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18 Nov 2002 : Column 393continued
Chris Grayling : Perhaps the Chancellor can answer a question that has puzzled me for some years. He says that the policies that he inherited in 1997 were built on Tory economic and spending guidelines. If the policies were so fundamentally wrong, why has he spent five years talking about their virtues?
Mr. Brown: I did not say that; I said that after 1997 we, first, made the Bank of England independent; secondly, we devised a new monetary regime that was based, unlike the Tories' regime, on a symmetrical inflation target; and, thirdly, we introduced new fiscal rules so that we could reduce the debt, which rose under the Conservatives, by not spending additional moneys over the first two years. The result is that we have cut debt, which had been rising under the Conservatives, from 44 per cent. to 30 per cent. of GDP. I should have thought that the hon. Gentleman would want to congratulate us on our prudence and the stability that we have tried to create for the British economy.
Having created a platform of greater stability with clear monetary and fiscal rulesunlike those of the Conservative partythe next stage is to make Britain better equipped to face the new challenges of globalisation, with more competition, more business creation, more investment and a more skilled work force. So, in the Queen's Speech, we have matched last Session's Enterprise Act 2002 with measures that will open up competition, which will be in a water Bill; with measures that will reduce barriers to entrepreneurship; and with measures to reduce planning delays by introducing business planning zones, which will be in a planning Bill.
At any point in the past 20 years, it was open to the Government of the day to make our competition authorities, like the Bank of England, independent and free of political influence. At any point, it was open to them to reform the insolvency laws. At any point, it was open to them to cut capital gains tax from 40p to 10p for business assets held for two years or more, to create a more favourable tax regime for capital gains than that of the United States. At any time over recent decades, it was open to the Government of the day to cut corporation tax from 33p to 30p, to create the lowest corporate tax in our history. I am pleased that it is this Labour Government and the Budgets that we have introduced that are pushing forward this agenda for business prosperity.
At any time in the past 20 years, a Government could have reduced the tax on small companies. It was open to the previous Government to introduce a new flat rate and simplified system for payment of VAT to replace accounting for every VAT item, thus cutting form-filling for nearly 700,000 businesses. We should be pleased that it is a Labour Government who have reformed VAT, cut
Andrew Selous (South-West Bedfordshire): What does the Chancellor say about the statement from the Confederation of British Industry last week that the #47 billion that he has taken from British business is enough, and that if he goes any further, we will not have the money to pay for the services that he has been describing?
Mr. Brown: The CBI welcomed what we achieved on stability and continues to do so, whereas it criticised the last Conservative Government every year. On tax, it is hardly surprising that the CBI, representing businesses, should press for less taxation of business, but I point out to the CBI, as I point out to the House, that we have reduced corporation tax from 33p to 30p, that the small business tax is now at 19p and that we have eliminated the 10p band, so that the first #10,000 of a small company's profits are not subject to taxation. In all these ways, including the cuts in capital gains tax, we are helping business. We should be pleased that it is a Labour Government who have cut corporation tax in this way, and in the Queen' Speech it is a Labour Government who are extending competition and introducing much needed planning reforms that will remove the need in many areas for detailed planning permission.
These announcements are just the start. In the pre-Budget report, working in partnership with local authorities and regional development agencies, we will designate 2,000 new enterprise areas, so that we can encourage home-grown economic activity in areas that were formerly areas of high unemployment, by cutting the cost of starting up, investing, employing, training and managing the payroll for those businesses.
At the heart of our response to the world economic downturn and the challenge of globalisation are policies for more flexible labour markets to raise employment and make work pay, and policies for family prosperity, including a child tax credit and a pension tax credit. I want to explain why, at every point, our policies are right for this country, and why we reject as wrong the policies of the Conservative party.
When the previous Government were in power, long-term unemployment among young people went as high as 350,000. By contrast, it is now less than 6,000. What was an average of 500 per constituency is now an average of nine per constituencysingle figures. This was the purpose and the achievement of the new deal, with 1.7 million participants, 830,000 young people and, for the long-term unemployed, more than 500,000 participants.
However, this is not the time to relax. Instead, we must accelerate our efforts in pursuit of the goal of full employment in the longer term, not just in one region, but in all parts of Britain. Where vacancies exist side by side with large numbers of unemployed, we are introducing intensive targeted initiatives to help the unemployed back to work and to break the destructive culture summed up by the claim, XNo one around here works", which damages areas and diminishes people's hopes. In pilot areas, we plan to test a more intensive
When the shadow Chancellor was Secretary of State for Employment, he cut the enterprise allowance scheme, jobstart and the job share programme. Even as jobs were being cut, he was cutting help for the jobless. The question is: do we want the Labour policy, which has created 1.5 million more jobs, or do we want the shadow Chancellor's policy as it was when he was Employment Secretary and 1 million jobs disappeared?
The difference is not only about employment, but about making work pay. Our policy is to ensure that work will pay more than benefits, so we have introduced the working families tax credit and are now ready to expand it to make work pay. For the first time, next April, single persons and couples aged 25 or over without children will be eligible for in-work support that makes jobs pay. Couples with wages of less than #280 a week or #14,000 a year and single people with less than #10,000 a year will start to gain from that tax cut.
In return for the responsibility to take up the opportunities that are available, the working tax credit fulfils our promise not simply to families with children, but to single people and couples without children, to make work pay by paying more to be in work than to be on benefits. We have introduced those changes on the foundation and building block of the national minimum wageit could not have been done otherwisewhich is now #4.20 an hour and covers 1.2 million people. Through the new chairman of the Low Pay Commission, we are now reviewing that rate.
What does the right hon. and learned Gentleman's party have to say about tax credits? The Conservatives now oppose tax credits, yet tax credits and the integration of tax and benefit were introduced in the United States of America by Ronald Reagan. They are supported by President Bush, who has just raised the tax credit. Ronald Reagan said that it was