House of Commons Hansard Debates for 9 Feb 1989

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alternative schemes to be investigated. It engaged consulting engineers and has come up with an excellent scheme that would cost just a few million pounds extra. If that could be provided from this magnificently flourishing economy that we have, it would be very much appreciated by my constituents.

Let me return briefly to the matter of roads and lighting. In this respect I have an interest to declare as a consultant to Thorn Lighting, but, more important, I am joint chairman of the British parliamentary lighting group. Perhaps I should draw the Government's attention to the work we have done as an all-party group in sponsoring research showing that very small increases in public expenditure to improve and increase the quality of street lighting, whether in the inner city or in the suburbs--like my constituency--or in rural areas, pays big dividends in the reduction of crime. It makes people who live in those areas much happier, and reduces the fear of crime. But it actually has an impact on public expenditure as well, because there is less need for the use of police time and there are fewer calls on the Health Service. There is also less need for calls on the social services from people who are worried about going out at night. The old and the frail are particularly affected in this way. So, increased spending on street lighting could have a dramatic effect on the well-being of our country and, I believe, in the long term, on public expenditure. Finally, I congratulate my right hon. and hon. Friends on the good work they have done in improving our economy since 1979 and in giving us the scope to spend more money. I hope that this will not stop, that public expenditure will continue to decrease as a percentage of total national income. But I hope also that the flourishing economy will make it possible to spend more money on projects on which the Government have a legitimate right to invest, and that they will encourage the private sector to come into partnership with them. 7.54 pm

Mr. Pat Wall (Bradford, North) : This debate, the debate that we had on the Chancellor's Autumn Statement and, even further back, the debate that followed the Budget of last April are as much a marketing exercise and a slick public relations operation as they are about real investment in the real economic world. I believe that the Government, whatever criticisms we may make of them--and I would make many--have had one relatively outstanding success. Despite the fact that, for the last 10 years, the British economy has achieved a relatively unremarkable performance, it has been paraded by the Government, with some success, as a most successful economic performance.

I think it is reasonable in this debate to look briefly at what has in fact taken place during those 10 years, because it is only in the light of the economic performance and of the economic decisions during that period that expenditure decisions announced in the White Paper have been taken.

This Government came to power at a time when the British economy was recovering, hesitantly, from the recession of 1975. They then proceeded, at a relatively very slow and poor-performance rate, to the second post-war world trade recession--in my opinion, a typical, traditional, capitalist world trade recession. I refer to the years 1981-82. Their vicious social policies exacerbated the consequences of that recession by the mass unemployment

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and increasing social misery which resulted for at least two fifths of the population of Britain, and which leave us today in the situation where at least 10 million of our fellow citizens are low-paid by any standards, earning under £150 a week, which is the base of the European Community's decency level for wages. In my opinion, the upturn in the economy during the last three years has been a highly exaggerated performance. I think that that was made clear in an Observer editorial on 27 November last year : "Behind the hitherto remarkably successful Government propaganda lies an uncomfortable fact--that economic growth since 1979 has been rather low by post-war standards. In particular, the growth in manufacturing output has been exceedingly low--indeed, almost negligible." The editorial went on to say :

"We are not producing nearly enough to satisfy the voracious appetite for imported goods created by the Government's credit relaxation and tax cuts."

The editorial went on to point out that that gap had not been nearly filled or offset by the growth in overseas earnings and in the proceeds of the City of London.

It is not an issue, as the Chancellor and the Minister would try to make out, of a temporary overheating of the British economy that creates the problems we now face. It is more and more apparent, I think, that what we have is a gross under-powering of British manufacturing industry, and that really results from the lack of investment, both in the private sector and, as we are discussing tonight in the vital public sector of our economy and the infrastructure of the economy.

During the period betwen the two world wars it was common in Britain to belittle the performance of France. Although, even in those days, Britain was declining as an industrial power, it was still a major producer of goods on a world scale. Scorn--indeed, contempt--was heaped on the heads of Frenchmen for being a nation that did not produce but invested abroad and lived on the interest. Now, rentier France out-produces British industry by more than one third, and so called productive Britain has become rentier Britain, relying more and more on its investments overseas, and less and less on the wealth that it used to create. It is an interesting fact that, since 1981, the proportion of the gross domestic product invested by the state in France has actually increased, whereas in Britain it has been declining.

