Recession and Unemployment

Opposition Day – in the House of Commons at 4:19 pm on 19th February 1992.

Alert me about debates like this

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East 4:19 pm, 19th February 1992

I have selected the amendment in the name of the Prime Minister. Due to the large number of hon. Members who wish to participate in the debate, I propose to place a 10-minute limit on speeches between 7 and 9 pm. If those called before that time make brief contributions, it may be possible to relax the time limit.

Photo of Mr John Smith Mr John Smith , Monklands East 4:26 pm, 19th February 1992

I beg to move, That this House deplores the continuing recession which has caused the longest period of continuously falling output since the Second World War; notes that Government promises of recovery from recession have been totally unfounded; condemns the record level of business failures and house repossessions, the damaging decline in manufacturing investment and manufacturing output, and the accelerating rate of unemployment which has risen for 22 months in succession; and calls upon the Government to adopt policies which promote investment, reduce unemployment, and tackle Britain's major training and skills crisis. In the wind-up speech at the end of last year's Budget debate, the Chancellor of the Exchequer said: I am not in the business of publishing forecasts that are more optimistic than I think is the case, as that leads us nowhere. It is better to put the facts before Parliament and the country. He continued: There is every reason to expect that growth will start again towards the middle of the year."—[Official Report, 25 March 1991; Vol. 188, c. 698.] It is difficult to disagree with the Chancellor that forecasts should not be based on false optimism, and that facts should be put properly before Parliament and the country. Unfortunately, despite the Chancellor's cautious tone and his admonition against bogus predictions, he and the Prime Minister have spent the year since that Budget engaged in little else.

Growth did not start again towards the middle of last year. Indeed, it does not look as though it will start before the middle of this year. Month after month, the Chancellor and the Prime Minister promised that recovery was just around the corner. The Chancellor often found interesting ways of expressing his words of optimism and self-encouragement. In June he detected "vague and faint stirrings". In September he found statistics that were "highly encouraging". In October he was convinced—admittedly in the curious atmosphere of the Conservative party conference—that the green shoots of economic spring are appearing once again. It was not only the Chancellor who indulged in a bit of bogus forecasting. The Secretary of State for the Environment, who has replaced the Secretary of State for Trade and Industry for this debate—[HON. MEMBERS: "Why?"]—claimed—

Photo of Mr Andrew Rowe Mr Andrew Rowe , Kent Mid

On a point of order, Mr. Speaker. It is well known that in the run-up to a Budget speech, the Chancellor of the Exchequer does not make major speeches. Is it in order for the right hon. and learned Gentleman to imply that it is in some way wrong for the Chancellor of the Exchequer not to be here?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I did not hear that implication. I simply heard the right hon. and learned Gentleman say that there had been a change on the Front Bench. It is perfectly in order.

Photo of Mr John Smith Mr John Smith , Monklands East

I am surprised that the hon. Member for Mid-Kent (Mr. Rowe) did not hear me refer to the Secretary of State for Trade and Industry and not to the Chancellor of the Exchequer. I can only conclude that he was not following the debate with his usual close attention.

I am glad that the Secretary of State for the Environment is taking part in our economic debates. I make no points against that; I am sure that his contribution will be valuable. He gets involved in economic matters from time to time, and he told us on 5 November, as reported in The Guardian, that the evidence of housing starts powerfully reinforces the Chancellor's message. They herald renewed hope for all those anxious to move house. Britain is pulling out of recession. That prompted an instant reaction from the House-Builders Federation, which represents builders accounting for 70 per cent. of national output. A propos the Secretary of State's observations, Mr. Roger Humber, director of the federation, said: Rubbish…Customer confidence is falling, house sales are weakening and confidence is clearly undermined by rising unemployment.

Photo of Mr John Smith Mr John Smith , Monklands East

The hon. Gentleman is a familiar interrupter; I will give way once again.

Photo of Mr Patrick Nicholls Mr Patrick Nicholls , Teignbridge

While the hon. and learned Gentleman is on the subject of the recession, will he name one major commentator who thinks that tax increases are the way out of recession?

Photo of Mr John Smith Mr John Smith , Monklands East

I think that the hon. Gentleman was referring to taxes rather than taxis. We will deal with that argument when we come to it. There are so many commentators critical of the Government's economic record—[HON. MEMBERS: "Answer."] I will make my arguments on their own merits.

Photo of Mr John Smith Mr John Smith , Monklands East

I know that right hon. and hon. Members on the Government Benches do not wish to be reminded of the frequent predictions of recovery which were made last year, but they are highly relevant to the debate today.

I return to the Chancellor. On 20 December, when the figures for GDP in the third quarter of 1991 were published, the Chancellor went so far as to claim that there had been what he called a technical end to the recession. [Interruption.] They are at it again.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. We are not getting off to a good start if we have interruptions from a sedentary position.

Photo of Mr John Smith Mr John Smith , Monklands East

The Chancellor claimed that there had been a technical end to the recession. He could only make such a claim because of the inclusion of oil production in the figures. The onshore economy for that quarter was clearly still in recession. He should perhaps have borne in mind the view expressed by the Bank of England quarterly bulletin for February 1992, which comments on whether oil should be relied upon in such an analysis and which might be thought to be a reasonably objective commentator on such matters. The Bank of England states: The slight rise in GDP in the third quarter came about because North sea oil production recovered sharply, having been particularly depressed by essential safety and maintenance work in the previous quarter. As part of the product of the economy, oil output should not be disregarded; but its liability recently to erratic movements can obscure the underlying trend in aggregate activity. It may be more helpful, therefore, to look at non-oil output, which fell in the third quarter for the fifth consecutive quarter. This is as long a period of continually falling output as on any previous occasion since the war.

Photo of Mr John Smith Mr John Smith , Monklands East

I doubt whether that frank analysis will be regarded as helpful by the Government, but it puts the matter clearly and unambiguously. The result of the Government's policies is that we have had the longest recession in the post-war era.

We should also bear in mind the Bank's analysis when the GDP figures for the final quarter of 1991 are announced tomorrow. The non-oil GDP may well have fallen yet again. That would be the sixth consecutive drop in succession.

Photo of John Butterfill John Butterfill , Bournemouth West

While the right hon. and learned Gentleman is on the subject of accuracy of forecasting, does he recollect that his Front-Bench spokesmen said last week that they saw no signs of a recession in Germany? Yet there seems to be one there now. Is this not a worldwide recession? Surely he can no longer rely on accusing the British Government, uniquely, of having created recession.

Photo of Mr John Smith Mr John Smith , Monklands East

It would certainly be instructive to compare the German and British economies. I shall deal a little later in my speech with the general excuse that the Government have promoted, about a so-called world recession being responsible for the British condition. I remind the hon. Gentleman that in the last full year, 1991, the German economy grew by 3 per cent. while ours shrank by 2.5 per cent. Germany has had some quarters of negative growth, but they have been only small reductions in its overall output compared with the British ones.

Investment in Germany grew by 6·6 per cent. last year. It is forecast to grow by 3·8 per cent. this year. Investment in the United Kingdom fell by 10·75 per cent. German unemployment was 4·5 per cent., contrasting with the figures for this country. Germany is forecast to have employment growth in 1992 while the United Kingdom is forecast to have a fall in employment. Most people would prefer the German economy to the British economy under its present management.

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley

Will the right hon. and learned Gentleman give way?

Photo of Mr John Smith Mr John Smith , Monklands East

I will not. I must get on with my speech—

Photo of Mr John Smith Mr John Smith , Monklands East

I know that Conservative Members are trying to distract the attention of the House—and no doubt of a wider audience—from what I have to say, but I intend to persist with the case that I am making about what is happening to our economy.

Photo of Mr John Smith Mr John Smith , Monklands East

Last week the effects of the continuing recession were made abundantly clear—[Interruption.] I am certainly glad that I did not give way before to the hon. Member for Northampton, North (Mr. Marlow)—all that he does is to make sedentary interruptions.

Photo of Mr John Smith Mr John Smith , Monklands East

One of the few things that I cannot be accused of is failure to give way, but I have already given way enough times in this debate. Last week—

Photo of Mr John Smith Mr John Smith , Monklands East

I have already made it clear that I will not give way.

Last week, the effects of the continuing recession were made abundantly clear in the clutch of economic indicators released on what has come to be known as black Thursday. Manufacturing investment was shown to have fallen sharply, manufacturing output continued to decline and unemployment rose by more than 53,000. These gloomy statistics were accompanied by the announcement of large redundancies by major British companies such as Ford and British Aerospace—figures which are not yet included in the economic statistics.

The reaction of Ministers to those events was curious. Some were subdued and clearly embarrassed. Even the Prime Minister was obliged to concede that the news was, as he chose to put it, "disappointing". One Minister, however, took a different view: the hon. Member for Fylde (Mr. Jack), a Minister at the Department of Social Security, said that redundant workers at British Aerospace had been "liberated". Such an attitude takes one back to the article in the Financial Times on 6 February last year in which an unidentified Conservative Minister justified Conservative economic policy as follows—

Photo of Mr Terry Dicks Mr Terry Dicks , Hayes and Harlington

Will the right hon. and learned Gentleman give way?

Photo of Mr Roger King Mr Roger King , Birmingham, Northfield

On a point of order, Mr. Deputy Speaker. Is it in order to quote unidentified Ministers from the Dispatch Box? How do we know—

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. The only behaviour that has been out of order so far has been Conservative Members' persistent attempts to intervene when the right hon. and learned Member for Monklands, East (Mr. Smith) has made it clear that he does not intend to give way.

Photo of Mr John Smith Mr John Smith , Monklands East

The article in the Financial Times said: One Minister was adamant that high interest rates remained the purgative needed to flush out the unreal yuppy jobs in the South-East created in the last part of the 1980s, just as the recession early in the last decade had cleared out the unreal jobs created by Labour. There we have it. Skilled engineering workers in the north have been liberated; service industry employees in the south have had their unreal jobs purged. That is the Tory message to Britain.

Our people look on in amazement at a Government who seem rooted in indecision, unwilling or incapable of acting to move Britain out of recession. The self-congratulatory terms of the Government's amendment to the motion today make that all too clear. We are invited to congratulate the Government on their success in winning the so-called battle against inflation and in bringing down interest rates. Why was that battle against inflation necessary? After all, in 1987 the Prime Minister, writing a pre-election article in the Hunts Herald & Post, said: Inflation has gone, the economy is sound, unemployment is falling, living standards are rising. On 14 January 1988, in the autumn statement debate when the Prime Minister was Chief Secretary, he told us: Inflation is low and will remain so".—[0jficial Report, 14 January 1988; Vol. 125, c. 549.] In fact, between 1988 and 1990 inflation went on to double. Why should those who put it up be congratulated on taking it down, particularly when the price of their deflationary action has been record bankruptcies, record repossessions and high and rising unemployment? For that matter, why should those who put up interest rates so high be congratulated on bringing them down? The Government go on to congratulate themselves on reducing the balance of payments deficit, but do they not realise the significance of having a multi-billion pound deficit in the midst of a damaging recession?

The Secretary of State for the Environment, who was brought in at a late stage to this debate, could not have been consulted about the terms of the Government amendment. After all, in an interesting speech that he gave to the Tory Reform Group at the Conservative party conference in Blackpool in October 1989 entitled A Fourth Term: Why re-elect the Tories?"— the question mark is a particularly interesting part of that title—the Secretary of State said:—

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

On a point of order, Mr. Deputy Speaker. This is an important debate about the recession. Are we not entitled to know what policies the Opposition have to deal with the recession? All we are getting is knockabout.

Photo of Mr John Smith Mr John Smith , Monklands East

The wider public outside will find the behaviour of Conservative Members in this debate extremely interesting. Conservative Members are far better at handing it out than they are at taking it.

In 1989 the Secretary of State for the Environment said: Britain is not paying its way. We have a serious balance of payments problem… I beg our Party not to believe that a deficit on overseas trade is of incidental importance, self-correcting, easily financed. I don't believe a word of it. If the right hon. Gentleman believes that, why should there be satisfaction about still having a substantial deficit in the midst of a recession—a deficit which, as the autumn statement tells us, is forecast to deteriorate still further to a figure of £9·5 billion in 1992?

What is staggering about the Government is not just that they are not willing in public debate to accept responsibility for causing and perpetuating the longest recession since the war: they are, as is the habit of the modern Tory party, actively seeking to blame others for our present economic misery.

The rules of the game for the Conservative party are well known: if everything goes well, it is to the Government's credit—if anything goes wrong, it is not their fault.

Several Hon. Members:

rose

Photo of Mr John Smith Mr John Smith , Monklands East

Thinking it implausible to blame the last Labour Government after a period of nearly 13 years of Conservative rule, the Government have been on the hunt for another scapegoat. On every occasion these days when Ministers are asked to explain the causes of Britain's economic difficulties, they are instructed to utter the magic words "world recession". We have had that already today.

Several Hon. Members:

rose

Photo of Mr John Smith Mr John Smith , Monklands East

It is an unsubtle and wholly bogus attempt to explain away the cause of the recession as an unfortunate foreign contagion, rather like a mediaeval plague, which no Government could avoid or counteract and which subverted the virtuous course of economic progress in which Britain until then was leading the world. That is the message that the Government wish to impress upon the public in every broadcast and in every speech on every occasion. It is an old technique—the constant repetition of the bogus excuse.

Several Hon. Members:

rose

Photo of Mr John Smith Mr John Smith , Monklands East

In view of Conservative Members' behaviour, I feel little incentive to give way. If they cannot abide by the rules of the House, they cannot expect to be supported by the rules of the House.

Unfortunately for the Government, the evidence of the real causes of the British recession are here at home. It was a recession made at Nos. 10 and 11 Downing street. It is patently clear—[Interruption.] I shall persist against barracking and interruption for as long as it is necessary to do so because there is a message that Conservative Members want to drown out but which Parliament and the public must hear.

Photo of Mr Roger King Mr Roger King , Birmingham, Northfield

On a point of order, Mr. Deputy Speaker. I wonder if I can help. The right hon. and learned Member for Monklands, East (Mr. Smith) has just said that he will not give way against a background of noise. I speak on behalf of all my colleagues when I say that we shall remain totally silent for every piece of policy that the right hon. and learned Gentleman comes across with.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

When hon. Members offer to be helpful, I start to quake.

Photo of Mr John Smith Mr John Smith , Monklands East

To return to the subject of the debate, it is patently clear to anyone who investigates the matter that the British recession was not caused by a world recession. It was the direct result of the roller-coaster economics which promoted an unsustainable credit and consumer boom, followed by a savage deflation which plunged our economy into its present condition.

Exactly that point was made by the Governor of the Bank of England in March last year in evidence to the Select Committee on the Treasury and Civil Service after last year's Budget. At page 26 of the report, the Governor said: The recession here is in response to what was undeniably an excessive growth in previous years and what might be called unilateral correction by us. No mention there of a world recession. Indeed, the use of the word "unilateral" points in the opposite direction.

On the very next day, the Chancellor appeared before the same Committee. Asked whether he agreed with what the Governor had said, he replied: I do not think there is a worldwide recession as there was in the early 1980s. I think it is absolutely true"— I hope that Conservative Members will listen to this if to nothing else— that the main cause and origin of the recession is a response to the very fast growth—which exceeded the underlying rate of growth capacity. Why was there no reference to a recession then, when the Chancellor was explaining how the recession had occurred? Although that frank admission by the Chancellor to the Select Committee has been noticeably absent from recent speeches in the House by the Chancellor and his colleagues, they know that it is the truth and that in the end it cannot be avoided.

Only last month, the Chancellor penned an article in a United States economic journal, International Economic Insights, in which, under the title "UK Economic Policy: Lessons from History", he re-examined recent developments in the British economy. In a section headlined "The Boom and its Aftermath", the Chancellor explained: in the latter stages of the boom it was becoming clear that macro-economic discipline was being threatened by one of the Government's micro-economic reforms, deregulation of the financial sector. The right hon. Gentleman went on: There was an explosion in bank lending … which unleashed a boom in asset prices, which generated an unprecedented and unsustainable surge in consumer spending. Government macro economic policy then turned to the task of curbing the inflationary consequences of that boom. The main policy instrument was high interest rates. That is pure Treasury-speak for "boom and bust"—home-grown, domestically caused, without a hint of a foreign bacillus.

With unusual candour and precision, the Chancellor set out to his American readers exactly what had gone wrong, and common sense reinforces his interpretation. What malign foreign influence pushed our domestic construction industry into its worst recession for 40 years? What external force has so severely depressed the domestic retail sector in Britain? From which foreign part did we import mortgage misery, and which foreigners are repossessing the thousands of homes that British families are being forced to leave?

The Chancellor has, as I have noted, been frank, but I regret that no contrition accompanied his candour. Where in all the Government's denials, explanations, contortions and misinformations is there a single word of apology for the misery that they have caused?

It is, I regret to say, even worse than that. If the Government had their time all over again, they would do exactly the same.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

Will the right hon. and learned Gentleman give way?

Photo of Mr John Smith Mr John Smith , Monklands East

No, I will not.

What I have said is not the result of some wild surmise on my part. At a meeting of the National Economic Development Council on 8 Janaury this year, the Chancellor said—[Interruption.] If the hon. Member for Lancashire, West (Mr. Hind) keeps interrupting, we shall not make much progress. I hope that he will listen to what I am saying. I will repeat my last remarks for his benefit as I doubt whether he is capable of listening and speaking simultaneously.

At the NEDC meeting on 8 January, the Chancellor said: the policy would not have been different had we known the outcome. The right hon. Gentleman told the House much the same at Treasury Question Time on 16 May last year, when he said—it is rather important for Conservative Members to comprehend and remember this— Rising unemployment and the recession have been the price that we have had to pay to get inflation down. That price is well worth paying."—[Official Report,16 May 1991; Vol. 191, c. 413.] If we had any lingering doubts about the Government's intentions, the Prime Minister put their position very clearly when he said, If it isn't hurting, it isn't working. Plainly, the Government are now embarrassed about what both the Chancellor and the Prime Minister have said. That was reflected in the Prime Minister's defensive scrambling at Prime Minister's Question Time yesterday. He claimed, for example, that the Chancellor had not "in context", as he put it, made the statement about unemployment and the recession being a price "well worth paying". We all heard him say that. The context, however, was entirely apposite; the Chancellor was answering a question about the link between unemployment and high interest rates, which had been asked by my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett). The exchange can be found in column 413 of Hansard, dated 16 May 1991. The Prime Minister's celebrated statement— If it isn't hurting, it isn't working"— conveyed exactly the same depressing message.

It may not be any comfort to the 930 companies going bust every week, the million people who have become unemployed or the thousands of families who have lost their homes to know that it was all part of the Government's plan—that their hurting was necessary to the Government's work. They should be in no doubt, however, as to who is responsible for the disasters that have befallen them. The Government's amendment contains not even a marginal recognition of the real problems of our economy, and the vital need for an investment-led recovery. I believe that we shall have little chance of meeting the challenges of the 1990s successfully if investment continues to fall. Investment is the very life blood of the economy; if it continues at a low level, we shall not be able to close the investment gap between us and our major European competitors.

Since 1979, investment in manufacturing has increased by 47 per cent. in Germany, by 52 per cent. in France, by 73 per cent. in Italy and by more than 100 per cent. in the Netherlands. In Britain, under the present Government, it is below its 1979 level.

The latest figures for manufacturing investment for the last quarter of 1991 show that it is still falling, and that the CBI forecasts a further fall this year. That is why so many other people—as well as Opposition Members—are urging action to stimulate investment. Early action to cut the high interest rate, particularly the high real interest rate, would of course be of particular value to our hard-pressed industrial sector. I believe that there is scope at this stage for the Government to make a further reduction, and they should not hesitate to do so.

The Government should also initiate fiscal incentives to boost investment. Why have they so obstinately set their face against increasing capital allowances, when so many in industry and commerce urge just such a policy? Investment is also crucially needed in the development of human skills. The sad fact is, as every objective international comparison reveals, that Britain lags behind the rest of the Community in provision for training.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepool

In the middle of last year, in another place, the Select Committee on Science—and Technology—with a Conservative majority—concluded in its report that the Government had no policy for industry and no policy for Britain. Furthermore, it expressed the view that, if the Government did not alter course, no British-owned manufacturing industry would be left in this country.

Photo of Mr John Smith Mr John Smith , Monklands East

My hon. Friend has made a particuarly good point. It will register with the Secretary of State for the Environment, whose book "Where There's a Will" is described as a No. 1 best seller. The only thing wrong with the cover is the view expressed by The Guardian's Hugo Young that the book is Of its kind, the most impressive book I've read by a modern Conservative. I do not know whether that will do him much good.

In his book, the Secretary of State makes a strong cse for an industrial strategy. [Interruption.] I do not suppose that Conservative Members want to hear about that, either, but I suggest that they read the right hon. Gentleman's book—especially those who voted for him in the leadership election.

Photo of Mr John Smith Mr John Smith , Monklands East

There is one of them. I will give way to him, because I know that he voted for the right hon. Gentleman.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

I am grateful to the right hon. and learned Gentleman. Will he explain how increasing taxation will get Britain out of the recession?

Photo of Mr John Smith Mr John Smith , Monklands East

I suggest that the hon. Gentleman, in his few remaining weeks in the House of Commons, should understand that Labour's tax and spending proposals mean that we redistribute money to pensioners and the recipients of child benefit. If the hon. Gentleman has any doubt about the effect of such a policy, he can read the comments of City analysts, who have described it as mildly reflationary.

Several Hon. Members:

rose

Photo of Mr John Smith Mr John Smith , Monklands East

I have only just given way, after repeated sedentary interruptions.

What is disturbing, and what I think that the Secretary of State for the Environment genuinely appreciates—although other Ministers may not—is the problem caused by our poor industrial training. Last year, the Institute for Economic and Social Research published a paper which starkly revealed Britain's weakness in developing intermediate skills. It showed that, in Britain, 31 per cent. of technical workers in manufacturing had no vocational qualifications. In Germany, the figure was only 8 per cent. At higher levels of qualification, only 14 per cent. of British technicians were qualified, while in Germany the figure was 36 per cent.

That could be put in another way. It could be put in this way: In West Germany 80 per cent. of fifteen year olds go on to full time vocational schools or employer co-ordinated training schemes. West German employers spend 20 per cent. more on training their workforce than employers in Britain. 94 per cent. of Japanese 16-year-olds stay on at school for another three years. France produces three times as many mechanical and electronic technicians as we do. That is a direct quotation from the right hon. Gentleman's famous Blackpool Tory conference speech. He clearly understands the nature of the problem. Nor, at that time at least, was he fooled by the Government. He said: We can point to the £2 billion we spend on training over and above that which was spent a decade ago. But let us be honest about what this programme really is. The training schemes which we have rightly created in the midst of the unemployment of the early '80s are mostly for those who cannot find work for themselves—to put it bluntly, the least able. But the most urgent problem is not to provide training for those devoid of any, important though that is. The priority is to raise the skill-levels of those clearly able to find employment. I would not choose to state the problem in precisely the way that the right hon. Gentleman chose for his speech to a Conservative party fringe meeting, but he understands very clearly that all is not well.

How, I wonder, can the right hon. Gentleman honourably justify the policies of a Government who have recently announced yet further cuts in expenditure on training? Next year it will be reduced by more than £170 million. Youth training will be cut by £50 million and employment training by £60, and training in work continues to be woefully neglected by the Government. It is all the more remarkable that training for the unemployed should be cut when the numbers of long-term unemployed have increased so substantially. Only yesterday the Prime Minister was wringing his hands and saying that the increase in long-term unemployment was "extremely unwelcome". If he means what he says, why does he not restore the budget for employment training which has been so drastically reduced?

We need to stimulate investment in new plant and equipment and new technology but that needs to be matched by an equivalent commitment to training for work and for people in work. To compete in a world of constant technological change, the investment and training gaps must be closed. Part of the stimulus to investment—[Interruption.] I shall resist Conservative Members' attempts to distract attention from what I am saying.

Part of the stimulus to investment—[Interruption.] If what we have heard from Conservative Members is debating, it is not debating as I understand it, but systematic and organised interruption and vanity by people who do not want to hear any criticism of their policies. They are too used to the uncritical columns of the Daily Mail, the Daily Express and The Sun, but—thank goodness—in this Parliament we can criticise them, and we will.

Part of the stimulus to investment should be regionally directed through the establishment of development agencies—[Interruption.]

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I am sure that the House will want in due course to give a fair hearing to the Secretary of State.

Photo of Mr John Smith Mr John Smith , Monklands East

Part of the stimulus to investment that we need should be regionally directed through development agencies in the English regions and the strengthening of the Welsh Development Agency and Scottish Enterprise and its associated local development companies. The Government constantly scorn a policy of regional economic development. According to them, it is a bureaucratic interference with the free forces of the market. It is, they say, another example of the dreaded intervention by Government which they, alone among the countries of the European Community, so relentlessly scorn. Had the Secretary of State for Trade and Industry been able to take part in our deliberations this afternoon—he who is the very embodiment of Thatcherite economics—he would undoubtedly have given us that message.

Will the Secretary of State for the Environment deploy such an argument? I wonder. Indeed, I doubt it. In his speech at Blackpool and also in his book "Where There's a Will", he argued the case for action in England to parallel the Scottish and Welsh initiatives. In the book he claimed: an English Development Agency would help to do for England what the Scottish and Welsh agencies have for years done in their own countries with great effect. That is from page 169 for those who want to pursue those interesting comments on the modern economic and political situation. The right hon. Gentleman cannot complain—I am doing my very best to boost sales. As the beneficiary of a past in publishing which has left him extremely well endowed, he should be grateful for such assistance as I am giving him.

Why do not the Government—this is directly related to the Secretary of State's own responsibilities—begin the phased release of capital receipts held by local authorities as a means of reviving the depressed construction industry? Such action is being urged by the industry itself, by local authorities, by the Select Committee on the Treasury and Civil Service and, for all I know, by the Secretary of State for the Environment in arguments within the Government.

When will the Government realise their special obligation to the million people who have been thrown out of work since March 1990 as a result of their policies? There is very little concern shown by any Conservative hon. Members for the unemployed. They are dismissed from Conservative Members' minds and put out of their consideration, but we believe that it is vital that we embark on a temporary work programme which combines jobs experience and training. It is urgently necessary in a country in which unemployment is moving relentlessly upwards as month follows month.

Photo of Mr John Smith Mr John Smith , Monklands East

To the hon. Gentleman who asks me "How much?" I say that our industrial recovery programme should cost about £1 billion, and this country can afford to spend £1 billion to start us on the road to recovery and to start to get unemployment down.

Photo of Mr John Smith Mr John Smith , Monklands East

I have told the hon. Gentleman that I shall not give way to him. His persistent attempts are intended merely to disrupt.

Photo of Mr John Smith Mr John Smith , Monklands East

If Conservative hon. Gentlemen and hon. Ladies reflect on what has been happening in this debate, they will find that they have very little claim to particular courtesy from me towards them in view of the way in which they have behaved.

Photo of Mr John Smith Mr John Smith , Monklands East

Hon. Members ask for policies, and we give them policies. We give them policies for investment, for training assuring work in research and development, and policies to deal with the urgent problem of unemployment, but however many policies one gives them, one is wasting one's time because they are not prepared to listen. That is obvious from this debate.

I have little doubt—

Several Hon. Members:

rose

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. The right hon. and learned Gentleman has made it very clear that he will not give way. Hon. Gentlemen and hon. Ladies should not persist. May I add that I hope that the hon. Members for Colne Valley (Mr. Riddick) and for Harrow, West (Mr. Hughes) will desist from their persistent sedentary interventions. If not, I may find it necessary to invoke disciplinary powers.

Photo of Mr John Smith Mr John Smith , Monklands East

In the circumstances that you have described, Mr. Deputy Speaker, I have been urging proposals on this blinkered Government, but I fear that, as usual, they will reject them. They are increasingly—and rightly—seen by the public as prisoners of their own outdated dogma, unable to recognise the full extent of their own failure.

The Government's amendment to the motion has the gall to claim that Labour policies would lead to a recession. Where on earth do they think we are now? What do they think of their own record? In one period of government, they have created two record-breaking recessions linked by an inflationary boom. In the early 1980s, this crowd of incompetents destroyed more than 20 per cent. of our manufacturing capacity in the deepest recession since the second world war. In the early 1990s, they have created yet another recession—this time the deepest in the service sector and, overall, the longest since the second world war.

