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Sir Peter Emery (East Devon): Will the Chancellor answer a factual question: other than the reduction in the deficit, what measures in his statement does he think will lead to greater convergence in the criteria in the Maastricht treaty, and what costs will that have for employment or for the economy generally?
Mr. Brown: The meeting of the convergence criteria is in itself right for Britain. I said in the House a few weeks ago that it is a question not only of meeting the nominal criteria on interest rates, inflation and deficit but of having real, sustained and durable convergence. That means that we are seeking improvements in productivity, structural reforms that will increase our economy's ability to grow, and greater investment. Those are all important factors in judging convergence. The measures are right in themselves, and achieving convergence would be right for Britain.
Dr. Lynne Jones (Birmingham, Selly Oak): May I note with pleasure that, notwithstanding our commitments on
tax and spend, it has been possible to provide a welcome improvement in benefits to help pensioners with their heating bills, and express the hope that my right hon. Friend will use some of the resources that are apparently available to cut corporation tax to provide the small amount that will be needed to prevent the cuts in lone- parent benefits? Lone parents will get no increase in their child benefit: it has been frozen, so there will be a cut in real terms. It is essentially an in-work benefit, and cutting it is contrary to our welfare-to-work programme.
May I welcome the Chancellors's statement on research and development, and the importance that he gave it, but also draw his attention to concerns in industry and the business community about the parlous state of our public sector research infrastructure? I hope that he will look at the recommendations from Dearing and the CBI that we should consider the way in which the Treasury accounts for such investment.
Mr. Brown:
I am grateful for those questions. My hon. Friend mentioned corporation tax. Of course we cut it, but people know that the pension fund reforms that we introduced in July meant a gain to the Exchequer, not a loss.
On lone-parent benefits, let me remind my hon. Friend that we have put £200 million into new measures to create job opportunities for lone parents. At the same time, we have put £300 million today into child care, which is the best in-work benefit for lone parents, to enable them to work, in addition to raising child benefit.
We have to make up our mind about our national priorities. We stopped the iniquitous housing benefit change proposed by the former Secretary of State for Social Security. We decided that it was right to use the resources we had to encourage many hundreds of thousands of lone parents to enable them to get more income in work. The average difference between out-of-work benefits and in-work wages is £50 for a lone parent. That is what we want to encourage.
Mr. William Ross (East Londonderry):
The right hon. Gentleman's proposals on cold weather payments will be much welcomed in the northern parts of the kingdom, certainly in Northern Ireland. They will at least do away with the inequities of the old system.
The right hon. Gentleman has announced a very large spending programme today. As the windfall tax on the privatised utilities and the return of extra money from Europe are one-offs, how will his programmes be financed in future years? It seems unlikely that the growth that he seeks in the economy will be sufficient to pay for them, so he will not be able to achieve a balanced Budget or repayment of capital debt unless he increases taxation. Can we take it for granted that the taxes that he intends to increase are taxes on capital? If so, will the Budget resolutions be framed so as to refer back to today rather than to the date of the Budget?
Mr. Brown:
I am grateful for those questions. The payment to pensioners to deal with winter fuel bills will come out of the reallocation of money from the European Union payments, which we budgeted for but from which we can use £400 million. Those payments
That money will be used over the five years of this Parliament to create jobs. It is a fund that will be available for giving help to the young, the long-term unemployed, the disabled and lone parents to get back into work and is ring-fenced in that way.
Mr. John McAllion (Dundee, East):
I warmly welcome my right hon. Friend's announcement of extra help for pensioners this winter, which will warm not only the homes of pensioners but the hearts of all socialists, wherever they can be found in these post-modern times. On the same principle, can he confirm that the Tory spending plans that he accepted were based on the expectation that, in the first two years of this Parliament, there would be a public sector borrowing requirement of some £31.5 billion?
As my right hon. Friend has announced this afternoon a PSBR some £13.5 billion less than that, can he confirm that there is a significant sum in the current spending plans that is no longer required to service that higher level of debt? If so, can he explain why that unexpected windfall cannot be used to stop the planned cuts for lone parents, people with disabilities and students?
Mr. Brown:
May I correct my hon. Friend on some points of detail? The spending totals are £266 billion for the control total, £274 billion next year. The full totals are £315 billion and £325 billion. Those are the totals that we are working within. They have not been reduced. As he would welcome, we have reallocated the money that became available from defence and nuclear programmes to the health service. We have reallocated money today from the European Union programme to help pensioners.
On the PSBR, bringing down public borrowing means that, over time, the £25 billion that we pay in interest payments--which we regard as something that should be reduced--will be reduced far more quickly. That means that, instead of one-off gains in public spending that cannot be continued, we will have sustainable public finances that will enable us to afford the regular, continuous increases in resources for health and education that we want.
Our aim is sustainable finances. We are not going to do what previous Labour Governments did: spend in the first two years, and then have to retrench in the last three. We will have sustainable public finances that allow us to improve health and education over time.
Sir Michael Spicer (West Worcestershire):
Why cannot the right hon. Gentleman bring himself to say thank you to his predecessors for the extraordinarily strong economy that they left behind? What is his answer to the question put to him earlier about the fact that, according to the Bank of England, under his regime the economy is set to run downhill?
Mr. Brown:
I will not thank the Opposition for what they left behind. They left behind a £23 billion borrowing requirement; they doubled national debt to £360 billion;
Gillian Merron (Lincoln):
I welcome my right hon. Friend's statement, which is all about long-term planning to improve people's lives, especially for those who need it most. I particularly welcome the announcement on out-of-school clubs, which, like the West End Kids club in my constituency, will offer a safe and constructive environment in which children can learn and be cared for. Does he agree that, if it is good for children, it is good for parents and for the economy?
Mr. Brown:
I am grateful to my hon. Friend. The generosity of her welcome contrasts with the way in which Opposition Members have failed even to welcome our measures for pensioners. On child care centres, we propose to have nearly 30,000 out-of-school centres, built and available as a result of the decisions taken today; £300 million is available, and potentially nearly 1 million children will benefit.
I am pleased that the model in my hon. Friend's constituency is one, among others, that will be looked at as we expand child care throughout the country. We must learn from the successful partnerships that are making child care possible in some communities, and we must provide a nationwide service for all mothers.
Mr. John Swinney (North Tayside):
In welcoming the consultation exercise on which the Chancellor has embarked, I hope that he is listening to points of view that are being expressed.
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