The Economy, Trade and Industry

– in the House of Commons at 3:56 pm on 25th June 2001.

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Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer 3:56 pm, 25th June 2001

The Queen's Speech and the detailed announcements that I shall make today build on the economic foundation of stability that, since 1997, has been our priority, which we shall never take for granted. The enterprise Bill proposed in the Queen's Speech will advance our economic objective to match, over the next 10 years, the higher productivity and prosperity of our major competitors. The welfare reform Bill will advance our objective to build on the 1 million jobs that have been created since 1997, to achieve full employment in this decade and to make work pay.

Today, I shall give details of the tax credit Bill. That measure and the pension credit Bill will advance our objective of ensuring that every child in our country has the best possible start in life and that not one is left behind, and that every pensioner can enjoy retirement in dignity.

One central, defining idea underlies the measures and the accompanying public service reform legislation. It has made the events of the past month more than simply a competition between parties and a real contest of ideas. For us and, I believe, the British people, opportunity for all, and our actions to secure it, is the key not only to enterprise and a good economy but to decent public services and a good society. We want to ensure opportunity for not only the few but everyone in our country.

The precondition for the reform programme in the Queen's Speech is that, even when we are tested by exchange rate pressures, oil price movements and the American slow-down, we strengthen, not relax, the monetary and fiscal disciplines and rules that have given this country the lowest inflation in Europe, the lowest unemployment for 25 years and the lowest mortgage and long-term interest rates for more than 30 years.

The Government will support the Bank of England and maintain our anti-inflation discipline. We shall hold to a fiscal regime that achieves a current budget balance. That has meant that, this year, debt is forecast to fall from the 44 per cent. that we inherited to 30 per cent. of gross domestic product. In future, any party that is serious about political office will need not only to have an inflation target and fiscal rules, but to set and follow clear, tough, monetary and fiscal objectives and disciplines if it is to convince the people that it is doing everything to avoid the old, familiar boom and boost.

There is an even greater economic challenge for Britain. It is to deliver this decade what has eluded us for too long: faster productivity rises than our main industrial competitors. At any point in the past 20 years, it was open to a Government to make not only the Bank of England independent, but our competition authorities independent and free of political influence, to use the criminal law to outlaw cartels, to reform insolvency laws and remove Crown preference, thus reducing the cost of business failure, to introduce an enterprise management incentive scheme for growing high-growth firms and to cut capital gains tax, as we have done, from 40 per cent. to 10 per cent. for transactions in business assets that are held for two years.

I am pleased, therefore, that it is a Labour enterprise Bill, led by the Secretary of State for Trade and Industry, and Labour Budgets that are pushing forward the agenda for prosperity. Furthermore, our review of planning procedures and our plans for improved workplace skills to provide better links between businesses and schools, and for a research and development tax credit giving special help to manufacturers will advance that agenda for higher productivity.

These announcements are just the start. Building on the cut in small business taxation, an extension of the new 10p small company rate, a new flat rate VAT scheme and a single system of accounts for small businesses, and building on the 170,000 new businesses that we have created since 1997, we shall publish in the next few weeks our proposals, area by area, for stamp duty exemptions so that we can have business development in our high-unemployment communities.

Charities and businesses will also join the Government in a £40 million community development venture capital fund to bring work to high-unemployment areas, and regional development agencies in every part of the country will soon publish their prospectuses for what will eventually amount to a £1 billion fund for the UK, to bring new businesses and jobs to every region.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I shall give way in a moment.

I hope that the whole House now agrees not only that regional development agencies are an essential element for achieving balanced regional growth, but that regional policy itself, equipping people and areas to cope with change, will have to be enhanced rather than swept away if we are to achieve high levels of growth in employment in every region of the country. [Interruption.] I see that some Members of the Conservative party have learned nothing from the past few weeks.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

The Chancellor will be aware that, over the past four years, the UK's position in the world competition league has dropped from ninth to 19th place. He will also be aware that Motorola, for example, has closed its plant in Scotland while keeping open its plant in Germany. He has just announced a series of new initiatives. Does he believe that in the next four years we can get back to ninth place, where we were when he started?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Not only are there 1 million more people in jobs and 170,000 new small businesses, but productivity has been rising this year, last year and the year before and it continues to rise. The question that Conservative Members should address with us is how we can do better. I would like to hear from the hon. Gentleman whether he welcomes our new competition policy proposals, our cut in capital gains tax and other measures that we are introducing?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I welcome the Chancellor's personal interest in encouraging a tougher line against anti-competitive practices, but why has his Department bottled out of its commitment to an early introduction of a regulator--Paycom--to curb the substantial excess profits that the banks earn from their control over the clearing system?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

We have not bottled out of anything. It was us who set up the Cruickshank review, published its proposals and put the performance of banks in relation to small businesses to the competition authorities. We are now waiting for their response on this matter. I thought that the hon. Gentleman would be standing up to congratulate us on taking action to deal with those abuses, as they will certainly have to be dealt with if we are to have the most competitive economy in the future. The Liberal party should be congratulating us, rather than criticising us for what we have done.

Our measures for opening up enterprise to all are complemented by our measures for opening up employment opportunity to all. Today in Britain, 28.1 million people are in work. That is more than at any time in our history. Long-term unemployment, which stood at 326,000 in the spring of 1997, is now below 100,000--the lowest for 20 years. Youth unemployment, which was once as high as 500,000, is now down to 41,000--the lowest since 1975. The shadow Chancellor might wish to note that in the past four years in his constituency, youth unemployment fell by 79 per cent. and long-term unemployment by 81 per cent. as a result of the new deal.

Because there is more to do, we shall never be complacent. For too long, Britain's communities--such as the one that I represent--were ravaged by long-term unemployment, youth unemployment, the fear of unemployment and the poverty and insecurity caused by unemployment. The first stage of the new deal tackled unemployment among young people. Now we shall tackle unemployment among all four of the worst hit groups: the long-term and young out of work, lone parents and disabled people, all of whom have been denied their right to work for too long.

From now on, no one will be excluded from the opportunities of the new deal, so this Session's welfare reform Bill will extend opportunities and responsibilities not just to all long-term unemployed, but to the partners of the unemployed, even when they are not heads of household. In that new phase, we shall offer special coaching help for others who are hard to employ, and we shall not hesitate to take additional measures, including greater sanctions, where they are needed to get people back into work and achieve full employment.

If only one young person had benefited from the new deal, it would have been justified, but, already, almost 300,000 young people have found work. I hope that there can now be all-party agreement that the Government were right to impose the £5 billion windfall tax, which is still helping to pay for our welfare-to-work programme, and are right about the principle of our approach. An active labour market policy is essential to equip people for the future, and we recognise that, in the modern economy, economic efficiency is bought not at the cost of social justice, but, indeed, by promoting social justice.

We also believe that decent minimum standards advance not only social justice but economic efficiency. Thus, in October the minimum wage, on which we legislated in the previous Parliament, will rise to £4.10 and, next year, to £4.20. That will mean a £17.50 a week rise. Also, last week, my right hon. Friend the Secretary of State for Trade and Industry announced to 140,000 young people that their minimum rate will rise to £3.20, then £3.50 and then £3.60 in 2002.

Following those changes, I can also announce that, in October, the guaranteed minimum income under the working families tax credit for full-time working families with children will be raised to £225 a week. That represents an £11,000 a year guaranteed income for working families with children, which means a negative tax rate of minus 200 per cent. as a result of our new proposals. Again, I hope that all parties will affirm that a working families tax credit, which Ronald Reagan himself said was the best anti-poverty and pro-family policy in America and which has been raised most generously by George Bush in the past few months, is also good for Britain's social justice and Britain's economic success.

The new tax credit Bill, with its targeted tax cuts for work, extends the principle of the working families tax credit to working households without children. Thus, for couples, the employment credit that we are introducing will guarantee for adults working full-time a minimum weekly income of £170, or £8,800 a year. That could not have begun to happen without a second-term Labour Government.

Photo of Diane Abbott Diane Abbott Labour, Hackney North and Stoke Newington

Labour Members are delighted and relieved to know that aspects of my right hon. Friend's active labour market policies have the endorsement of Ronald Reagan, but he will be aware that statistics published towards the end of the last Parliament appear to show that the gap between rich and poor had widened under the previous Administration. Can he give the House an undertaking that, by the end of this Parliament, the gap between rich and poor will begin to narrow?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Of course, it is as a result of the working families tax credit, the minimum income guarantee for pensioners, raising child benefit and the children's tax credit that low-income families are finding that their income position is being raised. If my hon. Friend talks to people in her--[Hon. Members: "Answer the question."] I am answering the question. If she talks to her constituents, she will find that many are £50 a week better off as a result of the changes that we are making. Precisely for that reason, we are narrowing the gap between rich and poor in this country.

I hope that my hon. Friend will take this from me: in the previous Parliament, Conservative Members were unable to support a policy that had the support of Ronald Reagan and George Bush, which was an amazing commentary on the Conservative party between 1997 and 2001.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

Do not worry; I could not get an answer either.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Conservative Members got an answer; it is called the election result.

In a modern economy, all young people should have the chance to develop their potential to the full, and a party that promises opportunity for all should be prepared to allocate the necessary public spending resources to ensure that every child has the best possible start in life.

Child poverty is a scar on the soul of our country. It was a matter of shame for Britain that, when we came to power in 1997, one child in every three was born poor. Having taken 1 million children out of poverty in our first term--if the Tory party had been in power, they would have remained condemned to poverty--our ambition in what I believe is the best anti-deprivation policy and the best anti-delinquency and anti-crime policy, is to take the next 1 million children out of poverty. Alongside our commitment to public services, that will be a central priority for next year's Budget and spending review. I am pleased to tell the House that in the Queen's Speech we were able to move closer to achieving that ambition.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am happy to give way to the right hon. Gentleman, who is one of the few people who is not standing in his party's leadership election.

Photo of John Redwood John Redwood Conservative, Wokingham

The Queen's Speech said that the Government would ratify the Nice treaty. Now that the Irish people have voted no in a referendum, does the Chancellor think that no should mean no and that is the end of it, or that the Irish people should be told that they need to think again, vote again and answer yes? We would like to know how strongly he supports referendums.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Trust the right hon. Gentleman--when we are talking about child poverty, he starts talking about the Nice treaty. The Irish Prime Minister has already answered his point. The Irish people will be asked to support the Nice treaty. This is a matter for them to resolve as they choose, and they will do so in the next few months. The right hon. Gentleman's intervention on Europe carries some menace for whoever takes over the leadership of the Conservative party.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I have answered the right hon. Gentleman's point. The Irish people will resolve this matter, as their Prime Minister has said. The menace is that the right hon. Gentleman remains committed, under all circumstances, never to consider joining a monetary union and wants to renegotiate Britain's membership of the European Union. He would set this country back many years. That is another sign that the Conservative party, far from having a debate based on candour and frankness with people being prepared to talk fairly among themselves, is about to enter into a big conflict on Europe.

Since 1997, we have raised child benefit by 40 per cent. in cash terms. We have introduced the new children's tax credit, which for 5 million families is a family tax cut worth up to £520 a year. We have reduced the direct tax burden for a single-earner family on average earnings from 21 per cent. to 18 per cent., which is the lowest level for 30 years. In this Parliament, we shall introduce a tax credit Bill that will provide for a new, seamless system of support for children.

From the foundation of a universal child benefit for all, which is £15.50 for the first child, the children's tax credit--which is the family tax cut--raises the income of 5 million families by £25.50 or up to the weekly payment for children, which is now £51.50, with most going to those who need help most. The Secretary of State for Work and Pensions is today announcing the transfer of the Child Benefit Centre to the Inland Revenue, so that universal child benefit and the new integrated child credit will be delivered by a single agency with a single aim, which will be to ensure that every child and family have the financial support that they need.

With the under-one credit set at £1,000 and maternity pay at £100 a week guaranteed for six months, more support is now available. Soon there will also be 1.6 million child care places for families when they need it most: when their children are youngest.

Photo of Caroline Flint Caroline Flint Labour, Don Valley

I welcome how much the Government have done in the past four years to improve family life, but could I direct my right hon. Friend to a report by the Daycare Trust, published today, called "Children's Centres", which says that despite the advances being made, and despite the money that has been put in the pockets of working families, there is still a shortage of day care places, the cost of which is still prohibitive? I recommend that my right hon. Friend reads the report and considers whether there are better ways of avoiding the 45 funding streams that child care providers currently have to use to get money to establish child care services.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

That is an important point. We have increased the working families tax credit payment for child care. We are also delivering our proposals, with money, to develop the 1.6 million child care places. I agree with my hon. Friend that more needs to be done more quickly. The difference between us and the Conservative party is that we are committed to a national child care strategy for the first time in this country, and we are committed to funding it properly. It is not clear whether that is the Conservative party's policy.

We spend £3 billion a year on children's social services, on sure start and on the new childrens fund. Now that the emphasis has switched from dealing with the consequences of neglect to the prevention of neglect, and now that there is a wide range of providers involving the voluntary and charitable sectors and community action centres, it is right that there be a new review across Departments of all services for children at risk, to ensure that in the next spending round the children in greatest need, wherever they live, have the services that can best meet their needs, so that no child is left out or left behind.

As part of our spending review, a second review of the voluntary sector will examine how Government and voluntary sectors can best work together to help families and communities in need. In addition to the work done under sure start, to be taken forward in the spending review, a third review of our spending round on health inequalities will tackle the persistent and unacceptable inequalities in infant mortality and in child health.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I will, but then I must move on.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

Now that the Chancellor has entered the realm of social policy--which is somewhat unusual for a Chancellor--can he clear up one point? Can he confirm that the Deputy Prime Minister has been moved to the Cabinet Office to be in charge of public services, that the Office of Public Service Reform reports to the Prime Minister, and that he himself is still in charge of cross-cutting reviews and public service agreements? Who is actually responsible?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am talking about the spending review for next year. I know that very strange things happened under the last Conservative Government, but I think that spending announcements were still made by the Chancellor of the Exchequer, and that is precisely what we intend.

As for public spending control, the public service agreements are an innovation introduced under the Labour Government. They are designed to relate the expenditure of money to the targets and objectives set by the Government for meeting its programmes. The amazing thing is that in 18 years of Conservative government no real attempt was made to relate the spending of money to the priorities and targets set by that Government. I should have thought that the hon. Gentleman, as a member of the Treasury Select Committee, would welcome the fact that our spending review takes into account the public service agreements that set outputs and targets for the future.

All the measures that I have announced on child poverty today--the new integrated child tax credit, which will form part of the legislation in the tax credit Bill, the transfer of the Child Benefit Centre, and our three reviews of the voluntary sector, children in need and health inequalities--show that, for us, tackling child poverty and ensuring that no child is left behind is not just an economic and social imperative; it is, for us, a litmus test of any political party running for office.

I hope that all in the House understand that we could not move 100,000 lone parents back into work and lift as many as 1 million children out of poverty if we had done what some argued that we should do--abolished the working families tax credit, removed benefits from lone parents with teenage children, cut the social fund, and abolished the new deal for lone parents.

I believe in eradicating child poverty, and I believe the country understands very well that when lone parents are simultaneously denied help to find jobs and faced with a cut of £50 a week in their incomes--as was proposed by the Conservative party at the election--all the rhetoric in the world about social liberalism cannot obscure the fundamental economic extremism of that position. If the Conservative party wants to do some rethinking, this strikes me as a very appropriate place to start.

Let me turn to the public finances. Some staked their reputation on saying that our public services plans could not be afforded, that they were inflationary, and that they were unsustainable. I can tell the House that we will implement our public spending plans in full, and that we will now prepare for the spending round from 2003-04 to 2005-06. I can also say that, as well as providing free television licences for the over-75s and raising the basic state pension this April, we plan to pay the winter allowance of £200 this year; and our new pension credit, introduced in 2003, will reward rather than penalise modest occupational pensions and savings, to ensure that every pensioner enjoys a share in rising prosperity.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I have given way enough.

Our obligations are international too. Diseases such as tuberculosis, malaria and HIV-AIDS are avoidable, and drugs are available to make them preventable and curable. This week the Secretary of State for International Development will announce further contributions from our Government to a new global health fund to tackle those diseases.

Our public service agreements--setting targets and demanding results--are key to securing value for money across Government. In advance of our decisions next summer on matching the resources in our public spending review to reform, the Chief Secretary to the Treasury is setting up seven interdepartmental reviews to examine how we match our spending priorities for the next period with a stepping-up of modernisation and reform to ensure for the public the best outcome and results. The reviews will deal with central themes set out in our manifesto: children at risk, health inequalities and the role of the voluntary sector, public sector labour market issues, improving the use of public space, science and research and small business support.

Under the previous Government, Britain spent more on debt interest than on schools. The reason that we can invest more in health and education is that we have managed to transfer resources from paying the bills of failure to investing in future success. A total of £9 billion has been cut from the typical annual cost that Conservative Governments paid to tackle debt and pay for unemployment. That has meant that, each year, there is £9 billion more for the national health service and for education. That is what we mean by putting hospitals and schools first.

There is an even bigger question for the future of our public services: how to meet demographic, technological and expectation-led demands. Instead of the fundamentalist calls to shrink public spending on those services, the challenge for the future is to secure additional public investments as well as the reforms that we need without putting at risk the economic stability that is so crucial. The detailed new policies that the Government are pursuing in the Queen's Speech--the tax credit Bill, the enterprise Bill and the other public service reforms--are central to the direction of our country in future. There are big questions about the role of Government which every political party will have to answer.

I understand from The Times this morning that the shadow Chancellor will announce in the debate that he will support all-women shortlists and more international aid. We welcome conversions to our policies but we remember what happened over the minimum wage: we supported it, the Conservatives opposed it; we succeeded, they recanted. We can explain our support and they cannot. Their new positions raise prior and profound questions about whether they are changing their policies because of opportunism or because of principle. Does the shadow Chancellor believe that decent minimum standards and social justice are necessary for a modern efficient economy?

Basic questions of principle inform the Queen's Speech. I ask the Opposition to address them, too. On economic management, it is not enough to say that the old era of rigid monetary targets is over. The question is whether we are to reject and set aside the short-termism of the old free market dogma in favour of not just a solid commitment to monetary and fiscal disciplines, but an industry, regional and skills policy that works with markets and businesses to equip this country for change.

On employment, it is not enough for the Conservatives to tell us as part of their rhetoric that they support full employment. The first question that we must answer--it is the pre-condition for a modern employment policy in the global economy--is will we reject the old, flawed laissez-faire policy and invest in an active labour market policy that is based on rights and responsibilities, but that lifts people from welfare to work?

On inclusion and opportunity for all, is it to be the illusion of inclusion for millions, or will we commit the substantial resources that everyone knows are needed if we are to tackle child and pensioner poverty? On health, do we choose to invest more in our NHS, as we have chosen, or do we instead make health care in Britain dependent, as some people want, on imposing new charges and private insurance?

Do we just talk about being internationalist and about Britain in Europe rather than Britain against Europe; or do we follow the logic for the national economic interest, as I do, that there are circumstances in which we will join the euro? No amount of policy launches, listening exercises or rhetoric about social liberalism can obscure the fundamental choices that have to be made.

Are we just to talk about good public services, or are we to modernise with the scale of money that is needed, rather than putting across-the-board tax cuts before the needs of public services and stability?

Photo of Peter Tapsell Peter Tapsell Conservative, Louth and Horncastle

As a long-standing Tory democrat rather than a social liberal, who has throughout a parliamentary career of some length always supported high levels of public expenditure, and is on the record as saying so throughout the Thatcher years, may I ask the Chancellor to answer the practical question of how his announcements of huge increases in public expenditure can be reconciled with his stability pact commitments to the European Union?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

We are talking about public services, but Conservative Members can talk only about Europe. The stability pact asks for Budgets to be at or near balance. Last year, we paid back £36 billion of debt. The hon. Gentleman should be congratulating us on that. Additionally, if he looks at our figures for future years, he will find that public borrowing is at a level that is perfectly sustainable and perfectly adequate not only within the terms of the Maastricht treaty, but within the terms of the golden rule that I have established.

When we want to talk about the health service and education, only Conservative Members want to move on to talk about the European Union and whether we should be members of it. I think that the country wants us to have a debate on public services. If Conservative Members have not learned that lesson from the general election, I do not think that they will ever learn anything about how to run their affairs.

The question that I am posing is whether we are prepared not only to talk about good public services, but to invest the scale of money that is needed, rather than putting across-the-board tax cuts before the needs of public services and stability. That issue was raised most helpfully in the general election campaign by the shadow Chief Secretary, whom I am pleased to see in the Chamber today. We did not see much of him in the later stages of the general election campaign, when he gave a new meaning to the word "shadow". We talk of people who are seen and not heard, but he was heard and then not seen. That was a feature of the election campaign. However, although we had no idea where he was, we knew what he was saying. That is the dilemma for Conservative Members.

The shadow Chief Secretary said:

"You've got a progression which goes £4 billion, £8 billion, £12 billion, £16 billion, £20 billion. We would like to head downwards"-- in public spending as a share of national income--

"to 35 per cent. of GDP . . . It is 190 per cent. realistic to cut spending growth in this way."

At today's prices, to reduce public spending to 35 per cent. of GDP, which is the ambition of the shadow Chief Secretary--an ambition that he has never denied--would entail cuts not of £5 billion, £10 billion or £15 billion, but of £50 billion. It is the equivalent of the entire budget of the national health service. Everyone knows that such changes could not be achieved without deep cuts in all of our major public services. That is the choice: to invest or to cut. We say that we cannot will the ends--better public services--without being prepared to will the means, which are investment as well as reform.

I see that Conservative Members are getting a bit jumpy about the looming leadership election. For the Conservatives, it is a time for reflection, and they have quite a lot to reflect upon--not just a search for power, but a search for a minimum level of coherence in the way they put forward their policies.

Some of the main contenders for leadership have been out of the country. The shadow Chancellor left the night after the election to visit some ancient relics--these were not Conservative constituency associations--moving effortlessly from one set of ruins to another. While we have been getting on with the business of Government, we have seen the contestants nightly on our television screens. They are closed off in a world of their own. They are nominated and then eliminated week by week in seemingly endless ballots. The last two are to be voted out by whatever is left of a dwindling audience of viewers. What we have ahead of us is the Westminster version of "Big Brother".

Like "Big Brother", the contest has already turned nasty. Newspapers are filled with accusations of backbiting, there are daily outbursts in front of the cameras and, increasingly, the rest of the contenders are turning on one man who is accused of disloyalty. At some point, the Conservatives will have to re-enter and face the world of reality. At some point, they will have to enter and face the world as we know it.

The theme of the Queen's Speech has been our commitment to improve public services. Last week, the shadow Chancellor said that his campaign theme was that he would be passionate about public services. However, on election night, in response to a member of the Conservative party who said that the campaign should have been about public services, the shadow Chancellor said:

"It would have been folly for us to concentrate on the issues--health and education--where Labour had the advantage . . . It would have been foolish of us to spend our entire campaign on the issues where Labour was ahead."

His folly last week is his passion this week.

How does this week's passion for public services square with the cuts manifesto that put large tax cuts before public service needs--a manifesto of which the shadow Chancellor said he was "very, very proud"? He was proud of tax cuts last week, while public services are his passion this week. How does his passion for public services this week square with his personal authorship of the £8 billion spending cuts plan last year? Was that an error? What about his statement that £8 billion of cuts was "just the beginning"--was that also an error? His personal conviction about the increased reliance on private health insurance--was that also an error?

Perhaps we should also look at the previous convictions that the shadow Chancellor has to his name. What about the record spending cuts when he was at the Treasury? Were they an error of judgment? His conviction about what he called an "ultra-low tax economy"--was that also an error of judgment? His conviction about "clear blue water" and shrinking the state--was that also an error of judgment? His conviction that the highest goal above all others was to minimise the state--in the context of support for more public services, was that also an error of judgment? His conviction about the poll tax being fair, a vote winner and misunderstood--was that also an error of judgment? Does the shadow Chancellor really ask us to set aside each and every one of his previous convictions?

It comes down to trust. Just as people will ask whether they can trust with the economy the Minister who, when Chief Secretary, gave us 15 per cent. interest rates, 10 per cent. inflation., £50 billion of borrowing, 22 broken tax promises and record mortgage repossessions and who was a principal architect of boom and bust, so, too, will they ask whether they can trust with public services the Minister who has spent most of his political career, in government and opposition, as the torch bearer for the ultra-low tax economy and for a radical scaling back of the responsibilities for public services.

One day, the Tories will have to address their fundamental problem. Britain cannot be served by a party hijacked 20 years ago and still imprisoned by a wholly out-of-date and socially divisive dogma. For our part, stability is the foundation. Our policy is investment, not cuts. We say yes to targeted tax cuts for families, pensioners and work, we say no to irresponsible tax cuts, and in this Parliament we put schools and hospitals first. That is why I commend the Queen's Speech to the House.

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea 4:35 pm, 25th June 2001

First, I draw attention to my interests, which are in the register.

I congratulate the Chancellor of the Exchequer on the election result, which means that he can continue in his office. I thought that his performance this afternoon was curiously edgy, nervous and bombastic--an out-of-date, old-fashioned sort of speech. I remind him that his party did win the election. It is over--he does not have to go over all the old arguments again. [Interruption.] As far as I could tell from looking at Labour Members, the only person in the House who enjoyed the speech was the President of the Council and Leader of the House of Commons, Mr. Cook. He seemed to enjoy it very much indeed.

The Chancellor of the Exchequer has shown a consistent interest in the plight of developing nations, and I am glad that that issue features in the Queen's Speech. Britain should play a role that is suited to our standing in the world in helping to relieve world poverty. As a civilised and relatively rich country, we should take pride in doing our duty. We must play our part in extending good governance around the world. We must do all that we can to reduce the causes of disease and of conflict. Even in terms of enlightened self-interest, the richer countries must see that money spent today reducing disease and eliminating the turmoil that gives rise to flows of refugees is repaid by the money saved on having to deal with the tragic consequences of those episodes. We must also work for global free trade, which is disproportionately to the benefit of the poorer nations in the world.

I also welcome the proposal in the Gracious Speech to make it easier for women to enter Parliament. The proportion of women here is too low. At this election, the progress made in 1997 has not been sustained. In my party, the under-representation by women is truly chronic. The Conservative party must put it right, and the Government's legislation may help us all in that respect.

Photo of John Bercow John Bercow Shadow Spokesperson (Home Affairs)

Given that there is now only one more female Conservative Member of Parliament than there was in 1983, and that that 18-year period has too often been characterised by studied inactivity in our own ranks, does my right hon. Friend accept that his recognition of the case for positive action to translate equality of opportunity from a phrase into a fact will be widely welcomed?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

My hon. Friend is very kind. I believe that the Conservative party must have the unshakeable objective of increasing the representation by women in this House, and that that objective must be achieved between now and the next election.

