First, may I congratulate Mr. Purchase? I have always found him to be an authentic and tremendous voice for the manufacturing industry-a great tribute and honour to the House. In making my own concluding remarks, I also want to mention my great affection and respect for my hon. Friend Sir Patrick Cormack and my right hon. Friend Miss Widdecombe, who made distinguished contributions, as did the leader of the Scottish Nationalists here, Mr. Salmond.
This has been a rather good debate, which has been enjoyable to listen to. There is not much time left, but I must say that I am struck by the way in which a career can cycle around and come back to where it was. In July 1966, I joined the Conservative research department as a very young economist. The day after, one G. Brown, Her Majesty's Secretary of State for Economic Affairs, had confided in the House, and I paraphrase, "We are running the economy in a way that no economy has ever been run before." Now, one could find that another G. Brown and his Chancellor are running the economy in very much the same way as the first G. Brown did 44 years ago.
At some time, we all have to get around to clearing out our offices, and I am doing that. Today, I came across the transcript of the Committee stage of the Bank of England Act 1998, which my right hon. Friend Mr. Heathcoat-Amory has also mentioned. In that Committee, we discussed the independence of the Bank of England and the restructuring of the regulatory system. On
On the balance of judgment, I have found it interesting that the voices from the left-we heard two together-and from the Scottish Nationalists have gone for the public spending solution. I do not believe that is plausible, but we have to find a balance, and I do not want my position to be caricatured at this late stage as saying that we want a kind of fiscal masochism of any kind. We need to tune things very carefully, but we need to bring the private sector with us, but the fear of further tax increases is the best way of killing any recovery.
Let me make two brief points that are more or less tax-related, and then three wider points. I regret that the Government have done nothing to abort the proposals to increase national insurance contributions or to reverse their proposals to truncate the personal allowances and superannuation deductions for higher earners. In that alone, they have aggravated a problem that has long troubled me, because they have imposed further arbitrary fits and starts in what should be a reasonably progressive-I hope moderately progressive-tax system.
Just as there are ridiculous marginal rates with benefit withdrawals, we now have in the tax system-wilfully-hurdles, dips and troughs. Spikes of marginal rate that are highly anomalous create deterrence. That is perhaps best seen, and most relevantly to the Budget, in the classic slab system that still applies to stamp duty. How many transactions for houses are done at £250,001, or at £1,000,001? The answer is very few, and that of course creates marginal rates on the order of thousands of per cent., because it is all or nothing when one goes over the limit.
The second anomaly has to do with national insurance contributions. They have been built up by the Government as a second and politically more palatable form of income tax, but there are again major anomalies. For instance, one arises when a man reaches 65: I have worked out that the grossed-up value of no longer having to pay employee national contributions is almost as great as the value of the pension. We need to tackle such anomalies if we are to provide rational, coherent and consistent incentives for people to stay on in the labour force. Given the possible abolition of the default retirement age, such an approach might even give employers some incentive to maintain people in employment after that age.
I shall share my wider concerns briefly with the House. They may appear a bit diverse, but I think that there is a common underlying theme. My first concern is that we still say too little about effective productivity and competitiveness. That has been a bit depressing today, yet we are in a lethally competitive world. Alongside British car firms, Volvo has just gone to a Chinese buyer. On the financial side, it is interesting to note that the City of London Corporation commissioned an Asian consultancy to produce reports on global financial centres. The seventh and final report has just been published, and the research has been described as being
"a wake-up call for policy makers that London's standing as a world-leading global financial centre should not be taken for granted."
Add in continuing concerns about skills deficiencies and the declining productivity of the public sector, and we have a fight on our hands.
If we are to fight that fight effectively, we must look to our social as well as our economic cohesion. Strangely, my upbringing took place on a co-operative farm. My father was a manager, and a Tory. I have stayed in the one-nation camp: I have not departed from that, and I have great sympathy with the renewed emphasis-it is not new-that my party is placing on social action and the voluntary sector.
I believe that the new emphasis will soften the harshness that any Government would have to impose on our society, and that it will help tackle the frustration that we feel as we see more of our lives and income going to the state. The state proclaims itself to be beneficent, but it does not really provide the services that we feel that we should get, and we do not have ownership of the process.
Most of us here can argue our way to getting our full share of the benefits of the public sector. However, I am always conscious of the people who, faced with that problem, come to see us in our surgeries because they are confused, demotivated and disempowered.
We in this place have a duty to think together about how we can equip all our people with a good education as a basis for personal and social development, and with the right mix of skills. They must also have a reasonable progression in employment, and in their chance to take personal responsibility. That should include a share in public and local decision making, which in turn implies a more decentralised public sector. If we do not get that, we will remain stuck with a high deficit, and with national underachievement and despair.
That brings me to my final point, which has to do with trust. The financial crisis was about a collapse in trust, and I shall always remember a cartoon that depicted a situation that I think that we have all seen. A person is about to a pay a filling station cashier. A queue is forming behind him, and the cashier says, "It's all right, sir. Your credit card's OK, but we're just making another call to check whether your bank is."
No one believes in the banking system. In the same way, no one believes in us as politicians. I think that it is all related. Whatever we say, people immediately throw it back at us. The answer is that we all have to learn to be more accountable, which involves more than process, or form, or box ticking. If we in this place want to be trusted again to make decisions on behalf of society, we need to know-and make clear-who carries the can for failure.
We cannot allow things to collapse through the middle, without anyone being responsible for what has happened. This recession has not been an act of God; it has been an act of man-a series of systemic failures. We need accountability at the highest level of state Government. We know that these have been difficult times, and government is never easy. Any Government would have been tested to destruction at the present time but, partly through their over-optimism, arrogance and rhetoric, we now find that this Labour Government have failed. I think that they will be held accountable for that very shortly.
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