Commons Sitting of 4 March 1996

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  NATIONAL HERITAGE

    National Lottery
    Mr. Jenkin: To ask the Secretary of State for National Heritage how many charities have now been awarded funds from the national lottery. [16350]
    The Secretary of State for National Heritage (Mrs. Virginia Bottomley): The National Lottery Charities Board has made 2,460 awards, worth £159 million, to charities and voluntary organisations. In all, lottery distributors have made 4,394 awards, totalling £556 million to charities and voluntary organisations. That accounts for more than 85 per cent. of all awards made to date.
    Mr. Jenkin: I thank my right hon. Friend for that staggering reply and draw her attention to the fact that the national lottery has meant a bonanza for my constituents, with more than £1.2 million spent in my constituency and the immediate surrounding region—and that achieved without any substantial fall in charitable giving for any significant charity. May I congratulate her on that excellent result?
    Mrs. Bottomley: I thank my hon. Friend and congratulate his constituents. He has a formidable list of
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    charities being supported by the national lottery. They include Homestart and church and sports projects. With other hon. Members, he is benefiting from the great national lottery. Contrary to expectations, the evidence is that contributions for charitable giving have not fallen.
    Mr. Maclennan: To put this in perspective, what has been the Government's tax take in the period for which the right hon. Lady gave those figures? What study are the Government undertaking of the lottery's impact on people whom the charities board is most concerned about: the poor?
    Mrs. Bottomley: I will write to the hon. Gentleman with figures on the tax take. Of course the Treasury would benefit from other ways in which the public spent their money if the national lottery did not exist.
    As to the effect on charities, I am sure that the hon. Gentleman is aware of some of the surveys of what has happened. A recent survey showed that, although 2 per cent. of people thought that they would give less, 4 per cent. thought that they would give more. Gallup found that 5 per cent. said that they would give more. The UK charities lottery and many of the people moving into scratchcards have benefited. The medical charities finally reported that, contrary to expectations, despite the lottery, they had had an extremely successful year. The Home Office is formally monitoring the position and that information will be available in due course.
    Mr. Jessel: To put this in true perspective, is not the national lottery a brilliant national achievement that has given tremendous pleasure to millions of participants and has raised enormous sums for charities and other good causes? Is it not a fact that charities such as the British Heart Foundation and Cancer Appeal have increased their uptake since the national lottery started?
    Mrs. Bottomley: Yes.
    Dr. John Cunningham: It is tempting to accept the right hon. Lady's suggestion that, under the national

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    lottery, everyone is a winner, but the story beneath the headline numbers that she has given is not quite that good. More than 80 per cent. of all lottery funding has gone to voluntary organisations, but 40 of those awards total almost £1 billion. Traditional street collecting, fund-raising charities—the tin shakers and ticket sellers—have been most badly affected, as figures from the National Council for Voluntary Organisations graphically demonstrate. Sadly, many small and medium local and regional charities are adversely affected by the national lottery's impact and its huge success in gathering money. We need to consider much more carefully and closely those effects, especially on small revenue-raising charities.
    Mrs. Bottomley: The right hon. Gentleman is correct to say that we need to consider keeping all aspects of the lottery under careful review. That is why my right hon. and learned Friend the Home Secretary announced—as he said that he would do during the Committee stage of the Bill that introduced the lottery—that the Department is monitoring not only giving, but how much charities are receiving.
    Charitable giving has fashions and although tin collections are not having an easy time, those organisations moving into scratchcards seem to be doing very much better. The British Legion, recently the National Society for the Prevention of Cruelty to Children, and the United Kingdom Charities Lottery have all recorded considerable increases in the amounts being made available. A particular charity says that it is losing contributions and that turns out to be a reduction in legacies—it is hard to understand how it could be thought that the national lottery is responsible for that.

    Seaside Piers
    Sir Teddy Taylor: To ask the Secretary of State for National Heritage what is the total sum contributed by the national lottery to seaside piers; and if she will make a statement. [16352]
    Mrs. Virginia Bottomley: The national lottery has contributed £790,042 towards two projects aimed at assisting seaside piers.
    Sir Teddy Taylor: I applaud the generosity of the national lottery in giving funds to what appear to be modest and unambitious pier projects. Is my right hon. Friend aware of the unique features of Southend pier, which is the longest pier in the world—more than 1 mile long—and which has a wonderful train running its length? It has survived three fires and vessels crashing into it. Given that great record, will my right hon. Friend give an assurance that, if Southend council applies for help further to improve that wonderful pier, careful consideration will be given to that application?
    Mrs. Bottomley: The piers of the realm need careful protection and I am delighted that the national lottery benefits them. My hon. Friend will be aware that I do not have direct control over the lottery distributors—more is the pity, I sometimes think. However, I shall do all that I can to encourage the chairmen of the distributing bodies to give piers every favourable consideration.
    Mr. Tony Banks: I am all in favour of lottery money going to seaside piers, but I hope that no lottery money
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    will go to hereditary peers. Will the right hon. Lady make it quite clear that no lottery money will go towards funding a royal yacht, just in case it crashes into Southend pier?
    Mrs. Bottomley: No such application has been made. However, the hon. Gentleman will be aware that a number of hereditary peers are chairmen of some of the distributing bodies that make the decisions on how lottery money is allocated.

    National Stadium (Manchester)
    Mr. Nigel Evans: To ask the Secretary of State for National Heritage what representations she has received about the siting of a national stadium in Manchester for the Commonwealth games in 2002. [16353]
    Sir Thomas Arnold: To ask the Secretary of State for National Heritage what discussions she has had with the Sports Council about the siting of a major national stadium in Manchester. [16361]
    The Minister of State, Department of National Heritage (Mr. fain Sproat): I have received a number of representations about both Manchester's plans for the Commonwealth games stadium and the city's bid to develop the new national stadium using lottery money. I have followed the debate closely, although it has always been an important principle of the national lottery that distribution of the proceeds should be independent from the Government.
    Mr. Evans: Is my hon. Friend aware that there will be a phenomenal number of visitors to the north-west when the games are held in Manchester in 2002? I am sure that he wants the games to be a success. However, to have a world-class games, Manchester will need a world-class stadium. Will he give the House a commitment today that the athletes, the phenomenal number of visitors and the people of the north-west will not be let down in 2002 by the facilities on offer during the Commonwealth games?
    Mr. Sproat: I am sure that visitors and athletes will not be let down. I am aware that my hon. Friend has taken the lead in looking after the interests of the north-west in this matter. The Sports Council is looking at the project for the national stadium, which may or may not be the stadium for the Commonwealth games. If it is not—it is a big if because the Sports Council has not made up its mind between Manchester and Wembley—I am sure that any other stadium will be absolutely fitting for the Commonwealth games.
    Sir Thomas Arnold: Will my hon. Friend confirm that Manchester city council is working hard to improve the chances of the Manchester bid being successful by attending to the traffic and public transport implications? Is he aware that those of us who represent constituencies in the nine other boroughs of the county of Greater Manchester would like to be confident on that point?
    Mr. Sproat: Yes, Manchester city council is looking very carefully at two transport matters—car parking and

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    the metro and rail facilities for the games. I know that both are being kept under very close consideration and my Department is keeping in touch.
    Mr. Alfred Morris: Can the Minister, from that Dispatch Box, assure the House that, whichever of the two cities succeeds in its bid, not one penny of lottery money will go into the pockets of private shareholders? Were that to happen, would that not be a gross misuse of such money?
    Mr. Sproat: Any distribution of lottery funds is a matter for the appropriate distributing body.
    Mr. Pike: Does the Minister recognise that such a stadium would be important not only to Manchester but to Lancashire and the entire north-west? Will he do everything possible to ensure the necessary transport links in Lancashire so that we will be able to make full use of the facilities that will be provided for 2002?
    Mr. Sproat: Yes, I will certainly do everything appropriate for my Department, and I shall draw the hon. Gentleman's remarks about transport in general to my right hon. Friend the Secretary of State for Transport.

    National Lottery
    Sir John Hannam: To ask the Secretary of State for National Heritage how many good causes have been awarded funds from the national lottery in south-west England. [16354]
    Mrs. Virginia Bottomley: In the south-west of England, 377 national lottery awards totalling £52,681,000 have been awarded. City Screen Ltd., the Riding for the Disabled Association and the Devon branch of the British Red Cross have received awards and are three examples of 10 awards that amount to more than £1 million in my hon. Friend's constituency.
    Sir John Hannam: I congratulate my hon. Friend on, and thank her for, the wide range of awards to my constituency and to the south-west. However, will she accept that the tremendous success of the national lottery has created its own problem because many organisations face increasing difficulties in raising matching funds for the grants that they have been given? Will she therefore consider relaxing the rules of matching funds to ensure that many such projects reach completion in future?
    Mrs. Bottomley: All the distributing bodies have flexibility in the extent of partnership funding for which they ask. The Sports Council, for instance, recently announced a number of initiatives for which it wants only 10 per cent. funding. The caring charities do not ask for partnership funding at all. In spite of the cries of concern, the evidence to date has been that matched funding is increasing. Overall, for every £1 of lottery money, £1.49 has been produced in partnership funding. Figures for the latest three months suggest that for every £1 of lottery money, £1.61 has been raised in partnership funding. In other words, lottery partnership money is improving in the same way as business sponsorship of the arts last year increased by one fifth on the previous year.
    Mr. Barnes: Is it not demeaning for hon. Members to have to get up in National Heritage questions to try to get
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    funds for their constituencies or to be informed by the Minister how much money has gone to their areas? Why do we not have proper Question Times such as those that we used to have on energy and on employment, which address serious matters rather than who happens to get what for his area in the log roll?
    Mrs. Bottomley: I think that hon. Members know that it is not within my power or gift to distribute lottery money. They also celebrate the fact that many arts, sports and heritage projects are able to receive funding on an unprecedented basis. That is a source of great pleasure and a great achievement for all those who are benefiting throughout the country through more than 5,000 different awards.

    Millennium Projects (Wales)
    Mr. Win Griffiths: To ask the Secretary of State for National Heritage if she will list the projects in Wales which will be considered by the Millennium Commission before the end of March. [16355]
    Mrs. Virginia Bottomley: The Millennium Commission has considered applications for funding for the Welsh national stadium in Cardiff and the Middleton botanic garden. The Millennium Commission awarded grants of £46 million and £43 million respectively to those projects. The commission does not expect to consider any further applications until April.
    Mr. Griffiths: Is it not true that, after the Cardiff opera house fiasco, the Millennium Commission never had any other intention but to award the national stadium to Cardiff? Consequently, the Bridgend proposal was strung along to the extent that, on the day that the announcement was made, Jennifer Page, the chief executive of the Millennium Commission, wrote to the Bridgend consortium saying that its proposal was insufficiently developed and, without the backing of the Welsh Rugby Union, would not succeed, while a Millennium Commission projects officer wrote on the same day to say that Bridgend's project was under initial consideration and that all projects would be reviewed by the end of April.
    Will the Secretary of State commission an inquiry into why Bridgend was deliberately misled by the Millennium Commission? Will she release a copy of the report given to the Millennium Commission and a transcript of the proceedings, which I believe were fixed? The Bridgend proposal was never going to be considered by the commission.
    Mrs. Bottomley: If the hon. Gentleman had had his way, there would not have been a lottery in the first place. Along with 41 Opposition Members, he voted against the national lottery. If he had had his way, there would be no national stadium in Cardiff and no botanic gardens. Some 23 per cent. of the Millennium Commission's money has gone to Wales, but not a penny of it would have gone to Wales if Opposition Members had had their way. The Millennium Commission looks carefully at each application. The decisions are never easy; I can say only that the commission takes great care and great trouble. I believe that the stadium in Cardiff will be a magnificent place to accommodate the 1999 Rugby world cup.
    Mr. John Marshall: Will my right hon. Friend suggest to the Millennium Commission that, when it considers

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    projects in Wales, it should consider that some in Wales want not to celebrate, but to destroy our national heritage by making Britain a republic?
    Mrs. Bottomley: I entirely agree. As Secretary of State for National Heritage, I believe strongly in protecting the institutions of this country. Those who flirt with republicanism are likely to get the result achieved by the Labour party in Australia.
    Mr. Fisher: What is the Secretary of State's policy towards millennium fund projects in Wales and elsewhere whose grants lead directly to an increase in the profits and capital assets of the private sector companies that happen to own the sites in question? How will she ensure that the public benefit from, and share, the huge profits and increase in land values that British Gas is likely to gain if the millennium exhibition goes to its site in Greenwich? What lessons are there more generally—
    Madam Speaker: Order. The question relates entirely to Wales. If the hon. Gentleman relates his supplementary question to Wales, it is acceptable; otherwise it is not. The question is specifically about one area of the country.
    Mr. Fisher: I was asking what lessons there were for millennium projects in Wales from the actions that the Secretary of State intends to take in Greenwich.
    Mrs. Bottomley: I appreciate the hon. Gentleman's question; it is an important matter which needs clarification. On all occasions, the Millennium Commission seeks to get value for grants. If the Millennium Commission had such a project in Wales, it would ask somebody of the calibre and ability of Sir Peter Levene to ensure that any grant that it invested in a project delivered the best possible return for the people.

    National Lottery
    Mr. Anthony Coombs: To ask the Secretary of State for National Heritage how many good causes have been awarded funds from the national lottery in the west midlands. [16356]
    Mrs. Virginia Bottomley: Three hundred and thirty-one national lottery awards totalling £53,426,000 have been awarded in the west midlands.
    Mr. Coombs: In contrast to the carping of Opposition Members, may I reassure my right hon. Friend that the national lottery is extremely popular in my constituency? Is she aware that the national lottery has meant that £25,000 has gone to Age Concern to fund anew its minibus for people in the area and that we are getting no less than £1 million for a regional sports centre between Kidderminster and Stourport? Will my right hon. Friend consider, through national lottery funds, funding for a permanent home for the Bewdley festival, which has become such a success in my area over the past decade?
    Mrs. Bottomley: I am delighted to hear about the great contribution that the national lottery makes in my hon. Friend's constituency. His Age Concern project is one of 40 Age Concern projects that have received almost £2 million so far from the national lottery. There have
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    been well over 840 awards for the arts—more will be announced tomorrow—throughout the country and particularly the west midlands. I shall pass on to the chairman of the Arts Council and its lottery board my hon. Friend's concern for his particular project.
    Mr. Olner: The Minister will realise that Nuneaton rugby football club in my constituency will not be happy with her answer, as the club had a perfectly good bid turned down for no transparent reason. Is she aware that no lottery money has come to my constituency? Does she agree that a transparent answer should be given to organisations that have been refused bids? Does she further agree that people in the west midlands require a transparent answer as to why the millennium exhibition will be in Greenwich, despite the fact that the midlands' bid was better?
    Mrs. Bottomley: The national lottery has been distributing grants for less than a year, but 176 awards amounting to more than £13 million have been made to football in that time. I very much hope that the club to which the hon. Gentleman referred will be one of the lucky ones in the year ahead.
    Mr. Fabricant: While I understand the concern of the hon. Member for Nuneaton (Mr. Olner) about the Millennium Commission not putting the exhibition in Birmingham, was not the British Tourist Authority—which promotes this country's tourism overseas—right to say that Greenwich was the only possible location for the exhibition, which will receive international recognition? Does my right hon. Friend deplore, as I do, the claim that jobs will be lost in south-east Staffordshire, of all places, because the exhibition will not be held at the national exhibition centre?
    Mrs. Bottomley: I am confident that the millennium festival in Greenwich will be a tremendous success, providing a national and international focus and an opportunity to gather together the nation to look forward to the next millennium. I appreciate the disappointment expressed by my hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant), my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) and others about the Birmingham bid. There will, however, be good news tomorrow for the west midlands, which will receive a further 13 arts awards amounting to more than £3.5 million.

    "Informing the Debate"
    Mrs. Clwyd: To ask the Secretary of State for National Heritage what is the closing date for responses to the consultation document, "Informing the Debate". [16357]
    Mr. Sproat: The Government's discussion with interested parties is now effectively complete. We shall shortly announce our proposals, which Parliament will then be able to debate fully.
    Mrs. Clwyd: Following the Government's humiliating defeat—yet again—in the House of Lords on the issue of listed sporting events, will the Minister assure the House today that mainstream television channels will be granted full access to those events in the future?
    Mr. Sproat: The Government are strongly and sympathetically aware of the concerns expressed by

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    Members on both sides of both Houses. If the hon. Lady follows the proceedings in the other place tomorrow, she will no doubt get an answer to her question.
    Mr. Whittingdale: In considering responses, will my hon. Friend the Minister pay particular attention to the views of the governing bodies of the sports concerned? Does he accept that the market created following the advent of Sky has resulted in millions of pounds going to sports that those sports would otherwise not have received?
    Mr. Sproat: My hon. Friend is quite right. A sport such as cricket, for example, receives about 40 or 50 per cent. of its funding from television rights. In respect of the question from the hon. Member for Cynon Valley, it is interesting that the Sports Council—totally uninfluenced by the Government—has greatly developed its views from those expressed in its letter of 16 January to those in its letter of 22 February, which I hope hon. Members will have a chance to see. That letter places strong weight behind my hon. Friend's point.

    Five Nations Championship
    Mr. Morgan: To ask the Secretary of State for National Heritage what consultations she has had with the rugby football unions of the five nations in the five nations championship concerning its inclusion in the schedule of listed events. [16358]
    Mr. Sproat: Representatives from the English and Welsh rugby football unions were among those who participated in a meeting with my officials last month to discuss issues raised in my Department's discussion paper on broadcast sports rights. The meeting covered a range of general issues, including the contents of the list of protected events.
    Mr. Morgan: Despite Wales having lost yet again on Saturday and despite me becoming for the past 48 hours the first in-patient that the Samaritans have ever had, does the Minister agree that this matter is important for the long-term future of the game of rugby football, and for inspiring young people to take up the game and for helping pensioners who may not have Sky—some of whom may be old enough to remember Wales winning a rugby match—to watch the game? Was not the list of eight events that left out the five nations championship drawn up defectively? Should it not be put right at the earliest opportunity?
    Mr. Sproat: I thought that Wales, although they were beaten yesterday, put on a terrific show and I hope that they will smack the French in the next match.
    The hon. Gentleman knows that not all the home unions want the Five Nations to be a listed event. However, the Government are considering that event and the question of listed events is kept under review. No doubt, the House will have the opportunity to discuss the matter during proceedings on the forthcoming Broadcasting Bill, when it comes to this place.
    Mr. Waller: Has my hon. Friend had any discussions with the Rugby Football League about the inclusion of rugby league events in the schedule? Does he agree that
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    the trick must be to try to ensure that rugby league receives proper remuneration for sports rights, while, at the same time, the maximum number of viewers have access to the important games?
    Mr. Sproat: My hon. Friend gets the balance right. I think that some 26 out of the 32 professional rugby league clubs were, or are, insolvent and in desperate need of the money that comes from television sports rights. At the same time, we want the maximum coverage on television so that people who cannot get to games can be inspired by, and enthused about, the sport.

    Sport
    Dr. Spink: To ask the Secretary of State for National Heritage if she will make a statement on her Department's role in promoting greater public involvement in sport. [16359]
    Mr. Sproat: My Department fully recognises the general benefits of sport and recreation, and aims to improve opportunities for both champions and the general public. That is why we issued the sports policy paper last summer, which outlines our proposals to improve sporting opportunities, starting with young people in schools. We are also involved in promoting the benefits of sport in "The Health of the Nation" initiative.
    Dr. Spink: Will my hon. Friend spell out the Government's policy on the selling off of school playing fields? Is he aware that Essex county council is trying to sell off a playing field that currently serves Hadleigh junior and infants schools in my constituency? Does he agree that those fields should be retained for the children's use and that communities in that area should be protected from further house building?
    Mr. Sproat: On my hon. Friend's specific question about Hadleigh junior school, I believe that today is the last day on which representations on the appeal to allow what he wants can be made to the Department of Education and Employment. Then it is up to my right hon. Friend the Secretary of State for Education and Employment. On his general point, we want school playing fields to be protected and we are consulting about whether the Sports Council should become a statutory consultee in all future sales of school playing fields.
    Mr. Pendry: Does the Minister agree, in spite of last week's helpful announcement by the Sports Council of a national junior sports programme, and while recognising, as did his department's document "Sport: Raising the Game", that there is no substitute for introducing sport to the wider public through sport in schools, that local authorities have a vital role to play, too? If he does agree, why have 75 per cent. of local authorities been forced to reduce expenditure on sport and recreation over the past year, why has the sportsmatch scheme been cut by 15 per cent., and why has the Sports Council's budget been reduced by £2.3 million? Is he aware that these cuts must be viewed against the background of a decline in the number of PE teachers from 42,000 to 24,000 and of the selling off since the Conservatives came to power of over 5,000 playing fields? Is the hon. Gentleman aware that if he wishes to promote greater public involvement in sport,

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    he should do it not merely by throwing lottery money at the problem—robbing Peter to pay Paul—but by putting in place a well-structured sports policy. When are we going to get it?
    Mr. Sproat: The hon. Gentleman has got it. It was called "Sport: Raising the Game" and it came out on 14 July last year. That document clearly states that an extra £1 million will be put towards training teachers, £1 million from Sportsmatch will go to schools and another £2 million will be put forward to be bid for so that schools and clubs can improve their links, one with another. On playing fields, we are consulting about whether the Sports Council should become a statutory consultee. In addition, there is PPG note 17 and the 1981 regulations that stop schools selling off sports grounds where there is not a certain ratio of pupils to hectares.

    National Lottery
    Mrs. Lait: To ask the Secretary of State for National Heritage how many good causes have been awarded funds from the national lottery in south-east England. [16360]
    Mrs. Virginia Bottomley: Four hundred and eighty-two national lottery awards, totalling £116 million, have been awarded in south-east England.
    Mrs. Lait: Is my right hon. Friend aware that the residents of Hastings and Rye are already seeing the benefits of some of the awards to my constituency, many of which are extending the tourism season? Is she also aware that people in Hastings enjoy gambling on the lottery? Does she agree that, if we are to extend the tourism season, high-quality casino gambling would be very acceptable? Would she please make representations to the Home Office to that effect and to ensure that no money from the national lottery goes to new build casinos?
    Mrs. Bottomley: My hon. Friend is right. Lottery money is promoting the tourism industry particularly in coastal areas and the English tourist board has submitted a bid to the Millennium Commission further to promote our coastal areas. She will be aware that my right hon. and learned Friend the Home Secretary is consulting on casinos and bingo, which also have an important contribution to make to the tourism industry. I shall certainly bear in mind my hon. Friend's comments.
    Mrs. Anne Campbell: As someone who takes her holidays in a seaside resort, the Secretary of State is no doubt aware of the importance to the local economy and national built heritage of some of our local seaside towns. As there have been capital controls on local authorities that have prevented them from investing in many of our national seaside heritage buildings, resulting in dilapidation and decay, would she be prepared to undertake a national review of seaside resorts and, in particular, of how investment in them can be facilitated?
    Mrs. Bottomley: I am well aware of the work undertaken by the English tourist board to promote our coastal towns. As far as I am concerned, we need a
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    booming tourism industry. The greatest threat to that industry is that the Opposition should reach power and introduce the social chapter and the minimum wage. That would, at a stroke, do more damage to our tourism industry than anything else.

    Personal Privacy (Media Intrusion)
    Lady Olga Maitland: To ask the Secretary of State for National Heritage what plans she has to introduce legislation to protect personal privacy from media intrusion. [16362]
    Mrs. Virginia Bottomley: There are no present plans to do so.
    Lady Olga Maitland: Is my right hon. Friend aware of the deep concern of many people that personal privacy is being persistently abused by the media? I refer in particular to the unauthorised use of material from overheard telephone calls, notably on mobile phones, which is published in the press. I also refer to snooping photographs, which are taken of people in their homes and without their consent. Will my right hon. Friend consider legislation in that regard? It would be a great tragedy if we allowed technology to abuse and kill our freedoms.
    Mrs. Bottomley: My hon. Friend speaks for many in the House when she describes her profound concern about intrusions into privacy. She will be aware that interception of private calls can be a criminal offence—it is a matter for the police to investigate. The Press Complaints Commission has warned newspapers that the publication of any material achieved as a result of an intercepted call might be a breach of clause 5 of the code.

    "Competing With the Best"
    Mr. Simon Coombs: To ask the Secretary of State for National Heritage what progress has been made towards implementing the proposals in "Competing with the Best". [16363]
    Mrs. Virginia Bottomley: We have made excellent progress towards achieving the two main objectives of "Competing with the Best"—improved quality and more effective marketing. We are continuing the drive to increase competitiveness by undertaking a major investigation into how well the industry uses and invests in its most important resource—its people.
    Mr. Coombs: Has my right hon. Friend had an opportunity to study the speech made last week by the chairman of Bass about the remarkable competitive advantage of this country in the matter of non-wage labour costs as compared with countries such as France, Italy and Spain? Given that the Spanish have just thrown out their labour party after far too long in power, would this be the right moment for this country to consider introducing socialist measures such as the national minimum wage and the social chapter, at a time, when other countries may well be considering how damaging to their tourism industries such measures are?
    Mrs. Bottomley: My hon. Friend is exactly right. Sir Ian Prosser identified the non-wage costs, which go

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    from 10 per cent. in the United Kingdom to 43 per cent. in Italy. He said in his speech last week that Europe and the European Union are at a crossroads, and asked:
    "Is it going to be a deregulated, business friendly, high growth region—or … a tradition-led, inward-looking region concentrating on attaining long-term political objectives without regard for the short-term consequences for business or employment?"
    The Government are quite clear about the answer—deregulation and low labour costs are the way to more employment and greater wealth for Britain.

    National Lottery
    Mr. Pike: To ask the Secretary of State for National Heritage what assessment she has made of the number of unsuccessful lottery bids. [16366]
    Mrs. Virginia Bottomley: In the 12 months from 1 January to 31 December 1995, almost 7,000 applications were received by the four arts councils, the four sports councils, the national heritage memorial fund and the Millennium Commission. Of those, fewer than 1,000 have so far been turned down—a rejection rate of 14 per cent. In the same period, the National Lottery Charities Board received more than 15,000 applications, of which around 13,000 were rejected.
    Mr. Pike: Has there been any attempt to advise those whose applications were rejected as to why they failed? Are there any examples of applications from deprived areas that were unable to meet the matching requirements that are necessary to get a grant from the lottery board?
    Mrs. Bottomley: I am anxious that, as we make progress with the national lottery, there should be greater assistance to those who have difficulty processing their applications and those whose first applications were unsuccessful. All the distributing bodies are trying to set in hand precisely such schemes. All the distributing bodies have flexibility over the partnership requirements for which they ask. The Sports Council for example, provides up to 90 per cent. funding for projects in areas of high need.

    World Cycling Championship
    Miss Hoey: To ask the Secretary of State for National Heritage if she will make a statement on the progress being made by the British Cycling Federation in its organisation of the world cycling championship in Manchester; and what assessment she has made of the value for money provided by the grant given by the Sports Council. [16367]
    Mr. Sproat: The British Cycling Federation has assembled an experienced organising committee to prepare for the championships and has provided appropriate assurances that satisfactory arrangements are in place. It is for the Sports Council to consider the value for money provided by its grants to governing bodies.
    Miss Hoey: I thank the Minister for that response. Does he share my concern that some of the arrangements for the world cycling championships to be held in Manchester at the end of August have not gone very well? Does he agree that it is particularly important that everything
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    possible is done to make the world championships a successful event? Has any further decision been made on televising them—there have been difficulties—and will he take a personal interest in ensuring that they are promoted successfully so that they bring success to our cyclists and show that Britain can organise and compete in an event in Manchester?
    Mr. Sproat: I agree with everything that the hon. Lady says. It is certainly true that the championships were bedevilled by difficulties between the British Cycling Federation and Sport for Television and by the structure of the velodrome. I hope that those difficulties are now completely settled. I also agree that it is important for us to show that we can run world championships in Britain. We have seven world championships this year and we aim to make them world class indeed.
    Mr. Hawkins: Does my hon. Friend agree that it is good for British sport that we have two world beating cyclists in Chris Boardman and Graeme Obree? Does he further agree that the development of new facilities, such as the velodrome in Manchester, is extremely important to the promotion of Britain in world sporting events?
    Mr. Sproat: I very much agree with the last part of my hon. Friend's question. One of the prime objectives of the new UK Sports Commission is to attract the greatest number of world-class sporting events to Britain. I share my hon. Friend's enthusiasm for Mr. Chris Boardman and, as proof of what I say, we have invited him to be part of the new English Sports Council, and he has accepted.

    National Lottery
    Mr. Garnier: To ask the Secretary of State for National Heritage how many orchestras in the east midlands have been awarded funds from the national lottery. [16368]
    Mr. Sproat: There have, as yet, been no awards to orchestras in the east midlands. However, there have been 38 awards to arts projects in the region, totalling some £8 million. Of those, seven awards have been made to bands and one to a choir.
    Mr. Garnier: My hon. Friend will realise that Leicestershire is the centre of English rugger, with the Leicester Tigers being the main side in the county. Will he help me make it the centre of English music-making by increasing the publicity his Department gives to applying for an award under the national lottery scheme? I am sure that many orchestras—not least the Wigston orchestra in my constituency—would be very pleased to know the details of how to make such an application so that they may benefit as a result.
    Mr. Sproat: As to my hon. and learned Friend's reference to Leicester and rugby, a son of Leicester—Dean Richards—made the single greatest contribution to England's Calcutta cup victory on Saturday. As to giving more publicity to how to make lottery applications, my right hon. Friend recently authorised the distribution

    15
    of a leaflet on the subject. If my hon. and learned Friend has any difficulties in that regard, I would be glad to answer any questions.
    Mr. Harry Greenway: To ask the Secretary of State for National Heritage how much revenue the national lottery has generated for good causes.[16369]
    Mrs. Virginia Bottomley: Revenue generated by the national lottery for the five good causes totals £1.613 billion.
    Mr. Greenway: That news is very welcome. My constituents are particularly delighted that the Greenford lawn tennis club has received £51,000 from the national lottery to open a new and much needed pavilion, which will be used by everyone in the area. Is my right hon. Friend aware that the pavilion will prove so good and useful that it is fit to be opened by the Prince of Wales, the Princess of Wales or the Queen—if Labour Members would leave them alone?
    Mrs. Bottomley: My hon. Friend speaks for many hon. Members in welcoming the contribution of national lottery awards to their constituencies. It is bringing communities together, promoting sport, encouraging arts activities and restoring heritage and many rural areas. It is a magnificent success.

  LORD CHANCELLOR'S DEPARTMENT

    Public Record Office
    Mr. Tony Banks: To ask the Parliamentary Secretary, Lord Chancellor's Department what representation he has received about the rules governing the date of release of documents from the Public Record Office. [16441]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. Jonathan Evans): Neither the Lord Chancellor nor I have received any recent representations either about the 30-year closure period for public records provided for by the Public Records Act 1958, or about the criteria for closure for longer than 30 years.
    Mr. Banks: I shall make a representation now. The Government continue to bang on about freedom of information, but there are records relating, for example, to the force-feeding of suffragettes or the abdication crisis and the Nazi past of Edward VIII that we are not allowed to know anything about. Is not it right that we should be told what has occurred in this country's history? All of those records should be freely available now and in the public domain.
    Mr. Evans: The hon. Gentleman might be interested to know that the 30-year period rule was established in 1967 by the then Labour Government and that the 30-year standard closure period—
    Mr. Banks: The suffragettes were more than 30 years ago.
    Mr. Evans: Does the hon. Gentleman want to listen to the answer? The 30-year closure period is standard in
    16
    most European Union countries. Notwithstanding that fact, in 1992–93, the Government decided to undertake a policy review in the area. After receiving representations, we came to the conclusion that 30 years was appropriate in those cases which the advisory council on public records—chaired by the Master of the Rolls—considers should be subject to the closure.
    Mr. Lidington: Does my hon. Friend agree that much more must be done to improve access to the public records by people who cannot make the difficult journey to the Public Record Office at Kew? Will he, therefore, encourage the keeper in her work of ensuring that finding aids, indices and some of the records are available through on-line databases and other forms of new technology?
    Mr. Evans: I am grateful to my hon. Friend for his observations. I share his concern about ensuring that public records are maintained and made available to the public. We are dealing with a substantial number of records, which is one of the reasons why the move to Kew was undertaken. His points about indices and matters of that nature are well taken.

    Mental Incapacity Report
    Mr. Khabra: To ask the Parliamentary Secretary, Lord Chancellor's Department what consideration underlay his Department's decision to organise a consultation exercise on its response to the Law Commission's report on mental incapacity. [16442]
    Mr. Jonathan Evans: In considering the Law Commission's report on mental incapacity, the Government recognise that that is an important and sensitive subject which raises moral and ethical issues about which many people have strong personal views. Therefore, the Government believe that it would be inappropriate to make any proposals to Parliament in the absence of there being full public consultation.
    Mr. Khabra: Will the Parliamentary Secretary confirm that competent patients' advance refusals of treatment for their medical conditions are legally binding on doctors by virtue of case law?
    Mr. Evans: I do not intend to be drawn into giving at the Dispatch Box answers about hypothetical legal situations. I am aware that the hon. Gentleman has some of those strong personal views to which I referred. He is keen to see voluntary euthanasia made acceptable, but the Government fully support the conclusion of the House of Lords Select Committee on Medical Ethics that euthanasia is unacceptable. Further, the Law Commission's report on the subject made no proposals for the legalisation of euthanasia.

    Family Law Bill
    Lady Olga Maitland: To ask the Parliamentary Secretary, Lord Chancellor's Department what further representations he has received in relation to the Family Law Bill. [16443]
    Mr. Jonathan Evans: I have received a number of further representations in relation to the Government's divorce reform proposals.
    Lady Olga Maitland: In the light of the overwhelming vote in the House of Lords last week, will my hon. Friend

    17
    consider reviewing the fair and just division of pension assets for divorced women? Does not he accept that the subject is causing great concern because it is unfair that women who have devoted their lives to bringing up children should be beggared in later life because they have not been able to take full advantage of the family assets?
    Mr. Evans: I note my hon. Friend's observations about pension splitting and, of course, the Government will give close attention to the views that were expressed in the other place. My noble Friend Lord Mackay made it clear in that debate that there were a number of practical difficulties in the proposals. Those practical difficulties were not removed by the vote that took place.
    I am grateful to my hon. Friend for clarifying which vote she meant, because there was another vote on Thursday that supported, by two to one, the Government's proposals for removing fault from divorce.
    Ms Lynne: Will the Minister make a commitment today that the vote on splitting pension rights on divorce will not be reversed on the Floor of this House?
    Mr. Evans: I said in response to my hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland) that there are a number of practical difficulties in the proposition that has been made. I do not think that I could have been clearer. It is appropriate for the Government to consider the views that were expressed in the other place and that is what the Government will do.
    Sir Ivan Lawrence: Is not the assertion that the Family Law Bill would make divorce easier a total misunderstanding? Is not the situation that anybody can get a quickie divorce today, on demand, by making allegations of fault and causing bitterness which, most importantly, distresses the children? The Bill would not allow quickie divorces and everyone would have to wait a year, during which the matter could be reconsidered, and there would be no obligation to make any allegation of fault that would cause bitterness between the parties and the children.
    Mr. Evans: My hon. and learned Friend is right about the proposals in the Bill. A wide range of concerns have been expressed about the arrangements to which he refers. I should like to mention some of the observations that have been made by those who have the greatest practical experience of couples who are, sadly, involved in marital breakdown. For example, the chairman of the national trustees of Relate, the former Marriage Guidance Council, said on 23 February:
    "The Family Law Bill is the best piece of social legislation for the last 20 years".
    Mr. Boateng: Does the Parliamentary Secretary recognise and accept that women and children are all too often the financial victims of divorce and the domestic victims of violence? Does he also accept that there is no majority in the House for a Bill that does not address effectively both those concerns? Will he indicate clearly and categorically from the Dispatch Box this afternoon that the Government support pension splitting in principle and that they support—in principle—giving more powers to the police to deal effectively with domestic violence?
    18
    Does the Parliamentary Secretary understand that, unless he is able to give those assurances, he will not find a majority in the House for his Bill? It is time that the Government started putting families and their protection first.
    Mr. Evans: Of course I accept that the interests of the parties—the wife and the children—are of great importance. That is why certain measures have been introduced by the Government.
    The hon. Gentleman knows that, during the divorce process, there is an obligation on the legal practitioners acting for the parties to take whatever the pension fund may be into account. I recognise that that was not considered sufficient. Pensions earmarking was, therefore, incorporated in the Pensions Act 1995.
    Mr. Boateng: Not enough.
    Mr. Evans: I have spelt out some of the practical consequences of pension splitting, but I have also made it clear that the Government will take account of the vote in the other place.
    The hon. Gentleman seemed to suggest that the Law Commission's recommendation that there should be additional power in the hands of the police should be made a part of the Bill that is now in another place. That matter was considered by the Select Committee on Home Affairs and by the Special Standing Committee that considered the Family Homes and Domestic Violence Bill last year. Those Committees concluded that the recommendation should not be included in legislation.

    Magistrates
    Mr. Jacques Arnold: To ask the Parliamentary Secretary, Lord Chancellor's Department what steps are being taken to differentiate between active and passive support for a political party when considering an applicant for the magistrates' bench and assessing the balance of appointments to any particular bench. [16444]
    Mr. Jonathan Evans: None. The political views of applicants are taken into account to achieve a balance on the bench, but it is not considered necessary to distinguish between active and passive support for a political party.
    Mr. Arnold: My hon. Friend will not be surprised to know that the majority of applicants to the bench tend to be Conservative voters. As a result of the Government's obsession with political balance and the fact that the overwhelming number of people who come forward vote Conservative, Conservative-voting applicants have been turned down while there has been a scramble for applicants for the bench who vote Labour, perhaps councillors or other activists. Given that, in my constituency, there is one example of a highly inappropriate appointment, could we perhaps differentiate between those who passively vote for a party and those who are activists? We would not then overlook many good applicants and end up with a few unsuitable ones.
    Mr. Evans: The only distinction that it would be relevant to raise in relation to active and passive support is in those cases where it may in some sense affect the

    19
    impartiality, as it were, of the bench. It is important that those who are appointed have a clear understanding of the rule of law, are people of good character and command local confidence. I am not surprised, therefore, that there is a significant number of Conservative applicants. Political views are taken into account only to maintain balance on the bench. As the House knows, the Lord Chancellor's Department is engaged in an advertising campaign, using the local press, television and radio, in areas where it is concerned that there might not be a balance, to encourage applicants with the qualities that I have outlined to come forward.
    Mr. Skinner: Is the Minister aware that most of my colleagues would be astonished to find more Labour applicants and more Labour justices of the peace than Tories in the areas that we represent? In Bolsover, throughout the 26 years that I have been a Member, there have always been more Conservative than Labour supporters on the bench. That is true of many other areas. There is only one solution: it is high time that we elected magistrates. We could try elections for judges as well, and retire them at 65.
    Mr. Evans: This seems to be one of those times when several Labour Members come through with Labour's secondary agenda. We shall have to wait to see whether the hon. Gentleman's proposals are adopted by his Front Bench colleague, the hon. Member for Brent, South (Mr. Boateng). A survey at the end of 1995 revealed that, of all appointments made in that year, fewer than 40 per cent. of those appointed to the bench were supporters of the Conservative party.

