I have some sympathy with the aims of the right hon. Member for Coatbridge and Chryston (Mr. Clarke), but I spoke at some length last year on the mathematics of the working families tax credit, so I shall not follow him down that route and bore the House twice on the same subject. He intimated that the Government had got good headlines out of the Budget, and he was right. However, it is true that Budgets that are praised in March are often pilloried by May, and I suspect that that might be the current Budget's fate.
It is hard to see the wood for the trees—or, perhaps, to take a line from my right hon. Friend the Member for South Norfolk (Mr. MacGregor), the mirrors for the smoke—following the Chancellor's performance yesterday. Perhaps the wisest course is for me to talk a little about the Government's long-term financing and the effects on the real economy.
As the Economic Secretary is on the Treasury Bench, I want to make a public accounting point. The Finance Act arranges that the National Audit Office audits those parts of the Budget that the Chancellor directs. Some assumptions were audited in the past, and others this year. A valid assumption last year is not necessarily valid this year, and the fact that something has been audited in the past does not make it right today. It is rather like having a public company in which the auditors are allowed to audit only those subsidiaries that the finance director picks in any given year.
Will Treasury Ministers consider amending the Finance Act so that the audit of the Budget is under the control of the Comptroller and Auditor General rather than the Chancellor? That might lead to better public finances and more confidence all round.
I have some concerns about the Government's overall financial strategy. Over the decades since the war, every Government have faced—not unreasonably—welfare, health and education expenditure that has grown faster than the economy. That has been funded by taxation going up as a percentage of gross domestic product, but the process has hit a limit. The world's most successful economies have public expenditure of about a third of their overall economy. Ours is about 40 per cent. When the figure gets to 50 per cent., even countries as powerful as industrial giants such as Germany stagger and fail. There is a serious limitation.
Another method of funding is by transfers in spending. For Britain and other countries since the war that has largely occurred by transfers from defence—expenditure on which has halved as a percentage of GDP over the past 30 years from 6 per cent. to about 3 per cent.—primarily to welfare, but also to education and health. We have already reached a minimum for defence spending.
Too many Governments, including even the Government in which I was a Minister, took too much of a peace dividend at the end of the Soviet Union's hegemony. The present Government have gone even further—unwisely, in my view. The proper dividend of peace is peace, not money for other expenditure. That source of funding, then, is also running out.
A further option for funding is privatisation. The previous Government led on that, and Labour opposed it virulently, although it has now been persuaded to support it. Privatisation was a useful source of funds when nationalised industries accounted for 11 per cent. of GDP, but now they account for only 2 per cent., so that source of funding is limited.
What are the Government's solutions? We have heard a great deal about their stealth taxes, and even the Prime Minister admitted last week that the burden of taxation is going up. I will not comment on that, as others will have plenty to say about it. The national asset register is a Government innovation of which I rather approve. It identifies assets that are less than useful to the state and sells them off. In effect, it is the garage sale of the century of public assets. That is nearer to the sale of the family silver and the Canaletto to which Harold Macmillan referred than privatisation ever was. The plan is to raise almost £4 billion a year in that way in the next few years, so it is a significant component of the Government's funding. I think that it is a good idea. However, it will be much harder to deliver on than the Government believe. Indeed, last week a Liberal question identified that only about half a per cent. of the asset base was sold in the past year, so it will be difficult.
I am concerned that the Budget has coupled the policy of stealth taxation with a new policy of covert debt—a potentially dangerous cocktail which could burden our economy.