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Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I appreciate the right hon. and learned Gentleman's vast experience in this matter, but that was too long a question.

Mr. Brown: The former Chancellor is forgetting that he left behind a legacy of a £28 billion borrowing requirement, debt at 44 per cent. of national income, inflation rising, the economy heading back to stop-go and even the shadow Chancellor after him predicting that there would be a recession. We had to tackle the issues and reduce the debt. So far from us praising him for the legacy that he left us, he should be more humble about what he achieved when he was at the Treasury.

I was wanting to agree with the right hon. and learned Gentleman because he put up a better show than the shadow Chancellor, but I have since heard that this afternoon, he said on television that VAT on fuel should now be raised to its full amount--something which he says will happen soon. Again, we remind ourselves that two of the Ministers who were responsible for that policy have spoken in the House this afternoon. If the right hon. and learned Gentleman wants to reject three-year planning for public spending and to go back to the old annual cycle, he should remember that there were huge losses in that, with end-of-year settlements that did not work properly. Local government, the health service, education and transport need a long-term framework within which to move ahead.

The right hon. and learned Gentleman talked about the economic cycle. We have met, and will meet, our fiscal rules, even on the most cautious case. We have an £8 million surplus in the current side, even in the year when the surplus is lower, and we have reduced national debt from 44 per cent of national income to 33 per cent. Therefore, the investment can be made on a sustainable basis. I would have expected someone who said that his own spending plans were "eye-wateringly tight" when he passed them on to us would want to praise the fact that we are now spending the sums that I would have thought he wanted to spend on education, health, transport and the public services.

Mr. Robert Sheldon (Ashton-under-Lyne): Is it not clear that my right hon. Friend came to office with a

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three-year programme to put the public finances in order and then to turn to investment? He said that money would be spent to ensure that output and investment were achieved; this is his third test and his track record so far makes us optimistic.

Mr. Brown: Yes; I am usually talked of in the context of five tests.

The first thing we had to do was to create stability. The second thing we have to do is to get people back to work. The new deal, which the Opposition would abolish, is a programme that is helping thousands of young people and the long-term unemployed back into work. I would have wanted an all-party consensus on moving forward on this issue. Instead, the Opposition are determined to abolish the new deal and to deprive young people of the chances of jobs.

The third thing we have to do is to invest to build a stronger economy and a stronger society. That is exactly what my right hon. Friend has spent much of his political career advocating, particularly in relation to productivity and output in the manufacturing sector of the economy. The funds that we are making available for training, education and science, and the funds for regional development agencies so that we can build up our regions, are one way in which we can build a stronger industrial base for the future, in accord with the ambitions that my right hon. Friend has always furthered, on which I congratulate him.

Mr. David Davis (Haltemprice and Howden): I should like to follow on from the Chancellor's comments on investment. I think I heard him say that the target for net investment will increase from £7 billion to some £18 billion in the next two years. The House of Commons Library tells us that his target last year was £6 billion, but the outturn was less than half that, at under £3 billion. How will he make the promise turn into delivery?

Mr. Brown: Here is a Conservative accusing me of spending too little, rather than too much. Over 20 years, Departments have not been in the business of moving forward investment plans as quickly as we want. We have also innovated in many areas including, following the last Government, public-private partnerships. I believe that the momentum is now there, particularly in transport, where investment is needed. Public-private partnerships in the London Underground and elsewhere have been developed. Therefore, I believe that we can make progress in these investment plans. Given what the right hon. Gentleman says, I hope that, in contrast to the shadow Chancellor, he will support us in them.

Dr. Gavin Strang (Edinburgh, East and Musselburgh): It is to my right hon. Friend's credit, and to the credit of this Labour Government, that the country's finances are in such a healthy state.

Does my right hon. Friend recall that in his last comprehensive spending review, he announced a proposal partially to privatise our air traffic control system and a timetable for the partial privatisation of DERA, the Defence Evaluation and Research Agency? Does he agree that the country's finances are much better than could have been imagined in 1998? Against that background, will the

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Government reconsider their decision to privatise key strategic assets such as National Air Traffic Services and DERA?

Mr. Brown: This is a proposal to get new investment into air traffic control. It is a proposal to secure massive investment funds which everybody knows are needed for the future of the air traffic control service. It will raise money from the private sector, but involve a public-private partnership. The same goes for DERA where, again, we are getting new funds in so that we can have the necessary investment in equipment and technology for the future.

This is about investment; about building for the future. In the air traffic control business, it is about building alliances right across the continents. I think that when the final plans are eventually implemented, we shall have the investment that we need in air traffic control and in DERA.

Mr. Peter Brooke (Cities of London and Westminster): Will the Chancellor remind the House of the annual real-terms growth rate over the three years for defence spending?

Mr. Brown: The annual rate is 0.3 per cent. in real terms over the next year. I take it from what the shadow Chancellor said that he cannot even support that.

Mr. Tam Dalyell (Linlithgow): What was the financial message that Sir Charles Guthrie, Chief of the Defence Staff, took to Downing street some two weeks ago? Is the real-terms increase in defence expenditure really sufficient to meet the long-term demands of our commitments in Kosovo and Bosnia? A fortnight ago, when some Albanians under the protection of British troops were asked how long KFOR and the British Army were expected to remain, some of them said 20 years and others said for ever. Has the Chancellor built in that long-term commitment to the Balkans? We have it now, whether people wanted it or not.

Mr. Brown: We have regular meetings with the Chief of the Defence Staff to talk about defence issues. I believe that this is an important settlement which allows our defence forces to complete the strategic defence review which was started by Lord Robertson and which is now being continued by my right hon. Friend the Secretary of State. It provides funds to buy new equipment and to replenish what has to be replenished after Kosovo. It provides funds to ensure the retention and recruitment of staff and to help our international peacekeeping role. As my hon. Friend knows, in normal terms, Bosnia and Kosovo become claims on the reserve.

Sir Peter Tapsell (Louth and Horncastle): If the pre-election bonanza that the Chancellor has just announced is to be regarded as economically sound, why has it been necessary for the Bank of England to raise interest rates repeatedly in recent months, causing great distress to British export manufacturing industry and to British agriculture?

Mr. Brown: I always enjoy discussing the economy with the hon. Gentleman because he seems to forget that when the shadow Chancellor was Chief Secretary, interest rates rose to 15 per cent. and remained there for a year. Interest rates are now at 6 per cent., and I remind him that the Bank of England had the Budget announcements,

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which were the framework within which we made our decisions. It said that the result of the Budget on interest rates seemed unlikely to be large over the next two years. All the framework figures were given to the Bank of England. The framework figures on which the decisions were made in the public spending round were announced in the Budget.

Mrs. Anne Campbell (Cambridge): I warmly congratulate my right hon. Friend on his statement, in particular the extra resources for education and science funding, which will be warmly welcomed in my constituency. Will my right hon. Friend ensure, perhaps using his considerable influence, that the extra funding for education is distributed in a way that makes the total funding for each pupil more equitable than at present?


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