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Letwin: We have paid all the taxes. Where has all the money gone?

Response to the Pre-Budget Report in the House of Commons

"The Prime Minister's friend, Commissioner Mandelson recently warned the Chancellor against 'exaggerated gloating.' The Chancellor doesn't seem to have heeded his advice. He prefers to slide over the inconvenient facts.

He didn't take much time discussing the figures for current borrowing. And he didn't take much time discussing the golden rule either. No wonder.

It's been alchemy in reverse. The golden rule has turned to dross in his hands. The golden rule was meant to be a guarantee that the Chancellor would borrow only to invest

All talk. He is borrowing to spend. His current borrowing for the first seven months is almost twice as high as his last prediction for the year as a whole.

And he's just announced borrowing of £170 billion over six years.

Why do the ITEM Club and the IFS say he has a black hole in his finances of £10 billion? Why do the IMF and the NIESR say his black hole is £12 billion?

Why do the CBI, the OECD,, the BCC, and the CEBR all say that, on his spending plans, he will have to raise taxes? Why do 20 of the 21 economists on the Treasury's own panel say the same thing? Doesn't he feel a little isolated?

The fact is, that the tide is going out on the Chancellor's credibility. The tragedy is, that the Chancellor is spending and borrowing and taxing so much because he is not getting value for taxpayers' money.

The Chancellor says that he has a plan to cut down on waste. Whose waste? His waste. We have paid all the taxes. Where has all the money gone?

This is the Chancellor who has put MoD civil servants on £1,000 chairs in Whitehall, each of which could have paid for 3 flak-jackets for soldiers serving in Iraq.

That's not the holy grail of value for money. He's not Sir Lancelot. He's Sir Waste-a-lot.

The Chancellor's plans to save money are like his promise to borrow only for investment. All talk.

Last year, the Chancellor's plan for cutting bureaucracy increased civil service numbers by 12,000. This year, the Chancellor is doing even better. In just five months, in just one newspaper, his bureaucracies have advertised 4,000 new jobs. That's a salary cost of over £150 million.

Talking of advertising, is the Chancellor proud of having increased the Government's advertising budget by £100 million? That's 17,000 heart bypass operations.

And that isn't the only thing he has increased. He has increased the number of tax collectors twice as fast as the number of nurses. He has increased the number of bureaucrats and support staff in education twice as fast as the number of teachers. He has increased the bill for management consultants by £1 billion a year.

The Chancellor says that Britain is working. But it's the bureaucrats and the administrators and the management consultants who are at work. Our public services aren't working.

After 66 stealth tax rises, why are there one million people on hospital waiting lists? After taxes have gone up by £5,000 per year per family in Britain, why are 5,000 people a year dying from infections picked up in dirty hospitals?

These are fundamental failures of public service delivery. The Chancellor can't mask them by making grand speeches about the long-term future of the economy - particularly when he himself is jeopardising that future with his taxes and regulations.

Our friend, Commissioner Mandelson wants to know, "Why our productivity is not better?" And the Commissioner is right to ask that question, because the Chancellor has presided over an economy whose productivity growth rate has dropped by a third, an economy which has slipped from 4th to 11th in international competitiveness, an economy which has grown more slowly than that of any other major English speaking country.

Nor can the Chancellor make up for his failures of public service delivery by parading new schemes.

The Chancellor's pledges to pensioners today won't make up for the 70% increases in council tax that have driven many pensioners to despair.

The Chancellor's plans for financial exclusion can't make up for the fact that the savings ratio has dropped by a third.

The Chancellor's grand statements about science won't make up for the fact that 100 university science departments have been closed.

The Chancellor's scheme for child-care won't make up for the lack of discipline in schools.

The Chancellor's plans for training won't make up for the fact that one child in three leaves primary school without being able to write properly.

The Chancellor's plans for academic research won't make up for the damage he caused when he created the rules that he is now abolishing.

This country faces great challenges in the years ahead - not least from the emerging economies of the sub-continent and the far-east.

We have the capacity as a country to meet those challenges. But we will not succeed if we are held back by failed schemes, fat government and excessive regulation.

We will not succeed if economic growth is siphoned off to pay for bloated bureaucracy that fails to give value for money.

The long and short of it is this: the Chancellor's failure to give Britain's taxpayers value for money will be the terrible legacy of this government."

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