Commons Sitting of 22 January 1992

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
  BRITISH RAILWAYS (No. 3) BILL [Lords] Read the Third time, and passed.

  LONDON DOCKLANDS RAILWAY (LEWISHAM, ETC.) BILL
  Order for Third Reading read.
  Queen's Consent, on behalf of the Crown, signified.
  To be read the Third time tomorrow.

Oral Answers to Questions
  ENVIRONMENT

    Housing Co-operatives
    Mr. Turner: To ask the Secretary of State for the Environment what plans he has to expand the number of housing co-operatives and other tenant-led initiatives; and what funds he intends to make available to the Housing Corporation to assist these projects.
    The Minister for Housing and Planning (Sir George Young): The Department has increased its grants for the promotion of tenant-led initiatives on local authority estates by more than a third since last year. For the housing association sector, the Housing Corporation will shortly be issuing a comprehensive strategy paper on housing co-operatives and tenant participation. It is for the corporation to decide what funds to make available for those purposes from its promotional grants provision and growing capital programme.
    Mr. Turner: The Minister will be aware that it is now two years since the Government produced their paper "Tenants in the Lead", which calls for significant progress to be made in the development of co-operative housing. Sadly, we have not seen much progress since receiving that publication. That led to the fact that today a new charter for housing co-operatives has been launched in the House of Commons—I know that the Minister is aware of that —which has received the full support of the all-party parliamentary group on housing co-operatives. Do the Government still believe in the development of housing co-operatives? If so, will the Minister meet a deputation from the Time For Action campaign to discuss the development of housing co-operatives?
    Sir George Young: The short answer would be yes. As the hon. Gentleman knows, until recently I was the chairman of the all-party parliamentary group on housing
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    co-operatives, a vacancy which the hon. Gentleman now so ably and amply fills. I reaffirm the Government's commitment to the concept of "Tenants in the Lead". We remain deeply committed to the involvement of tenants in the management and, where appropriate, ownership of their homes. I should be happy to meet a deputation involving the hon. Gentleman and the all-party group. The Department is continuing to approve a growing number of tenant management organisations. We are increasing significantly the grant resources that are available for that project this year.
    Mr. Gale: My hon. Friend's commitment to the housing co-operatives is well known. Indeed, as he said, he is a former chairman of the all-party group. What steps will his Department take to ensure that initiatives are not overcome or hidebound by unnecessary bureaucracy?
    Sir George Young: If my hon. Friend comes across any unnecessary bureaucracy, I hope that he will be the first to bring it to the attention of Ministers. The Department is increasing the number of grants that we give to tenant management organisations. We are approving a significant number of estate management boards, whereby tenants will take over the responsibility for managing their estates. I understand that at its meeting yesterday the Housing Corporation reviewed its own strategy on co-operatives and that it is shortly to publish a paper outlining its future strategy.
    Mr. George Howarth: The Minister and I have worked closely together on the subject of housing co-operatives, and I should like to share in the point that was made by my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner) about the Minister's commitment to that movement, which is well known and appreciated in the House and elsewhere. For the immediate future—while the Minister is still in office—we hope that his support will be translated into rather more tangible assets for the movement than hitherto. Evidence of the bureaucracy that now seems to be strangling the co-operative movement, to which the hon. Member for Thanet, North (Mr. Gale) referred, is now so overpowering that the Minister's commitment must be put to the test to resolve those problems.
    Sir George Young: I am not sure that I accept the analysis that the process is hidebound by democracy. We need to distinguish between tenant management and tenant ownership co-operatives. Progress on ownership co-operatives has indeed been slow, for a number of reasons. Management co-operatives, however, have made extremely good progress. I envisage tenant management co-operatives as the first step towards tenant ownership co-operatives. I envisage a continuous process from consultation to management and thence to ownership, and I believe that an unstoppable momentum is building up.
    Mr. Dunn: Are not the best tenant-led initiatives those that allow tenants a greater say in their own destinies, leading possibly to increased owner-occupation? Will my hon. Friend consider introducing the rents-to-mortgages scheme on a national scale?
    Sir George Young: As my hon. Friend will know, two pilot schemes are now under way, in Milton Keynes and

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    Basildon. The initial analysis of those schemes is positive, and when the Government have completed that analysis we shall indeed consider extending the scheme nationwide.

    Sheltered Housing
    Mr. Pike: To ask the Secretary of State for the Environment what recent discussions his Department has had with local authorities and housing associations in relation to outstanding demand for sheltered housing.
    Sir George Young: My Department has discussions with local authorities and the housing association movement throughout the year, covering a wide range of housing issues, including sheltered housing.
    Mr. Pike: Does the Minister accept that there is still a widespread shortage of sheltered housing, especially affordable housing for elderly people to rent? Will he give greater priority to that provision, and also ensure that more emphasis is placed on the need for housing to be provided in areas that elderly people know, rather than several miles away at the other end of town? It is important for old people to continue to live in the areas that they know.
    Sir George Young: In the past 12 years there has been an 86 per cent. increase in the provision of sheltered housing, which now accounts for some 2.5 per cent. of housing stock. It is true that, because of demographic change, we shall need to make appropriate housing provision for frail and elderly people, but I am not persuaded that sheltered housing is the only option: many people will prefer to remain in their own homes, where the necessary adaptations can be made and the necessary support can be given. To obtain more information on the subject, we have commissioned a study from Ernst and Young, which we hope to publish in July this year. That study will shed more light on the range, quality and quantity of accommodation that the elderly need.
    Mr. David Nicholson: My hon. Friend will be aware of the shortage of sheltered housing and other forms of low-cost accommodation in my constituency and elsewhere in the southern counties. Although the housing association movement has made important and valuable progress, it still cannot meet all the demands. My hon. Friend may also know that, in my constituency and elsewhere, there is all-party support for a continuing role for efficient local authorities, working effectively with the private sector, in the building and refurbishment of low-cost housing. Will he consider the matter urgently?
    Sir George Young: The Housing Corporation continues to allocate a substantial share of its resources to sheltered housing: this year, about £130 million is being made available for that purpose. We envisage an enabling role for local authorities; certainly, it is their responsibility to ensure that there is adequate provision in their areas for elderly people in housing need. They may wish to discharge that responsibility in a number of ways—for instance, working with housing associations, using their planning powers and building under licence. It is up to them to use the totality of the resources at their disposal to meet the social challenge outlined by my hon. Friend.

    Low-cost Housing
    Mr. Grocott: To ask the Secretary of State for the Environment whether he has any plans to meet the chairman of the new towns commission to discuss the release of land for low-cost housing.
    The Parliamentary Under-Secretary for the Environment (Mr. Tim Yeo): I have no plans for such a meeting.
    Mr. Grocott: Is the Minister aware of a specific aspect of the housing problem in the Wrekin, which is well recognised by all concerned, including the council, the housing associations and the churches? Nearly all the housing land is owned by the new towns commission, which cannot release it at less than its full market value.
    I urge the Minister to contact the commission's chairman and to impress on him the importance of making land available to meet the urgent housing needs of new householders and, in particular, elderly people. Will he give me an assurance that he will at least talk to the chairman, to ensure that affordable housing land will be supplied?
    Mr. Yeo: I am glad to be able to tell the House that the new towns commission has already agreed in principle to release 5 hectares of land next year in Telford at less than market value which will facilitate the provision of 200 units of low-cost housing. The real issue with housing in Telford and elsewhere is the problem that millions of tenants and owner-occupiers would face as a result of the savage cuts in take-home pay that people of all income levels would suffer if the Labour party came to power. The swinging increases in tax and national insurance—the central plank of the Opposition's programme—would force millions of households, who at present can afford to pay for their own housing and to stand on their own feet, into the humiliating dependence of subsided accommodation. There would be an explosion in demand for low-cost housing that no amount of land released could possibly satisfy.
    Mr. Speaker: Order. I hope that Ministers will answer the questions today that are asked rather than the ones that are not asked.
    Mr. Butcher: While the Minister is examining low-cost housing, may I refer him to a case with which he will be familiar: the attempt some years ago by my constituents to acquire low-cost housing in Marina and Pomeroy close, who are now caught in the legal crossfire between Coventry city council and my hon. Friend's regional officials. May I ask my hon. Friend to bang a few heads together and sort out this mess?
    Mr. Yeo: My hon. Friend has been assiduous in drawing this matter to my attention. The Department will do everything possible to ensure that his constituents are properly looked after. I hope that the same level of co-operation and commitment is forthcoming from the council.

    Environmental Projects (South Yorkshire)
    Mr. Hardy: To ask the Secretary of State for the Environment if he will provide funds to ensure that there is adequate support for necessary environmental projects in the South Yorkshire coalfield area.
    The Minister for the Environment and Countryside (Mr. David Trippier): The Government are already making a major contribution to the area by providing substantial resources to clear away the dereliction, improve the environment and create the conditions for a strong and viable economy.
    In the current financial year, we have provided Barnsley, Doncaster and Rotherham with more than £5 million from the Department's derelict land grant programme and over £1.5 million from the urban programme for environmental schemes. We have also awarded £14.9 million of city grant for three major development projects in the Dearne valley which will make significant contributions towards the improvement of the area.
    Mr. Hardy: As the Minister knows, I have pressed for, and I greatly welcome, central support for the regeneration of this area. Is he aware that anxiety continues about that share of expenditure which is a local authority responsibility? Will he ensure that neither lack of RECHAR money nor excessive central pressure or excessive limitations on local spending will in any way imperil this desirable and necessary achievement?
    Mr. Trippier: I am grateful to the hon. Gentleman for the way in which he put that question. As he knows, I have specific responsibility for the Dearne valley. I am anxious to do whatever I can to help to regenerate the area—as I know he is. We have made a number of representations to Commissioner Millan on this subject, particularly with regard to the RECHAR programme. We cannot for the life of us understand why the money cannot be released under the present terms and conditions. Somebody has to say that, and I am saying it now. Discussions will continue between the Government and the European Commission on this specific item. I hope that we can find a way to solve the problem.
    Mr. Batiste: Is not it clear that the problem with the RECHAR programme is that Commissioner Millan has unilaterally changed the rules on additionality and his interpretation of them and that he now proposes to act in a quite different way from the way in which all his predecessors have behaved? Is not it time that this matter was settled by agreement or referred to the European Court?
    Mr. Trippier: It is for that precise reason that I chose to answer the substantive question in the way that I did. I believe that Commissioner Millan has changed the rules unilaterally. I resent that. It means that this money is not available. The terms and conditions that are attached to programmes such as this have been in existence for a long time. The fact that there are people in the Dearne valley who are frustrated by this change of direction by Commissioner Millan is a disgrace.
    Mr. Allen McKay: In the case of the RECHAR programme, is not it a question of additionality? Although other countries have agreed with Bruce Millan on additionality, is not it a fact that this country's Treasury will not agree to it?
    Mr. Trippier: The difficulty is that whether or not the issue of additionality is resolved in the near future does not alter the fact that the terms and conditions attached to such assistance from the European regional development
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    fund or any other form of European support have existed for a long time. The local authorities in the Dearne valley have explained that they are frustrated because the money cannot be released. I am saying that it can be released if Commissioner Millan accepts and agrees to it.

    Litter
    Mr. Burns: To ask the Secretary of State for the Environment if he will make a statement about the working of the litter provisions of the Environmental Protection Act 1990.
    Mr. Trippier: The Government's litter legislation gives ordinary citizens the right to take action in the courts if public land is not kept clear of litter. Most local authorities and others under the new litter duty have responded well. But if they neglect the duties, local people can now do something about it.
    Mr. Burns: Will my hon. Friend join me in congratulating Chelmsford borough council on fully embracing the powers given to it under the Environmental Protection Act 1990 and urge other local authorities to follow its example? Is he aware that since appointing two litter wardens three months ago the council has apprehended 50 litter offenders and had six successful prosecutions against those dumping litter? Does my hon. Friend agree that that, combined with the council's educational programme, will ensure that the battle against the litter lout is waged effectively by Chelmsford borough council?
    Mr. Trippier: I should like my hon. Friend to convey to Chelmsford borough council that I believe that it has set a fine example of what local authorities can and should do now that we have given them those powers. As hardly any of the measures catalogued by my hon. Friend cost money, I wish that some Labour councils would follow Tory Chelmsford's example and stop bellyaching about shortage of cash.
    Mr. Skinner: Does the Minister recall that a few years ago the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), went to St. James's park with a bag and one of her Secretaries of State to pick up litter and had a great photo opportunity? When walking around London now, things are even worse. I have a suggestion: the right hon. Member for Finchley will finish work when the election is called; take her on permanently and let Lady Porter carry the bag.
    Mr. Trippier: No one is more qualified to talk about rubbish than the hon. Gentleman. I ask him and the House to be patient and wait for a report which is to be published shortly by the Tidy Britain Group. It will show, in contrast to what the hon. Gentleman suggested, that London is a cleaner place as a result of the Environmental Protection Act 1990 .

    Environment Business Forum
    Mr. Ian Taylor: To ask the Secretary of State for the Environment whether he has met representatives of the CBI to discuss the Environment Business Forum.
    The Secretary of State for the Environment (Mr. Michael Heseltine): I warmly welcome the Confederation of British Industry's decision to launch the Environment

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    Business Forum. I was pleased to participate in its launch at last November's CBI annual conference. It is in line with the concept of a "Green Club" which I floated in my Shell lecture at the Royal Society of Arts last May.
    Mr. Taylor: I congratulate my right hon. Friend on the initiatives that he has taken. Will he note that industry is getting its act together environmentally? Banks are increasingly questioning environmental liabilities when making lending assessments, insurance companies are making matters more difficult when assessing insurance risks if the environment is not taken into account and many companies are carrying out green audits. Will my right hon. Friend encourage industry's efforts to ensure that the environment is cleaned up?
    Mr. Heseltine: I very much agree with my hon. Friend. That is why I am grateful to John Collins and his advisory committee which presides over examining options for industry and commerce to put to the Government to improve environmental performance. It is having a profound effect on the thinking of British companies.
    Mrs. Ann Taylor: Does the Secretary of State agree that too many British inventions involving clean technology have been started in Britain but have been developed and manufactured abroad, to the extent that we now have to import eight times more than we export? Who does the Secretary of State blame for that? Does he blame British industry or does he accept the blame on behalf of the Government, who have done neither British industry nor the environment any favours by their failure to implement strict, clear and the best possible environmental standards?
    Mr. Heseltine: No; the blame lies firmly and squarely with the Labour party, whose high-taxation policy starved the enterprise culture of the opportunity to invest. It nationalised large parts of our industrial economy and denied them the opportunity to compete effectively in the world economy.
    Mr. Anthony Coombs: Does my right hon. Friend agree that British industry is at the forefront of eco-auditing, to the extent that, under British standard 5750, Britain is the first country to introduce a voluntary system of eco-labeling for companies? Will he recommend to British industry the example of Pilkington, which already carries out eco-auditing on a departmental basis not only for environmental reasons but for reasons of efficiency and higher profit?
    Mr. Heseltine: Pilkington is a first-class company, but the significance of the CBI initiative is that it is opening its club to companies that comprehensively observe environmental standards, which is a considerable step forward. My hon. Friend will know that the Government were at the forefront of pressing the Commission to introduce an European eco-labeling scheme. We were delighted that it was agreed at the last Council.

    Homelessness (Leicester)
    Mr. Vaz: To ask the Secretary of State for the Environment if he will make a further statement about homelessness in Leicester.
    Mr. Yeo: The primary responsibility for dealing with homelessness in Leicester rests with Leicester city council.
    Mr. Vaz: The Minister is aware that hundreds of families in Leicester are homeless. Does he agree that one way in which the council can help to alleviate their hardship, stress and suffering is to spend the money that it has received from the sale of council houses—a total of £10.4 million? Does he accept that that is one way in which the homelessness crisis, created by the Government's callous policy, will be solved?
    Mr. Yeo: Maintaining restrictions on the freedom of local authorities to spend capital receipts allows the Government to increase the borrowing power of local authorities whose housing needs are greater. That is why Leicester council has been treated so extraordinarily well in its housing investment programme allocation for 1992–93, which has increased by 8 per cent. to almost £20 million. That is well above the average for the region and is in addition to another £11 million of housing association funds for its area next year and £5 million of estate action money to tackle the worst estates.
    The Government are doing much for homeless people and tenants in Leicester. Unfortunately, Labour-controlled Leicester city council is not. It has one of the worst records in the country for collecting rent. At 31 December last year, it had £5 million of rent outstanding and 450 empty homes that could have been made available if it had managed its stock better. Its record is typical of Labour-controlled councils—inefficient and doctrinaire—and is a frightening warning of what the country would suffer if we had a Labour Government.

    Planning Applications
    Mr. Colvin: To ask the Secretary of State for the Environment what percentage of planning applications this year have been accompanied by environmental assessments as required by EC directive 85/337.
    Sir George Young: The environmental impact assessment directive applies to certain types of projects that are likely to have significant environmental effects. About 200 planning applications a year are subject to environmental assessment. This represents approximately one in 3,000 of all planning applications in the United Kingdom.
    Mr. Colvin: Does my hon. Friend agree that, by agreeing the directive, the Government are not saying that the European Environment Commissioner can dictate planning decisions but formalising best planning practice, as the directive gives the public full information about the environmental impact of major projects and helps local planning authorities to determine what conditions to put on planning consents?
    Sir George Young: I accept my hon. Friend's analysis. The Government are serious about their environmental stewardship. We are second to none in the thoroughness with which we consider major projects and have an excellent record on implementing European environmental measures. It would be wrong for anyone to suggest that that was not true.
    Mr. Simon Hughes: When I asked the Attorney-General on Monday why the Government were not acting on Sunday trading—because they say that the European Community has not yet said whether Sunday trading is in breach of European law—and why they were not acting to

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    enforce the environmental impact assessment directive, even though the European Commission had said that certain transport schemes were in breach of European law, the right hon. and learned Gentleman referred me to the Secretary of State for the Environment. As the Secretary of State has just returned from a meeting with the Commissioner in Brussels, will the bulldozers be called off Twyford down and will the Government obey Brussels's interpretation of the law and ensure that we do not rip up our countryside in breach of a law that we signed?
    Sir George Young: My right hon. Friend had a friendly and constructive discussion with the Commissioner. The Government believe that these issues can be resolved without recourse to the European Court of Justice and that is our objective. In the meantime, we do not wish to be drawn into a public argument on the matter.
    Mr. Marlow: Is my hon. Friend satisfied that the writ of Mr. Ripa di Meana runs in Italy as well as this country? If not, will he bring to the attention of the honourable gentleman—or whatever he cares to call himself—the principle of subsidiarity and tell him that we are far better able to organise our own environmental affairs than the Greeks, the Italians, the Spaniards, the French and the host of other European nations which he seems to leave alone?
    Sir George Young: I understand that other countries have been prosecuted by the European Court of Justice more intensively than this country. As I said at the beginning, our record on environmental stewardship is among the best in Europe and I am convinced that it is higher than that of Italy.
    Mr. O'Brien: Is it not a fact that the purpose of environmental assessments is to protect the standard of living and the quality of life of people affected by planning decisions? Therefore, is not it incumbent on the Government to ensure that environmental assessments are attached to planning applications, or are the Government reneging on the question of the quality of life being attached to planning applications, as they have reneged on so many other subjects?
    Sir George Young: The hon. Gentleman may know that the matter was discussed at some length during the Committee proceedings on the Planning and Compensation Act 1991. As he may also know, certain planning applications must be accompanied by environmental impact assessments and there is provision in the legislation to extend the categories that are so qualified if we so wish. I believe that at the moment the balance is right. The objective is to inform decision makers about the environmental impact of a planning application if they decide to go ahead. We achieved the right balance by insisting on such assessments where they are relevant but without encumbering the planning system by insisting on them in cases where they are not.
    Mr. Dykes: I thank my hon. Friend for that fair and balanced answer. Does he agree that in a country—especially in the south—which is congested and which has a diminishing supply of undeveloped land the environmental impact assessments are very important? Now that the more hysterical newspaper articles attacking the respectable Commissioner, mainly because he was Italian, have subsided, will my hon. Friend confirm that the
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    environmental impact assessments are extremely important to the Government and that the Government are fully committed to implementing them?
    Sir George Young: I can give my hon. Friend the assurance that he seeks. I believe that we were doing much of what the Commission wants us to do before the directive came into affect.

    Council Tax
    Mr. Andrew Welsh: To ask the Secretary of State for the Environment what representations he has received on the planned introduction of the council tax; and if he will make a statement.
    The Minister for Local Government and Inner Cities (Mr. Michael Portillo): There has been widespread support for the introduction of the council tax on 1 April 1993, as we propose.
    Mr. Welsh: It is difficult to believe the Minister. Is he aware that the Scots will be paying a surcharge on the council tax over and above their English equivalents and that young, first-time buyers in Edinburgh, Glasgow and Aberdeen will end up paying more council tax than the Secretary of State for the Environment who is one of the wealthiest members of the Cabinet? Why does the Minister ignore the warnings of local council finance departments and professional organisations that the tax is a bureaucratic nightmare riddled with unfairnesses and that, like the poll tax, it is unworkable?
    Mr. Portillo: The people of Scotland are paying a surcharge now on the community charge. It was announced today that Strathclyde's community charge is to rise by 35 per cent. because people have not paid. That is because the party that the hon. Gentleman represents urged them not to do so. When the people did not pay and had run up debts that they could ill afford the Scottish National party walked away, leaving them with accumulated debts and the law-abiding citizens to pick up the tab. The Scottish National party was not alone—some Scottish Members of Parliament from the Labour party were also involved, in particular the hon. Members for Glasgow, Provan (Mr. Wray), for Glasgow, Maryhill (Mrs. Fyfe) and for Glasgow, Hillhead (Mr. Galloway), all of whom advocated non-payment. That is now being added to the bills of law-abiding people in Scotland.
    Mr. Cran: Will my hon. Friend take the opportunity of the introduction of the council tax to reconsider the proposals of the borough of Beverley, supported by 25 to 30 other districts, concerning the unfair nature of the revenue grants system which will underpin the system of local taxation—indeed, it would underpin any system of local taxation? If he is not prepared to consider those proposals, why not?
    Mr. Portillo: My hon. Friend always speaks up well for the interests of his constituents and his local authority. I believe that there was a productive meeting with the Under-Secretary of State, my hon. Friend the Member for Salisbury (Mr. Key). I continue to say to my hon. Friend the Member for Beverley (Mr. Cran) that it is appropriate that the way in which we distribute grants to districts should reflect the social conditions in each place. Certain services provided by districts—for example, those

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    involving environmental health, the administration of housing benefit and the supply of housing to the homeless—are more expensive to provide in areas of social deprivation, so we must measure differences in social deprivation between one place and another.
    Mr. Gould: Does the Minister now regret his failure to abolish the 20 per cent. contribution rule, and his rejection of our offer to help get rid of the poll tax this year rather than letting it drag on until next year or the year after? Why has he failed to resolve the legal difficulties now confronting local authorities trying to collect what the Prime Minister described as the virtually uncollectable poll tax? Can it really be true that, on top of the £14 billion already down the drain, he and his right hon. Friend the Secretary of State are thinking of throwing yet more taxpayers' money at the poll tax problem? Does he not recall that the last time that this was tried the consumer faced a 2½p hike in VAT? Is that really what is in store for us again?
    Mr. Portillo: The hon. Gentleman's last suggestion is a product of the collective imagination of himself and The Guardian—so far as those two can be dissociated from one another; they seem almost synonymous. The Government have made it clear that if we need to legislate to put right the matter of computer evidence in magistrates courts, we shall do so. My right hon. Friend the Home Secretary is considering that now.
    On the question of abolishing the community charge, it is the Labour party which has done what it can to delay the progress of the Bill through the House and the other place. All that it has offered us is a return to the rates, which would be extremely unwelcome in England as well as in Scotland, which is where the question arose. People who have to contribute 20 per cent. of their community charge are given more in their social security benefits than the contribution that they are asked to make. I believe that the time has now come to stand up for the law-abiding citizens—the people who pay their community charge. They have every right to expect that people receiving money in their social security benefits should use that money to pay their community charge, for which it is intended.
    Mr. Squire: May I congratulate my hon. Friend on resisting any suggestion of a return to the rating system, which would penalise the one third of households in this country occupied by single adults? Whenever the hon. Member for Dagenham (Mr. Gould) repeats the figure of £14 billion, will my hon. Friend point out to him that a substantial chunk of that money is for rebates, which—unless we are to hear another revelation from the Labour party—a Labour Government—God forbid—would continue?
    Mr. Portillo: The figure of £14 billion, as my hon. Friend does well to remind us, is very silly. First, it cannot be computed—one cannot make the figures add up to that sum. Even if one could, the money has been paid to people to help them pay their community charge; it has gone into local services. If the Labour party is saying that it would contribute less than that to local services, it must stand up and tell us so. My hon. Friend is right that to return to a rating system, as the Labour party wishes to do, and to say that large households full of wage earners should pay the
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    same as a single widow is a disgraceful proposition. Only the Labour party—only a party that had learnt nothing in recent years—could possibly advocate it.

    Chemical Emissions
    Mr. Alton: To ask the Secretary of State for the Environment what plans he has to require the annual publication of details of chemical emissions into the environment.
    The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry): As I explained in my answer to the hon. Member on 20 December, monitoring information about releases to the environment must be placed in public registers as soon as it is received or obtained, which in some cases will be at more frequent intervals than annually. In addition, for 1992 and future years, Her Majesty's inspectorate of pollution will be required to publish aggregate totals of releases from the data that it receives in respect of processes subject to integrated pollution control. My Department will issue a consultation paper on this proposal soon.
    Mr. Alton: May I welcome the news that the Minister has just given? On Merseyside, there is considerable concern that following a recent chemical leak, 28 people had to receive hospital attention and treatment. Does the Minister agree that the American model, in which disclosures are forced by law and in which companies—some operating in this country—with plants there have to have far more stringent control means that the populations living in areas in which there are chemical factories are better protected? We should introduce such a model into our legislation.
    Mr. Baldry: In this, as in every other area, we are making far more information widely available to the public. Information about chemical emissions is being made available by placing monitoring data in public registers. The public registers can be examined free of charge at all reasonable times, and copies of entries can be obtained on payment of reasonable charges. Dangerous occurrences involving the uncontrolled or accidental release of chemicals must be notified to the Health and Safety Commission. As the hon. Gentleman knows, in reference to the instance to which he referred, my hon. Friend the Member for Mid-Worcestershire (Mr. Forth), the Parliamentary Under-Secretary of State for Employment, gave a detailed reply about the actions taken by the Health and Safety Executive on 20 December 1991.
    Mr. Michael Brown: Does my hon. Friend accept that there need be no concern for the Government about the requirements to publish more detail about chemical emissions? Will he take it from me that in my constituency, where we have two oil refineries, two titanium dioxide manufacturers and, shortly, two electricity generating companies, the amount of emissions by those companies is being reduced all the time? The combined cycle gas power stations which will be built by National Power and PowerGen in my constituency will cut sulphur dioxide emissions and carbon dioxide emissions to the benefit of the environment in the whole country, as well as in my constituency.
    Mr. Baldry: I am very happy to agree with my hon. Friend. He makes the point very well.
    Mr. Win Griffiths: Does the Minister agree that under the American model, there have been substantial reductions—90 per cent. in the case of one chemical company, Monsanto—in emissions, as a result of proposals such as those that Labour will introduce after this year's election? Does he agree that the publication of all the information available in the world is not of much use if a Government like his cannot implement legislation such as that relating to nitrates in drinking water?
    Mr. Baldry: Let us get that into context. The case to which the hon. Gentleman refers is the first case brought against the United Kingdom on an environmental issue in the 20 years in which we have been a member of the Community. Many cases have been brought against other states, including cases against almost all other member states in relation to the drinking water directive. In three of the five counts in the court case, compliance has now been achieved. A fourth count relates to legislation in Northern Ireland and it has not delayed the action being taken there to achieve compliance with the directive's standards. On the fifth count, relating to nitrate levels in some parts of England, the United Kingdom is already doing everything practicable to achieve compliance at the earliest practicable date.
    There is nothing wrong with the quality of drinking water in the United Kingdom. In the first annual report of the drinking water inspectorate, which was published last year, the chief inspector confirmed that in the 3.3 million tests made in 1990, 99 per cent. complied with the requirements of our national regulations which are more stringent than the European Community directive. That is a record of which we can all be proud.

    European Regional Development Funds
    Mr. Robert Hicks: To ask the Secretary of State for the Environment whether he has any plans to alter the arrangements governing the payment of European regional development funds to local authorities; and if he will make a statement.
    Mr. Heseltine: It is well known that there are differences between the Government and the European Commission concerning interpretation of the additionality requirement. The issue has been subject to extensive discussion. We shall, of course, make an announcement as soon as our differences with the Commission are resolved.
    Mr. Hicks: I hope that that gives cause for encouragement. Is my right hon. Friend aware that in those regions which have been identified as in need of additional financial aid because of their social and economic requirements, there is considerable disappointment and, indeed, frustration about the fact that we cannot take up our full allocations? Is he aware, for example, that in Devon and Cornwall there is a shortfall of £7.5 million? In the Plymouth travel-to-work area we have been able to use only £3 million of the £11 million allocated under the RENAVAL programme because of the reduction in the work load of Devonport dockyard. May I impress upon my right hon. Friend the need for urgency to resolve the problem?
    Mr. Heseltine: I fully understand the concern and care of my hon. Friend in representing his area. I hear what he says. Perhaps it is the Labour party which should bring
    308
    pressure to bear upon a former Secretary of State for Scotland who is now denying this country the benefit of these funds.
    Mr. John D. Taylor: Since European regional aid is supposed to be for additional public expenditure in the regions, why do the Conservative Government prevent regional aid going to local authorities throughout the United Kingdom?
    Mr. Heseltine: The right hon. Gentleman must know that very substantial increases in assistance have been provided through one Government programme or another to deal with the sort of issues that the matter covers. The Government have expressed the clear view that that has enabled additional funding to flow because we took into account the potential of the ERDF scheme. Anyone who has the slightest doubt about the force of these arguments should remember the eloquence with which they were expressed by Commissioner Millan when he was Secretary of State for Scotland.
    Mr. Andy Stewart: While Bruce Millan plays politics in Brussels, it is left to the British Government to give additional resources to coalfield areas. For example, in my constituency alone in the last financial year we received £0.5 million from British Coal Enterprise Ltd., £3 million in land reclamation grants and almost £1 million from the rural development programme. Will my right hon. Friend confirm that those valuable resources will be available in the coming year?
    Mr. Heseltine: No one has fought harder than my hon. Friend to bring resources to deserving areas. I do not think that we should deny Commissioner Millan the opportunity to play politics in Brussels. Certainly there will be no job for him in government in this country.

    Poll Tax
    Mr. Canavan: To ask the Secretary of State for the Environment how many representations he has received to date about the timing of the abolition of the poll tax.
    Mr. Portillo: We have received a number of such representations.
    Mr. Canavan: Is not the Minister ashamed to be going into the general election campaign telling electors that they will have to suffer the poll tax for another year or more? Would not it be in the interests of all the people to abolish the poll tax immediately and to reimburse local authorities with additional Government grant as a temporary measure until a much fairer system of local government revenue raising is introduced after Labour wins the general election?
    Mr. Portillo: Is not the hon. Gentleman ashamed that he told electors not to pay their community charge bills, and will he now pay the debts of those poor people who listened to his advice before he ran off and left them in the lurch?
    Mr. David Shaw: Can my hon. Friend confirm that one benefit of the community charge has been the increased accountability to which it has held left-wing councillors? Will he confirm that after the abolition of the community charge, the new council tax will also increase the accountability of left-wing councillors?
    Mr. Portillo: I believe that one reason why the community charge was so fiercely fought by the Opposition parties was precisely because it made clear the connection between spending decisions taken locally and the level of tax to be paid locally. Under the council tax as well there will be a direct relationship between what an authority spends and what it has to charge its people. That is an inescapable reality.
    Mr. Blunkett: Can the Minister confirm that on the issue of taxation the greatest incompetence and the biggest waste of public money are inflicted on the people not by the Opposition but by the party that introduced the poll tax? Will he give an absolute assurance that there will be no last-minute gerrymander to prevent poll tax bills going out before the date of the general election?
    Mr. Portillo: The hon. Gentleman and his hon. Friend the Member for Dagenham (Mr. Gould), who have both raised this topic this afternoon, seem to be uncommonly rattled that the Government will do something to make our election victory even more certain. As I have said time and again, we have made clear the amounts of money available to local government next year. They are generous amounts and they are what the country can afford. If the hon. Gentleman wants to know about the waste of resources in local government, he has only to look at the Lambeths, the Haringeys, the Hackneys and the other councils that have become bywords for waste.

    Derelict Land
    Mr. Simon Coombs: To ask the Secretary of State for the Environment what further proposals he has to reduce the extent of derelict or disused land in public ownership.
    Sir George Young: My right hon. Friend is today laying before the House regulations requiring local authorities to maintain and publish registers of their unused and underused land. Other possible measures to reduce the extent of such land in public ownership are also being considered.
    Mr. Coombs: 1 am sure that everyone—at least all Conservative Members—will welcome the news that registers of derelict and disused land are to be published for the first time. Does my hon. Friend agree that it is very sad that nearly 12 years have elapsed since legislation on that issue was first put in place? Is not it about time that further measures deliberately to stimulate the disposal of that land were put to the House?
    Sir George Young: As my hon. Friend will know, considerable progress has been made in addressing that problem over the past 12 years through derelict land grant, city grant and other measures. None the less, there are about 150,000 acres of vacant land in urban areas, about half of them publicly owned. For that reason, we are looking at what further measures are necessary to make faster progress.
    Mr. Soley: I should start by congratulating the hon. Gentleman on being the only Minister who still answer questions in this decrepit old Government. Will he introduce a register, as he is doing in respect of other areas,
    310
    of Government-owned land and property? I refer, for example, to the 24 houses in Nyland road, Swindon, which have been empty for up to 10 years and the 60 houses that have been empty in RAF Valley, Bryn Trewan estate, which are about to be sold off as a job lot, presumably to depress the housing market while we keep families in bed-and-breakfast accommodation. All those properties have been empty and unused, and all are owned by the Government. They are part of the 16 per cent. of the empty housing stock owned by the Government. We have no register, no action, bed-and-breakfast, cardboard city—what a record.
    Sir George Young: If the hon. Gentleman really wants to do something about empty houses, perhaps he will address his political colleagues in Liverpool, for example, where one in 10 houses are vacant. Perhaps he will talk to his political colleagues in Manchester, Lambeth, Hackney and Southwark. That is where the bulk of the empty houses lie, and that is where he should use his energy to make progress.
    Sir Anthony Durant: When my hon. Friend looks at structure plans, will he take account of empty land that is owned by nationalised industries, local government or any other local authority?
    Sir George Young: As my hon. Friend will know, it is the purpose of a structure plan to identify appropriate land use for the totality of land in a certain area. We would certainly expect local authorities, be they counties or districts, to identify positive uses for derelict land and to bring it back into use before they come up with proposals to make any encroachment on green-field land or land in the green belt.

    Water Payments
    Mr. Madden: To ask the Secretary of State for the Environment what progress is being made to offer water consumers a choice in how to pay for their water consumption.
    Mr. Baldry: The Director General of Water Services is encouraging companies to improve customers' awareness of their right to opt for a meter at their own expense and to deal with difficulties such as the high cost of installation and the unattractive tariffs set by many water companies. The director general's policy on charging for water was set out in "Paying for Water, the way ahead", a copy of which has been placed in the Library.
    Mr. Madden: Is the Minister aware that many people, including families in Bradford, are terrified of their water bills as a result of having water meters fixed to their homes? Is he aware also that they are unable to pay their bills and are putting their health and hygiene at risk by unreasonably cutting their use of water? Will he instruct the water companies not to install water meters compulsorily? As a member of a party that proclaims its support for freedom of choice, will he arrange urgently for water consumers to have a real and genuine choice of how they pay for their water in future?
    Mr. Baldry: Each company is responsible for deciding on its preferred system of charging, subject to the

    311
    overriding requirement that it does not give undue preference to or unduly discriminate against any class or group of customers. Metering is one obvious way of charging for water services and is the general method in other countries. It is potentially the fairest charging method as customers have some influence on their own bills.
    Sir Teddy Taylor: Does the Minister accept that the public would be more willing to pay by any means for their water supply if the Government would act speedily and effectively on the alarming report published this morning by the National Rivers Authority, which indicates clearly and precisely that agriculture is responsible for the biggest source of serious pollution incidents affecting public water supplies? Will he accept that the Department of the Environment has a special responsibility to protect the general public and the water supply against the huge and mighty pressures from agriculture which are always there?
    Mr. Baldry: It is because we recognise those responsibilities, not only in relation to agriculture but generally, that privatisation has enabled the water companies to invest some £5,000 a minute, each and every minute between now and the end of the century, on enhancing water quality in this country.
    Mr. Cryer: Does the Minister accept that his response on compulsory imposition of metering is unacceptable to ordinary people? In Bradford many people object to the imposition of metering by Yorkshire Water, an organisation which puts private profit before public service. If the Government are really concerned about genuine choice and the citizens charter and all the other public relations paraphernalia, why do they not give citizens a choice and make it their right to have either metering or a general charge?
    Mr. Baldry: Water is a facility for which it is right and proper that there should be a payment. Metering is one obvious way of charging for water services because it is generally the method used in other countries and it is a fair method because consumers are then paying only for the water that they use.

    Repossessions
    Mr. Andrew MacKay: To ask the Secretary of State for the Environment if he will make a statement on his latest discussions with lending institutions concerning repossessions.
    Mr. Heseltine: Last month, ministerial colleagues and I had a series of meetings with the Council of Mortgage Lenders to discuss the problem of mortgage arrears and repossessions. These resulted in agreement on the measures which my right hon. Friend the Chancellor of the Exchequer announced to the House on 19 December. I spoke to Mark Boleat, the Director General of the Council of Mortgage Lenders, earlier today on my return from Brussels, and I expect the lending institutions to be in a position to make announcements within the next two to three weeks.
    Mr. MacKay: I readily recognise that the agreement has been of great benefit to many home owners who, through
    312
    no fault of their own, are in fear of repossession, but will my right hon. Friend agree that it is absolutely critical that Mr. Boleat, on behalf of the lenders, ensures that housing associations are provided with those funds quickly so that they can be seen to be taking over the houses that could have been repossessed and so completely put at rest the minds of those who still live in some fear?
    Mr. Heseltine: We all sympathise with the point made by my hon. Friend the Member for Berkshire, East (Mr. MacKay). He will have welcomed the assurance of the building societies that they will not act against those people who have borrowed money from them, albeit in arrears, who are making a reasonable contribution or whose contributions are covered by income support.
    Mr. Gould: Was not the half-baked scheme announced before Christmas not only too little and too late but a classic case of passing the buck? Has the Secretary of State not just, in effect, confirmed that not a single agreement has yet been concluded under the scheme by any building society or housing association, so that not a single household has yet benefited in the way that was suggested by the hon. Member for Berkshire, East a moment ago? Is it not now clear that the whole sham was, typically, designed to deal with embarrassing headlines rather than with the real and pressing problems faced by thousands of families threatened with the loss of their homes?
    Mr. Heseltine: I am sorry that the hon. Gentleman was obviously half asleep on Saturday when the Mortgage Corporation announced the first such scheme. The most important help to give to people in those circumstances flows from the fact that interest rates have been cut by 4½per cent. since October so reducing the typical mortgage by an average of £70 a month. Anyone who is genuinely concerned about people having to pay their mortgages would be appalled by the Labour party's proposal to put tax rates up to 59p in the pound.

    Acid Rain
    Mr. Alan W. Williams: To ask the Secretary of State for the Environment what is his latest assessment of the damage caused by acid rain to mountain streams in upland Britain and to trees across the country.
    Mr. Trippier: There is clear evidence suggesting that the 40 per cent. reduction in the United Kingdom's sulphur emissions over the past 20 years is helping to bring about a decrease in acidification in some areas. The latest work on trees shows little evidence of widespread acid rain impact.
    Mr. Williams: What does the Minister think of National Power's proposal to switch Pembroke power station to the use of orimulsion fuel? Does he recognise that that will result in a massive increase in sulphur emissions which will mean that Pembroke will be the single largest sulphur emitter in Britain and, as it is sited on the western coast, it is in line to produce the maximum environmental damage? If that proposal goes ahead, will he insist that it is accompanied by flue gas desulphurisation?
    Mr. Trippier: To make it clear to the hon. Gentleman, the commitment that has been given to the House and to the country by my right hon. Friend the Secretary of State for Energy in terms of meeting the large combustion plant
    314
    directive, actually stands. The Government's commitment to cut emissions from large combustion plants from 1980 levels to 60 per cent. by the year 2003 and to cut NOx by 30 per cent. by 1998, is a target which will be met.

Colliery Closures
3.31 pm
Mr. Geoffrey Lofthouse: I beg to ask leave to move the Adjournment of the House under Standing Order No. 20 for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the announcement by British Coal of the loss of 13,000 jobs at the Prince of Wales, Sharlston, Kellingley and Whitemoor collieries and the closure of the topping cycle plant at Grimethorpe."
This matter is specific, because it follows the loss of 20,000 mining and support jobs in west Yorkshire since 1985 without any attempt by the Government to provide replacement industry and it includes the lack of RECHAR. It is important and urgent because the work force, with an average age of between 32 and 33, are being blackmailed by British Coal. If they do not accept voluntary redundancy by the end of March, they will lose £10,000.
Some of those men have been transferred from other collieries and promised long-term employment. They have been encouraged to purchase houses with high mortgages, and they are now desperate and worried. They have been portrayed as Europe and world beaters in coal production in recent months.
The Grimethorpe plant has played a leading part, with a lack of finances, for many years in producing clean coal technology. The closure of the plant is a retrograde step, as that technology is very much needed.
I ask you, Mr. Speaker, to grant my request to allow the House to consider this serious matter.
Mr. Speaker: The hon. Member for Pontefract and Castleford (Mr. Lofthouse) asks leave to move the Adjournment of the House under Standing Order No. 20 for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the effect on unemployment of the announcement by British Coal to further run down the coal industry in his own and in neighbouring constituencies."
I have listened with care to what the hon. Gentleman has said about the matter. As he knows, I have to decide whether his application comes within the Standing Order and, if so, whether a debate should be granted which would take precedence over the business set down for today or tomorrow.
In this case, I regret that the matter that he has raised does not meet the requirement of the Standing Order. I therefore cannot submit his application to the House today.

Shops (Amendment) Bill
3.34 pm
Mr. Ray Powell: I beg to move,
That leave be given to bring in a Bill to provide for certain descriptions of shops in England and Wales to be open for trade on Sunday, subject to their being registered with the local authority; to impose a general prohibition on the opening on Sunday of other shops, extending this prohibition to certain business premises which on week-days are open for the service of customers; to provide protection for persons employed in or for the purposes of a shop which is, or is to be, registered for Sunday opening, where they have conscientious or other objections to working on Sunday; to make consequential and other repeals in the Shops Act 1950; and for connected purposes.
Seldom has the time been more appropriate or the need more urgent for a Bill of this kind. You, Mr. Speaker—indeed, the whole House—will know that the Archbishop of Canterbury, the Cardinal Archbishop of Westminster, the Moderator of the Free Church Federal Council and the Chief Rabbi drew the Prime Minister's attention to the pre-Christmas law-breaking, which they said
"will determine the institution of a nationally observed day in the week substantially set apart for activities which are other than commercial in nature. We believe that all peoples need to have one day in the week which is different, and which provides an opportunity for varied forms of community life and activity. Divine worship is an important but not the only concern here. The progressive abandonment of such a nationally observed day poses a real danger to family life and social relationships and especially to the welfare of many workers in the retail industry."
My Bill seeks to address these concerns, which are shared by millions, in a very constructive way and is entirely based on the Keep Sunday Special proposals on rest—meaning recreation, emergencies, social gatherings and travel. I place on record appreciation to David Blackmore and his staff for all their efforts in addressing these problems.
Early-day motion 291, which has been signed by 124 right hon. and hon. Members, illustrates the measure of cross-party support that these proposals have. The economic evidence of the failure of Sunday trading is summarised by the trade magazine Supermarketing, whose latest research shows little evidence that seven-day opening helped to increase overall grocery spending. Instead, market share has been stolen from law-abiding retailers and the smaller shops, many of which have lost and are losing up to 50 per cent. of weekly turnover. Small shops cannot survive for long under these conditions.
The House needs to take note of the fact that, in 1961, there were 147,000 grocery stores in Britain, whereas in 1990 there were just 44,700. Indeed, the trade paper of the independent stores—Independent Grocer—now gives the figure as 41,000. The market share of these stores dropped from more than 50 per cent. in 1961 to less than 12 per cent. last Christmas. On the other hand, the share of the five big superstores rose from 50 per cent. in 1961 to a massive 62 per cent. of this £44 billion sector of the retail industry.
Sunday trading is raising prices and reducing real freedom of choice. The consumer, especially the disadvantaged consumer, is the loser. Losers too are local residents, who have to contend with traffic, noise and litter and all the other types of disturbance. So are the food producers and the transport companies, who face the exercise of near-monopoly market power by over-dependence on the five big supermarket chains.

317
The most telling evidence of all that Sunday trading is a costly mistake, for which the whole nation is paying a heavy price, is not the new year phoney price war by the supermarket chains but their savage attack on the living standards of the employees. I have a copy of a letter from the retail director of Sainsbury's confirming that all staff contracts will "have to be reviewed".
The letter continues:
"and details will be announced in late January of changes to be made effective from 15 March 1992."
I am given to understand that this will apply to Scotland also. There is no doubt that this will mean compulsory Sunday work for little or no premium payment. Such ruthless, unacceptable pressure, which closely follows that already applied by Woolworth's Gateway, Asda and others, is a callous and cruel deception upon thousands of vulnerable, low-paid, mainly part-time and largely female workers and their families.
I have been involved in the retail industry all my life. It is a people business or it is nothing. I have always found the staff honest, trustworthy, intensely loyal and hard-working, generally very tolerant of all extremes of consumer behaviour, and therefore the best asset and advertisement any business can have.
While I am proud to acknowledge my sponsorship by the Union of Shop, Distributive and Allied Workers and my commitment of faith as a Methodist, I address the House today as merely one voice in a large and growing all-party coalition ranging from all the Churches to trade unions and consumer groups, all seeking a genuine consensus solution to the Sunday trading shambles.
Much of the shambles is of the Government's own making, because of their singular inability and unwillingness to enforce the law of the land or to show any real leadership in promoting reform. Instead, they have allowed a small group of directors of retail stores—Woolworth, Sainsbury, Tesco and the like—to dictate a fundamental change in our way of life for their own self-interest and to the benefit of fewer than 5 per cent. of the population.
It is remarkable that our Ministers have failed in their responsibilities, claiming that European Community law prevents them from acting. A fellow member state of the EC, France, is doing just that, however, against Mr. Richard Branson's Virgin plc megastore in Paris, and to the tune of a £100,000 fine. France has also publicly stated that this year it will introduce moderate reforms to its laws on Sunday trading.
It is abundantly clear that in that case it is the Government of France and the National Assembly—not Mr. Branson—who will decide, after consultation with various groups, on the timing and content of the reforms. There will be no waiting for any further decision from the European Court of Justice, which has already ruled three times that the Sunday trading laws of member states are not contrary to article 30 of the treaty of Rome. What an unworthy contrast the relative inactivity of the United Kingdom Government presents.
My Bill is based upon five principles—first, that the reasonable needs of consumers are met; secondly, that employees' rights and freedoms are fully protected and promoted; thirdly, that families and friends are able to spend quality time together; fourthly, that the freedoms of shopowners and local residents are safeguarded; and
318
fifthly, that Sunday is actively promoted as a distinctive special day for rest, recreation and worship, as it is in the remainder of Europe.
My Bill would remove the anomalies and confusions of the 1950 Act. It would update and modernise the law by a type-of-shop approach, not by the use of lists or classes of goods. Local authorities would be asked to administer the scheme for a fee, which would make it self-funding, and with a simple system of registration. There would be a special provision in law for the smaller food and general convenience stores—the lifeblood of many neighbourhoods—to cater for the elderly, the infirm and those without cars who cannot take their custom very far. A clear mechanism of enforcement would be introduced, which would he fair and fully cost-effective.
When the House last debated Sunday trading on 13 December, the Minister of State, Home Office expressed her continuing openness to discussions. She said—I congratulate her on her perseverance:
"If the solutions of the hon. Member for Ogmore command great support, we will consider them with great interest."—[Official Report, 12 December 1991; Vol. 200, c. 1210.]
I therefore remind the House that the proposals in my Bill have the unanimous support of all Churches and denominations in Britain, numerous local authority and local government associations, more than 150 large high street retailers—including more than 50 per cent. of the British Retailers Association —together with companies with household names such as C and A, the Co-op and Iceland. Other companies are broadly in sympathy with the type-of-shop approach in my Bill, including Marks and Spencer, the Sears group, House of Fraser, the John Lewis Partnership, the Burton group, and organisations representing some 10,000 convenience stores. Some 42 trade associations——
Mr. Speaker: Order. Will the hon. Gentleman please bring his remarks to a close? He has had 10 minutes.
Mr. Powell: We now have the chance to change the law. If the House approves my Bill, it will create an historic opportunity to reform the law, to redeem the authority of Parliament and to satisfy all who genuinely seek consensus change. It is practicable, enforceable, and acceptable to the country at large, and it commands a majority in Parliament. Above all, it meets the needs of a variety of interests and desires on a matter of conscience. This debate relates to the quality of life of millions of people. My Bill gives practical expression to values that are beyond price. I beg to ask leave to present it to the House.
Question put:
The House divided: Ayes 224, Noes 4.

Division No. 48]

[3.44 pm

AYES

Adams, Mrs Irene (Paisley, N.)

Beith, A. J.

Adley, Robert

Bell, Stuart

Alison, Rt Hon Michael

Benn, Rt Hon Tony

Allen, Graham

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

Alton, David

Benyon, W.

Anderson, Donald

Blunkett, David

Archer, Rt Hon Peter

Boateng, Paul

Arnold, Jacques (Gravesham)

Bowden, Gerald (Dulwich)

Ashton, Joe

Braine, Rt Hon Sir Bernard

Barnes, Harry (Derbyshire NE)

Brown, Nicholas (Newcastle E)

Barron, Kevin

Burns, Simon

Battle, John

Burt, Alistair

Beckett, Margaret

Caborn, Richard

Beggs, Roy

Callaghan, Jim

319

Campbell, Ron (Blyth Valley)

Jones, Martyn (Clwyd S W)

Canavan, Dennis

Jopling, Rt Hon Michael

Carlile, Alex (Mont'g)

Kaufman, Rt Hon Gerald

Churchill, Mr

Kellett-Bowman, Dame Elaine

Clark, Dr Michael (Rochford)

Kilfedder, James

Clarke, Tom (Monklands W)

Kilfoyle, Peter

Clelland, David

Knight, Dame Jill (Edgbaston)

Conway, Derek

Kumar, Dr. Ashok

Cook, Frank (Stockton N)

Lambie, David

Coombs, Anthony (Wyre F'rest)

Lamond, James

Corbyn, Jeremy

Latham, Michael

Cormack, Patrick

Leadbitter, Ted

Cousins, Jim

Leighton, Ron

Cox, Tom

Lewis, Terry

Crowther, Stan

Livingstone, Ken

Cryer, Bob

Lofthouse, Geoffrey

Cummings, John

Lord, Michael

Cunliffe, Lawrence

Loyden, Eddie

Dalyell, Tam

Luce, Rt Hon Sir Richard

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

McAvoy, Thomas

Day, Stephen

McCartney, lan

Dickens, Geoffrey

McCrea, Rev William

Dixon, Don

McFall, John

Dobson, Frank

McKay, Allen (Barnsley West)

Dover, Den

McMaster, Gordon

Durant, Sir Anthony

McNair-Wilson, Sir Michael

Eadie, Alexander

McNamara, Kevin

Eastham, Ken

Mcwilliam, John

Edwards, Huw

Madden, Max

Emery, Sir Peter

Mahon, Mrs Alice

Enright, Derek

Marek, Dr John

Ewing, Harry (Falkirk E)

Martin, Michael J. (Springburn)

Fatchett, Derek

Martlew, Eric

Faulds, Andrew

Meacher, Michael

Flannery, Martin

Meale, Alan

Flynn, Paul

Meyer, Sir Anthony

Foot, Rt Hon Michael

Michie, Bill (Sheffield Heeley)

Foster, Derek

Moate, Roger

Foulkes, George

Molyneaud, Rt Hon James

Fry, Peter

Morgan, Rhodri

Gale, Roger

Morley, Elliot

Galloway, George

Morris, Rt Hon J. (Aberavon)

Garrett, John (Norwich South)

Morris, M (N'hampton S)

George, Bruce

Mowlam, Marjorie

Golding, Mrs Llin

Murphy, Paul

Gordon, Mildred

Nellist, Dave

Graham, Thomas

Neubert, Sir Michael

Greenway, Harry (Ealing N)

Nicholson, David (Taunton)

Gregory, Conal

Oakes, Rt Hon Gordon

Griffiths, Peter (Portsmouth N)

O'Brien, William

Griffiths, Win (Bridgend)

Orme, Rt Hon Stanely

Grocott, Bruce

Paisley, Rev lan

Hain, Peter

Parry, Robert

Hannam, Sir John

Patchett, Terry

Hardy, Peter

Pawsey,James

Hargreaves, Ken (Hyndburn)

Pendry, Tom

Harris, David

Pike, Peter L.

Heal, Mrs Sylvia

Porter, David (Waveney)

Higgins, Rt Hon Terence L.

Powell, Ray (Ogmore)

Hinchliffe, David

Primarolo, Dawn

Hind, Kenneth

Quin, Ms Joyce

Hoey, Kate (Vauxhall)

Redmond, Martin

Hogg, N. (C'nauld & Kilsyth)

Rees, Rt Hon Merlyn

Home Robertson, John

Rhodes James, Sir Robert

Hood, Jimmy

Robinson, Geoffrey

Hordern, Sir Peter

Robinson, Peter (Belfast E)

Howarth, George (Knowsley N)

Rogers, Allan

Howell, Rt Hon D. (S'heath)

Ross, William (Londonderry E)

Howell, Ralph (North Norfolk)

Rossi, Sir Hugh

Howells, Dr. Kim (Pontypridd)

Rowlands, Ted

Hoyle, Doug

Ruddock, Joan

Hughes, Robert (Aberdeen N)

Sedgemore, Joan

Hughes, Roy (Newport E)

Sheldon, Rt Hon Robert

Hughes, Simon (Southwark)

Sheldon, Sir William

Illsley, Eric

shersby, Micael

Ingram, Adam

Short, Rt Hon Peter

Janner, Greville

Short, Clare

Jessel, Toby

Skinner, Dennis

Johnson Smith, Sir Geoffrey

Smith, Dennis

Jones, leuan (Ynys Mdn)

Smith, J. P. (Vale of Glam)

320

Snape, Peter

Vaughan, sir Gerard

Spearing, Nigel

Wallace, James

Speller, Tony

Walley, Joan

Stanbrook, Ivor

Wardell, Gareth (Gower)

Steel, Rt Hon Sir David

Watson, Mike (Glasgow, C)

Steinberg, Gerry

Welsh, Andrew (Angus E)

Stokes, Sir John

Welsh, Michael (Doncaster N)

Stott, Roger

Wigley, Dafydd

Strang, Gavin

Wilkinson, John

Straw, Jack

Williams, Rt Hon Alan

Sumberg, David

Williams, Alan W. (Carm'then)

Summerson, Hugo

Winnick, David

Taylor, Mrs Ann (Dewsbury)

Winterton, Nicholas

Taylor, Rt Hon J. D. (S'ford)

Wise, Mrs Audrey

Taylor, Sir Teddy

Wray, Jimmy

Thompson, Jack (Wansbeck)

Young, David (Bolton SE)

Thompson, Patrick (Norwich N)

Thorne, Neil

Tellers for the Ayes:

Thornton, Malcolm

Mr. Frank Haynes and

Trimble, David

Mr. Jimmy Dunnachie.

