Global economic activity has suffered its sharpest slowdown for almost thirty years. The USA, Japan and much of Europe have been, or are, in recession. World trade growth fell twelve percent last year. In the past, Britain has always suffered badly in times of world economic difficulty. Under the Tories a decade ago, three million were unemployed, national debt doubled and mortgage rates hit fifteen percent. This time, the tough decisions we have taken over the last five years to keep inflation down and get public finances on a sound footing mean Britain is better placed to cope than in the past.
Our economy is still growing more than all our major competitors; by 1.6 percent this year compared to 0.4 percent in Germany and a 0.9 percent reduction in Japan. Unemployment is below one million. Inflation and interest rates are lower than for a generation. So much debt has been repaid that we are saving £7 billion a year on interest payments. That means we can invest record amounts in our vital public services and borrow more to help us through this difficult period.
That’s why I am not prepared to take any risks with our economic stability and why we can’t agree to unsustainable pay rises which are not justified by higher productivity. Faced with the world economic slowdown, the Tories want us to break our manifesto commitments and cut investment in our schools, hospitals and other vital public services. But this would be short-sighted, would repeat the mistakes of the past, and cost jobs.
Our debt repayments as a share of our national income are lower than at any time since 1915, so the country can afford to borrow to invest. We will still be borrowing far less than all our major competitors – and in real terms around a quarter of what the Tories borrowed during the early 1990s. So we have a solid foundation on which to move forward with the next steps of our economic policy.
Under the Tories, long-term youth unemployment soared to 350,000 – an average of 500 in every constituency. Thanks to the New Deal it is now less than 6,000 – an average of nine per constituency. No other employment programme has been so successful. 1.7 million have been helped and 700,000 have moved into jobs. We will build on the New Deal with extra help to those seeking work in areas of high unemployment, extend apprenticeships and improve skills. New enterprise areas will provide new financial support and help for small businesses in the country’s 2,000 most deprived areas.
We know that in the modern economy we cannot afford to waste the potential of a single child. Following July’s spending review, investment per school pupil will double from just £2,500 a year under the Tories to £5,000. Labour’s extra investment means 10,000 more teachers, 50,000 more classroom assistants, 20,000 schools rebuilt and the right to nursery education for every three year-old. Eighty percent of the sons and daughters of the professional classes rightly enjoy higher education, compared to just 14 percent of those of unskilled workers, so for the first time we will give a majority of young people the chance to attend university, with no one excluded because of lack of income. And to improve school staying-on rates, we are expanding student grants for lower-income families with Education Maintenance Allowances, worth up to £1,500.
Stability and prosperity for all also requires fulfilling our goals to tackle child and pensioner poverty. So I announced that, together with child benefit, the starting level for the new Child Tax Credit that will be paid direct to the mother from next April will be £1,400 a year for those with incomes below £50,000. Those with incomes of between £50,000 and £58,000 will receive between £800 and £1,400.
Five million pensioners will receive the biggest increase in their pension since the old age pension was introduced when the new Pension Credit is launched next October. £2 billion extra will be paid to help couples with incomes of up to £204 a week and single pensioners with up to £139. So a pensioner couple with an income of £150 a week will receive £21.50 extra, or £1,100 more a year. A single pensioner with £110 a week income will receive £11.60.
Our Labour government has led the movement to tackle poverty overseas. Britain has spearheaded the fight for debt relief and social justice for the poorest countries over the last five years. Now we are proposing a new international finance facility to double development aid and meet by 2015 the millennium development goals – to halve poverty, cut infant mortality by two-thirds, and ensure that every child enjoys schooling.
In the Budget I said that it was right to increase National Insurance by one percent to pay for the biggest expansion in NHS funding and reform since our health service was established. The case for the NHS is not weaker but stronger than in 1948, because today’s treatments and drugs are so much more expensive that a family suffering one illness could face bills of over £100,000. So the best policy is an insurance policy that covers all of the people all of the time: the British NHS, free at the point of need, offering such a high standard of care that it can become the best insurance policy in the world.
In the Budget we agreed reforms to renew the NHS, with new incentives, five year budgets, better staff conditions, action to turn around failure, and rewards for high performers through foundation hospitals, fully part of the NHS. The alternative course is the Tory policy to rundown the public sector, expand private medicine and turn our NHS hospitals into privatised companies with new charges, vouchers and two-tier healthcare with choice for the privileged few. Our NHS – free at the point of use, based on need, not ability to pay – is again the great issue of principle dividing us from the Tories.
The decisions we make about the NHS are not just about the future of our public services, but about the character of our country. It is an affirmation that duty, obligation, service, and not just markets and self-interest, are at the very heart of our idea of society – at the heart of what it means to be a citizen of Britain. We must have the confidence and leadership not just to renew our public services, but to renew the idea of Britain as more than the sum of private ambitions or a collection of isolated individuals, but a community of citizens who each owe obligations one to another.
So let us, as a party, look ahead to building a progressive consensus for full employment, with education and enterprise open to all, an end to child and pensioner poverty, and the best public services.