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AMENDMENT OF THE LAW

I have no idea what the final remark of the hon. Member for Brent, North (Barry Gardiner) meant. I promise to speak for less time than he did, or at least it will appear to be less. This was a sub-prime Budget from a Chancellor who had no room to manoeuvre. Like his predecessor, he managed to boast about growth in the UK economy—the usual boasts—but he did not seem to understand that OECD average growth outshone the UK for at least half of the 10 years up to 2007. He failed to mention, just as his predecessor normally did, that the small dynamic economies—Ireland in particular—have had larger growth every single year since Labour came to power. He ignored, as his predecessor did—I thought that his predecessor had written his speech—the quarterly downturns in the Scottish economy, and the many low and flat growth quarters on this Government’s watch. As a result of the historical policies outlined today, economic growth in Scotland has been lower than the UK average every year since 2001. Scotland has had, on average, a growth rate 30 per cent. lower than the UK’s for the past 25 years. The growth gap is not just measured in lost GDP opportunity, but in jobs, particularly manufacturing jobs. Since 1997, 1 million manufacturing jobs have been lost in the UK, with 100,000 in Scotland, 34,000 of which have been lost since 2002. As an example, 1,100 manufacturing jobs were lost in Dundee in the past year alone. Were the Government to do what is necessary to make Scotland more competitive, we could increase Scotland’s GDP by an extra £19 billion over the next 10 years, and match the recent growth rate of the 15 small EU states. I said that the consequence of the Government’s handling of the economy was not simply measured in lost GDP opportunity but in the loss of manufacturing jobs. The loss of those jobs is partly the cause of, and partly the result of, an £87 billion deficit in trade and goods, which the right hon. Member for Edinburgh, East (Dr. Strang) mentioned earlier. That deficit was £77 billion in 2006. There was a total balance of trade deficit of £70 billion, which was £55.2 billion in 2006. Those are extraordinary figures, but those deficits have a further impact: a direct, quantifiable suppression of GDP growth. The impact on GDP growth was valued at £4 billion, and there has been an impact on such growth every year since. UK GDP has grown by £30 billion less than it would have had trade been in balance—about £1,000 per household. We saw in the Red Book today that receipts are down £1.2 billion from the pre-Budget report, but there was an increased tax yield from the North sea, which was based on an average price of $83.60 a barrel of oil—an increase on the $68 a barrel estimate in the pre-Budget report. The average for the last quarter was $94 a barrel, and in four of the last five working days, we have seen record closing prices for North sea oil. I am pleased to see that the Red Book is forecasting £56 billion in revenues for the next six years, as opposed to the £38 billion in the last six-year forecast. I hope that the Government will not try to deny that this year. Nowhere in the Budget are there plans to invest the windfall in a trust or fund for future generations, such as that in Norway. Its oil fund—its national pension fund—is worth approximately 2,000 billion kroner. It is forecast to increase to about 2,800 billion kroner in a couple of years—that is equivalent to £250 billion, which is around 20 per cent. of UK GDP. Investing in such a fund is such a sensible idea that the Minister for Energy said,"““the idea as in Norway of building up a national fund is actually quite…attractive””." It is a pity that the proposal is not in the Budget. Even using some of the windfall from the high oil revenues to moderate the high price of fuel at the pump would help. Instead, we have fuel duty proposals that can be summarised as a deferral of the 2p rate just now, an increase of 1.84p a litre next year, followed by a ½p per litre increase above the index from 2010. That will ratchet up the percentage of the price at the pump in duty and VAT, of which the Government already receive more than 60 per cent. I hope that I can revert to that with amendments in Committee or on the Floor of the House as the Finance Bill progresses through the Commons. The key element lacking in the Budget is any incentive for growth. It contains next to nothing to give comfort to business. The economy is so tight, with the Government’s borrowing rules destroyed if the off-balance-sheet PFI liabilities are included, let alone the way in which the Northern Rock unsecured liabilities might be calculated and reported, that the Government, far from taking the necessary steps to stimulate economic activity, competitiveness and growth, are scrabbling around for every penny from the taxpayer and from business to plug the holes in the books. The Red Book illustrates my point. Last year’s pre-Budget report included an estimated net debt of £37.6 billion. Next year, the figure will be £43 billion. The pre-Budget report anticipated a cumulative deficit of £541 billion, and next year we face a deficit of £581 billion. Last June, the total of outstanding PFI liability was £179 billion on £53 billion-worth of capital projects; that figure has now reached £189 billion. Approximately two thirds of that is off balance sheet. Such debts are extraordinary. The Scottish National party Government in Scotland have removed or reduced business rates for 150,000 small companies. The UK Government should have followed suit for larger businesses and cut corporation tax significantly, allowing Scottish business to keep more of the £6 billion in corporation tax that the top 250 companies alone paid in the past financial year. The Government should, at the very least, have listened to the Scottish Chambers of Commerce and scrapped plans to raise the small companies rate, but of course they did not. Instead, they have taken their lead from the policy decisions of the previous Budget and the pre-Budget report, which the CBI estimates will take £5 billion out of business and straight into the black hole that is the UK economy. I have not added up all the numbers yet, but it looks as though the Budget will take more than £2 billion more from business in the next three years. That is cash. Given that borrowing is tight because of the credit crunch about which we have all heard, that cash could have delivered shareholder value or encouraged new investment. It might have allowed businesses to invest, acquire, recruit and grow. Businesses could have used the cash to market, upskill or retool, to absorb the swingeing increases in energy, transport and raw material costs or, indeed, to pay better wages. The workers are rightly saying, ““Look at real inflation—we need a bit of help here.”” Instead, the Chancellor has done another smash-and-grab raid, taking £2 billion extra from business and around £200 million from Scotland. I hope that the Financial Secretary will explain one specific point when she replies to the debate—perhaps she can intervene now and tell me. The table on page 111 of the Red Book includes a heading, ““North sea oil and gas: abuse of management expenses rules.”” That is forecast to take £500 million in yield in the next three years. I would have thought that, if there was an abuse in one sector to the tune of £500 million over three years, the Chancellor might have mentioned it in the Budget statement. One would have thought that something of that magnitude was worthy of note. Or is it simply another way of getting cash out of the North sea after a previous promise not to touch the fiscal regime relating to it? Likewise, the Chancellor could have made a difference with proper investment in research and development, which is historically low, at about 1.8 per cent. in the UK and less than 1 per cent. in Scotland, compared with about 2.5 per cent. for our competitors. Those measures could have made a difference. Instead, the Government seem to be stuck on spin and obfuscation, building on what was said in last year’s Budget, by estimating ““intangible investment,”” rather than counting what was actually spent. I refer hon. Members who are interested to paragraph B.71 on page 163, where they will find that that is exactly the approach that the Government are taking. They are no longer counting the investment spent; rather, they are estimating what it might have been, based on other parameters. The Budget speech was littered with references to social policy. Many of the social policies we agree with. Binge drinking and the violence that follows it were not referred to, but actions were taken in relation to the duty on alcohol that one might imagine would be designed to tackle the problem. It therefore seems quite extraordinary that the Government are putting 55p on a bottle of whisky, but only 3p on a litre of strong cider. Where was the attack on alcopops, which are designed to appeal to an immature palate? Where was the proper and fair taxation of cider, which is massively undertaxed, even up to 7.5 per cent.?