NOES

Campbell, Menzies (Fife NE)

Gorman, Mrs Teresa

Tellers for the Noes:

Kirkwood, Archy

Mr. Alun Michael and

Mudd, David

Mr. Dennis Turner.

Question accordingly agreed to.
Mr. Speaker: Who will prepare and bring in the Bill?
Mr. Ray Powell: Mrs. Ann Winterton, Sir Bernard Braine, Sir Patrick Duffy, Mr. Patrick Cormack, Mr. Donald Anderson, Mr. Ivor Stanbrook, Mr. Alun Michael, Mr. Michael Alison, Mr. A. J. Beith, Mr. leuan Wyn Jones, Mr. James Wallace, and myself, Sir.
Mr. Speaker: Order. I believe that an hon. Member who voted against the Bill was included amongst the sponsors. In that case, his name will have to be withdrawn as a sponsor of the Bill.
Bill ordered to be brought in by Mr. Ray Powell, Mrs. Ann Winterton, Sir Bernard Braine, Sir Patrick Duffy, Mr. Patrick Cormack, Mr. Donald Anderson, Mr. Ivor Stanbrook, Mr. Michael Alison, Mr. A. J. Beith, Mr. Ieuan Wyn Jones, and Mr. James Wallace.

SHOPS (AMENDMENT)
Mr. Ray Powell accordingly presented a Bill to provide for certain descriptions of shops in England and Wales to be open for trade on Sunday, subject to their being registered with the local authority; to impose a general prohibition on the opening on Sunday of other shops, extending this prohibition to certain business premises which on week-days are open for the service of customers; to provide protection for persons employed in or for the purposes of a shop which is, or is to be, registered for Sunday opening, where they have conscientious or other objections to working on Sunday; to make consequential and other repeals in the Shops Act 1950; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 21 February and to be printed. [Bill 56.]
Mr. Bob Cryer: On a point of order, Mr. Speaker. The right hon. Member for Mitcham and Morden (Mrs. Rumbold) has always intimated that, if a clear decision was reached over the question of Sunday trading, she would be prepared to take action. A clear decision has now been made. I therefore hope that you will

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encourage both the right hon. Lady and the Attorney-General to come to the House and make statements to the effect that legal action will be taken against those people who are flouting the law on Sunday trading.
Mr. Speaker: In order that no one outside the House is misled about this matter, it is right that I should remind the whole House that the motion was one seeking leave to bring in a Bill.
Mr. Alun Michael: On a point of order, Mr. Speaker. If I heard you aright during the course of the presentation of his Bill by my hon. Friend the Member of Ogmore (Mr. Powell), you commented that, by voting against the Bill, a Member would be unable to continue as a sponsor. Obviously one accepts your ruling on that matter, as on all other matters. May I point out, however, that both I and my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner), who are vice-chairman and chairman respectively of the Cooperative group of Members of Parliament, acted as tellers in order to give the House the opportunity to test the wish of the House. I hope that the Government will have heard that voice clearly and loudly today.
Mr. Speaker: All I can say to the hon. Member is that, if he voted against the motion, he cannot then say that he is for it. [Interruption.] The whole House will draw its own conclusions.
Mr. Bruce Grocott: On a point of order, Mr. Speaker. As you rightly said, what the House has decided today is simply to give leave for the Bill to be introduced. However, in view of the overwhelming majority in favour of the Bill—indeed, the complete absence of any significant opposition to it —and bearing in mind the fact that only about six or eight weeks of this Parliament are left, may I ask you whether discussions could take place that would enable the Government to introduce legislation, for which they now know that they have the overwhelming support of the House, so that the Bill introduced by my hon. Friend the Member for Ogmore (Mr. Powell) can become law as rapidly as possible?
Mr. Speaker: In view of what the hon. Member for Cardiff, South and Penarth (Mr. Michael) has just said, the case is somewhat weakened.

Autumn Statement
Mr. Speaker: Before I call the Chancellor of the Exchequer to move the motion, I must announce to the House that I have selected the amendment in the name of the Leader of the Opposition. In view of the late start and the large number of right hon. and hon. Members who wish to participate in the debate, I propose to put a limit of 10 minutes on speeches between 6 o'clock and 8 o'clock. I hope that hon. Members who are called before or after that time will bear that limit in mind, so that every right hon. and hon. Member who wishes to participate may do SO.
4 pm
The Chancellor of the Exchequer (Mr. Norman Lamont): I beg to move
That this House approves the Autumn Statement presented by Mr. Chancellor of the Exchequer on 6th November 1991; notes that the Government has continued to maintain firm control over public expenditure, while honouring its commitments in full and increasing spending in priority areas; and congratulates the Government on its sound and prudent economic policies, which have led to a substantial reduction in inflation and have laid the foundations for sustainable recovery.
It is now a little over two months since I delivered my autumn statement to the House, and I welcome today's opportunity to debate the economic policies and prospects that I set out at that time. We also have the Treasury and Civil Service Select Committee's informative report on the autumn statement, and I should start by paying tribute once again to my right hon. Friend the Member for Worthing (Mr. Higgins) for his skilful chairmanship of that Committee.
In the autumn statement, I announced a programme of public spending which channels money to areas of long-term priority within an overall total for public expenditure that the country can afford. The Labour party offers instead an economic strategy that would raise spending indiscriminately and give the British people a bleak combination of higher inflation, higher interest rates and higher taxes.
Mr. Harry Ewing: Will the right hon. Gentleman give way?
Mr. Lamont: I shall give way in a moment.
Today's debate is about the choice between the prudent long-term economic policies that we have put in place—policies that will lead to sustained and sustainable recovery—and the tax and spending policies of the Labour party, which would stop that recovery in its tracks.
Mr. Ewing: Will the right hon. Gentleman give way?
Mr. Lamont: I shall give way in a moment. I first want to make a statement to the House.
I set out in the autumn statement the Government's view of the immediate prospects for the economy. As I have already acknowledged on several occasions, output in the second half of 1991 has turned out weaker than I anticipated then. The signs of recovery, apparent in sales and production figures as well as in confidence indicators in the late summer, were not sustained. That, of course, is disappointing but there remain good grounds for believing that the recovery will become firmly established in the course of 1992.

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It has been said before, but it is worth emphasising again, that monetary policy operates with a time lag. The full effects of the reduction in interest rates from 15 per cent. to 10.5 per cent. have still to work through to businesses and individuals. The further mortgage rate cuts announced last week will mean that the monthly repayments on a £60,000 mortgage have fallen by nearly £200 a month from their peak. The temporary removal of stamp duty for house purchases under £250,000, and other measures that I announced in December, will provide a further welcome stimulus to the housing market.
Inflation has fallen dramatically over the last year, to a level clearly below the European Community average. Producer price inflation, excluding food, drink and tobacco, which is a good predictor of future retail price inflation, fell in December to 3.8 per cent. In the fourth quarter, the annualised rate was only 2.3 per cent., the lowest rate since 1973. That is excellent news. Low inflation makes British goods more competitive, and provides the stability and certainty that businesses and individuals need to save and invest.
Because inflation has fallen rapidly, the real incomes of those in work in this country are rising, unlike the position in the United States. There is no shortage of potential demand: indeed, there is considerable pent-up demand in the economy. There are always uncertainties about timing, but what is certain is that this rise in incomes will, in time, feed through to a rise in spending.
Fourthly, world stock markets, especially in the United States, are clearly anticipating economic recovery.
Fifthly, even in difficult circumstances, tens of thousands of people are still setting up their own businesses. The fact that so many new businesses are being set up shows that the entrepreneurial spirit that we nurtured in the 1980s still thrives. This reflects continued long-term optimism about the prospects for the British economy.
Finally, and perhaps most important, many manufacturers and retailers are responding in exactly the right way to weak demand by cutting prices and costs. Far from that being bad news, lower prices in the stores mean higher output and lower inflation. That is good news for consumers and for recovery, but recovery comes not, as the Labour party believes, from Governments trying to kick-start the economy but from businesses being more competitive.
Mr. Harry Ewing: I am grateful to the Chancellor for giving way so early in his speech, because my intervention may help to set the context in which his speech is delivered. When he has shown how wrong he was in his forecasts, backed up by all the paraphernalia of the civil service and the forecasting material at his disposal, why should the people of this country believe a word he says about the Labour party's spending proposals? Is the right hon. Gentleman aware that he now sounds very much like the Gerald Ratner of British politics?
Mr. Lamont: I am grateful to the hon. Member for inviting me to comment on and show why I am suspicious of the Labour party's spending proposals. I shall not disappoint him. I shall answer his question when I come to that.
Mr. David Winnick: Last year, we were told that recovery would come in the second part of 1991. On the Chancellor's own admission, that has not
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occurred. Is he telling the House that a recovery will take place in 1992, and why should the country believe him? Is that why the Secretary of State for Education and Science and the Tory party chairman are so hesitant about holding an election on 9 April? Is it true that the Government are so terrified of facing the electorate that some Ministers want to wait as late as July?
Mr. Lamont: I have just spelt out —apparently, the hon. Gentleman was not listening—why I believe we shall see a recovery in 1992. That view accords with that of the Organisation for Economic Co-operation and Development, which predicts that, in 1992, the British economy will grow by 2 per cent.—faster than Germany and as fast as France and Italy. Not only the Government but other organisations take an optimistic view of Britain's prospects in 1992.
I know very well that many businesses are continuing to face difficult conditions, but while the recovery has not yet become firmly established, it is clear that the foundations are in place.
The narrow definition of money—M0—has moved into the top half of its target range. Manufacturing investment—about which the right hon. and learned Member for Monklands, East (Mr. Smith) is always talking—rose in the third quarter. Imports of raw materials are rising. The rate of increase of unemployment has fallen sharply. The increase in the last quarter of 1991 was little more than a third that of the first quarter.
Mr. Bruce Grocott: Always look on the bright side.
Mr. Lamont: The hon. Gentleman says, "Always look on the bright side", but unlike the hon. Gentleman, who has made it clear again and again that he has a vested interest in making the gloomiest and most dismal—
Several Hon. Members rose—
Mr. Speaker: Order. I call the Chancellor.
Mr. Lamont: I give way to the hon. Member for The Wrekin.
Mr. Grocott: I am grateful to the temporary Chancellor for giving way. We are interested not in looking on the bright side or on the gloomy side but in looking at the truth.
Mr. Lamont: Sometimes that commodity is used more sparingly than on other occasions.—[Interruption.]
Mr. Speaker: Order. I have already said that there is great pressure to participate in the debate, so let us now get on.
Mr. Lamont: The car industry has faced especially difficult conditions, but has shown remarkable resilience in switching production to export markets. Production for export in 1991 was up nearly a half on the previous year, and car production overall rose 12 per cent. in December. Commercial vehicle production which has faced similar problems has been switching from domestic to export markets, and export production is at its highest level since 1980.
Nothing could say more about the underlying strength of the British economy and the skills of British workers than Nissan's decision last week to invest another £200 million in its plant in Sunderland. That will make the

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Nissan plant the largest Japanese investment in Europe. It will bring another 600 jobs to the north-east with more to come through orders from suppliers. It is not only Japanese investors: yesterday's survey from the German Chamber of Industry and Commerce in the United Kingdom showed that Britain is the most favoured location for German investment in Europe.
All over the country, British exporters have continued to perform well. Our share of world trade in manufactured goods has risen for three years in a row, for the first time in decades. Our exports are at record levels. This achievement is all the more impressive given the weakness of economic growth throughout the industrialised world. The Opposition, we notice, have a deliberate policy of ignoring the rest of the world. They claim that recession here has nothing to do with what is happening in the United States or elsewhere. Of course that is nonsense. We have seen recession in many countries.
Last year, even Germany saw two quarters of falling gross domestic product—technically a recession. Growth has slowed in Japan and France. In the United States, the effects of the recession have lingered on despite the fall in interest rates to their lowest level in a quarter of a century. In addition to that in the United States, there have been recessions in Canada, New Zealand, Australia, Sweden and Switzerland.
I have always stressed that unemployment is likely to continue to rise for some time. I do not underestimate the hardship that that causes to individuals and families, but the right hon. Gentleman the leader of the Opposition seems to think that unemployment is an affliction peculiar to Britain. Unemployment is rising in most Community countries. Last month, unemployment rose by 30,000 in France and by 290,000 in the United States. In France, it is now over 2 million. In Australia, it is at the highest level since the war. Therefore, hon. Gentlemen cannot ignore the fact that these issues are common to many countries.
Mr. Giles Radice: At the Select Committee hearing on last year's Budget, the Chancellor told me in answer to a question that the main cause and origin of the recession was the Government's response to a too rapid rate of growth.
Mr. Lamont: The hon. Gentleman is not quoting me precisely. The point that I am making is that the reason that the outlook—[Interruption.] I am about to come to domestic factors. My point is —any person would have to admit this—that the international climate has undoubtedly been deteriorating. For an exporting country such as ours, that has a major impact on the economy.
Mr. Neil Kinnock: While we are on the subject of admissions, will the right hon. Gentleman acknowledge that, out of every seven jobs lost in the European Community last year, five were lost in Britain, under his Government?
Mr. Lamont: As the right hon. Gentleman knows, the figure that he has given is gross. I have pointed out to him that unemployment has risen in a number of other European countries. The latest three-month on three-month figures on rises in unemployment show that, in the past three months, it has risen more quickly in several other countries than it has here.
Several Hon. Members rose—
Mr. Lamont: No, I should like to press on.
I know very well that times are difficult for business, but industrial production in Britain has fallen by less in the past year than industrial production in Canada, Italy, Belgium, Sweden or Australia.
Although the December fall in retail sales was disappointing, in this country sales were still higher in the last quarter than they were a year ago. Retail sales in Canada are down 10 per cent. on a year ago, and they are down in Italy, too. In the United States, the retail sales figures were the worst for 20 years.
It is pure folly to imagine, if one were ever tempted to do so, that we in Britain can isolate ourselves from the world economy. Economic conditions in other countries affect us directly, through the level of demand for British products abroad, but also indirectly through the effects on confidence. That in turn further affects domestic demand and output.
Of course, as the hon. Member for Durham, North (Mr. Radice) has said, domestic factors have also been at work. The most important of those is the sharp rise in the savings ratio in the course of the recession. Many individuals, having incurred large debts in the late 1980s, have chosen to repay those debts and, indeed, to build up their savings rather than to spend money on consumer goods.
In the short run, manufacturers and retailers have suffered as a result of weaker consumer demand. But it is not the business of Government to tell individuals that they should be spending rather than saving. In this country there has for a long while—quite rightly—been concern that our level of national savings has not been high enough. For too long, we have relied on house price inflation to do our saving for us. In the long run, an increase in real, genuine savings will help to finance investment, to reduce real interest rates and to strengthen the economy. That means that the recovery will be stronger and more soundly based.
Mr. A. J. Beith: Clearly, the Chancellor of the Exchequer genuinely believed that, by this time, consumers would be spending more money—that the pent-up demand of which he has spoken would have been released so as to start the economy moving again, and that that would lead the recovery. Why, does he think, have consumers not had the confidence to go into the shops and spend money? What does that reluctance say about Government policies?
Mr. Lamont: I have already said that one would not normally expect monetary policy to have had it full effect—for instance, the considerable loosening of policy that occurred between February and July last year. I am sure that the hon. Member for Berwick-upon-Tweed (Mr. Beith) is not suggesting this, but it would be absurd to suggest that, because output does not follow a predicted path from one quarter to another, the thrust and direction of policy should be changed, or that policy is wrong.
Good management of the economy has nothing to do with changing policy in the futile pursuit of each month's passing statistic. Good management is about getting the policies right and sticking to them. That is what we have done, and that is what we will continue to do.
We must, of course, be realistic and open about this recession. It has caused much hardship. However, it is not

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realistic to talk, as Opposition Members do, about a never-ending recession. It is positively irresponsible and shows that they will stoop to any depths to gain power and to try to frighten the British people. In the past few months, the Labour party has certainly succeeded in frightening the British people, but it is the Labour party of which the British people are frightened, because they know perfectly well that the one thing that could mean a never-ending free-fall recession is the advent of a Labour Government.
As this autumn statement has demonstrated once again, we are the only party that can keep public spending and taxation under control. Inevitably, the recession has added to the pressures both on public spending and on tax revenues. Weaker than expected activity in the second half of last year will mean that those pressures are even greater than anticipated in the autumn statement.
I shall present my Budget to this House on 10 March. The House would not expect me to anticipate my Budget, but I can tell the House that we will continue our prudent stewardship of public finances, in contrast to the reckless promises of the Labour party.
The right hon. and learned Member for Monklands, East likes to pretend that he has some alternative policy. For months, as we were lowering interest rates cautiously and carefully, he said they should be lower. Whatever the state of the economy, Labour's refrain has been the same—[Interruption.]
Mr. Speaker: Order. I ask the House to settle down. This is a very important debate, and many right hon. and hon. Members wish to participate. Interruptions do not make it easier for them to do so.
Mr Lamont: Whatever the state of the economy, the right hon. and learned Gentleman's policy has always been the same. Whatever the level of interest rates, he has always argued that they should be lower. Even in 1987 and even in 1988, right at the top of the boom, the right hon. and learned Gentleman advocated that interest rates should be lower. We all know where we should be if we had followed his policy. Today, inflation would be higher and the recession would be deeper.
The right hon. and learned Gentleman has been rumbled. Now he is trying to give the impression that he would not devalue the pound. He has been forced to admit that he could not cut interest rates. He has lost his only policy, so what does he call for now? He calls for a change of course—a new direction. He parrots the phrase. But what is this change of course—[Interruption.)
Mr. Speaker: Order. This gives a very bad impression—[HON. MEMBERS: "Oh."] I mean the reaction of the House.
Mr. Lamont: We all know that the last thing the Labour party wants is for any attention to be focused on its policies. That is the one thing that it cannot bear.
The right hon. and learned Member for Monklands, East has repeatedly in debate called for a fresh approach, a new policy and a change of course, yet in speech after speech we have not had the slightest sign or demonstration of what that policy is meant to be.
In the previous debate on the autumn statement, I asked the right hon. and learned Gentleman this question: if he did not disagree with monetary policy, what did he think about fiscal policy, about spending and about
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borrowing? I asked him then if he thought that public spending was too high, too low or just about right. I asked him whether he thought that borrowing was too high, too low or just about right, and he did not answer. What the right hon. and learned Gentleman lacks in frankness he makes up for in evasion.
Mr. Dennis Skinner: Will the Chancellor admit that, this time last year, he forecast that there would not be a budget deficit? We are now running into the possibility in 1992 of a deficit of the order of £19 billion. On top of that, when the Government came to power in 1979, personal debt on average was 45 per cent. The latest figure is 102 per cent. That figure will haunt the Government for ever.
Hon. Members: Hear, hear.
Mr. Lamont: The House will have noticed the cheers that the hon. Gentleman was getting from his Back-Bench colleagues. Perhaps that is because he is one of 25 hon. Members who signed an amendment to the motion, rejecting the market economy, calling for a fully socialist policy and disagreeing totally with the policy advocated by the Front Bench of his party.
Mr. Skinner: Answer.
Mr. Lamont: I will answer. For all his austerity, the hon. Gentleman has quite a few contacts with the City, but he does not seem to be well informed. No such prediction was made in the Budget last year. The hon. Gentleman has got it totally wrong.
To return to the right hon. and learned Member for Monklands, East, he is caught between the massive spending plans of his shadow Ministers and his wish to appear to be in a position to deny that a Labour Government would put up taxes, but he does not seem to be having much success with his colleagues.
Let me turn now in detail to public spending, the subject of the debate. On the programme for each Department, we have set out our spending plans for the next three years. On each of those, Labour promises to spend more. I hope that today the right hon. and learned Gentleman will tell us which of Labour's promises we should believe and which are just empty words.
Let me start with social security. In the autumn statement, I announced that provision for social security in 1992–93 would rise by £4.25 billion, to over £70 billion. That is a massive sum and a massive increase. We have honoured our commitments to the old, the disabled and the jobless. We gave extra help to the poorest disabled pensioners and those over 80. Unlike the Labour party, we did not use an economic downturn as an excuse to break our promises to pensioners.
But all that is not enough for the Labour party. Indeed, on 30 September last year the right hon. and learned Gentleman said:
"And of course that Labour Government will restore the link between retirement pensions and earnings and prices—whichever is the higher."
I noticed the right hon. and learned Gentleman nodding to confirm that. So much for the pledge that Labour has got only two specific pledges in its spending plans. We can see that not just the party but the right hon. and learned Gentleman himself does not believe in his policy.
The autumn statement demonstrated again that the national health service gets a better deal under this

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Government than it ever did under Labour. I announced an increase of £1.5 billion in United Kingdom spending on the NHS; for the hospital and community health services, the real increase in spending planned between this year and next is 5 per cent.
In 1992–93, we will be spending a greater share of national income on the health service than ever before—more than half as much again in real terms as in 1979. That has given more doctors, more dentists, more nurses, more midwives and more patients being treated. In addition, we are investing for the future of the health service because capital spending is three quarters as high as it was under the Labour Government.
All that is not enough for the Labour party. The hon. Member for Livingston (Mr. Cook) was reported on one occasion as saying that he would pour money into the health service. On 23 September last year, he said:
"We are going to restore the underfunding of the NHS."
On 21 October, he said:
"in the first year we shall start to tackle underfunding".—[Official Report, 21 October 1991; Vol. 196, c. 673.]
How much would he spend—£3 billion, £1 billion, or nothing? Is it a pledge—it sounds like a pledge—or is it just empty words?
Despite the recession, we have maintained British Rail and London Regional Transport's massive investment programmes. I announced an increase of £1.4 billion in Government finance, enabling them to maintain an investment programme of more than £2½ billion in 1992–93—three times as much as in 1979. Over the next three years, they will be investing half as much again in real terms as in the past three years.
But again that is not enough for the hon. Member for Kingston upon Hull, East (Mr. Prescott). On 22 April 1991, he said:
"the Government have the overriding responsibility to see that there is a high-speed rail link from the tunnel not only to London but to areas beyond—the midlands, the north, Wales and Scotland?"—[Official Report, 22 April 1991; Vol. 189, c. 760.]
He said nothing about having only two pledges on child benefit and taxes and about everything being optional. Are we to take those words at face value or not? Are those words a pledge? They sound like a pledge. Are they a pledge, or are they just empty words designed to deceive the electorate?
Opposition Members go on and on about education and training, but when will they look at the facts? Next year, we are providing for a real-terms increase of 15 per cent. in Government support for maintained schools. We have more students in higher education than ever before —one in four, compared with one in eight when the Labour party was in power. Again, it is not enough for the Labour party, and it is not enough for the Leader of the Opposition. In October 1991, he said:
"If that level of expenditure"—
he was talking about the proportion of GDP spent on education in 1979—
"had been maintained, an extra £2.6 billion every year would be going into education. We will continue with the scale of commitment at least at the levels of 1979."
Again there was nothing about having only two pledges. Is that a pledge, is it a firm promise—it sounds like it; it is calculated to be like it—or is it just empty words?
We announced that the overseas aid budget would increase by 2 per cent. in real terms. Again, that is not
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enough for the right hon. Member for Manchester, Gorton (Mr. Kaufman). He was not worried about things being phased in over the next Parliament or over two Parliaments. On 3 October 1991, he said:
"During our first Parliament we shall increase Britain's aid budget to the United Nations' target of 0.7 per cent. …That is a firm commitment, costed and clear, that I pledge our Labour Government will carry out."
Again, that sounds like a pledge, but the Labour party says that it has only two pledges. Is it a pledge, or is it just empty words?
Yesterday, my right hon. and learned Friend the Chief Secretary showed that the bill for Labour's spending plans has now risen to an astonishing £37 billion over and above the public—[Interruption.]
Madam Deputy Speaker (Miss Betty Boothroyd): Order. Barracking does not improve the quality of our debates.
Mr. Lamont: We all know that the Labour party simply cannot take any examination of its policy—it simply cannot. The Labour party has made—I quoted them today and there has been no intervention by Opposition Front-Bench Members—what sound like specific promises. Those promises add up to £37 billion. We have repeatedly challenged Labour Members either to drop those spending pledges or to tell the country what taxes they would put up to pay for them, but they have not responded.
Mr. Tony Benn: Is the Chancellor aware that, because of unemployment, each day 3 million working days are lost from production, and that the cost of benefit and lost production put together is probably about £50 billion a year?
Any proposal to expand production will be self-financing. [Interruption.] Of course it will. That is exactly how the rearmament programme before the war brought full employment back to Britain, after a slump under Neville Chamberlain as serious as the one that the Chancellor has engineered in this country.
Mr. Lamont: The right hon. Member for Chesterfield (Mr. Benn) in recent debates has made some telling contributions, but I am afraid that that is not one of them. It is a sheer fallacy to think that any public expenditure measure can be justified simply because it would create jobs and be self-financing. We have heard that many times before, but I am afraid that it does not work like that.
Hon. Members opposite have refused repeatedly to respond; perhaps we shall hear from the right hon. and learned Member for Monklands, East something about this today.
These plans have huge implications for taxation as well, although the Labour party has been a little more forthcoming than at first about its tax plans. It promised to raise the marginal rate of tax for the better-off to 59 per cent. I am not sure what it thinks that will do to house prices in the south-east, about which we will no doubt hear so much from the right hon. and learned Gentleman in a minute.
Labour Members promised to hit everybody earning more than £390 a week with a full extra 9 per cent. on national insurance contributions. That will hit not just those earning more than £20,000 a year but anybody

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whose earnings go over £390 in a week, perhaps because of overtime: they will be penalised by the tax proposed by the Labour party.
Despite their professed concern for investment, Labour Members promise to introduce a new 9 per cent. tax on savings income. They still call income from savings "unearned income", and they are determined to tax it as heavily as possible. The whole country knows, and we know, that the Labour party is the party of high taxation.
We saw in The Sunday Times—a quality newspaper that I read very carefully —an Access opinion poll which revealed that 57 per cent. of hon. Members on the Benches opposite want to put the basic rate of tax up by 2p. We also heard the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) admit in a broadcast the other day that he did not think that 83 per cent. was a penal rate of tax. Both those things reveal the attitudes of the party opposite.
We thought that we knew what Labour was promising on taxes, but now all seems to be in confusion after the Leader of the Opposition's famous dinner at Luigi's. I do not know if it was the effect of the frascati, but the right hon. Gentleman seems to have been in expansive mood. The dinner certainly cost a lot. It has cost Labour its last slender vestige of credibility on taxation. The truth is that Labour knows that it will have to increase tax and national insurance to pay for its extra spending. Even if it was able to phase in the increases, the phasing in would make no difference. In the end, the taxes would go up—and everyone knows it.
We were told by the right hon. and learned Member for Monklands, East that all this was going to happen, and happen immediately. Now we are told that the right hon. and learned Gentleman is furious with his leader—again according to that reliable paper, The Sunday Times. I am not surprised about the right hon. and learned Gentleman, because his credibility has rested on creating the impression that they had only two spending plans and that those plans could be financed simply out of the increases in national insurance and the higher rates of tax.
The priority package of the right hon. and learned Member for Monklands, East is in ribbons, and not just because the Leader of the Opposition wants to delay the tax increases to pay for it. The right hon. and learned Gentleman himself has also bungled it, because, on top of the two specific pledges which he keeps saying are their only ones, he has added £1 billion for training as an immediate package for industry. So the right hon. and learned Gentleman simply cannot say that they can finance their child benefit and pension increases and the industry package out the tax measures that they are proposing and at the same time postpone the introduction of those tax increases.
Mr. John Smith: Perhaps the Chancellor will refresh my memory. I do not know whether it was in The Sunday Times, but he claims that his credibility is much greater than mine. Why is that not reflected in the opinion polls that appear in newspapers?
Mr. Lamont: Powerful and persuasive though the right hon. and learned Gentleman is, he does not seem to have been very successful, because polls show that eight out 10 people think that a Labour Government would put up taxes.
Mr. Smith: If the Chancellor has such an outstanding economic record, and if I am so incredible, can he explain why he is so badly regarded by the public in every opinion poll?
Mr. Lamont: I am sure that the right hon. and learned Gentleman puts that question to his right hon. Friend the Leader of the Opposition all the time. The right hon. and learned Gentleman used the phrase "credibility gap". The Labour party does not have a credibility gap: it has a credibility chasm.
I hope that the right hon. and learned Member for Monklands, East will answer some questions today. Where is the money coming from? What is the order of priorities? How does Labour plan to build up the supply side? How would Labour cope with a flood of public sector wage claims? How serious is Labour on inflation? Those questions, which some hon. Members may recognise, are very good questions, not because they come from me; they were raised by the hon. Member for Islington, South and Finsbury (Mr. Smith) in a slim volume that was wistfully entitled, "Awkward Questions: Random Thoughts."
The hon. Member wrote that two years ago, but the Labour party has still provided no answers. Labour does not have an alternative policy; it simply has alternative presentation. Behind the lawyer's patter of the right hon. and learned Member for Monklands, East, he knows that he is defending a guilty party that is misleading the country. We know it, Labour knows it and, increasingly, the whole country knows it as well.
In the autumn statement, I announced a programme of public spending which the country can afford, designed to meet the needs of those areas that we see as the highest priority. I set out the economic policies that we have put in place that will provide the ground for a sustained, non-inflationary recovery—a real recovery, not the kind of sham recovery that we saw in the 1960s.
Some people say that there is not much difference between the policies of the two parties. However, some people are wrong. There is a vast divide between us and the Labour party on economic questions, in particular on taxation and public spending. We await the answers from the right hon. and learned Member for Monklands, East today. There is no doubt that he would increase spending rashly, indiscriminately and unaffordably, inevitably leading to the higher taxes that Labour Governments always introduce—higher taxes, higher interest rates and higher borrowing. All that would stop the recovery in its tracks.
We commend our spending proposals to the House with the confidence that they are realistic, affordable and clear. No such description can be applied to the spending explosion foolishly promised by the Labour party. That is why the House should endorse our plans and reject the amendment.
4.44 pm
Mr. John Smith: I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:
"declines to approve the Autumn Statement; deplores the continued mismanagement of the economy, which has plunged all parts of the nation into a deep and damaging recession, causing unprecedented and avoidable levels of business failures and rapidly rising unemployment; regrets the errors that are already apparent in the Government's

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forecasts for the economy made in the Autumn Statement; condemns the failure of the Government to invest in the economic infrastructure and vital public services; and calls upon the Government to promote an investment-led 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.'."
As today's debate proceeds, it might be necessary to remind ourselves continually that it is about the autumn statement which was produced by the Government last November. That statement did two things: it provided the Government's assessment of the economic prospects for 1992, and it outlined the Government's spending plans for the forthcoming year. We have already heard the Chancellor attempt to divert attention from the Government's economic record and their totally inaccurate forecasts. No doubt that tactic will be pursued relentlessly today and in the period ahead.
Conservatives want political debate in this country to feature on almost everything except their economic record. One can of course understand their motivation for that, particularly with regard to the autumn statement.
Let me remind the House of the forecasts that the Chancellor made in his autumn statement in November. He told the House that he expected GDP to rise by 0.75 per cent. in the second half of 1991. He said that growth in 1992 would rise by 2.25 per cent. He said:
"The increase in output from the second half of this year"
that is to say, 1991—
"to the second half of the next is expected to be 2¾ per cent." —[Official Report, 6 November 1991; Vol. 198, c. 453.] He claimed that growth from July 1991 to the end of June 1992 would be approaching 3 per cent. [Horn. MEMBERS: "No."] He did. There can be no question about it. The Chancellor said that very clearly on 6 November and I have quoted his exact words from Hansard. It is absurd to claim that growth would be nearly 3 per cent. between July 1991 and June 1992. It is right that that should be exposed today.
We are now in January 1992, more than halfway through that projected year. Where is the 3 per cent. growth? We are still declining and not expanding. It is now abundantly clear that all those forecasts, particularly the last one to which I referred, were rubbish.
In the light of the undisputed facts about the British economy, in particular the absense of growth in an economy which, in 1991 shrank by 2 per cent., it is astonishing that the Chancellor claimed on 6 November, when the forecasts were produced, that he was "realistic and cautious".
We all know what he was doing when he spoke to the House last November. He was doing one simple political task: he was creating a mythical economic scenario for a November election. That is what he was up to when he gave the House those figures.
Unfortunately for the Chancellor's reputation as an economic forecaster, the Prime Minister let him down by not having a November election because he ran away from the prospect of facing the electorate. We are now in January 1992, more than halfway through the economic year in which 3 per cent. growth was predicted. As we know, the economy is stagnant. At the very best, we are bumping along the bottom.
Mr. Tony Marlow: I am an admirer of the right hon. and learned Gentleman. We share certain objectives. He would like to see manufacturing industry expand and succeed to promote growth in the economy. How would the right hon. and learned Gentleman achieve that if, at the same time, he seeks to introduce swinging tax increases on managers and entrepreneurs and also introduce a tax on savings? How will he achieve investment in manufacturing industry on that basis?
Mr. Smith: May I ask the hon. Gentleman for a small favour? I should like him to keep his professed admiration for me to himself for some time. In the forthcoming election I could do without it.
The hon. Gentleman said that if I were Chancellor I would introduce swinging tax increases. Let him reflect that under Labour the top rate of tax—even adding tax and national insurance together—would be lower than the rate that was in force until March 1988 under a Conservative Government.
Mr. Marlow rose—
Mr. Smith: I am tempted to give way again, but if I were to do so I might encourage the admiration that I wish to stop.
Mr. Robert Adley: The right hon. and learned Gentleman has referred to the rate of direct taxes that applied in 1988. Presumably he is familiar with the Laffer curve. Is not it true that since the direct tax reductions of 1988 there has been a substantial increase in the tax take? In contrast, when his party was in government higher direct taxes produced a lower tax take. What on earth can he say to the British people to make them believe that what happened under the last Labour Government and what has happened under the present Government during the last two or three years would miraculously be reversed?
Mr. Smith: Let me make it quite clear that I have never accepted any economic propositions to the effect that if one constantly reduces tax rates one will constantly increase tax revenue. That seems to me to be an inherently absurd proposition. [Interruption.] Hon. Members must allow me to reply to the question. The reason for the higher-tax band figures is that well-paid people have received huge salary increases. We know perfectly well that the Government invited the late Professor Charles Brown to investigate the connection between tax and incentives. Professor Brown, whose investigation was financed by the Treasury, came to the conclusion that there was no reliable connection between the two things. With respect to the hon. Gentleman, I say that the professor probably knew a little more about this than he does.
Mr. Peter Thurnham: Can the right hon. and learned Gentleman say exactly how he would fund the increases in pensions and child benefit that he has promised— not to mention the rest of the £37 billion—if he were to phase in his tax bombshell?
Mr. Smith: I shall come to that matter. The hon. Gentleman knows perfectly well that we have proposed tax changes that would more than cover our promises in respect of pensions and child benefit.
I must get back to the autumn statement. I am quite happy to answer hon. Members' questions—
Mr. Patrick Nicholls rose—
Madam Deputy Speaker: Order.
Mr. Smith: I shall give way to the hon. Gentleman as he seems to be hailing me.
Mr. Nicholls: If right hon. and learned Gentleman were to be so generous on future occasions I should hail him more often.
The right hon. and learned Gentleman denied that his party would introduce swingeing tax increases. Is not he aware that Labour's stated intention to tax savings income in excess of £3,000 would hit 750,000 people who are basic-rate taxpayers? In those circumstances, how on earth can the leader of his party say that his tax proposals will not affect people earning less than £20,000 a year?
Mr. Smith: The hon. Gentleman does not seem to realise that the purpose of our changes is to treat unearned income and earned income in exactly the same way. That is a first-class principle that should apply to all tax systems.
I really must get back to the autumn statement. The Chancellor, in introducing that statement, sought to justify his claims, which I believe were ridiculous. He sought to rebut my challenge that his forecasts were incredible by saying:
"What the right hon. and learned Gentleman ignored was the fact that our forecasts are in line with those of independent organisations".—[Official Report, 6 November 1991; Vol. 198, c. 456.]
Let us look at what independent forecasters are saying. In Consensus Forecasts of 1992, which usefully brings together the data from 34 different independent British forecasting organisations, growth for the whole of 1992 is predicted to be 1.4 per cent. So let there be no doubt that the autumn statement's assessment of the British economy is so absurd that it should be withdrawn and fed into the Treasury shredder—an over-worked machine that is well used to pulping reams of bogus forecasts made by the present incompetent Government.
Anticipating the inevitable downgrading of his estimates, which he had to make today and will have to make in his Budget statement on 10 March, the Chancellor took the opportunity of an early-morning slot on TV-am to begin the process of his tortuous recantation. The risk, of course, was that he would appear to be a dismal Johnnie —"dismal Johnnie" being a phrase which appeared in the press release of the Prime Minister's recent speech to Newcastle business men but which, on delivery, was changed to "moaning Jimmy". The Chancellor had little choice but to accept what the nation knew only too well and to admit to David Frost
"The forecast I made at the time of the autumn statement will prove to have been somewhat over-optimistic."
Hard on the heels of the Chancellor, the Prime Minister himself appeared on TV-am last Sunday and conceded that the recovery that he said he had previously imagined had been delayed. Note the revealing choice of words: "imagined" and "delayed". The Prime Minister appeared to forget his own admonition against moaning Jimmys when, as a dismal Johnnie, he sought to downgrade the economic prospects for the world as a whole using the well-tried Conservative technique of blaming others. But we now know that the point at which a moaning Jimmy becomes a dismal Johnnie is when the Prime Minister appears on TV-am and admits that the recession will not be over before the general election.
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Despite the necessary backtracking in which both the Chancellor and the Prime Minister have been engaged, they have still not given up the addiction to producing bogus predictions about the British economy. Let us take the Prime Minister's most audacious effort to date. It occurred in that TV-am interview and was repeated yesterday in the House. In the interview he claimed:
"We are at a different stage in the cycle from many of our competitor countries, and I think we will come out of our difficulties earlier than them."
So that there may be no misunderstanding, let me quote the words that he used in the House yesterday at Prime Minister's Question Time:
"a number of European economies have either been in recession or are moving towards recession at precisely the moment when the United Kingdom economy is poised to come out of recession.—[Official Report, 21 January 1992; Vol. 202, c. 177.]
The Prime Minister's latest dodge is clearly to imply that as Britain was first into the recession it will be first out. But let us look at the latest available independent forecasts prepared by Consensus Forecasts, using 180 international forecasting institutions. These show that in 1992 Britain remains at the bottom of the G7 growth league. They even show that in 1993 we shall be at the bottom. The forecasts also confirm that the only other G7 countries to suffer a downturn in 1991 were Canada and the United States of America, which experienced declines of 1 per cent. and 0.5 per cent. respectively. This compares with Britain's decline of over 2 per cent.—more than twice as severe. Both of these countries are forecast to recover faster and earlier than the United Kingdom.
Let us look at the European Community, to which the Prime Minister referred yesterday. No single EC member, other than Britain, suffered a decline in gross domestic product in 1991, and the conclusion of the 180 forecasters is that in both 1992 and 1993 the only EC country with a worse projected growth rate than Britain is Greece. There never was, and there does not exist, any basis whatsoever for the Prime Minister's absurd proposition. The truth, as the objective facts reveal, is that Britain, first into recession under the Conservatives, would, under the Conservatives, be last out.
Mr. Norman Lamont: The right hon. and learned Gentleman is commenting on a forecast. It is astonishing that, even though he has it in front of him, he cannot read it accurately. When he looks at what he said, he may well find that it was a great deal of nonsense.
Mr. Smith: What was?
Mr. Lamont: What the right hon. and learned Gentleman alleged the forecast to be. Leaving that on one side, the figure that he forecast to June was not, in fact, to June but to December. He got it wrong; he never knows the details.
As I said earlier, what the right hon. and learned Gentleman said does not accord with the forecasts of the OECD, and neither does it accord with the views of the European Commission. In its latest European economy report, published in December, it states:
"The United Kingdom is the only country where signals of sustained economic recovery are discernible. By contrast, the tendency for a gradual slackening of growth continued in six countries—Germany, Spain, France, Italy, the Netherlands and Portugal."
That accords fully with what my right hon. Friend the Prime Minister said.
Mr. Smith: I could make the obvious point that, as all of the hon. Gentleman's previous forecasts were wrong, there is no need to believe this one. I assure the right hon. Gentleman that he said that, from the middle of one year to the middle of the next, the figure would be 2¾ per cent. If he did not say that, what was his prediction from the middle of that year to the middle of the next?
Mr. Norman Lamont: The right hon. and learned Gentleman is quoting the figure for the second half of this year on the second half of last year.
Mr. Smith: I shall give way again to the right hon. Gentleman if he will tell me what was his prediction from July 1991 to July 1992.
Mr. Lamont indicated dissent.
Hon. Members: Answer.
Mr. Lamont: It is all very well for hon. Members to shout, but they do not have the slightest understanding of these matters. The simple fact is that the forecast was expressed in terms of the second half of this year on the second half of last year. The right hon. and learned Gentleman has misquoted it, which must cast considerable doubt on almost everything else that he says.
Mr. Smith: We will look at the record and establish the facts. However, the right hon. Gentleman still has not told me what his forecast was from July 1991 to July 1992. I will give way again if he will tell me that. In the absence of a frank reply from the right hon. Gentleman, I shall move on —[Interruption.] I was not quoting what the right hon. Gentleman said in his statement, but what he said in the House.
It is not just in economic forecasts that we find the truth that belies Conservative propaganda, it is in the reality of our present economic experience; what is experienced every day by people in business. Unemployment in December rose yet again by 31,000, bringing total unemployment—on the Government's reckoning—to 2.54 million, a rise of more than 800,000 in the last year alone. Output is down once again, and home repossessions are occurring at the rate of 300 for every working day. In the last quarter of 1991, 995 business failures were occurring every week.
In case the Conservative party says that all that will come to an end, Mr. Philip Mellor of Dun and Bradstreet gave us the chilling news, in the Financial Times on 30 December, that
"The really worrying message … is that…well established companies as well as new ones are going to the wall."
He said that the position was getting worse. It is little wonder, therefore, that business confidence has slumped again, as reported by the Institute of Directors, the CBI, Dun and Bradstreet and The Engineer magazine, which reported on the serious problems of Britain's engineering companies.
One of the major reasons why there is so little confidence is that no one can have confidence in a Government who, year in and year out—and even from month to month—get it so badly wrong. The Chancellor has what might be called the opposite of the Midas touch. Every area of the economy in which he predicts a recovery goes in the opposite direction.
In the middle of last year, yet again on his favourite appearance venue of TV-am, he detected the now
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notorious vague stirrings of recovery in the housing market. As millions of home owners and the construction industry know only too well, that sector of the economy remains severely depressed. Indeed, as the industry's leaders tell us, it is in its worst condition for decades. According to the chairman of the Building Employers Federation— a gentleman who happens to be called Mr. John Smith, who is no relation but is clearly a reliable source—said in the Financial Times on 4 January:
"Construction output last year fell by between 8 and 10 per cent. and a further fall of at least 4 to 5 per cent. is likely this year."
So much for the vague stirrings of recovery in the economy.
Moving on from construction, the Chancellor applied his non-golden touch to the high street when he detected green shoots of recovery in time for the Tory conference. He then told his Guildhall audience that things were on the mend because retail sales were on an upward trend. The right hon. Gentleman will recall that there were exchanges between us in the House about that assertion. He is as aware as I am of the latest information that retail sales volume in December fell by a seasonally adjusted 1 per cent. compared with the previous month, giving a 0.4 per cent. year-on-year decline—
Mr. Tony Favell rose
Mr. Smith: I want to finish this passage. I am explaining how the Chancellor has a non-Midas touch.
The right hon. Gentleman said on 6 November, during our debate on the autumn statement:
"The last few months"
and we must remember that he was speaking in November
"have seen a surge in business optimism in nearly every sector, nearly every region, in businesses large and small…This gives powerful support to our view of the recovery."— [Official Report, 6 November 1991; Vol. 198, c. 453.]
Of course, that was the line to be used in a November general election—an election that did not happen.
As we now know, even the Institute of Directors—not a source known to be unremittingly hostile to the Conservative party—has found a sharp fall in the proportion of directors feeling optimistic about the economy. It reported a downturn in investment and said that the outlook for jobs was bleak. Construction, retail sales and business optimism all turned down as soon as the Chancellor fixed his eye on them. It is no wonder that businesses cringe at the prospect of becoming the Chancellor's latest projected vehicle for recovery. They know that he is, in that respect, the personification of voodoo economics.
Mr. Nicholas Budgen: Will the right hon. and learned Gentleman explain how it is possible for any future Labour Government to improve the position? Are not all the three factors that he mentioned the result of very high real interest rates within the exchange rage mechanism? As the new respectable Labour party has said that it wishes to remain within the ERM, and as it is likely—at least initially, and perhaps unfairly—to be badly viewed by the market, is it not likely that, far from being able to reduce interest rates, an incoming Labour Government would have to increase them, so making all those factors even worse?
Mr. Smith: I do not doubt that high interest rates have had a very bad effect on the British economy. However, I

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must warn the hon. Gentleman about one matter—the line is not, "the new respectable Labour party"; the right hon. Member for Bath (Mr. Patten) gives a quite different line. [HON. MEMBERS: "Answer the question."] I shall deal with the hon. Gentleman's points because, on the whole, he asks more intelligent questions than most of his colleagues.
The hon. Gentleman was right to say that high interest rates have had a considerable effect, but that is only half an analysis of the problem. The deplorable weaknesses in investment, training and education on the supply side have also weakened the British economy. That is why the Labour party's plans are so relevant.
Mr. Favell rose
Mr. Smith: I will not give way—[Interruption.] I have given way as often as the Chancellor gave way.
What the British economy needs and this directly answers the question of the hon. Member for Wolverhampton, South-West (Mr. Budgen)—instead of bogus forecasts and stultifying complacency, is action to move out of recession towards an investment-led recovery.
The Chancellor has received strongly worded representations from British industry. He has them on his desk. They have come from the CBI, the engineering employers and others. They have argued for the introduction of measures to promote investment, including the enhancement of capital allowances for investment in new plant and machinery—[Interruption.] Actually, for the benefit of Conservative Members, that is a tax reduction—although I do not know whether they would know one if they saw one.
Given that manufacturing investment is below the level for 1979, the need to promote manufacturing investment is overwhelming. The Government's usual response is to claim that, under their management, business investment —which is, of course, different from manufacturing investment —has been highly satisfactory. I hear day in and day out that it is highly satisfactory. The Chancellor nods, so at least we agree on that. As hon. Members know, that is a familiar argument.
I ask those who might be in doubt about the truth to consider the CBI's Budget submission. Page 10 shows that in the United Kingdom fixed investment per employee over the last decade was well below the level that was achieved by our main competitors. Manufacturing investment per employee in the United Kingdom was £1,980; in the United States it was £2,850; in Germany it was £2,850; in France it was £3,300; and in Japan it was £5,360. The figures for business investment as a whole are roughly similar—
Mr. Phillip Oppenheim rose—
Mr. Smith: Let me make the point.
If we have had such splendid investment under this Chancellor, why are our figures so bad in relation to those of our principal competitors?
Mr. Norman Lamont: Can the right hon. Gentleman name any year in the 1970s in which investment in plant and machinery as a proportion of GDP was as high as it is this year?
Mr. Smith: I shall certainly look into the details of the 1970s and 1980s because I want to be absolutely accurate. I shall tell the right hon. Gentleman what I do know because I do not make chance remarks across the Floor of
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the House without knowing what I am talking about. The right hon. Gentleman might bear that in mind when he considers forecasting. I can tell him that investment is plummeting this year. It was ridiculous of the right hon. Gentleman to claim earlier that we should be gratified because manufacturing investment has increased in the third quarter. Why on earth should we be gratified when manufacturing investment has fallen by 20 per cent. this year? What does it matter whether we are up or down slightly on the quarter when we are 20 per cent. down for the year as a whole? [Interruption.] That is a fact that the Chancellor cannot deny. If he wants to deny it, he should get to his feet. [Interruption.] He cannot deny that manufacturing investment fell—[Interruption.] Can he tell me a year in the 1970s when manufacturing investment fell by 20 per cent.?
Mr. Skinner: Get up.
Mr. Smith: I do not think that he can.
Mr. Oppenheim: Will the right hon. and learned Gentleman give way?
Mr. Smith: If the Government—
Mr. Oppenheim rose—
Madam Deputy Speaker: Order. The right hon. and learned Gentleman has made it clear to me and the House that at the moment he is not prepared to give way. Hon. Members should not persist in seeking to intervene.
Mr. Smith: I believe that I have given way certainly as much as the Chancellor—
The Chief Secretary to the Treasury (Mr. David Mellor)rose—
Mr. Smith: And I am being asked to give way again by a member of the Government Front Bench.
Mr. Mellor: The right hon. and learned Gentleman has issued an invitation about business investment and I shall now take him up on it. Investment in plant and machinery at constant prices—
Mr. Skinner: Here comes "Swank".
Mr. Mellor: It is no good the hon. Gentleman intervening. This is a serious matter, as his right hon. and learned Friend knows.
At constant prices, in investment in plant and machinery in 1979 was £19.7 billion. If the right hon. and learned Gentleman prefers, the average for the Labour years was £17.5 billion. In 1990, at constant prices [Interruption.] This is investment in plant and machinery —that is what the right hon. and learned Gentleman was concerned about. The figure was £32.6 billion in 1990, with a forecast for 1991—
Mr. Brian Sedgemore: Oh, forecasts.
Mr. Mellor: —of £29.5 billion, which is 50 per cent. up in real terms on the figures for 1979—even in a recession.
Mr. Smith: The right hon. and learned Gentleman has quoted the figures for business investment.
Mr. Mellor rose—
Mr. Smith: No, I am answering his point. I am not giving way—[Interruption.]
Madam Deputy Speaker: Order.
Mr. Smith: The right hon. and learned Gentleman should learn more manners. He should not interrupt someone who is speaking and who has already given way —[HON. MEMBERS: "Hear, hear."] He should try, at least. The right hon. and learned Gentleman quoted a spurious statistic. He referred to business investment as a whole, but he knows that there is a distinction between that and manufacturing investment—
Mr. Mellor rose—
Mr. Smith: Yes, I shall give way if the right hon. Gentleman would like me to.
Mr. Mellor: Complaints about manners could become the last refuge of the parliamentary scoundrel. I shall tell the right hon. and learned Gentleman—[Interruption.] If there had not been so much noise earlier from the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), who is a bit more Lambeth council than learned counsel—[Interruption.] If there had not been so much shouting from the Opposition, the right hon. and learned Gentleman would have been able to hear. I am talking about the one thing that the right hon. and learned Gentleman is concerned about—investment in plant and machinery. That is the key indicator of what is going on in the British economy, and especially in manufacturing. The figure was £19.7 billion for 1979 and, at constant prices, £32.5 billion for 1990 and £29.5 billion for 1991.
Mr. Smith: The right hon. and learned Gentleman has simply repeated the point that he has already made. He has not added anything new. He is talking about business expenditure as a whole, and there is an important distinction.
Mr. Alan Williams: We are seeing another example of sleight of hand from the Government Front Bench. They switched to business investment when the manufacturing investment figures were embarrassing because business investment includes empty office blocks. As the Chancellor told us, they have now switched to "core investment", which is investment in plant and machinery and includes all the investment in plant and machinery that has been made by the service industry as well as by those in the manufacturing sector. It includes the computers that are linked to supermarket checkouts. It is a completely different set of figures.
Mr. Smith: I am grateful for my right hon. Friend's strong support. He had a distinguished career at the Department of Industry when we had a Department that cared about British industry and worked hard to help and support it.
If the position is as good as the Government say, why is the CBI complaining so loudly about investment? I must get on, Madam Deputy Speaker, and deal with the autumn statement—[HoN. MEMBERS: "Yes, do get on with it."] Well, I am doing my best, but I keep being interrupted.
When concern about falling investment is expressed in the House, the Government's response is one of dismissive complacency. In one of their recent denunciatory tracts on Labour policy, they even went as far as to warn against what they call
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"force-feeding the economy with investment".
That appears to be the terrible peril lurking behind the next Labour Government. In that same document, the Government discussed the case for enhanced allowances for capital investment and dismissed them as if they did not matter. So, despite the recent arguments put forward by industry and the undeniable collapse in investment—and it cannot be denied—any change is ruled out by a Government who, I fear, are blinded by their own dogma.
When will the Government at last listen to the pleas of the construction industry, the local authorities and even of the Select Committee on the Treasury and Civil Service to relax the restrictive rules on local authorities using their own assets for capital investment? There are measures which the Government could take, but which they refuse to take, to help us to start to move out of recession. Opposition Members will continue to argue for action to encourage investment, to develop skills, to promote technology and to stimulate our vital regions.
In the motion the Government congratulate themselves on what they call "firm control over public expenditure" and on
"increasing spending in priority areas"
as if they had made a conscious choice to favour increased expenditure in some areas. If we examine the details, however, we discover that a great deal of the increase is the by-product of the recession which has been caused by the Government's own incompetence. In evidence to the Select Committee, the Chief Secretary to the Treasury said:
"around £5 billion could be directly attributable to the stage of the cycle."
In plain English, that means "as a result of the recession." The right hon. and learned Gentleman also told the Committee that, for example, at least half the increase to London Transport and British Rail related to what he called
"the shortfall in business due to the recession".
He added:
"And most of the increases in the Department of Employment Budget relate to the increased requirements …as a result of the increase in unemployment."
It is all too obvious that the more that unemployment rises, the greater the cost to the public purse.
Mr. Quentin Davies rose—
Mr. Smith: No, I must get on.
In his autumn statement, under questioning from my hon. Friend the Member for Durham, North (Mr. Radice), the Chancellor had to concede that the Government's assumption about unemployment in the coming year is 2.4 million. That still appears to be the Government's assumption, but we already know—only a few months after the autumn statement—that unemployment has risen to 2.54 million. The Government's assumption is already adrift by 140,000 unemployed and by the costs that that will involve. As unemployment regrettably continues to rise, the disparity between assumption and reality will become greater and the autumn statement's figures increasingly out of date.
In any case, when we consider Conservative promises about public expenditure immediately prior to an election, the public are entitled to a healthy degree of cynicism. As the CBI noted—
Mr. Favell rose—
Mr. Smith: The hon. Gentleman might at least listen to what the CBI said. The CBI's economic situation report of November 1991 noted that under the Conservatives
"underlying spending rises in election periods—this pattern is being repeated".
How right the CBI is.
Let us look back to the period before the 1987 general election. Then, the Conservatives promised increased expenditure over three years of £11.2 billion above and beyond the amount needed to make up for inflation. In fact, during the three years that followed the election, there was no real increase, but a cumulative cut of £12.7 billion.
When the autumn statement was first presented to the House in November, Opposition Members said that it was a gigantic confidence trick, in terms of both its economic assessment and its public expenditure promises. Nothing that has happened in the ensuing months makes us wish to change that verdict.
Mr. Norman Lamont: As the right hon. and learned Gentleman is talking about confidence tricks, will he tell us when he will answer the question that he said he would answer about how the increases in child benefit are to be financed if the abolition of the upper earnings limit on national insurance is to he phased? It does not add up.
Mr. Smith: I told the right hon. Gentleman that I would give way to him, and I now do so. The revenue increases referred to in Labour's election proposals more than cover those commitments; there is no difficulty whatever. [Interruption.] There is not the slightest problem.
Mr. Lamont: The right hon. and learned Gentleman has not answered the question. As he knows, he has given the impression that the increases would take place immediately, but he says that the national insurance changes would have to be phased in. What he also appears to have left out of his calculations is the fact that the changes that he proposes to make in the higher rate of tax will, in the first year, produce only half the revenue that he estimates that he will receive.
Mr. Smith: The right hon. Gentleman is asking me to give details of a Budget when he will not even tell us what his Budget may bring. [Interruption.]
Madam Deputy Speaker: Order. I can barely hear, but I understand that I have been asked to allow a point of order. I am sure that it is genuine.
Mr. Thurnham: On a point of order, Madam Deputy Speaker. The right hon. and learned Gentleman has implied that he answered my earlier intervention, but he did not.
Madam Deputy Speaker: That is a matter for debate; it is not a matter for the Chair.
Mr. Smith: Every day, there is speculation in the press about whether the Chancellor will cut the standard rate of tax by 1 p, whether he will increase personal allowances, whether he will do this and whether he will do that. He must deal with a huge range of options in a few weeks. Now, Opposition Members are expected to give details when the Chancellor will not.
Let me tell the right hon. Gentleman this. We shall be able to raise—from increases in the top rate of income tax, and by removing the upper limit on national insurance contributions—more than enough to pay for the increases that we propose. Every commentator agrees that that is so.
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As the Chancellor knows, the trouble with his promises is that, while giving the impression that he is committed to increases in public expenditure, he also pledges to cut the standard rate of tax from 25p to 20p in the pound. He has constantly reiterated that promise. How is it possible for the right hon. Gentleman to maintain the spending plans that he announced in the autumn statement if he is going to cut the standard rate of tax by that amount? [HON. MEMBERS: "Answer."]
Mr. Norman Lamont: The right hon. and learned Gentleman said that the question that I asked him earlier was like a question asked about a Budget before that Budget had taken place. However, he has repeatedly given the impression, on television and in the House, that his package would finance itself out of the national insurance increases. He has assumed that £2½ billion can be obtained from payments of income tax at the higher rate. What he does not seem to understand is that, in the first year, only £1¼ billion is obtained. The money is not there—even before we take account of the right hon. Gentleman's industry package.
Mr. Smith: The House will have noticed that the Chancellor has not said a single word about the Tory pledge to cut the standard rate of tax from 25p to 20p. If he reads the considerable debate that is now taking place in the public press about the respective tax and spending plans of the Conservatives and Labour, he will find that no objective commentator supports the point that he is making. [Interruption.] I am talking about objective commentators; the Tory tabloids are a different matter.
Mr. Mellor: Will the right hon. and learned Gentleman give way?
Mr. Smith: I must get on with my speech. [Interruption.]
Madam Deputy Speaker: Order. Do I understand that the right hon. and learned Gentleman is giving way?
Mr. Smith: Yes.
Mr. Mellor: Fair enough. I hope that a further intervention will be unnecessary.
If the right hon. and learned Gentleman believes that all this has been got up by Tory-inclined commentators, let him answer a straight question: did he know what his right hon. Friend the Leader of the Opposition was going to say to the journalists at Luigi's?
Mr. Smith: Did the Chief Secretary know that the Prime Minister and the Chancellor of the Exchequer—[HON. MEMBERS: "Answer."] I think that it is about time that we heard about these pledges to lower the standard rate of tax from 25p to 20p. It is an important point. Whenever the Conservatives are challenged about the matter, they quietly tell the commentators, "You need not worry; we shall not actually implement the tax-cutting pledge", or, "We shall not implement it in the lifetime of a single Parliament", or, "It will be done very gradually, and it will not cause any difficulty."
The Chief Secretary gave the game away when he told the Today programme on 20 June 1991:
"If people are actually putting forward pledges it is right that those pledges should be seen as being implemented within the lifetime of a Parliament over 5 years."

