Public Expenditure

HC Deb 07 May 1992 vol 207 cc163-265 2.37 pm

The Chief Secretary to the Treasury (Mr. Michael Portillo)

I wish to add my welcome to you, Madam Speaker, on taking up your post in the Chair. When you were elected there was a great deal of discussion about the loneliness of your position and the fact that you can have no friends. As the new Chief Secretary, I feel the strongest empathy for your position. I no longer have any friends. I have already found that colleagues who used to greet me cheerfully in the Corridors now pass by disdainfully on the other side. My ministerial colleagues are firmly pledged to support me in the most rigorous control of public spending and have given me their most firm and unwavering support, but always with the caveat, "Not in my Department, thank you." I believe that that is known appropriately as "NIMDism".

It is unusual during the debate on the Address to have a debate on public expenditure separate from the main debate on the economy, but public spending is an important subject, and I am delighted that it has been chosen. However, I am surprised that it is the Labour party which has chosen that subject. If there is one point on which we can agree, it is that economic policy was the issue on which the Labour party lost the general election. Its decision that economic policy should be the subject of the first debate is brave indeed. That is known as leading with one's chin, and it provides an early opportunity for the architects of Labour's defeat—the right hon. and learned Member for Monklands, East (Mr. Smith) and the hon. Member for Derby, South (Mrs. Beckett)—to remind us how their designer socialism turned out to be the blueprint for losing a record fourth election on the trot.

It is astonishing to sentient beings such as you, Madam Speaker, and myself, that now, with their edifice so evidently collapsed, those same architects are now referred to—apparently with no sense of irony—as the "dream ticket". Labour Members representing Scotland—those who survived the Tory onslaught there—will recall the Tay bridge disaster. William McGonagall—a fine poet with whom you, Madam Speaker, will be familiar—tells us that the Beautiful Railway Bridge of the Silv'ry Tay collapsed with the loss of 90 lives On the last Sabbath day of 1879, Which will be remember'd for a very long time. The architects of the Tay bridge never worked again —yet the designers of Labour's disaster are apparently to be commissioned to prepare the next set of drawings, with dispatch and without much of a competition. How can the Labour party contemplate forgiving the master craftsmen of its defeat? How can it entrust the future to such proven incompetents? The clue is to be found in the term "dream ticket". Shakespeare understood dream tickets. How prophetically he spoke of the need for modern electorates to forgive incompetent shadow Ministers. In "A Midsummer Night's Dream" he gave them the perfect apology: If we shadows have offended, Think but this, and all is mended, That you have but slumber'd here, While these visions did appear. That, indeed, is the dream ticket.

Although I am delighted to be given the opportunity to debate public spending, could it be that the Labour party has chosen that topic to enable each candidate for its leadership and deputy leadership to perform in the House? This will be a sort of beauty parade—if one can describe in such terms an event involving the hon. Member for Kingston upon Hull, East (Mr. Prescott).

Mr. Campbell-Savours

Will the Minister give way?

Mr. Portillo

I shall, even though this is by way of a maiden speech.

Mr. Campbell-Savours

Congratulations.

The Minister is pressing to know why we have chosen a debate on economic affairs. I have here a leaflet—I see that the Minister is being briefed about it by the Chancellor of the Exchequer. Perhaps he will tell us more about this document, which I believe was circulated as an eve-of-poll leaflet in the constituency of the hon. Member for Hendon, South (Mr. Marshall). It describes a tax demand from the Labour party, called "Labour's Tax Bombshell", which is followed by a tax table which was replicated in the tabloid newspapers.

Will the Minister admit today that that tax table is a lie? It was a campaign lie; it was not based on the truth. Those tax tables were never at the heart of Labour policy, and were never used by the shadow Chancellor. They were not produced at our press conference or in the shadow Budget. They were a lie, yet they contributed to the election of a Conservative Government. Will the Minister disown that leaflet today? [Interruption.]

Madam Speaker

Order.

Mr. Portillo

In my wildest dreams, I did not expect to draw so much blood so early in the debate. The hon. Member for Workington (Mr. Campbell-Savours) now tells us that the tax proposals were not central to the Labour party's policies. What an extraordinary thing! I suppose that that is a vote for the hon. Member for Dagenham (Mr. Gould), if not for the hon. Member for Brent, East (Mr. Livingstone).

I will answer the point raised by the hon. Member for Workington. We costed Labour's programme—the programme that the Labour party gave us. Why did we have to cost it? The reason was that the Labour party refused to cost it. If the Labour party had costed it, we might have been able to think about its figures. In the absence, we provided our own, based on Labour's programme.

Mr. Campbell-Savours

rose—

Madam Speaker

Order. The hon. Gentleman has had an intervention. I hope that he will bide his time for moment.

Mr. Portillo

I was drawn to mention the hon. Member for Brent, East. I am sorry that the hon. Gentleman has been excluded from the beauty parade. He has been banned even from reaching the catwalk. That is a great pity in view of his undoubted talent for spotting an election-losing policy at 40 paces. He warned the Labour party time and time again that its policies on taxation matters would lead it to disaster, but like the court fools who were licensed by great monarchs to tell the truth, but not to do it too often or too loudly, the hon. Gentleman told the truth too often and too loudly, and he has been sent packing from Labour's court. He knows why the election was lost, and he knows why it was won.

Our victory underlined the British people's confidence in this Government's capacity to manage the economy. It was an endorsement of our reliability under the pressure of a difficult international environment, with growth in the Group of Seven countries during 1991 at its lowest in a decade, and with the United States, Canada and Germany all having experienced recessions. The key factor in our victory was the voters' fundamental confidence in the Government's control of public finances.

Mr. John Marshall (Hendon, South)

On a point of order, Madam Speaker.

Madam Speaker

Is the hon. Gentleman rising on a point of order?

Mr. Marshall

Yes. The hon. Member for Workington (Mr. —Campbell-Savours) insists on calling— [Interruption.]

Madam Speaker

Order. Is the hon. Member for Hendon, South rising on a point of order?

Mr. Marshall

Yes, I am.

Madam Speaker

Let me hear it.

Mr. Marshall

The hon. Member for Workington says that I won my election on a lie. I did not, and I think that he should withdraw that statement.

Madam Speaker

That is not a point of order for the Chair. I hope that we shall have a most robust and interesting debate, and I hope that it will not be too personalised.

Mr. Portillo

Voters in the election were clearly concerned about how much they would be asked to pay in taxes, on what the money would be spent and what quality of services that money would buy. This party believes that what the Government take from those who earn to spend on their behalf should be as little as possible and should be spent as well as possible. That clarity of vision gave voters a stark choice.

Which party could the voters trust, and which party would lead them out of the recession? Was it to be the party whose solution to the recession was a £7 billion tax increase? Was it to be the party that, faced with a recession in the mid-1970s, recklessly carried on spending? Was it the party that, having increased public spending in the 1970s as a proportion of gross domestic product by some six percentage points in just two years, was forced to raise tax rates to 98p in the pound? Was it the party that, despite that massive increase in taxation, still could not balance the books so that the public sector borrowing requirement peaked at 9= per cent. of GDP—in today's money, almost £60 billion? Was it the party that borrowed and borrowed, and went on borrowing until its credit ran dry and it had to crawl to the International Monetary Fund?

The answer to those almost rhetorical questions is no. Instead, the voters put their trust in a party that had shown over the period of its government that it could reduce public borrowing, end the inexorable rise in public expenditure's share of national income and bring about a massive reduction in personal taxation.

Mr. Dennis Skinner (Bolsover)

On borrowing, the Chief Secretary will know that there was an estimate of roughly a £28 billion public sector borrowing requirement. There is also another suggestion in the hidden agenda that the likely outturn is well over £35 billion. What I want to know from the Chief Secretary, who is trying to lecture the Labour party about borrowing, is when he, in the medium term or otherwise, along with the Chancellor of the Exchequer, will be able to balance the books. We have a right to that answer now. We did not have it in the general election. Tell us now.

Mr. Portillo

On the first point, I have no reason to change our forecast of a £28 billion PSBR for this year. The rest of my speech deals with the broader point, and I hope that the hon. Gentleman will bear with me.

The tax reforms introduced by the Government since 1979 are the envy of Europe. We have cut the basic rate of income tax from 33p to 25p, and the top rate from 83p to 40p. We have introduced a new starting income tax rate of 20p, we have raised basic tax allowances by 27 per cent. in real terms, we have cut the corporation tax rate from 52 per cent. to 33 per cent., which is now a level lower than in any EC or G7 country, and we have reduced the small companies' rate of corporation tax from 42 per cent. to 25 per cent.—a remarkable record.

Despite that reduction, we have been able to increase public spending in priority areas, in particular to ensure that it reaches those people who depend necessarily on the taxpayer. I said just now "despite that reduction in taxation", but in fact it is largely because of that reduction. Opposition Members will not understand that paradox. They are not good at understanding paradoxes; they are good only at creating them—inadvertently. But the lesson of the past 13 years is that, if we reward enterprise and if we give people access to wealth creation, we get more wealth creation. It is as simple as that.

Lower tax rates and a smaller role for the state foster a n environment in which business can flourish, industry can prosper and the economy can grow. It is that growth which can enable and which will enable the Government lo increase public expenditure in key areas, cut direct taxes and reduce borrowing.

Mr. Bruce Grocott (The Wrekin)

Before the Chief Secretary goes entirely into fantasy, when he is talking about the economy growing, will he remind us how the economy grew in the past 12 months?

Mr. Portillo

The hon. Member knows that we have not had growth in the past 12 months, but his scepticism and cynicism are answered by this point. Labour Members also could not understand this point. They could not believe that we would be able to reduce public borrowing from the level at which it had been left to us by the Labour party. They did not understand that we could cut public spending as a proportion of GDP and could reduce taxation. We did all those things during our period in government, and we shall do them again. That is what we did in the 1980s, and that is what we will do in the 1990s.

It is by a determined policy of rolling back the reach and the scope of the state that the Government have created the conditions for a massive increase in wealth creation, with benefits not just for a privileged few but for all, spread widely through our community. Individuals are now free to buy their own council houses. They are free to leave the state earnings-related pension scheme. They are free to take out personal pensions. More than 4.5 million people so far have done just that.

It is now easier to set up and participate in employee share schemes, while the introduction of personal equity plans has reduced the bias against direct share ownership by the people. The return of state businesses to the private sector has not only given employees in those businesses a stake in the businesses in which they work, but has contributed to wider share ownership among the public at large. Those policies are the ones that we pursued successfully in the past decade. They are again at the core of the new Parliament, as the Queen's Speech makes clear.

We had to hear a great deal during the election campaign about how we were not spending enough on this programme or on that other pet project of the Opposition. No doubt, undaunted by the electorate's judgment at the election, the hon. Member for Derby, South will repeat the same things this fine spring afternoon.

You will not be surprised to hear from me, Madam Speaker, that I do not believe that one can judge the standard of services by the amount of taxpayers' money that we put into them. As Mandy Rice-Davies might have said, a Chief Secretary would say that, wouldn't he? But even if we use that outdated measure favoured by Labour Governments in the 1960s and 1970s and still favoured by the hon. Member for Derby, South today, it is clear that we have delivered large increases in resources to priority areas and that we were able to do that while cutting direct taxes and cutting public borrowing.

Since 1978–79, spending on the health service in England has increased by more than 54 per cent. Spending on law and order has doubled. Capital spending per pupil in the nation's schools fell by 60 per cent. under Labour. Since 1978–79, when, you will recall, Madam Speaker, we came to power, it has risen by 13 per cent.

Central Government investment spending on health and social services fell by 26 per cent. under Labour, but it has risen by 53 per cent. under this Government. Investment in vital infrastructure such as national roads and transport fell by almost 40 per cent. under the Labour Government, and is up by 63 per cent. under this Government. There have been substantial increases in the investment in British Rail and London Transport. Investment by those two this year is set to be more than £2.5 billion.

The reason why I have drawn your attention to these highly significant statistics, Madam Speaker, is to demonstrate that the Chief Secretary is not necessarily against public spending. I am against excessive public spending, poor value for money and public spending on the wrong things. In fairness to my colleagues, I should say that that has generally given Chief Secretaries plenty of scope, as my distinguished predecessor found when he had the job.

The essence of good government is to decide from time to time what our priorities are and to ensure that the money is available for those priorities and for those people most in need. That requires the Government to keep the firmest grip over the total of public spending. Aneurin Bevan once said that the language of priorities was the religion of socialism. But today the language of priorities is the monopoly of Conservatism.

Mr. Nigel Spearing (Newham, South)

I am grateful to the Minister for giving way to answer a question which he is uniquely fitted to answer. In determining the right level of expenditure for local government, his Government adopted standard spending assessments. Does he agree that more than 50 councils—both Conservative and Labour-controlled—received less money for their services than even the Government designated because of the shortfall in their SSA for capital charges of interest? For instance, Newham had £10 million less than it should have had because £18 million was allocated by the Government for interest charges, but it had to pay £28 million of interest. All those councils had to top-slice services. Was that deliberate or was it a mistake?

Mr. Portillo

I am grateful to the hon. Gentleman for raising the point about interest. It simply shows that a policy of borrowing does not come freely. The Government do not reward local authorities for the level of borrowing that they undertake. The Government compensate for what we believe to be an appropriate level of borrowing. That is why authorities which borrow excessively will have to bear the cost themselves. It is absolutely right that they should do so.

Value for money must play its part. When my right hon. Friend the Prime Minister was Chief Secretary to the Treasury, he summarised the need to focus on efficiency when he said: Value for money is not an arcane fetish of Treasury Ministers … It is an absolute obligation that public sector managers owe to the taxpayer. Value for money has been central to our reforms, in particular in health and education.

Figures for the first six months of our national health service reforms suggest that an extra 250,000 patients have been treated this year. Since 1978–79, there are 16,000 more doctors and dentists and 51,000 more nurses and midwives. In higher education, the number of students has risen from one in eight in 1979 to one in four in the coming year. Efficiency scrutinies, market testing and compulsory competitive tendering are saving us hundreds of millions of pounds a year in central Government, local government and the national health service.

The Queen's Speech underlines the priority that the Government attach to improving the quality of public services. The citizens charter, under the excellent stewardship of my right hon. Friend the Chancellor of the Duchy of Lancaster, will be at the centre of decision-making and steps will be taken to apply its principles throughout the public services, promoting the challenge of competition and putting the customer first.

At the heart of the citizens charter is the principle that what the state does it must do well. The charter programme is about finding better ways of converting the money that can be afforded into even better services. That will be a central component of public expenditure policy in the years ahead. However, the citizens charter is designed to complement rather than substitute for the Government's other fiscal policy objectives. Those objectives are unchanged, as the Queen's Speech makes clear.

Our determination to control public spending and conduct the business of Government prudently does not simply arise from our desire for efficient government and sound economic policy. Vital though those both are, there is, for us, a profound question of principle. Unlike the Opposition, we do not believe in the inexorable growth of the reach and size of the state. Nor do we believe that the state can and should try to solve all our problems.

Unlike the Opposition, we believe in rolling back the state and returning to the individual as much autonomy over his or her life as possible. For that reason, it is vital to keep the firmest control of that proportion of the national wealth that is taken from the people in taxation and spent on their behalf.

The Queen's Speech commits us to reducing the share of national income taken by the state, as it commits us to balancing the budget over the medium term. We shall set policy in the medium term to ensure that the United Kingdom meets the convergence criteria set out in the Maastricht treaty, and we shall reduce taxes when it is prudent to do so.

I do not claim that attaining those objectives will be easy, but attain them we must. Otherwise, we shall leave future generations with an unacceptable legacy. A sustained rise in borrowing would obviously imply higher debt interest payments in years to come.

The right hon. and learned Member for Monklands, East has stuck doggedly to his shadow Budget against criticism from far and wide—nay, from as far afield as Dagenham. The hon. Member for Derby, South has recently told us of her continued belief in clause 4, her attachment to the trade unions, her affiliation to CND and her lingering fondness for the right hon. Member for Chesterfield (Mr. Benn) and, indeed, for Mr. Arthur Scargill. The hon. Lady believes that a combination of leader and deputy leader of her party can form what she calls a "creative partnership".

That creative partnership on offer today is between the economic policies that lost Labour the 1992 election and the broader policies that lost Labour the elections of 1983 and 1987. That may be described as a dream. It is certainly the Labour party sleepwalking into the future. If it is a dream ticket, it is a dream come true not for the Labour party but for the Conservative party.

While the Labour party dreams, we shall work. Our policy remains to balance the budget over the medium term and to reduce taxation when it is prudent to do so. The policy is tough and is beyond the comprehension of an Opposition who do not understand how the economy works, nor the need to make choices. But it is a less daunting task than we faced in the 1980s, when we inherited high rates of taxation and a deficit in excess of today's. During the 1980s, we cut those taxes and we eliminated that deficit. Last month, we were re-elected because the British people know that the policies that succeeded in the 1980s will succeed again in the 1990s.

3.5 pm

Mrs. Margaret Beckett (Derby, South)

May I join in the congratulations to you, Madam Speaker? I am delighted to see you in your place.

I also congratulate the Chief Secretary to the Treasury on his promotion to the Cabinet. I am not entirely surely whether I should congratulate him on the specific post that he occupies, for two reasons. The first is the underlying situation that he has inherited—the state of the public finances, about which I propose to say a little more than he did. The second reason is the framework within which the right hon. Gentleman is expected to resolve those problems, about which I shall again say a little more than he did.

In case the right hon. Gentleman thought that a change of personnel might deflect our approach to the Government's policy, it is only fair to warn him that that is not so. The present Prime Minister, when he was Chancellor, speedily dissociated himself from targets set by his predecessor. When asked about the phrase that inflation should be the judge and jury of performance, he said, "I never said that." That was a wise precaution, as his policies were just about to shove inflation to almost 11 per cent. It may be that one reason for the present Chief Secretary's appointment is that he will be able to make a similar claim, and state, "I did not say that," about a number of matters that his predecessor has recently said.

The policy stance that the right hon. Gentleman must defend and implement on this occasion was explicitly stated and reinforced not only by his predecessor, the dear departed Chief Secretary to the Treasury, now the Secretary of State for National Heritage, but by the Chancellor and the Prime Minister that the present Chief Secretary to the Treasury still serves. I was delighted to hear the present Chief Secretary reiterate his position today.

The other possibility that we must entertain is that it is partly the Chief Secretary's own record that commends itself to the Prime Minister as thoroughly as it alarms me. The right hon. Gentleman came into government at the Department of Social Security, where he showed considerable competence and absolutely no conscience about presiding over a steady stream of cuts in the standards of living of the poorest people in our society. Those cuts were inflicted at the behest of the then Chief Secretary, now our caring Prime Minister. The right hon. Gentleman had a brief spell of relaxation at the Department of Transport and then resurfaced as the handler of the poll tax, which I understand he still defends.

I listened with fascination today when the right hon. Gentleman spoke about his views as Chief Secretary. He said—I hope that I repeat him correctly—that he was not against public spending, but against excessive public spending where it is poor value for money and spending on wrong things. I cannot think of a worse characteristic for a Chief Secretary than to champion the poll tax, as it suggests that he is willing—apart from anything else—to see billions of pounds of public money wasted on ideological folly. We look forward, not only with interest but with some trepidation, to the right hon. Gentleman's approach to the problems that he inherits.

In this first day of debate on the Queen's Speech, it seems right to examine the position of public expenditure due to the claims that the Government made during the election which, as the Chief Secretary fairly said, were at the heart of their statements about their record, the promises that they made for the future and the basis on which they were re-elected. The light that the Queen's Speech casts on those promises is also worth examining in this debate.

The first of the right hon. Gentleman's problems is the recession-worsened state of public finances, both the overall picture, and the waste, mismanagement and misdirection that that picture conceals. Let us briefly dispose of the myth of world recession, which, back in 1990 to 1991, was supposed to have ambushed an innocent Government from behind. It was, to be blunt, a load of baloney. Britain's recession was begat in Downing street and fed and nurtured in all those Whitehall Departments where Ministers insisted on price increases for electricity, for water, for rents, for fares—until, as inflation headed inexorably upwards, so too did interest rates: to 15 per cent., where they stayed and stayed and stayed, seeing off in the process thousands of our fellow citizens, who lost their businesses and homes as a result.

Sadly for our national interest, the fate of the boy who kept crying wolf has overtaken the Government—a wolf in the shape if not of a world recession, then certainly of serious problems in many of the world's economies. That is likely to cause increased problems for the Government, who hoped that someone else's growth might have helped to pull us forward out of our home-grown recession. As it is, we are in somewhat uncharted waters. After the elections of 1983 and 1987, the Government let inflation and interest rates rip and erode the promises that they had made on public spending. Inflation doubled within two years of each of those elections as public spending was cut or promises were not fulfilled; then interest rates rose to squeeze out inflation.

Membership of the exchange rate mechanism and the path of convergence to monetary union will make this course much more difficult to follow n this occasion, yet the Government must deal with the borrowing requirement of £28 billion which they predict for this year—and rising—against the background of a continued balance of payments deficit, which, without precedent, has persisted even in the course of the worst recession since the 1930s. Both the borrowing requirement and the balance of payments deficit are the consequence of underlying weakness in our economy, and that weakness, like the recession itself, is a product of this Government's mismanagement of the economy.

In both the recessions that the Government have induced, we have lost manufacturing capacity—20 per cent. of it in the first one alone. So we can no longer satisfy the demand for goods at home by the sale of goods produced at home—hence our balance of payments problems. And the startling and abrupt turnround in our public finances—from surplus quickly to balance and then in a year to a £14 billion deficit and a predicted doubling to a £28 billion deficit this year—is a result not of Government response to the recession, for which a case could perhaps be made, but almost wholly of the impact of the recession.

I noticed, incidentally, that the Chief Secretary referred to the borrowing requirement of today as if it were better than the borrowing requirement of the last Labour Government. [HoN. MEMBERS: "It is."] Conservative Members, not unusually, are wrong. If we take borrowing requirements excluding privatisation receipts, the fair basis of comparison—(Interruption.] That is the only sound basis of comparison, as the former Prime Minister who talked about selling off the family silver reminded the Conservative party. On this comparable basis, the borrowing requirement in 1978–79 was 5.4 per cent. of GDP. Next year, 1992–93, it is set to be 5.8 per cent. of GDP. So much for the prudence of the Conservative party.

Mr. Tim Smith (Beaconsfield)

The hon. Lady has been a little selective in her use of statistics. Perhaps she will remind us of the figures for public sector borrowing in 1975–76. Were they not 9 per cent. of GDP then, and would not that be £60 billion at today's prices?

Mrs. Beckett

The hon. Gentleman is referring to the centre of the lifespan of the last Labour Government, and I cannot recall whether his figure is right for 1975–76 or for the following year—[Interruption.] There is no need for Conservative Members to get so excited. I am making a minor point, and I cannot remember the year to which the figures apply. Unlike Conservative Members, I believe in using accurate statistics. I cannot recall from memory whether the hon. Gentleman's figure refers to 1975–76 or to 1976–77. That is the only point I am making, but I shall return to the hon. Gentleman's observation, such as it was, later.

I remind the hon. Member for Beaconsfield (Mr. Smith) that the last Labour Government left a borrowing requirement lower than the one that they inherited from the previous Conservative Government under the premiership of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), and in the course of the lifetime of that Labour Government they were hit by a fivefold increase in the price of oil. Nothing comparable has happened to this Government. The only problems that they have had were created by their own incompetence, as the hon. Gentleman is aware, and they still have a bigger borrowing requirement than the one that we left, which was smaller than the one that we inherited.

Mr. John Marshall

Will the hon. Lady confirm that, over the lifetime of the last Labour Government, the average public sector borrowing requirement was 6–5 per cent. of GDP, which is higher than that proposed for the current year?

Mrs. Beckett

We inherited the consequences of the Barber boom. The hon. Gentleman should read the speeches by Sir Geoffrey Howe and by Mrs. Thatcher, both of whom are no longer Members. They both acknowledged that we inherited the inflationary and other consequences of the Barber boom. Perhaps the hon. Gentleman is not well enough informed.

As I have said, we left a lower borrowing requirement than the one that we inherited. We were hit by a recession caused not by our actions but by world economic conditions. The Government have a higher borrowing requirement than the one that they inherited from us.

The impact of the recession is felt in reduced tax receipts from every source—income tax, corporation tax and indirect taxes—and in increased expenditure on support, whether for the unemployed or for the other consequences of recession such as increased deficits and the decreased activity of organisations such as British Rail. The latest figures suggest that every unemployed person costs about £8,500 in lost Exchequer revenues as well as direct costs. As unemployment is 1.5 million higher than the figure that we left in 1979, that cost alone is about £14 billion. It appears that, far from seeking to alleviate, to counter, the impact of the recession, the Government are merely absorbing its impact, which is all the greater because of their past incompetence.

The Chief Secretary spoke about the overall path of the economy under the Government's stewardship. There, the picture is even more alarming. The figures for the Government's programme contain a cumulative total of unrepeatable revenues of some £205 billion in 1991–92 figures. The Government received £109 billion of revenue from North sea oil and gas, £52 billion in privatisation receipts, £31 billion from council house sales, £8 billion from other local government sales and £5 billion from other central Government sales.

None of those asset sales can be repeated, and they have all helped to make the Government's public expenditure programme rather better than it might otherwise have been. Those huge sums have made up for losses due to our appalling growth record, which has averaged 1.7 per cent. over the Government's years in office compared with the historic trend rate of growth of 2.5 per cent., and that has cost us about £50 billion in lost output over those years.

Before and during the election, the Government claimed that they had delivered increased public expenditure, reduced taxes and a balanced budget. The Chief Secretary claimed that again in his speech. He also repeated the Government's claim that they would do all that again if they were re-elected. As I have said, during the Government's term of office, growth increased by an average of 1.7 per cent. a year. The exclusion of privatisation receipts, which is the only way to measure how the Government have used the resources available to them, shows that public expenditure has grown by an average of 1.3 per cent. per year. There has been a steady squeeze on public sector funds, and the Gracious Speech and the speech by the Chief Secretary confirm that that squeeze will be continued. The Government have expressed the intention to spend less than the country can afford.

Mr. Ian Taylor (Esher)

The hon. Lady's lack of credibility on public expenditure is not only that she would have given up all the benefits to the Exchequer from further privatisation proceeds, but that she would also have given up the access to private capital that those companies now have to spend. For example, in the water industry that figure is £30 billion, which is equivalent to the whole of the public sector borrowing requirement. What would the hon. Lady have done about that, having closed off the access to private capital?

Mrs. Beckett

The hon. Gentleman talks about our giving up all the benefits of privatisation revenues. I am sure that at least he is well aware that some privatisation revenues are still due to come in. They will come in and accrue to—

Mr. Taylor

There was a £9 billion hole in the Labour party Budget.

Mrs. Beckett

I assure the hon. Gentleman that he should not go by the figures that have been invented, as the Chief Secretary fairly admitted today, by the Conservative party. Apart from the fact that it is not true that we did not continue to receive some revenues from the privatisations that had already been undertaken, the right hon. Gentleman talked about access to private capital. If he had spent any time studying what the Labour party said as opposed to that which was said by the Conservative party, he would be well aware of our intention to mobilise private capital to help to implement many of the projects that we believed, and still believe, would be worth while.

The consequence of the policy of squeezing public expenditure to less than the country could afford can be seen in the autumn statement in supplement table 8.3. The table shows clearly—the Chief Secretary referred to the levels of asset sales and of investment in the public sect or —that, even if we take into account all asset sales, public sector investment in 1991–92 was lower in real terms than in 1978–79. That is despite the fact that even slow growth has given us an economy that is 22.6 per cent. larger.

That is the record of which the right hon. Gentleman boasted. The consequences are evident from figures such as those that are set out in the autumn statement and from the state of housing, schools, hospitals and transport. Nothing in what the Chief Secretary said this afternoon shows how this can be remedied and services improved, when the Gracious Speech and his speech suggest that the squeeze will continue.

The Government's response so far has been to mount diversions—for example, to promote opt-out schools and hospitals. They have introduced changes in organisation instead of increased funds, but in their earlier stages accompanied by the increased funds that the Government said were not needed for the sector overall to ease the path of the changes. How can that increased funding go on being provided when more and more schools and hospitals opt out and when public spending is to continue being squeezed? It is being squeezed not because the funds are necessary for some other reason but, as the Chancellor of the Exchequer told the Select Committee when he was Chief Secretary, to allow room for further cuts in taxes.

I know that the Secretary of State for Social Security is due to reply on behalf of the Government this evening, and I congratulate the right hon. Gentleman on his new post. Billions of pounds of his budget have been wasted in a programme to which the Chief Secretary referred. It is designed to persuade people to take the risk of taking out personal pensions, to accept the risk of taking all the responsibility for their own retirement income on their own shoulders. Apart from the enormous risk, there is less value for money for the individual because of the higher charges and costs that have to be paid.

In addition, as the Audit Commission has stated, there is great cost to the Exchequer. That cost arises to some degree because at present there is still a fallback or a bolthole, and that is returning to the state scheme. I hope that the right hon. Member for St. Albans (Mr. Lilley), in his new capacity of Secretary of State for Social Security, will give the assurance sought on so many occasions from his predecessor, which is that the bolthole will not be closed. I hope also that the right hon. Gentleman will say that those who are tempted by Government propaganda and Government bribes to take out what the Government call a "pension of their own" will not be left high and dry on their own without the fallback of the Government scheme when that becomes in their personal interest.

One of the effects of the squeeze on public finances has been the greater and greater squeeze on the poor. I refer to some of the missing millions who are not mentioned in the Queen's Speech and whose numbers will be greatly swelled in the decades ahead unless the Secretary of State for Social Security gives the assurance that I have sought. Millions of unemployed people saw their income cut by the social security changes of 1988. Their freedom, choice and opportunity—all words that are used in the Gracious Speech and in the Prime Minister's description of it—are still being reduced under a Government who claim that freedom of choice is their philosophy.

Millions of the homeless and millions of those who are carers are likely to find their task more difficult under the Government's public spending programme. So, too, are the rising numbers of 16 to 18-year-olds and women who are seeking a place in the labour market. Inadequate public services will make their task more difficult.

The social security system over which the right hon. Gentleman will preside does not reduce dependence; it fossilises it. It is geared still to a society of 40 years ago of a man in full-time employment with the same firm for more than 40 years, with a dependant non-working wife and children with easy access to jobs and training. That is the pattern that our social insurance scheme reflects, and it fits neither the work pattern nor the family pattern of today. With the Government's desperation to cut costs at all costs, the present scheme traps those whom it should sustain with dignity when there is no choice or support towards reduced dependence when choice appears.