In his opening speech the Chief Secretary made great play of the way in which--he said--investment had gone up. The real truth is that what is important is not so much whether investment has gone up or down in those terms ; it is the proportion of the national product that is used for state investment.

In 1983-84, 45.75 per cent. of gross domestic product went in Government expenditure. The figure has fallen to 39.75 per cent. in this financial year with a further decline to about 38.75 per cent. in 1991-92 suggested in the White Paper.

I was amazed by the arguments advanced by the Minister. The Government have repeatedly claimed that they have cut state expenditure and reduced the proportion of the national income that goes on it. For years, we were told in speech after speech and in article after article that when the public sector borrowing requirement was brought under control interest rates would fall and an investment boom would follow. Even

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today the Chancellor was boasting that the Government have had such success in controlling the PSBR that they are now repaying a substantial amount of the national debt.

The truth is that, so far from falling, interest rates have risen by eight stages to 13 per cent. That is the opposite of the outcome suggested in past Government propaganda and it has happened at a time when manufacturing industry--far from enjoying an investment boom--is struggling to achieve a level of investment only slightly higher than it enjoyed in 1979 when the Government came to power.

In addition to their false arguments about the public sector borrowing requirement, the Government have advanced false arguments about the balance of trade deficit. The Chancellor says that it does not matter that we have a balance of trade deficit of £14 billion or thereabouts. That was not what Tory party propaganda said about the Wilson and Callaghan Governments and their balance of trade difficulties, still less what it said about the Government of the right hon. Member for Old Bexley and Sidcup (Mr. Heath). For internal party reasons, great play has been made over the years of the balance of payments problems faced by that Government.

The Minister said that we can have proper investment only on the basis of a thriving economy. We should consider to what extent our economy is thriving. The Financial Times recently noted an "unwillingness and inability of companies"--

British companies--

"to set aside an increasing share of profits or outputs at the same rate as their foreign competitors."

In the past six years, manufacturing investment in Britain has barely covered depreciation in industry.

We should remind ourselves that in 1960 Britain produced a third more vehicles--cars and trucks--than France. We now produce only half the number of vehicles produced in France. Fifteen years ago, we produced 2.3 million vehicles ; we now produce fewer than 1 million. In mechnical engineering, we still have a surplus of £2 billion, but in electronics, which is supposed to be a more modern and thriving industry, we have watched rough equilibrium in balance of trade terms in 1970 turn into a £2 million deficit. In the key machine tool industry, Britain and France are the only countries in the OECD that have not recovered output lost in the recession of 1979. West Germany now produces six times as many machine tools as Britain, with a work force only three times the size. Little Switzerland produces three times more machine tools with a work force only half the size of ours.

A further interesting illustration is to be found in one of the few industries in this country that has been able to compete on the world market--the aerospace industry. In that industry, a turnover of £2 billion in the late 1960s has been increased to £8 billion and exports have quadrupled in 10 years, reaching £4.7 billion. That industry has probably had more state investment and state aid than any other. It has benefited in particular from state investment in research and development, because the vast majority of the Government's investment in research and development has been directed at the defence industry at the expense of the manufacturing and non-military sectors of the economy.

Even the successful sectors of our economy--chemicals, aerospace and mechanical engineering--are now suffering from a shortage of investment as compared with

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our major competitors--the point that was made by the Financial Times. Those industries have also suffered directly through the lack of trained scientists and skilled engineers and technicians. Despite that shortage, the White Paper cuts £25 million from the pathetic youth training scheme and reduces the funds available for the employment training scheme. Virtually nothing is being done to retrain unemployed workers or re-skill older workers in declining industries.

What about education? More than half our pupils leave school at 16. In America, more than 80 per cent. of pupils stay at school until they are at least 18, and in Japan the figure is 95 per cent.

The Paymaster General (Mr. Peter Brooke) : Would the hon. Gentleman like to give us another statistic? How many of those Japanese pupils stay on at school at their own expense?

Mr. Wall : That is not the point at issue. It would be far better if education were entirely free, and if I were in Japan I would be a Socialist fighting for that cause. The point is that Japan has invested sufficient amounts of money in its industry to enable it to maintain an education system allowing pupils to be educated to the age of 18 and beyond and allowing workers to be trained, skilled and equipped. The lack of investment that the Government have encouraged and the mad flight of capital abroad have led to a deterioration not only in our industrial performance but in our social superstructure, in our competitiveness in the world market and in our education, training and skills. Our work force is underskilled, undertrained and under-educated. As a result of Government policy, we cannot compete with our major competitors.

