On Boom & Bust - UK Chancellor of the Exchequer Gordon Brown

On Boom & Bust

UK Chancellor of the Exchequer Gordon Brown
Speech to Labour Party Conference

UK Guardian 25 September 2000

"No return to short-termism. No return to Tory boom and bust.. And it is precisely because we have taken the time and trouble to build the long term foundation for success, precisely because we have resisted short term lurches in policy, that we can today steer a course of stability at a time of uncertainty in the world economy without putting growth at risk... Breaking from the chronic and flawed Conservative short-termism and implementing Labour values; planning for the long-term; economic responsibility; building from strong foundations. Determined to protect hard working families from a return to boom and bust...So it is not by accident, but by our actions, that we now have the lowest inflation for over 30 years and around the lowest long term interest rates for 35 years, and a mortgage bill on average £1,000 lower than under Tory interest rates..."
Comment by tamilnation.org "There is 'no clean solution' to the problem. The end is not in sight. I don't know how long it will take. (in reply to a question seeking his perspective on the Wall Street turmoil that is threatening to slow global growth.). One extreme view was to nationalise bad debts and assets and let the banks restart. What will that cost? Many trillions of dollars. However, in the United States, the government is proposing a US$700 billion plan to buy up the toxic mortgage-related debt that started the financial firestorm. Even then, it appears to be an uphill task. Let's say there is a complete collapse. Does that mean the end of the world...the free market economy? No. I do not foresee this mother of all bail outs preventing a crash from ever happening again. From time to time you are going to get this kind of a problem. This time, the blame is on the 'derivatives mania' has been so cleverly packaged that it spread into reputable companies like AIG, the largest American insurance company. The US government saved it from bankruptcy with a US$85 billion loan. As an insurer, AIG was supposed to be a 'firewall' against the collapse of the financial system. But they also went into derivatives. Why not? Everyone was making money. This was a mania. Can such mania be tamed? Not likely. Human nature, greed, fear will always be there.' " Lee Kuan Yew at the Institute of Strategic Studies, London, 25 September 2008

Let me say first of all: it is because since 1997 we have put our Labour values and our priorities into action that Britain has greater economic stability, rising investment in health, education and our public services, a national minimum wage for the first time, and the lowest unemployment for a generation.

And here in Brighton today, again speaking the language of priorities, I want to discuss with this conference and, from this conference, to discuss with the British people the economic challenges our country still faces. The difficulties we must still surmount, the new world pressures we now have to tackle and the long term choices we as a country have to make on the future of our economy, the future of public spending, the future of pensions and the future of taxes.

Choices that we must make by heeding the call of principle and hearing the voices of the people as we listen and, as is our ambition and duty, to put ourselves at the service of the hard working people of Britain.

And I want the message to go out from Brighton this afternoon that if we, the Labour party, make the case for our values; and if by our service we show the British people we are worthy of trust then we can aim higher, and in our time and generation build a Britain of full employment. One where there is educational opportunity for all. A Britain where we abolish child and pensioner poverty, create a safe environment for all our children and show that the best health service for each of us is a national health service run for all of us.

A Britain where, true to our values, not just a few people but everyone has the chance to fulfil their potential and share in national prosperity.

In 1997 we said that the future depended upon first building strong and long term foundations for economic stability.

We all remember the early 90s.

It was Britain's hard working families -the one million who lost jobs in manufacturing, the one million businesses that went under, the million homeowners with negative equity. It was hard working families who paid the price and bore the brunt of economic failure. And by 1997 with the deficit nearly 30 billion, the national debt doubled, debt payments bigger than the schools budget, inflation rising, and the economy on the way back to the old familiar cycle of boom and bust, we resolved to, and under Tony Blair had the strength to, take difficult long term decisions

Bank of England independence. Tough controls on public spending. The difficult decision to raise fuel taxes. The decision to pay back debt and cut the costs of debt.
Breaking from the chronic and flawed Conservative short-termism and implementing Labour values; planning for the long-term; economic responsibility; building from strong foundations. Determined to protect hard working families from a return to boom and bust.
So it is not by accident, but by our actions, that we now have the lowest inflation for over 30 years and around the lowest long term interest rates for 35 years, and a mortgage bill on average £1,000 lower than under Tory interest rates.

