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Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, to the TGWU Conference on 5th July 2001.

I am delighted to be here today to address this conference.

And as we thank you we give you this promise too: as a Government we will work every hour, every day, everywhere we can be, to justify the faith you and the British people have placed in us.

And after four years of Government under Tony Blair’s excellent leadership, I believe that we are more determined than ever to implement in Government our values of justice and fairness.

Since the time I went to school and grew up beside a mining community – since the first factory closure I remember being announced in my home town — and for a whole generation our lives have been dominated by unemployment: long term unemployment, youth unemployment, the fear of unemployment, the poverty and insecurity caused by unemployment.

I remember when I first became an MP a young couple coming to see me, both in tears, who having lost their jobs, knew they would lose their homes too.

I remember too the tragedy of the miners in my constituency, steel workers, dockyard workers, transport workers TGWU workers redundant in their forties who feared they would never work again.

So I want communities where young children getting up and going to school each morning see a whole community going to work.

And 20 years ago, 10 years ago, even 5 years ago young people tried as hard as now to find work – they were applying for jobs, they were training for jobs. Don’t tell me these generations of young people didn’t have talent or potential, couldn’t learn or hold down a job. What they needed was a government on their side.

But for years in opposition we could do nothing about it. All we could do was protest. Together we marched for jobs, we rallied for the right to work, we petitioned for full employment. All of us, trade unionists, Labour party members, Labour MPs. But out of government we could not create jobs.

So the day we came into Government we acted  – with a windfall tax to pay for our New Deal.

And I say it was right that five billions be transferred from the richest utility companies in our land to create jobs in the poorest and most deserving communities of our country.

And every time a young person denied a job under the previous Government gets a job under this one we should be proud of the New Deal – that this is what can happen when we work together.

And we took action too, to secure the essential precondition for full employment – economic stability not boom and bust.

Remember all those who said we could never manage the economy.

But it is because we rejected short-termist free for alls, the take-what-you-can, irresponsibility — and it is because we put faith in our values of economic responsibility — building from solid foundations, looking to the long term — that with Bank of England independence, tough decisions on inflation, new fiscal rules, hard public spending controls, we today in our country have had economic stability not boom and bust, the lowest inflation in Europe, long term interest rates and mortgage rates for homeowners lower than for thirty five years.

And when we are told that low inflation, low interest rates and low borrowing are nothing to do with the decisions of this Government and are just a matter of good luck, let us ask them: if it was so easy to keep interest rates and inflation low, why did their policies give us 15 per cent interest rates, 11 per cent inflation, a £50 billion deficit and why did they repeatedly plunge Britain into boom and bust?

It was not by lucky chance but by difficult choices that we now have a more stable economy.  And it won’t be by a lucky chance but by hard choices in this Parliament – on extending competition, enterprise incentives – including our capital gains tax reforms – and reform – that we will build upon that stability a deeper and wider prosperity.

Now I understand the concerns people have today in the high technology sectors because of the American downturn — and as a Government we will help people, on their side to cope with change– and I understand also the worries people have about the exchange rate and we will continue to do more to recognise the vital contribution of modern manufacturing to exports, innovation, and our great regions.

But we know too that what manufacturers fear most is a return to the old boom and bust.

So there will be no return to the short-term lurches in spending policy or tax policy that would put long-term stability and public services at risk.

No inflationary or irresponsible pay rises, which put youth or other jobs at risk.

No relaxing our fiscal disciplines as some would like.

No change but consistency in our European policy – in principle in favour of the euro, in practice the five tests that have to be met.

And no change in the drive that Bill, you and I are all engaged in – with more competition not less, more innovation not less, more investment not less, and more not less small business development – to make Britain the most enterprising, productive and therefore prosperous economy over the next decade.

Our stability is for a purpose and I can report to you today that the full total of jobs we have together created since 1997 is 1 million 250 thousand jobs, more people in work today than at any time in the history of our country.

Unemployment among men the lowest since 1979.

Unemployment among women the lowest since 1976.

Youth unemployment now the lowest since 1975.

Long term unemployment now the lowest since the early 1970s.  Unemployment among single parents and the disabled lower than ever.

But as long as there is unemployment we will not be complacent.

With 300 million a year we are extending the New Deal so that every one of the long term unemployed and their partners in all parts of the country can have new opportunities.  And as we offer special coaching help for others hard to employ we will not hesitate to take additional measures, including greater sanctions, in those few instances where they are needed, to get people back to work and achieve full employment in this country.

Unemployment in Scotland, Wales, Northern Ireland, the North, South West, and Midlands, the lowest for more than twenty years.

But that is not good enough. With an additional 500 million pounds allocated to Regional Development Agencies in every area of Britain and our request for jobs plans for the regions, our aim is full employment not just in one region but in every region of the country.

Unemployment among the over 50s is now falling and is at its lowest on record – half a million more over 50s in jobs since 1997. But we want to do more to end what has been a scandal in too many areas: age discrimination against the over 50s, hence we have a guaranteed minimum income of nearly 190 a week for the over 50s returning to full-time work after being unemployed for more than 6 months.

And for men and women with disabilities who suffered most in the 80s and 90s and those able to do some work who for too long were denied their right to work, we are establishing new rights as well as new opportunities.

So it is the right policy to offer regular interviews on a three yearly cycle as we invest £130m in a New Deal service for the disabled, offer a guaranteed minimum family income to disabled men and women of £246 a week for full time work; and invest in the advice, help, training and support that ensures there is work for those who can work as well as security for those who can’t. A Britain where now no one is excluded from opportunity.

And because we believe a fair society is essential to a productive economy, just as there are new responsibilities at work, we are ensuring new rights:

–  new rights of recognition for trades unionists;

– the right to four weeks paid holiday;

– and because never again do we want mothers or fathers refused time off to see their sick child through a hospital operation, the right to time off when a family member is ill. This is what a good family policy is all about, backed up by the first ever National Childcare Strategy.

My belief is in equal opportunity for all.

Yes the minimum wage was a start as was the Equal Pay Act and I salute all those in this Union and other Unions who had the courage to take pioneering action to establish the right to equal pay.

But after 30 years of equal pay legislation it is now the right time to go further in ending discrimination to speed up procedures and ensure new rights for women so that no one will have — as in the past — to wait years for their right to equal pay to be realised.

And for part-time workers the right to the same treatment as full-time workers – same hourly rate of pay, same access to company pension rights, same rights to annual leave and maternity leave.

And because in no part of our society should there ever be discrimination – and in particular never racism tolerated – we will continue to remove barriers of prejudice, discrimination and racism.

And we will extend women’s rights. Maternity pay which is 62 pounds will be increased in successive stages to 100 pounds a week – as big a rise in two years as in the previous forty. And from 2003, the statutory obligation to maternity pay will be raised from 18 weeks to 26 weeks.  And we will introduce two weeks paid paternity leave, set at the same level of 100 pounds.

And we will support every trades union as you work with employers for access to learning direct in every workplace and to advance training so that together – employees, employers and government – we can create the best trained workforce in the world.

Under the previous Government more was spent on debt interest than on our schools. Next year we will spend £10 billion more on schools than on debt interest.

The reason that we can invest in health and education is that we have managed to transfer resources from paying the bills of past failure to investing in future success.

£9 billion cut from the typical costs of debt and unemployment before; £9 billion more each year for the NHS and education now.

That is what we mean by putting schools and hospitals first.

The reason I am concerned not just about nursery education and standards in the schools but higher staying on rates and wider access to college and university, is that I remember my school classes of the 1960s when it was for only a fraction of young people that a university place was available.

It was a scandal of wasted potential.

And I see today that there are still thousands of young people who have the ability and should have the chances that I – and others – were able to enjoy.

It was a scandal of wasted potential then and it is still a scandal now.

It is time to ensure that not just a minority have access to higher education but for the first time a majority by opening up recruitment and widening access so that our colleges and universities can draw on the widest possible pool of talent.

And let us be clear about the choice in this Parliament on our great public services.

It is between investment matched by reform under us and cuts leading to the run down of public services under the Opposition.

Our choice is not to cut but to invest more.

That is why in the Budget we announced a long-term assessment of the technological, demographic and medical trends over the next two decades that will affect the health service.  This review, led by Derek Wanless will report to me in time for the start of the next spending review.

Let me be clear about my commitment to the public services.  Every opportunity I have had – the best schooling, the best of health care when ill, for many of us the best chances at university – every opportunity I have enjoyed owes its origin to the decisions of past Labour Governments, decisions we made as a party to open up opportunity, to create a welfare state that takes the shame out of need and to fund a National Health Service open to all.

So under this Government the NHS will remain a National Health Service – a public service free at the point of use with decisions on care always made by doctors and nurses on the basis of clinical need.

And we will never tolerate replacing the NHS by privatised medicine where poverty bars the hospital entrance, where they check your wallet before they check your pulse.

And because we believe in nothing less than the vision of 1945 – an NHS free to everyone on the basis of their need not on the basis of their wealth – we will raise health service spending from 54 billion last year to 59 this year to 64 next year to 69 by 2003-04, an annual average increase over those years of 6.5% above inflation – the largest, sustained growth in NHS spending in the history of the health service.

And let me say: it is because as Tony Blair said yesterday, we have expanded and reformed the private finance initiative – and will continue to implement the ten year NHS plan  – that it has been possible to design and start 68 new hospital projects worth 7.6 billions since we came to power.

In the public services we are employing more, investing more, and – in partnership with the private sector – building more.  And will continue to do so.

But let us also be clear: just as schools exist for school children the NHS exists for patients; public services exist not for the public servant but for the public who are served.

And our aim must be that every classroom has the best teacher, every school the best staff, every operating theatre the best doctors and nurses, every hospital the best NHS staff.

Our aim is that every public service has the best public servants.

And those of us who believe passionately in the public services must modernise and reform so that public services can best serve the public.

Those of us who believe in the public services must learn from both the public and the private sectors and revitalise our public services from the inside.

And – as Bill Morris has said this week – we should aim for higher productivity in our public services, backing management as well as employee training. And can I tell you that we are supporting the National College of School Leadership and the Leadership Centre for the NHS, devoted to doing more to improving within the public services the quality of public service management.

And we will invest in transport.

For years this union has rightly told us of the social and economic importance of investing in transport.

And you have led the campaigns for free concessionary travel for the elderly.

And because of your and others representations we are now, over the next ten years, investing 180 billions in public transport – on our roads and in rail.

It is the biggest public investment programme in transport history.

Hundreds of new roads, 60 billions invested in rail and of course the proposals for investing in the London Underground which Steve Byers is going to be announcing today, proposals that I believe are the best ones for London and Britain.

Under the previous Government the average public investment in London Underground was just 395m a year. In the next 15 years the average public investment will not be £395m but rise as high as 900m a year – investing at nearly three times the old rate – the biggest single investment in the underground in its history.  More investment by the public sector in the next 15 years than we saw in the last hundred years

And when billions of your money are being invested you would want us to ensure not only best value for money but the best possible public service.

So to construct the new infrastructure that will increase the underground’s capacity to 1.3 billion travellers each year, the construction and engineering companies – like many of you work for – these private sector contractors will simply continue to do the work as they always have in digging the tunnels, building the infrastructure and replacing the track. But now for the first time they will have to take responsibility for what they deliver. So they will have to pay for the overruns, the delays, the faults in the construction and the mistakes that lead to extra maintenance.

So that we do not have another Jubilee Line fiasco – 2 years late, massive overruns – which if repeated in the new Underground investment programme would cost us two billion pounds.

And while the private sector directs its skills and expertise in risk and project management towards maintaining and improving the infrastructure, the public sector in the underground – and public sector staff – will operate the track, run and provide signalling, run trains and stations on every line, set service levels, set the standards and ensure safety, and be in charge of an integrated tube network from 5.00am to 1.00am.

At all times safety paramount with the London Underground and the safety inspector the final decision-maker on what needs to be done.

And we will do nothing unless we have the approval of the health and safety executive on the highest of safety standards.

Our choice is clear. Not a return to the old ways, not the short-termism of the past, but an approach that makes sure that the billions we invest provide the best service for the public.

Because of the work done by the TGWU, the retired members association whose conference I visited many years in the eighties and nineties, and in particular Jack Jones – the champion of justice for pensioners – we can now aim for the end of pensioner poverty in our generation.

And let me promise today that in addition to free TV licenses for the over 75s, raising the basic state pension by £5 – and £8 for couples – this year, we plan to pay the winter allowance at 200 pounds this year and our new pension credit – introduced from 2003, for most rising higher than an inflation link or an earnings link  – will reward rather than penalise modest occupational pensions and savings to ensure my aim: that every pensioner enjoys a share in the rising prosperity of our country.

And as stage by stage we do more year on year to improve care of the elderly, so we must recognise we must do more to tackle child poverty which is, in my view, a scar on the soul of Britain.

It was a matter of shame for Britain that when we came into power one child born in every three was being born poor and, having taken one million children out of poverty in our first term, our ambition, in what I believe is the best anti-vandalism, anti crime, anti delinquency, anti deprivation policy, is to take the next one million children out of poverty. And I urge you all to support our nationwide crusade so that no child is left behind.