Conservative Members are often heard to suggest that there are individual alternatives to a social insurance scheme, which pool costs and which offer cover to all. I shall remind them of a case that received only a small amount of publicity just before the general election, when a young woman took the advice of Conservative Members. Fearing that she might lose her job, which was only a temporary contract, she took out private insurance to sustain her mortgage for at least a year while she found a suitable job with pay rates that would enable her to keep her home. She wrote of her shock on discovering that unemployment benefit regulations, changed by the Government, meant that benefit depended on her willingness to take any job after three months, no matter what the financial consequences. That condemned her to lose her home, because the rates of pay she was required to accept would not enable her to meet her mortgage bills.

That woman took the advice of Conservative Members. She did precisely what they had urged on those faced with the danger of repossession. What they offered in advice with one hand, they took away with the other through small-minded social security cuts. They did that because they said that it was not work that was lacking for the unemployed, but the incentive to take any work—no matter how damaging to long-term unemployment prospects or immediate personal circumstances. So much for choice. The effect on that woman's life and the lives of many others in similar circumstances is a consequence of the Government's ideological dislike of any social insurance scheme, combined with the cost pressures imposed by their economic incompetence.

When we consider any aspect of the Government's expenditure plans, we must feel considerable doubt about their promise to improve public services. Their commitments show promised increases of £19 billion in general Government expenditure over the years of the public expenditure plan. They show too—again the Chief Secretary mentioned it today—a reduction in the public sector borrowing requirement, over the years of the plan, to £6 billion by 1996. That requires a turnround of a further £22 billion, so that, just in the years of the plan, total resources of almost £42 billion at 1992–93 prices will be required, without allowing room for any tax cuts.

The revenue projections for the years of the plan suggest available increases of just £21 billion. The hon. Member for Esher (Mr. Taylor) asked me about a potential hole in the Labour party's plans. Perhaps he would care to say something about the hole in the Government's published plans—£20 billion at the very least.

Sir Thomas Arnold (Hazel Grove)

rose—

Mrs. Beckett

This is a courageous man.

Sir Thomas Arnold

The hon. Lady was a Minister in the last Labour Government. Does she believe that we should be spending our way out of recession?

Mrs. Beckett

According to the Government, they are spending their way out of recession, although I would argue that they are simply relying on the impact of recession on public finances. As the hon. Gentleman may recall, we have proposed a recovery package to help this country out of recession. We have proposed measures, which I shall discuss later, for health and education, which we believe would help to alleviate the impact of the recession. That, however, is not the policy of the hon. Gentleman's Government.

I repeat that the Government's projections suggest that they have a hole in their budget of £20 billion. In fact, measured against the claims that they make for policy, the hole is larger than £20 billion, because, as the former Chief Secretary helpfully explained to the Treasury and Civil Service Select Committee, on the Government's own definition balancing the budget does not mean merely removing the borrowing requirement. He made it plain that the Government would require to do more than that if they were to justify their claim to balance the budget. In his evidence to the Select Committee on 25 November 1991, he said: The fact is that nothing has been done in this public expenditure round"— the one that we are discussing now— which makes it impossible to return to a balance, indeed throw up a surplus, at the height of the next cycle. He went on further in his evidence to make it plain that it was the Government's intention, and part of their definition of balancing the budget, to build up a surplus. Therefore, on their own definition, the Government have more than £20 billion to find if they are to balance the budget.

Mr. Campbell-Savours

They might want to privatise the House of Commons.

Mrs. Beckett

I do not think that anyone would pay much for that.

The third clear objective was restated in the Queen's Speech—further cuts in taxes. It is a myth that in the past cuts in income tax resulted in a lower tax charge for the majority of families. I was interested to hear the Chief Secretary repeating again today the argument put from the Conservative Benches which, taken to its logical conclusion, would imply that, if we did not charge any income tax at all, our revenues would be at an all-time peak. However, I do not think that the Government push the argument that far.

The Chief Secretary referred to the Opposition's lack of understanding, as he put it in his courteous way—that we did not know that reducing tax rates resulted in increased revenues. Perhaps I should gently point out to the Chief Secretary that a substantial body of evidence suggests that, far from it being reduced tax rates that produce the increased revenues, it is the enormous increases that people on the topmost salaries have paid themselves over the years, so that, even with a reduced tax take, they are paying larger contributions. That has also been sustained during the recession.

But for ordinary families, for the majority of families, the cuts in income tax under the Government were almost balanced by increases in national insurance contributions, and were wiped out totally by increases in other taxes—increases in the rate of VAT, the 13 new areas of spending to which VAT was applied and the poll tax, to which I have already referred.

But that, we know, is all behind us. During and before the election campaign, a change of policy was clearly identified. During and before the election, the then Chief Secretary, the Chancellor and the Prime Minister himself were as clear as crystal on the point, and it is important to put it on the record in the House. I remind the House what they promised. They promised no increase in VAT rates, no spread of VAT to areas where it is not now charged and no other new taxes or charges. We mentioned the possibility of school fees or tutorial fees for students, fees for visits to the general practitioner, means-testing of the basic state pension or child benefit. All were denied in terms by the representatives of the Conservative party. They were explicit that none of those developments would occur.

The former Chief Secretary and the Chancellor told us clearly that there was no need at all for any such measures. They said that their figures were all in the public domain —all in the autumn statement—that they all stood up to scrutiny and that their promises would all be delivered.

The Labour party made a number of proposals for tax and spending changes. Those which arise from our tax changes are clearly beyond the reach of what the Government can offer. We offered the restoration of the cuts in the training budget still being undertaken in a recession; a new scheme for the unemployed and for skills training, particularly for women; support through the tax system for manufacturing industry and for research and development for which industry is calling; and the phased release of capital receipts for local authorities, not just to stimulate construction but to provide homes and to save money on bed and breakfast costs.

The Labour party called for a fresh look at the possibility of leasing rolling stock so that British Rail can provide decent trains as well as an improved service and so that Britain's manufacturing industry can survive and prosper. We offered new resources for health and education services. Those were all dependent on our tax plans, and were all a stimulus to counter the recession.

Some of the changes that we proposed are still within the Government's grasp. The money for more city technology colleges could still go to fund nursery places, which would give a better start to far more children and the chance of greater independence to many women.

The subsidies for private health insurance could still be switched to help cancer victims. The poll tax could still be abolished. So could the 20 per cent. contribution, and student loans. All that would save money, and I commend those actions to the Chief Secretary.

As the Government may be looking to make savings apart from the overall figures that I gave, the Chief Secretary may recall an article in The Guardian, later backed by independent commentators, suggesting a deficit on current spending for the first time since records began. For that reason alone, the Chief Secretary should forget all the nonsense that the Conservatives churned out during the general election campaign, to the effect that Labour had nothing to offer, and look again at the many sensible proposals that we made for redirecting the public expenditure programme.

There is no doubt that at the heart of the Government's re-election campaign were three clear and simple pledges, which the Chief Secretary repeated today, and which are contained in the Gracious Speech. As to the promise to maintain and to improve public services, the autumn statement, judging from the words of the former Chief Secretary, is the nearest thing to be written on tablets of stone since Moses came down from Mount Sinai. We are assured that there will be no cuts in the public spending programme that was put before the electorate during the general election, and that what was offered will not be eroded—as was the case after the last general election.

The other two promises were to balance the budget—not just reduce borrowing but provide new services—and to make cuts in income tax while not increasing other taxes or inventing new taxes.

In the election campaign, the Conservatives said that they could do it all. The autumn statement supplement offered the Government's credentials and bona fides. That was the platform on which they fought the election, and on which victory was secured.

The Chief Secretary accused us today of leading with our chins in this debate, and said that the autumn statement and the figures that it contains, along with the election result, were an endorsement of the Government's reliability. There is no doubt that the public accepted the Government's assurances that they could deliver better public services, a balanced budget, tax cuts, and no increased or new taxes. The Conservatives are not the first people in recent years to promise all those things to an electorate. Now they must deliver.

3.37 pm

Mr. Tim Smith (Beaconsfield)

I congratulate my right hon. Friend the Chief Secretary to the Treasury on his appointment. It is notable that that post was established by Harold Wilson as recently as 1964, reflecting the growth in public spending since the war. In 1964, public spending accounted for 35 per cent. of gross domestic product. That is the target at which we should aim.

I was pleased to hear my right hon. Friend's remarks about the importance of containing public expenditure and of obtaining value for money. I wish him well in the forthcoming public spending round, which we all know will not be an easy one. I congratulate also my hon. Friends the Financial Secretary and the Economic Secretary on their appointments. They both bring special expertise to the Treasury. We now have in place an extremely competent Treasury team. I wish all of them well in managing the economy over the next few years.

We on the Conservative Benches attach great important to that aspect, as do the electorate—as was seen in the result of the recent general election. The Government's competence to manage the economy was the principal factor that led people to vote Conservative in such large numbers on 9 April. Listening to the hon. Member for Derby, South (Mrs. Beckett), I was struck by how few lessons she appears to have learnt from the election result. I wonder whether she actually listened to what anyone said to her during the election campaign.

Is it not extraordinary that the Labour party should try to lecture us on the importance of fiscal rectitude? Of course we all understand the importance of containing the public sector borrowing requirement; of course we all think that £28 billion, or £32 billion, is too high a figure for next year—although it can be justified at a time of deep recession. It is preposterous, however, that the hon. Lady of all people, given her record, should lecture us on the importance of such matters.

I am always struck by the way in which people assume that whatever is happening at the present time will continue apace for ever and a day. After all, only four years ago we had a public sector debt repayment of £15 billion, and at the time some people told us—perhaps rather too enthusiastically and with too much optimism —that, if we carried on in the same way, we would be able to repay the whole of the national debt by the year 2000. I never supposed that that would happen; but, on the other hand, I do not suppose that we shall have a public sector borrowing requirement this size for every year between now and the year 2000.

We all know that the public sector borrowing requirement is the difference between two very large figures, and we all know that public spending and the income from revenue are directly affected by the state of the economy. Although we want the figure to be reduced as quickly as possible, we all understand why we have a PSBR of this size at present.

The hon. Lady, of course, said nothing about Labour's manifesto, with its long list of public spending commitments for which she was responsible. I am sorry that she left the Chamber so quickly—

Madam Speaker

Order. I ought to inform the hon. Gentleman and the House that the hon. Member for Derby, South (Mrs. Beckett) has apologised to me, and let the hon. Gentleman know that he will also receive an apology. The hon. Lady has a long-standing engagement.

Mr. Smith

I am most grateful to you, Madam Speaker. I would have expected nothing else from the hon. Member for Derby, South, who is always most courteous in regard to such matters.

The hon. Lady was responsible for the many public spending pledges in the Labour manifesto. The people asked, understandably, where the money would come from to pay for all those pledges. If Labour Members cannot answer that question—and it has never been answered—what is the point of putting all those pledges into their manifesto?

I am also struck by the fact that, although people tell opinion pollsters that they are prepared to pay extra taxes to fund extra public spending, that is never entirely borne out in the results on polling day. I suspect that what most people want—it is an entirely understandable aspiration —are lower taxes and higher public spending. Only the present Government, on the back of economic growth throughout the 1980s, actually delivered that and only the present Government are capable of delivering it in the future.

Ms. Hilary Armstrong (Durham, North-West)

I am very interested in what the hon. Gentleman has said. Can he now, on behalf of his party, commit the Government to meeting all their public expenditure pledges and reducing taxes?

Mr. Smith

The Government's position is set out very clearly in the "Autumn Statement", covering the next three years. The hon. Lady does not need to ask me that question; she will be able to see the position for herself if she obtains a copy of the "Autumn Statement" from the Vote Office. My personal view is that something that has been successfully achieved during the 1980s can be achieved again.

Ms. Armstrong

It has not been achieved.

Mr. Smith

The hon. Lady says that it has never been achieved, but income tax was cut from 30 per cent. to 25 per cent. at a time when public expenditure was rising and the public sector borrowing requirement was falling. If it has been done before, it can be done again, and it will be done again when the economy starts to recover.

Mr. Skinner

When will that happen?

Mr. Smith

It will happen during the 1990s. The hon. Gentleman knows very well that no one can be sure precisely when such things will happen, but I am confident that it will come about.

I welcome the commitment in the Queen's Speech to sound finance and budgetary discipline in another context. The paragraph about the European Community states that, as part of the United Kingdom's presidency of the Council, the Government will promote sound finance and budgetary discipline. I believe that the need for that is urgent and that we are well placed to do it.

On many occasions, the European Community Court of Auditors has produced reports that are highly critical of spending in the Community, particularly on the common agricultural policy. I hope that the Government will take measures to see that we have effective mechanisms, just as we have in the House with Select Committees, including the Public Accounts Committee, to ensure that public spending in the Community means that taxpayers throughout the Community get value for money.

I welcome the statement in the paragraph dealing with the overseas aid programme which says that the Government will continue to press creditor countries for a further reduction in the official debt of the poorest countries. My right hon. Friend the Prime Minister is to be congratulated on the initiative that he has already taken. The Government have been leading the way. I hope that, over the coming months, it will be possible for the Government to persuade other western countries to cancel entirely the official debt of the poorest and least developed countries. It is not just a moral issue; it involves our economic interest as well as that of the poorest people in those countries. I attach the greatest importance to that commitment.

I welcome the strong statement in the Queen's Speech—it may be the first for some time—in which there is an explicit reference to price stability. We are told that the Government will pursue, within the framework of the exchange rate mechanism, firm financial policies designed to achieve price stability. For too long we have been satisfied with low inflation. It is good news that today we have low inflation and that inflation is containable. However, it is nearly a quarter of a century since we had one year in which the United Kingdom had stable prices. I am glad that the Government have committed themselves firmly to the objective of squeezing inflation out of the system altogether. It is inflation that destroys jobs, undermines savings and business confidence and negates economic growth.

Mr. Mark Wolfson (Sevenoaks)

In support of his point, does my hon. Friend agree that within the ERM our European competitors—in this context, I mean competitors rather than partners—are likely to be more successful in containing inflation than they have been in the past and that, to maintain our competitive position and jobs here, it is even more important than ever that we squeeze inflation out of the system?

Mr. Smith

I agree with my hon. Friend. That is borne out by recent experience in Italy and, particularly in France since they joined the ERM. Although the experience has been painful, it has been worth while. We have seen inflation across the Community fall as a result of ERM policies.

United Kingdom membership of the ERM is only 20 months old and the benefits of that membership are now showing through strongly. One of the most underrated benefits is the fact that it brings about exchange rate stability within the Community. It means that people who trade within the Community—after all, the majority of our trade is now with other Community countries—are able to forecast the exchange rate in currency transactions with a degree of certainty that did not exist before. That is good news for British industry and British exporters.

The key point is that the ERM provides an external discipline that ensures that we bring inflation down and keep it down. We have brought down inflation and underlying inflation—output prices are at record lows—and as a result, when we believe that it is prudent to do so, we can bring down interest rates. I welcome the fact that my right hon. Friend the Chancellor felt able to make a further cut of 0.5 per cent. on Monday. We have now seen interest rates fall by 5 per cent. since their peak in October 1990 when, not coincidentally, we joined the ERM. That is good news for us. Also, I hope that when Treasury Ministers feel that it is appropriate, we will be able to move to the narrow bands of the ERM. Perhaps that will be possible when sterling has traded for a reasonable time within those bands. That will reinforce our commitment to the ERM and facilitate the further lowering of interest rates.

The Queen's Speech also refers to the convergence criteria in the Maastricht agreement. I welcome the Government's commitment in the medium term to complying with the convergence criteria, which relate principally to inflation, interest rates and fiscal policy. Because of the Government's prudent handling of the economy, there should be no difficulty in meeting those criteria. For example, the criterion on official debt stipulates that such debt must be no more than 60 per cent. of GDP in total. The United Kingdom level is far below that, whereas that of, say, Italy, is far above it.

I welcome the fact—although it is largely attributable to the Labour party leadership election—that we are to have a debate on public expenditure at this stage in the parliamentary year. That debate normally takes place after the publication of the White Paper. Today we have an opportunity to comment on public expenditure in the next spending round, which is about to start.

I suspect that my right hon. Friend the Chief Secretary will start his discussions, especially with the Department Of the Environment, quite soon. All the discussions on the next public spending round will start soon. In this debate we shall be able to express our views on public spending in 1993–94.

In that context, the first thing to say is that it is clearly vital to contain the overall level of public spending. That is the easy part. We can all say that, and then we go to my right hon. Friend and tell him which part of public spending should be increased, because we have a special interest in that subject. I do not suppose that my right hon. Friend receives very many recommendations on which areas of public spending could be reduced.

The first stage in the process is the announcement made at the end of July on local authority spending—the local authority settlement for 1993–94. That is an important settlement, because next year will see the introduction of the council tax and of care in the community, and the transfer from the social security budget to local authority budgets of that amount of social security spending which is attributable to care in the community.

I hope that at that time it will be possible for my right hon. Friend to identify the sum which is notionally being transferred from the Department of Social Security to local authorities, so that local authorities have a clear idea how much it is. I am prepared to forecast now that whatever that sum is local authorities will say that it is insufficient—but that is not my point. The point is that the sum should be clearly identified. From April next year, local authorities are to be given substantial new responsibilities under care in the community. That means that we shall have to examine the standard spending assessment in relation to social services.

Some counties, including my own, which manage to contain total spending within the standard spending assessment still have difficulty with social services. My hon. Friends know what pressures there are on social services budgets—and those pressures are likely to increase rather than to decrease following the introduction of care in the community.

I fully support what my right hon. Friend the Chief Secretary says about securing value for money in public spending. That is what the citizens charter is all about—value for money and quality service for the customers of the Government's services.

Another factor on which I am sure that my right hon. Friend will agree with me—although he did not mention it —is the introduction of the Government agency programme. We now distinguish clearly between policy advice and policy execution, which means that we are in a position to give better value for money to customers of Government services. I hope that that programme will be developed further—especially in the Departments in which it has not yet been introduced—so that eventually all civil servants and officials working in policy execution will be working for agencies with considerable independence of management. That is how we shall get better value for money for all our taxpayers.

3.53 pm

Mr. Frank Field (Birkenhead)

I begin my contribution in a similar vein to those we have heard this afternoon in congratulating you, Madam Speaker, on your appointment. I then wish to develop a speech that is rather different from those I have heard so far.

There are at least two ways to cover a canvas: the broad brush stroke can be applied or a far more detailed brush can be applied to the canvas. I wish to adopt a more detailed approach in taking up two themes that have already, rightly, dominated the debate: incentives, and the issue about people controlling their own lives. I want to develop those themes with the small brush approach, thinking of individuals in my constituency and, as a result of joint canvassing, in the constituency of my hon. Friend the Member for Wallasey (Ms. Eagle).

I speak at the beginning of a Parliament when the Labour party has lost four elections in a row. I do not belong to the school that believes that, with one more small heave, we shall be on the Treasury Benches. In terms of our percentage of the vote, our turnout was worse than it was in 1935. In responding to speeches, we have the double job of performing our role as the Opposition and trying to convince the Government to change policy when that is desirable, and of beginning a rethink of policy ourselves in a build-up to the general election five years hence. I want to begin that task this afternoon.

I hope that before long we shall be seen as a tax-cutting party, not because we just want to beat the Government at their own game, but because it is vital if we are to build real incentives for those at the bottom of the pile.

We have heard much about public expenditure, about its restraints, and about the difficulties of balancing the increased provision of first-class public services with the Government's objective of cutting taxation. What we have not heard about in the debate—I hope that we shall hear a lot more about it—is the growth of the other welfare state, the tax welfare state. It is now so generous that it omits from taxation more than half of all personal income. We should now begin to set out a stall to commit ourselves to phasing out those tax handouts. That cannot be done at a stroke because people have made major commitments, such as buying pensions or their own homes, and their budgets would be split asunder if such measures were carried out at a stroke.

However, there could be commitments over the life of a Parliament to phase out some of the major tax benefits. I pick out two. If we or the Government were committed to phasing out mortgage tax relief and the subsidies that go with the acquiring of pensions, by the end of a Parliament we could cut the standard rate from 25p to 18p in the pound. I believe that that is right for a number of reasons. It is right because we should cease to be paternalistic—believing that only if we bribe people shall we get them to buy houses or provide pensions. They will do that if they have enough income with which to do so because they are good things to buy.

Such a change is also right because it would create a level playing field for savings. One now has to be almost certifiable to save in any way other than buying one's own home or pension, given the extent of the tax subsidies. Such a change is right because it achieves the goal of cutting the standard rate. I think of the standard rate especially as it affects low-wage earners in my constituency and in Wallasey where the difference between 18p and 25p per pound of tax paid is very important.

One of the policies that I hope we shall press on the Government is to be genuinely non-paternalistic and to be genuine about seeking major cuts in the standard rate of tax. I want to achieve the objectives I have outlined and I take seriously the question that we often mouth in this Chamber—I wonder how seriously we take it—when we look at the wage slips of the low-paid workers in our constituencies and see how crippling some of those contributions are.

I congratulate the Secretary of State for Social Security on his post, and I am glad that he will reply to the debate. I link my plea to another plea about caution, although having an open mind about the targeting of benefits. It is no longer good enough for us to mouth all those phrases which, in a very comfortable way, we have uttered in the Chamber over the past three or so Parliaments. The recipe is not to the liking of the electorate. That does not mean that we will desert all our positions, but it means that we have to rethink from first principles again. Therefore, I am not against opening up the debate, as some Conservative Members have put it, about universal provision and targeted provision, but I wish to make a plea before we jump too quickly or carelessly into the debate, because we could with one hand tend to undo the good that the other hand may do.

I refer again to a typical constituent of my hon. Friend the Member for Wallasey and myself. He works a considerable time when work is available and picks up nearly £40 in family credit. He is grateful for that family credit—he makes no bones about it; the family would not survive without that payment. However, he is well aware of what we in the Chamber call his marginal tax rates—the amount that is taken in income tax, the amount that is taken in national insurance contributions, the loss of family credit as his earnings increase, and other deductions as well on housing benefit.

Therefore, when we talk about the nice, easy move from universal provision to selective or targeted provision, we must think of what we are doing to people at the bottom of the pile. Although, sadly, we now have an underclass —perhaps there will be other debates in which I may develop that theme—large numbers of other people are poor simply because, by their own efforts, they cannot get a job or there is no job to have. For example, in the Wirral a new Sainsbury store is opening. The company took pages in our free press to advertise just before the election. For every job that was advertised, however skilled, a breadwinner with two children would still earn a low enough wage to claim family credit.

Employers are adapting to the means-tested assistance that is being given. They are becoming dependent on that form of Government support, and our constituents are being trapped in it. They have to think whether they get another job or work longer hours, given what their marginal tax rates are and given what the Government have already done on changing the housing benefit scheme, whereby an unemployed person on income support has the whole of his rent paid, but, because the income scales were changed for those in work, people now move from having rent totally paid when they are unemployed to an income which is hardly any different when they are in work, but facing practically the whole of their rent charges. Therefore, a council tenant paying a large rent such as those that we have in the Wirral has now to be patriotic beyond belief to move from unemployment to work, other than finding himself in the position of making his family worse off.

Those are real conditions that our constituents must face. I make the plea that, when we open the debate about the future shape of welfare, we do not do so just on an intellectual level but use one of the great resources that each of us has, and that is that we represent an area in this country and that we listen to what our constituents say, particularly those who will be most affected by the changes. There is all the difference in the world between keeping a universal provision of child benefit, which is a springboard to freedom, and thinking about how more selective one might be in future about making above-the-board increases in the standard rate of the old-age pension.

I am taking much time, but I wish to end on one other theme if I may, and that is pensioners. I wish to open up two themes briefly. The House is awaiting the Government's response to the Select Committee report on the ownership and control of pension funds. Way back in 1976, I thought that the Labour party should advocate the sale of council houses. Unfortunately, it was not a view which my party accepted. We now have an opportunity of extending capital ownership on the pensions front which makes the sale of council houses small beer. I am talking about the equity stake that most of us have through our pension scheme. Most of us do not realise that we have any asset there at all. If one worked for Robert Maxwell, one realises that one does not.

A person on average earnings approaching retirement, will have a portfolio of about £100,000 to support his or her pension, yet no one thinks that he owns that £100,000. None of us thinks that collectively through our pension funds we own about a third of the stock market. If we are to achieve the next big leap forward in people having control of their own assets and having the right to move those assets from one pension fund to another accepted body, I hope that the recommendations in the Select Committee will be accepted.

I end as I began, on a sombre note. I make a plea about those pensioners who thought that they had assets in Maxwell-run pension schemes only to find out that the funds were either sadly depleted or non-existent. I know that the Government are thinking about what their response will be. I make an immediate plea to the Government. I do not expect the Government to say this evening that they will underwrite all those pension funds, but they could say that they will give a conditional undertaking to underwrite on a month-by-month basis those funds which now find that they are not solvent and, therefore, must close.

The Government know the disadvantages of schemes closing. Not only are pensions lost but the body which seeks to trace the assets which may have been misappropriated disappears with the closure of the scheme. So there is a real need to pump money on a short-term basis into such schemes so that pensions can be paid. But there is also a longer term objective. Through the schemes we may retrieve some of the assets and give them back to the pensioners who own them.

It is not simply a matter of people losing their pension. Many of us in the House will know from our constituents who are Maxwell pensioners that with the loss of their pension goes the loss of their home. Pensioners have to sell their homes because they do not have the monthly income to keep them going. So before many more schemes close —one closed two weeks ago—I hope that the Government will respond, not in a universal way but in a selective way, to ensure that while they are thinking about the longer term reforms no more pension schemes go to the wall. With the closure of a pension scheme, people face the horror of losing not only the whole of their provision for retirement but their other greatest asset, their house.

Mr. Wolfson

I support in the strongest terms the point that the hon. Gentleman is making. I have experience of several constituents who, in some cases, worked for 37 years for a company which was not part of the Maxwell group but was taken over in the last three years of their employment. They now have no pension whatever. We need to keep open all possible gates to retrieving those funds.

Mr. Field

I am grateful for the hon. Gentleman's support. I hope that those on the Treasury Bench listened most carefully to his comments.

Labour Members have difficulties in approaching the Queen's Speech after our fourth election defeat. I hope that in the next year or so we shall use the debates in the House, both to criticise and probe the Government, as we rightly should, and to open up the debate about what our policy should be so that in five years' time we shall not suffer five losses in a row.

4.9 pm

Mr. Peter Fry (Wellingborough)

I am delighted to be called so early in the debate on the Queen's Speech, particularly because it enables me to join in the congratulations to you, Madam Speaker, on your well merited promotion to the Chair. I should also like to take the opportunity publicly to congratulate my right hon. Friend the Chief Secretary and his colleagues on their promotion to the Treasury Front Bench.

As so often, the hon. Member for Birkenhead (M r. Field) produced a thoughtful speech. I should not like him to think that only constituencies in the north-west of England experience the problems that he outlined. Some of the ideas in his speech will cause much thought, not least on the Opposition Benches.

I reinforce the hon. Gentleman's comments about the terrible trap into which people fall, particularly when they are unemployed and have families to support. He mentioned those who pay council house rents. I hope that my right hon. Friend appreciates that a considerable number of people live in the private sector where rents are often much higher than in the council house sector, and where the pressure on people is even greater. Even with the family credit system, many of them would find it not worth working at all. The pressure exists throughout the housing sector for those who do not own their own homes.

The hon. Member for Birkenhead also spoke about pensioners, particularly those who were let down by the collapse of the Maxwell empire. The Conservative party has a great obligation to ensure that people who take out private pensions receive them. It is not much good for us to say that we have an alternative to the state scheme and that we want people to stand on their own feet. We must ensure that when people have contributed money from their earnings and when firms have also contributed to pension schemes, those pensions are realised when they are due. There will be all-party agreement on both those points.

At the start of debates on the Queen's Speech, comments are always made about the election. I should just like to put in one little caveat to the euphoria that exists in the Conservative party. I must admit that, going round the country as I did, I did not find that the support for me and my party was based on unqualified approbation for everything that had happened over the past two years. The Government should accept that we were chosen as the best possible alternative—perhaps the least of all the available evils.

I think that that lesson has been learnt, and I welcome many of the measures contained in the Queen's Speech. We are entering a period when there may be less political strife and bickering than in the past 12 months. There is a feeling in the country that political bickering does no good in getting us out of the recession. Now that the election is behind us, people expect the Government to get on with the job of helping industry, helping to create jobs and helping people to raise their standard of living once again.

I was impressed that my right hon. Friend the Chief Secretary took as his theme value for money. Rather like the hon. Member for Birkenhead, I should like to look in a little more detail at one aspect of public expenditure. I was pleased to read in the Queen's Speech that the Government were committed to increasing the role of the railways in meeting the country's transport needs. However, I was not too happy to note that that was the only reference to the problems of the country's transport needs. The problem goes much wider than merely privatising part of British Rail.

While I am on the subject, I congratulate the Government on at long last grasping the nettle and dealing with how to bring competition into rail services and, at the same time, covering the cares and concerns of many people about what would happen if the whole system were privatised.

Sixteen or 17 years ago, I was a member of the Conservative party's transport policy committee when we first proposed the idea of separating the maintenance and ownership of the track from the operation of rail services on it. I am only too pleased that, at long last, that idea has been accepted by my right hon. Friends. The new regime that we set up for British Rail and the rail services can only benefit the country, the consumer and I hope, public expenditure as well.

However, the problem that has not been touched on, and which is fundamental, is that of how we shall deal with one of the greatest sources of waste and environmental pollution that exists in our society. How are we to use public expenditure to do something about the appalling traffic congestion in our major cities? The Government have already done a remarkable amount. I discovered that many people were totally unaware of the Government's achievements, and the fact that some imaginative schemes have been proposed and commenced for heavy rail systems, particularly in London.

There are light rail schemes, which are virtually 100 per cent. funded by the taxpayer, in Sheffield, Manchester and Birmingham. Many more schemes are queueing up to be approved. We have the biggest plan for inter-urban road building that the country has ever seen, which is surely important to ensure our economic recovery.

However, we have not yet resolved the problem caused by the massive public expenditure that will be needed to cope with the congestion that is becoming an everyday occurence, not only in the big cities, but in medium-sized towns. London is a special case, and I do not want to consider its problems at the moment, but I have been impressed by the fact that, if we are not careful and do not obtain value for money when we spend taxpayers' cash up and down the country, that will cost us much more in the future, not least in the environmental impact that the over-use of motor cars and lorries will have.

Some hon. Members will be surprised to hear me make such comments as, over the years, I have been known as a supporter of the road lobby, and I believe that roads play a fundamental part in the national economy. However, when we are dealing with the problems of urban centres, road building alone cannot be the solution. It is politically unacceptable, and the cost is too heavy. We have to ask ourselves, in the words of the Chief Secretary to the Treasury, "How will we get value for money?"

If we embark on enormously expensive schemes, they will take up money that could be used elsewhere. They also take a long time to complete and, as the former Secretary of State for Transport, Mr. Parkinson, said, if one conducts too many schemes at any one time in any one place, the ensuing chaos makes them counter-productive. We could turn to more of the light rail schemes that have been promoted, but it is my view that the number of those schemes that are viable is limited and that there is a danger that too many of them are being promoted merely to advance the aspirations of some local authorities. The problem remains.