Britain spends £265 per employed person on research and development ; France spends £325, and Germany £432. The latest CBI Industrial Trends survey found that 42 per cent. of firms in the capital goods industry face a reduction in output because of the shortage of skilled workers. In its latest quarterly survey the British Chamber of Commerce pointed out that 65 per cent. of companies in manufacturing industry now have difficulty in recruiting skilled staff.

What is true of education, training and research is true of a wide variety of public services, which are inadequately funded. As I have probably said before, 40 per cent. of our sewers in the city of Bradford are more than 100 years old and 30 per cent. of our schools were built before 1906. Large areas of redundant industrial land are waiting to be cleared to make way for new industry. We now have a major trunk road--recently opened by a Minister--which goes nowhere, to the complete bewilderment of the local population and to the consternation and amazement of visiting drivers.

What is true of Bradford is true of all our major cities. Public investment in infrastructure--roads, sewers, canals, railways and new industrial development--is absolutely vital to the reconstruction of British industry. At the same time, they are not in any way inflationary and have a real contribution to make for the good of society.

That public relations exercise has been exposed by rising inflation and the enormous balance of trade problems. Even the modest increase in exports has been dwarfed by the gigantic expansion of imports and has not kept pace with the growth of world trade. Far from there being any miracle, far from there being the marvellous,

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thriving, competitive economy that has been described by Conservative Members, the current situation promises a nightmare future for working people in Britain and the possibility of a return to mass unemployment and reduced living standards.

As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said in his much-praised speech on 25 October, the Chancellor who claims success for that marvellous economy and for the first-ever success since the war got it wrong. He got the figures on inflation wrong, he got wrong by 400 per cent. the figures for the balance of trade deficit, he was wrong by 100 per cent. about the imports into the country and he got wrong by at least 60 per cent. the increase in currency within the economy. The Government, the Treasury and the Chancellor have been proved wrong about almost every major figure. It is clear that they have also been proved wrong about the developments in the direction of the economy in the past few months.

In my opinion, far from leading us to a new, miraculous future, private industry has failed to compete worldwide, even with its major competitors. The issue of public investment will not go away. On the contrary, it will return as a major factor on the agenda. As a Socialist, I believe that the question of democratically run public control will shortly return to the political agenda of this country. 8.11 pm

Mr. David Shaw (Dover) : I must confess that the speech of the hon. Member for Bradford, North (Mr. Wall) reminded me of a visit I made to East Germany some years ago, but I fear that even East Germany is in better shape than the country he described.

The debate appears to have lost some of its importance in the parliamentary programme compared with previous years. That is because the Government have become too successful at controlling public expenditure by getting value for money from existing expenditure and limiting Government spending. It seems that my right hon. Friend the Chief Secretary has too efficiently and effectively reconciled the competing bids of all the Government Departments and has denied us the thrill of battle. We all remember that, under Labour, that battle was more like a civil war.

The results of that well-managed position are low inflation--an average of 5 per cent. in the past five years. As we all know, under Labour, inflation increased to nearly 20 per cent. We have falling unemployment--no Labour Government have ever achieved that. Between 1974 and 1979, unemployment rose by two and a half times. We have a successful and expanding economy, with a new positive and entrepreneurial feeling throughout the country.

The Opposition are so desperate that they have had to find a new way to fiddle the comparative figures. We all welcome back to the House the right hon. and learned Member for Monklands, East (Mr. Smith), but I notice that the new way that he describes some of the figures of the Government are as a percentage of gross domestic product. That enables him to say that in certain sectors expenditure has fallen because under this Government GDP has risen so hugely and rapidly that many areas of expenditure have fallen as a percentage of GDP. There has been real growth in the economy and there has been a real increase in income for those who are in work and for those

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on social security or pensions. At the same time, there has been debt repayment. I remind my right hon. Friends that the Bow Group--I am chairman of its economic affairs standing committee-- has issued its suggestions for the Budget, which include the proposal that the Government should seriously consider repaying the whole of the national debt by 1995. Certainly that must remain a real possibility on the agenda for economic success.