Why we can’t be cynical

So let us affirm our commitment to full employment, ending child and pensioner poverty, and the best public services and action to end poverty.

Let us reaffirm that giving every child the best start in life, every adult a job, every pensioner dignity in retirement, everyone decent public services are great causes worth working for, campaigning for and fighting for.

And let us affirm that there are great causes not only at home but all across the world that are worth fighting for, campaigning for and voting for.

We reject the idea that there are no great causes when there are one billion people in this world trapped in avoidable poverty, millions weighed down by the unnecessary burden of debt.

On Saturday I go to the G7 meeting and then in September to the Children’s Summit, in October to meet the IMF and the World Bank – a campaign which Nelson Mandela and others are leading so that instead of one child in every seven in Africa dying before the age of five, calling on the pharmaceutical companies and all governments to join us in widening access to life saving drugs and health care and eradicating avoidable infant deaths.

Instead of 120 million children denied education our objective is clear: every child in primary education.

Instead of 1 billion condemned to poverty, our aim is to halve poverty by 2015.

So let us answer the cynics by our actions, showing that when governments intervene to tackle injustice they are not violating rights, they are righting wrongs.

And when I visit Asia and see children dying avoidable deaths in poorer countries, when I see in South Africa young men and women wanting to know that the right to vote will mean the right to work too, when I see in all continents needless, avoidable, remediable suffering and pain that is the result of a poverty that we can eradicate and an injustice we must fight, I know – as the founders of this union knew one hundred years ago – that we as a union and as a party exist not for ourselves but for a larger and noble purpose: that we are all men and women who feel, however distantly, the pain of others; who believe in something bigger than ourselves; who in Robert Kennedy’s words, see suffering and seek to heal it, see pain and seek to end it, see injustice and seek to overcome it, see prejudice and seek to triumph over it.

Let us answer the cynics and tell the people that it is when politics fail and governments walk away that children are malnourished, that men and women go without jobs, that pensioners die in poverty, that public squalor exists alongside private affluence and potential is left unrealised.

It is when politics succeeds and governments engage that all can begin to have opportunity and no one is left out; that all our people have the chance to make the most of themselves and no one and no area is excluded; and that justice can triumph.

If by our actions we can lift one child out of poverty, give one young person a chance of training and a job, give one more person suffering from pain the chance of the treatment they deserve, give one more classroom the books and computers it needs, secure for one more pensioner a greater measure of dignity and decency in retirement, then we can be proud to have done something, not just for ourselves, but for our community and our country.

But if we can help millions we can in Tom Paine’s words make the world anew. So let us be the generation that abolished child and pensioner poverty, built modern public services, created full employment, tackled world debt and poverty and took the next steps to prosperity for all – causes worth fighting for.

Our task, our challenge, our manifesto commitment, a programme of change for a generation and working together this can be our achievement.

Below is the text of the speech made by Gordon Brown to the 2000 TUC Conference.

Rita and friends, to be here in Glasgow, where I was born, on the second day of the first Congress this century, exactly 100 years from the date when trades unions came together in the Labour Representation Committee to create the Labour Party, allows me, first of all, to pay tribute to those who have given a lifetime of service to our Movement and those, in particular, on the General Council of the TUC who are retiring this year ‑ and I have worked with all of them. I want to thank Eddie Warrillow, Wendy Evans, Tony Cooper, Bob Purkiss, David Evans, Anne Gibson, Hector MacKenzie for all the work they have done as they have been members of the General Council.

I want to congratulate Rita Donaghy, first of all, for giving me good advice and, secondly, for her new Chairmanship of ACAS. Your work on the Low Pay Commission and on the TUC General Council makes me absolutely sure you will be an excellent Chair of ACAS from October 6.

This week, in particular, I want to mark also the retirement of two General Secretaries who have given years of dedicated service, whose contribution will be remembered in every part of the country ‑ everywhere where trades unions exist ‑ and whom I have the privilege to count as friends: Ken Cameron and Rodney Bickerstaffe. Perhaps people do not know ‑ and Ken, my very good friend, allows me to tell you this story ‑ but Ken Cameron first made his name not in trades union affairs but in journalism. It was not a Saturday afternoon post‑match celebration. It was a Saturday morning pre‑match celebration that forced Ken to move very quickly from sports journalism into other affairs. Ken will be able to tell you all the details of how he was filing the results from the Drumnadrochit Highland Games with less than the usual standards of journalistic accuracy. In fact, every result he sent round the newspapers he got wrong. All those who had won were said to have lost: all those who had lost were said to have won. You can imagine the confusion and consternation that Ken created. The result of this youthful indiscretion was journalism’s loss but it was the Fire Service’s gain.

Ken, with this advance on your autobiography, can I congratulate you on your years of service. It has been a privilege for all of us to work with you. These are decades of distinguished service to the labour movement.

I want, also, to congratulate Rodney Bickerstaffe, not only on his work but on his dedication. His career began with the inspiration of his mother. It was built on years of local activity and even as General Secretary you know he was willing to visit every local branch, no matter how small. When I recall those speeches he made in the dark days of the 1980s at our Conferences, I do thank you, Rodney, for keeping hope alive.

I remember not only the passion of your speeches but also the humour ‑ what you said of Conservative Ministers at that time. Who was it of whom he said he had suffered from a charisma bypass? Who was not just a yes man; when Mrs Thatcher said no he said no, too? Of whom was it that you said he was, three years ago, unknown throughout Britain; now he was unknown throughout the whole world? Who was it of whom you said he lost the art of communication but not, alas, the gift of speech. That is what he said about the Tory Cabinet. I would not like to venture to think what he is saying about the Labour Cabinet. Rodney, you can retire in the knowledge that the causes of your life’s crusade are now being enshrined in the new laws of our land.

Let me say this. The Minimum Wage Act of 1998, which was brought in after 100 years of labour movement agitation since Keir Hardie, was not won by politicians at Westminster or administrative action in Whitehall and it was not won just by a vote in Parliament. The minimum wage owes its origins to, and was won by hundreds of thousands of trades unionists like all of you represented here today, and none of them did more than Rodney Bickerstaffe.

To speak to you here in Glasgow, with its great traditions, is, for me, a special privilege. As I said, Glasgow is where I was born. I was a son of a Church of Scotland minister who had come to Glasgow in the depression of the 1930s. His church overlooked the Govan shipyards and when I meet Govan workers later today I will say we all have a shared interest in working, as we will, to shape the shipbuilding industry of our country.

My father’s predecessor in Govan was a friend of the Labour Clydesider MPs. He, in turn, had followed the first Church of Scotland minister to become a Labour Member of Parliament. It was here in Glasgow that trades unionists and ethical socialists came together for a great common cause. Their Statement of Shared Mission and Common Purpose, which was written 78 years ago, inspired a generation of socialists and inspires me now. They said they would strive without ceasing to end mass unemployment; they would bear in their hearts the sorrow of the aged, the widow and the poor; that their lives would not be without comfort; that they would have regard to the weak and those stricken by disease and who had fallen in the struggle for life, and they would fight for justice ‑ not just in our country but in every continent.

These pioneers were idealists but they were not dreamers. They knew how much easier it was to tolerate the status quo than to reform it; easier to conserve than to change; easier to succumb to vested interests than take them on; easier to take your own share than to fight for everyone to have a fair share; easier to see progress as moving up on your own than ensuring everyone moves up together.

But hard times did not teach them selfishness. It taught them solidarity. They rose above their hardships to insist that injustice should not just not happen to them; it should not happen to anyone. They had a vision. The trade union movement and the labour movement is built on that vision. It is a simple but fundamental and unshakeable set of beliefs that I know all in our movement share. It is that, in Britain, opportunity and security should be open not just to a privileged few; it should be open to everyone. That is what I come here to say today.

It is because we believe in opportunity and security for all that I come here to affirm our commitment as a Government to the goal of eradicating child poverty in our generation; the cause of educational opportunity not for some but for all; a National Health Service built for the needs not of some but for everyone, to breaking the vicious cycle of world debt, poverty and injustice internationally. This is my theme today, to build, through growth and productivity, full employment for all in our generation.

Friends, for 20 years all of us ‑ all of us here in this hall ‑ have marched for jobs; we have petitioned for jobs; we have demonstrated for jobs; we have rallied for jobs. For 20 years the TUC and every individual trades union here has rightly said, and we have all said to each other, unemployment is the great economic social, indeed, the moral cause of our time. For nearly 20 years we could only protest about unemployment. Twenty years ago, ten years ago, five years ago young people tried as hard then to find work. They were applying for jobs. They were training for jobs. Do not tell me that that generation of young people did not have talent or potential, could not learn or could not hold down a job. But what they needed was a Government on their side.

If only one young person in this country had got a permanent job as a result of the New Deal that the trades unions and the Labour Government created together, then that would have been worthwhile in itself. But there are now, since 1997, 500,000 who are benefiting from the new deal and nearly 250,000 who are now in jobs. Every time a young person, denied a job under the Tories, gets a job now we should be proud of the new deal because that is what can happen when we all work together.

I believe it was right, even under the fierce opposition of Tories, Liberals and the utilities to take the decision to tax the excess profits of the privatised utilities. We did it to the tune of £5.2 billion and we have now put that money in the poorest, highest unemployment areas and communities of this country. I hear what is said today about the pain of unemployment. I hear also about the needs of manufacturing, and we will respond.

But I can report to you that, together, since 1997 we have created 1,035,000 jobs. Unemployment among men is now the lowest since 1980. Unemployment amongst women is now the lowest since 1976. Long term unemployment is now the lowest since the 1970s but as long as there is unemployment we will not be complacent.

From April next year, I can tell you that there will be a new investment of £300 million. We are extending the new deal so that every one of Britain’s long term unemployed in all parts of the country can have new opportunities to work.

Unemployment among young people is now the lowest since 1975, but as long as one young person is without a chance, there is more to do. With an extra £300 million from next April, concentrating on those people and places who have still been left behind ‑ those with literacy problems in particular ‑ we will now intensify the New Deal so that no teenager is without training or work.

Unemployment among single parents is now falling for the first time ever. But that is not good enough.

From April next year, with £400 million extra a year, our new programme of choices will offer training, jobs and, yes, at last, a national child care strategy to help all parents who want it and to help them work.

Unemployment rates amongst the disabled are falling for the first time in decades. I want every person with disabilities empowered to use their abilities if that is their wish. So from April we are going to extend the New Deal so that disabled men and women can have the right to work too.

Unemployment in Scotland, Wales, Northern Ireland and the regions, the North, the South West and others is the lowest for more than twenty years. But that is not good enough, as we have heard today. With 500 million more for regional development agencies our aim is full employment not just in one region of the country but in every region of this country.

Unemployment among the over 50s has been rising for decades in our country. It was a scandal in the 1980s and 1990s that thousands of men over 50 and women over 50 were thrown on the employment scrapheap. Now since 1997 there are half-a-million more jobs for people over 50, but we want to do more and end the scandal of age discrimination in work. That is why we are introducing a guaranteed minimum income for unemployed men and women over 50 returning to work.

Building from this starting point of a million more jobs and the strength to take the tough decisions to achieve stability, this is a moment not for complacency but it is a moment of challenge and opportunity for our country, and I believe the prize for all of us is great. It is not just full employment for a year or two that we seek but it is full employment for our generation.

To achieve it, first we must entrench an anti-inflation culture of long-term stability, a tougher New Deal to strengthen full employment, higher productivity – far higher to sustain full employment – a new unionism and public services to underpin full employment, and new rights against discrimination and exclusion so that there is, for everyone, the chance of full employment.

Our first task has been to escape from 18 years of boom and bust and never to go back. Let us not forget, despite all the difficulties, that when we had the Tory 15 per cent interest rates, one million homes were repossessed and one million jobs were destroyed in two years in manufacturing. It was not the Conservative Government but Britain’s hardworking people who bore the biggest burden.

I remember a couple coming to see me, both in tears, who, having lost their jobs, knew that they would also lose their home and they had nowhere to go. I remember, too, the tragedy in my own constituency in Fife of the skilled craftsmen, the miners and the steelworkers in Lanarkshire, redundant in their forties who feared that having lost their jobs they would never work again.

After three years we can reflect on where we are now and what we still have to do. Remember those who said that a Labour Government could not achieve economic stability and growth. Remember the Tory prediction, a downturn made in Downing Street. Let us just say that these forecasts have not aged well. Let me explain why. It is because we rejected Tory short-termist, take-what-you-can, irresponsibility – and it is because we put our faith in labour movement values of economic responsibility, planning for the long-term and building from strong foundations, that with the Bank of England independence and new fiscal rules, means we now in our country have inflation close to its lowest for 30 years. But we cannot take it for granted.

It was not by accident but by taking action that we have steady sustainable growth and investment is rising. It is not by default but by design that we now have the lowest long term interest rates and are repaying our national debt. It is not by chance but choice that we now have 28 million fellow citizens in work. This is what happens when the British people and their Government work together.

