Government Economic and Social Policy

Part of Orders of the Day — Opposition Day – in the House of Commons at 8:28 pm on 9th June 1993.

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Photo of Mr Peter Pike Mr Peter Pike , Burnley 8:28 pm, 9th June 1993

The debate is on important issues. The Prime Minister challenged my right hon. and learned Friend the leader of the Opposition about our programme at the election, but he failed to recognise the key difference between the Opposition and the Government. The side that wins the election has one important advantage over the people who lose, which is that the winner has an opportunity, in theory, to deliver its election programme—or break its promises. The Opposition do not have that opportunity.

The issues that we are now discussing reflect the simple fact that the Government have broken so many of the manifesto promises they made last April. They have not lived up to the statements that they made to the people in order to win the general election.

I wish to challenge the Government on one or two important points. I have raised the first issue time and again, and Ministers, have failed to answer it. The Government's public expenditure plans in the past and for the future always include figures representing receipts from the sale of assets such as National Power, British Telecom or PowerGen. I shall not debate the folly or otherwise of the railway privatisation as it is not appropriate to the debate, but assuming that the Government continue with the policy, what will they do when they have no more assets to sell to supplement their programme? They have to tell us what they will do then.

It all comes back to the fundamental question that we are debating today. Everyone is saying that we have to do something to reduce the £50 billion public sector borrowing requirement. The options are to increase taxation or to reduce public expenditure or, in theory, a combination of the two. The other possibility, which we all want, is a growth in the wealth of the country.

As I represent a key manufacturing area, I feel that there has to be growth in the manufacturing sector and in employment in manufacturing industry to get our balance of payments into surplus and reduce the appalling deficit in manufactured goods. Whoever is in office, we will never get the economy right until we recognise, once again, that the nation's wealth, and indeed its bread and butter, depends on our manufacturing base. Until we tackle that and get it right, we shall continue to have difficulties.

The Government say that they do not want to increase taxation, but we saw numerous examples of increased taxation in the Budget. Time and again in the past 14 years, they have got away with conning the public. They have done it cleverly by reducing direct taxation and increasing indirect taxation.

The overwhelming majority of people in my constituency now pay a higher percentage of their earnings in tax than they did under the Labour Government. They pay less in direct taxation, but their indirect taxation has increased.

When the Tories won the election in 1979, they increased VAT from 8 per cent. to 15 per cent. They then increased it to 17·5 per cent. to reduce the impact of the poll tax. Everything that was zero-rated is gradually being brought into the scope of VAT, and it has now been extended to domestic fuel and power. We all know that that was only the first step. Everything that is zero-rated at present is also under threat.

I believe that domestic fuel and power should remain zero-rated. The case for their being zero-rated was good in the first place, as it was for children's clothes, food and transport. The public believe, as I do, that the Government will gradually bring those items within the scope of VAT, as well as books and newspapers.

The Government are obsessed with not increasing income tax, which is based purely on the ability to pay and is the fairest possible way of raising revenue.

The hon. Member for Beaconsfield (Mr. Smith) said that the Government will protect the most vulnerable people in our society. We have heard that phrase time and again; we have also heard about better targeting. I know what has happened in Burnley after better targeting and the protection of the most vulnerable. The poorest and most deprived sectors of the community have lost and the wealthiest have gained. That is what better targeting means in Tory terms—making the poor pay and suffer more, and giving a little more to those who at least need it because they are already wealthy.

I referred to the increase in VAT. I received from the library a table of the increases in the price of leaded petrol. I shall not debate the rights and wrongs of duty on fuel for cars, but it was 48·8 per cent. in January 1979 and it is now 71·1 per cent. of the price we pay on a gallon of fuel, assuming that one is still using four-star leaded petrol, which I do not. That is only another example of how the Government have shifted taxation on to national insurance, VAT and other duties. For 14 years, they have managed to get away with conning people that they would lose as a result of higher income tax.

Last year, the Government got away with telling people who pay no tax that they would pay more if Labour were elected, when they would have been further from paying tax. I do not know how people believe some of the ways that the Government manage to con people.

I shall now turn to low pay, which I mentioned in a question to the Prime Minister last April. I also received a letter from him last week. The Prime Minister and the Government fail to recognise the scandal of low pay. In the 1990s, it is tragic to erode the protection of workers and working conditions that were fought for for so many years.

Why should we say that workers are not entitled to fair pay and conditions for a fair day's work? Why can we not have the social chapter and why is Britain second-class? It is because we have had a Tory Government since 1979. Why are we abolishing the wages councils, and why can we not have a national minimum wage? It will not lose jobs, as Conservative Members claim. That is a fallacy.

In my constituency, people work for scandalously low pay. I see that my hon. Friend the Member for Pendle (Mr. Prentice), who represents the constituency adjacent to mine, is in his place. Some people in our constituencies work for £60 a week before deductions. The Minister says that they get family credit, but it is appalling that in 1993 some people have to work for poverty wages. They have been unemployed, and are so desperate to be in work that they are prepared to accept low pay rather than to be on benefit. All credit to them, but it is a disgrace and a scandal.

Lancashire county council had a report published by the low Pay Unit. My constituency has a high percentage of people on very low pay. The report shows that Blackpool had a percentage that was not quite as bad as that for my constituency, that pay was slightly higher there. That was clearly because a high percentage of people in Blackpool are still protected by wages councils in catering, hotels and tourism. Once those wage councils are abolished, the people of Blackpool will see wages at the bottom end drop to the same level as in Burnley and north-east Lancashire.

As to the use of housing capital receipts, I have never in peacetime known so many housing problems. Homelessness has become a national rather than a big city problem, and councils are unable to meet their obligations to provide home improvement grants in the private sector, build their own houses, or improve their existing housing stock.

Housing associations, which the Government favour and which Labour does not oppose, say that they cannot build affordable housing and that a ghetto is being created, because only those at the top end of salary scales and those on full benefit can obtain a housing association property.

But for Government dogma, the capital receipts that already exist could be used. A concession has been granted for the current year, but we do not know whether it will be extended. Historical capital receipts, to which I shall refer later, cannot be used.

As to the current year's receipts, I was in the Chamber when the former Chancellor of the Exchequer, who is now in his place again, made his statement about their use—but that is more of a con trick than a reality. local authorities such as my own have lost their urban programme money. The Prime Minister said, "You should be glad that some authorities have city challenge." It is little use telling an authority that, although it did not receive city challenge money, it should be happy that others did and to pay for it.

In Burnley, receipts taken into account have been increased in the Government's calculations, and capital allocations have been reduced in the specific capital grant, from 75 per cent. to 60 per cent. That not only takes account of Burnley's theoretical capital receipts—so it will not even break even—but overstates the situation, so that Burnley will lose. Capital receipts will not help, and Burnley will be able to do less about its housing as a result of the change.

If the Government allow historical capital receipts to be used over a sensible, phased period, and directed at areas of need—I accept that some benefiting areas do not need them—we could tackle the housing crisis and get back into employment building and construction workers and those who make items such as baths, taps and window frames. That would give them consumer spending power, and they would pay tax and national insurance instead of claiming benefits. As people moved house, they would buy curtains and carpets.

I could develop that theme, but I hope that the Chancellor of the Exchequer accepts that capital receipts should start to be used. That would not only help to tackle the housing problem, but would start, in a sensible, phased manner, to get the economy moving in the direction we want, reduce unemployment and lower the public sector borrowing requirement. I hope that the Government will face reality and acknowledge that they can take certain initiatives, if only they would be willing to change their policies and direction.