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27 Mar 2003 : Column 443—continued
EU Economies
8. Mr. Mark Todd (South Derbyshire): What assessment he has made of potential measures to improve the flexibility of the economies of the European Union. [105157]
The Chancellor of the Exchequer (Mr. Gordon Brown): I attended the European economic reform summit last Friday. European Union Finance Ministers agreed a joint statement on measures to improve the flexibility of the European economy, in particular the European patent, a review of labour market flexibility and a reform plan for research and development across Europe. The Government's own report on economic reform in Europe shows the additional reforms that still require to be made.
Mr. Todd: I thank my right hon. Friend for that answer, and for the robustness of that approach and of his past statements on the importance of increasing the flexibility of European economies before we consider joining the eurozone, which we all wish to do at some point when that is appropriate.
Mr. Brown: It is absolutely important, for both the British economy and the rest of the European economy to grow, that we make changes to reform the labour markets, capital markets and product markets in Europe. The fact of the matter is that whereas a few months ago the European Union was predicting that the euro area would grow by over 2 per cent. this year, it is now likely to grow by less than 1 per cent. It is also true that the euro area economy has grown by more than 3 per cent. in only one of the last 10 years, compared with seven of the last 10 years in the case of America. That is what demonstrates the urgency of these economic reforms for economic prosperity.
There is an understanding that greater labour market changes must be brought in. Some people will have seen the announcements by Chancellor Schröder in Germany over the last few days. European unemployment is more than 15 million. That is unacceptable and the reforms are essential to tackle it.
Mr. Henry Bellingham (North-West Norfolk): What assessment has the Chancellor made of the effect of the agency workers directive? Is he aware that the CBI has predicted that it may well cost 50,000 jobs? Why did Labour MEPs vote for it? Surely he will not get the flexibility back into those labour markets until we once again opt out of the social chapter.
Mr. Brown: The hon. Gentleman is absolutely right that we are in negotiations over the future of the agency workers directive, and we will be doing what we can to protect the British position in this matter. However, the hon. Gentleman should really read the words of the shadow Chancellor when he talks about labour market flexibility. He said:
- "Our labour market is . . . more flexible than that in other EU countries"
- "in almost every case, the UK is the most liberal in the EU itself."
Mr. Brown: My hon. Friend is alluding to a question that is lower down the Order Paper, dealing with the assessment of the five tests on the euro. I can tell him that we are on course to complete the assessment of the five tests by June.
Mr. Michael Howard (Folkestone and Hythe): Of course it is true that this country's economy remains the most flexible in Europe, but does not the Chancellor realise that he is doing his best to destroy that? Does he not realise what a ridiculous figure he cuts when he lectures our European partners on the need for flexibility, while steadily undermining the flexibility of our own economy? How does the £15 billion a year in extra costs for British business, which result from his taxes and red tape, improve flexibility? How does his tax on jobs and pay, which comes into effect in 10 days' time, or the 15 new regulations introduced every working day since 1997, improve flexibility? Would not the Chancellor be listened to with a little more respect in presenting the case for flexibility if he started practising at home what he preaches abroad?
Mr. Brown: I have here the report of the Heritage Foundation—the most right-wing institute in the United States of America—that says that the economy in Britain is more flexible under Labour than it was under the Conservatives. Did not the shadow Chancellor have to admit:
- "Conservatives . . . were less responsive to these concerns, and less effective in deregulating, than they should have been."?
Millennium Targets
9. Mr. Stephen McCabe (Birmingham, Hall Green): What he estimates will be the cost to (a) the Treasury, (b) other Governments and (c) international finance institutions of meeting the millennium target for reducing infant mortality. [105158]
15. Valerie Davey (Bristol, West): What estimate he has made of the cost to (a) the UK Government and (b) international finance institutions of meeting the millennium development target that all children have primary schooling by 2015. [105164]
The Chancellor of the Exchequer (Mr. Gordon Brown): The World Bank estimates that the additional cost of providing for health care is £12 billion a year and, for education, £10 billion a year.
Mr. McCabe : Contrary to some other hon. Members, I think that my right hon. Friend deserves a great deal of credit for the dedication and commitment that he has shown to these matters. Will he continue to use his influence to ensure that the richer countries and the international financial institutions minimise waste and internal disagreements and maximise our chances of achieving those ambitious, but morally justified targets?
Mr. Brown: I am grateful to my hon. Friend for those remarks. I think that he would agree with me that this is a time when we have to see not only the reconstruction of Iraq planned in a way that is satisfactory for the people of Iraq and the middle east peace settlement moved forward, but an act of statesmanship from the developed countries to the developing countries, so that they know that, as they invest, open up their markets and prepare for the modern economic world, we will support them with additional resources for health, education and anti-poverty programmes. I believe that this is the time when all major industrialised countries should be supporting the new initiative that my hon. Friend is talking about—an international finance facility that can release substantial sums—so that we can show people that, in addition to tackling the problems of terrorism, we are tackling the problems of poverty and injustice in the poorest countries.
Valerie Davey: My right hon. Friend's positive response will be welcomed by many people in Bristol, West who support the millennium education project. What can my right hon. Friend and the other agencies involved do to ensure that as many girls as boys benefit from that exciting education development?
Mr. Brown: More than 110 million children are not going to school today. Two thirds of those children are girls, as my hon. Friend will know. If we achieve our millennium development goals by investing more than £10 billion extra in education, the greatest beneficiaries will be those who have been discriminated against most in the provision of education—girls and young women. The fact of the matter today is that, in almost all the African countries that we are talking about as well as in Asia, far too few girls are getting the chance of education, and I believe that the expenditure that we are proposing for literacy, numeracy and enrolment in primary education can yield those results. In countries where money has been provided, such as Uganda, the pupil-teacher ratio has halved and there is a prospect that every young child—girl and boy—will have the chance of education.
Mr. Desmond Swayne (New Forest, West): Does the Chancellor agree first, that there is perhaps a great lesson to be learned from the most enlightened aspect of the Marshall aid programme, which was: to tie repayment levels to balance of payment surpluses, thereby creating a huge incentive for nations to trade freely; and secondly, that trade will always dwarf aid?
Mr. Brown: I am grateful to the hon. Gentleman for raising a useful analogy about moneys for developing countries. The Marshall plan provided 1 per cent. of America's gross domestic product to the poorer countries of Europe when reconstruction was planned
after the second world war. It started as a foreign policy initiative and ended up with the economic and social reconstruction of Europe that produced benefits not only because of the money that was invested in Europe, but the resulting extra trade. That is the exact analogy that we should use when considering money for developing countries.We must increase the amount of development aid, and I must tell the hon. Gentleman that America provides 0.1 per cent. of its GDP and the developed countries provide only 0.2 per cent. We would have to go a considerable way to reach aid figures that are equivalent to the Marshall plan. At the same time, however, benefits will include not only the amount of aid for the reconstruction and development of the poorest countries, but the greater benefits that result from a more open trading world from which all countries may benefit.
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