And it is not by default but by design that unemployment among men is the lowest since 1980, unemployment among women the lowest since 1976, long term unemployment now the lowest since the 1970s, youth unemployment now the lowest since 1975. For the first time in years, unemployment among single parents and the disabled is now falling, as we make the right to work a reality. And I am determined that no one is excluded.

And because we have cut the costs of unemployment and debt, it is not by coincidence, but by choice that we are now tackling the long-term neglect of under investment in Britain and spending on health is rising by 7 per cent, education this year by 10 per cent and public investment in Britain is rising this year by 30 per cent, years of Tory underinvestment now replaced by a Labour plan for sustained long term investment.

These things did not just happen. The priorities and tough decisions of a Labour government made them happen.

And it is precisely because we have taken the time and trouble to build the long term foundation for success, precisely because we have resisted short term lurches in policy, that we can today steer a course of stability at a time of uncertainty in the world economy without putting growth at risk.

So we will not return to the old short-termism.

There will be no sudden lurches in tax or spending policy.

And there will be no irresponsible pre-election sprees or pay demands that put youth jobs or any jobs at risk. No change in our policy on Europe, support in principle for the single currency, in practise the five tests that have to be met. And no relaxing our fiscal rules.

We will not put hard won economic stability at risk. No return to short-termism. No return to Tory boom and bust.

Now, the Tories used to say a Labour government meant recession and unemployment but now Mr Portillo is pushing a new argument: to accept there is economic stability and growth but then to say this is nothing to do with the government.

I ask Mr Portillo and these Tories: if economic stability was so simple to achieve, why did the Tory party give Britain twenty years of stop-go, twenty years of boom and bust? It is Labour that is now the party for stability and growth.

If falling unemployment was so simple to achieve, why did their policies give us three million unemployed and why was it never below today's level on any single day in two decades of Conservative government?

And if prudence in public finances is so simple, why did the Tories land us with a 50 billion deficit, the worst in our history and double the nation debt?

These things didn't just happen. The flawed values of a Tory government made them happen.

And amidst their mismanagement when all these mistakes were being made is it nor right that we ask where was Mr Portillo?

When it came to imposing VAT on fuel, is it not right that all of us ask, where was Portillo?

I'll tell you. At the treasury, imposing VAT on fuel.

When it came to imposing twenty-two Tory tax rises, is it not right that we all ask, where was Mr Portillo?

At the treasury, imposing twenty-two Tory tax rises.

When it came to imposing the poll tax, is it not right that we all ask where was Mr Portillo?

I'll tell you. A local government minister imposing the poll tax.

When it came to the biggest ever cuts in public spending and public services, it is right that we ask where was Mr Portillo?

At the treasury imposing cuts in public services.

But our duty to the people of Britain is greater than avoiding Tory boom and bust, or even achieving stability for a year or two.

So we will stick with our long-term task - to build for the first time in a generation in Britain a culture that, by entrenching low inflation and long term stability, builds prosperity for homeowners, small businesses and all those in work and in need of work.

It is because we understand the difficulties that the weak Euro and strong pound has caused for manufacturers and exporters that we have introduced new tax incentives for manufacturers and exporters, and in every pre-budget report we look carefully at the needs of manufacturers and business.

And I say to all who want to avoid a return to economic instability, even when events like rising oil prices and unstable exchange rates challenge us, we will do everything we can with our international partners to promote stability.

A 300 per cent rise in oil price in 18 months cannot be justified and I understand the difficulties it is causing for motorists, business and consumers in Britain as it is in every continent of the world.

That is why when I was in Prague, we fought for and secured an agreement from all countries, oil producers and oil consumers, that oil production had to increase and that oil prices had to come down.