The fact that all those things have been happening in the economy and public expenditure has been so controlled means that, whenever one travels abroad, one finds that we are the envy of much of the rest of the world. [Hon. Members :-- "Nonsense."] Opposition Members may say, "Nonsense," but no one abroad would agree with them. That healthy position contrasts completely with the position under Labour in the 1970s, when the national debt increased by more than £100 billion. The interest costs incurred on that debt were very heavy, and every family in the land had to contribute to them through higher taxation. As has been said, expenditure was completely out of control, and the IMF had to put the handcuffs on the Labour Government. I well remember that Labour Ministers used to tour the trade union conferences promising money to every hare-brained idea that was discussed at those conferences. Did those promises of money buy anything? They brought the winter of discontent in 1978 and led to Labour's defeat in 1979.

One wonders whether Labour has learned anything since then. We noted a considerable lack of expenditure commitments in the speech of the right hon. and learned Member for Monklands, East--at least he did not put figures to most of his words. Of course, that speech contrasted with what happened while he was absent. During his absence, the hon. Member for Dunfermline, East (Mr. Brown) sang some beautiful songs, but he did not notice that the orchestra behind him was playing the music of more public expenditure with more state control. No doubt my right hon. Friend the Chief Secretary has an accurate total of all those expenditure commitments, but my personal estimate is that Labour Members made some £10 billion- worth of promises while the right hon. and learned Member for Monklands, East was absent. We all know that to pay for it would require an increase of about one quarter in income tax. We all know that any future Labour Government would not be able to find the means to pay for all those promises and commitments. They would simply not keep many of their promises.

The public expenditure White Paper reveals many sensible areas of expenditure. For example, there is to be some £2 billion additional revenue expenditure on health this year. In regard to law and order, we shall have more police on our streets. The country villages in my constituency are particularly concerned that they should have more policemen available.

Mr. Bernie Grant (Tottenham) : Tell us why.

Mr. Shaw : We all know that, because of the education policies pursued by the Labour Government in the 1970s, there was not enough discipline in the schools ; therefore, young people today are not properly educated not to commit crimes.

Mr. Brazier : Does my hon. Friend agree that one of the saddest aspects of the breakdown of discipline among

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young people is when politicians, in fact one hon. Member who is present in the House today, encourage them by making vicious attacks on a dead policeman?

Mr. Shaw : My hon. Friend has made a very strong point, which cannot be refuted.

The Health Service has benefited more than anything else from the Government's increase in expenditure. There has been considerable additional investment in hospitals and other sectors of capital expenditure. Over the next couple of years, my constituency expects to be especially grateful to the Government for a third operating theatre in its second hospital. One of the Government's major achievements has been capital expenditure on the Health Service. More value for money must be achieved in other sectors. The Government must answer why the expensive administration costs of the dock labour scheme are being incurred. It is forecast that the national dock labour scheme board will cost £4 million a year. More important, when will the sentence in the expenditure White Paper that refers to parliamentary approval being required for expenditure of £44.5 million on the national dock labour scheme be made subject to parliamentary approval? It is amazing that the dock labour scheme is still incurring so much expenditure, with much debt to be written off and forgiven by Parliament.

Considerable expenditure is incurred by the Department of Employment on wages councils. One wonders why we are spending so much money on them, when they have done more to increase unemployment than to reduce it.

Further improvements can be made by the Government as an employer. National wage bargaining could be a means of reducing inflexibility in the public sector, and if it were abolished it might reduce disincentives and disadvantages to recruitment. That could also lead to greater efficiency in the public sector and better distribution of its labour force.

That could be achieved by decentralisation, and I welcome the suggestion in the newspapers that the Government are considering further decentralisation. There are too many civil servants at too much office cost in London. I do not understand why the Civil Service should be exempted from private sector practices. The private sector pays people according to their performance ; civil servants should be paid in the same way. [Interruption.] Opposition Members may make statements. I will gladly give way if they will put their mouths where their minds seem to be.

Another aspect of Civil Service efficiency that the Government must consider is self-assessment for income tax. About 80,000 people still work for the Inland Revenue, which is far too many. The United States Internal Revenue Service manages with the same number of staff but handles four times as many taxpayers.

