INTEREST RATES

HC Deb 13 July 1988 vol 137 cc398-428

'In section 378 (3) (e) of the Taxes Act 1988 there shall be added at the end "and—(b) in particular for the publication of statistics on a monthly basis setting down prevailing levels of interest rates from a representative sample of market rates for mortgage lending, bank lending and other consumer credit".'.—[Mr. Chris Smith.]

Brought up, and read the First time.

Mr. Chris Smith

I beg to move, That the clause be read a Second time.

The new clause requires the Government to publish monthly comparative figures of the varying rates of credit available to consumers from mortgage lending institutions—building societies, banks and other finance institutions and stores. It is important for consumers to have access to the fullest possible, independently presented information about the rates of credit available to them. That is especially important in the present circumstances because of the enormous variation in the interest rates available for credit. I must pay tribute to my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley), who has already raised this issue in a Bill that he presented to the House.

The available rates of' credit show an enormous variation. An overdraft is available from the bank at between 14 and 17 per cent., plus bank charges. Personal loans may be available from a high street bank at between 19.5 and 20.75 per cent. Interest rates on Access and on Barclay's Visa cards range between 23 and 24 per cent. annual percentage rate. The Chase Manhattan Visa card, which has recently been introduced, is somewhat cheaper, at 16.9 per cent. APR.

If one goes along to the gas board showroom in the high street and wishes to purchase an item on hire purchase credit, one will find that the rate varies between 30 and 35 per cent. APR. The higher figure is the one charged to cash customers, which is blatant discrimination against people who do not have bank accounts.

The rates available on different store cards vary even more dramatically. Yesterday, I carried out a random survey of store card and store credit rates of interest in an average British high street. Perhaps I should not call it an average British high street, as it was Kensington high street. I discovered that various rates of credit are available in the major stores there. At Dixons, they range from 29.8 to 39.9 per cent. and at Next from 26.8 to 32.9 per cent. At Marks and Spencer, the rate is 26.8 per cent. At Barkers, on the Frasercard system, the rate is 29.8 per cent. At BHS, the rate is between 29 and 34.7 per cent.

In that welter of available mainstream high street credit, there is surely a crucial need for information to enable consumers to make well-judged choices and decisions. That may be all very well for the high street stores, but the back-street loan sharks are infinitely worse. Last year, Birmingham city council and Birmingham money advice centre carried out a joint survey which found that annual percentage rates for the back-street merchants in their area ranged from 153 per cent. up to a staggering 4,822 per cent. They also found that one local firm, S and U Stores, told its customers that the APR on the credit that it made available was 54 per cent. That in itself would have been bad enough, but, when the collection charges that the borrower had to pay were included, the real cost of borrowing was 835 per cent.

There is not only an enormously wide variety in the rates of credit available, but far more credit is being offered to and thrust at the public than ever before. Outstanding consumer credit has risen by an average of about 15 per cent. a year over the past four years. Last year, to October, it was even worse. It rose by 18.7 per cent. and it is becoming worse still.

Mr. Tim Smith

Will the hon. Gentleman tell us whether those figures include credit advance for house purchase and, if so, what proportion that represents?

Mr. Chris Smith

They do and, of course, the mortgage finance available is a crucial component part. It accounts for about three quarters of the overall credit figures. That does not make the point any less valid because, to an increasing extent, people are borrowing money on mortgages against the value of their house and spending that money on items other than housing. That is borrowing against security, but it is borrowing none the less.

The amount of outstanding consumer credit is rising in real terms. It is rising on a per person basis and as a percentage of GDP. It is also worth pointing out that Britain makes far more use of credit cards than any other EEC country. In this country, we hold about half the Visa cards in the entire Community and two fifths of the Eurocards were issued in the United Kingdom.

The problem is further highlighted by yesterday's figures on bank lending which were issued by the Bank of England. They showed that lending in the personal sector—again, lending ostensibly for house purchase formed a major part of that—rose by 7 per cent. in the three months to March. That is a rise of £4.4 billion compared with 0.2 billion in the three months to February. The money borrowed as part of those figures for house purchase both feeds on and fuels the massive rises in property prices which have taken place, especially in London and the south-east, during the last couple of years.

There was one slightly brighter point about the figures issued yesterday by the Bank of England. There was a considerable increase in industrial borrowing, and we hope that that is a sign that industry is now tentatively beginning to improve its investment performance, but that fact must not be allowed to mask the dramatic increases in individual, personal, domestic borrowing that yesterday's figures revealed.

Many problems are inevitably coming in train from that increase in borrowing. For example, personal savings are at their lowest for 26 years. When I asked the Prime Minister about that, she came out with a remarkable doctrine. In a letter to me of 16 February 1988 she seemed to claim that because there was greater confidence in the economy people felt that they could save less and spend more. She might care to tell that to the most prosperous and best performing economy in the world, Japan, because a large part of its economic success has been built precisely on high levels of personal saving.

6 pm

Mr. Ian Gow (Eastbourne)

So that the House may judge whether the interpretation that the hon. Gentleman put on the letter that he received from the Prime Minister is correct, will he read the relevant passage to the House?

Mr. Smith

I shall be delighted to do so. The relevant paragraph—the third—in the Prime Minister's letter says: One reason for the fall in the ratio during the 1980s has probably been the reversal of that unsatisfactory position. The Prime Minister had earlier in her letter been conducting her usual diatribe against the 1970s. She went on: Inflation has been brought down to levels last experienced in the 1960s and, with greater confidence in the future, consumers are now in a position to save a smaller share of their real incomes and enjoy higher spending and living standards". As an economic doctrine about the role of savings within an economy, that is astounding and somewhat peculiar in its economic logic.

We have a picture of personal savings at an extremely low level.

Mr. Oppenheim

Will the hon. Gentleman give way?

Mr. Smith

I should like to get on with my point. I shall give way to the hon. Gentleman in due course if he lets me continue for the moment.

The reality is rather different from that painted by the Prime Minister. For example, the Office of Fair Trading has estimated that more than 3 million adults have experienced difficulty in keeping up with their debt repayments during the past five years. That is the reality of the credit society that we in Britain have been building during the past seven or eight years.

The hon. Member for Beaconsfield (Mr. Smith) talked about people raising finance for house purchase. He will also be aware that repossessions of homes for mortgage arrears have risen fivefold in the past eight years. He will also doubtless be aware that the National Association of Citizens Advice Bureaux has recorded a doubling during that period of counselling on consumer debt and related items. Last year the citizens advice bureaux dealt with 1.4 million cases of debt counselling.

Personal indebtedness is a major and growing problem for many families and the more that credit is pushed upon them, sold to them in the glossiest and, in some cases, most misleading of ways, and the more that families are given insufficient information on which to make judgments, the more they will face problems of eventual indebtedness.

The growth of credit is bad enough for individuals; it is disastrous for the economy as a whole. The prosperity that parts of Britain—I emphasise parts—have been experiencing in the past couple of years has been built on a bubble of ever-expanding credit. It cannot go on for ever.

Yet the Chancellor's only response to the problem of credit expansion has been an idle and negligent one. His only answer is to adjust interest rates. Indeed, he reiterated that last Thursday in a speech to the Cities of London and Westminster Conservative Association's annual lunch. Where else should it have been held but at the Savoy hotel.

The Chancellor spoke about the problems of borrowing and credit. He made the somewhat surprising claim that fiscal policy was more or less unrelated to the availability of credit and levels of inflationary consumption. He seemed to be unaware of the fact that those people lucky enough to have benefited from the dramatic reductions in top rate tax in his Budget were unlikely to go out and spend the money that the Budget was giving them. He also ruled out any control of credit by the Government as being a distortion of the market

Mr. Oppenheim

The hon. Gentleman makes a case that the savings ratio in Britain has fallen somewhat in recent years, but is it not true that the ratio of public debt has also fallen somewhat, and that contrasts rather dramatically with the situation in the 1970s when we had high public debt and relatively low private debt? May I further take him up on his comparison with Japan? He says that Japan has consistently had a high savings ratio and that is supposedly one of the main reasons for its success. But the fact is that in the 1960s and 1970s Britain's savings ratio was as high as Japan's, and that did not do us much good. One reason why it did not do us much good is that, whereas the Japanese had a low level of public debt and public spending, we had a high level of public debt and public spending. May I also ask whether, as a matter of interest, it is possible nowadays to join the Labour party on a credit card?

Mr. Smith

I shall deal with the hon. Gentleman's substantive points, which I think related to the balance in the overall economy between public and private debt. The hon. Gentleman ignores the need in any economy to have a healthy supply of credit within the private sector. I shall come to that in a minute, because the crucial factor there is the word "healthy".

But that is also a principle which should be applied to the public sector. To make a virtue, as the Chancellor seems to have been doing in the course of his various pronouncements in the past few months, of having a minus figure for his public sector borrowing requirement is not necessarily a sensible way of planning for future investment in Britain's health, welfare and future wealth-creating capacity. That is an issue to which we shall doubtless return on many occasions in the next few months and years.

The Chief Secretary to the Treasury appears puzzled. I was making the basic point that for the Chancellor to claim that there is some necessary virtue in having a public sector borrowing surplus rather than a public sector borrowing deficit is not necessarily a sensible economic approach to running the national economy.

The Chief Secretary to the Treasury (Mr. John Major)

Is the hon. Gentleman therefore suggesting precisely the converse, that it is more virtuous for the Government to have a borrowing requirement than to be in surplus? Is that the Labour party's policy now?

Mr. Smith

No, it depends inevitably on the supply of revenue to the Government and on what the Government wish to spend their money on. In current circumstances, when the Government have more money than they know sensibly what to do with, and, instead of doing what they should have done and investing properly in our Health Service, house building, education and local services, they have given money to top rate taxpayers, they have the balance wrong within their own overall budgetary levels.

Inevitably, from time to time, a Government will need to borrow. There will be times when a Government want to be in surplus. It all depends on the circumstances at the time. However, I suspect that making a virtue of the great motif of Government economic policy that the PSBR must always be in surplus, which seems to be the Chancellor of the Exchequer's current view, will haunt the Chancellor when economic circumstances change. The Chief Secretary to the Treasury ignored the fact that economic circumstances will change and are changing. One of the problems that will fuel the change is precisely the level of available credit and borrowing.