On the economy, the Chancellor's mettle has not been tested in difficult circumstances. In the first half of the 1990s, 18 countries belonging to the Organisation for Economic Co-operation and Development experienced recessions, but in the second half, only five OECD countries suffered in that way. So the Chancellor of the Exchequer has steered the British economy only through calm waters. The economic conditions have been benign, and obviously we hope that they remain so. The Chancellor has been lucky, but he should ask himself whether his policies are robust enough if his luck should change. The world is more turbulent, as the Chancellor admitted during his speech.

In recent years, the United States economy has stimulated growth across the world. Last year, the United States grew by 5 per cent., but this year it is expected to grow by less than 2 per cent. United States manufacturing is in recession, retail sales have slowed and capital investment is down. Trade figures are down as well, which carries with it the threat that the United States problem may be exported and have wider effects.

Further afield, Japan's growth is unlikely to exceed 1 per cent. for the next two or three years. Germany is afraid that growth may have plunged to zero in the second quarter of this year. Growth in the eurozone in the past 12 months is down a full percentage point on the previous year, and industrial production has slowed. The European central bank has had to revise its growth forecast downwards; and European inflation, at 3 per cent., is well above the target. Iraq has suspended oil exports and withheld supplies. Crude oil now sells at $27 a barrel and the price has recently been higher. Higher oil prices mean higher costs for businesses and families.

Photo of Geraint Davies Geraint Davies Labour, Croydon Central

On growth, is the right hon. Gentleman aware that the International Monetary Fund has cut in half its growth targets for the United States, from 3 per cent. to 1.5 per cent? It has also cut its growth targets for Germany by 40 per cent., but has adjusted only marginally its targets for the United Kingdom, which have moved from 2.8 per cent. to 2.7 per cent. The Treasury forecast is still 2.5 per cent. Does he accept that it is the chancellorship of the economy that is showing great strength in the global environment? While everyone else is seeing their growth cut, ours is still strong, which is a testimony to the good work of the Labour Government.

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

Despite all the hon. Gentleman's good work during the previous Parliament in asking such questions, he remains on the Back Benches.

If there is to be less demand in the world economy, Britain must become more competitive just to maintain our position. We cannot be comfortable with the fact that our tax advantage, by comparison with that of our European competitors, has declined by two thirds since the mid-1990s. How can we be confident that the Chancellor will address the British competitiveness problem to which he alluded, when he refuses even to admit that the tax burden in this country has risen?

As we all know, the general election showed a dramatic drop in turnout. I believe that part of the disillusionment experienced by the public is caused by politicians failing to be straightforward. People feel insulted when the politicians who drove up their taxes pretend to them that their taxes have not risen. They find it extraordinary that the Chancellor has no scruples about raising their taxes, and has scruples only about admitting what he has done. Today, he had the opportunity to state in plain English that taxes rose under this Government during the previous Parliament and to set out his view on whether they will rise during the current Parliament--and on whether it is right that they should do so. It is a shame that he did not take the opportunity to be straightforward with the House and the British public on that matter.

On the point made by Geraint Davies, the Government like to pretend that the economy started to grow and unemployment started to fall on 1 May 1997. In fact, the economy has been growing since 1992 and unemployment has been falling since 1993. The OECD's view of the economy before the Government came to office in 1997 was this:

"The prospects for achieving sustained output growth and low inflation are the best in 30 years."

That was the situation that the Government inherited. Only a Government who were conscious of their under-achievement on the economy would devote more attention to trying to rewrite history than to trying to build on it.

The Chancellor's record has been mixed. The economy has continued to grow and unemployment has continued to fall, which are good things. However, the growth of the economy and the fall in unemployment have been slower since the Chancellor of the Exchequer arrived in his office. Our relative position has also declined. In his first Parliament, Britain's growth rate was lower and our inflation was higher than those of our competitors. That is the precise reverse of the position in the Parliament up to 1997.

Inflation has remained low and stable, as it was when the Government came to office, although the latest figures show that it has risen significantly. The Chancellor was right to make the Bank of England independent. [Hon. Members: "Oh!"] It is hardly new for me to say that. He was right to make the change, but he could have made better arrangements. The Monetary Policy Committee must be seen to be above political interference. That is especially the case if we are approaching a referendum on the euro. Even now, I urge him to make more transparent the selection of Monetary Policy Committee members and to limit them to a single term, albeit longer than that which they presently serve, in order to establish that they are clearly independent of the Chancellor.

Over the past few days and, again, today, the Chancellor has talked about productivity. He told us back in 1998 that productivity was

"a fundamental yardstick of economic performance".

He said today, with unusual frankness, that the quest to improve productivity had eluded us. To be more precise, it has eluded him more than it eluded the previous Conservative Government. Between 1992 and 1997, productivity growth was 2.3 per cent. a year. Since he has been Chancellor, it has averaged 1.8 per cent. a year. It is only by increasing productivity that we can increase the long-term rate of growth in our economy.

If the Chancellor of the Exchequer had a genuine agenda for improving productivity, we would be the first to support it, but he does not seem to understand that it is not the Government who improve productivity; businesses and working people do that. In a wonderfully telling sentence, he said that "we" have created 170,000 new businesses. I do not believe that he has created any new businesses--certainly not if he stuck to the rules of the House. He has a misconception of how wealth is created and of the people who are responsible for it.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

First, may I thank the right hon. Gentleman for visiting my constituency during the election campaign? It was extremely helpful. Secondly, if the Conservative party is in great peril, is not the shadow Chancellor part of its problem?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

That was a stinging arrow, from which I have not fully recovered. If the hon. Gentleman is alluding to the leadership contest in the Conservative party--which I think, clumsily, he is--most of the candidates are associated either with the catastrophe of 1997 or with that of 2001. My unique contribution is that I am associated with both.

A recent survey by the Institute of Directors shows that entrepreneurs typically spend six hours a week complying with Government regulations. That is time that they cannot devote to improving their businesses--time which is taken away from the search for ways in which to be better and more productive. There was a time when Britain could feel relatively smug about how smoothly the machinery of government operated in this country compared with the bureaucratic complexities of some of our European neighbours, but we are now horrendously bureaucratic. The foot and mouth crisis was a snapshot that revealed to many of us what the country has become. We saw any number of different Government agencies tripping over each other. No one had the power of initiative or authority. Many farmers watched in dismay as officials were sometimes more concerned about protecting their own patches than dealing with the problem.

It is a similar story when we talk to constituents, as I am sure hon. Members on both sides of the House do. People who apply for benefits are often sent on the most extraordinary bureaucratic treasure hunt in which they are passed from person to person and office to office. The machinery of government is increasingly unable to relate to people as people, whose complicated problems may defy bureaucratic templates. Under Labour, the cost to business of complying with regulations has risen by £5 billion a year. Last year alone, the Government introduced 3,865 new regulations, which was a record. It is true, as my hon. Friend Michael Fabricant said, that as a consequence of the neglect of the bureaucratic burden, Britain has slipped down the competitiveness league table, from ninth position to 19th.

The Chancellor is fond of saying that Britain needs to learn from America and to become more deregulated, but Americans have dubbed the Prime Minister "red-tape Tony". [Interruption.] Labour Members obviously do not read the world's press, but they should because they would find out what the outside world thinks of the Government. The Queen's Speech contains absolutely no recognition of the problem that Britain faces.

Photo of Andrew Miller Andrew Miller Labour, Ellesmere Port and Neston

The right hon. Gentleman referred to the problems that our constituents face when chasing around office after office. Does he accept, therefore, that the previous Administration made a mistake when they demerged the jobcentres and benefit offices?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

The hon. Gentleman needs to focus on the future.

Photo of Andrew Miller Andrew Miller Labour, Ellesmere Port and Neston

I asked a straight question--answer it.

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

I am not going to get into it. I believe that everyone in this country--bar the Chancellor of the Exchequer, perhaps, but certainly including the hon. Gentleman's constituents--knows that bureaucracy has increased enormously in the past four years. I do not claim for a moment that the increase in bureaucracy began only four years ago. I am not in the Chancellor of the Exchequer's black and white school in which it is said that everything that happened before 1997 was perfect. However, the Government's neglect of the problems of regulation and bureaucracy is extraordinary.

The Chancellor has already massively increased the cost of government, and he plans to go on increasing it during this Parliament. Whatever he may have said for party political reasons during the election campaign, he knows perfectly well that the Government could save billions of pounds, which they currently waste, if he would only put the same effort into controlling bureaucracy as he puts into bullying his colleagues.

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

I am sorry, but I was only picking up what Mr. Alastair Campbell said when he described the Chancellor as an out-of-control colossus--not an expression that I would apply to him at all.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I am listening intently to the right hon. Gentleman's new measured tones and his emphasis on looking to the future, but I want to find out exactly what he is now saying about public services. Now that we are beyond the cut and thrust of the election campaign, can he tell the House whether he has changed his mind about any of the Conservative's public spending plans and statements? Has there been any change from what he said during the election campaign? Has there been any change at all in his new guise?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

Obviously, the hon. Gentleman had that question written for him before I delivered the last paragraph before he rose in his place, because I have just very clearly said that when spending £400 billion a year--£12,000 a second--of the public's money, it simply is not credible to go to the country and say, "We cannot possibly spend a penny of this money better. We are spending every penny of your money perfectly." The hon. Gentleman's constituents know perfectly well that that is not true. If he went around his constituency claiming that schools and hospitals would close if we tried to save £8 billion out of £400 billion, it may account for the fact that so many fewer people voted for him this time than last time.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney

Will the right hon. Gentleman give way?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

Yes, but I obviously ought to make progress at some point; I do not want to test the patience of the House.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney

The right hon. Gentleman has just referred to the ideas on trying to save £8 billion from the Government's Budget. He claimed that he could save that money many times during the election campaign. Clearly, not many people believed him. On the few occasions those plans were put under scrutiny by media commentators, they fell apart. Let me however accept for the moment that he believes that he could have saved £8 billion from Government spending. If he is committed to public services, why did he not commit that illusory £8 billion to public services rather than tax cuts?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

Well, I shall come to the reason for that in a moment. The reason is that--[Interruption.] I am giving the House a preview of the bit that I shall come to. As Ms Abbott said, the point is that this Government have made the poorest people in society poorer. [Interruption.] Well, the hon. Lady said it, and she was right. One of the reasons why the poorest people have got poorer is that they have borne the brunt of the stealth taxes imposed by the Chancellor of the Exchequer--but I shall deal with that point in a little more detail in a moment.

There are real concerns about the balance of the economy. Consumer spending is strong, but the savings ratio has halved and Britain's share of world exports is down. We have a record balance of payments deficit, and the Chancellor predicts in the Red Book that it will continue to grow. Balance of payments deficits can be funded so long as people are confident that the economy is doing well. Those things can change very suddenly, but there is absolutely no sign that the Chancellor is concerned in any way. That lack of concern about the balance of payments deficit may prove very unfortunate for the Chancellor, as well as the country.

A strong economy is the pre-condition to any Government's plans. Economic stability allows families, too, to realise their ambitions to buy a better home, to make provision for their retirement, to provide opportunities for their children. The tax increases of the past four years have blunted our competitiveness, and people can see no evidence that those tax increases have led to improved public services. I have never heard the Chancellor say that lower taxes make a country more competitive and that higher taxes do the opposite. Perhaps he would like to tell us this afternoon whether that is his belief. We hear the Chancellor talk about reducing taxes for business, but the director general of the CBI has said:

"The reputation of the UK as a low tax economy . . . is under serious threat".

The funny thing is that, around the world, Governments of every political persuasion are busy cutting the taxes in their economy, and it is the Chancellor who is swimming against the international tide. Britain's taxes rose by the equivalent of 10p in the pound on income tax during the previous Parliament.

Now, the Government plan rises in public spending during this Parliament faster than the average growth rate of the economy. During the entire election campaign, the Chancellor refused to tell us whether such above-trend rate growth in public spending was the plan for the next two years or the longer term. Is he just turning on the tap now in order that he can turn it off almost immediately, or is he planning for public spending that will, of necessity, require higher taxes? Whenever one asks him those questions, he tends to resort to talking about his rules, but his rules allow him to tax and spend as much as he likes. The only rule is that, as he spends, he must raise taxes in order to match it.

During the election campaign, the Chancellor considered it a terrible affront that we should ask him which taxes he was thinking of raising during this Parliament. The question was wholly legitimate, since tax rises are indicated by the rate of public spending growth to which he is committed. He repeated his promise during the election campaign not to increase income tax at either the standard or higher rates, but will not make other commitments. He will not even make commitments relating to other taxes on people's incomes, and will not say whether he will raise or abolish the ceiling on national insurance contributions, which, effectively, would lead to a 50 per cent. tax rate on middle-income Britain. He had another opportunity in the House today to make clear what he intended. Raising the issue has at least brought to his face the first smirk of the afternoon.

The Chancellor now plans to subject one half of Britain's pensioners to the indignity and nuisance of means testing. During one passage in his speech, I think that he meant to say that he was planning that people should have retirement in dignity, but it sounded like retirement indignity. I am afraid that the latter is indeed what the Chancellor is planning for. This is the man who promised that he would remove means testing from pensioners altogether.

The proposed increase in means testing has important social consequences. The Queen's Speech promises us a pension credit, but that is made necessary by the penalties for saving that the Chancellor has introduced. Indeed, the pension credit itself will increase penalties further up the income scale.

The Chancellor has spoken today about his plans to tackle child poverty, and that is of course a very laudable aim. However, in referring to the hon. Member for Hackney, North and Stoke Newington, I ask again whether that is credible from this Government, since the Chancellor's stealth taxes have hit the poorest hardest. Since 1997, the poorest fifth of households have seen the sharpest rise in the share of their incomes that must be passed to the tax man. As the Chancellor has said, this Parliament will see huge changes in credits payable to families. We on the Opposition Benches will study those proposals very carefully, but I fear that the Chancellor will, as usual, create a system that is too complicated for people to understand and full of anomalies and perverse incentives. Characteristically, he cannot resist meddling: he cannot resist micro-management. He wants to live everyone's life for them.

During the last Parliament, the Chancellor had to show that he could manage the economy better than his Labour predecessors. Given the fiascos of previous Labour Governments, that was not so very difficult. However, he failed completely on his principal promise, which was to improve the public services.

We in this country used to be able to say that Britain had the best health service in the world. We cannot say that now. People in pain are being made to wait far too long before getting the treatment they need. Many people in this country have to wait more than a year for heart surgery, compared with two months in either Germany or France. In modern Britain, people with heart disease die while waiting for their operations. Britain's children do less well at school than children in Germany or France. Extraordinarily, the proportion of adults in Britain who are unable to read and write is among the highest in the industrialised world. In education, as in health, we should be willing to look humbly at what other countries have done to see how we can do things better.

Whole communities today feel defenceless against crime. Criminals lord it over residents in some of our worst estates. Many women are afraid to go out at night and many elderly people are afraid to go out at all. Our transport system is failing us. Our roads are congested and our railways are chronically unreliable. No one could reasonably have expected the Government to transform our public services overnight, but people had hoped for some improvement and they have seen no sign of it. The Prime Minister was careful during the election not to repeat his claim that we had 24 hours to save the national health service, but he can never resist giving a hostage to fortune: now he promises that services in this country wil become of world standard. That is the yardstick by which he will be judged.

The size of the Government's majority allows them to make whatever reforms they consider necessary to the public services. Who could possibly stop them? They have an entirely free hand. If the Government can deliver changes that make a real difference to people's quality of life, the Opposition will support them; but if the Government cannot do that, they will be completely out of excuses.

The Government have targets for recruiting more doctors, more teachers and more police officers. A target makes a good soundbite during a general election, but it is no substitute for a policy. The Government are struggling to retain the professionals that we have in service today. The GPs have threatened to walk out of the health service, there are teacher shortages, and police morale is being undermined.

I ask the Government to recognise that it is their own interference that has driven our public servants to despair. Labour's style of government--the style of government that seeks a headline every day for a new initiative every day--drives to distraction the unfortunate people who are supposed to implement Whitehall's bright ideas while trying simultaneously to deliver a service that works to the public. Our professionals today are longing to be left alone to work effectively in their chosen vocations.

We live in the age of the internet, at a time when people have unlimited access to information. Ours is a less deferential age in which people expect to use their initiative and to be able to innovate. The time of national plans and centralisation is over, but the Government show absolutely no sign that they recognise that. Just as businesses see a Government who talk deregulation while imposing countless new regulations, so public servants see a Government who talk decentralisation but hand down ever more directives to them.

The Government themselves now aim to be the nurse, the teacher, the police officer and even the parent in every home. True, they now promise greater freedom for teachers and say that more money will be given directly to head teachers. That is what the Conservatives have long advocated, but the Government have always been scornful. If the Government's is a genuine conversion, we shall be delighted, but is it genuine? Can we believe that of a Government who organised the abolition of grammar schools, scrapped grant-maintained schools merely because they had been invented by the Tories, and scrapped the assisted places scheme merely because Labour believes that if not everyone can get on a scheme, no one should be allowed to do so?

The Government spent much of the election campaign claiming that they would reform health care. There were hints that they would be willing to build new partnerships with the private sector, breaking down the absurd ideological division between the two sectors. We Conservatives have long advocated a practical approach based on getting the best possible treatment for patients, but over the years the Government have simply misrepresented our policy and derided us for it. If the Government have now been converted, I welcome that. But again, can we believe them? In the previous Parliament, Health Ministers abolished GP fundholders just because the Tories had invented them. The Secretary of State for Health described work by consultants in the private sector as

"one of the seven deadly sins".

This very day, he is out briefing again, emphasising the negative aspects of co-operation between the two sectors in health. It was he who proposed that consultants should not be allowed to practise in the private sector within seven years of signing a contract with the national health service.

That takes us back a long way. Even Nye Bevan, when he set up the NHS in 1947, recognised that it needed the support of consultants with a mixed practice in the private and public sector, which is why he introduced pay beds in NHS hospitals, so that consultants could treat their private patients there and the NHS could afford to use their skills. Under the present Health Secretary, we have moved backwards from Nye Bevan's stance.

Photo of Diane Abbott Diane Abbott Labour, Hackney North and Stoke Newington

I have listened with rapt attention to a fellow alumnus of Harrow county grammar schools. The right hon. Gentleman spoke about morale among public servants. Is he seriously suggesting that morale was better before 1997?

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

It is wonderful to see my schoolfriend here. Yes, I am seriously suggesting that morale was better then--the hon. Lady ought to be deeply shocked by that. Because she is a true believer, she genuinely believed that the problem with morale in the NHS and teaching was caused by a Conservative Government. She had in her mind the soothing idea that, as soon as Labour came to office, those problems would be put right, but she must admit that she has been disappointed.

There was no occasion under a Conservative Government when three quarters of GPs said that they would be willing to resign their NHS contracts; that simply did not happen. We did not have four-day weeks in many schools, as we have today, because we did not have as big a crisis with teacher morale as we do today. My unequivocal answer to the hon. Lady is that, however she describes the situation four years ago and however much it horrified her, she must now grapple with the fact that morale in the public services is worse today than it was four years ago. Unless the Government can free themselves from their ideological shackles, I do not expect them to make much progress. I do not deny for a moment that, following its defeat, the Conservative party will have to work hard to win the public's confidence on services to the public. We will do so with an open mind and a willingness to study what works elsewhere.

The Government's economic policy during this Parliament may be dominated by the question of the euro. Recently, it was curious to see the Government campaigning for re-election, supposedly wanting to focus on the economy, but unable to tell the public whether or not their economic policy was based on the premise that Britain would have its own currency and set its own interest rates. The Conservative party learned during the election that most people agree that Britain should have its own currency, but we also learned that, for now, the issue is not uppermost in most people's minds; they will take an interest in the question of currency if and when there is a referendum. For now, they want us to address their main concerns of education, health, transport and crime; we should listen to what they say about those issues.

I am glad that this week we shall see the emergence of two groups representing business people, one group in favour of having our own currency and the other against. This is a good time for a debate between business groups. The arguments about whether giving up our currency would be good or bad for business are not by any means the whole issue, but they are clearly an important part. The Conservative party's views, and the views of those in the party who disagree with the party leadership, were set out clearly during the election campaign and, in my view, can now be given a rest.

In the previous Parliament, the Government enjoyed good luck, on which I congratulate them. My worry is that, during that short four-year period, when global conditions ran in their favour, they developed a sense of invulnerability, which is the enemy of prudence. They eroded Britain's competitiveness and committed us to levels of public spending that will erode it further. They are indifferent to the balance of payments problem and unconcerned about bureaucracy growing like a leylandii--[Interruption.] It is a fast-growing plant or, more exactly, a tree that can be a great nuisance to one's neighbours.

When the Government talk about the need to reform services--

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

Representing Chelsea, I resent that very much.

The Government talk with forked tongue about the need to reform services. Each briefing that the Government give the media points us in a different direction. They favour radicalism one day, the next day they pour scorn on any change to the arrangements that were set in place in the 1940s.

I foresee another four years during which the public will be disappointed by a Government who will be unable to live up to the expectations that were raised during the election campaign. For the Conservatives, it must be four years of hard work on the policy areas where we have failed to convince, on the issues that matter most to the public. Under whatever leader the party may choose, I am confident that that work will be done.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee 5:10 pm, 25th June 2001

We usually come to the Queen's Speech with a sense of relief that the general election is over. Given the performance of Mr. Portillo, it is clear that the show will continue for some time. It is rather depressing that, rather like the Bourbons, Conservative Members have returned to this place having forgotten nothing and having learned nothing.

It is depressing that a debate on the economy, on industry and, understandably, on social services should, from the Conservative standpoint, be unspecific about the nature of improvements in social services. They have not shown that any lessons have been learned over the past four or five weeks about improvements in conditions of business, competitiveness and enterprise.

Conservatives continue to hammer on about regulation and the burden that it imposes on business. When I talked to business people in my constituency during the election, I was relieved--given past experience, I was somewhat surprised--by their response to questions about the Government's handling of the economy. Indeed, there was almost praise. I would be going too far if I said that Labour was given a dazzling write-up, but there was not the hostility of the past. There was frustration among many traditional Conservative-supporting business people that they could no longer support the party that they had backed for most of their adult lives.

Former Conservative voters did not support the Conservative party because they felt that the party was singing from a hymn sheet that, if considered relevant, was certainly discordant with present times. When it came to addressing the need to improve competitiveness, it was felt that the Conservatives had little to offer.

Many of us have had discussions with friends from America. Some of us have had the opportunity to visit the United States to see how the economic revolution of the 1990s and the first part of the present decade has progressed. It is important that we learn--the process has already started--that it is no longer the business of government to create a climate in which failure is punished. Individuals who have been unfortunate to see their businesses go down should not be denied the opportunity to start afresh. It is common in the US for it to be said, "Perhaps it is better to give money to people who have failed in business because they have learned the harshest and severest of lessons in the hardest way. At least these are people who know what the world is about."

The Conservative party does not say anything about how to help industry and to make life easier for individuals whose businesses, for whatever reason, have gone through difficulty. Given the bankruptcies, disruption to businesses and loss of housing, for example, that was commonplace in the 1990s, especially in the early part of that decade, one would expect Conservatives to begin to examine the issues.

The United Kingdom also has the problem of attracting money to business. One of the interesting and encouraging aspects of the past four years is the renewed enthusiasm for backing small, start-up businesses. The Chancellor has gone a long way in helping to bring venture capital to many fledgling businesses. I welcome his success with the European Union and the Commission in gaining agreement on the venture capital funds for regional development that he will make available. That is the final piece of the jigsaw for regional development agencies, which will not only have funds of their own, but be able to afford access to additional moneys for businesses that need support and assistance.

It has already been said that perhaps the most telling aspect of the Government's approach was shown by one of their first actions in the early days of the previous Parliament when they established the independence of the Bank of England. The shadow Chancellor made an interesting point about lengthening individuals' service on the Monetary Policy Committee, but only for one term. Perhaps we should consider that. Closer attention could be paid to aspects of the MPC's activities and terms of reference, but it is early days in the Parliament and we have only four years' experience to draw on.

The Bank of England's findings and outpourings now enjoy a special status. Last week, the Financial Times reported that it had pointed out the dangers of the two-tier economy: the successful, dynamic business and financial service sector and the sluggish, deteriorating manufacturing sector. There are qualifications of that stark divide. Indeed, several financiers from across the political spectrum, who have written a letter that appears in today's Financial Times, point to the threat to our financial services of remaining outside the eurozone for too long.

Opening the debate is worth while, because, in the previous Parliament, Labour Members at least paid insufficient attention to the impact of our absence from the eurozone on the manufacturing sector. It is fair to say that the biggest problem was not our absence in the 16 to 18 months of its existence, but the high value of sterling and the impact on exports to other eurozone countries.

In the past, Ministers said that our competitors--for example, the Federal Republic of Germany--had to contend with a high or overvalued currency, and that the Germans coped with that for many years. Like the United Kingdom, Germany had low inflation and interest rates, but it also had a climate that was conducive to high investment in staff and equipment. Our understandable reluctance to introduce training levies to fund skill improvements or to create additional skills is no excuse for not using fiscal instruments such as tax credits to finance training.

The Government have correctly identified the digital divide as one of the major barriers to employment mobility. They have been imaginative and supportive in introducing tax relief on computers and help with information technology training, but surely it is sensible to extend such schemes to ensure that support is provided when new equipment that incorporates IT is introduced, for example, in engineering. Greater assistance could be given with training and providing training grants for firms that use new equipment.

My interests in the area are documented, and I am not engaging in special pleading, but the Government ignore at their peril the present plight of engineering and manufacturing. It is certainly fair to say that too much of the potential profit, which would be the source of such investment, is being denied because margins are being slashed to sustain price competitiveness with other contenders in the eurozone. The failure to invest means that any short-term benefit that could be gained from price cutting will soon be lost as our competitors with a lower cost base invest using resources denied to us.

All the bold initiatives in the enterprise for all programme, which I welcome, will require more time and support as soon as they can be put into place. Twelve months ago, some of us were saying that we hoped that the gap between the pound and the euro would narrow: our optimism was, sadly, premature. That is due in part to the continued attractiveness of sterling and the dollar, and in part to the lack of confidence that many people have in the structure and control systems of the eurozone, particularly in relation to the European central bank.

As I said earlier, one of the Government's great successes has been the Monetary Policy Committee. I wish only that the countries of the eurozone had the courage to adopt a similar framework. Whether we must await changes in structure or the achievement of the five goals to the Chancellor's satisfaction, if we have to devalue and change to become members, Ministers must grasp that nettle.

Photo of Geraint Davies Geraint Davies Labour, Croydon Central

Does my hon. Friend think that the success of the Monetary Policy Committee--in terms of its constitution, its being transparent and its proceedings being minuted, for example--offers any lessons for the European central bank? The ECB is a black box whose proceedings are not minuted and which is difficult for the markets to understand. The limit on 2 per cent. inflation--as opposed to 2.5 per cent. plus or minus 1 per cent.--means that, in some senses, it is not only misunderstood but, arguably, relatively deflationary.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

It is fair to say that the MPC represents, in many respects, the brightest and best in the economic field in this country--or, at least, the brightest and best who choose to make themselves available. It is fair to say that, in the European Union, the need for everyone to have a seat at the table and to be represented means that the body may be representative but not necessarily effective. Given the other constraints that my hon. Friend Geraint Davies has identified, there is a great deal left to be desired.

