The Economy

HC Deb 24 November 1999 vol 339 cc617-726

Madam Speaker

There will be a 15-minute limit on the speeches of Back Benchers who are called to speak in the debate. I have selected the amendment in the name of the Leader of the Opposition and, for the purpose of Division at 10 o'clock, that in the name of the leader of the Liberal Democrat party.

3.31 pm

Mr. Francis Maude (Horsham)

I beg to move, as an amendment to the Address, at the end of the Question to add: But humbly regret that the Gracious Speech contains no proposals to reverse the policies that have given Britain a spiralling burden of taxation and a huge rise in burdens on business, that it contains no proposals to reverse the decline in Britain's productivity growth or the recent fall in Britain's international competitiveness, and that it does nothing to ensure that the public accounts are honest and open, nor to prevent the Government from saying one thing and doing another; and call on the Government instead to adopt policies which will engineer a return to the golden economic legacy of enterprise, dynamism and flexibility left by the previous Government. I start by declaring my outside interests, which are registered in the—[Interruption.]

Madam Speaker

Order. Will hon. Members leaving the Chamber do so quietly, please? We are starting a most important debate.

Mr. Maude

To win the previous general election, Labour Members had to put to rest the distrust that people felt for them and that had kept them out of office for 18 years. They conducted a cynical and concerted campaign to allay the mistrust of taxpayers, business, savers and pensioners. They offered clear assurances on tax and regulation, but those assurances have been cynically broken. This Queen's Speech continues the betrayal.

Before the general election, the Prime Minister made a crucial pledge on tax. Labour knew that soliciting the British public's trust on tax was perhaps the single most important thing that it had to do. Therefore, the Prime Minister declared, hand on heart, that Labour had no plans to increase tax at all". The declaration was not even tucked away—there it was, front-page news, in a newspaper of record. It was no accident or slip of tongue. It was never retracted and never rebutted, but it was not true. It was the first example of the great Labour lie, and still the Government do it; still they say that tax has fallen when it is rising. We know that tax is up by £40 billion. Now, the Office for National Statistics itself shows that tax has risen in each and every quarter since the Government came to power.

Mr. Lindsay Hoyle (Chorley)

rose—

Mr. Barry Jones (Alyn and Deeside)

Will the right hon. Gentleman give way?

Mr. Maude

I shall give way in a moment.

There have been no dips and no blips, just a sustained rise in tax throughout the Government's term of office. The ONS, the Library and the Organisation for Economic Co-operation and Development—how many more independent authorities have to spell out the truth before the great Labour lie on tax will admit defeat?

Mr. Jones

To facilitate the debate, will the right hon. Gentleman say whether he supports the minimum wage and the working families tax credit? He has never said yes or no, but it is about time that he stopped whingeing and gave us answers.

Mr. Maude

Three days before the previous general election, Labour refused to say what half its policies were. I shall not announce everything today.

The Chancellor of the Exchequer (Mr. Gordon Brown)

Will the right hon. Gentleman give way?

Mr. Maude

I shall give way to the Chancellor if he will deal with the issues that I am raising on the tax burden. Will he admit that the tax burden is rising? Is he able to cite any independent authority that supports the contention just made by the Prime Minister that the tax burden is falling? If he is able to cite one, he did not share the information with the Prime Minister.

Mr. Brown

The tax burden is falling, from 37.4 to 36.8 per cent. Will the right hon. Gentleman now answer our question? Will he support the minimum wage and the working families tax credit? The Conservatives have had 30 months to look at the issue. Can they give us an answer—yes or no?

Mr. Maude

I shall tell the right hon. Gentleman clearly. On the working families tax credit, we would not have abolished family credit and we think that it is wrong to extend means-tested benefits to people paying higher rate tax. The Prime Minister was right when he said at the election that social security bills should be cut, but they have increased by as much as health and education spending put together. As for the minimum wage, we shall want to see the employment effects.

I invited the Chancellor to say what independent authorities supported his contention, which he merely reasserted today, that taxes are falling. Significantly, he could produce no independent verification, so we shall take that as an admission that what we are saying, together with the OECD, the ONS and the House of Commons Library, is right—taxes are rising.

Mr. Brown

I said that the tax burden is falling, from 37.4 to 36.8 per cent. Is it not time that we had an answer from the Conservatives? Do they support the minimum wage and the working families tax credit? They have had 30 months to think about that. Abolishing the working families tax credit would mean a tax increase of £24 for the average family on it. Will the right hon. Gentleman give an answer—yes or no?

Mr. Maude

The Chancellor failed to answer the point. He merely reasserted what the Prime Minister said. He cannot cite any independent authority to support his view. The ONS figures show the position quarter by quarter. The tax burden has risen from 35.6 per cent. when Labour inherited responsibility for the economy from the Conservatives to 37.7 per cent. in the second quarter of 1999. The right hon. Gentleman knows that perfectly well. The Prime Minister admitted today that the only way in which the Government can massage the tax burden numbers down—still way above what they inherited—is by taking out the figures for the working families tax credit, which the Chancellor knows is in contradiction to accepted international accounting standards.

Mr. John Bercow (Buckingham)

Given his deserved reputation for generosity, will my right hon. Friend award at least one Brownie point to the hon. Member for Brent, East (Mr. Livingstone), who said in an interview on "On the Record", of which Labour Members should be constantly reminded, that, although the Government had not increased the top or standard rate of income tax, they had increased a lot of other taxes and that it would have been better to have told people honestly beforehand?

Mr. Maude

We know now why the Government are so desperate to keep the hon. Member for Brent, East (Mr. Livingstone) at bay. He refuses to go along with the great Labour lie and insists on telling the truth.

When the OECD first showed that Britain had the fastest rising tax burden in Europe, the Chancellor described it as totally untrue. He then said that it was not the report that was untrue, but the media's reporting of it. The report says that taxes were higher in 1998 than in 1997. It says that they went up during Labour's first full year. Is the Chancellor still saying that that is totally untrue—yes or no?

Mr. Brown

The right hon. Gentleman asked me what reports I can quote on taxation. I have a report commissioned by the Leader of the Opposition—the Nott report on the European Union. The shadow Chancellor has asked about the comparison of the British economy with others in Europe. The report says that Britain has a great deal to lose if statutory business tax rates are subject to extensive harmonisation, as our rates are relatively low: Taxes are significantly higher in most EU countries than in the UK". Now that I have answered the shadow Chancellor's question, will he answer mine? Will the Conservatives admit that the minimum wage, the working families tax credit and the new deal are good for Britain? If they do not, the Conservative party is more extreme than ever.

Mr. Maude

The fact that the Chancellor relies on a report to show something else illustrates how barren his cupboard is. He cannot dispute the central, crucial point that the tax burden has risen, and will continue to rise. The only way he can massage the figures is by fiddling them.

Mr. Brown

I have quoted the figures to the shadow Chancellor—37.4 per cent. down to 36.8 per cent. Let me add the figures that the Conservative Government were proposing for these years—1999–2000, 37.2 per cent.; 2000–01, 37.7 per cent.; and 2001–02, 38.1 per cent. The burden is lower than the Conservatives were planning. Will the shadow Chancellor now answer our questions? Does he agree that the minimum wage, the working families tax credit and the new deal are good for Britain?

Mr. Maude

The best the Chancellor can do is to contend that the tax burden is falling, under his fiddled definitions, from a level to which he himself has raised it. I must remind him that he is the Chancellor of the Exchequer—he has introduced these taxes. They have gone up in Budget after Budget. In every quarter, the tax burden has risen. These are the ONS figures—they show that the tax burden has risen.

Several hon. Members

rose—

Mr. Maude

I am not giving way for the time being.

It is in black and white in the report, but the Chancellor insists that black is white—that taxes are down when they are up, that promises have been kept when they have been broken, and that trust has been honoured when it has been betrayed. He goes on about how he is cutting one or two headline tax rates, but people know that what really matters is the tax burden—the total amount of the nation's income taken in tax.

No one is grateful for getting back the little that the Chancellor is giving with one hand when he is swiping so much more with the other—like a manager boasting about the one goal that his team scored, while omitting to mention the four that they let in. Will he use this opportunity today to get off the treadmill where he has got stuck? Let us call this national tax amnesty day. Why do the Government not just admit the truth?

Mr. Owen Paterson (North Shropshire)

Will my right hon. Friend give way?

Mr. Maude

I will not give way for the time being.

Will the Chancellor persist in lecturing businesses about the rate of corporation tax, when the Confederation of British Industry says that the Government have increased tax massively and that the sums they give back are trivial by comparison?

That is the first, and the worst, broken promise. In opposition, Labour said that it would not increase taxes at all. In government, the tax burden has risen every quarter since Labour came to power. Labour has decided that its only option is to rewrite the truth. There is nothing in the Queen' Speech to salvage Labour's promise on tax. There is nothing to reverse the dead weight of extra regulation that the Government have heaped on business.

Where was the Bill in the Queen's Speech to set Government Departments targets to cut red tape over the years? There was no sign of it. It was all so different in those trusting times before the election when Labour was courting business with its manifesto promise not to impose burdensome regulation. Labour went through the whole process of courting—the wooing, the dinner dates, the flowers, and the promises that it would still respect business in the morning. Now it seems that it was just a one-night stand. Regulation is rising relentlessly.

Mr. Dale Campbell-Savours (Workington)

Will the right hon. Gentleman give way?

Mr. Maude

No.

We are told that everything will be all right because the Government have declared war on red tape. They might as well say that they are declaring war on themselves. What does the Chancellor say to business men who trusted Labour before the general election and now face extra red tape costing £5 billion a year? Will he say, "Sorry, we can't help it; we're in the grip of some hideous compulsion."? Even the Prime Minister admitted that some of the regulation is "over the top", but who does he think put it there in the first place?

Mr. Campbell-Savours

Will the right hon. Gentleman give way?

Mr. Maude

No.

The Queen's Speech refers to the Financial Services and Markets Bill, which is a chilling example of regulatory incontinence. It invests oppressive powers in a single, unaccountable, over-mighty institution. That concentration of power in one pair of hands has no place in a free society. There is no split between the chairman and chief executive, no properly independent board and no checks and balances. The Financial Services Authority will act as rule maker, policeman, prosecutor, judge, jury and executioner.

It is hardly surprising that the imminent legislation is frightening a lot of people in the City. They are reluctant to speak out lest they be identified as troublemakers and targeted by the FSA. I have heard senior people in the City speaking in chilling terms about the threats that they fear from the authority and the Bill. The Bill needs further changes to end that fear.

Several hon. Members

rose—

Mr. Maude

I will not give way again. I have given way many times and I want to make some progress.

The Government inherited the fastest-growing economy in Europe. For two and a half years they have chipped away at the very foundations of Britain's competitive advantage with new taxes and more red tape. They thought that everything would be easy with the golden legacy that they inherited. They are like the cocky cyclist who says, "Look, no hands." Because of the strength of the legacy, they thought that a few more regulations here, a bit more tax there and, while they were at it, a few favours thrown in for the trade unions would not matter. For a time it looked all right, but slowly and surely the proof comes through.

Productivity is another notable absentee from the policy pronouncements in the Queen's Speech. Last year, the Chancellor thought that it was the factor that mattered most. [Interruption.] He said that it was a fundamental yardstick of economic performance and that poor productivity condemns a nation to being held back. This year—[Interruption.]

Madam Speaker

Order. The right hon. Gentleman must be given a proper hearing.

Mr. Maude

Thank you, Madam Speaker.

This year, the Chancellor promised in his Mais lecture that productivity would be the focus of his pre-Budget report, but he barely mentioned it in his statement. That is hardly surprising, as it has been disclosed that growth in productivity has fallen by two thirds since he took office. In the previous Parliament, it was 2.2 per cent. a year and now it is 0.7 per cent. Is he proud of that? How prudent is it to be presiding over an economy in which the seedcorn is being eaten away by degrading our productivity growth?

The next part of the great Labour lie is enterprise. Within days of announcing to the CBI tax cuts said to be worth £40 million to entrepreneurs, the Chancellor confirmed his plan to rake in £500 million under his IR35 proposals. It is a bit of a shame that he did not speak first to Mr. Peach from Aberdeen, who wrote to his local Member of Parliament.

Mr. Peach said—[Interruption.] Hon. Members should listen to this, because I guarantee that in every one of their constituencies there will be hundreds of people who are hit as Mr. Peach has been, and they might to like to know what the effect is.

Mr. Peach said: I promised to let you know how IR35 would affect me. I am pleased to say that it will, in fact, have no effect as I have obtained a contract with a top Internet solutions company in New York, for which I must thank the Government—without IR35 I would never have been looking… Given your Government's professed declarations of support for Information Technology and, in particular, internet technologies, I wonder if my skills are really the sort that you want to drive away from the UK. As my family will be emigrating with me, you will lose my wife's taxes as well as my own…last tax year we paid some £26,000 in Corporation Tax, Income Tax and National Insurance…and for the current year… I would estimate a net loss…of £30,000". Is the Chancellor proud of that?

The Paymaster General may come to regret her arrogant assertion that claims of a vast exodus are irresponsible and do not bear a moment's scrutiny. The fact is that the Government are hitting not only their old heartlands but the very people they persuaded to trust them before the election.

Mr. Campbell-Savours

rose—

Mr. Maude

I shall give way to the hon. Gentleman.

Mr. Campbell-Savours

Persistence pays. I have a constituent called Mr. Peach, who is a good friend of mine, and we have interesting conversations. I am sure that he would like to ask the right hon. Gentleman the same question that he has been asked by my right hon. Friend the Chancellor several times during this debate—what is the Opposition's position on the working families tax credit and the national minimum wage? Will the right hon. Gentleman answer that very important question today so that I can satisfy the interest of my constituent Mr. Peach?

Mr. Maude

It is very interesting that the hon. Gentleman, like his right hon. and hon. Friends, has no answer to the problem of IR35. We said that it would drive people abroad and it is already doing so. The economy, the country and the new technologies will all suffer from that ill-judged measure.

The Chancellor and his colleagues have made much of the claim that, this year, the economy is likely to have done better than outside forecasters predicted. However, Labour Members omit to mention one simple reason for that—consumer spending this year has been much stronger than predicted. Why? Because saving has halved. Most people want to save, to make themselves independent of the state and build up security for the future. Saving is one of the most prudent actions possible, but it has halved. How prudent does the Chancellor think that is?

After the raid on pension funds, the abolition of TESSAs and PEPs, the introduction of the ISA—a bewildering financial instrument and a tribute only to the taste for financial complexity of the former Paymaster General—saving has fallen by half since the Chancellor took office. However, the Prime Minister said before the election, in 1996, that the whole of Labour's economic policy was geared to promoting stability, saving and investment. The only thing that he did not say was that the gear would be the reverse gear. The Chancellor should now admit that, judged by the Prime Minister's words before the election, Labour's policy on saving has been a dismal failure. When will the Chancellor admit that his short-term attack on saving will be cripplingly damaging in the long term?

In the Finance Bill, we can expect some more small-scale measures, some foreshadowed in the pre-Budget report, which claim to help business. Businesses may be grateful for a few crumbs of support that slightly offset the hammering they are getting from rising tax and extra regulation, but they do not want those crumbs. The situation is starting to resemble what people used to say was Labour's approach: "If it moves, tax it; if it still moves, regulate it; and when it stops moving, subsidise it." Businesses do not want the trivial concessions that Labour now offers; they want the Government to stop beating them up.

The Government propose to bring forward a Bill introducing resource accounting. We support the principle—indeed, it was the Conservatives who decided to introduce it. My concern is not with what the Bill proposes to cover, but with what it fails to cover. It will exclude most of what the Government receive and, crucially, most of what they spend. The Government talk of greater honesty and transparency, but the proposed Bill would give the Treasury carte blanche to include or exclude items from the accounts at whim.

For example, there is nothing in the Bill to prevent the Government from reclassifying the working families tax credit as a tax reduction rather than a benefit expenditure, even though that would be a clear breach of international accounting conventions. We support resource accounting, but the Government are giving us creative accounting.

There is so much scope for fiddling the books that one begins to wonder whether the former Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson), is doing some consultancy work for the Chancellor. The Chancellor has been universally condemned for his corruption of the national accounts. Sir Peter Kemp has said that the Chancellor is a statistical heretic. The OECD has said that he violates international accounting rules when presenting his figures.

We feel the same unease about the proposed Bill on private finance. We strongly support the private finance initiative, but the latest proposal must not allow the Chancellor to remove debt from the Government's balance sheet simply by means of more financial engineering.

The Government are proposing to introduce a Freedom of Information Bill. That should be about openness and honesty, but the Government still do not provide honest information about people's tax bills. Only one Labour Member is prepared to come clean about tax, and that is the hon. Member for Brent, East. He has stated: We haven't increased the top rate of tax and the standard rate of tax, but we have increased a lot of other taxes…we have done it with all these stealth taxes. I just think it would have been better to have honestly told people beforehand. It is no wonder the Government do not want the hon. Gentleman to run for mayor. It is not because he will not sign up to the Labour party manifesto, but because he will not sign up to the great Labour lie—no wonder the Prime Minister says that it would be a disaster for the Labour party if the hon. Gentleman got selected.

The Queen's Speech is a blueprint for the short term. The Government courted the public's trust before the general election; since then, they have abused it. By their abuse of trust, the Government are undermining their own trustworthiness.

We heard how 1999 was to be the year of delivery. Perhaps it was: three facts of life under Labour have been delivered, and only one of them is new. Tax went up when a Labour Government were last in charge, and it is going up today. We have always known about Labour's obsession with more regulation and red tape, so it is no surprise that Labour's new regulations already cost the average small business £4,500 a year. Is that making them more competitive? Of course it is not.

The only new fact of life under Labour is the great Labour lie to sustain the false image that the Government have created. Just last Thursday, the Prime Minister said that if people don't trust us with their money, they won't trust us with anything. People do not trust Labour on tax any more, and they are right not to. The Government say one thing and do another. When they are discovered, they deny everything but carry on just as before. The corruption of the truth on tax is the new corruption in British politics.

3.58 pm

The Chancellor of the Exchequer (Mr. Gordon Brown)

We have just heard a rerun of the speech given by the Leader of the Opposition last Wednesday, only without the good jokes. I shall answer, one by one, each of the points made by the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude).

The shadow Chancellor said that the economy is doing badly. He wants to sustain the argument that he advanced last year about the state of the economy. [Interruption.] Apparently, one member of the Opposition Front Bench thinks that the economy is doing well. I am grateful for that acknowledgement, but the Opposition amendment before the House this afternoon does not say that.

Only one serious report on economic policy has come from the Conservative party in the past two and half years. It was authorised by the leader of the Conservative party to examine the question of Europe, but incidentally it looked also at the British economy. In it, we find answers to most of the questions asked by the shadow Chancellor. The report stated that the economy is doing well… The UK currently has the low inflation stability business has craved for decades. Surely that is the first answer to the Conservative party's charge that the Government are anti-business.

The report also examines the Bank of England. After two and a half years, the Conservative party has not given an answer—

Mr. Maude

We will give an answer on that long before the election—the Chancellor did not even an answer three days before the election—and our answer will be the result of a great deal of expert and careful consideration; it will not simply be lashed together on Mr. Balls's laptop.

Mr. Brown

The Conservative party has had two and a half years to think about it, and three former Chancellors have come out in favour of our policy. The Nott committee report says: the Bank of England is handling monetary policy effectively on the whole. Why cannot the shadow Chancellor give us an answer today? (Hon Members: "Go on."] We have raised four major policy issues with the shadow Chancellor today. They are neither incidental nor accidental, and cannot be dismissed as unimportant to economic policy. The Bank of England's independence is the foundation of monetary and fiscal policy; the new deal is the foundation of employment policy; the minimum wage is the foundation of our policy to make work pay and the working families tax credit is the foundation of our policy for families. Does the country not now deserve to know whether the Opposition support—in principle, not in detail—the minimum wage, the working families tax credit, Bank of England independence and the new deal? If, after two and a half years, Opposition Members cannot answer those questions, they have absolutely no credibility on the economy.

Sir Peter Tapsell (Louth and Horncastle)

Will the right hon. Gentleman give way?

Mr. Bercow

Will the right hon. Gentleman give way?

Mr. Brown

I am again happy to give way to the shadow Chancellor if he wishes to intervene. If not, what credibility do the Opposition have?

Mr. Michael Fallon (Sevenoaks)

Will the right hon. Gentleman give way?

Mr. Brown

I will be happy to give way, and the hon. Gentleman could also answer the fifth question about Conservative policy—the privatisation of parts of the national health service.

Mr. Tim Loughton (East Worthing and Shoreham)

Will the right hon. Gentleman give way?

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. We are not conducting an auction.

Mr. Brown

I have said that I will give way, but if the shadow Chancellor will not answer my questions, perhaps someone who aspires to that job will.

Mr. Fallon

While we are on the subject of credibility, the Chancellor has successively claimed to be the architect of independently set interest rates, the deliverer of low interest rates, and, this morning, the backer of higher interest rates. To which of those three claims should we ascribe greater credibility?

Mr. Brown

Stability in economic policy—the stability that eluded us for 20 years under the Conservative Government and that led the Nott committee—set up by the leader of the Conservative party—to say: the economy is doing well". I think my right hon. and hon. Friend will find particularly interesting the report's comment that a return to 'boom and bust' would undoubtedly threaten prosperity and jobs. Even the Conservatives are worried about a return to Tory boom and bust. I am happy to give way to the shadow Chancellor, but if he refuses to answer our questions, I will allow Opposition Back-Bench Members to make their points on his behalf.

Sir Peter Tapsell

Would the right hon. Gentleman allow me to put a question to him? If he is so very convinced of the desirability of an independent Bank of England why, when he set up the new arrangements shortly after the election, did he take care to keep the power to override the Monetary Policy Committee and the Governor of the Bank of England if he thought it necessary in a national crisis?

Mr. Brown

In almost every arrangement that governs the independence of central banks, an override is allowed for exceptional circumstances. Perhaps the shadow Chancellor can tell us whether the Conservative party wants to keep the Bank of England independent but with no override.

I have asked five serious questions about the Conservative party's economic policy, and I have quoted the Nott committee's doubts about the shadow Chancellor's policies. As the shadow Chancellor will not answer my questions, I will take an intervention from the junior employment spokesman, who has controversial views.

Mr. Bercow

Why did the Chancellor pledge in April 1997 that he would not impose burdensome regulations on business because he understood that successful businesses must keep costs down, when he well knew that he intended to impose an additional regulatory cost of £4,500 a year on the average small business?

Mr. Brown

That is absolutely untrue. We have cut small business tax from 23p in the pound to 20p. It is perhaps a reflection on the Conservatives that their Government did not do so. We have introduced a small business tax rate of 10p in the pound, which small business has widely welcomed and which the Conservatives failed to do in 20 years of Government. We have introduced a lower rate of capital gains tax at lop in the pound to encourage business investment, and that has also been welcomed right across industry.

The only contribution that the hon. Member for Buckingham (Mr. Bercow) has made to economic debates has been to argue that the new deal is a calamity. He wants people to believe that it would be best for Britain if we scrapped the new deal and the working families tax credit. The shadow Chancellor wants us to scrap Bank of England independence. The Conservatives are incapable of answering questions on the economy, and they have no credibility.

Mr. Bercow

rose—

Mr. Loughton

rose—

Mr. Brown

We still have not heard from the shadow Chancellor. About six Back-Bench Members have posed as the shadow Chancellor by trying to ask me questions, and I shall be happy to give way to more of them.

Mr. Loughton

Would the Chancellor remind us whose Queen's Speech we are debating? Is it the Government's programme or ours?

Mr. Brown

The Opposition have tabled an amendment to the Loyal Address, and they are attacking the Government. I have put some questions to the shadow Chancellor but he has remained silent six or seven times. I have asked him to answer questions on five fundamental aspects of Conservative economic policy. The shadow Chancellor cannot answer those questions because he always gets it wrong. He said last year that unemployment would rise, but it has fallen by 120,000. He said that employment would fall, but it is up by more than 200,000. He said that there would be a downturn but there has been 1.75 per cent. growth. [Interruption.] It appears that he wants to go back on what he said then, but he said that our forecasts were fantasy forecasts. A week later he stepped up his rhetoric accusing us of Peter Pan economics and lyrically saying that we used fairytale figures. Those are not the titles of Jeffrey Archer novels.

Mr. Maude

Does the Chancellor remember that, when he was shadow Chancellor in 1993, at the beginning of the longest sustained period during which unemployment fell, he predicted that unemployment would rise month after month?

Mr. Brown

I was quoting from the Budget report. The shadow Chancellor said that we had made fantasy forecasts and that we were talking complacent nonsense. He predicted that there would be a gaping hole in the public finances and a downturn made in Downing street. His problem is that he cannot justify the predictions that he made in Parliament.

Mr. Bercow

rose—

Mr. Brown

The shadow Chancellor has yet to answer my five questions. Can the hon. Member for Buckingham, the junior employment spokesman, help us by committing his party either way on continuing with the new deal, the working families tax credit and the minimum wage?

Mr. Bercow

That was a nice try but the Chancellor must do better than that. Will he answer my question? Is he aware that, since the new deal for young people was introduced, at least 50,000 have left the scheme for what the Government euphemistically describe as destinations unknown?

Mr. Brown

Does the hon. Gentleman support the new deal and want it to work better, or does he oppose it? Some 500,000 young people and long-term unemployed have gone on to the new deal, and 170,000 of them have got jobs. Does he or does he not support that? Does he now agree that the windfall levy on the utilities was the right thing to impose, or does he not? Why cannot the shadow Chancellor answer one serious question about the fundamentals of his economic policy?

I studied the Conservative amendment in great detail, and I now have great glee in reading it out. On the day that Conservative party finances are under scrutiny and in the week that Lord Archer is under scrutiny, the Conservative party's amendment has the audacity to call for honesty and openness. Conservative Members accuse other people of saying one thing and doing another, but the amendment was tabled by a party whose ethics and integrity committee has never met. Conservatives probably think that "Ethics" is the name of the county that includes Basildon and their leader's judgment is so bad that the first and last words that he uses about Jeffrey Archer are integrity and probity.

Let us consider the Conservative party's membership list. We need only begin with the letter A, and Aitken, Archer and Ashcroft—its A-list of candidates. These days, what does one call a Tory candidate whose name starts with the letter A? The accused.

Sir Peter Tapsell

rose—

Mr. Brown

I shall take one more intervention, but I shall offer it to the shadow Chancellor, so that he can answer the questions about the Bank of England, the minimum wage, the new deal and the working families tax credit. He can tell us what his policy is. If I cannot persuade him to intervene, I shall take an intervention from what I suppose is a surrogate for him. Will the shadow Chancellor answer those questions now, or is the hon. Member for Grantham and Stamford (Mr. Davies) going to reply? No, so I shall have to give way to the hon. Member for Louth and Horncastle (Sir P. Tapsell).

Sir Peter Tapsell

Although some of us have been here long enough to recognise that the right hon. Gentleman is relatively inexperienced in the affairs of the House, when a Chancellor does not want to defend his measures, it is one of the oldest tricks in the parliamentary book for him to ask a series of questions of the Opposition and to talk about everything else except what was in his Budget statement.

Mr. Brown

I have asked five fundamental questions of economic policy. I have asked a question about the Bank of England, which the Opposition cannot answer; a question about the future of the minimum wage on which 2 million people depend, and their fears have not been allayed; a question about the working families tax credit on which 2 million people and 3 million children depend, and the Opposition cannot allay people's fears; and they cannot allay the fears of people who are on the new deal, which was paid for by the windfall utilities tax. However, they neither support the new deal nor did they support the introduction of the utilities tax.

Mr. Michael Jack (Fylde)

Will the Chancellor give way?

Mr. Brown

I have said that I want to make progress. I shall outline the measures that are in the Queen's Speech.

Our domestic policy is built on five foundations—stability, employment and no return to the unemployment that we saw under the Conservatives, help and not harm for working families, investing billions more in the public services rather than privatising parts of them and support for engagement in Europe against isolation in Europe. We have made the Bank of England independent—

Mr. Edward Garnier (Harborough)

The Chancellor has wasted 15 minutes.

Mr. Brown

I have not wasted 15 minutes. We have discovered from the Conservative party that it has no answers questions of economic policy. I do not think that anybody listening to this debate will be in any doubt that, after two and a half years in which Conservative Members have been talking to themselves, issuing press releases, and when they now think of themselves as dissidents who are being persecuted, they have been unable to answer any serious questions of economic policy.

Mr. Jack

rose—

Mr. Brown

I have been very generous in giving way. However, each time that I seek to give way to those on the Conservative Front Bench, they refuse to intervene. They then ask me to give my full speech, and that is what I propose to do. We made the Bank of England—

Mr. Deputy Speaker

Order. I am not presiding over Opposition Question Time. I invite the Chancellor to follow his better instincts and to progress with his speech.

Mr. Brown

I hope that you are enjoying the debate, Mr. Deputy Speaker.

We made the Bank of England independent, and we ensured that interest rate decisions are taken in the long-term interests of the economy, and not for short-term political considerations. We now have a sound and credible platform of stability, low inflation, and low long-term interest rates. Growth is forecast this year to be 1¾ per cent.—stronger than expected at the time of the Budget—and next year to be between 2½ and 3 per cent. Opposition Members would have been proud of such a record had they achieved it.

Mr. Jack

Will the right hon. Gentleman give way?

Mr. Brown

I shall give way once more, because the right hon. Gentleman is a former Conservative Treasury Minister. If the shadow Chancellor cannot answer any questions about Conservative policy, I will assume that the right hon. Member for Fylde (Mr. Jack) wants to do so.

Mr. Jack

Following your advice to the Chancellor, Mr. Deputy Speaker, I should like to ask him a fundamental question. In response to the points made by my right hon. Friend the shadow Chancellor about tax levels, the Chancellor quoted certain figures from table B7 on page 150 of the pre-Budget report, which shows tax as a percentage of gross domestic product. Will he confirm that that table shows that, in the current financial year, net taxes and social security contributions total 37 per cent. of the gross domestic product, and that, by the next election, that figure will have risen to 37.2 per cent? The bottom of that table also shows rising Government receipts as a percentage of GDP. That table conclusively shows that taxes are rising.

Mr. Brown

I have the table in front of me, and ask the right hon. Gentleman to look at it carefully. Table B10 shows—

Mr. Jack

B7.

Mr. Brown

The table on net taxes and social security contributions is table B10. That shows that, for the 1998–1999 outturn, the figure was 37.4 per cent., and that the 1999–2000 estimate of 37 per cent—

Mr. Jack

I referred to table B7.

Mr. Brown

The table entitled Net taxes and social security contributions"— I do my homework, even if the Opposition do not—shows figures of 37.4, 37 and 36.8 per cent. The corollary—what the Conservatives would have done—is 37.2 per cent., rising to 37.7 and 38.1 per cent. That is the true position of what would have happened under a Conservative Government.

It is easy to see why that is so. We have cut corporation tax and income tax, and we have created a lop starting rate of tax and set a 10p rate for capital gains tax.

Mr. Jack

On a point of order, Mr. Deputy Speaker. Is it in order for the Chancellor to choose to answer a completely different question from that honourably posed by another hon. Member?

Mr. Deputy Speaker

The right hon. Gentleman has sufficient experience to realise that those are matters for debate and not for the Chair.

Mr. Brown

I repeat that the table in the pre-Budget report on net taxes and social security contributions shows—[Interruption.] It is not what the Opposition want to hear, but these are the facts that are stated in the document. They do not want to believe them because the share of tax next year will go down—and that is the truth. The reason is that the basic rate of income tax has been cut, a 10p tax rate has been set up, capital gains tax is falling to a 10p long-term rate, business tax has fallen—and is falling—from 33p to 30p and small business tax has fallen from 23p to 20p. Those are Labour tax cuts.

The Conservatives pushed tax up to the highest burden in history. Under the Conservatives, there was the fastest rise in taxes. They misled the people in 1992 when they said that they would not impose VAT on fuel, but then did so ruthlessly, punishing pensioners.

We have locked in not only action against inflation through the Bank of England—[Interruption.] If hon. Gentlemen on the Opposition Front Bench want to explain Conservative party policy, they may ask me to give way so that they may offer some answers instead of talking from a sedentary position as though they have something to say, although they have no policy to announce.

We have locked in fiscal tightening; we will not relax our discipline. Having moved from the ad hoc piecemeal approach in the old Conservative annual spending rounds, we have a three-year, long-term system of public expenditure planning, to which the 13 interdepartmental reviews that we have announced today will contribute.

The reviews, which will take place during the comprehensive spending review process, will cover the rural and countryside programme, young people at risk, crime reduction, support for older people, an interdepartmental review on drugs, Government intervention in deprived areas, science and research, welfare to work and its relationship to the new project, the criminal justice system, sure start, and two foreign policy issues—conflict prevention, and nuclear safety in the new Soviet Union. There will also be a major interdepartmental review of local government finance.

Mr. Edward Davey (Kingston and Surbiton)

The right hon. Gentleman will have noticed that there was a disruption in the Strangers Gallery earlier, and the pensioners who were shouting into the Chamber threw down some blue leaflets because they wanted to ask him a particular question—

Mr. Deputy Speaker

Order. There is only this Chamber; we cannot speak of places outside it.

Mr. Davey

I am sorry, Mr. Deputy Speaker.

Does the right hon. Gentleman think that a 73p a week increase in the basic pension gives senior citizens their promised rightful share in our nation's growing prosperity?

Mr. Brown

Why does the Liberal party not recognise the three measures that we have introduced, the first of which was the £100 winter allowance for every pensioner household—[Interruption.] I do not know whether the Liberal party supports that. Why does it not recognise what we have done for pensioners aged over 75, with the free colour television licence? The week before the pre-Budget report the Liberals said that they did not support that idea any more—[Interruption.] Oh, apparently now they do. They issued a statement saying that they would not support the idea of free television licences; now they—[Interruption.] Do they support them or not?

Mr. Matthew Taylor (Truro and St. Austell)

The Chancellor knows that we consistently argued for free television licences for pensioners over 75, but said that free television licences for all pensioners would be too costly. There has been no change in our policy. If the right hon. Gentleman is looking in his notes for a quotation from a newspaper arguing exactly that point, I think that he will find that that is what we said. Will he now answer the real question, which is about the basic state pension and pensioners' concern that they are getting only a 73p increase, although his reserves from social security underspend mean that he could well afford to give them much more?

Mr. Brown

I have looked at the billions of pounds worth of Liberal spending commitments, and the week before the pre-Budget report the Liberals withdrew their support for the free colour television licence, which we have now introduced. Why do they not also support the minimum income guarantee that we have agreed for between 1.5 million and 2 million pensioners? As a result of that, and all the other changes that we have made, the poorest pensioner, the pensioner aged over 75 or 80, is receiving £15 a week more than when we came to power, and the poorest couple aged over 80 is receiving £20 a week more.