And I will report further on this and other issues in my pre-budget report and in the budget.

And just as we have had the strength to make hard long term choices based on Labour values to build stability and growth, so too we have put in place a long term employment policy based on difficult choices, not just about the right to work but the responsibility to work. And we made the hard decisions the Tories would never make - to charge a windfall tax on the utilities, so that some of the richest companies helped the poorest communities.

All my life I have seen in the town I grew up in, and in the constituency I serve, unemployment scar the lives of far too many people.

In these years the unemployed people I met did not lack talent, did not lack initiative, did not lack the will to work, they lacked a government on their side.

That is why in the first days in government David Blunkett, Andrew Smith and I went out and talked to young unemployed men and women about a new deal. I knew then our challenge was to prove to these young people they finally had a government on their side. A government that worked for them.

With us today is Lee Ford, aged 23, from Barnsley.

Unemployed under the Tories, now in work under Labour.

And not just a job, but now with his fiancé buying their first home.

And we pledge that on behalf of Lee Ford and thousands like him,- what we have built up in the new deal we will never let the Tories destroy.

Remember our pledge card, our posters about jobs for young people moving from welfare to work.

I can report to this conference that we will next year be able to put on every billboard on the country: 250,000 young people who have moved from welfare to work.

And I am now determined that we build not one million jobs but build full employment for our generation.

Unemployment in Scotland, Wales, the north and midlands is the lowest for more than twenty years.

But we will not rest our efforts as long as there are people and places excluded. With £500 million for the regional development agencies in every area of Britain, our aim is full employment not just in one region but in every region of the country.

But if we are to achieve and sustain full employment, we must together - industry, unions, government, public services - address new world pressures and overcome the old British problems of short-termism and under investment, low productivity, inadequate skills and restrictive practises, wherever they are.

Already, to promote enterprise, £1 billion for science. A 10p rate of capital gains tax, a 10p small business tax rate. Employee shares for all, 180 billion for transport.

And enterprise open to all. For high unemployment inner cities and regions our pre-budget report will propose new tax cuts allied to spending increases to replace deprivation by enterprise, poverty by employment, neglect by new business.

Labour: the party of enterprise.

And all the time demonstrating that enterprise is not at the cost of fairness but that enterprise and fairness go together.

And because the Tories did not understand that efficiency and justice are not enemies but vital allies in the battle to raise productivity, they wrongly denied workers rights, women's rights, equal rights - and they said a minimum wage would cost a million jobs.

Yes, a minimum wage, and yes, a million jobs.

Let us tell them - in 3 years with the minimum wage in place we have not destroyed a million jobs, Britain has created one million jobs.

And the only jobs the minimum wage cost were those of the Tory MPs who opposed it.

And let us pledge here at this conference to work to make sure that these are jobs that are not coming back.

And because the evidence now demonstrates that economic efficiency and social justice are not at odds but go hand in hand, I can tell this conference today of a further priority for next year: Steven Byres has asked the low pay commission to report next year on a further rise in the minimum wage as we secure fairness at work.

And I give you this pledge as we celebrate 30 years of equal pay legislation, it is now the right time to ensure that in future no woman will have - as in the past -to wait years for their right to equal pay to be realised.

And because family friendly employment is good for both employers and employees, there will be new measures for maternity pay and leave, and with new investment, our commitment to high quality accessible and affordable child care, a national childcare strategy for Britain.

And never again do we want mothers and fathers refused time off to see their sick children, so the right to time off when a family member is ill. That is what a good family policy is all about.

And one of the best family policies of all - the working families tax credit.

With us today, Fozia Afzal from Preston, mother of three children. On poverty pay under the Tories. Now, as result of the working families tax credit, £25 a week better off this year alone.

The Tories would abolish the working families tax credit. I tell you today we will expand it.

Let us pledge for Fozia and one million others we will never let the Tories abolish the credit and push her and one million others back into poverty.

