Before I call the Chancellor of the Exchequer, I remind all Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind all Members that it is the norm not to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.

Today I report on a Britain that is growing, creating jobs and paying its way. We made difficult decisions in the teeth of opposition, and it worked: Britain is walking tall again.

Five years ago, our economy had suffered a collapse greater than that suffered by almost any other country. Today I can confirm that in the last year we have grown faster than any other major advanced economy in the world. Five years ago, millions of people could not find work. Today I can report that more people have jobs in Britain than ever before. Five years ago, living standards were set back years by the great recession. Today the latest projections show that living standards will be higher than they were when we came to office. Five years ago, the deficit was out of control. Today, as a share of national income, it is down by more than a half. Five years ago, they were bailing out the banks. Today I can tell the House that we are selling more bank shares and getting taxpayers’ money back. We set out a plan, that plan is working, and Britain is walking tall again.

So the critical choice facing the country now is this: do we return to the chaos of the past or do we say to the British people, “Let’s go on working through the plan that is delivering for you”? Today we make that critical choice: we choose the future. We choose, as the central judgment of this Budget, to use whatever additional resources we have to get the deficit and the debt falling. No unfunded spending, no irresponsible extra borrowing; for no short-term give-away can ever begin to help people as much as the long-term benefits of a recovering national economy. In the emergency Budget I presented to this House five years ago, I said we would turn Britain around, and in this last Budget of the Parliament, we will not waver from that task, because we choose the future.

Our goal is for Britain to become the most prosperous major economy in the world, with that prosperity widely shared. So we choose economic security. This Budget commits us to the difficult decisions to eliminate our deficit and get our national debt share falling. We choose jobs. This Budget does more to back business and make work pay, so we create full employment. We choose the whole nation. This Budget makes new investments in manufacturing and science and the northern powerhouse for a truly national recovery. We choose responsibility. This Budget takes further action to support savers and pensioners. We choose aspiration. This Budget backs the self-employed, the small business owner and the home buyer. We choose families. This Budget helps hard-working people keep more of the money they have earned. This is a Budget that takes Britain one more big step on the road from austerity to prosperity. We have a plan that is working, and this Budget works for you. [Interruption.]

Order. I am struggling to hear what the Chancellor of the Exchequer is saying. I am sure that all Members in the House want to hear the Chancellor; but, more importantly, so do our constituents.

The British economy is fundamentally stronger than it was five years ago, and that is reflected in the latest forecasts from the Office for Budget Responsibility. It seems remarkable that until this Government came to office, our national forecasts were manipulated by Chancellors, to be fiddled and fixed in pre-election Budgets. Today they are produced with independence and integrity by Robert Chote and his team, and I want to thank them for their work. The OBR confirms today that, at 2.6%, Britain grew faster than any other major advanced economy in the world last year. That is 50% faster than Germany, three times faster than the eurozone and seven times faster than France. There are some who advise us to abandon our plan and pursue the French approach. I prefer to follow the advice of the secretary-general of the OECD, which he gave to us all last month. He said:

“Britain has a long term economic plan”

and

“it needs to stick with it.”

“A long-term economic plan”—now there’s someone with a way with words. We need to stick with that plan, at a time when global economic risks are rising.

The biggest development since the autumn statement has been the further sharp fall in the world oil price. This is positive news for the global economy, but the overall boost this provides has not yet offset the rising geopolitical uncertainty it causes, and the eurozone continues to stagnate. So at this Budget, the OBR has once again revised down the growth of the world economy, revised down the growth of world trade and revised down the prospects for the eurozone. It warns us that the current stand-off with Greece could be very damaging to the British economy. I agree with that assessment. A disorderly Greek exit from the euro remains the greatest threat to Europe’s economic stability. It would be a serious mistake to underestimate its impact on the UK, and we urge our Eurozone colleagues to resolve this growing crisis.

The problems in Europe remind us why Britain needs to expand our links with the faster growing parts of the world. We have made major progress in this Parliament. I can report that the trade deficit figures published last week are the best for 15 years, and we will do even more, so today I am again increasing UK Trade & Investment’s resources to double the support for British exporters to China. We have also decided to become the first major western nation to become a prospective founding member of the new Asian Infrastructure Investment Bank, because we think we should be present at the creation of these new international institutions.

Mr Deputy Speaker, you would expect weaker world growth, weaker world trade and weaker European growth to lead to weaker growth here in the UK. However, the OBR has not revised down Britain’s economic forecasts; it has revised them up. A year ago, it forecast growth in 2015 at 2.3%. In the autumn statement, that was revised up to 2.4%. Today I can confirm that GDP growth this year is forecast to be higher still, at 2.5%. It is also revised up next year, to 2.3%. That is where it remains for the following two years, before reaching 2.4% in 2019.

The OBR reports growth revised up, and its numbers confirm that growth is broadly based, for we are replacing the disastrous economic model we inherited. Between 1997 and 2010, investment accounted for less than one fifth of Britain’s economic growth—four fifths came from debt-fuelled household consumption. Meanwhile, manufacturing halved as a share of our national economy, and the gap between the north and the south grew ever larger.

I can report that since 2010 business investment has grown four times faster than household consumption; Britain’s manufacturing output has grown more than four and a half times faster than it did in the entire decade before the crisis; and over the last year, the north grew faster than the south. We are seeing a truly national recovery.

Let me turn now to the rest of the forecasts. This morning we saw the latest job numbers. It is a massive moment. Britain has the highest rate of employment in its history—a record number of people in work and more women in work than ever before—and the claimant count rate is at its lowest since 1975. For years, Governments have talked about full employment. This Government are moving towards achieving it.

Unemployment today has fallen by another 100,000, and compared with the autumn statement, the OBR now expects unemployment this year to be even lower. It is set to fall to 5.3%, down almost a whole three percentage points from the rate we inherited from the last Government. When we set out our plan, the Leader of the Opposition predicted that a million jobs would be lost. Instead, over 1.9 million new jobs have been gained, because our long-term plan is based on the premise that if we provide economic stability, if we reform welfare and make work pay, and if we back business, then we will create jobs too. Today’s figures show that under this Government 1,000 more jobs have been created every single day. The evidence is plain to see: Britain is working again.

What about all those who say, “The jobs aren’t real jobs; they’re all part-time; they’re all in London”? Nonsense. How many of the jobs are full time? Eighty per cent. How many of the jobs are in skilled occupations? Eighty per cent. Where is employment growing fastest? In the north-west of England. Where is a job being created every 10 minutes? In the midlands. Which county has created more jobs than the whole of France? The great county of Yorkshire. We are getting the whole of Britain back to work with a truly national recovery.

It is only by growing our economy, dealing with our debts and creating jobs that we can raise living standards. To the question whether people are better off at the end of this Parliament than they were five years ago, we can give the resounding answer yes. We can measure it by GDP per capita, and the answer is, yes, it is up by 5%. Or we can use the most up-to-date and comprehensive measure of living standards, which is real household disposable income per capita—in other words, how much money families have to spend after inflation and tax. This is the living standards measure used by the Office for National Statistics and by the OECD. On that measure, I can confirm that, on the latest OBR data today, living standards will be higher in 2015 than in 2010. They confirm that they are set to grow strongly every year for the rest of the decade.

The British people for years paid the heavy price of the great recession. Now the facts show that households on average will be about £900 better off in 2015 than they were in 2010—and immeasurably more secure for living in a country whose economy is not in crisis any more, but is instead growing and creating jobs.

Because we have strong growth and a strong economy, we can also afford real increases in the national minimum wage. This week we accept the recommendations of the Low Pay Commission that the national minimum wage should rise to £6.70 this autumn, on course for a minimum wage that, as the Prime Minister just said, will be over £8 by the end of the decade. And we have agreed the biggest increase ever in the apprentice rate. It is the oldest rule of economic policy: it is the lowest paid who suffer most when the economy fails and it is the lowest paid who benefit when you turn that economy around.

Household incomes also go further because we now have the lowest inflation on record. The OBR today revises down its forecast for inflation this year to just 0.2%, and revises it down for the following three years. It is driven by falling world oil and food prices, not by the kind of stagnation we have seen on the continent. But we will remain vigilant.

I am today confirming that the remit of the Monetary Policy Committee for the coming year remains the 2% symmetric CPI inflation target. I am also confirming the remit for our new Financial Policy Committee, so that this time we spot the financial risks in advance.

