Amendment of the Law

– in the House of Commons at 4:06 pm on 30th March 2010.

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Debate resumed (Order, 24 March).

Question again proposed,


(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide-

(a) for zero-rating or exempting a supply, acquisition or importation,

(b) for refunding an amount of tax,

(c) for any relief, other than a relief that-

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families 4:16 pm, 30th March 2010

It is a great honour to be invited to open this final day of the Budget debate and to set out the steps we are taking in my Department to support families and public services. I was disappointed to discover, just five minutes ago, that the shadow Education Secretary will not be replying to this debate after all, but may I say how pleased I am that the reply will instead be made by Mr. Clarke, the shadow Business Secretary, who is someone of long experience? As a former Chancellor, Health Secretary and Education Secretary, he will know all about the dilemmas of making the sums add up and protecting front-line services-or not. I can think of nobody better to guide me, the House and the shadow Education Secretary on some of the choices before our country.

Photo of John Mann John Mann Labour, Bassetlaw

Before my right hon. Friend moves on, I am sure that he will wish to recognise that the right hon. and learned Member for Rushcliffe is also wonderfully positioned to demonstrate what the Tory party in government is like at the moment, because his and my local county council has been cutting care homes and cutting services to the elderly in just the past few weeks. Indeed, I have with me a petition with the names of 1,500 people who are protesting about its actions.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

My hon. Friend is right about that. However, to give the right hon. and learned Gentleman some credit, I should say that he was responsible for cutting VAT as Chancellor of the Exchequer. His predecessor tried to raise VAT on fuel and that was defeated in this place by votes from those on this side of the House, so he then had the opportunity to reverse that shift in VAT. That marks him out in contrast with pretty much every other Conservative Chancellor, as they tended to raise VAT. I shall not dwell on that comparison for the moment.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

It is very nice to see the right hon. Gentleman in the House, and I shall give way to him once I have made a little progress.

The Chancellor's Budget sets out the choices we are making to secure Britain's future. The first one is to secure the recovery and promote growth and jobs while halving the deficit steadily over the next four years. The second is to match pay and spending restraint in lower priority areas with fair tax increases-the new top rate of tax, the bankers' bonus tax and the national insurance rise. Everyone will make a contribution, but 60 per cent. of the extra taxes will come from the richest 5 per cent. of the population. The third is that alongside detailed proposals for savings of £11 billion in every Government Department, including my own, action will be taken to protect front-line services, such as the police, schools and hospitals, which families need and which play such a vital role in our country.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I shall give way in a moment, but I wish to make this point. The Chancellor considered proposals to cut the deficit faster and with deeper and immediate cuts, but concluded that such action would throw people out of work, threaten the recovery and lead to more debt, not less. He also rejected deeply unfair plans to cut child tax credits from middle income families and to cut child trust funds too while promising an inheritance tax cut that would benefit millionaires to the tune of hundreds of thousands of pounds. He concluded that to refuse to go ahead with the national insurance rise from next April and instead put all the burden of deficit reduction on cutting spending would require deep and savage cuts across all our public services, including our children's centres, colleges and schools. To take the road of drastic and immediate cuts in front-line services and family benefits would be reckless and unfair, and that is not this Government's choice.

I want to set out the detail of how my Department will be affected by Budget and pre-Budget report decisions, but I shall first give way to Mr. Cash. If Mr. Salmond has had time to learn about what is in the Budget, he will probably have thought of his intervention as well.

Photo of Bill Cash Bill Cash Conservative, Stone

About two weeks ago, I asked a question about the record of the Labour county council in Staffordshire on education-specifically on the extent of A grades and on general conduct since then as compared with what is going on in the rest of the country. Unfortunately, the relevant Minister replied that he was not able to give me that information. Will the Secretary of State be good enough to accelerate the provision of that information and ensure that I get it before Dissolution?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I am happy to do just that. I will make sure that the hon. Gentleman gets the information he requests. I also point out to him that the schools in his county are currently in the Building Schools for the Future programme but have not yet reached financial close. I am sure that he will be informing his constituents in his election leaflets about the very real risks to the building of schools in his constituency if they vote for him in the forthcoming general election.

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

May I go back to Mr. Clarke? If I remember correctly, he had the misfortune of being the Health Secretary and then the Education Secretary under Margaret Thatcher. The Chancellor of the Exchequer has accepted that the cuts envisaged by this Government will be deeper and tougher than Margaret Thatcher's, so how, given that the Education Secretary is now stranded in his Department, is the Education Secretary going to reconcile that position any better than the right hon. and learned Gentleman did?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

The right hon. Gentleman is a student of economics and will have studied that period in great detail. I have looked at the record of that period and it is true that capital spending under the Thatcher Government was very low and stayed very low indeed throughout the entire period of her government. That is why schools were leaking, hospitals were not built and train tracks were not working. It is also true-this might have been because of the persuasion of the right hon. and learned Member for Rushcliffe; I shall come back to Michael Gove in a moment-that the education and health budgets rose during that period. However, Margaret Thatcher broke the link between pensions and earnings, froze child benefit and raised VAT from 8 to 15 per cent. within weeks of coming into office. It was all that, plus the high interest rates, that led to high and mass unemployment and devastation for millions of families. I must say that the policies of cutting benefits for families, cutting support for pensioners and, potentially, raising VAT for families to make up for a budget hole all sound rather familiar.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I hasten to interrupt the series of references to me and the rather inaccurate wanderings down memory lane. Could we get to where we are now? Has the Secretary of State come here to agree with the Chancellor of the Exchequer that the Government, if re-elected, would make cuts in public spending deeper and tougher than those made by Margaret Thatcher's Government? Does he accept that statement? If so, will he go on to explain how that will affect his Department and others?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I am very happy to set out the details of exactly what I am going to be doing in my budget. That is what my speech will be about. The interesting thing about the early years of the Thatcher Government is not that they cut education spending; indeed, education spending rose. What they did do, however, was raise VAT from 8 to 15 per cent. to make up a budget hole, have interest rates in double figures for many years, break the link between pensions and earnings, and freeze child benefit. There was a doubling of child poverty in those 18 years. What if we have a Conservative Government again? Rising VAT, cuts to family benefits, rising poverty, and pensioners getting a raw deal-that is exactly the prospectus on offer from the Conservative party.

Photo of John Hayes John Hayes Shadow Minister (Education)

Will the Secretary of State confirm a very straightforward fact--that the growth of gross domestic product was at its greatest in the first three years of this Government? At that time, it was constrained by a fiscal regime inherited from my right hon. and learned Friend Mr. Clarke, but it has waivered since then.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I think that the hon. Gentleman will find that we had a decade of stability, with low interest rates and low inflation, because of the great leadership and prescience of an independent Bank of England. That was opposed by Mr. Clarke, who said that Bank of England independence was a mistake and should not have been introduced. I expect that he has recanted now, but he can set the record straight when he speaks. He can probably tell us his views on VAT, the winter fuel allowance and free bus travel as well, although I think that he was contradicted fairly quickly by the Leader of the Opposition when he gave his views on those matters a week or so ago.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I very much welcome my right hon. Friend's commitment to protect the schools budget. In the course of his speech, will he explain how the extra £6 billion in cuts advocated by the Opposition would impact on it?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I will turn to that very subject now. I hope that I can give some comfort-

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

No, I will not. I hope that I can give some comfort to my hon. Friend Ms Keeble about our plans, after which I shall set out the opposing choice. After that, I shall be very happy to give way, but I want to make some progress first.

The pre-Budget report and the Budget set out how, consistent with reducing the deficit steadily, we can maintain and in fact increase spending in our priority areas. For my Department, the Budget confirmed a real-terms rise in funding of 0.72 per cent. a year in 2011-2012 and 2012-13 for Sure Start, 16-to-19 education and schools, which account for around 75 per cent. of my overall budget.

Teachers' pensions make up a further 17 per cent., of my budget, but I am not proposing to touch them at all. That leaves 8 per cent. of my budget unprotected, money that covers programmes such as short breaks for disabled children, sport, music and looked-after children, as well as funding for our non-departmental Government bodies.

I have committed to finding £500 million of savings from that 8 per cent. unprotected portion of my budget. That is a 7 per cent. cut on £5 billion worth of savings in 2012-13, and-unlike the shadow Chancellor, let alone the shadow Education Secretary-I have also identified where those savings will be made.

So far, I have set out £300 million of savings in my Department. The £135 million that will come from non-departmental Government bodies will include £45 million from cutting funding to Becta, and £55 million from the Training and Development Agency for Schools. Also, £100 million will come from ending start-up funding for extended services, while £50 million can be saved by scaling back bursaries for initial teacher training, given that we now have a flow of new teachers coming through. A further £21 million will be saved in communications and back-office functions.

That all adds up to £300 million in savings, but I still have to find a further £200 million. That will be hard, but I am determined to do so without cutting into front-line spending programmes such as the support for music and sports, and for looked-after and disabled children.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

The right hon. Gentleman said a moment ago that teachers' pensions were part of his budget. Will he confirm that teachers' pension contributions are funded not from his budget but directly from the Treasury?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

A total of 13 per cent. of my budget covers pensions. The document that the Government published a few days ago showed our overall spending, and it includes a footnote making it clear that pension contributions are part of our departmental expenditure limit. I included pensions in the description of my budget because the shadow Education Secretary always includes them when he explains how easy it would be to find cuts. He always refers to our £60 billion-plus budget, so- [ Interruption. ] But if they are not in my budget, I have to say to the shadow Business Secretary that they are not available for the shadow Education Secretary to cut. That is the point. If only the shadow Education Secretary were here, he could set the record straight. Unfortunately, however, he is not here.

Photo of Simon Burns Simon Burns Opposition Whip (Commons)

Will the right hon. Gentleman give way?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I said that I would take an intervention, and I will do so in a moment.

I shall explain what I have protected. The settlement in the protected 75 per cent. of my budget is for Sure Start funding to rise in line with inflation, which will mean that we will meet our commitment to having 3,500 children's centres, or one in every community. For 16-to-19 learning, there will be a 0.9 per cent. real-terms rise, year on year, in 2011-12 and 2012-13, which means that we can pay for our guarantee-for every school leaver, a school, college or apprenticeship place for the next three years.

Finally, for schools, there is a real-terms overall rise in funding of 0.7 per cent., which, combined with efficiency savings, will mean that schools can meet their front-line cost pressures. After paying for 80,000 projected extra pupils, per pupil funding on our plans will rise, on average, in cash terms, by 2.1 per cent. in 2011-12 and 2012-13, on top of 4.3 per cent. in the coming financial years.

That is a tougher settlement than we have been used to, but the per pupil rise in cash terms-2.1 per cent.-is a real-terms rise in budget. It is more than our projected cost pressures, as we set out in the document. It means that we can deliver our guarantees of one-to-one tuition to every child who falls behind. It means that we can keep additional teachers and support staff in the classroom. It means that we can continue to invest in Building Schools for the Future. These are guarantees to the public from this Government, in legislation and based on rising budgets for Sure Start, school leavers and schools-guarantees not matched by the Conservative party, for reasons I shall explain.

Several hon. Members:

rose -

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I give way to the right hon. and learned Member for Rushcliffe.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I am grateful to the right hon. Gentleman. May I refer him to page 90 of the Red Book and paragraph 6.16? Referring to the Secretary of State's Department, the last sentence of that paragraph says:

"Taken together, this amounts to a total of £1.1 billion of education frontline efficiencies to be delivered by 2012".

With great respect, he has just given the most muddled and confused description of where any of that money is coming from, and he has wound up announcing a cash increase that is less than inflation, so it is a real-terms cut. As he has conceded that education spending rose under the Thatcher Government because of our choice of priorities, does he agree that this is indeed tougher and deeper than anything the Thatcher Government ever did?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

No. It is not fair to the shadow Business Secretary: why should he be here answering on the details of education policy when he does not know the facts? The £1.1 billion of efficiency savings are efficiency savings within the overall schools budget, which are being recycled from the back office in schools to the front line in schools. They are not reductions in school budgets; they are recycled efficiencies within the overall budget. The only reductions in budget that I have agreed to are the- [Interruption.] I will finish the point. I do not think that the right hon. and learned Gentleman should intervene from a sedentary position. He is much more experienced in the rules of the House than I am, and he knows that he has to intervene if he has something to say.

I have a half a billion pound cut, and I have told the House how I am finding £300 million of that. The £1 billion of efficiency savings are going back to the schools, not being taken away from them. Schools are seeing their funding rising per pupil in cash terms by 2.1 per cent. a year. And when we add in 80,000 extra places, we have made it clear in the document "School Funding 2010-13"-the right hon. and learned Gentleman will not have read it; why should he?-that projected cost pressures are 1.6 per cent. in schools over that period. That is a real-terms rise; it is not a real-terms cut. It is a real-terms rise compared to inflation as well. We are raising spending, and I shall come in a moment to what the choice is after taking an intervention from Mr. Burns.

Photo of Simon Burns Simon Burns Opposition Whip (Commons)

I am extremely grateful to the right hon. Gentleman for giving way. Despite all the waffle and the meanderings we are getting, will he now, so that we can put his speech in its proper context, answer the original question put to him by my right hon. and learned Friend Mr. Clarke about the Chancellor's comments on cuts and the Thatcher Government?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I did answer it, but I will say it again. When we came to government in 1997, the schools capital building programme was about £700 million, and today it is £7.8 billion. That is how we have managed to rebuild and refurbish 4,000 secondary schools. Over that 18 years, schools capital was decimated. Schools' current spending, as I said, rose in the early part of the Thatcher Government. There were cuts in '85 and cuts in '89. I have to say that the biggest spending cuts did not occur under the Thatcher Government; they occurred under the Major-Clarke Government between 1992 and 1997. What happened with the Thatcher Government was not spending cuts. Let us not forget that they had North sea oil revenues, which they were squandering. VAT was up to 15 per cent., the link with pensions was broken, child benefit was frozen and child poverty doubled. If my constituents are wondering whether they want to go back to a Conservative Government, when they look at that record they will say no, no, no.

Photo of Brian Binley Brian Binley Conservative, Northampton South

The Secretary of State is moving at an amazing speed and sometimes it is a little difficult to keep up with his flow of words. He intimated that he favoured the increase in the higher rate of income tax. He thought it was a good idea-at least, that is the impression I got. Will he therefore recommend to the Chancellor that he should keep that as a permanent increase?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

That is a matter for the Chancellor of the Exchequer, not for me. I am not going to start telling the Chancellor what his tax policy should be. I will not say, "Cut national insurance," when there are not the cuts to pay for it, and when I know in my heart that we will end up raising VAT to pay for it, which is what the shadow Chancellor proposes. I am not going to start telling the Chancellor what to do in future on tax policy. But when the country is faced with a pre-Budget report from the Chancellor of the Exchequer, my right hon. Friend Mr. Darling, or from the Chancellor of the Exchequer, Mr. Osborne, I know which Chancellor the British people will choose.

Photo of Barry Sheerman Barry Sheerman Chair, Children, Schools and Families Committee, Chair, Children, Schools and Families Committee

Does my right hon. Friend agree that many of the Conservative Members who usually come to the Chamber when education is being discussed do not seem to be here today, including the Front-Bench education spokesman? It is no wonder that the shadow Business Secretary seems unable to keep up with the momentum of my right hon. Friend's speech. Is it not a fact that there is good news on the education budget, excellent news on children's centres and Sure Start, and excellent news on the protection of looked-after children? Will he just clarify one point? Are there sufficient resources for raising the age of participation to 17 and then 18?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

My hon. Friend has a strong track record of contributing to education debates. I have to say it is rather good to have a different crowd in. I will try not to speak too quickly. I will try to talk a little slower for the benefit of Mr. Binley.

In 1997, we had leaking roofs, photocopied text books, demoralised teachers, two thirds of children not making the grade, and more than half our schools not at our basic performance benchmark. Now, we have 4,000 schools rebuilt, funding per pupil doubled, 42,000 more teachers, 120,000 more teaching assistants, half of pupils making the grade, not a third, and not half of schools not making the grade, but fewer than one in 12. That is a Labour record of investment and reform that we are truly proud of.

The commitments that we are making to rising funding in the years ahead mean that, yes, we can pay for our one-to-one guarantee; yes, we will continue with Building Schools for the Future; and, yes, we will continue with Sure Start children's centres in every community. We will not be cutting Sure Start children's centres as the Conservative party proposes, because, as my hon. Friend's Select Committee report said, what a retrograde step that would be for children and the future of our country. That is not something that people will see from a Labour Government.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

The Conservative party will not abolish Sure Start, and I wish that the right hon. Gentleman would take this opportunity to correct that for the record. Will he give the House an assurance today that pupils in North Yorkshire, and particularly in the Vale of York, receive as much per capita funding as those in his own constituency?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

The hon. Lady is a contributor to our education debates, so she will have studied in detail the consultation on the future of the dedicated schools grant. We are looking to ensure that we reflect rurality, deprivation, need and per pupil funding. I hope to make some progress. My constituency is in one of the F40 areas as well, so I understand the issues that she raises. I want to come on to the funding of education now on the basis of a different approach.

I must say to the hon. Lady that, as I understand it, the Opposition do not propose to abolish Sure Start, but if the shadow Chief Secretary to the Treasury would like to stand up today and say that the Conservative party will match my commitment to rising budgets in cash terms and in line with inflation for Sure Start this year, next year and the year after, he is very welcome to do so. However, he is not going to, because unfortunately Sure Start is not in the protected areas-health and international development-that the shadow Chancellor set out.

The Leader of the Opposition says that he wants Sure Start to be only for the poorest communities, and two years ago the Opposition said that they wanted a £200 million cut to the Sure Start budget. That sends a message to parents throughout the country, and it sends a chill down their spine. That is why we will continue to highlight it.

Let me move on.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I shall give way in a second.

I should like to set out in more detail our policy on Sure Start, on 16-to-19 funding and on schools, but before I do so I must say that there is a choice about different priorities and the different ways in which we fund things. This Budget has at its heart different choices, and to be fair to the Opposition they have been setting out their very different choices in recent days. If the shadow Education Secretary were here, I would not ask him to match me on schools spending or on pupil guarantees. I know that that is difficult for him, because he has different priorities. There are also problems that he has to face, and I understand his dilemma, which I shall explain to the shadow Business Secretary. He could answer and guide the shadow Education Secretary on how he should navigate those complexities.

First, the shadow Education Secretary has a free schools policy, which will be on all the leaflets of all Opposition Members, so it will be good for them to hear about the detail of it. The extra places in that policy will cost about £1.8 billion over the next Parliament-from within the schools budget or from my unprotected £5 billion. It will also lead to shifting about £4 billion from the Building Schools for the Future budget to pay for the new free schools.

Secondly, the shadow Education Secretary proposes to find about £2 billion to £3 billion, we think, for a new national pupil premium. Hon. Members-other than those who are experts on schools funding-may not know that, because they may not have followed the detail. As far as I have worked out, if the hon. Gentleman is to pay for the free schools policy and the national pupil premium, either he has to cut my unprotected budgets, which include those for sports, music, disabled children, short breaks-

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

My Department's budgets.

The shadow Education Secretary will have to cut either those budgets by about 50 per cent. or the schools budget. That was his dilemma before, and that is why up to now he has not been willing to match me on the school leaver's guarantee. He cannot make that guarantee. He has not matched me on Sure Start children's centres; he will not match me on the schools budget; and the Opposition voted against the one-to-one tuition guarantees in our recent Children, Schools and Families Bill.

Now, however, the hon. Gentleman faces an extra complexity, as the shadow Chief Secretary to the Treasury will know: unfortunately, the shadow Education Secretary has been asked to contribute to the £6 billion of extra savings, which were announced yesterday, to pay for the national insurance tax freeze. The Institute for Fiscal Studies, as I am sure the shadow Chief Secretary knows, calculates that that would involve a 2.8 per cent. cut for unprotected Departments. That would mean cutting a further £1.7 billion a year from the Sure Start, schools and children's budgets-were the Conservatives to be elected. As I said, it is no wonder the shadow Education Secretary cannot match our pledges.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

As the right hon. Gentleman has studied our announcement yesterday in such detail, has he calculated the saving to the schools budget from the reduction in employers' national insurance contributions that we announced?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I have just calculated that the hon. Member for Surrey Heath, the shadow Education Secretary, who is not here, will have to find £1.8 billion over a Parliament to pay for the free schools policy; £2 billion to £3 billion a year to pay for the national pupil premium; and £1.7 billion a year to make his contribution to the shadow Chief Secretary's spending cuts. So I am afraid that that massively outweighs not only the national insurance rebate for employers, but the whole £5 billion budget that, for me, is unprotected. There is no way the hon. Member for Surrey Heath can pay for those measures, other than by making deep cuts to the schools budgets: fewer teachers, fewer teaching assistants and larger class sizes.

The thing that baffles me is why education has been singled out in that way. Why has education not been given priority, alongside health and international development? Perhaps the shadow Business Secretary will give us some guidance, because it is very puzzling to those of us who follow education debates. Why is the hon. Member for Surrey Heath, a member of the Notting Hill set and the guy who does the role play for Prime Minister's questions, being unfairly treated in that way?

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

First, let me point out that when the Secretary of State started attributing what he thought our policies meant for the education budget, he attributed to the shadow Department things that have not been attributed to it at all out of yesterday's announcement. Secondly, he missed the point my hon. Friend Mr. Hammond made about the savings that would be made by the reduction in national insurance contributions-about 0.5 per cent. of the total pay bill. I cannot produce that figure off the cuff-my hon. Friend might be able to do so. The Secretary of State probably can, if he can sort it out from the other figures.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I cannot do the detail of the shadow Education Secretary's sums for him-nor can Carol Vorderman. However, the overall gap in his budget-£1.8 billion over the course of a Parliament, £1.7 billion to find the savings cuts to contribute to the £6 billion, and, we think, £2 billion to £3 billion to pay for the pupil premium-is more than the entire amount of money from the employers' national insurance rise. The idea that just the rebate to schools would pay for those cuts is unrealistic. There is no way to fund the cuts that education would have to contribute other than by cuts in the numbers of teachers and teaching assistants, bigger class sizes, and cuts to the Sure Start budget.

If the hon. Member for Surrey Heath were here, we could ask him to answer these questions, but he is not. If he were here, we could have said to him, "Will you guarantee to match us on Sure Start, on schools and on 16 to 19-year-olds?", but he cannot do that. It is not just that he cannot do it today-at every stage in the Budget debates- [ Interruption. ] I am happy to inform the junior shadow Minister, Mr. Hands-I do not know whether he is the shadow Economic Secretary or Financial Secretary; I apologise-about the Budget debates. Last year's Budget debate was opened by me, as well. I think that on that occasion the shadow Education Secretary did turn up, unlike today.

Photo of John Baron John Baron Opposition Whip (Commons)

The Secretary of State talks about help for poorer communities, but does he not accept that the freezing of personal allowances will hit the lowest paid the hardest?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

The freezing of personal allowances, which was announced in the pre-Budget report, is part of a package of tax rises to reduce the deficit, which also includes the bankers' bonus and the national insurance rise. As I said, everybody makes a contribution, but the more well-off people in our society make a bigger contribution. That has been set out very clearly. I do not hear Opposition Front Benchers saying that they are going to reverse the decision on personal allowances-perhaps they can clarify that in the debate-but they are trying to freeze the national insurance rise, which they would pay for by making cuts to children's centres, schools and apprenticeships while they spent £1.5 billion-plus on a cut in inheritance tax that would go only to millionaires. It is absolutely shocking.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I gave way to the hon. Gentleman once before, so I will carry on.

I have been trying to work out why the education spokesperson has had such a raw deal. It could have been because of the critical comments he has made in the past about the shadow Business Secretary, although given that so many people on the Conservative Front Bench have done that, it would be unfair to single out the shadow Education Secretary. It may be because of what he wrote a few years ago in his column in The Times:

"the Tories, fatally, foolishly, put all their eggs in the Belize basket. They secured the short-term comfort of Mr Ashcroft's tax-sheltered millions, but have paid the price in credibility forgone"- wise words from the shadow Education Secretary, one would have to say. He went on to say-and this is the problem:

"Mr Hague certainly has a well-developed sense of humour...You certainly do not emerge strengthened as an opponent of cronyism by expending what credibility you have acting as the paid lobbyist for your own title-hungry Treasurer."

That is what the hon. Member for Surrey Heath wrote a few years ago; perhaps that is why he has been singled out.

On the other hand, there may be some hope. Lord Ashcroft has already sponsored an academy in Wandsworth, so perhaps he is going to pay for the free-market schools policy as well, although we can just imagine the curriculum-not so much financial education as tax avoidance education, not school trips but extended overseas trips, not book clubs but beach clubs, not the Swedish model but the Belize model, excellence for the few paid for by cuts-

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I am quite sure that the Secretary of State is now going to concentrate on aspects of the Budget relating to public services.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

The reason why this is relevant to the Budget debate is that our Chancellor and our Prime Minister have set out a steady reduction in the deficit, not reckless cuts now that would put public services and jobs at risk. They have a balanced approach of fair tax rises combined with some spending restraint, and they included it in the Budget in a way that has protected schools, children's centres and 16-to-19 funding as well as the police and the NHS. To try to reverse the national insurance rise next year by cutting spending on schools and children's centres this year would be barmy economics. It would lead to fewer jobs, more unemployment and rising debt. It would be a perverse and misguided Budget strategy. That is why coming along and explaining the implications of the Budget for education, Sure Start and 16-to-19 apprenticeships and college places is well worth while.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

On a point of order, Madam Deputy Speaker. Perhaps there is no reason for the Secretary of State to know this, but I am an honorary graduate of Anglia Ruskin university, as is my noble Friend Lord Ashcroft, who also funds a business school at the university. On a point of information, the right hon. Gentleman ought to know that fact. [Interruption.]

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I am well capable of determining whether or not that is a point of order. The hon. Lady herself has indicated that it was really a point of information, so there is no need whatever for me to comment on it. Let the debate continue.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

Whether it was a point of order or a point of information, I am not sure that I really got the point. I am happy to take another intervention from the hon. Lady, and if she could explain her point in a little more detail, I will try to answer it.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

I am most grateful to the right hon. Gentleman. Is he aware that the business school at Anglia Ruskin university is funded by the noble Lord to whom he referred, whose reputation I believe he was trying to besmirch?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I was in no way trying to besmirch his reputation. I fear that it is the shadow Foreign Secretary's reputation that has been besmirched by the hon. Member for Surrey Heath rather than that of Lord Ashcroft. To be fair to Lord Ashcroft, he is sponsoring an academy, and he may well end up paying for the free schools policy as well. He is certainly paying for the Conservative party's election campaign-all credit to him.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Can we now get back to the debate on the Budget?