I noted that the new Secretary of State for Transport said once again that the Government were considering road pricing. I warn my right hon. Friend that, just as many people who responded to the opinion polls before the election made monkeys of the pollsters, so there is a danger of assuming that, when people answer that they are in favour of road pricing and deliberately restricting the use of motor cars, that is what people actually think.

The second most important purchase that most people make after their house is their car. Having bought it, they are going to use it. The problem facing much of the western world is not stopping people buying and using cars but persuading them to use them less often—in other words, using public expenditure to persuade people voluntarily to leave their cars in the garage or to use park and ride operations.

I have not yet mentioned the one form of public transport that can make the greatest contribution to solving traffic congestion: the bus. The trouble with the bus is that it has a down-market image. Years ago, we used to talk about the man on the Clapham omnibus as the fount of all wisdom, the man whose opinion should be taken as the average view. Alas, today, too many passengers on the Clapham omnibus are pensioners or those on concessionary fares, children going to school or people on low incomes, not traditionally the groups whose opinions are first taken into account when decisions are made.

I suggest that, if my right hon. Friends want value for money from public expenditure on public transport, they should take a good look at ways in which they can exploit the bus, rather than devoting hundreds of millions of pounds to schemes that can offer only limited relief.

There are those who ask why we should make such a fuss about the bus; surely now that the bus companies have been deregulated, they can sort out the problems for themselves. I venture to suggest that they cannot. First, traffic is already too bad, and only the Government at national and local level can alter the rules to give the bus greater priority. That needs to be done.

Secondly, if higher income groups are to use this form of public transport, they must have a convenient system —a clean, comfortable and swift system. At the moment, it is virtually impossible for bus companies to purchase the kind of new buses they want. The bus building industry in this country has virtually collapsed in recent years. Treasury Ministers must re-examine the regime under which many bus companies operate, to enable them to produce the profits with which to buy better, cleaner and more modern vehicles.

Thirdly, we must look seriously at the regime in which we expect our public transport operators to run their services. I was privileged a couple of months ago to go to Brazil. Hon. Members may wonder what on earth Brazil could teach us about public transport, but they may be interested to learn that the finest system of buses that I have seen anywhere in the world is to be found in the city of Curitiba, in southern Brazil. With the right sort of investment, that town is achieving levels of service as good as those provided by light rail systems in many other parts of the world; at the same time, it has successfully enabled people to leave their cars at home and move around the city without causing enormous traffic jams.

We should examine other systems. I hope that the Treasury will allow the Minister for Public Transport to go and have a good look at how other countries are solving their problems. It is not necessary to spend enormous sums on heavy or light rail or even on road building. We need, as the Chief Secretary said, to choose the right priorities. By choosing them wisely much can be achieved, we can obtain value for money and our appalling traffic congestion can be relieved.

I hope that, when the Secretary of State replies to the debate, he will deal with the vexed question of the future of care in the community. There is considerable unease, especially in the private residential homes sector, about what will happen over the next two years as a result of the change in funding for people who cannot look after themselves. County councils are currently presenting their broad outline plans, but they cannot say exactly howl hose plans will be implemented, because they do not know how much money they will receive.

I hope that the Secretary of State is aware that many thousands of elderly people are quite happy to remain in residential care. However, a shadow is being thrown over them because of the uncertainty of future funding. One of the greatest assurances that my right hon. Friend can give is that those people will not suddenly find, because of a change in county council policy as a result of a vast reduction in funding, that they will not know where they will stay when the new system is introduced. If care in the community is to be placed at the forefront of our social policies, it is essential to find the public expenditure to enable the policies to be carried out, to the satisfaction and happiness of thousands of our elderly citizens.

4.26 pm

Mr. Matthew Taylor (Truro)

I should like to repeat in public the private congratulations that I offered you, Madam Speaker, when I took my seat. The House looks forward to your continuing stewardship. The overwhelming vote of confidence in you was a measure of the respect for the work that you carried out when you were Deputy Speaker.

The speech by the hon. Member for Derby, South (Mrs. Beckett) failed to address the reality of the position of all the Opposition parties. The hon. Member for Birkenhead (Mr. Field) gave a rather more honest appraisal of the situation facing all of us who want to see not just a change of Government in the near future but, perhaps more importantly, the effective operation of democracy in this country.

In the weeks following 9 April, journalists, political commentators and politicians have advised, preached and speculated on the lessons that the Labour party and my party have to learn from the election result. There are certainly lessons to be learned, and the challenge is to provide an effective alternative. That means an alternative vision which is backed by practical, affordable policies. At this stage in the Parliament it is not enough for any Opposition Member simply to address the political situation as if those questions did not arise.

I am sure that, privately within the Labour party, those questions are being widely discussed, but in the past few days the tone of some of Labour's public comment on recent Government policy has failed to acknowledge that problem. That is not to say that the policies presented by my party and by Labour did not prove popular. Many Liberal Democrat policies and the positive way in which they were presented proved popular. Our pledge to invest more in education, even at the price of 1p on income tax, was the most popular policy of the campaign. We must also make it clear that a Liberal Democrat vote means Liberal Democrat policies, and fortunately people voting in today's local elections understand that. That will result in a record number of Liberal Democrat councillors and a record number of Liberal Democrat-led councils.

The Opposition parties have lessons to learn and thinking to do, but so do the Government. Indeed, a Government with such a reduced majority have the greatest responsibility to learn the lessons of the election and to consider what the citizens were saying. It is not enough to claim a mandate on a minority of votes or even on a small majority of seats in the House. Yet the Queen's Speech and the Prime Minister's comments yesterday suggest no such new thinking.

Shortly before the election campaign, I received a letter from the Prime Minister. It outlined, somewhat sketchily, his vision for the future and expressed the hope that I might share his views. It even suggested that I might contact the Truro Conservative association to see whether I could help in any way. I imagine that many members of the public received the same letter. No doubt the Conservative central office computer targeted it at those who were considered to be likely Tory voters, probably those in jobs with good incomes and with reasonable job security.

I wonder whether the Prime Minister sent his letter to the unemployed, to those whose homes have been repossessed, to old people struggling on the state pension or to those on health waiting lists. I doubt whether that was the intention, but it is those people who are most dependent on the Government's policies. Many of them will not have voted Conservative but some will have done so, perhaps in the shaky hope that they can rely on the Government to put things right. It is more likely, perhaps, that they did so because they were afraid that, with a Labour Government, their position might be even worse.

The Government have a duty especially to help those who for fear of anything else—another Government—put their trust in them. It was the Tories who fought a campaign to create that fear. Many of those who voted for them did so, as the hon. Member for Wellingborough (Mr. Fry) rightly said, not out of any enthusiasm for what had happened over the past few years under Conservative Governments but out of a fear—in my view, it was in part misplaced but in the Conservative party's view the fear was justified—of the options that were on offer. I do not believe that there was any great endorsement of Government policy. That being so, Conservative Members cannot afford to be self-satisfied about the Conservative election victory that was won on less than half the votes cast. They need to show that they deserved the victory, but there is little sign of that in the Queen's Speech.

During the election campaign, the so-called citizens charter was trumpeted as the flagship for a Tory Government. It appears, however, that no legislation is planned that would put citizens in charge of what takes place. No money is committed to giving the charter any bite. The Queen's Speech appears to be that of a Government who did not expect to be re-elected.

What are the plans to improve public services and how will they be funded? The subject of today's debate is public expenditure, but we have not heard how the Government will improve investment in basic public services. During the election, I believe that my party won the debate on education because the public recognised that the service could be improved only with substantial extra investment and that there was an honesty in explaining that that meant that they would have to pay for it.

The Labour party failed to bring the two components together. It gave the impression that it believed that the public could be persuaded that almost too much could be given at no cost to them. The Government said that it would cost, as it were, but failed to recognise that there was a mood to meet that cost or to face some of the costs that would be involved, provided that the public knew what it was that they were voting for and precisely what the costs would be. The poll evidence showed precisely that, when the issue was put together in that form—the potential benefits and an accurate indication of the costs involved—the public would support it, as they supported the 1 p increase in income tax that was proposed by the Liberal Democrat party.

How, for example, do Ministers intend to ensure that we have a high-quality train service, never mind who owns or operates parts of it? How do they intend to ensure that vital health operations are carried out quickly and well? How will they ensure that parents can be guaranteed high-quality education for their children in all instances and not only in flagship schools? How will they ensure that disabled people have access to the services and support that they need; and that care in the community can be made a high-quality reality delivering the support that people have been promised?

The Government say that they will provide improved services, but the financial equation fails to add up. The Government have also made other various spending commitments to index-link pensions, to child benefit and to a Department of Trade and Industry run by a more interventionist Secretary of State—who has made it clear that he will want additional cash. As more schools opt out, it will be in the expectation that they will receive the additional financial support that those which have already opted out have received.

Alongside those spending commitments, the Government have pledged further tax cuts and have said that their intention is to balance the books. Given the present and projected levels of borrowing, how can balanced books be achieved without cuts in services, let alone cuts in the promises that the Government have made? Indeed, it has already emerged that the Government projections assume too high a level of growth. More realistic assessments of growth suggest that borrowing will need to be even higher to meet the expenditure plans.

There have already been widely leaked projections for the coming public expenditure round, and cuts are expected. The services that will be hit will be the health service, education and community care—the very services about which the election showed people care most. Education authorities and governing bodies already face the prospect of having to sack teachers and cut the delivery of education to children in the classrooms. Over the next few months, the unwritten home truths about the Government's general election campaign will emerge. While the Government were effective in raising fear of the alternative, they were hugely ineffective in explaining the contradictions within their manifesto. That can mean only broken promises and further cuts.

How do the Government intend to lift our country out of recession and into sustained recovery? In my part of the world, we are well aware that natural growth, coming out of the few early signs that we are now seeing, will do nothing to tackle the deep-rooted problems of the British economy as a whole, and more specifically those of areas such as mine where, no matter how well the economy performs, there are always lower wages, higher unemployment and fewer prospects for young people.

We sought to present a costed manifesto that dealt with those problems—a manifesto aimed at recovery and investment in vital services such as school and college building programmes, housing schemes and NHS building, with investment that would create jobs while improving basic services. Whatever the result of the election, I believe that those policies were popular. As I toured the towns and villages, not only in my constituency but in areas where we did less well, the message I received was one of concern about schools, the health service, pensions and the sewage on our beaches.

There was uncertainty about whether people could risk the alternative that was offered to tackle those problems, but there was no uncertainty about the reality of those problems and the need for them to be tackled. It appears that the Government would rather ignore those concerns in order to achieve a tax cut. Why the obsession with tax cuts? The only way to achieve them will be through cuts in education and job creation and through further environmental decline. The economy needs new ideas and new investment if we are to emerge from the recession and if our long-term needs are to be met.

I shall cite a local example. Last July a Trade and Industry Minister told me that he recognised the case for Truro and St. Austell to receive assisted area status and a review was promised—but not until after the general election. Local people keenly await the result of that review, but it will call for additional investment by the Government. Cornwall has some of the highest levels of unemployment in the country. We need the benefits of assisted area status, combined with a development agency for that county, to bring us out of recession. The decision must be made now.

The Government know that they have campaigned on an agenda that means that they cannot possibly deliver the required investment while delivering cuts in taxes and the balanced economy that they have promised to deliver—at least, not unless they are prepared to go down the road suggested by the hon. Member for Birkenhead and attack tax benefits and privileges, including mortgage tax relief. Having stood for a party that talked about such reform, I know that the Government have been only too keen to exploit the subject without examining the issues that underlie such a programme. The Government will be judged on their determination to act on those matters.

The Queen's Speech contains many small actions, but fails to face up to the great acts, the great reforms, that Britain needs. Even the Government's narrow ambitions are undermined by the financial crisis and the self-imposed financial limitations which they face and which they still do not allow themselves even to acknowledge in public let alone face. That is the truth of the Government's programme, and that is why it should be opposed.

4.40 pm

Mr. Ian Taylor (Esher)

I congratulate you, Mr. Deputy Speaker, on your new position. We look forward to you holding the fort on many occasions such as this when the House is not quite as full of hon. Members who wish to speak as you, in your position as Mr. Deputy Speaker, might wish. Nevertheless, I am delighted to take part in this debate on the Gracious Speech.

From my experience in my constituency, I believe that the problem with the Liberal Democrats' plan, which was mentioned by the hon. Member for Truro (Mr. Taylor), for 1p on income tax to fund education was that progressively during the campaign it was regarded as a gimmick. The principle of such an hypothecated tax does not stand up to examination, because ultimately the question arises: does everything have to be hypothecated? Why not have an extra 1p for something else and something else more? The idea also looked increasingly feeble in comparison with what the Government were already predicting that they would spend in Red Book proposals for the forthcoming financial years. Therefore, even on that basis the Liberal Democrats' proposal did not answer the question.

After the Liberal Democrats' sorry showing in the election, they will have to go a good deal deeper than that sort of exercise to win votes. I am not questioning the fact that education is important; I am merely saying that there is a much bigger debate about how to finance public services, including education, and the answer is not to hypothecate tax in that way.

I shall return to some of the broader themes but I do not want to miss the opportunity to pay tribute to the hon. Member for Birkenhead (Mr. Field). I shall not embarrass him by praising him too much—that might not be what he is seeking. However, I suspect that he embarrassed the Opposition Front-Bench spokesmen. Certainly, the hon. Member for Derby, South (Mrs. Beckett) would have done better to speak after the hon. Gentleman—that might have improved her own speech. I am sorry that she is not here to hear my comments, but listening to her speak one began to understand why the hon. Member for Sheffield, Brightside (Mr. Blunkett) considered that it would be a disaster if she were to succeed in her attempt to become deputy leader of the Labour party. There was no new thinking there. She spent most of her time trying to justify the Labour party's election campaign which so visibly failed to obtain the support of the British people. There was no message for the future non-Conservative forces, which may be seeking to coalesce in order to make a better attempt against the Conservative party at the next general election, whenever that might be.

One of the more interesting debates within the Labour party at the moment concerns the interpretation of its platform on the Budget during the election campaign. I was interested in the fact that the hon. Member for Dagenham (Mr. Gould) made a trenchant attack on the proposals of the right hon. and learned Member for Monklands, East (Mr. Smith), saying that what had crucially affected the Labour party's chances in the south of England—those who come from Scotland should remember that there are quite a few people in the south-east and south-west of England and in the midlands, as the hon. Member for Dagenham also pointed out—was its fatal capping of the aspirations of those people who were not earning as much as £20,000 per annum but who saw no good reason why they should not earn that much as their careers developed.

Before the Labour party preaches to the country, it is crucial that it should understand that, during the past 13 years of Conservative government, the country has changed and people do not necessary feel that they will always be at the bottom of the heap. They have a chance to improve themselves in all sorts of ways, not only through their earnings but through the houses that they purchase and the investments that they make, including pensions, which the hon. Member for Birkenhead rightly said was the great hidden asset of most British people, to which they pay least attention, but which is of great significance and magnitude.

We must understand that the British people do not like being taxed at levels higher than they regard as reasonable and do not welcome the prospect of being part of a socialist redistribution of wealth from one section of society to another which, in order to have some impact, must begin taking at a fairly low income level. I was delighted to hear the hon. Member for Birkenhead challenging those old ideas. His presence here is a tribute to him, although not necessarily to his party, which may have represented a greater threat to him than anyone else in his constituency at the general election, as we know only too well.

I welcome the Gracious Speech. It contains many points which we shall be able to debate in the several days to come and subsequently.

I wish to breach convention slightly by taking up a point made by the hon. Member for Truro about the citizens charter having no real teeth and receiving little emphasis in the Queen's Speech. That is far from the truth when one considers not only the Queen's Speech but the speech yesterday by my right hon. Friend the Prime Minister. I have some little link with the Chancellor of the Duchy of Lancaster who is responsible for the citizens charter, so it is slightly in breach of convention for me to raise the issue in the House. Nevertheless, I shall do so, but only to set out the agenda.

The citizens charter and the principles behind it will now be at the heart of all Government decisions right across the board. It is an essential part of opening up public services and Government are making them more efficient and responsive. The new Department with a voice in Cabinet means that the citizens charter will not just have teeth but be of great importance. It is also critical to the concept of public expenditure. If I do not say too much about it it is because, as a Parliamentary Private Secretary, I am not free to do so.

The important statement in the Gracious Speech was that the Government intend to reduce the share of national income taken by the public sector and balance the budget over the medium term, reducing taxes when it is prudent to do so". That is the right objective, which is probably shared, privately or openly, by several Opposition Members. It is important not to prejudge the speed or the nature of moving to objectives such as reducing taxation.

There is nothing wrong with reducing taxation. It is clearly not right to reduce taxation imprudently when the buoyancy of consumer demand which leads to company profitability is insufficient to increase the total revenue from tax. Therefore, given the current state of the economy, it is difficult to predict when it will be possible to reduce taxation. However, there is no doubt that we can assist the increase in buoyancy of company and private fortunes by reducing taxation if that is done at the right time. We should never get ourselves stuck on the problem of why it is that at the right time a reduction in the level of taxation can increase the revenues that the Government receive from taxation, as was shown in the 1980s. If the Opposition could grasp that point, they would understand why it is possible to have low levels of taxation and large increases in expenditure on our great public services.

Since 1979, we have had a good record in real terms of spending money on the great public services. There is no embarrassment about that for a Conservative. As a Conservative, I believe in the role of the public services. That does not mean that I believe that everything should be done by the Government, but there is no doubt, that where people in our community require assistance, that is quite properly acted upon by the Government, who should constantly seek to make sure that no one is left outside the net, in financial or other terms. That would create the kind of underclass to which the hon. Member for Birkenhead referred. Because an underclass increases instability in society, that cannot be part of a Conservative objective.

One of the greatest objectives of all Conservatives is to create a stable society. If that is not done, tensions will be created that lead to insurrections and changes in society at too dramatic a pace, which would be worrying to anyone of a Conservative mind. Over many decades, Conservatives have quite properly attempted to ensure that the inevitable divisions that occur in society—only a theorist believes that there can be no divisions—are not of a magnitude that could ever cause our society to become unstable.

As Conservatives, we do not necessarily believe that the closing down of such instabilities should be entirely a function of the Government. The role of the individual —or, to use today's colloquial term, the active citizen—is most important, in a partnership with the Government. A Government who encourage the individual's desire to bind others in their community to them, participate in voluntary work and have some say in the institutions that they value, such as health and education, are playing their part in encouraging those allegiances in society that are essential if social stability is to be maintained.

It is not the Government's job to do that alone, thus creating a dependency culture. It is their job to do sufficient to encourage others to participate in that process. That is relevant to the whole public sector, which should not be seen as a total umbrella or framework for everything that ought to be done. The public sector exists to enable individuals to contribute to what we as Conservatives consider to be socially desirable ends. Achieving that balance is a constant concern for all Governments. At some times there is more emphasis on state intervention and at others more emphasis on the Government withdrawing from that course.

The Government can achieve none of those socially desirable objectives unless there is a stable economy. We have encountered a difficult recession over the past two or three years, but it is of academic, although perhaps political, interest whether the Government were entirely responsible for starting it. Matters would have been much worse had we listened to the recommendations at the time of the right hon. and learned Member for Monklands, East, who argued for deeper interest rate cuts during the boom prior to the recession. He would have engineered a recession that was more vicious than that which we have suffered.

Our current situation is relatively stable. It was made clear at the G7 meeting only the other week that in comparative terms we have a stable base from which to recover in the 1990s and from which to compete against other nations. Our percentage debt as a total of gross domestic product is perhaps the lowest of them all, and that is a good position from which to embark on recovery.

It is of concern to anyone to have a public sector borrowing requirement of 4.5 per cent. of GDP, but at this stage in the recession, that is less than it might be—and is certainly less than that of certain other countries, which look upon us with some envy.

Since joining the exchange rate mechanism, we have enjoyed consistent interest rate cuts, despite the tensions that could otherwise have arisen. I agree with my hon. Friend the Member for Beaconsfield (Mr. Smith) that, when trading patterns predict that it will be safe to do so, we should move into the narrow band of the ERM, because currency stability is an absolute prerequisite of growth and economic rectitude for our country.

Sterling has performed extremely well in recent months, which indicates not only domestic but international recognition of the fact that the return of a Conservative Government and the continuation of our policies to damp down inflation and resolutely to maintain a proper balance in overall public expenditure create confidence. There can be no greater vote of confidence than the narrowing of the difference between the Lombard rate in Germany and this country's base rate to only one quarter of a point. That would have been unimaginable in the past. If someone had written that that would occur in 1992, he or she would have been written off as a lunatic or Sir Alan Walters.

There are, however, certain matters that the Government must address. There is no doubt that the public sector borrowing requirement is at a level higher than that with which we would feel comfortable. That has been admitted by the Government, and there is no point in trying to hide it. If we attempt to do so, we shall not be able to tackle that problem in the way that is necessary.

It is not necessarily relevant to worry whether the PSBR will grow next year to more than £30 billion, as the Red Book predicts; it is much more important to find ways of reducing it over a period. The great thing about balancing a budget over a cycle is that one passes quickly on without defining the word "cycle" or the length of the cycle. Nevertheless, that is an important objective, and one of which we ought never to lose sight.

I hope that the Government do not slip into the view that it will be sufficient to meet the Maastricht convergence terms. Although I believe that we ought to move towards the convergence set out in the Maastricht treaty—the Gracious Speech rightly gives priority to that—the objective of bringing the PSBR below 3 per cent. of GDP is not itself a sufficient target. We must obviously go much below that.

Whether a surplus can be achieved depends on many other variables, such as the rate of growth—which itself is dependent on the performance of other world economies, because our nation spends much of its time and effort on trading. It is, however, crucial to attack public sector borrowing, and there are two ways of doing that. We know that in the current phase, there is far from any truth in Labour's accusation that we bought votes and therefore increased the borrowing requirement. In net terms, we injected only about £1.8 billion through the Budget's tax changes and the move towards the 20 per cent. band, which Labour was foolish to oppose during the general election campaign.

Our real problem has been that, in a recession, the Government quite properly use the automatic stabilisers. I do not believe that the great debate that The Guardian tried to foist on the electorate during the campaign was relevant. I refer to the golden rule about balancing Government income and expenditure over any period, however calculated, and whether or not the figures exclude items of capital expenditure. I refer also to a recent leading article in the Financial Times, which, judging by its editorial on election day, is not necessarily a Conservative newspaper. According to the Financial Times, it is entirely proper for the Government to be borrowing at this stage in the cycle, bearing in mind the depth of the recession. I think that that is absolutely correct; it offends none of my Conservative economic principles.

Of course the automatic stabilisers to which I referred will create a burst of expenditure on unemployment benefit. The point is, however, that that expenditure will be more than compensated for as the economy picks up. There will be a lagging effect on both sides, but, once tax revenues have picked up as a result of the buoyancy of the economy—a buoyancy that I believe is already present, and independent evidence underlines my belief—they will rapidly begin to provide us with some scope.

Although I do not wish to predict or even to request further tax cuts at this stage, I nevertheless expect to see a dramatic difference over the next two or three years in the revenues that the Government receive from current taxation levels. That will begin to give us a degree of freedom. Any economist who predicts growth rates is either a fool or working for the Treasury, but it is true to say that the rate of growth that is generally forecast for the country could be well above the trend established in the 1980s. I am heartened by the G7 forecasts of growth in other countries. We may well find that an automatic correction takes place in the PSBR in regard to revenues, and that would benefit the Government.

The other side of the PSBR is expenditure. The Government have a remarkably good record of expenditure on the great public services. While not going back on any of our current plans, we should clearly restrain the rate of increase in that expenditure. My right hon. Friend the Chief Secretary—he is not in the Chamber now, but I congratulate him on his appointment—faces a difficult public expenditure round, but that is an essential part of ensuring that the economy as a whole is put in a position from which a strong recovery is possible. Many other matters will depend on that.

It is often forgotten, for example, that some of our great public services are undermined by inflation. Unless inflation is controlled, we shall eat away at the very public services that we wish to support. By bringing the overall economy under control and lowering inflation, we shall help to improve those public services. That it is possible to do that only and simply by spending money is one of the great myths of politics. We must attempt to restrain the rate of public expenditure growth.

That leads me to a major point. Clearly, all our citizens want better services—better education, better local government and a better health service. In their wisdom, however—a wisdom that they demonstrated by returning a Conservative Government despite the background difficulties—the British electorate know that better services cannot be achieved by means of money alone. Sensibly, the Gracious Speech referred to a continuation of the privatisation programme. This crucial factor must be taken into account: if a service does not need to be performed by Government, it is better for it not to be performed by Government.

Before that observation is dismissed as dogma, let me explain it. The Government run many services extremely badly, placing limitations on expenditure and capital investment that are totally contrary to the cycle needed by the industries concerned. Many people criticised us strongly for denationalising the water industry for instance. They seemed to think that water and water purity were God-given. Perhaps they were originally, but I would not want to rely on God alone for the treatment of sewage!

The fact is that, once the water industry was removed from Government control, the Government could fulfil their role of protecting the consumer by toughening the regulatory controls, because they were not simultaneously providing the service. It is impossible to be both regulator and provider. Now, there is a massive programme of investment in the water industry.

The hon. Member for Dagenham—who is trying to do all the Labour party's thinking, apart from that done by the hon. Member for Birkenhead—said that Labour had its own solution: simply change the Treasury rules. But that is not possible, simply because if the Government are the guarantor in the last resort, even of a leasing programme, the public sector must stick to the Treasury's public expenditure budget. Total freedom from Government will be necessary. Then, access to the private markets will make it possible to improve services and raise the level of capital in the industries involved, without reducing the Government's responsibility to ensure that those services are delivered efficiently.

Another aspect of the public sector is the removal of waste. Contracting out is one method, and I hope that it will be adopted across the board in the public services. The Government, as the purchaser and the regulator of quality, need not be the provider at the same time; as I have said, the same applies to all the former nationalised industries and public services.

Those are the ways forward, and they represent a much clearer view of the Government's attitude to the way in which society should be run. We do believe in state activity; we do believe in embracing the concept of the welfare state. Any Conservative Government will require social provision. The critical difference between the parties lies in the fact that our interest is in the end user rather than in the provider. The provider could be the Government, or it could be any private contractor wishing to offer its services. There is now fresh thinking about the way in which the Government can run the railways, coal, water and social security—the "next steps" agencies are an example. Ultimately, the pressure on public expenditure may be lifted, allowing access to private capital and resources.

I believe that those are the great strands of thinking on which the Queen's Speech was based. They are the way forward, and I am confident that the economy, as its base becomes increasingly strong, will be able to deliver better public services without necessarily resorting solely to dramatically increased public expenditure. I commend the Government's programme, and I welcome the Queen's Speech. I think that we are on the right track for a very successful few years.

5.7 pm

Mrs. Bridget Prentice (Lewisham, East)

I am grateful for this opportunity to explain why the measures set out in yesterday's Queen's Speech will not benefit people in east Lewisham. First, however, let me say one or two words about my predecessors.

Colin Moynihan had held Lewisham, East since 1983. For much of that time, he was a junior Minister. I sometimes wonder whether the fact that the press often dubbed him a very energetic person might have been the reason for his being moved from sport to energy. I acknowledge his work in the constituency, and I am sure that the House will join me in wishing him and his wife —he recently married—all the best for the future.

Let me also mention Roland Moyle. He too was a Minister but served in a Labour Government. I want to put on record my thanks for his tireless work in the campaign for my election. I was honoured to receive his support, as I was to receive that of the people of east Lewisham.

Mine is one of the three constituencies in the London borough of Lewisham. All three are now represented by Labour Members, supported by an important and efficient Labour council. From Blackheath to Grove Park and the Downham estate, the area is overwhelmingly residential, with little manufacturing industry: the main employers are local government and the health service.

Therefore, most people have to commute to work using the dilapidated, rundown and often unreliable Network SouthEast or have to sit in the congestion and pollution of London traffic. Great hopes lay with the extension of the docklands light railway, but now even that is bathed in uncertainty.

The people of east Lewisham have a community spirit. They want better quality services, not just for themselves but for their neighbours and those less fortunate than themselves. That is why they voted Labour. There is a history of rebellion against Government injustice. That is shown by the first rejection of the poll poll tax by Wat Tyler and John Ball on Blackheath. We also have our modern heroes: the community spirit was particularly apparent to the nation in the welcome given to Terry Waite.

In the last election, the people of east Lewisham expressed their dissent with Government policies in a more conventional way than that of 1381. One of the many reasons for that dissent, apart from the transport policies, was the level of unemployment and the poor prospect of training, particularly for young people. It is that upon which I wish to concentrate.

Unemployment in east Lewisham rose last year by a staggering 87 per cent. Long-term unemployment rose particularly steeply. Tragically for our young people, in whom I have a special interest as a careers teacher, there were 247 people chasing every job vacancy. It was the unemployment black spot of London. Only last month, on the Government's own figures, there were only 34 vacancies in the jobcentre and 17 in the local careers office. What hopes does that give to young people ready to play their part in the local community? What hope do the Government give to the three out of four young people in east Lewisham who have participated in Government training schemes and find, three months after completing them, that they are no closer to having a job? There was nothing in yesterday's Queen's Speech that touched their lives.

Why will not the Government consider that quality training with a guaranteed job will build us a work force that can compete with anything that our competitors can do? Why do they not see that giving people the skills to work removes the alienation and brings positive results that benefit not just the individual but society and the economy as a whole?

I want to speak briefly about a project in east Lewisham that is in desperate need of help. The local Rathbone Society has been training and supporting 50 local people with special educational needs. It has had the total backing of the provider agencies such as the Spastics Society and has trained people to work in retailing and care so that organisations such as the local council and Tesco have returned to it again and again to take on more of its trainees. It was funded through the training and enterprising council, although the money was paid directly to the national society.

On Friday 10 April this year—I make no comment about the significance of that date—it was closed down. Now, the 30 people who currently need the particular support given by their dedicated trainers are left with no idea of whether their training will he completed or whether there will be jobs for them to go to. Yesterday the Prime Minister said that he wanted to create a country in which everyone may realise their aspirations to rise as far and as fast as they can if they have the will and the skills to do so"—[Official Report], 6 May 1992; Vol 207, c. 73] Those young people have the will and their trainers have given them the skills. The real test of the Prime Minister's fine words will be whether the Government will give them the opportunity.

5.14 pm

Mr. David Porter (Waveney)

I would not wish to be the only Member not to congratulate you, Mr. Deputy Speaker, on your new post, and I do so most wholeheartedly.

