HC Deb 10 December 1993 vol 234 cc610-28 10.18 am
Mr. Ken Livingstone (Brent, East)

I beg to move: That this House calls on the Procedure Committee to bring forward proposals so that in future years the House would no longer vote for or against the Budget, but would instead choose between alternative budgets put forward by both the Government and the Official Opposition, with the winning Budget proposals then going forward for consideration in Committee; that the Treasury would give full cooperation to the Opposition in the preparation of its Budget, and that in the event of the Official Opposition failing to take up this opportunity, it would fall to the third largest party to present the alternative Budget.

I have not prepared a long speech. The circumstances in which I have been called to address the House are extraordinary. I am in an almost unique position. A controversial motion—which could have been debated for not only one day, but two or three days—was tabled by a member of the governing party, with which I have had many disagreements. We now find that there are not enough Members of the governing party in the House, that that motion has fallen and that we move on to the motion standing in my name. I should be quite happy if, at some time today, the Prime Minister or a senior Minister arrived to announce the dissolution of Parliament and a general election, given the Government's failure to control the procedures of the House and to deliver their policies and prepared business.

I now offer the prospect of an interesting debate. Given the similarity between my motion and that tabled by the hon. Member for Calder Valley (Sir D. Thompson), I am sure that many hon. Members with speeches prepared for the first motion will find that most of them are in order on my motion. My motion is, after all, concerned with the Budget and the confidence that it engenders in industry and commerce.

I must inform the House that my motion does not reflect official Labour party policy. I feel strongly about the issue, but it is not formal policy that the rules of the House should be changed as I have suggested. Every year when we debate the Budget we find ourselves in a ridiculous position. There is always a major confrontation between the parties about the Government's taxation proposals, but confrontation is hardly adequate. In the aftermath of this year's disgraceful Budget, in which massive public spending cuts were made, the Opposition parties were merely able to oppose such cuts.

If the parties that seek to govern Britain genuinely believe that they are ready to take command of government for five years, they should be able to put forward genuine alternative proposals to the Budget. The British people would then witness not simply a debate in which the governing party of the day had its proposals attacked as inadequate, but one in which competing sets of proposals could be judged against one another. It would be a useful discipline for the official Opposition not simply to oppose the Government of the day, but to outline what they would do from day one, if elected.

Mr. Bob Cryer (Bradford, South)

I note that under my hon. Friend's motion the Government would be required to provide assistance to enable the Opposition to prepare their alternative Budget. That would be a great help to the Labour party, because it would be able to discover the extent of the maladministration and the enormity of the debt. We should be able to look at the books before we had the opportunity to form the Government at the next general election. That assistance would also lead to greater openness—the Government have not achieved that, despite their many claims—and that would benefit the community.

Mr. Livingstone

I am delighted with that intervention. One of the problems that the Opposition face is that most of the detailed financial information available to the Government remains confidential to them. The advice given by senior civil servants in the Treasury is not revealed to Parliament, except in those brief exchanges at sittings of the Treasury and Civil Service Select Committee, when it is possible to prise a few nuggets of information out of them. It would be of great benefit to the Government of the day and the Opposition if we were able to have more informed debate about the nation's finances.

If the Opposition were to have access to senior Treasury officials, we would know the true state of the nation's finances. That would mean that a Government in waiting would not make promises that could not be kept and repeat the mistakes that have sometimes been made. In 1964, for example, the incoming Labour Government knew that the financial position was bad, but, once in office, they found that it was infinitely worse than predicted.

Lord Callaghan says in his autobiography that on his first day as Chancellor of the Exchequer he was sitting at the desk in No. 11, surrounded by officials, when the outgoing Chancellor, the late Reginald Maudling, popped his head round the door and said, "Sorry to leave it in such a mess, old cock." He then sloped off. Governments have a tremendous interest in suppressing damaging facts about their stewardship of the economy. That is wrong and such practices should end.

The debate about each year's Budget and the projections for the year ahead, which lay the foundations for either recovery or recession, should be available to the alternative Government so that they can construct the details of their Budget.

Most of what is produced in the Budget passes without great public attention or even attention in this House. Most of the debate focuses on VAT, income tax and the projected total public spending. An array of subsidiary detail which is not controversial is provided, however, and there would be no problem in Treasury officials making it known to the official Opposition so that they could prepare a proper alterntative Budget.

Under my arrangements, I envisage that the Chancellor of the Exchequer would, as usual, address the House for several hours to explain the Budget. A debate would follow and then the House would adjourn. On the next day, the Leader of the Opposition or the shadow Chancellor would spend a similar amount of time putting forward the Opposition's proposals, based on the same range of detailed documents that the Government had provided to the Vote Office.

Mr. Dennis Skinner (Bolsover)

rose—

Mr. Livingstone

I am happy to give way to my hon. Friend because he helped to make it possible for me to make this speech.

Mr. Skinner

I did not realise what my hon. Friend's motion was about and there is no doubt that its content is different, unlike the motion tabled by the hon. Member for Calder Valley (Sir D. Thompson). My hon. Friend has offered some new ideas about the presentation of the Budget, but he had better be careful about what day he chooses for its presentation. If that day happened to be a Friday, the Government might not be here to carry their Budget through. He must pick his day carefully.

Mr. Livingstone

My hon. Friend has made a cruel and unkind point. I do not want to rub salt into open wounds.

Mr. Peter Hain (Neath)

As part of the new consultative process, does my hon. Friend agree that proper soundings should be made throughout the regions of England and in Scotland and Wales? The Budget offers no benefit to Wales. If a new devolved structure of government is established, and given the new Budget procedures that my hon. Friend envisages, perhaps consultations could be held with the Welsh Parliament to ensure that the Budget genuinely reflected the views of all Britain rather than those of the narrow Whitehall clique. That clique governs the momentum and the ideas of the current Budget procedures which we are now seeking to overturn.

