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Column 567market. In 1988 they took up 38 per cent. That is the area that the right hon. Gentleman chooses as a success story. In 1978, imports of commercial vehicles took up 22 per cent. of the British market. In 1988 they took up 40 per cent. That is not, I grant, such a dramatic increase as for buses and coaches, but the import penetration has doubled.
As The Guardian reminds us this morning, the Government are now even running a trade deficit in putty. We are £500,000 down in trade on putty. The Government cannot get their hands on enough putty to stick their policies together.
It is a pleasure to follow the right hon. Gentleman again. I had been rather afraid that with one bound last July he leaped from Richmond terrace to Victoria street and leaped free from the consequences of the NHS review which he helped to set in hand. He will recall that, when that review was set in hand, the Secretary of State for whom he then worked said that its consequences for health in Britain could be as dramatic as the discovery of penicillin. If I may say so, the consequences of the NHS review have certainly been dramatic, but they have perhaps not been as benign as the discovery of penicillin.
This morning the Royal College of Nursing published its report saying that it had the gravest reservations about the proposals. It said that they undermined and threatened fundamental principles of the NHS. Last weekend the British Medical Journal accused the Government of using the same strategy for the NHS as a steaming gang demanding money at knifepoint. But the unkindest cut of all comes from David Green, whom the hon. Gentleman will recall is one of the directors in the Institute of Economic Affairs, who spent all the preceding year urging the right hon. Gentleman to set up the review. Last month David Green wrote in the Health and Social Service Journal that the Government's proposals are in danger of giving competition a bad name.
I presume that at some stage the Secretary of State for Health will come to the House and invite hon. Members to debate the White Paper in full. I presume that that will be his intention, even if only by remote television link-up, which appears to be his favourite mode of communication with NHS staff. He would be wise to debate it in the House of Commons because, increasingly, it looks as if that is the only place in which he will ever muster a majority for his proposals. The last opinion poll to seek evidence on public reaction to his proposals discovered that of those members of the public who had heard of them, 14 per cent. approved and 71 per cent. disapproved. The truth is that the public do not want the NHS broken up. They do not want their doctors to have to weigh the treatment that they can afford against the treatment that the patient needs. But most of all, they do not trust a Government who propose cash controls for public health and cash subsidy for private medicine.
I turn to one of the key elements in the Chancellor's statement. The Chancellor of the Duchy of Lancaster suggested that I would spend money throughout my speech. I disabuse him of that notion, because I wish to propose a modest saving. The Government could save the £40 million that they are to give in tax concessions to the private medical sector, in the form of tax relief to elderly people paying for private medical insurance, such as the Prime Minister.
Mr. Cook : The hon. Gentleman says that is cheap, which is absolutely true. The Prime Minister spent a year devising a proposal for the NHS review, over which she presided. The first proposal to come out of that review and to be put before the House is one from which she will benefit, while the majority of pensioners will find it totally irrelevant. If the hon. Gentleman finds that cheap, perhaps he should take it up with the Prime Minister.
It speaks volumes for the Government's priorities that the first of the White Paper's proposals to be put before the House is not one that will improve the public sector but will give an old-fashioned handout to the private sector. It appears that the private sector appreciates the gesture. At breakfast yesterday, I was discomfited to be confronted with a photograph of the Chancellor of the Exchequer naked. I am not sure whether I was more distressed by the impersonation of his torso or by the text underneath that was an advertisement for BUPA. That advertisement promoted something called "Budget BUPA". It has indeed been a BUPA Budget, because the subsidy offered by the Budget to that organisation is substantial. I noticed that yesterday, the Financial Secretary--who is with us in body if not in terms of attention at the moment--referred to figures that I and my right hon. Friend the shadow Chief Secretary revealed at a press conference. The right hon. Gentleman said that the average cost of the relief per taxpayer would be £100. I find that rather curious. Earlier this week, my office contacted BUPA and invited it to quote a premium for a person aged 60 wishing to continue with the kind of medical insurance cover that they enjoyed while at work--which I understand is the intention behind the Chancellor's proposal. BUPA quoted £1,080 per year. With tax relief at 40 per cent., that means a cost to the public purse not of £100 but of £430.