I noted the point made by my right hon. Friend the Chancellor when he expressed concern about the way in which the ECB operated. While that is not one of the five conditions, it is perhaps one of a subset of additional anxieties that he is known to express from time to time about the working of the eurozone. We shall need to look at this institution before we shall be able to join it.

Ministers must grasp the nettle and explain the advantages for business and employment of the currency that they support but do not, as yet, wish to join. The Government were probably right to avoid confusing the electorate before polling day, but we need far more positive signals now. We should be under no illusion--our view on the five conditions must also include an indication of the euro value at which we would be prepared to join.

If such a package could be announced, it would be at that point--and only at that point--that a Bill for a referendum could be introduced. Assuming that that were to happen within the two years that the Government have set themselves, we would perhaps be talking about June 2003--I suppose, after the local government, Scottish Parliament and Welsh Assembly elections. We could then consider the passage of the legislation, and a referendum could probably be held in September 2003, with entry into the system taking place 18 to 30 months later--perhaps in February 2005 or 2006. Entry could take place later, but that would have implications for a general election in 2005. On the other hand, the matter could be delayed even further.

Whatever happens, it is abundantly clear that the argument in favour of a common European currency has yet to be put to the British public with sufficient clarity and concision to convince them that sharing power over monetary matters with our European partners will help our export competitiveness and give greater influence over the operation of the currency while still allowing us a degree of independence to establish our own fiscal and social priorities in a way that will benefit people and encourage them to support the new currency.

Failure to address those challenges will deny the British public access to the truthful and responsible information on the issue and jeopardise the confidence of the same European partners with which we need to work so closely on so many other Community issues.

There is much in the Queen's Speech that I am happy to support. The enterprise for all initiative has built on much of the work of the Clinton Administration and of my colleagues on the Trade and Industry Committee, in which we argued the case for relaxing a number of fiscal measures, an improvement in respect of capital gains and creating the opportunity to introduce new capital to businesses by removing certain penalties, which did not encourage people to invest.

We must not only unlock the doors of many closed businesses, but help businesses in which families have been reluctant to give up control, even though successive generations of family members showed no interest whatever in the business. The old guard would say that giving up their controlling interest was not in their financial interest, but, with an imaginative approach to capital gains tax, that will begin to happen.

I would like to think that we could begin to establish an equity economy such as that which is not uncommon in certain parts of California. In return for services, expertise and assistance of a sort hitherto denied to many small businesses by the corralling character of capital gains tax, fledgling businesses would be able, with equanimity, to hand over part of the equity in the business to people who join it.

All that, plus a willingness to encourage competition and to root out the cartels and cronyism that often infect areas of our national business life, is to be welcomed. I wish every success to my right hon. Friends at the Treasury and my right hon. Friend the Secretary of State for Trade and Industry, who is in her place. Like me, she has been impatient with cartels. The previous debate in the House in which we both spoke was on motor car prices and it was clear that a sharp axe had to be taken to that Gordian knot. Although it has not quite severed the knot, we have begun to get to the bottom of the problem.

In a number of examples, in a more competitive environment and with a more fiscally friendly approach to the structure of business, we are achieving the breakthroughs that we need. I would only ask my right hon. Friends the Chancellor and the Secretary of State to reconsider the ways in which we could seek productivity increases. Productivity lies at the heart of our economic regeneration, but if we cannot get our people to produce more and better-quality goods, all the rest is just empty rhetoric.

I wish my right hon. Friends good luck in their endeavours and I welcome the Queen's Speech, but let us look to the future and try to achieve even more than we anticipate achieving. The Queen's Speech represents an excellent start that enjoys the confidence of the country. It certainly enjoys the confidence of the good people of Ochil and the business community there. Although I have not always regarded it as the strongest supporter and friend of the Labour party, that is the strong message that I got at the election, and I welcome the opportunity to say so today.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury) 5:29 pm, 25th June 2001

I apologise to the House, but for family reasons I shall not be present for the winding-up speeches.

This debate is important for two reasons. First, it started with a debate between two people openly contending for the leadership of their respective parties, and not doing so terribly well. Secondly, it considers the fundamental issues that are likely to dominate the Government's path in the next four years. It is about the delivery of public services, and the degree to which that is about putting money in or about reform and change in the method of delivery. That issue is already dividing Labour Members of Parliament and those in the Labour movement, and is likely to be the crux of the debate.

The fundamental issues are also reflected in the debate on membership of the euro. The shadow Chancellor said that his party should now set that issue to one side in its campaigning. I take him to mean that he believes that the Conservative party should no longer campaign for or against the euro. He said that two business groups had been set up, one for and one against membership, and that the matter should be left to them. That seems remarkably similar to the position of the Chancellor, who also believes that the debate on the euro should be left to business, so that he need not dirty his hands with the issue.

This Parliament is also likely to be dominated by the question of the degree to which the private sector should be brought increasingly into play in public services.

Photo of Mr Michael Portillo Mr Michael Portillo Conservative, Kensington and Chelsea

I am accustomed to being misrepresented most of the time on most things, but it was perfectly clear from what I said that the British people will want to debate our membership of the euro and that they will want their political parties to be involved in that debate when the issue is ready for a referendum. The timing of that remains with the Government. As no referendum is in prospect, I made the remarks that I did.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

I think that the shadow Chancellor confirmed that he believes that his party should not campaign for or against the euro until a referendum is called. That seems remarkably similar to the position that the Government, and certainly the Chancellor of the Exchequer, have adopted.

It was interesting to see the first outing of the revised version of the shadow Chancellor's approach to campaigning--or perhaps I should say the shadow leader of the Conservative party's approach. It was rather like attacking the Chancellor of the Exchequer with a pillow. I am not convinced that trying to be nice will necessarily deliver victory for the Conservative party. It has not worked for us over several decades, but we are always willing to offer advice on such an approach.

I want to deal with the imbalance in the economy. It is odd that a debate on the economy has involved so little discussion about where we stand. The Chancellor seems to believe that there are no problems facing us, and the shadow Chancellor scarcely touched on the issue, except to outline a policy to do the same as the Labour party but fractionally more efficiently with fractionally less waste. The truth is that there is a serious imbalance in the economy.

Internationally, American manufacturing industry is slipping into recession, and both the United States and Europe face real difficulties. However, our greatest concern should be about the British economy.

On the face of it, many things are going well. Growth in consumption in the year to March 2001 was 2.6 per cent. Consumers in the United Kingdom are still spending: private sector consumption is higher than that, at 3.2 per cent. Housing growth is about 7 per cent. on the year, and inflation remains very low. However, we see a different picture in farming and manufacturing. It is a picture of an economy in real difficulties. History has always told us that if we have real difficulties in the manufacturing sector and yet sustained, substantial growth in consumption, we shall run into all sorts of economic difficulties.

Industrial production and manufacturing output both fell in the first quarter, while services continued to grow almost as strongly as those fell. As a result, imports grew twice as much as exports. The Bank of England's agents report continued weakening of manufacturing in sectors including information and technology, which has provided something of an engine for the support of manufacturing exports in recent years. Productivity growth continues to be weak by international standards.

The economy is seriously unbalanced, which is reflected in services price inflation of 3.8 per cent. in April, compared to a slight fall in manufacturing prices.

Photo of Geraint Davies Geraint Davies Labour, Croydon Central

Does the hon. Gentleman accept that the reason why productivity growth is low but rising is simply that in recent years we have experienced a massive influx of unskilled labour, which is reducing average productivity? The pattern of average productivity in the United States is of very low growth, below that in the United Kingdom, which has risen now that it has reached a high threshold of employment. That is a sound foundation on which to build productivity that is accelerating.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

I do not accept the hon. Gentleman's view, on two counts. First, the history of investment in manufacturing under Labour has also been poor: the investment that might deliver later higher productivity growth has not been adequate. Secondly, one factor above all characterises the United States--a continuing large influx of low-skilled labour into employment. In fact, one of the real attributes of the United States economy has been its ability to encourage people into employment, something at which this country has historically been rather poor.

At its latest meeting, the Bank of England pointed out that the strength of sterling and the weakening world economy would lead to lower interest rates in the medium term, except that that might worsen the imbalances in the British economy that I have described. It drew attention to the very problem that I have illustrated, which it rightly described as a key policy dilemma. This is not something that the Bank of England, through interest rate policy, can resolve alone; Government policy is needed to address it, and we believe that it can be addressed only if we recognise that there is currently a real problem with the exchange rate with the euro. Government policy needs to take that into account, and I share the concern of Mr. O'Neill in that regard.

I have argued here in the past that if the Government made clear their exchange-rate targets in connection with our joining the euro--the levels at which they believe joining could be sustainable--that in itself would drive us towards a more sustainable exchange rate, as it drove every other European country that joined in the first round. That is exactly what we saw happening after the election, when the markets believed that there might be an early move to the euro. As soon as that happened, they started to focus on a long-term sustainable exchange rate rather than on short-term speculation.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

I am grateful to the hon. Gentleman for giving way yet again.

The hon. Gentleman has asked the Government to clarify the exchange-rate target that they should be pursuing. Perhaps he could clarify what he thinks the target should be.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

We have published a document that examines the conditions for joining, which includes an exchange rate in the range from 1.25 to 1.45 euros to the pound. That document is now nearly a year old. Clearly, any Government will have to look at the position at the time when they join, but we could hardly be clearer than we have been. Indeed, ours is the only party that has been willing to provide any answers. Some Labour Back Benchers have made the case, as have many outside, but few Front-Bench Members have made it here.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

I do not want the hon. Gentleman to confuse me with others. I think it very dangerous for Governments to think aloud about exchange rates. Only when other decisions are made should such an eventuality be considered. I consider it foolhardy of those on the Government side to start talking in an airy-fairy way about an exchange rate two, three or four years away from the possibility of a referendum. We should be very careful: we would see serious problems in the money markets if we went down that road. I hope that only when we were near to offering the country a choice would the Chancellor and the Cabinet arrive at an appropriate range of figures. No one worries about what the Liberals say, but a lot of people depend on what the Government say.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

The former Chairman of the Select Committee on the Treasury might disagree with the hon. Gentleman. In the previous debate on the matter in the House, the former Chairman took exactly the position that we take. Since 1997, 500,000 people in manufacturing industry and nearly 80,000 people in farming have lost their jobs. That was closely associated with the problems of the exchange rate. They might beg to differ with the hon. Gentleman. Certainly, many in British industry would.

Photo of Edward Davey Edward Davey Shadow Chief Secretary to the Treasury, Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Chief Secretary to the Treasury)

Did not my hon. Friend find it odd that, when the pound was beginning to go towards competitive levels, which was taking some of the pressure off our manufacturing, agricultural and tourism industries, Her Majesty's Treasury started to talk up the pound, making the imbalances in the economy to which he has rightly referred even worse?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

My hon. Friend is right. We must understand that the history of the Labour party--the devaluations in the 1960s--may make it difficult for it to address those real issues, but real they are for those in the manufacturing and farming industries who are attempting to make exporting pay. The sooner those taking responsibility for our economy acknowledge the fact that jobs are draining away day by day with the present exchange rate, the better it will be.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

I have given way to the hon. Gentleman and I shall make a bit of progress.

I do not want to give the impression that the problems in farming and rural communities are to do merely with the exchange rate. The problems in those communities are severe. There is a crisis there. Any hon. Members who campaigned in rural areas during the general election cannot fail to be aware of that--Labour Members as well as others. I hope that those Labour Back Benchers who represent some of the more rural communities will, as we will, vigorously press the Government for more effective action to tackle the crisis in rural areas--the absence of measures to do so was one of the worst omissions from the Queen's Speech. It was as if a crisis were not happening. I assure Ministers that that crisis is happening: it is there strong and hard for all those in rural communities who have lost services, jobs and homes--for many farmers, the farm is their house as well as a source of income.

I turn to the issue that I thought might be pressed further today: the future of public services. Recession or not, the Government's cautious assumptions should mean no short-term problems for Government spending plans. Indeed, the assumption of 2.25 per cent. trend growth is arguably over-cautious, but just as in the general election we argued that the Government should be judged on their record on public spending over the previous Parliament as a whole, not simply by pre-election spending, the Government will be judged in the next election on their overall record over their two Parliaments.

There are serious questions. The Government's spending plans run only to April 2004 and the new ones will be announced only in June 2002, so we have no picture of Labour's plans for the second half of its term in office, but, as the Institute for Fiscal Studies has identified, if public spending were to continue to grow at the current rate of nearly 4 per cent., there would be a gap in Government income of some £10 billion. Of course, the Government have not announced that spending plan. The Conservatives were wrong when they said that there was a tax gap--a funding gap. There is actually a spending gap.

The question is not how the Government will fund their plans, but what their plans will be in the second half of the Parliament. That goes to the fundamental issue of delivery on pensions, education, health and the other public services. The issue is whether the Government believe that there is a need to fill further the pot for investment in public services, or whether their current spending proposals have gone broadly far enough. If they believe the latter, after the feast in the general election campaign, we shall see a return to famine in the second half of this Parliament.

The argument that growth will deliver all is made both by Conservative Members, who say that growth will fund tax cuts, and by Labour Members, who say that growth will fund their never-ending spending increases. However, if it were true that growth delivered all, the Thatcher years would have been a time of enormous bounty in the national health service. Year after year, the Thatcher Government used precisely the same argument: that economic growth delivered sufficient real-terms increases in health spending.

The truth, however, is that wages dominate public sector costs. Consequently, the public sector can deliver more nurses, doctors, operations and teachers only if wage growth is less than economic growth, unlike the private sector. As the figures clearly show, that is exactly what has been happening: the wages of those working in the public sector--teachers, doctors and police officers--have been held back.

In the previous Parliament, on average, real-terms private sector wage growth was more than 15 per cent., whereas it was only about 10 per cent. for doctors and teachers and about 6 per cent. for police officers. Moreover, that erosion has been not just a short-term process, as improvements have been delivered for a much longer period by restraining public service pay levels. In the 1990s, in real terms, private sector pay levels exceeded those in the public sector by almost 10 per cent., with nominal growth of 42.7 per cent. in public sector pay compared with 51.4 per cent. in the private sector.

It is the Government's misfortune that that disparity has reached such a point that they are having real problems in recruiting and retaining staff, whereas the previous Government encountered largely complaints about the disparity. The real problems of recruiting doctors, nurses, teachers and police officers are now visible to everyone, and they are one of the main reasons why the Government failed to deliver the improvements that they promised in the previous Parliament. Ministers have made some money available, but they have not been able to find enough people to fill even those posts because the rewards are not sufficient.

The issue is about not only pay, but conditions and the never-ending revolution in health and education that makes the job unbearable for many who simply want to get on with treating and educating people. Nevertheless, pay is now a real issue.

I should like finally to touch on the issue of bringing the private sector into the provision of public services, as if that were a panacea. The Government are offering private sector involvement as a partial solution, whereas Conservative Front Benchers seem to offer it as the only solution. However, a couple of myths need to be demolished, the first of which--it has clearly suckered the Deputy Prime Minster, although I very much doubt that it has suckered any Treasury Ministers--is that bringing in the private sector will unlock new revenue sources that would otherwise be unavailable.

On 20 June, on the "Today" programme, the Deputy Prime Minister said that, "if you can prime" transport investment

"by private money, you can reduce the pressure on resources that are available for education and health."

The fundamental truth, however, is that the Government have to pay for public services regardless of whether they are delivered by the private sector or the public sector. Private sector involvement is not a panacea for a shortage of public funds. As those in the public sector know, they are being forced into involving the private sector as a way of getting round Treasury rules. Local government especially is being forced down that route. However, on no basis can it be seen as free money; those services have to be paid for one way or another.

The Institute for Public Policy Research, effectively, made the case today that if the private sector is to be used in the delivery of public services, it must be on the basis that it can do something better than the public sector. In some way, the private sector must be able to get better value for money or deliver more caring services more efficiently. Whatever it is, there must be some such benefit.

The problem is that Treasury dogmatism has not allowed a level playing field in the assessment of whether the private sector brings real benefits, issue by issue. The IPPR demolishes Labour's case on National Air Traffic Services and London Underground almost as effectively as many Labour Members and the Mayor of London have already. If we are to judge use of the private sector, it must be on the basis of effective competition, with alternatives. If something can be delivered more cost-effectively and efficiently in the public sector, it can only be ideology that drives the Government into using the private sector.

Yet all the studies show that, in many cases, the decision is not taken on the basis that there is an effective public sector comparator, showing that the private option is cheaper. We need effective comparators that allow the public sector and other alternatives to be tested so that we ensure that the private sector is not used when it will waste public resources.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

The hon. Gentleman's argument does not allow for the fact that a number of public sector projects over the years have been over-budget and overdue; not just the Jubilee line, which was the most recent case, but a stream of hospital projects. The 39 hospital projects now using private finance initiative money are not in that realm at all. If we were not to recruit expertise from the private sector--which the hon. Gentleman seems to oppose--a large part of the Government's planned investment would go down the drain in wasteful and inadequately managed projects where the risks were not shared adequately with the private sector.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

I challenge the hon. Gentleman to come up with authoritative studies that support his position, because all but one have shown that money has been wasted by going down the PFI route. The IPPR report does not even attempt to defend the use of PFI. We know full well that public sector projects may sometimes overrun, but so undoubtedly do those in the private sector; the channel tunnel link is the most damning example of them all. However, if the hon. Gentleman is confident of his position, I am sure that he will agree that it is important that we test it against proper comparators and with the proper exposure of figures. The Treasury has not made the comparators public, nor has it been willing to publish the evidence.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

When the Treasury Committee looked into the matter, we had before us an analysis by Arthur Andersen that showed a range of different projects--both IT and construction projects--for which the average saving was 17 per cent., compared with the public sector comparator. The evidence appears to have been dismissed by the hon. Gentleman.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

The answer is that I made the exception of that one study. The Andersen study is always the one quoted by the Government, but it was based on expected savings and not on those achieved. Those savings were often not delivered, as subsequent reports on these projects have shown. If the Government are so confident of their position, why do they not make the information on the comparators available? They hide behind commercial confidentiality; it is hard to see how the public sector comparator could be a matter of commercial confidentiality.

Photo of Geraint Davies Geraint Davies Labour, Croydon Central

The hon. Gentleman should know that a number of studies by the National Audit Office were reported to the Public Accounts Committee, which has a summary of them, and show that a large number of the PFI projects do work.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Treasury)

The hon. Gentleman knows full well that although a series of reports have been published, the Government always quote the Arthur Andersen report because it is the only one to support their position. The survey was based on expected savings, rather than delivered savings.

Do not get me wrong; I am not arguing that there is never a role for the private sector. However, just as in the past--when the Conservative party made the mistake of believing that privatisation was always right, no matter what--we now see Labour Front Benchers going down the same route; arguing without being willing to show the public sector comparator that the use of private finance is a benefit. Indeed, they distort the position on the "Today" programme and elsewhere by pretending that they are making available new money, rather than spending Government money in a different way that can be judged only on the basis of whether it delivers better services.

There is one final point that I want to make. [Hon. Members: "Hear, hear."] I have probably spoken too long for Labour Members and for the Deputy Speaker. However, my final point was not touched on by the IPPR. Labour Members ought to look at the report if they seriously believe that there are no real problems with delivery; there are, and the Government must address them. One area, however, is scarcely touched on by the IPPR and it is the area about which we in this place should be most concerned: accountability.

There is real concern about people's ability to have a real say over how their public services are delivered and developed when the process is taken out of the hands of publicly accountable authorities. That is particularly so, given the appalling record in the public sector of setting contracts in terms that protect the public when the private sector is brought in. We have heard of everything from the selling on of contracts at huge profit--which can only mean huge losses to the taxpayer or that we are forgoing funding for improvements that might otherwise have been made in the public sector--through to hospitals suddenly finding that their patients are being charged for services that were forgotten about in the contracts. PFI hospitals that even charge people for receiving incoming telephone calls are just the tip of an iceberg of Government ineffectiveness in using the private sector effectively in public services.

This may be the defining issue of this Parliament, not least because the Government may duck the euro issue, and it will be fundamental to the future of our public services. Those, mostly on the Labour Benches, who believe in the importance of public services and in a national health service and a national education system that guarantee high quality to every child and every patient will know that getting this issue right would mean great improvements in public services. However, getting it wrong could mean that we lose the argument to the Conservative party for ever. Therefore, I say that they must tread carefully.

Photo of Chris Bryant Chris Bryant Labour, Rhondda 5:58 pm, 25th June 2001

I realise that pride comes before a fall, but I stand with some considerable pride as the new Member of Parliament for Rhondda. I am proud for two reasons. First, Rhondda is the only seat in the country to have been represented by a Labour man ever since the constituency was created and miners were first allowed to vote, in 1885. Secondly, for any Welshman, the Rhondda is the epitome of our industrial heritage and takes a special place in the hearts of all Labour men and women, especially those from Wales.

My predecessor, Allan Rogers, took a similar pride in representing Rhondda, something he did for 18 years. I know that many hon. Members will agree that Allan was a persistent and determined representative of the people of Rhondda and a committed and loyal parliamentarian. He was a Member of this House through the toughest of years for mining communities and most of his time was spent on the Opposition Benches, yet his work as shadow Defence spokesman during the Gulf war, on the Security and Intelligence Committee and in the Inter-Parliamentary Union won him respect and friendship from Members across the House. I pay tribute to him.

There are those who have said, however, that I am scarcely the stereotypical Member of Parliament for the Rhondda, with its macho image and non-conformist tradition. Apart from anything else, I am, thanks to the now repealed House of Commons (Clergy Disqualification) Act 1801, the first Anglican priest to take a seat in this House for 200 years and the last person ever to have resigned his orders under the Clerical Disabilities Act 1870--a recondite piece of legislation that has also now been repealed. It is, I suppose, no surprise that my career has been referred to as more of a Daily Mail headline than a curriculum vitae.

Most of the stereotypes concerning the Rhondda are inaccurate. Contrary to public perception, the Rhondda is not one valley but two--the Rhondda Fach and the Rhondda Fawr. Its two rivers no longer flow black with coal dust but have herons and wild mallards nesting there. I am sure that Ferndale rugby football club will forgive me for saying that our most successful sports team in recent years is not a rugby team but Britain's premier women's basketball team, the Rhondda Rebels.

The arts have played a central part in the Rhondda's heritage. Not everyone in the Rhondda sings, although we have at least three truly first-class male choirs--the Treorchy, Meibion and Pendyrus. Nor does everyone play in a brass band, although we have the best brass band in the country. That is not a vulgar boast but a simple statement of incontrovertible fact, as the Cory band, formerly the Ton Temperance band, is not only the British brass band national champion but the British open champion. This is the only time that both titles have been held by one band at the same time.

The Rhondda's most famous son was neither a Labour leader nor a rugby player, but an actor. The star of "The Guns of Navarone", "Zulu", "The Cruel Sea" and the rather ambitiously named "Sodom and Gomorrah" was one Stanley Baker, who was born in Ferndale and died, aged 49, in 1976, only a month after having been knighted. His ashes are scattered on Old Smokie, the tip behind my house.

Like all the south Wales valleys, the Rhondda is often portrayed by the London media as parochial and xenophobic. Nothing could be further from the truth. The Rhondda has always welcomed strangers and foreigners. After Paul Robeson's visit to the Parc and Dare theatre in Treorchy many years ago, he was made an honorary Welshman. Thanks to the influx of Italians from the village of Bardi, I suspect that we have more Italian cafes in the Rhondda than in Kensington and Islington combined.

As for political myths, Conservative Members--the few that there are--will be delighted to know that there are many Conservative clubs in the Rhondda. It was said that if everyone who drank in a Conservative club in the Rhondda voted Conservative, the seat would have been Tory for 150 years. I am delighted to say that the people of the Rhondda stick to just drinking Tory.

One stereotype about the Rhondda is, sadly, true. Ever since steam coal was first found in Dinas in the 19th century and the Klondike rush for black gold began, the Rhondda has suffered significant social problems. Many of the most deprived wards in Wales are in the Rhondda. Although unemployment has fallen dramatically under Labour--from 13.9 per cent. in 1997 to 7.9 per cent. and going down today--still far too many people are unable to work. Ill health, especially in the form of chronic conditions such as aeschemic heart disease and diabetes, are a modern plague. For too many households, the only income comes from the benefit system. Four in five people in the Rhondda own their own home but many of those houses suffer from terrible damp and are, frankly, unfit for human habitation. Drug abuse, especially heroin, claims an enormous clutch of lives every year.

Where do the solutions lie? First, the Rhondda relies on a Government who are committed to sound finances and to combating unemployment. It depends on a Government who are committed to a minimum wage. I particularly welcome the commitment to increasing the minimum wage for young people. The new deal has made a dramatic difference to hundreds of young people whom I have met in the past year.

Secondly, the Rhondda is not unique in being a geographically hemmed-in community. Like others, we need the infrastructure that makes employment and new businesses a possibility. We need both traditional infrastructure, in the shape of roads--most notably a relief road for the Rhondda Fach--and modern infrastructure, in the shape of high-speed wide-band access. One of the most successful recent ventures in the Rhondda is the Pop Factory, a television and new media studio based in the old Corona factory. I am sure that right hon. and hon. Members remember the advertisement about every bubble having passed its fizzical. This and other ventures need the Government to ensure the fastest possible roll-out of broad-band services. The new economy must be for the whole country, not just for a few.

Thirdly, we need a real assault on the causes of chronic ill health, including alcohol and drug addiction, so that more people want a job and are able to hold one down. Incidentally, many of the Rhondda's health problems are still the legacy of the mines. Although I recognise the significant steps that the Government have taken to hurry through miners' compensation, no Labour Government can rest until justice is truly and finally done to all our miners, their widows and dependants.

Fourthly, we need a new spirit of enterprise so that young people do not spend their last year at school wondering where they will be signing on but when they will be starting their first job. I heartily welcome the Government's declared aim of seeing more than 50 per cent. of young people going on to university, but I urge Ministers to do everything in their power to remove any obstacles that prevent young people from poorer communities and families from going on to college.

The people of the Rhondda are not looking for handouts. People simply want a chance to stand on their own two feet, to build a decent life for their family and to retire in dignity. These are honourable aspirations, and my constituents still look to politicians to make a real difference by waging an all-out assault on the pernicious and often seemingly intractable causes of poverty. Those aspirations are what democratic politics is all about. That is why I believe that the democratic system is so important.

