Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 9:14 pm on 14th April 2003.

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Photo of Michael Howard Michael Howard Shadow Chancellor of the Exchequer 9:14 pm, 14th April 2003

Let me start by drawing attention to my declaration in the Register of Members' Interests.

I congratulate the Chancellor on the personal good news that he announced 10 days ago. I also congratulate those who have spoken today in what I thought was a particularly interesting debate, featuring many distinguished contributions. I especially enjoyed the speech of Denzil Davies. I always say that, because the right hon. Gentleman represents my home town, but this was, I think, one of the few occasions on which the House genuinely regretted the falling of the guillotine, which prevented us from hearing the end of his interesting dissertation.

While I am in the business of offering congratulations, let me also congratulate the Chancellor on the timing of the Budget. It was a masterpiece of foresight. As the Chancellor delivered his speech, the television screens of the nation were dominated by attempts to topple the statue of Saddam Hussein in Baghdad. The Prime Minister was right to tell the Chancellor, "You don't need to announce the results of the euro tests to divert attention from the Budget". Events in Baghdad were doing that for him, and what a relief that must have been, for this was the Budget that he did not really want anyone to notice.

This was a bad news Budget. This was a Budget that required the Chancellor to come to the House yet again and admit that he had got all his figures wrong. This was his Micawber Budget, based on the premise that something would turn up. Economists at HSBC talk of the Chancellor's "wishful thinking". At Citigroup they say:

"The Chancellor... has chosen to cross his fingers and hope this problem vanishes".

The business editor of The Independent says that the Chancellor is

"entering the realms of fantasy".

The Economist says:

"The Chancellor's most worrying deficit is his growing credibility gap."

For once, even the BBC got it right. On BBC2, the Chancellor's Budget broadcast was sandwiched between "The Weakest Link" and "The Simpsons", and on Radio 4, it was slotted in somewhere between "Getting Nowhere Fast" and "Prayer for the Day". Indeed, "Prayer for the Day" would be a suitable title for the Chancellor's Red Book.

The truth is that although the Chancellor was brilliantly successful in timing his Budget, his ability to get his economic forecasts right has vanished into the fantasy world that he now occupies. For the second time in barely four months, he was obliged to come to the House and tell us that he had got it all wrong. At the end of November he was forced to admit that his forecasts on growth were wrong, his forecasts on revenue were wrong, his forecasts on borrowing were wrong and his forecasts on his deficit were wrong. Last Wednesday he was back at the Dispatch Box to admit that his forecasts on growth—delivered barely four months ago—were wrong again, that his forecasts on revenue were wrong again, that his forecasts on borrowing were wrong again, and that his forecasts on his deficit were wrong again.

Of course he produced his usual litany of excuses. He blamed the Germans, he blamed the eurozone, he blamed the world. He told the Cabinet that the world economy had faced the most rapid slowdown for 30 years. That is simply not true. On the very day the Chancellor delivered his Budget, the European Commission told us that the world economy had grown by 2.9 per cent. last year and was forecast to grow by 3.2 per cent. this year. In the early 1990s the world went through three years of growth averaging just 1 per cent. Does the Chancellor not realise how degrading it is to his office and to himself to violate the facts in this way?

The Chancellor told the House that we were doing better than other countries. That will be news to the United States, Canada, Australia, New Zealand, Spain, Sweden and Ireland, all of which grew more quickly than we did last year and most of which are expected to grow more quickly than we will this year. Does the Chancellor not realise how degrading it is to his office and to himself to make such misleading claims? And does he not realise that the lie is given to all his excuses by the fact that independent forecasters—those whose forecasts he publishes in his own documents—were telling him all the time that he was getting it wrong, that he was being too optimistic, and that he was likely to have to eat humble pie?