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House of Commons

Thursday 14 June 2007

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Employment Trends

1. Mr. Jim Devine (Livingston) (Lab): What recent assessment he has made of the economic effect of trends in employment levels over the last 12 months. [142561]

The Chancellor of the Exchequer (Mr. Gordon Brown): There are a record 29 million people in work—more than at any time in our history and 87,000 more than this time last year, making our growth last year 2.8 per cent. To create more jobs, we will maintain economic stability, intensify the new deal and, as we are announcing today, improve adult skills and seek excellent standards in every school in the country.

Mr. Devine: I am grateful to my right hon. Friend for that answer. As he knows, unemployment in my constituency is 2.4 per cent., but that will rise substantially if the Scottish National party council has its way. It has recently written to more than 5,000 staff, telling them that unless they sign a new contract, they will be dismissed by 30 September. Does my right hon. Friend agree that, far from bullying its staff, the SNP should withdraw the letter, apologise and get back to the negotiating table?

Mr. Brown: I am grateful to my hon. Friend for telling me that 5,000 jobs could be at risk as a result of the Scottish National party’s policies. We have created 200,000 jobs in Scotland over the past 10 years. Any economic policy or any policy pursued by the Scottish nationalists that puts jobs in Scotland at risk would be taken very seriously by the Scottish people. I hope that the Scottish National party will think again before it puts more jobs at risk in the Scottish economy.

Mr. Michael Fallon (Sevenoaks) (Con): Given that the right hon. Gentleman has now promised to be more open and accountable and govern differently, can we have a factual answer to the question of why long-term youth unemployment has risen by 32,000 in the last quarter and why it is now back to the level he started with in 1997?

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Mr. Brown: That is completely incorrect. Long-term youth unemployment is down 75 per cent. since 1997. The hon. Gentleman himself went on television just before the Budget to congratulate us on our economic stability. Perhaps he should recognise that in his and other constituencies there are 2.5 million more people in work than in 1997. Together with economic stability and the growth in our public services as a result of new investment, that is a record on which he should congratulate us, rather than condemn us.

Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): May I tell the Chancellor that there are more people working in my constituency today than there were 10 years ago when the Conservative party was in power? One sector is very important for the economy of Teesside: steel. Has he had any discussions with Tata management since the recent takeover of Corus by Tata Steel? If he has not, I urge him to talk to Tata Steel and give it any help and support that it wants to ensure that we have a viable, strong steel sector and that we can keep and protect the 3,000 direct jobs and 30,000 indirect jobs in the economy of Teesside.

Mr. Brown: I am grateful to my hon. Friend for being a champion of both the steel industry and jobs in his constituency. I have talked to Tata management since they bought Corus and they have assured me that they intend to invest in the steel industry in Britain for the future. The whole country faces the issue of building modern manufacturing strength for the future. Whether we are talking about aerospace, pharmaceuticals, information technology or steel, the issue is not manufacturing versus services; the issue is building modern strength in both services and manufacturing. I am sure that that is what we can go on to do.

Dr. Vincent Cable (Twickenham) (LD): It is obvious that employment growth, low claimant unemployment and general economic stability are among the Chancellor’s successes. In the same spirit of generosity, and since this is his last outing as Chancellor, will he acknowledge that there have been some mistakes in the past 10 years? They include, among other things, the London Transport public-private partnership, individual learning accounts, U-turns on film tax credits, company incorporation, operating financial reviews, the Treasury’s treatment of Railtrack, dividend tax credits, tax credit overpayments, rampant inflation in the housing market, widening inequalities in—

Mr. Speaker: Order. The question is a bit narrow.

Mr. Brown: I am grateful to the hon. Member for Twickenham (Dr. Cable) for his customary generosity. If there have been mistakes, it is usually when we have listened to the Liberals. Does he now agree that it was a mistake for the Liberal Democrats to urge us to join the euro immediately and to oppose the new deal and many of the measures that have reduced child and pensioner poverty in this country? I think he would agree that, over the past 10 years, not only has personal wealth increased, but we have taken more people out of poverty—unfortunately, that is not because we listened to the Liberal Democrats.

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Stephen Hesford (Wirral, West) (Lab): The hon. Member for Sevenoaks (Mr. Fallon) mentioned youth unemployment. I am sure that the House agrees that we look forward to my right hon. Friend the Chancellor becoming Prime Minister. Will he confirm that he will support and advance the new deal that has been so successful in dealing with youth unemployment throughout the years?