It is not for a newcomer to lecture the House on its practices, but one of the reasons for young people--and, for that matter, not so young people--failing to take an interest in politics is, I believe, because the way in which the House does its business is still incomprehensible to the majority of the population. They hear of a debate and a hefty majority vote in Parliament to ban foxhunting, for instance, and presume that that is the end of the matter. They do not understand why it still has not become law. I hope that my right hon. Friend the Leader of the House will be able to make significant progress on further reform in this House. However, the system is often not as complicated as people think. I was telephoned the other day by someone from a Minister's office who asked whether I would care to come and meet the Minister for tea. When I recounted this to my largely unpolitical partner, he replied, "I didn't know there was a Minister for Tea. Can I be Minister for Scones?"

Before I finish, I wish to refer to the first Member of Parliament for the Rhondda, William Abraham. He devoted his first speech, in 1886, to arguing for the disestablishment of the Church in Wales. Mabon, as he was known, said that the Church of England had entirely failed to meet the requirements of the people of Wales. In the spirit of his words, I am delighted that the Queen's Speech includes a commitment to complete the process of reform of the second Chamber, but I still find it difficult to comprehend why it is the exclusive preserve of the Church of England's Bench of Bishops to provide spiritual advice in this place. I believe that Britain would be far better served by a fully secular state, and that the Church of England's political contribution would be far stronger were the Church to be fully and genuinely independent. If we are to retain the Lords Spiritual-- I say "if" because I would prefer a fully elected second Chamber--surely they should include representatives of all the faiths and denominations.

In conclusion, the socialism that I espouse is based on some simple moral facts. The market was made for humanity, not humanity for the market. Poverty is not a mysterious dispensation from on high, but has very human causes and is susceptible to human remedies. Inequality gnaws at the moral fabric of society. I refer the House to the words of a former Member of this House who was also a priest in the Church of England, although in a different order from my own. As John Donne said:

"No man is an Island, entire of it self . . . any man's death diminishes me, because I am involved in Mankind; And therefore never send to know for whom the bell tolls; It tolls for thee."

I welcome the Queen's Speech, because it expresses that same belief in hard, practical and pragmatic measures, to ensure a strong and stable economy and to improve public services--measures that give new hope to the people of the Rhondda.

Photo of Mr Teddy Taylor Mr Teddy Taylor Conservative, Rochford and Southend East 6:10 pm, 25th June 2001

It is a great pleasure and honour to congratulate Mr. Bryant on his outstanding maiden speech. It stood out as a model maiden speech among those that I have heard. We have been told that hon. Members should use such speeches to make interesting and non-controversial remarks and to promote their constituencies. He did all those things, and many of us will feel like going to the Rhondda for our holidays, having heard about all those temperance bands and Conservative clubs. However, the great thing is that he spoke with sincerity. I am sure that hon. Members on both sides of the House will wish him every success and happiness in his future membership of the House.

It is a great pleasure and honour to speak again as the newly elected Member of Parliament for Rochford and Southend, East, where the Conservative party had a rather remarkable result. We not only gained a substantial swing, but secured a 54 per cent. share of the vote, which I am told makes the constituency the 10th safest Conservative seat in the country. In fairness, I point out that that result was not unique. Essex was rather remarkable, as we achieved similar swings in such places as Upminster and Romford, where we won seats from the Labour party, and in Dagenham, where a previous Labour majority of 17,000 was slashed to such an extent that we think we can win the seat next time.

I mention those facts, which are in many ways irrelevant, only because all the candidates were good, solid and true Conservatives. That might make people think twice about the idea being promoted almost everywhere by those who suggest that the way to recovery for the Conservative party is for it to adopt policies of delicate confusion that are only slightly to the right of Ken Livingstone. The party may find that other solutions have more merit.

I want to make six points, the first of which concerns the single currency. I assure my right hon. Friend Mr. Portillo that I am not making any sort of personal attack. He said that we should not mention the issue, but there are some aspects about which we must speak. I returned to the House after the election only because I was looking forward to taking part in arguments on the referendum, which is the last battle over Europe. The impression that I gain from the Government and from people connected with the banks is that the referendum is unlikely to occur in this Parliament, if at all. However, that is not the issue. The Government must give serious consideration not to whether we should prepare for a referendum to enter the single currency, but to what on earth we and our colleagues in Europe should do if that currency collapses, like every previous one.

That point must be considered, because all hon. Members, including the small number of enthusiasts for the single currency, must be aware that the British Government, the American Government and even the Japanese Government have been doing all in their power to boost the value of the euro, without any real success. We know also that the Governor of the Bank of England was told to sell a massive amount of gold and to put 40 per cent. of the proceeds directly into euros, even though that meant a massive loss for this country. Although that has been done, the euro has still been unable to recover. Mr. Beard, who was a member of the Select Committee on the Treasury, will be aware that Eurobonds have been issued as a further means of trying to promote the currency.

If hon. Members look back, they will see a plain fact: in respect of all previous single currencies--I can find records of only 11 such currencies--the same thing always seems to happen. First, one area becomes artificially prosperous, as the Republic of Ireland has. Another area then begins to suffer serious hardship, as has begun to happen in Germany, whose Minister of Finance said recently that he was now thinking in terms of zero growth. There is also concern among German banks. A bank chief called Hans Reckers said:

"There is in Germany a . . . combination of factors that could lead to recession."

Business analyst Paul Hoffmann said that a recession before joining the currency would be

"the financial equivalent of the D Day invasion being stopped on the beaches."

Although hon. Members may want to ignore it, there is increasing depression and worry in Germany. We have found in relation to all single currencies that widening gaps mean loss of confidence, falling value and interest rate rises.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

Will the hon. Gentleman explain how the dollar has survived?

Photo of Mr Teddy Taylor Mr Teddy Taylor Conservative, Rochford and Southend East

As the hon. Gentleman knows, a single currency can survive only if there is one Government, one Treasury and a feeling of nationhood. America has one Government and a Treasury that controls its affairs. It also has a feeling of nationhood. If one tells people in New York, "We're doing something nasty to you, but it will help people in Florida", they will understand, as they view Florida as a part of the same nation. However, if one were to tell people in Sweden that something nasty was being done to help people in Greece, they would think that something rather strange and unusual was happening. I say to the hon. Gentleman and to other hon. Members, some of whom remain enthusiastic about the single currency, that they should look around the world at every previous example of such a currency.

There have been two such examples in Europe: the Scandinavian and Latin currency unions. One might think that the Scandinavian project should have been an ideal union, as it involved the joining together of countries that had no great differences, and ask why it did not work. It failed for the same reason that single currencies never work. If that happened in respect of the euro, what would the Government's policy be? In the Conservative party, things are special, as we are not expected to talk about the issue, but no matter who is in power, we will have to face up to the situation and ask what must be done.

I suggest that we must find some means whereby European countries can disengage if circumstances work out as I suggest. Of course, it is possible that I am wrong. I fully accept that I might be mistaken, but I suggest that all the available evidence of previous single currencies shows the way they go. If we do not make appropriate provision, there could be disaster not only for Europe but for all the countries associated with it. I hope that the Government will give some indication of what plan they would follow if things went terribly wrong, as the evidence shows pretty overwhelmingly that that is what will happen.

The second of my six points is a straight question: what will the Government do about the extension of the European Union, which is very important for jobs in the United Kingdom? When the people of Ireland were given a democratic opportunity to express their opinion, they wanted to say something, as has happened frequently in the European Union. Unfortunately, the EU has been depriving people of such opportunities. The people of Ireland were the only ones who were given a chance to express their views on the Nice treaty and we know what they said. If the people of Germany were given a chance to say what they thought about the single currency, they would throw it out of the window. The people of Ireland had a chance to decide, and they said, "No, we don't want the Nice treaty."

Extension of the EU could have substantial costs for Britain. Various European grants come to Britain. They are not of much help to us, because every pound costs us at least £2 before we start, but if the European Union were extended, most of them would disappear. That would have consequences for jobs, as well as for agriculture. Nobody in agriculture wants to talk about the basic problem of massive over-production in the European Union. Nobody wants to face up to that problem because there is no solution. If Europe is extended, the activities that will occur in at least two of the new member countries--Poland and Romania--will mean a massive increase in agricultural production. What would happen at that stage? What is the Government's policy?

What worried me most about the Irish decision was that when the people of Ireland said no, which should have meant that Nice did not go ahead, EU officials made various statements indicating that they would proceed irrespective of those views. If the people of Ireland do not change their views, will the Government make it abundantly clear that they will not try, by one means or another, to extend the European Union? The principles of the EU have been undermined in many ways. Unless we are prepared to stand firm and ensure that a member state does not get something that it does not want, we will be letting those principles down.

The third issue that concerns me is economic stability. During the debate on today's private notice question, I asked about asylum seekers. The Minister for Police, Courts and Drugs said that it was unfortunate that I raised that subject. As someone who has never stirred up such problems, I can only say, in all sincerity, that I have seen good race relations seriously undermined in parts of London, in Southend and elsewhere.

One joy of coming to Southend from Scotland was that there was none of the religious tribalism that unfortunately still exists in Glasgow and other areas. There were good relations between the different races and religions. Indeed, Southend has two mosques and two synagogues. However, the situation has deteriorated alarmingly. A friend of mine--a Turkish Cypriot licensee of a restaurant in Southend--was abused in the high street and told, "Go home, asylum seeker." Another friend, whom I know very well, is a lady from South Korea who has two delightful children; she received similar treatment. I am not saying that Southend is special. Hon. Members know that such behaviour goes on. I accept that it is not an easy issue to resolve, but the basic problem is that the public have gained the impression that asylum seekers are not being dealt with effectively.

I hope that the Government will introduce legislation to ensure that speedy decisions are reached. Let me give a simple example. A couple from the Congo came to my surgery on Saturday. The London borough of Barnet--I do not know which party is in charge of that organisation--dumped them in Southend in the Palace hotel, which is neither a palace nor a hotel, more than a year ago. The couple have not heard from it since then. Their lawyers wrote two letters to the Home Office in February and May asking what was happening and what decisions had been made about them, but they have received no word or acknowledgment. Anyone who tries to pretend that such problems can be easily resolved is misleading people. However, something must be done if we are to preserve good race relations because they are a desperately important part of our community and vital for jobs and prosperity.

Fourthly, on public services, special attention should be given to the problem of seaside resorts. The Minister will know that they have a higher proportion of elderly people who require more attention from the health service. In addition, there are housing problems. The concentration of bed and breakfasts and houses in multiple occupation means that we have more homeless families. Rochford, as I have mentioned to the Minister before, has been treated appallingly by Governments of both parties. It has £400,000 less in annual grants than it received six years ago. It would help enormously if Ministers paid brief visits to seaside towns because they would then realise that their problems are special.

My fifth point relates to something raised by the hon. Member for Rhondda. I know that all Governments have problems of one sort or another, but it is important that this Government tell the truth on employment and related matters. I know that the Minister, whom I greatly admire, tells the truth on everything. I hope that she can tell me what the reference to foxhunting at the end of the Queen's Speech means. I appreciate that people are fanatical and passionate about that issue. Some people care more about the welfare of foxes than the welfare of democracy; others consider the abolition of foxhunting to be a greater threat to our democracy and freedom than anything else.

It is crucial that we are told what is happening. As someone who is part of an unpopular minority in my party on the issue, I have the impression--rightly or wrongly--that the Government are not pursuing it. Instead, we will have another private Member's Bill, a long discussion, with everyone shouting at each other, and nothing will happen. Some people will say that I am wrong, but the Government should tell us whether they have changed their mind and, if so, why. People who are campaigning on both sides want to know the score. If any Labour Member wants to intervene and explain the position, I shall be happy to give way. I have the impression that no one is clear. The sooner we have a straight answer, the better.

My final point is extremely important. I gained the impression--perhaps because of my advanced age--that local authorities face problems, especially on housing, that are more serious than they have been for a long time. When I arrived in Southend 21 years ago, there was one multistorey block of flats that everyone wanted to live in. Unfortunately, because of two or three impossible tenants, life in those flats is becoming unbearable for most people. Local authorities are spending more money on maintenance of housing schemes than before, but the activities of small groups of people make it difficult to keep up standards. Local authorities cannot do much about that because of Government rules and regulations on what action can be taken on the removal of tenants. We must face up to the problem fair and square and say that there is a case for concentrating in particular areas difficult tenants who make life impossible for others, and to focus public services on assisting them.

I hope that I have not bored the House. All I have done is raise issues in which I believe passionately. We will be in deep trouble if we do not face up to them. Unlike the hon. Member for Rhondda, who has just arrived in the House, I have been here for about 37 years and have rowed with all parties and many individuals. One thing worries me more than anything else. Although hon. Members make interesting speeches and give wonderful orations, they do not want to face up to and talk about many issues, such as the single currency or bad tenants. I wish they did because then, irrespective of who might win the election, more people might come out to vote for MPs.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth 6:27 pm, 25th June 2001

I assure the hon. Member for Rochford and Southend, East (Sir T. Taylor) that he rarely bores the House. I, too, pay tribute to the graceful and self-confident maiden speech of my hon. Friend Mr. Bryant. He paid a justifiable tribute to his predecessor and constituency while giving a flavour of his political philosophy and what motivates him. He will have a long and distinguished career in the House.

I am pleased to speak in a debate that was opened by my right hon. Friend the Chancellor. Much has been made of the distinguishing characteristics of this Parliament, but I do not believe that they will be the referendum on the euro or the involvement of the private sector in the public services. Instead, I hope that it will be distinguished by the fight against child and pensioner poverty and the campaign to bring about full employment, all built on a platform of fiscal stability and prudence. Major progress in those aims and adequate funding for public services will distinguish this Parliament.

Before I deal with public services and the role of the private sector, I want to address three other issues. My constituency, like the Rhondda, is a former mining area. Since the creation of the Labour party, such areas have been served by Labour party representatives and, before that, by trade union activists in the mining industry. Sadly, the mining industry was destroyed for vindictive reasons by the Conservatives. They can never be forgiven for that act and its impact on the communities that we represent. We are trying to lift them up off their knees, where they were left by the Tory Administration. The task of regenerating those areas, villages and communities has only just begun.

Four years seems a long time in an individual's life, but it is a relatively short time in the life of a community. During the election campaign, I was confronted with utter desperation, serious deprivation, absolute poverty and the most acute problems, not just in one or two areas, but throughout the former pit villages, which now have nothing at all, not even the infrastructure with which to attract new industry.

We face very difficult problems on the Yorkshire coalfield, especially in Hemsworth. Although we are bringing about regeneration at a macro-economic level, we must carefully consider the creation of micro- economic tools to attempt to tackle the acute pockets of deprivation found throughout the country, especially in the coalfields.

No doubt the Chancellor's emphasis on the role of regional development agencies is part of the thinking that suggests that we must somehow reach down much more sensitively into the areas where small pockets of deprivation continue to exist. I look forward to the regional development agencies being developed in the next four years. However, those agencies are not accountable in the way a democratic body would be, so at some time or other we should move towards elected assemblies, to which the local population gives its consent. I am sure that the consent of the local population would easily be found in Yorkshire. I should like elected regional assemblies to deal with regeneration.

There is a particular problem with long-term disabled and long-term sick people in our communities. Probably about 2 million people are not included in the economic register and thus not counted among the unemployed, but there are large numbers of long-term disabled people and we must find ways to help them back to work wherever possible.

Drugs have become a very serious problem in the mining villages and probably elsewhere as well. In the area that I represent, the people who push drugs into our communities are gradually winning the war and there is a sense of hopelessness among those communities. Only last Monday, I met some people in South Elmsall, in my constituency, who told me that the drug pushers are waging war on their community. We need to see rapid action.

The Queen's Speech refers to increased powers for those in the criminal justice system. I welcome those powers, but we need far more police on the streets and in the communities--perhaps more than we have committed ourselves to in the manifesto. The war against drugs must be won, because the cancer of drugs is rotting away all the neighbourhoods, villages and communities that we represent.

I want to mention the problem of housing. A housing Bill will be introduced to address some of the points made in the housing Green Paper. However, the most acute problems identified in the Green Paper will not be addressed in the first round of legislation. In particular, I refer to those areas where no demand exists for the houses that are for sale.

It is impossible to sell houses in communities such as the City and Fitzwilliam, or the Bronx, in South Elmsall, because there is absolutely no demand for them. A street of those houses could not be sold for £5,000 or £6,000. People are trapped in those communities. They are unable to escape and they are gradually sinking further into deprivation. We need urgent action to tackle such low demand, where it is a problem. I know that it is not a problem everywhere throughout the nation, especially not in the south, but it is a severe problem in my constituency.

Allied to that problem, but separate from it, is one that involves private landlords. Unscrupulous private landlords have taken over large amounts of very low-cost housing without a care for the tenants who have been placed in that housing. That has led to the further deterioration of the very communities that I have described. Somehow or other, I hope that we can find a non-bureaucratic technique to license and control private landlords, where their activities are clearly generating further deprivation, poverty and disorder.

In particular, I want also to refer to the public services. Clearly, the adequate funding of our public services represented the dividing line between the parties at the election. We know where the Tories stand; they are in favour of reducing public spending and, as a corollary, the public services. We must ensure that the public services are adequately funded, but reform is allied to that issue. I would not defend the existing structure of practices in the public sector in all its aspects. The Morrisonian model, on which most of our public services are based, is hierarchial and, in many cases, bureaucratic and unresponsive. Its structure is frequently insensitive to the needs of the customer. Its management systems are frequently uniform, rather than diverse. Clearly, it urgently needs reform.

I should be happy to see the modernisation of the public services, together with adequate funding. A modernising Government should be involved in reducing the number of layers of management, in tackling bureaucracy and in creating heterogeneity in the public services. I cannot however accept that introducing the private sector to the public services is the solution.

I stand on my political record as someone who has wanted to modernise the Labour party and our country. As the leader of Leeds city council, I did a lot to try to modernise services. When I was elected to the House at a by-election, I made it clear that I was a moderniser. For the first 18 months, I was Parliamentary Private Secretary to my right hon. Friend Mr. Mandelson, who is the arch-moderniser, and I had no trouble with that at all. But modernising the public services in the public sector is one thing; introducing the private sector is entirely different.

I may be quite a rare being in the House--I was a manual worker in the private sector building industry for 12 years or so, and I know precisely how the private sector works and how poor its management often is. I do not believe that the private sector is a paragon either of managerial excellence or even of particularly cost- effective service provision. There is a range of reasons why one should be extremely cautious about the introduction of the private sector to the public services. I do not believe that it has yet been shown that private sector provision is cheaper than public sector provision. There have been several studies, and the best that can be said is that they are not conclusive.

From personal experience, I do not believe that private sector management is necessarily and inevitably more efficient than the public sector. The records of some of the larger public sector construction projects that have been led by private companies are, at best, uneven. The private sector is arguably good at cutting costs and making efficiency savings. That would be its claim, but that does not inevitably mean that it is good at providing high-quality public services, especially as those services tend to be monopolies such as those that exist in health, education and, in large parts of the country, transport.

The private sector does not understand social exclusion at all, while the public sector is largely about addressing the processes of social exclusion. In fact, I would argue that the private sector is in large part the engine of social exclusion rather than the solution to it. It remains to be demonstrated that private sector solutions to social exclusion can be found.

Photo of Geraint Davies Geraint Davies Labour, Croydon Central

My hon. Friend mentioned that entire rows of houses in his constituency are worth £6,000. Does he agree that the keys to getting rid of social exclusion in his area are regional development agencies, lower capital gains tax, the attraction of venture capital, and investment in transport infrastructure in order to connect his people to the market and to provide more skills; and that the private sector is a crucial, central part of that process of creating prosperity?

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

I was talking about the public sector provision of health and educational services, rather than housing, but let us take the example of housing. Those of us who are slightly older than others in the House clearly remember the inter-war period and before, when private sector slum landlords operated over huge tracts of our country. The process of social exclusion in housing is one of the most disgraceful episodes concerning the private sector in this country's social history, throughout the previous century and the one before that. My hon. Friend's example of housing precisely illustrates my point.

It was only at the end of the first war, when councils--the public sector--began to construct social housing with gardens and adequate sanitation for reasonable rents, that the problems of social exclusion through housing were resolved. Notwithstanding all that, I accept that the private sector may have a role in housing renewal and regeneration, but that was not the point that I was making. My hon. Friend's choice of example was very poor.

I was talking about social exclusion and how the private sector is an engine of it, not a panacea. The Government's choice of the private sector as an instrument to tackle social exclusion is unusual. The use of the private sector in public service provision will result in increased fragmentation of government rather than joined-up government, which is what we are supposed to be about. If we want to bring together the various agencies of government to tackle social exclusion--perhaps in the pit villages that I represent--we should be trying to form a coherent pattern of public services. To do almost the reverse and use the private sector as a service provider--perhaps in education or health, rather than building council houses--will fragment and make more difficult the process of holistic regeneration. So I am terribly worried about the fragmentation of services that might follow such policies.

Introducing the private sector to public service provision will blur the lines of accountability, which are very clear in the public sector. If one introduces private sector companies to the public services, the question will be: in whose interests will those private companies operate? Somewhere or other, the role of shareholders must play a part. The accountability of employees, the board of directors and everyone in the private sector will thus be blurred, once again raising the question of fragmentation versus coherence.

I have already mentioned my doubts about the competence of the private sector, particularly in the construction industry, which I know very well, so I will not repeat the points. [Interruption.] One can usefully caricature the difference between public services and the private sector. It can be summed up in two words: service, which I have already mentioned, and profit. The public sector is there to serve people; the ethos is strongly one of service. Private sector companies, however, are ultimately set up to produce profit. I do not want to condemn the profit motive, but profit and service can be separated where profit is threatened.

For all those reasons, I warn my right hon. and hon. Friends in the Government--in the most polite and gentle way, having been a loyalist and a moderniser throughout my time in this House--that some of us on the Labour Benches will not easily accept the introduction of the private sector to public service provision.

Photo of Chris Grayling Chris Grayling Conservative, Epsom and Ewell 6:45 pm, 25th June 2001

It is a huge honour and a matter of great personal pride to address this House for the first time as the Member of Parliament for Epsom and Ewell. I have the great privilege of representing what I suspect is one of the few constituencies known around the world for its famous racecourse and Britain's most famous horse race. I also suspect that I am one of few Members of Parliament able to stand on the highest point of his constituency and look down across the valleys at the Palace of Westminster.

The Epsom and Ewell constituency covers not simply the borough of that name, but the north end of the Reigate and Banstead and Mole Valley districts. It runs from Worcester Park and Stoneleigh in the north to Ashtead and the borders of Tadworth in the south. I suspect that it must also be one of the greenest constituencies inside the M25, being well endowed with green spaces and parkland--not just the famous Epsom Downs but also Nonsuch park, the site of Henry VIII's palace, which is sadly no more. The constituency is also the site of the Epsom wells, the point of origin of the world-renowned treatment, Epsom Salts.

Epsom has always been an important commercial centre. Today, it is home to some of Britain's most successful companies, such as W. S. Atkins, the engineering consultancy, and Bacon and Woodrow. Indeed, I look forward in two weeks' time to attending the opening of Toyota's new British headquarters.

The real commercial heart of the constituency is not its big businesses but the smaller companies in places such as Ewell, Stoneleigh and Epsom, which are the engine of our local economy. They face real challenges of regulation and doing business in tough climates, and I look forward to being a powerful advocate of their cause in the years ahead.

Interestingly, I am only the second Member of Parliament for Epsom and Ewell since 1918 to take his seat following a general election and not a by-election, which is probably something of a relief to my predecessor, Sir Archie Hamilton. The adage "a hard act to follow" can be a cliche, but in Sir Archie's case it is genuinely true. In more ways than one he is a giant of a man. Members will see that I had to pass a height test in order to represent the constituency.

Sir Archie entered the House in April 1978, and served both his constituency and this House for 23 years. In that time, he managed to strike what I suspect can often be a difficult balance for a politician: to be a successful constituency MP and to make a real mark on the national stage. I have been very struck since the dissolution of Parliament--and was during the election campaign--by the number of letters that have arrived in the constituency office praising Sir Archie for his work in Epsom and Ewell and thanking him for the help that he has given individual constituents over the years.

On the doorstep I met only too many people who were keen to stop me and say, "Sir Archie has been a great help to us over the years. He has been a real tower of strength in this area." I met many, many people who were genuinely sad about his decision to retire. He will be much missed in Epsom and Ewell, and I face a tough challenge to do as good a job in representing the constituency.

As well as serving his constituents so well, Sir Archie made a distinctive mark on the national stage, in government and in the Chamber. A distinguished member of the last Conservative Government, serving as Minister of State for the Armed Forces, he was a vital part of Baroness Thatcher's team during her years in office. The importance of the role that he played in those years was made very evident last summer, when Lady Thatcher came to Epsom and Ewell to take part in a farewell tribute to Sir Archie. The glowing tributes she paid him on that night spoke clearly of his importance to her Government.

For the past four years, Sir Archie served a new leadership with distinction, as chairman of the Conservative 1922 committee and as an important prop to my right hon. Friend Mr. Hague during an undoubtedly difficult period for our party. Since my arrival, I have been struck by the affection in which Sir Archie was held by his colleagues. Clearly, he is a loss to the House as well as to his constituency. I hope that Members on both sides will join me in wishing him a long and happy retirement.

One of the lighter moments of my campaign occurred when I walked up the driveway of a house in Ewell and saw on its wall one of those tourist plaques that are often seen on the sides of houses in and around London. On it was the inscription:

"On this site, in 1762, nothing happened."

At first, I thought that it was a tribute to the first four years of Labour Government. That inscription certainly does not hold true of the Epsom and Ewell constituency as a whole. We face real challenges in the next few years and I hope and intend to play an important role in meeting those challenges.

First and foremost is the future of Epsom general hospital. Over the past few months, many of us in the area have fought hard to protect the hospital against the local health trust's plans to downgrade it and transfer key facilities to another, already overcrowded hospital 10 miles up the road. Our campaign crossed party divides, brought together organisations and individuals from throughout the constituency and beyond, and won the backing of more than 25,000 people. It is to the local NHS trust's credit that it has recognised the strength of the opposition to its plans and decided to take its plans back to the drawing board. The battle is far from over, however.

It has become only too clear to me that one of the consequences of the reforms and changes currently being made to the NHS is to weaken local services--to centralise at the expense of local people and local services. Experience in many parts of the country has shown us that that is a false step. I look to the Government and to NHS authorities to ensure that Epsom general hospital has a secure future, and that the people of my constituency continue to enjoy the services of a strong and effective local hospital.

Our second challenge is the availability of school places in the next few years. As we speak, many parents in my constituency are scared witless about what is to happen to their children this autumn, because places are not available for them. The problem is in part the result of funding cuts made in the past four years, when this country's grant-maintained schools lost funding and the support that they had enjoyed under the previous Conservative Government. In the next few years, between 500 and 1,000 teenagers in my constituency will face the prospect of having no secondary school place. That is clearly intolerable. I shall be beating a path to the Government's door to ensure that a solution is found to the problem--and quickly, because time is not on our side. The parents and children of Epsom and Ewell have the right to expect the secondary school places they need in future.

