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Finance Bill

I think that timing comes into play. Such action cannot be taken overnight. If the present Government are re-elected, they will have an opportunity to reconsider the 50p rate in their next Finance Bill, at a time when the impact on the perception of entrepreneurs may well be clearer because it will be known whether people have left the country in droves. Timing is all-important in this context. Let me say something about the forecasts on which the Bill is based, and the impact on the public finances to which it refers. The Chancellor claimed to the Treasury Committee that his forecasts were realistic; I think that that was the word that he used. Much of this debate has already been given over to discussion of how realistic these forecasts were, and I have to say that I find that claim truly astonishing given the Treasury's track record in forecasting both GDP and public borrowing. I had the pleasure of serving on the Treasury Committee alongside the hon. Member for Edmonton (Mr. Love). He chose to defend as gallantly as he could the Government's forecasting record, and tried to make a reasonable job of discussing arithmetical averages, but let me describe my recollections of studying the Treasury's performance. In each of the four Budgets and pre-Budget reports that I reviewed as part of that Committee's work, the then Chancellor had to appear before the Committee to try to defend his forecasts and explain why they were not so unreasonable in the circumstances compared with the forecasts he had made on his previous visit to the Committee. On each occasion, that was a very hollow claim. It was clear that the Treasury models were not giving rise to accurate forecasts for either GDP growth or, more particularly, public borrowing. That has been exposed not merely within months, weeks or days, but even within hours, of the Chancellor sitting down following his Budget speech. The Chancellor said that in the current year GDP growth would be negative 3.5 per cent., but barely an hour later the International Monetary Fund estimated it would be negative 4.1 per cent. A week later, the European Union estimated that it would be negative 3.8 per cent., and this week we have had reports from the National Institute of Economic and Social Research that its estimate is negative 4.3 per cent. Two days after the Chancellor sat down, the first estimate of first-quarter GDP growth came out from the Office for National Statistics. The underlying assumption in the Chancellor's forecasts had been that the figure for the first quarter was negative 1.5 per cent., but the ONS estimate was negative 1.9 per cent. That is a 27 per cent. difference. It is barely credible that the Treasury did not have some sight of the underlying information available to the ONS in preparing its forecasts, and that suggests either a lack of understanding about the data in the economy at the time or an astonishing lack of competence. I hope for the sake of any incoming Government that the Treasury is not so incompetent that it can make such a significant error within such a short period and have such a lack of understanding.