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Lord Strathclyde: My Lords, I hope that the noble Lord will forgive me. I pointed out in my speech, and I do so again, that the IMF also said--this was the point of my Motion--that the Government would be prudent to abstain from introducing significant new spending commitments in the March 2001 Budget.

Lord Tomlinson: My Lords, no doubt the noble Lord listened in detail to the context in which my noble friend Lord Woolmer placed that quotation. However, I am sure that the noble Lord, Lord Strathclyde, does not feel particularly proud of having to scurry through a multi-page report to find one comment that was critical and of ignoring everything else. The rest of the report from the International Monetary Fund was a paean of praise to the economic management of this country.

In his remarks, the noble Lord, Lord Strathclyde, gave me the impression that, basically, he believes two things: that taxes are too high and that services are under funded. It follows, therefore, that he wishes either to cut taxes or to spend more. In fact, his right honourable friend in another place, Michael Portillo, appears to want to do both. He wants to cut taxes and to spend more. Shortly after the Budget he told us clearly that Labour's spending plans were unaffordable. He went on to say that,

That equals £16 billion. So Mr Portillo wants to see £16 billion-worth of cuts on the one hand, but he promises no cuts; simply a formula which states that he will match Labour's spending plans. Talk comes cheap. "Less tax, more services", is an easy incantation. "Cut taxes and match spending plans", is an equally easy incantation. But that is not an economic agenda. That is a fraud. If a company outside this House issued a prospectus on that basis, the people responsible would have their collars felt and would be locked up.

I come now to some of the important aspects of the Budget of my right honourable friend Gordon Brown. I turn first to the important question of debt repayment and the consequences which flow from that. Here, unlike my noble friend Lord Desai, I warmly welcome that debt repayment and its consequences. Last year, the Government repaid £9 billion-worth of debt. This year, the record is even better. As the Chancellor pointed out in his Budget speech,

    "this year the net cash debt repayment will be £34 billion. This is more debt repaid by one British Government in one year than all the total debt repaid by all the previous British Governments of the last 50 years".--[Official Report, Commons, 7/3/01; col. 297.]

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Next year, debt repayments--that is, the cost of servicing our debts--are to be £1.5 billion less than were forecast in the Pre-Budget Report. That means that, in total, they will be £3.5 billion less than in the current year. That represents £3.5 billion which can be spent on services rather than on servicing debt. The fund will be available not only this year, but next year, the following year and each year that we have a government and a Chancellor who will keep debt under control. It is a permanent benefit for expenditure.

Once that is combined with other things that have happened since 1997--for example, it is clear that the Government have been able, because of the fall in unemployment, to reduce social security costs by £4 billion annually--you can then start comparing the aggregation of the reduction in debt servicing and the reduction in social security costs. You will find that in the period 1979-97--the period of the previous Conservative government--42 pence in every extra pound was spent on either debt servicing or social security. Today, the Budget suggests that that figure will be only 16 pence in the pound.

That has very clear, direct repercussions on major areas of policy. In 1997, we spent more on debt servicing than we spent on the schools' budget. Today, we are spending £10 billion more on the schools' budget than on debt servicing. The benefits of the Budget this year continue to be based on the principles of financial and economic prudence. By repaying debt, the Government rejected the opportunity to create a pre-election bonanza.

The modest extension of public spending was, in my opinion, well targeted. It was targeted on families, public services, fairness and social justice, modernising road transport, increasing employment opportunities and, yes, on building stronger businesses and business opportunities.

Above all, this arose while delivering a strong and stable economy; an economy which is praised by the British people, envied by other governments, supported by the IMF report and substantially welcomed by it. It is only the disappearing membership of the Conservative Party and its diminishing band of supporters, which we read about in the Sunday press with so much interest this week, which cannot welcome the Budget for what it is: good news for Britain and good news for the British people.

The noble Lord, Lord Stevens of Ludgate, who is no longer in his place, said that it is difficult for the ordinary man in the street to understand what is going on. I think he underestimates the ordinary man in the street. The ordinary man in the street understands this Budget; he supports this Budget; he values its priorities. With his support, it will the Labour Government who produced the Budget who will be going on to a second term in order to continue their work of building an economically strong and socially just Britain.

