Economic Growth (Hansard, 27 February 2003)

§ 5. Mr. Andrew Rosindell (Romford)
What changes there have been to his projections for economic growth since (a) the 2002 Budget and (b)the 2002 pre-Budget report; and if he will make a statement. [99466]

§ The Chief Secretary to the Treasury (Mr. Paul Boateng)
UK gross domestic product grew by 1.6 per cent. in 2002, as projected in the pre-Budget report, and we will update our forecasts for the UK and world economies in the forthcoming Budget as normal.

§ Mr. Rosindell
I thank the Minister for that reply, but does he accept that the reality is that the Chancellor got his figures wrong and that sustainable growth in this country is not compatible with high taxes? Bearing that in mind, will he now reverse the irresponsible increases, particularly in national insurance, that will come into force in April?

§ Mr. Boateng
We will do no such thing. Those increases fund a health service that is delivering to the hon. Gentleman's constituents, and that is widely supported on this side of the House, even if it is undermined by Opposition Members.

§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
Predicting growth is particularly difficult at present. Hon. Members on both sides of the House should recognise that. Many factors are affecting spending in the shops across the world. May I ask for an assurance that the Government's spending plans will be maintained, because if they are not, growth in this country could be put at risk?

§ Mr. Boateng
My hon. Friend, who studies these matters in great detail and whose contribution to the Treasury Committee is much appreciated, is absolutely right about the uncertainty in the time in which we live. One thing we can be certain about, however, is that our projections for public finances are based on reasonable and cautious assumptions, with built-in margins for the very uncertainty and shocks to which my hon. Friend rightly draws our attention. They are and remain fully affordable. That includes our proposals for the NHS and the increase in national insurance contributions that funds them.

§ Matthew Taylor (Truro and St. Austell)
Is it not extraordinary that, important as the voluntary sector and overseas aid undoubtedly are, the Chancellor ducks responding on the rather more fundamental issues of tax rises and the fall in economic growth currently taking place in this country? Can the shadow Secretary [HON. MEMBERS: "Shadow?"] I am sorry. Can the Chief Secretary, the Chancellor's shadow, explain—[Interruption.]

§ Mr. Deputy Speaker
Order. I appeal to the House for calm. The Liberal Democrat spokesman should be heard.

§ Matthew Taylor
Can the right hon. Gentleman explain why the Government seek to continue to blame world recession for problems where Britain is clearly doing worse, with investment now falling faster than in any other OECD country, with the exception of Iceland? Are the Government now pinning their reputation on beating Iceland?

§ Mr. Boateng
The shadow Chancellor from Truro is, I fear, in a bit of a muddle, and not for the first time. The fact remains that GDP growth in the United Kingdom was higher than that of any of our major EU partners and competitors in the last two years, and it is predicted to remain so in the next.

§ Geraint Davies (Croydon, Central)
Will my right hon. Friend give an assurance that he has no plans to change our published growth rates from pounds to euros? I note that the French growth rate last year was 1.2 per cent. in real terms, and the British growth rate was 1.6 per cent., but that the growth rate in euros was much greater in France due to currency fluctuations. Will my right hon. Friend assure me that the House will 390 look at the real growth rates and continue to underline the success of our economy compared with those of our economic neighbours?

§ Mr. Boateng
My hon. Friend, who represents the interests of Croydon so very well, will understand if I do not go down the euro path, but I can assure him that we have done better than France in terms of growth over the past two years and that we are predicted to do so in the next.

§ Mr. Michael Howard (Folkestone and Hythe)
Has the Chief Secretary forgotten that barely two weeks ago the Chancellor was boasting, on the Frost programme, that his November forecast for growth had been exceeded? Will the Chief Secretary acknowledge that yesterday's figures show that even that boast, based on the Chancellor's downgraded forecast of barely two months ago, was false? How many profit warnings does the Chief Secretary think the Chancellor can survive?

§ Mr. Boateng
The amnesia is on the side of the right hon. and learned Gentleman. He seems to have forgotten that, at the last time of global downturn, inflation peaked at almost 10 per cent. and he faced interest rates that had doubled for four years. That is the Conservative record; ours is one of sustained growth and stability. That is something of which we are proud and which the Conservatives should be applauding.