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Mark Pritchard (The Wrekin) (Con): Is it not time that this Chancellor took some responsibility for our failing economy? [Interruption.] Labour Members can mock, but unemployment in Shropshire has risen in the past 12 months by 36 per cent. Let us go back to 1979,
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when interest rates were at 22 per cent. under Labour. If we want to go back further, let us return to 1931 under Ramsay MacDonald, when interest rates were also high. When does it stop?

Mr. Brown: The hon. Gentleman talks about Britain’s failing economy. During the past year, the shadow Chancellor has said that the outlook for 2006 was gloomy and that the economy was slowing. He said that it had become the weakest in the developed world, that we were struggling to compete, and that we were “faltering”. Growth is higher than forecast—0.7 per cent. in the first, second and third quarters—and we will have growth higher than forecast this year. Indeed, while America is having to downgrade its growth estimates, Britain is seeing higher growth. The sooner the Conservative party stops talking down the British economy, which has been growing in a sustained way for the past 10 years, the better it will be for investment in this country.

Mr. Michael Fallon (Sevenoaks) (Con): If it is all going so swimmingly well, why is it reported this morning that one in five British companies is now considering relocating outside the United Kingdom because of increasingly uncompetitive taxation and new rafts of legislation?

Mr. Brown: The hon. Gentleman is reading from a survey of 89 companies. Let me tell Conservative Members what has actually happened since 1997. Some 389 companies have relocated their headquarters—national, European or global—to the United Kingdom, 56 have relocated to France, 39 have relocated to Germany and 35 have relocated to the Netherlands. Moreover, of the 389 companies coming to Britain, 30 were from Ireland. If Conservative Members really wanted to talk about the strength of the British economy, they would be saying what the right hon. Member for Wokingham (Mr. Redwood) says when he gives his presentations to the private sector. Does he not talk about “the lure” of Britain, and about Britain’s being a low-tax economy, when he gives his private presentations?

Mr. John Redwood (Wokingham) (Con): That was true, but it is no longer. Does the Chancellor accept that Ireland is now growing three times as fast because it is tax-competitive and Britain is no longer?

Mr. Brown: I would not give much for the right hon. Gentleman’s advice. At a presentation that he gave only a few months ago, he asked:

and spoke of

On the question of why companies want to come to Britain, he said:

Let us be clear. The right hon. Member for Wokingham is chairman of the Conservative party’s economic competitiveness working party. He produces recommendations, including considering the use of vouchers—this is the answer to the shadow Chancellor’s point about the recommendation on poverty—in place of rights to public services. [Interruption.] I am happy
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to read it out to the right hon. Gentleman during the debate. Conservative Members will be very interested to learn that, at a time when we are discussing what has happened to Farepak, he has recommended that regulation for low-cost savings products should be removed if people do not want to sign up to such regulation.

Mr. Redwood rose—

Mr. Brown: I am happy to give way if the right hon. Gentleman wants to clarify that point.

Mr. Redwood: The Chancellor is living in a fictitious world—he should wait to see the proper report. Of course, if people want good quality regulation, it should be there on their behalf, but what we do not want is the massive over-regulation that is now driving business out of this country.

Mr. Brown: This is a very important point, because it is about the future of the Conservative party. Did the right hon. Gentleman say, in his economic competitiveness group, that he wanted to produce plans for vouchers for public services, which the shadow Chancellor says they will not do? Did the right hon. Gentleman also say that if people wanted to sign up to no-regulation products in the financial services industry, they should be free to do so? The answer is yes. At the same time that Conservative, Liberal, nationalist and Labour Members are complaining about what has happened to Farepak, the right hon. Gentleman would remove the possibility of regulation.

Several hon. Members rose—

Mr. Brown: Well, this is very interesting. Which part of the Conservative party shall I give way to? We have the No Turning Back group, the Cornerstone group, the Bow group and the Tory Reform group and they all have tax proposals.

Mr. Julian Brazier (Canterbury) (Con): The Chancellor mentioned savings products, but can he tell the House why the savings ratio has halved since he took office?

Mr. Brown: The savings ratio in the US is negative, but the economy continues to grow —[ Interruption. ] The hon. Gentleman has to explain to us how removing protection from savings products would in any way liberate low-income users in our country. I was right—the hon. Gentleman is a member of the Cornerstone group of the Conservative party, which wants £40 billion-worth of tax cuts. It says that that is only 4 per cent. of GDP and we should not worry about it. It is only the cost of every school in the country, but that is the policy of the Cornerstone group of the Conservative party.

