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If the Chancellor had been at the Select Committee on the Treasury this morning, he would have heard Sir Eddie George and his colleagues on the Monetary Policy Committee say that one of the joys of maintaining the symmetrical inflation target over the past few years has been that we have ensured the lowest unemployment levels for 40 years. Does the Chancellor agree that economic stability and social justice should be the primary aims of the Government, to ensure that we keep up the level of public spending and have the best health service in the next five to 10 years in this country?
Mr. Brown: I thank my hon. Friend, who is the Chairman of the Treasury Committee, which I look forward to visiting in the next few days. He is right about the importance that we attach to maintaining levels of employment. He is also right to say that the levels of unemployment in this country are still the lowest for 25 years, despite the pressures of the world slowdown.
I should have thought that the shadow Chancellorwhom my hon. Friend mentionedwould want to point out that unemployment in his own constituency has gone down by 61 per cent. since Labour came to power. We have done substantially better than he managed to do when he was Secretary of State for Employment and unemployment was rising.
Mr. Brown: The shadow Chancellor blames the Labour party, but it was the Conservative partyif the history books record it properlythat took this country into the ERM at the wrong rate. No matter how the shadow Chancellor tries to deny the record, 1 million manufacturing jobs were lost and unemployment went up by 1 million in the last world slowdown, when he was Secretary of State for Employment. He is not the answer to the Tories' economic problem; he is the problem.
Mr. Kenneth Clarke (Rushcliffe): I notice that the Chancellor has abandoned poor Prudence and taken up with a Mr. Wanless. May I ask him questions about the future health of the public finances, which are his responsibility and the subject of a Budget? Will he leave the details of national health service policy to other Ministers responsible and accountable to the House who may be able to devote more time to detailed study of it? We do not want the health service run from the Treasury, in my opinion.
Does the Chancellor accept that debt repayment, for which he continually receives half-hearted cheers from those on the Labour Back Benches, is a result of accident, not prudent design? He has underestimated his revenues; the Departments did not pick up their spending after he
Will the Chancellor confirm that departmental estimates as a whole, not just on health and education, are going up by 7 to 8 per cent. per annum, which is unsustainable, particularly when the economy is beginning to run down? Does he therefore accept that, if he does not stop himself and his colleagues expanding the role of the state at such a rate when the economy is turning down, he will before long squeeze out private investment and private consumption, causing great damage to the British economy and our long-term prospects?
Mr. Brown: Much as I admire many of the former Chancellor's achievements, I do not accept his analysis. First, it was right to cut debt. It was not an accident: it was a deliberate decision. The right hon. and learned Gentleman knows that, when he left the Exchequer, debt was 44 per cent. of GDP, which was too high, and the deficit was nearly £30 billion, which was unsustainable. That is what we had to act on with the difficult decisions that he said he announced, but would never have implemented, to impose tight limits on public spending. That is why we had to take tax decisions at that time and why we also made a deliberate decision to cut debt.
On the mobile phone sale, Conservative Front Benchers advised us to use the proceeds not to cut debt but for other things. We decided to cut debt, and did so by £22 billion as a result. That was the right decision for Britain. I do not accept the right hon. and learned Gentleman's analysis in that respect. Of course, there are downside and upside risks for the economy next year, and I hope he agrees that I mentioned both in my statement. Nobody is complacent, but I am cautiously optimistic about the prospects for the British economy. I hope that, in the end, he is too.
On the health service, as a former Chancellor, the right hon. and learned Gentleman knows that funding comes back to the Treasury, so the idea that we should do nothing to plan future funding either from the Treasury or within the decision-making process of Government collectively is wrong. Of course, he made that point to me because he is embarrassed by the policy of Opposition Front Benchers.
All the time that the right hon. and learned Gentleman was Health Secretary, he defended a health service that was publicly funded, paid for by taxation and available to people based on need. Then he found that the new leader of the Conservative party was saying in the leadership election that he favoured private medical charges and was considering private medical insurance tax relief and the French or German systemanything but the existing system of state-provided, tax-funded health care. The right hon. and learned Gentleman said:
Although I welcome the additional support for business research and development announced today, does my right hon. Friend accept that there is a pressing need to invest more of the resources that he is able to provide in the universities so as to ensure that enough people across a full range of disciplines pursue academic careers and that the universities are thereby able to play their part in sustaining the UK's global economic competitiveness?
My right hon. Friend's plea for more funds for universities, and, in particular for their research arm, will have to be considered during the public spending round. As for the commercialising of university inventions, I think my right hon. Friend will agree that the university challenge fund and the enterprise institutes that have been created in every region are a means by which universities can capitalise on their inventions. We want to build on that. I hope that over the next few years more university- based inventors will see their ideas being used in small businesses, and as a result will contribute British products to the economy. My right hon. Friend's spending plea, meanwhile, I take as the first representation to the 2002 spending review.
Sir Peter Tapsell (Louth and Horncastle): Does the Chancellor understand that his statement will be seen as an admission that, far from overcoming boom and bust, the British economy is back at the "bust" stage of its trade cycle, and that the ratio between the pre-election boom that we had and the post-election bust that we are experiencing now is wider than it has been for a good many years?
Mr. Brown: Let me point out that it was the Opposition who raised the question of boom and bust. When the hon. Gentleman compares the last world slowdown with this, he will note that when the economy went into recession in 1990 it was impossible to cut interest rates, because inflation was running at 10 per cent. It was also impossible to take the action that was necessary on the fiscal side when it could have been taken.
The hon. Gentleman should look at the record of the last Conservative Government when he tries to suggest that there is boom and bust under this Government. It is quite the opposite. The policy we are pursuing is one of stability. This year that policy has yielded a growth rate of, we believe, 2¼ per cent., and we are forecasting a rate of 2 to 2½ per cent. next year. That is not boom and bust; that is an economy which is trying to achieve a degree of stability that we have not had during previous world downturns.