HC Deb 24 November 1999 vol 339 cc607-16
Ql. [98794] Mr. Phil Willis (Harrogate and Knaresborough)

If he will list his official engagements for Wednesday 24 November.

The Prime Minister (Mr. Tony Blair)

This morning, I attended a meeting of the parliamentary Labour party and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Mr. Willis

On behalf of the Liberal Democrats, I congratulate the Prime Minister and his wife on the fact that they are expecting their fourth child. [Interruption.] My colleagues will perform in good time. I am sure that the Prime Minister would agree that the finest gift that we could give any child is a quality education, and that that depends on quality teachers who are well motivated and well paid. Therefore, how can the Government break their promise to provide £1 billion for the teacher pay reforms by slicing £430 million off school budgets? Is not that a case of making one teacher's pay rise depend on another teacher losing his or her job?

The Prime Minister

First, I thank the hon. Gentleman for his congratulations. I certainly did not intend to start a trend.

The hon. Gentleman might have acknowledged the fact that, owing to the Government's policy, we have reduced infant class sizes in his constituency. At the beginning of the year, 18 per cent. were in classes of more than 30 and that figure is now 7 per cent. and falling. I assure the hon. Gentleman that the extra £1 billion for performance-related pay will not come at the expense of teachers' jobs or support for schools. Not only next year's settlement but that for the year after that and the year after that are the most generous education settlements over a three-year period that Britain has seen.

Q2. Mr. Bill Rammell (Harlow)

Does the Prime Minister agree that the deal struck with the French Government last night brings the lifting of the beef ban ever closer? Is it not only because of our membership of the European Union that we are able to progress this issue? Is it not also the case that, had we followed the advice of the Leader of the Opposition and launched an all-out trade war against France, the only losers would have been British exports and British jobs? Does the issue not demonstrate more clearly than anything that the Leader of the Opposition's judgment on getting the best for Britain in Europe is as flawed as it was when he endorsed Jeffrey Archer as Conservative candidate for mayor of London?

The Prime Minister

It is not the hopeless misjudgments of the Leader of the Opposition over the Conservative party that should worry people; it is his misjudgment over Bank of England independence, scrapping the working families tax credit and the new deal, which has halved youth unemployment, and starting an illegal trade war with the rest of Europe that would have put thousands of jobs at risk. As Leader of the Opposition he may be a joke, but as Prime Minister he would be a disaster.

Mr. William Hague (Richmond, Yorks)

At least my jokes are read out; the Prime Minister's jokes are all in the Cabinet.

For once, I begin with congratulations—I congratulate the Prime Minister and his wife on their happy family news. In future, when the Prime Minister hears the sound of crying in the next room, it will not be the Chancellor wishing that he had his job.

The Prime Minister and the Chancellor have stated in the House in the past two weeks that the tax burden is falling. Now that the Office for National Statistics has joined a long list of organisations in showing that the opposite is true, who agrees with the Prime Minister that the tax burden is falling?

The Prime Minister

First, I thank the right hon. Gentleman for his congratulations. Secondly, the answer is in the figures that we have published, which were, of course, checked by the National Audit Office. The Treasury public borrowing requirement basis shows that, next year, the tax burden is falling. It is true that, in our first two years, we had to sort out the appalling burden of debt that we inherited from the Conservatives. However, the statistics mentioned are not the only ones available. When the right hon. Gentleman was a member of the Cabinet, the Conservatives published their plans before the last election. Those plans suggest that the tax burden would have been greater under the Conservatives than it is under Labour.

Mr. Hague

The Prime Minister veers between boasting that he has increased taxes and claiming that he is reducing them. No independent organisation agrees with him that taxes are being reduced; every independent organisation says that the tax burden is increasing. Let us consider the latest figures from the Office for National Statistics. They take every quarter of 1997 after the last general election. Do they show the burden going down or up? The answer is up. They take every quarter of 1998—does the tax burden go down or up? The answer is up. They examine every quarter of 1999 so far, and again they show the tax burden increasing. They take a forecast for next year—does that show the tax burden going down or up? Yet again, the answer is up. If the right hon. Gentleman believes that taxes are falling, with which of those Office for National Statistics figures does he disagree?

The Prime Minister

That is simply not right. [Interruption.] The Opposition can have the facts or not, as they wish. It has been shown—and not only on the basis set out in our report—that the tax burden is falling. The only basis on which taxes can be seen to rise is if the working families tax credit is not considered to be a tax cut. If the working families tax credit is considered to be a tax cut—as it is, in exactly the same way as the Conservatives treated mortgage tax relief—the tax burden is falling.

Mr. Hague

Why does no independent analyst in the world agree with the Prime Minister? Everyone else who considers those figures says that he is increasing taxes. If he will not believe his own Office for National Statistics, what about the Organisation for Economic Co-operation and Development, which showed earlier this month that Britain has the fastest-rising tax burden in the advanced industrial world? Is it not time that he stopped saying, "We are cutting taxes", when that is not true?