Hon. Members: Give him a job!

Mr. Brown: I am talking about jobs, and the jobs of young people in this country. It is one of the greatest misfortunes of the past 10 years that the Conservative party still insists on opposing the new deal, which has affected 2 million young people, and more than 1 million of them have got jobs. The Conservative party still opposes that opportunity, which should be available to millions of people. At some time, the Conservative party will have to make a choice: will it support opportunities for all people in the country, which requires us to have the new deal, or will it simply support opportunities for the few, as its obsession with grammar schools shows?

Mr. George Osborne (Tatton) (Con): May I, too, join in congratulating the Chancellor on the remarkable achievement of surviving 10 years at the Treasury, even if it was twice as long as he wanted? On the question of employment and jobs, may I ask him about the biggest employer in the country, the Secretary of State for Health? This week, the Chancellor is reported to have said of her:

Can we take it, then, that she will soon be joining the record numbers of people who are economically inactive?

Mr. Brown: Our Government have invested more in the health service, with more results. When we came to power, there were 12 million people treated in accident and emergency; now it is 17 million. When we came to government, in-patient treatment rates were low; they are now high. When we came to government, 120 hospitals needed to be built, and we are building them. As for the shadow Chancellor, it is very difficult to listen to what he says on any one day, because he will usually have changed his mind by the next day, as he did on grammar schools. I understand that he has just given an interview to Glamour magazine. The interview has been issued with a free pair of flip-flops. He should take advice from the leader of his party, who said only a few days ago that we have a successful economy. He said:

Why? Because we have a Labour Government.

Mr. Osborne: At least I do not appear in glossy magazines talking about what I listen to on my iPod. My question was about the Health Secretary, and the Chancellor has just hung her out to dry. No wonder he writes books about political courage instead of appearing in them. The fact is that the NHS job losses, the ward closures and the crises are his doing, because it was his NHS plan, his Wanless report, and his money without reform. Does the anger that junior doctors feel
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about their employment prospects explain why one Downing street aide this week said of the Chancellor:

Or was he getting at something else?

Mr. Brown: I have been up against seven shadow Chancellors in the past 10 years, but the hon. Gentleman is the only shadow Chancellor who never asks me about inflation, interest rates or the economy. Every time that there is a question about employment and economic activity, he wants to change the agenda. First of all, on the national health service, it is because we have invested twice as much in the NHS that we do not have the waiting times and waiting list crises that the last Conservative Government had. It is because we have managed the economy well that we are able to invest in public services. If he does not think so, why does he always say to business audiences outside the House—he knows that they have to hear the truth about it—that Labour has had great success on the macro-economy? Why does he have to admit that the Tories left the economy in a mess? [Interruption.] Oh yes. There were interest rates of 15 per cent. under the Conservatives in the 1990s. [Interruption.] Well, who was the political adviser to the Chancellor of the Exchequer in 1992? It was none other than the Leader of the Opposition. The Conservative party stands and falls on its economic record; we stand and succeed on ours.

Mr. Dennis Skinner (Bolsover) (Lab): Will the Chancellor accept that in the real world, a remarkable change has taken place in many regions throughout Britain? Nowhere is that better exemplified than in the coalfields. In the last month, we started a junction on the M1 with £14.5 million that was derived from having a good economy. That means that there will be another 8,000 jobs where there used to be four pits that were closed by the Tories. As for the man from the Opposition, my right hon. Friend the Chancellor should not worry too much about those who were educated at Eton, because they were all educated beyond their intelligence.

Mr. Brown: My hon. Friend does what the shadow Chancellor does not do—he asks questions about the economy. When it comes to the real economy, jobs are being created. Jobs that were lost, unfortunately, as a result of the policies pursued by the previous Government are now being replaced by new investment. My hon. Friend is one of the great sponsors of the new investment in his region and near his constituency. Now we are seeing, as he said, not only 14,000 jobs but another 8,000 jobs. We are creating more jobs, and moving the country further and faster to full employment, and that is the result of a Labour Government.

Savings Ratio

2. Mr. Richard Spring (West Suffolk) (Con): What assessment he has made of the trend in the savings ratio over the last 10 years; and if he will make a statement. [142562]

The Financial Secretary to the Treasury (John Healey): Households are benefiting from steady economic growth, and they are benefiting from low and stable interest and inflation rates. The level of household savings ratio
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since 1997 reflects that stability, with households having the confidence to reduce their contingency savings, unlike in the early and mid-1990s.

