Chancellor Gordon Brown has defended himself against accusations that he has ‘lost control’ of public finances, following yesterday’s Pre-Budget Report.
The criticism followed his announcement that borrowing will increase to £37bn - £10bn more than his Budget forecast in April.
Mr Brown argued that his spending plans for health and education extend to 2008, and insisted that Britain can afford to make the debt repayments.
‘The right time to borrow is at the time when there is world downturn but it’s also right to borrow when you need to invest in the future’, said the Chancellor.
Mr Brown compared the UK’s debt levels favourably with those of other major countries, and argued that the economy has enjoyed its ‘longest peacetime growth’ since records began in 1870.
However, Shadow Chancellor Oliver Letwin warned that the deficit could threaten Britain’s long-term stability.
Mr Letwin commented, ‘This is a very odd way to conduct affairs. He has spent the money but has not improved the public services. We need fundamental public service reform’.
Date:11th-December-2003
The Government's objective is to build a strong economy and a fair society, where there is opportunity and security for all.
The Pre-Budget Report outlines the next stage of reforms, including measures on which the Government will be consulting in the run up to Budget 2004.
Key announcements in the Pre-Budget Report include:
- an updated economic forecast, which shows that growth in the UK economy is expected to continue strengthening and that the Government is on track to meet its fiscal rules for sound public finances over the economic cycle;
- new measures to raise productivity by promoting an enterprise economy, including improving access to finance for small business and reducing red tape for business;
- further reforms to promote employment opportunity across the UK, including more help for lone parents and partners of benefit claimants and improvements to Housing Benefit;
- additional help for pensioners and families with children, through an increase in the Child Tax Credit providing support for 7.2 million children, and measures to help with childcare;
- measures to promote fairness in the tax system so that everyone pays the proper amount of tax and receives the benefits they are entitled to; and
- further steps to protect and enhance the environment, including a new framework for duty incentives for alternative fuels and consultation on changes to climate change agreements.
Chancellor Gordon Brown has delivered an upbeat report on the UK economy in today’s Pre-Budget Report, despite acknowledging that the budget deficit has risen from the earlier estimate of £27bn, to £37bn.
The Chancellor highlighted the low levels of inflation, interest rates and unemployment, and stronger economic growth.
He said that net borrowing this year would be 3.4%, falling to 2.6% in 2004 and 2.4% in 2005.
Mr Brown set growth predictions of 2.1% for this year, and 3% to 3.5% for the next two years - a figure which some economists believe to be overly optimistic.
The Chancellor also insisted that he had adhered to the ‘golden rule’, which stipulates that Government spending and tax revenues must balance over the economic cycle.
Britain is also to adopt the harmonised index of consumer prices (HICP), which is currently used in Europe and America.
The Bank of England now has a new inflation target of 2%, bringing it in line with the European Central Bank’s inflation target. However, benefits and pensions will still be linked to the retail price index.
Date:10th-December-2003
Shadow chancellor Oliver Letwin has criticised the Chancellor’s Pre-Budget Report, arguing that taxpayers would ‘pay the price’ for his failed taxing policies.
‘The Chancellor has taxed and spent and failed. What this Pre-Budget Report offers is the possibility of them paying now and paying more later’, asserted Mr Letwin.
Vincent Cable of the Liberal Democrats said that Gordon Brown stood a '50:50 chance' of breaking his ‘golden rule’.
Opposition members also criticised the Chancellor’s announcement of plans to scrap 147 business regulations.
Oliver Letwin said, ‘At his present rate, it would take ten days to add that many regulations to the burden on businesses’.
Reacting to the Chancellor’s plans to provide manufacturing and industry with £400m in new allowances, the shadow chancellor said that for every day that Mr Brown had been in charge of the public purse, 300 factory jobs had disappeared.
Date:10th-December-2003