To ask the Chancellor of the Exchequer what is his latest forecast of United Kingdom inflation in 1992.

The Budget forecast is for retail prices index inflation to be down to 3¾ per cent. in the fourth quarter of 1992 and 3¼ per cent. by mid-1993.

Can my hon. Friend say what the figure is likely to be next year and what it would become under the Labour party's spending plans?

My hon. Friend makes a good point. Anybody who listened to last week's debate on inflation will have realised that the Labour party has no policy on it. Labour Members do not believe in the exchange rate mechanism—they are always calling for low interest rates —and when Labour were in government average inflation was 15½ per cent., whereas under the Conservative Government it has been 7½ per cent. Labour's lowest rate was never as low as our average.

To ask the Chancellor of the Exchequer what representations he has had from manufacturing industry in respect of his Budget proposals.

Businesses of all sizes have welcomed the reduction in the burden of business rates next year by £480 million. The car industry—at the heart of the manufacturing sector—has said that the Budget measures should boost sales by 70,000. The director general of the Confederation of British Industry has said:

"This is a prudent and positive Budget".

I warmly welcome the bringing forward of the benefit of the uniform business rate, and the measures announced in the Budget for small business and especially for the car industry. Does my hon. Friend accept that the two strongest economies in the world—Japan and Germany—are built on broad and substantial manufacturing bases? Will he consider sympathetically further measures to regenerate our manufacturing base, should such measures prove necessary?

One is always especially grateful for the steadfast support of my hon. Friend. I am familiar with his longstanding concern for the health of the manufacturing sector—the Government share that concern. My hon. Friend will be glad to note that the share of gross domestic product deriving from manufacturing is greater in this country than in even the United States and France. There have been substantial improvements in investment. Indeed, investment in plant and machinery in this country—the most important measure that there is—has risen dramatically over the past decade. Of course, we shall continue to consider carefully measures that could improve the lot of manufacturing industry. The one thing that manufacturers say that they want above all is a firm commitment to driving inflation down, so that they can continue to compete effectively in an ever more competitive world.

Although the Minister had the nerve to say what he just said, I do not think that he can really believe it. Many industrialists in key manufacturing regions such as the north-west and Lancashire believe that the Budget has done nothing to overcome the havoc that the Tory party has wrought on manufacturing industry over the past 13 years. They will be glad to see the back of this Tory Government.

Rather than relying on the hon. Gentleman's synthetic assertions, one ought to place more reliance on what business people say. They are the ones who really know. When a reputable City firm asked a number of finance directors of large and important companies what they thought of Labour's proposals, 5 per cent.—to give the good news first—thought that a Labour victory would be good for the economy. The bad news is that 86 per cent. thought that a Labour victory would be bad for the economy.

Is my hon. Friend aware that family-owned manufacturing businesses—indeed, all family-owned businesses—are delighted at his inheritance tax proposals? They will prevent businesses from being sold or closed because of debts—factors that are devastating the many family businesses in the north. Has my hon. Friend ascertained whether the Opposition support the proposals?

The House—indeed, the nation—is waiting on tenterhooks for Opposition Front-Bench Members to vouchsafe to the country whether they intend to support this important measure, which has been warmly welcomed, particularly by the small business sector. However, so far we have waited in vain. No doubt, the Opposition will let us know this afternoon what their attitude is, or perhaps they are still dithering.

To ask the Chancellor of the Exchequer what was the average level of manufacturing investment between 1974 and 1979 and between 1979 and 1991.

The average level was £9·8 billion at constant prices, in both periods. Between the same two periods, total plant and machinery investment at constant prices rose by more than 38 per cent.

As investment in manufacturing industry was slashed by 14 per cent. during the past year and as Britain is the only country in the European Community where investment is lower than it was in 1979, why did the Budget provide nothing to encourage investment, upon which industry could build, rather than bribing the electorate?

There are two points to make about that. First, it would be more reliable as a criticism of the Budget, from the point of view of business, to listen to what representatives of business and industry have said rather than to the hon. Gentleman's somewhat partial account. They have been extremely supportive. Secondly, Labour always concentrates on manufacturing investment because it thinks that that is the one that allows it to see that figures are not so good. [Interruption.] Oh, yes.