An increase in Government expenditure on port health charges would result in reduced local government expenditure. The Government get off cheaply, which is unfair on constituencies with ports, of which mine is one. Dover must pay 100 per cent. of the cost of checking food, which is distributed throughout the country. The Government must face up to their responsibilities, because it is ridiculous that Dover has to foot the bill for the whole country. This work benefits everyone, so the burden should be more widely shared.

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I ask the Government to note that there is considerable uncertainty in Whitehall about how the port health charges structure will continue, especially once the Channel tunnel comes into operation. I do not understand why the people of Dover should pay the full cost of port health charges for the Channel tunnel and the port of Dover. I have suggested a number of issues that the Government should consider. The Government can obtain better value for money for the taxpayer from the pounds that the taxpayer pays for the public sector. They must be vigilant and maintain control over public expenditure. The public expenditure White Paper will result in the Government maintaining their high popularity, and the economy will continue to expand and be successful under them.

8.24 pm

Ms. Hilary Armstrong (Durham, North-West) : It is an experience to follow the hon. Member for Dover (Mr. Shaw). He addressed us in his normally aggressive manner, for which we are grateful ; we should hate him to be inconsistent.

Throughout the debate, I have been amazed at the way in which Conservative Members are prepared to put only one side. It is as though we live in different countries. The descriptions given by the Minister and Conservative Members bear little relationship to the reality of people's lives in my constituency. We are told by Conservative Members that, whenever we talk about reality, we are running our people down. I resent that enormously, because I never have and never will run down the people of the north. They have contributed to Britain's wealth and prosperity more than anyone, but are paying the price of the Government's economic development of that region. For me not to represent the needs and aspirations of those people, who feel cheated by the Government, would be dishonest. For the Government not to acknowledge the costs of their public expenditure policy is short-sighted and a reflection of the short-term manner in which they have conducted the economy. Anyone who tries to follow the logic of the Government's argument becomes highly confused. They constantly attack the principle of public spending and seem to work on the principle that anything public is bad but anything private must be good. They should be considering needs, demands and opportunities and matching them and developing an economic policy around them rather than dogmatically acting as though everything in the public sector were evil. Whenever the Government's public expenditure policy is attacked, Conservative Members say how much expenditure has increased. The Government clearly find it difficult to live with those contradictions. We have an uneven economy that is riddled with differences, which are experienced as divisions and massive inequalities. The Government's priorities have not been determined by a cool assessment of needs. They have been determined by whomever has the most sway in Government or by whoever has committed a gaffe that must be put right. Earlier this year, the Chancellor had a difficult time with journalists. No one knew whether what the Chancellor said was on or off the record, and that resulted in a commitment to more public expenditure.

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That had not been planned ; there was no order of priority and no question of it meeting the need that it was supposedly addressing.

Mr. Major : Purely for the sake of accuracy, I must tell the hon. Lady that the package to assist elderly pensioners on low incomes that was announced, and to which she referred, was a matter that was under discussion between my right hon. Friend the Secretary of State for Social Security and myself for some months before the press conference to which she referred. Her comments in that regard are wholly wrong.

Ms. Armstrong : That is a matter of judgment.

Mr. Major : It is a matter of fact.

Ms. Armstrong : The facts were not placed before the House at that time and it took some time for the story to be given to the House.

Mr. Major : I have just placed the facts before the House. I invite the hon. Lady to accept them.

Ms. Armstrong : I am happy to accept the Chief Secretary's assessment of what happened, but other people will have their own assessment and history will decide.

It is clear to the Opposition that priorities have not been assessed in a clear, cool way, in which it is decided what the needs are and what is the most effective way for a civilised society to meet those needs. An example is the way in which the Government have responded to the crisis in the Health Service. Some of my hon. Friends were concerned that the review of the Health Service had been created by the Opposition and by the rather painful experiences that the Prime Minister had at the Dispatch Box at the end of 1987 and the beginning of 1988. As a result of very unequal decision -making processes, we have, therefore, an unequal and divided society. Our society is divided between north and south and between those who are doing well under the Government's economy and those who are not. For the Government not to acknowledge that substantial numbers of people in our society are paying a very dear price for the successes of the economy is staggering ; that is what I was angry about earlier this evening.

