The 2004 pre-Budget report set out the Treasury's latest projections for net borrowing. Updated estimates will be published in next week's Budget.
As ever, I am grateful to the Minister for a factual reply.
The Government have some ambitious expenditure plans. Some are very desirable, but many of the most responsible economic forecasters, including the Institute for Fiscal Studies and the International Monetary Fund, believe that the Government may have to breach their golden rule. Can the Minister tell us whether the Government will consider reducing expenditure, increasing taxation or increasing borrowing? Manufacturing industry awaits Government decisions with great interest.
Like the hon. Gentleman's party, those organisations have been wrong before and they are wrong again. The hon. Gentleman was a distinguished Chairman of the Health Committee, which constantly urged investment in the health service during the period of the Conservative Government. He well knows that this Government have embarked on a programme that involves moderate borrowing, but it is justified by the need to bridge the years of under-investment in public services that occurred under the Conservative Government, which he drew attention to himself. The reality is that our borrowing is sustainable because at the outset of the Labour Government we took the hard, tough decisions which the Conservative Government singularly failed to take throughout their 18 years of misrule.
In his earlier answer to my hon. Friend Sir Peter Tapsell, the Chancellor painted a rather rosy picture of what the IMF said about the British economy and its borrowing. In fact, the report said that many directors viewed the British authorities' projections to be "somewhat more optimistic" than warranted. Does not the build-up to a £10 billion black hole mean that the Chancellor is going to leave a pretty poor legacy to his successor, whether it be my right hon. Friend the shadow Chancellor or, perish the thought, the Chancellor's own special pal, the Chancellor of the Duchy of Lancaster?
Nothing could be further from the truth. Each and every one of the hon. Gentleman's assertions was wrong. I would draw his attention to what the IMF really said. For example, it said:
"Economic performance in the United Kingdom remains impressive . . . This success owes much to strong institutions underpinned by clear and well-designed policy frameworks . . . Fiscal policy is bound by well-constructed rules to which the authorities have reaffirmed their commitment".
None of those things could ever have been said about a Conservative Government. That is why, in the fullness of time, the British people will return a Labour Government and reject the option on offer from Conservative Members.
Does my right hon. Friend agree that there is nothing wrong with borrowing? The golden rule is about what one does with the money that has been borrowed. The Government have invested in education, health and the new deal, so they have spent that money wisely in comparison with previous Governments who borrowed to the hilt and spent the money on things that produced no jobs, no employment and no investment.
My hon. Friend is absolutely right. Ten years ago, the deficit stood at the equivalent in today's money of some £90 billion. Today it is £35 billion and we are meeting our fiscal rules. In the last full year of the Conservative Administration, they were spending more on servicing debt than they were on schools. That is the difference between them and us, and my hon. Friend is quite right to draw the House's attention to it.
Will my right hon. Friend give the House an assurance that, when it comes to the push, we will not use borrowing to avoid taking the tough decisions that are needed to keep our economy stable, which has happened in the past?
We have never avoided taking tough decisions. We have always stood by our fiscal rules and we will continue to stick by them. That is what has given our economy the sound macro-economic base that has seen 50 consecutive periods of growth.
The Chief Secretary will have noticed with his legendary eye for detail that Government forecasts for borrowing are £34 billion this year—three times what the Chancellor himself predicted at the beginning of this Parliament. The reason for it is the black hole in Government finances. Will the Chief Secretary give the House an assurance that capital gains tax on people's homes will not be one of the taxes that Labour increases, if it wins the election?
The hon. Gentleman knows that decisions on taxation are announced in the Budget. He also knows, as does the House, that the country believes this Government in a way that it never believed the previous Conservative Government. People know that we will do what is right by the economy and that we will keep our promises on tax. The Conservatives never did that, and as a result they presided over successive periods of boom and bust. There will be no return to boom and bust.
People remember that the Government promised there would be no tax increases under them, but in fact there have been 66 tax rises. Will the Chief Secretary take this second opportunity to reassure home owners that capital gains tax will not be levied on their homes, and that no one in the Treasury is looking at that?
What people know is that the Tories consistently failed to keep their promises on tax. They know that it was the Tories who raised value added tax on fuel, and gave this country double-digit inflation and interest rates and 3 million unemployed. There will be no return to the days when the Tories ruined the economy. If people compare and contrast their record on tax and growth with ours, this Government win hands down, every time.
There has indeed been a remarkable transformation since
We consistently operate according to what my hon. Friend calls normal international standards. Our borrowing is sustainable, and we borrow to invest. We are meeting our fiscal rules and will continue to do so over this cycle and beyond. That forecast is based on the cautious, audited and internationally recognised assumptions that have caused this country to have a record on growth and stability that is the envy of the G7.