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I take it that that applies to the Tory pledge to cut tax from 25p to 20p. If I am wrong, I will give way once more so that the right hon. and learned Gentleman can put things right.
Mr. Mellor: Every time that we have spoken about the matter, it has been made clear that that pledge is not timed, and that, when the time is right, further progress will be made towards our objective. There has never been any doubt about that. If what the right hon. and learned Gentleman has said about his pledges was as clear-cut as what we say has always been, we should be a good deal better off.
Mr. Smith: I am very glad that I gave way to the Chief Secretary, because his intervention allows me to put on record what the Prime Minister said in an interview with the Daily Express on 26 April last year. He said:
"Our primary objective is to reduce taxation at the lower end. There will be changes at the upper end, but we have an objective of moving to a 20p level of taxation."
What the Chief Secretary said—and I do not think that he understands the significance of his own comments—was:
"If people are …putting forward pledges it is right that those pledges should be seen as being implemented within the lifetime of a Parliament over 5 years."
In his Adam Smith Institute lecture on 12 April 1991, the Chancellor said:
"Our 20p remains a firm objective".
A pledge given by the Labour party must be implemented within five years; the Tories can take as long as they like.
I am trying very hard to return to the subject of the autumn statement. We know perfectly well, however, that when the Conservatives talk about taxation, they talk hypocritically. Their's is the party that increased the burden of taxation from over 34 per cent. to over 37 per cent., and pushed up valued added tax from 8 per cent. in 1979 to the current rate of 17.5 per cent. Conservative Members have been unable to tell us how they would maintain their pledges while simultaneously cutting income tax on the scale that they propose. It is probably true that the Conservative party is the party of choice, but what is the choice? The choice is between cutting spending on vital public services and putting up value added tax. That is the choice that the Conservatives would offer if they were re-elected.
The debate will go on about the Government's competence and about the tax and spending pledges of both sides. In case the House thinks that Opposition criticism of the Government's competence is something that we have invented or that it is the product of political malice, exaggeration or even hyperbole—which occasionally can be found in the speeches of right hon. and hon. Members—let me remind it of the measured conclusion of Mr. Samuel Brittan. In the Financial Times of 19 December 1991 he wrote:
"British Treasury forecasters have performed a hat trick. They failed to foresee the inflationary boom of the late 1980s; they failed to foresee the subsequent recession, and then they forecast a fictitious recovery."
I do not blame the Treasury civil servants. I blame the Treasury Ministers who were in charge during that period. With such an abysmal record—unemployment rising, businesses collapsing and homes being repossessed—one might think that an apology from the Government to the House and the people was in order. But not a bit of it. They are still as bold as ever they were. The Prime Minister told
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us that if it was not hurting it was not working. I hope that everyone who has been hurt remembers exactly why they are being hurt—because it is part of the Government's plan.
The Chancellor told us that the recession, rising unemployment, record bankruptcies and an unprecedented level of repossessions were a price well worth paying —words that will be remembered by every British elector at the next election. To cap it all, this month the Chancellor had the gall to say at the January meeting of the National Economic Development Council that
"the policy would not have been different had we known the outcome."
So the recession was part of the plan, the result of the Government's policies. The British electorate will soon be able to pass their verdict on a Government who treat their interests with such cavalier disregard.
5.31 pm
Mr. Terence L. Higgins: I thank my right hon. Friend the Chancellor of the Exchequer for his kind remarks about the report of the Treasury and Civil Service Select Committee. It provides, I believe, a helpful background to the debate. It was a unanimous report. The evidence that backed up the report is also helpful.
I listened with great interest to the speech of the right hon. and learned Member for Monklands, East (Mr. Smith). The crucial point in economic management is that, if one is to achieve sustainable economic growth, inflation must be brought under control. It is interesting to note that in a speech lasting more than 45 minutes the right hon. and learned Gentleman never addressed the crucial issue of inflation. That is a point of considerable significance, as we know the record of previous Labour Governments on inflation.
It is not easy to get inflation under control. It is vital that the Government maintain their present anti-inflationary posture, based on membership of the exchange rate mechanism and the use of interest rates. The Government are right to resist the cries of those who wish both devaluation and a reduction in interest rates to be used to kick-start the economy. If one kicks with both feet, the economy will probably go up in the air and end up on its back. My right hon. Friend the Chancellor is therefore absolutely right to maintain the exchange rate value of the pound.
In my view, it should also be possible for the present exchange rate to be kept within the ERM limits without an increase in interest rates. That is very much a tribute to the prudent polices of my right hon. Friend the Chancellor, which have led to a gradual reduction in interest rates. There has been a substantial reduction in interest rates. If we had listened to the Opposition's cries for a reduction in interest rates, I do not doubt that now we would find it necessary to raise them again. The trend in interest rates is crucial to business confidence. I believe that the Government have adopted the right approach.
I am bound to say, however, that recently we have had little co-operation from the other members of the European Community. The rise in interest rates in Germany did not help. That may be a warning against the dangers of an independent central bank. It would be very dangerous if we were to listen to those who say that we ought to withdraw from the exchange rate mechanism. If we withdrew, we would cease to have influence in Europe, particularly in resisting protectionist pressures. Even with

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a cut in interest rates and devaluation, I do not believe that we would achieve stability. There would be the usual J-curve effect. There would be a deterioration in the balance of payments and a succession of devaluations. I strongly support the points that my right hon. Friend the Chancellor put at the centre of his policies, which have led to such a substantial reduction in inflation and in interest rates.
The right hon. and learned Member for Monklands, East referred to public spending. He said that the Government had not placed sufficient emphasis on extra spending in priority areas. I shall take just one example, the national health service, which—outside the broad economic debate—has been the focus of the Opposition's attack. It is important to look at the figures in the autumn statement. They show a massive increase of almost £2.5 billion last year, 1990–91, in expenditure on the national health service, an additional £3.1 billion this year and another £2.4 billion increase next year.
It is difficult for people to comprehend such massive increases in expenditure. It is interesting to note that the announcement that an extra £2 million was to be spent on reducing waiting lists attracted far more publicity than the announcement that an additional £1.5 billion was to be spent on the national health service. The Government are giving priority to the health service. It is absurd rubbish to talk about cuts in the health service. It is important to get that point over to the public at large.
I turn to a more controversial point. Traditionally, we have divided the annual cycle of economic management between public expenditure—the autumn statement—and taxation, which is dealt with in the spring Budget. Some years ago, I chaired the Select Committee on Procedure (Finance) when it looked at the case for bringing the two sides of the equation together.
Treasury forecasts have been singularly fallible recently. The Treasury and Civil Service Select Committee is considering what might be done to improve them. At present, one finds after a short period—perhaps just a few months—that an adjustment needs to be made to the economy because the forecasts were wrong. It is absurd to say that, if it happens in the spring, it must be done by tax changes and, if it happens in the autumn, the adjustment must be made on the expenditure side. One understands the inhibitions against changing that. They are historic. Traditions in this place take a long while to break down.
Because we seemed to have Budgets every other week under the previous Labour Government, we have been reluctant to do anything in the autumn statement that involves tax or something in the Budget that involves expenditure. I do not suggest that adjustments should be made every other week, but a division between expenditure and taxation is not always appropriate. It should be possible to make appropriate adjustments in tax or expenditure at either time of the year. One can always get a stigma to beat a dogma on this sort of historical analogy, but I hope that my right hon. Friend the Chancellor will bear that point in mind.
On a number of occasions the Treasury and Civil Service Committee has pointed out that membership of the exchange rate mechanism of the European monetary system substantially inhibits the use of monetary policy. Therefore, we have argued that there is a strong case for a more active fiscal policy. I am glad that my right hon. Friend the Chancellor accepted our views on the use of
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automatic stabilisers, but we have suggested for a long time that there is a case for changes in discretionary expenditure.
I congratulate my right hon. Friend the Chancellor on maintaining our right in this country, and in the House of Commons in particular, to have a fiscal policy. If we had gone along with what the Labour party supported, the negotiations at Maastricht would have seriously inhibited the future use of fiscal policy. That would have been damaging. My right hon. Friend was right to fight for that, and I am glad that he succeeded in ensuring that we can continue to use fiscal policy when it is appropriate to do so —I hope that he will not now hesitate to do so if necessary.
We well know all the arguments against fine tuning. I understand the concern of my right hon. Friends the Chancellor and the Prime Minister about the need to avoid the situation in which one stimulates the economy and then has measures coming into operation when a boom is already under way. The Government's experience is reason to believe that that is important. Nevertheless, it is possible to take some public expenditure measures which are time limited and which would stimulate the economy without endangering the crucial medium-term control of public expenditure. We should not say that, because we may sometimes get the timing wrong, we should not take measures where the timing is specifically under control.
It has been said in this debate and previously that the recession has been deeper and longer than any of us hoped or anyone, except the Treasury and Civil Service Select Committee, had forecast. It is true that, regrettably, the recession has been deeper and longer than was expected. It is important to say why that has happened. Clearly—my right hon. Friend recognised this—we have had a substantial cut in interest rates and a corresponding reduction in mortgage rates. I looked at the figures the other day. A person with an average endowment mortgage of £30,000—the position is not much different for a repayment mortgage—is £82 a month better off than when we joined the ERM. A person with a £60,000 mortgage is £192 a month better off and a person with a £120,000 mortgage is £413 a month better off.
It is surprising that those cuts, which are important for householders, have not worked their way through into the economy. People have tended to pay off other debts, particularly credit card bills that they have run up during a time of high mortgage rates, or saved the money. As the Select Committee points out in its report, the role of savings is crucial in this respect. That being so, one must realise that that cushion is having a delaying effect. However, I do not doubt that the cuts in interest rates will gradually work through into the system. I do not go along with the so-called double-dip recession which has been forecast by some people. I believe that we shall see a steady improvement.
A cut in direct taxation now would probably suffer from the effects of a similar cushion. There is some case for avoiding the pushing-on-a-string effect. We should see whether something can be done with time-limited public expenditure.
I want to talk about local authority expenditure and the vast accumulated balances that local authorities now have. In a report which was formally published a few days ago on the Bank of Credit and Commerce International and the role of local authorities and money brokers, we pointed out that the conjuncture of Government policies and market conditions had led to a considerable increase

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in the level of local authority external investments. The investments have increased from £4.4 billion in 1986 to £11 billion at the end of 1989 and the figure is just short of £8 billion now. Local authorities are not allowed to spend that money. I am not advocating that the brakes should be taken off and that they should be allowed to spend it all but we should seriously consider whether some relaxation on a time-limited basis might be appropriate.
It is clear from our report that the financial decisions of local authorities have been pro-cyclical rather than anti-cyclical. We point out in our report that in 1989–90 local authority capital expenditure was £10.5 billion and that it fell to £7.7 billion in 1991. In short, the decisions of local authorities have made the boom bigger and the recession worse. We need to look carefully at the way in which the huge accumulated balances and the decisions of local authorities have- been distorting the operation of the economy as a whole. They are big enough to have a significant effect on the management of the economy. We cannot hope simply to sterilise those balances indefinitely. A recession is an appropriate time to ameliorate the matter to some extent.
I have restricted my remarks to the Government's policy, except for saying that the Opposition do not give the slightest priority to the control of inflation. The Opposition believe that the cap on national insurance contributions should be removed. I have tried hard to think of any insurance premium where the amount paid for any given level of benefits depends upon one's income. I have not managed to do so. Once one carries out the Labour party's proposal, any idea that it is a national insurance premium would go out the window. It is a straight increase in taxation.
Mr. John Smith: What did the right hon. Gentleman think of the Government when they removed the cap on employers' contributions?
Mr. Higgins: That is another matter. Someone else making a contribution to a given benefit is not the same as a contribution from the individual who is expecting to benefit.
Mrs. Margaret Beckett: I have listened carefully to the right hon. Gentleman. What did he think when the Government raised the national insurance contribution and steadily cut away at the benefits for which it was paid? I do not recall an insurance company finding it easy to do that.
Mr. Higgins: That has been known to happen, but I agree that it has not happened often.
The way in which the Opposition's policy is being formulated clearly involves a massive increase in taxation. However one disguises it or seeks to dress it up as an insurance premium, that is the reality. Labour's proposals on taxation and public expenditure are likely to prove highly inflationary, which would be disastrous for the future management of the economy. To get the economy back on an even keel, it is crucial to control inflation. The Government have steadily made progress in that respect, which has enabled them to reduce interest rates. The combination of the controlling of inflation and the reduction in interest rates will enable us to return to a sustainable rate of economic growth.
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That is the right approach for the Government to adopt, and I congratulate my right hon. Friend the Chancellor on resisting the calls for devaluation and cuts. It is important to ensure that the effects of our membership of the exchange rate mechanism on the control of inflation are brought out strongly.
5.50 pm
Mr. A. J. Beith: The right hon. Member for Worthing (Mr. Higgins) spent most of his speech—and much the best part of it—dealing with the report of the Treasury and Civil Service Select Committee. The Chancellor should pay more heed to its reports, which are so ably steered through the Committee by the right hon. Member for Worthing. They have consistently been more accurate than Government forecasts, especially on growth.
The advice accompanying them has also been good. If the Government had taken note of the report on, for example, public expenditure, they could have significantly countered the cyclical recessionary effects about which they speak so much. By the Committee's standards, they are at least a year late in some of the discretionary expenditure that they have made. I hope that the Chancellor will pay more heed to the Committee's reports.
That brings me to the fundamental point of what we are debating today. For much of the time, I suspect that we shall debate the general election and the battle that it involves rather than the autumn statement, but there is another reason why much of the debate will not be about the autumn statement—it is out of date. It is like trying to navigate the railway system with a Soviet railway timetable—it bears no resemblance to the trains that run. That is certainly the condition of the autumn statement. I do not know why the Chancellor did not do more to update the forecasts made in it. After all, the Prime Minister updates the forecasts that the Chancellor made in the statement.
Even the comments that the Chancellor made some time after the autumn statement failed to take account of how inaccurate his forecasts were proving. He said:
"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 this year. That is what I said in the Budget and in the autumn statement. That is what I say now." —[Official Report, 5 December 1991; Vol. 200, c. 425.]
Between 5 December and new year's day, the picture had changed. In his new year's day interview, the Prime Minister said that recovery looked "a little less certain", which he found "frustrating". He said:
"My judgment is, although it is jagged and irregular, in retrospect we will look back and say it has already started as we speak."
The opportunity to look back and say that recovery had started on 1 January still has not arisen, and I suspect that it will not do so this side of the general election.
What are the autumn statement's forecasts? Are they genuine statistical forecasts about the economy, or are they hyped up by ministerial desire to look optimistic and sound encouraging? They show many signs of the latter. It is always noticeable that, when they are wrong, they are too optimistic. Almost no Government forecast is excessively pessimistic. Occasionally, forecasts of revenue are too pessimistic, but forecasts of growth, output and inflation are always too optimistic. They give every impression of having been massaged to have an economic effect of their own—to try to instil the confidence that Ministers understandably seek.

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They do not have that effect, and the more that they appear to be massaged, the less they inspire confidence, because people have long since given up believing ministerial forecasts. It is time that we made the role of statistics clearer and made it clearer that they will be independently produced and published and will form part of the Government's attempt to inspire and encourage the populace, which is the impression that we have gained from them so far.
Statistics in Government forecasts are too optimistic, so their policy decisions must visibly correspond with them. That results in Ministers making policy decisions that prove as mistaken as the forecasts.
Misleading claims go with mistaken decisions. Departmental press releases at the time of autumn statements are riddled with misstatements or half-truths about the nature of the improved resources said to be available to the Departments and industries concerned.
Many of the Government's claims about spending do not fit with the reality. For example, Ministers never properly explained the difference between the real inflation faced by local authorities and the inflation that they claim to be compensating for in the spending assessments that they set for local authorities. Tomorrow, a delegation of every high school head teacher in Northumberland will come down to London to lobby the House because Northumberland education authority is imposing swingeing cuts on the education service. More than 100 teachers are being made redundant in an area that is large geographically but small numerically.
One can argue that, over the years, Northumberland did not foresee the extent to which its rising budgets would lead to that problem, but a significant part of the problem results from the fact that what the authority is allowed to spend does not correspond with real inflation and the additional burdens placed on it. That is true in many service areas. It is particularly worrying and damaging that it is happening in education.
The timing of Government expenditure has also been wrong. Paragraph 80 of the report of the Treasury and Civil Service Select Committee says:
"We recommend that the financial regime for local authority capital spending should be adjusted so that it is counter-cyclical, so that it does not compete with the private sector during years of higher growth, but assists its suppliers such as the construction industry when growth is below trend."
The obvious time for significant additional expenditure on local authority services and local authority capital investment is a recession, when the construction industry is flat on its back. Additional spending could help to create longer-term assets, create employment at a time of high unemployment and counter-cyclical trends. That would help more than making such expenditure at a time when it becomes inflationary, because it is added to considerable overheating pressures in the economy. The autumn statement was seriously at fault on all those points.
I must comment on some aspects of Labour's approach, because two Labour amendments appear on the Order Paper. The one that has visible support from more Labour Members talks about the evils of capitalism and market forces and calls for full-blooded socialist policies, including:
"the harnessing of the nation's savings",
whatever that may be. It sounds suspiciously like local authority pension funds that invest in politically approved
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projects, such as failed newspapers, because3 they are thought to be a good thing rather than because they represent a sound deal for the authority's pensioners.
There is another tendency in the Labour party that is by no means dead. It may be temporarily defeated, but it will clearly be a force to be reckoned with in a future Parliament.
Mr. Alex Salmond: Which of Labour's amendments does the hon. Gentleman prefer—the one that he is talking about, which at least proposes a change from the Government's policy, or the official Opposition amendment, which, in general macroeconomic terms, pursues a policy virtually identical to that of the Government?
Mr. Beith: The official Opposition amendment is markedly different from the one that I have been describing. It is significant more for its omissions than for its content. In its content, it reflects the significant change that has taken place in Labour Front-Bench policy—the gap between the two makes that contrast particularly stark—but it does not say what the Labour party would do about inflation or the fiscal problems that emerged earlier in the debate. That is another area where there is a great puzzle about Labour policy.
Labour advances proposals for the funding of the benefit and pension increases as if they were self-financing. It sincerely and genuinely proposed to finance those increases by uncapping the national insurance contribution and levying two top rates of tax, one of which is very much higher at a combined rate of 59 per cent. There might be a bit to spare—it is difficult to forecast such revenues—but that is what Labour would have done.
There is now talk of phasing in the national insurance change which is a significant part of the whole. If that is done, it casts doubt on the self-financing nature of the pensions and benefits pledge. That is a simple point. If the Labour party still wants to maintain its earlier approach and wants to set out its clear commitments and how it will pay for them, it must update its proposals. It would be reasonable to expect it to come up with a new set.
Mr. Thomas McAvoy: Will the hon. Gentleman give way?
Mr. Beith: I shall, but it will be for the last time, because I am about to be hit by the 10-minute rule.
Mr. McAvoy: To my mind, the hon. Gentleman has outlined the fact quite clearly that he would find working with the Labour party in a future Parliament unacceptable. Will he be honest and say that he is making a commitment to work with the Tory party after the next election?
Mr. Beith: The hon. Gentleman has drawn a fascinating conclusion from what I said. I gave the Labour party some honest and sincere advice on what it should do about its tax and benefit proposals during the debate on the autumn statement. I am not a socialist or a Conservative but a Liberal Democrat. If the hon. Gentleman will give me a little time, I shall explain the Liberal Democrats' policies, which will be advocated during the election and which we shall seek to pursue in the next Parliament with whatever power the electors give us.
Recent economic mismanagement has merely added short-term misery to the long-term failures of successive

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British Governments who have not been willing to face some of the fundamental changes that our economy and society need. Since the early 1950s, the value of the pound has dropped dramatically. From a 1951 value of 100, the mark has gone down to 32 and the dollar to 19, but the pound has gone down to seven.
Unemployment has increased again and again during the same period, reaching new heights under the present Government in the 1980s and it is now returning to those heights. If we were still using the same figures to calculate unemployment as we used earlier in that decade, we would now almost have reached those very high figures—we are certainly heading in that direction even under the Government's much more limited calculation of unemployment. Britain's imports have risen fourfold in value while our exports have barely doubled during the same period.
Those figures represent serious long-term problems, and long-term measures are needed to tackle them. Such measures must include serious investment in our education system so that we get it right. It is not enough merely to improve it as the current debate is designed to do, and the report published today is a contribution to the effort to improve primary education. However, it cannot be done without resources, which is why we shall be prepared, if necessary, to put a penny on income tax to generate those resources. If we can find them without doing that, we shall do so, but additional investment of about £2 billion is certainly required for the education system. Labour cannot deny that, as it must be aware of the problems facing some of the local authorities that it controls.
We need investment in transport, and such investment could also have been made earlier in the recession. It would have been better for getting the channel tunnel links constructed in time and for countering the cyclical effects of the recession. We also need investment in research and development, but changes are also needed in other policies.
We need to promote competition more aggressively and to break down the huge monopolies which have been created as a result of privatisation. We need genuine competition. There is no real competition in, for example, the electricity industry in which two large generating companies control the entire market between them and can therefore have a rigged market in their dealings with British Coal. There is no genuine competition—only a market controlled by two very large concerns.
We need long-term anti-inflation policies. We believe that an independent central bank is the right mechanism for that and that, in the end, we shall have it because of the development of a European central bank and a single currency. The question is, how long will the United Kingdom wait to get fully involved in that process? Time and time again, we have taken decisions but much later than we should have done, with the consequence that our economy is suffering.
Our entire role in Europe remains in question because Governments have not faced the inevitability of full British participation. There is no realistic future for Britain outside a strong single currency bloc such as is being created in Europe.
We also need changes in the way in which the country is governed. We need the stability that would come from a fair electoral system and the initiative that would come
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from the decentralisation of power as opposed to the current centralisation. Real change is required, not merely new management. Such change would have led to a very different autumn statement and to much better prospects for recovery.
My party believes that, during the election campaign, it will be necessary for parties to show as clearly as they can what their fundamental commitments are to the character of our society, on what changes they intend to spend money in the early days of a new Parliament and how they will finance them. We shall set out our proposals. The Liberal Democrats will offer a menu with prices.
The public would be entitled to view the promises of all parties with some scepticism, in view of the fact that the Government who said that they would be repaying £19 billion of public debt in the current two-year cycle are in fact borrowing a further £19 billion, thereby showing that their spending assessments were no less than £38 billion wide of the mark. Nevertheless, parties must make some pledges about their intentions and must show some honesty about where tax increases might be necessary. They must also offer some clarity in their tax proposals if they are to expect the electorate to believe anything they say.
Several Hon. Members rose—
Madam Deputy Speaker: Order. The Standing Order limiting speeches to 10 minutes is now in operation.
6.5 pm
Mr. John Townend: There are three matters arising from this year's autumn statement on which I wish to comment. The first is the Treasury forecast about the recovery, the second is how relevant Labour's spending and taxation policies are to the problems facing the United Kingdom and what damage would be done to public finance if they were implemented, and the third is the medium-term financial strategy.
Why has the long-awaited and long-forecast recovery —long forecast by the Government—not materialised? There are a number of reasons, but two principal ones. The first is that real interest rates are far too high. That is a direct result of our membership of the exchange rate mechanism and the abandonment of a floating exchange rate. Interest rates have ceased to be an instrument of monetary policy and have become an instrument of exchange rate policy.
Despite the fact that nominal interest rates have dropped by no less than 4.5 per cent., real interest rates at 6.1 per cent.—are at a historically high level and double what they were during the previous recession in 1981. That can only be perverse when the country is in a deep recession. In real terms, small businesses are paying a minimum of 9 per cent. on their borrowings, and many are paying more.
The reduction in nominal interest rates has not had the effect for which we had hoped. Instead of large reductions of 2 per cent. or 2.5 per cent. which would have kick-started the economy, we have had small reductions of 0.5 per cent., which have had less impact.
I appreciate the fact that the Government have been constrained in the way that they have reduced interest rates by their membership of the exchange rate mechanism, but, by introducing small reductions, they have dissipated the effect. That is similar to what happened

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when the economy overheated in 1988. Instead of banging up interest rates by 2 per cent. to bring the economy to a halt, to get the overheating over quickly and get us going again, the former Chancellor, the right hon. Member for Blaby (Mr. Lawson), had a salami policy of death by a thousand cuts, and put them up 0.5 per cent. at a time.
This year, all the financial indicators have been screaming for interest rate cuts. Those indicators include the decline in the rate of increase of broad money, consumer credit, declining corporate profits, a flat housing market, rising unemployment, poor retail sales, falling industrial investment and falling inflation. The Government have achieved their major objective of bringing inflation down, and the only reason that interest rates have not come down by 2 per cent. to 2.5 per cent. more is our membership of the exchange rate mechanism.
If interest rates had come down to that extent, the pound would admittedly have been a little lower but that would have boosted export markets. Mortgage payers would have had their burdens eased, and many small businesses would have been saved and consumer spending would be rising.
Mr. Budgen: May I interrupt my hon. Friend for a moment?
Mr. Townend: I have only 10 minutes, so I shall not give way. I hope that my hon. Friend does not mind.
The housing market would also be recovering. If by any mischance we do not win the election, the principal cause will be seen in retrospect to be the fact that we joined the exchange rate mechanism and handed over monetary control to the Bundesbank. Our country and our industry are having to bear the burden of Germany's battle to control the inflation caused by reunification. Surely that is not in the national interest. Indeed, the recent increase in interest rates by the Bundesbank has curtailed the possibility of the Government's making another long-awaited and very necessary reduction in interest rates.
It is ironic that both the Labour party and the Liberal party urged the Government to join the ERM more than a year before we joined. Indeed, the Labour party has made it clear today—its Front-Bench spokesman did not deny the fact—that it would keep us in the ERM and would not realign the parity. So the Opposition have made it clear that the Labour party is also the party of high interest rates.
The second cause of the continued recession is outside out control—it is world recession. Output has fallen, or growth has slowed, in most of the G7 countries. France has been badly hit and the United States is suffering quite badly. But because the United States is not hogtied by the ERM or a fixed exchange rate, it has done what we should have done, and its interest rates, from being at a historic high, are at a 25-year low. It is to be hoped that that will stimulate a recovery in the United States, which will help to revive the economies of the western world.
In the autumn statement, the Treasury said that the United Kingdom was emerging from the recession, and that the recovery would be led by consumer spending, stocks and exports. We are now at the end of January, and I have to say that there is little sign of recovery. The housing market is as dead as a dodo, repossessions and mortgage arrears are still rising, and the construction and motor industries are flat on the floor. The retail trade has
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had a bad Christmas, and January is even worse. In my constituency, there have been three major closures in the past three months.
There is a lack of confidence. What we need now is a kick start to get the economy going. In my view, a monetary stimulus would be best. Once the economy gets going again, if there is a danger of inflation starting to rise, it will be easy to reverse a monetary stimulus. A 2 per cent. drop in interest rates would do the trick; it would get the housing market going immediately and restore the confidence that is so badly lacking.
However, that would require a realignment, and as not only the Government but all the Opposition parties seem to have set their faces against that, we are left with a fiscal stimulus as the only alternative. In my view, that is second best, because it inevitably leads to an increase in the budget deficit, and once the economy is moving, it is more difficult to reverse than a monetary stimulus.
A fiscal stimulus can be obtained by cutting taxes or by increasing Government spending. I favour the former, but the increased expenditure in the autumn statement can be justified by the recession. However, I question the need for some of that increased spending, especially in Scotland, where spending is already so much higher than in England. For example, in Scotland we spend £475 per person on hospital treatment, as against £378 in England, and we give £1,150 per person in support to local authorities, whereas in England we give only £733 per person. In Scotland, we spend £1,900 per pupil on education, as against £1,200 in England. Those are not my figures; they were given by the Minister of State, Scottish Office, and published in The Times this week.
That expenditure no longer represents the relative populations of the two countries.
Mr. Salmond: Will the hon. Gentleman give way?
Mr. Townend: I only have 10 minutes, so I am afraid that the hon. Gentleman will have to make his points in his own speech.
In view of our present balance of payments deficit, I question whether this country can really afford to spend £2 billion on overseas aid. I question, too, whether at this time the country should increase spending on the arts.
Hon. Members should note, as should the public, how the cost of our membership of the European Community rises inexorably year after year, as the Community increases its spending at a significant rate. That cost will soon be almost £3 billion.
Additional spending should be supplemented in the Budget by reductions in taxation to stimulate the recovery. There should be help for small businesses. I suggest that the first £10,000 of retained profit should be tax-free. There should be help for industry, and capital allowances should be written off on a straight-line basis rather than a reducing balance basis. Perhaps, for one year only, small businesses could have 100 per cent. capital allowances on expenditure of not more than £50,000.
In that context, the Labour party's proposals to increase taxes and national insurance contributions would only make the recession worse and reduce confidence. Furthermore, proposed Labour increases in public expenditure would have to be funded by further increases in taxation on the majority of the population, or a Labour

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Government would run up a budget deficit way above the level of 3 per cent. of gross domestic product stipulated by Brussels.
The Labour party's proposals would cost between £30 billion and £35 billion a year; and—this is what Labour Members never mention—another £8 billion would have to be added to that total to make up for privatisation proceeds which a Labour Government would not receive, as the Labour party does not intend to continue with privatisation. All that would have to be added to the £20 billion public sector borrowing requirement estimated in the autumn statement.
Unless the Labour party makes major changes in policy and admits that all its promises of more expenditure on every policy area were mistaken, a Labour Government would have to increase taxes to the punitive levels of the 1970s.
Finally, the medium-term financial strategy—the MTFS—is dead if not buried. It was supposed to provide a framework in which macro-economic policies would be conducted over a rolling four-year programme, and to impose a discipline. But a continual abandonment of targets on expenditure, on the growth of monetary aggregates, and on inflation has made the MTFS hardly worth the paper it is written on.
As one who supports financial rectitude and believes in a balanced budget, I feel great sadness that, having achieved a balanced budget and then a surplus, the Government have been driven off course by recession into having an increasing budget deficit.
Mr. Deputy Speaker (Sir Paul Dean): Order. I am sorry, but I must interrupt the hon. Gentleman. He has exceeded his time.
6.15 pm
Mr. Brian Sedgemore: The Daily Telegraph and the Financial Times tell us today that the Prime Minister has decided that the general election will be held on 9 April. I welcome that decision, because it removes doubt and uncertainty which could otherwise damage the country's economic prospects.
In the expectation that a Labour Government will come to power later this year, the big question being asked at the Treasury is not, "Can we work with Labour policies?"—top civil servants have agreed that our policies are better for Britain than Tory policies—but, "Who will be the next permanent secretary?" The current incumbent, Sir Terence Burns, a professional economist, was a political appointment. As the architect of two Tory slumps in one decade, Sir Terence put more people out of work than anyone else in the history of Britain. My advice to him is, "Get on your bike, Terry. Find yourself another job. As an economist and a civil servant, you are finished".
Meanwhile, at the Bank of England people are desperate to know who will replace Mr. Robin Leigh-Pemberton, the dilettante appointed as Governor by the former Prime Minister—he was her husband's golfing partner. I am tempted to suggest a rakishly radical appointment—
Mr. Beith: Yourself?
Mr. Sedgemore: I am tempted to give the answer that the former Prime Minister gave when such suggestions
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were made—but on second thoughts I believe that the Labour party should plump for a Governor who believes in low inflation as the basis for sound economic growth and high employment. That means that Eddie George, the current Deputy Governor, should get the job. Eddie may not be such a good cricketer as Mr. Leigh-Pemberton, but he knows a hell of a lot more about banking.
I digress. I really wanted to tell the House that, during the past week, I have undertaken one of the most intensive investigations ever made. I have been to every corner of the kingdom, searching and seeking, in pursuit of at least one economic indicator that justified the assertion that the Tories are efficient economic managers. I have combed every library; I have read and reread every statistical statement on the British economy made between 1949 and 1992. I have consulted eminent economists, trawled through the national income accounts, and carried out endless computer runs.
In all honesty, I have to admit that I have failed. It has been a case of "mission unaccomplished". The data are conclusive, and show not only that the Tory party is the party of high taxation and high unemployment, but, contrariwise, that it is also the party of low investment and low output. When it comes to economic incompetence, the ragamuffins sitting on the Government Benches have no rivals. The idea of the Tories as efficient economic managers in the locust years of 1979–82 is an illusion, a mirage and a will-o'-the-wisp which belongs to the media world of make-believe.
When Swift said that all political parties die of swallowing their own lies, he had clearly anticipated the Tory claim in the 1990s that the Tory pary is the party of low taxation. If taxation is theft, the biggest thief Britain has ever known is the man whom the current opinion polls show to be the most unpopular Chancellor of the Exchequer—the right hon. Member for Kingston upon Thames (Mr. Lamont). He is despised even by his next-door neighbour, the Prime Minister. His incompetent best, not to mention the figures, makes him a laughing stock.
According to the Chancellor's own autumn statement, tax as a percentage of gross domestic product in the last year of the Labour Government, 1978–79, was 34.3 per cent. Under the Tories, it rose in 1981–82 to a colossal 39.9 per cent. of GDP. Today, it is, at 37.1 per cent., still way above what it was under Labour. The position is even worse. [Interruption.] According to Goldman Sachs, the Tory stockbrokers—I hope that the Financial Secretary will listen instead of muttering—way ahead, in 1994–95, tax under the Tories will go up even further, to 37.5 per cent. of GDP. Yet the Chancellor stood at the Dispatch Box today and had the temerity to say that the Tories were the party of low taxation.
The Financial Secretary to the Treasury (Mr. Francis Maude): Will the hon. Gentleman give way?
Mr. Sedgemore: No, because I know what the hon. Gentleman will say. He will make the introduction that his colleague the Economic Secretary to the Treasury made last time I made this comment. He will ask about borrowing in 1979. I will ask him about German borrowing. The Germans borrowed 5 per cent. of their GDP, and they have the strongest economy in Europe.
Mr. Maude: Will the hon. Gentleman give way?
Mr. Sedgemore: No, I will not give way, because I have only 10 minutes.
With sound economic growth under the next Labour Government, taxation will fall as a percentage of GDP and there will be more public expenditure too. That is what the public want, and that is what we will give them. That is what our supply-side economics is all about.
The Tories have an appalling record as the party of production. Not even the editor of The Sun, who daily proves my dictum that in journalism there is no honour, would seek to deny the figures from the Organisation for Economic Co-operation and Development, which show that, although industrial output rose by a piddling, paltry 10.3 per cent. in the United Kingdom from 1979 to 1990 under the Tories, it rose by 27.5 per cent. in the United States and by 55.5 per cent. in Japan in the same period.
Listening to today's debate, it seems that the Tories' appalling record is made worse by the Chief Secretary's appalling ignorance of matters economic. In his intervention during the speech of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) today, he showed that he does not know the difference between industrial investment, manufacturing investment, and investment in plant and machinery, the latter of which includes new, empty office blocks. The problem is that "Swank", as the Chief Secretary has become known, brings to economics the mind of a second-rate lawyer. The idea of the Tories as good economic managers comes in the main from practised professional lawyers.
I have already mentioned Kelvin MacKenzie, the editor of The Sun. Close behind comes the editor of the Evening Standard. Last week, the Evening Standard wrote that, according to the Institute of Fiscal Studies, one in three people in London and the south-east would pay increased national insurance contributions under Labour. The truth is that the institute said no such thing. It was a whopping lie. On the basis of that complete fabrication, the Evening Standard printed screaming headlines with breathless stories underneath about Labour's tax and benefit polices being in disarray. Only those for whom lies are a way of life would seek to argue that tax and benefit changes which produce five times more winners than losers will be unpopular.
John Wycliffe once said:
"I believe that in the end the truth will conquer."
It will not if the editor of the Evening Standard has his way. When H. Agar wrote:
"The truth that makes men free is for the most part the truth which men prefer not to hear",
he might well have added, "and which the editor of the Evening Standard, backed by Swank and the Chancellor, prefers not to print."
Happily, we can turn to The Times to see just how incompetent the Tories are as economic managers. On 4 January, a letter appeared in its columns which dripped with arrogance and conceit and which exuded the unconscious realisation of the effortless superiority in economic matters of its author. It was the kind of letter that decently modest and reticent men would leave their wives and mistresses or their friends to write. It was written by the right hon. and learned Member for Surrey, East (Sir. G. Howe).
When Professor Sidney Pollard, the distinguished economic historian, saw it over breakfast at his home in Sheffield, he almost choked on his cornflakes. Although
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not given to writing to newspapers, the professor grabbed for his pen. "This politician," he thought to himself, "is being worse than economical with the truth. He is a"—I cannot say the word, because it is unparliamentary.
Professor Pollard wrote in his reply that Sir Geoffrey had forgotten—how can one forget the very essence of one's being?—to mention that it was his first Budget with its massive Thatcherite transfer of the tax burden from the rich to the poor which raised the rate of inflation to the extent that the dramatic remedies he mentioned became a necessity. Professor Pollard then said that the much-lauded period of growth for seven years merely raised us back to the pit into which Sir Geoffrey's policies had brought the economy.
The growth rate for the whole period of Tory Government was well below that achieved from 1974–79. At the end of it, as Professor Pollard told readers of The Times, our economy was so weakened that it had to be put right by crude and cruel measures.
I will finish with Professor Pollard's epitaph to the right hon. and learned Member for Surrey, East, which is a fitting epitaph to the Tory Government. Professor Pollard says:
"Being personally responsible for a policy which damaged the economy to an extent that even the sufferings of millions could not fully put right is bad enough: to boast about it thereafter is quite intolerable."
6.26 pm
Mr. John Browne: In a speech limited to 10 minutes, I will concentrate on the exchange rate mechanism, especially in light of paragraph 36 of the report by the Treasury and Civil Service Select Committee on the autumn statement.
I share the Committee's concern about the effects of our membership of the ERM. The ERM is a central and crucial point in the great European debate. In essence, that debate is about power—how much or how little power we should surrender to survive as a developed country. The great European debate is about power—great power. Essentially, it is about German power and how best to cope with it. In coping with German power, there are basically two main approaches—that of Great Britain and that of France.
Great Britain is a net contributor to the European Economic Community. It has a 600-year-old democracy and it has successfully resisted German domination twice in the past century. In Britain, we intend to cope with German power by competition in a free market, but independently as a free nation. We in Britain believe in a Europe of free markets and free nations.
On the other hand, France—which, like most other members of the EEC, is a net recipient of EEC funds—has a relatively short history of democracy and has suffered a mauling and domination by Germany at least twice in the past century. The French approach appears to be to tie Germany down within Europe, like a modern Gulliver, and then to get closely into bed with Germany in the hope that Germany will be kind and will tend to favour France in the future. The French approach is to participate as a subservient friend of Germany in a market dominated by Germany, in the hope of future favours. Of course, people throughout Europe will ask: how much different is that from Vichy France?
In addition to that essential difference in political philosophy and approach, there are fundamental

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differences in economic structure between the United Kingdom and Germany. Let us make no mistake about it: the exchange rate mechanism is a halfway house to a single European currency. A single European currency, based on paper rather than on gold, will represent a single economy which in turn will be dominated by Germany.
The basic characteristics of the United Kingdom economy are that growth has been generated internally, that real rates of interest have always been low or even negative and that inflation has been tolerated to protect jobs, but the basic characteristics of the German economy are almost exactly 180 deg different. Growth has been externally generated, real rates of interest have been historically high and inflation has been tolerated only at a low rate or at zero.
To illustrate the crucial difference in attitudes towards inflation, let us remember today that our Government rightly claim a great sense of achievement in reducing inflation to its present level. In contrast, the Germans regard the very same rate of inflation as intolerable. Therefore, particularly on inflation, where do we meet?
The exchange rate mechanism is a halfway house to a single currency. It is a currency bloc dominated by the deutschmark. It reflects, in essence, the interests of the German economy. Within the exchange rate mechanism we see different interests. For example, the German transfer economies—countries such as Holland and Belgium—import, add value and export to Germany. Therefore, they feel little of the ill-effect of high German interest rates. Other economies, like those of France and Italy, are steadily being stifled by high interest rates within the ERM.
In our economy we have falling nominal rates of interest, but, as we have been told, inflation has been falling even faster than the nominal rate of interest. Therefore, real rates of interest—nominal, less inflation —are rising in the face of the worst recession in living memory. That has the effect of deepening our recession and causing even normally more prudent businesses to go into liquidation, even higher unemployment and even more mortgage foreclosures. High interest rates are encouraging higher savings and therefore less demand.
Our economy is crying out for lower interest rates, but our interest rates do not respond any more to our economic needs. Oh, no; thanks to our ERM membership, United Kingdom interest rates respond not to the needs of our economy but, through the ERM, to the needs of the German economy, which demands high interest rates in today's world. That surely must be economic nonsense. In the interests of our economy and the economies of other ERM members, interest rates must come down, just as they have done in the United States. The United States was free to bring its interest rates down so that, at the prime end, federal interest rates are negative by 25 basis points.
From within the ERM we must press for a reduction in German interest rates. If we fail in that, we must press the Germans to revalue the deutschmark, thus allowing other ERM domestic interest rates to fall. If we fail to achieve German co-operatoin and that goal, we must withdraw from the ERM without delay before we are forced to do so by trouble on the streets because of economic depression, not merely recession.
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My right hon. Friend the Member for Worthing (Mr. Higgins) and others have criticised that advice. They say that the prime aim is to bring inflation under control, but what is "under control"? Is inflation under control if it is plummeting and falls below zero into negative rates? I believe that that is depression. Inflation is yesterday's battle. It may be tomorrow's battle yet again, but today the battle is to stimulate confidence in the economy. The longer we fail to achieve that, the worse will be our competitive position in the prosperity race of the next decade.
My right hon. Friend the Chancellor has a very difficult job. I do not underestimate it or his great efforts to achieve a sound, prudent economy, but I beg him to withdraw promptly from the exchange rate mechanism unless he is successful in negotiating either a reduction in deutschmark interest rates or a revaluation of the deutschmark, which would allow other members within the ERM to lower their domestic rates. In the absence of that assurance, I regret to have to tell my right hon. Friend that I cannot support his autumn statement.
6.35 pm
Mr. Doug Hoyle: The Chancellor's opening speech was a joke. Instead of addressing himself to his forecasts in the autumn statement and to why they were so far out, he decided instead to spend his time attacking Labour's proposals. He did that with all the venom of a Pekinese let off the lead. If the Chancellor had been a rain doctor and had forecast to the tribe that rain was coming as often as he forecast the end of the recession, all the tribe would have died of starvation. The Chancellor is the worst in a line of successive Tory Chancellors, all of whom have failed the nation and all of whom have added to the ruin of the economy.
What we have today is a recession. Those are not just my words. Every hon. Member who has spoken from the Government Benches has referred to the fact that the recession is biting, that interest rates are too high and that business and industry are being throttled. We are facing very difficult times. Under the Tory Government since 1979 unemployment has gone up 150 per cent. and is still rising.
There has been much discussion about investment and what is meant by manufacturing investment. Following the recession, or rather the slump, between 1979 and 1981 manufacturing investment took a long time to recover. It was 1988 before it recovered. We had investment in the mid-1980s; however, most of it did not go into manufacturing but into retail, finance and services—all worthy in themselves but not things which added to the competitiveness of manufacturing investment.
Manufacturing investment only regained its 1979 level in 1988. Once more, it is beginning to plummet. Hon. Members do not need to take my word for that or the word of any of my right hon. or hon. Friends. The CBI has forecast that manufacturing investment between 1989 and 1992 will fall by almost 25 per cent. If investment is falling, there is no way that manufacturing industry can be competitive with the rest of the world, particularly in the single European market.
That is the truth, and it is very grave. It is no use the Chancellor pretending that investments are up. He was

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talking about all investment, of course. Manufacturing investment is going down, and, of course, manufacturing industry produced the wealth of this nation.
Mr. Tim Smith: Will the hon. Gentleman give way?
Mr. Hoyle: I should like to give way to the hon. Gentleman, but I do not have much longer to speak.
Quite apart from investment, of course, we have the problem of what is happening to small employers. Business failures have increased by almost 61 per cent., yet the Conservative party pretends to be the friend of small employers. Nothing that the Chancellor or even Conservative Back-Bench Members have said will add to confidence. We have a lack of confidence at the moment. As many hon. Members have said, all sectors, whether retail, construction or manufacturing, are completely flat.
Another problem is the rate at which we entered the ERM. To hear Conservative Members talk, one would not think that the former Prime Minister and the present Prime Minister took us into the ERM at the wrong time, for all the wrong reasons, and at the wrong rate. One cannot go in at that rate, because British manufacturing industry cannot compete. The rate at which we went in was almost three—
Mr. John Browne: Hon. Members should also look at the Opposition Front Bench.
Mr. Hoyle: I am sorry, it was the ex-Prime Minister and the—[Interruption.] The Government took us in at that level and put us in the dilemma in which we must compete at an artificial rate. I wish that Conservative Members would accept their responsibility and turn their attention to the Prime Minister who said, "In no way will we change the rate that we are in."
Mr. Tim Smith indicated dissent.
Mr. Hoyle: The hon. Gentleman keeps pointing. Why does he not apply pressure on the Prime Minister who took us into the ERM? I cannot understand the former Prime Minister—
Mr. John Browne: Will the hon. Gentleman give way?
Mr. Hoyle: I am sorry, but I cannot give way, much as I should like to do so. I have only three minutes left.
I cannot understand why the former Prime Minister is now objecting to our being in the ERM. She is the person who took us in. There is no doubt that, whichever party is in power, the Government will have to look at the realignment. It will have to be a fairly large realignment if we are to be competitive—that is, about 15 per cent.—and if we are to give back the competitive edge to industry, to have a recovery and to sustain that recovery.
We have plans in relation to providing incentives to manufacturing industry, and providing the incentives that the CBI has repeatedly asked the Government to give. We will give tax incentives for research and development. If we do not have research and development, our companies will not be in the forefront of those that bring forward new ideas. If we do not have new ideas, we will not be able to compete. Of course, we will opt for more training. Indeed, we will spend more on training. In addition, we will give real help to small businesses. We will get on with the task of revitalising the country. It will be a new start and it will give new hope, and new hope is certainly required.
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It is no use the Chancellor or the Financial Secretary spending all their time attempting to attack Labour's plans. The electorate will want to know what successive Conservative Governments have been doing since 1979 to land us in such a mess—and we are in a mess. We are the only member of the European Community in recession. All other members are looking to growth, but we have negative growth of 2 per cent. That does not augur well for the future of this country. It means that, instead of things getting better under the present Government, things will get much worse, and that is even before we are in the single European market. There has certainly been no progress in developing an infrastructure and in encouraging companies to compete in that market. Of course that market will offer opportunities, but it will also lead to failures if one is not prepared for it. The Government have not prepared us for it.
Let us have a general election and let us have what the country needs and is crying for—a change of Government, and a Government who will get on with the task of proudly leading us into the next century. That Government can only be a Labour Government.
6.45 pm
Sir Timothy Raison: I think, although I am not absolutely sure, that this is the first time in 21 years in the House that I have spoken in an economic debate. I have in common with the Leader of the Opposition the fact that economics is not my scene.
The debate has three purposes. The first is to enable hon. Members to take part in some electioneering along the lines that we have heard from the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore). The second is to discuss the overall economic strategy, and that is not what I feel qualified to do. The third purpose springs from the fact that the debate is just about halfway between the autumn statement and the Budget. The autumn statement and the accompanying material cover public expenditure and taxation. The two points that I shall raise are in the territory between the two.
My first point—both points are addressed to my right hon. Friend the Chancellor and my hon. Friend the Financial Secretary—is about one thing that we could do for small businesses in the present tough economic climate. We all know that the economic climate is tough—there is no point saying otherwise. I strongly urge my right hon. and hon Friends in the coming Budget to think hard about the possibility of some short-term relief from the unified business rate.
I am very struck that small business men whom I meet in my constituency and elsewhere say over and again that the UBR is causing them great difficulty. Of course, fundamentally, the lack of orders is the difficulty, but the UBR is a serious difficulty. It is pretty obvious that there is not much point in reducing corporation tax for people who are not actually paying corporation tax, whereas an immediate reduction in the UBR would be of great value.
That is a short-term measure to deal with the current situation. When the economic recovery comes, that measure could be dropped. I do not propose to say how it could be done; there are different ways of doing it. No doubt one way would be by stalling or even temporarily reversing the move to the level determined by revaluation. There is no doubt that the people who are feeling it most viciously in many parts of the country are those who are

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affected by the higher levels produced by revaluation in areas such as my own. The other way would be through some simple, straightforward cut. I hope that my right hon. and hon. Friends will think very hard about the possibility of doing something.
The second matter also falls in the interstices between taxation and public expenditure. I wish to say a word about the proposals which are currently being floated in relation to the possibility of tax relief on child care for working mothers, or the alternative version, which is to provide a voucher for child care to working mothers.
We have already seen brought in some sort of tax relief for workplace nurseries. It is now being suggested that this should be extended to all day care, presumably where fees are actually being charged. It is designed to help mothers to go out to work—or perhaps, more strictly, to help when both parents are at work. I understand the pressure for it and many of my constituents would be rather pleased by it, but I have a good many doubts as to whether it is the right course to follow.
The idea of a tax allowance of this kind goes against the general philosophy or policy of reducing tax reliefs and allowances rather than multiplying them, a philosophy that I am very much in favour of.
There are obvious problems about the feasibility of schemes of this kind. Definition is bound to be complicated: defining exactly what is meant by day care or child care. The voucher version of this is also open to abuse; it could end up in pockets for which it was not designed. So there are practical problems.
Is there an economic case for such a measure? It depends very much where we are in the economic cycle. It is rather hard at present to argue that there is a strong case for measures to encourage more people, who are not in it at the moment, to enter the labour market. The problem at the moment is unemployment rather than over-full employment, so I cannot see a desperate need to lure back to work people who are uncertain whether they should be there.
If, however, there is an economic need, it has always seemed to me that the proper people to pay for it, to put it crudely, are not the taxpayers as a whole but the employers, the people who would gain the economic advantage. In logic, that is irrefutable.
Above all, it seems to me unfair that those who earn a second income should receive tax relief while those who stay at home to look after their children receive neither income nor tax relief. Not only is that not equitable; it seems questionable on social grounds. How far do we really want to persuade the parents of very young children to go out to work? Of course they should have the right to do so—I am absolutely in favour of that, and often it is the right decision, but in other cases it is the wrong decision. I cannot see that it should be part of public policy to go out of our way to encourage people to leave home as soon as possible, because we know that the needs of children are very great and that, by and large, their mothers are the best people to look after them when they are very young.
What emerges from this is that, fundamentally, the argument in favour of tax relief is not really about supporting or looking after children but about helping their parents, about making life a bit easier for their parents. In all this, we should look primarily at the
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interests of the children themselves. If we were to give tax relief or introduce a voucher system for child care, that itself would give no guarantee of quality in child care, something in which I am very interested.
When I was Chairman of the Select Committee on Education, Science and Arts, I was active in producing a report which argued the case for the widest possible extension of nursery education, either in the public sector or the private sector. It should be not just glorified child-minding, but appropriate education of its kind. I would much rather see resources, if resources are deemed to be available, devoted to strengthening nursery education than to providing this particular tax relief.
I also believe that, if we feel that we are in a position to inject extra resources into this area, much the best way, on top of nursery education, is through an enhanced child benefit. It will be said that child benefit is not selective, but we all know very well that tax reliefs are not selective—or, if they are, that they are generally selective in favour of the better-off rather than the worse-off. So that is not a strong argument.
We should leave the choice of whether to go back to work to the parents themselves; the state should be neutral. I very much hope, therefore, that my right hon. Friends will not fall for the arguments which are being advanced with such fervour.
6.53 pm
Mr. Ronnie Campbell: The autumn statement is a testimony to the programme of whatever Government are in office. What we have here and what we have seen with the Government over the years is a waste of £100 billion from North sea oil and a waste of £10 billion with the poll tax. That is testimony indeed. When I hear bandied around the Chamber phrases such as those that we heard today, the one that comes most to mind is: "If it's not hurting, it's not working." I assure Conservative Members that in my constituency, where unemployment is very high, it is hurting and it is not working.
If we look at the testimony of the Government's record on investment and manufacturing, we see some interesting figures. I have managed to dig them up today by means of the Library. Investment in manufacturing was £12.4 billion in 1989 and £12.4 billion in 1990, but in 1991 it came down to £9.4 billion, a reduction of 30 per cent. In the 12 years since 1979, manufacturing investment rose by 52 per cent. in France, 48 per cent. in Germany and 54 per cent. in Europe as a whole, yet in Britain it has fallen in real terms.
Our manufacturing industry has been slashed to a minimum. At one time there were many millions of people working in manufacturing industry; today there are only 5 million. It is an absolute disgrace. It is again testimony to the Government and their so-called economic miracle. When people heard about it a few years ago, they were on the crest of a wave and thought that we had one of the best Governments in living memory, but we are now paying the price.
Business investment in Germany is rising by 7 per cent., in Spain by 5 per cent. and in Japan by 7 per cent. According to the Confederation of British Industry—not any Opposition Member—investment in Britain is falling by 11 per cent., so the CBI is telling the Government that their investment has been nothing to shout about.

