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Mr. Brown: I shall answer in detail every point that the right hon. and learned Gentleman makes, but the country will find it difficult to take lectures from the shadow Chancellor, who quotes his Government's economic record, but was Secretary of State for Employment during the last world downturn, when we had 15 per cent. interest rates, 10 per cent. inflation, a £50 billion borrowing deficit, then 22 tax rises and cuts in public expenditure.

The right hon. and learned Gentleman speaks about regulation. He said that the minimum wage would cost 1 million jobs. We have 1 million more jobs as a result of what we have done. He opposed Bank of England independence and he was wrong. He has said in the past few weeks that we are the worst economy of any when it comes to facing up to the future, and we have the highest growth in the OECD this year—so he is wrong again. Of course, he was the architect of the poll tax, and he was wrong on that as well.

When it comes to the national health service— Mr. Wanless was mentioned—I listened very carefully to what the shadow Chancellor said. He did not welcome the £1 billion that we are putting into the national health service. He did not say that he would join a consensus that the NHS would remain a publicly funded service, that he would support increased investment in the NHS in future years or that he would support a rising share of national income going from public expenditure to the national health service. I sense in the comments made by the Leader of the Opposition and the right hon. and learned Gentleman in the past few months that what was an all-party consensus over the past 50 years that the national health service should be publicly funded and based on the ability to pay is now a consensus that is being abandoned by the Conservative Opposition. Why is that the case? The shadow Chancellor made it his business to start this job by saying that public spending is more than we can afford this year, next year and the year after. That means that he wants to cut public spending.

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In a speech made in 1997 about policy for the next Parliament, the shadow Chancellor said that he wanted spending growth at only 1 per cent. a year. He said:

That is £50 billion of public spending cuts. He must now tell us which schools and hospitals and how many nurses and doctors will be cut. If the Conservative party is to start this period of opposition by saying that we are spending more than we can afford this year, it has a duty to spell out where the cuts will be made. The Opposition have moved over the past few months from being right, to being far right, to being outright wrong on the issues of public spending.

I shall now turn to each of the points raised by the shadow Chancellor. First, on international competitiveness, as he knows perfectly well, in recent studies by Arthur Andersen and The Economist intelligence unit, we are first and fourth on attractiveness to business. He knows also that when he left power, we were behind France and Italy, the sixth largest economy in the world, and we are now ahead of them, and the fourth largest economy in the world. On the questions on burdens on business, the biggest burden named in the reports is the minimum wage. He must face up to this question: does he now admit that he was wrong on the minimum wage, or is he still prepared to say that, at the next election, the Conservative party will abolish it?

On growth, he knows perfectly well that our growth level in the G7 is the highest this year. It is also the case that, while manufacturing has fallen by 5 per cent. across the major economies, it has, unfortunately, fallen by 2 per cent. in Britain. The difference between him and us is that we are putting money into permanent capital allowances, a research and development tax credit, regional development agencies, a regional venture capital fund and manufacturing apprentices, and it is all public spending—this includes spending on education—that he would not make. Again, if he is going to tell us that we should be doing more, he must spell out which cuts he would make in public spending to get to his 35 per cent. target and which additional expenditures he is prepared to make on other areas.

When the Leader of the Opposition took over, he said that he wanted a fresh approach, new faces, a new beginning and a new start. Instead, we got the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). The torch passed to the last generation.

The Conservative party has shown, by failing to support the basic principles of the national health service and the additional expenditure on it, that it is not fit for government. Even its fitness for opposition is being challenged. It was in government for 18 years; the way it is going, it will be out of government for 18 years.

Matthew Taylor (Truro and St. Austell): On the economy, this was a complacent statement from an extraordinarily complacent Chancellor. On the NHS, the right hon. Gentleman made an admission of failure. On pensions, he announced the biggest extension of means testing in history. After nearly 500,000 job losses in manufacturing since 1997, falling investment and a runaway trade deficit, will not the Chancellor's tax fiddling simply add more to the crippling burden of red tape and bureaucracy on industry and do nothing to tackle the overvalued pound?

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The right hon. Gentleman is confronted with record waiting lists. Only a day after the chairman of the Labour party admitted that parts of the NHS have got worse under Labour, does the Chancellor understand that the implication of the Wanless report is that the Liberal Democrats were right and that the only way in which to tackle the problems of the health service is to accept that, in the long run, the tax burden must increase? Perhaps the Prime Minister has not yet persuaded him.

