HC Deb 30 October 1997 vol 299 cc1012-3
4. Mr. Livingstone

What estimate he has made of when United Kingdom investment as a proportion of gross domestic product will reach the average level for the EU as a whole. [12651]

The Chancellor of the Exchequer (Mr. Gordon Brown)

The higher investment that we seek to meet the Government's objective of high and stable employment and growth requires stability as well as the specific measures that the new Government have taken to encourage long-term investment. The Treasury's economic assessment of Britain in Europe, published on Monday, suggests that to be outside economic and monetary union in the long term could damage investment. That is one of the reasons why we support the principle of a single currency.

Mr. Livingstone

May I start by recording my appreciation to the Chancellor for his wise decision to create a vacancy on Labour's National Executive Committee? Does he agree that the major reason why the British economy is weak and is not capable of joining the currency union is that the former Government neglected investment? Year by year, we were consistently recording investment levels that were barely 75 per cent. of the European average.

Mr. Brown

I agree with my hon. Friend on his second point. For 20 years, British investment compared with that in Europe has been lower than it should have been. With our cuts in corporation tax and our investment incentives, we intend to raise investment, but what would be most damaging, particularly for inward investment into Europe, would be to reject in principle the idea of a single currency. Thirty per cent. of inward investment in Europe, 40 per cent. of Japanese investment in Europe and 50 per cent. of Korean investment in Europe comes to Britain. The Conservative party should answer this question: why does it oppose the principle of a single currency? If the economic reasons for a single currency are compelling, why will it not support it in the national interest?

Mr. Townend

Does the right hon. Gentleman accept that it is the quality, as much as the quantity, of investment that matters? How does the return on investment in the United Kingdom compare with average return on investment in other European Union countries?

Mr. Brown

Of course it is the quality of investment that matters, but there has to be investment in the first place. I heard the hon. Gentleman on the radio talking about the single currency and his principled objection to it and I must tell him that we would not be serving the cause of British industry or investment in Britain well if we opposed in principle a single currency. To improve the quality of investment requires, first, that there is investment. The Conservative party's policies would ruin the possibility of more investment in our country.

Mr. David Taylor

Is the Chancellor aware that his clear line on the single currency has had the unforeseen effect of trapping four British nationals in an alien organisation? Would he care to comment on the dreadful plight of the hon. Members for Esher and Walton (Mr. Taylor), and for Leominster (Mr. Temple-Morris), the right hon. Member for Henley (Mr. Heseltine) and the right hon. and learned Member for Rushcliffe (Mr. Clarke)? Will he urge his ministerial colleagues to refer their case to the International Court of Justice which, unfortunately, sits at The Hague?

Madam Speaker

Order. As the Chancellor knows, he has very little responsibility for that, but perhaps he could pick one or two bones from that flesh.

Mr. Brown

It is just as well that I have no responsibility for the Conservative party in its present condition. My hon. Friend has made a point which is emphasised by the former Conservative spokesman on Northern Ireland who talked about the damage to business that would be caused by objecting to a single currency. He said that our businesses need to prepare for Europe urgently. That is the man who, until yesterday, sat on the Front Bench for the Conservative party.

Only this morning the former Deputy Prime Minister said that the Conservative party was now at war with business. I must ask the Conservative party whether it supports the principle of a single currency—yes or no. If the economic reasons for it are compelling, why does the Conservative party object to it when it is in the national economic interest?