Commons Sitting of 5 December 1991

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    KING'S CROSS RAILWAYS BILL (By Order)
    Order for consideration, as amended, read.
    To be considered on Thursday 12 December.

Oral Answers to Questions
  HOME DEPARTMENT

    South Yorkshire Police
    Sir Patrick Duffy: To ask the Secretary of State for the Home Department if he will make a statement on current manning levels in the South Yorkshire police.
    The Parliamentary Under-Secretary of State for the Home Department, (Mr. Peter Lloyd): At the end of September there were 2,998 officers in the South Yorkshire police—an increase of 438 officers or 17 per cent. since 1979. Eighteen additional police posts were approved with effect from 1 October 1991 and a further 15 posts from 1 April 1992.
    Sir Patrick Duffy: Is the Minister aware that 21 years of casework in Attercliffe have left me wholly admiring of, and grateful to, the South Yorkshire police? I am confident that they could make the streets of South Yorkshire safer if they could expand their manpower levels just that little bit more, but within the scope of the present standard spending assessment. Will he ask his right hon. Friends the Home Secretary and the Secretary of State for the Environment to bring that home to the support services and the district decision-takers in South Yorkshire and to urge on them the prior claim of South Yorkshire police at this time?
    Mr. Lloyd: I agree that the South Yorkshire police have a good record. Crime is lower in their area than it is nationally and the clear-up rate is higher. The hon. Gentleman asked me about future numbers. South Yorkshire police have asked for 17 posts for the coming year; they have been given 16. The SSA is up by 17·4 per cent., which enables them to increase the precept by 15 per cent. They should have no difficulty in paying for those extra officers.

    Northumbria Police Authority
    Mr. Clelland: To ask the Secretary of State for the Home Department when he next expects to meet the chairman of Northumbria police authority to discuss resources in the area.
    The Secretary of State for the Home Department (Mr. Kenneth Baker): I met the chairman of Northumbria police authority on 1 November when I visited Tyneside. Northumbria has received a generous increase in standard spending assessment of 17·3 per cent. In addition, it will be eligible for up to £3·66 million under the urban crime fund initiative that I announced on 26 November. Both the SSA increase and the experimental urban crime fund demonstrate clearly the Government's continuing commitment to a high level of police funding. The police authority has been facing serious difficulty in meeting the additional costs arising from the disturbances in Tyneside in September, so I am pleased to announce today that the Government will make a special payment towards those costs, at a rate of 95 per cent.
    Mr. Clelland: That news will come as a welcome relief to the authority, which has been waiting for more than three months for a reply from the Home Secretary. Will he confirm that the 5 per cent. that the authority must now find from its budget is on top of the £4 million shortfall and the 116-officer shortfall in an area with rising crime? When will he get together with the Secretary of State for the Environment to put an end to the nonsense of capping, which is squeezing resources at a time of rapidly rising crime?
    Mr. Baker: I do not agree with what the hon. Gentleman has said. I ask him to reflect on my answer. The increase this year in the Northumbria police SSA is 17 per cent. In addition, there is the experimental urban crime fund, from which Northumbria can benefit by £3·66 million. The 95 per cent. figure is the highest level that we have granted for any riot expenditure, and could involve a sum of between £5 million and £7 million, depending on the claims. That is a very generous, but correctly generous, settlement for Northumbria.
    Mr. Devlin: I am sure that the people of Northumbria will welcome the excellent news that my right hon. Friend has given the House. Will he reflect on the fact that one of the most unpleasant duties of the Northumbria police is having to drag the mangled bodies of motorists from cars that have gone into ditches alongside the A1 while on their way to Scotland? The sooner that that road undergoes a major programme of improvement, with it possibly increased to motorway status, the better. Will he make the appropriate representations to his colleagues at the Department of Transport?
    Mr. Baker: That question goes rather wide of the main question. I have driven along that road to Scotland many times and I know that beyond my hon. Friend's constituency it is not so good. I will draw my hon. Friend's suggestions to the attention of my right hon. and learned Friend the Secretary of State for Transport.
    Mr. Sheerman: Can I put the Home Secretary back on the right road by telling him that the reason why morale in the Northumbria police force is low and why chief constables generally despair is not because the right hon. Gentleman suddenly makes a generous offer of help in a

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    crisis, but because all chief constables, including the new chief constable of Northumbria, want consistency of funding so that they can be sure that they will get the officers and resources they require over a number of years? This year it has been impossible to plan policing in Northumbria because the force has 112 fewer officers than last year. That is not the way to run a police force, and that is why police morale is low. When will the right hon. Gentleman give that consistency and leadership to the police and back them for a change?
    Mr. Baker: I remind the hon. Gentleman that since we have been in office there has been an increase of 693 officers in Northumbria's police strength. I approved an additional 26 posts from 1 October of this year, with a further 27 from 1 April of next year. The hon. Gentleman talks of the need for consistency, but the only consistency under Labour was in cutting the numbers of police—and at that time the hon. Gentleman was a member of the Cabinet.
    Mr. Beith: Will the Home Secretary bear in mind that the rural areas of Northumberland have been especially difficult to police while the urban areas have been under great pressure and there has been a shortage of officers? Will he encourage the chief constable in the task that he has set himself of increasing the number of officers available for normal duties within the community?
    Mr. Baker: I could not agree more with the hon. Gentleman. There is a very high proportion of police officers on the beat, although it varies from force to force. I should like about 80 per cent. of a force to be on the beat. I have spoken to the new chief constable of Northumbria and he is a most impressive officer. I am sure that the hon. Gentleman has met him. We discussed the problems of policing rural Northumbria as well as the towns and cities. The hon. Gentleman's points are well made and I am sure that he will draw them to the attention of the chief constable.

    Passport Agency
    Mr. Robert B. Jones: To ask the Secretary of State for the Home Department what measures will be taken by the United Kingdom Passport Agency to raise its standards of service.
    Mr. Peter Lloyd: The Passport Agency has been very successful this year in speeding up the processing of passport applications. It has recently completed a major computerisation programme which will enable it to improve its service to the customer still further.
    Mr. Jones: I am grateful to my hon. Friend for that answer. The Passport Agency deserves our congratula-tions on the improvements that it has already achieved. Does my hon. Friend agree that it is time for the public to play their part? As the vast majority of applications occur in the same peak period, should not people try to spread them so that there is not the same concentration? To that end, would it be a good idea to impose a surcharge on passport applications in the peak period and give a discount in off-peak periods, so providing an incentive?
    Mr. Lloyd: My hon. Friend is right to say that there has been an enormous improvement. The average turnround for a passport application in the last year has been six
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    working days. I agree that many applications come in the holiday period and that that makes it difficult to maintain that average. The Passport Agency is using advertisements to suggest that people renew their passports at other times of the year. It is for the agency to consider whether it would be sensible to alter the price for a passport depending on the time of year and then to make any recommendations to the Home Office.
    Mr. Ronnie Campbell: Will the Minister consider establishing a passport office in the north-east, because at present people must travel to Liverpool or Glasgow to find the nearest office?
    Mr. Lloyd: The hon. Gentleman might suggest that his constituents make their applications by post, as most other people do. It is an efficient service and it causes the customer much less trouble.
    Rev. Ian Paisley: Does the Minister agree that his decision to retain the passport office in Belfast was a good one? He made that decision having listened to representations from hon. Members from Northern Ireland. Will he commend the Belfast office for being at the top of the league of all passport offices for getting passports out quickly for the people of Northern Ireland?
    Mr. Lloyd: We listened to the representations of hon. Members from Northern Ireland, but, more particularly, we observed the great efficiency of the passport office. We not merely retained it but expanded it, and it has fully justified our confidence. I pay tribute to it.

    Car Thefts
    Mr. Battle: To ask the Secretary of State for the Home Department what recent representations he has received about his proposal to introduce a Bill to address problems of youngsters under 17 years stealing cars.
    The Minister of State, Home Office (Mr. John Patten): My right hon. Friend introduced a Bill last week to strengthen the law against those who criminally take other people's vehicles. We had numerous written and oral representations from hon. and right hon. Members and from members of the public. I am happy to report that they were all in support of an early change in the law.
    Mr. Battle: I welcome the Bill, but will the Minister take seriously the views of the chief constable of West Yorkshire, whose recent report on vehicle theft—which has reached 85 per cent. in Leeds and 53 per cent. in West Yorkshire—stresses the need for preventive measures to identify potential offenders at an early stage, rather than wait for tragedies to occur? Does the hon. Gentleman agree that one of those measures could be a Government publicity campaign to warn youngsters that car stealing is as dangerous as alcohol or drug abuse?
    Mr. Patten: I am glad that the hon. Gentleman is in favour of more Government publicity campaigns and I shall listen to his advice on that. I have not read the report of the chief constable of West Yorkshire, but I shall do so. Yesterday I was in Salford in the metropolitan police area and I went to a crime prevention scheme that endeavours to divert youngsters from continuing with or getting into car crime. It is an excellent scheme and such schemes should be developed more generally.
    Mr. Lawrence: Does my right hon. Friend agree that if more people locked their cars fewer 17-year-olds would get into them? If car manufacturers treated alarm systems as standard, there would be even fewer. Will the Government look into a way to encourage car manufacturers to install alarm systems as standard equipment?
    Mr. Patten: I agree with my hon. and learned Friend. My right hon. Friend the Home Secretary and I shall see British car manufacturers again in the near future to urge them speedily to incorporate immobilisation devices into cars. My right hon. and learned Friend the Secretary of State for Transport is doing all that he can within Europe to achieve the speedy adoption of a Europewide directive, on which Great Britain has been in the lead, to get our Western European car manufacturing colleagues to do exactly the same.
    Mr. Trimble: I welcome the Government's moves in that matter. Does the Minister agree that, although the problem in English cities is bad—I do not wish to underplay the tragedies that have occurred there—the problem in Northern Ireland, especially in West Belfast, is much worse? Many more tragic and fatal accidents have occurred there. Should not the Government act with similar urgency to remedy that situation?
    Mr. Patten: I understand that my right hon. Friend the Secretary of State for Northern Ireland is considering whether to change the law in Northern Ireland to meet the ends to which the hon. Gentleman referred. While noting that what the hon. Gentleman says about west Belfast is right, we should also note that, setting terrorism aside, Northern Ireland is the most law-abiding part of the United Kingdom. Long may it remain so.
    Sir Michael Neubert: If my right hon. Friend is looking for ways to cut down car crime, will he have a word with the producers of "Inspector Morse". That police officer habitually, at the end of each episode, parks his red Jaguar unlocked and then strolls off—not into the sunset but into the nearest pub. What sort of an example is that?
    Mr. Patten: I am happy to inform my hon. Friend that that excellent series is filmed in my constituency. However, Inspector Morse's behaviour in not locking his car and in drinking heavily before driving is utterly disgraceful.
    Miss Lestor: I agree with what the Minister said. May I add that the promotion of fast cars and reckless driving by the media is not good for the youngsters attracted by such aspects? I refer the Minister to his reference earlier to a scheme in Salford, where my constituency is. Surveys have shown that of 4,500 youngsters on diversion schemes to stop them stealing cars, only about 100 have reoffended. Bearing in mind their success, does the Minister support such schemes, as many of us do, and will resources be forthcoming to finance them and make them viable?
    Mr. Patten: On the hon. Lady's first point. it is disappointing that car manufacturers advertise maximum speeds and acceleration more than security devices. In a period when car crime is a problem, I hope that manufacturers will begin to advertise cars using better security as a selling point.
    On the hon. Lady's second point, yes, I entirely support such schemes. They are an important part of our twin-track approach so that we not only come down hard on offenders who commit the crime of taking vehicles, but
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    we do all we can to prevent youngsters from offending. More resources will be made available through the safer cities scheme, which is funded by the Home Office.
    Mr. Marlow: Can we use a bit of common sense on this vexed problem? Is it not true that giving 17-year-olds fines does not work and sending them to prison is counterproductive? Could we arrange for such offenders to have a sound thrashing? Will my right hon. Friend do something about it?—[Interruption.]
    Mr. Speaker: Order. The hon. Gentleman has every right to express his views.
    Mr. Patten: As you know, Mr. Speaker, I often turn to my hon. Friend the Member for Northampton, North (Mr. Marlow) for common sense advice. However, I deplore the way in which he is becoming increasingly moderate. This week he urges a sound thrashing; last month he recommended immediate castration.

    Immigration and Nationality
    Mr. Maclennan: To ask the Secretary of State for the Home Department what discussions he has held recently with Ministers in European Community countries about immigration and nationality questions.
    Mr. Kenneth Baker: I attended meetings of European Community Ministers concerned with immigration matters at Berlin on 30 and 31 October. and at The Hague on 20 November. The Minister of State—my right hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten)—attended a meeting on my behalf at The Hague on 2 and 3 December this year. In addition, I have had a number of informal bilateral discussions with European Community colleagues.
    Mr. Maclennan: As those matters are clearly occupying the time of Ministers in the European Community, and as interest in the issue is bound to deepen with the removal of internal border controls, does the Home Secretary accept the proposed draft treaty article A arrangements recognising the common interest of Community countries in such matters? Does he accept that there should be Community competence in that sphere? What will be the Commission's role in it in future?
    Mr. Baker: The draft treaty on immigration, which is to be discussed at Maastricht next week, contains a series of proposals starting with article A. That proposes that immigration and asylum matters, together with certain police, fraud and drugs issues, should not come under the competence of the treaty of Rome, but should be dealt with on an intergovernmental basis—a view with which the Government completely agree. Article K allows for those matters to fall within the competence of the treaty only after a double lock—first, the unanimity of Ministers, and secondly, the specific approval of the House. The Government support that position and do not believe that immigration and asylum matters should fall within the competence of the treaty of Rome.
    Mr. Robert G. Hughes: Does my right hon. Friend agree that while Jean-Marie Le Pen is legally entitled to come to this country, his obnoxious views on racism, immigration and nationality mean that he is simply not welcome in this country? His racist views will be rejected by all the people in this country regardless of party. Does

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    my right hon. Friend share my view that those people who may wish to have a dialogue with Mr. Le Pen are simply selling short their country and their countrymen? Will my right hon. Friend say how unwelcome Mr. Le Pen and his views are?
    Mr. Baker: I am sure that Mr. Le Pen's views are racially and politically unacceptable. I was asked as Home Secretary to consider whether I should ban his entry. I decided not to do so. I see that a former Home Secretary, the right hon. Member for Morley and Leeds, South (Mr. Rees), agrees with that decision. I think that it is correct. Apart from anything else, Mr. Le Pen is a Member of the European Parliament. However, I want to make it clear that, by allowing him to come to Britain, neither I nor any Conservative Member has any agreement whatever with the racialist views that he is peddling, and I am sure that that is true of Opposition Members as well.
    Mr. Winnick: On reflection, does the Home Secretary consider that if someone is due to come to Britain with the sole purpose of inciting race hatred there is no reason why he should be allowed in, and that Le Pen should have been excluded? I welcome the view of the hon. Member for Harrow, West (Mr. Hughes) that Le Pen—a person whose only claim to fame is the manner in which in France he has agitated to poison race relations and incite hatred—is completely unwelcome in Britain and should not have been allowed in. Is it true that Le Pen is to meet a number of Tory Members and, if so, will the Home Secretary make it clear that that would be wrong?
    Mr. Baker: The best way of dealing with poisonous views is to expose and destroy them, and that is what free speech does. Le Pen will have few converts in Britain. The views that he is peddling in France exploit the anxieties of many people in a ruthless and unacceptable way. We want none of his ideas here and I am sure that they will not become established.
    Sir Nicholas Fairbairn: Will my right hon. Friend consider the remarks of the hon. Member for Caithness and Sutherland (Mr. Maclennan), who suggested that we were moving towards a cross-border liberalisation and liberation? Can my right hon. Friend explain why the hon. Gentleman's party suggests that we should increase the differences between those of us who live north and south of the border in the United Kingdom?
    Mr. Baker: If these matters were to pass into European competence in the way that the Liberal Democrats want, there would be an inevitable weakening of our controls and our frontier controls, which I am not prepared to accept. We need greater co-operation in Europe in these matters, because immigration and asylum flows are a major political concern, as we have just noted from the exchanges about Le Pen and the way in which people are feeding upon his visit. However, that comes best through the co-operation of European countries rather than through competence under the European treaty.
    Mr. Darling: I welcome what the Home Secretary said about Le Pen's visit to Britain, but will he go a little further and dissociate himself from those of his colleagues who are seeking to meet that man?
    Mr. Baker: I have no information on who is meeting Le Pen. I have made my views clear—[HON. MEMBERS: "Come on."] I do not know who is meeting Le Pen and I
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    have made my views clear. I regard Le Pen's views as totally and utterly unacceptable, and I have made that clear.

    Neighbourhood Watch
    Mr. Lee: To ask the Secretary of State for the Home Department how many neighbourhood watch schemes are now in place.
    Mr. John Patten: At the end of December 1990 there were estimated to be more than 92,000 neighbourhood watch schemes in England and Wales, covering nearly 5 million households. They are multiplying fast.
    Mr. Lee: I am sure that my right hon. Friend will be pleased to know that my Pendle constituency has 96 of these excellent neighbourhood watch schemes involving almost 20,500 households. Does he agree that not only do those excellent schemes make a positive contribution towards crime prevention, but they build bridges between the police and the community?
    Mr. Patten: As my hon. Friend says, the schemes are valuable in building bridges between the police and the community. I was particularly interested to note that in the Whitefield area of Nelson in my hon. Friend's constituency, largely occupied by ethnic minority households, a neighbourhood watch scheme has recently been set up and is helping to build bridges between the ethnic minority residents and the police.
    Mr. Vaz: I, too, welcome the growth of the neighbourhood watch schemes. However, does the Minister realise that the schemes place a great burden on individual residents in a particular area and that they depend on the co-operation of the police? In Leicestershire, the police are spending a great deal of their valuable time assisting neighbourhood watch schemes. What additional resources can be provided to local police forces in order to make the schemes even more efficient than they are?
    Mr. Patten: Neighbourhood watch schemes are by their nature genuine voluntary organisations, although they receive Government support, in that substantial resources are devoted to them through the funding of the police, who themselves assist neighbourhood watch schemes.
    While I am on my feet, perhaps I may apologise for referring in an earlier answer to my hon. Friend the Member for Northampton, North when I meant my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens), who made the suggestion.
    Mr. Malins: Neighbourhood watch schemes are very strong in my constituency and are a good example of the police and public working together in helping to beat crime. In the Croydon area, where neighbourhood watch schemes are strong, burglaries are down. Does not that show that public co-operation and awareness are major factors in reducing crime in our cities?
    Mr. Patten: My hon. Friend is absolutely right. That pattern is the same whether one is speaking of reasonably affluent, suburban Croydon, the outer estates of Luton, or the council house areas of Wythenshawe. Where there is sustained development of neighbourhood watch schemes, there is a sustained decrease in the number of burglaries.
    Mr. Randall: Does the Minister agree that not only crime but anti-social behaviour are causing immense alarm and distress throughout almost all of Britain? Does he accept that the overall effectiveness of the various schemes and agencies that contribute to crime prevention, including neighbourhood watch, is seriously impaired by the lack of co-ordination between them? Will he consider encouraging local authorities to formulate local strategies aimed at preventing crime and anti-social behaviour which are based on far greater co-ordination between the various agencies involved?
    Mr. Patten: We are consulting further on a recent report on those issues. Suffice it to say that no one owns neighbourhood watch schemes, except those who belong to them and who have helped to make them a success. The schemes are not in the ownership of the police, local authorities, any political party or any business. They are in the ownership of their communities, which we should support in their endeavours—not try to take over something that they started only in 1982, when the first neighbourhood watch began. There are now 92,000 such schemes, entirely due to the endeavours of individual active citizens and communities.
    Mr. Dunn: Will my right hon. Friend take time today to congratulate those who are running successful neighbourhood watch schemes in Dartford? Does he agree that neighbourhood watches can be deemed only an aid to proper policing, in terms of numbers and police efficiency? Will my right hon. Friend intervene with the chairman of Kent police authority to ensure that Dartford has its fair share of the new allocation of extra manpower for the county of Kent?
    Mr. Patten: I will certainly consult my noble Friend Earl Ferrers, who is directly responsible for those matters, and will draw my hon. Friend's remarks to his attention. The additional 1,000 police recently announced by my right hon. Friend the Secretary of State will be largely devoted to beat policing. My right hon. Friend has rightly ensured that 80 out of every 100 additional officers provided will go straight back on the beat, in Dartford and elsewhere.

    Derek Bentley
    Mr. Simon Hughes: To ask the Secretary of State for the Home Department if he will now announce the results of his consideration of the case for the posthumous pardon of Derek Bentley.
    Mr. Kenneth Baker: The representations made on behalf of Mr. Derek Bentley are still under consideration. I have asked the police to make inquiries and when I have the results of those inquiries I will be in a position to decide whether any action on my part is appropriate.
    Mr. Hughes: The right hon. Gentleman will be aware that the case for pardoning Derek Bentley was supported by his trial jury, which recommended mercy in 1952; by the Lord Chief Justice of the day; by the trial judge, who said subsequently that he believed that Bentley would not hang; a subsequent Lord Chancellor, Lord Hailsham; by many members of another place; by many right hon. and hon. Members of this House—nearly one third of whom signed a recent early-day motion; and by millions of our fellow citizens. On the face of it, the case for a pardon is
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    overwhelming. Will the Home Secretary expedite his consideration and either grant a posthumous pardon or at least instigate a public inquiry, so that what is regarded as the greatest injustice of our post-war criminal justice system left unremedied will be put right before the last member of the Bentley family dies without knowing the result?
    Mr. Baker: I know of the hon. Gentleman's interest in and concern about this; they are shared by many others. The Commissioner of Police of the Metropolis has been asked to look at the allegations and to arrange for certain persons who are said to be able to shed new light on the case to be interviewed. When I get his report, I shall, of course, examine it carefully and examine the full details of the case. Until I get that report, I will not get immersed in the details. I think it is right for me to receive the report and then to examine it.
    Mr. Alexander: Will my right hon. Friend, on the other hand, bear in mind the fact that when Bentley was apprehended and before PC Miles was shot, Bentley said to the police:
    "He's got a gun and it's loaded"?
    Will he bear in mind the fact that at no time did Bentley discourage Craig verbally from firing that gun, that he brought a 16-year-old accomplice, armed, to commit a robbery and that the Lord Chief Justice had every justification for what he did?
    Mr. Baker: These are the sorts of considerations that I shall have to take into account. I am quite clear that I shall have to go into the evidence very carefully when the police report is available to me. I hear what my hon. Friend says, as I hear all representations on this matter.
    Mr. Cryer: Will the Home Secretary acknowledge that fresh evidence was presented to him in the summer and that his review is long overdue? Will he acknowledge that this is an outrageous case of injustice? Derek Bentley could not have taken anybody anywhere; he could barely get himself around. He had a mental age of 11, although in body he was 19, and evidence of his mental incapacity was never produced during the trial. In view of that, will the Home Secretary make sure that he examines the evidence as rapidly as possible? Will he also acknowledge the sterling campaign carried out by the sister of Derek Bentley, Iris Bentley, in making sure that that grave injustice and wrong is righted as rapidly as possible?
    Mr. Baker: No one could accuse me of delaying consideration of allegations of miscarriage of justice when they have been presented to me. I have dealt with them very promptly, as, indeed, a Home Secretary should. I am awaiting further analysis of the evidence and I assure the hon. Gentleman that, when I get it, I will examine the whole case again.

    Ram-raiding
    Mr. Paice: To ask the Secretary of State for the Home Department what representations he has received regarding increases in the incidence of ram-raiding.
    Mr. John Patten: I have received representations from the London and Provincial Antique Dealers Association and from Sir Stanley Bailey, the former chief constable of Northumbria police.
    Mr. Paice: Despite the short list that my right hon. Friend read out, he will be aware that the problem of ram-raiding is increasing substantially in parts of the country. The difficulty with that type of crime is that, because of the speed with which it is executed, burglar alarms and security systems are relatively ineffective. The only way to protect property is by the construction of bollards and barriers, but that requires the consent of landlords and planning authorities. Will my right hon. Friend do all that he can to open a dialogue with representatives of landlords and planning authorities so that they can encourage and enable retailers to erect something to protect their property?
    Mr. Patten: That is a very constructive suggestion and I will certainly discuss it with my hon. Friend the Minister for Housing and Planning. I know that in some parts of the country, notably in the north-east, one or two local authorities have made it rather difficult for protective street furniture to be erected along the sides of roads where there has been ram-raiding. In my hon. Friend's own area in Cambridgeshire there have been no recent incidents. There have been many more incidents in the north-east, in particular, and that is why the recent transfer of Mr. J. A. Stevens from being deputy chief constable of Cambridgeshire will doubtless be welcomed in Northumbria. Cambridgeshire's loss is Northumbria's gain.
    Mr. Bermingham: Does the Minister agree that the next time one of these offenders comes before the courts for sentencing, if the sentence does not contain a deterrent element, bearing in mind the increase in this type of crime, it would be wise for the Home Office to seek the guidance of the Attorney-General so that the sentence can be referred to the Court of Appeal, which could then lay down a guideline sentence for this type of crime which contains a deterrent element?
    Mr. Patten: Again, I welcome the hon. Gentleman's constructive suggestion. I shall draw his views to the attention of my right hon. and learned Friend the Attorney-General. The decision on whether to lay down guideline sentences is for the Lord Chief Justice, the deputy chief justice and others in the Appeal Court, not for me.
    Mr. Janman: Although I agree with the sensible suggestion of my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice), does my right hon. Friend agree that we must try to prevent these crimes from happening and that the best way to do that is for him to instruct magistrates courts throughout the country to pass very harsh sentences on those who are convicted of this outrageous abuse of private property?
    Mr. Patten: I agree entirely that this is an outrageous invasion of private property, but I am sure that the House would not want Ministers to be able to instruct the judiciary to do anything, because we value its independence. A range of serious and severe penalties is available for those who are convicted of ram-raiding—for example, if robbery is involved, up to life imprisonment.

    West Yorkshire Police
    Mrs. Mahon: To ask the Secretary of State for the Home Department if he will make a statement on the allocation of police officers to West Yorkshire.
    Mr. Peter Lloyd: Fourteen additional police posts were approved with effect from 1 October 1991, providing for an establishment of 5,295. My right hon. Friend the Home Secretary announced on 28 November that he had not approved the police authority's application for 79 additional police posts in 1992–93.
    Mrs. Mahon: The victims of crime in West Yorkshire will not be satisfied with that answer. The Minister must be aware that, because of the threat of poll tax capping, by April 1992 we will have lost 200 police personnel on the beat and 200 civilian personnel. As the Government, with their policies of dividing society, have been responsible for the breakdown in law and order, cannot we at least expect bobbies back on the beat to protect us?
    Mr. Lloyd: I do not accept that capping, or the threat of capping, is responsible for West Yorkshire's inability to recruit its full establishment. I think that the hon. Lady will find the answer in Her Majesty's inspector of constabulary report for 1991, which notes that
    "West Yorkshire has one of the highest levels of expenditure per head of any police authority. If it could bring its cost-effectiveness nearer the average, it could recruit up to the establishment that the Home Secretary has recommended."
    The hon. Lady mentioned policemen on the beat. West Yorkshire has a smaller percentage of its force on the beat, which no doubt is partly due to its slow pace in the civilianisation of its various police activities.
    Mr. Donald Thompson: Is my hon. Friend aware that the chief constable of the West Riding and one of his policemen wrote to me recently to say that there are no outstanding matters with the Home Office and that they welcome the £3·16 million to fight crime and the refurbishment and establishment of new police stations in Bradford, Leeds and Pontefract? Will my hon. Friend do his best to ensure that constituents and police combine to spend the extra resources wisely?
    Mr. Lloyd: I am glad that my hon. Friend mentioned the extra expenditure under the urban crime fund, which is designed to tackle crime in particular areas. West Yorkshire has had the benefit of that. He is right that there are no outstanding issues with the Home Office. The outstanding issue is using the resources that the police authority has effectively.
    Mr. Corbett: Does the Under-Secretary accept that in the face of a tidal wave of crime there must be better planning in police manning in West Yorkshire, as everywhere else? Instead of the piecemeal approach, cannot he offer a three-year rolling programme of force levels to assist chief constables to make more effective use of manpower in a bid to prevent and combat crime?
    Mr. Lloyd: Of course, but decisions on the effective use of manpower are taken by the police authority and the police force. The inspector's report shows that there is room for improvement. As I said, there is certainly scope for further civilianisation.

    Police Interviews (Video Recordings)
    Sir John Farr: To ask the Secretary of State for the Home Department what plans he has to introduce video recordings of all interviews in police custody.
    Mr. John Patten: We will consider further introduction of video recordings of all interviews in police custody when the outcome of a joint study being conducted by the Association of Chief Police Officers and the Home Office has been fully considered. The pilot project is being carried out on three forces and an independent evaluation will be completed in the spring of 1992. We will announce our conclusions as soon as possible at that stage.
    Sir John Farr: Is my right hon. Friend aware that many miscarriages of justice have occurred recently due entirely to uncorroborated confessions? The sooner that that disgrace is ended, the better. One way of dealing with it, without waiting for the royal commission report, is by starting to video all such interviews forthwith. Will he do so?
    Mr. Patten: As my hon. Friend said, the issue is being considered by the royal commission, which will report as soon as possible. Perhaps my hon. Friend will be reassured when I announce to the House that we will be laying tomorrow an order to ensure that, for all indictable offences, there will be the compulsory taking of evidence by tape recording in police stations. That will apply throughout the country as soon as possible.

  PRIME MINISTER

    Engagements
    Mr. Bradley: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister (Mr. John Major): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Bradley: Will the Prime Minister confirm that neither he nor the Chancellor of the Exchequer has taken any action to ensure that the European central bank is located in Britain? Does he now agree that it should be based in Manchester?
    The Prime Minister: I can confirm to the hon. Gentleman that there have been no serious discussions yet about the location of the European system of central banks. It is possible, but not yet certain, that there will be such discussions next week in Maastricht.
    Mr. Patrick Thompson: Has my right hon. Friend had time to see the OECD report on unsatisfactory unemployment levels in France and the clear evidence that its minimum wage policy has served to make unemploy-ment worse? Does he agree with the conclusions of the report? Has he noted that the Leader of the Opposition has turned this, like everything else, on its head?
    The Prime Minister: I have not seen that report, but I have expressed before the dangers that a minimum wage
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    policy would hold for employment levels. I believe that it would cost many people their jobs and would cause far more damage than good.
    Mr. Kinnock: Does the Prime Minister recall telling The Daily Telegraph six months ago that economic recovery was coming, in his words, "within weeks"? How did he get it so badly wrong?
    The Prime Minister: If the right hon. Gentleman would study recent CBI surveys he would see that domestic and export orders are rising, that export orders are at their highest level for over a year and that there is confirmation that business conditions are beginning to improve in line with confidence. That is not just my view, but the view of industry and commerce.
    Mr. Kinnock: Is the Prime Minister aware that building employers say that conditions are worse than they have been in 40 years, that car sales are down 20 per cent. on the year and that Lord Prior, chairman of GEC, says there is no improvement in trading conditions? If the Prime Minister thinks that all that adds up to recovery, he is not living in the real world.
    The Prime Minister: The right hon. Gentleman should get out of the habit of writing his supplementary questions before he hears the first answer. What is concerning the right hon. Gentleman is the fact that the economy is moving back into growth and he does not like it. Growth is good for the country but bad for the Labour party.
    Mr. Kinnock: After years of pushing Britain down, the Prime Minister is in no position to make that kind of claim. He has taken Britain into negative growth, rising unemployment and falling output. It is time he was out.
    The Prime Minister: The right hon. Gentleman is a specialist in talking this country down and does it week after week. The only way to get proper growth is to have an economic recovery based on low inflation and proper investment, not on the sort of policies that the right hon. Gentleman has advocated. The policies that he stands for —of high taxation and centralised control—are the policies that would drive this country to ruin.
    Mr. Favell: As my right hon. Friend prepares for Maastricht, may he be reassured that to return without a treaty would be no failure? Our European colleagues' vision of Europe is fundamentally different from ours and a shotgun marriage would be in nobody's interests—and good luck.
    The Prime Minister: I am grateful to my hon. Friend for his best wishes. I assure him I will return with a treaty that I can recommend to the House or come back without a treaty.
    Mr. Galbraith: To ask the Prime Minister if he will list his official engagements for Thursday 5 December
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Galbraith: As his experiences clearly influence his policies and following his recent interview in The Sun, can the Prime Minister now tell the House exactly when he was unemployed?
    The Prime Minister: I was unemployed in the early 1960s. As to the precise dates, that is not a matter which I can immediately remember. It was in the early 1960s.
    Mr. Churchill: Is not it unacceptable that pensioners should be defrauded of pensions to which they have contributed throughout their entire working lives, as is the case with the Mirror Group Newspapers pensioners? Will my right hon. Friend confirm that there will be swift Government action to remedy that situation and will he commiserate with the Leader of the Opposition about the fact that his and his party's principal supporter should turn out to be a crook?
    The Prime Minister: I am not able to comment on the Mirror Group pension fund as the Serious Fraud Office is examining it. We have greatly tightened the protection of pension fund members over recent years. Nothing, of course, can be complete proof against criminality.
    Hain: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hain: The future of the Daily Mirror is now in hock to City spivs and business tycoons—[Interruption.] Hon. Gentlemen can shout as much as they like, but does the Prime Minister agree that citizens' rights are best protected by pluralistic ownership of the press? Or does he want to gag free speech and have every tabloid newspaper supporting the Tory party?
    The Prime Minister: I do not think that it would be proper for me to get involved in what is happening in terms of the Mirror Group pension fund. I commented as far as I am prepared to a moment ago.
    Mr. Roger King: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. King: The news that millions of new investors are seeking to invest in British Telecom is good news indeed. Will my right hon. Friend extend to them his best wishes on becoming part of the property-owning democracy and will he send a message of best wishes to the management and employees of West Midlands Travel—the country's biggest bus company—who yesterday concluded a £70 million buy-out? Is not it obvious that when employees own their own business, that is the Conservative way forward?
    The Prime Minister: Yes, Sir. The privatisation programme has been an enormous success in recent years and not the least part of that success has been the extent to which it has widened and deepened share ownership around the country. That will certainly increase in the years ahead.
    Mr. Ashdown: Will the Prime Minister reconsider his answer to me two weeks ago on mortgage repossessions? Does he realise that his answer was not only factually wrong, but betrayed a depressing complacency in the face of the scale of the homes repossession crisis which is now upon us? Does he realise that if he will not act on the
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    problem, it will not only produce a tide of human misery, but will bring to a clattering end any hope of economic recovery?
    The Prime Minister: The right hon. Gentleman touches on an important matter, but he misrepresents the views of the Government and he misrepresents what I said. As I said, my right hon. Friend the Secretary of State for Social Security has announced help in terms of income support assistance for those facing repossession and the loss of their homes. That help amounts to £400 million a year, which is very considerable and is necessary. The right hon. Gentleman should not misrepresent what the Government have said and are doing.
    Mr. Moss: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Moss: Does my right hon. Friend agree that privatisation receipts have helped the Government to increase public spending, to cut taxation and to pay off national debt? Does he further agree that it is sheer hypocrisy to oppose privatisation in principle and to promise more nationalisation, yet to claim that there will still be privatisation proceeds to spend, as did a Labour Front-Bench Treasury spokesperson this morning?
    The Prime Minister: My hon. Friend is entirely right. If the privatisation programme were to cease, it would have a damaging effect on the inflow of funds, as would proposals to renationalise parts of industry which is what the Labour party proposes. There is no doubt that there is a huge gap between Labour's spending proposals and its capacity to fund those proposals without huge increases in direct tax for the vast majority of people.
    Mr. Rooney: Does the Prime Minister have any intention of visiting Essex? If he does, does he have any retraining plans in mind for those of his hon. Friends who will not be here after the next election?
    The Prime Minister: The hon. Gentleman is ill-informed. We have gained four local council seats in by-elections in Essex recently.
    Mr. David Nicholson: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Nicholson: As a former Social Security Minister, my right hon. Friend will be aware of the importance attached by the retired to occupational pensions and to the great and successful expansion of those over the past 12 years. Given the crocodile tears on those matters from the Labour party, is not it essential that my right hon. Friend should as soon as possible launch an inquiry into how people's pensions were protected by the prominent Labour party members who were directors and trustees of the Mirror Group Newspapers pension fund?
    The Prime Minister: It would not be proper for me to comment on individuals who may be trustees of that pension fund. Pension management is based on trust law and the good management of pension funds and the behaviour of trustees is, therefore, paramount. As I said

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    some moments ago, we have strengthened the law requiring trustees to disclose key information to members, to pensioners and to trade unions. People listening to this Question Time may wonder why Opposition Members wish to drown out the subject.
    Mr. Hume: Does the Prime Minister agree that it is impossible to have a genuine single market without a single currency? Does he also agree that the reservations in his party about a single currency have more to do with nationalism than with economics? Given that in the harmonisation process we have already got rid of the half crown and of the threepenny bit, what is the emotional difficulty about changing the pound coin to the ecu?
    The Prime Minister: The hon. Gentleman bases his question on a premise that I do not accept. I believe that it is possible to have a perfectly satisfactory single market without a single currency. The question whether it would ever be right to move to one at some distant date is separate.

    Balanced Budget
    Mr. Janman: To ask the Prime Minister in what financial year he expects to balance the budget between Government expenditure and revenue received.
    The Prime Minister: It remains our policy to balance the budget over the economic cycle. The balance between revenue and expenditure in any one financial year will depend largely on cyclical developments.
    Mr. Janman: May I urge my right hon. Friend to keep as tight as humanly possible control on public expenditure so as to meet the objective of a balanced budget as soon as possible? Does he agree that the idea of spending an extra £35,000 million a year would be absolutely disastrous for the economy of this country? That is precisely what the Labour party seeks to do.
    The Prime Minister: My hon. Friend is entirely right. We have repaid a great deal of debt over recent years. It remains our policy to move back to a balanced budget as speedily as possible. The Opposition always promise to spend more. They never say where the money is coming from and they never will, but the taxpayers know where it is coming from—it will be coming from them.
    Mr. Tony Banks: Am I being completely cynical—[HON. MEMBERS: "Yes!"] Give me a chance! Am I being completely cynical in thinking that the Government's announcement about the great increase in public expenditure has something to do with a general election?
    The Prime Minister: Yes, totally cynical.