    Legal Aid
    Dr. Spink: To ask the Parliamentary Secretary, Lord Chancellor's Department what progress has been made on the reform of the legal aid scheme. [16445]
    Mr. Jonathan Evans: The Lord Chancellor published a Green Paper setting out proposals for the reform of legal
    20
    aid in May 1995. Approximately 200 responses have been received. The Lord Chancellor has been examining the responses and intends to make an announcement on the future of the legal aid system before the summer.
    Dr. Spink: When considering reform of the legal aid system, will my hon. Friend seek to improve or increase protection for my constituents and, indeed, for the taxpayer, from the people who occasionally use the legal aid system improperly, and particularly from vexatious litigants?
    Mr. Evans: I am very much aware, from responses to the Green Paper received by the Lord Chancellor's Department, of concerns about whether those who are granted legal aid are advantaged in relation to costs. That, in essence, is one of the points my hon. Friend has raised, and I have had correspondence with him about it. He will be interested to know that that concern was also raised by a number of people who responded to the consultation, and it may well be one of the areas that is addressed in the response.
    Mr. Llwyd: As the availability of legal aid has decreased, from about 80 per cent. when it was first introduced to just under 30 per cent., may I suggest one immediate saving that could be put in train—an appointment system in magistrates courts? Rather than have 10 or 12 legal aid lawyers wasting time all morning, give them an appointment system such as they have in the civil courts.
    Mr. Evans: That is an interesting idea and it might be taken up by the magistrates courts themselves. The hon. Gentleman will know that magistrates courts committees are independent.
    Eligibility is somewhat higher than the hon. Gentleman said. He is right to say that it has diminished, but the overall legal aid budget has grown inexorably. That is why the reform announced by my noble Friend the Lord Chancellor is so very important.

The Monarchy
3.30 pm
Mr. Dennis Skinner: In view of the controversy, especially over the weekend, about the monarchy, may I ask you, Madam Speaker, whether anything in our Standing Orders prevents the House from debating the future of the monarchy, and whether any Minister has approached you with a view to ensuring that such a debate takes place in the near future?
Madam Speaker: Nothing prevents the House from debating the monarchy. It is for the Leader of the House and the Government to make time for such a debate. At the present time, I have not heard that we are to have a statement or a debate on that matter.
Mr. Iain Duncan Smith: Given the confusion that exists as a result of the comments of a senior spokesman on the Opposition Benches, the hon. Member for Caerphilly (Mr. Davies), I wonder whether he or the right hon. Member for Sedgefield (Mr. Blair) has come forward to request time to make a personal statement about the confusion about Labour party policy on this matter.
Madam Speaker: No. What happens outside the House is not my concern, thank goodness.
Mr. Jeremy Corbyn: On a point of order, Madam Speaker.
Madam Speaker: There can be no further points of order on that.
Mr. Corbyn: In view of the comment that you have just made about a debate on the future of the monarchy, can I take it that you would accept an application for a private Member's debate on the relationship of the monarchy just as much as a motion from the Leader of the House? In other words, could any hon. Member propose such a motion to discuss the future of the monarchy in this country?
Madam Speaker: There are no private Members' motions days left, so I could not accept such an application—I was quite correct in my answer to the hon. Member for Bolsover.
Mr. Edward Leigh: On a point of order, Madam Speaker. A number of Labour Members who are very concerned about this and clearly oppose the monarchy are demanding a debate. I feel that you may want to give in to the request for a debate, so that we can sort out exactly what is happening in the Labour party. The country wants to know. Officially, the Labour party is in favour of the monarchy, but clearly some Labour Members are against it.
Madam Speaker: The hon. Gentleman is well aware that the Speaker of the House does not determine the time that is given to debates. It is for the Government to do that, or for the Opposition on their Supply days. We have heard all the exchanges across the Floor of the House on this matter. We shall now proceed with the debate on the economy.

The Economy
Madam Speaker: I have selected the amendment in the name of the Leader of the Opposition.
3.34 pm
The Chancellor of the Exchequer (Mr. Kenneth Clarke): I beg to move,
That this House congratulates the Government on the fundamental health of the British economy, as demonstrated by nearly four years of sustainable growth, the best inflation performance for almost 50 years, Government borrowing coming down, 29 months of falling unemployment and an increase of over half a million people in jobs since the recovery began, and recognises that this is a result of the Government's economic policies which are making the United Kingdom the enterprise centre of Europe.
We are discussing the British economy, which currently enjoys the most favourable circumstances that any hon. Member present can remember. We are debating, in Government time, the most attractive economic prospects that have obtained for a generation. Let me begin by setting out a few facts—facts on which any sensible debate must be based.
We in this country have enjoyed sustained economic growth for nearly four years. All the conditions are in place to ensure that that healthy growth is maintained. This year, the level of growth in the United Kingdom will be among the best—perhaps the best—in the G7 economies. Exports have performed strongly, thanks to improved competitiveness; unemployment has fallen every month for the past 29 months, bringing registered unemployment down by more than 750,000. The number of people in jobs has been boosted by half a million since the recovery began.
Mr. William Cash: Will my right hon. and learned Friend give way?
Mr. Clarke: In a second. First, let me finish giving the background, for my hon. Friend's benefit.
We are enjoying the longest period of low inflation for nearly 50 years. We are on course to meet the Government's inflation target. According to the Bank of England's latest inflation report:
"Underlying inflation in the United Kingdom is more likely than not to be somewhat below 2½ per cent. in two years' time."
Public sector borrowing is on a firm downward path, and we are on track to balance the budget over the medium term.
Mr. Cash rose—
Mr. Clarke: I am sure that those essential facts will assist my hon. Friend the Member for Stafford (Mr. Cash) to make his helpful intervention.
Mr. Cash: Does my right hon. and learned Friend accept that the great improvement in the British economy that has taken place under the present Government—which all Conservative Members acknowledge—dates back very nearly to 16 September 1992, when we abandoned the idea of fixed exchange rates? Why, in an interview that took place a few days ago, did he express sympathy for the concept of a single currency, although tens of millions of voters in this country and throughout

23
Europe are deeply opposed to it? Its manifestations so far have generated the prospect of the worst unemployment rate in Europe for 40 years.
Mr. Clarke: As my hon. Friend knows very well, I believe that our recovery dates from before our exit from the exchange rate mechanism. The circumstances that I am describing, however, are due to the Government's policies on taxation, public spending, inflation and deregulation over the past three or four years. Those are clear policies on which all members of the Conservative party are agreed.
As for the article that my hon. Friend mentioned, I was trying to give an interview about the economy to a journalist with whom I am otherwise friendly, but whom I have always considered to be obsessed with the single currency. I was just waiting to see whether I could give an interview that remained free of the subject. The experiment proved unsuccessful.
Today's debate, however, is about the economy. If my hon. Friend studies what I actually said—the parts of the interview that are in quotation marks—I think that he will find it to be an impeccable explanation of why our long-term interest rates were higher than those of France and Germany for many years. Those rates were dependent on our history of inflation and devaluation. Now we are putting that behind us, and establishing a track record that will stand the country in good stead. Whether or not we join the single currency—if and when it ever happens—the British economy will be safe in our hands.
Mr. Andrew Miller: Before the Chancellor leaves the subject of the interview, will he tell us whether he is sympathetic to his predecessor's view that a single currency would inevitably lead to a single European Government?
Mr. Clarke: No, I am not.
Several hon. Members rose—
Mr. Clarke: If I may return to the subject of the British economy—
Mr. Gordon Brown: I thank the Chancellor for giving way: I see that another of his hon. Friends, the hon. Member for Chingford (Mr. Duncan Smith), wishes to intervene on the European issue.
Does the Chancellor still believe that those who support the idea of a referendum on a single European currency are—as he told "Newsnight" two years ago—"slightly up the creek"? Does he support those who favour such a referendum, or not? Yes or no?
Mr. Clarke: I cannot really complain about the hon. Gentleman wanting to turn to the issue of Europe. I can only say that, whenever we mention the British economy—even when I last faced him, in Aberdeen—it is the last thing on earth he wants to talk about, and he welcomes any opportunity to change the subject. As for quotations, I prefer to see what I have said in full and in context. I tend to find that partial quotation—even by my hon. Friends, let alone by my opponents—of what I sometimes say on these subjects is extremely misleading.
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I should like to get back to the subject we are debating.
Mr. Brown: Will the hon. Gentleman give way?
Mr. Clarke: With respect—
Mr. Brown: With respect, the Chancellor has changed the subject and refused to answer the question. I should be very happy to quote in full what he said on "Newsnight" on that day, but will he answer the question whether he supports a referendum on the single currency—yes or no?
Mr. Clarke: The Prime Minister has made it extremely clear that, if and when we ever face the choice of whether to join a single currency, a referendum is one of the things that could be considered at the time. That has been my view. The hon. Gentleman knows that that is my view—I have repeated it very frequently. A referendum on the single currency has nothing to do with a debate on the British economy.
I will therefore, with your permission, Madam Speaker—
Mr. Gordon Brown rose—
Mr. Clarke: No; really, my own Back Benchers do it better. I have indulged the hon. Gentleman and my hon. Friend.
Madam Speaker: Order. I cannot have two hon. Members on their feet—[Interruption.] I presume that the Chancellor is giving way?
Mr. Clarke: No, Madam Speaker—I was deferring to you.
Madam Speaker: I am simply telling the House that I cannot have two hon. Members speaking at the same time.
Mr. Clarke: To get back to the point, let me remind hon. Members from both sides of the House of last year's Budget, which contains a summation of what I have just described. I was able to reduce taxes by £3 billion in total, leaving the British people with more of what they earn and save. I kept the total of public spending under firm control to pay for those tax cuts, but I was still able to spend more on the public services that people care about: the health service, education and the police service.
That combination of tax cuts, cuts in public spending to pay for them and increased resources for the national health service, schools and the police service is a combination that only good government can deliver.
The experience of this recovery demonstrates the British economy's potential.
Mr. Malcolm Bruce: Does the Chancellor recall that, on David Frost's programme, in September 1994, he said that he would not favour an income tax cut if borrowing was in excess of £30 billion? With borrowing now forecast to be in excess of £30 billion, does he think that he was right to cut taxes?
Mr. Clarke: I am always delighted to find that my words are followed with such close and rapt attention.

25
My forecast for the public sector borrowing requirement in the Red Book, as it happens, was £29 billion. Partial quotation is no good. My policy for three years—,[Interruption.] The hon. Member for Gordon (Mr. Bruce) can quote my Budget if he wishes to know what the Government's economic policy is.
My policy for three years has been to get public borrowing under control and to move towards balance in the medium term. The Red Book in front of the hon. Member for Gordon clearly shows that we are on course to achieve that. Of course we had to spend to finance the tax cuts I made this year, and we did so—which is why the Labour party had no opinion on the subject at all. The hon. Gentlemen voted for tax increases in the face of all that, but, as far as I am aware, in order to spend the revenue raised by those tax increases rather than to cut borrowing.
The combination of those policies has also put us on course to achieve what I believe is the sole object of economic policy: increased prosperity, falling unemployment and the prospect of creating a healthy enterprise economy.
Mr. Dennis Skinner: Will the right hon. and learned Gentleman give way?
Mr. Clarke: I shall in a moment.
We are enhancing the British economy's potential. The Government's liberalising, free-market reforms in the past 16 years have transformed the British economy into a flexible success story. I have a quotation to support that. Last year's OECD survey of the United Kingdom said that our
"sweeping structural reforms … are yielding dividends in a more flexible, competitive and less inflation prone economy."
That is what the Government have put into place, and that is what we are debating today.
Mr. Gordon Brown: Does the right hon. and learned Gentleman also agree with the OECD that Britain has slipped from 13th to 18th place in the world prosperity league?
Will he now answer a question on public spending that has been put to him in the past but which he has failed to answer? The Prime Minister has said that he wants to get public spending as a share of national income down to 35 per cent., but the Chancellor is quoted in The Daily Telegraph as saying that 40 per cent. is the maximum. Does he support the Prime Minister's figure—yes or no?
Mr. Clarke: If I am allowed time, and if there are not too many interventions, I propose to deal with all this rubbish about league tables at a suitable and later point in my speech. These bogus tables give a misleading impression of British economic performance since 1979—clean contrary to the everyday experience of people old enough to remember what things were like before 1979. That certainly deserves an answer, and I hope that the hon. Gentleman will allow me to give him one later.
I have set a target—it remains the Government's target—of reducing the proportion of GDP taken by the state to below 40 per cent. In my interviews, and in those given by the Prime Minister, we have made it clear that we would like to go beyond that, if that proves possible. No one in the Government has ever set a target of 35 per cent.; we are reducing the figure to 40 per cent.
26
The proposition is a straightforward one: in any given year, when the totality of Government spending grows by less than the growth of the economy, the proportion taken by the state falls. No party in the United Kingdom—or even in western Europe—could succeed in this endeavour as well as we have over the past few years.
I am proud of our economic performance during the recovery, but I am also optimistic about our prospects. I am confident that the British economy will defy its detractors and have yet another good year in 1996. [Interruption.] I should like to outline the solid reasons behind my confidence when I assert my 3 per cent. growth forecast—which I heard someone on the Liberal Bench questioning a moment ago.
I believe that 1996 will be a good year, first, because I expect investment growth to pick up this year as firms expand their capacity. The conditions for firms to invest have rarely been better. The hon. Member for Dunfermline, East has been going on about his meaningless strategy for investment—never as yet explained—for the past three years. We now have the conditions that stimulate investment, however.
Inflation is low and stable, providing the environment that business needs when making long-term decisions. Company balance sheets are in good shape, with profits up by about 6 per cent. over the past year. Because we have inflation under control, I have been able to reduce interest rates to historically low levels. That is the right strategy for investment, and its effects will flow through in 1996.
Secondly, in 1996 I also expect an upturn in the growth of consumer spending. This year, increased consumer spending will be the main source of growth in the economy. I estimate—it is only an estimate—that it will be up by 3.5 per cent. on last year. Consumers will be able to pay for the extra spending. People will see the effects of the Government's policies, which are putting an extra £9 a week in the average family's pay packet, after tax and inflation.
On top of that increase in disposable income, every household has just benefited from a £54 reduction in its electricity bill as a result of the sale of the national grid. On top of that, mortgage rates are now at their lowest for 30 years. Mortgage payments for average borrowers are about £150 a month less than they were in 1990.
On top of that, many people will also benefit from another £1.3 billion of building society payouts this year, as more societies turn themselves into banks. On top of that, many people's TESSAs will be maturing—more than £20 billion in total. I believe that most of that money will be saved, but the amounts involved are enormous, and some of the money will be spent.
For these reasons, quite a lot of money will feed its way through into the domestic economy this year, some of it undoubtedly into consumer demand. These are all solid reasons for my growth forecast for 1996.
Mr. Skinner: The Chancellor has been talking about the feel-good factor and claiming credit for things that are not the responsibility of the Government. Interestingly, he has said nothing at all about tax revenues.
It has been reported that, in the run-up to the end of this financial year, there is a likely shortfall of about £9 billion compared with the Chancellor's expectations.

27
That massive shortfall is surely due in part to the fact that some of the people who are supposedly in employment are actually in part-time work, and hence not paying the sort of tax that they would pay if they were in full-time employment.
Mr. Clarke: The hon. Gentleman is right to say that it appears likely that there will be a shortfall compared with my forecasts in the previous Budget on tax revenues this year. I have never heard anyone putting forward the explanation for it that he has. Differing explanations exist, but that shortfall is one reason why my plans will lead to a higher public sector borrowing requirement than I forecast in November 1994. Good government, however, is to respond in policy terms to that. That is what I did in the last Budget, which showed the public borrowing requirement on a downward path.
Mrs. Anne Campbell: The Chancellor paints a rosy picture of the state of the economy, but will not a typical family still be paying more tax after next year's Budget tax cuts than in 1979? Is that not the real state of the economy?
Mr. Clarke: I paint a rosy picture—which I have not always done as Chancellor—because I give solid reasons for expecting such a picture in 1996. That is no thanks to the hon. Lady and her colleagues, who voted against most of the things that underlie it. The tax take in 1979 was artificially brought down by the Labour Government, who incurred vast sums of public borrowing.
It is true that, from 1979 to 1981, in the early years of the Conservative Government, we raised taxation as we controlled public spending to bring public borrowing back under control. It was unsustainable in 1979. When they left office, the Labour Government must have known that all that borrowing was merely tax deferred, so, under Baroness Thatcher, we raised taxation and cut public spending. The tax level is now below its level in the early 1980s. It is on the downward course again, and our party believes in a downward force on taxation.
Mr. Bruce Grocott: Will the right hon. and learned Gentleman give way?
Mr. Clarke: Perhaps in a bit.
I have given the reasons for my forecast growth of 3 per cent. The key thing is that everyone, I think—every financial commentator certainly—expects that 3 per cent. will be healthy, non-inflationary growth and good for our economy's medium and long-term future. That growth in 1996 will be the product of good government and the firm foundation for our ambition to make Britain the enterprise centre of Europe.
The nature of the recovery is also interesting. In 1996, the ordinary citizen will at last begin to feel the real benefits of healthy economic recovery on his or her family finances. To produce today's good prospects, I have had to take some tough and unpopular decisions in the past three years. Sorting out public finances after a recession and keeping down inflation after a devaluation is good for business, but it can be hard in the short run on the taxpayer and the job seeker. However, in 1996, middle
28
England will begin to realise that our promise of greater prosperity and of more jobs without a return to boom and bust is beginning to be delivered.
I believe that consumer confidence will increase in 1996, for justifiable reasons.
Mr. Grocott: Will the right hon. and learned Gentleman give way?
Mr. Clarke: Let me just finish 1996, and then I will give way.
Added to what I have said, I am cautiously optimistic that the housing market is beginning to show signs of life. My cautious optimism about the housing market is again based on solid evidence. Mortgage rates are at the lowest level for nearly 30 years, and house prices in relation to incomes are at their lowest level for more than a decade. Nationally, house prices are just beginning to edge up a little.
Mr. Robert Hughes: You said that last year.
Mr. Clarke: I did not say that last year.
The Halifax house price index has risen for six months in succession. The latest figures from Nationwide, published on Friday, confirmed the tentative trend, with an increase of no less than 1.4 per cent. in the last month alone. Since last June, the number of mortgage loan approvals is up 13 per cent., and there are great bargains for first-time buyers on today's house market, so spring 1996 could be a good time for our housing market as well.
Mr. Grocott: As the gist of the Chancellor's argument is that middle England should be exceptionally happy with his management of the economy, rather than exchange insults across the Chamber, why not put it to the test? The South-East Staffordshire by-election is awaiting the movement of the writ by the Government. For nearly three months, it has not had a Member of Parliament. Let us end the words, put the argument to the voters, and find out what the people of middle England think about the Government's handling of the economy.
Mr. Clarke: From the interventions so far, it seems that some Labour Members need to be better informed before they face the electorate of South-East Staffordshire. I should not like them to mislead that electorate about where we are at the moment. However, I should like them to think of some mitigating reasons for voting against most of our measures that have produced the improvements, or even think of some policies of their own that might show how things could be done better.
Labour Members are singularly bereft in both those aspects. I have not spent my time over the past three years coming to this House and presenting a rosy picture. We have had some tough times, and all the improvements are not yet being felt by the ordinary citizen. That is inevitable, but again the Opposition will not face up to that.
A modern, flexible economy is an uncertain place for working people to earn a living for themselves and their families. No Labour Government could change the nature of the modern industrial world. The combination of modern technology and free trade causes rapid and massive changes to traditional patterns of employment.

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A competitive economy must respond rapidly to those changes, but that will inevitably mean that fewer people will have jobs for life. People and businesses will increasingly favour more flexible working patterns, although that can be taken to extremes. The apocalyptic message, put about by some merchants of doom, that there are no safe jobs at all any more is plainly nonsense.
The creation of a buoyant, dynamic enterprise economy creating ever more new jobs is the only credible answer to today's insecurity. No left-wing stakeholder alternative can substitute for that; it is simply a return to old, failed left-wing nostrums. Job security in this country will be increased as this Government continue to deliver sustainable economic growth, better job prospects and rising prosperity. After 29 successive months of falling unemployment, I am glad to say that British workers are beginning to regain the sense of job security that is essential to public well-being.
People are understandably wary, but their confidence will grow as the Government continue to deliver a sound macro-economic environment, low inflation and sound public finances; as we continue to cut red tape, to cut taxes when we can afford to, and to reduce the share of national income that goes on public expenditure; and as we continue to modernise our public services and make sure that they and our welfare system are affordable—in short, as we continue to create the very best conditions for businesses and individuals to prosper by their own efforts.
I will not be satisfied with a one-year-growth wonder. That is not what the Conservative Government have been labouring for over the past few years. I would not expect the British people to be satisfied with that, either. I am determined that the British economy will continue to deliver a world-beating performance into the next decade.
I want to refer to the league tables. Labour does not look to the future; it has no views on the future beyond the next polling day. It has no economic policies that it dares to utter. It denies that it has any tax plans. It is for ever denying the spending promises of its Front-Bench spokesmen and the lobbies to which they pander. It has no inflation target as a guide to monetary policy. Labour actually hides its economic policies in shame. It tries to divert attention from the optimistic present by giving a distorted and depressing picture of the past, by blathering on about our supposed decline in international league tables during the Tory years.
I believe that today's enterprise economy is actually founded on the success of our free market policies in the 1980s, and that we are poised to resume our climb to the top of the league tables. If we go into the international comparison game, those comparisons can properly be based only on the period of the international economic cycle.
Let us look at the United Kingdom's performance over the last OECD internationally standardised cycle from 1981 to 1993. Over that cycle, the full international cycle—
Mr. Barry Sheerman: Will the Chancellor give way?
Mr. Clarke: When I finish the point; it is perfectly valid. [Interruption.] I shall go into hon. Members' date-picking later. I am taking the only respectable method of comparing performances—over the full
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international economic cycle. [Interruption.] The hon. Member for Dunfermline, East is laughing nervously. It is an unusual gesture for him, but we always like to see it on the rare occasions that it evidences itself. He is laughing nervously because he knows the figures for the past full international cycle.
Dr. Jeremy Bray: Will the Chancellor give way?
Mr. Clarke: I will in a moment. Let me give my facts first. Opposition Members who understand the matter are getting nervous about what comes next.
Mr. Denis MacShane: Will the Chancellor give way?
Mr. Clarke: No.
Not all Opposition Members understand this. In the OECD internationalised standard cycle from 1981 to 1993—a good long period—the United Kingdom ranked equal second with Germany of the G7 countries for gross domestic product per capita growth. Of the G7 countries, only Japan beat us, and since then it has seriously lost its way—temporarily, I hope. Our growth over that cycle was faster than that in Italy, the United States, France and Canada. We grew faster than the G7 and the European Union averages.
That is the picture when the sensible figures for a full international economic cycle are used. The cycle coincides with Conservative economic policies beginning to come into effect in 1981. The Labour party uses figures—[Interruption.] There is more nervous laughter from the hon. Member for Dunfermline, East. The Labour party uses figures showing us slipping in a bigger league table from 1979 from 13th to 16th. It arbitrarily adds two new countries chosen at random to put us in 18th place and to try to make us look worse.
Even in that table, all the lost places from 13th to 16th occurred between 1979 and 1980. We have not slipped in the 15 years since—even on Labour's league table. That fall between 1979 to 1980 was entirely due to the economic mess that the last Labour Government left this country as its legacy.
Mr. MacShane: I am grateful for the Chancellor's fantasy, which if I can digest it properly means that he is heaping praise on his predecessor Lord Lawson for his boom and bust management of the economy in the late 1980s, which swelled certain figures.
If the right hon. and learned Gentleman looks at the reality in Britain, he will see that our car industry is owned by overseas interests, more and more of our banks are being taken over, and most of our industry is on standstill—destocking, de-investing, laying off. The image he presents is pure fantasy in the manufacturing heartland of Britain.
Mr. Clarke: My predecessors Lords Howe and Lawson were extremely successful Chancellors of the Exchequer. They took over a totally collapsed industrial economy that in 1979 was making us the laughing stock of Europe. They got hold of public finances, reduced inflation and allowed people to manage their own

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industry. We deregulated the labour market, and by the late 1980s we had one of the most successful economies in western Europe.
Yes, we got monetary policy wrong, but not as wrong as we would have done had we listened to the Labour party's advice. It was still urging us to cut interest rates in the late 1980s. Yes, we suffered in the recession, as did all other countries in the western world, because unsustainable public indebtedness brought us all down. Britain has recovered first from that, and stronger than our competitors, and the picture is that which I have just given.
Britain out-performed its rivals during the past full international cycle from 1981 to 1993. The hon. Member for Rotherham (Mr. MacShane) says that that is a fantasy, but he is old enough to remember the winter of discontent, the state of the British car industry in those days, our complete failure to attract investment, and the brain drain caused by high tax rates in this country. He can remember all those things, yet he seeks to deny the plain and obvious fact which is recognised by all, even those in Geneva, who look at this country.
Mr. Gordon Brown: If all that is true, why, on the same OECD figures, were we 13th in the world prosperity league in 1974 and 13th in 1979?
Mr. Clarke: Because other people were doing pretty badly as well. I am asked about Lord Howe and Lord Lawson. Does the hon. Gentleman pine for the great days of Harold Wilson? Does he think that Lord Callaghan's Government were good for business, investment and jobs in this country? Good grief! The hon. Gentleman should go to the hon. Member for Hartlepool (Mr. Mandelson); even he does not peddle that nonsense. That is the past that the Labour party is trying to bury; it is not something that it is digging up and saying that it will imitate if it ever gets back into power.
Mr. Sheerman: Surely the Chancellor will lose all credibility if he paints out of history the fact that, unlike all our major industrial competitors, the decline in British manufacturing industry, down to just below 20 per cent. of GDP, has left us with less than the critical mass necessary to fight our way back as a leading competitor.
Mr. Clarke: The condition of British manufacturing industry over the past three years has been extremely good. Manufacturing industry slowed down at the end of the last quarter of last year, but not in terms of manufacturing for consumption. There has been some destocking in terms of investment in intermediate goods. As the hon. Gentleman knows, if he meets people in manufacturing, the position has been extremely good. We are attracting more investment in manufacturing from overseas than ever before.
The hon. Member for Rotherham again gave us echoes of Labour's real self when he went on about the foreign ownership of factories. That is a good old-fashioned Labour prejudice, which Labour Members still have. We should be proud of the fact that Japanese, Koreans,
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Americans, Germans and Frenchmen think that this is the right place in which to invest if one wishes to manufacture goods and services.
Sir Michael Shersby: Does my right hon. and learned Friend agree that, although we hear all this nonsense from Opposition Members about the foreign ownership of British firms, we never hear anything at all about the substantial British ownership of firms throughout the world?
Mr. Clarke: I agree. We are the great open traders and open investors of the world. More British investment is going into the United States than there is Japanese investment. There is more overseas investment per head of the population, compared with our GDP, than is the case for any other developed country. The income from that investment contributes about 7 per cent. of our GDP and helps the prosperity of our pension funds and so on.
I will continue—enough of the 1980s. In the 1980s—[Interruption.] No doubt we shall have the league tables dug up again in a moment. The truth about the 1980s is that we banished some familiar ghosts; militant trade unions, penal tax rates and inefficient state industries were spectres that we faced and dealt with. In the 1990s and beyond, there are new big challenges.
International markets are becoming ever more open and integrated. Competition from the Asian tigers, from Latin America and from eastern Europe is becoming ever more fierce. Technological advance becomes ever more rapid. The British economy will have to be ever more competitive and ever better at responding to change if it is to continue to succeed. That is why we cannot have the Labour party taking over.
Inflation in Britain will have to match that in Germany and Japan, year in and year out. The Government will have to borrow less, spend less and tax less over time. That is the only way in which to create a low-tax environment in which British business has the right incentive to generate jobs, investment and wealth.
Success will require a Government who are committed to those economic principles and who have the determination to stick to them through thick and thin. The truth is that the Labour party represents the biggest single threat to the achievement of that success, and the delivery of that ambition. It has no ideas and, as we have just heard, it has old instincts which would take us back to the worst days of Harold Wilson.
I quote the words of the disillusioned Bryan Gould. Hon. Members must remember him, because he was a colleague. Quite recently, he was a leading member of the Opposition Front-Bench team, but he has now been exported to New Zealand. I quote from his article in The Independent. It was not written a long time ago; the quotation is from 6 November 1995, only a few months ago:
"From 1987 onwards, Labour ducked out of the battle of ideas—not a very comfortable position for a supposedly radical Party. If a discussion of ideas proved unavoidable, the Party managed to suggest—discreetly most of the time, but overtly when necessary—that it accepted much of the Thatcherite agenda. But we preferred to avoid ideas altogether. They meant too many hostages to fortune."

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That is a quote from one of the most recent Front-Bench colleagues of the hon. Member for Dunfermline, East. [Interruption.] The hon. Member for Bolsover (Mr. Skinner) agrees with every word of that quote—we know he does.
Mr. Skinner rose—
Mr. Clarke: I shall give way in a second.
The hon. Gentleman knows that the Opposition Front Benchers have not changed, and he knows that we know that he agrees with Bryan Gould and with my comments on Opposition Front Benchers.
Mr. Skinner rose—
Mr. Clarke: I shall let the hon. Gentleman say something rude about his erstwhile colleague if he wishes to curry favour with his current Front-Bench colleagues.
Mr. Skinner: I just want to get the facts straight. The Chancellor of the Exchequer talks about the views of my ex-colleague Bryan Gould on the state of the Labour party and the British economy. But he fails to tell us that, after the 1987 election, that same Bryan Gould—I remind my hon. Friends, as well as Tory Members—stood at the Dispatch Box and talked about taking over the argument on privatisation. I opposed him then. That is why I do not take too much notice of what he says now.
Mr. Clarke: Conservative members have always acknowledged the consistency of the hon. Member for Bolsover, but we have never expected any consistency from any Opposition Front-Bench Member. The fact that Bryan Gould changed his views after 1987 does not surprise me—the hon. Member for Dunfermline, East has done the same thing.
The main appeal of those on the Opposition Front Bench to the City, the business world and the public is a vague implication that a Labour Government would somehow carry on our existing economic policies, give or take a little tweak or two. Labour tries to avoid frightening the voters by implying that the hon. Member for Dunfermline, East would imitate me if he were to become Chancellor of the Exchequer.
There is even talk nowadays of "one-nation Labour". That is an illusion. Labour has never voted for the one-nation Conservative policies that I have proposed as Chancellor; nor has it voted for any of the policies that I and my colleagues have pursued in every office that I have held. The current Labour Front-Benchers have fought vigorously against every policy initiative I have taken in every office I have ever held, and I do not believe that they have changed their positions at all.
The clear red water between the Labour party and modern enterprise economics and public services remains as wide as ever. Labour would tax and spend and would allow inflation to rise, as the deputy Leader of the Opposition sometimes incautiously reveals. Labour would take Britain back into the relegation zones in any international league table, with the social chapter, the minimum wage and trade union legal recognition rights—all the baggage that socialism, and even social democracy, lays on the enterprise economy in Europe today.
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We are facing an ever more competitive world, and we want the British people to get the best out of it. But we will only do this by keeping our competitive edge. In the 1990s, there is still no alternative to the enterprise economy that we are creating, and we have not created our present prospects to hand them over to yesterday's Wilsonian men. That is why the Prime Minister has made it clear that our Conservative goal is to make this country the enterprise centre of Europe, as that is the way to continue to succeed and prosper this year, next year and into the next century.
The reason why we are having a debate on the economy in Government time—and the reason why the Opposition never debate the economy, in their time or anybody else's—is that the Opposition know the truth of every word I have spoken about our prospects, and every word of the indictment against them.
4.13 pm
Mr. Gordon Brown: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"rejects Government complacency about an economy in which the investment and skills gap with competitors has been growing and in which, during 17 years, the United Kingdom has fallen from 13th to 18th in the world prosperity league; notes also the Treasury Committee report which questions the Government's economic forecasts; regrets the widespread job insecurity throughout Britain; condemns the loss of the Community Action Programme which once again deprives the unemployed of a stake in society; and calls for welfare to work measures that would, over time, reduce social security bills as part of an economic strategy that would raise levels of investment in the economy, bring sustainable levels of growth without risks to inflation and end a situation in which unemployment is more than one million higher than in 1979.".
The Conservatives called this debate today to boast of the claim that they make in their motion, that Britain is
"the enterprise centre of Europe."
But today's events, with the anti-Europeans attacking the Chancellor of the Exchequer, have demonstrated that the phrase "enterprise centre of Europe" is just about the only mention of Europe that their party can tolerate without fighting breaking out in its ranks.
The Chancellor built his case on three things. He argued, first, that the league tables that we produced on Britain's relative decline were wrong; secondly, that his investment forecasts were right; and thirdly, that the feel-good factor was returning to the housing market. Before we enter the full debate, let us deal with those issues.
First, the Chancellor was unable to deny that Britain had slipped from 13th to 18th in the world prosperity league. It is significant that he has not been able to challenge that figure.
Mr. David Howell: Is the hon. Gentleman aware that it is Hong Kong and Singapore that have moved up the table and overtaken Germany, France, the United Kingdom and several other countries? That is why the numbers have changed. Perhaps he does not understand that. In that table, Britain is fast catching up with Germany and France. That casts a different light on his interpretation.
Mr. Brown: If Britain had fallen from 13th to 15th, the right hon. Gentleman might have had a point. Britain

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has fallen from 13th to 18th. We have fallen behind Italy, Norway and Iceland. The fact is that we have fallen from 13th to 18th. [Interruption.] I am quoting not my research or a Labour party source, but the Government's own competitiveness review, published only last year. Does the Chancellor want to say that that review is mistaken? Does he want to withdraw it? Does he not recall that it was signed by him, the Prime Minister, the Deputy Prime Minister and eight other Cabinet Ministers?
Mr. Kenneth Clarke: No; as I pointed out, my case against the hon. Gentleman was that the fall from 13th to 16th, which is what the tables that he relies upon show, took place by 1980, when we were in 16th position. Between 1970 and 1980, we fell from 13th to 16th. We are still 16th in that league table. I pointed out that between 1981 and 1993, taking a proper international cycle, we outperformed practically everyone in the G7 and had growth well above the G7 and European averages.
Mr. Brown: The facts are that we have fallen from 13th to 18th and that most of the fall did not occur in the early 1980s, as the Chancellor was trying to tell us today. The biggest fall happened between 1990 and the present day. When we entered the 1990s, we were 14th in that league; we are now 18th. The Chancellor had better get his Treasury statisticians to check the full facts, because he is entirely wrong and will have to apologise to the House. For all his bluster this afternoon, nobody can deny the central fact that Britain has fallen down the world prosperity league under a Conservative Government.
Mr. Cash: Will the hon. Gentleman take the opportunity of this important debate, having regard to the fact that unemployment rates in Europe are the worst for 40 years, to repudiate on behalf of the Labour party any idea of returning to any form of exchange rate mechanism and the idea of a single currency, which has been repudiated by opinion poll after opinion poll throughout Europe?
Mr. Brown: The hon. Gentleman this morning called on the Chancellor to consider his position because of statements that he made in The Daily Telegraph. We support the principle of managed exchange rates, as does the Chancellor. We support the principle of monetary union, but we must consider the details of what is on offer, and we shall do that.
Sir Roger Moate: The hon. Gentleman is fond of yes-or-no questions; will he answer the question that he put earlier? Is the Labour party in favour of a referendum on a single currency, yes or no?
Mr. Brown: We are absolutely clear that we are in favour of a test of opinion, whether at a general election—[Interruption.] The hon. Gentleman—[Interruption.] I see this afternoon something that is typical of the modern Conservative party. It is entirely a matter of honourable Gentlemen; there is not one woman on the Conservative Benches today.
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The hon. Member for Faversham (Sir R. Moate) asked me to give my position on the referendum; I have given it clearly. We favour a test, whether by a general election or a referendum. What is the Chancellor's position? I shall give way to him so that he can answer.
Mr. Kenneth Clarke: I have already given a much better answer. The hon. Gentleman's answer is ridiculous—as one of my colleagues said, it would give rise to the possibility of a phone-in. We shall make up our mind on economic and monetary union in the British interest at the time—if and when it happens. Whether a referendum is required will be a question for that time. That is our position and it seems a whole lot clearer than the hon. Gentleman's.
Mr. Brown: I take it clearly from his answer that the Chancellor would resist any proposition in the Conservative party that a decision be made to hold a referendum before a general election. In other words, he is putting forward the view—Conservative Members had better get used to it—that he is against the proposition that a commitment to a referendum be included in the Conservative election manifesto. The House has understood him correctly this afternoon.
Mr. Clarke: The hon. Gentleman does not have an idea in his head about anything. Can he not make up his mind? Does he know what day of the week it is? He was asked whether he was in favour of a referendum. May we have an answer?
Mr. Brown: I made the position absolutely clear—[Laughter.] Indeed, I did. The Chancellor made it clear to Conservative Members, and they had better understand it, that he is against the proposition that a commitment to a referendum should be included in the Conservative general election manifesto—exactly what Conservative Members have been calling on the Prime Minister to do. The Chancellor made it clear this afternoon that a decision on a referendum can be made only after the question whether we join the single currency in 1998 or 1999 comes up. It cannot be made before the general election. I understand the Chancellor perfectly correctly, as I think the whole House now does. That is the source of division in the Conservative party.
Mr. Iain Duncan Smith: Will the hon. Gentleman clear up the matter completely? He said that it would be put to the test—either in a general election or by some other means. If the currency went ahead during the next Government, and were Labour in government, the Labour party would not have set out the position in its manifesto. So, does he or does he not agree that there would be a referendum on the issue—yes or no?
Mr. Brown: I made the position absolutely clear. It is for the Government to make their position absolutely clear. The hon. Gentleman may want to attack me this afternoon. but he was on the radio attacking the Chancellor this morning.
Sir Peter Tapsell rose—
Mr. Brown: I really must progress, but because there is so much interest, I shall give way.
Sir Peter Tapsell: Does the hon. Gentleman agree that, if we are to have a referendum, it is useful if we all know