Remember all of those who opposed Bank of England independence and said our policies would mean a future of higher unemployment and lower public spending for the long term. Remember those who resisted our fiscal rules when we insisted on fiscal discipline and said we would never be able to spend on health, education and public investment. Unemployment is down, and because our prudence is not the barrier to spending but has been its pre-condition, spending on services is rising by 5 per cent in real terms for the next four years. Health Service spending is rising by 7 per cent in real terms this year, education spending by 10 per cent this year and public investment rising by 30 per cent this year.

But our task is even bigger than creating stability for a year or two. It is – and this is the next and critical stage for us – to entrench for Britain a culture of long term stability so that people no longer expect, as they have in the past, that every period of growth will be followed by an inflationary wages spiral and then boom and bust recession. And every event tests our resolve to end that short-termism of the past and to steer a course of long-term stability, which is the real foundation for full employment.

I understand the concerns about the exchange rate with the euro and we will continue to do more to support manufacturing. I understand the concerns that people have, too, about world oil prices and petrol prices, but we will not return to short termism in any respect and we will not put at risk our hard won stability. So there will be no short term lurches in spending policy or tax policy, no irresponsible spending increases or inflationary pay rises that put youth jobs at risk, there will be no quick fixes or soft options that would put long-term stability, then our public services and then our policy for full employment at risk. We are not going to return to the stop-go of the past.

Governments have to deal with both national and international events and oil and petrol raises the issue of both. When we came to power in 1997 the deficit was £28 billion. Yes -we had to face up to that deficit and we dealt with that deficit immediately. So we retained and extended the fuel duty escalator that had been operated by the Conservatives in successive years every year since 1993, and there were good environmental reasons as Kyoto proved for doing so. But last November – immediately – I had cut the deficit and was able to put in place new environmental measures. I said we would end the escalator, and we froze, and for four million cars reduced, car licence fees in a March Budget that was welcomed by the motoring industry.

Today, now that the deficit is down, let us note that the existing fuel revenues are not being wasted but are paying for what the public wants and needs – now paying for £10 billion of extra investment in schools and hospitals this year – a total of £18 billion extra invested in our public services, including roads and public transport, money well invested at the service of all the people. Yes, we have higher excise duties than in Europe but we also have just about the lowest tax rates on work, the lowest business tax rates, the lowest VAT rates and, unlike America, and we should be proud to say so, we fund from these revenues a truly National Health Service which is open to all the people.

Governments are, of course, subject not just to national pressures but to global pressures too. In our three years in Government we have had to deal not just with debt and deficits in Britain but like other governments we have been tested by the financial crisis that has spread from Korea to Asia, then to Russia and a slowdown in the international financial system.

We are being tested, too, by an oil price that first fell from $19 when we came to power to $11 and then has risen to above $30, trebling in 20 months. Of course, when the oil price shifts from $11 to over $30 every economy is affected, every country’s petrol price has risen, and I understand very acutely the pressures that manufacturers, hauliers, farmers and every day millions of consumers face. But it is precisely because there is volatility in oil prices that we should resist any lurches in policy and we should resist returning to the old short termism of the past. Instead, because of that volatility, we should insist on steering a long term course of stability.

Our first duty is to ensure internationally, as we are pressing here in Britain, that oil flows from the wells to the refineries, to the petrol stations and then to the consumers, and this we will do, without interruption by barricades or blockades.

Our second duty is to ensure that, with our international partners, we maintain a course of stability to ensure international economic growth to the benefit of us all, and this we will do.

I tell you that this week, among every one of Europe’s 15 governments, as in America, in face of oil price volatility, it is not shifts in oil tax rates that are now being considered but it is pressure on the oil producing countries to raise their production and cut their price. When OPEC countries themselves have stated that their sustainable oil price rate is not the $34 that we have seen but $22-$28, none of us should relax in our representations until they ensure levels of oil production that bring the price at least to the levels that they themselves plan. Moreover, because cartels should not exercise such power anywhere, we will now look even more intently at how to diversify our energy supplies.

The third lesson that I learn is this. It is precisely because of the volatility of these oil prices that we should refuse to lurch between budgets from one policy quick fix or soft option to another – lurches that would inevitably be based on uncertain prices and unknown revenues. Instead, we should steer a course of stability.

Short termism is the old way and it brought us the stop-go, boom-bust economy, the ups and downs of the past, and this I will not endorse. Let me just tell members here that when the oil price was $10, experts came to us and they advised us that our Government should allow the closure of every coal mine in our country because the oil price was so low, and this, I and my colleagues refused to do. Instead, for the correct long term reasons, we sought a level playing field for coal, ended the discrimination against coal and invested £100 million extra in the future of the industry, a policy I believe that the British people support.

It would be equally wrong and short termist to tie tax rates to what could be a temporary rise in oil prices as it would be wrong to lurch in the other direction between budgets and suddenly tie tax policies and other policies to a temporary oil price fall. In fact, in the last six months rising world oil prices have raised VAT revenues by only £20 million net, and over the last 12 months by £400 million. It would, therefore, be the worst of short-termism to make permanent shifts in fuel duties because of a one-off change in oil profits and, thus, oil revenues that might never be repeated. So we will listen but we will not fall for the quick fix and the irresponsible short termism of making tax policy this afternoon because of blockades this morning.

We will continue to make policy as we have done in Budgets and at Budget time, and I believe that the British people want long-term stability and it does nothing for full employment or for growth in our economy to return to the short-termism of policy lurches that brought us boom and bust in the past.

We will not change our European policy either – in principle our support for the single currency, in practice the five economic tests that have to be met. So we will continue to reject the Tory policy that panders to those who urge isolation and withdrawal, something that everybody here agrees would put jobs and stability at risk.

In our country today we have created greater fiscal and monetary stability, and, yes, there are a million more jobs, but, yes, too, as John Monks said a few minutes ago, there is a productivity gap of 30 per cent with our competitors, and if we are to achieve full employment we must bridge that, too. When I listen to those who say that we can now relax our efforts, return to the old ways and ignore long-term challenges, we will not fall for that complacency either.

Instead, from the platform that has been created, a new found stability and rising employment, I want today to challenge the whole of Britain – British industry, management, the unions, the public sector and the Government, all of us, to join together in seizing, not squandering, this hard won time of opportunity -never again to retreat back, as we have done in every previous economic cycle, into complacent short-termism, not to fight yesterday’s battles, but free of complacency to address tomorrow’s challenges and to use our new found stability and our growing strength in a national productivity drive to achieve a rise in productivity that will bring also a rise in prosperity that outpaces our competitors.

To achieve this, we must, day by day, week by week, year by year, have the discipline to overcome the old British problems of short termism and under investment, low productivity and inadequate investment in skills, over-complacency in the boardroom, restrictive practices wherever and whenever they exist, and we should use this time of opportunity to remove all the old barriers to employment and to prosperity for all.

I can tell you what the Government will do to contribute to this productivity drive. We will double public investment to £19 billion, with permanent capital allowances and R and D credits, we will be investing more in manufacturing industry in our country. One billion more pounds will be invested in science so that British inventions can lead to British manufacturing products and to British jobs. For the first time ensuring an employee share ownership plan that gives most benefit not just to a few employees on share options in a firm but benefit to all. We will make the biggest investment in education and skills in our country’s history – £10 billion more by 2004.

But winning at work – this is the theme of the Congress – is not simply making promises about what a Government can do, but it is setting goals we can all meet together. In the old days management said it was all up to the unions. The unions said it was up to management and both said it was up to Government. I say it is now up to us all working together. So I am here not to make new pledges but to summon us to new challenges.

All the evidence shows that when unions win at work on a productivity agenda, prosperity and employment increase. So we must, therefore, be honest with each other. Just as prosperity for all is undermined by the wrong kind of Government, so too in the past the wrong kind of management and the wrong kind of unionism have failed us as surely as the wrong kind of Government. When we know that in some plants our productivity is the best in the world and in other plants even in the same industry it is only half as good, our challenge together must be firm by firm, sector by sector, managers and union members, free from complacency, we address those barriers to productivity: the levels of our skills; the levels of investment; standards of management and industrial relations all round; barriers to the introduction of modern technology and questions of best practice and who does what in the workplace.

Our challenge is to work together to ensure that the benefits go, not as in the past, to a few but as they should always have done, the benefits go to all who play their part.

We, the Government, will accept our responsibilities in the public sector, inviting trades unions to work with us to improve both conditions of service and the condition of each service. In an environment of continuously low inflation, I ask unions across industry to consider seriously the benefits of moving from the annual cycle and extending multi-year pay deals.

Friends, great historical changes are at work, even more dramatic than the changes a century ago when craft unionism transformed itself into new industrial unionism. Now, in this new century, old industrial unionism is transforming itself into a new industrial unionism: – our enduring values, justice and just rewards for all remain the same; our objectives bolder than before, defending our members against the threat of poverty, now about ensuring all our members have the chance to realise their potential to the full; – and the surest way, the great drive of 21st Century unionism, to meet that age old aim of enhancing the value of our labour, and this is done best directly through education and training that will enhance the value of each of our skills.

So this Government will do everything in law, in financial support and in support, as you as trade unions, bargain on the issue of skills. Let me be clear about the scale of our ambitions: one million individual learning accounts, nearly a million able to benefit from adult literacy courses and the right to free or tax free computer learning from October 1. October 1 is the start of the new University for Industry – what, from the 1970s the Open University achieved for thousands in higher education through TV and distance learning as second chances, we are now ready to achieve for millions in lifelong learning through the University for Industry, using cable, satellite and interactive media so that people can learn direct in their workplace and direct in their home.

For anyone who needs it, our aim is any course of study at any grade at any age. We will support trades unions as they push that skills agenda. No one should be left out, because we believe a fair society is essential to a productive economy. So we are ensuring new rights for working people. Never again do we want mothers or fathers refused time off to see their sick child through a hospital operation, the right to time off when a family member is ill. That is what a good family policy is all about; the right to four weeks holiday – we will work with you to publicise that benefit so that everyone knows that that benefit exists and can be enforced – the right to maternity pay now extended to all low paid workers; the right of recognition for trades unionists, and let us not forget that from May 4 1997, the right to be a member of a trades union, as at GCHQ, a right that no future Government should ever now dare take away. (Applause)

We are now asking the Low Pay Commission to report next year on a further rise in the minimum wage, and no one should be excluded, because in no part of our society should there ever be institutionalised racism again. We will remove the barriers of prejudice, discrimination and racism that exist in our society.

Having lifted the first million pensioners out of poverty, having cut VAT on fuel, introduced free television licences for all those over 75 and a £150 winter allowance for all, our next challenge, as Alistair Darling said yesterday, is to ensure that all pensioners who need it – our priority is those on modest occupational pensions and modest savings, who have lost out in the past – are helped not penalised for their savings and thrift. Our aim is to reward pensioners for their savings, to end pensioner poverty and to ensure that not some but all pensioners will gain from the rising prosperity of the nation.

As we raise Health Service spending from £49 billion to £54, to £58, to £63 to £68 billion by 2003, we will demonstrate by our actions that the best Health Service for each of us is not a private one that favours the few, but a public service run in the public sector by dedicated public servants in the public interest for all.

Friends, they say that in one term we could never simultaneously abolish 800 hereditary peers, introduce devolution to Scotland and Wales, ban hand guns, legislate new working rights, introduced a minimum wage and lead the world in starting to tackle the problem of poverty and debt relief, but under Tony Blair we have done that. Now they will say that we cannot achieve full employment, abolish child and pensioner poverty, build world class public services in health and education and meeting our productivity challenge. I tell you that we can and we will. The fruits and benefits of working together will not be just for some but for all.

The test of our country’s advance will be judged not by the heights reached by a few individuals but by the benefits to all when everyone works together. The test of our country’s success will be judged not as the successes of a few but how success can be shared throughout the whole community.

Our national progress, not a few people moving up on their own, but all of us moving forward together with the strong helping the weak and, as a result, making us all stronger. Not selfishness but sharing. That is the realisation of our enduring values. They are the same yesterday, today and tomorrow – an opportunity and prosperity that enriches not just a few but everyone.

Friends, that is our vision, that is our task. Have confidence that by working together this also can be our achievement. Thank you.

Below is the text of the 2000 Budget Speech made by the then Chancellor of the Exchequer, Gordon Brown, on the 21st March 2000.

A year ago the Government forecast the British economy would grow at 1-1.5 per cent.

Today, I can report that in 1999, instead of the recession that many forecast, the British economy grew by 2 per cent.

And Britain has been growing steadily while meeting our inflation target.

Today inflation is 2.2 per cent.

For the third year running inflation is in line with our target. And the target of 2.5 per cent – which I reaffirm – will be met this year, next year and the year after that.

Because of the action we took in 1997 to stop inflation getting out of control, inflation in Britain has now been lower for longer than at any time since the 1960s.

For almost thirty years, Britain’s long term interest rates were, on average, 3 per cent higher than Germany’s. Now British long term rates are down to the levels in Germany and today lower than in the USA.

Amid the risks of an uncertain and often unstable global economy, we are determined to maintain our disciplined approach: determined not to make the old British mistakes of paying ourselves too much today at the cost of higher interest rates and fewer jobs tomorrow, determined not to make the old mistake of putting consumption before investment, the short term before the long term. Britain does not want a return to boom and bust.