I am glad to have heard the remarks of the hon. Member for Birkenhead (Mr. Field), who spoke so earnestly and from his heart. His remarks may have surprised some people, but not me. I have learnt to respect him for his work in chairing the Select Committee on Social Security during the last Parliament. I still favour the targeting of benefits, but I accept his point and I hope that we can open a broad debate on that issue in the House on another day. Like the hon. Member for Birkenhead, I also wish to refer to Maxwell.

On behalf of Conservative Members, I thank the hon. Member for Lewisham, East (Mrs. Prentice) for the tribute she paid to Colin Moynihan. Now that she is here, I wish her well on behalf of all her constituents. I still remember my maiden speech nearly five years ago. I felt that I had got off to a fairly good start, but about halfway through it suddenly hit me that I was talking in the House of Commons and then it was not so good. At least I did not have the misfortune of someone in the House of Lords who is reputed to have dreamt that he was speaking in the House of Lords and then woke up to find that he was.

Mention has been made of the historic nature of this fourth term of Conservative Government—1826 and all that. That is very interesting for historians, statisticians and psephologists, but for me the more interesting feature is the challenge and opportunity that the fourth term presents. It is a challenge and opportunity for those of us who came here in 1987 because we already feel that in this Parliament there is a new sense of listening and learning and a determination to get it right. I hope that that will be reflected in the Bill to enforce the Maastricht treaty.

There is also challenge and opportunity in my constituency of Waveney, which is the forgotten slice of north Suffolk. It is the most easterly point of the British Isles and 120 miles from London. On a bad day, on the road or on a train, it might as well be 10 times that. Only when British Rail is no longer in the queue at the public trough, together with schools, hospitals and pensions, will it receive the investment that it needs. Therefore, I am pleased about the prospects for railways held out in the Queen's Speech.

For tourists, who are vital to our local economy, the relative isolation is part of the area's charm. However, those who live in such a rapidly growing area and work offshore or in fishing, farming, food processing, construction or the professions, know that it is an area where, even in the late 1980s, we still had higher than the average unemployment in East Anglia. A programme built on steady growth, low inflation and, as the Prime Minister said yesterday, creating the wealth to spend on welfare is welcome, and I believe that such a programme will deliver its promises.

Whenever a recovery occurs, there is always a delay between improving demand and employers feeling able to take on more staff. In the eastern part of East Anglia that economic fact has to be added to the reality of a changing economic base in Lowestoft and in the large rural hinterland. It has been suggested by some pundits that the English countryside is already rather urban. That is because the social outlook and values of local residents are no longer so different from those of townspeople and because basic services such as water, power and telecommunications are generally universally available. That may be so in some senses, but in East Anglia we naturally and properly have a view that we are different from elsewhwere and, within East Anglia itself, differences happily abound.

In public spending, the provision of public services, all Government policies, the policies of the Rural Development Commission, the training and enterprise councils, the enterprise agencies and the local authorities there needs to be a rural dimension. I hope that we can deal with that issue in another debate. 1 felt it right to set down a marker since East Anglia is not only the bread basket of Britain but the engine for growth and the hub of the wheel of northern Europe.

We need to address the small business sector which, just as in the 1980s, is still the great hope for economic growth. Perhaps the Government would look at their definition of a small business. Businesses with one or two people are small as are businesses with 15 or 50 employees. However, they are all lumped together in Government statistics, and that is not always helpful.

In new businesses in East Anglia—according to VAT registration—there was a net gain of 18,000, or 34 per cent., between 1980 and 1990. Research at the Warwick business school suggests that about 40 per cent. of all new firms will have a short lifespan and that about 56 per cent. of firms will remain small but will exist for many years. That leaves just 4 per cent. of new firms that will be the key to long-term job creation.

The Government policy of the right balanced economic climate and regulations has to suit 100 per cent. of new firms—not to mention all the firms that already exist. That will be the challenge for this Parliament. It is especially vital for Waveney and other parts of Suffolk and Norfolk that the Government get the climate for growth right and make sure that the balance of regulations is fair.

The broad title for today's debate is "Public expenditure". As has already been hinted, on both sides of the House our first instinctive tendency is to measure the success of a project, idea or programme by how much is spent on it, as my right hon. Friend the Chief Secretary said at the beginning of the debate. Money is the criterion. "How much?" demand Opposition Members as soon as a statement on a new scheme is made. "Too much," may be the response of at least some of my hon. Friends. The amount of public expenditure seems to be the macho benchmark these days.

We all know that that money has to be earned before it can be spent, and the package in the Queen's Speech about firm financial policies, balancing the budget, reducing taxes when prudent, supplying market mechanisms and incentives, and improving the working of the economy is not only welcome—it is plain common sense. Without that package, the promises about the aid programme to developing countries, and about improvements to public services, the health service, community care, pensions, schools and our environment, would all count for nothing.

One sentence in the Queen's Speech reads: My Government will continue to improve and modernise the social security system with sustained emphasis on those groups with the greatest need. As economic recovery gathers pace, and as steady growth means that there is more room for flexibility in public expenditure, let us do more than keep faith with pensioners, which has long been our manifesto pledge. Yes, let us focus on targeting help on the elderly with low incomes, and let us direct efforts to the very elderly and the elderly sick and disabled. Yes, let us not lose sight of the needs of those in nursing and residential care or facing that prospect. But let us not neglect that group of people, now retired, who belong to the age group who gave the best years of their lives, their young adulthood, to the war effort, and who, through no fault of their own, could not take advantage of an occupational pension scheme. Because of their own efforts, many of those people are just above the benefit line, and, having worked hard and served selflessly, they now feel betrayed. I urge the Government to keep targeting, and to keep honing the arrows of spending that they aim, so that that group can be helped specifically, as appropriate.

The Maxwell saga has already been mentioned. I urge the Government to make an early statement in response to the report of the Select Committee on Social Security on the plight of all the pensioners robbed by Maxwell. That means the existing and future pensioners of all Maxwell companies, including British International Helicopters, which is now in administration in my constituency. Why cannot the good offices of Government be used urgently to co-ordinate the information and the rescue efforts so that no Maxwell victim suffers further anguish? Many Maxwell pensioners are now in such an urgent plight that it presents a danger to the whole pension-owning democracy, and cries out for urgent action. Will the new Select Committee have to draft a new pensions Bill, or will the Government do it—and do it quickly?

There are other omissions from the Queen's Speech. I know that the speech cannot contain everything, and that the catch-all phrase Other measures will be laid before you. may cover those omissions, but what about training? The education Bill and the employment Bill will not deal with training. Is it not time at least for a White Paper on training needs, leading to a form of statutory deal for the physically handicapped, the blind, the deaf and others, such as the mentally handicapped and—as a separate group—the mentally ill? Those people represent a huge and talented seam of national assets, which is not always allowed to realise its full and rewarding potential.

What about Sunday trading? We expect the European Court, by the end of this year, to settle how British law should be shaped or scrapped as we seem no longer able to determine that for ourselves. Surely we can this Session reform the Shops Act 1950 in line with the proposals of REST—Recreation, Entertainment, Social and Family Travel.

Why is there no pledge to update the sea defence laws? Another winter will come and go and the present ad hoc arrangements, with no coherent coastal protection or river flooding strategy, will stay in place. We who live in coastal areas will have to cross our fingers yet again. Will the Government respond urgently to the report of the Select Committee on the Environment on coastal zone planning?

Most people are disappointed at the delays in setting up the environment agency. I hope that that still remains a firm commitment. I trust that the appropriate Bill will be in the next Queen's Speech. I suppose that it makes sense to wait long enough to take account of the decisions made at next month's earth summit, so perhaps that is the reason for the delay.

If the pundits are right in saying that home ownership is reaching a ceiling, should we not be doing more than the Queen's Speech suggests to broaden the renting of homes?

I hope that I have offered my criticisms in a constructive manner. I am happy to welcome the thrust of the Queen's Speech and to play my part in implementing it, and in helping us to meet the challenges and opportunities as a group and as a Parliament. I welcome the chance that it gives me to continue to put and keep Waveney on the map, before either the Boundary Commission or the North sea sweeps it away.

5.25 pm

Ms. Hilary Armstrong (Durham, North-West)

Thank you for calling me, Mr. Deputy Speaker. It is a great pleasure to see you in the Chair. I am not sure what it says about the office of Speaker and the role of the Deputy Speakers that both our Speaker and one of our Deputy Speakers now come from Yorkshire. Perhaps it means that this seat of government is beginning to recognise that north of Watford there is not only life, but sense, too—and common sense. The future talent of this Chamber should be drawn much more from the North.

The debate on the Queen's Speech is one occasion on which we are allowed to be more parochial than usual. My commitment to the North and my parochialism will emerge later in my speech.

I was interested to hear the speech of the hon. Member for Waveney (Mr. Porter). He was the first Conservative in the debate on the Queen's Speech that I have heard acknowledge that there are issues which the Government have to think about, which emerged clearly during the election campaign, and that there are problems that the Government have not tackled, which were not broached in the Queen's Speech.

Many of us were disappointed by the Queen's Speech because it was so lacklustre, and did not take the situation of the country as it is and try to work with it. I do not quite share the forward thinking that my hon. Friend the Member for Birkenhead (Mr. Field) betrayed today, but it is important that hon. Members on both sides of the House begin to recognise more fully and honestly the position of many people in this country, and our responsibility to tackle it. Neither side should be complacent about where we are now. The Government must be cautious about triumphalism based on the results of the election. There are many lessons for all of us to think about.

The nation is very far from being at ease with itself. Some of us come from even further north than Yorkshire. In fact, some of us look upon Yorkshire people as really midlanders. In the north, the Labour party has its highest vote for many years. Yet again, the Labour vote in the northern region, as in every English region, increased. Our vote in the north is now more than 50 per cent.

Any Government who are honest in saying that they want a nation at ease with itself must not neglect the aspirations and wishes of people who voted in that way. It is important to consider the make-up of the north. My area and the constituencies around it are now represented exclusively by Labour Members. The changes in that area have been overwhelming. There has been a shift. The traditional industries, such as mining, steel and shipbuilding, have gone. There are virtually no jobs in those areas now. Yet the people are voting Labour in greater numbers than at any time under this Government.

The people did not say that they wanted to get rid of public expenditure altogether. The Government need to take account of the lessons about the use of public expenditure learned in recent years in the northern region. The Prime Minister paid his first visit to the north during the election campaign, but unfortunately he missed the essence of what we have been trying to do in the north.

We accept the world as it is, and we have tried to use public expenditure to fuel and encourage private sector expenditure so that we work together to ensure a future and opportunity for people living in the region. That is why Nissan is in the region. Local authorities and trade unions work hard with central Government and with the private sector to give that opportunity.

That is why we have the Northern Development Company. It is not a central Government initiative; it is an initiative born of the aspirations of trade unionists, of local authorities and of the private sector. They wanted a development agency that recognised the changing nature of the north and the fact that there needed to be that partnership and a determination to overcome. Once those organisations in the north had got themselves together and worked out where they were going, we asked the Government for support. Last year, the agency was given the European prize as the best development agency.

We have tried to use diminishing public expenditure to draw in the private sector and thus to get the best from both. It is still true that the private sector is very wary of investing in the north, because it knows that it still takes enormous risks and because the recession has meant that, in recent years, more economic development has begun to be difficult.

Unemployment has again started to rise drastically. When unemployment rises in the north, it does not do so from a zero per cent. or 2 per cent. base; it rises from a high base. In areas such as Consett, we are approaching 20 per cent. male unemployment. Despite all the amazing things that have been done in that town, there is again significant male unemployment. We know that we need a partnership approach to be able to unlock that problem.

In this debate on public expenditure, I plead with the Government to change their ideological view which, unfortunately, we could detect in the Queen's Speech yesterday and in the Chief Secretary's speech today "Public expenditure bad, private enterprise good." Our experience in the north is that we need a partnership, that we need not to be ideological about either side, but to use expenditure from the public and private sectors as effectively as possible.

I turn to child care, in which the Government, because they have turned their backs on public expenditure, have missed opportunities, which means that private enterprise is not growing as it should. In recent years, I have talked to employer after employer. They say, "Yes, we recognise that child care is important and that we should open up opportunities for our employees—especially women, but also some of our male employees." Employers want to introduce child care, but they say, "We are not child care experts and we do not want to find that we have to do it ourselves, because we know that it needs a skilled and careful application."

Employers were pleased by the Labour party's proposal for partnership development. We said that we would use public sector funds to draw in employers' funds and to raise money from employees who could afford to contribute. By using public funds most effectively, the Government would then be able to ensure that women were able to maintain their career paths and so continue to pay taxes. An independent report which came out just before the election demonstrated that, if that approach was taken, child care would be paid for within 10 years by the increased contribution in individual taxes of people who were involved.

As a result of the dogmatic approach that things must be achieved by the free market, we have lost the opportunity to open up the individual choices that some families wish to make about their pattern of family life which would enable their children to have access to quality child care. The Government's dogmatic approach has moved them away from opening up those opportunities.

There is another area in which the Government, because of dogma, are reducing choice rather than opening it up. I often wonder whether the Government have the same understanding of the word "choice" as I do. The Queen's Speech contained a commitment to a Bill to extend choice and diversity in education. I think that the Government mean that more children will have access to the private sector of education and that there will be more opting out of the state sector. That will not bring choice to the majority; it will reduce choice for the majority. It will give choice to the providers.

Other hon. Members have said that the Government are not interested in providers. In education, it is precisely what they are interested in. They want to emasculate local democratic decisions about the future schooling of children. By doing that, they will introduce not diversity, but division. That division will condemn groups of our young children and our adults to less opportunity and less choice in getting a quality education service. More than anything else, it will deny choice to communities and to the nation. It will reduce the overall quality of education.

If we are to lift groups out of poverty and to enable the poorest in our society to progress, they must be involved in education in a way that none of us has recognised in the past. Those people have to see education as a central part of their families, of their communities and of their individual lives. Only when the Government are prepared to draw away the veils of dogma will they begin to take hold of what real equality of opportunity for our youngest children and for our young adults will mean.

The people in my constituency who at present have to go to the neighbourhood school cannot afford to go to another school. Unless we ensure that the neighbourhood school, the village school and the small town school have no choice but to offer the very best opportunities in education, we shall offer those people not only no choice, but no future.

I urge the Government to recognise some of the lessons from the election that we are having to recognise. The Government must think their way through what we are getting in terms of a divided society and of a group of people who feel that they have no hope and no future in this society. The Government must recognise that, and they must work to ensure that they think about those people's futures. They must work with us to unlock opportunity for those who at the moment have no hope, very little aspiration and very little belief that the Government care about them at all.

5.39 pm

Mrs. Barbara Roche (Hornsey and Wood Green)

Thank you very much, Mr. Deputy Speaker, for calling me. May I congratulate you on your appointment?

I am extremely honoured to represent the constituency of Hornsey and Wood Green. It is one of the largest constituencies in population terms in London, and it is a collection of north London villages. It is an extremely beautiful constituency, with a great deal of open space, but it also has many inner-city areas and many residential areas.

I pay tribute to my predecessor, Sir Hugh Rossi, who held the seat of Hornsey and Wood Green for more than 26 years. He was widely recognised as an excellent constituency Member. It is the convention that, in one's maiden speech, one pays tribute to one's predecessor of whatever political complexion. In my case, it is no formal tribute. I have great admiration for the work of Hugh Rossi. He was an excellent Member of Parliament, and I look forward to following in his footsteps. He was well known in the House for his work as Chairman of the Environment Select Committee, and environmental matters are extremely important in the constituency.

Joyce Butler was the Member of Parliament for the Wood Green part of Hornsey and Wood Green, again for a long period—more than 24 years. Sadly, she died at the end of last year. She had a reputation second to none for making green issues a priority long before they became fashionable not only in the House but elsewhere.

My constituents feel passsionately about the preservation of their open space. There was a campaign to save Parkland walk from proposals to put a motorway through it. Local groups are working vigorously along the Archway road, to make sure that local homes are restored after more than 20 years of environmental blight. In my constituency we are also tackling the pilot scheme for red routes—a scheme which has led to business failure in a constituency in which nearly 8,000 people are out of work. The scheme has added to local unemployment and to the deterioration of the area.

I share the feeling of many people in my constituency who want Alexandra park to be preserved as an open resource not only for us in north London but for everybody in London who wishes to use and admire that lovely park. I also shared the sadness of many people in my constituency that the right hon. Member for Henley (Mr. Heseltine) as Secretary of State for the Environment did not list Alexandra palace, which is not only a symbol of Hornsey and Wood Green but the place where broadcasting began in this country.

Hornsey and Wood Green is an area of many active community groups. Another of my predecessors was Lady Gammans. It was said of Lady Gammans that she could not hear the tinkle of teacups in Hornsey without being present. I hope to follow her example.

When I talk about Hornsey and Wood Green, it would be wrong not to mention the richness of the constituency and its benefit from the variety of community groups. We are very privileged to have a very big Cypriot community. That community, although it is integrated into the country, and of course its hopes and aspirations for its children are centred on many of the issues that are discussed in the House, is also concerned with what is happening in the beautiful country of Cyprus—a country that is still cruelly divided, and a country which looks at barriers coming down in the rest of the world and in Europe, but which sadly still remains divided. I hope during my career in the House to add to efforts to bring about a just solution to the problems of that beautiful place and to the uniting of that country.

I was extremely interested to read in the House Magazine that, as a new Member, I am one of about 9 per cent. who are members of the Bar. I shall not dwell at length on the many virtues of members of the Bar, because some hon. Members would wish me to do so. Suffice it to say that when I have been welcomed to the House by my colleagues, I have noticed a tendency to count their fingers after the warm handshaking.

I noted that the Queen's Speech emphasises crime and law and order. That is a subject in which I am naturally extremely interested. My constituency in the past has seen a 16 per cent. increase in crime over the past year. Many of those crimes are street robberies and burglaries which go to the heart of living in our great city—crimes which make it difficult for people to go out at night, attacks on women and vulnerable people, and attacks on our black and ethnic minority communities.

Our local council and the police have had a good relationship in combating crime. There have been joint sessions between local councils, the police and myself on the issue. However, the issue goes beyond the police and the local authority. It needs proper support from central Government and resources. Yes, we need more police officers on the beat. Yes, we need better community policing. If we are to have the new initiatives that the Metropolitan police plan to introduce, we need state funding, support and extra resources.

We also need a legal system that is prepared to bring about that change. We need to make sure that the royal commission brings forward proposals to restore the emphasis on measures to make sure that our judiciary and legal profession truly represent the people of this country and that they reflect our modern society. 1 hope that the Lord Chief Justice can follow the excellent example of Madam Speaker and dispense with the wearing of wigs. I know to my cost that wigs are extremely uncomfortable and hot, particularly in the summer months.

I hope to be able to make a contribution to matters which are of interest to my constituents and to the wider community. It is only by getting the legal system right that we can truly make sure that we have the democratic society that the country needs and that I hope to be able to help to achieve on behalf of my constituents in Hornsey and Wood Green.

5.48 pm

Mr. Malcolm Chisholm (Edinburgh, Leith)

Thank you, Mr. Deputy Speaker, for calling me at such an early stage.

There are many things that I could say about Ron Brown, my predecessor, but I shall confine my self to saying that he knew the importance of class politics, when deceiving or joking voices prattle on about a classless society. He was, of course, officially the hon. Member for Edinburgh, Leith, a conjunction of places that might cause some horror among the present residents of Leith, and certainly would have done in years gone by.

Seventy-two years ago, Leith was a completely different town from Edinburgh. At that time, a Bill was introduced to make the two boroughs into one. The opposition to that Bill was led by the father of the right hon. Member for Chesterfield (Mr. Benn), the then Liberal Member of Parliament for Leith, Captain William Benn. He made many wise remarks in a remarkable speech in the House on 8 June 1920—none of them so wise, however, as his decision five years later to resign his seat and join the Labour party, something which I would recommend to right hon. and hon. Members in the present Liberal party if they were here.

Two remarks in that speech connect particularly with current problems. Captain Benn pointed out in 1920 that the whole breath and life of Leith was industrial. He also said that it should not be assumed that, because two places were contiguous, the interests of the smaller community would be best served by joining both under one administration. The latter remark about Leith then reminds me of Scotland now. It is crying out for more control over its own affairs. Of course, the Conservative party used to fulminate against centralising socialism but now presides over the most centralised state in Europe. We on this side of the House are the decentralisers. We are the democrats. It is because we are decentralisers and democrats that we demand a multi-option referendum now on the constitutional future of Scotland.

To say that the whole breath and life of Leith is industrial was true in 1920, true in 1979, but hardly true today. In the past 13 years, manufacturing employment in Scotland has fallen by 37 per cent. and by an even higher percentage within Leith. The result of that in my constituency today is the appalling percentage of unemployed people: 20 per cent. of the economically active population in Leith. That is the highest percentage in Scotland and it is the official figure, without the many fiddles of the past 13 years.

Just as there was nothing in the Queen's Speech about bringing democracy to Scotland, so there was nothing about bringing jobs to Leith. That stark, horrifying reality of unemployment is the background to everything that I support or oppose in the House. In particular, I will support only economic policies which make massive inroads into those unemployment figures and the human misery that lies behind them.

Today's debate is about public expenditure, and I want to talk about three areas of public expenditure which I know are important to thousands of people in Leith—housing, health and child care. In the four weeks that I have been a Member of Parliament, I have been inundated at surgeries and on the telephone with requests about housing. People are desperate for homes, yet public expenditure by the Scottish Office on housing has been cut more than any other area of expenditure since 1979. I am angry, but hardly surprised, that there was nothing in the Queen's Speech about building more homes. That would make it just too relevant to the problems of ordinary people.

On health, the people of Leith have been deprived of various services in the past few years at their two main local hospitals—Leith hospital and the Western General hospital. Now they face the certainty of opt-outs. With the 1993 Scottish opt-outs stitched up before the election and many more pencilled in for 1994, that means a health service based on need, but unfortunately, it is the need to generate income rather than the needs of patients.

The people of Leith care passionately about the health service. I can assure the Government that they will fight for the return of services such as the accident and emergency department at the Western General and for the retention of their hospitals under full NHS control.

Public expenditure on housing and health are areas of public expenditure which have traditionally suffered during the past 13 years. Child care is a relatively new area, but hundreds of people in Leith—mainly women—are telling me that it must now be given proper recognition. It has been my privilege in the past year to be a member of the Greater Pilton child care action group, which is drawing up plans for a child care centre within Leith constituency, as well as raising the issue in a more general way.

Child care is at the heart of the political agenda in Leith. First, it is necessary for the relief of poverty. Unemployment is the biggest single cause of poverty. Hundreds of people—mainly women—cannot work because there is no free or affordable child care. Secondly, without child care, equal opportunities are meaningless. Child care is essential for sexual equality. Class politics, or any other kind of politics, is no good unless it practises and promotes sexual equality.

Thirdly, child care is necessary for the revival of the economy in a high-wage, high-tech direction—the only direction worth going in. It would pay for itself in a short time. That fundamental point has been the subject of at least two recent books and requires a speech to itself on another occasion.

I was told last week that there would be something about child care in the Queen's Speech. Once again, I was disappointed, but not surprised. The prospects for child care under the Conservative Government cannot be good, because the Government have shown so little concern in the past 13 years for the relief of poverty, the pursuit of sexual equality or the modernisation of the economy. However, I remind the Government of the recent European Commission recommendation on child care which talked of publicly funded child care for people in employment or training. I shall remind the Government of it again in the weeks ahead.

Leith wants jobs and homes. It wants child care and health care based on need. It wants democracy to help it to achieve that. It has never wanted Tory Members of Parliament or Tory priorities. Leith's motto is "Persevere". I should like to end with thanks to the people of Leith for sending me here, and a pledge to persevere until their priorities have won the day.

5.57 pm

Mr. David Ashby (Leicestershire, North-West)

I am privileged to follow two very interesting maiden speeches.

I listened with great interest to the speech of the hon. Member for Hornsey and Wood Green (Mrs. Roche). She made a most eloquent reference to her predecessor, Sir Hugh Rossi, whom we all remember as a most distinguished Member of this House who had a great love of, and a great interest in, the environment and who cared greatly for the environment, as we know from his chairmanship of the Select Committee. I came into greatest contact with him in his role as chairman of the British-Italian all-party committee. I hope that the hon. Lady will join that committee and will continue that interest in the British-Italian group. It is one of the most thriving groups. It has always taken a great interest in that country and done its utmost to renew friendships and keep friendships going.

I was interested to hear that the hon. Member for Hornsey and Wood Green shares my professional background. It seems that Hornsey and Wood Green likes lawyers. Sir Hugh was a lawyer. If she continues as she began today, she will make a great mark on the House. She made a most eloquent speech, and I congratulate her most heartily on it.

The hon. Member for Edinburgh, Leith (Mr. Chisholm) made a rather more controversial speech—

Mr. Frank Field

He has just taken his speech out of the Chamber.

Mr. Ashby

In that case, I shall leave my remarks on his speech until he returns.

I wish to raise five matters. Two of them deal directly with the economy and businesses, and with Bills to be presented to the House. The Leasehold Reform Bill will not affect businesses, but it should. It will deal only with private property, the long leases of which are coming to an end and where people have an interest in that property. However, a much bigger and, in terms of the economy, more important problem should be dealt with—business property.

In the past 30 or 40 years most local authorities—county councils and district councils—have done a great deal to bring businesses into their areas by creating business parks and pump-priming their areas. They have had the necessary roads laid, helped with the planning and assembly, and sold off plots of land, invariably on long leases which may vary in length from 30 or 40 years to 90 years in exceptional cases. Most such leases last for 30 to 50 years. In north-west Leicestershire we have several such business parks.

As a result, the biggest owners of business premises in this country are local authorities. They own vast acreages and billions of pounds worth of property, and their ownership is continuously increasing. Local authorities will soon have an excessive grip on business. Indeed, we may have already reached that stage. We are grateful for what local authorities have done, and I have no quarrel with them; it has been magnificent for the economy, especially for local economies and businesses. But if one considers the overall economic state of the country, that ownership makes no sense. It is simply not good for the country that so much of its wealth is nationalised—and whether it is in local or Government hands, it is a form of nationalisation. Factories, shops and business premises throughout the country are effectively nationalised. Their control is nationalised not in a long-term but rather in a short-term sense.

Businesses that started 30 years ago have built themselves up and flourished. They have invested in factories and other buildings to benefit the economy and are now reaching the end of their leasehold interests. Their buildings are a wasted asset. What happens when the leases run out? Will the benevolent local authority say that, as the business is benefiting the local area, it will increase the length of the lease so that the business can continue? I wish that that were so, but invariably it is not.

When it comes to renewing leases, local authorities will drive the hardest bargain of all. They are Shylocks and very strong in the business sense. They have control because they hold the majority of the business land in the area. They have a stranglehold on business and will double or treble ground rents. That is not good news for businesses, especially when they are suffering from the effects of the recession.

If that were the only story, my complaint would not be so important, but the problem is even greater because local authorities are now demanding a piece of the action—a percentage of the profits as part of the extension of the lease. That is extremely bad news and simply not the way for local authorities to behave.

Local authorities should not own property. They can own their council offices and remain in one or two traditional areas, but they should not be in the property business, owning vast business parks. They should develop business parks, help the infrastructure and see that the properties are rented out at the beginning. Thereafter, they should sell the business parks, either offering them first to businesses within the business park or selling them to a pension fund. The money could then be recycled and invested in other land, and the local authorities could go back to pump-priming further expansion within the area.

I have not heard this serious problem raised in the House before. The problem will grow if it is not tackled firmly. The position of businesses in leasehold property differs little from that of people who own long, declining leases on their homes. When we tackle the leasehold ownership of housing, we should also consider the leasehold ownership of factories, factory sites and land.

The reform of local government will no doubt form part of other Bills to be laid before Parliament. Consultation is now taking place, but I believe firmly that this will be our last opportunity to reform local government, and we must get it right this time. I shall no doubt have an opportunity to make a speech when the relevant Bill is introduced, but we must now reflect on the form that it will take.

Our problem with local government has always been that the structures are too rigid. We have county councils, district councils and parish councils. We put the present form of local government into operation in 1974, but we found that it did not work and had to get rid of the metropolitan structures such as the Greater London council. As a former member of the GLC, I could see then that it did not work and I was wholly in favour of its abolition. If we are not careful, we shall put a similar rigid structure in its place which will not work either. The beauty of local government as it evolved, and before we started to interfere too much with it, was that it found its own way forward without too much central interference. If we are to have successful reform, we shall have to return to that.

The right structure for local government is to be found in the district authorities, which should be allowed to find their own structure for various services. They should be free to make contracts with other districts—for example, to form an education committee. The same district council should have the opportunity to work with a quite different one, which might specialise in welfare services. That would give them flexibility and freedom. If, at the end of five years, a district council is dissatisfied with working with another authority on welfare service issues, it should be able to break the contract and form a new one with another authority. Such flexibility is essential if we are to reform local government, and achieving that flexibility requires keeping to the smallest units.

Also absent from the Queen's Speech was a reference to the reform of shopping hours. I know that we are awaiting a decision on that from Europe, but reform is urgently needed. The law has been flouted, which is not good.

Action from the centre is urgently needed to allow us the freedom to shop on a Sunday; we must not give in to those with narrow minds. At the same time, an element of choice must be given to shop workers so that they have the right to say, "No, I will not work on a Sunday." Shop workers should have the full protection of the law, and polls have reflected that opinion.

I think that the most recent polls, have shown that about 68 per cent. of those questioned were in favour of fewer restrictions on Sunday trading, and 93 per cent. believe that shop workers should enjoy the legal right to say no to Sunday working without suffering as a consequence. That is the form of change that is needed for Sunday trading. It is urgently required in this Session.

We cannot wait long for that legislation, as the law is looking like an ass. There is enormous pressure on local authorities, which have to prosecute when there has been a contravention of the law, but the contraventions are so numerous that the authorities' departments and the courts are unable to cope. Larger businesses are flouting the law quite openly, which is not good for this country. We must put the law right, and we must do so in this Parliament. Some recent cases have brought into disrepute the way in which our laws are policed and presented in court. There is much concern about that, and a loss of confidence in our legal system. We must address the issue in this Parliament forcefully, strongly and urgently.

The cases in which the Court of Appeal has allowed an appeal fall into two categories. The first includes those cases in which mistakes—I use that word advisedly—have been made at the policing stage, and there have also been failures and corruption in policing. Secondly, mistakes have been made on appeal and even in the courts. We must consider all those issues.

The Government have faced up to many of the problems relating to police evidence and the way in which it is presented in court. They have taken a number of important steps to ensure that any apparent gaps are closed. That has been done by the Police and Criminal Evidence Act 1984 and by the amendments to that Act in subsequent criminal justice legislation. All such measures have been welcomed by those who practise law—by those who work at the Bar, solicitors and the judiciary generally.