The fall in food prices is good for families, but it reminds us of the challenge our farmers face from volatile markets. The National Farmers Union has long argued they should be allowed to average their incomes for tax purposes over five years. I agree and in this Budget we will make that change.

We will also use this opportunity to lock in the historically low interest rates for the long term. I can tell the House that we will increase the number of long-dated gilts that we will sell. We will also redeem the last remaining undated British Government bonds in circulation. We will have paid off the debts incurred in the South Sea bubble, the first world war, the debt issued by Henry Pelham, George Goschen and William Gladstone; the debt issued by Gordon Brown will take a little longer to pay off. [Interruption.]

Order. We want to get through this Budget. The sooner we get through it, the better, and then we can debate it.

Since the pound goes further these days, now is a good time to confirm the design of the new £1 coin. Based on the brilliant drawing submitted by 15-year-old David Pearce, a school pupil from Walsall, the new 12-sided pound coin will incorporate emblems from all four nations—for we are all part of one United Kingdom.

I now turn to the national debt. Lower unemployment means less welfare. Compared with the autumn statement, welfare bills are set to be an average of £3 billion a year lower. Lower inflation means lower interest charges on Government gilts: those interest charges are now expected to be almost £35 billion lower than just a few months ago.

Rising unemployment and compounding debt interest contributed to our national debt problem, but they were not the only cause. The previous Government increased debt by £192 billion bailing out the banks and sent the national debt rocketing up by a third.

We have already sold the branches of Northern Rock and raised £9 billion from Lloyds shares. Now we go further. Today I can announce that we are launching a sale of £13 billion of the mortgage assets we still hold from the bailouts of Northern Rock and of Bradford & Bingley. Lloyds bank has returned to profit and is paying a dividend, so we can continue our exit from that bailout, too. We will sell at least a further £9 billion of Lloyds shares in the coming year. The previous Government put taxpayers’ money into the banks and this Government are getting it back.

The bank sales, the lower debt interest and the lower welfare bills present us with a choice. We could treat them as a windfall, even though we know the public finances need further repair. With an election looming, some of my immediate predecessors may have been tempted to do this, but that would be deeply irresponsible. We would be spending money we did not really have and racking up borrowing that our country could not afford. We would be repeating all the mistakes of the last Government instead of fixing those mistakes.

Today, the central judgment of this Budget is this: we will use the resources from the bank sales and the lower interest payments and the lower welfare bills to pay down the national debt. We put economic security first, for higher national debt leaves our nation exposed, harms potential growth and costs taxpayers billions of pounds in debt interest. That would be throwing away billions of pounds we should be using to fund our public services and lower taxes.

Five years ago, national debt was soaring. That was why in my first Budget I set a target that we would have the national debt falling as a share of GDP by 2015-16, the last year of this Parliament. The eurozone crisis made that task here at home all the more difficult and for much of the past five years it looked like we might fall short. The Leader of the Opposition confidently predicted we would fail and the shadow Chancellor repeated that prediction last week, but I can announce to the House that the hard work and sacrifice of the British people has paid off. The original debt target I set out in my first Budget has been met. We will end this Parliament with Britain’s national debt share falling. The sun is starting to shine and we are fixing the roof.

The OBR reports today that debt as a share of GDP falls from 80.4% in 2014-15 to 80.2% in 2015-16. It keeps falling to 79.8% in 2016-17, then down to 77.8% the following year, and to 74.8% in 2018-19 before it reaches 71.6% in 2019-20.

National debt as a share of our national income has been increasing every single year since 2001. Those 13 years amount to the longest year-on-year rise in our national debt since the end of the 17th century. Today we bring that shameful record of irresponsibility to an end and make sure we pay down our national debt. There is a consequence for our fiscal plans. As the national debt share is falling a year earlier than forecast at the autumn statement, the squeeze on public spending ends a year earlier too.

In the final year of this decade, 2019-20, public spending will grow in line with the growth of the economy. We can do that while still running a healthy surplus to bear down on our debt—a state neither smaller than we need nor bigger than we can afford. For those interested in the history of these things, that will mean state spending as a share of our national income of the same size as Britain had in 2000. That is the year before spending got out of control and the national debt started its inexorable rise.

When we came to office, the deficit stood at more than 10% of our national income, one of the highest of any major advanced economy and the largest in our peacetime history. The IMF says we have achieved the largest, most sustained reduction in our structural deficit of any major economy. Today, the OBR confirms that it now stands at less than half of the deficit we inherited, but at 5% this year, it is still far too high and it must come down. With our plan, it does. The deficit falls to 4% in 2015-16, then down to 2% the following year and down again to 0.6% the year after that. The deficit is lower in every year than at the autumn statement.

In 2018-19, Britain will have a budget surplus of 0.2%, followed by a forecast surplus of 0.3% in 2019-20. We will also comfortably meet our fiscal mandate and Britain will be running a surplus for the first time in 18 years. That leads to borrowing. Every one of the borrowing numbers is lower than at the autumn statement. We inherited annual borrowing of over £150 billion from the last Government. This year borrowing is set to fall to £90.2 billion, £1 billion lower than expected at the autumn statement. It falls again in 2015-16 to £75.3 billion, then to £39.4 billion the year after that, before falling to £12.8 billion. In total that is £5 billion less borrowing than we forecast just three months ago. In 2018-19, we reach an overall surplus of £5.2 billion, a £1 billion improvement compared with December. In 2019-20 we are forecast to run a surplus of £7 billion.

Growth is up; unemployment is down; borrowing is down in every year of the forecast; we reach a surplus—all contributing to a national debt now falling as a share of national income. Out of the red and into the black—Britain is back paying its way in the world today.

Lower borrowing and falling debt as a share of GDP will continue only with a credible plan to control public spending and welfare. As we end the Parliament, we can measure the scale of the achievement. The administrative costs of central Government will be down by 40%. We have legislated for welfare savings of over £21 billion a year, and because savings have been driven by efficiency and reform, the quality of public services has not gone down—it has gone up. Satisfaction with the NHS is rising year on year; crime is down 20%; 1 million more children attend good or outstanding schools—but the job of repairing our public finances is not done, and here is a very important point that the country needs to understand. National debt as a share of GDP is now falling and we will only keep it falling if we commit to the fiscal path set out in this Budget. If we deviate from this path, if we go slower or borrow more, the national debt share will not keep falling—it will start rising again.

After all the hard work of the British people over the past five years to reach this point, that reversal would be a tragedy. Britain is on the right track; we must not turn back. In order to deliver that falling debt share we need to achieve the £30 billion further savings that are necessary by 2017-18. I am clear exactly how that £30 billion can be achieved: £13 billion from Government Departments; £12 billion from welfare savings; and £5 billion from tax avoidance, evasion and aggressive tax planning. We have done it in this Parliament; we can do it in the next.

The distributional analysis we publish today confirms that the decisions across this Parliament mean that the rich are making the biggest contribution to deficit reduction. That has been true at every fiscal event under this Government. I said we would all be in this together and here is the proof—[Interruption.] Compared with five years ago, inequality is down, child poverty is down, youth unemployment—[Interruption.]

Order. We have to get to the end to hear what the Leader of the Opposition has to say. We will not do that if Members keep trying to shout the Chancellor down.

They do not like to hear it, Mr Deputy Speaker, but inequality is down, child poverty is down, youth unemployment is down, pensioner poverty is at its lowest level ever. The gender pay gap has never been smaller. Payday loans are capped, and zero-hours contracts regulated. Even more than that, opportunity has increased. The number of university students from disadvantaged backgrounds is at a record high, apprenticeships have doubled and there are fewer workless households than ever before. In this Budget we are providing funding for a major expansion of mental health services for children and those suffering from maternal mental illness. Those who suffer from these illnesses have been forgotten for too long. Not any more, because we stand for opportunity for all.

We have also created a fairer tax system—further proof that we are all in this together. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25% in 2010 to over 27% this year. That is higher than in any one of the 13 years of the last Labour Government. We are getting more money from the people paying the top rate of tax because we understand that if you back enterprise, you raise more revenue. The House will also want to know that the lower paid 50% of taxpayers now pay a smaller proportion of income tax than at any time under the previous Government. [Interruption.] I will not accept lessons from those who impoverished the entire country and left millions of people out of work. We are delivering a truly national recovery.