Mr. Livingstone

I am in complete agreement with my hon. Friend. It is absolute nonsense for secrecy to surround the whole Budget process.

My motion focuses narrowly on the presentation of the Budget before Parliament. If my motion is agreed—there may be a vote on it and it could be passed unanimously—and the Procedure Committee studies it in detail, I hope that my hon. Friend the Member for Neath (Mr. Hain) will convey his remarks to it. Instead of the great secrecy that surrounds the Budget, a consultation paper should be issued two or three months before it is formally presented. It could set out the parameters of the Budget, the broad financial position, the various options and demands on spending and the range of available tax options. We should then be able to conduct a proper national debate in regional parliaments, which I hope will be established before the century is out, local authorities, chambers of commerce and trade unions. People could then debate the Budget options and give advice to the Government. Given current sophisticated polling techniques, the Government could then gauge public opinion of certain Budget proposals.

Mr. Cryer

Would it not be far better to conduct an open debate, as my hon. Friend has suggested, rather than give private dinners at No. 10, hosted by the Prime Minister? Those dinners are attended by people who give funds to the Conservative party and they influence decisions, most importantly, about the Budget. No doubt the brewers were present at such a dinner and exercised their influence, because there was no increase in the excise duty on beer. Similar influence must have been exerted by the tobacco industry, because, although the duty on tobacco has increased, there is continuing opposition within the Government to a ban on tobacco advertising. There is no doubt that such secret interventions and influences on the processes of government under the Conservative Administration, whom many regard as political corruption, would be kept at bay if we had a completely open debate about Budget priorities, as suggested by my hon. Friend.

Mr. Livingstone

That is exactly right. Part of the British tradition of secrecy and elitism means that a handful of people at the top of the Treasury and the most senior members of the Government know what is going on. We should be honest, however, and accept that most members of the Cabinet are no more than spectators of the process. They are told on the morning of the Budget what it contains, when it is far too late to make any serious changes. I suspect that it is too late for any change simply because all the documents have already been printed and collated, ready to be handed out at the Vote Office as soon as the Chancellor has sat down. It is absolute nonsense.

This is not, therefore, a question simply of the members of a wicked Tory Cabinet carving it up among themselves. It comes down to the Chancellor, the Prime Minister, the Chief Secretary to the Treasury and a handful of unelected Treasury officials, often drawn from a narrow public school, Oxford and Cambridge elite. That is utterly unacceptable at the tail end of the 20th century, when most countries in Europe have been functioning democracies for a very long time.

Mr. Cryer

While my hon. Friend is discussing the subject of secrecy of the intervention and influence of Treasury officials—who are almost entirely drawn from the Oxbridge category, public school educated and not sympathetic to the Labour party or to progressive ideas generally—will he dwell a little on the subject of the influence of the Common Market institutions on the preparation of the Budget, in which they also, not openly but clandestinely, bring pressure to bear on Governments to follow specific economic policies?

Mr. Livingstone

My hon. Friend is right that the advice and pressures applied to Government should he open. The country has been scandalised by the thought of the Prime Minister of the day sitting at a private dinner in No. 10 Downing street with foreign business men, many of whom are now known to be crooks, discussing what tax breaks they would like and then getting them into the Budget.

Mrs. Jones who lives next door to me would like to have a couple of hours with the Prime Minister over a tasty dinner and see what can be done to improve the quality of her life by bumping up her pension, but the Mrs Joneses get no say, whereas international criminals descend from Hong Kong and from Cyprus, in the run-up to the Budget, to bend the ear of the Chancellor and of the Prime Minister—and then there are nice fat cheques for Tory party coffers. That is a disgrace. I am sure that it is all perfectly legal, but I hope that an incoming Labour Government will introduce retrospective legislation so that those people can all be sent to prison, including the Ministers who are involved.

Mr. Martyn Jones (Clwyd, South-West)

I am in favour of the consultation process, which was mentioned by my hon. Friend the Member for Neath (Mr. Hain), with the—one hopes, elected—representatives of the regions. Does my hon. Friend agree with the process that we would institute by his new procedures, in the sense that the average person in the street could be consulted? There would be a range of proposals and, as in the case of the Sunday Trading Bill, for example, people could write in and put pressure on Conservative Members, who at the moment simply troop through the Lobbies, cut everyone's pension and increase national insurance contributions and so on and effectively increase tax rates to the highest that we have ever had. The public could plead with the Whips to abide by their voters' wishes and then go for our alternative proposals, which would reverse those decisions.

Mr. Livingstone

When listening to my hon. Friend, I was reminded of the Budget process in Grenada, when that country had a progresssive Government before it was brutally overthrown by American troops. Each year the Budget in Grenada was published in detail; there was a period of consultation; the whole community came together. It is much easier to do that in Grenada, where there are just a few tens of thousands of people—a couple of hundred thousand at most—compared with this country. It would be much more difficult in a nation of 56 million, but a party that has been able to govern for 14 years must surely have ideas about setting up structures for the consultation of the British people.

I hope that when we get a change of Government the climate of respect for community and commitment to community and community institutions will lead to a flourishing of representative organisations throughout the country: neighbourhood councils, a strengthening of trade unions, an increased attendance at the meetings of residents' associations and chambers of commerce. I see no reason why Government should not be widespread and open in their consultation.

When I was leader of the Greater London council—that brief, shining five years, the apex of human civilisation, government and wisdom—we were able to institute a procedure by which we did consult; and it was not just with the wicked old trade unions. The London Chamber of Commerce and Industry would come in to see me and the chair of finance would sit down and say, "We have a problem at the moment: could you cut the budget by another 2.5 per cent; bring the rate down?" and we were able to accommodate that. When the members of the London Chamber of Commerce and Industry were consulted by the right hon. Member for Mole Valley (Mr. Baker), who was then in his incarnation as destroyer of London democracy, he was amazed to discover that the chamber had had a better deal out of the Labour-controlled GLC, in being listened to and helped by the financial policies of the council, than they had ever had from previous administrations under Sir Horace Cutler and Lord Plummer.