Another 40,000 pensioners are likely to die through fuel poverty this winter. Does the Chancellor understand that means-testing half of all pensioners is likely to mean that many do not receive the benefits that he announced? Currently, 500,000 the poorest pensioners do not get through the humiliating means tests that they are forced to take for the minimum income guarantee. Why will the new means test for half of all pensioners work when the old means test for the minimum income guarantee continues to fail to deliver to those who need it most?

Does the Chancellor remember that in 1993 he said that the next Labour Government would

Instead, so many who have never before faced a means test will be subject to one. Does he remember attacking the Conservative Government in 1996 when he said:

Yet, today, manufacturing output is falling. Investment is 15 per cent. lower and business investment is decreasing. Judged on his own words, the Chancellor's statement on the economy is an admission of failure.

In 1997, does the Chancellor remember masterminding a manifesto that promised:

Yesterday, the chairman of the Labour party admitted that many parts of the NHS are getting worse.

The Wanless report proves that we were right to say that we cannot buy enough doctors and nurses to turn round the NHS without raising the tax to pay for that. Will the Chancellor give one simple, straight answer? At 6 pm, he intends to publish the national insurance rates. Will they increase today?

Mr. Brown: No to the right hon. Gentleman's last question. I am grateful to the Liberal Democrat shadow Chancellor. The House of Commons is in the unique position of having two shadow Chancellors: one sits in Folkestone and the other in Truro. It is rather like the mediaeval papacy: two hon. Members claim to hold the position of shadow Chancellor. I shall organise a play-off during the year.

The hon. Member for Truro and St. Austell (Matthew Taylor) asked three main questions on the economy, pensions and the NHS. On the economy, he knows, despite his comments, that the economy is growing by 2¼ per cent. this year. That is the highest growth among the G7 countries. He also knows through the forecasts that I have given him that we are cautiously optimistic about what should happen next year.

Of course, it is difficult for manufacturing. Last year, it grew by 2 per cent. and its productivity increased even more despite the weakness of the euro. This year, because

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of what is happening around the world, it is difficult for manufacturing exporters. I hope that the hon. Gentleman will support our additional measures on research and development, regional development agencies and the new venture capital funds in the regions. I hope that he will support measures that are designed to increase investment and thus long-term productivity.

On the question of the national health service, I remember the 1997 election, when the Liberals said that we should be spending £500 million a year more on the health service. We ended up spending £5 billion a year more on it. I saw the Liberal manifesto at the last election; I think that it proposed £300 million for the health service for the first year. I have just announced £1 billion for the national health service.

If the Liberal party wishes, as I think it should, to join this new consensus on the national health service—which, unfortunately, those on the Conservative Benches refuse to join because of their dogma—we can win such a new consensus throughout the country on the idea that a significantly higher proportion of public funds should go into funding the health service over the longer term. We have funded the health service to 2004. The debate should now begin as to what happens after that. I hope that the Liberal party will join that debate and be on our side.

On the question about pensions, it is a bit rich for the spokesman for the Liberal party to claim that all his policies have been stolen by the Labour party, because the one that he is now criticising was in the Liberal manifesto in 1997. The move towards the integration of tax and benefits, for dealing with the problems of pensions, was proposed by the Liberals in 1997. I believe that that move is right for the country.

It is wrong that pensioners should be penalised because of their savings. It is wrong that they should get no advantage, and even lose benefits, if they have occupational pensions. It is also wrong—if we are to devise a pension system for the next 20 to 50 years—when many people like me and the hon. Gentleman are going to retire on generous pensions and will be in a position to do without either a pension credit or a substantial rise in the basic pension based on earnings. Sooner or later, we will have to face up to this question. If we are going to do more for those people who deserve to have more done for them by rewarding the pensioner who has an occupational pension and savings, the pension credit is the right way forward. Instead of complaining about means testing, the hon. Gentleman should be saying that a benefit that people claim the minute they retire, then once every five years, and in which the integration of tax and benefits is proceeding apace, is the right way forward for pensions.

I hope that the hon. Gentleman will also welcome the fact that we have underpinned the pension credit by saying today that the basic pension will rise—no matter what the rate of inflation is—by at least £100 a year every year in this Parliament, as long as the Labour party is in power. In my view, that is the right policy for pensions and pensioners. I hope that, in addition to joining the consensus on the national health service, the Liberal party will support us on pensions as well.

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