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what it is to be about? A few moments ago, he said that the Labour party believed in managed exchange rates. If the managed exchange rate takes the form of membership of a single European currency, who does he think will be managing that exchange rate—will it be the British Chancellor or the German Chancellor?
Mr. Brown: I have read the Maastricht treaty, unlike the Chancellor of the Exchequer, and I understand the position very clearly. The principle that I am talking about is that of a single currency. The details obviously have to be considered. When we have made up our mind about them, we shall put that view to the country. It will be put to the test in either a general election or a referendum, and we have made that position clear. What is amazing this afternoon is that Conservative Members have still not grasped from the Chancellor's answers the important fact that he is refusing to support the idea of a referendum being inserted in the Conservative general election manifesto. He cannot deny that fact.
The second issue that the Chancellor raised was that, because he could now see that investment forecasts for 1996 were going to be realised, he thought that the economy could grow at 3 per cent. He has a history on investment forecasts, and we should understand what he has been saying for the past few years. Last year, he told us in his Budget statement that investment would rise by 10 per cent. In fact, it rose by only 2 per cent. He has been wrong every year that he has been Chancellor, and he has been wrong by substantial figures.
If the Conservative party were right, from the beginning of the 1990s, investment would have increased by more than 30 per cent., according to its forecasts. It has barely increased. The one consistent fact about the Chancellor's investment forecasts is that they are wrong. I read only the other day that the head of the Meteorological Office had to return his performance-related bonus because he had consistently got the weather forecast wrong. The Chancellor is wrong in his forecasts on investment, the public sector borrowing requirement and growth, so perhaps he should look at his own pay arrangements.
When the Chancellor tells us that investment this year might rise by about 10 per cent., I agree with the Select Committee—on which there are Conservative Members. Without further explanation from the Chancellor, I doubt whether that forecast is credible. Conservative Members must face up to the fact that, as a result of the recession in the 1980s, we have the slowest ever growth in investment—slower than even in the 1930s. If we are to build the modern capacity that is necessary to achieve high levels of sustainable growth without increasing inflation and interest rates, we must close the investment gap with our competitors, which is noted again in the Government's competitiveness report.
Mr. Quentin Davies: The hon. Gentleman aspires to be Chancellor of the Exchequer. If he wants to be taken seriously as a contender for that role, he will have to make up his mind about the following fundamental issues. Should we have inflation targets or should we not? Is the present one too high, too low or about right? Are interest rates too high, too low or about right? Is Government spending too high, too low or about right? Whenever we have an economic debate, the hon. Gentleman avoids those questions.
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Has he yet made up his mind and, if so, will he take the opportunity of today's debate to give the country the answers to those fundamental questions?
Mr. Brown: Of course, we shall have an inflation target. If the hon. Gentleman believes that public spending is too high, the reason is that we are paying the high cost of unemployment. The proper way to solve our problems is to have a Government who are serious about dealing with long-term and youth unemployment.
The Chancellor presented the House with his rosiest ever forecasts. He said that, as he had made pessimistic forecasts before, we should take these ones seriously. Let us recall the most recent published minutes of his meeting with the Governor of the Bank of England and quote what they agreed in January:
"Manufacturing output weak, housing market flat, short-term prospects for growth uncertain, extent and timing of firms' destocking unclear, growth below trend."
The document continued:
"Manufacturing output had declined fractionally. The construction sector had contracted again, the housing turnover had continued to fall, the new homes sector remained weak, the housing market fairly flat."
If that is not a damning picture, showing the gap between Conservative rhetoric and the reality that has to be expressed at meetings between the Chancellor and the Governor of the Bank of England, I do not know what is. It is just another example of the Conservative good news machine trying to create a good impression among people who are still suffering a great deal as a result of tax rises and job insecurity. The Conservatives are trying to build up a picture simply to fight a general election.
We have had many economic debates in the past 17 years when the Conservatives have been in power. Each time, the Conservatives find a new phrase to justify what they are trying to do. At the beginning of the 1980s, we heard about the triumph of monetarism. That was no longer heard about after the money supply ran out of control. In the mid to late 1980s, the Conservatives claimed to have created an economic miracle. We no longer hear about that as it caused the biggest recession since the war. Had there been an economic debate before the previous general election, they would have told us that they had created the biggest ever programme of tax cuts. We no longer hear about that, as 21 big tax rises have given Britain the greatest tax rises in history.
What is consistent about the Conservatives is that they pull out a phrase such as golden scenario, enterprise capital or centre of Europe, use it for a few months until reality dawns and they cannot justify the figures, and then bury it unceremoniously and move on to another variety of Conservative central office propaganda. The country will not be fooled by the Conservative party.
Mr. Anthony Coombs: The hon. Gentleman cannot shrug off a question about the inflation rate merely by saying that Labour would have a target—particularly in the light of the fact that the Labour party does not have any credibility on that front, as the average inflation rate was 15½ per cent. when it was last in government. As investment depends on a stable economy, will the hon. Gentleman tell the House exactly what his inflation target would be?
Mr. Brown: I have made it absolutely clear: we will set an inflation target. We shall consult the Governor of

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the Bank of England—as the Chancellor does and considers to be very important—and other interested parties, including Government advisers, and then we shall set our inflation target. I cannot make it any clearer than that.
The Chancellor boasts about inflation, but he should face the fact that last week we discovered that Britain is not top of the European Community inflation league—it is not second or third, but 10th. Far from the Chancellor's record being magnificent, as he claims, the Conservative Government have had a very poor record over the past 17 years.
Mr. Jacques Arnold: Will the hon. Gentleman give way?
Mr. Brown: No; I have given way sufficiently during my speech.
The Conservatives should face two facts about the British economy, but they refuse to do so. First, there is not only widespread job insecurity in the economy, but a responsibility on the part of Government to adjust their policies to tackle that problem. Secondly—as has been mentioned already—investment in this country is neglected. We cannot cast that fact aside and say that it is irrelevant at the point at which the economy begins to grow. Long-term neglect of investment is the single biggest reason why we have grown more slowly than most of our competitors since 1979, why our share of world trade is now at the lowest level this century, and why we have learned in the past week that we are importing more manufactured goods than we export and that British consumers are buying more foreign-made goods than those made by British firms. The decline of British manufacturing industry is a sad indictment on the Conservative Government.
Mr. John Redwood: Will the hon. Gentleman give way?
Mr. Brown: No, I shall not give way again; I have given way enough times during the debate. I think that it is about time that the right hon. Member for Wokingham (Mr. Redwood) put his questions directly to the Chancellor, because he is criticising the Chancellor, not me.
I draw the attention of the House to a study of unemployment conducted by the Central Statistical Office. The Chancellor boasted a great deal about the Government's record in that area. In the past decade, the Central Statistical Office has created a new database—the JUVOS database—which it calls a unique source of longitudinal information. It shows very clearly what is happening to people around the country who are worried about their jobs.
According to the study, 8.7 million people—5.8 milzlion men and 2.9 million women—have suffered a spell of unemployment since the previous general election. This is the Government who fought the 1992 election on the basis of their claim that people would be more secure if the Conservatives were elected. The Conservatives must face the fact that there is a fear of unemployment and job insecurity: it affects every region, every occupation and every class.
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New policies must be implemented to deal with that problem. When the Prime Minister assumed his position in 1990, he said that he wanted a nation at ease with itself—a classless society; an opportunity Britain. However, the study states in its own words that approximately 10.5 million different people have experienced a spell of unemployment since 1990. It continues:
"Approximately one quarter of the work force were affected by a spell of unemployment during the period."
Those are astonishingly huge figures. The President of the Board of Trade is in the Chamber this afternoon: he should apologise to the House for saying that job insecurity is only in the mind. It is reality for millions of people up and down the country, in every class and in every occupation.
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): If the hon. Gentleman does me the compliment of quoting me, will he do the House the courtesy of quoting me accurately? What he said is not what I said.
Mr. Brown: While I look for the quotation, perhaps the President of the Board of Trade can tell me what he did say. [Interruption.] What the President of the Board of Trade said—and I stand to be corrected—is that job insecurity is only a state of mind.
Mr. Lang: I shall have the opportunity to reply to the debate later on. The hon. Gentleman mentioned job security and job insecurity. What matters is which Government and which party have the right policies to reduce that insecurity. The figures that the hon. Gentleman has given the House simply show the rapid flow of people out of unemployment back into employment. Will he tell us by how much employment has risen in the past few years and, therefore, how many job opportunities have been created as a result of the Government's policies?
Mr. Brown: I note that the President of the Board of Trade has not corrected me and given us the proper quotation. It appears that he has something to hide on the subject.
The Secretary of State for Education and Employment issued a press statement this afternoon, which stated that 750,000 fewer people were unemployed now than in 1992. What her press statement did not say is that there are 250,000 fewer people in employment now than since that date in 1992. If the President of the Board of Trade and the Chancellor faced up to the fact that job insecurity is widespread and needs new policies to deal with it—and that it is not a lack of moral fibre that prevents people from getting jobs—we would do better. [Interruption.] The Chancellor asks, "What new policies?" I shall tell him. The first action that I would take would be to refuse to abolish the community action programme, which he will abolish at the end of the month.
Will the Chancellor explain to us why that programme—which was set up to give help to 30,000 long-term unemployed people; which was extended for three years in the 1994 Budget because, as he and his colleagues said, it was a success; which all the voluntary organisations that had a part in it welcomed; and which

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an Employment Minister called a testimony to the Government's willingness to deal with the problem of unemployment—will be abolished at the end of the month? Why is that happening?
Mr. Kenneth Clarke: It will be replaced by better and more cost-effective programmes.
We have reduced unemployment by more than 750,000 and increased the total number of people in work by 500,000 through our policies for the long-term unemployed, including the family credit proposals and the national insurance holiday for employers, which will come into effect in April. That is how we have reduced long-term unemployment and increased job security.
As far as I am aware, the new policies that the Labour party suggests include the social chapter and the minimum wage, which would destroy employment. What other employment-creating measures does the Labour party have? It does not have policies on inflation, taxation, public spending or any other economic issue.
Madam Deputy Speaker (Dame Janet Fookes): Order. The House will know my views on interventions. They should be short, even from Front Benchers.
Mr. Brown: The Chancellor said that the community action programme will be replaced by another programme. Will he tell us what it is?
Clarke: I cannot remember its name. A whole series of programmes, produced by the Department for Education and Employment, have been effective in reducing long-term unemployment and increasing opportunities for people to move from unemployment into work. The hon. Gentleman tries to obfuscate that by choosing one programme which he likes and which is now being phased out because it has been judged alongside other programmes and is not cost-effective.
The hon. Gentleman got me to my feet because I wished to challenge him on his policies. The social chapter and the minimum wage would destroy jobs. What polices does he have to compensate for that?
Mr. Brown: The Chancellor does not know which programme has replaced the community action programme, but 30,000 places have gone and very little has replaced them. The reason that the Secretary of State for Education and Employment gave when she scrapped the programme was not that she would replace it with something else. She said that it was not needed. There are 800,000 long-term unemployed, and the Government's attitude is that that programme is not needed. There is anger among voluntary organisations, charities, community groups and others who have been involved in that programme. The National Council for Voluntary Organisations has stated:
"A programme that was helping the unemployed back into work and giving them skills has simply been scrapped by the Government to save £70 million of money."
Let us remember that—
Mr. Redwood rose—
Mr. Brown: I will not give way again.
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A Minister at the Department for Education and Employment said that the programme's very existence was clear evidence of the Government's determination to tackle unemployment. What signal is sent by the programme's abolition? It is one that most of the country will understand. We, the Opposition, are prepared to say that, with a windfall levy on private utilities, we would create opportunities for work for young people under 25 and tackle the problem of long-term unemployment. The Government are prepared to accept a situation where 800,000 people have been unemployed for more than a year and 600,000 young people under 25 are out of work. In addition, there is 30 per cent. youth unemployment in many areas of our inner cities. Black youth unemployment in central London is 60 per cent. The Government are prepared to leave a situation that is socially divisive and causes a huge loss of economic output. They are not prepared to take the necessary action.
The central question about the future of the economy is how we shall create the necessary investment to ensure that we can build the future that the Chancellor of the Exchequer was talking about, but to which he has not, over recent years, directed his forecasts. The question will not be solved by Conservative Members. It will certainly not be solved by Conservative central office. Conservatives give the impression that every problem that the United Kingdom faces has already been solved. We have speeches such as those made by the Deputy Prime Minister. His speech on Friday was entitled "The Mood is Changing". That was just after the debate on the Scott report. He talked about a "new sense of optimism" and claimed that we face the "best economic circumstances" for a generation. He then talked about
"urban resurgence in parts of rundown Britain not witnessed since the last century."
I am aware that I have often been accused of doom and gloom by Conservative Members. I am aware also that there is activity in the building trade round the country. There is some significant inner urban development. Building works are taking place. They are big works on a grand scale. They are the brainchildren of grand visions. There is a development here and there with which the Chancellor is intimately associated. I must tell the House, however, that even with the best will in the world, the extension of the Deputy Prime Minister's office, however grand it may be, does not add up to an
"urban resurgence … not witnessed since the last century."
Adding another floor or two to the ministry of propaganda will convince no one that the real economy is flourishing.
Mr. Redwood rose—
Mr. Brown: I am not giving way again, because I am nearing the end of my remarks.
Mr. Redwood rose
Mr. Brown: Conservative Members are anxious to intervene. But what do they really think about the feel-good factor? Is there not one good barometer of what the feel-good factor is for the Conservative party? It is that 52 Conservative Members are retiring at the next general election, many of them in their 40s and 50s. Thirteen Conservative Members are relocating from marginal seats to not-yet marginal seats, which they will be fighting at

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the next election. Is not that the most reliable measure of what they see at first hand under a Conservative Government? They say that we have the best prospects for a generation, but what do they do? We know that 52 are leaving. They say that for the next 10 years, Britain will have the best set of circumstances throughout Europe, but what do they do? Thirteen are moving to other constituencies, so that they will have majorities. To use a phrase of Conservative central office, they say one thing and do another. That is what happens under the Government.
Until the Conservative party faces the investment gap in the economy, we shall not solve the long-term problems. The solutions to those problems have eluded the Government. They are responsible for our decline in relation to our competitors abroad. Promises made by the Government have been broken. That is why people are angry. They feel that their trust in regard to taxation, public services and even public borrowing has been betrayed by the Government's failure to keep the promises that the Conservative party made at the general election.
People saw at first hand the Government's failure to keep their promises with the Budget in November, which we can now discuss. We have seen the Conservatives give with one hand a small tax cut, but at the same time introduce council tax increases, increases in prescription charges, rent rises and rail fare rises. New mortgage protection schemes are costing more. Water bills and petrol bills have increased. Vehicle duty has increased. An ordinary nurse has not even been given the benefit of a full national public sector settlement. She is in a position where a small tax cut is having to be paid for by huge increases in bills that she must meet, including the rise in council tax for which the Conservative party must take responsibility. That rise is the result of the Government's settlement.
It will soon be 17 years since the Conservative party came to power. The Government said when introducing their first Budget that their responsibility was to end the relative decline that Britain had suffered. The then Chancellor said that ending that relative decline was the central issue. We know from this debate that ending the relative decline has not happened under this Government. We have fallen behind many of our competitors abroad. We know also that Britain's share of world trade is at its lowest this century and that it has fallen substantially during the 17 years of Conservative government. We know that, far from the manufacturing trade deficit being solved, that deficit continues to cause us problems.
No slogans, no expensive posters and billboard advertising, and no speeches by the Deputy Prime Minister, will obscure the central fact that the Conservative party has failed on the economy, taxation and public services. It will not be able to con people at the election, whenever it comes. The Tory lie machine will fail.
Look at what has happened to the Conservative Government. In 1983, they had a majority of 140. In 1987, it was 101. Even in 1992, they could boast of a majority of 21. The Government are now down to a majority of one and they are poised to take their leave of government. They have lost all authority. They have lost any credibility that they might have had. They are rapidly losing their
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majority. All that is left to them now is to lose office. For the millions whose trust has been betrayed, whose prospects have been blighted and whose hopes they still deny, that leaving cannot come too soon.
4.46 pm
Mr. David Howell: My right hon. and learned Friend the Chancellor of the Exchequer has given a most excellent account of his stewardship of the economy, an account which the speech of the hon. Member for Dunfermline, East (Mr. Brown) failed to dent in the slightest respect. What my right hon. and learned Friend had to say is extremely encouraging.
When we begin to study the not always reliable media both here and abroad, it is extraordinary how the concept of Britain has changed. Britain is seen now not as a failure or a salutary warning to others but as a model that demonstrates how to adapt, deregulate and modernise economies.
I can remember that, when I first entered the House, there was a tremendous cry from the party of Tony Crosland, the right hon. Member for Chesterfield (Mr. Benn) and others that we must all follow the Swedish model. That was the thing. We were told that we must all see how the Swedes managed their social security spending, for example. That has long gone. Unfortunately, the Swedish example did not work in the end. It blew up and the Swedes had to introduce completely different policies.
People are now coming to the United Kingdom from throughout the world and studying the British model. They are saying, "How did they have the political guts to push through all sorts of measures, with the Opposition"—it was the Labour party in the 1980s—"resisting every one of them, to lay the foundation for the British model?" I accept that it may have many faults, but it seems to have the qualities of flexibility and adaptability to meet current circumstances. It is an exciting state of affairs to have reached.
I greatly admire my right hon. and learned Friend the Chancellor for the way in which he has seized the opportunities that difficult struggles have provided. He has built up a British model which, as I have said, others admire. It is not only Conservatives who take that view—it is shared by the foreign press throughout the world. The model is admired by people who are far away from British politics, not only by Conservative central office.
I want to add only two messages to the account that my right hon. and learned Friend presented so excellently and with such panache. First, in the new trading conditions, there has been a shift in the centre of gravity, in both economics and politics, from Europe and the Atlantic countries to Asia. That is not a threat. Those who see the Asian challenge as a threat will make entirely the wrong policy judgments. It is a challenge that offers us a colossal opportunity. The whole of our policy and our industrial effort from now on—and for some years past—needs to be built around the ability to seize those opportunities.
My second message, which I want to sketch out briefly, is that the United Kingdom is superbly positioned to take advantage of the opportunities. I fully concede that Opposition Members, or anyone else, might say that it has all been a long time coming, that many years have passed and that, to put it mildly, not everything has gone right. I remember making an endless number of speeches in the

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1960s and 1970s—a long time ago—hopefully asserting that just around the corner was a high rate of growth and low inflation, that it would be sustainable, that we would have falling unemployment, high productivity, a strong economic performance generally and that sterling would be able to look other currencies in the face and be strong. One hoped for those things. Opposition Members and Labour and Conservative Governments all set the same objectives. Everyone tried very hard to the best of their lights, sometimes with disastrous policies and sometimes with successful ones.
What is extraordinary about the situation today, which the hon. Member for Dunfermline, East has not begun to grasp, is that those things are now happening. We are delivering low inflation, sustained performance and export performance in all areas—not just in manufactures, which is an old-fashioned concept, but in a wide range of foreign earnings activities throughout the planet. We are delivering superb productivity. We are the dominant magnet for foreign investment from outside Europe. Asian investment is pouring in—40 to 45 per cent. of all investment from outside Europe comes into the United Kingdom.
We are also, as my hon. Friend the Member for Uxbridge (Sir M. Shersby) rightly reminded us, a gigantic overseas investor with worldwide interests and huge invisible earnings from our tradeable services and from dividends and investments. That all gives the country a power that it has not had for 30 years.
When the hon. Member for Dunfermline, East talks about the narrow trade figures, he does not understand that, in the global economy, one has to measure the remittances and the profits that are generated by British firms with huge subsidiaries overseas. Those are the profits that come back to this country, even though the figures do not show up in the exports, because the goods have been sold in the market overseas. His emphasis on the old-fashioned economic aggregate concepts, including the trade statistics, is completely wrong. He does not understand the nature of the modern global economy.
It is not just in the statistics that the new situation has to be interpreted and seen. It is quite extraordinary—one almost has to pinch oneself to believe it—that 60 of the 100 largest corporations in Europe have their headquarters in London. It is quite extraordinary that banks are not gathering in Frankfurt, which is supposed to be the centre of the financial system of the European region, but coming to London. They are fighting for space in the City of London.
The hon. Member for Dunfermline, East talked about our being marginalised, isolated and so on, and about our not being in the centre of Europe. The financial wizards of Europe take a different view and are seeking to come to London and acquire assets and enterprises here at a great rate. I fully declare my interest and involvement in the financial world. The financial wizards are demonstrating that, far from Frankfurt being the centre of things, London is increasingly not only the enterprise centre but the financial motor of the entire European region and, indeed, the wider region as well. That goes beyond the statistics and demonstrates just how powerful and attractive the British model is proving to be.
Then there are the exports. It is not just a matter of products, manufactures, metal bashing and so on. The entire pattern of trade is changing, and there is ever
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greater emphasis on tradeable services. This country is extremely good at tradeable services. The British market share of financial services is overwhelming: 80 per cent. of all international funds are managed in London and other UK financial centres, mainly Edinburgh and Glasgow. It is not just finance. Other tradeable services, such as educational products, consultancy services, accountancy, scientific research, management skills, civil engineering, military and law enforcement training packages and a variety of other products are the resources that the British are extremely good at.
The most attractive prospect of all is the fact that those are the products that the great expanding markets of Asia want. Those are the information-intensive and technology-intensive products that will fit into the booming markets of the next 20 years. People think of products, as the hon. Member for Dunfermline, East does, as manufactures, as motor cars and laptops. Asia will not want them, as it can make them cheaply and to the highest quality. It wants the management skills that this island is very good at providing, and which are getting better all the time. What is more, we have a particularly good advantage. Sometimes I would like to urge my right hon. and hon. Friends to build on that advantage a little more than they have. We have in the Commonwealth a fantastic club network—an entree into all the new markets—of a kind not available to our immediate competitors and neighbours in Europe. The more we build on that, and on the fact that almost all the business of the planet is conducted in English, the better.
A considerable and forceful Labour leader of the past, a bigger figure than many we see today, I fear—Ernie Bevin—once described this country as an island
"almost made of coal and surrounded by fish".
Our coal now has to compete with that from other countries and I had better not say any more about the fish—but most of them have gone—so we have to look to other resources.
I am indebted to Sir David Puttnam—I do not believe that he is a Tory supporter, but he is an excellent fellow—for saying the other day that this country is an island of creativity surrounded by a sea of understanding. That "sea" is the enormous reach of British culture and language into every part of the global system. That is the opportunity for us. It is not just the future—we are exploiting it now.
Our audio-visual industries, which already employ more people than the whole motor components industry, are racing ahead. We are the second largest CD-ROM publisher in the world. We hold a massive chunk of the fast-expanding market for electronic education systems—and so we should given that the entire electronically stored information supply around the world is in English, that an estimated 1 billion people are learning English, and that the Internet is in English. It should be a marvellous opportunity for us and it will be, provided that we do not attack enterprise and undermine educational excellence, which would set us back and let the Americans take all the opportunities.
The picture that my right hon. and learned Friend the Chancellor painted was not only accurate but rather modest. It understated the colossal opportunities that are already being exploited by this economy and which are showing up in the figures.

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Now we come to investment, about which the hon. Member for Dunfermline, East made much. He alleged that we have failed—or are failing—in the investment league. In fact, personal savings—the idea that savings are related to investment may be old-fashioned, but it is one that I hold—are rising, and the general habit of saving up a bit and investing in shares and other routes has spread vastly during the Conservative years.
I feel very proud that the dreams of two or three decades ago of a property-owning democracy and a capital-owning democracy—the great projects promised by my party—have duly been delivered, while Opposition Members have mumbled, although I do not think that we heard it today, about stakeholding, which is yesterday's story and should be put aside. We are moving to a completely different pattern of ownership and a completely different society.
As for investment, we should try to clarify some of the figures. While Japan led the field in investment growth between 1980 and 1994 which, as my right hon. and learned Friend said, is a reasonable time scale to measure, Britain was second, with an annual growth rate of investment two thirds higher than that of Germany and 90 per cent. higher than that of France. I take my figures from very detailed analyses in The Wall Street Journal, which I have no reason to question. They are just as reliable, if not more so, than those given by the hon. Member for Dunfermline, East.
In real per capita income growth, between 1980 and 1994, Britain stood fifth among the world's richest nations and—this is the point that the hon. Gentleman did not pick up—it is closing the gap steadily with the United States, Canada, Germany and France. Among the 10 largest Organisation for Economic Co-operation and Development countries, Britain was second, at 74 per cent.—beaten only by Switzerland—in the proportion of the working population that it absorbed into the labour force over that period.
All that stuff about our dropping from 13th to 18th in the league table, which seemed to be the main platform of the hon. Member for Dunfermline, East, is a canard. In 1980, Britain was in 16th position. It is now in 18th position, because Hong Kong and Singapore have overtaken us. They have also overtaken Germany and France, as I observed earlier, and we are now breathing down the necks of Germany and France. That is not surprising. In terms of income per head, we are now six percentage points behind Germany and three behind France, and the gap is closing as—I take no great joy from this; in fact, it is a worry—those two countries become increasingly bogged down in layers of regulation, state control, subsidy and uncompetitive practices. Britain has been a pioneer in throwing off those shackles.
Mr. Redwood: Does my right hon. Friend find it strange, as I do, that although the shadow Chancellor says that he wants to get investment up and unemployment down, his two main policy recommendations that differ from the Government's are the adoption of the social chapter and a return to the exchange rate mechanism, linking us to the deutschmark rather than the dollar? Surely those are the very two policies that have led to
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much higher unemployment in France and Germany, and to some of the other problems that my right hon. Friend is describing.
Mr. Howell: No, I do not find that strange. I know that new Labour is trying, but it is still stuck in an intellectual time warp. It does not understand what is happening to the modern economies of Europe—economies such as Germany's—which have not deregulated fast and have concentrated on rather outdated concepts of heavy manufacturing. Those economies now face desperate circumstances.
Germany is having to put up taxes, and take-home pay there is said to be no higher than here—possibly lower. The same applies to France and other European countries—because they are having to invest outside. Siemens is going to Newcastle, not because of low wages—take-home pay here is just as high as it is in Germany—but because we have a deregulated, open economy, that enables it to jump into the new world markets outside Europe. Volkswagen is to go to Alsace—outside Germany. Germany is investing massively in the admittedly low-wage areas of eastern Europe, and in Asia. The net effect is that the German economy is ceasing to be the wonder machine that it has been for the past 30 years.
I forecast—I know that my right hon. and learned Friend the Chancellor cannot—that the mark is in for a fall: that the deutschmark will move down as sterling moves up. I believe that the mark will go the same way as the almighty dollar, the unchallengeable currency of the 1950s and 1960s. Look at what has happened to it since. I expect to see grave difficulties in both our neighbouring countries—France and Germany. That should cause us all sorts of worries, but the one thing that we should not do is copy them. On the contrary, we should encourage them to come and view the British model, as they have been doing.
My right hon. and learned Friend is absolutely right. The picture that he paints is enormously encouraging. I recognise that we have many social problems, but the point is that we can build on success rather than on the crumbling edifice of incompetence and failure with which we found that we had been left when we came into government in 1979. Lagging Britain is yesterday's story, presented by yesterday's men and women. It is not only very boring, but inaccurate and out of date.
I see the need for the hon. Member for Dunfermline, East—and, indeed, the whole Labour party, as it prepares for the great election that lies ahead—to "do a Harold Wilson". The trick is somehow to convey the idea that the whole of society is fracturing and falling apart, that people such as the genial Mr. Will Hutton, who wrote the ludicrous book "The State We're In", are right—that everything is going wrong, and that investment is down. Labour must try to prove the truth of that vision.
Harold Wilson was extremely clever—and lucky. He was able to secure figures to support his claim that the Tories were not doing well, that things were falling apart and that he would put everything right. The problem for today's Opposition Front Bench is that the script is not turning out as they want. There are no figures to confirm that things are falling apart, that our country's performance is lagging behind that of others and that we are isolated and a passenger in Europe. Indeed, the figures show that we are leading the pack, that we are the

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pace-setter, that we have the kind of economy that is suited to the 21st century, that others are trying to copy us, that our investment is rising in the outside world and that we are now gaining a dominant position in the great markets of the future—particularly as trade now follows investment, and our investment, and the trade that follows it, are beginning to score.
I draw confidence—though not complacency, I hope—from the excellent picture that my right hon. and learned Friend has painted. Nothing in Labour's analysis seems to connect with today's and tomorrow's problems and challenges. I believe that, if we understand what is really going on in the global economy, we in the Conservative party will be able to rise to the challenge and see Britain through to the prosperity for which we have fought for so many years.
5.4 pm
Mr. Austin Mitchell: My hon. Friend the Member for Dunfermline, East (Mr. Brown) drew attention to a fascinating aspect of Tory party policy: the way in which the Tories always take some accidental by-product of their own incompetence, and then trumpet it as though it were the new philosopher's stone of economics—the new discovery that will lead the country, and indeed the world, to greatness. In the early 1980s, British manufacturing industry was being closed down on a massive scale. The great discovery then was of lean, mean, fit, dynamic manufacturing. We were told that those that survived the process of anorexia were ready to take on the world, lean, mean and dynamic—before so many of them closed.
Then there was the great discovery of low inflation. That is not difficult to achieve, if enough people are put out of work and made to fear for their jobs. The credit explosion of the late 1980s gave people control over their own credit, allowing it to be used as a lever for economic growth; that discovery seems to have come from Roger Douglas in New Zealand. In 1990, there was the exchange rate mechanism. Suddenly, we were going to be at the heart of Europe, committed to Europe and to working within the ERM. That was to be the basis of economic management and control over inflation.
The contribution of George Soros to Government economic policy was not sufficiently recognised by the Chancellor today. In so far as the right hon. and learned Gentleman has had any success at all in economic policy, that success is largely because Mr. Soros forced us out of the ERM. Thanks to him, we discovered export-led growth, which was to be the new dynamic. Somehow, however, it has not quite materialised. The latest boast concerns financial services and the financial sector of the economy—the enterprise capital of Europe. The right hon. Member for Guildford (Mr. Howell) treated us to a litany on that subject, but, although the factors that he listed have boosted services—especially financial services—they have done little for jobs and the fundamental strength of the economy.
That sector was to be the new enterprise capital of Europe because it would be a deregulated, cheap-labour, de-unionised economy with low social costs, providing an attractive base for foreign investment. Japan, Korea and America, for instance, would see it as a kind of Mulberry harbour enabling the invasion of Europe, because of the low taxes on business.
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Unfortunately, that sector cannot substantially lower unemployment, which is the curse of the economy. Unemployment is still far too high, and, as it has fallen, no great improvement or surge in public finances has followed. Most people returning to work are taking casual, part-time jobs that are not particularly well paid. Many are still receiving income support. The tax take therefore does not rise, the benefits spend does not fall substantially and we still have an horrendous public sector deficit. This year's borrowing level will be about as high as last year's, despite the Chancellor's persistently expressed hope that he will bring it down and that we are moving towards a balanced position. We are not; we are accumulating an increasingly heavy deadweight of borrowing for future generations to bear.
The revival for which the Government hoped—that, indeed, they boasted about—is not there. Certainly, it has not been experienced in the Grimsby area: business people there have not observed the surge of enterprise and dynamism described by the Chancellor. They have not experienced the surge in demand or the enormous improvement in export markets that the Chancellor spoke of, essentially because there has not been a real revival in the base on which the economy rests, which is manufacturing. Manufacturing is the base that makes things in this country and supplies them to the world.
Most of our deficit is in manufactured trade. Most of world trade is still in manufactures, but our economy's manufacturing base has shrunk drastically, to below the level of viability. Manufacturing has not only to generate jobs—though it can never generate jobs on the old scale—but to support more jobs and a healthier superstructure of services, and to generate the economic growth to spread the well-being that makes people feel better off.
In the 1980s—I am afraid that it is still going on—we lost more than 3 million jobs in manufacturing; we experienced more shrinkage than any of our competitors. Manufacturing production is still around its 1990 level, and only a few percentage points above its 1973 level. That appalling record has not been matched by other economies, most of which have substantially increased production since 1973. We have not, and all the problems of the British economy rest on that fact.
Import penetration of domestic manufactures markets, which was about 17 per cent. in 1970, has risen to about half of demand. Our share of world trade in manufactures has decreased. That is the cause of our long-term failure, and there cannot be a real and substantial recovery in the British economy unless it is remedied. The factors mentioned by the right hon. Member for Guildford are flashes in the pan without a firm base to support them, which is required to pay our way in the world.
Mr. David Howell: The hon. Gentleman would find it easier to reconcile events with his thesis if he accepted that the concept of manufactures, which he keeps using, is very narrow. Nowadays, a manufactured product—even this pen or this piece of paper—requires a vast range of information and knowledge services in its manufacture, from research and design right through to marketing and sales. The service content of any manufacture gives it power and the ability to penetrate world markets. Because he keeps talking about manufactures, he has not noticed

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that the service content of manufactures is constantly becoming more dynamic and delivering the type of results that puzzle him.
Mr. Mitchell: I am happy for the right hon. Gentleman's lesson in monetarist economics to continue, if he wants, but the fact is that all those services rest on a healthy manufacturing base. Our base has shrunk because it has long been unprofitable to produce manufactures in this country, due to policies of dear money and an over-valued exchange rate. The test is whether it is profitable to manufacture in this country, and it has not been. That has been demonstrated by our sending many manufacturing processes to overseas manufacturers and reserving assembly for people in this country—a sort of "Amstradisation" of the British economy.
We need all those services. I am not arguing about their importance, or about the need to increase and upgrade those and other skills and to introduce more of the information technology that the right hon. Member for Guildford talked about—Robert Reich is preaching that in the United States—but the essential point is that a healthy manufacturing base is required to sustain such expansion.
We still need to make the basic items because most world trade is still in manufactures, and we pay our way through them or we run a deficit. As the manufacturing base shrinks, so does our ability to pay taxes and to support healthy public sector finances. We have a public sector deficit because we have put so many people out of work and they are not contributing to the tax take or to economic growth. That is the legacy of 17 years of overvaluation and dear money.
The lessons of what has gone wrong under the Conservatives are far too obvious to need reiterating. The Labour party has long emphasised those lessons. The problem is that we have a lame, limping and inadequate recovery, which is now petering out effectively because the Chancellor has blown it. After the devaluation, which occurred because we were pushed out of the exchange rate mechanism—
Mr. Anthony Coombs: Will the hon. Gentleman give way?
Mr. Mitchell: No.
After that devaluation, we should have gone for growth. That was our chance to recover the ground lost, particularly in competition with Europe. The Government assumed instead that we had economic growth and an export-led miracle and that they did not have to do anything more about it. They should have sustained the growth. The Chancellor then deflated the economy by increasing taxation and kept the difference between actual interest rates and inflation too high—at almost double the historic average for real interest rates since the second world war. To compound that, in 1994, he increased interest rates when they should have been decreased again to sustain expansion in demand and to lower sterling so that our exports were more competitive and imports were penalised.
That example shows the folly of a system in which the Governor of the Bank of England is given a bully pulpit to preach his reactionary views on economic policy and
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to make his insistent demands for ever higher interest rates. It is the wisdom of the parrot. When anything goes wrong or anything has to be said, the Governor automatically parrots, "Put up interest rates." Providing him with that pulpit, from which he can exacerbate the fears of an always nervous financial community. ties the Chancellor's hands and creates an impossible pressure for higher interest rates.
The Governor's advice in 1994 was absolutely wrong. We should have done the opposite and brought interest rates down to expand the economy. Even since then, there has been consistent pressure against a reduction in interest rates, which should be lowered by a couple of per cent. to bring down the pound, stimulate exports, penalise imports and allow us to expand the economy. That pressure is still on because the Governor is obsessed with the fear of inflation.
Inflation is not currently a problem. We can and should take risks with inflation. If not inflation, what will bring down the heavy burden of the dead-weight debt that the Chancellor is accumulating? This year, the public sector deficit will be almost as big as it was last year, which is just another massive addition of debt. I know that the right hon. and learned Gentleman might want to keep the public sector deficit within the Maastricht criteria—just as other European countries are being squeezed and deflated, in an anti-Keynesian fashion, to meet those artificial criteria—but, in a deflationary situation, all that debt is a dead weight imposed on the economy.
In the early 1950s, public sector debt was about 200 per cent. of GDP. In 1931, it was 150 per cent. of GDP. What brought it down? It was not the expansion of the economy but inflation. We need inflation to float us off the rocks of debt that have trapped not only our economy but, even more so, the European economies and every householder and person with an overdraft in this country. We can take risks because we need to expand the economy.
While Europe is in a deflationary welter because of the obsession with the Maastricht criteria, this is our chance to improve our trading position, to increase our exports to Europe, to win back the markets that we have lost and to reverse the flow of imports to win back the jobs we need. The Chancellor is just not taking that opportunity. I do not mind that he is not achieving economic growth and the feel-good factor that he needs to stand any chance in the election, but I do mind the disastrous damage that those policies are still inflicting on the manufacturing sector, which is central to our economy.
For all his ebullience and bounce, the Chancellor has been far too over-awed by the persistent counsels of caution from the Governor of the Bank of England, who has been put in far too strong a position by these regular discussions. The need now is to do a better deal for manufacturing industry and its prospects—by getting interest rates and the pound down to more competitive levels, and by giving a boost to the growth that this country needs.
5.19 pm
Mr. Anthony Coombs: I was disappointed but not surprised by the tone of the shadow Chancellor's speech. Yet again, he talked down Britain's achievements of the past 16 years. He also indirectly insulted the people in my constituency who have done an

