1997 Onwards -
Below is the text of Mr Major’s Commons speech on the 2001 Budget Resolutions Debate, made on the 12th March 2001. This was Mr Major’s last speech in the House of Commons.
MR JOHN MAJOR:
Mr Major: "Education, education, education" was originally a cry from Lenin, who did not mean it. I suspect that the Secretary of State, who has just left, does mean it. He is sincere and, in his unavoidable absence, I should like to congratulate him on graciously adopting some of the: proposals of my hon. Friend the Member for Maidenhead (Mrs. May), who is shadow Secretary of State. That behaviour is as welcome as it is unusual, and I hope that future Governments of both complexions will be inclined to follow that particularly good example.
Turning to the Budget as a whole, I am pleased that the Chancellor has cut taxes and given back to taxpayers a small proportion of the money that he has extracted from them in the past four years. His generosity is not surprising: notwithstanding the problems of foot and mouth, a general election is pending and the public accounts show ample scope for tax reductions and, perhaps, modest expenditure increases. Yet, only a few weeks ago, when the Opposition said that, they were condemned as "irresponsible" by spokesmen from the Treasury and elsewhere. We now see how shallow those attacks were, for if the Opposition were irresponsible, why has the most prudent of Chancellors done what they recommended? In truth, my right hon. and hon. Friends were right to identify the scope for tax reduction. Not only were they right but, if the economy stays on course, there may be scope for even more tax cuts in future.
A principal reason for that remarkable leeway is the sheer size of tax increases over the past four years. We must disentangle fact from fiction. Prior to the Budget, there had been 26 increases in personal taxation and 19 increases in taxes on business in this Parliament. That number has risen slightly although, given the Chancellor's remarkable gift for sleight of hand, one must study the small print carefully to find out precisely how many tax increases there are. However, their sum total is enormous. The abolition of tax credits on dividends alone will cost shareholders about £6 billion in the current tax year. The reorganisation of advance corporation tax at the beginning of this Parliament has affected the quality of pension funds for millions of elderly people and cost those funds more than £5 billion during the course of this Parliament; it will do continuing damage until it is changed.
Even after offsetting tax reductions -
More people have been dragged into tax. An extra 2 million now pay tax; 28 million pay it, compared with 26 million three years ago.
Mr. Mackinlay That is just nonsense. What about unemployment?
Mr. Major If it is nonsense, it is Red Book nonsense. Those figures come from the Red Book. Before the hon. Gentleman mutters into his non-
There are 2 million more taxpayers and 700,000 more higher-
It is no wonder, with such tax increases, that the ratio of tax to gross domestic product has risen 2.5 per cent. to 37.7 per cent. The Chancellor, despite all his promises, has not so much wooed middle England as assaulted it.
Mr. Geraint Davies Does the right hon. Gentleman know that, taking tax and borrowing together as a share of GDP -
Mr. Major The hon. Gentleman ought to know that his Chancellor changed the way in which the figures are quoted in the Red Book, and the actual equivalent of what he has done is an extra 10p on tax The hon. Gentleman may care to examine that matter. [Interruption.] If it is nonsense, it is the Government's nonsense in the Government's own figures. Those are the figures that I am using. I am glad to hear from Labour Members that they do not believe them.
It is ironic that the Government and the Chancellor have increased taxes so much. During the last Parliament, I remember vividly the present Chancellor and his colleagues, ever ready to find a catchy slogan, repeating the slander of 22 Tory tax rises, with no acknowledgment whatever of any offsetting tax reductions. To call their attacks disingenuous would be kind. They were patently untrue, and a forerunner of the manipulation of facts that has characterised so much -
The Government cannot deny that, because the figures for tax increases are now clear. The statistics cast light where the slogans cast deception. Before this Budget, the real increase in taxes over this Parliament was about 4.5 per cent. a year. Obviously, that figure is now a tiny bit lower, but not all that much. That compares with 1.8 per cent. between 1979 and 1997. I am indebted to the Institute for Fiscal Studies for pointing out that there were tax rises of 2 per cent. a year between 1979 and 1990, and of 1.3 per cent. between 1990 and 1997.
So much for the 22 Tory tax rises, or, indeed, the unsustainable proposition -
The Chancellor is ever ready to gloss over the excellent parts of his inheritance. He cherry-
We need more facts and less of the fiction that we so often hear. The economy has been growing steadily since 1992, before -
Mr. Mackinlay The Chancellor has been skilled, but I put that in perspective. Other factors have contributed, such as the ebb and flow of the economy, and I accept, to an extent, that employment growth was under way during the right hon. Gentleman's stewardship. I have intervened only because of his breathtaking assertion that people are somehow worse off than in 1996, which defies both belief and the litmus test of what one sees and feels. There was extensive unemployment, particularly among poor and unskilled people, during the period to which he refers, and although I do not apportion credit or blame in respect of employment, people are now in jobs. Demonstrably, they are better off.
Mr. Major Demonstrably, the people in jobs are better off. That is undeniably so, but I was referring to the scale of tax increases. If the hon. Gentleman reads some of the independent research, he will see precisely why I made that comment.