However, despite those provisions, there are examples of the police, believing that someone is guilty, tailoring the evidence to fit that belief or taking insufficient care when investigating the case to make certain that there is not perhaps another side to the story and those involved are not guilty after all. In such incidents, the police do not investigate the case fully to discover where the truth lies. That is a matter of grave concern and has been, and will continue to be, a cause of miscarriages of justice. But action can be taken to improve the position.

No single action could do more to stop such problems than a fundamental reform of the police force. The police are crying out for a national police force. The idea of a police force based on counties is antiquated and absurd. It denies the opportunity for forensic specialties, and denies the various police officers the ability to move between the forces and gain promotion. In addition, it means that the police are stuck within a small locality and police force for a long time, which is not good.

The fact that such practices are not healthy was shown by what happened in the various crime squads set up in the 1970s. We witnessed the effect that different crime squads had on each other when they were working together for a number of years. Malpractices and inefficiencies were not challenged.

The police force should be utterly reformed and a national police force created. All the detailed examinations of every aspect of policing that have been carried out by the Select Committee on Home Affairs and other committees have always concluded that there should be a national police force. We must get away from our prejudices and our fears about a police state. We must consider the many advantages of a national police force, and the fact that it would resolve many of the problems that we are now encountering.

Mr. Peter Viggers (Gosport)

Will my hon. Friend give way?

Mr. Ashby

I shall develop my next point and then give way.

It is not good enough simply to have a national police force; we need something else. The police force is a vast body of men and women; the problem is how to manage such a body without management expertise. Companies of all sizes have managers and directors—directors of finance, managing directors, personnel directors: in short, a managerial class. Without them, industry would fail. Everyone ascribes the success of industry first to its work force and secondly to its management. Other bodies of men also include a management class—the Army, the Navy and the Air Force all have such a class—yet the police force has no management class. It is managed, in army terms, by sergeant majors, half of whom have not even been on a command course.

I have inquired into what other police forces do. The best of them all have a management class or an officer class. I remember going to a school in Holland, in Apeldoorn, which trained officers in the Dutch police. I spoke to a young man of about 29 who had been an ordinary policeman and wanted to become an officer. He told me that he was not going to be a good officer because he was already 29 and too set in his ways. He thought that he might make a reasonable officer, but not a good one. To be a good one, he said, he should have gone straight into training at 18, 19 or 20. I could well understand what the young man meant.

The same applies in most other activities. Why should the police force be exempt from an officer system? We need a management class to manage the time of the police, to make sure that they keep to the rules and to inquire continually into cases in which the rules have been broken. The police force needs managers to manage it; if it had them it would do much to overcome the problems that have arisen at the police stage in cases that come before the Court of Appeal.

Mr. Viggers

I can see the sense and the force of my hon. Friend's argument for the abolition of the county police forces, and others hold the same view. However, I for one feel that the county police authorities make a significant input to police decision making, and I would be interested to know whether my hon. Friend has formed a view on how, if the county police authorities were abolished, this valuable input would be made.

Mr. Ashby

There is absolutely no reason why such an input should not continue to be made. A national police force would not mean the end of organisation at county or regional level. Indeed, it would be impossible to have a national police force without some sort of managerial breakdown at regional level—but that does not preclude a national police force, or regional police forces having slightly different uniforms, such as they have now.

I offer from my county of Leicestershire an example of the importance of having a national police force. The chief constable applied for and was offered the post of commissioner or chief constable of the transport police. He was delighted, until his police committee told him that he could not take the job because it would mean having to pay more into his pension. So the transport police did not get the man they wanted and the chief constable of Leicestershire had to remain in his position. No doubt he was delighted to do so, and he does a tremendous job, but it must have left some bitterness to discover that he could not advance as he should have done just because of a small-minded approach on the part of the police committee and its unwillingness to pay more into his pension.

That leads us to the wider question whether there should be a transport police at all. There are far too many police forces in this country, and we should do away with the transport police, the port police, the atomic energy police and all our other numerous police forces. We should have one police force. This large number of forces has no point any more—they date from an earlier age when we did not have modern communications and modern expertise.

To summarise, there is an urgent need for leasehold reform which will include business premises. It is essential to reform shopping hours, and to reform local government, basing it on small units. We need a fundamental reform of the police to bolster law and order.

I make a final plea for one more change in the processes of law and order. Some appeals have been based on identification, and if one thing cries out for reform it is this area. We must implement Lord Devlin's report of 20 years ago. It said that no one should be convicted on identification alone because it is a most unsafe and unfair method. There should be corroboration in some particular of the identification. I notice the hon. Member for Hornsey and Wood Green nodding. She is a barrister, and she knows what I am talking about. There is no lawyer who does not feel the utmost unease about convictions resulting from identification alone. One of the most urgently needed reforms of our legal system is to introduce corroboration in some particular to every identification case. To that end we must enact Lord Devlin's recommendation.

The Court of Appeal ducked out of that reform. It had the opportunity to change the law in the case of Turnbull, but it ducked it. It ducked out of insisting on corroboration. The court appears to have ducked the issue in several of the appeals that have come before it, appeals which have been allowed on referral back to the court only after a long interval.

Written confessions are another case in point. I have always been uneasy about them. I well remember the furore in this House when eight service men in the RAF were acquitted at the Central Criminal court of charges of passing information to the then enemy, the Russians. I think that I was the only person who said that that was a great day for British justice. In no other country, and certainly not in Russia, would eight people who had signed confessions be acquitted. It was shown that those confessions contained matters that were totally and utterly wrong and untrue, and the accused always maintained that the confessions were not properly obtained. The jury's verdict showed that they were not properly obtained, and I am loyal to the verdicts of juries.

However, in many confession cases juries have convicted, and in recent cases confessions were found to be invalid and incorrect. Too often the confession is used as a short cut to resolving a case. As in the law relating to identification, the law on confessions should be changed to require the confession to be corroborated by some material particular elsewhere. Urgent reform is required.

I am grateful for being allowed the time of the House, and I hope that those urgent reforms are brought in quickly.

6.31 pm

Mr. Hugh Bayley (York)

I am grateful for being called so early in the new Session and I congratulate you, Madam Deputy Speaker, on your appointment. I am also grateful to the electors of York for returning me as their Member of Parliament. I pay tribute to my predecessor, with whom I had many sharp disagreements on many issues. However, in one area of policy he made his mark in the House, as I am sure hon. Members will agree. It was child safety and safety in the home. I also pay tribute to his predecessor, Alex Lyon, who is still remembered in York as an exceptional constituency Member of Parliament. That was sharply brought home to me when my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) visited York a few months ago. People came to her in the street to ask about Alex.

I know that my maiden speech should not be controversial, but I am provoked into responding to a couple of matters raised by the hon. Member for Leicestershire, North-West (Mr. Ashby) who spoke about the problems, as he saw them, of local authorities owning property. In York an extremely old city council has owned property for hundreds of years. There are advantages in that. Shambles, one of our city centre streets, which is the finest and, I think, probably the only complete medieval street in Britain, is there because it has been in public ownership for hundreds of years. It was taken into public ownership under environmental health legislation. Traditionally, it was the butchers' street in York and taking it into public ownership was a way of providing regulation.

York city council's heritage of owning property in the city centre puts it in the enviable position of being able to levy what I think is the second lowest poll tax in Yorkshire and one of the lowest in the country. It was able to do that because it had the benefit of investment which it built up for the public good over the centuries.

I am also provoked to respond to the suggestion of a need for a national police force. In North Yorkshire, my county, crime has risen from 20,000 reported offences a year when Labour left office in 1979 to 50,000 such offences. The North Yorkshire police force has exceptionally good information technology and perfectly adequate means of communicating with other police forces. We need not a national police force but more police officers and more resources for local authorities to put into crime prevention.

Partly because I have digressed to respond to the comments by the hon. Member for Leicestershire, North-West, I shall spare the House the traditional guided constituency tour that occurs in so many maiden speeches. That is because I suspect that many hon. Members have already visited York. I invite those who have not done so to visit it in the near future. I shall use my time in the House as an advocate for my constituency and my constituents. I hope to be involved in debate on the future of the confectionery industry and on the need for the current GATT talks to retain export restitutions so that food manufacturers in the United Kingdom can compete on equal terms with manufacturers from outside the European Community.

My hon. Friend the Member for Lewisham, East (Mrs. Prentice) spoke eloquently about the need to improve rail services for London commuters. She spoke about the desperate state of clapped-out Network SouthEast trains that run from her constituency to the centre of London where the majority of her constituents work. There is a need for new trains and a need for them to be built by BREL in York. It recently received a stop-gap order which will keep the works in business for about 12 months, but we need a much longer programme of orders so that this country retains the ability to manufacture modern aluminium-bodied railway carriages.

BREL in York is the only place in Britain that manufactures modern suburban aluminium-bodied railway carriages. We need the work in York and commuters in the London area need modern trains to provide a good service. There is no point in a citizens charter offering penalty payments to London commuters if British Rail does not have the goods to provide the decent service that the charter requires.

I shall deal primarily with the issue of community care raised by the hon. Member for Wellingborough (Mr. Fry). In less than a year, the Government will start to transfer resources of about £2,000 million from the social security budget to social services departments to provide community care. That will be done from the social security residential and nursing care support budget. Is that enough? Community care may be a better option for many patients, but it is by no means a cheap option. Social services departments throughout the country—those in North Yorkshire are no exception—have felt the financial squeeze of pressure on local government finance and the effects of the poll tax. Will they have the resources to improve not just the quantity but the quality of community care, which was one of the matters stressed in the Gracious Speech? The fact that there is an increasing demand for community care is a tribute to the existence for more than 40 years of a free and demand-led, needs-based national health service.

More people are living to an old age and they need community care in their later years. More children survive infancy. Many of those who would not have survived some years ago are disabled. I have heard many harrowing stories from my constituents about the difficulties that they have in obtaining the community care that they need to enable them to look after their children.

I was approached recently by a family who have a 21-year-old Down's syndrome daughter. The family took the decision to foster a 21-year-old Down's syndrome man. That family will look after their natural child and foster child for as long as they can, but they recognise that at some stage they will no longer be able to care for them. The family hope that the natural child and the foster child will be able to look after each other and provide companionship and security. The family would like to find full-time day care for the two children in the same clay centre. North Yorkshire social services department admits that the two children should have that care but it is unable to provide either child with full-time day care. It is certainly unable to provide the two of them with full-time day care at the same day centre.

Had the foster child not been fostered, he would have spent the rest of his life, as he had spent the beginning of it, in an institutional home. He has been given the opportunity to live with a loving family in the community, but without community care support that sort of benefit for those who would otherwise be in institutions is likely to be lost.

I have been dealing also with the case of an extremely severely disabled young woman whose parents are now no longer able to care for her. An argument has developed between the health and social services authorities over who should take responsibility. The young woman is occupying a respite care bed at huge expense to the health authority. There are others who need that bed and she is preventing them from taking it because no long-term provision can be found for her.

The family was offered a bed in a home in Skipton, which is many miles from York. If the young woman had moved to Skipton, her family would no longer have been able to visit daily and she would have felt abandoned. Are we to provide community care services that will ensure that people are cared for in the community in which they live and in which their families can provide support, or are they to be shuffled off to wherever a bed is available?

I welcome the commitment in the Queen's Speech to the citizens charter. Coming from York, I could hardly do otherwise, because four years ago the city produced the very first citizens charter. However, merely to have a citizens charter is not good enough if public services are not provided with the funds to deliver the high quality of service that the charter demands.

North Yorkshire county council is examining a proposal to divest itself of 20 old people's homes. That may save the council money in the short term, but only between now and April of next year when the community care budget is transferred from the Benefits Agency to local government. The real question is whether the divestment will improve the quality of care that is referred to in the Queen's Speech. Will it improve choice for the residents? Will it improve the opportunity to obtain provision that is local to where people live so that an elderly person who moves into a home is able to retain links and friendships in the community in which she or he lived?

Previously I was employed in a professional capacity as a health economist. I undertook a study not long ago into long-term care for the elderly, which included interviews with 1,300 people living in nursing and residential homes. Among other things, they were asked to express their views about the care that they received, the freedom of choice that they had in their homes and the overall quality of care that was available. Those who lived in local authority homes thought, generally speaking, that the quality of care was good. In the private sector, opinions were extremely variable. Some private homes were extremely good and some were unacceptably poor.

If more old people's homes are to be transferred from the public sector to the private sector, it will be necessary to ensure that the quality of care within those homes is retained. According to the 1,300 residents, the public sector was much better than the private sector when it came to quality control.

The problem with statutory inspection and regulation procedures is that they concentrate on areas that can be measured relatively easily, such as the number of rooms, the number of toilets, staffing and the control of drugs. They do not focus on the key to caring, which is the personal relationship between the carer and the elderly person, the handicapped person or the disabled person. That relationship cannot be measured through the statutory process, but it must be ensured if high-quality care—the sort of care that the citizens charter wishes to ensure—is to be maintained. It is not only North Yorkshire county council that is proposing to divest itself of its old people's homes.

I am concerned about what divestment means in terms of freedom of choice for the residents of old people's homes. Will they have freedom of choice about the life that they lead within the home—for example, whether they can choose when to have a bath, whether they have a choice of different dishes at meal times and whether they can choose the clothes that they buy and wear? All those facets are important, and equally important is whether people retain a choice when it comes to the type of home into which they should move.

As I said, I was involved in interviewing 1,300 residents. Only one in 20 of those in local authority homes said that he or she had even considered moving into a private home. Only one person in 30 in private homes said that he or she had even considered moving into a local authority home. These elderly people had extremely firm views about the type of home and the type of regime in which they wanted to live, and that choice must be maintained. The short-term cash benefits for social service departments of divesting themselves of their directly managed homes, which will run out in a matter of months, mean nothing when set against quality of care and choice for residents.

The residents of these homes will live in them for the rest of their lives. As people who are concerned with the provision of community care, we have a responsibility to ensure that quality and choice within residential homes are as good as they can possibly be. There should be a granny test: if a home is not acceptable for someone's parents or grandparents, it should not be acceptable to anybody else's.

It is all very well to say that the Benefits Agency now or the social services department in future will pay the fees of those who cannot afford to pay for themselves in private sector homes, but that is not always the outcome. I recently received a call from a couple who were extremely frightened on having received a bill for £2,121.95 in respect of the woman's brother two weeks after he had moved into a private care home. They did not have the means to pay the bill. They also received a demand to sign a form to indemnify the home against the fees if the woman's brother was unable to pay them. In addition, they received what I can only call a pressurising letter from the matron of the home.

Fortunately, I was able to take up the matter and say that that couple had absolutely no responsibility to pay the fees on behalf of the woman's brother—and, sure enough, the social security authority agreed to pay the fees. What would have happened if that couple had not found somebody to shout for them at that critical time? What if they had used their life savings to pay the fees? It is not good enough for the public sector to provide services on contract unless it can guarantee that the proper people, at the proper time, will pay for them.

I welcome the community care approach, but there are 6 million unpaid, informal carers throughout the country, without whose services the community care system would fall apart. Ten thousand of those carers are in my constituency, with about the same number in other constituencies. They need a decent carers' benefit and respite care for those for whom they are caring. They need proper community services, such as home help and laundry services, which are not being provided by social services departments because of the financial squeeze on them. Those informal carers are the biggest army of overworked, unpaid, undervalued heroes and heroines in this country. The whole system could fall apart. The closure programme for long-stay institutions will certainly fall apart if carers do not get the back-up and support from social services departments that they need.

The hon. Member for Wellingborough said that it was unclear how social services departments would finance their responsibilities. That is a disgrace. It is only 11 months from when they will have to meet those responsibilities. It is no wonder that those who care for the elderly, the disabled and those with learning difficulties are scared. It is a great shame that £14 billion has been spent on the failed poll tax when it could have been used for decent funding for social services departments to provide the community care that we all know is needed. It is a public spending responsibility that the House must grapple with and come to terms with, and it must do so quickly so that those who depend on that support can know well in advance of April that they will get the backing that they need.

6.52 pm

Mr. Peter Viggers (Gosport)

I am grateful to you, Madam Deputy Speaker, for the opportunity to make my maiden speech in this Parliament—although not my maiden speech as such, as I made that 18 years ago. I wish that after 18 years I had one part of the skill of the hon. Member for York (Mr. Bayley) in marshalling his arguments and winning the ear of the House. I respect the way that he presented his argument. He obviously has a keen interest in his constituency and in the subject about which he spoke most—the welfare of the elderly and others. I have no doubt that he will be keenly listened to in the House in future, and I congratulate him on an exceptionally good speech.

The hon. Gentleman's predecessor, Conal Gregory, was a friend of many in this House, and we very much miss him. I am not sure whether it is his intention to knock out the hon. Gentleman at the next election. If so, Conservative Members will wish him well, despite the praise that I have lavished on the hon. Gentleman. Wherever Conal Gregory is and whatever he plans to do, I am sure that we wish him well and respect the many efforts that he made on behalf of his constituents during the time that he was in this House.

May I say, Madam Deputy Speaker, what a pleasure it is to see you in the Chair? We are all happy that you agreed to accept the position of Deputy Speaker. We have experience of you as a Chairman of Committees, and we know that you are not one from whose path one strays lightly.

The main subject of today's debate is public expenditure. As my constituency contains more service men and women and more service voters than any other, it will be no surprise if I begin with the subject of defence. I regard defence as the first priority of Government and the area upon which they should spend money before they consider anything else.

I am happy that the proposals in the "Options for Change" document produced by the last Conservative Government have been carried out. There were many dire threats about the consequences of the changes and we were told that there would be severe cuts. In fact, the strength of the Navy has diminished only slightly, from about 63,000 to 60,000. Naturally, the Army must bear the brunt of the reductions. It is no longer realistic to imagine that the Warsaw pact's tanks will roll through central Europe. The Warsaw pact has gone, and Russia has even applied to join NATO. We do not need to retain the same level of forces in Germany, so quite realistically the Army is being reduced by about 40,000. The RAF is being reduced from 80,000 to 75,000. The number of civilians employed in the United Kingdom will be reduced from about 140,000 to 120,000.

I regard those reductions in defence spending as realistic, taking account of the reduced threat from our major prospective aggressors, the Warsaw pact countries, which had built up a massive superiority of forces over NATO and the western forces. However, the reductions are not so extreme that they reduce our level of forces below that which takes account of the fact that this is and remains a very dangerous world. Appropriately, it is now proposed that we should make a major contribution to the rapid reaction force, which will be commanded by a British general. That force will be available should there be a crisis in the world that merits such a response.

As the world shrinks and communications continually increase, so different tyrants, dictators and prospective aggressors throughout the world may pose a major problem even for this country, thousands of miles away. Our defence policy is balanced, and it has taken full account of the "Options for Change" proposals. I am happy that we now have balanced forces.

On the matter of other public expenditure, we must always remember that initiative, enterprise and wealth do not grow in Whitehall. It is our duty to lighten the burden on those who have those qualities of initiative, enterprise and wealth production and to ensure that those qualities are properly liberated. We must take full account of the message from the Pacific basin, and perhaps above all from areas such as Hong Kong, Taiwan and Singapore where, because of the light control on industry, it has been able to flourish and produce wealth beyond their and our wildest dreams.

It was said recently that Thatcherism would live on after Mrs. Thatcher. I believe that to be true. I truly believe that our former leader was instrumental in bringing about a watershed of change throughout the world. Those who have had the opportunity, as I am grateful to have had, of travelling widely will know that, even in countries such as China, people are taken by the fact that free enterprise has provided wealth in other parts of the world. At the end of a lunch or banquet, my Chinese hosts would often say, "Mrs. Thatcher, very strong lady."

The message of Thatcherism—that it is possible to reduce the burden of public expenditure and public control—has been taken up around the world. Japan is privatising its railways—a matter of great controversy when I was last there. The message of Thatcherism is being applied successfully around the world.

Since 1979, the Government have returned 46 businesses to the private sector, from which the taxpayer has benefited—I use that word unashamedly—by £41 billion. In 1979, nationalised industries were costing us £50 million per week, £2.5 billion per year. Those same privatised companies are now paying £2 billion per year in corporation tax. The message of Thatcherism and the return of nationalised industries to the private sector has been effective in management and financial terms.

It is necessary to keep public expenditure and the level of taxation down. One message that the Labour party should have learnt during the election is that no one wins friends by proposing to increase taxation, and not only does one not make friends, one does not increase revenue. The reduction in the highest level of taxation after 1979 led to an increase in the proportion of tax paid by the top 5 per cent. of taxpayers from 25 per cent. to 30 per cent. of all income taxation. That proves that the previous Labour Government had been over-taxing to such an extent that the taxation was becoming inefficient and producing less revenue.

There are areas where the Government have been criticised for holding back on public expenditure but where they have in fact been increasing it—something which I proudly support. Two examples are the national health service and the education system. Those two areas can be improved in ways other than increasing the amount of money spent on them. Throwing money at a problem is no answer. My wife is a doctor working for the NHS, and she feels keenly that throwing money at the service is not the answer; it needs better management. I am confident that the separation of the providers and the purchasers of services within the NHS will lead to more efficiency by a reduction in the size of the overall management unit. How can anyone possibly maintain that the NHS, which I understand is the second largest single organisation in the world, second only to the Chinese army, and which has existed since 1945, should remain unreformed?

I believe that the reforms in the NHS are working. My constituents are happy with the service that they receive. In the context of a public sector spending debate, it is relevant to note that, since 1979, we have increased spending on the NHS by 56 per cent. in real terms and we that are now spending some £620 a year on health care for every man, woman and child. That is a large amount of money. Our record is extremely good. Every Labour Government have resulted in an increase in waiting lists; every Conservative Government have resulted in waiting lists being reduced. That is a proud record.

Similarly, we have increased spending on education by some 50 per cent. Here, too, I believe that improved management will play an important part. Teachers in my constituency are happy with the local management of schools, which they feel gives them more control over their budgets, and they are happy with the concept of grant-maintained status. The one school in my constituency which has moved to grant-maintained status is excited about the possibilities that that will give it for spending its own money and providing its own management services. There, too, contrary to the general tenor of my remarks that we would contain public expenditure, we have increased public expenditure, with good results. I believe that there is a high level of satisfaction with the NHS and a growing satisfaction with our education system.

There is one specific area in which there could justifiably be a modest increase in public expenditure and public effort. I refer to one area of trade and industry for which my right hon. Friend the Member for Henley (Mr. Heseltine) has been given responsibility and which I myself once had some responsibility for. I remember the very few words with which Mrs. Thatcher invited me to take up my office. All I knew was that a reshuffle was in progress. I was called in by the Prime Minister, who said, "Peter, I want you to be responsible for trade and industry—in Northern Ireland." For three years, I had that responsibility, which gave me a chance to compare notes with my counterpart responsible for trade and industry in Great Britain—my noble Friend Lord Young—and to take some account of Britain's export efforts and how they could be improved.

We can learn some lessons from the Japanese Ministry of International Trade and Industry, which co-ordinates trade and industry activities in Japan. I hasten to add that I do not believe in increased control or subsidy of industry within the United Kingdom, but the Government have an opportunity to draw together and co-ordinate the export efforts of some of our largest companies.

I was delighted to see the news today that Trafalgar House, in conjunction with a Japanese organisation, has won a major contract for a bridge in Hong Kong, but we are not always so successful. We can learn from the co-ordination of effort which is put behind industry in other countries which send out a flying squad of experts such as accountants, bankers and lawyers but also engineers to ensure that the best companies are selected and work closely together to win major overseas contracts.

Sometimes, two or three British consortia compete for the same contract, whereas other countries, notably Japan, manage to narrow their competitors down and throw all their weight behind one consortium. In that narrow area, my right hon. Friend the Member for Henley should be encouraged to bid for slightly higher public expenditure in order to bring that idea to fruition. Elsewhere, I believe that public expenditure should be strictly curtailed. The economy is ready for recovery; if we hold back on public spending, that recovery will surely come.

7.7 pm

Mr. Llew Smith (Blaenau Gwent)

I have the privilege to follow in the footsteps of Michael Foot and Nye Bevan, and I do not pretend that I can do the job in the way that they did, but I hope that I can do it in a way that is relevant to the communities that they both represented and loved.

Michael Foot is a grand socialist and an inspiration to the Labour movement. As a Member of Parliament he was outspoken, but always in the defence of his constituency. That constituency has a history of struggle, and the past few years have not made much difference to that. In that period, thousands of people have been made redundant because of the rundown of the coal industry, as well as thousands more who were dependent on that industry.

In recent months, many of the jobs which have supposedly replaced those which have been lost have been low-paid, part-time and non-union. Some months ago, I overheard a redundant miner chatting to his friend, expressing pleasure in the fact that he had found alternative employment. But he went on to say that unfortunately, despite having found alternative employment, he was about £100 per week worse off. I suspect that he would have welcomed the introduction of a minimum wage of £3.40 per hour.

The message from my community is that we want jobs. We desperately need jobs, but we do not want jobs at any cost. We want jobs that pay decent wages, which are carried out in decent conditions and which bring dignity to their labour. A higher level of public expenditure would assist our communities, and would begin to create jobs and to defeat the problem of low pay.

I do not want to give the impression that everyone in south Wales is losing out—that the whole population is unemployed or suffering under low pay. In recent years, there have been some winners. For example, John Elfed Jones, chairman of Welsh Water, increased his annual salary from £76,000 in 1990 to £143,000 in 1991. Wynford Evans, chairman of South Wales Electricity, saw his salary increase from £67,000 in 1990 to £120,000 in 1991. Privatisation has obviously worked for some, but not for the majority of my constituents.

Low pay and unemployment are not the only problems confronting Blaenau Gwent, great though they are. It also has problems with its housing stock. Many houses are too old, and others desperately need repair. A high level of public investment is needed to overcome those problems. The local authority needs an opportunity to use the money that it raised from the sale of council houses to build new homes and to repair dilapidated property.

A great deal of television publicity has been given to cardboard city in London, but Wales has its own cardboard cities. Shelter estimates that there are 60,000 homeless people in Wales, and another survey suggested that 80,000 families—around 160,000 people—are living in substandard accommodation. In Wales, more than 200,000 people are either homeless or living in substandard homes. In my opinion, and in the opinion of the community that I represent, that is unacceptable.

Investment is also needed in the national health service. Blaenau Gwent has some of the worst health problems in Wales. The people who make up that community, because of its history, are the real experts when it comes to the health service. They were somewhat surprised some time ago to find that local councillors who cared for and had committed their lives to the NHS were all of a sudden thrown off Gwent health authority, to be replaced mainly by business men. They included a building contractor, a management consultant, a former controller of purchasing and supply for British Gas, a former pharmaceutical industry consultant, and a farmer who specialises in pick-your-own fruit. In fact, I believe that she specialises in strawberries. Perhaps a right hon. or hon. Member could inform me and my community how those skills are relevant to the running of one of the greatest services in the world.

If the national health service is to live up to the dreams of its pioneers, the people running it should be those who have devoted their lives to it, are committed to it, know what is required to improve it, and would be accountable to the people. The NHS was the finest piece of socialist legislation this century. It set out to deal with many of the problems that confront my community, and it will not stand idly by while the health service is devastated.

Blaenau Gwent is also the victim of privatisation. When its bus service was privatised, we were told by the Government—as were people throughout the land—that that would result in a cheaper, more efficient, and cleaner service. Instead, the service has gone into receivership. The shopping centre in Tredegar has also gone into receivership, while other shops and places of interest and entertainment have closed because of the recession. Many shops are also confronted by difficulties caused by subsidence that is probably the result of old mine workings.

Tredegar was once a proud town that was boasted about throughout the land. To pass through it today is a sad experience. I have invited the Secretary of State for Wales to visit that community, and I repeat my invitation in the hope that the right hon. Gentleman will visit it in the months and years ahead, to see how he and the Welsh Office can respond to its problems.

I do not want to give the impression either that Tredegar is the only town with a problem. Its problems are seen time and time again throughout Blaenau Gwent. The Prime Minister's only response in his speech yesterday was to announce more privatisation. Before he privatises the coal industry, I ask him to instruct his Ministers to speak to the experts—to those people who have devoted their lives to the coal industry, and who worked in the old private mines. They will describe the conditions that once prevailed, and explain why it would be so wrong to privatise that industry again.

Michael Foot once described himself as an inveterate peacemonger. I tend to follow in that tradition, which is relevant not only to world peace but to my own community. Although we can always find the money to go to war, we rarely find the money to ensure that people can enjoy their dignity in times of peace. If my constituents are to experience that dignity, they need the money that is spent on preparing for war to be used instead to overcome many of the problems that confront them now. If that is done, those problems will become part of history, and I will be able to report to the House the progress that has been made.

7.16 pm

Mr. David Wilshire (Spelthorne)

I add my congratulations and good wishes to those that have already been expressed to you, Madam Deputy Speaker. I am sure that you will have a very enjoyable time, and that we will all try to make your life reasonably simple.

Public expenditure is an all-embracing subject, and there is a great temptation to roam over whatever territory one chooses in a debate such as this. I will resist that temptation and focus on a specific aspect of public expenditure, in drawing the attention of the House to particular problems and possible solutions to them. I refer to central Government spending via local government. I deliberately phrase it in that way, for reasons that I shall explain shortly. [Interruption.] I have rightly been told off by my hon. Friend the Member for Dartford (Mr. Dunn) for failing to congratulate the hon. Member for Blaenau Gwent (Mr. Smith) on his maiden speech. I ask the hon. Gentleman to accept my sincere apologies: I should have known better.

I was pleased to be congratulated after my terrifying ordeal of making a maiden speech all that time ago, and I wish that I had acquitted myself as well as did the hon. Member for Blaenau Gwent. He began by reminding the House that he was following in the footsteps of Nye Bevan and of Michael Foot, but was unsure of his ability to do so adequately. If all the hon. Gentleman's speeches are as good as that which he made tonight, he will soon be in the same category as his predecessors. I am sure that we can look forward in the years to come to more orations that follow in the footsteps of those two noble parliamentarians.

The hon. Member for Blaenau Gwent said also that his predecessors had served their constituents well and had stood up for their beliefs. Although I do not share the hon. Gentleman's beliefs, I find it easiest to have respect for the opponent who fights hard for his or her constituents and who stands up unashamedly for his or her beliefs. The hon. Gentleman did both tonight, and I am sure that he will continue to do so. If he does, he will gain my respect and that of the whole House. I again ask the hon. Gentleman to accept my apologies for my earlier bad manners.

I return to the subject of central Government spending by local government. I put it that way deliberately, for reasons with which I shall deal shortly. The House should consider the issue, because large amounts of central Government money are involved, and at present it is proving incredibly difficult to target the money in the way intended by the providers. Let me give an example.

In the last public expenditure round, the Government took the view that a certain sum was necessary to provide adequate social services for my county of Surrey. That indeed is the proper role of central Government. The Government passed the money, by way of the standard spending assessment, through the Department of the Environment to Surrey county council. Now, £8 million of the money earmarked for Surrey's social services is being spent on other services provided by the county council. Hon. Members know the size of the mailbags that we receive when social services provision is not of the standard that constituents want. That is an example of how difficult it is for a Government of any political persuasion to target funds under the present system.