If we look at total business investment in the economy, we find that in 1990 it was 55 per cent. higher, in real terms, than it was in 1979 and that, even in 1991, it was 37 per cent. higher. If we look at investment in plant and machinery, where the definition has not changed, as it has for manufacturing investment, we find that in 1990 the increase in real terms over 1979 was 65 per cent. and that even in 1991, a year of recession, the improvement in investment in our economy was such that it was nearly 50 per cent. higher than it was in 1979. That is the whole economy picture on which the hon. Gentleman should focus.

Does my right hon. and learned Friend accept that when setting up businesses in a capitalist society there will always be failures and that at a time of worldwide recession there will be more failures than usual? Is not it a fact, however, that there are still 1·2 million more people registered as VAT traders in industry and all commerce than there were when we came to office? Is not that what really matters—people can still venture and they can still prosper?

My hon. Friend is absolutely right. There are many more businesses in this country today than there were in 1979. There are over 1 million more jobs in the British economy today than there were in 1979. A greater proportion of adults in the United Kingdom are in employment than in any other European Community country, except Denmark. That is the reality' of our position today.

However the Chief Secretary handles the figures, is not it remarkable that investment in the manufacturing sector is less now than it was in 1979? [HON. MEMBERS: "No."] Oh, I see; it is not remarkable! If the Chief Secretary looks at the economy all around, can he explain why, in the past 13 years, with a growth record of 1!7 per cent. a year, this Administration has the worst growth record of any Government of any party since the war?

The right hon. and learned Gentleman's statistics are dodgy—[HoN. MEMBERS: "No"] Oh, yes. He knows only too well that the proper comparison is with the growth in non-oil GDP, which has been substantially higher under this Government. [Interruption.] The right hon. and learned Gentleman now says GDP. When he is trying to make the point that the country has been in recession for six successive quarters, he says that one cannot include the oil industry when looking at economic growth. When he wants his growth statistics to be right, he thinks it is right to do the opposite and stand on his head. It does not work like that.

Is my right hon. and learned Friend aware that even in the past few years when there have been some problems, even in places such as Yorkshire, we still have entrepreneurs who are investing in manufacturing, new processes and new technology to equip them to have confidence in the future and to compete not only in this country and Europe but worldwide?

The Labour party's constant belittling of the manufacturing sector will not do. The Labour party might like to bear in mind the massive investment from Britain in manufacturing as well as the massive investment from overseas. A total of 50 per cent. of the inward investment from the United States and Japan into the European Community comes to Britain. The Labour party might also like to know how much more effectively that investment is being used in the Britain of the 1990s than in the Britain of the 1970s. Manufacturing output since the election of the Conservative Government has increased by more than 25 per cent. Under Labour, it fell by 2½ per cent.

To ask the Chancellor of the Exchequer what was the cash amount paid in value added tax by a family with two children on average earnings in 1979; and what is his latest estimate for the amount at the present time.

At today's prices, such a family would have paid approximately £340 in VAT in the financial year 1978–79, compared with £985 in 1991–92. Over the same period, this family will have enjoyed a 35 per cent. rise in real take-home pay.

One can say only that that is a dodgy reply. There has been an increase of some £15 a week in VAT. Against that background and the background of other indirect taxes that ordinary families have had to experience, is not it clear that on 9 April the British people will not be taken in by promises but will be persuaded by the income tax and VAT changes which they have seen from the Government over the past 13 years?

What matters is real take-home pay and that is what people will take into account on 9 April. The 35 per cent. increase in real take-home pay amounts to £78 per week. That is what people will be concerned about. If the Labour party is so concerned about the tax burden, why is it proposing to vote against tax cuts twice in the next 24 hours?

Will my hon. Friend tell the House how much of that £78 increase in take-home pay is attributable to the reduction in the basic rate of income tax from 33p to 25p and, now, the lower band of 20p and the over-indexation of personal allowances introduced by the Government?

Perhaps my hon. Friend would be interested in the fact that the indexation of allowances has taken 2 million people out of tax compared with what happened under the Labour Government's regime. The tax cuts announced by my right hon. Friend the Chancellor in his Budget on Tuesday, against which the Labour party will vote twice in the next 24 hours, will take a further 380,000 individuals out of tax.

Has not the Government's consistent record over the years been one of balancing cuts in taxes on income by increases in other taxes? Therefore, are not people eminently justified in fearing that the Government's long-term plan is to pay for the cuts in tax, of which the Government boast so proudly, by widening the scope of VAT and by increasing the other charges and taxes that people have to pay?

