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The right hon. Member for Sheffield, Central (Mr. Caborn) also made his final speech. I rather enjoyed our debate on "Newsnight" last Monday about the role of the Unite trade union in taking over the Labour party. I found it interesting at the time that he failed to support the British Airways workers going to their jobs. I was in his constituency on Friday, as he knows-I will come to that in due course-and I have to say that the
Federation of Small Businesses in Sheffield takes a very different view of the Budget from the one that he described today.
My right hon. and learned Friend the Member for Devizes (Mr. Ancram) made a lovely speech. He reminded us that he has represented three seats. I wonder whether he had the opportunity to make three maiden speeches. It is our loss that he only has the opportunity to make one farewell speech. He appropriately spoke of the responsibility that we all have through the generations, and in this case about the Government's appalling debt crisis and the moral imperative for us to find a solution.
The right hon. Member for Barrow and Furness (Mr. Hutton) is another Labour ex-Minister with whom I enjoyed a debate recently, at the Financial Times election forum. Tonight he gave a thoughtful speech that confirmed the very good reputation that he has had in the House. I agree with him that we are not a post-industrial society. In fact, to return to Sheffield for a moment, I made a very important visit on Friday to ITM Power, which is making zero-carbon, hydrogen-powered cars and was very impressive. The right hon. Gentleman, as is his wont, attacked the Government, in this case for their proposal for a credit adjudicator and the new 50 per cent. tax rate, as he did last year, to be fair to him. We wish him the best and hope that he has a double reason to celebrate on 6 May. Not only is it his birthday, but I believe he will celebrate and cherish the fact that it will be the last day of the current Prime Minister being in office. He was absolutely right when he said that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr. Brown) would be an awful Prime Minister.
My right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who is also retiring, made an elegant speech, which covered many broad intergenerational themes, including our role in the world. The hon. Member for Tyne Bridge (Mr. Clelland) is standing down too, and he called the Budget "unexciting". Perhaps he meant it as a compliment, but, as a do-nothing Budget, it is not what the country needs. However, he spoke well in support of our policy on high-speed rail and made some important points about the value of clubs and charges, with reference to amusement machine licence duty.
My hon. Friend the Member for Stratford-on-Avon (Mr. Maples), who is also standing down, spoke appropriately about our responsibility to the next generation on debt. He spoke powerfully about facing up to the implications of debt unless we get a grip on our public finances, and the need to boost business and improve skills in the work force. He made important points about improving ethics in the City.
The hon. Member for Nottingham, South (Alan Simpson) mentioned his support for the Tobin tax, which was the Government's position until the Obama Administration told the Prime Minister that it would definitely not go ahead. Instead, the Conservative party is in line with the US Administration in calling for a banking levy on leverage. In my short five years here, I have always found the hon. Gentleman to be a first-class parliamentarian and I wish him all the very best.
The right hon. Member for Ross, Skye and Lochaber (Mr. Kennedy) made some important points on behalf of his constituents. He talked about his support for Government spending, but left me wondering what he thinks of his successor's pledge to make "savage cuts".
The hon. Member for Sheffield, Attercliffe (Mr. Betts) argued for high-tech value-added business in his constituency and praised the green investment bank, which was again a policy that the Conservative party first proposed.
My hon. Friend the Member for Mid-Sussex (Mr. Soames) made a characteristically powerful speech, describing a disastrous Government. I entirely agree. The hon. Member for Crawley (Laura Moffatt), who is also standing down, gave a characteristically loyalist speech, but I wish her all the best in her future career. The hon. Member for Upper Bann (David Simpson) gave various warnings about what would happen if we did not get policy on the economy right.
My hon. Friend the Member for West Suffolk (Mr. Spring) talked about the noble reasons for his entering politics in the 1970s and his regrets that, thanks to the Government, we seem to have come full circle on many matters. I think he said that history is repeating itself. He rightly attacked the Government's tax on jobs through the big increases in national insurance and highlighted the work of Policy Exchange on the severe negative impact that the tax rise would have on growth. We will miss him greatly. He has been an invaluable help to our shadow Treasury team and I wish him all the very best for the future.
