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The deputy Prime minister: I was talking about Singapore and Hong Kong.
Mr. Prescott: The right hon. Gentleman was talking about those countries that had done better than Britain, and he suggested that Singapore and Hong Kong had done better because they did not pay unemployment benefit or have a housing programme. I do not know whether he reads his Department's publications. Obviously not: otherwise, he would know that all the countries I mentioned have done better than Britain. It is nonsense for him to suggest that that has anything to do with benefits or the social costs involved in providing decent housing.
Another interesting fact is that almost all those countries have a minimum wage. Why have they done better than Britain when the Government say that a minimum wage would be a problem for our economy? The people who make that claim should face facts. Most of those countries have a minimum wage, but they do far better than Britain in the world prosperity league. Does the right hon. Gentleman look at the evidence and take it into account, or does he just ignore it? A few years ago, the right hon. Gentleman used to believe in a minimum wage. He has changed his mind. However, the principle is still right, even if he has moved away from it.
As well as the world prosperity league, we should study what the OECD has said--an organisation that the right hon. Gentleman claims has said Britain is doing well. I accept that it has said some good things, but it has also said some bad things. It, too, has leagues, and they show that employment in Britain is lower than it was in 1979, that Britain has plunged to 21st in the investment league, to 24th in the skills league, and to 35th in the world education league.
Those figures show the total and chronic failure by the Government to provide the essentials to make Britain a prosperous country. That is why Britain is falling down the leagues: we do not train our people sufficiently, and we do not give them a good enough education. We do not invest sufficiently in our industries. All that has happened while the Government have been in power, and it has contributed to our dismal fall from 13th to 18th in the world prosperity league.
In addition, most of that happened while the Deputy Prime Minister, in previous jobs, has been in charge of competitiveness. He has been in charge of that area of policy over the past five or six years, but it has been nothing but a dismal failure. I do not know whether the fact that he is Deputy Prime Minister will make any difference. Perhaps he can now take on the Treasury. We hope that Britain's position will improve, but our judgment is that the Budget will not do anything to bring that about.
The international tables are clear proof of the long-term failure of Tory economic policy, yet the Chancellor thinks that it will put Britain on course to be the enterprise centre of Europe. What will the Budget do to reverse Britain's decline? Nothing. All it has done is give us new theories and new targets.
In the 1980s, we were plagued by the theories of Friedman and the money supply--now generally discredited. Now we have the target of reducing public sector expenditure to below 40 per cent. of GDP. We are told that, if only that can be achieved, we will have the self-sustaining, non-inflationary growth the Government talk about continually. Do they not realise that it is not just how much they spend, but where they spend it? Labour spent money on investment and kept people in work. There were fewer than 1 million unemployed when the Government took office.
It is sheer arrogance for the Government to say constantly that somehow they have improved the employment situation--the number of unemployed people has risen from 1 million to 2.5 million, even by the fiddled figures. If the Government remain in power, there is the possibility that we will go into the next century with more than 2 million people unemployed. That is not only morally unacceptable, but creates massive problems with public finances which we are now trying to address. We are identifying the problems of failure.
We have to make it clear that the Tories--apparently-- spend more on keeping people out of work than using it to get them back to work. That is one of the essential differences between the Labour party and the Tories. They have cut public investment and increased public consumption--despite the enormous opportunities for investment. In the history of this country, no Government have ever been blessed with more resources in such a short period--from the £100 billion that they have taken from North sea oil to the £120 billion from privatising nationalised industries at a knockdown price.
That money has largely been wasted on keeping people on the dole. No Government in our history have had such resources, or, indeed, ever had such an opportunity to do something about fundamentally changing the relationship between investment and consumption to achieve greater prosperity in this country. That has always been our case, and the problem which we have always tried to address. It is not easy to deal with politically--I readily accept that--but, with such vast resources, the Government had an opportunity to make that change. No other Government would have squandered those resources like this Tory Government.
As last year's excellent report on manufacturing competitiveness by the Select Committee on Trade and Industry--chaired by my hon. Friend the Member for
Sheffield, Central (Mr. Caborn)--said, investment is the key. The Committee catalogued the decline in manufacturing, which it said was due to the lowest levels of investment, training, qualifications and skills among our people. It pointed out where the failures lie.
If one reads the report's conclusions and looks at what this Budget--and the one before--have done, one sees that it has made no recommendations along the lines of those suggested by the Committee designed to deal with problems in reversing the decline in our manufacturing industry. The Government have ignored the Committee's recommendations. We have to invest if we want the economy to grow. That is the crucial variable in every successful economy which one studies. We need long-term investment in capital, infrastructure and people.
In Germany, Japan, the United States and any other major competitor country, investment, with an industrial strategy, is the key to economic prosperity. Why should industrial strategy be considered an ideological difference between the parties in Britain, when Governments of the left and right in various successful countries have managed to deploy a proper role for Government in developing one?
Indeed, the right hon. Gentleman who is now the Deputy Prime Minister has often advocated the case for such a strategy. I thought that he was right to do so, and I wait to see whether he is successful in his new job in challenging the rather short-term view of the Treasury which has often dictated matters.
Mr. Fabricant:
Will the right hon. Gentleman give way?
Such a strategy is also the key in the Asian tiger economies, about which the Chancellor and the Prime Minister often talk, and on which the Deputy Prime Minister is so keen. In those economies, public and private finances work together in partnership, and the Government have a proper role to play. That is true of Singapore, as it is of Hong Kong. Any visitor to those countries notes that their deserved prosperity is as much to do with public as private investment. That is also true in Italy and Norway and a number of other European countries, because they invest more in capital and people. It is about not simply wages, but skills and productivity.
It is a mistake to suppose that the inward investors of whom we hear so much, and whom we welcome, come to Britain to take advantage of low wage rates or to dodge the social chapter. That is just not true. If that were the case, why has three times more investment left this country than come into it in the 16 years of Tory government? Of course, in a global economy, money flows in and out, but one cannot make the judgment that the money coming into this country is doing so simply because of cheap wages, and that the money leaving countries is because their wage levels are usually higher than ours. One cannot assume that that is somehow an indictment, and that we must therefore aim for the lowest costs with lower wages, and get rid of the social chapter. Such conditions have often been present in the countries where the money has gone.
Inward investors come to Britain because of the international advantage, and we should recognise that. Such an advantage is often down to our language
--a common language and culture. Of course, we are also close to Europe. Those are the reasons why companies invest in this country.
Mr. Fabricant:
On that very point, will the right hon. Gentleman give way?
Mr. Prescott indicated assent.
Mr. Fabricant:
That demonstrates that persistence pays off. I am grateful to the right hon. Gentleman for giving way. Does he think that one of the reasons--just one--why companies invest in this country is that we have the lowest rate of corporation tax? While we are at it, does he support the 1p reduction in income tax, given that a year ago he said that he would not support the Labour party if it were ever to go down the road of cutting income tax?
Mr. Prescott:
I thought that the Whips gave out only one question, not two. I shall deal with the first one. Again, if one looks at the OECD figures and the levels of taxation, whether corporation or personal, one sees that no common criteria produce a successful result. In some countries, conditions are very different. From the evidence, one can see that even those countries with high corporation tax have done better in getting more people back to work and attracting more investment. In some cases, low taxation has had that effect. [Interruption.] I suggest that the hon. Gentleman looks at the OECD figures--
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