The Economic Secretary to the Treasury (Mr. Peter Lilley) : Perhaps the hon. Gentleman was so riveted by the picture purporting to depict my right hon. Friend's torso that he did not read the wording that appeared below it. Had he done so, he would have read that BUPA estimate the cost of "Budget BUPA" to be
"from around £15 a month at age 55 to £27 at age 74, or even less."
Mr. Cook : The hon. Gentleman is right in giving those figures, but he must recognise that "Budget BUPA" in no way replicates the cover provided by a company scheme--which is, we understand from the White Paper and the reference in the Chancellor's speech, the intention behind the tax relief. If anyone wishes to follow the Government's logic and obtain cover that is equivalent to that which they enjoyed during their working life, the figure that will be quoted to them by BUPA will be £1,080, involving tax relief of £430. Yesterday, the Financial Secretary to the Treasury suggested that the average cost of an elderly person to the NHS is £1,000. I invite the right hon. Gentleman to refer to his own White Paper, where he will find that the cost of hospital services for a person aged 65 to 74 is £415, which is half the figure that he quoted. I begin to understand why the forecasts of the Treasury team are so wildly wrong. The Treasury propose spending more in subsidy so that wealthy elderly people may go private than it would cost to treat them in the National Health Service. That is crazy
Column 569economics, but the whole Treasury team knows that the proposal has nothing to do with economics but is entirely the product of political dogma.
The cost of providing private health relief is estimated at £40 million. The Treasury Bench arrived at that estimate as the figure necessary to cover those who already have private health insurance, plus, if I correctly understood the Finance Secretary yesterday, a 10 per cent. increase. I am sorry to tell the right hon. Gentleman that again.
BUPA is not playing ball with the Government. It estimates that the number of elderly people who will be covered as a result of the new tax relief will increase from 350,000 to 1 million subscribers. It adds that that figure of 1 million is a modest estimate. That represents not a 10 per cent. increase but a threefold increase and implies a total cost, using the right hon. Gentleman's own figures, of £120 million.
Even a figure of £40 million is sufficient to pay the annual salaries of 3,000 nurses or 1,000 consultants. It is enough to purchase 20,000 ventilators or 1,300 ambulances. It is enough to meet the operating costs of 35,000 cataract removals or of 17,000 hip replacements. Those are the substantial lost opportunities caused by putting that money into private health care rather than into the Health Service.
The Chancellor knows that he will get better value for money using that sum for direct NHS expenditure rather than using it for indirect expenditure on the private sector. One reason for saying that is that the effect of subsidising the private sector will be to target help on those who are most fit and least in need of help. They are the people who obtain private medical cover.
The private medical sector, unlike the NHS, screens applicants to ensure that they are well enough. The private sector, unlike the NHS, has no Hippocratic oath by which it is bound to treat the sick. Instead, the private sector smartly passes them back to the public Health Service on the basis that, as was helpfully observed by the managing director of one private health insurance company, such screening enables the private sector to protect essentially healthy people against the cost penalties of unhealthy people. That statement has the advantage of originality, in that it perceives healthy people as the vulnerable group that needs to be protected from the unhealthy.
Meanwhile, the NHS is left struggling to cope with the costs of the unhealthy. The extent to which it is losing that struggle was tellingly revealed by a blatant example of news management, with which the Chancellor of the Duchy of Lancaster will immediately identify as he will remember the trick from his old days. On Budget day, the Department of Health slipped out the latest hospital waiting list figures. As soon as I heard of that device, I assumed that the Department had something to hide--and it did. The six-monthly waiting list revealed on Tuesday shows a jump of 50,000 since September 1988. The figure now totals 900,000, of whom one quarter have been waiting almost one year. Nevertheless, the total sum of money given by the Department of Health this year to the waiting list initiative is only about £30 million, or £1 million less than the Government propose providing as a subsidy for private hospitals.