We have given categorical pledges that there will be no rise in the standard rate of value added tax either before or after the election. I wonder whether the hon. Lady would like to give such a categorical pledge. What is certain is that two parties are going into the election with pledges to increase taxation and one is going into the election with a pledge to decrease it—the Conservative party.

Will my hon. Friend confirm that the Government have no intention whatever of increasing VAT on televisions to 25 per cent., as was done by the previous Labour Government?

I am happy to repeat the categorical pledges given by my right hon. Friends the Prime Minister and the Chancellor that there will be no increase in the standard rate of VAT either before or after the election. We have no need and have no plans to extend the standard rate or to put up other taxes.

To ask the Chancellor of the Exchequer how many people have been relieved of liability to direct taxation as a result of his recent Budget proposals.

About 380,000, and nearly 4 million will pay tax at only 20 per cent.

Is not it clear that for those lower-paid people and for those whose basic tax rate has been cut to 20p in the pound, only the threat of a Labour Government stands between them and the better deal that they can expect from a continuing Conservative Government?

The tax changes in the Budget, as my hon. Friend said, were worth £100 a year to 21 million taxpayers. A key point is that 75 per cent. of the benefit will go to those who receive below average earnings. One would have thought that the Labour party might welcome that. It is absolutely extraordinary that the Labour party is so determined to vote against that, given that it issued a policy document only a few weeks ago in February that said that that was its policy. What is also astonishing is that one would have thought that when the Leader of the Opposition rose to reply to the Budget he might know that that was his party's policy.

What leads the Chancellor of the Exchequer to believe that the prospect of £100 a year or less, which, in some cases, will be offset against family credit—will send everyone running to the shops to spend large amounts of money and bring about a consumer-led recovery? Does not he realise that £2 billion, if invested, could bring about the recovery more quickly?

The tax cut was never presented and justified in the way that the hon. Gentleman seeks to put it. We believe in low taxes because they are good for incentives. It is good that people should keep money that they earn and right that they should have the choice. That logic should apply to low-paid people as much as to anyone else.

What does my right hon. Friend think that the working poor will make of Labour's plans to increase the tax on them? Is not this the message as far as the Labour party is concerned: one is never too poor to pay more tax?

My hon. Friend might observe, however, that it is clear that the Labour party wants to increase taxes on those who earn above average earnings—anyone on more than £20,000—and on the poor and on savings.

Will the Chancellor confirm that the past three Conservative party manifestos contain stern injunctions against borrowing, let alone borrowing billions to bribe millions with their own money? Will he also confirm that he justified that policy by saying:

"The objective of fiscal policy remains to balance the budget over the medium term"? [Official Report, 10 March 1992; Vol. 205, c. 749.]

Will the right hon. Gentleman confirm that in the Red Book, for which he has some responsibility, on page 17 in table 2A.5 the Government confirm that not only will they not balance the public sector borrowing requirement over the cycle but that there is no scope for tax reductions either?

I am afraid that the hon. Gentleman reads table 2A.5 wrongly, perhaps because he does not have a copy in front of him. If he looks at it, he will see a fiscal adjustment of £1 million in the past two years, so what he says is totally wrong. It is a bit rich for the hon. Gentleman to lecture us on borrowing. The fact is that the PSBR that we have projected for next year is well below the average for the entire period of the past Labour Government and it is half that which was reached in the peak year, when the right hon. Member for Leeds, East (Mr. Healey) had to go off to the International Monetary Fund and he had a PSBR of 9 per cent. of gross domestic product. I remind the hon. Gentleman that not so long ago the Leader of the Opposition used to say that he could not understand why we did not borrow more and that borrowing was not a sin. That used to be his attitude.

To ask the Chancellor of the Exchequer if he will make a statement on the impact of tax on pensioners' incomes.

About three quarters of pensioners will pay no income tax at all in 1992–93. The rest will gain up to £3·37 a week from the new lower rate and increases in allowances announced in my right hon. Friend's Budget.

My hon. Friend will know that many pensioners are very worried by Labour's taxation proposals. Will he quantify the pensioners who will be helped by the reduction in the first rate band to 20 per cent. and tell us how many pensioners in receipt of income support will benefit from the further increases announced last Tuesday?

