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Mr. Brown: The hon. Gentleman should really do his research before he comes to the House of Commons. I answered all those points in detail at a meeting of the Select Committee on the Treasury, when I pointed out to him that the measure on national insurance was announced in the 1999 Budget. It was in the Red Book for 2000.
Mr. Bercow: There is a good reason why I was not present at the meeting of the Treasury Committee. Quite simply, I am not a member of that Committee. The right hon. Gentleman is getting confused. Will he confirm that 20,000 nurses, 9,000 policemen and 23,000 teachers will be worse off as a result of the policy that he has introduced? If not, it is about time that he explained himself.
Mr. Brown: What I said to the hon. Gentleman--again, let us have accuracy--was that, if he had done his research properly, he would have known that the measure was in the 1999 Budget. That was made clear at the time. I explained to the Treasury Committee that the allegations that the Conservatives first made in The Daily Telegraph, which they then tried to make to the Daily Mail, and subsequently, over a number of weeks, they tried to give the impression that the measure had never been announced, when it was announced in the House of Commons. The hon. Gentleman should accept that that is the case.
As for taxation, what did the hon. Gentleman say to nurses and teachers when VAT was put on fuel? What did he say when national insurance was put up for everyone? What did he say when personal allowances were frozen? What did he say when airport tax and insurance tax were introduced? What did he say then?
Mr. Brown: Oh, there are different ways in which people try to excuse themselves from taking responsibility for the Conservative party's work in government. The hon. Gentleman, who is a Conservative Front-Bench spokesman, does not want to defend the record of the
We will not take any lectures from the Conservative party or the shadow Chancellor on public spending. After all, in October 1997, following the general election, the shadow Chancellor explained that the Conservative party was unpopular because of damaging cuts in public spending. In his lecture of October 1997, he said that the Tories were linked to harshness and thought to be uncaring about unemployment, about poverty, about poor housing, about disability, about single parenthood and were thought to favour greed. If the shadow Chancellor really believes that, he should think twice about proposals for privatisation or deep cuts in our public services.
We should not take any lectures from the shadow Chancellor on the running of the economy. After all, in September 1998, he said that of course, it--meaning the Conservative party--should be apologetic about the mismanagement of the economy. The shadow Chancellor now comes before us to criticise the record of the Labour Government, but he knows perfectly well that he understood the Conservative Government to have been guilty of mismanagement of the economy.
Mr. Edward Davey (Kingston and Surbiton): Does the Chancellor agree that borrowing for current expenditure is taxation deferred? Labour tax rises can therefore be considered to be Conservative tax rises.
Mr. Brown: We do not accept that. We have published forecasts on the growth of the economy and the fiscal position. It would be interesting to know the fiscal position of the Liberal Democrats, as they seem to have a rule that changes every day. Every day that we invest something, they always want more. Does the Liberal Democrat party agree with the Conservative party that there should be a balanced budget? Is that its policy? Or does it agree with the golden rule? Perhaps the Liberal Democrat spokesman on Treasury matters can tell us?
Mr. Brown: That is an interesting question. We have rules. The current budget must balance over the cycle. In other words, tax revenues must be equivalent to current public expenditure. That is a clear fiscal rule. We take the view that, given 20 years of under-investment in our social fabric, borrowing to invest in public services, such as transport, health and education, is necessary. That is why we say that, if there is a prudent and sustainable level of debt to GDP--that is the mechanism that we have chosen and which is examined by the National Audit Office--it is right in certain circumstances to borrow for investment.
Those are our two fiscal rules. Those are the rules that show that there will be a current surplus over the cycle. We will borrow if necessary for the public investment that our country needs, subject to a sustainable debt to GDP ratio. The sustainable ratio is below 40 per cent. In fact, as I reported to the House a few weeks ago, it is falling to 30 per cent.
Mr. Brown: I shall give way in a minute, but perhaps the shadow Chancellor will now answer my question. If he professes to be putting forward a more rigorous economic and fiscal policy than we are, if he does not accept those two fiscal rules, which are the discipline upon our Government--if he believes that those rules are not a proper discipline--perhaps he can say whether his rule is to go for a balanced budget. If his rule is for a balanced budget, how in the world can the Leader of the Opposition propose tax cuts at the next general election? I will give the shadow Chancellor the opportunity to answer that question, then I shall allow surrogates for him to come in if necessary. I responded to the shadow Chancellor at the beginning of the debate--
Mr. Brown: I did. It is interesting that the shadow Chancellor does not want to know that we work within those two fiscal rules. They may be technical rules, but they are fiscal rules that are understood. The question that he must answer is whether he faces a balanced budget--yes or no?
Mr. Portillo: Why will the Chancellor not answer my question? Is his policy to go on spending faster than the growth rate of the economy for just three years or beyond the three years? A very simple question--please answer it.
Mr. Brown: We will work within our fiscal rules. Our fiscal rules are over the cycle. The right hon. Gentleman seems to have forgotten that those fiscal rules are over the cycle. The current budget must balance. In other words, current expenditure must be financed by tax revenues over the cycle. We will borrow for necessary investment, but subject to a sustainable debt to GDP ratio.
Those are the two rules. They are understood in the economic community. The shadow Chancellor may wish to attack them. They are well understood and commented on generally. The question that the shadow Chancellor must answer is what is his rule. Is it a balanced budget, in which case he has no scope for tax cuts? He is deceiving the electorate if he believes that he can go to the electorate and say that he wants a balanced budget and tax cuts. Is it a balanced budget or not? He used to believe in a balanced budget. Some Conservative Members still believe in a balanced budget.