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Mr. Bercow: My hon. Friend will not want to understate his case. Does he agree that the increased complexity of the tax system is not accidental? Rather, it is a calculated--and I hope unsuccessful--attempt by the Chancellor to hide the fact that people who are married, who pay mortgages, who own cars and have the temerity to put petrol in them, who acquire savings, who possess pensions and who run businesses all face a higher tax burden under this Chancellor.

Mr. Ruffley: My hon. Friend anticipates me. Many of us are wise to that fact. I am sure that his comments are informed by what the good burghers of Buckingham tell him, because my constituents have been saying the same thing. They understand the situation.

The report accuses the Chancellor of being, at worst, power mad and bonkers, as one of his new Labour colleagues described him. [Interruption.] As my hon. Friend the Member for Buckingham (Mr. Bercow) correctly observes, that description is on the tepid side. At best, the report shows him to be an obsessive interferer, fixated with the idea that other Departments do not understand anything and cannot be trusted. He appears to think that he can micromanage business and run everything, but he cannot.

I fear that the Chancellor of complexity is not merely misguided: two much darker, more dishonest and sinister purposes lie behind this and his other four Budgets. First, he is deliberately bringing middle-income Britain into the state dependency net. The benefits and breaks of the children's tax credit, the working families tax credit and the baby bonus extend much higher up the income scale than any other comparable measure. He is trying to lure middle-income Britain into the net of dependency while disguising his truly cack-handed attempts to help people lower down the income scale by the ham-fisted redistributionism of old-style socialism. This Budget and previous Brownian Budgets are nothing less than socialism by other means.

The second purpose is even worse. The Chancellor pretends that his complicated tax changes are tax cuts, but they are nothing of the sort. New Labour is deceiving us. It is using this complex system to hide the fact that tax is rising. The complications that he has introduced into the system are a naked political attempt to try to bamboozle the electorate in the hope that he will negate taxation as an electoral issue. In reality, all we are left with is a mess of fiddled figures, amounting to no more than a large dollop of brown fudge.

The Red Book is nothing but a disgrace. The standards that would usually be expected from impartial officials are in danger of being jeopardised. The most impartial

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observers in the City of London who have to analyse Budgets for their clients and banking institutions think that the Red Book is an unprecedented disgrace.

Sir Michael Spicer (West Worcestershire): I am following my hon. Friend's brilliant speech with care, especially what he says about the Chancellor's tax rises. Why does he think that the right hon. Gentleman bothers to disguise those? Surely, if my hon. Friend were a socialist--like the Chancellor and his party--he would be proud of a tax-rising Budget and a tax-rising regime, because that produces tax expenditure.

Mr. Ruffley: I have the honour of serving with my hon. Friend on the Treasury Committee and he poses a question that many other Committee members and journalists have asked. I believe that if the Chancellor told the truth to the British people, he would be out on his ear pretty smartly. He is fighting a tough rearguard action to conceal the truth from the British people, but I know that with my hon. Friend's help and that of my colleagues on the Conservative Front Bench, we will expose new Labour's fundamental deceit.

On the meat--the detail--of the tax increases, we know from the Red Book that taxes are £28 billion higher after the Budget than they were at the last election. Of the 45 new stealth taxes, approximately half are levied on business and half on the personal sector. The Chancellor may be in denial about tax rises, but if he looks at tables C23 and C9 in the Red Book, he will discover that the tax burden in 1996-97 was 35.2 per cent. under the excellent stewardship of my right hon. and learned Friend the Member for Rushcliffe, and that it is 37.7 per cent. in the current financial year. His own figures show an increase of 2.5 per cent. Of that there can be no doubt. It is only a pity that he does not cough to the truth, but I fear that he will not.

Taxes are up on marriage, mortgages, personal pensions and petrol. Households are paying more indirect tax in the form of higher council tax. The Government have starved rural authorities such St. Edmundsbury council in Suffolk, which is in my constituency, of rate support grant. They have deliberately targeted them and forced them to increase council tax to make up the shortfall. The public are not stupid. They know what is going on.

Mr. Dale Campbell-Savours (Workington): Will the hon. Gentleman give way?