My hon. Friend makes an interesting point. Among the 4 million people who will have a marginal rate of income tax of 20p in the pound are 1,330,000 pensioners, for whom the Labour party apparently plans to raise taxes from 20p to 25p in the pound. The total number of people helped by the measures in the Budget, through the increases in income support payments for pensioners and the ancillary benefits that go with that, is 5 million.

Pensioners continue to have to pay the 17·5 per cent. levied on value added tax last year. What would the Minister say to the constituent who came to my surgery last week, bewildered by the fact that the Government, having raised VAT for the specific purpose of paying for the poll tax bribe last year, are not proposing to reduce it to 15 per cent. as they are not reducing the poll tax again this year? Why are not the Government reducing VAT?

VAT was raised last year for the specific purpose of reducing everyone's community charge by £140. The idea that the Budget does nothing for pensioners is absolutely ludicrous. It reduces the marginal tax rate for 1·33 million and increases benefits for 5 million. While the Conservatives have been in office, the real incomes of pensioners have risen faster than those of people in work. If the hon. Lady does not believe me, perhaps she will believe the director of Help the Aged, who said:

"It is a positive Budget that will make a positive difference to older people."

To ask the Chancellor of the Exchequer what measures the Government have taken to assist the growth of savings since 1987.

To ask the Chancellor of the Exchequer what measures the Government have taken to assist the growth of savings since 1979.

We have encouraged private saving by cutting income tax rates, implementing independent taxation, which has allowed married women to use their own tax allowance against their investment income, abolishing the composite rate tax which forced non-taxpayers to pay tax on their savings, extending personal equity plans and introducing tax-exempt special savings accounts.

In my constituency, more than 3,000 miners took early retirement and invested their money in savings schemes. Only this week I received a letter from a miner in Clipstone who wanted to know what would happen to his capital and income if the Labour party's savings tax were ever implemented. Will my hon. Friend tell me, my constituency and the country what a Labour Government would cost us?

My hon. Friend raises a good point. In the unlikely event of a Labour Government being elected, they would impose national insurance contributions on income from savings above £3,000 a year, neatly targeting the group described by my hon. Friend. That would hit almost 250,000 people with gross incomes of less than £10,000 a year. Of course, Labour also proposes to vote against the tax cuts for people on lower incomes and, according to financial analysts, its policies would increase inflation, which would further erode the income that that group of people could expect to get from their savings.

Will my hon. Friend continue to make it clear that we believe in people keeping more of their money to spend or to save, in stark contrast to the Opposition whose attack on savings and so-called unearned income would prejudice pensioners in particular who, if they have any sense, will vote Conservative on 9 April?

The Labour party has always sought to tax savings. Under the last Labour Government someone on the top level of tax and paying investment income surcharge was paying tax at the rate of 98 per cent.

What does the Minister think the impact will be on savings and interest rates of the 100 per cent. increase in Government borrowing?

As the hon. Gentleman knows, the increase in borrowing is almost entirely accounted for by the effects of the recession. There will be no effects.

A lot of people thought that their savings were safe in the houses that they were trying to buy. What does the Minister have to say about savings to the 85,000 people who had their houses repossessed last year?

Repossession is extremely sad, and disastrous for the families concerned. With the inflationary policies and disastrous taxation policies likely to be pursued by a Labour Government, if ever one were elected, people would see a disastrous erosion in all their capital assets.

To ask the Chancellor of the Exchequer what has been the income to the Treasury since May 1979 from (a) privatisation and (b) North sea oil revenues.

Between 1979–80 and 1991–92, privatisation proceeds are expected to amount to about £42 billion, and North sea oil revenues to £71 billion.

Will the Minister have the decency to admit that the true answer to my question is that at today's prices the Tories have taken more than £100 billion in North sea oil revenues and more than £50 billion from selling the family silver? Does he seriously think that the British people will be conned by a party that has squandered more than £150 billion of public money and is now hell bent on trying to borrow an additional £28 billion in a desperate but vain attempt to buy success at the general election?

Our attempts to borrow have certainly been nothing like so desperate as those of the Labour Government. Privatisation proceeds and North sea oil revenues have reduced the levels of public sector debt from 50 per cent. of our national income to about 27½ per cent. If they were still at 50 per cent., which was the level that we inherited from the Labour Government, they would be £140 billion higher.