Wandsworth Prison (Diplomatic Bags)
3.30 pm
Mr. Gerald Kaufman (Manchester, Gorton) (by private notice): To ask the Foreign and Commonwealth Secretary if he will make a statement about the diplomatic bags which have been lost in Wandsworth prison.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): We learned some days ago that bags containing Canadian diplomatic mail had been discovered by staff at Wandsworth prison. Diplomatic bags are routinely sent to Wandsworth prison for laundering. [Laughter.]
Mr. Speaker: Order. I imagine that it is a Foreign Office brief. Come on.
Mr. Lennox-Boyd: I must get the answer right. On this occasion, the Canadian bags in question had been inadvertently included in such a consignment sent to Wandsworth. Steps were immediately taken to recover the diplomatic mail and to investigate the incident.
Mr. Kaufman: I am sorry—I hoped that there would be more.
Will the hon. Gentleman explain why the question is not being answered by the Home Secretary? On Monday —[Interruption.]
Mr. Speaker: Order. I remind the House that we have a busy day ahead of us. Interruptions will take up time.
Mr. Kaufman: On Monday, dealing with one case, the Home Secretary hid behind his predecessor. On another case, he hid behind his legal advisers and a junior Home Office Minister. Today, he is hiding behind the most junior available Minister in another Department.
Will the hon. Gentleman say what action has been taken to explain why the missing material was left in the bags sent to Wandsworth prison? Will he explain exactly when it was discovered that that material was in the bags sent to Wandsworth prison and when the search for it started? Is it true that an interval of several days elapsed between the discovery and the search? How much material is still missing? Is a search still going on for missing material? How much of that material, missing or retrieved, is sensitive material? [Interruption.]
Mr. Speaker: Order. This is taking a long time. The right hon. Gentleman should be allowed to complete his question.
Mr. Kaufman: Will the hon. Gentleman tell the House whether a watch was in the missing material and what guarantees—[Laughter.]
Mr. Speaker: Order.
Mr. Kaufman: What guarantees can the Minister provide that other metal objects cannot find their way into prison in the way in which that did and disappear as it did? When was the Home Secretary informed about this latest episode? Why have the Government not made it public? Would they have made it public if prison officers had not been aware of it? The hon. Gentleman says that the Government sent the material to be laundered—[Laughter.]
Mr. Speaker: Order.
Mr. Kaufman: Are the Government going to send other material that they want to launder to Wandsworth prison or are they now going to come clean about this episode? [Laughter.]
Mr. Lennox-Boyd rose—
Hon. Members: Answer.
Mr. Lennox-Boyd: May I take the right hon. Gentleman's question seriously? [HON. MEMBERS: "No."] Clearly, this is a matter for the Foreign Office—[Laughter.]
Mr. Speaker: Order. I am beginning to wonder whether I should have granted this private notice question.
Mr. Lennox-Boyd rose—
Mr. Joseph Ashton: On a point of order, Mr. Speaker. This is your responsibility. There are 3 million people on the dole and this country is in a deep economic crisis, yet all this is being shown on television and it is a disgrace.
Mr. Speaker: Order. Let us get this over as quickly as we can.
Mr. Lennox-Boyd: This is a private notice question tabled by the Opposition. The Government have a duty and I am here to answer it—[Interruption]—if the House will give me an opportunity. I think that this is important —[Interruption.] I am sure that the House will agree that this is important and that I should explain the background to the answer that I have previously given. I am sure that the House will bear with me for one or two minutes while I explain what has happened on this occasion. It is a serious matter.
The position is that the Canadian Government routinely send their diplomatic bags—[Laughter.] Should I go on?—to the Foreign Office for onward transmission [Laughter.]
Mr. Speaker: Order. When I decided to grant this private notice question, I took it to be a serious matter and I should like it to be taken seriously.
Mr. Lennox-Boyd: On this occasion, some of their bags were contained in the white diplomatic bag belonging to the Foreign Office, which they were using for convenience to contain their consignment—[Laughter.]—and, as I have explained to the House, that was the commencement of the error in question which, of course, we very much regret.
I have come to the House this afternoon from a meeting with a representative of the Canadian High Commission, with which we have been in constant touch from the outset of the incident. It is perfectly satisfied with the outcome of the preliminary investigation.
Mr. Robert MacLennan: Is not the difficulty that the Home Secretary is incapable of keeping in prison those people who should be and keeping out of prison those things which should not be?
Mr. Lennox-Boyd: That is as absurd a political point as was made by the right hon. Member for Manchester, Gorton, (Mr. Kaufman). Clearly, this is not a matter for the Home Secretary. It occurred in the Foreign Office and

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the Foreign Office, and I personally take full responsibility for it this afternoon before the House. Cheap politics is no way to investigate the matter.
Sir Peter Tapsell: Bearing in mind the fact that Prince Metternich eventually left Vienna disguised in a laundry basket—[Laughter.]—is not it clear that this incident is in the highest diplomatic tradition? Can my hon. and diplomatic Friend assure us that these important diplomatic communications were not ultimately put to any ignoble use?
Mr. Lennox-Boyd: As we know, Prince Metternich was not the only person to be put into a diplomatic bag. It happened on other occasions, but not on this one. Our friends in the Canadian High Commission and the Canadian Government are conducting their own assessment of the case. It is obviously not proper for me to comment further on what it concludes, but it is satisfied with our preliminary conclusions.
Mr. Tom Cox: As the Minister who represents the area containing Wandsworth prison, may I suggest to the Minister that if the exchanges of the past few minutes were conveyed to BBC television's "Yes Minister" they might indeed help to revive the Government's fortunes? But there is a serious point here. [HON. MEMBERS: "No."] There is a serious point. Prison officers are repeatedly subject to abuses from the Government about their lack of commitment to the job that they do. If the diplomatic bags contained metal objects that got through the system, surely the Minister or his right hon. Friend the Home Secretary should take note of the seriousness of the problem. There have been enough prison escapes under this Government. Surely this should be an opportunity for giving serious consideration to and providing serious answers on this major issue.
Mr. Lennox-Boyd: The allegation about a metal object being contained in one of the bags is new to me.

Business of the House
3.43 pm
Dr. John Cunningham: Will the Leader of the House tell us the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): The business for next week will be as follows:
MONDAY 9 DECEMBER—Proceedings on the Aggravated Vehicle-Taking Bill.
Motion on the Teachers' Pay and Conditions Act 1987 (Continuation) Order.
TUESDAY 10 DECEMBER—Estimates day (1st allotted day). Until about seven o'clock there will be a debate on the financing of private residential and nursing home fees, followed by a debate on the future of the coal industry. Details of the estimates concerned and the relevant Select Committee reports will be given in the Official Report.
Motion on the Ministerial and Other Salaries Order.
At Ten o'clock, the House will be asked to agree the civil and defence votes on account and the outstanding winter supplementary estimates.
WEDNESDAY 11 DECEMBER—Until about seven o'clock, motions on the social security benefits uprating and disability benefits affirmative orders and regulations and any related negative regulations. Details will be given in the Official Report.
Afterwards there will be a debate on fisheries on a Government motion.
THURSDAY 12 DECEMBER—MOtiOn for the Christmas Adjournment.
Proceedings on the Consolidated Fund Bill.
FRIDAY 13 DECEMBER—Private Members' motions.
MONDAY 16 DECEMBER—Progress on remaining stages of the Local Government Finance Bill.
The House will also wish to know that European Standing Committee A will meet at 10.30 am on Wednesday, 11 December, to consider European Community documents Nos. 7816/91 and 8046/91 relating to speed limitation devices.
[Tuesday, 10 December
Relevant Documents
Estimates Day: Class XIV, vote 1, central Government administered social security benefits and other payments, in so far as it relates to the financing of private residential and nursing home fees; fourth report from the Social Security Committee Session 1990–91 (HC 421); first report from the Health Committee Session 1991–92 (HC 28); class V, vote 9, privatisation of the coal industry, in so far as it relates to the future of the coal industry; fifth report from the Energy Committee Session 1990–91 (HC 208): "Clean coal technology and the coal market after 1993"; first special report. from the Energy Committee, Session 1991–92 (HC 67); Government observations on the fifth report of last Session (to be published on Friday, 6 December at 11 am).
Wednesday 11 December
Social Security Orders and Regulations

1. Social Security Benefits Up-rating (No. 2) Order 1991

2. Social Security (Contributions) (Re-rating) (No. 2) Order 1991

3. Guaranteed Minimum Pensions Increase (No. 2) Order 1991

4. Statutory Sick Pay (Rate of Payment) (No. 2) Order 1991

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5. Social Security (Introduction of Disability Living Allowance) Regulations 1991

6. Social Security Disability Working Allowance (General) Regulations 1991

7. Social Security (Disability Living Allowance) Regulations 1991

8. Social Security (Adjudication) Amendment (No. 3) Regulations 1991.

European Standing Committee A
Relevant European Community Documents
7816/91 8046/91} Speed limiters
Relevant Report on European Legislation Committee HC 24-iii (1991–92).]
The House will also wish to know that, subject to the progress of business, it will be proposed that the House should rise for the Christmas Adjournment on Friday 20 December until Monday 13 January.
Dr. Cunningham: As someone whose motor car has just been stolen and used in a ram raid, may I give a personal welcome to the Bill which will come before the House next Monday? I am sorry that it has come a little late in my case, but I am sure that there will be a general welcome that the Government are at last taking action in that matter.
When the Home Secretary introduces that legislation next week, will the Leader of the House arrange for him to give the House a guarantee that it is not his intention, as reported in the newspapers, to stop publishing the quarterly crime statistics? Is that not yet another Government attempt to cover up their appalling record of the past 12 years and the explosion of crime which has taken place during their term of office?
Can we have a statement next week from the Government on regional industrial policy, especially on matters to do with assisted area status? May I sadly draw the right hon. Gentleman's attention to the announcement yesterday of several hundred more job losses in my constituency of Copeland? Is he not aware—and will he not make it clear to his right hon. Friend the Secretary of State for the Environment—that yet another Government inquiry into industrial decline and the huge increases in unemployment in west Cumbria is not necessary? We know of the job losses: what we want to hear about is some Government action, especially the provision of assisted area status for west Cumbria, and for Copeland and Barrow-in-Furness.
Will the Leader of the House arrange next week for the Secretary of State for Education and Science to explain in an oral statement how it has been possible so to order his priorities that he can easily find £26 million of taxpayers' money for prestigious new offices for himself and other Ministers, while throughout the country the Government are failing to provide cash to invest in crumbling schools and in our children's education?
Mr. MacGregor: I sympathise with the hon. Gentleman in the loss of his stolen car, as I have already told him. I am sure that he will agree that there are many other reasons for wishing to introduce the Bill, and he will know that we have moved as fast as possible to frame it and bring it before the House. I believe that it is the will of the
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whole House that the Bill should proceed as quickly as possible so that we can strengthen considerably the penalties involved in what is wrongly known as joyriding.
As to the question about crime statistics, we would be happy to debate the Government's record on all law and order matters and to outline the many measures that we have taken to strengthen the police and to improve police pay, as well as other measures dealing with increases in penalties for crime. That is not appropriate for next Monday, but we should be happy to debate those matters on any occasion with the Labour party.
On his second point, the hon. Member will know that there will be an opportunity to debate economic policy this afternoon. We would happily engage in a debate about all the policies that we have carried through to realise the high growth which was achieved throughout most of the 1980s, and which will certainly be achieved through the 1990s.
I cannot promise Government time next week to discuss assisted area status, but the hon. Gentleman will be aware that there will be a number of opportunities next week when individual matters can be raised.
I do not think that it would be appropriate for my right hon. and learned Friend to make a statement on education next week, but we shall be pleased on every occasion possible to talk about the 35 per cent. increase in capital allocation that has gone into the school building programme in the last two years. Our record is very good.
Several Hon. Members rose—
Mr. Speaker: Order. The House knows that I am always reluctant to curtail business questions, but today we have heavy pressure on debate, and I shall have to put a 10-minute limit on speeches. I therefore ask for questions to be related to the business for next week. I shall draw business questions to a close at 4.20, in the general interests of the House.
Mr. Patrick Cormack: Is it my right hon. Friend's intention to arrange a debate on the outcome of the Maastricht meetings next week or before Christmas, or to leave it till after Christmas?
Mr. MacGregor: As I said last week, the Prime Minister will make a statement to the House as soon as possible after the summit has been completed. We must await the outcome of the summit before deciding what further consideration might be given in the House.
Mr. James Wallace: Has the Leader of the House noted early-day motion 21 against the Control of Explosives Regulations 1991? [That an humble Address be presented to Her Majesty, praying that the Control of Explosives Regulations 1991 (S.I., 1991, No. 1531), dated 5th July 1991, a copy of which was laid before this House on 15th July, in the last Session of Parliament, be annulled.] Has he further noted that it has been signed by 80 hon. Members in all parts of the House—perhaps an unusual number of signatures against a statutory instrument—because of their understandable concern about rights being given to the police to enter houses without warrant, and for that to be possible by way of a negative order?
Will the right hon. Gentleman make time available, preferably in the Chamber but otherwise in Committee, to debate that important matter?
Mr. MacGregor: I shall look into the matter. From recollection, and from what the hon. Gentleman said, I believe that it is one of the early motions and that the time may have passed.
Mr. John Marshall: Following the visit of Mr. Le Pen, will my right hon. Friend arrange an early debate on racism so that many of us may take the opportunity to condemn his offensive and hateful doctrines?
Mr. MacGregor: There will be a number of opportunities next week for a whole range of matters to be raised in the House.
Mr. Ray Powell: Can the right hon. Gentleman make time available next week for a debate on the emotional subject of Sunday trading? He will recall the debates in 1986, when the majority of hon. Members rejected the proposals of the Government to alter the Shops Act 1950 and to introduce new legislation permitting Sunday trading. Is he aware that we must debate the matter urgently, because people in the Country are illegally opening shops, and people are able to go into them and buy goods, all of which is illegal and could be the subject of prosecution?
Does the right hon. Gentleman also recall the debates in 1986 when the House rejected the idea of bringing back the rope? If the Government intend to flout the law on Sunday trading, perhaps their next step will be to bring back capital punishment without the permission of the House and without the law of the land being changed. We in Parliament, not people in Europe, make the laws of this country. We need a debate so that everybody in Britain may know where Members of the House stand.
Mr. MacGregor: As the hon. Gentleman knows, prosecution of those matters is for local authorities to consider: it is for them to prosecute if they wish to do so. I well recall the debates in 1986 on the Auld committee report and on the Bill that the Government introduced to try to make sense of the current laws on Sunday trading. He will recall that there were a wide range of views about the matter at that time. That is why the Minister of State, Home Office is continuing to have discussions with all those involved to see if an acceptable way forward can be achieved. I do not think that that would be achieved by a debate next week.
Mr. David Shaw: Will my right hon. Friend arrange for an urgent debate next week on the plight of Mirror Group Newspapers pensioners? Will he also ensure that the debate is opened by the Attorney-General, who should deal with the question whether the Official Solicitor can step in, remove the trustees who have shown themselves to be totally useless, and obtain worldwide freezing orders on all the assets and money of the Maxwell family trust companies and Maxwell family companies? Will my right hon. Friend ensure that the debate is closed by the Foreign Secretary or the Chancellor, who can comment on the massive amount of income tax and capital gains tax of which the country has been defrauded by means of the Liechtenstein family trust, which has managed over the years to deal in other people's money free of tax, causing British taxpayers to lose millions of pounds?
Mr. MacGregor: I do not think that I can find Government time to debate that matter next week. As my right hon. Friend the Prime Minister said, the Serious Fraud Office is now conducting an inquiry into the Mirror Group Newspapers pension fund. IMRO, the investment fund regulator, is also conducting inquiries into Bishopsgate Investment Management Ltd. Those inquiries should be allowed to proceed on that aspect of the matter. As for who should participate, my hon. Friend would not be entirely right to ask that my right hon. Friends should participate in the debate.
Mr. Tam Dalyell: Are arrangements being made next week for a report back to the House by the hon. Member for Grantham (Mr. Hogg), the Minister of State, Foreign Office, who has been to Algeria, Egypt and Tunisia? Is the Leader of the House aware that some of us wish to argue the case for this country acceding to the Libyan request to send British and American judges to Libya?
Mr. MacGregor: No, I do not think that it would be appropriate to debate the matter in Government time next week, but there are opportunities this week for a number of matters to he raised, as the hon. Gentleman knows.
Mr. Bernie Grant: Has the Leader of the House had time to read a letter that I sent him regarding the treatment by the tabloid press of my appeal for information relating to the murder of PC Keith Blakelock? I appealed on television and elsewhere for anyone with information to come forward, and I offered to accompany them to the police. That has been distorted by the tabloid press, which has totally altered the position, thus creating difficulties in my constituency. An atmosphere has been created in which people will not co-operate with the police, as has happened in the past.
In view of the fact that right hon. and hon. Members have made comments in this House and in the papers about the situation, will the Leader of the House allow me time to make a full personal statement on the circumstances of the case, especially in view of the policy inquiry that has been launched today?
Mr. MacGregor: Personal statements, as the hon. Gentleman knows, are not a matter for me but for you, Mr. Speaker. Some of the statements made by the hon. Gentleman in the past have caused many people much concern.
Rev. Ian Paisley: Will the Leader of the House bear in mind the fact that part of his duty is to look after minorities in the House? When will we have a debate about accountability of Northern Ireland Office Ministers to Select Committees of the House? Yesterday in Dublin, the Prime Minister made it clear that he saw no reason why talks could not start immediately on stage 1. That is the conviction of the Unionist parties in this House—that talks should start before an election. Why cannot the Leader of the House get a Select Committee on Northern Ireland going so that, before the election, hon. Members will have an opportunity to question what is happening in Northern Ireland?
Mr. MacGregor: There are many opportunities to question what is happening in Northern Ireland—for example, in statements, at Question Time and in many of our debates. As for Select Committees, I have made it

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plain several times that my right hon. Friend the Secretary of State for Northern Ireland is willing to consider all those matters at the appropriate time but that we feel that the appropriate way to proceed is to get the talks going again.
Mr. John D. Taylor: Yesterday, our Prime Minister met the Prime Minister of the Republic of Ireland and agreed that, from now on, he will meet the Dublin Prime Minister twice a year to discuss the affairs of Northern Ireland. As the Prime Minister does not extend the same facility to the Unionist parties of Northern Ireland, whose members live in Northern Ireland, and are elected by and speak for the people of Northern Ireland, will the Leader of the House arrange for at least two debates a year in the House so that all hon. Members have the same rights as are now given to the Republican Prime Minister in Dublin?
Mr. MacGregor: I am well aware that we have more than two debates on Northern Ireland matters every year.
Mr. Speaker: I think that I inadvertently called two Members on the Opposition side, so I shall now balance that.
Mr. Rupert Allason: Bearing in mind the fact that there has been a Department of Trade and Industry inquiry into all aspects of the allegations of serious financial misconduct since March of this year, will my right hon. Friend arrange for his right hon. Friend the Secretary of State for Trade and Industry to make a statement to the House next week explaining exactly what the Government knew, and when, of the allegations made in March? Will he also arrange a full inquiry into "Mirrorgate", ranging from the allegations of the manipulation of the "Spot the Ball" competition, right through to the looting of £500 million from the Mirror Group Newspapers pension fund?
Mr. MacGregor: My right hon. Friend's Department is in close consultation with the Serious Fraud Office, which is now widening its investigation to include the Mirror Group Newspapers pension fund. I understand that my right hon. Friend the Secretary of State has made it clear that he will not hesitate to take immediate action if any issues emerge that justify an investigation by his Department, as long as doing so will not slow down the work of the SFO.
Sir Ian Lloyd: My right hon. Friend will know that the Advisory Committee on Science and Technology last week published its first triennial report raising a number of fundamental and far-reaching issues affecting this country's prosperity and future well-being into the next century. As there obviously will not be time to discuss the report next week, will my right hon. Friend ensure that he places high in his list of priorities a proper debate on those important subjects?
Mr. MacGregor: I agree with my hon. Friend about the importance of the subjects. He will know well my previous involvement in them. One reason why I agree with him is that I am well aware of the importance of those reports. I cannot promise time early in the new year, as we have a full
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programme of work. However, there will be two opportunities to raise the matter next week: Thursday and Friday.
Mr. Max Madden: The Leader of the House knows that the Asylum Bill is being considered in Standing Committee, but he may not know that the deliberations of the Committee are being made extremely difficult by the legal uncertainties that shroud the Bill. Clause 3 is widely seen as a breach of the Race Relations Act 1976. Clauses 4 and 5 cause difficulties because of the legal uncertainty about the future of the legal aid scheme.
Will the Leader of the House arrange for Law Officers to attend the Committee so that its members can receive the benefit of their advice or arrange for the Attorney-General to make a statement next week explaining why Law Officers are unwilling to attend the Committee?
Mr. MacGregor: I am not aware of those matters, and I shall discuss them with my right hon. and learned Friends.
Mrs. Maureen Hicks: In view of the disgraceful disturbances last night at Brinsford prison, near Wolverhampton, a spanking new £50 million prison in the constituency of my hon. Friend the Member for Staffordshire, South (Mr. Cormack), will my right hon. Friend the Leader of the House arrange for a debate on the problem of young offenders? We are too often given too many excuses. We have been told that the disturbances in our prisons are due to overcrowding and other conditions. However, Brinsford is a brand new prison that has just opened, and we should take the opportunity to link the debate on young offenders with the subject of young offenders outside gaol who are too often involved in joyriding episodes and other incidents that disturb our constituents.
Mr. MacGregor: My hon. Friend is quite right to draw attention to the considerable prison building programme undertaken by the Government. I shall not be able to find time for such a debate next week, but it may be a suitable subject to raise on the Consolidated Fund Bill.
Mr. Geoffrey Lofthouse: Is the Leader of the House aware that the Yorkshiree police authority, through its chairman and chief constable, has issued a press statement, followed up by a letter to West Yorkshire Members of Parliament, saying that the force is 200 policemen understaffed? Earlier this afternoon, during Home Office questions, a Home Office Minister and the hon. Member for Calder Valley (Mr. Thompson) suggested that that was not the case. Will the right hon. Gentleman arrange for an investigation to see who is telling the truth and for a statement to be made to the House next week?
Mr. MacGregor: That would not be an appropriate matter for a statement, but I shall ensure that the matter is brought to my right hon. Friend's attention and that he considers whether he should say something in some other form.
Mr. Jonathan Aitken: My right hon. Friend has given the impression from the Dispatch Box this afternoon that the involvement of the Serious Fraud Office in the affairs of the Daily Mirror somehow makes it impossible for the House to debate that subject. That view

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cannot be right in relation to one aspect of the affairs of the Daily Mirror—the uncertainties surrounding its future ownership. Will my right hon. Friend confirm that the House will be given an opportunity to debate any possible future transfer of the title, as it is required to do if the Secretary of State had to give his consent under the Fair Trading Act 1973 for a transfer of this important title?
Mr. MacGregor: I agree that only certain aspects are covered by the two investigations to which I have referred. I shall have to consider the matter that my hon. Friend raises, but it is unlikely that we shall be able to deal with it next week. If my hon. Friend wishes to raise other aspects of the matter, there will be plenty of opportunity for individual issues to be raised on two days next week.
Mr. Gerald Bermingham: As the Leader of the House is well aware, at 4 o'clock this afternoon the Government's latest proposals on the advertising of commercial and other credit facilities will be published. I fully appreciate that the matter can then be dealt with by way of statutory instruments in Committee, but, bearing in mind the seriousness of the matter and the importance of credit and credit display and warning, will the right hon. Gentleman give an undertaking that the matter will be dealt with on the Floor of the House at a later stage?
Mr. MacGregor: I have noted what the hon. Gentleman says. That will be a matter for us to discuss through the usual channels.
Mr. Kenneth Hind: My right hon. Friend will remember a Department of Trade and Industry report on Pergamon Press which said that Robert Maxwell should never be allowed to run a public company. Surely, in the light of Conservative Members' concern—
Mr. Geoffrey Dickens: Only Conservative Members.
Mr. Hind: —about what has happened to the Mirror group of companies, particularly the £500 million that has been taken from the pension fund, will my right hon. Friend provide time next week so that the matter can be properly debated?
Mr. MacGregor: As my hon. Friend knows, it was this Government who strengthened the law relating to directors and their disqualification a few years ago, after the particular case to which my hon. Friend refers in relation to Pergamon Press. The Government have also strengthened the law and the regulations in relation to pension funds. Again, my hon. Friend's point can be raised next week.
Mr. Jimmy Wray: Is the Leader of the House aware that the people of Scotland and England are living in fear of their lives as a result of the escalation of drug abuse and murder by firearms? A recent police report showed that there were 37 murders in the south-east of England and that parts of Scotland are becoming like Dodge City. When will the Home Office clean up the mess so that people can do their shopping and go out after dark in safety?
Mr. MacGregor: As the hon. Gentleman knows, the Government take such matters extremely seriously. That is why we have taken a range of measures to address them, including changes in the law relating to penalties for drug
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abusers and in many other ways. The Government's record is clear. We share the hon. Gentleman's concern; that is why we are doing a lot about it.
Mr. Phillip Oppenheim: Can we find time next week to broaden the debate on pension funds into a general debate on corruption in public life? For some time, Conservative Members have had to listen to Opposition Members moralising about "greedy business men" and "City spivs", but during the past few months the former Labour deputy leader of Liverpool council, who was backed up to the hilt by the Labour party when he was deputy leader, has been arrested for his shady dealings. There have been several leading councillors in north-east Derbyshire—
Mr. Speaker: Order. I am not personally aware, but is the hon. Gentleman sure that that case is not sub judice?
Mr. Oppenheim: I have checked on that, but I shall not pursue the matter.
We need a debate on the subject, particularly bearing in mind what has recently happened with regard to the Maxwell pension fund. Is it not the case that the real spivs are the Labour spivs who rip off pensioners and poll tax payers to line their own pockets?
Mr. MacGregor: I obviously cannot refer to the case that my hon. Friend has mentioned. He has made his point about the affiliations of some of the people about whom there is so much concern, but I cannot find Government time to debate it next week.
Mr. Andrew Welsh: Is the Leader of the House aware of the content of early-day motion 256, on the subject of genetic patenting?
[That this House notes with concern the proposed EC Directive which will allow the patenting of genetically engineered animals and plants, and which is designed to foster research in this field; believes that such patenting implies an ethically unacceptable view of animals as instruments for human use and exploitation and will lead to an increase in animal suffering such as that of the American pigs with human growth gene, which were arthritic and impotent and had deformed skulls; further believes that such patenting will increase the control of large concerns over genetic resources, thus harming the interests of farmers and of the Third World; further believes that it will lead to higher prices and curtailment of consumer choice; and calls upon Her Majesty's Government to reject this Directive and to advocate a moratorium on patenting of life forms to allow time for public debate.]
Is he aware also of public concern about the morality of creating and patenting life forms? Will he allow time to debate that important issue on the Floor of the House?
Mr. MacGregor: I am aware of early-day motion 256, but the Government consider that patent law is not the right vehicle for controlling genetic engineering activities. If an activity is not otherwise proscribed, then, in general, the benefit of the patent system should apply.
Mr. John Browne: Will my right hon. Friend accept that, in this day of the social charter, it must be wrong that members of the armed forces who are grievously injured in the course of duty should have to prove negligence by the mighty Ministry of Defence? When my right hon. Friend reads my new Bill, which sets

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out to reverse that unjust onus of proof, will he do so with a view to urging his Government colleagues not to kill my Bill?
Mr. MacGregor: I cannot comment on a Bill that I have not seen. However, I do not see how that relates to the social charter—which, as my hon. Friend knows, contains a number of measures that the Government feel could be deeply damaging to employment in this country, although not in the way that my hon. Friend describes. However, I have not yet read my hon. Friend's Bill.
Mr. D. N. Campbell-Savours: Has the Leader of the House noticed the large number of questions that Ministers are receiving on the subjects of policing and law and order? Given the breakdown in law and order throughout the kingdom, and having noted that last week the Home Secretary appointed four extra police officers for the whole of the county of Cumbria—which embraces half a million people—is it not time for the Government to make a full statement at the Dispatch Box so that right hon. and hon. Members in all parts of the House can press the Home Secretary on the need for additional policing in their constituencies?
Mr. MacGregor: But there are substantially more police in place now than when this Government took office, and they are better paid. There are not the problems of recruitment and retention that there were when the last Labour Government were in office, and many more officers are also on the beat, because the number of civilian workers in the police service has greatly increased. Penalties have also been increased, and expenditure has substantially increased. This Government have taken many more measures than the last Labour Government, with the result that the position in respect of the police is very much better than it was then.
Mr. Ivan Lawrence: There will be widespread appreciation that what comes out of Maastricht will be of monumental importance to the future of Britain. Will my right hon. Friend make sure that when that matter comes to be debated in the House, that is not done over one or two days, but that a whole week is set aside so that all right hon. and hon. Members may have an opportunity to express ideas and thoughts that will be so important for the future of Britain?
Mr. MacGregor: I repeat what I said to my hon. Friend the Member for Staffordshire, South (Mr. Cormack)—we have not yet taken a view on how further consideration of the outcome of Maastricht should proceed following the statement of my right hon. Friend the Prime Minister—which I made clear will be made as soon as possible. If we have a debate, I will endeavour to allow as much time for it as possible. However, in view of the amount of time that we have already given to those matters, and given the fact that we have a shortened Parliament—[HON. MEMBERS:"Oh? How shortened?"]—it is extremely unlikely that I will be able to allow a full week. However, if there is a debate, I will allow as much time as possible.
Mr. Ron Brown: The Government claim that the national health service is safe in their hands. However, the Royal Hospital for Sick Children in Edinburgh and the promised Leith hospital have been
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denied funding unless both are connected with the entrepreneurs—with the spiv society. Clearly that is a disgrace. Can the House debate that matter next week, because it is so important to my part of Scotland?
Mr. MacGregor: I do not know precisely to which individuals the hon. Gentleman refers in relation to those hospitals, but I should have thought that to describe them as entrepreneurs was entirely inappropriate. The hon. Gentleman will know of the considerable increases for the health service in Scotland in the coming year announced by my right hon. Friend the Secretary of State for Scotland. As to any debate, I made it clear that there will be a considerable number of opportunities for right hon. and hon. Members individually to raise such issues next week.
Sir Nicholas Fairbairn: Will the Leader of the House, as a good Scot, make a new year's resolution, if he is not able to do this before the new year, to have a debate, not on law and order, but on law, and on the comparative law of Scotland and England? If the law of Scotland applied in England, we would not need to waste our time on the Prison Securities Bill or the Aggravated Vehicle-Taking Bill—the Criminal Law Act 1977 does not apply and the Shops Act 1950 part II does not apply—or the release of innumerable people convicted of terrible crimes. If the law of Scotland applied here, the business of the House would be a great deal shorter and a great deal better done.
Mr. MacGregor: I am not sure about the last point, because I know that there are always so many candidates for Bills that, if some important ones did not come forward, others would take their place. My hon. and learned Friend is clearly not talking about next week in relation to a resolution that I might make on Hogmanay. I have a good deal of sympathy with the point that he makes about the Shops Act.
Rev. Martin Smyth: Will the Leader of the House undertake that, when the Prime Minister reports on Maastricht, he will include his talks leading up to Maastricht so as to allow hon. Members, particularly those from Northern Ireland, to probe about the meeting between him and the Prime Minister of the Republic of Ireland yesterday? Bearing in mind the disingenuous reply that he gave my colleague the right hon. Member for Strangford (Mr. Taylor) earlier, will he not accept that the Ministers in the Northern Ireland Office and in Dublin castle are not actually elected by anybody from Northern Ireland?
Mr. MacGregor: That is not the point that I was making earlier. The point that I was making was that there are a considerable number of opportunities to debate Northern Ireland matters and to ask questions on them in the House. I will draw to my right hon. Gentleman's attention the point that the hon. Gentleman makes about the Prime Minister.
Mr. John Wilkinson (Ruislip-Northwood): In the context of business next week, there are other European matters of importance beyond the Community that merit early consideration. Will my right hon. Friend urge the Secretary of State for Foreign and Commonwealth Affairs to come to the House next week and announce the official recognition by Her Majesty's Government of the newly

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eleted Government of Ukraine, which, in a referendum, by a majority of 9 to 1, has democratically endorsed the previous democratic decision of its democratically elected Parliament on its own sovereignty and independence? Her Majesty's Government ought to be seen to support these democratic movements.
Mr. MacGregor: Without making any commitment to a statement, I will draw the views of my hon. Friend to my right hon. Friend's attention.
Mr. Gavin Strang: May I draw the right hon. Gentleman's attention to early-day motion 249?
[That this House recognises with sadness the plight of those people infected with HIV as a result of contaminated National Health Service blood/ tissue transfers; recalls that the Government has given special financial assistance to haemophiliacs infected with HIV under National Health Service treatment by the blood product Factor VIII; notes that the Minister of State for Health has stated that haemophiliacs should be a special case; but believes that there is no logical or legal argument for the Government's refusal to extend aid to non-haemophiliacs infected by contaminated National Health Service blood/tissue transfers; regrets the Government's failure to recognise their obligations towards this small number of people; and calls upon the Government immediately to include non-haemophiliacs within the category of persons compensated for infection with HIV under National Health Service treatment.]
It has been signed by more than 170 hon. Members from all parties in the House, and calls on the Government to provide financial compensation to non-haemophiliacs who have become HIV-positive as a result of contaminated national health service blood transfusions or tissue transfers. Is the right hon. Gentleman aware that the Government Whips Office organised last Friday to prevent a similar motion from being debated in the House? I appeal to him to draw the motion to the attention of his right hon. Friend the Secretary of State for Health and to ask him to give it very careful consideration.
Mr. MacGregor: I think that the hon. Gentleman is quite wrong about the way in which debates are conducted in the House. He will know that many people often want to speak in individual debates. With regard to the early-day motion, I am sure that the whole House has every sympathy with the plight of those who have been infected with HIV as a result of blood transfusions, but the
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House decided only recently that it did not support the principle of no-fault compensation for medical negligence. If the NHS is proved negligent in a court, of course the Government accept their liability to pay damages.
Mr. Andrew MacKay: By now, my right hon. Friend will be aware of the very great concern on this side of the House about the crimes of fraud committed by Robert Maxwell and his associates, not least in respect of the raiding of the pension funds of Mirror Group Newspapers. May I, in supporting the request for a debate next week, put it to my right hon. Friend that there are millions of pensioners and contributors to company pension funds throughout the land who are today worried sick about the future of their pensions? We need to allay their fears by a debate to prove that not every company is crooked and not every group of trustees is negligent, as were those in the case of Mirror Group Newspapers.
Mr. MacGregor: I share the concern of my hon. Friend and of other Conservative Members, and I understand the anxiety of pensioners, and future pensioners, in the company. There is no doubt about where our concern lies. I am sure that my hon. Friend agrees that, under trust law, trustees have a duty to act in the interests of all beneficiaries. Many trustees of pension funds do so. The Occupational Pensions Board considered trust law in 1988. It saw no need to change the legal framework but recommended additional safeguards, which the Government enacted in 1990. I am sure that my hon. Friend agrees that many trustees of occupational pension schemes carry out their responsibilities responsibly. The reassurance that my hon. Friend wants can be given to many pension holders all over the country.
Several Hon. Members rose—
Mr. Speaker: Order. I will carefully keep the list of hon. Members who have not been called and will give them priority next week. I have a short statement to make.
Mr. George Foulkes: On a point of order, Mr. Speaker.
Mr. Speaker: No, I am on my feet.

Consolidated Fund Bill
4.20 pm
Mr. Speaker: I have a short statement to make about arrangements for the debate on the motion for the Adjournment, which will follow the passing of the Consolidated Fund Bill on Thursday 12 December.
Hon. Members should submit their subjects to my office not later than 10 pm on Tuesday 10 December. A list showing the subjects and the times will be published the following day. Normally, the time allotted will not exceed one and a half hours, but I propose to exercise a discretion to allow one or two debates to continue for rather longer, up to a maximum of three hours.
Where identical or similar subjects have been entered by different Members whose names are drawn in the ballot, only the first name will appear on the list. As some debates may not last the full time allotted to them, it is the responsibility of hon. Members to keep in touch with developments if they are not to miss their turn.

Points of Order
4.21 pm
Mr. George Foulkes: On a point of order, Mr. Speaker.
Mr. Speaker: I hope that it is not because the hon. Gentleman has not been called at business questions.
Mr. Foulkes: You kindly said that you would call hon. Members next week who had been rising. Somewhat eccentrically, the question that I was going to ask was about next Wednesday's business.
Mr. Speaker: What bad luck.
Mr. Foulkes rose—
Mr. Speaker: No—I am sorry, that was a bit provocative. However, I gave the hon. Member a very good run yesterday, and the day before.
Mr. Tony Marlow: On a point of order, Mr. Speaker—not related to business questions or to the fact that I am sulking or anything like that; it is a totally different matter.
Whenever there has been a whiff of financial scandal in the past, the Opposition, very much to their credit, have raised it and brought it before the public, and there has been a great hue and cry about it. Unaccountably, the Opposition have not requested a statement on one of the great scandals involving Robert Maxwell. Will you, Mr. Speaker, tell the House whether you have been approached on the subject, and, if so, have the Opposition told you why they do not want a statement on it?
Several Hon. Members: On a point of order, Mr. Speaker.
Mr. Speaker: The trouble with points of order like that is that they are highly contagious.
Mr. Dennis Skinner: In view of what you, Mr. Speaker, have had to say about the Consolidated Fund Bill, can you give some assurance that, if this matter about Maxwell and him laundering money is raised, you will ensure that people such as Arthur Scargill and Peter Heathfield will be given special tickets to sit in the Gallery so that they can hear the debate and so that they can draw the attention of various channels to the fact that perhaps Mr. Lightman should investigate the missing Maxwell millions, and perhaps we can find out whether Roger Windsor, Mr. Maxwell's nark, was paid £50,000 out of the Daily Mirror's missing millions. Those are the questions that we would like to be asked.
Mr. Speaker: There are opportunities to raise these matters next week. They would have to be raised in a parliamentary manner, and certainly couched in the proper terms.
Mr. Peter Thurnham: On a point of order, Mr. Speaker. Could you give guidance on the important matter of confidences given us by constituents? It is important that constituents should be able to consult us about confidential matters, but surely we should not go so far as to give comfort to murderers and bombers, as has been suggested. The hon. Member for Tottenham (Mr. Grant) said that he had been misquoted. Will you give a

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ruling, Mr. Speaker, that we are not like doctors, lawyers and priests, and that we should uphold the police and support them in their duties?
Mr. Speaker: I think I know to what the hon. Member is referring. The fact is that there is no privilege for confidences given to hon. Members. It is a matter for the discretion of hon. Members.
Mr. Bob Cryer: On a point of order, Mr. Speaker. In view of the point of order raised by the hon. Member for Northampton, North (Mr. Marlow), I ought to make it clear that we would very much like to see an investigation of the missing pension funds. Also, we have been calling for many years for legislation to get rid of the offshore tax havens of the sort that Lord Duncan-Sandys ploughed money into from Lonrho about 1970.
Mr. Speaker: I think that would be quite a good subject.
Mr. Tim Devlin: May I ask you about a serious point of order, Mr. Speaker? I have noticed the growing practice on Prime Minister's questions and on questions to other Ministers of Members on both sides of the House, but primarily Opposition Members, asking personal questions which do not relate to the Minister's responsibility. For instance, today the Prime Minister was asked about his period of unemployment.
Dr. Lewis Moonie: The hon. Gentleman might be unemployed soon.
Mr. Devlin: I doubt it very much. I wonder, Mr. Speaker, whether you could give us some guidance on the point. Surely Ministers are appearing at the Dispatch Box solely to answer questions about their governmental responsibilities.
Mr. Speaker: The hon. Member is absolutely right. In view of what he has said, I deeply regret having called him, I think on Question 2, to ask a question about the Northumbria police which had nothing to do with his constituency. I do allow a slight discretion in these matters.
Mr. David Winnick: The hon. Member for Northampton, North (Mr. Marlow) talked about an inquiry into the position of the Mirror Group pension fund. May it be made clear for the record that my hon. Friend the Member for Redcar (Ms. Mowlam), who is a junior Front-Bench spokesman, wrote to the Secretary of State this week asking for an inquiry? We are deeply concerned about the matter, about the theft that has taken place and about the laxity of the rules which allowed that to happen. We want a prompt inquiry.
Mr. Speaker: I think I called the hon. Member on business questions. Couched in the right terms, that seems to fall within the ambit of a Consolidated Fund Bill debate, or one of the Adjournment debates before we go off for Christmas.