The Liberals have to grow up in relation to public spending. They support public spending on everything as each cause becomes fashionable, yet they tell people in other parts of the country that they support toughness and rigour in public spending. They say that they support tax rises to spend on this and that, yet they tell people in Tory areas that they are against tax rises. They must sort out their position on public spending. On the main issues of health, education and pensions, we have done more than any Liberal ever dreamed of doing.

We have announced the new interdepartmental reviews of the spending round, which is part of our policy for fiscal and monetary stability, the foundation of which is the independence of the Bank of England. That is the first divide between ourselves and our opponents. We support the independence of the Bank of England, and monetary and fiscal stability under the clear rules that we have drawn up; we have had no answers from the Opposition.

The second difference is that we support constructive action in Europe, whereas the Conservatives are unprepared to do so; indeed, they would leave us isolated. The shadow Chancellor is only one step away from saying that he would never in any circumstances support the single currency for Britain—which puts him at odds with the hon. Member for Grantham and Stamford, his neighbour on the Front Bench, who is very keen on it, and regards as unacceptable the rejection of a single currency in principle.

The third area of division between us is employment policy. We have cut youth and long-term unemployment by half since we came into office, employment is up by more than 700,000 and there are more people in work now than at any time in our history. Unemployment is at its lowest for 20 years. I believe that one contributing factor to that is the existence of the new deal. I would like to think that right hon. and hon. Members on both sides of the House would support the new deal as being effective and for delivering the results.

Sir Teddy Taylor (Rochford and Southend, East)

Is the Chancellor willing to say something about the astonishingly sharp fall in the value of the euro since its launch, from 71p to its lowest ever value, recorded yesterday, of 63.3p? Is this something that the Government anticipated or did it take them by surprise? Is it something that we should worry about?

Mr. Brown

The hon. Gentleman has enough experience of the House to know that no Finance Minister has been prepared to make running commentaries on exchange rates. However, in the past year, growth in America was making the greatest contribution to the development of the world economy while Europe and Japan were not making the contribution that we wanted of them. The contribution from Europe is starting to increase this year as growth in Europe picks up. Like me, I think that the hon. Gentleman would want to welcome the fact that we have balanced economic growth worldwide, where Europe, Asia—including Japan—and America make their full contributions.

To be able to influence the policy of the European Union on the single market and other issues, we must take a constructive attitude to Europe and not remain isolationist in the way that the Conservative party now wants to do.

The three dividing lines between ourselves and the Opposition are first, our support for stability and their reversion to boom and bust; secondly, our support for the new deal and their rejection of it; thirdly, our support for a constructive attitude in the European Union. Unfortunately, the Conservative party is isolationist.

The fourth area of division is on public services. We have invested £40 billion in education and health cumulatively over the coming three years. We have built 1,600 extra classrooms and provided for 4,500 more teachers. By next year, all five, six and seven-year-olds will be in classes of 30 or fewer. We have doubled capital expenditure on schools. We are on track to meet our promises on waiting lists, and we are determined in future to finance the health and education services in a way that did not happen under the previous Government.

The Conservative party cannot escape the fact that, over the past year, it said that our spending plans were a "reckless spending spree". It said that spending was going through the roof year after year. At the Conservative party conference, the shadow Chancellor said that we had lost control in the biggest spending spree for a generation. On the "Today" programme, the right hon. Gentleman said that it was madness to embark on the public spending programme. The Conservative party also said that we had entered into extremely irresponsible and reckless commitments to which the country should not be committed. The shadow Chancellor has said that total spending is at a reckless level. Even this August, the shadow spokesman for the environment said that Labour's big mistake was to announce huge increases in public spending and said that the Opposition recommended reducing future spending plans. The shadow Chancellor was at it only a few days ago to the Financial Times when he said that Labour threatened yet another spending spree.

Let the Conservatives explain to the public how they will cut public spending without affecting the resources that are available to health and education. Let them explain to the country how they will meet their tax guarantee and maintain the levels of public services that people want to see. I think that Conservative Back Benchers will be surprised to know that, in the Hayek memorial lecture that the shadow Chancellor gave when he was out of the Government in 1995, he asked whether it was possible to change things. Then, he was criticising the Conservative Government for spending too much and for introducing too much regulation. He asked whether it was within the realm of practical politics to reduce the share of national income taken and spent by the state from the then current 41 per cent. share to, say, 25 per cent. He said that he supposed that, if his case for its overwhelming importance was accepted, then the question answered itself. He said that it had to be made possible and that politics was the art of making possible what one believed to be right. He argued that there could not be soft options; it required much more toughness.

Let us consider that 25 per cent. figure in public spending. Bizarre as it sounds, it would require a cut in public spending of £144 billion. As the Conservatives now favour 25 per cent. public spending, I shall take the House through the implications of that.

Spending on defence and foreign affairs accounts for about 3 per cent.; agriculture about 1 per cent.; and law and order about 2 per cent., which the Opposition want raised. Spending on transport and the environment together account for about 6 per cent.; and interest payments are about 4 per cent. Three per cent. is spent on pensioners—we had a debate last year, when the shadow Chancellor insisted that he did not want to abolish, cut or means-test the basic state pension, so we assume that he would pay that money out. Spending on disability and on education bring the total to 30 per cent., even before we have discussed the NHS.

What is the Conservative attitude to the public services? How would the shadow Chancellor get to 25 per cent? He may want to intervene now and give us more details of the Conservative economic policy. As he knows, I have been prepared to deal with interventions, and I will give way to him. In his 1995 lecture, ominously entitled "One Nation Revisited", he said: What I am arguing for is a strategic long-term shift in direction that takes us gradually away from compulsory collective state provision to private voluntary collective provision. Is that not what the Opposition health spokesman is telling people round the country? He is going around saying that non-urgent operations should be moved out of the NHS. He has been saying that he is about to unveil a plan for private medical insurance so that people can take up such insurance, or perhaps they will be forced to do so. The shadow Home Secretary has been going around saying that she wants charges in the NHS.

When the Conservatives published their plans for a common-sense revolution, I noticed that they never committed themselves to maintaining the levels of expenditure. I noticed that they said that public spending would be cut and that, in that document, they gave no commitment whatever in relation to the overall level of spending in the national health service.

Is it not the case that behind the shadow Chancellor's designs in relation to public spending is the aim that he set out so clearly? He can correct it now. If he did not say that public spending should be reduced to 25 per cent. and that that is the measure by which he will be judged on his toughness, I am happy for the record to be corrected so that there is no doubt about it.

Mr. Maude

This is a pathetic abuse of one of the most serious parliamentary occasions of the year. If the Chancellor wants to have it confirmed that I believe that we should resume the steady, very gradual downward path over time of the share of the nation's income taken by the state, yes, I confirm that. That is what we achieved over time when we were in power, and I believe that we should resume it.

That illustrates a stark difference between us. The Chancellor used to speak about how important it was to restrain the size of the state. What he has shown by what he does, rather than what he says, is that the share of the nation's income taken in tax and spent by the state is rising inexorably year after year.

Mr. Brown

This has been one of the most illuminating debates that we have had. We have a shadow Chancellor who refuses to tell us what he would do about the Bank of England, the minimum wage, the working families tax credit or the new deal. Now we have a shadow Chancellor who does not deny his statement on the record in 1995 that he wants to reduce public spending as a share of national income to 25 per cent. I notice that he did not deny what the health spokesman was saying around the country about private medical insurance, non-urgent operation outside the NHS and more charges in the NHS. Does he want to deny that now?

Mr. Garnier

I am glad to have an opportunity to speak in the debate, now that the Chancellor has resumed his seat.

Mr. Deputy Speaker

Order. [Interruption.] Order. Once I am on my feet, the hon. and learned Gentleman must resume his seat. It is becoming unclear, even to the Chair, whether the Chancellor has finished his remarks. If he is giving way, he must indicate, if only for my guidance, to whom he is giving way.

Mr. Brown

As you know, Mr. Deputy Speaker, I have been happy to give way many times during the debate. I volunteered to give way to the shadow Chancellor.

Mr. Desmond Swayne (New Forest, West)

On a point of order, Mr. Deputy Speaker. Is it in order, even for the Chancellor, to make a second speech without first seeking the leave of the House?

Mr. Deputy Speaker

I do not need such a contribution in the present situation.

Mr. Brown

Today's debate has been revealing. We now know that the shadow Chancellor does not deny his long-term plan to reduce the share of national income taken by the state to 25 per cent. We now know also that he is not prepared to repudiate the shadow Health Secretary on privatisation in the NHS. He has created another dividing line between us for the coming campaigns in Britain.

We are the party of stability. The Opposition, because they will not make the difficult—

Mr. Garnier

rose—

Mr. Brown

I shall not give way. You, have urged me to press on Mr. Deputy Speaker, and I have offered to give way to the shadow Chancellor on many occasions.

These are the dividing lines. First, Labour offers and achieves stability, while the Opposition offer only a return to stop-go. Secondly, Labour's commitment to the new deal will yield 170,000 job opportunities in the long term to young unemployed people. We shall continue to expand the new deal, while, as must be clear from today, the Opposition are determined abolish it. Thirdly, we are committed to the working families tax credit, from which 1.5 million people are benefiting. Furthermore, 1 million people have telephoned to inquire about taking it up. That shows that many of them are considering taking jobs and getting back into work, while the Opposition are determined to impose an average tax rise of £24 a week on those who would lose the working families tax credit. Finally, we are committed to Britain's public services, while people are now in no doubt that the Conservative party is the party of privatisation.

The debate on the Queen's speech has revealed the Conservative party in its true colours. It is the party of the few; Labour is the party of the many.

4.36 pm

Mr. Matthew Taylor (Truro and St. Austell)

I congratulate the Chancellor. He is overseeing a good position in Britain's macro-economy, on which he deserves congratulation. The Conservative party's amendment is bizarre in not recognising that in any form. The way in which the amendment is written makes one think that Conservative Members have not noticed the last couple of years and are attempting a criticism of their own record.

The Chancellor should recognise that that achievement has been built upon three foundations. The first is the golden rule, a sensible approach to public spending and balancing the economy, for which we argued before the general election. The second is independence for the Bank of England, for which we argued and which the Chancellor opposed before the general election. The third important element is the success of the American economy, the present growth within the other European countries and the quite remarkable bounce back of the Asian economies and the signs of growth in Japan. That has provided a good basis for the Government's management of the British economy. Nevertheless, the Chancellor has made important and right decisions, which we welcome.

However, there are real issues of concern within the economy and I want to touch on five—the complication of the tax regime; the difficulties of exporters hit by the high pound, who are well represented in my constituency; public spending, which I believe is set to follow a boom and bust pattern—just as the Chancellor attempts to avoid it in the wider economy he makes that very mistake in his handling of public spending; the environment; and preparation for the euro.

I do not want to say too much about the complication of the tax regime, simply that the increasing plethora of levels of personal taxation—the introduction of small schemes which the Chancellor says back entrepreneurs but which newspapers aimed at those very entrepreneurs, such as the Financial Times and The Economist, say overcomplicate the tax regime and are of no real benefit to entrepreneurs but are a real disbenefit to a simple, clear tax regime within which people can operate—is perhaps the Chancellor's single worst legacy as a detail manager within the Treasury. That is the opposite of the approach taken by Lord Lawson who, in some respects, the Chancellor criticises but who, in other respects, he admires. One thing which deserves admiration is the way in which complications in the tax regime were dealt with then. Perhaps it took money from accountants, but it helped small businesses, for which complication is not a benefit. Even if there are tax allowances, chasing them wastes time and energy in companies that cannot afford much outside expertise. They certainly cannot afford to use managers' precious time in chasing a few tax allowances.

Mr. Fallon

To which tax breaks does the hon. Gentleman have the greatest objection?

Mr. Taylor

One example is the complication of the capital gains tax regime. We argued that it would not help, and that it was not only over-complicated but that it tied people in unnecessarily for too long. The Chancellor acknowledged that in the pre-Budget report. [Interruption.] I could give many examples, but I do not want to delay our proceedings because I have greater points to make on other subjects, and I do not want to take up Back Benchers' time. I do not know whether the hon. Member for Sevenoaks (Mr. Fallon) wants to take part in the debate later.

I want to consider exporters and the strong pound. Does the Chancellor have a policy on exchange rates? What does he consider to be an appropriate exchange rate? Does he recognise the genuine difficulties that are caused by the Monetary Policy Committee's concerns about the housing boom in the south-east, which is leading to an increase in interest rates that is inappropriate for conditions in much of the economy elsewhere? It is important to know whether the Chancellor has a policy on those linked issues. Higher interest rates help to keep the pound high; keeping the pound high contributes to hitting manufacturing industry in the most depressed parts of the country. In my constituency, there are price-sensitive exporters in heavy engineering and especially in the china clay industry. Therefore, I know how direct the knock-on effect of the high exchange rate is on job losses, which have been continuing and will go on, according to their management, if the pound stays so high. There are other examples of that around the country.

There are various answers to the questions that I asked. Perhaps the Chancellor believes that differences between various parts of the country do not matter. Perhaps he believes that the current rate of the pound is appropriate, and that any pain in manufacturing is okay because there will be gain later. Both those answers would be wrong. It would also be wrong to ignore the serious effects of the house price boom in the south-east. It not only prices out of housing many people who live and work here and are not on high incomes, but stacks up problems in the economy through increases in interest rates. It also creates pressure for 1.1 million homes in the countryside in the south-east, while homes empty in many towns and cities in the north. By changing the tax regime to equalise VAT between new build and renovation and improvement of existing building—perhaps also considering a tax on greenfield sites to help to improve brownfield land so that it is more affordable and there is greater interest in building on it—we can begin to tackle some of the housing problems. However, the Chancellor appears to pretend that they do not exist.

Sir Teddy Taylor

The hon. Gentleman rightly referred to the great difficulties of the Governor of the Bank of England and his board in co-ordinating the effects of interest rates on different parts of the economy, for example house building and industry. I ask him in all sincerity, how do he and his colleagues believe that it will possible to co-ordinate the impact of a single interest rate in Europe? Surely the problems that the hon. Gentleman has mentioned would be infinitely worse if we had a single interest rate in the European Union.

Mr. Taylor

There are two parts to the answer. First, the effects could be addressed through fiscal policy. Secondly—as I am sure the hon. Gentleman, who studies these matters carefully, knows—there are fewer differences between European Union countries than between different regions of the United Kingdom.

Any debate on the economy should consider not only how much tax we raise and the state of the economy, but how public money is spent. The Government put a lot of emphasis on their prudence in planning for stable debt and increased spending on public services, but I watched the tax debate between those on the two Front Benches with some amusement because the simple fact is that the tax rate has risen over the 1990s, under both the Conservative party and Labour. The economy has also grown, not spectacularly—

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Taylor

In a moment.

The economy has grown not spectacularly, but steadily. Public spending, however, has been restrained and we see continued deterioration in key areas of public service. Where has the money gone? Essentially, in the past two years, it has gone on building up massive Government surpluses—on their figures, one of £33.5 billion before the next general election—but the true amount is disguised in reserves. For example, there have been increases in planned reserves for social security, even though there has been consistent underspending on benefits, and that has helped secretly to boost the Government's coffers.

The Chancellor has chosen what he calls prudent growth forecasts—I believe that he is right—but if the Treasury papers arguing that the sustainable growth rate is now 2.5 per cent. and not 2.25 per cent. are correct, he has even more in his war chest to spend. He might intend to spend those surpluses before the next general election. If so, he is leaving it so late that there will have been a bust in public services in the early years of this Parliament to fund a boom at the end. That is no more right for public service spending than for managing the economy.

Mr. Christopher Leslie (Shipley)

Will the hon. Gentleman give way?

Mr. Taylor

In a moment.

The Chancellor may not want a boom for the next general election, and one can understand why. After all, the 2005 general election may—he hopes—be rather more important for him personally and it might be better to offer a boom then, although that is not what his Back Benchers want as the next general election will be tight for some of them.

Mr. Leslie

Will the hon. Gentleman give way?

Mr. Taylor

In a moment; I want to proceed on that point.

Perhaps the Chancellor does not believe any of that. Perhaps he simply believes that it is the object of a Chancellor to bring as much money into the Exchequer as possible and to spend as little as possible. It is hard to believe that he thinks that storing up such surpluses would make sense in the long run, let alone be electorally viable, but if he does not, our argument is that steady, sustained growth in public spending would be sensible and that the present plans do not deliver the manifesto commitments on which he was elected. I said that I would give way to the hon. Member for Workington (Mr. Campbell-Savours).

Mr. Campbell-Savours

The hon. Gentleman has moved on.

Mr. Taylor

Then I shall give way to the hon. Member for Shipley (Mr. Leslie).

Mr. Leslie

It seems that I am second choice. Can the hon. Gentleman confirm that the Liberal policy is still to extend the personal tax allowance to about £10,000? If so—and if he wants more public spending, too—will cutting the national debt be the source of his income or does he intend to put up taxes? If so, which taxes?

Mr. Taylor

The hon. Gentleman will find that our policy has been spelled out in some detail. We have consistently published our proposals, which were to combine the abolition of some of the existing tax allowances with an increase to 50 per cent. in top-rate tax for those earning more than £100,000 a year and the gradual introduction of a carbon tax. That would allow such a process to take place. Incidentally, taxing pollution rather than people would help to tackle some of our environmental problems too. As the Government's energy levy is introduced, my own view is that we shall have to consider the policy position in the light of the current circumstances. We shall again publish our costed proposals for the next general election.

The Chancellor likes to attack Liberal Democrat economic policies and spending proposals, but I remind him that we have set out our costed proposals in detail at each general election, which is clearly more than he has been able to do. In 1987, our costed proposals contrasted with a Labour party manifesto—he was in the team—that was clearly unbelievable and unaffordable. Labour was unelectable. In 1992, the Labour party learned some lessons from that and presented a costed manifesto. The costings were so high that the party remained unelectable, and it was not elected. The Chancellor was a key part of that team.

By 1997, the Labour party had flipped the other way, and did not cost its manifesto. That is obvious in policy after policy.

Mr. Clive Betts (Lord Commissioner to the Treasury)

We were electable.

Mr. Taylor

Labour may have been electable but its policies were undeliverable. The Government now face problems with class sizes and waiting lists. They told us that a reduction in class sizes for five to seven-year-olds would be funded by the abolition of the assisted places scheme. The figures tell their own story. It cost many times that amount to get to where we are. Far worse than the financial costs—we are not unsympathetic about the extra spending—is the fact that the Government were not willing to provide money in the early part of this Parliament to fund the reduction properly, so that it has been bought at the expense of children over eight. Parents who had six-year-old children at the time of the last general election and who voted to get their children's class sizes reduced, because they saw the teachers struggling and were concerned for their children's future, now have eight-year-olds in record class sizes. They have paid in this way for that policy because the Government were not willing to provide the money when it was needed.

We should consider the Government's education spending record in this Parliament. It was interesting to hear what the Prime Minister had to say during parliamentary questions about where they will end up, but they should have started with those increases to make that policy happen, and to prevent class sizes from rising. Labour Members know that full well, because, when they visit schools, they hear that story. Incidentally, they cannot recruit sufficient teachers, which says something about what is happening on wages.

On health, the right hon. Gentleman fought the general election on a pledge to reduce waiting lists. The Government have not been able to achieve that, and now we are told that they have dropped that policy. The pledge to cut waiting lists is out of the window, because they are not prepared to provide the funds to make it happen. Waiting lists for out-patients—the people waiting to get on the waiting list—are at record levels. The Government have not even reached their targets on the in-patient lists, and 89,000 operations have been cancelled on the day of the operation. Meanwhile, there is a crisis in nursing such that the Royal College of Nursing's predictions of difficulties in nurse recruitment have been exceeded. The problem is even worse than the RCN dared predict.

On pensions, social security and the disabled, the Prime Minister defends the cuts in benefit for people with disabilities in the future on the ground that the manifesto said that the Government would review welfare policies. I do not believe that anyone who voted for the Labour Government did so because they believed that Labour intended to cut benefits for people with disability—benefits that those people have paid for through national insurance contributions. If that happened in the private pensions sector, the case would be taken to court. In this case, there is nothing people can do but protest from the Gallery.

Worst of all, the Chancellor pretends that he cannot afford to do better. On the day that he announced tax breaks for millionaire entrepreneurs, he pushed through on a Whip cuts for people with disabilities. On the day that he announced a 73p increase in the basic pension, he revealed that he is tucking away thousands of millions in surpluses on social security. No doubt he will tell pensioners later that they will get an increase—perhaps just before the next general election—but that does not help to pay their bills now.

Mr. Gordon Brown

The Liberal Democrat spokesman should tell the full story, which is that £1 billion is being spent on the disabled this Parliament, £6 billion extra on children, and £3 billion extra on pensioners. That is what the Government have been able to do.

The hon. Gentleman talked about health and education, and referred to manifesto pledges. His manifesto promised a 1p in the pound rise in tax to spend on education, which is less than £2 billion a year. We are spending more than £6 billion a year extra on education. He promised £700 million for health, and we are spending something in the order of £7 billion extra a year. Instead of pretending that he can add up when he patently cannot, he should admit that we are spending more on the disabled, pensioners and children, and that we are providing more resources and doing things in the health service that he can only dream about.

Mr. Taylor

The Chancellor is wrong, and I am glad that he has given me a chance to nail him. It is clear that our education pledge promised an immediate increase equivalent to a penny on income tax, and that that related to current spending. We would be spending, in real terms, an extra £2 billion a year in every year of this Parliament. According to their plans, the Government will be spending around half that amount by the end of the current Parliament—and that does not allow for the fact that we have never suggested that we would not spend more on the basis of growth, as all Governments do. What we said was that we would spend on the basis of a static budget, making no assumptions about growth, and that the expenditure was guaranteed.

The fact is that schools would be better off under our proposed measures than under the Chancellor's. First the Chancellor tries to ignore issues of inflation, secondly he tries to ignore the fact that there was growth planned anyway, and thirdly he tries to pretend that lumping together current and capital expenditure will make a difference to teachers in the classroom, and to books, equipment and class sizes. None of that is true.

Mr. Brown

The hon. Gentleman should tell the full truth to the House of Commons. The Liberal Democrats opposed the new deal; they opposed the windfall levy; they opposed the additional capital expenditure of more than £1 billion on schools that has now raised £2 billion through public-private partnerships. As well as spending nearly £20 billion extra on education, we have managed to put more money into schools through the new deal. Let the hon. Gentleman be honest with the House: he opposed that.

Mr. Taylor

The Chancellor is wrong. We did not oppose the new deal, although we did argue that the windfall tax was not the right way in which to fund those measures. [Interruption.] We shall have plenty of time to return to the issue, and I shall enjoy doing so, but let us now consider the future. I raised the subject of the comprehensive spending review at Treasury Question Time. The hon. Member for Bolsover (Mr. Skinner), who is not present now, said—echoing, I suspect, the views of many Labour Back Benchers—that the new comprehensive spending review, which will double up on the third year of the current spending plans, 2001–02, would provide an opportunity for increased public expenditure, reflecting the very good economic circumstances on which I congratulated the Chancellor earlier.

The Financial Secretary to the Treasury, however, has said more than once that there is no possibility of changing the third year of the present plans, and that they are set in stone. Will the Chancellor now tell us whether, when the new plans for 2001–02 are announced next year, the existing plans will prove to be set in stone, or whether people can hope for increased public spending on education, health and the police—just in time, coincidentally, for the general election? I do not detract from that; I simply want to know whether the Chancellor will answer that fundamental question. If people are to submit to the review on a coherent basis and argue the case—Labour Back Benchers, or Liberal Democrats—we need to know whether the plans for 2001–02 are set in stone.

The Chancellor does not want to answer that question, which makes us wonder whether there is not, after all, a secret war chest. The Chancellor says that he is prudent, that there is no war chest, that there is no money to spend. I am sure that Labour Back Benchers are horrified to learn that there is nothing to come for schools, hospitals and the police in time for their leaflets—but there he is, the prudent Chancellor. Or is he not replying because he plans to release the money not now, when it is needed by children in schools, but in time for the general election? Those are bust-boom economics.

Let me turn to an issue on which we may be able to agree. I am glad that the Government are at last dealing with the issue of environmental taxation. They are finally getting something right in regard to the environment.

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Taylor

I am very aware of the time, and I must make haste. The hon. Gentleman refused an opportunity to intervene earlier.

On environmental taxation, the Government have started to move in the right direction. They have accepted that the energy levy as originally designed was a complete disaster for both the environment and industry. It was introduced in one lump, giving industry no time to make the capital investment to adjust. It should have been introduced gradually over time, so that industry could respond.

The levy was not even good for the environment because it taxed all energy sources, whether they were environmentally beneficial or not. That is the difference between our policy of the carbon tax and the Government policy of snatching money from industry without giving it any chance to get it back, not worrying whether it was environmental.

The Chancellor has improved the policy by attempting to make it relate to those industries that pollute, but he has failed to do it well. For example, hydro and industrial combined heat and power schemes will still be taxed. The process through which he is doing it—he has ruled out a carbon tax—simply does not work well. On the other side, he is having to let some industry off.

Mr. Leslie

I ask a genuine question. Can the hon. Gentleman elaborate on what he means by "carbon tax"? Is he talking about fuel duty, or a levy on energy consumers? What sort of carbon tax is he talking about? It will have to be fairly considerable to cover the £20 billion cost of his £10,000 tax allowance.

Mr. Taylor

I do not want to delay the House at length. I would be happy to show the hon. Gentleman not only our workings, but those of the Institute for Public Policy and Research and the Institute for Fiscal Studies, all of which show how such schemes would work. I suspect that he would have some support for the IPPR.

The carbon tax would be levied at source on the carbon content of the fuel—that is the point of the tax. It would be introduced gradually, so that it gradually increases the income to the Exchequer and stabilises energy prices, which are falling. Incidentally, if the hon. Gentleman is worried about road fuels, they would be exempted because, unlike other energy sources, they are already extremely heavily taxed.

I ask the Chancellor another question that he can perhaps help to answer. He has said that the road fuel duty escalator will no longer be in place and that road fuel duty increases above inflation will be used to pay for public transport. I notice that, in the transport press and motoring journals, the policy is presented as the end of the fuel duty escalator, but that, to environment groups, it is presented as the way in which the Government will fund public transport. I ask a simple question. Is it the end of the increases, or the way to fund public transport? It cannot be both, yet the Chancellor seems to take credit for both.

Mr. Loughton

On the subject of escalators, it is not clear from the hon. Gentleman's last point whether he agrees with the policy that was initiated by the hon. Member for Weston-super-Mare (Mr. Cotter) at the time of the Budget—that the Liberal Democrats favoured an energy tax escalator.

Mr. Taylor

I have just described the carbon tax. I cannot elaborate further on that now, but, if the hon. Gentleman wishes to see the policies that we have presented on the matter—I said that it would be gradually introduced—he can see the material. A carbon tax has been looked at not only by ourselves, but by the Institute for Fiscal Studies and the IPPR, so, wherever people are on the political range, in that material, they should have something to read that they find interesting and informative.

I finish with a final question. It is a simple one; I do not know why the Chancellor has felt unable to get up to answer my previous questions. He was critical of the Conservative Front-Bench team for not responding to his questions. I am not sure why he has found it difficult to respond to many of ours. I will give him a simple one, to which he must know the answer.

The Chancellor will know that Liberal Democrats believe that we should move towards euro entry. We believe that it is important to establish a target range for the exchange rate—to have some sense of where we want to go in at. That fundamental issue is not in his criteria, surprisingly, but he has set a number of other criteria, many of which are important.

The question is simple. Does the Chancellor see himself as actively working to meet those criteria and to achieve euro entry, or as simply a spectator at the match, watching it go past, but not making any active efforts towards the euro? Does he want to join it, actively seeking to do so and creating the conditions for it, or is it simply a spectator sport, not mattering either way?

My questions are the questions that the Chancellor should have answered. They are important. It is noticeable that on none of them has he been willing to stand up.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. I remind the House that the 15-minute limit on Back-Bench speeches applies from now.

5.5 pm

Mr. Robert Sheldon (Ashton-under-Lyne)

The hon. Member for Truro and St. Austell (Mr. Taylor) made a lengthy attack on my right hon. Friend the Chancellor of the Exchequer—who was also attacked by the right hon. Member for Horsham (Mr. Maude). My right hon. Friend, however, has had only two and a half years in his position, and it has not been an easy time. Right from the outset, he said that his task was to produce stability and, to the surprise and admiration of those who follow such matters, he has achieved it. He should be congratulated on that.

I should like to speak briefly about the Monetary Policy Committee membership. I am pleased that the four outside, independent committee members will be given greater facilities to make their contribution. Each of the four will now have two economists—which is really quite generous, and will be very much welcomed, as they have an important contribution to make. I should have liked, however, for the committee to be rather more broadly based, and I wish that there were more visible signs of input from other parts of Britain, based on the needs of Britain outside the south-east. My right hon. Friend the Chancellor is right to have encouraged good and open argument, including from those who make the case for manufacturing industry in the regions. However, the argument—which is not between the regions, but between the south-east and the rest of Britain—should be rather more broadly based.

The Monetary Policy Committee has to deal with inflation, one important element of which is the large increase in house prices. Today, there was disturbing news about yet further increases in house prices. There is a very strong differential effect between house price rises in the south-east and those elsewhere. House price inflation is a fundamental part of inflation generally, although that has not always been sufficiently appreciated—particularly in the 1980s, when the Government thought that inflation was under control and ignored the importance of rising house prices.

I am worried that interest rates are being set to suit inflation in the south-east. Housing costs in the south-east are increasing greatly, unlike those in other parts of the country. The economy, however, is being run on the basis of events in the south-east.

The average house price in the south is more than £100,000. In my constituency—which is not as depressed as many of my colleagues' constituencies—one can buy an excellent house for less than half that price, and page after page in local newspapers describes such properties. My constituents are having to bear many of the consequences of high interest rates, for which the responsibility lies elsewhere.

My main concern—I am not sure that the Monetary Policy Committee has sufficiently dealt with it—is the forces of competition. When the committee decides to increase interest rates, is it fully taking into account changes in competition in the United Kingdom? The Government have done much to encourage competition—full marks to them for that—but does competition affect prices and inflation? I suspect that it does.

Car prices are very much affected by competition. The internet's effect on inflation is only small, but it will become much greater. Supermarkets such as Wal-Mart—the new company from America—also will have their effect on competition. What effect will they have on prices in the near future—a matter on which the Monetary Policy Committee has to comment?

Overseas competition, too, will have an effect on inflation. So many British producers are very conscious of competition from overseas. With a high exchange rate, that competition is even more serious. We need to widen and maintain the debate. The European central bank also needs to take those matters into account.

In his statement on 9 November, my right hon. Friend the Chancellor talked about hypothecation. That was very important, because it was the first comment that we have had on the subject. He said: the extra revenues from a 5 per cent. real terms rise in cigarette duties would go straight to additional investment in the national health service, worth £300 million a year—that is £300 million extra for hospitals and health care which could start next April."—[Official Report, 9 November 1999; Vol. 337, c. 891.] That is the first statement in favour of hypothecation since the road fund duties in the 1920s.

I have always agreed with the Treasury line on hypothecation. To earmark expenditure is to lose the ability to decide on priorities. In addition, the amount of tax collected may not accord with future expenditure plans. However, there is one case, which I have been pursuing for some years, for earmarking some money from taxation for particular purposes: when the demand is high and ever-increasing, the case for the services concerned is strongly urged and acceptable to all, and the cost is increasing indefinitely. The national health service meets all those requirements. As people's wants are satisfied, they turn ever more to their needs for medical care. The need and the cost are increasing, and will inevitably continue to do so.

In his foray into hypothecation, my right hon. Friend was right to select the national health service for what I hope will be the commencement of the process. The expenditure satisfies the conditions that would justify its introduction. It is clear that the cost of the health service will rise ever faster than the rate of inflation or growth in the economy because the population is ageing. As other wants are met, health needs become an area of increasing expenditure. The time is coming when either we shall have to turn more to private medicine, which I do not favour, or we shall need a special national health service tax.

Anyone who has been in the Treasury has a visceral feeling about that idea. The road fund licence still casts its shadow 70 years later. One important weakness of hypothecation is that it does not take account of changes in priorities, as I said. However, the demand will continue indefinitely and we need to consider introducing a separate national health service tax. The issue needs to be sensibly explored. Proposals for such expenditure on the national health service in the Budget, if properly managed, could gain widespread support in a way that taxation changes generally do not.

I should also like to talk about our entry into the euro zone. There was always a case for not wishing the European Community to come into being or, more realistically, for opposing any extension of its activities. However, having opposed and having discovered that the Community was going to develop anyway without our presence, it was unwise to deny ourselves the opportunity to get involved actively and wholeheartedly. I am increasingly worried about the delay in accepting the euro. On 1 January 2002, just two years from now, the euro will be introduced in the European Community in notes and coins. That is important, because it is what will make the fundamental change. It is possible that Sweden, Denmark and, just conceivably from what I read in today's Financial Times, Greece may have entered by then. We could be the only members of the European Community outside the euro. Further economic and monetary changes will follow and we shall be excluded from them. As my right hon. Friend the Chancellor of the Exchequer said in his statement to the House on 27 October 1997: The decision on a single currency is probably the most important question that this country is likely to face in our generation."—[Official Report, 27 October 1997; Vol. 299, c. 583.] The Chancellor set out five economic tests to be met before we joined the currency: whether there can be sustainable convergence between Britain and the economies of single currency countries; whether there is sufficient flexibility to cope with economic change; the effect on investment; the impact on our financial services generally; and whether it is good for employment. Some have queried the difficulty in deciding whether a clear and unambiguous case can be made for some of those. Can any precision be applied to the tests?

We have not had an assessment of how, in the two years following the statement, the tests are being met. Are we nearer to meeting them? If so, which ones? How have we moved in relation to the tests? Will there be a future assessment of how we are meeting the tests?

In today's edition of the Financial Times, the Foreign Secretary gave a stark warning about the potential dangers of staying outside the euro zone, and added that, by the end of next year, Britain could be the only EU member state without a firm date for joining the European single currency. Whatever happens following the introduction of notes and coin on 1 January 2002, it will mark a fundamental change in the perception of the currency and the closer economic integration of the Community.

We know that a number of manufacturers are querying the role of Britain as an offshore island and are considering that their future investment may be necessary in the euro zone. I am fearful of the cost to our country if we do not enter the euro zone before the common currency becomes an everyday currency. A decision to join after then could cause further problems for the Community and for ourselves, and the resolution of those problems could exact a considerable price economically and politically.