Several hon. Members rose—

Mr. Brown: Should I take the Cornerstone group, the No Turning Back group or perhaps the hon. Member for Wantage (Mr. Vaizey )—[ Interruption. ]

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Mr. Deputy Speaker (Sir Michael Lord): Order. I am having some difficulty in hearing the Chancellor and the debate. Perhaps the House could quieten down a little.

Mr. Edward Vaizey (Wantage) (Con): Given the Chancellor’s interest in the views of Back Benchers, will he confirm whether he supports the call by the right hon. Member for Darlington (Mr. Milburn) for vouchers in the NHS or the call by the right hon. Member for North Tyneside (Mr. Byers) for the abolition of inheritance tax?

Mr. Brown: The answer is no, and I have made that absolutely clear. The hon. Gentleman might explain to me why at one and the same time he supports the third fiscal rule, which requires us to cut public expenditure by £16 billion or £17 billion this year and next year, and at the same time calls for more spending on roads, the health service and all round. At some point, the Conservative party will have to make up its mind. Either it is the party—

Several hon. Members rose—

Mr. Brown: Well, I will give way once more and then I will have to make some progress, because I wish to expose the various positions in the Conservative party. I do not know which one the hon. Member for South-West Hertfordshire (Mr. Gauke) represents, but I will give way to him.

Mr. David Gauke (South-West Hertfordshire) (Con): If the Chancellor does not agree with the right hon. Member for Darlington (Mr. Milburn) or the right hon. Member for North Tyneside (Mr. Byers), does he agree with the right hon. Member for Birkenhead (Mr. Field) who has said that in 1997 the Labour Government inherited one of the strongest pension provisions in Europe and now has one of the weakest?

Mr. Brown: The pensions Bill, which I thought had all-party support, will guarantee a rise in line with earnings in the next Parliament and will put the pensions system on a better footing. I expect that during the debate my right hon. Friend the Member for Birkenhead (Mr. Field) will explain his views on that Bill. However, I was right—the hon. Gentleman is a member of the No Turning Back group, so he does not want only £40 billion of tax cuts; he wants £50 billion of tax cuts. I have read the group’s document. At the same time, however, the hon. Gentleman, who should be grateful that unemployment is down 36 per cent. in his constituency, has called for more health spending. How can he, at one and the same time, support more spending on the health service and a £50 billion cut in taxation?

Philip Davies rose—

Mr. Brown: I must make progress. The one group of people who do not seem to have a policy on which they are prepared to pronounce are the Front Benchers of the Conservative party. They have been absolutely silent while all the party’s different policies have been exposed.

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The main theme of the Queen’s Speech is the intention to build on the economic platform that we have created of stability and growth, and to look forward to the central challenges that we must meet as a nation. As a result of the Queen’s Speech, we will publish legislation on statistics, further education reform, welfare reform, and pensions—my right hon. Friend the Secretary of State for Work and Pensions will talk about that in detail later—and there will be a financial services Bill, too. In addition, today we are publishing our document on long-term challenges facing the British economy. What was remarkable about the shadow Chancellor’s speech was that none of those long-term challenges was addressed.

We will face the global terrorist challenge by enhancing security. We have doubled the security budget from £1 billion to £2 billion. [Interruption.] I am happy to give way, if any hon. Member can point out that that is not the case. Let us have no more talk about the Home Office budget. The security budget is doubling, and the Home Office budget is rising this year, next year, and the year after that, because we intend to meet our commitments to security.

The second challenge is how to meet the demands of global economic restructuring. We must do so by entrenching our stability. That is why the statistics Bill will continue the process that we started with the Bank of England and the competition authorities, and continued with industrial policy—the process of making policy independent of Government. We will out-innovate our competitors if we pursue the science, technology and skills strategy that we are putting forward.

We must meet the environmental challenge by taking action on climate change, hence the climate change Bill that we will discuss in the House. However, we must balance what we can do nationally and what we can do internationally. I should tell Opposition Members that the environmental challenge will require a degree of European co-operation, and that is no part of their policy at the moment. If we are to meet the challenges of the future, we must respond to rising individual aspirations and to the yearning in our communities for greater cohesion.

I will not give way. We take seriously the security needs of Britain and the issue of how to meet those needs through public expenditure. I can confirm not only that we have doubled the security budget, but that we are considering a single security budget. I can also confirm that we have spent £5 billion on Iraq and Afghanistan. To continue the support of our armed forces, I am making available extra money for operational needs. We are setting aside £24 million for the “Better Basra” project, and at least a further £100 million in reconstruction. We will expedite approval of any other desires that the Army has for necessary equipment if a similar operationally urgent need arises. I have said that there should be no hiding place for those who perpetrate terrorism, and there should be no hiding place for those who finance it, either.