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enormous amount, in the manufacturing and service sectors, to improve productivity and competitiveness and to make their firms among the most competitive in the world.
The Labour party needs reminding of the fact that when it left office—thank heavens, a long time ago—the British ambassador in Paris referred to the British economy as the sick man of Europe. Most of us can remember the Europeans looking down on our economy and regarding it as some sort of sick joke because of its low productivity and appalling strike record. In 1979, for instance, about 29 million days were lost to strikes. We suffered from the Red Robbo syndrome: complete industrial inflexibility.
By contrast, the president of the German CBI, Mr. Henkel, felt able to say only a month ago that the British economy is the best placed in Europe to deal with the challenges of global competitiveness—such has been the transformation. The British economy has made remarkable strides in productivity, competitiveness and the flexibility necessary to deal with global market challenges. This was the analysis of a man who ought to know—a man from a country that used to regard ours as the sick man of Europe.
My right hon. and learned Friend the Chancellor was not inventing his figures when he talked about the achievements of the past few years. Output has been growing for no fewer than 15 consecutive quarters. This year, growth—even on the most conservative estimates, and irrespective of whether we agree with the Chancellor's forecasts—is expected to run at about 2.6 per cent.
A poll of GDP forecasts for next year conducted by The Economist clearly shows that Britain, with 3.1 per cent., is forecast to have easily the highest growth of any country in the OECD or the developed world outside Australia, which is 0.1 per cent. ahead of us.
All this has had an impact in my constituency and on employment prospects there. Britain is the only country in Europe where unemployment has fallen significantly in the past four years, dropping by 770,000. Since the 1992 general election, unemployment in Wyre Forest has fallen by no less than a third—and these are not part-time or temporary jobs, which account for only 7 per cent. of the total. That 7 per cent. is itself one of the lowest figures in Europe. In human terms this means that 1,400 people who did not have a job in 1992 have entered good, competitive jobs in my constituency as a result of what the shadow Chancellor would call the "appalling" policies followed by this Government.
Between 1980 and 1994, an even longer period, Britain was surpassed among OECD countries only by Switzerland in its ability to find jobs for the additional people who become eligible for work. Of those eligible for the work force, 74 per cent. have been absorbed into it—a tremendous achievement over a long period. In line with the growth forecasts to which I have alluded, that success is set to continue.
How has all this come about? I believe that three reasons can explain it. The first is that, for the first time in three decades, people can invest in this country with confidence. They know that our currency is stable. Under Labour, inflation averaged 15 per cent. and reached 29 per cent. at one point. Today, our currency is being protected. The money that people invest will not have devalued by the time their investment returns come in.
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Secondly, our industrial relations have been transformed. Compared with the 29 million days lost to strike action in 1979, there were only 203 stoppages in 1993, at a time when a record number of people were in the work force. Sixty-eight per cent. of people in this country—a higher proportion than anywhere else in Europe—are in the work force. To be sure, the number of stoppages rose in 1994, but only to 205.
In short, what has changed is the fact that a climate of confrontation has been exchanged for a climate of consensus. Every company with a successful record in any market today operates by consensus—management reach down to what used to be called the workers; ideas go both ways; success is the result.
The third ingredient is investment. I was interested to hear the figures given by my right hon. Friend the Member for Guildford (Mr. Howell). The Wall Street Journal did say that between 1980 and 1994 investment in this country grew two thirds faster than in Germany, and 90 per cent. more than it grew in France. We were second only to Japan in terms of increased investment. That is why productivity and competitiveness improved here, and why the gap between our economy and the French and German economies—we used to look up to them in 1979—closed.
More evidence of how the British economy has been transformed is to be found in the fact that people from abroad are prepared to put their money where their mouths are. Over the past year the west midlands has enjoyed £1.25 billion of foreign investment. That equals 11,000 jobs, 6,000 of which are new and 5,000 of which have been safeguarded. It is certainly significant that 40 per cent. of all Japanese and American investment in Europe comes to this country. Moreover, all the top 10 consumer electronics firms in Japan have recently invested significantly in the United Kingdom.
As Mr. Henkel of the German CBI recently said, over the past 14 years our "declining" British industry has managed to attract no less than nine and a half times as much inward investment as German industry has, despite the fact that the latter is supposed to lead Europe.
To any person of common sense and objectivity it is easy to see why this inward investment has come. People want to put their money where they believe they will get the best return on it, and where the labour force is flexible and skilled. The British tax burden as a proportion of GDP has fallen, from 42 per cent. It is still too high; as the Prime Minister recently said, we want to get it below 40 per cent.—and then on down to 30 per cent. The countries that keep their tax take at near 30 per cent. of GDP—Switzerland, Japan and the United States—are the most successful at creating jobs of the kind that we want for all our constituents.
Another reason is that we do not burden our companies with the sort of non-wage costs that are increasing in Europe. It is significant that, in Britain, additional labour costs are about £18 for every £100 in basic wages, but in Germany the figure is £32 and in France it is £41. Small wonder that Mr. Henkel says that in Germany:
"We have too rigid labour laws. We have too high social costs and taxes. We work the shortest working week in Europe. The German government spends 50 per cent. of GDP as opposed to 42 per cent. in Britain. No wonder we have a problem."
The problem of a shorter working week, a minimum wage, more social costs and more taxation will be exacerbated if we have a Labour Government. That is why

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it is nothing short of barmy for members of the German Social Democratic party and Mr. Santer, President of the European Commission, to go around Europe, supposedly on a crusade for jobs around Europe, but in reality raising social costs for already competitive businesses in Britain, which would mean that they would be less inclined to employ people and lead to job losses overall.
The failure of Mr. Santer and those party members to recognise that is symptomatic of the appalling misguidedness of the Labour party's industrial and economic policy. Having heard Mr. Henkel's comments, how anyone could suggest that Britain should load costs on to its already competitive companies through the social chapter or, more especially, the minimum wage—giving us, in industrial terms, the sclerosis virus that is undermining European competitiveness—defies belief.
If the Labour party is guilty of that, it is also guilty of the fact that it has never been able to persuade the British people—as my right hon. Friend the Member for Guildford said, it will not be able to do so at the next general election—that it can keep its hands out of the taxpayer's pocket. Its Front-Bench spokesman may try to give the impression—it is only that—of fiscal rectitude, but every time they do so, in any debate, four out of 10 Labour Back-Bench Members make speeches with specific comments on additional Government spending.
It is disappointing that a man who aspires to be Chancellor should come up—this is the sum total of his fiscal policy—merely with the gimmick of 10p on income tax, which even the Institute of Fiscal Studies said was nonsense and a gimmick, and then talk, as he did again today, about a windfall tax, the proceeds of which have been—we have counted—"spent" no less than 11 times in different pledges by different Labour Front-Bench Members. If that does not show an unwillingness to confront the difficult issues that are involved in running a responsible fiscal policy, I do not know what does.
Sheer incompetence does not come much worse, especially in the realm of economic prediction, than when the shadow Chancellor said in 1993—we should keep reminding people of this because it shows the Labour party's feel for economic forecasting, irrespective of what it says about the Chancellor—that, as the result of the Budget, unemployment would rise this month, next month, the month after and for months to come. What happened? Unemployment did precisely the opposite. In the past six months, it has fallen by an average of 17,900. It is sad that the Labour party does not appear either in the debate or wider afield to confront the realities of an increasingly competitive global world in industrial and economic terms.
The Government are right to emphasise their supply side measures and to pursue their deregulation initiative, although I and some of my constituents are somewhat cynical that that is bearing as much fruit as it should. Only the day before yesterday, when I was out house visiting, one of my constituents, an engineering manager, told me that, as a result of some idiotic health and safety directive, he should have been undertaking stress monitoring for each employee. He said that, if he was expected to undertake stress monitoring and all his other health and safety responsibilities, he might as well shut the factory today.
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I agree that, led by the Deputy Prime Minister, deregulation is extremely important, but I hope that the President of the Board of Trade will take on board the fact that people do not believe that the deregulation initiative is as effective as it should be. Business link is making contacts around the country and doing a valuable job. It should take a greater role in producing information that would allow the Government to act more effectively on that.
The Government are right to try to reduce Government expenditure. I hope that it will go below 40 per cent. of GDP. That means changes in people's attitude to the welfare state. When it was first set up in 1945, it took 4 per cent. of GDP. This country is infinitely richer now, but the welfare state is taking 12 per cent. of GDP. That cannot be justified. Any steps to rectify that position, especially given the huge amount of private savings—£600 billion—in pension funds and investment trusts, should be taken.
I agree with my hon. Friend the Member for Stafford (Mr. Cash) that it is essential that the Government clearly say that we should not accept the straightjacket of a single currency and the regulations that are necessary for it, and that it would hamper and hidebound an increasingly competitive economy and mean that Britain may no longer be the enterprise centre of Europe. If we can split from a single currency that is unnecessary, unproductive and, happily—I hope—increasingly unrealistic, given the Government's enormously successful policies on the economy and industry in the past 16 years, we can be the enterprise centre not only of Europe, but of the world.
5.37 pm
Mr. Malcolm Bruce: I am a little puzzled why we are having the debate today. On Thursday, we thought that we would be debating something else, and suddenly the Government advised us that they urgently needed to have a full day's debate on the economy on Monday. I assumed that it was because the Chancellor of the Exchequer had something new and exciting to tell us, but he did not. He made the usual speech in the usual way—entertaining as always, but adding little or nothing to the sum total of our knowledge about the state of economy and his view of where it is going.
We have had a confetti of statistics, league tables, and perhaps just the beginning of the warm-up of an election debate on the economy tested out. Hon. Members will remember that, in the United States presidential election, for people asking what the issue was, the slogan on the wall said, "It's the economy, stupid!"
I wonder whether we should rephrase that and say, "It's the stupid economy", because it never seems to do what the Government expect it to do. Most of the time, the Chancellor tells us why it will be different next time, but, as I hope to make clear, his and his predecessor's record in forecasting the economy's development and progress is extremely doubtful and inaccurate.
We all want our economy to succeed. The difference between us is on what measures will help to achieve that, what policies the Government should pursue, and what factors must be taken into account. Of course the fall in unemployment over the past 17 months is welcome, insofar as it goes. The relatively low rate of inflation is also welcome, if it is sustained and sustainable, as the foundation for long-term investment. However, neither of

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those indicators is quite as good or quite as simple as the, perhaps understandable, euphoria of Ministers would have us believe.
The reality is that the Government have acknowledged that things have gone wrong, but say that things would be a great deal worse if there were a change of Government—and that, anyway, everything is about to go right, so we should trust and believe them. The Government talk about the fact—often suggesting that it is something new and startling—that there have been four years of sustainable growth, and that that is some sort of triumph. In fact, it has been a long, slow recovery from a deep and damaging recession. That is a long way short of an economic miracle. It debases language to suggest that it is a miracle.
In fact, we are talking about annualised growth of about 2 per cent., which is below the average of the past 25 years. I accept that it appears to be sustainable, but it is slow by international standards and measured against what we need to do if we are to get our output ahead of our productivity, so that we can create the jobs we need to bring about the economic success we all want.
One thing we might have expected from the Chancellor today, although I know that it is not the form, was a hint about a drop in interest rates. All the commentators tell us that that is likely later in the week. Perhaps today's debate is the scene setting to enable the Chancellor to say, "I told you on Monday that things were going well. We have cut interest rates again, and that proves it."
In fact, if interest rates are cut later this week, it will be not because of the strength of the economy, but because of its weakness. It is growing so slowly that there is not only room for a further cut, but a desperate feeling that something needs to be done if there is to be any hope of meeting the Chancellor's 3 per cent. growth forecast. The right hon. and learned Gentleman must be the only person in the land who believes that he can hit 3 per cent. growth this year—and he reiterated that belief today.
Let us examine where the economy is at the moment. Manufacturing output is actually lower than it was a year ago. The right hon. Member for Guildford (Mr. Howell) said that manufacturing was no longer as important as it used to be, and that it is now all about tradeable goods and services. That debate is old hat. The economy is infinitely diverse, and infinitely varied.
Of course tradeable goods and services generate wealth and are valuable, and they need to be supported, but the fundamental fact is that, unless we also create a stronger manufacturing base, the total size of the British economy will not be sufficient to generate the long-term performance we need.
Mr. Sheerman: I substantially agree with the hon. Gentleman, but is not it a fact that the percentage change we need to increase the size of the service and miscellaneous sector is enormous? We would have to take in the Tokyo and New York exchanges and much else. In contrast, just a relatively small increase in manufacturing could solve Britain's economic problems.
Mr. Bruce: That is a fair point, but I am not sure that I want to go down that route. We have dramatically expanded the service sector, so the scope for a much bigger share is limited. However, I agree with the hon. Gentleman that, without a much more successful and
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innovative manufacturing base, total wealth and total employment will not be sufficient to sustain us in the manner to which all parties would like this country to become accustomed and to feel good and confident about.
Investment in manufacturing, as a percentage of gross domestic product, is now the lowest on record. Indeed, manufacturing investment fell by 9 per cent. in the last quarter of last year. The point is that it is not a matter of not expanding our manufacturing base fast enough; it is still contracting. That is serious, as I hope the President of the Board of Trade will acknowledge tonight. Indeed, I hope that he will remember that he is the Secretary of State for Trade and Industry, not just President of the Board of Trade. I hope that he will give some recognition of what can be done.
I was amused, as were others, by the article on the front page of today's Financial Times, under the headline "Heseltine to defend UK investment record". The Deputy Prime Minister was basically saying that industrial changes mean that manufacturers can now produce more goods with less spending and therefore the fall in investment is not a matter for great public concern or anxiety. However, the article states:
"Mr. Sudhir Junankar, associate director of economics at the Confederation of British Industry, believes that, while changes in organisation might be having an impact on investment patterns, the general weakness in capital spending is a 'worrying' factor, inhibiting recovery."
Obviously, the Deputy Prime Minister did not get the Government off the hook. The reality is that we need a high-tech, expanding manufacturing sector.
The current position is of a Budget and an economic strategy based on achieving a growth forecast that none of the current indicators suggests is at all realistic. There was an article in The Observer yesterday by Maurice Fitzpatrick, who also wrote a letter to the Financial Times in January in which he set out—it still stands—that,
"to achieve 3 per cent. growth in 1996, the economy would have to accelerate sharply. One would be looking, by way of example, for growth of. 6 per cent. in the first quarter,. 9 per cent. in the second quarter and 1.5 per cent. in each of the two final quarters. That seems unlikely, particularly given the problems that are being faced elsewhere. It may well be only a matter of time before the Treasury downsizes its 1996 growth forecast."
That will have serious consequences for the Government's electoral strategy, let alone Britain's economic success. That is possibly a reason for going for an early election—before it becomes apparent that the Government's forecasts are unachievable, and that the position is in fact much less optimistic than the Chancellor's speech suggested.
The other matter about which the Government have expressed considerable satisfaction is the low rate of inflation. More than once, the Prime Minister has said, "We have got inflation in the box, we have locked it up, and we have thrown away the key." Apart from being a rather complacent comment, it does not square with the reality.
The first question is, what has delivered low inflation? Has it been the successful implementation of Government policies, monetary strategy, or fiscal management? Or is it not simply the fact that there has been a deep recession, in which, generally speaking, prices and price increases have been low throughout the world?
The reality is that, far from having an extremely good performance on inflation, Britain is at the bottom of the European league. Only Greece, Italy and Spain have a

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worse performance. The Chancellor's bullish remarks not only about his belief in a single European currency but about his determination to ensure that Britain can meet the criteria seemed to be very much off target.
On the latest analysis published last week by the Commission, taking either the national figures or the Commission's estimates for inflation, Britain does not look as though it will be able to meet the inflation criteria and qualify for EMU in 1997. If it is to qualify, it is crucial that the Chancellor gets inflation down to 2.5 per cent. and keeps it there, because that is the top end of the range that would enable Britain to meet the inflation criteria.
I believe that one reason why investment is low in Britain is that there is no deep and abiding confidence among investors that low inflation and interest rates and stable exchange rates are here to stay. They have had their fingers burned too often, and there is nothing to suggest that the encouraging trends will continue, or that the Government have any real control over them. People think that, with any external pressure, the whole cycle could be triggered off again.
That problem is exacerbated by the fact that the Chancellor shows signs of a weakening resolve. I have on a number of occasions praised him for standing his ground in the face of pressure from his party, and ensuring that he does not do the populist thing and knock the economy and then economic recovery off course. As the election draws closer, however, he has shown signs of acceding to that pressure.
The Chancellor has also—he cited it himself—reduced interest rates, with the possibility of a further reduction. Tax cuts are coming through which his own criteria do not justify, and the building society giveaways are also coming into the system. There is a danger that that could create a stimulus in the economy for which there is no buffer mechanism, which could stoke up inflation again. There is no real mechanism to turn the situation around. There is anxiety about whether the Chancellor has the bottle to stick to the policy under pressure from his party.
I intervened on the Chancellor about borrowing and tax cuts, which I am sure are not a source of great comfort to Conservative Members. I am astonished by the way in which Ministers suggest that they are getting borrowing under control and are confident that borrowing is coming down, when the overshoot on their forecast is approaching 50 per cent. Borrowing is clearly out of control.
I have grave doubts about how firmly the Chancellor is committed to reducing borrowing. I quoted what he said to David Frost in September 1994, but he did not seem to believe that I was quoting him word for word. He said that a public sector borrowing requirement of more than £30 billion made tax cuts impossible. He continued:
"£30 billion is not the basis for cutting taxes and would actually worry all those people out there … if they thought I was going to start tax cutting on the back of even a £30 billion public sector requirement."
All the indications are that the outturn in the current year is likely to exceed £30 billion, so what is the Chancellor going to do about it? His good intentions go only so far, and when the chips are down, he runs into the buffers of political opportunism.
Unemployment has come down, and that is welcome. The hon. Member for Wyre Forest (Mr. Coombs) said that, in his constituency, 1,400 people have found jobs.
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That is of course good news, but let us be realistic. We are being told that we should be pleased that unemployment has risen from 1.3 million in 1979 to 2.2 million today. The figures may have gone up and then down, but that is a net increase of almost 1 million.
To take a shorter cycle, since 1990, when the Prime Minister took over from Lady Thatcher, the number of unemployed people has risen by 540,000. The Government are still complacent about unemployment, but the problem is more than just a lack of concern for those people. The President of the Board of Trade said in an intervention that many people were going through the cycle of being unemployed and getting back into work fairly quickly, and that there are not too many people who suffer long-term employment. That is not a good enough way in which to dismiss the problem, because it is costing us billions of pounds.
The amount of taxpayers' money that is being wasted on unemployment is the fundamental reason why taxes cannot be brought down, and education and health are starved of funds. Unemployment during the Government's period of office has cost about £150 billion in lost taxes and the payment of benefits. That is more than all the receipts during that period from North sea oil and privatisation.
All that windfall, that unpredicted gain, has been dissipated in paying for the costs of unemployment. The debate about the 43 per cent. of taxation as a percentage of GDP is therefore sterile unless the Government can come up with some way in which to deal with unemployment. The Chancellor is taxing the British taxpayer just as heavily as Denis Healey did, because he has failed to tackle the underlying weakness in the economy.
Although there is some welcome recovery and some dynamic in the British economy, we are a long way from an economic miracle that will generate a feel-good factor, security in employment, confidence to invest, and the sort of growth rate that could conceivably enable us to reduce taxes and maintain public services where people want them to be. Unless that can be achieved, the argument about cutting taxes is also about cutting services, or at least forcing people to pay for more of their education and health care straight out of their own pockets.
We need a more long-term vision in economic policy, which is why Liberal Democrats believe that we should have an operationally independent central bank. That bank, tied into a single currency—I agree with the Chancellor—if it were achievable, would enable sustained lower interest rates year on year than those we could manage to achieve on our own.
We need to review the rules on public sector borrowing so that we can distinguish between capital and current borrowing. The trouble is that, in order to try to meet their borrowing targets, the Government are cutting capital borrowing rather than current borrowing, which is damaging the underlying strength of the economy.
We need to invest fundamentally in education and training. That is the single reason why Liberal Democrats voted against the 1p reduction in income tax. We believed that such a cut could not be achieved in the present climate. We also need to alter the balance of taxation and spending to deal with environmental issues—taxes on pollution rather than employment and wealth creation:

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a switch from motorway investment to public transport investment and to the reinvigoration of our ailing infrastructure.
All those fundamental changes are necessary for the beginning of what would be an economic miracle: the ability to secure high levels of employment in high-skill, high-earning jobs that would enable people to have a good quality of life, pay a reasonable level of taxes and have good-quality public services. The spending round in the past two years has shown that that cannot be delivered by the Government, because they have not created a climate for sustained and sustainable, low-inflation, investment-led recovery. Until they show that they can do so, this country will not succeed.
I was left lacking any enlightenment on either of the two major parties' position on the single currency. The Chancellor of the Exchequer appeared to hold out against a commitment to any possible referendum in the Conservative manifesto. The shadow Chancellor took the same view, seeming to say that somehow the issue would be left to the election, and that there might or might not be a single currency. One cannot put a cigarette paper between the two parties on the issue.
The one thing that Liberal Democrats are consistent about is that we believe that it is in Britain's interest not only for there to be a single currency, but for us to be there at the beginning of it and to shape it. We accept that the decision is difficult, especially at the present time. That is why it is also important to take the people with us.
We should show leadership and vision, and recognise that, in the long term, the prize that can be won through a strong European economy with a strong currency that removes the current frictions is well worth winning, and will enable Europe to compete much more effectively in an increasingly global market. That prize is worth winning, and the Liberal Democrats represent the only party in this country with that vision, which they are prepared to follow through.
5.58 pm
Mr. Nigel Forman: I am grateful to you, Madam Deputy Speaker, for calling me in this debate which, unfortunately for those who lay claim to parliamentary supremacy in these matters, is rather a sad example. With a vote on a three-line Whip at the end of our debate, we are discussing the central area of politics—the management of the economy by Government, in so far as Governments have much purchase on those matters these days. We see clearly the extent to which the House has more pressing things to do. It is sad: I note that fact in passing.
I was fortunate enough to hear the opening speeches by my right hon. and learned Friend the Chancellor of the Exchequer and by the hon. Member for Dunfermline, East (Mr. Brown). My right hon. and learned Friend set out clearly and persuasively some of the ways in which this Government, under successive Chancellors, have pursued responsible policies, which have made an important positive difference to the way in which the economy performs.
However, I do not think that one should exaggerate that point any more because the theme of my intervention will be that national Governments and national authorities are a great deal less powerful these days than some people in the House and the country fondly believe. It is about time
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that we politicians were more honest with the general public in our assessment of these matters, so that expectations did not run ahead of what can reasonably be offered.
The Opposition amendment is a fairly clear example of Labour's recent habit of being long on new Labour words, but rather short on substantial explanation about how Labour would put those words into effect if it came to office. When the hon. Member for Dunfermline, East was challenged on those points by several of my hon. Friends, both from the Back Benches and from the Front Bench, he was not very forthcoming. Yet we have been there before. We have had that experience when intervening during the hon. Gentleman's speeches, so today was nothing new, I am sorry to say.
It is noticeable in the Labour amendment, for example, that there are some plausible and worthy words about regretting
"the widespread job insecurity throughout Britain".
That is right. All of us know from our constituencies the extent to which a range of people who never expected to experience job insecurity now feel it in their lives. The important point, which the hon. Member for Dunfermline, East missed—I wanted to intervene, but he felt unable to give way—is that job insecurity affects those who are now in jobs and who had always assumed that they would be in jobs until their retirement.
The hon. Member tried to answer the Chancellor's point about the community action programme, and he spoke about the various worthy measures that Governments have introduced from time to time to try to help the long-term unemployed back into work. That is, of course, important, but the hon. Gentleman wilfully missed the point. The aspect that should be addressed by Labour Front-Bench Members—I have yet to hear them do so—is how they would stand against the new global developments which are bringing the forces of competition and insecurity into play for a much wider range of people than was previously the case.
I suspect that the only nostrum that Labour would have in its locker if it got into office would be the old Labour policies of protectionism in one guise or another, which would breed a false sense of security in the minds of the electorate. I await with interest the winding-up speech, if he catches your eye, Madam Deputy Speaker, of the hon. Member for Oxford, East (Mr. Smith). I shall look for some flesh on the bones. Failing that, it is incumbent on Labour to explain what it would seek to do to allay the central psychological and political problem of our time.
As I have said, the time has come for both sides in our economic debate to level with the British people, much more than we have felt able to do hitherto, about the new realities of the global economy, and to draw out some of the policy implications of those realities. I shall spend a few moments touching on some of those realities, because I am not sure how widely understood they are.
I remind you, Madam Deputy Speaker, that the United Kingdom has about 1 per cent. of the world's population, but 3.5 per cent. of world gross domestic product. It could be said that we punch above our weight already. The proportion of gross national product that is internationally traded has risen from 20 per cent. for exports and 27 per cent. for imports in 1979 to 23 per cent. and 25 per cent. respectively in 1994, which is the last full year for which I have figures.

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The export of goods and services, at constant 1990 prices, has risen from 22 per cent. of GDP in 1979 to 27 per cent. in 1994. Capital flows in and out of the United Kingdom, about which much was made earlier in the debate, have grown as a percentage of GDP, from 1 per cent. for inflows and 3 per cent. for outflows in 1978, before we lifted exchange controls, which is the relevant benchmark, to 5 per cent. for inflows and 6 per cent. for outflows in 1994, the latest full year for which figures are available.
Investment income from abroad is important to those who worry about foreigners owning our industry. It is just as important to bear in mind the other side of the account, which is the extent to which we earn from wealth-generating assets elsewhere in the world. That process will not diminish, but will increase with the passage of time.
Our investment income from abroad has increased from 9 per cent. of GDP in 1979 to 12 per cent. in 1994, the latest full year for which figures are available. The value of our external assets, which generate some of that wealth, has grown from £72 billion in 1979, producing about £8 billion of foreign income, to £1,405 billion in 1994, producing £78 billion of foreign income. Again, the trend is obvious.
The importance of financial services, which help to generate wealth for the United Kingdom, hardly needs stating. Financial services produce £20 billion of net earnings every year for this country, and are responsible for 13 per cent. of total UK employment. That is a dramatic increase compared with the figures for 10 or 20 years ago. The whole House is well aware of the extent to which we attract the lion's share of foreign direct investment in the European Union from third countries, notably the United States, Japan and the so-called Asian tigers.
I have taken the trouble, in what is not an overcrowded debate, to weary you, Madam Deputy Speaker, with those factual points, because it is important to put them on record. People in the media may not be listening to our debate, but they may at least read our remarks in future, and take account of the way in which the world has changed, and the implications of that. I will highlight three implications which seem obvious to me and which should be obvious to hon. Members on both Front Benches if they are paying attention to what is going on in the world.
The first implication is that monetary policy now has to be conducted in a different framework. It must be used to validate market expectations rather than heroically to attempt to lead or resist market movements and market expectations. If it tries the latter, it will, as sure as eggs are eggs, end in tears, to mix metaphors.
Foreign exchange flows are now 10 times world GDP and 50 times world trade. A group of nations may try concerted intervention, with concerted interest rate movements. However, there are severe limitations on the real autonomy and the real capacity for action of any national monetary authority. We might as well recognise that, and it might as well be our starting point for monetary policy.
The second policy implication is that fiscal policy needs to err on the side of prudence to earn the confidence of the financial markets. There have been many examples in the past 10 or 20 years of the way in which fiscal fecklessness is punished swiftly.
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The two obvious examples are the Labour Government's experience from 1974 to 1976 and the Mitterrand Government's experience from 1981 to 1983. In each case, a socialist or left-inclined Government sought to make a dash for growth, thought they could defy the laws of international economic gravity, and then suffered grievous consequences. Under the Labour Government, we had some of the largest and most dramatic cuts in public expenditure in any one year of the post-war period. In France, there was a total U-turn and a reversal of policy.
Given that both monetary and fiscal policies are severely constrained by those facts—they are not fiction—one is driven ineluctably to put much greater weight, quite rightly, on microeconomic and supply side policies. That is the new area in which Governments can make a difference, and if only one point in my speech lodges in the minds of my right hon. and hon. Friends tonight, I hope it will be that.
The approach to supply side policy must be broadly and imaginatively defined. The hon. Member for Gordon (Mr. Bruce) was right to talk about investment in physical capital and in public and private infrastructure, and investment in human capital is at the core of the areas of consensus between the Government and the Opposition. Such investment is important—the fact that we happen to agree on it makes it no less so—and it must be sustained for a long period to bear fruit.
The phrase "supply side policy" must be defined more broadly. In this, we can learn from the continent, where they know that, in a world of highly mobile capital and high net worth individuals, one must attract to one's shores, and then retain, people who could easily take their energy, efforts and wealth-creating abilities elsewhere. France recognised long ago that, to sustain the growth points in various parts of the country—Montpelier, Nancy, Grenoble and Rennes, to name a few—investment in higher education and even in culture was needed to make those centres more attractive to the people who wanted to invest and lead their lives there.
On supply side policies, one must look across the spectrum of government. It is not just a matter for the Department of Trade and Industry, although that Department is obviously important. It is not just a matter of deregulation, although that must constantly be carried out—particularly when it is borne in mind that Brussels may attempt to gold-plate regulations.
I believe that, if my right hon. and hon. Friends were to pay the greatest attention to supply side policies during the remainder of this Parliament and the whole of the next—during which I confidently expect that we will still be in government—it would greatly benefit our people. It would put more people back to work and generate the wealth that would allow us to finance the public services—something we all want.
6.11 pm
Mr. Barry Sheerman: The powerful oration of the hon. Member for Carshalton and Wallington (Mr. Forman) on supply side economics and much else could have been his curtain-raiser before joining us on the Opposition Benches. The only part of his speech that rang a little hollow was his mock confidence that he will still sit on the Government Benches after the next election.
I agree with the hon. Gentleman that, too often in the House, we make speeches of the yah-boo variety, and even the best speeches contain an element of that to

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maintain one's party and political credibility. When we accept the global dimensions of our problems, however, there is some convergence of party policy—although we do not like to admit that in public too often. It does us harm as Members to pretend that the Opposition are totally opposed to everything that the Government do and that the Government are opposed to every policy initiative that we take, and part of my speech will be on that theme. I intend to refer to a mixture of matters, some of which the hon. Gentleman might agree with, and others—some good party political stuff—that am I sure he will not.
There is no better example of our oppositionist debates in the House than our debates on the economy. That is not surprising, because the Government's handling of the economy is at the heart of our responsibilities as politicians. Our wealth-creating capacity and ability as a nation, both now and in the future, are central to our welfare. We must understand not only the present, but how economic policies have developed in this century—particularly in the modern era, post-1945.
It is our duty also to scrutinise the present and to see how current policies are affecting the lives of our constituents. But we would be dishonest if we did not also look at the way in which the economy might develop in the next 20 to 25 years. As politicians and Members of Parliament, we must look forward to 2020 and 2025 and try to see how wealth will be created in this country and how our constituents, and their children and grandchildren, will earn a living. That is our duty—to look at the past and learn lessons, fearlessly to scrutinise the present and to look carefully at how we can plan for the future.
Lord Healey, when he was Chancellor, said that the British economy was
"like a supertanker—it takes an awfully long time to turn it."
That supertanker is on a much longer journey, on a much broader ocean, than my noble Friend realised when he made that statement, and it will take any incoming Labour Government a long time to reposition that supertanker and rechart its direction. We shall inherit the Government's policies of the past 16 years, and it will take some time to eliminate the poorer polices and modify those that we find acceptable.
We deceive our constituents and delude ourselves by pretending that there are fundamental differences between the parties when, in truth, there is sometimes a convergence of policy. Of the three major aspects of policy of the post-war Labour Government, the one dealing with the economy—promoting full employment and influenced by Keynesianism—was borrowed from the Liberals; Keynes was a noted Liberal, as we all know. Although Labour built the notion of a health service that was free and open to all, the welfare state policy was based on the Beveridge report—Beveridge was another Liberal. We could say ruefully that the only one of the three policies that genuinely came from Labour was that on public ownership, which came from Morrison. I leave the House to judge which of the policies Labour was most successful in pursuing. I shall come back to that subject in a moment.
We have heard much today about the performance of the British economy in terms of international rankings, and I do not want to be one of those saying that we have slipped from 13th to 18th in the world prosperity league—enough hon. Members have done so, and there is sufficient
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evidence that there are worrying aspects of our economy's recent performance. The Chancellor of the Exchequer speaks as if the Government were responsible only for the past three or four years and, within that period, had no real responsibility for the worst recession that this country has had for 50 years. That was all part of the past; something for which the Government were not responsible.
Conservative Members display a strange logic when speaking on the subject. They all know that the British economy led the European economy into recession, but Minister after Minister—and many central office-fuelled Back Benchers—now says, "Aren't we doing well? The German economy is going down the tubes, the French economy is in trouble and the Spanish are struggling." Do they not realise that those countries are not only our competitors but our main customers? If they are heading for another recession. We may follow them into recession this time, and we shall all end up the poorer. I do not understand that logic. We are all in the economy together. I thought that Europe was about helping each other, trying to make sure that all our economies are supportive of each other—albeit in a competitive framework—and that we all survive better, as a wealthier part of the globe, as a consequence. That was why I was disappointed with the Chancellor's speech, which never aimed to get beneath the surface of the argument.
To everyone's surprise, the Government asked for this debate on the economy. In a major debate on the economy, it is not good enough for the Chancellor's speech to be a big puff for the latest chairman of the Conservative party's ambition to get a feel-good factor going. We all know that the Chancellor came to the House to proclaim that very soon, we shall never have had it so good. It was a long but not a thoughtful speech. I have heard him make good speeches, but today's was superficial, dwelt on the surface of things and will give his reputation little lustre.
To return to our responsibilities for scrutinising the economy, after a cool and serious appraisal of the past, present and future, the next step is to find ways of tackling our weaknesses and building on our strengths. We heard little of that from the Government. The way to do it is by spreading best practice and learning from our best competitors, wherever they are in the world. We cannot consider only one model, such as that which was always rammed down our throats when people said that we would never be as good as the Germans and that we must copy them or the Swedes. We must always seek the very best practices.
The competitive edge in the world has shifted from Europe to other countries; it has remained to a remarkable degree in the United States, which is still a very competitive, active and efficient economy. In the fashion for looking at the little tigers, the big tiger and other best practice, we sometimes neglect the economy across the Atlantic, which, by all criteria, is still doing pretty well. It is not without problems, but no economy is without those.
There is no excuse for not tackling the inability of our manufacturing industry to do better. I intervened on the Chancellor in the most worrying part of his speech, when he glossed over the period under Baroness Thatcher, when we lost so much of our manufacturing capacity. In analysing what we have to do now—not dwelling in the past, but asking how we get it right—one of the problems

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for any politician is tackling the base from which we have to work. How big is our manufacturing sector? It is perilously close to, or just under, 20 per cent.—one fifth of our gross domestic product.
The Chief Secretary to the Treasury (Mr. William Waldegrave): The hon. Gentleman is making an interesting and thoughtful speech. He told us to look across the Atlantic. It is wise not to forget that great economy and its success, but its proportion of manufacturing is comparable with ours. What lesson does he draw from that?
Mr. Sheerman: The United States economy is very different from ours. Many commentators would say that we must consider the whole of north America rather than only the United States. I would lump Mexico and Canada in with the United States if I were making such a comparison. The right hon. Gentleman makes a fair point.
Let us dwell on the other problem with getting our manufacturing capacity right. From all the comparisons with our competitors, it is clear that we do not have not enough medium-sized companies. There was a period in the 1980s when many more small enterprises were starting. Worryingly, few of them—not nearly enough—grew into more substantial enterprises. Some of our competitors, such as Germany, have had a capacity to grow small companies into medium-sized ones and some of those into large ones. It is a question not only of a critical mass but of the quality of the critical mass. That is also an answer to the point made by the Chief Secretary. It is the nature as well as the size of the critical mass that counts.
I invite the Chief Secretary to come to the parts of the country, such as that which I represent in West Yorkshire, the west midlands or parts of Scotland, where manufacturing industry is still alive and well in one sense. He should talk to manufacturers who believe that if, for example, the engineering industry in the west midlands or West Yorkshire goes down any further, the critical mass will be below that which is necessary to be able to compete internationally. It will no longer be possible to set up firms in those regions with the confidence that is given by the supply chains and supply relationships that make businesses viable and competitive.
The inability to move nimbly from our industrial base has inhibited our industrial situation over the past few years. I direct Ministers to the important problem—which was picked up well in Hamish McRae's recent book "The World in 2020"—of Britain's inability nimbly to move to new skills. The Chancellor did not deal with our inability to create and maintain a highly skilled work force that is competitive at every level with other countries.
We must prepare ourselves for the new structures and ways of working. We have all seen the literature on that problem. More and more enterprises are moving from hierarchical structures, with bosses at the top sending commands down a long chain, to working as teams with many more technically and scientifically qualified workers. Most experts suggest that we are ill-equipped to deal with that. Only last week, a group of hon. Members heard John Neill from Unipart talking about how he started running his enterprise in Oxford, which both the
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Chief Secretary and my hon. Friend the Member for Oxford, East (Mr. Smith) may know, with people with poor skills. Only by imaginative enterprise and management was he able to change dramatically the nature of those skills. Unipart is one of the few companies in this country that has reached such a level.
Time and again, we get our education priorities wrong and run education policies wrongly. After 17 years of Conservative government, we are still unable to deliver by the age of 16 competently trained and educated young people. The truth is that many of our schools fail our young people. If we fail to educate people before the age of 16, how much more expensive is it to repair the damage post-16? The priority must be to invest in our schools and high-quality teachers, and work with the profession as part of a team rather than as an alienated minority.
Secondly, there has been an amazing change in the further education sector. I was talking recently to the head of my local technical college, who explained that, under the new regime of funding from the Further Education Funding Council, the courses that are being threatened with funding cuts are the day release courses, those for training highly skilled people, the courses that used to supplement apprenticeships and the new apprenticeships to supplement so much of the skilled work force in engineering and many other industries. In the further education sector, the old technical colleges are the institutions that are most in danger.
We heard not one word from the Chancellor about how our universities can transform the British economy. I am one who believes that we are not nearly achieving our full potential—we are using only about 40 per cent. of the potential of higher education—and the full potential of the 100-plus universities to transform the regional economies and our national economy. At a time when we need that university input so much, we have hardly touched that potential.
Look at the successes of Professor Bhaticharia and the initiatives at Warwick, and at what has happened in Salford, as well as at the older universities such as Cambridge. Best practice shows how, in partnership with their local communities and with an entrepreneurial spirit, the universities can transform the British economy. In terms of knowledge-led innovation, the universities will be the secret of so much of our success. Our international competitors know that, so why have the Government consistently cut funding to higher education, which impacts on the quality of the work there?
To give a reasonably balanced view, I must admit that I welcome the fact that about 30 per cent. of the population now goes to university—when I and many other hon. Members went, the figure was only 3 per cent. That increase must be applauded, and I shall not gainsay that. Underlying that improvement, however, staff-student ratios, investment in equipment and buildings and the pay of the people whom we ask to teach and to do research in our universities are at such a poor level as to have a worrying effect on the future quality and effort of the sector.
How could the Chancellor not have alluded to that problem, when his Budget sliced another 7 per cent. off our university sector? I sympathised greatly with the vice-chancellors when they said that a capitation of £300 per student was the only response. Hon. Members on both sides of the House had better come to terms with