Often, what is seen as efficiency by the Government is experienced as real deprivation by the people who happen to be at the other end of it. I shall give an example. It was decided to close small unemployment benefit offices in villages in my constituency. The Government have done that as a matter of efficiency, and they are saving the magnificent sum of £2,000 a year. The cost to those unemployed people, just in bus fares, is about £11,000 a year. That means that those individuals will have to pay additional bus fares out of their benefit. A bus fare of £1.50 will not kill the Chief Secretary or myself, but if one is on unemployment benefit, the loss of that money every week or fortnight is significant. The Government are telling us that they are being efficient and saving money, but the cost to the individual is substantial. There is also a cost to the local economy and, therefore, to the ability of the local economy to regenerate and build up. It may be short-term efficiency for the Government, but in terms of the economy overall, it is a short-sighted, puny and vindictive measure.

We have heard something about squalor. I am not so interested, in this case, in the litter problem. I am interested in the squalid society that we seem prepared to tolerate. I

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have spent my lunchtime talking to people from the National Children's Home and Dr. Barnardo's and we talked about those young people who have left care and who are trying to live in the community. If they are not on a youth training scheme, they are entitled to nothing from the state and they are the victims. It is not their fault that they have ended up in care. Most of them ended up in care for a series of reasons over which they have little control, but they are being punished now. They are being punished in a way that I, as a politician, am ashamed to even have to discuss with them because I find it completely indefensible in a society that proclaims itself to be successful and prosperous.

Of course the economy of the north has been growing and changing. It has been changing significantly, and we welcome many of the changes. We welcome the diversity in the economy and we welcome an economy that is moving towards not being dependent on one industry ; but I would also argue that we could have moved towards diversification without destroying some of our industries and without destroying the skill base. We have benefited from the drip-down effects of prosperity elsewhere, but the effect is that in my constituency the level of skills is lower than it ever was. There has been investment through the Manpower Services Commission and the youth training scheme. The Chief Secretary will know that there has been a relatively high proportion of investment through the MSC in my constituency, but we have not ended up with the quality of training and the quality of skill that we should be demanding of any training programme that we are developing in this decade or century. In my constituency, the level of wages is significantly lower than it was 10 years ago. Conservative Members may be confused by that, so I shall give an example. A man who was a labourer in the steelworks is today earning what he earned eight years ago. He is now a foreman in one of the new factories and his take-home pay is exactly the same. No hon. Member can tell me that that is prosperity. What is the role of public expenditure in that? We have been arguing consistently with the Government that the economy is not at a stage where it can take off in the north.

Mr. Keith Mans (Wyre) : Will the hon. Lady give way?

Ms. Armstrong : No. I have given way once, and I know that other hon. Members want to speak.

The economy is not yet at that level. We have been arguing consistently for more expenditure in economic development. The authorities in the north have committed themselves without hesitation and with enthusiasm to working with the private sector to achieve a reasonable economic development programme. They have invested in the Northern Development Company as have the trade unions. They have not abandoned private industry ; they have tried to work with it. All of them, inlcuding the private sector, have told us that they need to continue to have investment in, for example, large factory space and to continue to be able to spend money through section 15 on European regional development fund schemes and if they cannot do that, we know, as the private sector tells us, that we shall not be able to achieve the level of investment that will allow us to take off.

The Government say that they still cannot do that and that by now things should be running on their own. In

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reality, people from all sectors are telling us that that cannot happen in the region. We have low wages, low skills and high credit levels. The commitment and determination of people to hang on and to continue to live there is matched by their fear about the future for their young people and about the future opportunities for young people.

Public expenditure is still too low in our region to enable it to take off economically. As long as that is so, its Members of Parliament will have to come here to represent the prosperous and the growing industries, but also those who are far from prosperous--those tens of thousands of people who are still living on benefit and whose benefit is being cut ; those young people who are still fearful about a future of real opportunity, and a region which is determined that it will not give way. The north has never been a dependent area. It has always been strong, contributing to Britain's economy. But we know that that requires work from all of us, from the public and the private sectors, and the Government are still selling short the people of the north.

8.40 pm

Mr. Julian Brazier (Canterbury) : The hon. Member for Durham, North- West (Ms. Armstrong) has just spoken with considerable conviction. I profoundly disagree with much of what she said and I intend to try to answer some of her points in a moment, but first let me make some general observations on the economy.

When I was a management consultant I learnt that one of the tests of a good well-run company was that it is rather boring for an outsider to visit. There is no sudden excitement from a crisis. There can be no more eloquent testimony of the Government's successful economic policies than the sheer emptiness of the Chamber. The Press Gallery and the Chamber have been almost completely empty because everybody knows that there is no crisis within a million miles and that the Government have the country firmly on course.