In this Budget, everything we spend will be paid for, and that requires the following decisions. We have already taken steps to curb the size of the very largest pension pots, but the gross cost of tax relief has continued to rise through this Parliament, up almost £4 billion. That is not sustainable. So from next year, we will further reduce the lifetime allowance from £1.25 million to £1 million. This will save around £600 million a year. Fewer than 4% of pension savers currently approaching retirement will be affected. However, I want to ensure that those still building up their pension pots are protected from inflation, so from 2018 we will index the lifetime allowance.

We have had representations that we should also restrict the annual allowance for pensions and use the money to cut tuition fees. I have examined this proposal. It involves penalising moderately paid long-serving public servants, including police officers, teachers and nurses, and instead rewarding higher paid graduates. So I agree with most of the Opposition Front Bench that such a policy would be neither progressive nor fair, and we will not do that.

Nor will we take advice on tax evasion and avoidance from those who, in office, were the friends of the avoiders and the evaders. When we came to office, City bankers boasted of paying lower tax rates than their cleaners, the rich routinely avoided stamp duty and foreigners paid no capital gains tax. We have changed all that, and it was this Prime Minister who put tackling international tax evasion at the top of the agenda at the G8. We will now legislate for the new common reporting standard that we have got agreed around the world. Our new diverted profits tax is aimed at large multinationals that artificially shift their profits offshore. I can confirm that we will legislate for it next week and bring it into effect at the start of next month.

I am also today amending corporation tax rules to prevent contrived loss arrangements, and we will no longer allow businesses to take account of foreign branches when reclaiming VAT on overheads, making the system simpler and fairer. We will close loopholes to make sure that entrepreneurs relief is available only to those selling genuine stakes in businesses; we will issue more accelerated payments notices to those who hold out from paying the tax that is owed; and we will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies that abuse tax reliefs on travel and subsistence, while we will protect those who are genuinely self-employed. Taken together, all the new measures against tax avoidance and evasion will raise £3.1 billion over the forecast period.

I can also tell the House that we will conduct a review on the avoidance of inheritance tax through the use of deeds of variation. It will report by the autumn. We will seek a wide range of views, and we look forward to drawing on the particular expertise of the Leader of the Opposition—unless, that is, the Labour party has executed its own deed of variation by then. My right hon. Friend the Chief Secretary to the Treasury will tomorrow publish further details of our comprehensive plans for new criminal offences for tax evasion and new penalties for those professionals who assist them. Let the message go out: this country’s tolerance for those who will not pay their fair share of taxes has come to an end.

Because we seek a truly national recovery, today I also ask our banking sector to contribute more. Financial services are one of Britain’s most important and successful industries, employing people in every corner of the country. We take steps to promote competition, back FinTech and encourage new business such as global reinsurance, but as our banking sector becomes more profitable again, I believe it can make a bigger contribution to the repair of our public finances. I am today raising the rate of the bank levy to 0.21%. This will raise an additional £900 million a year. We will also stop banks deducting from corporation tax the compensation they make to customers for products they have been mis-sold, such as PPI. Taken together, these new banking taxes will raise £5.3 billion across the forecast. The banks got support going into the crisis; now they must support the whole country as we recover from the crisis.

In each Budget we have used the LIBOR fines paid by those who demonstrated the very worst values to support those who represent the very best of British values. Today I can announce a further £75 million of help. Last week’s service of commemoration reminded us all of the debt we owe to those brave British servicemen and women who served in Afghanistan. We will provide funds to the regimental charities of every regiment that fought in that conflict, and we will contribute funding to the permanent memorial to those who died there and in Iraq. In the 75th anniversary year of the battle of Britain, we will help to renovate the RAF museum at Hendon, the Stow Maries airfield and the Biggin Hill chapel memorial so that future generations can be reminded of the sacrifice of our airmen in all conflicts. We will provide £25 million to help our eldest veterans. That will include nuclear test veterans, and I congratulate my hon. Friend the Member for Basildon and Billericay (Mr Baron) on his campaign on their behalf.

Many Members on the Government Benches have also written to me asking for support for their local air ambulances. We have backed these brilliant local charities in the past, and we do so again today, with funds for new helicopters for the Essex & Herts, East Anglian, Welsh and Scottish air ambulances, and for the Lucy air ambulance that transports children requiring urgent care. I pay tribute to many hon. Friends, including my hon. Friends the Members for Norwich North (Chloe Smith) and for Castle Point (Rebecca Harris) for their campaigns on this issue.

Our blood bike charities also do an incredible job. MPs from across the House have written to me about this campaign, and we are responding to it today by refunding the charities’ VAT. We are also setting aside £1 million to help to buy defibrillators for public places, including schools, and to support training in their use to save more lives.

Talking about people who save lives, and who sometimes sacrifice their own life to do so, we will also correct the historical injustice to the spouses of police officers, firefighters, and members of the intelligence services who lose their lives on duty. And there is additional money today to support the fight against terrorism.

The £15 million church roof fund that I set aside at the autumn statement to support church roof appeals has been heavily oversubscribed, so we are today more than trebling it. Apparently, we are not the only people who want to fix the roof when the sun is shining. Every weekend, thousands of people go out and raise sums for their local charities across Britain through sponsored events and high street collections. I am significantly extending the scheme that I introduced that allows charities to claim automatic gift aid on those donations, increasing it from the first £5,000 they raise to £8,000. That will benefit over 6,500 small charities.

We could not let the 600th anniversary of Agincourt pass without commemoration. The battle of Agincourt is, of course, celebrated by Shakespeare as a victory secured by a “band of brothers”, which is, sadly, not an option available to the Labour party. But it is, of course, when a strong leader defeated an ill-judged alliance between the champion of a united Europe and a renegade force of Scottish nationalists, so it is well worth spending £1 million to celebrate it.

Our country does not rest on its past glories. Within just 15 years we have the potential to overtake Germany and have the largest economy in Europe. Five years ago, that would have seemed hopelessly unrealistic; economic rescue was the limit of our horizons. Today, our goal is for Britain to become the most prosperous of any major economy in the world in the coming generation, with that prosperity widely shared across the country.

London is the global capital of the world and we want it to grow stronger still. Today, we confirm: new investment in transport; regeneration from Brent Cross to Croydon; new powers for the Mayor over skills and planning; and new funding for the London Land Commission to help address the acute housing shortages in the capital, for we do not pull the rest of the country up by pulling London down. Instead we will build on London’s success by building the northern powerhouse. Working across party lines, and in partnership with the councils of the north, we are this week publishing a comprehensive transport strategy for the north. We are funding the Health North initiative from the great teaching hospitals and universities there. We are promoting industries, from chemicals in the north-east to tech in the north-west. And I can today confirm agreement with the West Yorkshire Combined Authority for a new city deal.

Our agreement with Greater Manchester on an elected mayor is the most exciting development in civic leadership for a generation, with the devolution of power over skills, transport and now health budgets. I can announce today that we have reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the northern powerhouse. For where cities grow their economies through local initiatives, let me be clear: we will support and reward them. We are also going to offer the same 100% business rate deal to Cambridge and the surrounding councils, and my door is open to other areas that want to proceed as well, for our ambition for a truly national recovery is not limited to building a northern powerhouse. We back in full the long-term economic plans we have for every region.

The midlands is an engine of manufacturing growth, so we are today giving the go-ahead to the £60 million investment in the new energy research accelerator that has been sought and confirming that the new national energy catapult will be in Birmingham. And we are going to back our brilliant automotive industry by investing £100 million to stay ahead in the race to driverless technology. To encourage a new generation of low-emission vehicles, we will increase their company car tax more slowly than previously planned, while increasing other rates by 3% in 2019-20.

We are also connecting up the south-west, with over £7 billion of transport investment, better roads, support for air links, and, I can confirm today, a new rail franchise which will bring new inter-city express trains and greatly improved rail services to the south-west. We are confirming the introduction of the first 20 housing zones that will keep Britain building, along with the extension of eight enterprise zones across Britain, with new zones in Plymouth and Blackpool, too. I congratulate my hon. Friends from those areas on their campaigns.

We are giving more power to Wales. We are working on a Cardiff city deal and we are opening negotiations on the Swansea bay tidal lagoon. The Severn crossings are a vital link for Wales. I can tell the House we will reduce the toll rates from 2018, and abolish the higher band for small vans and buses. It is a boost for the drivers of white vans—let me reassure the deputy leader of the Labour party that it will apply to pink vans, too.

