Budget Debate

David Gauke condemns the budget as an empty budget written by a Government who have run out of steam, run out of ideas and run out of courage.

Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to respond to the debate, and I should like to thank my many hon. Friends who have participated in it, starting with my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton), who made his final speech to the House today. In a long and distinguished career here, he has never been frightened of controversy or of defying his Front Bench. Not only has he not been frightened, I think that he has rather enjoyed it-

James Duddridge (Rochford and Southend, East) (Con): Too much!

Mr. Gauke: That is not for me to say, but he has been consistent in his advocacy of manufacturing, and he argued today for a rebalanced economy and greater savings. I suspect that he has been reading some of the work on the new economic model by my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor-

Sir Nicholas Winterton: My constituent!

Mr. Gauke: Indeed? I am grateful for that information.

My hon. Friend the Member for Macclesfield's industry and independence have been well respected by his constituents and by hon. Members-and by those who fall into both categories-in his long career. I do not know whether he will be pleased to discover that he became a Member of Parliament eight days before I was born. He probably will not, but I congratulate him on his long and distinguished career none the less.

I also thank my hon. Friend the Member for Sevenoaks (Mr. Fallon) for his excellent speech, in which he highlighted his concerns about youth unemployment, the budget deficit, and the need for an office for budget responsibility. He also used a telling phrase when he described the Budget as a "mock Budget". My hon. Friend the Member for Uxbridge (Mr. Randall) provided the House with a business perspective, and with details of how businesses such as Randall's of Uxbridge had suffered under Labour Governments through the generations. This Government have been no exception.

I should also like to thank my hon. Friend the Member for Leominster (Bill Wiggin) for highlighting the Budget's attack on cider. He rightly said that, although the Government sometimes copy our policies, they frequently fail to get them quite right. This is just such an occasion, as they have raised the tax on all cider rather than targeting the super-strength ciders. That is most unfortunate and will cause great difficulty in his constituency-a fine constituency that I know well, and I know that you do, too, Mr. Deputy Speaker.

I also want to thank my hon. Friend the Member for Broxbourne (Mr. Walker), who started with the statement, which has been widely denied, that when he first came to this place, he was not a nice person. I knew him when he arrived here, and would just like to say that he was a very nice person. He was perhaps a little chubbier than he is now, but he was certainly very nice.

My hon. Friend the Member for Stone (Mr. Cash), following the example of my hon. Friend the Member for Macclesfield in being consistent in focusing on certain issues, highlighted over-regulation, immigration and Europe in his speech. My hon. Friend the Member for Bournemouth, East (Mr. Ellwood), who is a great advocate for the tourism industry, highlighted our party's policy on the difficulties with furnished holiday lettings. My hon. Friend the Member for Christchurch (Mr. Chope) mentioned the fact that Labour Governments always leave the economy and the public finances in a mess.

I also want to thank the right hon. Member for Rother Valley (Mr. Barron), who spoke well about his constituency, and the hon. Member for Luton, North (Kelvin Hopkins), who, rather to everyone's surprise, praised Lord Mandelson. The hon. Member for Leyton and Wanstead (Harry Cohen) revealed that he was a leading intellectual influence on Government policy and the return of Keynesianism. He also spoke of the need for greater transparency to prevent people from being ripped off. The hon. Member for Glasgow, North-East (Mr. Bain) spoke in his first Budget debate, and I suspect that it will not be his last.

The task for the Budget was perhaps best set by the Governor of the Bank of England, Mervyn King, in a speech in Exeter on 19 January when he said that the spring Budget provides an opportunity to

We can take it as implicit in that that the Government had not succeeded in demonstrating a strong commitment to fiscal sustainability prior to this Budget. The fact is that the Government have failed that task.

It is not persuasive for the Government to say, "Look, we have lower borrowing than we predicted." After all, the Institute for Fiscal Studies predicted in its green budget in January that the borrowing could be reduced to £167 billion for this year, but it went on to state that, even with the same level of growth as the Government predicted, lower tax revenues would result, so much of the gains would be lost. The IFS also pointed out that the Treasury's forecasts for economic growth were higher than the average of independent forecasts; indeed, we know that they are even higher than the Bank of England projected. There is consequently very little room for optimism as far as growth is concerned.

We have heard a lot about tax rises. Most noticeably, we heard about the increase in national insurance contributions. It was striking when, earlier this week, a policy exchange paper showed, by running through an economic model very similar to that of the Treasury, that an increase in employers' national insurance contributions of 2 per cent. would reduce gross domestic product by 2 per cent. and increase unemployment by 1 million. It was rightly said that the result should be viewed with caution and I am not saying that the figure is right. If it is, however, it is remarkable that the Treasury went ahead, especially if it had received such advice. The Treasury should come clean with the British people as to the advice it has received on this matter.

