Pre-Budget Report

Today, confronted with the biggest budget deficit in our peacetime history, the right hon. Gentleman faced a choice: would he take the tough spending decisions before the general election or would he completely duck them? We were promised a pre-Budget report and what we got was a pre-election report. The Government have today lost all the moral authority to govern. Instead, the full scale of the economic disaster that Labour has visited on this country is clear to us all: the biggest debt we have ever known; spending cut on almost everything; taxes up on anyone who earns more than £20,000 a year; Labour's new tax on jobs; and higher interest rates to pay for the higher borrowing. Every family in the country will be forced to pay for years for this Prime Minister's mistakes. At the end of their period in office, they have indeed adhered to the greatest of golden rules: "Never trust a Labour Government with your money again." Everything that the Government have told us on the economy collapses in the face of the truth. They told us that they would be prudent, and the figures that they have produced have shown us that Labour has quadrupled the national debt while in office. They told us that Britain was better prepared than other countries, and now our budget deficit is higher than that of any other comparable country anywhere else in the world. They specifically told us—this Prime Minister told us—that Britain would lead the world out of recession, and now the rest of the world leaves Britain behind as it recovers. We are the only G20 economy in recession, and that Prime Minister used to stand at the Dispatch Box on occasions like this and say that he had rewritten the laws of economics, that he had abolished the trade cycle, and that he had abolished boom and bust. The numbers that the Chancellor has given us confirm that this Prime Minister inflicted on us the deepest and longest recession in our modern history. No one will ever believe a word they say on the economy again. Faced with this catastrophe, the Chancellor had three tasks today: first, to restore confidence in the Treasury forecasts; secondly, to produce at last—we hoped—a credible plan to deal with Britain's record debts; and finally, to show the world that Britain is open for business again and can create jobs. He failed on all three accounts. First, the forecasts. Every single time this Chancellor has come to this House, he has got his forecasts wrong, and today was no different. He confirmed that the GDP figures for this year show a contraction of 4.75 per cent. That is not only a full percentage point worse than the figure in the Budget—it is almost four times worse than when he delivered the last pre-Budget report. I noticed in his speech a little sleight of hand. He gave the annual contraction figure for the UK and the total contraction figure for every other country. The total contraction figure for the UK is 5.9 per cent., the worst since the 1930s. It would be difficult to imagine that this year's forecast for borrowing would be an underestimate, but so it turned out to be. I am told that they are having a row in Downing street: the Prime Minister wants to get his forecasts wrong on purpose, while the Chancellor prefers to get them wrong by accident. Either way, Britain is borrowing £178 billion this year and £176 billion next year. This is a figure that he did not give: £789 billion of additional borrowing over the next six years, and that is based on some pretty heroic growth assumptions in future years. Of course, a sneaky fiddling of the definition of the structural deficit was buried in the report. It all amounts to the fact that he is doubling the national debt from where it is today to £1.4 trillion—£23,000 for every child born today. Without a hint of irony or contrition, the Chancellor publishes today what is farcically called a Fiscal Responsibility Bill—as if we needed a law to tell us that their irresponsibility has been criminal. This is what one of the Prime Minister's own appointments to the Monetary Policy Committee has just said about their law:""Fiscal responsibility acts are instruments of the fiscally irresponsible to con the public."" The Chancellor should have introduced our plan for a proper, independent office for budget responsibility that will keep the Chancellor honest and ensure that never again can a Government fail to fix the roof when the sun is shining. So, the Chancellor has not restored confidence in Treasury forecasts. That was his first task. His second was to set out a credible plan to deal with the debt crisis. Yesterday, as he well knows, another credit rating agency warned that that the UK was at risk of a downgrade. Even this morning, the deputy leader of the Labour party was admitting on television that markets are getting more nervous than they were about Government borrowing. The Governor of the Bank of England says that we must""eliminate a large part of the structural deficit"" over the lifetime of this Parliament. I agree with the man in charge of monetary policy in this country. Yet today the Chancellor is sticking with the same plan that he set out in the Budget—the plan that the Bank of England, the CBI and the OECD have all told him is not credible. The whole object of policy going forward as we come into recovery is to keep interest rates as low as possible for as long as possible. That is not what his recipe provides today. As the debts have become bigger, so the Government's response gets smaller. What the Chancellor had to say to the House today on spending is just not credible. He promises more efficiency savings, but coming from the people who have just admitted