Mr. Cryer

As my hon. Friend has alternative Budgets in his motion, I wonder if he would dwell a little on the alternative system of taxation, because the Chancellor of the Exchequer, when he delivered his long, somewhat monotonous and boring speech recently on the Budget, expatiated at length of the virtue of value added tax as opposed to direct income tax.

If Labour Members were proposing an alternative Budget in the way in which my hon. Friend's motion suggests, we would want to emphasise the fairness of direct taxation, which is linked to people's ability to pay, and the unfairness of value added tax, which oppresses the poor because it takes a much greater proportion of their income than of that of the person who is extremely, or relatively, well off. My hon. Friend should emphasise that, to show what radically different views we have about the means of raising taxation.

Mr. Livingstone

I am coming to that argument.

I have talked about the general procedures. I want to try to sketch out what would perhaps have happened if we had had that situation in operation this week. As my hon. Friend the Member for Bradford, South (Mr. Cryer) says, there are clear ideological difficulties in the House about the approach to taxation.

Sadly, the British media—most of whom are in the pockets of the present Government and collaborate in perpetrating the big lie—have gone on, year after year, depicting the Conservative party as a party of low taxation. In fact, we experienced, immediately after the former Prime Minister Lady Thatcher came to power, several years of real increases in taxation which hurt not just working-class families but middle-class families. There was a brief period when taxes were reduced a smidgeon as the oil revenues flowed in, but now once again we are committed to substantial real increases in taxation, which will mean that under the present Government we are being more severely taxed than under the last Labour Government.

They are different taxes, however. We do not get the cries of pain from the Tory press when this Government are banging up taxes that we had when Labour Governments did that, because the basis of the taxation is different. It is called low visibility taxation because, instead of putting up people's income tax honestly and fairly, which means that people who earn the most donate the most—people who have done the best make the greatest contribution—there has been a shift to just putting taxes on consumption. The way in which that works is pernicious.

Let us consider the way in which value added tax will be applied to heating fuel. The poorest 10 per cent. of people in Britain spend nearly 10 per cent. of their income on heating. The addition of VAT will mean a substantial increase in spending for them. The richest 10 per cent., with much larger homes but who are much more careless about the way in which they heat their homes, spend only £13 of their income—a ratio of 10:13. Yet the incomes of the top 10 per cent. are in some cases hundreds of times greater than those of people in the bottom 10 per cent. It is an unfair and regressive form of taxation which penalises the poor.

The aspect of that which I find most depressing is that we are now in a position which is worse than that which prevailed in Victorian times. We have got back to Victorian values—the values that produce great inequalities of wealth. The inequalities of wealth in Britain today between the richest and the poorest have grown so dramatically that they are worse than they were more than 100 years ago. As a result of the increasing use of VAT and the increasing reductions in taxation of high earners, the situation seems set to worsen year by year.

There is a moral case to be made for saying that that is unfair, but there is also an economic case for saying that it is damaging. If we examine the works of most modern economists, we find that the greater the inequalities of wealth in a nation, the more one accentuates the business cycle—the boom and bust cycle. When one is in a turndown in the economy and people start to cut back, the people at the top of society, the richest, can make dramatic and immediate reductions in their spending, whereas the people at the bottom cannot.

The more we widen the inequalities of wealth, the more we accentuate the shift into recession. If we had narrowed differentials, people at the bottom of society would have continued to spend in a recession because they spend on the basic essentials.

Let us consider what could have happened. Let us suppose that we had increased the top rate of tax and reversed the Lawson tax proposals of 1988. Suppose we had returned to a top rate of tax of effectively 60 per cent. which is what prevailed for a decade under Mrs. Thatcher's regime as Prime Minister—that could hardly have been a socialist measure. If we had returned to the tax regime as it was prior to 1988, we would have released between £5 billion and £7 billion in extra taxes on the rich. If we had transferred all that to pensioners, they would have seen a dramatic real increase in the quality of their lives and the money at their disposal.

Pensioners would have gone out and spent that money. They would have warmed their homes a little more. They would have bought themselves better food and some new clothes. Increasingly, the poor spend their money on British-produced goods and that creates more work. However, people affected by tax increases at the top rate often spend their money on highly expensive and high-tech imported goods which we no longer produce or perhaps never produced in this country. If we were to redistribute wealth from the rich to the poor, that would help to lift the nation out or recession. There is an underlying economic argument which the Government should have taken on board if they wanted to strengthen our move out of recession.

Mr. Derek Fatchett (Leeds, Central)

My hon. Friend has made a very important point about the distribution of income and the business cycle. Now that he is blessed by the presence of a Treasury Minister, he may want to reinforce that point by considering the difference between the business cycle in the United Kingdom and business cycles elsewhere in western Europe. The business cycle is much sharper in this country, which illustrates my hon. Friend's point about the wider distribution of income and the greater inequalities in the United Kingdom as opposed to other western European countries. That has a damaging impact on Britain's manufacturing industry and on the ability of our managers to manage and to plan ahead.

Mr. Livingstone

My hon. Friend has made a very valuable point. Modern European economies have done so much better than the United Kingdom in recent years because their economic cycles are managed by their Governments. Their Governments intervene to smooth the cycles to assist. However, we have the lunatic classical old economics which are regurgitated in a modern form. We stand back and let the cycle run its course.

The economic history of the past 150 years from the point of view of unemployment figures contains some striking differences. A graph depicting the level of unemployment prior to the start of the second world war would show that unemployment fluctuated up to 10 per cent. and then came down within four or five years. That was a sharp and rapid business cycle. However, that sharp cycle was smoothed out by the Keynesian economics which predominated from 1945 to the mid-1970s. Instead of violent oscillations in the business cycle, we saw the most sustained and successful period of growth in the global economy while most western nations were committed to Keynesianism.