There is another dimension to the Government's handsome handout to the private sector. The tax relief for
Column 570the elderly is the sole proposal from the Government's whole NHS review to improve the health care of the elderly. The speed at which it is being implemented contrasts with the Government's indifference to the plight of the elderly in need of care in the community. The Chancellor of the Duchy will remember the Griffiths report, because he was Minister of State when it was presented to his former Department. That report was also subject to a spectacular example of news management, being smuggled out and published in Budget week one year ago this very day.
The Government's response to the Griffiths report has been one year's silence. During that year, another 30,000 people have been added to the list of those aged over 85 requiring care in the community. During that year, another half dozen hospitals have been closed. The consequences can be seen within walking distance of the House. A hostel for the homeless in Covent Garden calculates that in 1983, 10 per cent. of its residents had a serious mental health problem. It calculates that this winter the proportion was 50 per cent. They are the victims of the Government's year- long neglect. Another aspect of the Budget that is critically important to the Health Service involves not what the Chancellor did, but what he did not do--his failure to increase excise duty. I notice that the chief executive of the Health Education Council said that he was dumbfounded by this, and the director of ASH said that it was incomprehensible. I understand their surprise. After all, only two months ago the Prime Minister launched a campaign to cut teenage smoking by half. Only last week, the Minister of State, Department of Health launched no-smoking day with the ringing declaration that he would give up smoking after dinner. This week, the Chancellor has knocked a hole below the waterline of both proposals.
There can be no room for doubt about the consequences of his action. More people will smoke more cigarettes--in particular, more teenagers will start smoking. Most people start smoking before they are 18, and making cigarettes cheaper makes it more tempting for them to do so. This is the second time in three years that the Government have failed to increase the duty on tobacco and is another stage in the Government's constant, pusillanimous retreat in the face of the tobacco lobby.
At present, the Government are the only Government in Europe resisting tougher warnings on cigarette packets. They defend their stance on the basis of voluntary agreements with the tobacco industry. Of course, since the Government have a cosy, voluntary agreement with a company such as Imperial Tobacco--its parent company donated £80,000 to Tory Central Office last year and £102,000 to it in election year--it is hardly surprising that the company finds its interests protected by this Government, in Brussels and in the Budget.
On the radio, the Chancellor said that it was necessary to control the excise duty rise because of the fight against inflation. That will not wash, because only last week the Secretary of State for Health slapped another 20p on prescription charges on the grounds that it was necessary to keep up with inflation. I remember that in 1979, when prescription charges were 20p, we were assured during the general election that it would be a lie to suggest that the Government had any intention of increasing prescription
Column 571charges. However, they did not merely double them but increased them fourteenfold in 10 years. That is a heroic rate of inflation. The result of that rise is that chemists in every constituency in Britain are faced every week with people at their counters asking which of two or three prescriptions they really need because they cannot afford them all. If the Chancellor was so anxious to control the fight against inflation, he would have frozen prescription charges, not the price for nicotine.
Another freeze announced in the Budget was that on child benefit. It is particularly important and appropriate to recall this in the Budget debate, because child benefit replaced child tax allowance. Since 1983, child benefit has decreased in real terms by 13 per cent. During the same period, every other tax allowance has risen by 22 per cent.
I have asked the following question on three successive occasions in the past six months, and I shall ask it a fourth time in the hope that someone on the Treasury Bench will have thought of an answer. Why do the Government imagine that the cost of maintaining a child has dropped by one eighth in the past 10 years, but the cost of maintaining a wife has risen by one fifth? How can they justify that double standard?