The failure to enter the euro zone could be the culmination of the greatest mistake in the post-war years. Many would consider this to be the final chapter, following our failure to take the leadership in Europe at the end of the war, which was ours for the asking; our failure in 1950–51 to lead Europe into the lion and Coal Community; our failure at Messina; our failure to join the Community in the 1950s; and our failure to play a constructive part in the growth of the Community. The Conservatives now look for a final opt-out from the euro. If we stay out now, our dismal record will be complete, consistent and wrong.

I do not want that failure to come at the end of a sad 100 years—including two world wars for this country—which had started with so many of the glories of the previous century. My right hon. Friend the Chancellor has achieved so much in running the economy sensibly and well. We must look to the question of the euro, which must remain at centre stage.

5.18 pm

Mr. John MacGregor (South Norfolk)

In view of the time limitation, I must be selective, and I will concentrate on three areas—agriculture, transport and pensions. I am aware that there have been debates earlier on those matters, but all the points that I wish to make are Treasury points. It is right to raise them today, and I hope to get a response to them.

I want to declare an interest, in that I am a non-executive director of companies involved in all three of those matters. These are included in the Register of Members' Interests. I say this in a positive way, as it gives me a detailed insight into the issues—especially pensions.

On agriculture, I wish to refer to the pesticides tax. On 9 November, I asked the Chancellor whether he would make a commitment not to proceed with the tax. He did not answer. He turned to one of his colleagues, seeking an answer—but he did not get it there. He did not answer any questions today. His speech was one of the emptiest that I have ever heard from a Chancellor; it was contemptuous of the House.

I hope that I will get an answer today. After failing to get one from the Chancellor, I read the pre-Budget report, which says: The Government believes that a tax or charge could be a useful tool, in conjunction with other measures, in addressing the environmental impact of pesticides. It goes on to say that the Government will have further discussions with the industry. It is questionable whether a pesticides tax is the best of way of dealing with pesticides issues in agriculture and the environment. All my farmers tell me that to impose such a tax now would be a further threat to an already heavily beleaguered industry.

Sir Teddy Taylor

Why is it beleaguered?

Mr. MacGregor

For many reasons that I do not want to go into now, as I am talking about the pesticides tax. I urge the Government to make a commitment not to proceed with the tax and to lift the threat.

The pig and poultry sectors are in difficulties and the pig sector is going through an exceptional crisis. I cannot remember such a situation in the industry, which is used to pig cycles. As a result of the events of the past 18 months, many people will come out of pig production because they are incurring great capital losses and, in some cases, facing bankruptcy.

This is an exceptional period, and, although I have always been resistant to substantial subsidies for such industries, it is important for the Government to see what they can do, as we face the threat of the pig industry diminishing seriously. I urge the Chancellor to meet the costs of the additional measures that are being imposed on our pig farmers, but not on those in the rest of the European Union or elsewhere. We impose higher standards of animal welfare, environmental protection and food safety, with a cost amounting to 5.7p per kg. I understand that the Agriculture Commissioner has said that he has no objection to such state aid in the present circumstances. Some such action is required if the pig industry is to survive.

We have had many discussions about labelling in the past 18 months. If I understand it aright, the agreement that is about to be reached with the French at last—after missing all the deadlines—contains a provision, on which the French have insisted, that British beef be labelled British. If that can be imposed on us, I see no reason at all why the same should not apply to products from other European Union countries and from Thailand and Brazil. We have urged that for a long time.

I want to follow up a point about the road fuel duty escalator made by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I think that it should be scrapped. We are committed to that, and I very much regret the fact that the Chancellor is not. The Deputy Prime Minister last week described the hypothecation or ring-fencing of any duties coming from above-inflation elements in the escalator as "a radical departure". It is not a radical departure: in May 1993, when I produced a document recommending motorway charging, we made it clear that direct charges for road use could provide additional sources of finance for improving the road network.

I could not have made that commitment without the agreement of the then Chancellor. It was the best way of persuading people to incur the charges. We were already committed to hypothecation, but we were talking about motorway tolling—there is still a good case for that when we can get the technology right—whereas the Government are talking about congestion charging, the dangers and difficulties of which make it a political minefield into which they will regret going. I am not at all surprised that the Deputy Prime Minister now says that, it will not be implemented before 2005. I believe that it is a mistake to embark on it, and we must consider the details extremely carefully.

I understand from the tax documents that we have that, if the Chancellor decided to increase fuel duty by 2 per cent. above inflation, for example, that would yield about £230 million. That could easily be balanced by reductions in the general transport programme. I suspect that the Chancellor will do that, because he has so savagely cut the transport programme already. The danger, therefore, is that he will introduce a further increase in fuel duty that will clobber rural motorists, but claim that he is helping the motorist by hypothecating that amount of money to the road programme. That is nonsense, because even if he reverted to the full 6 per cent. of last year, it would not compensate for the cuts already suffered. I hope that the Chancellor will not make a virtue out of the so-called radical departure of hypothecation.

My right hon. Friend the Member for Horsham (Mr. Maude) rightly castigated the Chancellor on his record on pensions and savings. The decrease in the savings ratio from 10.6 per cent. when we left office to 5 per cent. now is deeply worrying, but it is not surprising. My right hon. Friend listed some of the reasons, of which the most obvious—to us, if not yet to the public at large—is the removal of £5 billion a year from pension funds through the advance corporation tax changes, which will have an increasingly adverse effect on pensions. Another factor is that ISAs are a poor substitute for PEPs and TESSAs. The dithering over what to do with pensions and long-term savings has left everyone in a state of limbo while the Government make up their mind.

The danger of the stakeholding pension scheme is that it will turn out to be the biggest pension mis-selling of all, because those with incomes between £9,000 and £15,000 would do better not to enter the stakeholder scheme, but to wait and claim the minimum income guarantee—under current Government arrangements—which will rise much faster than the basic state pension. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) drew attention to that point in an extremely good speech.

The Government constantly denounce the pensions industry, but they will need to depend on it to ensure the delivery of their objectives. I was interested to note that the new director general of the Association of British Insurers, Mary Francis, who is a distinguished former Treasury civil servant, warned recently about the signals that the Government were sending to the consumer. She said: the government, which advocates the Third Way—that new partnership between private and public sectors, in which those that can should provide for their own needs without relying on the state—is simultaneously telling people they cannot trust the private sector. Where does that leave the employee thinking about a personal or a stakeholder pension? The Government run grave risks to grab a cheap headline or make a cheap point.

The result of the past two years of this Government is that many people who should be saving for pensions at a much younger age have been encouraged to put off that decision until tomorrow. Meanwhile, while the Government dither, a new threat develops, which could have more serious negative consequences than any positive effects from the stakeholder scheme. That threat has not been discussed in the House yet, but my knowledge of the pension industry has led me to believe that it is one of the most serious threats we face on policy grounds. Two of the great virtues of UK pension schemes—as compared with those of other countries and as they have developed over the past 40 years—are the strong growth in defined benefit occupational pension schemes, which is one of the reasons why pensioners retiring in the past seven or eight years have been so much better off, and the heavy investment of those schemes in equities. Both those virtues are now at serious risk.

I can elaborate only a few of the reasons, which include the costs to employers of defined benefit schemes compared with defined contribution money purchase schemes; the requirements of the minimum funding requirement, which encourage employers to abandon defined benefit schemes because they carry so many risks; the heavy regulation that employers face, which encourage them and the pension industry to play safe by investing much more in gilts; the low inflation era and the actuarial response to it; and a new Accounting Standards Board financial reporting exposure draft—known as FRED20. I just want to say a word or two about FRED20, and to draw the Government's attention to the dangers of going down that route.

Although FRED20 is the international standard, pension development in this country has followed a different course, which has been much to our benefit. Given that FRED20 will have a considerable impact on big companies' balance sheets and, because of its volatility, sometimes on their profit and loss accounts as well, it is likely that it will accelerate the trend towards money purchase schemes, as those big companies look to get out of defined benefit schemes. It will thus encourage people to move into corporate bonds and gilts—the latter of which are in short supply for the very good and laudable reason that the Government have cut back on borrowing—but that will drive down the overall yield for pension funds. For policy reasons, therefore, we are about to enter a regime in which much of what the Government want to do for pensions—and of what I want to see done for pensioners—will be undermined.

In conclusion, I urge the Government to do the following things. First, they should consider introducing compulsion into the stakeholder pension scheme, which will not work without it. I say that very reluctantly, as I have always opposed compulsion in regard to pensions. It is certainly important that the Government address the problem of mis-selling. They have been warned about it, and the Opposition will return to the matter if mis-selling is proved to have taken place.

Secondly, the Government should examine FRED20 very thoroughly, as it is about more than accountancy standards. It has big policy implications for the United Kingdom, and we should consider seriously whether it is right for us.

Thirdly, the Government should reconsider the tax regime for pensions and long-term savings. One compliment that I will pay the Government is that the brief produced, after much consultation, on the tax regime for stakeholder pensions was very good. We can build on that to develop a much more lasting and efficient tax regime for long-term savings than the Government are proposing. Finally, I urge the Government to look again at the minimum funding requirement and all the regulations being imposed on the pensions industry.

Unless the Government take those steps, they will not fulfil the objectives for pensions and long-term savings that they have set and which the previous Conservative Government were achieving.

5.32 pm

Mr. Denzil Davies (Llanelli)

The Government's economic strategy is set out clearly and succinctly in the Gracious Speech and my right hon. Friend the Chancellor repeated some of it this afternoon. The central objectives are high and stable levels of economic growth and employment and prudent management of the public finances in accordance with the codes and rules of fiscal stability. Moreover, as we have heard, monetary policy—that is, interest rates—is controlled by the Bank of England's Monetary Policy Committee.

That pious and godly couple, Mr. Stability and Miss Prudence, are still our role models. They would never be tempted to stray from the paths of righteousness and grace, but, if they ever were so tempted, rigorous rules are in place to ensure that they did not do so.

I was intrigued by the phrase high and stable levels of economic growth and employment". I thought that I would delve deeper into the sacred texts to find its antecedents. I began with the Mais lecture given by the Chancellor a few months ago—the occasion when Chancellors can show their intellectual prowess to the bovver boys in the City. In that lecture, the Chancellor reaffirmed his commitment to the splendid goal of high and stable levels of growth and employment. I have no trouble with that objective, which the Chancellor pointed out was first set in 1944. Most hon. Members probably know that, but I was surprised to learn it.

My right hon. Friend went on to say that, in what he described as the "famous" 1944 White Paper, full employment was defined as high and stable levels of employment. Off I went to the Library to find the famous 1944 White Paper, but life is never easy. Apparently, two relevant White Papers were published in 1944. Perhaps both were famous, but which was the more famous is a subjective decision. The first, published in June by the coalition Government, was called "Full Employment". I am sorry that not many Liberal Democrats are in the Chamber, because five months later—a bit late; he had tried to get it out sooner—came Mr. Beveridge's White Paper, if it can be described as such. It was entitled, rather pompously, "Full Employment in a Free Society".

The Chancellor, very wisely, was referring to the coalition Government's White Paper, which described full employment as "high levels of employment"—a clever description, because it does not require the use of percentages. Mr. Beveridge, who was more certain, and perhaps more bold, described full employment as occurring when unemployment stands at 3 per cent. Indeed, Mr. Beveridge made some great claims for his version of full employment. He claimed that it was consistent with socialism, capitalism and some strange dogma, or theory, which he described as a liberal-collectivist via media. What on earth that means, I do not know. No doubt there is another sermon in it somewhere. However, when I saw it I thought, "Eureka! I have found the antecedents of the third way." [Interruption.] I see that the hon. Member for North Cornwall (Mr. Tyler) is pleased about that.

The Chancellor was not tempted to follow Mr. Beveridge, but stuck to "high employment" as his definition. His lecture also came close to extolling the 20 years following the 1944 White Paper as a golden age of low unemployment and low inflation. He also praised other aspects of the 1944 White Paper. He praised the call for greater productivity—well, nothing changes. He praised the call for work over idleness—again, nothing changes. He called, as the 1944 White Paper did, for a responsible attitude towards wage bargaining. Some of us, such as my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) might shudder at that phrase, with its echo of an incomes policy, but perhaps the world has changed since then.

However, the Chancellor did not touch on the fiscal and monetary policies that underpinned the 1944 White Paper. Despite the fact that the policies set out in the 1944 White Paper and the Chancellor's current policies aim for high employment and stable growth, the Chancellor has a different fiscal and monetary policy. The White Paper referred to the need for total expenditure to be used to maintain full employment as well as improve public services.

Those who drafted the White Paper would have given short shrift to all the codes and rules of fiscal stability—the so-called, rather pompous, golden rule, and the absurdly named growth and stability pact. All the attempts to entrench those rules into a kind of economic constitution and to put it beyond a nasty and irresponsible democracy would not have appealed to the people who drafted the White Paper.

The same applies to monetary policy. The people who drafted the White Paper would have had no truck with monetary committees of central banks determining interest rates. In fact, they lived through an era in which central bankers entirely failed to deal with economic traumas. There seems to be a paradox. On one hand, we have the goal of high and stable growth, and on the other, we have monetary and fiscal policies that seem entirely different.

My right hon. Friend the Member for Ashton-under-Lyne said that the Chancellor had done well and that the goals of high and stable growth and employment had gradually been achieved. I agree with that. If growth is high and unemployment and inflation are low, surpluses will be created, even at present taxation levels. There will inevitably be more money in the Exchequer, but I worry that the Chancellor has hemmed himself in with his rules of fiscal stability. I fear that he will feel unable to use the surpluses to benefit the public services. He may feel trapped and unable to break the rules that he has placed upon himself, but our public services need a lot of money.

It is not the Government's fault that our health service can no longer be described, perhaps with slight exaggeration, as the best in the world. Our health service no longer competes with the best standards of care in other European countries. Nor does our education system, despite the assistance that the Government have given. Far more money is required, especially for the centres of excellence that would enable us to compete in a global economy with the Harvards, Stanfords, Cal-Techs and MITs. Whether we call those centres of excellence or of elitism, we must compete with them in a global economy. We are not putting enough money into that.

There is great pressure on pensions, not only to restore the link between pensions and earnings but to raise the basic pension. Perhaps those who have not put savings aside and who can pass the means test will have their pensions increased, but those who have saved, but not much, find themselves on the same basic pension as those who have not. We are in danger of creating a two-tier system in which those who have not saved get a bit more, but those who have saved a little fall behind. That causes resentment among my constituents.

Substantial sums are required for the care of the elderly. Carmarthenshire social services department is under great pressure to provide residential care. In many cases, elderly people remain in beds in acute hospitals until someone dies or a room otherwise becomes available in a private residential home. The social services department simply does not have enough money to put all the elderly into residential homes. That puts considerable pressure on the health service.

Our transport infrastructure needs enormous sums of Government money if we are to put it right and to compete. I am not being profligate or trying to waste money, but there is a great need for money. Surpluses—some exist already and more will arise—should be used to improve the public services.

I fear that that pious and godly couple—Mr. Stability and Miss Prudence—are still around and that my right hon. Friend the Chancellor will listen to them a bit too much. I fear that he will be trapped by the wonderful rules—they are marvelous—of fiscal stability. Although they work wonders, they do not enable a Chancellor to use the surpluses, which were perhaps created by adherence to those rules, for the benefit of public expenditure. It would be ironic if my right hon. Friend, who has done so well in his stewardship of the economy, were to create surpluses that he could not spend because he must adhere to the rules that he himself created.

5.45 pm

Sir Teddy Taylor (Rochford and Southend, East)

I had wanted to raise three brief points in the debate, but, having heard some of the speeches, I must point out to the Government that there are two sides to every argument.

Although my right hon. Friend the Member for South Norfolk (Mr. MacGregor) always makes wonderful speeches, I was horrified to hear him talk about the need to solve the problems of agriculture, and pig farmers in particular, by providing more subsidies. I have been through a bit of a nightmare over the European Union, and it horrifies me to hear from those who landed us in the common agricultural policy, which is the greatest protection racket ever devised by man. It wastes more money than any other public policy I can think of. I am sure that that money could solve all the problems of Carmarthenshire and of the elderly and the disabled, yet those who landed us in that nightmare say that the answer is more subsidies.

The Government should consider the money that the European Union spends on agriculture. It is at its highest level ever. We must add to that the money spent by Great Britain—about £5 billion last year—and all that spent by other national Governments throughout Europe. The result is a nightmare—the massive over-production of food that we do not know what to do with.

For example, demand for meat on the continent is falling by about 2 per cent. a year, and in Britain it is falling by 1 per cent. a year. Having created that shambles that we cannot get out of, we are told that the answer is simply to provide more subsidies. At some stage, the European Union or the Government will have to face up to the fact that we have created a monster in the CAP. Unfortunately, we know it cannot be reformed because of the way the EU works, but the last thing in the world that we want to do is to try to solve the problem by spending more money.

I ask people to think of the money that is spent on destroying food. I hope that my right hon. Friend the Member for South Norfolk would love to come with me to one of the great occasions where we spend vast amounts of taxpayers' money destroying food. Last year, more than 1 million tonnes of food were destroyed. I am sure that lovely cauliflowers are grown in Norfolk but, last year, 170,000 tonnes of them had to be destroyed to help agriculture.

What has probably upset me even more than my right hon. Friend's speech was to learn—I remind him that this is no laughing matter—that the National Farmers Union, the great guardian of farmers, had been to local superstores, including the Asda superstore, to tell them that they had to stop selling New Zealand lamb because it is being over-produced. When one thinks of how New Zealand has helped us whenever we have been in trouble and asked nothing for itself even though it is at the other end of the world, it is insulting that superstores are caving into such demands.

I do not make my remarks as someone who represents a constituency with no farmers; I have plenty of them there.

Mr. Paul Tyler (North Cornwall)

The hon. Gentleman will not have many left.

Mr. Deputy Speaker

Order. We do not want sedentary interventions.

Sir Teddy Taylor

I assure the hon. Gentleman that there are many farms in my constituency. However, it would be sickening to do what most Liberal Democrats would do, which is to pretend to farmers that one can solve their problems by providing them with even more subsidies. That would land them in an ever greater mess. The Liberal Democrats—and, indeed, the Conservatives—who supported the European Union and the CAP as a means of solving the problems of agriculture should be thoroughly ashamed of themselves. We have spent a fortune and ruined agriculture as a consequence. We have created a vast over-supply that we do not know what to do with, and public expenditure is higher than ever. The idea that providing more subsidies will solve the problem is an insult not only to taxpayers but to agriculture, which we all care about.

Mr. MacGregor

I did not want to interrupt my hon. Friend because of the limits on time. However, he will know that I am deeply critical of the CAP and fought very hard to get changes made to it. Will he also accept that I was talking about temporary aid to an industry that has costs imposed on it in the United Kingdom that all our competitors do not have?

Sir Teddy Taylor

It is wonderful to hear my right hon. Friend saying that he is critical of the CAP. That is a fat lot of good. Having voted for all the treaties and the money, we are stuck with it. It is all very well saying that we want to reform the CAP—I hear this from farmers themselves—but it cannot be changed. People should realise that there is no way in which the CAP will be reformed; the countries of Europe will never sit in a corner and say that they would like to change it. If we pretend that we will solve the problems with subsidies, we are insulting the farmers and the taxpayer.

I was interested to hear the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who is clever, a senior member of his party and, unlike most of my hon. Friends and myself, very wise—one can tell just by looking at him—say that we should join the single currency earlier than proposed. I ask him honestly whether he has ever found a single currency that has worked. All of them have ended up causing mass unemployment, misery and distress. There have been 11 previous examples in the world, including two in Europe—the Scandinavian and the Latin currency unions. The tragedy is that every one collapsed. A single currency cannot work unless, as in the United States, there is one Government, one Treasury and a feeling of nationhood.

The right hon. Member for Ashton-under-Lyne talked nonsense about the horror of the Bank of England bothering more about property prices in the south than industry in the north. If that is a problem, what the blazes will it be like in a united Europe?

I had the pleasure of seeing that nice Mr. Duisenberg—I have seen him twice now—just a few weeks ago. He was saying that the single currency was a terrible problem for him. He said, "What can I do? I have people in Ireland and Spain asking me please to calm things down, but people in Germany and Italy wanting me to boost proceedings." That simply cannot work.

The right hon. Member for Ashton-under-Lyne talked of the need for us all to join the single currency. What has happened to the two countries that said no? I was present for the referendums; the people of Norway and Switzerland displayed a courage that we and other countries did not. Posters, paid for by the right hon. Gentleman's fat, rich friends, said that the countries must join or jobs and trade would be destroyed. Norway and Switzerland have the lowest rates of unemployment in Europe, while countries such as Germany, Italy and France are suffering economic nightmares.

When I was over in Germany seeing the Central Bank, I heard business men saying, "We have a rubbish Government." I said that I was very sorry about that, but they replied, "The Opposition are rubbish as well." They said that the parties were not being kind to business, but that once they had the single currency their problems would disappear.

I saw people who represent the French equivalent of the CBI—one of my hon. Friends on the Front Bench was there, too. They were delightful people; they drank a great deal. They told me, "We have a mad Government." I said, "I am terribly sorry; it's not my fault." They explained that their Government were introducing a 35-hour week, which will destroy jobs, but that, once there is a single currency, such action will not be allowed. I am afraid that people are kidding themselves, in a mad way, that the single currency will work.

The best guidance of all is in a wonderful speech by Mr. Duisenberg, who is such a nice, courteous man. He said: The process of monetary union goes hand in hand, must go hand in hand, with political integration and ultimately political union. EMU is, and always was meant to be, a stepping stone on the way to a united Europe.

Mr. Sheldon

I did not like to intervene, given the shortage of time, but the hon. Gentleman has referred to me so frequently that I must do so. Can he devise a system whereby a single currency, to which all the countries of Europe are committing themselves, would collapse or be allowed to collapse? If he cannot, what are we doing out of it?

Sir Teddy Taylor

If the single currency is to collapse, it would not be a very good thing to join it. I am not trying to be clever. I have studied all previous single currencies, and the same things have always happened. One area does very well, one does very badly, and people march on the streets and become agitated. Let us remember that there is no democracy or mechanism by which we may express views through elections because, as we know, the "democratic" institutions in Europe are basically irrelevant. What can one do? The right hon. Gentleman may say that that is just silly, but let us consider what the markets say.

The right hon. Member for Ashton-under-Lyne may have been present when we were told on one occasion that the euro would go like a rocket. Yesterday, it was at an all-time low against the pound, having fallen from a value of 71p to 63p, which is a substantial drop. Although that may change, let us consider long-term interest rates. What about things called 20-year bonds, by which clever people with money, unlike myself, indicate what they think will happen? Why are the 20-year British interest rates far lower than those in Germany or France? The simple reason is that people on the money markets have confidence in a British currency, but not in the European one.

I am not merely getting my views across; I am genuinely concerned about what will happen to people, jobs and prosperity in Europe. It will not be nice for us. Before the right hon. Member for Ashton-under-Lyne becomes too optimistic and too sure about the single currency, he should ask himself why such a currency has never worked and whether it is possible to harmonise the economies of Europe.

Owing, as I am sure my right hon. and hon. Friends on the Front Bench would say, to the achievements of the previous Conservative Government, or, as Labour Members would say, to the great achievements of the Labour Government, our taxes are much lower in Britain—about 36 per cent. of gross national product, in comparison with the European average of 44 per cent. How the blazes will we harmonise economies? Inevitably, some areas will prosper, some will suffer and the poor bank in the middle will not know what to do. The single currency cannot work. It has never worked before, and an awful lot of people will suffer as a consequence of it.

I had not meant to talk about such things, but they must be said. I hope that the Government will appreciate that there are two points of view. I have seen Government after Government of different parties say that they are not doing well in Europe, but that if they show good will and take a further step, somehow things will improve. Every further step has failed to help anyone, including farmers, who are ruined despite massive expenditure.

Will the Treasury think carefully about the considerable cost of all the massive quangos that it is setting up? I am thinking of three, but will mention just one: the Financial Services Authority. It strikes me as an enormous organisation, which has massive power. It is making life impossible for people in the private sector. I have been in touch with its chairman about individual cases. The expenditure involved in continuing to send stuff in the post worries me. I am sure that other hon. Members receive it, too; I keep wondering why.

Yesterday, the great organisation sent the following fascinating information: A recent survey showed 500,000 households have endowment mortgages which would not pay for their homes. That is a clear statement. On the same day, I received wonderful information in a very reliable magazine that is published by the insurance industry. It said: We have no record of any Low Cost or Full endowment failing to achieve its objectives over the short or long term. Indeed the longer the term the better the prospects. There are dozens of case studies that show multiples of two…why the media hysteria? What is the PIA concerned about Endowments for? The basic argument is that the FSA has obliged companies to present policies on a 6 per cent. Yield—the yield is usually 12 or 14 per cent.

Such events have caused a great deal of alarm among some of my constituents. They have come to my surgeries to tell me that they have such endowment mortgages and that the news is terrible. It worries me that supposedly reputable organisations, which are sited in huge offices, employ a multitude of staff and spend a fortune, make statements that cannot be true. Either it is true that 500,000 people are in a mess, or nobody is in a mess. Issuing such statements is not sensible. I would like to think that such organisations were more sensible.

The report of the Primarolo group on the code of conduct on business taxes, which operates strongly in Europe, worries me a great deal. I serve on the Treasury Committee, which is basically a waste of time—all those who are involved in it know that to be so. We ask many questions and talk about many things, but say nothing at all. However, we are producing a detailed report on the code of conduct in Europe.

We asked the Paymaster General for a copy of the report but were told that it was terribly secret and that no one was allowed to see it. I then simply phoned a bloke in Stroud, who then rang the European Commission, and we received a copy the next day. What worries me is that that sort of thing is happening all the time.

The final report has just been issued and will be considered by the Council on 29 November. I have a copy of it in my hand, yet we are told that we cannot have it because it is secret. I feel that something very nasty is happening, because the report states clearly and precisely that although the Government accept that these territories have tax autonomy, the United Kingdom has undertaken to make the code of conduct principles apply there. There have been many recommendations for the Channel Islands, and the people there are worried. There have also been recommendations for Gibraltar and the Isle of Man. Why on earth can we not get the information, when it is readily available to anyone who telephones the Commission and asks for it?

More important, the Channel Islands are not represented in this place. What can we say to the people there, who had the clearest assurances in the protocol to the treaty of Rome that the islands were excluded from the European Economic Community and did not have to pay charges and taxes decided by anyone else? The Government have apparently decided to make the principles apply in the Isle of Man and the Channel Islands.

What powers does the Minister think that she has? The treaty of Rome exempts the Channel Islands from the European Union and the imposition of taxes. The provision is clear and precise—it is in the treaty in black and white—yet the Minister says, "I'm going to force these changes on the islands."

If we cannot get the report until it is all agreed—

Mr. Deputy Speaker

Order. The hon. Gentleman's time is up.

6.1 pm

Ms Harriet Harman (Camberwell and Peckham)

In this debate on the economy, I want to highlight the fact that the success of our economy depends to a great extent on the skills, creativity and capacity of our people. That is something which, over the years, my right hon. Friend the Chancellor has addressed—indeed, he addressed it this afternoon when he talked about the working families tax credit, the minimum wage and, above all, the new deal.

Whereas our economy used to depend on land and then on machinery, it now depends on what, in economic debates, we have come to call human capital. Therefore the family, where that human capital is nurtured, is critical to the economy. The issues that I want to raise tonight—the questions of work and the family—lie at the interface between economic and social policy.

The Government are determined to deliver a stable and growing economy. They want to support families, they want to tackle the problems of workless households, they want to tackle social exclusion, they are pledged to end child poverty, and they want equality of opportunity for women. The question of how families balance their work and their home commitments is central to delivering on all those issues.

There have been huge changes, both in the family and in the workplace. One of the most stunning changes is in the way children are being brought up. My generation were brought up by mothers who, for the most part, stayed at home when we were young. If our mothers did return to work, it was when the youngest child had started school. That has changed: mothers are redefining motherhood to be about providing for their children as well as caring for them. Now, most children are being brought up in families where both parents work, or by a working lone mother.

We know that the economy needs those women's work. We also know that the income coming into the household depends, to a great extent, on women's work. However, we should be concerned about the effect on children when they swap a mother who stays at home for one who goes out to work as well. That is why, through the Smith Institute, I commissioned Heather Joshi to carry out longitudinal research into the effect on children of their mothers working when they were young.

The findings show the importance of giving mothers more choice about when and how they return to work after having a baby. No research should tell a mother what to do, but those research findings, which echo United States research, should inform our public policy. Following publication of the research, my postbag showed that real choice is what women want more than anything, especially when their babies are under 12 months old.

That is why I very much welcome the Chancellor's statement in paragraph 5.27 of the pre-Budget report: The Government will also examine whether the Working Families' Tax Credit or other measures can give additional help to the mother who wishes to stay at home in the first months after her child is born. That is also why I call on the Government today to establish a new deal for families. The Government have already laid the foundations for such a move. The minimum wage and the working families tax credit are not just economic policy, they are family policy.

Mr. Bercow

I am listening intently to what the right hon. Lady is saying about the working families tax credit. Does she regard it as satisfactory that, because of the tapering of the child care element, in some cases people face a marginal tax rate as high as 46 per cent?

Ms Harman

For parents in my constituency, the working families tax credit, which is just being introduced, will make a huge difference to low-income families who are in work but have not been well-off. Even more importantly, for many families it will make work pay. Not only will there be more income going into the household, we will not have the problem of children being brought up in households where no one is working—where they see a life of dependence on benefits and never understand the world of work. That is the principal objective of the working families tax credit, and one that I am certain it will meet. We are only just bringing the measure in, and of course it will be under constant review, but both the principle and the practice are important. It is disappointing, although predictable, that the Opposition Front-Bench spokesmen will not say whether they would abolish it.

The minimum wage and the working families tax credit are, as I have said, not just economic policy. The reason they are also family policy is because they mean that fathers and mothers will not have to work all hours just to make ends meet. The Chancellor has ensured the investment of hundreds of millions of pounds in the national child care strategy. The right to parental leave will, for the first time, give parents the right to take time off work when their children are ill.

The foundations have already been laid and the process of change is under way, but that needs to continue on the basis of partnership. There must be partnership between different Departments, especially between, on the one hand, the economic Departments—the Treasury and the Department of Trade and Industry—and on the other, the so-called social policy Departments—the Home Office, the Department of Social Security and the Department for Education and Employment.

We need that partnership between Departments, but we also need a partnership between Government and business, especially small business. A minority of businesses remains opposed to any legislative change on principle, but I recognise that many businesses that are not opposed to the change in principle are none the less wary about their ability to cope with the pace of change. They already feel that they are coping with a lot because of the working time regulations, the introduction of working families tax credit, and the parental leave regulations. Government must play a role in ensuring that patterns of work change to recognise that women have family as well as work responsibilities. However, they must make those changes in a way that makes it as easy as possible for business, especially small business, to adapt.

We should learn from our experience of what works, such as the successful introduction of the minimum wage. Unfortunately, that is yet another issue on which we have heard no views this afternoon from those on the Opposition Front Bench. However, I believe that the minimum wage has been introduced successfully. As shadow employment spokesperson in opposition, when I took over responsibility for that portfolio I was faced by business wanting no legal minimum wage and by trade unions wanting a minimum wage at what I believed was an unrealistic rate. By establishing the policy of the Low Pay Commission, I made it clear that our objective involved business and unions working in partnership to agree on how that objective should be put into practice.

We should do the same with the new deal for families. We should make clear our objectives and our determination to make changes, but, as with the other new deals, involve business and unions in partnership to deliver the changes in the workplace that families need. A new deal for families could consider what can best be done by example, good practice and persuasion; what will need to be done by legislating for minimum standards; where Government financial support is necessary for employees or employers; and how we can use the partnership funds under the Employment Relations Act 1999 to pioneer new family friendly working.

A strong partnership could set a radical modern agenda to establish a workplace and a work force fit for the next century. I shall identify some areas where I think that a new deal for families could deliver change. No one really thinks that a woman should have to return to work when their baby is only 18 weeks old, yet financial support to replace a mother's earnings lasts for only 18 weeks. That limit was set in 1953 and it needs to be updated. I think that we should extend it for the first 12 months of a baby's life, at the very least for low-income families.

No one would argue that a woman should have to return to work when her baby is only six months old. However, maternity leave lasts for only six months. We should extend that, too, to 12 months. No one would argue either that nothing changes when a woman has a child, yet a woman has to return to her full-time job as though nothing has happened, when for her the whole world has changed. I think that the mother should have the right to return to work part-time if she wants to, as the Employment Committee recommended in its important report on part-time working.

No one would argue that the new right to parental leave should be only for the better off. I think that we should pay parental leave, which would implement a recommendation of the important report of the Select Committee on Social Security on parental leave. We should do that at least for low-income families.

We are putting millions of pounds into our radical reform programme for welfare to work, our hospitals and our schools, and that is right. However, it is time that we had substantial investment and radical reform of our maternity provision. I am talking not about public services, but about mothers who are part of the labour market but still the centre of their families. The work force has changed, our economy has changed and it is time that our maternity provision was changed too.

I propose that the new rights to parental leave and any further changes that we make should be carefully and independently monitored to ensure that we understand how they are helping families to cope with their work and home responsibilities. We should also understand how business is coping with the changes. It is not good government to legislate, even with the best of intentions, and then walk away and leave everyone else to get on with it. The Family and Parenting Institute, to be launched next week, could play a key role in this.

I argue for a new deal for families that works across both economic and social policy and in partnership with business and unions. It could modernise public policy to ensure that both our economy and our children thrive.

6.12 pm

Mr. Richard Page (South-West Hertfordshire)

It is a sad but well-known fact that, when anyone becomes a Member of Parliament, he or she loses one ability and gains another. First, they lose the ability to say, "Sorry, I made a mistake. I apologise." Secondly, they try to grab any form of advantage and claim credit for it, even though they have little or no ownership of it.

The examples are numerous. The classic one is when Lord Lawson as Chancellor of the Exchequer had the economy literally in his hands. He pumped money into it and the public went on a spending spree as if there were no tomorrow. They were aided and abetted by the banks and building societies, which gave mortgages of 100 per cent. or even 110 or 120 per cent. We know what happened. The tales of woe were legion and we had negative equity.

I followed with interest what the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said about interest rates and the effect that they are having on house purchases. In London, prices are going through the roof. I read in this evening's newspaper that they have increased by more than 30 per cent. this year.

That is one side of the coin. The right hon. Gentleman did not speak of the other, which is the effect that interest rates have vis-a-vis overseas competition and what that is doing to our exporters and our manufacturers. This is a problem that the Chancellor has to face, and I have some sympathy for him. However, when Lord Lawson was doing what he was doing and when the results became clear, I think that a few sorrys should have been expressed, just as they should have been when we ceased shadowing the deutschmark.

