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12 Feb 2003 : Column 878—continued

1.10 pm

The Chancellor of the Exchequer (Mr. Gordon Brown) : I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

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The right hon. and learned Member for Folkestone and Hythe (Mr. Howard)—the shadow Chancellor—omitted to tell the House today the central economic facts. We have the lowest inflation that we have had for 40 years this year, as we did last year and the year before that. We have the lowest interest rates that we have had for 48 years, and we have lower unemployment than America, Japan and the rest of Europe for the first time since 1945. Today's employment figures, which the shadow Chancellor glossed over—

Mr. Howard: I did not.

Mr. Brown: He mentioned them, but glossed over them. They show that the number of people claiming unemployment benefit have fallen by 3,500 in a month, that unemployment fell by 36,000 over three months, and that despite all the economic uncertainties and the restructuring, which I acknowledge is taking place in the British economy, employment is up by 150,000.

Miss Julie Kirkbride (Bromsgrove): Does the Chancellor think it is a good thing that one person in four now works for the Government?

Mr. Brown: It is right that we have more doctors in the health service. It is right that we have more nurses, more teachers, and more policemen and policewomen.

Running through the shadow Chancellor's speech was one assumption and one assumption only: that the answer to every problem was public expenditure cuts. There are more people in work today than there have been at any time in our history. There are 1.5 million more people in employment now than there were in 1997. There is more employment in every region of the country. Let us remember that in the 1980s 350,000 young people had been unemployed for more than a year—hundreds in each of our constituencies. Today the figure in Britain is 5,000, an average of eight per constituency. Moreover, far from there being an inflation problem, the figures show that earnings growth has fallen to 3.7 per cent.

In the face of the global slowdown that every country has had to confront—we have seen recession in America, recession in Japan and recession in Germany—our monetary and fiscal policy, and the changes that we made in 1997, have not just enabled us to cope with that global slowdown without recession but have enabled growth to rise in every quarter of nearly six years of this Labour Government. The worst policy that could be pursued is that of the shadow Chancellor—to

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cut spending, abolish the new deal, get rid of tax credits that make work pay, and end up repeating the mistakes that the Conservatives made in the early 1990s.

Mr. John Redwood (Wokingham): Is the Chancellor proud of the fact that 600,000 people have lost their jobs in manufacturing? Is he proud of the two manufacturing recessions over which he has already presided? Is he proud of what is happening in manufacturing today? What does he say to those people?

Mr. Brown: What I am proud of is this: we have cut corporation tax, introduced a research and development tax credit for manufacturing, and introduced capital allowances. When the right hon. Gentleman was a Minister in the Conservative Government, 3 million manufacturing jobs were lost.

When it comes to solutions to the problem, we must recognise that the shadow Chancellor and the right hon. Gentleman are not saying exactly the same things. What did the right hon. Gentleman say in his election address in 2001?

The shadow Chancellor is not prepared to say that.

Worse than the danger of abolition of the new deal and tax credits is a proposal advanced by the Leader of the Opposition in an interview on 30 December 2002, when he announced that a study was being conducted by the hon. Member for Arundel and South Downs (Mr. Flight), the shadow Chief Secretary to the Treasury. The study, he said, was

[Interruption.] I will quote the whole interview. The interviewer said to the Leader of the Opposition:

The answer was:

The interviewer said:

The answer was:

Mr. Howard Flight (Arundel and South Downs): If the Chancellor had done us the courtesy of reading the report to which the Leader of the Opposition referred, he would know that it referred to areas of potential for savings. That was absolutely clear. Moreover, the report stated twice that it did not refer to cuts in health or education spending. I ask the Chancellor to end the spin propaganda in which he has been indulging.

Mr. Brown: Now we are getting to the heart of the matter. "Potential" cuts of 20 per cent!

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The hon. Gentleman says that that did not apply to the health service. In that "World at One" interview on 30 December, however, the Leader of the Opposition said that he was looking at cuts

Mr. Flight: I am surprised that the Chancellor of the Exchequer displays such economic naivety. The scope that exists, to an extent, to make economies in some areas accommodates extra spending in others. The virtuous action of looking for areas of waste, which the Chancellor should be doing, would enable him to deliver much better services by redeploying funds.

Mr. Brown: This is very helpful. The shadow Chancellor will be very pleased that the shadow Chief Secretary has joined us. He has confirmed the "potential" for savings. He has confirmed that the study has taken place. He has not denied the Leader of the Opposition's statement that he was looking for

Is the hon. Gentleman saying that the Leader of the Opposition was misleading people in that interview?

Mr. Flight: The Leader of the Opposition was clearly referring to my comments and to the potential, not to an across-the-board figure. I repeat: I am astonished that the Chancellor has to resort to such cheap, false propaganda to establish his credentials.

Mr. Brown: The hon. Gentleman has not denied my point that he is looking at cuts in the national health service. That is what the Leader of the Opposition said. [Interruption.]

Mr. Speaker: Order. We must have some order in the Chamber.

Mr. Brown: I suggest that we take up the offer made by the shadow Chief Secretary to give us a copy of his report when it is completed. He has identified the potential for savings, and he has not denied that the national health service is part of the investigation. Either that, or the Leader of the Opposition is misleading people.

When asked:

the Leader of the Opposition replied:

Mr. Howard: May I remind the Chancellor of a sentence that appeared in his party's 1997 general election manifesto? Funnily enough, it is directly relevant. The manifesto contained the following sentence:

Does the Chancellor still adhere to that?

Mr. Brown: Yes, and because we are increasing value for money and the amount of public money spent, there

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are more doctors, more nurses, more teachers and more police. The shadow Chancellor cannot get away from the fact that he is embarrassed by what the shadow Chief Secretary has been up to. The interesting thing—I ask the shadow Chancellor to confirm this—is that, in 1997, he made a speech to the British Chambers of Commerce in which he recommended that public spending be reduced to 35 per cent. of national income, and said that that was the right target to aim at. What is 35 per cent. of national income but a 20 per cent. cut in public spending? Until the Conservatives come clean on what their real proposals are and how they would affect the national health service, in every constituency in this country they will be offering explanations as to the number of doctors, nurses and teachers, and they will have to offer such explanations every weekend.

The shadow Chancellor may have something of a problem in that regard. I have in front of me an article that he wrote in the Folkestone Herald. Of course, he is adamant that he does not want to make any spending commitments. However, he said in that article:

Is that not a demand for nine more GPs? Does that not cost at least £500,000? If that were repeated throughout the country, would we not need to spend more on the national health service? How can the shadow Chancellor say that he refuses to spend more on the national health service? Just to show that he is consistent in what he is advocating locally but not telling us nationally, I refer the House to an article that he wrote only a few days ago, in the Folkestone Herald of 9 January, entitled "Housing must be our priority". What does he say now about public spending? He states:

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