Photo of Barry Sheerman Barry Sheerman Chair, Children, Schools and Families Committee, Chair, Children, Schools and Families Committee

I spoke last Thursday at that very business school, the Ashcroft school of business at Anglia Ruskin university, and I can tell my right hon. Friend-

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I have already made a ruling, and there is no need for that debate to continue. The ruling was that we must get on with the debate before us, which is the fourth day of the Budget debate.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I will say only that we announced today that 15 more academies are now moving forward through their funding agreements. We now have more than 55 universities sponsoring academies, and if Lord Ashcroft would like to sponsor an academy through his university, I would be very grateful indeed to receive the resources. The fact that they would now come not from non-dom money but from proper tax-paid money would be very welcome.

Photo of Denis MacShane Denis MacShane Labour, Rotherham

My point is about a very modest element of public expenditure. I met three constituents last week, Mr. Kevin Lomas, Miss Sarah Johnson and Rachel Hughes, all of whom- [Interruption.] They all- [Interruption.] They all- [Interruption.]

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Is the hon. Gentleman making an intervention? Please continue.

Photo of Denis MacShane Denis MacShane Labour, Rotherham

I am trying to! They all have autistic children, which Opposition Members seem to find funny, and they cannot get a statement. Is there any way we can encourage more statements and more individual support for our autistic children? I hope that that is a reasonable intervention, Madam Deputy Speaker.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

My right hon. Friend is a well known campaigner on that matter. I must inform him that this morning, I did a video for TreeHouse, which has a special school in north London for children with autism, about its "talk about autism" campaign. Talking about autism is very important. If we were to start cutting the budgets beyond the £500 million that I have committed to, it would be support for children with special educational needs that was at risk, so I welcome my right hon. Friend's intervention.

Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

The Secretary of State has been talking about 16-to-19 funding, and he may or may not be aware that in my constituency, the local authority is seeking to merge the sixth forms of the six high schools in an effort to save money. Does he have a view on the dangers of ripping out sixth forms to save money, potentially at the cost of education in those rural communities?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I do not want to see anybody ripping out educational provision in a haphazard and random way; to do so, or to have a free market in schools policy whereby one rips schools from one community to give to another, is also very dangerous. The right thing to do is to ensure that we plan education provision for 14 to 19-year-olds properly across an area. I would be very happy to look at that matter in greater detail.

Let me conclude, because we have gone on for some time.

Photo of Annette Brooke Annette Brooke Shadow Spokesperson (Children, Schools and Families), Shadow Minister (Education)

On that very point-I need to declare an interest in that my daughter teaches at this school-the local Tory authority is proposing to take £8 million away from the primary capital programme for a school in a deprived area and to put it with the £1 million that the Government have generously given to provide 150 extra primary places elsewhere. Will the Secretary of State investigate that?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

Members of the House who are regulars at Children, Schools and Families questions will know that it is my habit to offer meetings with the Minister for Schools and Learners to discuss any difficult issues. He tells me that he was already planning such a meeting to discuss pupil place planning with the hon. Lady, and I will ensure that that is expedited to ensure that she and he do not miss their chance.

To conclude, to be fair to him, the shadow Chief Secretary told us this last Wednesday: "Unlike Labour, we have protected the whole of the NHS budget and the overseas aid budget." When I asked, "What about schools?" he said, "We have not ring-fenced the schools budget; we have ring-fenced the NHS budget and the overseas aid budget." The fact that the schools budget is not ring-fenced means that it is a prime target now, so if the Conservatives get their way, we might see cuts in teachers and teaching assistants, larger class sizes, and fewer children's centres and apprenticeships. We will not take that drastic road of cutting front-line spending and family benefits. That would be reckless and unfair, and it would lead to higher debt, more unemployment and-if history is a guide-another Tory hike in VAT.

We will cut the deficit steadily and put growth and jobs first; we will match public spending restraint with fair tax increases; and we will protect the police, the NHS, and Sure Start, college and schools budgets so that every child can succeed, and I commend this Budget to the House.

Photo of Patrick McLoughlin Patrick McLoughlin Shadow Chief Whip (Commons), Opposition Chief Whip (Commons)

On a point of order, Madam Deputy Speaker. This is the final day of the Budget debate, which is usually wound up by the Chief Secretary and the shadow Chief Secretary, but the former is not in the Chamber, and he has not been here for the whole of the opening speech. Is it likely that he will not catch your eye, Madam Deputy Speaker, come the winding-up speeches?

Photo of Denis MacShane Denis MacShane Labour, Rotherham

Is that a point of order?

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Mr. McLoughlin is correct. It is certainly usual to see in the Chamber-the occupant of the Chair would expect this-the people who are making the winding-up speeches on behalf of both the Government and the Opposition. Clearly, if those Members are not present, it is entirely their responsibility as far as the House is concerned, but it would be usual to see them in their places now.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State 4:59 pm, 30th March 2010

Thank you for your ruling on that point of order, Madam Deputy Speaker. The debate was opened by the Children, Schools and Families Secretary, who plainly came here thinking that this was a debate about education and schools policy; and it is supposed to be wound up by a Treasury Minister, who so far has not appeared. That is obviously not the main point of the debate, and I shall try to avoid it. However, I am one of the minority of senior Members who is not retiring at the coming election-if my constituents are prepared to consent-and in all my years in the House of Commons I do not remember a single debate on Government business in which the Minister who proposed to wind up failed to turn up. Perhaps the Chief Secretary intends to come after his dinner or his coffee break.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I will give way in a moment, because there may be an explanation and I am prepared to listen to it. As the Government have belatedly come to pretend, after 13 years, that they are a reforming Government and are taking an interest in constitutional reform-and as in my experience the present Prime Minister, like the previous one, regards the House of Commons as a somewhat inconvenient press conference that Ministers would rather not attend-can the Secretary of State tell us whether this is an instance of changing custom and that the Government intend that Ministers should attend only to make their speeches and should not have to listen to or participate in the debate to which they are replying?

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I do not know the answer, but we will get an answer as soon as possible. It is possible that the Chief Secretary is meeting Michael Gove.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

There may be a reasonable explanation, but I shall not take more time from the debate on the Budget to labour the point too far. However, it is a serious point. It is ridiculous if, on the last day of the Budget debate, the Treasury has decided not to send a Minister-

Several hon. Members:

rose -

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. The right hon. and learned Gentleman has not indicated that he will give way. Members must contain themselves.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Does my right hon. and learned Friend recall that in our early years in Parliament Ministers were very courteous? They always made a point of trying to respond to points made even by Opposition Members. Regrettably in recent years that custom seems to have gone out of fashion. Perhaps the Chief Secretary is not here because he has no intention of winding up in a traditional way by responding to points made in the debate.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

It could be that he is trying to think what to say, because there is not much in the Budget to talk about.

Photo of John Baron John Baron Opposition Whip (Commons)

Perhaps the Chief Secretary's absence could be explained by the fact that he is preparing the cuts.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

He may be trying to prepare a rather clearer explanation of the cuts than has just been given by the Secretary of State. I welcome appearing opposite him-

Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

I was with the Chief Secretary on Thursday night on "Question Time", so perhaps I can give an alternative explanation. On that programme, he said that the cuts being proposed by this Government would go deeper and further than those made by Margaret Thatcher. Perhaps the Chief Secretary did not want to listen to the Secretary of State deny that point, or perhaps he is locked in a dialogue with the Chancellor to work out the position.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

It is more likely that Charlie Whelan is trying to deal with the problem if there is some discrepancy in what the Chief Secretary says in public. I trust that the Secretary of State is playing no part in whatever is being done to re-educate the Chief Secretary. I normally have a very good relationship with the Secretary of State-we come from the same part of the world-and I would have been happy to go down memory lane and debate schools and education with him had I known that the Government intended to try to turn the last day of the Budget debate into such a debate.

I knew that the Secretary of State would take part in the Budget debate, as he did last year. He often does, but that is because he thinks that he should take part in all Budget debates. I commiserate with the right hon. Gentleman on that front, because events have moved on even in the last week or two. He has concealed today what must be his deep and bitter disappointment, because he was beside himself with rage when he was not made Chancellor of the Exchequer last year. For some unknown reason, the Prime Minister has just announced that our current interim Chancellor might be reappointed in the unlikely event of the Government being re-elected.

So, with patience, the right hon. Gentleman has to hold himself in exile at the Department for Children, Schools and Families, waiting for what he always believed would be his inheritance-to be Chancellor of the Exchequer. I am sure that he is dying to deliver and explain the Budget, given that, I strongly suspect, he had quite a large input into it-as he has had a considerable input into economic policy ever since he first emerged in opposition as the acolyte of the Prime Minister. We all remember with wonder that amazing speech on neoclassical endogenous growth theory- [Interruption.] Post-neoclassical!

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

He should give it again; we are waiting for the finer details.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

It is important to set the record straight, Madam Deputy Speaker. It was actually post-neoclassical-not neoclassical-endogenous growth theory. The words in draft were written by me. I cut them from the speech, but then a figure more senior than me wrote in the margin, "Put the theory back in!" and that is how it ended up in the speech.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. As interesting and entertaining as this dialogue has been, it is important that we now return to the fourth day of the Budget debate.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I shall obey your strictures, Madam Deputy Speaker.

It is difficult to get back to the Budget. We are debating the Budget-the last serious business of this Parliament before we break up-but it was not so much a Budget as a holding statement. In the middle of a serious economic crisis-certainly the gravest financial crisis that anybody can remember-the Chancellor delivered a Budget that was almost totally devoid of content, which certainly did not answer the only serious question, and which made no significant changes to tax, except for one or two that I shall touch upon.

I cannot help commenting on something in passing: I heard the Children, Schools and Families Secretary say, when asked about tax, that he was not going to give any advice to the Chancellor of the Exchequer on tax levels-although the next time he mentioned it, he did at least say, "in future". On behalf of the present Chancellor of the Exchequer, I would like to ask for that in writing, in case it has not been recorded in Hansard, because we know who was responsible for the national insurance increase. The Chancellor did not want to put it in his pre-Budget report; it was not the tax increase he had in mind at all. However, I shall return to that matter in a moment-it just seemed relevant. The Prime Minister and the Children, Schools and Families Secretary told the Chancellor that he could not have the pre-Budget report that he wanted. I suspect that, on this occasion, the Chancellor might have produced a serious Budget, and I strongly suspect that it was the Prime Minister and the would-be Chancellor of the Exchequer, the Children, Schools and Families Secretary, who prevented him from doing so and who gave us the holding statement that we heard.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

On the issue of whose advice was listened to over tax policy, a few days ago, on the question of reversing the rise in national insurance contributions, the shadow Business Secretary said:

"We will only know if we can afford it in the"- first emergency-

"50-day Budget... The Budget is not just something you knock off for a TV programme."

Does he think that the shadow Chancellor ignored his advice not to offer something on a TV programme without knowing whether it is affordable?

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

What emerged was the work of Sir Peter Gershon and Martin Read, and the question of how to pay for it was addressed. I have listened to the Secretary of State trying to explain how he will make his £500 million of savings from a budget that is not increasing in real terms-as shown by the forecast for the retail prices index in the Red Book-and I think that we have made it much clearer how we could afford to get rid of this appalling national insurance increase, for which he is in large part responsible. We have addressed the question-I was addressing it in the interview he quoted-of how to account for any changes, and we have explained how we would pay for them.

There is a big, serious question-the one that we are debating and that we will resolve in our proceedings today: whether there is a credible plan for dealing with the nation's problems of a budget deficit and debt. We are having a very entertaining debate, but the dimensions of the problem that the Budget should be addressing, and which we need to address, should overwhelm everything that we do. On that question, the Budget turned out to be a mere holding statement-probably not the statement that the Chancellor of the Exchequer wished to give. I am afraid that he fell into some of the usual traps-the whole recession somehow came from overseas; it was nothing to do with here-and he tried to present as good news the fact that the deficit was going to be only £167 billion, which is just under 12 per cent. of GDP. The fact that the deficit was mildly smaller than his horrendous forecast is not good news.

When it came to how the Chancellor would start to tackle his stated objective, there were optimistic forecasts, which I honestly do not believe are likely to be achieved. Everything is being disposed of on the basis that we are likely to get into a mini-boom from next year onwards and to sustain it, and that huge cuts could be made in infrastructure spending. I shall not keep arguing the past, but it was private finance initiatives that enabled the schools capital programme to take off; indeed, huge cuts in infrastructure spending have already been set out by the Government in the Red Book. The problem is that the ballpark figures were plucked from the air and kind of attributed to each and every Department. What the Children's Secretary illustrated was that an individual Department cannot give any meaningful description of how it is supposed to be making its contribution to eliminating the £11 billion of waste or making the £5 billion of lower priority spending cuts that were cheerily set out in the Budget speech and the Red Book.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I will pause to give way in a moment.

In the end, given such inadequate content, all it adds up to is a vague target of halving the budget over the course of the next Parliament. The debt-to-GDP ratio will rise to "only" 75 per cent. of GDP, on the Government's very optimistic forecast.

Ever since the Government broke into heavy public spending and borrowing in 2000, when they stopped following the figures that I had laid down in 1997, public spending has been increasing by 4.3 per cent. on average each year. The Budget set out that it would reduce that to 0.4 per cent. each year; it gives no credible description of how on earth it is supposed to get there, and if it did that, it would still leave the deficit at 4 per cent. of GDP in 2014-15. That is above an acceptable level. As we heard from the Children's Secretary's agitated ramblings about the details of his budget, the Government have not the first inkling of how they are to get to what we regard is an inadequate position and not at all healthy public finances for a return to normal growth.

Photo of John Hayes John Hayes Shadow Minister (Education)

My right hon. and learned Friend mentioned the spending plans that the current Government inherited. Indeed, I mentioned in an intervention on the Secretary of State that growth was at its greatest under this Government during the period when the fiscal constraints that they inherited still applied. Is it my right hon. and learned Friend's view that a fiscal tightening, coupled with holding down tax, would be more likely to deliver the growth targets that the Government anticipate than their Budget, which will raise tax and not fiscally tighten in the way that most national and international experts recommend?

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I wholly agree with my hon. Friend. Indeed, when the public are trying to make sense of what they probably regard as the confused arguments about tax, spending, borrowing and all the rest, they should recall two previous occasions when similar issues were posed. One was early in the Thatcher Government, when we also had a huge fiscal crisis. We went in for fiscal discipline and a tight monetary policy in order to get stability, and that produced growth. We were bitterly opposed by the Labour party, however. I took over during a comparatively minor fiscal crisis, albeit an important one: £50 billion was the annual deficit figure that frightened me when I became Chancellor of the Exchequer. I went in for fiscal discipline and a strict monetary policy, and I was fiercely opposed in terms that the Secretary of State still longingly recalls. He sometimes forgot that it was the Major Government, rather than the Thatcher Government, whom he was attacking. We were bitterly opposed.

Now, we have the worst recession-the deepest and longest that we have ever had-and the worst fiscal problems that we have ever faced. We are proposing to tackle that with sensible, courageous fiscal policies while maintaining proper monetary policies. Labour Members call themselves neo-Keynesians, but they are actually the populist, short-term, vote-catching, easy-way-out people of so-called new Labour, and they are opposing the same approach being taken again, dressing it up and-with great respect-getting things rather confused.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

I only wish that I had had the chance to pay tribute to the right hon. and learned Gentleman in my speech; I did not know that I would be facing him today. He was my first MP, and I think that he made some very wise decisions in his time as Chancellor. We have already established, however, that he was ignored on national insurance. Speaking of the time when he was Chancellor, he has also said:

"I got rid of the married couples allowance...This is social engineering, for God's sake, and when I joined the party we weren't in favour of it".

Is he going to be ignored for a second time, on the married couples allowance, or might his view prevail? Might this uncosted, unfunded pledge to introduce an unfair marriage tax break be dropped by the Leader of the Opposition?

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I am glad that my pre-Front Bench quotes are being so lovingly preserved by the right hon. Gentleman. We are committed to recognising marriage in the tax system. Those were my comments on the married couples allowance-and on why I abolished it-given at some seminar, I think, before I was exposed to the collective wisdom of my colleagues. But we must still wait to see how we are going to honour our commitment to recognise marriage in the tax system.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

The right hon. and learned Gentleman does himself a disservice in talking about the quotes being lovingly preserved. I was harking back to my experience in 1983 when he was my MP, but his quote about the marriage tax break was actually from December 2008. That is not an old quote; it is a very recent one. The question is will he be listened to, or will he be ignored yet again.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

On a point of order, Madam Deputy Speaker. The Secretary of State has six pages of quotes. Can we hear them all at once, rather than one after another? [ Laughter. ]

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. That is not a point of order for the Chair. May I remind all-

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. May I please remind the House that a considerable number of Back Benchers are waiting to contribute to the debate? Their speeches will be time-limited, and I therefore ask for some consideration from other Members who are making their contributions.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I shall stop giving way for a time, Madam Deputy Speaker, to help with that.

That quote was taken from an academic seminar at which I spoke before I was on the Front Bench. There were no doubt considered views of the same kind in my Budgets when I was addressing the same question- [ Interruption. ] The Secretary of State keeps quoting-he has probably got a whole wad of quotes of me and my hon. Friend Michael Gove, the shadow Secretary of State for Children, Schools and Families-but I wish he would take more notice of what we say to him from the Dispatch Box and answer some of our questions. He should certainly take notice of my hon. Friend's education reforms.

We are committed to recognising marriage in the tax system, and there are many ways of doing that-on which my right hon. Friend the Leader of the Opposition will no doubt decide in due course. [ Laughter. ] I shall go back to the serious question. I have made my point about the debt. I do not object to the House having a good-natured debate about the most grave situations-I am sure that there have been entertaining debates when the nation has gone to war-but the gravity of our economic situation should not be underestimated. The public are about to take part in the general election campaign-or, rather, to listen to it and then vote-and they realise that this is a very big question. They are frustrated by the difficulty of deciding about it.

The real question is this: are we going to have the present economic and financial crisis resolved by the democratically elected Government of this country, or are we going to have our affairs decided by a collapse in the bond markets and a further collapse in sterling, which is already devalued on a trade-weighted basis by 25 per cent.-the greatest devaluation, I think, since the second world war.

What frustrates the public looking at the major parties is the fact that although we are all agreed on the dimensions of the problem, the present Government are simply not prepared to face up to them. The Chancellor of the Exchequer, not just the Chief Secretary, acknowledged that cuts would have to be deeper and tougher than those under the Thatcher Government. I said that some weeks ago and the Chief Secretary appears to have repeated it. The only person who has difficulty repeating it is the Childrens Secretary, but it is a fact, not an opinion, that we are going to have to get into some extremely serious spending cuts. Whoever is elected will have to make those cuts.

If by chance we were to re-elect a Government who did not have a credible plan and who did not have the political will to face up to the problem-if the present Government were re-elected, they would not do so-the process would have to be introduced by the International Monetary Fund. As happened before, we would have conditions imposed on us to restore our solvency in the eyes of the bond markets. That is the background against which the Government are not treating the House or the country properly and against which the Government have failed to produce a Budget that could be rationally debated as an approach to the crisis on the eve of an election.

Photo of Barry Sheerman Barry Sheerman Chair, Children, Schools and Families Committee, Chair, Children, Schools and Families Committee

The right hon. and learned Gentleman is known for his honesty, and I have known him for a very long time. He is talking about what the British public should know as we come to a general election. The truth is that both sides realise that there must be cuts, but would it not be suicidal for our economy if we started to cut public investment before private investment had recovered? That is the truth that the public know, and we should tell them.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

No. This is the delay argument. We are supposed to be having a debate about whether we should start to act straight away or whether some economic virtue will allow the Government to go on without making any serious adjustments beyond the election and before recovery comes. I do not accept that. It is arguable, but it seems to me quite obvious that the reason why the Government are arguing for delay is that they have decided to fight the election on a rosy and complacent perspective, so the Chancellor of the Exchequer has been instructed not to address the long-term problem in the Budget. We have all seen the Prime Minister being persuaded only with great difficulty and very belatedly to recognise the need for any public spending cuts at all. It is a political tactic, not economic calculation, that is causing the delay.

The Prime Minister is particularly fond of speaking as though the increased spending and increased borrowing from 2010 to 2011 is some sort of contrived fiscal stimulus or a plan. It is not a plan; it is the fag-end years of the Government in whom there has been no proper control of public spending, leading to a mismatch, now reaching £4 of spending for £3 of revenue, which is piling up the deficit. Yet that is described as a fiscal stimulus. We have no policy in place or in operation to stimulate the economy-apart from a scrappage scheme for boilers, which is not going to lift our economy very far. All that we have is a purely political refusal to face up to answering the questions before the election takes place.

On efficiency savings, there are two elements to consider. Of course we must all make efficiency savings-those on both sides of the Chamber talk about them-and the public are extremely aware of the need to cut wasteful spending. We addressed the national insurance increase and identified areas where we were confident that we could avoid that particular tax increase- [Interruption.] It is no good saying, "Come on, Ken."

As for the national insurance increase, the moment it was announced I said what I have said throughout-I cannot remember whether I said it first in the House-namely that national insurance was the worst possible tax base for the Government to turn to if they wanted to raise revenue in a recession. It is a tax that should be avoided at a time when a Government are trying to nurture a weak economic recovery. It is not only an income tax on everyone in work, but-more important, in my opinion-a tax on jobs. It stops employers hiring new staff, and discourages them from retaining the staff whom they already have. It also puts pressure on their wage costs. The Federation of Small Businesses estimates that it would probably have cost 57,000 jobs had it been allowed to stand.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

The right hon. and learned Gentleman spoke of delaying tactics. He has now been speaking for nearly half an hour without addressing himself to the real issue of the debate: the Budget, and in particular the education budget. The only proposal that he has come up with so far is not to increase national insurance contributions, which would add £6 billion to the deficit. What I want to hear, and what I am sure others want to hear, are his proposals relating specifically to the education budget and, in particular, the schools budget, which the Institute for Fiscal Studies has described as the biggest single unprotected budget that the Tories have.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

That brings me to my next point. First, there are the efficiency savings, which have been debated a fair amount publicly in the last day or two. Secondly, we will have to move on to a public spending round. We will have to move on to addressing the programmes of individual Departments, and they will be addressed. The education Department is only one of them.

I shall explain the problem to the Opposition in a moment, but as things stand-as I think has just been conceded-the education Department faces a real-terms cut in its current spending over the next few years. It is also down for £1 billion-worth of efficiency savings, but no one can adequately explain where they will come from. No one in most Departments can explain where the pencilled figures for efficiency savings are supposed to come from.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I will give way to the Secretary of State for the last time. We are both taking up too much time.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

We are, but I want to make sure that we are absolutely clear about the position, and to give the right hon. and learned Gentleman time to explain his own position clearly.

On 19 March, under the headline "Cameron overrules Clarke on NICs", the Financial Times quoted the right hon. and learned Gentleman as saying:

"We will only know if we can afford it"

-the national insurance freeze-

"in the [first emergency] 50-day budget."

What has changed between then and now?

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I do not know whether the Secretary of State does the research for the Prime Minister, who is also very fond of quoting me, but he has just used the same quotation twice.

As I have just explained, I certainly agree that there should be no tax reductions, or abandoning of tax increases, unless it can be explained how they will be paid for. What I said was what I said, and what has happened since then is this: we have had the reports from Gershon and Reed, and we have settled down and studied them. We have worked out that of their £12 billion savings, £6 billion can certainly be secured. That can pay for what we have proposed. As I have just said, increases in national insurance are particularly disastrous.

What a responsible Government should have tackled is the public spending programme for the next three years. They should have produced a review of the changes that were needed to address the deficit. That has not been done, and it is extremely difficult for an Opposition to do it. A strange background is provided to the debate by what I consider to have been the most cynical of all the decisions made by the Government in the last 12 months: the deliberate decision to put off a public spending round in the run-up to an election.

According to the Government's own programme, there was supposed to be a full public spending round. That would have informed everyone's debate, and would have set out priorities properly. The excuse given for its postponement was pathetic: "uncertainty". No one believes that. Everyone knows that it was postponed because the Government did not want to address any of these questions in the run-up to an election. That displays unforgiveable cynicism. We as the Opposition party keep getting pressed by exasperated journalists and members of the public to give details of what cuts we would make, but even when the information available to us is not complicated further by the explanations offered by the Childrens Secretary, but is set down on paper in English prose, it is not adequate to address that question. Similarly, Secretaries of State need to take advice from within their Department and negotiate with the Chief Secretary and his officials before they can draw up a possible programme. We need to have a public spending round, but this Government suspended that out of cynicism-out of pure electoral opportunism.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

If the right hon. and learned Gentleman cannot have any confidence in the £11 billion of savings we have said we can find, how can he have any confidence that he can find a further £6 billion of savings to pay for his national insurance freeze? He has just dug a very deep hole for himself. He has just explained why he was completely right a few weeks ago when he did not think this NICs tax freeze could be paid for. He has confirmed that now, which is why people know that what is actually going on here is a secret plan for an increase in VAT.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

We have set out the five bases Gershon says we should pursue, but we have not allocated figures to individual Departments as we are not in a position to do so. However, the Children Secretary has, for his own reasons, tried to allocate figures, and he has allocated the £11 billion in such a way that nobody in any Department has the first idea of how they are supposed to produce these savings. With the greatest respect to the right hon. Gentleman, I say to him that to suggest that that is an adequate substitute for a public spending round is a pathetic response.

We should have had a proper Budget. Not only would we then have had a better debate, but it would have been more challenging to both Opposition parties if the Chancellor of the Exchequer-who holds that office despite the Children Secretary's wishes-had been allowed to come to this House and say to us and the Liberals from the Dispatch Box, "These are my tax plans and my spending plans for Departments over the next three years. Which of these tax changes are you going to vote against? Are they tough enough for you? Would you like them to be tougher?" It would have been more challenging to the Opposition parties if he had said on the spending plans for Departments, "How would shadow Ministers for spending Departments on your side of the House react to these plans? Are the Opposition parties going to settle for these plans, or are they going to toughen them up-or weaken them?"

If that had happened, we would have had a serious debate. The public would have been less disillusioned with politicians as a whole, we would have been put on the spot, and-who knows-we might have done what the then Leader of the Opposition and the then shadow Chancellor, who is the current Prime Minister, did in 1997: we might have said, "We agree with your fiscal policy." We might have said what Blair and the current Prime Minister said then, on the advice of the current Childrens Secretary: we might have said, as they did after my Budget in 1997, "We accept your spending plans, we accept your tax plans, and we are going to stick to them."