Opposition Day
[2ND ALLOTTED DAY]

Economy and Recession
Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister. Furthermore, in view of the late start and the number of hon. Members who wish to participate, I am putting a precautionary limit of 10 minutes on speeches between 7 o'clock and 9 o'clock. If the Front-Bench spokesmen and those who are called before 7 o'clock exercise discretion, it may be possible in the interests of the whole House to relax that limit.
4.28 pm
Mr. John Smith: I beg to move,
That this House deplores the Government's economic policies, which have caused the severe and continuing recession and which are damaging all parts of the economy and all areas of the nation; and calls upon the Government to initiate without delay an investment based recovery including financial incentives for investment in manufacturing, tax credits for the enhancement of technology, assistance for regional economic development and a major programme of education and training to tackle Britain's continuing skills crisis.
I happen for my sins to have been shadow Chancellor since the last election in 1987, during which period there have been three Chancellors of the Exchequer. The first was the right hon. Member for Blaby (Mr. Lawson), who is not remembered with exactly ecstatic affection by Conservative Members. Despite being described by the right hon. Member for Finchley (Mrs. Thatcher), then Prime Minister, as both "unassailable" and "brilliant, brilliant, brilliant", he is given a much lower rating by contemporary Conservative opinion. Whenever they gather in private, he is berated for the economic mess in which their political fortunes are floundering, although in public, as hon. Members know only too well, the fiction is resolutely maintained that Conservative economic policy has been a continuing success. The right hon. Member for Blaby will be remembered as the Chancellor who dismissed rising inflation as a temporary blip and who, having put up interest rates to 15 per cent., none the less assured us that the economy would have, to use his phrase, a soft landing. The right hon. Gentleman may personally have achieved a rather soft landing, but sadly that was not true for the economy of which he was in charge.
There followed the present Prime Minister who spent about a year in the job—a year in which the British economy went steadily downward into a deep and savage recession, paralleled only by the recession in the early part of the decade which was presided over by that other Tory Chancellor, the right hon. and learned Member for Surrey, East (Sir G. Howe).
The present Prime Minister assured us that there would not be a recession at all. Speaking to the Association of British Chambers of Commerce on 6 December 1989 he said:
"I do not myself think a recession is either likely or necessary."
Even 11 months later, in presenting his autumn statement to the House, he refused to use the word "recession" throughout and forecast:

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"the British economy is coming back on track".—[Official Report, 8 November 1990; Vol. 180, c. 125.]
To be fair to the right hon. Gentleman, he did appear to have a revealing glimpse of self-doubt in his own assessment when he told the Financial Times in an interview on 27 October 1990:
"It will take some time. It always does to change the economy. It's like turning the Titanic round as you know."
Well, we do not know; we do not think that that was the Titanic's problem.
I believe that there is a unifying characteristic about the three most recent Tory Chancellors—a stunning inability to predict even with vague accuracy what is about to happen to the economy, coupled with the disreputable technique of bogus reassurance which would put Arthur Daley to shame. In the latter respect, the present Chancellor is the undisputed champion. Shortly after he became Chancellor, he told the Treasury and Civil Service Select Committee on 5 December 1990 that the recession would be "short lived and shallow."
As the economy went into a nose dive, the right hon. Gentleman was soon proved to be absurdly wrong. Perhaps chastened by that experience, he seems to have decided by the time of the Budget that he would be more realistic in his forecasts for recovery. In his wind-up speech in the Budget debate on 25 March 1991 he told us:
"I am not in the business of publishing forecasts that are more optimistic than I think is the case, as that leads us nowhere. It is better to put the facts before Parliament and the country."
He went on to predict:
"There is every reason to expect that growth will start again towards the middle of the year."—[Official Report, 25 March 1991; Vol. 188, c. 698.]
He repeated that forecast a month later when speaking at a press conference of the International Monetary Fund in Washington on 29 April. According to The Times, the Financial Times and The Independent, the Chancellor said —and I quote from The Independent's copy:
"The recession would be over somewhere around the end of the second quarter"
that is, the second quarter of this year.
Therefore, the Chancellor, who was by that time careful not to be over-optimistic, predicted that recovery would begin in July of this year. By June of this year he was beginning to moderate that forecast somewhat. He told David Frost on TV-am on 2 June this year:
"In my Budget speech I said that from the middle of the year the recovery would begin … it may be slow at first. It will begin in certain sectors, probably in the housing market … there are … vague stirrings, but the signs arc there."
I have on previous occasions reminded the House of the outraged reaction of the building industry to the Chancellor's statement, but one person at least appears to have been persuaded—and that is the Prime Minister himself.
In an interview in The Daily Telegraph on 19 June this year, under the banner headline "Recovery coming 'in weeks'"—this way in June—the Prime Minister was asked about the faint stirrings that the Chancellor had detected in the housing market. The interviewer said:
"The Chancellor did speak of 'vague stirrings' in his recent television interview."
The Prime Minister replied:
"I think you can look anecdotally at what is happening."
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I am not sure how one does that, but I am quoting exactly what the Prime Minister said, and it must be right because it is in The Daily Telegraph. He went on:
"Anecdotally you look around you, you find lots of those For Sale boards now have Sold stickers on them."
To help the comprehension of the readers of The Daily Telegraph, there are photographs of signs with "Sold" stickers on some of them.
Mr. Den Dover: The right hon. and learned Gentleman says that signs of recovery are hard to find. Can he explain why unemployment in Chorley has gone down in the past two months and why several of the builders are doing very well?
Mr. Smith: The hon. Gentleman should look at the figures for the country as a whole. If he does so, he will find that that is not an encouraging sign. Some 850,000 people have been put out of work in the past 18 months and that is the figure about which the hon. Gentleman should think. If we are conquering the unemployment problem, why do vacancies keep falling? Vacancies have fallen again from 106,000 to 103,000. There are now 24 claimants chasing every notified vacancy and the number of vacancies in Greater London has almost halved, leaving a remarkable 84 claimants for each vacancy. Anyone who thinks that that is a satisfactory state of affairs has a lack of ambition for our economic success.
I return to the Prime Minister and the "Sold" signs all over the area at which he looks anecdotally. At this point one wonders what world the Prime Minister lives in, as repossessions mount to a record level, projected to be 100,000 in this year alone, and as the housing market remains wholly depressed.
No doubt encouraged by the Prime Minister's reassuring anecdotal ventures, the Chancellor continued into the early autumn promising recovery around the corner. He told the Financial Times in an interview on 16 September:
"Britain is coming out of recession. The statistics are highly encouraging and pointing very much in the right direction."
A month later, at the Conservative party conference in Blackpool, the Chancellor told the Tory faithful:
"the green shoots of economic spring are appearing once again".
I must bring the House rapidly up to date.
Interviewed by Mr. Walden last Sunday, the Chancellor appeared to be sadly bereft of statistics or even of anecdotal sightings of recovery. Rather lamely, he claimed:
"I have never changed my view about how I saw the path of the recovery … so far things have turned out very much as I expected".
In what I find an astonishing backtrack, he then told Mr. Walden:
"We are not assuming, in our view of the future, that there will be a great and sudden revival necessarily of the housing market … we arc not assuming that housing is leading the economy out of the recession on this occasion".
The words "on this occasion" should be translated as "in this interview". It was precisely the housing market in which the Chancellor claimed to detect the "vague" and faint "stirrings" which led the Prime Minister off on his anecdotal trail.
Will the Chancellor now admit that what he said in June on TV-am about "vague stirrings" in the housing market and what the Prime Minister told us about "Sold" signs everywhere was rubbish then, as it is rubbish now?

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What is most revealing is that if we accept that Ministers believed what they said at the time, they were woefully ignorant of the catastrophic effect that their policies were having on the housing market and on the construction industry generally.
Ministers appear to have no concept of the mortgage misery and the consequent alarming surge in repossessions and lost homes, which are the direct result of their economic mismanagement. The collapse in the construc-tion industry simply cannot be talked away. I noticed an article by Mr. Andrew Taylor in today's Financial Times which said:
"Bad news continues to pour out of the sector with no sign of the recession loosening its grip on residential and commercial property markets."—
The article quotes Sir Clifford Chetwood, chairman of Wimpey, Britain's second largest housebuilder, as saying:
"I have been in the industry 42 years. These are the worst conditions I have experienced."
The article goes on:
"Tarmac, the country's biggest housebuilder, said this week that trading conditions had deteriorated substantially during the last two months."
That is, the "last two months" in which recovery is supposed to be happening before our very eyes. Where are the encouraging statistics which are pointing very much in the right direction?
In his Mansion House speech given this year at the Guildhall, the Chancellor told us that the good news was that
"In Britain we are now on the road to recovery. Retail sales are on an upward trend."
The Chancellor felt so strongly about that matter that he waxed indignant in our previous debate. Indeed, he challenged me to withdraw my sceptical remarks about his statistical justification. Unfortunately for the Chancellor, since that debate the release of the latest figures for October shows a 0·5 per cent. fall in retail sales for the month, a 0·3 per cent. fall for the August-October quarter over the previous quarter, and even a 0·3 per cent. fall compared with the equivalent period a year ago. On 19 November, the Financial Times reported:
"The Treasury agreed that sales had been flat for the last three months."
It quoted a Treasury spokesman as saying:
"On the face of it the figures are a bit of a disappointment." We cannot look for recovery in that quarter—certainly if the Treasury assures us that it is not happening.
Construction is a disaster and retail sales are poor. What about industry? The Government claim that we should be encouraged by a 0·3 per cent. rise in GDP in the third quarter, a rise which has occurred exclusively, as they well know, because of the full resumption of North sea oil production after a period of interruption. However, in the onshore economy, non-oil GDP continued to contract by 0·3 per cent., with manufacturing flat and services falling. Over the past three months—sad to say—both the value and volume of exports have declined, and manufacturing output, which constitutes about a quarter of our GDP, has barely moved since April. Car production in October fell by 27 per cent. and sales of new cars plunged by 22·5 per cent. in the same month.
Perhaps the most worrying feature of all is the alarming growth in liquidations and the rise in unemployment. The Association of British Chambers of Commerce revealed last week that companies are going out of business at a faster rate than at any time in the past five years. Dun and Bradstreet tell us that, in the first nine months of this year,
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business failures are running at a rate of 930 per week—a 70 per cent. increase over the previous year and the largest increase for 11 years. Other alarming figures, from the real economy in which our constituents live, are that, in the past 18 months, unemployment has soared by 850,000 and 100,000 homes are being repossessed this year alone.
Against that tragic background, is it any wonder that consumer confidence has been slipping in successive months ever downwards—September down on August, October down on September, and November down on October? I agree, none the less, with the Chancellor on one point. In his Budget wind-up speech, he said:
"It is better to put the facts before Parliament and the country."—[Official Report, 25 March 1991; Vol. 188, c. 698.]
In the absence of candour from the Government, that is just what this debate is about.
Mr. Peter Thurnham: The right hon. and learned Gentleman has mentioned putting the facts before Parliament and the country. Will he put the facts before the country about Labour's spending pledges? Will he comment on the remarks of the right hon. Member for Manchester, Gorton (Mr. Kaufman), who said that he would increase overseas aid to 0·7 per cent., which would cost £2·3 billion? How does that square with Beckett's law that only old-age pensions and child benefit would go up?
Mr. Smith: I can understand the hon. Gentleman's anxiety to talk about almost anything except the recession. I have made our spending plans clear on innumerable occasions. We are discussing—I really must keep in order —the recession from which this country is suffering, even if there is a disinclination among those responsible for it to want it discussed in Parliament.
I ask the Chancellor how he can conceivably justify his claim earlier this year that the recession would be over "somewhere around the end of the second quarter." That is to say in the middle of this year. There is no doubt that he claimed that, and there is no doubt that that has not happened. Here we are, approaching the end of the fourth quarter, and the very best that one can say is that we arc bumping along the bottom of a deep and damaging recession. That is all too clearly understood by those at the sharp end in industry, commerce and finance, as well as by our constitutents.
The repeated claims of recovery around the corner, which are not fulfilled and which have been the Chancellor's stock-in-trade month after month, have fatally damaged his credibility and that of the Government as a whole. Indeed, the Chancellor's efforts are now regarded as risible as well as incredible. At the recent royal variety performance, Mr. David Frost, who was compering the proceedings, told the company that the Chancellor could at last give a completely firm forecast of when the recovery would occur—he said that it would happen definitely in the fifth quarter of the year. That statement has some aptness, because Mr. David Frost elicited the "vague" and "faint" stirrings that the Chancellor detected in the housing market.
What is deeply disturbing for Parliament and for the country is the "wait and see" attitude, which is the Government's substitute for a policy for recovery from recession. They hope for a consumer-led recovery. Indeed, on 4 June, the Chancellor told the OECD conference in Paris:
"Consumer spending led us into recession and I expect it to lead us out."

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Many people might think that high interest rates led us into the recession, but I let that point pass for the moment.
In the Walden interview, the Chancellor even seemed to lose confidence in that hoped-for salvation. On the retreat once again, he said:
"We are looking for part of the recovery to come from consumer demand, but by no means all … It does take time" —we have heard that before—
"what we need is what Disraeli once called the alchemy of time."
Intrigued by that reference to alchemy, which I did not think was all that honourable an occupation, I consulted "Collins English Dictionary", which I have in the office. According to that dictionary, alchemy—alchemy of time is what we are relying on—is
"the pseudo-scientific predecessor of chemistry that sought a method of transmuting base metals into gold: an elixir to prolong life indefinitely: a panacea"—
it is hardly believable—
"or universal remedy."
The Chancellor was being even more percipient than he realised. The truth is that, after 12 years in power and with an election fast approaching, the Government are merely hoping that something will turn up. In no sense is that an economic policy for this country.
What we need surely is an investment-led recovery which recognises the fast-approaching challenge in the form of the single market after 1992 and which seeks to rebuild the industrial capacity on which this country depends. Over the Conservative years, we have seen the persistent reduction in the capacity of our manufacturing sector, which, after all—we repeat it endlessly, but it is a fundamental truth about our economy which should be appreciated by the Conservative party—is our fundamen-tal wealth creator and the indispensable internationally tradeable part of our economy. For a country which has a tendency both to inflation and a balance of payments deficit, the overriding objective of policy must be to enlarge our capacity to produce the goods that customers wish to buy, both at home and abroad. That is exactly what is not happening now.
Mr. Phillip Oppenheim: The right hon. and learned Gentleman is correct to say that manufacturing is important, but is he aware that, according to the OECD's six-monthly series figures, manufacturing output fell under the last Labour Government, whereas it has risen by a quarter under this Government and rose faster in this country in the 1980s than in any other major country in Europe? Will he cast his mind back to the time when his party last implemented its industrial policy— when British Leyland was the butt of international jokes; when British Airways was rated beneath Aeroflot and when British Steel was the world's largest loss maker? As the right hon. and learned Gentleman has never manufactured anything except dodgy policies, how can he do any better?
Mr. Smith: As he often does, the hon. Gentleman has once again traded in bogus statistics. He is quite wrong about that—
Mr. Oppenheim: No.
Mr. Smith: As I recollect it, manufacturing investment is now lower in real terms than in 1979, which is pretty well the end of that argument.
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We do not have an investment-led recovery now—
Mr. Oppenheim: The right hon. and learned Gentleman is denying OECD figures.
Mr. Smith: To show that that is not just a view that is held uniquely by the Opposition, I shall quote from the National Institute Economic Review of May 1991, which argued—in my view, persuasively—that
"the loss of manufacturing capacity in the early nineteen eighties must be partly to blame for the overheating of the economy at the end of the decade and the consequential problem of inflation and payments imbalance. It's only too likely that the present recession will create the conditions for just the same kind of overheating to occur again sometime in the nineteen nineties if nothing is done to compensate".
So what is being done to compensate? Seemingly nothing.
Let us take the projections for investment, the very life blood of economic development. After a dramatic fall this year in gross fixed investment, which the Chancellor conceded in his autumn statement to be almost 11 per cent., the consensus of economic forecasts, which was helpfully compiled by the Treasury, shows an even further fall in gross fixed investment next year. According to the International Monetary Fund, the United Kingdom will be bottom of the investment league of the G7 countries next year and, according to the Confederation of British Industry, manufacturing investment, which is already falling this year by around 15 per cent., is expected to fall again next year by almost 4·5 per cent.
However, in this situation, the Government do not propose any action to bridge the investment gap. We appeal to them, before even more damage is done, to reconsider their rejection of the case for fiscal incentives to encourage company investment in manufacturing by increasing capital allowances and by introducing tax credits for research annd development expenditure to stimulate the adoption of new technologies in British industry. Those proposals are backed—
Mr. David Shaw: Will the right hon. and learned Gentleman give way?
Mr. Smith: I am sorry, but I have given way frequently and I really must get on.
Those proposals are backed by a wide consensus in industry. The excellent House of Lords report, "Innovation in Manufacturing Industry" of January this year, argued strongly for the principle of such fiscal incentives. It is also supported, as the Chancellor well knows, in Budget submission after Budget submission by the Engineering Employers Federation, the CBI and the Trades Union Congress. I have no doubt that, in anticipation of next year's Budget, the representations will be resumed with even more urgency than before as our industrial situation deteriorates even further. I hope that the Chancellor does not, on this occasion, turn a deaf ear. What is galling for our industry is that, allegedly in the name of creating a level playing field, the present Government have created a situation in which, in the context of international competition, our industry has to play uphill in both halves against competitors whose Governments specifically encourage industrial investment.
I make no apology for once again urging the compelling case for a new approach to education and training. In "Training Statistics 1991"—the Chancellor seems to find this amusing, but the skills shortage is the most serious problem that this country faces and should not be a subject for amusement. "Training Statistics 1991", issued recently

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by the Department of Employment, again reveals the astonishing prevalence of serious skills shortages even at a time of severe recession and high unemployment. It takes a bit of believing, but in the past 12 months, according to the Department of Employment, 24 per cent. of all enterprises reported skills shortages. The figure rose to 41 per cent. in high technology sectors, such as mechanical engineering.
The amount of training that employers are planning to provide has fallen dramatically. The balance of large manufacturing firms plans has become negative, falling by a staggering 67 per cent. between October 1989 and July 1991, with a balance of 20 per cent. of those firms planning to decrease training in the next 12 months. That is further evidence of the baleful effect of savage recession on industrial companies which are forced to cut essential investment and essential training simply to survive. According to the Government's own report, fewer than half the participants in employment training complete the course; 55 per cent. go straight back into unemployment; and only 23 per cent. find a full-time job at the end of it. That is no doubt why the Treasury quarrelled with the Department of Employment about giving it more money for schemes that achieve such poor results.
Perhaps most damning of all are the international comparisons. Our weakness in developing intermediate skills is starkly revealed in a paper by the National Institute of Economic and Social Research, which was published in January this year. It shows that, in Britain, 31 per cent. of technical workers in manufacturing had no vocational qualifications. In Germany, the figure was only 8 per cent. At higher levels of qualification, only 14 per cent. of British technicians were qualified, while in Germany the figure was 36 per cent.
It is absolutely clear that to compete, against Germany and others, in the single market after 1992 and in the world of constant technological change, those investment and training gaps must be closed. The Government can no longer shuffle off responsibility for training on to companies, particularly companies that have been debilitated by the recession. The Labour party believes that it is in the necessary marriage of technology and training and in the continuous enhancement of investment, particularly in manufacturing, that we can find the way forward to the competitive and productive economy that alone can guarantee our economic progress and support our standard of living.
As is often said, it is quite true that we need a recovery of confidence before we will see an end to recession. The Opposition believe that such confidence can be secured and maintained only by an investment-led recovery. Once this country starts investing in enlarging its industrial capacity, in enhancing its technological capability, and in developing the skills of our people, there will be a sound basis for self-confidence in our economic future. There is no sign whatsoever that this Government and this Chancellor comprehend those realities. That is why., after 12 years of failure, they will soon be relieved of the responsibilities of government.
4.47 pm
The Chancellor of the Exchequer (Mr. Norman Lamont): I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:
"welcomes Mr. Chancellor of the Exchequer's Autumn Statement, which reaffirmed the Government's forecast of a
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modest recovery in the second half of 1991, with growth gathering pace in 1992; notes that the total output of the British economy rose in the third quarter of 1991, providing further confirmation of this forecast; and congratulates the Government on its sound and prudent economic policies, which have reduced inflation from nearly 11 per cent. to under 4 per cent. have allowed interest rates to be reduced from 15 per cent. to 101 per cent. and have laid the foundations for sustained non-inflationary growth.".
After four days of not always very exciting negotiations in Brussels, it is a great pleasure to return to the light entertainment that is provided by the right hon. and learned Member for Monklands, East (Mr. Smith). As usual, he has given an assortment of selective quotations and short-term statistics. If he has any constructive thoughts about the economy, he is determined to keep them firmly to himself. He has not offered the House any policies—he never does, and he never will. He knows that, as each month goes by and as the economy moves out of recession, the Labour party's position will become more difficult. He is desperate to talk down the British economy, but his opportunities are fast fading.
Much of the right hon. and learned Gentleman's speech dealt with forecasts. He told the House of the Government's stunning inability to foresee even the immediate future, but the right hon. and learned Gentleman himself has a bit of a past at forecasting. He, too, has a track record. In fact, his speech today bore an extraordinary resemblance to the speech that he made on 12 November 1984, when he forecast that unemployment
"will go on rising relentlessly and remorselessly."— [Official Report, 12 November 1984; Vol. 67, c. 435.]
In March 1985 he said:
"So long as the Tory Government remain in office, unemployment will continue to rise".—[Official Report, 11 March 1985; Vol. 75, c. 104.]
What happened after that brilliant forecast? Over the next four years unemployment fell by more than a million.
Dr. John Cunningham: It has risen again.
Mr. Lamont: It is lower today than it was when the right hon. and learned Gentleman made his point.
The OECD said:
"Between 1984 and 1990, the UK had by far the best job creation record of the larger EC countries".
So much for the right hon Gentleman's forecast.
Mrs. Gwyneth Dunwoody: Will the Chancellor give way?
Mr. Lamont: I will give way in a moment.
Far from being able to forecast the future, the right hon. and learned Gentleman has shown that he is singularly unable to forecast either the past or the present. In the same speech in March 1985 he was unable to do it. He said that he was amazed to be told that we were in the fourth year of economic recovery. What was happening? Between 1982 and 1985 growth had been running at more than 3 per cent. a year and the economy carried on growing for another four years after that. Not only did the right hon. and learned Gentleman not know where we were going; he did not even know where we had been. So much for his ability to forecast. What about the favourite subject of the right hon. and learned Gentleman, to which he returns in every speech—investment? On 12 November 1985 he predicted that,
"there will be a temporary upward blip in the figures. However, from 1987 onwards … there will be a return to the downward trend."—[Official Report, 12 November 1985; Vol. 86, c. 467.]

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That was an extraordinarily precise prediction, one might think, from someone who is so meticulous in his determination never to say anything. What happened? In 1987, 1988 and 1989 there was an unprecedented investment boom in Britain. Some downward trend! Even today, manufacturing investment is running at levels higher than those achieved in 1986. In view of those forecasts, is the right hon. and learned Gentleman in any position to give anyone lessons in forecasting? He does not even bother to make new mistakes; he just repeats the same ones that he has made before.
Mr. Robert Sheldon: While we are talking about the past and the nature of precise predictions, will the Chancellor recall the precise predictions that were made in 1985 about the way in which the money supply would diminish over the years and inflation would follow correspondingly year by year? The figures were precise—7 per cent., 6 per cent., 5 per cent., 4 per cent., year by year. That was the nonsense of all time.
Mr. Lamont: From the early 1980s inflation fell. The right hon. Gentleman knows that perfectly well. Inflation fell markedly and it has fallen again.
The right hon. and learned Member for Monklands, East and his hon. Friends have talked in the past of a recession made in Downing street. That is the phrase often used by the hon. Member for Dunfermline, East (Mr. Brown). My right hon. Friend the Prime Minister and I must have more influence than we thought because, as the right hon. and learned Gentleman knows only too well, throughout the industrialised world 1991 has been a year of either falling industrial growth or recession. Even in Germany industrial production is falling. Indeed, industrial production has fallen in the past year in every G7 country. The United States, Australia and Canada have been in recession for much of the past year. In Europe, Sweden, Switzerland and Finland are all in recession, while in turn growth is now slowing and unemployment is rising across much of the rest of Europe.
Overall, 1991 is likely to show the weakest growth in the world economy in a decade. We know that Opposition Members are still locked in their isolationist world. It is wilful ignorance to imagine that that factor could have no impact on the United Kingdom. Of course, the last year has been a difficult one for the British economy. Some sectors and many individual businesses have been badly hit. However, the right hon. and learned Gentleman's portrait of ever-deepening recession is fiction.
In my Budget statement last March, I forecast that growth would resume in the second half of the year. So far, the economy has developed in line with that prediction, so when I presented the autumn statement a few weeks ago there was no need whatever to depart significantly from my Budget forecast. I have no reason to revise my view that GDP will show a modest increase in the second half of this year and that recovery will accelerate next year. That is what I said in the Budget and in the autumn statement. That is what I say now.
Mr. Giles Radice: The Chancellor mentioned what is happening on the continent. Does he remember that the Governor of the Bank of England told the Select Committee that our recession was home grown?
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In view of the right hon. Gentleman's optimistic forecast, will he tell the House whether he believes that there will be a credit crunch this winter?
Mr. Lamont: I do not believe that there are reasons for thinking that there will be a credit crunch, if by that the hon. Gentleman means the inability of British banks, because of capital inadequacy, to meet the demands of borrowers, I do not believe that that is the position in Britain. Britain is better positioned in that respect than many other countries. I have demonstrated to the House that many countries are in recession and many countries are experiencing slowing industrial production. That plainly affects the world economy and the growth of world trade.
The right hon. and learned Member for Monklands, East did his best to suggest that my forecast for next year was over-optimistic, but my view is broadly shared by independent forecasters. Over half of the main City forecasters believe that growth in 1992 will be 2 per cent. or more and so do organisations as diverse as the National Institute of Economic and Social Research, the International Monetary Fund and the European Commission. The IMF forecasts that we will grow as fast or faster than Germany or France in 1992.
As for this year, the right hon. and learned Gentleman did his best to present my views and those of independent forecasters who support my views as unrealistic. However, he admitted that no one has ever suggested that we would see fast growth at this stage. In virtually every speech and public appearance that I have made since the Budget, I have made it clear that growth would be modest at first and that business conditions would remain difficult in some sectors for a while. I understand the frustration and impatience of business men who would like to see demand picking up more quickly, but it is simply not normal for the economy to move instantly from recession to speedy growth. Current conditions are exactly what one would expect to see at the turning point between recession and recovery. Mixed signals are inevitable but there are signs that the fall in output is behind us.
Industrial production rose by more than 1 per cent. in the third quarter. That was a larger increase than in the United States, Japan, Germany, Italy or France and larger than in all the G7 countries other than Canada. As one of my hon. Friends said, the rise in unemployment in October was the smallest for over a year. Unemployment fell in the north and Wales and fell in Scotland for the second month running.
Manufacturing investment, in which the right hon. and learned Gentleman claims to be so interested, rose in the third quarter for the first time in a year. Companies increased their stocks in the third quarter, again for the first time in a year. The narrow definition of money has moved into the upper half of its target range, again for the first time in a year. Manufactured exports are running at record levels and business surveys show that output, export and investment expectations are all up. After falling by I per cent. in the second quarter of this year, GDP rose by 0·3 per cent. in the third quarter. However the right hon. and learned Gentleman seeks to explain that away, it was the first time in a year that the total output of the whole economy had risen. Industrial production also rose in that quarter compared with the previous quarter, and by

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a larger amount than in other G7 countries. That fully justifies some of the remarks that I made in both the Budget and the autumn statement.
Mr. John Smith: Does the right hon. Gentleman accept that, as is reported in The Independent, he said in Washington on 29 April of this year that the recession would be over
"somewhere around the end of the second quarter"?
Is he saying that the recession is now over?
Mr. Lamont: As the right hon. and learned Gentleman knows, a recession is defined as falling output. Total output has ceased to fall and it rose in the third quarter. In that sense, technically, the recession has ended, as I have said publicly before.
Mr. George Foulkes rose—
Mr. Lamont: I will give way in a moment.
There are good reasons for believing that growth will gather momentum during coming months. Real incomes have been rising, consumer expenditure will increase as the full impact of lower interest rates works through to demand and, as world growth picks up, exports will increase further.
The right hon. and learned Member for Monklands, East and his hon. Friends seem confused. Today the right hon. and learned Gentleman talks of nothing but recession; in September, he absentmindedly started to use the word "recovery". Not only that, he and his right hon. Friend the Leader of the Opposition were so alarmed at some of the accounts appearing in the newspapers that the Leader of the Opposition said that Britain was heading for a short-lived boom fuelled by consumer credit. Which is it, recession or boom? The right hon. and learned Gentleman should have made up his mind.
Even during a boom, firms fail and people lose jobs —so it is not surprising that, as the economy emerges from recession, the right hon. and learned Gentleman always manages to come up with plenty of gloomy quotes., but his picture is highly selective. He should listen to the words of those who know far better than he does what is going on in the economy. Professor Doug McWilliams, chief economic adviser to the Confederation of British Industry, agrees that the economy "is edging up slowly." The president of the Association of British Chambers of Commerce said:
"Commerce and industry is on the road to recovery."
Even in the depressed housing market, the chief executive of Abbey National says that the worst is over.
The right hon. and learned Gentleman says that I am wrong, but does he think that all those people are wrong as well? He went on about retail sales again this afternoon, but they rose in the third quarter. It is true, as he said, that they fell back in October. Instead of talking so much about how bad business is, he should listen to some people in business.
Mr. Desmond Pitcher, the chief executive of Littlewoods, said:
"I am sure we have turned the corner."
Mr. Colin Evans, deputy chairman of Austin Reed, said:
"I believe the turnround has arrived."
The CBI's last survey of the retail trade said that the
"slow upturn in retail sales is now starting to gather momentum."
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That does not mean that all retailers view the position in the same way and that all retailers are experiencing the same conditions. Clearly, there are business men who believe that conditions are improving.
In the months ahead, there will be weeks when the figures are encouraging and weeks when they will be less so. Does the right hon. and learned Gentleman seriously think that the way to run the economy is to try to manage demand, quarter by quarter and week by week, changing our policy as each new statistic is published? What sort of stability is that for industry?
Mr Foulkes: As the Chancellor knows, I am a simple sort of soul. I do not know all the professors and chief executives to whom he refers. Every week I spend Friday, Saturday, Sunday and Monday in my constituency. I talk to the textile manufacturers, who tell me that they are in a slump. I talk to the motor sales men, who tell me that things are pretty bad. I talk to all of the people in my constituency, people who see the reality of rising unemployment—then I come back to the House and hear an entirely different story, divorced from reality, from the Chancellor. Does not he think that it might improve his credibility if he were to admit what is really happening outside, and say what he intends to do to resolve the problem?
Mr. Lamont: I am sorry that I gave way to the hon. Gentleman. He is not such a simple soul—only a bit of one. His intervention would have been more telling if he had commented on some of the facts and statistics that I have given. He made no attempt to reply to those.
The right hon. and learned Member for Monklands, East wrote me a letter last week—I have it here somewhere —calling for what he referred to as a "change of economic course". What change of course is he suggesting? Today he offered nothing in the way of serious policy proposals. He talked a great deal about recession, but did not say what alternative policies he would pursue, apart from training. What is this mysterious change of course that he keeps talking about? He implies that it exists, but he does not specify, or tell anybody, what it is. At the time of the Budget, the right hon. and learned Gentleman refused to say what his tax policies were. Now he tells me to change course. What does he want? Now is the time for him to tell us. Does he think that taxation is too high or too low?
At the time of the autumn statement, I asked him whether he thought that public expenditure was too high or too low. He asks us to change course, but what does he want? He will not say. I asked him a few weeks ago if Government borrowing was too high or too low or just about right. He calls for a change of course, but he will not tell us what he thinks the three main levers of policy— spending, taxation and borrowing—should be or how they should be used differently. He will not tell us because he has not got a clue.
Conservative Members have learnt the folly of fine-tuning, even if the right hon. and learned Gentleman has not. The sort of quick fix that he implies exists does not exist and could only undermine stability for business. It would encourage the illusion that Governments know best, that Governments produce economic recovery. As the history of Labour Governments shows only too well, attempts to pump up demand in response to short-term statistics end only in disaster. Businesses generate economic growth and prosperity. That is why we say that

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the Government must stick to doing what only they can do —providing the framework within which businesses can plan and invest in the expectation of a sustained recovery, something that never happened and never could happen under Labour.
The Government have kept control of public spending; under Labour, it ate up almost half the nation's wealth. The Government have cut taxation rates. We now have the lowest corporation tax rates in the Community and among the G7 countries. That is why we get more inward investment than anywhere else in Europe. All Labour wants to do is to put up taxes again. The Government take a long-term view of measures to promote competitiveness. We cut unnecessary regulation and help markets to work better.
The right hon. and learned Gentleman wants to smother business in bureaucracy and restore trade union power. The Government have brought inflation down—it is now 3·7 per cent., half the lowest rate that the last Labour Government ever achieved. Most important of all, by joining the exchange rate mechanism and sticking to its disciplines, the Government have demonstrated their determination to keep inflation down to levels comparable with the best in Europe.
Above all, it is our determination to secure low inflation that is laying the foundations for sustained recovery. Retail price inflation is down by two thirds. Underlying inflation, which never rose as high, has fallen less dramatically, but will fall further during the coming year. Factory gate inflation has fallen even faster than expected and by the end of the year should be down to the lowest level in more than 20 years.
As usual, the right hon. and learned Gentleman managed to go through a speech on the economy without mentioning inflation, exactly as his right hon. Friend the Leader of the Opposition did in his interminably long speech at the Labour party conference. There was not a word on inflation. We have been trying to get inflation down. All that the right hon. and learned Gentleman does is to try to get everyone down. His refusal to accept that the defeat of inflation must be the first priority—and, what is more, his refusal to understand and support the measures necessary to deal with inflation—would have led us to a far deeper and more damaging recession.
No matter what the level of interest rates, for years the right hon. and learned Gentleman has been arguing for a cut. In October 1990, when inflation was 11 per cent., he was calling for interest rate cuts. In October 1987, when interest rates were 9·5 per cent., he called for interest rate cuts. In March 1988, when interest rates were 8·5 per cent. —many people with hindsight believe that they were too low—he called for interest rate cuts. The right hon. and learned Gentleman proclaims his undying devotion to the ERM, but has never stopped him calling for interest rates to be cut further and faster. He never fails to choose soft options and easy answers. If I had taken his advice, it is all too clear what would have happened to the pound in the last few weeks.
In July, when the right hon. and learned Gentleman was asked about the effect on sterling of his policies, he made this extraordinary remark to "Newsnight":
"All I would have to do is pick up the phone and talk to someone on first name terms."
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I wonder who that would be. I have been thinking about it. One can imagine the conversation, "Alto Jacques, is that you? How are things in Brussels? Listen Jacques, I've got a bit of a problem here. Can you help? Yes, I know you had to bail us out last week, but the colleagues keep spending it—yes, all of it. Yes, I'm sorry Jacques". But even the right hon. and learned Gentleman must have realised that first name terms might not deliver the goods —[Interruption.] Two weeks ago he seemed to be having doubts about his own abilities because he said, in answer to a similar question, that before doing anything, he would have to take advice. A lawyer's cry. Advice from whom? I can give him some advice, though I do not think he will thank me for it. His death-bed conversion to monetary prudence will not convince anybody, least of all the foreign exchange markets. They have heard him week in, week out talking of lower interest rates. The truth is that his policies inevitably would have led to higher inflation and higher unemployment in the long run.
Mr. A. J. Beith: Does the Chancellor see much prospect for lower interest rates in the coming months? Is he prepared, if necessary, to allow higher interest rates if there is pressure on sterling?
Mr. Lamont: The hon. Gentleman knows that I never comment on the trend of interest rates—[HON. MEMBERS: "Answer."] I will answer his question by saying that we shall do whatever is necessary to sustain the pound's position.
Mrs. Dunwoody rose—
Mr. Lamont: I have given way several times.
The one policy that the right hon. and learned Gentleman always puts forward in answer to every problem, short term or long term, is training and investment. That is the one phrase he always uses. He became rather cross when, in a previous debate, I compared him with a parrot which knew only that one phrase—training and investment. Whatever the question, the answer is always the same from the right hon. and learned Gentleman—training and investment. When he was asked on the radio the other day how he would keep inflation down, he replied:
"We need a programme of investment and training."
In another broadcast, he said that the United Kingdom was in a poor competitive position, and he gave as his remedy more money for training and investment. When asked how he would keep the pound in the ERM, he replied that it would be done through
"a programme of investment and training."
When asked how Britain would be able to be ready for monetary union, he replied:
"A programme of training and investment, of course."
The right hon. learned Gentleman's letter to me last week called for action to initiate a programme of training and investment. That really will not do. He has refused to answer questions about taxing, spending and borrowing. We know why he refers to training and investment—because it is less embarrassing than talking about the things that other people want to talk about. Someone at some time should let him in on the secret that next year we shall be spending over two and a half times as much in real terms on training, enterprise and vocational education as in 1978–79.
Perhaps someone will tell the right hon. and learned Gentleman that employers' training expenditure is now