That is the kind of debate that we could enjoy if rival Budgets were presented based on different economic priorities and different attitudes towards Government intervention in the economy and the balance between the public and the private sector. Such issues could be debated seriously and that would engage the British public.

Let me consider now what would have happened if my system had been in operation this year. The Chancellor would—as he did—have presented his Budget. His presentation last month might have been quite different if he had known that an alternative was to be produced the next day which would have been judged against the Chancellor's Budget. I am not alone in suspecting that the Chancellor's Budget was geared very much towards winning the next election—and I do not for a moment mean the general election: I mean the next Tory leadership election.

On Budget day, I arrived too late to obtain a seat on the rather crowded Labour Benches and I had to sit in the overspill Gallery. For the first time in my life, I listened to the Chancellor's Budget surrounded predominantly by Conservative Members. It is not unfair to say that they were almost sub-orgasmic with joy and ecstasy as the Chancellor rolled out those right-wing platitudes. He did it quite casually, with little of intellectual substance to sustain them. Conservative Members were bouncing up and down, and I suddenly thought that the Chancellor was attempting to pander to them. He was attempting to pander to the people who had helped to bankrupt Britain and who had led us into this disastrous economic position.

The Chancellor is supposed to be something of a liberal—if that is not a contradiction in terms for any Conservative Member these days. However, he pandered to the worst, most ignorant and backward instincts of the Conservative party. I am not sure whether the Chancellor would have attempted such a shallow performance if he had known that it would be judged the next day against the performance of the Leader of the Opposition or the shadow Chancellor.

The alternative Budget would have been presented the day after the Chancellor's Budget. That would have provided a stark contrast and would have been a benefit to the Labour party. The British people would have been able to see the alternative.

I want now to consider briefly what that alternative Budget would have contained. I have no doubt that it would have contained serious proposals to deal with the crisis facing Britain in terms of military spending. Virtually all economic commentators point out that we are spending twice the proportion of our gross domestic product on the military than the average European nation. That builds in an economic disincentive because military spending is not as dynamic in terms of its economic impact as other forms of public spending. Military spending produces only one quarter of the jobs that other forms of public spending produce.

A nation that is disproportionately spending on its military creates fewer jobs, and it is jobs which help to fuel economic recovery. A Labour party which knew that it had to present a serious Budget would have consulted the defence industry, the trade unions working in that industry, the managers in the industry and the academics who have examined the question of arms diversification and conversion. The Labour party would have produced a detailed proposal for a phased programme of arms conversion—

Mr. Hugh Dykes (Harrow, East)

On a point of order, Madam Deputy Speaker. I am sorry to interrupt the debate, but I am not sure whether the hon. Member for Brent, East (Mr. Livingstone) is now in order and I ask for your ruling. Having already made a phantasmagoric and hysterical speech about weird suggestions for new procedures, the hon. Gentleman is now straying from the terms of his motion.

Madam Deputy Speaker (Dame Janet Fookes)

The debate must of course centre around procedures. I am happy to hear illustrations, but the debate must not go so far beyond illustrative purposes as to forget the main terms of the motion. I am sure that the hon. Member for Brent, East (Mr. Livingstone) will bear that in mind, as will all other hon. Members.

Mr. Livingstone

I hasten to say that I am not engaged in a filibuster. I can see the end of my speech hoving into view even as I think of my next sentence.

The procedures that I have proposed would not simply affect this House. There would have been a wide debate in the arms industry. Labour would have produced detailed proposals to protect jobs because jobs in the industry are being lost. Without a proper state-led arms conversion and diversification programme, jobs are being lost industry by industry, site by site across the country. Those jobs often involve the most skilled workers in British manufacturing in the most modern plants. They are exactly the kind of workers who should be put to work to create in Britain the high-skilled, high-tech products that we are importing and which are adding to our balance of trade deficit problems.

The alternative Budget would have contained a major element about making the arms industry in Britain much more dynamic. That would have made a much greater contribution to reducing our terrible balance of trade deficit.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell)

That is an interesting idea. However, the terms of the hon. Gentleman's motion call for an alternative Budget to be put forward by the official Opposition. Would the official Opposition espouse the cause which the hon. Gentleman has just argued?

Mr. Livingstone

I have no doubt whatsoever that that would be the case. The Labour party is committed, in the shadow Cabinet and at conference, to a proper arms diversification strategy for Britain. We should hear no more nonsense about the Conservative party being sound on defence. By ignoring the great historic changes that are taking place and by refusing to have a defence review, the Government are locking us into a position where we are losing jobs week by week because we do not have such a strategy. Labour is committed to that strategy.

There may well be an intense debate in the Labour party about how fast we should go or exactly what form that strategy should take, but no one in the Labour party denies that there should be a proper diversification strategy. Otherwise, people will lose their jobs. The Labour party is committed to ensuring that, if defence jobs are lost, the workers are retrained, the factories are retooled and we keep the workers producing for Britain. That would have been a major part of this debate—

Madam Deputy Speaker

Order. The hon. Gentleman is straying too far from his self-imposed brief.

Mr. Livingstone

I apologise. I was led astray by the Minister—I am told that it happens all the time.

The second major item would be the fundamental question of public spending. We have been told in a quite breathtaking sleight of hand that the Government will reduce public spending. There are two strands to that. First, the Government are freezing the wages of public sector workers and, secondly, they are making unspecified commitments to cuts by robbing the contingency fund. Amazingly, the markets have bought that rubbish. It is incredible that the Chancellor can say that the Government will make cuts in public spending and then get away with simply referring to the contingency fund and public sector wages. It is absolute nonsense.