The legislation devolving corporation tax to Northern Ireland passed the House of Lords yesterday and we now urge all parties to commit to the Stormont House agreement, of which it was part. In Scotland, we will continue working on the historic devolution agreement, implementing the Glasgow city deal and opening negotiations on new city deals for Aberdeen and, of course, for Inverness.

Although the falling oil price is good news for families across the country, it brings with it challenges for hundreds of thousands whose jobs depend on the North sea. Thanks to the field allowances we have introduced, we saw a record £15 billion of capital investment last year in the North sea. But it is clear to me that the fall in the oil price poses a pressing danger to the future of our North sea industry, unless we take bold and immediate action. I take that action today.

First, I am introducing, from the start of next month, a single, simple and generous tax allowance to stimulate investment at all stages of the industry. Secondly, the Government will invest in new seismic surveys in underexplored areas of the UK continental shelf. Thirdly, from next year, the petroleum revenue tax will be cut from 50% to 35% to support continued production in older fields. Fourthly, I am, with immediate effect, cutting the supplementary charge from 30% to 20%, and backdating it to the beginning of January. It amounts to £1.3 billion of support for that vital industry in the North sea. The OBR assesses that it will boost expected North sea oil production by 15% by the end of the decade. It goes without saying that an independent Scotland would never have been able to afford such a package of support. But it is one of the great strengths of our 300-year-old Union that just as we pool our resources, so we share our challenges and find solutions together—for we are one United Kingdom.

We back oil and gas, and we also back our heavy industry, such as steel and paper mills. I have listened to the engineering employers, and I will bring forward to this autumn part of our compensation for energy-intensive plants. But since we aim to be the most prosperous major economy in the coming generation, then we must support the latest insurgent industries too. So we take steps to put Britain at the forefront of the online sharing economy. Our creative industries are already a huge contributor to the British economy, and we back them again today: we make our TV and film tax credits more generous, we expand our support for the video games industry and we launch our new tax credit for orchestras. Britain is a cultural centre of the world, and with these tax changes I am determined we will stay in front. In the week after Cheltenham, we support the British racing industry by introducing a new horse race betting right. Local newspapers are a vital part of community life, but they have had a very tough time in recent years. Today, we announce a consultation on how we can provide them, too, with tax support.

Future economic success depends on future scientific success, so we will add to the financial support I announced at the autumn statement for postgraduates, with new support for PhDs and research-based masters degrees. We are also committing almost £140 million to world-class research across the UK into the infrastructure and cities of the future, and I can announce today that our national research institutes get new budget freedoms. We will also invest in what is known as the “internet of things”. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances, so should—to use a completely ridiculous example—someone have two kitchens, they will be able to control both fridges from the same mobile phone.

All these industries depend on fast broadband. We have transformed the digital infrastructure of Britain over the last five years. Over 80% of the population have access to superfast broadband and there are 6 million customers of 4G that our auction made possible. Today, we set out a comprehensive strategy so that we stay ahead. We will use up to £600 million to clear new spectrum bands for further auction, so that we improve mobile phone networks. We will test the latest satellite technology, so that we reach the remotest communities. We will provide funding for wi-fi in our public libraries, and expand broadband vouchers to many more cities, so that no one is excluded. And we are committing today to a new national ambition to bring ultrafast broadband of at least 100 megabits per second to nearly all the homes in the country, so that Britain is out in front.

We cannot create jobs without successful businesses. As well as the right infrastructure, businesses also need low, competitive taxes. In two weeks’ time, we will cut corporation tax to 20%, one of the lowest rates of any major economy in the world. There are those here who are committed to putting the rate of corporation tax up. They should know that that would be the first increase in this tax rate since 1973, and a job-destroying and retrograde step for this country to take.

Rather than increasing the jobs tax as some propose, we will go on cutting it. This April, we will abolish national insurance for employing under-21s. Next April, we will abolish it for employing a young apprentice. I can confirm today that 1 million small businesses have now claimed our new employment allowance.

From this April, we are also extending our small business rate relief and our help for the high street. In my view, the current system of business rates has not kept pace with the needs of a modern economy and changes to our town centres, and it needs far-reaching reform. Businesses large and small have asked for a major review of this tax, and this week that is what we have agreed to do.

The boost I provided to the annual investment allowance finishes at the end of the year. A better time to address that is in the autumn statement. However, I am clear from my conversations with business groups that a reduction to £25,000 would not be remotely acceptable and so it will be set at a much more generous rate. Today, I am announcing changes to the enterprise investment schemes and the venture capital trusts to ensure that they are compliant with the latest state aid rules and increasing support to high-growth companies.

Businesses, like people, want their taxes to be low. They also want them to be simple to pay. We set up the Office of Tax Simplification at the start of this Parliament, and I want to thank Michael Jack and John Whiting for their fantastic work in this regard. To support 5 million people who are self-employed and to make their tax affairs simpler, we will, in the next Parliament, abolish entirely class 2 national insurance contributions for the self-employed.

Today, we can bring simpler taxes to many more people. Some 12 million people and small businesses are forced to complete a self-assessment tax return every year. It is complex, costly and time-consuming. So, today I am announcing that we will abolish the annual tax return all together. Millions of individuals will have the information the Revenue needs automatically uploaded into new digital tax accounts. A minority with the most complex tax affairs will be able to manage their account online. Businesses will feel like they are paying a simple, single business tax, and again, for most, the information needed will be automatically received. This revolutionary simplification of tax collection will start next year, because we believe that people should be working for themselves, and not for the tax man. Tax really does not have to be taxing, and this measure spells the death of the annual tax return.

We want to help families with simpler and lower taxes, so let me turn now to duties. I have no changes to make to the duties on tobacco and gaming that have already been announced. Last year, thanks to the persistent campaigning of my hon. Friends the Members for Burton (Andrew Griffiths) and for Keighley (Kris Hopkins), I cut beer duty for the second year in a row, and the industry estimates that that helped to create 16,000 jobs. Today I am cutting beer duty for the third year in a row—taking another penny off a pint. I am also cutting cider duty by 2% to support our producers in the west country and elsewhere. To back one of the UK’s biggest exports, the duty on Scotch whisky and other spirits will be cut by 2% as well. Wine duty will be frozen. That will mean more pubs saved, jobs created, families supported, and a penny off a pint for the third year in a row.

I also want to help families with the cost of filling up a car. It is a cost that bears heavily on small businesses, too. The previous Government’s plans for a fuel duty escalator meant that taxes would rise above inflation every year. But I want to make sure that the falling oil price is passed on at the pumps, so I am today cancelling the fuel duty increase scheduled for September. Petrol is frozen again. It is the longest duty freeze in more than 20 years. It saves a family around £10 every time they fill up their car. That is £10 off a tank with the Tories.

We believe that work should pay and that families should keep more of the money they earn. When we came to office, the personal tax-free allowance stood at just £6,500. We set ourselves the goal—even in difficult times—of raising that allowance to £10,000 by the end of the Parliament, and we have more than delivered on that promise. In two weeks’ time, the allowance will reach £10,600. That is a huge boost to the incomes of working people, and one of the reasons why we have a record number of people in work. Today I can announce that we will go further. The personal tax-free allowance will rise to £10,800 next year, and then to £11,000 the year after. That is £11,000 that people can earn before paying any income tax at all. It means that the typical working taxpayer will be more than £900 a year better off. It is a tax cut for 27 million people, and means that we have taken almost 4 million of the lowest paid out of income tax all together.

As we pass on the full gains of this policy, I can make this announcement today: for the first time in seven years, the threshold at which people pay the higher tax rate will rise not just with inflation, but above inflation. It will rise from £42,385 this year to £43,300 by 2017-18. That means that an £11,000 personal allowance and an above-inflation increase in the higher rate have been delivered by a coalition Government and a Conservative Chancellor. That is a down-payment on our commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000—it is an economic plan working for you.

In this Budget, the rate of the new transferable tax allowance for married couples will rise to £1,100, too. That is the allowance that is coming in just two weeks’ time to help more than 4 million couples. That is help that Labour would take away, but that we on this side are proud to provide.

This Budget takes another step to move Britain from a country built on debt to a country built on savings and investment. Last year I unlocked pensions with freedom for millions of savers, but there is more to do to create a savings culture. Today I announce four major new steps in our savings revolution. They are based on the principles that cutting taxes increases the return on savings, and that people should have freedom to choose how they use those savings. First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible. From next year, the punitive tax charge of at least 55% will be abolished. Tax will be applied only at the marginal rate, and we will consult to ensure that pensioners get the right guidance and advice. That means freedom for 5 million people with an annuity.