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running at record levels and that under the Conservatives the share of our total resources going into investment has reached record levels, far above anything achieved under Labour. Even with a fall in investment—and it always falls in recessions—the investment-GDP ratio will be far higher this year than at any point under the last Labour Government.
The truth is that the right hon. and learned Gentleman's much-vaunted programme for training and investment would only make it more difficult for business to train and invest. How would he pay for it? His hon. Friend the Member for Derby, South (Mrs. Beckett) tells us that the Labour party has only two spending commitments—increasing pensions and child benefit.
"Everything else is regarded as a desirable aim",
she tells us, and will have to be paid for "as resources allow" out of economic growth. So there we have it— Labour's main policy to create growth will have to wait until there is growth. Under Labour it would be a very long wait indeed.
Where will the right hon. and learned Gentleman find the money to finance the training and investment? He has talked in the past of financial incentives and tax credits, but he knows, or he should know, that one business's tax break is another business's tax increase. We have reduced corporation tax from Labour's 52 per cent. to 33 per cent. He would have to put the rate up again. He would be taxing away the money that businesses already use to finance training and investment.
The right hon. and learned Gentleman always forgets that people invest in the hope of making profits, but does he ever talk about making profits—not in our hearing. In the 1980s, profitability increased markedly. The result was that, contrary to the famous prediction that the right hon. and learned Gentleman made in 1985, business men invested on a vast scale. Business investment under Labour increased by barely 1 per cent. a year; under the Conservatives it has grown by over 2·5 per cent. a year. Despite the recession, business investment in plant and machinery is 50 per cent. higher than in 1979 and business investment will rise again next year as profitability recovers. Who is the right hon. and learned Gentleman to talk about investment? As I say, it is easier for him to talk about investment and training than more difficult issues such as taxing and spending.
Another point to which the right hon. and learned Gentleman never refers is the fact that the best way to get more investment is to have more savings. That is one of the first things students learn in economics, though not, apparently, in the Labour party. The more we save, the more investment we can have and the more interest rates can be lowered. We have had 10 years of cutting taxes on savings. What a contrast to the position of Labour Members, who still refer to income from savings as unearned income; they believe in taxing it as heavily as possible.
The Labour party wants to introduce a new tax on savings, disguised as national insurance contributions. That proposal, together with all of Labour's other tax increases, would slash the return on savings. As a result, savings would fall and so would investment. A Labour Government would end up, as they did before, with a miserable investment performance. As always, there is a yawning gulf between rhetoric and reality. In every area, the right hon. and learned Gentleman is determined to repeat the mistakes of his predecessors.
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Nowhere is that more true than on public expenditure. All over the country the right hon. and learned Gentleman's colleagues have been pledging extra spending —£35 billion worth of pledges at the last count, and still rising. Who is to pay for it? That is the key question. We do not know, they will not answer, they do not have an answer and they never will have an answer. There is a gaping hole in Labour's accounts, the same hole which last time they filled first by borrowing and then by running to the International Monetary Fund.
At the last election, at least the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was frank and honest. He told basic taxpayers where they stood—that they would be hit hard with higher rates. This time, the right hon. and learned Member for Monklands, East talks mysteriously only of new tax bands. We are told that they would not make basic-rate taxpayers worse off. What on earth is the point of introducing bands if they are not to take money from some people and give it to others? We do not get any answers.
On economic and monetary union, it is the same story. Is Labour in favour of a single currency? We have had no answer—or rather, we have had two answers, yes and no. Labour's leader opposes the opt-out clause that we want, but its shadow Chancellor refuses to make a commitment to a single currency. They think that things are better seen in perspective—facing both ways.
The Opposition called this debate on the economy today. I am more than happy to respond by expressing the confidence of the Government that the policies that we are following are right. Is not it extraordinary for the Opposition to use one of their parliamentary days to call for a change of course, then advance scarcely a single positive proposal or suggestion in the debate? Is not it amazing that they come to the House crying loudly for what the right hon. and learned Gentleman called in his letter a "change of course", without being able to give the slightest detail on that change of course or how the Labour party would make such a change? Perhaps it is all training and investment.
We know what a change of course really means. We have cut tax rates, controlled public borrowing, reduced inflation and brought down interest rates. The Opposition would change course all right—they would put up taxes, borrowing, inflation and, ultimately, interest rates, too. They are not only devoid of positive policy proposals for economic success, they actively hope for economic failure. They will be disappointed, and no amount of gloom, depression and hand wringing will stop the recovery gathering momentum. That recovery will be produced by policies that are clear, consistent and firm, not diverted or abandoned because of each passing statistic; policies designed to ensure sustainable growth in the future, on the firm base of stable, low inflation. Every hon. Member knows that those policies are right.
The only threat to renewed growth would be a return to office of a party that is reckless with inflation and profligate with taxpayers' money. Britain's economic recovery can survive the cultivated gloom of a Labour Opposition, but it certainly could not survive a Labour Government. That is why we shall continue with policies that have created the opportunity for renewed growth and increased prosperity. Our policies have laid the foundations for recovery and they deserve the support of the House.
5.30 pm
Mr. Robert Sheldon: There were two surprises in the Chancellor of the Exchequer's speech, but the one that struck me most was that he wants more saving. There seems to be some schizophrenia, because I understood that the Government's policy was to encourage people to spend, that they wanted a consumption boomlet that would last until the election. The right hon. Gentleman now says that that is not what was in his mind—that he is really trying to reconcile what he has been saying for many years.
It is unwise to make comparisons with past predictions, because in 1979 the Government increased VAT from 8 to 15 per cent., saying that it would not increase prices. I found that astonishing then, and I still find it astonishing. We need reasonable forecasts, not because we expect them to provide blueprints for the future but because they provide a guide so that policies can be changed. The Government, however, see the trends and continue to make the same forecasts. If they were realistic, they would admit that they need to change their policies, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) has proposed.
The Financial Secretary to the Treasury (Mr. Francis Maude): What can we understand the right hon. Gentleman to be proposing?
Mr. Sheldon: I shall come on to that in great detail. I shall go into greater detail than my right hon. and learned Friend the Member for Monklands, East had a chance to do on the kinds of investment that can be produced, rather than the consumption boom which the Chancellor hopes for.
The debate is intended to bring the Government to account. They must account for their management of the economy. Naturally, I do not expect the apologists on the Government Front Bench to criticise the Government's policies, still less to condemn their actions. However, some of them might have had it in them to refrain from congratulating the Government on delivering the two worst recessions of the post-war years.
How did the implementers of the monetarist nonsense which brought about the first recession manage to produce a second recession? The Government came to office in 1979, when my constituency, Ashton-under-Lyne, was a manufacturing area with a level of prosperity higher than the national average. It earned its living then, as it does now, by making things, and it had many small to medium firms.
It used to have less unemployment than the regional or national average. In the district that embraces both my constituency and Stockport, there were 20,000 skilled engineers, many of whom were made unemployed. Today, there are no longer 20,000 but 5,000. At a time when skills are in demand, they have been wantonly discarded. That is why my right hon. and learned Friend continually puts forward those proposals, and he has the full support of the companies in my area, which understand those problems.
In the two years 1979–81, one third of the firms in my constituency closed. That was a devastating blow from which the constituency is struggling to recover. My right hon. Friend is right to talk about the industrial capacity being too low to produce the recovery we need. It is a long-term, essential and immediate job to bring industrial capacity back to what it should be. I have never forgiven
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the Government for what they did to my constituency in those two years. The good medium and high-tech firms all flourished in Germany, Japan and the United States—indeed, in all countries. They had a good past and a reasonable future, but they were ruined by the highest interest rates this century and an unrealistic exchange rate, which lost them export markets and provided further competition in their home markets.
We now have the present long-lived recession, which is a further injury to deal with. It will be some time before I have the figures to show how serious the second recession has been—how many firms have closed, how many jobs have been irrevocably lost, and how the finances of the survivors have suffered. However, I know of repeated pleas for action and the despair of so many small firms, one of which resulted in yet another suicide of someone whom I knew, resulting from business failure. Meanwhile, closures of important firms continue. There is no question of a weeding-out process. Many are firms that expanded and invested with no expectation of 15 per cent. interest rates. Even prudent companies' reasonable expectations have been destroyed by the Government's actions.
The Chancellor gives selective statistics, but I suppose that all our statistics are, to an extent, selective. I visit many manufacturing companies and ask them about the state of their order books. I do not ask what hopes or expectations they have, or what they are dreaming of, but what they are experiencing. There is no question but that firms that expect recovery do not lay off workers. Firms that are hopeful about the future do not take such measures. Therefore, the rising levels of unemployment are a direct consequence of what those firms are experiencing, not what they are hoping for. That should be of concern to the Chancellor.
In such circumstances, it is effrontery that my right hon. and learned Friend the Member for Monklands, East and my hon. Friend the Member for Derby, South (Mrs. Beckett) should be attacked for what they might do, instead of the Government being brought to account for what they have done and continue to do. Opposition Members want to return to common-sense methods of running the economy, encouraging investment and skills.
When I hear the attacks on that modest, even cautious, and certainly prudent programme, I must compare it with the gross waste of public money in which the Government have indulged. They spent billions of pounds on the nightmare of the poll tax, and millions of pounds were lost to the taxpayer when they sold off publicly owned assets at well below valuation. In fact, some of them were not even valued, so anxious were the Government to get rid of them. They waste our public services, and essential repairs are not carried out. The fabric of our schools, public buildings and roads store up bigger and bigger bills for the future.
Meanwhile, the Government are busy opting out of industrial policy. I recently asked Lord King of British Airways about his decision to buy Boeing aircraft and United States General Electric aero engines—not only that, but the fact that he was giving them a foothold in Britain at the expense of Rolls-Royce. I asked him what he had told the Department of Trade and Industry, and he said that he had said nothing. I was astonished, and thought that he had misunderstood my question. I asked what the DTI officials had said, and he said that they had told him nothing. I could not believe that, but he confirmed it openly and readily.

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If the Department of Trade and Industry is dealing with one of the most important companies in our country, it should hold a view on what that firm should do or how it might be helped to overcome its problems. I am not talking only about the position in countries such as Germany or Japan, but about second or third-world countries. We are dealing with the issue of investment and the necessity for it—which, I regret to say, the Chancellor of the Exchequer did not seem to understand.
The Confederation of British Industry has come round and is now talking about 40 per cent. capital allowances. I do not think that that is enough, but I am delighted that my right hon. Friends have again and again spoken of the necessity for plant and machinery. We must recreate the industrial structure that we once had and wantonly destroyed.
Mr. Tim Smith: Does not the right hon. Gentleman appreciate that, if we were to return to 100 per cent. capital allowances—which I think he may want—it could have a damaging effect on the quality of investment decisions, which are at present made for good, sound, commercial reasons? When I worked in industry in the 1970s, people took investment decisions for tax reasons, which are the wrong reasons for taking such decisions.
Mr. Sheldon: There is no doubt that the best way to invest is with the intention of selling more of the goods that come from those investments, and receiving a greater return on them. However, does the present level of 25 per cent. provide a level playing field? I do not believe that it does. Anyone who buys a piece of plant and machinery and tries to sell it back to the manufacturer at 75 per cent. at the end of the first year will be laughed at, because the value will then be much less—in some cases it will not even cover the commission of the salesman who organised the sale. That provides not an incentive to invest but a disincentive—a penalty. I understand why the Government call for neutrality, but the present position is far from neutral. I am in favour of some incentive beyond that represented by depreciation, because new methods tend to encourage new ideas of production, which is so important.
Again and again, I hear people say that it is a pity that we who produced the great ideas of the world did not actually manufacture their consequences. The feeling is that we had the idea, which was the crucial element, and anybody could manufacture the product, but that is not true. The great skill of Japanese and German manufacturers is that they know how to make things efficiently and well, which is what we are so bad at. Manufacturing requires the necessary industrial investment to transform the ideas into the articles that can be sold in the keenest markets. We must be more than neutral, but at present we are not even that.
Meanwhile, the Government are busy opting out of industrial policy. I asked Lord King of British Airways about the decision to buy Boeing aircraft and United States General Electric aero engines, giving that company a foothold in Britain at the expense of Rolls-Royce. We must turn our attention to that. When industry takes such decisions, the DTI must be involved and must know what is going on. I am not even sure that the Department's officials knew, but if they did, and they took no action, they are culpable in the extreme.
Mr. John Watts: Will the right hon. Gentleman explain to the House more clearly what sort of involvement he would expect from the DTI? Should it twist the arm of British Airways? Should the company have been subsidised with taxpayers' money in order to buy a British product? What sort of distortion of the market is he recommending?
Mr. Sheldon: The market is being distorted: if General Electric wants to come into this country, it gives a price concession which damages one of this country's crucial companies. The DTI should at least have investigated the issue and asked questions. Its officials may not have come to exactly the same conclusions as I did, but they should have tried to find out. If they had agreed with British Airways, I could understand that they might have left the issue alone, but they might have come to different conclusions and taken different action. However, the Government leave it to the financial operations of others, and meanwhile the economy is run on the basis that one might be able to regulate but not to promote. I totally disagree.
We are now hearing that our outlook is so bad that we had better leave it to an independent central bank to decide the important aspects of our future. I find it strange that people with whom I have been associated should now accept that independent bankers control so much of our destiny. I would expect them to be more cautious.
People point to the success of the German Bundesbank as a sign of the strength of the German economy. It is nothing of the sort. It is not the cause of German economic strength, but the consequence. Mercedes-Benz, Siemens and Bayer do not owe their success to the Bundesbank: the Bundesbank owes its strength to German industrial progress. Germany found itself facing an expansionist Europe and a booming industry. The strength of Germany derives from the skills of people in industry. It did not matter that so much plant and machinery, and so many factories, were destroyed in the war, because the skills of the people were not destroyed; they remained, to recreate the industrial strength which we once again admire and respect. That is the task facing us.
When my right hon. and learned Friend the Member for Monklands, East rightly speaks of the essential nature of skills, training and investment, he has it exactly right. It is terrible that, for 45 years, we have not done that—that is the scandal of our time. It is about time that we started to realise that the financial centre of London is not the key to our success. I do not deny that it plays an important part, but the key to our strength is our industrial might.
I find our love affair with the banking profession curious. From being the bogey of bankers, we are becoming the bankers' friend. I have played my part in defending the role of banks and the necessary role that they have, but I find myself a little outflanked by the new enthusiasm. If British industry were in the same powerful position as German industry, I might be a little more relaxed about economic monetary union, but I am worried about the time at which we are entering into new commitments.
The urge for an independent central bank and a proposed Euro central bank comes at a particularly dangerous time, when recessions, depressions and even a slump cannot be ruled out. We could be legislating well into the next century. Nobody can say that depressions were something peculiar to the 1930s. At times,

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Government intervention is required. This could be a time when Franklin Roosevelt's new deal, hated by bankers, could come into its own. It is a time for the Governments to act together to take charge of economics for the sake of the citizens that they, and only they, can represent.
I used to hold that an international depression was impossible because, faced with an economic catastrophe, the bankers, people and Governments would overcome their differences and co-operate with Keynesian methods to end such a disaster. There are goals other than conquering inflation. The Government and our times rightly attach great importance to conquering inflation, but it is not the only aim of a successful economy. Following the German inflation of the 1920s, there was enormous unemployment and the rise of Hitler. Nazism was the result not of inflation, but of the counter-inflationary measures that did so much damage. The trouble was that they voted against the large numbers of unemployed and voted for Fascist and Nazi Governments.
In 1945, the Bank of England was nationalised with some Conservative support because of the way it had handled the depression. Independence of the central bank would restore its power. I always thought that, if an international crisis similar to that of the 1930s were to recur, there would be international agreement to control such events. I cannot be sure now that that would happen. With a Eurobank, I would be even less sure.
My right hon. Friend the Member for Leeds, East (Mr. Healey) once told the Governor of the Bank of England that the latter had the better job. I do not think that he was joking. The power of day-to-day decision-making, even in a nationalised bank, is underestimated. How much greater would be the power of the Eurobank.
Of course we cannot be excluded from progress within the Community. We must accept our position in the Community, which will lead to a greater alignment between us, but the main solution to our economic problems lies in ourselves. It lies in our will, determination and good industrial sense, wherein the Government have been found seriously lacking.
5.50 pm
Sir William Clark: It is always a pleasure to follow the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). We have all listened to his speech with great interest. He certainly convinced me, and I am sure the rest of the House, that he is diametrically opposed to a central bank. In those circumstances, he seems to be at variance with his own Front Bench spokesmen. I do not know whether that is a serious matter, but given the right hon. Gentleman's experience and standing, I should have thought that the Opposition Front Bench spokesmen would take careful notice of what he says.
The right hon. Gentleman spoke about his constitu-ency. I agree that many jobs, particularly in manufacturing industry, have been lost since 1979, but one must remember that there was a great deal of overmanning in 1979. For example, in 1979 the steel industry employed roughly twice the number of people that it does now, producing the same amount of steel. That in itself meant that we took over an uncompetitive company. In order for it to remain competitive, jobs had to be shed.
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Politicians often succumb to the danger of talking down the economy. For example, if a Gallup poll goes against the Government, sterling starts to shake. Equally, when Labour politicians talk down the economy, saying how bad it is, that has an effect on the foreigner. Therefore, I hope that they can be persuaded to stop.
As my right hon. Friend the Chancellor said, the latest reports of the Institute of Directors and the CBI show that they are not pessimistic about the economy. In fact, they say that the increase in confidence has been the highest for some years. The chambers of commerce are not pessimistic. It does the economy no good for the Opposition continually to talk it down. Never once does one hear the Opposition say that, since 1981, manufacturing output is up 25 per cent., manufacturing investment is up by 33} per cent., and manufacturing production is up by more than 50 per cent.
Dr. John Marek: The Government took office in 1979.
Sir William Clark: If the hon. Gentleman just thinks about what he is saying, he will realise that it takes a Government one or two years to bring the economy round. The economy cannot change overnight. It is ridiculous to suggest otherwise.
The Opposition never mention manufacturing exports, which are up 75 per cent. since 1981. The export of motor cars in the past nine months is 90 per cent. higher than last year. Those are all pointers for the economy. Why do we not start talking about some of our successes?
Mrs. Dunwoody: Would the right hon. Gentleman therefore care to suggest what I should say to those 420 workers in Rolls-Royce who have been ejected from their jobs with scant courtesy and with no idea why it has happened, who have all the skills required for building motor cars and are not to be given the chance to do so?
Sir William Clark: I fully sympathise with the hon. Lady's constituents, but one must face the facts of life: in a recession, and coming out of a recession, jobs are always being lost.
In the third quarter of this year, our exports rose by 1 per cent. That is something that we should be talking about. There is a slowdown in destocking. Many manufacturing industries have been destocking during the past few years but now that is slowing down. That in itself is a sign that we are coming out of the recession.
In the third quarter of this year, pay settlements were down from an average of 10 per cent. to an average of 6·5 per cent. In manufacturing industry, pay settlements were down from an average of 9 per cent. to 5·5 per cent. Those are all steps in the right direction to make us more competitive; and if we are more competitive, we can obviously sell more of our goods.
As my right hon. Friend the Chancellor reminded the right hon. and learned Member for Monklands, East (Mr. Smith), he did not mention inflation once. He did not say that our inflation rate had been 10·9 per cent. and was now down to 3·7 per cent. It is just a little above that of Germany, but it is well below the EC average. Consequently, it is forecast that in 1992 our inflation rate will be below even the German average, which at the moment is 3·5 per cent.
In order to give people more confidence rather than surrounding them with gloom and doom, we should point

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out that, since 1979, GDP has risen 22 per cent. in real terms. There are 800,000 more jobs now than there were in 1979. The net income of an average family, a husband and wife with two children, is up by 37 per cent. in real terms.
Our corporation tax, which has already been mentioned, is the lowest in the EC. It is the lowest in the G7 countries. It has come down from 52 per cent. under the previous Labour Government to 33 per cent. now. Income tax has dropped from 33 per cent. to 25 per cent., and the top rate, a penal rate of 83 per cent., is down to 40 per cent. The investment income surcharge, which we abolished, had a top rate of 98 per cent.
The economy is also assisted by separate tax assessments for husband and wife. In many cases, that has given the family an added incentive and advantage.
Public expenditure is under control. In 1979, it was 44 per cent. It is now down to just over 40 per cent. Up to last year, we had repaid £26 billion of the national debt. That is unheard of. It is true that this year we have a public sector borrowing requirement of about £10 billion or £10·5 billion, but with the strength of sterling and of previous national sector repayments, borrowing, and debt, that is something we can meet.
I want to make a few suggestions to my right hon. and learned Friend the Chief Secretary about small businesses. Many of the new firms that started were under-capitalised and so went to the wall, but the net number has increased by many hundreds of thousands since 1979. One of the snags that confronts small businesses in particular is that of cash flow. They have orders—although perhaps not as many as they had—but also cash flow problems, because the companies they supply do not pay their bills on time.
It is time that the Government considered a system such as that operated by some of our retail stores. If one has an account at Harrods, for example, and does not pay one's bill by a certain date, a mandatory rate of interest is immediately added to the total.
Mr. Beith: Harrods does that?
Sir William Clark: Yes, it does—if one does not pay within the stipulated time.
When a small company arranges to supply a bigger client, settlement terms of, say, 30 days may be agreed. Once that period is exceeded, a mandatory rate of interest should automatically be added. The small supplier would then not be in the hands of his bank. As it is, his overdraft increases, and so do the interest charges, at two or three points over base. That penalty should be paid by the firms which owe money to a smaller business.
I also want to point out that the Trades Union Congress, with 6·5 million members, has six represen-tatives on the National Economic Development Council; the National Federation of Self Employed and Small Businesses, with 5 million members, has none. I believe that organisation ought to be represented.
As to the capital allowance, I was interested in the point made by the hon. Member for Ashton-under-Lyne, and I agree with the comments made by my hon. Friend the Member for Beaconsfield (Mr. Smith) in his intervention. One hundred per cent. capital allowances could lead to investment decisions being made entirely for tax reasons. What else could be done? At present, a 25 per cent. reduction is given on a reducing basis. In terms of cash flow, it takes a business man eight or nine years to get his money back on any machinery, for example, that he buys.
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Would it not be easier to offer a straight-line reduction, giving 25 per cent. capital allowance over four years? That way, a business man making an investment would know that he would get his money back within four years.
I hope that my right hon. and learned Friend will consider that suggestion. It would not cost the Exchequer anything more the first year, because a 25 per cent. allowance is already given. Only in the second year, when the allowance currently is 25 per cent. of 75 per cent., would any difference arise.
Mr. Sheldon: I am delighted that the right hon. Gentleman has come up with some further suggestions. There are probably many more. However, perhaps he could be more generous, given the present need for investment, and allow for a limited period, such as that which operated when the right hon. Member for Blaby (Mr. Lawson) was Chancellor. An allowance period shorter than the four years mentioned by the right hon. Gentleman might have an immediate and useful effect.
Sir William Clark: That is worth considering, but I am not completely sold on that idea. My right hon. Friend the Member for Blaby (Mr. Lawson) reduced corporation tax to 35 per cent., but at the same time he took away the 100 per cent. allowance. In that way, despite the fact that a company lost the capital allowance on the excess on its investment, it gained on the reduction in corporation tax, from—I believe it was—42 per cent. to 35 per cent.
During his 30-minute speech, the hon. and learned Member for Monklands, East did not once say where the money for his proposals—other than those on training and investment—would come from. Neither did he refute the two commitments made by the hon. Member for Derby, South (Mrs. Beckett) in respect of pensions and child benefit. Will Labour fulfil the £35 billion of pledges being given by its spokesmen throughout the country'? I understand that is a conservative estimate.
Mr. Austin Mitchell: It would be.
Sir William Clark: I meant, with a small c, in that some economists attach a higher figure to the cost of implementing those pledges.
There can be no doubt that, if Labour's pledges are implemented, even an increase in taxation from 40 per cent. to 49 per cent. would not produce enough revenue to pay for them. The ordinary person would inevitably be affected. Every person in this country earning between £10,000 and £30,000 would, if Labour implemented all its pledges, be worse off. Anyone earning more than £30,000 would be severely worse off.
Mrs. Margaret Beckett: The hon. Gentleman knows that we have answered that point many times, but I cannot let it pass. We have made it explicitly clear that none of the changes that we propose, either in tax or in national insurance contributions, will make a penny difference to any individual earning less than £21,000 a year. No one earning less than £21,000 will pay a penny more under us.
Sir William Clark: Rhetoric and promises are all right, but if Labour's pledges are to be honoured, there is no question but that the ordinary taxpayer will be affected —or that some of those pledges will have to be reneged upon. It is as simple as that.

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I have no doubt that, as my right hon. Friend the Chancellor said, Britain is coming out of the recession. The recovery is slow and patchy, but the policy is sound— [Interruption.] Labour Members who laugh and snigger at such remarks ought to ask themselves why it is that Britain of all the countries in Europe has the most inward investment from overseas investors.
Mr. Austin Mitchell: Because Britain offers them cheap labour.
Sir William Clark: That is simply untrue.
I agree with my right hon. and learned Friend the Chief Secretary that the British economy is basically sound. Our gold and dollar reserves are sound, and we can look forward with confidence to the future—provided that there is no change of Government.
6.10 pm
Mr. A. J. Beith: I was glad to hear the right hon. Member for Croydon, South (Sir W. Clark) reiterate his support for measures to help small businesses, in particular over the late repayment of debt. This is something for which my hon. Friends and I have pressed for some time. I hope that the right hon. Gentleman's call will be heeded by those on his own Front Bench, because it would be an extremely helpful and valuable measure.
The fairest statement that I have seen recently of the prospects of recovery was the one in the Greenwell Montagu Recovery Watch bulletin a few days ago. It said:
"The balance of evidence over the last month has been towards continued recession. Shafts of light from company statements and bullish confidence surveys are outweighed by gloomy economic data and depressing anecdotal evidence."
One can make one's own judgment a little to one side or the other of that. There is a mixture of indicators, but on the whole the adverse indicators seem heavier and more serious than the favourable ones, many of which are things such as confidence surveys, which do not tell one very much about what will happen.
We must, surely, eventually get to recovery, but we have been waiting for it for a long time. The Chancellor has been waiting for Father Christmas since the spring, and I do not think that Father Christmas will arrive for him before 25 December. Worse than that from the Government's point of view, I do not think that he will arrive in time for the general election.
The Government are laying great stress on the possibility of a consumer-led recovery. That is perhaps the area in which they are least believed by those closest to the reality of retailing and the experience of consumers. The Government produced in the autumn statement a graph of consumer confidence. It is the first time, as far as I can see, that what is in effect an opinion poll has found its way into the autumn statement. It is a bit like taking a poll of general election candidates asking them to state in public whether they think that they will win. Of course, they all say that they will win. How many meetings have we all been to, all of us in all parties, at which the candidate has said that he looks forward to winning? Consumer confidence is not all that far from that, but, from the retailer's point of view, it does not pay the staff wages. The people in the street outside may tell the market researchers that they are more confident than they were six months
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ago, but that does not take them into the shop, put their money over the counter or pay the staff wages of the retailer.
The Government do not seem to realise how severely consumers have been affected by the experience of recession. That is the factor that the Government are not considering. Consumers who saw their commitments enlarge so dramatically as a result of higher interest rates, who found themselves over-committed, and then found themselves unemployed and even less able to meet those commitments, will not rush out and spend money even if they have more of it. They are credit-wary, because their experience of credit has been a very adverse one in recent times. The Government fatally underestimate how very chastened many consumers are by the harsh experience of the last couple of years.
The main driving force of a consumer-led boom would have to be improvement in the housing market. That is where so much of the consumer boom of the 1980s came from. There is massive equity withdrawal from housing. There is no sign of that recovery in the housing market. That is perhaps the weakest of all the indicators on which the Government seek to rely. However hopeful we may be, however much we may snatch at the more encouraging indicators, we cannot look forward with any great confidence to a consumer recovery.
Mr. Tim Smith: Chart 2.7 in the autumn statement shows consumer confidence. It also shows that, since 1974, before every increase in consumer spending there has been an increase in consumer confidence—that the one always follows the other. What reason is there to suppose that this will not happen this time?
Mr. Beith: The reason that I just gave, which is the experience of recession. But I am prepared to wait and see. I advise the Government, however, not to take an indication of confidence as the same thing as money over the counter. One could never run any business on that basis.
Another danger which the Government face in the coming months is that of post-Maastricht pressures on sterling. There is considerable evidence that markets are expecting a realignment following the Maastricht negotiations and that there will be downward pressure on sterling, testing the Chancellor's resolve over interest rates. I believe that there is a strong likelihood that markets will seek to test that resolve. Nobody in the markets seems to believe that the Chancellor dare put up interest rates this side of the general election. Indeed, I have defended the Chancellor in some conversations on this very subject with people in these fields. I have said that I think that he might and they have all said that of course he will not; he dare not, they say, there is no way that he will put up interest rates this side of the general election. My touching faith in the Chancellor's resolve and commitment to anti-inflation policy was ridiculed by those with whom I had this discussion, who were obviously much more deeply cynical than I am. I have to warn the Chancellor that there is a widespread belief that he is not at all likely to take the measures that might prove necessary if intervention is insufficient to stem severe downward pressure on sterling in the coming months.
All this adds up to the likelihood that the Government cannot sort out the economy in the very short term and certainly cannot do so this side of the general election; they

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cannot generate the feeling of happiness and cheerfulness about the economy which parties traditionally rely upon to win general elections. I think that that is impossible. I do not think that any incoming party with any set of policies could turn the economy around over the next six months. It is a much longer-term task than that.
My plea to the Government, therefore, is that they concentrate on what they can do, and that is to improve the long-term prospects for the economy. If they fiddle around with the short-term situation that will not enable them to win; it will not enable them to get a better general election performance. They might get at least some credit if they were seen to be laying better long-term foundations for the economy. They must, at the same time, provide some immediate help to the main sufferers, particularly the unemployed, and take measures designed to reduce unemployment by investment in those areas which can produce some reduction in unemployment. I am thinking particularly of repairs in schools and housing, which can generate some employment.
The Government must get on with addressing the long-term solutions. One of these is, of course, the single currency. Our whole a witude to this is fundamental to the future of our economy. What an admission to make after 12 years of Conservative government that our economy is uniquely incapable of being signed up for participation in a single currency. That is one of the principal arguments of those on the Government Benches who say that we should not sign up, that we cannot say at this stage whether we are capable, as an economy, of participating without damage in a single currency. That is a terrible indictment of 12 years of Conservative government.
The alternative to participating in a single currency is higher interest rates in this country than within that currency. The opt-out clause which the Government have so anxiously sought, the clause that would enable Britain uniquely to opt out of participation in a single currency, is a health warning on the British economy. It is a label attached to the British economy which says, "Warning: This is the United Kingdom economy; we reserve the right to devalue our currency. If you invest here, your money may lose its value, your products cannot be reliably priced for trade across Europe; you may face high transaction costs; and you may not get the full benefits of a single market." That is the label which the opters-out wish to attach to the British economy.
Mr. Alan Williams: In that case, how does the hon. Gentleman explain how, under both the Labour Government and the Conservative Government, inward investment has been at its peak when there has been a floating currency, where that has been a possibility?
Mr. Beith: The right hon. Gentleman must address himself to the new situation which is developing and in which there will be a single currency. I believe that, if we are not participants in it, it will be severely damaging to inward investment. In the case of a Japanese company wishing to invest in this country, whereas hitherto the attractions of the United Kingdom economy, along with the English language, which is important in Japanese investment, have been significant, for the future we are issuing a warning to the Japanese investor to be careful; he may not be able to price across Europe in the future, he may experience high interest rates in this country and he may find it much harder to trade into the Community,
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because if we are not participating in the single currency we may not get all the benefits of the single market either. This is a warning which the Government must heed. It is not a label which I want to see attached to the British economy.
Sir Ian Stewart: What the hon. Gentleman has said is an absolute travesty of the position taken by the Government and, as far as I know, by the official Opposition as well.
The reason why it is considered so important that we should not make a commitment at this stage to join a single currency is that a single currency would involve not only a single central bank but single economic management and a commitment by the Government and people of this country to subsidise, if necessary, the trade deficit of Italy, the budget deficits of other countries and the different standards of living. That would be a major constitutional and economic decision which we could not possibly take here and now. That is the reason why that option has to be kept open. It has nothing to do with the arguments which the hon. Gentleman has put forward.
Mr. Beith: The right hon. Gentleman has not been listening to his hon. Friends. Unlike the Prime Minister, I am prepared to have a referendum on this fundamental constitutional issue. I am prepared to let the people of this country decide.
The right hon. Gentleman mentioned the independent central bank, which I believe is part of the long-term anti-inflation policy. It was significant that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) expressed two views—that an independent central bank was a bad thing, and that there are worse problems than inflation. Inflation has been at the root of many of the worst economic problems that we have faced, and was certainly at the root of the problems in pre-war Germany, to which the right hon. Gentleman referred.
The Chancellor has clearly got the message about how an independent central bank would have to work if we had a single currency. He said:
"But the European central bank in stage 3 would have to be free to set interest rates without interference."
Significantly, he said:
"That is the view of every member state. In a Community of 12 countries, it simply would not be practical for 12 Finance Ministers to intervene in the monetary policy decisions of the central bank."—[Official Report, 21 November 1991: Vol. 199, c. 516–17.]
It is Government policy that if we have a single currency there can be no interference with the setting of monetary policy by the central bank. That is a significant step forward in Government policy. I accept that it is conditional on the decision to participate in a single currency, but I hope that Conservative Members have noted that the necessity of an independent central bank to such a system is accepted by the Government and other member states.
For the long-term benefit of the economy, the Government should invest to ensure that we have an adequate public transport system to move people to and from places of work without massive environmental pollution and to move goods. Our record compared with France, for example on the channel tunnel, is deeply depressing.
The Government should invest in housing to encourage labour mobility, and in training and education, which the Chancellor sought to ridicule as if they were unimportant.

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It is fair to point our that training and education were one of the few positive points that the right hon. and learned Member for Monklands, East (Mr. Smith) made. They are extremely important and, as the right hon. and learned Gentleman said, a frequent cry of industry and business is that those needs are not being met.
The Government should consider the genuine promotion of competition. The fiddling little Competition and Service (Utilities) Bill, which is being considered in Committee, does not address the need to promote competition in the economy, particularly among the massive privatised utilities that the Government have created. We have made proposals on the break-up of British Gas and British Telecom that are designed to promote competition, which the Government have not begun to do.
The Government must consider corporation tax and not simply brush it aside. I do not share the confidence of the right hon. and learned Member for Monklands, East in investment incentives. They run considerable risks of distorting investment decisions. It might be more productive to guarantee a stable tax environment for business by indexing corporation tax allowances, for example, so that business could predict with reasonable accuracy what its tax liability would be. In the long term, that might be a more effective way of encouraging investment than some of the short-term proposals that we have heard today.
The Government must establish the constitutional framework for stable and decentralised government. The Federal Republic of Germany has had both because of its electoral system and the decentralised way in which so much of Germany is governed, where many decisions are taken by the regions. Such changes would be to the long-term good of the United Kingdom's economy.
My advice to the Government is that they cannot sort out the problem this side of a general election, so why not get on with the job of laying the long-term foundations for a successful economy? There might be some credit for that.
6.24 pm
Sir Peter Hordern: I have just finished reading Roy Jenkins's memoirs, which I commend to you, Mr. Deputy Speaker. They are most civilised, and are rather like reading about Marie Antoinette in the French revolution: all elegance amid disaster. One would not dream that he was giving an account of the first visit to the International Monetary Fund.
More recently, in his excellent memoirs, Edmund Dell—an admirable person, I always thought—gave an account of his stewardship as Chief Secretary under the previous Labour Government. As he was in charge of public expenditure, it might help the hon. Member for Derby, South (Mrs. Beckett) to read what he said. He said that there had been
"No comparable example of such intellectual and political incoherence in a party coming into office. They had no economic policy except a 'social contract' of obeying trades unions which was worse than codswallop and an industrial policy that politicians should tell industrialists how to be industrial, which could not be taken seriously yet had to be taken seriously."
We all know where the Labour party's policies landed us then—the collapse of the economy and our
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infrastructure and a high Cuban-like tax regime. The basic rate of tax was 33 per cent., the top rate was 83 per cent. and tax on investment income was 98 per cent.
We are told that Labour has learnt its lesson, but the leaders of the previous Labour Government were highly intelligent, well-meaning people. All of them had firsts at Oxford and one never would have thought that they could make such a mess of the economy.
I wonder whether the Labour party has learnt its lesson. The hon. Member for Derby, South has said that there will be higher taxes to pay for higher pensions and higher child benefit. But is there not to be more money for training? Did not the right hon. and learned Member for Monklands, East (Mr. Smith) tell us that there will be more money for training? Did I not hear that there will be more money for the national health service? Were we not told that the Government are spending £6 billion too little on the NHS?
Mrs. Beckett: Those are the BMA's figures, not ours.
Sir Peter Hordern: So the hon. Lady disagrees with the BMA's figures.
Mrs. Beckett: The BMA is giving its impression of the level of underspending. It may be right. We have not committed ourselves to restoring that underspending, nor are we in a position to do so.
Sir Peter Hordern: That is helpful, because it is now clear that the Labour party has no assurances of increasing expenditure on the national health service—contrary to the impression that it has been giving.
Nationalisation of the water authorities is deeply embedded in Labour's policy. It will cost quite a lot to do that. We do not know how much, but Labour will inherit the capital expenditure programme of all the water authorities. When the authorities were nationalised, total capital expenditure was £8 billion. Today, it is £28 billion. Instead of being financed by borrowing and the private sector, it will count as part of the public sector borrowing requirement.
I do not know what the PSBR will be next year, but some estimates suggest that it will be as much as £20 billion. If we add a further £28 billion, what does the Labour party think that will do to its credibility as a potential Government? It would represent such an enormous increase in borrowing as to make its policy incredible. If the hon. Member for Derby, South would like to correct me, I shall happily give way. The hon. Lady is not prepared to deny the figures. Taking the capital expenditure programme of the water authorities, the PSBR will be almost £50 billion.
It is hard to understand, therefore, why the Labour party should be so enthusiastic for a single currency and a European central bank because in the plans for the European central bank in the Dutch draft the deficit cannot exceed 3 per cent. of GDP and with Labour's proposals it would exceed 5 per cent. very easily. The only possible conclusion is that the Labour party would devalue again, as it has always done in the past.
The European dimension is the most important element in our economic policy. We have always been a trading nation, but the single market will bind our trade and business even more closely to Europe. Over very many years we have learnt the lesson that we cannot be immune from casualties which occur in other countries. For

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example, the savings and loan debacle in the United States and the Government guarantees which were given at the time meant much higher borrowing for the federal Government. That affected interest rates everywhere throughout the world.
The collapse of stock markets in 1987 was universal; so was the response of lower interest rates. That was followed by a property boom. Perhaps more could have been done at that time. It is easy to argue in retrospect, but the Governor of the Bank of England could have been more explicit about what would happen because of the quantity of money that was borrowed for the property market. The difficulty now arises from the amount of money tied up in unproductive investment, such as empty office blocks here, in the United States and in Japan.
Now there is a new phenomenon. More and more money is being invested in east Germany in basic infrastructure— quite rightly, because they cannot proceed without it. But there is no immediate return from any of that investment. The return on trading activities throughout the world is inadequate. We cannot buck that trend. It is bound to be still with us, whichever party is in power in future.
However, there are some sensible things which we can do. One is to concentrate on the proper use of assets in the public sector. That is only a small example, but my right hon. Friends might consider it. I mean something as mundane as police stations. A police authority cannot sell a police station in order to build another one, because, although it may sell the station and put the money in the bank, it has to get Home Office permission to build a new one. That is absurd. There cannot be any possible financial loss in the transaction, because one set of assets will be paid for by the private sector and the police will be able to put the police station where they believe it should be sited. What the Home Office has to do with the calculation, I cannot imagine.
We can also continue to attract investment from abroad; in that we have been remarkably successful. The Japanese have invested in our country because they believe that is the best way of getting into the European Community; they invest because they reckon that we will be full partners in the Community. That is why Europe is so important.
That brings us back to the great debate. It is doubtful whether we would continue to attract so much investment from Japan and the United States if they felt that we were not full members of the European Community. The debate is between those who accept no diminution of our sovereignty and those who say that, having accepted membership of the exchange rate mechanism, we might as well take the next logical step and proceed to a single currency, believing that that is where our destiny lies.
I start from a different position. Let us look at the last 30 years. Are we satisfied with the stewardship of our economic sovereignty? This goes back over a long period, involving both political parties. In 1961, there were $2·80 to the pound; the exchange rate is now $1·79. There were FF13·7; there are now just over FF10. There were DM11·2; there are now DM2·85. We had fixed exchange rates with the dollar until 1972. After that, we floated; we floated downwards and we have done so ever since. That movement was a fair reflection of our economic performance relative to other major economies.
Parties of all political complexions have tried everything—prices and incomes policies, both voluntary
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and statutory, and monetary policies. They all failed. The prices and incomes policies failed because of their inherent absurdity, and the monetary policies because they were not strictly applied.
So we joined the exchange rate mechanism under my right hon. Friend the Member for Finchley (Mrs. Thatcher). I have reached independently the same conclusion as my right hon. Friend the Member for Blaby (Mr. Lawson). Since so much trouble had been caused by trying to manage monetary policy ourselves, why should we not hitch ourselves to the deutschmark, which is managed so much better? Sir Alan Walters and Professor Minford told us that that was an impossible and disastrous policy. Encouraged by their opinions, we should consider what happened. We have seen a fast fall in inflation and a rapid fall in interest rates. Now they say, "Look at the trouble you are in."
The position cries out for further cuts in interest rates but, hooked as we are to the deutschmark, it seems that interest rates may have to rise rather than fall. They may rise, but I think that Germany is in difficulty. When it is recognised that Germany's internal deficit amounts to 5 per cent. of GDP and is rising, I expect the pound to begin to rise against the deutschmark, which would give scope for cuts in interest rates. I think that the fear of a possible Labour Government is the only thing that is holding the pound back.
We have to face the fact that, over the last 30 years, our economic sovereignty has meant the sovereign right to devalue our currency. We have had a sovereign right always to accommodate high wage increases without increases in productivity. Our manufacturing companies especially have never bothered to be competitive, because they knew that they would always be bailed out by the Government, as they always have been. That is not the position now, and they know it. That is why we are seeing much lower wage increases and substantial improvements in productivity. If there was not an exchange rate mechanism, something like it would have to be invented.
What about our loss of sovereignty? After the House of Commons Committee of Secrecy presented its second report on the expediency of the Bank resuming cash payments on 6 May 1819, Britain was on the gold standard for a century and more. Nobody talked about our losing our sovereignty to South African, Californian or Australian gold miners then. For many years after the last war, under the Bretton Woods agreement, we were effectively subject to the US Federal Reserve. Nobody complained about loss of sovereignty. Nobody called Sir Winston Churchill, who presided over our membership of Bretton Woods, arrogant for not having a referendum. For the best part of the last 170 years, we have deliberately relinquished our economic sovereignty, first to gold and then to the dollar, and we are arguably the better for it.
So now, what is new? We are already in the exchange rate mechanism. We are moving towards a single currency and a European central bank. That move needs to be considered carefully. Clearly there are considerable doubts about the timing and whether it will work. That needs to be looked at at the right time. I do so now not because of any Euro-enthusiasm but because of a calm calculation of our national interest. What is that interest? It is the defeat of inflation; it is to create conditions for sustained growth, which only stable prices and competition can secure.
We could, of course, decide to go no further hut, as a member of the exchange rate mechanism, we would not