The hon. Member for Harrogate and Knaresborough (Mr. Willis) also gave a final speech. He spoke well of the future of UK science and engineering and the importance of innovation. He said that the Budget provided little cheer. It is unfortunate for him that he will find it difficult to square his rhetoric with his leader's pledge on savage cuts.
I am sure that the contribution of my hon. Friend the Member for Isle of Wight (Mr. Turner) will not be a final speech. He spoke well about our moral duty to decrease the debt and said that we cannot leave it to the people who got us into the crisis to get us out. The hon. Member for Stroud (Mr. Drew) claimed that he was standing on a different programme for the election from that of the Government, but I feel that his fate will nevertheless probably be the same.
My hon. Friend the Member for Ludlow (Mr. Dunne) made some important points about growth and the Government's optimism, to which I will revert in due course, and also attacked the deficit and the cynical failure to spell out the consequences of freezing personal allowances and other Labour subterfuges, including the impact on petrol retailers. My hon. Friend the Member for South-West Norfolk (Christopher Fraser) spoke strongly about the need to take measures to strengthen the family. We wish him all the best in his future career and send best wishes to his wife, too.
I hope that this is not the last occasion on which I will address the House, although it will probably be the last time I speak as the Member for Hammersmith rather than the Member for Fulham. I am proud to have served as the first Conservative Member of Parliament for Hammersmith since 1966, and I greatly hope that Shaun Bailey will succeed me in that part of the constituency. He will be the first Conservative Member of Parliament for Shepherd's Bush since Sir William Bull in 1918, and I shall return to Sir William later.
First, I want to consider gold. When debating the last Labour Budget, we should examine the Labour Government's overall record under the right hon. Member
for Kirkcaldy and Cowdenbeath in the past 13 years. I was fascinated by the end-of-the-year investment review of the decade in The Sunday Times, which was published just before Christmas. The review featured the best and worst-performing investments in the past decade-that is, since 2000. It showed that the best-performing asset class was gold, and that the worst-performing shares in the same period were Royal Bank of Scotland shares. Whatever our Prime Minister intends to do after he is given the heave-ho, let us hope that he has no intention of becoming a fund manager. The Prime Minister told last year's Labour party conference that the test of a Government is the quality of their judgment, but on gold and their economic record in general, their judgment has been calamitous.
It is worth dwelling for a moment on the subject of gold, as my hon. Friend the Member for Mid-Sussex did, because the Prime Minister says that he has made the right calls throughout. We have noted that he is resisting freedom of information demands, and many of us know why. In May 1999, he first signalled to the market that he would sell 400 tonnes of gold at a 20-year low in the price. That is never a good time either to telegraph a big sale or to sell, and that became known as the Brown bottom. The Prime Minister sold off Britain's gold for between $256 and $296 an ounce, raising around $3.5 billion. Since that time, the price has almost quadrupled, despite low inflation, and the total loss to the economy is independently reckoned to be a staggering $6 billion. That was the Prime Minister's version of black Wednesday. Unlike 1992, it was not partly driven by the force of circumstance; it was a decision taken by our Prime Minister entirely of his own volition and entirely at his own choice of time.
I mentioned that the Budget has gone down very badly in my constituency, but to get a wider cross-section of views, on Thursday and Friday, I went to Leeds, Morley and Sheffield in Yorkshire. Judging by the mood at the Leeds chamber of commerce and the Sheffield Federation of Small Businesses, the Budget went down very badly there too. The mood in Morley, where the Secretary of State for Children, Schools and Families will be a candidate, was particularly hostile. Our candidate Antony Calvert and I launched our document, "Getting Morley Moving", which went down very well in Morley high street and Morley market.
Of course, the Budget is all about debt. Remarkably, Labour has embarked on a strategy designed deliberately to increase our debt. At Prime Minister's questions in December 2008, at the outset of this crisis, we were told that
"we need debt to rise, we do not resile from that."-[ Official Report, 17 December 2008; Vol. 485, c. 1096.]