We heard more about higher tax on alcohol, not least on cider, and we heard about a permanent increase on stamp duty. There is also the issue of freezing personal allowances, raised by a number of hon. Members, which will cost 30 million people at least £48 a year as a consequence of the retail prices index being much higher than the rate to which the personal allowance will be raised.

The big question and the big missing element is the absence of spending plans-the absence of a comprehensive spending review that is long overdue. The Government's excuse, of course, is that there is uncertainty about what the debt and unemployment figures will be over the months ahead, yet somehow those uncertainties are magically removed once we are the other side of a general election. At that point, it is possible to set out spending plans going through to 2013-14.

We are not given the numbers and, given what the IFS said earlier today, we know why. According to the IFS, spending on public services and administration will have to fall by a total of £48 billion in real terms by 2014-15 and in unprotected areas such as higher education, transport and housing, spending will have to be reduced by between 19.5 and 25.4 per cent. by 2014-15. If the Minister disputes those numbers, I urge him to take the opportunity to do so this afternoon.

My hon. Friend the shadow Chancellor provided us with some quotations from officials regarding spending plans. I am not going to repeat them-time does not allow me-but I can throw in some examples where both the Department for Business, Innovation and Skills and the Department for Communities and Local Government seem to be making the same claims for the same efficiencies in exactly the same terms. It looks as if there is an element of double counting as well. It is worth quoting Cathy Newman, the Channel 4 journalist who compiled this list, when she described Departments as being

The truth is that the Government have a dreadful record on efficiency savings. They had their own target of £35 billion of savings to be found between April 2008 and April 2011, but confirmed yesterday that they had found only £10.8 billion. As the IFS pointed out today, some savings that have been found belong to existing efficiency drives and are therefore not additional, while some, because they are in protected areas, will be recycled and will not count towards deficit reduction. Savings must be about delivering. It is a question of having to show, not tell. That is one reason for saying that the sooner we get on with delivering these efficiency savings, the better.

The fact is that this has been a thin, empty, dead-end Budget, lacking ideas and vision and giving no sense of how this Government will take the country forward. Perhaps, as we debate what Conservative Members hope will be the last Budget produced by Labour, this is a good time to look back at the first, delivered on 2 July 1997 by the then Chancellor, now Prime Minister. It is well worth reading some of the lines that appear in it:

Mr. Desmond Swayne (New Forest, West) (Con): He was right.

Mr. Gauke: He was indeed. We are now borrowing more than we have borrowed at any time in our peacetime history.

The then Chancellor went on to say:

The IFS green budget and the OECD estimate that the trend growth rate is now 13/4 per cent., so there is another failure.

The then Chancellor also said that past Chancellors had

but oh yes he did. He also said that one of important elements of growth was business investment, but now, in 2010, we are seeing the largest fall in business investment since records began.

The then Chancellor said:

Under the current Government, saving rates have reached record lows. He also said:

He went on to boast about our tax competitiveness on the basis of the corporation tax rate. In 1997, our rate was lower than the OECD average; now it is higher. In 1997, ours was the 11th lowest rate in the world; now it is the 23rd lowest. In 1997 ours was the third lowest rate in the EU 15; now it is the sixth highest, and the Prime Minister is standing in the way of our proposals to reduce corporation tax further.

The then Chancellor said that

He also focused on young people, saying:

Now 923 young people aged between 16 and 24 are unemployed, and the figure is 50 per cent. higher than it was in 1997. The figure for economic inactivity is at a record high, at over 8 million.

That was not a Budget that stood the test of time. It introduced fiscal rules that have been abandoned. It boasted of dismantling the internal market in the national health service, which had to be reintroduced. It proposed individual learning accounts, which had to be abandoned after being abused by fraudsters. It proposed a university for industry; that proposal led nowhere. Nevertheless, we could at least say that that was not an empty Budget. It was packed with ideas, although most of them were bad ideas. In contrast, yesterday's Budget showed that the Government have completely run out of ideas and run out of steam. I can, however, find one similarity between the hyperactive Chancellor and the fading Prime Minister who will go to the electorate very shortly. Both can be described in this way: fired with enthusiasm.

This is a Government who are just trying to muddle through-a Government who have run out of steam, run out of ideas and run out of courage. With this Budget, they are ending with a whimper.

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