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have the protection of the single currency and we would be outside an arrangement of the dollar, the yen and the ecu. I do not believe that the position of sterling outside those major currencies would be sustainable for long. If it were, it could be sustained only by higher interest rates than would otherwise be the case.
What are we being asked to do? I understand that, according to the Dutch draft, no national deficit should be more than 3 per cent. of GDP. It is rather good to have such a limit. For those who believe—as I do—in monetary policy, such a limit is an acceptable—indeed, necessary —discipline. Of course, it will take some time to deliver. I understand that the Italians have a deficit of about 20 per cent. and no prospect of being able to deliver at the moment. However, it could lead in time to phase 3 of the negotiations for a European central bank.
Some people say that we cannot have economic union without political union. I recognise that that is a great difficulty, but I do not understand why it should be so, because the Federal Reserve in the United States does not attempt to conduct fiscal policy or to set the level of federal spending, and nor does the Bundesbank in Germany. It remains the policy that the federal Government of the United States and the German Government set fiscal policies and public spending levels, which is what Governments are for.
Provided always that the fiscal deficit overall is not more than 3 per cent., there is no reason why the countries of the European Community should not run their own fiscal and public spending policies and maintain their parliamentary sovereignty. There is no reason why there should be an even distribution of resources throughout the European Community. I do not go along with the idea of converging economies. I see no reason why that should be the case, any more than it is in the United States at present. If that were the case, it would allow us to allow entry to the eastern European countries in due course.
We must ask one question—what is it in our national interest to do? I believe that the acceptance in due course of a single currency and of a European central bank are plainly in our national interest and would bring about a stable and competitive economy and a rising standard of living for our people, which is what we are here for. It is not an easy policy. If the Opposition are genuinely interested in obtaining manufacturing investment and long-term investment of any kind, low—or better still, nil —inflation is required. It is no coincidence that Germany and Japan have had the lowest rates of inflation, the highest levels of investment and low interest rates for many years.
It would be easy to pump money into the system as the Opposition propose, but—
Mr. Dave Nellist rose—
Sir Peter Hordern: No, I am coming to an end. But it would also be fatal. By far the most demanding economic policy of the past 20 years is that which the Government are trying at present. I think that it is a courageous policy which deserves to succeed.
6.42 pm
Mr. Alan Williams: It would be sad enough if we were debating only one recession, but we are debating the consequence and continuance of the historic tragedy of the 1980s. I remind the hon. Member for Horsham (Sir. P. Hordern) that if the Government had not destroyed 20 per cent. of manufacturing industry, if they had sustained the record level of manufacturing investment that they inherited and if they had used the opportunity provided by £130 billion worth of oil from the North sea, we should not be talking about recession today —we would be celebrating our continuance in a virtuous circle such as that enjoyed by Japan and Germany for decades.
Instead of talking about high interest rates, we would be talking about the fact that we had balance of payments surpluses which gave us low interest rates which gave us the opportunity for higher living standards for our work force and low unemployment. Instead, we are talking about the monumental failure of the past decade and the recession is merely one sad—but sadly not final— symptom of that failure.
When the Government came to office, they took the £5 billion surplus in manufacturing trade and turned it into a £17 billion deficit by 1989. That represents a £22 billion turnaround in our trading position and I shall deal with that issue later. In fact, if one up-values that to current prices, it represents a £27 billion turnaround, because the 1978–79 surplus would be worth about £10 billion at today's prices.
The Government inherited a £594 billion current account surplus but turned it into a multi-billion pound deficit. Despite the £130 billion of balance of payments benefit from the North sea oil, they recorded a decade deficit of £25 billion. They took 10 years to equal the level of manufacturing investment that they inherited and, sadly, the recovery turned out to be a temporary blip, as hon. Gentlemen well know. Already, manufacturing investment has fallen another 20 per cent. and is due to fall again.
It is fascinating that, as they cooked the employment statistics, the Government have wriggled and tried to switch ground when talking about investment. When manufacturing investment was looking bad they switched to business investment so that they could include empty office blocks. In the autumn statement there was a switch to core investment, which includes the computers at race courses and supermarket checkouts—anything but face the reality of what they have done to this country.
We are now able to quantify what that destruction of investment has meant for this country, not on the basis of my figures, but on the basis of the Prime Minister's figures given to me in answer to a written question when he was at the Treasury. We have repeated those figures time and again—£20 billion of manufacturing investment has been lost merely because of the failure to sustain investment at the 1979 level. However, that does not mean anything—it is difficult to conceive it—so I shall illustrate what it could have meant.
The value of that investment is equivalent to 30 Nissan car plants washed away in the destruction of manufacturing investment. Nissan contributes £0·9 billion to the balance of payments each year. Had we been able to carry out investment on that scale—and I am talking illustratively—we could have been talking of a return on

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payments of between £20 billion and £30 billion a year. But let us halve that, because we must recognise that there are limits to the number of investment opportunities of that quality. Even so, we would still have rid ourselves of our balance of payments problem.
The virtuous cycle—the price that we sought for the whole of the post-war period—is the prize that was lost in a bout of monetarist madness. The Chancellor today spoke about running to the International Monetary Fund. Instead of the prize, we have the spectacle of a party which derided the £2 billion IMF loan—which, incidentally, had been paid back before the Government came to office—itself being dependent, and its policies conditioned by its dependence, on £80 billion of footloose hot money that it had to hold in this country to finance its payments deficits. Because it has had to hold that £80 billion, it has had to keep interest rates high and because it has kept interest rates high, the exchange rates have been high. As exchange rates have been high, our companies could not compete and because our companies could not compete they have closed and our people have lost their jobs. At the end, another balance of payments problem was created. Instead of generating a virtuous cycle, the Government have generated a vicious downwards spiral.
I said that we are facing not only a single recession but a symptom of the long-term structural decline which the Government have brought about. They did not do so calculatedly, because they did not have the intelligence to understand the consequences of what they were doing and do not now have the honesty to admit the consequences of what they have done. To listen to what the Prime Minister and the Chancellor say is to hear a masterpiece of public relations. They say repeatedly "Good news, the recession is hitting bottom." How many times have we heard that phrase?
I am reminded of the leader of the lemmings, plunging down a 1,000 ft. cliff, seeing the jagged boulders below him and looking over his shoulder and shouting, "Don't worry boys, we're nearly there." That is what the Government are saying. Hitting the bottom, about which the Chancellor has been boasting today, is not an achievement. For heaven's sake, is that an achievement? It is the culmination of failure. The dead bodies at the foot of the cliff are the 41,000 dead bodies of companies that have gone into liquidation in the past two and a half years alone. That is the cost of blindly following the ludicrous monetary policies which Ministers have espoused.
The Chancellor said today not only that we have hit the bottom, which is supposed to be so reassuring, but that the worst is over. What does he mean? At the bottom of the cliff, the survivors now have to get all the way back up again. That is what the Chancellor means when he says that the worst is over. The Government will now measure all growth from today—from the bottom of the chasm. When the Government climb all the way to the top again—
Mr. Austin Mitchell: If.
Mr. Williams: I will come to that. If they climb all the way to the top again, they will have got back only to where they started. Yet they will tell us, "Look how marvellously we have done in getting ourselves from down there, where we should not have been, to here where we started." They will not say, "If only we had had the sanity to cross the bridge, we would be so much further down the other side."
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As my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, we may not get back and we certainly will not do so in the life of this Government. There are economic time bombs in the cliff which have been manufactured by the Government's own policies. The Government are, for example, relying on the recovery of consumer spending to lead them out of the recession. However, if the £9 billion that has gone back into circulation on an annual basis as a result of the change in mortgage rates is spent, as the Government hope that it will be, in time to bail them out, a third of that, as I have said before, will go into imports and £3 billion will go on to the balance of payments. Before anyone says that that is rubbish, he should look at the autumn statement. The Chancellor said then that the balance of payments would worsen by £3·5 billion next year.
The other economic bomb that the Government have planted is a wage explosion, which will not be brought about by a trade union plot. It will be created, pushed and driven for by the marketplace. If there is a recovery, the shortages, to which my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) referred, that exist in key industries at the bottom of the cliff will be even greater as we start to find our way back up. As firms start to compete for finite skills resources, they will drive us into wage inflation on the way back up. The consumer boom that the Government hope to see will generate a balance of payments problem and wage inflation, prompted by business men and not by the unions, will generate an inflation problem.
As the balance of payments deficit grows over the next 12 months, as firms force up wages and as inflation inexorably rises as a result, the hot money will become increasingly volatile. The Government will be forced, if they are to retain it—and with an increase of £3 billion in the balance of payments deficit they cannot afford not to retain it—to increase interest rates.
I will make a purely personal observation. The hon. Member for Horsham and I came to the House at the same time and he knows that I am not given to seeking colourful or irresponsible solutions. We may disagree, and what I am about to say will inevitably attract the rebuttal of those on both Front Benches. I accept that. I would not make my observation if I did not think that it is essential that we face up to reality.
The heart of the problem was touched on by the hon. Member for Berwick-upon-Tweed (Mr. Beith), but he then sidestepped the implications. The heart of the problem is the exchange rate. We have gone into the exchange rate mechanism at the wrong rate of exchange. I remind hon. Members of my point about the gap of £155 billion and they will understand why I am giving a political hostage to fortune. If we have had over the decade £130 billion benefit in balance of payments terms out of the North sea, and if even with that we are in a £25 billion negative position, without the oil—and we all know that there will be less oil in the 1990s than there was in the 1980s—the gap in our capability of paying our way is £155 billion. That is the gap that we must close.
The rate at which we have gone into the ERM is the average rate over a period of years, according to the Government. How on earth in logic or in practice can anyone pretend that we can close a gap of £155 billion at the rate of exchange that created a gap of £155 billion? We must understand that truth, instead of making silly political points about this or that party being the party of

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devaluation. As I said when I intervened in the speech of the hon. Member for Berwick-upon-Tweed, who does not seem to understand much about economic matters, if devaluation is such a sin, why on earth did the Conservative party live for so long with a floating currency? That is not just devaluation, but oscillating currency. Whether devaluation or revaluation, it is left to the marketplace. It cannot be so wrong to say what I am saying; it is just politically inexpedient for the Government to say it.
Both the Conservative party and the Labour party have to recognise another fact. I realise that Front-Bench Members cannot support the conclusion to which I have come. I understand why they cannot endorse my remarks and why they will have to rebut them, but there is another consequence if my analysis is correct. A single currency is either an illusion or a suicide note. It is a suicide note because we cannot survive economically at the present rate of exchange, so we cannot guarantee our future. It is an illusion because at the present rate of exchange it is an economic impossibility to meet the requirements of convergence. [HON. MEMBERS:"No."] I ask hon. Members to think it through. The rate of exchange is such that by 1997 we shall not be able, at the present rate of exchange, to meet the convergence requirements that have been laid down in the proposals coming from Brussels and in the conditions set out by the Opposition.
I realise that the Government must say no to devaluation. However, I suspect that the real answer is, "No, at present." I suspect that it may not be no even before an election and it certainly will not be no after an election.
Mr. Austin Mitchell: My right hon. Friend should not he so embarrassed about the Government's position. Previous Conservative Governments have devalued the currency quite substantially. The Heath Government's own expansion was stimulated by a devaluation, which they called floating, and, in the same way in 1985–86, the pound went down about 30 per cent. in real terms against the deutschmark, which was one of the reasons for the Lawson expansion.
Mr. Williams: My hon. Friend's intervention is helpful. The Economic Secretary to the Treasury may find that his own Front-Bench Members are in a somewhat different position even before the election, not out of choice but out of necessity. I suspect that the Government would love to participate, not in a crude devaluation but in a nice respectable currency realignment. That is not devaluation —it is just tidying up the house. I do not care how it comes about and I do not care what label it is given, but if we do not face up to the reality that the rate of exchange is completely and utterly indefensible, Britain, which once boasted of being the workshop of the world. will become the back-street sweatshop of Europe.
Several Hon. Members rose—
Mr. Deputy Speaker (Sir Paul Dean): Order. At the beginning of the debate, Mr. Speaker announced a precautionary 10-minute limit on speeches, which meant that we would judge the state of play at 7 o'clock. I am glad to inform the House that I judge that it is not necessary to impose a 10-minute limit. However, if hon.
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Members are to have the opportunity to speak, I calculate that there should be a voluntary limit of about 12 minutes on speeches. I hope that right hon. and hon. Members will respond to that request.
7.1 pm
Sir Ian Stewart: I must immediately use one or two of my valuable minutes by saying a word about what the right hon. Member for Swansea, West (Mr. Williams) said. The most immediate response to his call for a devaluation of the currency is that, since sterling joined the exchange rate mechanism a year ago, there has been a substantial and sustained increase in British exports. That seems to undermine the main basis of the right hon. Gentleman's argument about the correct level of the exchange rate.
Both the right hon. Gentleman and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) filled out a bit of the case that is being deployed by the Opposition on investment incentives. The right hon. Member for Swansea, West appeared to argue that only investment in manufacturing industry is relevant to the state and the prospects of our economy. As he knows, since the 1970s, an increasing proportion of investment has been in the oil and energy sectors, which are not part of the manufacturing sector, and in the service industries. Those trends have been followed not only in this country but elsewhere.
The level of investment in the economy has risen dramatically since the late 1970s, when the Labour party was in government. The benefit of that investment has been strongly demonstrated. It has meant a great increase in output during the 1980s, which can be closely related to the changes in the investment allowances which were introduced at the time. In the 1980s, we looked very carefully at the potential impact of reducing the 100 per cent. investment allowance and, at the same time, reducing the overall level of taxation on corporate profits. We came to the conclusion that it would be far better for companies to know that they could retain a much higher proportion of their profits than that they should have to shelter their profits from high rates of tax by resorting to artificial levels of investment allowances in order to save themselves having to pass over all their profits to the Exchequer.
Although it seems to have acquired a certain vogue that increased investment allowances are needed. the converse is an increase in the basic rate of corporation tax. That would be a step in the wrong direction. In the second half of the 1980s, following the changes in the investment allowance and corporation tax regime which we introduced at that time, we saw a considerable increase in investment. I have no doubt that if we were to reverse that change we would encourage a certain amount of investment which would not and should not otherwise have taken place, because it would be less concerned with profitability and more concerned with reducing the tax bill of the companies concerned. I do not believe that that would be in the interests of companies, and I am certain that it would not be in the interests of the British economy.
I strongly caution hon. Members who may be tempted to think that simply by increasing investment allowances, which would have to be offset by an increase in the rate of corporation tax, one would encourage investment in the long term, or even in the short term. A low rate of corporation tax of 33 per cent.—33 per cent. is the highest

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rate; the small company rate, of course, is only 25 per cent. —coupled with a reasonable flat rate of 25 per cent. for investment allowances is much more likely to encourage companies to retain profits for productive investment rather than the artificial system which applied before.
I wonder why the Opposition have chosen economic management as the subject of the debate. Perhaps they are beginning to realise that national health service trust reforms and other moves in that direction are beginning to show their worth and they no longer regard it as a suitable policy on which to try to create political difficulties for the Government. Nevertheless, it is remarkable that they should choose this subject for debate. I always enjoy the witty speeches of the right hon. and learned Member for Monklands, East (Mr. Smith), but I am always left wondering what is the economic policy of the Labour party. If Labour Members are to put themselves forward seriously as a prospective Government, they must answer some basic questions which have so far been left unresolved. The heart of the problem is the fact that Opposition Members' sums do not add up on public expenditure, taxation and borrowing.
My hon. Friend the Member for Horsham (Sir P. Hordern), who spoke about water authorities, put his finger on an important issue. At the very least, a Labour Government, if by some mischance they were elected, would discontinue the programme of privatisation and would therefore immediately deprive themselves of many billions of pounds of revenue over the public expenditure programme period. If they were to increase taxes on higher earners, savings income, capital gains and on the other matters that they threaten, they would only barely replace the money which they would lose by discontinuing the privatisation programme. That is without taking into account any money spent on renationalisation or deprivatisation, whatever the correct term might be, let alone bringing back into the public sector all the borrowings of companies which are currently in the private sector and which now do not count as part of the public debt.
The Opposition cannot have thought the matter through. We have had no explanation from them. Endless speeches, statements and policy documents have been produced by Labour Members, but not a single line has addressed the gap between what they say that they would want to spend and their means of raising the money to meet it. There is a serious conflict of interest in what they are trying to do. They are saying to people, "We want you, as voters, to believe that we will spend an extra £35 billion, £40 billion or £50 billion on wonderful public expenditure projects, and we will not tax you, as earners. All right, if you are on a higher income, you will get a big increase in taxation." However, everybody knows that increasing taxes on higher incomes does not produce anything like the revenue necessary to sustain Labour's public expenditure commitments. Opposition Members cannot have their cake and eat it. They must explain how they will bridge the gap. To put it another way, they cannot use the same financial resources twice.
Let us consider a parable. Let us suppose that a disreputable business man was running a great commercial empire with many public and private companies and had control of the group's pension funds. One could not take money out of the pension fund and put it into the private companies controlled by the same person and still have that money in the pension fund. One cannot use money
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twice over. Similarly, one cannot make commitments to huge public expenditure programmes while saying that one will not raise taxation ferociously to meet those commitments.
We need only look back at the past. The same sort of noises were being made in the 1970s that the hon. Member for Derby, South (Mrs. Beckett) is making now about not imposing extra taxation on people with low incomes. In the election, as a result of which I first became a Member of this House, I well remember the right hon. Member for Leeds, East (Mr. Healey) travelling around the country with a great grin on his face saying that he would squeeze the rich until the pips squeaked with his new tax policy. The Opposition are at it again now. They want to increase taxation on higher earners. The right hon. Member for Leeds, East did not say that "the rich" included all those on anything above half average earnings, yet those were the people who received the extra tax burden.
One has to increase taxation all the way down the scale, to those on average and low incomes, if one is to raise anything like the amount that Labour would need to fund its public expenditure programmes. That is why the last Labour Government stopped increasing personal allowan-ces in line with inflation and why, as a result, nearly 2 million people were brought into the income tax net. However, in the 1980s, under a Conservative Government, about 2 million people have been removed from the tax net. We have reversed the unsatisfactory direction that was taken by the last Labour Government. That is why take-home pay for a person on average earnings remained virtually unchanged under the previous Labour Government. Indeed, the income of the average single person actually fell whereas, since 1979 under a Conservative Government, the average increase for single and married people, and married couples with two children, has been no less than 40 per cent. in every category.
That is the difference between an economy that has tax rates that are set to encourage incentive—and earnings progress—and an economy with the suffocating levels of taxation that are inevitable under a Labour Government because of their huge public spending commitments. If a Labour Government raised the basic rate of taxation from 25p to 33p, which was their chosen rate at the end of their last period in government, they would raise in tax only about half of what is needed to meet the public expenditure commitments that they have made throughout the country in the past two or three years.
That is the scale of the mismatch between the Opposition's words and figures. I warn them—perhaps I am even trying to be helpful—that they will not do their cause any good if they continue to put forward financial and economic arithmetic that does not add up. They will not be able to do that during a general election campaign because it will be easy for us to point out the gaping holes in their arithmetic and nobody will believe them.
The Labour party should come clean. There is nothing wrong or immoral about saying that one wants to be a high tax, high public expenditure party and that that is the way in which one wants to conduct oneself in government, but one cannot say that one would form a high public expenditure, low tax Government; that simply could not work. It has not worked in the past and Labour Governments have come a cropper every time that they have tried it. One cannot use creative accounting to get out of that problem. The Opposition must face up to that. The

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sooner that they do, the better for them, but the better for the country also, because people will know where they stand.
7.13 pm
Mrs. Irene Adams: It is now just a year since I first became a Member of Parliament. In fact, I was elected on the very day that the right hon. Member for Huntingdon (Mr. Major) became Prime Minister. In my maiden speech, I told the House of the difficulties that my constituency faced and the rundown that had occurred there during the 12 years that the Tory party had been in power.
In my first few weeks here, I listened intently to the Government telling us, "Our difficulties are over now that Mrs. Thatcher has gone. Mr. Major is about to deliver unto us a bright new tomorrow." In fact, at that time the Prime Minister and the Chancellor were denying that we were in a recession, and even when they finally conceded that there might just be a recession, they continued to deny its depth.
Far from having a bright new tomorrow, my constituency has continued to suffer since the right hon. Member for Huntingdon came to office. All the key indicators have gone from bad to worse in that time. Unemployment in the country has increased by about 3,000 a day; businesses have failed at a rate of more than 200 a day; and in every working day of the past year 300 families have had their homes repossessed. The misery that homelessness brings to families is a terrible indictment of any Government.
During the past year, manufacturing investment has decreased by 12 per cent. and manufacturing output by 5 per cent. In the past year, 8,178 businesses have failed in Scotland. Again, that has caused abject misery.
My constituency has not fared any better than any other. The picture has become bleaker and bleaker. Paisley is essentially a mill town—or rather, it was a mill town until 1979 when the Tories came to power. At that time, United Thread Mills in Paisley employed 3,271 people, but today only 402 people are employed there. Only last week, we were told that Paisley is likely to lose those 402 jobs in the next few months. That is not because people no longer need thread or because it is no longer being manufactured, but because that company, which started its life in Paisley, is now a multinational company with investments all around the world. Because of the Government's policy on and attitude to manufacturing industry, the jobs are no longer in Paisley—and they are not likely to be there.
In a recent written reply to my hon. Friend the Member for Paisley, South (Mr. McMaster), the Minister responsible for Scottish industry admitted that, between 1979 and 1989, the Paisley postal area lost 76 per cent. of its manufacturing jobs. If that is updated to the present day to include the recent manufacturing job losses, the figure is now over 80 per cent. In fact, only today we heard that we are likely to lose another 320 jobs in the whisky industry in Paisley, South.
Our area now needs a major economic initiative to regenerate its manufacturing base. We have suffered a haemorrhage of job losses. That has not happened in one fell swoop; it has been death by a thousand cuts. We now need a genuine initiative, but not the sort that has
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happened in other areas, where jobs are simply transferred from one area to another without any new jobs being created. We desperately need a Government partnership with industry, such as the Labour party would initiate. As a result of the Government's lack of initiative and investment in manufacturing and training, we are in desperate danger of losing all our manufacturing skills. In my area, those were the skills of the thread-making industry and of heavy and light engineering.
During the by-election in which my hon. Friend the Member for Paisley, South and I were elected—on the day that the right hon. Member for Finchley (Mrs. Thatcher) resigned—I was campaigning when a newsagent said to me, "Look out at that road. I remember the day that Mrs. Thatcher came to power. I remember it well because a small boy was knocked down outside the shop when he was trying to cross the road. He was knocked down because the road was so busy with traffic and with people going to work in the manufacturing industries that he could not cross it safely. I looked out at that road this morning and there were two boys playing football on it." That is what the Government have done to the manufacturing industry of Britain. They have reduced it to absolute rubble.
Mr. Gordon McMaster: Does my hon. Friend recall that the newsagent made that statement on the very day that the right hon. Member for Finchley (Mrs. Thatcher) resigned? That is the legacy that she left us from that 10-year period.
Mrs. Adams: I agree with that.
As a result of the lack of investment in manufacturing and training, young people have not learnt the old skills that we had in manufacturing. Therefore, it is all the more difficult to convert those old skills to fit the new technologies of today. Indeed, we have missed a rung on the evolutionary ladder. The end result is that we miss out yet again because we do not have the necessary skills for the new industries that are coming along, so the vicious circle created by the Government becomes an ever-increasing downward spiral in the loss of manufacturing jobs that has so damaged my constituency.
The only new jobs that we have been offered are at a toxic waste incinerator. An application has been made to site one in Renfrew in my constituency. No one wants such an incinerator. It would cause greater damage to the industry than we already have because the nature of the business would discourage new investment in the area.
I have described the grim reality that people in my constituency face every day. The Government have presided over that loss of jobs. Coupled with that, a lack of investment in the construction industry, especially public sector housing, and a lack of funding for local authorities have created huge waiting lists for council housing and high levels of homelessness in my constituency. Council houses are in increasing disrepair. Renfrew district council estimates that it would need to invest some £300 million to bring its housing stock up to a tolerable standard.
Is it any wonder that people in my constituency continually question the sanity and morality of a Government who allow public buildings to fall into disrepair while building workers are unemployed, who have presided over record unemployment and record interest rates, who have created a level of homelessness in

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Britain that we have not seen for a hundred years, who refuse to invest in manufacturing industry and training, who are locked into a dogma of the past and who are bereft of new ideas? They are a Government in their death throes who cling on to power in the hope that something will turn up. I have to tell them that it does not look as though something will turn up. It is time for the Government to die with dignity; it is time to go now.
7.22 pm
Mr. Tim Smith: I had the pleasure of listening to the maiden speech of the hon. Member for Paisley, South (Mrs. Adams). She spoke then with the same passion with which she spoke this evening on behalf of her constituents in Paisley. It is entirely right that she should do so. As the character of this recession has been rather different from that of the previous recession, not only her constituents have been affected. 1n many ways this recession has been harder in the south-east. In some respects it has been a white-collar, middle-class recession and many of my constituents have also been affected. Therefore, I sympathise with what the hon. Lady said.
However, we must ask ourselves what policies are most likely to be effective in dealing with the problems that we face. The Government are right to give the highest priority to getting inflation down. I make no apology for repeating what I said at the end of July when we last had a debate on the economy. Reducing inflation should be the Government's top priority. Since we joined the exchange rate mechanism of the European monetary systern, we have had considerable success in reducing inflation.
In the autumn statement of 1990 the Chancellor forecast that in the fourth quarter of 1991 inflation would fall to 5·5 per cent. By the Budget of this year he forecast in the Red Book that in the fourth quarter of this year inflation would fall to 4 per cent. He has beaten both those forecasts. Today inflation is below 4 per cent. In the Budget he forecast that by the middle of next year inflation would be 3·75 per cent. In this year's autumn statement he forecast that inflation would be 4 per cent. by the fourth quarter of next year.
It is possible that the Treasury is being unduly pessimistic. There is every possibility that the underlying inflation, and indeed the retail prices index, will be below 4 per cent. by the end of next year. That is the benefit of having adhered through some difficult times to the policy of United Kingdom membership of the exchange rate mechanism. That is the great benefit which the ERM will deliver to the British economy in due course.
Of course, there is an important trade-off here between the short term and the long term. What would have happened if we had not joined the ERM a year or so ago? Interest rates might be 1 or 1·5 per cent. lower today. Almost certainly sterling would be lower than it is today, and, therefore, inflation would be higher. It does not follow—I am sure that the right hon. Member for Swansea, West (Mr. Williams) would disagree if he were still here—that exporters could have taken advantage of a weaker exchange rate in the way that he suggested.
As my right hon. Friend the Member for Hertfordshire, North (Sir I. Stewart) said, the record of exporters in the past 12 months was a good one, even with an exchange rate which some people claim is excessively high. I should have thought that most people would have learnt by now that devaluation of the currency is not an economic
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panacea and that they would see that countries which have had a firm exchange rate have been among the world's most successful exporters.
If inflation was higher than at present, house prices might be a little firmer and there might he a little more consumer confidence knocking around, but I suggest that that would give the illusion of improvement but no real improvement. There is no doubt that our membership of the ERM offers an opportunity to break the mould in which we have been stuck for the past 20 or 30 years. In the short term, it seems that everyone in the House agrees that there is no quick fix. I was doing a piece for the BBC World Service earlier this afternoon with the hon. Member for Redcar (Ms. Mowlam) in which she agreed that there was no quick fix. The right hon. and learned Member for Monklands, East (Mr. Smith) did not come up with any proposals that would have any short-term consequences on the economy. There are no policies designed to give it an instant kick start. All that the right hon. and learned Gentleman could come up with were the same policies that we have heard endlessly before. As my right hon. Friend the Chancellor said, those policies are the answer to every question about Labour's economic strategy—more investment and more training.
We all want to see more investment and more training, but, as I said to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the way to achieve that is not by increasing tax allowances to 100 per cent. That would have a distorting effect. My right hon. Friend the Member for Hertfordshire, North, who was a Treasury Minister at the time, was right to make the changes that were made in 1984. They have paid handsome dividends because the main source of cash for new investment is retained profits. If the taxes on retained profits are low, people have more cash for investment.
The Government have the right economic policy, even if it is frustrating that recovery seems to be so long coming. ERM membership brings a stable exchange rate and no one should under-estimate the value of that to Britain's exporters. It brings, and has already brought, lower inflation and in due course that will doubtless be followed by lower interest rates.
The Government also have the right fiscal policy. In a time of recession, it is right that we should move from the position three years ago, when we had a large public sector debt repayment, to the situation today when we have a growing but not unmanageable borrowing requirement, which will rise next year to about 3 per cent. of GDP.
Mr. Jimmy Wray: The hon. Gentleman says that the Government have the right fiscal policy now. They have been in government for 12 years. I feel sorry for the Opposition Front Bench, which will have to take over after April, because of the mess that the Conservatives will leave behind. There are debts totalling billions of pounds, but the Government have sold the assets of this country. How can the hon. Gentleman say that they have the right fiscal policy now?
Mr. Smith: The Government have had tremendous success in reducing the national debt. In the previous three years, there have been substantial repayments of public debt. We can contrast the position today with that under the last Labour Government, when the fastest growing head of public expenditure was debt interest. That Labour Government borrowed so much money. The bill has to be

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met by taxpayers today and by future generations. Our achievement in repaying some of the national debt is that future generations will not have to pay, today's taxpayers will not have to pay and that money is available to be spent on hospitals, schools and all the other things that we would like money to be spent on.
Hon. Members should read a written answer given to my hon. Friend the Member for Dover (Mr. Shaw), who asked which member state is doing best in the European monetary union stakes as regards public sector borrowing, which is one of the criteria for convergence. Hon. Members will find that one of the conditions is that the total national debt of a member state must be 60 per cent. of GDP or less. Some of the member states in the European Community have a national debt of more than 100 per cent. In the United Kingdom it is well below the 60 per cent., so we shall have no difficulty meeting that test, if and when the time comes. It would be irresponsible and wrong to go any further as regards fiscal policy. We should seek to place a ceiling on borrowing of around 3 per cent. of GDP, which is exactly what the draft economic and monetary union treaty does.
In comparing this recession with that in 1981, hon. Members will recall that in the 1981 Budget, contrary to conventional wisdom—although it was certainly the right decision at the time—my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) cut public sector borrowing in the middle of a recession. That was the right policy at that time and rapidly proved successful in terms of economic recovery.
Today we face a different situation. As I described, we start from a much stronger fiscal position and so it is right that we should now have a larger public sector borrowing requirement. I welcome the autumn and the fact that the Government want to increase public spending in key areas, including health and the transport infrastructure.
Mr. Frank Haynes: What about Blaby?
Mr. Smith: Does the hon. Member for Ashfield (Mr. Haynes), who is wittering from a sedentary position, want to intervene?
Mr. Haynes: What about Blaby?
Mr. Smith: I shall ignore that remark.
Mr. Haynes: You supported him, that is why.
Mr. Smith: On unemployment, the position now is very different from what it was after the recession of 1981, when unemployment continued to rise until 1986. The signs are quite encouraging. Unemployment is still rising, which is obviously unacceptable and a matter of considerable regret—certainly to those of my constituents who have lost their jobs.
However, although unemployment is normally a lagging indicator in the economy, already the monthly rate of increase in unemployment has declined substantially. Last month it was only 15,000 and it fell in Scotland, Wales and the north of England—[HON. MEMBERS: "No."] I have the Department of Employment's figures here. Unadjusted unemployment fell throughout the United Kingdom last month by 25,000. The figures rose by 16,000
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only on an adjusted basis. In Scotland, Wales and the north of England unemployment fell. That is also cause for some optimism.
On the question of economic and monetary union, I was sorry that the hon. Member for Berwick-upon-Tweed (Mr. Beith), who is no longer in the Chamber, grossly misrepresented the Government's position. He knows very well that the criteria are clearly set out, in the draft treaty. If he looks at them, he will realise that the United Kingdom will have no difficulty in meeting the criteria. That is not the point. The question is whether it is sensible to make a decision now about something that the treaty says will be considered in five years' time, at the end of 1996. No rational person would try to make that type of decision now. It should be for the next Parliament or for the Parliament after that to decide.
The United Kingdom will have no difficulty in meeting the criteria, which relate to inflation, to our fiscal position, our performance within the ERM and to interest rates. We meet all those criteria and we should continue to pursue policies which ensure that we meet them. I think that we shall.
The two written answers that I referred to, given to my hon. Friend the Member for Dover, show that many other countries in the European Community do not meet the fiscal criteria—either current borrowing of 3 per cent. of GDP or a total national debt of 60 per cent. of GDP. The United Kingdom is in a much stronger position than many other member states, and meeting those criteria will not be a difficulty.
I was disappointed by the speech by the right hon. and learned Member for Monklands, East. I want my hon. Friends to hear a little more detail about Labour's economic policies. That is not an unreasonable request when an election is imminent. People will start asking more detailed and more searching questions as the elections approaches. I am sure that my right hon. Friend the Member for Hertfordshire, North is right in saying that we hear so little because the Labour party has no answers to those questions. We hear the same tiresome statements about investment and training, but no answers to other questions. It is about time that we had some answers to those questions from the Labour party.
7.36 pm
Mr. Austin Mitchell: I do not intend to follow the hon. Member for Beaconsfield (Mr. Smith), because his economics is the economics of accountancy. He knows all about the figures but nothing about the reality behind them. It is his obsession with figures that leads him to make the crucial economic mistakes that he made. The debate is interesting in the light of those mistakes. It is almost a throwback debate to 1981, with the Government saying that things are bad but—a Micawberism—"Wait and see, something better will turn up, it might get a bit better."
Conservative Members have obviously been briefed by Conservative central office, because they cannot find anything good to say about their Government, so they give central office speeches attacking the Labour party and asking what it would do. They are attacking not a past Labour Government but the Labour Government who will take office next year. If that is all they have to say, if they can only attack Labour, it is a sad summation of 13 years in power. The reality is clear to all of us. My hon. and

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learned Friend the Member for Monklands, East (Mr. Smith) summed it up brilliantly—it is the state of the depression. It is horrendous—the mother of all recessions. It makes the Chancellor the Saddam Hussein of economics for accomplishing it in such a brief period.
I will not go on about the statistics. They are shocking. The consequences of those statistics are dismal for the future of this country. The manufacturing base, which is already nearing the limits of viability—it is only about 20 per cent. of GDP, compared to about 30 per cent. in Germany—is shrinking still further. We are losing all the supporting network of training, research, development and suppliers which keeps the manufacturing base in being.
The balance of payments has become a stranglehold. In the depths of recession, we are in a balance of payments deficit. It is horrendous. What happens when we expand? We cannot expand without making that balance of payments deficit worse. Every job we lose now, every factory we close, every production line that stops producing, means more imports later. It means, in other words, a tighter balance of payments deficit.
We shall be entering the single market in the coming year. That will be a highly competitive environment and we are entering it by jettisoning investment, research, design, development and all the other attributes that would allow us to compete in that market. We are not prepared for it, whereas our competitors are.
Firms that should be investing and preparing are throwing overboard, just to survive, research, design and everything, including model changes and investment, to struggle through a depression that the Government have created. That is the prospect not of success but of disaster later. It is a national tragedy for Britain.
The hon. Member for Beaconsfield said that, sadly, the depression had hit Beaconsfield. I remind him that it hit Grimsby bitterly between 1979 and 1981, and now we are having a second dose of it. with the loss of Findus Ltd. and 900 jobs, and the shrinking of labour forces by major employers. We are suffering the failure of viable businesses. It is a tragedy. People who put their lives, their effort, their everything into creating businesses have seen them close simply because of the level of interest rates, the depth of the depression that the Government have created and the hostile, unfavourable and unacceptable behaviour of the banks.
From where will the recovery come? What will produce it? I cannot see the answer. The Government are always making predictions, and in that sense the Chancellor may be described as the Mother Shipton—perhaps I should call him the Brother Shipton—of economics. I fear that we are in a new norm, a prolonged recession with no real recovery, rather than the real prospect of recovery. I say that because all the engines of recovery seem incapable of driving us out of the recession.
Housing is one such engine. From where will recovery in housing come, with interest rates at their present level, with house prices still having some way to fall and with a huge overhang of unsold houses? One house in five sold in Britain now is repossessed, and that depresses the house price market. That is why I ask where the recovery will come from in housing.
Where will it come from in terms of consumer demand if unemployment continues to rise? People are more
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frightened as unemployment rises and they have less money to spend. Credit, the debt level, presses on everyone and causes people to save and struggle rather than spend.
It will not come from companies. They are still struggling under a huge burden of debt. Nor will it come from exports, which are now falling because the pound is so overvalued that we cannot have export success at its present level of valuation. There might have been an improvement earlier with an expansion of the German economy, but that is now being deflated.
It will not come from Government spending, because the Government will have to borrow massively to keep going at the present mean levels of public spending. Hence none of the engines of recovery is available to pull us out of the recession. There is no escape and the tragedy is that the exchange rate mechanism—which the present aggressive, decisive Prime Minister bullied the hapless, shrinking right hon. Member for Finchley (Mrs. Thatcher) into entering all those months ago, forcing it on her against her will in such a decisive fashion—precludes recovery, because we cannot reduce interest rates.
It is paramount for us now to retain high interest rates, which are high in the historic sense, in real terms, and are high compared with Japan, and with America, where they stand at 5 per cent. Interest rates at 5 per cent. have not yet produced recovery in America. Yet our higher interest rates cannot be reduced; nor can we reduce the exchange rate, because high interest rates are necessary to support the exchange rate.
The right exchange rate is necessary for a country in deficit, as we are, to shift resources from imports to production and to attract investment into manufacturing industry by again making it profitable. The exchange rate, which in a market situation would fall, cannot come down because the whole dedication of Government policy is to keep the exchange rate at an unreasonable level. The result is that the market cannot operate. We have nailed down the lid on the recession.
There can be recovery only if we reduce interest rates and the pound with them. It is no good reducing interest rates on their own, because there is no point in just pumping out credit. It is like trying to push on a piece of string: it cannot be done. One can pull interest rates up., but one cannot push the string to get them down again. We must increase demand for British goods by adjusting the exchange rate so that demand is channelled to British goods through the price mechanism, making our goods and exports more attractive and cheaper and imports dearer.
It is no good telling me that the price mechanism does not work any more. The Government's alternative is to reduce prices in manufacturing from the uncompetitive levels to which they are forced up by the exchange rate, by firing people and depressing the price of labour. I agree that price is important, but the only way to achieve a reduction in prices and an ability to expand is to adjust the exchange rate. If inflation is too much money pursuing too few goods, it does not follow that we must—as we have been doing in this country—reduce the supply of money all the time and thus have the disastrous consequences for industry that have occurred.
We should expand the supply of goods, which simply means expanding the money supply and channelling demand to British production in Britain. If the exchange rate is kept at its present level, every coal mine, steel plant and textile mill that closes is due directly to the exchange