Can there be any wonder that their record of economic growth—an average of 1·71 per cent. per annum from 1979 to date—is so dismal? Had they been able over that period to achieve growth even at the British trend rate of 2·5 per cent. which was achieved from the mid-1950s to 1979, in 1991 our GDP would have been £50 billion greater and, on average, every family in Britain would have been £2,200 better off in 1991 alone.

All this was despite the enormous advantages of North sea oil—more than £100 billion in revenues alone. And that does not take account of all the other benefits that North sea oil has conferred on the economy. It is so seldom referred to by Government apologists that from time to time we ought to remind ourselves of its contribution over the past decade. Despite all those advantages—falling commodity prices, for example—the growth record is appalling.

Inevitably, that has been reflected in the standard of living of our people. It is revealing that last week the Treasury itself issued to all British Members of the European Parliament a briefing arguing the case against increasing the British contribution to the Community budget—it is a public document—and one of the key justifications of the case was: The UK's relative prosperity has fallen since 1988. Our representatives in the European Parliament have to argue that our contribution should be less, because we are poorer in relation to the other countries than we were in 1988. It is a great pity that the Government do not issue a similar document to all Members of the House, especially Conservative Members. It can easily be established by consulting the statistics that the European Community as a whole has achieved 7·5 per cent. since 1988, whereas in Britain, under the management of the present Chancellor of the Exchequer and the present Prime Minister, economic growth since 1988 has been only 1 per cent. No wonder it is said that our standard of living has fallen over that period.

That is proof positive of our relative economic decline under the incompetent management of an increasingly discredited Government. The people of this country will not forget that it was the Chancellor of the Exchequer who told us that rising unemployment and the recession have been a price well worth paying. [HON. MEMBERS: "You have said that before."] Yes, and I shall say it again, from one part of this country to the next, throughout the general election campaign. Conservative Members are all worried about it; they are all frightened about it; they are all guilty about it. It was an appalling thing for a Chancellor to say and it was an even more appalling thing for a Government to do.

Increasingly, the people of this country know that rising unemployment and recession are the totally unacceptable price of having the Conservative party in government. Fortunately for our country, a general election comes closer every day.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

On a point of order, Mr. Deputy Speaker. I am sorry to delay the Secretary of State's speech. The House will wish to hear him, as the likely Leader of the Opposition in a few months' time. However, you will be well aware, Mr. Deputy Speaker, that during the speech of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) there was organised gangsterism. Normally it would be difficult to ascertain which individual hon. Member was responsible, but during the speech many copies of a document were being waved about by Conservative Members. We can therefore ascertain which Conservative Member was responsible for the hooliganism, because under the rules of the House we can take up to 12 copies of a document without charge, but any larger number of copies has to be paid for. Will you, Mr. Deputy Speaker, through the authorities of the House, identify the hon. Member who took all those copies and make sure that—[Interruption.]

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. It was obvious that there were a number of facsimiles of whatever the document was, but I have no evidence to suggest—[Interruption.] Order. Let me deal with it. Hon. Members must resume their seats. I have no evidence whether the copies were produced by one individual, or of their source. However, it is obvious that there was behaviour symptomatic of an orchestrated demonstration—[Interruption.] Order. In my judgment, that is a matter that the Chair would deprecate—from whichever side of the House it came.

May I advise the House that, whatever the election date may be, we still have several weeks to go before the general election? I very much hope that the House will cool down and steady itself. Perhaps we can now get on with the business. I call Mr. Secretary Heseltine.

Several Hon. Members:

rose

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I doubt whether it would help matters for me to take any more points of order. I call Mr. Secretary Heseltine.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment 5:13 pm, 19th February 1992

I beg to move, To leave out from "House" to the end of the Question and to add instead thereof: congratulates Her Majesty's Government on its success in winning the battle against inflation and in bringing interest rates down; welcomes the recent reduction in the balance of payments deficit and the fact that exports are at record levels; notes that the United Kingdom has some of the most competitive tax rates in the world, including the lowest level of corporation tax in either the G7 or the European Community and that Government spending on training has increased by two and a half times over and above the rate of inflation since 1979; recognises that the foundations for economic recovery are now firmly laid; and rejects totally the policies of the Opposition, which would lead to soaring inflation, greater public sector borrowing, higher taxation, increased unemployment, rising interest rates, declining investment and a spiralling cycle of higher wages and prices which would destroy any prospect of recovery and plunge Britain into perpetual recession.". You, Mr. Deputy Speaker, will of course identify the speech of the right hon. and learned Member for Edinburgh, Monklands—[Interruption.]

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

—the right hon. and learned Member for Monklands, East (Mr. Smith). You, Mr. Deputy Speaker, will know that the main thrust of the right hon. and learned Gentleman's argument was to suggest that the recession in this country was the responsibility of the Government, and of the Government alone.

Nobody questions the nature of the recession with which we have to grapple. It has never been disputed by my colleagues or by myself. It is interesting that in this morning's newspapers the effect on the German economy is so adequately described—to indicate as clearly as possible the effect of recession on that economy.

I fear that this morning's newspapers reveal another casualty of the recession. Labour's campaign, as The Guardian reveals, has quite failed to convince the British people that the British Government are to blame. Only 9 per cent. of the British people believe that the recession here is the fault of the British Government.

If the right hon. and learned Member for Monklands, East has scanned this morning's newspapers, what he will have found interesting is not the uncritical columns of the Daily Mail or the Daily Express, but what he might have found in the uncritical columns of The Guardian. The Labour party, dismayed by the right hon. and learned Gentleman's failure to pin the blame on the Tory Government, is looking for a scapegoat.

I read with some surprise that, despite the onslaught from the Labour party, its members have already lost faith in the man at the front end of the attack. No Conservative Member would say such things, but I understand that the right hon. and learned Gentleman's colleagues, loyal to a man, are concerned that he is not radical enough on the economy". I gather that it is felt—dare I say it—that he is " less clever than he thinks and less busy than he should be". There is even a suspicion growing—only on the Labour side, of course—that he has left Labour boxed in", and that his policies are deflationary and offer little comfort for the unemployed or for debt-laden firms". [AN HON. MEMBER:"Is that The Guardian?"] Yes, that was The Guardian. The tumbrils are rolling. This evening's Evening Standard carries the headline: Labour's knives out for Smith". The debate began as a vote of confidence in the Government's economic policies; it has rapidly become a vote of confidence in the shadow Chancellor. I find no difficulty in agreeing with some of the anxieties that flow from the whispers on the Labour Benches, although I totally reject the implication that what is needed is not less but more of them.

Nothing more reveals the willingness of the Labour party to misread the harsh nature of present events than the accusation by the Leader of the Opposition in the House two weeks ago that the Government are "inventing recessions abroad". The report of the Bundesbank—the right hon. and learned Member for Monklands, East will not feel that I am undermining his position in saying that I trust the Bundesbank's views on the German economy rather than his—is that the main reason for three successive quarters of negative growth in Germany is the international recession which is reflected in particularly low investment activity". Perhaps the right hon. and learned Gentleman should think again. Inventing recessions? How does he explain unemployment in Germany of 3 million? Did we invent the fact that in the past three months, industrial production fell by more in the United States, in Japan and in Germany than it did in the United Kingdom? Did we invent the fact that there are economic problems across the world, from Stockholm to Sydney? Did we invent the comment on Japan by Russell Jones of Phillips and Drew? He said: There's no doubt in my mind that the manufacturing sector is in recession".

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

The right hon. Gentleman talks about inventions. Let us bring him to the facts. Do he and the Government take responsibility for the tens of thousands of people who have lost their houses? Does he take any responsibility for or feel any guilt about the 2·5 million people who have lost their jobs? Let him deal with the facts for which he is responsible.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

We shall come to the policies that will affect those who have lost their jobs. The hon. Gentleman will welcome as much as I do the fact that houses are now beginning to sell and that the starts are 2 per cent. up.

The issue that we must recognise is that there is one particular reason why the world economy is especially difficult for this country. Britain's economy is one of the world's most dependent on exports. The right hon. and learned Member for Monklands, East knows that Scotland alone exports more manufactured goods per head of population than do Germany, America or Japan. He knows that Britain exports a greater proportion of our gross national product than Japan does. If there is difficulty in the world economy, our economy will suffer disproportionately as a consequence. If all our principal overseas markets are sluggish, we cannot avoid the consequences at home.

The question that must concern us is the nature of the policies that we need to fight our way out of the present international difficulties. In stark contrast to the right hon. and learned Gentleman, let me set out the policies that are essential for us to fight our way out of our present position.

Photo of Mr Tony Benn Mr Tony Benn , Chesterfield

When there are so many unmet needs in Britain and so many unemployed people who could meet those needs, why cannot the two be put together to create prosperity for the 1990s?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

The reason is that, unlike the right hon. Gentleman's right hon. and hon. Friends, we are not prepared to direct labour, as all the most ineffective economies in the world have tried to do at some stage.

The question with which we must concern ourselves concerns the essential policies which we believe we must follow to fight our way out of our present circumstances. The first essential ingredient is that we must pursue the drive for competitiveness in every aspect of the domestic economy. That is critical in the battle to contain public expenditure, to reduce inflation, to keep interest rates under control, to attract inward investment, to stimulate new enterprise and to keep our tax rates competitive. Those economic policies are essential to our policies, as are those for improving education and training, and for the safeguarding of the environment.

The right hon. and learned Member for Monkland.s, East said that we were doing nothing. All that reveals is that he does not understand what must be done. During the past 16 months, interest rates have been cut eight times and inflation has fallen from 10·9 per cent. to 4·1 per cent. The contradiction in everything that the right hon. and learned Gentlemen says is displayed no more eloquently than in the words of the man who is something of a hero figure to the right hon. and learned Gentleman—Jacques Delors. He said that Britain is fast becoming a paradise for foreign investment. That is why, in spite of the world downturn, we have seen in recent months Toyota's announcement of further investment in Derbyshire bringing 3,000 more jobs, Nissan's additional £150 million in Sunderland and other inward investment projects from Kimberley Clarke on Humberside to Toshiba in Plymouth.

The objectives are clear. The question that we must debate today is how we are to achieve those objectives. To be fair to the right hon. and learned Gentleman, I do not think that he would have too much difficulty in accepting many of the priorities that I have listed. Nobody should be especially surprised about that. He is one of the few Labour Members who has served in a Government with a basic rate of 35p in the pound, a top rate of 98p in the pound, inflation running out of control at 27 per cent. and more days lost in strikes in just one month in the winter of discontent than were lost in the whole of last year. I understand that he is not leaping up and down to restore the record of a Government among whom he was prepared to serve without complaint.

The right hon. and learned Gentleman's problem is that most of his right hon. and hon. Friends are positively enthusiastic to restore, piece by piece, the regime that Labour left behind in 1979. What is at issue this afternoon is not the debate across—[interruption.]

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I very much hope that the hon. Member for Vale of Glamorgan (Mr. Smith) will show a little more restraint.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

What is at stake this afternoon is not the debate across the Floor of the House; it is in reality the debate within the Labour party and, even worse, the debate within the shadow Cabinet. On the one hand, we have the much vaunted prudence of the shadow Chancellor and on the other, the irresponsible extravagance of his shadow Cabinet colleagues.

I hear wherever I go that the right hon. and learned Gentleman has become a star attraction in the City. Lunch after lunch, dinner after dinner, the assurances flow. The prawns are consumed and there are soft shells, soft words and soft lights. Not a discordant crumb falls on to the thick pile. "All will be well," is the message that the right hon. and learned Gentleman conveys. "The shadow Cabinet? Don't you worry," is the message. "I've stitched them up." The words are no sooner uttered than up pops the hon. Member for Oldham, West (Mr. Meacher), the shadow Secretary of State for Social Security, who said: If you took a poll on Labour's public expenditure commitments in the City, you would find it almost 100 per cent. against". Think of the tragedy, Mr. Deputy Speaker. All those prawn cocktails for nothing. Never have so many crustaceans died in vain. With all the authority that I can command as Secretary of State for the Environment, let me say to the right hon. and learned Member for Monklands, East, "Save the prawns."

Photo of Mr John Smith Mr John Smith , Monklands East

I forgive the Secretary of State for not knowing that Monklands is not in Edinburgh. It was very revealing about Conservative attitudes to Scotland. [Interruption.] I hear the right hon. Gentleman asking his hon. Friend where it is. It is in Lanarkshire. However, I ought not to badger the right hon. Gentleman about his lack of knowledge of his country. While we are of divisions within parties, does the Secretary of State hold to the view expressed in his article in November 1989 in The Times that Britain should sign the social charter?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

The right hon. and learned Gentleman knows full well that the matter was then negotiated brilliantly by my right hon. Friend the Prime Minister [Interruption.] The Labour party has been duped on the social charter. Labour Members all know that the Germans want to export their high costs, that the French cannot resist the social charter because they have a socialist Government, and that other countries will not take any notice of it. The Labour party has been duped into signing up to that extravagant impost on our industrial economy.

I have to recognise that there is another lacuna in the dilemma that we on this side of the House face. Up to now I have discussed the unlikely hypothesis of the right hon. and learned Member for Monklands, East being the Chancellor of the Exchequer should a Labour Government emerge. I assumed that we should enjoy the bespectacled geniality of the right hon. and learned Gentleman. But there is even dispute about that. The hon. Member for Livingston (Mr. Cook) tells us: Once we have a Scottish Parliament handling Scottish home rule affairs in Scotland, it is not possible for me to act as Minister of Health administering health in England and Wales. At a stroke, the shadow Health Secretary—a Scot—is gone. By the same standards, the shadow Chancellor—a Scot—is gone; the shadow Trade and Industry Secretary —another Scot—is gone. All Scots, all gone. Never have I heard so convincingly and eloquently made the case for devolution.

Let us assume that the right hon. and learned Member for Monklands, East survived the scenario sketched by the hon. Member for Livingston. The right hon. and learned Gentleman may think that he has trouble now, but in those circumstances his trouble would hardly have begun. Not a day passes when his protestations of economic constraint are not shot to pieces by his colleagues. As each Labour spokesman promises a new priority, urgent action, immediate initiative—

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

No.

Each Labour spokesman has his own variant of a crash programme. That is exactly what it would be—the biggest crash programme in British economic history.

Let us look at the heart of the matter. Only two weeks ago, Labour's housing spokesman, the hon. Member for Hammersmith (Mr. Soley) tried to cook the books by redefining public borrowing. He promised—his phrase was eloquent—a phased release of up to £8 billion of capital receipts, without, of course, increasing the public sector borrowing requirement. Consternation in the Opposition camp. Urgent telephone calls. But they were all abroad somewhere out there across the continent. Dramatic disruption of the grand tour. Then, before we knew where we were, the climbdown.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

No. I am not giving way. In order that the hon. Gentleman does not get the quotation wrong, it might be helpful to provide the House with the quotation from The Times of 6 February this year in which he continued his saga of this phased release. He said: There is no plan to revise the PSBR. I was wrong. I withdraw it. This is not really about the phased release of capital receipts. We have witnessed the phased release of the Opposition spokesman on housing. The whole House will wish to join me in saying, "Good luck, good fortune and goodbye."

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I have the advantage over the Secretary of State of having the script available to me with the exact words. What I said, as the hon. Member for Ealing, Acton (Sir George Young) will tell him, was that there should be a phased release of capital receipts and that that would have an impact on the PSBR. That is precisely what I said. The interesting thing, as the hon. Member for Acton will agree, is that he went on to say that the Government were also keeping that very option under review.

Mr. Hesetine:

The Times now joins the list, along with the Daily Mail, the Daily Express and The Guardian, of unprincipled misrepresentation of Labour's policies.

Photo of George Howarth George Howarth Shadow Spokesperson (Environment, Food and Rural Affairs)

On a point of order, Madam Deputy Speaker. A few moments ago, the Secretary of State wilfully and deliberately misquoted comments attributed to my hon. Friend the Member for Hammersmith (Mr. Soley) who, with the benefit of his script, has corrected him. Should not the Secretary of State apologise to my hon. Friend?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

I fear that that is a point of frustration, rather than a point of order. [Interruption.] Order. These are matters for debate, not for points of order.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

Without taking issue with you, Madam Deputy Speaker, it is not frustrating me, it is frustrating them. All that I want to know is, if the transatlantic or trans-European phone calls produced a result, how much did they add to public expenditure as a consequence? Opposition Members cannot have it both ways.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

I am willing to give the Secretary of State a copy of the script. I have the exact words, as taken down at the time. I am happy to give them to him either in half an hour or later. If I give them to him, will he give an apology to the House?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

I am just old-fashioned: I believe what I read in The Times. I, the House and the country want to know what deal the hon. Gentleman did with the right hon. and learned member for Monklands, East. How much public expenditure was slid under the carpet which they thought that no one would see?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

I had not intended to raise the matter, but as I hear the hon. Member for Knowsley, South (Mr. Howarth) interrupting from a sedentary position, I tell him to go back to Knowsley and look at Cantrill farm, as it once was. It was one of the great housing slums of Europe. It took a Tory Government to rescue it.

Photo of Robert Wareing Robert Wareing , Liverpool, West Derby

On a point of order, Madam Deputy Speaker. Is it not one of the conventions of the House—[Interruption.]—there are such things—that when a Member names another Member as part of a speech, he is willing to give way when requested to do so?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

It is certainly up to the hon. Member who has the Floor whether he gives way, but I am afraid that many of the common courtesies which we used to extend to each other in the House were forgotten a long time ago.

Photo of George Howarth George Howarth Shadow Spokesperson (Environment, Food and Rural Affairs)

At least because of you, Madam Deputy Speaker, the Secretary of State has learnt some courtesy. He mentioned Stockbridge village. Will he confirm that the Stockbridge Village Trust has been technically bankrupt for the past three years and that, without the guarantees which have been provided by the Labour council in Knowsley, it would have been in the hands of the receiver?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

The Labour council of Knowsley begged me to rescue that estate. The hon. Member should never forget that the Abbey National and Barclays bank made it all possible.

If I may leave the junior spokesman for the environment, I should like to come to the hon. Member for Dagenham (Mr. Gould)—no slouch he, when it comes to egging up the public expenditure ante. Within the past few months, by his team alone we have been asked to support: local authority bids for an extra £2 billion a year; the full release of all those capital receipts; the unfettered discretion of local authorities to clobber the business rate payer.

That is just part of the hon. Gentleman's programme. Then there is the problem of renationalising the water industry. In the past few weeks—this is why there has been so much muttering on the Labour Back Benches—we have heard about the £1 billion so-called recovery package, about the £800 million that Labour wants to spend on training and the £50 million that it wants to spend on the national health service by cancelling private health insurance.

But hold on: not to he outdone, the hon. Member for Dagenham says that renationalising the water industry is a "priority" for Labour. What will all that cost—about £4 billion, just to get control of it. That will cost about four times the size of Labour's recovery package; five times the amount that it proposes to spend on training; and 80 times what it deems to be essential for the national health service. All for one purpose—to buy off the hard left of the Labour party. The consequence would be a return to the regime when Labour cut water investment. That was Labour's contribution to the environmental enhancement of that vital industry.

Before the day is out, the hon. Member for Dagenham will be back on his feet, defending the higher tax rate plans of the Labour party, which overnight would do more to destroy the housing market than any other single thing one could do.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

I know that the Secretary of State can hardly wait for me to get to my feet. When I do so, I shall attack the Government's record on the recession—something which the right hon. Gentleman has so far notably failed to defend.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

My colleagues and I tremble on our feet. I promise the hon. Gentleman that we shall all be here waiting for the great hour when the hon. Member for Dagenham flattens us. I confess that I had intended to go out to dinner tonight, but I shall not do so now.

I do not want to be unfair to the hon. Member for Dagenham. Why should he respect the shadow Chancellor's edict, when the leader of the Labour party designs policies over Luigi's pasta, late at night—economics bolognaise?

Several Hon. Members:

rose

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. The Secretary of State has made it abundantly clear to me that he is not giving way.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

I do not want to pretend that the Leader of the Opposition isolates himself from advice, to act alone. He does not act alone—he does it with the aid and assistance of some of Britain's leading economists, even if they are heavily disguised as journalists from the Galleries of the parliamentary Lobby.

There was the leader of the Labour party—wrestling with the twin complexities of national insurance on the one hand, and how to carve up the shadow Chancellor on the other. Picture the scene. The Leader of the Opposition, fighting to prevent long strings of spaghetti from slipping through the prongs of his fork, while the minutiae of national insurance were slipping through the caverns of his mind.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

In my constituency, the level of unemployment is more than 20 per cent. Is it therefore in order for the Secretary of State to give us nothing other than a music hall turn?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

The hon. Gentleman knows that that is not a point of order for the chair.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

So, there we were, it was the politics of Bedlam—fork-twisting, head-spinning, mind-boggling—the right hon. Member for Islywn (Mr. Kinnock) firmly in charge. He would have been better employed wrestling with the damaging consequences of his tax policies on the national economy.

The right hon. and learned Member for Monklands, East is not that far apart from his leader on putting up tax rates. In a recent interview, David Frost put it to him that The Economist had pointed out that, under his proposals, Britain would have the highest tax rates for middle managers anywhere in the world. Quick as a flash, the right hon. and learned Member for Monklands, East said, "Ah."—[HON. MEMBERS: "Ah!"]—I paused because it is so awful that I had to check it before I read it. He said, by way of excuse, "Ah, what they took was not all the countries in the world; what they took were the G7 industrial countries."

So, there it is, on the record, staring us in the face. Put the right hon. and learned Member for Monklands, East in the Treasury and, as long as he can find some clapped-out, down-at-heel, fly-blown socialist economy with higher tax rates than we have in this country, he will be content to point his lawyer's finger and say that someone, somewhere is suffering more than we are.

The Opposition have the effrontery to come to the House and talk of job creation. They talk of better education. They did so when they were in government. They called for a great debate, which consisted of agonising over the collapse of education standards that the worst excesses of Labour's social engineering had delivered.

Twelve years ago, only one in eight of our young people went through higher education. Today, that figure is one in four and it is heading for one in three. The Government are investing £2·8 billion in training, enterprise and vocational education—that is two and a half times as much in real terms as was invested in the final year of the last Labour Government. In addition, the private sector is spending £20 billion on training its employees; exports are at an all time high; inflation is at 4·1 per cent., below the average of the European Community and that of the G7 countries. Interest rates are down by 4·5 per cent. in just over a year. We have some of the most competitive tax rates in the world and the lowest level of corporation tax in either the G7 countries or the European Community. All the Labour party can do is talk about taxing the rich, as though that will help the economy.

The Labour party does not understand that there is a whole generation of young people out there—the skilled, the talented and the enterprising—who need to believe that there is a future for them here, in Britain, where energy and initiative will be rewarded.

We want to see young teachers seek the initiative to assume responsibilities as head teachers. We want young engineers to believe that it is worth their while to be promoted to production managers. We want young doctors to stay and practice in Britain and aim for the privilege and reward of running our hospitals. We want young scientists to relish the opportunities to explore tomorrow's frontiers in our laboratories and research establishments.

Photo of Mr Giles Radice Mr Giles Radice Chair, Treasury & Civil Service Sub-Committee

On a point of order, Madam Deputy Speaker. Is it in order for someone who is making a speech to the House to speak only to those on his Benches? Is this a leadership bid?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

Why should I not speak to my own Benches? We are the governing party and we will stay that way because the Labour party is out of date, out of touch and out of office. We will keep them there.

Hon. Members:

More, more.

Photo of Stuart Bell Stuart Bell , Middlesbrough

On a point of order, Madam Deputy Speaker. It should be placed on record, for the benefit of the House and the people, that the Secretary of State at no time made any reference to those who are unemployed. He had no message and no excuses for them.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

The hon. Gentleman knows better than that; that is not a point of order with which I can deal.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney 5:51 pm, 19th February 1992

The House has had some entertainment in the past half an hour. However, the Secretary of State did not in any way raise the level of the debate or people's understanding of the problems that now face the country. We should all give him some credit for what he did do, because he raised the morale of the Conservative party. Conservative Members are now feeling slightly less miserable than they have been in the past few weeks. However, that is an evanescent experience, because I do not believe that it will last very long.

The nation, having watched the right hon. Gentleman and the enthusiastic reception that he received, will be amazed. It will think what a splendid bid it was for the leadership of the Conservative party after it has lost the next election. However, I believe that the right hon. Gentleman has mistimed his brilliant assault upon the leadership of his party.

I want to consider the subject of the debate—the problem of massive unemployment, which is now the greatest problem that faces the country. I am glad that the Opposition motion concentrates precisely upon that problem, the tragedy of high unemployment.

The House should recognise that unemployment has not just been experienced in 1991–92—painful as that has been—but that it has been our continuing experience ever since the Conservative Government came to power in 1979. Unemployment rose from just over 1 million in 1979 to more than 3 million in January 1982—less than three years later. Unemployment stayed at more than 3 million in every January until 1988. That is evident from the Government's own official figures, which allow for all the careful savings that enabled them to pare down the official total. More than 3 million people were unemployed in every year from 1982 to 1988. Then we had a brief decline in unemployment when it fell to its lowest point of 1,680,000 in January 1990. Since then unemployment has gone up yet again and we are now having this debate against the background of 2,670,000 unemployed people at the count in January this year. Everyone in the House as well as the Government know that that figure will go up still further.

I will not say much about the misery caused by such continuing high unemployment. Everyone who is in touch with his own constituency knows what wreckage unemployment causes to the life and the domestic peace, happiness and security of every home that it visits. We know that millions of our people are experiencing that. In common with my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), the unemployment level in my constituency stands at more than 20 per cent.: one in five of the work force is unemployed. The unemployment rate has seldom been as high as that, but it has seldom been lower during the past 12 years of Conservative government. Such is the scale of misery with which we have to deal.

We all know that unemployment is the main cause of poverty among families—it always has been. We also know that it leads to an appalling loss of personal self-confidence, self-esteem and dignity. That is what unemployment inflicts upon countless individuals.

It is terribly wasteful to any country and any economy to allow 2·5 million people, who could be contributing to the growth of output and the creation of wealth, to stand reluctantly idle because their resources cannot be put to use. The fiscal cost of such a high level of unemployment is great. People out of work impose two burdens—if I can put it that way—on the Exchequer. The first is the tax forgone because they no longer contribute to national insurance or to any other form of taxation. Secondly, they inevitably have to draw upon the state for social benefit. It is calculated that every person currently unemployed costs about £8,000 a year in terms of tax forgone and benefits. We have 2·5 million unemployed and, according to my reckoning, that amounts to more than £20 billion a year. That is the cost of the scandal of 2·5 million unemployed.

The Government have been asked why we are in a recession. They answer, when they can turn their mind to the subject at all, that the problem is inevitable because they had to impose high interest rates upon the economy and squeeze its vitality to deal with the problem of inflation.

That is a partial explanation. The right hon. Member for Blaby (Mr. Lawson), the former Chancellor, has reflected upon his own experience. He now tells us that that inflation was caused by the deregulation of the financial institutions of the economy and the unexpected consequences of that deregulation. I am rather puzzled that the right hon. Gentleman was taken by surprise with his own policies. Anyone could have told him that inflation, in the sense of people borrowing, was getting out of hand. It was crazy when one considers the amount of indebtedness that was taken on by companies and, above all, private individuals. That indebtedness inflated demand to a point at which it could not be sustained. I should also say that, according to others who were not entirely happy with the performance of the right hon. Gentleman when Chancellor, it was his own absurd policy of shadowing the deutschmark and therefore failing to use interest rates in the way that they should have been used and at the right time, that led to the debacle.

I am convinced that the Government have felt obliged, in the confines of their policy, to impose deflation on us because of the appalling current account deficit on the balance of payments that we have suffered in recent years. In 1987, the last year in which things were reasonably all right and the Government were thinking competently and talking about an economic miracle and so on, the deficit was just over £4 billion. In 1988 it rose to £15·5 billion; in 1989 it went to £24·4 billion; by 1990 it was down to £15·2 billion; and in the last year it was just under £6 billion.

In a four-year period, the Government have managed to sustain a combined deficit of nearly £70 billion. It is the largest amount of indebtedness ever experienced in our history, in absolute amount and in terms of percentage of GDP. It is a shameful consequence of Conservative policies. The Government have no reason to feel happy about what has happened in the last year, because to reduce the deficit to a mere £6 billion in the midst of an appalling recession represents no achievement at all. Any further expansion of the economy would simply seriously reopen the gap.

