I begin by acknowledging the central importance to the debate of the resignation statement made by the ex-Chancellor of the Exchequer. I also welcome the new Chancellor to his job and to his first debate on Treasury affairs, and I congratulate him on the fact that in only nine months he has made the transition from Chancellor-in-waiting to Prime Minister-in-waiting. I doubt that he will have to wait terribly long after today's events. Given that only yesterday he said that he had to turn the economy round, may I tell him that, if he is to achieve anything in his new job, he must also make the transition from the failed Conservative agenda to a new agenda for policy-making that will succeed.
First, we need a fresh industry policy for Britain that will bridge the technology, research and investment gap that is identified by everyone who looks at the issues, and ensure long-term, sustainable growth. Secondly, we need a long-term skills strategy for our country that will implement for Britain the skills revolution by reallocating resources and persuading employers to use resources for training their work force.
Thirdly, we must have immediate action against the surge of mass unemployment. If the Chancellor is to cut borrowing in the long term, he must cut unemployment and raise the long-term growth rate of the economy. If he feels that he must make a choice between public spending and tax reforms, let me tell him that, before he starts to cut the budgets for housing benefit or for invalidity benefit or for pensions, he should look at the very substantial tax abuses that our colleagues on the Opposition side of the House have identified—tax abuses that even the former Chancellor on his last day, in an interview in The Guardian, exposed.
As his first Budget approaches in November, let me give the new Chancellor some advice on his Budget purdah to which, given his outstanding track record for reticence, he may be temperamentally unsuited. I suspect that Budget purdah will only work for him if he is told to go away and lie down in a dark room, made to keep taking the tablets and compelled to think carefully about whether he has even one new proposal for the economy to offer.
The Chancellor believes that he comes to the job with something of a clean sheet. May I just remind him that Opposition Members know that he not only supported loyally but was vociferous in supporting all the changes that were made by previous Chancellors, many of which have done so much damage to the economy? When I consider his outspoken support for Government policy, I think particularly of his speech at the Welsh Conservative Conference exactly five years ago this weekend.
The Chancellor is obviously very proud of that speech. He said:
There can no longer be any doubt that we are now enjoying extraordinary economic growth, so the real question facing us today is, will it last? If the experience of the sixties and seventies is all we had to go by, I would have to answer no, but I believe that under Mrs. Thatcher Britain has seen such a change, and such irreversible change, that I can answer yes—yes, it can last. In the old days, borrowing always threatened to get out of control. Today all that has changed.
One Chancellor of the Exchequer departed after creating an unsustainable boom and boasting about it. A second Chancellor eventually went after failing to secure the strong recovery that was promised. The new Chancellor, therefore, should learn not to exaggerate the successes of Conservative policy at any time.
We have a new face as Chancellor. It would have been better this evening if we had also had a new policy from the Government. The whole purpose of the debate is to determine whether the change of personnel in the Cabinet has been matched by a change in policy. Having heard the Prime Minister this afternoon, it is clear that, although he has changed his Chancellor, he has no intention of changing the social and economic policies of the Government in favour of the people of this country.
The revelations of the former Chancellor of the Exchequer were the key feature of the debate: that there is no chance of change under this Prime Minister. His revelations were about the way that affairs have been conducted in Downing street. What was significant about the ex-Chancellor's revelations was that, in the case of every central event, when mistakes were made it was the Prime Minister's insistence upon making those mistakes that caused the problems that the country faces: the intensification of the recession before the right hon. Gentleman became Chancellor, the use of interest rate policy in advance of the election, the timing of decisions such as the decision to join the exchange rate mechanism.
These were not indictments of isolated policy errors. It was not just about mistakes of timing over this or that decision. Today we had a crushing indictment of the style of the Prime Minister and of the character of his Government. What the country feared, and now knows, is not that the Government have got it wrong on just about every major issue that they have tackled but that they have no strategy, no purpose and no sense of direction, that they are driven by events, not controlled by them, that they listen to Saatchi and Saatchi before they make their decisions, that there is nothing at the centre, just a void, that there is no central philosophy governing events.