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the fact that we must get the funding of higher education right. I know that the Opposition are working on it and trying to get it right. I must tell the Opposition Front Bench—I shall say it again in other circumstances—that we must make some pretty unpleasant decisions in the education funding world to get it right.
All the evidence shows that those who go through higher education get all the best things in life—they get more training once they have their degree, as well as a higher quality of life and higher salaries. If I were in charge—I am not, Mr. Deputy Speaker—I would put the money in at the other end, especially into skills training for the 14 to 19-year-olds. That is the age that seems to be so crucial to our performance as an economy.
Finally, I must mention the notion of a stakeholding economy—a concept that is dear to my heart, but which raises some interesting responses from Conservative Members every time I mention it. The Chancellor referred to that notion in passing and seemed to deride it, which seems strange when one considers its history. One does not have to go that far back—not back to the diggers and the levellers, who did talk about stakeholding in a very real way.
I was trying to track down where the notion came from. I thought that it was from the khaki election, just after the first world war, when Lloyd George, I think, said that three acres and a cow was every man's right—it was every man's right to have a stake in his country—which was stakeholding with a vengeance. I understand from the Library, however, that it goes back to 1885 and beyond, so it was not vintage Lloyd George.
In recent years, the concept of stakeholding has come, not from politicians, but from the corporate sector—from companies, managers and the heads of the most successful international corporations. It comes from people who say and have been saying for many years that, unless we have stakeholders in this enterprise, we shall not be able to compete with the international competition—the very best in the world—as we shall not be using the full potential of all our employees, including the employees of our suppliers, and of the other stakeholders.
Basically, there are five participants in the process. They are the employees, the managers, the shareholders, the supplying companies—the supply chain, which is made up of those who supply the larger companies, which then go on to supply someone else, is much underrated in this country—and the local community. All are important. Working together, they can assure the real efficiency of a company and an economy.
What is wrong with the Leader of the Opposition using a concept intelligently and realising that, just as we cannot have an internationally competitive company without stakeholding, we cannot have an internationally competitive country without it? Stakeholding makes us corporately and competitively efficient as an economy, but it also makes us efficient in terms of delivering the good things in life to our constituents and citizens. Surely it is worth exploring and working on that concept, and understanding it better. That is worth saying, and valuable.
What is wrong? Is it that the Prime Minister did not say it first? Is it that someone in Conservative central office or at No. 10 has been working on stakeholding for a long time and that, suddenly, the rug was pulled from under him? I suspect so because, on the one hand, the Prime
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Minister says that it is a ridiculous notion, but on the other, he seems to applaud it. One never knows where he is coming from.
We had hardly got into the debate when there was some to-ing and fro-ing on the subject of Europe. Primarily, it was a debate within the Conservative party, rather than between the Government and the Opposition—our debates on Europe were sorted out a long time ago. That debate seems be continuing fervently and at a pretty high temperature among Conservative Members.
Let me make one final plea. Any discussion of the economy must include Europe. Many of us support Europe because we believe that it will benefit our constituents and Britain's economic health. We care about Europe, so we are often painted into a corner. However, the fact that we are positive about Europe does not mean that we applaud everything about it. Those of us who are pro-European are often called upon to defend the iniquitous common agricultural policy and the ghastly way in which Europe is executive-driven, with no proper legislative check by domestic national Parliaments or the European Parliament. Those deficiencies must be addressed.
I was encouraged by the Confederation of British Industry calling for an intelligent, rational dialogue in Europe, which, according to the director general, should be based on
logic and facts rather than emotion and slogans".
According to press reports, the CBI seems to be fed up with the Conservative party in terms of emotion and slogans about the European Union. I hope that the CBI will look at the logic and facts and not just at the emotions and slogans surrounding the social chapter. Many members of the CBI have not scrutinised the social chapter or its implications.
The future of Europe will change our economy, whether or not we debate endlessly European monetary union. In the run-up to the intergovernmental conference, we must raise the level of the debate, learn from the CBI and begin a rational, pragmatic debate about whether EMU will assist the European economies, and our economy in particular, and whether we shall benefit from the changes that will be discussed at the IGC. We need to talk about the facts, not the myths of European membership. I end my remarks with the faint and vague hope that we can have a positive debate on Europe.
6.41 pm
Mr. Nigel Evans: It is always good to follow the hon. Member for Huddersfield (Mr. Sheerman). It is a little known fact that he taught me politics at Swansea university. His influence is demonstrated by the fact that I am standing here and he is sitting over there. It is good to be here after an excellent weekend, in which the socialists were kicked out of Australia and Spain. As I cannot believe that the good people of Australia and Spain are more intelligent than the good people of Britain, no doubt that trend will continue here after the next election.
As my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) said in his excellent speech, it is a shame that so few Members are here for today's important debate. It represents a useful opportunity to reflect on the Government's policies and—if we can

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wrestle them from Opposition Members—those of the Opposition to ensure that Britain continues on the successful route that it has followed for the past 16 years.
The debate gives me the opportunity to dwell on the fact that we have experienced 15 consecutive quarters of growth. We are selling more abroad than ever before and we export more per head than Japan. Who would have envisaged that 15 or 16 years ago? Inward investment in Britain was a record in 1994–95, with 434 new projects creating some 36,000 new jobs and securing more than 51,000 existing jobs. Britain attracts 40 per cent. of investment from the United States and Japan. We are second only to the United States as a beneficiary of inward investment.
I find it difficult to understand the xenophobic approach of those who say that it is dreadful that foreign companies have bought into British industry. I do not consider that to be a problem, so long as there is free interchange between industries. If British investors can invest abroad, it is only right that foreign investors should be able to invest in Britain.
I should also mention the standard of living in Britain. A married couple on average earnings with two children have seen their income and quality of life increase by more than 40 per cent. in real terms since 1979. It is the Government's stated aim to double the living standards of people in Britain in the next 25 years. Our policy is not boom and bust, but sustained economic development that will benefit everyone.
We need to develop policies that will help British businesses. The Opposition are not content that the red flag should fly above Parliament and the House of Commons; they also want it flying above Buckingham palace. The Leader of the Opposition should get a grip on some of his colleagues and tell them to start concentrating on the issues that concern the British people and the policies that they want, which certainly do not involve the abolition of the monarchy. He should tell his red rebels to concentrate on the issues that the Government are confronting.
We need to consider how we can help our businesses, particularly small businesses. I am vice chairman of the Small Business Bureau. More than 345,000 new businesses were created in the last nine months of 1995. They look to the Government to cut red tape so that bureaucracy—whether it is from Europe, Whitehall or the town hall—is restricted to that which is necessary, and to ensure that Britain remains as competitive as possible. We are competing not only with the rest of Europe, but with the Asian tiger economies, which are expanding significantly and which we ignore at our peril. We must ensure that Britain is economically viable and can compete with those new, strong economies.
I am extremely interested in deregulation and I was on the Standing Committee that considered the Deregulation and Contracting Out Act 1994. Those in industry who are following the debate or who will avidly read Hansard tomorrow and may be aware of any rules or regulations that they believe are not essential or are hampering their businesses should bring them to the notice of the Department of Trade and Industry so that, if possible, they can be scrapped. The last thing that businesses want is on-costs produced by rules and regulations that are of no benefit to employees or customers. We should scrap unnecessary rules and regulations as quickly as possible.
Mr. Jim Cunningham: Given what the hon. Gentleman has just said, does he agree that the Government should take another look at the business rate, particularly its effect on the small shopkeeper?
Mr. Evans: I remember not so long ago, when we had not the unified business rate but the old rating system. I was a county councillor and business men used to troop into West Glamorgan county council offices and plead with councillors to restrain their spending so that costs would not be heaped on businesses that operated on tight margins. As it was a good, socialist-run county council, the councillors listened carefully and ignored them. Up went the costs and the businesses were penalised. The unified business rate is a massive improvement on the old rates. At least businesses can now predict their rates instead of being at the whim and pleasure of socialist local authorities.
So that our businesses remain competitive, we need to ensure that inflation remains low. We have heard much about inflation today. It is easy to forget past inflation levels, but I shall say more about that later. We welcome the fact that inflation is approaching 2.8 per cent. and that it has been at a sustainable level for so long. We need competitive, low interest rates and they are now running at 6.25 per cent. The 0.25 per cent cut on 18 January was extremely welcome and I look forward to further cuts when possible. That will help businesses, particularly those that must borrow money to reinvest in their companies to remain competitive.
There is a knock-on effect also on mortgage rates. The Chancellor mentioned the families who have benefited to the tune of £150 per month since 1990. Much of that money will find its way back into the economy. Low, competitive interest rates coupled with low mortgage rates will boost the country's economy.
Inheritance tax reform was vital to allow small family businesses to retain money to spend as they choose. The threshold for inheritance tax was increased from £154,000 to £200,000 in the Budget and I hope that the tax will soon be scrapped completely. Families have enough to contend with when they lose someone near and dear to them without the added misery of inheritance tax. I hope that capital gains tax will be re-examined too.
Strikes are an important aspect of business welfare, and they are now at their lowest level in more than 100 years. That is extremely welcome. Low income tax is also vital. A new rate of 20 per cent. has been introduced and the higher rate of income tax has been reduced from 83 per cent. to 40 per cent. Some hon. Members may remember when income tax was 83 per cent. and 98 per cent. of annual income: we must never forget those days.
Corporation tax has been reduced from 52 per cent. to 33 per cent. It has decreased from 40 per cent. to 25 per cent. for smaller companies—and it will drop further to 24 per cent. later this year. Those moves are very welcome. When the Chancellor announced the 1 p reduction in the basic rate of income tax, the Liberals—none of whom is in the Chamber—voted against that measure and Labour Members sat on their hands, as they do on many issues these days. We must reduce income tax to the lowest level possible and allow people to retain and to spend their own money.
The Government's stated intention is to reduce expenditure to below 40 per cent. of gross domestic product. That aim must not be confused with reducing

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expenditure on essential services, because that will not occur. That expenditure will be met by examining present expenditure patterns and through economic growth. This year's Budget announced increased expenditure for education of £878 million and for health of £1.3 billion.
The Government announced that 5,000 extra police officers will be on the beat and that 10,000 closed circuit television cameras will be installed. We are spending money on essential services while cutting, as a result of growth, the amount that we spend as a percentage of GDP. We must create the conditions that allow businesses to flourish and to expand. Industry must be able to invest confidently in the British economy, sure in the knowledge of seeing a return on that investment.
Businesses must be extremely worried about the threat posed by a future Labour Government. I shall refer to some important issues on which we are not receiving straight answers from the Opposition. The first is the social chapter and the on-costs and extra bureaucracy that businesses would have to bear if we signed up to it. We read in the newspapers that the Labour party is rethinking some of the clauses in the social chapter. Labour Members may like to comment on that during the debate. Is Labour prepared to sign up to everything in the social chapter? I get the impression that the Opposition are so wedded to everything that comes out of Brussels these days that they are prepared to sign the social chapter to make it look as though they are very communautaire.
Mr. James Couchman: Perhaps my hon. Friend heard the interview with the hon. Member for Streatham (Mr. Hill) on the radio this afternoon, in which he said that the social chapter is about terms and conditions of work. However, the hon. Member for Livingston (Mr. Cook) says that the social chapter contains only one condition about works councils. It is very curious that those two hon. Members do not glean the same story from the same hymn sheet.
Mr. Evans: I am grateful to my hon. Friend for making that point. There is much more to the social chapter than meets the eye, and no doubt Labour Members will tell the public as little about it as possible so that they do not frighten the children. The social chapter contains many measures that the European Community will want to introduce—no doubt under the guise of health and safety or by declaring that it will benefit all the people of Europe. However, the tiger economies of Asia do not face the same on-costs and, therefore, we shall find it extremely difficult to compete for export markets. We must be careful when deciding which of Brussels' rules and regulations to accept—whether or not they are in the social chapter.
The second issue is the minimum wage. The Opposition's position on that is extremely shady.
Mr. Robert Ainsworth: Shady?
Mr. Evans: Yes. Opposition Members refuse to say at what wage level it would be introduced. The right hon. Member for Kingston upon Hull, East (Mr. Prescott) said that, if a minimum wage were introduced, there would be a jobs shake-out in the economy. I do not see how that view balances with that of other Labour Members who
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say that they care about unemployment and that they want it to decrease. However, at the same time the Opposition are prepared to introduce a minimum wage, which would result in a shake-out of jobs in the economy and lead to an increase in the number of unemployed in this country.
I am totally opposed to the concept of a minimum wage. It is estimated that, if it were introduced at £4.15, more than 1 million jobs would be lost. That would mean massive increases in the social security costs and other add-on costs that taxpayers would have to meet. While the minimum wage sounds fine in theory, in practice it would be devastating for jobs—not only in the north-west, which I represent, but in the tourist and industrial areas of this country.
I do not believe that the Labour party has a correct inflation policy or target. We forget at our peril what occurred when the last Labour Government allowed inflation to rip in this country—it was 27 per cent. at one point, and averaged 15 per cent. I run a small retail business in Swansea and I can remember wholesale prices on some goods changing regularly—perhaps twice a week—because inflation was running so high.
Pensioners on fixed incomes who had put a little aside for their old age found it very tough: they saw their savings cut in half in four years. Their pensions did not keep up with the rising rate of inflation and they suffered greatly. Their Christmas bonuses were stopped twice by that caring Labour Government.
Mr. David Shaw: Does my hon. Friend recall the position of private pension funds, particularly occupational pension funds, under the last Labour Government? Is he aware that the Conservative Government allocated £1 billion to the British Rail pension fund to meet the deficit that Labour left behind? Investments performed so badly in many pension funds during the 1970s that most were in deficit when the Conservatives took office. People's money was not safe in private pension funds at that time.
Mr. Evans: My hon. Friend makes an extremely valid point. Far more people have private pensions these days. Labour Members make much of the dreadful profits that industries—particularly the former nationalised industries—are making. However, they do not take account of the fact that many people rely on those industries to make a profit so that they can pay for their pensions later. It is vital that we do not forget that and I am grateful that my hon. Friend has raised that issue.
I wish to comment about the relationship between the Labour party and the trade unions. Many Labour Members, including all shadow Front Benchers, are sponsored by trade unions and the unions have half a say at the Labour party conference. Because the Government have introduced trade union reforms to ensure that the trade union barons do not dictate any longer to employees in industry, we now have good industrial relations.
What is the big message from the Labour party on the future of the economy? Is it the stakeholding economy? I cannot believe that that is the big message that the right hon. Member for Sedgefield (Mr. Blair) let slip out in Singapore. I cannot believe that that soundbite policy is the big message. What is a stakeholder? What is the stakeholding economy? I remember that back between 1974 and 1979, and before, one could say that everyone

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was a stakeholder in all the nationalised industries. Those industries lost £50 million every week and taxpayers had to put their hands in their pockets and pay out for those great industries in which they were stakeholders.
Now what has happened? Those industries have been privatised. They are far more profitable and they are providing far better levels of service, in the main, than before. They are now contributing £50 million from their profits to the taxpayers. That is the sort of stakeholding that we want to see and that is what is happening now—thanks to the policies that have been introduced by the Government.
We also now have 10 million shareholders who invest directly in industry. We have also heard that some of the trade unions, through their pension funds, invest in newly nationalised industries, because there is a good rate of return for their members.
I cannot believe that stakeholding is the great idea from the right hon. Member for Sedgefield, but it would be an opportunity for the Labour party to sidle up to its friends in the trade union movement and give them a greater say in how industry is run. I cannot see how that will be of any benefit to industry.
In a speech to the Institute for Public Policy Research in London on 29 February 1996—not that long ago—John Monks, the general secretary of the Trades Union Congress, explained that a stakeholding economy would mean more power for the trade unions. He called for fundamental changes to company law that would lead to
"a new industrial relations settlement … A start would be a change in Company Law to widen the obligations of directors and require them to take into account the interests of the different stakeholder groups."
Mr. Monks called for "independent voices" to be appointed to company boards, including
"suppliers, the community and employees."
In a crucial passage, he explained that giving extra representation to employees would, in practice, mean extra influence for union bosses:
"employees come together collectively through trade unions. An employee stakeholder interest cannot therefore be expressed unless employees have the right to express their collective views."
There we have it, from the mouth of John Monks. The stakeholder economy would mean a transference of power from the Labour party to the trade unions, which would have a greater say in how industry was run.
We do not need to look back any further than to the years between 1974 and 1979. We do not want to revisit those days. The hon. Member for Huddersfield said that we should always remember the past, but he surely did not mean 1974–79. We should remember the past. Last year, we lost only 278,000 days through strikes, yet in 1979 we lost 29 million days. Those who cannot remember what those days were like have only to refer to the situation in France a few weeks ago.
Mr. Couchman: Does my hon. Friend remember the great stakeholder of the 1978–79 winter of discontent, one Jamie Morris? He was a hospital porter who decided which patients should be treated, whether they had cancer or a more trivial illness. That was an example of stakeholding and the Labour party's relationship with the trade unions.
Mr. Evans: I remember a trade union official making those decisions, but I did not know that his name was
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Jamie Morris. I also remember that if he made the wrong decision and the people died, they could not be buried because another trade union had closed all the cemeteries. Those days were wretched and miserable.
We saw glimpses of the past in France recently in the stoppages. We saw how ugly the scenes were. That is what it was like in Britain in 1974–79 and that is what it would be like again if we allowed a massive transference of power back to the trade unions. Industry now has reliability. Industrialists who produce goods want to know that those goods can be produced on time and at the right price. They also want to know that those goods will be transported so that they can be sold. Industry has changed so much that industrialists know that they now have predictability and that when goods have been produced they will get to the customers. That is what we need. Trade union reform as envisaged in the stakeholding economy is the last thing we want.
We have been successful for the past 28 months with falling unemployment. Unemployment has risen in many other European countries, especially in Germany, which has more than 4 million unemployed, and in France, which has more than 3 million unemployed. Spain has some of the highest levels of youth unemployment in Europe. It is no wonder that Felipe Gonzalez was shown the door yesterday. We have got unemployment down to 7.9 per cent. and it is still falling.
It is appropriate to send our congratulations to all those people in the employment exchanges in our constituencies who do a tremendous job giving advice and help to people looking for work. I visited two branches recently, in Clitheroe and Preston, and congratulated them on doing a splendid job and thanked them for their work. I wish them well for the future. The last thing that we want to do to the people who are looking for work is to disadvantage them by introducing policies such as the minimum wage and the social chapter.
The Government are considering ways to assist people over a certain age who are looking for jobs. I wish the Government well on that and I hope that more can be done. Agism in the work force is the last thing that we need. There is a massive resource of people over 45 who, for whatever reason, have left their jobs and are looking for work. They have a great deal to offer industry and this country. It would be a great advantage if we could entice industry to reconsider some of the older people in the work force who want to contribute that little bit more. I know that a group is advising the Department for Education and Employment at the moment, and I hope that the Government will bring forward some initiatives that will give people over a certain age more hope and opportunities to rejoin the work force.
Europe has been mentioned a few times tonight and I am not going to let the subject pass. Ann Leslie wrote a splendid article in the Daily Mail last week about the situation in Germany. She spent a few days over there. Germany used to be the power house of Europe, but the situation has changed dramatically and Britain is now the power house and the enterprise centre of Europe. That will continue, but Germany has stalled because of the on-costs. I do not know whether hon. Members realise that it costs one and a half to two and a half times more in social on-costs to employ somebody in Germany. It costs three times more in non-labour costs to employ somebody in France. Industries cannot afford those costs. I wish that some of the politicians in Europe would let go

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of their fixation about a greater Europe and ensure that the single market, which we have now, worked more effectively. We need more improvements in the general agreement on tariffs and trade and in world trade, not a fortress Europe that will not help anybody. Politicians in Europe should also let go of their fixation with the single currency, which I do not believe will occur in 1999. Focusing attention on the single currency will not help the situation.
Mr. Geoffrey Clifton-Brown: Does my hon. Friend agree that non-wage labour costs are becoming increasingly important to industry? Is he aware that P and O Ferries is asking the French Government for subsidies to keep French people employed—
Mr. David Shaw: Does my hon. Friend mean Brittany Ferries?
Mr. Clifton-Brown: Yes. I am grateful.
Is my hon. Friend the Member for Ribble Valley (Mr. Evans) aware that Brittany Ferries is asking the French Government for subsidies so that it might compete with P and O Ferries in Britain, which has no subsidies and whose non-wage labour costs are half those in France?
Mr. Evans: I am grateful to my hon. Friend for intervening. Subsidies are the last things with which we should become involved. That route would lead to the paying of subsidies to industries throughout Europe, which would lead in turn to a terrible stranglehold. How will that help us in competing with other countries, such as the United States, and the tiger economies of Asia?
Mr. Jim Cunningham: The hon. Gentleman argues against subsidies. May I take it that he is opposed to the Government's assistance through Europe to Coventry Jaguar? May I have an answer?
Mr. Evans: No. That is a specific point. We were looking for inward investment. We wanted to ensure that it was retained in the United Kingdom.
Mr. Cunningham: Answer a straight question.
Mr. Evans: I am. We wanted to ensure that there was investment in Jaguar. I visited the Jaguar plant in Coventry not so long ago. It does splendid work, exporting more than 80 per cent. of its products. We have been able to retain Jaguar production in this country. I support Jaguar's retention here. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) wishes to ensure that subsidies are not paid because of non-essential labour costs. That form of subsidy will not help Brittany Ferries, the French Government, the French people or Europe.
Mr. Couchman: Does my hon. Friend agree that there is a vast difference between assisting people inwardly to invest in the United Kingdom—the Taiwanese are investing in Scotland and Nissan in Sunderland, Siemens is to become involved and there has been investment in Northern Ireland—through capital grant, and Credit
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Lyonnais or Brittany Ferries looking for revenue support, support for day-to-day running costs, because of high on-costs as a result of the social chapter?
Mr. Evans: Absolutely. I was trying to make that very point. My hon. Friend did so far more eloquently.
If we take the route of the social chapter and accept the addition of massive non-wage labour costs to the costs already facing industry in this country and in the rest of Europe, we shall be paying subsidies to companies from the rest of the world to come and set up in the United Kingdom. I hope that these issues will be taken up in the White Paper that is shortly to be published. Surely we wish to take Europe forward in the manner in which the United Kingdom is being taken forward so that the rest of Europe may take on board the policies that we have introduced, bearing in mind how successful we have been in reducing unemployment and attracting inward investment. If the rest of Europe followed our policies, its unemployment would fall too.
Like the hon. Member for Huddersfield, I am interested in manufacturing. British Aerospace is in my constituency. I cannot think of a finer example of the best of manufacturing industry. It represents all the necessary skills. Its work force received extensive training. It has a superb director of education in Professor Steve Grigg, who is looking at investing in local schools. Schools in my constituency have been beneficiaries of some of the money that has been made available through technology associations and through computers going into some primary schools.
British Aerospace is looking to expand education through a university for life so that it can attract some 15, 16, and 17-year-olds to enter university to obtain the necessary and right skills that will enable them to take employment with the company. The hon. Member for Huddersfield talked about training, and it is indeed vital that we achieve the right training. If we fail in that, the country will be the loser.
British Aerospace is leading the way. I hope that other industries will examine carefully what it is doing and join it or follow suit. The company operates in a competitive industry, especially with the Americans coming in hard. The tiger economies of Asia are considering how they can become involved in producing aircraft. The future will be extremely competitive. As long as British Aerospace invests in its work force, its plants and within its industry, I believe that it will succeed. We have seen that with the research and development that has gone into the European fighter aircraft. That has been achieved in collaboration with other European countries, and I hope that that is how we shall continue to go forward.
I read in the Financial Times over the weekend that Dick Evans of British Aerospace is talking about the European aerospace industry, in which we collaborate in several areas. That is necessary to ensure that our aerospace industry remains competitive in Europe.
Mr. Couchman: My constituency, too, benefits greatly from the arms manufacturing business. The House will be aware that the avionics division of GEC is an important high-tech company that manufactures in my constituency. One of the peace dividends for the company has been a downturn in business, which has led to a reduction in the work force from 7,000 to 3,500 over a short period. Does

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my hon. Friend agree that some of the rubbish that was uttered during the debate on the Scott report last week will have done our arms manufacturers no good, especially that which we heard from Opposition Members? It will have done a great deal of damage to our position as the No. 2 arms supplier in the world.
Mr. Evans: Yes, that is so. There are those who assume that big defence suppliers, such as British Aerospace and GEC, can weather any storm. That is wrong. At the same time, we must give consideration to the many small suppliers of components to GEC and British Aerospace, for example, throughout the country. When GEC and British Aerospace are hit, component suppliers are hit as well. We must pay due regard to component manufacturers, which rely on larger companies' contracts.
A fine example of the attitude of some Opposition Members is that some Labour Members have signed two early-day motions calling for the contract for the supply of Hawks to Indonesia to be stopped. That would cause the loss of hundreds of jobs in my constituency. The employees involved rely on Hawks being exported. We are assured that the aircraft are being used for defensive purposes and not against the people of East Timor. If they were being used to attack those people, I would join in the chorus and say that Hawks should not be exported.
What attitude do Labour Members take to defence manufacturing in the United Kingdom? Do they support it or do they not? As usual, questions remain unanswered. I suspect that the one that I have just posed will remain in that category.
It is not only British Aerospace in my constituency in which I take pride. I am proud of smaller industries as well, including a company called Ultraframe. Since I became a Member of this place I have seen its work force grow from 200 to more than 500. I shall not take the credit for that. Economic conditions have been right for John Lancaster, the managing director. He has been able to invest. He has a good work force and he relies on local schools to supply him with employees, whom he trains. The company is selling its products throughout the country and exporting them as well.
We must ensure that the right policies are in place to help, not hinder, businesses. That does not mean that governments are good at running businesses because we have seen in the past that they are not. In many instances, however, we must ensure that the right conditions are put in place. At the same time we must get off the backs of businesses. We are doing that with the deregulation initiative. We are ensuring that we have low inflation, competitive interest rates and that we are able to attract inward investment. Manufacturing productivity is increasing. We are the enterprise centre of Europe. We want that to continue, and that will happen with a Conservative Government.
7.18 pm
Mr. Robert Sheldon: I apologise, Mr. Deputy Speaker, for having to leave the Chamber to attend a meeting of the Public Accounts Committee. It was an important meeting. We took
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evidence on the Overseas Development Administration and decided to visit the Court of Auditors in Luxembourg to examine how it is managing its affairs and whether we are satisfied with what it is doing. The Public Accounts Committee does not usually make overseas visits, but this is an exception. So many frauds are occurring in the Community that we felt it essential to make that start.
Starting in November last year, annual assurances have been given about the way in which funds are earmarked and spent, which gives us an opportunity to ensure that we have proper control over the way in which the Court of Auditors spends its money and investigates its affairs. That is why I was away for part of the debate.
We have infrequent debates on the economy. The reason for today's debate is that the Government believe that they have a good story to tell. There are some doubts about that. The Chancellor of the Exchequer talked about "trough to trough" and chose the period 1981 to 1983. Whenever the Government talk about improvements in the economy, they always seem to forget the crucial years 1979 to 1981. What happened in those years is emblazoned in my memory. I lost one third of the manufacturing industry in my town, but not because the companies were low tech or anything like that. Some were medium tech and some were high tech. As a result of the Government's attitude to monetarism—they believed in a $2.40 pound and a 17 per cent. interest rate—opportunities were diminished in my constituency.
My community was a prosperous one. The level of employment was higher than the regional average. Pay was higher even than the national average. We had a success story, following the decline of the cotton industry. I have never forgiven the Government for what they did in those two crucial years. One third of manufacturing industry was lost. Skilled engineers, who were supposed to be in short supply, were laid off from companies that will never again be available to us. The wealth that they could have created was also lost.
The current position—I pay tribute to the Chancellor of the Exchequer—is that inflation is satisfactory. Nobody can doubt that. Relations with the Bank of England are good. Great tribute must be paid to the Chancellor for the way in which he has dealt with the Bank of England. He has not been frightened of handling it and ensuring that his own views prevailed. Not every Chancellor of the Exchequer would have done that, although a few might have. He must be given credit for the way in which the minutes are now made available. What he cannot be given credit for is investment. Investment is bad, as is the balance of payments.
Since 1992, we have had a 24 per cent. devaluation of the pound against the deutschmark. Despite that, our balance of payments has been in the red ever since. After a devaluation, there is the J-curve effect. At the beginning, one will not gain much from it, but subsequently one does. It has been three and a half years since the devaluation and we should have seen the benefit to our balance of payments, but we have not. In the lifetime of this Government, we have seen a devaluation against the deutschmark of 40 per cent.
Despite North sea oil and the enormous advantages that it has brought, the Government have failed to get our balance of payments right. That is a most serious consequence. We are now finishing the trough and are on the way up. There will be more consumption. Does

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anybody believe that the balance of payments will improve as a result? Even the Red Book, which the Chancellor of the Exchequer produced, does not show such an improvement. Given the rise in consumption, there will be an even greater balance of payments deficit, which we have come to expect from the Government.
If we are at the bottom of the trough and still in deficit, I am afraid that, as we come out of it, we will be in even worse difficulty. When will we ever pay our way? The Chancellor of the Exchequer does not believe that investment is poor. In fact, the Deputy Prime Minister is trying to tell us that we do not need to invest so much because we have better management. He says that investment is good enough because of better management in industries. All I can say is that, five or 10 years ago, our investment was lower than that of almost all our industrial competitors. Did they get it wrong? Are we the only people who know how to do these things? I find that assumption astonishing.
The whole point about better management and investment is that they are not alternatives, but complementary. Decent and good management will want to invest. The failure to invest has been one of the serious consequences of this Government. I do not see how we will get our balance of payments into surplus, or at least into equilibrium, without investment in manufacturing industry. The importance of it is not so much that it creates jobs, because I do not think that we will get many jobs from investment or from the improvements and expenditure in manufacturing industry subsequently; one wants the investment to enrich the economy and to pay our way internationally so that we have the wealth to spend on housing, roads, education and the rest.
Those are the consequences of successful manufacturing industry. Faced with what the Deputy Prime Minister said in his references to manufacturing industry, I thought that I should make that quite clear. I hope that people will begin to understand the importance of manufacturing industry, as the hon. Member for Ribble Valley (Mr. Evans) does. Unfortunately, all too few of his colleagues do.
7.25 pm
Mr. James Couchman: I had not intended to speak in the debate. I saw the earlier exchanges between my right hon. and learned Friend the Chancellor and the hon. Member for Dunfermline, East (Mr. Brown) on the screen in my office while I was answering some of my constituency post.
During that exchange, the hon. Gentleman did his usual trick of selling the country short, which I regret he has done consistently as an Opposition spokesman on economic matters. He seems to think that that is the way to be considered a worthy alternative occupant of No. 11 Downing street. I can tell him otherwise, for I think that people will soon learn that the Labour party has very little to offer in the way of an economic policy.
The recession has been extremely difficult in my constituency. During the recession of the early 1980s, Chatham dockyard closed, throwing out 7,000 job opportunities and many manufacturers. There was very high unemployment—some 17.5 or 18 per cent. It was a time of great sadness in my constituency.
During the relatively prosperous years of the middle 1980s, unemployment gradually fell. New jobs were created. An excellent new industrial park—Gillingham
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business park—was formed, and prospered, under Grosvenor Developments, which is, perhaps, the best operator of business parks that I have come across. We also had the redevelopment of Chatham dockyard by English Partnerships, formerly English Estates.
English Partnerships is developing one of the biggest development areas in Europe. We are seeing quality development there. New jobs are coming, including 1,000 jobs for the major headquarters of an insurance company, Colonial Mutual Group. The scientific units of the Overseas Development Administration have come to us and a number of other significant employers have moved in to replace the old metal-bashing jobs that prevailed during the long period during which the Royal Navy occupied Chatham dockyard.
That development has been slower than we would have liked is undeniable, and the second recession, of the late 1980s and early 1990s, has been quite hard. It particularly hit the small businesses that were formed out of the dockyard closure. Often small, single-handed or two-handed businesses, they were formed with the redundancy money of people with metal skills who had worked for many years in the royal naval dockyard in Chatham. They went into business on their own account, perhaps making, as my hon. Friend the Member for Ribble Valley (Mr. Evans) suggested, things for GEC, which has been a superb backbone to the constituency in which I have worked for the past 12 years.
Because of the downturn in defence orders, GEC's work force has declined from 7,000 to 3,500. Unemployment in my area has again risen to too high a level—although it has now fallen to the national average of around 8 per cent.—and we look forward to continuing development of the old Chatham dockyard by English Partnerships.
One reason for our success in Gillingham has been the unique opportunity provided by the Japanese. Some hon. Members will know the "Shogun" story: an English sailor was shipwrecked in Japan, and founded the Japanese navy. My constituency, uniquely, is twinned with two Japanese cities, which has enabled us to exploit a relationship that has caused three second-line Japanese companies to site their European headquarters at Gillingham business park.
As my hon. Friend the Member for Ribble Valley said, however, those Japanese companies—along with American companies—would not have chosen to site their European headquarters in this country had it not been for the current benign regime for inward investment. It is obviously important that the Japanese speak English—and the Americans speak a form of English—but it is largely because we have a flexible and skilled work force, and have not lumbered ourselves with the same social on-costs as our German, French and other European Union partners, that we have secured 40 per cent. of inward investment.
As I said in my intervention on the speech of my hon. Friend the Member for Ribble Valley, inward investment is one of the most exciting imports to this country. Major German companies such as Siemens are locating here and big Japanese companies are siting their European headquarters here, as are Taiwanese companies. As a member of the all-party group on Taiwan, I have a close relationship with that country.
Opposition Members have denigrated the state of manufacturing industry. It is certain that too much of the industry was lost in the late 1970s and early 1980s, but it

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was not simply a case of monetarism, as was suggested by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I believe that that loss resulted from our profound economic weakness at the end of the 1970s, which led to a halving of the value of our money in the five years between 1974 and 1979, and the appalling strength and irresponsibility of the trade unions. All those factors brought our industry to its knees during that recession. They will not feature now, although I share the fear expressed by my hon. Friend the Member for Ribble Valley that, if trade union power is boosted again by some future Labour Administration, it could well drive us back to the weakness of 1979.
I am only too pleased to support what was said by my right hon. and learned Friend the Chancellor, who gave us an excellent rundown of the state of the economy. I am only sorry that the hon. Member for Dunfermline, East was so downbeat, and so denigrated our economic efforts.
7.33 pm
Mr. Paddy Tipping: I listened carefully to the Chancellor's speech, and noted with interest that, according to him, middle England's prospects were balmy and ambrosial. As I have the advantage of coming from the same county as the right hon. and learned Gentleman, I have the opportunity of seeing him play both at home and away; I also know what is going on in his own back yard. I should be very surprised if people in Nottingham—which, clearly, is part of middle England—accepted his claim that the prospects are rosy. Many of them visit the Chancellor's surgery, and they tell me that they have been well received; but they tell the Chancellor that, in tax terms, they feel worse off—in effect, £670 a year worse off—since the last general election.
Some of those people will also have noted that the tax-and-prices index rose by 3.7 per cent. in 1995, and that average earnings rose by only 3.25 per cent. In effect, living standards fell. Real personal disposable incomes also fell in the second and third quarters of 1995. It would be interesting to know the figures for the fourth quarter. My impression is that things are not rosy for taxpayers in Nottinghamshire, who look askance at the Chancellor's figures suggesting that they will be £800 a year better off as a result of the last Budget. They do not believe that, because it is unbelievable: it implies a growth rate of 3 per cent. and a wages increase of 4 per cent.
I note that the Chief Secretary to the Treasury has been present for most of the debate. Last month, he told the House that real incomes had fallen in 1995. Things are not balmy and rosy in Nottinghamshire now, and people know that they can expect another tax rise soon. Many local authorities are setting council taxes this week. The Chief Secretary has told us that he has worked on the assumption of an 8 per cent. rise nationally, but I can tell him that the rise in Nottinghamshire will be around 4 per cent.—still more than 50 per cent. the rate of inflation. I suspect that the average increase in council tax in England as a whole will be around 6 per cent., and it is likely to be about 15 per cent. in Scotland. The Government have taken measures today to try to mitigate the effects of that, but the fact remains that things are not rosy. People have less money in their pockets; their council taxes are to increase; and, worse, they are paying more and receiving less.
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Nottinghamshire county council set its budget last Thursday. It is to spend £12 million, or 3.4 per cent., more on education than is allowed by the Government's guideline, the standing spending assessment. In his Budget, and in the subsequent financial settlement for local authorities, the Chancellor boasted that Nottinghamshire would have an extra £18.5 million to spend on schools. Next year, the Labour-controlled council will spend an extra £25 million on education, but, despite that, school budgets are being cut by £5 million and 200 teaching jobs are at risk. The prospects are not rosy for those who live in Nottinghamshire.
People complain not just about the revenue costs of education, but about the capital costs. The way in which last November's Budget cut capital spending has not received enough publicity. The state of schools across the country can be described only as deplorable. Local authorities made bids for £1.9 billion to repair, refurbish and replace schools, and they received a borrowing allocation of £416 million.
At schools in rosy Nottinghamshire, there are outstanding repairs of £85 million. If the Chancellor cared to look in his backyard—his constituency of Rushcliffehe— would find that £6.8 million worth of repairs to schools are outstanding. At Rushcliffe comprehensive school—an excellent school, which is only 200 yd from his house—£1.5 million worth of repairs are outstanding.
We need to invest in education—in revenue and in capital terms—and in higher and further education. Education can drive the economy. I noted with interest that the Chancellor is a member of the court of Nottingham university, and that he has an honorary degree from there. Its capital spending has been reduced by 47 per cent. for next year, and the funding per student reduced by 28 per cent.
If the Chancellor took an interest in such matters, he would also know that capital funding for colleges of further education has been reduced by 70 per cent. We have to invest in higher and further education if we want to skill people for a new, changing and dynamic industry. We must provide new equipment and modern techniques and training methods, but the resources that have been made available do not do that.
Let us consider the rosy Nottinghamshire economy. Textiles and engineering are struggling, and the manufacturing base needs investment. There has been a lack of investment and, as the economic cycle picks up, they will face real problems.
Mr. John Sykes: Can the hon. Gentleman share with the House exactly how he thinks that the social chapter and the minimum wage will encourage investment for the hard-struck business men of this country?
Mr. Tipping: Above all, we must move from a low-skill and low self-esteem economy to one that invests in people, puts them at the cornerstone of our economic future and teaches them to adapt and work in teams. It should also teach them how to become enterprising and demonstrate that they can have a stake in the running of their country. That is the fundamental—
Mr. Sykes: Will the hon. Gentleman give way?
Mr. Tipping: No, I will not give way again.