The Government have offered no policies for dealing with the present crisis, except to say that they hope that, once inflation is down, the economy will spontaneously revive. There is no evidence of that happening. It might have a certain plausibility if real interest rates came down pari passu with a fall in the rate of inflation. But while the rate of inflation has fallen—from just under 11 per cent. to just over 4 per cent.—there has been no similar change in the rates of interest that bind and constrict the economy.

The reduction has been from 15 to 10·5 per cent., but the difference between the rate of inflation and the rate of interest is higher now in real terms than it was when interest rates were at their peak of 15 per cent. So I can see no prospect of a revival of any substance in the economy under the Government's present policies.

What measures are needed and what must be done in addition to any measures that have been suggested so far? My right hon. and hon. Friends are right to concentrate on the longer and medium-term problem of improving the supply side of the economy. We want better training and output from our education system and we must promote research and development in the economy, but those are longer-term measures, not the sort of actions that will have an appreciable effect on the unemployment situation or the economy in the short run.

My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) is correct to speak about the desirability of an investment-led recovery. If by that he means spending money on, for example, construction projects of all kinds, including a substantial house building programme—with housing that can be let at affordable rents for our citizens who are desperate for housing—and investment in roads and transport and other infrastructure, that can have an effect in the reasonably short term. Such programmes should be put into place and we should give a commitment to finance them. They are necessary not merely to save the construction industry from almost total collapse but to provide essential infrastructure services and housing for the many who are in desperate need.

Increased investment is essential to restore our manufacturing base, the collapse and erosion of which my right hon. and learned Friend the member for Monklands, East described well. If we are to get a revival of investment in manufacturing and industry generally, we must stimulate demand. Industry will not respond just to investment incentives such as tax allowances. Such action might have a marginal effect, but it will not have a substantial effect until demand picks up and employers, industrialists and captains of industry know that they can sell their current output. Until they can do that, they will not invest on the scale we need to rescue the economy. That is the heart of the problem.

The crucial question flowing from that analysis is where the demand will come from to trigger the investment we need. The demand can come from two sources. One is domestic consumption, and the other is foreign consumption. Either we shall get the demand from domestic consumption here at home, which means increasing consumer or public expenditure—if it is the second, that must have PSBR implications; we should not be frightened of that because it is what the country needs—or from foreign consumption.

In considering the latter, we face perhaps the most difficult problem of all, which is the competitiveness of the British economy. Can we, at the present rate of exchange and with our present interest rates, compete with our major competitors in Europe and elsewhere? I shall not make a long speech about the exchange rate mechanism.

Photo of Robert Wareing Robert Wareing , Liverpool, West Derby

Does my right hon. Friend agree that, from the public expenditure point of view, the nation has many needs? Capital receipts could be released to enable local authorities to build houses and we could do much to improve our railways and infrastructure generally. That, in addition to my right hon. Friend's proposals, would be a way to increase demand in the economy.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

My hon. Friend refers to the kind of programmes that I strongly recommend. But manufacturing industry is an important area and we must increase our capacity, range and competitiveness, which leads me to the forbidden subject of the exchange rate. No occupant of either Front Bench is prepared to be honest about the exchange rate. Once a country enters a system of fixed exchange rates, nobody will speak the truth about the exchange rate. That is why we on the Back Benches are free, and have a duty, to see that important questions about that are discussed.

I do not expect any comment on the subject from either Front Bench, but I put it to the House that if we entered at the right exchange rate in October 1990, it is not right now. If DM2.95 was the right rate in October 1990—I have not seen convincing evidence to show that it was; it was consistent with an external current account deficit of about £15 billion, which was unsustainable—it cannot be right now. During the three years 1989 to the end of 1992, the German industrial economy will have grown by well over 25 per cent. while Britain's economy will have declined in terms of overall investment by not less than 9 per cent. Those figures show how the increased competitiveness of Germany and how our own declining competitiveness affect us.

Although I do not believe that interest rates and exchange rates are the absolute arbiters of policy, we shall not escape from the present deep recession until we are prepared to pluck the nettle and lower our interest rates in the knowledge that that will, if necessary, force us out of the exchange rate mechanism or force us to change our exchange rate within that mechanism. That is an essential ingredient in a total strategy for success.

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest 6:10 pm, 19th February 1992

It is always a pleasure to follow the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and to listen to his characteristically interesting and illuminating remarks. But it is an even greater pleasure to remind the House that this is an Opposition Supply day. My extraordinary observation is that this is supposed to be a day when the Opposition pick a subject on which they feel that the Government are most vulnerable. Having listened to the contributions from the two Front Benches, I do not think that many people will be left in any doubt that my right hon. Friend the Secretary of State for the Environment put on a superb performance. His speech was as peppered with amusing anecdotes as the speech of the right hon. and learned Member for Monklands, East (Mr. Smith), whose contributions I always enjoy. I was very taken with university debating societies and it is good to see that tradition continued in the House.

The unruly behaviour, however—in which I would have no part, Madam Deputy Speaker—may have arisen from the Conservative Benches because of the unique failure of the right hon. and learned Member for Monklands, East to answer any of the direct questions put to him by my right hon. and hon. Friends. In the course of the next few minutes, in what I hope will be a quieter atmosphere, I shall repeat some of those questions so that the hon. Member for Dagenham (Mr. Gould) can think about answering them when he winds up.

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest

The hon. Gentleman usually addresses the House on home affairs, but I am anxious to hear his comments on the economy.

Photo of Mr Stuart Randall Mr Stuart Randall , Kingston upon Hull West

Although we heard an entertaining speech from the Secretary of State for the Environment, there is a serious point to be made. Many people will have been watching the debate on television. They will include people who are unemployed, who have had their homes repossessed, and who have lost their businesses. They will wonder what on earth is going on in the House of Commons when there are so many problems outside, so there are two sides to the coin.

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest

In the next few minutes I intend to follow the line that the hon. Gentleman has just taken. I shall offer my contribution as a small business man—one who has been in business for himself on and off for the past 20 years. Others will no doubt wish to contribute to the debate from their own perspectives.

I am happy to acknowledge that the Government, in the wake of the 1987 stock market correction— it was called a crash at the time, but we all know that it was a correction—pulled the levers of demand too hard. I supported the Government, as did my right hon. and hon. Friends, because we desperately wanted to avoid a crisis of confidence—a recession, sadly—and in doing so it is clear that we over-ignited the flames of demand. The consequences of that were very sad.

I merely make two observations. The most salient one, which should oft be repeated, is that Opposition Members urged us at that time to take even more fierce action to ensure that demand was maintained. Now that the House is quieter, I can say that it is also clear beyond peradventure that conditions in world markets have now exacerbated a situation which faced this country just at the point when we would otherwise have been beginning to come out of recession. The evidence of what is happening in the United States has already been felt by the British car market, for instance. Evidence of what is going on in Germany was cited by my right hon. Friend the Secretary of State.

I therefore have no qualms about accepting the full share of moral responsibility for the present position of the British economy. I see no point is pulling over entrails to determine the proportions of such responsibility, particularly in view of the evident collusion and strong endorsement of the Opposition.

Furthermore, I deeply resent the implication in the remarks of the hon. Member for Kingston upon Hull, West (Mr. Randall) that only the Opposition care about the unemployment consequences of the recession. I know of no Conservative Member who believes that one unemployed person is a desirable feature of any economy. One unemployed person is one too many, one failed business is one too many, and we have seen too many of both those individual tragedies. Business failures are tragedies in themselves. They are as regretted as sad news, and as desperately disappointing to my hon. Friends as they are to Opposition Members. They are the sad and inevitable price that is paid for the brave action that the Government took when they recognised that the levers of demand had been pulled too hard and the economy was overheating.

Although the Government took brave, draconian action which hurt, it has had, beyond any doubt, the desired effect in re-establishing the essentials for recovery and growth in the 1990s, such as low inflation and the best record of employment losses through strikes for the past five decades.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

I do not intend to intervene frequently, but I am listening with great interest to what the hon. Gentleman is saying. Although I would reach a different conclusion about the beneficial consequences of the policy that he describes, I am entirely with him in his description of the sequence of events and the causal connection between those events. How does his analysis square with the case made by the Secretary of State for the Environment a moment ago, when he said that the recession had nothing to do with mistakes of economic policy made by the Government?

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest

I have a clear impression of the exchanges between the two Front Benches. The Opposition absolutely refused to recognise that international conditions have an impact on Britain's economy. That is patently absurd. It would be unrealistic to attempt to discharge the Government of their share of responsibility for the present economic conditions. That is so beyond peradventure as to be hardly worthy of debate.

The crucial point is that we are now faced with a choice. For the British economy we have a choice between two paths into the 1990s. I have a message for any potential elector, of whatever age or income. Some people believe that one can make the poor richer by making the rich poorer. The right hon. and learned Member for Monklands, East called it redistribution, but we know what it means. What of those people who bother to drag themselves up and make a success of their lives, who start businesses which create genuine employment? Some believe that, by so doing, such people become class enemies, and some believe—this is crucial—that there is credibility in the idea that raising personal taxes is the way out of recession. Anyone who believes any of those three fundamental adages should vote Labour at the next election. That is what the Labour party is offering, and it is no more and no less than the politics of envy.

The reality is quite the opposite. Higher personal taxes simply deter consumer confidence. People have less money to spend and the expectation of still less spending power, and they refrain from doing the one thing that needs to be done if we are to emerge from recession—namely, spend. Such a situation destroys the housing market. Hon. Gentlemen opposite are good at telling us how many jobs there are in construction.

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest

Yes, the ladies are just as guilty as the men.

If Opposition Members do not see the inevitable consequences of higher personal taxes for the housing market and, therefore, for the construction industry, they are blind to the obvious realities.

Photo of John Battle John Battle , Leeds West

Will the hon. Gentleman give way?

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest

I hope that the hon. Gentleman will forgive me if I do not give way. As you, Madam Deputy Speaker, have pointed out, time is limited.

Let us consider the effect of higher taxes on pensioners, on people who during their working lives saved for the purpose of enhancing their retirement incomes. Why should significant additional burdens be imposed on those people? Why should such people be condemned for putting all their effort into the accumulation of a small capital sum? Why should they be driven to the conclusion that it was never worth while, that they should never have bothered, that thrift was never the right policy, that there is a distinct disincentive to save and provide wealth for investment in this country?

The ludicrous minimum wage policy that the Opposition offer as a way out of recession would also be disastrous for the British economy. There can now be no doubt that a national minimum wage would only raise overall unit costs and add to inflation. A minimum wage is wonderful in theory, but utterly impractical. That is accepted by Conservative Members and, as I believe Opposition Members know, even the Fabians have pointed out time without number that the minimum wage would be a recipe for disaster for the British economy.

Then there is the whole matter of the extent to which the Labour party is obliged by those who pull its own levers to relax the reform of trade union law that the Government, over a considerable number of years and with a great deal of effort, have put in place. Our industrial relations record is at its best for five decades. That being the case, we should not be thinking about a return to the old chaos—the old business of half Britain being on strike at any one time. In those days, one could count strikes by the dozen. I was about to refer to counting them on one's fingers, but perhaps I should rephrase that as it would have taken far more than the available digits to count the strikes on any day anywhere in Britain.

I wish to refer to another consequence of the policies of the Labour party. This is something that matters a great deal to me. Spirit, entrepreneurship and initiative constitute the germ of business and the creation of new jobs. People starting businesses do what such people have always had to do—that is, risk probably most of what they have ever built up during their working lives. They may have to secure second mortgages on their homes. They often have to work seven days a week rather than five; they are the last out through the door at the end of the day, the ones who switch off the lights; they are the ones who check the quality of every item leaving the factory; and they are the people who, year in and year out, are unable to take holidays. In this country there are many thousands of such people. But a person can be asked to make those sacrifices only if he is offered the prospect of the ability to enjoy his success.

The Opposition's case rests on the desperate fallacy that, somehow, such people are class enemies rather than people on which the whole future of our economy depends. Entrepreneurs must be allowed to enjoy the fruits of their success, of all their effort and their risk. That is something that the Labour party has never understood. No party with any understanding of how business operates could ever propose raising taxes as a way out of recession and conducting a kind of class warfare, which is not only desperately out of date but also desperately inappropriate to this country at present.

We have the lowest corporation taxes of all the G7 countries, and we have our best strike record for five decades. Conservatives are committed to lower personal taxes and lower corporation taxes because we genuinely want to encourage investment. But what we want is real investment, not the state-directed picking of winners. That is the disastrous policy that the Labour party adopted in the 1970s.

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest

Yes, it failed significantly.

What we want is real investment. We want to encourage reward. We want to encourage success and entrepreneurship. We want to encourage risk-takers. Anyone in business, contemplating going into business, or even working for a small or medium-sized business, should look at the choices on offer in the forthcoming general election. Such people ought to say no to the politics of envy. They should say yes to the party of entrepreneurship, the party that wants the British economy to grow, the party that wants a successful outcome in the 1990s. I am convinced that, as the general election programme unfolds, ordinary men and women will realise increasingly the wisdom of that conclusion.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 6:27 pm, 19th February 1992

The hon. Member for Epping Forest (Mr. Norris) gave a very graphic and accurate description of the life of small businessmen, the risks that they take, and the anxieties and burdens that they have to bear. He seemed to want to give the impression that the entire small business community, despite its difficulties during the recent recession, is generally weathering the situation remarkably well and can afford to look with enthusiasm to another period of similar government.

The reality is so dreadfully different. The hon. Gentleman talked about people who switch the lights on in the morning and are the last out at night, people who have risked their savings and, as many have second mortgages tied up with their businesses, their homes. Those are the people who are going bankrupt at a record rate. They are experiencing business failure on a scale that this country has never seen before. Incidentally, it is not they who are paying out large amounts of income tax and corporation tax, as the return on their investment is currently so low, but they are the people who have to find the uniform business rate. They have been taxed at a ludicrous level because of the Government's decision, in successive years, to pitch the uniform business rate at the highest legally permissible level. Why do the Government, who are supposedly concerned about small business, pitch the uniform business rate at the maximum that they have legally permitted themselves to do, and then claim that, if the matter were in the hands of local government, business would pay far more? What a ludicrous proposition that is.

Photo of Mr Stephen Day Mr Stephen Day , Cheadle

Am I correct in saying that the Liberal party has proposed giving local authorities the power to impose a business rate based on land values? Is that not a recipe for disaster for employment figures in places such as Lambeth and Liverpool?

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

No, it is not. If the hon. Gentleman wants to talk about local government finance and the sort of measures that we would take to help districts such as Liverpool, so long as they were properly run and not run as they have been during much of the past decade, I can explain how those measures would not prove disastrous. Land values in much of Liverpool have been at a relatively low level for fairly obvious reasons. One thing that does not make sense, however, is to pitch the business rate at the highest level legally permitted when there is a crisis among small businesses, which is what the Government have done.

The Secretary of State for the Environment seems to have brought forward his dinner engagement so that he can return in time to hear the hon. Member for Dagenham (Mr. Gould) and is no doubt trying to digest his prawns so that he can enjoy the hon. Gentleman's speech later.

I know why the Chancellor did not speak in today's debate. It was for the very good reason that he was appearing before the Treasury Select Committee, answering questions about why this country is committed to the cohesion fund of European monetary union while not actually committed to joining the monetary union. British taxpayers will pay for the convergence exercise that must take place, even if the country is not to enjoy the benefit of being in the monetary union. The Chancellor had a job to do.

I do not understand why the Secretary of State for Trade and Industry was replaced by the Secretary of State for the Environment, but I can think of a reason. The Secretary of State for the Environment squashed the Secretary of State for Trade and Industry out of sight on the subject of RECHAR and European funds. The Secretary of State for the Environment told the Government that they would have to climb down on that issue and, ultimately, they did. I am grateful to the Secretary of State for the Environment for making his views known both within and, eventually, outside Government. I represent a coal mining district which has suffered all the consequences of the decline in the industry. We need that money, and I am glad that a deal has been struck between the Government and the European Community on that issue.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

The hon. Gentleman commented on why the Secretary of State for the Environment led for the Government. Perhaps in years to come he will be grateful to him for introducing a new concept of Labour policy —economics bolognaise—a phrase that may live with us for many years.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

I do not think that that phrase will be what anyone from among the unemployed and homeless who heard or took notice of the Secretary of State's speech will remember. They will remember the Secretary of State reducing Conservative Back Benchers to gales of delighted laughter by his oratorical skills.

The Secretary of State did not apply any of his energies to developing policies that could give homes and jobs to the people so desperately in need of them. That was the action of a Secretary of State who is known to have a genuine interest in shifting the direction of Government policy towards a more interventionist role than that favoured by the former Prime Minister. As a spending Minister, the Secretary of State is also responsible for local authority funds, which are currently tied up but which could be spent on building houses.

The Secretary of State seemed more interested in what —if they will forgive me for calling them this—obscure Members of the Labour Front Bench team may or may not have said about housing capital receipts, than he was about directing those capital receipts towards reinvesting in our housing stock, which is what matters to people who are not homeless. They are concerned not with what the hon. Member for Hammersmith (Mr. Soley) may or may not have said, but about whether money from local authority bank accounts will flow into building and repairing houses, and provide jobs in the construction industry. That is what the economy needs now.

Unemployment increased by 53,000 last month and has increased by 713,000 over the year. Yesterday's figures on long-term unemployment showed the largest rise for 10 years. The output figures published on Friday show that output is no higher than it was at the last election. After almost five years of the most recent Conservative Administration, and the boom and bust cycle, we are back where we were. Manufacturing output fell by 5 per cent. between 1990–91. In the last quarter of 1991, total output fell yet again. Are those figures explained by a world recession? Of course they are not.

A world recession makes it much harder for us to get out of the recession that we entered long before some other parts of the world. It makes the problem more difficult for any Government, but it strengthens the argument for the Government to take anti-recession steps and to develop anti-recession policies. An export-led recovery will not come easily when other countries are also experiencing economic difficulties. Some of the difficulties experienced by those countries look like benefits compared with what we have been through in the past couple of years.

In the rest of the Community, gross domestic product has still risen, while in this country it has fallen by 2·5 per cent. In France it has grown by 1·4 per cent. Italy's GDP is growing. Japan's GDP has been slowing down, but it still grew by about 4·5 per cent. in 1991. If those are problems, they are problems that we in this country would prefer to the experience that we have suffered in the past couple of years. Forecasts for the future show the outlook for Britain to be far worse than that for other countries.

Photo of Mr David Nicholson Mr David Nicholson , Taunton

I should alert the hon. Gentleman to one of his own party's proposals, which is hardly likely to advance Britain's economic recovery. I believe that the Liberal Democrats are committed to swingeing increases in the price of petrol, which will hit all people, including business people in rural districts such as his constituency, the constituency of the right hon. Member for Yeovil (Mr. Ashdown) and my own constituency. I believe that the right hon. Member for Yeovil has also proposed drastic increases in energy taxes. Surely that would have a crippling effect on industry. How can the hon. Gentleman justify those proposals?

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

The hon. Gentleman should read what Ministers have said on the subject—for example, what the chairman of the Conservative party said when he was Secretary of State for the Environment. He said that energy prices would have to rise. If the hon. Member for Taunton (Mr. Nicholson) thinks that increases of 10p per year over a period of four years represent swingeing increases in the price of petrol, and if he refuses to take into account the extent to which we—unlike the Government —intend to channel resources into rural districts which might be affected more adversely than urban districts, he fails to understand what is happening in terms of environmental policies. He might be surprised at what the Government have in store, were they to be in office much longer.

The hon. Gentleman interrupted me at an early stage in my argument when I was seeking to relate how the recession came about and the way in which it was fuelled by the Government. The hon. Member for Epping Forest (Mr. Norris) was honest enough to admit that the Government cannot absolve themselves of the blame for the recession, but he did not go into that part of the blame relating to the way in which the Government deliberately stimulated the economy to an extent that was bound to lead to debt on a scale that is now protracting the recession. It is the experience of recession and the debts that people incurred during it that makes them so unwilling to rush into shops and create the consumer-led recovery that the Government said would be the way to emerge from the recession.

Ministers are now beginning to make some admissions about what has happened. The right hon. Member for Blaby (Mr. Lawson) has admitted that the authorities in this country, including the present Prime Minister, greatly underestimated the demand effect that deregulation—a supply side reform—would have. We know what happened: at one and the same time, the Government presided over substantial deregulation—making capital much easier to borrow—promised tax cuts later in the year, thus leading people to believe that it would be safe to get into debt, and told people that if they wanted to buy a house in London they should do so in the next few months as there would never be such a time for tax relief. They made tax changes on that basis. The combined effect of those actions was a dramatic credit boom, within which lies the cause of many of the problems and the extent of the present recession. The Government mercilessly fuelled the recession.

With the economy so deep in recession, Britain needs a programme that recognises the urgent need to get the economy going and reduce unemployment. There is little room for using interest rates, due to the importance of the exchange rate mechanism in anti-inflation policy, so one is left with a choice between cutting taxes or increasing public expenditure to get the economy going again. All the signs are that the Government's approach will be to try to achieve that aim through income tax cuts. We do not believe that that is the most efficient approach. Income tax cuts take time to come through and the people who gain by tax cuts may use the money—understandably—to repay their debts and not to engage in the consumer boom that the Government hope will get us out of recession.

Income tax cuts only increase the spending power of those in work—not those relying on the state pension or those who are unemployed. Nor is it financially prudent to fund income tax cuts by public borrowing. It would be most irresponsible to increase public borrowing in the Budget in order to fund tax cuts. When Britain desperately needs investment-led recovery, Liberal Democrats do not think it responsible to concentrate scarce public resources on attempting to foster an unlikely consumption-led recovery.

As for Labour's approach, there are signs that it has been criticised from within as timid and that key changes will have to be phased. That was indicated some time ago after the Leader of the Opposition's slightly confused comments about Labour's tax plans. He said that if the tax changes were to be phased, perhaps increased pensions and benefits would also have to be phased. There is an air of extreme caution, born of a desire to live down the reputation gained by earlier Labour Governments, and the caution may be so great that it leaves Labour offering no better option for an investment-led recovery than the Government. It will be interesting to see how much borrowing the Government engage in. If Labour comes up with a figure before the Government, they may find that in the end the Government have a higher PSBR than they would have had.

The other great weakness of Labour's position so far is that it lacks the anti-inflation policy which is necessary to accompany the investment measures set out in the motion. That is why we sought to amend the motion by adding the anti-inflation buttress which we believe would best be provided by an independent central bank. It is a mistaken charge for the Government to lay against the Labour party that its proposals would deepen recession. I do not believe that they would, although they might have some effect on the beginning of recovery from recession. The danger is that they might restart inflation if not accompanied by a firm anti-inflation policy.

Labour has other proposals, such as the one-off increase in capital allowances to 100 per cent., which sounds a good idea, but on examination they do not seem likely to have all that great an effect. I would favour providing a consistent taxation environment for business— for example, by indexing the corporation tax allowance so that business could plan in the knowledge of its corporation tax commitment if earnings increased.

If we are to cut taxes, one of the best places to aim tax cuts might be at business, and particularly small business, by cutting the uniform business rate and business rates in Scotland. That would improve liquidity for every business and there would be an immediate cash flow improvement. At the same time, we could get rid of some of the silly restrictions in the uniform business rate transition relief scheme—such as the fact that relief is attached to property and not to the business, thus discouraging businesses from moving premises when that might be one of the best ways for them to cut costs in response to the recession.

Liberal Democrats believe that the most effective way out of the recession would be through a large-scale programme of capital investment and training measures over the next two to three years. Such a programme would boost confidence throughout the economy, reducing the fear factor which worries so many firms and people. It would help the troubled construction industry, enabling firms to continue in business and to expand their labour forces. It would enable British Rail to go ahead with the plans already drawn up to modernise and electrify more routes. It would enable many councils to start on projects for major and minor repairs to schools and housing stock. Health authorities would be able to implement improvements to hospital buildings which they have been wanting to make for years. There would be employment and export opportunities in the major energy conservation programme and the programme to develop our skills in energy efficiency.

Perhaps even more importantly, such projects have to be carried out if Britain is to be more competitive in the long term. The Secretary of State said much about Britain's competitiveness, but too little about how important some measures are to secure that competitiveness in future. We need investment in our infrastructure and more efficient use of energy, backed by a firm anti-inflation policy.

I noted that the Secretary of State quoted the Bundesbank a lot. I was interested to hear the deputy president of the Bundesbank calling on Britain yesterday to speed up moves to create an independent central bank to ensure adequate prior familiarisation with the new structures of decision making". He was warning the British Government that they should understand their commitment that if they go into the monetary system they will accept an independent central bank. Alongside that, there must be a genuine commitment to free enterprise and to a free market economy.

I was very struck by the fact that the UBS Phillips and Drew economic briefing published on Monday last week said of the Liberal Democrats' economic programme, part of which I have outlined: Of the economic programmes on offer, theirs is easily the most logically argued and the most sensibly radical. Looking forward to a balanced Parliament, and considering the possibility of a minority Government, the review said: For economic performance the better outcome would involve power sharing in which the Liberal Democrats pressed home their sensibly radical economic programme—enhancing the best features of the Conservatives' policies or limiting the possible damage of Labour's". That was a sensible and wise judgment.

In the light of the unemployment and misery which stalks so much of the country, we must offer the people some hope. Without an investment programme for jobs, backed by a programme to beat inflation, the Government are offering no hope to the unemployed millions, no prospect of improvement and therefore no basis for recovery.

Photo of Mr David Nicholson Mr David Nicholson , Taunton 6:46 pm, 19th February 1992

The hon. Member for Berwick-upon-Tweed (Mr. Beith) is always heard with respect in the House. He made a serious contribution to the debate, unlike the right hon. and learned Member for Monklands, East (Mr. Smith). We take issue with him on energy costs and on the idea that businesses would be better off if local authorities were free to determine their own business rates, but I shall return to that shortly.

With regard to the prospects of the Liberals influencing policy if there were a hung Parliament, I reflected with sadness on the time when the Liberals tried to influence the policy of the Labour Government during the Lib-Lab pact. I am afraid that the Government of Lord Callaghan and the right hon. Members for Leeds, East (Mr. Healey) and Blaenau Gwent (Mr. Foot) had the Liberals for breakfast, if we are pursuing the admirable gastronomic parallel of my right hon. Friend the Secretary of State.

My hon. Friend the Member for Epping Forest (Mr. Norris) made the point that, probably in a few weeks' time, the electors will have to choose between alternative policies to govern the country. Electors are irritated by the badinage across the Floor of the House, which was particularly marked earlier today during the two Front-Bench speeches.

In the approach to the February 1974 election I was in a position to observe matters as a party back-room boy. Possibly because there was a big miners' strike which diverted attention from politics, I do not believe that the Conservative party warned the electorate adequately in those months about what a Labour Government would mean.

My hon. Friends may remember that Labour was elected to power without a majority in the House and with 1 per cent. less of the electorate voting for it than voted for the Conservative party. If we had properly warned the electorate of what the policies of the right hon. Member for Chesterfield (Mr. Benn) and his right hon. Friends would inflict on the country in 1974, 1975 and 1976, I suspect that we might have tilted the balance and retained power. My God, would not the country have been a better place and would not the economy have been better if we had done that.

So I fear that the electors must put up with our analysis of Labour's alternative policies. For myself, I am content to rest with what I think we all agree was a brilliant speech by my right hon. Friend the Secretary of State for the Environment. He certainly dealt with most of the main weaknesses in Labour's programme for Britain's future. I intend therefore to speak mainly about certain matters affecting my constituency and about policies for getting out of the recession.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) referred to manufacturing industry and the trade imbalance. He may recall that before I arrived in this House I worked for the Association of British Chambers of Commerce which took a great interest in those matters and, in the early to mid-1980s, was critical of various aspects of Government policy on manufacturing industry, the state of our trade and our trade balance. It is therefore with some relief that I can refer to exchanges that took place during Treasury oral questions on 16 January.

In the first of these exchanges, my right hon. and learned Friend the Chief Secretary pointed out that United Kingdom exports have grown by 23 per cent. in the past five years and reached record levels during 1991. In December 1991, export volumes, excluding oil and erratics, were the highest on record. My right hon. and learned Friend also pointed out that after decades of decline the United Kingdom's share of world trade in manufactures flattened out in the mid-1980s, just after the time when my previous employers were issuing their warnings to the Government, and then increased in 1989 and 1990—and are expected to have increased again in 1991. That is a remarkable achievement at a time when this country was in economic difficulty.

