29 November 2002
The chancellor announced a massive increase in public borrowing for this financial year in his pre-Budget report on November 27. Instead of the £11bn he forecast in April's Budget, he will now borrow £20bn – almost double his original estimate.
Brown has been forced to act because of a worldwide economic downturn, coupled with lower than expected growth. The UK economy will increase by just 1.6%, this year instead of the 2–2.5% he forecast in April. Tax revenues will be much lower as a result.
The alternative would have been to take an axe to ministers' spending plans for health, education, transport and local government.
Brown told the House of Commons that that course of action would be 'neither competent nor prudent' and could lead to 'rising unemployment and the old boom and bust'.
Bill Morris, general secretary of the T&G union, hailed Brown's decision. 'We welcome the continued commitment to invest in public services. It is a brave and confident move by the government,' he said.
But the chancellor made clear there would be no let-up in the government's drive to increase efficiency in public services. 'The public sector must also meet the competition test and the investment we make must be matched by continuing reform,' he told MPs.
Brown said the Office of Fair Trading would scrutinise new public sector regulations to ensure they do not harm competition. A Treasury spokesman explained: 'Every government department will be considering whether its own legislation may be having an anti-competitive impact on markets.'
PFnov2002