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That is the fundamental difference. Many Opposition Members believe that investment in education and training is how to make progress—not through an unskilled and unrewarded labour force.
Mr. Nirj Joseph Deva: The hon. Gentleman said that he wants to move from a low-skill, low-wage economy to one which is high-skill, high-wage and highly productive. Those objectives are excellent, but how does he propose achieving them? It would be helpful if he would express not his aspirations but his policies.
Mr. Tipping: If the hon. Gentleman will restrain himself for a short while, I shall give him some concrete examples.
The recovery in Nottinghamshire was patchy. I should like to use this opportunity—while the President of the Board of Trade is in the Chamber—to talk a little about the Nottinghamshire coalfield and about coalfield communities in general. He will recall that, in 1980, there were 40,000 miners in Nottinghamshire. Today, there are fewer than 3,000. Privatisation has occurred, but the future is uncertain. He will know of the uncertainties that face investments in coal and the future of the Annesley colliery. He will know that Bilsthorpe colliery, which is one of RJB Mining's collieries, is due to close next year. He will know about the difficulties of Asfordby, a super-pit developed under British Coal, which may now never come into production. He will know of the challenge caused by the new contracts with the generators, which begin in 1998.
Mining is a very difficult industry. It has been in decline and it needs help. I have stressed the need for help, and I now ask for the help of the President of the Board of Trade in relation to another matter. This afternoon, there was a serious—perhaps fatal—accident at Thoresby colliery, in Nottinghamshire. The details about it are still coming through. It is the second serious accident at that colliery in the past five months. I ask the President of the Board of Trade to talk very seriously to the mines inspectorate, because people who work underground, and their families, are under pressure. I hope that he will ensure that there is a full investigation into the accident and that lessons are learnt from it so that the men who go underground, from whom we all benefit, will be more reassured about the future.
Given the scale of the rundown of the mining industry, it is important to consider what has happened in employment and unemployment in Nottinghamshire. Since October 1992, when the current Deputy Prime Minister announced the closure of the collieries, unemployment has fallen nationally by 17 per cent. In coalfield areas, the fall has been nowhere near that. Over the same period, in the Mansfield travel-to-work area, unemployment fell by only 7 per cent, and in the Worksop travel-to-work area unemployment fell hardly at all. A scenario is emerging of a greater gap between relatively affluent areas and areas of disadvantage.
I am not asking the President of the Board of Trade to spend extra money on mining areas. I ask him to do the following. First, I ask him to make an early announcement about the sale of British Coal Enterprise, which has brought jobs into the coalfield communities, and to ensure that successor organisations pick up its mantle and continue to develop those jobs.
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Secondly, I should be obliged if the right hon. Gentleman would carefully look at the difficulties over the transfer of some 80 sites from British Coal to English Partnerships. Discussions have been taking place about that for months, if not years, and the deal is still not done. I understand the issues in relation to liabilities and insuring against them, but those sites are essential to create new jobs in the area. I cannot understand why greater efforts have not been made to ensure that a deal is struck and that the sites are put to productive use.
I also want to speak about youth unemployment. The hon. Member for Brentford and Isleworth (Mr. Deva), who has left the Chamber, asked me how we can achieve objectives. One achievement would be to examine youth unemployment and to remedy it. The current scene can be described only as a shambles. In January this year, there were 619,982 young people out of work, of whom 136,000 had been out of work for more than a year. Four thousand of those people have been out of work for more than five years—or, put another way, they have probably never worked productively in their lives. It is important that those young people do not lose hope or represent a waste of talent. They represent an opportunity, and we should be using them. We should examine our approach and policies on young people.
I support in principle the modern apprenticeships scheme, which was launched on 1 April 1995. It should now have 60,000 young people in training.
Mr. Sykes: I am grateful to the hon. Gentleman for indulging me again. If he is so concerned about youth unemployment, how does he explain the fact that Spain's youth unemployment is running at 33 per cent. because of the social chapter, which I mentioned earlier, and the minimum wage? What will he say to young people in his surgery in years to come if the Labour Government gain power and impose on business the social chapter and the minimum wage, which will lead directly to the youth unemployment that he is complaining about?
Mr. Tipping: I would say to young people, "You have rights and responsibilities too." For 4,000 young people to be out of work for more than five years reflects badly not only on the economy, but on them. We must ensure that the cost of youth unemployment is worked out.
Sixty thousand modern apprentices should be in training; today, only 15,000 youngsters have gone into the modern apprenticeship scheme. That needs to be re-evaluated and relaunched. The real problem is that, for employers to take on a modern apprentice, they must commit to train them over three years. I understand that, because the economic position is hard to foresee, many employers are reluctant to enter into that commitment.
I should like the President of the Board of Trade to consider a report on youth unemployment that will be published this week by the training and enterprise councils' national body. It will say that 250,000 18 to 20-year-olds are out of work. One in eight of that age group is out of work, out of training and out of education. The cost to the state through benefit payments, crime and other factors is £350 million. What a waste of money. We should have new priorities and be working towards from-welfare-to-work schemes and putting those youngsters back into work to make them productive. That is the sort of programme that I want and it can come by recycling existing resources.

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It is important to put young people first, to train them to have high skills, to make them adaptable and enterprising and to give them the skills to work in a team. We should excite and enthuse them and consider getting them to work in the environment. I look forward to a revamped community action team scheme that considers environmental issues.
It is crazy that the home energy efficiency scheme has been cut by £31 million. A total of 200,000 fewer homes will not be insulated. We could have a scheme to insulate homes, to guard and enhance the environment, and to reduce carbon dioxide emissions, but, at the same time, to reduce bills and unemployment. We could create 50,000 jobs. Young people should be clearing derelict areas. In any former industrial area, there is plenty of work for young people.
Young people must have rights and responsibilities, We must stop the waste, recycle and refocus it and give it a higher priority. Over the centuries, miners have always wished better for their children than they have had. They and I believe that, for the first time for generations, their young children face a worse time than they do. Coming from a coalfield community, that is one of my concerns. That is no way to drive forward an economy. We must get young people into work. We must invest in them, in training, in education and, most important, in all our futures.
7.53 pm
Mr. David Shaw: I am pleased to be able to make a good-news speech. There can be no doubt that the amount of good news about the economy recently has been incredible. It has been completely transformed in a host of sectors. We are unquestionably out of a recession that has been tough, long, deep and worldwide, but we have come out of it in good shape.
We know that many changes are taking place in the labour market. They have contributed towards the so-called feel-good factor not being as good as one would like and as the recovery that we are experiencing would normally produce, but the reason is that the labour market is changing enormously, and the number of people in stable, long-term employment—as distinct from shorter-term employment—has changed.
That is a continuing change, with the labour market demanding more flexibility. Provided that the earnings and job creation are there, however, that is no reason why the country should not enjoy not only a period of sustained economic growth, but a sustained opportunity for people to accumulate savings, provide for their future, and create more personal wealth and assets for the future, which I and Conservative Members believe could be a prosperous future for our population.
That is being achieved by a sustained policy of keeping inflation at record low levels. At 2.9 per cent., it is at one of its lowest consistent levels for the past 40 years. Some evidence exists that it will continue at that level for a long time. It compares favourably with the inflation level when we came to office in 1979, when under Labour it averaged at about 15.5 per cent.
With low inflation comes reducing unemployment, which has been falling for about three years. Interest rates are very low—they are at some of the lowest levels in the post-war period. In some cases, they are the lowest levels for 50 years in terms of what business is able to borrow at.
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In the 1950s, when interest rates were consistently and over a long period at levels approaching today's, the margins at which banks required lending to take place were much higher than today. Today, many businesses are borrowing at just 1.5 per cent. over base rates. In the 1950s, when interest rates were at a similarly low level, businesses often had to borrow at 2, 3 and 4 per cent. above base rates, so the cost of borrowing money to British business is also at record low levels.

When we came into office in 1979, because inflation was so high, banks and savers required a higher rate of return on their money. The consequence was that, when Labour left office, British businesses were having to borrow at about 18 per cent.—a horrendous rate. Today, British business often borrows at 7 to 8 per cent. That is a tremendously improved position compared with Labour's term in office. It is also a good position compared with the Conservative Government's record over 16 years, and with the past 50 years.
I am delighted that the graphs and newspapers at the weekend showed that the number of house price sales has increased modestly. The increase is not massive, but we would not want that. It might be inflationary, and, for young people trying to buy homes, lead to the difficulties that occurred towards the end of the 1980s. We want to avoid the house price spiral of the 1980s. Surely the best way to do that is by having a much more stable economy than when we had uncontrolled growth—welcome though that growth was to some people. who often accumulated their first house and property.
The position is much improving. I hope that, under broadcasting laws, the media devotes as much time to the recovery as it did to the recession. Reporting success stories and some good news stories would be most welcome. British industry and British business has been transformed.
There are still one or two problems. East Kent, for better or for worse, is blessed with being close to France. The East Kent Initiative—a body that promotes east Kent—recently advertised a young people's job training scheme, under which those between the ages of 18 and 27 could get three months work experience in France, attend language schools and live with host families. They would not incur any expenditure, as they would receive a moderate income to cover their costs.
Last year, eight out of 10 young people who went on the scheme found work when they returned to the United Kingdom, directly as a result of expanding their skills and getting better training on the scheme. This year, the scheme has been advertised in the jobcentres of east Kent, where some 9,000 young people aged between 18 and 27 are registered as unemployed. Yet, until very recently, only one young person had applied to go on the scheme. That is incredible, when there are supposedly 9,000 young people unemployed. It is a wonderful work experience scheme, with a good record of success in getting young people into work, yet only one youngster applied—although I understand that a second has now done so.
Our competitive position, both in Europe and worldwide, is very good. The latest good news statistic, about which we should be crying from the rooftops to ensure that everyone is aware of it, is that Britain is now exporting more per head of population than Japan. That is another major achievement under a Conservative Government. The Opposition say that Britain is low on

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the prosperity league; they say that many countries, including Japan, are ahead of us. The reality is that, in many statistical areas, Britain is well ahead of Japan.
Mr. Sykes: Is it not much more expensive to employ a German than an Englishman; a Spaniard than an Englishman; or a Frenchman than an Englishman? Is my hon. Friend aware that, today, Hyundai announced its intention to invest £850 million in building a factory in Britain? Is that not a good example of why Britain is doing so well and why companies are queuing up to invest here? Of course, if the Opposition were in power, the position would be quite the reverse.
Mr. Shaw: My hon. Friend is absolutely right. Japanese, American and South Korean companies are queuing up to invest in this country. It is a great success story, because, as my hon. Friend said, there are higher unit labour costs in France, in Germany and in Spain—which also has the social chapter and the minimum wage.
Spain has just thrown out its Labour Government, as has Australia. High wage costs put people out of work. In France, when someone loses his job, he is unemployed for three years on average; in Spain it is four years—but in the United Kingdom, it is only nine months on average. A young person in France has to wait 22 months for a job; in this country, he has a good chance of getting a job within nine months.
That is why our method of running the economy, with no social chapter, has been so successful. France and Spain, with their minimum wages and socialist policies, have followed the path of utter madness. Germany, which is run by what we might almost call a Conservative Government, has fallen prey to many socialist policies that have increased its wage costs. The minimum wage and the other costs of the social agreement are so high that jobs are not being created. Indeed, Germany is now exporting jobs, because many German companies want to set up in Britain.
Reference was made earlier to one of the problems of French socialism—the higher indirect costs that companies have to pay for the labour force. In particular—this affects my constituency—there is the outrageous practice of French ferry companies being subsidised either by the French nationalised railway, which has £30 billion of debt, or by the French Government.
It is appalling that our industry in Dover, which is highly competitive and unsubsidised, is being forced to compete with a subsidised French ferry industry. Those subsidies should be stopped and the ships taken off the routes, because they are not as efficient as P and O, Stena Sealink and other British ferry and hovercraft companies that sail out of Dover. The ferry industry in Dover is efficient, while the French has subsidised inefficiency, paid for from massive borrowings by the French Government or French nationalised industry.
Some hon. Members have questioned Britain's manufacturing base. I find it remarkable that they should allege that it is shrinking. The question I want to pose—which I hope my right hon. Friend will answer—is, what do current manufacturing statistics actually mean? About one third of the worldwide computer games industry is produced in the midlands. Britain is better at producing computer games than many American or Japanese
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companies. Indeed, many foreign companies are trying to invest in or buy Britain's companies. Alternatively, they buy our products. It is a whole new industry that did not exist under Labour. Indeed, it did not exist even a few years ago under a Conservative Government.
Does that industry come into the manufacturing statistics when it manufactures a computer game, or does it come into the service industry statistics when it produces the software that goes into the computer game? Many companies are not included in the manufacturing statistics, yet they employ people in jobs that ultimately manufacture a product or produce computer software that is sold in boxes on the shelves. I regard that as a manufacturing product just as much as a car or a computer.
While on the subject of computers, and in view of my right hon. Friend's previous job as Secretary of State for Scotland, it is worth drawing attention to the fact that 60 per cent.—almost two thirds—of Europe's computers are made in Scotland. Would they still have an export market if they bore the seal, "This computer has to bear a Labour Government tartan tax"? A computer manufactured by employees paying a tartan tax would not be exported past the port of Dover. It would be too expensive to justify the production and sale of such goods on the European market.
There has been tremendous change for the good in our economy under this Government. One point typifies how privatised industries are much more efficient than they were when they were in the public sector. In 1983, when British Telecom was still suffering from the lack of investment under the Labour Government between 1974 and 1979, I started a business. It took me six months to get a telephone line for that business. I would have gone out of business had I not been able to borrow a friend's telephone line.
Last year, some 12 years later, my wife needed a telephone line for her new business, and she got it in two days. That is the difference between today and when Labour was in power. My wife also had to pay less in real terms for that business telephone than I did 12 years earlier. BT is enormously more efficient, and provides a much better service today under a Conservative Government than it did when it was in the public sector under Labour.
Under the trade unions, Labour talks about stakeholding. As trade union leaders have pointed out, it is another way of taking us back to the 1970s and the interference in British business and industry. Stakeholding is a threat not only to people's jobs and futures but to their private and occupational pension schemes. Those pension schemes have to invest in British business and industry. Stakeholding would damage people's investments through their private pension schemes. It would result in lower returns and the Government and trade unions having a say in the returns and profit of British business.
If business and industry are not making the same returns and profits, where will the dividends come from to pay 10 million occupational pensions and 5 million pensions in private pension schemes? If stakeholding ever got out off the ground, the pensions of 15 million people who had spent years saving for their retirement would be lower, which would be enormously damaging. Their pensions would be under threat as a result of stakeholding.
Labour is also a high-tax party. Regardless of the state of the economy, it is always making commitments to higher taxation and more spending. Although it says that

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it has not made any spending commitments, Labour Members of Parliament, Labour parliamentary candidates and Labour Members of the European Parliament are making speeches in which they are promising spending increases under Labour. They try not to tell the hon. Member for Dunfermline, East (Mr. Brown) about the promises; they try to make them discreetly in local newspapers.
In my local newspaper, my local Labour Member of the European Parliament has even talked about a tax reduction. He has said that he would lower alcohol duty to French levels. He gave away £3 billion of a future Labour Government's funds just like that, in one little speech of a few words, which were very easily delivered to the local newspaper. Of course he did not have the approval of the hon. Member for Dunfermline, East or the Labour Front-Bench team, but he was able to promise it to the trades people of Dover and my constituents none the less.
I hope that the hon. Member for Oxford, East (Mr. Smith) will disown the Labour Member of the European Parliament for Kent, East, say that his commitment was false, that the promise was totally unjustified, and that there is no authorisation from the Labour Front-Bench team for giving away a tax reduction of £3 billion on alcohol duty.
I also hope that hon. Gentleman will have a word with the hon. Member for Peckham (Ms Harman), the shadow Health Secretary, and that she will be invited to comment on whether the shadow health team supports the statement on the reduction of alcohol duty made by the Labour Member of the European Parliament for Kent, East. Labour Members of the European Parliament are making false promises in local newspaper articles which they are not authorised to deliver. It is disgraceful that Labour is offering the British public so many misleading promises.
Mr. Stephen Timms: Did the Prime Minister have the Chancellor's authority when he promised to abolish capital gains tax?
Mr. Shaw: If the hon. Gentleman reads the Prime Minister's words very carefully, he will realise not only that the Prime Minister had the full support of the Chancellor, but that it is the Conservative party's long-term aim to abolish capital gains tax.
The Financial Secretary to the Treasury (Mr. Michael Jack): Hear, hear.
Mr. Shaw: My hon. Friend has just said, "Hear, hear." My hon. Friends are very confident that we can deliver that long-term aim. We do not think that capital gains tax is sensible in the long term. It discourages the accumulation of capital, saving and job creation.
Mr. Deva: Am I correct in assuming that my right hon. Friend the Prime Minister is the First Lord of the Treasury and does not therefore require the permission of my right hon. and learned Friend the Chancellor?
Mr. Shaw: Despite the fact that my hon. Friend might be correct, my right hon. and learned Friend the Chancellor and my right hon. Friend the First Lord of

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Treasury are totally united on the point; there is no division—unlike in the Labour party where we hear from time to time odd bits of animosity between one or two leading members of the Labour Front-Bench team. They do not always agree with one another.
At the weekend, the shadow Secretary of State for Wales decided that he did not like the Prince of Wales. We discovered that the Labour party immediately had to retract the statement on his behalf—before he could retract it himself, it would appear. It is in such a panic about the possibility of debating the monarchy because it knows that so many of its members want to abolish the monarchy, which would be bad for our economy and would certainly not gain the support of people in the United Kingdom, who think about the issues and are concerned about them.
Mr. Sykes: It would be a pity to leave the subject of capital gains tax without my hon. Friend commenting on the following point. Does he think that it is a shame that the hon. Member for Newham, North-East (Mr. Timms) has illustrated his lack of understanding about business? The hon. Gentleman should be calling for the abolition of capital gains tax, because that is exactly what business needs to be able to expand. Family companies are desperate for the Government to abolish capital gains tax. Is that not an illustration of new Labour, old tricks?
Mr. Shaw: My hon. Friend speaks with considerable authority about family businesses. Indeed, he has experienced building a business, establishing a number of jobs and ensuring not only that those jobs are secure and safe, but that more will be available in the future. Anybody who has any experience whatever of job creation knows that capital gains tax is one of the taxes that damage job creation. If the Labour party were serious about wanting to create employment and reduce unemployment, it would also be calling for the abolition of capital gains tax.
Getting income tax rates down is very important. I believe that we should be looking seriously at the flat rate tax that has had an airing in the United States. It could not be introduced in the short term in this country, but if the economy continues to grow under a Conservative Government, there will be opportunities around 1999 seriously to consider its benefits. If we had a £7,000 exemption or an allowance of £5,000 per person, we might be able to have a flat rate tax of 15 per cent. That would benefit many people, and would take many others out of tax altogether.
I know that the Treasury's initial costings, which my hon. Friend the Financial Secretary to the Treasury produced, suggested that it could be quite expensive to bring a flat rate tax into being, but I point out to my hon. Friend that, when the Treasury did the costings, it did not envisage abolishing all the allowances that it would be possible to abolish if we had one tax allowance at the start of the assessment for flat rate tax of £5,000 to £7,000 per person or per household.
I believe that the cost of introducing a flat rate tax could be well below the initial figure of £26 billion which the Treasury produced if we abolished more allowances, by giving a generous allowance on the flat rate tax, and by having a rate of no more than 15 per cent. We should encourage serious debate on that.

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The debate must be more serious than Labour's proposals for a 10 per cent. income tax. We have never seen Labour's proposals; they were a soundbite in a speech, then they vanished from the airwaves. I hope that the 10 per cent. income tax soundbite will be explored vociferously by my hon. Friends, because I would like to know what has happened to the 10 per cent. basic rate of tax.
Where is Labour's proposal on that? Why can we not see some costings? I am sure that the Treasury would co-operate by making its computers available to cost Labour's 10 per cent. income tax proposal. We should hear how the proposal would be put into effect, because so far all we have heard is a short wave soundbite, rather than a long wave policy. We have not even heard any guidelines, let alone an explanation of the policy itself.
The economy is improving enormously, day by day and month by month. There is no doubt that the United Kingdom is now getting overseas investment in record amounts. We are seeing unemployment fall substantially, on a regular and sustained basis. We see some of the best good news features that we have seen for some time.
There are still some problems; I referred to the fact that the flexibility required in the labour force today is different from what was required before. People must adapt to the changed labour market, but those who can and do adapt—those who have been on Government retraining schemes and those who are taking time out to learn new skills, to get up-to-date information technology and to learn all the requirements of the labour market—have great opportunities under a Conservative Government in the rest of the 1990s.
Those people will see the benefits of an improving economy. We must ensure that the conditions are in place to encourage them to get the full benefits. One way in which people can get the full benefits that the new industries and the new businesses of the 1990s can offer is by re-electing a Conservative Government when the election comes in the next 12 months.
8.22 pm
Mr. Jim Cunningham: I had hoped, certainly in the interests of the 65 million people of this country, that the level of debate among Conservative Members would be higher. I had hoped that, regardless of party politics, the Government would put the country first, and would start to outline the true state of the country's economy and how they intended to remedy it. In fact, all we got was a little bit of knockabout from the Chancellor instead of constructive ideas and constructive proposals. I have sat here since 3.30 pm, thinking that the debate is all stage-managed to lift the morale of the Tory party, with an eye on the by-election in South-East Staffordshire.
I must respond to some of what has been said in the debate, especially what has been said about 1979, to which I shall come in a little while. The hon. Member for Dover (Mr. Shaw) said that a Labour candidate for the European Parliament had talked about a reduction in beer tax to French levels. I do not know about the French levels, but I remind the hon. Gentleman that I and a number of his colleagues listened to evidence in the Select Committee that considered beer tax. We looked at the effect of the import of French wines and beers on this country, especially in terms of the black market, and we discussed the consequences for the north of England,
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where people were threatened to make them sell imported wines and spirits. If the hon. Gentleman has a good look round the north of England, he will be aware of the protection rackets there, and he may change his mind. He may then not pour ridicule on the proposal. I do not necessarily agree with it, but I know that there are serious concerns. I suggest that the hon. Gentleman has a good look at the report and takes a more serious interest in it.
Conservative Members extolled the Tory party's virtues in terms of its management of the economy. They said that we managed our economy better than any other country on the continent and, by implication, better than the Japanese and the Americans. I am reminded of when I went to Germany and looked at the tramline system in Frankfurt. When I arrived, some Germans who spoke impeccable English said, "How is the weather on the islands?" I said, "I do not come from the Scottish islands. I come from mainland Britain." One of the Germans said, "That is the point." The moral of the story is that the Tories are saying exactly what the Germans said to me. They are supposed to be co-operating in the single market, yet they do not believe in it.
Another theme running through the debate—it came up during the Chancellor's speech and we never got a response to this point—is the question of insecurity, which also predominates in the Tory party's sister party in the United States. There is insecurity among middle-class and working-class people today, on both sides of the Atlantic. People feel as if they do not have a future. Newt Gingrich has gone on record as saying that the American Congress should debate the matter and that it will be a major issue during the next presidential election. The Tories should not pour ridicule on that. If they want to talk about the feel-good factor, they must address themselves to the problem of insecurity. They did not address the problem tonight, although it affects the well-being of the 65 million people of this country. We are not talking about little sections of this country. If we cannot address the issue, we have a major problem. Certainly, Conservative Members have a major problem in lifting the morale of their party. That is not a task for me.
Mr. Sykes: Will the hon. Gentleman give way?
Mr. Cunningham: Not for the moment.
Equally, I was interested that Conservative Members poured ridicule on France, despite the fact that a sister party is in power. One can assume only that the French Government are pursuing the same economic policies as this Government. The same people poured ridicule on Germany and said that we would now outstrip Germany. However, it is only 20-odd years ago that the Conservative party, under a previous Prime Minister, told this country that if Britain got involved in Europe, we would get more holidays, better pensions and a number of other benefits. That was a version of the social chapter from which the Tories have systematically run away during the years since Maastricht. What hypocrisy. The Tories run away and pick only what suits them. When something does not suit them, they take another road.
We have referred tonight to middle England. I represent a constituency, Coventry, South-East, which is part of middle England; it is part of the west midlands which is, in turn, part of middle England. The west midlands was noted as the engine house of the British economy, but we

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can see what the Tories have done to it over the past 16 years. One can go further. The Tories mention the winter of discontent in 1978–79, but they fail to say that there was also a winter of discontent in 1970, with the advent of a Tory Government. What happened when that Government took office? If I remember correctly, house prices doubled. I remember the three-day week, the Conservatives' equivalent of the 1978–79 winter of discontent. In addition, there was a summer of discontent last summer. The House will remember the nurses' pay dispute and parents marching to demand better teachers and classroom facilities.
The Government have betrayed Coventry's young people. Nearly one third of the city's 16 to 25-year-olds are unemployed; in the west midlands as a whole, the figure is 21 per cent. for the same age group. Many of them have no formal qualifications—that is not surprising, given that 30 per cent. of Coventry's 16-year-olds are not in full-time education. The figure rises to 51 per cent. of all 17-year-olds. With their cuts in youth training and services, the Government have betrayed the hopes and life chances of a generation. Youth unemployment on such a scale represents a massive waste of talent and ability, a waste that we cannot afford financially or socially.
Youth unemployment is personally disastrous and socially destructive, and helps to produce crime and the decay of our very social fabric. What many people in Coventry will find most disturbing is the fact that 16 to 24-year-olds account for 51 per cent. of the convictions in the city. That is a result in part of the failure of the education system, created by the Government, the lack of youth training and the decimation of the job opportunities that are open to young people. The responses to a crime survey in Coventry demonstrated that many people have realised that fewer facilities for young people contribute to rising crime in the city, and the Government must accept responsibility for that.
I invite either the President of the Board of Trade or the Chancellor to come to Coventry and the west midlands. It is noticeable that they can make big speeches on what they are supposed to be doing for the country in the cloisters of the House of Commons, but they do not come to open public meetings to justify their policies. Instead, they leave it to local councillors to defend the Government's decision on cuts. As a result of systematic cuts by the Government in the past 10 to 15 years, the council in Coventry is considering cuts in the wages and conditions of employees—particularly lower-paid workers, such as cleaners.
The minimum wage has been mentioned by Tory Members in the debate, but I have not noticed the Conservatives' sister party in America talking about abolishing the USA's minimum wage. Pat Buchanan raised that issue when he was fighting the South Carolina primary, and he got his answer—he did not win.
Mr. Sykes: Will the hon. Gentleman give way?
Mr. Cunningham: In a moment. In addition, investment is now going to South Carolina and other places in the depressed south from abroad, and—in certain places—2,000 to 3,000 jobs have been created by that investment. The Tories' argument against a minimum wage does not stand up.
Mr. Sykes rose—
Mr. Cunningham: I shall give way to the hon. Gentleman, who is obviously very anxious.
Mr. Sykes: I am very grateful. I thought that I was going to have to get up and down like a yo-yo, but the hon. Gentleman has kindly given way. Does he agree with the deputy Leader of the Opposition, who said that any silly fool knows that unemployment will come as a result of the minimum wage?
Mr. Cunningham: I do not think that my right hon. Friend said that and, if he did, I do not know in what context it was said. The hon. Gentleman must not quote people out of context, as the hon. Member for Dover has.
Referring back to the 1970s, I recall the real problems that were related to the winter of discontent. Hon. Members may recall that OPEC raised oil prices, basically because the Conservative party said that we should not give aid to the third world. The third world replied that it did not want charity, but would certainly start raising oil prices.
Much has been made by the Chancellor of the Exchequer of the virtues—or lack of them—of the Government. But the debate today is all about the Government trying to cover up their mismanagement of the economy. They have suffered a series of by-election defeats in the past two or three years, and they know what will happen in South-East Staffordshire. That is what this debate is all about.
8.34 pm
Mr. John Sykes: I wish to speak not just as a Member of Parliament, but as a manufacturer with a factory in Filey, close to Scarborough. I am also the director of our family business, which was started in 1845. The firm has survived Whig Governments and Liberal Governments—it has even survived Labour Governments.
Dr. John Reid: Hear, hear.
Mr. Sykes: It only just survived. I hear the hon. Gentleman saying, "Hear, hear." He will be happy to know that my grandfather was responsible for helping to break the general strike in Huddersfield in 1926, a story that I shall tell my grandchildren when I am rocking them on my knee.
I also speak as probably the only Member of Parliament who has gained the class I HGV licence—it took me two goes, but I passed it in 1978.
Ms Dawn Primarolo: What does that have to do with it?
Mr. Sykes: I hear the hon. Lady. I have driven lorries and delivered oil to my customers to keep my customers, in spite of the Labour Government. I mentioned that fact because it does have something to do with today's debate.
The Chancellor, the Government and the Conservative party need no lectures from a party of lecturers, whose only experience of employment is limited to the thousands of research assistants based in Millbank. I joined the

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family firm—a company called Shaw fuels in Huddersfield—in 1974 when I left school. At the time, we were delivering 400 million gallons of heavy fuel oil a year to factories and mills all over the United Kingdom. When I left school in 1974, Harold Wilson was Prime Minister. By the time I had become manager of the Yorkshire oil depot in 1979, Jim Callaghan was Prime Minister.
I recall the Labour party's winter of discontent. At the tender age of 22, I was in charge of the Yorkshire oil distribution depot. I remember clearly a grown man coming to me and weeping, because his wife and child had received threatening phone calls from trade unionists as he had driven a lorry through a picket line to deliver oil to a hospital. That is real Labour. I was only 22 at the time, but I remember it as if it were yesterday. That man was worried for his wife and family, because trade unionists—those pals of the Opposition—had threatened his wife and child. I shall never forget that.
I also recall going on bended knee to members of a trade union strike committee, to plead with them to allow my lorries to deliver heavy fuel oil to Redfearn's National Glass, because the secondary picket there would not let the lorries through. Had those lorries not got through, the kilns would have run out of oil. As a result, the kilns would have dried up, gone cold and cracked, and 4,000 people in Barnsley would have been out of work. We finally got our way, and our private family company delivered oil when that company needed it badly, and that is why that company is still there today.
I remember one trade union leader commenting at the time that secondary picketing was "anarchy gone mad". But what else is anarchy, if not mad and chaotic? I remember one particularly sordid moment in 1979 when the gravediggers went on strike, and it was said at the time that there would be severe cases of panic dying. The whole country, and business in particular, breathed a huge sigh of relief when the Labour party was finally chucked out of government on 5 May 1979.
Mr. Simon Burns (Lord Commissioner to the Treasury): It was 3 May.
Mr. Sykes: My hon. Friend is older than me.
The first thing that the Government did was to sort out the unions—in the teeth of opposition from Labour Members. The second thing that they had to do was to sort out the nationalised industries, which they did via privatisation—in the teeth of opposition from Labour Members. Now, in 1996, British Telecom is cabling the world. British Airways is the world's favourite airline. How many Labour Members remember what a pantomime horse British Airways was in 1979? Do they remember coming back from their holidays to find the baggage controllers on strike, so that they could not get their luggage out of the aeroplane? I remember it clearly. British Aerospace is selling defence products from one end of the world to the other. Rolls-Royce sells its engines across the world. British Gas is laying pipelines across the world. All those were nationalised industries.
Mr. Jim Cunningham: Will the hon. Gentleman give way?
Mr. Sykes: I shall give way in a minute, if the hon. Gentleman can hold his fire. He is a fiery, passionate Scottish Member. I have spoken to him many times and respect him.
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British Steel is a world-famous company in 1996. I do not remember anyone saying that back in the 1970s. Today, it is an example to the world of the sort of company that we want. Before I became a Member of Parliament, I went on a business trip to Malaysia with my brother in 1990. The news on the front pages there was that they were going to privatise their steel industry the next year. That was an example of how the rest of world is following British Tory policies.
To add to my story about British Steel, there is a famous Sheffield beer called Stones Bitter. The firm that brews it wanted to associate itself more closely with Sheffield. How better to do that than by associating its beer with British Steel? It got a fancy advertising agency up from London.
Mr. Cunningham: Will the hon. Gentleman give way?
Mr. Sykes: I shall give way in a second, I am coming to my peroration. It is a good story. Unless the hon. Gentleman is considering putting an advertising agency together, he ought to listen to this story.
People from the fancy advertising company came all the way from London to Sheffield. They looked for a firm that could produce grimy men in hard hats shovelling things into furnaces, because that exemplified steel. They could not find one, because British Steel is so modern that everything is mechanised. They had to go to Czechoslovakia to do an advertisement about British Steel. That is where the old-fashioned practices are. British Steel is a wonderful company and a wonderful example of what private capital and privatisation can do. It was the Government who privatised it.
Mr. Cunningham: May I take the hon. Gentleman back slightly, to before he went into his fantasy? What does he think would have happened to Rolls-Royce in the early 1970s if the Government then had pursued the same policies that the present Government pursue? Does he recall that it was a Tory Government who, when Rolls-Royce collapsed, set it up as a separate company under Government control? What does he have to say about Rover in that period?
Mr. Sykes: Rolls-Royce was taken in by the Conservative Government under my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), but it was privatised by Baroness Thatcher. The Labour party voted against that. It stood up for Red Robbo. I remember as if it were yesterday, driving through Bradford in 1980. I turned the radio on and heard that, for the first time, Red Robbo had been beaten. I knew that once we had beaten him, we had won the argument.
Dr. Reid: Will the hon. Gentleman give way?
Mr. Sykes: I shall give way to the hon. Gentleman, because I want a word with him in the Lobby afterwards.
Dr. Reid: I shall not take the hon. Gentleman back, because he started in about 1834 in a short speech and has only got to 1980. If all the vast economic improvements that he is talking about are real, why have we fallen from 13th to 18th in the world prosperity league?
Mr. Sykes: That is not the sort of intervention that I was hoping to get from the hon. Gentleman. It does not justify his standing in the House.
Mr. Peter Butler: Yes it does.
Mr. Sykes: No, my hon. Friend is being unfair.

My right hon. and learned Friend the Chancellor of the Exchequer has already dealt with that. The Labour party has used wrong figures for its own purposes; I do not know why.
To go back to another unanswered question, the hon. Member for Sherwood (Mr. Tipping), who is not in his place, would not answer the question that I asked, because he was banging on about unemployment of young people. I asked him why he thought that unemployment in Spain was 33 per cent. He could not answer. I could have told him, but he would not give way. It is because of the minimum wage and the social chapter.
Unemployment is high in France, Spain and Germany because of the minimum wage and the social chapter. Why is unemployment lower in the United Kingdom? It is because we do not have a minimum wage or social chapter. Everyone thinks that Scarborough and Whitby are all about tourism, but there is much more to them than that. They have manufacturing, service industries, financial services and second-line engineering. There is tons of stuff that goes on. We used to build ships. We built Captain Cook's ship.
We have plenty of manufacturing expertise in my constituency, of which I am proud. We have Pindars, a leading international company that sells goods and services all over the world. Plaxtons is famous for building coaches, which it is turning out like nobody's business. Even as I speak, it is selling them right across Europe. We have McCain, which is a wonderful example of how to start a business. Its productivity is increasing 10 per cent., year by year.
Mr. Deva: Does my hon. Friend agree that in considering the question about the fall from 13th to 18th, we must consider which countries have grown fastest in that league table? Have not the countries that have the same industrial infrastructure as us, such as France and Germany, grown more slowly? The countries that have grown fastest are those such as Singapore and Hong Kong, which have deregulated economies and low taxes—things that are far removed from the Labour party's understanding.
Mr. Sykes: My hon. Friend makes a good point. I first went to Singapore in 1974. I remember leaving cold, socialist England as it then was—Harold Wilson had just got back into power. Singapore was then the fifth biggest port in the world; now it is the biggest. That is a good example of how the Asian economies have driven forward.
I was explaining about the wonderful business and manufacturing in my constituency. Whitby Seafoods is another example of innovative products. It came to Whitby only a short time ago and is now one of Whitby's largest employers and sells its products across the United Kingdom. It is doing so well because the business climate in the United Kingdom is conducive to that. There is no minimum wage or social chapter.
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One large company in my constituency could not afford to build a factory in France because of the social chapter and the minimum wage. It doubled its production line in Scarborough, much to the benefit of the people who work in the factory. If one looks out to sea in my constituency when driving up the coast, one sees ferries going at about 10 mph. They come from Sunderland. They are full of Nissan cars and are on their way to Europort. Who would have said 10 years ago that Nissan would be in Britain? It has come to Britain because we have a business climate in which it can thrive. It will continue to thrive as long as there is no social chapter, no minimum wage and, most of all, no Labour Government.
My friends and colleagues who run firms in Europe are fed up with the social chapter and the minimum wage. Their companies pursue policies that are designed to minimise the employment of human beings because once they take people on, they cannot get rid of them. That is why unemployment is so high in Europe. The closing years of the 20th century will magnify how profoundly misguided are Europe's policies of the social chapter and minimum wage. Those policies and the Labour party are fused like Siamese twins. What Europe needs is a good old dose of Tory Anglo-Saxon economic liberalism, and that is what we shall get after the next general election.
8.49 pm
Mr. Stephen Timms: I apologise for being absent from the Chamber for a fair part of this debate: I was attending the Select Committee on the Treasury.
The background to the debate is the disastrous failure of Conservative economic policy in the past 15 years. I was sharply reminded of that failure at the weekend when dealing with constituents and, in particular, when responding to a letter from a couple who bought what they described as their "dream home" for £80,000 in 1989, shortly before the sharp jump in interest rates.
Once the rates went up, they could not keep up the increased repayments and the house was repossessed in 1991. The mortgage company sold it for £45,000. The balance, plus interest and other charges left the couple with a debt of £64,000 by August 1995 and they are struggling to pay it off with monthly payments. Both have been employed throughout the period. Their letter bears relaying to the House. They say:
"This is a devastating plea which we are bringing to your attention because we have come to a point where we feel helpless."
As I said, their house was repossessed in 1991, when the interest rate increased dramatically. They continue:
"Since then, we have been suffering and enduring … financial problems and all sorts of difficulties especially between ourselves …We are living in a very bad nightmare, our social life as well as family life has been destroyed because we always blame each other for what happened. We are even scared to have another child because its too demanding.
However, you are surely aware that thousands of couples like us who had been hit by that disaster are still suffering and living in a silent trauma. So many families have split and so many people have stopped working deliberately to get away. We are honest people trying hard to keep ourselves together and survive, but believe me Sir, its very hard indeed …we can make no saving for our son's future."
Is that fair? They go on to make a plea—it is a novel suggestion—that funds from the national lottery be used to tackle housing debts and so end the nightmare that they are suffering with tens of thousands like them.