The former Chancellor's indictment was perhaps the harshest we have ever heard from a campaign manager about the candidate he supported and with whom he worked as a colleague for more than five years at the Treasury. The Prime Minister should now confirm what the ex-Chancellor has alleged: that interest rate decisions were taken with a view to politics, not the economy, that the policies did not matter too much, just how they were presented, that everything was done with the next 36 hours in mind.
Having heard the former Chancellor's statement, I can understand his sense of grievance at the Prime Minister. He now knows, at first hand, what is meant by the phrase, "Unemployment is a price worth paying." His unemployment, the Prime Minister considered, was a price worth paying for a few more months in office. Can the ex-Chancellor say that he has any regrets now? He could be forgiven for regretting that he ever trusted the Prime Minister. The second in command was sacked for obeying the orders of his leader. If the policy was that of the Prime Minister, the whole country will now ask: why was it that the Chancellor, not the Prime Minister, paid the price for the mistakes?
What we have found, of course, over the past few weeks is that it is not just the former Chancellor who believes what is said in the resignation statement. There are others who sense that this Government have lost their direction. People as close to the Prime Minister as the former Chancellor believe exactly the same. On every central aspect of criticism that was made by the former Chancellor, is not the new Chancellor already on record as agreeing with him?
The Chancellor gave an interview immediately after the county council elections, in which he made it clear:
We are in a dreadful hole.
That is hardly an endorsement of the Government's record under the Prime Minister. The Chancellor went on to say—this is significant because of the turn of events:
The key thing is not to get into a panic"—
advice the Prime Minister did not seem prepared to take—
or start looking for a head to go in the basket to appease our more worried Back Benchers.
It is comforting for the ex-Chancellor that the new Chancellor did not think that the answer was to get rid of the old Chancellor, to have any summary executions from the Government or to panic with a reshuffle, or that those actions would solve the problem.
The Chancellor went on:
We have to approach this thing with common sense and decide how we are to get out of this dreadful hole we are in. That requires a medium-term view, an agenda for the Government over the next two or three years. It requires an agreement about how we are going to present the agenda in a way that gives back a sense of purpose to our followers.
The new Chancellor was in no doubt that what was needed was a new agenda and for the Government to give a sense of purpose to their followers. What is the difference between what the former Chancellor said about the Prime Minister and what the new one is saying? They both agree that the Prime Minister and his Cabinet have lost their way and their sense of direction.
What has been the Prime Minister's reaction in the past few weeks? It is certainly not to turn up at events where he should be to answer debates that he has been involved in. What change has come about as a result of the Prime Minister's recognition of the problems of the county council elections? Have we had a new industry policy? [HON. MEMBERS: "No."] A new deal for the unemployed? [HON. MEMBERS: "No."] Have they dropped rail privatisation? [HON. MEMBERS: "No."] Have they thought again about coal privatisation? [HON. MEMBERS: "No."] Have they even thought about prison privatisation or dropping VAT on fuel and the charges to pensioners?
In response to one of the worst years ever for a Government, in response to one of the biggest by-election defeats ever inflicted, in response to the creation of a situation in which we no longer talk about the Tory shires, but only about the Tory shire, we have had a series of Cabinet promotions, with one member of the Cabinet dropping off at the end. After 1 million redundancies in the country under this Prime Minister, had we not the right to expect more than just one redundancy from the Cabinet?
The Prime Minister explained why only one person went from his Cabinet and there were no new changes in policy. When he was asked at a press conference in Paris only a few days ago, he said:
All that was necessary was to refresh the Government.
There was not a change to help the country, the economy, unemployed people or our trading position, but somehow
the Cabinet was in need of refreshment, as if the problem was boredom in the Cabinet rather than crisis throughout the country.
As a means of refreshing the Cabinet, what happened? What decision was made? The refreshing answer to all our problems was the right hon. Member for Wokingham (Mr. Redwood) becoming Secretary of State for Wales. The right hon. Member for Wokingham presumably went to Wales because Wokingham and Wales both start with "W". He was plucked from relative obscurity and given a road map to take him to Cardiff. A Cabinet that needs to be refreshed by the inclusion of the new Secretary of State for Wales is indeed a Cabinet in need of refreshment.