In the 1980s and 1990s, thousands of men and women over 50 were thrown on the employment scrapheap. Age discrimination is wrong. Today half a million people over 50 are back in work. And I give you this pledge - we will do all we can to end age discrimination in employment and help older workers back to jobs.

Now when we came into power we decided that the right thing to do was to put the poorest pensioners first.

And in this parliament we are spending £6 billion more. More than the earnings link, most to those who need it most, most to help lift the poorest pensioners out of poverty

It was not wrong to put the abolition of pensioner poverty first.

But I know that we have more to do, much more to do.

We have to do more not just for the poorest but for millions more, all those pensioners who have yet to share enough in the rising prosperity of the country.

We will build upon the basic state pension: the basic state pension is now, and will remain, the foundation of everything we do.

We will fight against the Tories' plan to opt out, to break up, to destroy the basic pension.

And let me tell this conference today that in the pre-budget report, it will be a priority that we do more, with by 2003 a new pension credit that will get extra help not only to the poorest, but to the millions who have lost out in the rising prosperity of the country.

And in the meantime as the statement to this conference which Alistair Darling and I put to the economic policy commission last week, says there will be transitional arrangements to the benefit of all pensioners. And we will publish a detailed plan in the next few weeks.

Let me explain the new pension credit. Just as the working families tax credit is getting extra money directly to lower and middle income families, so too our new pension credit will reward saving and get cash directly to millions of lower and middle income pensioners.

Each year, more cash than either an inflation rise or an earnings link would provide.

More money for retired men and women with small works pensions, more money for widows with modest savings, more for men and women who have worked hard and saved all their lives, but who struggle to get by, and whose cause is our cause.

Everybody knows that we are having to tackle extremes of pensioner poverty and also rising pensioner inequality that has demanded new thinking:

Today in the year 2000, one in 6 pensioner couples retire on more than 4oo a week

Soon that figure will become one in five, and in time, one in four and then one in three.

It is a progressive principle that we should do more for those who have the greatest needs.

So if we are to plan for the future, our priority cannot be that the wealthiest get exactly the same as the neediest.

A flat rate increase will not do enough to help pensioners on modest incomes and do nothing to diminish growing inequalities but instead reinforce them.

We will build upon the basic state pension.

For the poorest pensioners, we are drawing up plans to raise the minimum income guarantee to £90 a week.

And our pension credit will ensure that we reward and do not penalise saving and will ensure that all lower and middle income pensioners will receive extra help, get more than the earnings link, year by year.

We will spend more and we will spend more fairly.

And I want it to be said of us:

This was the generation that had the determination and commitment to abolish pensioner poverty in our country. But not only that, by all our measures taken together, we ensured every pensioner shared in the rising prosperity of the nation.

I say to this conference, I want a Britain where what matters is not the privilege you were born to, but the potential you are born with, I want a Britain where what matters is not the school you went to but the skills you are prepared to acquire.

It is a Britain where what is valued is not the connections you inherit but the contribution you are prepared to make.

What drives us forward, what inspires us to action is not the Britain we are but the Britain we can become, the causes yet unworn, the potential yet unrealised, the vision yet unfulfilled, the future yet to be born.

And because these values challenge us to higher efforts, I tell this conference that in the months ahead, the months up to the coming election we will work every day every week to convince the British people that we deserve a new mandate for a purpose: with already 1.2 million children lifted out of poverty, we can aim higher, we will seek a simple and fundamental mandate to eradicate child poverty in our generation. And give every child best possible start in life.

So there is a Tory way - tolerating child poverty - and there is a Labour way - ending it.

Already there are hundreds of thousands more students in higher and further education, but we can aim higher. We will seek a mandate to enable a majority of young people to go to college or university. And educational opportunity truly for all.

So there is a Tory way - education for an elite, and there is a Labour way - lifelong education for all.

With the health service now allocated more resources year on year than ever before, we can aim higher for an NHS true to its central founding ideal - that the best NHS for each of us is the health service free at the point of need for all of us in every part of Britain.

