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Mr. Brown: The fact is that we have cut corporation tax, which is falling from 33p to 30p. We have cut small business taxation from 23p to 20p. Conservative Members do not want to know, because they refused to make the corporation tax cuts that we have been prepared to make to encourage new investment. Instead of dismissing our changes to capital gains tax, the Conservative party should welcome them. We are making it possible for long-term investment in our economy to expand in the next few years, as is the case in other countries.
It is true that enterprise and fairness are the themes of this pre-Budget report. It is a pity that neither enterprise nor fairness is part of the Conservative party's policies.
Mr. Peter L. Pike (Burnley):
Is my right hon. Friend not surprised that Conservative Members are still
Mr. Brown:
I agree. The only people who oppose the windfall tax are the Conservatives. People recognise that the windfall tax dealt with the excess profits of the utilities that followed the Conservative Government's botched privatisations. At the same time, it has made possible the creation of new job opportunities for the 500,000 people who are on the new deal. It is sad that the Conservatives want to abolish the new deal and that Front-Bench spokesmen say that it is a fraud. If the new deal had got just one or two young people back to work, it would have been a start. In fact, it has got 170,000 people back to work. It is time we had some support from the Conservative party.
Sir Peter Tapsell (Louth and Horncastle):
If, as the Chancellor said in his statement, the underlying inflation rate is 2.1 per cent., what was the justification for raising interest rates last week to nearly three times that figure?
Mr. Brown:
The Monetary Policy Committee makes decisions--I thought that the Conservative Party understood this--18 months to two years ahead. Decisions do not have an immediate, day by day impact on inflation. Last week's decision will have an impact over the next year or two years. The MPC should be supported in what it is doing, as the alternative is a return to the boom and bust days of the Conservative Governments, and we are not prepared to let that happen.
Mr. Ronnie Campbell (Blyth Valley):
I wholeheartedly welcome my right hon. Friend's statement, especially the announcement of free television licences for the over-75s. Will he examine, however, the economic situation in the north-east of England, possibly considering a Barnett formula mark 2? The region is not booming and has been depressed since losing major industries including coal, steel and shipbuilding. We are in recession, and another 1,000 job losses are in the pipeline.
Mr. Brown:
My hon. Friend has been, and continues to be, a strong advocate for the north-east economy. He is right to say that there have been huge changes as coal and shipbuilding have been affected by what has happened in the world economy. However, the Government are trying to ensure that resources go to the north-east, which is one of the biggest beneficiaries of the new deal. My hon. Friend will know that the minimum wage and the working families tax credit are helping thousands of people in the north-east.
Meanwhile, the new deal for communities announced by my right hon. Friend the Deputy Prime Minister is making a difference to some of the worst unemployment areas in the north-east. There are currently 50,000 vacancies in the region, twice as many as there were at the peak of the 1980s boom when the Conservatives were in office. We want to ensure that people who can fill the vacancies have opportunities to gain the skills that
they require. That is why we are introducing changes to the new deal today. The north-east will be one of the biggest beneficiaries of the changes that I have announced.
Mr. Stephen Dorrell (Charnwood):
Last week, the Chancellor told The Guardian that
Mr. Brown:
The right hon. Gentleman can quote what he likes, but I have said today that the tax burden is falling from 37.4 per cent. to 37 per cent. to 36.8 per cent. No doubt he will read out that quote in full at a later date, but that is what I have said.
Fiona Mactaggart (Slough):
The Chancellor's statement will be welcomed by many people, particularly for the tax benefits that will encourage greater charitable giving. However, the most radical part of his statement may prove to be the hypothecation of taxation of cars and cigarettes, on which I congratulate my right hon. Friend. Is that the way in which taxation will move in future so that people may see that their taxes are used to improve the services that they expect?
Mr. Brown:
I am grateful to my hon. Friend, and can say that that is the way in which taxation on petrol and cigarettes will go in future.
Sir Michael Spicer (West Worcestershire):
Why did the Chancellor say at the beginning of his speech that productivity rates were rising when they are in fact falling?
Mr. Brown:
I said that we had to increase productivity to the world's best. [Hon. Members: "Ah."] There we have a Conservative party that presided for 20 years over an economy in which the average rate of growth was below 2 per cent. The Labour Government are making changes that will increase the rate of productivity growth in our country. Instead of opposing every measure to increase productivity, the Conservative party should support them.
Mr. Harry Cohen (Leyton and Wanstead):
I congratulate my right hon. Friend on his statement and especially on the measures to eliminate child poverty. Has he considered investment in London transport? Did he read the City corporation's claim that it could find £2 billion to build crossrail? Will my right hon. Friend bind it to that commitment so that crossrail gets built this time?
Mr. Brown:
Millions of pounds are being invested in London transport as a result of the measures that the Deputy Prime Minister proposes. Today's decision about the future of fuel duties means that more money will be invested in transport in London and in other parts of the country.
Mr. John Swinney (North Tayside):
I thank the Chancellor for his refreshing honesty in admitting at last
Mr. Brown:
The hon. Gentleman is wrong on both counts. It is the Scottish National party's plans that would increase taxes in Scotland. It fought an election campaign on increasing the rate of tax. Taxes are falling through the Government's actions; taxes would have risen under Scottish National party policies. The party's failure to promote its policy successfully is one of the reasons for the Labour Administration in the Scottish Parliament.
On the hon. Gentleman's second point, moneys will go on road and public transport in the whole of the United Kingdom, which includes Scotland and will continue to do so.
Dr. Norman A. Godman (Greenock and Inverclyde):
I offer my thanks and compliments to my right hon. Friend for his positive observations on the give-as-you-earn scheme. That scheme has enabled many non-governmental organisations and voluntary organisations to fund worthwhile projects for the poor in this country and in the third world. Will my right hon. Friend seriously consider raising the amount of money that an employee can pay over a year through the scheme?
I have some reservations about unemployed people having to attend agency centres more frequently. If such a development occurs, it must be handled with considerable compassion. The overwhelming majority of unemployed people in my constituency are desperately anxious to find work.
Mr. Brown:
I can confirm that the payroll giving scheme will be more generous and give greater help to charities, especially those that receive money from employees. I want to provide maximum help to third world charities, which my hon. Friend mentioned. We are removing a series of restrictions that prevented charities from getting the money that they needed and that also made the system difficult to understand. The new system is simplified and will enable more money to go to charities.
"we've always been clear that the tax burden had to rise".
Is that process now at an end?
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