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Business failures are even worse. Let us look at the record. In 1980 when the Conservative party had just come to power, there were 10,651 business failures; in 1991 the figure was 47,777—another testimony to the hopelessness of the Government. The growth rate under this Government has been 1.75 per cent.—lower than under any other post-war Government. The Government have the worst record since the war. Gross domestic product fell by 2.3 per cent. in 1990, while that of Germany grew by 1.9 per cent., of France by 1.2 per cent. and of Italy by 1.4 per cent. Britain is indeed the poor man of Europe.
Manufacturing output growth in the United Kingdom between 1979 and 1991 was the lowest of all the countries in the European Economic Community, except for Greece where it was just 1 per cent. lower than in the United Kingdom.
Last year, in the north, there were 3,730 business failures—an increase of 57 per cent. on 1990. When I looked at the position in the south-east, I felt that the north's figure was not too bad because the figure for the south-east was 9,722. Then I looked at the position in the south-west, because that is where all the Tory Members are. No wonder they are not here tonight. No wonder the Government cannot find speakers for the debate. According to last year's figures, there were 5,401 business failures in the south-west.
The figure for London is even worse, but that is where the Tories hope to gain some seats to win overall control. According to last year's figures, there were 7,731 business failures in London. That is an absolute disgrace. The Government are hoodwinking people in those areas. I hope that one day those people will realise what the Government are all about. The Government are for themselves; for the rich and for anyone who wants to put something in the coffers of Conservative central office. According to last year's figures, 200 firms a day went under.
Since 1979, unemployment in the north has increased by 39 per cent. in real terms. It has increased from 93,000 in 1979, when the Conservatives came to power, to 129,000. More than 31 per cent. of unemployed people in the north-east are under 25. Fortunately for us, there are Labour Members in the north-east. There are also one or two Conservative Members, but the figures which I recounted will ensure that they are defeated at the next election. Given the figures which I just described, I hope that Conservative Members will also be defeated in the south-east.
Thirty-three per cent. of people in the north-east have been out of work for more than a year. That is intolerable. It is no good the Government telling us, as they tried to tell us today, that everything is hunky-dory and that the recession has bottomed out. According to the 1991 figures, there were 80,000 house repossessions in England, Wales and Scotland. That was a 90 per cent. increase over the 1990 figure. That is the Government's testimony. Mortgage arrears are now at record levels and one in 12 people are two months behind with their mortgage repayments.
In respect of taxation, the Tories believe that their party gives everything away and takes nothing back. Unfortunately, that is wrong. When Labour came to power, VAT was 8 per cent. As we all know, under the Tories today, VAT is 17.5 per cent. That has caused
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problems for working people, because VAT applies to everyone and not simply to the rich. It applies to the low-paid man who has to buy clothes for his children.
Mr. Tim Smith: Value added tax does not apply to children's clothes.
Mr. Campbell: The hon. Gentleman is right; I apologise.
In the last Budget, VAT meant an extra £2 for the average working family. The increase in alcohol duty meant an extra £1 on that family's budget. The tax increase on tobacco in the last Budget meant £1 a week for the average working man. Changes to petrol duty meant an extra 30p a week for the average working man—not many average working men have motor cars, not like some of us in this place who are very rich. In all, last year's Budget meant an increase of £4.30 in taxation for the average working man. It is a fallacy that the Government are not a Government of taxation. They should get out and let another Government come in and do the right thing for the working class of this country.
7.4 pm
Mr. Nigel Forman: It is already crystal clear from this debate and from the official Opposition amendment that, if the Labour party was ever to form the Government, this country would have to spend more, tax more and borrow more. That would be quantitatively and qualitatively far more than if this Conservative Government were to remain in power.
It is also misleading for the right hon. and learned Member for Monklands, East (Mr. Smith) and his colleagues to present Labour's programme as cautious and carefully costed. They must know, just as we know, that it is the cost of a Labour Government over a full five-year term which would concern the British people. That cost would be well in excess—perhaps more than £30 billion in excess—of the Government's current spending plans, which are already based on some pretty optimistic assumptions about future growth in the economy over the relevant period.
The Labour party has sought to lull the British people into a false sense of security by referring only to the first year's cost of its promised increases in state pensions and child benefits. However, any fair-minded observer is bound to conclude, on the basis of previous evidence of the Labour party in office, that there are usually three stages in a typical Labour path to perdition: first, Labour spends more in an effort to redeem its pledges to special interest groups—and it is very close to many producer groups; then it taxes more, whether via income tax or national insurance, in an attempt to cover at least some of that cost; then it borrows more and has to raise interest rates higher than they would otherwise have been until the markets or the International Monetary Fund—possibly both—intervene to stop Labour. That all ends in tears.
We saw all that before, between October 1974 and October 1976. If the British people were foolish enough to return a Labour Government once more, we would see it again. The bills to the taxpayer may be delayed somewhat under the formulae espoused by the right hon. and learned Member for Monklands, East, but they would all be in the post—as the saying goes—even if, under Labour, that would be a pretty inferior second-class post.

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Furthermore, in a modern society such as ours, Labour would soon encounter a taxpayers' revolt if it pursued its irresponsible public spending plans. Notwithstanding all the adult education that Labour Members have received during their long years in opposition, they do not seem to have learnt that large and rapid increases in public spending are not the most efficient way to meet genuine social needs or to get maximum value for money in the public sector. Too much of an extra spend of that kind tends to be absorbed in a rapid pay increase.
Labour's redistributive politics—the politics of envy as it was once called—would involve robbing middle-class Peter to provide services for middle-class Paul. Indeed, because of the pattern of use in many public services, it would often be a case of increasing tax on the relatively lower-paid in work, or national insurance contributions, to increase pay in the public sector and provide services which the hon. Member for Birkenhead (Mr. Field)—who, alas, is not in the Chamber today—and others have shown are secured disproportionately by what the hon. Member has described as the "sharp elbows" of the middle class.
The wrong way in which to promote an investment-led recovery, which is precisely the objective in the Opposition's amendment, is to pursue policies that would raise interest rates, increase taxation and national insurance and weaken market confidence in the currency. However, those would be the consequences of Labour's high-spending and high taxation policies.
The Opposition's amendment refers to other desirable measures, such as those designed to promote education and training, but they are medium to long-term measures. They would have no positive impact during the current phase of economic recession. In any case, the private sector has commendably continued with its expenditure on human capital throughout the recession in a way that it did not do in the last recession. However, private firms do not want the prospect of a statutory training levy, something that they would get from a Labour Government, which would be rigid and unfair and would add to their costs.
Against that background, the autumn statement is a worthy document which catalogues the Government's commitment to increase public spending in our priority areas—for example, the national health service. However, the obligatory forecasting duty that the Industry Act 1975 imposes leads to some forecasts that are more than usually inaccurate—for example, forecasts about the pace and scale of economic recovery, and especially about the turnaround in consumer expenditure and fixed investment. I regard this as a pity, because it may have served to raise among the public some hopes whose fulfilment now seems destined to be deferred.
However, there is good news in the autumn statement. Much of this should breed confidence that the recovery, when it does come, will be soundly based and sustainable. For example, consumer price increases have halved since their peak last year, unit labour cost increases have halved since their peak last year, and sterling remains securely within its agreed ERM bands. I believe that, on this basis, we can he confident that the coming year will see the beginnings of recovery after what may turn out to have been the longest and deepest recession of the post-war period.
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Incidentally, we should not really have been surprised at the extent of the recession, as the downturn is not confined to this country. But, primarily, the boom that preceded the downturn was also the longest and strongest period of continuous economic growth in this country since the 1930s. These experiences have obviously had their behavioural and psychological effects in both phases of the economic cycle.
Against that background, my right hon. Friend the Chancellor was right when he said in the House last week that reduced inflation is absolutely the first condition for medium-term prosperity. Having heard his speech today, I am confident that he will stick to his view into and beyond the next election. He was also right, in a recent Financial Times interview, to reject the temptation to buy votes in the election period. Only an irresponsible Government would seek to do that. It would be completely wrong for my right hon. Friends even to contemplate such action—not least because Conservatives intend in the next Parliament to inherit the consequences of current policy decisions.
7.12 pm
Mr. William Ross: At the time of the autumn statement, I asked the Chancellor whether it did not represent a decisive shift from the concept of balanced budgets. He replied that he intended to balance the budget over the cycle. Since he uttered those words, I have given some thought to them, but have not yet been able to figure out what period of years, from inflation to deflation to inflation, he was talking about.
I have not been able to figure out whether the right hon. Gentleman intended to retain the same burden of debt over a very long period—perhaps permanently—and whether that burden would be in cash terms or real terms or would be expressed as a percentage of gross national product, or whatever. I hope that the Front-Bench spokesman, if he is unable to give me the information tonight, will have the courtesy to write and let me know what maintaining a balance over the cycle means. Quite a number of people will be interested to hear.
I should like to know whether the current Administration or their predecessors ever intended to diminish central Government debt, or even the entire public-sector debt, as a matter of policy, or whether the diminution was simply the result of a happy accident that occurred because they got their sums wrong. Governments seem to be very good at getting their sums wrong. In the very rumbustious electioneering speeches that we have heard from the two Front Benches and from some other Members today, there was some evidence of that. As neither of the major parties will make any impact in the election in Northern Ireland, I can take a more casual, and perhaps a more objective, view and can state what very many people in the country are thinking.
The Government did not only get their sums wrong in relation to the whole United Kingdom; they got their sums wrong over Government expenditure in Northern Ireland in the current year. But there is something that annoyed some of us even more. When, some weeks ago, the Secretary of State for Northern Ireland announced the moratorium on certain aspects of public expenditure in Northern Ireland, he did not have the guts to do so in the

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House. I do not wish to be impolite, but I must point out that it was in reply to a planted question that he told us that the Government were at least considering the matter.
That was followed up with a statement that the overspend of about £30 million had been identified by early December, that it represented 0.5 per cent. of the Northern Ireland block grant, and that the right hon. Gentleman intended to correct what was amiss. The 0.5 per cent. does not seem very much. Given the magnitude of the mistakes that have been described in almost all speeches today, there could very easily be an underspend of 0.5 per cent., or even 2 or 3 per cent. That being the case, I wonder whether the corrective measure is somewhat premature.
Even worse is the fact that the Government's first excuse for this moratorium in Northern Ireland expenditure was the high cost of compensation for damage and injury caused by terrorist activity. That was the most foolish of remarks. Everyone in Northern Ireland knows that bills arising from terrorist damage do not come in during the financial year in which the damage occurs. The great bulk are received the following year, and sometimes even later. The sums that have been set out for future years seem to suggest that the Government do not expect to conquer the terrorists in the near future.
When, in this case, the Government were blown off course, they had to come up with some other excuses. The real problem is simply that they got their sums wrong, and they do not yet know where the moratorium and the cut will fall. When I put a question about this matter, the Secretary of State had to say that he did not know. He did not say it quite so baldly, but that is what he meant. He said that the changes would be laid before the House in February.
Well, we look forward to February, but when we receive the figures, we shall have to search through the whole mass of detail and make comparisons with the previously published figures to work out exactly where things went wrong. The Government would have been rather more honest if, at the beginning, they had regarded this as a contingency matter—it arose out of terrorist activity—and had decided that the sums required should be provided out of the United Kingdom contingency fund. That is what would happen in respect of any other part of the United Kingdom.
On the national scene, the Government are confronted with a rising budget deficit. The Chancellor now finds himself with a fixed exchange rate. I remember the joy that was demonstrated in this place when we were told that we were to go over to a floating exchange rate. Sometimes I wonder how long the Government stayed with the floating exchange rate. However, they have decided to move to the fixed exchange rate, and the whole economy of the nation is at the mercy of an arbitrary standard that the Chancellor of the Exchequer cannot control.
I feel sure that the Chancellor—whoever he may be —will find the role of a supplicant at European summits very humiliating. Perhaps it will be good for the soul—which, in this case, certainly requires some purification. The Chancellor has no control whatever over interest rates. Would any hon. Member deny that the Chancellor would be overjoyed if he once more had the capacity to reduce interest rates and manage the economy of the nation? After all, that is what he was elected to do. I feel very sad that he has thrown that power away, and I hope to live to see the day when it is restored.
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The right hon. Gentleman's alternatives are few. I believe that, very soon, he will find himself in the position of his predecessors, who had to wrestle with fixed exchange rates. I believe that he will be forced, through this wonderful economic cycle, to create inflation or to deflate according to whether the value of the currency is rising or falling. It is not a prospect that any Chancellor would welcome, but it is one with which the present Government have chosen to live.
The problem is that that will continue until we either leave the ERM or become part of a federal Europe with one currency and, inevitably, one budget. When Europe reaches that stage —and I hope that we are not still part of it—that currency will float. It will be bought and sold on the world currency markets because that is the only way in which its true value can be found. If the Chancellor is prepared to deny that that currency will float, I should like to hear him say so. I do not think that I will hear it this evening.
Two minor matters also concern me. Perhaps they are not that minor because they have been the making and the breaking of many a person's fortune. They have cost people their businesses, their dwellings and their incomes. The first is the problems that small businesses face because of the high level of bank rates and the horrendous activities of the banks.
When a business is in trouble and its owner goes to the bank and explains the problem, instead of being sympathetic, the bank says, "You are a risk," and bangs another 3 or 4 per cent. on to the interest rate. We have heard a great deal about caring banks—but from the banks themselves, not from business men or people who owe them money. By putting up the interest rate, the bank ensures that the business goes under and the jobs of its employees are lost.
The second point is the high level of rates being charged on retail premises. It appears to many of us, and especially the retailers, that, every time another few quid has to be found for the local economy, the attitude is, "Get it from retail business." It does not matter whether it be central Government or a local authority, that is the attitude, and it has led to the destruction of many small businesses—the very group the Government say they rely on and want to encourage.
7.21 pm
Mr. Nicholas Budgen: It is a privilege to follow the hon. Member for Londonderry, East (Mr. Ross). In so much of what he says he shows the fundamental agreement that there has always been between the Tory party and the Ulster Unionists. He makes us realise how many mistakes have been made by successive Tory Governments and how easy it is to understand the despair and resentment felt towards us by many Ulster Unionists. I hope that he and they understand that there are many on the Conservative Benches who have noted those mistakes and who, across the barrier of resentment and misunderstanding, feel strong affection and admiration for our cousins in the Province.
I listened with care to the two opening speeches. I was reminded of the agreeable battles—and "agreeable" is the right adjective—that used to take place in the 1970s between Lord Whitelaw and Lord Jenkins, as they have now become, when they discussed home affairs. Lord Jenkins treated Lord Whitelaw with that urbane

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condescension for which he was rightly known, and Lord Whitelaw—with genial good will—accepted the role made for him by Lord Jenkins. Both of them were united in the view that it was crude, vulgar and against the public interest to say anything about immigration, which at that time was a subject of some interest to the public. Such vulgarity was avoided in all discussions of home affairs.
The position is similar today. The two Front-Bench spokesmen, who are now carrying out the economic policy of the Bundesbank, did not for a moment allow the words "exchange rate mechanism" to pass their lips. It was left to later and more vulgar speakers to mention those words. My hon. Friends the Members for Bridlington (Mr. Townend) and for Winchester (Mr. Browne) put the fundamental and first arguments against ERM with great force and clarity.
It is interesting that we are now debating these matters in the shadow of the great intellect of my right hon. Friend the Member for Blaby (Mr. Lawson). After all, he was the single most important politician of the period between 1974 and his resignation, because economic policy decides so much in our political affairs. Between 1974 and 1979, he helped us to understand the three most important factors that would guide Tory economic policy between 1979 and 1985. They were, first, that there would be a decline in the increase in money supply; secondly, that there would be floating exchange rates; and thirdly, that, as far as possible, we should aim for fiscal neutrality. It is one of the great tragedies of the Tory party that he who understood everything was, perhaps, less strong in belief.
In 1985, my right hon. Friend went to a great conference—the new field of the cloth of gold—which was a meeting of the G5 at Plaza. He went along with what was then the new American fashion of interfering with exchange rates. No doubt, having been persuaded that it would be of temporary advantage, he persuaded my right hon. Friend the then Prime Minister—who was not immune to the charms of American persuasion—that if the Americans wanted it, it must be good for Britain. The then Prime Minister went against what had been the firm convictions of the Tory party for the whole of the period since the agony of it, having so unnecessarily lost power in 1974.
From starting to rig exchange rates, my right hon. Friend the Member for Blaby then laid the ground for those who wanted to go into the ERM and to move from fixed and variable rates to fixed rates. The consequence of that was that in 1985 he did not merely undermine the argument for a floating exchange rate; he undermined the argument for the medium-term financial strategy and also, in the end, the argument for fiscal neutrality.
It is important that my right hon. and hon. Friends who may be saying to themselves, "There is a risk that we might lose the election", know that if we do lose it, in the end it will be because of what happened at Plaza in 1985, which ended up with Britain joining the ERM. We abandoned the three tenets of a highly successful Tory policy as it was applied between 1979 and 1985.
I hope that my right hon. and hon. Friends will note some of the consequences of the abandonment of those policies. Let us consider the consequences of having what, in practical terms, is a fixed exchange rate. The first is the political consequence. Anybody who has read, thought
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about or experienced in close circumstances the period of the Callaghan-Wilson devaluation knows what happened. It is a constitutional necessity for the Chancellor of the Exchequer of the day to keep saying, "There will be no change in the value of the currency." He goes on saying, "We shall defend the currency to the last man and to the last drop of blood", but suddenly it changes and not only does the Chancellor have to resign but the Government of the day suffer a considerable political setback as a consequence of having said so much that requires the eating of words.
It also becomes clear that intervention—no matter by how many Governments—is not enough to stand against market forces. Governments then come to the conclusion that they very much dislike using the interest rate weapon when it is so obviously at variance with domestic needs. So what happens? They do things such as reimposing exchange controls. Let us remember that when the Tory Administration abolished exchange controls in 1979, they did so in the belief that they would always be supporting floating exchange rates. Exchange controls are extremely useful with either a variable or a fixed exchange rate.
It will not be long before people start advocating exchange controls, which will considerably affect the viability of the City of London. And it will not stop there —if one has to have a fixed exchange rate, one can no longer remain neutral between exports and imports. We shall be back to import surcharges and to saying that imports are wicked and that exports are morally good. It is highly likely that we shall find that the new privatised arrangements for export credit guarantees are deficient. We shall have to have some system of state subsidy for exports.
All those distortions will inevitably flow from having abandoned those three important tenets that we worked so strongly and so well towards in our difficult period in opposition between 1974 and 1979. But it will not end there. Indeed, it is obvious that it has not ended yet. In my opinion, the system of fiscal neutrality was a good one. Most of all, it said that politicians should not decide who has the tax breaks and that, on the whole, that should be left to the market and we should have low taxes and few tax breaks. If we abandon the principle of fiscal neutrality, we lay ourselves open to every interest group and to every section of the community that can get support from a grouping of Members of Parliament or others who want some special deal.
I regret the way in which in 1985 we abandoned so much that was so successful. I hope that the Tory party will soon reconsider the advantages of so much that was so good between 1979 and 1985.
7.32 pm
Mr. John Battle: It is only two months since the Chancellor presented his autumn statement with all its false economic optimism. The period since then has been characterised by short-term electioneering tactics. It seems that the Government's whole approach is now to appeal to the presumed amnesia of the British people about what has actually happened during the past 13 years and then to deny any responsibility for it.
Week by week, another proposed quick fix leaks out from the Government—another spurt of spending for power with a short-term election-winning adjustment. Was not an example today's rumour that the 20 per cent.

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mandatory poll tax may go, although only two months ago all Conservative Members voted to retain it? That strategy is based on a short memory and on the hope that everyone will forget that this is the Government who were elected in 1987 on a manifesto that never even mentioned the poll tax—an experiment that has cost thousands of millions of pounds of public money. The Conservative manifesto never even mentioned that VAT would be pushed up from 8 per cent. right through to 15 per cent. and this year to even 17.5 per cent. That manifesto never even mentioned that child benefit would be frozen solid for three years or that pensioners' incomes would be undermined by reductions in housing benefit. The Conservative manifesto never even mentioned that cuts in income support would lead to homelessness among youngsters.
It is worth recalling that in 1979 child benefit was 7 per cent. of average earnings. It is now worth only 4.8 per cent. In 1979 social security benefits, such as sickness benefit, were worth 29.2 per cent. of average earnings, but are now worth only 20 per cent. The Government were elected in 1979 on the basis of getting unemployment below its previous level, but they have had to make 30 alterations to the way in which the official figures are calculated. Yet under the Tories, since 1979, unemployment has never been lower than the figure that they inherited then, which was 1.08 million people, or 4 per cent. of the work force. It is worth recalling that in 1979 unemployment benefit was 29.2 per cent. of average earnings, but is now only 20.9 per cent. That is the real price that people in our society are having to pay for the Tory Government's economic con tricks over the past 13 years.
The Prime Minister told us to pretend that what is happening is a form of sadistic tonic, saying, "If it isn't hurting, it isn't working", but the many who are not working have had their lives effectively broken by the Government. For millions of people in our society these have been 13 years of economic pain, and that economic pain has been because of a deliberate Government policy. They have been quite conscious and deliberate in their experimental attempts to solve the economic crisis that they created by shifting Britain in the last decade to being a vulnerable, low-wage economy.
When Conservative Members talk about such things now, they say that they cannot improve things overnight. They pretend that they have just taken over and that the Prime Minister inherited a mess for which he is not responsible, yet that same man has been both Chief Secretary to the Treasury and Chancellor of the Exchequer. The economic mess and the illusion that one can both cut taxes and increase public spending is of the Government's conscious making. Conservative Members voted night after night in the House to set that policy in place.
The Government are trying to create the illusion of increasing public spending while cutting taxes, but not only has the overall burden of taxation been increased from 34.7 per cent. in 1979 to 37 per cent. now, so that the tax burden for a typical family with two children has increased by 13 per cent. since the years 1978–79, but the Government have effectively cut public spending on the national health service, education and training, and on housing in particular. In 1987, the pre-election bribe in the autumn statement that preceded the election was the promise of an increase in public spending over the next three years of £11.2 billion above and beyond the amount
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that was needed to make up for expected inflation. However, there was no increase whatsoever. There was a cut of £12.7 billion. That was the way in which that promise was fulfilled.
When the Prime Minister was asked on "The Frost Programme" on Sunday whether VAT would increase under the Conservatives if they were re-elected, the right hon. Gentleman said:
"We have no plans for an increase in VAT."
I seem to remember that that is exactly what the former Prime Minister said in 1979, in 1983 and in 1987, and she subsequently increased VAT. It seems that the promise further to cut income tax has been suspended from today's speeches but it might be a better idea for the Chancellor to come to the House to say that he will cut the 20 per cent. mandatory poll tax payment because that is one of the measures that has hit hardest the poorest in our society.
We need to bear in mind exactly who is paying the price for the Government's decisions. Primarily, it has been the unemployed. In the past year, unemployment has soared to 2.5 million—mainly young people—with the biggest annual rise since 1980. A total of 703,000 people joined the dole queue in 1991. Last month saw a 31,100 rise, bringing the total to 2.5 million people, or 9 per cent. of the working population. That was the worst rise since the first year of the Thatcher Government when in 1979–80 the total number of unemployed rocketed by 738,000 to 1.8 million people. That was what happened under a Government who were elected on a pledge to reduce unemployment, and in the 13 years since then unemployment has never been at a level lower than it was in 1979. Each registered job vacancy is now being chased by 23 unemployed people. That is the real, personal tragedy —a tragedy of lives blighted by the lack of work and purpose. Those people are certainly paying the price for the Government's misguided, short-term economic experiment.
As the trends continue, millions of people begin to feel that they are only a pay cheque away from the dole queue. For every extra 1,000 unemployed, social security spending is increased by £300 million. That is the real waste. Worse, 11 separate cuts in unemployment benefit have saved the Government between £5 billion and £6 billion.
In my constituency, while the unemployed poor pay the price, those in work face a future of low investment and low output under the Government's current economic strategy. Since 1979, the Government have almost seen off manufacturing industry: Britain is now the only EC country in which manufacturing investment is lower than it was in 1979. According to a detailed survey carried out by the Amalgamated Engineering Union, 170,000 jobs were lost in manufacturing industry last year, and 22,000 were lost between October and December. Since the completion of that survey, a further 3,500 jobs have gone. My region, Yorkshire, is highlighted as one of the worst hit.
Paradoxically, the United Kingdom is the second largest world owner of multinational assets. Its economy has been starved of capital investment, as—paradoxically again—the increase in part-time work demonstrates. The country is crying out for Labour's manufacturing investment initiative, which would bring enhanced first-year capital allowances for investment in plant and machinery, innovation and design. That is why we need a strong regional policy, to tackle the divide that is the legacy of the Government's strategy.

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It is not only the unemployed who have been forced to pay the price. An estimated 10 million people on the poverty level have suffered real cuts in income since 1979, while 1 per cent. of the population—more than half a million adults with the lowest incomes of all—have experienced a cut of no less than 22.6 per cent. in living standards, in real terms. As Ministers go around the world advertising Britain's special economic advantage of low labour costs, it should be remembered that a further 10 million people—those earning less than the Council of Europe's decency threshold of £5.15 an hour—are also paying the price of the Government's policies, and paying it every week.
There has been a massive income shift from the poorest third of the population to the better-off two thirds—and, above all, to those who are genuinely rich by any standards. The homeless, too, are helping to pay the price of that shift. Every "light at the end of the tunnel" forecast by the Government seems to be yet another oncoming train. The only chance now seems to be a general election, which would offer the people some hope for the future—the hope that a Labour Government is elected.
7.42 pm
Mr. Tim Smith: As is so often the case, the real debate about economic policy has taken place almost exclusively on the Conservative Benches. Labour Members have produced a torrent of statistics, but they have given us little in the way of constructive alternative policy. The speech of the right hon. and learned Member for Monklands, East (Mr. Smith) was even more notable than his previous speeches for the paucity of policy proposals that it contained.
The hon. Member for Leeds, West (Mr. Battle) has just told us of his wish for enhanced capital allowances, which he believes would lead to increased investment. Although, in the late 1970s, such allowances may have led to an increase in the quantity of investment, they distorted economic decisions: investment decisions are made for tax reasons rather than on their merits, and the quality of investment was affected.
Even if such a policy proved successful, it would be counterbalanced by another policy—the policy of increasing tax on savings. How can a party that proposes policies to encourage investment also propose policies to increase savings taxes? How can that encourage people to save, and therefore to invest?
I have listened carefully to my hon. Friends—especially my hon. Friends the Members for Wolverhampton, South-West (Mr. Budgen), for Winchester (Mr. Browne) and for Bridlington (Mr. Townend). My hon. Friend the Member for Winchester, in particular, seemed very complacent about the prospects for inflation. The great advantage of our membership of the exchange rate mechanism is not that it will lead to a reduction in inflation —although that has already happened—but that it will ensure that inflation is kept down. On too many occasions in the past, we have succeeded in getting inflation down, only to let it rise again, thus throwing away the benefits of a successful policy.
It is only 15 months since we decided to join the ERM, and that policy is widely supported in the House. My hon. Friend the Member for Wolverhampton, South-West is
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one of the few Members who criticised the Government's monetary policy at the appropriate time, in 1987 and 1988. The right hon. and learned Member for Monklands, East called for further interest rate reductions when interest rates were running at 7.5 per cent.
Mr. Favell: Here speaks an hon. Member who was not at all happy about ERM entry. My hon. Friend says that he believes that the ERM will keep inflation down; but, when my right hon. Friend the Member for Blaby (Mr. Lawson) was Chancellor and our currency was shadowing the deutschmark, we had to reduce interest rates to such a level that inflation took off. How would my hon. Friend ensure that we do not have to reduce them to the same level while we are in the ERM straitjacket?
Mr. Smith: With economic policy, it is necessary to go either forward or back, and my hon. Friend wants to go back—he wants to withdraw from the exchange rate mechanism. I think that we must soon move on—that is, move into the narrow ERM bands and thence, soon, to a single currency. It is vital for us to "progress" the policy.
Mr. Budgen: Surely the problem is the fact that we are now in an unstable, intermediate period. There is a case for the policies that I suggested, and there may be a case for a single currency according to those who believe that there is such a thing as a European nation.
Mr. Smith: There is something in what my hon. Friend says, but I feel that he sometimes underestimates the value of exchange rate stability to those in business. That is why the CBI is so enthusiastic about Britain's ERM membership: a business man who is trying to plan ahead will need some indication of the future level of inflation, interest rates and exchange rates. It is very difficult to carry out either import or export business if exchange rates are fluctuating like a yo-yo. That is why I think that the policy will bring about long-term benefits—although I understand how frustrating it is for some people that we cannot lower interest rates in the way that they would like.
The United States, after all, has reduced interest rates substantially, but as yet it has experienced no economic recovery. I think that people's main concern is less about the level of interest rates than about the level of debt, which is unaffected by the level of interest rates. Like people in the United Kingdom, they are concerned about the debt that built up in the late 1980s, and they want to repay some of it.
In the long term, that is good news: the savings ratio is holding up well, which means more money for investment. It is good that people are repaying their debt, although in the short term an increase in consumer spending would be desirable. It is extraordinary that, in the present circumstances, Labour should propose an increase in taxes on savings. We want to encourage people to save, so that there is more money for investment.
I think that the autumn statement had it about right. A substantial increase in public spending—an increase of some £11 billion—is proposed for next year. Labour would like to increase spending further—much further, no doubt. My right hon. and learned Friend the Chief Secretary has costed all Labour's proposals, and they total £37 billion. [Interruption.] Very well. Let us look at the interesting table on page 27 of the autumn statement which shows the record of public spending from 1963–64 onwards. In the first and second years of the last Labour

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Government, public spending increased hugely. As a proportion of gross domestic product it rose from 41 to 49 per cent. in just two or three years. That is what would happen if another Labour Government were elected.
There is another side to this question. It illustrates why people do not believe what the Labour party says about taxation. On 26 March 1974, the right hon. Member for Leeds, East (Mr. Healey) introduced his first Budget as Chancellor of the Exchequer. He said:
"Finally, I turn to the rates of income tax…I require to raise from the taxpayer a substantial amount of additional revenue for the coming year…I propose to increase the basic rate of income tax by 3p in the pound."—[Official Report, 26 March 1974; Vol. 871, c. 325.]
The rate was 30p; it was increased to 33p. There was no mention of that in the Labour manifesto of February 1974. There will be no mention in Labour's 1992 manifesto of an increase in income tax. However, the poll published in The Sunday Times shows that most Labour Members of Parliament want income tax rates to be increased.
It happened again. On 15 April 1975, the right hon. Member for Leeds, East introduced his third Budget and said:
"I therefore have no alternative but to raise the income tax…My proposal is to raise the basic and higher rates of income tax by 2 percentage points".—[Official Report, 15 April 1975; Vol. 890, c. 317.]
On that occasion, the standard rate of income tax was raised to 35 per cent. Again, there was no mention of that proposal in the Labour manifesto of October 1974. Labour did it before. It will do it again.
7.51 pm
Mr. Thomas McAvoy: According to the Prime Minister, there are an awful lot of dismal Jimmies, as he called them, about. With the exception of just two Conservative Back Benchers, every Conservative Back Bencher agrees that there has been a recession, a depression or a slump. The last one to disagree with that proposition, the hon. Member for Beaconsfield (Mr. Smith), was, I think, given a job to do. That may have satisfied him, because he is patently trying to get a job in Government.
I take no pleasure in agreeing with most Conservative Back Benchers that the British economy is in a deep and damaging recession. Far from there being a recovery, which Ministers have told us over and over again is about to happen, the British economy is still in the middle of a severe recession. There is talk of a plunge down again— the so-called double-dip recession.
Unemployment increased by 31,000 in December, bringing total unemployment up to 2.54 million, a rise of over 800,000 in the last year alone. Output, if North sea oil is excluded, was clown again in the third quarter of 1991 —the fourth consecutive quarter that output was down. Repossessions are running at 300 each working day. Business failures were running at 200 each working day in the last quarter. Consumer confidence is down. Business confidence is also plunging. The latest Confederation of British Industry survey shows that there is no expectation of a pick-up in the distributive trades.
Faced with all those signs, what did the Chancellor of the Exchequer, the Prime Minister's right-hand man, do? He has done absolutely nothing to help the economy. Throughout the time that he has been Chancellor he has been complacent. His predecessor as Chancellor, the present Prime Minister, said:
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"I do not myself believe that a recession is likely or necessary."
When the present Chancellor realised that that statement was untenable, he switched to saying that the recession would be painless. On 5 December 1990, he told the Treasury and Civil Service Select Committee:
"I think there are reasons why one could believe that it will be relatively short-lived and relatively shallow."
When that no longer held water, the rhetoric switched swiftly to talk of an imminent recovery. In his 1991 Budget speech he said that there were good reasons to expect that the recovery would begin in the second half of the year. In the following month he told everybody, amazingly, that economic recovery was around the corner.
The hon. Member for Beaconsfield had the cheek to tell us that no one believes us. The Prime Minister added to the nonsense by saying in April 1991 that Britain's position was strengthening month by month. I could refer to many other remarks which have been made which show the complacency of the Prime Minister or, if I were to be more frank, his incompetence and that of the Chancellor in failing to realise the serious state that this country is in and to do something about it.
We have referred frequently in this debate to the Prime Minister's heartless statement that, if it is not hurting, it is not working. [Interruption.] Conservative Members do not like the truth. The Prime Minister's statement showed that he personally was all right. Despite all his whining and moaning about the hardship of his early life, he cares nothing for the people who face the consequences of his economic policies.
The Prime Minister tries to blame Britain's economic woes on a massive worldwide recession. He would have us believe that the recession has nothing to do with him or the Chancellor. The Prime Minister was, however, Chancellor of the Exchequer. He has therefore tried to distance himself from the economic mess in which we find ourselves. The present Chancellor of the Exchequer has been a Treasury Minister since 1986 and a member of the Cabinet since 1989. Between 1987 and 1989 the Prime Minister was second in command to the right hon. Member for Blaby (Mr. Lawson) when he was Chancellor and he was also a member of the Cabinet. Then he became Chancellor of the Exchequer before he was appointed Prime Minister. Therefore, the present Chancellor and Prime Minister helped to plan the top rate tax cuts of 1988 that fuelled the credit boom.
The Chancellor and the Prime Minister told us of the economic miracle that meant that we would have boom times for ever and that people should not hesitate to take on more debt. All of us could give instances of credit being made readily available; people could take on any amount of debt. That was disgraceful, given the misery that it caused. No other country is in such dire straits. The current recession was brought about by the present incumbents of Nos. 10 and 11 Downing street.
Britain was the first major country to go into recession. It has had the deepest recession and, if one considers current form, it may be the last country to come out of the recession. The only other countries within the European Community or the Group of Seven that have experienced serious declines in output in recent times are the United States and Canada. In each case, the fall was smaller than in the United Kingdom.
It is totally misleading to suggest that all countries are facing surging unemployment. The damage done by the

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Government to my part of Scotland was illustrated again when British Steel decided to close Ravenscraig. My constituency borders on Ravenscraig. Many of my constituents work there. The closure of Ravenscraig will affect them but, to quote the Prime Minister again, if it is not hurting it is not working. Again, though, he is not the one who is getting hurt.
The hon. Member for Beaconsfield referred to Labour's programme and said that it would cost £35 billion. In The Daily Telegraph today—a newspaper that does not usually support the Labour party—its city editor says:
"Conservatives, you remember, are the people who are pledged to cut taxes; so they have, if the only tax that matters is income tax. But other tax rates, notably Value Added Tax, have doubled since and the proportion that a manual worker earning the average income pays in taxes, both direct and indirect, is higher now than it was then."
There is another article in The Guardian today which also questions the Government's credibility. It talks about the Government's campaign about the Opposition's so-called £35 billion spending plans. It says:
"the campaign was slightly dented by remarks last night by Brendan Bruce, former Conservative communication director, who said: 'No-one sensible in the Tory Party actually believes the Labour Party will put up public spending by £037 billion.
The Conservatives are criticised by their own. The Government know that what they are saying is false.
The Chancellor suggested that the Labour party would raise the basic rate of income tax to 35 per cent., but that was dismissed as absurd by Andrew Dilnot, the director of the Institute of Fiscal Studies. That suggestion shows, yet again, nothing but scaremongering by the Conservatives to undermine the Labour party.
Mr. Favell: Will the hon. Gentleman give way?
Mr. McAvoy: I have only 10 minutes, so I must press on.
We will support a manufacturing investment initiative and a package to help small businesses and we will provide a boost for housing. Getting house building going again would provide the kick-start which has been mentioned by Conservative Members. We would support a programme for skills, work for the unemployed and to get the railways moving.
The recession is continuing. It is making life miserable for millions of our people and is severely challenging the country's economic prospects. The recession shows few signs of lifting, but the Prime Minister and the Chancellor do nothing except make bogus attacks on Labour party policy. What are they doing about the country?
The forecasts in the autumn statement are another part of the charade. The gloss of extra spending presented in the autumn statement is simply money to make up for the costs of the recession. Labour's policies to revive the economy are clear and will work. It is time to sweep aside the Government who believe that economic policy consists of doing nothing but trying to talk up recovery.
8.1 pm
Mr. Tony Favell: My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made a wonderful contribution to the debate, as he always does. Like my hon. Friend, I listened to the right hon. and learned Member for Monklands, East (Mr. Smith) with
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some amusement as he threw punches at my right hon. Friend the Chancellor and called upon him to stimulate industrial activity, to deal with the problems of the housing market and to reduce insolvencies and bankruptcies. He knew all the time that he would be unable to take the action necessary to deal with all those problems—reduce interest rates. The right hon. and learned Gentleman could not reduce interest rates because, like his party, he worships at the feet of the European sacred cow—the exchange rate mechanism. He knows that if he were to take office as Chancellor, he would not abandon the exchange rate mechanism because it is the first stage in the three-stage plan to take us to a single currency. He is committed to it. Anybody who votes for the Labour party thinking that it will reduce interest rates and deal with all the problems will soon be disillusioned.
My right hon. Friend the Chancellor is, alas, within the straitjacket of the exchange rate mechanism. I think that he has done remarkably well since becoming Chancellor. Given the confines within which he has operated, he has behaved in a masterly fashion. He has reduced interest rates by 4.5 per cent.—although I believe that the first 1 per cent. reduction occurred when my right hon. Friend the Prime Minister was Chancellor. The way in which my right hon. Friend the Chancellor marshalled his troops, including my hon. Friend the Economic Secretary, when the Germans increased their interest rates so that we did not have to follow them was extraordinary. I agree with my hon. Friend the Member for Wolverhampton, South-West that there is no way in which the Labour party could have reduced interest rates by 4.5 per cent. within the exchange rate mechanism or have defended our interest rate when the Germans increased theirs.
Having said that, in the words of the song, the time has come to review the situation. We must look again at the exchange rate mechanism. It is only 14 months since we joined the ERM and it is no secret that I would not have joined because I see it as a political move to take us towards a single currency and because it is the first stage of the three-stage Delors plan to take us ultimately to a European state. Even from an economic point of view—
Mr. Salmond: To my recollection, this is the fourth or fifth speech against the ERM from Conservative Members. Can the hon. Gentleman estimate for the benefit of the House how many of his colleagues share his view that withdrawal from the ERM should be an immediate priority for the Government?
Mr. Favell: 1 cannot possibly estimate how many there are, but there are probably almost as many on the Conservative Benches as on the Opposition Benches. Alas, the Opposition are so thirsty for office that no speaker dares mention the subject.
Like my hon. Friends the Members for Wolverhampton, South-West and for Stafford (Mr. Cash), I think that the time has come to review the situation because of the water that has passed under the bridge since we joined the ERM. We joined the exchange rate mechanism before German reunification took place. The Germans have taken on 16 million people who were formerly in East Germany. That state was bankrupt, out-of-date and thoroughly socialist. They have exchanged one eastern mark for one deutschmark and they now have a monumental public sector deficit. As a result,

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unexpectedly, they had to put up their interest rates. We have been unable to reduce our interest rates because we are locked in to them.
We read in the newspapers today that the German state is threatened with inflation and with strikes from the steel workers, bank clerks and car workers. Our economy depends on the way the German economy performs. It is far better to put our trust in my right hon. Friends the Prime Minister and the Chancellor and my hon. Friend the Economic Secretary than leaving it to the German Bundesbank in which even the chairman, Karl Otto P¨hl, has lost confidence.
Since joining the ERM we have entered the most serious recession since the war. We have had growing unemployment, bankruptcies and mortgage repossessions. Those problems may not have been caused directly by joining the ERM, but it means that we are unable to deal with them. It is a total and unnecessary abdication of power and the decision to join was taken without the consent of the voters. I doubt whether it will even be an issue at the next general election—I am glad to see that the right hon. Member for Chesterfield (Mr. Benn) is nodding. If the Opposition take office, they will have done so without telling the people that they, too, will be unable to deal with the recession or with the things about which the right hon. and learned Member for Monklands, East was complaining.
Some say that the ERM has been essential in the battle against inflation. Was it? In the early 1980s we inherited an inflation rate which reached 27 per cent. at its height in May 1980. In three years it came down to 3.7 per cent. and that was without the benefit of the exchange rate mechanism. Oddly enough, during the same period, the rate against the deutschmark varied by less than 5 per cent. and between October 1979 and October 1983 our rate against the deutschmark went up. Yet we were not in the exchange rate mechanism.
I firmly believe that the time has come to reconsider our decision. As many of us thought when we joined, the ERM has not proved to be in the interests of the British people. By remaining in the mechanism, we shall take a gigantic gamble with British industry, the property market and jobs. Recently, the Bundesbank said that it will act in the interests of the German domestic economy, and it has done so. It believed that it was in the interests of the German domestic economy to increase interest rates shortly before Christmas. That is exactly what we should be doing. Hon. Members should be controlling the British economy in the interests of the British people, and we should take ourselves out of the ERM.
8.10 pm
Mr. Alex Salmond: Like the hon. Member for Stockport (Mr. Favell), I enjoyed the speech of the hon. Member for Wolverhampton, South-West (Mr. Budgen), not so much because I agreed with it but because it provided an antidote to the sterility of the economic exchanges of the past two weeks, which continued earlier this afternoon.
In some ways, it can reasonably be said that the hon. Member for Wolverhampton, South-West has dominated this economic debate. He asked the shadow Chancellor the question that has no answer: if the shadow Chancellor and the Labour party are committed to the same monetary policy as the Government—defending the position of
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sterling within the exchange rate mechanism—it can hardly be argued that interest rates would be different under Labour.
Interestingly, the Chancellor did not pursue the shadow Chancellor on that policy, no more than the shadow Chancellor seemed to want to pursue the Chancellor on the story in The Guardian today suggesting that the Government's aspirations and programme would cost about the same as the Labour party's— £35 billion. The reason why the shadow Chancellor and the Chancellor do not pursue each other on such points is clear: it is not in their interests to stress the similarity of the economic policies of Ministers and Labour Front-Bench spokesmen. It is far better to continue with the phoney war of exchanges that we have seen in the past two weeks. As the policy similarities increase, so the acrimony of the exchanges grows to attempt to find some semblance of a difference between two economic policies that are basically the same.
It is remarkable that the Government are attacking the Labour party for the over-ambition of its policy programme. To be committed to increasing pensions and child benefit and no other spending initiative can hardly be termed an over-extended programme. The weakness of Labour's policy programme is its lack of ambition. Its Achilles heel is its lack of firm commitments.
The Government should have a care about ascribing figures of £35 billion or £37 billion to any aspiration or policy objective of a party, because as in The Guardian story, exactly the same can be done to the Government. In addition, if one considers the detail of the Government's programme and assumes, as one reasonably can from statements that have been made, that a balanced budget is an objective of the policy, with the public sector borrowing requirement heading towards a £20 billion deficit next year, the same type of argument would have it that the Chancellor must be plotting to increase income tax by 10p in the pound in the Budget to square that circle and eliminate the PSBR deficit or perhaps even a larger increase in the percentage of VAT.
Similarly, as the right hon. and learned Member for Monklands, East (Mr. Smith) said, if it is an objective—albeit a long-term one when circumstances allow—to reduce the direct rate of tax to 20p in the pound, it is reasonable for people to ask how it will be paid for within a Parliament. The Government and the Opposition should address the low standard of debate that, sadly, we have witnessed in the past fortnight.
I was disappointed that the chairman of the Treasury and Civil Service Select Committee chose to attack the proposal to lift the ceiling on the national insurance contributions. As far as I know, that is the only tax proposal that the three Opposition parties in Scotland have in common. If one narrowly defines national insurance as an insurance scheme in itself, one can make an argument against it, but if one accepts, as most people surely do, that national insurance has become part of the income tax system, it is impossible to defend a position whereby people who earn more than £21,060 a year pay lower rates of marginal taxation than those who earn less. That is what would happen next year if nothing is done to correct that anomaly.
If Conservative Members are truly concerned about high marginal rates of taxation, they should consider not people earning more than £21,000 but those at the bottom of the earnings scale, who face by far the highest marginal

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rates of taxation. The Library made a quick calculation for me. I accept that it is a theoretical example, but none the less it shows that it is possible for someone who is on very modest earnings—through a combination of income tax, national insurance, family credit, rent rebates and poll tax rebate—to pay a marginal rate of tax on earnings of 96.04 per cent. Unless the proposal to lift the national insurance upper limit is carried, a family man on perhaps £7,000 a year will pay double the marginal rate of taxation of somebody earning more than £21,000 a year.
Half a dozen Conservative Members are present. I shall gladly give way if one of them can explain why a marginal rate of taxation of 49 per cent. for people earning more than £21,000 a year will have a disincentive effect, but apparently nothing is to be done about the marginal rate of taxation of 96 per cent. for those who earn about £7,000 a year. Is there any semblance of logic in that? Should it not be a priority to shift the burden of taxation from the lower paid to those on higher incomes?
I propose that the upper limit for national insurance be lifted and that the money be used to introduce perhaps a lower first rate of taxation, perhaps to raise tax allowances by 15 per cent., or to incorporate an allowance system into the national insurance system to try to attack the exceptionally high marginal rates of taxation for those on lower earnings. An Administration that had an ounce of compassion and economic rationale would be arguing for that policy.
The debate has done little to focus attention on the real constraints on the United Kingdom economy. I was a relatively young economist before I became an hon. Member, but even I remember the nostrum that the underlying weakness of the United Kingdom economy was that a balance of payments constraint emerged as soon as the economy moved towards recovery, and that recoveries would always be aborted by the balance of payments coming into play and acting as a constraint. According to the independent forecasts that are released by the Treasury, the balance of payments constraint on the current account is emerging before the economy has moved into recovery. The consensus of the forecasts of the organisations is that the current account deficit will increase from £6.6 billion this year to £8.6 billion next year. That is before any firm recovery in the United Kingdom economy.
The underlying weakness of the United Kingdom economy is becoming ever more evident. I think that the hon. Member for Stockport referred to the fact that no one had argued about some of the dangers of the ERM when we joined. I made a speech on 22 October 1990 in which I made some of the points that I am about to repeat. The rate at which we joined the ERM underscored some of the constraints on the United Kingdom economy and put it back into the fairly familiar position of trying to defend an exchange rate that is unsustainable.
In line with the United Kingdom's economic history, it is only a matter of time before someone writes a tract called "The Economic Consequences of Mr. Major". In The Times just before Christmas Anatole Kaletsky had a stab at what might be a precis for such a tract. He wrote that all players in the game of trying to find someone to blame for the problems in the United Kingdom's economy
"are supposed to forget that John Major had anything to do with economic management in the past five years. They are
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not allowed to recall that Mr. Major was the Chancellor who panicked into raising interest rates to 15 per cent. in October 1989; or that it was Mr. Major who blundered into the ERM at the worst possible time with the wrong exchange rate. Above all, players must forget that Mr. Major was the man who, during his brief tenure as an ERM Chancellor, elevated the ERM into a sacrificial totem of a kind unknown in this country since the days of Stonehenge and John Barleycorn."
That is an apt summary of the case that could be made against the present Prime Minister.
Mr. Favell: Is the hon. Gentleman in favour of our remaining in the exchange rate mechanism?
Mr. Salmond: I am coming to that. I was going to refer to the speech I made on 22 October 1990 which I am sure the hon. Gentleman remembers. I said that, although I was in favour of the ERM, there was a key difficulty for sterling's position in it. That difficulty can be described simply. The ERM has worked because it had a single dominant currency within its structure and the other currencies—they could be called subsidiary currencies—revolved around it as planets revolve around a star. The difficulty with sterling introduced into the exchange rate mechanism is a second centre of polarity because it is a major international tradeable currency. It is an investment currency with 90 per cent. of its value determined by capital flows as opposed to trade flows. Therefore, there are particular difficulties in trying to hold it within what was, in effect, a deutschmark block. In summary, I am in favour of the ERM but I have grave doubts about whether sterling is in the appropriate position, and I certainly have doubts about it being in at the level which there is now an attempt to defend.
The hon. Member for Wolverhampton, South-West asked about the economic impact of the parties' various policies. He rightly argued that if the Labour party was suggesting exactly the same policies as the Conservative party on the question of the ERM, the effect of the monetary policies of the two parties would be neutral. If we take the Labour party at its word and accept that its only definite spending commitments are to pensions and child benefit which will be financed within the tax system from the various tax increases outlined, Labour's fiscal position is also neutral. The tax increases will exactly match the planned expenditure increases. Therefore, the Labour party's fiscal and monetary position—
Mr. George Robertson rose—
Mr. Salmond: I shall give way to the hon. Member for Hamilton (Mr. Robertson) in a second. The Labour party's fiscal and monetary positions are neutral, so the economic effect of its fiscal and monetary policies will make little or no difference to the current recession. I am sorry that the hon. Gentleman is about to leave because I am coming to an interesting point.
The Labour amendment refers to measures which might help to stimulate the recovery but, as I understand it, none of them are spending commitments. The only spending commitments are to child benefit and to pensions. None of the measures for recovery are definite spending commitments.
Mrs. Beckett rose—
Mr. Salmond: I remember an interview that the hon. Lady gave on, I think, "On the Record" in which she made it absolutely clear that health spending was to be judged only as growth allowed in the economy and that there was

