Government's Assessment as set out in the Pre-Budget Report 2001 for the Purposes of Section 5 of the European Communities (Amendment) Act 1993

[back to previous text]

Mr. Francois: I would not for one moment want to compete with my hon. Friend's almost photographic memory of the relevant articles. In a broad sense, my understanding is that what he says is entirely correct.

To round off this section of my remarks, when we talk about independence of the Bank of England, we must ask ourselves a simple question. At present, we have the capability, through the Bank of England and the monetary policy committee, to set interest rates which are appropriate for the United Kingdom. We can choose which interest rate best suits our people, our businesses and our economy. If we devolve or give away that power to the European central bank in Frankfurt, we will have to accept the running average for the whole of Europe, which in many instances is unlikely to be the sort of interest rate that we need. The argument is simple: should we set interest rates that benefit our people and our country, or should we give that power away to someone else who can set interest rates that do not benefit our people and our country? That is the fundamental economic part of the debate that we will have if and when the referendum comes, and if the Chancellor can ever meet his five tests.

On the main substance of the debate, the Conservatives are the official Opposition—however much that might irritate Liberal Democrats—and it is therefore appropriate that we oppose what the Government say in their report. I want to do that

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under a few headings. The Minister painted a rosy picture of a glorious country with a wonderful economy. However, that bears little relation to what happens in the real world, away from the Westminster and Whitehall village. I shall cite a few examples, bearing in mind some of the things that I see in my constituency.

In relation to education and teacher shortages, on which my hon. Friend the Member for Buckingham touched in his remarks, Essex has more teacher shortages than any of the shires in England.

The Chairman: Order. Will the hon. Gentleman take into account the fact that this has been a long debate? Perhaps others in the Committee might like to hear the Minister's reply.

Mr. Francois: I shall condense my remarks under four headings so that the Minister has time to reply.

There are more teacher shortages in Essex than in any other shire in England, and the way in which the Government calculate the numbers underestimates the problem. Bearing in mind your guidance, Mr. Cran, I shall not go into detail. Suffice it to say that the Government are fiddling the figures, and the shortages are therefore worse than they appear. There are shortages of police throughout England, especially in the county of Essex and particularly of special constables. I shall not elucidate further, but special constables are quitting at an alarming rate, and the Government are not doing anything to replace them.

On health, waiting times are increasing, especially in accident and emergency units, a matter that I attempted to raise at Prime Minister's Question Time a few weeks ago. On transport, many of my constituents use rail to come into London and then the tube. To say that the tube network is a shambles is an understatement; I shall not go into details about what happened this morning, but the tube system virtually broke down. The Government have been talking for four years about a public-private partnership plan to improve the tube, and last week the Secretary of State intimated to Parliament that after four years of working on it, he might abandon the whole thing.

The Government are beginning to live on borrowed time. They can hide behind spin and press releases for only so long; at some point, the people will ask them to deliver, and if they fail to do so the voters will look to the Conservatives to have a crack at it instead.

11.55 am

Ruth Kelly: I have enjoyed the interesting, although not always good-natured, debate. I look forward to at least three minutes in which to reply to some of the numerous points that were made.

I was surprised that the hon. Member for Buckingham (Mr. Bercow) decried the performance of the UK economy and its recent growth rates. It is extraordinary, at a time when we have the lowest inflation rate since 1963, the lowest interest rates for 40 years, the lowest unemployment since the 1970s, and a prudent fiscal stance with public finances in a good position, that the hon. Gentleman should use this opportunity to test his thesis that the UK economy is

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not in good shape. It is the contrary. Given our tough decisions on public finances and the independence that was given to the Bank of England in a bold move after the 1997 election, despite the global economic downturn, we can be cautiously optimistic about the future prospects for the UK economy, which is why our forecast for this year of 2¼ per cent. is at the lower boundary of what we were forecasting in the Budget for this year of 2¼ to 2¾ per cent. For next year, the International Monetary Fund and the Organisation for Economic Cooperation and Development are forecasting that the UK will have the strongest growth performance among G7 countries. If that performance is compared with the consensus forecast for the United States, the euro area and Japan, which is printed at the back of the Pre-Budget Report, it will be seen that the US is expected to grow by 0.7 per cent. next year, and the euro area by 1.5 per cent. Japan is expected to contract by 0.6 per cent. next year. In that context, we are right to be cautiously optimistic about the UK, and say that it is faring reasonably well in the conditions of uncertainty after the terrible events of 11 September.

The hon. Gentleman spoke at length about the tax burden, about regulations on business and so forth. The latest figures for the tax burden show that it is falling substantially—from 37.3 per cent. in 2000-01 to 36.4 per cent. next year and the year after. In such conditions, when the tax burden is falling at the same time as we are cutting corporation tax, it is not the time to talk about a tax-raising Government; this is a Government who cut taxes.

The hon. Gentleman points to the international scoreboard of competitiveness but not to other reports. The Economist intelligence unit report shows that the UK is less regulated than other European countries, and the Arthur Andersen report shows that the UK is the best place for entrepreneurship. This country is probably one of the best places, certainly in

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the G7 if not in the OECD countries, in which to invest, which is why we continue to have such strong inward investment performance figures.

The hon. Gentleman made some remarks about the fairness of the Government's proposals for families. The Government have overseen a 1.2 million rise in employment since 1997. They have introduced the working families tax credit and the minimum wage. They have also extended child benefit—its largest rise in history—and they have introduced the children's tax credit.

We will hear more about these measures this afternoon. As a result of them, the incomes of families with children which earn half the average wage have risen by about £3,000 per year.

Question put:—

The Committee divided: Ayes 9, Noes 4.

Division No. 1]

Austin, John
Cox, Tom
Gerrard, Mr. Neil
Kelly, Ruth
Quinn, Lawrie
Rooney, Terry
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Ward, Claire

Bercow, Mr. John
Davey, Mr. Edward
Flook, Mr. Adrian
Francois, Mr. Mark

Question accordingly agreed to.


    That the Committee has considered the Government's Assessment as set out in the Pre-Budget Report 2001 for the purposes of Section 5 of the European Communities (Amendment) Act 1993.

        Committee rose at one minute past Twelve o'clock.

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The following Members attended the Committee:
Cran, Mr. James (Chairman)
Austin, John
Bercow, Mr.
Cox, Tom
Davey, Mr. Edward
Flook, Mr.
Francois, Mr.

Column Number: 32

Gerrard, Mr.
Kelly, Ruth
Quinn, Lawrie
Rooney, Terry
Stuart, Ms
Sutcliffe, Mr.
Ward, Ms Claire

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