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rate and will produce a worse balance of payments problem later on. We are deliberately taking resources out of production by means of the exchange rate.
It is no answer for Ministers to keep saying that we need only reduce inflation to produce the conditions for recovery. That is not true. We produce nothing but a graveyard. Any fool can bring inflation down. The Conservatives, understandably therefore, have been successful in their graveyard economics. But what is to produce recovery once inflation is down?
Our tragedy has been that we have always cut the supply of money, and kept money at too high a price, because of the dominant interests of finance and the kind of economics about which the hon. Member for Beaconfield talked. It is rubbish in terms of production, because a high exchange rate means that we shift the balance from production in this country to production overseas—in other words, to imports—thereby making imports more attractive and our production more expensive. We shift the balance from investment in Britain to investment overseas, and we have been doing that for the last 13 years. We shift resources from production into consumption, as we have been doing over the years.
Mr. Tim Smith: Why has that not worked for the Germans?
Mr. Mitchell: A country with a powerful exporting sector can let its currency appreciate because it has the economic strength to ride that out. A country in which manufacturing has been shrinking needs the edge of a competitive currency to expand and rebuild back to the competitiveness which will allow its exchange rate to appreciate. It does not happen simply by putting up the exchange rate—that way comes rigormortis for industry —but from policies which make investment in this country profitable. It gives industry the prospect of being able to sell its production, and the only way to do that is to make the currency competitive. It is simple economics, although the Government do not understand that.
Instead, they have shifted the emphasis from production to consumption by the exchange rate. In other words, they have shifted from labour, which we represent, to wealth, which they represent. It has been a matter of simple social priorities for them. They have shifted it from manufacturing to finance. The whole policy of the Government has been dedicated to making money dear and people cheap, and they have succeeded. They have produced the sort of society that reflects that set of attitudes. Unemployment will increase because there is no way of stopping it increasing.
There is no way out unless we reverse the priorities. We must reduce interest rates, and with them the exchange rate. We must do that to channel demand to production. No other way will lead to recovery. Water cannot be made to flow uphill. By constantly preaching about defeating inflation, the Government simply shift the emphasis from the real economy to the mythical battle against inflation.
It is a mistake for a country to tie its currency to that of another, because a currency insulates a country against drops in another countries' economies. It is also a mistake to tie our economic cycle to that of Germany, which wants to increase interest rates and deflate its economy, whereas we want to hold interest rates down and expand our
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economy. Yet we are forced to keep interest rates high to suit Germany. It means that we cannot improve our balance of payments and market forces cannot operate. It is a mistake to make changes in our exchange rate dependent on competitors who have a vested interest in seeing that exchange rate overvalued, because it strengthens, confirms and sustains their access to our market.
To make all those mistakes and then compound them by entering the exchange rate mechanism at too high a rate is total folly. The Prime Minister took us in at that high rate, and it is the last nail in his coffin. The pound is 24 per cent. overvalued in real terms against the deutschmark and more than 40 per cent. overvalued in real terms against the dollar. British industry can never recover the ground that it has been forced to give up by that overvaluation. The estimate of John Williamson in the bulletin of the National Institute of Economic and Social Research is similar.
The overvaluation will cause a growing deficit in our balance of payments, more unemployment, less invest-ment and a Government who are twisting in the wind because they will be subject to every threat and challenge to the exchange rate. Governments who hang on in that way are usually challenged by their friends—in the present Government's case, the markets, which will test them in the next six months. Every year we are wasting production and there is a gap between what we produce and what we should produce, if we were on the trend growth line, even the low trend growth line of the 1980s. I do not know how much that amounts to. Sir Donald MacDougall came up with an estimate of some £60 billion a year in lost production just because of that economic folly. How much richer that would make us and how much more powerful as a nation, yet we are chucking it all away.
The position worries me, because I now see a deflation sustained by the exchange rate mechanism, which has become tripartisan policy. Each party is committed to the mechanism that imposes that deflation. It is strikingly close to the situation of the 1920s, when Winston Churchill took us back to gold at an overvalued rate in 1925. The consequence was the general strike of 1926, the depression of the rest of the 1920s, and the suffering of manufacturing industry and basic industries of this country because they could not leap the hurdle of overvaluation that the Government had imposed on those industries. The problem ended only in 1931, when a Conservative Government took us away from gold and devalued by 30 per cent. A Labour Government, who had broken their backs and given their all to keeping the country on gold, went out, with Ministers saying, "They never told us we could do that".
We now have the same orthodoxy, except that it is called "communautaire". It is called a commitment to Europe, and is placed higher than the recovery of our economy and jobs for our people. It is producing the same results, and the outcome can only be the same. There will be a breach, and we shall devalue because such suffering cannot be imposed on electorates through the hidden hand of the exchange rate. The Government cannot keep the lid down.
We have seen what is happening in Europe. Because of the futile quest of the exchange rate mechanism to get inflation rates down to Germany's abnormally low level, which it has achieved because of its powerful manufacturing sector, France now has the CRS using its batons on nurses and has experienced four rounds of public

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expenditure cuts, and Ministers cannot leave Paris without a police escort. A similar fate awaits us, because our deflation will be harder than that.
The only way out is to devalue. It will happen because it is the job of politicians in an untenable situation to walk out backwards, proclaiming that they are doing something different from what they are doing. I hope that it will be a Labour Government who do that because, without that devaluation, no Government can succeed, people can only suffer, our manufacturing base can only shrink further, and we shall be relegated to an indefinite, long-term future of crippling—[Interruption.] The hon. Member for Beaconsfield sneers.
The previous Chancellor of the Exchequer effectively devalued our currency by 30 per cent. against the deutschmark in 1986. That was the reason for the expansion and was a contributing factor to the Tory party's success in the 1987 election. So let us not have a sneering partisan attitude to that, because the fate of this country and British industry is at stake. British industry has been strangled by a crippling and excruciatingly high exhange rate, from which there will be no escape unless someone devalues.
7.55 pm
Mr. John Watts: Like my hon. Friend the Member for Beaconsfield (Mr. Smith), I was both puzzled by and disappointed by the speech of the right hon. and learned Member for Monklands, East (Mr. Smith). He started with a few good jokes, in true barrister style, then went through the ritual denunciation of the Government, but he said little about the Labour party's policy or anything relating to the motion on the Order Paper. I could not understand why that should be, but, as the debate has developed, the reasons have become crystal clear. Labour Back Benchers have said little in support of what I understand to be official Labour party policy.
We have just heard a powerful speech by the hon. Member for Great Grimsby (Mr. Mitchell), denouncing the Leader of the Opposition's commitment earlier this week, when he met his socialist comrades in Europe, to sign up to economic and monetary union with absolutely no conditions. We heard a similarly powerful speech from the right hon. Member for Swansea, West (Mr. Williams) in a similar vein, and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) was not exactly fulsome in support of the line peddled by the Opposition Front Bench.
Therefore, all that the right hon. and learned Member for Monklands, East could do was try to pour scorn and ridicule on the economy's prospects for recovery. In recent weeks, the Labour party has cast itself in the role of someone scouring the country looking for bad news. Earlier this week, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who is clearly becoming rattled because the financial and management reforms in the health service are reducing waiting lists, felt that he had to rubbish the Government's policies on that.
Likewise, the right hon. and learned Member for Monklands, East disputed whether the economy was now starting to recover. He castigated my right hon. Friend the Chancellor for having forecast that the recovery would start from the middle of this year. Yet the GDP figures for
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the third quarter show a 0·3 per cent. increase, which is surely one sign that the worst is over, and that better times are coming.
Labour Members will then say that, if oil is taken out of the calculations, everything else is going flat. One can always pick and choose one's statistics, taking out all the good news and giving only the bad. Labour Members sought to do the same when my hon. Friend the Member for Chorley (Mr. Dover) intervened and asked, very reasonably, why, if everything was so dreadful, unemployment was falling in his constituency in the north of England over the past two months. The right hon. and learned Member for Monklands, East said that he should look at the national figures. If we do so, we find—as my hon. Friend the Member for Beaconsfield said—that, on an unadjusted basis, unemployment fell last month and, even on an adjusted basis, the increase was only 15,000 which is much less than most independent forecasters had expected.
In my constituency, unemployment is no longer rising but has peaked and levelled out at about 5 per cent. That is a problem for my constituents who are out of work and I look forward to the prospect of their finding work again when the economy recovers. But 95 per cent. of the working population in my constituency are in work and still earning good money.
The Slough industrial estate is still the largest in western Europe. The demand for power on the power station which serves the whole of the estate and therefore relates to a cross-section of businesses, and which provides employment for thousands of people, is higher this year than it was last year. That is another sign that industry in my constituency is recovering. The Thames Chiltern chamber of commerce and industry covers my constitu-ency and that of my hon. Friend the Member for Beaconsfield. In fact, it covers the whole of the Thames valley district north towards Aylesbury. In the past two quarters, the returns from a wide cross-section of businesses have been positive.
Opposition Members are wrong to seek to talk down the performance of the economy. They are equally wrong to pour scorn on the notion of an increase in consumer spending contributing to recovery. I may be too simple in my approach, but I do not think that I could find a business man in my constituency who would be prepared to invest in new capacity unless he believed that he had customers in the market who would buy those goods.
Some of that increased purchasing power in the domestic economy will come from the success of my right hon. Friend the Chancellor in squeezing down inflation and part will come from the benefits of lower interest rates, which mean that the disposable income that was being consumed—particularly by the servicing of mortgage debt —is now available for other expenditure. Some of that purchasing power could then be applied to increased consumer demand to give manufacturers the markets for their goods. That would be a positive development that should not be decried.
Similarly, our partners in the European Community should join us in concentrating on measures to complete the internal market to increase the market available to all producers in the Community rather than being sidetracked by issues of political union—which do not necessarily have to be decided at this juncture. They should also concentrate on making progress in the important negotiations on the general agreement on tariffs and trade

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to expand the prospects for trade worldwide. Such activities would expand the export markets for our producers.
The argument that financial incentives for investment will necessarily lead to greater investment in the absence of any increased demand is clearly flawed. I believe that it was my right hon. Friend the Member for Hertfordshire, North (Sir. I. Stewart), who explained that such tax allowances were necessary only if the Government ran a high tax regime. If profits are taxed at 52 per cent., 60 per cent. or 100 per cent., tax allowances are needed if companies are to have enough cash to fund their investment programmes. How much better it would be to have a low tax regime, so that even companies that make the largest profits can retain 67 per cent. of them tax-free and smaller companies can retain 75 per cent. of their profits after tax and spend the money on investment that they judge to be commercially viable.
Investment can be financed from the retained profits that companies are allowed to keep due to a lower tax regime, and private sector savings. The supply of savings would be fatally affected by the Labour party's policy of taxing private individuals heavily. If the higher rate of tax is effectively to rise from 40 per cent. to 59 per cent., from where will the extra tax revenues be diverted? Savings, not consumption, are far more likely to be squeezed.
All our experience of trying to slow down a booming economy showed that the last sector of expenditure that consumers were prepared to cut was consumption. Their savings went first, and a decline in the savings ratio was created as people tried to maintain their standard of living. That would be the response if a Labour Government— were one ever elected—were to impose their new high tax policies on both those who pay high rate tax and those who pay basic rate tax.
In an intervention, the hon. Member for Derby, South (Mrs. Beckett) reiterated that, under a Labour Government, there would be no increased burden of taxation for anyone earning less than, I think, £20,000 —it may have been £21,000. That simply does not square with the Labour party's spending commitment pledges, which my right hon. Friend the Chancellor and his colleagues have costed at £35 billion. I know that Labour spokesmen and women find it boring when Conservative Back Benchers or Ministers question them about their spending plans. They are in the habit of saying that our estimate of £35 billion is rubbish. Labour's Treasury team should take the opportunity of this debate to make the position absolutely clear. Do they dispute my right hon. Friend's costings which total £35 billion, or do they allege that what we have identified as their commitments are not really commitments? Either way, I believe that the electorate have the right to know.
There is a suspicion that the Labour party is making promises to bribe people with their own money. They throw out promises of extra spending but are unwilling to frighten the horses by telling those same people what they will have to pay in taxation. Even today, I learned that the Labour party has announced two new spending commitments—
Mr. Austin Mitchell: —it says here, in this Central Office brief.
Mr. Watts: No. I have that information from an hon. Friend who serves on a Standing Committee.
I understand that the Labour party has made a new commitment that the 20 per cent. contribution to community charge will be abolished by an incoming Labour Government so that the community charge benefit will rise to a maximum of 100 per cent.—[Interruption.] I am not talking about the council tax, on which I estimate that that policy would cost about £400 billion.
I understand that a Labour spokesman in the same Committee said that there would be no control over the level of local government expenditure if a Labour Government came into office. I understand that there would be no capping, no circulars, no friendly chats and no attempt to constrain the level of local government spending. That is a further commitment on top of those that have already been costed.
Mr. Nellist: When the hon. Gentleman talks of the minimum 20 per cent. contribution to the poll tax, is he saying that he is in favour of literally millions of people in this country being driven further into debt to try to pay that 20 per cent.? Is he not aware that, despite Treasury protestations that nobody who could not afford to pay the poll tax would ever go to prison for failure to do so, of the 100 people who have been sent to prison, 31 were unemployed, 15 were pensioners and three were on invalidity benefit? If the Government carry on with the 20 per cent. rule for at least another 15 months, those people will be joined by many more.
Mr. Watts: It is perfectly reasonable for Opposition spokesmen to make new pledges that, if a Labour Government came to office before the community charge was abolished, they would increase the benefit to 100 per cent. However, I want the Opposition Treasury team to say how such a policy will be funded, because it is very much at odds with the frequently reiterated statement of the hon. Member for Derby, South that a Labour Government would make only two commitments to increase spending: on pensions and child benefit.
I am sure, particularly as my right hon. and learned Friend the Chief Secretary is present, that Conservative Members will sympathise with the hon. Member for Derby, South. As shadow Chief Secretary, she has the difficult job of trying to keep under control the wild spending promises of her would-be ministerial colleagues. I am sure that my right hon. and learned Friend has had some experience of restraining some of the demands of his right hon. Friends.
The hon. Member for Derby, South must make it absolutely clear to the House and the country whether her frequently reiterated statement that the only increased expenditure would be on child benefit and pensions is still Labour policy. Is she saying that the other so-called commitments—the extra money for overseas aid that the right hon. Member for Manchester, Gorton (Mr. Kaufman) promised at the Labour party conference, the new commitment made today on community charge benefit and the extra spending on training and investment about which we have heard today—are not commitments, even though the training and investment proposals were contained in the speech of the right hon. and learned Member for Monklands, East? The House and the country are entitled to a clear answer on those matters.

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The speeches that we have heard tonight suggest that there is clearly much less confusion and division on the single currency on the Conservative Benches than on the Labour Benches. A substantial proportion of Opposition Members are unreconstructed 1960 devaluers, as the hon. Member for Great Grimsby made clear. It was a travesty of Conservative Members' position for the hon. Member for Berwick-upon-Tweed (Mr. Beith) to say that our concern was that the British economy was uniquely unfitted to meet the criteria for entry into a single currency system. On the contrary, the British economy is one of the few of the 12 which currently meets the criteria laid down in the draft treaty.
My concern relates to what is known as Club Med; whether, at the time that a single currency is introduced, a political decision will be made, in the interests of what is called social cohesion, to allow Greece, perhaps Italy, and other weaker economies which cannot meet the criteria, none the less to be allowed into the system, and then for massive financial transfers to be made from the northern states to Club Med in order to bail out their economies which could not take the effects of a single currency, any more than the east German economy would easily adapt to the introduction of the deutschmark.
That is a particularly strong concern because, along with the Germans, we are still the only consistent net contributor to the EC budget. If any such costs arose from social cohesion, they would fall heavily and unfairly on the shoulders of British taxpayers and, at the same time, would add to the balance of payments problem to which Opposition Members have referred.
We are already in the unhappy position of contributing more to our wealthier partners in the EC than we make available to the third world and eastern Europe through our overseas aid programmes. Unhappily, the public expenditure plans in the autumn statement show that that trend is to continue. By the end of the planned period, we shall be shelling out £3 billion a year to our rich Community partners without any changes in policy or additional burdens being imposed by the Community.
That is my concern about the arrangements for a single currency. That is why we are wise to insist that, while we should take part in the discussions about the institutions which would be required and the way in which a single currency should work, we should not commit ourselves to joining such a club until we know who the other members will be on day one.
8.12 pm
Mr. Giles Radice: I congratulate the hon. Member for Slough (Mr. Watts), who is a colleague of mine on the Select Committee on the Treasury and Civil Service, on his stout defence of the Government. It is clearly central to that line to attack the Labour party on public spending, as every Conservative speaker so far has done. That attack has been answered many times by my hon. Friend the shadow Chief Secretary, and no doubt it will be answered again with her usual ability this evening. Therefore, I shall not follow the hon. Gentleman in his remarks, but I shall take him up later on what he said about economic and monetary union.
Having had the pleasure of watching the Chancellor carefully for about a year, I have decided what his problems really are—and I should like to share my discoveries with the House. The Chancellor's first difficulty
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is that he has to fight an election in the next seven months. Left to himself, he is a man of realistic disposition, a pragmatic chap, the sort of person to see things as they are. By nature, he is by no means a Pangloss.
If the election were in 1993, things would be much easier for the right hon. Gentleman. He would be much more relaxed and he might even have told the House what he really thinks—but because the election is imminent he continually has to be promising a recovery. We have heard the stories this afternoon—dawn is nigh, the sunny uplands are in sight or, in the words of the old song, good times are just around the corner.
Last December, as I am sure the hon. Member for Slough will remember, the Chancellor told the Treasury and Civil Service Select Committee that he believed that the recession could be relatively short lived and relatively shallow. In fact, it was neither short lived nor shallow. We now know that output fell for four quarters in succession and that non-oil output fell for five quarters in succession. Output also fell by 3·7 per cent., the second deepest recession since the 1930s.
At the time of the Budget, as my right hon. and learned Friend the shadow Chancellor said, the Chancellor revised his position and said that the recovery would begin around the middle of the year. That prediction is looking precarious. The latest output figures show that in the third quarter there was a fall of 0·3 per cent. in the non-oil economy. The hon. Member for Slough did not mention that. During the past three months there has been a fall in retail sales, a dip in consumer confidence, and big companies such as GEC and Pilkington, which have reported during the past two days, see no sign of recovery. We should listen to what they have to say.
The Chancellor points to the stock-building figures. He says that there is a small rise in manufacturing investment and he points to a fall in the rate of increase in unemployment as evidence of the recovery. An objective observer would probably conclude that the jury is still out, that it is too early to say that there is a recovery. The Chancellor rather admitted that when, in a Freudian slip, he told the Treasury and Civil Service Select Committee that the recovery was slow in coming.
If there is a recovery, it is so imperceptible as to be a micro-recovery that cannot be discerned by the ordinary human eye. I suspect that the real situation is that the economy, after taking a nose dive for a year, is probably still bumping along the bottom and that any recovery, when it comes, will be slow and hesitant. It could be some time, even as much as a year, before we return to our productive potential. I suspect that that is what the Chancellor thinks; it is certainly what he should have said to us this afternoon. However, he did not dare say it because to do so would be politically disastrous for the Government.
The Chancellor has another obvious problem and that is that his predecessors, the right hon. Members for Blaby (Mr. Lawson) and for Huntingdon (Mr. Major), have left him an appalling inheritance. First we had the Lawson boom and now we have the Major slump. As to the Lawson boom, experts will continue to argue about the precise moment when the British economy went out of control. Monetarists emphasise the money supply figures and the explosion in the housing market. Keynesians point to the splurge in consumer spending and the succession of

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tax-cutting Budgets. It is certainly the case that by March 1988 the economy was seriously out of balance, and the March Budget accelerated the process.
I shall not accept this evening the hoary old argument that I am speaking from hindsight; I am not. I have looked again at the speech that I made at the time and that is what I said then, as did many other Opposition Members.
Mr. Oppenheim: Does the hon. Gentleman accept that tax cuts in 1988 amounted to only £4 billion, whereas the increase in credit that year amounted to £40 billion? Does not that show, therefore, that the real culprit was not tax cuts, but the fact that interest rates were too low, and they were cut in 1988 at just the wrong time?
Mr. Radice: I will reply to the hon. Gentleman's point about interest rates later. It is true that there was a credit explosion, mostly due to Government deregulation. However, the hon. Gentleman's figure for tax cuts was wrong: they amounted to £6 billion in a full year. Added to everything else, they led to the consumer boom and to the economy going out of control. Therefore, those cuts must be taken into account—as we said in our Select Committee report.
I do not believe that the explosion was an overreaction to black Monday. Other countries that relaxed policy in the immediate aftermath of black Monday subsequently tightened it. Britain could have done the same, if the then Chancellor of the Exchequer had not begun to believe his own propaganda, to the effect that Britain had experienced a supply side miracle. There was no miracle, but instead a very British boom followed by a very British recession. The Governor of the Bank of England told the Select Committee—as I reminded the Chancellor this afternoon —that it was a home-grown recession.
The recession of the right hon. Member for Huntingdon was caused by relying solely on raising interest rates to bring the economy under control. As many of us warned at the time, interest rate increases take a long time to work, have unpleasant side effects and clobber the economy. It would have been far better, as many of us also said, to have taken a more balanced approach—especially in respect of tax and credit control. The Government ignored our advice, and look what happened. The British economy did not slow down until the middle of 1990. Small and medium-sized companies went out of business at record rates. Investment dropped like a stone, the service sector suffered, and house owners were dispossessed.
When the economy eventually slowed down it fell over a cliff, and we are still crawling along at the foot of it. There is an undermining of public finances, which the Chancellor admitted to the Select Committee was caused by recession and inflation. Two thirds of the public sector borrowing requirement can be accounted for by recession and inflation. In other words, that is the cost of the Government's mistakes with the economy. Bankruptcy announcements and redundancy notices continue to be issued and "To Let" signs are still in all our high streets. We see all around us the waste of talent, enterprise and skill. I see the impact of recession in my own region and constituency and even in my own family.
My right hon. and hon. Friends reminded the House that the present recession is the second to be caused by the
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Government in 12 years. I remind Conservative Members that in the first ICI lost one third of its suppliers. That was not a question of dross or of overmanning, but of ICI—the bluechip flagship of our country—losing one third of its suppliers. That was a big recession and now we are experiencing another. It is a tragedy for the British people and no one can pretend that the Government are not responsible for it.
I want to conclude my speech with a few words on economic and monetary union.
Mr. Austin Mitchell: Oh, no.
Mr. Radice: My hon. Friend said a word or two about that matter, so I shall do so—especially as I am in line with party policy and he is not.
A good result will strengthen the prospects for our economy. There are strong arguments for Britain committing itself now to the objective of a single currency. They include savings on transaction costs, the elimination of exchange rate instability and the provision of a firm framework for economic and monetary growth. Instead of seeking an opt-out clause, which would weaken our bargaining stance in other regards at Maastricht, it would be better for the Government to have the courage to make up their mind now on a single currency.
It is no argument to say that no rash person would expect the Government to make up their mind now. Rational people in most of our partner countries are making up their minds in favour of a single currency—and some have an economic position that is less strong than our own. Uncertainty about our intentions will be bad for investment. Inward investment might switch from this country to the core EC countries, such as France and Germany, and uncertainty could be bad also for currency stability. If our position at Maastricht is seen to be too negative, we could have problems afterwards, and that might be bad for our reputation within the EC, which is bad enough anyway.
In contrast, a decision in favour of the objective of achieving a single currency would lend credibility to our anti-inflationary policies, underwrite the need to maintain a balanced macro-economic strategy—without the boom and recession we have had over the past five years—and provide the economic and monetary framework within which it would be possible to improve the supply side in the way that my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) described—through education and training, research and development, and high-quality investment.
The Chancellor made fun of those objectives. I cannot imagine what he was thinking about, for those are the ways to improve the supply side and the economy's productive potential. There is no other way. If we do not start tackling those problems we will be unable to improve the supply side. We need the framework of European monetary union and of a single currency to achieve that. Deciding on a single currency would help to promote economic change in the decade ahead and would make us ready for the third stage of monetary union.
Mr. Austin Mitchell: My hon. Friend mentioned earlier that he is in line with current policy. As I understand it, current policy is that we would be in favour of economic and monetary union, provided that there was convergence between the economies. I refer to a convergence according to a much wider range of measures, including productivity.

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The alternative would be a system of redistribution. Otherwise, we would see the same sort of tearing apart that hit East Germany. Is my hon. Friend suggesting that we should commit ourselves without insisting on either of those safeguards?
Mr. Radice: No, I am saying that if one accepts the objective of a single currency it will be easier to promote convergence. I am glad to learn that my hon. Friend wants convergence, because that implies that he is in favour of a single currency. That is splendid news.
The Government have lost their nerve. In 1987 and 1988, they set off an unsustainable boom, and in 1989–90 they forced the country into a deep and unnecessary recession. Now the Government are fudging the issue of a single European currency instead of giving a decisive lead. That is not a good record.
The Government have failed the British people, but fortunately they will soon be replaced by a Labour Government committed to preserving balance and to improving the country's productive potential—unlike the Government, who do not want to invest in education, training, research and development or high-quality investment. A Labour Government will also at last give a lead in the European Community.
8.28 pm
Mr. Phillip Oppenheim: The hon. Member for Durham, North (Mr. Radice) made a cogent case for Britain's entry into European monetary union. Earlier, other Labour Members argued that Britain should not follow that course. No wonder members of the Opposition Front Bench take an ambivalent attitude towards the issue. Members of the Opposition Front Bench have not told the House, either today or in previous debates, whether they want Britain to go full speed ahead into EMU in the 1990s, or approve of the Government's negotiating position—which is that Britain should have the right to opt out of the European monetary union if the conditions at the time are not right. I really think that an Opposition which takes its own policies on Europe so seriously and now says that it is the party of Europe should at least come clean and have a positive, definite policy on this very important issue.
It is also worth noting that there seems to be a certain amount of division on the Opposition Benches. I for one believe that it is better to have an honest debate on this crucial issue than to be dishonestly united, which is what the Opposition have tried to present to the country over the past year or so.
Mr. Chris Smith: The hon. Gentleman will recall that the Prime Minister, when asked by my hon. Friend the Member for Sunderland, South (Mr. Mullin) whether he accepted the principle of a single currency, said:
"It is entirely clear from the documents in front of us in the treaty that what we are doing is entirely enabling for ourselves to have an option to opt in and we are not committed to opting in by anything either in clause 2 or any later part of the treaty."
What on earth did that mean?
Mr. Oppenheim: I hope that my right hon. Friend is not catching bad habits from the Leader of the Opposition. My understanding of the Government's position is that we
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want the option to go into EMU in the mid-1990s if conditions are right. I hope that that is a straightforward view that can be understood.
The hon. Member for Durham, North mentioned research and development and said that this was a very important part of increasing our productive capacity. I agree to an extent, but I warn the research and development lobby that it is not quite as simple as that. It is not enough just to pour money into research and development. The economy must also have the ability to commercialise, to productionise and to market that technology.
One problem that Britain and many other western countries have had compared with say, Japan is that we have put a lot of money into research and development and have come up with good products, but we have not always manufactured or marketed those products properly. The Japanese, by contrast, have bought a lot of technology from other countries and concentrated on honing their production and marketing skills. It is only now—as they have got these to a very productive level —that they are beginning to pour money into research and development.
It is also worth noting that recently the British Patents Office produced a paper that showed that in Europe countries wasted £20 billion a year reinventing the wheel because they put money into R and D for products which have already been invented and for which patents are on offer.
One of the themes of Opposition Members on both the Front and the Back Benches is that we need to take a long-term view in industry and that British industry needs to be able to plan for the long term. That is an important concept which deserves examination. I believe that most hon. Members would agree that the two countries in which industry has best been able to plan for the long term in recent years are Germany and Japan. So what characterises their policies?
First, Germany and Japan have tiny state sectors; there is virtually no state industry in Japan and very little in Germany. Secondly, both countries, consistently since the war, have followed extremely sound monetary policies. I accept that there has been an aberration in German policy in the last year or two, but there are special circumstances. Since the war Germany and Japan have pursued extremely sound, rigorous monetary policies. They have almost always balanced their budgets. In Japan, public spending has been very low. I accept that in Germany public spending has been more in line with that in the rest of Europe, but the important fact there is that the Germans have increased spending only when their economy has been growing and has been able to afford that spending —not the other way round, as has so often happened in Britain.
Mr. Nellist: Will the hon. Gentleman also accept that one thing that links Germany and Japan is that they have very little in the way of standing armies and no nuclear weapons? Since Britain has spent in the last 40 years, in present-day money, something of the order of £20 billion a year on those things, Germany and Japan have each been able to invest in their manufacturing industry around £400 billion more than Britain. That is quite relevant as well.
Mr. Oppenheim: I do not want to shock the hon. Gentleman unduly, but I rather agree with the point he

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makes. Countries such as Britain and America have borne a disproportionate share of the burden of defending the west over the past 30 or 40 years. Although there are benefits to certain sectors of the economy, such as defence and aerospace, high levels of defence spending are detrimental to the overall performance of the economy. That is one reason why America has failed so dismally in commercial and consumer electronics and done so well, by contrast, in defence electronics, and why Japan has done so well in areas such as consumer electronics.
However, although I agree with the point the hon. Gentleman makes, I believe that someone had to bear the burden of defence spending over the past 30 or 40 years, and we would not be enjoying the slight improvement in the world situation now if Britain and America had not borne that burden. Although it is a factor in the success of Japan and Germany, other factors to which I am about to come have been far more important and significant.
The point I was making was that public spending in Germany has not been based on large public sector deficits. Rather, the spending has increased as the economy has grown; hence, the country could afford the public spending.
Another factor that links Germany and Japan is that both encourage saving, with very low taxes or no taxes at all on savers. On the other hand, neither country encourages over-consumption with tax breaks on consumption. The result is that in both countries there has been a large pool of available capital for industry. Industry has not been crowded out by high state spending. Those policies have also borne down on inflation and interest rates, because more capital has been available.
In other countries, by contrast, the encouragement of consumption through tax breaks, penal taxes on savers, high state spending and budget deficits have led, first, to a shortage of capital for industry, secondly, to high interest rates, thirdly, to inflation and, fourthly, because of high interest rates, often also to artificially overvalued currencies, which of course has been detrimental to industry.
Finally, and perhaps most important, Germany and Japan have had rigorous exam-oriented, vocationally geared and selective education systems, which have produced the highest attainments in basic literacy, maths, science and engineering.
These policies are far more significant than financial structures, takeovers or other factors which are often blamed for short-termism in industry in Britain and the United States. These policies have allowed industry to finance and plan for the long term.
None of these policies strikes me as being particularly socialist or even Labour. In fact, to the extent that we know what Labour policies are at the moment, they strike me as being almost the exact opposite of the policies pursued in Germany and Japan. As I understand it, Labour would raise state spending above what could be afforded and they would clobber savers with an investment income surcharge, just as they did in the 1970s, all of which would mean less capital being available to industry.
It is interesting that the right hon. and learned Member for Monklands, East (Mr. Smith) spent so much time talking about the importance of investment in industry. I agree with him, but he does not seem to have grasped the
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simple point that unless there are good levels of savings in the economy it is not possible to finance successfully that investment in industry.
The Opposition also paid lip service to the need for better education, but they would abandon and reverse the crucial education reforms which the Government are now pursuing, so industry would have no chance of matching the quality of the work force of competitors.
That is Labour's long termism. As always, rhetoric is far easier than the deed. Instead, the Opposition often offer simplistic interventionist policies, which have been tried and have failed before. We all know what happened last time Labour tried its brand of long termism: British Steel became the world's largest loss maker; British Airways was rated by its passengers below Aeroflot; British Leyland became the butt of international jokes.
Mr. Radice: The hon. Gentleman said that before.
Mr. Oppenheim: It is a good line and I am going to stick to it.
Madam Deputy Speaker (Miss Betty Boothroyd): It could be repetitive.
Mr. Oppenheim: I accept what you say, Madam Deputy Speaker.
That is where Labour's long termism led us. Interventionism and protectionism are no substitute for sound monetary policies and good education.
I know that some Labour Members are thinking that Germany and Japan have followed interventionist industrial policies, so I shall disabuse them of that misleading notion. Since the war, Germany has been one of the most liberal of the major industrial nations on trade and industry policy. For example, it has been the least rigorous in implementing the multi-fibre arrangement in Europe. Figures from the Organisation for Economic Co-operation and Development show that Japan has given the lowest subsidies to industry of any of the major industrialised nations—well below subsidies in the United States.
I know that the mythology is that Japan has prospered because of the Ministry of International Trade and Industry and trade barriers. GATT reports show that Japan has been one of the lowest offenders in these areas, and, more often than not, MITI's industrial policies have failed. In the 1950s, MITI tried to consolidate the car industry to produce a people's car on Volkswagen lines. It failed because MITI did not get the co-operation of the car industry. There are many more such examples.
Many of Japan's most successful industries have had little or no help or guidance from MITI. Photocopiers, excavators, calculators, personal computers and consumer electronics are good examples. Many of the least successful Japanese industries such as chemicals and aluminium have received much help and guidance from MITI.
Often western politicians of all parties and western business men have used the bogey of MITI and supposed trade barriers as excuses for their failure in economic policy or their failure to market competitive products in Japan. It is too easy to forget that all western countries, including the United States, have heavily subsidised and protected industries at least as much as Japan.
Another important point about the success of the Japanese economy is that what characterises Japanese industry more than anything else is the intense competition

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in the Japanese economy. As soon as a new sector comes into being, be it motor cycles, calculators or the latest example, notebook computers, 30, 40 or 50 companies pile in. They have a massive competitive battle, from which three or four incredibly strong competitors emerge. Because of that competitive honing process, when they start marketing their products on the world market they are almost unbeatable.
State-directed industrial policies are no anwer. They have failed in Britain before, and they are failing in Europe now. Decades of massive national state and EC aid to, and protection of, European computer, semi-conducter and consumer electronics industries have failed to produce world-class competitors.
Sometimes, given the way in which the hon. Member for Dunfermline, East (Mr. Brown) and the right hon. and learned Member for Monklands, East (Mr. Smith) go on, one would think that British industry had been the envy of the world until my right hon. Friend the Member for Finchley (Mrs. Thatcher) came along and single-handedly devastated it. Recent OECD figures tell a different story. They show that in the 1980s the productivity of British manufacturing industry rose by 50 per cent.—far more than in any major economy, including Japan. Britain's manufacturing output has risen by almost a quarter since 1979, at a time when, according to the Opposition, the Government where laying waste to our great manufacturing industries. Our manufacturing performance in the 1980s was well ahead of Germany, France and any other major European country.
By contrast. going back to the 1960s and 1970s, OECD figures reveal that manufacturing output fell under the Labour Government of 1974–1979, despite the professions of Labour Front-Bench spokesmen that only they care about manufacturing. In the 1960s and 1970s, our performance in manufacturing output and productivity lagged behind most of our major competitors, in complete contrast to the past decade when we have at least made up some of the lost ground.
It is true that a number of international problems loom over our economy. An international shortage of capital is about to hit the world economy. The three great capital exporters of the middle east, Germany and Japan are becoming net importers of capital—Germany because of reunification, the middle east because of reconstruction and Japan because of various reasons to do with its banking system and the monetary problems that it is experiencing.
Our policies have resulted in major improvements to the supply side, the basic efficiency of the economy, in the 1980s. No one seriously talks of reversing those policies now. Our monetary policies will ensure that we can build on that in the 1990s on the basis of sound sustainable growth. Our education policies will ensure that industry has the literate, well-educated work force that it needs to produce wealth to pay for higher living standards and better, affordable public services. Nothing in Labour's policies would help long-termism or the basic productivity of our manufacturing industry. Its monetary and spending policies would starve industry of funds. Its education policies would deprive industry of the well-educated work force that it needs. Labour has no cures for our industry —rather, it is part of the problem.
8.45 pm
Mr. Dave Nellist: Too many of the Chancellor's pronunciations in recent weeks have been in the nature of a contribution to an academic debate on how recovery or the end of a recession is defined. That is of little interest to millions of working-class people and their families, who face the continued uncertainty of unemployment. Their definition is simple: recession is when their neighhbour loses his or her job, a slump is when their own job is lost and a recovery is when the Tory Government lose their job. It is a definition with which I have much sympathy, and it has much to commend it.
By any criteria, Coventry's economy is suffering badly. I arrived in Coventry in 1971, when it was probably the richest working-class town in Britain. Sixty-seven per cent. of workers worked in factories. If Britain was the workshop of the world, Coventry was the fitting shop, the heart of manufacturing in the midlands.
On Monday, I received an answer from the Department of Employment showing that, between September 1981 and September 1989, Coventry suffered a net loss of 19,900 factory jobs. More than 29 per cent. of our manufacturing employment was wiped out in a decade. Since September 1989, the recession has arrived and deepened in our area. The west midlands continues to suffer more than the other regions. The prognosis of the regional employers' organisation, the Confederation of British Industry, is that 10 of the 11 regions will come out of recession by next February; the one that will not will be the west midlands. West Midlands Regional Forum says that the west midlands
"is one of the most pessimistic about the proximity and future strength of a recovery, sees further significant redundancies from its key manufacturing industries, shows little preparation for a recovery through increased investment, now has an unemployment rate above the EC average, is still expecting unemployment to continue increasing and employment to fall even further."
In the two years since the figures that I began with, several thousand more jobs have gone in my city. The tactics of employers have grown more outrageous as their confidence has grown, and that is certainly evident in the aftermath of the miners' strike. Coventry is paying the price today of replacing the right of workers to work with the right of managers to manage. As we saw with the redundancies that were made at GPT in recent weeks, redundancy terms have worsened. Other workers have been threatened that, if they do not accept a quick death, as in the closure of a pit last month, severance terms will be slashed.
The latest survey of the chamber of commerce, the bosses' organisation in Coventry, showed that 15 per cent. of firms in Coventry are working at full capacity. Investment in the past three months, compared with the previous three months, had fallen by 11 per cent., and orders had fallen by 55 per cent.
Twelve months ago, the chamber of commerce did a similar survey in Coventry, when it questioned 150 firms. When it conducted its survey this year, only 64 remained. Major companies in Coventry are not just shedding jobs: it is a haemorrhage. Not only is the damoclean sword of redundancies hanging by a thread over Rolls-Royce, but the sale of Parkside, the plant in my constituency, and the move to Ansty means that compulsory redundancy is rearing its ugly head.

