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Budget Resolutions and Economic Situation

This has been an evening of memorable valedictory speeches, so I do not think we should let this moment pass without paying tribute to two Members—the hon. Member for South Staffordshire (Sir Patrick Cormack) and the right hon. Member for Maidstone and The Weald (Miss Widdecombe)—who are leaving. However often and however much I have disagreed with them, I have always regarded them both as great parliamentarians who have spoken with sincerity and integrity and, as illustrated here again tonight, with a sense of values and principles in which they passionately believe. I believe that they have set an example to all of us. I also agree with what they both said about the need for a new Parliament after the election that is very different from this quarrelsome and vituperative one that we have had—one that can earn the respect of the electorate because we represent the democratic centrality of Parliament. I think that both those Members will be greatly missed. I will be brief—I will probably not use my 15 minutes—and I want to concentrate on the general structure and strategy of the Budget. I begin by congratulating my right hon. Friend the Chancellor on, once again, showing how adept he is at playing a difficult hand well. He has navigated a sensitive balance between preventing a double-dip recession, not endangering the recovery, keeping the financial markets on side and at least beginning to reverse some of the more grotesque inequalities that, in my view, so badly mar the face of Britain today. Having said that, I remain concerned about the proposed strategy for reducing the deficit, particularly the relative weight allotted to higher taxes, public spending cuts and higher economic growth in achieving that objective. The Treasury has proposed tax increases of £19 billion and public spending cuts of £38 billion. If the deficit of £167 billion is to be halved within four years—reducing it to £83 billion—that must mean economic growth yielding something in the order of £26 billion. I think that the first of those objectives on tax is readily achievable. At last it is being accepted that the burden of tax should rest much more on the shoulders of those who have made disproportionately huge gains in the last decade or two, not least on the shoulders of those responsible for the slump in the first place. The 50 per cent. top tax rate, the bonus tax on bankers, the loss of personal allowances, the freezing of inheritance thresholds and the mansion stamp duty tax will not have any effect on roughly 95 per cent. of the population. In fact, they will very largely be directed at the super-rich 1 per cent. Frankly, I think it absurd for the Tory press to scream as they have over this last week that this is an attack on hard-working middle and high earners. Who do they think middle Britain actually is? The medium income in Britain today is £22,000, while one third of the population subsists on less than £15,000 a year—a fact that we in this Chamber ought never to forget. The term "middle Britain" roughly applies to those earning between £15,000 and £30,000 a year, whereas the Budget increases will affect hardly anyone earning less than £70,000 a year. This is not spite; it is, at last, the beginnings of a switch back to some semblance of fairness. For that, I praise my right hon. Friend the Chancellor.