I have no objection to shadowing the deutschmark provided that we have the same productivity and efficiencies as Germany. However we were not in that position then and the results were inevitable. It was clear that it would all end in tears, and it did. I am a little worried that the same will happen tomorrow.

Following those setbacks, it was to the considerable credit of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my right hon. Friend the Member for Henley (Mr. Heseltine) that they formulated and followed sensible policies to address them. My right hon. and learned Friend controlled public expenditure rigorously and controlled interest rates, and my right hon. Friend the Member for Henley launched an annual White Paper on competition and competitiveness. He addressed the issue and showed just how far we were behind some other countries, notably Germany and the United States. He also tackled our rates of efficiency and productivity and, as a result, they started to increase and we began to record some significant improvements.

We left a golden legacy to the Labour Government in May 1997. The success of the economy since then owes a great deal to the work of my two right hon. Friends. The Government too often forget that the economic strategy of the Conservative Government has underlain the low inflation and falling unemployment that we have enjoyed over the past two and a half years.

The Prime Minister and the Chancellor of the Exchequer both claim credit for the present state of the economy. Of course, there is an element of schizophrenia involved. On the one hand, it is said that the Government have followed Conservative spending policies—that is cited almost as a mantra when there are any complaints about whether enough money is going into one sector or another. On the other, the Government claim credit for a huge and novel economic success.

I know that the Government have been very good at introducing stealth taxes. I shall not go through the figures again and again—

Mr. Fallon

Why not?

Mr. Page

I shall not do so because they have been put on to the record and, to answer my hon. Friend, because I have only five more minutes to complete my speech.

Mr. Ronnie Campbell (Blyth Valley)

Will the hon. Gentleman give way?

Mr. Page

I shall not give way to the hon. Gentleman because of that shortage of time—it is moving against us.

The stealth tax figures have been endorsed by the Library and by the British Chambers of Commerce. We can see the regulatory burdens that are being imposed on small businesses.

I am worried that a rich legacy is in danger of being squandered. The excessively high rate for sterling via-a-vis our overseas competition means that our foreign competitors inside and outside the European Union are finding it easier to sell to us while our exporters are finding it harder to sell to them. I shall not read out the entire press release from the EEF/Robson Rhodes third quarter Business Trends Survey report, but the headline is, "Pound still too strong for exports". A number of people are saying that as well as myself. Countries such as Germany are able to secure productivity gains without suffering adverse effects on their currencies.

With our exchange rates, we know that our markets are more open to other countries' exporters without us enjoying that comparable benefit. Of course, that is not true for all EU countries. Some of them are not experiencing productivity gains, and that will build up huge tensions within the euro zone. That problem will have to be resolved in some way or another. That being so, I think that it is exceedingly wise to resist the blandishments to go rushing in at this stage. Let us stand back and wait to see how the tensions will be released. We should certainly spend some time looking at our own economic cycle before even considering getting involved in the euro.

I do not think that the Government have been able to tackle the significant and difficult problems that we have had with our service and manufacturing sectors. There are DM3 and 10 pfennigs, or nearly 10 pfennigs, to the pound. It was a figure way over that which turfed us out of the exchange rate mechanism. It is not surprising that, over the past 12 months, we have seen the loss of 157,000 manufacturing jobs. No productivity gain and no improved cost controls in manufacturing can compensate for that loss. I well remember the Labour party criticising the Conservative Government in the early 1980s over manufacturing losses. A few "sorrys" from Labour Members are due now to those who have lost their jobs in manufacturing. Certain hon. Members, on the Government Benches in particular, know what is going on in their constituencies and are desperately worried about how to make some form of recompense or offer alternative employment to those who have lost their jobs.

The managing director of Nissan UK was quoted in The Sunday Times as saying: The UK is uncompetitive at these"— current— exchange rates. It is difficult to believe that our present position is sustainable. I hope that it is, but I worry that it is not. Exporters are bearing losses and holding down overseas prices, using hedging techniques to hold on to markets, as well as shedding employees. That process cannot go on indefinitely. Some adjustment is necessary, and I suspect that it may be earlier, rather than later.

It is not just manufacturing industry that is facing problems. We must consider what is happening to small firms. As a former Minister with responsibility for small businesses, I know how important they are to the economy. We have witnessed the failure of the much-vaunted statutory right on late payment. It does not seem to have done the trick, although I would love it to solve the problems. We did not believe that it would be practical and sadly, that seems to be the case.

Small businesses have learned from the experience of extra regulation, compulsory union recognition and all the other burdens imposed on them. The Forum of Private Business estimates that, on average, an extra £4,500 is needed each year to meet the cost of red tape.

I was glad to learn that the Government will introduce a Bill to enable the Post Office to improve its services and to compete more effectively, both domestically and overseas. Post Office reform will help to build a "knowledge-based economy", harnessing new technology, according to the Prime Minister a week ago.

I fully support a more competitive Post Office, but it cannot be a truly competitive player domestically until it, too, faces free competition in its protected UK market, and until its accounts are subject to independent regulation, so profits from its monopoly sector may continue to be seen to cross-subsidise competitive activities against its private sector rivals. That cannot be fair.

The Post Office should be set free to compete internationally. I do not believe that what the Government propose will let the Post Office be a world player. It will not be enough to allow the Post Office to invest or to borrow up to £75 million a year at commercial rates to make financial purchases. Last year, buying the third largest parcel carrier in Germany cost between £200 million and £300 million. We know that the Post Office cannot buy a significant player on the continent or in the United States with an annual sum of £75 million.

I welcome the announcement in the press release that the Government further pledged that it will approve commercially robust proposals from The Post Office for larger investments in projects within the scope of The Post Office's strategic plan. Part of me welcomes that, but it also sends a shudder down my spine. We are back to politicians trying to second-guess how an industry should be run. We must not forget that, in the early 1980s, the nationalised industries had their hand in the taxpayer's pocket for £50 million every week. When those industries were privatised and went out into the free market, they paid into the Exchequer £50 million every week. I do not believe that the Government breathing down the neck of the Post Office is the way forward.

The Post Office has been a political football for years. It is time to set it free in the same way as BT. For example, we must consider how the Post Office can compete against Bundespost, which is buying up company after company while under Government protection, so that, when it is privatised, it will be a global player.

When we privatised BT, we stole a march on the German telecom business. The Germans have made up their minds that they will not allow the same thing to happen to their postal service and, unless we get our Post Office geared up and in a powerful enough position to have relationships with overseas countries and companies, we will be in trouble.

In an Adjournment debate on the subject, the then Minister of State, Department of Trade and Industry, the right hon. Member for Makerfield (Mr. McCartney) rightly teased me about the amount of money that the Government took from the Post Office just before the last election. That was a temporary measure, and on the assumption that we would be successful, we intended to return to the question of Post Office privatisation after the election.

I sincerely hope that the Government will have second thoughts on support for the Post Office, and that they will cut the umbilical cord and set it free commercially in the market. The Government's approach shows that they are not learning lessons from the past. They believe that with a few slick phrases and a word in the ear of media editors, everything will be all right—a bit of spin will do the job of government and keep the public quiet. From the point of view of small firms and manufacturing, I wonder whether that will be the case.

6.27 pm

Mr. Tom Clarke (Coatbridge and Chryston)

Last year at this time, during a similar debate on the Queen's Speech, some of us spoke against the backdrop of the global economic crisis. It was a deeply worrying time. The integrated nature of a modern global economy meant that the shocks in Russia and Asia had a real impact, especially in terms of investment and jobs, on us, too, in the United Kingdom.

Since the height of the financial instability in September 1998, the Government and many other Governments throughout the world have taken decisive action by putting in place new long-term disciplines—indeed, a new financial architecture—to promote greater economic stability throughout the world.

Significant progress has been made. Reform, based on transparency and accountability, has begun to restore confidence in the stability of the global economy that was lost over the past couple of years. Growth prospects across the world, based on sound foundations, are now substantially better than they appeared even a few months ago.

Only last week, China agreed to a package of trade liberalisation measures that will provide even greater trade opportunities to the west. The opening up of the world's largest potential market is, of course, welcome, but those opportunities should not be reserved solely for the west and the other countries in the developed world. Those opportunities should be available to all, particularly those in the developing world, many of whom feel left behind in the rapid development of the global economy.

Plainly, past policies on trade and investment have been accompanied by increasing disparities between rich and poor, both between and within countries. True, there has been a huge growth in global wealth and consumption, which we welcome, but that does not tell us the full story. Many within developed countries have bathed in the fruits of the new global economy, but millions upon millions of people today live in avoidable poverty, in part because of their inability to develop their economies. That remains a major international challenge, and a challenge to us all. We simply cannot continue to live with a situation where, globally, 20 per cent. of the world's people in the highest income countries account for a massive 86 per cent. of total private consumption expenditure, and the poorest 20 per cent., a minuscule 1.3 per cent.

The facts are simply devastating and I am glad that they are being addressed in the Queen's Speech as well as in the Government's approach to the global economy. That is necessary. The least developed countries have seen their share of exports decline to a tiny 0.4 per cent. during the past 20 years, while, on the other hand, the United States and the European Union, containing roughly the same number of people, account for nearly 50 per cent. of the world's exports. We cannot, in all conscience, allow that trend to continue unchallenged, and I am glad that the Government see the need to respond. That is why I am genuinely delighted that the Chancellor in particular has acted on those appalling statistics. The debt relief measures initiated by the Government have, for me, been the highlight of their term so far, and they deserve to be warmly congratulated.

I am sure that the Chancellor would agree that there is no room for complacency. In the New Statesman recently, I wrote: Fundamental to the whole package are the contributions of the USA…the Republican dominated House of Representatives may not agree to President Clinton's request for funds for debt relief. Sadly, since I wrote that article, we heard only last week that that is precisely what has happened. I know that the House, and particularly the Chancellor—I am glad to praise him in his presence, as I did in his absence—will agree that the Government should continue to work with the United States and President Clinton to resolve this unfortunate impasse. Progress is being made, and the Chancellor will know that he has the support of the House in his efforts to obtain relief for the debt crisis which he has so courageously addressed since taking office.

Trade, in tandem with debt relief, can be a powerful tool in combating poverty and aiding development in the poorest countries, because investment in the developing world is crucial in promoting the economic growth that is needed to eliminate that unacceptable poverty. Until the world trade playing field is levelled out for the benefit of developing countries, I fear that spectacular achievements on debt relief will simply be tarnished. For that to take place, developed countries must also understand the practical problems that developing countries face. I strongly believe that it is up to the developed world to take a lead in improving market access for those developing countries. Consistent with that, I am pleased that the EU has proposed committing more resources to improve the market access for developing countries to take advantage of trade opportunities and participate fully in the world economy. That is as it should be.

As the House will know, one of the main problems in the past has been that policy making has been fragmented, and organisations such as the International Monetary Fund, the World Bank and the World Trade Organisation, have often operated with separate agendas. Some of us have long argued that the international bodies responsible for global financial supervision should work together more effectively.

We all look forward to next week's WTO ministerial meeting in Seattle, and the Government have our support when pressing for a new initiative led by the World bank and the WTO, involving the IMF, to ensure more and more effective trade-related assistance to developing countries, and to improve coherence in global economic policy making.

The closer relationship between those bodies in responding to the needs of the poorest and most vulnerable is a hugely important development in its own right, and provides a strengthened opportunity to make a real impact on complete poverty eradication. The Seattle ministerial conference presents a key opportunity for our Government—one which I believe that they will grasp—to take a lead in shaping trade regulations to the benefit of the many in the third world. Ministers' decisions will have significant implications for poor people whose lives are increasingly affected by multilateral trade rules and commitments. It is therefore vital that, among the many areas of debate, there is a real and proper focus on the relationship between trade and development.

I passionately believe that the trend towards rising inequality and marginalisation of the world's poorest people and countries from the benefits of international trade must simply be reversed. I believe, too, that the real challenge for the WTO is to design international trade rules so that they contribute to sustainable development and generate benefits for the world's poor. Therefore, I particularly welcome the call made by my right hon. Friend the Secretary of State for International Development for the forthcoming negotiations to have that development focus, especially when we consider that developing countries account for four fifths of WTO members.

Many poor countries feel that the Uruguay round—the previous big trade round—has brought them few economic benefits and has left them struggling to catch up with the developing world. It is there that we must be seen to be offering hope, inspiration and a practical response to the demands that exist. Economic liberalisation can have a positive impact on economic growth, but where it is carried out too quickly, or without a proper understanding of economies, the results can be negative—the opposite of our worthy intentions.

As many now acknowledge, a sound global economy depends crucially on social systems that build social cohesion, alleviating poverty among the most vulnerable. We must implement reforms to ensure that the benefits and opportunities of the global economy can be shared by all. In setting their global priorities, Her Majesty's Government have made a most admirable beginning.

6.39 pm

Mr. Paul Tyler (North Cornwall)

It is now 25 years since I was first elected to the House, although I immediately acknowledge that you, Mr. Deputy Speaker, and other hon. Members, have had a much more distinguished and continuous service to the House. It is tempting to look back to see how little seems to have changed. In 1974, the Conservative party was spectacularly split over Europe, so nothing has changed there. The larger group was then sane, but the lunatics have taken over the asylum, as I think that the right hon. Member for Huntingdon (Mr. Major) would now acknowledge. Similarly, the term "sleaze" had not been invented 25 years ago, but there was a feeling that the Tories had gone stale in office. We all know what happens to a product that goes stale—it starts to smell unpleasantly. Although the sleaze was not of Archer, Hamilton or Ashcroft proportions, it was nevertheless serious.

Equally, the new Labour Government of 1974 were quickly perceived to have run out of steam. They were so desperate to win power that they invested little time or imagination in working out what they wanted to do with it. That applied especially to economic policy and is thus relevant to the debate. The Wilson Government were widely perceived to be more interested in managing the economy better than their predecessors than in managing it differently, or in creating radical economic reform, much to the consternation of many of its active members in the country. I suspect that that is also a general feeling today. The Wilson Government failed to pursue the redistributive fiscal policy that had been promised in the election campaign.

I remember the queues of pig farmers who came to my advice surgery in 1974 and were constantly on the phone complaining about the mess left by the outgoing Tory Government. I also remember that a certain Mr. Jeffrey Archer left this place under a cloud. It may seem as if nothing much has changed in 25 years.

Mr. Garnier

Will the hon. Gentleman give way?

Mr. Tyler

No. There is limited time and I want to make progress towards the substance of the debate.

There are important differences between the Labour Government of 1974 and the current Government. The Government should claim without apology that their cross-party consultation on constitutional reform has been a success. I regret that such consultation has not extended to other policy matters.

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. The hon. Gentleman has mentioned economic policy; he should stick to that tonight. If he considers other subjects, I shall have to call him to order.

Mr. Tyler

I am grateful for that guidance. Other hon. Members have related subjects such as support for single mothers, agriculture, and trade—about which the right hon. Member for Coatbridge and Chryston (Mr. Clarke) spoke—to the economy. I propose to do that as well.

Liberal Democrat Members were pleased when the Government poached our policy on the independence of the Bank of England. The Chancellor opposed that central economic policy when in opposition, yet it was taken up as part of the new Government's policy. We do not mind our clothes being stolen in that way. However, the Government's timidity in some parts of their economic policy has returned to haunt them. That is evident in their attitude to the role of the privatised utilities in the national economy.

In the last Parliament, my predecessor as transport spokesman and I tried to persuade Labour party spokesmen that, if the Conservatives insisted on privatising Railtrack, it was vital, for economic as well as other reasons, that the Labour party should be committed to buying back a controlling interest of 51 per cent., with no profit and a bond scheme. If that had happened, Railtrack would probably not have been sold and the crazy profiteering that we have witnessed would not have happened. We argued on grounds of safety, investment and economic co-ordination. Unfortunately, the Labour party was so scared of the nationalisation tag that it did not respond, and the Government did not put in place the broad-based economic strategy that they should have devised. In the aftermath of Paddington, the Deputy Prime Minister is probably not the only member of the Labour party who regrets not having the courage of our convictions.

There were signs early in the Parliament that Ministers were listening. Some would complain that they listened to the wrong people—middle England tax cutters rather than the old, the disabled and the excluded. However, despite their large majority, they at least pretended that they were not omniscient as well as omnipotent. We may worry that they took the wrong message from their listening, but at least they seemed to be trying to identify new, important priorities in economic policy and to leave the insulated bunker of their Tory predecessors. It was unfortunate that, during their first two years in office, they failed to break out of the spending straitjacket that they inherited in the Treasury cupboard.

We are now halfway through the Parliament. In its early stages, there was a real attempt to introduce a different sort of government, especially in economic policy. The Prime Minister seemed genuinely to favour a pluralist approach rather the sterile, "my party, right or wrong" attitude of the past. There has been an interesting consensus in the Chamber this evening on the role of the World Trade Organisation and our objectives for the Seattle talks next week, and on the importance of the euro, to which the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) referred earlier. I welcome that. It is important that we can agree on objectives and major policy issues across the Chamber. That is what Parliament should be about. Sadly, there are signs that we may slip back to the aggressive, confrontational, Punch and Judy politics to which we became accustomed in the previous 25 years.

Parts of the legislative programme seem designed more to appeal to the Labour party's vested interests than to modernise our economy and communities for the 21st century. I do not apologise for referring to the deepening crisis in the countryside, mentioned by the right hon. Member for South Norfolk (Mr. MacGregor). It is important that every part of the economy—urban and rural—fulfils its potential. It is depressing that the only measures that will affect the countryside are irrelevant to the deep-seated crisis that the whole rural economy suffers. The measures on the right to roam, the pesticide tax and foxhunting are not vital. Anyone who knows what goes on in the countryside must recognise that. Those issues are not central to addressing the calamity that has befallen employment and businesses in the countryside.

One of the few brighter spots in the continuing decline of the rural economy is the belated recognition that it is an essential, integral part of the national economy. The contribution of the right hon. Member for South Norfolk, and his exchanges with the hon. Member for Rochford and Southend; East (Sir T. Tayler); referred to that. The previous Government failed to respond to our forecast that some parts of agriculture could not survive if the playing field remained so uneven, and our competitors on the continent and elsewhere continued to have such a huge advantage in balance of trade. That applies especially to pork and pigmeat products. I gave that warning in the last Parliament and Conservative Ministers ignored it. Imports of pigmeat products are now at record levels. The Meat and Livestock Commission recently announced an increase of 40 per cent. in ham imports in the first six months of this year. As everyone knows, overseas suppliers do not insist on the same public health and animal welfare standards as Britain. The right hon. Member for South Norfolk was right to identify that major crisis in the economy.

Mr. Deputy Speaker

Order. The hon. Gentleman is considering agricultural matters when our debate is on the economy. He must confine his speech to the economy.

Mr. Tyler

I acknowledge what you say, Mr. Deputy Speaker, but the right hon. Member for South Norfolk talked about agriculture as an issue that affects the economy. I am sure that you agree that the rural economy is an important component of the national economy. If farmers in my constituency and in that of the right hon. Member for South Norfolk—

Mr. Deputy Speaker

Order. The hon. Gentleman knows that I came to the Chair not long ago. I cannot be held responsible for the words of hon. Members when I was not in the Chair. I suggest to the hon. Gentleman that he can mention in passing that agriculture has an effect on our economy, but that he cannot go into detail about animal welfare and farmers' problems, serious as they are.

Mr. Tyler

I am grateful to you, Mr. Deputy Speaker. I hope that, with equal liberal latitude, you will recognise that there have been interventions in my speech.

Mr. Deputy Speaker

Order. I hope that the hon. Gentleman does not refer to my interventions because there is no injury time for those.

Mr. Tyler

I do not know how to react to that one, Mr. Deputy Speaker.

I want to emphasise that massive and devastating effects on the balance of trade resulting from a big increase in food imports to this country have major economic implications, and anybody who has watched what has been happening to the food industry and agricultural production must recognise that that is a real threat. The balance of trade and the balance of payments are important to the future health of our economy, but I do not want to labour the point.

I want to emphasise the importance of the immediate economic effect of those trends on local economies in sensitive parts of the country. Unfortunately, such areas—Northern Ireland, rural Scotland outside the central belt, the Pennines and mid-west of England and my own county of Cornwall and the south-west, for example—tend to have high unemployment and do not have wide opportunities for economic diversification. Those businesses that are supplying and supplied by agriculture and horticulture are still suffering the after-effects of the BSE crisis, which has also had a major effect on the health of the national economy.

Areas that have already been identified as being in need of economic support—they have objective 1 or objective 2 status under the new European Union structural funds—will need to know soon whether the Government are able to ensure matching funding so that they can take up that support. Without that guarantee, the new programme could fail as badly as the old objective 5b process has under the present regime.

If our national economy is to operate at its optimum level of activity and sustained growth, each sector and each geographical area must be enabled to perform to its full potential. Keeping the lid on the inflationary pressures in the south-east—hon. Members may have seen the report in tonight's Evening Standard that house prices in London are going through the roof—simply cannot be allowed to divert attention from the real problems of many areas of the country outside London and the south-east. If we have a macro-economic policy that does not recognise the need for diversification of the economic approach to those issues, some of the more remote parts of Britain will have great difficulty in escaping further recession.

The list of Bills in the Queen's Speech looks much more like end-of-term tinkering than serious reform. Where have all the radicals gone? Are they clearing the decks? Are we seeing preparatory moves for the general election? If so, that will indeed be a final irony. By behaving like an insulated and insular Government who are not prepared to listen to other parts of the country with other points of view—rather than by being pluralist—and by not being prepared to cross the party divide to seek consensus, the Government will start to look like the old-style party cliques that they thought they had left behind. That, indeed, could lose them power at the general election.

6.53 pm

Mr. Doug Henderson (Newcastle upon Tyne, North)

I may not endear myself to my hon. Friends, but I have to confess to feeling a trifle sorry for the right hon. Member for Horsham (Mr. Maude), who, for the second time in a couple of weeks, presented the case for Conservative economic policy. He knew that he was batting on an appalling wicket and, when I looked at the expressions on the faces of the Conservative Members sitting behind him, I was not sure that they were confident that he would produce a terribly good innings even on a good wicket.

The appalling wicket that the right hon. Gentleman has inherited was laid out by the Conservative party, which seems to be remote, out of touch, lacking in economic direction and withdrawn into itself. It must be painful for the more sensitive members of the Conservative party to be told time and again by business men and women who perhaps do not like what the Government are doing that they like even less what is being said by those at the Conservatives' end of the political spectrum. I find that extremely strange. The Conservative party is more remote from business than at any other time in my political life.

My right hon. Friend the Chancellor is batting on a good wicket and he is largely responsible for its preparation. He is on a strong wicket in respect of tackling inflation and building output, and that strong wicket has allowed other Ministers to undertake essential spending on health and education, which are crucial to any sense of social justice in this country. Without social justice, we can never expect to command the full support of the people. That strong wicket has also brought down unemployment to the levels of 20 years ago.

It is not in my character to spend my allocated time eulogising my right hon. Friend, and I do not propose to do that, but I want to place on record that I think that he has been sound, innovative and prudent in running our economy. The difficulty is that economic activity is not spread evenly. That problem is not new—it has existed for perhaps 70 years and more—and there have been endless Government and independent inquiries into the regional issue over a long period. Many Government measures, initiated by both principal parties in the House and sometimes supported by the other parties, followed those inquiries, but, despite all the concern about regional policy and the measures taken on it, we have not done enough.

There is still a major regional economic problem, and I believe that we have to tackle it if we are to achieve economic efficiency and social justice—we cannot achieve them nationally without dealing with the different parts of the economy. My own Front Benchers have been innovative in looking at many of the other problems that we face in society—those of the family, young people and how to build enterprise—but I hope that they will turn their attention to the regional problem. No area has more experience of it than my own, the north-east of England. Despite all the good economic indicators, there are still indicators that I want to see reversed. We have not been getting the benefit of the changes in the economy.

I do not claim to have all the answers in respect of tackling some of those problems, but I do claim to have experience of talking to people in the north-east of England, whatever capacity they fill in life. They tell me what they think should be considered as we try to tackle the regional problem, and I think that we need new thinking and new ideas. I have never been one of those who says that the Government can solve all the problems in society because I do not believe that that is the case, but they have to do certain things if they are to lay a foundation for change.

In my view, the Government have to continue to make every effort, through their various agencies and the regional development agency One North East, to try to get a share of the mobile investment that may be available. We all recognise what has to be done to attract that investment: we must be able to say to investors that we have people with the right skills, a regulatory regime that is attractive to them and the right sites in which to invest. Probably the best site for economic development in the north-east is in my constituency. I do not say that out of any narrow interest, because Great North park is an area with enormous potential and One North East has recognised that by giving development priority to it.

The area's development priority has also been recognised by the business and trade union communities in the north-east and, coming on to joined-up government, I hope that the Government will recognise it as well when the planning application goes before the Department of the Environment, Transport and the Regions. Without an innovative approach to such development, we cannot tackle regional problems. We need more of the traditional methods of tackling regional economic disparity.

We should come up with new ideas. If we are to change our capital gains structure, the Treasury should consider a regional differential and a different shape for the taper to encourage the development of businesses that create employment in certain regions. My business friends in the north-east believe that that should be a priority.

We should review the Barnett formula on the allocation of public expenditure. It was set some time ago, and it has been reviewed from time to time. As we reach the millennium, we are moving into a new era of political and economic development. The formula should be revisited, and we should consider whether the case for each area of the country that was made 30 years ago still stands. If not, how should we respond to that?

We should consider the relocation of Government institutions. The private sector in the north-east of England strongly believes that, if only that region had a stronger public sector—as do counties such as Hampshire and Wiltshire through Ministry of Defence investment in one form or another—and had the same economic background, private businesses would thrive to a greater extent on the back of that.

It is wrong that only 1 per cent. of Ministry of Defence employment is in the northern region, despite the fact that 12 per cent. of the British Army is recruited from there. That does not help anyone. When the Treasury reviews the public partnership rules, it should consider applying regional criteria. I am not picking out the MOD for special mention, as this probably applies to all Departments where there is southernism, as they say in Newcastle. When Departments consider relocating various parts of their operation, whether to a site in Hampshire or Wiltshire or to a third site, more attention should be given to the third site. That makes economic sense, and would spread economic activity and release sites in the southern part of the country for the essential house building that must occur if, in the next 25 years, everyone who needs a home is to be able to buy or rent one. Much Government property in the south could be released for house building, without spoiling any of the greenbelt. Colleagues often raise that matter with me when dealing with a regional issue.

As I said, the Government cannot do everything. People should do as much as they can for themselves. Communities in the regions of Britain that are suffering should try to do more for themselves. We must all do more about basic economic standards. In the northern region, fewer people attain qualifications than in any other part of the country. That problem must be addressed. It is part of the same story as the literacy and numeracy measures that Departments are taking. There should be greater liaison with regional institutions, and the regions should give a greater push to tackle this terrible problem.

An attempt must be made to build a small business community, because that is what will produce the industries of tomorrow. The small businesses of today should become the big businesses of tomorrow. The truth of the matter is that people in the north-east of England are not taking the initiative to create a cluster of small businesses in the knowledge industries of tomorrow. The Government can help us with education and training, but we must take those initiatives. That view is strongly held by large sections of the community in the north-east.

Universities and colleges have not done enough. They want to keep their traditional campuses, whether it is a greenfield campus with a wire round it or a city centre campus. Universities and colleges should integrate with business developments throughout the country, not just in the north-east. If that link is established with young people of 19, 20 or 21 with lots of energy, it will be carried forward to a later stage in their lives when they are ready to take part in the establishment of small businesses.

We should stop the extension of universities and colleges in inner urban areas in the north-east or, for that matter, in other parts of the country. They should be in business parks and on other sites. That is the example from California and elsewhere. There have been some good examples in Sweden, where such developments have helped to build new economic communities in old areas that had been written off.

Much can be done. The Government should have some fresh thinking and fresh ideas. I do not particularly want committees to be set up to investigate these matters but, if that is what is required, let us have them. We need to consider how we can tackle many of the issues that have been with us for 70 or 80 years or longer and that we have tried to tackle. The regional policy initiatives that we have taken have prevented things from getting worse, and have often been helpful, but that is not enough. We need more if we are to have a sustained balance in our economic activity.

7.6 pm

Mr. Michael Fallon (Sevenoaks)

It is a pleasure to follow the hon. Member for Newcastle upon Tyne, North (Mr. Henderson). He has always been a strong advocate for the north-east, and I am delighted to hear him issue a challenge to his own Government of the kind that he used to issue to the Conservative Government when he was in opposition.

I do not share the hon. Gentleman's enthusiasm for the Queen's Speech. It left me unmoved, and it left my constituents unmoved, because there was nothing in it to bring forward the financing of the replacement for the ageing Pembury and inadequate Kent and Sussex hospitals. The new single-site hospital that we have long been promised in west Kent has been delayed for another year. There was nothing in it to provide additional funding for police numbers in Kent, which have been cut under the Government, or to assist us to bear the burden of asylum seeking in Kent, which falls on my county more than on any other and is now a serious drain on the resources of the police and social services.

Instead, the Queen's Speech was packed with fussy Bills that will do little to stimulate our economy or to improve competitiveness. Contrary to what the hon. Gentleman said, the Government do not understand business. I shall give some examples from the Queen's Speech on the economic side. The great glory of internet trading was not a Department of Trade and Industry scheme: it was not DTI legislation or an Act of this Parliament. How do the Government propose to regulate it? The Electronic Communications Bill contains 17 pages of heavy-handed legislation. Even the Select Committee on Trade and Industry has described it as unnecessary and irrelevant. It should have had a lighter touch, but the Government have overcooked it.

The deregulation Bill is extraordinary. It is a deregulation Bill to provide less regulation. We have not seen it yet. We have had deregulation speeches, but we have not seen the Bill. We have not had any deregulation from the Government. In 1995–96, which was the last full Session of the Conservative Government, 39 deregulation orders were laid before the House. In the Session just concluded, only four deregulation orders were laid before the House. The Government talk about deregulation, but they do not propose deregulation measures.

There will be a Bill to introduce Partnerships UK, the new state investment bank. The Government assured me in a written answer on 16 July that there were no plans for a state investment bank. Now they are publishing a Bill, and Partnerships UK will be given the power to invest, to have grants from the Exchequer and to make selected investments. If it looks like a bank and behaves like a bank, it probably is a bank. We know what happened to the great National Enterprise Board. It was supposed to pick winners but, if anything, it picked losers.

There is nothing in the Queen's Speech for small businesses, except the new small business service that is being established this year. Just as business links had been established, were up and running and understood by the small business community, they are being torn up and we will have a new small business service. That is not what small businesses want. Small businesses in my constituency complain about taxes and red tape. They do not want more Government offices; it is the little things that bother them—the charges for various inspections, the level of business rents and, above all, the burden of regulation.

Let me give three examples. First, small businesses are often hit not by the main effect of the regulation that we pass in the House, but by the side effects. Secondly, they are sometimes hit by the interaction between one regulation and another: for instance, the holiday arrangements under the working-time directive clash with the arrangements for the national minimum wage. Thirdly, there is the cumulative weight of all the new burdens.

As the right hon. Member for Camberwell and Peckham (Ms Harman) tried to remind us, each of those burdens is perfectly defensible on its own terms. Who is against paternity leave, and the various other rights involved? They are all highly desirable in themselves, but they are all expensive, and they will all have to be paid for. It is the weight of those burdens, when combined, that sinks our small businesses. Suddenly, one day, the little corner shop is not there any more.

Ministers and bureaucrats have no understanding of the pressures on small businesses, and no such understanding is reflected anywhere in the Queen's Speech. There is no understanding of the difficulties involved in taking on the very first employee in a business that employs only three or four people, coping with the problem of an employee who is unexpectedly pregnant, dealing with redundancy or preparing for the first VAT inspection. Those are the factors that bear down on small business, but nothing in the Queen's Speech brings any comfort to small business men in my constituency.

I must tell the Government that, during the first half of the current Parliament—now concluded—they have implemented all their policies in a relatively benign economic environment. They inherited a sound economy from us, and they have been governing in a relatively benign climate ever since. They have set up a new monetary policy framework, but I am not yet convinced that it is the right framework. Even in good times, it has proved to be a peculiarly fussy arrangement. My hon. Friends may care to note that, in the two and a half years since the establishment of the Monetary Policy Committee, it has changed rates 14 times. In the same period, the Federal Reserve has changed rates only six times. I suspect that the Monetary Policy Committee meets too often and that its fingers are too itchy, and I am not at all sure that its relationship with the Treasury is as clear as it should be.

Mr. Edward Davey

Will the hon. Gentleman give way?

Mr. Fallon

I hope that the hon. Gentleman will forgive me if I do not. Time is short.

The Chancellor boasts that he set up an independent operation. He also boasts to the House that we had low interest rates throughout last year. Today, The Daily Telegraph quotes him as backing high interest rates. The Chancellor set up an independent system, but he claims credit when interest rates are low, and now he will claim credit when they have gone up again. I suspect that such a quasi-independent monetary framework spells trouble for him.

Let me now deal with fiscal matters. The tax burden continues to rise. It rose during the last years of our Government—there was a recession, and unemployment costs had to be met—but it should be falling, not rising, during a time of growth. This afternoon, the Chancellor refused to answer a question about the overall weight of the tax burden, but we will keep asking that question until we are given an answer.

As the tax burden continues to rise, overall spending programmes continue to increase. The pre-Budget report gives the game away. I see no mention in the report of any serious receipts from asset sales. What happened to the great doomsday register? The Government were going to add it all up, and see what they could sell. They have even removed the line about privatisation receipts: if hon. Members look at table B15, they will see that it is not in the report. The Government's privatisation programme, and all the profits that they were going to scoop up from asset sales, have been delayed. Everything has become confused.

We are promised 27, 28 or 30 Bills in the current Session. A Liberal Democrat described the programme as rather fussy, although I cannot remember his exact words. Certainly a busy Session lies ahead, but it is a fatal flaw in Government to confuse busyness with effectiveness. This is the last Queen's Speech of the century, and of the millennium; but we cannot say of it that it is really anything new. If anything, it is the last old Labour Government Queen's Speech, promising more legislation, more fussiness, more regulation and more taxation. Yet again, this is a tax-and-take programme from a tax-and-take Government.

7.15 pm

Mr. Ronnie Campbell (Blyth Valley)

As will be clear from my accent, I, like my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), will be concentrating on the north-east of England.

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) spoke of the north-south divide. I was down there only the other week, because my daughter moved there some years ago: she was one of those who migrated from the north-east in an attempt to find happier grounds, and I am pleased to say that she succeeded. A few weeks ago, my wife and I helped her to move house. The house cost her £160,000; in my time, it would have cost £50,000 on a good day.