There have been major pressures on the Government because people in the public sector have been losing real income. I do not believe that those who serve our nation in public sector employment—whether they are nurses, local authority workers, teachers or the people who sweep our streets—should bear the burden of lifting Britain out of the present economic morass by having their wages cut. Clearly, that would have been the central theme of an alternative Budget—being much more precise and honest. If we reduce the wages of public sector workers, it means that they will spend less. In that sense, they are being used to undermine economic recovery.

The Labour party's alternative Budget would have been precise and clear because we would have had access to Treasury officials. We would have had time to consult and work out exactly where we plan to increase public spending—what would be most urgent and most useful in lifting the nation out of the present and appalling recession. I know that technically we are out of recession, but it still feels very much like a recession to most people.

The third major item—I will not go beyond these three items because they are the core of any Budget—is the question of taxation. What was damaging for the Labour party at the general election—I disagree with some of my hon. Friends on this point—was the fact that it launched an alternative Budget at the beginning of the campaign. If we had been in the position year by year of preparing a fully detailed Budget with the support of Treasury officials, we would have had a debate about taxation as part of the normal political cycle, rather than launching it under the constraints of an election.

I do not know about other hon. Members, but I tend to find that people are more resistant to believing what I say during a general election than at any other time that I open my mouth. I suspect that the public defences go up as soon as the election "off" is given—they tend to be rather less receptive to what we say. A debate about the level of taxation for a week or more in the normal political cycle, as issues are tested and positions clarified, would leave people in a much better position to make up their minds about the truth of who would or would not increase taxes. Of course, the judgment of history will be that Labour's proposed taxes at the last election would have been much less savage than those with which we will have to live. We have been penalised for telling the truth. I want to get away from the situation in which such matters are thrown in at the last minute in an election.

I have no doubt that a Labour Government would have had to increase income taxes. The discipline of preparing an alternative Budget, the discipline of sitting down with Treasury officials and the discipline of saying where the money would come from to pay for the vital reconstruction of our industrial base and the rebuilding of those, public services that have been savaged the most, and to fund a public works programme or to start to bring unemployed people back to work, would inevitably have forced the Labour party to face up to what increases in taxes would have been required and equally to work out those taxes in a way that would be the most productive for the nation as a whole rather than simply benefiting a narrow section.

I have not the slightest doubt that, after such a debate, we would have come up with an increase in the top tax rate and the tax rate for those earning over £30,000 a year. I should be quite happy to see the top tax rate back at 60 per cent., including national insurance contributions, for people earning over £30,000 a year. The argument would have been hammered out here and people would have decided whether it was fair and whether it was something that they were prepared to support.

I hope that the Government can see an advantage in that for them. Of course, there would be a major advantage for the Labour party in having access to Treasury officials. There would be major advantages in the Labour party's, being able to prepare for government with that discipline. However, there would also be major advantages for an honest Government. We would not have elections that degenerated into slanging matches of promises and accusations; we would build into the normal political cycle an annual debate about the priorities of the parties with regard to public spending and taxation. People could watch that debate away from the heat and the nonsense of an election campaign, and all the diversions and sound bites, and come to their own conclusions about which party had the long-term interests of the people and the economy at heart.

In that situation, the Labour party's alternative Budget would have been a decisive nail through the heart of the Government and would have opened the way not simply to a Labour victory but to a Labour party coming to power prepared and ready to govern from day one.

10.54 am
Mr. Simon Burns (Chelmsford)

I am grateful for the fact that, by a quirk of parliamentary procedures, we are debating this extraordinary motion this morning. I offer my apologies to the House. Unfortunately, my business men's lunch club is coming to Westminster today, so sadly I cannot be here for the end of the debate. However, I guarantee that I will read Hansard with interest on Monday. My business men were looking forward to hearing a report of the business and industry issues discussed in the House this morning. Sadly, that is not to be, because of the premature curtailment of the debate, which I suspect is something to do with the ongoing petulance of the war of attrition that the Labour party is waging to restore some of its credibility over its monumental incompetence in failing to table an amendment to the Budget resolution on value added tax on fuel and heating.

The motion strikes me as naive if one is being charitable, and extraordinary if one is being realistic. Listening to the cogent and well-argued speech of the hon. Member for Brent, East (Mr. Livingstone), it crossed my mind what Lord Healey would think if he had an opportunity to read the motion. I suspect that, if one went down the Corridor to another place and drew his attention to the motion, one would be able to hear echoing down the Corridors his belly-aching at the preposterousness of the motion. The motion states: That this House calls on the Procedure Committee to bring forward proposals so that in future years the House would no longer vote for or against the Budget".

I am sure that the hon. Member for Brent, East does not need a lesson on constitutional history or on the way in which the constitution operates. However, in case he needs such a lesson, it would be sensible simply to explain that, in a constitutional democracy, there are general elections in which different parties compete with a set of proposals that are to be implemented on successful election as the Government. Normally, although not always, the Opposition parties, by definition, have serious differences of opinion on the main thrust of the policies of the Government of the day. To think that a Budget could be produced when there is a fundamental difference between the basic philosophies of the two parties is to ask too much. If one cannot get agreement because of a difference in the fundamental philosophies of two political parties, how would one ever get a Budget? If one could not get a Budget, how would the country continue to operate?

Mr. Livingstone

The hon. Gentleman is not reading the motion as I intended. If the motion is poorly worded, I apologise; I am not suggesting for one moment that the House would choose a compromise Budget from the two parties. There would be the Government's Budget and the Opposition's Budget, and the vote would be between the two. In a sense, we would still have a vote for or against the Budget, but it would not simply be for only one Budget. In a hung Parliament, which might be on the books one day, the Opposition's Budget would perhaps be carried.

Mr. Burns

I am grateful to the hon. Gentleman. All I can do is discuss the proposals in the motion. I am sorry if he has not worded his motion properly; he could have tightened it up and improved it. We are meant to be debating and considering a motion under which the House would no longer vote for or against the Budget. That proposition would be a recipe for disaster. In most years, we would never get a Budget because we would not be able to reach agreement.

