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Mrs. Beckett: Speaking of lines handed out by the Whips Office.
Mr. Garnier: I have a copy of the Queen's Speech, which was written by the right hon. Lady's Government. I dare say that there may be the odd copy of it in the Government Whips Office, and the occasional Labour Member may have the independence of mind to disagree with the hot air and guff that Her Majesty was required to read out on behalf of her Government.
Ms Ruth Kelly (Bolton, West): It is my privilege to speak in the debate on the Queen's Speech relating to the economy. I welcome the Gracious Speech, in particular the commitment to enterprise and fairness, high levels of economic growth and employment. The Government's central objective is to deliver high and stable levels of economic growth and of employment.
The Government have a clear strategy. The hon. Member for Kingston and Surbiton (Mr. Davey) accused the Government of not having a clear vision. Of all Governments since the second world war, this is the Government with the clearest vision of how they will take the economy forward. They have a clear strategy to help people back into work, with a new deal tailored to help individuals with particular difficulties, and to make work pay, with the introduction of the minimum wage, cuts in income tax and the introduction of the working families tax credit. Central to all of that is the prudent management of the public finances, to ensure that there is no return to the days of boom and bust that we experienced under the Tories.
The Gracious Speech entrenches economic stability as the platform for growth and employment. The economy's success has indeed been remarkable. I took the precaution of reading some comments on my right hon. Friend the Chancellor's latest pre-Budget statement, all of which were favourable. One eminent commentator, Martin Wolf, who can hardly be described as a keen Labour supporter, referring to economic stability, said:
The success in controlling inflation can be seen not only in the headline inflation rate, but in people's expectations for inflation over the coming years. For the past two years--almost since the general election--inflation expectations have been within 2 or 3 per cent. a year, well within what one would expect the margin of error to be. The differential between UK and German long-term interest rates is also at a historically low level and, as set out in the Gracious Speech, long-term interest rates are at their lowest level for almost 30 years.
My right hon. Friend the Member for Ashton- under-Lyne (Mr. Sheldon) referred to the composition of the Monetary Policy Committee, but I disagree with him that its make-up is a problem. It is necessary to have the best possible expertise on that committee, with the highest quality of debate and the widest information available to the members of that committee, and that is what we have at the moment. The standard of debate in that committee has leapt since the days before the Bank's independence, and that is reflected in its success.
It is the role of the Bank's court to ensure that regional information is fully incorporated into the analysis of the members of the MPC. From my experience, the Bank is open to regional information and takes considerable care in incorporating different views from around the country. It has a network of bank agents, which it has developed considerably during the past two years, whose specific role is to listen to businesses and economic actors, and to ensure that their expectations of price changes and their behavioural changes are incorporated into the Bank's forecast and analysis of information.
The other major strategic policy success has been the fiscal rules--the golden rule, which is complete common sense, that one should spend no more in any given year on current outgoings than one receives in current income, and the second rule that borrowing for investment should be kept at a reasonably credible and stable level during the economic cycle.
The current budget is now forecast to be in surplus to the tune of £9.5 billion this year, up from the £2 billion forecast at the time of the last Budget, and to remain at about 1 per cent. of GDP until 2003-04.
Perhaps the most remarkable fact about last year, however, is that the economy has continued to grow, despite all the dire forecasts of recession and the
Opposition's scaremongering. I look back now with incredulity to predictions made by the shadow Chancellor who, in August 1998, said, "The outlook is bleak"; in September 1998,
The Conservative party could not accept Bank of England independence and the tough new fiscal rules. It could not accept that those policies would create the economic stability that now exists. We still do not know whether it would keep or abolish Bank of England independence, the tough new fiscal rules, the minimum wage or the working families tax credit. From time to time, we are accused of introducing stealth taxes to rectify the macro-economic disaster that the Tories bequeathed us, but the Conservatives have stealth policies.
Kali Mountford:
I thank my hon. Friend for giving way before she moves on from stability. I am conscious of the fact that she is an expert on the economy. If we change the policies that she described, especially that of keeping to the golden rules, does she believe that we will return to the so-called dynamism that existed under the previous Government, with its attendant job losses in steel, coal and textiles in my constituency; or does she, like me, advocate stability that encourages long-term investment?