The Prime Minister

It is true, for the reasons that I gave. As the income tax cut is introduced next year—the 10p tax rate and the cuts in corporation tax—it is clear, as the figures show, that the tax burden is falling. I repeat that one can only show otherwise by not treating the working families tax credit as a tax cut. It is a tax cut, in exactly the same way as the Conservatives treated mortgage tax relief as a tax cut.

I have said that, in our first two years, we had to get rid of a £28 billion borrowing requirement and a national debt that had doubled. As a result of sorting out the fiscal position, we have had the most successful set of economic forecasts that this country has seen for years. If we followed the right hon. Gentleman's proposal, we would return to the boom-and-bust economics of years ago—[Interruption.] That is absolutely right. The only alternative would be swingeing cuts in schools, hospitals, police and transport. The past few months have shown that the Labour party is the party of economic competence; the Conservative party would return us to boom and bust.

Mr. Hague

The Prime Minister becomes less and less coherent on this subject. He says that it is impossible to reduce taxation while increasing spending on health and education, but claims to be doing just that at the moment. Can he not understand that the experience of increased taxation is a matter not only of statistics but of the daily experience of people who pay for their petrol and their pensions and have a marriage and a mortgage? The British Chambers of Commerce says that we are more heavily taxed than two years ago. The Confederation of British Industry says that cuts in taxation are trivial by comparison with the increases. The Treasury Committee, which has a Labour majority, says that the tax burden will increase during the current financial year. Why does he not stop saying, "We are cutting taxes," when he is actually increasing them?

The Prime Minister

That is wrong, for the reason that I have given—the tax burden is falling next year. The country has a simple choice. If the right hon. Gentleman is saying that he will slash everyone's taxes at the same time as he will increase everyone's spending—what I call "Haguenomics"—that simply will not work. If we did that, we would be back to where the previous Conservative Government put us in the late 1980s and early 1990s, when interest rates—which he has not mentioned—were at 10 per cent. for four years, when thousands of businesses went bankrupt, when we lost more than 1 million manufacturing jobs and when this country ended up having to cut essential public services because we could not pay our way. This Government have got inflation under control and interest rates down. We have managed to put more money into public services and living standards are increasing by more than 3 per cent. this year. That is a record of economic competence, not the Conservative policy of economic ruin.

Mr. Hague

The Prime Minister talks about what we are trying to do. All we are trying to do is get a truthful answer out of him. Now he says he is cutting taxes, and he says he is right, but he also says that the Office for National Statistics, the OECD, the British Chambers of Commerce, the CBI, the Institute of Directors and the House of Commons Library are all wrong. Is it not the case that his willingness to answer questions and face up to the facts is falling, as is the chance of him giving a straight answer, but that the tax burden is definitely rising?

The Prime Minister

I have already pointed out to the right hon. Gentleman why the figures that he has given me are simply wrong. Next year, the tax burden, as I have said, is falling. The tax burden is not merely falling; we have managed not only to introduce a 10p starting rate of tax, but to put a direct income tax in place next year. As a result of what we have done in running the economy, we are able to get the extra money into the public services that the country needs. If the right hon. Gentleman wants to take all that money away, and if he wants to return to saying that all that is reckless and irresponsible, let him get up and say so. I believe that our spending policies are right. They are exactly right—not a penny more, not a penny less.

Mr. Bernie Grant (Tottenham)

Has my right hon. Friend had the opportunity to see the recent Channel 4 documentaries on slavery, in which it was stated that one in five white people in Britain have the blood of African slaves running through their veins? Similarly, people from the Caribbean have white blood running through their veins. I do not want to worry him, but my mother's maiden name was Blair. Perhaps I should refer to him as my right honourable relative.

My question relates to the past 1,000 years, 400 of which were taken up by enslavement and 200 by colonisation. There has been no acknowledgement of the contribution made to the wealth of Britain, Europe and America by millions of African people. The Guildhall and other places in London have monuments to the slavers, not the enslaved. Will my right hon. Friend set the historic record straight? Will he apologise to people of African origin, living and dead, for the part that Britain played in the transatlantic slave trade?

The Prime Minister

I am happy to acknowledge the pain and suffering of people who were enslaved in times gone by. I was in Hull recently, in the constituency of the Deputy Prime Minister, which was once represented by William Wilberforce. Many radical politicians in this country fought against the slave trade. I should like in particular to acknowledge the massive contribution made by Afro-Caribbean and black people in this country today, and to say how much we value and treasure it. One of the great things that has happened in politics in the past few years is that every political party in this country is now committed to a multiracial, multicultural society. We owe an awful lot to the pain and suffering of those people who went before us.