Does my hon. Friend agree that apart from the capital receipts from privatisation the amount of income given to the Exchequer has been much increased because most of the nationalised industries that have been privatised are now making profits, whereas previously many of them made losses? Consequently, the Exchequer benefits not only from the capital receipts, but from revenue receipts, corporation tax and tax on dividends.

My right hon. Friend is absolutely right. Privatisation has been an enormous success. Anybody who seriously thinks that British Airways or British Telecom were better run businesses when they were in the public sector must be going round with their eyes shut. What is amazing is that the Opposition still plan to renationalise the water industry and large bits of the electricity industry.

Can the Minister explain how it is that in the 13 years when the Conservatives have received either £71 billion or more than £100 billion in North sea oil revenues and nearly £50 billion from selling the family silver, and when the taxation is higher now—with VAT, a regressive tax, at 17·5 per cent. compared with 8 per cent. in 1979—our trains do not run on time, or at all, more people live in poverty, national health service waiting lists are at their highest levels ever and we are borrowing £28 billion this year, with public debt rapidly increasing? Where has the money gone?

It is interesting that all the examples that the hon. Gentleman picks of bad services are not among businesses that have been privatised. I give him the answer that I gave to his hon. Friend the Member for Falkirk, East (Mr. Canavan). One thing that the money has done is to reduce the level of public sector debt from 50 to 27½ per cent. of national income. That is equivalent to £140 billion, which would involve interest of £14 billion or £15 billion per year. That is one of the differences. The Labour party apparently plans to reverse that.

Will my hon. Friend confirm that over the next two years the Revenue will expect some £13·5 billion from privatisation proceeds? A Labour Government who do not pursue that privatisation policy will find that the £13·5 billion will have to be raised from an increase in the public sector borrowing requirement.

My hon. Friend raises an extremely interesting point. Labour has £37 billion of public spending plans to finance and it will not receive £13 billion of privatisation revenues. It will also have the cost of privatising the water industry, although the hon. Member for Newham, North-West (Mr. Banks) said that Labour would do that without compensation, so it may not cost Labour anything.

To ask the Chancellor of the Exchequer what was the overall tax burden for a married man with two children on 75 per cent. of male average earnings in 1978–79; and what it was in 1990–91.

To ask the Chancellor of the Exchequer what was the overall tax burden for a married man with two children on 100 per cent. of male average earnings in 1978–79; and what it was in 1990–91.

The tax burden is estimated to have moved from 27½ to 28½ per cent. for a man on three quarters of average earnings and from 32 to 33½ per cent. for average earnings. That compares with increases of 32·2 and 35·5 per cent.—about 3 per cent. higher—if Labour's 1978 regime had been indexed. During the same period, real take-home pay for a man on three quarters of average earnings has risen by £45 per week and at average earnings by no less than £60 per week. [Interruption.]

Order. I ask the House to listen to questions in silence because it is difficult to hear at this end of the Chamber.

In 1980, the then Chancellor of the Exchequer, the right hon. and learned Member for Surrey, East (Sir G. Howe), abolished the reduced rate band by saying, and I quote—

Reading.

The hon. Gentleman should not quote. Please paraphrase.

I will paraphrase. The right hon. and learned Gentleman said that the case for the reduced rate band was never at all clear. Why have the Government suddenly found a clear case for it? Is it not because they hope to use it to bribe the electorate?

It is extraordinarily offensive to people who work hard for their income for the Labour party to talk about that income as though it belonged to the Government and not to those people. It is their money, for which they have worked hard, and the Government believe in leaving more of it—and especially more of the money that the lower paid earn—with them. It is extraordinary that, although this is explicit Labour party policy, the Labour party has decided to vote against the proposal and to increase tax by 5p in the pound for some of the lowest paid in our country.

Dr. Norman Godman.

Thank you, Mr. Speaker, and all the very best.

Is it not the case that the overall tax burden has increased? I remind the Financial Secretary that in Scotland, gross domestic product stands at 93·2 per cent.

of the United Kingdom average, when as recently as 1984 it was 97·4 per cent. Is it not the case, therefore, that, despite the fantastical riches given to the Government by the revenues from offshore oil and gas, for the people of Scotland things have got worse and worse? It is no wonder that the Government are slipping down the political plughole in Scotland: they are down to 18 per cent. in the opinion polls, and they have further to go.

