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Mr. Brown: I take it clearly from his answer that the Chancellor would resist any proposition in the Conservative party that a decision be made to hold a referendum before a general election. In other words, he is putting forward the view--Conservative Members had better get used to it--that he is against the proposition that a commitment to a referendum be included in the Conservative election manifesto. The House has understood him correctly this afternoon.
Mr. Clarke: The hon. Gentleman does not have an idea in his head about anything. Can he not make up his mind? Does he know what day of the week it is? He was asked whether he was in favour of a referendum. May we have an answer?
Mr. Brown: I made the position absolutely clear--[Laughter.] Indeed, I did. The Chancellor made it clear to Conservative Members, and they had better understand it, that he is against the proposition that a commitment to a referendum should be included in the Conservative general election manifesto--exactly what Conservative Members have been calling on the Prime Minister to do. The Chancellor made it clear this afternoon that a decision on a referendum can be made only after the question whether we join the single currency in 1998 or 1999 comes up. It cannot be made before the general election. I understand the Chancellor perfectly correctly, as I think the whole House now does. That is the source of division in the Conservative party.
Mr. Iain Duncan Smith (Chingford): Will the hon. Gentleman clear up the matter completely? He said that it would be put to the test--either in a general election or by some other means. If the currency went ahead during the next Government, and were Labour in government, the Labour party would not have set out the position in its manifesto. So, does he or does he not agree that there would be a referendum on the issue--yes or no?
Mr. Brown: I made the position absolutely clear. It is for the Government to make their position absolutely clear. The hon. Gentleman may want to attack me this afternoon, but he was on the radio attacking the Chancellor this morning.
Sir Peter Tapsell (East Lindsey) rose--
Mr. Brown: I really must progress, but because there is so much interest, I shall give way.
Sir Peter Tapsell: Does the hon. Gentleman agree that, if we are to have a referendum, it is useful if we all know
what it is to be about? A few moments ago, he said that the Labour party believed in managed exchange rates.If the managed exchange rate takes the form of membership of a single European currency, who does he think will be managing that exchange rate--will it be the British Chancellor or the German Chancellor?
Mr. Brown: I have read the Maastricht treaty, unlike the Chancellor of the Exchequer, and I understand the position very clearly. The principle that I am talking about is that of a single currency. The details obviously have to be considered. When we have made up our mind about them, we shall put that view to the country. It will be put to the test in either a general election or a referendum, and we have made that position clear. What is amazing this afternoon is that Conservative Members have still not grasped from the Chancellor's answers the important fact that he is refusing to support the idea of a referendum being inserted in the Conservative general election manifesto. He cannot deny that fact.
The second issue that the Chancellor raised was that, because he could now see that investment forecasts for 1996 were going to be realised, he thought that the economy could grow at 3 per cent. He has a history on investment forecasts, and we should understand what he has been saying for the past few years. Last year, he told us in his Budget statement that investment would rise by 10 per cent. In fact, it rose by only 2 per cent. He has been wrong every year that he has been Chancellor, and he has been wrong by substantial figures.
If the Conservative party were right, from the beginning of the 1990s, investment would have increased by more than 30 per cent., according to its forecasts. It has barely increased. The one consistent fact about the Chancellor's investment forecasts is that they are wrong. I read only the other day that the head of the Meteorological Office had to return his performance-related bonus because he had consistently got the weather forecast wrong. The Chancellor is wrong in his forecasts on investment,the public sector borrowing requirement and growth, so perhaps he should look at his own pay arrangements.
When the Chancellor tells us that investment this year might rise by about 10 per cent., I agree with the Select Committee--on which there are Conservative Members. Without further explanation from the Chancellor, I doubt whether that forecast is credible. Conservative Members must face up to the fact that, as a result of the recession in the 1980s, we have the slowest ever growth in investment--slower than even in the 1930s. If we are to build the modern capacity that is necessary to achieve high levels of sustainable growth without increasing inflation and interest rates, we must close the investment gap with our competitors, which is noted again in the Government's competitiveness report.
Mr. Quentin Davies (Stamford and Spalding):
The hon. Gentleman aspires to be Chancellor of the Exchequer. If he wants to be taken seriously as a contender for that role, he will have to make up his mind about the following fundamental issues. Should we have inflation targets or should we not? Is the present one too high, too low or about right? Are interest rates too high, too low or about right? Is Government spending too high, too low or about right? Whenever we have an economic debate, the hon. Gentleman avoids those questions.
Mr. Brown:
Of course, we shall have an inflation target. If the hon. Gentleman believes that public spending is too high, the reason is that we are paying the high cost of unemployment. The proper way to solve our problems is to have a Government who are serious about dealing with long-term and youth unemployment.
The Chancellor presented the House with his rosiest ever forecasts. He said that, as he had made pessimistic forecasts before, we should take these ones seriously. Let us recall the most recent published minutes of his meeting with the Governor of the Bank of England and quote what they agreed in January:
The document continued:
If that is not a damning picture, showing the gap between Conservative rhetoric and the reality that has to be expressed at meetings between the Chancellor and the Governor of the Bank of England, I do not know what is. It is just another example of the Conservative good news machine trying to create a good impression among people who are still suffering a great deal as a result of tax rises and job insecurity. The Conservatives are trying to build up a picture simply to fight a general election.
We have had many economic debates in the past17 years when the Conservatives have been in power. Each time, the Conservatives find a new phrase to justify what they are trying to do. At the beginning of the 1980s, we heard about the triumph of monetarism. That was no longer heard about after the money supply ran out of control. In the mid to late 1980s, the Conservatives claimed to have created an economic miracle. We no longer hear about that as it caused the biggest recession since the war. Had there been an economic debate before the previous general election, they would have told us that they had created the biggest ever programme of tax cuts. We no longer hear about that, as 21 big tax rises have given Britain the greatest tax rises in history.
What is consistent about the Conservatives is that they pull out a phrase such as golden scenario, enterprise capital or centre of Europe, use it for a few months until reality dawns and they cannot justify the figures, and then bury it unceremoniously and move on to another variety of Conservative central office propaganda. The country will not be fooled by the Conservative party.
Mr. Anthony Coombs (Wyre Forest):
The hon. Gentleman cannot shrug off a question about the inflation rate merely by saying that Labour would have a target--particularly in the light of the fact that the Labour party does not have any credibility on that front, as the average inflation rate was 15½ per cent. when it was last in government. As investment depends on a stable economy, will the hon. Gentleman tell the House exactly what his inflation target would be?
Mr. Brown:
I have made it absolutely clear: we will set an inflation target. We shall consult the Governor of
"Manufacturing output weak, housing market flat, short-term prospects for growth uncertain, extent and timing of firms' destocking unclear, growth below trend."
"Manufacturing output had declined fractionally. The construction sector had contracted again, the housing turnover had continued to fall, the new homes sector remained weak, the housing market fairly flat."
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