HC Deb 16 December 1998 vol 322 cc962-8
Q4. Mr. Ian Bruce (South Dorset)

Has the Prime Minister had a briefing this morning on newly published labour market statistics showing detailed figures for unemployment? Does he know that for 18 to 24-year-olds—about whom he is so concerned—the number in employment has gone down during the relevant quarter? Does he know that the number of long-term unemployed aged between 18 and 24 has gone up by 25 per cent. after six months of the new deal? What will he do about the new deal, which is turning out to be a busted flush?

The Prime Minister

The hon. Gentleman's facts are wrong. For a start, there has been a cut in unemployment levels among people within the new deal category who are aged 18 to 24 of more than 30 per cent.—the largest cut in unemployment for young people that there has ever been. Furthermore, even today's figures show employment over the past three months up by 80,000. The number of vacancies unfilled has risen again. There are 260,000 more jobs than there were a year earlier. As a result of what the Government have done, to the opposition of the hon. Gentleman's party, long-term interest rates are at their lowest level for more than 30 years. That is how to get through economic difficulties, not returning to having 15 per cent. interest rates, a million manufacturing jobs lost and Tory boom and bust.

Dan Norris (Wansdyke)

Farmers in my constituency have been greatly encouraged by the lifting of the beef ban, particularly when they compare that with the lamentable performance of the previous Government. Does the Prime Minister agree that co-operation, not confrontation, is the way forward in Europe?

The Prime Minister

As a result of co-operating sensibly in Europe, we had the beef ban lifted. When we came into office, virtually nothing had been done to secure the lifting of the ban. As a result of what we did, and within 18 months of our following a different policy, we secured the lifting of the beef ban. I believe that that is the best way to get results for Britain in Europe. We will stand up for British interests whenever it is necessary and, if necessary, alone. However, we do not seek confrontation as the sole method by which to provide British diplomacy with a way forward.

Q5. Mr. Andrew Lansley (South Cambridgeshire)

Has the Prime Minister read today the Treasury "Survey of Independent Forecasts", which forecasts growth for the UK economy in 1999 at just 0.8 per cent? That forecast is below the Chancellor's forecast range of 1 to 1.5 per cent., which was published just six weeks ago. Does the Prime Minister realise that while he complacently talks about stability, the reality is that his policy is bringing the British economy grinding to a halt?

The Prime Minister

As a result of the policies that we are pursuing, we have the best chance of getting ourselves through any economic downturn. Monetary stability is in place because of the independence of the Bank of England, which has given us the lowest long-term interest rates for more than 30 years. Because of the changes that we made in public spending on coming to office, we were able to reduce the Conservative deficit, and are able to put £40 billion extra into our schools and hospitals from next April. Through the working families tax credit and the new deal, we are helping families to make work pay. That is a better way of getting through any economic difficulty than boom and bust, underfunding of our public services, and creating a situation where we end up with large numbers of people unemployed for long periods, as happened under the previous Conservative Government.

Q6. Mr. Bill O'Brien (Normanton)

Further to my right hon. Friend's welcome statement to the House on Monday, does he agree that there is a need for an impact study on the effects of the abolition of duty free on jobs throughout the United Kingdom, and its economic effect on airports, seaports and jobs in such units? The need for the impact study is heightened by the fact that information on the alternative to duty free has never been published. Will my right hon. Friend explain the difference between duty-free goods and tax-paid goods? I think that hon. Members are sometimes confused about that.

The Prime Minister

We support the notion of having a proper study of the effects of the abolition of duty free. The door to that has now been pushed open as a result of what we agreed at the Vienna summit. Our difficulty is still that, seven years ago, the previous Conservative Government agreed to abolish duty free and unanimity is required to change that. We shall try to do our best to get it changed; if we are able to do so, it will be another example of a better method of diplomacy than that of the previous Conservative Government.

