HC Deb 13 May 1999 vol 331 cc402-6
5. Sir David Madel (South-West Bedfordshire)

What projection he has made for unemployment levels at the end of the 1999–2000 financial year. [83192]

The Chancellor of the Exchequer (Mr. Gordon Brown)

In line with the practice of previous Administrations, the Government do not publish forecasts of unemployment, but, for the purposes of projecting social security spending, the Government have introduced a new and deliberately more cautious unemployment assumption, based on an average of outside forecasts.

The official figure for unemployment now stands—according to the definition of the International Labour Organisation—at 266,000 less than when the Government took office, and on a claimant count at 355,000 less.

Sir David Madel

Employment in manufacturing has fallen over the past four months, and is set to go on falling. Over-regulation and stealth tax policies are making matters worse. Why do the Government keep slithering out of their responsibilities for manufacturing industry—or is it someone else's fault that things are going wrong?

Mr. Brown

Under the last Administration, manufacturing unemployment fell from 7 million to 4.1 million. It is still above 4 million under the present Government. However, the latest figures show that manufacturing output rose last month, despite everything that the Opposition have been saying about manufacturing.

I am surprised that, when tabling a question about unemployment, the hon. Gentleman chose not to refer to the new deal on unemployment, which is doing much for his constituency and many others. The shadow Chancellor has called the new deal a fraud and a waste of money—[Interruption.] He did say that. But the hon. Member for South-West Bedfordshire (Sir D. Madel) was pictured with a new deal entrant a few months ago, and was quoted as saying that he was delighted by the scheme. He also said: When we are returned to power we will build on this scheme, which is doing a lot to help people". The Conservative party should take the advice of the shadow junior health Minister, the hon. Member for Rutland and Melton (Mr. Duncan), and go back to the drawing board.

Mr. Barry Sheerman (Huddersfield)

Did my right hon. Friend see yesterday's statement by the Bank of England that the economy was now on course for growth with price stability? Will he suggest to Conservative Members, and to the shadow Chancellor in particular, that the shadow Chancellor should consult more widely with business representatives, rather than just talking to representatives of Asda? We have a 4.6 per cent. unemployment rate; and businesses up and down the country welcome the new deal, and welcome the creation of a business environment in which they can get on with the job.

Mr. Brown

I am grateful to my hon. Friend for his reference to Asda. If the shadow Chancellor were to talk to the person from Asda, who is also a Conservative Member, he would hear him say about the Budget: We'd welcome the help for small business. I think that's good. We'd welcome the reduction in corporation tax and lower corporation tax for small business. That's good … everyone in the country is dead keen on it"— employee share ownership— and that's good. Overall, not a bad business Budget. Those are the words of the vice-chairman of the Conservative party.

Mr. Malcolm Bruce (Gordon)

Does the Chancellor accept that the biggest continuing threat to jobs in farming, food production, tourism and manufacturing is the continuing high exchange rate and high interest rates, compared with those of our main partners? Is it not time that he had a strategy for bringing our exchange rate to a more competitive level, and our interest rates into line with those in our major markets? When will he do that?

Mr. Brown

The biggest threat to jobs in any sector would be the pursuit of the wrong macro-economic policies—the policies that were pursued under the previous Government. I think that the hon. Gentleman agrees. There will be no return to stop-go, boom-and-bust policies. We have kept inflation low, we have made the Bank of England independent, and we have set tough fiscal disciplines. All those disciplines are now yielding results in terms of both the inflation rate and the growth path of the economy, but we have still to have some answers from the Opposition. They oppose Bank of England independence. They oppose all the measures that we are taking that are to do with employment—the minimum wage, the working families tax credit and the new deal. They do not have an economic policy and, sometimes, I wonder whether the Liberal Democrats do.

Mr. Derek Twigg (Halton)

One of the problems in terms of unemployment is that the Opposition have been talking down the economy for the past two years. As my hon. Friend the Member for Huddersfield (Mr. Sheerman) pointed out, the Bank of England said that the economy is set to grow, and Barclays says that there will be no recession. Is it not true that, in that context, the new deal is even more important in getting people trained and skilled for jobs?

