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Mr. Brown: I do not know where the Liberal Democrat spokesman stands. He accuses me of buckling under pressure, including pressure from him, by giving away too much, and ends up telling me that I am giving away too little. He will have to work out what his position is on these matters. No doubt his position in one part of the country will be for more, and in another part it will be for less, as is usual with the Liberal Democrats.

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On the specific issue of pensions, the Liberal Democrat spokesman--the champion of pensions--should remind himself of what he and his party said at the general election.

Mr. Taylor: That was the last century.

Mr. Brown: That is right: the Liberal Democrats are living in the last century. Their 1997 manifesto said that the basic state pension would remain indexed to prices. The hon. Gentleman should congratulate us on what we have done, rather than condemn us.

As for our adopting Liberal Democrat policies, one which we have not adopted, and about which I do not hear him talking much when he speaks every week on economic matters, is the road fuel duty escalator of 8 per cent. a year in real terms. [Interruption.] The hon. Gentleman shakes his head. Presumably that is a policy for inner-city areas only, not for rural areas.

Having heard the Liberal Democrat spokesman today, I suggest that he works out whether he thinks we have given too much or too little, because he cannot make up his mind.

Mr. Peter Kilfoyle (Liverpool, Walton): Earlier, I asked whether there was a doctor in the House, because I have never seen so many sick people as I saw on the Opposition Benches this afternoon while my right hon. Friend was speaking.

Will my right hon. Friend accept that from my political perspective this has been a welcome statement? Its implications for different parts of the country and different parts of the economy are far-reaching. It is innovative, and I applaud it. Does my right hon. Friend agree with me that, given the extraordinary statement from the shadow Chancellor, the choice facing the country has now been set? It is between investment in economic, social and human capital as set out in my right hon. Friend's statement, and the £16 billion of unspecified cuts proposed by the Conservative party.

Mr. Brown: I agree entirely with my hon. Friend. I know that he will welcome the measures we are taking for inner-city development and to create employment throughout the country in areas such as Liverpool. He is absolutely right that the country faces a choice between investing in our future or returning to the old stop-go, boom-bust of the past. Until the Conservative party, and the shadow Chancellor in particular, tell us where their proposed cuts will fall, the right hon. Gentleman will have no credibility either in arguing for tax cuts or in arguing that his is a coherent economic policy.

I remind the shadow Chancellor what the Leader of the Opposition said a few days ago--on the Jimmy Young show, of all radio programmes: "I have to present a coherent programme for government. It is my job to provide the country with an alternative government, not to ride around on whatever bandwagon from time to time. It is my job to present an alternative government, and that means we have to put forward a coherent programme." We are waiting for that coherent programme.

Mr. Kenneth Clarke (Rushcliffe): It gives me and others pleasure to hear the Chancellor continuing to use the language that he took over from the previous

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Government of "no return to boom and bust" and "stability." However, will he stop using it? He presents two Budgets a year, when he comes along in response to the latest events to ensure that no lobby group is left unsatisfied, that no pressure group is unpaid and, on this occasion, that Barbara Castle and the hauliers are allowed their triumph--all in the hope that he gets re-elected. Will he confirm that the only reason why he can reconcile all that with his previous fiscal forecasts and his estimate that debt-GDP ratios would go down to levels that we have not seen since the boom phase of the late 1980s is that he and the Treasury keep getting wrong their forecasts of the revenue that they are receiving? Will he repeat his warning to the House that those revenue forecasts can change rapidly--overnight--and lead to very great disappointment?

Will the Chancellor take a little look beyond his hopes of being re-elected at the next general election and accept that--after three years in which he has increased the tax burden and reduced public spending to the lowest percentage of GDP since the 1960s--he has embarked on tax-raising potential and spending programmes that will far exceed any likely growth of the economy? Why will he not admit that that is unsustainable, and that a new Government will have to go back to the drawing board to recover those very qualities of prudent management that he sometimes affects to scorn even in the Government whom he succeeded?

