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It might well have done, but it did not satisfy the Conservatives' macro-economic conditions. Such action led to the crisis that Mr. Lawson created, which resulted in interest rates of 15 per cent.
Boom and bust was not just an historical economic accident that came along while the Tory party happened to be in power: it was the result of the Conservatives' own feckless, ideologically driven policies, which they appear inclined to repeat in 2050, or whatever future date thereafter when they next take power.
To lift a major part of the country's economic policy out of political controversy, I appeal to the Conservative Front Bench spokesman to say at the end of the debate that the Conservatives accept the Chancellor's fiscal rules as a basis for future economic policy. If that commitment cannot be given, can the House please be told why not?
I turn to some of the more specific issues that were brought out during the Treasury Committee's consideration of the Budget. The current economic cycle is considered to have started in the financial year 1999–2000 and to end in the financial year 2005–06. On the basis of cautious assumptions, the average annual surplus over that period will be 0.1 per cent. of gross domestic product, so the golden rule will be properly satisfied. However, tax receipts for the past three years have been overestimated and the outturn has been lower than forecast. In the next two years, tax receipts from income and corporation tax are forecast to bounce back.
Some of the Treasury Committee's external advisers have questioned whether the extent of the forecast increase in tax revenue will be achieved. That question was put to Treasury officials when they gave evidence on the Budget to the Committee. Their answer was that the forecasts are grounded in confidential information from the Inland Revenue and Customs and Excise about how taxes are paid, which feeds into the methods of forecasting tax revenues. Given that that information is so central in assessing whether the golden rule is likely to be satisfied, I emphasise the Committee's recommendation that the Treasury should consider ways of sharing with outside forecasters as much aggregate data on the way in which taxes are paid as possible. That would lead to a more fully informed debate on the extent to which the fiscal rules are likely to be satisfied.
The Treasury forecasts that the economy will grow at 3 to 3.5 per cent. during the next two years but will then return to a trend growth rate of 2.5 to 3 per cent. The fiscal projections are in line with that economic projection. However, if growth should continue above trend, it is important that the increased fiscal surpluses are retained and not spent, so that fiscal and monetary policy work in the same direction at that point in the economic cycle and so that fiscal flexibility for the next cycle is ensured.
Now that we can contemplate continuing conditions that are favourable to economic growth and prosperity, to full employment and to major improvements in our public services, the productivity of the United Kingdom economy increases in significance as a factor that could restrain the wealth of this country during the 21st century. In terms of output per hour, the UK is far behind France, Germany and the United States. Between a third and a half of that deficiency is due to a lack of investment in plant, machinery and other physical assets. As a more predictable economic climate takes hold and takes away uncertainties, attitudes to new investment might change. Indeed, the Chancellor's various means of encouraging business investment are to be welcomed.
What is astonishing, however, is that two thirds of the productivity gap between Britain and the United States exists because Britain lags behind in innovation. This country is one of the most ingenious and inventive in the world, but we do not follow through to gain the economic benefits. Too often, something is invented in Britain but commercialised in America or Japan. In that context, I am pleased to see improved tax incentives for research and development on top of the Government's increased budget for scientific research, and their commitment to excellence in our universities.
Governments can only enable, however, and there is also a need for a culture change in boardrooms and business schools to give far greater emphasis to business renewal. That is vital not only to catch up with the United States but if we are to hold our own in competition with the rising economic power of China, India and south-east Asia.
There is another dimension to productivity, which is not a concept that should apply only to market-driven sectors of the economy but to the public sector, too. There must be developed an agreed measure, equivalent to productivity, for health, education, public transport and local authorities. Sir Peter Gershon's recent report addresses the issue, but it is only a snapshot. With increasing resources committed to public services, there must be systematic accountability for what is being achieved.
Productivity in one form or another will be a major economic issue in the first half of the 21st century and beyond. The Treasury Committee is embarking on an inquiry into United Kingdom productivity and its regional variations. The resulting report may provide the occasion for a much fuller debate on these issues in the Chamber.
The peacetime history of the past 100 years has been about developed countries learning how to manage their economies in order to mobilise the energy and abilities of the people to increase their own wealth and opportunities. It is a continuing process to which this country has made a major contribution. That contribution has never been greater than what this Government have achieved over the past seven years. It is not at an end. Indeed, the prosperity and temperament of Britain in the 21st century depend on progress continuing. This Budget and this Finance Bill are a further step towards achieving that.