Orders of the Day — Finance (No. 2) Bill

Part of the debate – in the House of Commons at 4:50 pm on 14 July 1988.

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Photo of Mr John Major Mr John Major , Huntingdon 4:50, 14 July 1988

The hon. Gentleman is talking about investment income, which provides jobs and the economic growth that funds so many of the social services, which the hon. Gentleman claims to care about. I propose to deal with that point directly later and we shall then examine the reality of the tax changes.

It is important to understand the distinction that I mentioned a moment ago. The measures on the Finance Bill—contrary to what the Opposition have said—do not add to demand. Although tax rates have been cut, the tax burden itself has not—as Opposition Members occasionally point out to us during Treasury Question Time. The measures were enough to prevent the tax burden rising, but no more. The Budget and the Bill improve incentives and hence improve supply side performance.

In the long run, that means more growth, more jobs and more prosperity. In their obsession with the short run, the Opposition never seem to think of the medium and long term, yet all of us should have our minds fixed firmly on the medium and long-term outcome. The Opposition have no answer to the fact that our supply side measures are working. That is why they have conjured up false dragons to slay. Ludicrously, they appoint themselves the guardians of fiscal rectitude—unlikely casting to the mind of anyone who remembers the Labour party in government—and they tell us that the Budget is irresponsible.

It is hard to take lectures on fiscal rectitude from a party which. 13 months ago, fought an election with plans to spend an extra £35 billion in its back pocket—a party that planned not a public sector debt repayment of £3 billion but a massively inflated borrowing requirement. [Laughter.] Opposition Members may giggle like schoolgirls on an outing, but they have no proper economic policy, no tax policy and no understanding of what is going on. Until they change all that, they will remain what they are now—an Opposition with no policy and no hope.