Mr. Charles Kennedy (Ross, Skye and Inverness, West)

Which does the Prime Minister consider the voters of London will view as more offensive: the Conservatives' disgraced mayoral candidate or Labour's discredited selection system?

The Prime Minister

I am not sure that they would have anything to say about the Liberal Democrat candidate. The most important thing is that we focus on policy. The Labour party's policy for London is the right policy on transport, law and order, and business and development in the City. Those policies will win the election for Labour.

Mr. Kennedy

To win an election, a party must have a candidate, and only the Liberal Democrats have a candidate at the moment: an excellent one in Susan Kramer. Let us consider one of Susan Kramer's Liberal Democrat policies for London. Will the Prime Minister back off from his present plans for the future of the tube and embrace our proposals, because they have been assessed by outside bodies and would result in a net cut in the profits that big business would make under the Government's proposals of £150 per Londoner—per voter? Is not that a sensible policy, and why does he not embrace it?

The Prime Minister

In case the right hon. Gentleman had not noticed—I certainly had—Labour is undergoing a selection process. Let us have this argument about his policies for the tube. His policy is to leave the construction of the tube for the future in exactly the same hands as now. That is the wrong policy for London. Consider the Jubilee line: it has a £1.4 billion overrun and is almost two years late. The public sector should do what the public sector does best, which is the running of the underground and responsibility for safety and for the drivers. The construction work should be done on a public-private basis, because that will get the best value for the ratepayer and the taxpayer. If we get the best value, we get the tube completed on time and we get money into the tube. The Liberal Democrat proposals would land the ratepayers and taxpayers of London—and, indeed, elsewhere—with an almighty bill that they could not meet. In other words, it is typical Liberal Democrat policy.

Mr. Andrew Reed (Loughborough)

As we head towards the new millennium, the Prime Minister can be justly proud of the advances that this country has made in cancelling the debts of the poorest countries in the world. However, will he use the last weeks of the millennium to make even further progress and achieve 100 per cent. cancelation of those debts, so that we can celebrate the new millennium by doing something of which we can all be proud?

The Prime Minister

We have said that we are working towards that; but the contribution to the problem worldwide made by us as a country, and by my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for International Development, has been enormous. We as a country can be very proud of what Britain has done and stood up for in the past couple of years. The debts of a large number of countries will now be written off: I think that the total is some $1190 billion, which is a tremendous contribution. Prudent finance is obviously important as well, but we will go as far as we possibly can. We can be proud of the fact that, as a result of an initiative developed by Britain, countries throughout the world will, for the first time, be relieved of an enormous burden of debt.

Q3. Mr. David Rendel (Newbury)

The Prime Minister said in his last manifesto that, as he cut benefits, he would increase spending on education. He just told my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) that he considered this year's education settlement to be the best ever. Why, then—according to figures from the House of Commons Library—is the percentage of gross domestic product spent on education during the current Parliament expected to be less than it was in the last Parliament?

The Prime Minister

That is simply wrong, and I will explain why. [Interruption.] It is wrong, and, if the House will allow me, I will explain exactly why it is wrong.

At the end of the current Parliament, a higher proportion of national income will be spent on education than at the beginning. That is the pledge that we gave, and it is true. People are able to say that we have broken that pledge only because they are using a figure relating to 1994, when the Conservatives were in government. It is true that the figure was higher in 1994, but, for the following three years, the Conservatives cut it. When we compare the figure that we inherited in 1997 with the figure at the end of this Parliament, the latter figure is higher. What is more, the figure—£19 billion—is infinitely higher than any amount that the Liberal Democrats ever asked us to spend on education.

Thousands of schools throughout the country are receiving new deal money for school buildings and other purposes. That new deal money came from the windfall tax on utilities' excess profits. It was opposed by the Liberal Democrats, as were the measures relating to class sizes for five, six and seven-year-olds.

In each of those areas, we are spending more than the Liberal Democrats ever asked us to spend. It is simply not right to say that, at the end of the current Parliament, the proportion of national income spent on education will be smaller rather than greater. It will be greater, and it will represent another pledge delivered.

Ms Oona King (Bethnal Green and Bow)

Given that the last time Russia waged war on Chechnya, between 1994 and 1996, 80,000 people died, and given that the Russian Prime Minister, Vladimir Putin, has declared that Chechnya must be eliminated, does my right hon. Friend agree that the west should be as proactive as possible? In particular, will he consider the possibility of linking the International Monetary Fund's multi-billion-dollar loan to Russia, which is going through at the moment, with an immediate and verified ceasefire in Chechnya?