Mr. William Hague (Richmond, Yorks)

Last Thursday, the Treasury made an announcement that means that people who have done the right thing and saved for their retirement, but who are too poor to pay income tax, will now have to pay a new tax on their hard-earned savings. Will the Prime Minister personally look again at that misguided decision?

The Prime Minister

I explained last week that we would make an announcement on the policy on that matter, and we did so. We believe that it is in the best long-term interests of all pensioners. If we combine it with the measures that we announced yesterday, for the first time many people on modest incomes are going to get far better access to decent-quality pensions than they have ever had before.

Mr. Hague

This decision will cost the 300,000 poorer pensioners, who will lose their tax credit on dividends, an average of £75 a year. How on earth is that meant to be in their best long-term interests? Is it not yet another tax increase from a Government who said that there would be no tax increases at all? Is the right hon. Gentleman aware that Age Concern has said that it believes the decision to be totally unjust? Does he at least accept that the measure hits poorer non-taxpayers?

The Prime Minister

No, because the best thing for those pensioners and other pensioners is that we have a healthy method of ensuring that companies earn the profits that allow pensioners to get the best deal. Those people will get the best deal—[Interruption.] No matter how much Conservative Members shout, as a result of what we announced yesterday lots of people on modest incomes, for the first time and after all the pension mis-selling gambles of the Conservative years, are going to get the chance to save properly. It is the best deal for them and for all pensioners.

Mr. Hague

It is very clear from the Prime Minister's answers that he has no rational justification whatsoever for the policy. I am sorry that he cannot admit that it hits the poorest non-taxpayers, because the Paymaster General has actually said that it does so. Although I note that he is not here now, the Paymaster General said in the House on 30 June: I am aware …of the growing anxiety among poorer non-taxpayers who have been hit by the measure".—[Official Report, 30 June 1998; Vol. 315, c. 175.] Now, the Prime Minister is defending the measure, but will not agree with the Paymaster General. Surely he is not distancing himself from the Paymaster General for any particular reason?

Why have the Government taken this decision? Is the Prime Minister prepared to think again? Is he prepared to accept representations from Members of Parliament and from Age Concern and similar organisations, and to tell the Treasury to rescind the announcement that it made last week?

The Prime Minister

No. We looked at this over six months and we believe it is the right thing for future pension provision. I remind the right hon. Gentleman that, as a result of the changes we made yesterday—which I note he does not dispute at all—for the first time all those who have had a full working life will get proper pension provision. Those people will no longer be dependent on means-tested benefits. As a result of stakeholder pensions, people with private pension schemes will get better-value, better-costed and better-regulated schemes. Those people on incomes of less than £9,000 will get special help and those on incomes of between £9,000 and £18,500 will get even better help. Taken as a whole, the package gives the best deal to pensioners that this country has seen after years of pensions mis-selling and pension fraud under the Conservatives.

Mr. Hague

The Prime Minister has yet to say a single word in justification of this policy. Yet again, he and the Government are trying to face both ways at once. One day, they want to encourage everyone to save for their retirement, and the next day, they are defending taxing more heavily those people who have saved. The Government's indecision in this area has now produced a real and genuine injustice for several hundred thousand people. It is not too late to think again. Can the right hon. Gentleman produce a single reason why he should not think again?

The Prime Minister

Yes—and they are the reasons that I have just given the right hon. Gentleman. [Interruption.] I appreciate that Opposition Members do not wish to listen to them. Our pension proposals are better for those on modest as well as higher incomes. As a result of the proposals announced by the Secretary of State for Social Security yesterday, people on modest incomes will get more help than ever before with their pensions.

The right hon. Gentleman is quite right: there is a choice between Labour and Conservative on pensions, since I assume that the Conservatives' pension policy is still the one announced by their deputy leader before the election. [Interruption.] Opposition Members do not want to hear it. That would mean an end to tax relief on private pensions and the abolition, over time, of the basic state pension. It would have a massive upfront cost for current taxpayers. Our proposals will take more people off means-tested benefits, improve pensions for people on modest incomes and end the scandals of mis-selling allowed under the previous Conservative Government.