I want to focus on four statistics which say a great deal. The first relates to debt. There was a lot of chattering among Opposition Members when my right hon. Friend the Chief Secretary commented on debt. I have spent a great deal of time in working men's clubs and pubs at both ends of the country and I know that many Labour party supporters started to come over to the Conservative party on that one issue. Again and again I heard people say that my right hon. Friend the Prime Minister had paid off the debts that had been run up. I am not talking only about paying off international debts--the transformation from being a debtor country to being the second largest owner of overseas assets. It equally importantly applies to the domestic level--the sheer wastefulness inherent in the fact that the second largest area of Government spending when the Government took office was not health, education or defence but paying back the debts caused by the profligacy of previous Governments.

What a contrast now. Like my hon. Friend the Member for Dover (Mr. Shaw), I would like to see a firm target date, albeit some way away, for paying off the national debt. I would not be quite as ambitious as my hon. Friend ; I would be satisfied with the year 2000, and I am satisfied that there will be a Conservative Government throughout that time to do it.

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The second statistic is that for inflation. The only comment that I would make on inflation is that ours is still a little higher than our competitors. It is the single aspect of Government policy about which I am most concerned and I am glad that the Government are giving it primacy. But, my God, any recent Labour Government would have been proud to have reduced it to the present level.

The third statistic that I touch on is growth. In his long speech, which cleared the last remaining members from the Press Gallery, the hon. Member who represents the Militant Tendency--I have forgotten his constituency-- alluded again and again to our output falling further and further behind our European competitors. He must be joking. Our total national domestic product has grown faster since we took office, even allowing for the first poor 18 months when we emerged from the Labour-created crisis, than that of any of our three main European competitors--France, Germany and Italy.

The fourth of the key statistics is that for unemployment. The sad fact is that the unemployed today are the sixth largest state in the EC. There are more unemployed people in Europe today than there are people in Portugal, Ireland Luxembourg, Belgium, Holland and Greece. But that does not reflect a high level in Britain. We have only 7 per cent. unemployment. The average the other side of the water is 11 per cent. It is true that the unemployment figure today is a little higher than when the Government took office, but compared with the massive increase across the water, it is a remarkably small difference, and whereas our unemployment is falling fast, it is rising in almost every other country.

Mr. John Battle (Leeds, West) : I remember the slogan, "Labour isn't working" when unemployment was at 1.2 million. Will the hon. Gentleman confirm that even according to the Government's massaged figures, with 24 changes in the way that they are calculated, unemployment is well over 2.5 million? Will he condemn that figure rather than praise it?

Mr. Brazier : I confirm three things. First, unemployment is well below 2.5 million. It is more like 2.2 million. Secondly, at the time when those posters were put up, Britain's unemployment was among the highest in Europe. It is now among the lowest. Thirdly, the proportion of people who are in work today is not only substantially higher than it was then, but it is, as I have already mentioned, higher than that of any other EC country, except I believe Denmark and Luxembourg.

Mr. John Watts (Slough) : Is it not also true that at that time there was a tremendous amount of hidden unemployment which was one of the major problems in our economy that the Government have had to tackle?

Mr. Brazier : My hon. Friend makes a good point. To expand that, one of the features of a successful growing economy is that employment within manufacturing shrinks quickly. It is striking to note that even today with a move from 8 million in manufacturing when we took office, of whom perhaps 6 million were really necessary for the job, to 5 million now, we still have a much higher proportion of people in manufacturing than, for example, America or Japan. If one takes into account hidden unemployment, even on that one statistic the record is much better than it was then.

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I want to deal briefly with the points made with such deep feeling by the hon. Member for Durham, North-West. Although I do not know Durham well, I do know two cities on either side. I know Darlington to the south, because my sister lived there for a long time, and Newcastle to the north where I worked for a client over a number of years. I fought a seat just to the north of

Newcastle--Berwick-upon-Tweed--at the last election but one. In both those areas public spending, for which the hon. Lady calls so vociferously, is vastly higher than that enjoyed by my constituents in Canterbury. Let me touch on just three areas. According to every set of statistics that I have seen, hospital waiting lists are much shorter in the north-east than they are in my health district. Secondly, road provision in the north-east is excellent, but in my part of the world it is crummy. I hope that it will get better and I welcome the decision to develop the Thanet way which will make a big difference to us. Thirdly, investment in schooling in the north- east has been higher than in my constituency, and not just under a Labour- controlled authority. A lot of investment was made by a Conservative- controlled Northumberland county council. The national constraints applied in the south-east mean that our investment in schooling has been low.