I will also be pressing the Government on their proposals to reform the planning system. Ashtead, which is at the southern end of my constituency, is one of the many communities that have been blighted by the ill thought out Central Railway proposal that threatens to do so much damage in Kent, Surrey, Buckinghamshire and beyond. Do not get me wrong--I do not think that anyone would disagree with the proposition that it is desirable to take freight off the roads and get it on to rail. However, it strikes me as extraordinary that a company can launch a major infrastructure proposal simply by sketching lines on an Ordnance Survey map, not backed up by any detailed engineering drawings, and can then sit back for years doing nothing.

That is the problem facing many of my constituents today; while it prevails, houses cannot be sold, or can be sold only at reduced prices. Ashstead and Leatherhead, on the other side of the M25 in Mole Valley, are two of this country's property black spots in which prices are falling. That cannot be right. The current laws must be changed and I shall look to the Government to address those issues in the current Session of Parliament as part of their proposals on the planning system.

I do not believe that, on his arrival in this place, any Back-Bench Member of Parliament, especially an Opposition Member, can seriously expect to wield much power and influence, but I do believe that we can be powerful advocates for our constituents and constituencies and that by persuasion we can achieve many positive outcomes for them. That is my goal, as I take on the mantle of Sir Archie Hamilton. In the years ahead, I hope and expect to repay the trust that has been placed in me by my constituents, by working tirelessly on their behalf and helping them to solve many of the problems that they face.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield 6:56 pm, 25th June 2001

I, too, welcome the two new Members of Parliament who have made their maiden speeches today. We have just heard Chris Grayling, who made a very good first speech in which he clearly stated how passionate he feels about local issues. I am sure that he will be an asset to the House. When he referred to his predecessor in glowing terms and mentioned the height restriction on the seat, there was some twitching on the Bench in front of him: his hon. Friend Mr. Bercow will tell him that height and size are not everything. None the less, I welcome the hon. Gentleman to the House.

My hon. Friend Mr. Bryant made a first-class speech that highlighted his commitment to combating poverty in his locality. I was worried--less for myself than for others--by that part of his speech in which he mentioned the number of Conservative clubs in the Rhondda. It was a good thing that the shadow Chancellor and other Opposition Front Benchers were not around to hear that remark, or they would have been straight out of the Chamber and off to the Rhondda to canvass.

Today, the debate focuses on the economy and trade and industry, and I should like to discuss four issues in connection with those subjects. First, I shall say a word or two about the contents of some of the enterprise legislation that is to be laid before the House. I shall offer a few thoughts, secondly, on the issues affecting the future of manufacturing and, thirdly, on the relationship over the next four or five years between industrial policy and regional policy. Fourthly, I shall comment on the state of public debate on issues of personal taxation.

I welcome the enterprise legislation prefigured in the Queen's Speech. As well as boosting competition and strengthening our competition law, it will begin to destigmatise responsible risk taking by entrepreneurs. I also welcome the proposed legislation to crack down on rogue traders, which is overdue.

The Under-Secretary of State for Trade and Industry, my hon. Friend Nigel Griffiths, will remember that in the previous Parliament I introduced a private Member's Bill to crack down on a specific type of rogue trader--those who are half rogue trader and half rogue employer and who continue to rip off thousands of people throughout the country using home working and outworking scams. That Bill had the support of the previous Government and of hon. Members on both sides of the House but, sadly, went the way of many other private Members' Bills as it was blocked by a small group of Opposition Members who evidently felt more strongly about the need to play parliamentary games or people's inalienable right to rip off others in the name of enterprise than about the need to protect the vulnerable. Sadly, the Opposition Front Bench acquiesced in that. I hope that, in this new Parliament, as the Government think about what to include in enterprise legislation, they will consider legislation banning payment upfront for outworking schemes. If they do not include that in the original draft of a Bill, I hope that they will consider including it in an amendment when such a Bill comes before the House.

I should like to turn briefly to issues affecting manufacturing, as I come from a region built on that industry. The nature of manufacturing industry is changing beyond all recognition, but it is still a vital part of the future strength of our economy. Without a firm manufacturing base, the foundations of a strong economy can become extremely shaky. I therefore appreciate the welcome of my hon. Friend Mr. O'Neill for the measures already taken by the Government. Rightly, he made particular reference to the efforts of the Chancellor and his colleagues on regional venture capital funds.

There is no doubt that manufacturing has benefited from the stability that the Government have helped to create, especially the climate of consistently low interest rates, but the sector now faces serious challenges, which cannot be ignored and should not be masked by the overall strength and buoyancy of the economy as a whole. One issue is the persistent question of the level of the pound against the euro, which has been and continues to be a problem. While sudden fluctuations, whether up or down, are not good for anybody, the relationship of our currency to that of our major trading partner, the zone to which we export of our goods, is a serious issue. That relationship, our manufacturing industry and exporters cannot be helped if sterling becomes a kind of hedge currency on the outskirts of the eurozone.

The Chancellor and the Government were right to set clear economic tests both for entry into the euro and a referendum. My hon. Friend the Member for Ochil was right to say that careless talk about this or that exchange rate does not help at this time. What happens to the euro and what happens in the eurozone affects us, whether we like it or not. The relationship of our currency to the euro, our ability to get that into a proper form and ultimately, when the economic conditions are right, look positively at joining the euro, remain important to our manufacturing industry.

Photo of Edward Davey Edward Davey Shadow Chief Secretary to the Treasury, Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Chief Secretary to the Treasury)

I have a lot of sympathy with the hon. Gentleman's remarks. Does he regret a briefing given by Her Majesty's Treasury? When the pressure was, seemingly for the first time for many months, coming off sterling, the Treasury deemed it wise to talk up the value of the pound, thus causing our manufacturing, agriculture and tourism industries even more problems.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I heard the Government state that they had a clear position, which, in principle, is that we are in favour of joining a successful European currency, but that clear economic tests have to be met. That is a wise and realistic position. Many manufacturers tell me that, over the coming period, we need a continuing debate about the positive advantages of being part of the euro and that we must recognise, as I said earlier, that we are not insulated from what happens to the euro simply by claiming that we can stay outside or by opposing entry. That has not been the case, is not the case and will not be the case.

Photo of John Bercow John Bercow Shadow Spokesperson (Home Affairs)

I applaud the hon. Gentleman's witty and gracious tribute to my hon. Friend Chris Grayling, but he has not demonstrated whether or how any economic convergence that is achieved within the eurozone can be regarded as anything more than a meeting of ships that pass in the night. What assessment has he made of the lack of democratic control, on which the treaties proudly insist, in the operation of monetary policy?

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I fully acknowledge that the single currency has constitutional implications. I raised the issue in our debate on the economy and industry sections of the Queen's Speech precisely because I differ fundamentally from the hon. Gentleman, who seems to think that our trading relationship with Europe, whatever it might be, has something to do with the passing of ships in the night. Our relationship is not like that; the ships are locked together, whether we like it or not. We must accept and act on that.

When addressing the challenges facing manufacturing industry, we need to do more to boost investment, and paying attention to fiscal rules can help us to do so. I welcome moves in the previous Budget to provide further tax credits for research and development and expand the range of tax incentives to foster and promote such work. It is vital to move from consultation to early action, which would certainly be welcomed by manufacturing. It is right that we recognise and meet the environmental challenge and voice our disappointment with policies currently emanating from the United States Administration on meeting that challenge. As a Government, we must look more at the detail of the way in which our own climate change levy has impacted on small manufacturing firms.

The commitment to the climate change levy is, rightly, fiscally neutral, which I welcome, but having talked to manufacturers in my area and other parts of the country I think that there is a need to look at neutrality, not simply between sectors and in the economy as a whole but within sectors. In the past few months, some welcome progress has been made from the motor manufacturing perspective, but more work needs to be done and more attention paid to the problems that might be faced by small manufacturing firms.

The third area that I wish to discuss is the regions. We will not get our industrial policy right or ensure that rising prosperity is spread evenly across our country unless we get regional policy right. People in the regions need far more say about how to map out their economic future and secure and spend the resources to do that. We have faced big industrial challenges in the past few years, some in my own area, and it is no accident that the Government's welcome and important response has been to set up regionally based taskforces that have played and fulfilled a vital role in mapping out responses, bringing together local players and acting as a bridge to government to develop appropriate answers.

The links with the regional development agencies have been important during those crises, but we need to learn the lesson of how the bits fit together and how partnerships, built during problematic times, can be sustained and nurtured, rather than grafted on to what might be most convenient for existing institutions, whether part of local government, Government Departments, local government offices or whatever. It is important that people in the regions understand how, in the development of the regeneration agenda, they and the institutions that they fashion, relate to government. Many good initiatives are emerging, but there is a danger of confusion of the roles of different departments in regional policy; it is important to clarify those relationships.

It is important to allow regional agendas to develop in a way that suits localities and regions. Where area-based regeneration is considered appropriate, the impact on areas not designated for regeneration should be considered as well as that on those that are included. There is a danger of moving towards development schemes that link lines on a map rather than consider the needs of communities. I welcome the Government's commitment to maximising the regional agenda, but we must avoid the danger of merely linking lines. We must not fall into that trap.

We must not draw false distinctions between economic and social regeneration. Regeneration that does not promote social inclusion will not work. That is why I welcomed the announcement of my right hon. Friend the Chancellor of the Exchequer in his Budget speech that there would be consultation on the introduction of a community reinvestment tax credit. It is important that that process develops in a way that builds relationships between firms and communities. There might need to be some changes to the plans that have been outlined to achieve that, but the principle of a community reinvestment tax credit should be welcomed.

The creative use of tax credits is a means of integrating benefits and taxation and achieving twin advantages. First, there is the advantage of ensuring that work pays. Secondly, the tax system should be allowed to assist those on low and fixed incomes. I look forward to the introduction of a tax credit Bill, which will foster that process.

However, the public debate about the fairest forms of personal taxation to raise revenue has not advanced a great deal. During the election, Conservative candidates used well-worn scare stories, which fell flat. People know that there is a need for investment in public services. They knew that the sums produced by the Conservative party did not add up.

We have demonstrated the importance of tackling the national debt. Getting more people into work is the foundation for funding public services. We were able to give the lie to the old Tory smears on Labour and tax, and the investment that is committed in the comprehensive spending review round is not dependent on tax and other increases.

The time has come to initiate a debate that moves beyond talking about taxation as a swear word. Instead, we should discuss the place that personal taxation should have in the funding of public services. We must also consider the balance between direct and indirect taxation and how the taxation system can best embody the recognition that economic sufficiency and social justice can go hand in hand. We should discuss how our right to have decent public services carries the responsibility of identifying the fairest means for corporate institutions and individuals to fund such services.

There is time for a grown-up debate on taxation that perhaps moves beyond previous strictures. Given the foundation of economic stability that we have laid, now is the time for us to lead that debate.

Photo of Richard Younger-Ross Richard Younger-Ross Liberal Democrat, Teignbridge 7:13 pm, 25th June 2001

This is my maiden speech, and I understand the pride felt by Mr. Bryant and the honour felt by Chris Grayling. I understand also the responsibility that lies on those elected to this place. I thank my hon. Friends and other hon. Members for giving me--I am sure that this applies to other new Members--a friendly and warm welcome. We are grateful for the advice that has been proffered on how we should set up constituency offices, for example. Advice is one thing that we are not short of as new Members. My constituents have offered me quite a good deal of advice, especially on the issues that I should raise in this debate. The first suggestion made to me on 8 June was that we should discuss how to apply the "offside rule". My constituents showed a higher regard for the powers of the House than I felt we had.

I am the second Member to represent the constituency of Teignbridge. The new constituency was formed in 1983 from the old Totnes and Tiverton constituencies. Teignbridge, contrary to what some removal companies might think, is not in the north-east but is in Devon. It lies between Torquay and Exeter and covers about 660 square miles of beautiful rolling Devon countryside. It extends from the granite tors on Dartmoor to the sandy beaches at Teignmouth and Dawlish.

Many right hon. and hon. Members will have travelled through my constituency. They will have taken rail journeys to the far west from Exeter along the Exe estuary. The route turns south as one comes to Dawlish. It runs along the sea front following the sea wall, the sea being on the left; the cliffs, which are red weathered brescia, are on the right. The route continues to the Teign estuary. It is one of the most beautiful sections of railway in the world, and certainly within the United Kingdom.

If people have not heard of the towns that I shall mention, they will probably know of at least one village in Teignbridge, which is Widecombe in the Moor. They will know also of at least one of its reputed residents, Uncle Tom Cobbleigh, and some will have seen the area on television. The hon. Member for Epsom and Ewell referred to the famous racecourse in his constituency, but Teignbridge can boast two racecourses--Newton Abbot and Exeter. I am sure that many a punter has sat on a Saturday afternoon waiting for his horse to come last at one of those courses.

When my hon. Friend Mr. Sanders made his maiden speech about four or five years ago, he urged right hon. and hon. Members to visit his constituency and to take a holiday there. That was a good idea. To travel to Torbay, and to constituencies further west, most people have to travel through Teignbridge, where there is much to commend a stay. For those with an historical interest, it is the home of Hornblower--Lord Exmouth, who lived in Teignmouth. It is where Sir Arthur Conan Doyle created "The Hound of the Baskervilles". It is also famous for the man who they could never hang, John "Babbacombe" Lee, who lived in the village of Abbotskerswell.

Right hon. and hon. Members may be interested to know that much of what we can do in this place is due to events in my constituency. After William Prince of Orange landed at Brixham, he quickly beat it out of the Totnes constituency and, I regret, through Torbay to camp his troops on Milber Down before sleeping the night at Forde house, which is now council offices. He entered Newton Abbot the following morning, where I am told that he was first proclaimed monarch. What followed was the glorious revolution.

Teignbridge is a mixed constituency. The moorland areas on Dartmoor have suffered greatly over the past six months and are still suffering from the effects of foot and mouth disease. They suffered from the BSE crisis before that. They will continue to suffer unless the TB problem in cattle is resolved.

There is farming around the Teign valley, which forms a commuter belt to Exeter and contains some of the most beautiful Devon country lanes. There are picture postcard images of thatched cottages with white cob walls.

The rolling hills south of Dartmoor are good beef-rearing country, but they are suffering too. I hope that in the coming months the Government will consider seriously the compensation packages given to farmers and the tourism industry, which is also suffering. I hope that they will ensure that people do not continue to suffer and do not go bankrupt for lack of Government action.

Newton Abbot is at the heart of the constituency. It is a small town of some 20,000 residents, but it is also suffering because of the foot and mouth crisis. It had a weekly market, which is about to resume, but businesses and traders are suffering. As was said earlier, not only the obvious businesses suffer. For example, dry cleaners who do the cleaning for hotels are also affected. I hope that they will be compensated for their losses and that jobs lost in such businesses can be reinstated. I urge the Government to consider the recovery programme that Devon county council has proposed. Hon. Members from both sides of the House have backed that plan, and the Government should support it and the council's ambitions to ensure the economic recovery of the whole of Devon.

Ball clay is one of my constituency's most important exports. At some time, most hon. Members will have sat on products made from ball clay. It is an important mineral resource, which continues to do well. Sadly, the headquarters of WBB, one of the major companies, is in the process of moving out of the constituency and going north. One of my hopes and aims as a Member of Parliament is to encourage businesses to locate their headquarters in the Teignbridge area and in south Devon.

I referred to the two seaside resorts in the south of my constituency. Dawlish is a beautiful seaside town, which is famous for Dawlish Warren, which has a stunning bird sanctuary for any twitchers in the House. Teignmouth is a working seaside town. It has a pier and all the desired attributes of a place by the sea, but it also has a working port. There is therefore a genuine mix of tourism and industry in the same place, which makes it interesting.

My hon. Friend Mr. Laws referred in his maiden speech to the occasional difficulties of complimenting predecessors. He said:

"When one has overturned somebody from another party . . . that can be a testing process."--[Hansard, 20 June 2001; Vol. 370, c. 103.]

My predecessor was Patrick Nicholls, but I have no difficulty in praising him and his achievements for the constituency. He was a conscientious constituency Member of Parliament, who held regular surgeries and attended to his constituency work diligently. We agreed about several issues. For example, he was a keen campaigner for the reform of legislation on mobile homes. That issue is close to my heart, and I shall try to pursue it in the years ahead.

Patrick Nicholls took up other issues on which we shared views and about which we sent a joint delegation to meet the Minister. That applied especially to shellfish and the way in which the Ministry of Agriculture, Fisheries and Food interpreted European legislation. We both perceived the insanity of Britain closing shellfish beds for 12 months after failing environmental tests, whereas France and the Netherlands would act after the failure of one test and reopen the beds for exploitation when the mussels proved safe to eat. We allow people to eat rotten shellfish for three months, and close the beds for 12 months while healthy fish grow large at the bottom of the river. Patrick and I shared the view that something needed to be done.

Sometimes, Patrick surprised me. During the general election campaign, we took part in joint meetings that the churches organised. We were asked about the term "bogus asylum seekers". Patrick roundly condemned the term "bogus", as I do. We had common cause on several other matters in the debates. I am sure that hon. Members from all parties would like to wish him and his wife well in the future.

Teignbridge was unusual in the general election because we had a turnout of 69 per cent. That may sound good when compared with other constituencies, but it was poor because it was 5 per cent. down on the previous election and almost 12 per cent. down on the 1992 election. Villages with a greater population of elderly people had a higher turnout, and it is clear that places with a younger population and perhaps more working- class areas had a lower turnout. People may say that there is nothing new in that, but I am especially worried about young people. Several young people voted with a passionate opposition to the Government's policies, but more could not be bothered and did not vote--they did not see the point.

What do we have to offer young people? That brings me back to the "offside rule". The "offside rule" comment dealt with people's passion for sport, which applies especially to young people. I am passionate about sport, and I am glad that Mr. Lammy is present because I enjoyed his speech on the opening day. However, I believe that Sol Campbell will not necessarily go to Barcelona; I hope that he will come to Arsenal. I am sure that the hon. Gentleman agrees that it is difficult to get referees to give away teams an offside decision at Old Trafford.

Young people often have a passion for sport that is not reflected in government--local and national--provision for them. My hon. Friend Bob Russell has tabled an early-day motion in which he urges the Government to make physical recreation a curricular subject in schools. Physical activity is the best method of helping the health of the nation for the future. We must encourage that not only when young people are at school but after they leave. To do so, we must make sure that the funding is in place and that bureaucracy is cut away so that sports clubs are not messed around for months or years when trying to find premises.

I shall refer to two local clubs in my constituency that experience difficulties. Newton Abbot has a water polo team, which has entered its equivalent of the premier league and will play against the Manchester Uniteds of water polo. Although based in Devon, it must play its home games at Millfield school in Somerset, a drive of an hour and a half. If the local authority is asked to provide a swimming pool of the right size and with the right facilities for water polo, it says that it will not consider the matter, that it may find the capital funding or lottery money, but that it will not do it because of the costs of maintaining and running the pool in future.

The local authority faces difficulties because of the Government's funding constraints. If we are serious about sport and ensuring the provision of sports facilities, perhaps the Government should consider ring fencing or providing additional funding so that we have centres of excellence for sport throughout the country.

The River Teign is an estuary in Teignbridge, on which River Teign rowing club is based. It has more than 400 members, many of whom will row past here in the great river rowing race later this year. That club has a problem with bureaucracy and access to funding, which takes time. In the meantime, people are put off the sport. The longer it takes to find facilities, the greater the number of young people who walk the streets and get bored. We want to get people into sports clubs to enjoy the facilities, and fewer bored young people walking the streets at night.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell 7:30 pm, 25th June 2001

I am grateful to Richard Younger-Ross for that intimate portrait of his constituency. I have a previous connection with it, in that I was a member of a book club based in Newton Abbot. I do not know whether it still exists, but perhaps my reading of its books assisted me in my future career. I am sure that I shall follow the hon. Gentleman's parallel career with great interest.

It is a great privilege for me to speak in this debate. In the previous century, hon. Members representing my party never had the opportunity to debate a legislative programme at the start of a full second term in government. The opportunity now afforded to us could shape the future of our country for a generation--a generation that I hope will never have to face the hardships that our parents and their parents had to endure.

I am proud to follow in the footsteps of John Gunnell, who represented the people of Morley, Middleton and Rothwell for nine years. In the last year or so of his membership of the House, his health suffered a debilitating decline and I am sure that all hon. Members will join me in wishing him respite and a full recovery from his illness. Despite his often painful condition, John was still determined to come down to Westminster to perform his duties. He did not always complete the journey and, on a couple of occasions, had to be diverted to hospital.

In that regard, John Gunnell showed the same devotion to duty as another predecessor of mine, Sir Alfred Broughton, whose vote--facilitated by a journey by ambulance--helped to keep an earlier Labour Government in power. Perhaps it was appropriate that John served diligently on the Select Committee on Health. He was not only a patient; he was also very impatient to see the regeneration of the national health service--a cause to which he remains totally committed.

I also want to place on record my appreciation of an early and trusted mentor of my political career, Mary Redpath, who, sadly, died just a week after the general election. Much of what I learned about election campaigning I learned from Mary, and she will be missed by all those who knew her in the Labour party and outside it.

As many hon. Members may know, the constituency known as Morley and Rothwell, which includes the major community of Middleton, straddles the southern boundary of that great northern city, Leeds. The complexion of the constituency has changed considerably over the past 20 years. It was once dominated by mills and mines, and played a significant part in the industrial revolution. Part of its boundary is formed by the still-functioning Middleton railway, the first commercial railway in the world.

The last mines closed in the 1980s, during that terrible decade of industrial decay. One former mining community is called Lofthouse, whose place name means an upper chamber. If we ever come to consider a new name for the other place once its reform is complete, perhaps we could call that upper Chamber the "Lofthouse of Lords", in memory of the ordinary people who really made this country great.

Some traditional occupations survive, however, and I am pleased to report that from where I live in East Ardsley, I can still see fields full of rhubarb, because we sit on the edge of the great Yorkshire rhubarb-growing triangle. Rhubarb-growing was a flourishing trade in the 19th century, and I am told that today rhubarb is still considered a great delicacy and is served in the best London restaurants. Thankfully, the constituency does not rely entirely on the vagaries of the London restaurant scene to provide high employment, good education and improving health facilities.

Since 1997, unemployment has dropped by 34 per cent., not by chance but by choice in the context of a stable, growing economy. Our primary school results have improved markedly, and we have four new primary schools planned, with building work starting imminently on one of them. One of our high schools, Rodillian school, has just been awarded arts college status. That will bring the extra resources needed to raise standards across the curriculum, which will focus on the performing, visual and media arts.

Bricks and mortar are being laid for the biggest health facility the constituency has seen in 20 years, which is part-funded by Leeds city council and is to be managed by local people serving on the board of the new primary care trust, which I expect will be in place soon. We have approval for the Leeds supertram, which will serve a large part of the constituency and the wider area, with a park-and-ride terminal at Tingley. In Rothwell, where once we had a coal mine, we now have a brand new country park.

Morley, Middleton and Rothwell is deservedly a popular area. That fact brings its fair share of problems, which I am sure will be familiar to many Members. Housing development has placed great pressure on the immediate countryside and the roads are increasingly congested. Even Morley, it seems, now has its own mini-rush hour. However, the problems of affluence sit cheek by jowl with the problems of deprivation. Part of the constituency is classified as being in the top quartile of the indices of multiple deprivation published by the former Department of the Environment, Transport and the Regions. There is still poor housing; there are still excessively high rates of heart disease; there are still youngsters who turn to drugs; and there is still a fear of crime which no politician inebriated with statistics will eradicate.

In 1997, we were elected to tackle those problems and I think that people have given us credit for the start that we have made. However, to paraphrase one of Morley's most famous sons, Herbert Asquith, we can no longer say "wait and see", because what we now want is delivery, delivery, and delivery. This has been a theme of the general election and of the debate on the Gracious Speech. It has been said that the low turnout occurred because voters could see no difference between those of us sitting on this side of the Chamber and those on the other. I must say that after only a few days sitting in the Chamber, the difference has been all too plain for me to see and hear.

Perhaps the low turnout happened because electors felt powerless. They have witnessed violent demonstrations on the usually peaceful streets of Gothenburg and elsewhere. Perhaps, we are told, people feel powerless to affect the emerging shape of Europe, or to influence the most powerful nation on earth, where democracy produced an ambiguous result that is nevertheless being taken as a mandate to challenge hard fought-for international agreements on peace and sustainable development. Perhaps people feel powerless to tackle the mysterious forces of global competition, which, unhindered, pick up and deposit wealth wherever the markets choose. "Where", voters might ask, "is our say? Where is our voice to be heard in these markets?"

However, these expressions of powerlessness are nothing compared with what people can experience in their own lives if we do not deliver what they expect. Real powerlessness is to be in pain, waiting too long for a hospital bed. Real powerlessness is hiding at home, fearful of going out or of facing the yobs who will make our lives a misery if we challenge them. Real powerlessness is sitting on a train or waiting on a platform wondering what time we might get home. Most importantly, real powerlessness is not being able to enjoy the basic human right to a decent standard of living, and being excluded both economically and socially from participating in society. We must tackle those basic issues if we are to be judged a success in this second term.

I have referred to the mines that used to exist in my constituency. Most of them suffered from routine disasters that claimed the lives of many miners. When reading the history of those often merciless workplaces, I am struck by the everyday acceptance, in days not that long gone, of death and injury as a routine and unavoidable hazard. But I am also struck by the fact that not every employer of the age necessarily believed that inhumane conditions and appalling privations led to greater productivity.

Increased productivity is indeed one of the pillars of a competitive economy, but to another famous son of Morley, Sir Titus Salt, it was conceivable that workers and their families could be treated humanely, live in decent housing and have their lives to live and that that ideal could be supported by hard-edged commercial logic. In the Victorian age of laissez-faire markets, it was perhaps surprising that businesses could flourish and prosper with such enlightened owners.

To listen to the rhetoric of the global market, one might assume that, if any such businesses were established today, they would fail immediately, their bottom lines burdened with the cost of social cohesion. Is it not ironic that some companies can value good will in millions, but that the good will of the work force and their families rarely gets a mention until it is time to push through their redundancy packages? Therefore, I welcome the commitment in the Gracious Speech

"for an early and comprehensive World Trade Round, which will benefit industrialised and developing countries alike."

We need to co-operate internationally to secure trade that benefits all people and all nations, not just those who have already gained lucrative markets for themselves and positions of dominance that hurt developing countries. We need a trade round that reflects people's aspirations for sustainable development, not the rapacious destruction of the world in which we live. We need a trade round that elevates stability and quality of work to the same rank as the freedom to invest.

We also need international co-operation that functions openly and transparently and in which the democratic forces always lead and can be held accountable. As elected representatives, we face renewed pressure about strengthening our accountability, for that is one way to address the democratic deficit. Throughout the Gracious Speech, there are clear commitments to devolution, to opening up key public institutions and to continuing the reform of our constitutional structures. I welcome all those.