Mr. Ruffley: With a due sense of dread and regret.

Mr. Campbell-Savours: I have a simple question. Does the hon. Gentleman want to comment on whether it is helpful to pay off Government debt?

Mr. Ruffley: It is helpful, but we need to strike a balance. Paying it off saves about £1.5 billion in debt interest, but there is a more imaginative proposal. The hon. Gentleman probably does not keep up with the literature, so I shall give him the details. My hon. Friend the Member for West Dorset (Mr. Letwin) has come up with a radical and innovative plan to use mobile phone receipts to establish a higher education endowment fund, which has been extremely successful at Princeton and Harvard. The balance sheet for higher education spending

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would be relieved, over time, by that fund. However, on the hon. Gentleman's core point, of course it is intelligent to pay off debt if the money is available.

Mr. Oliver Letwin (West Dorset): Does my hon. Friend agree that there is another strange feature of the scene? The Chancellor has diminished the prevalence of gilts in the long-dated market without relieving the annuity provisions for people over 75, causing widespread and unnecessary misery.

Mr. Ruffley: My hon. Friend's intervention allows me to showcase some of the excellent policies that have been developed by the Conservative Treasury team. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) has addressed the matter of annuity provision. That and the excellent policy on endowing higher education institutions are testimony to the fact that the Conservative party has been doing some serious thinking in opposition. We are raring to implement the policies in office.

We know that higher taxes on marriages, mortgages, petrol and personal pensions and even higher increases in council tax have had an effect on the incomes of real people in real households. As Credit Suisse First Boston has helpfully calculated in the past month, household disposable income, which is arrived at when all direct and indirect tax and inflation has been taken into account, has increased by only 1.6 per cent. under this Government. There was a 2.9 per cent increase under the regime of my noble Friend Baroness Thatcher and a 2.5 per cent. increase between 1990 and 1997. As my right hon. and learned Friend the Member for Rushcliffe observed, the Government are laggardly on economic growth and in delivering increases to ordinary households. When those families look at increases in their disposable income, they see that they are worse off than they were under previous Administrations.

The Conservative party will give people back their own money. After all, they earned it. They can spend money that they have earned and saved better than big government and certainly better than the new Labour Government. Overtaxing is not clever. My auntie could have overtaxed to the extent that the Chancellor has and delivered a huge surplus. There is nothing clever about that. We would give £8 billion back in tax cuts, funded by £8 billion of costed savings from the huge total of more than £400 billion a year that the Chancellor proposes to spend. If Labour Members are in any doubt about how deliverable that is, may I remind them that the state spends a total of £400 billion? Our proposal is practical, modest and will not frighten the horses; we propose that £8 billion, or 2 per cent. of that £400 billion, can be saved. In any business, that percentage would, dare I say it, be seen as a bog standard saving. The saving is not at all difficult to achieve.

We have published details of our proposals and we can give the money back. I shall quickly examine who will be the targeted beneficiaries of Tory economic policy. The abolition of the savings tax for everyone on basic and lower-rate tax will reward those who do the right thing and take personal responsibility for themselves and their families. We will also increase the age-related allowance for pensioners, taking 1 million pensioners out of tax altogether. As my right hon. Friend the Member for

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Kensington and Chelsea (Mr. Portillo) said, those pensioners who remain taxpayers will be about £8.50 better off a week.

We will introduce a transferable tax allowance, worth up to £1,000 a year, recognising married women who wish and choose to stay at home to look after children under 11 and women in a similar position who decide to look after an aged relative. Those are the common-sense principles in which our party believes. We are backing our beliefs with real money, because those women would be up to £1,000 better off. Finally, we will reduce tax on petrol which, as my constituents in Bury St. Edmunds never tire of reminding me, is still, even after the Budget, the highest in Europe.

Those sensible Conservative reductions in wasteful expenditure and the tax burden will deliver incentives for work, saving and investment to stimulate the growth that will and must deliver higher living standards to all the British people. That is the Conservative way. The Labour way is the way of Complexity Brown, a man in the clutches of the delusion that interference and lever-pulling deliver the goods. That is a socialist fallacy in a modern setting. It has never worked and, as we shall soon learn, it will not work this time either.


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