That is why the Bank of England has been right to take pre-emptive action on interest rates and to be vigilant on wage inflation.

It is because the foundations on which we build are strong that the economy can meet our inflation target and achieve steady growth.

Our forecast is that growth this year will rise to 2.75-3.25 per cent, and next year and the year after it is forecast to be 2.25 to 2.75 per cent – in line with our view of trend growth.

Manufacturing is growing by 1.75 to 2.25 per cent this year and next.

And business investment grew by 7.7 per cent last year to 14.5 per cent of national income, with Britain since 1998 for the first time investing more of our national income than our major European competitors, and more than America.

This Budget is built on the realities of this new economy – that we will meet and master a new tide of unprecedented technological change by continuing to remove the old barriers to business investment and by continuing to expand employment opportunity for hard working families.

I can report that unemployment today is at its lowest for 20 years, that there are 800,000 more people in work since 1997 and that there are one million vacancies on offer.

Take-home pay is rising – by next year, for the typical family, a real terms rise in living standards of 10 per cent since 1997.

Britain’s economic success depends not only on monetary stability but on fiscal stability.

Today, I can report that because of tough decisions to cut the deficit in our first two years and lower long term interest rates, debt interest payments will be four billion pounds a year lower.

Because of the Welfare to Work reforms that have cut unemployment, social security spending on economic failure this year is a total of 3 billions less than the plans we inherited.

Today, Mr Deputy Speaker, the state of the public finances is sound.

In 1997 we inherited a current deficit exceeding 20 billion pounds.

A year ago I estimated that this year’s current surplus would be 2.5 billion pounds.

I can report that we have not only balanced the current Budget but our current surplus this year is forecast to be 17 billion pounds.

We have met and we will continue to meet, even on the most cautious of cases, our first rule of fiscal prudence, the golden rule.

And we are also meeting our second rule, the sustainable investment rule.

This year debt as a share of national income will fall well below the 44 per cent we inherited – to 37.1 per cent.

Last year we forecast that the overall budget would be in deficit for this financial year – that public sector net borrowing would be 3 billion pounds.

I can now report that due to the performance of the economy and to prudent management, the Budget is not in deficit by 3 billion but in surplus by 12 billion pounds.

Mr Deputy Speaker, we inherited a deficit of 28 billion pounds in 1997. This year we will make a debt repayment of 12 billion pounds.

Too often in the past, at the first sign of a cyclical surplus, governments have fallen back into imprudent ways.

It is because we have learned from the mistakes of the last forty years that this Government will maintain its prudent and responsible approach. The figures I am announcing today show that we will meet our fiscal rules over the cycle. We will meet our fiscal rules even in the most cautious case, on the most cautious assumptions, including the most cautious view of trend growth at 2.25 per cent.

And Mr Deputy Speaker, I can announce today that I have decided to lock in a greater fiscal tightening next year and the year after than we promised in last year’s Budget and Pre-Budget Report.

After the measures I announce today our projection is for a current surplus next year of 14 billion pounds and for the years after, surpluses of plus 16, plus 13, plus 8 and plus 8.

Debt to GDP, which was 44 per cent in 1997, will fall to 35 next year, then 34, and then 33 in each of the next three years.

Net borrowing will be minus 6.5 billions next year, that is, we will make a debt repayment next year of 6.5 billion pounds.

Then net borrowing in 2001-2 will be minus 5, a debt repayment of 5 billion pounds, with net borrowing for the years after 2002-3 of plus 3, plus 11, plus 13, well within our fiscal rules.

So from this stable platform of sound finances I am able to set out today our prudent and responsible approach for future years. Having met all of our fiscal rules, paid off 18 billions of debt this year and next, and locked in a greater fiscal tightening, we are able both to set a new envelope for public spending and investment for the years from 2001 and to cut taxes for hard working families.

I can report that our fiscal rules enable us to increase current public spending by 2.5 per cent a year in real terms for the 3 years from 2001 and double net public investment as a share of national income from 0.9 per cent next year to 1.8 per cent in 2004.

Mr Deputy Speaker, I have always said that our prudence is for a purpose.

And in this Budget, because of our continuing prudence, we can now take the next steps towards that purpose – a Britain of opportunity and security not just for a few but for all:

– with stability locked in, and enterprise growing, we can meet our prosperity goal – closing the productivity gap;

– with 800,000 more in jobs and the work ethic being restored, our full employment goal – employment opportunity for all;

– with 50,000 more students and standards rising, our education goal – 50 per cent of young people in higher education;

– with 800,000 children already lifted out of poverty and our civic society renewing itself, we can meet our anti-poverty goal – to halve child poverty by 2010 and end it by 2020.

First, I announce major reforms today to reward enterprise and entrepreneurship; open up competition in banking; promote new and growing businesses and e-commerce – and balanced growth across all the regions and nations of the United Kingdom.

To remove more of the old barriers to new investment, I have decided on radical reforms of capital gains tax – beyond the tax cuts I set out in the Pre-Budget Report.

When we came into Government capital gains tax was fixed at 40 per cent and we cut the long term rate of capital gains tax for business assets held for ten years or more.

I have now decided to radically cut rates.

I am announcing that from 6th April this year the new capital gains rates for business assets will be cut from 40 per cent to 35 per cent after one year.

To 30 per cent after two years.

To 20 per cent after three years.

And down to 10 per cent after four years.

I will make further tax cuts to remove the barriers that hold small and growing businesses back. Today business investors who own between 5 per cent and 25 per cent of a new and growing business do not benefit from the 10p rate.

I will now cut their rate to 10 per cent for all investments above 5 per cent held for four or more years.

I will make a further radical change – this time for Britain’s unquoted companies. All investments held for four years will benefit from the 10 per cent rate.

With both the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax rates for long term investors, Britain is now the place for companies to start, to invest, to grow and to expand.

I have a decision about one other tax on capital – inheritance tax.

The threshold for inheritance tax is 231,000 pounds.

I will next year raise it to 234,000 pounds. 96 per cent of people will be exempt from inheritance tax.

I have one further cut in capital gains tax to be introduced from 6th April.

So that millions more hard working people have a stake in the businesses whose wealth they create, we will remove the old barriers to a new share owning democracy.

The all employee shareholding scheme which starts on 6th April has one defining requirement: that shareholding should be open to all employees.

I can confirm that the 1.7 million people now in the ‘Save As You Earn’ scheme will continue to enjoy its benefits.

I have also decided that high tech firms recruiting essential personnel will be able to offer share option incentives of 100,000 pounds for up to 15 employees.

And the Financial Secretary will now consult on a technical solution to the tax treatment of share options in unapproved schemes.

I can go further. In future all employee shareholders will secure all the benefits of the 10 per cent capital gains tax rate.

Taken together, our measures are the biggest boost for employee shareholding our country has seen.

The next step on our road to a wealth-owning democracy.

Yesterday in response to the Cruickshank Report, my Rt Hon Friend the Secretary for Trade and I referred small business banking to the Competition Commission.

Mr Cruickshank estimates that competition can reduce banking costs and charges by up to 10 per cent or 3 – 5 billion pounds a year.

The money transmission system affects every cheque, every credit card and every debit transaction and reaches from every local cash dispenser to every corporate inter-bank transfer.

Today I am announcing that we will legislate to ensure the UK payments system is open to new competition.

The international competitiveness of the bond market in the City of London depends upon a level playing field.

That is why today I am announcing the abolition from April 2001 of the withholding tax on the interest paid on international bonds. We will legislate so we can proceed on the basis of exchange of information nationally and internationally. This change should be widely welcomed in all parts of the house. There is no clearer indication of our determination to stand up for what is right for Britain.

Since 1997 the number of small businesses in Britain has risen from 1.2 million to 1.3 million – a 100,000 increase.

Today I continue to remove the old barriers to small business growth.

Having already cut small business corporation tax from 23 per cent to 20 per cent and, for the first 10,000 pounds of their profits, to just 10 per cent, I am today making a further tax reduction. For all small and medium sized businesses the 40 per cent capital allowances – which I introduced in my 1997 Budget – will be made permanent.

This will be of special help to manufacturing companies.

Half manufacturing employment is in small and medium sized firms. So manufacturing will derive further benefit from the 150 million pounds I am allocating to our new research and development tax credit, introduced on 6th April, to finance 30 per cent of their R and D costs.

I want to make Britain the best environment for e commerce and catch up with America as swiftly as possible.

To encourage one million small companies to go on line, I will introduce a special tax reduction. For the next three years any small business buying computers, or investing in e commerce and new information technology, will be able to immediately write off against tax the full 100 per cent of the cost in the year of purchase.

Side by side with this incentive, the small business service will offer consultancy, advice and planning to help small businesses get on line and become e companies, and with the additional resources the Secretary for Employment is providing the University for Industry, which starts this Autumn, will offer small business employees training on the Internet

We are determined to lead in e-commerce and the Internet. Today we are introducing new rules for work permits in areas of highly skilled information technology where there is a global shortage.

And to promote the use of the Internet we will legislate for other tax cuts – a 100 pounds tax cut for electronic filing of tax and VAT returns, and a further 50 pounds tax cut for electronic filing for those paying the working families tax credit.

Tax cuts since 1997 are worth one billion pounds a year for small businesses alone.

After today’s measures, Britain now has the lowest small business corporation taxes we have ever had, the lowest in the industrialised world: since 1997, for small companies an average tax cut of almost 25 per cent.

And to encourage the next generation of entrepreneurs, we are forming a partnership with the CBI, the Institute of Directors and the Chambers of Commerce to encourage enterprise in all communities. Two new enterprise funds will target business loans and management scholarships to high unemployment areas.

Stage by stage we are moving from the Britain where enterprise was a closed circle for the few, to a Britain where enterprise will be open to all.

We must also remove the old barriers of under-investment and neglect that for too long have held our regions back.

Working with the new Regional Development Agencies and the Small Business Service, our aim is balanced economic development across all the regions and nations of the United Kingdom – a modern regional policy supporting local innovation, more investment and improved infrastructure.

To finance a network of regional venture capital investment funds, we are today announcing a partnership with the European Investment Bank and the private sector – with a target of one billion pounds for new economic development for our regions and nations.

The regional targets will be 85 million for the South West, 120 million for the North West, 130 million for the North East and Yorkshire, 250 million for the Midlands and East, 250 million for London and the South East. Scotland, Wales and Northern Ireland will have their own funds.

To further promote a modern regional policy, the Secretary for Industry will be announcing a regional innovation fund to facilitate the formation of local clusters in hi tech industries.

For years Britain, as a whole, has lagged behind America in business access to venture capital investment. Here only half as much is invested per head.

I am grateful to Mr Paul Myners, who has agreed to head a review of institutional investment, to report to me in time for the next Budget.

Our goal for the whole of the United Kingdom is to remove the old barriers to full employment.

We know that greater opportunity for all means greater prosperity for all.

Since 1997 the number of unemployed on benefits has fallen by 30 per cent.

Youth unemployment is down 70 per cent and nearly 200,000 more young people have now found jobs.

Long term youth unemployment, which in the mid-eighties was at 500,000 and even in 1997 was as high as 200,000, is already down to 50,000.

The New Deal demonstrates how false was the old choice between enterprise and fairness, between efficiency and equality. By delivering employment opportunity for all, we are making Britain both more enterprising and more fair, to the benefit not just of the high unemployment areas but the whole country.

And because we have succeeded in this Parliament in removing the old barriers to employing the young, I can announce that starting from April next year we will extend the opportunities and the obligations of the New Deal to the long term adult unemployed – with four options of: work, work-based training, work experience including in the voluntary sector, self-employment. But no fifth option, no staying at home on benefit doing nothing.

The relationship we are forging between rights and responsibilities is firmly rooted in both economic opportunity and individual responsibility.

Instead of being left to draw benefit at a social security office, the unemployed who are able to work will sign up to seek work, with the long term unemployed offered the help of a personal employment adviser.

To ease the transition back to work, the Government will introduce a new job grant for long term unemployed starting at 100 pounds and help with rent or mortgage.

Instead of benefits paying more than work, work will now pay. And I can announce that we will extend the principle of the working families tax credit.

As a first stage, from 1st April, all long term unemployed over 50 who want to return to work will be guaranteed a minimum income for their first year back – for wages up to 15,000 pounds a year, an extra payment of 60 pounds a week.

And building on the forthcoming rise in the national minimum wage, I am today increasing the working families tax credit. It is already being paid to one million families in our country. And with today’s family tax cut, the minimum family income will rise next April – from 200 pounds a week by 7 per cent to 214 pounds a week.

Full employment is not just about the right to work, but, where there are jobs, the responsibility and the requirement to work.

We will implement the Report of Lord Grabiner QC.

Starting in May, a confidential phone line will advise claimants on how to move from the hidden economy and end fraudulent benefit or tax claims; how to get work, register as a business, or become self employed. After six months, from 1 January, for those who fail to respond, tougher rules and penalties will be imposed.

From October, in the 20 highest unemployment areas of Britain covering 127,000 unemployed, local special action teams will be set up to help local unemployed people into nearby vacancies.

The number of lone parents on income support has fallen by almost 100,000 since 1997.