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That is the reality of the Government's management of the economy. Behind the self-congratulation in the Government motion, 1,000 people a week are having their homes repossessed—one third of a million have suffered that fate—and there are still 1.7 million people in negative equity. The reason is that the Government have made a hash of it in the past 17 years and everyone is paying the price.
The most grievous indictment of the Government's management of the economy has been the explosion of inequality in the past 17 years. Last year, the Joseph Rowntree Foundation concluded its 15-month inquiry into income and wealth in Britain. Its three key findings ought to have rung alarm bells for the Government. First, income inequality grew between 1977 and 1990 to a higher level than at any time since the war. Secondly, income inequality increased faster in Britain than in any other industrialised country except New Zealand and, thirdly, the poorest 20 to 30 per cent. in Britain failed to benefit from economic growth in any way after 1979, unlike in any other post-war period.
Mr. Sykes: If what the hon. Gentleman says is true, what does the Labour party propose to do about it and what does he propose? Would he put up higher rate tax for so-called rich people and at what rate would that tax begin?
Mr. Timms: I am making a critique of the Government's policy and I intend to deal in some detail with tax. I should be grateful if the hon. Gentleman would wait until I get to that subject.
The effects of what I am describing are profound. Families are stretched as both parents are forced to work long hours, giving them less time for their children. Youngsters in low-income families are being denied the network of community support that they need to supplement their parents' primary role.
The Rowntree report also exposes a disturbing racial dimension, finding that the greater risk of poverty and low education qualifications among some of the ethnic minority groups is likely to exacerbate inequality. The report shows, with shocking clarity, how that growing inequality tears at the fabric of our nation.
The cohesiveness of society is not just an altruistic aspiration, but an economic necessity. If we are to function as a modern economy in the new millennium, we will need a flexible and secure work force, who are highly skilled and able to cope with the ebb and flow of the global market. We need a population who feel that they have a stake in Britain, not what we have at the moment—a society in which the poorer members are being driven into permanent poverty and most of the rest are faced with the insecurity of knowing that they could be the next to fall.
The hon. Member for Scarborough (Mr. Sykes) has worked hard on the issue of benefit hostels on behalf of some of his constituents. We are both members of the Standing Committee that is considering the Housing Bill and he has raised that issue with other members of that Committee. He should be asking himself why so many people have to live in such hostels. It is not merely the victims of what I have been describing who suffer, but the rest of the community as well. His constituents in Scarborough, whose cause he has properly taken up with
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great vigour, are suffering because of what Government economic policy has done to the country and particularly to the least well-off. Everyone is faced with insecurity and knows that they could be the next to fall.
The Rowntree report refers to the tax system and shows that inequality in post-tax incomes has grown as fast as that in pre-tax incomes. In other words, the tax system has done nothing to stop the widening gap between rich and poor. There used to be agreement on both sides of the House that the tax system should effect some redistribution from the richest to the poorest, but the system is failing us in that regard and it is failing Britain.
Mr. Deva: Concern for the less well-off and about how to improve their circumstances is very laudable, but would the hon. Gentleman move on from his critique and tell the House whether his solution is less borrowing or an increase in higher rate taxes? What are his policies?
Mr. Timms: I am dealing with the Government's economic policies, which are the subject of the motion, and will continue to do so. I want to concentrate on the Government's intentions for inheritance tax. The plan that has been unveiled to abolish inheritance tax epitomises the Government's abandonment of the one-nation ideal for a lurch to the right.
There was a time when the Prime Minister's aspirations were for a classless society, but that feels like a long time ago. We have come a long way since the Prime Minister could speak in those terms. Today, the vision that he holds out is of a measure that can only reinforce the inherited privileges that remain as entrenched as ever in the Britain of the late 1990s.
The Institute for Fiscal Studies has frequently assessed inheritance tax and recently published an interesting report, which I commend to hon. Members. It is entitled,
"Two nations? The inheritance of poverty and affluence"
and illustrates the extent to which people's income and social class is determined by that of their parents. The Prime Minister once said that he wanted a classless society. It shows the extent to which he has failed in that aspiration and the proposed abolition of inheritance tax suggests that he has abandoned it altogether.
The report is based on the national child development study, which tracks the lives of a group of more than 3,000 people born in a single week in 1958. A series of studies has been carried out over nearly 40 years. Those people entered their 20s at about the time the Conservative party entered Government in 1979.
The report reveals, first, the intergenerational transmission of poverty through unemployment. Those people raised against a backdrop of unemployment are about twice as likely as the population in general to end up with a substantial history of unemployment. Secondly, the sons of managerial and professional families are almost three times as likely to end up in managerial and professional occupations as the sons of semi-skilled and unskilled fathers. Thirdly, sons of managerial and professional families are less than one third as likely to end up in semi-skilled and unskilled groups.
According to the report, the son of a father in the top 20 per cent. income bracket is more than three times as likely to end up in the top 20 per cent. income bracket as in the bottom 20 per cent. bracket. More than one third of

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sons in the top 20 per cent. income bracket had fathers in the same bracket, while only one in 10 had fathers with incomes in the lower bracket. The effect is even stronger in top 10 per cent. income bracket.
Mr. Sykes: How does the hon. Gentleman account for Essex man? None of the survey—which must have been conducted at the expense of the taxpayer by God knows whom—relates to real life. Obviously people who are wealthier should be able to pass their goods and services down to the next generation, but how does the hon. Gentleman explain Essex man and the increase in videos, holidays abroad and wealth that has affected everyone in Britain? The people who conducted the survey must be living on a different plant.
Mr. Timms: I am interested in the hon. Gentleman's comments. The Institute for Fiscal Studies is an extremely reputable body. I shall gladly send a copy of the report to the hon. Gentleman as it makes thought-provoking reading. He should pay close attention to it as it shows the extent to which affluence is inherited in Britain today.
The key factor influencing prosperity is not merit or ability, but parental income. Those social rigidities are not only unfair, but make us all poorer. That is the reality of Britain in 1996, yet the Prime Minister who said that he wanted a classless society proposes to make matters even worse by abolishing inheritance tax. The Chancellor—on this and the other taxes that we discussed earlier—appears to be less enthusiastic about that prospect, and one can only hope that he prevails.
Abolishing inheritance tax would cost £1.6 billion a year. That is not far short of the cost of taking a penny off income tax. Only about 3 per cent. of the 600,000 estates transferred each year pay inheritance tax at the current threshold and the benefits of scrapping inheritance tax would be massively, disproportionately and overwhelmingly concentrated on those who are best off. That exposes what really drives the modern Conservative party.
An analysis of the 1992 figures shows that 30 per cent. of the handout from abolishing inheritance tax would go to 3 per cent. of the estates—those valued at more than £1 million. In 1994, the top 10 wills were worth £179 million, so with inheritance tax at 40 per cent. their beneficiaries would have gained up to £72 million from its abolition. Nearly 5 per cent. of the handout from scrapping inheritance tax would have gone to the largest 10 out of 600,000 estates of extremely wealthy people.
Their preoccupation with giving money to the rich exemplifies the Government at their worse. It is doing terrible damage and leading to the benefit hostels about which the hon. Member for Scarborough said so much. At the same time, we are forcing asylum seekers into penury, closing hospitals and leaving schools in chronic disrepair. We are forcing increasing numbers of people to choose private sector solutions for health and education so we are further exacerbating the divisions in our society which are the worst problem that most threatens the well-being of Britain as we approach the millennium. Those divisions are a blight.
There is not the slightest chance of Britain being a nation at ease with itself while inequality continues to worsen and the Government concentrate on finding ways
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to make rich people richer, leaving the rest struggling, anxious and insecure. Inheritance tax is criticised—with some justification—because people often avoid paying it. However, as The Economist pointed out last summer, that is an argument for making it work better, not for scrapping it. There are strong arguments for changing the nature of inheritance tax and making it a tax on those who receive the inheritance rather than on the estate that provides it. However, scrapping it altogether would be a dreadful and a regressive move.
Why should people pay tax on their earnings if there is no tax on inheritance? Why should someone who earns £100 pay £25 or £40 in tax, while someone who receives £100 as a gift or an inheritance pays no tax? Why does the Prime Minister hold that up as something to which the nation should aspire? If people could accumulate large sums in inheritance tax free, giving tax advantages to unearned income over earned income would undermine work incentives and damage the prospects of having the innovative, hard-working and highly motivated work force on which our future prosperity depends.
Mr. Sykes: I am grateful to the hon. Gentleman for indulging me yet again. The inheritance tax threshold is currently £154,000. Would a Labour Government lower or increase it?
Mr. Timms: I do not think that the threshold should be lowered and it has not been uprated in line with inflation in recent years. I am concerned about the enormous handouts to those with the biggest estates and the huge sums of money from which they would benefit if inheritance tax were abolished. I think that there is a case for raising the threshold somewhat—I do not argue with that, if it is the thrust of the hon. Gentleman's intervention. It may be that the very rich support the Conservative party, but that is not a good enough reason to hand them hundreds of millions of pounds a year by abolishing inheritance tax, as Conservative Members seem to propose.
I have not spoken about capital gains tax and I do not intend to comment on it at length—although there was an exchange about it earlier. That situation is not dissimilar to inheritance tax: abolishing capital gains tax would cost billions of pounds, the bulk of the benefit would be concentrated on a tiny handful of people, and it would take funds from the public services on which the cohesion of our society depends.
We want to achieve cohesive communities, a flexible, highly skilled work force and a modern economy that benefits from the talents of all people. However, we are becoming increasingly divided. There are more and more people who have never worked and who have no prospect of working. The Government are walking away from what needs to be done to put matters right. Abolishing inheritance tax can only make things worse: huge handouts to a small number of people while inequality worsens further. The resources for public services, such as education, would be reduced even more, divisions would deepen and cohesion would be undermined. We would all suffer as a result—and we have suffered too much already.
9.7 pm
Mr. Nirj Joseph Deva: I am conscious of the time, so I shall be brief. The country would pay a heavy inheritance tax if the Labour party

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were to take office. However, if it won an election, Labour would inherit the best economic circumstances seen in this country for the past 50 years.
I am very privileged to represent the constituency of Brentford and Isleworth, where there are some extraordinarily good multinational and national companies. Along the A4 is a stretch of road called the golden mile and in that area I am proud to represent Samsung Electronics Co. Ltd., Bull Information Systems Ltd., SmithKline Beecham plc, Gillette Industries plc and many other international companies, including the British Standards Institution.
In the past three years, the rate of unemployment in my constituency has decreased by 100 per cent. and some 3,500 new jobs have been created in the past two years. That is a proud record, for which we commend the Government. Some 770,000 new jobs have been created since 1992—more than in the entire European Union. Inward investment alone has created about 40,000 jobs in this country.
When I listen to the Opposition talk about the British economy, sometimes it crosses my mind that they are talking about a different country from the one that I know. The Opposition talk about the country as they wish it to be, not the country that it is now. Today, we have one of the lowest inflation rates of any country in the world for the past 50 years. Our interest rates and growth are higher than in any other country in Europe. All those facts should be supported by hon. Members on both sides of the House. We need to talk Britain up, not talk it down. The trouble with the Opposition is that they are constantly trying to talk this country down when we need to create more jobs and to attract more investment and more money so that we can compete internationally.
I shall spend a few minutes describing what might be the result of Labour's economic policies. We know very little about the Labour party's policies. This evening, we have tried to elicit its policies from Labour Members, but either they do not know because they do not have any policies or they will not tell us. It is, therefore, difficult for us to examine the policies in detail, but vignettes of the Opposition's ideas are revealed occasionally, and we have heard about endogenous growth theory.
If we ask about the endogenous growth theory that the Opposition have talked so long and loud about, we come to some fundamental differences. Let us never believe that the economic policies of the Conservative party are the same as the economic policies of the so-called new Labour party. They are not. The new Labour party has nothing new about it. Its economic policies are as fundamentally different from a capitalist, social market, free enterprise economy as one could imagine. Endogenous growth theory, in other words, is another way to manage the economy—not by commanding the heights of the economy as the late Tony Crosland tried to do, but by managing relationships.
The Opposition would set about managing the relationships between suppliers, producers, retailers, distributors and marketers. They would try to manage the economy by putting a civil servant into every boardroom in every company. That is as fundamental a difference on intervention as one could imagine. It is almost Marxist in outlook. It implies that the Government, civil servants and officials know best how to manage the economy by insisting, cajoling—even possibly forcing—companies to take investment decisions for the good of the country as the Government and officials see it.
Mr. Sykes: Civil servants in Whitehall making decisions would be bad enough, but what about shop stewards? The Opposition would put shop stewards left, right and centre—everywhere.
Mr. Deva: I agree entirely with my hon. Friend. If we add the endogenous growth theory to the idea of a stakeholding economy, we would find that the trade unions would come back into decision making.
We would find that the national enterprise board and all the other people in the Department of Trade and Industry would return to the boardrooms of every company and tell company directors where they should be investing their money. The officials would tell the company directors not to buy a new plant, but to invest their money in something else. That is what new Labour is about and there is nothing new about it. It is old Marxist Labour.
9.13 pm
Mr. David Lidington: When I was preparing for this debate, I drew inspiration from the current edition of the New Statesman and Society and, in particular, from a telling analysis by Lord Desai, the former Opposition spokesman in the other place. His analysis is very different from the gloomy one put forward by so many Opposition Members tonight. He says that "the story all round" on the economy is positive, and that inflation is likely to "remain within" its target range in 1996, "dipping below 2.5 per cent." He notes that unemployment has fallen every month since March 1993 and now
"appears to be falling faster than it was last year."
Manufacturing employment, on a downward trend since 1966, is now increasing once more and personal incomes are set to rise. In summary, he concludes that it would be foolish to count on the economic position helping Labour. Having listened to some Opposition Members, I think that Lord Desai is perhaps underestimating the extent to which the economic debate favours the Government rather than their political adversaries.
I listened with great care to the hon. Member for Newham, North-East (Mr. Timms), who spoke with characteristic passion and concern for the poor in society. Throughout his contribution, however, I heard no constructive Labour party alternative to the policies that the Government are pursuing. That is hardly surprising. After all, when we last debated economic matters, on the annual report presented by the Government on the domestic economy to the European Commission, the shadow Chief Secretary, the hon. Member for Oxford, East (Mr. Smith), was so confused that he strayed into the wrong Lobby by mistake and voted against his party's policy and against the United Kingdom's obligations under the treaty of Rome. We still have not heard an explanation. It may have been a deliberate act, or it may have been that the hon. Member for Hartlepool (Mr. Mandelson) was not available to lend the hon. Gentleman a guiding hand. Perhaps the hon. Member for Oxford, East has already written a letter of abject apology to President Santer and has been assured by the Leader of the Opposition, the right hon. Member for Sedgefield (Mr. Blair)—
Mr. Sykes: Will my hon. Friend give way?
Mr. Lidington: I shall press on because of the time constraint.

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The outlook for the immediate future is certainly encouraging. The Government are entitled to take credit for that. The long-term trends, however, undoubtedly present serious challenges. The twin pressures of international competition and computer technology will not disappear. Those pressures are responsible for many of the difficulties experienced by individual firms and families, to which hon. Members on both sides of the House have alluded.
We do not have to be uncritical admirers of Correlli Barnett's thesis about Britain's economic history to appreciate the risks of a country or continent that tries to live beyond its means or which seeks to pay for social policies that it cannot generate the wealth to finance properly. The great risk for Europe—not only the United Kingdom—is stagnation, or what is termed by the pundits Eurosclerosis, which would destroy our ability as a continent to generate new jobs at a time when we face fearsome competition from the far east and from the American continent.
It is depressing that Labour Members have failed to acknowledge global pressures along with their uncritical acceptance of the regulatory approach that is peddled in Brussels, which has damaged employment prospects and blighted the economies of some of our continental neighbours. That approach would have the same consequences in this country if the Labour party were ever to get its hands on the levers of economic power.
The Government can point to many initiatives that have helped to provide jobs and to bring investment to the United Kingdom. Through our privatisation policies we have ensured that British firms and foreign firms investing here have lower charges for telecommunications and for fuel than they would have had under the old nationalised regime. They face lower charges than those that apply in many international competitor countries.
Our non-wage labour costs remain lower here than in most of our continental competitor countries due to the Government's policy of keeping regulations and business taxes to the bare minimum.
We should concentrate our attention now on what my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) described as investment in human capital. I have been heartened to see in my constituency how modern apprenticeships are being valued both by the providers of that training and by the employers who take on the trainees after graduation. I was encouraged, too, to see how general national vocational qualifications are beginning, at last, to provide the stratum of technical pre-vocational education that has been lacking in this country for a century and which, until the lifetime of this Government, we had never got around to dealing with adequately.
I hope that the Dearing review, which will be reported before long, will carry those developments further. In my view, it is not just a matter of money. If one studies the figures in publications such as "Social Trends", one will see that we compare favourably with most of our competitor countries in terms of spending per head. The key question is how to deliver higher standards in primary education so that we avoid having to take remedial measures later, and in training and university education, too.
I am confident that if we get that right we can build on the successes that Lord Desai recognised and bring a bright future for later generations.
9.20 pm
Mr. Andrew Smith: For a debate that was called by the Government, speeches from Conservative Members fell flat, just as the Chancellor's speech did. We were waiting to hear what great, new initiative of Government policy would be announced. Yet there was no announcement. As my hon. Friend the Member for Coventry, South-East (Mr. Cunningham) pointed out, there were no new ideas from Conservative Members, although the hon. Member for Dover (Mr. Shaw) sought to get Treasury Ministers to commit themselves to a flat tax. I look forward to hearing, when the President of the Board of Trade replies, whether they will consider the hon. Gentleman's proposal. That was the only new idea that we heard.
The hon. Member for Wyre Forest (Mr. Coombs) took comfort from forecasts in The Economist, which, he said, were exceeded only by those for Australia. I do not know whether he followed the news over the weekend and learnt the right lessons from Australia. His hon. Friend the Member for Ribble Valley (Mr. Evans) clearly had, and said that the results from Spain and Australia had set a trend. I am not sure that he had the trend exactly right. The correct parallel to draw with this country is that long-established Governments who had made significant changes to their country were ejected from office by an insecure electorate who believed that it was time for a change.
The hon. Member for Carshalton and Wallington (Mr. Forman), in a thoughtful speech, highlighted the nature of global competition, the constraints on national monetary and fiscal policy, and the over-arching importance, where resources and capital are mobile in today's world, of investing in what he called "human capital" and what we would call people. That is pretty much the argument that the Labour party has made. Indeed, my hon. Friend the Member for Huddersfield (Mr. Sheerman), in an excellent speech and with great vigour did precisely that and spelt out proposals to raise education standards and skill levels and to stimulate innovation. The hon. Member for Carshalton got his answer there.
My hon. Friends the Members for Grimsby (Mr. Mitchell) and for Huddersfield rightly drew our attention to the importance of manufacturing industry, not, as is sometimes misrepresented by Conservative Members, instead of the service sector but as an essential complement to it, because in a essential economy the health of one depends on the other. That is the point that my hon. Friends were making.
My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) pointed out how alarming it is that, despite the fall in inflation, Britain has had low investment, and that despite a huge devaluation there are pressures on the balance of payments.
My hon. Friend the Member for Sherwood (Mr. Tipping) rightly drew attention to the importance of training and motivating young people, because it is they who are suffering most from the insecurity that is afflicting the labour market. How indefensible not only that the Government are abolishing the community action programme but that the Chancellor of the Exchequer cannot even remember the name of the projects that he supposes will replace it.
Anyone reading the motion must wonder why people feel so insecure—why only 20 per cent. of the public have any confidence in the Government's economic policies.

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We know the answer given by the President of the Board of Trade: "It is all in the mind". What he actually said—at a briefing during the CBI conference in Birmingham in November—was:
"What I am saying is that job insecurity is a state of mind."

Because it is out of touch, the Conservative party does not understand what people feel like when they have experienced the sharpest fall in living standards for 14 years, as they did last year; when they have had two years of appalling take-home pay; and when, in place of the year-on-year tax cuts that they were promised—indeed, in the last Conservative party manifesto the present Chief Secretary promised a full 5p off tax—they have been hammered with year-on-year tax rises.
Under the present Government, 400,000 people have had their homes repossessed, and many more teeter on the brink. As my hon. Friend the Member for Dumfermline, East (Mr. Brown) pointed out, 8.5 million people have experienced a spell of unemployment since 1992. The Conservatives, of course, said that that was a price worth paying. Under the Conservatives, who promised to cut crime, the crime rate has doubled, with incalculable human costs and financial costs of £17 billion a year. Is it any wonder that people who have experienced all that feel betrayed by the Government? Is it any wonder that they feel misled by the Conservatives—misled at the election, misled in Parliament and misled by the Budget? They have been betrayed by a Government who keep promising one thing and doing another.
Mr. Forman: I thank the hon. Gentleman for his courteous reference to my speech. That proves that he listened to what some Conservative Members said.
May I put to the hon. Gentleman the point that I would have put to his hon. Friend the Member for Dunfermline, East (Mr. Brown) if he had had the courtesy to give way to me? The Labour amendment makes much play of "job insecurity". As I said in my speech, that affects all our constituencies in one way or another; but I should like to know, here and now, what policies the hon. Gentleman's party proposes to deal with the real issues of job insecurity—bearing in mind that its causes have much to do with global markets and technological developments.
Mr. Smith: We keep telling Conservative Members what policies are needed to deal with job insecurity, and to make our economy prosperous and successful. We need an investment strategy to increase productivity and profitable investment; we need the policies for education and training, to improve skill levels and skill standards, to which my hon. Friends have referred; and we need the "welfare to work" proposals that we have spelt out, which would enable us to start to provide employment for the young and long-term unemployed.
The claims in the motion do not square with people's experience, or with the facts. It refers to "sustainable growth". Since the Government came to office, the average annual growth rate—including that resulting from North sea oil—has been 1.9 per cent. That is the worst growth rate since the second world war. The United Kingdom is 10th out of 15 countries in the European growth league, and growth has been slowing for two years.
The Government also boast about their record on inflation. Only last week, the latest Eurostat figures showed that the UK had come 11th out of 14 European
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countries in the inflation league. Since 1979, Britain has had a worse inflation record than any other industrial nation except Italy. No wonder the Governor of the Bank of England recently said:
"across the Group of Seven we're towards the bottom of the League."
The motion also has the nerve to refer to "Government borrowing coming down". Even on the optimistic growth forecast for this year in the Red Book, the Chancellor proposes to borrow twice as much between now and the end of the decade as he said that he would borrow just a year ago—an extra £39 billion between now and the millennium.
No one will be fooled by the Government's claims about the state of public finances. The burden of public debt has increased by 40 per cent. in real terms since the Tories came into office. Despite all the North sea oil and all the privatisation receipts, every person in work is carrying their share of the national debt—£12,500. Under the Tories, only £1 in every £16 of public spending goes into investment, whereas £1 in every £8 went into investment under Labour. Interest payments on the debt alone are set to increase from £96 billion in the first half of this decade to £115 billion in the second half.
Mr. Couchman: How does the hon. Gentleman explain the Labour party's most recent period in Government, when the value of our money halved in five years, between 1974 and 1979, and the value of the debt doubled?
Mr. Smith: That Labour Government had to deal with a quadrupling of oil prices, and with the type of global conditions with which this Government have never had to contend. We talk about public debt and the reasons for it. Unemployment is one reason, and it is now more than double the level it was when Labour left office. The average number of unemployed people under this Government is 1.5 million more than it was under that Labour Government. That is the £20 billion cost of unemployment, which is part of the price of the economic failure that the Conservatives have inflicted on us.
Mr. David Clelland: Will my hon. Friend confirm that when the Labour party came to power, in 1974, inflation was running at 13 per cent. and rising, and that when they left office, in 1979, it was 9 per cent. and falling?
Mr. Smith: I confirm that. I also point out that it was under this Conservative Government that inflation reached no less than 22 per cent. They should not mention inflation in their motion.
The last claim in the Government motion is about employment. What they do not mention, of course, is the brutal and undeniable fact that unemployment has more than doubled, at a cost of £20,000 million a year, under this Government. On job generation, the Tories' record in this country since 1979 has been the worst of all the European economies, and there are a million fewer people in jobs now than there were when the current Prime Minister took office.
It is interesting that even this Government, even in such a misleading motion as this one, did not dare to make any claims about investments. We discover why that is when

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we examine the figures. It is because Britain's share of European investment has fallen under this Government. In the present recovery, such as it is, manufacturing investment is alarmingly low—barely 1 per cent. above its depths in the recession of early 1992. At the same stage after the 1991 recession, investment had recovered by 21 per cent. At the same stage after the 1975 recession, it had recovered by 25 per cent., and yet we have just seen the sharpest quarterly fall in manufacturing investment for five years. It is no wonder that Treasury Ministers did not mention investment in their motion.
Despite Conservative Members' understandable desperation to talk up their economic record, the truth will out. The big picture is that the Government have an appalling record on investment, skills, education and the quality of our infrastructure. They sold off the family silver like there was no tomorrow, and now they are struggling to compensate for all their boom-bust macro-economic mismanagement in the years since 1979.
Britain's record under the Tories is one of a low-growth, low-investment and high-unemployment economy. The tendency has been to increase productivity by shedding jobs, to maintain competitiveness by devaluing the currency and to fund ever increasing transfer payments by cutting public investment.
Public spending goes ever more towards paying the price of economic and social failure, ever less towards investment for success. As my hon. Friend the Member for Newham, North-East pointed out, the result is that Britain is more divided now than at any time this century—with incalculable consequences for our social fabric and economic well-being.
Taken together, all this goes to show why Britain has gone down the world prosperity league to 18th place, and why it is only the 10th richest country in the European Union. It also explains why the Chancellor can convince so few of his colleagues of Britain's ability to hold its own in an economic and monetary union. These are the facts which all the Chancellor's knockabout propaganda cannot disguise.
From time to time, however, the Chancellor does give the game away. Such a revealing moment came in a "Today" interview a few weeks ago, when he let slip the following:
"In the union of national states that Europe is, what I want Britain to be is the most powerful economic force inside that Union … We have obviously a long way to go."
That certainly blows out of the water all the Government's claims about Britain being the enterprise centre of Europe.
Quite apart from anything else, enterprise centres need confident entrepreneurs. But business is far from confident about the economic position and prospects. The most recent Forum of Private Business survey showed that only a minority of businesses are expanding—38 per cent. of the total. As the summary of the survey said:
"The latest small reduction in interest rates was a welcome move, but the Forum of Private Business is still concerned that it may be insufficient to reverse the current trend of a decline in the number of expanding businesses."
Similarly, the latest CBI small and medium enterprises survey reported a virtual standstill in orders over the four months to the end of January, and said that overall growth was approaching a three-year low. And the main CBI
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quarterly survey showed manufacturing orders down for the first time in three years, employment falling at its sharpest rate since July 1994, and business confidence still falling.
Yesterday's Sunday Times Coopers and Lybrand survey of middle-market companies warned of a significant slowdown ahead. The fact is that the climate of confidence necessary for business will not be created by the recent Budget, which did nothing on capital allowances and nothing to encourage investment for the longer term, which increased the VAT threshold by half the rate of inflation only, and which increased business rates by 5 per cent. more than the rate of inflation.
Businesses, like people, can no longer trust what the Government say. They cannot trust the Government's claims about the past or their promises for the future. They certainly cannot rely on their forecasts. As my hon. Friend the Member for Dunfermline, East pointed out, year after year since 1990 the Government's business investment forecasts have turned out to exceed what actually happens. The Bank of England forecasters are just as badly let down by the Government. Their February inflation report states that economic growth since the end of 1994 has been slower than at first thought. Net exports were weaker than expected; investment growth was not as fast as projected. And the high point of economic achievement is represented by the statement that
"much of the increase in consumption was in spending on the National Lottery".
Is that really what the country has come to? Our economic success apparently owes more to gambling than to manufacturing investment or investment in infrastructure.
The Government's record in no way justifies the smug, self-congratulatory complacency of their motion. That, of course, is why we tabled our amendment. If the Government claim everything is so wonderful, let them explain why they have broken all their tax promises, why take-home pay has fallen two years in succession, why 8.5 million people have experienced Tory unemployment since 1992, why investment is so low, why public borrowing is so high, why we have one of the worst inflation records in Europe and why long-term interest rates are still one quarter higher than those in Germany.
Where British firms and their employees are doing well, we are the first to applaud them because they are succeeding despite the Government's economic policy, rather than because of it. Britain needs the strategy for investment, skills and infrastructure that Labour is calling for. We need the welfare-to-work policies that we have spelt out to remove people from benefit and to provide them with jobs. We need partnership so that people pull together for a strong economy and a fair society.
The mistake that Conservative Members make in their motion is that they judge Britain's economic prospects not against what the country is capable of, but against the dismal record for which they are responsible. When this country has fallen from 13th to 18th in the world prosperity league and is 24th on investment and 35th on education, when it has the lowest share of world trade this century, when German and American workers have 60 per cent. more plant and equipment than British workers, when job insecurity here is rife, living standards are running 25 per cent. behind the core of Europe and Conservative Members say they are satisfied, we say theirs is not the enterprise centre of Europe, but the complacency capital of the world. Britain can do better—much better—than that and, with Labour, it will.
9.41 pm
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): I have no doubt that the Government were right to hold this important debate on the economy, if only so that we could hear the excellent speeches of Conservative Members. In particular, my right hon. Friend the Member for Guildford (Mr. Howell) drew attention to the rise of the Asian economies and rightly pointed out that, for us, they are not so much a threat as an opportunity. My hon. Friend the Member for Wyre Forest (Mr. Coombs) spoke of the dramatically improved industrial relations that we are experiencing and of the need to press further ahead with our deregulation policy.
My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) talked about Governments of all complexions having less ability to influence most issues than we sometimes pretend. His remarks on job insecurity were far more sensitive than those of Labour Members. My hon. Friend the Member for Ribble Valley (Mr. Evans) talked knowledgeably about small businesses' interests and the benefits of lower tax rates. In an eloquent speech, my hon. Friend the Member for Gillingham (Mr. Couchman) spoke of the benefits of inward investment.
My hon. Friend the Member for Dover (Mr. Shaw) spoke knowledgeably of the Government's taxation changes and my hon. Friend the Member for Scarborough (Mr. Sykes) made a telling speech on the damage done to our nation's economy by the winter of discontent and of the great benefits that have derived from our privatisation programme. My hon. Friend the Member for Aylesbury (Mr. Lidington) prayed in aid the New Statesman and Society and spoke of the need to invest more in human capital. My hon. Friend the Member for Brentford and Isleworth (Mr. Deva) pointed out that all the Labour party has done today—again—is to talk Britain down.
I am sorry that I was out of the Chamber and missed the speech of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), but I shall read it with great care in Hansard tomorrow. I was sorry to learn of the mine accident to which the hon. Member for Sherwood (Mr. Tipping) drew the House's attention and I shall of course ensure that it is fully and properly investigated.
The hon. Member for Huddersfield (Mr. Sheerman) made what I think can be described as a thoughtful speech and I found much in it with which to agree. He spoke of there being more convergence of party policy than we like to admit—certainly much more than the Labour Front Bench likes to admit. He spoke of wealth creation being central and said that he wanted more manufacturing. Unfortunately, he spoiled it all by praising the United States of America and asking why we could not be more like them when, as a proportion of GDP, we are almost identical in terms of the level of manufacturing.
Opposition Back Benchers were more in touch with reality than their Front-Bench colleagues. My right hon. and learned Friend the Chancellor of the Exchequer spelled out the extremely favourable economic circumstances that face the United Kingdom. For the benefit of newcomers to the debate and of the hon. Member for Oxford, East (Mr. Smith) I shall précis my right hon. and learned Friend's speech and repeat some of his important points.
We will soon be entering our fifth year of a healthy and sustained economic recovery based on sound public finances and permanently low inflation. All the economic
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fundamentals are in place to ensure that that continues. Total underlying exports have risen by almost a third since the beginning of the recovery and they continue to rise. Unemployment has fallen by more than 750,000 since the beginning of the recovery; at below 8 per cent., it is at its lowest for five years. Meanwhile, 600,000 more people are in work than at the end of the recession. Perhaps most impressive is the fact that inflation has been below 4 per cent. for more than three years—something we have not experienced in the United Kingdom for almost 50 years.
We are just getting used to low inflation. Our national record on inflation since the war has, at times, been less than impressive. That is why we adopted the current inflation target and, more important, stuck to it. The underlying rate of inflation has averaged just 2.6 per cent. since we adopted the target in 1992, compared with an average rate of 6.5 per cent. in the 1980s and 13 per cent. in the 1970s. Low inflation is vital to providing the confidence to invest in the future. It is the best way to encourage business men and investors to take the long-term view.
I am glad to note that many of our businesses are responding. Manufacturing investment has risen by 6.5 per cent. in each of the past two years. What matters is the long term, not the short-term fluctuations of a notoriously volatile measure, with which Labour Members are so bedazzled. It is a pity that the Opposition will not spell out any of their targets, whether for inflation, investment or any of the other issues that really matter for the management of the economy.
Mr. Malcolm Bruce: I obviously agree with the right hon. Gentleman that permanently low inflation is a desirable objective. Is he aware of a report published on Friday by the Library which shows that Britain is the fourth worst performer on inflation in the European Union and that we are on course to fail the Maastricht inflation criteria? How, in his opinion, can the Government ensure that we do qualify and that we raise ourselves to near the top of the European Union average?
Mr. Lang: Our inflation rate is low, but the hon. Gentleman must recognise that all the inflation rates in the European economies are relatively close. What is significant is that, compared with the appalling record of the last Labour Government, under whom the cost of living doubled, Britain's record has improved dramatically in recent years—as it did in the 1980s.
For the benefit of the Opposition, I shall spell out what a commitment to the long-term health of the United Kingdom economy means in practice. Since 1979, overall investment has risen faster in this country than in any other major European economy. What is more, it has risen six times faster than it did under the last Labour Government. Investment in plant and machinery has risen by more than 50 per cent. and business investment has risen by more than a third. The Confederation of British Industry has reported investment intentions at their highest level for six years.
The hon. Member for Dunfermline, East (Mr. Brown) spoke about job insecurity and tried to distort and misquote what I have said on the subject. I emphasise, as I have previously, that job insecurity exists, and we must take that into account. People feel a sense of anxiety about

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future employment. However, the reality is that, by creating a flexible labour market, as we are doing, we shall be best prepared to create the jobs and increased employment that will help to remove the sense of insecurity.
The 1994 labour force survey showed that three quarters of men in employment had been with the same employer for more than two years—the same figure as 10 and 20 years ago. The change is nothing like as dramatic as the hon. Member for Dunfermline, East suggested. Another survey of males between 30 and 49 showed that 44 per cent. had been in the same job for at least 10 years. Further research shows that, of those in jobs for five to 10 years, 80 per cent. will still be there in five years and most of those who move will go to better jobs. The hon. Gentleman drew attention to the Juvos database, which shows that the number going through unemployment are doing so for shorter periods. Half of those who claim unemployment benefit leave the count in three months and two thirds leave in six months.
The biggest cause of insecurity is unemployment. The fact that unemployment has fallen for two and a half years and is down by almost 200,000 in the past year alone is a considerable boost to the increase in a sense of security. At below 8 per cent., unemployment is more than two percentage points below the European average, three points lower than in France, four points lower than in Italy and almost 14 points lower than in Spain. Britain has more of its people in work and fewer out of work than any other major European country.
Mr. Michael Connarty: Is the President of the Board of Trade not concerned that, of the 25 million people employed in Britain, 6 million are in part-time employment? Only 19 million people are keeping an economy of 56 million people going. Full-time employment is being substituted by part-time, low-paid employment. Is he proud of that?
Mr. Lang: The vast majority of people in part-time employment are in it because that is the kind of employment that they want. The hon. Gentleman will find that, although youth unemployment in Britain is too high—almost 16 per cent.—in France it is almost 28 per cent., in Italy it is 36 per cent. and in Spain it is 38 per cent. In Britain, unemployment among women is 7 per cent., in France it is almost double that at almost 14 per cent., in Italy it is 17.5 per cent. and in Spain it is more than 29 per cent. Almost every comparison that one can find shows that enormous progress has been made in the United Kingdom compared with European Union countries in recent years.
However, we need greater flexibility in employment. It is only by pursuing the Government's flexible labour market policies that we will create more jobs and thus greater job security.
Mr. Andrew Smith: If the news about unemployment is all so good, why are more than 1 million fewer people in employment than when his right hon. Friend became Prime Minister? Is that not a true indictment of the Government's unemployment record?
Mr. Lang: It is to the credit of our employment measures that 68 per cent. of the eligible population in the
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United Kingdom are in work, which is more than any other comparable country in the EU. The point that I was making is that our flexible labour market policies are creating jobs and thus creating more job security. The Opposition's policies include the national minimum wage and the social chapter, which would destroy hundreds of thousands of jobs. That is no way to create job security. The rigidity that would come in with the stakeholder policy—the unions would stake out their share of power and fence in the economy—would result in a loss of jobs and a lack of confidence.
The deputy leader of the Labour party—the right hon. Member for Kingston upon Hull, East (Mr. Prescott)—said of the national minimum wage on London Weekend Television:
"I knew that the consequences were that there'd be some shake-out, any silly fool knew that".
From their own mouths, Labour's policies stand condemned. The only fools left are those in the right hon. Gentleman's party, who would pursue policies that they know would destroy jobs, not create them.
What are the Labour party's policies? We listened in vain today. We hoped that we might hear more about the social chapter, which was introduced by the Labour party leader as just a set of principles. As soon as he discovered that it would be part of a solemn and binding treaty and an obligation and that most of its proposals, coming through under qualified majority voting, would be imposed on the United Kingdom, he suddenly announced that he would start picking and mixing, backing off, and trying to negotiate some special arrangements.
We know that Labour Members want a national minimum wage, but they will not tell us at what rate because they know that, at £4 an hour, it would cost us 900,000 jobs if only half the differentials were restored. We hear that they are backing off from their training levy. We hear that stakeholding, the big idea of just a couple of months ago, is now just a slogan. The sweetheart deal with BT to set up a cable network around Britain—a special favour for party advantage to a monopolist company—has suddenly been abandoned. All the Labour party's policies are quietly being put back in their box. Like the Cheshire cat in "Alice in Wonderland", piece by piece, Labour's policies are disappearing and all we are left with is the smile.
Labour has no inflation target and no borrowing target. There is just one commitment from the Labour party, and that is for a windfall tax. What an appalling message to send to the people of this country. A windfall tax is, by definition, a one-off tax. It cannot be spent 10 times over, as it has been by the Labour party, on successive policies. It would destroy investment plans, it would be unfair and capricious and it would penalise success. Nothing is more designed to destroy competition in the privatised utilities than such a tax.
Labour Members talk about investment. They should look at our inward investment record as well as the indigenous investment record. Since 1981, not only has our overall investment rate over the cycle been faster than that of every nation in the G7 group except Japan, but we have seen the world's verdict on Britain in inward investment. We see billions of pounds creating tens of thousands of jobs and bringing many new industries and new technologies to this country.
Just as it is with inward investment, so it is with outward investment and with trade. Britain is first and foremost a trading nation, out again on the world stage.

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With 1 per cent. of the world's population, we are the fifth largest exporter. We export more per head than either Japan or the United States. We are selling more goods and services than ever before. Our underlying export volumes have risen by a third since the beginning of the recovery.
We will continue to work to expand global trade and to secure free trade through multilateral trade liberalisation. Just as we were a key player in the Uruguay round, so we shall seek to secure progress through the World Trade Organisation. We have identified areas in which we can develop the case for further open trade around the world at the meeting in Singapore.
Britain is now back on its feet again. The Labour party has made strenuous efforts to convince anyone who will listen that we have fallen behind many of our main competitors. My right hon. and learned Friend the Chancellor pointed out Labour's deceit in seeking to project a table of world prosperity growth in which, it transpired, the slippage from 13th to 16th place took place not over the term of this Government, but in 1979–80, the first year of our period in office when, as everyone knows, we had a mess to clear up after the Labour Government.
What Labour Members have neglected to say is that our GDP per head is actually in line with that of the European Union and 10 per cent. ahead of that of Europe as a whole. They neglected to point out that our living standards have risen by 40 per cent. since 1979 compared with only 1 per cent. under the previous Labour Government. They neglected to point out that we have closed three quarters of the gap in manufacturing productivity against France and Germany since 1979, a gap that widened under the previous Labour Government.
Labour Members clearly enjoy league tables, so I shall give them some of my own. Between 1974 and 1979, of the major EU countries, the United Kingdom had the slowest GDP growth, the slowest growth in manufacturing productivity, the second slowest growth in manufacturing output and the slowest growth in private consumption. I reinforce what I say with a statement today by Mr. David Kern, the NatWest bank's chief economist. He says:
"Perceptions of UK underperformance are incorrect and need to be carefully reassessed".
Writing in the March issue of the group's "Economic and Financial Outlook", he then says:
"In terms of per capita GNP/GDP, the UK has narrowed the gap with its main West European and North American competitors; while growth has been higher in the UK than in comparable economies since the early 1980s."
He is right.
Since 1980, the United Kingdom has had the fastest growth in GDP, equal to that of Germany. It has had the fastest growth in productivity bar none, the fastest growth in manufacturing output, the fastest growth in investment and the fastest growth in private consumption, with the lowest tax burden.
Free enterprise and free trade are the twin pillars of our economic policy, and both are bringing growing success in an increasingly competitive global economy. Our policies—privatisation, liberalisation, deregulation and flexible labour markets—are increasingly finding favour around the world. We are in the mainstream—we are leading world opinion. We are punching above our weight as a nation because, under this Government, we are competitive again. Socialism is in retreat and decline all
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over the world. Last Saturday in Australia, the Labor party bit the dust. Yesterday in Spain, Labour bit the dust. Last year in France, Labour bit the dust. Socialism is irrelevant there, and irrelevant here. I urge the House to stick by the Government's policies, throw out the amendment and support the motion.
Question put, That the amendment be made:—
The House divided: Ayes 242, Noes 288.

