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Mr. Hawkins: Will the hon. Gentleman give way?
Mr. Brown: I will not give way any more.
What of crossrail? It was first promised in January 1989, the Government gave the go-ahead in 1990 and this year, 1995, it is at risk because of the costs of rail privatisation.
Public money for the railways should be used not to fund expensive consultancies and the subsidies that will accompany privatisation but to invest in rail transport.
Why not use money from the venture capital trust and the European investment scheme budget, which has not been taken up, to invest and help small businesses move ahead? Why not bring new technology into schools under competition proposals that my right hon. Friend the Leader of the Opposition has made?
What is happening to employment under the Government? The best way to save money in the long run is to tackle the £20 billion bill that is the cost of unemployment. The biggest barrier to sorting out our public finances is the billions being poured down the black hole to pay the costs of unemployment.
Perhaps the Chief Secretary to the Treasury will draw the House's attention to what he said in his pamphlet,
"Changing Gear: What the Government should do next" before he landed up at the Treasury. As we are discussing public investment, let me read what he said:
The right hon. Gentleman said that it would be sensible to think that £4 billion to £5 billion would be spent on capital projects in the next two years. He continued:
What do the Government do instead? They scrap the community action programme, which was launched two years ago by the then Chancellor in the Budget and which was helping 100,000 people a year. They cut the training budget by 4 per cent.--I am not surprised that the Secretary of State for Education and Employment is now not to speak in this week's Budget debate--and, of course, by freezing it, they scrap the one-parent benefit, which provides an incentive for single parents to return to work. They are making it increasingly difficult for single mothers to take up employment again.
What should the Government have done? They should have introduced our employment programme, and they should have paid for it with the windfall tax on the utilities. If anyone has any doubt about the case for such a tax, they should look at the profit made by Yorkshire Water. It has increased its profit by 50 per cent.--not by supplying the people of Yorkshire with water, but by not supplying them. [Interruption.] Conservative Members are well aware that the plans to take away the supply of
many people in Yorkshire are still on the table, and could be introduced. But how can they defend circumstances in which the profits of Yorkshire Water have doubled, while the service that it is providing is the subject of massive criticism--even from constituents who normally support the Conservative party?
This Budget is a survival package for the Government, and it has failed. It does not begin to tackle the underlying weaknesses. It does not tackle the investment gap with our competitors; it does not tackle the skills gap, because there is no new measure to deal with post-school training for young people other than the measure to deal with single parents, as the one-parent benefit has been cut.
In my view and, I believe, in the country's view, the Government have run out of steam and given up on the future. They are not prudent; they are paralysed and powerless--frozen in the headlights of the oncoming election. This is the Budget of a Government who are now a prisoner of failure. The public are not short-sighted, greedy, gullible, easily fooled or forgetful of what has happened. The public do not want to praise this Government: they want to bury them.
This is a Budget that marks not the beginning of the Conservative party's fight back, but the irrevocable public exposure of its terminal decline. It will be seen not as the brave new launch, the turning point for victory, but as the last-gasp effort of a decaying regime.
The Chief Secretary to the Treasury (Mr. William Waldegrave):
I always enjoy the speeches of the hon. Member for Dunfermline, East (Mr. Brown). That was not one of his vintage contributions, but I was very flattered when he referred to my elderly pamphlet, produced in 1980. I recommend its approach to my hon. Friends on the Back Benches; it was moderately troublesome to the Government of the day, and shortly afterwards I was given a job. I consider that quite a good way of proceeding.
I think that the pamphlet makes me look rather good. It sounded rather moderate to me. Given the investment figures in those programmes of the 1980s, the Government have a very good record. And, if we are to go back into the past, we cannot fail to remind the hon. Gentleman that he came to the House on a CND manifesto. Opposition Members always get cross when we remind them of that, but it strikes me as a more fundamental shift in political stance than any that I have made.
The Budget has three main themes. It keeps spending down, keeping borrowing on its downward path and protecting high-priority programmes; it sets Britain on a course of cutting taxes in a sustainable way; and--through the £700 gain in real income that the average family has experienced since the last election; some £450 will probably be added next year--it continues, in a plausible way, our campaign to reform the way in which government works, so that the state does less but new partnerships are built with the private sector.
First, let me deal with spending and borrowing. The Budget keeps borrowing on a clear downward path by keeping tight control on public spending. Lower borrowing will keep pressure off interest rates. That is good news for business, investment, home owners and, above all, jobs. I am sure that the House will be pleased to learn that three building societies have cut their mortgage rates this afternoon; that shows that they support the climate of confidence produced by my right hon. and learned Friend's Budget.
We have made tough decisions to return public finances to a sound footing. Borrowing always goes up in a recession, but once the recession is over the test of a Government is the Government's ability to ensure that it goes down again. That is what we are doing. We have done it before. We inherited an unsustainable level of public borrowing in 1979. There was a tough Budget in 1981. My noble Friend Lord Howe--ignoring 364 economists, the Labour party and everyone else--tackled the public sector borrowing requirement head on. The consequence was one of the longest periods of growth that we had experienced since the war.
We are now doing the same. We are already in the fourth year of a period of sustained growth--the steadiest for a generation. Exports are doing extremely well: last year we increased our share of world trade, which is very unusual. Businesses are investing: contrary to what was said by the hon. Gentleman, manufacturing investment was up 12 per cent. this year. As for business investment, an increase of 9 per cent. is forecast for next year. Living standards are improving, and unemployment is falling-- and all that is happening without an increase in inflation.
Mr. Donald Anderson (Swansea, East):
What is the reason for the continued decline in sterling?
Mr. Waldegrave:
The hon. Gentleman should ask the markets. We do not have targets for sterling. I do not know whether the hon. Gentleman would like to set some targets; would he like sterling to be higher, or lower?
Mr. Waldegrave:
The hon. Gentleman will find that there are benefits as well as costs. What matters is the inflation target, and the inflation target will be met. I do not think that serious commentators are in much doubt about that.
We intend to lower the public sector borrowing requirement further. Our goal is clear: we intend to bring the budget back towards balance over the medium term. We have done that before, and we will do it again. Balance should be achieved at the end of the decade; the current balance will be in surplus a year or so earlier.
Sound public finances cannot just mean ever higher taxes to balance ever higher spending. That is the fundamental difference between Conservative and Opposition Members. We believe that, when the businesses and workers of the country create wealth, it belongs to them. It is their right to keep what they make; Government must take only the minimum that is needed to provide decent services and the essential functions of government.
"In the public sector, a wide range of public investment should be undertaken. Amongst the investment undertaken should be house-building, renovation, insulation aimed at inner-city areas in part at least, road building, other infrastructure work, telecommunications and school equipment."
"If such a policy combined with other less expensive initiatives we suggest elsewhere on training and social policy were to be vigorously pursued, the atmosphere as well as the real economy might well be different at the time of the election, and if we lost, we would at least not have landed ourselves with the permanent stigma of apparent callousness and inaction"--
exactly the stigma that now threatens to attach itself to the Conservative party as a result of the huge cuts in capital investment for which the Chief Secretary and Chancellor are now responsible. I will tell them how they might begin to tackle the problem. They might do so by adopting our plans to reduce unemployment, especially youth unemployment and long-term unemployment.
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