Child benefit is superior to tax allowances because it puts the cash into the hands of the mother who feeds and clothes the child. If the target of child benefit is to help with the cost of children, it hits the bull's eye because it puts the money in the hands of 98 per cent. of mothers and is therefore, dramatically better than family credit, which, we are told, is a targeted benefit. The problem with family credit is that it keeps missing two thirds of its targets. We were promised that family credit would achieve a 60 per cent. take-up rate, but it has never been anywhere near that rate. The current take-up level is stuck at about half that target. When we debated the matter in January, I pointed out that, far from increasing, the numbers of those taking up family credit fell between November and December. I was told by the Secretary of State for Social Security that this was because Christmas had resulted in a delay in applications. Apparently, families on family credit were too busy Christmas shopping to submit their applications on time. As a result of my private notice question last week, I have found that at the end of February, far from recovering from the Chrismas blip, the numbers on family credit had actually decreased from the December figure. Christmas was not a temporary blip. I presume that, this time, it was because the applicants were all out at the January sales that they forgot to submit their applications.
The truth is that family credit is a failure. It has failed to protect families from the extra costs of the loss of free school meals and the cuts in housing benefit. It can no longer be used by the Government as the threadbare pretext for freezing child benefit, which goes to far more poor families than family credit ever could.
Mr. Humfrey Malins (Croydon, North-West) : Does the hon. Gentleman agree that the present rate of child benefit is about £40 a year more valuable than child tax allowance would have been if it had been indexed at the same rate as the married man's allowance?
Column 572it did so with child benefit higher in real terms than it is now. I am not suggesting--and I wish to disabuse the hon. Gentleman of any misunderstanding that he may have on this matter--that we should convert child benefit back into a tax allowance. That would be regressive and would not give money to poor families, but to the father, rather than the mother. However, I do sometimes suspect that it might be in the interests of the 7 million mothers to rename child benefit child tax allowance, because the Government would then immediately uprate it in the way that they uprate everything that is labelled tax allowance.
One last group was entirely left out of the Budget. They will not gain, either from this week's statement on tax or from next month's uprating of social security. The 570,000 claimants, who are mostly pensioners, are almost double the 350,000 who gained tax relief for private medical cover. There will be no tax relief for this group because they do not pay tax-- their income comes from social security benefits. They will receive no increase in benefits in April because last April they received a litle bit extra for heating costs because they were housebound, for their diet because they have special needs, for their laundry costs because they are incontinent. Last April, the Government scrapped all those allowances and as a result this group found that they had more in cash than they were entitled to in benefit. Therefore, they are not entitled to any increase from this year's uprating.
Every one of those 570,000 cases was one of the 88 per cent. whom the House was assured last spring would not lose from the changes in social security. I invite the Ministers on the Treasury Bench to the surgeries held in my constituency and to explain to my constituents who fall within that group that they do not lose because of the changes in the rules.
This is the second year running in which this group of poor, vulnerable people have suffered a freeze in income--they are probably the only ones to have suffered that two years running. Ironically, by definition, the group contains the most frail, elderly and disabled, and their treatment has been a disgrace. It is also a disgrace that, in a Budget with a surplus of £12 billion, the Chancellor could not find enough to uprate their benefit by 5 per cent. The total cost of uprating would probably be £60 million a year, which is not that much more than the £40 million that he has handed out to private medicine. If the Chancellor had to make a choice, he should have given the money to those half million pensioners. It would have proved better as a contribution to the health of our nation to enable those half million adequately to feed and heat themselves, rather than to provide a subsidy to private hospitals.
I do not doubt that, when the Division bells ring on Monday, the Government will find a majority for these polices. I do not doubt that the Whips would be able to find a majority of Back Benchers willing to vote for the proposition that pensions should be taken away entirely. Equally, however, I do not doubt that when history judges this period it will be as bewildered by such priorities as all the pensioners who are the victims, and will join us in condemning the social strategy that financed tax cuts for the rich through cuts in benefits for the poor.
Column 5735.49 pm
Mr. David Howell (Guildford) : Although we are not yet in the "long speech exclusion zone", which I think begins at 6 pm, I shall try to apply a voluntary quota to my remarks and keep them as brief as possible.
The House has heard a detailed speech from the hon. Member for Livingston (Mr. Cook) about the National Health Service and social policy. NHS issues are vastly important and will no doubt be debated in the Chamber at great length, but I hope that the hon. Gentleman will forgive me if I return to the impact of the Budget on the economy, and discuss the industrial energies and dynamism from which funds must flow to finance the social policies that the hon. Member for Livingston and others wish to see. It is on such energies that we must concentrate our efforts if the goods are to be delivered in the form of higher living standards, whether in health, education or any other regard.
