Tony Blair’s Broadcast Speech on Economic Policy
June 30, 2000
In a few week’s time, Gordon Brown will announce to Parliament andthe country the Government’s spending plans for the next three years. I can’t,of course, reveal the details here. But what I can say that this ComprehensiveSpending Review, as it’s known, will deliver sustained extra investment tocontinue modernising and improving our key public services－that ishospitals, schools, transport links and the police.
But we can only promise this extra investment－and beconfident we can deliver it over the next three years－because ofthe strong state of the economy and the strength of the public finances.
But the fact that we are repaying billions of pounds of our nationaldebt now, that inflation is low, on target－the lowest at thepresent time in the whole of Europe－and that nearly amillion more people are in work than when we came into Government. None of thishas happened by chance.
It’s a result－at least in part－of the difficult decisions, sometimes tough decisions, we took in theearly years of this Government. It’s the reward in other words for the economybeing run competently and for the good of all the country.
When this Government came into office, we inherited an economy whereannual borrowing was running at £28 billion a year, the national debt haddoubled, we were paying out more just in interest payments on that debt than wespent on the whole of the UK school system. One in five families had nobreadwinner and inflation was creeping back into the system.
We had to act and we did act to put things right. We gave the Bankof England independence in monetary policy to help in the fight againstinflation and to keep interest rates under control.
We kept, as we promised, to tough spending limits for our first twoyears.
That included keeping the last Government’s fuel escalator which Iknow has pushed up petrol duty automatically above inflation each year.
We also tackled the waste of unemployment - and particularly thescandal of long-term youth unemployment－through the NewDeal.
We brought in the minimum wage, we brought in the new WorkingFamilies Tax Credit, the enhanced Family Credit, to help make work pay andtackle waste and fraud in the welfare system.
And we’ve also targeted tax cuts to benefit the many and to helpagain ensure that those in work were rewarded with the basic rate income taxcut and the 10p starting rate of tax.
The result is inflation is low and on target, interest rates roundabout half the level they reached under the last Government.
And the public finances are back in good shape. And because ofcourse we’re reducing the national debt, then we can save on those interestpayments.
The New Deal has helped reduce unemployment, youth unemployment byover 60 percent and we’ve extended it to the long-term unemployed and loneparents who want help back into work. Round about 250,000 jobs or more havebeen created in this way.
Living standards are rising, more people are in work and paying taxthan ever before.
In short, there is a new stability in our economy which is enablingbusiness to plan with confidence for the future.
It’s has also enabled us to scrap, in the last Budget, thatautomatic above-inflation rise in petrol duty.
I know petrol has gone up and it’s a good deal more expensive thatit was. And I know the difficulties that causes for people in rural areas andpeople who have to use their cars a lot of the time. It is important, however,to point out two things. First, most of the recent rise has been because of anincrease in crude oil prices the world over. The price of oil has risen fromround about 18 dollars a barrel sold a short time ago to 30 dollars a barrel ormore now.
And secondly, while people say it now costs £50 to fill up theaverage car with petrol in Britain, they don’t point out that it also costsover £40 now in Germany and in France where of course there are motorway tollsand much higher income tax.
But yes, it is the case that the price of petrol also went upbecause of the action in those early years when we had to cut Governmentborrowing. Because if we didn’t, then we were never going to get the publicfinances under control. The point that I’m making is this. All these things fittogether. It’s only because of the hard choices, the choices to give the Bankof England independence in monetary policy, to cut the deficit to put thepublic finances in order, to solve the problems of long-term unemployment so weget welfare bills down and have more money to spend on the things we want. It’sonly because of those hard choices that we now can sit down with ease to planahead, to invest more over the next few years to improve schools, hospitals,crime, transport, the key public services. It couldn’t be done without thosetough decisions - not on the basis that we’re planning to do it which issustainable increases, year after year after year.
The first responsibility of any Government is to run the economycompetently.
It is the first responsibility because it’s the foundation uponwhich everything else is built. I promise it’s a responsibility this Governmentwill carry out. And we’ll carry it out because otherwise the good things wewant to spend money on, the public services we need, the facilities and helpthat people want, simply can’t be provided. There is a new economic policy inthis country today. It’s a foundation of economic stability and sound public finance,and built on that are strong public services. We intend and will do both.