I have argued with my right hon. Friend the Chief Secretary that the time will come when we must have more of the cake, but part of the reason for that is precisely-- [Interruption.] Does the hon. Member for Durham, North-West want to hear my point? We all listened to her. [Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd) : Order. One at a time, please.

Mr. Brazier : Thank you, Madam Deputy Speaker.

The Government's priority has been precisely to ensure that the hon. Lady's constituents get a decent share of the growing cake. That is why jobs are moving up to the north and why firms are relocating there.

Ms. Armstrong : I represent not the city of Durham but part of Durham county. We have been deprived of all of the special grants because we are not a city, which adds to our problems. Part of the special investment in the city has now gone from such areas as mine, because they are considered to be essentially rural areas.

Mr. Brazier : I have heard the hon. Lady's point. The same point applies to my constituency. When the hon. Lady comes to see the beautiful city of Canterbury, I shall ask her to walk with me through some of the deprived streets that are literally a stone's throw from the cathedral. We do not qualify for inner city relief either. The rural areas in the hon. Lady's part of the world--I know the areas a little further north than her constituency a little better--have much better facilities, especially health care, and roads than my constituency.

I hope my right hon. Friend the Chief Secretary will forgive me if I ride a few hobby horses--that is what these debates have become now that the days of economic crises are over--and mention a number of specialist areas. While we have turned round our overall economic performance enormously, it is time that we focused a little more on the detailed ways in which we apply financial controls. I should like to mention four specific points of financial control and then one special case at the end. First is the

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issue of public sector pay. We must get closer to the market place. It cannot be right, for example, that in the south-east, where average private sector earnings, excluding London, are 30 per cent. above the public average, that so many public sector workers are paid the same as their counterparts in other parts of the country, and account is not taken of the enormously higher housing costs. It cannot be right either that people with critical and scarce skills in the public sector are not given extra reward to keep them employed within it.

I shall cite a couple of important examples. In my neck of the woods we are short of candidates for heads of department in local schools. A school head of physics recently told me that he applied for some posts in the north before he came to Canterbury. Each post that he applied for had more than 100 applicants, but there were only a handful of applicants for the post that he now holds. There are shortages, too, of people with key technical skills, especially those related to the sciences. I am pleading for better rewards for hospital physicists and the special laboratory staff who support our universities. They are a small number of people, but they are crucial to the running of the universities, and we would receive good value if we rewarded them.

Secondly, it is important that, if the Treasury is to have a modern approach to controlling capital spending, it takes full account of life cycle costing. I shall cite as an example the defence sector, which I know well. It is possible by spending extra money up front to save substantial sums of money later on. All too often pressure from the Treasury--under all Governments--has been towards trying to save the up-front costs, even if that meant having an armed vehicle which spent a lot more time being repaired. It is worth spending more money on designing in features which make repairs cheap and easy. That applies not only to defence, but to all forms of infrastructure. If one looks at the rebuilding programme on the M2 --a post-war road--one can see that only a generation ago corners were cut. If they had not been then, we would have saved a great deal of money now. Thirdly, it is important that, when we look at the way in which we control spending on research and development, we do not stifle innovation. When a man comes forward with a good idea, it is easy to shoot it down on financial grounds. One does not know whether it will work for certain until it has been tried. To some extent one must put faith in people according to a past record that has been tested over a number of years. I put it to my right hon. Friend the Chief Secretary that to have 12 separate sets of accounting checks on some of our branches in the Procurement Executive is not the best way to control public spending within it. We would get much better value out of the Procurement Executive if we were willing to allow project managers their heads.

My hon. Friend the Member for Horsham (Sir P. Hordern) made some interesting comments. Unfortunately, he has had to leave. He commented on the importance of getting better value for money out of our defence budget. I would just like to add two of my thoughts. First, there is nothing which could more effectively ensure an increase in waste in defence spending than allowing the takeover of Plessey by GEC to go ahead. A frightening situation is developing within the European

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