That sums up the challenge that the Government face in regard to house prices. When we were down there, one gentleman told us that he had already made £30,000 on a house that he had bought two years ago. Inflation is really kicking in, and the fact that interest rates have risen affects the whole picture. That is the shame of the matter: in regions such as mine, the north-east, house prices have not risen enough to enable people to reap the benefits of interest rate rises—although, as we read in today's Evening Standard, there has been a 30 per cent. price increase in London.

I do not know what the answer is. Could regional interest rates be introduced? I very much doubt it, but at least we could talk about it. The north-east did not cause the problem; why should we have to pay for it? As the south-east created the inflation problem, with all the house-buying and gazumping, perhaps it should have to pay. That may not be a very good argument, but it is the only argument that I can produce at the moment.

My hon. Friend the Member for Newcastle upon Tyne, North mentioned the Barnett formula, which was devised 20 years ago by a Treasury Minister who is now in the other place for poor old Scotland and poor old Wales. At that time—it was in Harold Wilson's day—Scotland was experiencing a poor economic cycle. As for the north-east of England, in those days we had 40 pits, we had shipyards building ships, and we had steelworks in Consett and in various other places. We were enjoying an economic upturn, while Scotland and Wales were at rock bottom.

The Government were a bit afraid of the Scottish national party at the time, as it was making some headway, so they devised the Barnett formula to deal with the arguments in favour of independence for Scotland. It applied the formula to Wales as well. It got them out of the mire, and we have had it ever since. Unfortunately, during the intervening period, the north-east of England has lost all its mines except one, which is teetering on the brink, as well as its shipyards—although I understand that we may start building ships on the Tyne again. I look forward to an announcement to that effect. I know that some roll-on roll-off ships are planned, and I anticipate a subsidy for shipbuilding on the Tyne and the Tees. I understand that it could create 1,000 jobs per ship on the Tyne.

Scotland got the formula. It was good for Scotland and it should be good for us. We in the north-east ask Ministers not to do away with the formula in Scotland and in Wales, but to devise it for us. If it was good enough for Scotland when it was on its knees—we supported introducing the formula there—it is good enough for the north-east of England. We are on our knees at the moment.

It is estimated that, without the Barnett formula, the north-east is missing out to the tune of £2 billion a year. That is a lot of money for the north-east of England. If we can get an extra £2 billion a year in the north-east economy, we will do wonders.

The only pit in the area is Ellington colliery. About 400 men work there. We are not sure what will happen to it. A guy from Italy with various connections to some dubious people wants to buy it. I do not know why. He says that he wants to take the coal to Yugoslavia and the middle east. He can get coal cheaper on the spot market. He can go to Poland to get coal cheaper, so we do not know why he wants to buy the pit and take British coal all around the world. We will have to wait and see. He is in for buying the pit, which could save jobs and save the lads.

Talking of the lads who work at the pit, all they want is a job. They do not care who owns the colliery. The Government say that they will not step in to help the pit; they will not subsidise it. The lads are not bothered if the guy from Italy is a bit of a gangster, or whatever, as long as their jobs are safe.

It is estimated that, if the colliery closes, the plans fall through and the 400 jobs are lost, £40 million will be taken out of the south-east Northumberland economy. That is a lot of money to take out of the economy. Redundancy money is not the same as it was a few years back. It is a private industry now, so only a pittance is paid.

Another argument involves the standard spending assessment for the north-east of England. Local government receives subsidies from the Treasury. I praise the Newcastle newspaper that has, for a long time, been running a campaign on the Barnett formula and SSAs. The headline "North losing millions to the south" sums it up. It says that councils in the north are losing up to 1.4 billion in SSAs. Those were set under the Tory Government. Unfortunately, when they came to power, my Government said that that they would keep the SSAs for the next three years. We have tried to change them, but obviously the Government will stand fast to Tory programmes. Conservative Members have not lost everything yet: we are still on one of their programmes, which disadvantages north-east councils and advantages those in London and elsewhere in the south.

I should like to give a few figures to back the case up. It is important that figures are given. Ministers might want to challenge them. Perhaps they have some figures of their own that they want to put forward in a reasonable way.

I give the figures for public spending per head of population. In Northern Ireland, it is £133; in Scotland, it is £120; in Wales, it is £114; in London, it is £108; in the north-east of England, it is £98. We can see that the regional money to the areas for development—inward investment—is still low; we are still down.

Of course, we have to remember that Wales and Scotland have the Barnett formula—the only two areas to have it. I do not know what Cornwall thinks. I have seen the figures for Cornwall, but I am sure that the hon. Member for North Cornwall (Mr. Tyler) can argue his case himself. If we had Barnett, we would be up with Scotland and Wales. That is where we want to be—up with Scotland and Wales, with the same money and help.

Regional selective assistance is given. Scotland receives £152 million. Again, the figure is adjusted because of Barnett. Wales receives £106 million. The north-east receives £41 million. When those figures are bandied about and we see the state of north-east England, we will realise that there is a gross miscarriage of justice. Employment is not increasing there. It might be increasing in other parts of the country. The Government come to the Dispatch Box and sing their praises, but it cannot sing the praises of the north-east—not on the new deal.

The new deal is a good idea. It gets people into work, but there is not always work at the end of it. However, at least it gives a start and assists the areas that need help.

My hon. Friend the Member for Newcastle upon Tyne, North mentioned education, which is very important. We cannot educate our kids. We are going into a new era. Heavy industries, as we know them, are dying; we recognise that in the north-east of England. We have lost them all. Obviously, we look to diversify, but I give more Barnett figures. Let us look at those figures: Education spend per head of population in inner London is £1,527; in Wales, it is £1,021; in Scotland, it is £1,388; in north-east England, it is £966. That is the education grant that we get because, again, we are not part of the Barnett formula. We see what Barnett has done in the past 20 years. It has given great advantages to Wales and to Scotland, while other regions have not received the same amounts and have fallen behind. We have fallen behind on that level.

This afternoon, late on, a Liberal Democrat gave me some more figures, which I appreciated. I got them in the Tea Room. They are very interesting. In 1999–2000, Northumberland received £2,240 per primary school pupil from the Government. Kensington and Chelsea got £3,315. Northumberland got £2,879 per secondary school pupil. Kensington and Chelsea got £4,130, so we can see an enormous difference, even in education. That is only one example, but we looked at different places in London and elsewhere and they all received more; spending in Kensington and Chelsea was the furthest ahead. Northumberland is well behind Hertfordshire, according to the figures on spending per pupil. Again, in education, the north-east is losing out.

If anyone has been to Northumberland, they will know that it is a beautiful county. There are wonderful places to see. It is a great place for making films now; it is the Hollywood of Britain. Many films are being made there. It has some lovely places, but, again, it does not get much for tourism. Wales receives £6.40 per head of the population for tourism. Scotland gets £5. The poor north-east of England gets 8p—we are doing well again.

In every comparison of spending, the north-east does badly. I do not know about the other English regions. I am not here to argue their case; I am sure that they can do that themselves. I am here to argue the case for my area and the people there. We have lost their traditional industries, as Scotland and Wales did. Now we are on the same road. We want the help of Scottish and Welsh Members to ensure that we have the same standards.

7.29 pm

Mr. David Ruffley (Bury St. Edmunds)

In a changing world, one is sometimes reassured to see things not changing. The Gracious Speech and the Chancellor's pre-Budget statement show that two things have not changed. The first is the Treasury's refusal to admit that it has increased taxes, or to say that it will undo the damaging effects caused by its tax increases. The second is the omission in the Gracious Speech of a proposal to deal with the problems experienced by small businesses, particularly by small businesses in market towns, such as Stowmarket and Bury St. Edmunds in my constituency.

A change has occurred in the way in which the public and the press perceive the Chancellor's economic management, particularly his taxation policy. Most recently, that changing perception was demonstrated in an Office for National Statistics publication—it was subsequently endorsed by the Library—which said that, in the financial year 1996–97, the national tax burden was 35.7 per cent. of gross domestic product, and that, for the current year, the burden is forecast to be 37.7 per cent. Those figures are pretty much incontrovertible—unless, of course, one is a Treasury Minister.

There has been a spate of criticism of the Chancellor's twisting of the facts on the tax burden and tax increases. It is interesting that, on the Government's presentation of economic statistics, Bob Worcester of MORI—who is by no means a Conservative-leaning commentator—recently said: It is not being clear, it is not being precise… They are putting spin on the statistics and that spin is an affront to the British public… These things ought to be crisp and clear and absolutely straightforward". My hon. Friends, like me, represent many hard-working couples who want only to keep more of what they earn, to spend or save as they wish. Average hard-working couples in my constituency know that, annually, they are £223 worse off because the Chancellor abolished mortgage interest relief at source, and £285 worse off because he abolished the married couple's allowance. My constituents also know that, on Automobile Association figures, if they drive the average annual mileage of 8,000 miles in an average-size car, they are likely to pay a minimum of £165 more each year because of the Chancellor's unnecessary fuel tax increases. Those tax duties are all the more punishing for motorists in rural constituencies, such as mine, for whom a car is a necessity and not a luxury. Under this Government, middle-income earners on just over £27,000 a year will pay more direct tax in national insurance contributions.

Those are the facts on taxation. I do not expect the Treasury to reverse any of its taxation policies, but I have some modest hope that Ministers will listen to what small retailers in small market towns, such as Bury St. Edmunds and Stowmarket, are pleading and demanding. They are being hit by the small business rate burden more than by anything else.

I should like to share some statistics that the Department of the Environment provided in its document, "The Impact of Rates on Businesses", which was produced near the end of the previous Government's time in office. The statistics show that a small business—typically, a small retail shop in a small market town—with a turnover of up to £50,000 will have to pay a business rate equivalent to 7.7 per cent. of turnover; to 13.7 per cent. of overheads; and to a staggering 35.9 per cent. of profits. It is an extremely heavy burden on small businesses.

The burden for businesses with a turnover of £500,000 to just under £2 millio—typical of big superstores on the edge of large market towns—is much less. As a share of turnover for those businesses, business rates amount to 4.1 per cent. of turnover; to 3.7 per cent. of overheads; and to a relatively trifling 15.9 per cent. of profits.

Even Labour Members will agree that the statistics show that there is a disproportionately heavy burden on small retail traders and that the time has come for the Government to consider practical measures to alleviate that burden. The Government talk about fairness—but let us have some fairness, and let the small businesses in my constituency see some of it.

I should like briefly to outline an idea that Treasury Ministers should consider, which first appeared in the much-maligned 1997 Conservative party manifesto. Although Conservative Members are accustomed to having many of our better ideas swiped by Labour Members, I shall not object if they swipe this one: that the poundage should be increased for all businesses subject to the uniform business rate regime. The Treasury can do that, as it sets the poundage. Implementing the idea would raise extra revenue, which could then be used by the Treasury to grant a tax-free exemption for all businesses in the low rateable value bands—which would automatically receive a tax-free slice similar to the personal allowance in the personal income tax regime. Implementing the idea would provide a windfall gain for the small retailers in my constituency who are going to the wall.

In Bury St. Edmunds, we have a distinguished retail street—Abbeygate street—that, for many years, but less so today, was known as the Bond street of Suffolk. Now, shops on Abbeygate are closing specifically because of high business rates, and cheap and cheerful shops are moving into premises vacated by very well-established retailers who had to close. In Churchgate street, an old established bakery had to close because of business rates.

The situation simply cannot continue. Truthfully, honestly and genuinely, I urge Ministers to reconsider creating a regime to provide tax-free slices, free from the uniform business rate, to lower rateable value properties. It would not be difficult to create such an exemption—which would also ensure that the big, out-of-town supermarkets paid their fair whack.

The Queen's Speech is disappointing in its failure to address those issues. My disappointment is shared by Mr. Stan Mendham, chief executive of the Forum of Private Business, who is respected on both sides of the House. He said: Those business owners looking forward to the future have little to cheer, as business rates…have not been tackled". The Gracious Speech contains some measures attempting to play to the small business lobby, but they offer only warm words. On that matter, I agree with the Institute for Fiscal Studies, which helpfully drew attention to what it believes are gimmicky measures, such as the proposed R and D tax credit. We do not yet know much about the credit, but it will probably carry a £150 million cost and will certainly not assist small businesses in my constituency.

The better capital allowances for small and medium-sized enterprises, which over the past two years have amounted to about £175 million, are small potatoes compared with the problems facing British industry. The IFS concludes: it was very unclear whether the plethora of measures targeted at small companies will have any significant impact on the aggregate investment and productivity gaps that the government has highlighted. I am also disappointed by the all-employee share scheme, which builds on the approved profit-sharing and save-as-you-earn schemes. We all know, as the IFS has emphasised, that the new scheme is built for listed companies. For those who work in a corner shop, the public sector, a small partnership or a small business or family firm, the hype about employee share ownership is irrelevant.

There is nothing on tax for small businesses in the Gracious Speech. There is nothing to cheer the part of middle Britain that I am proud to represent in Bury St. Edmunds. Let us hope that, in due course, we shall have a Government with the wisdom to match deeds with words. My final plea is for the Treasury to consider small business rate reform.

7.41 pm

Ms Sally Keeble (Northampton, North)

I am grateful for the chance to speak in this debate, because the economy is of central importance to my constituents. I, too, represent middle England. The right hon. Member for Horsham (Mr. Maude) said that those whom Labour persuaded to vote for us last time would be the worst affected by the economic measures in the Queen's Speech. There are many of them in my constituency. I recognise in the Queen's Speech a continuation of the economic policies that have greatly benefited my constituents. I find it difficult to recognise in the doomsday scenarios that we have heard from the Conservatives the lives of my constituents and the way in which they have improved under this Labour Government.

Of all the areas in which my constituents have benefited under this Government, the economic improvements have been the most marked and the ones that have given me the most pleasure. My constituents do not have the salary levels that the hon. Member for Bury St. Edmunds (Mr. Ruffley) mentioned.

Mr. Ruffley

I was merely observing that those earning £27,000 a year are by no stretch of the imagination rich, but they are hit by the increase in national insurance contributions levied by the Chancellor.

Ms Keeble

The hon. Gentleman was talking about average earnings of that amount. My constituents are on about £10,000 less than that. For people on such wages, the Government's control of inflation and prices has been of great benefit. The high levels of employment that the Government have brought about have also been very important. Northampton now has about 2.5 per cent. unemployment.

Many households in my constituency need one and a half incomes, because pay levels are not high. The fact that we have such a thriving economy that households can have one and a half stable jobs has meant that they are able to keep up their mortgage repayments and are benefiting from more secure home ownership. The Government have also recognised that, to deal with the economy properly, they have to deal with certain supply side factors, including tackling the skills gap. School achievement levels have not been good in my constituency. The Government's measures to deal with that problem will be of profound benefit to local industry.

I am firmly convinced that the main reason why the Conservatives lost my seat at the election was their mismanagement of the economy. Conservative Members have spoken frequently about the golden legacy, but it was not evident in my constituency. As mortgage rates soared, people lost their jobs. That unemployment may not have been permanent—Northampton, North is not one of the great inner-city areas—but it was bad enough for a lot of people to default on their mortgages and lose their homes. There was a profound lack of confidence in the record of the previous Government. Some of the alleged failures of this Government, such as the decline in the savings rate in our first year, are signs of the feel-good factor that was created when Labour came to power.

The Conservatives also pour scorn on the regulation of financial services, but for my constituents, who rely mainly on private provision or self-provision, that regulation will be very important and welcome. When I started running advice surgeries after I was elected, I was shocked by the number of people who complained about the mis-selling of a range of financial services. I look forward to the regulations being tightened.

The measures to support enterprise are also important. We have heard a lot about big business. The changes for small businesses that have already been put in place and those that are to come, particularly the new small business services, will be important for a significant section of my constituency and will be welcomed by them.

Perhaps the most important changes are those to support families. We have heard the Conservatives talk about what hard-working families want. For the most part, they have got what they want in my constituency because the Government have provided many benefits and made many tax changes to support them. There are many working women with children in my constituency. I carried out a family survey that showed that combining work and home was one of the key pressures on the families of middle England. The changes in the Queen's Speech continue the Government's existing policies. Those changes are important and will be telling at the next election.

The measures on the state second pension and the carers pension will be particularly important, because they will ensure that the vast number of women in my constituency who work part-time will be able to make provision for their retirement independently of their husbands or partners. They will be able to have a more secure retirement than many women currently have. The carers pension will be crucial and will be of enormous help in underpinning family life, because it will make it possible for women who give up work to look after children or disabled relatives to have their contributions for their state second pension paid. That is one of the Government's many measures to benefit families.

The changes to the Child Support Agency will also have an enormous impact on the quality of many families' lives, because they will ensure that children get more money and that bureaucracy is removed. That will also help to end some of the friction that we all know that the CSA currently produces in many homes throughout the country. In addition, the changes to holiday rights and parental leave will help to ease many day-to-day pressures.

The new deal for lone parents—allied to the working families tax credit—is often associated with inner-city areas with high unemployment, but it is of profound benefit also to middle England. There has been much emphasis on how the new deal has benefited young people. However, my constituency is not packed with unemployed young people. It does have a large number of lone parents who, through the Tory years, were forced to stay at home and live on benefits. They bitterly resented that. The introduction of the working families tax credit and the child care tax credit has been a liberation for them.

In my constituency, I have talked to women who are £60 and £65 a week better off and who are able to go out to work for the first time in many years. It is not just that they are financially better off, but that their children will grow up in a home where someone goes out to work. That is important in terms of what happens to those children.

When my constituents contemplate the prospect of another Conservative Government, the choices for them are stark, and a number of themes have been summed up in the Gracious Speech and the pre-Budget statement. Those women who are now £60 and £65 a week better off would lose that money. They would lose their jobs also, because they would lose their ability to pay for child care. They would have to go home and live on benefits again. My constituents and I do not think that that is good management of the economy.

The Conservative party is not in favour of the independent setting of interest rates so, presumably, my constituents would see interest rates again tied to political convenience. There would be a repetition of the jiggery-pokery with interest rates. We saw what happened last time—people ended up losing their homes because they defaulted on their mortgages. Before the election, the then shadow Housing Minister came to my constituency, and we looked at rows of boarded-up houses. This was not empty council housing, but private housing where people had had to lock the door and walk away because they were no longer able to pay for it.

Many people who now have a chance to work would not have that chance under a Tory Government, and would be on benefits. In particular, pensioners would be infinitely worse off and would not have the many benefits that were set out in the Gracious Speech. They would not have the £100 payment for fuel, the state second pension, the carers pension or the stakeholder pension. They would not have the lower tax rate on interest-free savings, or the much higher pensioners' tax thresholds.

It is easy to talk about global figures and macro-statistics when we talk about the management of the economy. However, we should look at the impact on the lives of people in middle England. I have no doubt that the Gracious Speech will play an important part in ensuring that they understand that the Government are on their side, and will provide them with a sound, stable and secure future for themselves and their families.

7.54 pm

Mr. Tim Loughton (East Worthing and Shoreham)

It is difficult to address the economy within the debates on Queen's Speech, given that there was so little about the economy in the speech—apart from the Financial Services and Markets Bill, of which we have spoken many times before. Those of us on the Committee seem to have been dealing with it since the Ark, and the leviathan nature of the organisation remains, despite our best endeavours to trim its powers. The only other measures affecting the Treasury are resource accounting and private finance initiative banking, and we will deal with the Second Reading of those Bills in a little while.

The Queen's Speech contained familiar phrases about managing public finances prudently, monetary policy making, interest rates and inflation—words which, in a political sense, did not trip easily from the lips of Her Majesty. I am happy to admit that, on the face of it, our economy appears to be in a relatively sound state. However, it certainly merits closer attention in an international context than the Chancellor is prepared to give it, despite his constant entreaties to look to the examples of Europe or America.

For example, the best forecast of gross domestic product growth, even from the Treasury, for this year is 1.7 per cent., compared with 3.8 per cent. for the US, 2.1 per cent. for the EU and 2.6 per cent. for the whole of the OECD. We are rather near the bottom. For two years' time, the growth forecast for this country is 2.3 per cent.—beaten by France at 2.9 per cent., the United States and the EU, at 2.8 per cent., and again by the OECD at 2.6 per cent. Despite the great growth miracle that is apparently going on in this country, in an international context it is not that exciting.

On the current account balances as a percentage of GDP, we will be suffering deficits for the next two or three years of around 1.5 per cent. at a time when France is experiencing a surplus of 2.4 per cent. The EU average will be 0.3 or 0.4 per cent. It is even better in the rest of the OECD. The current account balance is not looking so healthy in an international context.

Short-term interest rates will remain higher here than in the United States, and much higher than in the EU as a whole. Things are not looking quite so good in an international context as the Chancellor would have us believe.

Productivity has been referred to as the acid test of economic success by the Chancellor. It was growing at 2.2 per cent. at the time of the election, but the figure is 0.7 per cent. after two years of Labour rule. One test of productivity is GDP per capita. Taking the base of 100 for the UK, the figure for the United States is 137. We are well below the rest of the EU in terms of productivity.

My right hon. and hon. Friends have mentioned the tax burden many times. It is interesting that the Chancellor is happy to quote selectively from reports but, when it comes to a fairly definitive report from the OECD on the tax burden, he refuses to believe it. The figures, supported by the House of Commons Library, show that the tax burden in this country has risen from 35.4 per cent. at the last election to 37.6 per cent. Direct payments to the Exchequer have risen from £270 billion to £333 billion a year. I do not know how the Chancellor is able to wriggle out of these facts.

In Germany, the tax take is lower, and it is just 29.7 per cent. in the US. The tax burden is falling in the rest of Europe, but it is rising here. We know the reason for that—the stealth taxes that the Chancellor has dishonestly taken out of people's back pockets.

My major theme has been taken up by Labour Members, particularly those representing constituencies in the north-east of England. I want to counterbalance that, speaking as someone representing a south-east constituency. I am concerned about the divergence in economic performances within the UK. That is a worsening trend.

Unemployment in the north-east is at 9.7 per cent and rose by 1.3 per cent. last year. In Wales, it is 7.3 per cent, but in my area—the south-east—it is 3.8 per cent. and falling. Those are enormous divergences. In the north-east, gross domestic product per head is £9,500; in Wales, £9,400; and in my region, £13,500. We have also heard examples of extreme divergences in house prices.

Not surprisingly, there is mass migration from the north to the south—not only the daughter of the hon. Member for Blyth Valley (Mr. Campbell) has moved. The population of Wirral and Manchester has fallen by 9 per cent. over the past seven years; north-east Lincolnshire is losing 1,000 people a year; and the population of the home counties and central London is rising commensurately.

The Government's solution is to take councils such as West Sussex to court to force massive housing development on largely greenfield, rural counties. They fail to condemn the Crow report, which would impose 1.1 million extra homes on the south-east by 2016. We are witnessing a catastrophic and fundamental shift in the regional economic fortunes of the United Kingdom.

I have various quotations on the subject. One is: There's no doubt there's going to be a brain drain. Another says: It means some of the new investment that might have been spread around the country will not take place. A third says: You would have the north-south divide back again and it would devastate the north of England. Those comments are all by Labour leaders of northern metropolitan boroughs. I wholeheartedly agree with them.

Concentrating economic development in the south-east will act as a magnet for more population migration from the north, more inward investment that would have gone to areas with greater need and more concreting over of largely rural south-east areas, leaving vast swathes of brownfield sites in the north undeveloped.

Ms Keeble

The hon. Gentleman makes an important point about the north-south divide, but does he not accept that the Government set up the regional development agencies to deal with the problems in the teeth of opposition from the Conservative party?

Mr. Loughton

Yes, indeed. The problems have been accentuated and the RDAs have failed, inevitably, to deal with them, simply because the south-east, by its very nature, will always command a premium because of its proximity to the continent and the financial markets in London.

Amazingly, there is blatant discrimination against the north of England. The people of the south-east do not want it to become one of the top 10 regions of Europe if it is at the cost of turning the garden of England into a patio. Many people in the south-east would prefer it to be equal 20th with all the other regions of Europe.

The Government have done more than any other to destabilise the United Kingdom constitutionally and are now guilty of accelerating its economic fragmentation. There is increasingly no such thing as a single, homogeneous state of Britain.

The damage is being accentuated by the energy tax, for example. Large industrial concerns, especially in northern urban areas, are being penalised to the benefit of service industries in the south. Even after the partial climb-down in the pre-Budget statement, it will still prove lethal for the chemical, steel and paper industries among others. It has no regard for companies that have invested in energy efficiency and there is still no emissions trading policy, which is an essential part of an integrated energy policy. All the Kyoto targets could be achieved by converting more coal-fired power stations to gas.

There is an enormous extra burden of red tape on industry, with 2,700 extra regulations, costing £10,000 a year extra for medium-sized businesses and £1,700 for companies with fewer than 10 employees. There is an annual bill of £500 million for firms to administer three new Government measures on PAYE, national insurance and statutory sick and maternity pay.

The Government have slashed the savings ratio. The problem is most severe among lower-income families in the north. Individual savings accounts have signally failed to attract a single one of the 6 million new investors we were promised. The new schemes for wider share ownership, which are welcome as far as they go, are surely a tacit admission that ISAs have failed to attract new investors.

Many problems are being stored up for the future. The tax system has become hopelessly complicated. Many of the tax advantages, such as the 10 per cent. starting rate for tax on savings, will go unclaimed because of the complexities involved. One tax adviser said: The average person in the street would find it almost impossible to understand our tax system and recognise whether they are entitled to any tax rebates… The people who are most likely to suffer are those who can least afford it. That has all apparently been in the service of building up a war chest, which has been made up of stealth taxes taken dishonestly from everyone's back pocket and which should be given back, not used as an election bribe.

The tax burden is up and the tax system has been drastically complicated. Businesses and individual taxpayers are all feeling the effects, mostly imposed by stealth. The savings ratio has crashed despite warm words about encouraging greater pension provision and savings for later in life. We are storing up trouble for the future.

All the trends fly in the face of what is happening in the rest of the OECD countries, especially in Europe, whose growth and productivity are outpacing ours. Most alarmingly, the greatest ever divisions are emerging between the regions. After a frenzy of splitting up the United Kingdom through constitutional iconoclasm, it is a great irony that the Government, who have their greatest concentrations of seats in the north of England and in Scotland and Wales, are promoting a severe form of economic apartheid that is causing the greatest pain in those parts of our still, nominally at least, United Kingdom.

There is nothing in the Queen's Speech to reverse that worrying trend.

8.7 pm

Kali Mountford (Colne Valley)

It is common to start a speech by saying that we have had a wide-ranging debate, but that is true today. We have heard comments about pigs; witnessed an internecine battle about Europe; visited and revisited housing; talked about deregulation; and been told about the north-south divide.

It is worth taking a moment to consider the Conservative amendment, and in particular its last sentence. The Conservative party would have us engineer a return to the golden economic legacy of enterprise, dynamism and flexibility left by the previous Government". Let us consider the credibility of that formulation and ask, if the economy is successful, who is to share in that success and whether we are being fair.

The right hon. Member for Horsham (Mr. Maude) refused to take interventions from Labour Back Benchers, which is regrettable in any event. He refused to give way on IR35, which Conservative Members love so much that they cannot resist mentioning it in the debate again and again. Who is really affected by IR35: the poorest people in our society; the unemployed; those struggling to make a living? No, not at all.

Conservative Members talk of enterprise measures when what they are really talking about is tax avoidance. On IR35, they refuse to answer the simple questions about whether one pays tax through PAYE or as a self-employed taxpayer or whether one avoids it.

Mr. Oliver Letwin (West Dorset)

Why does the hon. Lady think it reasonable for a self-employed computer contractor, who has happily been working three-week contracts, suddenly to have to regard himself as employed because he gets a six-month contract?

Kali Mountford

If the hon. Gentleman considered the measures properly, he would find that genuine entrepreneurship is rewarded, not discouraged, by IR35. All the cases that I have considered in detail and all the fears engendered by the Conservatives, who have made people scared that they would be much worse off, happen not to be true. If people have long-term contracts with a firm, it is correct to admit that they are employed and they should pay tax accordingly.

The Queen's Speech advocated investigating benefit fraud more closely and introducing measures to discourage it. How can it be right to say to someone on income support that benefit fraud is wrong and take measures to combat it, but to say to someone on a more than adequate income that it is acceptable for them to avoid paying their proper taxes? After all, tax avoidances means less money for the rest of the economy and, therefore, for all the measures necessary to help people who are much worse off.

It is wrong to avoid paying tax and it is certainly wrong to describe attempts to prevent that as an attack on enterprise. When it comes to enterprise, we should ask how we should reward it. Do we do it in an ad hoc manner, so that, if someone has the wit to employ the right accountant, he can avoid tax? Or should we ask how we can best encourage enterprise in the economy? The measures in the Queen's Speech will do much to address the latter question.

We should nurture the enterprise culture in schools. We have had some discussion tonight about generating the right skills for the economy, but enterprise is never talked about in schools. We should fund schools to encourage young people—especially girls, so that they can start to do something about the pay gap between men and women—to think about enterprise and how they can make an economic contribution. Another measure should be introduced to make available a sum of money in the early days of a new enterprise to provide support. That would be an excellent way in which to encourage enterprise properly, instead of in some strange, ad hoc fashion.

How can we share economic success fairly? I am grateful to those Conservative Members who have recognised that we are economically successful, but such success must be sustained and enable people to make long-term judgments. The Opposition's amendment is self-congratulatory, although one Opposition Member at least acknowledged that their time in office saw two recessions and our withdrawal from the ERM. To listen to most Tories, one would think that we lived through the most successful economic period in history before the general election in 1997, but that simply is not the case. People felt insecure and could not make plans for the future. Many hon. Members have mentioned the housing market, but that, too, was affected by people's inability to plan for the future. We now have a period of sustained and sustainable economic growth, stability, low interest rates and low inflation. We will experience fluctuations, but the current economic stability has to be good for the generation of jobs and the sharing of our success among a wider range of people.

The Labour Government have made a point of sharing success with more people including, for example, lone parents. Indeed, we have a convert to that approach in the hon. Member for Havant (Mr. Willetts). I recently asked him about his ideas for lone parents and he proudly gave me a copy of his speech on them, which makes interesting reading. He accepts, at last, that young women benefit from being in a family which has one or more members in work, even in a single parent family. Encouraging a culture of work and ensuring that work pays enough to be worth while is beneficial to everyone.

It is right that people should be able to share in economic success whatever the size, shape or condition of their families, but the worrying aspect of the Conservatives' proposals is the suggestion of the removal of choice. It has been suggested that the Opposition are schizophrenic in their attitude to this debate, and that is true of their attitude to making work pay and caring for the family. They have gone on about MIRAS, the married couple's allowance and how to keep families together, but they propose a measure that would force women, when their children are 11 years old, to claim jobseeker's allowance and according to which they would have their benefit taken away if they did not get a job within 13 weeks. That is way too much stick and no carrot.

The Opposition's amendment contains nothing about how to help people into work or the barriers to work. One of the major barriers for women who do not have a partner—and those who do—is the lack of quality, affordable child care that is supported by the Government, but Conservative Members refuse to recognise that. They have not caught up with the reality of making work pay so that it genuinely benefits families. The Opposition's schizophrenia will continue until they realise that they cannot encourage mothers into work by force. The one thing that Conservatives should have learned from the old YTS and YOP schemes is that people forced into a scheme do not fare well and look to leave it quickly. Work must pay, which is why I welcome the tax credits imaginatively introduced by the Government—which are not the ad hoc tax credits that people affected by IR35 awarded themselves.

Mr. Stephen Day (Cheadle)

Speak for your constituents.

Kali Mountford

I am. My constituency has low unemployment and many families with young children. Despite the image of "Last of the Summer Wine", it is a young constituency and the regional development agencies—about which the Opposition do not appear to have heard—are making the sorts of changes that will encourage enterprise. The RDAs are introducing corridors for new technologies to encourage growth. However, unemployment in my constituency is already low, and people who previously did not have opportunities have them now. The jobs that people get are real, with real career prospects. Women no longer simply run a shuttle backwards and forwards, or work in the typing pool, or answer telephones. They can now look to the future, so that their families' prosperity can grow.

The schizophrenic approach of the Conservative party would condemn women to lives on benefits, without a choice of well-paid employment, until their children were 11. However, when the children reached 11, women would be told that they had to go to work, regardless of the type of employment available, or of the skills that the women were supposed to have been able to acquire.

The Government support families and take account of people's skills and enterprise. The Conservative party does none of those things, and the amendment is therefore absolute nonsense.

8.21 pm

Mr. Edward Davey (Kingston and Surbiton)

Many hon. Members—especially Conservative Members, but also a few Liberal Democrats—have said that the Queen's Speech was rather timid and cautious. They are right, but one element of the speech is historic in the economic benefits that it will bring. That element is the Government Resources and Accounts Bill.

That Bill is one of the most important measures to be introduced in this Parliament. It represents the most major reform of public finances since the time of Gladstone. Given that Gladstone was a Liberal, the House will not be surprised to hear that Liberal Democrat Members will support the Bill on Second Reading, which takes place soon.

Mr. Letwin

I am most grateful to the hon. Gentleman for giving way with his usual courtesy. Will he explain why the Bill should represent the most important reform since Gladstone, when the resource accounting system that it proposes will create a public sector balance sheet that omits hospitals, schools and most other major public assets?

Mr. Davey

The hon. Gentleman ought to examine how local authorities and the NHS deal with capital assets, as such organisations are already moving towards using similar procedures in their balance sheets. I am looking forward to the debate on the Bill even more than before. If the hon. Gentleman does not understand public accounts, he should not be a member of the Opposition Front-Bench economy team.

Mr. Letwin

I am doubly grateful to the hon. Gentleman, who is completely right: I have not understood the public accounts, and I wonder whether any living human being could. The Government Resources and Accounts Bill will not bring any greater clarity to those accounts, which would now defeat any mortal.

Mr. Davey

I completely disagree with the hon. Gentleman. I am surprised at his intervention, as I was about to say that the Bill, and the processes in the Department and in Whitehall leading up to its publication, show the House at its best. The proposals on which the Bill is based were put forward by the right hon. and learned Member for Rushcliffe (Mr. Clarke), the Chancellor in the previous Conservative Government. They have been studied by the Public Accounts Committee, by the Select Committee on the Treasury and by the Select Committee on Procedure. As a former member of the Procedure Committee, I am now, as a current member of the Select Committee on the Treasury, looking forward to scrutinising the Bill.

Until the hon. Member for West Dorset (Mr. Letwin) decided to intervene, I had thought that the Bill had the general support of the House.

Mr. Letwin

I am triply grateful to the hon. Gentleman. I absolutely agree with him that the motive behind the Bill is marvellous. When my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) introduced resource accounting, we were all four-square behind it. We had no objection to it whatsoever. However, is not the Bill about the emptiest version of resource accounting that any Government could have conceived of?