The theme of the Gracious Speech is spelled out in "inclusivity". That word does not trip off the tongue easily, nor have I heard anyone use it in the pub or the supermarket. I am sure that more colourful words could be used to excite interest in the work on which we have embarked, but if we do not succeed, much more colourful language, and worse, will be used to chronicle our failure.

Whether we use the word "inclusive" or not, let us show it in our actions and deliver it in practice. Then, in four or five years, it will be a case not of third term lucky, but third term well deserved.

Photo of Elfyn Llwyd Elfyn Llwyd Opposition Whip (Commons), Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Defence) 7:42 pm, 25th June 2001

First, I warmly and sincerely congratulate Mr. Challen on a fine maiden speech that was thoughtful and thought provoking. His confident contribution augers well for the future. I also congratulate Richard Younger-Ross on his excellent speech. Those of us who are relative old lags have been fortunate to hear several good maiden speeches today. Perhaps there are more to come; we do not know.

I want to deal with key areas of the Queen's Speech that show a lack of cohesion in the Government's overall economic thinking. Richard Burden referred to the need for a firm regional policy, but before considering regional policy, one must examine the public spending allowable under current taxation rates. We as a party will challenge that centre-right thinking of low taxation linked to low public spending.

Last year, for example, public spending was 38.3 per cent. of gross domestic product--the lowest since 1964. Like other parties, we call for a substantial increase in public spending. Otherwise, we will not be able to pay for efficient public services, decent schools and hospitals, safe and efficient public transport and investment in the future of the economy. Day after day over the past five or six weeks, we all heard about those matters from the electors. We need to make progress on them and to reverse current thinking about low tax, low spend. Obviously, we also need a fairer distribution of wealth, which was alluded to eloquently by the hon. Member for Morley and Rothwell.

Over the past 20 years, there has been a substantial shift of resources from Wales to richer parts of the UK. In the first two years under the Government, Wales' GDP unfortunately fell by 3 per cent., compared with the UK average. We want that trend to be reversed and Wales to have its share of general economic growth. Of course, having less inequality in various parts of the UK would benefit the whole economy.

I shall refer briefly to the Barnett formula. We in Wales demand a fairer system to work out the sum of money from the Treasury in London to which Wales is entitled. The current allocation is worked out purely on the basis of population, whereas we need a system that takes into account Wales' greater needs, which are due to such factors as relative poverty and the higher proportion of older and other economically inactive people. In some cases, the sparsity factor plays a part.

We want the Barnett formula to be replaced by a needs-based formula that considers the wider picture of public expenditure in Wales. It would have to include so-called non-identifiable expenditure, such as defence, which equates to £700 per capita in south-west England, but perhaps £100 per capita in Wales. Such expenditure should be described as non-identified, not non- identifiable, because, clearly, projects such as the Jubilee line extension and other large flagship projects are not reflected in any expenditure given to Wales.

We must have a needs-based funding mechanism. Establishing such a formula would be complex, but it is essential and the task should be undertaken by an independent body similar to the Australian Commonwealth Grants Commission. A needs assessment should be carried out to analyse public expenditure requirements across the UK and it should consider the range of major public spending programmes case by case. For example, school expenditure might depend on the number of children of school age, rather than on the total population, and roads expenditure might depend on population density as well as population itself.

The less private spending capacity there is in an area, the more public expenditure it should receive. In the Welsh valleys, there are numerous examples of high sickness rates, low employment and serious poverty. The valleys need more public investment to counteract those obvious and crippling disadvantages.

Labour, and the Chancellor in particular, has made bold claims that there will be no return to boom and bust while it remains in power. Those claims ignore the fact that there has already been a form of boom and bust. For the first two years of Labour's first term, there was bust in the public sector, and its effects are becoming increasingly apparent in the failure to deliver quality public services.

The comprehensive spending review seeks to reverse that trend by increasing public expenditure rapidly in real terms over the next three years. We all hope that there is delivery--I refer to the speech of the hon. Member for Morley and Rothwell--but this boom and bust is curious and such a stop-go approach is hardly conducive to effective and efficient management of the public sector.

As we know, at the end of the three years covered by the CSR, the Government will face the choice of either cutting the rate of increase in public spending or having to increase taxation. That is one reason why Plaid Cymru, the Party of Wales, advocates increasing taxation for those earning more than £50,000 per annum.

There is another way in which Labour's claim to have abolished boom and bust rings hollow. I quote the Financial Times of 21 June, which encapsulates the point:

"The minutes of the latest meeting of the Bank of England's Monetary Policy Committee . . . neatly summarise the difficulties. The MPC's is a tale of two economies.

Consumers are feeling prosperous. House prices are rising . . . and retail spending is robust . . .

But boom in the personal sector sits alongside bust in the tradable goods sector. The strength of sterling against the euro is crippling . . . Manufacturing output fell by 0.9 per cent. in April, and the sector is set to fall into recession. Reflecting this, the UK registered its largest ever trade deficit."

Superficially, the Government have enjoyed a good run of economic management in their first term. As Napoleon asked of his generals, "Is he lucky?" We may envy the Chancellor's good fortune, but the Government's second term is likely to be much more difficult and will test their mettle.

The United States is experiencing a major economic slowdown, and Germany is facing a recession. Stock markets around the world are in retreat, and in the United Kingdom the outlook for growth is deteriorating slightly. The Government's spending plans under the comprehensive spending review predicted growth of 2.25 per cent. a year, but even so the public finances will move into deficit in 2002-03. In the past, the Chancellor has relied on actual growth exceeding his projections to ensure that the public finances have a healthier outcome than planned. It is likely that that trick will no longer work, with actual growth being at or lower than planned. The Government will then face having to raise taxes, borrow more or cut public spending, and I hope that it is not cuts in public spending.

Much has been said in the debate about the euro. I appreciate that the debate is not often of a high quality. As always, comments in today's debate have been emotive. I seriously and honestly hope that when the debate begins--it should begin fairly quickly--we all have an informed discussion. I am no expert, nor I suspect are other hon. Members, and we need to be guided by independent analysts, good political thought and economists who understand what it is all about. I hope that we have a mature debate, because it is an extremely important issue.

The economy of many parts of the UK, and certainly of Wales, has suffered from the fact that we are now highly dependent on trade with the countries of the euro zone. Since the euro was introduced in January 1999, there has been a sharp drop in its value against sterling. That has placed a huge burden on manufacturing industry. It has become more difficult to export, and imports from the eurozone have fallen in price because of the rate of sterling. One of the most graphic examples of the impact of the strong pound has been Corus, although I have my doubts about the honesty of that company and whether we know the whole truth even now. The strong pound was cited as one of the problems.

The Government must not procrastinate about entry into the euro, because that is placing at risk manufacturing jobs not just in Wales but throughout the UK. I believe that it will also deter overseas companies from investing in the UK. Major employers, such as Ford, have made it clear that they are continuing to invest in Wales only because they assume that the UK will adopt the euro within the next few years. The signals that have emanated from the Government and from the Bank of England since the general election are not encouraging, and will do nothing for the confidence of manufacturing industry.

The impact of the euro is not confined to manufacturing. Agriculture and tourism also suffer, and again Wales is particularly vulnerable.

In his Mansion House speech last week, the Chancellor claimed that he favoured a "stable and competitive" currency. At sterling's current level, that is an oxymoron. The Government face a dilemma. It is generally accepted that sterling is overvalued against the euro by approximately 15 per cent. That will need to be remedied before the UK adopts the euro, but if that is done, the drop in sterling's value will lead to additional inflationary pressures. If the Government continue to rely solely on monetary policy to control inflation, interest rates will have to be increased and that will tend to increase the value of sterling against the euro. There will be only two ways out of that dilemma. I shall not go into them now, but there are clearly some important decisions ahead. I am sure that all parties would appreciate an indication from the Government that they are taking the euro debate seriously.

Another matter that has not been taken seriously in the Queen's Speech debate is the crisis in agriculture and in the rural economy. Matthew Taylor referred to agriculture, which is another vital part of the Welsh economy. Within the past five years, income for a typical 500-acre farm, often family run, has been cut by well over 70 per cent. Current average income from farming activity in the UK is £4,500. In the past two years, 40,000 jobs have been lost from UK farming, at a rate of 450 a week. In Wales alone, the number of workers on Welsh farms has fallen by 10 per cent. and jobs are being lost at a rate of 73 per week. Those figures were produced before the foot and mouth crisis.

We call for a young entrants scheme to help young people into farming, and an early retirement scheme that is not linked to coupling farms to make them larger. The average age of a Welsh farmer is 58 years, and such a scheme would enable farmers to have a proper, respectable retirement on a reasonable income. We should go to the European Union, because it caters for such schemes. Given the early signals that we had a couple of weeks ago, even though there was no reference to this matter in the Queen's speech, I hope that the Government will take it up urgently.

There is no mention in the Queen's Speech of any direct help for the agriculture sector specifically or the rural economy generally. The Government must realise that the sector is in great peril and deserves urgent and constructive action to avoid the utter devastation of rural communities, not just in farming but in all rural businesses and among rural dwellers who are beset by these awful crises. They will bring with them huge population moves, and will have a great impact on the lives of all rural dwellers, with additional hugely detrimental effects on the Welsh language and culture. Despite there being no reference in the Queen's Speech to that problem or to rural problems generally, I urge the Government to give the sector urgent and high priority over the coming months. 7.57 pm

Photo of Hywel Francis Hywel Francis Labour, Aberavon

In rising to make my first speech in the House as the new Member for Aberavon, I am struck by the significance of 7 June. That was the date on which this year the British people for the first time returned a Labour Government for a second term with a substantial majority. They are committed to a programme of social justice, abolishing unemployment, pensioner poverty and child poverty, and achieving an advancement of opportunity for all. The date of 7 June was also the day in 1984 when I was outside the House with tens of thousands of people from mining communities all over Britain, seeking that very same justice. For many Labour Members, there is a certain poetic justice about the date of 7 June.

In paying tribute to my distinguished predecessor, Sir John Morris, who served our constituency for almost 42 years, I am reminded that I am only the fifth Member to represent Aberavon since the constituency was created in 1918. Sir John served Aberavon, Wales and the United Kingdom with great distinction. He had the vision to campaign successfully for greater investment in the steel industry, for better road and sea links through the M4 and our deep water harbour, and for the diversification of the local economy, culminating in the recent development of the Baglan energy park. The arrival of our new regional hospital is also a tribute to his diligent campaigning.

Sir John will also be recognised more widely as both a Welsh and a British statesman. He was latterly the Attorney-General, and in the late 1970s he was the architect of the first attempt at devolution in Wales. It was Sir John who said of our defeat in 1979:

"When you see an elephant on your doorstep, you know it's there."

The Labour Government's achievement of what Sir John called

"the repatriation of democracy to Wales" owed much to his pioneering work over many decades.

Aberavon is a very special constituency. It has a remarkable history, and because of the talents of all its people it has a bright future. It is the birthplace of Dic Penderyn, the first martyr of the Welsh working class. It is also the birthplace, at Cwmafan, of William Abraham--Mabon--the great champion of the Welsh miners, who was the first Welsh worker to be returned to the House. Aberavon was the constituency to have the distinction of returning the first Labour Prime Minister, Ramsay MacDonald, who remained steadfast to the Labour cause, at least while he was in Aberavon.

The constituency has long been distinguished for its tolerance and for its radical, dissenting, co-operative, community, socialist and internationalist values, which we still proudly embrace today. On Friday, I attended a charity concert for the benefit of children of Chernobyl; on Saturday, in the Upper Afan valley there was a fund-raising event to protest against land mines. Those values are also clearly demonstrated by the success of co-operative enterprises at Glyncorrwg and Blaengwynfi, which deserve further support. Historically, the internationalist values are perhaps best expressed by the old Independent Labour party centre at Briton Ferry--visited frequently by such remarkable speakers as Emma Goldman, James Maxton and the Afro-Caribbean writer C. L. R. James, who, it is said, completed his masterpiece "Black Jacobins" in our locality.

Today the constituency faces great economic, landlordist, educational and environmental challenges. The steel industry at Port Talbot, as elsewhere, has lost many jobs in recent years, but the skills of its work force deserve a long future, and I will campaign for that alongside our local authority, the National Assembly for Wales and the steel unions. We have witnessed an ordered withdrawal of the petrochemical industry--a model of corporate social responsibility--and its replacement by the private-public partnership in the context of the new energy park and the planned urban and sports villages envisaged for Llandarcy.

In my first speech to the House, I want to focus specifically on the citizenship rights of disabled people and their carers in relation to the economy and to the whole of society. Our new Labour Government should and will be measured by the extent to which we tackle, in partnership, the fundamental inequalities faced by disabled people and their carers.

Already in my constituency good progress is being made through the local authority's special needs provision at Briton Ferry and Sandfields schools, the new special needs activity centre for very young children at Taibach, the work of the Shaw trust at Llandarcy--including its disability action centre, which is soon to be officially opened--and the thousands of volunteers often working with disability groups, and networked through the local council for voluntary service.

Government, in Westminster and in the National Assembly for Wales, have demonstrated their serious commitment by setting up the Disability Rights Commission and the recently launched carers strategy in Wales. Three organisations--Mencap, the Down's Syndrome Association and the Carers National Association--recently held awareness-raising weeks. The House would do well to reflect on the vital matters that they raised in relation to employment and wider social issues, and I urge our new Labour Government to listen to their concerns in order to achieve a sense of full citizenship for disabled people and their carers in the new millennium.

Disabled people are twice as likely as others to be out of work. Fewer than one in 10 people with a severe learning disability are in work, and more than 1 million people with disabilities want to work. There is a shortage of at least 40,000 supported employment places. The benefits system is a barrier for many people wanting to work, and most employers have no experience of employing people with a learning disability.

We need an expansion of the access-to-work scheme, offering on-the-job support. We need new rules for the disabled persons tax credit, making work pay for part-time workers, and we need a Government strategy to promote employment of people with a learning disability. We need statutory provision to support carers in the workplace, and young--and not so young--carers who are in education. For all young adults with a learning disability, we need structured programme routes from school and college to the world of work, and we need to involve carers in decision-making bodies.

We need proper and sensitive national consultation with the Benefits Agency, and a new development of the new deal to break down barriers and remove benefit traps for many people with a learning disability who are able to work and wish to do so. We need a national awareness campaign for employers, aimed at breaking down the obsession with formal qualifications. We need to give priority to those who will never work again, and to their dependants. We need to increase the pace of the settlement of miners' compensation claims, and those of their widows, until it becomes a whirlwind.

The aspirations of disabled people and their carers mirror those of the general population: a good standard of health, educational opportunities that lead to a meaningful occupation in adult life, sufficient income to afford a comfortable standard of living, a safe and secure home environment, a fulfilling family and social life and a valued place in the community. Those are, after all, universal rights, whether they apply to a disabled child in Soweto or to a disabled miner or steelworker in Skewen.

We have a more benign and friendly elephant on our doorstep now--our great Labour majority. Let us use that power wisely and swiftly to achieve social justice--the power which we did not have on 7 June 1984, but which we now have following 7 June 2001.

The Queen's Speech began by referring to our aspiration for a more prosperous and inclusive society. We can do no better than recognise the need to make that essential and courageous journey of hope from social inclusion to social justice, to build a truly inclusive society. The people of Aberavon and the people of Britain expect nothing less.

It was the Chartist poet Ernest Jones who wrote of that fine sense of hope and courage:

"The coming hope--the future day

When wrong to right shall bow,

And but a little courage, man!

To make that future--now!"

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks 8:06 pm, 25th June 2001

I declare again the interests recorded in the most recent Register of Members' Interests.

It is a very pleasant duty to congratulate Dr. Francis, on behalf of the House, on his maiden speech. He did all the right things: he paid proper and generous tribute to Sir John Morris, who was much liked on both sides of the House and, I am sure, carries the best wishes of all of us in his retirement--if, indeed, he is retiring; he never seemed to retire before.

The hon. Gentleman also spoke eloquently about his constituency, as is right and proper, and spoke particularly eloquently of the interests of both the disabled and those who care for them. We look forward to hearing from him again on that subject, which stood out from a remarkably well thought out and eloquently delivered speech.

The hon. Gentleman produced something of a first: I think that that was the first time I had heard a Labour Member speak highly of Ramsay MacDonald. Perhaps he has now been rehabilitated. Who knows? Perhaps he is becoming new Labour again. I suspect, however, that we may not hear of Ramsay MacDonald again quite so swiftly--although we certainly want to hear from the hon. Member for Aberavon again. I repeat my congratulations on behalf of the House, and, indeed, congratulate all who have delivered maiden speeches so far.

This was a good Queen's Speech. Before I am misquoted, I must add that it was a good Queen's Speech in terms of its intentions. It focused on public service reform and on the quality of life of all the people who send us here. In one sense, of course, that is an admission of failure. The one phrase that was missing from the Chancellor's speech this afternoon, long though it was, was "the last Government"--because he, of course, was Chancellor in the last Government. It was under his chancellorship that productivity stayed flat, that our position and competitiveness declined so markedly, that the poorest 10 per cent.--as he was sharply reminded by one of his own Back Benchers--were falling further and further behind. Above all, it was under this Government that the failure to deliver public services--now the mantra from both sides of the House and from every Tory leadership candidate--became most apparent.

I remember canvassing in Archer way, Swanley, and meeting a lady whose husband had been referred for an important eye consultation. She showed me, in disbelief, a letter from the Dartford and Gravesham NHS trust, telling her that the current ophthalmological wait was 99 weeks. That is not something of which I would have been proud had I been a Minister speaking in today's debate.

I encountered general practitioners--I had never found this in five previous parliamentary elections--who were seriously considering leaving the service altogether. I found schoolteachers who were overwhelmed with bureaucracy--that was the last Government's legacy. It is up to the Minister who is summing up the debate to answer that honestly and properly. Before I get into detail, perhaps I should welcome back to the Department of Trade and Industry, as an Under-Secretary, Nigel Griffiths--I never understood why he was dropped in the first place; perhaps he did not. Anyway, it is good to have him back. I hope that he will concentrate all his energies on his responsibilities, which I think include the Small Business Service which does not so far seem to have had much impact.

I want to speak on three points: the enterprise culture that the Chancellor is now promoting, the hospital and school reforms that are at the heart of the Queen's Speech, and some of the difficulties that we have experienced in my constituency with law and order. On enterprise culture, I came here today to praise the Chancellor; I certainly give him five out of 10. At least he has shown in his speech last week and in some of his earlier measures that he understands the problem.

We have had nine years of continuous growth--five under the Conservatives and four under Labour--but productivity has not been rising and we have only slowly become more entrepreneurial as a society. Some of the Chancellor's solutions are clearly right. I welcome the reform and lowering of capital gains tax--it helps to keep serial entrepreneurs in the United Kingdom investing in new businesses, and I applaud the Chancellor for that.

I applaud measures to promote enterprise in schools. The Chancellor must be right to move education business partnerships forward from the old, rather shaky foundation of sponsorship and vouchers into real partnerships where businesses play a part in schools that serve the local community. That is important. I look forward to seeing those ideas fleshed out with some practical proposals to make a reality of those partnerships.

The Chancellor was right to widen the opportunity for share ownership. He has come at that in a rather zigzag fashion, but the extension of the enterprise management incentive scheme is good news. Where I differ from the Chancellor is that he still thinks that enterprise culture can all be done only by or through Government. I have my doubts. Over the past four years, we have seen how too much tax tinkering can frustrate enterprise. Complexity Brown has introduced many different rates of company car tax; he even introduced many different rates of capital gains tax before he started to reform his own reforms. There are new and rather complicated research and development credits. That seems to be getting in the way, rather than reducing the tax burden, simplifying the tax code book and lowering rates.

Alongside much of that fidgeting, the Government have almost unhesitatingly accepted far too much of the Brussels agenda, piling rights upon rights, all of them defensible as individual measures--who could be against more maternity leave, more paternity leave and workers councils? Who could be against any individual part of that agenda? However, the cumulative burden on enterprise is taking this country in exactly the opposite direction to the economies of the United States and far east, which are leaping ahead in productivity and competitiveness.

All those measures--we will see more of them, I suspect, in the next couple of years--distract management from its key job, which is raising productivity and improving competitiveness. They also act as something of a deterrent to small companies. It is the larger companies that have the human resources departments which can hire the lawyers and deal with all the new legislation. It is the small business that is not formed--the self-employed business man or business woman who does not start up--that cannot cope.

Too much Government monopoly, or quasi-monopoly activity, is still getting in the way. Perhaps we did not see it clearly enough then, but it is easier to see now how, for example, British Telecom's dominance of internet access has frustrated new enterprise and new internet services. I support the reforms in competition that the Chancellor is promoting. The more one believes in markets, the more important it is that the regulatory framework for markets is robust and regularly renewed.

On public service reforms, it is all about that magic word "delivery". No speech now is complete without it, but there is, as I said in my question to the Chancellor some four and a half hours ago, some confusion at the top. The Chancellor is still responsible, as I understand it and as he clarified today, for public service agreements negotiated between the Treasury and the spending Departments, but the Deputy Prime Minister in the Cabinet Office is responsible for overall public service delivery, and now we are told that the Office of Public Service Reform will report to the Prime Minister, there is a role for the performance and innovation unit and even a delivery unit--all those central bodies in Whitehall will be chasing each other around and no one Cabinet Minister will have clear responsibility for overall delivery of public services.

It seems that the approach is still top down. There is a reference in the Queen's Speech to more freedom for head teachers, but the Government cannot give more freedom to head teachers if, at the same time, they are demanding from Whitehall more and more targets. They cannot talk about freedom in delivering primary care when they are still overlaying from Whitehall efficiency targets throughout the NHS. They cannot talk about giving police more freedom locally when Whitehall initiatives are laid down by the Home Office. It is all still very top down.

As for the budgets themselves, they have been increased over the past four years and I welcome that, but there is no point keeping on increasing them if they go on being top sliced for Whitehall initiatives and different schemes. That reduces the amount of money available in the front line and demoralises front-line staff. Every Government initiative requires co-ordinators, conferences and area managers and takes people out of the ward, the classroom, the police section. If we are serious about public service reform, we must believe in competition within the public sector--above all, competition in ideas. We must enfranchise police area commanders, head teachers and hospital managers, and set them free to develop their own ideas, rather than rely on ministerial targets and 10-year plans.

We need to be much clearer about the role of the private sector. It seems to be an accepted nostrum among Labour Members--there were a couple of brave exceptions earlier today--that the private sector is good, but I have not yet seen any clear thinking from the Government as to exactly how the role of the private sector is to be developed. If it is to be involved in current expenditure as well as capital expenditure, in managing existing provision rather than establishing new provision, some more thinking is required. Too many of the contracts that are currently available are still controlled and managed by the public sector. Some Labour Members will want precisely that--they want the public sector always to be in control--but the private sector will not necessarily welcome that.

The contracts will have to be longer term than some of the contracts so far and they will certainly have to involve longer leases than have so far been made available, if those same private sector companies are expected to make a considerable capital commitment. We may need to think again about the ability of staff to transfer between the public and private sectors. It is not a question simply of TUPE--the Transfer of Undertakings (Protection of Employment) Regulations 1981. The private sector lives with TUPE all the time: TUPE is a fact of life. However, sometimes, it wants to be able to offer new contracts that may indeed involve higher, if slightly different, conditions and may be framed in slightly different ways.

We need to involve the private sector not simply in running public sector contracts, but much earlier in the design of those services, the design of the delivery and in the process of delivering public services. We need to get the best in innovation, in ideas, in management of design as well as in actual delivery.

I should like, finally, to say a few words about law and order. As I have told the House before, we seem to be much better at law than we are at order. Every year, we have a new police Bill or criminal justice Bill, putting rafts of new regulation and new offences on to the statute book. Returning from our constituencies, however, all of us will recall our constituents' growing refrain about the quality of life that they have to endure--the petty vandalism, the aggressive behaviour in public places and the problems of late-night drinking and drug dealing. We have to think again about how we can enfranchise local communities and give them more serious powers to deal with matters locally.

I think that both the current Government and the previous one have gone in the other direction, away from local solutions. Smaller police stations, for example, are being closed. Indeed, when Sevenoaks police station is closed, I shall have no police station at all in my constituency. Moreover, our magistracy has been enfeebled and is unable to deliver the type of local sentencing and local policies that their communities might want. Furthermore, our local councils have been emasculated.

Communities need real powers to deal with those problems. I am not at all convinced that some of the solutions that we have offered so far are really working. Antisocial behaviour orders, for example, do not seem to be biting properly. We shall also have to see whether the penalty notices provided for in recent legislation can work properly. We have to look again to see what works, and we need Government to be a little more humble and work with local communities for local solutions.

I tell Ministers to go a little easier on the 10-year plans, the great national schemes, the ministerial targets and the Office of Public Service Reform. Let them look again to local solutions and support different approaches. If Government have a role, it is to clear away some of the practical second and third-order barriers, many of which have been imposed by Parliament itself. Ministers should approach the problems with a little more humility. If they succeed, I shall certainly cheer them on. The past four years, however, are not really an encouragement.

Photo of David Wright David Wright Labour, Telford 8:22 pm, 25th June 2001

In my first speech in the House I should like to touch on three themes. I should like, first, to comment on my predecessor in the House; secondly, to speak about the constituency of Telford and its unique position in the history, including economic history, of our nation; and, finally, to look a little to the future.

It is not hard at all to be complimentary about Bruce Grocott, the previous Member for Telford. He served the town as Member for The Wrekin between 1987 and 1997, and then, from 1997 to 2001, after a boundary review, as the Member for Telford. Previously, in the 1970s, he was the Member for Lichfield and Tamworth. In those years he was an excellent parliamentarian, serving his constituents with efficiency, honesty and good humour. It is a testament to him that, whenever I have introduced myself as the new Member for Telford, people have not only commented on my height--indeed I am taller than Bruce--but mentioned their great fondness for him.

Bruce Grocott served the Prime Minister with great loyalty as his Parliamentary Private Secretary. Previously he served Neil Kinnock, and before that the late John Smith. I know that, in the other place, he will continue to serve our country with enthusiasm and his infectious optimism. I am also sure that I speak for hon. Members on both sides of the House when I say that he richly deserves the honour that has been bestowed on him. Having campaigned with him for 15 years, I can say that he is enormously well-respected in Telford. It is very hard to find anyone with a bad word for him. In fact, he has sometimes complained that I have looked too hard for someone with a bad word for him. Nevertheless, I am glad to call him my friend.

As hon. Members know, the constituency of Telford sits in the county of Shropshire and contains most of Telford new town. Although it is a new town, it is largely a mix of older communities--the old districts of The Wrekin, each with its own rich industrial and social heritage. I feel very honoured to be the new Member for Telford because I have lived in the constituency all my life. I think that it is a particularly humbling and moving experience for any Member to be able to say that he represents his home town.