The Government should have produced a proper Budget, but instead they have not produced any serious fiscal or spending plans. Optimistic growth forecasts, inchoate figures and a complete refusal to hold a public spending round is the only background to the practically content-free statement the Chancellor gave the other day.

Several hon. Members:

rose -

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

I must move on now.

As we have turned this into a business debate rather than an industry debate, I shall briefly touch on the implications for small businesses and the contribution made to this debate from afar by Lord Mandelson and his Department for Business, Innovation and Skills. What we should all be talking about is how to return to growth: what is the future for British enterprise, and how do we make this economy successful again? However, until we tackle the debt problem, we cannot do so; there will be no return to normal growth until we satisfactorily address the deficit and the debt problem.

Let us consider the current prospects for businesses. We have no fiscal stimulus, and if this Government survive, business faces a national insurance increase. Business faces a considerable increase in business rates-I believe it will be £1 billion in the year about to start-and the small business corporation tax rate is increasing from 21 to 22 per cent. in April 2011. So the first thing that business faces is an increase in taxation.

Obtaining credit is the big problem for small business, and that is holding back growth on a great scale. Lord Mandelson accepted as much with some vigour in a speech he made about the behaviour of the banks a few days ago. What is in the Budget to tackle this? What is pulled out of the hat on the eve of the election? The answer is a credit adjudicator service. Apparently, some sort of new tribunal will be resorted to by every business man who cannot get the credit he thinks he ought to get from his bank; there is to be an appeals system. A whole new profession of sub-lawyers and separate risk managers could be about to appear. The banks are to be determined by some tribunal, some official or perhaps some political adviser. When someone is worried about their credit, they will have to say how marginal their constituency is and whether the Labour candidate is a Blairite or a Brownite. That might have a very significant effect on someone's success when they appear before the credit adjudicator service. It was rightly ridiculed by Richard Lambert, and nobody has the first idea as to how it is meant to act as an answer to the credit problem.

Lord Mandelson is trying to sell his whole Government on "active government" and "interventionist government", but when he was last at the Department of Trade and Industry he did not take that view at all. Indeed, I often quote with approval one of the things he said when he first came into what is now the Department for Business, Innovation and Skills. He was against the Government picking winners, saying that the history of this had usually been losers picking the Government. That is a very good description of the industrial strategies of the past. It was a very witty remark, with which I wholly agree.

However, suddenly we find that "active government" means that there is a kind of slush fund of grants from various parts of government. They have been holding back various grants and financial approvals that they could have given in the past few months and are now releasing them in a sudden rush on the eve of the election. The allocation to the noble Lord's budget in BIS is a one-off £750 million, which he got as a kind of dowry when he turned up-he called it a strategic investment fund. What has happened, as the Financial Times showed in some research a couple of days ago, is that no less than £7 billion-worth of grants or financial approvals have been given in the past week or two. This has been done by three Departments in particular-the Department for Transport, the Ministry of Defence and BIS-with the money to be spent on trams, trolley buses and defence contracts. Some of these grants to industrial enterprises are doubtless worth while, but this is happening all over the place; I advise anybody in a marginal seat who is looking for Government money to get in a bid quickly in the next few days.

Let me discuss one of these grants. I shall not oppose it, because I do not know enough about it, and I shall go on to explain why I do not get up to oppose such grants. So let me give approval to one of Lord Mandelson's recent grants. Some £8 million has gone to the refurbishment of Blackpool tower; the iconic tower and Winter Gardens in Blackpool has suddenly got a grant.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

Heaven forfend. I like the tower and I always go there when I am in Blackpool. My party used to go there and I also have fond memories of it as a child. The tower is a national monument and £8 million is no doubt money well spent. [Interruption.] I am being told that Blackpool has a Conservative council. Indeed it does, but it has two Labour seats, both of which used to be Conservative seats. This is, thus, a mere coincidence. One of my hon. Friends was unkind enough to mention that after a wait of all these years £8 million has gone to Blackpool tower. This is part of the £7 billion that is suddenly being disbursed. Where is the money coming from? It is being borrowed. Is it the Government's money? No, it is the taxpayer's money, which the Government hope that eventually some Chinese investor will help to finance. At the moment, the necessary bonds are presumably being printed by or bought by the Bank of England. [Interruption.] The only person who Lord Mandelson ever consults on political tactics is the Children Secretary. They are the architects of new Labour, a movement that we all know is, in essence, a media management and party political campaigning organisation.

Lord Mandelson would, of course, want to know whether or not I oppose each and every one of those grants. it. He knows perfectly well that if I say that I oppose a certain grant, that information will go to the relevant place and people will say, "If you vote Conservative, there will be x million less in Barsetshire." People will say that there will be less of a grant for this or that, so I do not do that. I have a good reason for looking at those grants, some of which-the bigger, more substantial ones-I would probably approve of, but I have no access to the business plan. I am not able to ask any great, international company, "Why are you not able to get this money from your normal sources? Why can't you go to the markets?" I cannot say, "Explain to me why the taxpayer must borrow this money to make a contribution," so I do not oppose the grants. When I used to shadow the old industrial strategy of Wilson and Callaghan, I did not oppose them all because I could never get enough information, but sometimes one could look at the political map and get a pretty good indication of why grants had been so surprisingly successful. It is cynical electioneering and the election must bring it to a satisfactory end.

That grave problem is not addressed by the Budget, the background to which is appalling. The decline in manufacturing as a proportion of gross domestic product has been faster than at any time in our history. The most worrying manifestation of the crisis is the huge fall in the level of business investment. When business investment goes off a cliff at a faster rate than at any time since records began, which I think was in the 1960s, that tells us how near we are to the end, and, in reality, how likely we are to have growth. That is what happened in the second half of last year, and it tells us we are at risk.

Labour caused the crisis in the first place. When the Prime Minister was the Chancellor, he contributed to the global crisis. It was not just Wall Street; it was also the City of London. It was a failure not just of regulators in New York, but of the Prime Minister's own regulatory system in London. Everyone outside the Anglo-Saxon world knows that Bush and Brown, when he was Chancellor, were two of the principal architects, by their negligence-two of the principal contributors-to the folly that we all suffered from because of the hubris of bankers.

The Prime Minister lost control of public sector finances when he was the Chancellor. While he was bound, by his electoral pledge, to follow my policies and my figures until 2000, he was the Iron Chancellor, whose work was based on prudence. If only he had stuck to my rules-balance the Budget over the cycle; no more than 3 per cent. deficit on GDP; and limit debt to GDP ratio to 40 per cent.-all of which were hit and maintained when Labour stuck to my fiscal policy for its first three years of government. Thereafter, it went completely mad and ignored all the warnings.

Dr. Cable constantly claims that he foresaw the dangers. I think he would agree that when he and I spoke in Budget debates, we used to say the same things about the sea of debt that was piling up and the fact that the level of household debt, let alone Government debt, was unsustainable. We were treated as a couple of Jeremiahs who did not understand the modern economics that the current Prime Minister was taking such credit for. He gave knighthoods to successful bankers; he did not regulate them. And he did not doubt for one moment that he could sustain the whole thing on the basis of what was the most foolish and extraordinary bubble.

I spent last night reading a very interesting book by Malcolm Balen about the South sea bubble. Although it is not quite so bad, this financial bubble is quite high up the league table. It is worse than the dotcom nonsense we had about 10 years ago, and is absolutely absurd. In this case, I do not believe for one moment that there is the slightest hint in the House of Commons of the corruption that was at the heart of the South sea bubble, but the sheer incompetence and the credulity of the worst Chancellor of the Exchequer we have had in modern times, and the iron control of the new Labour movement that made sure there was no real challenge until the crash came in 2008, is, to a certain extent, reminiscent of past financial scandals. The outcome should be that the Government pay the penalty. They have caused and contributed to the crisis and they currently have no answer to precisely how they will get us out of debt and deficit. They cannot seriously offer themselves for re-election.

It appears that most former Cabinet Ministers are planning their future careers in various branches of private enterprise. Where legitimate, I wish them success in the private sector phase of their careers, although one or two have been going near the wind when it comes to what they are contemplating.

I very much hope that most of them are thinking about what they can take up as an alternative to government for the next few years, as the British economy cannot possibly stand their return. This hopelessly inadequate Budget is the last sad epitaph to a history of failure.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury) 5:45 pm, 30th March 2010

I too came along this afternoon under the impression that this was to be an economic debate. I am pleased to see that the first detachment of cavalry from the Treasury has arrived, and maybe there are others to come.

As this is the end of the Budget debate, many of the arguments have been aired already, either in the Chamber or outside. One useful aspect of coming in at the end of the debate is that we have a chance to compare the arguments that we are having here with what is happening in the real world in our constituencies, as I tried to do over the weekend.

Essentially, our debate has centred on when cuts will be made, which the shadow Business Secretary characterised a few moments ago. Should we make them now? The Government view, which I broadly support, is that the economy is rather too fragile for us to embark on cuts at this stage, whereas the Conservatives tend to argue that the cuts should be made more rapidly. That is the debate that we are having: right or wrong, there are arguments on both sides, but I find it very difficult to reconcile that debate with what is happening on the ground.

When I left Parliament last Thursday, my first port of call was a mass meeting of teachers and lecturers at my local further education college. The problem is that 70 front-line staff have been told they will be sacked over the Easter recess, and they do not understand why. The college is a top-quality, academic establishment for post-16 year olds., and the staff have been told that the Government attach enormous importance to post-16 education. As far as I know, there is no fault with the college, but people have been told that there are going to be cuts. Those cuts are happening now, and people will get their redundancy notices in a few weeks.

I thought that that may be some kind of strange outlier that was not typical, but I went to the local university the following day and it too is grappling with a completely new set of budget numbers that will almost certainly mean very substantial cuts in student numbers and teachers. Then on Monday morning I had an opportunity to go to the National Physical Laboratory, which happens to be in my constituency. It is one of the country's leading science centres, and it is where Greenwich mean time is based.

I spoke to a staff union meeting there, and again it appears that Lord Mandelson's Department has decided that this very productive corner of British science must have cuts. The Government have suggested that it generates £25 of benefit for UK plc for every £1 that it spends, but 40 or 50 members of staff have been given redundancy notices already and others are to follow.

This is what is actually happening, in the real world. We are talking theoretically about making cuts now or later, but the environment in which some sectors of the economy are operating is one in which cuts are being made already. Coming back from that contact with the real world, I had a fresh look at the Budget in a bid to understand what is going on.

When we read the Budget, we think it appears to have absolutely no impact on the economy at all. We are talking about a change in revenue worth about £1.5 billion, or one tenth of 1 per cent. of the economy. The fiscal changes in the Budget therefore have absolutely no effect on the economy at all, but the report published at the end of last week by the Institute for Fiscal Studies showed that 2010-11, the next financial year, will see a very big fiscal contraction of about 2.5 per cent. of GDP. That is because the fiscal stimulus that the Government supplied is being withdrawn, and it is also due to the big cuts in capital spending.

Again, back in the real world, I was reminded of what that actually means. I was invited to one of the big rooms at Twickenham rugby stadium to speak to a group of roofing contractors-500 of them. They had various experiences, and many of them had had a tough time in the recession. They told me that all their business plans are being affected by the fact that the Government are drastically reducing capital spending. This is happening and it is affecting their businesses. That, combined with the severe contraction of credit from the banks, means that many of those companies are finding it extremely difficult to operate. The artificial debate around the Budget has little connection with the real world in which those companies work.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Scotland), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs)

On the point about the very real world, I notice that just before the Budget Danny Alexander was opposing fuel tax rises, but Mr. Clegg, the Liberal Democrat party leader, was in favour of them. What is the Liberal Democrat position, in the real world, on fuel taxes?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

We want special provision for remote rural areas. If the Government were able to introduce a scheme of that kind, we would be happier with the fuel tax proposals. The hon. Gentleman will see how we vote on the matter tonight, but that is heavily coloured by the fact that we have had no provision for remote rural areas.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

While the hon. Gentleman is clearing up confusions, what about this one? Last night on television, he said he wanted to bring down the budget deficit by, among other things, removing child benefit for high earners. That position was contradicted by the leader of his party earlier this month, when he said that the universality of child benefit would not be questioned by the Liberal Democrats. What is the position of the hon. Gentleman's party on this? Who speaks for the Liberal Democrats?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

What I said, or what I thought I said, was that we would cut child tax credits for high earners. [Hon. Members: "No!"] Well, if I mispronounced it, then I mispronounced it. [Interruption.] No, we are not talking about cutting child benefit; that is quite clear. We are talking about child tax credits. Let me be absolutely clear, and I apologise if I did mispronounce it, because the policy is unambiguous.

Let me turn to the Budget pluses and minuses. There are pluses. First, the Chancellor clearly did not accept some of the demands that were being made of him to run a populist Budget. He restrained himself from that, which is a big contrast with earlier Budgets. I go back, for example, to 1992, when there was a similar situation. The economy was in difficulty and an election was coming. Large offerings were made, which had to be withdrawn a few months later. This Chancellor, to some credit, has desisted in that respect.

The second, rather minor, positive is the fact that the Chancellor's news on economic borrowing was slightly less severe than it could have been, but that is a little like someone grappling with a very large overdraft discovering that their mobile phone bill is not quite as bad as they thought it would be. Still, it is good news.

The other positive, though I say this slightly sardonically, is the fact that we have had an accurate description of what the fiscal problem actually is-the scale of it and the time scale over which it is due to be dealt with. However, that is a little like saying that the Chancellor has identified and acknowledged, probably for the first time, the fact that we have a very large elephant in the room; has carefully measured the elephant, telling us that in eight years' time it will become a mouse; and has suggested a time scale over which that contraction will occur, but without at any point explaining to us the biology by which that elephant will transform itself into a mouse. There was no discussion whatever of the what and the how of the fiscal contraction occurring.

Photo of Stewart Hosie Stewart Hosie Shadow Chief Whip (Commons), Shadow Spokesperson (Treasury)

That is a very good point indeed, as was the description of the real cuts at the hon. Gentleman's university, his college and the National Physical Laboratory, but in all the national hustings I have done recently, the Liberal spokespeople have tended to use the same form of words, which is that they are on the same page as the Government with this. Is he backing those cuts; or if he has questions now about how we get from a huge deficit to a slightly less huge deficit, is he backing the process or will he give us something new today?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

No, the criticism is not of the fact that there needs to be a tightening of budgets. Of course there has to be, although we have taken a view, which I have communicated publicly with the hon. Gentleman's party leader, about the emphasis on protecting the Government budget for next year. However, if cuts are to happen, it is important that they should be done openly, not under the radar. My criticism of what is happening in the FE sector, universities and science laboratories is that it is all happening by stealth. There is no discussion whatever of priorities. It is happening through civil servants and quangos. There is no acknowledgement of the fact that cuts are occurring or of how they should occur. That is my central criticism of what is happening at the moment.

On timing, the hon. Gentleman well knows-we have had this communication already-that we broadly support the Government's view that it would be better not to embark on large additional cuts in the budget in the coming financial year, because the economy is fragile and that would aggravate the recession, creating even more unemployment. Arguably, it would make the fiscal deficit even worse. That is our position.

Let me talk about the negatives-the worries-in the Budget. The first is the almost hopelessly optimistic assumption about the rapid return to growth in 2011. There is now a long list of independent forecasters in British industry and in the City, none of whom thinks it remotely likely that growth will approach the level that the Government assume. There is one exception: Goldman Sachs. The Bank of England is also at the upper end of the range, but the overwhelming majority of independent forecasters believe that the Government are far too optimistic.

The second criticism is of how the Government intend to achieve some of the cuts when they come. We had the real Budget announced in press releases after the official statement in Parliament last Wednesday, in the form of these efficiency cuts. For the rest of the day, Mr. Hammond, the shadow Chief Secretary, and I had quite an amusing series of exchanges, ridiculing those cuts. Neither of us is normally noted for mirth-we are often compared to undertakers-but we found this very funny, because the efficiency cuts had obviously been cobbled together and written on the back of an envelope. They did not amount to much at all.

That made me all the more surprised yesterday when I discovered that my opposite number, the shadow Chancellor, had adopted all these fictitious cuts-efficiency savings-and used them as the basis for promising to repeal the national insurance increase. These efficiency savings-if we can have them, they are great, but on the one hand to ridicule them and on the other to use them as the basis for promised tax cuts has no credibility whatever.

For the record, this is the approach that we have adopted. We are by no means able to explain, any more than anyone else, the full extent to which the fiscal contraction could occur, but we have identified £15 billion gross of savings, which we think we could achieve. We specified them. They are not efficiency savings. Any efficiency savings are above that. We have allocated some of that figure, £5 billion, to job creation in the short term and other spending priorities in the longer term, including the pupil premium, which would provide additional funding for schools. We recognise that there will have to be-especially in 2011-12 and beyond-some serious spending reductions over and above what we have identified.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

The hon. Gentleman talks about the credibility of plans to cut spending and he has announced his £15 billion plan. Will he confirm something that he said last night during the television debate-that the £15 billion includes scrapping tranche 2 of the Eurofighter project? Perhaps he has seen a different contract from the one I have seen, but my understanding is that the cancellation charge for tranche 2 exceeds the cost of taking delivery of tranche 2. Can he explain to the House how he would make a saving there?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

That is not the information that we have received. We have repeatedly checked our understanding of the charges involved in such a decision. There are two different components to the end of the Eurofighter contract, as the hon. Gentleman knows. We believe on the basis of what we have been told-of course, we are not told everything, because some of this is supposedly commercially confidential-and on the basis of our information that some savings could be made.

Like the hon. Gentleman, however, we take the view that the bulk of the savings that will have to come from defence procurement-there will be a lot-must be considered through an overall review of our strategic objectives, provided that that takes place quickly in the early stages of the next Parliament.

Photo of Stewart Jackson Stewart Jackson Shadow Minister (Communities and Local Government)

In the welcome spirit of mea culpa, will the hon. Gentleman share with the House the circumstances that led him to give a grovelling apology to the permanent secretary to of the Treasury for misrepresenting the involvement that he had in terms of a contribution from his Front Bench to that Department?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I gave no grovelling apology to the permanent secretary to the Treasury. I misrepresented nothing. I had a meeting with the permanent secretary to the Treasury, as indeed all Opposition Front-Bench spokesmen did. It was a perfectly routine meeting, and that was the way I represented it. People may choose to dramatise it in the context of discussion of hung Parliaments, but I have to say that that was wholly false. I have written no grovelling letter of apology. I have written him a friendly note, confirming what I had said and had not said, but no apology whatever was needed or has been given.

Photo of Edward Balls Edward Balls Secretary of State for Children, Schools and Families

May the confusion about tranches 1 and 2 of Eurofighter, and therefore the confusion about exactly what the level of spending and efficiency savings add up to, have been what the shadow Business Secretary had in mind when he said that one could pay for the reversal of the next increase only after the election? Is that the kind of confusion that the right hon. and learned Gentleman was trying to avoid, and was it wrong that he should be overruled by the shadow Chancellor?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I appreciate the Secretary of State coming to my rescue, but I do not think I need it. I have given an explanation that deals with the point.

I conclude by referring to two issues of substance that arose in the Budget in relation to the banks and the banking system. One of the big and unexpected revenue changes was the yield from the bank bonus tax. I acknowledge that we underestimated it, as did the Government. We thought that the tax would be widely avoided and it was not. It suggests a certain degree of chutzpah among the bankers that they were perfectly happy to pay up rather than change their behaviour, but it leaves us with several conclusions that now need to be followed through but are not being followed through.

The first is that the banks are perfectly capable of sustaining a permanent rather than a temporary tax in order to cover the insurance-the protection-that the banks derive from the taxpayer. The second is that it is clear that excess profits are being made in the banking system, particularly in the investment banking arms. I was delighted to see that the head of the Office of Fair Trading is now investigating the possibility of cartel, or other forms of anti-competitive behaviour, which are producing excessive profits from Government and possibly private client relationships, and which are the source of many of the bonuses that are currently paid. I would be interested to hear from the Minister when he replies whether the Government have prompted or are encouraging the OFT to pursue the investigation.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

To clarify matters so that there is no misunderstanding, would the hon. Gentleman be prepared to publish the letter to the permanent secretary to the Treasury so that we can all see that the speculation was incorrect?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I sent the permanent secretary to the Treasury a handwritten note. His conversation with me was private, and it was a private note. I can assure the hon. Gentleman on the record that no apology was sought or given or was necessary. I did not misrepresent the meeting. It was a routine meeting between Front-Bench spokesmen of both our two parties. That was all that was involved.

My final point concerns the bank lending practices for which the Government have responsibility in the semi-nationalised banks. We get very excited in these debates about the Government's fiscal objectives, but these are tiny by comparison with the significance of the amount of bank lending to the corporate sector. The Government are talking about targets of roughly £90 billion of business lending. My question is: should we believe them? We have had these targets before. They were legally binding. They were not met. We in all parties have experiences of large numbers of small and medium-sized companies either being unable to obtain credit or being offered credit on terms that are so onerous they cannot take them up. I ask the Minister when he replies to give a much clearer explanation than he has been able to do so far about how these bank lending targets will be achieved next time when they were not achieved before.

Photo of Liam Byrne Liam Byrne The Chief Secretary to the Treasury

On a point of order, Mr. Deputy Speaker. May I apologise to you and to right hon. and hon. Members for missing the beginning of the debate? I was unavoidably detained on Treasury business, but I am very sorry for any discourtesy. None was intended.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

Further to that point of order, Mr. Deputy Speaker. Is it not the convention of the House that an hon. Member who wishes to wind up a debate must have listened to that debate? Indeed, I am quite sure that on a previous occasion you have reminded me of that rule.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I cannot recall the exact instance to which the hon. Gentleman refers, but obviously, as I think has been rehearsed already on points of order from his right hon. Friend Mr. McLoughlin, it is usual for the debate to have been heard for the winding up. But having said that, there are occasions when both Ministers and shadow Ministers are missing for parts of a debate. The Chief Secretary has apologised to the House and perhaps it would be better to save the time for further debate. It is now on the record.

Photo of Kenneth Clarke Kenneth Clarke Shadow Secretary of State

Further to that point of order, Mr. Deputy Speaker. I do not want to make a meal of this, but I do not think that we should just move off in that way. This is extremely unusual; indeed, no one can remember a Minister winding up who did not attend the first two hours of a debate. There are occasions when some untoward incident causes a Minister, or sometimes a shadow Minister, to miss a lot of a debate. The custom is to send a note to the other side urgently with the apology, which is always accepted, and no one makes a fuss about the absence of the Minister. Foreign affairs can be quite serious and be the reason that has taken the Minister away. That has not been done on this occasion. I do not think that it is adequate for a Minister to turn up and say that he has been busy in his Department and that departmental business has stopped him from coming, and have that accepted and carry on as though missing practically the first half of the debate is an unavoidable problem compared with the very important meetings that he has no doubt been having. We should at least establish a precedent. He is apologising now, but it really makes a farce if the Minister comes along when he can and answers which part of the debate he has listened to.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I am not for one moment saying from the Chair that the situation today is in any way admirable. We have had an apology. The right hon. and learned Gentleman says that he does not want to make a meal of it, but we have now had three courses on this matter, and perhaps we should regard our appetite as fulfilled on this occasion. The Chief Secretary may feel moved to make further reference to it should he catch my eye at a later point.

With regard to the time limit on speeches, once again, as yesterday, Mr. Speaker and the Deputy Speakers have been wrong-footed by events in their calculation, so I give notice that the 15-minute limit that has been imposed by Mr. Speaker will have to be adjusted down at some later point. However, I will try to maintain it for as long as looks credible.

Photo of David Blunkett David Blunkett Labour, Sheffield, Brightside 6:08 pm, 30th March 2010

I will endeavour to take less than the 15 minutes, and I will also endeavour to help my right hon. Friend the Chief Secretary by making reference to some of the comments that have already been made.

I am grateful to Dr. Cable for speaking just before me, because the first two speeches in the debate were an entertaining exchange between Mr. Clarke and his former constituent, the Secretary of State, but the reality that we face this evening is to speak on behalf of those who do not have a voice. I therefore immediately want to take up a point that was made by the shadow Business Secretary about credit ratings in the bond market.

It goes without saying that, in a global economy, we are subject to those who make decisions through credit-rating organisations and the bond markets, and if we take no notice and are not cognisant of the consequences, we will be severely damaged. However, in a democracy we have a number of elements in addition to the rule of law and a free media. We have political, participative and representative democracy that gives a voice to those who have power, wealth and privilege in the economic democracy-in the marketplace.

This afternoon I have heard people blame this Government and our Prime Minister for a global meltdown-for what happened throughout the world-that was initiated not actually in the United States, but in the development of savings in China, because of the economic and social changes in that country. That led to the availability of credit and money in the United States, which inevitably led to the over-extension and meltdown. When I hear the Prime Minister blamed for that by a former Chancellor, I do not take it seriously. The right hon. and learned Member for Rushcliffe knows better than that. He knows perfectly well that this Government and country cannot be and are not responsible for what took place three years ago.

Some of those who were responsible for the meltdown were, incidentally, engaged with credit-rating agencies and the bond markets, and it is the cheek of the devil for those people, who have wealth, power and privilege internationally, to say that it was the fault of political democracy for not regulating them toughly enough-to turn the tables on the politicians who are saving our economy, our services, our jobs and the livelihoods of our people and our communities and to say that we are to blame for not stopping them from doing what they did in the first place. That is just nonsense.

Photo of Brian Binley Brian Binley Conservative, Northampton South

Does the right hon. Gentleman not recognise the anger out there; that the Prime Minister, then the Chancellor, said to the Financial Services Authority that he wanted a light touch on all those matters; and that that contributed massively to our problems?

Photo of David Blunkett David Blunkett Labour, Sheffield, Brightside

The Opposition were the first to criticise us for being too tough on regulation. They preached year after year that this Government were too heavy-handed on regulation, and that business and finance wanted to be left alone. They preached what Margaret Thatcher preached, and now they intend to practise in the social arena what they preached in the economic arena-that Governments should get out of such business and leave private enterprise alone. They said that we would flourish if Governments did so, not that bankers if left alone would bring our country to its knees and then blame us for not intervening harshly enough to stop them from doing it. What nonsense is that?

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

Does the right hon. Gentleman not remember that in 1998, when the current Prime Minister introduced that financial system of regulation, my right hon. Friend Mr. Lilley said that it would lead to trouble? And lead to trouble it has.