Mr. Major

I fear that the hon. Gentleman is misleading the House unintentionally. He equated the desirability, as he saw it, of the PSBR to necessary investment, also as he saw it, in public sector services. He thereby implied, and the Labour party states this frequently, that there is under-investment in those services. Perhaps he will remind the House of the level of public sector capital investment in the current year and the extent by which expenditure on priority programmes has increased in the past public expenditure round.

Mr. Smith

Yes. I can also remind the Chief Secretary of the needs that are not being met and which should be met by the Government in their current public expenditure provision.

I remind the Government of the desperate needs of the Health Service and the issues raised earlier by my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley), who referred to the way in which the Government have failed to fund fully the nurses' pay award. The Government are neglecting much in public financial provision. Instead of thinking that they have done everything that they need to do, they should consider the needs that are not being met, and which they should be meeting.

Referring once more to the nub of the proposition under discussion—personal sector borrowing and the way in which personal credit is expanding— the Government's only answer is to say that we must adjust interest rates. At the same time, they rule out the possibility of alternatives such as any direct control of credit. They claim that high basic interest rates will solve the problem. They will not. High basic interest rates have very little impact on consumer credit consumption because the margins between base rate and consumer rates are so high.

High basic interest rates will have a direct impact on the mortgage rate. Any further rise in the mortgage rate—which must be imminent now—will have only temporary macroeconomic benefits while harming directly many millions of home owners. Higher interest rates do not appear to take much of the steam out of the credit boom, but they increase the risk of default.

In addition, high basic interest rates make life much more difficult for British business. The Confederation of British Industry estimates that the most recent five changes in interest rates have cost British industry about £625 million.

Mr. Jeremy Hanley (Richmond and Barnes)

I have been following the hon. Gentleman's arguments with some care. Before he refers in detail to business interest charges, will he explain in the light of his statement that personal borrowing, particularly on credit cards, is dangerous for the economy and the individual, how he would discourage people from using credit cards? Would the Labour party introduce a tax on credit cards?

6.15 pm

Mr. Smith

"No" is the short answer to that. The hon. Gentleman quite clearly has not listened to me with care. The proposition that I have been advancing is not that personal borrowing per se is bad, but that personal borrowing either at usurious rates of interest or when rising out of control, is not necessarily in the best interests of consumers or the economy as a whole. The key point is to ensure that the growth of consumer credit is kept properly under control

Mr. Hanley

How?

Mr. Smith

I was coming to that. It is not being kept properly under control at the moment. At the moment supply imposes more credit on consumers than they want or need.

The National Consumer Council has provided the answer to the question raised by the hon. Member for Richmond and Barnes (Mr. Hanley). It wants better protection for consumers and it has stated that fact clearly in many papers and statements over the past year. However, none of those documents relates directly to the new clause, so I will not refer to them in detail.

The Director General of Fair Trading also wants better protection for consumers and in his annual report he makes precisely the point made in new clause 3. In his annual report, Sir Gordon Borrie states: For credit to be used successfully"— hon. Members should notice that Sir Gordon, like Opposition Members, wants credit to be used successfully because it has a major, important and beneficial role to play in an economy provided that it is used successfully— there are two vital prerequisites—first both parties must know what they are letting themselves in for; and second credit must be both given and taken responsibly. This means that, if there are to be improvements, both lenders and borrowers must be better informed and both must demonstrate the highest standards of moral responsibility. Better information is precisely what new clause 3 is about. The Opposition entirely agree with Sir Gordon Borrie, and the new clause is a first step towards a better informed consumer market better able to judge, discern and choose between available credit. New clause 3 will also assist the ability to make demand the arbiter of credit rather than supply. At present, supply dictates and credit is effectively on the loose.

If Conservative Members are not prepared to listen to me, to Sir Gordon Borrie or to the National Consumer Council, they might listen to what The Times stated this morning. The Times comments on the latest figures on bank lending. While welcoming the improvement in the figures in industrial borrowing, it describes the present state of affairs graphically as a candy floss society busy spending its way towards the next balance of payments crisis. That is precisely what is happening, but the Chancellor of the Exchequer sits back and believes that an adjustment of a half per cent. here or there in the base rate is sufficient to make amends. It is not. The least that the Government can do is to accept the logic of our case, accept the dangers inherent in the present situation, and accept our new clause to provide consumers with at least basic information about the rates of credit that are available to them, to enable them to make informed choices rather than uninformed choices, as they are doing at the moment.

Mr. Gow

This debate takes place in the benign presence of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). He had to listen, as you had to listen, Mr. Speaker, to the speech of the hon. Member for Islington, South and Finsbury (Mr. Smith). You are a keen student, Mr. Speaker, as I am, of missives that were sent by the right hon. Member for Ashton-under-Lyne and by the right hon. Member for Leeds, East (Mr. Healey) to Dr. Johannes Witteveen. On the desk in the study at our house in the republic of Lambeth there is a copy of the famous letter dated 15 December 1976.

By one of the strange accidents of events, I happened to re-read that letter this morning. The right hon. Member for Leeds, East assisted in drafting the letter. The then Labour Government embarked upon precisely that policy of borrowing that is, once again, advocated by the hon. Member for Islington, South and Finsbury. The right hon. Member for Ashton-under-Lyne approved the Chancellor of the Exchequer's draft commitment to reduce public borrowing and the share of public expenditure as a proportion of gross domestic product.

On that famous day, just before Christmas 1976, there was the beginning of an understanding of the need to restrain borrowing. [Interruption.] I should not be rebuked by Opposition Members for talking about borrowing. The hon. Member for Islington, South and Finsbury spent little time talking about new clause 3, but he spent considerable time redefining the Labour party's borrowing policies. My right hon. Friend the Chief Secretary to the Treasury was perfectly justified in intervening twice during the hon. Gentleman's speech to try to educate him in the lessons that were learnt 12 years ago by the right hon. Member for Ashton-under-Lyne, who is sitting only two Benches behind the hon. Gentleman. We have heard the hon. Gentleman disagree with all the lessons that were learnt so painfully by the Labour Government in 1976.

Mr. Chris Smith

Will the hon. Gentleman give way?

Mr. Gow

Of course I shall give way. The more the hon. Gentleman seeks to intervene, the more I shall certainly give way.

Mr. Smith

I am delighted to receive such a ready reception from the hon. Gentleman. When he forecast a public sector borrowing requirement of £4 billion in 1986 and said that that was just about the right sort of borrowing level for the economy that year, was the Chancellor of the Exchequer being sensible, wise or foolish?

Mr. Gow

When my right hon. Friend the Chancellor presented his Budget statement in 1986, he made a forecast about the then borrowing requirement. He said that, in the conditions of 1986, it was correct to adopt a borrowing requirement of about the figure that the hon. Gentleman gave. Then, in 1987, my right hon. Friend budgeted for a small public sector borrowing requirement, but, as it turned out, there was a surplus or negative borrowing requirement in the financial year ended 30 March 1988. In his Budget statement in March this year, my right hon. Friend told the House that he would not budget for a surplus this year, and that, quite rightly, it will be the future policy of Conservative Chancellors—he gave no time limit—that there should not henceforth be a deficit Budget. That policy is long overdue.

The right hon. Member for Ashton-under-Lyne will recall that the last time a Labour Government balanced the Budget, Lord Jenkins of Hillhead, one of the founders of what used to be known as the Social Democratic party, was Chancellor. In each year from 1974 to 1979, we had a massive borrowing requirement. The Chancellor's decision, which was announced in this year's Budget, that henceforth we should have a surplus is one of the important factors that will have downward pressure on the rate of inflation.

I deplore the speech of the hon. Member for Islington, South and Finsbury. He will be corrected by the right hon. Member for Ashton-under-Lyne. There was another extraordinary contrast and illogicality in the hon. Gentleman's speech. He rebuked my right hon. Friend the Chancellor for allowing an explosion of domestic borrowing, and then criticised the same Chancellor for curtailing public borrowing. That was an extraordinary duality of proposition in consecutive sentences. I shall refer to the serious explosion of domestic credit.

I am certainly one of those who believe that, on balance, my right hon. Friend the Chancellor was mistaken to reduce interest rates. I welcome the 2.5 per cent. increase in interest rates in the past six weeks. Now that the Chancellor has wisely decided that there is to be an excess of revenue over expenditure this year—I am sure that he will meet and possibly exceed that target—interest rates are the principal remaining weapon in his hands for keeping downward pressure on inflation.

Interest rates are referred to in the new clause. I am glad to see my right hon. Friend the Chief Secretary on the Treasury Bench. If, by the end of this Parliament, we are to abate the evil of inflation still further—I believe that we should—and secure the goal of stable prices, which, after 12 years of Tory Governments, we should secure—that means zero inflation—we must face up to the fact that we must have relatively high interest rates.

Mr. Nigel Griffiths

How does the hon. Gentleman square his opinion with that of Dr. Andrew Sentance, the head of the CBI's economic trends policy group? He stated: Industry is currently bearing the brunt of the Government's determination to squeeze inflation by raising interest rates. Does the hon. Gentleman realise that by "bearing the brunt" the head of the economic trends policy group means more job losses and less competitiveness abroad, and that that is a direct consequence of what the hon. Gentleman is advocating?

Mr. Gow

I do not know how you would react to comments from officials of the CBI, Mr. Speaker. I should be anxious if I found myself in agreement with the economic spokesman of the CBI. It comes as no surprise that the CBI is criticising the Government's interest rate policy. There would be greater reason to sympathise with Government critics in the CBI if, in recent years, when we have had high interest rates, industry had performed less well. The truth is that such folk are always whingeing. You do not have the misfortune to listen to them as often as some hon. Members do, Mr. Speaker.

