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Mr. Gordon Brown rose--

Mr. Clarke: No. I shall give way in a moment, but first I ask the hon. Gentleman to tell us which of his

22 Nov 1995 : Column 686

shadow Cabinet colleagues gave him the strong advice that they wished to hear no more about income tax at 10p in the pound.

Mr. Brown: The Chancellor's first two jokes have misfired. Which does he think is fairer--the objective of a 10p starting rate for income tax or the abolition of capital gains tax and inheritance tax? Will he give a truthful answer?

Mr. Clarke: It was not my joke--the 10p in the pound rate was the hon. Gentleman's joke. Perhaps the hon. Gentleman expected me to come back with a 5p in the pound rate, as he appears to want to conduct economic policy in that way. The hon. Gentleman knows perfectly well that it was a bizarre and ill-judged policy, and it is the nearest he has ever got to showing us an inch of detail that we could discuss in the House. That is an abuse.

Mr. Brown rose--

Mr. Clarke: Will the hon. Gentleman give us a measure? Is there a Labour party tax commitment that he might wish to offer the House?

Mr. Brown: Will the Chancellor answer the question I put to him? I have set down the principles for a modern taxation policy as fairness, encouraging work and opportunity and being honest with the public, none of which is achieved by the modern Conservative party. Which is the fairer--a 10p starting rate for tax to help work opportunities and to reward effort, or the abolition of capital gains tax and inheritance tax?

Mr. Clarke: I believe in the principles of fairness in taxation, and we demonstrate those principles. I believe that taxation should encourage work and enterprise, and I am delighted to hear the Labour party at least pay lip service to the principle of incentive, which has guided the Conservative party's approach to taxation for a long time. We are committed in the long term to the abolition of capital gains tax and inheritance tax. The ex-socialist in the hon. Member for Dunfermline, East has not yet discovered the importance of capital taxation in an enterprise economy. His remarks on capital gains tax go back to the old politics of envy.

The hon. Gentleman's policy of a 10p in the pound rate of income tax is an incredible gimmick, and independent commentators have pointed out that such a rate does not serve the objectives that he said it would. The hon. Gentleman is merely trying to enter into a bidding match outside this House and is aiming below our clear objective of a 20p in the pound basic rate, to which I shall return.

The hon. Gentleman's speech was wholly typical of his approach to these occasions. He insists on having an economic debate less than a week before the Budget, and it is an obvious opportunity for the shadow Chancellor of the Exchequer to come to the House of Commons and give a shadow Budget. But he never does so.

If the hon. Gentleman can praise one-nation Conservatism--which I certainly support--I can praise the Liberal Democrats, although this may never be repeated on the Floor of the House. The Liberal Democrats always set out their proposals on taxation at this time of year, and they say what they would spend that taxation on. They set out their views on interest rates and set out their economic policy. The hon. Member for Dunfermline, East always comes here and gives a rant and he always goes back to a

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few of his favourite themes, such as the state of the Conservative party, but he hopes that he will not upset the shadow Foreign Secretary as much as his attempts to say something about economic policy always seem to do. The forced smile of the hon. Gentleman does not conceal the fact that arguments about divided parties do not come too well from that side of the House.

The shadow Chancellor should come to the House and give us a full set of tax plans, spending plans and borrowing plans. But he cannot do that, because the numbers must add up. The hon. Gentleman cannot deliver a shadow Budget, because he does not have the policy components necessary to do so.

Mr. Peter Hain (Neath): Will the Chancellor give way?

Mr. Clarke: I will give way to the hon. Gentleman, who I hope will give me a policy on interest rates or inflation. I would also like to know whether he is rising in support of the official Opposition amendment, which was supposedly moved a moment ago by the hon. Member for Dunfermline, East. Does he support the amendment tabled by the right hon. Member for Chesterfield (Mr. Benn) and others, which has some policy in it? That amendment attacks the market economy and goes back to the old values of the Labour movement. I would like to know which amendment the hon. Gentleman supports, and then I want to hear a point of policy.

