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The Chancellor of the Exchequer (Mr. Gordon Brown):
Mr. Letwin: I personally never opposed the decision—[Hon. Members: "You did."] I did not. I was in favour of the decision from the beginning and I was part of the group of people who persuaded my party to adopt the position of being in favour of it. It was the right move. The point I am making about the decision, which the Chancellor is in no position to deny, is that the effect—
Mr. Brown: You voted against it.
Mr. Letwin: One does things out of party loyalty that one does not necessarily—[Hon. Members: "Oh!"] I have never personally opposed the decision. [Interruption.] I have been in favour of it—[Interruption.]
Mr. Speaker: Order. It is very noisy. We must hear the right hon. Gentleman.
Mr. Letwin: The Chancellor is perfectly aware that the reason monetary stability has been achieved is that someone else has been running monetary policy, and that is a very good thing.
Mr. James Plaskitt (Warwick and Leamington) (Lab): On the subject of fiscal stability, can the right hon. Gentleman remind us what proportion of GDP Government debt was when his party was in office?
Mr. Letwin: Fiscal stability has to do with obeying a set of fiscal rules, and the Chancellor would not have come close to obeying his fiscal rules had he not followed the policies of my right hon. and learned Friend the Member for Rushcliffe.
If we want to find the policies that the Chancellor himself has adopted—his policies—we have to look beneath the surface of the two forms of stability that have been created by other people. What do we see when we turn to the question of what the Chancellor himself has been responsible for? Let us take productivity.
Huw Irranca-Davies (Ogmore) (Lab): Will the right hon. Gentleman give way?
Mr. Letwin: No, I am going to continue for a while.
The Chancellor's pre-Budget report of 1998 said:
Well, what has his record been on productivity growth? It has dropped by a third. The Chancellor shakes his head. Why does the Chancellor shake his head? It is because here we have a classic case of the manipulation of statistics by the Treasury and the contrast between the way in which the Treasury does business and the way in which the Office for National Statistics does business.
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The Treasury uses the so-called underlying trend rate of growth of productivity and it seeks to persuade itself that the productivity growth rate is reasonable. But the ONS, which is not in this respect governed entirely by Treasury diktats—thank God—produces a different series of actual productivity growth rates which show that they have dropped by a third.
The Deloitte UK productivity index—the latest figures—shows that productivity growth in the UK is now at its slowest for two and a half years and is below the EU average.
Let us turn to competitiveness. The Chancellor has frequently told us that his great vision, which he has been adumbrating in various newspapers recently, is to increase Britain's competitiveness—a very laudable ambition and one indeed that the 1997 Labour manifesto told us would be one of the Government's main hallmarks. It stated:
"We will build a new partnership with business to improve the competitiveness of British industry for the 21st century".
[Interruption.] The Chief Secretary comforts himself with the illusion that he has done some such thing, whereas in fact the Government have brought about a condition in our economy such that we have dropped from fourth to 11th in the international competitiveness league, we have record trade deficits and we have lost 790,000 manufacturing jobs. If that is competitiveness—
Jim Knight (South Dorset) (Lab): Will the right hon. Gentleman give way?
Jim Knight: I am most grateful to the right hon. Gentleman for his generosity. Does he accept that his plans to slash the business support programme of the Department of Trade and Industry by £500 million would damage British competitiveness?
Mr. Letwin: Absolutely not at all. The hon. Gentleman suffers from the most astonishing delusion if he believes that the Department of Trade and Industry is currently assisting British competitiveness. It is in fact the Department that has presided over the fall in our competitiveness. The DTI is causing extra costs for businesses through extra taxes and is producing astonishing little result. Our plans to reduce the bureaucracy of the DTI by four fifths will assist British business by reducing the tax on British business and by reducing the degree of unnecessary interference in British business, thereby promoting its interests—long overdue.
Let us turn to growth. The Chancellor is proud of his record on growth, too—[Hon. Members: "Hear, hear".] Yes, his hon. Friends are very pleased about it, too, but they do not spend much time noticing that about six sevenths of the growth in the last quarter was due to the public sector. They do not do much comparison of our growth rates with countries that are growing fast. The Chancellor likes to compare us with the eurosclerotic zone; by those standards, he says, we are doing brilliantly. But what about the rest of the world? What about the other major English-speaking countries; how does our economic growth compare with theirs? It is
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slower than that in any other major English-speaking country. It is half the rate of growth in Ireland since 1997; our per capita income is now below that of Ireland. Why? Because in Ireland they have been following quite different economic policies from those of the Chancellor. They have gone for low regulation and low tax and have ended up with people investing in Ireland. The Chancellor has not achieved a similar growth rate because his policies were not designed to the same ends.
Rob Marris (Wolverhampton, South-West) (Lab): The right hon. Gentleman talks of low regulation in Ireland and the Conservative amendment refers to reducing regulation and cutting excessive bureaucracy, so can he give the House three examples of regulation that should be abolished forthwith?
Mr. Letwin: I can give the hon. Gentleman not three but thousands and thousands of examples. I will send him a very long list. My hon. Friends and I do not intend merely to cut regulation; we intend to cut the drivers of regulation. We intend to change the culture that creates regulation by cutting the bureaucracies that produce it. As the hon. Gentleman wants to talk about regulation and the question of what we shall abolish, he tempts me to move immediately to the very question of the Chancellor's statements about regulation—[Interruption.]
Mr. Speaker: Order. The right hon. Gentleman is not giving way.
Mr. Letwin: I was referring to the Chancellor's statements in the last pre-Budget report. He did not limit himself to three regulations. No, he said that he would abolish 147 regulations. Some interesting facts have come to light about those 147 regulations. The starting point of that interest is that the Chancellor was for once—I think it was unique—unduly modest.
Actually, when we got hold of the list it turned out that he was claiming to be abolishing 159.
Mr. Letwin: I am sorry; the right hon. Gentleman has already intervened once and he did not do very well last time. I am not going to give him another go.
The Ernst and Young team looked at what the Chancellor had suggested and they said this:
"Unfortunately, with one hand the PBR adds much more to the regulatory burden than it subtracts with the other . . . The PBR announcement of an enquiry into reforming or reviewing 147 different regulations was announced with optimism . . . the devil was . . . in the detail: only 25% of the 147 referred to tax and red tape issues."
In fact, the Ernst and Young team were pretty kind to the Chancellor, because when we asked parliamentary questions of the Treasury, the Treasury was able to name only one business measure in the 147, and when we
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checked on that measure, it turned out that it had already been announced in 2000 and again in 2002, and that it was not in the list of 147 or 159. So we asked—
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