Mr. Brown: I am always interested to hear the former Chancellor, usually because he is in total disagreement with the current shadow Chancellor about the way forward. As for the statements made to the House in the course of a year, it was the previous Government who--because of protests that people made quite rightly, and defeat in Parliament--had to come to the House and rewrite all their legislation on VAT on fuel. Therefore, he is not the one to comment on our introducing proposals over the course of a year.

I should have thought that, on his general point on economic management, the former Chancellor would have been in agreement with me that the stop-go policies of the 1980s were not the right policies for the British economy. I remember--I wish that I had brought the quotes with me--his own criticisms of those policies. As he himself has admitted, in those times, excessive tax cuts were made in one year that could not be afforded in every year. There was also a neglect of investment in the supply side, so that, as the economy grew, we could not sustain the growth that we wanted.

Equally, the former Chancellor, as a supporter of independence of the Bank of England, knows that the lack of a tough and tight monetary policy that is absolutely explicit about where we are trying to go is another recipe for a return to the situation that we had in the 1980s.

I believe that, on those three matters, the former Chancellor and I would share common ground--if it were not for the fact that he also thinks he is preparing for a general election.

Ms Hazel Blears (Salford): I congratulate the Chancellor on the measures that he has announced today. His measures will help to bring long-term prosperity to

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inner-city areas, which is in marked contrast to the years and years of dereliction caused by Tory policies. I also know that my right hon. Friend believes, as I do, that the future for inner cities lies in enterprise, not welfare, and in getting local people involved in their own companies, thereby bringing life to our inner-city areas.

Will my right hon. Friend confirm that the measures--all those incentives--that he has announced to encourage business, research and development and enterprise will be targeted particularly at some of our poorest and most deprived communities, to encourage them to share in the prosperity that is available to the rest of the people in Britain?

Mr. Brown: I am grateful to my hon. Friend, and I applaud the work that she does in securing regeneration in her own constituency and in the areas surrounding it. It is very important to recognise that the combination of public spending and targeted tax incentives will be necessary for the regeneration of areas which for too long have been left behind, and for people and places that have been too long forgotten. It is not only the measures that I have announced today but the measures that were announced in the public spending review that will give additional money to some of the hardest hit areas, so that they can meet higher standards in education, create more business development and, consequently, create more employment.

I believe that the challenge for the Government--having cut unemployment in the past few years and increased the numbers of people in employment by 1 million--is to go further. In every area of this country where there is still unemployment that is avoidable, we want with our measures to take the action that is necessary so that full employment becomes a reality for every region of this country.

Mr. Dafydd Wigley (Caernarfon): I generally welcome the Chancellor's statement, but should like to deal with a couple of matters. First, I urge him not to get too rigidly locked into the perpetual surplus to which he referred, as there may be times in the economic cycle when he needs to be free of such a commitment.

Secondly, a moment ago, the Chancellor mentioned regional policy. Will he clarify whether there will be consideration of operating aids--particularly within objective 1 areas such as Wales, Merseyside, South Yorkshire and Cornwall--to help secure inward investment into those areas? Will he also give an assurance that that package will be helpful for people in work but on low incomes, to increase GDP per head, which is a real challenge in so many areas?

Mr. Brown: Only a few weeks ago, I had the privilege of visiting Wales and talking both to the Welsh Pensioners organisation--I had a very interesting and constructive meeting with its members--and at a seminar of entrepreneurs and local authority leaders who were planning the next stages of the development of objective 1 projects. I consider that both the enthusiasm and the determination to make the projects work stands Wales in good stead for the future, and we want to back them up in whatever ways we can.

Extra money is available for the new deal in areas where unemployment is still high. The working families tax credit is the main means by which we can make

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work pay--as the right hon. Gentleman is asking us to do--in a part of Wales in which, in the past, a large number of people have been either on the minimum wage or just above it. The working families tax credit is specifically designed to make work pay.

The right hon. Gentleman asked about the level of regional development incentives provided by both the British Government and the European Union. We will do what we can to ensure that regional development in every part of the country can move ahead. The fact that the regional development agencies are today being given new powers and new flexibilities is a measure of that--and, of course, they were given new money in the July spending review. As the right hon. Gentleman knows, Wales was given a 5.4 per cent. real-terms increase in expenditure, not least to meet the needs of objective 1 areas.

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