Division No. 66]

[10.00 pm

AYES

Abbott, Ms Diane

Dobson, Frank

Ainger, Nick

Donohoe, Brian H

Ainsworth, Robert (Cov'try NE)

Dowd, Jim

Allen, Graham

Eagle, Ms Angela

Alton, David

Eastham, Ken

Anderson, Donald (Swansea E)

Etherington, Bill

Armstrong, Hilary

Evans, John (St Helens N)

Ashton, Joe

Ewing, Mrs Margaret

Austin-Walker, John

Fatchett, Derek

Barnes, Harry

Field, Frank (Birkenhead)

Barron, Kevin

Flynn, Paul

Battle, John

Foster, Rt Hon Derek

Bayley, Hugh

Foster, Don (Bath)

Bell, Stuart

Foulkes, George

Bennett, Andrew F

Fyfe, Maria

Benton, Joe

Galbraith, Sam

Bermingham, Gerald

Galloway, George

Berry, Roger

Gapes, Mike

Betts, Clive

Garrett, John

Blunkett, David

George, Bruce

Boateng, Paul

Gerrard, Neil

Bradley, Keith

Godman, Dr Norman A

Bray, Dr Jeremy

Godsiff, Roger

Brown, Gordon (Dunfermline E)

Golding, Mrs Llin

Bruce, Malcolm (Gordon)

Gordon, Mildred

Burden, Richard

Grant, Bernie (Tottenham)

Byers, Stephen

Griffiths, Nigel (Edinburgh S)

Callaghan, Jim

Griffiths, Win (Bridgend)

Campbell, Mrs Anne (C'bridge)

Grocott, Bruce

Campbell, Menzies (Fife NE)

Gunnell, John

Campbell, Ronnie (Blyth V)

Hain, Peter

Campbell-Savours, D N

Hanson, David

Canavan, Dennis

Hardy, Peter

Cann, Jamie

Harman, Ms Harriet

Chidgey, David

Harvey, Nick

Chisholm, Malcolm

Hattersley, Rt Hon Roy

Church, Judith

Henderson, Doug

Clapham, Michael

Heppell, John

Clark, Dr David (South Shields)

Hill, Keith (Streatham)

Clarke, Eric (Midlothian)

Hinchliffe, David

Clarke, Tom (Monklands W)

Hodge, Margaret

Clelland, David

Hoey, Kate

Clwyd, Mrs Ann

Hogg, Norman (Cumbernauld)

Coffey, Ann

Home Robertson, John

Cohen, Harry

Hood, Jimmy

Connarty, Michael

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

Cook, Robin (Livingston)

Howells, Dr Kim (Pontypridd)

Corbyn, Jeremy

Hoyle, Doug

Corston, Jean

Hughes, Kevin (Doncaster N)

Cummings, John

Hughes, Robert (Aberdeen N)

Cunliffe, Lawrence

Hughes, Roy (Newport E)

Cunningham, Jim (Covy SE)

Hughes, Simon (Southwark)

Cunningham, Roseanna

Illsley, Eric

Dafis, Cynog

Ingram, Adam

Dalyell, Tam

Jackson, Glenda (H'stead)

Darling, Alistair

Jackson, Helen (Shef'ld, H)

Davies, Bryan (Oldham C'tral)

Jamieson, David

Davies, Chris (L'Boro & S'worth)

Janner, Greville

Davies, Rt Hon Denzil (Llanelli)

Jones, Jon Owen (Cardiff C)

Davies, Ron (Caerphilly)

Jones, Lynne (B'ham S O)

Dewar, Donald

Jones, Martyn (Clwyd, SW)

Dixon, Don

Jones, Nigel (Cheltenham)

119

Jowell, Tessa

Primarolo, Dawn

Kaufman, Rt Hon Gerald

Purchase, Ken

Keen, Alan

Radice, Giles

Kennedy, Charles (Ross.C&S)

Randall, Stuart

Khabra, Piara S

Raynsford, Nick

Kilfoyle, Peter

Reid, Dr John

Lestor, Joan (Eccles)

Rendel, David

Liddell, Mrs Helen

Robertson, George (Hamilton)

Litherland, Robert

Robinson, Geoffrey (Co'try NW)

Livingstone, Ken

Roche, Mrs Barbara

Lloyd, Tony (Stretford)

Rooker, Jeff

Llwyd, Elfyn

Ross, Ernie (Dundee W)

Lynne, Ms Liz

Rowlands, Ted

McAllion, John

Ruddock, Joan

McAvoy, Thomas

Salmond, Alex

McCartney, Ian

Sedgemore, Brian

McCartney, Robert

Sheerman, Barry

Macdonald, Calum

Sheldon, Rt Hon Robert

McFall, John

Shore, Rt Hon Peter

McKelvey, William

Short, Clare

McLeish, Henry

Simpson, Alan

McMaster, Gordon

Skinner, Dennis

McNamara, Kevin

Smith, Andrew (Oxford E)

MacShane, Denis

Smith, Chris (Isl'ton S & F'sbury)

Madden, Max

Smith, Llew (Blaenau Gwent)

Maddock, Diana

Snape, Peter

Mahon, Alice

Soley, Clive

Mandelson, Peter

Spearing, Nigel

Marek, Dr John

Spellar, John

Marshall, David (Shettleston)

Squire, Rachel (Dunfermline W)

Marshall, Jim (Leicester, S)

Steinberg, Gerry

Martin, Michael J (Springburn)

Stevenson, George

Martlew, Eric

Stott, Roger

Maxton, John

Strang, Dr. Gavin

Meacher, Michael

Straw, Jack

Meale Alan

Sutcliffe, Gerry

Michael, Alun

Taylor, Mrs Ann (Dewsbury)

Michie, Bill (Sheffield Heeley)

Taylor, Matthew (Truro)

Timms, Stephen

Milburn, Alan

Tipping, Paddy

Mitchell, Austin (Gt Grimsby)

Touhig, Don

Morgan, Rhodri

Trickett, Jon

Morley, Elliot

Turner, Dennis

Morris, Rt Hon Alfred (Wy'nshawe)

Tyler, Paul

Morris, Estelle (B'ham Yardley)

Vaz, Keith

Mowlam, Marjorie

Walker, Rt Hon Sir Harold

Mullin, Chris

Walley, Joan

Murphy, Paul

Wardle, Charles (Bexhill)

Oakes, Rt Hon Gordon

Wareing, Robert N

O'Brien, Mike (N W'kshire)

Wicks, Malcolm

O'Hara, Edward

Williams, Rt Hon Alan (Sw'n W)

Olner, Bill

Williams, Alan W (Carmarthen)

Parry, Robert

Wilson, Brian

Pendry, Tom

Wise, Audrey

Pickthall, Colin

Worthington, Tony

Pike, Peter L

Wright, Dr Tony

Pope, Greg

Young, David (Bolton SE)

Powell, Ray (Ogmore)

Prentice, Bridget (Lew'm E)

Tellers for the Ayes:

Prentice, Gordon (Pendle)

Mr. George Mudie and Ms Janet Anderson.

Prescott, Rt Hon John

NOES

Ainsworth, Peter (East Surrey)

Banks, Robert (Harrogate)

Aitken, Rt Hon Jonathan

Bates, Michael

Alison, Rt Hon Michael (Selby)

Batiste, Spencer

Amess, David

Bellingham, Henry

Arbuthnot, James

Bendall, Vivian

Arnold, Jacques (Gravesham)

Beresford, Sir Paul

Arnold, Sir Thomas (Hazel Grv)

Biffen, Rt Hon John

Ashby, David

Body, Sir Richard

Atkins, Rt Hon Robert

Bonsor, Sir Nicholas

Atkinson, David (Bour'mouth E)

Booth, Hartley

Baker, Nicholas (North Dorset)

Boswell, Tim

Baldry, Tony

Bottomley, Peter (Eltham)

Banks, Matthew (Southport)

Bottomley, Rt Hon Virginia

120

Bowden, Sir Andrew

Gillan, Cheryl

Bowis, John

Goodlad, Rt Hon Alastair

Boyson, Rt Hon Sir Rhodes

Goodson-Wickes, Dr Charles

Brandreth, Gyles

Gorman, Mrs Teresa

Brazier, Julian

Gorst, Sir John

Bright, Sir Graham

Grant, Sir A (SW Cambs)

Brooke, Rt Hon Peter

Greenway, Harry (Ealing N)

Brown, M (Brigg & Cl'thorpes)

Greenway, John (Ryedale)

Browning, Mrs Angela

Griffiths, Peter (Portsmouth, N)

Bruce, Ian (South Dorset)

Grylls, Sir Michael

Budgen, Nicholas

Gummer, Rt Hon John Selwyn

Burt, Alistair

Hague, Rt Hon William

Butler, Peter

Hamilton, Neil (Tatton)

Butterfill, John

Hampson, Dr Keith

Carlisle, John (Luton North)

Hannam, Sir John

Carlisle, Sir Kenneth (Lincoln)

Hargreaves, Andrew

Carrington, Matthew

Harris, David

Carttiss, Michael

Haselhurst, Sir Alan

Cash, William

Hawkins, Nick

Channon, Rt Hon Paul

Hawksley, Warren

Chapman, Sir Sydney

Hayes, Jerry

Clappison, James

Heald, Oliver

Clark, Dr Michael (Rochford)

Heath, Rt Hon Sir Edward

Clarke, Rt Hon Kenneth (Ru'clif)

Heathcoat-Amory, Rt Hon David

Clifton-Brown, Geoffrey

Hendry, Charles

Coe, Sebastian

Heseltine, Rt Hon Michael

Congdon, David

Higgins, Rt Hon Sir Terence

Coombs, Anthony (Wyre For'st)

Hill, James (Southampton Test)

Coombs, Simon (Swindon)

Hogg, Rt Hon Douglas (G'tham)

Cope, Rt Hon Sir John

Horam, John

Cormack, Sir Patrick

Hordern, Rt Hon Sir Peter

Couchman, James

Howard, Rt Hon Michael

Cran, James

Howell, Rt Hon David (G'dford)

Currie, Mrs Edwina (S D'by'ire)

Howell, Sir Ralph (N Norfolk)

Curry, David (Skipton & Ripon)

Hughes, Robert G (Harrow W)

Davies, Quentin (Stamford)

Hunt, Rt Hon David (Wirral W)

Davis, David (Boothferry)

Hunt, Sir John (Ravensbourne)

Day, Stephen

Hunter, Andrew

Deva, Nirj Joseph

Hurd, Rt Hon Douglas

Devlin, Tim

Jack, Michael

Dicks, Terry

Jackson, Robert (Wantage)

Dorrell, Rt Hon Stephen

Jenkin, Bernard

Douglas-Hamilton, Lord James

Jessel, Toby

Dover, Den

Johnson Smith, Sir Geoffrey

Duncan-Smith, Iain

Jones, Gwilym (Cardiff N)

Dunn, Bob

Jones, Robert B (W Hertfdshr)

Durant, Sir Anthony

Jopling, Rt Hon Michael

Dykes, Hugh

Kellett-Bowman, Dame Elaine

Eggar, Rt Hon Tim

Key, Robert

Elletson, Harold

Kirkhope, Timothy

Emery, Rt Hon Sir Peter

Knapman, Roger

Evans, David (Welwyn Hatfield)

Knight, Mrs Angela (Erewash)

Evans, Jonathan (Brecon)

Knight, Rt Hon Greg (Derby N)

Evans, Nigel (Ribble Valley)

Knight, Dame Jill (Bir'm E'st'n)

Evans, Roger (Monmouth)

Knox, Sir David

Evennett, David

Kynoch, George (Kincardine)

Faber, David

Lait, Mrs Jacqui

Fabricant, Michael

Lamont, Rt Hon Norman

Fenner, Dame Peggy

Lang, Rt Hon Ian

Field, Barry (Isle of Wight)

Lawrence, Sir Ivan

Fishburn, Dudley

Legg, Barry

Forman, Nigel

Leigh, Edward

Forsyth, Rt Hon Michael (Stirling)

Lennox-Boyd, Sir Mark

Forth, Eric

Lester, Sir James (Broxtowe)

Fowler, Rt Hon Sir Norman

Lidington, David

Fox, Dr Liam (Woodspring)

Lilley, Rt Hon Peter

Fox, Rt Hon Sir Marcus (Shipley)

Lloyd, Rt Hon Sir Peter (Fareham)

Freeman, Rt Hon Roger

Lord, Michael

French, Douglas

Luff, Peter

Fry, Sir Peter

Lyell, Rt Hon Sir Nicholas

Gale, Roger

MacGregor, Rt Hon John

Gallie, Phil

MacKay, Andrew

Gardiner, Sir George

Maclean, Rt Hon David

Gare-Jones, Rt Hon Tristan

McLoughlin, Patrick

Garnier, Edward

McNair-Wilson, Sir Patrick

Gill, Christopher

Madel, Sir David

121

Maitland, Lady Olga

Smyth, The Reverend Martin

Malone, Gerald

Speed, Sir Keith

Mans, Keith

Spencer, Sir Derek

Marland, Paul

Spicer, Sir James (W Dorset)

Marlow, Tony

Spicer, Sir Michael (S Worcs)

Marshall, John (Hendon S)

Spink, Dr Robert

Martin, David (Portsmouth S)

Spring, Richard

Mawhinney, Rt Hon Dr Brian

Sproat, Iain

Mellor, Rt Hon David

Squire, Robin (Hornchurch)

Merchant, Piers

Stanley, Rt Hon Sir John

Mills, Iain

Steen, Anthony

Mitchell, Andrew (Gedling)

Stephen, Michael

Mitchell, Sir David (NW Hants)

Stern, Michael

Moate, Sir Roger

Stewart, Allan

Molyneaux, Rt Hon Sir James

Streeter, Gary

Monro, Rt Hon Sir Hector

Sumberg, David

Montgomery, Sir Fergus

Sweeney, Walter

Neubert, Sir Michael

Sykes, John

Newton, Rt Hon Tony

Tapsell, Sir Peter

Nicholls, Patrick

Taylor, Ian (Esher)

Nicholson, David (Taunton)

Taylor, John M (Solihull)

Norris, Steve

Taylor, Sir Teddy (Southend, E)

Onslow, Rt Hon Sir Cranley

Thomason, Roy

Ottaway, Richard

Thompson, Sir Donald (C'er V)

Page, Richard

Thompson, Patrick (Norwich N)

Paice, James

Thornton, Sir Malcolm

Patnick, Sir Irvine

Thurnham, Peter

Patten, Rt Hon John

Townend, John (Bridlington)

Pawsey, James

Townsend, Cyril D (Bexl'yh'th)

Peacock, Mrs Elizabeth

Tracey, Richard

Pickles, Eric

Tredinnick, David

Porter, Barry (Wirral S)

Trend, Michael

Porter, David (Waveney)

Twinn, Dr Ian

Powell, William (Corby)

Viggers, Peter

Redwood, Rt Hon John

Waldegrave, Rt Hon William

Renton, Rt Hon Tim

Walden, George

Richards, Rod

Waller, Gary

Riddick, Graham

Ward, John

Rifkind, Rt Hon Malcolm

Wardle, Charles (Bexhill)

Robathan, Andrew

Waterson, Nigel

Roberts, Rt Hon Sir Wyn

Watts, John

Robertson, Raymond (Ab'd'n S)

Wells, Bowen

Robinson, Mark (Somerton)

Wheeler, Rt Hon Sir John

Roe, Mrs Marion (Broxbourne)

Whittingdale, John

Rowe, Andrew (Mid Kent)

Widdecombe, Ann

Rumbold, Rt Hon Dame Angela

Wiggin, Sir Jerry

Sackville, Tom

Wilkinson, John

Sainsbury, Rt Hon Sir Timothy

Wilshire, David

Scott, Rt Hon Sir Nicholas

Winterton, Mrs Ann (Congleton)

Shaw, David (Dover)

Wolfson, Mark

Shephard, Rt Hon Gillian

Wood, Timothy

Shepherd, Sir Colin (Hereford)

Yeo, Tim

Shepherd, Richard (Aldridge)

Young, Rt Hon Sir George

Shersby, Sir Michael

Sims, Roger

Tellers for the Noes:

Skeet, Sir Trevor

Mr. Derek Conway and Mr. Simon Burns.

Smith, Tim (Beaconsfield)

Amendment accordingly negatived.
Main Question put and agreed to.
Resolved,
That this House congratulates the Government on the fundamental health of the British economy, as demonstrated by nearly four years of sustainable growth, the best inflation performance for almost 50 years, Government borrowing coming down, 29 months of falling unemployment and an increase of over half a million people in jobs since the recovery began, and recognises that this is a result of the Government's economic policies which are making the United Kingdom the enterprise centre of Europe.

DELEGATED LEGISLATION
Madam Speaker: With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 101(6) (Standing Committees on Delegated Legislation),

That the draft Juries (Northern Ireland) Order 1996, which was laid before this House on 31st January, be approved.
AGRICULTURE
That the Farm and Conservation Grant (Variation) Scheme 1996 (S.I., 1996, No. 230), dated 5th February 1996, a copy of which was laid before this House on 9th February, be approved.

URBAN DEVELOPMENT
That the Central Manchester Development Corporation (Area and Constitution) Order 1996, dated 6th February 1996, a copy of which was laid before this House on 13th February, be approved.—[Dr. Liam Fox.]
Question agreed to.

PETITION

  School Playing Fields, Castle Point
  10.15 pm
  Dr. Robert Spink: It is with regret that I present a petition to save Hadleigh school's playing fields. I should not have to save those fields, because the Liberal and Labour-controlled Essex county council could and should even now withdraw its claim to them.
  The petition was raised by Hadleigh junior school and Hadleigh infants school to save their playing fields and was signed by more than 600 of my constituents. The petition reads:
  "To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament Assembled, the Humble Petition of the residents of Hadleigh and the surrounding area, Sheweth that we, the undersigned, are deeply concerned that Essex County Councillors decided to fence off and claim ownership of part of a playing field which had previously served Hadleigh Junior School. That the aforementioned Councillors did this as part of a political response to the democratic decision of parents to secure for the school Grant Maintained status. That we are deeply concerned that the whole playing field is needed by the children and should be retained for educational and community use. That we are deeply concerned about the County Councillors' intention to build homes on the land or to sell off the land for housebuilding at some time in the future. That we deplore the decision of Labour Borough Councillors to change the Local Plan Draft in order to remove the designation of the field for educational use. That we support Councillor Doug Robert's objection to the Borough Draft Local Plan to reinstate the land usage as exclusively educational and community use which would prevent further housebuilding and all the consequential adverse environmental and traffic implications. We are disappointed that the Educational Assets Board have rejected Hadleigh Junior School's claim against the County Councillors and we seek to have this decision reversed.
  Wherefore your petitioners pray, that your Honourable House do urge the right hon. John Major MP, Prime Minister, to use his powers to reverse the decision of the Education Assets Board and save Hadleigh School playing field for the children.
  And your petitioners in duty bound will ever pray.
  To lie upon the Table.

  Campbell's Soups
  Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]
  10.17 pm
  Mr. D. N. Campbell-Savours: Since last October, I have been running a determined campaign seeking the reversal of the decision by Campbell's Soups of the United States of America to close the Homepride plant in my constituency. In an Adjournment debate in November, I set out the background to that decision, while expressing the anger of the people of Maryport over the loss of one of the town's foremost employers. Campbell's Soups, having paid £58.6 million for the plant at the beginning of August last year, promptly announced its closure 11 weeks later.
  The decision was an outrage. It has never been justified commercially, and has been repeatedly questioned during a number of television programmes and articles in the national press—notably the Daily Telegraph, The Guardian, The Independent, the Financial Times, the Daily Mirror, the regional media, and "Newsnight".
  Since the announcement, I have lobbied the Prime Minister, raised innumerable questions on the Floor of the House, used every available parliamentary procedural peg to put the case for my constituents, attended Campbell's annual general meeting in Camden, New Jersey, to lobby shareholders, and visited the King's Lynn Campbell's Soups plant to which production is being transferred, with a personal appeal to the work force for their support.
  During the campaign, I have written to 2,300 newspaper editors in every part of the kingdom seeking publication of a letter appealing for a national boycott of Campbell's Soups products; written to more than 300 major supermarket groups and chains promoting the boycott; approached thousands of organisations throughout the country, either directly or by way of correspondence, drawing attention to the plight of my constituents; and secured the support of 340 Members of Parliament on a motion asking for the company to reverse its decision.
  On the international stage, I have, in conjunction with British trade unions, sought the support of trade unions throughout the western world and liaised with Tony Cunningham, Member of the European Parliament for Cumbria, in promoting the boycott throughout the Community.
  However, all that effort has been to no avail. The company, which is 58 per cent. owned by a single family and its successors in the United States, prefers to thwart the views of the majority in the House of Commons—as expressed in the early-day motion—by insisting upon pursuing its original decision. The motion received the 13th largest number of signatures of the 30,000 similar motions tabled in the past 56 years in the House of Commons.
  The facts are that Campbell's Soups, through its wholly owned, unaccountable British operations, has proved completely insensitive to the very reasonable and commercially sound pleas that it has received from various parts of the world. To cap it all, the Homepride
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  work force have been driven into a financial settlement with the company under the pressure of changes in entitlement to unemployment benefit, while the redundancy package has been tailored in such a way as to ensure loyalty until the final day of operations. The work force have been effectively silenced. In my view, it is the worst closure decision in the constituency in the past 16 years—it is an outrage from start to finish.
  My response, with the boycott campaign of Campbell's Soups and Fray Bentos products, has clearly been successful, considering the thousands of letters and approaches that I have had from all over the country. Recent attempts to provoke discussion among Campbell's Soups King's Lynn work force—the beneficiaries of the Maryport closure—have failed. It knows that King's Lynn does not need the Homepride lines. It knows also that offers of employment to Maryport workers ring hollow when the same jobs are being offered to King's Lynn workers.
  The reality is that only half a dozen people are transferring from Maryport—mostly from management—and statistics produced by Coutts to identify employment opportunities in the Maryport area are nonsense. Coutts' statistics are the laughing stock of west Cumbria. Its well-meaning operation has simply succeeded in reducing the availability of job opportunities for the existing unemployed. Campbell's has not created a single job.
  The King's Lynn work force, without union recognition, has been particularly unresponsive, and is kept on a tight rein by Campbell's management. Perhaps that accounts for the lack of national publicity surrounding the five scalding incidents and one fatal accident at the King's Lynn site, which were revealed in a parliamentary answer to me last week. The King's Lynn work force should be asking why Campbell's Soups promotes union recognition in America and not in the United Kingdom.
  Mr. Henry Bellingham: Will the hon. Gentleman give way?
  Mr. Campbell-Savours: No, I am sorry, but I wish to complete my remarks. I shall certainly give way if I have time, or the hon. Gentleman can intervene on the Minister.
  To answer the boycott, Campbell's has employed the services of Barclay Stratten for advice. I believe that it has been poorly advised—indeed, journalists have described it as incompetent. It would have been better if the company had used its own Member of Parliament, the hon. Member for North-West Norfolk. He would certainly have corrected its wildly inaccurate interpretation of events, and particularly its suggestion that I was annoyed by his intervention. I can only advise Campbell's to review the Barclay Stratten account.
  What of the future? I have argued repeatedly that Campbell's Soups purchased Homepride only for its brand name. The reality is that the Homepride brand name and the "Fred" advertising logo have opened the door to immense further potential in national distribution. Dalgety recognised that potential, which is why it decided to invest more than £9 million in Maryport in 1994.

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  Dalgety's former finance director, Mr. Peter Byers, who was responsible for Homepride operations and who now works for Campbell's Soups, recognised the potential for cook-in sauces. I suspect that he was the key to the Campbell's Soups decision. His role in the whole affair raises a number of questions. He, drawing on his time at Homepride, must have known that the Homepride label would open the door to increased market share.
  The die is cast, and we must now look to the future. I now understand, and the House should know, that there have been early discussions in west Cumbria about a proposal to establish a new company, to be called Marypride. That company could manufacture processed food products. The idea is in its infancy. The Marypride brand name knocks on an open door. From the point of view of the local community in Maryport, it would capitalise on pride that the townspeople have in their community. What they have built in the past could be re-created in the future. I wish to say no more on that matter at this stage.
  The House should also consider the lessons that can be learnt from the takeover of Homepride, and there are many. Campbell's Soups' acquisition arose only in conditions of binding confidentiality on bidders at the time of the Dalgety sale.
  The question we need to ask is whether it is in the public interest for a predator in the market, hiding behind a wall of such confidentiality, to be able to acquire a target company without any element of accountability. Under current arrangements, the whole area is unregulated, and it is not my purpose to advocate onerous regulatory requirements that undermine enterprise and impede the operations of the market. Nevertheless, takeover arrangements in those limited conditions require some greater transparency to balance the interests of employees with those of shareholders and corporate decision takers.
  In the Homepride case, at least six organisations submitted bids during the Dalgety auction. Most of the bids came from companies or consortia that intended to keep the Homepride plant open. In the case of at least one bid, I am confident that—if that company had won—not only would Homepride have been secure, but it would have grown into a substantial food manufacturing company over the years, and would have employed many hundreds of people. The problem was that the accepted bid came from a company whose intentions were closure. It all happened behind closed doors. The Mustoe agenda was realised in conditions of total confidentiality. No one knew of the impending holocaust.
  I ask a simple question: is it in the public interest for bids to be transacted in such secrecy? Could corporate takeovers survive greater transparency? What would have happened if, at the time of bidding for Homepride, each bidder—having cleared the preliminary hurdles—had been required immediately prior to bids closing to indicate publicly their interest in Homepride?
  The interested parties—the local authorities, the regional Department of Trade and Industry, the training and enterprise council, the local development agencies, the Member of Parliament and, most of all, the work force—would have known which companies were bidding, and, after the close of bids, whom to approach
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  about the prospects for the company. Every bidder would have received an approach as to their intentions. They might have remained silent, but we can be sure that a number of bidders would have been prepared to give assurances as to the future. Dalgety, subject to public pressure, would at least have taken those assurances into account.
  One could easily devise a regulatory framework for such a proposal. All that it would require is a bid notification procedure. That single regulatory change would allow decisions on the acceptability of bids to be influenced by issues other than price, as is the case today on environmental matters. Transparency would open the door to an element of accountability.
  In the Homepride case, if such a procedure had been in operation, Campbell's Soups would probably never have succeeded and, even if it had survived the bidding stage, public pressure would have forced a withdrawal prior to or even during exchange of contracts. Its motives would have been flushed out far earlier, and Dalgety would have been obliged to sell to a more sensitive predator. Alternatively, Dalgety itself, conscious of its public image, might have sought some form of undertaking about Maryport's future, if only to avoid a public row.
  It is arguable that these transparency arrangements could be taken a stage further. Some might argue that bidders should be identified, and that there should be a regulatory requirement on them to define their intentions for a given period—for example, nine or 12 months. That might take the form of a time-limited statement of intent—I call it an SOI—at the time of public notification of the bid. I recognise the complications that could arise under an SOI procedure, certainly in terms of disclosure of commercially confidential information to bidders by vendors. Nevertheless, having given the matter much thought over recent weeks, I do not regard the difficulties as insurmountable.
  The professionals would have to adjust. We could set a threshold below which notification would not be required, so as to avoid unnecessary burdens being placed on smaller acquisitions. I suggest a threshold of £20 million in cash or equivalents.
  Some argue that such proposals might damage the bidder's commercial credibility if he were to fail—markets do not like losers. Equally, an element of market and employee instability might be induced in the target's work force. We must weigh these considerations against the rights of employees to influence where they are going. I believe that the exercise is damage-limitation manageable if the time between bid notification and ink on contract is limited. I accept that problems could arise where a bid is issued for loss-making assets.
  Corporate decisions are often difficult and unpopular. Very often, the inevitable consequence of rationalisation in a sector where losses are being incurred is job losses. Bid notification could prove difficult in these conditions, especially if we regulated for an additional SOI requirement. The answer to the difficulty may well lie in the way in which the vendor presents his own options to his work force. That would certainly sharpen the debate over rescue packages, but these are not uncharted waters for talented management.

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  My proposal needs much refining if it is to be included in legislation. It is little more than the embryo of an idea for further consideration at this stage, but I believe that it should be taken seriously.
  I have tried to identify legal frameworks for notification proposals. My preliminary view is that disclosure provisions in the case of bankruptcy under rule 4.11 of the insolvency rules 1986, disclosure provisions for winding-up orders under section 130(1) of the Insolvency Act 1986, and disclosure provisions in the use of administration orders under rule 2.10 of the insolvency rules 1986 all point the way forward. In each instance, disclosure is required in the London Gazette, which is published in London, Edinburgh and Belfast.
  I ask the Minister seriously to consider my proposal for what I intend to promote as the Campbell's Soups amendment. Let some good come out of this whole squalid affair.
  10.32 pm
  The Minister for Competition and Consumer Affairs (Mr. John M. Taylor): I acknowledge straight away the concern of the hon. Member for Workington (Mr. Campbell-Savours) about the closure of the Maryport plant. I realise that it is a blow for his constituency. But the matter is for the commercial judgment of Campbell's. It would be wrong for the Government to intervene in such decisions. I say also in the margins of the debate that there is a fair amount of understanding between the hon. Gentleman and myself over this matter. If I do not in the time available cover all the points he raised, I shall certainly refer to the matter in a letter to him.
  I fully understand the depth of the hon. Gentleman's concern for his constituents, but he must bear in mind the fact that Campbell's has been present in the United Kingdom since 1959. The company employs about 1,200 people here, and has shown its commitment to the UK by recently investing over £100 million. The Government would not want to threaten these jobs and investment.
  I realise that closure must be very disappointing for Maryport, and in particular the 120 employees involved, but I understand that Campbell's has offered all employees jobs at one of its five other plants.
  I know that the hon. Gentleman is aware that Maryport is within an assisted area and, as such, qualifies for regional selective assistance for investments that create or safeguard jobs. That means that the site of the Campbell's Soup plant qualifies for RSA. Proposals by companies wishing to invest in the facility would be considered for support against the criteria for RSA awards. Of course, it is not for Government to say what type of business might make use of the site.
  A range of other services is also available through the local Cumbria training and enterprise council, through business links, and through Inward, the north-west development agency, which could assist in attracting new businesses to invest in the area of the Campbell's site. Those services include business advice counselling, diagnostic and consultancy services, exports advice,
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  business enterprise services, and technical expertise as well as access to the personal business advisor network. I know, for example, that Cumbria TEC already offers practical help to individual employees of Homepride and will continue to do so beyond closure.
  I remind the hon. Gentleman that west Cumbria has European objective 2 status, which gives the area access to funding for business support measures, and also for the cost of training and re-skilling activities.
  Let me remind the House that the food industry is a very successful UK industry. The success of the industry in recent years can be demonstrated by the figures on exports: in 1988, UK exports of food and drink were worth some £5 billion. By 1994—six years later—they were worth some £9 billion.
  The rest of Europe, and, indeed, the world, is finding out how good British food and drink really are. British bread is chic in Paris, and British lamb and Scottish salmon are particularly well regarded there. We are selling pizzas to Italy and ice cream to Spain. Such successes are a tribute to the industry, and also to the Government's determination to create and maintain an economic framework within which such enterprise can be rewarded.
  Sales by the UK food and drink manufacturing industries in 1994 were worth more than £56 billion. With a work force of about 450,000, the sector accounted for one in nine jobs in manufacturing. The industry has continued to compete effectively in world markets, with 1994 exports of food, feed and drink valued at £9 billion.
  The soups and sauces industry is no exception to this success story. In 1992, UK exports were worth some £13 million, with major markets established in Ireland, Germany and France. Not only that, but the UK consumer can choose from a vast array of delicious and imaginative soups and sauces on sale at the supermarket, grocer or corner shop. The competitive nature of the market means that companies are constantly looking for new product types and ideas to provide what the consumer wants.
  The UK soup market has recently been characterised by rapid innovation and increased choice, not only in the variety of flavours on the market but by different product types, such as low-calorie, premium, chilled and fresh. Sales of soup are expected to continue to grow steadily in the near future. I have no doubt that Campbell's Soups will continue to play a significant role in this expanding and innovative market.
  The hon. Gentleman referred to the role of merger control. As he knows, the Director General of Fair Trading has a duty to advise my right hon. Friend the President of the Board of Trade on qualifying mergers. The director general looked at this transaction, and concluded that it did not give rise to a qualifying merger.
  The transaction met neither of the tests in the Fair Trading Act 1973. The assets being acquired were only £9 million, as I understand it, which is some way short of the £70 million test in the Act. Indeed, it is short of the hon. Gentleman's suggested £20 million. The market share test—that a 25 per cent. share should be created or increased—was not met, either. There was therefore no role for my right hon. Friend the President of the Board of Trade in the matter. He had no decision to make on the acquisition.

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  Let me remind the House that a merger can be blocked only if the Monopolies and Mergers Commission finds it to be against the public interest. Furthermore, since 1984, the policy of the Government has been to make decisions about whether mergers are referred to the MMC primarily on competition grounds. That policy will continue.
  The hon. Gentleman called for greater transparency in such bidding procedures. I emphasise that the conduct of the sale of Homepride Sauces was a commercial matter for Dalgety; it would be wrong for Government to intervene in such matters. There are no plans to change existing legislation or policy governing mergers.
  Mr. Campbell-Savours: Under this Government.
  Mr. Taylor: I am speaking for this Government, as I think the hon. Gentleman knows.
  There have been calls for the Fair Trading Act to be amended, so that smaller mergers can be considered by the competition authorities. As the House will know, in February 1994, the assets threshold for mergers was increased from £30 million to £70 million: that was agreed by Parliament as part of the Government's deregulation initiative. The change does not signal a weakening of competition policy; all larger mergers, and any small mergers that create or increase a 25 per cent. market share, will still be considered under the Fair Trading Act. The measure is clearly deregulatory, and has been welcomed by business generally.
  Let me also make it clear that United Kingdom and foreign companies are treated alike under UK merger procedures. The Government feel that commercial considerations should generally determine ownership of businesses. UK companies themselves do very well overseas, and long may that continue.
  There have been calls for predatory takeovers to be blocked. I understand that Dalgety put the Homepride business up for sale and decided to sell to Campbell's. That was a normal commercial transaction. As I said earlier, it would be wrong for the Government to intervene in commercial decisions: companies must be free to adjust to the competitive demands of the market.
  The hon. Gentleman referred to the role of foreign companies in the UK economy. I remind him that the Government welcome foreign investors, and will continue to do so. Nowhere is the competitiveness of our economy better demonstrated than in our ability to attract inward investment.
  Mr. Campbell-Savours: Does the Minister think that it would be much fairer if a work force knew when the enterprise for which they worked was being put on the market and bid for?
  Mr. Taylor: The hon. Gentleman will not be surprised to learn that my knowledge of the company and the transaction is not as detailed as his. In fact, it would be rather surprising if, as Member of Parliament for Solihull, I knew as much about Maryport as he does. I shall reflect on what he has said, because good practice should always involve consultation; but I do not wish to stray into matters involving his constituency or a particular transaction.
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  I was talking about inward investment. More than 40 per cent. of all United States, Canadian and Japanese investment in the European Union, together with over 50 per cent. of Korean and over 57 per cent. of Taiwanese investment, has come to the United Kingdom. Our stock of inward investment is now £147 billion—up from £44.3 billion in 1985—and 99 of the "Fortune" top 100 companies have chosen to locate in the UK. Our record in attracting inward investment within the European Union is second to none.
  The UK has a long history of welcoming overseas inward investment—over 100 years. We have made Britain the most attractive place in which to invest. The facts speak for themselves. Since 1979, my Department's Invest in Britain Bureau has registered more than 4,200 inward investment projects, with more than 700,000 associated jobs. In recent months, we have secured investments from Ford, Siemens, Nissan, Fujitsu and Chunghwa. That equals more than 11,200 jobs.
  In the last financial year alone, we won some 454 inward investment projects, supporting some 91,000 jobs. Those jobs are in tomorrow's industries—highly skilled, bringing the best management standards, with exciting potential, down the supply chain of industry.
  Mr. Bellingham: My hon. Friend will remember that the hon. Member for Workington (Mr. Campbell-Savours) said that there were recognised trade unions at all Campbell's plants throughout the country. Is he aware that the staff at the factory at King's Lynn have been given the opportunity on a number of occasions to have trade union representation, but have opted for an advisory committee? Indeed, they have had many recent opportunities to reverse that decision, but have decided not to.
  Mr. Taylor: I am very interested to learn that. I was not, candidly speaking, aware of what my hon. Friend says. I am very glad that he has put it on the record, however.
  Mr. Campbell-Savours: Perhaps I may tell the Minister that the King's Lynn work force is one of the lowest paid in the processed food industry in the whole of the UK.
  Mr. Taylor: This evening might have been more interesting if we had had a debate between the hon. Member for Workington and my hon. Friend the Member for North-West Norfolk (Mr. Bellingham). I have a role to discharge, however, and limited time in which to do so.
  Inward investors add significant strength to our industrial economy. Overseas-owned manufacturers provide a third of all manufacturing investment, nearly a fifth of manufacturing employment, over one fifth of manufacturing output, and about two fifths of UK-manufactured exports. The Government are determined to maintain this enviable record. We must be competitive to attract inward investment.
  Britain has many attractions for the inward investor: a strong economy, a pro-business environment and the world language. We also have no foreign exchange controls or restrictions on sending profits abroad. Britain

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  offers the best available combination of a skilled and flexible work force, low taxes, lower production costs and a mature system of law. These are all good reasons for the United Kingdom's success.
  Mr. Michael Jopling: Does my hon. Friend understand that this whole matter has caused a great deal of unhappiness in Cumbria? I have asked Campbell's to look at the matter again, but have not heard from the company. Will the Minister do the same?
  Mr. Taylor: With only seconds to go, all that I can tell my right hon. Friend is that I shall certainly reflect on
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  what he says—the more so since the question comes from him. I shall take his request very seriously indeed.
  The closure of the site in the hon. Gentleman's constituency is, I recognise, an unwelcome event. With the assistance of Government support, through regional selective assistance and other services on offer, I hope that another employer may be able to move into the plant, but let me emphasise again that the closure of the plant reflects Campbell's commercial decision, and it would be wrong for the Government to intervene.
  Question put and agreed to.
  Adjourned accordingly at thirteen minutes to Eleven o'clock.