| Previous Section | Index | Home Page |
Mr. Howard: You never asked for one.
Mr. Brown: Oh! So it would have been right, as an act of statesmanship, for us to ask for an assessment before it could be done?
Mr. Howard: The Chancellor cannot escape from his history on the matter. A year before we joined the ERM, he was asking for early entry. When we joined, the right hon. Gentleman and his colleagues in the shadow Cabinet never asked for an assessment, never said it was the wrong rate and never criticised that decision in any way, shape or form. Instead, they gave that decision their full and wholehearted support. That decision, which was a grievously mistaken decision, had the full support of the Chancellor, all his right hon. and hon. Friends, the TUC, the CBI, the Liberal Democrats—of absolutely everyone. The Chancellor cannot escape his history.
Mr. Brown: The shadow Chancellor was Secretary of State for Employment. He conducted no assessment of the employment consequences of entering the exchange rate mechanism, and the Secretary of State for Trade and Industry did no proper assessment of the investment and trade consequences—and now the Opposition try to blame us. They told us at the time that they had five conditions that had to be met. Those conditions were not met, and they still joined the ERM. They were never able to prove to us that the conditions were met.
The shadow Chancellor thinks that he has got out of the problem because he has made an apology, but I seem to remember that, as Home Secretary, he used to say that apologies were not enough. He said that the punishment must fit the crime. He used to tell us that punishment worked and that we should condemn a little more and understand a little less. Why is he the only surviving member of that ERM Cabinet who is still sitting on the Conservative Front Bench? He is a very fortunate man, but the electorate will not forget that he was responsible for the loss of a million jobs in manufacturing and unemployment rising above 3 million, even while he was cutting employment training schemes that would have kept people in work. So we will accept no attempt to blame the Labour party in opposition for the mistakes of a Conservative Government who brought us the worst recession since the second world war and caused 15 per cent. interest rates and 10 per cent. inflation. Until the Conservatives do more than apologise for those mistakes, the electorate will never support them for economic competence again.
Roger Casale (Wimbledon): I am grateful to my right hon. Friend for giving way. At the time of ERM entry,
there was not only a complete lack of rigour in making any assessment, but the Government of the day also had a completely enfeebled negotiating stance, because the party was completely split on Europe—a split between those who wanted to come out and those who saw its practical benefits. Does he agree that that is still the case today? The Conservatives would be on their knees in the face of having to negotiate at a new intergovernmental conference, whereas I know that my right hon. Friends will stand up and fight for British interests.
Mr. Brown: My hon. Friend is absolutely right. [Hon. Members: "Give him a job."] Job applications do not come to me; they come to the Prime Minister.
Mr. Tam Dalyell (Linlithgow): I intervene in the hope of understanding a little more and perhaps making a little bit of special pleading on the question of the stability of interest rates. My right hon. Friend and I know, as we both represent the paper industry, how incredibly important stability of interest rates is. My hon. Friend the Member for Glasgow, Anniesland (John Robertson) and I, along with other colleagues, were recently in Finland finding out about nuclear waste, but we heard about the paper industry there. Surely these industries throughout Europe need an indication of the stability or otherwise of interest rates? Can he be helpful on that point?
Mr. Brown: I am grateful to my hon. Friend. We represent adjoining constituencies, but I cannot say that I represent the paper industry, even though I use a great deal of paper. It is absolutely true that a number of companies are involved in the production of paper and that they represent a number of companies throughout the country that are worried about issues relating to interest rates and stability. I assure him that we will do nothing in any decision that we make to put the basic stability of the British economy at risk. It is precisely because we will not put the British economy's stability at risk that we introduced independence for the Bank of England and our new fiscal and monetary regime. It is also precisely for that reason that we will take no risks in the euro assessment, which will be conducted with rigour and in a way that is both transparent and comprehensive. I hope that he will agree that the documentation produced by the Treasury, which has been made available to every Member of Parliament—all the detailed work done by the Treasury on these issues has been made public—shows that we take these issues seriously. The future of both manufacturing industry and industry in services generally is uppermost in our minds as we consider these issues.
