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Chancellor upbeat for town and country

PUBLISHED: 17:27 15 November 2001 | UPDATED: 10:50 03 March 2010

WITH polling day in the Ipswich by-election just a week away Political Editor PAUL GEATER has been down to the Treasury in London with Ipswich Labour candidate Chris Mole to speak to Chancellor of the Exchequer Gordon Brown.

WITH polling day in the Ipswich by-election just a week away Political Editor PAUL GEATER has been down to the Treasury in London with Ipswich Labour candidate Chris Mole to speak to Chancellor of the Exchequer Gordon Brown.

IT'S hard not to be impressed when you step inside the marbled halls of the Treasury.

I'm told it isn't as grand as the Foreign Office – but it's definitely one of the smartest offices in town!

We had been due to meet Mr Brown "at home" in 11 Downing Street, but the venue had to be changed because he was on the telephone to other finance ministers on IMF business.

Yesterday's rise in the unemployment figures were the first clear indication we have had that the British economy could be heading into a recession.

Last time we were hit by recession, the development of Ipswich was set back several years as major development programmes almost ground to a halt.

Why would it be any different this time?

"The British economy is now in a far better shape to ride out the worldwide recession than it was in the early 1990s," the Chancellor insisted.

"Back then the recession was worldwide and heightened by an international crisis – the Gulf War – but the British economy wasn't in a good shape at all.

"There was high inflation, so interest rates had to go up to 15 per cent and that was crippling for the economy as a whole.

"Now interest rates are just 4pc, their lowest for 40 years, and we have the lowest rate of inflation in Europe.

"The British economy isn't immune from worldwide pressures, but we're in a very good position to deal with them."

Mr Brown said the events of September 11 and the subsequent military action on Afghanistan was having a huge effect on world trade – but would not blow government finances off course.

"When we came into office in 1997, we made sure that the government finances were put in order – it was central to all our plans," he said.

"This is now enabling us to invest in public services – hospitals, schools, pensions – but there are also reserves if unexpected contingencies like the current crisis or the Foot and Mouth outbreak earlier this year blow up," he said.

Mr Brown had been doing his homework on the by-election before the meeting.

"If you look at Ipswich, the jobs situation there has improved enormously over the last four and a half years," he said.

"When we came into office in 1997 there were more than 3,000 people registered as unemployed in the town, now there are 1,700. More than 1,000 people have found employment through the New Deal.

"There are more people in employment in Ipswich – it has one of the highest employment rates in the country."

Mr Brown said the reduction of the number of unemployed was vital for the government because it meant it cut the social services bills.

"But it isn't just the reduction of the unemployment rate that is important, it is the help that is given to people in work, especially the minimum wage and the introduction of the 10p in the pound income tax rate," he said.

During the recession of the early 1990s much investment in Ipswich dried up – especially in the Waterfront area.

Mr Brown could give no assurance that there would be no slow down in the development. "We are investing in public services and creating the conditions for private investment," he said.

Chris Mole, who is deputy chairman of the East of England Development Agency, said he remained confident that private money would still be attracted to the area.

"The high technology sector has given the Waterfront a boost – with new companies spun off from BT Brightstar in Martlesham," he said.

The government was proud of its investment in public services – but Mr Brown said that a solid base to the economy was vital to be able to carry out that investment.

For the first two years, the government stuck to targets set by the former Tory administration – a decision which prompted criticism from some of its supporters.

"That was absolutely right," Mr Brown said. "Because we did that then, we are now able to make the investment in the public services that are needed.

"When we took over the government was running a deficit of £30 billion a year – that simply wasn't sustainable. We had to get the basics right."

He was dismissive of Liberal Democrat claims that more should be spent on these services by raising taxes.

"Their figures don't add up," he said. "Before the 1997 election they said they would raise an extra £500 million for the health service. We have spent £5,000 million more – because the basic economy is in good shape."

Mr Brown had kind words about Mr Mole and his leadership of Suffolk County Council – just as the government is preparing to tell local authorities how much they will get next year.

In the past there has been criticism from councillors that the government hasn't given them enough money and has forced them to put up council tax bills.

"We want to be fair to local authorities – but there are a lot of factors to be considered," said Mr Brown.

"But Suffolk, under Chris Mole, has been a very successful council and has done very well – and that success has been recognised (it is the current "council of the year")."

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