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no distinct spending commitment. If that is the case for health spending which is currently of such supreme importance, surely it must also be the case for investment grants which are set out in the Labour party's amendment. The Labour party cannot have it both ways. If there are distinct spending commitments matched by taxation, there cannot be other spending commitments as detailed in the amendment.
Mrs. Beckett: The hon. Gentleman is making an interesting but entirely incorrect point. There are definite commitments in the anti-recessionary programme and they are covered by the taxation changes that we have announced. We have always made that clear. I am sorry if it is not clear to the hon. Gentleman—no doubt it is our fault or perhaps the facts were drowned in the barrage of noise from Conservative Members.
Mr. Salmond: I am glad to hear that, but perhaps we could have some quantification of the policies. Let us be clear that they are in addition to the spending commitments on pensions and child benefit which have been widely announced in the past few weeks as being the only key priorities of the Labour party.
Mrs. Beckett indicated dissent.
Mr. Salmond: I must tell the hon. Lady that the shadow Chancellor has tended to stress fiscal rectitude in the past few weeks and months. Indeed, it seems that he is attempting to outflank the present Chancellor on the right of the political spectrum.
Mrs. Beckett: I must once again correct the hon. Gentleman. He should pay more attention to the debate if he wants to use quotations. It is the Conservative party that pretends that we have referred only to pensions and child benefit. We have always made it clear that they were our initial, specific and costed commitments but for a considerable time—I think probably most of last year since the recession became evident—we have also advocated early moves on such issues as investment allowances and training. They were contained in our shadow Budget almost a year ago—they were identified and costed. I am sorry if the hon. Gentleman did not know that, but it is not our fault.
Dame Elaine Kellett-Bowman: Where is the cash coming from?
Mr. Salmond: That is exactly the point. It is sensible for the Labour party under current conditions to argue for an increase in the public sector borrowing requirement to pay for the additional fiscal measures.
I noticed that when the right hon. Member for Chesterfield (Mr. Benn) argued that expenditure during a recession could well be self-financing because of the stimulus that it gives the economy, he did not receive much support from Labour's Front Bench. The Labour Front Bench—albeit on a more modest scale— now seems to be arguing that its investment to take the country out of recession will be self-financing.
Mr. Mellor: I am sorry that I missed the beginning of the hon. Gentleman's speech and I shall not speak for long.
It is a funny old world. I have spent much of the past week— indeed, much of the past year—closeted in radio and television studios with the hon. Member for Derby,
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South (Mrs. Beckett). During that time she has said that it was a dreadful slur to suggest that the Labour party has anything other than the two commitments. Now, she is attacking the hon. Gentleman who dares to say that that is the case.
Mr. Salmond: I am coming to the point
Mrs. Beckett rose
Mr. Salmond: No, I shall not give way. I have been exceptionally generous to the hon. Lady, far more generous than the Labour Front Bench is to me when I try to intervene.
I have come to a conclusion about the two warring parties. It is excellent news if as a by-product of my speech the Labour party's fiscal policy has shifted to a more ambitious level. I think that the key weakness of its policy is that, without a substantial difference in either monetary or fiscal policies from those of the Government, nothing can be offered to shift the economy out of recession. I believe that such a substantial difference would be justified by the depth and level of the recessionary experience.
I wish to comment on Scotland's experience as it has undergone the recession in the past few years. It is generally agreed—especially by Conservative hon. Members who are anxious to blame the right hon. Member for Blaby (Mr. Lawson) for all that has gone wrong—that the initial rationale behind a high interest rate policy was to cool down the overheated economy of the south-east of England which the right hon. Gentleman did so much to reinforce in the 1988 Budget. I have not heard anyone seriously argue that the Scottish economy was ever overheated.
In the early years of the penal interest rate policies, the wrong economic medicine was applied to Scotland. It is bad enough to suffer high interest rates if one suffers from the economic disease, but it adds insult to injury if one has to take the medicine without having had the disease in the first place. As I have gone on to argue, the high interest rate policy is now sustained by the requirement to defend the weak investment currency of sterling within the ERM.
We have substantial evidence that Scotland is not suffering from a balance of payments problem. There is no indication that a Scottish currency within the ERM would suffer from the same problems as sterling. On the contrary, a country such as Scotland, which exports more manufactured products per head than does Japan, would almost certainly have a comfortable balance of payments position.
From a Scottish perspective, this has been an unnecessary recession, provoked and sustained by policies totally inappropriate to Scottish economic conditions. Only when the constitutional framework has been fundamentally transformed can the Scottish economy be put back on the road to recovery and full employment.
8.30 pm
Mr. Quentin Davies: The hon. Member for Banff and Buchan (Mr. Salmond) has done the House a great service with his speech, because he has thrown even more light than has already been thrown during the debate on the extraordinary confusion evident in the Labour party's spending and taxation plans.
Mrs. Beckett: This is becoming extremely boring. I do not know whether the hon. Gentleman was not here for

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the Budget debate last year, whether he does not listen or whether he is simply incompetent, but I have said over and over in the House what I have just said to the hon. Member for Banff and Buchan (Mr. Salmond). I have said it to the Chief Secretary to the Treasury in the debates and exchanges to which the right hon. and learned Gentleman just referred. If his case is so strong, why does he need to misrepresent what others say?
Mr. Davies: I hear the hon. Lady's intervention with interest, and make a practical suggestion to her, which she may consider helpful. If she accepts my suggestion, it will greatly contribute to the clarity and integrity of political debate during the coming general election campaign. I have here a document that the hon. Lady knows very well—a document on Labour's public expenditure plans. She knows that those plans all add up to the famous figure of £37 billion. She should go through each individual item in the document, and say, "This is a genuine pledge, but that pledge is not genuine." If she does not like the figure of £37 billion, she should boil it down to the hard core of Labour's real spending plans—those that the party really intends to propose to the electorate. If the hon. Lady is willing even to make a start on that now, I shall, of course, give way to her again.
Mrs. Beckett: I shall make my speech later.
Mr. Davies: I look forward to the hon. Lady's speech, and I hope that she does as I suggested. My right hon. Friend the Chancellor of the Exchequer, in an extremely good speech, repeatedly invited her and all her Front-Bench colleagues to do just that.
My right hon. Friend the Chancellor described a number of the Labour party's spending proposals.
Mr. Deputy Speaker (Mr. Harold Walker): Order. I did not have the opportunity to listen to the earlier part of the debate, but as I understand it the debate is about the Chancellor's autumn statement.
Mr. Davies: As I have understood the debate so far, Mr. Deputy Speaker, it has been about public expenditure, including prospective public expenditure. Logically—I hope that you, Mr. Deputy Speaker, will agree with me about this—the public expenditure that we shall face, if the terrible mishap of the Labour party's winning the election should arise, is very much a part of that subject. In that case, of course, for a large part—perhaps the greater part—of the coming financial year, the Chancellor's autumn statement will not govern the level of public expenditure; some other programme will govern it. We are attempting to find out what that other programme is. This is a matter of the keenest importance to every man and woman in the land.
Are the public expenditure plans in the Labour party's document to be believed? If not, what public expenditure plans is the Labour party offering the country? I warn the hon. Member for Derby, South (Mrs, Beckett) that a second question naturally and logically follows. When she has told us what her genuine public expenditure plans and pledges are—as opposed to the bogus ones that her colleagues have been putting about over the past months and years—a second question will arise, to which, equally, the electorate has a right to an answer. That question is: what proportion of those real additional incremental
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spending plans will be financed from taxation, and what proportion will represent incremental public borrowing? That is also a vital question, to which I shall look forward to receiving a concrete, specific, unambiguous answer in the hon. Lady's speech.
It is clear that the great result of the debate has been to put the focus clearly, effectively, and so far devastatingly, on the Labour party's expenditure plans. But I am sorry to say that not everything that might be said, and ought to be said, has been said on that subject, by any means.
I shall touch on three other aspects of those plans, which are crucial to the future of public spending in this country.
Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will speak to the amendment to the motion. He has not done so so far.
Mr. Davies: The amendment on the Order Paper, Mr. Deputy Speaker, effectively offers the House, and therefore the country, a range of options for public expenditure policy over the coming year. If this is not an opportunity to debate the various possible scenarios for public spending over the next 12 months, I hope that you, Mr. Deputy Speaker, will help me by giving me some advice about when the opportunity will arise for the House to discuss such a vital matter for everybody.
My hon. Friend the Member for Canterbury (Mr. Brazier) has handed me a copy of the Opposition amendment, so I shall read part of it. The amendment
"condemns the failure of the Government to invest in the economic infrastructure and vital public services; and calls upon the Government to promote an investment-led 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."
If that is not a range of public expenditure commitments, I do not know what it is. I hope that when I deal with those commitments you, Mr. Deputy Speaker, will feel that I am acting within the rules of order.
So far, the Labour party's response to the autumn statement has been essentially a prospectus without a price—that is, a spivvy and rather worthless response.
As I said, I shall raise a number of pertinent questions that not only might be asked but need to be asked about that response.
Mr. Derek Enright: I wonder whether for one moment the hon. Gentleman will deal with the words in the motion
"which have led to a substantial reduction in inflation and have laid the foundations for sustainable recovery".
Will he describe where those foundations are, and where are the signs of a recovery? I am a newcomer here, and I do not understand the rules of the House, but I thought that one of the elementary rules of debate was that one spoke to the motion tabled by one's right hon. Friends.
Mr. Davies: I am indeed speaking to the motion, but I shall now answer the hon. Gentleman's question about the foundations for recovery. The key foundation is the reduction of inflation. The hon. Gentleman will recall, as we all do, with no satisfaction, that this time last year inflation was about 10 per cent. The producer price index is now below 4 per cent. That is a remarkable turnround

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by any historic standards in any country in the course of 12 months. If that is not the basis for renewed growth in the economy, I do not know what is.
Clarity would be added to our economic debates if Opposition Members made it clear that they do not suggest to the British public that if people were misguided enough to vote in a Labour Government there would never be a recession again—that the Labour party has it in its power to abolish the trade cycle and enter a qualitatively new phase of human economic history, in which there will no longer be a business cycle to contend with, and recessions will all be in the past. I am afraid that we shall always have the trade cycle and that there will always be recessions, whoever is in power. That is as certain as the weather. However, what matters is the response that one decides to make to such recessions.
It will not have escaped any hon. Member's attention that a number of Labour Members were rather concerned that I should not continue to add to their embarrassment and, no doubt, gloom by living up to my promise of making other pertinent points about Labour's economic policies which have been described this afternoon.
The first point has not been raised before, but it is extremely relevant. If Labour comes to power, it is committed to abolishing the capping of local authority expenditure. Unless that means that if local authorities spend more, a Labour Government would reduce central Government expenditure pound for pound to compensate, that one pledge effectively means that a future Labour Government would abdicate all control of local government expenditure. The whole country needs to take that on board. The hon. Member for Derby, South may give us tonight the only alternative to that prospect, which is that she commits a Labour Government, when they abolish the capping and control of local government expenditure, to reducing central Government expenditure pound for pound as local authorities increase their expenditure. Unless we have that pledge, the consequences and conclusions are unassailably and unambiguously clear.
My second point on Labour's attitude to increased spending is that Labour has failed to make clear, because Labour Members themselves are unclear about it, the extent to which when they increase public expenditure—whether it goes up to £37 billion or goes to a lower figure about which the hon. Member for Derby, South will tell us —that spending will buy increased value and services for the British public or for the sections of the British public who are intended to benefit. Or will that expenditure in fact be used simply to defray increased costs? If so, we shall simply end up spending more for the same. In that case, the public will be doubly defrauded because they will have paid the tax burden, the inflation burden or the burden on interest rates caused by higher public sector borrowing to pay for that increased expenditure, and the public will not get value as a result.
I give two concrete examples to the House. I heard only this morning from the most authoritative source possible in British Rail—I shall be no more specific than that—that the cost to British Rail alone of implementing the social chapter, which we know that Labour intends to implement, would be £500 million a year. The cost would be especially great for British Rail because railways have to operate at night and at weekends, so there is a lot of overtime. That is just one enterprise— in this case a nationalised enterprise—which would incur such costs.
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We are told—I do not believe that the Labour party will be able to dispute this figure either—that the cost to the national health service of the minimum wage proposals, which Labour intends to introduce, would be about £500 million—
Mr. Deputy Speaker: Order. All this is part of a far wider debate than a debate on the motion or on the amendments. I very much hope that the hon. Gentleman will bring his remarks much closer to the subject of the debate.
Mr. Davies: I shall follow your advice, Mr. Deputy Speaker. May I just point out that the figures in the autumn statement will need to be revised to take account of the factors which I have mentioned if a Labour Government come to power, especially if they are in power for a significant part of the coming financial year? It is, therefore, necessary for the House and for the general public to be able to understand the full purport of the autumn statement so that they can take account of the amendments which would be required if the general election went the wrong way.
Dame Elaine Kellett-Bowman: Does my hon. Friend agree that everyone's private budget would have to be amended? Anyone who works over eight hours would have to start to pay national insurance contributions. At present, those earning under £52 a week do not have to pay. There will be enormous hardship for many part-time workers in the health service, for cleaners and for part-time postmen who will pay national insurance contributions which they have never had to pay before. Their employers will have to pay as well.
Mr. Davies: I absolutely agree with my hon. Friend and I most grateful for her intervention. I did not make those points myself because I am trying to focus on another aspect of the debate. My hon. Friend's point may be even more important and was extremely well made.
It is an illusion to suppose that the extra £35 billion or whatever would purchase additional services—
Mr. Ronnie Campbell: On a point of order, Mr. Deputy Speaker. Is it right that the hon. Gentleman should refer to Labour party policy when the subject of debate is the autumn statement, which is the direct responsibility of the Government?
Mr. Deputy Speaker: I well understand the hon. Gentleman's point of view. I very much hope that the hon. Member for Stamford and Spalding (Mr. Davies) will now direct his remarks more closely to the matter before the House, as I have asked him to do on at least two occasions. Will he please do so or resume his seat?
Mr. Davies: I shall move on from the two earlier points to my third point. I think that you will agree, Mr. Deputy Speaker, that it goes to the heart of our public expenditure debate this afternoon. My third point is reflected in the words that I read earlier from the Labour amendment which we are discussing.
The Labour party has a remarkable tendency, which is frightening, to put objectives and targets in terms of inputs rather than of outputs. It focuses, bizarrely, on a certain sum which is often expressed as a certain proportion of gross national product or of gross domestic product which should be spent on something. Labour talks of spending 5.5 per cent. of GDP on education—a magic figure. It talks

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of spending 0.7 per cent. of GDP on overseas aid. It seems that one starts from a figure, which is taken out of the blue and which is always a nice round figure and presented as a proportion of GDP, which is a moving target, and then as a secondary and retrospective matter—if at all—one begins to explain why it is necessary to spend money in particular areas and in what specific areas the money will be spent.
I could understand an approach to the autumn statement which began by saying, "The following are our objectives in overseas aid. We need to provide for this in disaster relief. We need to get ourselves involved in these projects or to give this money to these agencies for this precise purpose. We are looking at the most efficient way in which to deliver these programmes and we have come down to the fact that the budget we shall need is x, y and z which add up to n." That would be the sensible and responsible way to conduct affairs and is the way that any institution in the hands of responsible and competent men and women would adopt. That description and those epithets clearly do not apply to Labour Front-Bench Members because they are presenting the very reverse of that approach as a substitute for financial management.
What is the policy? It is basically a policy of spend first and think later. One point about which I am confident is that one may occasionally be able to deceive portions of the British public on certain issues, but that one cannot sell the British public a policy based on that principle.
8.49 pm
Mr. Tony Benn: In a few weeks' time we shall be addressing the electorate. Therefore, I should like to say to the House what I propose to tell the electorate about the economic position and the relevance of the autumn statement. The truth, which no one has mentioned in the debate so far, is that there are grounds for believing that, far from our pulling out of the recession, Britain and the western world may be falling into a major slump comparable to that which occurred in the 1930s. That is a possibility which has not been touched on.
Of course, that itself could deepen the misery which is now occurring in the old Soviet Union, as, in panic, they try to copy the failed policies of the west. When I heard that the British Government were sending emergency aid to be auctioned in the Soviet Union, I thought that that must be the first time that an aid programme had been so arranged that only the rich could get hold of the aid, although it was said that the money raised would be spent on relief.
The crisis has caused enormous hardship to very large numbers of people. It is as much political as economic in its origins, and it requires a political response. I do not know how many homeless people, how many unemployed or how many people denied the services they need will have been much impressed by the statistics about what M0 had done in the third quarter compared to the first quarter of the last Labour Government. What impression will that have on the people that we, as Members of Parliament, know are suffering seriously?
What nobody ever says about interest rates is that, if a person is rich and lends money, high interest rates enrich
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him, but if he is poor and borrows money, high interest rates impoverish him. That aspect of interest rates has never been touched on.
Dame Elaine Kellett-Bowman rose—
Mr. Benn: I am not giving way, because I have only a few minutes, owing to a long speech having been made before mine.
Dame Elaine Kellett-Bowman rose—
Mr. Benn: I am not giving way to the hon. Lady in any circumstances.
There is no one left in the House who served here in the 1930s, yet we have to look back on that period in order to avoid the mistakes and learn the lessons. Not only was the suffering in Europe caused by the depression very serious, but it had serious political consequences as well. In Germany, unemployment rose from over 1 million in 1929 to 6 million in the two and a half years that followed. That brought Hitler to power.
In Britain, Oswald Mosley was quick to point out in the Fascist Quarterly:
"It is particularly interesting to note that that Fascist success in Italy and Germany followed upon capitalist trade depression."
If we are considering the possibility—we cannot put it —higher than that—that the recession may be on its way down, and not on its way up, different policies will be necessary.
In America, Roosevelt, a progressive President, introduced the new deal. In Britain, we had some leaders who advocated different policies. I cite one because he came from the Conservative party—Harold Macmillan, then the Member of Parliament for Stockton on Tees. In his book "The Middle Way" in 1938, he said:
"We have lived so long at the mercy of uncontrolled economic forces that we have become sceptical regarding any plan for human emancipation. Such a rational and deliberate re-organization of our economic life would enable us, out of the increased wealth production, to establish an irreducible minimum standard which might progressively be raised to one of comfort and security."
In 1945, when we won the election—I participated in it as a young RAF pilot on leave—we published a manifesto commenting upon the hard-faced men who had controlled the economy between the wars. Mr. Attlee's manifesto said:
"They controlled the banks, the mines, the big industries, largely the press, and the cinema.
They controlled the means by which the people got their living.
They controlled the ways by which most people learned about the world outside.
This happened in all the big industrialized countries.
Great economic blizzards swept the world in those years.
The great inter-war slumps were not acts of God or of
blind forces.
They were the sure and certain results of the concentration of too much power in the hands of too few men."
That was the policy which carried us to power. Indeed, I was elected to the Parliament over which Mr. Attlee still presided as Prime Minister.
It was not just the left of the Labour party which took that view. In the debate on the first motion of censure which Winston Churchill moved against the Government on 5 December 1945, a young Member, Hugh Gaitskell, referring to his colleagues on the Labour Benches, said:
"We have a philosophy of our own which binds us together…We believe, for example, that the present capitalist system

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is inefficient, that it produces insecurity and that it is unjust. Can anyone deny those things?"—[Official Report, 5 December 1945; Vol. 416, c. 2364.]
It is worth looking back at that ideological conglomeration of opinions of Macmillan, Mosley, Roosevelt, Attlee and Gaitskell if we are to avoid what is already happening in France—a major growth of the National Front under Le Pen. That is a product of unemployment. In Germany, fascism is growing again. In Britain, the British National party is growing again. Perhaps in Britain the fascists were held back because they had for a period a Prime Minister who was doing their work for them; but they are reappearing.
I say to the House, as I shall say to my constituents when the election comes, that the problems we face have been caused largely by the uncontrolled international operation of market forces which place profit before people and widen the gap between the rich and the poor, here and worldwide. Every time a factory lays off people, they cannot buy the products of another factory, so another group of workers is laid off. That is the consequence of the system. Meanwhile, people who need homes and services cannot afford to purchase them, and they cannot get them provided through public expenditure.
What I put in the amendment which I tabled with 25 of my colleagues—quite a substantial body of opinion in the party—is that we need a national recovery plan which will restore full employment by stimulating industry, renewing the infrastructure, improving the environment, and expanding all essential services through a planned increase in public expenditure which alone can act as the engine of economic development here and worldwide.
Before the war, it was rearmament which brought us back to full employment. Everyone knows that. There were 3 million unemployed. They were hired and put into factories. Instead of being on the dole, they got a wage and paid their taxes, and the war was financed. All rearmament was public expenditure. My granny never bought a sten gun; my dad never had a Spitfire in the garage. Those were paid for by public expenditure. Now there must be public expenditure to reconstruct our industry. Of course it would have to be financed by cuts in the arms budget, by harnessing the nation's savings, by fair and progressive taxation, and by borrowing.
If that is to work, it must involve the nation as a whole. We cannot plan it just at the top. Neither the Bank of England nor the Bundesbank nor the Cabinet can do it. That must mean a restoration of democracy in local government. When a local authority is elected, if it says that it will do something, it must be free to do it. Why was the GLC abolished? It was because the Government were not prepared to accept decentralised power, full trade union rights and other civil liberties.
It amuses me to see Tory party statements and horror stories about Labour and the trade unions. Conservative Members always boast about fewer days being lost and about there being fewer industrial disputes under this Government. Let us consider days off—we must not just consider industrial disputes—and unemployment. As I put to the Chancellor in an intervention, 3 million working days are lost every day because of unemployment, which is the direct product of the Government's policy. Conservative Members never mention that. The cost of that is £50 billion a year, bearing in mind the dole, benefits such as housing benefit and the loss of production. When
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they frighten us with the £37 billion, or whatever they cook up at Tory central office, they omit to mention the £50 billion that they themselves consciously waste.
What is the point of attacking those who think that we do not need Trident when Cabinet has agreed to unilateral economic disarmament by handing over the key powers over our own economy to those who are responsible for the ERM and EMU and, ultimately, the single currency and the Bundesbank? People are slowly coming to realise that that is the way ahead.
When the whistle blows and Parliament is dissolved, I shall fight my 16th election as a candidate. I detect already a substantial body of opinion that shares the views that I have tried briefly to summarise. These views may threaten the power and the privileges of the bankers and the multinationals. They may offend the sensibilities of the clever economists and smug media commentators who presume to tell us what we can and cannot do. However, unless we take action, we could slip into a slump, the political and economic consequences of which could cost this country very dear indeed, as happened from 1939 to 1945.
I shall say all that in Chesterfield when the election comes. If the policies that I have mentioned, which are socialist policies, were to be carefully prepared and advocated with conviction and introduced by consent through the democratic process, they would win the active support of the majority of people in Britain. That is plain common sense, but, more than that, it offers hope to people who are now in despair. No country can solve its economic problems if the people can see no light at the end of the tunnel. After 13 years of this Government, that is the reality for many who thought that it would be good but who now find that they are scraping along at the bottom.
9 pm
Mrs. Margaret Beckett: All over this country, people look around them at the schools, the hospitals, the roads and the railways. They worry about their jobs, their mortgages and their poll tax, and they say to themselves, "Surely there must be a better way. Isn't there a better way than this?"
The answer is a resounding yes. There are alternative policies and different choices, and it is not only the Labour party who says so. There are better ways of identifying those choices, and it is not only the Labour party who says so. The fact that there are alternatives is the fact that the Government are most desperate to conceal—so desperate that they do not seem to care what they say. No one is saying that our problems can easily or speedily be resolved; they are too deep for that. However, the fact that we cannot do everything at once does not mean that there is nothing at all that we can do.
We are debating—or some of us are—the Government's autumn statement. Its weaknesses have already been identified. Those weaknesses are most obvious where the statement talks of the condition of the economy. But when the assessment of the condition of the economy is deeply flawed, so too must be the assessment, the shape and the scale of the public spending programme. Even before the recent Government admissions of continuing economic weakness—admissions which undermined the whole picture in the autumn statement—its flaws were evident. The unemployment assumption, which is used as the basis for the autumn statement figures on

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forecast spending, was already out of date when the forecast was published. It does not say so in the published document; the admission was dragged out of the Chancellor on the Floor of the House by my hon. Friend the Member for Durham, North (Mr. Radice).
There were early questions about the scale of privatisation receipts and the anxieties raised—first, about how sound the figures are, and, secondly and much more seriously, about how sound is the public expenditure planning process which depends so heavily upon such rather dubious assumptions—questions again raised by the Select Committee and, I suspect, not answered altogether to its satisfaction. Always, because of what the Prime Minister calls the primary objective of the Government, there is the underlying query about whether, hidden in the opacity of the autumn statement, there is enough room for manoeuvre to allow for further cuts in income tax instead of further public investment.
This year, it appeared that the answer was no; then, lo and behold, just before Christmas, desperate to say something about the problems of house repossessions—problems that they dismissed as insignificant throughout 1989, 1990 and 1991, while thousands of families lost their homes— the Government found £1 billion that they did not yet need to spend on stamp duty relief.
It suggests an interestingly cavalier attitude to the public purse— £1 billion overlooked, judging from the Chancellor's tone when he announced it. But then, perhaps more worryingly, the Chief Secretary also thinks that £1 billion or £2 billion is neither here nor there, to judge from the way, on "Newsnight" last night, he dismissed the revelation of the Conservative party's party political broadcast alleging a Labour programme of £35 billion, when he had announced on the same day that it cost £37 billion, as a mere bagatelle. We do not regard £2 billion as a bagatelle, but it is yet further evidence of the incompetence of the Conservative party.
It is the combination of incompetence, of errors and of obscurity in the autumn statement that make it so dangerous to place any real reliance on it as a guide to the Government's public spending plans.
The Government's record also calls the autumn statement into question. In the run-up to the 1983 election, they had inflation at less than 4 per cent. and interest rates at less than 10 per cent., and they promised funding for improved public services and an income tax cut. A month after the election, they cut public spending because of "unforeseen factors" and, incidentally, within two years inflation had doubled and interest rates had reached 14 per cent.
In the run-up to the 1987 election, they had inflation at just above 4 per cent. and interest rates at 9 per cent., and they promised funding for improved public services. With the election safely over, funding for public services stood still and billions of pounds were lavished on the income tax cuts of 1988. Incidentally, within two years of that election, inflation had doubled on its way to 10.6 per cent., interest rates were heading for the 15 per cent. at which they stuck for long enough to make this, as was said recently, the worst recession of modern times, and the same scenario was repeated.
Today, in the run-up to the 1992 election, the Chancellor of the Exchequer offers us inflation at just
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above 4 per cent. and interest rates at 10.5 per cent., and he promises increased funding for the public services and further income tax cuts. Even if the figures in this autumn statement stood up—and they do not—the Government's record demonstrates that they cannot be trusted as guardians of the public service.
Whatever revenues are earned, there is a clear choice between their use for public investment and services and for tax cuts, as the Chancellor and the Prime Minister have emphasised again and again. The autumn statement reiterates that the Government will continue to reduce the share of the nation's wealth that goes into public spending. The Prime Minister recently emphasised the case for continuing tax cuts by saying that it was their primary objective to reduce taxation at the lower end, the objective of moving to a 20p level of taxation, because it was right that people should own more of their income to spend in their own interests and in the interests of their family.
Let us examine the nature of that choice and of that freedom. If leaks of recent days are to be believed, implicit, although not evident, in the autumn statement are further income tax cuts of perhaps 1p in the pound. What is that choice worth? Half of all men in work earn at or below £14,430 a year, median earnings. From a 1p cut in income tax at the standard rate, a single man with no mortgage would gain £2.14 a week; with a mortgage, it would be less than £1.50—better than a kick in the teeth, although not enough, under this Government, for a prescription. Private health insurance would cost that individual more than twice as much.
From a 1p income tax cut, a man on average earnings of over £16,600 with no mortgage would gain just over £2.50 a week, less if he had a mortgage, and still half of what private health insurance would cost.
Let us take a family with its varying needs. A one-earner, two-child family on the median wage of around £14,000, with an average mortgage of £37,000, would gain from a 1p cut in income tax £59.65 a year— £1.15 a week.
Health insurance with reasonable cover for that family would be more than £800, or more than £15 a week, which is—
The Economic Secretary to the Treasury (Mr. John Maples): So what?
Mrs. Beckett: The Economic Secretary to the Treasury asks, so what? I am describing the false nature of the choice that the Prime Minister claims to postulate to the British electorate. He says that he will give the electorate the freedom to have an extra £1 or perhaps £1.50 a week, when the services that are being undermined by the billions of pounds forgone will cost an elector tens or hundreds of pounds.
Middle-range private school fees, as our state-funded system is undermined, are £1,500 a year, or almost £29 a week. That is 25 times as much as such a family would gain from a 1p cut in income tax. Middle-range private secondary school fees are £3,500 a year, or £67 a week. That is 58 times as much as such a family would gain from a 1p cut in income tax.
I do not want to be too unkind to the Government. Let us consider a two-earner family for whom the second income of more than £7,600 represents the earnings of half of all women in manual work. In addition to what the man might gain from his tax cut, that family would gain an

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extra 84p a week. The figures are of the same order for those on average earnings of more than £16,000. It is a matter of extra pence or perhaps £1 a week.
Let us consider a married couple whose circumstances are more familiar to the Economic Secretary to the Treasury£who is, if I recall rightly, a member of Lloyds and probably does not mix in these circles—both earning at the top of the income scale where they are still only paying the standard rate of tax. This is a much more difficult couple about whom the Government are concerned, and this is the best case for the Government, as we are considering the top 94 per cent. of taxpayers.
Taking account of all the potential allowances, if the man has a gross income of £32,000 and maximum mortgage interest relief, and she earns £26,800—this may come as a shock to Conservative Members, but that is not a totally typical couple although it is the best case that we can make— 1p off their tax is worth £235.20 each. That is a grand total of £470.40 a year. That is still nowhere near the cost of private health insurance or school fees.
What would happen if any of those families had elderly relatives on their way to private nursing homes? The standard cost for residential care is £9,000 a year, or £180 a week. If the care is indeed care in a nursing home, the standard cost is closer to £255 or £275 a week, or £14,300 a year. That is the real nature of the costs to individuals on those earnings and on the services that no doubt the Government hope they will believe they can replace as the state services are undermined by the Government's determination to forgo revenue for income tax cuts. As their determination to cut public spending to allow income tax cuts undermines state provision, more and more families with no choice must use those facilities, because nothing else is on offer.
When the Government claim that they are offering people better choice by prioritising income tax cuts over public investment, that is not a choice for most families —it is sheer insanity.
Mr. Ray Whitney: It seems that the hon. Lady is basing her entire argument on the fact that she would require the whole nation to take out private health insurance. Her concern about expenditure on the national health service should take account of the fact that, while the present Government have reduced income tax, they have also created an economy in which expenditure on the national health service has been increased in real terms by 50 per cent. The Labour party, when it was in power, was the best recruiting sergeant for private health insurance in this country.
Mrs. Beckett: If that is true, why did the Government bother to provide tax relief to encourage people to take out private health insurance? [Interruption.] If he had been here he might have followed it.
The Government continually use a phoney analogy. They think that by cutting income tax they are in some way offering people greater freedom and that it does not matter if public services are undermined, as there is an option, a choice, a substitute. That is total nonsense.
Labour gives priority to public investment, and we are proud of it. Pensioners should be the first priority. Younger pensioners may have good extra occupational or state pensions. If so, good luck to them. At least 1 million pensioners—some of them the oldest and most frail—who never earned enough to save and never even had a chance
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to belong to good occupational schemes, are living at less than income support level. They are the generation who regard income support as charity. They will not claim it, and they are not going to change now. The only way to help these people is Labour's way —by increasing the basic state pension for all.
Mr. Norman Lamont: The hon. Lady is making a very clear and very logical statement, but is not the logic of her position that she ought to want to increase the basic rate of tax?
Mrs. Beckett: We do not believe that most ordinary families in this country could afford to pay any more tax. They have been hit by the present Government, under whom the tax burden has increased. Taxes are higher than they have ever been in this country's history, and the burden falls disproportionately heavily on lower-income families. That was so even before the introduction of poll tax. Everyone has had to pay VAT increases and increased national insurance contributions. People cannot afford to bear a heavier burden, and we shall not put a heavier burden on them. As I have said, the only way to help pensioners is Labour's way—by giving them an increase in the state pension.
Millions of children belong to families whose income is at or below income support level. Half of these children belong to the families of the unemployed, and many belong to families who have work but at a desperately low rate of pay. The best way to help them all is Labour's way —by increasing child benefit to £9.95 for every child, to reflect 1987 value. We shall fulfil the pledge given by the Prime Minister in 1987 and abrogated every year since then. Under Labour, child benefit will be paid "as now".
The package of tax and national insurance changes that we actually propose will include lifting the ceiling on national insurance contributions, which will affect only those on individual earnings of £405 a week, or £21,000 a year, from April; introducing a new top rate tax of 50p in the pound, which will affect only those on individual earnings well above £30,000 a year. This package, set against our pension and child benefit changes, will leave 96 per cent. of families better off. That figure was produced by the independent Institute for Fiscal Studies.
From our package, we could readily cover not only the proposals I have just described but also our anti-recession measures to kick-start the recovery. It is a package with measures to promote investment and provide capital allowances similar to those that industry and commerce are begging for—pleas that are falling on the deaf ears of the Chancellor. We would also introduce measures to support training, provision for which is still being cut, as both the autumn statement and the Chief Secretary's evidence to the Select Committee have revealed, while unemployment soars.
We shall begin to release some of the money that local authorities already have to stimulate construction and help the homeless. There will be a pilot scheme, in partnership with the private sector, to put new rolling stock on Network SouthEast—rather more useful than name badges for the guards. We know we can fund all that, because we know that we can raise the additional revenues we need, and we have told the British people where they will come from.
That package is what the Chief Secretary the other day called "socialist spite", a typically graceful phrase from the

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right hon. and learned Gentleman. In April 1988, in this Parliament, the Government implemented the changes pushed through when the Prime Minister was a Minister at the Department of Social Security. They cut benefits to pensioners, the severely disabled, widows, the unemployed, those with industrial injuries and families with children, in or out of work. There are still a few thousand of the biggest losers who have not had a single penny increase in income from that day to this. What sort of spite was that—or was it just Conservative callousness?
Mr. Quentin Davies rose—
Mrs. Beckett: I am confident that these issues are something about which the hon. Gentleman knows absolutely nothing.
What we have promised in our "most urgent" package we know we can deliver. We are constantly asked by Conservative Members to state our highest priorities. We have. We are constantly asked to say how we will pay for them. We have. We can identify areas of spending where different choices and priorities can be exercised—for example, using city technology colleges funding to provide nursery places. We can identify areas where money is wasted, such as the poll tax.
Any attempt to draw up a wider programme would have to rely overwhelmingly on the only information available to the Opposition—the autumn statement in its present form. As the Select Committee pointed out, last year's autumn statement was out of date by March. This autumn statement was in doubt when it was published. We can rely neither on what it says about the state of the economy nor on the little that it reveals about the state of the public finances.
The Chief Secretary said yesterday that he wanted a serious debate about the economy, yet the ridiculous, but no doubt expensive, campaign that the Government are running is designed to do the very opposite. The Government wish to discuss neither where we are on the economy nor what we can do about it. All the sound and fury of the past few days has been a desperate diversion designed first to draw attention away from the unemployment figures, the inflation figures, and the figures for businesses closed and homes repossessed; and, secondly, to draw attention away from what the Labour party is actually saying, and for the simplest of all reasons —they know it makes sense.
Let us indeed debate the choices before the country; this is the forum for that. However, let us not pretend that there cannot be a choice. The form of the autumn statement makes that debate more difficult, and in 13 years the Government have done little or nothing to improve it. It must be redesigned so that it illuminates the choices facing the country—not, as now, obscures them.
We believe that the final public spending decisions and the Budget should be brought together, so that people can see clearly where the money that is raised will actually be spent. We want the capital and revenue spending of Government more clearly identified, so that we can judge the balance of investment for the future and what we spend today. We want far greater clarity in what we get for our money, measuring output and value for money, not just input.
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Most essential of all for the future assessment of public finance, we must establish a truly independent source of economic statistics to ensure that judgments are not distorted—as they have been under this Government, by political interference in their collection or presentation.
Although information can do much to foster debate, it cannot replace judgment. Perhaps the most extraordinary of all the peculiar things that the Chancellor has said during his period in office was his comment on, I believe, 8 January:
"the policy would not have been different had we known the outcome".
The right hon. Gentleman and all his colleagues have constantly reiterated the view that there is no need for a change of policy, that there is no alternative to present policies and that, if re-elected, the Government would pursue the same course. Now we have their final assurance that things
"would not have been different had we known the outcome."
I wonder what the thousands of people who have lost their jobs, homes, businesses or all three thought when they read that.
I believe the Chancellor when he says that, and that is why the Government have to go. A fourth Tory term would mean a fourth Tory recession as surely as night follows day. It is not true that there are no alternatives to their policies. It is not true that there are no choices to be exercised differently; and because there are choices, there is hope. It will not be easy to turn this country's economy round, but it can be done.
The Conservative party ignores the economic policies that we propose, although many independent commentators identify that they would be not only successful, but more successful than the Government policies—
Mr. Greg Knight (Lords Commissioner to the Treasury): Name one.
Mrs. Beckett: I can, indeed, name one as it happens —[Interruption.] Oxford Economic Forecasting refers to
"The …better long-run growth picture in the Labour case …arises from better productivity gains".
In other words, there would be better growth under Labour.
The National Institute of Economic and Social Research has stated that, in the longer term—[Interruption.] I am giving the hon. Member for Derby, North (Mr. Knight) his answer. He and his hon. Friends should listen. The national institute stated that our policies
"could raise the sustainable level of output in the United Kingdom and might also bring about a lasting reduction in unemployment".
Goldman Sachs has referred to our "extra training provisions" while James Capel has stated that there can be little doubt that our
"supply-side measures…would improve the United Kingdom's long-term sustainable growth rate and expand the supply-side of the economy".
[HON. MEMBERS: "More, more."] I am so glad that the hon. Member for Derby, North asked me that question—
Mr. John Townend: Ask her another one—ask about policy.
Mrs. Beckett: Now to our policies for benefits and taxation. I have referred to our policies on the economy and to many independent views of them. We often hear one phrase in particular from Conservative Members about our policies on benefits and taxation. They talk

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about the "politics of envy"—a revealingly ugly, negative phrase that sets one person against another. We have described the policies that we advocate as the "ethics of community"—as something that calls on what is best and most generous in the human spirit. That is the essence of the choice that the people will face in the election. It will be a choice between the politics of envy, as advocated so often by the Conservative party, and the ethics of community. When the Prime Minister has the guts to call the election, we shall be ready.
9.28 pm
The Chief Secretary to the Treasury (Mr. David Mellor): This has been a debate about two documents, only one of which has been tabled. I refer to our document, the "Autumn Statement", which sets out clearly the Government's spending priorities for the next three years. To pick up the point that the hon. Member for Derby, South (Mrs. Beckett) made at the end of her speech, that document makes substantial additional provision for a range of public services, such as the national health service, social security and pensions.
This is an autumn statement of which my right hon. and hon. Friends and I are proud. It is the autumn statement of a Government who have been able to increase public expenditure, in a well-targeted and specific way, by 20 per cent. in real terms during their lifetime; under Labour, it fell by 2½per cent. in real terms. However much Labour may talk about public expenditure, it normally makes such a mess of the economy that there is little benefit to be found in the longer run.
The House ought to be given the opportunity to see another document: the document that sets out Labour's programme, and presents the alternative that Labour Members are well able to encapsulate in amendments to motions but always fight shy of actually producing. That document will tell us Labour's spending priorities, and how it will balance those priorities. Up and down the country, Opposition Front-Benchers have come out with protestations about what they will give this, that and the other interest group; the document will make clear the order of priorities, and will begin to explain how the expenditure will be paid for.
It is not only the Conservative party that has asked for such an explanation; Labour supporters and sympathisers have done so as well. What about Mr. Hugo Young, who wrote in The Guardian yesterday? [Interruption.] Ah, Mr. Young has been disavowed, has he? Whenever we quote anyone, Labour Members seem anxious to become an even smaller group: they want to disavow even those who write for The Guardian, if what they say does not suit Labour. Mr. Young wrote:
"But we need to know more about priorities. An outline Labour public spending white paper would not be impossible to produce. Is it schools before hospitals, or houses before anything, after pensions and child benefit?"
We have heard two extensive speeches from the Opposition Front Bench, but they did not devote a single minute to answering that basic, common-sense question.
Because nature abhors a vacuum, we have had to produce the second document for today's debate—"Labour's Public Expenditure Plans". That document sets out Labour's views. It reveals all that has been said in the many policy launches and the speeches that have been made all over the country. Let me say this to Labour
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Members: if for one moment they feel uneasy about the document, let us have the alternative that they have tabled; let us know where we stand.
Mr. Barry Sheerman: Awful!
Mr. Mellor: What is the matter with the hon. Gentleman? He has not been seen in the Chamber throughout the debate, and now he comes in shouting "Awful!" It would be encouraging to believe that he was capable of listening as well as jeering. Perhaps if he listened for a bit and then jeered, he would at least be able to jeer from a better-informed position.
We have not just heard what the official Opposition have to say, or what the Government have said in the autumn statement; we have heard what the Opposition's opposition suggest, in the form of the amendment tabled by the right hon. Member for Chesterfield (Mr. Benn). I did not agree one bit with his speech, but I will say this for him: at least he has political integrity. At least he states his beliefs as they really are, and does not mould them to electoral advantage. The right hon. Gentleman pointed out exactly what has happened: a substantial body of opinion in the Labour party supports his amendment. Twenty-five Members—more than 10 per cent. of the parliamentary Labour party—support the amendment. I wonder how many others would have liked to sign it but did not feel that they should.
Mr. Peter Snape rose—
Mr. Mellor: Perhaps the hon. Gentleman is one of those who would have liked to sign the amendment. I give way to him so that he can enlighten us.
Mr. Snape: Does the Chief Secretary remember the October 1974 general election when he was my opponent in West Bromwich and then described me as a militant? Is he sure, all these years later, when he makes remarks about my right hon. Friend the Member for Chesterfield (Mr. Benn) that he could recognise one now?
Mr. Mellor: I am not sure that militant was a word in common parlance at that time. I think that I accused the hon. Gentleman of being a member of the Tribune group, which was then a significant force in the Labour party. Then it moved a great deal leftwards and left the hon. Gentleman looking quite bourgeois compared with some of the later entrants to the Labour party. I do not begrudge the hon. Gentleman his moment of happy, nostalgic reflection. As he knows, he got the biggest majority he has ever had in his constituency against me. Things have become much more difficult since then.
Mr. Speaker: Order. I think that there should now be a little less militancy. Come on, please.
Mr. Mellor: The right hon. Member for Chesterfield and 24 other Members of Parliament have put their names to a return to the alternative economic strategy—a return, once again, to the longest suicide note in history. [HON. MEMBERS: "Oh!"] It is all very well for Opposition Members to say "Oh!" but all of them were happy to fight the 1983 election on exactly that manifesto. Those who think that the Labour party has become a safe party—a party that it would be safe to elect because it has learnt all its lessons— should not forget that it is a pretty wild dream to imagine that the Labour party would get a majority in the House. It is an even wilder dream to imagine that it

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would get such a majority that it could escape from being held to ransom by the 25 Members who signed the amendment. That is another blow to the credibility of the Opposition Front-Bench spokesmen who speak on Treasury matters. Why otherwise would the right hon. Member for Chesterfield feel the need to table such a motion and why would 24 other Members sign it, if they had real confidence in what they were being told by the Opposition Front-Bench spokesmen and agreed with them?
Mr. Radice: Will the right hon. and learned Gentleman give way?
Mr. Mellor: I do not seem to be able to make a speech without an intervention from the hon. Gentleman. Has he been taking lessons from the right hon. Member for Yeovil (Mr. Ashdown) in arm movements, or perhaps he is auditioning for a part in "Thunderbirds"?
Mr. Radice: I was just wondering when the right hon. and learned Gentleman was going to tell the House how his Government intend to get out of the recession that they have created.
Mr. Mellor: As it happens, my right hon. Friend the Chancellor devoted most of his speech to doing precisely that, but I did not detect a great deal of interest on the Opposition Benches in what he had to say.
I am dealing with rather more interesting matters. My right hon. Friend the Chancellor has made it clear where we stand and we now want to know where the Labour party stands. It is clear that, if the Labour party were elected, the position in which we find ourselves today would become dramatically worse. The right hon. and learned Member for Monklands, East (Mr. Smith) knows that, even if some Opposition Back Benchers do not. That is why the right hon. and learned Gentleman keeps quiet about interest rates. He no longer talks about 1 per cent. off. He knows that the organisations that the hon. Member for Derby, South said commend Labour party policy and many others are arguing amongst themselves about only one thing—how much the Labour party would have to put up interest rates in order to establish its credibility if it were elected.
What is the Opposition's alternative to the autumn statement? [Interruption.] Even if Opposition Members are not interested, plenty of people in the wider community are interested. About 60 per cent. of people in that wider community told a Harris poll that they believed that Labour would raise the basic rate of tax, 57 per cent. told a Gallup poll that they believed that they would pay more tax under a Labour Government and 59 per cent. told an NOP survey that they thought that their take-home pay would be hit. Even more interestingly—this may interest the hon. Member for Huddersfield (Mr. Sheerman), who has resumed shouting—a survey of Labour Members of Parliament done by Access Opinions Ltd.—
Mr. Sheerman: When?
Mr. Mellor: That is hardly relevant, but the survey took place last week. Access Opinions Ltd. asked a number of Labour Members for their views on taxation and what the Chancellor should do in the Budget. A total of 5 per cent. said that they would want the basic rate increased by more
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than 2p, 40 per cent. said that they would want it increased by 2p and 11 per cent. want it increased by 1p. That is Labour's hidden agenda.
Mrs. Llin Golding: How many Labour Members were polled?
Mr. Mellor: Such questions should be directed to Access Opinions Ltd. [Interruption.] I dare say that if the hon. Member for Newcastle-under-Lyme (Mrs. Golding) wishes to challenge the integrity of Access Opinions Ltd. it would be delighted to consult its lawyers. I understand that it was a sample of 100 Members of Parliament.
Mrs. Beckett: Has anybody told the Chief Secretary that that survey also questioned Conservative Members and revealed that more than half of those surveyed did not think that there should be a cut in income tax in the Budget?
Mr. Mellor: What is the Labour party's view on that poll? Does the fact that half of the sample of Conservative Members said that there should be no change in income tax in this Budget invalidate a survey in which well over half the hon. Lady's colleagues who were consulted said that the basic rate of income tax should go up? It is not our credibility on tax matters that needs to be proved, but the Labour party's. The Labour party is not trusted on tax matters, and that is small wonder when its Members of Parliament say things like that.
Mr. Battle: Will the right hon. and learned Gentleman give way?
Mr. Mellor: No, I want to push on. I wonder whether—[interruption.]
Mr. Speaker: Order. I ask the House to calm down. We have only 15 minutes left.
Mr. Mellor: Commenting on Labour's public expenditure plans, The Economist said:
"It has tried to respond to its familiar dilemma—of wanting to be a high-spending party without being a high-taxing one—by splitting itself in two. Mr. Smith reassures the City and voters generally about his tax plans. But shadow spending ministers pander to health workers, teachers and the low-paid with a different tune. By harping on 'Tory underfunding', they deliberately create the impression that a Labour Government would spend far more. Yet unless taxes were raised substantially, it could not."
It is absolutely clear that many Labour Members want taxes to be raised but are not prepared to say so. They want taxes raised that have an impact on ordinary people.
Labour Members say that they want to have a debate, yet because they have been discomfited in other debates they have come in to the Chamber to start shouting and jeering. If they think that the public will be impressed by that, all well and good.
We listened to the hon. Member for Derby, South when she gave us the present status of Beckett's laws—a pledge to increase pensions and child benefit, to which the new manufacturing package has been added. In addition, there are all the other measures included in this document. Labour Members may jeer in a debate in the House, but do they believe that they will get through an election campaign with the inconsistencies that are revealed in this document?
Mr. Peter Hain: Will the Chief Secretary give way?
Mr. Mellor: No. I had enough of the hon. Gentleman when I increased my majority against him in the past two elections.
Let us see if Labour Members have an answer to one of these pledges. In 1990, the hon. Member for Cynon Valley (Mrs. Clwyd), who leads for Labour on overseas development, said:
"I want to see Britain reach the UN aid target of 0.7 per cent. of GDP as top priority."
[HON. MEMBERS: "Hear, hear."] The support that that quotation received proves the point. The hon. Member for Derby, South appeared on "On The Record" on 19 May last year. She said:
"No, that is a goal and it's explicity set out as a goal. That's what we're aiming for. Nobody is absolutely able to put their hand on their heart and say we know we can get there."
The right hon. Member for Manchester, Gorton (Mr. Kaufman) told the Labour party conference—
Mr. Robert Sheldon: Will the Chief Secretary give way?
Mr. Mellor: No, I shall complete the point.
The right hon. Member for Gorton told the Labour party conference:
"Over our first Parliament we shall increase Britain's aid budget to the United Nations target of 0.7 per cent. of GNP."
Those words are significant, even to Labour Members who want to open their mouths and close their ears. The right hon. Gentleman said:
"That is a firm commitment, costed and clear that I pledge our Labour Governincnt will carry out."
Mr. Sheldon rose—
Mr. Mellor: I shall give way in a moment.
We have an atmosphere reeking of deceit—the unmistakable whiff of under-arm aspirations. When the hon. Member for Derby, South is pressed, she makes a clear statement that it is nothing but an aspiration. But no less weighty a person than the shadow Foreign Secretary gives the clear statement that it is
"a firm commitment, costed and clear".
If it is, the hon. Lady should tell us how Labour will pay for it.
Mr. Sheldon: I may have minority tastes, but I came here to find out what the right hon. and learned Gentleman would say about the autumn statement. I am interested in the method of recovery because we have the highest levels of unemployment, the highest real rates of interest and a deplorable balance of payments. When the recovery comes—I suppose that whatever Government are in power, even one as incompetent as this, some sort of recovery will come eventually—what will happen to the balance of payments? I want to hear the right hon. and learned Gentleman's answer.
Mr. Mellor: I am dealing with how we can save the country from the kind of economic muddle that existed when the right hon. Gentleman was a Treasury Minister. He was the Financial Secretary to the Treasury when Lord Barnett was Chief Secretary, and we know what he had to say. This will be a trip down memory lane for the right hon. Gentleman. Lord Barnett said:
"The 1974–79 Labour Government had a difficult economic and financial task rendered impossible by pledges foolishly made without any serious thought as to where the money would come from. You name it, we were pledged to increase it. The crucial lesson for all political parties must be that we cannot take growth for granted, and above all, we
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should not plan in advance how to spend it. Even if we manage growth of 1 or 2 per cent. a year it will largely be needed to meet demographic changes."
The Labour party's document makes it clear that Labour has forgotten every word, and that is why the country needs to be saved from a Labour Government.
Another reason why the country needs to be saved from a Labour Government is that it is bad enough to have the type of nonsense that went on in Luigi's restaurant happening when the Labour party is in opposition, but it would be especially ridiculous if it happened with the Labour party in government.
I want to ask the right hon. and learned Member for Monklands, East a thing or two. If a week is a long time in politics, two days were a long time in the right hon. and learned Gentleman's life last week. It all seemed so clear when he appeared on the Frost programme two days before the Leader of the Opposition's visit to Luigi's restaurant. The right hon. and learned Gentleman was asked extensively by Mr. Frost—I have the transcript here and it goes on a fair bit—about Labour's policy. He set out clearly—
Mr. Battle rose—
Mr. Mellor: I shall not give way. I am dealing with the right hon. and learned Member for Monklands, East. He told Mr. Frost about Beckett's law and Mr. Frost asked him several times whether the level of taxation that would then result—
Mr. Battle rose—
Mr. Mellor: The hon. Gentleman is trying to disrupt my speech because he does not want to hear what the country wants to know. For the avoidance of doubt, Mr. Speaker, I do not intend to give way to the hon. Gentleman and, if he persists in intervening, it is merely because the Labour party's grasp of democracy cannot survive a week such as the previous one. It does not want to know.
Mr. George Foulkes rose—
Mr. Mellor: Things are really bad when the buffoonish tendency has to come out.
Mr. Foulkes rose
Mr. Speaker: Order. What is it?
Mr. Foulkes: The debate is entitled "Autumn Statement". The Chief Secretary has spoken for 22 minutes but has not mentioned the autumn statement. We have heard only advertisements for Luigi's restaurant.
Mr. Speaker: Order. Since I have been in the Chair, the Chief Secretary has been interrupted so often that there has not been much opportunity for him to do that.
Mr. Mellor: Has the hon. Gentleman, who reads with his lips so much that he could almost give lessons to the Leader of the Opposition, read the amendment which deals with precisely this issue? [Interruption.] It is pretty disgraceful if I cannot put to the right hon. and learned Member for Monklands, East the points which have been the centre of debate in this country for the past 10 days, but I shall do so.
David Frost put it to the right hon. and learned Gentleman no less than three times that it would be an unfair burden on many people who are not rich if he were

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to carry out immediately his proposed taxation arrangements to pay for Beckett's law—the abolition of the upper earnings limit for national insurance contributions and the 50 per cent. increase in the top rate of tax. He had endless opportunities. The transcript goes on for pages and pages, and not a single word was said about any of those increases being phased in. Indeed, finally, David Frost asked:
"I mean in the situation that if you find that those two moves, the tax at 50p and the National Insurance contribution raised £4.5 billion or £4.8 billion"
which David Frost said was more than the right hon. and learned Gentleman needed—
"you wouldn't adjust what you're going to do, downwards?"
That gave the right hon. and learned Gentleman every opportunity to say that the increases would be phased, but what did he say? He said:
"I reserve my position on that because I have not only got to find money for the welfare changes. I want to see the National Health Service properly financed".
[Interruption.] This noise is worse than the Shed at Chelsea football club. Is this really what Parliament is all about? Is this what Parliament is coming to?
Several Hon. Members rose—
Mr. Mellor: We can take it—[Interruption.]
Mr. Rhodri Morgan rose—
Mr. Mellor: And we can take all that, as well. We can certainly take this point: on David Frost's programme the right hon. and learned Member for Monklands, East did not have a thought in his head about the phasing in of any of those changes. I asked the right hon. and learned Gentleman whether he knew that his right hon. Friend the Leader of the Opposition would go to Luigi's restaurant and say what he said about phasing. The right hon. and learned Gentleman, who smiles at the idea, did not answer the question. We know why he did not answer. It was because he did not know. If he did know, he would say so. Will he say so now? Will he say that he knew what was going on at Luigi's?
Mr. John Smith: The right hon. and learned Gentleman has spent a great deal of his speech talking about the Labour party's spending plans. Last night, on "Newsnight", Mr. Brendan Bruce, the former director of communications for the Tories, said:
"No-one sensible in the Tory Party actually believes the Labour Party would put up public spending by £37 billion".
If no one in the Tory party believes that, why should the public?
Mr. Mellor: The right hon. and learned Gentleman could have made the shortest speech that he has ever made in the House. He could have said, "Yes, I knew what was going on at Luigi's restaurant." We know that he did not know, and we know that the Leader of the Opposition went to Luigi's restaurant and achieved what, even for him, was a famous first. He became the first man in history to walk into a restaurant and trip over a ceiling.
When the right hon. and learned Member for Monklands, East went on television that night to clean up the mess that his right hon. Friend the Leader of the Opposition had put him into again, he did not look pleased about it. He looked like a man who had just found that his tax returns had been filled in by Ken Dodd's accountant,
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or that Kitty Kelley was going to write his biography. He had his revenge today, though. He started talking about individuals' opinion poll ratings. I wonder why he made such a thing of that. Was it to say that his right hon. Friend's opinion poll rating was 20 per cent. below that of my right hon. Friend the Prime Minister? [Interruption.] Was that a way of getting his own back? [Interruption.] We heard what the Leader of the Opposition had to say about that. [Interruption.]
Mr. Speaker: Order. I ask the House to listen in reasonable silence for the next two minutes.
Mr. Mellor: The Labour party does not like to know that it has been rumbled. Labour Members know that, whatever they may bray and shout in here, the public outside distrust them. The public know full well that the Labour party taxes and spends, taxes and spends. We will not give Labour the opportunity to do so.
Question put, That the amendment be made:—
The House proceeded to a Division—
Mr. Phillip Oppenheim(seated and covered): On a point of order, Mr. Speaker. May I on behalf of my right hon. and hon. Friends point out that the disgraceful barracking and shouting which came from the mob opposite during the reply was clearly an exercise orchestrated by the Labour Whips? It was because they are afraid of the public learning the truth about Labour's taxation policies.
Mr. Speaker: The noise in the Chamber tonight did not do the House great credit, but I do not think that it came from one side alone.
The House having divided: Ayes 233, Noes 320.

Division No. 49]

[10 pm

AYES

Adams, Mrs Irene (Paisley, N.)

