010-11 by £31 billion, below the projection in the Red Book. Perhaps the hon. Member for Chipping Barnet will tell us later whether that is what she envisages.