Photo of David Blunkett David Blunkett Labour, Sheffield, Brightside

Of course we introduced that system precisely because there was no financial regulation. We also made the Bank of England independent, so that it could make judgments and intervene independently-and of course the Opposition opposed that, too.

The contradictions abound. We know that it is necessary to take care and time to determine what needs to be done. We know it, because one year ago we anticipated that in 2014-15 debt would be £100 million more than we now expect it to be. Even three months ago we thought that growth was just 0.1 per cent., and it turns out that growth is 0.3 percentage points higher than that, based on the recently announced readjustment. Indeed, we know that the growth that can be achieved, the changes that can be ascertained and the way in which we need to proceed are a moveable feast.

Above all, we need to be clear about who carries the consequences for the decisions that we make. Of course, on the macro scale, we have to take into account the consequences of what is happening globally, but we, as political representatives and the only voice of most people in this country who do not have wealth and privilege, have to speak out about the consequences of too rapid a cutback, too rapid a disinvestment and too many cuts to front-line services.

I heard the shadow Business Secretary say that his 1997 Budget was wonderful and that we stuck to it. Actually, we did not. I was the shadow Education and Employment Secretary from 1994, and in market towns throughout Britain in 1995 and 1996 I spoke to parents, teachers and children whose schools were falling apart-whose roofs were leaking. Primary schools were reliant on outside toilets, the teaching profession had totally collapsed and there were four-day weeks. There was under-recruitment, so teachers with no training had to be placed in the classroom; there were no teaching assistants; books were being recycled; and parents were being asked to pay for them.

That was the reality, and in 1997 the July emergency Budget put £700 million more into the education service, and £1 billion of new deal money from the windfall levy, from which we also benefited in terms of the employment drive that got people back to work. We do not want to go back to the era that I have described: it would not be the shadow Chancellor; it would be more like John Osborne-look back in anger and see just what happened when the Conservatives put their friends before the electorate of the country's most disadvantaged constituencies, such as mine.

Photo of Brian Binley Brian Binley Conservative, Northampton South

Will the right hon. Gentleman acknowledge that the school improvement programme, much of which we benefited from in Northampton, was a direct result of the private finance initiative, which the then Chancellor said was the only game in town?

Photo of David Blunkett David Blunkett Labour, Sheffield, Brightside

It was not the only game in town, because, as I have just spelt out, we started in 1998 with £1 billion and the new deal for schools, which turned into Building Schools for the Future. That budget-just to get the figures right-was £600 million when I became Education and Employment Secretary; it is now £9 billion and is transforming the learning opportunities and environment of our children.

The argument has been made that we should immediately start to reduce spending. However, one thing that concerns me, to which the hon. Member for Twickenham referred, is that many agencies-next steps agencies, Departments, primary care trusts and strategic health authorities-are already starting to cut in anticipation of even deeper cuts, should a Conservative Government be elected. Paradoxically, that is reducing the speed of growth by cutting back on spending that would keep people in jobs.

Let us look at what happened in the past. We cannot live in it, and I shall not compare historical debt to the reduction in the structural debt, which in any case we intend to get down to 2.5 per cent. of GDP by 2014. However, let us presume that we are in 1951, and a Conservative Government have been elected not on an austerity programme, but on a programme of lifting rationing and bringing hope and aspiration to the 1950s. That is what they were elected on. They were elected on the back of the wartime lend-lease and debt, and the debt that Maynard Keynes negotiated in Washington in 1947, but they did not enter office promising that they would wipe out that massive, historic wartime and post-war debt by 1955, 1959 or 1964. In fact, it was paid off in 2002, and the Canadian bonds were paid off in 2007.

We need a voice of reality saying that we in the political arena must take cognisance of the international financial arena and speak on behalf of the people who have no other voice. The issue is about continuity of spending; about retaining people in jobs, paying tax and national insurance; and about reducing the anticipated welfare spend-on which Margaret Thatcher did spend while cutting front-line services in my city and those throughout the country. Some of us remember it; some of us dealt with it. As the leader of Sheffield city council for seven years in the 1980s, I lived with it day after day, and none of us should want to go back to that. We do not need to; we can plan sensibly; we can be rational; and, above all, we can act as a counterweight to the voices of those who will not feel the cuts-who will be immune to what happens in education, health, transport, the environment and housing, because they can buy their way out of cuts.

We speak on behalf of those who cannot do that, and that is why we should stick to our guns. We should be rational and thoughtful and careful. Above all, we should resist the siren voices of those who know what they are about, and who will vote in this election-they will vote for their own self-interest. That is not acceptable for Britain and it is not the future for our country.

Photo of Patrick Cormack Patrick Cormack Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee 6:20 pm, 30th March 2010

It is always a pleasure to follow Mr. Blunkett. We all admire his commitment, his courage and what he has contributed to our country. I hope, though, that he will forgive me if I do not follow him in his loyal defence of the Government, for which he should be roundly thanked by those on his Front Bench.

This is the last time that I will address the House of Commons, and I find it a strange experience almost exactly 40 years since I made my maiden speech. When I was talking to one of my former secretaries the other day about stepping down at the general election and about how I love this place, she said to me, "Well, it's what you are." I have to say to colleagues on both sides of the House that for the past 40 years, it has been what I have been.

I love the House of Commons in general and I love the Chamber in particular, and it always saddens me when people on either side of the House do not give it the respect that it deserves. Of course, one accepts that the apology by the Chief Secretary has been sincerely given. He is not a man who is unthinkingly impolite. In fact, he is a man who likes to make sure that all people know exactly what he wants, whether it is the strength of his coffee or the size of his seat. I would just say to him gently that he must not do this again, whether he is Chief Secretary, shadow Chief Secretary, or anything else. The primacy of the Chamber of the House of Commons when great issues are being debated must be respected by those who are winding up debates on either side of the House.

I believe that what is so important at the moment is that people outside should begin to regain their confidence in this place. I would say to the fourth estate, which sometimes seems hell-bent on destroying the other three, that the House of Commons is the ultimate defender of all our liberties. Of the people I have known in this place over the past 40 years, the overwhelming majority of men and women, in whatever part of the House they have sat, have been true public servants who have come here for what they can put into it, and not for what they can get out of it. I hope that that will be recognised when the furore of recent months dies down.

I came here with a sense of history, and I have had the great privilege of living through history. I shall never forget listening to the great orators of our time, particularly to the recently late great Michael Foot and the late great Enoch Powell, who were close personal friends-most people do not know that, but they were-and who disagreed on almost every subject but respected each other because each one was first, second and last a parliamentarian. I think that we should take an example from people like that.

I very much hope that the new House of Commons, with many new Members in it, will collectively restore faith in this place. I also hope that the new individuals who come here will regard being here, as I always have, as the greatest honour and privilege that any British man or woman can ever have. I believe that it is an honour beyond compare. I hope that, whichever party forms the next Government, those who come here and sit on the Government side of the House-I hope that my party will be over there then-will not come here merely hoping to be driven around in a ministerial Mondeo, or whatever, but come here because they believe that membership of this place is the most important thing of all.

When one makes a maiden speech, one is supposed to be non-controversial. I do not want to be particularly controversial today, because I have been here long enough to know that no party ever has the monopoly of wisdom, virtue, or any other quality, good or bad. I remember opposing policies of my own party, such as the poll tax-I will not go into a great list-and I know that we have made mistakes in the past. However, I say, against that background, that this is the least substantial Budget that I have ever known. It is skimpy, it is bare, and it does not address the nation's problems. At a time when interest on our debt is more than twice what total public expenditure was in 1970, it behoves us all to recognise the seriousness of our position. Incidentally, in 1970-you will remember this, Mr. Deputy Speaker, because you came here for the first time then, as well-one had dinner in the Members' Dining Room for eight and sixpence: something that would warm the cockles of Sir Ian Kennedy's heart.

Photo of Patrick Cormack Patrick Cormack Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee

I would rather not, if my hon. Friend does not mind.

I like to measure every Budget against two of my favourite political sayings. Benjamin Disraeli-I make no apology for being a devotee of the great man-once said that one of the great objects of our party was to elevate the condition of the people. Does this Budget give an opportunity to elevate the condition of the people? I fear that the answer has to be no. One of the most moving speeches that I heard in this place was made by John Nott-Sir John Nott, as he now is-in moving the Loyal Address. He said that the real poor of the 20th century are those without hope. Does this Budget bring hope? I fear that the answer, again, has to be no.

Much has been made of the Prime Minister's great contribution as Chancellor. I do not believe that he was a great Chancellor. In the middle ages, people used to search for the philosopher's stone-the material that was going to turn base metal into gold. The Chancellor discovered how to turn gold into base metal: he sold it at bargain basement prices. Perhaps that is why he has always looked rather lugubrious ever since. I hope that at the general election, in spite of the dire condition of the nation's finances, we will have some fun and some spirited debating. I hope that the Prime Minister will be able to be a bit cheerful about it. He reminds me of a character from a programme of my childhood, "ITMA"-Mona Lott, who said it was being so cheerful as kept her going. That is what the Prime Minister looks like-as though it is being so cheerful as keeps him going. Well, the British people want some hope; some true optimism.

The British people may live in a nation that is on the verge of bankruptcy, brought there largely by the feckless attitude of this Government, but they do not want a Budget that is bereft of vision, or a party that has run out of ideas to steer them through the next four or five difficult years. It will be all of that, because whichever Government come in must have the sustaining power to take us through not just the first Parliament but the second and beyond.

There are many, many things that I shall miss about the House of Commons. There are some that I shall not miss. I shall not miss being here when people are serving on a Panel of Chairs. I am glad that your own current title will be preserved, Mr. Deputy Speaker. We could not have a Chair of Ways and Means-that would merely be a rocking chair, would it not? I will miss the camaraderie of this place and I will miss the cross-party friendships-some of the things that I have enjoyed most of all have involved Members of all parties.

I shall miss very much my Northern Ireland Affairs Committee, and I am delighted to see three Members from Northern Ireland, two of whom have served on that Committee, here this afternoon. We are able to demonstrate through our Select Committee system that people can put their party political interests to one side and work together for a common cause to produce reports that are not anodyne but are hard-hitting and deal with serious subjects, but which bring people together. That is an aspect of our work that it is not sufficiently understood and appreciated outside.

The Select Committee system has developed very well, but what has declined has been the importance and centrality of this Chamber. As I prepare to leave it, I want to express the hope that those who come will not only regard being here as an enormous honour and privilege, as I said a few moments ago, but that they will want to inject some life into the Chamber. It is deeply disappointing that it is so sparsely populated this afternoon, although there are more here now than there have been on the other days of the Budget debate. It is tremendously important that they should recognise that to contribute in this Chamber, and to tread in the footsteps of those giants of old, is not only a privilege but a duty-a duty that they owe, and we all owe, to our constituents.

I say to colleagues whom I am leaving a heartfelt thanks for their comradeship and friendship over the years. I say to those who are to come after that this is an imperfect institution, as every institution composed of human beings must inevitably be, but it is the bulwark of our liberties. It is the place that ought to matter most of all at the end of the day. When they come here, they should try to recognise that and rise to the occasion. They will be very well served by the staff of the House, and they will come to an institution to which they can feel proud to belong. I say to them that every day they should try to do what I have done and spend at least a minute or two walking through Westminster Hall, the most historic part of this great Palace, where so much of our history has taken place and which should give us all a sense of pride in being British.

And so, Mr. Deputy Speaker, thank you for the opportunity to make these closing remarks. Ave atque vale.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North 6:34 pm, 30th March 2010

It falls to me, a girl from Biddulph in Staffordshire, to pay tribute to the public service that Sir Patrick Cormack has shown over his 40 years here. From reading through Hansard for the three previous days, it is clear to me that as well as having debates about the Budget itself, we have had valedictory contributions. Many Members are leaving and want to ensure that this place remains one in which what actually matters to our constituents is discussed and what we do really counts and makes a difference. That was the case with my right hon. Friend Mr. Blunkett when he made £650 million available in a previous Budget. That meant that schools in Stoke-on-Trent that had not had any proper accommodation, never mind paint to improve it, had some money to rebuild. I refer particularly to Holden Lane high school. It became the first refurbished school in Stoke-on-Trent, which made a huge difference.

I am pleased that the Chief Secretary to the Treasury is in his place. It might come as no surprise to him that there is really only one reason for my being here for this debate, which will become clear shortly. It is important that he is here to listen to what Members of all parties have to say. I accept his apology and am very pleased that he is here now.

I turn to what is in the Budget in general, and I have to say that it has a lot to commend it. Of course we are in the run-up to the general election, so it is different from Budgets in previous years, but as we try to come through the recession, the most important thing is that we do nothing to destabilise the recovery. The worst thing that could possibly happen would be to undermine the recovery that the Chancellor has embarked upon. I want to ensure that the House recognises what a difference the detail and small print of the Budget will make. I am thinking particularly about support for business growth and the 20,000 extra undergraduate places, which I know will make a difference. Education, education, education is the way out of the poverty and lack of hope that so many of our constituents find themselves in. The hon. Member for South Staffordshire will know, as I do, the importance of the work of our Staffordshire institutions, not least Staffordshire university, of which I am an honorary doctor.

I am sure that my right hon. Friend Mr. Meacher will refer to the green investment bank and the provision in the Budget for green environmental technologies, as well as the importance of targeted support for households and individuals. Mention is also made in the Budget of the importance of regional government and regional Ministers, and it sets out the hope that if at all possible, Government offices, regional development agencies and parts of the Homes and Communities Agency will be relocated. To link in with the theme that is coming from the Department for Communities and Local Government, it sets out how we can have a Total Place response to ensuring that Government Departments work in a vertical way alongside local authorities so that their policies make a difference. There is enough in the Budget to help with that.

It will come as no surprise to my right hon. Friend the Chief Secretary, if not to you, Mr. Deputy Speaker, if I say that there is really only one overriding reason why I should wish to speak in this afternoon's debate. It is simply to make the case for the Government relocating Departments to the city of Stoke-on-Trent and to the Potteries, where-I have to mention this-we shall celebrate on 1 April the centenary of the federation of the six pottery towns of Stoke-on-Trent: Tunstall, Burslem, Hanley, Fenton, Stoke and Longton. What subsequently became a city was formed simply because of the pottery manufacturers wanting a brand name so that they could trade their ceramics and tableware on the global stage. That was why the city of Stoke-on-Trent came about.

It is no surprise that because there has been so much outsourcing, our traditional manufacturing industry-in not just ceramics, but all the associated manufacturing that goes with that-has suffered structural decline. That is not to say that some of our existing manufacturing businesses are not doing very well, and I am not talking down Stoke-on-Trent because we have huge opportunities, but structural challenges that existed before the recession remain. The important thing is to recognise what the Government and Parliament can do. That is why this Budget debate is so important to us.

The recent reports from the Centre for Cities show that we have high numbers of jobseekers and that we have lost a large number of private sector jobs. For that reason, it is critical that the Government intend to build on the 2004 Michael Lyons report. They need to ensure that in addition to the 20,000 jobs that have already been allocated away from London and the south-east to other strategic areas around the country, they drive the agenda to ensure that the Ian R. Smith report that has come about as a result of the Budget-"Relocation: transforming where and how government works"-applies to Stoke-on-Trent. That is critical. That could provide the extra jobs that our city, in its centenary year of federation, actually needs.

I want the Chief Secretary, when he comes to reply, to refer not only to the fact that I have come along to the Chamber tonight on the fourth day of the Budget debate to raise this matter, but to tell the House that my colleagues and I have been raising it consistently since the Lyons report came out. Perhaps we have not put a sound enough business case for Stoke-on-Trent, but we have had the intent and the objectives-in that I include the chamber of commerce and the North Staffordshire Regeneration Partnership.

We have been thwarted by how the Office of Government Commerce has looked at relocation. It says, "Oh, we'll leave it to the heads of the civil service and let them decide which areas, which parts of the country and which regions will be best suited for those newly created jobs." I want that to change. I have read the detail of the Smith report, which we are debating as part of the fourth day of the Budget debate. It clearly states that the Government should show leadership and that there should be a way for Regional Ministers to come together. I want a Regional Minister who really makes the case for Stoke-on-Trent's needs-I know that our current Regional Minister does that.

The proposals in the report also set out a new way of government and there is talk of seeing government in a new, integrated way. Perhaps given our desire for Parliament to connect better with the people whom we represent, we should propose to relocate Parliament to somewhere in the centre of the country-somewhere that has the most fantastic links, which this Government have provided along the west coast main line, so that we would have good access.

The most important thing for me is that a further 15,000 jobs or so are going to be created. The Chief Secretary has said:

"Over the past few years, we have moved something like 24,000 jobs out of London and the south-east. Just before the pre-Budget report, we said that we would seek to move another 13,000 out over the next few years. I would be very happy to sit down with my hon. Friend and other colleagues from Stoke-on-Trent to talk about how we can maximise Stoke-on-Trent's chances of getting a big share of those new jobs."-[ Hansard, 15 December 2009; Vol. 502, c. 800.]

I wanted to speak in this debate to ensure that after the election-I intend to be part of this House then-those talks can resume.

Photo of Ann Widdecombe Ann Widdecombe Conservative, Maidstone and The Weald 6:44 pm, 30th March 2010

I am following my hon. Friend Sir Patrick Cormack in that this will be my last speech in the House of Commons. Unlike him, I cannot claim a 40-year record-I have had a mere 23 years in this place-but I always imagined that when I was making my last speech and about to depart, I would be sad. Instead, I find that my uppermost sentiment is one of profound relief. I sincerely hope that future generations of Members of this House will be able to serve in an atmosphere free of the welter of public vituperation and vilification that this Parliament has been confronted with, and that there will once again be a recognition on the part of the public that the overwhelming majority of people who come here-on both sides of the House and in all parties-do so with some degree, and sometimes quite a lot, of sacrifice, in terms of either finance or family. My hope for the future is that some calmness and some respect will again prevail.

Whereas my hon. Friend came here with a sense of history, I came here with a sense of the future. My maiden speech was on Trident. Of course, at that time, I was very much in favour of keeping Trident, and those on these Opposition Benches, which were then occupied by the Labour party, were very much opposed to that. I am delighted that they have seen the error of their ways, and that they now in fact see the merits of Trident. That gives me great hope. They also now see the merits of privatisation, so I am very hopeful that at some stage in the future, they will see sense on a great many other things as well, and that a far more sensible and down-to-earth approach will prevail among them.

However, my main hope was that we would have a smaller state and a larger individual. My other main hopes, to which I shall address the main body of my remarks-I took this for granted at the time, but now I do not-were that we would have a stable society, in which the family was the bedrock, respected and supported by Governments of whatever party, and that citizens could feel safe and live decently, regardless of the income that they had at their disposal, and regardless of where they were obliged to live in this country. I want to direct the rest of my remarks in this Budget debate to measures that I feel are still desperately needed, and that would go some way towards securing those objectives.

I turn first of all to the family. If in our time there has been an assault on any great institution, it has been not on the House of Commons, but on the family. I am talking about the record levels of family break-up and the record numbers of young children who are growing up in houses where the parents have split, who are expected to split their time, emotions and whereabouts between those parents. But for all the many families like that, there are plenty of other parents who stay together in a committed and subsisting marriage, and who wish to bring their children up in a stable environment. I therefore wish to draw particular attention to the plight-and it is a plight-of the non-working mother.

When a family decides that upon the birth of the first child, the mother-it may sometimes be the father, but statistically it is usually the mother-will stay at home to take on the full-time duty of bringing up that child, they are faced with moving almost overnight, from being two people living on two incomes, to being three people living on one income. Where that family is well off, that is not such a big issue, but for the majority of families that model, which many would like to follow, is now but a distant aspiration. There are many reasons for that, and it has not been helped by the prevailing social view that somehow there is something intrinsically second class about the woman who opts voluntarily to stay at home and bring up her children.

While I have been in this place, I am pleased to say that I have lost three secretaries to full-time motherhood-I am not pleased that I lost them, but pleased for the reason that I lost them. The most recent said to me that she spends all her time trying to justify to her friends and contemporaries why she had chosen not to come back to work when the child was born.

The social attitudes do not help, but there are also massive financial considerations. As a result of property prices and the huge mortgages that are necessary, it is simply impossible in many families for one of the parents to say that they will stop earning. Therefore, every shred of help that we can give to such families should be given by the Government of the day. It is especially iniquitous that there should be such a difference between the support given to a family where the mother has decided on full-time motherhood-which is the highest calling, because those mothers are bringing up the citizens of tomorrow-and to families where the parents have decided to carry on working. This example is given by Peter Saunders, professor of sociology, who points out that

"if both parents go out to work and put their children into childcare, the government gives them each a £6,035 tax-free allowance, as well as heavily subsidising their child care costs. But if they prefer to look after their children themselves, sacrificing one income and foregoing all the child care subsidies, the government penalises them by making the stay-at-home parent forfeit her (or his) right to a tax-free income."

That is one of the most scandalous inequalities that we have.

We not only fail to support the non-working wife, but we positively pour support on those people who are existing on two incomes rather than one. Much of that inequality stems from the decline in the respect for marriage that we used to take for granted in our society. That is one of the groups of people about whom I wished to talk about today-the non-working mother. I see nothing in this Budget to help the non-working mother, but I see much in some of the Conservative proposals that might help the non-working mother if they are fully implemented. In any case, the Government are wrong to have ignored this problem, and in the wind-up I would like to hear what the Government will do-in the limited time available to them-to give some support to the non-working, stay-at-home, full-time mother.

The other group are those about whom I have spoken in this House before, and whom I have always called the forgotten decents. These are the law-abiding decent citizens, often but not always families-perhaps pensioners, a couple whose family has grown up and gone or single persons-who, because of a lack of resources, cannot escape from the environment in which they are trapped. I refer particularly, but not exclusively, to those big inner-city council estates where people have no aspiration but living a normal, unmolested life. That does not seem to be a ridiculous aspiration for a British citizen. But those people often do not dare even to leave their houses or flats after dark-not only after 8 or 9 pm, but even 6 or 7 pm-because they would be subjected to intimidation, robbery and thuggery. They live with that prevailing fear.

Mothers who live on such estates have told me, and continue to tell me, as nothing much appears to have changed, that before they let their children out to play-which should be a normal activity-they have to check the surrounding area for needles. It is in those areas where the law-abiding live behind bars, because they fortify their homes like Fort Knox. There is wanton vandalism on those big estates and I vividly remember talking to one person who was disabled and had therefore no choice but to live on the ground floor. He could not live any higher: he had to occupy the ground floor. He had a pathetic, small patch in front of his flat where he had put pot plants to try to make a pleasant area in which to sit out in his wheelchair. Is that such a big aspiration? But his garden was regularly vandalised and finally every last plant was destroyed when some yob threw acid all over them.

Are those areas policed? Is there a regular police presence on which those ordinary and modest British citizens can call? The answer is no. The regular plaint goes up, "We rarely"-they do not say never, because that would be an exaggeration-"see a policeman." There is no visible deterrent walking around these streets in the form of someone who could be called on by those who feel afraid. Money spent on policing those areas or bringing any other sort of hope to those areas would be money well spent. I do not see much encouragement for those people-the forgotten decents-in this Budget. I hope that I am wrong. I hope that in the wind-up, the Minister will be able to point to measures that have been taken, but I have deliberately chosen in this, my last speech, just two groups of ordinary, decent people-full-time mothers who just want to be able to afford to bring their kids up and not feel compelled to go out to work, and those who live in terrible areas and cannot get out of them, where every agency shrugs and they are abandoned by those whose job it is to look after them. Ultimately, that job is the Government's.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras 6:59 pm, 30th March 2010

Subject to the views of the electorate of Holborn and St. Pancras, it is not my intention not to be here after the general election, but I wish to pay tribute to the two veteran Members whom we have just heard. However, I will not attempt to follow them because I welcome the Budget statement and the Government's and the Chancellor's refusal to listen to the siren voices who demand cuts before the recovery from the recession is well under way. My view is that we will need to be fairly careful about cuts in public spending and public investment even when the recovery is well under way. The definition of a recession, in many ways, is that the economy is working below its maximum, and the best way to deal with deficits, debts and practically every imaginable problem is to get that economy back to working at its maximum as soon as possible. Slashing investment stifles growth; it does not encourage it.

I was not surprised-but it was saddening-to hear the shadow Business Secretary harking back to the days of Mrs. Thatcher, on the basis that, if it is not hurting, it is not working. He gave the impression that her policies of slashing public services promoted economic growth, but nothing could be further from the truth. Average annual economic growth under Mrs. Thatcher was lower than the average under the preceding Wilson and Callaghan Governments. Things went down, not up, as a result of those policies. We also had massive inflation during that time. The lowest inflation under Mrs. Thatcher in a year was 3.4 per cent., and it averaged 7 per cent. It was all kept afloat with takings from the North sea and privatisation, and that money was squandered: it was not invested in industry-there was not a British sovereign investment fund-research or training. However, some of the decisions that the Chancellor has made in the Budget mean that there will be investment in industry, research and even more in training.

We must remember that the biggest beneficiaries of the economic policies of the Thatcher Government were the finance industry and the speculators-the speculators who have been ruining the world economy for donkey's years now, whipping up and down the world price of oil and gas. There can be no rational justification for the price of a barrel of oil falling from $140 to $80 in the space of a fortnight-that is speculation and nothing else. There was also speculation in the price of wheat and rice. When I was in Bangladesh, I asked a rice farmer whether the price he was paid for his rice had quadrupled in the previous year, but he had not seen a penny of that. Price changes took place partly on the American markets. There are also the speculators in currencies.

The changes and relaxations introduced under Mrs. Thatcher contributed to-I do not say that they brought it about-the banking crisis, and the banking crisis has undoubtedly caused most of the deficit, directly as a result of the taxpayer having to provide bail-out funds to some of the banks that were going broke and to give guarantees to others to prevent them from going broke. The banking crisis has indirectly caused the recession, and the recession has caused the fall in output and tax take and led to more benefits being paid out. We do not need to stop investing; we need more investment to counter the downturn and to get back to maximising output. When someone loses their job, we all lose out: we lose the goods or services that they were producing, the tax that they would have paid had they been employed and then there are the benefits that we have to pay out to keep them and their families going. As I understand it, it averages at least £12,000 a year to keep someone out of work-so keeping people out of work adds to the deficit.

