Orders of the Day — Nationalised Industries

Part of the debate – in the House of Commons at 5:18 pm on 10 November 1981.

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Photo of Mr John Hannam Mr John Hannam , Exeter 5:18, 10 November 1981

First, I congratulate the hon. Member for Croydon, North-West (Mr. Pitt) on a most effective maiden speech. During his election campaign, he experienced a rather fuller blaze of publicity than most of us encounter at general elections. At least, however, coming to the House after a by-election, the hon. Gentleman has avoided the very long delay before making his maiden speech which many others, including myself, experienced when we were elected at general elections.

The hon. Gentleman follows a much liked Member of Parliament whom we all miss and to whom he paid due tribute, for which we are grateful. Having listened to the hon. Gentleman's first speech in the House, I am sure that he will enjoy his time here and will make many worthwhile contributions to our debates.

Today's debate, although in the context of energy matters, is also part of the general debate on the forthcoming programme of legislation. Therefore, although I wish to devote most of my speech to my right hon. Friend's very welcome proposals for de-monopolising British Gas and introducing real public investment into BNOC, I wish initially to comment on the general economic situation and also to describe how the Government could assist the disabled in a particular way.

As someone who has spent most of his life as a small business man, running a service industry and creating more than 100 jobs from scratch, I have long campaigned for a new approach to employment. Throughout the 1960s, we talked of a switch from manufacturing to service industries but did very little about it. Our education system dropped further behind our European rivals in providing vocational training, skills and apprenticeship schemes that did not follow outdated lines at a time in the 1970s when there were ominous signs of the effect of the second industrial revolution on unemployment, which doubled and doubled again under both political parties.

Little has happened in our employment strategies to counteract that dramatic change in the nature of employment. To give him credit, the hon. Member for Truro (Mr. Penhaligon) was alone among members of the "soft option" party to speak out against the belief that there was an easy answer to our present unemployment problems. At the Liberal Party conference, the hon. Gentleman outlined the problems that we all face in trying to overcome these difficulties.

But at a time in the last decade when we needed a coordinated approach to the new economic and industrial future, we had the same old resistance to change from the Labour Party and its allies, the trade unions. Restrictive practices, militant shop floor wage demands, employment protection measures taken to the absolute limit and opposition to the breaking of cumbersome State monopolies have all combined to land us in a position where even without a world recession strong measures were needed to make Britain's trading and manufacturing position comparable with our competitors in the wide world outside.

Of course, the recession has made the task of industrial reconstruction even more difficult. I well understand the worries of those who feel that because of the recession we should perhaps shelve any attempts to restructure our economy and that we should increase still further our overspending and subsequent borrowing. I have thought deeply about that and have come to the conclusion that we must follow the strategy adopted by the OECD, the IMF, the EEC and all the main international economic organisations. In other words, if the recession is to be overcome, inflation must be defeated by reductions in national spending budgets and by a lowering of wage demands and financial expectations. That strategy must be followed if we are not to see the whole world economy collapse.

Governments are now experiencing deep unpopularity as they struggle to achieve success against inflation and recession. It is interesting to note that in recent times no Government have survived a general election. Be they of the Right or Left, Governments in the United States, France, Greece and Norway have fallen in the wake of electoral unpopularity. If an election were now to be held in West Germany, Britain or any other country at this stage of the recession, I believe that the people would vote not for any alternative—I have yet to hear of one—but against the pain and unpleasantness of the illness and the medicine prescribed for it.

Having said that, it does not follow that Governments should forsake their responsibilities in the long-term national interest for short-term electoral gain. I therefore support the brave and determined fight being pursued by the Government. I believe that Britain will emerge from the recession in a better position on the world trade ladder than before.

France and Germany are experiencing all the difficulties that we have undergone, and only their higher productivity and lower levels of State spending have enabled them to achieve lower levels of unemployment. While we can all take issue with individual tactics pursued by various Government Departments in the overall approach to the battle against inflation, I cannot see a great deal of scope for substantial changes of course.

I now turn to more specific matters, one of which is an item of Treasury policy with which I beg to differ and which I believe needs adjustment. I am, of course, referring to VAT charges on charities. I wear my disablement hat to show that I take this matter seriously. In fact, during the Conservative Party conference in Blackpool I spoke at a fringe meeting on this subject. It was not one of those notorious fringe meetings that monopolised the media. It was organised by the Spastics Society and took place at the same time as that famous fringe meeting addressed by my right hon. Friend the Member for Sidcup (Mr. Heath).

Despite the fact that delegates had to walk three quarters of a mile along the seafront to find the hotel, and regardless of the fact that it took place at the same time as other widely-publicised fringe meetings, the room was packed with nearly 100 people. That shows that Conservative Party delegates considered this an important subject.

I put my views on the record and hope that they will be taken into account in the next Budget. The philosophy of the Government and my party is to help voluntary social service agencies so that they can work with the State bodies in providing maximum care services for the handicapped and disabled in our community. Much is being done in this regard, but it is being nullified by the effect of unrecoverable VAT at 15 per cent. A tremendous financial burden is crippling those very charities that we are asking to take up the extra burden during the recession.

I could go into great detail about the effects and anomalies of VAT on the fund-raising efforts of our voluntary organisations. If I merely say that during the last year our eight major disablement charities paid more than £1½ million in unrecoverable VAT—money that had been hard earned—and recouped only £ ½ million through the concessions announced in the last Budget, it is easy to understand why those vitally important organisations are facing grave financial difficulties. They have been caused not by the recession but by a counter-productive tax levy on services which, if provided by local authorities or health authorities, escape that 15 per cent. VAT levy.

This should not be regarded as a "wet" call for increased expenditure. This is another of those areas where, if such a service is not provided by a voluntary organisation, the cost of provision by the State will be much greater. On behalf of the many hundreds of thousands who give up their time and the millions who give up their money, I register this call for some alleviation of this tax impost, which was surely never meant to be applied in this way.

I turn to the proposals in the Gracious Speech for the raising of the NCB's borrowing limits and the changes in the financial structures of the British Gas Corporation and the British National Oil Corporation.

I congratulate the Minister on his realistic approach to the question of coal, which is a vital energy industry. The raising of the cash limit in June and the increased borrowing limits, in my view and that of my hon. Friend the Member for New Forest (Mr. McNair-Wilson), were inevitable, bearing in mind the impact of the recession upon coal demand and prices. Having sat on all the Committees throughout the 1970s that considered coal legislation, I can verify the Conservative Party's commitment to a competitive and thriving coal industry. That was reiterated today by my right hon. Friend the Secretary of State.

Capital investment has increased year by year and has now reached £800 million a year. New coalfields, and the continuing closure of old uneconomic pits, are resulting in substantial improvements in productivity. I for one wholeheartedly congratulate the industry and the miners on their achievements. But with 40 million tonnes of coal now lying on the surface, it must be obvious to the miners—even to Messrs. Scargill and McGahey—that if imports of cheaper coal are to be restrained and the large surpluses of coal stocks sold, wage demands in return must be in line with those in other industries.