Secondly, we will introduce a radically more flexible individual savings account. In two weeks’ time, the changes that I have already made mean that people will be able to put £15,240 into an ISA. But if they take that money out, they lose their tax-free entitlement, and so they cannot put it back in. That restricts what people can do with their own savings, but I believe that people should be trusted with their own hard-earned money. With the fully flexible ISA, people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement. It will be available from this autumn, and we will also expand the range of investments that are eligible.

Thirdly, we will take two of our most successful policies and combine them to create a brand new Help to Buy ISA. We do it to tackle two of the biggest challenges facing first-time buyers: the low interest rates when they build up their savings, and the high deposits required by the banks. The Help to Buy ISA for first-time buyers works like this: for every £200 they save for their deposit, the Government will top it up with £50 more. It is as simple as that. We will work hand in hand to help you buy your first home. This is a Budget that works for you. A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000, we will put in up to £3,000 more. A 25% top-up is equivalent to saving for a deposit from your pre-tax income; it is effectively a tax cut for first-time buyers. We will work with industry so that it is ready for this autumn, and we will make sure that you can start saving for it right now.

So, there is access for pensioners to their annuities, a new flexible ISA, the backing of home ownership with a first-time buyer bonus—and one other reform. Today I introduce a new personal savings allowance that will take 95% of taxpayers out of savings tax altogether. From April next year, the first £1,000 of the interest earned on all savings will be completely tax-free. To ensure that higher rate taxpayers enjoy the same benefits but no more, their allowance will be set at £500. People have already paid tax once on their money when they earned it; they should not have to pay tax a second time when they save it. With our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished altogether—an entire system of tax collection can be scrapped. At a stroke we create tax-free banking for almost the entire population; and we build the economy on savings, not on debt.

Five years ago I had to present to this House an emergency Budget. Today I present the Budget of an economy that is stronger in every way than the one we inherited—the Budget of an economy taking another big step from austerity to prosperity. We cut the deficit, and confidence is returning. We limited spending, made work pay and backed business, and growth is returning. We gave people control over their savings and helped people own their own homes, and optimism is returning. We have provided clear and decisive economic leadership, and from the depths Britain is returning. The share of national income taken up by debt—falling; the deficit— down; growth—up; jobs—up; living standards—on the rise. Britain: on the rise. This is the Budget for Britain, the come-back country.

Provisional Collection of Taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

(a) Alcoholic liquor duties (rates) (motion no. 27.); and

(b) Tobacco products duty (rates) (motion no. 28.).— (Mr George Osborne.)

Question agreed to.

I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and on the remaining motions will be put at the end of the Budget debate on Monday 23 March.

Never has the gap between the Chancellor’s rhetoric and the reality of people’s lives been greater than it was today. This is a Budget that people will not believe from a Government who are not on their side. Because of the Government’s record, because of their instincts, because of their plans for the future and because the Chancellor, most extraordinarily, made no mention of investment in our national health service and our vital public services, this is a Budget that people will not believe from a Government they do not trust.

This Chancellor has failed the working families of Britain. For the first time since the 1920s, people are earning less at the end of a Government than they were at the beginning. [Interruption.]

Order. Quite rightly, I expected the Chancellor to be heard, and I certainly expect the same courtesy to be extended to the Leader of the Opposition.

People are £1,600 a year worse off. The next generation has seen wages plummet and tuition fees treble. The Government have built fewer homes than at any time in the past 100 years. It is certainly not a truly national recovery when there are more zero-hours contracts than the populations of Glasgow, Leeds and Cardiff combined. That is the reality of the lives of working people. These are the facts. These are the inconvenient truths of this Chancellor’s record. It is a recovery for the few from a Government of the few.

The Chancellor chose to make a number of references to me today. Let me just tell him that we are not going to take lessons on fairness from the trust fund Chancellor and the Bullingdon club Prime Minister. Not for the first time, this is a Budget from this Chancellor that simply will not be believed.

We support the change on the personal allowance, but on tax he gives with one hand and takes far more away with the other. Nobody believes this Chancellor when he says that he will cut their taxes, because that is not what has happened. Not only are wages down by £1,600, but taxes are up—24 tax rises. As a result of his measures, families are worse off by £1,127 a year, on average, which is equivalent to 8p on the basic rate of income tax. That is the reality behind a Budget that cannot be believed. Everyone knows what is coming if the Government get back in charge: another rise in VAT, the tax the Tories love to raise. Of course, in the finest Tory tradition, the lesson is this: deny it before an election and jack it up afterwards.

On living standards, which the Chancellor made much of in his speech, he knows that, as the official measure from the Office for National Statistics shows, people are clearly worse off under him, so he had a bright idea: invent a new measure of living standards to prove that what people know from their wallets and pockets to be true is somehow not true. People do not need a new measure that pretends they are better off; they need a new Government to make them better off. That is the reality behind a Budget that cannot be believed.

What about low pay, which the Chancellor also talked about in his speech? He poses today as the friend of the low-paid. You could not make it up, Mr Deputy Speaker. [Interruption.]

Order. There is too much noise coming from the back row. Mr Shelbrooke, do not think that I cannot see you just because you have moved position. The last thing I need is for you to explode. That would be good neither for you, nor for the Chamber.

I am bound to ask, whatever happened to the promise of a £7 minimum wage this year? The Chancellor made much of that 18 months ago, but he has broken that promise. The idea of this Chancellor boasting about a 20p rise in the minimum wage, expecting low-paid workers to be grateful: that is the reality behind a Budget that cannot be believed. Of course, the Chancellor does not just claim to be a friend of the low-paid; he now claims to be a friend of the north. [Interruption.]

Order. I will not keep saying that I want to hear the Leader of the Opposition; I expect everybody to hear the Leader of the Opposition.

On the specifics, we are pleased that the Chancellor has adopted our policy of councils being able to keep 100% of business rates, but why not for every council right across the country? Why is he doing it for just one? [Interruption.] Oh, he has done it for two, says the Chief Secretary, helpfully. Is it not great? The Liberal Democrats locked in the boot of the Conservative party.

Let us talk about what the Chancellor has done to the north of England. Let us test whether he is a friend of the north—75% bigger cuts to local government budgets in the north than in the rest of the country. In the north-west, 400,000 working families have seen their tax credits cut. That is more than any other region. In the north-east the Chancellor is spending £1 on transport for every £25 he spends in London. He spent time in his speech praising northern councils. Let us see what northern councils have to say about him. He talked about Leeds. This is what the leader of Leeds council said—[Interruption.] Yes, Labour. The Chancellor was praising northern councils in his statement. Let us see what they have to say. The leader of Leeds council says that the Chancellor “fails to deliver the devolution we need. This Government is no friend of the north.”

For the interests—[Interruption.]

Order. This is getting seriously out of hand. [Interruption.] Just a moment. He can shout all day. I have already looked at Mr Hands. He may hide behind Sir Tony, but we all know where he is. His voice carries and I know where he is sat. Sir Tony may move, but I recognise the voice. [Interruption.] I do not need any more help. All I will say to those on the Government Benches is let us listen. Let us get to the end because, as I said earlier, our constituents want to hear what both sides wish to say.

Joe Anderson, the mayor of Liverpool, said that the Chancellor has “bludgeoned Liverpool. We’ve had 58% of our funding taken away. Even Dick Turpin had the decency to wear a mask when he robbed people.” That is what he thinks of the Chancellor. [Interruption.] Hon. Members ask why I do not quote Conservative leaders. In the interests of balance, I would have liked to quote a Conservative leader of a northern city, but there are none, and with these two—the Prime Minister and the Chancellor—in charge, there never will be.

The Chancellor spoke about tax avoidance in his statement, but the gap between what is owed and what is collected is up, not down, and no wonder. He has not acted on tax havens, despite the Prime Minister’s promises. He did not act on HSBC. In fact, he appointed the chairman as a Minister. What about hedge funds? Those were strangely absent from the Chancellor’s statement. Where was the action on stamp duty avoidance? It is costing well over £l billion a year. Of course the Government cannot act on hedge funds because they bankroll the Tory party. The Chancellor cannot act because they own him, lock, stock and barrel. The Conservative party is now just the political wing of the tax avoidance industry.