Q7. Helen Jones (Warrington, North)

Does my right hon. Friend accept that the contribution that carers make to the economy has been consistently underestimated because we do not count the value of their unpaid work? Does he agree that yesterday's announcement of a second-tier pension for carers not only marks this Government's determination to protect the most vulnerable, but should signal our recognition of the extremely valuable work that carers do, at great saving to the Exchequer and often at great personal cost? Will my right hon. Friend assure the House that the future needs of carers will be at the forefront of Government policy not just in pensions but in other areas of social policy?

The Prime Minister

Yes. Carers and disabled people with broken employment records will, for the first time, have the right to a second pension. Three groups will gain from that policy: parents taking breaks to look after young children; others caring for a sick or disabled person; and those forced to leave work because of an illness or disability. Over time, at least 4 million people will benefit by up to £50 a week. That is surely a better set of pension proposals than those of the Opposition, which would do nothing for carers and would abolish the basic state pension.

Mr. Nicholas Winterton (Macclesfield)

Although I am proud to represent the Macclesfield constituency in the north-west and the north-west region as a whole, I am also proud to be a citizen of, and a Member of Parliament in, the United Kingdom. Will the Prime Minister tell the House why so much of the Government's legislation and so many of their policies are designed to undermine the United Kingdom and its sovereignty? Is the intention merely to soften us up for the Europe of regions?

The Prime Minister

No. We are in favour of devolution because we believe in a sensible partnership within the United Kingdom for the modern world. That is why the Conservative party is now in favour of devolution: the Conservatives have changed their mind since the election. As a result of their policy at the election, they secured not a single seat in Scotland or Wales.

As for Europe, of course we want a Europe of nation states. However, we do not believe that in order to be pro-British one has to be anti-European. That is the difference.

Q8. Mr. Dennis Canavan (Falkirk, West)

Bearing in mind the fact that patronage can be just as undemocratic as heredity, will the royal commission be able to consider the complete abolition of the House of Lords? After all, the Scottish Parliament will soon be setting a good example by passing legislation without reference to any second Chamber. Would not a modern democratic Scottish Parliament be degraded if it were involved in the nomination of a few characters to a pantomime such as the House of Lords? Will my right hon. Friend therefore reject such a harebrained proposal even though it is reported to emanate from his former tutor, the Lord Chancellor?

The Prime Minister

As for the long-term future of the House of Lords, we have announced the establishment of a royal commission and we shall wait to find out its decision. I am in favour of retaining a revising Chamber and having a bicameral system, which has served our country well. What has served our country ill is the domination of that Chamber by hereditary peers, the vast majority of whom take the Conservative Whip and therefore provide an in-built, permanent Conservative majority. We can get rid of the worst aspects of the House of Lords while preserving the idea of a second, properly revising Chamber.

Q9. Mr. Oliver Letwin (West Dorset)

Does the Prime Minister believe that it is ethical to have released every IRA murderer without achieving the decommissioning of a single armament?

The Prime Minister

We believe that the right policy is that the whole agreement that we entered into on Good Friday is put in place. I ask the hon. Gentleman, as a member of the Conservative Opposition, to try to stick with the bipartisan policy that we supported in opposition.

I remind the hon. Gentleman and the House that we supported that bipartisan approach in difficult circumstances; for example, when it was revealed that, despite their denials, the previous Government had been involved in secret negotiations with Sinn Fein. After the first IRA ceasefire, we continued to support the previous Government's approach when they asked for the ceasefire to be declared permanent and then dropped that demand. We followed them when they included the Washington 3 precondition of decommissioning and when they effectively abandoned it. We supported the previous Government all the way through the process and never once played politics with the issue. I hope that the hon. Gentleman's party will do the same.

Hon. Members

On a point of order, Madam Speaker.

Madam Speaker

There is a lot of business before I can take points of order.