The only new initiative after a year of disaster that has come from the Prime Minister is that he thinks that the presentation of events must be improved—as the former Chancellor confirmed today—and not the policies. The fact that 1 million more people are unemployed under his leadership is simply a problem of presentation.
Ten million pensioners facing the imposition of VAT must be an excellent policy sadly misrepresented. Spending cuts in health or other services are a great idea, if only it could be got across. According to the Prime Minister, the only problem is how policies are communicated. That is such a pathetic explanation that I can understand why, after 30 minutes with the Prime Minister, the former Chancellor could not understand why he had been sacked, and was eventually reduced to faxing rather than writing a letter.
As the Government will find, the truth is that one can change the style, the presenters, the ad men and the public relations agency but, if there is no strategy, no direction and no purpose—as we now know—everything remains the same. I must warn the Prime Minister that he may think that the economic crisis is over, but for him the political crisis is only just beginning. He should be clear that, if the ex-Chancellor was the last to know at the last reshuffle, he—the Prime Minister—will be the last to know at the next reshuffle. Next time, it will not be the Prime Minister telling the Chancellor to go; it could be the Chancellor telling the Prime Minister to go.
I can imagine how events will unfold, but the former Chancellor knows only too well. The Prime Minister may think it safe to relax and go to a party—[Interruption.] It is safer for the Prime Minister to be beside the Chancellor in the next few days watching him. I can imagine how events will unfold. like the former Chancellor, the Prime Minister will think that his troubles are over, that the worst of the crisis is behind him and that he has survived. He will think it safe to relax and go to a party, perhaps at the invitation of a Cabinet colleague, such as the Chief Secretary, as happened only a few days ago. Perhaps it will be a birthday party at the Spanish club, with a relaxing glass of champagne.
The Prime Minister will arrive back in Downing street and will notice the Chief Whip's car parked outside No. 11. In a flash he will remember that absent from the agreeable gathering he has just left were the Chief Whip, the chairman of the party and his next-door neighbour, the Chancellor—the three men who did not go to dinner. He will then recall that the Chancellor's freely announced and admitted ambition is to take over the office of Prime Minister.
The next morning, at 9 am—as the former Chancellor knows all too well—there will be a telephone call. The Chancellor is on his way to No. 10 Downing street, not to discuss the economic crisis but to hear the unwelcome political news. The Chancellor, the chairman of the Tory party and the Chief Whip will tell the Prime Minister that his time has come. He will turn in despair to his political friends and find that he has none—et tu, Portillo?
The Conservatives have come a long way in managing change at the top. They are no longer the men in grey suits but, as the Chancellor found out, the men who did not come to dinner. Although lady Thatcher put up iron gates at the end of Downing street, they are not enough to save the Prime Minister. To protect himself, he will have to brick up the door of No. 11 Downing street. He will find that the greatest threat to his position is the enemy within.
The Prime Minister's problem is obvious—he can blame one Chancellor, but it is difficult to blame two. Having sacked one Chancellor when things got tough, he cannot when things get tough again sack another, because the country will ask not what is wrong with the Chancellor but what is wrong with the Prime Minister.
The country requires a strategy for government. It is interesting that the Prime Minister came into the Chamber a few moments ago—he has to be told what to do by the Opposition now, because he has no ideas of his own. This country requires a strategy, a long-term view, an economic and social policy that deals, as the former Chancellor said today, not with only with the problems of today but with the problems of a whole decade. The country needs a social policy based on the needs of the people and on principles, not on an expedient approach to events.
That cannot be delivered by a Government who govern for 36 hours at a time, motivated only by the next day's headlines. We argue that it must be done by a Government who are fair to people, fair to pensioners and fair to those in poverty, a Government with a modern approach to the public services, a Government with an industrial policy. It cannot be done by a Government dominated, as the former Chancellor said, by short-termism and by the approach of Saatchi and Saatchi.
What about industrial policy? The Confederation of British Industry is complaining that there is no proper partnership between Government and industry. It has said that, despite all the talk from Downing street, there is no real attempt at a partnership between Government and industry to secure long-term growth. Today the Government's, and the country's, record on research and development has been published, showing that we have one of the worst records in Europe.