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5.43 p.m.

Lord Boardman: My Lords, I share the congratulations to my noble friend Lord Strathclyde from the noble Lord, Lord Tomlinson, but for very different reasons. My noble friend quite rightly referred to the points that the noble Lord did not want to read out, while the attack made by the noble Lord was quite out of context.

Perhaps I may refer to the remarks that the noble Lord, Lord Tomlinson, made about borrowing. I do not know whether the noble Lord has a copy of the report but, if he has, I suggest that he turns to page 209, which deals with the net cash requirement. It shows there that £19.5 billion had come in from "unanticipated spectrum receipts". They were nothing at all to do with the present Government or the Chancellor of the Exchequer; they were a lovely windfall.

Lord Tomlinson: My Lords, of course they were. Does the noble Lord think that the tooth fairy produced them.

Lord Brooke of Alverthorpe: My Lords, the £19.2 billion surely arose as a result of government decisions to run the telephone auctions, the licence auctions.

Lord Boardman: My Lords, the previous Government had built up these various technologies, the sale of which enabled this windfall to fall into the lap of the present Government. However, whatever the cause of it, let us refer to what is stated here, which is that the £19.5 billion is being used to reduce the debt.

Turning to the Chancellor's speech, he refers to forecasts, plans, projections, adjusting for the economic cycle, being locked into a tight fiscal stance, and so on. He then goes on:

    "Because of this and because of the spectrum cash proceeds, we are able to repay debt. Last year we repaid £9 billion. I can tell the House that this year the net cash debt repayment will be £34 billion".--[Official Report, Commons, 7/3/01; col. 297.]

So that was entirely due to the unanticipated receipt of the spectrum proceeds, which will be eroded by reductions of debt repayment in future years.

The noble Lord, Lord Tomlinson, suggested that the debt reduction was due to the Government's prudent financial management. That had nothing to do with it. I suspect that the noble Lord's comments were perhaps planted in a brief, and those who have not read the brief do not understand what they are talking about.

While I am commenting on previous speeches, perhaps I should say to the noble Lord, Lord Taverne, that investment in this country has been higher than investment in Europe. I think that the noble Lord was suggesting that we would have higher investment than we have at the moment if we were to join the euro. That is not so according to the figures that I have.

The noble Lord, Lord Woolmer, referred to the golden rule of borrowing only to invest and said what an excellent rule it was. It sounds attractive, but how do you decide what you are investing in. School meals?

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Obviously they are current account. School buildings? I do not know; I think that they are probably capital account. A battleship? Where is that covered? That problem will be left entirely to the Chancellor to decide to suit his own particular books.

I was going to refer to the remarks made by the noble Lord, Lord Desai, but as he is not in his place I shall not do so.

Turning to the summary of taxation, we have been quoted figures that it has increased since Labour have been in office by 3 per cent of the GNP. That is an enormous amount of money. It has gone up from 35.2 per cent to 38.2 per cent in that period. Those figures are taken from the Office of National Statistics. The noble Lord, Lord Haskel, referred to those figures, but he put an altogether different slant on them. If he reads the books and the figures, he will see that taxation has increased by 4 per cent of GNP while the Labour Party has been in government.

That very heavy burden has been inflicted by a great number of stealth taxes. At the time of the last election, the Chancellor understandably said that Labour would not increase income tax. It has not done so. He has, in fact, reduced income tax, but he has used a very skilful device to increase a whole variety of other taxes. These increases have not dropped on people in one block and all at the same time--they have been spread out--but the Government have collected these vast sums of money, some 4 per cent more of GNP than in previous years.

The Chancellor has, for example, raised stamp duty--I take these increases not in any particular logical sequence but as they occur to me--and fuel duties; the marriage allowance was reduced and then abolished; mortgage tax relief has been abolished, causing great hardship to many who are buying their homes; the tax relief on life insurance has gone, which has had an extremely uncomfortable, adverse effect on pensions. After this Budget, a family on reasonably modest earnings could end up being £669 per year worse off.

I turn to productivity. Here again, the noble Lord, Lord Haskel, quoted figures with which I find it impossible to agree. Productivity increased by 3.7 per cent under the Conservatives; it has increased by 2.9 per cent under the Labour Government.

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