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Courtaulds, Matix Churchill, Dunlop, Kalmar and the Co-op—all household names—are on short-time working. At Jaguar, 2,000 jobs are going, and a couple of weeks ago its ownership transferred to America. The new owner, Ford, says that that is a technical tax matter. Workers in Coventry fear that, after the ownership has gone, development and possibly production will follow.
In the last 12 months, 8,000 have been added to the unemployment figures, and a real fear of unemployment stalks my city. Having spent three years on the dole before I became a Member, I know to my personal expense that unemployment is a degrading tragedy of almost unimaginable proportions. It is also a weapon which employers use to instil fear in their workers.
Unemployment has a cost as well. It is a "price worth paying" to get inflation down—so says the Chancellor. Officially, we have 2·5 million unemployed. That is costing £21 billion this year. Each unemployed person costs £9,000 a year in dole and income support and in the tax and national insurance lost to the Treasury. That is an underestimate which does not take account of lost production, the extra burden on the health service and other indirect costs.
Let us consider the figures in my constituency, where there are 4,500 officially unemployed. That costs £40 million a year. I reckon that there are about 30,000 in work in my constituency. Everyone in work is paying over £1,350 a year, or £27 per week, to service the unemployed. If my party still had the policy which it had when I was elected in 1983, of a programme to bring about full employment during the lifetime of a Government, not only would we lift the burden off the unemployed but those in work would have an increase in living standards of £27 a week.
Many hon. Members have spoken in favour of the European Community. I was elected in 1983 with the aim of seeing our withdrawal from the Common Market within the life of that Parliament. I am still opposed to our membership of that bosses' club, but not for nationalistic reasons. It is an illusion to think that a united capitalistic market can be created which can compete and build multinationals in Europe which are the same size as multinationals in Japan or America.
In the last five years, Japan has added to its gross national product an economy the size of that of France. Sir John Harvey-Jones has predicted that, if European multinationals are to be built in Europe in the next eight years on the same scale as those in America and Japan, half the factories in Europe will have to close. In Europe, there are 300 firms making domestic products—everything from kettles through to fridges; in America there are four. In Europe there are 13 manufacturers of trains and locomotive goods; in America there are five. In Europe there are 40 firms making batteries; in America there are four and in Japan five.
We have had two massive body blows recently. In Coventry, over half our employment is dominated by 15 multinationals. If we remain in the Common Market under current terms, with a move towards a single market, I am not sure that those 15 multinationals will survive. One example is telecommunications. GEC, the British leader in the production of public telecom systems, took over Plessey two or three years ago. Then Siemens came in from
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Germany and took over 40 per cent. of the amalgamated GPT. In April 1988, Coventry had 9,552 employees in GPT. By last month, that had dropped to 4,495. Last week, the biggest private employer in my constituency, GPT, announced another 320 redundancies. When will it name the people who will lose their jobs? Seven days before Christmas: 18 December is the date when the workers of GPT will find out which of them are going down the road for the last time.
It is estimated that any public telecom manufacturer needs 12 per cent. of the world market, with investment in new switching systems, to have an adequate return. Britain has 6 per cent. of the world market in its domestic market. Even with the benefits of the single market, I do not think that GEC, with Siemens, will survive the 1990s.
There is still an hour and seven minutes left of this debate. I am doing my best to represent my constituents in what may be my last speech as a member of the Labour party. Hon. Members may not know that my hon. Friend the Member for Liverpool, Broadgreen (Mr. Fields) was expelled from the Labour party two hours ago. I intend to follow him on Saturday. I am rushing as much as I can. I will finish this speech on behalf of my constituents as a Labour Member.
My constituents face the insecurity and uncertainty of unemployment. The other body blow we had was the closure by British Coal of the pit in Keresley a couple of weeks ago. Only 13 days after the announcement of the closure of the pit 1,300 men worked their last shift. I do not think that the pit has been closed. The buildings are still on the surface. I challenged the area director of British Coal about what was being done with the land. He said that it was not being sold. I know why. British Coal has sacked 1,300 NUM members, but it is talking about driving two roadways from Dawmill, the UDM pit, down into that coalfield, which has 40 million tonnes of coal, so that, if the Tories win the general election and pits are privatised, a privatised Dawmill can come back. That is the penalty of market forces in Keresley.
When I asked British Coal to meet the leaders of the councils and the Churches, I was told that it was not interested in such fringe groups, which were low in their priorities. It is the local authorities which have to pick up the pieces when pits close. It is the social services department which has to go to pick up the pieces in villages like Keresley, where over a quarter of the jobs are going overnight.
What shall I tell my constituents when the debate is over? Is recovery around the corner? Car production fell by 27 per cent. last year. Production for the home market has fallen by 39 per cent. That was the rock on which Coventry and the midlands were built. It is no good singing, like Monty Python,
"Always look on the bright side of life."
We should not hope, like Micawber, that things will turn up. Things have to be planned if workers are to get jobs. We are not getting that planning from the Tory Government. Workers who have been laid off or sacked cannot buy goods even if factories are producing them. People are going into debt; 250,000 are now six months in debt on their mortgages, and thousands have already lost their jobs.
I doubt whether exports will prove to be our salvation. Over half our exports go to the Common Market. Italy and France are still in recession. There is talk of a double dip in America, which is operating at only 77 per cent. of

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its capacity. Germany is beset by the colossal cost of unification. There is no salvation in the capitalist system. It is a failure. I confess to plagiarism; those are not my words but the words of my right hon. Friend the Member for Islwyn (Mr. Kinnock). Unfortunately, they were said 17 years ago.
In the year since the Prime Minister got his new job, 67,500 men and 17,800 women in my area of the west midlands have lost theirs. Since the Prime Minister moved into his new house, 13,632 families in my area have lost their houses, having had them repossessed by banks and building societies. Therefore, I look forward to a majority Labour Government taking the economy by the scruff of the neck and bending it to the needs of our people—the working class people and their families.
I want a majority Labour Government to take millions of people—possibly more than 15 million—out of the ranks of poverty, if we define poverty as living on or below the margins of up to 40 per cent. above income support levels. I want a Labour Government to eradicate low pay, and I welcome my party's intransigence in the face of all the slanders from the Tories about the inadequacy of a national minimum wage—£130 a week even on half average earnings. Conservatives would not think twice about spending that on a meal for four in the Dining Room, but when it comes to curing homelessness, the Minister for Housing knows all about that. He defines the homeless as the people one steps over when one comes out of the opera at Covent Garden. One could not get one of the best seats in Covent Garden for £130, so why should folk not get that for a week's wages?
I also want a Labour Government who redistribute wealth, because the top 10 per cent. of the people in this country now own more than half the wealth. To achieve that and to carry out the necessary building programmes for the construction of hospitals and schools, it is not enough to hope for economic recovery or to place our faith in the capitalist completion of the single market. We must plan the economy and that is why my party card still has clause IV(4) on it. [Laughter.] To the laughter of Conservatives, I remain an unreconstructed socialist, and I am not at all ashamed of that.
8.59 pm
Mr. James Paice: I know that the House is looking forward to the wind-up, so I shall not detain it very long. Understandably, while there is little in the speech of the hon. Member for Coventry, South-East (Mr. Nellist) with which I agree, I very much respect the principles behind what he said. It is a pity that I cannot say that about many other members of the Opposition, who have already abdicated most of their principles.
We are discussing the Opposition's motion on the Government's handling of the economy and their suggestions to improve it. The right hon. and learned Member for Monklands, East (Mr. Smith)—I am glad that he is now in the Chamber—ridiculed the fact that my right hon. Friend the Prime Minister referred to anecdotal evidence. I am glad that we have begun to take notice of anecdotal evidence, because if we had done so two or three years ago, it would have been—indeed, it was— abundantly clear anecdotally that inflation was getting out of control long before it appeared in the figures. It was equally clear anecdotally that businesses were beginning to
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get into difficulty long before that fact showed in the figures. I welcome the move towards a recognition of evidence other than Treasury statistics.
Many of my right hon. and hon. Friends have said much this afternoon about the Labour party's proposals, which are loosely described in the motion. The Opposition Front-Bench team have ad nauseam tried to persuade us that they can increase expenditure by varying amounts —we have heard all kinds of promises—with only a minimal increase in taxation. Several of my hon. Friends referred to the 9 per cent. surcharge on savings which is being proposed. I slipped out of the Chamber for some of the debate, but I did not catch anyone referring to the other area that the Opposition have made it clear that they expect to be a source of income—the change in the past few years to a property-owning and share-owning democracy.
My right hon. Friend the Prime Minister coined the phrase "a cascade of wealth"—as the benefits of property ownership cascaded through the generations, everyone would benefit. However, the Labour party and the right hon. and learned Member for Monklands, East regard inheritance tax as a major source of increasing Government revenues, so the cascade becomes an opportunity for them to follow their basic creed of envy to spend.
This morning we heard on the "Today" programme what I can only believe was a slip of the tongue by the hon. Member for Derby, South (Mrs. Beckett). To its credit, the Labour party has as a matter of principle opposed privatisation whenever it has been discussed in the House and whatever industry was involved. It has a declared policy that it will wish to regain control of certain industries, but this morning the hon. Lady—my right hon. and learned Friend the Chief Secretary to the Treasury was also present at the interview—declared that Labour would go on spending privatisation proceeds from the deferred payments which would still be coming in if Labour came to power.
I do not believe that one can have it both ways. Labour cannot be against privatisation but happily go on spending the proceeds. However, that is the nature of the Labour party, as we have seen over and over again today. It is a party devoid of principles, which seems intent on chucking out the only members who have any principles, and we heard them amply described only a few minutes ago. This country has no truck with people who discard their principles, and it will have no truck with the Labour party.
9.3 pm
Mr. Peter Hain: In the year since the present Prime Minister got his job, 26,900 men and 5,400 women in Wales have lost their jobs. In the year since he got his new home in Downing street, 8,842 people in Wales have had their homes repossessed. In the year since the right hon. Gentleman set himself up in business as leader of the Tory party, 1,760 businesses in Wales have failed. Ministers often say that Labour is talking Wales and Britain down. That is patronising drivel. Labour is not talking Wales down; the Government are doing Wales down, and that is understood by everybody in Wales.
The Government cannot see beyond the next consumer bribe or the next tax cut. They have elevated short-termism into a science, always striving to boost consumption and never resourcing investment. Consumption may have

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stalled in the past year, but since 1979 it has risen by 40 per cent. Interestingly, at the same time, production by British companies of British consumer goods has risen by only 7·8 per cent., barely one fifth of the consumption boost. As a result, consumer debt stands at a staggering £52 billion, five times what it was in 1979, and corporate debt is an even more staggering £27 billion, much of it financing the dividend payments to shareholders which have tripled since 1979 while investment has remained virtually stagnant.
Between 1979 and 1990, the real priorities of the Tory Government are clear. Manufacturing investment in Wales rose in real terms by a pitiful 10·6 per cent., whereas the market value of United Kingdom and Irish equities increased in real terms by a massive 214 per cent.—20 times more. Surely that is eloquent testimony to the fact that market forces are not working, and that institutional shareholders and the capital markets are abjectly failing British industry. Why will not the Government boost the real economy and not just the candy-floss economy which it is so keen to promote?
The issue is seen most clearly in pension funds, which have recently been exposed by the Maxwell scandal, one of a series of scandals in British industry. Short-termism is significant in this context. A handful of pension fund managers now control assets of £400 billion—three quarters of the wealth generated across the United Kingdom each year. Those managers have helped to create and promote a climate in which high dividends have been the norm at the expense of long-term investment in British industry and at the expense of pensioners and employees, whose rights have been negated as pension funds have been looted by business tycoons.
The Government have deregulated the corporate finance structure. They have turned a blind eye to the abuse of pension funds in recent years. Their announcement that they will bring forward the 5 per cent. limit on self-investment is simply not good enough. It does not address the Maxwell problem, for example, or the problem of British Steel lifting £150 billion of the pension fund money due to its workers.
All those issues point to the fact that the Government are interested only in tomorrow and not in building for the future. That is why we need a Labour Government who have the economic policies to invest in the future, to invest in industry and to invest in the skills base which has collapsed over the past 12 years. People understand that only a Labour Government have the economic policies which will put Britain back into the first division in Europe, and which will lead to rising living standards and rising prosperity for our people.
9.8 pm
Mrs. Margaret Beckett: This has been an interesting debate with some excellent contributions from both Opposition and Conservative Members. However, the comments on the present state of the economy by Conservative Members have been overwhelmingly characterised by the enormous gap between rhetoric and reality. The rhetoric is that there is sustained success; the reality is very different.
The figures given by my hon. Friend the Member for Paisley, North (Mrs. Adams) bear repeating. Over the past
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year, 3,000 jobs have been lost every working day, 200 businesses have collapsed every working day and 300 families have had their homes repossessed every working day. We know that in every one of those groups. as the year continues, there is more to come. Manufacturing output is down more than 5 per cent. on the same period a year ago, manufacturing investment is already down 12 per cent., and the CBI predicts an overall fall of 20 per cent. over the year, retail sales are totally flat and gross domestic product is down 2·3 per cent. That is the reality that the Government have sought today to obscure with rhetoric. Faced with that, they weave, dodge and bluster. The other day, I was fascinated to note that the Chief Secretary apparently holds a special appointment as blusterer-in-chief.
What is most important is that the Government spend their time and energy not on finding ways to combat the recession, but on trying to find ways to combat the impression that they are giving and reinforcing of a Government adrift in shark-filled waters—and they are. However, the sharks that matter most are neither addressed nor affected by the Government's strategy. The sharks that really matter are our competitors, especially our partner competitors in Europe—the ones that are snapping up the export orders that Britain should be winning, the ones that are gaining the markets that Britain is relinquishing, and the ones that, whatever their problems, are still growing and still drawing further and further away from us.
During last week's Treasury questions the Government, with a fresh barrage of statistics about investment and exports, again sought to create the impression that there is no problem. On examination, almost all the new figures are based on highly-selective choices of data, not on the Government's whole record, or on bogus comparisons between incompatible figures. We can knock them down as fast as the Government can pull them up, but juggling the data to try to justify some line that Ministers will use anyway will not explain away that harsh reality.
It is less than a week—as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) reminded the House, or perhaps told Conservative Members—since the president of the Building Employers Confederation was reported as saying that he had been in the industry for 42 years and that these were the worst conditions that he had ever experienced. The conditions are shockingly depressed. How can Ministers square that with either their fountain of recalculated and re-presented figures or with the rhetoric with which they accompany them? Of late, the Chancellor has been insisting that—I quote what he said to Brian Walden—what is happening now is
"very much as I expected".
That was said in answer to a depressing litany from Mr. Walden, who said to the right hon. Gentleman that there might be
"a technical recovery, you admit that some of the figures look very bad … there are serious debt problems … you admit that the housing market is flat, you say you expect a contribution to growth from consumer spending, now Chancellor none of it sounds very upbeat does it".
That is a judgment from which the Chancellor noticeably did not dissent.
It seems that the Chancellor has perhaps been taking lessons from the Prime Minister in the art of precision. It was the Prime Minister, after all, who as a Minister in the

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Department of Social Security pledged that child benefit would continue to be paid as now—a pledge which was carried out to the ha'penny for a number of succeeding years. One could not say that his words were untrue, but it is certainly not what people thought he meant at the time. It is something to be borne in mind before getting too excited about his pledge, for example, not to privatise the national health service.
Similarly, it is certainly true that in his Budget speech in March the Chancellor said that he expected recovery to begin in the second half of the year. As my right hon. and learned Friend the Member for Monklands, East pointed out, later in the debate he said that it would be towards the middle of the year. The Chancellor now says that our present circumstances are very much what he expected, that he never expected anything else at this stage arid that they are very much what he expected all along. He cannot stretch that to be compatible with the impression that his further comments no doubt deliberately created.
Whatever the Chancellor's precise words either at the beginning or end of the Budget debate, on 25 April—not long after—the Prime Minister said that
"the United Kingdom is coming out of its economic difficulties, while other countries are still facing deepening difficulties."—[Official Report, 25 April 1991; Vol. 189, c. 1206.]
On 29 April, the Chancellor said in Washington that recovery is "around the corner". However, that is not the impression that he has been trying to create today. The Chancellor was no longer saying "in the second hai' or "towards the second half"; in April he was saying, "around the corner". The right hon. Gentleman is stretching things a little.
However, one must be charitable because that was said when there was still talk of an election in June 1991. Even when the June option had faded—no doubt with an eye on the autumn—on 19 July the Prime Minister was still saying:
"I am confident that, in the second half of this year, the economy will begin to take off". [Official Report, 19 July 1991; Vol. 195, c. 679.]
That sentence contains an active verb. I am sure that we have all noticed that take-off coming about.
By September, the pre-election hype was again well under way and, on the 16th, the Chancellor said
"Britain is coming out of recession … The statistics are highly encouraging and pointing very much in the right direction".
What a contrast between those statements and the one made to Mr. Walden a mere two months later—that the Chancellor never expected anything else but the position in which we now find ourselves.
I am trying to believe the right hon. Gentleman. I do not think that he did expect anything else, but he did his best to make the electorate expect something else. With that record, not just on recession but on recovery, it is better to look to others for their judgment on where we stand and for the real signals that we should be considering.
The Government have been saying that with the technical recovery will come the end of all our problems. Some light was inadvertently cast on that today when the Chancellor, under pressure from my right hon. and learned Friend, conceded that, technically, the recovery was indeed here. "Technically", he said, "the recovery is now ended." We all recognise, however, that the problems have not ended. Others, of course, apply a rather more
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stringent judgment. The Chancellor quoted Professor McWilliams of the Confederation of British Industry saying that output was "slowly edging up". However, the right hon. Gentleman did not quote what Professor McWilliams stated in a letter to the Financial Times only last week about real recovery. He wrote that,
"the onset of recovery does not mean the recession has ended. If you are a diver, your head may still be below water even when you are rising towards the suface … I prefer to define the recession as over when the economy has recovered to its previous level of output … the recession will not end before the second half of 1992, even using the Chancellor's own forecasts as published in the Autumn Statement."
Professor McWilliams identified the right hon. Gentleman's forecasts as more optimistic than those of other commentators.
The Government still take no responsibility for Britain's real needs and conditions. They boast—many Conservative Members have done so in this debate— about bringing down inflation over the year from 10·6 per cent. to 3·7 per cent. Hands up whoever is taking the blame for putting it up. Are there no volunteers on the Conservative Benches? After all, it was the CBI that referred to the Government's "inflationary own goals" in the year that resulted in inflation at 10·6 per cent. It was the Governor of the Bank of England who referred to "administered price rises" as a result of political decisions. I note that the Government will take the credit when things improve, but none of the blame when they worsen. The Government took all the credit when unemployment was falling. Do any of them take any of the blame for its rise today? [HON. MEMBERS: "No."] That was a truly rhetorical question—one that expected no reply.
The Government have talked about worldwide recession, undoubtedly in an attempt to find someone to blame. However, I concede that the Chancellor was more accurate than usual today. He spoke of either "recession" or "falling growth" among our competitors. He sought to give the impression, without explicitly saying so, that somehow or other somewhere in the world sinister influences had brought about our recession.
It is only right to remind the Chancellor of what Peter Morgan of the Institute of Directors said earlier this year. He said:
"this awful recession, which has caused so much grief, is a failure of government economic management."
Undoubtedly he is more than a socialist.
Let us look further at who is to blame for the recession. On the question of recovery, the London business school, which again is not hostile to the Government, has said:
"The economy will do little more in 1992 than make up for the output losses of 1991".
The Government have given up on ungrateful harsh reality, as they gave up on it in June and November when twice they chickened out of calling an election. It is increasingly evident that, having run away from an election twice, the Government are spending their time worrying about presentation rather than performance, script in lieu of substance. The Prime Minister tells The House Magazine that the Government have abolished the poll tax—yet it is alive and well and at the heart of the council tax, for which the legislation had not even been published when he spoke.
The Prime Minister told us that the Government had "got inflation licked" in the autumn when he thought that perhaps they were about to have an election. Yet in the autumn statement the Chancellor murmured quietly that inflation

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"may rise slightly early next year".—[Official Report, 6 November 1991; Vol. 198, c. 452.]
I understand that the Chancellor of the Duchy of Lancaster, the chairman of the Conservative party, told us on Sunday what the Government had achieved in negotiations on the social charter. The next day the Secretary of State for Employment was on the airwaves telling us how he was off to conduct the negotiations on the social charter, on the result of which the Chancellor of the Duchy of Lancaster had commented. I think it was McLuhan who said that the medium was the message. Under this Government. the massage is the message. The concentration is all on public relations.
There was a revealing announcement last week. It conveyed the Government's sense of priorities better than perhaps most of the things that we could say in the House. They announced that they were putting £2 million more into extra help to relieve national health service waiting lists. That is terrific; we are all delighted. It could have been £4 million if the Government had not wasted at least as much—according to their figures—on sending us all a copy of the patients charter.
When it comes to the crunch and the Government are asked what action they intend to take to promote economic recovery, the answer is always the same, as it was the same today—they will wait and see whether it happens. Any approach, on any time scale, to economic and monetary union requires us to be able to compete on equal terms with the Germans, the French and the Italians. What do the Government intend to do to bring that about? They will wait and see whether it happens.
When the Government are forced to say what they would do if they were re-elected, they tell us that they would do it all again. They want to cut income tax again. To fund those cuts, they want to cut the proportion of national income which goes on public services—again. The Government tell us that they have got the inflation rate and interest rates down. They say, "If you want to know what we will do, just look at our record." Well, let us look. The Government cut income tax, yes, but they put up national insurance contributions and value added tax twice. This year they have got inflation down nicely in time for the election. That is very welcome, but is it unprecedented? Well, no, as a matter of fact it is not. In June 1983 inflation was 3·7 per cent.; within two years of the election, in June 1985, it was 7 per cent. In June 1987, when there was an election, inflation was 4·2 per cent.; within two years, in June 1989, it was 8·3 per cent. As we know, it continued to rise.
This year the Government have got interest rates down nicely in time for the election. Is that unprecedented? No. in June 1983 interest rates were at 9·5 per cent.; within less than two years, in January 1985, they were at 14 per cent. By June 1987—and an election—the Government had reduced them to 9 per cent. again; within another two years, in October 1989, they were at 15 per cent.
Mr. Ian Taylor: Will the hon. Lady give way?
Mrs. Beckett: I do not have very much time. I shall give way to the hon. Gentleman if I have time later.
The Government make much of their record on interest rates and inflation, but under them we have had a roller-coaster ride between boom and bust. Whoopee, we
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are going round again. I do not believe that the country can afford a repetition of those policies or a third Tory recession.
Economic debates have two consistent features—yet more dubious statistics and greater strength in their advocacy—[Interruption.]
Madam Deputy Speaker: Order. One debate at a time.
Mrs. Beckett: In our motion we call on the Government to initiate targeted tax relief, to promote investment in manufacturing, to reverse the cuts that they are still making in training, to establish a new skills programme and to offer support for research and development. Those are exactly the policies being called for by the Engineering Employers Federation and the Confederation of British Industry, whose members I seem to recall the Chief Secretary describing as "a few out-of-step people with old-fashioned ideas" during the last Budget debate.
Those policies are also called for by the Machine Tool Technologies Association, in a document produced a week or so ago, which argued that
"there is a role for Government in closing this investment gap … The correct balance and level of … investment needed … will come if policy provides: a stable economic environment; more innovation and training; greater availability of funds for investment; and the appropriate incentives from the tax system."
All those are Labour party policy, for which we have consistently called.
Yet the Government Front Bench and Conservative Members consistently claim that the Labour party has no proposals. When commentinL, on the speech by my right hon. and learned Friend the Member for Monklands, East today the Chancellor said:
"If he had constructive ideas he kept them to himself. He has no policies, he never has and he never will have."
Later he said:
"There is nothing in the way of serious economic proposals."
[HON. MEMBERS: "There is nothing. new."] Indeed that was not new. The Government say that in every debate on the economy. I find that fascinating.
All over the world there are Governments who do not know that such proposals are not part of the policies for running their economy. that they are outdated and do not work, as our Government claim. All over the world there are Governments who believe that while keeping inflation and interest rates as low as possible is necessary for economic prosperity, it is by no means sufficient. All over the world Governments are carrying out precisely the policies that we advocate and call on our Government to pursue for the sake of the country, yet the Chancellor accuses us of being
"locked in their isolationist world."
All over the world there are Governments, lacking the wise counsel of the British Conservative party, who do not know that they are getting it all wrong—grievously misled as they are by the fact that they have higher growth, higher investment, are more prosperous, and have better public transport. health, training, and education than we have. That has misled them to think that what they are doing is not an economic policy. I do not care what the Conservative party call it—[Interruption.] The Chancellor is pathetic.
Nowhere else in the world are there parties or Governments who do not recognise that the policies that we have consistently advocated for years from these

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Benches are not part of a proper planning and direction for the economy. Only on the Conservative Benches are they so foolish, so "isolationist"—to use the Chancellor's word—and so locked in their own determination to listen to no one that they will not pay attention.
As the Chancellor has made crystal clear, while this wait-and-see Government are in power, our only hope of competing with those who follow, and are successful by following the policies that we advocate, is that they lower their standards to our levels. The British Government's idea of competing in Europe seems to be for Britain to crawl in at the bottom of the heap, when British people have the skills and the capacity to hold up their heads at the top.
All that the British people lack is a Government with the understanding, determination and policy to help them reach that place. When the Government are finally forced by the date to stop running away from the electorate, they will get them.
9.30 pm
The Chief Secretary to the Treasury (Mr. David Mellor): Mr. Speaker—[Interruption.] I have not even started and Labour Members are laughing. I do not know what is to become of them. They might let me get a few sentences out first. I see laughing on the Opposition Front Bench the hon. Member for Brent, South (Mr. Boateng). I remember when he was a power in the land and chaired committees at the GLC. It seems that his only function these days is to come into the Chamber twice a day, for the opening and wind-up, and to laugh and make animal noises. It is a sad deterioration in what was once a rather good career.
Mr. John Smith: That is unfair to my hon. Friend.
Mr. Mellor: I am sorry that the right hon. and learned Gentleman thinks I have been unfair to his hon. Friend, who I am sure will grin and bear it. Indeed, knowing him, he will probably jeer and bear it.
I have been puzzled by today's debate. I assumed, since the Labour party had initiated it, that Labour Members had something significant to say. So it was with some expectation that I attended to hear what new thoughts the right hon. and learned Member for Monklands, East (Mr. Smith) wished to convey. One can only say of his speech that it was environmentally friendly in that everything in it was recycled; we had heard it all before.
We have had a lot of negative criticism of the Government—what my right hon. Friend the Member for Croydon, South (Sir W. Clark) rightly called talking down Britain—[Interruption.] Labour Members may find, particularly when they see what the opinion poll in The Daily Telegraph says tomorrow, that the British people do not find comfortable the rubbishing of the efforts that millions of people throughout the country are making to come out of a recession that has afflicted many of the world's developed economies. Finding themselves increa-singly in the position of having to talk down any good news for Britain and cheering at anything they can remotely distort into bad news is not an appealing platform for Labour Members and they must be seriously concerned about that fact.
We have had today only a sorry old rehash of the usual charges based on misconceptions about what has been happening. As usual, there has been from Labour Members an exclusive focus on manufacturing rather than
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on any other part of the economy. Not that I resent that. I am not disposed to being shy about our record in manufacturing—[Interruption.]—but I wonder when they will start talking about the other 80 per cent. of the economy.
I am not ashamed of manufacturing when 22 per cent. of our national output for manufacturing is more than that in the United States or France, when our exports are at an all-time high, even during a recession, and when, for the third year running, we shall be increasing our share of world trade in manufacturing. I am not embarrassed by that record, notwithstanding the obvious difficulties that we know many businesses are facing here, just as they are in the United States, Canada, Sweden, Australia and in a number of other countries which are suffering equally from an economic downturn.
I was interested to note how much reliance the hon. Member for Derby, South (Mrs. Beckett) placed on the CBI in the somewhat selective reading to which she treated us from the recent CBI report "Competing With the World's Best." For instance, she did not quote the following passage from that report:
"most of those responsible for running British industry believe there has been a marked improvement in performance during the 1980s which has been more than a temporary phenomenon. While there is no concealing the seriousness of the current recession, most manufacturers believe that their companies are in much better shape to weather the current downturn than was the case a decade ago."
I wonder whether the hon. Lady has the same document, because the whole of it is worth reading. At the end of the document, the CBI said:
"To sum up the Group's conclusions to this point, the state of the Manufacturing Nation is better than is generally recognised. Many of Britain's manufacturers have shown that they can compete with the best in the world, there is a sound base on which to build".
Mr. Jeff Rooker: Will the Minister give way?
Mr. Mellor: The hon. Gentleman, who has not been part of this debate but has just joined us, is obviously unaware of the fact that the hon. Lady constantly referred to the CBI. I am perfectly happy to share the CBI's opinions with the House. [Interruption.] The hon. Gentleman is becoming very excitable. Had he been here for a number of hours, any excitement would have died rather quickly.
Mr. Rooker: Will the Minister give way?
Mr. Mellor: No, I shall not give way if the hon. Gentleman cannot contain himself. The hon. Gentleman squawks, but I shall give way only to hon. Members who have taken a serious interest in the debate. On a generous estimate, that might even include the right hon. and learned Member for Monklands, East.
The Opposition's portrayal of the CBI as a damsel in distress waiting to be rescued from the Government by the Labour party is absolute nonsense. The CBI is about as anxious to have a Labour Government as we would all be to have our daughters go to an all-night party at the Kennedys.
The CBI's document says:
"It is quite clear in recent years that central government should not he in the business of picking winners, or of engaging in direct intervention in the strategic direction and management of companies. Experience has shown"—

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the right hon. and learned Member for Monklands, East should focus particularly on this point—
"that Ministers and civil servants do not have the necessary skills and experience".
If anyone is in doubt about how the CBI feels about the Labour party, he or she should look at the interview given by John Banham to The Guardian on Wednesday, 30 October. He said:
"Labour means an explosion of public pay settlements without increases in productivity; it means the minimum wage (causing up to a 300,000 increase in unemployment) and other social initiatives in line with the EC social action programme; it means business diverting resources from investment to meet rising local government bills unprotected by a retail price index cap.
The other threat is devaluation, even though this is one which Labour has gone out of its way to stress is not real"—
unlike the hon. Member for Great Grimsby (Mr. Mitchell), who was all for it in today's debate.
"We're very much opposed to devaluation but there are siren voices in the Labour party talking about that, he says.
All these add up to inflation, each percentage point increase in which he says costs business £5 billion a year."
That is what the CBI thinks of the prospect of a Labour Government. It is not impressed by the 283 quangos which Labour would invent, and does not want social audits, contract compliance, work force monitoring and other such stuff. Mr. Banham has no doubt noticed what Conservative Members have noticed about the right hon. and learned Member for Monklands, East—he says nothing about inflation. The hon. Member for Derby, South mentioned inflation only to make a trivial point about marginal changes of fractions of a percentage point between just under 4 per cent. and just over 4 per cent. When she was last a Minister, inflation averaged 15·5 per cent. and peaked at 28 per cent. Therefore, I do not find that very convincing.
No doubt, when Mr. Banham mentions public sector pay, he is also aware that there has never been a strike during the Government's lifetime that was not fully supported by the Labour party. He is aware of the Labour party's proposals for the minimum wage. The only thing that independent commentators disagree about over the minimum wage is how much unemployment it will cause. It is a case of, "You pays your money and you takes your choice." Nomura Securities starts low and says it will cost 145,000 jobs, James Capel says that it will cost 166,000, the CBI says that it will cost 200,000 to 300,000, UBS Phillips and Drew says that it will cost 400,000 for stage 1, up to 50 per cent., and 1·25 million for stage 2, up to 66 per cent. Even the Fabian Society says that it will cost almost 900,000 jobs. No wonder the CBI is not struck on the minimum wage. We only have to think what the national minimum wage would cost the national health service—at least half a billion pounds. The total cost to the public sector would be about one and a half billion pounds, without any increase in the productive capacity of the economy.
Mr. Banham is not impressed by the Labour party's proposals to remove the caps from local government expenditure.
Mrs. Beckett rose—
Mr. Mellor: Oh, yes, I shall certainly give way to the hon. Lady.
Mrs. Beckett: I was not going to bother to intervene, but, as the right hon. and learned Gentleman keeps going on about Mr. Banham, I shall ask him the following question: is he aware that Mr. Banham still supports the poll tax? Would he like to say more about that?
Mr. Mellor: I was about to tell the hon. Lady something even more interesting. It is all very well the hon. Lady criticising Mr. Banham, now she knows the real nature of his views, but she was giving an entirely misleading impression to the House about what the CBI thought.
In his interview with The Guardian, Mr. Banham was referring to the fact that, although the right hon. and learned Member for Monklands, East has been extremely coy about saying what the Labour policy will be, one or two Labour spokesmen are not so coy. The hon. Member for Dagenham (Mr. Gould) still occasionally plays the part of wild, colonial boy. In a debate with the Secretary of State for the Environment he said:
"Unlike the Secretary of State, I shall be precise. There will be no provision for capping in any legislation that we introduce."—[Official Report, 6 November 1991; Vol. 198, c. 472.]
It remains to be seen quite what will happen to the British economy and British business if there is some outrageous increase in the already outrageous spending of most of the Labour councils.
The Labour party has made a great deal of investment and training, which seems to be its answer to every difficult question. If we have a flu epidemic this winter, its answer to it will no doubt be investment and training. However, the Government's record on investment is extremely good. Business investment at constant 1985 prices—comparing like with like—is £36·6 billion in 1979, £56·7 billion in 1989, £56·4 billion in 1990. Even though, as the right hon. and learned Member for Monklands, East said, there has been a falling-off in investment, it is still forecast that investment will be more than £50 billion this year. For business to be investing this year, even in a recession, almost 40 per cent. more in real terms than in 1978–79, which passes under a Labour Government for a good year, is an astonishing sign of how much investment has increased.
A former adviser to the Labour party, Mr. Gavyn Davies, said in his column in The Independent the other day—[HON. MEMBERS: "Who?"] It is no good Opposition Members asking, "Who?" They know only too well who he is, and if they do not, they should ask his wife, who works for the Leader of the Opposition. Mr. Gavyn Davies—the Opposition know who I mean now—said that business investment had settled at 14·1 per cent. of GDP in the second half of this year, which was a remarkably high level bearing in mind that we are in a recession. When we consider the figures for investment in plant and machinery, they seem even more significant. At constant 1985 prices, the investment was more than £32 billion in 1990 and less than £20 billion in 1979.
In addition, because low corporation tax has given businesses the incentive to invest where they see fit, the quality of investment has improved. The productivity of capital fell by 1·5 per cent. per year under Labour, but it has risen on average during the lifetime of this Government. It has risen more than in the United States, Japan, Germany, France or Italy where it fell during the period of this Government.
If one wants a real comparison of investment in the British economy with investment in the rest of the Group

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of Seven, in the 1970s growth of investment in the British economy was 2·3 per cent. a year while in the Group of Seven it averaged 3·1 per cent. In the 1980s, growth in the United Kingdom each year on average was 6·7 per cent. while the G7 average increase was 4·6 per cent.
Honest to goodness, I do not think that we need any lectures from the Labour party on investment. It is a bit like being lectured by miss Elizabeth Taylor on the sanctity of marriage.
Mr. John Smith: Not that one again.
Mr. Mellor: I have not used that one before as it happens. I am not sure whether anyone else has, but I have not. I shall not use it again. That is its final appearance. If only the right hon. and learned Gentleman could say the same about most of the points that he makes.
I was up in the north last week and we saw the Nissan plant—[Interruption.] No, well north of Watford, almost in the territory occupied by the hon. Member for Berwick-upon-Tweed (Mr. Beith). I was not quite brave enough to stick my nose into his constituency, but I was almost there. There is the Nissan plant at Sunderland and the Fujitsu plant at Aycliffe which has created 1,500 jobs and had £600 million worth of investment. That is the kind of thing that the Labour party should be jumping up and down about saying, "Jolly good thing too that more than 50 per cent. of inward investment in 1990 from the United States and Japan came to Britain." But at the Trades Union Congress a motion was passed saying that that investment is alien. The motion was proposed by that dreadful old Stalinist, Mr. Ken Gill. Mr. Jack Adams, the number two in the Leader of the Opposition's own union, the Transport and General Workers Union, has just been elected and takes up his post next March. He is a communist. Why worry about communism in the Soviet Union? Communism in the Soviet Union might have gone, but in the TUC it is alive and well and passing motions.
The sad thing is that, notwithstanding the outrageous nature of that motion which Mr. Gavin Laird said was sheer hypocrisy and racism, not a word of criticism of anything like that strength has been levelled by the Opposition Front Bench about it. The Opposition should not talk to us about investment when they talk in that way about major countries investing in Britain.
Then we have all the points about training. Once again, we will have much more sympathy with the Labour party's view on training when the Leader of the Opposition's union, which also sponsors the hon. Member for Sedgefield (Mr. Blair), who leads for the Labour party on these matters, stops passing motions to boycott employment training, youth training, employment action and TECs. It would be much more convincing if the Labour party could persuade the TGWU to co-operate. Then we might believe that it would do something about the country if it was ever given a chance to run it.
The Labour party has not told us a jot about what it would do. What is the right hon. and learned Member for Monklands, East so bothered about when it comes to telling us what the Labour party would do if in office on the crucial issue of economic management? Is he worried that we might pinch his ideas if he tells us what they are? The only thing that we would do is to pinch ourselves to make sure that we were not dreaming.
The right hon. and learned Gentleman is an eloquent man and, like me, has a previous incarnation at the Bar. I
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cannot help feeling that he has all the eloquence necessary to deploy his case if he sees fit, but that he takes the same attitude that we used to take at the Bar when representing a particularly dodgy client who, when one realised that his story would not stand up but that he was determined nevertheless to plead not guilty, would be advised not to give evidence on his own behalf. That is precisely the attitude that the right hon. and learned Gentleman is taking towards the Labour party's economic policy. It is all pretty blatant.
I have with me a document—it is well-thumbed, because I recite it to myself of a night, when I am bored —entitled "Meet the Challenge, Make the Change: A New Agenda for Britain." On page 8 there are some solemn words, given added solemnity by the fact that there is a facsimile signature at the bottom of them. It is in joined-up writing, which is suspicious, but it purports to be the signature of the Leader of the Opposition. The presence of that facsimile signature is obviously intended to give added value to the words set out therein:
"At the time of the next General Election, we will set out the accurate costs of our manifesto proposals in the light of the economic situation we are likely to inherit and the priorities which we consider most urgent."
What could be clearer, yet on 26 September the hon. Member for Copeland (Dr. Cunningham), who is Labour's campaigns organiser, told us that that pledge was inoperative, and that Labour is not going to do that. I will be corrected if the hon. Gentleman did not say that.
Why the change? I will give way if any member of Labour's Front Bench will tell me. Was the hon. Member for Copeland right when he said that, despite that facsimile signature being put to those solemn words, Labour do not intend to do what they say?—[HON. MEMBERS: "Answer."] We are used to Labour breaking its promises after a general election, but to do so even before the next general election campaign begins really is something else. It was worth giving up the Mozart death night concert that I planned to attend just for that.
Although the right hon. and learned Member for Monklands, East is eloquent, plainly he has lost his voice. And well he might. What does Labour party policy amount to? Its interest rates policy used to be known as Monklands law—whatever interest rates are, Labour will take I per cent. off them. The right hon. and learned Member for Monklands, East seems to have changed his mind as the evil hour of the election draws near.—[HON. MEMBERS: "Oh!"] The evil hour for him, not for me. I am looking forward to the general election.
When the right hon. and learned Gentleman was asked about interest rates on "The World at One" on 15 November, we did not get the 1 per cent. figure, but these words:
" I would have to take advice about it, and see what the situation was. I would be pushing to try to get it, but the timing of it is of course always a matter of judgment."
What is the reason for that sudden change of tune? The right hon. and learned Gentleman used to sound ever so certain that 1 per cent. off interest rates would be the answer to everything.
Perhaps it has dawned on the right hon. and learned Gentleman that the real problem for Labour is not how much they can take down interest rates, but by how much they will have to put them up because of the collapse of confidence that would be the consequence of a Labour Government being elected.

