Amendment of the Law

Part of Budget Resolutions and Economic Situation – in the House of Commons at 6:28 pm on 10th March 1992.

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Photo of Stuart Bell Stuart Bell , Middlesbrough 6:28 pm, 10th March 1992

It is a pleasure to follow the hon. Member for Wycombe (Mr. Whitney)— not least because he will not be retiring at the next general election. The same cannot be said of the right hon. Member for Plymouth, Devonport (Dr. Owen), who I am glad to see still in his place, and the hon. Member for Halesowen and Stourbridge (Sir J. Stokes).

The hon. Member for Wycombe was right to refer to the GATT negotiations and to the important and significant personal pledge made by the Government leaders that they would intervene to ensure that those negotiations reached a successful conclusion. Was that promise genuine, as I hope it was, or just another sound-bite promise, made of the moment to impress people and to allay their fears, but amounting to little?

The hon. Member for Wycombe asked whose hand was on the tiller. We will quickly know that answer, and it may come as a surprise to the hon. Gentleman. He mentioned that there have been eight reductions in the interest rate, which currently stands at 10·5 per cent. I dislike giving the hon. Gentleman bad news, but no Government have ever won a general election when the interest rate was above 10 per cent. I share the hopes of the right hon. Member for Devonport that we will see, in the interests of the economy and of the British people, a reduction in interest rates between now and the general election—although I understand that the odds are not that good.

The hon. Member for Wycombe referred to financial rectitude. I always smile when I hear that phrase. I am reminded of one of Lord Denning's famous summings up, when he observed that the more that a defendant talked of his honesty, the more one was tempted to count the silver. When I heard the hon. Member for Wycombe, I thought that I had better start counting my silver. The hon. Gentleman referred also to a responsible fiscal stance. We will have some fun with that phrase as this debate continues over the next few days.

I was pleased to be in the Chamber for what might be the last speech by the hon. Member for Halesowen and Stourbridge, who made a telling point when he said that our economy was increasingly being linked to Germany's economic and financial policies and to those of the Bundesbank.

I also enjoyed the speech of the right hon. Member for Devonport, although he may not have understood the remarks of my right hon. Friend the Member for Islwyn (Mr. Kinnock), to which the hon. Member for Wycombe referred. My right hon. Friend did not have the benefit of knowing in advance the contents of the Budget and had to make decisions and judgments as to the content of his speech as he went along. Today, he was right to desist from criticising the Government's specific tax policies and to welcome the tax cuts that will benefit the car industry, among others.

Today was the first time that the Opposition have been able to see the Treasury's books. We will be able to present an alternative Budget next week that will inform the British public of our proposals for the British economy.

The Chancellor mentioned a move towards the narrow band in the exchange rate mechanism and linking sterling to a rate of 2·5 deutschmarks. The challenge awaiting the next Chancellor of the Exchequer is how to equate a fixed interest rate with rising unemployment throughout the Community. No Government—whether it be that of Ireland, France or Italy—have come to terms with that difficulty. How can one reconcile the exchange rate with job creation and lower unemployment?

The Chancellor said that tax revenues depend on the level of activity, but he seems again to be going for a consumer boom rather than one based on investment and manufacturing. If we are tempted to follow the route of consumer boom, we will risk institutionalising the boom-bust philosophy with which we have lived for too long.

The Chancellor spoke of a Budget for recovery, but it seems more like a Budget of discovery. He believes its almost exclusive emphasis on tax cuts will be sufficient to switch public opinion, and that will he seriously tested when the general election is called. The Budget's proposed 20 per cent. tax rate on the first £2,000 of income will be worth £2·65 to the average working man and woman. That is the equivalent of 30 pieces of silver in olden times. We will have to see whether the British people accept those 30 pieces of silver.

I will share one secret with the Chancellor and the House. The low-paid generally vote Labour, and I do not believe that the Chancellor's endeavours to tempt Labour voters will be rewarded at the general election. Those who might stand to benefit from such a tax reduction and who might even come out of the tax band altogether will not so easily forget the last 13 years of Conservative government.

According to the Chancellor, that tax cut will cost £1·8 billion in the next financial year and £2·3 billion the following year. That is expenditure on tax cuts rather than on hospitals, schools, or—as my right hon. Friend the Member for Islwyn said—putting an extra bobby on the beat. When there is both an increase in the public sector borrowing requirement and tax reductions, we are right to claim that it is an attempt to bribe the British people.