This is no ordinary time. The world was stunned at the events of 11 September, which will be forever imprinted on our memories as well as the pages of history. In the face of terrorist intention to bring the world’s financial system to a halt, to undermine the very prospect of global prosperity, we must show that we will not succumb or surrender to terrorist threat. We must play a full part in the international response to the horrors in America and maintain our focus here at home to deliver opportunity and prosperity for all.
The ready supply of finance is the lifeblood of modern terrorism. Those who finance terror are as guilty as those who commit it. Our response to the funding of terrorism must be every bit as unequivocal and united as our response to the terrorist acts themselves. We are determined to ensure that just as there is no safe haven for terrorists, there is no safe hiding place for their funds. That is why we are pushing for tough new international standards on terrorist funding and severe sanctions against countries failing to meet them.
It is a tribute to international co-operation that governments around the world are demonstrating their resolve to maintain the conditions for growth and stability. Not only have interest rates been brought down world wide, but the central banks of America, the euro area and Japan, as well as Britain, have made clear their determination to take any necessary further action.
No country can insulate itself from the world economy with world trade slowing and growth slowing sharply in America, Japan and Germany. But because of the tough decisions we took in 1997 to create monetary and fiscal stability, Britain is better placed to withstand the ups and downs of the economic cycle than in the past.
Ten years ago, when the US economy slowed at a time of international conflict, British inflation had risen above ten percent; interest rates were at ten percent for four years and rose to fifteen percent; unemployment was rising above two million; and borrowing rose to £50 billion.
Today the economic fundamentals are strong. Interest rates are at their lowest for nearly 40 years for homeowners and businesses; inflation has been at or near our target of 2.5 percent for four years; and we are meeting our tough fiscal rules.
As November’s Pre-Budget Report showed, economic stability is the foundation for achieving our goals for Britain. We will take no risks with the British economy. We will not relax our fiscal disciplines and we will continue to work within our fiscal rules. We will hold to our spending plans. The last spending review provided for average annual growth in spending for the three years from 2001/02 of 5.2 percent for education, 5.6 percent for health, 20 percent for transport and 4.2 percent for the criminal justice system. Next year’s spending review will set out our future plans.
Today, in an uncertain world, our goal of full employment is even more important. We will build on the national minimum wage and Working Families’ Tax Credit that are making work pay. The employment tax credit will reward the work of people on low incomes whether or not they have children.
Employment remains high – up over one million since the 1997 general election. With the help of the New Deal, long-term unemployment has been cut by 60 percent since 1997, and youth unemployment has been cut by 75 percent. Our task now is to extend and improve the New Deal and invest more in skills retraining. With new opportunities matched by new responsibilities, we will help those long-term unemployed without jobs, skills, earnings or prospects, back to work.
We are steadfast in our ideal of lifting the low paid out of poverty, helping pensioners to ensure dignity in retirement and giving Britain’s children the best possible start in life. In our first term of government over one million children were lifted out of poverty through measures such as the Working Families’ Tax Credit, the Children’s Tax Credit, and the record rise in Child Benefit.
Our aim is to halve child poverty in a decade as part of the Prime Minister’s commitment to abolish child poverty within twenty years. We will create an integrated child credit of cash support for children, built on the foundation of universal Child Benefit. Next year, we will also expand the Children’s Tax Credit to offer up to £1,000 per year for parents of newborn children.
We will continue our objective to combat pensioner poverty and ensure pensioners can share in rising economic prosperity. Alongside the free TV licenses for over 75s and the £200 Winter Fuel Payment, the basic state pension will rise next year by £3 a week for single pensioners and by £4.80 a week for pensioner couples and the Minimum Income Guarantee will be increased each year in line with earnings throughout this Parliament.
These are testing times. Challenges – abroad and at home – lie ahead. Working together we can shoulder our international responsibilities, pursue our economic goals and build a Britain of which we are proud.