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AMENDMENT OF THE LAW

No, I would not accept that. Very good economists have analysed whether that expenditure should be included, and concluded that it should not. Furthermore, we are talking about direct Government debt, for which the Government are responsible, and because the Government are by far the largest player in the economy that has a direct macro-economic effect. Perhaps my hon. Friends on the Front Bench would like to respond further to that later, but that is my understanding. Secondly, the Government set a low and credible inflation target—credible because it was managed by an independent central bank, which has been long debated. The effect, which we have seen recently, is to bring down inflationary expectations, and therefore interest rate expectations. Consequently, when companies and individuals seek to borrow, they can do so at much more preferential rates, which has had a huge effect on building the capacity of the economy and keeping more people in work. Thirdly, and crucially for this Budget, the Government have not been afraid of massive interventions on the supply side to raise the capacity in the economy and to increase levels of education, research, science and so on. Conservative Members may mock the new deal, and they did so while the Chancellor was speaking—that is not surprising, as perhaps they would abolish it—but they must realise that that kind of targeted welfare-to-work policy has had a transformational effect on employment levels and on the individuals affected. My argument is that it should go further. I am delighted that we are now using the same techniques to lift the long-term unemployed and those on incapacity benefit into the workplace where that is possible for them. We now need to focus on people in work with low salaries. Immediately and crucially, we must do so through the tax credit system, but we should also learn some of the lessons of the welfare-to-work and new deal programmes. We should consider a new deal for those in work, with targeted career advice so that they understand where, if they invest in such training, it could be expected to take them in five or 10 years’ time. Experience has shown that such an approach is effective for people who are out of work; let us apply it more widely and, perhaps, draw lessons from organisations such as learndirect in extending it to the workplace. I should be interested to know what Conservative Members think of the idea, but I doubt that they could cope with it conceptually.