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Issue of the day: The economy
Party spokesmen debate the state of the British economy.
Labour: Chief secretary to the Treasury Paul Boateng
With Labour the British economy is enjoying the longest period of sustained economic growth for 200 years – despite a challenging period for the global economy.
This is not the result of chance, but of the tough decisions taken since 1997 – giving the Bank of England independence, continuing to meet our strict fiscal rules, paying off the national debt – meaning that while growth in the euroarea is forecast to be 1.5 per cent and then just over two per cent, our forecast for British growth this year is three to 3.5 per cent – the fastest growth in the G7 along with North America.
On top of the two million more people in work since 1997, supported by labour market reforms, making work pay through reform of the tax and benefit system and the New Deal, there are now four million businesses in Britain – 300,000 more businesses than in 1997 – with 4,000 new businesses starting up every week.
It is a tribute to the hard work and dynamism of the British people, but also a sign of the stability that Britain has already achieved: a macroeconomic stability that can and will endure.
Through a focus on skills and enterprise we are equipping Britain to rise to the long-term challenges of the international economy. We will take every opportunity to explain to the British people how Michael Howard's Conservative Party is committed to abolishing the New Deal, the Small Business Service and other business support.
Their plans would put Britain’s future economic prosperity at risk – this we are not prepared to see happen.
Conservatives: Shadow chancellor Oliver Letwin
[I]f Labour is re-elected...it's not a question of whether Labour will put up taxes, or even when, but which taxes they will raise.
What we now need is action to get spending under control to deliver value for money and to set Britain on the path to lower taxes.
We can do this by spending on the things that matter to the majority of people and cutting back on the rest. That is why a Conservative government will spend the same as Labour on schools, hospitals, transport and international aid and slightly more than Labour on police, defence and pensions, but save £12bn by cutting back on the size and cost of government.
We'll use £8 billion of the savings to reduce public sector borrowing and avoid the tax rises that would be inevitable under Tony Blair. The remaining £4bn will be used for reducing tax in our first Budget, including a permanent 50 per cent discount up to a maximum of £500 on council tax bills for households where all members are over 65.
There will be no cuts to public services under a Conservative government: no cuts to nurses, doctors, teachers or police. Spending on frontline public services will increase significantly year on year. What Mr Blair does not want to admit is that this is compatible with lower growth in public spending if his vast and wasteful bureaucracies are meaningfully reduced.
There will be a clear choice at the next election between more waste and higher taxes under Mr Blair or value for money and lower taxes with the Conservatives.
Liberal Democrats: Treasury spokesman Vincent Cable
Our strong economy is as much by luck as by judgement, and there are problems storing themselves up within our economy.
There are many of us who are concerned about the record levels of personal debt and almost unprecedented house prices in relation to incomes. The potentially destabilising effect this could have – were there to be some sort of shock to our economy such as a sudden rise in the price of oil – is not fully grasped by those inside 11 Downing Street.
Outside the Westminster bubble, whether the chancellor is well placed to gloat about the UK's relative economic success is rather beside the point. If people are feeling the positive effect of a healthy economy then we should all be happy. I, however, do not believe that this is the case though; our economy is strong as our richest get richer and the inequality gap widens. We have a less fair system now then we did at the height of the Thatcher era.
As a government, the Liberal Democrats would be prepared to make these tough choices by switching government spending from low to high priorities.
By scrapping the DTI, ID cards and Child Trust Funds (among other things) we would make £5bn in savings, which would go into pensions, policing and education.
These measures - not the mixture of gimmicks and half promises we saw in Gordon Brown's latest Budget - are necessary to ensure future service provision and economic prosperity.
The above texts are edited versions of articles which first appeared in the Parliamentary Monitor magazine.
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