| Previous Section | Index | Home Page |
Mr. Brown: The Conservative party has now become the "defence of the utilities" party. People in the country will understand exactly what is happening. Does the right hon. and learned Gentleman agree with me that the privatised utilities have made excess profits, especially during the recession, and that the case for a windfall tax on the utilities is supported overwhelmingly throughout the country?
Mr. Clarke: We defend the people who work in those utilities. We defend the small shareholders in successful
companies. Above all, we defend the customers of the companies that supply electricity, gas, water and telephone services. They will notice that the right hon. Gentleman never answers any questions about a tax that will increase costs and result in losses for many people. The cost will fall on all those people whom the Labour party used to call the stakeholders in the utility companies, and whom he now wants to tax.
Mr. George Foulkes (Carrick, Cumnock and Doon Valley) rose--
Mr. Clarke: I shall not give way. I want to get back to the point from which the right hon. Member for Dunfermline, East is trying to distract us--what is happening out there in the real economy and how policy is being pursued. I have already dealt with the fact that, above all, we seek to ensure that we hit an inflation target. The right hon. Gentleman does not even have an inflation target. He has the nerve to attack me because he is not sure that I will hit the 2½ per cent. inflation target. This country has never combined such low inflation with a recovery.
The right hon. Gentleman must watch me taking decisions with which he reluctantly agrees and which are keeping us on course. I have achieved such a low inflation climate that I am able to move interest rates by small amounts. I bet that no hon. Member can remember when we last saw an increase in interest rates of only a quarter of 1 per cent. Past Chancellors would have given their eye teeth to live in a world where they moved interest rates by only 25 basis points, or a quarter of 1 per cent. We can all remember rates going up by 1 per cent., half a per cent. or 2 per cent.
My approach to monetary policy of keeping ahead of the game has enabled me to keep interest rate movements within a narrow range, and it has produced the healthiest and strongest economic recovery in western Europe.
Mr. William Cash (Stafford):
Is my right hon. and learned Friend aware that, in the past couple of weeks, the European Commission has introduced radical proposals for a uniform rate of VAT throughout the European Community? Does he agree that we would veto such proposals, and that it is perfectly clear from what the right hon. Member for Dunfermline, East (Mr. Brown) has said that the Labour party would not?
Mr. Clarke:
I am not in favour of a uniform rate of VAT. I am sure that we would be against that, as I am sure would most other member states. No one will go to a uniform level of VAT throughout western Europe. I am in favour of minimum levels; otherwise, attempts are made on either side of a border to win markets in particular goods by attracting customers.
I am in favour of some approximation of taxes that bear on sales, such as excise duty, because that would help many industries in this country. I firmly believe that taxation should rest in the hands of member states. It always will, and any British or German Minister, and most of the other Ministers in western Europe, would veto any proposals to the contrary.
As I said, our recovery is stronger than that of any of our major western European competitors. It is becoming balanced and sustainable. The whole point of our policy is to keep it that way.
We are generating growth without inflation. We are generating growth without a balance of payments crisis--something which damaged this country so much in the past. We are generating growth while keeping relatively low interest rates. Too often in the past, we have allowed recoveries to run out of control. We will not allow that to happen again.
One of the guidelines which I have laid down throughout my chancellorship is no return to boom and bust. The public can see that that is what we are delivering. They can also see that the Opposition can offer only the threat of boom and bust, in equal proportions, if they run the economy in the way indicated by the right hon. Member for Dunfermline, East.
Mr. Barry Sheerman (Huddersfield):
If the Chancellor wants to know about the real economy, he should talk to some of our manufacturing sector which, since 1992, has suffered a massive recession. Now, after just one year of good times, manufacturing is falling back; it is heading back to another recession. Is that the sort of management of the economy of which the right hon. and learned Gentleman is so proud?