As we know, Labour has already doubled the debt and will double it again. Remarkably, in this Budget, the Chancellor presented as a triumph the reduction in the forecast borrowing from £178 billion to £167 billion. At that point, he rather reminded me of a football manager who praises the quality of his team's consolation goal after they receive a 5-1 drubbing.
As various of my hon. Friends have pointed out, the amount of debt this year-£167 billion-is more than the Treasury raises in income tax. Borrowing is almost £500 million a day, and in the 15 minutes of my speech, the Government will have borrowed another £4 million, which is more than most people could ever dream of
earning in their lifetime. As important as the new debt is the amount that we are paying as a country in interest on existing debt, which someone mentioned. This year, at £43 billion, debt interest will overtake the defence budget, and next year it will overtake the schools budget.
The figures on debt interest are grim, but the main risks-remarkably-are on the downside. There are two main risks. First, there is an assumption that interest rates will remain low. Most figures for debt interest in 2014 assume an average interest rate on that debt of 4.4 per cent. I hope that interest rates will remain low, and that is a big priority for an incoming Conservative Government, but clearly, the risk is that interest's rates might rise, not fall. Secondly, there is an assumption that growth will be strong. As my hon. Friend the Member for Ludlow pointed out, despite a small downgrade in the growth forecast in 2011, the Government are still forecasting growth of between 3 and 3.5 per cent., but independent forecasts are for 2.1 per cent. The Treasury forecasts growth rates of 3.25 to 3.75 per cent. in all years thereafter, but again, the risk is that we will undershoot that-there is not much chance that we will overshoot it. Lower growth feeds through to a bigger deficit, which in turn leads to more debt interest. We have to take urgent action to prevent this perfect storm of high debt, high interest payments, downwards pressure on our currency, low growth and static or worsening employment from happening.
On Thursday, The Sun said that this Budget and the Chancellor could be summed up in four words, "spend now, pay later"-only he is spending now, and you will pay later. Budget day was a real throwback to the 1970s, not just with the size of the borrowing and a Government seemingly crying, "Crisis, what crisis?", but with picket lines outside the Treasury and this very Parliament. There is better news for the country-I can report a return tonight to double digit poll leads for the Conservatives, just as happened in 1979.
I conclude by returning to the subject of my predecessor as Member of Parliament for Hammersmith, Sir William Bull. He was once suspended from the House for calling the Prime Minister a traitor. I do not intend to make the same comment today, but I will say that with the Government borrowing £500 million a day-and borrowing more this year and next than all other Governments in history combined-and given how Labour has run the whole economy into the ground, it is the whole Government who have betrayed our country.
The Financial Secretary to the Treasury (Mr. Stephen Timms): We have had a good debate, on the whole, on crucial matters for the economy. We have come through the most severe and synchronised downturn since the great depression. Thanks to the action that the Government have taken, the damage suffered in the UK has been a great deal less than we suffered in previous recessions and were expected to suffer in this one. Now the world economy is returning to growth. We are in the early stages of recovery, but as we can see by looking around Europe, the recovery is still fragile. Germany returned to growth in one quarter and then went flat the quarter after that. Italy returned to growth, but went back into negative growth the following quarter. Spain is still to come out of recession.
As we forecast, the UK economy returned to growth at the end of last year, but the remaining uncertainties underline the need for support for the economy to continue until the recovery is secure. When we reduce our borrowing-as we must-we need to safeguard the front-line services on which people depend. We must ensure that future industries can grow, and promote innovation to provide opportunities and skilled jobs. In that way, we can secure strong and sustainable growth in the future.
Throughout the crisis, the Government have acted to support the economy, families and businesses. Several hon. Members referred to the tremendously successful time to pay scheme, which has given more than 200,000 businesses more time to pay more than £5.2 billion in tax so far. That success has convinced us to continue to offer that scheme to viable businesses having difficulty in meeting their tax obligations, at least through the next Parliament. Some £900 million of support has been delivered to almost 9,000 small and medium-sized enterprises through the enterprise finance guarantee. The small companies' rate of corporation tax will remain at 21 per cent. for the coming year.
