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10 Apr 2003 : Column 463—continued
Mr. Kenneth Clarke: Will the Secretary of State give way?
Mr. Smith: Britain is not simply doing better compared with other industrialised countries, but doing very much better than in the past, including when the right hon. and learned Member for Rushcliffe (Mr. Clarke) was in charge.
Mr. Clarke: Will the Secretary of State please stop making ridiculous claims about interest rates and inflation based on comparisons with the inflationary recessions in the 1970s and 1980s, which were quite different from the problems that are hitting this country now? Almost every country in the world can claim that it now has the lowest interest rates that it has had for about 30 years—indeed, fears of deflation are running through the developed world. In fact, the UK currently has the highest interest rates in the G7 and has done so for most of the time that the Labour Government have been in office.
Mr. Smith: I do not think that the right hon. and learned Gentleman was listening to me. I did not simply point to the '70s and the '80s; I pointed to the '90s as
well—not that long ago—when, under the Conservatives, inflation was in excess of 10 per cent. The reason why there is now greater economic stability, 1.5 million more people in jobs and many more businesses thriving in our country is that we have been building an economy on a sound macro-economic foundation, following tough, firm and clear fiscal rules, assisted by the independence of the Bank of England. By contrast, he refused to put firm fiscal rules in place and opposed the independence of the Bank of England.
Mr. Clarke: The Secretary of State is going back to the '90s, but not to the time when the economy was handed over to the present Government. When I left office as Chancellor I was able to boast of the lowest mortgage rates and interest rates for many years. This country has had 10 years of growth with low inflation. Private sector jobs were created as a result of the ongoing benefits of that and the United States-led boom. Things have changed now: public sector employment has been rising by 70,000 a month—they are not all teachers or nurses—and private sector employment is falling quite rapidly. Once they get into difficulties, the Government will find that they have lost control.
Mr. Smith: I do not blame the right hon. and learned Gentleman for talking up his record and achievements, but he should compare current mortgage rates with what they were when he was in charge. As for his legacy, look at that debt of 44 per cent. of GDP and compare it with our achievement of getting debt below 34 per cent.
If the right hon. and learned Gentleman is comparing different downturns in the world economy and their domestic effect, he must ask himself why it was that in the world downturn of the 1980s, employment went down by 1.3 million. In the downturn of the 1990s, employment went down by 1.6 million. Contrast that with the position in this world downturn, where employment has increased by half a million. That is the result of the macro-economic stability and the policies of economic success that we have put in place.
Mr. Parmjit Dhanda (Gloucester): If the right hon. and learned Member for Rushcliffe (Mr. Clarke) is not content with main comparisons of mortgage interest rates, perhaps he should consider the growth in living standards under the present Government compared with that under the Government of whom he was a member.
Mr. Smith: Absolutely. Living standards have been rising. Net household wealth is 40 per cent. stronger than it was when we came into office. That is a consequence of the stability that I have been talking about and the tough fiscal decisions that we have taken. That has meant more people in jobs, people being better off and successful businesses. It has meant also that we are able to invest more money where it is needed. The Conservatives ran down public services, investment and infrastructure, with unemployment of more than 3 million and millions in poverty. We are tackling poverty and, at the same time, targeting public spending on front-line services—for example, health, education, transport and crime fighting.
This year's Budget implements our spending review commitments with real rises in education spending, for example, of about 6 per cent. a year. As my right hon. Friend the Prime Minister highlighted yesterday, an international report finds that English primary school readers are now among the best in the world. We have the highest ever number of police officers—there are more than 130,000 officers, more than ever there were under the Conservatives. According to the British crime survey, crime is down by more than 25 per cent. Through the increase in national insurance that was announced in last year's Budget, spending on health in the United Kingdom will rise by 7.2 per cent. a year in real terms right through to 2008. That will secure the national health service as a quality service, with 25,000 more doctors, 80,000 more nurses and more than 100 new hospitals, all free at the point of need. It is because we took tough decisions, stuck to the fiscal rules and built a strong economy that we can now go further.
Yesterday, my right hon. Friend the Chancellor of the Exchequer set out a range of measures that build on a stable foundation to promote enterprise, to tackle poverty, to protect the environment and to ensure a better quality of life for current and future generations. During the debate today and in the days that follow, Opposition Members will have to tell us whether they support our drive to improve the supply of housing and the streamlining and simplifying of planning decisions. They need to say whether they back our measures to help break down the barriers to business success by reducing red tape and simplifying tax for small businesses. These measures will bring greater flexibility to capital markets, to product markets, to housing and planning and labour markets.
Mr. Jack: Will the Minister give way?
Mr. Smith: On flexibility, I am happy to give way to the right hon. Gentleman.
Mr. Jack: I wonder whether in that litany of gains that he has put before the House he can refresh my memory as to how much the loss has been in the value of pension funds, endowment policies and other similar investments since 1997.
Mr. Smith: We should consider what is happening to pensioner incomes rather than the allegations and the figures that are thrown around by Opposition Members. It is possible to hypothesise all sorts of things about funds. What matters to pensioners is the money that they are getting. We must have regard to surveys of household income. The right hon. Gentleman and those on the Opposition Front Bench will find that pensioner incomes are up by 20 per cent. in real terms since Labour came into office.
Mr. John Bercow (Buckingham): The right hon. Gentleman is focusing excessively on inputs to the detriment and perhaps even the exclusion of outputs. Given that the trumpeted public service agreement targets on literacy and numeracy were both missed in 2002, and that the target on truancy was missed, then
scrapped, can he not see that although it would be disappointing if the Government missed targets set by independent experts, for them to fail to meet the targets that they have set themselves requires incompetence on a truly spectacular scale?
Mr. Smith: I heard the hon. Gentleman use precisely the same language yesterday to make precisely the same point, which was rather more effective in the original than in the repeat. He is talking about outputs, and so am I. Crime surveys show that crime is down by more than 25 per cent. If the hon. Gentleman wants to talk about outputs in the health service, he should take a look at the fact that 130,000 fewer people are waiting a long time for operations, or that, unlike the past, 98 per cent. of people suffering from cancer now get to see a consultant specialist within two weeks. Literacy and numeracy have both improved significantly since the Opposition were in office to the point where, as I said earlier, the Prime Minister could highlight international reports commending English standards in our primary schools. We are therefore doing better—[Interruption.]
Madam Deputy Speaker (Sylvia Heal): The hon. Member for Buckingham (Mr. Bercow) asked the Minister a question and he has replied, so perhaps he would listen.
Mr. Smith: I shall take your advice, Madam Deputy Speaker. I think that I have answered that one.
On employment, since 1997, we have transformed our employment programmes and approach. On input, we are investing £2.2 billion in transforming Jobcentre Plus to make it the best welfare-to-work service in the world. On output, every year we are helping over a million people into jobs through Jobcentre Plus. Investment is matched by reform, for example, the introduction of the work-focused interview and an approach that matches rights and responsibilities, and makes work pay. The Budget carries reform further forward. With some parts of our country still having twice the unemployment of others, we want to get more people into work and offer a better service still to employers through local initiatives and innovation, harnessing the talents of our local managers and staff to meet the labour market needs of their communities.
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