Carr, Michael

Allen, Graham

Cartwright, John

Alton, David

Clark, Dr David (S Shields)

Anderson, Donald

Clarke, Tom (Monklands W)

Archer, Rt Hon Peter

Clelland, David

Armstrong, Hilary

Clwyd, Mrs Ann

Ashdown, Rt Hon Paddy

Cohen, Harry

Ashley, Rt Hon Jack

Cook, Frank (Stockton N)

Ashton, Joe

Cook, Robin (Livingston)

Banks, Tony (Newham NW)

Corbett, Robin

Barnes, Harry (Derbyshire NE)

Corbyn, Jeremy

Barnes, Mrs Rosie (Greenwich)

Cousins. Jim

Barron, Kevin

Cox, Tom

Battle, John

Crowther, Stan

Beckett, Margaret

Cryer, Bob

Beith, A. J.

Cummings. John

Bell, Stuart

Cunliffe, Lawrence

Bellotti, David

Cunningham, Dr John

Benn, Rt Hon Tony

Dalyell, Tam

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

Darling, Alistair

Bermingham, Gerald

Davies, Rt Hon Denzil (Llanelli)

Blair, Tony

Davies, Ron (Caerphilly)

Blunkett, David

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

Boateng, Paul

Dewar, Donald

Boyes, Roland

Dixon, Don

Bradley, Keith

Dobson, Frank

Bray, Dr Jeremy

Doran, Frank

Brown, Gordon (D'mline E)

Douglas, Dick

Brown, Nicholas (Newcastle E)

Dunnachie, Jimmy

Brown, Ron (Edinburgh Leith)

Eadie, Alexander

Caborn, Richard

Eastham, Ken

Callaghan, Jim

Edwards, Huw

Campbell, Menzies (File NE)

Enright, Derek

Campbell, Ron (Blyth Valley)

Evans, John (St Helens N)

Canavan, Dennis

Ewing, Harry (Falkirk E)

Carlile, Alex (Mont'g)

Ewing, Mrs Margaret (Moray)

411

Fatchett, Derek

Marshall, Jim (Leicester S)

Faulds, Andrew

Martin, Michael J. (Springburn)

Fearn, Ronald

Martlew, Eric

Field, Frank (Birkenhead)

Maxton, John

Fisher, Mark

Meacher, Michael

Flannery, Martin

Meale, Alan

Flynn, Paul

Michael, Alun

Foot, Rt Hon Michael

Michie, Bill (Sheffield Heeley)

Foster, Derek

Mitchell, Austin (G't Grimsby)

Foulkes, George

Moonie, Dr Lewis

Fraser, John

Morgan, Rhodri

Fyfe, Maria

Morris, Rt Hon A. (W'shawe)

Galloway, George

Morris, Rt Hon J. (Aberavon)

Garrett, John (Norwich South)

Mowlam, Marjorie

George, Bruce

Mullin, Chris

Gilbert, Rt Hon Dr John

Murphy, Paul

Godman, Dr Norman A.

Nellist, Dave

Golding, Mrs Llin

Oakes, Rt Hon Gordon

Gordon, Mildred

O'Brien, William

Gould, Bryan

O'Hara, Edward

Graham, Thomas

O'Neill, Martin

Grant, Bernie (Tottenham)

Orme, Rt Hon Stanley

Griffiths, Nigel (Edinburgh S)

Parry, Robert

Griffiths, Win (Bridgend)

Patchett, Terry

Grocott, Bruce

Pendry, Tom

Hain, Peter

Powell, Ray (Ogmore)

Hardy, Peter

Prescott, John

Harman, Ms Harriet

Primarolo, Dawn

Hattersley, Rt Hon Roy

Quin, Ms Joyce

Haynes, Frank

Radice, Giles

Heal, Mrs Sylvia

Randall, Stuart

Henderson, Doug

Redmond, Martin

Hinchliffe, David

Rees, Rt Hon Merlyn

Hoey, Kate (Vauxhall)

Reid, Dr John

Hogg, N. (C'nauld & Kilsyth)

Robertson, George

Home Robertson, John

Robinson, Geoffrey

Hood, Jimmy

Rogers, Allan

Howarth, George (Knowsley N)

Rooker, Jeff

Howell, Rt Hon David (G'dford)

Rooney, Terence

Howells, Dr. Kim (Pontypridd)

Ross, Ernie (Dundee W)

Hoyle, Doug

Rowlands, Ted

Hughes, Robert (Aberdeen N)

Ruddock, Joan

Hughes, Roy (Newport E)

Salmond, Alex

Hughes, Simon (Southward)

Sedgemore, Brian

Ingram, Adam

Sheerman, Barry

Janner, Greville

Sheldon, Rt Hon Robert

Johnston, Sir Russell

Shore, Rt Hon Peter

Jones, Barry (Alyn & Deeside)

Short, Clare

Jones, leuan (Ynys MÔn)

Skinner, Dennis

Jones, Martyn (Clwyd S W)

Smith, Andrew (Oxford E)

Kaufman, Rt Hon Gerald

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

Kennedy, Charles

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

Kilfoyle, Peter

Smith, J. P. (Vale of Glam)

Kinnock, Rt Hon Neil

Snape, Peter

Kirkwood, Archy

Soley, Clive

Kumar, Dr. Ashok

Spearing, Nigel

Lamond, James

Steel, Rt Hon Sir David

Leadbitter, Ted

Steinberg, Gerry

Leighton, Ron

Stephen, Nicol

Lewis, Terry

Stott, Roger

Litherland, Robert

Strang, Gavin

Lloyd, Tony (Stretford)

Straw, Jack

Lofthouse, Geoffrey

Taylor, Mrs Ann (Dewsbury)

Loyden, Eddie

Taylor, Matthew (Truro)

McAllion, John

Thomas, Dr Dafydd Elis

McAvoy, Thomas

Turner, Dennis

McCartney, Ian

Vaz, Keith

McCrea, Rev William

Wallace, James

Macdonald, Calum A.

Walley, Joan

McFall, John

Warden, Gareth (Gower)

McGrady, Eddie

Wareing, Robert N.

McKay, Allen (Barnsley West)

Watson, Mike (Glasgow, C)

McKelvey, William

Welsh, Michael (Doncaster N)

McLeish, Henry

Wigley, Dafydd

McMaster, Gordon

Williams, Rt Hon Alan

McWilliam, John

Williams, Alan W. (Carm'then)

Madden, Max

Wilson, Brian

Mahon, Mrs Alice

Winnick, David

Marek, Dr John

Wise, Mrs Audrey

412

Worthington, Tony

Tellers for the Ayes:

Wray, Jimmy

Mr. Jack Thompson and

Young, David (Bolton SE)

Mr. Eric Illsley.

NOES

Adley, Robert

Dover, Den

Aitken, Jonathan

Dunn, Bob

Alison, Rt Hon Michael

Durant, Sir Anthony

Allason, Rupert

Dykes, Hugh

Amery, Rt Hon Julian

Eggar, Tim

Amess, David

Emery, Sir Peter

Arbuthnot, James

Evans, David (Welwyn Hatf'd)

Arnold, Jacques (Gravesham)

Evennett, David

Arnold, Sir Thomas

Fallon, Michael

Ashby, David

Farr, Sir John

Atkins, Robert

Favell, Tony

Baker, Rt Hon K. (Mole Valley)

Fenner, Dame Peggy

Baker, Nicholas (Dorset N)

Field, Barry (Isle of Wight)

Baldry, Tony

Finsberg, Sir Geoffrey

Banks, Robert (Harrogate)

Fishburn, John Dudley

Batiste, Spencer

Fookes, Dame Janet

Bellingham, Henry

Forman, Nigel

Bendall, Vivian

Forsyth, Michael (Stirling)

Bennett, Nicholas (Pembroke)

Forth, Eric

Biffen, Rt Hon John

Fowler, Rt Hon Sir Norman

Blackburn, Dr John G.

Fox, Sir Marcus

Blaker, Rt Hon Sir Peter

Franks, Cecil

Body, Sir Richard

Freeman, Roger

Bonsor, Sir Nicholas

French, Douglas

Boscawen, Hon Robert

Fry, Peter

Boswell, Tim

Gale, Roger

Bottomley, Peter

George, Bruce

Bottomley, Mrs Virginia

Gilmour, Rt Hon Sir Ian

Bowden, Gerald (Dulwich)

Glyn, Dr Sir Alan

Bowis, John

Goodlad, Rt Hon Alastair

Boyson, Rt Hon Dr Sir Rhodes

Goodson-Wickes, Dr Charles

Braine, Rt Hon Sir Bernard

Gorman, Mrs Teresa

Brandon-Bravo, Martin

Grant, Sir Anthony (CambsSW)

Brazier, Julian

Greenway, Harry (Ealing N)

Brooke, Rt Hon Peter

Greenway, John (Ryedale)

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

Gregory, Conal

Bruce, Ian (Dorset South)

Griffiths, Peter (Portsmouth N)

Buck, Sir Antony

Grist, Ian

Budgen, Nicholas

Ground, Patrick

Burns, Simon

Grylls, Sir Michael

Burt, Alistair

Gummer, Rt Hon John Selwyn

Butler, Chris

Hague, William

Butterfill, John

Hamilton, Rt Hon Archie

Carlisle, John, (Luton N)

Hamilton, Neil (Tatton)

Carlisle, Kenneth (Lincoln)

Hampson, Dr Keith

Carrington, Matthew

Hanley, Jeremy

Carttiss, Michael

Hannam, Sir John

Cash, William

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

Chalker, Rt Hon Mrs Lynda

Hargreaves, Ken (Hyndburn)

Channon, Rt Hon Paul

Harris, David

Chapman, Sydney

Hawkins, Christopher

Chope, Christopher

Hayes, Jerry

Churchill, Mr

Hayhoe, Rt Hon Sir Barney

Clark, Rt Hon Alan (Plymouth)

Hayward, Robert

Clark, Dr Michael (Rochford)

Heathcoat-Amory, David

Clark, Rt Hon Sir William

Heseltine, Rt Hon Michael

Clarke, Rt Hon K. (Rushcliffe)

Hicks, Mrs Maureen (Wolv' NE)

Colvin, Michael

Hicks, Robert (Cornwall SE)

Conway, Derek

Higgins, Rt Hon Terence L.

Coombs, Anthony (Wyre F'rest)

Hill, James

Coombs, Simon (Swindon)

Hind, Kenneth

Cope, Rt Hon Sir John

Hogg, Hon Douglas (Gr'th'm)

Cormack, Patrick

Hordern, Sir Peter

Couchman, James

Howarth, Alan (Strat'd-on-A)

Cran, James

Howell, Rt Hon David (G'dford)

Currie, Mrs Edwina

Howell, Ralph (North Norfolk)

Curry, David

Hughes, Robert G. (Harrow W)

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

Hunt, Rt Hon David

Davis, David (Boothferry)

Hunter, Andrew

Day, Stephen

Irvine, Michael

Devlin, Tim

Irving, Sir Charles

Dickens, Geoffrey

Jack, Michael

Dorrell, Stephen

Jackson, Robert

Douglas-Hamilton, Lord James

Janman, Tim

413

Jessel, Toby

Porter, Barry (Wirral S)

Jones, Gwilym (Cardiff N)

Porter, David (Waveney)

Jones, Robert B (Herts W)

Portillo, Michael

Jopling, Rt Hon Michael

Powell, William (Corby)

Kellett-Bowman, Dame Elaine

Price, Sir David

Key, Robert

Raffan, Keith

Kilfedder, James

Raison, Rt Hon Sir Timothy

King, Roger (B'ham N'thfield)

Redwood, John

Kirkhope, Timothy

Renton, Rt Hon Tim

Knapman, Roger

Rhodes James, Sir Robert

Knight, Greg (Derby North)

Riddick, Graham

Knight, Dame Jill (Edgbaston)

Ridley, Rt Hon Nicholas

Knowles, Michael

Ridsdale, Sir Julian

Knox, David

Rifkind, Rt Hon Malcolm

Lamont, Rt Hon Norman

Roberts, Rt Hon Sir Wyn

Lang, Rt Hon Ian

Roe, Mrs Marion

Latham, Michael

Rossi, Sir Hugh

Lawrence, Ivan

Rost, Peter

Lee, John (Pendle)

Rowe, Andrew

Leigh, Edward (Gainsbor'gh)

Ryder, Rt Hon Richard

Lennox-Boyd, Hon Mark

Sackville, Hon Tom

Lester, Jim (Broxtowe)

Sainsbury, Rt Hon Tim

Lloyd, Sir Ian (Havant)

Sayeed, Jonathan

Lloyd, Peter (Fareham)

Scott, Rt Hon Nicholas

Lord, Michael

Shaw, David (Dover)

Luce, Rt Hon Sir Richard

Shaw, Sir Giles (Pudsey)

Lyell, Rt Hon Sir Nicholas

Shaw, Sir Michael (Scarb')

McCrindle, Sir Robert

Shelton, Sir William

Macfarlane, Sir Neil

Shephard, Mrs G. (Norfolk SW)

MacGregor, Rt Hon John

Shepherd, Colin (Hereford)

MacKay, Andrew (E Berkshire)

Shepherd, Richard (Aldridge)

McLoughlin, Patrick

Shersby, Michael

McNair-Wilson, Sir Michael

Sims, Roger

McNair-Wilson, Sir Patrick

Skeet, Sir Trevor

Madel, David

Smith, Tim (Beaconsfield)

Major, Rt Hon John

Soames, Hon Nicholas

Malins, Humfrey

Speed, Keith

Mans, Keith

Speller, Tony

Maples, John

Spicer, Sir Jim (Dorset W)

Marland, Paul

Spicer, Michael (S Worcs)

Marlow, Tony

Squire, Robin

Marshall, Sir Michael (Arundel)

Stanbrook, Ivor

Martin, David (Portsmouth S)

Stanley, Rt Hon Sir John

Mates, Michael

Steen, Anthony

Maude, Hon Francis

Stern, Michael

Maxwell-Hyslop, Sir Robin

Stevens, Lewis

Mayhew, Rt Hon Sir Patrick

Stewart, Allan (Eastwood)

Mellor, Rt Hon David

Stewart, Andy (Sherwood)

Meyer, Sir Anthony

Stewart, Rt Hon Sir Ian

Miller, Sir Hal

Stokes, Sir John

Mills, lain

Summerson, Hugo

Mitchell, Andrew (Gedling)

Tapsell, Sir Peter

Mitchell, Sir David

Taylor, Ian (Esher)

Moate, Roger

Taylor, Sir Teddy

Monro, Sir Hector

Tebbit, Rt Hon Norman

Montgomery, Sir Fergus

Temple-Morris, Peter

Moore, Rt Hon John

Thompson, Sir D. (Calder Valley)

Morris, M (N'hampton S)

Morrison, Sir Charles

Thompson, Patrick (Norwich N)

Morrison, Rt Hon Sir Peter

Thorne, Neil

Moss, Malcolm

Thornton, Malcolm

Moynihan, Hon Colin

Thurnham, Peter

Mudd, David

Townend, John (Bridlington)

Neale, Sir Gerrard

Townsend, Cyril D. (B'heath)

Nelson, Anthony

Tracey, Richard

Neubert, Sir Michael

Tredinnick, David

Newton, Rt Hon Tony

Trippier, David

Nicholls, Patrick

Trotter, Neville

Nicholson, David (Taunton)

Twinn, Dr Ian

Nicholson, Emma (Devon West)

Vaughan, Sir Gerard

Norris, Steve

Viggers, Peter

Onslow, Rt Hon Cranley

Wakeham, Rt Hon John

Oppenheim, Phillip

Waldegrave, Rt Hon William

Page, Richard

Walden, George

Paice, James

Walker, Bill (T'side North)

Parkinson, Rt Hon Cecil

Walker, Rt Hon P. (W'cester)

Patnick, Irvine

Waller, Gary

Patten, Rt Hon Chris (Bath)

Walters, Sir Dennis

Patten, Rt Hon John

Ward, John

Pawsey, James

Wardell, Gareth (Gower)

414

Warren, Kenneth

Wolfson, Mark

Watts, John

Wood, Timothy

Wells, Bowen

Yeo, Tim

Wheeler, Sir John

Young, Sir George (Acton)

Whitney, Ray

Widdecombe, Ann

Tellers for the Noes:

Wilkinson, John

Mr. David Lightbown and

Wilshire, David

Mr. John M. Taylor.

Winterton, Nicholas

Question accordingly negatived.
Main Question put:—
The House divided: Ayes
317, Noes 227.

Division No. 50]

[10.13 pm

AYES

Adley, Robert

Cran, James

Aitken, Jonathan

Currie, Mrs Edwina

Alison, Rt Hon Michael

Curry, David

Allason, Rupert

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

Amery, Rt Hon Julian

Davis, David (Boothferry)

Amess, David

Day, Stephen

Arbuthnot, James

Devlin, Tim

Arnold, Jacques (Gravesham)

Dickens, Geoffrey

Arnold, Sir Thomas

Dorrell, Stephen

Ashby, David

Douglas-Hamilton, Lord James

Atkins, Robert

Dover, Den

Baker, Rt Hon K. (Mole Valley)

Dunn, Bob

Baker, Nicholas (Dorset N)

Durant, Sir Anthony

Baldry, Tony

Dykes, Hugh

Banks, Robert (Harrogate)

Eggar, Tim

Batiste, Spencer

Emery, Sir Peter

Bellingham, Henry

Evans, David (Welwyn Hatf'd)

Bendall, Vivian

Evennett, David

Bennett, Nicholas (Pembroke)

Fallon, Michael

Biffen, Rt Hon John

Farr, Sir John

Blackburn, Dr John G.

Favell, Tony

Blaker, Rt Hon Sir Peter

Fenner, Dame Peggy

Bonsor, Sir Nicholas

Field, Barry (Isle of Wight)

Boscawen, Hon Robert

Finsberg, Sir Geoffrey

Boswell, Tim

Fishburn, John Dudley

Bottomley, Peter

Fookes, Dame Janet

Bottomley, Mrs Virginia

Forman, Nigel

Bowden, Gerald (Dulwich)

Forsyth, Michael (Stirling)

Bowis, John

Forth, Eric

Boyson, Rt Hon Dr Sir Rhodes

Fowler, Rt Hon Sir Norman

Braine, Rt Hon Sir Bernard

Fox, Sir Marcus

Brandon-Bravo, Martin

Franks, Cecil

Brazier, Julian

Freeman, Roger

Brooke, Rt Hon Peter

French, Douglas

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

Fry, Peter

Bruce, Ian (Dorset South)

Galbraith, Sam

Buck, Sir Antony

Gale, Roger

Budgen, Nicholas

Gardiner, Sir George

Burns, Simon

Gilmour, Rt Hon Sir Ian

Burt, Alistair

Glyn, Dr Sir Alan

Butler, Chris

Goodlad, Rt Hon Alastair

Butterfill, John

Goodson-Wickes, Dr Charles

Carlisle, John, (Luton N)

Gorman, Mrs Teresa

Carlisle, Kenneth (Lincoln)

Grant, Sir Anthony (CambsSW)

Carrington, Matthew

Greenway, Harry (Eating N)

Carttiss, Michael

Greenway, John (Ryedale)

Cash, William

Gregory, Conal

Chalker, Rt Hon Mrs Lynda

Griffiths, Peter (Portsmouth N)

Channon, Rt Hon Paul

Grist, Ian

Chapman, Sydney

Ground, Patrick

Chope, Christopher

Grylls, Sir Michael

Churchill, Mr

Gummer, Rt Hon John Selwyn

Clark, Rt Hon Alan (Plymouth)

Hague, William

Clark, Dr Michael (Rochford)

Hamilton, Rt Hon Archie

Clark, Rt Hon Sir William

Hamilton, Neil (Tatton)

Clarke, Rt Hon K. (Rushcliffe)

Hampson, Dr Keith

Colvin, Michael

Hanley, Jeremy

Conway, Derek

Hannam, Sir John

Coombs, Anthony (Wyre F'rest)

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

Coombs, Simon (Swindon)

Hargreaves, Ken (Hyndburn)

Cope, Rt Hon Sir John

Harris, David

Cormack, Patrick

Hawkins, Christopher

Couchman, James

Hayes, Jerry

415

Hayhoe, Rt Hon Sir Barney

Morrison, Rt Hon Sir Peter

Hayward, Robert

Moss, Malcolm

Heathcoat-Amory, David

Moynihan, Hon Colin

Hicks, Mrs Maureen (Wolv' NE)

Neale, Sir Gerrard

Hicks, Robert (Cornwall SE)

Nelson, Anthony

Higgins, Rt Hon Terence L.

Neubert, Sir Michael

Hill, James

Newton, Rt Hon Tony

Hind, Kenneth

Nicholls, Patrick

Hogg, Hon Douglas (Gr'th'm)

Nicholson, David (Taunton)

Hordern, Sir Peter

Nicholson, Emma (Devon West)

Howarth, Alan (Strat'd-on-A)

Norris, Steve

Howell, Rt Hon David (G'dford)

Onslow, Rt Hon Cranley

Howell, Ralph (North Norfolk)

Oppenheim, Phillip

Hughes, Robert G. (Harrow W)

Page, Richard

Hunt, Rt Hon David

Paice, James

Hunter, Andrew

Parkinson, Rt Hon Cecil

Irvine, Michael

Patnick, Irvine

Irving, Sir Charles

Patten, Rt Hon Chris (Bath)

Jack, Michael

Patten, Rt Hon John

Jackson, Robert

Pawsey, James

Janman, Tim

Porter, Barry (Wirral S)

Jessel, Toby

Porter, David (Waveney)

Jones, Gwilym (Cardiff N)

Portillo, Michael

Jones, Robert B (Herts W)

Powell, William (Corby)

Jopling, Rt Hon Michael

Price, Sir David

Kellett-Bowman, Dame Elaine

Raffan, Keith

Key, Robert

Raison, Rt Hon Sir Timothy

Kilfedder, James

Redwood, John

King, Roger (B'ham N'thfield)

Renton, Rt Hon Tim

Kirkhope, Timothy

Rhodes James, Sir Robert

Knapman, Roger

Riddick, Graham

Knight, Greg (Derby North)

Ridley, Rt Hon Nicholas

Knight, Dame Jill (Edgbaston)

Ridsdale, Sir Julian

Knowles, Michael

Rifkind, Rt Hon Malcolm

Knox, David

Roberts, Rt Hon Sir Wyn

Lamont, Rt Hon Norman

Roe, Mrs Marion

Lang, Rt Hon Ian

Rossi, Sir Hugh

Latham, Michael

Rost, Peter

Lawrence, Ivan

Rowe, Andrew

Lee, John (Pendle)

Ryder, Rt Hon Richard

Leigh, Edward (Gainsbor'gh)

Sackville, Hon Tom

Lennox-Boyd, Hon Mark

Sainsbury, Rt Hon Tim

Lester, Jim (Broxtowe)

Sayeed, Jonathan

Lloyd, Sir Ian (Havant)

Scott, Rt Hon Nicholas

Lloyd, Peter (Fareham)

Shaw, David (Dover)

Lord, Michael

Shaw, Sir Giles (Pudsey)

Luce, Rt Hon Sir Richard

Shaw, Sir Michael (Scarb')

Lyell, Rt Hon Sir Nicholas

Shelton, Sir William

McCrindle, Sir Robert

Shephard, Mrs G. (Norfolk SW)

Macfarlane, Sir Neil

Shepherd, Colin (Hereford)

MacGregor, Rt Hon John

Shepherd, Richard (Aldridge)

MacKay, Andrew (E Berkshire)

Shersby, Michael

McLoughlin, Patrick

Sims, Roger

McNair-Wilson, Sir Michael

Skeet, Sir Trevor

McNair-Wilson, Sir Patrick

Smith, Tim (Beaconsfield)

Madel, David

Soames, Hon Nicholas

Major, Rt Hon John

Speed, Keith

Malins, Humfrey

Speller, Tony

Mans, Keith

Spicer, Sir Jim (Dorset W)

Maples, John

Spicer, Michael (S Worcs)

Marland, Paul

Squire, Robin

Marlow, Tony

Stanbrook, Ivor

Marshall, Sir Michael (Arundel)

Stanley, Rt Hon Sir John

Martin, David (Portsmouth S)

Steen, Anthony

Mates, Michael

Stem, Michael

Maude, Hon Francis

Stevens, Lewis

Maxwell-Hyslop, Sir Robin

Stewart, Allan (Eastwood)

Mayhew, Rt Hon Sir Patrick

Stewart, Andy (Sherwood)

Mellor, Rt Hon David

Stewart, Rt Hon Sir Ian

Meyer, Sir Anthony

Stokes, Sir John

Miller, Sir Hal

Summerson, Hugo

Mills, lain

Tapsell, Sir Peter

Mitchell, Andrew (Gedling)

Taylor, Ian (Esher)

Mitchell, Sir David

Taylor, Sir Teddy

Moate, Roger

Tebbit, Rt Hon Norman

Monro, Sir Hector

Temple-Morris, Peter

Montgomery, Sir Fergus

Thompson, Sir D. (Calder Valley)

Moore, Rt Hon John

Morris, M (N'hampton S)

Thompson, Patrick (Norwich N)

Morrison, Sir Charles

Thome, Neil

416

Thornton, Malcolm

Wardle, Charles (Bexhill)

Thurnham, Peter

Warren, Kenneth

Townend, John (Bridlington)

Watts, John

Townsend, Cyril D. (B'heath)

Wells, Bowen

Tracey, Richard

Wheeler, Sir John

Tredinnick, David

Whitney, Ray

Trippier, David

Widdecombe, Ann

Trotter, Neville

Wilkinson, John

Twinn, Dr Ian

Wilshire, David

Vaughan, Sir Gerard

Winterton, Nicholas

Viggers, Peter

Wolfson, Mark

Wakeham, Rt Hon John

Wood, Timothy

Waldegrave, Rt Hon William

Yeo, Tim

Walden, George

Young, Sir George (Acton)

Walker, Bill (T'side North)

Walker, Rt Hon P. (W'cester)

Tellers for the Ayes

Waller, Gary

Mr. David Lightbown and

Walters, Sir Dennis

Mr. John M. Taylor.

Ward, John

NOES

Adams, Mrs Irene (Paisley, N.)

Dixon, Don

Allen, Graham

Dobson, Frank

Alton, David

Doran, Frank

Anderson, Donald

Douglas, Dick

Archer, Rt Hon Peter

Dunnachie, Jimmy

Armstrong, Hilary

Eadie, Alexander

Ashdown, Rt Hon Paddy

Eastham, Ken

Ashley, Rt Hon Jack

Edwards, Huw

Ashton, Joe

Enright, Derek

Banks, Tony (Newham NW)

Evans, John (St Helens N)

Barnes, Harry (Derbyshire NE)

Ewing, Harry (Falkirk E)

Barnes, Mrs Rosie (Greenwich)

Ewing, Mrs Margaret (Moray)

Barron, Kevin

Fatchett, Derek

Battle, John

Faulds, Andrew

Beckett, Margaret

Fearn, Ronald

Beith, A. J.

Field, Frank (Birkenhead)

Bell, Stuart

Fisher, Mark

Bellotti, David

Flannery, Martin

Benn, Rt Hon Tony

Flynn, Paul

Bermingham, Gerald

Foot, Rt Hon Michael

Blair, Tony

Foster, Derek

Blunkett, David

Foulkes, George

Boateng, Paul

Fraser, John

Boyes, Roland

Fyfe, Maria

Bradley, Keith

Galloway, George

Bray, Dr Jeremy

Garrett, John (Norwich South)

Brown, Gordon (D'mline E)

George, Bruce

Brown, Nicholas (Newcastle E)

Gilbert, Rt Hon Dr John

Brown, Ron (Edinburgh Leith)

Godman, Dr Norman A.

Caborn, Richard

Golding, Mrs Llin

Callaghan, Jim

Gordon, Mildred

Campbell, Menzies (Fife NE)

Graham, Thomas

Campbell, Ron (Blyth Valley)

Grant, Bernie (Tottenham)

Canavan, Dennis

Griffiths, Nigel (Edinburgh S)

Carlile, Alex (Mont'g)

Griffiths, Win (Bridgend)

Carr, Michael

Grocott, Bruce

Cartwright, John

Hain, Peter

Clark, Dr David (S Shields)

Hardy, Peter

Clarke, Tom (Monklands W)

Harman, Ms Harriet

Clelland, David

Hatters ley, Rt Hon Roy

Clwyd, Mrs Ann

Haynes, Frank

Cohen, Harry

Heal, Mrs Sylvia

Cook, Frank (Stockton N)

Henderson, Doug

Cook, Robin (Livingston)

Hinchliffe, David

Corbett, Robin

Hoey, Kate (Vauxhall)

Corbyn, Jeremy

Hogg, N. (C'nauld & Kilsyth)

Cousins, Jim

Home Robertson, John

Cox, Tom

Hood, Jimmy

Crowther, Stan

Howarth, George (Knowsley N)

Cryer, Bob

Howell, Rt Hon D. (S'heath)

Cummings, John

Howells, Dr. Kim (Pontypridd)

Cunliffe, Lawrence

Hoyle, Doug

Cunningham, Dr John

Hughes, Robert (Aberdeen N)

Dalyell, Tam

Hughes, Roy (Newport E)

Darling, Alistair

Hughes, Simon (Southwark)

Davies, Rt Hon Denzil (Llanelli)

Ingram, Adam

Davies, Ron (Caerphilly)

Janner, Greville

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

Johnston, Sir Russell

Dewar, Donald

Jones, Barry (Alyn & Deeside)

417

Jones, leuan (Ynys Mon)

Quin, Ms Joyce

Jones, Martyn (Clwyd S W)

Radice, Giles

Kaufman, Rt Hon Gerald

Randall, Stuart

Kennedy, Charles

Redmond, Martin

Kilfoyle, Peter

Rees, Rt Hon Merlyn

Kinnock, Rt Hon Neil

Reid, Dr John

Kirkwood, Archy

Robertson, George

Kumar, Dr. Ashok

Robinson, Geoffrey

Lamond, James

Rogers, Allan

Leadbitter, Ted

Rooker, Jeff

Leighton, Ron

Rooney, Terence

Lewis, Terry

Ross, Ernie (Dundee W)

Litherland, Robert

Rowlands, Ted

Lloyd, Tony (Stretford)

Ruddock, Joan

Lofthouse, Geoffrey

Salmond, Alex

Loyden, Eddie

Sedgemore, Brian

McAllion, John

Sheerman, Barry

McAvoy, Thomas

Sheldon, Rt Hon Robert

McCartney, Ian

Short, Clare

McCrea, Rev William

Skinner, Dennis

Macdonald, Calum A.

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

McFall, John

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

McGrady, Eddie

Smith, J. P. (Vale of Glam)

McKay, Allen (Barnsley West)

Snape, Peter

McKelvey, William

Soley, Clive

McLeish, Henry

Spearing, Nigel

McMaster, Gordon

Steel, Rt Hon Sir David

McWilliam, John

Steinberg, Gerry

Madden, Max

Stephen, Nicol

Mahon, Mrs Alice

Stott, Roger

Marek, Dr John

Strang, Gavin

Marshall, Jim (Leicester S)

Straw, Jack

Martin, Michael J. (Springburn)

Taylor, Mrs Ann (Dewsbury)

Martlew, Eric

Taylor, Matthew (Truro)

Maxton, John

Thomas, Dr Dafydd Elis

Meacher, Michael

Turner, Dennis

Meale, Alan

Vaz, Keith

Michael, Alun

Wallace, James

Michie, Bill (Sheffield Heeley)

Walley, Joan

Mitchell, Austin (G't Grimsby)

Wardell, Gareth (Gower)

Moonie, Dr Lewis

Wareing, Robert N.

Morgan, Rhodri

Watson, Mike (Glasgow, C)

Morris, Rt Hon A. (W'shawe)

Welsh, Michael (Doncaster N)

Morris, Rt Hon J. (Aberavon)

Wigley, Dafydd

Mowlam, Marjorie

Williams, Rt Hon Alan

Mullin, Chris

Williams, Alan W. (Carm'then)

Murphy, Paul

Wilson, Brian

Nellist, Dave

Winnick, David

Oakes, Rt Hon Gordon

Wise, Mrs Audrey

O'Brien, William

Worthington, Tony

O'Neill, Martin

Wray, Jimmy

Orme, Rt Hon Stanley

Young, David (Bolton SE)

Parry, Robert

Patchett, Terry

Tellers for the Noes:

Pendry, Tom

Mr. Jack Thompson and

Powell, Ray (Ogmore)

Mr. Eric Illsley.

Primarolo, Dawn

Question accordingly agreed to.
Resolved,
That this House approves the Autumn Statement presented by Mr. Chancellor of the Exchequer on 6th November 1991; notes that the Government has continued to maintain firm control over public expenditure, while honouring its commitments in full and increasing spending in priority areas; and congratulates the Government on its sound and prudent economic policies, which have led to a substantial reduction in inflation and have laid the foundations for sustainable recovery.

Housing Support Grant (Scotland)
10.26 pm
The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I beg to move,
That the draft Housing Support Grant (Scotland) Order 1992, which was laid before this House on 17th December, be approved.
I propose to keep my opening remarks brief. This is the 14th annual housing support grant order to have been laid before the House. Hon. Members will remember that housing support grant is a subsidy paid to those local authorities which, on the basis of reasonable assumptions about income and expenditure, would find it difficult to meet the costs of council housing from rental income. Full details of the grant settlement for next year are given in the order and the accompanying report.
I should like, as usual, to express my thanks to the Convention of Scottish Local Authorities, with which the grant settlement for next year has been discussed. Although COSLA has reservations about certain aspects of the settlement, I am grateful for the constructive and helpful approach that it takes in our annual discussions on these matters.
The draft order provides that the total grant payable next year will be £47.5 million. This sum represents the difference between the eligible expenditure and the relevant income of those authorities which, in the absence of grant, would have a deficit on their housing revenue accounts.
Eligible expenditure consists mainly of loan charges and management and maintenance spending. The loan charges that we estimate authorities will have to meet in the next financial year are, as usual, based on a projection of each authority's capital debt to the mid-point of the 1992–93 financial year, taking account of new borrowing and debt redemption.
In order to calculate interest charges, we apply to these projections of capital debt the pool interest rate expected for local authority debt in 1992–93. Our present estimate of this rate is 9.8 per cent. Interest rates may fluctuate, however, and 1 can assure the House that if there is a significant change in the estimate of the pool rate for 1992–93 we shall, as is normal, bring forward an appropriate variation order. For the moment, our estimate of loan charges for all authorities in 1992–93 is £505 million.
During this debate last year, a number of hon. Members—including the hon. Member for Western Isles (Mr. Macdonald), for Ross, Cromarty and Skye (Mr. Kennedy) and for Roxburgh and Berwickshire (Mr. Kirkwood)—expressed their concern at the position of some authorities which, it was argued, faced average interest rates consistently higher than the pool rate of interest.
I discussed that matter with COSLA, and we gave serious consideration to a proposal to use individual estimates of the average interest rate that would apply to each authority. COSLA agreed, however, that the use of the standard pool rate should be retained, subject to changes in the system of prior year adjustments to ensure that differences between estimated and actual loan charges were more closely reflected in such adjustments. I welcome

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that conclusion, to which COSLA agreed and which will mean that in future authorities are better protected against unexpected local variations in interest rates.
Mr. Archy Kirkwood: Can the Minister assure us that the changes, especially as they apply to Roxburgh, will mean a better deal than last year? We understand that these are provisional estimates, but the overall amount of money has been cut. There is widespread concern north of the border, especially in counties such as Roxburgh, that the allocations for next year will be less than they are for this year.
Lord James Douglas-Hamilton: The reason for the level of housing support grant is that the interest rates have come down. That factor was taken into account. What the hon. Gentleman, and the two other hon. Members to whom I referred, called for would have been to the disadvantage of the majority of authorities in Scotland, including Glasgow. However, we believe that it is possible to meet their point by adjusting the pool rate of interest and compensating those authorities where the estimates are found to be out. Action is being taken.
Mr. John Maxton: I should be interested to hear how the Minister arrived at an average interest rate figure of 9.8 per cent. I do not know anyone who can get that rate at present.
Lord James Douglas-Hamilton: That is the estimate held by the Scottish Office but, as I said, if it is found to be incorrect, we will introduce a variation order—something that we have done before.
The other major item of expenditure to fall on housing revenue accounts is that on the management and maintenance of the housing stock. Our estimate of eligible management and maintenance spending in 1992–93 is based on an assumed average spending level of more than £526 per house. That represents a 15 per cent. increase over the equivalent average for the current year. It is the highest annual increase ever adopted for the grant calculations, and it provides evidence that the Scottish Office is prepared to make a real and growing contribution to the costs of providing improved services to council tenants.
There is a further aspect of eligible expenditure to which I draw the attention of the House. It concerns the way in which we have estimated the amounts of lost rental income arising from vacant houses. In previous years, that has been estimated with miscellaneous income on the rough-and-ready basis that it would form the same percentage of management and maintenance spending as it did in the year preceding the year in which the settlement was determined.
Lost rental income from vacant houses has been growing at an alarming rate—from £11.3 million in 1985–86 to more than £29.5 million in 1990–91—and authorities were automatically compensated through the grant system for that loss of income. Such a position could not be allowed to continue. The system has therefore been changed so that the Government's liability in respect of local authorities' lost rents will be limited to a set percentage of their overall rental income. For 1992–93, that has been set at 2.5 per cent.
I am satisfied that the 2.5 per cent. level takes adequate account of the numbers of vacant houses that arise in the normal course of local authorities activities as a landlord,
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as well as those houses being held empty for the purposes of comprehensive improvement schemes or demolition or disposal. More generally, I shall continue to urge local authorities to minimise the number of empty houses that they hold.
Mr. Tom Clarke: Like me, the Minister spent some time in local government. Does he recall sitting in his surgeries and listening to people saying, time after time, that they had refused houses? That is an exercise in choice. If people are exercising choice in that way, why should the local authority be penalised in the way that the Minister suggests?
Lord James Douglas-Hamilton: The vast majority of authorities will not be affected this year. The policy is discouraging authorities from obtaining an increased number of empty houses. We believe that the 2.5 per cent. level is a reasonable assessment, taking into account all the circumstances. It is true that some houses will be vacant for decant, improvement and other purposes, but we believe that 2.5 per cent. of lost rental income is entirely reasonable when one takes into account all the factors.
Dr. John Reid: Will the Minister give way?
Lord James Douglas-Hamilton: I shall give way in a moment, but I wish to develop the arguments first.
As for standard rents, the assumed average rent for 1992–93 is £26.36 per house per week. That represents an increase of 10 per cent. above the assumed rent for the current year. I should stress that the rent figure of £26.36 is not a forecast of the actual average local authority rent for the next year; nor is it a guideline or recommendation to authorities. The figure of £26.36 is the average rent which, for the purpose of the grant calculations, we consider authorities should reasonably be expected to receive. The actual rent levels of individual authorities may be higher or lower depending on authorities' own decisions about income and expenditure. I shall discuss the implications of the subsidies settlement for actual rents later.
Dr. Reid: I am sorry to repeat the question of my hon. Friend the Member for Monklands, West (Mr. Clarke), but I am afraid that the Minister did not answer it. It was an important point as regards not only the practice of council house lets but also the principle of freedom of choice. If the Minister believes in freedom of choice and if the tenant chooses not to have a house because of its condition, why should the council be penalised? Should not the Minister be investigating why houses are repeatedly refused and why the choice is exercised against taking them—often due to their bad condition? Should he not provide substantial means to upgrade those houses, rather than negate tenants' choice and penalise the council?
Lord James Douglas-Hamilton: The short answer to the hon. Gentleman's question is that the sums involved have been growing at an extremely alarming rate. As I said, in 1985–86, £11.3 million was lost in rental income because of empty houses. That figure has increased to £29.5 million. We believed that that trend should be arrested and authorities should be given maximum encouragement to bring empty houses back into use. If a house is

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uninhabitable and the council cannot do it up itself, the council should investigate other possibilities, through a housing association or the private sector.
I wish to mention the housing support grant arrangements for subsidising local authority hostels. Last year in this debate, I announced that hostel grant was being extended to all authorities with housing department hostels, and that 15 local authorities would qualify. I announced that additional capital resources were being made available to local authorities specifically to help them deal with homelessness. Some of those additional allocations have been invested in additional hostel provision.
To ensure that those new hostel grants are taken account of in the grant calculations, hostel grant has been yet again extended. We have thus been able to make a contribution to the net costs of new hostels in 1992–93. Those contributions have been based on the average cost per hostel bed space in Scotland as a whole. I recognise that the level of contribution may not cover 100 per cent. of the net costs of some of those new hostels, particularly in the case of a certain hostel in Edinburgh, where the annual running costs are more than £21,000 per hostel space. It would be unreasonable to expect the Government to fund hostel provision at such a level. Nevertheless, the overall hostel grant for 1992–93 of more than £1.6 million will be shared among 17 authorities, compared with £1.4 million among 15 authorities in the current financial year.
Mr. Thomas Graham: The Minister will know that, due to the policy on selling council houses—which the Government have pushed heavily—many districts contain many elderly people who have never been able to purchase a house and are now dying off. The finances of those elderly people have been so severely reduced because of Government cuts that those residents have been unable to keep their houses in as good a condition as normal. The local authorities will have to return those houses to their normal standard before they can release them. Repossessions of houses bought by local people provide a further reason for local authorities to provide housing for homeless families.
Lord James Douglas-Hamilton: Spending per council house is being maintained. I have visited the hon. Gentleman's district council, which has been working with Scottish Homes. He is right to say that the provision of adequate housing for the elderly is extremely important; but, in the settlement reached so far for this year and the provisional allocations, not only has spending per house been maintained but—over and above that—there is a further £21.9 million: £7.5 million for homelessness projects; £7.5 million for energy projects which can help the elderly; and £6.9 million for innovative projects in urban regeneration schemes.
General fund contributions represent a subsidy from community charge payers to council tenants. Such contributions are indiscriminate, in that they benefit all council tenants regardless of their circumstances, and they are unnecessary to the extent that tenants who are unable to meet the costs of their housing receive assistance in the form of housing benefit.
I therefore make no apology for our proposal that 49 of the 56 local housing authorities should be barred from
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estimating for such a contribution next year. The remaining authorities will be allowed to budget for varying levels of contribution, amounting in total to £1.5 million. The level of those contributions has been calculated as the amounts necessary to restrict the average rent increase in each of the authorities concerned to a maximum of 10 per cent.
Mr. Dennis Canavan: The Minister seems to be trying to skate over the serious problem of homelessness in Scotland. Is he oblivious to the fact that, according to Shelter, the homelessness figures in Scotland have more than doubled over the past seven years? The Scottish total is now well over 34,000 and in some areas—for example, Falkirk district, where at the last count there were more than 1,300 homeless applicants—local authorities have received hardly a penny over the past decade or so in housing support grant.
All that the order offers Falkirk district council is a relatively trivial amount for hostel accommodation. When will the Minister face up to his responsibilities, and do something for homeless people—such as giving every housing authority that requires housing support grant, and every housing authority that requires capital allocation, the necessary resources with which to build and maintain council housing and cater for homeless people throughout Scotland?
Lord James Douglas-Hamilton: I am glad to tell the hon. Gentleman that the bids for the £7.5 million that we have allocated for homelessness projects next year should be in by 7 February, and the allocation will then be made as soon as is practicable.
May I make a general point? The Convention of Scottish Local Authorities would have preferred to have complete discretion in regard to whether to use the funds for any other purpose, but Shelter welcomed the fact that specific projects had been called for, because it knew that the funds would definitely be used for those projects.
The effect of our subsidy proposals on local authority rent levels for 1992–93 will vary. 1 should make it clear that decisions on council rents are for local authorities. The majority of authorities do not receive housing support grant in respect of their council housing; nor do they make GFCs. Clearly, the subsidy proposals will have no direct effect on the rent decisions of those authorities.
As for the other authorities, changes in the level of subsidies from 1991–92 to 1992–93 will have a varying impact. In a number of cases, subsidies are a relatively minor component of housing revenue account income, and the influence of the subsidies decisions is likely to be outweighed by authorities' own decisions on, for example, management and maintenance spending. Even when subsidies form a sizeable proportion of housing revenue account income, it remains only one of a number of factors that need to be considered.
I should particularly draw the attention of the House to the expected expenditure of local authorities on loan charges, which amount to more than half of all local authority expenditure. Because of the decline in interest rates over the past 12 months, the loan charges payable by many authorities will be lower next year than this year. That should enable many local authorities to increase rents by relatively modest amounts, while still leaving room for real improvements in the level of management and maintenance spending. The general fund contributions

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specified in the order will ease the position of those few authorities that face the need to increase rents by more than 10 per cent.
Mr. John McFall: Further to the point made by my hon. Friend the Member for Falkirk, West (Mr. Canavan), there are 2,000 homeless people in my constituency. That number has shot up. My authority received £1.7 million in housing support grant for 1980–81. It has not received a penny for the last 12 years. Homelessness is increasing inexorably, but for 12 years there has been no housing support grant. How can the Minister possibly justify that?
Lord James Douglas-Hamilton: Housing support grant is a deficit subsidy provided by the Government to bridge the gap between reasonable expenditure and reasonable income. In practice, the major factor that determines whether an authority qualifies is its level of outstanding capital debt per council house. When the hon. Gentleman's authority makes a hid in its housing plan for the homeless, that hid, together with the other bids for the £7.5 million, will he looked at with the greatest possible care.
The allocations that have so far been made are provisional. In previous years, the final allocations have always been considerably higher than the provisional allocations. The final allocations are due to be made in March. [Interruption.] The hon. Member for Glasgow, Pollok (Mr. Dunnachie) says that it is allocated to sales. What matters is how much is spent on housing stock in the public sector. More than £1 billion has been spent on public sector stock as a result of right-to-buy sales. That is why it is strongly welcomed throughout Scotland.
Mr. Jimmy Wray: Does the Minister agree that he ought to have taken Shelter's advice that 84 children arc being made homeless each day? The Minister is working on a £2.40 a week increase, but the average increase in Scotland is £2.50 to £3. Does he also agree that he has made a mistake in the estimates by saying that he has given 0.5 million to Scotland, when in reality he has stolen that sum? There is a £53 million shortfall.
The £47 million allocation is too low. The Convention of Scottish Local Authorities says that it is short of £1.5 million. The Government arc talking about spending £521 per house. COSLA is spending £541 per house. Next year, it will spend £600 per house. COSLA says that there is a £53 million shortfall. Therefore, the Government have not allocated £7.5 million to deal with the homeless.
Lord James Douglas-Hamilton: The hon. Gentleman is not correct. The combined provisional allocation for 1991–92 for the housing revenue account and the non-housing revenue account was £520 million. The combined HRA and non-HRA for 1992–93 is £532 million—£12 million higher. Spending per council house is being maintained, and the £7.5 million for homelessness projects is over and above that—as is the £7.5 million for energy projects, for which the hon. Gentleman's authority will be bidding.
Mr. Maxton: Not true.
Lord James Douglas-Hamilton: I assure the hon. Gentleman that it most certainly is true.
The analysis of the relatively modest impact of the subsidies settlement on local authority rents would appear
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to he confirmed by those authorities which have already settled their rent levels for 1992–93. In particular, I note that Glasgow has opted for an average increase of about 7 per cent., while Edinburgh is considering an increase in the range of 5 to 7 per cent. The hon. Members for Dundee, East (Mr. McAllion) and for Dundee, West (Mr. Ross) will be aware that the increase in that city will be 6.5 per cent.
The proposals made tonight constitute a fair and reasonable subsidies package. They set out an acceptable balance between the interests of the council tenant, the community charge payer and the national taxpayer. We have consulted local authorities about the order and I strongly commend it to the House.
10.49 pm
Mr. John Maxton: I suppose that the only good thing that could be said about that speech is that it will be the last one that the Minister will make before the election in his present role as Minister responsible for housing. It is the last one that he will make because he will be returning to the Bar thereafter. God help the criminals that he will defend. I have a great deal of sympathy for them.
As the Government stagger towards defeat in the election, I thought that because this was the Minister's last speech we might just have had a contrite speech which at least recognised that over 13 years he and his Government had created a major housing crisis in Scotland. It is a crisis which has led to a deterioration in our housing stock, to which my hon. Friends have referred in terms of housing support grant for empty properties.
The most ridiculous position with regard to empty properties is in Castlemilk where hundreds of houses are standing empty as part of a redevelopment programme that is at least partly financed by the Government. Glasgow district council is losing housing support because those houses are standing empty and bringing in no rental income. What an absurd position. It is also the case in other partnership areas.
Our housing stock has deteriorated. Fewer and fewer houses are being built in the public sector. Our houses are increasingly damp. As my hon. Friends pointed out, there is an ever-increasing number of homeless people. My hon. Friend the Member for Falkirk, West (Mr. Canavan) was right when he said that Shelter's figure showed that the number of homeless people had reached 34,000. But let us remember that that figure does not include young homeless people living rough, in hostels or on the streets in both Scotland and London. The figure includes only those people who are accepted by local authorities as homeless. Of course, we also have ever-rising rent levels.
The Minister's speech was, as ever, bland, inadequate and complacent. We have come to expect that from the Minister, as we did from his predecessors. As ever, he says that all is well. He says that he is allowing local authorities to spend enough money to fulfil housing needs in their area. That is a travesty and a farce. Let me give some of the facts and compare next year with this year and with those for the whole period of the Government. Let us look first at basic figures for the total resources that local authorities in Scotland will have to spend on housing in the coming year. As the Minister said, the general fund contribution has been reduced from £2.2 million to £1.5 million.