As a result of the policies we have pursued over the past nine years, our determination to abate the evil of inflation has enabled industry to secure the dramatic renewal of its own fortunes, the dramatic increase in output, and improved productivity. It lies very ill on the lips of CBI members to criticise the very Government policies on interest rates that have brought about their companies' renewal.

6.30 pm

Mr. Hanley

Does my hon. Friend agree that it is the failure of CBI members to keep wage increases under control that is one of the greatest contributory factors to the inflation we have today?

Mr. Gow

I have never believed that high wages cause inflation, but I have believed that high wages cause unemployment. Only Governments can cause inflation, and only Governments can cure it.

By another of those strange accidents of events, I have in my hand a copy of a speech made by the noble Lord, Lord Callaghan when he was Prime Minister. The post that he held was First Lord of the Treasury. [Laughter.]My hon. Friend the Member for Watford (Mr. Garel-Jones) laughs when I remind him that Lord Callaghan was First Lord of the Treasury, but the right hon. Member for Ashton-under-Lyne remembers it, because he was at the Treaury at the time.

Mr. David Winnick (Walsall, North)

That is more than the hon. Member for Eastbourne (Mr. Gow) ever was.

Mr. Gow

I was at the Treasury, although not for very long. However, when Opposition Members intervene from a sedentary position, their interventions should at least conform with the truth. I have always had a suspicion about those who wear red shirts, and my suspicion seems to be confirmed.

I commend this quotation to the hon. Member for Islington, South and Finsbury, who is now the Opposition spokesman on Treasury matters. I have a copy of this excellent speech also at the side of my bed, along with the famous letter of 15 December 1976.

Mr. Tristan Garel-Jones (Vice-Chamberlain of Her Majesty's Household)

To whom was that letter written?

Mr. Gow

My hon. Friend was not in the Chamber when I mentioned earlier that the letter was to Dr. Johannes Witteveen. I shall send a copy to the Vice-Chamberlain.

This speech was made a little earlier, in September. In it, the then Prime Minister commented: We used to think that you could spend your way out of a recession, and increase employment by…boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step. Yet we hear the Opposition spokesman on Treasury matters say that the Government are wrong to eliminate borrowing this year, and that they are wrong to set out as a long-term strategy a commitment to no further borrowing but to the repayment of debt. The hon. Gentleman ought to be pleased that the Government have decided to lighten the burden on our children, upon whom an extra burden had been heaped by the Labour party, because every time that a Government borrows to finance current expenditure, it is the next generation that must repay that borrowing.

Labour party Members claim to be the great moralists. They accuse my right hon. and hon. Friends who sit on the Treasury Bench of being immoral, but the great immorality is for Governments to borrow. The great morality is this Government's commitment to repay debt.

Mr. Robert Sheldon (Ashton-under-Lyne)

The hon. Member for Eastbourne (Mr. Gow) has a fair selection of bedroom ornaments, and I offer another that he may like to add. I refer to another speech of the now noble Lord, Lord Callaghan. When he was Chancellor of the Exchequer he claimed to have a triple objective, which was to keep inflation down, to keep the balance of payments right, and to improve growth. He omitted reducing unemployment, because that was not a problem at the time. It is a measure of change that one can no longer talk about a triple objective, because reducing unemployment is now also a major objective.

My noble Friend did not achieve his triple objective but it was an honourable one at which to aim. Today, we have a simple objective. It is not difficult to attain, based as it is purely on the level of inflation; all other matters are subordinate to the task of reducing inflation. I am not denying the importance of that objective, but I deny the overwhelming significance we attach to it in a limited manner of operation.

Our balance of payments is now right, not because of any brilliance on behalf of the Government but because of North sea oil. It is not a question of revenue but of the balance of payments. We used to import enormous quantities of oil, which cost us large numbers of dollars. Now we export our oil. That is the major difference, and we ought to be more aware of that than of the more secondary revenue implications.

Growth comes in the wake of balance of payments, because that was the major constraint throughout our entire post-war history. Ever since 1945, stop-go was a question of our balance of payments. It is no measure of the brilliance of the Government's operation of the economy that that constraint is not what it was.

The Government's determination to keep down inflation is admirable, but they have gone a little too far in a number of directions. They have tried to interfere with the exchange rates. The level of the pound, the deutschmark and the dollar, has become of overwhelming importance. All of my hon. Friends, and I suspect many Conservative Members, agree with the Chancellor of the Exchequer in his quarrel with the Prime Minister, believing that he was right and that she was wrong. He was right to take into account the situation that will emerge at the end of this year, when our balance of payments moves into deficit. The Chancellor attempted, quite rightly, to iron out that peak in the deutschmark in particular, even to the extent of not enjoying the beneficial effects upon inflation that the Prime Minister put as the dominant factor.

The right hon. Lady took the easy way out. The easy way out has been chosen by too many Chancellors of the Exchequer facing a level of inflation that was greater than they wanted. They tried to make the pound too strong, and it was industry that suffered. Industry suffers again and again. The Government receives the cheers of the City but the complaints of industry.

The hon. Member for Eastbourne should not diminish too much the views of the CBI. Occasionally, it does talk a little bit of nonsense, but in so far as there is any organisation speaking for industry, it does not do so all the time. It speaks also for other aspects of the economy. In speaking for industry, nobody does it better than the CBI. Chambers of commerce perform that function fairly well, but the CBI is a much more important body. We should not try to diminish its efforts to stand up for manufacturing industry in a way that no other body does.

Mr. Oppenheim

How can the right hon. Gentleman assert that the Government are keeping the pound too strong when the current pound-deutschmark exchange rate is 20 per cent. lower than it was two years ago? It is also about 40 per cent. lower than it was five years ago. Even against the dollar, the pound is about 20 per cent. lower than it was five or six years ago.

Mr. Sheldon

The hon. Member for Amber Valley (Mr. Oppenheim) should not view such matters historically. It is simply a matter of looking at our balance of trade. That is the real test of how well we are exporting the products of our manufacturing industries, and that figure has declined markedly by comparision with imports of manufactured articles. That is the test of industry, and it is the test of employment as well. So we see that there is a need to reduce interest levels, which was a point put so well by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith).

It is the easiest thing in the world to increase interest rates in an attempt to affect inflation, but I do not think that that will have much effect on consumer demand when consumers are paying the rates that my hon. Friend has described. When they are paying between 25 and 35 per cent. APR, the odd 1 per cent. will not make much difference to them. It will, however, have an enormous effect on industry. That is the dilemma: the one can be helped, but only at the expense of the other. In the one case such action will have little effect, and in the other it will cause disproportionate suffering. Once again industry is the major victim of the Government's policies.

The inflation problem does not relate merely to the retail prices index, at somewhere between 4 and 5 per cent. Property inflation must also be taken into account. Statistics do not tell us much about that aspect, but it is enormously important. We have given advantage after advantage to those who, instead of spending their money on productive assets, spend it on the way in which they live in their houses. We have gone too far: the level of mortgage relief is now quite nonsensical.

The tax return on productive assets does not bear comparison with the advantage from adding an extension to a house, trading up and moving into a new one. Buying a productive asset means paying capital gains tax of up to 40 per cent., but nothing need be paid on a home. In the case of inheritance tax, those who trade up will again have the advantage. The abolition of schedule A was nonsense. Buying a productive asset means paying the full tax on the income from it, but no tax need be paid on the advantage of paying no rent on a property.

That absurdity of absurdities, the poll tax, will act as a further ratchet on the value of expensive houses. No one could oppose home ownership, but we can oppose the incredible distortion that results form it. House price inflation is 3 or 4 times the RPI, or even higher. Those who want inflation to fall must level that charge at the Government.

House prices vary too much between the north and the south. House prices in the north, particularly in the past month or two, have increased very rapidly, and I do not regard that as a good development. We are not simply equalising prices in the north and the south; we are letting the disease travel north. Inflation of 4.5 or 4.75 per cent. may be important, but it is not having the devastating effects of the 15, 20 or 25 per cent. inflation in house prices.

The Economic Secretary to the Treasury (Mr. Peter Lilley)

The right hon. Gentleman said that he thought that the difference between house prices in the south and those in the north was too great, but that he did not want it to be made good by a rise in house prices in the north. Does he advocate engineering a fall in prices in the south?

Mr. Sheldon

That is a very facile question for the Ecomomic Secretary to put. Of course I do not. The result of the increase in house prices is that people are behaving as if they had received large increases in their wealth—which indeed they have—and gaining some comfort from those increases by sitting on them. That causes a distortion of the housing market in this part of the country. I am sure that, in his more reflective moments, the Economic Secretary will not try to defend the increase in house prices. No one would defend it. People say that it is a pity, but that they see no way of doing much about it.

6.45 pm

I am not sure that I have the agreement of my Front Bench—one of the pleasures of being a Back Bencher is being able to speak one's mind without considering the consequences too fully—but I believe that we should think about credit control. Of course there is no final answer; instructions to the banks and credit card controls are not permanent. But nothing in this sphere is permanent. It is the Government's ideology that prevents them from even considering the possible solutions.

Financial management is about a number of solutions. That, indeed, is what Budgets are about. They do not aim to set the economy for all time, but seek to deal with problems as they arise. A major problem of our time is the level of house prices and the level of credit, which have gone disgracefully wrong, and the way in which credit for consumers is going ahead much more strongly than credit for industry.

Sir William Clark (Croydon, South)

Apart frorn advocating the imposition of credit controls—which did not work very well when his party was in government—is the right hon. Gentleman now saying that Labour policy is to abolish mortgage interest relief on owner-occupation, and at the same time to introduce capital gains tax on any profit that an owner-occupier might obtain on selling his house?

Mr. Sheldon

The hon. Gentleman usually listens to me rather more carefully. I distanced myself from the Front Bench from the outset. I have just pointed out that the advantage of speaking from the Back Benches is that one speaks for oneself. Speaking for myself, I should like to see some sort of credit control.

The hon. Gentleman has said that credit controls did not work in the past. I know that they cannot work over a long period, but what they can do is have an immediate and direct impact at the time of their imposition. The impact will weaken and die away thereafter, but such immediate intervention might bring about an improvement in the present position.