Telford is a creation of the post-war new towns movement. In the post-war era, building on the principles of the garden city movement and the actions of some of the enlightened philanthropists--Titus Salt has already been mentioned today--the then Government sought to build new communities to relieve people of poor housing conditions in the conurbations and tackle the problems presented by the juxtaposition of industrial and living environments. In the late 1960s, Telford was designated as an expansion of the original Dawley new town project. The aim was to revitalise the older communities of Oakengates, St. George's, Dawley and Madeley, where older mining, foundry and engineering industry was falling into decline on the east Shropshire coalfield.

Alongside those communities were created new areas of housing and industry as well as retail and leisure facilities. It has taken more than 30 years for those new communities to gel into the older areas and districts of The Wrekin. I think that I belong to the first generation of people from the area who would describe themselves as Telfordians.

Perhaps the most well-known part of my constituency, however, is the Ironbridge gorge, including Coalbrookdale. It was there, in 1708-09, that Abraham Darby first used coke to smelt iron and signalled the commencement of mass iron production, which was the birth of the industrial revolution. It was people such as Darby and Wilkinson--"The Iron Masters", as they were known--who were the innovators behind the industrial processes of the modern world. In 1779, iron from the Coalbrookdale foundries was used to construct the world's first iron bridge. The area is now of course a world heritage site.

It was, however, not those innovators alone who led the process of industrial change in our nation. That process was led also by ordinary working people who worked in often appalling conditions. It is their contribution to our society that I should like to celebrate today. Indeed, many summaries have been made of what Coalbrookdale looked like in that time of industrial change. It was a living hell, where people lived and died tied to large corporations and gave their lives to drive forward our nation. Far too often in our history, the achievements of ordinary working people are hidden behind the big names. I pay respect today to those hidden heroes of our industrial past.

For many years, the economy of Telford was dominated by big corporations such as the Lilleshall company, with its focus on foundry and engineering work. To be fair to the Lilleshall company, it was often fairly enlightened, building good quality homes for the work force and driving forward a process of change. That process was built upon the non-conformist traditions that Telford has enjoyed over the years. From this industrial landscape grew the co-ordinated organisation of labour in the trade union movement, a legacy that, I am pleased to be able to say, has lasted beyond the life of some of the old companies that I have mentioned.

Looking to the future, I believe that Telford can continue to be a beacon of innovation and economic growth in the west midlands. During the election campaign, I visited numerous companies that are leading the global field in electronics and computing, automotive component manufacture, plastics, engineering and the banking and service sector. What struck me most during those visits was that the goods and services being offered were often of the highest quality and that in order to compete in the global marketplace, quality is now the key. Being the best in the world is the most important factor for many of our companies.

Large corporations will continue to be important in Telford; that goes largely without saying. However, the future will be increasingly dependent on the success of small businesses and the self-employed; the new innovators of our age. Central to the future also will be the continued creation of real partnerships between employers, employees and the union movement. The best organisations are encouraging this partnership approach, adopting team-focused working and the principles of quality management and allowing people to be innovators at all levels in organisations, not just in senior management positions.

Companies such as Brinton's carpets or Aga Food Services Group in my constituency provide jobs for many of my constituents. They are embracing new working practices, dismantling the old structures and unlocking the potential of their employees in a way that was never done before. If that is done well, it can be done in partnership with the union movement and we can drive forward the productivity of those companies and of our nation.

The products produced by Brinton's and Aga are world class and, importantly, they pay decent wages. For many years, Telford was known as a low-wage location. That is why the minimum wage and the working families tax credit have been so important in my constituency. Thousands of people have found their living standards improved during the last four years. The challenge now will be to provide more jobs in Telford.

I wish to flag up one area of concern: the proliferation of agency work and temporary employment contracts in our economy in Britain today. In many circumstances, such contracts and arrangements are acceptable and give flexibility in the labour market. But too often they are used to circumvent giving people the employment rights that they deserve. We need to consider our approach in this area in much more detail.

During the election campaign, I went to the local constituency jobcentre, where up to two thirds of the vacancies available were for agency-based working. This is a real problem across the country. We need to encourage employers to adopt better working practices and to pay the going rate for the job, while giving people better standards.

The Government are providing the platform for continued economic growth in Telford, and the figures bear that out. Unemployment in the constituency has fallen by 22.6 per cent. since 1997. Youth unemployment has fallen dramatically--by more than 70 per cent.--in a similar period. Nearly 500 young people have benefited from the new deal programme.

I welcome the principle in the Queen's Speech that economic stability will continue to be the foundation on which increased spending on social infrastructure can be built. I believe that Telford and its people can continue to mirror the achievements of the industrial innovators and the working people of the past. As a local lad, I am proud to represent the constituency; a constituency with such an illustrious past and, I hope, a bright future.

Photo of Iris Robinson Iris Robinson DUP, Strangford 8:33 pm, 25th June 2001

First, I congratulate David Wright on his maiden speech. Both in content and delivery, he has demonstrated a keen grasp of his subject and has set a high standard for the rest of the new Members to follow. As a fellow member of the new class of 2001, I will watch his progress with interest and, I suspect, envy.

It is an enormous honour for me to become the second Member of Parliament for Strangford since it was created in 1983. Each of us--even the most humble--when first we walk into this House will experience a sense of accomplishment, satisfaction and even pride to be chosen to speak for our constituents.

I feel especially fortunate to represent one of the most scenic and beautiful areas in the kingdom. If anyone doubts my word, I invite them to come and judge for themselves. They should visit the historic Scrabo tower, nestled beside the principle town of Newtownards; see Saintfield, Comber and Carryduff expanding and shaping their future; drive around the coast, stopping, of course, at the picturesque villages of Ballywalter and Ballyhalbert; and sail around Strangford lough, taking in the quaint settlements of Greyabbey, Portaferry and Kirkubbin. They should leave time to walk around the charming fishing village of Portavogie and try those world-famous Portavogie prawns, and if anyone has the energy, they should come to Dundonald leisure park. Almost 10 million people have made it one of the United Kingdom's most visited leisure attractions.

Visitors should cast their eyes over the rolling County Down countryside, the lush green fields, the lough and the coastal views. This is an area untouched by much of the plastic commercialism of the age. It is nature at its best. It is God's own country.

Most of all, visitors should take time to meet the people of Strangford. No friendlier citizens could be found anywhere, and I am delighted to report to this House that Her Majesty will find no more loyal subjects, wherever her writ may run, than the good people of Strangford.

My predecessor, John Taylor, represented this constituency for 18 years. Those who know of the many fierce and bruising battles that we have had will be wondering how I will come to terms with the convention that a new Member, in a maiden speech, should make some complimentary remarks about their predecessor. I cannot deny that Lord Taylor and I have had major political differences. We directly fought two elections against one another in the constituency of Strangford--one for Westminster, the other for the Northern Ireland Assembly. The score is one all and, before he stood down, I had been looking forward to the decider at the recent election.

If there was ever a politician who could treat political triumph and disaster just the same, it was John Taylor. Despite our political differences, I appreciate the personal sacrifice that he made by being involved in politics in Northern Ireland over the last turbulent 30 years. Indeed, when in 1972, the official IRA shot my predecessor, he almost paid the ultimate price for his service to the community.

From being a Minister in the Stormont Government before 1972 through to the present day, John Taylor has been elected to almost every body formed. He has been a district councillor, a Member of the Stormont Parliament, the Northern Ireland Forum, the Northern Ireland Constitutional Convention, three Assemblies, this House, the European Parliament, the Council of Europe and now the other place. I am sure that I have left something out but I am equally sure that he will remind me of it. I genuinely wish him well for the future.

Much as I feel a sense of pride at having been elected to this House, I feel an enormous sense of responsibility to those who sent me here. On the doorsteps, it was clear that those who had never before voted for my party or for me were doing so because they felt that they had been betrayed and let down, not just by the Ulster Unionist party but by this Government.

There was no greater sense of betrayal than that voiced by those who serve in the Royal Ulster Constabulary. It is difficult to put into words their feelings of hurt and anger at how they have been treated. For the past 30 years, they have been the last line of defence against terrorism for the entire community. It is impossible to estimate the countless lives saved by the gallantry of the RUC. Its officers can never switch off from the constant and continuing threat to their safety. We cannot calculate the endless hours of worry for the families of those officers during the darkest days of the troubles--the nights when wives watched their husbands leave for duty, fearing that they might never return.

For more than 300 families, their loved ones never did return. Thousands of others returned with injuries from which they would never fully recover. I fear that it will not be so, but I contend that history should record that the officers of the Royal Ulster Constabulary have been the real heroes of the Ulster troubles.

Imagine, then, the ignominy that they faced when they discovered that the so-called peace settlement contained an explicit remit for their destruction and specific rewards for the very terrorists from whom they had been protecting our society. Murderers were released from prison after as little as two years, and they saw terrorists elevated into government and even offered places on the very body that has authority over the police. At the same time, the police force to which they had dedicated their lives was being consigned to the history books on the altar of political expediency. Their name was removed, their uniform changed and even their proud insignia was taken from them. One cannot avoid the conclusion that the RUC has been disgracefully and shabbily treated.

Even now, the Government are engaged in talks that are aimed at satisfying the latest demands of republicans on policing, which will further denigrate the service of the Royal Ulster Constabulary. However, this is not a question only of symbols or titles; it is about effectiveness in the job that the police have to do. Police cuts are taking place and morale is at an all-time low. It is simply impossible for police in many areas to do their job properly.

Even now, the RUC is still facing attack. Which one of us could possibly envy the job that it has to do, with conflict in areas such as north Belfast, where, night after night, it seeks to preserve life and property? It also faces serious difficulties from terrorists, many of whom have recently been released from prison and are terrorising their communities, creating Mafia-style ghettos, engaging in racketeering, extortion and gangsterism, and running their evil drug empires. This is not the creation of a bright new future; it is the unfolding of a terrifying nightmare.

I have been sent to this House to deliver the message that the present political arrangements do not attract cross-community support. History should have taught us all that, unless both sections of our community support the institutions, the structures will fail. It is not feasible in a divided society such as that of Northern Ireland to govern without consent.

The results of the elections have confirmed that about two thirds of the Unionist community oppose the present arrangements. That is not a matter for debate; it is a matter of record and fact. This reality cannot be spun out of existence or brushed away. It must be faced. The Belfast agreement has at its heart the principle that it can exist only with the support of a majority in both the Unionist and nationalist communities. Now that it has been established that Unionist support is absent, it is the duty of the Government to renegotiate the agreement and to seek support for a way forward that can gain and enjoy the support of both Unionists and nationalists.

This House should be slow to turn its back on the democratically expressed will of the Unionist community. To tell a people that its votes will be ignored and that there is no political way of remedying its concerns is to drive it away from the democratic process, with all the obvious and attendant dangers.

I have represented Strangford in the Northern Ireland Assembly since 1998 and before that in the Northern Ireland Forum. I have always sought to put the interests of my constituents first in all that I do. My door is open to any person of any background. I ask nothing more for the people of Strangford than any other hon. Member would ask for his or her constituents, and I will accept nothing less.

My father came from this city of London, and although he died from war wounds while I was still a very small girl, he inspired me and passed to me his love of our British traditions and way of life. I am not a polished or professional politician. Much of what I have to do in politics does not come easily to me. I was an uncomplicated working-class girl who was driven by circumstances and lifted up by the people in spite of my limitations. I can only hope that down-to-earth loyalty, compassion, honesty and effort can substitute for all else that I lack. There can be few greater honours than to be elected to represent the interests of our constituents. I intend to make their cares my concern, and I am willing to be judged on that basis when the time comes for them to pass their verdict.

Photo of David Miliband David Miliband Labour, South Shields 8:45 pm, 25th June 2001

I have listened carefully to the serious and interesting contributions in this debate. I extend my congratulations to hon. Members who have made excellent maiden speeches. My hon. Friends the Members for Aberavon (Dr. Francis), for Morley and Rothwell (Mr. Challen) and for Telford (David Wright) made powerful and persuasive contributions. My hon. Friend Mr. Bryant showed that, although he may have abandoned the cloth, he has not lost the gift of the preacher. I am grateful for the chance to join them and address the House for the first time.

South Shields is a constituency where unemployment is three times the national average, where the rate of economic inactivity is one of the highest in Britain and where the collapse of the mining and shipbuilding industries has brought massive economic change and wrought real economic pain. It is therefore appropriate that I should make my maiden speech in a debate on economic policy as part of a Queen's Speech that is dedicated to defining and reforming the Government's role in a modern society, for I am here to represent a constituency and to stand up for an ideal--the power of our action together to create a more equal, more productive society.

A maiden speech is a daunting occasion. One of my predecessors, Mr. Cecil Cochrane, waited 12 months before opening his account in the House. He then said:

"I was commissioned . . . to render the Government every possible support during the War, and I am not certain . . . that I have not rendered that support better by keeping silent than I should have done by asking you . . . to notice me before."--[Hansard, 22 May 1917; Vol. 93, c. 2205-206.]

I hope that I do not come to regret opening my mouth sooner than Mr. Cochrane, but my commission is to represent the people of South Shields and it is about them and their needs that I want to speak.

First, I pay tribute to my immediate predecessor, David Clark. He spent 22 years working hard for the people of South Shields and had a distinguished ministerial and parliamentary career. He has a permanent memorial of his commitment to the constituency and his passion for the environment in the magnificent leas, now owned by the National Trust, along the South Shields coastline. I am sure that he will make a distinguished contribution to the other place.

South Shields is a town of rich heritage and great diversity. It is known for its river, its mines and the sea. It is also a political town, steadfast in its values, rich in a tradition of radicalism and reform rooted in trade unionism and community organisation. The people of South Shields know the dignity of work, the difficulty of economic change and the difference that an active, enabling Government can make; they know how high quality public services can liberate them as individuals and lift up our entire society; and they know that although there has been progress in the past four years, the work to tackle inequality of life chances is nowhere near done.

South Shields has real strengths. The Port of Tyne Authority has more than 1,000 employees; shipyard and engineering workers have skills and expertise second to none; and there are growing companies in the manufacturing, retail and finance sectors. After four years of fast progress, the performance of our primary schools now outstrips the national average. South Tyneside college is a world leader in marine and nautical studies. Crime in South Shields is falling and housing and social services are improving.

The town boasts more than 200 voluntary organisations, as well as Britain's oldest local daily newspaper, the Shields Gazette. South Shields did not just provide the inspiration for Britain's most-read author, Catherine Cookson, but now has a vibrant artistic life centred on the old Customs house. Its coastline is magnificent, its neighbourhoods diverse, and its people warm and hard working.

There is more. South Shields football club is only 12 divisions off the premiership, in the Albany Insurance northern league. For a nervous first-time candidate, the local team provides the perfect answer to the difficult choice between professing allegiance to Newcastle football club or Sunderland football club. In that, as in much else, South Shields has no trouble finding a third way.

South Shields also has a long, proud, multicultural tradition. The town's roots go back to Roman legions and Danish settlers. Our Yemeni community, about 1,000 strong, dates back to the 1890s. The Bangladeshi community, of similar size, now into its third generation, is ready to challenge Birmingham as the curry capital of Britain. Both communities play a vital part in the life of South Shields.

The River Tyne has sent whalers to the Arctic, shipped trains to the Punjab, refuelled Navy destroyers for the fight against fascism and sent the first lifeboats to sea to rescue those in trouble; in return have come goods, ideas, investment and people. Just as the river gives and the river takes, so South Shields depends on what we take from the world and what we can give back. I have special reason to know this.

Over 50 years ago, my distinguished predecessor as Member for South Shields, J. Chuter Ede, was Home Secretary in the 1945 Government--probably the greatest reforming Government in our history. One of his hardest tasks was to make decisions on immigration applications from millions of refugees around Europe. There were many hard cases. One application came from a man who had spent the war here, separated from his wife and daughter who were in occupied Belgium, but with his son, who studied at school and then served in the Royal Navy.

The man who lodged that application was my grandfather, Samuel Miliband. Despite long correspondence, the then Home Secretary felt compelled to deny his application. There could not, he wrote, be exceptions. My father had previously been given leave to stay, and later, I am pleased to say, my grandparents were allowed to join him.

Inclusion and opportunity have been the great motors of progress throughout human history. For me, it is a sign of hope for South Shields, and hope for Britain, that the grandson of a man denied residence in Britain by the then Member for South Shields can, 50 years later, represent South Shields in the House; but my job will not be done until every person in South Shields is able to develop every part of his or her potential to the full.

South Shields is a great town with great people, but they have so much more to give. It is the Government's job to help them all to shine. Unemployment has fallen by more than 1,000 since 1997, but in Rekendyke ward, it is more than 17 per cent.; in Tyne Dock, 11 per cent.; in Beacon and Bents, 11 per cent. Those figures represent a toll of misery and waste. Some 60 per cent. of young people in South Shields fail to get five good GCSEs--more waste. Long-term illness, often associated with mining, affects one in five households--more pain.

To those who say that economic policy is for middle England and social policy for the Labour heartlands, South Shields replies that a strong economy and a strong society are inseparable and must be built together, with leadership from Government. In South Shields, icy North sea winds lead people to say "cold hands, but warm heart". Today, we need a Government with helping hands and a warm heart.

I am glad to say that the priorities of the Queen's Speech are the priorities of South Shields. In my previous role, I was privileged to play an advisory part in developing the manifesto on which the Labour party was elected to serve a second full term, but I now feel much more privileged to be elected by the people of South Shields to ensure that they receive the full benefit of the policies in that manifesto.

South Shields needs investment in skills, transport and business support to tackle unemployment. We need investment and reform to support our teachers in building up secondary education and to sustain all staff in building up the health service. We need modernisation of the tax and benefit system to tackle child and pensioner poverty. As well as innovative legislation for new ideas, we need effective administration of policies already announced, from expansion of services for under-fives to swift action for miners' compensation.

South Shields has a unique political history. I am the only Member of the House who can say that, since the first Reform Act of 1832, his constituency has never elected a Conservative Member of Parliament. Until the first world war, the Liberal tradition was dominant, but for 70 years, South Shields has been a Labour town. Throughout that period, South Shields has benefited from flashes of Labour radicalism. The Housing (Financial Provisions) Act 1924--known as the Wheatley housing Act--brought council housing. The 1945 Government brought new health facilities. The 1964 Government brought development assistance. The 1974 Government brought child benefit. The 1997 Government enacted the new deal and the minimum wage. Through all that time, however, South Shields suffered because those flashes of radicalism were never consolidated by two consecutive terms of Labour government.

For 70 years, South Shields has felt like a Labour town in a Conservative country. Following the general election, I am glad to say that South Shields feels like a Labour town in a Labour country, making common cause across divides of tradition and geography with people across Britain who share its values and its priorities: public services based on need, active government dedicated to spreading wealth and opportunity, communities built on tolerance and mutual responsibility.

South Shields is bounded by the River Tyne and the North sea, but our town is outward looking. Our community is south Tyneside; our economy is Tyne and Wear and the wider north-east; our commitments and connections stretch across continents.

I chose to stand in South Shields and now South Shields has chosen me. I believe in the potential of inclusion, the power of opportunity and our responsibility to extend it to all. That is the hope for South Shields. That is the message of the Queen's Speech. That is the cause that I shall stand for every day that the people of South Shields choose to send me to this House.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield 8:56 pm, 25th June 2001

It is a very great and genuine pleasure to follow Mr. Miliband, who gave a powerful, clever, articulate and moving speech. I have been having a bet with my colleagues on the Front Bench that he will be in government within the next two years. I hope that that is not a curse; it is not meant to be. It is meant to be a compliment on the quality of his speech.

The hon. Gentleman's speech was particularly moving for me, because when I first became involved in politics the very first elected office I stood for was Parliament, and in South Shields in 1987. I like to think that the South Shields Gazette became known as a Tory rag at that time, because I frequently appeared in it. As a direct consequence, there was the biggest swing in 30 years--from Conservative to Labour. David Clark was elected on an even bigger majority than many in the north-east had expected.

It was a joy to be reminded of all the places that I went to in 1987. The hon. Gentleman referred to the tradition of curry in South Shields. I hope that I will not be accused of being racist, but I recall that Ocean road is filled with curry houses and, with the best possible intentions, is known as Asian road. I still go there; the cuisine is excellent. More importantly, the relationship between all the people in South Shields is excellent too, and perhaps a lesson to those in other parts of northern England where there are so many difficulties at the moment. I truly wish the hon. Gentleman well in what I know will be a long career in the House of Commons.

The Queen's Speech was interesting for its contents and for its omissions. We all expected two subjects to be included--one of which caused me to rebel ever so slightly in the previous Parliament. I was confidently expecting there to be a Bill to outlaw tobacco advertising, which would merely have been a continuation of the Conservative policy of banning it on radio and television. The Bill was not there. Is Bernie Ecclestone the real power behind the Labour throne? The other Bill that we all confidently expected was one to regulate cross-media ownership. That, too, was not included. One wonders what debt of honour the Labour Government owe Rupert Murdoch for ensuring that. Nevertheless, a number of matters were included in the Queen's Speech which I welcomed.

The Prime Minister said during the election campaign--and he was right--that the people of this country are interested in health, education, transport and crime. Indeed, that was echoed by my right hon. Friend Mr. Portillo. It is a source of great mystery to me that we did not fight the election on those issues. Those are the issues on which I, however, chose to fight the election.

Although 70 per cent. of the population hold strong views on the euro and the European Union, the issue is of secondary importance to many people. Although I found my university studies in abnormal psychology far more interesting than those in normal psychology, I remember that in normal psychology the great psychologist Maslow determined what he described as a hierarchical ladder of needs. It is clear that people are more interested in health, education, transport and crime, and that only when those issues are rectified do they become interested in what they regard as the secondary issue of Europe.

I fought on health: the issues that I fought on in Lichfield could have been fought on throughout the whole country. The Victoria hospital, Lichfield, with which you, Madam Deputy Speaker, are familiar, and the Hammerwich hospital in Burntwood both face closure. It is extraordinary that on 8 June--the day after the general election--South Staffordshire health authority issued its conclusions on the future of community hospitals in South Staffordshire, in which it announced those closures so as to save £1 million. You will know, Madam Deputy Speaker, that I raised that issue in the House month after month. When I raised it with the Prime Minister and the Secretary of State for Health, they said--perhaps understandably--that they could not comment on leaked documents that had not yet been published. Was it not cynical of the authority to issue the document the day after the election?

Those are the very matters mentioned in the Queen's Speech. The Queen's Speech contained a commitment to improve health services in the United Kingdom. I urge Ministers to bear it in mind that health services in the United Kingdom encompass more than primary care and the great specialist centres, such as the traumatic injuries unit at the North Staffordshire hospital, Stoke-on-Trent; they also include the community hospitals that are found in all our constituencies.

I also fought on the subject of education. People out there feel that there is no difference between Labour and the Conservatives--that both parties are heading in the same direction. Today, Alastair Campbell had to announce that there is no great fight between the people--[Interruption.] I do not know why the Government Whip is gesticulating at me, but I am sure that it is not very interesting.

Education is tremendously important to most Members of Parliament and to our constituents. I am delighted that the Government are beginning to fund ever more centrally, direct from the Treasury. That is important, especially in areas such as mine. Staffordshire is second from the bottom of the table of shire counties in allocation of funding under the standard spending assessment mechanism. Such disparities put children in Staffordshire and other parts of the United Kingdom at a disadvantage. I praise Mr. Kidney, who is not present, for leading a group of 40 constituencies--located throughout the United Kingdom but especially in England and Wales--that feel that they are underfunded.

Such underfunding is wrong and historical, but Labour owes a debt to the British people. In 1997, the party promised that the problem would be rectified within one year. The Prime Minister said that 2000 would be the year of delivery, but it was not. Perhaps this Parliament will witness the year of delivery. I hope that it will, for the sake of the people who use hospitals in my constituency and the children who go to school in my constituency.

The other issue on which I fought the election was crime. Last year, violent crime in Staffordshire rose by 43 per cent; it rose by a further 23 per cent. this year. One of the main reasons for that rise was the lack of policing. Two hundred and forty police officers have been withdrawn from the Staffordshire police force in the four years of the Government's stewardship of our police forces. That is wrong; there is a direct correlation between the number of police officers on the beat and crimes committed on our streets. I hope that the new Home Secretary will be given the financial wherewithal to ensure that something is done about that. Simply having new recruits is not enough; we need police officers with experience as well.

May I suggest to the Treasury that one way of saving money is to keep police officers beyond the age of 55? If they have the skills and are fit, perhaps they should be retained by the police force. Showing my age, I well recall "Dixon of Dock Green". At one point, Jack Warner, who was crippled with arthritis, was being wheeled about behind the desk in Dock Green police station. However, there are many fit people of sixty and over who could be retained by the police force and do good police work. It is wrong that 240 police officers from Staffordshire have been withdrawn; as I said, that consequently led to a rise in crime in our area.

There has been considerable mention of the debate on the euro. After all, our debate today is concentrating mainly on Treasury and Department of Trade and Industry matters. One reason why I fought the election on health, education, crime and transport, is that we have paid many taxes yet not seen delivery. If the stealth taxes that we have paid had been put on income tax, they would have raised it by the equivalent of 9.8p. That gives an idea of the huge increase in taxation that we have suffered, yet we have not enjoyed a concomitant growth in services.

Will the euro be the great panacea? I think not; the Chancellor is right to show caution. While the euro will provide the advantage of fixed currency exchange rates between countries in the eurozone, it will also magnify any preponderance towards boom and bust. The Chancellor is as aware as I am that the economic cycle in continental Europe is nothing like that of the United Kingdom or the United States of America. There are huge structural reasons for that. We--not the Japanese--are the largest investors in the USA and vice versa, so there are huge fund flows linking us to the USA. In the United Kingdom, just as in the USA and Canada, people have long-term mortgages. However, people who own their own homes in continental Europe are a minority and tend to do so because they have inherited them. Most people rent their homes; they do not have long-term debt. Given the damping effect arising from that, and for many other different reasons, we are not in synchronisation with continental Europe.

The Chancellor is therefore right to show caution: he knows as well as I do that if we were in the eurozone and there were a boom in continental Europe, but a bust in the UK, interest rates would rise in Europe, which would make our recession even deeper. Similarly, when Britain is doing well--as we are at the moment because the USA has been doing well, although other speakers have pointed out that we must show great caution about that country, which is already beginning to slow up--and Europe is doing badly, the last thing we want is lower interest rates, which would simply fuel inflation.

The Chancellor of the Exchequer is right to say time and again that if we reach synchronicity with continental Europe, that must be sustained. It--[Interruption.] I do not know whether the Economic Secretary to the Treasury is disagreeing. Is there a split already on the Government Front Bench? I am quoting what the Chancellor has said, and he is right. There is no point in having synchronicity for only a short time. Just as two roads approach each other and pass at crossroads, there will be great dangers to business in the United Kingdom, and to the United Kingdom at large, if we enter the euro and are not in sustained synchronicity.

I can see there being sustained sychronicity only if we do not invest in the United States and it does not invest in us. That would be dangerous for employment. There will be dangers also if we decide that we shall not encourage people to own their homes. That would be wrong, too. One of the good things about the Government is that they have embraced what the Conservative party has long believed in, namely, the advantages of home ownership.