As it happens, I was about to give credit to the Chancellor. The economy is in good shape and he can take a great deal of satisfaction from that. I shall not be mealy-
For example, some hon. Members, but perhaps not all, believe that an economic miracle began on 2 May 1997. Let us take a date at random -
I thoroughly welcome the fact that economic management has reached a maturity whereby the two major parties do not feel it necessary to reverse all the actions of their predecessor. That is beneficial to the British economy, and it will remain so for as long as that is the case. I may be wrong, but I think that the Chancellor took that too far in his first two years by adopting the previous Government's expenditure plans in toto. I can tell the House, and I hope that it is not a great shock, that we certainly would not have done that. We would have increased them in the two public expenditure rounds that followed, as we had in every public expenditure round since 1979.
Stakhanovite is one word; masochistic is another, which might perhaps describe more plainly the Chancellor's disposition. He has been an economic masochist over public spending. We hear a huge amount about public spending, and the Secretary of State for Education and Employment was at it as well this afternoon, but despite the hype about the unprecedented sums for health and education, the fact is that the Chancellor has raised taxes by far more than he has increased expenditure. The public have not noticed because one skill that the right hon. Gentleman has perfected is that of counting, and that includes the capacity to double count, overcount and miscount, which he has done repeatedly.
Again, I am indebted to the Institute for Fiscal Studies: total Government spending in this Parliament has risen at 1.2 per cent. a year in real terms. That is not only less than tax increases, but less than economic growth. It compares with public spending of 2.6 per cent. in the previous Parliament, which is a point that Liberal spokesmen have often made, although they are not often nice about the Conservative party. I am glad to see a nod of agreement, rather than a shake of the head, from the hon. Member for Sheffield, Hallam (Mr. Allan), because that is undoubtedly the case.
I concede that much of that expenditure was not discretionary: it resulted from the unavoidable impact of the recession. However, it puts in a better context that hoary old myth about Tory cuts, which the Prime Minister is trying to recycle with his current spate of posters about potential future Tory cuts. Either he is ill-
The Government's publicity on cuts is familiar: it is an echo from the past. It was an odd experience in the last Parliament to be taunted by the Labour party over so-
Mr. Willis Nothing has changed.
Mr. Major The Rt Hon. Gentleman may be right. The health of the economy in 1997 and subsequently suggests that we may have got that balance about right.
During this Parliament, the Chancellor has benefited from the supply side reforms of the 1980s and the disinflation brought about by the policies of the 1990s. When he chants his mantra of boom and bust -
There is a boom and bust today: a boom in tax raising and a bust in the competitiveness of manufacturing industry. Perhaps the Chancellor and the Prime Minister should concentrate on that boom and bust.
Mr. Geraint Davies Will the right hon. Gentleman give way?
Mr. Major I shall make a little progress, if the hon. Gentleman does not mind.
The Chancellor of the Exchequer is a redistributive Chancellor. He tries to hide that fact, but it is evident, and from his perspective he should not hide it. He aims to redistribute to the less well-
The Chancellor abolished the married couples allowance last year, and this year -
The organisation of that tax credit is a shambles. As it is based on the highest-
The minimum income guarantee is the Chancellor's safety net against poverty, but it is so complex that more than one third of eligible pensioners do not claim it. The form is so complex and absurd that a large percentage of graduates might not claim it.
The 10p band extension is right in principle. I do not disapprove of minimising tax on lower income groups. However, the proposal is so niggardly and mean as to be almost pointless. The maximum gain from the Chancellor's measures in the Budget is 75p a week -
Many of the main effects of all economic management, by every Chancellor of the Exchequer, become apparent some years after the announcement of the original tax and spending decisions. This Chancellor was lucky. He was lucky in his predecessors -
I will not be in the House to see the Chancellor's legacy at first hand, but much of it is now predetermined. He inherited an economy of falling unemployment and low inflation, and he has maintained it. That was well done; but under his stewardship also, taxes have risen too much. The tax system has become far more complex. Manufacturing industry has declined further. Regulations have soared. Increases in business taxes are undermining competitiveness, and so in due course will the social charter, whose economic folly is not yet fully apparent but will become so. It is, in truth, a mixed record -
I cannot be certain, but this may well be the last occasion on which I shall speak in the House. Let me say that it has been a privilege beyond measure to be here, in this mother of Parliaments. I hope that the next generation of hon. Members, whichever of our great parties they may represent, will feel as I did when I first came to the House; I hope that they will feel that way in future, and I hope that we shall be able to end the miserable political climate of spin and counterspin that has grown up in recent years.
We need to separate fact from fiction, substance from soundbite, information from innuendo. The public -
Mr. Jim Cunningham (Coventry, South) I hope that that was not the last speech that the right hon. Member for Huntingdon (Mr. Major) will make in the Chamber. We can agree with some of what he says from time to time and disagree with other things he says, but we must all recognise that he has made interesting contributions to the House over the years -