Pre-Budget Report

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 12:30 pm on 6th December 2006.

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Photo of George Osborne George Osborne Shadow Chancellor of the Exchequer 12:30 pm, 6th December 2006

Will the Chancellor also confirm what is buried on page 198 of the report just published—that he has downgraded his growth forecast for 2008? He did not mention that.

The Chancellor talked about sound public finances, but he downgraded his borrowing forecast again. Will he confirm that that means that Britain is set to have the largest structural deficit of any major European economy next year—as he himself might once have put it, larger than Germany, larger than France, larger than Spain and larger even than Italy? Will he confirm that he has just revised upwards his net debt figures for this year? By 2010, they will be £4 billion higher. He did not mention that in his statement, but will he confirm that when he replies?

How on earth could the Chancellor have given a report on the state of the economy without mentioning that Britain has just recorded the largest rise in unemployment in the developed world? He is so obsessed about securing his next job that he has forgotten about the 300,000 people who have lost their jobs.

How could the Chancellor possibly have the nerve to speak for 40 minutes without addressing the crisis in the NHS? He had no new answers today. He promised a change of gear, but as usual all we got was more of the same. His speech was full of rhetoric about the long term, but he did not address the central, long-term economic question that we face: why, according to every international measure and league table, is Britain becoming less competitive?

Does the right hon. Gentleman remember saying when he first became Chancellor that the first challenge was to increase our productivity? It remains the first challenge today. Productivity was 2.6 per cent. when he entered the Treasury, and is just 1.5 per cent. ashe leaves. Measured against what he calls his "fundamental yardstick", has he not fundamentally failed?

What is the Chancellor's answer? Like every central planner in history, he hides behind a relentless production of reports. There have been 70 in total, and never have so many poor trees died in vain. However, a glimpse of the truth can sometimes slip past the Treasury censors. Sir Rod Eddington jetted in from Australia to tell us what we already knew—that the UK transport network is stretched beyond capacity. The Leitch report says that the Chancellor's skills policies have led to "complexity, duplication and bureaucracy", and that it is no wonder that the UK has

"a large and significant basic skills problem".

Today, the Chancellor promised action for 16-year-olds, yet one 16-year-old in six cannot read, write or add up properly. They are the very children who have been educated almost entirely under a Labour Government, and they have already been failed by the Chancellor.

The Chancellor's second challenge today was to sort out the public finances. We all know that he is a man in a hurry, but he read out his borrowing figures so quickly that people might have missed them, so I shall read them out again. Over the next six years, theright hon. Gentleman says that borrowing will be£37 billion, £31 billion, £27 billion, £26 billion,£24 billion and £22 billion. That is higher in every year than he forecast in the Budget last spring. By the way, the current Budget deficit has increased this year. Not only that, he said in the spring that we would be in surplus next year, yet today he confirmed that we will again be in deficit.

All that borrowing comes despite the biggest tax increase in our peacetime history. Let us be absolutely clear that that means that each family will pay £9,000 extra tax each year. In a world where our competitors are simplifying and reducing business taxes, the UK is almost alone in increasing ours. Where is the long-term sense in that? Where is the sense in landing us with the most complicated tax code in the developed world?

The Chancellor often responds by citing last year's inward investment figures. That is a typical example of the systematic distortion of statistics that we have come to expect from him, as more than half of our annual inward investment—£50 billion—comes from one company, Shell, which features in the figures only because it moved its headquarters from Britain to Holland. Does not that say everything that we need to know about this Chancellor's spin?

The third great challenge that we face is climate change. People say that the Chancellor has become green only recently, but that is most unfair. He has been green ever since that meal at Granita. The Prime Minister remembers that and, although he does not live in Islington any more, it says something about the state of the Labour party that the restaurant is now called Desperados.

This week, Friends of the Earth said that the Chancellor's record on climate change had been "woefully inadequate". Will he confirm that carbon emissions are higher than when he took office and that the share of taxes collected by green taxes has fallen? Today's increase in air passenger duty should have replaced other taxes and not added to them. It proves that the right hon. Gentleman is more interested in raising taxes than in cutting pollution.

The fourth challenge is to spend public money wisely. The Chancellor once pledged to rise to that challenge. Does he remember saying when he was shadow Chancellor that he wanted to be remembered as a wise spender, not a big spender? His political obituary will say many things, but not that: he has spent £4,000 billion, and now he pledges more spending on education—[Hon. Members: "Hear, hear."] The lemmings on the Labour Benches do not know that that was the third time that he has reannounced his extra capital spending on schools. When he first made the promise in the Budget, the Institute of Fiscal Studies dismissed it as a "highly misleading presentational device"—economist speak for "spin". Will the Chancellor confirm, after all the rhetoric, that the rate of capital spending growth is set to fall?

The Chancellor's greatest mistake is that he has spent without reform. The Organisation for Economic Co-operation and Development has said that, despite the extra money, NHS mortality rates are declining no faster than before. By the way, the extra £1 million for medical research was first announced last year. The Select Committee on Education and Skills says that school standards are not improving as fast as they were. People up and down the country who are struggling to find a decent school place or campaigning to keep their local hospital open or sitting in traffic on congested roads are entitled to ask: where has all the money gone?

The Chancellor is trying to persuade the public that he is the change that they are crying out for. He lets it be known with nods and winks that he will end the spin and eye-catching initiatives of the Blair years, but let there be no mistake: they were his years too; the Blair-Brown years were the years of the clunking fist. The hospital cuts are the Chancellor's cuts, the failing schools are his failures, and the pensions that were destroyed were destroyed by him. The truth is that Labour can be new only once. If the public want change, they will have to vote for it.

Let us see whether the Chancellor can really break with his past and be different from the Prime Minister. I have four straight questions, to which I hope he will give four straight answers. First, will the Chancellor confirm what the European Commission has said—that this year Britain has grown more slowly than 21 of the 25 EU member states? Secondly, will he acknowledge that in the past year our country has recorded the largest rise in unemployment in the developed world? Thirdly, does he accept that Britain is set to have the largest structural deficit of any major European economy? Fourthly, will he admit that, in an age of prosperity, real living standards in Britain are now falling?

Those are four simple questions, so let us see whether the Chancellor can give us four straight answers. Let us see whether the clunking fist can change.