Mr. Davey

I advise the hon. Gentleman to stop digging. The Bill will replace the Acts of 1861 and 1921 that brought in appropriation accounting. The Bill will provide the legislative procedures to ensure that the House will be able to hold the Government to account on resource estimates.

I shall scrutinise the Bill to make certain that it does its job properly, but I am very surprised at the Conservatives' apparent opposition to it, especially as the earlier remarks of the right hon. Member for Horsham (Mr. Maude) seemed to contain some support for it. Sadly, however, he went on to be grudging about the Bill and to make some unsubstantiated allegations that it was to do with creative accounting. That appeared to relate to the amendment, which states that the Gracious Speech does nothing to ensure that the public accounts are honest and open". For all its other failings, the Queen's Speech contains proposals for a Bill to deal with the public accounts that will ensure that Parliament has the information that it has lacked for decades. The Conservative amendment is therefore especially inappropriate.

I shall dwell for a couple of minutes on the benefits that the Bill will bring. We applaud the Government on its introduction. The Bill will improve the way in which Whitehall and Government Departments account for capital spending. In the past, there has been a bias against capital spending in the public expenditure survey rounds.

The Bill will mean that Ministers and public sector managers have better information. That will improve the decisions that they make, and ensure that the bias against capital spending no longer exists. As a result, our capital assets, which play a key role in underpinning the strength of our economy, will be properly maintained and will receive proper investment. The capital wealth of our nation must not be forgotten when scarce resources are allocated.

The hon. Member for Sevenoaks (Mr. Fallon) mentioned the national assets register, which is connected with resource accounting and budgeting. The Government have not taken the opportunity provided by the register to try to allocate our capital resources more effectively before the Bill is introduced. They could have disposed of more assets and reinvested the proceeds into our public sector stock. It is a shame that they have not done so.

A second major advantage of resource accounting and budgeting is that it will link the spending authorised by the House to objectives, outcomes and outputs. That is a major and highly welcome change, at the cutting edge of the reform of public sector finances. The question is one of sensible, rather than dishonest, accounting processes.

Most importantly, the Bill will improve the House's ability to hold the Executive to account. For a long time, the House has lacked the information necessary to scrutinise departmental budgets. The Bill will provide four additional schedules of information, so that the House will be able to inspect a proper balance sheet, and a proper statement of profit and loss.

Conservative Members shake their heads and deny that that is so, but that is not good enough. If they had introduced the same proposals on a fast track when they were in power, we would by now be able to have decent debates about the public accounts. I am sure that a close inspection of the accounts of the Tory Government would have revealed not only dishonest, but some incredibly creative, accounting practices.

I said in my opening remarks that this was a timid Queen's Speech, particularly with regard to spending and aspects of public service reform and investment, apart from the accounting side. The Government have a huge majority; they have a huge lead in the opinion polls; they have a massive amount of money in the Exchequer, and they have huge surpluses. Yet, with all their political, economic and financial strength, they are still extremely cautious. They have not provided a vision for investing in our public services.

The Chancellor seems to take great pride in prudence, but it is not a big step from Miss Prudence to Scrooge. The sort of prudence that leaves our public sector under-invested is actually financial irresponsibility, which stores up social, environmental and political costs for the future.

Previous Labour Chancellors have frequently not had enough money in the coffers. In the 1970s, for example, Lord Healey had to ask the International Monetary Fund for help in sorting out the Government's finances. Some Chancellors have looked desperately for ways in which to cut public expenditure. The Government have £9.5 billion in surpluses in this financial year; they will have £11 billion in the next financial year and £13 billion in the financial year after that. On current figures, there is clearly enough money in the kitty, and that does not even take into account the huge contingency reserves that are, quite rightly, included in the accounts.

Various City commentators believe that the current surpluses are based on very cautious projections of growth. The chief economist of CCF-Charterhouse, Richard Jeffrey, was quoted in the Financial Times as saying: Undoubtedly for political reasons, the probable budget surpluses over the next 2 years have been underestimated by at least £5 billion a year". If we had proper forecasts based on realistic forecasts of growth, the surpluses would be even larger.

The Chancellor has a huge war chest at his disposal. The question is, when should he spend some of it? Should it be in this financial year or in the next financial year, or should he leave it until the Budget before the general election? Thinking about timing makes me think about the needs that I see across the country, in the capital and in my constituency. Many people believe that Kingston, the London borough that I represent, is very affluent. While some areas may be, it is not homogenously affluent—we have pockets of severe deprivation. More importantly, from the Government's perspective, Kingston's hospitals, schools and police force are in great need.

London's housing price boom, which has been mentioned by several hon. Members, presents real problems for people working in the public services in the capital, because it is pricing them out of working in the public sector. They have been expensively trained to work in the public sector; they have been to university, gaining detailed qualifications at the taxpayers' expense over a number of years, but they can no longer afford to work in the public services, particularly in London.

The chief executive of Kingston hospital was having such problems recruiting nurses that he had to spend a special team to the Philippines to recruit nurses there. The Government say that they are against recruiting nurses from abroad, but if they do not tackle the problems of public sector pay in London and in my constituency, the chief executive of Kingston hospital will have to repeat that process to plug the gaps in his nursing staff.

The nurses from the Philippines are well qualified; they have been integrated into Kingston hospital, and are very caring, but they are on two-year contracts and will, at the end of their term, return to the Philippines, to be replaced by other recruits from the Philippines or from somewhere else. That is not a sustainable way to run a health service.

When I knock on doors in my constituency, I meet ladies and gentleman who were trained to work as nurses—indeed, as senior nurses. They would like to work in the health service, but can earn more working in offices and supermarkets. That is ludicrous.

Under the previous Government, the number of police officers in Kingston was reduced by more than 40 and, under this Government, it has been reduced by more than 20. The Commissioner of Police of the Metropolis is having real problems recruiting officers. He says that the youngest constables have to survive on housing benefit because of the high rents and house prices in London. That is not sustainable.

High rents and house prices also cause problems for pensioners. In my constituency, pensioners face an increase in their council tax bills of £90 this year because of the Tory council. That wipes out their pension increases, but the Government have offered them 73p a week and told them to be grateful for it. That is ludicrous. It is no wonder we had an interruption earlier today. When the Secretary of State for the Environment, Transport and the Regions outlines the local government grant settlement tomorrow, I hope that he will take account of difficulties in the London boroughs where people face high costs and where it is difficult to recruit teachers. I hope that the grant settlement will allow the Metropolitan police service enough money to recruit officers and to pay them the wages that they need simply to survive in the capital.

The Queen's Speech lacked the vision required for a modern, high-quality public service. It lacked the vision required if we are to have the best education for our children and the best schools in the world. It failed to ensure that the United Kingdom would be prepared to take its proper place as an outward-looking economy at the heart of Europe. That is why the Liberal Democrats will vote against it.

8.36 pm

Mr. Christopher Leslie (Shipley)

The hon. Member for Kingston and Surbiton (Mr. Davey) must have heard a different Queen's Speech from the rest of us. Now that we have heard Liberal Democrat economic policy, there may be some consensus across the House. The hon. Gentleman suggested that it was bad that Government finances had gone into surplus, and that all the money— some sort of war chest—should instantly be spent. In fact, however, we can start to repay some of the national debt and to reduce the £26 billion consumed annually by debt service payments. That money can be used for investment, which is precisely the Government's strategy.

The recklessness and irresponsibility of the Liberal Democrats has already been demonstrated from their Front Bench by the hon. Member for Truro and St. Austell (Mr. Taylor). He told us his plans for a carbon tax, which would somehow offset the Liberal Democrat pledge to raise the personal income tax allowance to around £10,000. They want to spend more and more, but to cut the tax burden, too. How will they do that? And what on earth would the carbon tax mean? Would it be added to fuel duty? What sort of carbon are they talking about? [Interruption.] Clearly, the Liberals cannot take the heat as some of them are leaving the kitchen.

Mr. Davey

Does the hon. Gentleman know that carbon is an element and that there is only one sort?

Mr. Leslie

If the hon. Gentleman wishes to be pedantic, he might explain which form of carbon he would tax. Will it relate to fuel duty, or to diesel? Will it affect electricity? Will it be across the board? People deserve to know what the Liberal Democrats mean to do.

Mr. Letwin

I thought at first that the hon. Gentleman was merely having fun, but as he is serious, let me explain the difference between the carbon tax and an energy tax. The former, although we do not propose it, is at least rational in that it taxes those whose emissions are environmentally dangerous, while the Government's proposed energy tax specifically fails to do so.

Mr.Leslie

Carbon dioxide and hot air may both fall under a tax, which would obviously mean a heavy levy on the Conservatives and the Liberal Democrats. It is interesting that the two parties have teamed up and that the Tories see the merit in Liberal policies.

It is a curious anomaly that the Conservatives have moved an amendment to the motion but that their Back Benches have remained empty throughout the evening. Tonight was their golden opportunity to criticise the Government and to set out the future of the nation as they see it. They have miserably failed to take that opportunity. At the 1997 election, the Tories tried to propagate through their "demon eyes" campaign the scare tactic that Labour should not be allowed to blow it. Not only has Labour not blown it, we have improved matters. We have shown convincingly that stability and confidence can be put in place by a sensible left-of-centre Government. I am proud of our stewardship, which has dispelled the myth that Labour Governments are imprudent and incautious.

It was interesting to read today the comments of the International Monetary Fund on how well the economy is performing. There is clearly a consensus internationally on how the Government and the Chancellor are managing the economy. I am pleased that we have been able to put firm foundations in place for the future.

I come to the progress of our monetary policy. The Monetary Policy Committee and the independence of the Bank of England have enabled us to create a safer and more transparent way of setting interest rates that is free from the political dogma and the whims of the partisan Conservative party. In October 1998, the right hon. Member for Horsham (Mr. Maude), the shadow Chancellor, said: We would not have given up control of interest rates in the first place. Therefore, we can all assume that, should the prospect of the Conservatives returning to government ever materialise—on the form that has been apparent this week, that is a distant prospect—they would reverse the Bank of England's independence. In the absence of any other policy from them, we wait to hear whether that is so. We need to contrast the stability that has been set in train by this Government and the stop-go economics that the Conservatives would restart.

Fiscal policy is the other side of the equation, so we must also examine the Chancellor's policies not just for expenditure, but for taxation and public borrowing. As I said earlier, an enormous amount is wasted each year—£26 billion—to finance past borrowing. We should try to reclaim that money by beginning to pay off the national debt. That is the sensible way of managing our budget.

The "Haguenomics" theories of the Conservatives have created a credibility gap. Somehow, they believe that they can have a golden rule on borrowing, which will create a balanced budget—they have taken a copy of the Gramm-Rudman amendment from the United States—along with a tax guarantee stating that the proportion of the gross national product going on public expenditure should constantly decrease. What on earth will they cut to achieve that?

We have heard this afternoon that the shadow Chancellor once said that he wanted public expenditure to be reduced to about 25 per cent. of gross national product. That presages a variety of worries for many people—and not only in health and education, but in other policy areas.

Mr. Letwin

Does the hon. Gentleman recollect from his school days the power of compound arithmetic? Does he accept that, if public spending grew by one percentage point less than gross domestic product each year for 15 years, we would achieve exactly that result?

Mr. Leslie

I shall not talk about my school days, because they are obviously very distant. However, what is the effect of a downturn on public expenditure? If a downturn ever occurred, the shadow Chancellor's pledge would mean that he would be forced to scale back on public expenditure much more harshly than would otherwise be the case. In a downturn, expenditure would be needed on the jobseeker's allowance and other welfare payments—unless, of course, the Conservatives plan to cut the jobseeker's allowance. We have to consider the possibility that they would slash such benefits. We have heard that the working families tax credit would go over the edge, but we should ask about other things, too.

The Conservatives say that we are being reckless and irresponsible on social security spending. Are they referring to the £100 winter allowance for pensioners? I assume that they are. What about the significant increases in child benefit? Such payments come under social security expenditure. Are those the areas of expenditure that Conservatives think should be cut? Do they think that such priorities should not be funded? Many people would like to know. I would be happy to give way for a Conservative Member to make a commitment on such matters. I do not think that they will; that is the problem with the Conservatives these days.

If I were not a Labour Member, I would start to feel sorry for the Conservatives. They have a long way to go. I do not know how old I will be by the time that there is another Conservative Administration. I could well be in my fifties or sixties; I might even qualify for a free television licence as an over-75-year-old. I suspect that the shadow Chancellor would not be in post for very much longer, in the unlikely eventuality of Michael Portillo winning the Kensington and Chelsea by-election. It will be interesting to see how swiftly he progresses to the Front Bench and exactly whose job he will take. There will probably be much nervousness on the Conservative Front Bench. [Interruption.] I am sure that the hon. Member for East Worthing and Shoreham (Mr. Loughton) will not be laughing on behalf of the leader of his party.

We must scrutinise exactly what the Conservatives threaten and what risks they would create in many other areas, too. The hon. Member for Rochford and Southend, East (Sir T. Taylor), who is admittedly on the extreme edge of the Conservative party—his comment is none the less a hint for the future—talked of ridiculous farming subsidies.

Mr. Loughton

It might be useful to the House if the hon. Gentleman remembered that we are debating his Government's Queen's Speech and not the Conservative party's.

Mr. Leslie

I am addressing the Opposition amendment. I am trying my best to draw dividing lines between Government policy and what the Opposition oppose and propose.

Farming subsidies are very important. When, for some reason, I was watching "Dimbleby" one Sunday about two weeks ago, I noticed that the shadow Chancellor said: Investment in industry is something Governments should not be doing anyway. We must presume that that refers to farming subsidies and all sorts of arrangements that support industry.

Kali Mountford

Research and development?

Mr. Leslie

As my hon. Friend suggests, that could include research and development.

Had the Government not created today's financial climate, we would not be able to afford some of the major capital investment and infrastructure improvements that are coming on line, not only in my constituency but elsewhere. Those are the issues about which people are concerned.

Let us consider Conservative attacks on the burdens on business and regulation. When one asks what they are, one is of course told of the working families tax credit and the minimum wage—and even the Financial Services Authority, which has been criticised in this debate. It will be interesting to see what position Conservative Members take on that. We need to know the areas in which the Conservatives are proposing to scrap, keep or amend policies. Answers and further explanations are required.

In my constituency, only 1,500 people are out of work and claiming benefit. The figure has reduced significantly since the election. The savings of my constituents, especially pensioners, are a lot safer thanks to continually low inflation. Economic growth is gradually and steadily benefiting many people and prosperity is increasing. That is in enormous contrast to where we would be under the Conservatives, who have lurched to the right. They would create risks, particularly threatening vital public services—should they ever get their hands on power again.

8.49 pm

Mr. Edward Garnier (Harborough)

Following the hon. Member for Shipley (Mr. Leslie), I wonder whether his mother knows that he is up this late. I am sure that the Government Whips do, because it is they who have enabled him to read out that fascinating speech. There are some speeches that those in the Whips Office do not need to read in Hansard the next day because they have read them beforehand.

However, there are other speeches that those in the Government either will have listened to, or will read tomorrow, with interest, and they were made by two Labour Members from the north-east—the hon. Members for Blyth Valley (Mr. Campbell) and for Newcastle upon Tyne, North (Mr. Henderson). From those two we heard the voice of sceptical Labour, uncontrollable Labour—a voice that the Government should listen to as they continue their Teflon march to the end of the debate on the Queen's Speech.

I usually approach economic debates with considerable diffidence, especially in the presence of people such as my hon. Friend the Member for West Dorset (Mr. Letwin), who has spent both his academic and his professional life studying economics in some depth. However, today I have been emboldened by the performance of the Chancellor of the Exchequer. I use the word "performance" because, if he fails to impress the Prime Minister as a leading politician in the Labour Government, the right hon. Gentleman has a good career ahead of him on the stage—but I am not sure from which end of the pantomime cow his speech came.

That speech was a classic of its sort, and I trust that the right hon. Gentleman will repent it before long, because it failed to address any of the points made either by my right hon. Friend the shadow Chancellor or in any of the interventions. Worse than that, the Chancellor must have been suffering from some form of physical, if not mental, exhaustion, because he kept having to sit down, perhaps to have a little rest, from time to time. I was sufficiently puzzled to think that he had given up speaking, and I began to address the House myself—but the right hon. Gentleman recovered himself and managed to complete his speech, such as it was. I then had to wait from about 3.30 until now to make my short contribution.

I shall concentrate particularly on the part of my right hon. Friend's amendment to the Loyal Address that mentions the huge rise in burdens on business and the absence of proposals to reverse the decline in Britain's productivity growth". I regret the fact that, despite his sometimes amusing performance, the Chancellor failed to deal with those criticisms and let down his office, if not himself. In his jokey performance, we saw a man more impressed by gimmicks and theatricality than by substance. He is a man of huge intellectual ability and political success, but he disappointed us all this afternoon. In particular, he disappointed his two hon. Friends from the north-east, whom I mentioned earlier.

Over the past few months, in the pre-Budget statement and in the right hon. Gentleman's speech today, as well as in what his supporters have said, we have heard a series of gimmicky statements that reflect the gimmicky business tax reductions that the Government have been pleased to shower upon us.

Those tax reductions are reduced to total insignificance in comparison with the £30 billion-worth of tax increases on business that the Government have already announced. Although I say that they have "announced" those increases, they have not, of course, stood up in the House of Commons and said up front, "Here we are, business community, here's £30 billion in increased charges that you will have to pay." No, they sneaked the increases in through the back door.

Ms Ruth Kelly (Bolton, West)

Will the hon. and learned Gentleman give way?

Mr. Garnier

I would love to, but unfortunately, owing to the 15-minute deadline—

Mr. Leslie

Injury time?

Mr. Garnier

I do not wish to be injured by the hon. Lady. However, there is a 15-minute limit; she undoubtedly has ready a speech that the Whips passed to her earlier, and I know that she will read it out most capably in due course. If she would like to respond to what I have to say during her 15 minutes, I am sure that the House would be pleased. It is—[Interruption.] No doubt the Leader of the House, who is chattering from a sedentary position, will give the hon. Lady full praise—

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett)

I would be happy to intervene, but I understood that the hon. and learned Gentleman was not giving way.

Mr. Garnier

If the right hon. Lady would have the courtesy to listen to the end of my sentence, she would perhaps understand that she leapt to her very dainty feet rather too early. I invite her to resume her seat. She will have an opportunity to reply on behalf of the Government to the criticisms made of their economic policies by my right hon. Friends the Members for Horsham (Mr. Maude) and for North-West Hampshire (Sir G. Young). I suggest that she has a difficult task ahead of her. None the less, that is what she is paid for.

I draw to the attention of the House the Government's failure to understand the difficulties in which they have placed the business community, and especially the small business community, which is in trouble. I cite the example of my constituency which, like that of my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley), is based upon an ancient market town with a population of between 20,000 and 25,000. It is the hub of a rural and agricultural hinterland and, in the town and in some of the villages and other larger communities, including the area called Oadby and Wigston, are to be found small family businesses. I suggest that none of them will have a turnover of much more than £500,000.

We do not have the big industries that are prevalent in the north-east, such as coal, steel or shipbuilding, which the hon. Members for Blyth Valley and for Newcastle upon Tyne, North were keen to tell us about. As I say, there are small family businesses that are reeling under the imposition of regulations and business burdens that have been placed upon their shoulders by the Government. That is in addition to the interest rate rises and exchange rate problems with which they have to deal.

Light engineers, shoe manufacturers and the firms that make parts that go into shoes and the products that form parts of other products, such as clothing, are—I have conducted a survey to establish this—suffering from an excess of regulation and interfering fussiness from the Government, which inhibits them from getting on with what they want to do, which is to expand, to employ more people, to export outside the United Kingdom and to export within the east midlands and the greater United Kingdom. Nothing that the Government are doing is assisting them.

I complain also about the Government's failure to do anything positive to support the business culture. They only listen to their own rhetoric. They are slack on innovation and they are failing to introduce procedures and a culture that will allow small start-up industries, especially in information technology. We have had exchanges about IR35, and I regret that interventions from Labour Members have been deeply unconvincing. We have heard nothing intelligent from the Government that would produce a climate of innovation. We shall be the poorer for that, and our constituents and their businesses will be the worse. In other countries, especially the United States, the culture of innovation and the culture that allows people to spend huge sums on research and development are not encouraged by the Government.

Kali Mountford

Will the hon. and learned Gentleman give way?

Mr. Garnier

I have already expressed regret that I could not give way to the hon. Member for Bolton, West (Ms Kelly). I repeat my regrets to the hon. Member for Colne Valley (Kali Mountford), who had 15 minutes earlier to educate us.

In respect of training and education, the promotion of young and new businesses, and the promotion of enterprise zones in the sense mentioned by the hon. Member for Newcastle upon Tyne, North, the Government have produced a catalogue of failure. Businesses need to be left alone to trade, to employ and to earn the money out of which the Government can take their due tithe in taxes. What is not needed is Mr. Whitehall sitting on the shoulder of the small company, telling it how to behave or what to do all the time. Small firms are desperate for the Government to get off their back.

I am acutely worried that, for all the Chancellor's talk about enterprise, he believes that he is cleverer and wiser than the market, and that that entitles him to intervene and interfere to a large extent to produce his desired micro-income. His so-called cleverness leads to damaging results for my constituents, for their small businesses, and for the economy of the country as a whole. While the Chancellor fiddles with the tax system, making it increasingly complex and difficult to understand, he has nerve to come to the Treasury Dispatch Box and announce that he is the friend of the business world.

The Queen's Speech contains an extraordinary paragraph, which states: As part of my Government's drive to address inappropriate and over-complex regulation, legislation will be introduced to increase the effectiveness of the power to remove regulatory burdens. My hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) mentioned the figures, which speak loudly for themselves of the huge increase in regulations and secondary legislation that bear down on the ability of our constituents to earn a living and benefit the country.

I do not know what measures the Government propose to introduce to increase the effectiveness of the power to remove regulatory burdens", but if the Government's current performance is anything to go by, that paragraph of the Gracious Speech is just part of the great Labour lie. It is high time that the public were treated—

Mrs. Beckett

Speaking of lines handed out by the Whips Office.

Mr. Garnier

I have a copy of the Queen's Speech, which was written by the right hon. Lady's Government. I dare say that there may be the odd copy of it in the Government Whips Office, and the occasional Labour Member may have the independence of mind to disagree with the hot air and guff that Her Majesty was required to read out on behalf of her Government.

The paragraph that I quoted sows the seeds of despair in me and in all those who wish the Government well in so far as they are the Government of our country, but who are desperately concerned that the Government's proposals are calculated to cause increased damage to our economy, and particularly to those parts of the economy in which small businesses try to earn a living.

9.3 pm

Ms Ruth Kelly (Bolton, West)

It is my privilege to speak in the debate on the Queen's Speech relating to the economy. I welcome the Gracious Speech, in particular the commitment to enterprise and fairness, high levels of economic growth and employment. The Government's central objective is to deliver high and stable levels of economic growth and of employment.

The Government have a clear strategy. The hon. Member for Kingston and Surbiton (Mr. Davey) accused the Government of not having a clear vision. Of all Governments since the second world war, this is the Government with the clearest vision of how they will take the economy forward. They have a clear strategy to help people back into work, with a new deal tailored to help individuals with particular difficulties, and to make work pay, with the introduction of the minimum wage, cuts in income tax and the introduction of the working families tax credit. Central to all of that is the prudent management of the public finances, to ensure that there is no return to the days of boom and bust that we experienced under the Tories.

The Gracious Speech entrenches economic stability as the platform for growth and employment. The economy's success has indeed been remarkable. I took the precaution of reading some comments on my right hon. Friend the Chancellor's latest pre-Budget statement, all of which were favourable. One eminent commentator, Martin Wolf, who can hardly be described as a keen Labour supporter, referring to economic stability, said: Mr. Brown can now treat this not just as an aim but as an achievement…Despite the global turbulence of the past few years, the performance of the economy, the public finances and the monetary policy committee he established in the Bank of England has been outstanding. The reason the UK has experienced only a modest slowdown in growth rather than another full-blown recession is the outstanding control over inflation". He went on to say that the most important factor was the independence of the Bank of England—a clear strategic success in policy making.

The success in controlling inflation can be seen not only in the headline inflation rate, but in people's expectations for inflation over the coming years. For the past two years—almost since the general election—inflation expectations have been within 2 or 3 per cent. a year, well within what one would expect the margin of error to be. The differential between UK and German long-term interest rates is also at a historically low level and, as set out in the Gracious Speech, long-term interest rates are at their lowest level for almost 30 years.

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) referred to the composition of the Monetary Policy Committee, but I disagree with him that its make-up is a problem. It is necessary to have the best possible expertise on that committee, with the highest quality of debate and the widest information available to the members of that committee, and that is what we have at the moment. The standard of debate in that committee has leapt since the days before the Bank's independence, and that is reflected in its success.

It is the role of the Bank's court to ensure that regional information is fully incorporated into the analysis of the members of the MPC. From my experience, the Bank is open to regional information and takes considerable care in incorporating different views from around the country. It has a network of bank agents, which it has developed considerably during the past two years, whose specific role is to listen to businesses and economic actors, and to ensure that their expectations of price changes and their behavioural changes are incorporated into the Bank's forecast and analysis of information.

The other major strategic policy success has been the fiscal rules—the golden rule, which is complete common sense, that one should spend no more in any given year on current outgoings than one receives in current income, and the second rule that borrowing for investment should be kept at a reasonably credible and stable level during the economic cycle.

The current budget is now forecast to be in surplus to the tune of £9.5 billion this year, up from the £2 billion forecast at the time of the last Budget, and to remain at about 1 per cent. of GDP until 2003–04.

Perhaps the most remarkable fact about last year, however, is that the economy has continued to grow, despite all the dire forecasts of recession and the Opposition's scaremongering. I look back now with incredulity to predictions made by the shadow Chancellor who, in August 1998, said, "The outlook is bleak"; in September 1998, what I do know is that the downturn will turn out to be longer and deeper than it need have been"; and in October of the same year in his conference speech: This is a downturn made in Downing Street. I wonder whether he regrets those words now. Perhaps, at the time, he was genuinely trying to make political capital in the only way he knew how—by talking down the economy. Last year, he accused the Chancellor of fantasy forecasting and Peter Pan economics—now we know which party lives in never-never land.

The Conservative party could not accept Bank of England independence and the tough new fiscal rules. It could not accept that those policies would create the economic stability that now exists. We still do not know whether it would keep or abolish Bank of England independence, the tough new fiscal rules, the minimum wage or the working families tax credit. From time to time, we are accused of introducing stealth taxes to rectify the macro-economic disaster that the Tories bequeathed us, but the Conservatives have stealth policies.

Kali Mountford

I thank my hon. Friend for giving way before she moves on from stability. I am conscious of the fact that she is an expert on the economy. If we change the policies that she described, especially that of keeping to the golden rules, does she believe that we will return to the so-called dynamism that existed under the previous Government, with its attendant job losses in steel, coal and textiles in my constituency; or does she, like me, advocate stability that encourages long-term investment?

Ms Kelly

My hon. Friend makes an excellent point. If we abolished Bank of England independence and the tough new fiscal rules, we would return to the boom-and-bust policies of 18 years of Tory rule. No one in this country wants that. The Chancellor knows exactly where he is heading, not only through his prudent economic stewardship but through the Government's remarkable economic ambitions for this country and its people.

I shall respond in my own speech to the charges of increased taxation that the hon. and learned Member for Harborough (Mr. Garnier) made although he did not allow me to answer through intervention on his speech. I compared the figures for taxation under the Government with the Conservative Government's plans. As anyone can verify, the burden of taxation is less under this Government than it would be under Conservative plans.

Mr. Page

So we are responsible?

Ms Kelly

Yes.

Ms Keeble

Does my hon. Friend agree that the average household will be £380 a year better off as a result of the last Budget and that the direct tax rate for a typical family is at its lowest for 25 years?

Ms Kelly

That is an excellent point, which I shall develop later. First, I want to consider the Chancellor's ambition of increasing productivity. He supports raising productivity to give everyone the opportunity to work and to ensure fairness. Productivity must be increased to create fairness and to promote enterprise.

Between 1950 and 1996, productivity growth in Britain was only 2.6 per cent. a year compared with 3.7 per cent. in France and 3.9 per cent. in Germany. If we can increase productivity, we can bridge the gap with our competitors, create high employment and raise living standards. One method of achieving that is to increase employability and skills.

I especially welcome the new deal for the over-25s, which ensures that everyone who is out of work receives active, tailored advice to gain the skills and experience that they need to get back to work. Such support chimes in completely with the modern, dynamic labour market, which is being transformed by information technology. In that market, people change jobs more often and skills are at a premium.

A year ago, I made a rather forlorn trip to a factory in my constituency to visit the managing director of Horwich Sewing, who had told me that his company had found it impossible to continue in the constituency. It was to move to eastern Europe because he did not see a future in the sewing industry in my part of the world. The visit was pretty depressing and there was nothing that I could do to change his mind, but the story soon reversed.

Recently, I accompanied my hon. Friend the Minister for Competitiveness on a visit to a brand new factory located on the same site in my constituency. It, too, is a textile factory, but it is not a low-skill operation—it is high tech and high skill and relies on new polymer technology. Within three years, it had transformed its turnover from slightly more than £1 million to £12.5 million, which is more than a tenfold increase; but the success of the company is not only about technology—it is about people. Its culture is people centred and all its staff are members of the company so they share in its risks, rewards, hopes and fears. We have to replicate that success right across the country. We have to turn Britain into an entrepreneurial society, unleashing creativity and enabling people to take their destinies into their own hands.

A recent survey in Lloyd's "Economic Bulletin" showed that only one in 30 people in Britain want to start their own business compared with one in 12 in the United States. We have to change that. We have to reach into the poorest communities to tap the potential of all our people and offer them opportunities that, until now, have been the preserve of the few rather than the many. The economic future of our country demands an investment in its people, their skills and their ideas. That is the only way that we can hope to compete in a globalised economy and it is also a demand of social justice. That is why I welcome the commitment to turn Britain into a dynamic, knowledge-based economy. I welcome in particular the new scholarships for dynamic business men and women in the poorest and most deprived neighbourhoods in our country, which will offer them the opportunity to learn new skills; the lessons in entrepreneurship in schools; and the new regional venture capital funds.

Many hon. Members have mentioned the divide between the different regions in this country. My constituents will not become better off through poor macro-economic management, however. They will be helped only if we can unleash entrepreneurial activity and their entrepreneurial potential, and give them the opportunities that they deserve.

One of the most important economic ambitions set out by the Chancellor is the end to child poverty. By next April, child benefit for the first child will be £15 and, for the typical family, child benefit and the children's tax credit will be £23. With tax cuts, the tax burden for the average family will be cut to its lowest level for 25 years. That is an honourable ambition in the best tradition of the Labour party. Enterprise and fairness to families and children must go hand in hand; if they do not, our whole society will suffer. We have made a start by moving towards enterprise and fairness. The Government have rejected the boom and bust of the Conservative party, taken the politics out of setting interest rates by giving independence to the Bank of England, cut the deficit and put the public finances back into good shape. We are taking strides towards a full-employment economy, making work pay and investing in our people and their ideas. I welcome the Gracious Speech most wholeheartedly.

9.19 pm

Sir George Young (North-West Hampshire)

Let me begin by saying a word or two about the high-quality debate that we have had. I shall then put it in the broader context of the debates that we have had over the past week.

Not even his most ardent supporter could assert that the Chancellor's speech was one of his finest. He seemed to be in a particularly bad mood this afternoon, but he gave my party advance notice of the line of attack that the Labour party will deploy against us at the next election. It struck me as rather implausible, but we are grateful for the notice of where Labour will be coming from. Like the Prime Minister at Question Time, he was struggling to deny that taxes are rising under the Labour Government.

The Chancellor was followed by the hon. Member for Truro and St. Austell (Mr. Taylor), who identified some rather worrying factors in the economy that the Chancellor had overlooked, such as the high pound and its impact on exports and manufacturing industry, higher house prices, which have been in the news today, and the north-south divide, which was a theme running through the debate. Along with other Liberal Democrat Members, he developed the war chest theory of politics. That is obviously a convenient theory for the Liberal Democrats, because they can feel free to spend it. They contrasted the sums that they alleged were accruing in the war chest with the problems of delivery that confront the Government on health and education.

We listened with respect, as we always do, to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who made a similar speech to the one that he made in the same debate last year. He continues to be worried about the high interest rates set by the Monetary Policy Committee, and their impact on employment in his constituency. He made an interesting comment about hypothecation. That issue is worth a serious debate on its own. If hypothecation is to re-enter the public accounts, we should have a debate along the lines suggested by the right hon. Gentleman. What are the ground rules? How do we deal with the point raised by my right hon. Friend the Member for South Norfolk (Mr. MacGregor)? What would the baseline have been before the hypothecated stream of revenue came in? The right hon. Member for Ashton-under-Lyne was right to put down a marker about hypothecation, and we should look into that issue again on a different occasion. He made, as he always does, an eloquent case for immediate entry into EMU.

My right hon. Friend the Member for South Norfolk asked for a Government statement on a pesticide tax. That is of concern to farmers, and would have a serious impact on agriculture. He asked for a clear answer, and I hope that he will receive one when the Leader of the House winds up the debate.

My right hon. Friend rightly said that the pig industry was on its knees, and made the case for some short-term, targeted assistance to help with the welfare and other costs borne by farmers in this country but not by some of our competitors. He raised a serious issue about savings, which also needs a debate on its own. He drew attention to the worrying decline in the propensity to save, and identified some of the reasons for that, such as the change from PEPs and TESSAs to ISAs and some of the Government statements that may have undermined confidence in the pensions industry. He introduced the House to Mr. FRED20—an important character who is doing some seriously damaging work in the City of London.

I listened with interest to the right hon. Member for Llanelli (Mr. Davies). I congratulate him on the research that he has undertaken to identify the origins of the third way. He went all the way back to 1944. He made an old Labour speech, and it was none the worse for that. He was concerned that the Chancellor would be trapped by his own rules and prevented from doing the things that his party wants to see done. He outlined some of the problems of delivery that a number of hon. Members have mentioned during the debate.

My hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) reminded us of the wisdom of my right hon. Friend the Member for South Norfolk in getting an opt-out. He made a trenchant speech about the common agricultural policy, and about the Financial Services Authority and some of the risks of tax harmonisation.

I listened with interest to the right hon. Member for Camberwell and Peckham (Ms Harman), who referred to the research that she had commissioned on the impact on children of young mothers returning to work. She identified that what they really wanted was choice. She went on to say that the other side of the coin of choice for the mother was a regulatory burden on businesses. She made the case for assisting businesses with some of the additional burdens that have been placed on them. She asked for a new deal for families, which sounded to me like a new headache for the Chief Secretary, as it had one or two pound signs attached to it.