I should like the Treasury to be more transparent. In the 1980s, I worked in broadcasting. I used to travel three or four times a year to the Soviet Union. I was there when Mikhail Gorbachev was in power, and he talked about glasnost, or openness. I wish there were more openness about the five tests on entering the euro and about our position on membership of the European Union.

The Prime Minister has said repeatedly that it is right that we should stay in the EU, because it saves 3 million jobs. He may be right. Others have said, including the United States Government, that being in the EU is costing us 100,000 jobs and that if we were outside it we would, within four years, overtake Germany and become the third largest economy in the world. The US Government have produced a large document that they believe proves that fact. I do not know whether it is accurate. Perhaps the Americans are right or perhaps the Prime Minister is right.

I do know, however, that the Treasury has not produced any such document. I am not advocating leaving the EU, but I advocate an open investigation into whether the EU is benefiting the United Kingdom. What are we frightened of? Are we frightened of knowledge? Is it that the Treasury fears--it is the Treasury that will have to do the work--that if we quantify the costs of our membership of the EU and quantify all the undoubted benefits of our membership, the costs will outweigh the benefits? It they do, that is worrying.

If the Treasury is confident, as so many others are, that we are gaining from membership of the EU, it should produce the work to demonstrate that the benefits far outweigh the costs. We need some glasnost in this Parliament too.

The debate will be summed up by the new Secretary of State for Trade and Industry. I welcome the right hon. Lady to her position; I am glad that she is listening to the debate. She will be aware that about £10 billion has been added to the costs of British business. That was the calculation of the British chambers of commerce and trade. She is aware also--she was in her place when I intervened on the Chancellor earlier--that over the past four years the UK has dropped from ninth to 19th place in the international competitiveness league. That is worrying. It has resulted in firms such as Corus axing jobs in Britain when it has not axed jobs elsewhere in the EU. It has resulted in Motorola closing factories in Scotland when it has kept open factories in Germany, which have high wage costs. One must ask the question: four years ago, when we were ninth in the league, would the British factories have been closing and the German factories staying open? Whether we are in ninth or 19th place seems an academic discussion, but it affects jobs and people's lives.

The Prime Minister said that 2000 would be the year of delivery. It was not. When he returned to 10 Downing street after the general election, he suggested on the doorstep that he knew only too well that it was the last chance for Labour to deliver. For the sake of the nation, I hope that the Labour party finally delivers.

Photo of Ian Lucas Ian Lucas Labour, Wrexham 9:15 pm, 25th June 2001

I am grateful for the opportunity to speak in the debate and to record my pleasure at the contents of the Gracious Speech. It is an especial pleasure to follow Michael Fabricant. Lichfield is a beautiful cathedral city, which I know well and visit often to meet close personal friends.

I am also pleased to follow my hon. Friend Mr. Miliband because I was born in Gateshead in south Tyneside. I owe a great deal to that town and community, which reminds me of the community that I am now proud to represent: Wrexham.

Labour has delivered for Wrexham, which has progressed greatly in the past few years. In preparing my speech, I was interested to read the maiden speech that my predecessor, Dr. John Marek, made in 1983. He said that unemployment in Wrexham stood at 20 per cent. The town was in the middle of momentous change. The coal and iron industries--the rock on which the community was built--were about to be fatally undermined by a callous and short-sighted economic policy. In 1983, my predecessor remarked that the people of Wrexham wanted to work but that no work was to be found.

Much anxiety has been expressed about the low turnout at the general election. It has been said that voters believed that Governments are all the same and that politics does not affect people's lives. I disagree. The people of Wrexham have now been given the chance to get on; previous Governments did not give them that chance. Governments change lives, for good or ill. Politicians must not hesitate to make that point and urge our electors to remember how things were and how they have changed through Government action.

The events of the past four years show that when a Government build the right foundations, Wrexham people are ready to seize new opportunities and compete in a changing world. Unemployment was 20 per cent. in Wrexham in 1983; it was 3.3 per cent. in May 2001. That is testament to the people of the town, who have shown themselves ready and willing to adapt, learn and work in a transformed economy, and to a Government who have created a stable economy in which business and industry can thrive.

As someone who has run a small business, I know the importance of stability, low interest rates and the ability to plan ahead. I also know, however, that the biggest asset of any business or town is its people. That is where Wrexham shows its mettle. The town has a strong civic pride. It has the qualities of a Labour town: it is resilient, welcoming and open. It demands fairness and it wants the chance to get on.

My first constituency engagement after my election was a community litter pick, which was enjoyable. It introduced me to an interesting lady who was well over 70. She spoke not with a Wrexham accent, but a southern African accent. While picking litter with her, we chatted about the length of time she had been in Wrexham. She said that she had been there for four months, and that she was there with her daughter and her granddaughter, who was four years old. She said that they had arrived in Britain from Zimbabwe four months earlier with seven suitcases. Their farm there had been taken away from them. They had arrived back in Britain and come to Wrexham because her late husband had fought in the battle of Britain and had had a friend who lived in the town.

As a result of that connection, the British Legion in Wrexham welcomed this lady. The local authority found a flat for her in the town and the British Legion decorated and furnished it. That is how Wrexham treated one asylum seeker. That shows what Wrexham is like to the outside world, and it shows the strength of its community.

Wrexham knows, however, that, in the modern world, it must continue to progress and to change. It knows that skills development and a willingness to learn hold the key to more prosperity. Colleges in the town are now working with industry to develop the work force Wrexham needs to attract the best industries and build further prosperity, because people there understand that prosperity is the key to attacking the problems of poverty and drug-related crime that still exist in the community.

I worked with teenage drug addicts, as a lawyer representing them. I remember one 14-year-old who had committed 23 house burglaries to feed a heroin habit. I also remember the face of his mother who always came with him to court. Crime has many victims in many different guises. I welcome the work carried out in towns such as Wrexham to help those victims, and I welcome the measures in the Queen's Speech to make those who profit from their misery pay proper penalties.

The work of my predecessor, Dr. John Marek, has played an important part in dealing with constituency problems in Wrexham for the past 18 years. This was very evident to me as I knocked on doors in the town. I heard from many people about his diligence and about the work that he had carried out on their behalf. I can best pay tribute to him by striving to uphold the same standards.

I would like to end on a personal note. I sought election to this House because I believe that it can change our country for the better. I hope that I have the skills to contribute to bring about that change. If I have, it is because I have benefited from those who have taught me and argued with me over the years. I thank them; they know who they are. But above all, I wish to thank my parents, who have supported me and given me the chance to get on. For me, being a Labour Member of Parliament is about striving to give all people the chances that I have had.

Photo of Edward Davey Edward Davey Shadow Chief Secretary to the Treasury, Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Chief Secretary to the Treasury) 9:23 pm, 25th June 2001

It is a privilege to follow Ian Lucas. His maiden speech, which was moving and passionate, shows that he will make many good contributions to debates in the House. Many of us remember his predecessor, Dr. Marek, and I join the hon. Gentleman in paying tribute to John, who had many friends across the Floor.

In the short time remaining to me, I would like to focus on the economy. I am concerned about some of the contributions that I have heard tonight, and about some of the ways in which the economy was debated during the election. There is too much complacency about the UK economy. People seem to forget that the problems in the international economy, particularly in the United States, but also in Japan and Germany--the world's three largest economies--will inevitably impact on the UK economy. The UK economy is not as well placed to meet those challenges as is often made out.

There are huge imbalances in the UK economy between consumption and manufacturing output, between the service sector and the manufacturing sector and between different regions. A slowdown is already taking place in our economy. The monetary data, the manufacturing output data and the gross domestic product growth data show that. We have a weakening economy that is not well placed to meet the challenges, particularly in the light of the present uncompetitive exchange rate.

I am concerned that, even in these early days, the new Government have made exactly the wrong decisions and the wrong noises to meet that challenge. In interventions made many hours ago, I questioned Labour Members about whether the remarks from Her Majesty's Treasury, talking up the pound when it was falling towards a more competitive level, were sensible: answer came there none.

I am worried for those working in the manufacturing, agriculture and tourism sectors in particular. They face problems because of the uncompetitiveness of the pound, but the Government's first words, albeit sotto voce in briefings to the press, undermined the markets' reaction to the pound, which was easing the pressure on those industries.

I hope that the Government will change their mind about the way in which they brief the press and realise that they must support the Monetary Policy Committee to achieve a rebalance in monetary policy. That is crucial for those sectors of our economy that are under pressure.

I return to a matter that is not directly referred to in the Queen's Speech, but which was mentioned in briefings related to it and in speeches made today--the Chancellor's proposal that the economic theme for this Parliament will be competition and productivity. He made welcome announcements about how policy will change in the Department of Trade and Industry and the Treasury in order to promote competition and, thus, improve productivity.

We welcome many measures in the package, but three omissions represent a real problem and the Government must focus on them if they are to reach their productivity goals. The first is education. Investment in education is the key to improving productivity and making our nation competitive, but it was not the centrepiece of the Chancellor's announcement. Secondly, the need to simplify regulation and the taxation system is also important, and Mr. Fallon made the same comment in his excellent speech. In this Parliament, we need a major change in the Treasury's attitude to the taxation system.

The third omission is a debate about Britain joining the euro. If there is one measure that would change the way in which British industry and the British economy had to face up to competitive pressures in the world and promote its own productivity, it is joining the euro.

Countries in euroland are already achieving a massive improvement in their competitive position. Although that is yet to come through to the macro data, there is huge and unprecedented merger activity in euroland, which is sowing the seeds for a competitive rejuvenation of those countries that are members of the euro. The economic rationale is price transparency and the competitive pressures that that unleashes, but if Britain is on the sidelines we shall not receive the micro-economic benefits that are the foundations for macro-economic success. The Government are determined to make this Parliament the one in which British productivity picks up, but they are making serious errors on core aspects of the policy changes necessary to achieve that.

I return to how the House debates and holds the Government to account on economic policy and shall introduce the debate on the euro in my remarks. Often, we are lectured by Eurosceptics in the House that joining the euro would undermine parliamentary sovereignty and that, somehow, monetary policy being decided by the European central bank would completely change the historical position of this place. That argument is nonsense on stilts, as any analysis of UK monetary policy over the decades would reveal.

There has never been a vote in the House on interest rates or the exchange rate. As the minutes of the MPC show clearly, day-to-day setting of monetary policy is very technical, and the House is not equipped to hold the Government properly to account in such a way. Moreover, the international capital markets hold all Governments to account for their monetary policy and how it is implemented. The gnomes of Zurich and the red braces wearers in the City hold the Government to account on monetary policy, not the House. However, the House should hold the Government to account on fiscal policy, but it has failed to do so for decades.

The last time the House voted against a spending request from the Executive was in 1919--it was for a second bathroom for the then Lord Chancellor. I referred to that anecdote several times in the previous Parliament, and I shall come back to it. If hon. Members are interested, they can read my booklet called "Making MPs Work for our Money". I am not trying to get commission, because it is available free on my website--www.edwarddavey.co.uk. It can be downloaded free of charge, and I recommend it to new Members. In that paper, I have tried to set out how the House could reform itself to ensure that it holds the Government properly to account for fiscal policy. That requires radical changes.

In its various reports during the previous Parliament, the Select Committee on Liaison nudged the House in that direction. I ask new Members to read its report and join in the historical mission for this Parliament to reform the way in which we hold the Government to account for economic policy. 9.31 pm

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I wish to declare the interest recorded in the House of Commons Register of Members' Interests, which may be appropriate to the debate.

It is my great pleasure to congratulate hon. Members who have made maiden speeches this evening. They have been of a consistently high standard. I particularly congratulate my hon. Friend Chris Grayling. All hon. Members who made maiden speeches showed great knowledge of, and affection for, their constituencies, which is an important feature of our parliamentary system, with its single member constituencies. All of them will be a great credit to the House in the years ahead and in the debates that we shall have with them.

I also congratulate the Secretary of State for Trade and Industry on her well-deserved promotion, and her ever-growing army of junior Ministers. There are eight now, which must almost be a record. They will not take up the Front Bench entirely, because two of them are from the upper House. Nevertheless, they are collectively a formidable team, and we look forward to debating contentious and other issues with them.

A heavy responsibility lies with the Secretary of State for Trade and Industry and her colleagues. Her Department looks like taking on the role of balancing the expenditure ambitions of other Departments. It is perhaps no exaggeration to say that this Parliament will be dominated by public expenditure issues in respect of public services. That may be right and proper, but if public spending is to be the chief issue, it is important for the Department of Trade and Industry to ensure that that is balanced by an equal attention to the wealth-creating process. It is only from the taxes paid by businesses and their employees that we have any public services. Quite simply, without profits and tax there can be no welfare. All Governments must bear that eternal truth in mind.

We shall support the right hon. Lady and the Department in so far as they act to promote the success and enterprise of the economy. However, the signs so far are mixed and not altogether encouraging. The Chancellor gave his own version of the Queen's Speech. There was a time when Her Majesty laid out the Government's programme, but now that task is shared with the Chancellor of the Exchequer. The Chancellor showed that he may have learned something from his mistakes, and we shall support elements of the enterprise and competitiveness package in so far as they do the trick; but in other respects there was more familiar meddling from the Chancellor and the Treasury.

What was noticeable, I am afraid, was that the Department of Trade and Industry had again been reduced to playing second fiddle. It essentially had a walk-on part in the drawing up and promotion of that package. That was a persistent problem in the last Parliament. The DTI, under a succession of Secretaries of State, was unable or unwilling to stand up to the Treasury. That is why we had damaging and unnecessary taxes, such as the climate change levy, which is incredibly complex and utterly irrelevant to the task of combating global warming. It is why we had record fuel duties and why the whole British haulage industry was made uncompetitive. The DTI apparently did absolutely nothing to resist the Treasury's taxing ambitions in that respect. That is not to mention IR35, the notorious tax change that has done, and continues to do, so much damage to the information technology sector.

My friendly advice to the Secretary of State is that the DTI should have its own enterprise and growth package on its own terms, and that the Treasury should come in behind that. The package should include the opening issues on which mistakes were made in the last Parliament--and there is plenty of evidence of those mistakes. Today's debate has reminded us that since 1997 we have fallen from ninth to 19th place in the world competitiveness league, and that the productivity gap to which the Chancellor is fond of referring has, in fact, widened. That was not apparent from his speech, and it is certainly not apparent from any Treasury document; but a careful reading of the DTI annual report published in March reveals that, on the basis of both calculations of productivity--output per worker and output per hour--the gap has widened since 1997, in relation not just to the United States but to France and Germany.

Every Budget that we had in the last Parliament referred to productivity and the productivity gap, but the gap has widened rather than narrowed. Why should we believe the Government's new emphasis on productivity, and why should we think that it will be any more successful than what happened last time--especially when many of the same mistakes are being repeated?

For instance, within days of the general election the Government admitted that they had given in to the European Union over the information and consultation directive. It is precisely that sort of centralised, standardised, legalistic interference from firms and business that is so damaging, and has caused so many problems over the past four years. It has led to the persistent over-regulation described by my hon. Friend Mr. Fallon. I do not refer just to the individual items; this is a cumulative burden that adds to business costs and loses us competitiveness in world markets.

Of course, the Government opposed that directive. The last Secretary of State for Trade and Industry said in the House on 18 January:

"The Government remain opposed to the directive".--[Hansard, 18 January 2001; Vol. 361, c.498.]

Another DTI Minister, the Minister for Employment and the Regions, who is present, was also against the directive. He said:

"We want a dialogue based on trust and partnership, not legal obligations."

I wonder whether the hon. Gentleman is still of that opinion. He certainly lost the argument in Europe.

That is one more decision that would once have been made in the House of Commons by the Government. Mr. Davey said that there was no democratic transfer in these matters. The decision on that proposal, which would have been made in the House by a Government, has now been transferred to the European Union and made on the basis of majority voting. Of course, that will increase: the Nice treaty extends majority voting. That has been spotted by the Irish. The Nice treaty is not primarily about enlargement. If it were, the budget and the common agricultural policy would have been tackled. The Irish spotted that it was about further centralisation. Therefore the warnings of my hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) are valid. Even before the Nice treaty has come into effect, a consultation directive opposed by a Labour Government has been decided by the institutions of the European Union. That is why not just this country but the European Union as a whole is losing its way in global markets.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I will not give way, if the hon. Gentleman will forgive me, because I wish to pick up on some other points from the debate.

One of the puzzles about the whole debate is why it is that the Chancellor and other Ministers talk glowingly about the United States success in enterprise and venture capital, yet converge on a different economic model promoted by the European Union. It is true that the Government have picked out items from the American experience, such as the proposal to apply criminal sanctions against business people guilty of anti-competitive behaviour, but, if they want to pick out certain items such as that, why do they not buy the full American package and realise that American entrepreneurial success is built on low regulation and low business taxation?

In short, the Government are in a muddle. That is dangerous when we consider how vulnerable the British economy is. We have a highly distorted economic backdrop. There is something approaching a boom in services, bank lending to the private sector is at near record levels, but the trading sector, particularly the manufacturing sector, is almost in recession. Competitiveness and productivity are down; we are running a record trade deficit; the savings ratio has collapsed; and our enormous public expenditure commitments go far beyond any anticipated growth in the economy. That is why we shall look critically at the enterprise Bill. We shall be constructive on bits of it that we approve of, but shall look critically at it to find out whether it will strengthen the sinews of the economy to see us through any economic downturn.

Perhaps when the Secretary of State replies, she could kindly answer one or two additional questions. Is she serious about the need to remove excessive regulation, which is an unnecessary burden to growth? It was in that area that the biggest gap opened between words and deeds in the previous Parliament.

On the euro, my hon. Friend Michael Fabricant urged caution on the Government. In anticipating his words, the Government have already responded by telling others, "Cool it on the euro." If the Government are cooling it on the euro, should firms and businesses cool it on their conversion to the euro? In the previous Parliament, the Government urged businesses to use their own money to prepare to convert to the euro. If the Government are going cool on the whole project, is their message and instruction to firms to back pedal on the anticipated conversion costs? Can the Secretary of State confirm the £32 billion figure, which will be the cost to business on conversion? The Chancellor rubbished that figure from an authoritative source during the election. Have the Government a superior one?

My last specific question is on energy policy. The Government and, indeed, Europe as a whole have a hypocritical policy towards the United States. They criticise the American presidency for renouncing the Kyoto accord, but meanwhile Europe as a whole has no long-term or even medium-term strategy to counter the increase in carbon dioxide emissions. With the decommissioning of nuclear power stations in the medium term, it is not only an opinion or a possibility but a certainty that our carbon dioxide emissions will increase. Why is Europe lecturing the United States about global warming when Europe collectively has no answer to the problem after 2010? Will the Secretary of State confirm that there is to be a comprehensive review of energy policy that will get to the bottom of that issue?

Opposition Members will enter into the debate on public services with gusto. We agree that, as a country, we must be far more creative--this applies right across the political spectrum--about how to mobilise the means to supply the health, education and other requirements of the population. We shall tackle that subject with the same vigour with which we tackled the industrial and economic problems of the 1980s and 1990s. [Interruption.] Let us not forget--[Interruption.]

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. Mr. O'Neill should not shout across the Chamber.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I am grateful to you, Mr. Speaker.

I ask the House not to forget, and to balance those ambitions for public expenditure with the knowledge that all those plans depend on the health and success of the productive sector of the economy. It is that task that the Government must tackle more energetically in this Parliament than they did in the previous one. If they do so, they will have the support of Conservative Members. If they do not, the disillusionment shown by the scandalously low turnout in the general election will become terminal.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry 9:46 pm, 25th June 2001

We have had a wide-ranging and constructive debate that has been particularly remarkable for the number and the quality of maiden speakers. I must apologise to right. hon. and hon. Members for the fact that my unavoidable commitments elsewhere prevented me from hearing so many of those speeches in person, but I look forward to reading them tomorrow with pleasure and with profit.

All of the hon. Members who made their maiden speeches today paid eloquent tribute to their predecessors, many of whom served in the House for many years. All of them also gave the House vivid descriptions of their own constituencies. In a thoughtful and wide-ranging speech, my hon. Friend Mr. Bryant reminded us that he is one of the very few hon. Members whose way into the House was paved by a special new Act of Parliament.

Chris Grayling spoke about local problems and the local public services that have so dominated the recent general election.

In a witty speech--we look forward to further speeches from him--Richard Younger-Ross spoke particularly about the need for more businesses to move into south Devon, which is a central preoccupation of the regional development agency in that area, as is the case elsewhere.

In very well-informed and wide-ranging speeches, my hon. Friends the Members for Morley and Rothwell (Mr. Challen), for Aberavon (Dr. Francis) and for Telford (David Wright) all spoke about the impact of the extraordinary technological changes taking place in our economy on the industrial structure and on employment in their constituencies. They reminded us of the central importance of ensuring opportunities for every individual, regardless of background, to find and fulfil their potential not only for their own sake and that of their families and communities but for the sake of our wider economy. Opportunity for all as a route both to a dynamic economy and to a more inclusive and fair society is a central theme in the Queen's Speech.

Iris Robinson brings to the House her experience in the Northern Ireland Assembly. She paid generous tribute to her predecessor, against whom she reminded us she has stood in various elections.

I particularly want to refer to the speech of my hon. Friend Mr. Miliband, with whom I worked so many years ago on the Commission on Social Justice. He, too, stressed--and vividly illustrated with examples from his constituency--that in the modern world, a dynamic economy and a fair society are not enemies but partners.

In a moving and personal speech, my hon. Friend Ian Lucas also stressed the waste of so much talent in our community and, again, the importance of extending opportunities to every individual. All of those who spoke will make a distinctive and valuable contribution to this House and I look forward very much to hearing from them on future occasions.

Before I turn in particular to the contribution of Mr. Portillo, I must refer to the position of one of the United Kingdom's oldest companies, a matter that I know is of great concern to Members on both sides of the House. I am referring to one of Britain's oldest and most famous brands. Unfortunately, the company's product line is stuck in the 1980s, its consumers are ageing, its share price is falling, its boardroom is split and its chief executive has just resigned: the Conservatives plc now has to find itself a new leader.

Does the party turn to the chairman of the divided board, an aristocratic but perhaps weary potential candidate? Or does the party put its hopes in a Spanish takeover bid? That is the choice that faces the Conservatives plc. Will it be the toffs, or will it be the tapas? We look forward with great anticipation to the decision that will resolve the brand identity of the modern Conservative party.

I must thank Mr. Heathcoat-Amory for his kind remarks about my appointment and those of my Front-Bench colleagues. I am delighted also that the right hon. Member for Kensington and Chelsea added a fresh conversion to the list: we have seen him turn from opposition to independence for the Bank of England to full support for it. We have also seen him turn from voting against the minimum wage to supporting it, if reluctantly.

This evening, the right hon. Gentleman has declared an astonishing conversion to support for the steps that I shall be supporting, as Minister for Women, to increase women's representation in this House. Even more astonishing, the right hon. Gentleman has brought with him Mr. Bercow. The hon. Gentleman is not present for this part of the debate, but I now understand that he is a convert to feminism. If I can achieve so much in a mere two weeks as the new Minister for Women, I look forward to seeing hon. Gentlemen from the Conservative party supporting the Bill that we expect to propose to enable the Conservative party, as well as our own party, to take the necessary measures to continue to deal with the under-representation of women in this House. Converts are always welcome.

I regret that Conservative Members have so little of value or strategic significance to say about how we build upon the economic stability secured over the last four years to promote enterprise and productivity. I regret that they have so little to say about how, in the modern economy, we move from an industrial base to a knowledge-driven economy, and so little to say about how we harness the talent of all our people in the service of both a more inclusive society and a more efficient and dynamic economy. I regret the fact that this evening we heard again the familiar talking down of the strengths of the British economy and the same old, and frankly tired, complaints about red tape.

I shall remind the House of what independent and authoritative observers have to say about the state of the British economy. The Economist Intelligence Unit says:

"The United Kingdom remains one of the world's most attractive business locations over the next five years . . . The strengths of the UK's business environment over the next five years will continue to be the government's generally pro-business policy orientation, the depth and sophistication of the financial markets, the comparative lightness of the tax regime and the flexibility of its labour market."

That was written before my right hon. Friend the Chancellor announced last week his latest reform to capital gains tax, which will give us an even more favourable environment for entrepreneurs and investment--indeed, it will result in the provision of an even more favourable regime for capital gains taxation than in the United States.

A. T. Kearney registered the fact that the United Kingdom rose to second place on the worldwide index as a destination of choice for foreign investors and confirmed its position as the single most favoured destination by far for foreign direct investment into the European Union. The vice-president of A. T. Kearney said:

"strong economic growth in the first three quarters of 1999, as well as the continued pro-business stance of the Blair government may all underlie this favourable British market position."

More recently, Arthur Andersen's world entrepreneurship survey rated us on a range of measures as No. 1 in the world as an environment for entrepreneurs. Those are fair measures of the success that we have already achieved in helping to create an effective environment for enterprise and investment.

The right hon. Member for Wells asked specifically about regulation. I remind him that one of the flagship measures in this year's Queen's Speech is an enterprise Bill that will bring forward radical, pro-competition reforms, including a new power for the competition authorities to scrutinise regulations for possible anti-competitive effects. That will be the next stage in a radical, far-reaching package of reforms to the frankly byzantine and out-of-date competition regime that we inherited from the Conservative Government.

Furthermore, the Regulatory Reform Act 2001 will give the House the opportunity and power to sweep away unnecessary, out-of-date, entangled old regulations. Quite inexplicably, Conservative Members voted against that measure. In addition, my right hon. Friend the Chancellor last week announced a radical simplification of the VAT system, a measure that will be particularly helpful to hundreds of thousands of smaller companies.

In contrast, the Conservative party has no strategic analysis of the way the modern economy is changing, or of the role of Government in a modern economy. The Government understand the changes that are taking place, which are driven by an extraordinary speed of technological change in the modern economy.

In their first four years, the Government set out to achieve the right framework for economic stability and to bring more than 1 million more people into employment. Upon that foundation of economic stability, the Government can now move to improve productivity and spread enterprise throughout our community. Upon that foundation of economic stability, we can introduce reforms to the economy that mean we will be even better placed to adapt to the change and restructuring that are taking place in an increasingly competitive global economy.

The stability that we have achieved means that we can move on to make the reforms that the country needs--to increase enterprise in every nation and every region of our country, to raise productivity and the skills of our work force to give us the most pro-competitive regime in the world, to support hard-working families and to enable opportunities to be extended to every individual.

We can do all that because we have made our choice. We set out that choice clearly in the election--it was between stability and a return to boom and bust; it was between full employment and mass unemployment; it was between investment in our future prosperity and public services or cuts in essential public services. Those cuts would have been the inevitable consequence of the utterly irresponsible promises being made by Conservative Members. Tax cuts--initially for £4 billion, then £8 billion, then £20 billion--would be paid for by public spending cuts affecting teachers, doctors, nurses and police officers.

We put a choice before the British people--

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.