Mr. Spring: Will the Minister confirm that the household savings ratio is now one third of what it was in 1997, and is the lowest of any sizeable EU country? Can he explain why?

John Healey: The UK is not unusual, as the savings ratio has declined in the United States, Australia, Japan and Canada, and is lower in the US than in the United Kingdom. The level of the savings ratio in the UK is broadly similar to the level in the 1960s, when there was also high employment, a stable economy and low inflation, so people had less need for the cushion of security that savings can offer.

John McFall (West Dunbartonshire) (Lab/Co-op): The savings ratio for low-income householders and individuals has not moved much in the past 10 years, but a Government initiative—saving gateway phase one—has helped people, because it has provided assets for people on low incomes. The Economic Secretary will appear before the Treasury Committee next week, but will my hon. Friend have a word with him before then to extend saving gateway phase one, which is simple and has been well received, to ensure that people on low incomes increase their assets and play a more active part in the economy?

John Healey: My right hon. Friend is right to draw attention to the importance of savings, and his Committee has consistently examined the issue. We recently completed the second pilot on the saving gateway, which shows promising signs of success. He will know that twice as many people hold the individual savings accounts that we introduced as their predecessors, personal equity plans and tax-exempt savings accounts. He will know, too, that one in four families and people on low incomes hold ISAs, which is far better than the performance of previous schemes. The savings ratio in the UK hit its peak at the very time that repossessions and negative equity hit their peak, and I can assure him that what we will not do is introduce economic policies that will drive us back to the point in the early 1980s, when an estimated 1.5 million households suffered from negative equity.

Mr. Desmond Swayne (New Forest, West) (Con): My constituent complains to me that when he chides his grown-up children for not making any savings they laugh in his face and call him a mug, because he saved and consequently lost not one but two pensions. He blames the Chancellor. Who does the Minister blame?

John Healey: Clearly, the hon. Gentleman and I share the view that savings are important, so I am disappointed that he has not got behind the pensions reforms that the Government have introduced, the child trust fund and ISAs—all schemes that we introduced to raise the level of savings, particularly for the young and those on lower incomes.

Mr. David Kidney (Stafford) (Lab): Given the changes to demography that we are all witnessing, will my hon. Friend give the Treasury’s view of the report
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by Sir Derek Wanless, requested by the King’s Fund, about the cost of long-term care? Does the Treasury hold talks with the financial services sector about bringing together public and private policies so that we can have a range of financial products in which it makes sense for people to invest when they are young for their care when they are old?

John Healey: My hon. Friend is an active and articulate advocate for stronger policies and support in that area. Following the Wanless report, and particularly in preparations for the comprehensive spending review, we are looking at precisely those areas.

Mr. Christopher Fraser (South-West Norfolk) (Con): An article in the Eastern Daily Press yesterday states that one in 10 East Anglian families cannot afford food or medicine, or risk eviction because they are

Research shows that that is due in part to poor financial management and inadequate saving. Does the Minister accept that he needs to do much more to encourage people on low incomes in constituencies such as mine to save money and learn how to manage their finances more effectively?

John Healey: We need to do a good deal more not just in constituencies such as the hon. Gentleman’s, but right across the country. I hope that he will recognise the potential of the child trust fund, particularly alongside the greater education on financial affairs that we are looking to put in place through the education system. I hope that he and his party will be prepared to weigh in and support the efforts that we are making in that regard.

World Trade

3. Chris Mole (Ipswich) (Lab): What recent assessment he has made of the impact of world trade on the UK economy; and if he will make a statement. [142563]

The Chancellor of the Exchequer (Mr. Gordon Brown): According to the World Bank, full trade liberalisation could bring up to $300 billion of benefits and contribute to reducing world poverty. There must be no going back to protectionism. Reaching a Doha trade deal is a crucial step. Europe and America must urgently make progress on agriculture, and further offers on industrial goods by India and Brazil are needed. That would help both the developed world and developing countries.

Chris Mole: Growth in world trade is manifestly crucial to the UK. The most recent statistics show that the UK has taken the lion’s share of foreign direct investment. What can my right hon. Friend do to ensure that regions such as the east of England continue to benefit from that?

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