But the employment rate among lone parents in Britain is still only 45 per cent, far below the 70-80 per cent rates of America, France and Scandinavia.

In this Budget we remove old barriers to work and I can today announce an extension of the New Deal in a new way to half a million lone parents.

Piloted from this Autumn, and starting nationally from next April, lone parents with children over five will be invited to work-focussed interviews – and encouraged to take up new choices:

– the choice to train for work with a new cash payment of 15 pounds a week on top of benefits;

– the choice of a few hours work a week, with the first 20 pounds of earnings allowed with no reduction in benefit;

– the choice of part time work with a guaranteed 155 pounds for 16 hours or the choice of full time work on a guaranteed 214 pounds a week;

– and on every rung of this ladder of opportunity, help with back-to-work costs and with child care.

Just as we remove old barriers to lone parents working when their children go to school, so too we will help mothers who want to be at home in the first months of their child’s life.

Today, too many children are born into poverty because the family income drops when the mother stops work. Yet this is the time when many mothers feel they need to be at home with their young child.

The Secretary for Trade is announcing that he will review what improvements can be made in maternity pay and parental leave to improve family friendly employment.

But today I can announce immediate decisions which recognise the extra costs families face when a child is born.

For all low income mothers who meet the basic requirement of health check ups for their young child, we will increase the Sure-Start maternity grant from 200 to 300 pounds. Helping over 200,000 low income mothers.

Mothers on paid maternity leave who would otherwise fall into income support will now stay on working families tax credit.

Families receiving the credit where the mother wants to stay at home will no longer have to wait as long as six months for additional support after a child is born – this will be worth up to 30 pounds a week.

I have examined the alternative put to me of a transferrable tax allowance for husbands and wives when mothers stay at home.

Under this system, a family with two children on 15,000 pounds a year would receive 965 pounds a year. The working families tax credit is far better. With the improvements in it announced today the same couple will receive not 965 pounds a year but 2,200 pounds a year.

The Prime Minister has set a national goal for our country – to abolish child poverty in 20 years, and to halve it by 2010.

A Sure Start for all Britain’s children is not only right but the best anti-crime, the best anti-drugs, the best anti-unemployment and the best anti-dependency policy for this country’s future.

And our strategy starts from the foundation of universal child benefit for all seven million families with children.

When we came to office, child benefit was just 11 pounds five pence for the first child.

Child benefit will be 15 pounds fifty pence from April 2001, 40 per cent more than in 1997.

For young children in the poorest families, weekly support in 1997 was just 28 pounds.

We have raised it in every Budget and today the Secretary for Social Security is announcing a further increase for the poorest children of four pounds 35 pence a week.

So maximum support is up from the 28 pounds of 1997 to up to 50 pounds a week next year.

As a result of all our measures, the poorest two child family on income support will now be 1,500 pounds a year better off than in 1997.

And the low paid family with two children on a wage of 10,000 pounds a year will now be 2,700 pounds a year better off.

This is what we mean by tackling child poverty while making work pay.

I can now report that the numbers of children lifted out of poverty will this year rise beyond one million, and next year reach 1.2 million children – the greatest reduction in child poverty in 50 years, our country now at last fulfilling this generation’s obligations to the next.

And as we move forward to take the second million children out of poverty, I can confirm today that the Secretary for Social Security and I have agreed on the next major reform.

Over the next three years, building on the foundation of universal child benefit, we will create an integrated and seamless system of support for children paid to the mother.

The war against child poverty needs more than finance and more than the efforts of government acting alone.

The war against child poverty can only be won by the combined efforts of private, voluntary, charitable and public sectors working together.

I can confirm that after consultation with charities and voluntary organisations we will proceed to set up, in every region of our country, and with new cash allocated in our spending review, not just one children’s fund but a network of local and regional children’s funds to support work by the voluntary sector in meeting the needs of children.

A strong civic society is built not by rights alone but by rights and responsibilities and by the shared pursuit of the common good – which every year enlists the energies and realises the idealism of more than 22 million British citizens.

It is time for Government to do more to encourage and extend this civic patriotism.

All voluntary organisations and charities will benefit from the tax reforms I am announcing to make it easier to give money and time.

From 6th April this year for every pound any taxpayer gives to charity, the Government will add an extra 28 pence.

And to encourage payroll giving, for every pound contributed through the pay packet, the Government will add up to 50 pence worth of tax relief.

Tax relief will be available not just for cash donations, but for gifts of shares.

To encourage corporate giving, any company can, from 1st April, receive tax relief on the full amount of any donation.

Within prescribed limits, I will go further in exempting ticket sales for charitable fund raising events from VAT, so that the contributions people make will go straight to the charities they support.

Each of these measures will also help those charities and non-governmental organisations who, with the churches, have, for decades, led the crusade to combat Third World poverty and secure debt relief.

With these reforms, this Government matches their commitment because it shares their cause – a virtuous circle of debt reduction, poverty relief and economic development for the poorest countries.

A strong civic society takes seriously its obligations to our elderly:

– to the very poor pensioners whom we must help out of poverty;

– to those just above benefit levels whose lifetime savings should not – as in the past – be a barrier to securing a better retirement income;

– to those who, while better off, are on fixed incomes.

The Secretary for Social Security is to launch a consultation on how, for the next Parliament, we can develop a new pensioners credit – designed not only to lift the poorest out of poverty, but also to do more for those with modest occupational pensions and savings who should not be penalised for having worked hard all their lives and saved for their retirement.

Under the framework on which we will consult, an older pensioner with income, for example, of less than 100 pounds a week, or a couple with less than 150 pounds a week, would qualify for a pension credit to raise their income.

As we consult on this reform, we are making immediate changes.

The pensioners tax allowance will be set this year at 5,790 pounds and for those over 75 at 6,050 pounds.

Nearly 6 million pensioners will not pay any income tax at all.

And with the new 10p rate on savings, 1.5 million pensioners will, for the first time, pay tax at half the rate of the past, at 10p not 20p.

And I have decided to do more today for elderly citizens with modest savings whose very thrift has perversely and unfairly debarred them from receiving the income they need.

For years any pensioner with savings over 3,000 pounds has lost out on income support.

The last Government froze the limit at 3,000 pounds in 1988.

I have decided from next April to double the limit – raising it from 3,000 pounds to 6,000 pounds.

The cut off point for income support was frozen at 8,000 pounds of savings in 1990. We will raise that to 12,000 pounds.

As a result, 500,000 elderly people – previously penalised for their thrift and savings – will be on average 250 pounds a year better off, many better off by 1,000 pounds a year.

Fuel poverty scarred our country for too long. That is why in our first Budget we cut VAT on fuel; why in our second the winter allowance was introduced at 20 pounds and then in our third Budget raised to 100 pounds, available to all 8.5 million households with a resident over 60.

Under this Government the winter allowance will be paid this year and paid every year.

I have considered whether to raise the allowance in line with inflation, which would put it up to 103 pounds, or in line with earnings, which would raise it to 104 pounds fifty.

But I have decided in this Budget not to raise it by 4 or even 5 pounds but to raise it by 50 pounds to 150 pounds.

This winter allowance, at 150 pounds, will now cover up to four winter months of a hard pressed pensioner’s fuel bill.

I can further announce that 600,000 of our elderly will benefit from the new ‘affordable warmth’ programme to install fuel efficient central heating in one million homes throughout Britain.

Beginning on 1st November all pensioners over 75 will receive the free TV licence, worth 104 pounds. And I can announce today that any pensioner over 75 who has an unexpired licence which runs beyond 1st November will also be eligible for a refund for every unexpired month.

Of all the measures to lift our poorest pensioners out of poverty, the minimum income guarantee is the most essential.

We will raise the minimum income guarantee in line with earnings next year.

For a single pensioner it will be worth 82 pounds a week, and for pensioners over the age of 80 it will be 90 pounds a week. For a couple it will be 127 pounds a week and for over-80s, 137 pounds a week.

Taking these measures together – the winter allowance, the TV licence and the higher minimum guarantee – by April next year 1 million pensioners will be, compared with 1997, 20 pounds a week, or 1,000 pounds a year, better off.

As we look to the future, I want all to be able to achieve the security of a wealth-owning democracy, with prosperity reaching the people and places the economy has too long forgotten.

So we want to do more to help people start a bank account and start saving, more to help people invest in their pension, more to help people get on to the first rung of the savings ladder and make provision for their future.

Today in Britain up to 3.5 million adults have no bank account. The Cruickshank Report has revealed that a basic affordable bank account for everyone would be profitable for the banks and that using banking facilities – and not the cash economy – just to pay gas and electricity bills could save families 50 pounds a year, or one pound a week.

I am now inviting the banks to work with the Post Office to offer this basic banking service to all.

And I want working families to be able to move seamlessly from starting an account to starting to save.

I have already announced measures to reward pensioner savings.

This year 6.5 million individual savings accounts have already been started. For the coming year, the ceiling was announced at 5,000 pounds of savings. Instead, for one more year I will keep the ceiling at 7,000 pounds.

I said last November that I would, in future, make an annual Budget decision on real term rises in road fuel duties – the money to go to a new ring-fenced fund for roads and public transport.

Since the Pre-Budget Report world oil prices have risen rapidly from 23 dollars to 30 dollars a barrel.

So, in this Budget I have decided that, beyond the automatic inflation rise of two pence a litre, there will be no real terms increase in road fuel duties.

And to encourage the use of ultra-low sulphur petrol, I will set fuel duty at 1p per litre below other petrol from 1st October.

An extension to the new lower rate vehicle excise duty comes in on 1st March next year. Until that date I have decided – for all cars – to freeze vehicle excise duty.

At present the lower rate – at 55 pounds below the standard rate – is available for 1.5 million cars.

From next year I will extend the reduced rate of vehicle excise duty to cars at 1200 ccs or below.

This will cut vehicle excise duty to 105 pounds for 2.2 million additional cars, the reduced rate will now cover almost 4 million cars.

I am also introducing from 1st March next year, for newly purchased cars, a four band vehicle excise duty rewarding the most environmentally friendly vehicles.

Under the rates I am publishing today, 95 per cent of new cars will pay less than they would under the current system, half of them at least 30 pounds less.

We will also cut the vehicle excise duty for forty thousand 38 tonne and 41 tonne lorries by 500 pounds; the 40 tonne class lorries will have their rate cut by 1,800 pounds; for all other heavy lorries rates will be frozen.

The environmental impact of these tax cuts – taken together with the revenue neutral proposals for company cars – will be a reduction in carbon emissions of one million tonnes by 2010.

This is on top of the 5 million tonnes reduction in carbon emissions by 2010 as a result of the climate change levy which is also revenue neutral and on which the Financial Secretary is publishing further details today.

To further cut pollution we will legislate the aggregates levy, which will again be made revenue neutral through a further 0.1 per cent cut in employers’ national insurance.

These two measures will together cut employers’ national insurance contributions by 1.35 billion pounds.

There is also a strong environmental case for reducing stamp duty for development of brown-field sites, as recommended by the Rogers Report. The Paymaster General will now consult in detail on the measure.

For the property market, in addition to the previously announced withdrawal of mortgage interest tax relief, stamp duty on property sales will be raised for sales above 250,000 to 3 per cent and for sales above 500,000 to 4 per cent. But for properties below 250,000 I propose no change. And I also propose to freeze insurance tax.

Last year I froze duties on all spirits.

This year an inflation rise would push the price of whisky up by 22 pence a bottle.

Because of the competitive position of the industry I will this year continue to freeze duty on all spirits.

Beer will rise only by inflation – by 1 pence a pint- and wine only by inflation, by 4 pence a bottle.

Now that the return-leg exemption for air fares has been found in breach of Single Market law, I am taking the opportunity to introduce a new, fairer and lower air passenger duty – at an overall cost to the Exchequer of 80 million pounds a year. The tax on economy flights within the UK will be the same or lower. For economy flights outside Europe the rate will remain at 20 pounds and there will be a new business class rate of 40 pounds.

30 million economy passengers travelling to Europe will have air passenger duty cut in half – from 10 pounds to 5 pounds. And on flights from the Scottish Highlands and islands I will abolish air passenger duty altogether.

On tobacco, the Paymaster General will tomorrow announce tough new measures to tackle smuggling.

Cigarette taxes will rise by 5 per cent above inflation from tonight – by 25 pence a packet – with every penny of the extra revenue going – as I promised – to funding our hospitals and the National Health Service.

And I am also commissioning a long term assessment of technological, demographic and medical trends over the next two decades that will affect the Health Service, to report to the Treasury in time for the start of the next spending review in 2002.

I have a number of other fiscal decisions to make.

Debt interest payments are down by 4 billion pounds a year. And because we have not spent and we will not spend more at the expense of being prudent, we have also made the tough decisions to tackle benefit fraud, to move people from welfare to work, and to control the social security budget.

Compared to last year’s Budget forecast, social security spending is lower this year by 2 billion pounds and will be another 2 billions lower next year, a saving of 4 billions in all.

Because we have cut borrowing and reformed the welfare state, cutting the costs of social and economic failure, and because we have been financially disciplined, extra resources are now available for our priorities.

And, Mr Deputy Speaker, a Budget is about priorities.