The biggest sleight of hand of all is on the deficit. The Chancellor was rewriting history today. Five years ago, the Prime Minister said: “We will balance the books in five years”—no ifs, no buts, no maybes, just like the immigration pledge. Today, the Chancellor comes along to boast that he has halved the deficit, but that is not what the Prime Minister used to say about halving the deficit. He said that would be “completely inadequate”. Let me get this straight—it has gone from completely inadequate to a great triumph. I do not think that will wash with people. The only thing long-term about the Chancellor’s plan is that it will take nearly twice as long to balance the books. And it cannot be believed—[Interruption.]

Order. Mr Ellis, as I said earlier, a little more control, please.

It cannot be believed, because we have heard it all before—five years of promising a recovery for all, five years of delivering a recovery for the few, and now the Chancellor asks us to believe it all over again. The most unbelievable thing of all is the Government’s claim that we are “all in it together”. They say yes to the bedroom tax, no to the mansion tax. Food banks are on the rise, bank bonuses are in the billions. Taxes are up for working families, taxes are cut for millionaires. The best thing one can say about the Chancellor and the Prime Minister is that when the removal vans turn up, they will be in it together.

The Chancellor’s failure on living standards, on tax and on the deficit are all linked. That is because our economy is too unproductive, too unbalanced and too insecure. There are some things that he did not mention in his statement today. Our productivity gap with the rest of the G7 is now the worst for a quarter of a century—on his watch. He talked again today about rebalancing, but the rebalancing that he promised has not happened. The Chancellor’s target for exports is set to be missed by over £300 billion. On this Budget’s figures, he has overseen the slowest recovery for 100 years. That is the reality behind the Budget that cannot be believed.

For all the window dressing today, the Government cannot tackle insecurity at work, because they think that is how we compete. They cannot make work pay, because they believe low pay is the way that we succeed. They cannot build an economy for working families, because they think wealth flows from the top. Not for the first time, the chairman of the Conservative party perfectly summed up Tory philosophy in his celebrated handbook, “Stinking Rich 3”. I am not sure what happened to “Stinking Rich 1 and 2”.

The Chancellor announced a number of measures on savings and it is important that we look at the detail of these changes. We want people to have more flexibility, including on annuities. He talked about advice in the annuity market. It is incredibly important that advice is available quickly because there are rip-off merchants ready to pounce. We know that it has happened before—[Interruption.]

Order. Mr Williamson, you are this side of Mr Miliband. I can see you very easily.

This is a serious issue. We know that it has happened before. It happened in the 1980s—a dreadful mis-selling scandal—and the Chancellor needs to get proper regulation in place on these issues. We will look at the changes that he spoke about.

The glaring omission from this Budget statement was the national health service and public spending. It was an extraordinary admission. Where was that discussion of the national health service and investment in public services? It is time that we looked at the reality of this Government’s spending plans, because this is the Budget that cannot be believed. The Chancellor does not want us to know it, but he had an extreme spending plan yesterday and he has an extreme spending plan today. It is here in the Red Book in black and white. Page 69 shows his plan for extreme cuts in the next Parliament. Table 2.4 of the Red Book shows that he is trying to hide big cuts between 2015-16 and 2018, so let me tell the House what the Chancellor tried to hide. His plans are for at least as many cuts in the next Parliament as in this one, and the pace of cuts in the next few years will be faster than the cuts in the past few years.

Here is the thing, and it is important that the country knows it: the Chancellor came along today to try to suggest that the pain was over, but if the Conservatives get back, it is not. Their failure on the deficit means that they are planning massive cuts—billions of pounds of cuts—in the next Parliament.

You might ask, Mr Deputy Speaker, what is the evidence for it. There is a lot of evidence. Let us start with what the Prime Minister said in his education speech. He said they were going to cut early years, they were going to cut schools, and they were going to cut colleges: cuts in education spending. Short-changing education today means we cannot build a recovery for all tomorrow.

The position is most worrying of all on the national health service. The massive cuts that the Government have announced—all their Members will have to go and justify this to their constituents—mean that colossal cuts will be planned, and I emphasise “planned”, in defence, in policing, and in local government. But they will not be able to deliver those cuts, so they will end up cutting the national health service. That is the secret plan that dare not speak its name today. The Chancellor did not tell us—[Interruption.] You can tell they are really worried about it. The Chancellor did not tell us that his plans also continue massive cuts to social care. [Interruption.]

Order. The defence Minister and I do not want to fall out. If there are some letters to sign on her desk, that might be better if she cannot keep quiet.

They did not tell us that their plans involve massive cuts to social care as well. We have already, in this Parliament, seen hundreds of thousands fewer elderly people being cared for. What is the lesson? If you devastate social care, you betray the elderly and pile unsustainable pressure on our national health service—and these two are coming along and promising more of the same. That is why they cannot be trusted on the national health service.

Building a truly national recovery needs a new Government. We will not sit by when people are on zero-hours contracts month after month, year after year. Instead we will legislate for a new principle that if someone does regular hours they get a regular contract. The Chancellor talked about the minimum wage. Let us talk about what has happened on the minimum wage. [Interruption.]

Order. Mr Williamson, be helpful to the Chamber, or I will be unhelpful to you, and I do not want to get to that stage. Let us hear Ed Miliband.

The minimum wage has gone up by just 70p in this Parliament. A Labour Government will raise it by more than double that to a minimum wage of more than £8 an hour. And we will have a real industrial policy.

The Chancellor has been a particularly malign influence in this Government on climate change. The Prime Minister used to claim that he believed in climate change. I have to say that it is extraordinary, even by his standards, to put a wind turbine on your roof and then want a moratorium on wind turbines. I know he is a stranger to consistency, but even by his standards that is going some. We will end the dabbling with climate change denial and have a proper green investment bank.

A Labour Government will support the young, not make them pay the price of hard times. We will ensure that every major Government contract will guarantee apprenticeships. We will cut tuition fees to £6,000 to reduce the burden of debt on young people—and let the Deputy Prime Minister defend his broken promises on the doorstep.

All of this will be underpinned by a balanced plan that cuts the deficit every year, protects education and health, and has fairer taxes—yes, I do believe in a progressive tax system—by reversing the Chancellor’s millionaires’ tax cut, introducing a mansion tax to fund the NHS, and abolishing the vindictive, unfair bedroom tax that he imposed. That is what a Labour Budget would do, from a Labour Government who know that Britain succeeds only when working families succeed.

Now we know the choice at the election. We have seen five years of falling living standards, young people paying the price of hard times, and the NHS going backwards. This Budget did not solve the problems facing working families; it confirmed them. Britain needs a better plan—a plan for working families. Britain needs a Labour Government.

rose—

I suggest to the House that I do not put a time limit on, but I expect Members to take up to 10 minutes and no longer, and then we shall get everybody in. I call Andrew Tyrie.

Thank you very much, Mr Deputy Speaker.

The Leader of the Opposition has to make the most difficult speech of anyone’s in Parliament: he has to respond to a Budget that he has not even seen. I congratulate him on his effort, and I can assure him that those bits of the Budget that he argued should be scrutinised carefully we will scrutinise on the Treasury Committee. It is a tall order to make that speech when the economy is weak, but when it is strong, it really is an impossible task—and the economy is strong, with the best growth in the G7 last year.

Chancellors should be judged on the performance of the economy during their tenure. We should all now accept that this current Chancellor deserves a good deal of credit for the improved performance of the British economy. Five years ago, Britain’s prospects were pretty bleak. The UK was saddled with a deficit of over 11% of GDP, and the developing euro crisis was shrinking the UK’s export markets and creating a massive risk of financial contagion. Above all, the UK was afflicted with a crisis of confidence. Five years later, as the Chancellor has announced, the deficit will be 4% of GDP next year—only a little over a third of what was inherited. The banking system, which he did not discuss at great length, is much better equipped to handle a euro crisis if it comes, particularly the risk of a disorderly exit by Greece. Confidence is returning. The evidence for the returning confidence is overwhelming from survey data.

A great deal of that success—

The hon. Gentleman makes an assertion that every analyst I have read denies. The lack of investment—the amount of money held in corporate bank accounts that is not being invested—is a major problem for this economy, so where does he get the evidence of this rising confidence in investment?

I have not brought all the survey data along with me, but I can supply it to the hon. Gentleman if he is interested. He makes a valid point, which is that there is a lot more work to be done fully to restore confidence to the point that is needed to unlock cash piles on the balance sheets of some of Britain’s larger businesses. For smaller businesses, investment is often not taking place at the level we would like, although it is much better, because the small and medium-sized enterprise lending market is still relatively weak. The banks are not supplying them with the resources they need. We desperately need to break down what still amounts to a banking cartel on lending. We need to get to the point where these small firms—the new firms that create so much wealth in Britain—can get access to the lending they need.

