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27 Nov 2002 : Column 340—continued

Mr. Brown: I am grateful to my right hon. Friend. He has been a lifelong proponent of greater aid and investment in the poorest countries of the world so that we can tackle their poverty. The whole House knows his contribution.

I believe that we can have the support of all parties in the House for the policies that we are now pursuing, and I appreciate the fact that all Opposition parties have said that they wish to support that initiative. Our aim is 0.7 per cent. The initial measures that we are putting forward for a £50 billion increase to £100 billion of development aid by the developed world involves a compact whereby, in return for the developed countries insisting on corruption-free policies for stability, better conditions for trade, which require the Doha talks to have been successful, and a more conducive environment for investment, we should in return be prepared to put in the additional development aid. That is why we are proposing the new international finance facility. I believe that the response from other countries will encourage us to move ahead. I chose to end the pre-Budget statement with international development aid. If we are to tackle the insecurities and inequalities of globalisation, we as developed nations will have to do far more.

Sir Michael Spicer (West Worcestershire): Why has the enterprise culture, which the Chancellor inherited, been replaced by one that is dominated by trade union activity, regulations and high taxation, and why in particular has investment collapsed?

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Mr. Brown: The enterprise culture is being encouraged in the schools with the measures that we are putting forward today, in high unemployment communities with the 2,000 new enterprise communities, in our work with Young Enterprise, the inner city 100 and all the enterprise agencies, which we have tried to encourage over the past few years. The hon. Gentleman should recognise that, if an enterprise culture can be built in each region and in each community, from the school classroom to the boardroom, it can make a huge difference to the chances of creating businesses and jobs. I should have thought that he would have been at one with us on that.

Mr. Nigel Beard (Bexleyheath and Crayford): I congratulate my right hon. Friend on the robust strength of the economy, despite the uncertainties and difficulties in the rest of the world. What steps have been taken to encourage business investment and innovation, particularly in manufacturing industry?

Mr. Brown: I am grateful to my hon. Friend, who is a member of the Treasury Committee and is extremely interested in that matter. As he knows, the main measures that have been taken over the past few years are the research and development tax credit and the raising of capital allowances for small and medium businesses, but in addition the creation of regional venture capital funds, where the European Union has given approval to go ahead, provides additional funds that are put at the service of business. The university challenge fund and the higher education innovation fund are a means by which to link ideas coming out of universities to the creation of new businesses. In each region, we can see more opportunities for business to benefit from new ideas and new insights. If we are to win in respect of the high value-added, technology-driven products of the future, it must be part of the Government's job to encourage science, innovation and research, and to put that more at the service of successful businesses.

Mr. Alex Salmond (Banff and Buchan): The Chancellor knows that he will get support from these Benches on international aid initiatives, but can he confirm that his growth forecasts are down, his borrowing forecasts are up, he has created a bust out of boom in the oil industry and is now trying to repair the damage, and he has scuppered a settlement in the firefighters' dispute because of pressure on the public finances? Given that for five years in a benign international environment he claimed the credit for every single success, is there any measure—even one—that, on reflection, he will want to point to that may have contributed to him being blown off course?

Mr. Brown: On the oil industry, we were right to raise the supplementary corporation tax for an industry that had made very substantial profits, but in return for that we increased investment allowances to 100 per cent. and we have now abolished North sea royalties. The hon. Gentleman's political party opposes the tax rise for North sea oil but has no means of raising revenues for the measures that it is proposing in every other sector. On the economy, I think that he would agree that the

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Scottish National party could never deliver low inflation, low interest rates, high employment, stable growth and continuing investment in public services.

Alan Simpson (Nottingham, South): I congratulate the Chancellor on being open about the downturn in the global economy and the dangers of accelerating the problems were we to cut public spending. I come back to some of the key points in his statement. There are dangers in cutting benefits to the young unemployed who are most marginalized—it is more likely to turn them towards drugs and crime than jobs and prospects. The schemes that have worked have stuck with the most marginalised long term, rather than sought to penalise them short term.

For the past 20 years, the problem for public services has been the absence of real structural investment, rather than a shortage of private tendering. We must be careful about going down that path, and trying to sell to the electorate the virtues of a tax credit in exchange for a pay cut. In relation to the £20 billion of borrowing—

Madam Deputy Speaker (Sylvia Heal): Order. The hon. Gentleman must conclude his remarks.

Mr. Brown: Long-term youth unemployment reached nearly 500,000 at one stage in the 1980s, but is now around 5,000. My hon. Friend will acknowledge that that is a singular achievement, which was made by giving young people rights, responsibilities and opportunities. Those opportunities involved a lot of expense in training and advisory services, and young people had an obligation to take them up. I hope that my hon. Friend will agree that that is the right way to proceed.

My hon. Friend the Member for Nottingham, South is right to say in connection with the PFI that there has been a low level of public investment in our vital public services. We are trying to correct that. However, the need to ensure better value for money and more investment in the short term in our hospitals and schools has required us to use the private finance initiative.

Mr. John Maples (Stratford-on-Avon): According to figures from the House of Commons Library, the tax burden next year will be £153,000 million more than it was when Labour came to power. If my calculations are right, that means that on average every man, woman and child in the country will pay £2,600 a year more in tax. Are those figures correct?

Mr. Brown: The figures that we are publishing today show that the tax burden is 37.1 per cent. of national income, which compares with the peak under the Conservatives of 38.9 per cent.

Dr. Nick Palmer (Broxtowe): The House will have enjoyed the shadow Chancellor's efforts at singing, and will wish him a great career on XPop Idol". He criticised my right hon. Friend the Chancellor for excessive public spending, but the Governor of the Bank of England told the Treasury Committee yesterday that the contribution of public spending to the economy at this point is very important to stability and growth in Britain. Does my right hon. Friend agree?

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Mr. Brown: I am grateful to my hon. Friend for reminding us of that. Like the rest of us, the shadow Chancellor may wish to thank the Governor of the Bank of England for the work that he has done. However, the Governor pointed out yesterday that the best way forward for the economy is borrowing. That contrasts with the policy of cutting public spending put forward by the shadow Chancellor, who has absented himself from the House.

Mr. John Bercow (Buckingham): Why have the Government failed to meet 40 per cent. of the public service agreement targets set in 1998? Why does the Chancellor not recognise that, while failing to meet targets set by independent experts would be disappointing, failing to meet his own requires incompetence on a truly spectacular scale?

Mr. Brown: We met 87 per cent. of the targets in time. Subsequently, we have met another 6 per cent., which means that we have met 93 per cent. of our targets. The hon. Gentleman should congratulate us.

Several hon. Members rose—

Madam Deputy Speaker: Order. In the time remaining, I intend to try and call all hon. Members who want to contribute to the debate. However, I urge hon. Members to ask short questions and, perhaps, offer short answers.

David Taylor (North-West Leicestershire): In response to my hon. Friend the Member for Nottingham, South (Alan Simpson), my right hon. Friend the Chancellor mentioned the benefits of PFI. However, are they not rather short term and illusory? In the medium and long terms, will not PFI be shown to be prohibitive in cost, flawed in concept and intolerable in consequence for taxpayers, citizens and workers in our country? The figures that my right hon. Friend published in the House today show that public projects could be financed in a traditional way. We do not need the PFI. It does not wipe off figures from the public balance sheet.

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