Mr. Nicholas Bennett (Pembroke)

The right hon. Gentleman has talked about house prices. Is it not more symptomatic that demand may be outstripping supply? Ought we not to ease planning controls to allow developers to build more houses?

The right hon. Gentleman and his hon. Friends should support the Housing Bill, which will bring on to the housing market many of the 700,000 surplus properties that are being kept empty because of the Rent Acts.

Mr. Sheldon

As for surplus properties, the Public Accounts Committee found that the Ministry of Defence was far worse about hoarding its houses than any local authority, but we had better not go any further into that.

Of course this is a matter of supply and demand—because it is so easy to obtain credit. That is the entire point of what I have been saying. There is of course no final solution, and anyone who thinks that we can legislate and then go away for a year or two is living in cloud-cuckoo-land. But what we can do is produce a temporary effect.

It is a pity that Conservative Members' ideology does not allow them to examine such methods. We could have a better debate if these matters were examined more fully.

Mr. Oppenheim

Judging from the comments made by both Front and Back-Bench Opposition Members, it appears that credit explosions are all right as long as they are in the public sector, but that they are immoral in the private sector. That is a strange contradiction, but goes some way to explaining why earlier this decade, in 1983–8.4, Opposition Front Bench spokesmen said that we should emulate the public spending policies of the Government of the United States of America, a line which they rapidly dropped when the pigeons came home to roost in America a couple of years ago, when the Americans began to see what we unfortunately found out in the 1970s and what Lord Callaghan found out a little earlier—that one cannot simply spend one's way to economic success or out of recession. Far from it, because that just means inflation and builds a store of problems for the future.

The hon. Member for Islington, South and Finsbury (Mr. Smith) spoke knowledgeably about Japan. I am sure that he has a lot of first-hand experience of Japan. He mentioned that the Japanese have a high savings ratio. It is also true that, along with their high savings ratio in the private sector, the Japanese have consistently had a low level of public debt and a relatively low level of public spending. The Japanese have had to save a lot of money for their old age because their public and state provision is not very good.

Mr. Chris Smith

Perhaps the hon. Gentleman will reflect on the fact that the Japanese are so successful in keeping public spending down because they spend less than 1 per cent. of their GDP on defence.

Mr. Oppenheim

The hon. Gentleman is quite right. The Japanese do spend a small amount on defence because that was the agreement that they made with the American occupying forces in 1952. It might interest the hon. Gentleman to know that the Japanese are moving rapidly to becoming the world's third largest spender on defence because their GNP is far higher than ours. Even forgetting defence spending, and whichever way one looks at it—the fairest way is as a proportion of GNP—Japanese public spending is far lower than ours and has been far lower ever since the war. Indeed, it is far lower than that of almost any other developed country.

By contrast, Britain also had a high private savings ratio in the 1960s and 1970s. In fact, our savings ratio was almost as high as that of Japan. Therefore, it is not wise to try to argue that a high private savings ratio is necessarily the main road to economic success. A savings ratio is part of the story but what we did in the 1960s and 1970s, which was to have high private savings but also high public borrowing and spending, is the way to disaster and is certainly not one of the main planks of Japan's economic success.

Mr. Rhodri Morgan (Cardiff, West)

Will the hon. Gentleman comment on today's statement by Mr. John Banham, the director general of the Confederation of British Industry, that Britain should now save more and spend less and that the tax cuts in the Budget, especially those given to higher rate taxpayers, were a great mistake in our economic policy because they will lead to much higher consumption and a further lowering of the private savings ratio?

Mr. Oppenheim

I am happy to comment on that. I am afraid that the hon. Gentleman does not realise the nature of the CBI. It is a pressure group, and one main function of pressure groups is to whinge and whine. Throughout this Government's period in office, the CBI has issued statements weekly and monthly which have often opposed the Government's economic policy. Indeed, in inverse proportion to the number of statements that it has issued attacking Government policy, the economy has grown more and more successfully—[HON. MEMBERS: "Is the statement true?"] Mr. Banham may well have made that comment, but I would dispute its veracity or relevance.

It is ludicrous to say that a high private savings ratio is the main plank of any country's economic success. It certainly is not. If the hon. Member for Islington, South and Finsbury wants to to take Japan as an example, I must advise him that Japan's economic success relies on far more complex causes than just its high savings ratio.

Another point which has been missed is that three quarters of the private debt at the moment is debt which is fully secured against housing; it is not debt which is being used primarily to buy imported consumer products. In many ways it is a good thing, as it means that we have an expansion of home ownership. However, I go a little way towards meeting the arguments of the hon. Member for Islington, South and Finsbury in that it is at least arguable that too large a proportion of our national wealth is in housing. In some of the more successful economies, a lower proportion of wealth goes into housing. The hon. Gentleman might have had a point if he had cared to make it a little more forcefully.

I should like to turn to the substance of the new clause—

Mr. Gow

There is no substance.

Mr. Oppenheim

Well, my hon. Friend says that there is no substance and that is not a comment on which I would choose to take him to task.

My understanding of the lack of substance of the new clause is that the hon. Member for Islington, South and Finsbury would like to introduce a league table of interest rates which would be published monthly. That is a bureaucratic nonsense. My first question is, where will that league table be published? My second question is, how would the hon. Gentleman ensure that all interest rates are published in that league table? Unless he can assure me that every interest rate would be published, I believe that the whole point of the league table would be lost.

The hon. Gentleman mentioned that there were backstreet pedlars of debt with interest rates of up to 4,000 per cent. How can he be absolutely sure that all those backstreet pedlars of debt would be included in the league table? Unless he can assure me that the league table would be completely comprehensive, I believe that it will be a total waste of time.

I noticed with some concern—

Ms. Hilary Armstrong (Durham, North-West)

Why is it important that every interest rate is included in the league, rather than a sample which would give consumers a greater knowledge of or greater desire to find out about the particular rate that they were being asked to pay?

Mr. Oppenheim

Surely, if people want a relatively small sample or a selection of the current interest rates, they can find that in most newspapers, as they currently publish samples weekly. Even the beloved Daily Mirror publishes a sample of interest rates on its weekly money page which it introduced about two years ago. Therefore, a certain amount of selective information is already available to the public.

If the state is to provide a huge league table of national interest rates, it must be comprehensive; otherwise it will not add anything to the information that is already available to the public. Where would the league table be published so that it is accessible to the public, and how will the hon. Member for Islington, South and Finsbury ensure that at least a substantial number of interest rates are available in the list?

I think that I heard the hon. Gentleman trying to induce support for the new clause from the National Consumer Council. I think that I can speak with a little authority when it comes to the views of the National Consumer Council and I can absolutely and categorically assure the hon. Gentleman that, far from supporting the new clause, the National Consumer Council thinks it a total nonsense.

Finally, if the hon. Member for Islington, South and Finsbury had limited his aims to something a little more sensible and attainable, he might have achieved something, but as usual the Opposition have tended to go way over the top in trying to propose something totally unattainable.

Mr. Tony Worthington (Clydebank and Milngavie)

Will the hon. Gentleman inform us at what meeting the National Consumer Council considered the new clause and pronounced it a total nonsense?

Mr. Oppenheim

I thank the hon. Gentleman for his intervention and can advise him that the chairman of the National Consumer Council personally informed me that she thought the new clause a total waste of time. I hope that that is sufficient authority for the hon. Gentleman.

Mr. Elliot Morley (Glanford and Scunthorpe)

rose—

Mr. Oppenheim

I should like to continue because I am coming to the end of my brief speech—[Interruption.] The hon. Member for Clydebank and Milngayie (Mr. Worthington) should pipe down and listen.

If the Opposition spokesman had concentrated on something that was attainable—

Mr.Morley

rose—

Mr. Oppenheim

No, I shall not give way.

If the hon. Member for Islington, South and Finsbury had concentrated on something attainable, he might have gained some sympathy from Conservative Members. He could have concentrated on the fact that when credit card holders get their monthly bill, the only interest rate which legally has to be quoted is the monthly interest rate. No APR, no annualised interest rate and no annual interest rate is quoted on monthly credit card statements. I believe that that is misleading because it gives credit card borrowers a false sense of security. If they see that they are paying 2.5 per cent., 3 per cent. or even 4 per cent. monthly, they do not consider it to be very much. If they saw the true annualised rate, the true APR at anything between 20 per cent. to 50 per cent. plus, they would be far more concerned and far less likely to borrow.

7 pm

If the hon. Member for Islington, South and Finsbury had limited himself to the sensible objective of trying to persuade the Government to ensure that APRs and annualised interest rates were printed on credit card statements, he would have gained more sympathy from Conservative Members, and possibly achieved some success. I shall make up for the hon. Gentleman's deficiency by proposing to my hon. Friend the Minister that he should consider making it legally incumbent on credit card companies to publish on monthly credit card statements the APR that people are expected to pay, instead of simply the monthly interest rate.

Mr. Worthington

We tabled new clause 3 because we believe that people should be helped to be more aware of the true cost of credit in this country. The figures that were quoted by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) demonstrate the enormous range of interest rates that are charged and that people should be made much more aware of those issues. The Opposition believe that the credit explosion and the increasing amount of debt because of that credit pose a considerable problem.

The Scottish Consumer Council, which decides its affairs in a much more democratic way than the National Consumer Council, where apparently mummy speaks and that is the view, believes that there is a problem with regard to the credit explosion. In March this year it published a study of debt and debt advice in Scotland. Of course, such studies are already out of date because their research extended only to 1986. However, it is worth noting that the Scottish Consumer Council received no co-operation in its investigation from the credit card companies in regard to the level of public accountability which it wanted to show. The Scottish Consumer Council demonstrated that in the past five years the consumer credit taken on by the public had increased by about 50 per cent., and that that increase in credit was much more rapid for bank credit cards, and particularly for in-store credit cards.

Of course, for many people it is not a problem, as my hon. Friend the Member for Islington, South and Finsbury said. Credit is essential in our society, and Barclaycard published the fact that something like 40 per cent. of people settle their debts within a month. For those people credit is a form of cheap, interest-free loan. However, 60 per cent. do not do so.