In my Pre-Budget consultations I have read carefully detailed Budget representations and examined proposals from all sides of the House.

I have examined proposals for transferrable tax allowances at 4.25 billion, private health insurance tax reliefs at half a billion and for abolishing capital gains tax at 3.9 billion and top rate tax cuts at 690 million for every 1p. And I have established that, for these last two alone, 75 per cent of the tax cuts would go to the wealthiest five per cent of the population, leaving us nothing extra for public services like the NHS.

And because the proposals are made irrespective of economic circumstances, they would risk a return to boom and bust.

I have decided instead on a prudent and responsible approach that allows us to repay debt and lock in an even greater fiscal tightening, and that allows us even after meeting our fiscal rules, to target tax cuts on hard working families and to release for our public services in the coming year alone additional resources of four billion pounds.

These extra resources are not at the expense of our prudence, they arise because of our prudence.

I can announce an immediate new investment of 280 million pounds in transport, 250 million of it to a ring fenced fund for improving roads and public transport including transport in rural areas. The Deputy Prime Minister will be making a statement on individual allocations for the coming year later this week.

I am able to announce an additional 285 million pounds to be spent from April for fighting crime. Later this week the Home Secretary will announce further details.

And I am also announcing additional investment in UK education starting on 1st April of 1 billion pounds.

Under the Secretary for Education and Employment’s leadership, class sizes for 5 -7 year olds in primary schools are being cut and significant improvements in reading, writing, and maths achieved.

Last year he made a payment to every primary school for books of 2,000 pounds.

Now this year more cash will go directly into the classroom.

To support the Secretary of State’s drive for literacy and numeracy, every one of these 18,000 primary schools will from 1st April receive a new payment of 3,000 pounds for the smallest school and rising to 9,000 for the largest.

The money will go straight to the head teacher.

And schools offering special tuition to help the weakest pupils catch up will be able to draw on an extra 20 million pounds to boost pupil results.

The Secretary of State is proposing to back up reforms in our secondary schools with new measures to boost the performance of those falling behind and to raise the performance of all pupils by the age of 14.

To support these reforms in our secondary schools he will now make a payment to every head teacher for books, equipment and staffing.

Last year he was able to make an extra payment for books and equipment of 2,000 pounds.

This April every one of these 3,500 secondary schools will receive a minimum payment of 30,000 pounds and the largest schools will receive 50,000 pounds.

A total of 300 million in new investment through these measures alone, money paid direct to the school and to the head teacher for use in the classroom.

And to advance our goal of 50 per cent of young people in higher education, the Secretary for Education will also announce that three times as many 16 year olds will, from this Autumn, benefit from education maintenance allowances – worth up to 30 pounds a week and that next month he will launch a national campaign to raise staying on rates.

Further announcements on the full allocation of additional money for education will be made by the Secretary of State on Thursday, and by the Scottish and Welsh Administrations and the Northern Ireland Secretary. I can announce today that for the year from 1st April the real terms rise in the UK education spending will be 8 per cent.

After these new spending decisions, I have a decision to make on income tax. Our prudent approach allows us to repay debt, invest in public services, and cut taxes for hard working families. . I will proceed from 6th April with our one pence cut in the basic rate of income tax from 23 per cent to 22 per cent, the lowest basic tax rate for 70 years.

I am also combining the cut in income tax with a further tax cut – this time for families.

Next April for 5 million families with children, the new children’s tax credit will be increased from 416 pounds to 442 pounds a year. For these families this credit will now be worth twice as much as the old Married Couples Allowance it replaces. And it reduces the family tax bill from April next year by a total of 8.50 pounds a week, on top of the 60p rise in child benefit this April for every mother.

Taken with the 10p income tax rate and the 22p basic rate, and the normal indexation of tax allowances and thresholds, next year’s tax burden for the working family will be the lowest since 1972 – a fall from the 21.5 per cent we inherited to 18.8 per cent.

As I said a Budget is about priorities.

A choice has been posed between investing in a National Health Service financed by public expenditure with access based on need, and privatised health care dependent on private insurance. This Government is committed to a publicly funded National Health Service true to the original principles of its founders.

Securing the long term future of the NHS is one of the great challenges this country must and will meet.

Tomorrow the Prime Minister will make a statement to this House on the work he and the Health Secretary will lead over the next 4 months to reform and modernise the Health Service.

The Government’s plan, to be published in July alongside the detailed public spending allocations, will address long standing variations in efficiency performance and health outcomes, and the right balance between preventative, primary and hospital care.

And now that the overall public spending total is set for the years until 2004, I have decided that I can back long term reform with long term resources for the Health Service by today announcing the NHS allocation not just for one year but for the next four years.

Since its creation, National Health Service spending has risen by an average 3.3 per cent a year above inflation.

Under the last Government it rose by 2.9 per cent.

We have decided that in the years from now until 2004 the NHS will grow by twice as much – by 6.1 per cent a year over and above inflation, by far the largest sustained increase in NHS funding of any period in the 50 year history of the Health Service.

Last year the equivalent of just over 1,850 pounds per household was spent on the NHS.

By 2004 more than 2800 pounds per household will be spent on the NHS.

Half as much money again for health care for every family in our country.

In the UK there has been an increase of 4,000 in the number of nurses working in the Health Service. That was just a start. With today’s extra resources, and the reforms still to come, we can plan to recruit and train up to 10,000 more nurses.

Let me emphasise that more resources must mean more reform and modernisation .

The Prime Minister, in his statement to the House tomorrow, will set out how with the guarantee of sustained investment, the Government, the professions and the NHS can together rise to the challenge of delivering better health care for all.

I can make one further announcement.

In 10 days time at the beginning of the new financial year the NHS was scheduled to have a 2.9 billions addition on last year.

I have decided to raise that figure with immediate effect by allocating not only the 300 million in tobacco revenues I promised last Autumn, but by adding to that to achieve in total an extra 2 billion pounds – making a rise next year of 4.9 billion pounds – extra money the NHS can start using from 1st April.

So health spending will rise from last year’s 45.1 billion, and this year’s 49.3 billion to next year: 54.2 billions; the year after 58.6 billion; then 63.5 billion; and then from April 2003, 68.7 billion pounds – over these five years a cash increase of over 50 per cent, a real terms increase of 35 per cent.

New money we can provide because we have made our choice: a Budget that unites the whole country, a Budget for all the people.

We have been prudent for a purpose: a stronger fairer Britain. And I commend this Budget to the House.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, in the House of Commons on 14th July 1998.

Madam Speaker, with permission.

This Government’s central objectives are high and stable levels of growth and employment, and sustainable public services, built from a platform of long term stability.

And to achieve this, two fundamental economic reforms have been undertaken for the long term – to take monetary policy out of party politics through operational independence for the Bank of England, and to impose a new framework of financial discipline, through fiscal rules that achieve a current budget balance and prudent levels of debt to national income.

Last May we imposed a two year spending limit and we have kept to this limit. We promised to cut public borrowing, and it has been cut by 20 billion. A fiscal tightening that will be locked-in into next year.

And to meet our fiscal rules and in line with cautious and published assumptions audited by the Independent National Audit Office, we plan current surpluses for the next three years of 7 billion, 10 billion and 13 billion. And as a proportion of national income, debt will fall below 40 per cent.

By the end of this parliament debt interest payments will be 5 billion a year lower than if we had simply left borrowing at the level inherited from the last government.

In the last economic cycle, under the previous Government, the current budget deficit averaged at 1 1/2 per cent of national income, the equivalent of 12 billion of extra borrowing every year. And during the 1990s national debt doubled.

Over this economic cycle and for the first time for decades, Britain is set to have both a current budget in balance and a sustainable approach to debt. An approach that is among the most prudent of our G7 partners, and more prudent than our predecessors.

All the allocations we make this afternoon are made within and subject to this overall financial discipline, as I set out in the Economic and Fiscal Strategy Report published last month. And through our New Deal for the unemployed, we are tackling the bills of economic failure and under the plans published today the growth in social security spending for this Parliament will be significantly lower than in the last Parliament.

Working within this framework, the Comprehensive Spending Review has examined the most effective use of public money across and within each department and I am grateful to the Chief Secretary and to the Public Spending Committee of Cabinet for their work.

By looking not just as what Government spends but at what Government does, the Review has identified the modernisation and savings that are essential. The first innovation of the Comprehensive Spending Review is to move from the short-termism of the annual cycle and to draw up public expenditure plans not on a one year basis but on a three year basis.

And the Review ‘s second conclusion is that all new resources should be conditional on the implementation of essential reforms, money but only in return for modernisation: Government moving out of areas where it need not be, and – in those areas where public service matters – Government setting clear targets for modern, efficient and effective services.

So today we begin not, as all spending announcements for the last 30 years have traditionally done, with annual allocations, but by setting out:

– the new three year objectives and targets for each service and therefore the results we are demanding;

– the new standards of efficiency which will have to be met to ensure every penny is spent well;

– the procedures for scrutiny and audit that will now be set in place;

– and the reforms we have agreed.

And all based on a clear and modern understanding that Government should only do what it has to do, but do what it does to the highest standard.

So let me set out the essential changes.

First, each department has reached a public service agreement with the Treasury, effectively a contract with the Treasury for the renewal of public services. It is a contract that in each service area requires reform in return for investment.

So the new contract sets down the new departmental objectives and targets that have to be met, the stages by which they will be met, how departments intend to allocate resources to achieve these targets and the process that will monitor results.

The Prime Minister has decided that this continuous scrutiny and audit will be overseen by a Cabinet Committee, continuing the work of the existing Public Spending Committee, and money will be released only if departments keep to their plans.

Second, the contract will stipulate new 3 year efficiency targets for the delivery of services – targets that range between 3 per cent and 10 per cent. The terms of these will be made public.

The purpose of these efficiency targets is to ensure more resources go direct to front line services – to patient care in the NHS, to classroom teaching, to fighting crime – a policy of promoting front-line services, so that by securing greater value for money, we secure more money for what we value.

Third, in addition to efficiency targets we have embarked upon a programme of radical reforms.

To achieve our priorities, difficult decisions and choices have had to be made.

We have already reformed student finance and begun welfare reform – matching rights with responsibilities.

And as a result of the Comprehensive Review, further reforms will be announced in legal aid, procedures for asylum, in child benefit, youth justice and with the withdrawal of unjustified subsidies. And in Defence and the Foreign Office, we have achieved the changes necessary to provide us with the defence and diplomatic capability we need while making the savings necessary – for example in the number of warships, and with a new public/private partnership for the Defence Evaluation and Research Agency.

Fourth, for central and local government we have now agreed a programme for releasing assets we do not need to fund 11 billion of additional new investment in health, education, housing, transport and other capital projects that we urgently do need. And with a number of further announcements today our policy of promoting public private partnerships is extended into new areas, including national science policy, urban policy and overseas development.

Fifth, while we are raising capital investment for a fixed period of three years in order to tackle a backlog of under-investment, current spending will grow by no more than 2 1/4 per cent. And we must ensure that public sector pay settlements are fair and affordable and do not put at risk our targets for public service improvement in each of the next three years for which we have budgeted.

So in line with the 3 years allocations, the independent review bodies will now report not just to the Prime Minister but to the departmental Ministers who have to meet these public service improvement targets and who will now respond to the recommendations.

And consistent with three year allocations, we are announcing a further strengthening of the pay review system. Having spoken to the chairmen, the Prime Minister has confirmed that their remits – in addition to their responsibility to recruit, reward and motivate staff – and therefore their role will be strengthened with three responsibilities:

– their recommendations will take account of affordability: in other words the current departmental spending limits;

– they will take account of the Government’s inflation target of 2 1/2 per cent;

– and they will take account of the need to achieve the Government’s targets for output and efficiency.

This reform offers the opportunity for public services to manage their pay and conditions more directly but also gives departments a responsibility to ensure that pay settlements cannot be determined without regard to the demands of the service. In this way – as in every other organisation – pay decisions will now be made in relation to the overall objectives of the service.

But perhaps the most important advantage of conducting a comprehensive spending review is the opportunity it allows for individual Secretaries of State to put in place a substantial reallocation of resources within their departments – from bureaucracy to front-line services, from dealing with the symptoms of problems to dealing with causes – and to consider a co-ordinated approach that breaks free from old departmental fragmentations and duplication.

As a result of interdepartmental reviews, services for asylum seekers will now be managed by one department rather than five; the three departments responsible for criminal justice will work together to one set of objectives; children’s services and the urban regeneration budgets and our approach to tackling fraud will be reorganised, achieving both efficiencies and savings.

Our prudence has been for a purpose. It is because we have set tough efficiency targets, and reordered departmental budgets that our top priorities, health and education, will receive more new money than the other 19 Government departments combined. To accommodate this we have had to take a firm line with other spending programmes, and rigorously select priorities.

As a result more than half today’s allocations – over 50 per cent – will be invested in health and education. So there will be additional resources – but it is money in return for modernisation.

Now the allocations to individual services.