If the tax burden has gone up by so much, and if that is such a bad thing, why does the hon. Gentleman want to increase it further? Does he really want to increase the tax burden on the lowest paid in our society by voting against the Government's measure to reduce the tax for the lowest paid by 5p in the pound?

Does the Minister agree that families in the lower income brackets will benefit from the Government's success in maintaining the zero rate for food? Does he further agree that those families and pensioners in particular spend an above average amount of their incomes on zero-rated food?

That is so, and people right across the income spectrum have seen their real take-home pay increase dramatically while we have been in power. As I said, the real take-home pay today of average earners is no less than £60 per week higher than it was in 1979.

Is it not a fact that the average family man can rely on us for continuity when it comes to income tax? [Interruption.] We have brought income tax down from 33p to 25p and it is now going down to 20p. Does my hon. Friend agree that whereas we shall continue to reduce income tax, Labour would insist on increasing it?

It is a constant feature of history that Conservative Governments like to bring tax down—[Interruption.] so as to leave more of people's hard-earned money with them, whereas every Labour Government, apart from the first Ramsay MacDonald Government, increased the basic rate of tax. [Interruption.] All history is against the Labour party. I look forward to seeing my hon. Friend the Member for Wolverhampton, North-East (Mrs. Hicks) back here in April.

rose—

Order. There is a great deal of excitement this afternoon. I hope that the House will settle down.

In relation to family income, what comfort does the Budget bring to the working woman, or the woman who wants to work? It contains nothing on child care or child benefit. Is it not clear that this cynical and incompetent Government put women and children last?

Not only is child benefit going up already, as the hon. Gentleman would know if he had done his research, but the lower rate 20p income tax band will particularly help working women. The hon. Gentleman would also know, if he had done his research, that a great many of the groups concerned with children urged us not to go ahead with a move on tax relief for child care.

To ask the Chancellor of the Exchequer what has been the change in the number of persons owning shares in the past five years.

The number of adults in Great Britain owning shares has increased from about 8· million in 1987 to almost 10 million in 1992.

Does my right hon. and learned Friend agree that that transformation to share and home ownership under successive Conservative Governments has put us well on course to becoming a property and share-owning democracy?

Yes. This major extension in popular capitalism has been one of our greatest achievements.

Did the Chief Secretary note that share and bond prices fell sharply following the presentation of the Budget? Has he also noted that the market is off a further 25 points this morning? Does not that first opinion poll suggest the thumbs down for the Budget?

I think that the hon. Gentleman will find that all that is troubling the stock market is the thought of a Labour Government—a fear which we shall be in a position to put out of their heads quite quickly.

To ask the Chancellor of the Exchequer whether he will make a further statement about his long-term objectives for income tax.

Our objective is to reduce the basic rate of income tax to 20p in the pound when it is prudent to do so.

Is it not clear while the Budget has cut the marginal rate of tax from 25p to 20p for 4 million people on modest incomes, the Labour party would cut their take-home pay and threaten their jobs by its absurd minimum wage proposals?

My hon. Friend is right. The Budget will help to reduce the marginal rate of tax immediately to 20p in the pound for those 4 million people. The Labour party may not have seen today's Gallup poll, which says that 71 per cent. of those questioned supported and approved of the 20p band.

While we are on the subject of long-term objectives, will the Economic Secretary confirm that the Red Book shows clearly that the overall tax burden within our economy has risen in the past 13 years and, moreover, is set to rise further in the next four or five years? The Government have not cut the tax burden—they have raised it.

If the hon. Gentleman believes that, why is he about to vote, tonight and tomorrow, to raise the tax burden?

To ask the Chancellor of the Exchequer if he will make a statement on the level of total demand in the economy.

Domestic demand fell by 3 per cent. in real terms in 1991. In my right hon. Friend's Budget forecast, it is projected to rise by 1¼ per cent. in 1992 and by 3¾ per cent. in the year to the first half of 1993.

Does my right hon. and learned Friend agree that the tax cuts in the Budget will help to restore consumer demand, which is much in need of a boost?

Indeed, and my hon. Friend will know only too well that since October 1990 the income of the average wage earner has increased by 15 per cent. in real terms as a result of real growth in earnings and the continuing fall in mortgage interest rates. That is the basis for my right hon. Friend the Chancellor's forecast that the economy will pick up in line with his Budget statement.