The Chancellor of the Exchequer (Mr. Gordon Brown): In 1997, financial services earned £45 billion for the United Kingdom, and last year the figure was £94 billiontwice as much. Net exports have risen from £11 billion to £19 billion and financial services, once 6 per cent. of the economy, are now 8.5 per cent. of our economy. With the new City task force we will continue to found our policy for competitiveness on thinking globally, investing in skills, a competitive business and light-touch regulatory environment, and, most of all, doing nothing to put economic stability at risk.
Mr. Love: The City is set for another bumper year of growth, due in no small measure to the stability and low-inflation environment of the wider economy. Will my right hon. Friend reject any unfunded tax cuts as putting that stability at risk, and what more can he do to enhance the role of the City in the world economy?
Mr. Brown: In 1997, 280 billion shares were traded in the City of London: last year, the figure was 900 billion. That shows that the City is responding to the global challenges in a way that we can be proud of. What we will not do is put stability at risk by irresponsible, unfunded and reckless tax cuts, as proposed by the Opposition. The policy we will not follow, as suggested in the new competitiveness economic policy group document published last nightit is interesting what one can read on the Conservatives websiteis to abolish consumer protection for mortgages, pensions, insurance and credit cards. We will not return to the pension mis-selling that we have spent years getting away from.
Sir Peter Tapsell (Louth and Horncastle) (Con): Does the Chancellor agree that it will help to maintain the competitiveness of the City of London if the London stock exchange is not taken over by a foreign stock exchange company?
Mr. Brown: I hope that the hon. Gentleman will agree with the Governmentwe propose new legislation on the issuethat nothing should interfere with the right of the City to be regulated by the Financial Services Authority. Rather than Governments deciding who should own what, we must put in place the proper regulatory mechanisms that insist that whoever owns industries, services and, in this case, the stock exchange in London, it is regulated in London by the FSA. I hope that we will have all-party support for the Bill that my hon. Friend the Economic Secretary will introduce.
Mr. Brown: In the nine years since we took office, of the companies that have located either their national, regional or international headquarters, it is true to say that 398 have located in London and the United Kingdom, 63 in Paris, fewer in Germany and the Netherlands and 30 in Ireland. Opposition Members who wish to suggest that the success of Ireland is somehow comparable with the success of London should think again. London has doubled the amount of trading and financial services work. It will continue to thrive because we will think globally, but we will not put it at risk by an irresponsible funding of tax cuts that we cannot afford, and which would put at risk the very public services, infrastructure and skills on which the City and the rest of the British economy depend.
Mr. Michael Fallon (Sevenoaks) (Con): Is the Chancellor aware that the Citys big fear now is that big bang is being followed by big bureaucracy? On the very day that he had City leaders in last week for a bit of spin and one of his fake smiles, he forced through this House new legislation compelling companies to reveal their most sensitive commercial information. Is not the City right to judge him by his actions, rather than by his words?
Mr. Brown: The hon. Gentleman, who should know something about this, should look at the facts about the performance of the City and the British economy. Perhaps he might read the comments from the chairman of the New York stock exchange, who said that London is getting business for two reasons: one, it does not have the heavy touch regulatory environment of the United States of America; and, two, it has proved itself to be competitive in so many areas. I contendand the hon. Gentleman should think about thisthat the stability of our economy and the future of the City of London would be put at risk by getting the balance wrong between tax, spending and borrowing. That is why we will not accept the unfunded, irresponsible and reckless commitments being made by the Conservative party.
Mr. Siôn Simon (Birmingham, Erdington) (Lab):
I declare an interest, as I chair the all-party group on private equity and venture capital. The City of London is the centre of the world when it comes to private equity, with 52 per cent. of the European market. That is principally due to the unprecedentedly supportive
environment that this Chancellor and this Labour Government have created and put in place over the past 10 years. In the context of the Financial Services Authoritys [ Interruption. ]
Mr. Speaker: Order. I cannot hear the hon. Gentleman because of all the shouting from Conservative Members. Also, he knows that a supplementary should be brief, and should be a question. Perhaps the Chancellor would like to respond.
