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Mr. Brown: First, there is no such proposal, nor is there any proposal for a windfall tax on the banks, as the Conservatives suggest. The Conservative Government introduced a windfall tax on the banks, and it is unfortunate that they did not support our tax on the utilities.
Secondly, on the general question about the economy, it is because we have got inflation under control and have taken action to eliminate the structural deficit that monetary and fiscal policy can now work together. The right hon. Member for South Norfolk (Mr. MacGregor) will remember the position faced by the Conservative Government in the early 1990s. Even at the worst stage of the economic cycle, interest rates had to be above 10 per cent. for years because of their failure to control the inflationary tendencies in the economy. As a result of their failure to control public spending, at the worst point of the spending cycle the deficit was £50 billion. I could give Conservative Members more figures to show what happened.
The Conservative Government failed to take action to eliminate the deficit. Because we have taken early action to tackle inflation--which the Conservative Government never took--and because we have been eliminating the structural deficit, monetary and fiscal policy can work together--I think the right hon. Gentleman understands that point. That is the basis on which we have made our forecasts for the economy. The right hon. Gentleman will find that sensible economic commentators agree with us.
Mrs. Anne Campbell (Cambridge):
I warmly welcome my right hon. Friend's commitment to enterprise and innovation, and his recognition that high-tech companies require special financing measures. Will he undertake to study carefully the collapse of Ionica last week to see whether special lessons can be learned from that innovative, high-tech company, whose collapse had nothing to do with interest rates--[Interruption.]--or with the exchange rate?
Mr. Brown:
My hon. Friend has done a tremendous job working with the science industries in her constituency and throughout the country. It ill befits Conservative Members, who know nothing about what is happening in individual constituencies, to sneer at my hon. Friend's comments. She is absolutely right. The high-tech industry faces problems of financing. There have been particular difficulties in attracting and developing science-based industries in this country.
My right hon. Friend the Trade and Industry Secretary is examining these matters. I acknowledge the work that my hon. Friend has done in pushing this process along. We shall deal with these problems, and we shall look
practically at the barriers to job creation and to opportunity in this country. We shall not pursue the dogmatic policies of the Conservative party.
Mr. Eric Forth (Bromley and Chislehurst):
The Chancellor has just said that he will look practically at problems. What in practical and real terms do the Chancellor and his colleagues intend to do effectively to reduce the costs of employment over the next crucial two or three years against a background of almost certainly rising unemployment? The Chancellor knows that, together with his colleagues in government, he has already increased the costs of employment, thus contributing to the real problems of the manufacturing and service sectors.
Mr. Brown:
The right hon. Gentleman implies that the situation is all bad. He should acknowledge that there has been a 19 per cent. fall in unemployment in his constituency since the general election. There has also been a fall in the constituencies of many other hon. Members, who should acknowledge that employment has been rising.
As for future policies for employment, the right hon. Gentleman should also acknowledge that we have cut corporation tax to 30p, cut small business corporation tax from 23p to 20p, introduced a new 10p rate of capital gains tax, are cutting national insurance employers' contributions for low-paid employees, and have cut national insurance for employees. Those measures will help employers take on additional workers. The right hon. Gentleman will find that many employers say that they wish a Labour Government had been in office years ago.
Mr. Geraint Davies (Croydon, Central):
Does my right hon. Friend know why Opposition Members make no mention of help for the disabled in jobs, help for minimum income families, and help for small businesses? Why do they make no mention of the venture capital industry, one-stop VAT and national insurance, linking enterprise and universities, the new deal, and extra cash for health and education? Is it because the black hole is between their ears and they cannot hear?
Mr. Brown:
I am grateful to my hon. Friend for reminding us of the range of policies that we have introduced and which the former Government failed to introduce. Yesterday, when the House considered the international financial system, the Conservatives had absolutely nothing to say. On monetary policy, they cannot tell us what they would do about the Bank of England. As for fiscal policy, against the advice of the Confederation of British Industry and almost every sensible commentator, they want to cut health and education expenditure over the next year. The sooner the Conservative party wakes up to economic realities, the sooner it will have a chance of being listened to by the British people.
Sir Peter Emery (East Devon):
Will the Chancellor of the Exchequer understand that people listen with some doubt to his talk of a solid, long-term strategy for the economy, given that that strategy has altered considerably since the original announcement in the Budget 16 months
Will the Chancellor answer one question? We know about the increase in education and health expenditure to which he has referred, but we should also consider a number of other announcements that were included in his statement. Will he give us some figures showing what increase in expenditure they will involve? The statement included no costing of that expenditure.
Mr. Brown:
The right hon. Gentleman talked of the so-called golden legacy. I have to tell him that the "golden legacy" was a £28 billion public deficit--3.5 per cent. of national income--which the last Government had failed to tackle, and which we had to tackle on coming to power.
The right hon. Gentleman also talked of the long-term strategy. Our long-term strategy is this: to have eliminated the current structural deficit, to have reached our target on inflation, and to enable monetary and fiscal policy to work together for stability and growth in the economy. It is because we have made those tough decisions on public finances, and cut the deficit--something that the Opposition never supported and have never done--that we are now in a position to spend £40 billion--[Interruption.] The Conservatives left a deficit of £28 billion, claiming that that was a golden scenario. They are now saying that to borrow even £1 is an absolute disaster. What is the view of the Opposition?
As for the health service--[Interruption.]
Madam Speaker:
Order. Do stop shouting. I shall have to use my powers to remove Members from the Chamber if the noise continues.
Mr. Brown:
As for health and education, the right hon. Member for East Devon (Sir P. Emery) was right to ask whether we had budgeted for the money that we are going to spend. The answer is yes: the prudent assumptions are the ones that I have listed. Moreover, because we have underspent as a result of choosing priorities and cutting waste, we shall be able to spend an extra £250 million before the end of the financial year.
Ms Diane Abbott (Hackney, North and Stoke Newington):
The whole House welcomes the extra £250 million that is to be spent on the health service, but may I ask a question about monetary policy? My right hon. Friend will know that today Sainsbury marked down its profits forecast, citing the exchange rate and the approaching turndown as part of the problem. We all support my right hon. Friend's intention to bear down on inflation, and most of us understand that Eddie George is doing his best within his narrow frame of reference; but does my right hon. Friend accept that, in the very long run, there may well be a case for looking at the framework in which the Monetary Policy Committee operates, and putting on that committee people who are known to have some understanding of and feeling for industry in the north, the midlands and elsewhere?
Mr. Brown:
The Monetary Policy Committee is not to be made up of representatives of this pressure group or that. It is a group of people chosen for their expertise in certain areas. What I have been intent on doing--in the
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