Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Amendment of the Law

Part of Budget Resolutions and Economic Situation – in the House of Commons at 6:05 pm on 21st March 2000.

Alert me about debates like this

Photo of James Plaskitt James Plaskitt Labour, Warwick and Leamington 6:05 pm, 21st March 2000

I am interested in the line that I often hear from Conservative Members, who have spent years extolling the virtues of the free market. The euro is doing what I think an international currency is supposed to do in free currency markets. It has depreciated to enable the European economies to recover. The likelihood is that, as the European economies grow, which they are beginning to do, the euro will strengthen.

I turn to the third problem, which I cited at the outset and which has plagued our economy for so long. I refer to the productivity gap and skills shortages. There is a significant productivity gap between us and our competitors. It is part of the under-investment by both industry and Governments. Indeed, Governments have been responsible for historical under-investment in education and training. There is no more important investment than in the skills of the work force. The economy needs a strong skills base. Hence it is vital to raise education investment, across the board, as we are doing. It is vital to help reskilling across the board, as we are doing. The labour market needs to grow not only in quantity but in quality. It is therefore impressive that 800,000 more people are working than in 1997. It is also impressive that the quality of the work force is improving through greater opportunities to train and reskill.

Government measures across the board are helping us deliver on these objectives. The minimum wage, the working families tax credit, child support, the new deal—now extended—all help to make work pay and raise productivity. The lower marginal rates of tax and national insurance for those moving into work are also extremely important. We inherited from the previous Government a situation in which more than a million people moving off benefit into work faced an effective marginal tax rate of 70 per cent. That marginal tax rate is now virtually eradicated, and the further measures announced by my right hon. Friend today in extending the new deal to those over 50 are very welcome.

Finally, the headlines in tomorrow's newspapers will undoubtedly be grabbed by a few key features. They are, of course, excellent features. However, the real story of the Budget is that it makes it possible to have targeted tax cuts and increased public investment in vital areas without any short or long-term risk to the economy. It is possible to do those things only because of the platform of stability that we have created.

The real test of this Budget, as with any Budget, is whether it adds to the fundamental strengths of the economy and to that platform of stability. In my view it does, and that is why it should be commended to the House.