What are the dimensions of the debt problems that people face? Let us consider the issue in regard to housing in Scotland. In 1986, 36 per cent. of those in local authority housing in Scotland were in arrears and 27 per cent. of people in Scottish Special Housing Association dwellings were in rent arrears. In regard to mortgage arrears in the United Kingdom, between 1982 and 1986, the number of those more than 12 months in arrears went up from 6,000 to 11,000. Between 1979 and 1986 those who were between six months and 12 months in arrears on owner-occupied housing went up from 2,500 to more than 20,000—an eightfold increase in seven years. The Scottish Consumer Council calculated that around 20 per cent. of all Scottish households—that is, about 400,000 households—were substantially in debt in terms of housing.

As for Gas Board disconnections, between 1983 and 1987 there was something like a 90 per cent. rise in disconnections, and in 1985–86 around 600,000 British Gas consumers were on repayment plans which were their way of settling their debts. The Association of Scottish Citizens Advice Bureaux reports that, between 1983–84 and 1986–87, the number of inquiries it received relating to clients' debt problems went up from 13,000 to more than 42,000—an increase of more than 300 per cent.

The Scottish Association of Citizens Advice Bureaux considers that the problem of debt is increasing massively. It does not consider that the problem has been caused by the fecklessness and unworthiness of people in debt. It believes that it has a number of causes. Certainly in Strathclyde it is due to the increasing poverty experienced in that area, where about a third of the people are at or around supplementary benefit level. Those figures covered 1986–87 and can only have worsened since the housing benefit changes, the 20 per cent. contribution to rates and the increasing problems of fuel debt.

It is worth pointing out that there are considerable public costs to private credit. Those public costs relate to the work that has to be done by the courts and by social services and housing departments. In Strathclyde, about 70 per cent. of the clients of the social services department are there because of debt-related problems. Even the taking of children into care is related to poverty and debt. Large profits are being made at considerable public cost.

The in-store credit cards are particularly blameworthy. In some cases, there seems to be virtually no check on creditworthiness. Sir Gordon Borrie, of the Office of Fair Trading said: A few are giving them away like sweeties. That is not the usual language in official reports.

I hope that new clause 3 is part of the way in which we can give people a greater awareness of the cost of credit, and that through such lists and other mechanisms people will eventually come to recognise that the way in which we borrow money in this country is simply crazy. It makes very large profits for remote finance houses. Surely we must look for other ways of providing cheaper credit.

It is particularly annoying that, as in all things, the poor pay more. They certainly pay more for credit. I should like to spend a little time encouraging people from all political parties throughout the United Kingdom to look more closely at the contribution that credit unions could make to providing better and cheaper credit. Credit unions manage to advance money at a fraction of the cost to the citizen with a very low rate of credit default—far lower than that achieved by finance houses. It is important to see that the credit union is there to serve the needs of its members rather than to exploit their need for credit. We need networks of credit unions to replace our reliance on finance houses and credit cards, charging the APR that was quoted earlier.

Strangely, credit unions have not thrived in Britain, as they have elsewhere. For example, the first credit union in the United States was formed in 1909 and by 1970 there were 23,400 credit unions in the United States. Some of them are now massive. In 1984 there were 82,000 credit unions in 55 countries with combined debt assets of £402 billion. In Britain in 1984 there were only 72 credit unions, which were mainly small, but they are growing in number. The number has increased considerably in recent years and there are now 73 hon. Members with credit unions in their constituencies.

I am pleased to be talking about this because the region from which I come, Strathclyde, has the greatest concentration of credit unions in the country and the district I represent, Clydebank, has the highest concentration of credit unions within Strathclyde. I know from experience what an enormous contribution they have made to people in my constituency on average and below average incomes in terms of reducing the amount of money that has to be paid to finance houses.

The House—including the Labour movement—has not paid enough attention to cost minimalisation. We have been concerned about the impact of poverty but we have not looked adequately at ways in which to reduce the cost of credit. Credit unions are one way in which we could do that.

My motive for supporting the clause, which is about the publication of lists, is to bring home to people the horrendous cost of credit in this country because of the way in which the financial system operates. By joining credit unions people could obtain that credit at a much lower cost. It is gratifying that organisations such as police forces are increasingly forming their own credit unions and giving credibility to the movement. I hope that people will take note of the desirability of bringing home to people the cost of credit and that they will realise that this is only a step to finding a better way of allowing people on average and below average incomes to borrow more cheaply.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

I have always been interested in the interest rate structure and it is right that any changes should be published. The problem faced by Governments is that they place too much simple faith upon the movement of interest rates. A £5,000 overdraft is a lot of money. However, if people are locked into that overdraft, a 2 per cent. change in interest rates means only an extra £100 a year. However, if industry is locked into the interest rate structure and is involved with sums of £1 million, £2 million, £3 million or £4 million, it has a huge effect upon how it structures its costs.

Governments have too simplistic a faith in the fact that interest rates can control the spending pattern of a country. I do not think they can. It is almost like going back all those years to Adam Smith's day, when, if people were short of money, they ended up being able to afford to buy only bread even though bread cost a huge sum because they could not afford anything else. If people are locked into overdrafts and owing money, in the end all they can afford to do is to pay interest on that money. Governments should not make interest so expensive but should go back to the days when one did something about controlling the way in which money was spent.

7.15 pm

In an age such as this, why do people think that they should be able to borrow money cheaply in order to buy a house when house prices are rocketing? Why do people think that they should be able to obtain money to buy a house at a cost lower than they can obtain money to set up a business? It is much more important for people to be able to borrow money and obtain tax concessions in order to set up a business than just to invest in a home when its value goes up. I am a great believer in people owning their own homes. As a man who has been involved in investment all my life, I can say that one of the best investments I ever made has been in my home. Why is it that, because of some ideology we need to give tax concessions on home ownership?

It is splendid to own one's own home, but is it not better to encourage people to invest in growth or in a business? Thanks to one of the most enlightened and progressive Chancellors of recent years—one needs luck as well, and if I had to choose between being lucky or clever, I would always choose being lucky—we are set upon a path of growth, and so-called experts tell us that within the next five or 10 years we will be able to do away with income tax altogether or reduce the national debt. Surely, if we give concessions on interest rates, they should be to people who encourage growth of real resources.

One of the problems about owning homes and putting money into property is that it is basically sterile capital. People ask whether the price of the pound will be affected by controlling interest rates. I do not think that it will. We have to ensure that we encourage the growth of capital in Britain.

We cannot spend money until it has been earned. Some Governments have tried to do that. Some of our friends on the Opposition Front Bench were involved in Governments who thought that they could spend money they had not earned. We cannot do that because it encourages inflation. We should encourage growth. We should encourage people to invest not in property but in a growing business. We need to give people interest rate concessions on putting money into businesses, whether a small shop, a small business or a great business.

We have had to put up interest rates five times—2.5 per cent.—in the past few weeks, but to what avail? It has not stopped people borrowing money in the shops or borrowing money to buy houses. It will discourage people from setting up businesses. I urge the Government —

Mr. Morgan

There is a great deal of thoughtfulness in what the hon. Gentleman is saying, but is he not missing out one factor that tends to make the investment in our home usually the only or best investment that we make? That factor is that it is almost guaranteed to go up in value. In other countries, particularly in the United States, if an area does badly in economic terms, the value of houses will fall by 20 or 30 per cent. In Seattle, for example, that happened during the aviation crisis in the early 1970s; and in Houston, Texas the price of houses dropped by 25 per cent. a couple of years ago. Is he saying that in such circumstances people can make a more rational decision between investment in business and investment in housing?

Mr. Beaumont-Dark

No. I am saying that the reason why property values are rising so much—and the trend is sweeping from London to the midlands and even to the north—is that the country is basically so prosperous. Tax concessions make buying a home one of the best things to do. In Switzerland and Germany more people rent than buy property, but in this country buying a home is a fantastic investment.

I give myself as an example. I live in the midlands and when I got married in 1959 I paid £3,100 for a house that would now change hands at £120,000. Why the hell do I need tax concessions as well? It is better to give tax concessions to people who are building up a business than to people who own their homes.

When we talk about interest rates, we tend to forget that we must encourage growth. Interest rates affect growth considerably. When a person starts to build up a business, he needs to borrow money and that is when concessions and help are needed. They are also needed when people buy their first home, and I am a great believer in giving tax concessions to those people. But why should we give concessions year after year to people who do not need them? It is best to give all tax concessions on interest rates to those who are buying their first home, starting their first business or starting their first venture into life.

The problem is that when one reaches a prosperous stage in life one can sometimes become greedy. Sir Robert Crichton-Brown of British American Tobacco is not content with getting £290,000 a year and share options. He wants to be given £750,000 tax-free as well. The idea of business and enterprise is not merely that people should think that the world owes them something because they have been lucky enough to become a director of a good business and because 29,860 other people happen to work for that company. Becomin,g the chairman should not be regarded as hitting bingo or winning first prize in the premium bonds.

The idea of capitalism, as I understand it, is that we do not simply say to people that it is easy for everybody. Of course we must encourage people to go in for enterprise, but we must not allow one or two people to foul the nest from which the golden eggs must come. The golden eggs must be laid. What happens at the moment is that people like Sir Robert Crichton-Brown of BAT or Sir John Clark at Plessey think that it is their world. It is not. It is everybody's world. Capitalism will grow if people understand that. I hope that the shareholders of BAT will vote against the extremists—whether on the union side or on the capitalist side. The whole idea of capitalism and prosperity is that things should be done from a moral point of view. It is not moral when people simply help themselves; and if capitalism is not moral, it is nothing.

Mr. Doug Henderson (Newcastle upon Tyne, North)

I am rather surprised by the direction that the debate is taking. We have heard some interesting views on interest rates and their effect on the economy, and I hope that we shall hear more on that subject tomorrow, on Third Reading.