497
The hon. Member for Derby, South trailed her coat a bit. She started doing that on the "Today" programme this morning. I will come to that later. She continued that process this evening, by quoting Professor Douglas McWilliams, chief economic adviser to the Confederation of British Industry. However, she did not quote his words from The Independent on 6 September, when he warned that if Labour won the next general election,
"interest rates would probably have to rise for several months, in order to convince the currency markets that devaluation of the pound was not in prospect."
Let us have a little parlour game at this stage in the proceedings, to liven things up. Who on the Opposition Benches can answer this? What do the following groups have in common—James Capel DJB, Goldman Sachs, Midland Montague, NatWest, Nomura, and UBS Phillips and Drew? They have in common the fact that they have all warned against higher interest rates under a Labour Government. That is the prevailing view that Labour must deal with. Small wonder that Monklands law has been abolished. However, it is not only that law which has died lately. We also have to mourn the death of Beckett's law, which is that whatever other promises may be scattered to the four winds—and there have been many of them—Labour makes only two pledges. They are to increase pensions, and to increase child benefit.
On the "Today" programme the hon. Lady made an appearance, which I hope all hon. Members heard, in which she commended a motion which contains a number of expenditure commitments, not one of which is part of Beckett's law, and made it clear that this was what the Labour party was committed to. But she said that it was cost free.
The right hon. and learned Gentleman has not got quite the brass neck to say that it is cost free. He admitted on an earlier occasion that one element in it would cost £900 million. He admitted that
"Reinstating the training programme"—
these are his exact words on Radio 4—
"and bringing in the temporary work programme, we calculated in terms of the budget of somewhere about £900 million."
Then he went on to say these wonderful words, which show that, despite the fact that he may look like a bank manager, he does not always act like one:
"which isn't a great deal actually in the context of public expenditure."
That is a wonderful attitude. A billion here, a billion there; soon he will be talking real money.
Then we had the hon. Lady's celebrated passage on privatisation. Here we really do have an extraordinary instance of the left hand not knowing what the left hand is doing. The hon. Lady is now engaged in an exciting conversation with the right hon. and learned Member for Monklands, East. She is opting out at this point, but it will get more interesting if she will bear with me. She may be against privatisation but she said that she was looking forward to pocketing the proceeds in order to balance the books if her party was elected. Indeed, she sounded as if she quite relished the idea, and she ran off the names of the organisations to whose privatisation she referred, despite the fact that her party is committed to renationalising them. Furthermore, if she had read The Guardian before she got into the radio car this morning she would have seen
498
that the hon. Member for Dunfermline, East (Mr. Brown) was accusing the Government of wasting taxpayers' money subsidising the £5·5 billion sale of shares in British Telecom, the proceeds of which seem to be a key part of her policy for meeting expenditure if she is elected.
Indeed, when it comes to the question of renationalisation, the Labour party gets ever so coy. On Saturday The Times did a survey. It was excitingly headlined "Spotlight on Labour's financial wares". They wanted to ask questions about renationalisation. Apparently all the members of the shadow Cabinet were at lunch or dinner or otherwise unavailable, so a gentleman called Geoff Mulgan, senior research assistant to the hon. Member for Dunfermline, East, was put up. He could be a distant relative of Dave Spart, who knows? He was asked first about electricity renationalisation, and he said—hon. Members must listen to this:
"There will be no need for cash. We will make use of the complex web of debts and stakes in other generating companies. There will be no increase in the PSBR."
One would have thought that he had been asked a question about the Maxwell empire.
Then the going got a bit hot for Mr. Geoff Mulgan, cousin of Mr. Dave Spart; he was asked about buying back the water companies. Here he got ever so hesitant and said this:
"I can't say how we will do it. The uncertainties that exist here would make it foolish of me to be more specific."
That is the ringing manifesto on which 12 years of Tory misrule are to be brought to an end.
The only thing that is worse than that is the right hon. Gentleman's statement when producing his £2 billion package for manufacturing. When asked where the money was to come from, he said that it would come from better collection of tax revenues, the idea being that the Inland Revenue would collect the taxes as well as most Labour councils collect the rubbish. He got the idea of those £2 billion of tax revenues just waiting around for the election from the tax inspectors' union. The reality, as I understand it from the Inland Revenue, is that it is most unlikely that those proceeds would be available. If they were, it would take between 1,650 and 5,000 extra tax inspectors to collect them, and it takes four to five years to train a tax inspector. Yet that is to pay for the Labour party's manufacturing policy in its first year of government.
I end by thinking—[HON. MEMBERS: "More."]—but I think that they have had enough.
Mr. Derek Foster rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 204, Noes 312.

Division No. 23]

[10 pm

AYES

Adams, Mrs Irene (Paisley, N.)

Beggs, Roy

Allen, Graham

Belth, A. J.

Anderson, Donald

Bell, Stuart

Archer, Rt Hon Peter

Bellotti, David

Ashdown, Rt Hon Paddy

Benn, Rt Hon Tony

Ashley, Rt Hon Jack

Bennett, A. F. (D'nt'n & R'dish)

Ashton, Joe

Benton, Joseph

Banks, Tony (Newham NW)

Bermingham, Gerald

Barnes, Harry (Derbyshire NE)

Boateng, Paul

Battle, John

Boyes, Roland

Beckett, Margaret

Bray, Dr Jeremy

499

Brown, Ron (Edinburgh Leith)

Illsley, Eric

Bruce, Malcolm (Gordon)

Ingram, Adam

Caborn, Richard

Jones, Martyn (Clwyd S W)

Callaghan, Jim

Kaufman, Rt Hon Gerald

Campbell, Menzies (Fife NE)

Kennedy, Charles

Campbell, Ron (Blyth Valley)

Kilfoyle, Peter

Campbell-Savours, D. N.

Kinnock, Rt Hon Neil

Canavan, Dennis

Kirkwood, Archy

Carlile, Alex (Mont'g)

Kumar, Dr. Ashok

Cartwright, John

Lamond, James

Clark, Dr David (S Shields)

Leadbitter, Ted

Clay, Bob

Lestor, Joan (Eccles)

Clelland. David

Lewis, Terry

Clwyd, Mrs Ann

Livingstone, Ken

Cohen, Harry

Livsey, Richard

Cook, Frank (Stockton N)

Lloyd, Tony (Stretford)

Cook, Robin (Livingston)

Lofthouse, Geoffrey

Corbett, Robin

Loyden, Eddie

Corbyn, Jeremy

McAllion, John

Cox, Tom

McAvoy, Thomas

Crowther, Stan

McCartney, Ian

Cryer, Bob

Macdonald, Calum A.

Cummings, John

McFall, John

Cunliffe, Lawrence

McKay, Allen (Barnsley West)

Cunningham, Dr John

McKelvey, William

Dalyell, Tarn

McLeish, Henry

Darling, Alistair

Maclennan, Robert

Davies, Rt Hon Denzil (Llanelli)

McMaster, Gordon

Davis, Terry (B'ham Hodge H'I)

McNamara, Kevin

Dewar, Donald

Madden, Max

Dixon, Don

Mahon, Mrs Alice

Dobson, Frank

Marek, Dr John

Doran, Frank

Marshall, Jim (Leicester S)

Duffy, Sir A. E. P.

Martin, Michael J. (Springburn)

Dunnachie, Jimmy

Martlew, Eric

Dunwoody, Hon Mrs Gwyneth

Maxton, John

Eadie, Alexander

Meacher, Michael

Enright, Derek

Meale, Alan

Ewing, Mrs Margaret (Moray)

Michael, Alun

Fatchett, Derek

Michie, Bill (Sheffield Heeley)

Faulds, Andrew

Mitchell, Austin (G't Grimsby)

Fearn, Ronald

Moonie, Dr Lewis

Fisher, Mark

Morgan, Rhodri

Flannery, Martin

Morris, Rt Hon A. (W'shawe)

Foster, Derek

Mowlam, Marjorie

Foulkes, George

Mullin, Chris

Fraser, John

Murphy, Paul

Fyfe, Maria

Nellist, Dave

Galloway, George

Oakes, Rt Hon Gordon

Garrett, John (Norwich South)

O'Brien, William

Garrett, Ted (Wallsend)

O'Hara, Edward

George, Bruce

O'Neill, Martin

Gilbert, Rt Hon Dr John

Patchett, Terry

Godman, Dr Norman A.

Pendry, Tom

Golding, Mrs Llin

Pike, Peter L.

Gordon, Mildred

Powell, Ray (Ogmore)

Gould, Bryan

Primarolo, Dawn

Graham, Thomas

Quin, Ms Joyce

Grant, Bernie (Tottenham)

Radice, Giles

Griffiths, Nigel (Edinburgh S)

Randall, Stuart

Griffiths, Win (Bridgend)

Rees, Rt Hon Merlyn

Grocott, Bruce

Richardson, Jo

Hain, Peter

Robertson, George

Harman, Ms Harriet

Robinson, Geoffrey

Hattersley, Rt Hon Roy

Rooker, Jeff

Heal, Mrs Sylvia

Rooney, Terence

Healey, Rt Hon Denis

Ross, Ernie (Dundee W)

Henderson, Doug

Rowlands, Ted

Hinchliffe, David

Ruddock, Joan

Hoey, Kate (Vauxhall)

Salmond, Alex

Hogg, N. (C'nauld & Kilsyth)

Sedgemore, Brian

Home Robertson, John

Sheerman, Barry

Howell, Rt Hon D. (S'heath)

Sheldon, Rt Hon Robert

Howells, Geraint

Shore, Rt Hon Peter

Hoyle, Doug

Short, Clare

Hughes, John (Coventry NE)

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Smith, Andrew (Oxford E)

Hughes, Roy (Newport E)

Smith, C. (Isl'ton & F'bury)

Hughes, Simon (Southwark)

Smith, Rt Hon J. (Monk'ds E)

Hume, John

Soley, Clive

500

Spearing, Nigel

Welsh, Andrew (Angus E)

Steinberg, Gerry

Welsh, Michael (Doncaster N)

Stott, Roger

Williams, Rt Hon Alan

Strang, Gavin

Williams, Alan W. (Carm'then)

Straw, Jack

Wilson, Brian

Taylor, Mrs Ann (Dewsbury)

Winnick, David

Thompson, Jack (Wansbeck)

Wise, Mrs Audrey

Turner, Dennis

Worthington, Tony

Vaz, Keith

Wray, Jimmy

Wallace, James

Warden, Gareth (Gower)

Tellers for the Ayes:

Wareing, Robert N.

Mr. Frank Haynes and

Watson, Mike (Glasgow, C)

Mr. Ken Eastham.

NOES

Adley, Robert

Currie, Mrs Edwina

Aitken, Jonathan

Curry, David

Alexander, Richard

Davies, Q. (Stamf'd & Spald'g)

Alison, Rt Hon Michael

Davis, David (Boothferry)

Amery, Rt Hon Julian

Day, Stephen

Amess, David

Devlin, Tim

Amos, Alan

Dickens, Geoffrey

Arbuthnot, James

Dorrell, Stephen

Arnold, Jacques (Gravesham)

Douglas-Hamilton, Lord James

Arnold, Sir Thomas

Dover, Den

Ashby, David

Dunn, Bob

Aspinwall, Jack

Durant, Sir Anthony

Atkins, Robert

Dykes, Hugh

Atkinson, David

Eggar, Tim

Baker, Nicholas (Dorset N)

Emery, Sir Peter

Baldry, Tony

Evans, David (Welwyn Hatf'd)

Batiste, Spencer

Fairbairn, Sir Nicholas

Bellingham, Henry

Fallon, Michael

Bendall, Vivian

Farr, Sir John

Bennett, Nicholas (Pembroke)

Favell, Tony

Blackburn, Dr John G.

Fenner, Dame Peggy

Blaker, Rt Hon Sir Peter

Fishburn, John Dudley

Body, Sir Richard

Fookes, Dame Janet

Bonsor, Sir Nicholas

Forman, Nigel

Boscawen, Hon Robert

Forsyth, Michael (Stirling)

Boswell, Tim

Forth, Eric

Bottomley, Peter

Fowler, Rt Hon Sir Norman

Bottomley, Mrs Virginia

Fox, Sir Marcus

Bowden, A. (Brighton K'pto'n)

Franks, Cecil

Bowden, Gerald (Dulwich)

Freeman, Roger

Bowis, John

French, Douglas

Boyson, Rt Hon Dr Sir Rhodes

Gale, Roger

Braine, Rt Hon Sir Bernard

Gardiner, Sir George

Brandon-Bravo, Martin

Garel-Jones, Tristan

Brazier, Julian

Gill, Christopher

Bright, Graham

Gilmour, Rt Hon Sir Ian

Brooke, Rt Hon Peter

Glyn, Dr Sir Alan

Brown, Michael (Brigg & Cl't's)

Goodhart, Sir Philip

Browne, John (Winchester)

Goodlad, Alastair

Bruce, Ian (Dorset South)

Goodson-Wickes, Dr Charles

Buck, Sir Antony

Gorst, John

Burns, Simon

Grant, Sir Anthony (CambsSW)

Burt, Alistair

Greenway, Harry (Ealing N)

Butler, Chris

Greenway, John (Ryedale)

Butterfill, John

Gregory, Conal

Carlisle, John, (Luton N)

Griffiths, Peter (Portsmouth N)

Carlisle, Kenneth (Lincoln)

Grist, Ian

Carrington, Matthew

Ground, Patrick

Carttiss, Michael

Gummer, Rt Hon John Selwyn

Cash, William

Hague, William

Channon, Rt Hon Paul

Hamilton, Rt Hon Archie

Chapman, Sydney

Hamilton, Neil (Tatton)

Chope, Christopher

Hampson, Dr Keith

Churchill, Mr

Hanley, Jeremy

Clark, Rt Hon Alan (Plymouth)

Hargreaves, A. (B'ham H'll Gr')

Clark, Dr Michael (Rochford)

Hargreaves, Ken (Hyndburn)

Clark, Rt Hon Sir William

Harris, David

Clarke, Rt Hon K. (Rushcliffe)

Haselhurst, Alan

Colvin, Michael

Hawkins, Christopher

Conway, Derek

Hayes, Jerry

Coombs, Anthony (Wyre F'rest)

Hayhoe, Rt Hon Sir Barney

Cope, Rt Hon Sir John

Hayward, Robert

Cormack, Patrick

Heath, Rt Hon Edward

Couchman, James

Heathcoat-Amory, David

Cran, James

Hicks, Mrs Maureen (Wolv' NE)

501

Hicks, Robert (Cornwall SE)

Moss, Malcolm

Higgins, Rt Hon Terence L.

Moynihan, Hon Colin

Hill, James

Neale, Sir Gerrard

Hind, Kenneth

Needham, Richard

Hordern, Sir Peter

Neubert, Sir Michael

Howard, Rt Hon Michael

Newton, Rt Hon Tony

Howarth, G. (Cannock & B'wd)

Nicholls, Patrick

Howe, Rt Hon Sir Geoffrey

Nicholson, David (Taunton)

Howell, Rt Hon David (G'dford)

Nicholson, Emma (Devon West)

Howell, Ralph (North Norfolk)

Norris, Steve

Hughes, Robert G. (Harrow W)

Onslow, Rt Hon Cranley

Hunt, Rt Hon David

Oppenheim, Phillip

Hunt, Sir John (Ravensbourne)

Page, Richard

Hunter, Andrew

Paice, James

Hurd, Rt Hon Douglas

Parkinson, Rt Hon Cecil

Irvine, Michael

Patnick, Irvine

Jack, Michael

Patten, Rt Hon Chris (Bath)

Janman, Tim

Patten, Rt Hon John

Jessel, Toby

Pattie, Rt Hon Sir Geoffrey

Johnson Smith, Sir Geoffrey

Pawsey, James

Jones, Gwilym (Cardiff N)

Peacock, Mrs Elizabeth

Jones, Robert B (Herts W)

Porter, Barry (Wirral S)

Jopling, Rt Hon Michael

Portillo, Michael

Kellett-Bowman, Dame Elaine

Powell, William (Corby)

Key, Robert

Price, Sir David

Kilfedder, James

Raffan, Keith

King, Rt Hon Tom (Bridgwater)

Raison, Rt Hon Sir Timothy

Kirkhope, Timothy

Rathbone, Tim

Knapman, Roger

Redwood, John

Knight, Greg (Derby North)

Renton, Rt Hon Tim

Knight, Dame Jill (Edgbaston)

Rhodes James, Sir Robert

Knox, David

Ridsdale, Sir Julian

Lamont, Rt Hon Norman

Roberts, Rt Hon Sir Wyn

Lang, Rt Hon Ian

Roe, Mrs Marion

Latham, Michael

Rossi, Sir Hugh

Lawrence, Ivan

Rumbold, Rt Hon Mrs Angela

Lawson, Rt Hon Nigel

Ryder, Rt Hon Richard

Lee, John (Pendle)

Sackville, Hon Tom

Leigh, Edward (Gainsbor'gh)

Sayeed, Jonathan

Lennox-Boyd, Hon Mark

Scott, Rt Hon Nicholas

Lester, Jim (Broxtowe)

Shaw, David (Dover)

Lilley, Rt Hon Peter

Shaw, Sir Giles (Pudsey)

Lloyd, Sir Ian (Havant)

Shaw, Sir Michael (Scarb')

Lloyd, Peter (Fareham)

Shelton, Sir William

Lord, Michael

Shephard, Mrs G. (Norfolk SW)

Luce, Rt Hon Sir Richard

Shepherd, Colin (Hereford)

Lyell, Rt Hon Sir Nicholas

Shepherd, Richard (Aldridge)

MacGregor, Rt Hon John

Shersby, Michael

MacKay, Andrew (E Berkshire)

Sims, Roger

Maclean, David

Skeet, Sir Trevor

McLoughlin, Patrick

Smith, Tim (Beaconsfield)

McNair-Wilson, Sir Michael

Spicer, Sir Jim (Dorset W)

McNair-Wilson, Sir Patrick

Spicer, Michael (S Worcs)

Madel, David

Squire, Robin

Major, Rt Hon John

Stanbrook, Ivor

Malins, Humfrey

Stanley, Rt Hon Sir John

Mans, Keith

Steen, Anthony

Maples, John

Stern, Michael

Marland, Paul

Stevens, Lewis

Marlow, Tony

Stewart, Allan (Eastwood)

Marshall, John (Hendon S)

Stewart, Andy (Sherwood)

Marshall, Sir Michael (Arundel)

Stewart, Rt Hon Sir Ian

Martin, David (Portsmouth S)

Sumberg, David

Mates, Michael

Summerson, Hugo

Maude, Hon Francis

Tapsell, Sir Peter

Maxwell-Hyslop, Robin

Taylor, Ian (Esher)

Mayhew, Rt Hon Sir Patrick

Taylor, Sir Teddy

Mellor, Rt Hon David

Tebbit, Rt Hon Norman

Meyer, Sir Anthony

Temple-Morris, Peter

Miller, Sir Hal

Thatcher, Rt Hon Margaret

Mills, Iain

Thompson, D. (Calder Valley)

Miscampbell, Norman

Thompson, Patrick (Norwich N)

Mitchell, Andrew (Gedling)

Thorne, Neil

Mitchell, Sir David

Thornton, Malcolm

Moate, Roger

Thurnham, Peter

Monro, Sir Hector

Townend, John (Bridlington)

Montgomery, Sir Fergus

Townsend, Cyril D. (B'heath)

Morrison, Sir Charles

Tracey, Richard

502

Tredinnick, David

Widdecombe, Ann

Trippier, David

Wilkinson, John

Twinn, Dr Ian

Wilshire, David

Vaughan, Sir Gerard

Winterton, Mrs Ann

Waldegrave, Rt Hon William

Winterton, Nicholas

Walden, George

Wolfson, Mark

Walker, Rt Hon P. (W'cester)

Wood, Timothy

Waller, Gary

Woodcock, Dr. Mike

Walters, Sir Dennis

Yeo, Tim

Wardle, Charles (Bexhill)

Young, Sir George (Acton)

Warren, Kenneth

Younger, Rt Hon George

Watts, John

Wells, Bowen

Tellers for the Noes:

Wheeler, Sir John

Mr. David Lightbown and

Whitney, Ray

Mr. John M. Taylor.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes Mr. Chancellor of the Exchequer's Autumn Statement, which reaffirmed the Government's forecast of a modest recovery in the second half of 1991, with growth gathering pace in 1992; notes that the total output of the British economy rose in the third quarter of 1991, providing further confirmation of this forecast; and congratulates the Government on its sound and prudent economic policies, which have reduced inflation from nearly 11 per cent. to under 4 per cent., have allowed interest rates to be reduced from 15 per cent. to 10½ per cent. and have laid the foundations for sustained non-inflationary growth.

ESTIMATES
Resolved,
That this House agrees with the Report [3rd December] of the Liaison Committee.—[Mr. David Davis.]

CONSOLIDATION, &C., BILLS (JOINT COMMITTEE)
Ordered,
That Mr. Graham Allen and Mr. Frank Cook be discharged from the Select Committee on Consolidation, &c., Bills and Mr. Derek Enright and Dr. Ashok Kumar be added to the Committee.—[Mr. David Davis.]

PROCEDURE
Ordered,
That Mr. Graham Allen and Mr. Dale Campbell-Savours be discharged from the Select Committee on Procedure and Mr. Eric Illsley and Mr. Gordon McMaster be added to the Committee.—[Mr. David Davis.]

PETITION

  Beer Supply Orders
  10.15 pm
  Mr. Tim Devlin: I present a petition on behalf of 332 of my constituents who are residents of Stockton-on-Tees and who protest:
  That high rents and business rates have created high bar prices at a time when people can ill afford to pay them. Licensees are having to leave their pubs in their thousands, and more and more pubs are being closed down. The Beer Orders have allowed brewers to ride roughshod over the intention of the Monopolies and Mergers Commission to lower beer prices, allow greater competition and greater choice for customers.
  That we the undersigned, wish to protest at the current activities of the major brewers who are increasing bar prices or forcing tenants out of their businesses and homes.

  503
  Wherefore your petitioners pray that your honourable House carry out an immediate review of the Beer supply orders and give proper compensation for licensees forced out of their pubs.
  To lie upon the Table.

  GPs (Computer Costs)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Davis.]
  10.17 pm
  Sir Peter Emery: Computers and their use are not a normal subject for debate in the House. The subject of the computerisation of our family doctors' practices has almost never been raised, and has never been raised as an individual subject for debate. Basically, I come to praise the positive steps taken by Health Ministers over the past five years, although in a minor way I will ask for reconsideration of a wrong done to a medical practice in my constituency.
  Taking major steps further to encourage medical practices to use computers and various software packages in dealing with medical records has brought, and I hope will continue to bring, benefits to the patient, and it is the patient who matters. The accurate presentation to any doctor seeing a patient of that patient's record, the full and easy referral to past treatment and the ease of transfer of records are obvious benefits. The screening of procedures, the control of prescriptions and the identification of patient groups are further benefits for doctors and for patients.
  The Government have set aside £44 million for the period 1989–92 to aid and to stimulate the installation of computers in doctors' practices and that must be welcomed by all of us. I am worried that, certainly in the beginning, all those funds were not used. Therefore, the Government's record in general terms has been good. I urge them to continue to meet the necessary level of funding to maintain and update where necessary what has been achieved.
  However, there is one specific item in respect of which I believe—nay, I know—the Government have fallen down. What are the facts? A large and excellent doctors' practice in Axminster, which is within my constituency, with Drs. Church, Sutton, Vann, Evans, Hodges and Taylor as partners, decided to computerise the practice. The doctors examined carefully the hardware necessary to provide access for each doctor and also for the pharmaceutical dispensery. They spent time arriving at a decision on the correct software. They were not opting for a particularly expensive scheme. It was not a Rolls-Royce, but a practical working and adaptable system. Following my automobile analogy, it was a Rover system. They based their decision on a clear statement in a Department of Health approved document, entitled "Funding General Practice 1990". According to that document, no nfundholding practices such as the one to which I am referring were entitled to reimbursement of computer costs from April 1990. They were entitled to 50 per cent. of maintenance costs, 50 per cent. of purchasing, leasing or upgrading costs, and 50 per cent. of the first year of staff costs. That document—I now quote from it so that I can make certain that I am not misleading the House—states:
  "Special software packages are being developed commerci-ally and will be available before April 1991. They will:
  Enable practices to run budgets on a day-to-day basis
  Account for expenditure incurred
  Produce monthly and annual reports and statements for the FPC
  Keep track of hospital referrals
  Further guidance on software will be issued in the Spring of 1990."

  505
  There was no mention of a restriction on the cost or repayment that a practice could obtain. The Under-Secretary of State for Health acknowledged that fact in a letter to me of 31 January 1991. In the second paragraph he said:
  "During our discussions I accepted that there had possibly been some scope for misunderstanding. Even though Dr. Vann's practice has not applied to become a fund-holding practice you mentioned the GP fundholder brochure which, while mentioning the 50 per cent. maximum contribution, did not specifically mention the additional list size criteria on the same page."
  What are the facts? A large, excellent doctors' practice proceeded—how many doctors did the same?—and made a claim for the reimbursement that they expected. Having spent £25,775 on computerisation, the doctors might reasonably have expected a 50 per cent.—£12,800—reimbursement. They were amazed and "aghast" when they received only £4,830 from the family health services authority. In this instance, the Department of Health is diddling general practitioners.
  I have pressed the Minister on this matter both in correspondence and in a visit to the Department when he and his officials told me that they would reconsider it. Our correspondence culminated in a letter on 14 August, stating:
  "From 22 July 1991, family health service authorities (FHSAs) have been given management discretion to target funds in order to maximise value for money and service to patients. The limits that previously existed within the Statement of Fees and Allowances (SFA) which related reimbursements to list size have been removed."
  Hooray. I have won. However, the letter continued by referring to non-fundholding practices, which do not affect this case.
  The letter then continued:
  "With regard to Dr. Vann's request for retrospective payments"—
  "retrospective" is the Minister's word not mine because the payments were not retrospective. They were demanded when the doctors installed the system. The letter reads:
  "With regard to Dr. Vann's request for retrospective payments to be made to GPs who have been reimbursed under the previous arrangements, the object of the scheme, as has been explained in the past, is to ensure the widest possible spread of computing within a cash-limited budget."
  I emphasise the words,
  "within a cash-limited budget."
  The letter continued:
  "In the light of this, there is no provision to make further payments to those doctors who, like Dr. Vann, feel that the scheme which operated when their claim was made was less generous than the present. If Dr. Vann wishes to upgrade his system, then the reimbursement for his upgrade costs will be assessed under the revised arrangements. I am sorry that, despite the delay, I cannot be more helpful."
  The Minister's argument seems to be, "It is impossible to act because the costs have increased above the Treasury total for computerisation." Therefore, on 13 February 1991, I tabled a written question:
  "To ask the Secretary of State for Health how many general practitioners in previous years, in complying with his wishes to move to use computers, applied for a grant for the installation of a computer system that was above the figure of payment sct out in the published computer cost reimbursement schedule."
  That was accepting that the scheme, to which I did not think that reference had been made, might have been applied.
  The Minister's reply to me stated:
  506
  "No figures are held centrally either in respect of individual claims made by GPs or individual amounts reimbursed by family health services authorities".—[Official Report, 13 February 1991; Vol. 185, c. 512.]
  I found that interesting because it appears that the Minister does not know how many doctors made a claim that was above the amount of the reimbursement schedule or, if he did know, he was unwilling to tell me, so I must presume that he did not know.
  One can imagine my indignation when I finally received a copy of a letter that had been signed by Mr. Ian Fleming, one of the Minister's officials, clearly stating in annex A:
  "The scheme was introduced in April 1990 (but took into account in its first year any systems obtained by GPs since April 1989). £24 million was made available in 1990–91 (to cover the two years) but was significantly underspent".
  It was not a case of there not being any money, but simply that the Minister would not darn well apply it. I believe that that money has been carried forward, which means that funds are available today if the Minister should decide to pay the Axminster practice.
  I have been a Minister and I know that there is a difference between Ministers being in charge and Ministers who are run by their civil servants. If the practice had not done the efficient thing and had installed only part of the structure, to a value of £8,000, it would have received 50 per cent. of that £8,000. Last year and this year they could have upgraded it at a cost much greater than the initial expenditure and much less efficiently. In that case they would have obtained 50 per cent. of their total extra computerisation costs under the new scheme. The doctors are being held to account for being efficient. They are not being fairly treated by the Department.
  Therefore, I say to the Minister, "Gird your loins. Tell the office that a way must be found to pay the balance of slightly less than £10,000. Do not allow the civil service to say that there are ways in which it cannot be done. Any civil servant will find ways of not doing something." I am confident that if my hon. Friend the Minister wants to do this, he can. I expect him so to do.
  10.30 pm
  The Parliamentary Under-Secretary of State for Health (Mr. Stephen Dorrell): I am grateful for the confidence of my hon. Friend the Member for Honiton (Sir P. Emery) in my competence. I do not dispute that if I chose to instruct that the payment be made, it could be made. On that proposition I have to agree with my hon. Friend. But before I talk about whether I should use that discretion, I should like to say that, as my hon. Friend said, I have known about his concern about the Axminster practice virtually since I arrived in the Department of Health 18 months ago.
  My hon. Friend has been an effective and persuasive advocate in private and now in the House of the interests of his constituents. The arguments, as he -has presented them to me both on earlier occasions and tonight, are, indeed, seductive. However, I will seek to set them in the wider context of the Government's commitment and programme for the computerisation of general practice. I shall show why I do not think—it is not what my officials think, but what I think—that I would be right to use the discretion which he correctly said lies with me.
  I agree with my hon. Friend about the substantial benefits which computers can bring to a modern general practice. They can perform simple administrative tasks which were previously both dull and expensive. Indeed,

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  they can do so more accurately than traditional methods. Registration and administrative and financial returns are all functions which computers can carry out in a modern general practice.
  In addition, and more important, computers can keep clinical records and, therefore, be of direct clinical value to the general practitioner. They can keep records of the attendances of a patient at the surgery, the clinical condition of the patient and the prescriptions written for the patient. They can produce repeat prescriptions when the doctor so authorises. So computers are a valuable tool for a clinician in general practice, as well as being a valuable administrative tool to a partner in a practice.
  Therefore, the Government see the extension of computerisation in general practice as an important part of our commitment to the growth, modernisation, expansion and development of primary care in the NHS. That has been a consistent record of the Government since 1979. Our commitment is much wider than computers. We have shifted substantial sums of money into the extension and development of primary and community care in the NHS.
  The primary and community health care sectors of the national health service have increased their share of the health service budget from 28 per cent. in 1979 to 33 per cent. today. That represents a growth of expenditure in those sectors of roughly 80 per cent. in real terms. That money has been used to increase the number of lay staff, practice nurses and other professionals available in general practice and to improve the physical facilities in which general practice is offered. It is a substantial record of investment in the expansion of primary and community health care. Computers have an important part to play in that wider programme.
  As recently as five years ago only 10 per cent. of general practices had access to computers. On 31 March 1987 there were 942 practices in the national health service which used a computer. Four years later, on 31 March 1991, that figure had risen to 6,130, which represents 63 per cent. of all general practices within the health service. The practice that my hon. Friend mentioned is typical. Computers tend to be concentrated in larger practices. On 31 March this year 76 per cent. of all general practitioners in the NHS had access to a computer.
  That is a substantial record of success in support of a much wider strategy of developing primary care as an essential part of modern health care delivery. How was that expansion of computerisation brought about? Substantial encouragement for the computerisation process in the primary care sector was developed by the scheme which my hon. Friend the Member for Honiton criticised.
  Until I changed it earlier this year, the scheme had four essential elements: it met 50 per cent. of the system costs and 70 per cent. of the initial staff costs. However, both those were subject to a ceiling, determined by the practice list size.
  Sir Peter Emery: It was not clear.
  Mr. Dorrell: I shall come to that in a moment.
  The fourth key point was that for the first two years of the programme, between April 1989 and March 1991, we committed a budget of £24 million to the programme.
  My hon. Friend had two criticisms of the way in which the programme was put into effect. First, he is concerned
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  about the application of the list size criterion. He is concerned about its merits, but, perhaps more important in the context of his constituents' practice, he is concerned about whether they knew that the limitation on the payments due existed within the scheme that we were operating.
  I have told my hon. Friend in private and I am happy to tell him in public that if the doctors concerned say that when they installed the computer they did not know that the list size criterion existed, I am happy to accept that as a statement of fact. I am happy to accept that they did not know that the payment that they stood entitled to receive was limited by the list size criterion.
  However, even if Dr. Church and his partners did not know of the operation of that rule, many others in primary health care knew. The correspondence files of my hon. Friend the Member for Kettering (Mr. Freeman), my predecessor, stand witness to the fact that the existence of the list size limit was known and was the subject of substantial criticism from representative organisations within the profession.
  I answered my hon. Friend's question about how many payments were made to practices—where list size criterion limited payment—saying that I did not know the answer. That was a statement of fact because the totals were not available to me. However, I know that substantial numbers of doctors invested in computers, while complaining about the operation of that rule.
  I am absolutely confident that Dr. Church and his partners are not unique and that many other doctors are in the same position, in the sense that they made financial investments during 1989–91 and the payments that they received from the fund were limited by the operation of the list size criterion.
  Sir Peter Emery: So I am fighting for the profession.
  Mr. Dorrell: Indeed, my hon. Friend is fighting a wider battle than purely that of Dr. Church and his partners.
  My hon. Friend's second criticism of the way in which the scheme has worked is that the £24 million budget which was set aside for the two financial years—and I emphasise two years–1989–91 was underspent. The actual amount disbursed under the scheme in the two years for which it ran was £17 million, not £24 million. My hon. Friend says that cash is available which could be used at least to make some payment to doctors who had their payments limited by the list size criterion.
  I considered that point during the summer, when we were considering the rules of the scheme which should operate for the current financial year. I decided on a different approach, and I will explain that approach and why I adopted it. My hon. Friend, and the medical profession more widely, seemed to me to have made a powerful case against the rigid operation of the list size criterion. That is why, for the current financial year, it has been abolished. I recognise that that provision has limited payments to my hon. Friend's constituents, but it is no longer limiting payments to doctors because, as of April of this year, it no longer applies.
  The next facet of my approach was that I wanted to see more flexibility in the hands of local family health services authorities over the application of funds and the use of the substantial sums of money that are available to them for the development of primary health care. So for this year I made the computerisation funds part of the wider fund

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  available to FHSAs to support not merely computerisation but the extension of ancillary staff in general practice and the development of new accommodation facilities for primary health care.
  Those three elements now all come out of the same fund, with discretion in the hands of the FHSA to use the fund for any one of those three purposes, but with a clear steer that the amount for the current year should be roughly £20 million, which my hon. Friend mentioned.
  I believe that the spending levels that we are now seeing, through the new scheme that I announced in the summer, vindicate the judgment I made because the £17 million that was spent in the two years of the initial scheme represents an average spend of £8.5 million. The initial budget for the current year was £13 million, which was increased to £20 million to take account of the £7 million underspent in the first two years. So the budget fixed for the current year was £20 million and the £7 million underspent in the first two years of the scheme did not go back to the Treasury—it was not lost to computerisation—but was committed to the further development of GP computerisation.
  I inquired of my officials—those officials who are supposed to have such total control over everything I do—what the experience would be of the new scheme during the current financial year. I am pleased to tell my hon. Friend that the latest estimate we can make for the spend on computerisation this year will not be £20 million but £25 million. So there will be a £25 million spend in a single year, in the current financial year, against an average of £8.5 million in the two previous financial years.
  That will be possible because I made the scheme more flexible, so the FHSAs are allowed to use the funds that would previously have been limited to practice premises and ancillary staff to support the continued development and expansion of computerisation of primary health care.
  Sir Peter Emery: At the cost of my constituents.
  Mr. Dorrell: Not at all. It is a constant of any Minister's experience—my hon. Friend referred to his experience as a Minister—that when a new scheme is introduced, there will always be somebody who did the same thing on his own initiative in the previous year and who feels that those who benefit from the newly introduced scheme are receiving an unfair advantage over the individual who took the real risk and did it himself.
  Sir Peter Emery: My hon. Friend has been most fair, and I understand the argument that he propounds. However, will he give one undertaking? If, at the end of this year, the total funds—I reckon those to be £44 million, but that figure may not be quite accurate—are underspent, will my hon. Friend advertise for people who, from 1989 to 1991, did not receive their full allocation and allow anyone, including my constituents, to apply to help them use up any unused balance? That would be very fair.
  Mr. Dorrell: I said that my hon. Friend's arguments were always powerful, persuasive and seductive and he has just demonstrated that fact once again. Unfortunately, he double counts in quoting a figure of £44 million—
  Sir Peter Emery: Over four years.
  Mr. Dorrell: For three financial years. The budgets that we announced were £24 million and £20 million, which my hon. Friend has added to make £44 million. But he forgets that the £20 million included a £7 million carry-over from last year's underspend, so the amount is not £44 million but £37 million.
  As the spend over the three years will be more than that —last year's spend was £17 million and I expect this year's to be £25 million, making a total of £42 million—I suppose that I could give my hon. Friend the assurance that he seeks, but even if our figures were so way out that I could be caught on that commitment, when I consider the matter next May—assuming that the burden still falls to me to do so—I would have to make the same calculation as I made this year. I would have to ask whether it is right to use the measure to reward people who did something two years ago, or whether it would be better to use the money to encourage people to continue the process in the future. This summer, I concluded that the latter was better than the former and I can give my hon. Friend no assurance that I would not reach the same conclusion again.
  Sir Peter Emery: I do not accept absolutely my hon. Friend's final factor. If a balance were left over, it would be reasonable for him to try to use it to repay those who have set the trend. Those are the people from whom the doctors are seeking advice and asking, "How has this worked with you?" Therefore, I believe that the Minister should give me the assurance that I seek.
  Mr. Dorrell: As I said, the assurance would cost me nothing, because I am confident that it would not be activated.
  Sir Peter Emery: Then give it to me.
  Mr. Dorrell: Politics are partly about applying principles, as well as stitching up deals. The principle must be whether it is right to use public money to reward something that has happened anyway or to encourage something that might not happen if we do not use that public money. When faced with that choice this summer, I chose to encourage people to continue to develop computerisation in primary health care rather than simply to reward directly those who did something very valuable —there is no doubt about that, or about the fact that they did it at their own risk—some years ago.
  Question put and agreed to.
  Adjourned accordingly at thirteen minutes to Eleven o'clock.