Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 7:03 pm on 28 November 1996.

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Photo of Bernard Jenkin Bernard Jenkin , Colchester North 7:03, 28 November 1996

It is a basic tax rate that is now 23p—which is 10p lower than when the Labour party was last in office. I am most grateful to the hon. Gentleman for drawing attention to my promise to my electors, which we have been able to keep.

As I said, the key concern in the Budget was the level of public borrowing. There is no doubt that there is disappointment that borrowing has remained so stubbornly high. It is instructive, referring to paragraph 1.06 of the Red Book, to make a comparison between the projected borrowing figures in this year's and last year's Budgets. This year's outturn was meant to be 3 per cent. of GDP, and it is 3.5 per cent.; next year's was meant to be 2 per cent., and it is 2.5 per cent. We do not achieve balance until 2001.

Against that background, my right hon. and learned Friend the Chancellor of the Exchequer had a most difficult Budget judgment to deliver, and I congratulate him on what he has achieved. The higher borrowing is due to sluggish tax rates. Therefore, I utterly applaud his initiatives to do his best to collect taxes that people are due to pay. The spend-and-save initiative aims to improve the Government's efficiency, not only in reducing social security fraud—which is possibly the main thrust of this debate—but in improving the efficiency of Customs and Excise and the Inland Revenue, to ensure that businesses and individuals pay the taxes that they are due to pay.

The Budget was also delivered against the background of an extremely successful economy. We have only to look at the key outputs. We are in our fifth successive year of growth. The graphs show that industrial investment is rising above its trend levels. There is also good news about jobs. It is ridiculous for the Opposition to pretend that the economy is somehow on its uppers and that 17 years of Conservative Government have been wasted when unemployment in the United Kingdom has fallen by more than 1 million in the past few years, while our European competitors who have not dealt with their structural and other difficulties are still experiencing sharp rises in unemployment. The fact is that unemployment in the United Kingdom is 7.5 per cent. when it is more than 11 per cent. in France and more than 25 per cent. in Spain.

If the Government deliver one pledge to the electorate it is that people should have the best possible opportunity to get a job. When I intervened in the speech of the hon. Member for Peckham and asked her to produce evidence that a minimum wage would not destroy jobs, she was completely unable to do so. The right hon. Member for Kingston upon Hull, East (Mr. Prescott) has also admitted that the introduction of a national minimum wage would destroy jobs. How would that help the most vulnerable people in society? How can people make the transition from welfare dependency into work if we create an even higher barrier for them to surmount?