Mr. Clarke:
We have had five years of recovery. Manufacturing was strong at the beginning of the recovery. Of course, there has been a slowdown, just as there has been a slowdown in continental Europe. Now, manufacturing is picking up again as the stocks that built up earlier in the year are reduced. There is no point in the hon. Gentleman and me exchanging tales about different manufacturers, although I meet manufacturers who certainly do not share his views. If he looks at the surveys done by the Confederation of British Industry and talks to the Federation of Engineering Employers, he will find that the climate among manufacturers is one of considerable optimism for the foreseeable future. That optimism is based on what we have already achieved and what we will preserve.
Not only will we not throw away the best prospects for economic growth that we have seen for a generation by not letting inflation destroy it, but we will not throw away those prospects by letting public borrowing get out of control. Public borrowing is coming down and I shall keep it coming down towards balance over the medium term. Again, that is a clear policy objective that is not matched by the right hon. Member for Dunfermline, East, who has no such objective in this key field of economic policy.
The public sector borrowing requirement is now half what it was three years ago. Throughout the period of the last Labour Government, it averaged almost twice as much as it is now. The hon. Member for Rotherham (Mr. MacShane) intervened earlier about the national debt. National debt, as a share of national income, has been lower every single year under this Government than it was for any single year under the last Labour Government. At the beginning of the debate, the right hon. Member for Dunfermline, East spoke about national debt. If our average deficit since 1979 had been as bad as it was under the last Labour Government, our national debt would now be twice as high as it is--£650 billion, or more than 90 per cent. of gross domestic product. That is what has happened in many continental countries, which are now trying to recover from that.
It is obvious that, if there had been a Labour Government in the late 1970s and the 1980s, Britain would be in the same public debt mess that half of continental Europe is in now. Instead, our debt is among the very lowest in the European Union; under Labour, it was among the highest. The right hon. Member for Dunfermline, East spreads scare stories about public finances. He tries to prepare people, in the most alarmist way, for the Budget. He has spread a scare story about a shortfall in tax revenues, by looking back at tax forecasts and comparing them with the revenue variants. The fact is that, because of profitability and growth, tax revenues are rising faster than public spending. That is why public sector borrowing is falling. That is the key element to hold on to in looking at the state of the public finances.
Put another way, revenues are rising slower than activity. That has surprised both me and my forecasters. However, although revenues are rising slower than activity, spending is rising even slower than revenues. The Government are committed to sound, sustainable public finances--and we are on course to deliver just that. We will keep Government borrowing coming down.
I do not intend to give away the brightest economic prospects that we have faced for a generation by giving in to the siren calls for higher public spending--calls that will come at me and at the right hon. Member for Dunfermline, East from the Opposition Benches over the next few months.
Mr. Thomas Graham (Renfrew, West and Inverclyde):
Is the Chancellor telling us that, after 17 years, my constituents are once again going to face potholes in the road, schools falling down and empty hospital beds that could be filled with patients who need health treatment? Is that the type of system and society that you are expecting my constituents to face when you claim that Britain is booming and doing well? Tell that to the unemployed people in my constituency. Tell that to the elderly people who are waiting for a hospital operation. Tell that to the young people in my area who cannot get full education because the Government have not provided the wherewithal. Chancellor, you should be ashamed.
Madam Deputy Speaker (Dame Janet Fookes):
Order. I remind the hon. Member for Renfrew, West and Inverclyde (Mr. Graham), not for the first time, that he should address me and not the Chancellor direct.
Mr. Clarke:
I apologise to the hon. Gentleman for the fact that my NHS figures may relate to the English NHS rather than the Scottish NHS, but in England he will find that, throughout the period of our government, we have increased the level of spending on the NHS by about 70 per cent., in real terms over and above inflation. We have committed ourselves to continuing to increase spending on the NHS in real terms, year in year out. As far as I am aware, that is something to which the Labour party will not commit itself, and, anyway, it is something that the Labour party failed to deliver when it was last in office, because it is the only party in office since the war that has ever cut spending in real terms on the NHS in any single year.
| Next Section
| Index | Home Page |