The other important figures in the exchanges at oral questions emerged in a reply to a question from me to my hon. Friend the Minister of State, Treasury. She pointed out that in 1988 and in 1989 62 per cent. of all United States inward investment in the European Community came to the United Kingdom, and that 42 per cent. of all Japanese direct investment in the Community came to the United Kingdom. 1 believe that the figures for 1990 will show that investment from the United States and Japan came here in proportions of 60 and 50 per cent. respectively. That, too, is a remarkable achievement for a country experiencing economic difficulty.

The achievement of the Prime Minister in negotiating at Maastricht an agreement that would protect industry and employment from the social charter and the other horrors that some in the European Community and all the Labour party want to inflict on us has helped to promote the prospect of more inward investment to this country.

Turning to my constituency, I am pleased to see that, following the movement last autumn of the Treasury Solicitors's property division and the Charity Commissioners' southern regional office to Taunton with several hundred employees, the construction of headquarters for Western Provident Association, health insurers, is going ahead on the Blackbrook business site. The firm has already begun to recruit locally. Inquiries for the Blackbrook business site, which is under construction, have come from the service sector—Taunton is strong in services—and also from manufacturers from other parts of the country.

At Chelston, outside Wellington, where there has been a business park for more than a year, there are now 300 jobs. Developments are also just beginning at Dellers wharf in Taunton, most of the site having been cleared in the past six months. It is also awaiting the start of construction of a Safeway food store and other shops, and a housing development.

I take this opportunity to warn those responsible for planning in my local authority and in similar authorities not to depend too much on the retail sector. In the past Taunton has been rather heavily dependent on that sector and a number of large retail developments are in the pipeline, but we have seen during the past few years what can happen when there is a slump in retail purchasing. If, God forbid, fashions should change and people no longer wanted to shop in Taunton, there would be a further problem. I want a diversified local economy, which is why I welcome the movement of professional jobs that I have already mentioned.

It is estimated that the various developments to which I have referred have provided 700 jobs in Taunton and Wellington; unemployment, which, in the travel-to-work area in January was slightly more than 3,400 or 6·6 per cent., would have been more than 4,000 had those developments not taken place. I pay tribute to all involved in them. They have rendered Taunton's unemployment rate well below the regional average in the south-west, which is 9·1 per cent.

I move on to various matters which I believe are relevant to the Chancellor's forthcoming Budget. The policy of the Liberal party on this matter notwithstanding, Conservative Members expect some reduction in personal taxation. I am glad to see my hon. Friend the Financial Secretary on the Treasury Bench. There is a perfectly good reason for wanting to reduce personal taxes: a reduction would help to encourage and restore consumer spending. It is one of the ways in which this country can move out of recession. I would prefer the reductions to come from a raising of thresholds, not from a reduction in the basic rate, but we have had debates on that. I now want to move on to certain other proposals.

The hon. Member for Berwick-upon-Tweed mentioned business rates. I do not think that many Conservative Members would like to return to each local authority setting its own business rate, but I know that Treasury Ministers already acknowledge that the revaluation, which was necessary and which had been disgracefully postponed by Governments of both parties, has, despite phasing, caused crippling damage to a number of businesses—especially small businesses and small shops, and particularly in the south.

I know that there is a lot of pressure on the Chancellor to provide in his Budget some relief from business rates. The simplest way of providing that relief would be a cut in the poundage, but that would mean the benefit going to businesses of all kinds, including many which benefited from the revaluation and the introduction of a uniform business rate—for example, businesses in areas which used to have high rates. If we are really aiming to bring relief where the boot hurts most—I realise that that may be administratively difficult—we should direct it to the businesses whose rate increases have been most dramatic in recent years.

I echo a point made by the hon. Member for Berwick-upon-Tweed: can we not do something about businesses that want to move premises? At present they do not benefit from the phasing, which is one reason why there are so many unoccupied shop premises and offices. I hope that this can be dealt with in the Budget, because the problem represents one way in which the business rate pinches hard.

Small firms in my constituency complain a great deal about bank charges—having to pay for paying in cheques and so on. Some of the banks' policies are just an irritant, but others affect businesses' ability to compete and survive.

I note that the Financial Times of 29 January reports a survey of 30 managers carried out by Birmingham polytechnic which suggests that bank managers, when assessing business proposals, pay too much attention to narrow financial criteria and not enough to factors such as management skills and technical knowledge.

The Forum of Private Business, which has many members in my constituency and carries out regular surveys of those members, not only on business expectations but on policy matters, has addressed the policy of the banks. In a statement issued on 21 January 1992, it said: There is still a gulf of misunderstanding and fear between borrowing businesses and their banks … With … a third of businesses still taking the risk of growing out of recession, it is tragic that … the codes"— which my right hon. Friend the Chancellor has encouraged the banks to produce— have missed these real 'life and death' issues". The Forum of Private Business then marks the banks according to its own assessment based on the experience of small businesses. The exception to which great praise is given is the Royal Bank of Scotland, whose charter for business customers received an 82 per cent. rating. I do not want to mention the important national banks because I have accounts with one or two of them myself, but I assure the House that their ratings were well below 82 per cent. Two of them were rated as 63 per cent. effective and one disappointed greatly, being only 33 per cent. effective.

Mr. Stan Mendham of the Forum of Private Business said: we are pleased that the banks have yielded to our long-standing call for invoicing for charges. But unfathomable bank charges have been more a cause for resentment than a threat to survival. The biggest threat to small businesses has been bank-imposed restraints on borrowing—at a time when small businesses need financial support to see them through The Forum of Private Business went on to say: Of 33 per cent. of businesses reporting a tougher attitude from their banks in the past six months, one in five said this took the form of removal, reduction, or refusal of borrowing, or increased interest rates. We understand why the banks are in difficulties and, regrettably, have to impose burdens on business. I hope that those burdens can now be lessened and that the Government will do what they can to encourage that process. That leads on to a matter that I raised at Prime Minister's questions about a year ago. I remember, as will my hon. Friends, that three or four years ago the lending institutions encouraged businesses and personal borrowers to borrow in the most irresponsible way.

When I first purchased property, I was subject to a restriction of two and a half times my income and about 70 per cent. of the value of the property. We all know that ridiculous 100 per cent. loans were available at four and five times people's incomes. That was why the property market fell into such extraordinary difficulties, the down side of which has hit the construction industry so badly during the past year and, I fear, will continue to do so. The same was seen with lending to businesses, including farming businesses in my constituency.

We have debated the Government's role in that situation through their low interest rate policy in 1987 and 1988 and their perhaps rather delayed response to the great credit boom. Everyone in property and retail was enjoying that boom, but few pointed out that it might end in tears, as it did.

Therefore, as the Conservative party produces its Budget and election manifesto, I hope that it will reassure the electorate that we have learned from these experiences in credit control and credit borrowing in recent years which have led to the difficulties of high interest rates which, happily, in the past year have been falling. We move into the next few months on the basis of lower inflation, much lower interest rates, and lower personal taxation compared with the past and compared with many of our competitors, and the best strike record for 60 years. That is a situation in which I am content for us to go to the country and ask for a further term of office.

Several Hon. Members:

rose

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. The Standing Order limiting speeches to 10 minutes now comes into operation.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East 7:03 pm, 19th February 1992

This debate on the recession and unemployment is timely because it comes immediately after the devastating blows that were showered on the British economy a few days ago.

Last Thursday, the unemployment figures revealed an increase of 122,000 to more than 2·6 million of the working population. That was the 22nd consecutive monthly increase. For such a trend to continue unabated over such a long period suggests inertia on the part of the Government. Today, any Government has immeasurable control over the economic levers of power. However, the Government have chosen not to act and appear to be holding up their hands and saying that that is not their responsibility.

On Monday, in a statement, the highly respected chairman of the Rover motor company, Mr. George Simpson, protested about the Government's failure to support industry. How right he was. The Government's laissez-faire approach is no good. It is no good for the unemployment that we are now experiencing which is causing considerable social despair. The lives of individuals, their families and whole communities are badly affected. Even Scotland Yard has recognised the link between social conditions, such as unemployment, and crime.

Significantly, unemployment is not now confined to the so-called blue collar sector. People with professional qualifications have been equally badly hit. Likewise, the loss of jobs has not been concentrated in the traditional areas of high unemployment, such as Scotland, Wales and the north of England. If anything, the south-east of England has been even more badly hit.

Some of our major companies have been badly affected. For example, the Ford motor company has just announced an all-time record loss of £590 million. Coupled with that comes the news of redundancies in its plants throughout the country. A redeeming feature of that company is that its investment in manufacturing facilities in the United Kingdom has been maintained. Last year it totalled some £500 million. Those figures reveal the importance of that company to the well-being of the British economy.

Two of Ford's plants are in Wales, at Bridgend and Swansea. In recent years, Wales has suffered badly from closures and redundancies. Traditional industries such as coal and steel have been badly affected and the last thing that we need now is a loss of jobs in the relatively new industries. In fact, certainly in Wales, there is a crying need for new investment and new jobs.

Unemployment in Wales is now 123,600—9·5 per cent. of the working population. It is worth putting on record a list of companies that have recently announced redundancies. They include the British Steel Corporation, British Aerospace, Allied Steel, Ford motor company, British Petroleum, Ferranti, Marconi, Ferodo, National Power, Trecwn and Brawdy, the military establishments in Pembroke, Royal Worcester, Christie Tyler and South Wales Electricity. The list is endless, but wage levels in Wales are reckoned to be the lowest in the United Kingdom. There is a moral there somewhere.

The bad news about the recession and unemployment has continued unabated. A week ago, BP announced massive losses. British Aerospace is to make redundant 2,500 skilled workers. What a waste. The CBI reports a sharp fall in manufacturing demand and output in all regions during the past four months. Even the Bank of England has had to reverse its earlier prediction that the economy was moving out of recession. Bankruptcies are at a record level. Home repossessions and mortgage arrears are at record levels, with 75,000 repossessions in 1991 and all the misery and unhappiness that that involves.

On top of that, there was the announcement of an increase of 10 per cent.—more than double the inflation rate—in prescription charges. That is a direct act by the Government. The charge for a single prescription now stands at £3·75; in 1979, when Labour left office, the charge was 20p. What price now the glib assertion by the right hon. Member for Finchley (Mrs. Thatcher), when she was Prime Minister, that the national health service was safe in her hands?

Given all those developments, it is no wonder that there is now widespread speculation about a giveaway Budget. Those who call for such a Budget do so loudly and vociferously, the main reason being the imminence of a general election and the need to save Conservative skins. We are experiencing the worst recession since the end of the second world war; after 13 years of the present Government, business confidence is at an all-time low.

My feeling is that the Government's crocodile tears will be shed too late, and they will be swept from power. When Labour is returned to office, however, it will face a mighty challenge. My advice to my Front-Bench colleagues is to be bold. I have no wish to criticise my right hon. and learned Friend the Member for Monklands, East (Mr. Smith)—I think that he will make a fine Chancellor—but the lessons of history bear out my analysis. Back in 1931, restraint and cuts were the wrong medicine, and led to the downfall of a Labour Government. Likewise, between 1964 and 1967, Lord Callaghan waged a futile battle, struggling to maintain the exchange rate; that did immense damage.

Marx may be old hat, but, in my opinion, Keynes is back in vogue. What the economy now needs is a bit of old-fashioned pump priming. That is needed for the transport infrastructure, road and rail; and housing problems are crying out for action. Homelessness has reached record levels. Surely it is better and cheaper to build houses than to keep people in bed-and-breakfast accommodation. Council house sale receipts should be released: council tenants' right to buy should be retained, but the sold housing stock should be replaced. A housing drive would also provide the means of returning people to work—not only the professional architect, but the unskilled labourer.

The cuts in training provision are most unwise. Already, our skill training provision is well below that of our competitors. Money spent on training is the seedcorn for future development; our industrial competitiveness is at stake, and training should be encouraged in every way possible.

Industry badly needs new investment. Long before now a sensible Government would have sat around the table with the captains of industry and the trade unions, and outlined a package of industrial incentives to bring about the investment that is so vital.

I believe that, when the general election comes—on 9 April—the British people will finally come to realise what a disaster the past 13 years have been, and will elect a Labour Government.

Photo of Mr Timothy Devlin Mr Timothy Devlin , Stockton South 7:13 pm, 19th February 1992

I certainly agree with the hon. Member for Newport, East (Mr. Hughes) that there are significant regional variations in the state of the economy, and in the way in which the recession has hit our country. I found the hon. Gentleman's speech most enlightening. It gave all who heard it — I hope that many more will read it—a flavour of the pressures that could fall on any future Labour Chancellor of the Exchequer when he came to frame his Budgets. He would, for instance, be under extreme pressure to spend a great deal on pump priming, and on other policies from which some parts of the Labour party are now moving away to a significant extent.

It was interesting that the right hon. and learned Member for Monklands, East (Mr. Smith) seemed to disavow any knowledge of a world recession, especially as on Monday the managing director if ICI on Teesside, Britain's largest chemical plant, said: 1991 was an awful lot tougher than any of us expected. This recession has been longer and deeper than anyone thought. Effectively, it has been worldwide with even Japan and Germany slowing down.Most of our businesses are global, so we felt the effect on Teesside. I do not know where the right hon. and learned Member for Monklands, East gets his information, but I should be interested to know whether he disagrees with that view. Indeed, I tried to intervene to find out.

The right hon. and learned Gentleman said that the Government scorned what he would describe as a sensible, planned regional policy. Over the past 12 years, however, the Government have brought about a significant turnround in the regional economy of the north of England. That may explain why Labour, having tabled a motion on the recession, has so far been unable to produce one northern Member who wishes to discuss the matter. Perhaps that is because Labour Members feel that the recession is not quite so bad in the north as it is in the south-east.

Last month, Mr. Simon Briscoe of Midland Montagu argued that the north and Scotland should reap the benefits of the often painful restructuring in the 1980s. While the south-east is experiencing post-boom retrenchment in the financial services sector, with adverse effects for the housing market and the construction industry, more distant parts of Britain, Mr. Briscoe says, frequently have a varied manufacturing base and growing service industries.

The Government's role in the north-east, as elsewhere, has been to create a climate in which businesses can prosper and, in turn, generate strong and sustainable employment growth. However, in view of the region's deep-rooted difficulties—such as its long-standing overdependence on declining industries—the Government have sought to underpin those policies with substantial central support. Indeed, the north-east region has benefited to the tune of more than £3·5 billion since 1979.

I might just point out that that money is composed of the old regional development grant, the new regional development grant, regional selective assistance, urban programmes, urban development corporation funds, derelict land grant, housing investment programmes and estate action programmes. The most significant element —the urban development corporations on Teesside and Tyneside—have a budget allocation of £51 million each for the current year.

As we heard earlier from my right hon. Friend the Secretary of State for the Environment, this country has been the most significant player in the international market in attracting inward investment into the country and, in particular, our region. Dr. John Bridge, the Northern Development Company's chief executive, says: Since 1985, some 25,000 jobs have either been created or safeguarded in the north of England as a result of inward investment. He estimates that since 1985 a total of £2 billion has come into the region as a result of inward investment.

Mr. Briscoe of Midland Montagu sees "a multi-track Britain" in 1992, with recovery beginning in Scotland and the north of England, only to reach the south-east some time later. I know that that will be sad news for some of my hon. Friends. I should mention in passing that the uniform business rate, which the hon. Member for Berwick-upon-Tweed (Mr. Beith) described as a significant cost to industry, has been of substantial benefit to manufacturing industries in the north.

No one says that there is no recession in the north of England, and I shall not say that either. There is indeed a recession—it is a worldwide recession, but it has had significant effects in the north of England and Scotland. Even so, the Institute of Directors' bi-monthly poll found that northern businesses are much more confident of recovery than those anywhere else in the country. The MORI poll of 500 chief executives found that 70 per cent. of northern businesses were confident of economic recovery very soon this year.

Stockbrokers BWD Rensberg, based in Hull, said that the northern region from the Lake district to Teesside, incorporating north Yorkshire and Humberside—the area represented so ably by my hon. Friend the Member for Richmond, Yorks (Mr. Hague)—was an area where disposable income was as high as that in the south-east because the cost of living was lower while pay was comparable.

It is interesting to note that in Darlington the jobless total has just dipped below the national average of 10 per cent. That is nothing short of a miracle, according to John Vaughan, Darlington council's assistant economic development officer, who is reported as saying: whether the town can continue to buck the national jobless trend into 1992 is heavily dependent on how far away the recovery really is". However, Mr. Vaughan believes that until now, the signs, including those in the retail sector, have been very good. I am talking about a Labour-controlled council, and those are the comments of an independent official of that council. I have no doubt that my hon. Friend the Under-Secretary of State for Education and Science, who represents that town and who has fought so valiantly for its jobs, has contributed significantly to that trend.

We would have a much worse recession on Teesside but for the brilliant performance of our exporting industry. There are currently £400 million-worth of contracts under way at the river's three module construction yards for the offshore oil industry. Industrialists such as Joe Campbell of British Steel find that although the going is tough in their industries, they are securing significant contracts in distant parts of the world—most recently in Japan and Korea. Barry Phillipo, chief executive of Davy McKee, recently said: The world is in recession and people keep delaying decisions. But we have a number of prospects in the offing. What are the Government doing to help the northern region? Let us consider briefly the total of £4 billion currently being invested in Teesside. The biggest project is the £2 billion gas pipe from Amoco's fields in the North sea, which will bring 500,000 barrels of oil ashore from Ekofisk to the Seal Sands petroleum refinery. Similarly, Teesside's development corporation project is investing £1 billion in my constituency.

ICI is constructing a new acrylics plant at Billingham, and the ICI Quorn food plant at Stokesley is receiving £37 million of investment. British Steel's new pipe mill in Hartlepool has £100 million of investment. The MTM chemical plant at Teesport is receiving £100 million. The port authority is putting £27 million into the development of the port in the next three years.

Even Middlesbrough council city challenge is renovating the city centre with a £35 million grant from central Government. Meanwhile, Sir John Hall of Wynyard is building a new business park worth £500 million. Recently we heard that the Livera Foods cake factory will bring 700 jobs to Preston Farm industrial estate and will be worth £7 million. As Sir John Hall so ably says: There is no other region in the UK where people have the confidence to invest. The Middlesbrough Evening Gazette recently commented: This region once known as England's workshop is now turning out top class products and services which are helping the entire country to fight back. One of the biggest boosts to the area has been the continuing development of the Teesdale site at Thornaby and the new university. It continues: But ICI, one of the foundation stones of Cleveland's past prosperity, continues to invest in large-scale plant—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I am afraid that the hon. Gentleman's time is up. It is up once the signal on the digital clock becomes static. I hope that hon. Members will keep an eye on the clock. I dislike interrupting them in full flow and I try to indicate when they are nearing the end of their time.

Photo of Mr Tony Benn Mr Tony Benn , Chesterfield 7:24 pm, 19th February 1992

One of the functions of a Member of Parliament is to explain as best he or she can to their constituents what is happening, why and what may be done about it. Having listened to some of the speeches today, I wonder whether they would make much sense to people who are suffering serious economic difficulties.

I make no apology for speaking about the constituency that I have the honour to represent and for describing a Chesterfield development plan which is being considered with the good will of the council of the chamber of commerce, the trade council, the law centre and the citizens advice bureau, among others.

The reason why I want to approach the problem of unemployment from the bottom up, rather than from the top down, is that I—and, I believe, many other hon. Members—believe that there is a world slump. I went further and recently used the word "slump" rather than "recession". The decline in the past 10 years has been very serious, and it is most unlikely that prosperity will trickle down from the top even if interest rates are reduced, even if the Common Market and 1992 works as promised, and even if there is a devaluation.

Every community has its own history and tradition. Chesterfield was built on coal, steel, chemicals and engineering, and it had canals and railways. During the past decade, a decision was made—not an economic but a political decision—to close the coalfields in Britain. Nuclear power costs three times as much as coal, but pits are being closed to make way for it. We heard today of the imminent announcement that the port of Immingham is to be used—as we knew it would be—to provide imported coal. I think it is likely that the north Derbyshire coalfield, which when I was elected only eight years ago provided a quarter of the employment in Chesterfield, may well go—to be replaced by imports from countries where conditions for miners are disgraceful.

Our manufacturing industry is in decline. I shall not give all the figures that other hon. Members have given, because statistics often do not reveal the true position. However, on the old 1979 figures, we have 13 per cent. Unemployment—6,000 people out of work. We hear about days lost in industrial disputes, but what about days lost in unemployment? In Chesterfield, 6,000 days are lost every day because of unemployment. If one adds the number of people whose work is lost through unemployment to that of people whose work is lost through industrial disputes, one finds that the figure has soared under this Government, and it has done so at an enormous cost. I understand that every unemployed person costs nearly £9,000. Chesterfield alone is therefore paying £50 million for the privilege of having those people out of work.

Other problems include the housing crisis—the fact that no houses can be built—and the rundown of schools. I think that I speak for many hon. Members, whatever their political opinions, who take long surgeries as I do every week for four or five hours. We receive 15,000 or so letters a year. The problems brought to us divide equally into two types: those of people who are out of work and those of people who have needs which would be met if those out of work were in work. That is the issue which I put to the Secretary of State.

There is no question but that the Government accept a demand only if it comes from someone who can afford to pay for it. A need unbacked by money does not constitute a demand. The Secretary of State said that they did not believe in employing people to meet unmet needs because it would involve the direction of labour. I must point out that people on the dole have been directed on to the dole. If one wants to see a brutal direction of labour, one need only look to that. If money were provided for unemployed people to be used, there would be a move back towards full employment.

Two factors are necessary to achieve full employment. That is what the Chesterfield development plan is all about. First, local authorities must be provided with general powers. I will not go into the details now, but I have introduced two or three Bills to give local authorities such powers. There should be only two restraints on what they can do: the police station if there is corruption, and the polling station if they are unpopular. Apart from that, local authorities should be able to do whatever is necessary to meet local need.

The second question which always arises is: where is the money to come from? I asked the Library kindly to break down the national budget into personal figures, and I will tell the House some of those figures. I do not know where to start—except by saying that Trident has cost the people of Chesterfield £18 million, and that North sea oil and gas revenues, worked out pro rata among my constituents, would have brought £192 million to Chesterfield. Pro rata among all the people in Chesterfield, the capital exported has been more than £600 million. The EC contributions from Chesterfield alone represent £45 million.

I cited another figure earlier today—that the cost of defence is £30 per week for every family of four. When one looks at it like that, one realises that if the money were redirected—[HoN. MEmBEas:"Oh!"] Of course it would be redirected. Do hon. Members think that Trident should take priority over manufacturing industry? Why are the Japanese and the Germans so powerful? It is because they do not spend money on weapons on that scale. Of course, that means that the money must be provided by borrowing. The party which opposes borrowing has encouraged more irresponsible personal borrowing than any other Government. So many people who need to have reserves have been encouraged to spend them.

The way back to full employment is to fund local communities so that they can put their unemployed people back to work.

What interests me about what I have just said is that I have won the support of the local chamber of commerce, which said in a letter to me that what was needed was a new freight terminal for the east midlands, electrification, and so on. It was concerned about matching skills to jobs. There is a common interest in every community between the firms that have laid people off because money is not being spent and the community which has a need for requirements to be met.

The next election will be the 16th that I have fought as a parliamentary candidate, and I am looking forward to the whistle being blown. I believe that when that happens, our arguments are the ones that will convince people—we need homes, better schools, and better facilities. If we were to elect a Government who committed themselves to that, there would indeed be a way out of the recession. Otherwise, we shall go deeper and deeper into a situation that will prove comparable with that of the 1930s, which cost so many hopes and destroyed so many lives and which ended with right-wing Governments in Europe and a war that cost us 50 million more lives.

That is what the House should be telling the people —the truth about how to get back to full employment. If they do not do that, if they just play games, I believe that the Conservative party will come a cropper on polling day.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester 7:34 pm, 19th February 1992

It is always an honour to follow the right hon. Member for Chesterfield (Mr. Benn), but he sang the same tune, although with different words, tonight. He spoke about redistribution, which has been his clarion call all the time that I have been in the House, and all the time that he was a Minister.

In the right hon. Gentleman's speech, and in the speech of the hon. Member for Newport, East (Mr. Hughes) we heard the authentic voice of socialism. We heard the real call for a return to the discredited policies of the past—[Interruption.] I hear those policies being vocally supported by Labour Members.

The hon. Member for Newport, East said, "Be bold, go further, spend more." That is what the Labour party means. The right hon. Member for Chesterfield talked about redistribution, about cutting our defences and destroying our strategic nuclear deterrent—which, incidentally, has provided employment, industry and investment in Barrow-in-Furness and the rest of the country.

The real pressure on the Labour Front-Bench spokesmen comes from their Back-Bench colleagues, who want more spending, and a greater burden of taxation on the people of this country. The Labour party has moved away from what was previously its clarion call—central planning as a means of restoring economic activity and growth. The discredited policies of the 1970s, which brought into existence the reviled National Enterprise Board and brought our economy into penury, have been replaced by a neo-socialism, which talks about redistribution.

In that policy there is as fallacious a hoax as there ever was in the calls for central planning. The call for redistribution assumes essentially that somebody will be better able to decide how money should be spent than those in whose hands it is at present. It relies on Peter robbing Paul to pay for public expenditure, hoping thereby that that money—

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

I should love to give way, but time does not permit.

The Labour party hopes that its policies will provide more investment, jobs and economic growth than would otherwise be the case. But if we examine the excessive commitments and expenditure plans of the Labour party, we find that the money will not be spent mainly on jobs, capital investment or manufacturing industry. Most of it will go into recurrent expenditure—into the social security budget, for example, which represents £15 billion out of the £37 billion, at least, that has already been costed.

The Labour party is trying to perpetrate a cruel hoax on the electorate. It is time that we nailed the Labour lie. Redistribution will not regenerate growth in this country; it will merely add a further burden on people who are working and saving, trying to achieve some choice and an improvement in their personal standard of living.

Neither the motion, nor the contents of the speech by the right hon. and learned Member for Monklands, East (Mr. Smith) about education and training, offer any immediate panacea. Labour Members talk about cuts in the training programme—yet we are spending 2·5 times as much in real terms as the Labour party ever considered spending on education and training.

In my part of the country we have Sussex Training, of which I am honoured to be president. It has provided important vocational training for young people, expanding their vocational opportunities, and it has been significantly funded by the employment policies of the Government—not those of a Labour Government. Under Labour the money was not there, and neither were the training opportunities. A Conservative Government have delivered the goods.

For those reasons, far from Labour's policies being a kick start for the economy, they would be a kick in the teeth for the economy. It is high time that the country and the House realised that the Labour party cannot get away with trying to pretend that its policies would have neutral implications for the taxes that people pay, yet that there would also be a magic crock of gold to be dispensed with the largesse of the sheriff of Nottingham.

As my hon. Friend the Member for Taunton (Mr. Nicholson), and others, have said, no one could be more conscious of the depth and severity of the recession than those of us who represent seats in the south of England. I know that, especially in the property and construction industries, the recession has been serious in my part of the country.

That is why I, with Conservative colleagues from Kent, East Sussex, West Sussex and Hampshire, wrote to the Chancellor of the Exchequer this week, urging him to consider introducing some relief in the uniform business rate for businesses in our constituencies. I should like to reiterate tonight to my right hon. Friends the reason why I believe that to be necessary.

Businesses in the south face a combination of the revaluation of their properties at the historical height of the market a few years ago and moving from a lower industrial rating system, under prudent Conservative councils, to a national average rate of poundage which reflects the expenditure of local authorities elsewhere. Even though the Government are rightly introducing, under the Local Government Finance Bill, transitional arrangements to help businesses in areas that have faced such big increases, businesses in the forthcoming year yet again face significant real-terms increases in their uniform business rate at a time when they can least afford it.

For those reasons, there is a strong case for doing one of two things. The first is to freeze for the forthcoming year the transitional element of the UBR increase, which will especially help those who face increases in excess of 20 per cent. in real terms. The second is to cap the extent to which any UBR increase can rise in real terms in the forthcoming year. That will not only ensure that help is directed to businesses in the south which are being hit by the reccession at this time, but will limit the overall yield cost to the Exchequer. I hope that my right hon. and hon. Friends will consider that.