The proposition is that we choose instead between alternative Budgets proposed by the Government and by the Opposition. I have always understood that the duty of the Government was to govern and the duty of the Opposition was to oppose. If the country wanted the Opposition and the Government to determine our way forward during a five-year period, I suspect that they would use their votes in a general election to come up with that extraordinary mish-mash. That is what is suggested as the logical conclusion of the motion.

I would find it quite extraordinary if any Labour Government ever agreed to the contents of the motion. I look forward to reading with great interest the speech of the hon. Member for Leeds, Central (Mr. Fatchett), who is to respond for the Opposition. I would think that the shadow Chancellor, the hon. Member for Dunfermline, East (Mr. Brown), and his predecessor in that position, the Leader of the Opposition, would have no truck with such a suggestion.

The motion goes on to say that if the Opposition could not or did not want to exercise the right to take part in the little performance, it would be up to the next party to do so —the Liberal Democrat party. I see that representatives of that party are conspicuously absent from today's debate. That suggestion boggles the mind.

Mr. Dorrell

I agree entirely with my hon. Friend. The hon. Gentleman's proposal is, at best, naive.

Will my hon. Friend consider the fact that there may be at least the germ of an idea in the motion? We have just had five days of parliamentary time devoted to the Budget debate, during which we discussed the Government's proposals in the conventional way. It was regarded as normal in other years that the Opposition would have at least one single proposal on how things might have been done better.

Instead, we had five days of speeches from the Opposition Front Bench which did not contain a single proposal with the authority of the Labour party. Whether the hon. Member for Brent, East (Mr. Livingstone) would agree with any such proposal is a further matter on which one may speculate. The Labour party did not have a single proposal on how it would deal with things differently from what the Government propose.

Mr. Burns

My hon. Friend has a justifiable reputation for being eminently reasonable and perspicacious. Like him, I was not in the slightest bit surprised that the Labour party could not, for whatever reason, come up with a single constructive proposal. That rather adds to my misgivings about the motion, because, as a charitable person, I should hate to have to put the Opposition on a spot in which they were forced to come up with constructive proposals to deal with the economy and with the Budget.

Mr. Livingstone

rose—

Mr. Burns

I will give way with pleasure to the hon. Gentleman in a moment. He may say that he has many suggestions about an alternative Budget, and I have no doubt about that, because he is an interesting thinker. Without wanting to get involved in the internecine wars in the Labour party, I must say that, sadly, he is a man in the wilderness whistling in the dark when it comes to making constructive suggestions.

Mr. Livingstone

Surely the hon. Gentleman will accept that one cannot complain that the Labour party puts forward no alternative during the Budget debate, and then complain also about a motion that would institutionalise, a procedure whereby the Opposition had to make specific proposals. On the basis of this speech, I would expect him to support my proposal.

Mr. Burns

With respect, that was not what I was suggesting. I was worried that it might be unfair to institutionalise a system that brought pressure to bear on the Opposition to have the courage to make constructive proposals.

The hon. Member for Dagenham (Mr. Gould) and others have commented on the alternative Budget that has been heralded so much during the past 18 months. That alternative Budget was announced, I think, on the steps of the Treasury in that arrogant photo-opportunity which showed the over-confidence of the Labour party during the general election. The hon. Member for Dagenham said that, as soon as he had read it, he realised with horror that the Labour party had totally misunderstood what was going on in the economy in the south-east of Britain.

To paraphrase the right hon. Member for Manchester, Gorton (Mr. Kaufman), the alternative Budget was the longest suicide note in history for the Labour party in the south-east. It bore no reality to the average earnings and the tax payments that were made by people in the south-east. That has been reflected in the fact that the Labour party has a minimal number of seats outside London in the south-east. That shows how out of touch it is with what goes on in this country broadly on a line from the Wash to Birmingham.

I return to the quite extraordinary motion. I should be fascinated to know whether a future Labour Government would want to abide by its terms because, frankly, I cannot foresee that happening. The hon. Member for Brent, East clearly knows that we have just had five days of debate on the Budget, and that we have an ongoing debate, not just for five days of the year but for 365 days of the year, on general economic policy.

The Government put forward their economic policy and stick by it, and the Opposition say constantly how, in their view, the economy could and should be improved. A different emphasis should be placed on economic policy. Suggestions are made as the official policy of the Opposition, when we are lucky—at the moment, there is a dearth of such policies. There are also different interest groups within the parliamentary Labour party which are associated with the general philosophy of that party.

To say that there is no debate on an alternative economic programme or an alternative Budget clearly does not stand up to investigation. The motion would allow the Opposition, and presumably the shadow Chancellor, to have time on the Floor of the House, to make proposals.

Certainly, that spokesman would not be the hon. Member for Glasgow, Garscadden (Mr. Dewar), after his comments during the past few weeks in the press and in the House. The Labour party would not want the hon. Gentleman to be official spokesman on the economy in case he gave the game away and put his foot in it, once again, and caused embarrassment. I suspect that it was because of the hon. Gentleman's alleged remarks in The People that the Labour party failed to table an amendment to the Budget earlier this week. That embarrassed the party and highlighted its incompetence. The hon. Member for Garscadden knows that the package produced by my right hon. and learned Friend the Chancellor to give genuine help to pensioners and to others with their VAT bills from 1 April next year has met the needs of those people.

To return to the main motion, no Labour Government would ever want to offer the Opposition in the future the facilities that the motion gives. I suspect—this will not come as any surprise to the hon. Member for Brent, East—that the shadow Cabinet does not support it either. Under this ricochet motion, if the official Opposition fail in any way to take up the opportunity offered, it passes to the third largest party which, of course, is the Liberal Democrat party. That suggestion is fraught with danger. I hope that we have some common ground on that point. I suspect that the experiences of the hon. Member for Brent, East and the hon. Member for Garscadden as parliamentary candidates do not differ from mine.