Does my hon. Friend agree that a very good indication of confidence is the extra 2 million-plus jobs and 450,000 new businesses created in the past five years?

I agree entirely, but I will not linger on the point, because I am sure that my hon. Friend will be making his own speech in his own way very shortly.

What has also happened is that many people have found ways of improving quality and value for money in the goods and services they provide, whether in the public or the private sector. That has generated a good deal of force for the recovery—something that is not fully captured in productivity statistics. Governments do not create wealth; they either get in the way of it or create the conditions for it.

Will the hon. Gentleman give way on that point?

If the hon. Gentleman will forgive me, I would like to make a bit of progress now.

This Government have helped to create those conditions for growth in at least three important ways. First, in the early part of the Parliament, they authorised £175 billion of extra quantitative easing. That was crucial. Secondly, they allowed the so-called automatic stabilisers to kick in—that is, allowing the deficit to widen as eurozone demand collapsed. It is important to recall that the Chancellor was faced, right at the start, with a weakening of demand for our exports in European markets. That caused a great deal of difficulty for British industry. Thirdly, in my view, the Chancellor showed a good deal of tenacity. The coalition has contributed a great deal to restoring confidence. Few predicted that it would last five years. To be frank, I did not think that the Liberal Democrats had it in them to stay the course, but to their credit they have stuck with it, and for that they deserve a good deal of praise.

I thank the hon. Gentleman for his recognition of the coalition, which the broadcasters have lost sight of in reporting what happens in the House. The Budget specifically talked about how Government can get in the way of business, but has it not shown how the Government can, with the right engagement, take positive action, as they have with the North sea oil and gas industry? Entering into dialogue and bringing in incentives will see the industry through the downturn and enable it to reach maturity so that we get a long-term benefit; without the industry, the oil would be left in the ground, and we would get no tax.

I wonder where the hon. Gentleman represents.

Broadly speaking, the hon. Gentleman is right, although I wonder whether we needed quite as many changes to the North sea oil tax regime during this Parliament, particularly since we began it by announcing there would be stability for the medium term in the overall fiscal regime. It can be argued, however, that North sea oil is a special case, and not like the rest of the tax system. Frequent changes in the tax system nearly always have an economic cost in the bottom line for growth.

My colleagues on the Treasury Committee and I will collect as much evidence as possible on the Budget before Prorogation. We will hear from the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chancellor. One measure that was effectively announced before the Budget is the extension of pension freedoms to those who already possess an annuity, and we will take evidence on that major change. Likewise, we will look at the savings measures that have just been announced, not least the savings allowance and the change to the structure of individual savings accounts. Both of those measures sound extremely significant, given that we must revive the savings culture. The Committee will ask about other measures that the Chancellor announced today, including making sure we can be confident that £3 billion will be made available by the tax avoidance measures, the North sea tax regime to which the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) referred, and of course the increase in the personal allowance. There is a great deal for the Committee to do in a short space of time before the election, and we will get on with it as best we can.

We will hear a lot more argument about who is better off. A key recommendation of the Committee in 2010 was that the Treasury and the Chancellor should be required to provide much more information about the distributional impact of tax and benefit changes—who wins and who loses—and, to their credit, they now provide much more detailed analysis at each Budget and autumn statement. For decades, successive Chancellors—my right hon. Friend’s predecessors—were very reluctant to provide that analysis, but they now do so. We will consider the published distributional analysis in the light of the debate, about which we have already heard, about who is better off and who is worse off. It is already clear from the data that almost everybody has borne some of the burden of austerity one way or another, but also that everybody has now almost certainly gained overall, and I will come on to that if I get the chance.

In relation to the distributional analysis, is the hon. Gentleman concerned that the Institute for Fiscal Studies has quite clearly shown that the situation for families on the lowest incomes has worsened, and that the Equality Trust has said that £39 billion has been taken out of the economy as a result of such inequalities?

An answer to that would need to be quite long and involved, but I invite the hon. Lady to come to our hearing with the IFS because that is a central issue. I am not at all sure that the IFS got it quite right on the basis of the published data. In any case, if I may say so, it did not quite say what she purports it to say.

Will the hon. Gentleman give way?

I will give way one more time, and then attempt to wind up.

The Chairman of the Select Committee is trying to make the case that there have not been distributional problems, but as I am sure he knows, the truth is that according to the Government’s own statistics, there are 2 million more households living in absolute poverty in this country.

We will be looking at such issues. I was not trying to make that case, or if I was, I was also pointing out that, in the early stages of the recession created by the financial crisis, almost every sector of society had borne some of the burden. I think that the Hansard record will show that I made that point.

We have to rely on conflicting survey data from the Office for National Statistics. The Bank of England has complained about the quality of data, and a heap of other people have said that the data need to be improved. The Treasury Committee ought to look at that in the next Parliament. Some data suggest that the man in the middle is not much better off even in nominal terms—the point was made by the Leader of the Opposition—which is based on the annual survey of hours and earnings. However, another ONS annual survey shows that the man or woman in the middle who has been in continuous employment has done well since 2010, both in nominal and real terms. Those data need to be considered very carefully, because the overwhelming majority of people in work have been in continuous or near continuous employment for the past five years. The data look quite persuasive as an overall picture of living standards. In answer to the hon. Lady’s intervention, the Treasury Committee will certainly consider that matter.

Whoever wins the next election—I hope the whole House will understand that I am very biased about who I think will win—all these tricky issues will need to be considered carefully. The Committee will need to set to work on further research into some of the points and policies covered in this Budget and over this Parliament. Competition in lending and banking has already been mentioned, and we must find a way of getting much greater competition in the banking sector. In relation to doing more to encourage long-term savings, the measures announced today are only a start, because something has been seriously wrong with the savings culture in this country for a long time. The Committee has already said a good deal about reforming and simplifying the tax system, and more needs to be done. The fact that some parts of the tax system are still hopelessly complex provides an opportunity for tax avoidance and evasion, reduces the yield and is bad for overall economic performance. There are also the economic effects—by no means all good—of current energy policy, among many other important energy issues, its reliefs, allowances and public spending subsidies.

What matters most are the measures that will succeed in releasing the energies of the British people. That used to travel under the name of supply-side reform. The next Parliament, with the next Government inheriting a more stable economy, will be an opportunity to get more supply-side reforms under way. I have a clear view, as do many other Members, about how to accomplish that, but it is absolutely essential to move on from the deficit reduction task to that of ensuring we improve the overall economic performance of the British economy in the long run.

It is an honour to follow the hon. Member for Chichester (Mr Tyrie). I have listened to his speeches during this Parliament, and he has offered us his wisdom and made a serious contribution. I am very glad that he finished by talking about deficit reduction, because that is how I want to start my speech.

I am afraid that I must begin with what I see as the Chancellor’s failed record on deficit reduction. We must not let people in this country forget what he promised when he came in and wrote the emergency Budget in 2010. He told people in this country that he would close the budget gap by the end of this Parliament, but he has failed to do so. Despite the most severe cuts to some of our communities in this country, he has failed in the objective he set himself. That will leave the next Government, whoever they are, with a serious and significant challenge. I will say more about the right way to meet that challenge.

The Chancellor has also failed on two of his other targets. Let us not forget the target he set himself on protecting our credit rating, which he failed. Given that the Chancellor’s target was to get debt falling, not rising, in this Parliament, do we really expect the British public to accept that a mere 0.2% is good enough to meet that target? That is meeting the target by the merest technicality. We have sort of and a little bit turned the corner on reducing debt, and that is supposed to be okay with the British public. Well, that might be okay for the Tory party, but it is not okay for my constituents.

The Chancellor has failed the tests he set himself, but—much more importantly—he has failed the test that the country set for him, which was to put money in the pockets of British people. I want to set out four ways in which the next Government will get that right. On the deficit, we will close the gap in the right way. We will not do as the Chancellor did and claim that severe austerity will do the job and that we just need to cut indiscriminately to fix the gap.

With those cuts decimating some of the poorest people in society and the need to leave at least two thirds of fossil fuels in the ground if we are to avoid dangerous climate change, does the hon. Lady agree that handing out yet more eye-watering tax breaks to multinational oil and gas companies is a deeply irresponsible use of public money?