Here the main conclusion of the Comprehensive Spending Review is that it is not just a social duty for government to invest in good public services, to improve our social fabric, and to tackle poverty and deprivation by extending opportunity. Most people in Britain, apart from a small and extreme minority, also agree that it is in the economic interests of the whole country to create an infrastructure of opportunity, and invest in education, science, transport and strong communities so that individuals can contribute to the economic and social well-being of the country.

I turn to education.

Invest in the education of our children and we are investing in our future.

In the old economy it was possible to survive with an education system that advanced only the ambitions of the few. The new economy demands an education system that advances the ambitions of all.

But investment will take place only in exchange for further modernisation and reform.

The Education Secretary has agreed not just to set numeracy and literacy targets for 11 year olds but to set Government targets for nursery education, for cutting truancy, for higher attainment by teenagers, for improved standards of teaching including a qualification for head teachers, for greater efficiency in further and higher education and for the inspection of schools. In return for investment there will also be further reforms in teacher training and in the administration of school budgets.

At every stage we are linking investment to reform and it is on this basis that the Education Secretary tomorrow will announce the biggest single investment in education in the history of our country. In this and in other services there will be separate announcements based on the Barnett formula for Scotland, Wales and Northern Ireland.

In the last three years of the previous Government growth in education spending was 7 billion.

For the next three years, I can announce additional education spending of 19 billion.

In total we will spend 3 billion more next year, 6 billion more in 2000, 10 billion more in 2001.

That is what we mean by education, education, education. Honouring our commitment to the British people.

In eighteen years of the last Government, spending on education rose on average by 1.4 per cent a year.

Education spending will now rise in real terms by an average of 5.1 per cent a year till the end of the Parliament.

We said we would devote a rising share of national income to education – and we have.

Spending on education will now rise to 5 per cent of national income.

Today around a million children are still being taught in classrooms built before 1914. 6,000 schools are already being refurbished. On top of this, over the Parliament capital investment to re-equip our schools will double.

And after our reforms in student finance, there will now be an expansion in the number of students in higher and further education – by the end of this Parliament more than 500,000 additional students.

We said we would meet our pledge on school class sizes for 5, 6, and 7 year olds. Under the proposals the Education Secretary will announce tomorrow our pledge will be met – as we promised.

Investing in education is essential to secure both a fairer society and an efficient economy. And if our country is to be prepared and equipped for the competitive challenges ahead the Government also has an economic responsibility to invest in science and innovation; in the transport infrastructure, and in building safer and stronger communities.

Net public investment will be doubled as a result of the Government’s new Investing in Britain Fund, but in every area investment is conditional on reform.

It is the development and application of ideas and inventions in science that hold the key to improved national competitiveness.

As a result of a reduction in subsidies that can no longer be justified and as a result of 400 million in support from the Wellcome Foundation, whom I thank, the Government is able to announce the biggest ever Government-led public/private partnership for science. A total of 1.1 billion will now be available to provide modern facilities for science research at our universities and support science teaching and research throughout the country. This innovative step-change in our approach to science will lay the foundations for putting Britain at the forefront of the next generation of scientific and industrial research.

Anyone who travels on our roads and railways knows that after years of neglect and under-investment Britain suffers from an overcrowded, under-financed, under-planned and under-maintained transport system.

So for transport we propose a new investment strategy involving new public private partnerships – like those for the Underground and Channel Tunnel rail link – and a commitment to integrated planning. In return for these innovations there will be 2 billion more investment. From a 25 per cent decline in transport investment in the last Parliament, there will be a 25 per cent increase in the next three years – for investment in public transport and meeting our environmental objectives. Full details will be set out by the Deputy Prime Minister in his Transport White Paper.

Economic success and social cohesion both depend on safer and stronger communities. That is why we will now invest more in crime prevention. And that is why today also we propose policy reforms to tackle the underlying causes of poverty.

It is because we are announcing major modernisations that put legal aid on a fairer footing and reform youth justice, that more resources will be made available for policing and for the first time substantial resources for innovative evidence-based crime prevention work. Measures to tackle drug abuse will have a new priority, with a 25 per cent increase in funding. All details, including the new targets that will be met, will be given by the Home Secretary.

To build stronger communities we need also to renew our housing stock. To cut out waste and ensure best use of resources, the Deputy Prime Minister will impose new guidelines for greater efficiency in construction and repair. And a new Housing Inspectorate will audit housing management in every local authority.

With the help of these reforms we will be able not just to tackle homelessness but to renovate 1.5 million homes and to do so we will allocate, from capital receipts, 3.6 billion. Our commitment to the environment recognises the need for responsibility in the use of energy means there will be a new programme for home energy efficiency.

We are committed to a comprehensive programme of welfare reform.

Since coming into office we have introduced the New Deal, the reform in student finance, the working families tax credit and a new approach to child benefit. The Prime Minister has set up a Welfare Review which led to the Welfare Green Paper and a long term framework for the provision for future pensions and for the reform of disability benefits will be announced later this year.

Last week we announced reforms in the Child Support Agency, and yesterday new measures to combat social security fraud.

Today I announce further changes in welfare policy.

The New Deal for the unemployed is based on opportunities matched by responsibilities. It is now time to extend this approach to communities by tackling the underlying causes of poverty. For our most deprived estates, the key problems are not just poor housing but lack of employment and economic opportunity. In exchange for long term targets for improving business start-ups, skills and educational qualifications, a total of 800 million will be allocated to the New Deal for Communities. And a New Deal helping the young unemployed to become self-employed will be launched on Friday.

A further reform will make it possible for thousands more young people to stay on in school and go on to further and higher education. To raise Britain’s appallingly low staying-on rates, a new educational maintenance allowance, linked to attendance and based on parental income, will be piloted for 16 to 18 year olds.

If, as we expect, the new educational maintenance allowance succeeds in encouraging young people to stay on in education, we plan to introduce it nationally, using the money currently spent on child benefit post-16.

As the interdepartmental review of children’s services has uncovered, we spend 10 billion on young children but do so in an uncoordinated and piecemeal way with thousands of the youngest children, those under 3, missing out.

Plans for a Sure-Start programme will be announced later this month , to bring together quality services for the under-3s and their parents – nursery, child-care and playgroup provision, and post-natal and other health services. One new feature will be to extend to parents the offer of counselling and help for them to prepare their children for learning and school.

This is a significant step in the development of a family policy for our country, supporting family life and encouraging stable families, and building on our national childcare strategy. The Home Secretary’s group will bring forward further recommendations on family policy.

At the heart of our review has been a determination that we fulfil our duty to the oldest members of our society.

First, pensioners will benefit most from a better health service. And it has always been wrong that charges are levied on pensioners for the eye sight tests that they regularly need to preserve sight and protect against disease. So for pensioners, from next April, eye test charges will be abolished.

Second, the elderly who rely heavily on public transport need a fairer deal to enable them to be more mobile. In his Transport White Paper the Deputy Prime Minister will announce plans for nationwide help with transport for the elderly.

Third, the elderly fear their winter fuel bills. As a result of the cut in VAT, our winter fuel payment and other changes, average pensioner fuel bills are up to 100 lower this year. Later this week the Social Security Secretary will announce our further plans for help with fuel bills for the rest of the Parliament.

And she will also announce further financial proposals to help pensioners who need it. Here also we are prepared to make reforms that will help alleviate poverty. From next April every pensioner and pensioner couple will have a minimum income guarantee.

And we will also set a minimum tax guarantee: that no pensioner will pay income tax unless their income rises above a specified level. The Government will also announce measures to ensure that more people receive the income that they are due. As a result of our proposals, thousands of pensioners will be relieved from poverty. A total of 2.5 billion will be set aside for this programme.

Further reforms in other services have made possible new investments that improve the quality of our community life. As a result of cutting wasteful bureaucracy and quangos and a new targeting of resources on priorities, 290 million extra will be invested in museums, the arts and sport over the next three years, a real increase of 5 1/2per cent, making possible improved access to museums and galleries.

And as a result of asset sales in areas where spending is no longer needed, the Foreign Office budget will not only ensure more resources for the proper representation and promotion of Britain abroad, but also the Foreign Secretary is announcing today that our support for the BBC World Service will be raised by a total of 44 million over the next three years.

For twenty years overseas aid has been falling as a proportion of national income.

Under this Government it will rise.

As a result of a decision to sell a majority stake in the Commonwealth Development Corporation, and of a new decision to target overseas development assistance on health, education and anti-poverty programmes, the Secretary of State for International Development will announce today that Britain will, during this Parliament, increase overseas aid from the low of 0.25 per cent of national income – the budget figure we inherited last year – to 0.30 per cent of national income.

Britain will enter the millennium at the forefront in pressing for debt reduction for the poorest countries. And aid which was falling by 2 per cent a year under the last Government will rise in each of the next three years.

The National Health Service is compassion in action, what its founder, Aneurin Bevan, rightly called the most civilised achievement of modern Government.

The final conclusion of the Comprehensive Spending Review is that it is fair and efficient to provide the best health service we can on the basis of need, not the ability to pay, and that under this Government health services will never be left to the hazards of private or charitable provision.

Yet half the beds in NHS hospitals are in accommodation built before the First World War. And three quarters of ward blocks are hand-me-downs from the days of charity, voluntary and municipal and emergency wartime hospitals. Investment in the NHS is long overdue. And we will recognise the care, the responsibility and the dedication of doctors, nurses and all staff to the patients of the NHS.

My Right Hon Friend the Secretary of State for Health will announce on Thursday in this House targets that tackle inefficiencies in hospitals and cost overruns, that simplify management structures and give a new emphasis to long term planning.

On quality all hospitals will be required to publish league tables measuring the success rates of their treatments. Over the lifetime of this Parliament over 1 billion will be saved from red tape and put into patient care, in part by scrapping the costly and time-consuming annual round of contracts.

So on the fiftieth anniversary of the NHS this Government will now make the biggest ever investment in its future, giving the NHS for the first time for decades the long term resources it needs.

Under the last Government the increase for the last three years was 7 billion.

For the coming three years, I am announcing an increase in health service funding of a total of 21 billion.

Health department spending rose by an average of 2.5 per cent a year during the last Parliament. Next year it will rise by 5.7 per cent. The year after by 4.5 per cent.

For the rest of the Parliament this Government will achieve yearly real growth averaging 4.7 per cent.

We will meet our waiting list pledge as promised.

And every hospital will benefit from the 50 per cent increase in investment in equipment and buildings and the 5 billion fund for NHS modernisation – the largest hospital building and modernisation programme this country has seen.

As we start its next fifty years the National Health Service is safe in this Government’s hands.

This Government has made the choices necessary to deliver stable and sustainable public finances. We have been steadfast in our priorities – the nation’s priorities.

And now, as a result of prudence and a commitment to an investment in return for reform, a total of 40 billion pounds will be invested in the nation’s priorities – health and education.

A Government whose prudence allows us to build modern public services and to renew Britain.

A Government keeping our promises to the people of Britain.

A Government step by step making Britain better.

And I commend this statement to the house.

Below is the text of the speech made by the then Chancellor of the Exchequer, Gordon Brown, on 12th June 1997 at the Mansion House in London.

1. I am pleased to attend the Lord Mayor’s dinner here at the Mansion House. 
2. An annual dinner that has been going since mid-Victorian times, celebrating an institution, the Corporation of London, that has lasted since the 11th century. 
3. Tonight a third of our guests are from overseas, including from Frankfurt, New York, Japan and Hong Kong. 
4. A clear example of the internationalism, the openness and global reach of the City today and an illustration of how the City has changed in response to changes in the economy around it. 
5. And I am pleased to speak alongside, not only the Lord Mayor, whom I thank for his invitation, but also the Governor of the Bank of England. 
6. The City of London has established itself as one of the world’s greatest financial centres for over three hundred years. 
7. At each stage the City has continued to respond imaginatively to the need for change: from the days in the 17th century when Edward Lloyd discovered the post office had become a better source of shipping information than the waterfront and moved his coffee house from the docks to Lombard Street; to today, when face to face contact, telephones, and ledgers have been replaced by computer screens and electronic information. 
8. Because it has demonstrated the best qualities of our country, what can be described as the British genius:
   • always outward-looking and open to the world;
   • invariably innovative;
   • aware of the need for hard work
   • and perhaps most relevant of all, to the bewildering changes we see around us, continuously willing to respond and adapt to changing conditions and emerging technologies.

    

9. And these qualities – evident in the City from its earliest years – the qualities that make for the British genius – are exactly the qualities required to succeed in today’s global marketplace. 
10. We can take pride that London is home to more us banks than New York, and more Japanese banks than any City except Tokyo:
    • that there is more international equity trading on the London Stock Exchange than any other exchange;
    • that Britain’s overseas earnings from financial services amount to 12 billion Pounds a year.