The Government's measures have been working. The jobless total is fewer than the wiseacres were predicting; the number of houses repossessed is lower than the level predicted by the wiseacres in the City; and there has been an element of recovery. It has to be said that Britain has led the way. I know it is a commonplace to mock the Prime Minister, but I put more faith in the words of Paul Krugman, who won the Nobel prize for economics for his study of recessions and knows what he is talking about. In response to what the Prime Minister did in the year running up to the G20 summit in London, Krugman said that the Prime Minister had acted with "stunning speed", and had

"defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up", and that he and the Chancellor had displayed a

"combination of clarity and decisiveness" that had not

"been matched by any other Western government".

So when some trivial tripehound from the City comes on the "Today" programme or one of the other BBC or ITV programmes, I would stick with Krugman.

The Government should not be pushed off course by economists led, for instance, by Howard Davies of the London School of Economics. When the Government nationalised Northern Rock, he gave us the benefit of his view that it would undermine the reputation and standing of the City of London in the eyes of the finance industries in other parts of the world. Get real, Howard! The City and Wall Street have been hoist by their own petard. What they were doing has blown up in their faces.

Let us consider Lehman Brothers, whose auditor was Ernst and Young. Then we are faced with the output of the Ernst and Young ITEM Club, and we are expected to take notice of the predictions and are told that we need to recognise what wonderful people they are. Well, Ernst and Young was an item with Lehman Brothers in the other sense-they formed a couple that could not have been closer as they covered up for one another. And they, of course, were assisted by the noble Linklaters, the City solicitors, which actually provided cover here-cover that even some of the dodgy lawyers on Wall Street had refused to give-for what Lehman Brothers was doing worldwide.

These bankers, their auditors and the ratings agencies caused the banking crisis, and these self-same people are now demanding cuts in investment, while insisting that their bonus culture continue. Bankers apparently need mega-pay and bonuses to compete internationally, but everybody else has to take lower pay and worse working terms and conditions to compete globally. Who are these bankers and auditors and what is their track record? I have checked. Next time someone from KPMG gives us advice on finance, remember that it was supposed to be HBOS's and Bradford & Bingley's auditor. Next time Deloitte sends someone to give advice, remember that it was the auditor for the Royal Bank of Scotland-and a cracking good job it did! PricewaterhouseCoopers was the auditor of Northern Rock, and I have already mentioned Ernst and Young, which allegedly was the auditor of Lehman Brothers.

Let us consider the banks themselves. The shadow Chief Secretary to the Treasury, in a previous debate, quoted the wisdom of somebody from the City Group, but it lost $55 billion. It bought up-or got into bed with-Merrill Lynch, which lost $51 billion. We might get someone from UBS telling us what we ought to be doing about our public services, but it only lost $44 billion. HSBC lost $27 billion; the Royal Bank of Scotland lost $15 billion; and Morgan Stanley and JP Morgan both lost $14 billion, yet we are expected to take notice of them.

Then there are the ratings agencies. They gave triple-A ratings to all the rubbish that brought the international banking system to its knees, and now we have got to listen to them. Are they seriously saying that they believe that a United Kingdom Government would default on their borrowing? If they are not saying that, there is no reason at all why the British Government should have any difficulty getting their bonds on to the market. We have got to take an altogether more rigorous approach. We have got to reach a situation in which the banking industry is working for the rest of us. We can no longer continue with a situation in which the rest of us are working for the worldwide banking industry. We need a yet more radical response than we have had. We have got to end the fail-safe arrangements for the dodgy dealers. There should be no more bailing out of the people who got us into this mess.

I am genuinely fearful that unless we do something about the problem, the democratic institutions that we subscribe to will be in danger. If the people think that their elected representatives cannot protect them from what is happening in this world, while another group of people are still being paid multiples of millions of pounds in bonuses, I do not think that they will tolerate it. They will turn their attentions to those who say, "We can do away with this." If I were running the British National party, I would be delighted with the present situation, with bankers lining their pockets and handbags, and teachers, nurses and firefighters being told that their meagre pensions pose a problem for the economy. Those teachers, nurses, firefighters and others did not get it wrong, but they are being expected to pay the price. The bankers undoubtedly did get it wrong. They are not going to have to pay the price; they are claiming the right still to be paid bonuses. Such a society will not be easy to sustain. Indeed, I think that there will be a threat to our democracy and to this institution unless we do something to change the balance and provide greater protection to ordinary people against the people who speculated us into the mess that we are in now.

I welcome the Budget and the fact that we have not fallen for the silly idea of cutting investment before the recovery is well under way. However, we shall have to be careful about making cuts even when the recovery is well under way. We need the economy working at maximum output. That is the best way to deal with the deficit, debt and nearly every other problem that this country is afflicted with.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells 7:13 pm, 30th March 2010

I am pleased to follow Frank Dobson, although I cannot accept his prescription for growth, which consisted of little more than more public expenditure-or "investment", as he called it-which is what got us into this trouble in the first place. His criticism of auditors had some traction, but they had far less to do with the problem than the failings of the tripartite system of banking regulation, which was set up by the Bank of England Act 1998, and which spectacularly failed when the banking crisis occurred.

I am also pleased to follow my hon. Friend Sir Patrick Cormack and my right hon. Friend Miss Widdecombe, both of whom made fine valedictory speeches. We will miss them both in the next Parliament, which I hope to be part of. We will long remember their speeches, particularly the sense of history and tradition brought by my hon. Friend the Member for South Staffordshire, which was a hallmark of his years here, and the passionate defence that my right hon. Friend the Member for Maidstone and The Weald made of the family and her support for it. She will long be remembered for those causes as well.

It is a shattering commentary on the Government and their Budget that borrowing this year will be only £167 billion, which is slightly less than the £178 billion predicted by the Chancellor last year. Whatever figure is right, we are now in the premier league for debt, which will dominate the next Parliament and probably the one after it. We are entering a decade of debt, and even on the Government's own figures, the national debt will rise during the next Parliament to £1.4 trillion. A trillion sounds a lot, and it is. That is perhaps best illustrated this way. If we were to repay debt at £1 a second, we would repay £1 million of debt after 12 days. It would take much longer to repay £1 billion. At the same rate of repayment, it would take 32 years to repay £1 billion. To repay £1 trillion at the rate of £1 a second would take 32,000 years, and that is just £1 trillion, because the Government are increasing the debt to nearly £1.5 trillion. The task before us is therefore truly awesome. There is also an intergenerational problem and a question of fairness. Are we really going to hand on to our children a debt that we have incurred? It is already the case that a baby born in Britain today arrives with a debt around its neck. That is not a sure start; it is a debt start, and it is up to us- [ Interruption. ]

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I am sorry to interrupt the right hon. Gentleman, but there is a three-way conversation going on from a sedentary position that is now starting to disturb the debate.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

The reason for our noises off was that if 1 million seconds last for 12 days and 1,000 million is 1 billion, we are confused about whether 1 billion seconds would last for 32 years, which is certainly more than 1,000 times 12 days. I suspect that the right hon. Gentleman is defining a billion as 1 million million, but that is not the definition that the Government use when calculating borrowing.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

No, but the hon. Gentleman had better check his arithmetic. I have done mine, and it is the case that on the Government's own figures it would take 32 years to repay £1 billion and 32,000 years to repay £1 trillion. I do not expect the Treasury to understand those figures, and I am a little disappointed in the hon. Gentleman from the Liberal Democrats, although I am perfectly certain that those on the Conservative Front Bench will understand them.

Photo of Brooks Newmark Brooks Newmark Opposition Whip (Commons)

It would perhaps be much easier for anyone listening to this debate to understand that £1.4 trillion of debt, which is roughly what we will be left with, approximates to about £46,000 of debt for every individual in this country by 2014.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I am grateful to my hon. Friend for that illustration. I think that we can all agree that we are talking about a pretty big debt, and there are only three ways of bringing it down: tax, raising the national growth rate, or cutting expenditure. There are no other ways of doing it, and I want to say a word on each.

If the solution was taxation, we would have solved all our problems many years ago. It is a hallmark of this Government that their solution to every problem is tax and spend. That is the only consistent economic policy that I can detect from the Treasury Bench. In fact, the Chancellor is the perhaps unwitting originator of the phrase "stealth tax". When I was shadow Chief Secretary in 1997, the present Chancellor sat opposite me as Chief Secretary. I read up some of his old speeches. They were pretty heavy going, but I spotted that he had criticised taxation by stealth. I started to use the phrase and it came into common currency. We can therefore say that the Chancellor conceived the phrase. I might have been the midwife and given it currency, but we can definitely agree that the present Chancellor is the prime practitioner of stealth taxation, and there are plenty more examples in last week's Budget.

I should like to dwell for a moment on a non-stealth tax: the increase in cider duty was at least declared in the Budget speech. I come from the west country, where cider making is an important local industry. It is an environmentally benign, indigenous industry, and an important employer, but it is now being subjected to a vindictive and quite unnecessary 13 per cent. tax rise that will do great damage, particularly as the industry relies on long-term planning. Cider makers plant orchards, or persuade farmers to do so, and sign contracts with the people who buy the fruit. The industry needs to be able to plan, and for the Government suddenly to announce this vicious tax rise shows that they do not understand the second component of deficit reduction, which is raising the level of economic growth. Indeed, the Government's own so-called deficit reduction plan depends crucially on the growth targets that were declared in the Budget, which I do not believe; I think that they are too optimistic.

The Government's entire political philosophy-let alone their economic philosophy-is founded on their belief in tax and spend. That in turn depends on their mistaken belief that, in their 13 years in office, they have discovered a philosopher's stone of continuous, low-inflationary growth on which they can permanently depend. Well, the credit crunch happened, and that belief was cruelly exposed. The real foundations for economic growth have nothing to do with Government expenditure: growth depends on the supply-side reforms at the level of the firm that were pushed through in the face of relentless opposition during the 1980s and 1990s. Those reforms secured a competitive advantage for this country in world markets.

I cannot overstate the challenge that this country faces, in the face of pitiless international competition. There is only one way to get out of this mess. It is not to spend our way out, or to borrow our way out; it is to earn our way out. That will critically depend on the national growth rate, which has been eroded over 13 years of extra taxes, of tax complexity, of a benefit system that no one understands, and of over-regulation. There is not the slightest indication that the Government understand that, or that they have learned from those mistakes. They do not understand issues of competitiveness, risk or commerce.

As we read the Budget documents and listen to the Chancellor speak, we are taken back to the 1970s with all his talk of state growth funds, innovation units and a green bank. Why do the Government want to own another bank? They already own great sections of the British banking industry. Now they want to own a new one, but it will be no more successful than the discredited regional venture capital funds. They were the target of well-merited criticism by the National Audit Office, which showed that their investments are worth only a fraction of what they cost.

I hope that my colleagues on the Front Bench will summon up the determination completely to abolish the regional development agencies. They are run by people who do not understand business. They give out loans and grants to the most vociferous, rather than to the most economically deserving. The one in the south-west is a byword for incompetence and waste.

My message is that we must concentrate on micro-economics and on getting the conditions on the ground right for business, industry and enterprise to flourish. That is not easy. The easy part of politics is spending other people's money. As Milton Friedman told us, there are only two kinds of money in the world: your money and my money. The easiest thing for me to do is to spend your money. We need to get back to attention to detail, and away from this blundering interference by central Government and all their agencies, with their mania for regulation and taxes as a solution to our problems.

The third pillar of recovery involves tackling public expenditure. The challenge there is not to make new, exaggerated claims about cutting this and that, but to show that announced reductions can really be made. I am afraid that we shall have to go well beyond that old favourite, efficiency savings. I have sat through and participated in 27 Budgets, some as a junior Minister, and I have heard references to efficiency savings in all of them. Of course they are important, but I am afraid that we shall need to go much further. We need to re-engineer government. Quite simply, we need to run official Britain at a lower cost, and that is going to require creativity, determination and flair. I see those qualities among those on my Front Bench, and I believe that they can do it, but it will not be easy, and it will require a change. Those on the Government Front Bench have not the slightest interest in this, nor do they have the talent for it.

I should like to talk briefly about pensions. They are the submerged whale of the problem. They are submerged because they appear on no Government balance sheet. I have asked Ministers about this at questions. According to many independent estimates, the scale of the public deficit on pensions is more than £1 trillion. Tackling that will also require great courage and determination.

I must also mention the EU budget, as I think is expected of me in these debates. It is a disgrace that our net contributions next year will rise to the new figure of £1.6 billion. There is no interest in restraint or economy in the European Union; I know that because I sit on the European Scrutiny Committee and we see a weekly blizzard of proposals for new regulations, laws and spending. Now they want an economic Government in the European Union. That, too, has to be tackled. It will be difficult, because there is no easy or legal way of challenging it-certainly not according to my Committee.

Next year's EU budget is going to go up again. My Committee advises that the social policy agenda is going up by 21 per cent., and that the already enormous structural funds are going up by nearly 7 per cent. The decentralised agencies are the European quangos, and they are even less accountable than the ones we deal with. I wonder whether the House can guess by how much the expenditure on those agencies is going to go up next year. The answer is 53.3 per cent. We are in the middle of a European recession. If national Governments are having to make cuts, why cannot the European Union play its part? It is because it has a dynamic to spend taxpayers' money, and there is no countervailing force to oppose it. There is also no willingness on the Government Benches even to challenge it.

All these problems need to be tackled, but, as my hon. Friend the Member for South Staffordshire said, we need hope. It can be done. We have faced such problems before, as a country. This is not a counsel of despair because we can overcome these problems. That cannot be done, however, by a Government who spend now, tax later and leave the debt to be dealt with later still.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am grateful to the right hon. Gentleman for giving way, for two reasons. The first is that I want to support his comments about cider, and particularly about the long-term planning that needs to go into ensuring that the right apples are produced for cider manufacture. The second is that I want to apologise to him. Having had a bit more time to do my mental arithmetic, I realise that 1 billion seconds will indeed last for 32 years. I hope that our earlier conversation was not too misleading and to be able to use that impressive statistic myself at some point.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I am grateful to the hon. Gentleman. We have heard a few apologies in the Chamber this afternoon, and I accept his. Perhaps he has been taking arithmetic lessons from Dr. Cable, who is now sitting next to him. I can promise him-and he must now agree-that a £1 trillion debt would take 32,000 years to repay, at £1 a second. I can assure him that these are not American billions or Labour billions but British billions.

I shall end in the spirit in which I came in: this is going to be difficult, but it is possible. What is absolutely certain is that it will require a change of Government. This Government's time is up, and the date in question is 6 May.

Several hon. Members:

rose -

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. To deal with much smaller numbers than those we have just heard about, after the next two speeches-one from each side of the House-the time limit on Back-Bencher speeches will come down to 12 minutes.

Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton 7:30 pm, 30th March 2010

This has been an evening of memorable valedictory speeches, so I do not think we should let this moment pass without paying tribute to two Members-Sir Patrick Cormack and Miss Widdecombe-who are leaving. However often and however much I have disagreed with them, I have always regarded them both as great parliamentarians who have spoken with sincerity and integrity and, as illustrated here again tonight, with a sense of values and principles in which they passionately believe. I believe that they have set an example to all of us. I also agree with what they both said about the need for a new Parliament after the election that is very different from this quarrelsome and vituperative one that we have had-one that can earn the respect of the electorate because we represent the democratic centrality of Parliament. I think that both those Members will be greatly missed.

I will be brief-I will probably not use my 15 minutes-and I want to concentrate on the general structure and strategy of the Budget. I begin by congratulating my right hon. Friend the Chancellor on, once again, showing how adept he is at playing a difficult hand well. He has navigated a sensitive balance between preventing a double-dip recession, not endangering the recovery, keeping the financial markets on side and at least beginning to reverse some of the more grotesque inequalities that, in my view, so badly mar the face of Britain today.

Having said that, I remain concerned about the proposed strategy for reducing the deficit, particularly the relative weight allotted to higher taxes, public spending cuts and higher economic growth in achieving that objective. The Treasury has proposed tax increases of £19 billion and public spending cuts of £38 billion. If the deficit of £167 billion is to be halved within four years-reducing it to £83 billion-that must mean economic growth yielding something in the order of £26 billion.

I think that the first of those objectives on tax is readily achievable. At last it is being accepted that the burden of tax should rest much more on the shoulders of those who have made disproportionately huge gains in the last decade or two, not least on the shoulders of those responsible for the slump in the first place. The 50 per cent. top tax rate, the bonus tax on bankers, the loss of personal allowances, the freezing of inheritance thresholds and the mansion stamp duty tax will not have any effect on roughly 95 per cent. of the population. In fact, they will very largely be directed at the super-rich 1 per cent.

Frankly, I think it absurd for the Tory press to scream as they have over this last week that this is an attack on hard-working middle and high earners. Who do they think middle Britain actually are? The medium income in Britain today is £22,000, while one third of the population subsists on less than £15,000 a year-a fact that we in this Chamber ought never to forget. The term "middle Britain" roughly applies to those earning between £15,000 and £30,000 a year, whereas the Budget increases will affect hardly anyone earning less than £70,000 a year. This is not spite; it is, at last, the beginnings of a switch back to some semblance of fairness. For that, I praise my right hon. Friend the Chancellor.

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Photo of John Hayes John Hayes Shadow Minister (Education)

I am an admirer of the right hon. Gentleman and I share some of his views about the redistribution of advantages in society. Nevertheless, freezing tax thresholds and increasing national insurance could not by any measure be described as the most progressive ways of enforcing tax increases in line with his ambitions.

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Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton

I was referring to the tax increases in this Budget, whereas the hon. Gentleman is referring to the increase in insurance, which was signalled by the Chancellor in the previous Budget. I agree, of course, that that applies across the board. My point is that most of the additions in this Budget are concentrated, with a degree of equity that we have not seen before, on those who can afford to pay for them.

As I was about to say, my only concern is why the Chancellor did not go further. Why are the 50 per cent. tax rate and the bankers' bonus taxes just a temporary one-off? Why are they not being made permanent? Why not take the cap off national insurance and make the well-off pay exactly the same proportion as the rest of the population? Why not end the loophole whereby City insiders redefine their income as capital gains so that they pay merely 18 per cent. capital gains tax rather than 40 per cent. income tax, which has made the City of London a virtual tax haven? Taking the lead from the Prime Minister, why do we not bring in a highly popular Robin Hood transaction tax on the banks, as other countries have done, without waiting for an international consensus? Yes, it would be better with such a consensus, but it can certainly be done effectively without it. If all those eminently reasonable proposals were pursued, the balance between tax increases for those who can well afford them and public expenditure cuts that hurt everyone else and begin to undermine the very core of our society could be substantially redressed.

One of the paradoxes-it has already come out in our debate-is that all three parties seem to be saying, with varying degrees of panache, that the coming round of spending cuts will be more swingeing than under Margaret Thatcher. Some parties say it with relish-the Tories will always grab at a chance to shrink the state-but the Labour party is very different in that respect. It might regard the cuts as a necessary pain to be endured, but if that is the party's view I would question it on two grounds.

First, if the Government are anywhere near accurate in their growth forecasts-1 to 1.5 per cent. this year; and 3 to 3.5 per cent. in the succeeding two years-the need for massive destabilising cuts is hugely reduced. If the Government are right in their predictions for the two years 2011 and 2012, gross national product will increase by about £100 billion, of which the Government's take would be roughly £40 billion. That alone would go a long way towards closing the deficit, thus significantly reducing the need for spending cuts.

I would be the first to express the doubt-other hon. Members might have the same view-that Government forecasts might well be unduly optimistic, but even if growth were only 2 per cent. a year, which I think is eminently plausible for those two years in a recovery, Government revenues would still increase by nearly £30 billion, which would make for a major shrinking of the deficit, greatly reducing the need for highly damaging cuts.

There is a second point, however. This is the one part of the Budget with which I take issue. In his statement, my right hon. Friend the Chancellor said:

"We will not go back to the interventionism of the past, but nor can we return to the hands-off approach of the free-marketeers."-[ Hansard, 24 March 2010; Vol. 508, c. 261.]

Of course no one wants a reversion to overall state planning, but the idea that the private sector is, or should be, exclusively the engine of growth, or that it is the sole or main generator of efficiency, is a Thatcherite canard that should be dispensed with rapidly, because there is simply no evidence to justify it.

It cannot be asserted too often or too strongly that the present recession was caused by the dramatic collapse of private investment before the autumn of 2008. Between the preceding year and the succeeding year, there was a cataclysmic collapse in private investment amounting to, I believe, more than 35 per cent. That was hugely aggravated by the reckless excesses-again-of private banking, and the consequences of those excesses. I must tell Ministers that we have as yet been given no commitment, or even a hint, of the establishment of a committee of inquiry or royal commission to look into the causes of what happened and recommend ways of preventing it from happening again, which I believe is urgently needed.

What I think is called for now is a partnership-I am not referring to interventionism-between the public and private sectors, in which at times of deep recession the public sector would take the lead. Private investment will not improve until the prospects of profitability improve substantially. Merely titillating the private sector with a range of tingling but rather small incentives-which is what the Budget does, because my right hon. Friend's room for manoeuvre was extremely small-will not generate the necessary scale of recovery within anything like the time scale that is required for a Government to deal with the still very high level of unemployment. Let us never forget that 2.5 million people remain jobless.

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Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton

I will give way to the hon. Gentleman for the second time.

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Photo of John Hayes John Hayes Shadow Minister (Education)

I am grateful to the right hon. Gentleman. It is arguable that, as he is asserting, in an ordinary economic cycle with consequent ordinary economic conditions, a case could be made for increased public borrowing to offset private saving, but this is not an ordinary saving. The deficit is structural, not cyclical, to an unprecedented degree. I therefore suggest that the right hon. Gentleman's argument does not hold water, although he and I may have a romantic affection for it.

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Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton

Of course I take the hon. Gentleman's point. There is a significant structural deficit as well as the cyclical deficit. Whichever form of deficit we are considering, however, what the market wants is not the cutting of the deficit per se, but the prospect of the economy's being pushed strongly towards a course of growth that will reduce the deficit more quickly and more effectively than any other measure.

I think that the role of the public sector is important in that context, especially given the depth of the recession. I do not say this to be aggravating, but it is factually clear that the private sector will never be prepared to make the first move without the support of-indeed, a strong, vigorous lead from-the public sector. I believe that the one serious omission from the Budget is the omission of any systematic action by Government to promote public sector jobs programmes in certain sectors. The decline in house building has been greater than any in the last 80 years-1.8 million households, 12,000 of them in my constituency, are stranded on the waiting list-and there has also been a decline in infrastructure improvement. We are talking not about "make work" jobs, but about jobs that are desperately needed in our society at present. I believe that there is broad agreement on the need to drive forward the new green, digital economy. That must be done if we are to reduce unemployment by 1 million in two years, thus swinging the economy out of budget-dependent joblessness into job-providing growth yielding higher revenues for the Treasury in the form of income tax, national insurance and VAT.

Let me give credit where it is due: the Government have moved a considerable distance from the market triumphalism of the last three decades. Sadly, however, they are still stuck in Thatcher market mode, in which it is considered only appropriate for the private sector to take the lead. That is an absurd economic prejudice and, in my view, a serious mistake which this Government, once re-elected, should rapidly correct-thus giving a much better grounding to what could otherwise be described as a Budget that has been skilfully balanced in unprecedentedly difficult circumstances.

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Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party 7:46 pm, 30th March 2010

It is a pleasure to follow Mr. Meacher. As he probably knows, I would always have voted for him in internal Labour party elections if only I had had a vote in those contests. I agree with much of what he said, and I shall return to it shortly.

I have been taking part in Budget debates in this Chamber for 23 years. I know that that is a mere smidgen of time compared with Sir Patrick Cormack, but it is a fair spell none the less. I warmly congratulate the Chancellor of the Exchequer, not on the direction of his Budget and still less on its content but certainly on its timing. He is one of the few Chancellors in recent times-over those 23 years-who have resisted the temptation to hold Budgets in the middle of the Cheltenham National Hunt festival. For that, and that alone, I am profoundly grateful, together with many other people in the country, and in that spirit of generosity I warmly congratulate him.

I said that I had participated in 23 Budget debates, but that is not entirely true. During the first, I was unfortunately and, of course, entirely unjustly suspended from the Chamber by a narrow vote of 354 to 19. It was, obviously, a close-run thing. Any of the 354 who are present now-certainly the hon. Member for South Staffordshire-will recognise the error of their ways. Checking the record today, however, I noted that one of the 19 was the Minister for Children, Young People and Families, Dawn Primarolo. I do not forget these things. Let me assure the right hon. Lady that if-perish the thought-the Portillo effect were to overcome her in the coming election, a warm ministerial welcome would await her north of the border. However, I am sure that no such unfortunate circumstance will befall her in the coming campaign.

The Chief Secretary to the Treasury was unfortunate to miss the start of the debate today. Had he been present, he would have been treated to a fascinating vignette featuring the Secretary of State for Children, Schools and Families-the next Chancellor but one-and Mr. Clarke, the shadow Business Secretary, who were discussing whether the cuts proposed by the Government would indeed be deeper and tougher than those made by Margaret Thatcher. I do not think there is much doubt about the Chancellor's view. I have consulted Nick Robinson's Newslog, which has clearly overtaken Hansard as the main record of such matters. Last Thursday's edition reads as follows:

"I asked Alistair Darling to spell out how tough spending cuts could be:

Robinson: 'The Treasury's own figures suggest deeper, tougher than Thatcher's-do you accept that?'

Darling: 'They will be deeper and tougher'."

As far as the Chancellor was concerned, that seemed to be a pretty direct answer to a direct question, but as far as the Secretary of State was concerned earlier in today's debate, that was not the position as he understood it-initially, I thought, just for his Department, but it then emerged that, as he understood it, it was not the position for the entire Government. We went through a range of possible explanations, one of which was incredible. The Schools Secretary actually suggested that Margaret Thatcher had not been engaged in cutting education funding in real terms. I think he should tell Baron Hattersley, who on 12 July 1988 said that the then Prime Minister was planning "massive cuts" in education spending. Clearly, however, the passing of time has altered the Schools Secretary's memory of such occasions. Perhaps he was not advising Baron Hattersley at that particular time.

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Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I cannot help but ask the right hon. Gentleman this question: would he prefer to have a Labour or a Conservative Chancellor after the next election?

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Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

Although I concede it may not be the likeliest circumstance to arise from the campaign and election, with balanced Parliaments a possibility, perhaps Stewart Hosie will be taking up that role-or I understand that it might be the sainted presence on the Liberal Benches, Dr. Cable. Unfortunately, it will not be my old friend Andrew Mackinlay since he, tragically in my view, has decided to forsake the House just when it needs him most to step in to that role. Any of these people, however, would be infinitely preferable to Tweedledum or Tweedledee, whom we might well get.