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The Minister made much play of how he was improving housing support grant. It has been reduced from £55 million to £47.5 million. Capital consents—which are not part of the order but will be very much part of the overall expenditure on housing in the next 12 months—have been reduced from £453 million to £412 million. Of course, there is the £120 million for the non-housing revenue account. But local authority expenditure on capital allocations has been reduced from £453 million to £412 million.
Local authorities expected a rise at least equivalent to inflation, which would have meant a rise in total housing expenditure from £510 million this year to £531 million next year. Instead, it has been reduced to £461 million. The Minister made great claims about the £7 million increase, but total housing expenditure for local authorities, the statutory providers of accommodation for homeless people, is being reduced. That is a farce. In real terms, the Government are making a cut of £70 million.
Mr. Jimmy Hood: I have two district councils in my constituency—part of Hamilton district council and Clydesdale council. Hamilton's housing expenditure is being cut by more than £1.8 million and Clydesdale's by £1.1 million. How can the Minister say that he is trying to help homeless people when he is cutting the means of helping them?
Mr. Maxton: My hon. Friend is absolutely right. As he knows, I live in Hamilton and am aware of its housing problems.
Mr. Graham: Is my hon. Friend aware that, since the start of the year, 300 houses a day have been repossessed? In Scottish terms, we are talking about 30 houses a day. Over a 10-day period, 300 houses, which people are desperately trying to get from local authorities, will have been repossessed. The Government say they are tackling homelessness. What a travesty!
Mr. Maxton: Absolutely. I shall return to repossessions, about which I recently received an interesting letter from the Minister.
The Government have been in office for almost 13 years, but 11 years ago housing support grant stood at £228 million. The general fund contribution provided a further £100 million, but is now down to £1.5 million. In the early 1980s, housing support grant and the general fund contribution provided £328 million, but next year they will provide only £49 million. The Convention of Scottish Local Authorities estimates that since 1979 £1.5 billion of direct Government support has been cut from housing in Scotland.
Those are cash figures. In real terms, the facts are more catastrophic. In 1979, 47 per cent. of housing costs came from rents, 39 per cent. from housing support grant and 14 per cent. from rate fund contribution. This year, 93 per cent. will come from rents, 7 per cent. from housing support grant and only 1 per cent. from the general fund contribution. Housing costs rely almost entirely on rents paid by tenants. Rents have risen from an average of £4.92p in 1979 to an average of £23.18p this year and COSLA expects the average increase to be between £2.50p and £3—an increase of 10 per cent., when the Government estimate inflation to be 4.1 per cent.
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Since 1979, rents have risen by more than 370 per cent.—much more than the rate of inflation. Local authorities can do little to improve their housing stock. They cannot build sheltered housing for the increasing number of elderly people. Tenants with major dampness in their houses, with all the ill health that that can lead to, particularly among children, are told that although the council would like to do something it does not have the money to do so.
The capital allocation position is more farcical than housing revenue support. Gross allocation has been cut by £41 million, but the net consent—the money local authorities know they can spend at the beginning of the financial year on housing developments—has been cut by £71 million, or 34 per cent. They have to make up the rest from the sale of council houses.
Mr. John Home Robertson: My hon. Friend refers to council house sales and capital allocations. What would he say to a local authority such as that in my constituency which, we understand from the orders, is expected to have capital receipts from council house sales of £8.346 million but which will be allowed to spend only £6.587 million on building new houses and on capital expenditure? That is a negative capital allocation. In view of the fact that East Lothian has more than its fair share of repossessions and subsequent homelessness, why on earth are the Government taking money for house building away from it?
Mr. Maxton: I entirely agree with my hon. Friend. I was coming to that point. The most ridiculous aspect is that eight local authorities in Scotland now have a minus net allocation. Their gross allocation is less than what the Government expect them to obtain from the sale of council houses. Perhaps the Government will say what happens to the surplus money. Where does it go? Who is allowed to spend it? Does it go to the Exchequer? That would be ridiculous as it is a local priority to spend the money.
The Minister and I were members of the Committee that dealt with the Bill which introduced the right to buy. I remember the then Secretary of State, the right hon. Member for Ayr (Mr. Younger), and his junior Minister, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind), saying that the great thing about the right to buy was that local authorities would have more money to spend on housing. The money received was to be an extra, not taken off local authorities' other allocations. If the local authorities sold houses, they would at least have extra money to spend. However, that is not what is happening. The receipts have now become a substitute for spending consents rather than an addition. Eight authorities in Scotland are now in the ludicrous position of having to sell more council houses to get more money than they are being allowed to spend.
We are in the middle of a major economic recession and the private housing sector is on the verge of collapse. How are people who face unemployment and short-time working suddenly going to be able to buy their council houses if they did not do so previously? The impact of the most recent increases in discounts is rapidy wearing off and the Government's latest announcement is a major blow to local authorities and their tenants. Housing

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departments cannot plan their repair and redevelopment programmes on this basis, let alone start building new houses.
The orders and capital allocations will do nothing to help to solve Scotland's housing problems. In particular, they will do nothing to help the growing number of homeless people. The Minister has made great play of the £7 million. As I said, there is a cut in capital allocations of £71 million. The way to solve the problem of homelessness is to bring the empty houses about which he is so concerned back into use by redeveloping them, to get rid of the dampness and to allocate them to homeless people.
As my hon. Friend the Member for Renfrew, West and 1nverclyde (Mr. Graham) said, the orders do not help people facing repossession of their homes by mortgage companies because they cannot afford the payments. I recently wrote to the Minister about the problem and asked him to give extra resources to local authorities in the form of capital allocations—that is nothing more than the right to borrow—so that more local authorities could take up the excellent scheme piloted by Clackmannan district council. It is worth quoting the Minister's reply. It states:
"It is true that I have welcomed the Clackmannan scheme but it is important to remember that that district council have chosen to commit their own resources to that scheme in the light of their judgment of local needs and priorities. It is open to other local authorities to do likewise within the existing level of resources available to them."
The Minister is nodding. Thus he is saying that any money for such schemes must come from the same capital allocations which he has savagely cut this year. In other words, local authorities must choose between using the money to help someone facing repossession, and redeveloping a damp house and getting rid of the dampness, or perhaps building sheltered housing, rewiring the houses and doing other works on them. That is a farce, and the Minister knows it.
The Minister went on to say:
"Individuals entered freely into their mortgage commitments and it would be inappropriate for the public sector to provide additional resources to assist anyone who got into difficulty."
That was said by a Minister who, with his colleagues, has for 13 years bribed, cajoled and blackmailed people into buying their homes—a Minister whose Government's only housing policy has been obsessively to foster home ownership. Now, like Pontius Pilate, he wants to wash his hands of the problems that he has created. He is happy to allow local authorities to use their scarce resources to help, but he stands aside and does nothing.
As I have said, the one ray of hope in the debate is that this is the last time that the Minister will stand at that Dispatch Box presenting a housing support grant order. The sooner the election comes the better, so that we can begin the task of bringing sanity and concern back to Scottish housing.
11.6 pm
Mr. Bill Walker: We have just listened to the standard speech that we hear regularly from the hon. Member for Glasgow, Cathcart (Mr. Maxton). Perhaps when my hon. Friend the Minister replies to the debate, he will tell the House how much public money is spent on housing in Scotland. It is important to understand that local authorities are not the only providers of housing in Scotland. Vast sums of public money go into other areas—I include housing benefit,
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because that is taxpayers' money that goes straight into the housing coffers, to the benefit of the individuals who qualify. It is public money.
As in our other debates with them, the Opposition deal in what I call Monopoly money, or fairy tale money. Opposition Members talk about how they will spend it and what they will do, but when they are asked how they will finance their plans they find that they cannot give us straight and relevant answers.
I welcome my hon. Friend's initiative on empty properties. Hon. Members on both sides of the House have felt for many years that too many properties in the control of Scottish local authorities remained empty for far too long. I have mentioned the housing developments in my home town of Dundee before, and I do so again, because those developments have pioneered ideas of what to do with properties that people did not previously want to live in. Such initiatives require support.
I am delighted to hear that the hon. Member for Cathcart acknowledges that the Government and the local authority are collaborating in his constituency so that unpopular properties in which people did not want to live may be renovated and brought back into use. That is a sensible use of resources.
I welcome the Government's recognition that, if we are to deal with the problem of homelessness, funds must be allocated specifically for the task. It is fairly clear that, if the funds were allocated generally, with local authorities left to make the decisions, they would not give homelessness the priority that they could and should have done—they have not done so in the past.
That is also true of the way in which local authorities refused over many years to acknowledge defects in houses. At one time they pretended that defects did not exist. Conservative Members, and some other hon. Members who have taken a direct interest in such matters, know that some local authorities pretended that conditions such as dampness did not exist. We discovered that a long time ago, when we carried out an inquiry into dampness. Until we exposed the problems, local authorities were telling us that there were none.
Mr. Graham: What could they do?
Mr. Walker: What could be done? The hon. Gentleman must be aware of the scale of the problem and the fact that we did not have direct control of decision making. That is why I welcome the £7.5 million being allocated positively for specific projects. For too long we allowed the decisions to be made locally. Sadly, that did not operate to the benefit of the people, partly because of policies that, at the time, were deemed to keep rents down for everyone. That is why I have always—I make no apology for this—said that I welcome the use of housing benefit as a means of directing funds to those in need, thus preventing the funds going to those not in need. That is the proper way to help people in need.
Mr. Maxton: What about mortgage tax relief?
Mr. Walker: The hon. Gentleman mentions mortgage tax relief. He has never understood the difference between allowing people to keep their own money and spending taxpayers' money. The hon. Gentleman has no understanding of finance and he makes that clear every

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time that he speaks. That is why I believe that, contrary to what he thinks, my hon. Friend the Minister will be on the Front Bench for a long time.
11.10 pm
Mr. James Wallace: The Minister, who is usually courteous in giving way, refused to give way to me in his opening remarks. I can only think that he was afraid—not of the figures in the order, but of the figure of 1,234, which is his majority over the Liberal Democrats in Edinburgh, West.
The hon. Member for Glasgow, Cathcart (Mr. Maxton) has set out to the House the basic figures which form the backdrop to our debate. They show the drop, if one takes inflation into account, of £71 million in the cash available for investment in public housing in Scotland.
That is happening when, as has already been said, homelessness is rising, and it is widely accepted that the quality of housing and the number of houses below tolerable standard in Scotland have been grossly underestimated for many years. One need only think of the report last month from the Public Accounts Committee. In the 44 per cent. of Scottish housing surveyed, the number of houses deemed to be below tolerable standard was up to the level on which the Scottish Office had operated in respect of Scotland as a whole.
Against that background, we are discussing a further cut in the resources available to our local authorities for housing. In the housing support grant itself, there is a reduction of 14 per cent. and there is a reduction of 34 per cent. in the net capital consents for 1992–93.
I repeat the question put by the hon. Member for Cathcart. The Government expect an increase in the sales of council houses in the next year. On what basis are the estimates made? Can the Minister also tell us, for the most recent year for which figures are available, how the receipts compare with what the Government estimated for the year ahead? Judging from the local authority representations made to my hon. Friends and from a letter from Ettrick and Lauderdale district council to my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), the local authorities cannot see how, especially at a time of recession and repossessions, people will make the financial commitment to buy their own houses. The Minister owes it to the House to explain how the figures have been arrived at.
Homelessness is a growing problem. The hon. Member for Falkirk, West (Mr. Canavan) mentioned a figure of 34,500. That is the number of households that, in 1990–91, applied to the local authority as homeless under the statutory provisions. The number of people who are homeless is far greater than that. Some 84 children per working day have been made homeless in the most recent year for which figures are available. That is intolerable. Yet, against that background, we get fewer resources for local authorities to meet the challenge of housing.
Hon. Members may think that I am fortunate, because both islands councils in my constituency are receiving some housing support grant, which is more than can be said for some local authorities in Scotland. In Orkney, where there has been a waiting list increase of 30 per cent. in the last five years and where, because of high rents in the private sector, more and more people are looking to the
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local authority to provide housing to let at costs which can be afforded, there is a reduction of £200,000 in housing support grant for the coming year. That has prompted a doubling of the rent increase initially proposed for Orkney tenants. The council has a relatively small debt, yet it believes that, because of its prudence in trying to keep the debt down, it is being penalised.
The question that I wanted to ask the Minister, when he would not give way, applies to my constituency and to that of the hon. Member for Western Isles (Mr. Macdonald). It is estimated that, in the islands, building costs are 30 per cent. to 40 per cent. higher than in mainland Scotland. The Minister said that £526 per house had been taken into acount for repair and maintenance costs. COSLA believes that the amount being spent this year is £541 per house. Even allowing for the grand gesture of the 15 per cent. increase, it will still not meet what is being spent per house in 1991–92. If we take inflation into account, the amount is estimated to go up to £602 per house. Grossed up, there is a shortfall of £53 million.
The Minister referred to an average. In the islands, I am talking about costs which are 30 per cent. to 40 per cent. above the average. There is nothing in the report which goes with the order to show that any consideration has been given to those substantially higher building costs. I hope that the Minister will respond to that when he replies to the debate.
In the case of Shetland, there is £4.59 for housing support grant, mostly reflecting the high debt charges which occurred as a result of the enormous building programme which Shetland islands council had to incur to meet the challenge of the oil industry and the terminal coming to Sullom Voe. That programme was carried out on behalf of the nation, but the debt charges continue.
The total capital consents for the HRA allocation for Shetland this year are only 70 per cent. of what was requested. Having been prudent in times past, and having tried to make realistic assessments of the housing programme, the council is being penalised. Before the storms of 1 January, the council had already realised that those living in caravans would have to be rehoused in better accommodation, yet the resources being made available will hardly help the council to start to address that problem, although it will make every effort to do so.
No doubt the Minister will recognise that weather conditions in the islands are another contributory factor to the higher building costs, because higher standards are needed to withstand the weather. To date, the Minister has responded in negative terms to the appeals for an increase in the capital allocations, both for the housing revenue account and for the non-HRA capital consents. He has indicated that the matter may be considered sympathetically if more money is available later.
I stress that considerable costs will be incurred even when insurance has been taken into account. I think I am right in saying that a cost of £500 per house has to be met by the council before the damage is covered by insurance. That will lead to a substantial cost. I hope that the Minister will bear that in mind should resources become available.
On homelessness, £7 million has been set aside for specific projects. As the hon. Member for Cathcart has pointed out, it is being taken away with one hand and given back with the other. No doubt that was done with a fanfare to pretend that the Government are trying to do something about homelessness.

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I stand corrected if I am wrong—I hope that I am wrong—but it has been put to me that some of the projects which the Minister has said have to be submitted by local authorities must be projects which are not already in their capital programmes. One wonders what the Scottish Office thinks local authorities are doing if they are not already trying their best to make provision for the homeless and to cover some of those things in their capital programmes.
The Minister is encouraging some projects to be taken out and resubmitted so that specific funds identified for homelessness can be put forward, and trying to give the impression that the Government care about homelessness. We know, and the figures show beyond any shadow of doubt, that, as the crisis of homelessness mounts in urban and rural areas in Scotland, the Government's response has been to cut, cut and cut expenditure again. That has been a policy of failure over the past 12 years. For the sake of the homeless, if for no one else, the sooner the Government go the better.
11.20 pm
Mr. Mike Watson: Once again, we have had to listen to the Minister's complacent view of the Scottish housing scene. He places rose-tinted spectacles on his nose and gives us the view that his Department is available only to those who enter the Scottish Office and see matters from its point of view.
I wish to refer to the city of Glasgow and the people whom I represent. Time and again, the people of the city of Glasgow are hammered by the Government's housing policies. We have some of the worst housing conditions in the developed world, yet that is not bad enough for the Minister. He is concerned with inflicting continuing pain and suffering. Last September, he announced that, for 1992–93, housing support grant would not be given to local authorities for rents lost through houses being empty if the total amount lost was more than 2.5 per cent. of rental income. Glasgow's housing department estimates that for 1992–93 it will have 5.7 per cent. voids, or an average of 7,700 houses—a lost-rents budget of more than £10.5 million. That is not through choice.
The Scottish Office has said that the total amount of housing support grant withdrawn will be about £1.7 million—that is the total for the whole of Scotland—of which no less than £1.6 million will be borne by the city of Glasgow. That alone will add about 24p a week to the average rent of council tenants in Glasgow. That angers people in the housing department, because almost half the total voids in the city exist not because the council does not want to let them but as a result of tenants' decants, improvements, demolitions or transfers to developers or co-operatives. People are particularly angered because the Scottish Office enthusiastically supports the initiatives. It is no wonder that housing department officials in Glasgow, as well as councils, are incensed that the Minister is using housing support grant to penalise the council for pursuing initiatives.
The Minister's arguments are utterly perverse. He reduces subsidy as a means of penalising the city of Glasgow for carrying out the housing strategy which the Government purport to support. That contradiction in terms is compounded, first, because Glasgow has been making determined attempts to reduce those voids. The council reduced the total number of voids in its stock—the empty houses by 11 per cent. over the past year.
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Secondly, it reduced the total number of lettable voids—the Minister will appreciate the differentiation between total voids and those that are lettable—by 27 per cent. over the past year. The council is improving its position, yet it is still being hammered.
The third reason why that inflicted reduction is a disgrace is that it is shot through with hypocrisy. At the same time as councils have been told that they must limit their voids to 2.5 per cent.—they are being hammered if they do not—an entirely different approach or a more relaxed regime is being applied to Scottish Homes. I have in my possession a letter from Mr. Peter McKinlay, the chief executive of Scottish Homes, in which he admits—he has no secret to hide—that
"as at 29 December 1991 we had 2,016 houses void out of a total directly factored stock of 56,248 houses."
That comes to 3.7 per cent. of Scottish Homes' stock, but no action has been taken against it; there is no restriction on what it can spend. It is a matter of double standards: the rich get richer and the poor get poorer. I hope that the Minister will make some attempt to explain that appalling situation and say why Glasgow and other authorities—Clydebank and Shetland are the other two—are kept in that position while Scottish Homes is allowed to get away with it. It is utter hypocrisy. I shall happily let the Minister answer that point now, if he wishes.
Lord James Douglas-Hamilton: Is the hon. Gentleman aware that the portable discount scheme which Scottish Homes operates has been made available to tenants who live in tied houses? He should bear that factor in mind.
Mr. Watson: I am glad that the Minister mentioned the portable discount scheme, because this letter goes on to talk about it, and it might interest him. He has not, of course, answered my question. Evidently, the portable discount scheme is so popular that the total number of sales in Scotland under the scheme was 12 in 1989–90, 74 in 1990–91 and 32 to date. That is hardly any explanation whatever of the preferential situation, and it is not a fair comparison.
We should give the Minister some credit. He had, we understand, a distinguished record in his earlier years as a boxer. That is something for which he might well take credit. I suggest that he can take absolutely no credit now for this situation where the Marquess of Queensberry's rules have been cast aside. In a boxing match, if a boxer knocks someone down he is forced to retreat; the Minister advances on people that he has knocked down and he puts the boot in good and proper.
I wish to give one personal example which I came across a week ago. Mrs. Brenda McDonald, who lives in Queen Elizabeth square in the Gorbals, suffers the most appalling housing conditions one can imagine. Dampness is rife, wallpaper hangs off the walls and two of the four rooms are utterly uninhabitable. Her children had been sent home from school because their clothes were smelling. They did not smell because they were dirty. Mrs. McDonald is scrupulous in cleaning them, and it takes days to dry washing in the house that she is forced to occupy. They smelled of the dampness that pervades that house, and it almost made me sick when I visited her.
Those are the conditions in which the people in Glasgow are living, but that is completely ignored by the type of story that we heard from the Minister this evening. It is simply not good enough. Of course, this is his last

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appearance at the Dispatch Box, but when will he understand housing in Scotland? He shows a complete lack of knowledge and understanding. He inhabits a different world. When the election comes, the people of Scotland will show what they think of his performance.
11.26 pm
Mr. Gavin Strang: As an hon. Member for Edinburgh, the Minister should be well aware of the housing crisis in Edinburgh. The scale of homelessness in Scotland is a national scandal, and nowhere is it worse than in the capital city itself. Time and again I have experience in my surgery of people with the most desperate housing circumstances, people who, 15 years ago, I know, would have been offered council housing without difficulty but who now find it impossible to get a house.
The underlying reasons for that are the failure of public investment in housing stock, the failure of the Government to provide adequate support for housing in Edinburgh and the selling-off of council houses without them being replaced by other public sector houses.
In 1979–80 Edinburgh received over £11 million in housing support grant. That was phased out within a few years, and for a considerable number of years we have had no housing support grant—I will come to the hostel support grant, to which the Minister referred, in a minute. That £11 million in 1979–80 would have bought a lot more housing and paid for a lot more building work than one could ever get today for that money. I asked the Minister how much that was in 1991–92 prices, and it is £26 million. That is a measure of the shortfall: £26 million at current prices that we were receiving in 1979–80 in housing support grant. When this is multiplied over, say, a 10-year period, it comes to £260 million. That is an indication of the lack of support for public sector housing in Edinburgh.
The Minister spoke about the hostel support grant which he now provides to Edinburgh. It is quite inadequate. The Minister may refer to the high revenue costs of the proposed third hostel in Randolph crescent. That hostel will be in addition to the hostels at Leith and Greyfriars. The hostel support grant that the Minister plans to provide in the next financial year will hardly be enough to pay the revenue costs of the two existing hostels. I appeal to the Minister to face up to that and at the minimum to give sympathetic consideration to the representations that he has already received from Edinburgh district council about an increase in that small housing support grant for hostels.
With regard to the housing revenue capital allocation, we in Edinburgh have a real grievance in respect of the provisional gross allocation for 1992–93. Edinburgh does not believe that it has any chance of achieving the targets for receipts. In recent years Edinburgh has broadly hit its targets, but it believes that it has no chance of achieving the Government's targets in 1992–93. By any test the gross provisional allocation represents a cut. In real terms, housing revenue block provisional allocation will represent a cut.
Lord James Douglas-Hamilton: How does the hon. Gentleman believe that I could justify spending 20 times
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more than the national average—20 times more than on anywhere else in Scotland—on the hostel at Randolph crescent?
Mr. Strang: If the Minister wants to sit down and talk to representatives of the district council about the costs of running that hostel, that would be fine. No doubt he could ask his officials to do that. However, the proposed money is not even sufficient for the other two hostels. There is nothing in the proposed hostel grant for the next financial year for the third hostel because the money is only sufficient for the first two. The Minister may not want to cover the total costs of running the third hostel, but surely the Government could at least increase the figure as a contribution towards the running of that hostel.
The Minister must be aware of the disgraceful situation in relation to the modernisation of our older tenements in Edinburgh and the utterly inadequate allocation for repairs and improvement grants. The Minister's gross allocation for that in 1992-93 is £24 million. No less than £12 million of that has been earmarked for the pre-1984 application backlog. A further £9 million has been allocated for the backlog in 1993–94.
Even in housing action areas like Portobello in my constituency, people who were assured that their repair grants would be paid in the current year have had their works halted. There are cuts in this year's repairs and improvements which are desperately required and which should be going ahead.
The test in relation to the improvement grants is how many houses have been improved. I received a parliamentary answer to a question that I tabled last November. It shows that in 1989–90 the average number of dwellings that received modernisations and improvements was 538. In the previous three years the average was 776.
Over the past two years when I have spoken to officials and my constituents I have said that, just as in the run-up to the 1987 election, in the run-up to this election we will find that the money will start to flow and with a bit of luck we might get more repairs and improvements. In fact, the opposite has happened: the money has not been made available. One of the most effective ways of getting building workers off the dole—there are many who are in that position in Edinburgh—is to step up improvement and repair grants.
The Government must accept a large share of the responsibility for the housing disaster in Edinburgh because of their failure to provide the financial support that the district council has warranted.
11.35 pm
Mr. Geoffrey Dickens: I wish to make only a short contribution to the debate. I have been the leader of a local authority, I served within local government for 16 years and for many years I was a housing chairman.
I have spent a great deal of time in Scotland—even the new year—and I have seen much badly designed and ugly municipal housing as I have travelled within the country. In some areas there is a high density of population and badly maintained housing stock. Council tenants have rights, and someone must speak up for those tenants whether they live in Scotland, England or Wales. If resources come from central Government and the housing stock is not managed properly—for example, painting properties and repairing gutters regularly—what happens?

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When several years pass and it is decided that the properties should be painted, the workmen say, "We can't paint these window frames and those doors because the wood has rotted. That has happened because they have been neglected for so long." They are then neglected for another few years, but in the end it costs a great deal—more than regular maintenance would have cost—to repair the doors and windows.
The answer is not always to throw resources at a problem. The problem often lies with local councillors and local government officers who let down council tenants by not using the resources which are provided to undertake the work for which they were earmarked.
Mr. Home Robertson: Will the hon. Gentleman give way?
Mr. Dickens: I shall not give way because I want to be brief.
There are many—particularly Opposition Members—who would like to condemn people to live in council houses for the rest of their lives, to pay rent until they are in their graves and to have nothing to sell so that they can leave money to their children or be in a position to buy a retirement home. I often wonder whether part of the hidden agenda is to abolish home ownership. I have suspected that for some time, and the electorate should be warned.
Scottish Members should stop moaning about the resources that Scotland is given. Tell local councillors and local government officers to use the moneys for what they were intended. Council tenants have rights, and if they are withheld we shall fail those people and the people of Scotland generally.
11.37 pm
Mr. Michael J. Martin: I am disappointed that the Minister has once again attacked local authorities throughout Scotland, and especially Glasgow district council. He spoke of houses that are lying empty, but he must know that many tenants want some houses to remain empty so that there is a choice of housing. If there are no vacant houses and a family
suddenly becomes homeless, or a property is destroyed in a storm, only hostel accommodation will be available, not decent housing.
The Minister is a former councillor and he must know that when tenants see their councillor or Member they do not say, "I want a local authority house." They express a wish for a local authority house in the community in which they were born and in which their mothers and fathers have remained. There are some who want sheltered housing while others want multi-storey dwellings or a property with a garden in which their children can play. It stands to reason that, if a local authority is a responsible authority, there is bound to be some empty housing stock.
My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) was right to say that the Government have asked Glasgow and many other authorities to become involved in new housing initiatives. Sometimes they mean demolition, and there will have to be decanting until the co-operatives that my hon. Friend has in Castlemilk are ready. In my limited experience of local government, the only way that there can be decanting of property is by
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having some empty housing stock. Glasgow has property such as Easterhouse and Drumchapel, which were built at the time of the Wheatley housing reforms.
The then Conservative Prime Minister, Harold Macmillan, said that he would build so many houses a week. He forced local authorities to build houses, many of which were not traditional in structure. Many of my constituents have taken up the right-to-buy option. In one case, the Government had to buy back the properties because they had been built with aluminium. There was such corrosion in those dwellings that it was only fair that the Government should buy them back. When those houses fall down around the tenants—and they will—the local authority will have to rehouse them. They will say, "We have been 20 years in this area, and we want decent housing." The Minister must be fair.
I am a little sick of hearing the Minister and Conservative Members saying that, where there are rent rises—there will be rent rises in Glasgow because of the Government's decision—they will look after the people in need through the rent rebate system. I do not want to mention anyone's name, because I do not have permission to do so, but there is a railway driver living around the corner from me. He is out at 3 am, sometimes at 5 am, and sometimes at 2 pm the following day. He works whatever overtime he can get. His wife works hard in a local newsagent shop. They are not entitled to rebate. When there is a rent rise, couples like that are hit. They work hard to get something extra for the family, to have a decent holiday or perhaps to put their children through further education.
The sneaky thing about the order is that it will be Glasgow district council that will get the blame for the rent rises, not the Minister or the hon. Member for Tayside, North (Mr. Walker). Every official to whom I have spoken has said that, because of the Government's decision, services will decline. The Conservatives are supposed to be the party of law and order. The hon. Member for Littleborough and Saddleworth (Mr. Dickens) is always talking about law and order. I have more multi-storey dwellings in my constituency than any other hon. Member. Old-age pensioners are frightened because there is no concierge service.
Mr. Dickens: Who built those houses?
Mr. Martin: I do not want to digress, but the houses were built because the local authority was put under pressure when the then Tory Government said, "Build multi-storey dwellings if you want support grant." Both the Government and the local authority built those dwellings.
Mr. William McKelvey: Who got the profits?
Mr. Martin: That is another story.
No matter who built those dwellings, pensioners are frightened, and they would appreciate the protection of a concierge service. They will not get it, because of the Minister's statement tonight.
Every police officer to whom I have spoken has said that street lighting and communal lighting is important in the prevention of crime. The housing authority is responsible for communal lighting, and I know that if the

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proposal is adopted, when the lighting fails on a Friday night, it will not be returned for the pensioners until Monday—if they are lucky.
We are all committed to improving services for tenants regardless of whether they are owner-occupiers or council tenants. However, we can never achieve that objective if the Government keep squeezing local authorities who are dedicated to improving services. The most important requirement after heat and food is a decent home. The facts show that 90 per cent. of our problems relate to housing. It is important that everyone has a decent home, and the Minister should provide that.
11.46 pm
Mr. John McAllion: The hon. Member for Tayside, North (Mr. Walker) referred to his home town of Dundee, which he has now left—to the great delight of Dundonians across the city. He paid tribute to the pioneering work that has been carried out by the Labour council in Dundee, and I think that he was referring to the Whitfield partnership between central Government and local government, and the private sector. I agree with the hon. Member that the council and central Government should be congratulated on the work that has been carried out in the Whitfield district.
However, the hon. Gentleman failed to mention that the work was made possible by huge injections of public cash. All that work required massive public investment by central Government and local government—which is precisely what the order does not allow. Setting up housing co-ops and refurbishing and modernising blocks requires public investment. Even if the private sector is to start to build houses, it will require grants, and blocks will have to be demolished and land given over to it at virtually no cost.
If there is a lesson to be learned from Whitfield, it is that the housing problems facing the people of Scotland will not be tackled effectively until the Government release the resources to enable councils to begin to do so-something which all Conservative Members and Ministers ignore time and time again.
There are only four partnership districts in Scotland, and they were set up not as trail blazers for what would happen across Scotland in future, but as window dressing. They provide Ministers with somewhere to take the press and media, so that they can turn up for half an hour or an hour in the morning, have their picture taken beside the latest improvement and then disappear. Outside those partnership districts, the housing conditions are disgraceful—there is dampness and disrepair everywhere. The Government ignore those problems, as they can show off the partnership districts to the media.
The Secretary of State's report accompanying the order referred to the aggregate amount of housing support grant being the difference between two estimates that the Secretary of State for Scotland has to make: first, the eligible expenditure for a housing authority and, secondly, the likely relevant income. The formula was applied to Dundee, and the Secretary of State concluded that Dundee's income exceeded its eligible expenditure, so Dundee should not receive any housing support grant.
There is nothing new in that fact. Dundee has not received any housing support grant since 1982–83. In every one of nine years, Dundee has been denied that grant by
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the Government because the Secretary of State for Scotland always estimates that the income going into the housing revenue account was more than the council needed to spend in the Dundee district.
The Minister has been round Dundee with me and looked at the terrible housing problems it faces. He has been to districts such as Mid-Craigie and Beechwood, and he knows perfectly that there is a crying need for further investment in those areas. The only reason that the council does not spend money on those districts is that they do not have it—it has been denied them by the Government. However, the Minister can ignore that reality because he has a neat and tidy formula contained in the rate support grant order which allows him to persuade himself that Dundee has more money than it needs when, in reality, it does not have nearly enough money to do what is required.
According to the order, the estimated expenditure on repairs and maintenance per house should be £396.43. People in Dundee would be very pleased to be told that, in the coming year, the council would be able to spend that amount on their houses; but the reality is very different. Apart from the cost of repairs and maintenance, the council must meet the repayments on the capital building carried out in previous years. That means that there is far less to spend on improvements.
Government legislation also prevents Dundee district council from carrying out improvements that it wishes to make to certain properties. The Minister will know—because I have written to him about it—that, as a result of the Government's right-to-buy policy, communal properties exist where owner-occupiers and council tenants live side by side.
The Government are aware of the problems that can arise in such circumstances. They know that, when essential repairs and maintenance have to be carried out, owner-occupiers are legally obliged to bear their share of the cost incurred by the council. If they refused, they could be taken to court and forced to pay. That obligation, however, does not extend to the cost of improvements.
In a recent case in Dundee, damp was invading a number of deck-access blocks with flat roofs, and the council decided to install pitched roofs instead. One owner-occupier, however, did not simply refuse to pay his share; he could not pay. The council sought legal advice, but discovered that it could not take the owner-occupier to court. The court would not have found in its favour, because the law obliged owner-occupiers to pay their share only of essential repair and maintenance costs. The council considered paying the owner-occupier's share itself, but was told that it had not the legal authority to do so. Thus, the Government have prevented the council from improving the block concerned: it is a shambles and a disgrace.
I wrote to the Minister, asking him what he was going to do about the matter. He replied with a lot of waffle that had nothing to do with the problem; the problem itself he dealt with in a single sentence:
"I am not in a position to comment on the District Council's decision, which I know has been taken in the light of legal advice."
The Minister is walking away from his responsibilities. Some of my hon. Friends have pointed out that this is his last opportunity to speak from the Dispatch Box on a housing support grant order, but I will go further: it is the last opportunity that any Minister will have. There will be

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a general election in a few months' time, and there will be a Labour Government after that general election—and a Scottish Parliament.
11.52 pm
Lord James Douglas-Hamilton: I shall look into the points made by the hon. Members for Edinburgh, East (Mr. Strang) and for Glasgow, Central (Mr. Watson) about Scottish Homes' empty stock. I should make the general point that the final allocations in previous years have been substantially up on the provisional allocations. What hon. Members have said will be taken into account, however, and I am happy to see any hon. Member who has legitimate points to make about matters of pressing urgency.
As for the homelessness allocations, we shall take very seriously what all bidding authorities say in their representations, and we shall announce the allocations as soon as possible so that the necessary steps can be taken. As a result of the bids already received earlier this year, some 700 units have been provided for homeless people. We believe that that figure can be more than doubled, and that it will be generally welcomed in Scotland.
I was asked why Dundee does not receive housing support grant. Dundee's outstanding capital debt per house is only £3,814, which is well below the Scottish average of £5,052.
Several hon. Members asked about empty housing. We believe that the 2.5 per cent. rents-lost assumption makes reasonable allowance for temporary vacancies during redevelopment, as in Castlemilk and other parts of Glasgow. The effect of the change in the method of housing support grant calculation is relatively small. In Glasgow's case it will involve 13p a week on Glasgow's rents. I have told the Convention of Scottish Local Authorities that I am willing to consider the points that it wishes to put on empty houses when making the housing support grant settlement for the year thereafter.
Three factors must be borne in mind this year in respect of final allocations and receipts. The first is rising receipts; the second is that spending per council house should be maintained: and the third is that there are 26,000 fewer council houses than there were last year. If our estimates of receipts are found to be incorrect—in previous years they have been found to be cautious and underestimates—and a supplementary allocation is made, we always take that into account and do our utmost to make sure that those authorities which, through no fault of their own, have a shortfall benefit.
Mrs. Maria Fyfe: Will the Minister give way?
Lord James Douglas-Hamilton: I have only one more minute left. If the hon. Lady wishes to see me, I shall be happy to meet her and listen to her representations.
The estimate for receipts in 1991–92 was £243 million. The actual amount received was £280 million. The outturn was very much higher than expected. I strongly believe that that will happen this year. Our position is strong and creditable. Since the Conservatives came to power, 240,000 houses have been built in Scotland, but I must make it—
It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 ( Exempted Business).
The House divided: Ayes 175, Noes 138.

Division No 51]

[11.56 pm

AYES

Alison, Rt Hon Michael

Harris, David

Allason, Rupert

Hawkins, Christopher

Amess, David

Hayes, Jerry

Arnold, Jacques (Gravesham)

Hayhoe, Rt Hon Sir Barney

Arnold, Sir Thomas

Heathcoat-Amory, David

Ashby, David

Hicks, Robert (Cornwall SE)

Atkins, Robert

Hill, James

Baker, Nicholas (Dorset N)

Hind, Kenneth

Batiste, Spencer

Howell, Ralph (North Norfolk)

Bellingham, Henry

Hughes, Robert G. (Harrow W)

Bennett, Nicholas (Pembroke)

Hunter, Andrew

Bonsor, Sir Nicholas

Irvine, Michael

Boswell, Tim

Jack, Michael

Bottomley, Peter

Janman, Tim

Bowden, Gerald (Dulwich)

Jessel, Toby

Bowis, John

Jones, Gwilym (Cardiff N)

Brooke, Rt Hon Peter

Jones, Robert B (Herts W)

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

King, Roger (B'ham N'thfield)

Buck, Sir Antony

Knapman, Roger

Burt, Alistair

Knight, Greg (Derby North)

Butler, Chris

Knowles, Michael

Carlisle, John, (Luton N)

Knox, David

Carlisle, Kenneth (Lincoln)

Lang, Rt Hon Ian

Carrington, Matthew

Latham, Michael

Carttiss, Michael

Lawrence, Ivan

Channon, Rt Hon Paul

Lennox-Boyd, Hon Mark

Chapman, Sydney

Lester, Jim (Broxtowe)

Chope, Christopher

Lightbown, David

Clark, Rt Hon Sir William

Lloyd, Sir Ian (Havant)

Clarke, Rt Hon K. (Rushcliffe)

Lloyd, Peter (Fareham)

Conway, Derek

Lord, Michael

Coombs, Simon (Swindon)

Luce, Rt Hon Sir Richard

Cope, Rt Hon Sir John

Lyell, Rt Hon Sir Nicholas

Couchman, James

MacGregor, Rt Hon John

Gran, James

McLoughlin, Patrick

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

McNair-Wilson, Sir Michael

Day, Stephen

McNair-Wilson, Sir Patrick

Devlin, Tim

Malins, Humfrey

Dickens, Geoffrey

Mans, Keith

Douglas-Hamilton, Lord James

Marland, Paul

Dover, Den

Martin, David (Portsmouth S)

Dunn, Bob

Maude, Hon Francis

Durant, Sir Anthony

Maxwell-Hyslop, Sir Robin

Dykes, Hugh

Meyer, Sir Anthony

Emery, Sir Peter

Miller, Sir Hal

Evennett, David

Mills, lain

Fallon, Michael

Mitchell, Andrew (Gedling)

Favell, Tony

Mitchell, Sir David

Fenner, Dame Peggy

Moate, Roger

Finsberg, Sir Geoffrey

Monro, Sir Hector

Fishburn, John Dudley

Montgomery, Sir Fergus

Forsyth, Michael (Stirling)

Morris, M (N'hampton S)

Fowler, Rt Hon Sir Norman

Morrison, Sir Charles

Fox, Sir Marcus

Neale, Sir Gerrard

Franks, Cecil

Nelson, Anthony

Freeman, Roger

Neubert, Sir Michael

French, Douglas

Nicholson, David (Taunton)

Gale, Roger

Nicholson, Emma (Devon West)

Goodlad, Rt Hon Alastair

Norris, Steve

Goodson-Wickes, Dr Charles

Paice, James

Gorman, Mrs Teresa

Patnick, Irvine

Greenway, John (Ryedale)

Porter, David (Waveney)

Gregory, Conal

Portillo, Michael

Griffiths, Peter (Portsmouth N)

Powell, William (Corby)

Grist, Ian

Price, Sir David

Gummer, Rt Hon John Selwyn

Raffan, Keith

Hague, William

Redwood, John

Hamilton, Neil (Tatton)

Renton, Rt Hon Tim

Hannam, Sir John

Riddick, Graham

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

Rowe, Andrew

Hargreaves, Ken (Hyndburn)

Sackville, Hon Tom

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Shaw, David (Dover)

Walden, George

Shepherd, Colin (Hereford)

Walker, Bill (T'side North)

Skeet, Sir Trevor

Waller, Gary

Stevens, Lewis

Ward, John

Stewart, Allan (Eastwood)

Wardle, Charles (Bexhill)

Taylor, Ian (Esher)

Watts, John

Taylor, John M (Solihull)

Wells, Bowen

Taylor, Sir Teddy

Wheeler, Sir John

Temple-Morris, Peter

Whitney, Ray

Thompson, Sir D. (Calder Valley)

Widdecombe, Ann

Widdecombe, Ann

Thompson, Patrick (Norwich N)

Winterton, Nicholas

Thornton, Malcolm

Wood, Timothy

Thurnham, Peter

Yeo, Tim

Townend, John (Bridlington)

Young, Sir George (Acton)

Tredinnick, David

Trippier, David

Tellers for the Ayes:

Trotter, Neville

Mr. David Davis, and

Twinn, Dr Ian

Mr. Timothy Kirkhope

NOES

Adams, Mrs Irene (Paisley, N.)

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

Alton, David

Dewar, Donald

Archer, Rt Hon Peter

Dixon, Don

Banks, Tony (Newham NW)

Doran, Frank

Barnes, Harry (Derbyshire NE)

Douglas, Dick

Battle, John

Dunnachie, Jimmy

Beckett, Margaret

Eadie, Alexander

Bradley, Keith

Eastham, Ken

Bray, Dr Jeremy

Enright, Derek

Brown, Gordon (D'mline E)

Evans, John (St Helens N)

Brown, Nicholas (Newcastle E)

Ewing, Harry (Falkirk E)

Brown, Ron (Edinburgh Leith)

Ewing, Mrs Margaret (Moray)

Caborn, Richard

Fisher, Mark

Callaghan, Jim

Foster, Derek

Campbell, Menzies (Fife NE)

Foulkes, George

Campbell, Ron (Blyth Valley)

Fyfe, Maria

Canavan, Dennis

Galloway, George

Carlile, Alex (Mont'g)

George, Bruce

Clarke, Tom (Monklands W)

Godman, Dr Norman A.

Clelland, David

Golding, Mrs Llin

Cook, Frank (Stockton N)

Graham, Thomas

Cook, Robin (Livingston)

Grant, Bernie (Tottenham)

Cox, Tom

Griffiths, Nigel (Edinburgh S)

Cryer, Bob

Grant, Bernie (Tottenham)

Cummings, John

Grocott, Bruce

Cunliffe, Lawrence

Hardy, Peter

Dalyell, Tam

Haynes, Frank

Darling, Alistair

Hinchliffe, David

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Home Robertson, John

O'Hara, Edward

Hood, Jimmy

O'Neill, Martin

Howarth, George (Knowsley N)

Parry, Robert

Hughes, Robert (Aberdeen N)

Patchett, Terry

Hughes, Simon (Southwark)

Powell, Ray (Ogmore)

Illsley, Eric

Primarolo, Dawn

Ingram, Adam

Quin, Ms Joyce

Jones, leuan (Ynys MOn)

Reid, Dr John

Kennedy, Charles

Robertson, George

Kilfoyle, Peter

Rogers, Allan

Kirkwood, Archy

Rooney, Terence

Lamond, James

Ross, Ernie (Dundee W)

Leadbitter, Ted

Salmond, Alex

Leighton, Ron

Skinner, Dennis

Lewis, Terry

Smith, Andrew (Oxford E)

Litherland, Robert

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

Lloyd, Tony (Stretford)

Soley, Clive

Lofthouse, Geoffrey

Spearing, Nigel

Loyden, Eddie

Steel, Rt Hon Sir David

McAllion, John

Steinberg, Gerry

McCartney, Ian

Stephen, Nicol

McCrea, Rev William

Stott, Roger

Macdonald, Calum A.

Strang, Gavin

McFall, John

Taylor, Matthew (Truro)

McKay, Allen (Barnsley West)

Thompson, Jack (Wansbeck)

McKelvey, William

Turner, Dennis

McMaster, Gordon

Vaz, Keith

McWilliam, John

Wallace, James

Madden, Max

Walley, Joan

Mahon, Mrs Alice

Wardell, Gareth (Gower)

Marshall, Jim (Leicester S)

Watson, Mike (Glasgow, C)

Martin, Michael J. (Springburn)

Welsh, Michael (Doncaster N)

Martlew, Eric

Wigley, Dafydd

Maxton, John

Wilson, Brian

Meale, Alan

Winnick, David

Michael, Alun

Wise, Mrs Audrey

Michie, Bill (Sheffield Heeley)

Worthington, Tony

Moonie, Dr Lewis

Wray, Jimmy

Morgan, Rhodri

Young, David (Bolton SE)

Mowlam, Marjorie

Mullin, Chris

Tellers for the Noes:

Nellist, Dave

Mr. Robert N. Wareing and

O'Brien, William

Mr. Thomas McAvoy.

Question accordingly agreed to.
Resolved,
That the draft Housing Support Grant (Scotland) Order 1992, which was laid before this House on 17th December, be approved.

Revenue Support Grant (Scotland)
12.7 am
The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): I beg to move,
That the Revenue Support Grant (Scotland) Order 1992, dated 16th January 1992, a copy of which was laid before this House on 16th January, be approved.
The order has two purposes. First, it marks the final stage of the local government settlement for 1992–93, details of which my right hon. Friend the Secretary of State first announced to the House last July, when he emphasised that the settlement included £50 million from other programmes within the Scottish Office because of high local authority current expenditure in Scotland. Secondly, it redetermines the amount of revenue support grant for each Scottish local authority for 1990–91 in the light of the actual level of non-domestic rate income for that year.
I deal first with 1992–93. My right hon. Friend announced to the House that the aggregate external finance for that year had been set at £5,130 million—6.1 per cent. more than the corresponding figure for 1991–92. The House will recognise that that figure is well above the rate of inflation.
The AEF figure has three components. The first is non-domestic rate income. On the basis of the rate poundages which my right hon. Friend announced on 23 December and which are prescribed in the Non-Domestic Rate (Scotland) Regulations 1992 which were laid before this House on 15 January, we estimate that the total level of NDRI in 1992–93 will be just under £1,263 million. The rate poundages for 1992–93 do, of course, take account of the reduction of £60 million which I announced on behalf of my right hon. Friend last November as the third stage of the Government's unified business rate policy.
The second component of AEF is the provision for specific grants which will be paid in 1992–93. That is estimated at just over £333 million. A breakdown of that figure is given in the report. I am glad that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) is appreciative of the publicity which Stephen Hendry and I received for the new jobs in his constituency.
Mr. John Maxton: The hon. Gentleman knows more about politics than the Minister.
Mr. Stewart: He certainly knows a lot more about snooker than I do.
The third component is revenue support grant. For 1992-93 this totals almost £3,534 million, including £7.5 million which will be provided to the authorities which since 1989–90 have benefited from the revenue support grant safety net. The main purpose of the order is to specify how this total amount of RSG is allocated among Scottish authorities. A full explanation of how AEF for 1992–93 has been distributed to authorities is contained in the report to the order.
I shall summarise the procedure. There are broadly two stages in the process. The first stage is to equalise differences in authorities' spending needs as determined by the client group assessment methodology. Just over £736 million of the total amount of RSG and NDRI—just over 15 per cent. of the total—is used to equalise spending needs. The second stage is straightforward. It is to
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distribute the rest of RSG and NDRI, excluding the safety netting amount to which I referred—that is, a sum of just under £4,790 million—on a straight per capita basis.
Mr. Archy Kirkwood: Will the Minister explain why the Government are imposing the technical adjustment in the aggregate external finance in the way that it will affect the Highlands, the Borders and Dumfries and Galloway? It will mean that some district councils in those regions will have to pay more in impost and community charge—Roxburgh, for example, will have to pay £12 more. Is there no provision in the various stages for a phasing-in of that technical adjustment to ameliorate its effect on the coming year's community charge in those districts?
Mr. Stewart: The hon. Gentleman is right. There is a technical adjustment and the three regional councils—the Highlands, the Borders and Dumfries and Galloway—benefit from it. In the past, those three regions have provided services such as libraries and building control but that RSG went to the district councils. The hon. Gentleman makes the reasonable suggestion that the change, which no one disputes is correct, should be phased. My right hon. Friend the Secretary of State made it clear to the Convention of Scottish Local Authorities that if the regions and districts agreed and COSLA put a phasing proposal to him he would consider it positively. I do not especially blame or attack COSLA for it, but the problem was that its members were unable to reach an agreement.
If the hon. Gentleman thinks that there is a problem here, he should consult Borders regional council. It was one of the authorities which, for understandable reasons, could not reach an agreement. This is an important matter for the districts concerned, and I can tell the hon. Gentleman that there should be no additional community charge for the charge payer.
Mr. Kirkwood: We shall see.
Mr. Stewart: Obviously, the hon. Gentleman does not trust Borders regional council to pass on the money.
Mr. Kirkwood: I do not trust the Government to give Borders regional council the grant.
Mr. Stewart: The council has the grant. There is a straight transfer, which is agreed to be reasonable, between the regions and the districts. There is no reason why any individual community charge payer in any of the 16 districts should pay any more than he or she would otherwise pay. I shall share the outrage of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) if the saving made by Borders regional council is not transferred automatically to the community charge payer.
Mr. Menzies Campbell: If the council does not do that, will the hon. Gentleman shave his whiskers off?
Mr. Stewart: I shall not respond to any personal criticism coming from the general direction of the hon. and learned Gentleman.
I return to explaining the order in detail. The £7.5 million safety netting amount has been distributed to all authorities that have benefited from the safety net since its inception in 1989–90. They will each receive 50 per cent. of the amount that they are receiving in the current year. The

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main beneficiaries are, therefore, Strathclyde region and Glasgow. As the House knows from previous debates, 1992–93 will be the final year of the safety net.
Hon. Members representing constituencies in Lothian have made a claim—I do not criticise the hon. Member for Edinburgh, South (Mr. Griffiths) for not being here, but I had intended to quote from his constituency newsletter—have claimed for some time that Lothian is somehow being cheated over the distribution of Government support. If I recall correctly, the hon. Member for Glasgow, Cathcart (Mr. Maxton) made the same allegation in a recent Committee debate on the Local Government Finance Bill—[Interruption.] Perhaps he did not. If my memory is not accurate I shall not press the point.
Mr. Maxton: When people get to the Minister's age—
Mr. Stewart: This week the hon. Member for Carrick, Cumnock and Doon Valley celebrated his 60th birthday, and people said to me that I look almost as old as he does.
Mr. George Foulkes: I am not normally allowed to speak from the Dispatch Box in Scottish debates. The Minister has a digit wrong, yet again.
Mr. Stewart: I apologise to the hon. Gentleman who, this week, celebrated his 65th birthday.
The claim by hon. Members with Lothian constituencies is absolute nonsense. The allocation under the grant-aided assessment system is the result of the client group methodology which is agreed and which is regularly reviewed with the Convention of Scottish Local Authorities. I hope that the hon. Member for Cathcart will not follow the view that Lothian has somehow been disadvantaged under the system that is agreed with COSLA. I am sure that if he were to take that view, his good friend, councillor Pat Lally, would immediately correct him.
Mr. Maxton: He normally does.
Mr. Stewart: Yes, he normally does.
As I said, the second purpose of the order is to redetermine revenue support grant for 1990–91. It may be helpful to the House for me to explain briefly the background to the redetermination. In view of the difficulty of estimating the amount of non-domestic rate income that an authority will receive in a particular year as a result of, for example, valuation appeals, agreement was reached last year with COSLA to guarantee the combined RSG and NDRI figure issued to each authority at the time of the original distribution proposals for the year in question. The year 1990–91 is the first to which the guarantee applied.
The agreement with COSLA was on the basis of swings and roundabouts. If an authority's actual level of non-domestic rate income for the year in question is above the original estimate, its RSG figure will be reduced. If NDRI is below the original estimate, its RSG will be increased. Local authorities have, I think, welcomed the arrangement as providing stability for their Government-determined support. I must tell the hon. Member for Cunninghame, North (Mr. Wilson) that Cunninghame
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benefits to the tune of £3.6 million as a result of the agreement and of the positive Government response to the reasonable representations that he and his hon. Friend the Member for Cunninghame, South (Mr. Lambie) made—I know that he cannot be here this evening because he is on legitimate Council of Europe business—to the Government. The readjustment has been accepted by COSLA.
As I said, the settlement is well above the rate of inflation. It is fair and reasonable. I recommend the order to the House.
12.22 am
Mr. John Maxton: I prefer the Minister when he is being slightly more rumbustious rather than drearying his way through the details of the revenue support grant. He was lucky because he managed to get the details before the end of last week. The rest of us could not because the Government appeared to be unable to lay the details before the House earlier than that. It is disgraceful that we are expected to discuss such orders with our local authorities and with the Convention of Scottish Local Authorities when they are not laid before the House a week before the debate.
Mr. Allan Stewart: The hon. Gentleman will accept that the local authorities had the figures in essence on 11 November. I hope that he is not speaking for the entire Labour party in saying that it and the local authorities do not speak to each other over such a long period.
Mr. Ernie Ross: That was not the final document.
Mr. Maxton: That is right. It was not the final document, as my hon. Friend makes clear. The simple fact is that we had not got the order. We should have had it long before it was laid.
I also found the Minister's speech remarkable for the fact that, having met Western Isles council today to discuss its specific problems, he did not refer to that matter, as one might have expected. I hope that my hon. Friend the Member for Western Isles (Mr. Macdonald) will have the opportunity to make the case for the council.
On the surface, the Minister's claim that this year's revenue support grant settlement is generous seems reasonable—inflation stands at 4.3 per cent. and the increase in the settlement is just over 6 per cent. But the Minister blandly and deliberately avoided the real position facing local authorities in the coming financial year.
First, the assumptions made about the level of next year's pay increases in the local government sector are, in the view of the Convention of Scottish Local Authorities, Scottish local authorities and myself, totally unrealistic. The inflation in local government costs has been consistently above that of the retail price index, largely because pay accounts for nearly two thirds of local government costs, and the rate of wage increases has been higher in the main than inflation. As a result, local authorities have a finance shortfall.
Secondly, local authorities have calculated that they require an extra £80 million a year simply to cater for the extra burdens which the Government have imposed upon them. The extra duties include the setting up of the system for the collection of the new council tax, the extension of community care, protecting the environment and the control of dogs. All those add to the sums which local

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authorities have to spend over and above their existing statutory obligations. Little account has been taken of those extra duties in the revenue support grant.
Thirdly, and most importantly, the Government have refused to take any account of the crisis that the poll tax has brought to local authorities. When the poll tax was introduced in 1989–90, local authorities budgeted for a collection rate of 94 per cent. against the collection rate of 98 per cent. which they had achieved under the old rating system.
In Committee, Ministers believed that, in putting the rate as low as 94 per cent., local authorities were being pessimistic. My hon. Friend the Member for East Lothian (Mr. Home Robertson), who served with me in Committee, will remember that he and I, and our colleagues, consistently said that 94 per cent. was wildly optimistic. During the passage of the legislation, my hon. Friend and I predicted that 85 per cent. was more likely. Two years on, 12 per cent. of the 1989–90 poll tax is still uncollected; 20 per cent. of last year's poll tax is still outstanding. As a result, local authorities face a shortfall of £343 million in income for the first two years of the operation of the poll tax.
Eight months into this financial year, £447 million, or 57.6 per cent., still requires to be collected, and local authorities are undertaking the biggest debt collection exercise in history. Despite what Ministers say, local authorities are making every effort to collect the money, but the task is enormous and is almost beyond their ability. Much of the outstanding debt is owed by people who are very poor but who, because of the absurd rule that the Government insisted on laying down for a minimum 20 per cent. payment, have to try to find the money. By law, local authorities must try to collect that money, even though the Audit Commission has said that it costs two and a half times more to collect that 20 per cent. than is raised by it.
It was interesting to note in The Guardian this morning a suggestion that the Chancellor, in his Budget on 10 March, intends to abolish the 20 per cent. minimum payment from 1 April this year rather than wait for the introduction of the council tax on 1 April 1993. I gather that he will also increase VAT again to try further to reduce next year's poll tax figures. It would appear that, yet again, Scottish Office Ministers, including the Secretary of State, will be kicked in the teeth by their Cabinet colleagues—[Interruption.] The Chancellor of the Exchequer. Having stoutly defended the poll tax through thick and thin, Scottish Office Ministers had to surrender and accept a return to a property tax which they had viciously attacked for five years, or a return to a roof tax, having condemned the Labour party for trying to introduce it. They had to stand on their heads, they had to squirm and they had to twist, but somehow they managed to do it.
Having repeatedly said that the 20 per cent. rule would remain—the Under-Secretary of State, the hon. Member for Eastwood (Mr. Stewart), said it in the Committee when he was trying to quote recently—the Minister said that the 20 per cent. rule would remain as long as the poll tax was on the statute book. It again appears that the Government may have to eat their words and that the Chancellor will intervene. Of course, we have been demanding that very sensible move month after month, year after year. Let us hope that at least one member of the Cabinet has been listening—the Chancellor of the Exchequer. I hope that he
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finds his glasses, for which he was looking earlier, and will be able to read his Budget speech, when he will announce that very sensible amendment.
Mr. Ernie Ross: Given what my hon. Friend just said, how are the changes likely to help local authorities with collection? Some local authorities are well ahead with the new demands for the tax. Will the measure mean that, once again, they will have to shred them?
Mr. Maxton: That is exactly the point. The Government should have made an announcement at least seven or eight months ago. They should never have introduced the 20 per cent. minimum payment at all, but to do it as a cheap election ploy in the Budget 20 days before bills have to go out and be paid is entirely cynical and something that the Government should not indulge in.
The Government should not indulge in cheap political electioneering. They should have got rid of the 20 per cent. rule months ago. It would have made sense—it still makes sense—to do so. Local authorities will have an enormous burden placed upon them. The Government cannot walk away from their responsibility for the poll tax and try to put all the blame on local authorities. They introduced the absurd system. I notice Conservative Members who served on the Committee and vigorously voted for the measure. Every finance expert said that the system simply would not work. The Government have now been forced to admit that we were right—the system will not work.
Why should local authorities, Scottish poll tax payers and the users of local government services have to pay the price of Ministers' crass stupidity? The Government should not continue to hide behind the smokescreen that was usefully given to them by those who advocated the non-payment campaign. Over the past few months, Scottish nationalists have tried to claim that the end of the poll tax was the result of their non-payment campaign. When they realised that non-payment was creating a major crisis for local authorities, with 3 million outstanding warrants, and local authorities facing cuts in services and imposing more than 30 per cent. increases on their poll tax payers next year, it became obvious even to them that they were in trouble over the issue of non-payment.
Then Scottish nationalists tried to claim that the deliberate non-payment campaign had had little effect and that it was the 70-odd per cent. of non-payers who could not pay who were the problem, not them at all. They were so mixed up that I have at times heard hon. Members using both arguments in the same speech, claiming, on the one hand, great success for the poll tax campaign and, on the other, that it was not really anything to do with them.
The fact is that their campaign has allowed the Government to dodge their responsibilities by putting the blame on the deliberate non-payers. The poll tax was always a crazy, unworkable system that would inevitably collapse under the weight of its own absurdities. What Scottish National party members and supporters have done is increase the problems for local authorities by not paying their taxes; they have given the Government an excuse for evading their true responsibility; and, most immorally, they have left thousands of poor people who mistakenly followed them with a burden of debt that will be round their necks for years. Scottish National party members—
Mr. Thomas Graham: Is my hon. Friend aware that Inverclyde district council

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recently declared that it would increase the poll tax by £60 and reckoned that roughly half that came about because of non-payment? Is he aware also that a recent university study showed that Inverclyde was one of the poorest places in Europe? The Minister did not consider that when it came to the poll tax.
Mr. Alex Salmond (Banff and Buchan)rose—
Mr. Maxton: I will allow the hon. Gentleman to intervene in a moment; I am quite happy to do so. The members of the SNP, including the hon. Gentleman, called off their non-payment campaign as soon as the Government announced that the poll tax would be withdrawn. They were not concerned about what would replace it; in fact, they went into the Lobbies, when the vote eventually took place on the council tax, against that very council tax over which they had withdrawn their non-payment of poll tax campaign. Meanwhile, they took out their cheque books, paid their debts and left many of their supporters in dire straits, seemingly without feeling the slightest pang of remorse for the problems that they had caused these poor people.
Mr. Salmond: I should have thought that that was a rather better action than that of the nine colleagues of the hon. Gentleman who abandoned their non-payment campaign before the Government announced the demise of the tax, or the three colleagues who continued their non-payment campaign after the Government had announced the demise of the tax, or indeed the hon. Gentleman himself who surrendered before the battle was even joined.
When it comes to confusion, does the hon. Gentleman recall arguing to the House on 17 October 1990 that the non-payment campaign was irrelevant to the crisis in local authority finance? I have the quotation here if the hon. Gentleman wants me to read it into the record. Can he please explain why, during the non-payment campaign, he thought that it was irrelevant but, after the non-payment was over, all of a sudden he thought that it was substantial?
Mr. Maxton: The hon. Gentleman tries to pretend that he is a clever man, but he has never understood my position on the non-payment campaign. I have always believed that there would be a large non-payment of the poll tax by those who could not afford to pay it. His campaign and that of his hon. Friends had been a dangerous diversion which has given the Government an excuse. That has always been my argument on non-payment. I do not think that their campaign had a major impact on local government finances, but it gave the Minister and his hon. Friends that excuse. I would argue strongly that, but for that excuse, the sheer absurdities of the poll tax would have brought about its end six months earlier, and would have brought about the resignation of the ex-Prime Minister six months earlier as well. They extended the poll tax by giving the Government the excuse that the problems and failures of the poll tax were due to deliberate non-payment.
It was always a farce. What is so immoral about the approach is that the SNP has left thousands and thousands of poor people in debt, without a single pang of
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remorse. The Scottish National party is a bunch, as it has proved in case after case, of political chancers who are interested only in cheap political games.
The revenue support grant order, despite its apparent generosity, will do nothing to help local authorities with the crisis caused by non-payment of the poll tax. Services will be cut and there will be redundancies. Poll taxes will increase well above inflation. Luckily, the election is not far away. The electors in Scotland will not forget the important part played by the Government and by the arm-chair martyrs in the SNP in the poll tax mess. After the election, we will have a Government who understand local government and who will be able to work with local government to solve the problems facing it. The sooner that election comes, the better.
12.39 am
Sir Hector Monro (: I have heard some political chancers in my time, but that effort from the hon. Member for Glasgow, Cathcart (Mr. Maxton) was the best. In our earlier debate on housing and also in this debate, the hon. Member for Cathcart, who has been so full of himself, did not tell us what he proposes to do were he to be in government in the summer.
The hon. Member for Cathcart began by saying that local authorities needed 20 per cent. more revenue support grant. Would he give them that? The hon. Gentleman thought that he had made a case for extensive expenditure by local authorities in housing and on the revenue side, but he gave us no hint of what Labour would do—perhaps in a few months' time. Pehaps he is so lacking in confidence that he is worried about having to make any promises.
The hon. Member for Cathcart was irresponsible to the House and to Scotland by his reluctance to tell us what he proposes to do. People who read our debates and those who read reports in the press and see them on television will draw their own conclusions: they will decide that, as ever, the Labour party would allow rip-oaring expenditure in local authorities, which would inevitably be followed by high inflation and high unemployment. The proposals—or lack of proposals—of the hon. Member for Cathcart contain the usual socialist cycle.
The hon. Member for Cathcart highlighted the difficulties of some local authorities in collecting the community charge. I offer praise now to my regional council—although I shall criticise it in a moment—for budgeting for the coming year on a 95.5 per cent. collection rate. It believes that it can achieve that rate without difficulty. That shows what can be achieved if local authorities are determined and have the right policies.
In this debate, we must highlight the steady annual increase in local government expenditure, which has been far above the rate of inflation. Unless that is taken into account, we will inevitably fall once more into an inflationary cycle.
In the four years from 1988–89 to 1991–92, inflation rose by 23.6 per cent. Dumfries and Galloway region increased its expenditure by 36 per cent. Annandale and Eskdale district increased it by 88 per cent.; Nithsdale increased it by 40 per cent.; Stewartry increased it by 77 per cent.; and Wigtown also increased it by 77 per cent.
Mr. John McAllion: The hon. Gentleman has just referred to a list of councils that have increased their expenditure from between 40 per cent. and

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70 per cent. Why have none of them been capped by the Secretary of State for Scotland, when Tayside region, which increased its poll tax by 7.9 per cent., is being capped?
Sir Hector Monro: The hon. Gentleman cannot abide a second. He has no patience to wait for hon. Members to contribute to the debate. He spends half his time intervening, sometimes in the most unnecessary way. If he would only sit down and listen, he might be able to comment later.
Given the tremendous increases in expenditure of local authorities, one might be under the impression that they had not received a generous revenue support grant. Over the same period, however, there was a 70 per cent. increase in RSG in the region which I represent. Annandale and Eskdale received an increase of 146 per cent. In round figures, the increases for Nithsdale, Stewartry and Wigtown were 170 per cent., 216 per cent. and 211 per cent. respectively.
There has been a vast increase in local government expenditure—there are no cuts in its expenditure. The cuts that are headlined by the press and taken up by the media relate to the exorbitant budgets that are presented by socialist councillors, who say, "Because we cannot spend to the extent of our budget, we are suffering a cut." In fact, they are spending more year on year. Socialist councils' expenditure is not being cut. It is high time that the nation began to understand that it is only budgets that could never be contemplated by anyone with any common sense that are being cut.
This year, the Government are providing 89 per cent. of the expenditure—
Mr. Maxton: They are controlling 89 per cent. of the expenditure, not providing it.
Sir Hector Monro: It is coming from the taxpayer, which is the most important factor. The hon. Gentleman has raised a quibble that is on a par with that of the hon. Member for Dundee, East (Mr. McAllion).
Local authorities are controlling, to use the nomenclature of the hon. Member for Cathcart, 11 per cent. of overall expenditure. Revenue support grant has increased on average by 6 per cent., yet the expenditure of the regional council of Dumfries and Galloway has increased by 8.3 per cent. There is no reason to take grant-related expenditure to the maximum when good housekeeping could maintain it at the level of inflation. It is because of expenditure beyond the rate of inflation that the community charge of the regional council in my constituency is increasing by £39, or 29.5 per cent.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) did not remain in his place for very long to listen to the debate, but he referred earlier to libraries and building controls. I should be surprised if the regional council had taken those factors into account when it increased the community charge so substantially. It has done so when interest rates and inflation have been reduced and the revenue support grant has been increased. That example of local authority expenditure is, sadly, reflected so frequently in Scotland. Those who are on low incomes and those who are struggling to run businesses or commercial enterprises generally should be supported by smaller increases in the community charge.
Everyone should be prepared to engage in some tight budgeting at times when the nation's economy is difficult.
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We know that economies are difficult also elsewhere in Europe and throughout the world. Local authorities have a duty to keep down the rate of inflation. Every item of expenditure must be controlled.
I am disappointed that proposed reductions in community charge have been thwarted by socialists, Liberal Democrats and the Scottish nationalists who vote for more expenditure irrespective of whether it is required.
Of course, as Members of Parliament, we want to give our local authorities all the help we can where there have been complications, such as the transfer problem that has been mentioned, or if they have particular problems and want to put particular emphasis on, for example, school building repairs. However, the message that should go out from the House tonight is that local authorities are spending too much money; they are not cutting back. Year on year on year, they are spending more and more.
The only way to achieve sensible spending is through the policy of my right hon. Friend the Secretary of State to cap those councils that go a good deal too far. I hope that that will not be necessary. I hope that councils will realise that they have a duty to be responsible and to set budgets below grant-aided expenditure if they possibly can.
I support the order, and I hope that my words will have some impact on some local authorities in Scotland.
12.50 am
Mr. Calum Macdonald: The day that has just ended has been a sad one for the Western Isles. It is certainly the saddest day that I have known since I came to the House. Next week, the Western Isles council will have to make a truly calamitous choice between increasing the poll tax in the islands many fold or introducing steep cuts in its budget.
My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) said that there had been a delegation from the Western Isles today. In fact, there were two. There was one from the Western Isles council and one from the trades council—the largest delegation that I have seen during my time in the House. We had a meeting with the Minister, but I regret that we left it empty handed. We did not get the support for which we had hoped.
Since last July, the islands have been reeling in the face of a financial crisis—£24 million would have been a major loss for any community, but especially so for one such as the Western Isles. It is not just a case of almost half of the revenue budget being lost, but of that happening against an economic background already at a very low ebb. Over the past two or three years, almost all the industries in the islands have suffered extremely bad times, and the economy is very low by national standards.
Gross domestic product per capita in the islands is half that of the country as a whole. Income per household is two thirds of the national average. That is the background against which that calamity has to be considered, and the background that has led to a unique outcry from every sector of the community and to the joint delegation today.
The local council, which has to deal with this appalling position, has appealed for aid. The trades council has mounted a unique campaign, not just on behalf of those in work—either with the council or in the private sector, which will also be affected—but on behalf of the whole community of the Western Isles, especially the most vulnerable who will be hit hardest by this crisis.