My third reason for drawing attention to the problem is the fact that local government expenditure has proved extremely difficult to control—again, irrespective of the political colour of the central Administration. Successive Governments have tried to control it, and have encountered problems. When Governments say that they want to sort out the spending of public money by local government, they really mean that they want to get public expenditure under control.

If our aim is to control the spending of public money via local government, surely trying to control local government income is not the most effective method. When I have difficulties with my bank balance, it is the expenditure involved with which I must deal first. Surely it is self-evident, at least in private circles, that, when we experience expenditure problems, we must control expenditure. That is the first lesson that I would draw from 20 years of trying to do something about local government expenditure.

There is no point in arguing about whether local government expenditure needs to be controlled. All expenditure, public or private, needs to be controlled. Money is a finite resource, and there is never enough to meet all needs. It must be controlled, whether we like it or not; and I believe that it must be controlled directly. Over the years, every attempt to control this part of public expenditure by means of income control has failed. As each method proves unsuccessful, another method is invented, even more draconian than the last and even sillier. There are plenty of absurd examples.

How, then, do we control local government expenditure? I have four suggestions. First, the Government must be certain that they have identified the source of the money involved. Secondly, they must be certain that they have identified the real purpose of the expenditure. Thirdly, they must be clear about who controls what is going on. Finally, they must ensure that there is a link between the providers and the client or customer.

All that may strike hon. Members on both sides of the House as eminently obvious. Why do we need to discuss something that is self-evident? The answer is that, although the solution may seem obvious, things are being handled badly at present.

First, let us consider the need to identify the source of the funds. The argument goes like this. There are many kinds of provision, and many kinds of expenditure—public expenditure, voluntary sector expenditure and quango expenditure, for example. Each type of expenditure needs to be controlled in a different way, and it is therefore vital for us to be clear about the source of the finance.

Probably the best illustration of the wrong way in which to categorise public expenditure is provided by the public-expenditure category called local government spending. That is because a range of sources is involved. There are councils' fees and charges; there is agency allocation of money—for instance, transport supplementary grants; there is the local tax, whether it be community charge, council tax or rates. Then there is the grant from central Government. Each of those different sources requires a different method of control. For example, the marketplace controls fees and charges: a council can charge only what the market will bear for, say, swimming facilities. But the marketplace does not and cannot control the amount that is provided by central Government.

If we are to control this part of public expenditure, we must be absolutely clear about the source of finance. That is why I said that I wanted to discuss the issue of central Government spending via local government, for that is what the central grant is—central Government expenditure. Anyone in the Treasury will confirm that. It needs to be identified for what it is, and discussed separately.

There is another catch. In saying that we need to control central Government expenditure via local government, we may forget that central Government expenditure is a pretty poor category as a source of money. It includes money from the Departments of Transport, Education and Health, from the Home Office and from many other Government Departments. We need to be clear about the source of every element of the central Government grant.

Secondly, we need to be clear about the purpose of the expenditure. That, too, may sound obvious, but far too many spending categories are vague; many are far too large or far too small; and even more are just plain confusing. We talk readily in the House about public expenditure on education, as though education spending were an entirely proper category of expenditure which we could control. But when a local councillor talks about education spending, he or she is talking about spending money on primary schools, secondary schools, clothing grants and remedial help for children: that is what councillors understand by the label "education".

An Education Minister, however, takes education spending to mean expenditure on all schools and on further and higher education, but certainly does not take it to mean expenditure on clothing or remedial help, which are the responsibilities of the Department of Social Security and the Department of Health respectively. It is small wonder that there is poor control of education spending, when two people engaged in a debate on the subject find that they are talking about different issues.

There is another reason for the confusion. Neither the councillor nor the Education Minister is talking about the totality of education, for neither is talking about expenditure on private schools or tutors. If we are to control public expenditure, we must get the categories right.

Thirdly, we must sort out who controls each section of public expenditure. That brings us straight into a debate that has been going on ever since local government began —the debate about the nature of the real relationship between central Government and local authorities in terms of expenditure.

There are those on both sides of the House who believe that local government should be left to get on with its own spending and that one solution would be less interference. However, central Government have a role in all expenditure, whether it is public or private. The nature of a country's economy is a concern of central Government. Some of my colleagues are great believers in non-intervention, but even a decision by central Government not to intervene has a profound effect upon public expenditure and the national economy. Therefore, the two extremes of saying that we need do nothing or that we must do everything do not hold water.

We cannot get away from the fact that there must be central Government involvement. Therefore, we must ask what central Government should be involved in. I can offer only one guiding principle: he who pays the piper calls the tune. In my Surrey example, central Government believed that they were making available £8 million for what they had decided was a correct priority. However, that £8 million was not spent on that priority.

It is small wonder that people in the Department of Social Security and the Department of Health are angry to discover that the money is not being spent on what they decided was a correct priority. The principle of he who pays the piper must apply if central Government are providing money for a specific purpose. Whether money is spent by central Government, local government or a voluntary agency, the provider of the funds must have control.

There are obstacles to my argument. My hon. Friend the Parliamentary Under-Secretary of State for Social Security needs to make money available to local government. What does she have to do? She provides that money for the Department of the Environment, which then passes it on as a block grant. There is another reason why targeting and control are not much good. If all the Departments that are providing money for local government pass it on to the Department of the Environment, there is an intermediary. Intermediaries in the chain of control are not a good idea.

Another problem is that both local government, in its capacity as a mini-Government, and the Department of the Environment have their own priorities and policies, so my hon. Friend the Under-Secretary of State passes money to the Department of the Environment which imposes its priorities, and when the money is passed to, for example, Surrey, there is a second lot of priorities. There is no effective control in that method.

We need to know what the tests could be for controlling such expenditure. For example, there is no way in which local taxation could fund an expensive service such as education. An expensive service will almost certainly need to be controlled by central Government if there is to be effective control of expenditure. However, if one focuses on local democracy, that is a different argument—one may end up sacrificing effective control to achieve it. Thus, the first test is, if it is expensive, it is central.

The second test must be who sets the standards. I do not think that the House would become excited about whether the grass verges in my constituency of Spelthorne were kept half an inch high or an inch high. That is a matter for the worthy burghers of Spelthorne to decide. However, from the newspapers and my mailbag, I get the impression that, if the standard of literacy in Cornwall is different from that in Kent, mayhem would break out in the House because that should not be tolerated.

That tells us something about who should control expenditure on reading. Although some standards can be set locally, things may change. I cannot imagine a time when the length of grass in Spelthorne will become controversial, but one must be flexible in case a standard suddenly becomes controversial.

Having said that he who pays the piper must have control and that whoever sets the standards should have the final say, if that increasingly becomes central Government, where does that leave local government? Regardless of who is providing the money or controlling the public expenditure, we must ensure that there is some mechanism that allows local needs and priorities to be brought to bear. That is the role of local government.

I know from my experience on a local council—many of my colleagues also have a background in local government—that although councils do not control hospitals, if there is a proposal to close a hospital, the council becomes agitated. If enough people complain that there is not a decent supermarket, councillors become concerned.

That is the local input to the totality of the provision of services and the spending of money. It has nothing to do with whether local government is the provider. Therefore, my argument that he who pays the piper should control spending does not undermine local government input into the spending of money and the provision of services.

Mr. Bob Dunn (Dartford)

I am very interested in what my hon. Friend is saying. If, inevitably, the vast majority, or indeed the totality, of secondary schools become grant-maintained, who should have the authority to decide expenditure? For example, in previous years a lower level of expenditure has been followed in secondary schools in Kent compared with secondary schools in London. If all schools in Kent were to become grant-maintained, who would have the authority to bring up the levels of spending in the county? Would it be the burghers of Kent or the Government? That is a conundrum.

Mr. Wilshire

Yes, it is a conundrum. However, what must be made clear in my argument is that the line of communication is from the school to the Department of Education and Science, because that is where the money is coming from. That is the strength of the grant-maintained system. A school that feels hard done by can argue with the provider of money rather than with county hall, which is simply the middle man. In this analysis, I would not try to answer the question in detail, but the principle of talking directly to the provider of funds bears out my thesis.

Where does this lead us? The Government must turn their mind to controlling expenditure by local government. They must do that by controlling expenditure, not income. We have tried that with the rates and the comunity charge, and we are now trying the council tax. Until we grasp the nettle of controlling expenditure directly, the House will again and again be asked to make changes.

If one is to identify the source of the funds and ensure that the provider provides directly, the Government will have to grasp another nettle. That involves taking the Department of the Environment out of the business of funding services provided by local government. That is a major change, but I believe that it is necessary. The only control that the Department of the Environment should have over a service provided by local government is when it is the provider of the money rather than the processor of the money.

We must be clear about purpose. We must look hard when we say that we want a specific sum to be spent on such and such. We must ring-fence it and ensure that it is spent properly. That requires a fair amount of rethinking by the Treasury.

We need a new role for local government. Happily, we have all started to talk about the enabling role of local government. I believe that this approach to local government expenditure leads to a greater enabling role for local government.

Those of us who were here during the last Parliament and those who have been here a great deal longer than I have will remember that public expenditure has always been an issue. If my crystal ball is any good, I believe that it will become a big issue in the months ahead. If we are to get on top of the problems of public expenditure now and in the future we must deal with local government expenditure. If we are to do that, major reforms in our way of controlling local government expenditure are still necessary, and I urge them on the Government.

7.39 pm

Mr. Dennis Skinner (Bolsover)

I have been listening as carefully as I can to the argument about who should control local government expenditure. One thing is certain: being on a local authority today is very different from what it was when my hon. Friend the Member for Jarrow (Mr. Dixon) and I were in local government in the 1960s—and when my hon. Friend the Member for Workington (Mr. Campbell-Savours) was in local government, too.

Then we could do things without central Government interfering. I remember when we could put in for spending money on slum clearance on a scale gigantic for the size of the authority, which covered a population of about 10,000. We got grants from central Government to do that, and we used to be able to balance the books. We could decide the rents. There was no busybody from central Government telling us what rents in Clay Cross should be.

When I talk to people on local authorities nowadays, despite all that the hon. Member for Spelthorne (Mr. Wilshire) has said, the main burden of the argument that I hear from Labour councillors is that they do not have the power to do what they would like to do. They cannot build houses as they used to, although they have the money to do it.

Mr. Wilshire

The hon. Gentleman may view what I am about to say as an attempt to deflect some of his wrath away from my direction, but is not meant in that way. The example that he cites probably makes my point. He talks about central Government trying to control rents. I argued that an attempt to control income—rent is income—is doomed to failure. So, for once, we may be making the same point. That may upset the hon. Gentleman rather than pleasing him.

Mr. Skinner

If I introduce a Bill in this Session of Parliament to give local authorities the power to spend their capital receipts from council house sales on building houses in order to get rid of some of the cardboard boxes that litter every town and city in Britain, will the hon. Gentleman support me?

Mr. Wilshire

The hon. Gentleman has not extended the thought process that I was using. I agreed with him about income, but he has now switched to expenditure, and it is expenditure that we wish to control. If he is inviting me to vote with him to abolish expenditure control, he will have a long wait.

Mr. Skinner

Now I have got the gist of it. I had thought that the hon. Gentleman was on a flight of fantasy—but now we get down to it: he is the same as all the other Tories, the same as the rest of the ragbag over there. They all believe in the same thing. They do not believe that local people in the towns and cities controlled by Labour should have the power to build houses so as to put roofs over the heads of the 200,000 homeless people.

We have millions of tons of bricks; the London Brick Company has millions of bricks. A quarter of a million people in the construction industry are without jobs. There are all those homeless people who do not know where to live, and it costs a small fortune to lodge them in bed-and-breakfast accommodation in many London areas. Yet the Government are so besotted with controlling local government from the centre that they will not allow local people to decide to build some houses.

That is all that is needed—it is a question of political will. The hon. Gentleman can potter about with figures as long as he likes, but it will not make any difference to the basic fact that we need a Government who will give local authorities the power to build houses so that they can start rehousing people. If some of the capital receipts could be used, the dole queues would go down, too.

The hon. Member for Kent talked about opted-out schools. The hon. Member for Kent—

Mr. Dunn

Dartford.

Mr. Skinner

Dartford is one bit of Kent. The hon. Member for Dartford (Mr. Dunn) was a Minister at one time—until Mrs. Thatcher decided to sack him during the holidays. She wanted to have a big change-round and she said, "Sack Dunn." That was the word that went round, but as it happened during the holidays people had gone off to the four corners of the world, and they could not find Dunn. The big clear-out was to take place in October, and the hon. Member for Dartford, who was a junior Minister at the Department of Education, was still in his job when he came back, because Mrs. Thatcher could not find him. He had gone as far away as her son Mark—whom she managed to discover, although it cost a bob or two.

Mr. Dunn

That story is embellished more and more as time goes on. I was not sacked in October—

Mr. Skinner

But the hon. Gentleman was sacked?

Mr. Dunn

—but in July. Yes, I was sacked; I do not deny that.

Mr. Skinner

Later on.

Mr. Dunn

No, it was in July 1988. I was there when I was sacked and the hon. Member for Bolsover (Mr. Skinner) was not.

When the hon. Gentleman was talking about schools, he implied that the 1960s and the 1970s were a golden age when there was no governmental interference. He is now in his seventh decade, so he will remember the time when Labour Secretaries of State for Education and Science said to local authorities, "If you do not go comprehensive, we will starve you of cash and withdraw your money." That happened with the Labour Governments of 1964–70 and 1974–79, and it is a good example of governmental interference.

Madam Deputy Speaker (Dame Janet Fookes)

Order. So far I have been fairly mild, by my standards, but I deplore interventions which turn into speeches.

Mr. Skinner

If I may briefly reply to the hon. Member for Dartford, Madam Deputy Speaker, I must say that I do not recall the Government ever withdrawing money from Derbyshire county council because it had not gone comprehensive. 1 was on that council between 1964 and 1970, and, despite six years of Labour Government, there were only two comprehensive schools in the whole of Derbyshire. But no money was withdrawn from Derbyshire, although it had not obeyed the diktats to which the hon. Gentleman referred. Some people may have said that it would be a good idea to withdraw money, but it did not take place.

When making his speech about local government, the hon. Member for Spelthorne gave the impression that local government could implement Acts of Parliament without any extra money. There have been at least 10 major Acts affecting local government during the past 10 years—the House passes at least one every year—and they have cost local government a small fortune to implement. The Government expect local government to find the money from within their existing budgets, without being able to use what they have already got. That is one reason why rates shot through the roof.

Another reason why rates increased was that the Government decided to withdraw about £60 billion-worth of rate support grant equivalent over the years. Local government tried to keep up with the mandatory Acts of Parliament that it had to carry out, so the rates had to increase and local government got the blame.

That is where the poll tax came in, and that cost another £14 billion. The Government talk about saving money, yet they are the ones who spent all that money on the poll tax. There are many Conservative Members still in the House who went trooping through the Lobbies, glad to vote the poll tax through. The result was that local government was burdened with £14 billion-worth of extra expenditure, as well as having £60 billion less in rate support grant.

At the same time, local government was having to deal with the fact that, as a result of the advances in medical science, people now live longer. That means that social services departments in every local authority have to pay more for each person in their area who manages to hang on for another two, three or four years. That is one reason for the massive proportionate increase in the sum that has to be spent by local government, even when the population may remain roughly the same.

The same is true of the disabled. If people live longer, they are disabled for longer, and the net result is that thousands of people in every constituency need more money from the social services for aids and appliances, such as stair lifts and ramps. Yet the Government tend to think that it is possible for local government money to be cut and for local government to manage to do the job it is expected to do.

Crime has gone up about threefold in many towns and cities since the Government came to power. Local authorities have to deal with that, except in London where it is dealt with differently. Where do the Government expect local authorities to get the money from?

In Derbyshire, we had a bizarre situation the other week. The chief constable of the West Midlands—he and his force have been guilty of so much malpractice and so many faulty decisions in their area—was appointed to carry out a survey of Derbyshire police.

Mr. Don Dixon (Jarrow)

The hon. Member for Spelthorne (Mr. Wilshire) is leaving.

Mr. Skinner

He has probably gone to do some more reckoning up.

The chief constable of the West Midlands is criticising the local authority in Derbyshire when everyone knows that the crime rate in some British cities, including London, has gone through the roof.

There has been mention of the citizens charter. Conservative Members give the impression that the citizens charter is a wonderful and beautiful thing. It is just a con trick by the Prime Minister. When we get to the next election, many people will find that out.

In my constituency, somebody talked to me about dioxin not long ago. He said, "Ey up, Dennis, can we complain under the citizens charter to get rid of the dioxin in the milk?" I said, "That's a good idea, but you had better check on it." The truth is that whenever one comes up against a problem of that dimension—all the local community wants to make a complaint to ensure that the matter is resolved—the citizens charter means absolutely nothing.

Last June, milk was contaminated by dioxin. The Minister of Agriculture, Fisheries and Food came to the Dispatch Box and told us that it would be a nine days' wonder. He gave the impression that it would all be resolved by the end of June or by July. It is now next May, yet there are still three farmers in my constituency who are not allowed to farm because the dioxin is still there. What good is the citizens charter for those people?

If we want to help people in the community, there is another way in which to do so. We could spend more money on the citizens advice bureaux, because in reality they did the job of the citizens charter. Thousands of people in every constituency trotted along to the citizens advice bureaux. What did the Government do? They cut the money for the citizens advice bureaux, yet they have the cheek to talk about a citizens charter.

We used to have a system of widespread appeals on every aspect of social security legislation. We did not need a citizens charter for that. People could ask the social security for a grant, and if they did not get one they could appeal. What did the Government do? They believe in a citizens charter, but a few years ago the Prime Minister introduced legislation to stop people having the right to appeal when they were turned down for a grant. On top of that, the Government told people that they would have to have a loan and get deeper into debt. That is hypocrisy on a grand scale.

The same is true for all those on hospital waiting lists. What good is the citizens charter to them? We can go through all the aspects of where it hurts in life. What rights do people have to make a complaint against the Government? In almost every respect, people have had rights taken away.

It was not long ago that we argued in the House about the right for law centres to be kept in operation. There used to be law centres in most large towns and cities. What did the Government do? They closed down many of them. The same is true of legal aid. If we really want to help people to make a complaint against the Government, the state or local authorities, what better than to extend the amount of legal aid available? The citizens charter is just a con trick to give people the impression that the Government are giving them rights. The truth is that the Government have taken them all away.

Several hon. Members have referred today to borrowing and public expenditure. The Chief Secretary to the Treasury, who is dealing with cutting expenditure, talked about getting rid of the public sector borrowing requirement in the "medium term". I have heard the jargon in here for years, including "medium term", "mirrored J-curve" and "crawling peg". I have heard them all. They come and go like the names of washing powders, although they are important at the time. People talk about them as if they will last for ever.

I asked the Chief Secretary what he meant by "medium term" and when the PSBR—which is supposed to be £28 billion, but which is more likely to be about £35 billion in the autumn statement—would come back into balance. he said that it would be in the "medium term". I asked him what the "medium term" was. We all know that in the past two years the PSBR has increased geometrically, so we know that it will not be in balance by the end of this Parliament. The Government do not have a cat in hell's chance of getting the budget into balance.

Only two years ago, there was a tiny PSBR. The following year, it was up to £14 billion and this year it is supposed to be £28 billion. We then have the £2 billion of tax cuts and we shall have an autumn statement. I am going to take a chance on it: I am prepared to bet that the PSBR will be closer to £35 billion by the next budget in March than it will be to £28 billion.

The Government have the cheek to tell people that the Labour party is not fit to run the country. This gang of supposedly clever business men and women—most of them have been moonlighting Members of Parliament in their time, who made money hand over fist before they became Ministers—have told us that we are not fit to govern. Yet this Government had more than £100 billion of North sea oil tax receipts and £40 billion of privatisation receipts. They have managed to get the country into debt to the tune of £28 billion, according to the official figures. That is how bad the Government are.

Mr. Campbell-Savours

The answer to the conundrum may be in the Red Book, as the Prime Minister suggested yesterday. It seems that borrowing will rise next year to £32 billion, according to the Red Book. It will then decline the following year to £25 billion, then to £19 billion and then to £6 billion. I understand that that is the period that the Government determine as being "medium term".

Table 2A.2 on page 16 of the Red Book deals with where the money will come from. That table deals with the burden of taxation. If I recall correctly, during a press conference in the general election campaign, the Prime Minister was asked by Mr. Anthony Bevins, the political editor of The Independent, "What does this table mean?"

Madam Deputy Speaker

Order. I have reminded a Conservative Member that he was supposed to be making a brief intervention, not a speech. I must therefore ask the hon. Member for Bolsover (Mr. Skinner) to resume his speech.

Mr. Skinner

My hon. Friend the Member for Workington (Mr. Campbell-Savours) made the point that buried away in the Red Book are figures that show that the Government have been pulling a fast one. They hoped that nobody would discover it. The truth is that the Government are up to their necks in debt. That is the bottom line. That clever set of business men and women have got the country up to its neck in debt. If the truth had come out at the election and had not been subjected to such treatment by the tabloid press about Labour taxes and so on—untrue reports concerning about £1,250 for everybody in Britain—and the leaflet to which my hon. Friend referred earlier, and if people had known what was in the Red Book and how they were being conned by the Government, the result could have been different.

Mr. Campbell-Savours

rose—

Mr. Skinner

If my hon. Friend wants to complete what he tried to say, by all means I shall give way to him.

Mr. Campbell-Savours

I refer my hon. Friend to table 2A.2 in the Red Book, which is where the information is hidden away. It shows that the Government are projecting an increase in the burden of taxation from 35.75 per cent. of non-North sea money GDP to 38 per cent. They are predicting an increase at the very same time and during the same medium-term period as they are predicting a reduction in borrowing. Perhaps my hon. Friend, or even the Secretary of State, will be able to explain the connection between the two.

Mr. Skinner

We all know that, in their first 13 years, the Tory Government increased taxes. Most people think that taxes mean income tax, but the truth is that they are much wider than that. We are talking about customs and excise and value added tax, which has more than doubled. The truth is that the Tories have increased tax from about 34 per cent., or just over, in 1979 to about 36 or 37 per cent. in the past year. There was a minor reduction because of the £2 billion in handouts—bribes—just before the election, but by and large the Tories have increased the total tax take. My hon. Friend is saying that hidden away in the Red Book is a proposition that, to balance the books in the medium term, there will be another increase in tax, and the chances are that VAT will be up to about 25 per cent.

Mr. Jacques Arnold (Gravesham)

If the hon. Gentleman wants to do something about debt, how would he advise the Labour party to cope with the debt that was incurred by the Sheffield extravaganza?

Mr. Skinner

I shall tell the hon. Gentleman what I would do to resolve some of the problems in Britain. I would have a fully employed economy. There are 3 million people out of work, but the official figure is only 2.7 million. When we add on all the kids on slave labour schemes and all the women who have not registered but were previously in work, we are talking about 3.5 million people without a job and on that pile of human misery known as the dole queue. The cost is equal to at least £8,000 per person to be unemployed per annum. It is costing the country more than £30 billion to keep those people idle.

That is what I would have said at Sheffield if I had been given the chance. As the hon. Member for Gravesham (Mr. Arnold) is so keen, I would have made that statement on television, but for some reason or other the television managers did not want to hear me; they painted me out of the picture during the general election campaign.

Mr. Arnold

rose—

Mr. Skinner

I shall not give way. You, Madam Deputy Speaker, made it clear that you did not want such interventions. The hon. Gentleman has had one crack of the whip. He wants to go back to Kent and guard his back. Almost certainly he will be in the next batch of 40 or 50 hon. Members who lose their seats at the next election. The hon. Gentleman should not come rabbiting to me. He has made noises on the Back Benches during the past five years and he had not even the guts to vote against the poll tax. I do not need lectures about Sheffield or anything else. I am telling the hon. Gentleman where I would get the money to finance the budget.

I would have a fully employed economy. Everybody knows that we cannot place every person in work, but, at one time in the post-war period, we never had more than about 500,000 or 600,000 out of work—what they call cyclical unemployment. If we reduced unemployment to that level, we would save £25 billion. We would be near enough to wiping out the public sector borrowing requirement. Once we get people back into work, they pay tax and insurance. I ask my hon. Friends who have influence in the higher echelons of the Labour party to make sure that we list full employment in the next manifesto. Let us make sure that we talk about it well in advance of the next general election. That is one way to balance the books.

I shall give hon. Members some more tips. In the first 10 years of the Thatcher Government, the richest 1 per cent. in Britain received £26.2 billion in tax cuts. If I were the Chancellor of the Exchequer in a Labour Government, I would haul back that money in the first 12 months. I do not believe that the richest 1 per cent. in Britain, which includes the Queen, who does not pay any taxes, should get away with that kind of money when people live in cardboard boxes, without a roof over their heads, and when pensioners have to scratch by on about £50 a week.

Mr. Simon Burns (Chelmsford)

Does the hon. Gentleman believe that, when the Labour leadership elections are out of the way, the Labour party will go down the route advocated by the hon. Gentleman, or will his party agree with his hon. Friend the hon. Member for Birkenhead (Mr. Field), who earlier advocated that the Labour party should cut the standard rate of income tax to 18p in the pound as a long-term objective?

Mr. Skinner

I did not hear the speech of my hon. Friend the Member for Birkenhead (Mr. Field). I think that he is trying to paint another rainbow alliance, but I do not want to do him a disservice—it is probably something of that order.

I make it plain that I believe that the rich had it pretty good during the Thatcher years. It is time that that money was brought back. I do not believe that they should be allowed to make that money. On top of that, most of the people we are talking about have had massive salary increases of £50,000, £100,000 or £200,000 a year. About 200 Tory Members in the previous Parliament—I suppose it will be the same in this Parliament—were not content with salaries of £30,000. They were picking up moonlighting jobs at £100,000 a time. Some of them had as many as 10 directorships in the past few years. They were making money hand over fist.

Peter Walker left office to look after the family. In 12 months he had 10 directorships, probably the equivalent of 100,000 quid. The ex-Chancellor of the Exchequer Lawson picked up about £200,000 for a two-day week at a bank. Those people have the cheek to talk to us about the rich and about where the money is coming from. I would have no hesitation in bringing back that money. [Interruption.] And I would tax the Queen as well. Every survey shows that 80 per cent. of the population believe that that should be the case.

We could go further on defence. I have heard hon. Members talk about defence cuts. In the 20 years that I have been in the House we have always heard about Labour cutting defence, but, in the past two or three years, which party has cut defence? The answer is the Tory party. It really is an amazing turn of events. Conservative Members have been cutting defence expenditure and accusing us of being unpatriotic.

I would reduce defence expenditure. I do not see the point in Britain spending more money per head of population than European countries such as Germany. I just do not see the sense of it. I know that Germany is going through some difficulties now because we have got a good strike on. [Laughter.] I do not knock it. I believe in workers fighting for their rights. There is nothing wrong in that. Conservative Members should not laugh too loud and too long. Do not think for a moment that the people who create the wealth—the workers—will not take action some time in the future. It always turns full circle. It may be a little passive at the moment, but, make no mistake, it will change eventually.

I would save about £7 billion on defence and use that for the national health service, to pay better pensions to old-age pensioners and to give a little bit more to the disabled. I will tell the House where I would save some more money. This is not Labour party policy, and it was not discussed in the election campaign by those in power. I would save some money in Northern Ireland. It is costing at least £1 billion per annum to keep the troops in Northern Ireland. I would bring them out. It cannot be done straight away, but I would draw up a plan. We have had 20-odd years of the killing fields of Northern Ireland.

Ministers come to the Dispatch Box one after the other and say, "Things will get better. We have a new initiative." We listen to them for two years and then they get sacked and someone else is put there who comes up with another initiative. But those initiatives do not resolve the problem of self-determination in Northern Ireland. So I would save another £1 billion in Northern Ireland.

I would not have spent the £3 billion on the Falklands adventure. That is what it cost. So when people say to me, "Where is the money coming from?", I can show where I could save £50 billion already. I am prepared to balance my books, unlike the Government who have got us into this unholy mess.

The same is true of the Common Market. Britain pays £17 per week for every family in Britain to finance the tinpot common agricultural policy. Make no mistake: if I had that brief, I would put a stop to that.

Mr. Campbell-Savours

That is our policy now, Dennis.

Mr. Skinner

Well, it is not mine. My hon. Friend has a different policy on the Common Market from me. If he wants me to reveal my policy here in the House of Commons, I will. Before we entered the Common Market, which has been an unmitigated disaster, we had a deficiency payment system for farmers. After 20-odd years in the Common Market, many farmers—although not all; many gentlemen farmers are happy—who remember the deficiency payments system say, "Yes, it was a better system than the one that we have now."

If my hon. Friend believes that the Common Market's halcyon days are not over, he should simply read the newspapers. The Common Market is not what it was in the 1950s, 1960s and 1970s. The economic growth days have gone.

Mr. Campbell-Savours

All I am saying to my hon. Friend is that Labour party policy at the last election was to secure a massive reduction in our payment into the agricultural budget. We advocated the reform of market pricing for agricultural products. To what extent is my position different from that of my hon. Friend on these matters and, in particular, on agriculture?

Mr. Skinner

I read the manifesto closely. I was involved in the policy review. Although my hon. Friend might have believed the jargon that he read in the newspapers, the truth is that at no time was a statement made about the precise amount that a Laour Government would save on the common agricultural policy. Many things were said which might have given that impression, but that was not the precise nature of what we fought the election on.

I have an honest difference of opinion with my hon. Friend. We shall come home to this cake and milk eventually because the Common Market and political union will not be on offer much longer. It will not happen. I say here and now that there will never be a time when someone with the name of Baron von Traushauser will stand for Labour in Bolsover and win in a general election. We all know that it will not happen. If people cannot accept the bottom line, why do they parade all these wonderful virtues of political union? That is what it means at the end of the day.

The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), who used to be Leader of the Liberal party—

Mr. Campbell-Savours

The Liberals are not here.

Mr. Skinner

They are never here. We know that they are not here. The right hon. Member for Tweeddale, Ettrick and Lauderdale thought that he could be the great political adventurer, trot across to Italy and fight in a Common Market election. What happened to him? He got about as many votes as Lord Sutch did, or his old mate David Owen did when he finished up.

I would love to be able to say that there will be world government. I want it. I believe that that is how we could achieve socialism on a grand scale. But I am not a fool. I see the Scots arguing the toss about breaking away from the United Kingdom. I do not knock that, if that is what they want. But what does it tell me? It tells me that they have a different culture and want to have it identified. That is the real world.

Hon. Members

Hear, hear.

Mr. Campbell-Savours

Conservative Members are agreeing with my hon. Friend.

