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Mr. Geraint Davies (Croydon, Central): Will the right hon. Gentleman give way?

Mr. Portillo: I shall give way later in my speech.

With no vision for the next Parliament, the Government will be judged on their broken promises: on higher taxes, on poorer public services, and on their betrayal of the hopes that they raised so falsely.

Mr. Chris Pond (Gravesham): Will the right hon. Gentleman give way?

Mr. Portillo: No.

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Labour has taxed more and delivered less. Before the last election, the Chancellor of the Exchequer said that he understood where previous Labour Governments had gone wrong. He said that they had been wrong to believe in tax and spend. He promised that this time it would be different, that Labour would reform the public services and would therefore be able to deliver improvements without having to raise taxes, but of course he has delivered the opposite.

The Labour manifesto proclaimed that Labour would be wise spenders, not big spenders. It said that what mattered was not how much was spent, but how well or badly it was spent. Now the Chancellor talks only one language, that of big spending--"Never mind the value or the quality", he says, "look at the quantity."

It took 18 years in opposition for the Labour party to learn wisdom and it has taken just three years for it to forget it all.

Mr. Barry Gardiner (Brent, North): Will the right hon. Gentleman give way?

Mr. Portillo: Let me finish this passage.

The Chancellor is now committed to increasing Government spending over the next three years much faster than the growth rate of the economy, so we need to be told whether this is a policy for just three years. Is it a splurge which is announced just before an election to be followed by a painful return to reality afterwards? Is it a turning on of the taps now so that they can be turned off again in due course? Is it a bad old Labour policy of boom and bust? If it is--[Interruption.] There are many precedents of Labour spending and spending and then having to cut back. We have seen it all before. These are the lessons that the Chancellor said that he had learned, but he has not learned them. So is it a splurge? Will Departments rush to spend all the money before the closing down sale comes to an end? If so, it will produce very bad value and it will be a very bad policy.

Alternatively, does the Chancellor propose to continue raising Government spending faster than the growth rate of the economy year after year, even after that three-year period? If that is the case it will lead to a bloated public sector increasingly squeezing out the private sector and private investment. It will mean that the Government will have to go on raising taxes year after year during the coming Parliament just as they have in this Parliament, and, just as has happened in this Parliament, the poorest in society will pay the most.

So the question for the Chancellor today is a very simple one. Which is it to be: will it be boom and bust--the three-year programme followed by the whole thing being switched off--or will it be a continuous increase in Government spending faster than the nation could afford, with the burden being borne by the poorest members of society?

Several hon. Members rose--

Mr. Portillo: Why does the Chancellor not answer? It is either one or the other.

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The Chancellor of the Exchequer (Mr. Gordon Brown): I can tell the House that we will meet our fiscal rules--the golden rule and the sustainable investment rule--over the economic cycle. Will the right hon. Gentleman now give us an answer: does he propose a balanced Budget, or does he propose to support our fiscal rules? Yes or no?

Mr. Portillo: The Chancellor's fiscal rules, unfortunately, are not worth the paper they are written on. I shall come to that later in my speech. I shall dissect the Chancellor's fiscal rules and show him why they are not worth anything. I have used as the basis for my planning the same figures for surplus and deficit that the Chancellor of the Exchequer has used in planning his rules.

Mr. Gardiner: The right hon. Gentleman has said that this Government were spending over and above what the country could afford--the equivalent of £600 for every taxpayer. Does his maths extend to multiplying £600 by 27 million--the number of taxpayers in this country? Does he agree that the figure thus produced-- £16 billion--is the amount that he believes the Government are spending over and above what they should be spending? What would the right hon. Gentleman cut to bring spending back to what he believed was in line with what the country could afford?

Mr. Portillo: I made all that clear in announcements that I made when I set out the proposals. With regard to the £16 billion, I shall quote Mr. Evan Davis, economics editor of the BBC's "Newsnight" programme. He said:


Mr. Frank Dobson (Holborn and St. Pancras): He is a Tory.

Mr. Portillo: It is only wilful misreading of the figures that allows the hon. Member for Brent, North (Mr. Gardiner) to say that the cuts will amount to £16 billion. It is about time that Labour put that stupid figure to bed.

The Chancellor of the Exchequer has not answered my question about what his policy will be. However, I shall tell the House all about our policy.

Mr. Pond: I do not think the right hon. Gentleman was able to answer the question from my right hon. Friend the Chancellor about whether he was still in favour of a balanced Budget. If he is, how will he fund the tax cuts that he proposes?

Mr. Portillo: The Chancellor of the Exchequer is not in favour of a balanced Budget. He is planning to borrow. [Interruption.] It would be much better for the order of the House if the Chancellor stood up to make interventions. I have just told him that I am making my plans on the same figures for surpluses and deficits over the next three years that he is using. It is wrong for the hon. Member for Gravesham (Mr. Pond) to claim that the Chancellor is planning a balanced Budget; he is not.

Mr. Gordon Brown: For the benefit of the House, the right hon. Gentleman should confirm that he put out a

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press statement at the time of our spending review last July saying that our spending plans could not be afforded to the tune of £600 per taxpayer, or £16 billion. Also, will he now answer this question: if he does not accept our fiscal rules, which form the basis on which we will work, does he believe in a balanced Budget? Yes or no? If he believes in a balanced Budget, how can he fund tax cuts?

Mr. Portillo: I believe in greater prudence than the Chancellor of the Exchequer. I believe in greater rectitude and in spending what the nation can afford. I believe in much tighter constraints on me, as Chancellor of the Exchequer, than the right hon. Gentleman has been willing to accept for himself. In the second half of my speech, I shall describe our rules, as well as tear his rules apart.

Mr. John Bercow (Buckingham): Is my right hon. Friend aware that, as a result of this Government's policy of tax, tax and tax again, tax freedom day--the day on which we cease to work for the Chancellor and start to work for ourselves--is now 30 May? That is fully 20 days worse than in the United States of America. How much more deterioration does my right hon. Friend expect if the Chancellor's tax and spend policies are continued?

Mr. Portillo: It is impossible to give my hon. Friend an accurate answer, as the Chancellor of the Exchequer will not tell us what his policy is. I have just asked him whether it is his policy to go on spending more than we can afford for three years or in perpetuity, and he would not answer. I suppose that we must assume it is his policy to go on spending more than we can afford in perpetuity. In the new year, I will produce the figure for the extra amount of taxation that would be required from every family in the country.

The Chancellor's abandoned pledge to be wise on spending is the first of five pledges on the economy that he made before the election, all of which have now been broken. He also pledged not to increase tax at all, but the burden of tax is now up by 2.6 percentage points of gross domestic product. That is £25 billion, the equivalent of 10p on the standard rate of income tax. He has taxed what people earn, what they spend and what they save. He has hit marriages, mortgages, alcohol, tobacco and petrol.

The Labour manifesto said:


but that is exactly what the Labour Government have been about. Taxes have fallen most heavily on the poorest people in society, and Labour Members know the truth of that even though it is a truth that they dare not speak. The Joseph Rowntree Foundation reported this week that the Government have failed to attack the problem of poverty and inequality.


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