---

Mr. Tam Dalyell (Linlithgow): Will the Chancellor of the Exchequer give way?

Mr. Clarke: I must conclude.

I say without fear of sensible contradiction that the UK is facing the most promising prospects for a generation. How different things looked in 1979, when we inherited a shambolic, inflation-prone economy. [Interruption.] Let me take the 1979 comparison. Hon. Members say that we have slipped behind in the league tables. In 1979, when the Conservatives came in, the Organisation for Economic Co-operation and Development report said of the UK economy:

17 Jul 1996 : Column 1161

"By the Spring of 1978 the rate of increase in consumer prices had fallen from its peak of nearly 27 per cent in 1975 to about 7 per cent".

That was supposed to be a pat on the back for the previous Government. In 1996, the OECD said:

"Inflation performance over the past four years has been remarkably good."

In 1979, the OECD said:

"By the end of 1978 British external competitiveness was at its worst level since 1966".

In 1996 the OECD said:

"International cost competitiveness remains sound".

In 1979, the OECD reported:

"Amendments to the Finance Bill in Parliament by the Opposition Parties led to a reduction in the basic rate of income tax from 34 to 33 per cent."

Contrast that with this year's OECD report, which states:

"Tax measures announced in the 1996-97 Budget included: basic rate of income tax reduced from 25 to 24 per cent.; a widening of the 20 per cent. lower rate band by £700; standard rate of tax on savings income cut from 25 to 20 per cent."

Mr. Skinner: They are falling asleep behind you.

Mr. Clarke: Opposition Members should try to wake up their Front-Bench team. They should be taken out of the torpor of persuading themselves that the British economy is not a success and is not headed for more success. They should face up to the responsibility of deciding how they are going to face that.

Those are the successes of 17 years of Conservative Government--successes that I am proud of and that we are not going to throw away. Only the return of a Labour Government could blight the prospects of the public beginning to enjoy the full fruits of that economic success.

4.35 pm

Mr. Gordon Brown (Dunfermline, East): When I heard the Chancellor warming to his theme that Britain faces the best prospects for a generation, I wondered where we had heard that before--where we had heard the same boasts, the same promises of a balanced Budget, and the same prospects outlined for higher investment and growth. Perhaps I can jog the right hon. and learned Gentleman's memory. We faced

"the best economic outlook that most people of today's working generation have ever faced in their lifetime."

Yes, that was the Chancellor, speaking as industry spokesman, on 20 March 1986, before the Conservatives led us into an election and then a recession as a result of their policies.

What else did the Chancellor say that he has said today? That we have

"the best record for growth of any major economy in Europe."

That was on 3 June 1986, before the Conservatives let spending get out of control and forced us into a recession again.

The summer forecast states:

"exports have been fairly flat . . . manufacturing output has been roughly flat . . . construction has been roughly flat . . . investment yet to show a very clear cyclical upturn".

17 Jul 1996 : Column 1162

That is the problem of the Government's recovery--it is neither investment nor industry-led, nor is it now export-led. As in 1986 and 1987, the Government are relying on a one-off consumer boom.

The Chancellor quoted the OECD, but let me tell him where we are in the OECD league. We are 20th out of 24 for growth, 13th for inflation--we are 18th for this year--19th for employment growth, and 17th for unemployment rates over the past 17 years. The reason is that manufacturing investment has barely recovered since 1979, and manufacturing output is now only 20 per cent. of the economy. We have heard all these boasts from the Chancellor and the Conservative party in the past 17 years: the pound to be stronger than the deutschmark; zero inflation; the transformation of our prospects; the productivity revolution; and then, the enterprise centre of Europe.

Let me remind the Chancellor that, last week, the regional statistics of the Conservative Government--not a leaked document--which are published in "Regional Trends", clearly showed that Britain is not top of the European league but ninth. Every one of our nine regions except the south-east and East Anglia is below the European average. In half our regions, income per head is about half that of the most successful region in Europe.

Is it not surprising to discover, therefore, that, in contrast to the bluster from the Chancellor and his smug and self-satisfied account of the economy today, in private the Treasury does not believe a word of it? His Department's view of this country's economic prospects under the Government is such that it believes that we will continue to decline in the economic league of world nations. The only solution that they can contemplate and put to the Chancellor is the privatisation of the welfare state.

The document says:

"There is a further proposal under active consideration for the privatisation of roads."

Will he answer that question?

Mr. Kenneth Clarke: I have answered it once. The document contains no proposals on the privatisation of the welfare state, as the right hon. Gentleman knows. It is preposterous to waste the time of the House with a management document. The only recommendations that this document makes are on grading levels and on possible needs for expertise in the next century under a variety of configurations. It is pathetic to produce documents of this kind as a substitute for having to debate economic policy on the floor of the House of Commons.

Mr. Brown: The Chancellor protests too much. He is trying to reduce the document to the status of some work experience project that went wrong in the Treasury.

We know from the interview given by the Financial Secretary at lunchtime that the document was instigated by, and went directly to, the permanent secretary to the Treasury. The Chancellor now tells us that it was available to him, if he had bothered to read it, several weeks ago. We now know that all the directors in the Treasury have been involved in its planning. Will the right hon. and learned Gentleman now answer my question: is privatisation of the roads under active consideration?

Mr. Clarke: I do not know how the right hon. Gentleman defines those terms; the document does not do so. He is asking a question about a subject that he cannot

17 Jul 1996 : Column 1163

define. I have explained the Government's perfectly well known policy on the private financing of infrastructure, and I thought that the Labour party was in favour of it. He is scratching about. Is this reference to privatising the roads programme the extreme agenda for abolishing the welfare state? I have not discussed the report with officials, because they did not think that it would arise. What exactly does he want to find out?

Mr. Brown: The Chancellor will not answer the question. Is the privatisation of roads under active consideration? He refuses to answer.

Mr. Clarke: Will the right hon. Gentleman explain what he means by the privatisation of the roads programme?

Mr. Brown: The document says:

"A further proposal under active consideration is the privatisation of the roads."

[Interruption.] I am reading from the document, and this is only the first question that I have for the Chancellor. It continues:

"It would be to treat roads as a utility rather than a public service. Ownership would be transferred to regulated private companies who would receive their income from road users."

Does the Chancellor deny that the proposal is under active consideration?

Mr. Clarke: It is not the policy.

Mr. Brown: Is this proposal under active consideration? He will not answer that question.

Mr. Clarke: For heaven's sake. The right hon. Gentleman is meant to shadow me. He should be shadowing the policies I propound, with, I think, considerable clarity and consistency. He is quite incapable of entering into any serious discussion of economic policy. He scratches about using management documents in my Department to try to goad me on to ground that he knows is not the policy of me or the Government.

Mr. Brown: Either the statement is factually wrong and the Chancellor should deny its authenticity altogether, or the right hon. and learned Gentleman is not prepared to answer the question directly.

Let us move on to the second question. The document says:

"Consideration is currently being given to reducing state support for post-16 education on the grounds that rising demand is unaffordable and that private returns to individuals and their employers exceed social returns."

Is this under active consideration?

Mr. Clarke: It is by the Labour party. I am being advised by people who have obviously penetrated the mysteries of Labour policy documents rather better than I have. It is not the policy of the Government. That document is not policy advice. The right hon. Gentleman should be engaging in a debate about the summer economic forecasts.

---