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Mr. Speaker: Order. I have given the Chancellor a lot of elbow room, but the policies of the hon. Member for Tatton (Mr. Osborne) are nothing to do with the Chancellor. I know that he has disowned himself in that way, but perhaps he can continue.

Mr. Brown: The hon. Gentleman complains about investment. Business investment was £87 billion in 1997; it is £110 billion this year. How can he say that there has been a collapse in business investment when business investment continues to rise? He says that the new deal is not working, but we have 330,000 more people in jobs this year. He complains about our regulation, but we are getting rid of some of the ridiculous regulatory agencies created by the Conservative Government. We the Labour Government are taking to Europe the proposal to put a competitiveness test on regulations and to end the gold-plating of European Union regulations.

The Conservative party's policies are to abolish the new deal, to cut the child tax credit and to announce—[Interruption.] The hon. Gentleman said that our growth was lower than that of Spain and Ireland. What he did not say is that our growth is higher than that of France, Germany, Italy, the euro area and the whole European Union. If he wants to look at differences in growth in the economy, let us look at the comparison between two recessions under the Conservative Government and growth in every year under a Labour Government.

The hon. Gentleman's policies are to abolish the new deal, to scrap the child tax credit—[Hon. Members: "What are your policies?"] Conservative Members do not like it, do they? At the last election, they said that they would spend more—[Interruption.]

Mr. Speaker: Order. The Chancellor will assist me by not referring to the Conservative party's policies. I know that he has got a lot of material there, but perhaps he could use material that will not embarrass the Speaker.
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Mr. Brown: Our policy is to keep the new deal, to keep children out of poverty, to increase public investment in this country and to increase enterprise efficiency and productivity in our economy. The Conservatives were in power for 18 years; from what we have heard today, they will be out of power for 18 years.

Dr. Vincent Cable (Twickenham) (LD): Three years ago, the Chancellor told us that Britain was recording its best economic performance for 50 years. Two years ago, he told us that it was the best economic performance for 200 years. On his last outing, he told us that it was the best economic performance for 300 years. We are all rather disappointed that he has not come along today and told us that he is outperforming the Romans.

The Chancellor has demonstrated his talent for producing rabbits from hats, while disregarding the big long-term challenges, such as creating a sustainable state pension system and reforming the unfair system of local taxation—but we welcome some of his rabbits. I am glad that he has listened to representations from Liberal Democrat Members and others and scrapped the tax relief on second homes under the self-invested personal pension scheme. That is very welcome. I also welcome the substantial relief from overpayment—the £25,000 ceiling—that he is now giving on tax credits.

The Chancellor is having to acknowledge, however, that we are now in the process of what economists call a growth recession. It might have been desirable if he had gone next door to the Prime Minister to ask for a short seminar on how to do humility, but instead he has tried to blag his way through by blaming the problems on the oil producers and slow-growing Europe. He knows that that is complete nonsense. If the problem is oil, why are the oil-importing United States and Japan booming? If the problem is a slow-growing Europe, why has Britain been consistently outperformed by Sweden and Spain? The problems, as he well understands, are domestic.

Does the Chancellor accept the explanation that a large part of the slow-down in consumer spending is caused by growing anxiety about private debt? Does he accept that the share of our income that is spent on debt servicing—20 per cent.—is almost the same as it was when personal finances collapsed under the last Conservative Government? If he does not accept that explanation, does he accept the explanation of the Governor of the Bank of England that consumer anxiety about taxation has produced the slow-down in spending? How does he explain the fact that private investment in the economy is half what he forecast in the Budget? In particular, why has commercial research and development fallen, despite the fact that he is spending £800 million a year of taxpayers' money subsidising it?

The Chancellor is quite right to say that the big long-term challenge is about public spending, the public finances and how to make tough choices on public spending—we endorse that. However, may I ask him a series of specific questions? Can he explain why no Treasury Minister publicly contradicted the Home Secretary after he promised that compulsory identity cards would be made available free of charge at a cost of £6 billion to the Home Office, excluding the cost to other Departments? Has the Chancellor put any financial limitations on the Prime Minister's expressed enthusiasm for nuclear power? Will there be any limitation of the subsidies and guarantees that could become available?
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The Chancellor has written eloquently in the past few weeks about the evils of the common agricultural policy. Can he explain why the Prime Minister is now on the brink of surrendering £1 billion of British taxpayers' money, despite having achieved no single concrete concession on the common agricultural policy? Can the Chancellor explain where he was when his deputy and the Secretary of State for Trade and Industry reached an agreement on public sector pensions that was such that a rising star in the Treasury could join the civil service at 20 or 21 years of age and retire 40 years later on a generous final salary scheme, while the rest of the population has money purchase pensions, or a state pension scheme that Lord Turner has described as "not fit for purpose"?

In conclusion, I speak as someone who I think has more time for the Chancellor than many of his own colleagues. Why cannot he stand up in Parliament and say, "Yes, indeed I am proud of my record as Chancellor in presiding over economic stability and low unemployment and fighting poverty"—I endorse all those things—and also say, "I have made mistakes. We've exaggerated the projections and there has been administrative over-centralisation."? Why cannot he simply stand up and acknowledge his own failures?

Mr. Brown: I, too, have a great deal of time for the shadow Chancellor who resides in Twickenham, rather than the shadow Chancellor for the Conservative party. However, the hon. Gentleman must recognise what has happened to the economy during the course of this year: we have been able to maintain stable growth.

When the hon. Gentleman gave his press conference on Thursday, he said:

On public sector debt, he said:

On investment in public services, he said:

On employment, he said:

On monetary policy, he said:

He acknowledged all those things; at least he did so at a press conference, while the Conservative shadow Chancellor tries to write them in an obscure article that he hopes that no one will be able to read.

The fact is that the Liberal Democrats have dropped all their tax proposals, but are still making public spending commitments. If the hon. Gentleman is really going to be a successful shadow Chancellor for the Liberal party, he must stop the barrage of public spending commitments that have been made by his spokesmen and women in only the past few days. I have press releases that have come out on transport, the Home Office, child care, more money for dentistry and, of course, the Liberals' London manifesto. They are all public spending commitments, but the hon. Gentleman has dropped all his tax pledges and has no way of paying for them. As far as we are concerned, a public spending
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review will take place in 2007. All the issues the hon. Gentleman raises will be examined during the course of that.

On public sector pensions, the hon. Gentleman should know that £13 billion of public sector money was saved as part of the negotiations. All the other issues will be part of our public spending review in 2007. I would rather be in my position on public sector finances, looking at increased public investment and taking the right decisions for Britain, than in his position of being forced by his colleagues to drop all the tax plans while still being unable to control their spending plans.

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