Although I make that point and although I am aware of the implications of the recession in my own constituency, I say openly in the House to the Government and to my constituents that I will continue to support the economic policies that the Government have pursued in their determination to reduce the rate of inflation. The real tragedy for our economy has not necessarily been the bantering of party politics and may not even be the differences over planning policies. The real tragedy has been the persistent level of inflation which has so increased the borrowing costs to industry that the profitability of British industry in the north and in the south of England, year after year, has suffered. We must all agree that, whether there have been Labour or Conservative Governments, the profitability of British industry, especially manufacturing industry, has been insufficient and has not begun to compare with that of our competitors.

If we can get inflation down and interest rates to follow, and if we can pursue policies that will improve the rate of productivity in British industry, the prizes will be glittering, the opportunities for British industry will be outstanding, and the prospects of investment in new technology and the expansion of markets in Europe and elsewhere will be stupendous.

What if the country took the alternative route, which is a policy of negativism—and that policy, regrettably, seemed to be described by the right hon. and learned Member for Monklands, East? Once again, it seemed to be a policy of talking Britain down. We saw the prophets of gloom and the negativism of the Labour party. That is no part of what I stand for and it offers no prospects for my constituency. That is why we must pursue our policies; that is why we must spell them out clearly to the electorate at the next general election and that is why we shall again receive the mandate that we rightly deserve.

Photo of John Battle John Battle , Leeds West 7:42 pm, 19th February 1992

It may be too much to expect that Conservative Members will take the massive scale of unemployment in our society seriously as an economic, social and personal problem. I listened to every word of the speech by the hon. Member for Chichester (Mr. Nelson). I do not recall—I will check Hansard—that he uttered the word "unemployment" once in his speech. He suggested that inflation was the tragedy. I suggest to him that most of the people who have experienced economic difficulties for more than 13 years—the whole of this Government's regime—have been the unemployed. I am surprised that Conservative Members cannot bring themselves to acknowledge that unemployment is a major problem in our society.

In the 15 months since the Prime Minister moved into No. 10, 841,000 people have lost their jobs. That is 3,000 people every day. In 1991 alone, unemployment rose by 700,000. Unemployment has now risen in every consecutive month for the past 22 months to an official rate of almost 2·6 million people. That means that one person in 11 is without a job.

In my constituency, according to the figures of the Department of Employment, there has been an increase of 31 per cent. According to the figures before the 30 fiddles and changes, the rate is almost 15 per cent., according to the assessment of the Unemployment Unit. We heard yesterday that the long-term jobless total has risen by 42 per cent. in a year to almost 750,000—the highest level for three years. The number of those unemployed for more than 12 months has risen by 93,000 to 747,000 in the three months to January.

Young people, especially those in the 18 to 24 age group, bear the brunt of unemployment. The number of claimants aged between 18 and 24 has risen by 35 per cent. in the past year. In the last quarter, the number rose by 21,700 to 147,000—the highest level since October 1988.

The figures also show a sharp rise in those out of work for more than six months. The figure is up by 136,000 to 1,338,000 in the three months to January. That represents an increase of more than 56 per cent., and it is young people who now face endemic, structural, long-term unemployment. In effect, a generation is being written off, yet the Government claim success for their policies.

The hon. Member for Chichester claimed that the Government had had great success in their training provision, yet the number of adults who are out of work three months after taking part in the Government's main training programmes continues to increase—by 58 per cent. in 1990–91. Last year, the Treasury tried unsuccessfully to axe the employment training budget and it justified that approach with a forecast that fewer than three out of 10 would find a job after completing the scheme in 1992–93. According to the employment training leavers survey for 1990–91, the proportion out of work after completing the scheme in the north of England and in the west midlands rose to more than 60 per cent. In other words, there are now up to 80,000 young people who are on waiting lists because the Government cannot even honour the guarantee of youth training.

There has been a shift in strategy by the Government. They have moved away from training the long-term unemployed to giving them short-term work experience. That has been described by the National Institute of Economic and Social Research as "perverse" because of the likely increase in the number of long-term jobless. As was reported in the Financial Times on 28 November, the institute pointed out that in a recession more people enter long-term unemployment and many factors make it harder for them to find jobs than it is for the short-term unemployed. Today, 25 people chase every vacancy; that is the reality. If a person is unfortunate enough to be "liberated" from his job, as the Under-Secretary of State for Social Security, the hon. Member for Fylde (Mr. Jack) put it so casually, his chances of becoming one of the long-term unemployed are very high. Such people are not only marginalised, but effectively written off by the Government.

Unemployment is a serious social and personal problem. It means lives of hardship, social isolation, multiple debt, and family and personal stress. Yet the Chancellor of the Exchequer described that increasing human suffering and hopelessness on 16 May 1991 as a "price well worth paying" for the Government's continued economic experiment. The Government, as in education, health and the economy, treat our people as if they are specimens in a laboratory who are to be experimented on at every turn to the point of destruction.

We occasionally hear Conservative noises about the comforting myths, such as the informal economy which means that people out of work will be OK. We are told that the unemployed can always turn to their supporting families when the Government withdraw their social security money. Those myths are constructed to minimise public sensitivity to unemployment. The Government have even had the nerve to limit the period during which the unemployed can claim benefit as if the cure for the problem of long-term joblessness is simply to ensure that people accept any job at any price when it is first offered. If they do not do so, they are crossed off the register.

As other hon. Members will remember better than I, there was a time during the post-war period, following the publication of Beveridge's "Full Employment in a Free Society" and the earlier work by Keynes, "The General Theory of Employment, Interest and Money", when the state was committed to tackling the question of providing employment for everyone, and to setting the conditions for steady growth in the economy to achieve full employment and, at the same time, to keep inflation moderate. However, it has to be said that throughout their 13 years the Government have been the Government of unemployment. They have been characterised by higher unemployment than when they took office, when unemployment was 1·3 million. In every year that the Government have been in office, taking the Government's own fiddled figures, unemployment has never been below 1·7 million.

Even in the so-called boom of the 1980s, what happened? Still one in eight of the labour force were out of work. Admittedly, unemployment dropped a little between 1988 and 1990, but that was merely the result of that old-fashioned consumer spending spree. As Professor Wynne Godley said in New Statesman and Society on 11 January 1991, in a statement backed up by the Organisation for Economic Co-operation and Development economic survey of 1989–90: The rapid expansion of output … was caused entirely by the largest boom in personal consumption by far that has ever occurred. But that short-term boom aside, the 1980s have been characterised by the Government's policy of using high unemployment to introduce cheap labour.

I close by making two references. In March 1985, the Government published a document entitled "Employment: The Challenge for the Nation". In the same month, they published a similar document entitled "Burdens on Business". What did that document recommend but that wages councils be reduced and eliminated so that wage rates could be driven down? Wage rates have gone down, especially in my area in Yorkshire. Now, in the Government's latest document "People, Jobs and Opportunity", if one reads as far as chapter 7, before which the unemployed do not even feature, one finds yet again a commitment to abolish what is left of the wages councils.

I believe that the Government are committed to using unemployment as an economic weapon. It is an instrument for introducing lower and lower wages in the false hope that they will attract inward investment. Recently Ministers went to Japan and said, "Come to Britain with the investment, because there the wages are even lower." I recently met the ambassador to Korea, who expressed surprise that wage rates in the north of England were lower than those in Korea.

If that is the Government's economic policy, it holds out little hope for the people of Britain. Only when we have a Labour Government who treat the unemployed seriously and are committed to positive intervention in the labour market, macroeconomic stability and investment in manufacturing industry, the regions and infrastructure, will some hope be offered to the millions of unemployed who have been written off in the years of Conservative government.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire 7:51 pm, 19th February 1992

The Labour party's motion simply says that the House calls upon the Government to adopt policies which promote investment, reduce unemployment, and tackle Britain's major training and skills crisis. There is an old adage that people who live in glasshouses should not throw stones. I begin with the question that I put to the shadow Chancellor of the Exchequer, the right hon. and learned Member for Monklands, East (Mr. Smith). I asked how he thought that increased taxation and national insurance contributions would help to drag Britain out of the recession. Significantly, I had no material response to that question.

We must recognise that increasing taxation reduces investment. It takes money out of the pockets of the public and reduces their spending capacity. It pushes up interest rates and inflation and, of course, reduces the price of houses, which are the basis of many people's savings and the most important thing that they buy in their life. All in all, increasing taxation amounts to bad news. I suggest to my right hon. and hon. Friends on the Front Bench, and to the Opposition, that the way forward is not to increase taxation. That will only deepen the recession.

The way forward is to cut taxation and give industry incentives for capital purchases of machinery. It is to put more money into the pockets of the public, whether by cutting the basic rate of tax, by increasing tax thresholds by more than the rate of inflation, or by other methods, but the certain recipe for disaster is to increase taxation. The public must realise that.

The problems of unemployment and the recession have been mentioned in the debate. In the north-west, for the first time in my nine years in the House, I see a north-south divide, but it is the reverse of the one in the early 1980s. In my constituency in west Lancashire, where the new town of Skelmersdale has been marked out in the past as a place of high unemployment, unemployment is now 22·5 per cent. lower than when I was last elected, in June 1987.

The Halifax survey covering 1990 and 1991 shows that, in the housing market in the north-west region, there has been an increase of more than 30 per cent. on average in house values. In the last quarter of 1991, apparently at the height of the recession, there was a 4·1 per cent. increase in the value of our homes. Yes, we are losing jobs, but we are still hanging on to vast amounts of manufacturing jobs. In the north-west, 27 per cent. of our work force is in manufacturing jobs, compared with 23 per cent. in the other regions of Britain.

I see nothing but disaster if the Labour party, as it has pledged to do, cuts a further £6 billion from the defence budget over and above what is proposed in "Options for Change". There is no comfort in Labour's policies for the blue-collar workers of Preston and Warton at British Aerospace, Ferranti, Leyland DAF and throughout the north-west.

To those who live in glasshouses and throw stones, I say, "Why do you not examine your policies? Let us see whether they will be better than those advocated by the Government." First, interest rates would rise. Most commentators assume that, if Labour were elected, there would be a substantial rise. DKB Bank and the Nomura Research Institute predict a 2 per cent. rise. We also hear from Credit Lyonnais that the higher inflation, borrowing and balance of payments deficit under Labour would push short-term interest rates sharply higher to defend the pound—by up to four points by the end of four years. That is from its document, "Life under Labour", dated 1 October 1991.

Higher interest rates would increase the cost of mortgages, reduce consumer confidence and push down the value of houses. What it would do for the building industry is beyond credibility. The construction industry desperately needs help, but it certainly does not need higher interest rates, which would virtually make it disappear completely. Industry's costs would rise as a result of higher interest rates. In a manufacturing region such as mine, what would happen with the minimum wage and the social chapter? They would make Britain less competitive in the world. As a consequence, we would see less investment, fewer jobs, and lower standards of living in the north-west region and difficulties all round.

A Japanese industrialist recently called the social chapter "commercial suicide". Yet the Leader of the Opposition will urge us to sign on, despite the problems. We cannot underestimate the effect of the minimum wage. We would probably lose 2 million jobs, large numbers of which would be in the north-west of England. UBS Phillips and Drew states in its "Economic Briefing" of 8 July 1991: in straight economic terms, Labour's minimum pay proposals would be a big blunder". That is a great understatement.

Higher taxes are proposed. The Labour party proposes £37 billion of extra spending. That will inevitably lead to higher rates of taxation for basic rate taxpayers right across the board. That will damage enterprise and inevitably result in a brain drain such as we saw in the 1970s. With free movement in the employment market, people will go to other countries with lower taxes and better standards of living. Labour's spending plans suggest that vastly increased taxes all round will have a strong impact on spending within the community. That will be bad for the economy.

It is foolish to think that increases in higher rate taxes will increase the amount of tax taken. The tax avoidance industry would come back into operation and the tax take would be lower, as has been proved by experience in the rest of the European Community and in the United States. That can only damage the position in Britain. Inevitably a Labour Chancellor will have to turn to the basic rate taxpayer and ask for increases in the basic rate of taxation.

Inward investment is the key to our present prosperity. We receive the largest proportion of inward investment in the European Community and jobs are being created. Immediately we signed on for the social chapter of the Maastricht agreement, investment would disappear and go elsewhere, possibly to the Pacific basin. We would never get those jobs back.

Finally, we must consider Labour's policy of being hand in glove with the trade unions. We must not forget that the trade unions came first and spawned the Labour party. They are its paymasters and, to a large extent, it will do what it is told. That will mean an inevitable return to some of the unpleasant and in many respects damaging trade practices that we consistently swept away through our employment legislation in the 1980s. That would mean fewer jobs, less inward investment, more disruption and a less prosperous Britain.

Last year, 800,000 working days were lost through strike action, compared with 29 million in 1979. That cannot be of any benefit to the community. The success of the Government's industrial relations policy is an example to the world, and I am afraid that that will be lost.

We have low inflation, but Labour's policies will result in high inflation. Our interest rates are down 4·5 per cent. in a year. Inflation is down. We have record exports and an increasing share of world manufacturing trade. We are spending £2·8 billion on training, and industry is spending £20 billion. One in four of our students go into higher education—it was one in eight in 1979—and we are heading for one in three. Those policies, and not the policies advocated by the Labour party, will bring Britain out of recession.

We should listen to the managing director of Coats Viyella who has said that, if Labour comes to power with its minimum wage, 11,000 jobs will disappear overnight. How many more will follow? The public must realise that they have no future under Labour. All they will have is Labour's hand in their pockets.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West 8:02 pm, 19th February 1992

The most interesting aspect of today's debate was the extraordinary speech by the Secretary of State for the Environment. On a personal level, I do not begrudge him his parliamentary success but Conservative Members, especially those on the Front Bench, may take a different attitude, especially when the Conservative party has lost the next election and the leadership stakes begin to shape up. The right hon. Gentleman's speech was all about that and had nothing to do with the disastrous situation which 13 years of Tory government have caused the country and its economy.

It is hard to see how the Secretary of State could have made a different speech. He would have been indulging in a classic recantation if he had attempted a sustained or reasoned defence of Government policies and achievements in the past 13 years. It would have been a total recantation of everything that he has stood for in his political life. It would have been a specific recantation of his remarkable speech to the Tory Reform group two years ago, when he was unfettered by Government office and unshackled by the failures of the Government with whom he finds himself inextricably entwined—probably to his regret.

If I take five or six of the main points from that speech and compare them with what the Government have done, hon. Members will realise the sort of problems that the Secretary of State would have faced had he tried to defend those policies. First, he described the inadequacy—both in volume and character—of Conservative training programmes. What has happened since then? Recently they have been hacked further to pieces, and the Government have been concentrating more and more on people at the bottom of the skills table.

Another issue to which the Secretary of State graphically referred in his speech to the Tory Reform Group was education and our comparative inadequacies within the European scene—our failure to perform, compared with the achievements of Japan. What has happened? What has been the Government's most indicative action to ensure that education standards are maintained—let us not speak of an improvement? The Tory Government's reaction has been to privatise the inspectorate. Could there be a more pathetic or more irrelevant reaction to a great national problem?

Thirdly, the Secretary of State referred to the attractions of a development agency for England. Present Tory policies show a pathological hatred of any sort of regional development policy—a hatred which is bringing us to the point where, because of their antagonism to Scottish feelings, they are hell bent on the annihilation of the Tory party in Scotland. That seems to be a perverse policy. If it were pursued—thank heavens that that will not be allowed—it would threaten the very Union.

Those are three significant areas in which Government policy has been disastrous for the nation. The Secretary of State exposed them about two years ago before he took office and so we could not expect him to defend them today.

Let us consider three other interlinked areas which Labour Members agree are vital to economic success: the overriding importance of manufacturing; the balance of payments as the essential criterion to determine economic and industrial success; and, if one accepts those two overriding priorities, their inescapable implications for the exchange rate mechanism, the value of sterling and the other currencies within it. I mention the latter in the same context as my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) mentioned it earlier.

I shall not bore the House at this late stage with all the essential figures, which have been rehearsed. They simply point to the fact that we have the worst record among our major competitors for manufacturing output and investment. There are no two ways about it. Even on a partisan occasion such as this I would go so far as to say that British Governments have had to wrestle with that deep-rooted problem.

However, the Government's policies have been marked, first, by their malign neglect of that problem and now by their benign neglect of it. They have never really set out to deal with our manufacturing problems. As a result, they have managed to heap £70 billion of foreign exchange debt on the shoulders of people in this country in the past four years. What sort of achievement is that?

It is no good talking about productivity increases and our increased share of world trade. The latter is an indictor, but the ultimate determinant is the balance between imports and exports. That alone tells us whether we are succeeding as a nation. It is clear from the Government's record that there is no way that it can be called anything other than a calamitous defeat for our industry. That has been brought about by the combination of perverse economic policies carried out by the Tory Administration.

Even in the past two years, while the country has been moving towards recession—and has been in recession for the past 18 months—the Government have managed to achieve a £10 billion deficit in our balance of payments, which is amazing. One could expect that to happen during a boom, if we were trying to encourage an investment boom, or in most other circumstances except for recession, and we are in the longest recession since the second world war. Conservative Members are still using the absurd argument that the whole world is in recession.

It may be true that there has been a slowdown in world trade. However, in 1990–91 most of the major world markets enjoyed solid growth in trade, except the United Kingdom. The fact that there is now a general slowdown in world trade means that our recession, which is already the longest in our post-war history, will last even longer.

The Government may argue that they are doing everything right and that everyone is experiencing recession, but surely action should be taken now. Action should be taken to help the construction industry, but, unfortunately, the Conservative party cannot forget its hidebound, ingrained dislike of any form of public sector investment. My constituency is in the west midlands where the car industry is in great need of help. The 10 per cent. special car tax could be scrapped. Even some Conservative Members have argued that the business rate should be reduced. I also believe that 50 per cent. capital allowances should be restored. All those steps could be taken, but they will not be. We know that, because of the Government's incompetence, the recession will be allowed to drag on, which means that our people will suffer unhappiness and destitution for even longer.

It has been argued that the people do not yet blame the Conservative party for the recession, but it is the Government's incompetence that has brought us to this. I shall argue that point day in, day out up to the next election. I believe that we will win the argument. The Prime Minister may profess his concern. That is fine, but nothing can condone his professional incompetence.

I believe that the people will come to see that we need a Labour Government with policies that are designed to restore a sense of purpose and the correct order of priorities necessary to rebuild the country arid its economy.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury) 8:11 pm, 19th February 1992

I owe you, Mr. Deputy Speaker, and the House an apology for having been absent for much of the debate, because I am a member of the Committee on the Further and Higher Education Bill. I was particularly keen to speak in this debate because I wanted to expose the extraordinary argument advanced by the right hon. and learned Member for Monklands, East (Mr. Smith), whose speech I was able to hear.

One of the great advantages of coming in and out of a debate is that one can gauge the reaction of the media and hon. Members to what has been said so far. It is clear that there is agreement on both sides of the House about the fact that this is a deep and difficult recession. The hon. Member for Coventry, North-West (Mr. Robinson) recognised, if somewhat opaquely, that the recession is international. Surely he has seen the irrefutable evidence from Germany and America to demonstrate the international nature of that recession. Both those countries are important to other European economies, and their experience demonstrates that one cannot say that the recession has been made in Britain.

The comments that I have heard about the debate have made me realise the grave difficulty in which the Opposition have landed themselves. The nature of the recession requires the policies that the Government have been pursuing as they will bring about the upturn that will undoubtedly come. Hard and harsh though the recession is, our policies are the right ones, and they will be successful.

It is equally clear that the Labour party crafted the policies that it wanted to implement in the unlikely event of winning the election at a different point in the economic cycle from that which we face today. How on earth can any party hope to be treated with any economic respect when, in the teeth of a difficult recession, it intends to raise taxation? No respectable economist would ever suggest that raising taxes would do anything but make the recession worse. In fact, the great danger is that it could lead to a double-dip recession. That would be the result if the Opposition's policies were followed.

Photo of Dr John Marek Dr John Marek , Wrexham

I accept that, on the normal definition, Germany is marginally in recession. There are various reasons for that. It also faces the obvious difficulty of having to deal with the problems of East Germany. Perhaps the hon. Gentleman can tell me of another Community member state, besides the United Kingdom, that is in recession.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury)

The hon. Gentleman is as capable as I am of reading the statistics of economic trends in other countries. He accepts that Germany is marginally in recession; therefore, he is arguing my precise point. Germany is in recession and my right hon. and learned Friend the Chief Secretary to the Secretary will demonstrate that it is an international one.

When mistakes were made in 1987, the Labour party offered advice on how to deal with the difficulties that the economy faced. If we had followed it, the recession would have been much worse and more difficult to contend with. Judgment had to be exercised by the Government about what to do with interest rates, and at that very point the policy of the Labour party, as described in the Chamber and in speech after speech by the Leader of the Opposition, was that interest rates should be cut further. With hindsight, it is clear that that was entirely the wrong answer. What a good thing for the country and for our business men that the Leader of the Opposition's policies were not followed by the Treasury.

Our policies are the right ones to get us out of the recession. It will be a long and difficult process, and I accept that, in many constituencies, the consequences have been tough for those with small businesses. The only long-term solution is one that leads to low inflation, stable growth and competitiveness. We have pursued the policies designed to achieve that. We have the guts to stick to our guns to ensure that, when the upturn comes, it is real rather than the illusory type which is the speciality of file Labour party.

The extent to which the Labour party is boxed in because it composed its policies at a different point in the economic cycle is truly enormous. Apart from the Opposition's stated intention of raising taxes in a recession, one must also consider what would happen to the 180,000 teachers who earn more than £20,280 per annum. They would be faced with an immediate tax increase. Do the Opposition really believe that teachers are overpaid? Do they want to cut their take-home pay just when the Government have demonstrated their support for teachers and when the pay review body has now ensured that they are better rewarded?

Hamish McRae argued persuasively in The Independent that, if the Opposition's policies were implemented at this point in the economic cycle, they would threaten the housing market, which is in an extremely delicate state. He also argued that their policies would cause grave damage to the economy and threaten the income of those who, because of the recent reductions in interest rates, have a little more spending money and greater ability to meet the cost of their home loan. Those advantages would be prejudiced by the taxation policies of the Opposition.

We cannot even get a straight answer from the Opposition on their taxation policies. Would they or would they not immediately abolish the higher threshold on national insurance? We get one answer from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), another from the hon. Member for Derby, South (Mrs. Beckett) and yet another from the shadow Chancellor. Millions of people need to know the answer, but they have not had it from the Opposition. Why should redundant miners in Nottinghamshire see the redundancy money that they have earned threatened by a savings tax, as proposed by the Opposition? Many former miners in my constituency want to know the answer.

When will we get an answer to the question put by my hon. Friend the Member for Lancashire, West (Mr. Hind) about the minimum wage? The Labour party claims to be concerned about unemployment, and it is truly extraordinary that it should put forward the fatuous and bizarre policy of a minimum wage.

Photo of Dr John Marek Dr John Marek , Wrexham

I will not comment upon the minimum wage, but as for lifting the cut-off point for national insurance contributions, we will consult with the civil service to see how that could be done easily. We have made that commitment. The hon. Gentleman should also note that no one who is earning less than £21,000 a year will pay a single penny extra tax as a result of our policies.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury)

Why will the hon. Gentleman not answer our questions about the minimum wage? He simply said that he would rather ignore the whole issue. I gather from his other remarks—I shall have to read what he said in the Official Report—that we have a fourth version of Labour's plans for national insurance. That must be added to the three versions which I outlined. In other words, we are no less confused than before the hon. Gentleman's intervention. He might also have commented on the whole issue of the taxation of pensioners' nest eggs. When will we get a straight answer from the Labour party on that and many other taxation matters?

A hard and severe struggle is being faced by many unemployed people in my constituency and elsewhere. My party is committed to offering long-term hope to the unemployed by pursuing policies of low inflation and stable growth. Under Labour, we would have just pious words and platitudes, with a short-term fix and a long-term return to the trend of higher unemployment. That is why every Labour Government have seen an increase in the level of unemployment on leaving office compared with when taking office.

Although Opposition Members are full of good intentions, their actions do not measure up to the harsh and tough policies that must be taken if unemployment is to be conquered and fuller employment is to return. Britain has more people in employment as a percentage of its population than any other European country, apart from Denmark.

In a number of areas Labour Members tentatively recognise the new realities of competition, free enterprise rather than nationalisation, and central planning, but they do not embrace them. They have abandoned principles held since 1945 and earlier by their party and have adopted a new set of principles which they believe will inveigle the electorate into giving them the keys to Downing street. They cannot get away with that.

We are the party of free enterprise. We brought about huge changes throughout the 1980s in the supply side of the economy. That is why the Prime Minister will still be occupying his position on the Government Front Bench after the general election, whenever it occurs.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby 8:22 pm, 19th February 1992

I am grateful to the hon. Member for Gedling (Mr. Mitchell) for warming up the House for me. It is clear that the name A. Mitchell appearing on the television screens all over the Palace has brought Members flooding into the Chamber. Even so, I will not follow the line taken by the hon. Gentleman, because it was typical of the performance of his hon. Friends in the debate. They have adduced two arguments only—that it is a world recession, and that the Labour party in power would make it worse. That was put over as a knockabout turn by the Secretary of State and as a more serious exercise, at a higher intellectual level, by the hon. Member for Gedling.

But both arguments are fallacious, particularly the claim that we are in a world recession. It does not explain why this country went into recession earlier and is in deeper now, making it harder here. The answer is that the recession is a direct consequence of Government policy. The Conservatives came to power and installed massive deflation in the first three years, the results of which closed down about a quarter of Britain's manufacturing capacity, with a huge loss of jobs.

They followed that with a kind of North sea bubble in which rising asset prices and looser credit pursued each other, so that one inflated the other. That inflated demand. British manufacturing, which had been decimated in the recession, could not cope with it. Imports were sucked in and inflation developed. In that situation the Government panic and start damping down. The cause of the recession has been the Government's attempt to damp down the consequences of their own folly. In doing that, they deliberately meant their measures to be painful.

If it isn't hurting, it isn't working, the present Prime Minister told us. The Government's chosen instrument, they told us, would hurt, and it has. The pain is being felt all over the country. It is acute in Grimsby. It is terrible to se our constituencies bleeding with the loss of jobs, with industries closing, with people being thrown out of work and their houses being repossessed. That is all happening because of the Government's policies.

They have added to those consequences by nailing the lid down on the recession, because, as they began their punitive measures, they entered the exchange rate mechanism with the pound high and with interest rates at an unnaturally high level. The pound was high because the economy was being deflated, so they nailed the lid down on the deflation. The present Prime Minister took office and with his decisive, firm, tough, aggressive manner bullied the weak and wilting previous Prime Minister into joining the ERM against her better judgment. We are now seeing the consequences of that.

It is a mistake to have a fixed exchange rate because the exchange rate is a market clearing mechanism which must change with circumstances. It is a heightened mistake to tie our exchange rate to that of a major competitor, and thus tie our economic cycle, which is different from its, because we are forced to act on its behalf. It is a folly to make changes in the exchange rate subject to the consent and agreement of competitors who have a vested interest in seeing our exchange rate over-valued because it safeguards their access to our market.

That is a folly, but it is a disaster to do all that at an over-valued rate, which is what we did. The rate was high and it has got higher since, because our inflation has been higher. Other economies have increased their productivity and productive power and are therefore in a more powerful position. So the gap has widened and the pound is now grossly over-valued in that situation.

The currency of a nation must be over-valued if that nation is in continuous and sustained deficit, especially in a recession. It is a horrendous symptom of industrial weakness, but it is also a symptom of the exchange rate being over-valued. It is clear that this deficit requires a devaluation. It is not a matter of morality. It just must happen. The United States faced a similar deficit in 1985. The dollar has come down by about 40 per cent. and the pound must come down, too. It is the only way open to us; otherwise, we are faced with long-term deflation which will be devastating for industry and jobs, which will take years rather than months to carry out and which will undermine permanently the competitive power of our economy.

Deflation is the only alternative to devaluation, so devaluation is the only way out. We cannot lower interest rates because of the ERM, but if we did, it would not achieve anything unless our industries were competitive, making our exports competitive. If, as some hon. Members have suggested, the Government borrowed to cut taxes in the budget, the money thereby pumped out would simply wash overseas at this level of over-valuation. It would suck in imports rather than having a beneficial effect. The multiplier has gone to live in Germany, and it is as simple as that.