that they wasted £4 billion on an NHS computer system, that rings a little hollow. As for the waste advisers who wrote those reports that the Chancellor is publishing today, they have lived up to their names by deciding that they will not waste any more time with him: they are working with us. Then there are the proposals on bankers. We warned the Chancellor two months ago that he should try to stop big cash bonuses being paid out. I said in my conference speech that we should look at the tax system. Let us be clear: the Government are going to pay out a load of bankers' bonuses that they should not have been paying out in the first place, then put a one-year windfall tax on them and declare it a triumph. The real test of this new tax will be whether it curbs bank bonuses instead of curbing bank lending. Let us hope that it is more effective than those binding lending agreements that we once heard so much about at that Dispatch Box. The Government say that they will use the money on youth unemployment, because instead of abolishing it, as promised, the Prime Minister has led youth unemployment to a record high. We need a real, lasting plan to get Britain working and to deal not just with the million or more people who have lost their job under Labour, but the millions more who have never had a job under Labour. On spending, the Chancellor is prepared to tell us what he will spend money on, but he stays almost totally silent on where the real axe will fall. He is achieving the previously impossible trick of ring-fencing a black hole. He said, with understatement, that this is not the time for a comprehensive spending review. This is from a Chancellor who said that that he was acting from a position of strength! Why is it not the time for a comprehensive spending review? The Government have all the figures and they have access to all the information that they need. They had spending reviews just before the 2001 election and just before the 2005 election. Now, suddenly, the spending review has to wait until after the 2010 election. That spending review is the massive missing piece of this pre-Budget report. They have given us lavish detail on the few things that they say that they are protecting, and almost nothing on the many things that they are planning to cut. They are not being honest with the British people about the real price of their incompetence. This has got nothing to do with protecting front-line services and everything to do with protecting themselves. What we see today is not a credible plan on the debt, and the Chancellor has failed his second task. The Chancellor's final task was to set out a real plan for growth. What does he propose? A higher tax on jobs. That is his answer to Britain's unemployment problem—higher costs for struggling businesses and more money taken from families. That is yet another thing that we could have avoided if this Government had taken the hard decisions in the good years. Let me just say this about some of the tax measures that the Chancellor has announced in the Budget, the last pre-Budget report and this pre-Budget report. The message to aspiring families from these tax changes is pretty clear: if you want to get on in life, if you want to own your own home, save for a pension or leave something for your children, then the Labour party is not for you anymore. All that work Labour did to drag the party on to the centre ground of British politics, as well as all the effort it made to persuade the country that it was for enterprise and aspiration, is gone. Instead, it has erected a sign over the country that says, "Closed to enterprise and wealth creation," all for the sake of narrow political dividing lines. Instead of telling the country that we are all in this together, Labour now pretends that it can solve our problems by setting one part of the country against another. At the next election, it will be the few who support this approach and the many who reject it. Instead of a plan for growth and jobs, the Chancellor's plan means higher taxes, higher taxes on jobs, higher interest rates and turning his back on aspiration and enterprise. His third and final task—failed. There is no confidence, no credible plan, no growth and aspiration is being abandoned. Why is it that every Labour Government have taken this country to the brink of bankruptcy? Each one in turn seems to ignore the most basic rule of finance: if you keep on spending more than you earn, sooner or later you run out of money. How difficult can it be for them to remember this simple point? The country now faces a choice. There is Labour's route, which has been set out for us today: higher debts leading to higher taxes and higher interest rates; the recovery choked off; and Britain reduced again to being the sick man of Europe. Or people can choose our route, which is to face up to the problem; set out to eliminate a large part of the deficit in the Parliament for which we are accountable; expect everyone to share the burden, but protect the lowest paid; keep interest rates lower for longer; send the message out loud and clear that Britain is open for business; and transform the economy that Labour built on debt into one in which we save and invest for our future. That is not going to happen under this Government. The Prime Minister—[Interruption.] ... The Prime Minister always called himself the nation's bank manager, and so he has been. He bet the nation's finances on a never-ending property bubble and a City bonanza, and now, like every other failed master of the universe, he is coming to the taxpayer and asking to be bailed out, but he should remember this: most bail-outs start with a change at the top.