HC Deb 11 May 1995 vol 259 cc870-2
3. Mr. Clifton-Brown

To ask the Chancellor of the Exchequer what was the effect on the Exchequer in the last financial year of industries privatised since 1979; and what was their effect in 1979. [22227]

Mr. Kenneth Clarke

In 1979, nationalised industries cost the taxpayer about £50 million each week. In 1994–95, privatised companies paid about £55 million each week into the Exchequer.

Mr. Clifton-Brown

Does my right hon. and learned Friend agree that those figures demonstrate the outstanding success of our privatisation policy, which has been widely recognised throughout the world by such regimes as North Korea and Cuba? Does he not find it strange that the last bastion of socialism, the new Labour party, has yet to appreciate the effects of privatisation?

Mr. Clarke

I agree with my hon. Friend. The Labour party held a special conference to try to pretend that it no longer agreed with the North Korean communists, but only a week later, when the first privatisation proposition came before Parliament, it was opposing it again and backing the keeping of nuclear fuel in state-owned hands, in spite of the fact that privatisation will bring a dramatic fall in electricity prices in England, Scotland and, indeed, all parts of the United Kingdom.

Ms Armstrong

Does the Chancellor recognise that the Treasury will make about £5 billion from the two privatisations that the Government are pursuing—£5 billion for tax cuts before the general election, which will have to be paid for by the British people to the tune of £10 billion in the costs of decommissioning power stations and subsidies to British Rail? What sort of bargain is that for the taxpayer?

Mr. Clarke

The hon. Lady has at least worked out that the proposal to privatise the nuclear electricity industry has nothing to do with tax cuts. It has to do with putting in place commercial disciplines and private sector management, which those in the industry want, and reducing the costs of electricity to consumers throughout the country. That is the purpose of the privatisation.

If it has become the policy of the Labour party to seek tax cuts—I have no knowledge of the direction in which it intends to go in that regard—tax cuts depend on tight control of public spending and the reduction of public borrowing. If the Labour party ever gets round to having an economic policy, perhaps Labour Members will give us the benefit of some of their opinions about some of those elements—tax, spending and borrowing.

Mr. Alan Howarth

Does my right hon. and learned Friend agree that the capacity of the privatised and other industries to invest and deliver wealth to the nation, jobs to our people and revenue to the Exchequer depends critically upon the level of interest rates? Does he agree that choking off investment every time we fear a tremor of inflation is a formula for the progressive debilitation of our economy?

Mr. Clarke

That is right, but I am sure that my hon. Friend also agrees that inflation has killed off fast recovery and poses the biggest threat to the confidence that people must feel before they will invest in increasing industrial capacity. That is why we make the judgments we do on the basis of a clear inflation target. That is why we look at the real economy, as well as the monetary aggregates and the exchange rate, when we make those decisions. I believe—judging from his speech today, the Governor believes it also—that we have been remarkably successful in getting the right balance over the past two or three years.

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