Pre-Budget Statement

Part of the debate – in the House of Commons at 3:30 pm on 25th November 1997.

Alert me about debates like this

Photo of Kenneth Clarke Kenneth Clarke Conservative, Rushcliffe 3:30 pm, 25th November 1997

Is the Chancellor aware that, after announcing some small and, on the whole, welcome spending increases and skipping over the spending cuts that he proposes to make in benefits for the disabled, defence and elsewhere, he has still announced public sector borrowing requirement figures that show him reducing public sector borrowing at a rapid rate, and even likely to hit a period of debt repayment that he never intended, despite the fact that we have one of the lowest debt to GDP ratios in the western world?

Does the right hon. Gentleman not accept that that underlines the fact that his July Budget was unnecessary, and that the most courageous social step he could have taken was to reverse his taxation changes affecting pension funds? That would have been the most significant announcement on social policy for the longer term that he could have made today.

As for the other changes in the forecast, has the Chancellor noticed that the Bank of England now forecasts that, as a result both of rapid increases in interest rates and the increase in the exchange rate that has resulted, and of tight fiscal policy, it expects economic growth to fall away very rapidly next year, and possibly to disappear? Does he accept that nothing he has announced today could have a significant effect on that?

Does the right hon. Gentleman really stake his reputation on the forecast of 2.75 per cent. growth next year, which seems highly unlikely? Will he stop justifying what he says with constant references to the late 1980s, when circumstances bore no relation to what we see now, earnings were running away at 8 per cent. per year, there was a balance of payments crisis, and economic growth of 4 per cent. had been running for two or three years?

Before the right hon. Gentleman revives the myth that the Conservative Government were profligate big spenders, reckless on inflation—that was not what he said in opposition—will he not accept that he inherited stable growth with low inflation, falling unemployment and public finances that have surprised him by how rapidly they are improving? Will he go back to the drawing board and consult genuinely on a more constructive long-term economic policy that might protect living standards and jobs?