New clause 3 embodies a simple proposition, which I think is unanswerable. I am surprised that Conservative Members have resisted the proposal that the Government should publish regularly the real rates of interest pertaining in different sections of our economic life. It is especially surprising that the Government should take that view in an age in which we commonly have to identify the the contents of goods that we trade in, in which advertising codes are required for the pensions provisions of the Financial Services Act and in which there is general demand by the public for more ready access to information.

I find the attitude of Conservative Back Benchers somewhat disingenuous. I do not wish to single out the hon. Member for Amber Valley (Mr. Oppenheim) for special mention, but he looked rather shamefaced when he suggested that it was impractical for the Government to publish a list of relevant interest rates. He is a member of a party that would have us believe that consumer choice is everything. I should have thought that the Conservative party would want to give the consumer the maximum information on which to make a choice.

The new clause is not about restricting or even regulating credit card operations, although if my mailbag is in any way typical, there is growing public demand for more strict controls on credit cards. The representations come not just from the Churches but from many business organisations and, most desperately, from people whose lives have been wrecked when the pack of credit cards has fallen.

Borrowing is not unique to a particular class. I know that it is not fashionable to talk about class these days but in the city of Newcastle, people in Gosforth can distinguish between their standard of living and that of people on the Newbiggin Hall estate. All sections of the community are equally likely to borrow. The difference is that when the richest in our community borrow, they are considered to be upstanding: for them, borrowing is laudable, even quite prudent. Anyone on his way up in society has to borrow to get there. It is considered to be a sign of dynamism. In the rich sections of society, it is not even called borrowing. It is called investment.

That is a far cry from what happens to people from the Newbiggin Hall estate in my constituency, who have to borrow. When they go to the DHSS office to ask for money from the social fund to help their family, it is considered slightly shady. That borrowing is regarded as a sign of bad household management, even though it enables families to make ends meet and makes the difference between having some kind of existence and not having an existence at all.

The rich have the advantage of full information. My Gosforth constituents have access to their bank manager, their building society manager, perhaps to a stockbroker on a trip to London on a first-class saver, to the counter staff at Harrods and perhaps, at their golf club, to money managers, who exist even in the city of Newcastle. They know the real cost of borrowing, whether on their Access card, their Visa card or on a credit card for a retail store. They know what they are paying.

The super-rich who consult finance houses or credit brokers know exactly what they are doing. They know the difference between a bank overdraft and a bank loan or any other source of finance. They know the rate of interest and the cost, just as Antonio in "The Merchant of Venice" knew the real cost when he had to borrow from Shylock to help his pal Bassanio with funds for a wedding [Laughter.] I am glad that that amuses my literary Friend the Member for Cardiff, West (Mr. Morgan). Such people know the real cost and they rarely default on any of their borrowings to finance investments. They rarely have to pay a pound of flesh.

7.30 pm

I ask the Economic Secretary to contrast the information available to the rich—I am not saying that it should not be available—with the information which is available not only to those who are the poorest, such as my constituents at Newbiggin Hall, but to the average citizen who is perhaps a more typical borrower on credit these days. Most people borrow to make ends meet rather than to make a speculative investment, and many have to pay exorbitant interest rates.

Contrary to what the Economic Secretary and Conservative Members may think, my average constituent does not have the information. When he goes to his DHSS office, the person behind the counter is not the chap with whom he played golf the previous Saturday, who gave him advice on how to invest his Giro. When he goes to the local shop, the person who serves him is not someone with whom he has had a Pimms in the club, who has told him of the latest bet in the City on which he should borrow money. When he goes to the Newburn Memorial club on a Friday night for a game of snooker and a pint of scotch —[Interruption.]No half pints, as at the annual beano in Amber Valley—there are not many money brokers to advise him on how to invest his funds and what risks to take. It is little wonder, with the lack of information on credit available to the average citizen, that people are increasingly becoming pawns to their credit cards.

I had better not risk incurring the wrath of Whips and others on this side of the House, so I shall conclude. I do not want always to follow the example of my hon. Friend the Member for Wrexham (Dr. Marek) who often encouraged me to speak at length during the Committee stage.

New clause 3 would guarantee that more information was available to consumers. Someone who tries to obtain credit is a consumer in the same way as someone who tries to purchase a commodity. Such information could lead to an increasing awareness of the true costs of borrowing and credit. It could give the less-informed sections of our community a better chance to understand the implications of their borrowing and the risks of investing funds.

Crucially, it could perhaps begin to act against the increasing headache suffered by many individuals and families from the destruction of family life when the pack of credit cards falls. Such people come to Members of Parliament and explain the damage and their anger. If they had known what lay before them, they would not have borrowed in the first place, hard up as they are. It is important that people have such information and consumer choice, and it would be disingenuous of the Government not to accept the new clause.

Mr. Morley

The hon. Member for Amber Valley (Mr.Oppenheim) said that the National Consumer Council was not in favour of new clause 3, but I have a quote from it which states: We recommend the issuing of guidance on prevailing interest rates for different types of loans. These should be widely publicised, so as to provide information for consumers. That is exactly what the new clause seeks to do.

We need new clause 3 because of the massive growth in credit. About 77 million credit cards are in circulation in the United Kingdom and credit card companies are among the worst offenders on interest rates. It would be a great advantage to consumers to be able to compare the different categories of interest rates, whether for credit cards, hire purchase or other forms of loan. Interest on credit cards has been consistently about 14 per cent. above the average bank rate. Regulations should be introduced to deal with that, but that goes beyond what we can talk about in this debate and I certainly shall not take up time on it now.

There is concern that many consumers are not getting the information that they need to make the best decision on getting value for money from a loan. Too many people are waiting to take consumers for a ride. Credit card companies certainly come into that category—not only bank credit cards but in-store credit cards. We are talking not so much about flexible friends as plastic pirates, considering the interest rates which are charged, particularly in stores.

The question of interest rates goes beyond the United Kingdom. In France, interest rates on credit cards range between 12 per cent. and 18 per cent., in Belgium they range between 18 per cent. and 23 per cent., and even in the home of free enterprise, the United States, credit companies can make a profit charging 14 per cent. interest rates. That is a long way from the level of interest rates charged in the United Kingdom.

The most vulnerable need information most. Those who pay the highest interest rates are often pensioners. A pensioner in my constituency had difficulty paying an electricity bill so took out a short-term loan, the interest rate on which was more than 1,000 per cent. APR. As the law stands that is perfectly legal, but it was certainly nowhere near the best available deal. Even the electricity board, which would have helped, could have offered better terms.

The Government have a responsibility to make this information available to consumers and to assist consumers. They are responsible for adding to the debt problem. They have replaced many one-off payments for those in need with loans. They have pushed up energy prices deliberately as part of a political programme, thus adding to people's burdens. They have pushed up council house rents deliberately as part of their programme. All that has added to the burden of debt on the weakest and most vulnerable people in society.

The new clause tries to tackle some of the consequences of the explosion of debt and easy credit. There is a great need for more regulation. There should be controls on the interest rates that are charged. Clearer information should be printed on credit agreement forms so that people know exactly what they are getting into. There should be easier explanations of what APR means. The NCC survey found that 50 per cent. of people do not understand APR. There should also be restrictions on the peddling of in-store credit cards, which look attractive for short-term weekly repayments but whose APR rates are excessive. The new clause goes some way to giving consumers some rights and protections and the Government should back it to the hilt.

Mr. Lilley

We owe you, Mr. Deputy Speaker, and Mr. Speaker a debt of gratitude for allowing us a lose rein in this debate, as a result of which we have been treated to some fascinating contributions.

We heard a vintage performance from my hon. Friend the Member for Eastbourne (Mr. Gow), who endeavoured to entice us up to his bedroom with a promise that we could see, not his etchings, but certain framed letters from the IMF. There was a serious point behind what he said, and I am sure that all hon. Members took note of it. There has been an enormous change in the nature of the supposed problem that we are discussing today. The last Government were running a deficit of the equivalent of £40 billion a year; this Government are now running a surplus, and all that Opposition Members can do is to try to arouse our concern about borrowing in the private sector.

We also heard a speech that will merit re-reading from my hon. Friend the Member for Amber Valley (Mr. Oppenheim). It was interesting not only for the inside information that we were able to garner on the thinking of the chairman of the National Consumer Council but for his interesting proposal to print APRs on credit cards. I shall draw that suggestion to the attention of my right hon. and noble Friend the Secretary of State for Trade and Industry, whose responsibility that is.

My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) reminded us of the priority that should be given to borrowing by businesses as against borrowing for home ownership. The Government recognise that priority but do not think that the two are mutually exclusive. We want to enable people to borrow for business and for owning their homes. As my hon. Friend will remember, there is unlimited tax relief for an unincorporated business or a partner to borrow for the purposes of his business—that is considerably more beneficial than the terms for homes.

The hon. and literary Member for Newcastle upon Tyne, North (Mr. Henderson) regaled us with Shakespearean evidence of the need for greater information for the less well-off, but he did not convince many of us that his equally literary constituents would really rush off to buy a supplement to the financial statistics such as that proposed —in effect—by the new clause

The hon. Member for Clydebank and Milngavie (Mr. Worthington) rightly emphasised the importance of credit unions. I thought he spoiled another part of his case by suggesting that those who ultimately default on loans are somehow enriching those who have lent to them. That is sheer nonsense. There is a mutual interest between those who lend and those who borrow to ensure that the lending and borrowing are not excessive. It is crucial in a free society that both sides to a contract should have an interest in its success, never more so than in lending and borrowing.

7.45 pm

I turn now to the strange case put by the hon. Member for Islington, South and Finsbury (Mr. Smith). There were two parts to his thesis. First, he maintained that we are suffering from a consumer credit boom; and, secondly, that we have excessive interest rates. The first part of his theory is untrue. About 85 per cent. of personal credit is on mortgages on peoples's residences. We are not ashamed of the fact that considerable sums are borrowed every year by people to buy their homes. As a result of that, about 2,500,000 extra people have been enabled to become home owners since the Government came to power. Consumer credit— the 15 per cent. of personal lending that is purely for consumption—has been growing at a steady, not an accelerating, rate since the beginning of the decade. It is growing less rapidly than lending on mortgages.

