Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 9:39 pm on 14th April 2003.

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Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury 9:39 pm, 14th April 2003

Over-egged, over-long and vaguely unpleasant; the only truth that was missing was the fact that the British economy has grown, is growing and will continue to grow—something that Mr. Howard strangely failed to mention. The reality is that, in the main, this has been a very good debate in which right hon. and hon. Members on both sides of the House have made some important and worthwhile contributions, and I will just refer to a number of them.

My hon. Friends the Members for Sunderland, North (Mr. Etherington), for Huddersfield (Mr. Sheerman) and for Wythenshawe and Sale, East (Paul Goggins) stressed the importance of the enterprise culture and our work to promote innovation and science, which is absolutely essential if we are to address the productivity issues that have concerned all hon. Members.

My hon. Friends the Members for Reading, East (Jane Griffiths), for Glasgow, Cathcart (Mr. Harris) and for Peterborough (Mrs. Clark) stressed the importance of ensuring that we build on the growth that is occurring in the private and the public sectors, that we recognise the importance of productivity in the public and the private sectors and that the challenges of both those sectors need to be addressed. The Government would be the first to admit that we still have a way to go, but the Budget lays out the challenge, establishes very clearly the basis of macro-economic stability on which we have proceeded and stresses the importance of working together to bridge the productivity gap and to narrow the gap that undoubtedly exists between ourselves and the United States.

Two important contributions were made by Opposition Members. Mrs. Shephard talked importantly about the need to ensure that we maintain the course that we have started on in relation to environmental taxation and do not miss the opportunities that exist. That is undoubtedly the case, and, with bioethanol, we have begun the process of recognising what alternative fuels can produce for the agricultural economy and the environment generally.

Mr. Soames said that we must address the needs of the armed forces. We have done that, and I am sure that he will recognise the fact that the last settlement for the armed forces was, as the chiefs of staff have recognised, perhaps the most generous for 20 years. In relation to the contingency reserve that my right hon. Friend the Chancellor has made to ensure that we meet the challenges of the conflict in Iraq, I can give the hon. Gentleman the assurance that he seeks: that £3 billion is new money, over and above the allocations that have been made already.

I wish to end my review of the speeches that have been made with reference to the contribution made by my right hon. Friend Denzil Davies, because I wholeheartedly agree with the shadow Chancellor that he made an important contribution, in which he very rightly focused on the changes of managing globalisation. Indeed, the backdrop to the Budget has been a global economic slowdown and a hesitant global recovery.

Hon. Members on both sides of the House will recognise the picture that my right hon. Friend painted of a complex and challenging global economy, and the Budget seeks to address precisely that. The world economy has been stalled by continuing uncertainties about the conflict in Iraq. That has affected the world economy, world trade growth having slowed to zero and our oldest and strongest competitors—the USA, Germany and Japan—having been in recession in the past two years.

The Budget confirmed that no country can remain immune to the effects of that global uncertainty, but as a result of the economic framework that the Government have put in place over the past six years Britain is better placed than many of our competitors and better placed than in the past to withstand the difficulties and to ensure that we are not diverted from our priorities. Our priorities are investing in our public services, encouraging enterprises, achieving full employment and tackling child and pensioner poverty to build a Britain of economic strength and social justice. Unlike Opposition Members, we do not believe that the two are inconsistent. We believe that the two can be achieved by working together.