We can see the difference that all this support has made. Unemployment reached not 3 million but 1.6 million -and it has come down in the last few months. Home repossessions are much lower than in the 1990s recession, and much lower than was projected at the beginning of last year. The rate of company liquidations has been a third of what it was in the 1990s recession.
John Hemming (Birmingham, Yardley) (LD): On the question of unemployment falling, I presume that the Minister means on the claimant count basis. Constituents of mine have expressed concern that if one half of a married couple is in work but the other is unemployed, the latter falls off the claimant count after six months but is still unemployed.
Mr. Timms: A lot of things have happened that have ensured that the claimant count has not reached the levels of the past. Part of that is undoubtedly because of flexibility-people being willing to reduce their hours-and that has been supported to a significant extent by the tax credits system, which has ensured offsetting payments if income is reduced. The incomes of some 400,000 families have been increased through tax credits to offset a reduction in earned income. The hon. Gentleman makes a fair point about the operation of the means-tested system, which has been in place for a long time, but however we look at it, it is undoubtedly the case that, in employment terms, the damage from the recession that we have been through has been a great deal less than that from the recessions of the 1980s and the 1990s.
No. Actually, we have been successful in avoiding the big increase in long-term unemployment that was such a damaging feature in the 1980s and the
1990s. The hon. Gentleman is right to draw attention to concerns about youth unemployment, which is why we offered the six-month guarantee for 18 to 24-year olds, which we extended in the Budget for a further year.
The hon. Member for Taunton (Mr. Browne) spoke on behalf of the Liberal Democrats. Let me make a couple of points about cider duty, which is of course significantly less than duty on other alcoholic drinks. The two largest companies produce some 80 per cent. of cider in the UK; indeed, I noticed that the share price of one of them went up on Budget day. The majority of cider producers-some 400 smaller producers, producing less than 70 hectolitres-will not be affected at all. The duty rise was concentrated on the strongest industrial ciders-the hon. Member for Hammersmith and Fulham (Mr. Hands) mentioned them-which are those with the lowest apple content, such as Frosty Jack's and Diamond White, with which there has been a link with disorderly behaviour, as we all know.
I take issue with one point that the hon. Member for Taunton made. Referring to the child trust fund, he said that having a pot of money does not have an impact on life chances. He is quite wrong about that: in fact, it is the case-there is clear evidence to show this-that having a sum of money as one enters adulthood can make a big impact for the better on life chances. The child trust fund delivers that in an important way.
Mr. Hands: I thank the Minister for giving way; he has plenty of time. Let me take him back to cider. He mentioned two brands of high-strength, industrial-type cider, which he pledges action on, but why has he raised the duty for all ciders by 10 per cent.?
My right hon. Friend the Member for Sheffield, Central (Mr. Caborn) rightly welcomed the Budget's impact on manufacturing. I have also visited the Advanced Manufacturing Park, to which he referred, and I have seen the work of Boeing and others that are based there. I join him in paying tribute to the work that Professor Keith Ridgway has done and welcome the announcement of the investment at Sheffield Forgemasters, with the establishment of perhaps the biggest press in the world. He is right to say that we in the UK want to be at the forefront of the global nuclear supply chain.
The right hon. and learned Member for Devizes (Mr. Ancram) also gave a thoughtful valedictory speech, the theme of which was stewardship, and demanded that the deficit be cut more quickly than we have proposed. He was followed by two speakers with whom I have worked closely. My right hon. Friend the Member for Barrow and Furness (Mr. Hutton) welcomed the measures for business in the Budget, pointing out that the Conservative arithmetic does not add up, particularly following today's announcements about national insurance reductions. He did a superb job as Secretary of State for Work and Pensions, and as Secretary of State for Business, Enterprise and Regulatory Reform.
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