Pre-Budget Report

May I start with the bits of the statement I agree with? I am glad that the Chancellor has listened to at least some of the advice from the Liberal Democrats about environmental taxation. He has not listened to all of it, because revenue will not be returned in tax cuts for the lower paid, but at least there is something. The Chancellor may not have noticed that the Stern commission report recommended that tough preventive action was needed, amounting to something of the order of 1 per cent. of gross domestic product. The tax changes he announced today amount to about one tenth of 1 per cent. of GDP. Where will the other nine tenths come from? The Chancellor’s environmental credentials are not helped by publishing in parallel the Barker report, which is really a property developers’ charter, and the Eddington report, which makes an unashamed plea for the expansion of airports. As the Member who introduced the most recent piece of legislation outlawing copyright theft, I welcome the Chancellor’s recognition of the creative industries. That is a major step forward. He is also right to put such emphasis on the long-term challenges from international competition and on creating a knowledge-based economy. However, one question troubles many of us. After all the billions that have been spent on science and on education, why has the number of British young people studying at A-level and equivalent the core disciplines of maths, science and modern languages—the foundations of a globalising economy—fallen since 1997 in both relative and absolute terms? Why are the fundamentals not being got right? I turn to the basic theme of the Chancellor’s statement. Of course, he has earned much credibility over the years from the fact that the British economy is stable and performing well. He would have earned more credibility today if he had acknowledged some of the problems that his successor will inherit. I start with personal debt. Two million people are in extreme debt. According to the Bank of England, one in six people has severe debt problems. The number of mortgage possession orders going through the courts is now 100,000 a year. The level of debt service in relation to income is close to the rate when the last Tory boom burst. My question is simple: who is responsible? Is it the responsibility of borrowers? Is it the responsibility of lenders? Has the Bank of England not done enough? Is it adequate for the Chancellor to be a passive spectator or does he have a role in these matters? The Budget numbers are impressive on the surface. The Chancellor has produced some impressive numbers for Gershon savings, but why should we believe them? Until he accepts that his numbers have to be fully independently audited—both the assumptions and the outcomes—he will be treated as the clever schoolboy who always gets 10 out of 10 in his tests because he marks them himself. Why does he not take advantage of his good initiative in partially increasing the independence of the statistical service to establish a fully independent system of fiscal policy monitoring? The Chancellor presented the Budget numbers reassuringly, but he knows perfectly well that if capital investment is to grow, current spending, especially public sector pay, must be dealt with severely in the years ahead. He has taken on board some big, expensive, open-ended public sector spending commitments: the continuing Iraq war; big defence procurement contracts, such as Eurofighter and Trident; new nuclear power; Ken Livingstone’s Olympics; and ID cards. In that constrained environment, how can he guarantee that key public sector spending commitments, such as pensions, policing and hospitals, will be sustained? I finish with a question that I put to the Deputy Prime Minister last week and which I think bewildered him. I am sure that the Chancellor will always want to be remembered not just for economic prudence but for a progressive record in advancing social justice, so can he answer the following simple question? After 10 years of Labour Government, why is income inequality as bad as when the Conservatives left power and why is wealth inequality—in assets—actually worse than it was then?