I turn to the challenges of global economic restructuring. The Queen’s Speech legislation on further education reform, welfare reform, and statistics, as well as the document that we published today setting out the long-term challenges, are designed to make us better equipped, as a nation, for the challenges ahead. Asia is now producing
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more than Europe, and China alone produces half our computers, clothes and digital cameras. Even more challenging for the future is the prediction that China and India are likely to be responsible for half of the world’s growth in the next 10 years. There has been a 400 per cent. increase in the number of unskilled workers in the industrialised economy. China and India charge wage rates that are only 5 per cent. of those of the United Kingdom, and they are therefore making large numbers of the world’s unskilled workers unemployable or redundant. That is a major social, as well as economic, challenge, and that is why we have set up a number of reviews, led by prominent business men and women in this country.

Our challenge is to out-innovate our competitors, and to consider how to build on our commitment to science. That commitment has led us to double the science budget. The Gowers report will consider how Britain can become the leading intellectual property centre of the world. The Cooksey report will consider how we can bring private and public sectors together, so that we can take the lead in medical technology. In transport, where we are still paying the price for decades of under-investment under the Conservatives, Rod Eddington, former chief executive of British Airways, will advise on future priorities. Kate Barker, a member of the Monetary Policy Committee will produce her report on planning.

I turn to the skills needs of the economy. Allied to further education— [Interruption.] The Conservatives do not like talking about serious issues, such as the future of jobs and skills in our economy. We have made more progress towards full employment than any Government in recent years.

Mr. Peter Bone (Wellingborough) (Con): Can the Chancellor explain why there are more unemployed people in my constituency now than in October 1997?

Mr. Brown: I tried to do my research before the debate and the figures that I have say that unemployment has fallen from 1,856 to 1,500—[Hon. Members: “Where?”] In Wellingborough. Perhaps the hon. Gentleman should look at the unemployment figures for his own constituency. He is of course a member of the No Turning Back group—[Hon. Members: “They’re everywhere.”] They are certainly everywhere on the Conservative Benches, and they want to cut taxation at a cost of £50 billion. The hon. Gentleman must benefit from the new deal, which is creating jobs in his constituency, yet he wants to abolish it. He must benefit from the additional 85,000 nurses and 30,000 doctors in the national health service. If the third fiscal rule were applied, we would be cutting that public expenditure. If the figures that I gave the hon. Gentleman are right—obviously I shall correct them if they are wrong—and unemployment has fallen from 1,856 to 1,500 since we came to power and is down 19 per cent., perhaps he might apologise to me.

Mr. Bone: Will the Chancellor give way?

Mr. Brown: I am happy to give way if the hon. Gentleman wants to give me the right figures.

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Mr. Bone: It is simple; the figures are the Government’s. At the end of October, more people were unemployed in Wellingborough than at the end of October 1997—those are Government figures.

Mr. Brown: It is interesting that I can give the hon. Gentleman figures for his constituency but he cannot give them to me.

When the Welfare Reform Bill and the Further Education and Training Bill go through the House of Commons, we shall also be considering the Leitch report on skills. Since 1997, we have trebled apprenticeships; through educational maintenance allowances, we have increased the number of people staying on at school to 300,000; and the national employer training programme is forecast to reach 350,000 employees. In addition, the Further Education and Training Bill will deliver accountability of further education colleges. It will borrow from the community colleges model in America and will mean that there is greater individual choice. At the same time, more money will be spent on learning and skills as a result of the record investment in further education colleges— [Interruption.] If the hon. Member for Wellingborough (Mr. Bone) has new figures on unemployment, I shall be happy to hear them.

The new deal has helped 3.6 million people to find jobs. It has helped 1.8 million people into work and 980,000 people— [Interruption.] What is the point of abolishing the new deal when it helps people to get jobs?

I turn now to the issues at the centre of any economic debate: tax and spending as a whole. In 1992, when I became shadow Chancellor, we decided that we must have discipline in our party about public spending commitments. We decided that no shadow Minister should make public spending commitments that were not approved, and that we would freeze public spending for the first two years of a Labour Government to achieve the stability necessary for the economy.

The Conservatives have adopted a fiscal rule that suggests that they would cut public spending by £17 billion this year and by £16 billion next year. If it were across the economic cycle, the figure would be even higher and nearer to the No Turning Back group’s £32 billion or £31 billion. I would like to read out some of the commitments made by the Conservatives on public spending.

The Conservative shadow Chancellor says that he wants stability and to keep spending low, yet there are promises of more money for the Home Office, more money for the police who should have higher basic salaries, more money for border police, more money for 24-hour security at ports, more money to invest in drug rehab, more money for what are called “relationship centres”, more money for roads, for voluntary bodies, for occupational therapists—and those are the commitments made only by the Leader of the Opposition. It sounds awfully like a Liberal party shopping list.

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