Liberal Democrat candidates can go up and down a street, meet 30 people in that street and give 30 variations on a policy in the hope of winning votes for their party. They are the experts at grubbing for votes by saying anything that they think the listener wants to hear. I suspect that the Liberal Democrats themselves would recoil in horror at the thought of presenting an alternative Budget. The last thing that any Liberal wants to do is categorically to state what his party believes in and will stick by, however tough the going gets.

Let us take the issue of VAT on fuel. We all know that in 1991 it was official Liberal Democrat policy to impose VAT on fuel. That is clear in the party's documents. Yet now, because the Liberal Democrats saw the initial reaction before the compensation scheme was announced, they have run away and tried to disown that policy. Imagine the conflicts, the arguments and the dilemmas that the Liberal Democrats would face if they had the opportunity to have an alternative Budget considered by a future House of Commons. It would not work.

The hon. Member for Brent, East has given us a useful opportunity to debate—

Mr. Livingstone

The Government gave us the opportunity.

Mr. Burns

The hon. Gentleman says that we gave him the opportunity. On this particular morning, it was the hon. Member for Bolsover (Mr. Skinner) who gave us the opportunity by seeking prematurely to end the debate on business and industry initiated by my hon. Friend the Member for Calder Valley (Sir D. Thompson). However, I shall not argue the semantics of the matter.

I am grateful to the hon. Member for Brent, East for giving us the opportunity to indulge in this intellectual exercise and this canter around the course. I fear that he is in a small minority in supporting the motion. However attractive it might be to an Opposition party now, there is a possibility—albeit a slim one—that at some point in the future we will conceivably have a Labour Government, and no Government would want to be saddled with this nightmare proposal.

11.12 am
Mr. Nirj Joseph Deva (Brentford and Isleworth)

We have before us a set of procedures which are wholly unworkable and highly unrealistic. The proposals enunciated by the hon. Member for Brent, East (Mr. Livingstone) are probably intellectually interesting enough, but they have wide implications for an entire area of the economy which I suppose that he has not thought about.

It is my understanding that political parties set out before elections their manifestos which contain commitments to the country on the economy, the manufacturing base, fiscal policy, monetary policy, trade policy and all other areas of economic activity. The hon. Member for Brent, East made out that the Budget is an occasion once a year when we decide how to cut or increase taxes. But the Budget has a structure based on the fiscal, monetary, trade and economic policy of the Government.

If the hon. Member for Brent, East assumes that a Budget is merely a matter of increasing or reducing taxes, I am glad that he would never be Chancellor of the Exchequer in any future Labour Government. The country has always been given choices; those choices are set out in our manifestos and policies. In the past 14 years, the Conservative Government have done many things that have widened the base of share ownership, wealth ownership and property ownership in our country. All those changes have been made as a result of successive Conservative victories. They have come through the various Budgets which have fine-tuned the economy and achieved the successes that we have seen so far.

The hon. Member for Brent, East talks about open government. Open government is, indeed, important. It can be seen as something which ought to be a part of our democratic process. The Conservative Government are wholly committed to open government. My right hon. Friend the Prime Minister has gone out of his way, through our citizens charter and other initiatives, to make sure that open government is a matter of great importance in our policies.

If the proposals of the hon. Member for Brent, East were accepted, many of the measures that any Government, whether Conservative or Labour, could put into effect would be cancelled and stultified at the outset, right here in the House. We would end up with a hotch-potch, a compromise, and an indistinguishable morass of policies which would have been traded and bartered across the Floor of the Chamber. There would be no politics, let alone policy, in the running of the Government.

Today, our economic performance is one of the best of any member state of the European Community. Would it have been possible, under the proposals of the hon. Member for Brent, East, to bring inflation down to 1.4 per cent.—the lowest in the EC and G7 countries and the lowest in Britain since 1959? Would it have been possible to bring industry's interest bill down by £12.5 billion since 1990 by reducing interest rates? Would it have been possible to reduce unemployment since January by 137,000? Would it have been possible for industry to increase productivity by 5 per cent. in the last quarter? Those improvements can be engendered only by the Government creating the right framework and a stable economic environment. That is done by the Government and the Chancellor of the day, unilaterally, but through consensus and discussion. It cannot be done by bartering across the Floor of the House of Commons on different aspects of policy.

Would it have been possible under the hon. Gentleman's proposals to reduce corporation tax since 1978 from 52 to 33 per cent. and yet to see our revenue from corporation tax increase from £4 billion in 1978 to £21 billion in 1990? I wonder whether it would have been possible for the United Kingdom to be the largest receiver of overseas investment in the past five years. I estimate that overseas investment totals £149 million, of which £80 million was portfolio investment. Would it have been possible to attract such investment under the hon. Gentleman's proposals for hotch-potch Budgets? Would it have been possible for Britain to attract 44 per cent. of all inward investment into the EC if we had had the mish-mash of policies, compromises and bartering that the hon. Gentleman has proposed? Would it have been possible for us to save 240,000 jobs in Britain through foreign investment, if the hon. Member for Brent, East had been allowed his proposition?

The hon. Gentleman's proposal has wide ramifications for our trade, inward investment and macro-economic policies and implications for our fiscal and monetary policies. If we had agreed to it, could Britain have been among those countries with the largest amount of foreign investment? I understand that last year we earned £26 billion from such investments. Surely the Opposition were well known for enforcing exchange controls and for their protectionist policies. Could that type of policy have been discussed alongside our policies in the House and been mitigated and alleviated by the procedures that the hon. Gentleman suggests?

Is it not a fact that our overseas investments in many parts of the world—I understand that they amount to $80 billion in the United States—including south Asia, the Pacific rim and the far east are earning money for this country, bringing in investment and protecting jobs? Could British companies have won contracts in Thailand, Indonesia and Malaysia? Could they have set up joint ventures in India, under the Prime Minister's Indo-British initiative, thereby encouraging a flow of inward and outward investment? Would all that have been possible, given the hon. Gentleman's proposal? It would not.