My hon. Friend the Member for South-West Hertfordshire (Mr. Page) spoke about the importance of productivity. That issue was not mentioned much during the debate, except by the hon. Member for Bolton, West (Ms Kelly), but it is clearly an important factor. My hon. Friend also spoke about the Post Office. I am sure that he will want to serve on the Standing Committee considering that Bill. It would be a tragedy if his great knowledge of the Post Office was denied to the Committee.

The right hon. Member for Coatbridge and Chryston (Mr. Clarke) spoke about the importance of assisting the third world. It was right that there was at least one speech in this debate on the economy that focused on assistance to the third world. It was a good speech on the same theme as his contribution in the Queen's Speech debate last year, but it was particularly timely as we move towards the WTO meeting in Seattle shortly.

The hon. Member for North Cornwall (Mr. Tyler) asked where all the radicals had gone, and said that parts of the Queen's Speech appeal to Labour's vested interests without facing up to some of the real issues confronting the countryside. The decline of the rural economy is not addressed by attacking those who hunt foxes.

We enjoyed what I believe was the first post-ministerial speech of the hon. Member for Newcastle upon Tyne, North (Mr. Henderson). He wrongly accused my party of being remote from business, and was full of praise for the Chancellor; but he also spoke of the need to tackle the regional imbalance, and identified specific problems in the north-east. In that regard, he was echoed by the hon. Member for Blyth Valley (Mr. Campbell), who made what I considered to be a rather effective speech—a blend of humour and statistics. He illustrated the north-south divide by telling us about his daughter, who has just bought a house in the south-east. He advocated regional interest rates, but then modestly asserted that they would not work. He said—I wrote it down at the time—that in his constituency people were on their knees, and that contrasted with the rosy picture of the national economy painted by the Chancellor.

The hon. Gentleman also asserted that his constituency was losing revenue support grant to the south. I found that deeply worrying, because I happen to represent a southern constituency. We have lost revenue support grant, but we were told that that was because it was going to the north. Perhaps the hon. Gentleman and I should form a joint deputation to the Treasury to find out exactly where the money has gone. Perhaps it has gone to the midlands.

My hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) said that tax was going up. He identified, and quantified, the impact of the stealth taxes; he then made some helpful suggestions about business rates. He made the point that they had a disproportionate impact on smaller businesses, and generously proffered an item that was in our last manifesto—now, sadly, surplus to requirements—that would redistribute the burden, moving it from small businesses to those best able to pay the extra costs.

The hon. Member for Northampton, North (Ms Keeble) made a speech which will, I am sure, be well received in her constituency, and also in the Whips Office. My hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) spoke of the Financial Services and Markets Bill, and also put the British economy in a broader international context. He pointed out that, in such a context, our growth rates are not that hot, and that growth in productivity is slowing down; he also made the point about the north-south divide.

Mr. Geraint Davies (Croydon, Central)

Will the right hon. Gentleman give way?

Sir George Young

With respect, I must point out that the hon. Gentleman has not been present for the bulk of the debate, unlike a number of other hon. Members.

The hon. Member for Colne Valley (Kali Mountford) made a brave speech in defence of IR35. I suspect that, as I speak, her speech is whistling around the internet, and that, when she reads her mail tomorrow, she may find that highly literate people have taken exception to some of what she said. She also criticised what my hon. Friend the Member for Havant (Mr. Willetts) had said about single mothers, asserting that it was all sticks and no carrots. She should be cautious: that sounds to me like exactly the sort of policy that her Government may shortly introduce.

Until that point, no one had really focused on the Government Resources and Accounts Bill, but then the hon. Member for Kingston and Surbiton (Mr. Davey) asserted—I wrote this down as well—that it was the most important measure to come before the House in the current Parliament. I am sure that it will be useful in reforming the national accounts and helping us to make sensible decisions about priorities, but I must say that I do not expect it to live up to the star billing that the hon. Gentleman gave it.

The hon. Member for Shipley (Mr. Leslie)—a patient man, who sat through virtually all the debate—tried to paint my party as an extremist party. That, I think, lacked credibility.

My hon. and learned Friend the Member for Harborough (Mr. Garnier) had tried to make his speech earlier. Fortunately for the House, he then had four hours in which to polish the speech, which focused on the regulatory burden imposed on firms in his constituency.

The hon. Member for Bolton, West (Ms Kelly) began with some remarks about the clearest vision of any Administration. She is too nice and too clever to be deceived by her own oratory. We all know that there is no clear vision at all; it is all done by focus groups, and it changes from week to week.

It now seems much longer than a week ago that the debate on the Loyal Address was launched from Cumbria. Since then, there have been 127 speeches from Members, including two high-quality maiden speeches—I heard the speech by the hon. Member for Hamilton, South (Mr. Tynan) last week.

If one analysed the speeches of Labour Members, however, loyalty would not be the adjective that sprang to mind. In what is probably the last full Queen's Speech of the Parliament, the Government must have hoped that Members would queue up to pronounce their full support for the programme. On the first day, 12 Labour Members spoke and five expressed concern about the proposals in the Queen's Speech. Over the week, three major Bills attracted significant dissent from Labour Back Benchers. The Minister who used to have Cabinet responsibility for the Freedom of Information Bill, the right hon. Member for South Shields (Dr. Clark), was one of many who criticised that proposed Bill, saying: We are not there yet."—[Official Report, 17 November 1999; Vol. 339, c. 40.] The Minister who had Cabinet responsibility for National Air Traffic Services, the right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang), disagrees with the Government about the proposed privatisation. He said: I have no doubt that many Labour Members are still trying to persuade Ministers not to privatise Britain's air traffic control. On the same say, the hon. Members for Keighley (Mrs. Cryer) and for Reading, West (Mr. Salter) expressed similar doubts. The Chairman of the Transport Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), also attacked the NATS proposals and said: It is not sensible to hand over air traffic control to a private company whatever its nationality".—[Official Report, 18 November 1999; Vol. 339, c. 151, 165.] Yesterday, the proposals on trial by jury were questioned by many Labour Members, having originally been opposed by the Home Secretary himself. On the first day of the debate on the Loyal Address, the hon. Member for St. Helens, South (Mr. Bermingham) went so far as to say: We are going to restrict the right to trial, and that is a matter that should cause concern to any person with libertarian feelings."—[Official Report, 17 November 1999; Vol. 339, c. 90.] He went on to oppose the withdrawal of benefits from offenders who breach community service orders.

I suspect that those doubts resemble an iceberg. For every two Labour Members who voice their doubts in public, another seven share them in private. Therefore, the Government's legislative programme will not be the unifying, inclusive one that they wanted. It will be contentious and divisive.

In her article in this week's edition of The House Magazine, entitled "A better Britain for all", the Leader of the House found space for many of the smaller Bills in the programme. The bigger ones were less lucky. The mode of trial Bill got but 12 words. Astonishingly, nowhere in the entire article is there any reference to the Freedom of Information Bill, one of the flagships, or to the proposals for NATS. The business manager in her may wish that those Bills were not proceeding, but they are.

The language of the Queen's Speech is perhaps more partisan than it has been. It resembles last year's in one respect: "modern" or "modernise", which appeared 12 times in last year's Queen's Speech, appear 10 times this year, although the institutions covered by the Governments' enthusiasm for reform has widened to include the United Nations.

The Queen's Speech is different from all earlier ones in two respects. First, it is the first Queen's Speech whose Bills will be scrutinised by the transitional House of Lords. Secondly, it is the first Queen's Speech since devolution. It is worth spending a moment reflecting on those two points, which have not been commented on before.

Reading The House Magazine for 27 September—the editor is just behind me—I read that Baroness Jay said that the interim House of Lords will be more legitimate, because its members have earned their places, and therefore more effective in playing its part in our bicameral institution. In The Parliamentary Monitor of November this year, she wrote that the House will be able to speak with more authority…a decision by the House not to support a proposal from the Government will carry more weight because it will have to include supporters from a range of political and independent opinions. So the Executive will be better held to account. Can the Leader of the House therefore confirm that she expects more amendments from the other place and that it will be more difficult simply to disregard them?

Earlier this month, the Government would have lost on one of Lord Ashley's amendments to the Welfare Reform and Pensions Bill without a single Conservative vote. The Government simply ignored it, but, if they assert that the new upper House is more legitimate, will they be able to disregard its views in the same cavalier way in the current Session? When the business managers decided to put 28 Bills in the Queen's Speech, had they considered that dimension, as well as the fact that, as I have said, Back-Bench Labour Members will need time to ventilate their own concerns about the programme?

Last Thursday, at business questions, I asked the Leader of the House if the Government would say which Bills in the Queen's Speech applied only to England and Wales, post-devolution. It was a highly relevant question, as an answer to it would show how the House of Commons has been changed by the Government's constitutional reforms. I hope that, in her reply to this debate, the right hon. Lady will say how many of the 28 Bills—my estimate is 18—do not apply to Scotland, but are effectively domestic Bills for England and Wales. The answer should illuminate the debate about those constitutional reforms—which Labour Members have been anxious to avoid, as they have no answer on the democratic deficit in this Chamber for English Members.

The Government's measures in the Queen's Speech amount to a hotch-potch of proposals with no discernible theme. They are beads with no string, with a substantial number of beads spilling all over the parliamentary floor. If the Government are able to mismanage a programme comprising 18 Bills, they are certainly able to mismanage a programme with 28 Bills.

For many of us, the shambles of the fag-end of the previous Session is still fresh in our memory—four guillotines in the last 10 days of the previous Session, and 820 amendments to the Greater London Authority Bill. However, far from learning the lessons of the end of the previous Session, the Government seem determined to repeat and to amplify their mistakes.

The Times of 18 November states: Government sources voiced confidence that the ambitious programme could be driven through, even though it is far bigger than in the previous two years. It seems certain that Ministers will use new powers to allow some Bills to be carried forward from one session to the next. I remind the Leader of the House that that can be done only by agreement. Perhaps she will also explain to the House what is meant by "driven through". Is not the truth that the only way in which the Government will be able to get all those Bills on the statute book is by over-reliance on the guillotine and curtailment of debate, with the consequence that legislation will be as shambolic as the Greater London Authority Bill was?

What about the clear breach of a manifesto commitment? One might have thought that a programme of 28 Bills in the third Queen's Speech of the Parliament would have had room for the commitment to hold a referendum on electoral reform for the Westminster Parliament. The Government have clearly breached one of their manifesto commitments.

The Queen's Speech does not help the Government with their problems of delivery. A consistent theme in today's debate, on both sides of the House, has been the gap between rhetoric and reality.

In North-West Hampshire, we are concerned about the report of the panel on Serplan—the so-called Crow report, which has been mentioned in the debate. Despite the rhetoric on protecting the environment, we are confronted with urban sprawl, linking Basingstoke to Winchester and on to Southampton—is that what Labour means by joined-up government?

This is meant to be the Government's year of delivery. We all know the syndrome: the goods are promised on a certain day, so one stays at home, waiting for the van to arrive. Nothing happens in the morning, so one rings at midday and is told that the driver is in the middle of his round and will be there shortly. At dusk, one begins to lose hope. When one rings up again, one is told that there has been an unexpected hold-up—which of course is not the company's fault—and that they hope to get there tomorrow. It is the same with the Government and their promises. The goods that were promised are not being delivered, and the customers are becoming impatient.

As with so much else with the Government, they say one thing but do another. We have the language of devolution, but the reality of central control. The Cabinet Office deregulation Bill is contradicted by the large amounts of red tape contained in other provisions. On the one hand, the Government introduce measures that virtually privatise air traffic control and the Post Office; yet, in the same programme, they seek to re-nationalise a part of Railtrack.

The Government's programme lacks common sense. Britain needs to give more power to communities and to families—to build a more secure society; to release Britain's potential; to protect Britain's integrity and independence; and to restore faith in politics. It is those priorities, not those of Labour, that are in line with the common-sense priorities of the British people.

The Queen's Speech is irrelevant to Britain's needs; inconsistent within itself; unpopular with many of the Government's own supporters; and wholly indigestible for Parliament. That is the bad news. The good news is that it is the last full programme from this Labour Government.

9.39 pm

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett)

It is customary when winding up on the final day of debate on the Queen's Speech for the Leader of the House to make some reference to House of Commons matters. Like the right hon. Member for North-West Hampshire (Sir G. Young), I should like to take this opportunity to congratulate my hon. Friends the Members for Wigan (Mr. Turner) and for Hamilton, South (Mr. Tynan), who made impressive first contributions. I should also like to highlight an important feature of our programme—this did not come out in the right hon. Gentleman's remarks—that shows how we are modernising and reforming the legislative process.

Five of the Bills in the speech have been published in draft and undergone some form of pre-legislative scrutiny. We have set the important precedent of carrying over the Financial Services and Markets Bill by agreement. The draft Bill received scrutiny from an ad hoc Joint Committee of Lords and Commons that was chaired by the former permanent secretary to the Treasury, Lord Burns, and included distinguished members of both Houses. It is an important, although highly technical and complex, measure and there can be no doubt that it has benefited from that practical and worthwhile extension of our methods of handling legislation.

Our local government legislation was also considered by a Joint Committee. The draft Freedom of Information Bill was examined by the Lords Delegated Legislation and Deregulation Committee, a Lords ad hoc Committee, and separately by the Commons Public Administration Committee, which took evidence from my right hon. Friend the Home Secretary, among others.

The limited liability partnership proposals have been examined by the Select Committee on Trade and Industry and our proposals for the railways, now subsumed into the transport Bill, were considered at an earlier stage by the Transport Sub-Committee.

That shows the development of how we are handling the House's work and casts light on the remarks of the right hon. Member for North-West Hampshire about the scope of our programme. Much of it has already been before the House. I strongly believe that continuing to expand the drafting programme, as we have made it clear that we shall do, is a much more efficient and effective way of preparing legislation and leads to the better use of one of the scarcest resources that we have—Members' time. It should also produce better legislation, as well as encouraging attention to be focused on our core necessities or priorities.

Today's debate offers a final opportunity to assess the overall shape of the Government's programme for the forthcoming parliamentary year. I assure the right hon. Member for North-West Hampshire that it is not the last of this Parliament. It is fitting that we have concentrated on the economy, because the Gracious Speech has to be seen and judged alongside my right hon. Friend the Chancellor's pre-Budget report of two weeks ago.

We began with a typically ungraceful contribution from the shadow Chancellor. I recognise that he is facing real problems. Apart from the fact that he knows that somebody is after his job, this time last year he prophesied economic doom and gloom. Fortunately for the country, he was wrong. This year, he made the same prophesy. He could see nothing good in the Government's handling of the economy and claimed that the business community felt the same. He spoke about our pre-election consultations, and he claimed to know what resulted from them and that the business community felt betrayed.

The first request of the business community was stability in economic management, together with increased investment in education and training and in Government support for research and development and a programme of investment in transport infrastructure. The business community recognises, even if the shadow Chancellor does not, that all of that is being delivered, as well as significant cuts in corporation tax, particularly for smaller businesses.

Unlike the right hon. Member for Horsham (Mr. Maude), the hon. Member for Truro and St. Austell (Mr. Taylor) welcomed the Government's handling of the public finances. Unfortunately, like his hon. Friends the Members for North Cornwall (Mr. Tyler) and for Kingston and Surbiton (Mr. Davey) later, he then reverted to type and called for far greater public expenditure without the faintest adequate explanation of how it would be funded.

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) spoke with enthusiasm about the need for Britain soon to join the euro, and was followed smartly by the hon. Member for Rochford and Southend, East (Sir T. Taylor), who disagreed with my right hon. Friend and with the right hon. Member for South Norfolk (Mr. MacGregor). The latter referred to many issues, including pesticides, an issue to which the right hon. Member for North-West Hampshire also referred.

Both right hon. Gentlemen said that they were seeking the Government's view. However, it was clear that the right hon. Member for South Norfolk knew the Government's view—indeed, he quoted the Government's observation that the matter was under consideration. He sought not the view of the Government, but a commitment not to pursue the matter. He knew the Government's view—he just wanted it to be different.

Mr. MacGregor

The point is that Government have simply said that they will have further discussions. Given the desperate state of agriculture, it would be so much better if the Government made their view known now.

Mrs. Beckett

I recognise that that is the view of the right hon. Gentleman. I simply say that he does know what the Government are saying on this matter, and he knows that it is being considered by my right hon. and hon. Friends.

The right hon. Member for South Norfolk highlighted the long-term impact of changes in pension provision, and he made a number of points about the contrast between defined benefit and money-purchase schemes. His concern about attitudes to pension provision would be shared by many hon. Members on both sides of the House.

Unfortunately, the right hon. Gentleman's concerns concentrated entirely on the last two years. He failed utterly to acknowledge that all the changes that he deplored flow directly from the approach and record of the Government in which he served. Nothing in the recent history of this country has done more to undermine sound pensions policy than the pensions mis-selling over which the Conservative party presided.

My right hon. Friend the Member for Camberwell and Peckham (Ms Harman) and my hon. Friend the Member for Colne Valley (Kali Mountford) spoke of the need—especially among women—to be able to exercise choice, and about how Government policy is promoting such an approach. My hon. Friends the Members for Newcastle upon Tyne, North (Mr. Henderson) and for Blyth Valley (Mr. Campbell) talked about the concerns in their areas, and both of them are well aware of how much the Government have done to try to tackle their concerns.

My right hon. Friends the Members for Llanelli (Mr. Davies) and for Coatbridge and Chryston (Mr. Clarke) applauded the goals of high and stable levels of employment, but both expressed some concerns—one about world poverty, and the other about the framework of fiscal and monetary policy. That framework, and its impact, was welcomed by my hon. Friend the Member for Bolton, West (Ms Kelly).

The shadow Chancellor, the Opposition amendment and the hon. Member for South-West Hertfordshire (Mr. Page) referred to the Government's "golden legacy—a legacy, they said, left by the Conservatives. Surprisingly, they seem to be unaware of a report published this morning by the IMF, which observed of the UK economy that this strong performance is in good part owing to the improved policy framework which has fostered sound monetary and fiscal policies and significant structural reforms. The report goes on to speak approvingly of the supply side measures taken by the Government, and of the potential of the new deal and the working families tax credit. Although we were unable to extract anything clear from the shadow Chancellor, we think that the Conservative party continues to oppose those measures.

The "golden legacy" to which the amendment refers was, of course, fool's gold, shielding the enormous debt built up as a result of the Conservatives' incompetence. As a result of our policies, we have been able to begin to repay the debt that their policies created and, in addition, to set out a huge programme of investment in public services—particularly in our top priorities of health and education. In the pre-Budget statement, taken alongside the Queen's Speech, my right hon. Friend the Chancellor has made it clear that he is now bringing forward further measures. Those measures will stimulate further action and support for enterprise. They will not sacrifice fairness, and measures such as the working families tax credit, free television licences for over-75s and the earnings link for the minimum income guarantee for pensioners will actually enhance it. That was recognised in a moving speech about her area by my hon. Friend the Member for Northampton, North (Ms Keeble).

A key purpose for the Government is to pursue the twin aims of enterprise and fairness side by side and to make them not separate but joint endeavours. As my right hon. Friend the Chancellor identified in his pre-Budget statement and my right hon. Friend the Prime Minister highlighted in the opening debate on the Queen's Speech, that is in recognition of the stark reality that, in the next century, those purposes must be inextricably intertwined, because the one cannot succeed without the other.

Successful pursuit of the knowledge economy requires us to develop and nurture the creativity, skill and talents not only of a lucky few—as Britain, especially under Conservative Governments, has so often done in the past—but of all our citizens. For example, the reshaping of post-16 education, itself long overdue, will make an important contribution to achieving that goal. We have taken a further step in the direction identified and pursued in the first two Queen's Speeches of this Parliament. We must not only invest in education but use that investment specifically to raise standards. That is equally long overdue.

Comment from Conservative Members, in this as in previous Queen's Speech debates, has typically missed that point altogether. There has been much contradiction in what they have said. They went straight from saying that there was nothing in the speech to bemoaning the fact that it contained too much.

The right hon. Member for Devizes (Mr. Ancram) said that the Government had "run out of steam" and the right hon. Members for Penrith and The Border (Mr. Maclean) and for Wokingham (Mr. Redwood) and the hon. Member for Lichfield (Mr. Fabricant) said respectively that the speech was "thin gruel", that it was "a thin speech" and that there was "nothing new" in our programme.

Within 24 hours, however, the shadow Leader of the House thought the speech substantial enough to be more than the House is able to chew"—[Official Report, 18 November 1999; Vol. 339, c. 118.] and the hon. Member for Poole (Mr. Syms) said: In the number of Bills they plan to introduce, the Government appear to have bitten off too much".—[Official Report, 19 November 1999; Vol. 339, c. 281.] From the outset, the comments of many Conservative Members have been inconsistent and indeed downright contradictory; so what else is new? Contradictory themes have run throughout their contributions, with calls for mutually incompatible tax cuts and spending increases on specific items in their constituencies.

There was a further example tonight when the shadow Leader of the House spoke about the attitudes that the transitional House of Lords might take and invited me to speculate on how we might handle such attitudes. During all the days when we discussed House of Lords reform, Conservative Members claimed that there could be no problem for a Labour Government in the transitional House of Lords because it would be packed with "Tony's cronies" and we would have a majority. The shadow Leader of the House betrays the fact that they took their criticisms with as little seriousness as we did—indeed, with as little seriousness as they merited.

There is still a reality gap between the world as Conservative Members see it and the real world of the British people. We had an insight into the illusions—or perhaps delusions—still afflicting Conservative Members in a throwaway line by the hon. Member for Southend, West (Mr. Amess) earlier in these debates. He added a new dimension to the Tory party's continual complaint that everything that the Government do—down to their sheer existence as a Government—is evidence of arrogance. He told us that to claim that Britain as the Tories left it in 1997 had any need to be modernised or reformed was in itself arrogant. That is an extraordinary judgment, and it was clearly not shared by the British people, or they would have seen no need for change.

I see that the new Tory slogan is that we now need a common-sense revolution. I fear that it would take a revolution to give today's Tory party any common sense. As we have seen in these debates, they still operate by knee-jerk reaction and still oppose unthinkingly whatever the Government suggest that they are going to do. The Tories opposed giving control of interest rates to the Bank of England; cuts in the VAT on fuel; the new deal; the national minimum wage; the working families tax credit; and the extra investment in health and education. Those are things that they are against, but we have tried to discern in these debates what it is that they are for.

Contributions from Tory Front Benchers have given us a bit of a clue. They are for privatisation of the Post Office; privatisation of the tube; privatisation of the welfare state; and privatisation of health care. What we have heard in these debates is not the common sense of the British people or anybody else: it is Tory party extremism run riot, without justification, restraint or sense—never mind common sense.

Common sense and, indeed, basic arithmetic are most conspicuously lacking in the Tories' proposals on public expenditure and the economy, where their record exposes their rhetoric. The British people have not forgotten that, in 1992, the Tories promised tax cuts and spending increases. Although they got away with it in the election, they were exposed when they could not deliver the reality and, as a result, they will never again be trusted on tax.

It has been fashionable in these debates, and recently in the media, to bewail what is seen as the lack of a single big idea. I find that odd and ridiculous. This Government have set themselves to achieve the long-sought transformation of our country so as to liberate the talents and support the endeavours of all its citizens, and, in the process, to use the fruits of those endeavours for the good of all. The pursuit of such a purpose demands action on a myriad of fronts. It cannot be pinned down to a single, all-transforming piece of legislation, or the outcome of a single Queen's Speech or even a single Budget. It calls for a series of separate, sometimes even disparate actions, undertaken over time in many different areas, without ever losing sight of that overarching and vital purpose.

To modernise Britain, as we seek to do, and to foster a vibrant and successful economy is the work, not of years, but of decades. To harness that prosperity to the relief of poverty is a worthy end in itself. As my hon. Friend the Member for Northampton, North pointed out, to harness it to the relief of child poverty is an especially worthy aim, although that will take time to achieve. Importantly, that can also contribute to our achieving our economic goals.

Our third Queen's Speech shows this Government to be clear about their goals, steadfast in purpose, and resolved on the steady and resolute pursuit of the policies required to reach those goals. I commend it to the House.

Question put, That the amendment be made:—

The House divided: Ayes 149, Noes 381.

Division No. 2]	[10 pm
AYES
Ainsworth, Peter (E Surrey)	Emery, Rt Hon Sir Peter
Amess, David	Evans, Nigel
Ancram, Rt Hon Michael	Faber, David
Arbuthnot, Rt Hon James	Fabricant, Michael
Atkinson, David (Bour'mth E)	Fallon, Michael
Atkinson, Peter (Hexham)	Flight, Howard
Baldry, Tony	Forsythe, Clifford
Beggs, Roy	Forth, Rt Hon Eric
Bercow, John	Fox, Dr Liam
Beresford, Sir Paul	Fraser, Christopher
Boswell, Tim	Gale, Roger
Brady, Graham	Garnier, Edward
Brooke, Rt Hon Peter	Gibb, Nick
Browning, Mrs Angela	Gill, Christopher
Bruce, Ian (S Dorset)	Gillan, Mrs Cheryl
Burns, Simon	Gorman, Mrs Teresa
Butterfill, John	Gray, James
Cash, William	Green, Damian
Chope, Christopher	Greenway, John
Clappison, James	Grieve, Dominic
Clark, Dr Michael (Rayleigh)	Gummer, Rt Hon John
Clifton-Brown, Geoffrey	Hamilton, Rt Hon Sir Archie
Collins, Tim	Hammond, Philip
Colvin, Michael	Hawkins, Nick
Cormack, Sir Patrick	Hayes, John
Cran, James	Heald, Oliver
Curry, Rt Hon David	Heath, Rt Hon Sir Edward
Davies, Quentin (Grantham)	Heathcoat-Amory, Rt Hon David
Davis, Rt Hon David (Haltemprice&Howden)	Heseltine, Rt Hon Michael
	Hogg, Rt Hon Douglas
Day, Stephen	Horam, John
Dorrell, Rt Hon Stephen	Howard, Rt Hon Michael
Duncan, Alan	Howarth, Gerald (Aldershot)
Duncan Smith, Iain	Hunter, Andrew

Jack, Rt Hon Michael	Robertson, laurence
Jackson, Robert (Wantage)	Roe, Mrs Marion (Broxbourne)
Jenkin, Bernard	Rowe, Andrew (Faversham)
Johnson Smith, Rt Hon Sir Geoffrey	Ruffley, David
	St Aubyn, Nick
Key, Robert	Sayeed, Jonathan
King, Rt Hon Tom (Bridgwater)	Shephard, Rt Hon Mrs Gillian
Kirkbride, Miss Julie	Smyth, Rev Martin (Belfast S)
Lait, Mrs Jacqui	Soames Nicholas
Lansley, Andrew	Spelman, Mrs Caroline
Leigh, Edward	Spicer, Sir Michael
Letwin, Oliver	Spring, Richard
Lewis, Dr Julian (New Forest E)	Stanley, Rt Hon Sir John
Lidington, David	Steen, Anthony
Lilley, Rt Hon Peter	Streetet, Gary
Lloyd, Rt Hon Sir Peter (Fareham)	Swayne, Desmond
Loughton, Tim	Syms, Robert
Luff, Peter	Tapsell, Sir Peter
Lyell, Rt Hon Sir Nicholas	Taylor, Ian (Esher&Walton)
MacGregor, Rt Hon John	Taylor, John M (Solihull)
McIntosh, Miss Anne	Taylor, Sir Teddy
MacKay, Rt Hon Andrew	Thompson, William
Maclean, Rt Hon David	Townend John
McLoughlin, Patrick	Tredinnick, David
Madel, Sir David	Trend Michael
Major, Rt Hon John	Tyrie, Andrew
Malins, Humfrey	Viggers, Peter
Maples, John	Wardle, Charles
Mates, Michael	Waterson, Nigel
Maude, Rt Hon Francis	Whitney Sir Raymond
Mawhinney, Rt Hon Sir Brian	Whittingdale John
May, Mrs Theresa	Widdecombe Rt Hon Miss Ann
Moss, Malcolm	Wilkinson John
Nicholls, Patrick	Willetts, David
Norman, Archie	Wilshire, David
O'Brien, Stephen (Eddisbury)	Winteron, Mrs Ann (Congleton)
Ottaway, Richard	Woodward Shaun
Page, Richard	Yeo, Tim
Paice, James	Young, Rt Hon Sir George
Paterson, Owen
Randall, John	Tellers for the Ayes:
Redwood, Rt Hon John	Mr. Keith Simpson and
Robathan, Andrew	Mrs. Eleanor Laing.
NOES
Adams, Mrs Irene (Paisley N)	Bradley, Peter (The Wrekin)
Ainger, Nick	Brake, Tom
Ainsworth, Robert (Cov'try NE)	Brand, Dr Peter
Alexander, Douglas	Breed, Colin
Allan, Richard	Brinton, Mrs Helen
Anderson, Janet (Rossendale)	Brown, Rt Hon Gordon (Dunfermline E)
Armstrong, Rt Hon Ms Hilary
Ashton, Joe	Brown, Rt Hon Nick (Newcastle E)
Atherton, Ms Candy	Brown, Russell (Dumfries)
Atkins, Charlotte	Burden, Richard
Austin, John	Burgon, Colin
Baker, Norman	Burnett, John
Ballard, Jackie	Burstow, Paul
Barnes, Harry	Butler, Mrs Christine
Bayley, Hugh	Cable, Dr Vincent
Beard, Nigel	Campbell, Alan (Tynemouth)
Beckett, Rt Hon Mrs Margaret	Campbell, Mrs Anne(C'bride)
Beth, Rt Hon A J	Campbell, Rt Hon Menzies (NE Fife)
Bell, Stuart (Middlesbrough)
Benton, Joe	Campbell, Ronnie(Blyth V)
Bermingham, Gerald	Campbell—Savours,Dale
Berry, Roger	Caplin, Ivor
Best, Harold	Casale, Roger
Betts, Clive	Caton, Martin
Blackman, Liz	Cawsey, Ian
Blears, Ms Hazel	Chapman, Ben (Wirral S)
Blizzard, Bob	Chaytor, David
Boateng, Rt Hon Paul	Chidgey, David
Borrow, David	Clapham, Michael
Bradley, Keith (Withington)	Clark, Rt Hon David(S Shields)

Clark, Dr Lynda (Edinburgh Pentlands)	Gorrie, Donald
	Griffiths, Jane (Reading E)
Clark, Paul (Gillingham)	Griffiths, Win (Bridgend)
Clarke, Charles (Norwich S)	Grogan, John
Clarke, Eric (Midlothian)	Gunnell, John
Clarke, Rt Hon Tom (Coatbridge)	Hall, Mike (Weaver Vale)
Clarke, Tony (Northampton S)	Hall, Patrick (Bedford)
Clelland, David	Hamilton, Fabian (Leeds NE)
Clwyd, Ann	Hancock, Mike
Coaker, Vernon	Hanson, David
Coffey, Ms Ann	Harman, Rt Hon Ms Harriet
Colman, Tony	Harris, Dr Evan
Connarty, Michael	Heal, Mrs Sylvia
Cook, Frank (Stockton N)	Healey, John
Corbett, Robin	Heath, David (Somerton&Frome)
Cotter, Brian	Henderson, Doug (Newcastle N)
Cousins, Jim	Henderson, Ivan (Harwich)
Cox, Tom	Hepburn, Stephen
Cranston, Ross	Heppell, John
Crausby, David	Hesford, Stephen
Cryer, Mrs Ann (Keighley)	Hewitt, Ms Patricia
Cryer, John (Hornchurch)	Hill, Keith
Cummings, John	Hinchliffe, David
Cunningham, Rt Hon Dr Jack (Copeland)	Hodge, Ms Margaret
	Hoey, Kate
Cunningham, Jim (Cov'try S)	Hope, Phil
Curtis-Thomas, Mrs Claire	Hopkins, Kelvin
Dalyell, Tam	Howells, Dr Kim
Darling, Rt Hon Alistair	Hoyle, Lindsay
Darvill, Keith	Hughes, Ms Beverley (Stretford)
Davey, Edward (Kingston)	Hughes, Kevin (Doncaster N)
Davey, Valerie (Bristol W)	Hughes, Simon (Southwark N)
Davies, Rt Hon Denzil (Llanelli)	Humble, Mrs Joan
Davies, Geraint (Croydon C)	Hurst, Alan
Davis, Terry (B'ham Hodge H)	Hutton, John
Dawson, Hilton	Iddon, Dr Brian
Dean, Mrs Janet	Illsley, Eric
Denham, John	Ingram, Rt Hon Adam
Dobbin, Jim	Jackson, Helen (Hillsborough)
Donohoe, Brian H	Jamieson, David
Doran, Frank	Jenkins, Brian
Dowd, Jim	Johnson, Alan (Hull W&Hessle)
Drew, David	Johnson, Miss Melanie (Welwyn Hatfield)
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)	Jones, Rt Hon Barry (Alyn)
Eagle, Maria (L'pool Garston)	Jones, Helen (Warrington N)
Edwards, Huw	Jones, Ms Jenny (Wolverh'ton SW)
Efford, Clive
Ellman, Mrs Louise	Jones, Jon Owen (Cardiff C)
Ennis, Jeff	Jones, Dr Lynne (Selly Oak)
Ewing, Mrs Margaret	Jones, Martyn (Clwyd S)
Fearn, Ronnie	Jones, Nigel (Cheltenham)
Field, Rt Hon Frank	Jowell, Rt Hon Ms Tessa
Fisher, Mark	Kaufman, Rt Hon Gerald
Fitzsimons, Lorna	Keeble, Ms Sally
Flint, Caroline	Keen, Alan (Feltham&Heston)
Flynn, Paul	Keen, Ann (Brentford&Isleworth)
Follett, Barbara	Keetch, Paul
Foster, Rt Hon Derek	Kelly, Ms Ruth
Foster, Don (Bath)	Kemp, Fraser
Foster, Michael Jabez (Hastings)	Kennedy, Rt Hon Charles (Ross Skye&Inverness W)
Foster, Michael J (Worcester)
Foulkes, George	Kennedy, Jane (Wavertree)
Fyfe, Maria	Khabra, Piara S
Galloway, George	Kidney, David
Gapes, Mike	Kilfoyle, Peter
Gardiner, Barry	King, Andy (Rugby&Kenilworth)
George, Andrew (St Ives)	Kirkwood, Archy
Gerrard, Neil	Kumar, Dr Ashok
Gibson, Dr Ian	Ladyman, Dr Stephen
Gilroy, Mrs Linda	Lawrence, Mrs Jackie
Godman, Dr Norman A	Laxton, Bob
Godsiff, Roger	Lepper, David
Goggins, Paul	Leslie, Christopher
Golding, Mrs Llin	Levitt, Tom
Gordon, Mrs. Eileen	Lewis, Ivan (Bury S)