I was raising the question of convergence generally and specifically referring to the state of the housing market and the inflationary consequences that have arisen over many years from its volatility. To help balance supply and demand in the housing market further and reduce the scarcity of housing, which is an issue for many British people and has lain behind the long-term growth in house prices, in the national interest as well as the interests of convergence, the Deputy Prime Minister will shortly make further announcements on new house building with the aim of
achieving existing planning targets in the south of England and building an additional 200,000 homes by 2016. That will include expanding the Thames gateway, which is probably the largest area of derelict land available for development in western Europe; releasing surplus public sector landholdings to further increase the supply of land for housing; and ensuring that regional and local planning authorities—I think that all hon. Members would wish to see this—respond to housing market needs, not least by encouraging land that has been allocated for commercial and industrial purposes to be used for housing unless a convincing alternative case can be made.We have also been looking at the planning system. To speed up that system, the Deputy Prime Minister is giving planning authorities an extra £170 million by 2006; insisting that 60 per cent. of all major applications are processed within 13 weeks; intervening when planning authorities fail; taking powers to call in large planning applications in areas with housing shortfalls; and piloting a new planning advisory service to drive up performance. We are also considering—he will make an announcement at the appropriate stage—whether the poorest-performing local authorities should be linked with high-performing authorities, so that we can share best practice and achieve best results. So further housing market reforms will be put in place over the coming year.
Mr. Michael Connarty (Falkirk, East): I am very enthusiastic about the announcements from the Deputy Prime Minister. Has there been any discussion with the Scottish Executive about housing in Scotland and the similar planning issues that arise time and again in every local authority in Scotland? Will there be any liaison with the Scottish Executive on this policy?
Mr. Brown: Not only is there liaison on these issues, but a Scottish euro preparations committee will be formed by the Secretary of State for Scotland. That will involve representation from the Scottish Executive and the business community in Scotland. I believe that similar organisations will be formed—announcements will be made very shortly—in Wales and Northern Ireland. Of course, we are adding representation from the regions to the euro preparations committee that meets under my chairmanship and includes representatives of the Bank of England, the Financial Services Authority, the clearing banks and many other financial sector organisations.
Those further housing market reforms will be put in place over the coming year. They are right, in any event, for the British economy, as hon. Members in all parts of the House will agree. They will help to ensure that, by having a reduced propensity towards house price inflation in this country, stability in our economy can be further entrenched. In addition to the study that Kate Barker of the Monetary Policy Committee is leading to examine what more can be done to remove barriers to supply in housing, a further study, also with an interim report in the pre-Budget report, by Professor Miles of Imperial college, is examining the case for a long-term fixed-rate mortgage market in the UK and how we can help its development.
On convergence, I also announced to this House on 9 June that, subject to confirmation at the time of the pre-Budget report, I intend to change the inflation target
at that time to the consumer prices definition. As is customary, I will provide all the supporting documentation setting out the detailed advantages of the new target at that time. The advantage of the current indicator, RPIX, is that it is known and well understood and has served us well. However, the advantages of the consumer price index, HICP, the harmonised index of consumer prices, which is internationally recognised, are that it uses a geometric rather than an arithmetic mean and so allows for consumers substituting cheaper goods for more expensive ones when relative prices change and can therefore more accurately reflect people's behaviour in the marketplace. It is also in line with best international practice; it gives a more complete picture of spending patterns as it takes account of spending by all consumers, including foreign visitors and pensioners, who are not part of the RPIX process in the way that one might have expected; and it is the most comparable measure internationally and is used by our neighbours in Europe. It also gives businesses and households the information that they need to make sound decisions on pricing and investment in the context of being able to make comparisons with other countries in this increasingly global economy. Given that pensions, benefits and index-linked gilts will be calculated on exactly the same basis as now, however, pensioners and claimants do not need to fear that there is any change that will directly affect them, and they will not lose out.The second issue raised on 9 June when I made the assessment and announced it to the House of Commons was flexibility. The flexibility test that would have to be made is whether, if problems emerge, there is sufficient flexibility in our economy to deal with them. Although Britain is indeed a more flexible economy, flexibility means being able, in the absence of exchange rate or interest rate flexibility, to adjust our economy quickly to any shocks that arise so that we do not put at risk our objectives of high and stable levels of growth and employment and sustained and sustainable funding of schools, hospitals and other services.
| Next Section
| Index | Home Page |