We in Britain must increase demand and channel it to British industry by a competitive exchange rate. That is the only way to increase profitability. It is a question of allowing British industry to make a profit, enabling it to produce and invest in this country. The profitability of our manufacturing has been consistently lower than that of its competitors and of sheltered industry. The position must be redressed in favour of British manufacturing.

The exports of British industry are not profitable at the moment. We are exporting, but we are doing so by throwing overboard research, design, development, investment, jobs—anything—just to keep going. But many of those exports are not profitable. So there must be a devaluation, and it must he substantial.

That brings us to the heart of the problem. We cannot devalue, we are told, because of our membership of the ERM. In other words we cannot recover because we are not allowed to do so. We would be accused of being uncommunautaire if we were to devalue in the ERM, or came out of the mechanism and devalued. So jobs are being lost, factories are being closed and houses are being repossessed to show what good Europeans we are and to demonstrate our commitment to an ERM which is not in the interests of this country.

That is the essence of the argument, and it means that deflation will go on, because there is no way out of it. We shall have the same sustained deflation as France and Italy had in the 1980s, with the same consequences on employment, with rising Government expenditure, with diminishing Government receipts as profits and jobs go down, and with an increasing Government deficit. That is the inevitable consequence. Everything will have to be cut simply to allow us to stay in the ERM. It will be a disaster for this country. The British people are not being told that all this is being done for the exchange rate mechanism. If they were told the truth, their answer could be summed up in three words, two of which would be "the ERM".

Deflation is becoming a way of life, and it is horrifying to see it as an orthodoxy from all three main parties, all the pundits, the CBI and the Bank of England. They all say the same thing and they are all wrong. The only way to revive the economy is to devalue, as happened in the 1920s when Churchill took us back to gold standards—an over-valued rate—and Keynes wrote about "The Economic Consequences of Mr. Churchill". The same could be written now, entitled "The Economic Consequences of Mr. Major".

The depression will go on unless we devalue. We must have a competitive exporting industry. I am happy to see the Conservatives go down chanting the mantra that pain is good, decline is growth and ruin is improvement. It could not have happened to a nicer party. However, I do not want Labour to break itself in government on the altar of a financial orthodoxy that is not mine. I am not in politics to make Europe fit for central bankers to rule in. I am in politics to improve the lot of the people, to generate jobs, growth and expansion—all the measures which make people's lives better and which, in turn, generate public spending to improve the quality of that life. We cannot do that unless we devalue.

We must swing back the balance that over-valuation, for a prolonged period, has pushed in directions that are damaging to the people. We must move those balances back from investment overseas to investment in this country, from imports to production, and from wealth to work. We must make money cheap and people dear, not the other way round as it is at present.

Photo of Mr Stephen Day Mr Stephen Day , Cheadle 8:32 pm, 19th February 1992

I respect the principles and the well-argued standpoint of the hon. Member for Great Grimsby (Mr. Mitchell), although I do not agree with him. At least he has a principled viewpoint, which cannot be said for the views on Europe of the Opposition Front Bench.

No one denies that the economy faces serious difficulties,. The problem is to convince the Opposition that our troubles are being experienced, to some degree, elsewhere. I set great store by what my constituents tell me, and some interesting observations arise from that exercise. The mood of the average business man in my constituency[Interruption.] If hon. Members will wait, I shall tell them precisely what it is. My constituents realise that they are experiencing great difficulties, and I could not describe them as particularly happy. I understand that, but the greatest factor that comes through when I speak to them is that of fear—not fear of the recession, but fear of the election of a Labour Government.

I do not believe that it will be possible—I hope that it is—for us to witness real signs of recovery this side of a general election, for the simple reason that that fear manifests itself in the business community's belief that it is not safe to invest in their businesses with that ever-present threat. The only way that we shall see the economy move forward is for the general election to be held and my right hon. Friend the Prime Minister to be returned to No. 10, as I am confident that he will be.

I invite Opposition Members to come to my constituency and witness the fear of the business community. It would be refreshing for Opposition Members to see a part of the country that has the good sense to have only 9 per cent. of the electorate voting for the Labour party. If they came to my constituency, they would find a very different mood from the one that they think prevails throughout the country. My constituents remember only too well what life was like under a Labour Government, before the Conservatives came to power in 1979, and they do not want to return to that scenario. Again, that is a strong feeling that I get from my constituents.

The Labour party has a recipe for everything, and it is the same now as it has always been: if there is a problem, throw money at it. It does not ask where the money comes from or whether it will be used effectively, but simply throws it at the problem. On every issue that the Labour party deals with, its answer is that wonderful word "resources". Anybody who understands that word knows that resources are finite. The right hon. and learned Member for Monklands, East (Mr. Smith) would do himself and his party a favour if he began to understand the basic meaning of an important word that the Labour party uses regularly but does not seem to understand.

A classic example can be found in one of the most important areas of the economy—the national health service. It is important to the economy because it employs so many people. Indeed, it is the largest employer in the country.

Photo of Mr David Evans Mr David Evans , Welwyn Hatfield

It employs a million people.

Photo of Mr Stephen Day Mr Stephen Day , Cheadle

As my hon. Friend says, it employs a million people, so it is larger than the red army, when that was intact.

Labour constantly says that it would spend more money on the national health service, but where is the evidence? When the last Labour Government were in power, it was the only time when the NHS suffered actual cuts in spending—yet the Labour party claims to be the defender of the health service. The same would happen again because we hear the same rhetoric.

The Labour party says that it would spend more on roads, education, training and everything else, but it never asks where the money will come from, never daring to admit where it will come from. It cons the public into believing that the money will be found through systems of taxation that will affect no one, yet Labour Members think that people will vote for them. What nonsense—the British people will not fall for that, and the nearer we get to an election the more that will become self-evident.

Cheadle is a prosperous constituency, but it suffers some difficulties at present. One of its difficulties concerns the British Aerospace plant at Woodford. We all know that the difficulties of British Aerospace have much to do with the so-called "peace dividend". At Woodford, however, that is not precisely the case, because Woodford is successfully engaged in the production of the 146—the so-called "silent jet". Although I am sincerely upset for all those who have lost their jobs in other parts of the country, I am pleased that we have managed to limit job losses in Woodford to just 70. I readily accept that that is no comfort to the 70 people who have lost their jobs. I shall visit the plant on Friday to discuss how the management will implement job cuts, and I hope that there will be no enforced redundancies.

Interestingly, the right hon. and learned Member for Monklands, East cannot accept that there is a world recession. He should come with me on Friday to meet the management at Woodford. He would then find out that the reason for those 70 job cuts is that there has been a collapse in aircraft sales in the United States. The airline industry is in recession and the market is in decline. Yet the right hon. and learned Gentleman says that there is no world recession and that our problems are all caused by the Government. He is living in cloud-cuckoo-land.

One aspect of his accusation is particularly offensive. When there is a total reluctance to accept what is manifestly the case and people are suffering from it, how on earth can the Opposition hope to deal with the issue and provide policies that will help people to avoid the situation that those 70 people at Woodford now face? The Opposition find it easier and more politically acceptable to use that misery and suffering as a stick to beat the Government. It is a question of cheap votes, and, coming from a party that says it wishes to rule this country, that is extremely depressing. I am sure that for that reason, among others, that will not happen.

We have heard today another argument put forward by those who say that there is no world recession and no recession in the United States. I should like to hear in the Opposition's winding-up speech an explanation of the difficulty in which President Bush finds himself on the domestic front because of the recession in the United States. Everywhere he goes, he gets into trouble about the recession—the recession which does not exist. Perhaps Opposition Members should go and explain to President Bush that his worries are ill-founded, that there is no recession in the United States. On the other hand, any hon. Member doing so would learn something and would come back with a recognition of the realities of the world—in particular, the realities of the economy of the United States and of the British economy.

No one can deny that we are deep in recession, but we have laid the groundwork for progress when the upturn comes. Companies are more competitive, and we have seen loss-making nationalised industries turned into profit-making industries. In the British economy, we have the basis for progress within Europe and the rest of the world. I am proud to say that for many years I was a member of the Institute of Export. Before coming to this House, I was involved in selling products abroad. We owe a great debt to our exporters. Those firms recognise that, if they are to continue to compete, if they are to continue to be a great credit to their industries and to this country, the last thing that is needed is the election of the Labour party, which has no grasp whatever of what is required for Britain's future.

Photo of John McAllion John McAllion , Dundee East 8:42 pm, 19th February 1992

At the beginning of this debate we witnessed a spectacle on the Government Benches and heard from the Secretary of State for the Environment a speech that summed up quite brilliantly why the current Government have no friends in my country—Scotland—and fewer and fewer friends south of the border. In all the nauseating point-scoring of the Secretary of skate—"skate" is a good word, but I mean the Secretary of State—we heard nothing at all offering one scintilla of hope to the millions of our fellow-citizens who are without work and without homes and who will be without any kind of economic prospects while the Conservative Government waste their time in office.

The Secretary of State's knowledge of Scotland is so limited that he believes that in Scotland there is a place called Edinburgh, Monklands. The fact that Edinburgh is the Scottish capital on the east coast, while Monklands is in Lanarkshire on the west coast, was totally lost on the Secretary of State, yet this man purports to be a senior Minister in a Government charged with responsibility for running Scotland. He could not even find Scotland unless someone took him by the hand and showed him where it was.

His ignorance of Scotland is so pervasive that he is undoubtedly equally ignorant of a crisis facing a company in my constituency this very evening. I refer to Alma Holdings, which manufactures confectionery. The firm employs about 300 people in Dundee, and hundreds more across the Tay in Fife, in Kirkcaldy and Glenrothes. Tonight Alma Holdings has been forced to call in the receiver as a result of the mother and father of economic recessions, which has been caused by the present Government's policies.

It is in recessionary times such as these that belts have to be tightened and spending has to be cut. It is in recessionary times such as these that the public stops buying the kind of confectionery that Alma Holdings produces. If that company is not selling, it is not earning; if it is not earning, it is not able to sustain employment as it has in the past. That is why the receiver has had to be called in. Such is the reality facing people trying to run businesses while the Conservative Government are in office. It is entirely remote from empty rhetoric such as we have heard from Government Members during this debate.

We are now in an infinitely worse economic situation that the country faced in 1979, when the Tory Opposition claimed that Labour Britain "wasn't working". The current Prime Minister took part in that campaign nearly 13 years ago. Like every other Tory taking part in that campaign, he had no misgivings whatsoever about blaming the then economic troubles on the then Labour Government. He did not then mouth weak excuses such as are now trotted out by Ministers. At that time we heard from the Conservatives nothing about the battle against inflation. We did not then hear Tory Members say that "if it isn't hurting, it isn't working", or that it is a price worth paying. There were no such words back in 1979. Then the situation was simple and straightforward to them: there was mass unemployment and there was a Labour Government, and the first was caused by the second.

Now, 13 years later, we have twice and three times the 1979 level of mass unemployment. Why are the Tories not now doing what they did then? Why are they not blaming the situation on the elected Government? Why the inconsistency? Perhaps consistency is not something that the public have come to expect from political parties, but, given the circumstances that now face this country—recession and mass unemployment—a little humility would not be out of place. We might hear a note of regret about the suffering of the millions in the dole queues and of their families.

There might even be a little remorse about the million more who are trapped into poverty wages as a result of the Government's deliberate policy, perhaps even a little shame that, after 13 years of Tory government, almost one quarter of Europe's 50 million poor live in Britain. Given these appalling circumstances, we should not be asking too much if we were to expect the Government to begin to recognise that perhaps—just perhaps—they got it wrong in the past and that it might be time to change their economic policies.

In the Government's amendment to the Opposition's motion, there is no sign whatsoever of recognition that the Tories may have made mistakes. In fact, the Government, in the amendment, congratulate themselves on what they call success. Success? Millions of families throughout this country must be saying to themselves tonight, "If this is success, God preserve us from failure." The amendment goes on to boast about what the Government call the foundations for economic recovery, which we are told have now been firmly laid. "Foundations for economic recovery" is yet another euphemism for throwing millions of people out of work for the purpose of deflating the economy and bringing inflation under control.

The foundations for economic recovery were supposed to have been laid at the end of the last Tory recession in the early 1980s. We were told then that the price had been paid for the breakthrough that would sustain economic recovery. In fact, we were told that such a breakthrough had been achieved. At that time, the Tories liked to call ut the British economic miracle. It was the high point of the then rising tide of Thatcherism, the pinnacle of the achievements of the then Tory Chancellor, whom the Prime Minister called "my brilliant, brilliant Chancellor".

Of course, both of them have now gone, and neither is lamented in any way by Labour Members. But their skeletons are still rattling very loudly in the cupboards of the right hon. Gentleman who is now Prime Minister, who at that time was their protege and owed his personal advancement to their sponsorship. Now the Prime Minister does not give them a second glance. He tries to place the maximum distance between himself and their political heritage before facing the British people in a general election. So far as the Prime Minister is concerned, the right hon. Member for Finchley (Mrs. Thatcher) and the right hon. Member for Blaby (Mr. Lawson) might never have existed. Indeed, I am sure that he sometimes wishes that they had never existed.

But exist they did, and so does the economic damage that they inflicted upon the British people. If the Tories think that, by ditching those two individuals, they have absolved themselves of responsibility for 13 wasted Tory years, they are very sadly mistaken. It was not this or that individual who foisted upon the British people the ghastly experiment of monetarism; it was not this or that individual who forced through the poll tax in defiance of public opinion. It was each and every Tory Member of Parliament who, throughout those 13 years, knowingly gave their support.

Chief among those, of course, was the present Prime Minister, who was the most loyal supporter of the Government at that time—until it was in his personal interests to cease his support. In every sense of the word, the right hon. Gentleman was a right honourable rat deserting a sinking ship.

The flagship has sunk and pulled down its captain. It is now the turn of the rest of the crew who are beginning to sing a slightly different economic tune. They say that it is all the fault of a global economic crisis and nothing to do with the British Government. They say that Germany, Japan and the United States are all at the mercy of huge, international and impersonal economic forces that are sweeping the world and leaving in their wake international recession and mass unemployment.

In their desperation, the Tories are beginning to sound like so many Trotskyists as they say that it is all the fault of capitalism, and nothing can be done by any elected Government. Capitalism is cyclical—bust follows boom just as boom follows bust—and contained within capitalism are the destructive seeds of inevitable recession and mass unemployment. That is the logic of the Government's argument. They are saying that, if we want to put an end to economic recession and mass unemployment, and break through to a sustained economic recovery, we must first destroy capitalism, as it contains seeds that cannot be removed. I would not wish to quarrel with that argument, but I find it strange coming from Conservatives.

The truth is that something can be done: a programme of Government action and investment as outlined by my right hon. and hon. Friends in today's debate. Capital allowances would encourage investment to improve this country's transport and infrastructure, and we could introduce special employment measures. However, the suggestions all come from Labour Members.

One of the key reforms that must be implemented if we are to break away from the present problems is constitutional reform. Within this country, a political state is developing that is so skewed by the dominance of southern constituencies that is now possible for a Tory Government to be elected on the back of southern votes and pursue policies targeted solely in the interests of people living in the southern half of the country. That policy cannot bring economic prosperity to the whole of the United Kingdom. If the Tory Government are re-elected after the next general election and they persist with that policy, the United Kingdom could be put at risk.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow 8:54 pm, 19th February 1992

We have had a most interesting debate. Of all the speeches made, I wish to single out that of the hon. Member for Great Grimsby (Mr. Mitchell). He tempts me to engage in a debate with him on competitive exchange rates, as he came over as a powerful advocate of floating exchange rates. However, I shall resist that temptation and latch on to something else that he said. The hon. Gentleman said that he thought that the reaction from Conservative Members had been entirely typical. I shall return that compliment: in many instances, the reaction of Opposition Members was equally typical.

One feature of such debates is their predictability. People with no experience of employing people talk about unemployment, and people with absolutely no ideas and no visions for the future talk about the recession. The stock answer from the Opposition on so many issues is more public spending—a point made by my hon. Friend the Member for Cheadle (Mr. Day) in his most interesting and robust contribution. The Opposition advocate more spending on just about everything in the public sector. That argument stands up only if they are prepared to recognise that the money has to come from somewhere.

The question I want the Opposition to answer— perhaps the hon. Member for Dagenham (Mr. Gould) will provide an answer when he winds up—is this: if they have their way and all the additional money is found for health, education, infrastructure and all the other attributes of the state, what will be left for investment?

There is an enormous contradiction—a great inconsistency—in the argument of the Labour party. It says that it wants more investment in industry and in the wealth-creating sector—although it does not call it that, as it does not recognise trade and industry and commerce as a wealth-creating sector—but it also says that there should be more money for the public sector. It does not say where the money for the essential investment in the private sector and industry will come from. Will there be any money left in the pockets of the private investor if the Labour party comes to power?

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

My hon. Friend confirms my worst fears. There would be no money left for investment under a Labour Government.

In an interesting speech last night, which I commend to the House, my hon. Friend the Member for Welwyn, Hatfield, (Mr. Evans) took us down what he described as memory lane, and recited all the obstacles that previous Labour Governments had put in the way of entrepreneurs. The Labour party would do the same again were it to come to power, as its only answer to any problem is more regulation, more intervention and more regional policies —in short, preventing managers from managing, business men from running their own businesses and, as the nation now recognises, imposing higher taxes.

I should like to say in the strongest possible terms what an enormous achievement it is, and what great credit it reflects on the Government that, in a decade when hundreds of thousands of men have lost their jobs in the traditional labour-intensive industries, they have been redeployed in real jobs in the wealth-creating sector. As well as being a tribute to our Government and their policies, that is a tribute to the resilience and competence of United Kingdom employers.

How have we created those real jobs? We have done so simply through lower taxes, more realistic labour relations, deregulation, the encouragement of wealth creation and the development of a climate for investment and risk taking.

The Labour party can talk as long as it likes about throwing money at job creation, but neither it nor the public can create real jobs. The only people who can create real, lasting, rewarding jobs are employers. I have not heard that word used once in the debate—certainly not by any Opposition Members. Employers—entrepreneurs—will identify market opportunities and make the products to fill them. They will do so at a price that the customer can afford, which will be reflected in the profits of their businesses and the prosperity of their employees.

I have been critical of the Opposition for having no vision of the future. I want to give my right hon. Friend the Minister an idea. He may have noticed within the last 24 hours the comments of the director general of the Institute of Directors, who has, correctly analysed one deficiency in our economy. He has identified a dearth of medium-sized independent companies. That is a weakness of our economy compared with the Japanese and German economies—in other words, the countries which represent our strongest competition.

I commend to my right hon. Friend the importance of encouraging medium-sized independent companies. He should spend some time considering what encouraging such companies would do to the economy. Many criticisms have been made of the economy today because of its short-term view. There are many reasons for that —our tax regime being one of them. I should like to sow in my right hon. Friend's mind the seed that he should do all that he can to encourage medium-sized independent or private businesses because of their ability to introduce stability and a longer-term view of industry into the economy.

All of that is anathema to the Labour party. It is envious and exhibits hatred of successful families and successful businesses. My hon. Friend the Member for Epping Forest (Mr. Norris) identified that in his splendid speech. He drew the correct conclusion: that the great British public will recognise that fact when they vote in the general election. I too have no doubt that when they make that analysis, they will vote Conservative and return this Government.

9 pm

Photo of Keith Vaz Keith Vaz , Leicester East

I make no apology for raising yet again in the House the plight of the victims of the Bank of Credit and Commerce International. I do so because, as the Government are aware, the closure of the bank last year and its subsequent liquidation on 14 January this year have had and will have an effect on the economy. Unless the Government take firm, corrective action in the next few days, some of the depositors and creditors will not be able to continue their normal and basic commercial activities because of what has happened since liquidation. Some of those people are constituents of the Chief Secretary to the Treasury; indeed, the largest single depositor is a constituent of the Chancellor of the Exchequer.

As we know, when the bank was put into provisional liquidation, the Sheikh of Abu Dhabi announced that he could no longer keep on staff. Therefore, as of the end of last year, 1,200 people who were in full-time employment in the bank were put on the dole. There was no substantial compensation scheme for them. Many of them have written to me since the closure of the bank to say that despite their best endeavours they have been unable to find jobs. Many have cited comments by the Governor of the Bank of England about the nature of BCCI as the reason why they have been unable to find employment.

When the bank went into liquidation on 14 January, that was supposed to trigger the deposit protection scheme. Last year, on 8 July, when the Economic Secretary to the Treasury made to the House the statement which the Chancellor could not have made, he said that the closure of the bank would trigger the operation of the scheme, and that those with over £20,000 on deposit would be able to get a maximum of £15,000. That has not materialised.

Since my meeting with the Bank of England a few weeks ago, it has become clear that no payments will be made from the deposit protection fund until the liquidators have circulated a proof of debt form to the 40,000 depositors of BCCI resident in this country. Therefore, the payments of many businesses, which have borrowed over the last seven months in anticipation of getting money under the deposit protection scheme, will have to wait.

A promise was made to the High Court last December that by 14 January the compensation scheme, which was the result of negotiations between the Sheikh of Abu Dhabi and the liquidators, would be published. Despite that promise, the scheme has still not been published, and the anxiety, distress and concern of the thousands of depositors in this country and abroad are obvious. Almost seven months after the bank went into provisional liquidation, they have no means of knowing precisely how much money they will get.

Indeed, a report in The Independent today said that some depositors from Gibraltar, who have lost up to £96 million, have decided to come back to Britain because their money is frozen, they do not have any benefit scheme in Gibraltar and there is no equivalent to the deposit protection scheme there. Their arrival in this country will add to our economic problems.

All this can be sorted out if the Government take corrective action. I should like the Chief Secretary to say that he is prepared on behalf of the Government to write to the Sheikh of Abu Dhabi and the liquidators to ask them when their plan will be published. We have seen newspaper reports that the depositors may get a compensation scheme worth up to $2·2 billion. None of those reports has been corrected or confirmed by the liquidators.

Seven months after the provisional liquidation of the bank, the creditors have still not met to formally agree to the appointment of the liquidators. As the Minister will know, the four liquidators were appointed on 14 January as a result of faxes sent from the official receiver and received at the Department of Trade and Industry at 12.57 on 14 January, and a fax was sent back at 13.09, when the four liquidators were appointed. No creditors meeting has taken place. I do not want to cast aspertions on the character or performance of the four liquidators. I happen to think that both Christopher Morris and Brian Smouhar, the joint provisional liquidators, have acted properly and worked diligently trying to make sure that the negotiations proceed.

The principle here is important: the liquidators have received millions of pounds for their professional fees from this bank. It is only right that the creditors should meet at the earliest opportunity to endorse their actions. I understand that the liquidators are unhappy about such a meeting because they say that it is impossible to circulate 400,000 depositors with notice of a meeting—and that they would have to hire a very large hall if all the creditors turned up. My view is that, if it is possible for companies like ICI to circulate their large number of shareholders, it is quite possible for the liquidators to circulate a notice to all the creditors.

It is vital that the liquidators call this meeting so as to be legitimised. Now that the decision rests with the Department of Trade and Industry, and now that the decision has been taken by the Secretary of State for Trade and Industry to appoint the liquidators, an early intervention is necessary to ensure that such a meeting is held.

It is also important that the liquidators be told of the need to proceed as a matter of urgency with writing to the depositors in this country—those who are protected by the deposit protection scheme—to enable the compensation payments to be made under that scheme. The Bank of England has told me that, on receipt of a certificate from the liquidators, it will make its payments under the deposit protection scheme within three days. The Bank tells me that it has been waiting to make these payments since 22 July last year, when 10,000 and more claim forms were sent out, but it cannot make the payments because it is still waiting for the certificates from the liquidators.

I know of many business people who cannot proceed and cannot obtain loans from other banks because the deeds forming part of their security are still being held by the old BCCI and the liquidators will not release them. There can be no set-off arrangements unless the compensation plan is discussed.

Knowing the Chief Secretary's constituency interest and the constituency interest of the Chancellor and of other right hon. and hon. Members, I hope that the right hon. and learned Gentleman will tell us that he intends to make an early intervention to ensure that these payments are made.

It has been estimated that the closure of the bank will cost the British economy millions—some say billions—of pounds in lost exports. I believe that the Government have a duty to act now to mitigate that loss.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham 9:08 pm, 19th February 1992

The Secretary of State for the Environment generously promised to give up his dinner in order to listen to my speech, and I see that on that issue at any rate he has been as good as his word. I know what a penance that must have been for him.

The plaudits of Conservative Members must have sounded sweet in his ears, but I suspect that his pleasure was tempered by the reflection that those plaudits were little more than a consolation prize for the manifest failure of those who cheered him today to vote for him a little more than a year ago.

As the right hon. Gentleman engaged in that private conversation with his own Back Benchers, in pursuit no doubt of his own private agenda, what a pity it was that the unemployed, the homeless or the failed business people were not here to hear him; that there was no one from those who had suffered from the recession present to hear. There would have been few plaudits from any of them, and, in truth, the Secretary of State had literally nothing to say to them.

It was clear that the right hon. Gentleman had, in effect, given away the next general election. Otherwise, why fail to address that wider electorate? As I say, he simply ignored that audience outside the House. He limited his remarks to that narrower audience on his own Back Benches. It is clear that he has a quite different election in mind and a very different electorate as well.

Although the right hon. Gentleman's speech was hardly relevant to the debate, we are making some progress. Ministers, and even the right hon. Gentleman, no longer deny that we are in recession. They no longer deny that the recession is the worst and deepest for 60 years. They no longer even pretend to discern recovery just around the corner. Even they must now fear the mocking laughter when that hollow claim is made. The green shoots which the Chancellor pretended to identify turned out to be just so much rhubarb.

The Government's only refuge now is in the assertion that our problems are just part of a worldwide recession. There was a time when patriotism was said to be the last refuge of a scoundrel. The scoundrels whom we have to deal with today clearly go further afield in order to seek their comfort. But even that claim is flatly contradicted by the facts and by the more honest of Conservative Members. In case there are those who dispute that statement, I direct their attention to the speech made by the hon. Member for Epping Forest (Mr. Norris).

Britain led the world into recession. We sought it out. It was the deliberate objective of policy. We were first in, we were deepest in, we are hurting worst and we have the least prospect of emerging from that recession. The truth is that our recession is the end product, the inevitable outcome, of 13 years of Tory government. It is a home-grown recession—home-grown in the sense that it was made here in Britain by a British Government, and home-grown in the sense that the homes of the British people have played a major part in creating and sustaining that recession.

No one now doubts, and no one except Ministers now disputes, that the seeds of recession were sown in the mistakes in economic policy in the late 1980s. Those mistakes were described by the hon. Member for Taunton (Mr. Nicholson) as ending in tears. I could not have chosen a better phrase myself. In their more honest moments, and because they can find someone convenient to blame, Ministers are sometimes inclined to accept that those mistakes were made and to point the finger at the right hon. Member for Blaby (Mr. Lawson). That is easy enough now; it is only a pity that there were so few Conservative Members who were prepared to make that criticism at the time.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

The hon. Gentleman spoke about mistakes. Will he confirm to the House his commitment, which I understand the hon. Member for Dewsbury (Mrs. Taylor) has confirmed as a priority, that a Labour Government would renationalise the water companies at a price of some £4 billion? Will he also confirm whether that has been agreed with the right hon. and learned Member for Monklands, East (Mr. Smith)?

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

If the hon. Gentleman would care to do his homework—as so few of his hon. Friends are prepared to do—and to read our policy documents, he will see a very clear statement of our intention to restore the essential degree of public accountability to the way in which the water industry operates.

Let me continue on the subject of the Government's mistakes—evidently a subject on which there is an element of sensitivity on the Conservative Benches.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

No; I want to make this point.

Not everyone needed the benefit of hindsight, or a convenient scapegoat, to recognise the truth of what was happening to the economy. Some of us knew what was happening; some of us knew what terrible problems were being stored up.