Lewis, Terry (Worsley)	Prescott, Rt Hon John
Linton, Martin	Primarolo, Dawn
Livsey, Richard	Prosser, Gwyn
Lloyd, Tony (Manchester C)	Purchase, Ken
Llwyd, Elfyn	Quinn, Lawrie
Lock, David	Radice, Rt Hon Giles
Love, Andrew	Rammell, Bill
McCabe, Steve	Rapson, Syd
McCafferty, Ms Chris	Raynsford, Nick
McCafferty, Rt Hon Ian (Makerfield)	Reed, Andrew (Loughborough)
	Reid, Rt Hon Dr John (Hamilton N)
McDonagh, Siobhain	Rendel, David
Macdonald, Calum	Robinson, Geoffrey (Cov'try NW)
McDonnell, John	Roche, Mrs Barbara
McGuire, Mrs Anne	Rogers, Allan
McIsaac, Shona	Rooker, Jeff
McKenna, Mrs Rosemary	Rooney, Terry
Mackinlay, Andrew	Rose, Ernie (Dundee W)
Maclennan, Rt Hon Robert	Rowlands, Ted
MacShane, Denis	Roy, Frank
Mactaggart, Fiona	Ruane, Chris
McWalter, Tony	Ruddock, Joan
McWilliam, John	Russell, Bob (Colchester)
Mahon, Mrs Alice	Russell, Ms Christine (Chester)
Mallaber, Judy	Ryan, Ms Joan
Marsden, Gordon (Blackpool S)	Salter, Martin
Marsden, Paul (Shrewsbury)	Sanders, Adrian
Marshall, David (Shettleston)	Sarwar, Mohammad
Marshall, Jim (Leicester S)	Savidge, Malcolm
Marshall-Andrews, Robert	Sawford, Phil
Martlew, Eric	Sedgemore, Brian
Maxton, John	Shaw Jonathan
Meacher, Rt Hon Michael	Sheerman, Barry
Meale, Alan	Sheldon, Rt Hon Robert
Merron, Gillian	Shipley, Ms Debra
Michie, Bill (Shef'ld Heeley)	Simpson, Alan (Nottingham S)
Michie, Mrs Ray (Argyll&Bute)	Singh, Marsha
Milburn Rt Hon Alan	Smith, Angela (Basildon)
Miller, Andrew	Smith, Miss Geraldine (Morecambe&Lunesdale)
Mitchell, Austin
Moore, Michael	Smith, Jacqui (Redditch)
Moran, Ms Margaret	Smith, John (Glamorgan)
Morgan, Ms Julie (Cardiff N)	Smith, Llew (Blaenau Gwent)
Morley, Elliot	Smith, Sir Robert (W Ab'd'ns)
Morris, Rt Hon Ms Estelle (B'ham Yardley)	Snape, Peter
	Soley, Clive
Morris, R Hon Sir John (Aberavon)	Southworth, Ms Helen
	Spellar, John
Mountford, Kali	Squire, Ms Rachel
Mowlam, Rt Hon Marjorie	Starkey, Dr Phyllis
Mudie, George	Steinberg, Gerry
Mullin, Chris	Stevenson, George
Murphy, Denis (Wansbeck)	Stewart, David (Inverness E)
Murphy, Jim (Eastwood)	Stewart, Ian (Eccles)
Murphy, Rt Hon Paul (Torfaen)	Stinchcombe, Paul
Naysmith, Dr Doug	Stoate, Dr Howard
O'Brien, Bill (Normanton)	Strang, Rt Hon Dr Gavin
O'Brien, Mike (N Warks)	Straw, Rt Hon Jack
O'Hara, Eddie	Stringer, Graham
Olner, Bill	Stuart, Ms Gisela
Öpik, Lembit	Stunell, Andrew
Organ, Mrs Diana	Sutclifle, Gerry
Osborne, Ms Sandra	Taylor, Rt Hon Mrs Ann (Dewsbury)
Palmer, Dr Nick
Pearson, Ian	Taylor, Ms Dari (Stockton S)
Pendry, Tom	Taylor, David (NW Leics)
Pickthall, Colin	Taylor, Matthew (Truro)
Pike,Peter L	Temple-Morris, Peter
Plaskitt, James	Thomas,Gareth (Clwyd W)
Pollard, Kerry	Thomas, Gareth R(Harrow W)
Pond, Chris	Timms, Stephen
Pope, Greg	Tipping, Paddy
Powell, Sir Raymond	Todd, Mark
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)

Tonge, Dr Jenny	Wicks, Malcolm
Trickett, Jon	Williams, Rt Hon Alan (Swansea W)
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)	Williams, Alan W (E Carmarthen)
Turner, Dr Desmond (Kemptown)	Williams, Mrs Betty (Conwy)
Turner, Dr George (NW Norfolk)	Willis, Phil
Turner, Neil (Wigan)	Wills, Michael
Twigg, Derek (Halton)	Wilson, Brian
Tyler, Paul	Winnick, David
Tynan, Bill	Winterton, Ms Rosie (Doncaster C)
Vis, Dr Rudi	Wood, Mike
Walley, Ms Joan	Worthington, Tony
Ward, Ms Claire	Wright, Anthony D (Gt Yarmouth)
Wareing, Robert N	Wright, Dr Tony (Cannock)
Watts, David
Webb, Steve
White, Brian	Tellers for the Noes:
Whitehead, Dr Alan	Mr. Tony McNulty and
	Mr. Don Touhig.

Question accordingly negatived.

Amendment proposed, at the end of the Question, to add, But humbly regret that the Gracious Speech fails to address the urgent need to protect the rights of the individual, reinforce communities and promote enterprise through increased liberalisation, decentralisation and deregulation; call for a reforming agenda including the prevention of discrimination on grounds of age, disability, religion, sex and sexual orientation; urge the introduction of measures to increase the accountability of the police, promote crime prevention and victims' rights, rehabilitate offenders in the community, and establish a Royal Commission to examine the misuse of all drugs; call for effective Freedom of Information legislation; regret the continued failure of the Government to provide for referendums on a fair voting system for the House of Commons and the European Single Currency; urge the Government to introduce proportional representation for local elections and to ensure that innovations in local government are transparent and accountable; note the absence of proposals to promote environmental responsibility and efficiency in government, business and private households; urge the Government to replace the Child Support Agency with a unified system of family courts to deal with cases quickly and fairly; believe that good health policy demands that the Government should abolish charges for eye and dental checks and establish a single healthcare regulator; deplore the Government's continued neglect of rural communities and call for effective scrutiny of supermarket profiteering, fundamental reform of the Common Agricultural Policy and the establishment of an Agricultural Ombudsman; and regret that the timidity of the other measures in the Gracious Speech will do little to assist those who are worst off in society."—[Mr. Tyler.]

Question put forthwith, pursuant to Standing Order No.33 (Calling of amendments at end of debate), That the amendment be made:—

The House divided: Ayes 44, Noes 340.

Division No. 3]	[10.15 pm
AYES
Allan, Richard	Ewing, Mrs Margaret
Baker, Norman	Fearn, Ronnie
Ballard, Jackie	Foster, Don (Bath)
Beth, Rt Hon A J	George, Andrew (St Ives)
Brake, Tom	Gorrie, Donald
Brand, Dr Peter	Hancock, Mike
Breed, Colin	Harris, Dr Evan
Bruce, Malcolm (Gordon)	Harvey, Nick
Burnett, John	Heath, David (Somerton&Frome)
Burstow, Paul	Hughes, Simon (Southwark N)
Cable, Dr Vincent	Jones, Nigel (Cheltenham)
Campbell, Rt Hon Menzies (NE Fife)	Keetch, Paul
	Kennedy, Rt Hon Charles (Ross Skye&Inverness W)
Chidgey, David
Cotter, Brian	Kirkwood, Archy

Livsey, Richard	Stunell, Andrew
Llwyd, Elfyn	Taylor, Mathew (Truro)
Maclennan, Rt Hon Robert	Tonge, Dr Jenny
Michie, Mrs Ray (Argyll&Bute)	Tyler, Paul
Moore, Michael	Webb, Steve
Oaten, Mark	Willis, Phil
Öpik, Lembit
Rendel, David	Tellers for the Ayes:
Russell, Bob (Colchester)	Sir Robert Smith and
Sanders, Adrian	Mr. Edward Davey.
NOES
Adams, Mrs Irene (Paisley N)	Cox, Tom
Ainger, Nick	Cranston, Ross
Ainsworth, Robert (Cov'try NE)	Crausby, David
Alexander, Douglas	Cryer, Mrs Ann (Keighley)
Anderson, Janet (Rossendale)	Cryer, John (Hornchurch)
Armstrong, Rt Hon Ms Hilary	Cummings, John
Ashton, Joe	Cunningham, Rt Hon Dr Jack (Copeland)
Atherton, Ms Candy
Atkins, Charlotte	Cunningham, Jim (Cov'try S)
Austin, John	Curtis-Thomas, Mrs Claire
Barnes, Harry	Dalyell, Tam
Bayley, Hugh	Darling, Rt Hon Alistair
Beard, Nigel	Darvill, Keith
Beckett, Rt Hon Mrs Margaret	Davey, Valerie (Bristol W)
Beggs, Roy	Davies, Rt Hon Denzil (Llanelli)
Bell, Stuart (Middlesbrough)	Davies, Geraint (Croydon C)
Benton, Joe	Davis, Terry (B'ham Hodge H)
Bermingham, Gerald	Dawson, Hilton
Berry, Roger	Dean, Mrs Janet
Best, Harold	Denham, John
Betts, Clive	Dobbin, Jim
Blackman, Liz	Donohoe, Brian H
Blears, Ms Hazel	Doran, Frank
Blizzard, Bob	Dowd, Jim
Boateng, Rt Hon Paul	Drew, David
Borrow, David	Dunwoody, Mrs Gwyneth
Bradley, Keith (Withington)	Eagle, Angela (Wallasey)
Bradley, Peter (The Wrekin)	Eagle, Maria (L'pool Garston)
Brinton, Mrs Helen	Edwards, Huw
Brown, Rt Hon Gordon (Dunfermline E)	Efford, Clive
Brown, Rt Hon Nick (Newcastle E)	Ellman, Mrs Louise
Brown, Russell (Dumfries)	Ennis, Jeff
Burden, Richard	Field, Rt Hon Frank
Burgon, Colin	Fisher, Mark
Butler, Mrs Christine	Fitzsimons, Lorna
Campbell, Alan (Tynemouth)	Flint, Caroline
Campbell, Mrs Anne (C'bridge)	Flynn, Paul
Campbell, Ronnie (Blyth V)	Follett, Barbara
Campbell—Savours, Dale	Forsythe, Clifford
Caplin, Ivor	Foster, Rt Hon Derek
Casale, Roger	Foster, Michael Jabez (Hastings)
Caton, Martin	Foster, Michael J (Worcester)
Cawsey, Ian	Foulkes, George
Chapman, Ben (Wirral S)	Fyfe, Maria
Chaytor, David	Galloway, George
Clapham, Michael	Gapes, Mike
Clark, Rt Hon Dr David (S Shields)	Gardiner, Barry
Clark, Dr Lynda (Edinburgh Pentlands)	Gerrard, Neil
Clark, Paul (Gillingham)	Gibson, Dr Ian
Clarke, Charles (Norwich S)	Gilroy, Mrs Linda
Clarke, Eric (Midlothian)	Godman, Dr Norman A
Clarke, Rt Hon Tom (Coatbridge)	Godsiff, Roger
Clarke, Tony (Northampton S)	Goggins, Paul
Clelland, David	Golding, Mrs Llin
Clwyd, Ann	Gordon, Mrs Eileen
Coaker, Vernon	Griffiths, Jane (Reading E)
Coffey, Ms Ann	Griffiths, Win (Bridgend)
Colman, Tony	Grogan, John
Connarty, Michael	Gunnell, John
Cook, Frank (Stockton N)	Hall, Mike (Weaver Vale)
Corbett, Robin	Hall, Patrick (Bedford)
Cousins, Jim	Hamilton, Fabian (Leeds NE)
	Hanson, David
	Harman, Rt Hon Ms Harriet

Heal, Mrs Sylvia	McWilliam, John
Healey, John	Mahon, Mrs Alice
Henderson, Doug (Newcastle N)	Mallaber, Judy
Henderson, Ivan (Harwich)	Marsden, Gordon (Blackpool S)
Hepburn, Stephen	Marsden, Paul (Shrewsbury)
Heppell, John	Marshall, David (Shettleston)
Hesford, Stephen	Marshall, Jim (Leicester S)
Hewitt, Ms Patricia	Marshall-Andrews, Robert
Hill, Keith	Martlew, Eric
Hinchliffe, David	Maxton, John
Hodge, Ms Margaret	Meacher, Rt Hon Michael
Hoey, Kate	Meale, Alan
Hope, Phil	Merron, Gillian
Hopkins, Kelvin	Michie, Bill (Shef'ld Heeley)
Howells, Dr Kim	Milburn, Rt Hon Alan
Hoyle, Lindsay	Miller, Andrew
Hughes, Ms Beverley (Stretford)	Mitchell, Austin
Hughes, Kevin (Doncaster N)	Moonie, Dr Lewis
Humble, Mrs Joan	Moran, Ms Margaret
Hurst, Alan	Morgan, Ms Julie (Cardiff N)
Hutton, John	Morley, Elliot
Iddon, Dr Brian	Morris, Rt Hon Ms Estelle (B'ham Yardley)
Illsley, Eric
Ingram, Rt Hon Adam	Morris, Rt Hon Sir John (Aberavon)
Jackson, Helen (Hillsborough)
Jamieson, David	Mountford, Kali
Jenkins, Brian	Mowlam, Rt Hon Marjorie
Johnson, Alan (Hull W&Hessle)	Mudie, George
Johnson, Miss Melanie (Welwyn Hatfield)	Mullin, Chris
	Murphy, Denis (Wansbeck)
Jones, Rt Hon Barry (Alyn)	Murphy, Jim (Eastwood)
Jones, Helen (Warrington N)	Murphy, Rt Hon Paul (Torfaen)
Jones, Ms Jenny (Wolverh'ton SW)	Naysmith, Dr Doug
	O'Brien, Bill (Normanton)
Jones, Jon Owen (Cardiff C)	O'Brien, Mike (N Warks)
Jones, Dr Lynne (Selly Oak)	O'Hara, Eddie
Jones, Martyn (Clwyd S)	Olner, Bill
Jowell, Rt Hon Ms Tessa	Osborne, Ms Sandra
Kaufman, Rt Hon Gerald	Palmer, Dr Nick
Keeble, Ms Sally	Pearson, Ian
Keen, Alan (Feltham&Heston)	Pendry, Tom
Keen, Ann (Brentford&Isleworth)	Pickthall, Colin
Kelly, Ms Ruth	Pike, Peter L
Kemp, Fraser	Plaskitt, James
Kennedy, Jane (Wavertree)	Pollard, Kerry
Khabra, Piara S	Pond, Chris
Kidney, David	Pope, Greg
Kilfoyle, Peter	Powell, Sir Raymond
King, Andy (Rugby&Kenilworth)	Prentice, Ms Bridget (Lewisham E)
Kumar, Dr Ashok	Prentice, Gordon (Pendle)
Ladyman, Dr Stephen	Prescott, Rt Hon John
Lawrence, Mrs Jackie	Primarolo, Dawn
Laxton, Bob	Prosser, Gwyn
Lepper, David	Purchase, Ken
Leslie, Christopher	Quinn, Lawrie
Levitt, Tom	Radice, Rt Hon Giles
Lewis, Ivan (Bury S)	Rammell, Bill
Lewis, Terry (Worsley)	Rapson, Syd
Linton, Martin	Raynsford, Nick
Lloyd, Tony (Manchester C)	Reed, Andrew (Loughborough)
Lock, David	Reid, Rt Hon Dr John (Hamilton N)
Love, Andrew	Robinson, Geoffrey (Cov'try NW)
McCabe, Steve	Roche, Mrs Barbara
McCafferty, Ms Chris	Rogers, Allan
McCartney, Rt Hon Ian (Makerfield)	Rooker, Jeff
	Rooney, Terry
McDonagh, Siobhain	Ross, Ernie (Dundee W)
Macdonald, Calum	Rowlands, Ted
McDonnell, John	Roy, Frank
McGuire, Mrs Anne	Ruane, Chris
McIsaac, Shona	Ruddock, Joan
McKenna, Mrs Rosemary	Russell, Ms Christine (Chester)
Mackinlay, Andrew	Ryan, Ms Joan
MacShane, Denis	Salter, Martin
Mactaggart, Fiona	Sarwar, Mohammad
McWalter, Tony	Savidge, Malcolm

Sawford, Phil	Thomas, Gareth R (Harrow W)
Sedgemore, Brian	Thompson, William
Shaw, Jonathan	Timms, Stephen
Sheerrnan, Barry	Tipping, Paddy
Sheldon, Rt Hon Robert	Todd, Mark
Shipley, Ms Debra	Trickett, Jon
Simpson, Alan (Nottingham S)	Truswell, Paul
Singh, Marsha	Turner, Dennis (Wolverh'ton SE)
Smith, Angela (Basildon)	Turner, Dr Desmond (Kemptown)
Smith, Miss Geraldine (Morecambe&Lunesdale)	Turner, Dr George (NW Norfolk)
	Turner, Neil (Wigan)
Smith, Jacqui (Redditch)	Twigg, Derek (Halton)
Smith, John (Glamorgan)	Tynan, Bill
Smith, Llew (Blaenau Gwent)	Vis, Dr Rudi
Smyth, Rev Martin (Belfast S)	Walley, Ms Joan
Snape, Peter	Ward, Ms Claire
Soley, Clive	Wareing, Robert N
Southworth, Ms Helen	Watts, David
Spellar, John	White, Brian
Squire, Ms Rachel	Whitehead, Dr Alan
Starkey, Dr Phyllis	Wicks, Malcolm
Steinberg, Gerry	Williams, Rt Hon Alan (Swansea W)
Stevenson, George	Williams, Alan W (E Carmarthen)
Stewart, David (Inverness E)	Williams, Mrs Betty (Conwy)
Stewart, Ian (Eccles)	Wills, Michael
Stoate, Dr Howard	Wilson, Brian
Strang, Rt Hon Dr Gavin	Winnick, David
Straw, Rt Hon Jack	Winterton, Ms Rosie (Doncaster C)
Stringer, Graham	Wood, Mike
Stuart, Ms Gisela	Woolas, Phil
Sutcliffe, Gerry	Worthington, Tony
Taylor, Rt Hon Mrs Ann (Dewsbury)	Wright, Anthony D (Gt Yarmouth)
	Wright, Dr Tony (Cannock)
Taylor, Ms Dan (Stockton S)
Taylor, David (NW Leics)	Tellers for the Noes:
Temple—Morris, Peter	Mr. Tony McNulty and
Thomas, Gareth (Clwyd W)	Mr. Don Touhig.

Question accordingly agreed to.

Main Question put:—

The House divided: Ayes 329, Noes 185.

Division No. 4]	[8.28 pm
AYES
Adams, Mrs Irene (Paisley N)	Brinton, Mrs Helen
Ainger, Nick	Brown, Rt Hon Gordon (Dunfermline E)
Ainsworth, Robert (Cov'try NE)
Alexander, Douglas	Brown, Rt Hon Nick (Newcastle E)
Anderson, Janet (Rossendale)	Brown, Russell (Dumfries)
Armstrong, Rt Hon Ms Hilary	Burden, Richard
Ashton, Joe	Burgon, Colin
Atherton, Ms Candy	Butler, Mrs Christine
Atkins, Charlotte	Campbell, Alan (Tynemouth)
Austin, John	Campbell, Mrs Anne (C'bridge)
Barnes, Harry	Campbell, Ronnie (Blyth V)
Bayley, Hugh	Campbell—Savours, Dale
Beard, Nigel	Caplin, Ivor
Beckett, Rt Hon Mrs Margaret	Casale, Roger
Bell, Stuart (Middlesbrough)	Caton, Martin
Benton, Joe	Cawsey, Ian
Bermingham, Gerald	Chapman, Ben (Wirral S)
Berry, Roger	Chaytor, David
Best, Harold	Clapham, Michael
Betts, Clive	Clark, Rt Hon Dr David (S Shields)
Blackman, Liz	Clark, Dr Lynda (Edinburgh Pentlands)
Blears, Ms Hazel
Blizzard, Bob	Clark, Paul (Gillingham)
Boateng, Rt Hon Paul	Clarke, Charles (Norwich S)
Borrow, David	Clarke, Eric (Midlothian)
Bradley, Keith (Withington)	Clarke, Rt Hon Tom (Coatbridge)
Bradley, Peter (The Wrekin)	Clarke, Tony (Northampton S)
	Clelland, David
	Clwyd, Ann

Coaker, Vernon	Hill, Keith
Coffey, Ms Ann	Hinchliffe, David
Colman, Tony	Hodge, Ms Margaret
Connarty, Michael	Hoey, Kate
Cook, Frank (Stockton N)	Hope, Phil
Corbett, Robin	Hopkins, Kelvin
Cousins, Jim	Howells, Dr Kim
Cox, Tom	Hoyle, Lindsay
Cranston, Ross	Hughes, Ms Beverley (Stretford)
Crausby, David	Hughes, Kevin (Doncaster N)
Cryer, Mrs Ann (Keighley)	Humble, Mrs Joan
Cryer, John (Hornchurch)	Hurst, Alan
Cummings, John	Hutton, John
Cunningham, Jim (Cov'try S)	Iddon, Dr Brian
Curtis——Thomas, Mrs Claire	Illsley, Eric
Dalyell, Tam	Ingram, Rt Hon Adam
Darling, Rt Hon Alistair	Jackson, Helen (Hillsborough)
Darvill, Keith	Jamieson, David
Davey, Valerie (Bristol W)	Jenkins, Brian
Davies, Rt Hon Denzil (Llanelli)	Johnson, Alan (Hull W&Hessle)
Davies, Geraint (Croydon C)	Johnson, Miss Melanie (Welwyn Hatfield)
Davis, Terry (B'ham Hodge H)
Dawson, Hilton	Jones, Rt Hon Barry (Alyn)
Dean, Mrs Janet	Jones, Helen (Warrington N)
Denham, John	Jones, Ms Jenny (Wolverh'ton SW)
Dobbin, Jim
Donohoe, Brian H	Jones, Jon Owen (Cardiff C)
Doran, Frank	Jones, Martyn (Clwyd S)
Dowd, Jim	Jowell, Rt Hon Ms Tessa
Drew, David	Kaufman, Rt Hon Gerald
Dunwoody, Mrs Gwyneth	Keeble, Ms Sally
Eagle, Angela (Wallasey)	Keen, Alan (Feltham&Heston)
Eagle, Maria (L'pool Garston)	Keen, Ann (Brentford&Isleworth)
Edwards, Huw	Kelly, Ms Ruth
Efford, Clive	Kemp, Fraser
Ellman, Mrs Louise	Kennedy, Jane (Wavertree)
Ennis, Jeff	Khabra, Piara S
Field, Rt Hon Frank	Kidney, David
Fisher, Mark	Kilfoyle, Peter
Fitzsimons, Lorna	King, Andy (Rugby&Kenilworth)
Flint, Caroline	Kumar, Dr Ashok
Flynn, Paul	Ladyman, Dr Stephen
Follett, Barbara	Lawrence, Mrs Jackie
Foster, Rt Hon Derek	Laxton, Bob
Foster, Michael Jabez (Hastings)	Lepper, David
Foster, Michael J (Worcester)	Leslie, Christopher
Foulkes, George	Levitt, Tom
Fyfe, Maria	Lewis, Ivan (Bury S)
Galloway, George	Lewis, Terry (Worsley)
Gapes, Mike	Linton, Martin
Gardiner, Barry	Lloyd, Tony (Manchester C)
Gerrard, Neil	Lock, David
Gibson, Dr Ian	Love, Andrew
Gilroy, Mrs Linda	McCabe, Steve
Godman, Dr Norman A	McCafferty, Ms Chris
Godsiff, Roger	McCartney, Rt Hon Ian (Makerfield)
Goggins, Paul
Golding, Mrs Llin	McDonagh, Siobhain
Gordon, Mrs Eileen	Macdonald, Calum
Griffiths, Jane (Reading E)	McDonnell, John
Griffiths, Win (Bridgend)	McGuire, Mrs Anne
Grogan, John	McIsaac, Shona
Gunnell, John	McKenna, Mrs Rosemary
Hall, Mike (Weaver Vale)	Mackinlay, Andrew
Hall, Patrick (Bedford)	MacShane, Denis
Hamilton, Fabian (Leeds NE)	Mactaggart, Fiona
Hanson, David	McWatter, Tony
Harman, Rt Hon Ms Harriet	McWilliam, John
Heal, Mrs Sylvia	Mahon, Mrs Alice
Healey, John	Mallaber, Judy
Henderson, Doug (Newcastle N)	Marsden, Gordon (Blackpool S)
Henderson, Ivan (Harwich)	Marsden, Paul (Shrewsbury)
Hepburn, Stephen	Marshall, David (Shettleston)
Heppell, John	Marshall, Jim (Leicester S)
Hesford, Stephen	Marshall-Andrews, Robert
Hewitt, Ms Patricia	Martlew, Eric

Maxton, John	Sheerman, Barry
Meacher, Rt Hon Michael	Shipley, Ms Debra
Meale, Alan	Simpson, Alan (Nottingham S)
Merron, Gillian	Smith, Angela (Basildon)
Michie, Bill (Shef'ld Heeley)	Smith, Miss Geraldine (Morecambe&Lunesdale)
Milburn, Rt Hon Alan
Miller, Andrew	Smith, Jacqui (Redditch)
Mitchell, Austin	Smith, John (Glamorgan)
Moonie, Dr Lewis	Smith, Llew (Blaenau Gwent)
Moran, Ms Margaret	Snape, Peter
Morgan, Ms Julie (Cardiff N)	Soley, Clive
Morley, Elliot	Southworth, Ms Helen
Moms, Rt Hon Ms Estelle (B'ham Yardley)	Spellar, John
	Squire, Ms Rachel
Morris, Rt Hon Sir John (Aberavon)	Starkey, Dr Phyllis
Mountford, Kali	Steinberg, Gerry
Mowlam, Rt Hon Marjorie	Stevenson, George
Mullin, Chris	Stewart, David (Inverness E)
Murphy, Denis (Wansbeck)	Stewart, Ian (Eccles)
Murphy, Jim (Eastwood)	Stoate, Dr Howard
Murphy, Rt Hon Paul (Torfaen)	Strang, Rt Hon Dr Gavin
Naysmith, Dr Doug	Straw, Rt Hon Jack
O'Brien, Bill (Normanton)	Stringer, Graham
O'Brien, Mike (N Warks)	Stuart, Ms Gisela
O'Hara, Eddie	Sutcliffe, Gerry
Olner, Bill	Taylor, Rt Hon Mrs Ann (Dewsbury)
Osborne, Ms Sandra	Taylor, Ms Dari (Stockton S)
Palmer, Dr Nick	Taylor, David (NW Leics)
Pearson, Ian	Temple—Morris, Peter
Pendry, Tom	Thomas, Gareth (Clwyd W)
Pickthall, Colin	Thomas, Gareth R (Harrow W)
Pike, Peter L	Timms, Stephen
Plaskitt, James	Tipping, Paddy
Pollard, Kerry	Todd, Mark
Pond, Chris	Trickett, Jon
Pope, Greg	Truswell, Paul
Powell, Sir Raymond	Turner, Dennis (Wolverh'ton SE)
Prentice, Ms Bridget (Lewisham E)	Turner, Dr Desmond (Kemptown)
Prentice, Gordon (Pendle)	Turner, Dr George (NW Norfolk)
Prescott, Rt Hon John	Turner, Neil (Wigan)
Primarolo, Dawn	Twigg, Derek (Halton)
Prosser, Gwyn	Tynan, Bill
Purchase, Ken	Vis, Dr Rudi
Quinn, Lawrie	Walley, Ms Joan
Radice, Rt Hon Giles	Ward, Ms Claire
Rammell, Bill	Wareing, Robert N
Rapson, Syd	Watts, David
Raynsford, Nick	White, Brian
Reed, Andrew (Loughborough)	Whitehead, Dr Alan
Reid, Rt Hon Dr John (Hamilton N)	Wicks, Malcolm
Robinson, Geoffrey (Cov'try NW)	Williams, Rt Hon Alan (Swansea W)
Roche, Mrs Barbara	Williams, Alan W (E Carmarthen)
Rooker, Jeff	Williams, Mrs Betty (Conwy)
Rooney, Terry	Wills, Michael
Ross, Ernie (Dundee W)	Wilson, Brian
Rowlands, Ted	Winnick, David
Roy, Frank	Winterton, Ms Rosie (Doncaster C)
Ruane, Chris	Wood, Mike
Ruddock, Joan	Woolas, Phil
Russell, Ms Christine (Chester)	Worthington, Tony
Ryan, Ms Joan	Wright, Anthony D (Gt Yarmouth)
Sarwar, Mohammad	Wright, Dr Tony (Cannock)
Savidge, Malcolm
Sawford, Phil	Tellers for the Ayes:
Sedgemore, Brian	Mr. Tony McNulty and
Shaw, Jonathan	Mr. Don Touhig.
NOES
Allan, Richard	Baldry, Tony
Amess, David	Ballard, Jackie
Ancram, Rt Hon Michael	Beggs, Roy
Arbuthnot, Rt Hon James	Beith, Rt Hon A J
Atkinson, David (Bour'mth E)	Bercow, John
Atkinson, Peter (Hexham)	Beresford, Sir Paul
Baker, Norman	Body, Sir Richard

Boswell, Tim	Gorman, Mrs Teresa
Brady, Graham	Gorrie, Donald
Brake, Tom	Gray, James
Brand, Dr Peter	Green, Damian
Breed, Colin	Greenway, John
Brooke, Rt Hon Peter	Grieve, Dominic
Browning, Mrs Angela	Gummer, Rt Hon John
Bruce, Ian (S Dorset)	Hamilton, Rt Hon Sir Archie
Bruce, Malcolm (Gordon)	Hammond, Philip
Burnett, John	Hancock, Mike
Burns, Simon	Harris, Dr Evan
Burstow, Paul	Harvey, Nick
Butterfill, John	Hawkins, Nick
Cable, Dr Vincent	Hayes, John
Campbell, Rt Hon Menzies (NE Fife)	Heald, Oliver
	Heath, David (Somerton&Frome)
Cash, William	Heathcoat-Amory, Rt Hon David
Chidgey, David	Heseltine, Rt Hon Michael
Chope, Christopher	Hogg, Rt Hon Douglas
Clappison, James	Horam, John
Clark, Dr Michael (Rayleigh)	Howard, Rt Hon Michael
Clifton-Brown, Geoffrey	Howarth, Gerald (Aldershot)
Collins, Tim	Hughes, Simon (Southwark N)
Colvin, Michael	Hunter, Andrew
Cormack, Sir Patrick	Jack, Rt Hon Michael
Cotter, Brian	Jackson, Robert (Wantage)
Cran, James	Jenkin, Bernard
Curry, Rt Hon David	Johnson Smith, Rt Hon Sir Geoffrey
Davey, Edward (Kingston)
Davies, Quentin (Grantham)	Jones, Nigel (Cheltenham)
Davis, Rt Hon David (Haltemprice&Howden)	Keetch, Paul
	Kennedy, Rt Hon Charles (Ross Skye&Inverness W)
Day, Stephen
Dorrell, Rt Hon Stephen	Key, Robert
Duncan, Alan	Kirkbride, Miss Julie
Emery, Rt Hon Sir Peter	Kirkwood, Archy
Evans, Nigel	Lait, Mrs Jacqui
Faber, David	Lansley, Andrew
Fabricant, Michael	Leigh, Edward
Fallon. Michael	Letwin, Oliver
Fearn, Ronnie	Lewis, Dr Julian (New Forest E)
Flight, Howard	Lidington, David
Forsythe, Clifford	Livsey, Richard
Forth, Rt Hon Eric	Lloyd, Rt Hon Sir Peter (Fareham)
Foster, Don (Bath)	Loughton, Tim
Fox, Dr Liam	Luff, Peter
Fraser, Christopher	Lyell, Rt Hon Sir Nicholas
Gale, Roger	MacGregor, Rt Hon John
Garnier, Edward	McIntosh, Miss Anne
George, Andrew (St Ives)	MacKay, Rt Hon Andrew
Gibb, Nick	Maclean, Rt Hon David
Gill, Christopher	Maclennan, Rt Hon Robert
Gillan, Mrs Cheryl	McLoughlin, Patrick

Madel, Sir David	Stanley, Rt Hon Sir John
Major, Rt Hon John	Steen, Anthony
Malin, Humfrey	Streeter, Gary
Mates, Michael	Stunell, Andrew
Maude, Rt Hon Francis	Swayne, Desmond
Mawhinney, Rt Hon Sir Brian	Syms, Robert
May, Mrs Theresa	Tapsell, Sir Peter
Michie, Mrs Ray (Argyll&Bute)	Taylor, Ian (Esher&Walton)
Moore, Michael	Taylor, John M (Solihull)
Moss, Malcolm	Taylor, Matthew (Truro)
Nicholls, Patrick	Taylor, Sir Teddy
Norman, Archie	Thompson, William
Oaten, Mark	Tonge, Dr Jenny
O'Brien, Stephen (Eddisbury)	Townend, John
Öpik, Lembit	Tredinnick, David
Ottaway, Richard	Trend, Michael
Page, Richard	Tyler, Paul
Paice, James	Tyrie, Andrew
Paterson, Owen	Viggers, Peter
Randall, John	Walter, Robert
Redwood, Rt Hon John	Wardle, Charles
Rendel, David	Waterson, Nigel
Robathan, Andrew	Webb, Steve
Robertson, Laurence	Whitney, Sir Raymond
Roe, Mrs Marion (Broxbourne)	Whittingdale, John
Rowe, Andrew (Faversham)	Widdecombe, Rt Hon Miss Ann
Ruffley, David	Wilkinson, John
Russell, Bob (Colchester)	Willetts, David
St Aubyn, Nick	Wilshire, David
Sanders, Adrian	Winterton, Mrs Ann (Congleton)
Sayeed, Jonathan	Woodward, Shaun
Smith, Sir Robert (W Ab'd'ns)	Yeo, Tim
Smyth, Rev Martin (Belfast S)	Young, Rt Hon Sir George
Soames, Nicholas
Spelman, Mrs Caroline	Tellers for the Noes:
Spicer, Sir Michael	Mrs. Eleanor Laing and
Spring, Richard	Mr. Keith Simpson.

Question accordingly agreed to.

Resolved, That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.