Enough of this frippery, however; let us move on to the substance-if I can find it-of the Budget. When Members make their final speech in the House, it is traditional for them to refer back to their maiden speech-after all, it often contains the best lines we ever deliver here. In my maiden speech, I said-and I meant it-that my constituency of Banff and Buchan has

"robust characters who work with their hands and get their faces dirty. They are involved in producing, making and catching things. They are people engaged in the manufacturing and primary sectors who are the real creators of wealth. If Government policy was orientated more to the primary and manufacturing sectors of industry, rather than to the rentier economy produced by the Conservative party, the long-term health and welfare of this country would be better served."-[ Hansard, 29 June 1987; Vol. 118, c. 321.]

I believed that then and I believe it now, and I am astonished that the process over recent years has managed to make the rentier economy of Thatcher's Britain of the 1980s look like small beer, because it is clear that this Prime Minister, who once claimed to have abolished boom and bust, had pinned the foundations of that in a totally unsustainable fashion, and now we have landed in the largest bust since the great depression.

When I was elected as a Member of Parliament back in 1987, the public sector's net worth-the value of public assets minus liabilities-stood at 74 per cent. of national income. By 1997, it had fallen to 15 per cent., and if we are to believe the forecasts in the Red Book-I should stress that "if"-in 2014-15 it will reach minus 5 per cent., which is the lowest level since records began. I suppose that boom and bust was abolished, therefore: certainly the boom bit has been abolished, and we have been left with the bust.

What I cannot understand in this process is that in the equivalent debate last year, when I suggested that the detail of the Red Book would, indeed, show that there would be greater cuts than those of Margaret Thatcher in the early 1980s, there was a huge amount of irritation from those on the Labour Benches. Now, however, the Chancellor-if not the Schools Secretary-admits that, and when the Chief Secretary appeared on "Question Time" last Thursday night with me, he immediately confirmed the Chancellor's view when that direct question was put to him. This is a serious situation.

I argued in the debate 12 months ago that until there is enough strength in the private sector, it is vital that fiscal stimulus is maintained. I am not alone in arguing that case. It is not only the right hon. Member for Oldham, West and Royton who agrees, but so too does the International Monetary Fund. We can both quote it in our favour, although that is not something we have done regularly over the years. None the less, the IMF argues that

"one of the key lessons from experiences of similar crises is that a premature withdrawal of policy stimulus can be very costly, particularly if the financial system is weak."

We believed that that was the Prime Minister's position for much of the last year with his warnings that "recklessly and rapidly" withdrawing Government support would

"risk driving our economy back into recession."

Also, the Chancellor argued in his Budget statement of this year:

"To start cutting now risks derailing the recovery".-[ Hansard, 24 March 2010; Vol. 508, c. 235.]

Therefore, just as I looked at the Red Book last year and identified a trend of public spending cuts greater than that of Margaret Thatcher in the early 1980s, chart 2.5 of this year's Red Book clearly shows that the UK's fiscal stance for 2010-11 is negative. Discretionary fiscal policy will act to tighten public spending and taxation relative to 2009-10. One analyst states that

"despite all the warnings about withdrawal" of

"support too early, the fiscal stance is being tightened in 2010/11 by 1.1 per cent. of GDP."

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Photo of Ken Purchase Ken Purchase Labour, Wolverhampton North East

Does the right hon. Gentleman accept, however, that although the Chancellor's remarks may be seized upon and used for great merriment or other purposes, the truth of the matter is that during the years of the Thatcher curse we were not cutting away fat or meat; we were sawing at bones? Given that there has been a fourfold increase in vital services since Labour came to power, does the right hon. Gentleman accept that however deep the cuts, they will never match the damage done by the cuts under Thatcher?

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Photo of Alex Salmond Alex Salmond First Minister of Scotland, Leader, Scottish National Party

I advise the hon. Gentleman to look again at the projections in the Red Book, because if they are followed through they will wipe out all the expenditure and public spending gains in the previous 13 years. Although I do not want just to reiterate this single quote from the Chancellor, which will hang around Labour's neck in the coming campaign like an albatross, please let us remember that the Chancellor did not only say that the cuts would be "deeper"; he also said that they would be "tougher", by which he presumably meant he was going to cut deeply where no one had cut before.

That is the wrong approach. Among the G20 nations, only Argentina and the UK stand apart in choosing to provide no further fiscal stimulus. That might have been justifiable if the rate of recovery had exceeded the Chancellor's predictions, but that is not the case. The Red Book revised the growth forecast for coming years downwards, not upwards, yet despite that the fiscal response remains roughly as it was in the 2008 pre-Budget report.

With the honourable exception of the previous two speakers from the Labour Benches, especially the right hon. Member for Oldham, West and Royton, our debate has centred on how deeply the cuts in public spending must slice and how quickly they must happen. Therefore, it is right and proper that a different approach is suggested. I believe that the best way forward is to grow the economy out of recession for the very reasons the right hon. Gentleman spelled out: growth in the economy is the single greatest determinant of closing a budget deficit, just as a reduction-a loss of capacity in the economy, such as the 6 per cent. we have lost over the past two years-is the dominating and overwhelming reason for the £167 billion public sector deficit. The fiscal stimulus is not the cause of this record borrowing, therefore. The stimulus we have had over the last year is one of the reasons why the borrowing has not been even greater and why the economy has not gone totally off a cliff over the last 12 months. Therefore, it is all the more puzzling that the Red Book does not contain a stimulus for this year.

In the introduction to today's debate we were treated to a discussion of economic history from the shadow Business Secretary and the Schools Secretary. I was reminded that Denis Healey said that Margaret Thatcher had given us "sado-monetarism", but, of course, Joe Stiglitz has called the stance of this Government "fiscal fetishism" whereby

"cutting back means the economy goes into a downturn and the markets lose even more confidence, triggering another recession or depression."

We should learn the lessons of other countries' experiences. In the 1990s, the Japanese Government's debt was 65 per cent. of GDP. Following a prolonged economic downturn and slowdown, they withdrew fiscal support too soon, and that debt is now approaching 200 per cent. of GDP.

There is a strong case for a directed capital acceleration or fiscal stimulus this coming year to do the very thing to which the right hon. Member for Oldham, West and Royton drew our attention: getting the economy moving into a growth cycle, which would have more effect than anything else in reducing the budget deficit. We cannot cut our way out of a recession, but we could cut our way into a double-dip recession. Yet the Red Book proposes no further fiscal stimulus, so that is precisely what those on the Treasury Bench are proposing.

These are difficult times for public finances and it is proper that we identify not only general efficiency savings, as the other parties have done, but projects that could be cut altogether and rendered null and void, thus saving the country billions of pounds. I am thinking of the £100 billion over the next generation that is proposed to be spent on Trident missiles. Miss Widdecombe, who is leaving the House, said that one of her great delights during her time in this place was seeing both parties move to support the Trident missile. Let me forecast that both Labour and the Tories will have to move in the opposite direction over the next few years, because the missile system is now not only totally unjustifiable and immoral, but totally unaffordable under any sensible projection of the UK's finances.

As we ditch the Trident system, so let us ditch the remnants of the identity cards system, the underground repository for nuclear waste and, as the climax of this identifiable cuts agenda, which contrasts with the vagueness of the efficiency savings proposed by the Government and the Opposition, we could abolish an entire Government Department in the form of the Scotland Office in Dover house. That would save only £10 million, but I am sure that when the Conservative party looks into its innermost soul it will acknowledge that it has always wanted to abolish an entire Department and will see the sense and logic of getting rid of the Scotland Office, which has managed to overrun its budget by 15 per cent. over the past year. That has been done under the nose of the Chief Secretary to the Treasury.

I have enjoyed and relished this Chamber for all of my 23 years here. The rest of the Palace of Westminster I can take or leave, but this is a fantastic Chamber and a fantastic place for debate to be joined. It has a great atmosphere and at its best it is second only to the Scottish parliamentary Chamber, which looks better on telly. None the less, this is a fine place to have enjoyed debating. I have met and clashed with a number of formidable debaters and speakers from both sides of the House, and I have enjoyed every minute of doing that. I wish well the individual Members-if not necessarily their parties. However, I should say that what has happened over the past 23 years has strengthened my absolute conviction that the case for our having full determination over Scotland's finances and resources has never been more urgent and has never required to be better made than it is now.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

May I remind the House that there is now a 12-minute limit on Back-Bench speeches?

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Photo of Ken Purchase Ken Purchase Labour, Wolverhampton North East 8:03 pm, 30th March 2010

It is an interesting experience following Mr. Salmond, who is known for his rapier wit. I shall resist the almost irresistible temptation to joust with him this evening, because I would not want to have to make a round condemnation of nationalism in any form. I, of course, wish him well in his future role in the Scottish Parliament. It would not have been my personal choice to have a Parliament in Scotland. Birmingham and its surroundings has a larger population than Scotland in any case, so if there is to be a Parliament in Scotland, there should, thus, certainly be a Parliament in the west midlands-but I think that we should resist that temptation too.

I welcome this Budget, not because I think it is scintillating or that it will transform people's lives but because this 14th Labour Budget was smart. It picked up on a little of the Belize debate, by bringing about a new tax regime. It was also smart in its use of changes in stamp duty. The Budget was sensible, because the windfalls afforded to us by lower unemployment than was expected and by the bigger take from the banking bonuses have been used to reassure the international markets, rather than to have a spending spree just before a general election. I believe that that is understood by the British public and will be appreciated.

The Budget is also well crafted. After almost every Labour Budget the Conservative press have done their best to disaggregate it, to take it apart and to ensure that nobody can feel that we have had a good Budget. We have had 14 very good Budgets, but this one was particularly well crafted and it has been extremely difficult to take it apart in the usual manner. Those 14 Budgets have meant cumulative benefits to my constituents which I do not think would have accrued from a continuation of Conservative policies. Pensioner credits, child credits, heating allowances, and Sure Start and children's centres make an extraordinary difference to the quality of life of people in my constituency, as does the minimum wage.

I do not think that the minimum wage is a substitute for vigorous trade union action. There can never be a better guarantee of good working conditions paid for at a proper rate than vigorous, strong and well supported trade unions. The minimum wage is a simple mechanism that, in the absence of strong trade unions, has produced a sensible outcome for people who were being paid a miserable pittance, of whom there were many in my constituency. I am thinking, in particular, of younger people in that regard. Younger people in my constituency were being paid as little as a pound an hour for working in a petrol station, and if there were any deficiencies at the end of the evening, they were expected to make those up. The minimum wage has been a very helpful development for my constituents.

Waiting times have reduced dramatically in the health service. We have four times as many consultants in my local hospital as there were previously. We also have the health teams to back them up: the nurses; the technicians; the maintenance workers on the estate; and the hotel service workers who deal with laundry, the food and the cleaning services, which are so vital to us. The massive improvements in waiting times have made such a difference to so many people. I pay tribute to Sir Patrick Cormack, who gave an excellent speech, and I appreciate the support that he has given to the hospital that Wolverhampton shares with his constituency. This Government have done a terrific job in improving the quality of people's health, in ensuring better budgetary control, on the quality of treatment and, above all, on providing people with very much better service through these improved waiting times.

On education, considerable increases have, again, been made in staffing and we have brought new technology into classrooms. We said, "Education, education, education", but just as importantly the then Prime Minister promised that every child would have access to a computer. Who believed that that would happen? Now, every school that one visits has been re-equipped and equipped again with the latest technology to assist pupils in learning. That has been a tremendous achievement.

My disappointment, which I cannot cover up, is that we have spent far too much time on structures, new missions, reorganisations and this idea of choice-it is a myth really. I am sorry to say that until there is a 10 to 15 per cent. surplus of places, the idea of parental choice is nonsense. I wish that Labour Front Benchers had recognised right from the start that the Labour mantra "Every school a good school" was the right one for socialists to pursue. Despite the great increase in expenditure, which was most welcome, and other wonderful achievements, the obsession with form, content and reorganisation has been a missed opportunity.

On council housing, Labour has a great record on refurbishment, but why have we not been building? Why, in Wolverhampton, do we have as big a waiting list for council houses as we had in the 1970s when we were trying, and succeeding, to build council houses? If the health service is Labour's greatest legacy to date, the greatest legacy that we could produce for public health is the provision of well-maintained council housing for people who need it.

I want to discuss manufacturing, which is at the heart of my constituency. Throughout the post-war years, almost 70 per cent. of the people in my constituency were involved in manufacturing either directly or indirectly, but that percentage has fallen dramatically. From the '80s onwards, there were terrific job losses, which continued through later years. But modernisation has come, and productivity has been massively increased by the efforts of workers and managers pulling together to ensure that the best technology is available and that there is investment. Perhaps other hon. Members will, like me, recall visiting factories in their constituency where they would be likely to see a machine that had been pulled off the sea bed after the first world war, which some poor sod-excuse me, Mr. Deputy Speaker-had to operate. Now, old engineers like me can barely understand the technology that is being used to improve productivity in our factories.

I welcome the approach that we have taken to boost apprenticeships, which are the lifeblood of engineering and our prosperity. I pay tribute to the aerospace industry in my constituency for continuing to take on apprentices through all the bad years. Goodrich-formerly known as Lucas, and as Hobsons before that-has continued to take boys and girls into apprenticeships year on year, and that is paying off. It is doing extremely well and is taking on more people. We must grasp the new opportunities that improvements in manufacturing can bring in international markets, but such opportunities must be tempered by the recognition that all trade from now on must be fair trade that recognises the rights of workers here and internationally. It must be ethical.

The mention of ethics makes me recall my friend and fellow socialist Robin Cook, whose tragic death has left a lacuna at the heart of Labour politics. He is sorely missed. He was my friend for 20 years, and I still miss him now, and I believe that the House also misses him. He was a great parliamentarian. He was the Leader of the House and the Foreign Secretary, but he will be remembered for his brave and intelligent attempts to bring reform. He warned us what would happen in relation to freedom of information, and we ignored what he said to our present-day cost.

It remains for me to say something about this Parliament-the tribune of the people. Again, I agree with my colleague the hon. Member for South Staffordshire. This is the tribune of the people, but the fourth estate continues to criticise, undermine and damage, almost certainly at the expense of the vitality of our democracy, and we find ourselves in positions that we have to defend when we should be getting on with the business here. A free and vigorous press is a necessary, but insufficient, part of our democracy. Above all, it needs to become rhetoric-light and hyperbole-light. It should try to produce reports that reflect the reality, rather than producing some of the diabolical reporting that we have had the misfortune of seeing.

As I leave this place, I thank the many people here who have treated me with kindness and fairness. The staff have been terrific. I thank the people of Wolverhampton who elected me four times, even though they once failed to do so, which was a terrible thing to do, and I thank the Labour party for choosing me to stand for it. Most of all, I thank my wife, without whose support and love I could not have done what I have done. This year, we celebrate 50 years of marriage. I leave this place a happy man.

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Photo of Tim Boswell Tim Boswell Conservative, Daventry 8:15 pm, 30th March 2010

First, may I congratulate Mr. Purchase? I have always found him to be an authentic and tremendous voice for the manufacturing industry-a great tribute and honour to the House. In making my own concluding remarks, I also want to mention my great affection and respect for my hon. Friend Sir Patrick Cormack and my right hon. Friend Miss Widdecombe, who made distinguished contributions, as did the leader of the Scottish Nationalists here, Mr. Salmond.

This has been a rather good debate, which has been enjoyable to listen to. There is not much time left, but I must say that I am struck by the way in which a career can cycle around and come back to where it was. In July 1966, I joined the Conservative research department as a very young economist. The day after, one G. Brown, Her Majesty's Secretary of State for Economic Affairs, had confided in the House, and I paraphrase, "We are running the economy in a way that no economy has ever been run before." Now, one could find that another G. Brown and his Chancellor are running the economy in very much the same way as the first G. Brown did 44 years ago.

At some time, we all have to get around to clearing out our offices, and I am doing that. Today, I came across the transcript of the Committee stage of the Bank of England Act 1998, which my right hon. Friend Mr. Heathcoat-Amory has also mentioned. In that Committee, we discussed the independence of the Bank of England and the restructuring of the regulatory system. On 4 December 1997, I moved a series of amendments that were intended to test the strength and integrity of the Government's tripartite financial regulatory system, and we were told that it was all down to a memorandum of understanding. All I will say now-with hindsight, I readily admit-is that things went wrong not just in Britain, but internationally, and beyond our worst fears. They have triggered a massive recession and have paved the way for what I would describe as a hiatus of a Budget, because everyone is too frightened to move, at least on the Government side. They have left us all in the waiting room. We are waiting for some very unpleasant fiscal surgery, further particulars of which will be afforded at a later stage.

On the balance of judgment, I have found it interesting that the voices from the left-we heard two together-and from the Scottish Nationalists have gone for the public spending solution. I do not believe that is plausible, but we have to find a balance, and I do not want my position to be caricatured at this late stage as saying that we want a kind of fiscal masochism of any kind. We need to tune things very carefully, but we need to bring the private sector with us, but the fear of further tax increases is the best way of killing any recovery.

Let me make two brief points that are more or less tax-related, and then three wider points. I regret that the Government have done nothing to abort the proposals to increase national insurance contributions or to reverse their proposals to truncate the personal allowances and superannuation deductions for higher earners. In that alone, they have aggravated a problem that has long troubled me, because they have imposed further arbitrary fits and starts in what should be a reasonably progressive-I hope moderately progressive-tax system.

Just as there are ridiculous marginal rates with benefit withdrawals, we now have in the tax system-wilfully-hurdles, dips and troughs. Spikes of marginal rate that are highly anomalous create deterrence. That is perhaps best seen, and most relevantly to the Budget, in the classic slab system that still applies to stamp duty. How many transactions for houses are done at £250,001, or at £1,000,001? The answer is very few, and that of course creates marginal rates on the order of thousands of per cent., because it is all or nothing when one goes over the limit.

The second anomaly has to do with national insurance contributions. They have been built up by the Government as a second and politically more palatable form of income tax, but there are again major anomalies. For instance, one arises when a man reaches 65: I have worked out that the grossed-up value of no longer having to pay employee national contributions is almost as great as the value of the pension. We need to tackle such anomalies if we are to provide rational, coherent and consistent incentives for people to stay on in the labour force. Given the possible abolition of the default retirement age, such an approach might even give employers some incentive to maintain people in employment after that age.

I shall share my wider concerns briefly with the House. They may appear a bit diverse, but I think that there is a common underlying theme. My first concern is that we still say too little about effective productivity and competitiveness. That has been a bit depressing today, yet we are in a lethally competitive world. Alongside British car firms, Volvo has just gone to a Chinese buyer. On the financial side, it is interesting to note that the City of London Corporation commissioned an Asian consultancy to produce reports on global financial centres. The seventh and final report has just been published, and the research has been described as being

"a wake-up call for policy makers that London's standing as a world-leading global financial centre should not be taken for granted."

Add in continuing concerns about skills deficiencies and the declining productivity of the public sector, and we have a fight on our hands.

If we are to fight that fight effectively, we must look to our social as well as our economic cohesion. Strangely, my upbringing took place on a co-operative farm. My father was a manager, and a Tory. I have stayed in the one-nation camp: I have not departed from that, and I have great sympathy with the renewed emphasis-it is not new-that my party is placing on social action and the voluntary sector.

I believe that the new emphasis will soften the harshness that any Government would have to impose on our society, and that it will help tackle the frustration that we feel as we see more of our lives and income going to the state. The state proclaims itself to be beneficent, but it does not really provide the services that we feel that we should get, and we do not have ownership of the process.

Most of us here can argue our way to getting our full share of the benefits of the public sector. However, I am always conscious of the people who, faced with that problem, come to see us in our surgeries because they are confused, demotivated and disempowered.

We in this place have a duty to think together about how we can equip all our people with a good education as a basis for personal and social development, and with the right mix of skills. They must also have a reasonable progression in employment, and in their chance to take personal responsibility. That should include a share in public and local decision making, which in turn implies a more decentralised public sector. If we do not get that, we will remain stuck with a high deficit, and with national underachievement and despair.

That brings me to my final point, which has to do with trust. The financial crisis was about a collapse in trust, and I shall always remember a cartoon that depicted a situation that I think that we have all seen. A person is about to a pay a filling station cashier. A queue is forming behind him, and the cashier says, "It's all right, sir. Your credit card's OK, but we're just making another call to check whether your bank is."

No one believes in the banking system. In the same way, no one believes in us as politicians. I think that it is all related. Whatever we say, people immediately throw it back at us. The answer is that we all have to learn to be more accountable, which involves more than process, or form, or box ticking. If we in this place want to be trusted again to make decisions on behalf of society, we need to know-and make clear-who carries the can for failure.

We cannot allow things to collapse through the middle, without anyone being responsible for what has happened. This recession has not been an act of God; it has been an act of man-a series of systemic failures. We need accountability at the highest level of state Government. We know that these have been difficult times, and government is never easy. Any Government would have been tested to destruction at the present time but, partly through their over-optimism, arrogance and rhetoric, we now find that this Labour Government have failed. I think that they will be held accountable for that very shortly.

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Photo of Edward Leigh Edward Leigh Conservative, Gainsborough 8:26 pm, 30th March 2010

It is a great pleasure to speak in this debate. It is rather like the ones that follow a general election, when one has to speak after maiden speeches and say, "What a marvellous prospect my hon. Friend for Daventry will certainly be in the years to come in this Parliament, given that he has made such a brilliant speech!"

We have had some wonderful speeches-from the right hon. Members for Banff and Buchan (Mr. Salmond) and for Oldham, West and Royton (Mr. Meacher), and from Mr. Purchase. We have had a lot of old Labour speeches: perhaps they are as much unreconstructed old Labour as much as I am unreconstructed old Tory. We have a lot in common.

The right hon. Member for Banff and Buchan made a most marvellous speech. We love him so much because we know that he really loves this place: for all that he is a so-called nationalist, he is very sad to be leaving, and that is why we hold him in such respect. We also had a marvellous speech from my right hon. Friend Mr. Heathcoat-Amory, who totally confused us by trying to work out what a billion seconds add up to.

We got there in the end, but he was making the very important point that language has been so corrupted that no one-not the public, nor us-can visualise what a billion or a trillion is. That is why it is becoming increasingly difficult for us to put pressure on Governments to control public spending. However, it is worth saying that the deficit is so huge that the Government will have to borrow more in 2009-10 and 2010-11-£166 billion and £163 billion, respectively-than the entire income tax take last year. As my right hon. Friend said, that will raise the debt to £1.46 trillion.

What is £1.46 trillion? What is a billion? This is how I describe a billion to my constituents. Look at those mansions in the constituency of the Liberal party's spokesman, Dr. Cable. He calls them mansions, but many of them are ordinary family houses worth £1 million, so 1,000 of those make a billion. That is how we have to visualise those figures to try to get home to the public the appalling difficulties that we are in.

Once again, the Chief Secretary, unfortunately, is not with us, although I hope he will respond to all these points, because that is what Parliament is for. It is not about making set-piece speeches; it is about responding to the debate. My appeal to the House and to those on all three Front Benches is that we should be honest. The fact is that in the next Budget, after the general election, for all classes of taxpayer-from those at the very bottom to those in the middle and those at the top-the real burden of taxation will increase. It is better to say that now.

We will not be able to get that money off just the rich. True, the Government have increased taxation on higher income tax payers by £7 billion-they will do so by 2012-13-but the Treasury believes that the yield from the 50 per cent. rate, for instance, will be just £2.4 billion, because high earners will adjust their behaviour in ways that mean that they avoid incurring all the increased liabilities. We know that, so let us not delude ourselves that the rich will pay. We will all pay, from the bottom to the top.

The next point that I want to make about honesty is that all Departments of Sate will have to take cuts. That includes the Department of Health. That is the honest truth. Health spending has doubled in the past 10 years. We employ 1.6 million people in the NHS, which is, I think, the second largest employer in the world, but there has been a catastrophic decline in NHS productivity. I am sure that my hon. Friends, because they are honourable people, will meet their pledge to increase resources in real terms every year if they are lucky enough to form the next Government, but of course the famous Baroness Thatcher-the great right winger, so often referred to in the debate-did exactly the same. However, if health spending is increased by 0.5 per cent. in real terms, that will ensure a cut in health outcomes because of the ageing population and the increasing number of more and more expensive drugs.

Let us be honest with the people: everyone will end up paying more tax and they will all see cuts in Departments, including health, international development, education and transport. If health and international development, but particularly health and the benefits system, are absolved from cuts, that will ensure massive cuts in other Departments.

My Committee has already alluded to the black hole in the Ministry of Defence budget. Even if we assume the 2.7 per cent. increase in defence spending, which by the way will not happen because whoever forms the next Government will probably freeze the defence budget, there is a £6 billion black hole. If we start to make real cuts, that could rise to £80 billion. Let us be honest about it: there will be real cuts and real tax increases. There will also be these famous efficiency savings.

I hope that this is not my valedictory speech as a Member of Parliament-that is up to the good folk of Gainsborough-but it is certainly my valedictory speech as Chairman of the Public Accounts Committee. I think I know a little about efficiency savings. I have interviewed 1,000 civil servants over the past 10 years and chaired 420 hearings. Let us not place too much credence on efficiency savings.

The Budget promised, did it not, £11 billion-worth of efficiency savings. Many of the areas highlighted by the Government chime with areas that my Committee has had to focus on, such as the overuse of expensive management consultants, wasteful use of IT, inefficient management of the Government's vast property estate, poor procurement of goods and services and the desperate need of better project management. If there is one way to keep a secret, it is, as we all know, to make a speech in the House of Commons. The next best way is to send a letter to all colleagues, because it will certainly end up in the bin like these leaflets from the Conservative and Labour parties, which we have all been putting through letterboxes. I have tried to outline in a letter to colleagues some of the lessons that can be learned.

Let me say a little about these famous efficiency savings. Last December, the National Audit Office-a non-political body-reviewed the savings claims made respectively by the Department for Transport and the Home Office. It cast enormous doubt on the reported savings. In 2007, we found that there was a question mark over nearly three quarters of the claimed £13.3 billion annual efficiency savings. The philosopher's stone has been referred to in the debate. People imagine that efficiency savings are like that-that somehow we can turn iron into gold. That simply does not happen. There is wishful thinking going on here.

Those claims, from either party, must be real and demonstrable. They must be delivered year after year. They cannot be just one-offs. They are not genuine efficiency savings if, as we have found in many cases, they are achieved at the expense of the quality of the service. This is an opportunity. Just as falling markets are an opportunity to promote efficiency in the private sector, so the freeze in budgets that we are now going to achieve, because we have no choice, should produce real efficiency savings. But do not assume for a minute that they can be achieved without some cut in the service provided to the public. I am delighted to see the hon. Member for Twickenham, because, like me, he has often questioned these efficiency savings.