     

11. And it is because of its adaptability, its innovation, its dedicated workforce – managers and employees alike – and its willingness to embrace change that the City is well-placed for the 21st century. 
12. If the City is to succeed today and tomorrow in an ever more competitive international marketplace it must be prepared to continuously adapt to ever greater change. And so too must the rest of the British economy be prepared to change if it is to prosper . 
13. In a global marketplace characterised by ever more fierce competition, and unparalleled waves of technological change, we need – more than ever before – to be able to respond to change. 
14. How we as a country prepare ourselves for these challenges of the future is the subject that I want to address this evening. 
15. In this new economy our task is to ensure that, as individuals and companies and indeed as a country, we are fully equipped to contribute to and compete within this global marketplace. 
16. While our national objectives of high and stable levels of growth and employment are unchanging, they can only be achieved in a new world by new methods and new policies. 
17. I want to suggest tonight that we need as a country to take a long view of what needs to be done, set in place a foundation of monetary and fiscal stability that will last, and make long term decisions too about how we remove the obstacles to dynamism in our economy and make supply side improvements that are are needed to deliver higher levels of investment, growth and employment. 
18. And let me say that this global economy, characterised by rapid and all-pervasive change, stability is more important than ever. 
19. The stability of the post-war period was achieved within a relatively closed economy, with national financial markets, fixed exchange rates and frequent recourse to capital controls. 
20. Today stability has to be won in an environment of global capital markets where investors have more choice and more freedom than ever before, and where day to day flows of capital are greater and faster than ever before. 
21. It used to be said that a week is a long time in politics. Now an hour can be a very long time for a government that loses credibility in international capital markets. 
22. Today the judgement of the markets – whether to punish or to reward government policies – is as swift as it is powerful. 
23. The evidence shows that, over the long-term, investors will choose to invest for the future in a stable environment rather than an unstable one. Many of our competitors have enjoyed higher levels of investment than us, for the very reason that they have delivered more economic stability. 
24. For in the new global marketplace there are no short cuts to long-term prosperity. To succeed, countries must convince the markets that they have the policies in place for long-term stability. 
25. After a century of relative economic decline, we have to move Britain up the world economic league . I believe therefore that now is the time to lock into place long term policies for stability and for growth which will encourage investment, overcome the obstacles to dynamism, and make for better employment opportunities for our citizens. 
26. If we are to achieve these objectives, there are five barriers to success that this country has to tackle. We must overcome instability and imprudence in public finances. We must address under-investment and unemployment, and avoid the risk of isolationism. 
27. So I believe we must overcome these challenges by making, as a country, five long term commitments.
    • first, a commitment to monetary stability that allows businesses, as well as families, to plan for the future with confidence;
    • second, a commitment to long-term fiscal stability, to meeting our priorities within sustainable public finances;
    • third, a long term commitment to higher levels of investment both in people and in business to provide the capacity for strong and stable growth for the long term;
    • Fourth, a long-term and far-reaching modernisation of the welfare state so that it complements the needs and realities of modern employment by extending the opportunity to work, and allowing the workforce to adapt within a dynamic economy;
    • and let me add one further long-term commitment; a long term commitment to free trade and to Europe with policies I want to outline for constructive engagement in the developed world’s largest open market.

     

28. So it is because we intend to play our full part in equipping the country for the future that this government will give short shrift to short-termism. 
29. Step by step, I want our government to overcome each of the barriers to our long-term prosperity as a nation. 
30. My first Budget on July 2nd will not be a budget for the short term but will take the long-term view:
    • so it will start from economic realities and challenges we face in a global market place where no one owes us a living;
    • and, with its concentration of welfare to work measures it will take the first in a number of steps we are determined to take to modernise the welfare state, and equip our country for the future.

    Monetary Stability

     

31. We must start from the foundation of monetary stability. 
32. The challenge for this government, has been to establish a credible long-term approach to monetary policy, that tackles the root causes of inflation, including the capacity constraints that have so often derailed recovery and convinces investors that they can expect stable non-inflationary growth that lasts. 
33. Consistently low and stable inflation is essential to encourage the long-term investment on which high levels of growth and employment depend. 
34. Since I became Chancellor, a lot of attention has been focused on the specific details of our institutional reforms giving the Bank new monetary policy responsibilities. But these highly-publicised changes are the means by which we will deliver a more fundamental and long-prized objective that has eluded Britain for years – to create a lasting framework for monetary stability. 
35. During the last two decades governments have adopted and then abandoned a succession of monetary targets – sterling M3, M0, the ERM. And, far from delivering monetary stability, Britain has suffered the most volatile inflation record of any G7 country in the last 10 years. And we have had the lowest investment as a share of GDP. 
36. Our new monetary framework is established on the basis of clear principles: it is for the long-term; it sets clear rules, and clear divisions of responsibility; and it is open, transparent and accountable. 
37. The government’s role is clear – to set the economic objectives and, in particular, the inflation target. The Bank of England’s role is clear – to take the operational decisions to meet the inflation target. 
38. Interest rate decisions will be free from any political influence. They will be recognised as being based on good long-term economics: beyond any accusation of bad short-term politics. 
39. My appointments to the Monetary Policy Committee, made with the Governor’s agreement, were based on economic expertise, not party political persuasion. 
40. The new Monetary Policy Committee has already shown it is prepared to take the action necessary to keep a lid on inflation. 
41. Demand in the British economy is growing faster, but because the economy we inherited suffers from a long-term lack of investment in capacity and in skills, the recovery needs to proceed steadily to avoid a rebound in inflation. And it was because of this I decided to raise interest rates in May. 
42. We must break out of the stop go cycle under which, every time we expand, capacity constraints and under-investment trigger inflationary pressures. 
43. Progress has already been made in building our anti-inflation credibility. Long-term interest rates and inflation expectations have fallen. 
44. But to create the lasting stability I want, we need to go further. 
45. We need to lock into our economic policy a commitment to consistently low inflation over the long term. 
46. Real stability is achieved not when we meet a target one or two months in a row, but when we can confidently expect inflation to be consistently low for a long period of time. 
47. We need a long-term monetary policy framework. 
48. This afternoon in the House of Commons I affirmed the inflation target. Tonight I will explain how I am completing my reform of monetary policy, by introducing more rigorous, precise and open procedures. That will help the Bank of England to deliver the inflation target consistently over the long-term. 
49. If inflation is 1 per cent higher or, for that matter, lower than the target of 2.5 per cent, then the Governor, on behalf of the Monetary Policy Committee, should write an open letter to the Chancellor. 
50. That letter should explain:
    • the reasons why inflation has moved away from the target by more than 1 percentage point;
    • the policy action which they are taking to deal with it;
    • the period within which they expect inflation to return to the target;
    • how this approach meets the Bank’s objectives as set by the government.

     

51. Of course, any economy at some point can suffer from external events or temporary difficulties, often beyond its control. Attempts to keep inflation at the target in these circumstances may cause undesirable volatility in output. 
52. But, if inflation is still more than 1 per cent away from the target after three months, I will expect the Governor to write to me again. 
53. Instead of the old procedures that were ad hoc, personalised, and could not last credibly for the long term, this government has set in place clear rules, divisions of responsibility and a target supported by tight procedures for monitoring whether it is delivered. It is because there are clear rules and rigour that our approach will command greater confidence. 
54. Over the coming years I want the British economy to enjoy the far greater underlying strength that comes from a base of low and stable inflation. 
55. If we succeed in strengthening the ability of the British economy to sustain growth with low inflation. And if international conditions permit, I would hope to lower the inflation target. But the long-term inflation target of 2.5 per cent I have reaffirmed for the Bank of England today, reinforced by the open letter system, provides the final building block for our new framework of British monetary policy. 
56. The open letter is yet another example of the government’s commitment to a more transparent and accountable system of monetary decision-making. 
57. The committee’s performance and procedures will also be reviewed by the reformed court. The Bank will be accountable to the House of Commons through regular reports and evidence given to the Treasury Select Committee. Finally, through the publication of the minutes of the Monetary Policy Committee meetings and the inflation report, the Bank will be accountable to the public at large. I believe, in time, our new framework may become a model for other countries to follow.Fiscal Stability

     

58. Building a platform of long-term stability means not only a stable monetary framework for the long-term, but government must play its own role by achieving sustainable public finances for the long-term. 
59. That is why yesterday the Chief Secretary announced our plans for a comprehensive review of all government spending. 
60. This will be a root and branch appraisal of how we can improve the efficiency of government in meeting our objectives for improving investment, opportunity, fairness and employment; how we can make better use of government assets; and, finally, how we can best make use of public/private partnerships to harness new sources of financial and management expertise. 
61. The review will ensure that our public spending decisions reflect our long-term priorities, and meet the country’s long-term needs. 
62. Our determination to have long-term stability in the public finances lies behind our commitment to draw up a national register of government assets. One of our departments alone has 90,000 buildings. 
63. We are committed to ensuring that government assets are used efficiently to deliver our priorities and we will not hold assets that have no further use. 
64. I can announce tonight that we have asked departments to complete this register by November, so that it can inform the conclusions of our Comprehensive Spending Review. 
65. And just as we will resist any other irresponsible demand on public spending, we will resist irresponsible public sector pay demands. 
66. Alongside the Comprehensive Spending Review, we will introduce tough rules for government borrowing. 
67. Two central principles will guide our approach. First, meeting the golden rule for borrowing. Over the economic cycle, the government will only borrow to finance public investment and not to fund public consumption. 
68. Second, alongside this golden rule commitment, we will keep the ratio of government debt to GDP stable on average over the economic cycle and at a prudent and sensible level. 
69. This platform of fiscal stability will deliver, more investment, more growth and more jobs.Investment

     

70. But we will only achieve and sustain monetary and fiscal stability if we can strengthen the underlying capacity of the British economy. 
71. For too long investors have recognised the importance of stability and taking a long-term view, while governments have not. 
72. Long-term investment holds the key to our future prosperity in Britain. That is why I am determined to put in place the conditions that will encourage the high levels of investment we need. 
73. Of course economic stability – with investors confident of low inflation over the long term – is central 
74. But it is also crucial to improve the supply-side of the economy – to remove the obstacles to dynamism, and make it possible for us to sustain high and stable levels of growth with low inflation. 
75. Geoffrey Robinson, the Paymaster General, will head an Enterprise and Growth Unit in the Treasury which will work with business to nurture innovation and entrepreneurship. And he has asked Malcolm Bates formerly deputy managing director of GEC, to undertake a thorough-going review of the Treasury arrangements for PFI projects to ensure quicker and better decision-making. 
76. We need to seek public/private partnerships to deliver better public services and investment. And I am determined that the private finance initiative has a new start. 
77. And I am also determined that we improve the competitiveness of our marketplace so that investment levels can rise. 
78. Our measures on the electricity industry yesterday show that we are prepared to open up markets to competition and contribute to investment and dynamism.Welfare reform

     

79. Stability provides the platform. But we cannot build a dynamic economy unless we can unleash the potential in everyone. A welfare state that thwarts the opportunities that we need, will hold the economy back. A welfare state that encourages work is not only fair but makes for greater dynamism in the economy. 
80. This new approach to welfare aims to strengthen the supply side of the economy and so contribute to the maintenance of long-term stability. 
81. The three modernisations we propose – of employment policy, of tax and benefits, and of lifelong learning – reflect our determination not merely to compensate people for their poverty, but actually to tackle the causes of poverty by means that provide opportunity and so strengthen our economic performance. 
82. Britain cannot succeed unless we develop our greatest asset: our people. The new realities of fast changing labour markets mean there is a constant need for retraining and upskilling by the British workforce in the new global economy . 
83. So the starting point of our reforms is our welfare to work programme. It will be aimed at helping 250,000 young and long-term unemployed people into work by giving them opportunities to learn, train and gain employment. 
84. But we will also modernise the tax and benefits system to ensure that people have jobs, are able to keep the jobs they have, and are able to move into better jobs. 
85. Finally our new approach to welfare will establish a new platform of educational opportunity – a skills ladder – through initiatives such as the university for industry – in order that British people can acquire the new skills they need to earn a living and contribute to our economy’s long-term strength.Long-term stability in Europe

     

86. We cannot build a stronger British economy in isolation. Europe is where we are, where we trade, and where we make our living. 60 per cent of our trade and 3.5 million jobs depend upon it. 
87. It is vital that investors have confidence in our relationship with Europe. I can put that beyond any doubt tonight: Europe is where we are and where we will stay. 
88. Our long-term commitment to Europe means that it is essential that we must play a leading role in shaping Europe’s future. 
89. We will pursue a British agenda to equip Europe for long-term success. That is what the British initiative that I launched last week to get Europe to work was all about. 
90. We will push ahead with the completion of the single market. 
91. David Simon is taking forward the government’s competitiveness agenda in Europe. He will promote flexible labour markets across the EU and work to break down the barriers to competition in the single market. 
92. Tonight’s audience will recognise that there remain major barriers to free trade in financial services in the EU. We are working hard to overcome those barriers. 
93. It is in every country’s long-term interest to have internationally competitive industries, trading freely in an open market. 
94. We in Europe must also share our experience and expertise in reforming our welfare systems and promoting long-term flexibility in our markets, especially our labour markets. And we must tackle obstacles to dynamism.Conclusion

     

95. A lot has been written and said about the first days and weeks of the new government. Popularity in politics will ebb and flow, but the true test of the announcements and reforms we are making is not the response we have received or will receive in the short term but the results these reforms achieve in the long term. 
96. In our monetary and fiscal policy we are determined to chart a consistent course, not for a few months or even a year or two, but for the long term. By being better equipped for the future, Britain and the British people can and will be better off.