Mr. Skinner

I do not worry what anyone says, because I know in my heart that I am right. I know that wasting time and energy on a grand political design which has been foisted on us from the top will not work. If we were dealing with socialists in the Common Market, it would be different. Does my hon. Friend suggest for a minute that Helmut Kohl is a socialist who has come from the working class?

Mr. Burns

What about Jacques Delors?

Mr. Skinner

I do not think that he is any different.

I suggest that the Common Market is coming from the top downwards. From a socialist point of view, if any substantial changes are to take place they must come from the bottom up. The Common Market is an apparatus designed by people such as Shirley Poppins, Dr. Death, Woy of the Wadicals and all that gang. Where are they now? Can they be found? They are people who pass through political history and disappear. They have great ideas. They used the Labour party for 15 or 20 years to pursue their tinpot ideas.

We have to read our history not only of Britain but of all the other countries. There have been a thousand treaties between Britain and other western European countries. Where are most of those treaties now? If we ask the Library, it will tell us. They are in the dustbin of history. They do not last for ever. I have no doubt that for a short period some people were excited and were caught in the time warp. They believed that those treaties would last for ever. But treaties do not last for ever. People ought to understand that.

The idea of a European currency and a European bank will not happen. Why bother? We have to build socialism on our own plot of land. There is nothing wrong with building it in a much wider field, but we must prove that we can do it on our own turf. That is what I am about. That is why I put forward these propositions to balance the books, achieve full employment, and give local authorities the power to build houses again and spend more money on schools and hospitals for an aging population.

If the other thing happens, so be it, but I will not put the horse before the cart. That is what some of our people will have to understand. That is why, when it comes to the vote on Maastricht, I want my hon. Friends to vote with me against it. If all of us on these Benches do the same, the Government will be in trouble because they have a majority of only 21. If we can get all our people to vote against Maastricht, we shall test those on the other side who reckon that they will cast their vote against it. Who will bail out the Government? It will be a great political event because the Liberals will bail out the Tory Government and be sunk for ever. They did not do very well in the general election, but they will go even further down the pan.

Mr. Campbell-Savours

My hon. Friend has put a powerful case, but, as he knows, I do not agree with much of what he says on European union. What does he feel about the social chapter, which will bring to this country standards that he would want to support and which are not otherwise available under the Government?

Mr. Skinner

I have no hang-up about improvements for workers, wherever they come from. If someone introduces a Bill to improve the lot of workers and take a little power away from the bosses—we cannot enhance the power of workers unless we take power away from somewhere else—I would support it. There is no yellow brick road along which everyone can walk together and live happily ever after. That is not real political life. If a social chapter clause is introduced which says that workers in Britain will be given 10 weeks holiday, just as Members of Parliament have during the long recess, I would not care who introduces it. But it will not come. The Government are incapable of delivering it because the bosses in the Common Market run the show, and they will not give all workers 10 weeks' holiday in the summer. If they did so, I have no doubts about what I would do.

Mr. Campbell-Savours

Will my hon. Friend be just a little more clear?

Mr. Skinner

I have been clear.

Mr. Campbell-Savours

If it were possible to secure within the treaty, when we legislate for it in the House, amendments that carry the areas about which the Labour party is concerned, would my hon. Friend then be tempted into the Lobby to support it on the basis that he was supporting principles that he holds so dearly to his heart?

Mr. Skinner

My hon. Friend has not checked the record. On a couple of occasions, two minor social security matters relating to care, one of which my hon. Friend the Member for Oldham, West (Mr. Meacher) will remember, went before the European Court. I was then asked whether I was in a dilemma over it and I said that of course I was not. Anything that advances the cause of working people, wherever it comes from, does not place me in a dilemma. But I shall not vote for the Maastricht treaty because it is a pig in a poke. My hon. Friend knows that there are no such provisions in the Maastricht treaty—

Mr. Campbell-Savours

At the moment.

Mr. Skinner

And there never will be, because the bosses run the Common Market.

Has my hon. Friend ever stopped to think about the political complexion of the countries in the Common Market? There are only two socialist countries among the 12, and they are not really socialist, so there is none. That is even worse.

Mr. Jacques Arnold

Then why is the Labour party so much in favour of it?

Mr. Skinner

I am speaking for myself. I am trying to make a statement on the Queen's Speech, but I have been drawn into questions on the Common Market. I have made my position clear. It is not new. Many people know where I stand on the issue. I am simply saying that I would save £17 a week per family—obviously, I could not save it all, but that is what it costs to prop up the common agricultural policy. I would make massive inroads into saving some of that amount.

We do not need the Common Market. Britain produces 50 to 60 per cent. of its food. We must import a lot because we do not live in a climate in which we can produce all our food. We must export many manufactured goods—rather, we used to—to pay for that food. It is not a bad idea to produce enough food in Britain to reduce the balance of payments deficit on food. I would devise a method to suit us rather than Germany and Italy. They have other fish to fry, which is only natural because they are different countries.

I am not being xenophobic but stating a fact. People should understand that. If everyone in this country acknowledges that Wales is different from England—some of my hon. Friends are Welshmen and proud of it and other people are proud of being Scots, and I do not knock their culture—why, when someone says that Germany is different, are they told that they are being xenophobic? I do not know the difference.

As an immediate move, I would not hesitate to get out of the exchange rate mechanism because it will not last even as long as the grand design on political union or the central bank. Like all the other forms of apparatus for managing currency, it will not last. There was an attempt at a gold standard before the war and economists wrote long articles about how wonderful it was, saying that it would reign for ever. But it did not. Rather, it helped to create mass unemployment in Britain. After the war and the Bretton Woods agreement, there was another attempt. There was then the floating pound, and that did not work either. It is like saying that we are not fit as socialists to run our own country and our own family purse but must give it to the Bundesbank.

I feel strong enough to do it. I do not need to go running to Germany and Italy, where the neo-fascists are now rearing their ugly heads on a grander scale than ever before and where mass unemployment is now the order of the day in many of the eastern European countries, gradually spreading into the other 11 European states within the Common Market. We no longer see massive growth in the Common Market but internecine warfare. We see warring tribes all along the edges of the Common Market. Now that Germany has annexed East Germany, it has run into serious trouble. Religious fundamentalism is now stronger than ever before and my hon. Friend the Member for Workington still goes on about the grand Common Market. These are different days. We are living in a different age and the great days of economic growth are over.

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I should be grateful if the hon. Gentleman would address his remarks to the House rather than to the hon. Member for Workington (Mr. Campbell-Savours).

Mr. Skinner

I was arguing about the Maastricht agreement, which is mentioned in the Queen's Speech.

Mr. Deputy Speaker

I am not arguing about the content, but the hon. Gentleman keeps referring to his hon. Friend and the rest of us would like to join in the debate.

Mr. Skinner

There is such a thing as a debate. It is your first time in the Chair, Mr. Deputy Speaker—or maybe you have been in it before. This place is still a debating chamber and I picked up the remarks of a Conservative Back Bencher, then from another Tory who had made a speech. I picked up some other remarks and my hon. Friend the Member for Workington has made some reasonable remarks in his own way about an important issue and on which he holds certain views. This is a Queen's Speech debate and we have a right to discuss it.

Mr. Deputy Speaker

I do not challenge the content of the hon. Gentleman's speech, but simply ask him to refer to the whole House so that the rest of us can listen.

Mr. Campbell-Savours

May I take my hon. Friend back to the ERM? He said that it will go in the same way as similar apparatus in history. That may be the policy and strategy. Would there be a need for ERM if we had a single currency?

Mr. Skinner

There will not be a single currency.

Mr. Campbell-Savours

There might be.

Mr. Skinner

It will not happen, because the climate and environment in the Common Market are now different from what they were during the great growth years when the grand designs were made. The Common Market is no longer what it was when those grand ideas were put forward. There is now insecurity all over the place, and when people feel insecure and see unemployment—12 million people are now out of work in the Common Market—and other difficulties, that insecurity results in their being insular. They then start to look closer to home for answers. The great ideas are then pushed on to the back shelf.

Even if the idea was great, unfortunately for my hon. Friend, the climate is totally different now. We shall debate this matter in the future, but I feel pretty confident about what will happen.

While I am dealing with the Common Market, I shall dispose of the subject of proportional representation. I looked at the Queen's Speech carefully and noted that it contained no mention of it. If ever people in this place and in this country have been led up the garden path, it is on the issue of proportional representation.

When the Liberals—who are not present—were challenged about it in the general election, they did not know whether they were on this earth or Fuller's earth. What is proportional representation? In which brand do they believe? They suffered a reduction of about 5 per cent. in their overall vote throughout the country. The people declared their feelings in the general election. I wish that we had received 42 per cent. of the poll, as we should then have been sitting on the Government Benches. I would have relished the opportunity of making some of these comments when in power. I believe in taking power from the bosses, unlike some others.

During the election the Liberals advocated proportional representation on washday Monday, Tuesday and every time they opened their gills. No one can say that we did not have a vote on that issue in the election—we did. The subject did not go unnoticed; people had it rammed down their throats until they were sick of it and, ultimately, more than 80 per cent. voted against it. That is the truth—

Mr. Campbell-Savours

I was not one of them.

Mr. Skinner

There are odd exceptions.

No one can tell me that proportional representation did not get a good run for its money in the general election. It was found flagging. If the general election had been a horse race, proportional representation would still be at Tattenham corner, trying to get round the course when the other horses had finished—it was as far behind as that. Let us hear no more nonsense about that.

One factor that helped us to lose the election was that, near the end of the campaign, some of our people started to follow Paddy Backdown's tail and ran after him and proportional representation. As a result, people gained mistaken ideas about a hung Parliament, and became uneasy and insecure. We should have been positive and spent the last few days of the campaign talking about a real classless society, a subject which is not mentioned in the Queen's Speech.

The Prime Minister is always on about the classless society, so he should put something about it in the Queen's Speech. If he wants a classless society, he should get rid of the House of Lords. We cannot have such a society unless we get rid of the House of Lords and the honours list. It is not enough simply to tamper with them. We must get rid of all the money that is given to those who jump queues in the national health service in order to get a private bed. We must stop giving additional money to allow people to send their kids to posh schools, bailed out by tax relief of one sort or another.

One detestable aspect of the Queen's Speech involves the privatisation of British Coal, not only because it will throw even more people on the scrap heap, but because of the economic cost to the country. We imported 20 million tonnes of coal last year—equivalent to 20 pits and about 20,000 miners. We are talking about an extra £1 billion on the balance of payments. What will the figure be if the pits are privatised and their number reduced by another 20 or 30? That would increase the balance of payments by at least another £2 billion.

We are talking about throwing people out of work. It costs £8,000 every time someone is thrown on the scrap heap of the dole queue—a sum picked up by the taxpayer. The Government, who talk about a classless society, have the cheek to include the subject of the privatisation of the coal industry in the Queen's Speech; and the same is true of rail.

I had the appalling experience the other day of talking to one of my constituents, Eion Watts, who said that he had been to one of the colliery review meetings on the future of Markham Main pit in Yorkshire. British Coal is so arrogant now that the Tories have won the election that it summoned the union representatives from the National Association of Colliery Overmen, Deputies and Shotfirers, the National Union of Mineworkers and the rest and read a statement declaring simply that the Markham Main pit would shut and waved them goodbye.

Do we remember 1984, when, in the middle of the strike, the Tory Government and British Coal promised that there would be a review of all the pits, and proper arguments would be held on their merits or otherwise? On this occasion, the pit workers were kicked out of the door. Privatisation of the coal industry will do the same thing, but on a grander scale.

Mr. Ray Powell (Ogmore)

My constituency of Ogmore has been a mining constituency for more than 50 years. Since the Government were elected in 1979, they have closed all seven pits in my constituency and put 7,850 miners on the dole. We have not recovered from that during the past 13 years and, with privatisation, in all probability the last three or four pits left in the whole of Wales will close and thousands more will be put on the dole.

Mr. Skinner

I agree. There were about 14 pits in my constituency when I first became a Member of Parliament and there are now two. My hon. Friend is absolutely right. Wales has been treated as badly as any coalfield in Britain.

The constituency of my hon. Friend the Member for Ogmore (Mr. Powell) contains many retired miners and miners' widows, many of whom receive solid fuel allowances or money in lieu. As there are a couple of Ministers present, I shall ask them for a guarantee that, if privatisation takes place—we shall fight it to the very end, and I hope that there will be no pairing by Labour Members, who should all go through the Lobby to fight that policy day and night—those people who suffered in Wales, Derbyshire and elsewhere will not be stripped of that fuel allowance or the money in lieu.

There is no privatised industry in Britain that will pay out to those people—more than 500,000—who receive fuel allowances. Where will the money come from? Is there a private entrepreneur who will foot the bill? I do not believe that there is. That is an important issue. The Government had better find some answers as there will be an even bigger march to this place if such action takes place.

What happened to the pensions of the miners in Wales who had worked for Wales for 40 or 50 years, and to their widows? What guarantee do they have? There are Maxwell types waiting to get their greedy hands on the £1.4 billion worth of extra money in the miners' pension scheme. Already there have been clever articles in The Daily Telegraph and The Sunday Telegraph telling advisers and financiers how to get their hands on the money in miners' pension schemes in the event of privatisation. We know what the Tories would do in that event.

The Queen's Speech contained something about shorter hours for Members of Parliament. The Government have a majority of 21. I have a message for one of my hon. Friends who is a stalwart on this issue—no names, no pack drill, but he may be prepared to let me mention him. He is the Labour party deputy chief Whip, my hon. Friend the Member for Jarrow (Mr. Dixon). If we are to fight the Government on all their privatisation policies and other issues, we need to ensure that Labour Members are present in the Chamber to challenge those policies in the early hours of the morning. There must be no talk of wrapping Members in cotton wool and giving them time off.

We have been elected to fight the class enemy. Millions of people were disappointed that they did not gain a Labour Government, and they would be even more disappointed if they thought for one minute that we were not taking on the Government through the long hours to fight them at every possible turn. I propose a battle to the end.

8.37 pm

Mr. Bob Dunn (Dartford)

I congratulate you, Mr. Deputy Speaker, on your appointment and wish you a long and happy time in the Chair. I guarantee that I shall not cause you trouble, as long as I am called frequently.

I echo some of the sentiments expressed so admirably by the hon. Member for Bolsover (Mr. Skinner) in his speech, which I think lasted for the best part of an hour. I have listened to him on many occasions during the 13 years that I have been a Member, and he of all people is a man who has kept true to himself and his beliefs. He has never watered them down or changed them. He has never taken advice from a spin doctor or a public relations agency. Today, we heard a vintage speech—because he expresses what he believes, he believes what he expresses. That is not always true of speeches made in the House.

The hon. Gentleman's references to developments in the European Community also struck a chord among Conservative Members, as did his references to proportional representation, which echoed a sentiment expressed yesterday by my right hon. Friend the Prime Minister in his comments on the Gracious Speech.

We have all become accustomed to the refrain that proportional representation would bring stability and fairness to government, but it would not, as has been proved in Italy which is now enjoying its 49th Government since the war. It has not worked either in the Federal Republic of Germany, where the grand coalition of the CDU and the SDP ran affairs for about 15 years. Members on both sides who flirt with proportional representation —some of my own colleagues believe in it—must recognise that PR simply transforms stability of government into instability and transfers responsibility for the shape of Government policy to a small group of extreme parties.

Under any system of PR—the Italian example is the best—which gives parties seats in the Chamber according to their strength outside it, the possibility of the National Front and extreme parties of the left gaining seats is opened up. That would result inevitably in clusters around a core party.

I believe in policies that I do not want to give up, just as the hon. Member for Bolsover has a philosophy that lie wants to turn into policies that he would not give up. We have a commonality and an amity of interest in that regard.

Mr. Campbell-Savours

The hon. Gentleman writes off proportional representation as if there were only one system of it, but there are many. The single-member constituency system would not provide for the election of curious and extreme minorities and would be to the advantage of the major parties. The hon. Gentleman grossly misrepresents the impact of greater proportionality of representation.

Mr. Dunn

It is true that there are as many different systems of PR as there are countries that follow it, but the worst system of all is the party list system, under which the hon. Member for Bolsover would not be in the House, as he and I both know. Perhaps that is why he rejects any idea of PR.

Ten years ago I had the pleasure of seconding the motion on the Loyal Address and I am glad that through all the Queen's Speeches since then there has run the thread of pushing out responsibility from the hub to the rim. That theme continues in this Queen's Speech too. I especially welcome the determination to open up even more responsibility to parents and schools. I was an education Minister when the grant-maintained system was made law. There are five schools in my constituency which are now independent of the local education authority. They offer greater dynamism, choice and excellence, and by doing their own thing they meet the needs of the industrial and commercial community in north-west Kent. Parents, governors and teachers whom I have met have all expressed the view that the decision to go grant-maintained was right and proper and in the interests of the schools in question. I hope that as more schools move out of local education authority control the dynamism in education that I have always tried to foster on behalf of my constituents will grow and flourish.

I welcome some of the new appointments to the Government. Perhaps the appointment that gave me greatest pleasure was that of my hon. Friend the Member for Crawley (Mr. Soames), who has been made Minister with responsibility for food. I hope that he will not take it amiss when I say that my initial reaction on hearing of his appointment was to think that the party managers had shown a sense of humour. I am sure, however, that my hon. Friend will overcome his problems of birth and girth and become an extremely able Minister.

I was intrigued by the remarks of the hon. Member for Birkenhead (Mr. Field), who referred to pensioners who have worked for and paid into pension schemes operated by companies that were plundered in recent years by the late Robert Maxwell. I hope that in the next few weeks and months the House, together with the Government and the Select Committee on Social Security, will deal with the problem facing many of our constituents because of the termination of their pension payments. I am sorry that that was not mentioned in the Queen's Speech, but I do recognise the difficulties that the plundering has caused the Government. I hope that sense will prevail and that my constituents will gain consolation and solace in time from the return of the money taken away from them by Maxwell.

I was pleased by the reference in the Gracious Speech to British Rail. Along with my hon. Friends the Members for Gravesham (Mr. Arnold) and for Maidstone (Miss Widdecombe), I have battled over many years to improve commuter services from our constituencies into central London termini. I welcome the introduction of the new Networker trains on the north-west Kent lines serving Dartford and Gravesham, and the decision to break up British Rail's monopoly by introducing private competition. I do not believe that the proposals go far enough, but I am a firm believer in taking one step at a time, so I hope that eventually there will be more movement towards the greater privatisation of British Rail and towards allowing it to raise on the open market the funds that it needs and deserves.

British Rail's quandary at the moment stems from its being told to behave in a businesslike fashion while being unable to raise money on the open market in the same way as ICI or Sainsbury would. We should unfetter British Rail and give it the capacity to borrow money for capital works. I do not believe in continuing to inject public money into British Rail. It must become a businesslike operation serving commuters who, because of the nature of transport systems in north-west Kent, have to use British Rail. Often there is no real alternative.

I wholly disagree with the idea of a national police force; our party must not embrace it. I represent one of 16 constituencies in Kent, which has a population of 1.5 million. We have special needs, not least those caused by the development of the channel tunnel, which has to be policed, and by the construction of the high-speed link and the associated difficulties. We are in the front line for Europe and for the movement of goods and people. Kent's needs are peculiar to Kent, although Kent's functions are in the national interest. It is nonsensical to set up a national police force advisory body to represent the interests of the public. We need a police force for Kent, answerable to our police authority. I declare an interest in that my wife is a member of the Kent police authority, but even if she were not I would still be against the establishment of a national police force. It might be fine while we were in government, but the Labour party has different values, standards, philosophies and principles and I should be very worried if central political control were extended to a national police force. I therefore record my strong protest against any such proposal. I welcome the Gracious Speech and look forward to the implementation of many of its measures in this parliamentary year.

8.50 pm

Miss Emma Nicholson (Torridge and Devon, West)

I add my congratulations to those of other hon. Members on your elevation to the Chair, Mr. Deputy Speaker. I was fortunate enough to serve under your chairmanship in several Committees. Your chairmanship is always marked by wit and firmness and I look forward to your long service in the Chair.

The maiden speeches have been marked by sincerity and commitment to the welfare of constituents. I am sure that all hon. Members respect and honour such virtues. Yesterday and today we heard some stale arguments, attempted resurrections by the Leader of the Opposition of the arguments that lost his party the general election. He had at least some ideas, even though they were conclusively rejected by the electorate. The leader of the Liberal Democrats did not even offer that, but returned to proportional representation and the other failed ideas that always leave the House empty as he rises to speak. That is in contrast to the freshness of style, approach and content of the Prime Minister's response to the Gracious Speech. He leads a reforming Government who promise to create fresh opportunities and return more freedom to citizens of the United Kingdom, their families and communities.

The Prime Minister will build upon the successful and great Conservative reforms of the 1980s. The scorn poured out yesterday by the Leader of the Opposition and directed at Conservatives seemed to flow harmlessly back to him because we have succeeded in our reforms to date. Our great programmes on health, education, social security and privatisation are the keystone, cornerstone and jamb of our democracy, giving power to the people and not to the state. They have been copied by other nations. The blueprint offered to the developing world by the World bank and events in eastern Europe show that our programmes are being copied quickly and successfully in countries such as Poland and Russia.

The poorer former socialist-run economies remind us of a truth that should mark the coming years—that real freedom is economic freedom. Without the freedom to save and purchase as the individual wishes, and without the freedom to inherit and pass on wealth, there is dependency upon and control by others. Under the Labour Government practices which we inherited, that control was classically state acquired and run. We have broken the spell. It could even be said that we have kissed and awakened the sleeping princess of individual energy and creativity of the British people.

Our next step is most important. We must address as a priority the amount that the state spends. We have altered the balance of tax raising and the European Community VAT model is now ours. But the percentage that the state spends must now be the determinant, the marker, for our Conservative commitment. Let us aim to reduce that 43 per cent. of gross domestic product to at least 40 per cent. That would bring us closer to the average ratio of the Organisation for Economic Co-operation and Development, not well above it as happened in most post-war years.

We must urge the Government to look at the big spenders. Some 22 million of our citizens receive social security benefits. We must look at the environment, about which my hon. Friends have spoken so ably and with much knowledge. The welfare state must be the servant and not the master of the public purse. We have not yet reached our goal. The 13 years of Conservative government have increased in percentage terms the income taken by the Government in taxes from those on average earnings. We pay too much tax. We have altered the balance, but we have not grasped the nettle of reducing the percentage. The extension of the 20p tax band to the first £2,000 of earnings is wonderful news to Conservative Back Benchers. It is real Tory news announced yesterday by the Prime Minister himself.

Where have we failed? What must be our next step? We must rigorously question the redistributive theory. Why should services throughout the United Kingdom be created to the same national level? That is the "Big Mac" philosophy, without the quality controls. We must question, challenge and overthrow the assumption that the state will provide from the beginning to the end of life. The great users of public services and public funding are in the middle income group, and expenditure on those services is not expenditure for the poor. We must reassess our priorities because surely the middle income group now have sufficient wealth, created under Tory Governments, to pay at least a part of their way. Only when that happens will the really poor benefit in the way that they truly need.

Those imperative assumptions will take years to change, despite the fact that they have been rocked in countries as far apart in culture and income as Sweden and Zambia. We must move from non-judgmentality to impartial but rigorous assessment of need, and match that need with underpinning that will lead to help for success. We must grasp the nettle of universal benefits. We must reform housing. Why should we have state ownership at all? Some 20 per cent. of housing is still state owned. Why not zero per cent? In recent years, it has been socialist thinking that an Englishman's home is the castle of the state.

We must reform the police. More money has not meant, at least not yet, a reduction in crime. We must also reform local government. We started that under the John Banham commission. We must look again at pensions and cut subsidies. We must forget the socialist gravy train, because it ran into the buffers of the International Monetary Fund. The agencies represent wonderful thinking that we must carry further and we should look firmly at the creation of a body based on the Audit Commission. What about a real British Fontainebleau, matching our excellence in the civil service by sharing with industry knowledge at a much earlier training and learning age? If the excellence and flexibility of top civil service thinking are matched by the citizens charter corrupts throughout, we shall have a model of a modern Major Government—slimline and effective government service to the electorate.

The open government reform is most welcome because knowledge is power and that power should rest with the citizen. We must not be short-sighted in our determination to succeed in shrinking the mushroom cloud of public expenditure. We must invest in areas where government must provide services. We should have statutory education from the age of four and should reassess our commitment to nursery schooling. That would help women.

There should be an equal opportunities employment commission that offers equal opportunities not only to women but to that great and undervalued section of the population, the disabled and to ethnic minorities. That commission could focus on employment, because equality of opportunity issues are best coped with by the relevant Departments. One of the keynote practice employers in equal opportunity is the civil service. Sir Peter Kemp of the Cabinet Office and his colleague, Susan Haird, the equal opportunities officer, are carrying out wonderful and careful work which industry would do well to follow.

The Government must spend, or continue to get others to do so, on infrastructure such as roads and sewerage. The privatisation of the coal industry and the beginning of the nibbling away at the privatisation of the railways are welcome music to Conservative ears. I believe that we should shed everything that it is not strictly necessary for the Government to run. The determinant of what ownership will give the best results for all our citizens should be competition, not ownership. Competition, in a variety of ways, offers the best services. Ownership is of less importance.

The great place on which the Government must spend is the national health service, in which we have trusts and management choice. All sorts of good things flow from the NHS, and I am confident that our 90:10 per cent. ratio in health provision is good. It has resulted in first-class management, and that is where our reforms are starting to bear fruit.

The electorate declared conclusively last month that socialism and its weaker sibling, the Liberal Democrats, are finished. The Conservatives are the reformers now. We are a Government who are truly worthy of the nation. We shall all enjoy a happier and a more tolerant, prosperous, generous and efficient five years under the leadership of our great Prime Minister.

8.59 pm

Mr. Michael Meacher (Oldham, West)

First, Mr. Deputy Speaker Morris, I congratulate you on achieving your post. I add my congratulations through you to Madam Speaker on achieving her prestigious position and on the overwhelming majority with which she won it. We look forward to you and her regulating our affairs in the House with good-humoured forcefulness when it is even more packed than it is now.

I take the opportunity to compliment several of my hon. Friends on what I am sure the House will agree was a series of remarkable maiden speeches. One of the benefit s of an election, even when one's party loses it, is the inflow of new talent. My hon. Friend the Member for Lewisham, East (Mrs. Prentice) made a forthright speech in which she extolled especially the need for better training. We look forward to further speeches from her in which she harasses the Government on what is unquestionably a major deficiency in their policy.

My hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche) spoke of her special concern on a range of constituency issues, including environmental matters. She directed her attention also to Cyprus and the Law Commission. I do not forget her recommendation that the tradition of legal wigs should be dropped. I can assure her that the list of anachronisms does not end there.

In a debate on public expenditure, my hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm) made a passionate speech on the issues that concern his constituents and, indeed, the entire country. These included decentralisation of power, unemployment, housing, hospitals and child care. As those issues embrace much of today's debate, my hon. Friend is clearly a natural. With your permission, Mr. Deputy Speaker, I am sure that he will be a frequent contributor to our debates.

My hon. Friend the Member for York (Mr. Bayley) made an eloquent speech about the special constituency interests of the beautiful city of York, where I had the great pleasure of living for several years, and about his deeply felt concerns in respect of community care and the care of the elderly in residential homes. He raised issues forcefully on behalf of many who often do not have a public voice. We look forward to his strongly keeping such issues before the House.

My hon. Friend the Member for Blaenau Gwent (Mr. Smith), in the spirit of his great predecessor, Michael Foot, made a passionate plea on the great issues that have always been at the centre of socialist struggle: low pay, bad housing, the health service and privatisation. I do not know what it is about south Wales, but it seems always to produce great champions of the people. We clearly heard another one in the making this evening.

It is to be noted that the non-controversial principle of maiden speeches that ruled firmly when I entered the House seems to have gone for good. I can say only that the pleasure that we derived from the speeches to which I have referred was all the greater for that.

It is customary on these occasions, when the Minister is newly appointed, to offer congratulations. That is a formality which I am happy to follow. However, if the reputation of the Secretary of State for Social Security is any sign of his future performance, we can certainly assure him of a hard pounding. One likes to think that, as was said earlier today, the Prime Minister has a sense of humour in some of his appointments. On this occasion, I fear that the joke may be at the expense of the unemployed.

The Prime Minister likes to claim that he has some affinity with the unemployed because, for a brief period, he was one of them. The truth is that nobody who had any concern about the unemployed would have appointed the right hon. Gentleman as Secretary of State for Social Security—[Interruption.] I hope that I am wrong. I shall be willing to apologise to the House in due course if the record shows that. However, everything that we know about the right hon. Gentleman leads us to view his tenure of office with considerable apprehension—not on our behalf, but on behalf of those for whom we speak.

Before I come to the contents of the Queen's Speech, I wish to refer to what is not in it. There is a glaring omission, to which my hon. Friend the Member for Birkenhead (Mr. Field) drew attention, and which was then taken up by a number of Conservative Members, including the hon. Member for Wellingborough (Mr. Fry). There is no mention of establishing a proper pension fund framework, which is now urgently required not only to prevent any repetition of the Maxwell saga, but to deal with a series of dubious manoeuvres that have occurred in several other cases, not least treating pension funds as the trigger for takeover targets.

On an even more urgent matter, there is no mention in the Queen's Speech of what the Government intend to do in support of thousands of Maxwell pensioners who, through no fault of their own, and to a large degree due to the Government's negligence, now face being deprived of their basic livelihood—[Interruption.] I shall come to the reasons for saying that in a moment. Does the right hon. Gentleman accept—it is obvious to most people—that the banks recklessly encouraged Maxwell in his orgy of borrowing and takeovers? If so, will he repudiate the statement a few days ago by the Governor of the Bank of England and put pressure on the banks to return the pension fund assets that they now know to be stolen, as is the law with other property known to be stolen?

If there is still a shortfall—there may be one of £200 million to £300 million—will the right hon. Gentleman meet that out of the Exchequer? I should be very happy to give way to him if he wishes to answer that question now. I certainly want an answer tonight. If he chooses not to reply at this moment, I give him notice that I shall intervene in his speech, because we want an answer to that question tonight. It is an urgent matter which demands an answer from the Secretary of State, and only he can give it.

I ask that question because the Government are liable to meet any shortfall. The Secretary of State's predecessor was culpably negligent in failing, for 22 months after the Social Security Act 1990 received Royal Assent in July of that year, to bring forward two regulations—one on the 5 per cent. ceiling on self-investment and the other making the pension fund a debt to the employer in the event of a winding up. Those two regulations would have made the Maxwell depredations very difficult, if not impossible.

I ask again: will the Government pay for their own negligence? If it is of any assistance to the right hon. Gentleman, and in case he is tempted to say that the Government cannot afford to do that at a time of public expenditure restraint, I shall put two considerations to him. One is that the Government saw fit to compensate the Barlow Clowes losers who openly speculated on offshore profits. In that case, how could the Government not compensate those who believed, in good faith, that they were putting their money into the most secure possible investment for their retirement?