We hear so often about the sharing of back-office services, as if this was a great achievement. The PAC has heard great claims about these back-office functions. Let us look at one. The Department for Transport planned and implemented a shared corporate services project. That is the sort of language that the Treasury loves. This was carried out with stupendous incompetence. Rather than saving the taxpayer £57 million over 10 years, which, of course, all adds up to these £11 billion of efficiency savings, it will, because of the incompetence with which it was carried out, cost the taxpayer an extra £81 million, so no efficiency savings there. Perhaps one reason was that the computers spewed out instructions in German. Perhaps the thinking was that the only way to be efficient in Whitehall is to speak German. Unfortunately, most of the clerks in the Department for Transport do not speak German, so do not place too much credence there.

Time is short and I could go on and on, but I will not because it will bore hon. Members and anyway I will be called to order in a couple of minutes. The Budget announced plans to realise property savings of £5 billion a year in running costs and £20 billion in disposals. If we believe that, we will believe anything. The Inland Revenue, of all people, was to save £236 million by reducing the size of its estate. We looked at the Mapeley STEPS contract. What an extraordinary contract that was. Not only was it carried out in such a way that it did not provide value for money, but the Inland Revenue was giving the contract to an offshore provider. The Inland Revenue of all people, which was supposed to raise taxes, hired as its estate provider somebody who is a taxpayer offshore.

Consultancy spend, we are told, will be cut by 50 per cent., but the PAC found that central Government alone was paying out nearly £2 billion a year in consultancy fees. A further £100 million is to be saved by cutting benefit fraud. Benefits are staggeringly complex, but we have to take action. Last but not least is wiser and more effective IT spending. Apparently, if the Treasury is to be believed, the budget will be cut by £500 million. Look at the Rural Payments Agency, look at the NHS computer system. It will not happen. If we are to have real efficiency savings, we have to have an honest debate. As I said at the beginning, we have to raise taxes, balance the budget and produce real cuts in all programmes. Let us be honest with the people as we go into this general election.

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Photo of Sammy Wilson Sammy Wilson Shadow Spokesperson (Education), Shadow Spokesperson (Treasury) 8:38 pm, 30th March 2010

This has been an enjoyable debate. Listening to the valedictory speeches from a number of well-respected Members has been a great experience. In particular, because I served under him in Northern Ireland Affairs Committee, I want to refer especially to the help that Sir Patrick Cormack has been to me as a new Member of the House, and the enjoyable time that I had under his chairmanship. Some Members are leaving public life altogether. Mr. Salmond is now going to run part of the Celtic fringe of this great United Kingdom, and I wish him well in that.

The debate started off with an exchange between the Secretary of State for Children, Schools and Families, who probably would like to be the Chancellor, and the shadow Business Secretary, whom many on the Opposition Benches might wish was the shadow Chancellor. But the one thing that became clear during the early exchanges in this debate was that this Budget is not the real Budget; it is a phony Budget. As the debate has developed, we have heard people talk about the hard choices that lie ahead and the difficult decisions that have to be made, but none of those difficult decisions has been made in this Budget; it is quite modest. Indeed, it contains about £1.4 billion of new measures, as opposed to the £5 billion of new measures that were in last year's Budget.

Coming from Northern Ireland, I welcome some measures, such as the delayed increase in fuel duty, which in my constituency, with its large rural area, will be welcomed by those who cannot avoid using private transport and do not have the option of public transport. The fuel duty increase would have been a huge imposition on them. Doing away with stamp duty for the first-time buyers of houses worth less than £250,000 will also be welcomed in Northern Ireland, where house prices ran well ahead of first-time buyers' ability to enter the housing market. With almost 20 per cent. of people in Northern Ireland in fuel poverty, the additional winter fuel allowance will be welcomed, too. The Northern Ireland Executive will benefit by about £12.1 million in Barnett consequentials, and, even though that money will be offset by additional efficiency savings of almost £122 million this year, it will nevertheless be welcomed.

However, we all recognise, and have recognised during this debate, the need to reduce public borrowing. Although the Chancellor has made much of the fact that borrowing is £11 billion less than he expected, it has nevertheless increased by £20 billion since last year, and our total borrowing is now 12.6 per cent. of GDP, with interest payments amounting to the same as that which we spend on defence. We know that that situation is unsustainable, and, as Mr. Leigh, the Chairman of the Public Accounts Committee, has pointed out, we need to be honest with people. We cannot pretend, as some Members have done, and say that after the second world war we had a huge debt and waited until 2002 to pay it all off. We do not have that luxury, given the financial situation and how the banking system and financial markets will view the deficit, so we need a degree of candour with the electorate. We need also to tell the electorate that the issue will not be dealt with just by efficiencies; there will be cuts to front-line services, and we will need to look at some things that we do in the public sector and whether we should continue to do them.

I hope that this does not sound contradictory, but I welcome the fact that, although we are at least now considering how we reduce the deficit, the Chancellor has not jumped in to take action and make swingeing cuts. Whether they are as deep as the cuts that Mrs. Thatcher introduced in the 1980s, or more modest, when I look at the issue from the perspective of Northern Ireland, I think that this would have been the wrong time to make them. Northern Ireland is still not out of the recession, and, while there has been a gradual upturn in other parts of the United Kingdom, unemployment is still increasing in Northern Ireland, house prices are still falling and the purchasing managers index, which shows the orders that are coming through for businesses, has fallen in Northern Ireland while it has increased elsewhere in the country. Although we will have to face the deficit, there are nevertheless good grounds for saying that the reductions should not be introduced immediately.

There has been some debate about whether there is any connection between spending now and the recovery. I would argue, after looking at some public sector infrastructure projects in Northern Ireland, that spending now gives us better value for money. Construction costs are down by 20 per cent. Because of the state of the construction industry, we can get six schools for every five that we purchased before, or we can get extra miles of road. Indeed, were it not for public investment in Northern Ireland, the construction industry, which now has about 53 per cent. of its work coming from the public sector, would have even greater levels of unemployment than it has at present. In the past year, there has been a reduction of more than 7,000 in jobs in the construction industry, but that could have been far worse without continued public spending. I recognise, however, that that cannot go on for ever. I also accept that Northern Ireland cannot be exempt from what happens in the rest of the United Kingdom.

Two things are essential. First, we must have a greater degree of certainty about what is going to happen with the level of cuts and reductions. That has not been the case to date. Departments need to plan ahead to see how they can deal with the reductions that are going to be made. Those reductions cannot suddenly be parachuted in-some preparations must be made.

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Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

The truth is that preparations are being made at this precise moment, but people are not being told about it.

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Photo of Sammy Wilson Sammy Wilson Shadow Spokesperson (Education), Shadow Spokesperson (Treasury)

That brings me to my question for the Chief Secretary; I hope that we will get some answers when he replies to the debate. If the plans are there-if it is known what will happen to departmental expenditure levels-why is that information not being passed down so that proper plans can be made by Departments and, especially, devolved Administrations, and they can play their part in a constructive approach to the difficulties that face us as a nation? As the position develops-the plans that are in place may well change-why cannot information be continually fed to devolved Administrations so that they know how the situation is changing?

Secondly, there are ways of protecting public services, one of which is a cap on public sector pay. I know that the Chancellor has indicated that he does not want to see pay increases of more than 1 per cent. However, we still have a bonus culture in the public sector. Ironically, Northern Ireland is the only part of the United Kingdom in which, despite the recommendations of the Senior Salaries Review Body, bonuses for senior civil servants were not implemented last year. That is in keeping with the approach that we need. Bonuses often take up a huge part of public sector pay and are a cause of public resentment, as well as queries as to why people are getting paid huge bonuses when Departments are not performing. It would be useful to hear the Chief Secretary's thoughts about ongoing public sector pay negotiations and whether a pay freeze would be a way of protecting, at least to some extent, the provision of public services.

I do not believe that the current situation is still sustainable, and anyway, I am a natural philosopher and my view of life is that I would rather people have their own money to spend than have it taken off them in tax increases and spent by the public sector. There is a balance to be a struck and a need for certainty, and the importance of timing cannot be overestimated. We will gain in credibility as a Parliament only if we approach the financial difficulties in an honest way, as the hon. Member for Gainsborough said. We must lay out all our cards for the public. I listened to interviews on "Newsnight" the other night, and people were saying, "Do they think we're fools? We know that if we're spending more in our own houses we have to cut our spending, and we know you've got to do it for the nation."

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Photo of Brooks Newmark Brooks Newmark Opposition Whip (Commons) 8:50 pm, 30th March 2010

I first draw Members' attention to my ever-diminishing entry in the Register of Members' Financial Interests.

I join others in paying tribute to my hon. Friend Sir Patrick Cormack, my right hon. Friend Miss Widdecombe and my hon. Friend Mr. Boswell for their services not just to our party but to the House. I doubt that I will last as long as them in the House, and I have huge respect for all they have achieved. They are incredibly independent individuals who have followed their own paths and achieved great success here, and I wish them luck after they retire.

In Budget after Budget when he was Chancellor, the Prime Minister consistently pledged, "No return to boom and bust". It was his defining mantra, but now we know that he did not abolish boom and bust, he simply fuelled it. Millions of families, pensioners and businesses are now paying the price for more than a decade of economic mismanagement and fiscal imprudence.

The Budget that we are debating was the current Chancellor's chance to leave a better economic legacy for our country than his predecessor, the Prime Minister. It was a chance to present a credible plan, get the British economy moving again, support hard-working families, offer a new direction for public services, reverse the tax on jobs and offer equality of opportunity for all. Instead, we got a do-nothing Budget from a Government with nothing new to offer. The legacy of this Labour Government is clear: they have taken Britain right from boom through to bust. It is on that record of boom and bust that the Prime Minister will shortly be judged at the ballot box, and it is that record that I wish to examine a little today.

I begin with the budget deficit. With due respect to Frank Dobson, who is no longer in his place, he seems to live in a parallel universe. We are living with perhaps the worst budget deficit in the G7. We have a worse deficit than even Greece. In fact, I believe it is the worst in the developed world. For too many years, the Prime Minister has been effectively maxing out the nation's credit card, and his solution and that of the Chancellor in the Budget is to say, "Let's take out a new credit card."

We are treading on dangerous ground, and in fact the Government have been chastised by both the European Commission and the Bank of England for their lack of clarity in dealing with the budget deficit. The financial markets have begun to punish their fiscal imprudence. I believe that in the credit default swaps market, McDonald's is rated higher than the British Government today.

This Budget did nothing to allay anybody's concerns. Reducing projected borrowings by a projected paltry £11 billion provides no basis for rejoicing. Indeed, as we have heard, the Red Book shows that Government borrowing in 2009-10 is projected at £166 billion, which works out-I am sorry that Mr. Browne is not here to hear this-at £456 million a day, or £19 million an hour, or £317,000 a minute, or £5,280 a second. That is the legacy that this Government are leaving for us to clear up, after 6 May hopefully.

On public debt, the last Conservative Government bequeathed national debt of some £350 billion. Under the Prime Minister's stewardship and his ceaseless moving of the goalposts of his now discredited golden rules, debt is forecast to reach some £777 billion this year. That means that each and every person will owe a liability of an extra £23,000 by 2014. As debt has increased, so has the cost of servicing it. We read in the Red Book that the debt interest for 2010-11 will be £41.6 billion. As we are discussing education today, I should say that that is in fact bigger than the whole of the schools budget of £40.6 billion. However, that is not the whole story. The Minister may be familiar with my analysis of the true extent of Government debt. Counting liabilities that are hidden off the balance sheet, debt now perhaps stands at a staggering £2.2 trillion. That includes public sector pension liabilities, to which my right hon. Friend Mr. Heathcoat-Amory alluded, which are almost £1 trillion, private finance initiatives and bank debt-we must count the debts of the banks that we have acquired.

The Chancellor may be comfortable for debt to rocket to a predicted £1.4 trillion on-balance sheet in 2014-15, but that is more than 100 per cent. of gross domestic product, and we cannot keep our heads in the sand any longer. The hard decisions must be taken now, and we need mechanisms in place to prevent any future profligate Chancellors-of any party-from frittering away taxpayers' money. The Conservative party would establish an office of budget responsibility to provide an independent audit of all Government liabilities and to hold them to account for all their fiscal promises.

This is all about transparency, and the Government have not been transparent with the public on the true extent of the nation's debt, among other things. A lack of transparency permeates every aspect of the Prime Minister's legacy of boom and bust, yet surely now more than ever, taxpayers deserve transparency. The Government have rightly demanded rigorous transparency from banks and companies, but they lose all credibility when they refuse to apply the same standards to themselves. It seems that few lessons have been learnt. In his Budget speech, the Chancellor failed to mention the stealth hikes that are hidden in the small print. He has frozen all personal allowances, effectively increasing taxes for 30 million hard-working individuals up and down the country.

The Chancellor also promised details on spending cuts, but instead, we have a £20 million black hole where details of future spending should be. Departmental officials have even admitted that they know nothing of those details. For a Government claiming economic rectitude to have no spending plans beyond next year simply defies belief, and economic and financial credibility. We need to create transparency throughout government-both local and national.

Savers are the economic bedrock of society, and those who prudently put away money during the good times in preparation for the hard times must be rewarded, yet that logic is entirely antithetical to our boom-and-bust Prime Minister. That is why household savings had dropped almost to zero when the recession hit. We are consistently one of the lowest-saving countries in the OECD. I was pleased with the doubling of the individual savings account limit in the Budget, but we need to go further to restore a savings culture. The path to prosperity depends on an economic model based on savings and investment, not consumer borrowing and Government debt.

The poorest pay the highest taxes: the poorest 20 per cent. pay 39 per cent. in income tax while the richest 20 per cent. pay 35 per cent. Indeed, when the withdrawal of benefits is taken into account, low-paid earners have a marginal tax rate of some 96 per cent. Furthermore, child poverty has increased for the third year in a row. Today, some 4 million children live in poverty. Tony Blair's ambition of halving child poverty by 2010 has been left in tatters by this Prime Minister.

As the Joseph Rowntree Foundation has concluded, the strategy against child poverty and social exclusion pursued since the late 1990s is largely exhausted. Today, one in five young people cannot find a job. In my constituency alone, unemployment has trebled. Will the 1 per cent. increase in national insurance be an incentive for employers to hire more people? I suspect not, and we are right to propose abolishing it.

The Prime Minister talked about the collapse in sterling. In 1992, when he was shadow Chancellor, the Prime Minister said that

"a weak currency arises from a weak economy which in turn is the result of a weak Government".

Never was a truer word spoken. We have heard about the sell-off of gold at prices four times below its level today, losing the Exchequer some £6 billion. The tax credits system has lost billions of pounds through incredible mismanagement, and the Public Accounts Committee has pointed out that

"tax credits suffer from the highest rates of error and fraud in government".

My constituents would certainly agree. Every week I, like many hon. Members, hear from families facing real hardship, uncertainty and stress at a time they can ill afford it. I am a firm supporter of tax credits, but the system needs urgent reform. For a start, the Government should have used this Budget to focus on tax credits for households with incomes less than £50,000.

The dissection of the Prime Minister's blueprint from boom to bust could go on, but the message is clear. The very boom and bust that the Prime Minister hubristically claimed to have abolished will now be the epitaph of this Labour Government. The Chancellor said that this Budget would be about choices, and his choice was simple-generate the ideas and reform necessary to get Britain moving again, or end Labour's terms in office with a continuation of the Prime Minister's boom and bust politics. The Chancellor made the wrong choice. A Budget comprising back-of-the-envelope sums and delivered with one eye on the ballot box was not the Budget that Britain needed. We do not need more of this debt, waste, tax and irresponsibility. Short-sighted political positioning should never come above the economic interests of the nation. We need change, vigour and ideas to get our economy moving again. In a few weeks' time, I hope that that is exactly what we will have.

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Photo of Andrew MacKinlay Andrew MacKinlay Labour, Thurrock 9:02 pm, 30th March 2010

Much of this long Budget debate has focused on apportioning blame for the present crisis. Many institutions and individuals, in Parliament and outside-and Parliament itself-must take a considerable amount of the blame for the problems that we face, including the failure to regulate, over-confidence and arrogance. However, the crisis also took place against the backdrop of things that were way beyond the capacity of the UK to control or monitor. We have to be realistic about that.

One thing of which I am certain is that the Chancellor and the Prime Minister are the best people to provide good stewardship and see the UK through the crisis. I have two historical parallels. At the time of the Norway debate, 70 years ago, Winston Churchill should arguably have taken some of the blame for that disaster as First Lord of the Admiralty. However, I have never had any doubt that he was the best person to prosecute the war with vigour and to victory. Margaret Thatcher could have been charged with abdicating her responsibilities and giving the green light to the Argentine dictators to take the Falkland Islands, but I have no doubt that she had the greatest chance of pushing the invader out and prosecuting that war with great success. In the same way, this Labour Government need to be returned in order to see us through this crisis and I have every confidence in their capacity to do so.

I would like to refer to some aspects of the Budget. There has been a real attempt to protect fragile industries and small and medium-sized businesses, and, in many cases, to incubate them against the crisis swirling around us in the economy. It is essential that we protect our public services and, in so doing, maintain demand and stimulus. The Government's long trek to reducing public expenditure is the correct and prudent approach, unlike the approach that our friends in the Conservative party would rush to and which would create a deeper hole and crisis in the short term. The Chancellor is the best person to see us through the crisis, and I believe that his strategy is correct.

Eighteen years ago, I made my maiden speech here. It was my fifth attempt to get elected to Parliament, and over the years I have been a Labour candidate of some sort on 13 occasions. It is with great pride that I have stood for the Labour party, and it is also with immeasurable pride that I have been the Member of Parliament for Thurrock, representing people of all persuasions to the best of my ability. It has been a great honour and privilege to serve them. My constituency has changed greatly-for the better-in 18 years: there is higher employment and greater diversity, in terms of ethnicity and social class, and one could justifiably say that it is booming. The Labour Government will leave to the people of Thurrock a rich legacy, particularly in the improvement of education. My borough had been greatly deprived for many years by the old Essex county council. Getting unitary status and developing academies has benefited the children of my borough enormously over the past 18 years, particularly since the advent of the Labour Government.

Of course, during those 18 years there have been some frustrations. It is a great pity that the Labour Government have never addressed the West Lothian question. It is a mistake to ignore this, as if it would go away. I also wish that we had gone faster on electoral reform, but as I leave Parliament, there is a real opportunity for a substantial change in the electoral system during the next Parliament. I wish, too, that we had tackled the upper House, whose functions are extremely important, but whose construction is of questionable legitimacy. If I had a chance of being one of the last to get there, that would be fine, but I would love to be one of the first of the new. If there are elections to the upper House in the future, and if I am fit and well, I would certainly like to throw my hat into the ring.

I should add, before I digress totally, that the Budget also referred to my constituency in relation to the Dartford-Thurrock toll, which, as my right hon. Friend the Chief Secretary has said on several occasions, the Government want to privatise. I have no ideological objection to privatising the Dartford tunnel toll, but I do ask him again how he plans to do it. Mandarins, who are removed from the real world, have conjured up this idea, and Ministers repeat it like a mantra. I am not necessarily opposed to it, but I invite him, for the third time, to tell us how he plans to privatise or sell the Dartford toll. It is not clear to me how it could be achieved or what would be of benefit. I think it will be seen to be a non-runner.

As I said, my constituency has changed greatly in my 18 years. To the great benefit of the community, we have absorbed large numbers of people who have come to this country, often in very distressful and adverse circumstances. We had the Bosnians in the mid-1990s, Kosovans, Afghans, people from war-torn parts of Africa and people trying to get out of the despotic regime that currently disfigures the wonderful country of Iran. That has put a great strain on my staff and colleagues, and we have done our best to protect and promote these people's interests. However, I have been particularly frustrated by how the Home Office has been unable to get on top of the chaos at Lunar house. Many hon. Members from across the political spectrum share that view. It is just unbelievable that there is such chaos upon chaos, but it also has distressing human consequences for families who do not know their status and who cannot travel or make contact with loved ones. I urge the Government to address that with some dispatch. We are also very proud of the growing Nepalese and Gurkha community in Thurrock. In particular, their young people are becoming wonderful role models in our schools.

The Budget had a significant section on Government savings. I personally think that whoever forms the next Government needs to have a war on quangos, of which there are far too many, and also stop this perpetual so-called-but wholly bogus-system of reorganisation. Both parties have been guilty of that in the past. There is enormous cost and loss in reorganisation. Good people retire early and are never seen again. It is like painting the Forth bridge, and the product is not much better at the end, if it is at all better. We had local government structures from 1888 to 1974 that worked well and underwent organic change. This obsession, of both the Tory and Labour parties, with reorganising the public sector nationally and locally is frankly bonkers and very costly, and I hope that this trend will end.

I would also urge my hon. Friends to stop their obsession with creating things such as quangos-or whatever gobbledegook they call it-with names like "Stepping Stones", "Partnership", "Looking at Blue-Sky Policies", and all that kind of nonsense. Why do we not stop all that, have some definite structures and call public servants precisely what they are, with titles such as "borough engineer" or "surveyor", which we understand, rather than "director of this" or "director of that", for the six weeks before a further reorganisation?

I am pleased that my friend Sammy Wilson is here. One of the great successes over the period in which I have been in Parliament has been the resolution of conflict in Northern Ireland. It is a wonderful place and I intend to spend more time there recreationally when I leave this place. I am also going to work on my notebook-alas, it is not a diary, like that of my hon. Friend Mr. Mullin, but there are some good things in it, and I want to codify them.

Members who are leaving this House will want to say the following on behalf of those who are bravely standing again and hope to be returned. Being in this House is a priceless privilege, but it is also seven days a week, 52 weeks a year. There are many critics, and we should be subject to some criticism, but some of it is very harsh and unfair. I say to those who think that they can be a Member of Parliament better and more cheaply that not only can they stand for election, but arguably they have a duty to do so. They need to stand up for what they claim.

The last point that I want to make, in thanking all the staff here, my staff, and my wife and family for their support, is this. Theodore Roosevelt said 100 years ago:

"Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat."

I send my best wishes to Members from right across the political spectrum who are standing for re-election. I thank them for their fellowship while I have been in this House, and I hope that this place will strengthen itself in the next Parliament.

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Photo of Brian Binley Brian Binley Conservative, Northampton South 9:14 pm, 30th March 2010

I have listened to some excellent speeches, many of which have been by people who will be leaving this House. It has been a privilege to be here, and I know that we all wish them well in the years to come.

I also listened to some good people in Northampton over the weekend. I wanted to know what they thought about the Budget. I hate to say this-no I don't-but they gave me some bad news for the Chancellor, because they told me that the Government had not been honest about the size of the problem that the country faces. They feel that the Government have not been truthful about growth forecasts, their borrowing requirement, or their handling of public sector debt, and they are unhappy with the plan to cut the deficit through increased taxation.

My constituents told me that they felt there were just two certainties. The first was the continuation of debt, waste and taxes, and the second was the continuation of pain for themselves and concern for the business world. They thought this was a fairytale Budget of could-bes, might-bes and maybes, and that it did little to eradicate the fears that they have voiced. They did not think it was good enough. The really sad thing was that not many of them felt any great hope for the future-certainly not for the next four or five years. It is worrying that a Chancellor presenting his last Budget should create such an effect.

So much for the responses of the people of Northampton. I want now to discuss one of the problems that they identified in a little more detail, however-that of public sector debt. I am not surprised that my sensible constituents expressed concern about this. We have only to look at the Treasury forecasts to understand just how much debt we face. A figure of 44 per cent. of gross domestic product was given for 2008-09. The figure for 2009-2010 is 56 per cent., and it is set to rise to 78 per cent. in 2014-15. That is all because the Government apparently took the advice of a lady we remember well, who won the pools many years ago. When asked what she was going to do with the money, she said she was going to "Spend, spend, spend".

That is exactly what has happened in recent years, as illustrated by this Prime Minister's vain boast that he had done away with bust. He thought he was infallible, but we are now paying the price. So certain was he about this that he told the Financial Services Authority to apply a light touch. The policy of spend, spend, spend has ended up just as we all thought it would: with bust, bust, bust. The Prime Minister's arrogance has led to a longer, more persistent recession than we would otherwise have experienced. The real problem for many people is that the cost will be borne by their children and grandchildren, and they will not thank Mr. Blair or Mr. Brown for that legacy.

The Government have admitted that public sector debt will increase until 2014-15. Under the Fiscal Responsibility Act 2010, the net debt is required to fall as a share of GDP by 2015-16, but many think that there is little hope of that happening. It will be a long climb out of recession, and it is unlikely that we will have cleared public sector debt by 2030. It is clear that the nation-and, in particular, its small and medium-sized businesses-will face continued difficulty, and will suffer as a result of this Budget and the Government's actions up to this stage.

The Chancellor has claimed that Budget pledges will help small businesses, but they tell me that that is not the case. Among the measures that will not help them are the national insurance increases involving a 1 per cent. increase for all employers and a 1 per cent. increase for everyone earning more than £20,000. Those increases represent a massive belt to the confidence of industry at a time when it needs all the confidence it can get. The Federation of Small Businesses tells us that they will cost 57,000 jobs. The Treasury's own economic model suggests that national insurance rises will reduce GDP by 1 per cent. after three years. The Forum of Private Business has said that these measures are not helpful for job creation, and suggested that a 12-month cut in national insurance contributions would encourage small businesses and allow them to hire extra staff. I hope that those on the Government Front Bench are listening because, by golly, if there is one thing we need to do at this moment it is to produce wealth and create the jobs that are vital to the future well-being of this country.

I want to touch briefly on the increase in alcohol duty. Many will know that I am a keen supporter of pubs; I enjoy them immensely. However, 2,377 pubs have closed in the past year, thanks to falling beer sales, and seven are going out of business every day. Let us also look at the increase in fuel duty. The Road Haulage Association has claimed that hauliers are already operating on a shoestring budget, and that they desperately need a break. Some have already gone bust and many others are struggling to survive. When VAT decreased to 15 per cent. in January 2009, an extra 2p a litre was levied on fuel, but that was not changed when VAT returned to 17.5 per cent. in January 2010. People feel let down. They feel they were conned, as this has impacted massively on their businesses.

Many businesses have told me they are worried about the lack of measures to tackle the underlying problems. The Institute of Directors would have liked to hear more about the deficit reduction. Miles Templeman said:

"The Chancellor's GDP forecasts are too optimistic and there is still no sign of a credible deficit reduction".