In October 1988, for example, at the height of the property boom—in the midst of the triumphalism that marked so much of this period—the Chancellor was accused of building, on foundations of supply-side weakness and soaring demand, a house of cards. On that occasion, the speaker warned: Those cards are now teetering and trembling and cannot be sustained for much longer. When they collapse, everything will collapse and then we shall discover that the stakes in the game he has been playing have been not chips in some poker game, but real jobs, real living standards and lives."—[Official Report, 25 October 1988; Vol. 139, c. 256.] It did not require much prescience for me to make that speech in the House on 28 October 1988; but even I could not have foreseen how those initial mistakes—enthusiastically supported at the time, I have no doubt, by the then Chief Secretary to the Treasury, now Prime Minister—would be compounded by further mistakes made by the same right hon. Gentleman, first as Chancellor and then as Prime Minister.

How the Prime Minister must regret his complacent assertion that If it isn't hurting, it isn't working. It is hurting all right, and it is hurting because the Prime Minister intended it to hurt. The problem is that it is not working—and not only is it not working; nor are those who are thrown on to the scrap heap day by day and week by week as a result of the very hurt that the Government intended.

Several Hon. Members:

rose

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

I am not giving way for the moment.

The recession is home-grown in another sense as well. Homes, houses, the housing market, the construction industry, mortgages, repossessions—all have played a central part, first in the mistakes made by the Government, then in the corrective measures attempted by the Government and now in the hurt sustained as a result of the Government's policies.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

Not for the moment; I have limited time. If I have time, I shall give way later.

House values were the great bellows of the credit boom —fanning the flames of asset inflation, and then using those inflated values to create yet further credit. It was that unstable structure that, inevitably, came crashing down; and, again, it was the housing market that was the deliberate target of Government policy, and the chosen instrument with which the crash was brought about.

Several Hon. Members:

rose

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

Of course Conservative Members do not want to hear what I am saying, but I invite them to sit down and listen.

Interest rates were raised to record levels; housing values slumped; the market fell; millions were caught in the trap into which they had been lured, and which was then sprung. Their repayments soared at the same time as their assets lost value. In many cases, mortgage debts exceeded the value of the properties on which the loans had been raised. Repossessions mounted; family budgets were wrecked; consumer confidence plummeted; spending stopped; demand fell; unemployment soared. Unemployment drove repossessions, and repossessions drove unemployment.

The economy was now in terrifying, dizzying, spiralling free-fall. Still the Government did nothing except, presumably, congratulate themselves that their policies were working. It was certainly hurting. This deliberate wrecking of the private housing market took place—[Interruption.] Hon. Gentlemen can keep up this racket and rabble for as long as they like. I shall make my speech and they will listen.

This deliberate wrecking of the private housing market took place against—

Several Hon. Members:

rose

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. The hon. Gentleman who has the floor has made it clear that he is not giving way at present. I call Mr. Gould.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

On a point of order, Mr. Deputy Speaker. May I make it clear that my hon. Friends have no intention of disturbing or interrupting the hon. Gentleman. We want to ask him some questions and we need some answers.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

These delays will reduce the time available to the Government spokesman. I have made it clear that for the moment I do not intend to give way, and I would therefore be grateful for an absence of interventions until I am satisfied that I have had enough time to say what I have to say.

This deliberate wrecking of the private housing market took place against the background of the deliberate denial—

Photo of John Butterfill John Butterfill , Bournemouth West

On a point of order, Mr. Deputy Speaker. Is not it true that the conventions of the House allow an hon. Member to refuse to give way only if he is making his maiden speech? Is the hon. Gentleman claiming that he is making his maiden speech and therefore cannot be interrupted?

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

It is a matter for the hon. Member who has the floor. I remind the House that this has been a relatively quiet debate—[Laughter]—for the past two or three hours and I hope that it will continue that way.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

I am afraid that Conservative hon. Members are very slow learners. They do not seem to understand that the more they attempt to disrupt a speech, the less likely it is that the speaker will give way.

I was saying that the deliberate wrecking of the private housing market took place against the background of an equally deliberate denial to the construction industry of its other main source of orders in the public sector. Infrastructure contracts dried up and local authorities were prevented from using their own money to build houses, with the result that last year virtually no houses were built in the public sector.

Little wonder that the construction industry is now the main engine of recession. It has shed 250,000 jobs at the rate of 1,562 a week since July 1989. Nearly 5,000 firms have gone to the wall. The trade gap in building materials has widened disastrously. The number of housing starts fell by a disastrous 37 per cent. between 1988 and 1991,. Little wonder that an industry which was once counted as the most loyal supporter of the Conservative party has now decided that it has had enough.

Let us listen to what the industry's leaders have to say. Mr. Peter Drew, chair of Taylor Woodrow, said on 4 September 1991: We are enduring the worst conditions for over half a century. The impact of high interest rates and a widespread lack of confidence has affected all sections of the company's business. Mr. Terry Upsall, president of the House-Builders Federation, said on 24 July 1991: Government should be aware that the recession is deepening. There will be no recovery in the housing market until the end of the recession is in sight. Reliance for so long on high interest rates is driving the country into deepening recession, creating unnecessary unemployment. On 26 July 1991, Sir Clifford Chetwood, chair of Wimpey, said: I have no doubt that the current recession is the worst this industry has experienced for 40 years. In the UK there are no signs of an upturn and it is hard to see how the tide can turn without a decisive move by the Government to restore confidence. No wonder that Builder magazine—I quote this with special reference to the question asked by the hon. Member for Bournemouth, West (Mr. Butterfill)—began its leading article on 10 January by saying: It is not the job of this magazine to tell its readers how to vote, but imagine if construction companies had the franchise—and had to exercise it in the best interests of their shareholders. Their vote would be cast for Labour.

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak

I am obliged to the hon. Gentleman for giving way, because I want to ask him one simple question. If we live in a world in which people invest for profit, which is surely a sensible thing to do, how is it that in this knacker's yard of an economy—[Interruption.]—that is how the economy has been portrayed by Labour Members today—60 per cent. of all foreign investment in the Common Market comes to this country? Why does six times more money come to this country than goes to Germany? Why do people want to invest here—to lose money? Is it not true that the socialists are more concerned with office and the investors have got it right?

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

Perhaps the hon. Gentleman would care to ask himself why that investment is not matched by equal investment from domestic sources. My answer to that question is that it is because Ministers make no response to the cry of pain from an industry crucial to our economic recovery.

Do Ministers recognise the need for much-needed public sector investment, as we propose? Of course they do not. Do they accept the futility of forbidding local authorities to spend their own money on desperately needed housing? Of course they do not, notwithstanding the fact that, on page 199 of the book written by the Secretary of State—clearly, he has no worries about consistency on such matters—the right hon. Gentleman rejects the current Treasury policy on the issue. Do Ministers acknowledge the damage done by using the construction industry as a sort of political balloon—inflating it irresponsibly and then puncturing it mercilessly?

The Government's answer to all those serious questions of such importance to the construction industry is the same loud raspberry that the Secretary of State blew today—the loud raspberry that the Government have blown at all those who are losing their homes, who are in bed-and-breakfast accommodation or who are sleeping rough on our streets, and at people who have lost their jobs in the construction industry.

That is the response of Ministers who no longer have any concern other than to save their own skins, Ministers who have no greater ambition than to deflect criticism by trading in selective statistics, snide comments, sneak attacks, and—in the case of the Secretary of State—reruns of his bid for the leadership of the Tory party. I shall confer a little accolade, as I am in a generous mood: the high priest in that black art is the Chief Secretary to the Treasury. It is he who is deployed to put up a smokescreen to divert attention from Government failures. We know that we cannot look to him for any grasp of the issues, understanding of the problems or compassion for the victims of the Government's recession.

It has always been a puzzle to me what the right hon. and learned Gentleman's precise role in the Cabinet is. Is he there to make the Chancellor of the Exchequer look as if he knows what he is talking about, or to make the Prime Minister seem decisive? Is he there to make the Secretary of State for Education and Science appear polite? Perhaps he is there to convey an image of the Secretary of State for the Environment as a serious politician.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

I conclude that the right hon. and learned Member for Putney (Mr. Mellor) is there principally because of his ability to give a good news gloss to any disaster that turns up. Here he is, a man who would have hailed the sinking of the Titanic as a first in underwater exploration. Here is a man who would have greeted the black death as a necessary step towards a leaner and fitter economy. Here is a man who would have celebrated the great fire of London as a vital contribution to urban regeneration. It is no accident that it is he who will wind up the debate for the Government.

The Government could not more clearly signal their intentions to provide no answers to the real issues which matter to millions of our fellow citizens. The right hon. and learned Gentleman's role is as a promising understudy for the Secretary of State for the Environment. The right hon. and learned Gentleman is a trainee Michael Heseltine. What does that tell us about the stature of the Ministers who hide behind the right hon. and learned Gentleman's somewhat insubstantial figure—I speak figuratively of course?

We know that the Chancellor—I am glad that he has joined us—is now regarded as such a liability that he is to be kept out of the public eye at all costs. What of the Prime Minister, who appointed the Chancellor, who landed him with the problems and who now offers him no idea about how to resolve them? We shall truly be able to measure their stature when, after the election, their inadequacies can be judged dispassionately, when they are stripped of office, when they are no longer cosseted by civil servants, when they are no longer driven in ministerial cars, and when they are no longer surrounded by red boxes and the other trappings of office. That is when they will be revealed for what they are—bumbling incompetents who are simply not up to the job.

In the meantime, what are the voters to make of that barrage of Tory propaganda to which they are now subjected? That propaganda is directly contradicted by their own personal experience. My advice to those voters is to take courage. I say to the voters, "Open your eyes, look around you and make your own assessment. Stick to your own judgment. Ask yourselves how you find the state of Britain. Ask yourselves whether you see the evidence of recession all around you. Ask yourselves whether you see evidence of people without houses and homes, whether you see people who have lost their jobs, and whether you see businesses that have failed and services that have been run down. Ask yourselves if it is really credible that a Government who have been in power for 13 years can wash their hands of what they have done and disclaim all responsibility for the disaster that has overtaken this country. Above all else, ask yourselves whether this Government, having led us into recession, have any idea of how to get us out of it and whether they show any sign of realising the enormity of what they have done."

The speech by the Secretary of State for the Environment will help enormously in making that judgment. It was a silly and frivolous speech which did not match the gravity of the nation's plight. The right hon. Gentleman may have had his tawdry triumph this afternoon—

Photo of John Butterfill John Butterfill , Bournemouth West

On a point of order, Mr. Speaker. Earlier in his speech the hon. Member for Dagenham (Mr. Gould) said that he was directing a point directly at me. He has consistently refused to give way since. I do not mind being savaged by New Zealand lamb, but I believe that he should give me the right to reply.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

That is not a point of order for me.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

It is a sign of the desperation on Conservative Benches that that is the third false point of order made by the hon. Member for Bournemouth, West in the past 20 minutes. In my book, that is deliberate disruption which does the House no good.

I conclude on the subject on which I was expounding my views to the House—the pathetic apology for a speech by the Secretary of State for the Environment. The right hon. Gentleman may have had his tawdry triumph on his own Benches, but an impartial judgment will be made by all those outside who will rightly condemn a Government who have destroyed lives and hopes and who recognise no burden on their conscience as a consequence. The electorate will take the chance presented by the next general election, not long delayed now, to recall the Government to their proper responsibilities.

Photo of Mr David Mellor Mr David Mellor , Putney 9:34 pm, 19th February 1992

The hon. Member for Dagenham (Mr. Gould) was in excitable form, but I am not sure that he entirely obscured the fact that once again the Opposition have chosen a day for a debate on the economy and found nothing whatever to say. The hon. Gentleman ribbed me about what might be in my speech, but he did not set me an elevated example with a speech that was entirely devoid of any policy commitment. When he was asked a straight question about what one of his junior spokesmen had said was a priority for the Labour party—renationalisation of the water industry—he ducked the question in a way that would not have done credit to someone in a fifth-form debating society.

The debate has revealed the Labour party's split personality—on the one hand, the conventional speeches of orthodoxy from the Front Bench, but on the other, Back Benchers seething with discontent, as we read in The Guardian today. Hollow unconvincing laughter does not prevent the discontent from showing through.

Then there is the split personality of the hon. Member for Dagenham. He shed crocodile tears about the poor state of the nation while undoubtedly still savouring the £500-a-plate dinner that he had the other night at the Park Lane hotel. If he can deliver that many fat cats to pay that kind of money for the Labour party, he must be doing something right. However, at least that dinner proved that the Leader of the Opposition is capable of learning from his experiences. It is the first dinner that he has ever attended where he opened his mouth only to eat.

Photo of Mr David Mellor Mr David Mellor , Putney

The right hon. and learned Gentleman says, "Very poor." Well, he is an expert. I shall try to do better. I am working on it.

The debate was not a triumph for the Labour party, first, because its analysis is incredible to the general public, as is obvious from the opinion polls. The Labour party has failed to acknowledge what everyone knows to be the reality in the world about us. Secondly, the public are much more interested in looking ahead to see what policies are on offer. In no respect do they find the Labour party's policy convincing. Indeed, the Opposition spokesmen cannot even agree what their policy is in crucial areas of spending and taxation.

The right hon. and learned Member for Monklands, East quoted with approval the Governor of the Bank of England. One is never sure where the Governor of the Bank of England stands with the Labour party. As Disraeli once said, it is never quite sure whether to blacken his character or blacken his boots. Today was a day for blackening his boots so perhaps I might remind the House of what he said in a speech yesterday about the international situation. He said: The slowdown in the world economy appears to have spread now to all of the major economies. It has been particularly evident in the United States where, despite the authorities' actions, the recovery which seemed in prospect in early summer appears now to have dissipated. In fact, output appears to have risen hardly at all in the final quarter of the year. Western Germany has also ceased to grow after its post-unification rise in output, while in France and Italy activity has remained weak. Even Japan is experiencing a notable slowing in the pace of GDP growth."— [HON. MEMBERS: "Boring."] It may be boring but it is the truth—a truth which the Opposition dare not countenance because the flimsy house of cards which is their policy falls apart once the reality of the situation is known.

Photo of Mr David Mellor Mr David Mellor , Putney

I shall not give way. I want to press on. How can the Opposition deny that Germany is in recession? Today The Times stated: Germany is in a full-fledged recession, with unemployment the highest since the Weimar republic and with industrial production having fallen by over 3 per cent. in December alone. How many of those who have watched the coverage of the United States presidential primary in New Hampshire can deny the problems of the United States economy, where the motor industry contracted by 8 per cent. last month? The Opposition make play of the losses made by Ford, but Ford in the United States lost £2·2 billion last year. Manufacturing production there fell by 1 per cent. last month.

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak

I shall ask my hon. Friend and question similar to the one that I asked the hon. Member for Dagenham (Mr. Gould), who seemed shy to answer. If it is true that our economy is so bad and that this country really is in the knacker's yard, why do 60 per cent. of investors, who have to make a profit, come to this country? That is six times the number going to Germany and three times the number going to France. Would my right hon. and learned Friend rather trust an investor or those people who are aching for office? Who is likely to do the right thing?

Photo of Mr David Mellor Mr David Mellor , Putney

I am grateful to my hon. Friend for those relevant remarks. If one considers figures for international investment in the United Kingdom, one finds that, at constant 1990 prices, in the six years to 1989 there was nearly £8 billion of inward investment from the United States, culminating in an investment of more than £4 billion in 1989. What was the figure during the last full year of the last Labour Government? In 1978, it was £321 million. That is the difference. Consider the figures for Japan. In 1987, there was £657 million of investment from Japan; in 1988, it was £768 million; and, in 1989, it was £1·12 billion. What was the figure in the last year of the last Labour Government? In 1978, it was minus £10 million. That is the difference between our record and that of the Labour Government.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

Does the Minister accept that this country has been in uninterrupted recession for six quarters? No other major industrial economy has faced that situation. I agree that other economies are slowing down and perhaps going through recession, but that does not make it right that we have been in recession for a year and a half and have no prospect of coming out of it. That only reinforces the need to do something about it. What does he intend to do?

Photo of Mr David Mellor Mr David Mellor , Putney

The hon. Gentleman sounds as confused as when he was mismanaging Jaguar all those years ago. He is wrong. Australia, Canada and Sweden have all been in recession for longer. If he is interested, I will give him the figures. Since the beginning of 1990, only two of the 14 largest economies—Japan and Denmark—have never experienced a quarter on quarter fall. Six quarters for 14 economies amount to 84 movements and 34 of them have been downwards. That is a sign of the extent of international problems.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

Since the hon. Gentleman is clearly a master of this part of his brief at any rate, can he tell us which of the countries to which he referred has enjoyed or suffered six successive quarters of officially defined recession?

Photo of Mr David Mellor Mr David Mellor , Putney

The hon. Gentleman is such a master of his brief that he cannot even put the British position right. We have not had six successive quarters of falling growth. Growth did not fall in the third quarter of last year.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

Answer the question.

Photo of Mr David Mellor Mr David Mellor , Putney

I have given the answer. I have told the hon. Gentleman that his premise is completely false. He should leave others to decide who is on top of their brief.

Photo of Mr David Mellor Mr David Mellor , Putney

I shall not give way to the hon. Gentleman.

The Opposition find themselves in the eminently discreditable position of having to talk down not only the efforts of the Government, but those of many other people in our economy who have performed well. It is not just we who object to that. Did the right hon. and learned Member for Monklands, East and the hon. Member for Dagenham see the speech made by Sir John Banham yesterday? He said: incessant politicisation of the economic situation was causing the very lack of confidence that is at the root of the current recession … We are building the right partnership for Government and industry.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

Let us have the election.

Photo of Mr David Mellor Mr David Mellor , Putney

I think that the hon. Gentleman will get this election. If the speech that he made was a dry run for what he intends to say then, he has every reason to be worried about the outcome.

The climate for recovery has been established. Inflation is at 4·1 per cent., within a tenth of a percentage point of Germany's inflation rate. Producer prices are the lowest for a quarter of a century and interest rates have come down by 4·5 per cent. from their peak. Interest rates in this country have experienced seven downward movements, while German rates have gone up 4 per cent.

I notice that the right hon. and learned Member for Monklands, East has reverted to one of his more facile arguments, as he is again calling for a reduction in interest rates. He had gone off that argument for some time. The right hon. and learned Gentleman was extremely querulous about noise when he was speaking. It would be interesting to know if he now has an answer about interest rates.

The right hon. and learned Gentleman may call for a reduction in interest rates, but is he aware that Crédit Lyonnais has calculated that interest rates will increase by 4 per cent. under a Labour Government? The London Business School has said that a Labour Government would put up interest rates by up to 3 per cent. Kleinwort Benson has calculated that interest rates would rise by between 2 and 4 per cent. DKB bank and Nomura Research Institute have calculated that they would go up by 2 per cent. The right hon. and learned Gentleman may ignore those calculations, but the public will not. James Capel and Barclays de Zoete Wedd have said that they will increase by 1 per cent. UBS Phillips and Drew, Midland Montagu, Goldman Sachs and the Confederation of British Industry have all said that interest rates would rise under Labour. That is why the Labour party is not trusted. The right hon. and learned Gentleman's puerile response does him no credit.

Conditions for recovery exist, but the Labour party has no policies to improve them—it would make them worse. Let us consider what the Labour party proposes for the business community—the 28 ways in which it proposes to increase the burdens on business. Social audits would interfere with investment decisions. Labour would return to the trade unions the power of secondary picketing and remove from the courts the right to sequestrate the assets of trade unions.

How many people want to go back to the days when flying pickets held the nation to ransom? What does the right hon. and learned Member for Monklands, East say about the fact that, in 1991, 800,000 days were lost in industrial disputes whereas in 1979, 29 million days were lost? What has the Labour party learnt about the problems that can be caused by out of control trade unions? Some people put their mistakes behind them. The Labour party puts its mistakes into policy documents and seeks to give the kiss of life to ideas that were the kiss of death in the 1970s.

Photo of Ronnie Campbell Ronnie Campbell , Blyth Valley

The Government having decided to abolish wages councils, do they believe in a low wage economy for British people?

Photo of Mr David Mellor Mr David Mellor , Putney

The hon. Gentleman must bear in mind the fact that the consequences of the Labour alternative—the minimum wage—would massively increase unemployment. That is not just the view of Conservative Members but of leading figures in the trade unions. Only one newspaper supported Labour party policy on the minimum wage, and that was the Morning Star.

Photo of Ronnie Campbell Ronnie Campbell , Blyth Valley

On a point of order, Mr. Speaker. I asked the Minister a question and he has not given me an answer. Does he believe in a low wage economy for the British people? I have not had an answer to that question.

Photo of Mr David Mellor Mr David Mellor , Putney

The hon. Member for Blyth Valley (Mr. Campbell) is well past his yell-by date. [HON. MEMBERS: "Answer."]

We had the commendation from Labour Front Bench spokesmen of the social charter, which would prevent Mr. Delors's greatest fear—that Britain would be a paradise for inward investment. That would worry Labour Members if they were rational. Just as the Labour party is trying to advocate the social charter, we learn from the Financial Times today that the Germans are proposing to move away from it. Talking about a package of measures designed to improve inward investment into Germany drawn up by the Economics Ministry, it said: The package is an attempt to meet the growing chorus of complaints from German industry that high wage and tax costs and an excessive burden of social and environmental spending are driving German and foreign investors alike away from the market. What is happening is typical of Labour Members. They cannot tell the difference between a bandwagon and a sinking ship, and they are leaping on to the idea of the social charter just as people in Europe are beginning to realise that it does not work.

The Labour party has no serious answers on those issues. One simply gets bogus propositions, such as the recovery package that is supposed to cost £1 billion, £800 million of which is to be on training. Perhaps the right hon. and learned Member for Monklands, East can answer an important question. Is £800 million on training and an extra £200 million on other matters supposed to be able to transform an economy of £600 billion, with over £200 billion of public expenditure? The whole thing is risible and an insult to the intelligence of the British public.

It becomes even more of a nonsense when one considers that the Labour party proposes to pay all trainees on training schemes the minimum wage. So unless Labour is prepared to cut the number of trainees, out of that £800 million extra more than £600 million will have to go to top up the amount of money paid to trainees, with no benefit whatever. What is Labour's answer to that? If the right hon. and learned Member for Monklands, East will cease his selective reading of the Secretary of State's book, he might care to answer that question.

The right hon. and learned Gentleman, who is not having good week—even his hon. Friends are getting dissatisfied with him—will be thought to be clowning around when he goes before the public with a recovery package of £1 billion and it turns out that more than £600 million of it will be needed to top up the money going to existing trainees and will not add one to the number of people being trained.

Photo of Mr David Mellor Mr David Mellor , Putney

I will not give way to the hon. Gentleman, who has not been present for most of the debate.

Labour cannot even agree on whether the recovery package will he a priority. The deputy leader of the Labour party said that the recovery package would be paid for only when the recovery had taken place. I sometimes think that the right hon. Gentleman, who spends half his time as a novelist and half as a politician, is getting his roles confused. It is the novels he should he making up as he goes along, not the politics.

Photo of Mr Terry Dicks Mr Terry Dicks , Hayes and Harlington

Is my right hon. and learned Friend aware that the leader of the Labour party said recently on television that the recovery package would take place as a result of economic growth? In other words, if there is economic growth after four or five years, that is when Labour would introduce its recovery package.

Photo of Mr David Mellor Mr David Mellor , Putney

Exactly.

In the past two weeks, the right hon. and learned Member for Monklands, East, the hon. Members for Oldham, West (Mr. Meacher) and for Dunfermline, East (Mr. Brown), and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) twice, have tried to answer the simple question whether that so-called recovery package, which is entirely bogus, will be introduced straight away, but they cannot agree among themselves. No wonder the right hon. and learned Member for Monklands, East had to acknowledge today what a muddle and a mess the Labour party is in. He had to admit that it is about to produce a document which sets out its spending plans and the tax implications of those. So the Labour party will not produce a document just yet.

Photo of David Blunkett David Blunkett Opposition Spokesperson (Local Government & Poll Tax), Member, Labour Party National Executive Committee

Will the Chief Secretary answer one simple question? When will his own recovery programme be implemented?

Photo of Mr David Mellor Mr David Mellor , Putney

Everyone in the forecasting community accepts—the Governor of the Bank of England said so yesterday—that there will be a recovery during the course of this year. That would not happen if there were the kind of programme that the Labour party wants to carry into effect. [HON. MEMBERS: "Answer the question."]

If the right hon. and learned Member for Monklands, East has reached the conclusion, after the mess and confusion of the past few weeks, that he now needs to produce a document to say what Labour will spend and what that will cost in taxation, why does he not produce it now? Why must he wait?

I was interested to see a Labour party publication entitled "Woman Today" with a competition which says: Win a day in Parliament. All you have to do is say in no more than 100 words what you think the priorities of a Labour government should be". So we know that we must wait until those good ladies have sent in their answers before the right hon. and learned Gentleman can produce his document. We really want to know not what people must do to win a day in Parliament but what they must do to win a dinner at Luigi's. Perhaps they must make Labour's tax plans add up.

No amount of bluster and continuous talking will allow the right hon. and learned Gentleman to escape from the fact that he cannot bring home the bacon for his hon. Friends, as a result of which they are mouthing their dissatisfaction to the press. They are prepared to put up with the orthodoxy so long as it looks as though it will deliver electoral victory.

Labour's tax plans do not convince. They would commend themselves only to the boxing promoter responsible for finding Mr. Frank Bruno's next opponent, because they are guaranteed to stand up for not more than three minutes. In every test for a credible alternative Government, the Labour party has failed to find a policy that remotely commends itself to anybody who believes in the recovery of this country.

The fact is that in recent months we have increased our exports to other European countries by 5 per cent., that for the third year running our share of world trade in manufactures has increased, and that we have a climate fully competitive with that anywhere else in the European Community. All that would be put at risk by the Labour party's tax-and-spend policies. Today the Opposition have had yet another opportunity to prove that they are fit for office, and they have taken yet another opportunity to prove that manifestly they are not.

Question put, That the original words stand part of the Question:

The House divided: Ayes 211, Noes 311.