I am glad that the hon. Lady focuses on those with the least. I have been to Brighton and seen people rough-sleeping, and it worries me greatly that the council there is insufficiently focused on those with the least. She also mentioned wrong choices, and I want to say a little more about the right choices. First, we need to focus on the financial services industry, because it worries me that the Chancellor has defended bank bonuses on many occasions, not least in Europe. That is why I want to see us raise more through a bank levy, which we will invest in the next generation through our pledge for free universal child care for three and four-year-olds from working families.

In the final year of the five-year forecast, the Chancellor will increase public spending by £38.1 billion in a single year. Does the hon. Lady think that is enough? If not, how much more would she like?

If the right hon. Gentleman had been listening to my speech, he would have heard me say that we need to make the right choices and show our priorities. As I was saying, the right way to close the budget deficit is to focus on taking money through a bank levy on the financial services industry and investing that money in the next generation and in hard-working families in Britain. I am pleased that we have confirmed that the next Labour Government will have no requirement for new debt for our election pledges. That is the right way to go about managing the British economy.

The right investments matter. It matters whether we choose to invest in infrastructure for the long term. I am sorry that the rhetoric about investment is still not matched by the reality on the ground, and is still so heavily focused—as it has been over the past five years—on London and the south-east. Of course steel in the ground matters, but we also need to think about our education system as part of our country’s infrastructure. I am concerned that we have not heard a pledge from the Chancellor to match our commitment to fund education properly and to ring-fence that budget all the way through children’s lives.

While we are talking about the right balance and right investment, I want to talk about the north of England. I am in politics because I grew up on Merseyside in the 1980s and 1990s and I knew that the then Governments did not care very much about families like mine. I wanted to see a future for my friends and family in Wirral South in which they did not have to leave the place that they loved to have a successful career. Under the last Labour Government, that was happening. We had “The Northern Way”, which saw regional development agencies investing in the north. That was the right way to rebalance the economy, and it was working. Labour investment was working.

Today the Chancellor has tried to use rhetoric and spin to talk about a northern powerhouse that nobody in Merseyside believes in for a second. We have been living with the Chancellor’s true political priorities—a level of cuts not seen in the wealthier parts of the country. That is despite historical deprivation and the fact that we are still living with the consequences of a Tory Government who deindustrialised the north and provided no other options. “The Northern Way” and the regional development agencies were working under the last Labour Government, and that was the right way—not soaring rhetoric about northern powerhouses, but actual investment in the north—[Interruption.] If the Under-Secretary of State for Transport, the hon. Member for Devizes (Claire Perry), wants to intervene, she is more than welcome. As she does not seek to do so, I take it that she has nothing to say about the north.

I am a Member from the north-west and I have shared platforms with the hon. Lady in the past. Does she not accept that, under the Northwest regional development agency and the infrastructures that her party put in place, the jobs that were created were public sector jobs? We now have a more sustainable platform of private sector growth. From memory, unemployment in her constituency is down by more than 30% in the last year—does not she welcome that?

I bow to no one in my applause when unemployment falls, but to say that Wirral, Merseyside and the rest of the north-west have not suffered from huge cuts to local government is to ignore the facts. I know that that is an argument that almost everyone in the north-west—perhaps with the exception of members of the Tory party—will recognise.

We need not just the right investment but the right protections. We have seen family budgets hit radically and hard, we have seen child poverty rise and, on the relative measure, we have seen people in the middle of the income distribution fall back towards the bottom. That is not offering families in our country the right protections—

Will the hon. Lady give way?

I will not take any more interventions, because I might be here for a long time if I did.

We need a bank levy to fund 25 hours of free child care for working families with three and four-year-olds. That pledge alone will help 51,000 children in poverty and will be a real boost to their families’ incomes, which have been hit hard. Whatever the Chancellor says, and whatever the Tories try to convince themselves of, it is not only the London School of Economics and its analysis of the past five years that shows that the incomes of the bottom half have fallen while those of the top half have risen; the Treasury’s own figures now say that the bottom fifth has done worse. We need the right protections to ensure that when economic growth happens, it is not just for the few but real growth for the many. Rather than failed austerity, we need a truly progressive Government in favour of the many, not the few, and more than anything else we need a Labour Government.

May I first refer Members to my declaration in the Register of Members’ Financial Interests?

I commend the Chancellor for his Budget, which continues the themes of economic reform and fiscal consolidation that we have seen in each of the Budgets and autumn statements in this Parliament. It is that twin-track approach that has led to a fall in the deficit, putting the nation on a path towards a surplus in 2019-20, with one of the strongest growing economies among our competitors, falling inflation and a job-rich recovery confirmed by today’s unemployment figures.

It is absolutely vital that we continue the programme of deficit reduction. The previous Government spent beyond the nation’s means, increasing the deficit even when the economy was growing. In his speech, my right hon. Friend the Chancellor mentioned the fact that debt as a proportion of GDP increased in each year of the previous Labour Government. Even in the good times, Labour continued to spend more than the country could afford. The problem we inherited was not that the UK was under-taxed, but simply that the Government were spending too much. It has therefore been right that the bulk of deficit reduction has been borne by spending cuts.

I am pleased the Chancellor has reconfirmed our commitment to tackling the deficit after the next general election. It is wrong of both the Labour party and the Liberal Democrats to seek to slow the pace of deficit reduction. The longer the deficit takes to tackle, the more debt we will incur. Labour has failed to mention—I notice the Leader of the Opposition failed to mention it in his speech today—the £30 billion of cuts it has already signed up to. It is also pledging to spend £50 billion more than we are, which would require increased borrowing or increased taxes. The people of this country cannot afford borrowing on that scale, and to continue would be inequitable. There are three reasons why I think it is wrong.

I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.

That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.

Will the hon. Gentleman give way?

Let the hon. Gentleman answer this question: is it really fair for our children and grandchildren to pay the cost of debts we have built up? Let him answer that question.

Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?

That is a remarkable argument. Is the hon. Gentleman saying that we should have cut further and faster? That is not the prescription of the shadow Chancellor or the Leader of the Opposition. They always said we were cutting too far, too fast. They cannot have it both ways. That is the problem and that is why the Labour party has no economic credibility: it has no coherent argument on the economy or on the deficit.

While interest rates are at historically low levels we can afford to service those debts, but when interest rates return to more normal levels, money that could be better spent on schools or hospitals will have to diverted to meet higher interest payments. The Chancellor today talked about the £35 billion we have saved as a consequence of lower interest rates. If we return to the economic chaos of the previous Government, will interest rates remain low? Will we not see an increase in the cost of interest payments cutting the amount of money that can be spent on health and social care?

I was struck by the hon. Gentleman’s comments about economic credibility. What credibility do the current Government have, given that they insisted they would eliminate the deficit in this Parliament but have achieved only half that?

I am surprised by what the hon. Gentleman says, because he is a member of the Treasury Committee and has looked at these things very carefully. He will have seen what happened in the eurozone in the first half of this Parliament. The headwinds from the eurozone—the OBR confirmed this—had a negative impact on the UK economy. We cannot ignore the impact of turmoil abroad on the strength of the UK economy. It is surprising that a respected Member fails to recognise the lessons of what has happened over the course of this Parliament.

I congratulate my hon. Friend on the powerful speech he is making. Does he also recall that the OBR spelled out very clearly, a year or so after 2010, that it had underestimated the real impact of Labour’s recession?

My hon. Friend is absolutely right. The problem for Labour Members is that when they are confronted with the facts, they hide. That is the problem they will all face in the course of the next 50 days. They have clearly not developed economic credibility, because their plans and message are confused. They have no idea how they would deal with the economy. All we know about Labour is that it will spend more and borrow more and tax more, the way all Labour Governments have behaved in office.

The final reason we should be moving towards a surplus and reducing the national debt is that if we continue to lock in debt at high rates, we are reducing the capacity of future Governments to withstand future economic shocks. One of the challenges we faced in this Parliament was that the high levels of debt racked up by the previous Government made it increasingly hard to put in place the measures to turn the economy around.

We cannot simply pretend to ignore, or rack up, unfunded spending cuts. We need to work hard to tackle the deficit to ensure debt falls as a proportion of national income, as it will at the end of this Parliament, to get the right messages across. Let us be responsible about how much we spend. Let us be responsible on taxation and spending. Running a surplus in the good times will help the economy when difficult times lie ahead.