Secondly, if the Government can afford £6 billion to bribe younger people to opt out into personal pensions, and if they can afford nearly a further £1 billion during the next five years to bribe older people to take out personal pensions—the Queen's Speech, which is generally devoid of detail, goes out of its way to re-emphasise that detail, which we knew already—the Government certainly can afford to protect the Maxwell pensioners.

Therefore, I ask for the third time whether the Government will deal with the chaos of trustee law regarding pension funds, and compensate the Maxwell pensioners. Will the Secretary of State answer that question now, because the House needs an answer to it? The Secretary of State clearly does not intend to answer the question now. I repeat that we shall not leave the Chamber until we have some answer to that question tonight.

Mr. Skinner

We might be here all weekend.

Mr. Meacher

I cannot make the Secretary of State answer the question, but I can repeatedly intervene and demand an explanation. If he is on his feet, he has to give some answer, so we shall wait to see what happens.

The Queen's Speech is more opaque than usual when it comes to the social security paragraph, but the Government never announce the big changes in social security in the Queen's Speech, particularly when they are bad news. They did not announce, either in the manifesto or in the Queen's Speech, the ending of the pension link with earnings in 1980, which, according to the Government's figures, has cumulatively robbed pensioners of more than £35 billion. Nor did they announce beforehand the child benefit freeze, which, between 1987 and 1990, cost mothers and children more than £1 billion.

But the drift of the Queen's Speech is perfectly clear. The most ominous phrase in the Queen's Speech says it all. It says that it is the Government's intention to reduce the share of national income taken by the public sector". Clearly, the Department of Social Security, with a bigger budget than any other single Department, is to have its budget cut sharply. That is why a right-wing Thatcherite Minister has been appointed Chief Secretary and why a right-wing Thatcherite Minister has been put in charge of social security.

The cycle is perfectly clear. The Government so mismanaged the economy with an inflationary credit boom in the mid-1980s that they were forced to jack up interest rates to trigger a recession, and now that that savage disinflation has produced a PSBR of at least £28 billion, they are determined to offload most of the hardship on to the most helpless and vulnerable sections of the population whom they hope and believe cannot or will not retaliate—the pensioners, the unemployed, the sick and disabled, the lone parents and the low paid.

Mr. Ian Taylor

The hon. Gentleman talks about those most in difficulty. Given the targeting that he was implying in his comments, does he support a shift towards selective benefits and away from universal benefits?

Mr. Meacher

There was considerable debate earlier on that issue. Unlike many people who use the words, when I tell the hon. Gentleman that I shall be coming to that point later in my speech, I mean it.

That is the strategy which is contained in the phrase in the Queen's Speech. with sustained emphasis on those groups with the greatest need. Decoded—we have had plenty of experience of this—it means more means testing, more rationing, more cuts for the 22 million people in Britain dependent on benefit. It means more chipping away at benefits for the poor on low incomes in order to give tiny increases to the poorest on the lowest incomes of all. That is the bitter experience that we have had during the past 13 years.

Yes, the Government believe in redistribution, but never from the rich to the poor, only from the poor to the utterly destitute. I have three fundamental objections to the Government strategy of targeting, which is Toryspeak for means testing, and clearly is about to be considerably expanded.

The first of my objections—and I readily admit that this is the least effective of them, because the Government have as much compassion as a jar of vinegar—is that targeting is manifestly unjust. Last month, the Institute of Fiscal Studies reported that, since 1979, tax and benefit changes have given an average of an extra £87 a week to the richest 10 per cent. in our society, while the poorest 10 per cent. were forced to take a loss of £1.

How can it be right now to kick the poorest 10 per cent. in the teeth again? The Government have already produced the most unequal society since the Edwardian era. On the one hand, there are the 1 per cent. of the population who are the richest—and they total more than half a million people, so we are not talking small numbers. According to the Government's own figures, they have seen their incomes increase by no less than £877 per week since 1979. That is not the result of pay rises or of perks —although they have massively increased, too—but of cumulative tax cuts over 13 years.

On the other hand, there are the pensioners—3 million of whom are forced to make do on only £54 a week. That became by far the lowest pension in the EC, except for Greece and Portugal, after the Government removed the pension link with earnings. Also, 2.75 million unemployed are reduced to living on £43 per week per adult. That is also by far the lowest unemployment benefit in the EC, after the Government made 11 separate additional cuts in unemployment benefit since 1979.

More than 1 million young people aged 16 to 17 are denied entitlement to any benefit if they cannot get a job, obtain training or enter further education, through no fault of their own. That is unlike any other country in the EC. The Government have forced young people into debt and into criminal activity in order to survive. The National Association of Citizens Advice Bureaux reports continually reveal continuing destitution and starvation at levels that we have not seen for decades.

Worse still are the 10 million people living on or below income support—which is only £42 a week for an adult. Eight years ago, silently and without any announcement, the Government broke the link between earnings and that final safety net benefit. Those are the people whom the right hon. Gentleman will be hitting if he cuts social security benefits further.

If the Secretary of State denies that he will do that—I want an answer to this question, too—will he give the House a categorical assurance tonight that there will be no change in the next five years in the status of the retirement pension or of child benefit, as universal benefits available to all without a means test? I will gladly give way if the Secretary of State will come to the Dispatch Box. All he has to do is say that there will be no change—just utter the single word "No". We are entitled to an answer. What are the Government's plans? What do they intend to do?

The Secretary of State for Social Security (Mr. Peter Lilley)

I shall answer.

Mr. Meacher

The right hon. Gentleman says that he will answer. We shall seek to ensure that he does. If he will not give that assurance, and if he will not deny that he is planning to cut social security benefits further, I have three questions for him.

Mr. Lilley

Of course we will stick to the pledges contained in our manifesto—unlike the Labour party, whose heir presumptive seems determined to open up the very issues on which the hon. Gentleman wants an assurance from the Government: an assurance that we will not review the position. Will the hon. Gentleman give the House an assurance that he will not serve under the right hon. and learned Member for Monklands, East (Mr. Smith) if he asks his social security spokesman to review whether child benefit and the retirement pension should be means tested?

Mr. Meacher

It is the right hon. Gentleman's party which has just won a general election. Although it may surprise the Conservatives, they are still the Government, and the people of this country—10 million pensioners and 12 million families receiving child benefit; that is 22 million people altogether—want an answer to my question. Will the Government maintain the retirement pension and child benefit as universal benefits? The right hon. Gentleman still has not answered that question.

As the right hon. Gentleman will not give the assurance that I seek, let me ask him three questions. First, how can it be right for someone like him, on £1,212 a week, to decree that £43 a week is too much for an unemployed person to receive? How can he say that that amount should be cut, when he has no experience whatever of what it is like to have to get through a week on £43, which must cover all expenses except housing?

Secondly, how can the right hon. Gentleman persist in a policy of extending means testing, when the latest evidence confirms yet again what Opposition Members have always said? We have constantly pointed out how self-defeating, and what poor value for money, that policy is. The Oxford-Oldham study, published last week, shows yet again that, despite the spending of millions of pounds on expensive advertising promotions by the former Secretary of State for Social Security—who has just entered the Chamber, right on cue—family credit still reaches only 50 per cent. of those for whom it is intended, while child benefit reaches 100 per cent. of its intended targets.

My third question is, in many ways, the most important. What right has the Secretary of State to make further cuts in national insurance benefits? They are not charity; they are not donations. They are rights that have been paid for. The Government have already increased national insurance contributions by 38 per cent. since 1979. If any private insurance company made such swingeing increases in premiums and then cut benefits that had already been paid for, it would be taken to court and convicted of breaking its contract. If the Government believe in the rule of law, they should be subject to the same rules.

My second fundamental objection to the Government's social security strategy, as revealed—somewhat opaquely —in the Queen's Speech, is that it flies in the face of everything that the Prime Minister said yesterday. He said that he wanted to build a society in which choice and freedom existed, and in which there were no barriers. Let me repeat his words, which were quite striking. In that society, he said, people would be able not only to get their feet on to one rung, but to scale the whole height of the ladder".—[Official Report, 6 May 1992; Vol. 207, c. 73.] How does the Prime Minister expect people on benefit— who, after all, constitute a third of the nation—to get their feet on the ladder at all, when he has crippled those feet?

Unemployment is still rising by an average of 30,000 a month, and the Government are cutting training budgets by £300 million. How, in such circumstances, can people on benefit get into the labour market to better themselves? How can people on £30, £40 or £50 a week find the wherewithal to launch themselves? The unemployed have been targeted, not for choice and opportunity but for bearing the costs of the Government's economic mismanagement. If unemployment is a "price worth paying", the unemployed form a class worth dispensing with.

Pensioners, too, are trapped in poverty, because the Government have broken the link between pensions and earnings. That has cut £17 a week from the income of a single pensioner and £28 a week from the income of a married couple. Lone parents are trapped into dependence by a lack of child care facilities, even though most of them would much prefer to earn in order to support themselves and their children.

All those people—more than one third of our nation —have no alternative to social security at this time, yet the Government intend to kick them when they are down. Those people form the excluded Britain. Conservative Members make no mention of them in their rhetorical speeches in this debate. They are the disappearing ones to whom the Government turn a blind eye until they grate by sleeping in shop doorways or on the steps of the opera. They formed the gap in the Prime Minister's opening speech yesterday. They are the people whom the classless society will never touch and was never intended to touch. Their enforced losses and deprivation over the past 13 years are financing the opportunity and incentives for those who are able to climb the ladder. For them, the Prime Minister's citizens charter is a sick joke.

Mr. Tim Smith

Can we take it from what the hon. Gentleman has said that not only is he not in favour of any extension of selective benefits but that he would prefer to see them reduced and have a system of more universal benefits? Is that right?

Mr. Meacher

I believe that universal benefits are the only way of ensuring that the poorest in our society receive the benefits that Parliament has intended that they should receive. The retirement pension is the only thing available to 2 million or 3 million of the poorest pensioners, and child benefit is of key importance not just to the poorest families but to those on middle incomes. Child benefit is without any poverty trap, because it is not means tested. It is essential that those benefits should be preserved and that is my immediate requirement. That is why I asked the Secretary of State whether the Government intend to keep them. He did not answer that question and he still has not done so.

Mr. Lilley

We have not had an answer from the hon. Gentleman. Will he serve under a leader whose manifesto for the leadership election says that he wants to carry out a review of all universal benefits to see whether they should be means tested?

Mr. Meacher

Can we be clear about this? I am glad that the Chief Secretary is with us. I take it that there has been some discussion between the Secretary of State and the Chief Secretary. Is the Secretary of State confirming that the basic retirement pension, open to all at the age of retirement, and child benefit will be preserved as universal benefits over the next five years?

The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe)

It is in the manifesto.

Mr. Meacher

I am glad that we have that assurance from the Under Secretary. I hope that the grimace on the face of the Chief Secretary is not a sign of pain. That is an important achievement in this debate.

Mr. Ian Taylor

rose—

Mr. Meacher

I want to make progress. [Interruption.] We are here to discuss the Queen's Speech and the Government's intentions. People are interested in those who have just won the election and their intentions over the next five years. At this time, and probably for the next two or three years, that is exclusively what matters to the people of this country. That is why we are sticking to that issue, and will continue to do so.

My third fundamental objection to the Government's social security strategy set out in the Queen's Speech is one which the Secretary of State, however hard-nosed he may be on compassion or inequality—

Mr. Lilley

The hon. Gentleman has asked me questions and I have answered them all in full. He owes it to the House to answer the question whether he would take part in a review of the universal benefits which his right hon. and learned Friend believes should at least be considered for means testing.

I shall see that the pledges in our manifesto are implemented. Will the hon. Gentleman remind the House that, when he was in government he participated in a breach of Labour's pledges to pensioners, both over the Christmas bonus and over the link with earnings?

Mr. Meacher

Certainly, I gladly recall for the House that on two occasions the Labour Government did not pay the Christmas bonus—that is a matter of historical record. However, the result of that was that pensioners lost £20 altogether. By comparison, they gained 20 per cent. in real terms during the last five-year period of Labour government. Over the past 13 years of Tory government, pensioners have gained fractionally over zero per cent., because there has been no real gain for pensioners—at least for the poorest pensioners, who do not have other income, and that is what really matters. That is the difference between the parties. There was a 20 per cent. gain over five years of Labour government and virtually nothing over 13 years of Tory government. [Interruption.]

My third point is something about which the Secretary of State should be concerned—[Interruption.] Let me finish this point. If the Government persist with their policies for another five years—and, indeed, tighten the screw further—I say advisedly that there is a real risk of a social explosion.

In America in the 1980s, there was the same Government-driven generation of inequality as there has been here, both at the top and at the bottom. For the first time, we now have about 2.5 million people living in families forced below the safety net of income support by social fund loan repayments, poll tax arrears, electricity and gas repayments, rent arrears and so on. Three quarters of the people who are desperate for last-resort assistance from the social fund are now turned away. Not only are there beggars on the streets, but children are inadequately clothed and fed, and our housing is crumbling. More than 20 per cent. of homes are now officially unfit for human habitation.

The relative deprivation that pervades this country is not so very different from that in south central Los Angeles. The explosion there provoked lawlessness, but its causes were poverty and injustice. The same tinderbox ingredients are increasingly present in Britain for anyone with eyes to see.

I am talking about the people with no voice, no hope, and often no votes—more than a million of them have fallen off the electoral rolls as a result of the poll tax. I warn the Government that, if they are provoked further, the underclass—call it what you will—will have no other means to make their presence felt except by insurrection in the streets. I desperately hope that that does not happen, but we are not the Government and we want to ensure that the Government do not deliberately provoke an explosion. Many of us believe that they may.

In its own research studies, the Home Office recognises that the rocketing crime rate is linked to poverty and recession. A few months ago, Robert Reiner, professor of criminology at the London School of Economics, concluded an in-depth study with the following words: The bottom line is that, if we separate out long-term trends and more recent sudden changes, the rate of increase really does relate to increased poverty and inequality, and to sharp declines in consumption levels amongst the worst off. The Secretary of State is playing with fire by pushing inequality at the bottom still further. The clashes in Trafalgar square two years ago and the five nights of disorder on the Meadow Well estate in Newcastle last summer were a warning. I believe that that warning should be heeded.

I draw attention to the news today that President Bush has concluded that the main lesson from the Los Angeles riots is that there must be a huge and continuing Government programme to lift the victims of society out of poverty—one which must be sustained so that they do not fall back into poverty. That is clearly desperately needed in America today. Even in the absence of immediate riots, such a programme is desperately needed here too. That is one major reason why we find the Queen's Speech so lacking in judgment and in wisdom.

9.35 pm

The Secretary of State for Social Security (Mr. Peter Lilley)

I join everyone in welcoming you, Madam Speaker, to your high office and in adding my congratulations to you on achieving it. I also add my congratulations to the chorus of maiden speakers we have heard today, if that is the correct collective word for maiden speakers. All were of an extremely high standard, as the hon. Member for Oldham, West (Mr. Meacher) has just remarked.

I took a particular interest in the contribution by the hon. Member for Lewisham, East (Mrs. Prentice) who paid an especially kind tribute to her energetic predecessor. She represents an area in which my family had its roots. Although she represents it with great lucidity, she does so in accents that I do not recall from my youth. She mentioned the particular problem of the Rathbone Society in her area. I have made rapid investigations and I have discovered that it suffered from unresolved organisational problems which caused it finally to close on 24 April. All those being trained by it are being found other places by the South Thames training and enterprise council.

I was also interested in the excellent contribution by the hon. Member for Hornsey and Wood Green (Mrs. Roche). She paid a welcome tribute to Hugh Rossi, who was one of the outstanding Members of Parliament and a former Minister in my Department. My wife comes from the area and she was originally a councillor there, so I will keep a beady eye on proceedings.

I unfortunately missed the speech of the hon. Member for Edinburgh, Leith (Mr. Chisholm), but I gather that he made an impressive contribution and argued that child care should be his top priority. I shall read his speech with interest.

The hon. Member for York (Mr. Bayley) rightly paid tribute to Conal Gregory, a friend to many of us here. I agree with him about the importance of getting right the changes in the arrangements for community care as they are made.

I am sure that all hon. Members will join the hon. Member for Blaenau Gwent (Mr. Smith) in his tribute to his predecessor. Michael Foot was one of the great orators and wits whom the House has known. I was glad that his successor had a fluent and confident style. I am sure that all those hon. Members will make important contributions in the House again. We look forward to hearing from them in future and we miss their predecessors.

The hon. Member for Derby, South (Mrs. Beckett) appears, as my hon. Friend the Member for Beaconsfield (Mr. Smith) said, to have learnt nothing from defeat. She defended, in an astoundingly lengthy contribution, the record of the 1974–79 Labour Government. One felt for a moment that she was not so much a part of a dream ticket as of a nostalgia ticket—nostalgic for a nightmare at that.

The most important and significant Opposition contribution came from the hon. Member for Birkenhead (Mr. Field). He was thoughtful, creative, compassionate and reasonable. The thought passed through my mind, "Thank heavens he is not standing for the leadership of the Labour party." I am not convinced that his proposals on taxation are necessarily viable or workable, but I am certain that they present our party with a greater electoral threat than anything that the right hon. and learned Member for Monklands, East (Mr. Smith) has been or would be able to devise ahead of a future election.

The hon. Member for Birkenhead is undoubtedly right to point out that targeting, if achieved by steep rates of benefit withdrawal, can give rise to serious disincentive effects. I shall certainly look at the specific examples that he gave and see whether there are lessons to be learnt.

On the Maxwell issue, the hon. Member for Birkenhead will know that the Government will respond to his Committee's report in due course. On the specific proposal that the hon. Gentleman put today, I am afraid that it would be far more open ended than it appears and, I am sure, than he intends. But I can assure him that we are keeping in close contact with the trustees, actuaries and managers of all the pension funds concerned. Action is being taken energetically to try to resolve the ownership of assets and return them to the funds. If, in the meantime, anyone is not receiving his or her pension, they are of course entitled to the guaranteed minimum equivalent to their SERPS entitlement. If they need support from the benefits system because of uncertainty as to their income or future income, we have alerted the social security offices to make sure that, if necessary, emergency provisions are put into effect to make sure that they receive that help. I hope that the hon. Gentleman will recognise that we are trying to respond as positively as we can to the very serious problems that are raised by that issue.

Mr. Frank Field

Have any of the funds that fear that they may not have the assets to continue to pay pensions approached the Government, asking them to underwrite their commitments in the way that I suggested, or have no approaches been made at all?

Mr. Lilley

I do not think that anyone has made the specific proposal that the hon. Gentleman has suggested to us. Obviously, in the first instance, the trustees are seeking the return of those funds. One hopes that that will be achieved as rapidly as such a complex matter can be achieved.

Mr. Meacher

rose—

Mr. Lilley

I am about to refer to the fascinating list of questions of the hon. Member for Oldham, West, if I may. Indeed, I shall come straight to them if that will help him to contain himself. He said that there was no mention in the Queen's Speech of a new framework for pensions. I have just said to the hon. Member for Birkenhead that we will be responding to the Select Committee's report on the subject. Of course, we are committed in the manifesto to a full review of pension law and the framework of pension law. The hon. Gentleman wanted the banks to restore stolen property. Of course, every effort is being made to identify and return it, and it is right that that should be the case.

The hon. Member for Oldham, West asked whether the Exchequer would give an open-ended guarantee to meet any shortfall. He recognises in advance that that cannot be the case. He argued that the Department had brought about the situation by failing to bring in two items of legislation which, in his view, would have made it impossible for the late Mr. Maxwell to carry out his wrongdoing. There is absolutely no reason to suppose that those pieces of legislation would have had that effect. They were, of course, delayed because of the serious, costly implications that there could have been of the Barber judgment interacting with them, and there is absolutely no evidence that had they been introduced already they would have prevented what has happened.

The hon. Gentleman knows, too, that the Barlow Clowes situation is not and was said at the time not to be a precedent. He knows, I should have thought, that when he says that £6 billion has been used in what he describes as a bribe to persuade people to take up private pensions, he has simply got the wrong figure by a large factor. He is including the contribution that individuals would otherwise have had to make to SERPS, which instead goes to the private pension schemes. Those private pension schemes being funded means that there is a flow of committed long-term savings available for long-term investment in industry. That must be something which surely all of us who believe in investment wish to encourage.

Lastly, the hon. Gentleman repeated his question, "Do the Government intend to deal with trustee law?" Obviously I shall not give details at this stage, but the review will cover the whole framework of pension law.

So the hon. Gentleman's remarks on those fronts did not carry us much further than in the previous Parliament. Nor did they on several of the other matters that he raised.

Mr. Meacher

The Secretary of State will not be surprised to know that I am far from satisfied with his answers. First, I asked whether he would press the banks to return the assets in the way that the Governor of the Bank of England has said that they should not. Does the Secretary of State believe that they should? We do. Does he?

Secondly, the Secretary of State does not seem to have answered the question about underwriting the continued payment. He said that no approach had been made. If an approach were made, would he support it? Thirdly, if there were a shortfall even after the banks returned the assets, would the Government meet it and provide compensation as they did in the case of Barlow Clowes?

Mr. Lilley

The hon. Gentleman seems to wish me to answer his questions three times even though he has refused to answer my questions. I repeat the answers. Of course, there is no question but that assets identified as belonging to the funds must be restored. I made it clear to the hon. Member for Birkenhead that his proposal was unfortunately much more open ended than it appeared at first sight and, therefore, we could not endorse it. If the hon. Member for Oldham, West failed to catch that, I am sorry about it.

Perhaps I may now return to the mainstream of my remarks. I must begin by thanking the hon. Member for Oldham, West for his kind, if somewhat mixed, words welcoming me to the job. Many of those who have welcomed me to the job have recognised that it is not entirely a bed of roses. Someone pointed out that when I was Financial Secretary to the Treasury it was my responsibility to relieve taxpayers of about £70,000 million a year through a complex and incomprehensible system of interlocking taxes. Now I am responsible for handing out £70,000 million a year through a complex and incomprehensible system of benefits. I think that it was my predecessor who said that the only difference was that one was far more unpopular giving it out than taking it away.

It is a particular challenge to follow my predecessor, who is unrivalled in his knowledge of the system and his manifest dedication to the beneficiaries. The hon. Member for Oldham, West is a great luminary on these subjects. He has detailed knowledge of the benefits system and I recognise his personal commitment to all those who are in need.

The only occasion that I recall on which the hon. Gentleman and I have previously debated was at a meeting in my constituency which he might recall. It was called by his union, the Confederation of Health Service Employees. I was foolish enough to accept the invitation. I fully realised that the entire audience would be on the hon. Gentleman's side. But the union took the additional and somewhat unnecessary precaution of inviting seven platform speakers to support him. I had none. I was getting a pretty good drubbing, but I took comfort in the remark of Einstein, whose theory of relativity was denounced by 100 German professors. He replied: If I were wrong it would take only one professor to prove it.

Mr. Meacher

But they did not support the right hon. Gentleman.

Mr. Lilley

At the election we found a great many people to support me and remarkably few to support Opposition Members.

I have always admired the hon. Gentleman's debating style. He is never knowingly understated. He is not afraid to exaggerate a little. He might even be described as the Dame Edna Everage of the Opposition Front Bench. He deserves praise from this side of the House for other reasons, too. He is the unsung hero of the Tory election victory. After all, it was the hon. Member for Oldharn, West who committed Labour to the initial pledges which forced the shadow Chancellor to spell out how he would raise taxes—a commitment damaging in itself but rendered incredible by the additional pledges that the hon. Gentleman crammed into his party's manifesto. We calculated that the hon. Gentleman's pledges alone totalled £13 billion or more—over a third of Labour's total promises. No one could match him, no one could stop him and no one could believe him. Never in the field of public expenditure has so much been promised to so many at the expense of so few.

Now the hon. Gentleman is playing a key part in the subsequent election—for the leadership of the Labour party. On 28 April, The Guardian reported: Already left wingers such as Michael Meacher and Robin Cook are arguing that the party's historic support for universal benefits, such as child benefit and pensions, must be reconsidered in favour of targeting. That gave the right hon. and learned Member for Monklands, East the impression that the coast was clear to his left. So he promised in his leadership manifesto to examine in an open-minded way the balance between universal and selective benefits. He said: There may be a case for many of them remaining universal, but it's only right … to re-examine everything. I have not ruled anything out of court. Unfortunately, that crossed in the post with a letter to The Guardian from the outraged hon. Member for Oldham, West repudiating the very idea of a move in favour of targeting. The leter said: I have never said or implied … any such idea". So the brothers are in a real mess. The heir presumptive is at loggerheads with the spokesman incumbent. We want to know whether the spokesman incumbent will remain so when the heir presumptive wins the election.

Mr. Meacher

The Minister has made the point that I was going to make. After 20 minutes of his speech he has not yet reached the Queen's Speech, but I wanted to ensure that he understands that the report in The Guardian had no foundation whatsoever. He has now quoted it to make a long and cumbersome point about the internal discussion within the Labour party.

Mr. Lilley

On the subject of being long and cumbersome, the hon. Gentleman took six minutes of my speech and has just reattributed them to me retrospectively. Therefore, if I cannot deal with all the points as I wish, it is his fault. I never expected to be outflanked to the right by the right hon. and learned Member for Monklands, East. I can only assume that he covets my "Spitting Image"—uniform, monocle, jackboots and leather gloves. And he is welcome to them.

The Labour party spent the last four years claiming that we had laid the social security system to waste and that we did not care. The electorate did not believe it because its rhetoric was manifestly at odds with the facts. We have increased spending by over half in real terms since we came to office. It is absurd to say that a party that spends £70,000 million on social security does not care about those who need it. That is over £10 from every working person every working day being spent on social security.

Ms. Armstrong

What are the future trends of Government policy? Will the Minister recognise the point made by the hon. Member for Waveney (Mr. Porter) that 16 and 17-year-olds are not finding places on youth training schemes because places are not available? The hon. Gentleman said that there were problems with that and that benefit was still not being paid.

Mr. Lilley

Opposition Members keep asking me to get on with my speech and then taking time out of it.

We have an excellent record on social security, not least on the disabled. We have increased real spending on long-term sick and disabled people by 150 per cent. We have increased the number receiving attendance allowance fourfold, to nearly 1 million. We have increased the number receiving mobility allowance sevenfold to nearly 660,000.

We are adding further help from two new benefits this April—disability living allowance and disability working allowance—which will bring help to around 300,000 disabled people, at a cost of an additional £300 million in 1993–94.

We were the first to give proper recognition to the role of carers. We have increased the numbers on invalid care allowance from 5,000 to 155,000 and we introduced the special carer's premium in income support.

For pensioners, too, we have a good story to tell. Pensioners' real average incomes have risen by 34 per cent. since we came to office. That is faster than the incomes of those below retirement age and five times faster than under Labour. Pensioners have benefited from the growth of private pensions, the positive yield on savings, the development of the state earnings-related pension scheme and the abolition of the hated earnings rule.

We have also targeted extra help on the least well off. Last month we increased pensioner premiums for the over-80s and disabled pensioners by more than inflation. From October 1992, there will be further increases in all the pensioner premiums: £2 per week for a single person; £3 for a couple. We will have given £700 million extra since 1989 to poorer pensioners over and above the normal benefit upratings. That proves that one can target without introducing a means test into the basic retirement pension —a point which the hon. Member for Oldham, West may have to make to the right hon. and learned Member for Monklands, East.

The election revealed how fundamentally different the approaches of the Government and the Opposition are to social security. Labour believes that the problem is inadequate funding, which can be made good by a once-for-all increase in spending. We recognise that demands on social security are rising inexorably. There will be more elderly people, there will be more frail people and people's expectations will continue to rise. A once-for-all increase will not cope with that.

We need a continually growing economy to fund those demands, which means a low-tax, lightly regulated, enterprise economy. Moreover, many needs are better met directly by long-term economic growth than by reliance on the benefit system, however generous. Sound economic policies feed through to private pensions through higher dividends, to generate jobs, to permit a wide range of self-provision and to protect savings. I am convinced that the policies that we are pursuing will ensure that Britain is one of the first countries out of the world recession—just as it led the world out of world recession in the early 1980s. We will again generate jobs. Let us remember that during the 1980s Britain created more jobs than most other countries in the European Community combined and we still have a higher percentage in work than in any other country in the Community.

This is a momentous period for our social security system. Major change is likely to come to a head in the next few years for a variety of reasons. First, the Maxwell case has made it clear that we need to review the occupational pension framework. Unlike the hon. Member for Oldham, West, we agree with the Select Committee on Social Security on that. I shall be announcing my plans for that review to the House in the course of the next few weeks. The Barber case will put heavy burdens on private pension schemes. The Coloroll case will clarify that and, together with the Maastricht protocol, will, we hope, remove the threat of retrospection. But it will leave many loose ends to be tied up.

The Government are committeed to equalise the pension age. I shall be considering the responses to our consultation paper, when consultation ends in June, with a genuinely open mind.

In April 1993, there will be a change in responsibility for community care, which will involve major changes in social security. A new Child Support Agency is being established. Finally, our pledge on personal pensions has to be implemented.

Let me make clear my priorities. While fulfilling our commitments, I believe that we must apply six criteria. I want to focus benefits, with any improvements that we can afford, on the most needy. I want to minimise the disincentive effects of our benefit structure. I want to simplify the system wherever possible. I want to ensure that our system adapts to the differing needs of the people it is intended to benefit—the elderly, the disabled, the unemployed and families—not to force people to adapt to a complex system. I want to bear down on fraud and abuse, since every penny misappropriated means less for those in real need. I want to encourage personal responsibility, not undermine it. That is why I attach such importance to the Child Support Agency, whose remit is to ensure that parents meet their legal and moral obligations to help maintain their own children. It is why I shall press ahead to enact our pledge to encourage personal pensions. The extension of personal pensions to 4.5 million people has been an enormous success. It has dramatically widened the range of people with their own pension to supplement that provided by the state. It is increasing the volume of committed long-term saving available for long-term investment by industry. And it has given millions of people greater flexibility and mobility.

The hon. Member for Oldham, West calls the incentives that have encouraged this welcome growth a bribe. His right hon. and learned Friend, in his ill-fated shadow budget, threatened to abolish the incentive—and even to repudiate retrospectively the obligation to pay it in respect of savings made last year. Nothing could demonstrate more clearly the divide not just between Labour and Conservative, but between Labour and the British people. Labour Members are out of date, out of touch and out of office.

The electorate have shown that they reject Labour propaganda about the failings of our system; they distrust Labour's pledges as ill targeted and irresponsible. They acknowledge the massive increase in benefits that we have financed. They know continuing improvements require a dynamic and enterprising economy. They want extra help to be focused on those in greatest need—

It being Ten o'clock, the debate stood adjourned.

Debate to he resumed tomorrow.