I confess that I do not consider the Budget statement a very good occasion for the examination of economic policy. First, the current policy is very complex, and it is hard to establish what point we have reached in the unwinding of the overheated economy. The Budget statement must be made at some time, but this happens not to be a very good time to pull up the economy by its roots and examine it in broad daylight.
Secondly, I entirely share my right hon. Friend's view that fiscal policy is not a suitable instrument for short-term management of the economy. It should be carved and shaped for the medium term to achieve supply side improvements. Attempts to use fiscal measures to adjust the wing flaps, as it were, and to change the steering at the last minute, are almost certain to end in tears and to prove futile. Much of the comment on the relationship of the Budget and the Government's fiscal stance to the immediate position is entirely unrealistic. Fiscal policy works on a different time scale, and we cannot draw any fresh conclusions about the evolution of short-term economic policy from my right hon. Friend's statement. It is impossible to rush forward and take a snapshot of the economy on Budget day, and to be wonderfully well informed as a result. I sometimes feel--my right hon. Friend must feel the same--that it is as though someone ran up with a camera and took a flashlight picture, I hope in a more suitable place than a nightclub, and then expected that picture to portray the scene truthfully. Often an entirely false impression will be given.
I note that some of my right hon. Friend's critics, especially in the press, are rushing to conclusions. My right hon. Friend is being accused of being a closet Keynesian. One commentator suggested in yesterday's papers that he was discarding monetary controls. That, I think, is a facile picture--a back-seat commentator's view. I suspect that the reason why my right hon. Friend no longer mentions some of the monetary controls and aggregates of which he and others talked earlier in the decade is that they have been tried and found useless and irrelevant in today's wide open economy.
I do not think that my right hon. Friend has gone back to closet Keynesianism or that he is trying to manage the United Kingdom economy as a separate, closed entity, steering the ship from day to day. Nor do I believe that he has thrown over monetarism, deciding that such issues do not matter. The reality, in my view, is that the instruments
Column 574that are all thought important to steering the monetary side of the economy and controlling inflation--as at one time they were--have turned out to be levers with no wires connected to them.
Like Finance Ministers in other western economies, my right hon. Friend is having to fly his aircraft in exceptionally difficult circumstances. He is, indeed, flying blind, in that all economists disagree on where the economy now is. We are given contrary statistics, which in themselves are suspect, and--almost daily--contrary assessments of the rate at which the economy is cooling down.
As my right hon. Friend peers through the fog, all he has to go by is one glimmering dial before him : M0, which is not a control mechanism but merely an indicator. He has, and is using vigorously, the lever of interest rates, and intends to continue to do so. What he lacks is the additional support that he would receive from a clear sterling exchange rate policy within the framework provided by the European monetary system. I believe that such a policy, underpinned by a relationship to the grid of European currencies through the exchange rate mechanism, would enhance the Government's credibility in squeezing inflation out of the system. My right hon. Friend, however, is denied that, and is thus faced with an extraordinarily difficult task.
Some of my hon. Friends, along with the high priests of monetarism and monetary technicians, say that that is all wrong, and that those other monetary instruments should be installed. They say that my right hon. Friend should be pressing different buttons. I cannot help feeling that it is useless to tell a pilot trying to land his aircraft in foggy conditions that he should be in a different type of aeroplane, and that it is a pity that he is in that one.
I wish my right hon. Friend well in his attempt to achieve a soft landing for the economy in the next few months with the limited instruments that he has to hand. I think that he will achieve it, although I do not believe that the tax changes or even the broad fiscal stance in the Budget will make much difference to what is happening from day to day.
I think that it was David Lloyd George who said that, when making a speech in the House of Commons, Back Benchers should stick to one point and Ministers to two. I shall therefore make only one point about the tax policies presented in the Budget speech. Let me begin with a slightly worrying fact. We now have the lowest ratio of personal savings to disposable income since the 1950s. According to the Central Statistical Office, it fell as low as 1.3 per cent. in the last quarter of last year. That should be of particular concern to my party when we consider the way in which we want to shape our fiscal policy for the medium term.