The hon. Member for Islington, South and Finsbury and other hon. Members concentrated on credit card borrowing, as if that were a major aspect of the amount of credit in the economy. But less than 5 per cent. of personal borrowing is accounted for by credit cards, and of that nearly half is credit that does not bear interest because it is repaid within the time specified on the card— [Interruption.] As my hon. Friend says, a small amount is probably borne by those who are paying their Labour party subscriptions on their credit cards.

The hon. Member for Islington, South and Finsbury said that mortgages were merely a concealed form of consumer borrowing because people siphoned off the money in one way or another to buy consumer goods—although they raised it on a mortgage on the house. He presented no evidence that that was a significant part of mortgage lending and gave no sign of what the Opposition would do to prevent it.

The hon. Gentleman then turned to the second part of his thesis—that interest rates were not, as one might suppose if we were suffering from a credit explosion, too low but too high. I shall give him the opportunity to elaborate on that interesting point.

Mr. Chris Smith

I wanted to take up an earlier point that the Economic Secretary raised about house purchases and mortgages. Can he give the House an absolute and categorical assurance that the reports in Sunday's newspapers that a paper was circulating in the Treasury which proposed a tax on property as a means of controlling house prices were wrong, and that the paper does not exist?

Mr. Lilley

I can give the hon. Gentleman a categorical assurance that he should not believe what he reads in the newspapers. That report has already been denied by my right hon. Friend the Chancellor, so it is rather strange that he should repeat it—

Mr. Smith

The statement made by the right hon. Gentleman was that there was no Government proposal, but is there a paper that puts forward such a proposal and is it being considered?

Mr. Lilley

That is a silly point. I have a piece of paper that considers the problem that we are discussing, but I do not see how that is relevant.

The hon. Member for Islington, South and Finsbury is advancing the bizarre thesis that we simultaneously have an excess of credit and credit that is too expensive. Rather than suggesting that interest rates should rise, as the logic of his case might suggest, he wants to lower interest rates. He quotes back-street lending rates of up to 4,000 per cent. a year, yet appears to deplore the greater competition that we have opened up among the reputable banks and building societies which offer a proper alternative to such shady operators at much more reasonable rates. To the extent that there is a problem of borrowing at excessive rates of interest which people cannot repay, the two answers to it are greater competition and greater information.

Since 1979, the Government have required those advertising credit to show the APR clearly and boldly on the advertisement so that people know the rate of interest that they will be paying. Under this Government, Visa and Access were referred to the Monopolies and Mergers Commission. Those are more positive and concrete acts than any proposed in the Opposition's new clause.

Having persuaded himself that the solution to excessive credit was lowering interest rates, the hon. Gentleman compounded that economic blunder by arguing that we should run not a public sector surplus, but a deficit. He derided my right hon. Friend the Chancellor for the pride that he takes in the fact that we are one of the few major countries able to repay debt rather than incur and burden ourselves with more.

The substantial expansion in home ownership, financed by increased mortgage lending, has come about because the savings of the people are no longer pre-empted by the borrowing of Governments, but are available for industry and home owners to borrow and use productively. We are reaping the benefits of that both in industry and in home ownership.

The hon. Gentleman said that the recent figures analysing the banking loans showed a tentative sign of a recovery in borrowing by manufacturing. He calls a 21 per cent. increase a tentative sign. The growth in borrowing by construction in the past year has been 38 per cent. I do not know what degree of tentativeness he would assign to that.

Mr. Major

Super-tentative.

Mr. Lilley

My right hon. Friend the Chief Secretary suggests super-tentative.

The hon. Gentleman gave us no firm signs of what he would do—not just with the present problems, but with the serious problems that could arise if he had his public sector deficit—to control private credit. He did not venture to repeat the ideas recently stated by his right hon. and learned Friend and boss the Member for Monklands, East (Mr. Smith), who, in that great journal of financial discussion and debate Woman's Own, seemed to commit the Labour party to returning to controls on capital and credit. Most people, including readers of Woman's Own, realise that control would be ineffective and unusable in a world without exchange controls, such as we happily have and will continue to have.

Hon. Members might have imagined from the debate that we were discussing a genuine and serious problem that needed a major and substantial solution. The solution proposed is simply that the Government should take powers that would enable them to introduce regulations, and in turn enable them to publish a list of the interest rates available in the market place. Such a list is already available in "Financial Statistics". The effect that it would have on consumers would be negligible. Anyone who proposes such a puny remedy cannot believe that we are suffering from a serious disease. I urge my right hon. and hon. Friends to oppose the new clause.

Mr. Chris Smith

The debate on the new clause has been extremely interesting, if only because it has revealed that the hon. Members for Eastbourne (Mr. Gow) and for Amber Valley (Mr. Oppenheim) wish to launch a savage attack upon the rectitude and wisdom of the Confederation of British Industry. Of course, that organisation is not always right, but it sometimes has a sensible point to make. Whether we like it or not, it is the voice of British industry, and for the two hon. Gentlemen to dismiss it in that way was foolish.

Those hon. Gentlemen also raised an interesting argument about the level of public borrowing, and the Economic Secretary picked it up. However, the hon. Member for Eastbourne gave the game away when I asked him whether he thought the Chancellor of the Exchequer was right in 1986 when he forecast a public sector borrowing requirement for that financial year of £4 billion. The hon. Gentleman replied that "it was the right amount for the time." Precisely. Whether a public sector borrowing requirement is or is not necessary, or to what extent the borrowing should be, is entirely dependent on what is right for the time.

For Conservative Members to commit themselves by saying that on all occasions the public sector borrowing requirement should be unnecessary and that a balance or a surplus should always be the aim, is incredibly foolish economically. I am sure that that will not happen even under this Government. The crucial point is that what is necessary and right under the circumstances of the time should be adopted in any Budget. It should not he a case of erecting a totem, as the Government appear to have done.

The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) made an especially interesting point. He mentioned the adverse impact on industry of rises in interest rates. He asked to what avail was the 2.5 per cent. rise in the base rate in recent weeks. He rightly said that it has not stopped people borrowing money or spending it, but that it has prevented industry from making some of the advances that it might otherwise have made. Using the base rate as the only lever—it is the only lever that the Chancellor has allowed himself to control the expansion of credit—is an imperfect way of dealing with the problem. Other ways to deal with the problem of expanding credit and indebtedness need to be considered.

The Chancellor should be examining temporary credit controls, as my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) suggested, rather than dismissing them in one sentence as he did in his speech last Thursday, which was widely reported in the press. At the very least, the Government should be adopting measures such as those contained in our new clause.

We are not suggesting that the publication of lists of comparative rates will solve all the problems of the expansion of credit, but at the very least it will give consumers more information about what they are letting themselves in for. That can only be for the benefit of consumers and the overall expansion of credit, because people will be able to make more informed judgments, decisions and choices than they can presently. It is a first step and a small measure, but to dismiss it for the flimsiest of reasons, which are all we have had from the Economic Secretary and Conservative Members, is to throw away what would be a good step forward in the interests of both consumers and the economy. I commend the new clause to the House.

Question put, That the clause be read a Second time—

The House divided: Ayes 189, Noes 244.

Division No. 411]	[7.59 pm
AYES
Abbott, Ms Diane	Cousins, Jim
Adams, Allen (Paisley N)	Cox, Tom
Allen, Graham	Cryer, Bob
Alton, David	Cummings, John
Anderson, Donald	Cunliffe, Lawrence
Archer, Rt Hon Peter	Dalyell, Tam
Armstrong, Hilary	Darling, Alistair
Ashley, Rt Hon Jack	Davies, Ron (Caerphilly)
Banks, Tony (Newham NW)	Davis, Terry (B'ham Hodge H'l)
Barnes, Harry (Derbyshire NE)	Dixon, Don
Barron, Kevin	Dobson, Frank
Battle, John	Doran, Frank
Beckett, Margaret	Duffy, A. E. P.
Bell, Stuart	Dunnachie, Jimmy
Benn, Rt Hon Tony	Dunwoody, Hon Mrs Gwyneth
Bennett, A. F. (D'nt'n & R'dish)	Eadie, Alexander
Bermingham, Gerald	Eastham, Ken
Bidwell, Sydney	Evans, John (St Helens N)
Boyes, Roland	Ewing, Harry (Falkirk E)
Bradley, Keith	Ewing, Mrs Margaret (Moray)
Bray, Dr Jeremy	Fatchett, Derek
Brown, Gordon (D'mline E)	Field, Frank (Birkenhead)
Brown, Nicholas (Newcastle E)	Fields, Terry (L'pool B G'n)
Brown, Ron (Edinburgh Leith)	Flannery, Martin
Buchan, Norman	Flynn, Paul
Buckley, George J.	Foot, Rt Hon Michael
Caborn, Richard	Foster, Derek
Callaghan, Jim	Fyfe, Maria
Campbell, Menzies (Fife NE)	Galbraith, Sam
Campbell, Ron (Blyth Valley)	Garrett, John (Norwich South)
Campbell-Savours, D. N.	Garrett, Ted (Wallsend)
Canavan, Dennis	Godman, Dr Norman A.
Clark, Dr David (S Shields)	Gould, Bryan
Clarke, Tom (Monklands W)	Graham, Thomas
Clay, Bob	Grant, Bernie (Tottenham)
Clelland, David	Griffiths, Nigel (Edinburgh S)
Clwyd, Mrs Ann	Griffiths, Win (Bridgend)
Coleman, Donald	Grocott, Bruce
Cook, Frank (Stockton N)	Hardy, Peter
Corbett, Robin	Harman, Ms Harriet