Division No. 87][9.59 pm
AYES
Adams, Mrs Irene (Paisley, N.)Blair, Tony
Alton, DavidBlunkett, David
Anderson, DonaldBoateng, Paul
Archer, Rt Hon PeterBradley, Keith
Armstrong, HilaryBray, Dr Jeremy
Ashley, Rt Hon JackBrown, Nicholas (Newcastle E)
Banks, Tony (Newham NW)Caborn, Richard
Barnes, Harry (Derbyshire NE)Callaghan, Jim
Barnes, Mrs Rosie (Greenwich)Campbell, Menzies (Fife NE)
Barron, KevinCampbell, Ron (Blyth Valley)
Battle, JohnCampbell-Savours, D. N.
Beckett, MargaretCanavan, Dennis
Beith, A. J.Carlile, Alex (Mont'g)
Bell, StuartCarr, Michael
Bellotti, DavidClark, Dr David (S Shields)
Benn, Rt Hon TonyClelland, David
Bennett, A. F. (D'nt'n & R'dish)Clwyd, Mrs Ann
Benton, JosephCohen, Harry
Bermingham, GeraldCook, Frank (Stockton N)
Bidwell, SydneyCook, Robin (Livingston)
Corbett, RobinLamble, David
Corbyn, JeremyLamond, James
Cousins, JimLeadbitter, Ted
Cox, TomLeighton, Ron
Crowther, StanLestor, Joan (Eccles)
Cryer, BobLewis, Terry
Cummings, JohnLitherland, Robert
Cunliffe, LawrenceLivingstone, Ken
Cunningham, Dr JohnLofthouse, Geoffrey
Dalyell, TamLoyden, Eddie
Darling, AlistairMcAllion, John
Davies, Rt Hon Denzil (Llanelli)McFall, John
Davies, Ron (Caerphilly)McKay, Allen (Barnsley West)
Davis, Terry (B'ham Hodge H'l)McLeish, Henry
Dewar, DonaldMaclennan, Robert
Dixon, DonMcMaster, Gordon
Dobson, FrankMcNamara, Kevin
Doran, FrankMadden, Max
Duffy, Sir A. E. P.Mahon, Mrs Alice
Dunnachie, JimmyMarek, Dr John
Dunwoody, Hon Mrs GwynethMarshall, Jim (Leicester S)
Eadie, AlexanderMartin, Michael J. (Springburn)
Edwards, HuwMartlew, Eric
Enright, DerekMaxton, John
Ewing, Harry (Falkirk E)Meacher, Michael
Ewing, Mrs Margaret (Moray)Meale, Alan
Fatchett, DerekMichael, Alun
Fearn, RonaldMichie, Bill (Sheffield Heeley)
Field, Frank (Birkenhead)Michie, Mrs Ray (Arg'l & Bute)
Fields, Terry (L'pool B G'n)Mitchell, Austin (G't Grimsby)
Fisher, MarkMoonie, Dr Lewis
Flannery, MartinMorgan, Rhodri
Flynn, PaulMorley, Elliot
Foot, Rt Hon MichaelMorris, Rt Hon A. (W'shawe)
Foster, DerekMorris, Rt Hon J. (Aberavon)
Foulkes, GeorgeMowlam, Marjorie
Fraser, JohnMullin, Chris
Fyfe, MariaMurphy, Paul
Galbraith, SamNellist, Dave
Galloway, GeorgeOakes, Rt Hon Gordon
Garrett, John (Norwich South)O'Brien, William
Garrett, Ted (Wallsend)O'Hara, Edward
Gilbert, Rt Hon Dr JohnOrme, Rt Hon Stanley
Godman, Dr Norman A.Parry, Robert
Golding, Mrs LlinPatchett, Terry
Gordon, MildredPowell, Ray (Ogmore)
Gould, BryanPrescott, John
Grant, Bernie (Tottenham)Primarolo, Dawn
Griffiths, Nigel (Edinburgh S)Quin, Ms Joyce
Grocott, BruceRadice, Giles
Hain, PeterRandall, Stuart
Hardy, PeterRedmond, Martin
Harman, Ms HarrietRees, Rt Hon Merlyn
Hattersley, Rt Hon RoyRobertson, George
Haynes, FrankRobinson, Geoffrey
Heal, Mrs SylviaRooker, Jeff
Healey, Rt Hon DenisRooney, Terence
Henderson, DougRoss, Ernie (Dundee W)
Hinchliffe, DavidRuddock, Joan
Hoey, Kate (Vauxhall)Sheerman, Barry
Hogg, N. (C'nauld & Kilsyth)Sheldon, Rt Hon Robert
Hood, JimmyShore, Rt Hon Peter
Howarth, George (Knowsley N)Short, Clare
Howells, GeraintSkinner, Dennis
Howells, Dr. Kim (Pontypridd)Smith, Andrew (Oxford E)
Hoyle, DougSmith, Rt Hon J. (Monk'ds E)
Hughes, Robert (Aberdeen N)Smith, J. P. (Vale of Glam)
Hughes, Roy (Newport E)Snape, Peter
Hughes, Simon (Southwark)Soley, Clive
Ingram, AdamSpearing, Nigel
Janner, GrevilleSteinberg, Gerry
Johnston, Sir RussellStott, Roger
Jones, Barry (Alyn & Deeside)Strang, Gavin
Jones, leuan (Ynys Môn)Straw, Jack
Jones, Martyn (Clwyd S W)Thomas, Dr Dafydd Elis
Kaufman, Rt Hon GeraldThompson, Jack (Wansbeck)
Kilfoyle, PeterTurner, Dennis
Kinnock, Rt Hon NeilVaz, Keith
Kirkwood, ArchyWalley, Joan
Kumar, Dr. AshokWareing, Robert N.
Watson, Mike (Glasgow, C)Wise, Mrs Audrey
Welsh, Andrew (Angus E)Worthington, Tony
Welsh, Michael (Doncaster N)Wray, Jimmy
Wigley, Dafydd
Williams, Rt Hon AlanTellers for the Ayes:
Williams, Alan W. (Carm'then)Mr. Ken Eastham and
Wilson, BrianMr. Thomas McAvoy.
Winnick, David
NOES
Adley, RobertDevlin, Tim
Aitken, JonathanDickens, Geoffrey
Alexander, RichardDicks, Terry
Alison, Rt Hon MichaelDorrell, Stephen
Allason, RupertDouglas-Hamilton, Lord James
Amery, Rt Hon JulianDover, Den
Amess, DavidDunn, Bob
Amos, AlanDurant, Sir Anthony
Arbuthnot, JamesDykes, Hugh
Arnold, Jacques (Gravesham)Eggar, Tim
Arnold, Sir ThomasEmery, Sir Peter
Aspinwall, JackEvans, David (Welwyn Hatf'd)
Atkinson, DavidEvennett, David
Baker, Rt Hon K. (Mole Valley)Fallon, Michael
Baker, Nicholas (Dorset N)Farr, Sir John
Baldry, TonyFavell, Tony
Banks, Robert (Harrogate)Fenner, Dame Peggy
Batiste, SpencerField, Barry (Isle of Wight)
Beaumont-Dark, AnthonyFinsberg, Sir Geoffrey
Bellingham, HenryFishburn, John Dudley
Bendall, VivianForman, Nigel
Bennett, Nicholas (Pembroke)Forsyth, Michael (Stirling)
Benyon, W.Forth, Eric
Bevan, David GilroyFowler, Rt Hon Sir Norman
Bitten, Rt Hon JohnFox, Sir Marcus
Blackburn, Dr John G.Franks, Cecil
Blaker, Rt Hon Sir PeterFreeman, Roger
Body, Sir RichardFrench, Douglas
Bonsor, Sir NicholasFry, Peter
Boscawen, Hon RobertGardiner, Sir George
Boswell, TimGill, Christopher
Bottomley, PeterGoodhart, Sir Philip
Bottomley, Mrs VirginiaGoodlad, Rt Hon Alastair
Bowden, Gerald (Dulwich)Goodson-Wickes, Dr Charles
Bowis, JohnGorman, Mrs Teresa
Boyson, Rt Hon Dr Sir RhodesGorst, John
Braine, Rt Hon Sir BernardGrant, Sir Anthony (CambsSW)
Brandon-Bravo, MartinGreenway, Harry (Ealing N)
Brazier, JulianGregory, Conal
Bright, GrahamGriffiths, Peter (Portsmouth N)
Brooke, Rt Hon PeterGrist, Ian
Brown, Michael (Brigg & Cl't's)Ground, Patrick
Bruce, Ian (Dorset South)Gummer, Rt Hon John Selwyn
Buck, Sir AntonyHague, William
Budgen, NicholasHamilton, Rt Hon Archie
Burns, SimonHamilton, Neil (Tatton)
Butler, ChrisHampson, Dr Keith
Butterfill, JohnHanley, Jeremy
Carlisle, Kenneth (Lincoln)Hannam, Sir John
Carrington, MatthewHargreaves, A. (B'ham H'll Gr')
Carttiss, MichaelHarris, David
Cash, WilliamHaselhurst, Alan
Chalker, Rt Hon Mrs LyndaHawkins, Christopher
Channon, Rt Hon PaulHayes, Jerry
Chapman, SydneyHay hoe, Rt Hon Sir Barney
Chope, ChristopherHayward, Robert
Clark, Rt Hon Alan (Plymouth)Heath, Rt Hon Edward
Clark, Dr Michael (Rochford)Heathcoat-Amory, David
Clark, Rt Hon Sir WilliamHeseltine, Rt Hon Michael
Colvin, MichaelHicks, Mrs Maureen (Wolv' NE)
Conway, DerekHicks, Robert (Cornwall SE)
Coombs, Anthony (Wyre F'rest)Higgins, Rt Hon Terence L.
Coombs, Simon (Swindon)Hill, James
Couchman, JamesHind, Kenneth
Cran, JamesHordern, Sir Peter
Currie, Mrs EdwinaHowarth, Alan (Strat'd-on-A)
Curry, DavidHowarth, G. (Cannock & B'wd)
Davies, Q. (Stamf'd & Spald'g)Howell, Rt Hon David (G'dford)
Davis, David (Boothferry)Howell, Ralph (North Norfolk)
Day, StephenHughes, Robert G. (Harrow W)
Hunt, Sir John (Ravensbourne)Pawsey, James
Hunter, AndrewPeacock, Mrs Elizabeth
Irving, Sir CharlesPorter, Barry (Wirral S)
Jack, MichaelPorter, David (Waveney)
Jackson, RobertPortillo, Michael
Janman, TimPowell, William (Corby)
Jessel, TobyPrice, Sir David
Johnson Smith, Sir GeoffreyRaison, Rt Hon Sir Timothy
Jones, Gwilym (Cardiff N)Rathbone, Tim
Jones, Robert B (Herts W)Redwood, John
Jopling, Rt Hon MichaelRhodes James, Sir Robert
Kellett-Bowman, Dame ElaineRiddick, Graham
Key, RobertRidley, Rt Hon Nicholas
Kilfedder, JamesRidsdale, Sir Julian
King, Roger (B'ham N'thfield)Roberts, Rt Hon Sir Wyn
King, Rt Hon Tom (Bridgwater)Roe, Mrs Marion
Kirkhope, TimothyRossi, Sir Hugh
Knapman, RogerRost, Peter
Knight, Greg (Derby North)Rowe, Andrew
Knight, Dame Jill (Edgbaston)Rumbold, Rt Hon Mrs Angela
Knox, DavidSackville, Hon Tom
Lamont, Rt Hon NormanScott, Rt Hon Nicholas
Lang, Rt Hon IanShaw, David (Dover)
Latham, MichaelShaw, Sir Giles (Pudsey)
Lawrence, IvanShaw, Sir Michael (Scarb')
Lee, John (Pendle)Shelton, Sir William
Leigh, Edward (Gainsbor'gh)Shephard, Mrs G. (Norfolk SW)
Lennox-Boyd, Hon MarkShepherd, Colin (Hereford)
Lester, Jim (Broxtowe)Shersby, Michael
Lilley, Rt Hon PeterSims, Roger
Lloyd, Sir Ian (Havant)Skeet, Sir Trevor
Lloyd, Peter (Fareham)Smith, Sir Dudley (Warwick)
Lord, MichaelSmith, Tim (Beaconsfield)
Luce, Rt Hon Sir RichardSoames, Hon Nicholas
McCrindle, Sir RobertSpeed, Keith
MacGregor, Rt Hon JohnSpeller, Tony
MacKay, Andrew (E Berkshire)Spicer, Sir Jim (Dorset W)
Maclean, DavidSpicer, Michael (S Worcs)
McNair-Wilson, Sir MichaelSquire, Robin
McNair-Wilson, Sir PatrickStanbrook, Ivor
Madel, DavidStanley, Rt Hon Sir John
Malins, HumfreySteen, Anthony
Mans, KeithStern, Michael
Maples, JohnStevens, Lewis
Marland, PaulStewart, Allan (Eastwood)
Marlow, TonyStewart, Andy (Sherwood)
Marshall, John (Hendon S)Stewart, Rt Hon Sir Ian
Martin, David (Portsmouth S)Stokes, Sir John
Maude, Hon FrancisTapsell, Sir Peter
Mellor, Rt Hon DavidTaylor, Ian (Esher)
Mills, IainTaylor, Sir Teddy
Miscampbell, NormanTebbit, Rt Hon Norman
Mitchell, Andrew (Gedling)Temple-Morris, Peter
Mitchell, Sir DavidThatcher, Rt Hon Margaret
Moate, RogerThompson, Sir D. (Calder Vly)
Monro, Sir HectorThompson, Patrick (Norwich N)
Montgomery, Sir FergusThornton, Malcolm
Moore, Rt Hon JohnThurnham, Peter
Morris, M (N'hampton S)Townend, John (Bridlington)
Morrison, Sir CharlesTownsend, Cyril D. (B'heath)
Morrison, Rt Hon Sir PeterTracey, Richard
Moss, MalcolmTredinnick, David
Mudd, DavidTrippier, David
Neale, Sir GerrardTrotter, Neville
Nelson, AnthonyTwinn, Dr Ian
Neubert, Sir MichaelVaughan, Sir Gerard
Newton, Rt Hon TonyViggers, Peter
Nicholls, PatrickWakeham, Rt Hon John
Nicholson, David (Taunton)Waldegrave, Rt Hon William
Nicholson, Emma (Devon West)Walden, George
Norris, SteveWalker, Bill (T'side North)
Onslow, Rt Hon CranleyWalker, Rt Hon P. (W'cester)
Oppenheim, PhillipWaller, Gary
Page, RichardWalters, Sir Dennis
Paice, JamesWardle, Charles (Bexhill)
Parkinson, Rt Hon CecilWarren, Kenneth
Patnick, IrvineWatts, John
Patten, Rt Hon Chris (Bath)Wells, Bowen
Patten, Rt Hon JohnWhitney, Ray
Pattie, Rt Hon Sir GeoffreyWiddecombe, Ann
Wiggin, JerryYeo, Tim
Wilkinson, JohnYoung, Sir George (Acton)
Wilshire, DavidYounger, Rt Hon George
Winterton, Mrs Ann
Winterton, NicholasTellers for the Noes:
Wolfson, MarkMr. David Lightbown and
Wood, TimothyMr. John M. Taylor.
Woodcock, Dr. Mike

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments):—

The House divided: Ayes 309, Noes 208.

Division No. 88][10.12 pm
AYES
Adley, RobertCouchman, James
Aitken, JonathanCran, James
Alexander, RichardCurrie, Mrs Edwina
Alison, Rt Hon MichaelCurry, David
Allason, RupertDavies, Q. (Stamf'd & Spald'g)
Amery, Rt Hon JulianDavis, David (Boothferry)
Amess, DavidDay, Stephen
Amos, AlanDevlin, Tim
Arbuthnot, JamesDickens, Geoffrey
Arnold, Jacques (Gravesham)Dicks, Terry
Arnold, Sir ThomasDorrell, Stephen
Aspinwall, JackDouglas-Hamilton, Lord James
Atkinson, DavidDover, Den
Baker, Rt Hon K. (Mole Valley)Dunn, Bob
Baker, Nicholas (Dorset N)Durant, Sir Anthony
Baldry, TonyDykes, Hugh
Banks, Robert (Harrogate)Eggar, Tim
Batiste, SpencerEmery, Sir Peter
Beaumont-Dark, AnthonyEvans, David (Welwyn Hatf'd)
Bellingham, HenryEvennett, David
Bendall, VivianFallon, Michael
Bennett, Nicholas (Pembroke)Farr, Sir John
Benyon, W.Favell, Tony
Bevan, David GilroyFenner, Dame Peggy
Biffen, Rt Hon JohnField, Barry (Isle of Wight)
Blackburn, Dr John G.Finsberg, Sir Geoffrey
Blaker, Rt Hon Sir PeterFishburn, John Dudley
Body, Sir RichardForman, Nigel
Bonsor, Sir NicholasForsyth, Michael (Stirling)
Boscawen, Hon RobertForth, Eric
Boswell, TimFowler, Rt Hon Sir Norman
Bottomley, PeterFox, Sir Marcus
Bottomley, Mrs VirginiaFranks, Cecil
Bowden, Gerald (Dulwich)Freeman, Roger
Bowis, JohnFrench, Douglas
Boyson, Rt Hon Dr Sir RhodesFry, Peter
Braine, Rt Hon Sir BernardGardiner, Sir George
Brandon-Bravo, MartinGill, Christopher
Brazier, JulianGlyn, Dr Sir Alan
Bright, GrahamGoodhart, Sir Philip
Brooke, Rt Hon PeterGoodlad, Rt Hon Alastair
Brown, Michael (Brigg & Cl't's)Goodson-Wickes, Dr Charles
Bruce, Ian (Dorset South)Gorman, Mrs Teresa
Buck, Sir AntonyGorst, John
Budgen, NicholasGrant, Sir Anthony (CambsSW)
Burns, SimonGreenway, Harry (Ealing N)
Butler, ChrisGregory, Conal
Butterfill, JohnGriffiths, Peter (Portsmouth N)
Carlisle, Kenneth (Lincoln)Grist, Ian
Carrington, MatthewGround, Patrick
Cash, WilliamGummer, Rt Hon John Selwyn
Chalker, Rt Hon Mrs LyndaHague, William
Channon, Rt Hon PaulHamilton, Rt Hon Archie
Chapman, SydneyHamilton, Neil (Tatton)
Chope, ChristopherHampson, Dr Keith
Clark, Rt Hon Alan (Plymouth)Hanley, Jeremy
Clark, Dr Michael (Rochford)Hannam, Sir John
Clark, Rt Hon Sir WilliamHargreaves, A. (B'ham H'll Gr')
Colvin, MichaelHarris, David
Conway, DerekHaselhurst, Alan
Coombs, Anthony (Wyre F'rest)Hawkins, Christopher
Coombs, Simon (Swindon)Hayes, Jerry
Hayhoe, Rt Hon Sir BarneyNewton, Rt Hon Tony
Hay ward, RobertNicholls, Patrick
Heath, Rt Hon EdwardNicholson, David (Taunton)
Heseltine, Rt Hon MichaelNicholson, Emma (Devon West)
Hicks, Mrs Maureen (Wolv' NE)Norris, Steve
Hicks, Robert (Cornwall SE)Onslow, Rt Hon Cranley
Higgins, Rt Hon Terence L.Oppenheim, Phillip
Hill, JamesPage, Richard
Hind, KennethPaice, James
Hordern, Sir PeterParkinson, Rt Hon Cecil
Howarth, Alan (Strat'd-on-A)Patnick, Irvine
Howarth, G. (Cannock & B'wd)Patten, Rt Hon Chris (Bath)
Howell, Rt Hon David (G'dford)Patten, Rt Hon John
Howell, Ralph (North Norfolk)Pattie, Rt Hon Sir Geoffrey
Hughes, Robert G. (Harrow W)Pawsey, James
Hunt, Sir John (Ravensbourne)Peacock, Mrs Elizabeth
Hunter, AndrewPorter, Barry (Wirral S)
Jack, MichaelPorter, David (Waveney)
Jackson, RobertPortillo, Michael
Janman, TimPowell, William (Corby)
Jessel, TobyPrice, Sir David
Johnson Smith, Sir GeoffreyRaison, Rt Hon Sir Timothy
Jones, Gwilym (Cardiff N)Rathbone, Tim
Jones, Robert B (Herts W)Redwood, John
Jopling, Rt Hon MichaelRhodes James, Sir Robert
Kellett-Bowman, Dame ElaineRiddick, Graham
Key, RobertRidley, Rt Hon Nicholas
Kilfedder, JamesRidsdale, Sir Julian
King, Roger (B'ham N'thfield)Roberts, Rt Hon Sir Wyn
King, Rt Hon Tom (Bridgwater)Roe, Mrs Marion
Kirkhope, TimothyRossi, Sir Hugh
Knapman, RogerRost, Peter
Knight, Greg (Derby North)Rowe, Andrew
Knight, Dame Jill (Edgbaston)Rumbold, Rt Hon Mrs Angela
Knox, DavidSackville, Hon Tom
Lamont, Rt Hon NormanScott, Rt Hon Nicholas
Lang, Rt Hon IanShaw, David (Dover)
Latham, MichaelShaw, Sir Giles (Pudsey)
Lawrence, IvanShaw, Sir Michael (Scarb')
Lee, John (Pendle)Shelton, Sir William
Leigh, Edward (Gainsbor'gh)Shephard, Mrs G. (Norfolk SW)
Lennox-Boyd, Hon MarkShepherd, Colin (Hereford)
Lester, Jim (Broxtowe)Shersby, Michael
Lilley, Rt Hon PeterSims, Roger
Lloyd, Sir Ian (Havant)Skeet, Sir Trevor
Lloyd, Peter (Fareham)Smith, Sir Dudley (Warwick)
Lord, MichaelSmith, Tim (Beaconsfield)
Luce, Rt Hon Sir RichardSoames, Hon Nicholas
McCrindle, Sir RobertSpeed, Keith
MacGregor, Rt Hon JohnSpeller, Tony
MacKay, Andrew (E Berkshire)Spicer, Sir Jim (Dorset W)
Maclean, DavidSpicer, Michael (S Worcs)
McNair-Wilson, Sir MichaelSquire, Robin
McNair-Wilson, Sir PatrickStanbrook, Ivor
Madel, DavidStanley, Rt Hon Sir John
Malins, HumfreySteen, Anthony
Mans, KeithStern, Michael
Maples, JohnStevens, Lewis
Marland, PaulStewart, Allan (Eastwood)
Marlow, TonyStewart, Andy (Sherwood)
Marshall, John (Hendon S)Stewart, Rt Hon Sir Ian
Martin, David (Portsmouth S)Stokes, Sir John
Maude, Hon FrancisTapsell, Sir Peter
Mellor, Rt Hon DavidTaylor, Ian (Esher)
Mills, IainTaylor, Sir Teddy
Miscampbell, NormanTebbit, Rt Hon Norman
Mitchell, Andrew (Gedling)Temple-Morris, Peter
Mitchell, Sir DavidThatcher, Rt Hon Margaret
Moate, RogerThompson, Sir D. (Calder Vly)
Monro, Sir HectorThompson, Patrick (Norwich N)
Montgomery, Sir FergusThornton, Malcolm
Moore, Rt Hon JohnThurnham, Peter
Morris, M (N'hampton S)Townend, John (Bridlington)
Morrison, Sir CharlesTownsend, Cyril D. (B'heath)
Morrison, Rt Hon Sir PeterTracey, Richard
Moss, MalcolmTredinnick, David
Mudd, DavidTrippier, David
Neale, Sir GerrardTrotter, Neville
Nelson, AnthonyTwinn, Dr Ian
Neubert, Sir MichaelVaughan, Sir Gerard
Viggers, PeterWilkinson, John
Wakeham, Rt Hon JohnWilshire, David
Waldegrave, Rt Hon WilliamWinterton, Mrs Ann
Walden, GeorgeWinterton, Nicholas
Walker, Bill (T'side North)Wolfson, Mark
Walker, Rt Hon P. (W'cester)Wood, Timothy
Waller, GaryWoodcock, Dr. Mike
Walters, Sir DennisYeo, Tim
Wardle, Charles (Bexhill)Young, Sir George (Acton)
Warren, KennethYounger, Rt Hon George
Watts, John
Wells, BowenTellers for the Ayes:
Whitney, RayMr. David Lightbown and
Widdecombe, AnnMr. John M. Taylor.
Wiggin, Jerry
NOES
Adams, Mrs Irene (Paisley, N.)Doran, Frank
Alton, DavidDuffy, Sir A. E. P.
Anderson, DonaldDunnachie, Jimmy
Archer, Rt Hon PeterDunwoody, Hon Mrs Gwyneth
Armstrong, HilaryEadie, Alexander
Ashley, Rt Hon JackEdwards, Huw
Banks, Tony (Newham NW)Enright, Derek
Barnes, Harry (Derbyshire NE)Ewing, Harry (Falkirk E)
Barnes, Mrs Rosie (Greenwich)Ewing, Mrs Margaret (Moray)
Barron, KevinFatchett, Derek
Battle, JohnFearn, Ronald
Beckett, MargaretField, Frank (Birkenhead)
Beith, A. J.Fields, Terry (L'pool B G'n)
Bell, StuartFisher, Mark
Bellotti, DavidFlannery, Martin
Benn, Rt Hon TonyFlynn, Paul
Bennett, A. F. (D'nt'n & R'dish)Foot, Rt Hon Michael
Benton, JosephFoster, Derek
Bermingham, GeraldFoulkes, George
Bidwell, SydneyFraser, John
Blair, TonyFyfe, Maria
Blunkett, DavidGalbraith, Sam
Boateng, PaulGalloway, George
Bradley, KeithGarrett, John (Norwich South)
Bray, Dr JeremyGarrett, Ted (Wallsend)
Brown, Nicholas (Newcastle E)Gilbert, Rt Hon Dr John
Caborn, RichardGodman, Dr Norman A.
Callaghan, JimGolding, Mrs Llin
Campbell, Menzies (Fife NE)Gordon, Mildred
Campbell, Ron (Blyth Valley)Gould, Bryan
Campbell-Savours, D. N.Grant, Bernie (Tottenham)
Canavan, DennisGriffiths, Nigel (Edinburgh S)
Carlile, Alex (Mont'g)Grocott, Bruce
Carr, MichaelHain, Peter
Clark, Dr David (S Shields)Hardy, Peter
Clelland, DavidHarman, Ms Harriet
Clwyd, Mrs AnnHattersley, Rt Hon Roy
Cohen, HarryHaynes, Frank
Cook, Frank (Stockton N)Heal, Mrs Sylvia
Cook, Robin (Livingston)Healey, Rt Hon Denis
Corbett, RobinHenderson, Doug
Corbyn, JeremyHinchliffe, David
Cousins, JimHoey, Kate (Vauxhall)
Cox, TomHogg, N. (C'nauld & Kilsyth)
Crowther, StanHood, Jimmy
Cryer, BobHowarth, George (Knowsley N)
Cummings, JohnHowells, Geraint
Cunliffe, LawrenceHowells, Dr. Kim (Pontypridd)
Cunningham, Dr JohnHoyle, Doug
Dalyell, TamHughes, Robert (Aberdeen N)
Darling, AlistairHughes, Roy (Newport E)
Davies, Rt Hon Denzil (Llanelli)Hughes, Simon (Southwark)
Davies, Ron (Caerphilly)Ingram, Adam
Davis, Terry (B'ham Hodge H'l)Janner, Greville
Dewar, DonaldJohnston, Sir Russell
Dixon, DonJones, Barry (Alyn & Deeside)
Jones, Ieuan (Ynys Môn)Powell, Ray (Ogmore)
Jones, Martyn (Clwyd S W)Prescott, John
Kaufman, Rt Hon GeraldPrimarolo, Dawn
Kilfoyle, PeterQuin, Ms Joyce
Kinnock, Rt Hon NeilRadice, Giles
Kirkwood, ArchyRedmond, Martin
Kumar, Dr. AshokRees, Rt Hon Merlyn
Lambie, DavidReid, Dr John
Lamond, JamesRobertson, George
Leadbitter, TedRobinson, Geoffrey
Leighton, RonRooker, Jeff
Lestor, Joan (Eccles)Rooney, Terence
Lewis, TerryRoss, Ernie (Dundee W)
Litherland, RobertRuddock, Joan
Lofthouse, GeoffreySheerman, Barry
Loyden, EddieSheldon, Rt Hon Robert
McAllion, JohnShore, Rt Hon Peter
McFall, JohnShort, Clare
McKay, Allen (Barnsley West)Skinner, Dennis
McLeish, HenrySmith, Andrew (Oxford E)
Maclennan, RobertSmith, Rt Hon J. (Monk'ds E)
McMaster, GordonSmith, J. P. (Vale of Glam)
McNamara, KevinSnape, Peter
Madden, MaxSoley, Clive
Mahon, Mrs AliceSpearing, Nigel
Marek, Dr JohnSteinberg, Gerry
Marshall, Jim (Leicester S)Stott, Roger
Martin, Michael J. (Springburn)Strang, Gavin
Martlew, EricStraw, Jack
Maxton, JohnThomas, Dr Dafydd Elis
Meacher, MichaelThompson, Jack (Wansbeck)
Meale, AlanVaz, Keith
Michael, AlunWalley, Joan
Michie, Bill (Sheffield Heeley)Wareing, Robert N.
Mitchell, Austin (G't Grimsby)Watson, Mike (Glasgow, C)
Moonie, Dr LewisWelsh, Andrew (Angus E)
Morgan, RhodriWelsh, Michael (Doncaster N)
Morley, ElliotWigley, Dafydd
Morris, Rt Hon A. (W'shawe)Williams, Rt Hon Alan
Morris, Rt Hon J. (Aberavon)Williams, Alan W. (Carm'then)
Mowlam, MarjorieWilson, Brian
Mullin, ChrisWinnick, David
Murphy, PaulWise, Mrs Audrey
Nellist, DaveWorthington, Tony
Oakes, Rt Hon GordonWray, Jimmy
O'Brien, WilliamYoung, David (Bolton SE)
O'Hara, Edward
Orme, Rt Hon StanleyTellers for the Noes:
Parry, RobertMr. Ken Eastham and
Patchett, TerryMr. Thomas McAvoy.

Question accordingly agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,That this House congratulates Her Majesty's Government on its success in winning the battle against inflation and in bringing interest rates down; welcomes the recent reduction in the balance of payments deficit and the fact that exports are at record levels; notes that the United Kingdom has some of the most competitive tax rates in the world, including the lowest level of corporation tax in either the G7 or the European Community and that Government spending on training has increased by two and a half times over and above the rate of inflation since 1979; recognises that the foundations for economic recovery are now firmly laid; and rejects totally the policies of the Opposition, which would lead to soaring inflation, greater public sector borrowing, higher taxation, increased unemployment, rising interest rates, declining investment and a spiralling cycle of higher wages and prices which would destroy any prospect of recovery and plunge Britain into perpetual recession.