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All sorts of other groups have added their voices to the campaign. I have received representations from the local health council which refer to the ramifications the crisis will have, not just within the economy, but throughout society. Members of the local branch of the Scottish Society for the Mentally Handicapped have also raised their voices. They include relatives of people who will be hit by the crisis and are protective and concerned about those who are truly the most vulnerable in a community, and the innocents in the affair—the mentally handicapped.
Thousands of other individual voices have made representations to me directly. Every weekend when I go about the constituency and walk the streets I am told that the matter is of ever-pressing concern to people, and has been since last July. That worry was made manifest in the petition signed by thousands of people that was handed in to the Scottish Office.
The Government may say that the council has brought the crisis on itself through some form of financial management. However, it is not the council, as an entity, that will be directly affected, but the people of the Western Isles—the community. Those people did not participate at any level in the decisions that led to the present problem.
If the council is to blame for aspects of mismanagement, why should the resulting problems be visited on the people, particularly when the council, whatever errors it may have made, was not unique in doing so? Its members acted on advice that they received and, in the months to come, when the Bingham inquiry reports, the chain of errors will be shown to go much higher than the Western Isles council. It will be seen that the key mistakes were made by those responsible for regulating this country's financial system—the Bank of England and the Government.
Mr. Salmond: Many hon. Members will find it extraordinary that, as the poll tax is such a small percentage of the finance of the Western Isles council, that authority should be expected to bear the burden of such a gigantic loss. Is the hon. Gentleman aware that, in discussions that I have had with the Minister about my local authority, the Minister made the extraordinary statement that, even if the Bingham inquiry were to find the Bank of England or the Treasury culpable for what happened with the Bank of Credit and Commerce International, that would not necessarily affect local finance in Scotland? Given that the Government seem to be disowning any culpability of their own, how can they use the culpability argument as an excuse for not providing help for the Western Isles?
Mr. Macdonald: The Government's argument in that instance is untenable. The case of Barlow Clowes shows that, where a Government Department has been found to have fallen down on its job and that has resulted in people losing their savings, the moral responsibility lies with the Government, who should respond to the problem and pay compensation, which they did in that case. They will have to do so in the case of the Western Isles if the chain can be traced back to where I suspect it can.
It would be interesting to have before us the testimony and evidence that the Prime Minister and the other Ministers involved will present to the Bingham inquiry. I understand that some of it has already been submitted, but
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we shall not be able to have access for a number of months—probably, coincidentally, not until after the general election.
Perhaps the most perverse aspect of the whole affair is the fact that, when the truth finally comes to light and the real burden of blame can be assessed, those who are shown to be ultimately guilty and to have fallen down on their responsibilities and duties will no longer be there to clear up the mess, having been discharged from office by the people.
Let me illustrate the impact that the cuts would have. A number of secondary schools in my constituency would close—Leurbost, Scalpay, Leverburgh, Eriskay and Uig schools. All those schools serve small, remote communities, for whom a school is not simply a place of learning where youngsters can develop skills and talents and then move on, but a community centre. Not only education, but whole communities would be hit by the proposed cuts.
Community workshops would close, and the number of teaching posts would be reduced. Some 50 jobs in the Western Isles education department could be lost. Library and text book provision would also be reduced. Something that I find especially poignant, although it is not included in the list from which I am quoting, is the likely reduction in the already paltry provision of special education for children with learning disabilities. They cannot travel to another nearby town; they are stranded on the Western Isles. If the education that they need is not supplied by the council there, it will not be supplied at all. It is when considering such details that we truly appreciate the consequences of the proposed cuts for the islands' community.
Social services will suffer as well. There will be no grant for playgroups, daycare clubs and voluntary organisations; centres for the physically and mentally handicapped will also be hit. Innocent people will be caught up in an international banking scandal and crisis.
Lucky people will suffer too: people, that is, who are lucky in comparison with those who lack work and incomes. An estimated 300 job losses will result from the cuts in one of the three Scottish travel-to-work areas with the most unemployment. That estimate is based on the Fraser of Allander Institute's computer model, which was completed last year with Scottish Office help; in other words, it is based on an independent study. It will have an impact not just in one year; it will happen year after year, for 30 years. Almost £3 million a year is to be squeezed out of the community, for no productive purpose, for that period of time. About £90 million will be squeezed out of a community of 30,000 people. It is intolerable.
A Government with imagination and a constructive will could do something to help. They could do a number of things. A variety of capital programmes could be brought forward. Certain projects deserve support on their merits. For example, there is no direct Government funding for a trunk road network on the islands. Any funding that is made available has to go through the local authority. The Government could provide help for that. In the long term, it would save revenue. There would be a saving on repairs and maintenance.
Houses need to be built. Schools need to be refurbished. The economic infrastructure ought to be built up. Various European Community projects would be beneficial, if the Government were prepared to become involved in them. A leader project has already been awarded to the Western

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Isles, in conjuction with Skye and Lochalsh. Bruce Millan recently announced a new programme specifically targeted at declining textile industries. That would be of great help to the Western Isles, by virtue of the Harris tweed industry. If all that is to happen, the Government have to show a positive will to assist.
Today we have asked for help on the revenue, the cash flow side. Again the Government, with a little imagination, could assist. For example, the revenue side of the council's budget contains a special islands element. The Government ought to look at that closely. I await an undertaking from them. My hon. Friend the Member for Falkirk, West (Mr. Canavan) referred earlier to lifting the burden of the police and fire brigade requisition which the Minister knows has increased this year and is totally outwith the council's control. The Government could, if they were willing, see whether it could be rearranged in such a way as to lift that additional burden from the shoulders of the islands community.
There is a rare mood of dismay and despair in the islands. I have not experienced that mood since I was a young boy in the 1950s and early 1960s. There was a mood of gloom in the islands then. That has lifted since the early 1970s. It was lifted by the very council that now faces so much criticism and mockery. It was a pioneering and imaginative council throughout those years. It made a tremendous difference to the islands community. It restored hope and optimism throughout the community. Even when things were not going too well economically, people still felt that things were improving. The tragedy is that their morale has been devastated by the impact of this loss. People are looking for a signal of help from this Government to give them hope and raise their morale. They want to be able to see some light at the end of the tunnel. We got a no today, but we shall be back month after month and year after year until we get assistance.
The Government will have to change their attitude. Otherwise, I fear that their failure to appreciate and sympathise with them and to help positively will not only affect the opinions of people in the Western Isles but have an impact on people throughout Scotland who are watching the situation. They, at the end of the day, will change the Government.
1.9 am
Mr. Nicol Stephen: It has been said already that the 6 per cent. increase in grant is generous on the face of it, but that it is misleading. It is also misleading to suggest some spurious reasons why the grant should be more generous. For example, the funds that the Government have made available for the introduction of the new council tax legislation total more than the entire accumulated bids from all the local authorities. That proves that even the Government are prepared to throw money at problems, certainly when those problems are writ as large as the poll tax.
The amount of grant available is misleading in the sense that the total forecast increases that poll tax payers in Scotland will pay are nothing like 6 per cent. Taking even the Government's figures, it is likely that the increases will average about 10 per cent. On the basis of the figures provided by the Convention of Scottish Local Authorities, we could well face an average increase of 25 per cent. At a time of serious economic recession, with unemployment
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increasing and major closures such as that at Ravenscraig, that will put a terrible additional tax burden on the people of Scotland. It should be prevented.
Let us take a moderate, well-managed council, such as Grampian regional council, which is likely to fix the lowest poll tax of any regional council in Scotland. Despite that, Grampian's personal community charge will rise by about 12.5 per cent. That is unacceptably large, with inflation at current levels. Why is that happening? It is certainly not because Grampian region is spending excessively on essential services. Grampian is spending about £5 million less than the Government say that it requires to spend to provide essential services. That is true of many other local authorities in Scotland. If Grampian spent up to the Government's limit, the increase in the poll tax would be roughly double what poll tax payers in the region face.
The hon. Member for Glasgow, Cathcart (Mr. Maxton) said that the Government's allowance for inflation and increases in wages was inadequate. That argument is put every year and, indeed, every year the Government underestimate. Apart from that, there are two closely related reasons why the 6 per cent. increase in grant will lead to such a big increase in the poll tax.
The first reason is the gearing effect. Aggregate external finance has been reduced this year—placing a huge additional burden on the poll tax payer—from 88.9 per cent. to 88.4 per cent. That sounds like only a small amount. However, when one looks at it the other way round, the poll tax payer has to fund 11.6 per cent. instead of 11.1 per cent. of expenditure. Immediately, the poll tax payer is hit by a 4.5 per cent. increase, before we have even begun to look at inflation and other factors. That, in a nutshell, is the gearing effect. It means that any small shift in Government grant puts a huge burden on the poll tax payer. That is because the poll tax created such a narrow tax base. That must be changed.
The second reason is closely related but is perhaps more interesting. Last year, the Government announced a £140 per head reduction in poll tax bills, to be funded by increases in value added tax. The £140 reduction is still included in the calculation of this year's figures, but not a penny more, not a penny less. In the past year, inflation has continued apace, eroding the value of that £140. To compensate the poll tax payer for that erosion, the figure would have to be increased to £146.
Mr. Allan Stewart: I am trying to follow the hon. Gentleman's argument, but if the Government were to accept his suggestion, the gearing effect which he has criticised would be worse.
Mr. Stephen: If the Government were to do what I suggest, the effects of gearing would be mitigated because additional funds would be made available through grant, which would reduce the impact on the poll tax payer. My party advocates radical overhaul of the system, which would remove the gearing effect, but as long as we have it the impact of small changes in the grant system are significant to the poll tax payer, as evidenced by the £140 payment.
VAT is a buoyant tax and Government income has increased as a result of the increase to 17.5 per cent., but there has been no extra benefit for the poll tax payer. I plead with the Government to make some extra cash available. They should meet local authorities' demands so that those authorities can plan ahead more thoroughly. If

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the Minister intends to abolish the 20 per cent. payment for people on low or no incomes, then do so tonight. If he wants to change the system, tell us now. Local authorities will prepare demand notices in late February and early March. If the Government delayed an announcement until the Budget on 10 March, it would be a blatant attempt to buy votes at the expense of hundreds of thousands of pounds being wasted on preparing and then destroying millions of poll tax demand notices.
That approach could delay the issuing of demand notices, the electoral advantage of which might not have escaped the Government. The Minister should prevent that delay, prevent a few trees from being destroyed and prevent justifiable accusations of cynical manipulation of the Scottish voters.
If the Government are to announce any reduction in the Scottish poll tax, whether it be in the £140 payment or the abolition of the 20 per cent. rule, they should announce it here and now.
My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) mentioned the added difficulties faced by 16 district councils. The Scottish Office's late and rather inept transfer of grant from district councils to regional councils is causing severe difficulties. Sutherland district council is one of the worst affected. It faces a 76 per cent. increase in its poll tax. That is through no fault of its own and is largely as a result of the transfer of grant, again putting the burden on the poll tax payer.
Mr. Allan Stewart: If the hon. Gentleman listened to my reply to the hon. Member for Roxburgh and Berwickshire, he would recognise, first, that there is a genuine anomaly and, secondly, that there is no personal increase for the community charge payer because one council gets more and another council gets less.
Mr. Stephen: The Minister may not be aware, but the Highlands region has made it clear that it does not intend to reduce its poll tax to take into account the additional grant that it will receive. I have received representations on this matter and copies of correspondence from my hon. Friends the Members for Ross, Cromarty and Skye (Mr. Kennedy) and for Caithness and Sutherland (Mr. Maclennan).
The important point is that the Minister well knows that he could intervene to solve the problem. I ask him to give a reassurance that he will intervene if he discovers that regional councils are avoiding their responsibility to reduce the poll tax to compensate and balance out the increase from district councils. As the Minister said, the district and regional councils have failed to agree. He has not received clear advice from the Convention of Scottish Local Authorities, but it did not prevent him acting before if he wanted to do so. I urge him to act now to protect the poll tax payers who live in those district council areas.
The business taxation system in local authority areas is a related issue. There has been some equalisation. Businesses in Scotland used to be taxed an average of 60 per cent. more than those in England and Wales, but I understand that that figure is now down to 40 per cent. more. The Minister is making £60 million of additional funds available this year to allow for that equalisation—£11.5 million is supposed to come from local authorities through so-called efficiency savings. If local authorities
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continue to make the savings that the Government seek, I assure the Minister that the authorities will be very lean and efficient indeed. The remainder will come from central Government.
After the coming fiscal year, there are only two fiscal years in which to make the fiscal adjustment—£60 million this year means that £200 million will be required over the following two years. I ask the Minister to make a commitment that he still intends to achieve equalisation by 1995.
I finish by dealing with the Government's capping powers. The Government said that capping would not be required in respect of the poll tax, but the powers remain as draconian and as centralist as ever. Does the Minister intend to us the capping powers in the coming fiscal year? If the Government truly wished to avoid doing so, they could have introduced a fair voting system for local authorities, with elections based on proportional representation. They could also have introduced a local income tax to raise local government revenues, based on a system under which ability to pay is taken into account.
1.21 am
Mrs. Maria Fyfe: When we debated housing support grants, hon. Members expressed strong views about the appalling state of affairs and the impact on people's lives. It was a pity that we did not have more time for that debate.
This debate is about the level of services provided, which seriously affect people's lives in other ways. We are talking about the price of emptying bins and cleaning the streets, of providing libraries and swimming pools, cleaners for council buildings, school dinners, home helps, education and social services, water, sewerage, roads and much else besides. We know what impact massive cuts will have on such services and on people's lives.
It has already been said that, although a 6 per cent. increase might have been regarded as reasonable if everything else was equal, we know that everything else is not equal. Although such an increase is well above the rate of inflation, it in no way compensates local authorities for their financial position since the introduction of the poll tax. The Government know that there is no less than £334 million outstanding from the first two years of the poll tax.
In refusing to pay heed to the lack of that enormous amount of money, the Government are not facing their responsibilities. Jobs will be lost—that is what it comes down to. The Government will be morally responsible for the loss of £334 million-worth of jobs because they introduced the poll tax. They are refusing to give the councils any credit for their efforts to cope, and refusing to face widespread poverty, especially in areas such as Strathclyde, where the system of paying for local government is unjustifiable, unjust and unworkable. They have refused to acknowledge that the provision will be required to meet several other types of increase which, although more minor, are still important—for example, pay and price increases next year. Teachers alone have won a commitment to 9.2 per cent., and the education bill accounts for a large slice of the expenditure of any regional council. That alone will lead to an enormous increase, which the Government ignore.
There is also the cost of introducing the council tax, and the responsibilities for community care and other matters that have been mentioned by COSLA. They are all being

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disregarded, too. If we add all those costs together, it is clear that the settlement is about 3 per cent. short of what local authorities will require.
The hon. Member for Dumfries (Sir H. Monro) talked in terms of local authorities having to be controlled because they kept going in for vast expenditure and were all terribly unreasonable. But if he bothered to pay any attention to the estimates of local authorities anywhere in Scotland, he would see for himself that that idea is laughably far from the truth.
Councils such as Glasgow may introduce the odd improvement in service here and there, but those are more than offset by the cuts in services caused by the need to balance something like a decent level of service against the amount that the council has to call upon its poll tax payers to pay. Even when substantial cuts are made, the people of Glasgow still face an enormous increase in poll tax.
If there were such a human being as a Tory Member of Parliament for a Glasgow seat, such a person would have to sit on the Government Back Benches tonight looking very embarrassed.
Mr. Gordon McMaster: We shall never see it.
Mrs. Fyfe: No, we shall never see it—not in a million years. But if there were a Tory representing a Glasgow seat, that person would have to admit shamefacedly that what the Government say about councils such as Glasgow—and all the other Scottish local authorities—is absolute nonsense. Hon. Members can simply open the books and see for themselves that there is no such thing as those vast increases that Conservative Members parrot about, hoping that people will believe them.
Do people come to our surgeries on a Friday night and say, "Stop wasting our money—your services are far too good"? Do they hell. They want services improved, and a Labour Government will deliver that.
1.26 am
Mr. Dick Douglas: I shall be brief, because I hope that there will be an opportunity for the Minister to reply—at least to the speech of the hon. Member for Western Isles (Mr. Macdonald). We should try to get an undertaking from the Government this evening if we can.
We know that local government finance is in a mess, and the Scottish National party will not let the Government off the hook on that issue. We opposed the poll tax on clear and stringent grounds. We have always argued that the poorer sections of the community—those who pay 20 per cent.—should have the tax remitted. That should be done now, as a matter of urgency.
Figures have been quoted about the indebtedness of such people to the local authorities. I shall spend a minute trying to examine the convoluted reasoning of the hon. Member for Glasgow, Cathcart (Mr. Maxton). He said that there would be only about an 86 per cent. pay-up, yet now he complains because his predictions have been fulfilled. He blames the Scottish National party and others for that. That is the reasoning that someone uses when he has been educated at a fee-paying school—[Interruption.] I ask hon. Members not to interrupt. I only have a few minutes left, and I want to be fair to the hon. Member for Cathcart.
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At the beginning, the Labour Front-Bench spokesman argued that the non-payment campaign would have a marginal impact—[Interruption.] What a murmur. Then, when the hon. Member for Cathcart sees that people who really cannot pay compose the bulk of the non-payers, he argues about what people such as myself have done. We were frequently supported by members of the Labour party, such as the hon. Member for Falkirk, West (Mr. Canavan), who was a stringent non-payer. In those circumstances, the Labour party deserted the poorest section of the population and said to them, "Pay up, stump up and go cap in hand." That is on the Labour party's conscience and it will have to answer for that in areas such as Cathcart and Garscadden. I know from going round constituencies such as Dumfermline, West and Glasgow, Garscadden that no criticism is levelled at the Scottish National party. The criticism from the poorest section of the population is levelled at the Labour party.
The Labour party hopes to inherit office at the general election. If that happens, there will not be the current level of non-payment. Very few people will pay, and Labour has no answer to that problem. I hope that the Minister will reply to the points about Western Isles.
1.30 am
Mr. Harry Ewing: I congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on his moving submission on behalf of his local authority and of the people he represents about the plight in which the Western Isles council now finds itself.
I address remarks to the Government and to the Government who will come to power in 12 weeks' time, when my Front-Bench colleagues will be Ministers. No Government, whether Conservative or Labour, are entitled to abandon a community because of mistakes made by others and not by the community. No Government are entitled to expect the community—in this case Western Isles council—to tell people that they must lose their jobs to pay the penalty that should be borne by others.
The Government have a social responsibility here. It would be easy for the Conservative party to write off Western Isles politically because it will not make any impact there. It would be easy, but immoral. The moral case is plain. As a mainland Member of Parliament, I plead the case of the community of Western Isles, because the suffering that those people will endure must be beyond our comprehension. They will suffer not only for the next few months, but for years ahead because of mistakes made by others. They should not be made to pay, and I plead with the Government to look on Western Isles as a special case.
It has always struck me as nonsense that we should discuss the revenue implications without discussing capital expenditure as well, and I refer especially to policing. We have seen a massive increase in crime in Scotland. I speak with some pride as a former Minister, because, when I left the post in which I was responsible for police and crime prevention in Scotland, there was a reduction of 13 per cent. in crime levels in Scotland.
We have now seen an explosion of crime in Scotland. The resources must be made available, either through revenue expenditure or through capital expenditure, to allow our police forces to deal with that explosion of

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crime. If that does not happen, we shall pay the cost in terms of human life and of human misery for many years to come.
1.33 am
Mr. Allan Stewart: The House will recognise that there is a limited time left—I make no complaint about that—in which to reply to the debate. I may wish to write after the debate to the hon. Member for Kincardine and Deeside (Mr. Stephen) about his detailed points. I say to the hon. Member for Falkirk, East (Mr. Ewing) that I want to spend a few moments on the question of the Western Isles, as the House would expect.
I say to the hon. Member for Western Isles (Mr. Macdonald) that, when I opened the debate, I set out the general position in relation to all local authorities. As he has told the House, I met two delegations today. I saw no point in being other than absolutely clear with the Western Isles council.
My right hon. Friend has agreed to extra borrowing consent of some £24 million to keep essential services going, but the Government must have regard to the position not only of other local authorities but of the large numbers of other depositors in BCCI. Of course, the Government are not in the position, which might have been possible, where COSLA came and said to us, "Here is a general formula which we are prepared to put forward." I am not criticising COSLA for that.
I must also point out that the personal community charge in Western Isles is £26. That compares with the Scottish average of £247. I fully recognise that the Western Isles council will have to face some very hard decisions. I say two things in response to the hon. Member for the Western Isles. I recognise what he said about capital and roads, and we will take that into account.
The hon. Gentleman also referred to the island needs allowance, which was raised by the delegation this afternoon. We have this year helped Western Isles to the extent of £1.4 million through a change in that allowance, but I am prepared to make a commitment to an independent study of the island needs allowance, both in total and in its distribution among Orkney, Shetland and the Western Isles, because I think that the dissatisfaction of the Western Isles about the distribution has considerable merit.
Opposition Members have made a fairly ritual complaint about the level of the revenue support grant. I must correct the hon. Member for Dunfermline, West (Mr. Douglas), who attacked the hon. Member for Glasgow, Cathcart (Mr. Maxton) for having attended a fee-paying school. The hon. Member for Cathcart was a teacher at a fee-paying school; the person who attended the school was the hon. Member for Glasgow, Garscadden (Mr. Dewar).
What was important was that there was no commitment by the Labour party to increase the level of the order which I commend to the House.
It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 ( Exempted business).
The House divided: Ayes 150, Noes 107.

Division No. 52]

[1.37 am

AYES

Alison, Rt Hon Michael

Jones, Gwilym (Cardiff N)

Allason, Rupert

Jones, Robert B (Herts W)

Amess, David

King, Roger (B'ham N'thfield)

Arnold, Jacques (Gravesham)

Kirkhope, Timothy

Arnold, Sir Thomas

Knapman, Roger

Ashby, David

Knight, Greg (Derby North)

Atkins, Robert

Knowles, Michael

Baker, Nicholas (Dorset N)

Knox, David

Batiste, Spencer

Lang, Rt Hon Ian

Bellingham, Henry

Lawrence, Ivan

Bennett, Nicholas (Pembroke)

Lester, Jim (Broxtowe)

Bonsor, Sir Nicholas

Lightbown, David

Bottomley, Peter

Lord, Michael

Bowden, Gerald (Dulwich)

Lyell, Rt Hon Sir Nicholas

Bowls, John

MacGregor, Rt Hon John

Brooke, Rt Hon Peter

McLoughlin, Patrick

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

McNair-Wilson, Sir Michael

Buck, Sir Antony

McNair-Wilson, Sir Patrick

Burt, Alistair

Malins, Humfrey

Carrington, Matthew

Mans, Keith

Channon, Rt Hon Paul

Mariand, Paul

Chapman, Sydney

Maude, Hon Francis

Chope, Christopher

Maxwell-Hyslop, Sir Robin

Clark, Rt Hon Alan (Plymouth)

Meyer, Sir Anthony

Clark, Rt Hon Sir William

Miller, Sir Hal

Clarke, Rt Hon K. (Rushcliffe)

Mills, lain

Coombs, Simon (Swindon)

Mitchell, Andrew (Gedling)

Cope, Rt Hon Sir John

Mitchell, Sir David

cran, James

Moate, Roger

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

Monro, Sir Hector

Davis, David (Boothferry)

Montgomery, Sir Fergus

Day, Stephen

Morris, M (N'hampton S)

Devlin, Tim

Morrison, Sir Charles

Dickens, Geoffrey

Neale, Sir Gerrard

Douglas-Hamilton, Lord James

Nelson, Anthony

Dover, Den

Neubert, Sir Michael

Dunn, Bob

Nicholson, David (Taunton)

Durant, Sir Anthony

Nicholson, Emma (Devon West)

Dykes, Hugh

Norris, Steve

Emery, Sir Peter

Paice, James

Fallon, Michael

Price, Sir David

Favell, Tony

Raffan, Keith

Fenner, Dame Peggy

Redwood, John

Finsberg, Sir Geoffrey

Renton, Rt Hon Tim

Fishburn, John Dudley

Riddick, Graham

Forsyth, Michael (Stirling)

Rowe, Andrew

Franks, Cecil

Sackville, Hon Tom

Freeman, Roger

Shaw, David (Dover)

French, Douglas

Skeet, Sir Trevor

Gale, Roger

Stevens, Lewis

Goodlad, Rt Hon Alastair

Stewart, Allan (Eastwood)

Goodson-Wickes, Dr Charles

Taylor, Ian (Esher)

Gorman, Mrs Teresa

Taylor, John M (Solihull)

Greenway, Harry (Ealing N)

Taylor, Sir Teddy

Greenway, John (Ryedale)

Temple-Morris, Peter

Gregory, Conal

Thompson,Sir D. (Calder valley)

Grist, Ian

Gummer, Rt Hon John Selwyn

Thompson, Patrick (Norwich N)

Hague, William

Thurnham, Peter

Hamilton, Neil (Tatton)

Trippier, David

Hannam, Sir John

Trotter, Neville

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

Twinn, Dr Ian

Harris, David

Walden, George

Hayes, Jerry

Walker, Bill (T'side North)

Heathcoat-Amory, David

Waller, Gary

Hicks, Robert (Cornwall SE)

Ward, John

Hind, Kenneth

Wardle, Charles (Bexhill)

Howell, Ralph (North Norfolk)

Watts, John

Hughes, Robert G. (Harrow W) Hunter, Andrew

Wells, Bowen

Irvine, Michael

Whitney, Ray

Jack, Michael

Whitney. Ray

Janman, Tim

Widdecombe, Ann

Jessel, Toby

Winterton, Nicholas

463

Wood, Timothy

Tellers for the Ayes:

Yeo, Tim

Mr. Irvine Patrick and

Young, Sir George (Acton)

Mr. Tim Boswell.

NOES

Adams, Mrs Irene (Paisley, N.)

Kirkwood, Archy

Banks, Tony (Newham NW)

Lamond, James

Barnes, Harry (Derbyshire NE)

Leadbitter, Ted

Battle, John

Leighton, Ron

Bradley, Keith

Lewis, Terry

Bray, Dr Jeremy

Lofthouse, Geoffrey

Brown, Gordon (D'mline E)

Loyden, Eddie

Brown, Nicholas (Newcastle E)

McAllion, John

Brown, Ron (Edinburgh Leith)

Macdonald, Calum A.

Campbell, Menzies (Fife NE)

McFall, John

Campbell, Ron (Blyth Valley)

McKay, Allen (Barnsley West)

Canavan, Dennis

McKelvey, William

Carlile, Alex (Mont'g)

McMaster, Gordon

Clarke, Tom (Monklands W)

McWilliam, John

Clelland, David

Mahon, Mrs Alice

Cook, Frank (Stockton N)

Martin, Michael J. (Springburn)

Cook, Robin (Livingston)

Maxton, John

Cryer, Bob

Michael, Alun

Cummings, John

Michie, Bill (Sheffield Heeley)

Cunliffe, Lawrence

Moonie, Dr Lewis

Darling, Alistair

Morgan, Rhodri

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

Mullin, Chris

Dewar, Donald

Nellist, Dave

Dixon, Don

O'Brien, William

Doran, Frank

O'Hara, Edward

Douglas, Dick

O'Neill, Martin

Dunnachie, Jimmy

Primarolo, Dawn

Eadie, Alexander

Quin, Ms Joyce

Eastham, Ken

Reid, Dr John

Enright, Derek

Robertson, George

Ewing, Harry (Falkirk E)

Rooney, Terence

Ewing, Mrs Margaret (Moray)

Ross, Ernie (Dundee W)

Fisher, Mark

Salmond, Alex

Foster, Derek

Skinner, Dennis

Foulkes, George

Smith, Andrew (Oxford E)

Fyfe, Maria

Spearing, Nigel

Galloway, George

Stephen, Nicol

George, Bruce

Stott, Roger

Godman, Dr Norman A.

Strang, Gavin

Golding, Mrs Llin

Thompson, Jack (Wansbeck)

Graham, Thomas

Turner, Dennis

Grant, Bernie (Tottenham)

Vaz, Keith

Griffiths, Nigel (Edinburgh S)

Wallace, James

Griffiths, Win (Bridgend)

Walley, Joan

Grocott, Bruce

Watson, Mike (Glasgow, C)

Hardy, Peter

Welsh, Michael (Doncaster N)

Haynes, Frank

Wilson, Brian

Home Robertson, John

Wise, Mrs Audrey

Hood, Jimmy

Worthington, Tony

Howarth, George (Knowsley N)

Wray, Jimmy

Hughes, Robert (Aberdeen N)

Young, David (Bolton SE)

Hughes, Simon (Southwark)

Illsley, Eric

Tellers for the Noes:

Ingram, Adam

Mr. Robert N. Wareing and

Kennedy, Charles

Mr. Thomas McAvoy.

Kilfoyle, Peter

Question accordingly agreed to.
Resolved,
That the Revenue Support Grant (Scotland) Order 1992, dated 16th January 1992, a copy of which was laid before this House on 16th January, be approved.

Mifegyne
1.48 am
Mr. Robert G. Hughes: I have a petition from 483 of my constituents against Mifegyne, which is known as RU486. The petition reads:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The humble petition sheweth
That we, the undersigned, wish to note with regret that the abortion pill Mifegyne has been granted a product licence. We believe that drugs and medicines should be used only to save life. We deplore the fact that this drug causes the death of unborn beings and we express our grave concern that it will damage women physically and psychologically.
Wherefore your petitioners pray that your honourable House, which is committed to upholding respect for human life and protection of the weak and vulnerable, will do everything possible to prevent the distribution and use of Mifegyne and any other drugs which, like it, are produced with the deliberate intention of destroying innocent human life.
And your petitioners, as in duty bound, will ever pray.
I am pleased to present this petition and I agree with it. I think that it represents the majority view in my constituency.
To lie upon the Table.

Mr. James Murray
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]
1.49 am
Mr. John Home Robertson: I am grateful for this opportunity to debate the pernicious consequences of section 22 of the Social Security Act 1989. In view of the way in which my constituent, Mr. James Murray, has been ripped off by the Department of Social Security, I make absolutely no apology for keeping the Minister and one of her officials here to respond to this debate at this ungodly hour of the morning. Those responsible for administering that legislation cannot possibly sleep easily in their beds at night, so they might as well come and face the music in the House.
Exactly three years ago, in January 1989, the Social Security Bill, which included a new provision to enable the Department of Social Security to raid industrial injury compensation awards, was debated in detail in Standing Committee F. By a cruel irony, while that Committee was at work, James Murray fell through a defective scaffolding platform while carrying out engineering repair work on the coal preparation plant at Bilston Glen colliery, a colliery that has subsequently been closed by British Coal.
Mr. Murray was married and was 30 years old at the time. He had a young family of twins, then aged three, and a five-month-old baby. The family were buying their house, and Mr. Murray had good prospects as a skilled engineer with British Coal. However, while working on that pipework during the night of 30 January 1989, a scaffolding plank gave way under his feet and he fell 20 ft to the ground, suffering permanent damage to several vertebrae, his wrist and his knee, not to mention cracked ribs and associated pain and trauma. That accident has obviously been a disaster for Mr. Murray and his wife and children. I want to challenge the Minister on the way in which the Department's compensation recovery unit has kicked Mr. Murray and his family when they were down.
Mr. Murray had a series of major operations to stabilise his spine, wrist and knee. He may well require painkillers for the rest of his life. He will certainly never be able to undertake physical work again. His engineering days are definitely over.
The family then had to give up the house because they could no longer afford the mortgage repayments. It was fortunate that East Lothian district council could let them another house as a matter of urgency.
For the first six months after the accident, the Murrays had to make do with benefits totalling just £70 a week. They later got advice which secured a range of extra benefits—industrial injuries disablement benefit, reduced earnings allowance, income support, invalidity benefit, mobility allowance and statutory sick pay. And why not? Mr. Murray had paid his national insurance contributions and his taxes for 14 years—ever since he started work at 16. He was fully entitled to those benefits.
Meanwhile, Mr. Murray, supported by his trade union, pursued a claim for industrial injury compensation against his employer, British Coal. The case came to court in November 1990. In fact, it was settled out of court, as virtually all such cases tend to be, on the advice of lawyers.
The agreed settlement was the payment of a capital sum of £50,000 to cover all aspects of the employer's liability for the tragic consequences of that defective scaffolding
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platform—the pain, suffering, loss of amenity, loss of employment prospects, loss of earnings and everything else. That was not, I suggest, a very generous settlement in the circumstances, but there it was.
By any reasonable analysis, such a compensation award should be seen as a capital sum to help a victim and his family to cope with an injury and to make the best of the rest of his life. It surely is not a total substitute for social security entitlements covered by the same victim's tax and national insurance contributions. But no: it then emerged that the Minister's compensation recovery unit had tallied up literally every penny of benefit that Mr. Murray and his family had received in the 20-odd months after the accident. That amounted to £17,705.98 to be precise, covering industrial injuries disablement benefit, reduced earnings allowance, income support, invalidity benefit, mobility allowance and statutory sick pay. One hundred per cent. of that £17,705.98 was then deducted from his £50,000 settlement, swallowing up 35 per cent. of his compensation, leaving him with a net capital award of £32,294.02 to compensate him and his family for all those serious and permanent injuries.
I cannot resist referring to the fact that this very week Mr. Jason Connery has been awarded £35,000 following a press story that claimed that he was scared of the prospect of conscription during the Gulf war. The alleged hurt feelings of an actor appear to be worth more than the permanent physical injury and pain of someone such as James Murray.
The legislation that provides for the clawback of benefits from industrial accident victims is as perverse as it is pernicious. I appreciate that under the 1948 legislation a compensator could offset a proportion of certain benefits against the award and that there were complications and anomalies, but the Government made things infinitely worse when they enacted what became section 22 of the Social Security Act 1989. The section is entitled
"Recovery of sums equivalent to benefit from compensation payments in respect of accidents, injuries and diseases."
The Hansard report of debates on what is now section 22 makes depressing reading. The Government, who have given such generous tax breaks to the very rich, are, as ever, taking meticulous steps to tighten the screw on less fortunate citizens, including even those who have suffered serious injury at work.
Section 22, which was clause 18 of what was the Social Security Bill, was vigorously opposed by the Labour Opposition in Committee and on the Floor of the House. The debate in Committee filled no fewer than 107 columns of Hansard. Labour Members, who were led by my hon. Friends the Members for Derby, South (Mrs. Beckett) and for Newport, West (Mr. Flynn), tried again and again to restrict the scope for clawing back a victim's compensation. The Minister of State, the right hon. Member for Chelsea (Mr. Scott), was having none of it. He tried to justify the Government's mean measure by saying that to combine benefit entitlement with other compensation would be to pay a victim twice for the same thing. He even tried to claim support by quoting the Beveridge report of 1942, which was the foundation of the national insurance scheme. The right hon. Gentleman quoted paragraph 260 of the report, which states:
"An injured person should not have the same need. met twice over. He should get benefit at once without prejudice to any alternative remedy, but if the alternative remedy proves in fact to be available, he should not in the end get more from two sources together than he would have got from one alone."

467
I understand that principle and I do not necessarily dissent from its fair application, but I submit that we have another and worse form of double jeopardy, where the victim and his employer are both paying for the state benefits through tax and national insurance and the employer is also paying for the compensation, probably through an employer's liability insurance premium. At the same time the Department of Social Security is having its cake and eating it by accepting national insurance contributions and clawing back benefit from compensation claimants, as in Mr. Murray's case.
The other serious flaw in the Government's case for filching compensation from people such as Mr. Murray is the fact that on one hand not all of the compensation relates to claims covered by benefits while on the other not all of the benefits are reflected by any part of the compensation award. For example, compensation awards cover such considerations as pain, suffering, loss of amenity and loss of employment prospects. Not everything is earmarked, especially in out-of-court settlements, but it is clear that the bulk of the award has nothing to do with considerations covered by social security benefits. It is rank nonsense to talk of double compensation in that context.
Equally, a benefit such as mobility allowance, which is also subject to the clawback, has nothing to do with loss of income, injury at work or even being out of work. It is supposed to be a free-standing benefit for those with mobility problems. Indeed, Mr. Murray is still receiving mobility allowance, and he is likely to continue to do so. It is because of the wretched section 22 of the 1989 Act that he has had, in effect, to pay back £2,191.40 of his mobility allowance in respect of payments received between his original claim and the court settlement in October 1990.
This is daylight robbery on the part of the Department. It gives new significance to delays in processing compensation claims in court. In Mr. Murray's case, the process took 20 months to complete, and all the benefit paid during that period was clawed back. Thereafter, of course, the benefit could continue without the threat of clawback. That illustrates the idiocy of the nasty provision that has been put in force by the Government. The delay cost almost £18,000, which is bad enough, but it is not impossible that, in similar circumstances, a complicated case could drag on for up to the maximum five years prescribed in section 22. If that were to happen, it would be possible for the total compensation payment to be swallowed up by the 100 per cent. DSS clawback. I do not know whether that has happened yet, but it could happen and the Minister should recognise that.
The clawback mechanism is spectacularly inconsistent because no similar provision applies to other forms of compensation, such as criminal injuries compensation. Why not? If the Government want to apply that sort of rule, why not apply it across the board? I would prefer that they did not, but at least they would be consistent.
I understand that, by a bizarre twist of the regulations, the clawback can be offset where a reward is reduced to take account of contributory negligence by the victim. Mr. Murray was in no way responsible for any part of his accident, so he could not take advantage of that. He did exercise his right to appeal against the clawback of his mobility allowance, on the undeniable grounds that mobility allowance should be completely detached from other considerations and that it is supposed to be isolated
468
and protected from this sort of erosion. His appeal was rejected on the grounds of section 22 and the associated regulations.
Ministers have been warned about the dangers inherent in this fundamentally unjust legislation. My hon. Friend the Member for Derby, South said in Committee:
"As I see it, the Government are setting a time bomb for themselves, because it can only be a matter of time before a judgment is made, under the combination of the existing damages system and clause 18, in which someone who, in the judgment of ordinary people, should receive damages, perhaps even substantial damages, yet will have those damages severely cut and perhaps almost wiped out by the prior claims of the Department."
Little did my hon. Friend know that at the very time that she was speaking that time bomb had been set in motion only four weeks earlier when Mr. Murray had his tragic accident. As my hon. Friend was speaking, Mr. Murray was already in hospital. The legislation has slashed his well-deserved compensation by 35 per cent. Any reasonable person would recognise that this is a monstrous injustice.
The Minister responded to my hon. Friend:
"I stand by the principles underlying the clause. My hon. Friends should have no reservations about voting for the clause and having their names associated with those principles."—[Official Report, Standing Committee F; c. 857-910.]
Of course, Tory Members did vote for the clause and their names are certainly associated with it, to their eternal shame. We live in hope that the injustice may yet be remedied either by this House or elsewhere.
James Murray is not alone in his predicament. I understand that the Minister's compensation recovery unit and its staff of 136 civil servants has extracted more than £17 million from unfortunate people like Mr. Murray since the legislation was brought into effect retrospectively from January 1989. I suggest that people who have suffered that injustice should contact each other to co-ordinate pressure in Parliament and on the Government to get the legislation changed. I know that my hon. Friend the Member for Barnsley, Central (Mr. Illsley) has been active in pursuing this issue on behalf of a number of people from the mining industry.
It has become a bit of a cliche to talk about adding insult to injury, but that is precisely what the Government are doing to people like James Murray. He has been cruelly physically injured and he and his family have suffered as a consequence. Now, the DSS is adding to that injury by using downright insolent statutory powers to dock the compensation that he has secured.
However, we live in hope that sinners may repent. The Under-Secretary, the hon. Member for Fylde (Mr. Jack), sent me a letter on 23 July last year which concluded:
"However, in common with other aspects of the new arrangements the Department is keeping the situation under review."
I hope so. I have got nowhere in my correspondence with Departments on behalf of Mr. Murray. His appeal in writing direct to the Prime Minister led only to a rather complacent reply from one of his officials.
This injustice cannot be allowed to stand or to continue. The incoming Labour Government will have to review the position, but principles of justice really should be above politics. That is why I make this final further appeal to the Minister to recognise that, under the circumstances, the 100 per cent. clawback of all those benefits is irrational, unjustifiable and demonstrably

469
unfair. It may be 2.4 am but it is still not too late for the Minister to put things right for Mr. Murray and the other victims of industrial injuries.
2.5 am
The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe): I congratulate the hon. Member for East Lothian (Mr. Home Robertson) on obtaining the Adjournment debate. The issues that he raised give me the opportunity to explain what actually happened in the case of his constituent, Mr. Murray. They also enable me to remind the House why the compensation recovery scheme was introduced, and to outline how it works.
I shall deal first with the background to the scheme. The principle of recovering the value of social security benefits from personal injury compensation awards is not new. The hon. Gentleman quoted the relevant paragraph from the Beveridge report on which we have always based our belief that double provision should not be made from public funds. That principle is the basis of our policy today, and is implemented by section 22 of the Social Security Act 1989.
The Act addressed inconsistencies in the operation of the general principle which had developed since it was first reflected in legislation in the Law Reform (Personal Injuries) Act 1948. Under that Act, compensators—the negligent parties—could reduce compensation by an amount equal to half the benefits specifically covered by the Act—for example, sickness benefit, invalidity benefit and disablement benefit. However, the deduction had to be applied to five years' benefit following the date of the accident, no matter how quickly compensation was settled. That meant that future benefit entitlement often had to be estimated. Clawback was based not merely on what had been paid and was readily verifiable but on what could be paid in the future. The hon. Gentleman may be mistaken therefore when he says that his constituent's benefit was slashed because of the new Act. In fact, under the new Act, because of the time in which the compensation was settled, his constituent may well have been better off. We estimate that 80 per cent. of people affected are no worse off than they would have been under the old Act, and those whose compensation is settled more quickly, and so not subject to clawback based on the future, are better off.
Many benefits, however, were not covered by the 1948 legislation—for example, income support, statutory sick pay, unemployment benefit, mobility allowance and attendance allowance. In the course of awarding damages for injuries, the court therefore considered the question of adjusting the award to reflect the amount of those benefits received from the state. In those cases, courts reduced the compensation by the whole of the benefit so that the injured person was not compensated from two sources. In some cases, the judgment was that no future benefit should be taken into account; in others, that more than five years' entitlement should be deducted. Moreover, and regardless of whether the reduction was made under the 1948 legislation or under later case law, the compensator was permitted to keep the amount deducted. That meant that he did not pay out the full amount for which he was liable. The cost instead fell as an extra burden on the national insurance fund and on the taxpayer.
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The hon. Gentleman said that, as both employer and employee contribute to the national insurance fund, he did not see why there should be any clawback. Contributions to the national insurance fund is not done on the basis of covering negligence, which can be arranged through employer's liability insurance, but goes towards other benefits that Mr. Murray and others would expect to enjoy, such as the retirement pension and benefits that are paid for on the basis of national insurance contributions.
The policy was not dreamed up by a hard-hearted Department of Social Security, as the hon. Gentleman would have us believe. In 1987, a report to Parliament by the Comptroller and Auditor General examined the history of personal injury compensation and the overlap between social security benefits and damages. The Public Accounts Committee considered the report, and concluded that a compensation recovery scheme should be established without delay. The Government agreed to that.
As I said, the scheme was enacted in section 22 of the Social Security Act 1989. It came into operation in September 1990, and applies to compensation awarded after that date for injuries sustained on or after 1 January 1989.
Mr. Home Robertson: The Minister is trying to pass responsibility on to other advisory bodies. Did the PAC report, and the other reports to which she referred, specifically state that 100 per cent. of all benefits, including mobility allowance, should be clawed back in such circumstances?
Miss Widdecombe: There is no question of passing on responsibility. What I am saying is that there was general recognition that the law as it stood was deficient and should be remedied, and that that was what the Act attempted to address.
Mr. Home Robertson: It made matters worse.
Miss Widdecombe: I dispute that; five years' projected benefits are not now clawed back.
Let me now turn to the case of Mr. James Murray. The unfortunate injuries that Mr. Murray sustained at work on 30 January 1989 led him to claim various social security benefits: industrial injuries disablement benefit, reduced earnings allowance, income support, statutory sick pay, invalidity benefit and mobility allowance. He also claimed compensation from British Coal. Settlement of the size of the compensation award was reached in November 1990, and British Coal deducted over £17,000. That was the figure prescribed on the certificate of total benefit issued by the compensation recovery unit.
I should perhaps say in passing that the hon. Gentleman was wrong to suggest that, if criminal injuries compensation had been involved rather than employer's liability compensation, no deductions would have been made, because criminal injuries legislation itself prescribes that deductions in respect of benefit may be made. It should be understood that Mr. Murray would not have been better off if he had been mugged or run down in a car accident, as he has recently claimed in the local press.
Let me emphasise that there is no further claim under the Act against the award in respect of future payments. Invalidity benefit, mobility allowance and disablement benefit continued to be paid to Mr. Murray beyond November 1990. Had the old arrangements still been in

471
place, the compensators could have made deductions on the basis of benefits that Mr. Murray might have received for five years from the date of his accident.
When the compensation recovery scheme was designed, the Government recognised that in some instances victims, compensators or their representatives might disagree with the sum quoted on the certificate of total benefit—or, indeed, might wish to challenge the claim that all the benefits had been paid as a direct result of the accident involved. We therefore ensured that the legislation contained a right first to ask the compensation recovery unit to review its decision, and then to appeal to an independent tribunal.
As the hon. Gentleman said, Mr. Murray exercised his right of appeal. The basis of his submission to the tribunal was that mobility allowance should not have been included in the certificate of total benefit. He argued that the benefit had nothing to do with loss of income or injury at work, or even with being out of work. The appeal was considered by a tribunal in September 1990, and the chairman and members decided unaminously that, because mobility allowance is defined as a relevant benefit in the regulations, the decision of the compensation recovery unit should be upheld.
I should explain to the hon. Gentleman that mobility allowance was included as a relevant benefit because the Government took the view that, if the benefit was awarded as a consequence of the claimant's injuries, it should be recouped. Had there been no injury and no accident, the benefit would not have been paid; but it was the accident that led to the payment, and the benefit is therefore relevant. We believe that to be in line both with Sir William Beveridge's principle and with the previous case law
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stating that attendance and mobility allowances should be deducted in full, as they were to be regarded as available to meet the cost of care resulting from the accident generally.
I have every sympathy with Mr. Murray and his family, and I am saddened by the effects that the injury has had on them. Despite the sad cause, I am glad that the benefit system was able to give him immediate practical help without waiting for the outcome of his claim against his employer. However, I am unable to agree with the hon. Gentleman when he suggests that the legislation should not be permitted to impact in the way that it does. Parliament has accepted that the principles set out by Beveridge 50 years ago should be applied. This means that an injured person should not be compensated twice. I believe that in applying this principle the compensation recovery scheme represents a considerable practical improvement over the old and inconsistent arrangements.
I thank the hon. Gentleman again for raising this case and for giving me the opportunity to explain the position. He said that he got no joy whatsoever from his representations to the Department. Parts of his speech revealed some misunderstanding—other parts of it were based on plain disagreement—of the way that the law works. If he so wishes, I invite the hon. Gentleman to meet me to discuss the principles that underlie the rules and their application. I should have been very willing to do that at any time in the course of his representations to the Department.
Question put and agreed to.
Adjourned accordingly at fifteen minutes past Two o'clock.