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Pre-Budget Report and Comprehensive Spending Review

I do not know why the Prime Minister even bothered to turn up. He should have called that election, and let us give the Budget. Instead, we had a pre-election Budget without the election. We all know that the report was brought forward, so that it could be the starting gun for the campaign, before the Prime Minister took the pistol and fired it into his foot. Let us deal straight away with the announcements on aviation, and on non-domiciles and inheritance tax. For 10 years, the Prime Minister has been sucking millions of families into the inheritance tax net. For 10 years, he has been pulling first-time buyers into stamp duty. For 10 years, he could have reformed air passenger duty. For 10 years, he did nothing on non-doms. Now, a week after we introduced our plans, the Prime Minister and the Chancellor scrabble around in a panic trying to think of something to say. The Prime Minister talks about setting out his vision of the country, but he has to wait for us to tell him what it is. That is not leadership of this country—it is followership, Prime Minister. It is not strong, Prime Minister, it is weak. He has learned nothing from recent events. The public will see today's measures as a desperate, cynical stunt from a desperate and weak Prime Minister, and the public can tell the difference between a Labour party that sees this all as a cynical, calculating game, and a Conservative party that believes in lower taxes and in aspirations. The Chancellor attacked my non-domicile policy, but then announced that he would consult on it. Will he confirm that? From this day on, let there be no doubt about who is winning the battle of ideas in Britain. If the Prime Minister wants to debate our policies, and if he wants to challenge the independent experts who support our costings, he should have the courage to call a general election, but he will not. This Prime Minister's name may appear on the cover of books about courage, but it is never likely to appear in the index. These cynical stunts should not distract us from the fact that today was the day when the economic chickens came home to roost. Britain needs a Government who prepare us for the new economic revolution by freeing our economy, reforming public services and putting us on the path to lower taxes. Instead, we got a speech that boils down to this: growth is down, borrowing is up, the spending rate is down, and overall taxes are likely to go up. What a mess after 10 years in office. The real charge against the Prime Minister is not just that he got his growth forecasts for the next year wrong, although he did. The real charge against the Prime Minister is, first, that he should have prepared the public finances for a slowdown in the economy, and he did not; and secondly, he should have prepared the public services for a slowdown in spending, but he did not do that, either. The pre-Budget report is the opposite of what a sensible, prudent Government should do. Let us look at the public finances. After 15 years of global growth, we should be running a surplus in this country. Instead, we are entering what the Chancellor himself admits are difficult times, with Government borrowing out of control. The Prime Minister told us in last year's Budget that 2007 was the year when the finances would move into the black. Then, in this year's Budget he told us that he was wrong, but that at least borrowing would fall. Today the Chancellor admitted that borrowing is going up again. Total borrowing this year is now expected to be £4 billion higher than forecast. We all waited for the moment when, as the former Chancellor used to do, he would rattle off the borrowing figures for the years afterwards, but he entirely missed them out—talk about burying bad news! Indeed, the annual deficit, which he did mention, will be £4 billion higher in the current year. The real tragedy is that the Government should not have borrowed in a boom; they should have saved. Now there is nothing left to prepare Britain for the rainy days that may lie ahead. Why did not the Chancellor tell us that the savings ratio has fallen? Page 146 of the report shows that the savings ratio this year has fallen from 5½ per cent. to 3½ per cent. That is the lowest savings ratio on record. He did not tell us that the estimates for the growth of disposable income for millions of families have also fallen sharply from 2½ per cent. to 1½ per cent. this year. Why did he hide those figures? He should be blaming his predecessor, not copying him. The Chancellor has not prepared us for the economic slowdown or the spending slowdown. The growth rate of spending has been cut in half. The Chancellor has been forced to share the proceeds of growth. This is another example of us setting the agenda. Why cannot the Chancellor be honest with people about what that means, instead of trying to spin the figures? Let us take the education budget. When the more gullible Labour Members cheered, perhaps they did not realise that the Chancellor is cutting the spending growth rate of education in half. The real tragedy is that the Government failed to use the boom years to reform education and prepare it for this slowdown. The building schools for the future programme, which the former Chancellor used to boast about, is now in such a mess that just 14 of the 100 schools that were supposed to open this year will do so. The £1 billion spent on tackling truancy has led to a 45 per cent. rise in it. The question people are asking is simple: where has all the money gone? [Interruption.] ... I might try that again: where has all the money gone in health? Why does not the Chancellor be honest with the public about what this health settlement means? The growth of health spending is set almost to halve in the next three years, so a health service that is already seeing maternity wards closing, accident and emergency wings shutting and staggered pay awards for nurses will now have to make do with a much slower rate of spending growth. It would have been able to cope better if the recent spending boom had been matched by reform. I know that the Prime Minister has found himself a new health guru, Lord Darzi. Remember him? He is the one whose report sunk without trace last week. The Prime Minister should listen to the previous health guru, Derek Wanless, who says that the hoped-for productivity gains have not been achieved and that a lot of money has been wasted. When Wanless compared our health care with other similar countries, he found that Britain was still lagging on crucial outcomes such as life expectancy, infant mortality, cancer survival and health inequality. The Health Secretary puts it in a more technical way:"““We've put a lot of money in, but that hasn't led to a lot of happy bunnies””." Even with today's spending slowdown, this report confirms that the tax burden is now set to reach a record high—at a time when all our global competitors are trying to reduce their taxes. By the way, why did the Chancellor not tell us that this is a tax-raising pre-Budget report? We heard all the talk about inheritance tax and so on, but I see that in 2010-11 there will be a £1.4 billion rise in taxes as a result of the measures that he announced from the Dispatch Box just a few minutes ago. This pre-Budget report should have prepared our country for the new economic revolution, but instead we got over-spun claims, desperate stunts and fake figures from a Government who have given us fake photos, fake troop withdrawals and fake hospital openings, all led by a Prime Minister who is increasingly seen as a fake. The Chancellor should spare us the Brownite nonsense and save it for the election campaign. Instead, he should give us straight answers to these straight questions. First, will he confirm that the Prime Minister got the growth and borrowing forecasts wrong? Secondly, will he confirm that the growth rate of health and education spending will be cut by almost half? Thirdly, will he confirm what he did not say when he gave his original report: that this report raises taxes overall? Out of curiosity, will he also confirm that he had no plans to reform inheritance tax in this PBR until we made our announcement and he looked at his polls? We know that the Prime Minister cannot give straight answers to straight questions, so let us see whether the Chancellor can do any better—let us see whether he can begin to restore trust in this weak and cynical Government.