Businesses wanted to hear that; they wanted to hear what the Government were going to do. They felt let down, and we talked about lack of hope because they did not know where they stood. The CBI remains of the view that the Government's target date of 2017-18 for Budget balance is

"too far off to instil the credibility necessary to ensure the UK's public finance position".

I could go on about the plight of small businesses. They are the largest employer in Britain, and if Britain is to recover, small businesses need to be encouraged to grow. They are the life-blood of the nation's creativity: almost 70 per cent. of British creativity comes from this sector. The sector was in the process of producing 2 million jobs up to the recession, at a time when UK plc was shedding 1.5 million jobs. Small businesses are the powerhouse of jobs growth, and the Government need to recognise the importance of encouraging that particular sector to flourish. My party has pledged to do away with a sizeable part of the planned increase in national insurance because it will help that particular sector to do exactly what it does best: grow jobs, be creative, produce wealth.

My party has also pledged to cut corporation tax for small businesses and will not tax the first 10 jobs in any new company. That is welcomed by them, too, but the national insurance rise that I just mentioned is bad for job creation. It does not encourage people to get back to work. We should be pushing policies that increase economic growth to get Britain working again. My grandmother would have told anyone that the way to get out of debt is not by spending more money but by recognising that too much money is being spent and doing something about it. This Government have not yet reached that position. Perhaps it is because there is an election coming up; that may well be the truth of the matter.

The people to whom I spoke at the weekend felt that this Government had failed them. They said it was time for new thinking, for a new message, for a new approach. They did not want the same tax and spend and waste that they felt had occurred quite sizeably over recent years. They told me it was time for a new Government made up of people who understood the needs of SMEs. I would tell them that this Budget proves that such a Government would exclude the party that has been responsible for it.

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Photo of John Hayes John Hayes Shadow Minister (Education) 9:23 pm, 30th March 2010

I have never been terribly interested in the present because "now" is an illusion, as it instantly becomes "then". I have always been most interested in the past, as it is the thing we can most readily alter through our memory. Unlike Keynes, however, I am interested in the future. Keynes said that in the long run we are all dead. But I say the long run counts. It counts particularly for those of us who have children. I have two young children and I care about what happens to them. I care about the debt they will face-both personally and as part of a country now facing, as my hon. Friend Mr. Binley has just said, a mountain of debt.

By their very nature, Budgets look to the future. They plan the economic future and particularly the next 12 months in economic terms. This was not really a Budget that looked to the long term; it looked no further ahead than about six weeks. It was an immensely short-term Budget and a political Budget-one that took not difficult strategic decisions but convenient tactical decisions, failing to meet the challenges we face.

It is clear from the Budget that the Chancellor and the Prime Minister misunderstood the scale of the recession from the outset. They did not expect it to last longer than those experienced by their economic rivals. As we know, however, it has lasted six full financial quarters, longer than any recession in any other G7 country, and GDP has shrunk by 6.2 per cent. The International Monetary Fund forecasts that Government borrowing as a share of GDP will be the highest in the G20 this year. What is the response from the Government? The Budget offers no credible path to a stronger economic future; all it offers are more hidden tax rises in the shape of frozen income tax thresholds and increased national insurance, which is a tax on jobs.

The banking crisis and the recession that followed exposed fundamental problems for an economy that has become too dependent on a single sector. Two of the most profound macro-economic changes in my lifetime, both of them undesirable, have been the growth in the power of transnational corporations with no allegiance to any one nation and, indeed, no loyalty beyond their commercial interests, and the dependence of economies-bought by many liberal economists as desirable-on a limited number of economic providers, or sectors. That is what has happened to our financial services and banking. It is impossible to imagine the Government emerging from the present problem, given that they failed to recognise it and were, to an extent, responsible for it.

Perhaps the most tragic outcome of those failed financial policies is the growing army of young people who are not in employment, education or training, and in the few minutes available to me I want to say a word about their plight. They are often presented in a fairly cold way-they are seen as an economic opportunity cost- but we are talking about up to a million young lives. We are talking about broken dreams and shattered hopes. We are talking about people who, because of their disengagement, are likely to be socially and culturally detached, and who, because of the declining number of unskilled jobs, are unlikely to find employment even in the medium and long term. If one's first experience of the job market is one of disappointment and detachment, that may have profound long-term implications.

Even in the good times, the times of economic growth, the number of young people so affected was rising. That was a trend problem, and not a result of the recession. Nevertheless, it has been exacerbated by the recession, and we have a moral duty to do something about it. We have a duty to create new opportunities for those young people, and to provide them with the skills they will need to participate in an economy that will become increasingly highly skilled and high-tech. For Britain has no long-term future as a low-tech economy: we will not return to the days when we made tin-plate metal toys. We will survive and compete only as a high-tech, highly skilled nation. Those young people's opportunities lie in that vision, but no such vision is set out in the Budget. It contains no such ambition for the generation that I have described-that forgotten army of young people.

In the couple of minutes left to me, let me propose an alternative. Let me give the House a taste of a different Britain. Let me allow the Chamber and the country to dare to dream again of something better. It is entirely possible for us to regenerate the prospects of that forgotten army by investing in skills. The House would expect me to say something about skills.

I do not take the Chicago economist's view that all that matters is flexibility in economies or, indeed, in labour markets. I was interested by one or two of the speeches made by members of other parties in that regard. I believe that investment in skills pays dividends beyond the obvious, and that it has a variety of social and cultural as well as economic effects. I believe that it gives people a sense of pride and purpose, and builds a cohesive society.

We need to boost the number of apprenticeships massively by transferring large amounts of money from the Government's failed Train to Gain programme, with its immense deadweight cost, to the apprenticeship budget. We must do that by designing new apprenticeship frameworks, by making it easier for small companies to participate, and by changing both the prospects of people and our economic prospects. We could have seen that in the Budget, but we did not. We will see it in a Conservative Budget, run by a very difficult Administration who will bring new hope to those people and to the whole of our country.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 9:30 pm, 30th March 2010

We have heard some excellent speeches this evening. This has also been a poignant debate, with six valedictories. They were delivered by the hon. Members for Wolverhampton, North-East (Mr. Purchase) and for Thurrock (Andrew Mackinlay); by my hon. Friend Sir Patrick Cormack; by my right hon. Friend Miss Widdecombe, whom I had the privilege of serving under when she was shadow Secretary of State for Health; by my hon. Friend Mr. Boswell, who led for the Opposition on the first Standing Committee on which I had the pleasure of serving in this place; and by Mr. Salmond, who said, in referring to his own, that a Member's maiden speech is often the best speech that they make in this place. I suspect that that might not be the case for all Members, but it is probably beyond question that it is the best rehearsed speech any Member ever makes in this place. I pay tribute to all of the departing Members, and I am sure that I speak for all of us in wishing them well whatever they do in the future.

The scale of the fiscal and economic challenge this country faces is unprecedented. The backdrop to the Budget is stark: unprecedented levels of public borrowing and structural imbalance in the public finances. Despite the prediction that we would "lead the world" out of recession, Britain was the last G20 country to emerge from a recession that was the longest and deepest on record. We still have the biggest Budget deficit in the G20 and one of the weakest economic recoveries. In February of this year alone, the Labour Government borrowed more than they will spend on police and immigration in the whole year. They are racking up debt at a rate of more than £300,000 a minute-a legacy to our children and our grandchildren that will take them a lifetime to pay off.

Our credit rating is under threat; one in five young people in this country cannot find a job; child poverty is increasing; the banking system cannot finance the recovery in the small and medium-sized business sector; and national income per head is lower in real terms now than it was at the last general election. Therefore, what we needed last Wednesday was a big Budget: a Budget to match the scale of the challenges the country faces; a Budget for recovery; a Budget with the vision and the toughness to tackle the challenges we face, not duck them. This Budget was Labour's last chance to bid for fiscal credibility, and they blew it.

For the Chancellor personally, it was the last opportunity to secure his legacy, but he chose partisanship over statesmanship. What did he give us? He gave us a Budget whose good news announcement was that we are borrowing "only" £167 billion this year and £163 billion next year; a Budget whose only big ideas-the stamp duty cut for first-time buyers, the green investment bank and new university places-were stolen from the Conservatives; an empty, cynical, pre-election Budget, lacking in energy, lacking in vision, lacking in new ideas to get the economy moving again. It shows no sign of the Government's having grasped the scale of the mess they have got us into.

It is therefore unsurprising that my right hon. and learned Friend Mr. Clarke said it was "not so much a Budget as a holding statement." A City commentator described it as

"a do-nothing Budget that had shades of Nero about it".

It contains nothing to deal with the legacy of Labour's debt, nothing to put this country back on the path to sustainable prosperity-instead, just more delay, dissembling and ducking of the tough decisions.

Perhaps we should not be too surprised when we look at the track record of this Government and this Prime Minister: the man who ended boom and bust; the man who doubled the tax rate for the poor and destroyed social mobility in this country; the financial genius who sold the nation's gold reserves at a quarter of what they are now worth; the visionary who raided our pension funds and destroyed a pension system that was once the envy of Europe; who has doubled our national debt and set it on course to double again; who has made an art form of deferring the bad news; and who has made every decision since this crisis began on the basis not of what is good for Britain's economy, but of what will conceal the scale of his failure until after a general election. His credibility is destroyed. Just a few months ago, he was still peddling the line, "Labour investment versus Tory cuts", but now his own Chancellor says that the cuts will be deeper and tougher than Margaret Thatcher's.

What did we get from the Chancellor in the Budget statement on his planned spending cuts? We got about 30 seconds in a 58-minute speech, with the real announcement sneaked out later in the afternoon in a series of press releases that were meaningless in their content and bogus in their precision. I am thinking of the £343 million-not £340 million-of savings identified in the Ministry of Justice over the next three years and the £194 million saving to be made in the Department for Environment, Food and Rural Affairs. Those are meaningless and bogus because the Prime Minister has refused to allow his Chancellor to publish a spending review for the next three years. A departmental saving is meaningless if we do not know what the departmental budget is to start with.

Cabinet Ministers, including the Schools Secretary, have been tripping over themselves to claim that they have to cut only x hundred million or y hundred million pounds from their budgets. The truth is that they do not know how much they will have to cut, because they do not know what their budgets will be as the Chancellor has not told them and he has not told the electorate. He has not told the electorate for a reason, which is that he does not want them to know because he does not want a real debate on spending priorities.

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Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

The hon. Gentleman decries the Chancellor for lacking credibility, vision, energy and new ideas, but in the few minutes remaining to him tonight will he set out what the Opposition would do, because that was singularly lacking from the Leader of the Opposition's response to the Budget on Wednesday?

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

If the hon. Gentleman had been listening, he would have heard plenty about what the Opposition will do. I do not know where he was yesterday, when we spent most of our time telling the world what we plan to do. Ending Labour's tax on jobs is our first mission.

The Chief Secretary to the Treasury, wearing his "I am ever so reasonable" straight face, tells us that the reason why we do not have a comprehensive spending review is because it "does not make sense" to set departmental spending totals when we do not yet know what unemployment will be next year or the year after next. However, he does not mind setting a Budget based on a growth projection for next year and the year after, which nobody outside the four walls of the Treasury, and probably not many people inside them, thinks is a sensible Budget assumption.

What the Government's press releases did was confirm that Labour has identified, on its own estimation, £11 billion of waste. That is waste that it says it can eliminate without affecting front-line services, but that it will not eliminate until some time after 2011-12. Move over post-neoclassical endogenous growth theory, because we now have a new economic theory from the Labour party: Labour's waste-induced growth theory. It appears to state that Government waste is an essential ingredient of economic recovery. Presumably, on the Schools Secretary's logic, higher economic growth-perhaps even the achievement of the Chancellor's 3.25 per cent. target-will require even more waste to be identified, but not eliminated. Let us be clear that Labour's stated plan is to carry on wasting and raising taxes to pay for that waste. Its approach is about taxing jobs in a recovery to pay for Labour waste, which the Government have identified but have not got the wit or the commitment to eliminate.

I lose track of who is allied to whom in the Government, and who is speaking to whom this week, but some hon. Members may remember that just a couple of weeks ago the Chief Secretary said emphatically that there would be no tax increases. He was immediately slapped down by the cardinal archbishop and by the Chancellor, and now we know why. Although we would not have heard most of them in the statement that the Chancellor delivered last Wednesday, the Budget contained plenty of Labour's hallmark stealth taxes. It contained a £2.2 billion hike in income tax through the freezing of thresholds-that is a £48 bill for every taxpayer in the country, which did not even merit a mention in the Chancellor's speech. Indeed, he seems to think it a matter of yawn-inducing indifference that everyone will pay £48 more in tax.

The temporary abolition of stamp duty for first-time buyers, which, incidentally, the Economic Secretary to the Treasury said was not

"an effective use of public money" -[ Official Report, Finance Public Bill Committee, 21 May 2009; c. 108.]

when we proposed it, is being financed by a permanent tax increase on higher value property. That is another sleight of hand. The huge tax hikes on cider drinkers put at risk an industry that employs thousands of people in the west country, and I shall ask my hon. Friends to vote against that ill thought through tax proposal.

Despite the Chancellor's rhetoric about helping small businesses, there are yet more stealth taxes on businesses, including an increase in the small business corporation tax rate. There was an apparent cut in business rate relief, but the small print of the Red Book shows that revenues from business rates will go up by £1 billion, not down. The product of a botched rates revaluation and the deferred hikes from last year will mean soaring bills for many small firms from April 2010. That is literally the last straw for many cash-strapped businesses that are struggling to raise credit. There is also the telephone tax on households and businesses across the land-a tax of £7 a year, including VAT, for every line. What is that for? It is to pay for an objective that we have clearly shown can be delivered without any tax rise.

Just when people might have thought that things could not get any worse, tucked away in a footnote on page 204 is the admission that the Government more than doubled our contribution to the European Union between 2008 and 2010. They have gone to extraordinary lengths today to bring back Tony Blair. Perhaps they would like to bring him here to explain what he meant when he told the House:

"The UK rebate will remain and we will not negotiate it away. Period."-[ Hansard, 8 June 2005; Vol. 434, c. 1234.]

He was right in one sense, of course. They did not negotiate it away; they gave it away. Britain deserved better then and it deserves better now.

What we needed was a Budget for the future. We needed a Budget that took tough decisions, rather than shirking them, such as the decision to start reducing the deficit in 2010 with a credible plan to eliminate the bulk of the structural deficit over the lifetime of the next Parliament. We needed a Budget that answered the critics in the markets, in the business community and among overseas investors who have repeatedly condemned the Government's plans as inadequate, incomplete and incredible.

When the family budget gets tight, people have to think about what they can afford. When the national finances are in this kind of crisis, we as a nation have to think about what we can afford. It is clear that Britain cannot afford five more years of this-five more years of Labour's debt, waste and taxes. That would bring a risk of interest rate rises choking growth, mortgage rates soaring for millions of families and the UK's credit rating in play. It would mean five more years of a Labour Government who were elected on a bogus promise to carry on spending, which they know they cannot keep.

It is time for a change and for a new Government with the vigour, the commitment and the energy to sort out the mess this country is in and to get us back on the path of sustainable economic growth, securing both private prosperity and high-quality public services for future generations. Let us do that now. Let us stop Labour's waste so that we can stop Labour's tax rises. Let us tackle the debt, not talk about it. Let us put this discredited Parliament and this discredited Government behind us. Let us vote for the change that Britain needs.

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Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

On a point of order, Mr. Deputy Speaker. I was present at the start of the debate and it was notable that the right hon. Gentleman was not. I wonder on what basis he is going to reply to the debate given that he has not been present to witness or participate in it.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I say to the hon. Lady that the matter has been taken up, perhaps when she was temporarily not in the House herself. It has been dealt with, and I think that we should now complete the Budget debate.

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Photo of Liam Byrne Liam Byrne The Chief Secretary to the Treasury

I am grateful for your guidance, Mr. Deputy Speaker.

I was about start on a note of consensus, by agreeing with the shadow Chief Secretary that we have had four days of full and frank debate about the Budget. I should like to begin my words of congratulation with a tribute to my right hon. Friend John McFall. He is not in his place at the moment, but he has made a significant contribution, just as he has contributed to economic debates in this House over the last 22 years-and not least during the eight years in which has chaired the Treasury Committee.

My right hon. Friend outlined the importance of the Budget's measures to support small business, and he endorsed the view that to end Government support for small business now would be nothing short of inviting disaster. I know that all Members of the House will join me in wishing him a long and enjoyable retirement.

Over the course of these debates, some hon. Members have argued for a faster pace of deficit reduction. We heard contributions on that from Mr. Ancram, and from the hon. Members for Stratford-on-Avon (Mr. Maples), for Gainsborough (Mr. Leigh), for Stone (Mr. Cash) and for Bournemouth, East (Mr. Ellwood). We also heard this afternoon from Sir Patrick Cormack, who was making his last contribution in this place, and he was echoed by Mr. Boswell.Others, on the other hand, argued that the stimulus provided in the Budget was insufficient. That was the argument as set out by Mr. Salmond in his final contribution to debates in this House.

Others, however, have welcomed this Budget for its help for manufacturing and business, and for its investment in their communities. My right hon. Friends the Members for Sheffield, Central (Mr. Caborn) and for Barrow and Furness (Mr. Hutton), as well as Richard Younger-Ross, my hon. Friend Mr. Betts and David Simpson, echoed that point. This afternoon, my hon. Friend Andrew Mackinlay made the same point in his valedictory speech, as did my hon. Friend Mr. Purchase.

Others welcomed the Budget's investment in infrastructure such as Thameslink, which was the point made by my hon. Friend Laura Moffatt, while others welcomed the investment in schools, the point made by my right hon. Friend Mr. Barron. Bill Wiggin made a powerful argument in support of the cider industry, and this afternoon Mr. Binley flagged the impact on pubs.

This morning, the Office for National Statistics confirmed that the British economy grew not by 0.1 per cent., or indeed 0.3 per cent., at the end of last year, but by 0.4 per cent., which is faster than Germany, Italy and across the European area. We must, of course, remain cautious, but it is fresh and welcome evidence that the action taken by my right hon. Friend the Chancellor has worked.

That action has kept unemployment in this country down. It is 2 per cent. lower than across Europe, and 2 per cent. lower than America. The Chancellor's action has worked to keep the rates of repossessions and business failures at half of what we saw in the 1990s. So the central argument set out in the Budget has to do with how we build on that action, lock in recovery over the months and years to come, and secure growth.

That is why the Budget puts up public spending for the year ahead, rather than cuts it. That is why it widens the help for business cash flow, and why we are taking sweeping measures to increase lending to small and medium-sized businesses. It is why we are extending the offer of a job to every young person out of work for six months, and why we are bringing together £4 billion of new investment in small businesses. It is why we are creating a £2 billion green investment bank, doubling entrepreneurs' relief to £2 million, and investing £250 million more in our transport infrastructure. We will not leave recovery to chance, and we will not leave the jobs of tomorrow to the vicissitudes of the marketplace.

The Budget puts £2.5 billion towards supporting the jobs of the future-what a contrast to the Opposition! The Leader of the Opposition is fond of saying that his party's evolution is something of a journey. It would be a good aphorism for his economic policy, as it is a journey that has gone round in circles. Back in 2006, the shadow Chancellor said that stability and not tax cuts was his priority. In 2007, he dropped stability and said that tax cuts were all that mattered. Then he said that he would stick with our spending plans, and then that he would not. Then he said that he would prioritise the deficit, and now he is back to tax cuts.

It was no surprise to hear Mr. Hammond tell the BBC, "Of course there is no plan." He was not kidding. First he got it wrong on regulation, then on banks, then on saving jobs, and now he has got it wrong on helping business.

The Tory plan to scrap investment allowances, says the Institute for Fiscal Studies, would

"be at the expense of businesses that are investing heavily in the UK."

The international tax adviser to General Electric said it was a "real own goal". The Engineering Employers Federation-a body not known for its slavish adherence to Labour party orthodoxy-has said that abolishing those allowances

"would be a disaster. Any business would have to think twice about investing in the UK."

Did that move the Conservative party? Of course not. As Mr. Hoban said, ignoring GE and the EEF was the right thing to do because he would not be

"seduced by the arguments of losers."

With policy brains such as that at work, it is scarcely a surprise that Mr. Clarke has been manoeuvred in to help. As I was casually looking at my favourite new blog,, I was surprised to read that at Tory central office the shadow Chancellor's desk is now listed as "George Osborne/Hotdesk". Are they trying to send him a message? May I comfort him with the news that we have strengthened protection for temporary workers?

The truth is that Conservative Front Benchers are auditioning for the same job without a script. That is the only explanation for why one day Mr. Cameron says that Greece represents

"the scale of the problem we could face", and the next, the shadow Chief Secretary says

"nobody is suggesting that we are going to follow Greece".

One day, the Leader of the Opposition says:

"Of course there is a danger if you do too much too early, you could choke off demand."

The next day, the shadow Chief Secretary says, "We've got to make a start in 2010." The IMF, the IFS, UBS, the CBI, two Nobel laureates and, greater still, Dr. Cable say that now is not the time to slam on the brakes, as do 186 members of the IMF. Only North Korea and Iran disagree.

At the very least, may I ask the shadow Chancellor to listen to his own fiscal adviser, Sir Alan Budd, the former Treasury chief economist? He says:

"If you go too quickly then there is a risk that the recovery will be snuffed out".

Mr. Deputy Speaker, you know that you are in trouble when your own adviser starts repeating Labour's dividing lines.

Alongside our plan to secure recovery and growth, the Chancellor set out our plan to halve the deficit. It is the most ambitious plan in the G7. The forecasts set out by the Chancellor show that debt over the next few years will be £100 billion lower than forecast. That means that borrowing will fall by £78 billion over the next four years: £19 billion will come from increased taxes and £38 billion from cuts in public spending, with the rest coming from a return to growth in the economy.

Difficult decisions will be demanded of us, but we will approach that challenge determined to protect vital front-line services-in health, education and police numbers-while we bring borrowing down. Because we blunted the force of the recession, our tax receipts are better than expected. Borrowing this year is £11 billion lower, but our plan to halve the deficit will continue at the same pace.

We have already announced tax increases that make up £19 billion in tax by 2013-14. In this Budget, we set out, Department by Department, £16 billion in cuts and efficiencies by 2012-13, on top of which will come £4.5 billion in savings by holding down public sector pay and reforming public sector pensions, as well as £300 million more in welfare reform savings.

We do not salivate at the prospect of making those savings. We will do them carefully as we preserve our commitment to protecting front-line spending on the NHS, Sure Start, schools and police numbers. Conservative Members have attacked the clarity of the Budget, but the truth is that this week we have learned a lot about the plans of the Conservative party. Last week, the shadow Chief Secretary said to me that it was impossible to deliver £11 billion in efficiencies in two years' time. Yesterday, the shadow Chancellor said he could do it in two weeks' time. We are now being invited to believe that he can save £12 billion from Government budgets, although he cannot say which ones-not to pay down debt, but to pay for a tax cut.

Even the shadow Chancellor has said that that will cost £5.6 billion, but the Treasury has now costed those increases in national insurance thresholds at £6 billion in 2011-12, £6.3 billion in 2012-13 and 2013-14, and £6.7 billion in 2014-15. Once again he has got his sums wrong. This policy is not a U-turn; it is more of a handbrake turn. Only the right hon. and learned Member for Rushcliffe had the honesty to say that only in the Budget after the election will we know if the national insurance tax cut is affordable. This policy from a shadow Chancellor who told us

"if you want to cut taxes you can't simply rely on more buoyant tax revenues, you can't simply rely on cutting red tape".

The Conservative party now has something of the order of £34 billion of unfunded tax and spending commitments-and counting. Just to meet those promises alone, let alone cut the deficit faster, it will need new tax rises or deeper cuts to front-line public spending. It is a huge credibility gap, which, frankly, it cannot fill. Despite this spiralling loss of control, it persists with the argument that it can cut the deficit further and faster. But it will not say which Departments it will cut next year. It will not say what it will cut next year. It will not say when it will halve the deficit. It will not say how much further it will cut the structural deficit.

The shadow Chief Secretary is fond of saying that he will take out the bulk of the structural deficit during the next Parliament. Labour's plans already take out two thirds. Why will not the Conservatives tell us what "bulk" means. What does it look like? How would we recognise it if we saw it? Why do they insist on it being a secret? Why is this bulk being hidden away from us? After all of these debates, we are none the wiser.

The Chancellor's Budget set out an argument for fairness. This Budget was a Budget for the many, not the few. That is why the greatest burden will be carried by those with the broadest shoulders. In our deficit reduction plan, 60 per cent. of the £19 billion in new taxes that we need to secure will be paid for by the top 5 per cent. of earners. What a contrast to the Conservative party, which has said that it will cut child tax credits and child trust funds for families on modest incomes, all to pay for a £200,000 tax break for the 3,000 richest estates in Britain.

Our Budget seeks to extend help where it is needed and to support aspiration, hard work and families. That is why, for those families seeking to buy their first home, the Budget includes a two-year stamp duty holiday for those first-time buyers of properties of up to £250,000 in value. It helps with targeted support for children. The new child tax credit of £4 a week will help families with children aged one and two from April 2012-a point made by Miss Widdecombe earlier. It will extend extra help for Britain's 12 million pensioners, with a 2.5 per cent. increase in the basic state pension from April 2010, and extra help again for winter fuel payments.

What a contrast that is to the policies of the Conservative party. It is not a party of change because it has not changed its party. Five years of rebranding cannot hide its attempt to destroy child tax credits. Just to save the £400 million, it needs to make its own sums add up. It would have to cut credits for people earning as little as £16,000 a year. Its plans to cut child trust funds would rip the heart out of the scheme, taking away a scheme that encourages parents and grandparents to save for a child's future-all to pay for a £200,000 tax cut for the 3,000 richest estates in Britain.

The truth is, this was a policy authored by the shadow Chancellor. Some shadow Chancellors lack experience and some lack judgment, but this shadow Chancellor lacks both. The truth is that these debates have revealed the Tory party as risky, wrong and unfair. Find me the parent on a modest income who says, "Please scrap my child tax credit. Those 3,000 richest estates desperately need an inheritance tax cut." Our plan is for securing the recovery and renewing our country, and I commend the Budget to the House.

Question put and agreed to.



(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide-

(a) for zero-rating or exempting a supply, acquisition or importation,

(b) for refunding an amount of tax,

(c) for any relief, other than a relief that-

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order (No. 51(3)).

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Instead of reading out each motion in full, I propose to follow the procedure used in recent years-that is to say I will first state the title of the motion and then put simply the Question that the motion be agreed to.

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