Mr. Hain: Will the Chancellor give us a clear commitment that, when he is the shadow Chancellor in two years' time, he will deliver a shadow Budget one week before my hon. Friend the Member for Dunfermline, East gives his Budget? Will he promise that that shadow Budget will give marginal tax rates, detailed spending commitments and all the other paraphernalia of the Budget he is demanding from my hon. Friend? Will the Chancellor give a solemn promise to the House this afternoon that he will give a shadow Budget in two years' time?

Mr. Clarke: I have been in opposition, and the Conservative party in opposition had clear economic policies. We most certainly knew what we were attacking the then Government for, as they had reduced this country to being the laughing stock of western Europe in any industrial league table. We put those policies into effect in the 1980s when we transformed this country into an industrial success story. We have clear objectives--

Several hon. Members rose--

Mr. Clarke: I will not take any interventions for the moment. The hon. Member for Dunfermline, East was generous in giving way, but I do not want to take as long as he did.

We have a clear set of objectives for our economic policies--Government borrowing falling to zero; public spending below 40 per cent. of GDP; inflation below 2.5 per cent.; a basic rate of income tax of 20 per cent. Those are clear and consistent objectives, and we are putting them into place. We are delivering a recovery that will be for keeps and will increase the living standards of families year after year.

The Labour party, after years and years in opposition, does not have a single element of a policy framework that has either been agreed upon by itself or that its Front-Bench Members have ever expounded or set out.

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Mr. Malcolm Bruce (Gordon): The Chancellor has clearly set out his objectives, and has articulated them on a number of occasions. During the debate on the summer economic forecast, he said:

Does he agree that--against the background of a huge overshoot in current borrowing--any tax cuts in next week's Budget would have to be clawed back after the next election?

Mr. Clarke: I have just set out our policy on borrowing, and one of the reasons for that policy has just been correctly set out by the hon. Gentleman. We are committed to reducing the borrowing balance to zero over the medium term, and that remains our firm commitment. We intend to return to a situation where the ratio of debt to GDP in this country is declining, and that is a policy that my predecessors and I have followed consistently. I have never heard the shadow Chancellor express a clear opinion on that objective, and certainly he did not do so this afternoon.

Several hon. Members rose--

Mr. Clarke: I shall give way later, or I shall be giving way more frequently than the hon. Member for Dunfermline, East did. I shall give the background against which our policies should be seen, so far as the Budget next Tuesday is concerned.

The economy has been growing steadily for three years. Output in this country is now 6 per cent. above its previous peak in the boom a few years ago.

Mr. Roger Berry (Kingswood): Will the Chancellor give way?

Mr. Clarke: The International Monetary Fund expects Britain to be joint top with Germany in the league table for growth in the seven main industrial countries next year. Unemployment has fallen by more than 700,000 since its peak, and 1 million new jobs have been created since the recovery started.

Mr. Berry rose--

Mr. Clarke: Some 250,000 of those jobs were created last year alone, and the majority of those new jobs were full-time jobs.

Mr. Berry: Will the Chancellor give way on unemployment?

Madam Deputy Speaker: Order. I shall make it clear that hon. Members must resume their seats if the Chancellor does not give way.

Mr. Clarke: I was about to add that we are enjoying the best run of low inflation for half a century.

Mr. Berry: Will the Chancellor give way?

Mr. Clarke: I shall give way to the hon. Gentleman. I am the Chancellor of the Exchequer in the only country in western Europe that has got unemployment down by 750,000, and the only country in western Europe that has been creating jobs--some 500,000--since the recession, so I will not be shouted at about unemployment by a member of a party that is in favour of a minimum wage and the social chapter, but does not even have the nerve

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to say at what level a minimum wage would be, because it knows that we would put a figure on how many jobs the minimum wage would destroy. I shall listen out of courtesy to the hon. Gentleman on unemployment, as he might produce a policy. That would be more than his Front-Bench spokesman has done.

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