The Prime Minister

My hon. Friend is right to say that we should do what is possible. I have been in touch with the Russian Prime Minister and the Russian President, and we have made it clear to the Russian Government that, although we recognise the genuine security threat faced by Russia, Russia's response must be proportionate and in accordance with international humanitarian obligations. We are also—both at European Union level and at the Organisation for Security and Co-operation in Europe summit—putting pressure on Russia to adopt a more humanitarian position in relation to Chechnya and, in particular, towards the refugees. We keep everything under review in considering what will produce the best results.

Q4. Sir Peter Tapsell (Louth and Horncastle)

Will the Prime Minister explain why, when Germany has gold reserves of 3,400 tonnes, France has gold reserves of 3,000 tonnes and Italy has gold reserves of 2,400 tonnes, and each of those three countries has publicly pledged not to sell any of its official gold over the next five years, he and his Chancellor of the Exchequer have decided to reduce Britain's gold reserves to 300 tonnes? What are the reasons for that decision? The country deserves to be told.

The Prime Minister

The country has been told. The hon. Gentleman has been told a number of times. The Conservatives just do not like the explanation. First, in relation to the gold reserves, they will be 20 per cent. of our reserves. We have acted on advice throughout. We believe that it is entirely sensible to do what we are doing. We are not the only country round the world that has sold part of our gold reserves. We should have a balanced portfolio.

I understand most of the obsessions in the Conservative party and we get used to a new one being added from time to time. Quite what the Conservatives' obsession is with the issue of gold reserves, I confess I no longer know. All I can tell them is that there is no great sinister agenda here. We are acting on advice. We are doing what we believe to be the best thing for the country. It is what many other countries round the world are also doing.

Q5. Mr. David Kidney (Stafford)

In Staffordshire, parents, pupils, governors and school staff have chosen this week to campaign about ending the unfairnesses in the way in which the Government fund education services. Does my right hon. Friend agree that they have chosen a fitting week to highlight education funding as, yesterday, the Government announced the biggest ever increase in funding for further education and they will soon announce, for the second year running, a huge real-terms increase in schools funding? Does he accept, however, that there is unfinished business in terms of fair funding? Will he promise that, when the working party that is looking into the question reports next year, the recommendations will be made public?

The Prime Minister

Yes, I can certainly say that, as a result of the extra money going into education, there will be a substantial increase—for example, a 6 per cent. increase in Staffordshire. That is on top of moneys that are already additional moneys going in. Also, further education and sixth form colleges are to get an extra £365 million in 2001–02. That will mean that there will be a 16 per cent. real-terms increase over the year 1998–99.

Of course, there is still an awful lot more that we need to do in our schools, but the one thing no one can doubt is that there is a very clear choice now between this Government, who are putting in more money in real terms over the next three years than any Government have ever put in by way of increases in education spending, and a Conservative party that describes such spending as reckless and irresponsible.

Q6. Mrs. Cheryl Gillan (Chesham and Amersham)

At that Dispatch Box on 30 June last year, the then Secretary of State for Health gave the Government's guarantee to the people: As now, no one will be denied the drugs that they need. That is a guarantee."—[Official Report, 30 June 1998; Vol. 315, c. 143.] I have here a list of my constituents with multiple sclerosis. Their consultant neurologist says that they need to have the drug beta interferon. They have been denied that drug on the ground of cost. Will the Prime Minister now, at that Dispatch Box, authorise the money for those patients in my constituency who need treating with beta interferon, or is that guarantee worthless?

The Prime Minister

No, it is not. I will take account of the words that the hon. Lady has just spoken in relation to her constituents and look into their cases for her. Let me just tell her in relation to extra spending on the health service—[Interruption.] I am sorry, but Conservative Members cannot have it both ways. They cannot say that, on the one hand, the spending that the Government have committed is reckless and irresponsible—[Interruption.)

Madam Speaker


The Prime Minister

They cannot say at one and the same time that the extra spending that we promised was reckless and irresponsible and that they want more spending. They cannot in particular give the people—[Interruption.] They talk about guarantees. They are issuing a tax guarantee that they will cut everyone's taxes and they have also said that the extra spending is reckless and irresponsible. At some point, they will have to choose.

The Government have put more money not only into ordinary health service spending, but into every aspect of the health service. I tell the hon. Lady that, by the end of this Parliament, for the first time, health service spending will be more than 6 per cent. of national income. Spending would have been cut under the previous Government, whom she supported.

Q7. Mr. Lindsay Hoyle (Chorley)

Will the Prime Minister reaffirm that the British people will make the decision on the future of the pound in a referendum? Is not that policy governed by common sense—unlike the policy of the Conservatives, which makes no sense?

The Prime Minister

That is absolutely right—the final decision will be taken by the British people in a referendum. Our policy on the euro—to have the test of economic conditions—is the sensible one. The Tory party's euro policy demonstrates its usual misjudgment—rule it out on principle, but only for five years. It is, as one might say, "a nightmare".