Mr. Brown: It is clear that the Opposition do not like hearing the good news about the achievements of the British economy. Six previous shadow Chancellors have dined out on the idea that the City of London and our whole economy were about to move into recession, so I shall give the House the benefit of the latest foreign direct investment figures. In 2005, inward investment into the UK amounted to £164 billiontwice the level in France, five times the level in Germany, eight times the level in Italy, and 50 per cent. more than in the US. The Opposition should congratulate the Government on their success, not try to claim failure.
Mr. George Osborne (Tatton) (Con): What the Chancellor did not mention is that we are celebrating this week the 20th anniversary of the big bang, which he opposed at the time but now presumably welcomes. The City is not celebrating the damage that he has done to the pensions industry with his tax and regulatory regime. Labours first pensions Minister was the right hon. Member for Birkenhead (Mr. Field), who has said:
when Labour came to office we had one of the strongest pension provisions in Europe and now we...have some of the weakest.
Mr. Brown: I notice that the hon. Gentleman is not defending his £4.7 billion tax cut proposal. After all the publicity that he sought last week, I should have thought that he would at least explain how that would be funded. As for pensions, let me read out the policy that we will not follow:
In financial services we should allow people to buy and sell products that are not regulated if they have signed to do so.
Mr. Speaker: Order. In the past I have allowed the Prime Minister and the Chancellor, and their Opposition shadows, some leeway, but the right hon. Gentleman cannot dwell on Conservative party policy. [ Interruption. ] The hon. Member for Wallasey (Angela Eagle) is looking at me, so I shall tell her why. The reason is that Ministers are responsible for the Government, not for the Opposition. She has been in the House long enough to know that.
Mr. Osborne: No one believes what the Chancellor says about his own policies, let alone ours. [ Interruption. ] Excellent! The Chancellor has thrown his copy of our document at me. I thank him very much, as I am glad that he is reading such things. Nor, by the way, should anyone pay any attention to the ludicrous claims from the Economic Secretary to the Treasury, but I make one request to the Chancellorplease put him on television more often.
I return now to the matter of the City and pensions. The Chancellor may ignore Labours first pensions Minister, but he cannot ignore the facts. His pensions tax has reduced the value of peoples pensions by £100 billion, and his pensions regulations have forced 60,000 pensions schemes to close. Does he accept what his own party saysthat he has made serious mistakes in the handling of pensions? If he cannot accept that, surely the current Secretary of State for Work and Pensions is right: the Chancellor will make an effing awful Prime Minister?
Mr. Brown: It is very interesting that the shadow Chancellor has made the question of whether pensions are properly regulated in this country the central issue. The difference between us is that we want proper regulation to protect individual pensioners, whereas the Opposition have proposed a plan that would deregulate and abolish consumer protection for pensioners. Until Conservative Members look at the plans that their own group is pursuing and find out what damage would be done to the regulation of pensions, they will be living in a dream world about what their policy proposals are going to be. We will insist on the proper regulation of pensions. We have introduced compensation for people who were deprived of their pensions. We have introduced a new Pension Protection Fund board to ensure that there is proper protection for pensions. We have a new pensions Green Paper to ensure that protection. Most importantly, we will not as unfortunately happened under the Conservative Government, or put the stability of the economy at risk, and that will be foremost in resisting irresponsible and unaffordable tax cuts.
The Chancellor of the Exchequer (Mr. Gordon Brown): We have created the new deal for skills, which we will expand. We have the new train to gain programme, which we will also expand after the Leitch report is published. We have increased education spending from 4.7 per cent. to 5.5 per cent. of GDPinvestment which we will not cut in future years, but will increase.