It does not matter in the very short term if personal savings ratios are as low as that--and one does not know whether the figures are accurate-- because this is a credit-worthy economy. We can continue to borrow, we can continue to finance a large trade deficit easily and, in any event, if personal savings are low, corporate savings are high. Government savings are also high, and that is what the public sector surplus is all about.
Overall, the savings of the economy may not be too bad and one can argue that, for the time being, we need not worry on that score and that no problem exists just because of the low savings ratios for individuals. I suppose that it can also be argued that high personal saving is not
Column 575necessarily a guarantee of economic perfection and dynamism. After all, the savings ratios in the Soviet Union are among the highest in the world--not due to any economic efficiency but because they cannot find anything on which to spend their roubles.
It matters a great deal, however, in the medium term, which is where we should be focusing our attention in considering my right hon. Friend's fiscal reforms. It matters because the expansion of personal and domestic savings is the key to the creation of the kind of society that Conservative Members believe is right, just, flexible and fair for the future.
Our whole party aim--my right hon. and hon. Friends need no reminding of this--is to avoid the state doing all the saving and investing. We think that the state makes a rotten job of both. Our intention over the years has been to encourage personal savings, not merely for their economic contribution but as part of the pattern for a future in which people take more responsibility for organising their own lives, health, education, retirement, housing and the rest.
It worries me, therefore, as a member of the Conservative party and a Member of this House that the personal savings ratios have fallen to dramatically low levels. It would seem a legitimate object of policy to try to get them up, even though the overall savings of the economy may not immediately be a matter for worry.
Another reason why these matters concern us is that they reflect something of a slowing down in our ambition to achieve a popular capital-owning democracy. The Chancellor of the Duchy has had much to say about democratic capitalism. It has been a central theme of successive Conservative Governments since 1979. It gives momentum to what we Conservatives are trying to achieve, which is to extend and spread ownership, to turn earners into owners and to get away the sort of mad propositions of the past which set capital against labour and made the war on capital, ownership and profits such a feature of successive Labour Governments and Oppositions.
We must continue to watch how well the pattern of popular personal share ownership is getting on, and it is not getting on as well as it has in the past. I read in the Financial Times today that personal shareholding has ceased to grow ; it has been static for the last year.
I note that the proportion of shareholding by people, as opposed to the great institutions, far from rising, has continued to fall, until it is now below 20 per cent. That, too, worries me, and I look to the Budget to see what can be done to reverse that trend because it is vitally important for the whole momentum of our economic and social programmes that it should be reversed.
The Budget helps in those areas in some ways. As the Chancellor of the Duchy mentioned, a welcome boost is given to employee share ownership. This is immensely valuable and is one of the good things that the famous Lib-Lab coalition of the late 1970s achieved. The Administration of the time did much damage to a great deal of the economy, particularly the health sector and the public infrastructure, with the appalling cuts that were made, which some of us have been trying to restore ever since.
But Labour Members agreed, under pressure from the Liberals and with our support, to introduce employee share ownership plans with tax relief on them. That is how it started, successive Conservative Chancellors have built
Column 576on that and today we are seeing a growth in employee ownership, which is healthy for industrial relations, social responsibility and a wider share-owning democracy generally.
We are proposing that personal equity plans should be expanded so that people can now invest in pooled forms of savings--unit trusts, investment trusts and equity shares. I make no secret of the fact that I would have liked to see something more dramatic. I would have liked to see the personal pension plan participant's present freedom to put quite large sums of his or her income tax-free into a savings plan extended to the freedom to invest in equity shares, unit trusts or investment trusts tax-free up to a certain amount, with that applying to every working person who wishes to save. That could have been an opportunity vastly to increase personal savings and personal participation in the wealth and industrial strength of the nation. I hope that what has been done is not a surrender to institutional saving, as the distinguished financial editor of the Financial Times suggested this morning. The implication was that we had gone back from encouraging individual share ownership and were now trying to encourage institutions to flog people more savings plans. That is a misjudged interpretation. That is not what the Chancellor is doing. Wider ownership involves a vast variety of forms of encouragement everything from small business ownership and unit trust investment right up to the full action of investing in equity shares, a difficult and sometimes not particularly rewarding occupation. I hope that the interpretation in the financial columns is not right and that the Chancellor will reassure us that the Government are still committed to the goals that we set ourselves in the 1970s of widening personal ownership in every way.
