Pre-Budget Report

The right hon. and learned Gentleman is talking nonsense. As the Chancellor said, we looked at a range of options and decided on the fairest options necessary to bring borrowing back down. That is the right thing to do to support a fiscal policy and a fiscal boost that are supported across the world. That is supported by the Bank of England, the CBI, the Federation of Small Businesses, the TUC, the national institute and the Institute for Fiscal Studies—everyone except the Conservative party. Conservative Members also oppose the action we need to take in future to bring borrowing back down. The credit crunch is not hitting our economy only today; it is affecting our public finances into the future. This year alone, the revenue from the financial and housing sectors is likely to be £25 billion lower, and it will take the financial sector some time to recover. Because of the recession and the impact of the credit crunch, tax receipts will fall to 33.8 per cent. of GDP, and responsible Governments know that that has to be dealt with not now, while the economy is under pressure, but in future once the economy grows. We have set out how to do that in a fair way, but the Conservative Front Benchers oppose any action to bring borrowing down in future. They oppose any tax increases, although I notice that they are still supporting tax cuts on millionaires' estates. Not only would they not bring borrowing down, but the effect of their programme would be to push borrowing up even higher. When my right hon. Friend the Chancellor said earlier that the Government ought to be cutting taxes and giving a fiscal stimulus to the economy, quoting what the Conservative party leader said in July, I noticed that the hon. Member for Runnymede and Weybridge (Mr. Hammond) cried out no, saying it should be done permanently. I should point out to the hon. Gentleman that a permanent fiscal stimulus is a permanent increase in borrowing. That is what this party opposes and why we are calling for borrowing to come back down and why we are being responsible about it. The cut in VAT, once it is passed through, will mean that the average household will find its normal spending costs more than £20 less each month. That is extra cash that people can spend to support the economy or to help them get through the more difficult times ahead. We want to give every pensioner in the country £60 extra in the new year—something opposed by the Conservatives at the very time that it is most difficult for pensioners to pay their fuel bills in the winter months. We want £3 billion brought forward to repair schools, insulate homes and build roads—again, that is early investment opposed by the Conservatives. We want to put £20 billion into the economy, which the Conservatives also oppose. It will be funded by borrowing in the short term that we will bring down and which they have opposed time and time again. Yes, it means borrowing more in the short term; the truth is that it will cost us all far more later if we do not do that now. The Conservatives say that we cannot afford to do it, but we know that we cannot afford not to.