Chris Mole: With 20 million students graduating in China every year and 2 million in India, can my right hon. Friend reassure me that the Government will seek to resource fully the recommendations from the Leitch review so that the United Kingdom can continue to compete in the global knowledge economy? Will he reject any tax proposals that come before him that would undermine our education service and take us back to where we were 20 years ago?
Mr. Brown: I can assure my hon. Friend that when the Leitch report is published the national debate on skills for the future will be led by this Government. We want to see more people who are in work at the moment acquiring the skills for the future so that British workers can get jobs that are available because they have the skills to do so. We wish to see more students able to study at university and college and more students staying on at school to get the necessary qualifications. We have already increased education spending from 4.7 per cent. to 5.5 per cent. of national income. We will continue to increase that figure in future years. What we will not do, in the interests of both stability and public investment, is go for irresponsible tax cuts in preference to investment in education. What we will not doas I now find is another policy of the Conservative party from their economic policy reviewis to introduce vouchers to pay for our public services. I hope that Conservative Members are aware that that is now their new policy.
Mr. Sheerman: Is my right hon. Friend aware that all the evidence that comes to my Committeethe Education and Skills Committeesuggests that the massive investment in education and skills over the years of the Labour Government has resulted in a direct improvement not only in millions of peoples lives but in the dynamism of our economy? [ Interruption. ] Yes, in our report that was published yesterday we called for more expenditure, greater investment and a speedy material increase in the amount of money going to individual pupils.
The shadow Chancellor says from a sedentary position that to increase expenditure from £2,500 to £4,500 is meaningless. That is an illustration of just how the Conservatives treat the very big issue of
how we fund education in our state schools. We have increased spending from £2,500 to £4,500; we will increase it to £5,500 by 2007-08. As for capital investment per pupil, I have to tell the House that it was £100 when we came into power and it is now £650 on average per year. That is expenditure on IT, computers, buildings and equipment. That will rise to £1,100 in the next spending round. It will be above the level that is spent in private schools, as we move to our aspiration that state school pupils get the same teacher-pupil ratios and advantages in education as are available in private schools. I thought at one point that there was all-party support for that, but unfortunately the Conservatives have gone for irresponsible tax cuts.
Dr. Vincent Cable (Twickenham) (LD): Does the Chancellor accept the economic analysis published earlier this week that a liberal and flexible approach to the work force, reflected in substantial skilled and unskilled immigration, has boosted growth, reduced inflation and boosted the Governments revenue? If he agrees, what estimate has he made of the possible cost to the British economy of the Home Secretarys U-turn on that policy this week?
Mr. Brown: We have always said, we continue to say, and I hope the hon. Gentleman agrees, that migration to this country must be managed. We must get the balance right between the number of people we need to fill the skilled jobs that are available and a policy for managed migration to this country. I hope that that is still the policy of the Liberal party. We have benefited enormously from immigration in this country and we continue to do so, but there will always beas there should bemanaged migration to this country.
Mr. Bernard Jenkin (North Essex) (Con): Why are the Government cutting adult education grant funding to Essex county council, which is resulting in the closure of Grey Friars adult community college in Colchester? Does not that make the Governments commitment to skills in the work force rather hollow?
Mr. Brown: I would have thought that the hon. Gentleman supported what we are doing; in other words, what we are doing is[Hon. Members: Cuts!] Well, we are putting the money through the employer, through the train to gain scheme. The employer and the individual will buy their courses from colleges where that is appropriate. If the college is providing the right service to the employer and the employee, it will get the business; if the college is not providing the right service, it will have to do so in future. I would have thought that was the policy of the Conservative party, but if that, too, has changed between tonight and today, perhaps the hon. Gentleman will tell me.
Mr. Don Touhig (Islwyn) (Lab/Co-op): Funding for higher national certificate work-based learning programmes for engineers is very important. Will my right hon. Friend clarify what the Government are doing to improve the skills of our engineers?
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