Hattersley, Rt Hon Roy	Mowlam, Marjorie
Haynes, Frank	Mullin, Chris
Healey, Rt Hon Denis	Murphy, Paul
Heffer, Eric S.	Nellist, Dave
Henderson, Doug	Oakes, Rt Hon Gordon
Hinchliffe, David	O'Brien, William
Hogg, N. (C'nauld & Kilsyth)	O'Neill, Martin
Holland, Stuart	Orme, Rt Hon Stanley
Home Robertson, John	Parry, Robert
Hood, Jimmy	Patchett, Terry
Howarth, George (Knowsley N)	Pike, Peter L.
Howell, Rt Hon D. (S'heath)	Powell, Ray (Ogmore)
Howells, Geraint	Prescott, John
Hughes, Roy (Newport E)	Primarolo, Dawn
Hughes, Sean (Knowsley S)	Quin, Ms Joyce
Illsley, Eric	Radice, Giles
Ingram, Adam	Reid, Dr John
Janner, Greville	Richardson, Jo
John, Brynmor	Robertson, George
Jones, Martyn (Clwyd S W)	Robinson, Geoffrey
Kaufman, Rt Hon Gerald	Rogers, Allan
Kirkwood, Archy	Rooker, Jeff
Lambie, David	Ross, Ernie (Dundee W)
Leadbitter, Ted	Rowlands, Ted
Leighton, Ron	Salmond, Alex
Lestor, Joan (Eccles)	Sedgemore, Brian
Lewis, Terry	Sheerman, Barry
Litherland, Robert	Sheldon, Rt Hon Robert
Livsey, Richard	Shore, Rt Hon Peter
Lofthouse, Geoffrey	Skinner, Dennis
Loyden, Eddie	Smith, Andrew (Oxford E)
McAllion, John	Smith, C. (Isl'ton & F'bury)
McAvoy, Thomas	Snape, Peter
McCartney, Ian	Steel, Rt Hon David
Macdonald, Calum A.	Steinberg, Gerry
McKelvey, William	Strang, Gavin
McLeish, Henry	Taylor, Matthew (Truro)
McNamara, Kevin	Thompson, Jack (Wansbeck)
McTaggart, Bob	Turner, Dennis
McWilliam, John	Vaz, Keith
Madden, Max	Wall, Pat
Mahon, Mrs Alice	Wardell, Gareth (Gower)
Marek, Dr John	Wareing, Robert N.
Marshall, Jim (Leicester S)	Welsh, Andrew (Angus E)
Martin, Michael J. (Springburn)	Welsh, Michael (Doncaster N)
Martlew, Eric	Wigley, Dafydd
Maxton, John	Williams, Rt Hon Alan
Meacher, Michael	Williams, Alan W. (Carm'then)
Meale, Alan	Winnick, David
Michael, Alun	Wise, Mrs Audrey
Michie, Bill (Sheffield Heeley)	Worthington, Tony
Millan, Rt Hon Bruce	Wray, Jimmy
Mitchell, Austin (G't Grimsby)
Morgan, Rhodri	Tellers for the Ayes:
Morley, Elliott	Mr. Allen McKay and Mrs. Llin Golding.
Morris, Rt Hon A. (W'shawe)
Morris, Rt Hon J. (Aberavon)

NOES
Aitken, Jonathan	Blaker, Rt Hon Sir Peter
Alexander, Richard	Body, Sir Richard
Alison, Rt Hon Michael	Bonsor, Sir Nicholas
Allason, Rupert	Boscawen, Hon Robert
Amess, David	Bowden, A (Brighton K'pto'n)
Amos, Alan	Bowden, Gerald (Dulwich)
Arbuthnot, James	Bowis, John
Arnold, Jacques (Gravesham)	Boyson, Rt Hon Dr Sir Rhodes
Ashby, David	Braine, Rt Hon Sir Bernard
Atkinson, David	Brandon-Bravo, Martin
Baker, Nicholas (Dorset N)	Brazier, Julian
Banks, Robert (Harrogate)	Bright, Graham
Batiste, Spencer	Brooke, Rt Hon Peter
Beaumont-Dark, Anthony	Browne, John (Winchester)
Beggs, Roy	Buchanan-Smith, Rt Hon Alick
Bellingham, Henry	Burns, Simon
Bendall, Vivian	Burt, Alistair
Bennett, Nicholas (Pembroke)	Butcher, John
Benyon, W.	Butler, Chris
Biggs-Davison, Sir John	Butterfill, John
Blackburn, Dr John G.	Carlisle, John, (Luton N)

Carlisle, Kenneth (Lincoln)	Jones, Gwilym (Cardiff N)
Carttiss, Michael	Jones, Robert B (Herts W)
Cash, William	Jopling, Rt Hon Michael
Clark, Dr Michael (Rochford)	Kellett-Bowman, Dame Elaine
Clark, Sir W. (Croydon S)	Key, Robert
Colvin, Michael	Kilfedder, James
Coombs, Anthony (Wyre F'rest)	Knapman, Roger
Coombs, Simon (Swindon)	Knight, Dame Jill (Edgbaston)
Cope, Rt Hon John	Knox, David
Couchman, James	Lamont, Rt Hon Norman
Cran, James	Lawrence, Ivan
Critchley, Julian	Lawson, Rt Hon Nigel
Currie, Mrs Edwina	Lennox-Boyd, Hon Mark
Curry, David	Lester, Jim (Broxtowe)
Davies, Q. (Stamf'd & Spald'g)	Lilley, Peter
Davis, David (Boothferry)	Lord, Michael
Day, Stephen	Maclean, David
Dickens, Geoffrey	McLoughlin, Patrick
Dorrell, Stephen	Major, Rt Hon John
Douglas-Hamilton, Lord James	Maude, Hon Francis
Dover, Den	Maxwell-Hyslop, Robin
Dunn, Bob	Meyer, Sir Anthony
Durant, Tony	Mills, Iain
Dykes, Hugh	Miscampbell, Norman
Evans, David (Welwyn Hatf'd)	Moate, Roger
Evennett, David	Monro, Sir Hector
Farr, Sir John	Morrison, Sir Charles
Favell, Tony	Moss, Malcolm
Fenner, Dame Peggy	Neale, Gerrard
Fookes, Miss Janet	Needham, Richard
Forman, Nigel	Nelson, Anthony
Forsyth, Michael (Stirling)	Neubert, Michael
Forth, Eric	Nicholls, Patrick
Franks, Cecil	Nicholson, David (Taunton)
Freeman, Roger	Nicholson, Emma (Devon West)
French, Douglas	Oppenheim, Phillip
Gale, Roger	Page, Richard
Garel-Jones, Tristan	Paice, James
Gill, Christopher	Patnick, Irvine
Goodhart, Sir Philip	Patten, John (Oxford W)
Goodson-Wickes, Dr Charles	Pawsey, James
Gow, Ian	Peacock, Mrs Elizabeth
Gower, Sir Raymond	Porter, David (Waveney)
Grant, Sir Anthony (CambsSW)	Portillo, Michael
Greenway, Harry (Ealing N)	Powell, William (Corby)
Greenway, John (Ryedale)	Price, Sir David
Gregory, Conal	Raffan, Keith
Griffiths, Sir Eldon (Bury St E')	Raison, Rt Hon Timothy
Griffiths, Peter (Portsmouth N)	Rathbone, Tim
Grist, Ian	Redwood, John
Ground, Patrick	Rhodes James, Robert
Grylls, Michael	Riddick, Graham
Gummer, Rt Hon John Selwyn	Ridley, Rt Hon Nicholas
Hanley, Jeremy	Ridsdale, Sir Julian
Hannam, John	Roberts, Wyn (Conwy)
Hargreaves, A. (B'ham H'll Gr')	Roe, Mrs Marion
Hargreaves, Ken (Hyndburn)	Rost, Peter
Harris, David	Rowe, Andrew
Haselhurst, Alan	Ryder, Richard
Hawkins, Christopher	Sackville, Hon Tom
Hayhoe, Rt Hon Sir Barney	Sainsbury, Hon Tim
Heathcoat-Amory, David	Sayeed, Jonathan
Heseltine, Rt Hon Michael	Shaw, David (Dover)
Hicks, Mrs Maureen (Wolv' NE)	Shaw, Sir Giles (Pudsey)
Hicks, Robert (Cornwall SE)	Shaw, Sir Michael (Scarb')
Higgins, Rt Hon Terence L.	Shelton, William (Streatham)
Hill, James	Shephard, Mrs G. (Norfolk SW)
Holt, Richard	Shepherd, Colin (Hereford)
Hordern, Sir Peter	Shepherd, Richard (Aldridge)
Howarth, G. (Cannock & B'wd)	Shersby, Michael
Howell, Rt Hon David (G'dford)	Skeet, Sir Trevor
Hughes, Robert G. (Harrow W)	Smith, Sir Dudley (Warwick)
Hunt, David (Wirral W)	Smith, Tim (Beaconsfield)
Hunter, Andrew	Soames, Hon Nicholas
Hurd, Rt Hon Douglas	Speed, Keith
Irvine, Michael	Speller, Tony
Irving, Charles	Squire, Robin
Jack, Michael	Stanbrook, Ivor
Janman, Tim	Stanley, Rt Hon John
Johnson Smith, Sir Geoffrey	Steen, Anthony

Stern, Michael	Walker, Bill (T'side North)
Stevens, Lewis	Waller, Gary
Stewart, Allan (Eastwood)	Walters, Sir Dennis
Stewart, Andy (Sherwood)	Ward, John
Stokes, Sir John	Wardle, Charles (Bexhill)
Stradling Thomas, Sir John	Watts, John
Sumberg, David	Wells, Bowen
Summerson, Hugo	Wheeler, John
Taylor, John M (Solihull)	Whitney, Ray
Taylor, Teddy (S'end E)	Widdecombe, Ann
Temple-Morris, Peter	Wiggin, Jerry
Thompson, Patrick (Norwich N)	Wilkinson, John
Thorne, Neil	Wilshire, David
Thornton, Malcolm	Winterton, Mrs Ann
Thurnham, Peter	Winterton, Nicholas
Townend, John (Bridlington)	Wood, Timothy
Townsend, Cyril D. (B'heath)	Woodcock, Mike
Tracey, Richard	Yeo, Tim
Trippier, David	Young, Sir George (Acton)
Trotter, Neville
Twinn, Dr Ian	Tellers for the Noes:
Waddington, Rt Hon David	Mr. Peter Lloyd and Mr. David Lightbown.
Walden, George

Question accordingly negatived.