Budget Resolutions and Economic Situation

It is a great privilege to follow the right hon. Member for West Dunbartonshire (John McFall), who has played a distinguished role in our economic debates over the years. I wish him well in his retirement. His contributions will be long remembered here. The Prime Minister—both as Prime Minister and as Chancellor of the Exchequer—has always believed that words were a substitute for reality. He believed that simply by repeating his commitment to prudence, he could distract people's attention from his practice of imprudence, which involved building up the largest unsustainable growth in expenditure that this country has experienced in many a long year. He believed that by repeating his assertion that he had abolished boom and bust, he could make us think that he had done so, until the reality exposed him and burst his credibility. Now, the Prime Minister asserts that the problems are all global, and tries to convince us that he had no part in the problems and could have done nothing to mitigate or avoid them. However, two Anglo-Saxon economies similar to our own—Canada and Australia—were prudent and did not go in for excessive boom. As a result, they avoided the rigours of the bust when the problems hit countries such as Canada's near neighbour. So, more could have been done in this country to mitigate and prevent the problems from which we are suffering, of which this Budget is a symptom. We could have avoided the present levels of non-employment, for example. The Government claim that the unemployment figures are encouraging, but they do not tell us how many people have withdrawn from the labour market because they are discouraged, and because there are no jobs available. Ultimately, however, the problems that we face can be summed up by the size of the deficit that we face. The Chancellor has tried to convince us that because the forecast of £178 billion has come down to the current estimate of £167 billion, that would somehow make a significant difference to the scale of our concerns. But £167 billion is unprecedented. It cannot for an instant be tolerated, excused or minimised. There are only three ways to reduce the deficit. The first, and worst, is to raise taxes. The second, better, way is to cut spending. The best way is to encourage growth. Raising taxes might be unavoidable, but if we are elected to government, we will do all we can to avoid raising taxes. By contrast, raising taxes is the first choice of the present Government. They have already put up taxes today, stealthily and with little mention, by an extra £19 billion, as my right hon. Friend the Leader of the Opposition pointed out. That is a burden that we have already had to pay. When the Prime Minister was asked what action he had taken to reduce the deficit, the three measures that he mentioned were all tax increases. That is this Government's instinct and their practice, and if they are returned to office we must fear that such measures will form the bulk of what they introduce. It is inevitable that they would be forced to introduce measures to reduce the deficit more quickly than they are now proposing, in rather unspecified ways. Better than raising taxes is cutting expenditure. Indeed, even the Labour Chancellor recognises that large reductions in spending are required, even with the higher taxes that they are proposing and those that they have already introduced. The Institute for Fiscal Studies has pointed out that, on the Government's own projections, they are set to undo almost all the increases in expenditure that they introduced over the first 10 to 12 years of the Labour Government. The Prime Minister is a "Duke of York" leader, who marches his party, and the country, up to the top of the hill with massive and unsustainable increases in spending, then marches us down again, while undoing them. It is small wonder that he has not spelled out in detail any proposals in a spending review. That has been postponed until beyond the election, because it would be the ultimate confession of failure if he were to spell out in detail what he needs to do.