It would have been wholly impossible to run this country in the way that it has been run for many hundreds of years, and it would have been impossible for political parties to function sensibly.

The proposal would simply create intellectual chaos. Does that not show that the Opposition have no real alternatives to the successes that Conservative Governments have engendered during the past 14 years and that the proposal has been suggested as a way of wearing some of our clothes?

11.22 am
The Financial Secretary to the Treasury (Mr. Stephen Dorrell)

I am bound to say that when I was brought in to respond to this debate at relatively short notice, I found the terms of the motion somewhat surprising. The first element to attract my attention was that mentioned by my hon. Friend the Member for Chelmsford (Mr. Burns). It seemed an odd proposition that we should approve a motion which states that, when dealing with future Budgets, the House would no longer vote for or against the Budget". That proposition begs two questions. First, what would be the role of the House in the context of the Budget and, secondly, what would be the consequences of whatever action the House might take if it were not being invited to vote for or against? That seems an interesting constitutional doctrine which, as a Treasury Minister, might make my life quite comfortable. However, as a Member of Parliament and a citizen of this country, I find the idea deeply offensive.

My hon. Friend the Member for Chelmsford very properly speculated on the attitude of Lord Healey or Lord Barnett to the idea that, between 1974 and 1979, they should have presented a few ideas to the House, but that other ideas would also have been invited; they would merely have adopted the guise of advocates for their ideas, as there would have been ample opportunity for anyone else to come up with others that might directly contradict them. I doubt whether they would have embraced that proposition with warmth, or considered it an idea to be pursued.

Mr. Burns

I wonder whether my hon. Friend thinks that Lord Healey, who is renowned for his very forthright views, might think that anyone who supported such a motion was out of their "tiny Chinese minds".

Mr. Dorrell

My hon. Friend has taken the words out of my mouth. That was a formulation which sprang to mind as a description that Lord Healey might have used of someone suggesting alternative proposals of which he did not desperately approve. If he were still a Member of this House he might even have used that phrase about the views expressed by the hon. Member for Brent, East (Mr. Livingstone). If my memory serves me right, Lord Healey first used it when talking about his reception at a national executive committee meeting of the Labour party, so if it was not specifically a description of the hon. Member for Brent, East, it at least described many of his friends in the Labour party. I do not remember whether the hon. Member for Brent, East was a member of the NEC at the time, but I am certain that the people at whom Lord Healey's remark was directed were people of whom the hon. Member would approve.

As I said during my intervention on my hon. Friend the Member for Chelmsford, the motion contains one kernel of an idea with which I have a sneaking sympathy. If accepted, it would put the onus on the official Opposition to come to a Budget debate with some ideas—even one idea would be an advance on what we heard last week—and they would have to show how they would have preferred budgetary policy to develop.

I can understand the frustration of the hon. Member for Brent, East about the fact that the Opposition Front Bench did not see fit to set out an alternative economic strategy to the House last week. Indeed, they did not see fit to set out any clear ideas on fiscal, monetary and trading policy, or on any other aspect of economic policy.

The Opposition expect the House and the country to take seriously a party that presents itself as the low-tax option. No doubt, there are plenty of arguments that the Labour party might use in a Budget debate, but the proposition which the Opposition would come to the House and go to the country on the basis that they would levy less tax and be sterner disciplinarians of the public finances than the Government defies common sense. Also, that is not a proposition which the hon. Member for Brent, East would support.

I think that I detect in the motion an attempt by the hon. Member for Brent, East to wheedle out of his hon. Friends some ideas about how they think that the economy should be run. If that is his endeavour, I wish him well. Honest debate would indeed be served if the Opposition could be persuaded to tell the country just one detail of what they would do if they had the opportunity to present economic proposals and packages to the House.

The hon. Member for Brent, East suggests that, as part of this process to encourage honest and informed debate on practical measures, the official Opposition should have access to Treasury officials when preparing their ideas to present to the House. That suggestion could create serious problems in terms of constitutional doctrine, the use of Treasury officials' time and so forth. However, I have an even more fundamental difficulty with the idea, because in the Budget debate last week we did not hear any concepts of what the Opposition think that they would do.

The implication of the motion is that the void that currently occupies the part of Labour party thinking that should be filled by economic policy would be filled by Treasury officials. Although there are good officials in the Treasury, that would not lead to good economic policy. It is not my understanding of how political choice operates or of the purpose of debate in the House or of elections. It is not the job of Treasury officials to fill the policy void of politicians who do not know, or cannot agree on, what they want to do. It is the job of Treasury officials to assist and support in the execution of policies espoused by elected politicians.

Until we have clear evidence that the Opposition have a package of proposals and ideas about how they think that the economy should be managed, there is no job for Treasury officials to do, because it is for politicians to set out the parameters within which they want officials to work. The implication of the motion is that when politicians have failed to produce even the sketchiest of parameters, somehow it is for Treasury officials miraculously to fill that void. That is an unattractive proposition.

My hon. Friend the Member for Brentford and Isleworth (Mr. Deva) put forward the most rigorous objection to the idea that the House can pick and choose between various options presented to it in the Budget. It is that although the tax expenditure balance is an important part of total economic policy, it is by no means all of it. Indeed, it is probably much less than half, if one wanted to measure it, of total economic policy.

The Government pursue an economic strategy based on a clear idea that our task is to deliver fiscal and monetary discipline and a stable background against which a free economy can work, and to provide a legal and social framework that reinforces a free market economy. We do that because we think that it is the most effective way to generate wealth and improve living standards, which is the basis on which we presented the Budget on 30 November and on which we shall continue to present Budgets and ask the House to support them.

Question put and negatived.

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