So there is a Tory way - the road to privatisation and cuts and there is a Labour way - investing in a national service run in the public sectors by the best public servants as a public service, and Labour internationalism, not Tory isolationism is our goal.

That is why yesterday in Prague led by Clare Short and by this party we pressed for and agreed a new plan to wipe out the debts of the 20 poorest countries by December this year. And unlock millions of the world's poor from the chains of unpayable debts. But as long as there is poverty suffering and injustice we must never relax our efforts our cause endures - a virtuous circle of debt relief, poverty reduction and economic development that helps all the worlds poor.

The abolition of child poverty.

An end to pensioner poverty.

Full employment.

Educational opportunity truly for all.

The best health service for each of us.

Great causes worthy of our party's ideals.

Great causes today shared, I believe, by the British people.

An essential foundation for our country's future.

Causes that now challenge indeed call us as a party and as a country to action.

Causes for which we will work every day to earn a new mandate from the people of Britain.

But let no one be in any doubt - to achieve these goals requires the country to make a choice.

It is a choice facing us, which goes beyond decisions on any individual tax or spending programme

The choice is this.

Is our national priority today to build long term stability and invest in hospitals, schools and strong public services for all?

Or is it to put both stability and public services at risk by irresponsible tax promises, which if implemented will cut billions from hospitals, schools and our core services?

And there should be a great national debate about this choice.

When I became shadow chancellor I said to you then, as I say to you now, that we will never tax just for taxation's sake, that spending decisions will never again be made in isolation from how we pay for them, that all spending and tax decisions must have a sound justification in principle, and that we are prepared to make difficult decisions so that Britain can enjoy stability in our public finances and invest in our public services - the hospitals, schools, public transport and the policing the country needs.

But it is because this country needs full employment that with the 10p rate, with cuts in employers and employees national insurance, and with the new working families tax credit, we have targeted tax cuts to encourage and reward work.

It is because we want to promote investment and savings and encourage and reward entrepreneurs that we have introduced a new 10p small business tax rate, a new tax cut for innovation research and development and cut capital gains tax for long term investment to as low as 10p.

It is because we want a tax system that is fair to working families and tackles poverty that we are introducing a new system of family support, which while giving £15 to every child will give £50 a week for the poorest child.

It is because we want to safeguard the environment that we have cut pollution through the climate change levy and cut car tax on the 4m least polluting cars and targeted tax incentives on ultra low sulphur diesel.

It is right that we target tax cuts on the countries priorities. And in future budgets we will have targeted tax cuts again.

But what we rule out is blanket irresponsible tax promises that cut into the £4 billion extra investment in transport, the £12bn in education and training, the £14bn in health, we will not put the long term future of our public services at risk.

For however difficult the decisions we have to make, the country will never forgive us if we lurch from one opportunist tax decision to another and retreat to the old short termist ways of the past

We will do nothing that puts this country's stability and public services at risk.

So I tell you the country does face a choice. And there should now be a great national debate.

Not a debate simply conducted in Westminster or Whitehall; this is a debate, the outcome of which will affect every part of this country, and so it must take place in every part of this country.

As we debate this choice - and in the annual pre budget consultation - we will listen and we will also make our case.

With the farmers and hauliers - and also with the nurses and health service workers, the teachers and public servants, people working in manufacturing service and exporting sectors, and all those who depend upon our public services...all the hard working families of Britain.

This national debate is too important to ever be decided by those who shout the loudest or push the hardest. The British way, the Labour way is that every voice must be heard.

Friends, they said in one term we could never simultaneously create stability, one million jobs, abolish 800 hereditary peers, create devolution for Scotland and Wales create a minimum wage for Britain and take a million children out of poverty.

But we have.

Now they will say we cannot achieve our priorities.

Full employment. Abolish child and pensioner poverty. Build world class public services. Prosperity for all.

I say we can and we will