Ms Kelly:
My hon. Friend makes an excellent point. If we abolished Bank of England independence and the tough new fiscal rules, we would return to the boom-and-bust policies of 18 years of Tory rule. No one in this country wants that. The Chancellor knows exactly where he is heading, not only through his prudent economic stewardship but through the Government's remarkable economic ambitions for this country and its people.
I shall respond in my own speech to the charges of increased taxation that the hon. and learned Member for Harborough (Mr. Garnier) made although he did not allow me to answer through intervention on his speech. I compared the figures for taxation under the Government with the Conservative Government's plans. As anyone can verify, the burden of taxation is less under this Government than it would be under Conservative plans.
Mr. Page:
So we are responsible?
Ms Keeble:
Does my hon. Friend agree that the average household will be £380 a year better off as a result of the last Budget and that the direct tax rate for a typical family is at its lowest for 25 years?
Ms Kelly:
That is an excellent point, which I shall develop later. First, I want to consider the Chancellor's
Between 1950 and 1996, productivity growth in Britain was only 2.6 per cent. a year compared with 3.7 per cent. in France and 3.9 per cent. in Germany. If we can increase productivity, we can bridge the gap with our competitors, create high employment and raise living standards. One method of achieving that is to increase employability and skills.
I especially welcome the new deal for the over-25s, which ensures that everyone who is out of work receives active, tailored advice to gain the skills and experience that they need to get back to work. Such support chimes in completely with the modern, dynamic labour market, which is being transformed by information technology. In that market, people change jobs more often and skills are at a premium.
A year ago, I made a rather forlorn trip to a factory in my constituency to visit the managing director of Horwich Sewing, who had told me that his company had found it impossible to continue in the constituency. It was to move to eastern Europe because he did not see a future in the sewing industry in my part of the world. The visit was pretty depressing and there was nothing that I could do to change his mind, but the story soon reversed.
Recently, I accompanied my hon. Friend the Minister for Competitiveness on a visit to a brand new factory located on the same site in my constituency. It, too, is a textile factory, but it is not a low-skill operation--it is high tech and high skill and relies on new polymer technology. Within three years, it had transformed its turnover from slightly more than £1 million to £12.5 million, which is more than a tenfold increase; but the success of the company is not only about technology--it is about people. Its culture is people centred and all its staff are members of the company so they share in its risks, rewards, hopes and fears. We have to replicate that success right across the country. We have to turn Britain into an entrepreneurial society, unleashing creativity and enabling people to take their destinies into their own hands.
A recent survey in Lloyd's "Economic Bulletin" showed that only one in 30 people in Britain want to start their own business compared with one in 12 in the United States. We have to change that. We have to reach into the poorest communities to tap the potential of all our people and offer them opportunities that, until now, have been the preserve of the few rather than the many. The economic future of our country demands an investment in its people, their skills and their ideas. That is the only way that we can hope to compete in a globalised economy and it is also a demand of social justice. That is why I welcome the commitment to turn Britain into a dynamic, knowledge-based economy. I welcome in particular the new scholarships for dynamic business men and women in the poorest and most deprived neighbourhoods in our country, which will offer them the opportunity to learn new skills; the lessons in entrepreneurship in schools; and the new regional venture capital funds.
"Mr. Brown can now treat this not just as an aim but as an achievement . . . Despite the global turbulence of the past few years, the performance of the economy, the public finances and the monetary policy committee he established in the Bank of England has been outstanding. The reason the UK has experienced only a modest slowdown in growth rather than another full-blown recession is the outstanding control over inflation".
He went on to say that the most important factor was the independence of the Bank of England--a clear strategic success in policy making.
"what I do know is that the downturn will turn out to be longer and deeper than it need have been";
and in October of the same year in his conference speech:
"This is a downturn made in Downing Street."
I wonder whether he regrets those words now. Perhaps, at the time, he was genuinely trying to make political capital in the only way he knew how--by talking down the economy. Last year, he accused the Chancellor of fantasy forecasting and Peter Pan economics--now we know which party lives in never-never land.
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