Of course, the complaints about the Government's strategy come not only from the CBI, the engineering employers, the Labour party and the trade unions; complaints have come from within the Department of Trade and Industry itself. The DTI report shows that we are 30 per cent. behind the world's best in productivity, and 40 per cent. behind in skills, and says that the factors that determine competitiveness and that must be improved as a matter of urgency are
education and training, finance for business, innovation, international trade, physical infrastructure".
In all those areas, companies can do best when they have the support of Government in partnership with them. But, because of a dogmatic approach to industrial policy, we are doing badly in all those areas.
Is not the trade deficit a real problem, which the Government cannot wish away as a short-term problem that need not be tackled? Is not our industrial capacity weaker than it should be? Is it not true that, as the CBI has said and the former Chancellor has acknowledged, there should be a long-term policy for Britain? Is not our skills base low because we have not thought about the long term and about investing in the future? Does not everything that has been said about the lack of strategy and long-term direction, and about the lack of thinking about the future, apply directly to the contraction of our industrial base and the failure to support manufacturing and trade under the Conservative Government? A Government bogged down in short-termism, as the former Chancellor said, cannot solve the problems of our skills base either.
The training budget has been cut. We are 20th out of 22 in the international skills league, falling behind not only Germany and Japan, but Korea and Taiwan. Is that not also the result of the abject failure, confirmed today, ever to be prepared to think for the long term? When we are cutting budgets for people who are unemployed, when there are 80,000 fewer training places than when the recession started in 1990, is it not the height of irresponsibility for a Government to fail to use the best resource of our country—the talents and skills of the people in our community?
While I am on the subject of long-termism, will the new Chancellor, who says that he is tough on vested interests, agree that the banks have largely failed to meet the country's needs, that their charging and Commission policies have to be reviewed, and that he should now lay down minimum standards? If he is to take on people other than the weak and the poor, that is the vested interest that the Chancellor should take on, in the interests of the people of this country.
It is also because the Government have no long-term view that exactly what we predicted would happen to our public services and our welfare state is now happening. Because they have no long-term view and no sense of social cohesion, because they think only of tomorrow's headlines, they think that they can get away with breaking promises to the sick, to the disabled and to pensioners in this country.
The Prime Minister spent a great deal of time accusing the Labour party of scaremongering about public expenditure. let me just remind the Prime Minister, and the country, what he said:
We will stand by the figures in the Red Book. I see no reason why we should not meet our promises. We have seen these concerns in the past and it has not been necessary to change plans.
Any Prime Minister worth his salt, instead of trying to run away from those promises, would be trying to honour them today.
The right hon. Gentleman said:
If we were going to cut public expenditure, we would have done it before now, and I do not believe it is economically right. So you can rule out any expectation of that.
If the Prime Minister is to carry any integrity from now on —and that is doubtful—he must not do to his promises on public expenditure what he has done to his promises on tax. He must keep the promises that he made to the poorest people in our country.
I will tell the Prime Minister why he should do that. I have a paper that the Government have circulated around the Departments. The Prime Minister says that the Labour party is creating unnecessary scares and fears. It is the Government who are creating those fears by what they are threatening to do to the sick and to invalids in this country. The Prime Minister must look at the papers, which say clearly that taxation of invalidity benefit is
a long-standing policy objective…We should review the upper age limit for invalidity benefit. We should be seeking to reduce the levels of average payment. We should be considering taxing the reformed or the replacement benefit.
What is the purpose of the changes? Is it somehow to help the sick and disabled? No, the document makes that clear:
One of my objectives, which has been discussed with the Chief Secretary"—
this comes from the Secretary of State for Social Security—
is to curtail expenditure on benefit.
We are talking about a Treasury-driven review to cut public expenditure, not in the interests of the sick and disabled but simply for the purpose of saving money at the expense of people who are sick. [Interruption] let the Conservative Members who are shouting recall that they told the invalid, sick and disabled members of the community at the election that they would stand by their promises. Conservative Members said that they had nothing to worry about, that those benefits would not be cut and that it was the Labour party that they could not trust. let billboards in every part of the country show the truth—that the Tory party can never be trusted again.