Mr. Brown

I am grateful to my hon. Friend. I wish that the Opposition party would now welcome the new deal and that, instead of the shadow Chancellor saying that it is a failure, a waste of money and even a fraud, he would respond to the fact that 250,000 young people are now benefiting from the new deal, that the number of young people unemployed for more than six months has been cut by 56 per cent. since the election, and that long-term unemployment has fallen by 42 per cent. I hope that he will take the advice of the hon. Member for South-West Bedfordshire, welcome the new deal and wish that it could be extended.

Mr. Francis Maude (Horsham)

The Chancellor will recall that, in 1989, when the European Commission last proposed a job-destroying withholding tax on savings—[Interruption.] The question is about employment, and the tax is a job-destroying measure. At that time, the measure was quietly and politely strangled at birth by the then Conservative Government. Although the tax would have destroyed fewer jobs because it excluded eurobonds, in opposition, Labour supported us in ensuring that it never even went into negotiation.

Is not the right hon. Gentleman's negotiation now not about whether jobs will be destroyed in Britain by the withholding tax, but about how many and whose? Why cannot he just say no to that wretched tax, so that people who fear for their jobs can have those fears put to rest?

Mr. Brown

I have made it absolutely clear that the United Kingdom will not accept any directive that requires member states to introduce a withholding tax. It has been absolutely clear for months. It is only the Conservative party's obsession with finding conspiracies in every part of Europe that allows it to use a question on employment simply to talk about the withholding tax.

Mr. Maude

I do not think it eccentric to use a question on unemployment to talk about a European measure that would destroy jobs; it is directly relevant to unemployment. If the right hon. Gentleman does not understand the connection, that is perhaps part of the problem that the City of London faces. How many jobs is it acceptable to destroy as the price of his going with the flow in Europe?

Mr. Monti is still drawing his salary two months after being fired from his job. The 10,000 people who will lose their jobs thanks to the tax will not be so lucky. The next time Mr. Monti swaggers into London to lecture Britons and to threaten them with higher Euro stealth taxes, why cannot the Chancellor just tell him to get lost?

Mr. Brown

First, it is very difficult to take lectures about European legislation from the man who signed the Maastricht treaty. Secondly, it is not true to say that the measure was off the table when we came into office; it was on the table and being discussed. Thirdly, because the right hon. Gentleman sees a conspiracy in every part of Europe, he will not accept what I have said all along: the UK will not accept any directive that requires members to introduce and impose a withholding tax. I have made that absolutely clear. It is about time that Conservative Members took what they said they were going to do to heart and listened.

Jacqui Smith (Redditch)

Does my right hon. Friend accept that, given last year's very worrying measures of business confidence, yesterday's estimate by the Bank of England of a gentle take-off in growth was not only very encouraging but unprecedented? Will he spell out which of the Government's policies he believes have contributed to creating that growth, and which future policies will ensure that it continues? Will he also assure the House that he will not be thrown off by an Opposition who seem to be unsure whether they believe that public spending is reckless or desirable, whether the Bank of England should be independent, and whether they would raise or lower business taxes?

Mr. Brown

I agree entirely with my hon. Friend. I also think that the Opposition should take to heart the comments of the junior shadow Health Minister—who shall remain a junior shadow Minister—who said of the speech of the right hon. Member for Hitchin and Harpenden (Mr. Lilley) a few weeks ago: You can't build a strategy on unclear thinking: that's the cart before the horse. We need clear thinking". He also said: We've got to go back to the drawing-board and no longer just scrabble around in the hope of winning short-term engagements". As my hon. Friend says, the Conservative party has a lot of thinking to do.

As for the Government's economic policy, we shall continue to steer a course of stability, to achieve the low inflation that we need to make possible the growth and employment creation currently happening in the United Kingdom. As I said, since the general election, more than 500,000 extra jobs have been created. There are now more people in employment in our country than at any time in our history.