Labour Conference: Prudence key to prosperity, says Brown

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The economy could be back on track next year, Gordon Brown told delegates. Anthony Bevins, Political Editor, on a speech marking a return to the promise of full employment.

The Government was determined not to repeat the mistakes made by the two Wilson administrations of 1964 and 1974, and had learned the lesson of prudence and spending discipline, the Chancellor said in Brighton.

But in spite of his authority as the first Labour Chancellor for 18 years, and the restoration of the party commitment to full employment, the conference applause appeared lukewarm, if not muted.

Asked why there had been no standing ovation, one of Mr Brown's aides said: "This is the Labour Party."

But Brian Johnson, of GCHQ trade unions, was given a standing ovation less than an hour after Mr Brown had spoken, and it is possible that the tough austerity of the Chancellor's message dampened delegates' enthusiasm.

Mr Brown reminded the conference that he had said two years ago that the New Jerusalem could not be built on a mountain of debt.

"That is why, with our deficit reduction plan for public borrowing, with our tough reforms at the Bank of England, with the interest rate rises made necessary by Conservative failures, Britain has begun to break from Tory short-termism - and I am now more optimistic that the economy can be back on track next year.

"And I tell you we have learned from past mistakes. Just as you cannot spend your way out of recession, you cannot, in a global economy, simply spend your way through a recovery either.

"In place of irresponsible Tory short-termism there will be no risks with inflation, no irresponsible fine-tuning, no massaging of the figures, no short-term dashes for growth.

But Mr Brown then added: "We will not make the mistake of 1964, when our government failed to take the tough long-term decisions for change early on. And we will not make the mistake of 1974, spending hopefully for the first two years - telling the people the party was over but acting as if it had barely begun, and then having to cut back miserably on spending in the next three years.

"It is only by being prudent and disciplined now ... that we will be able to deliver the people's priorities for health and education in the years ahead."

Part of that process, he said, would involve firmness and fairness in the review of all spending decisions - "including pay settlements right across the board".

Turning to unemployment, Mr Brown laid down the Good Samaritan principle that lies behind the new commitment to full employment, saying: "When literally millions of people with talent and energy are denied the chance to realise their potential to the full, no minister can walk by on the other side.

"It makes me angry when I meet young people at 16 or 17, their life's chances crippled by unemployment and poverty."

Any fair-minded citizen moved to anger, would also be moved to action, said Mr Brown, and he set out the detail of a programme to help the young and long-term unemployed into work, backed by the pounds 5.2bn windfall levy on the privatised utilities.

He said that his aim was a root-and-branch modernisation of the economy, with a new and reformed welfare state. That was the only way "to achieve what we have always sought and what I affirm as our goal today: employment opportunity for all in every part of Britain. Full employment for the 21st century. The ambition of decent-minded people everywhere."