Those are ways in which the Budget somewhat helps the situation which causes me unease about low personal savings and a static pattern of personal ownership. However, those issues do not touch the heart of the matter, which is that the pattern of savings in Britain is mad. That is the case because it is influenced by a traditional pattern of fiscal privilege which, in turn, is mad.
As a nation, we invest a great deal, as the Chancellor of the Duchy said, and we are doing well on that front ; investment is roaring ahead, at the moment even more in cities in the north than in the south. But we are not saving, which is why we have the present trade deficit. We are not saving on the personal level because of an extraordinary traditional pattern of fiscal and tax privileges which sends strange messages to families and individuals in all income groups and causes a major distortion in the pattern of saving. The message that comes from the tax system today, even though the Chancellor has struggled to change it a little, is that one should save for one's house--reflected in the vast growth in house prices, a trend that is now spreading across the whole country--that one should save for one's pension, which is fair enough, and that one should stick in one job for life and take no risks. The message, generally speaking, is that one should sit tight and take no risks. The message that we should be sending, if we can engineer it, is that people should save for investment, for undertaking entrepreneurial risks, for the next generation--for health and education. These things may be anathema to Members of the Opposition, including the hon. Member for Livingston, but to us they are extremely
Column 577welcome concepts and ideas that should be spread, to bring privilege and opportunity of that kind to everybody in society so that they save for these things.
The trouble at present is that the tax system is only just beginning to be tilted in the direction of encouraging saving for those social aims rather than merely for the pension and the house ; and encouraging savings for investment, therefore matching--as must happen in the medium term--the savings of the nation with the huge desire to invest that now exists in this nation and which I so greatly welcome.
I believe that my right hon. Friends are grappling with an immensely difficult task and that they have begun to grapple in the right way. But only when--
Mr. Frank Haynes (Ashfield) : I shall be very different from the right hon. Member for Guildford (Mr. Howell) because he is a financial whiz kid and I am not. I have my feet on the ground, not my head in the air. That has not been the situation as regards Conservative Members, either at the Dispatch Box or behind the Chancellor and the various Ministers. I know what the members of this Government are all about. They are a load of pawnbrokers. The things they are doing are a disgrace. But I have my feet on the ground and I am a realist.
I talk to people in my constituency who have problems. I do not bother those who have no problems ; they can look after themselves. I have plenty of people with problems in my constituency. There were 550 of them in a theatre on Friday afternoon listening to what we had to say about what they should be getting, but are not getting, from this Government. Those pensioners and lower-paid workers told us in no uncertain terms how they felt about the way they are being treated by the Government.
I have elderly people and lower-paid people in my constituency who cannot afford the kind of contribution that the Chancellor of the Exchequer suggested for private health. They are totally dependent upon the National Health Service. I am right behind the National Health Service and I will give my reasons in a very few minutes, because I only have eight left.
The surplus that is knocking around could have been spent in a very sensible way to do something, for instance, about waiting lists. My right hon. Friend the Leader of the Opposition, following the Chancellor's statement, said quite clearly that money should have been spent on the National Health Service from that massive surplus that the Government have created. One way it could be used is to get waiting lists down. We spend millions of pounds on operating theatres and on equipment for them, and for eight hours of the 24 they are doing nothing. That is shocking.
I can tell the Government why that situation exists. It is because consultants will not work a night shift. We expect the workers that provide all the necessary services to work mornings, afternoons and nights. What is wrong with a consultant working a night shift? [ Hon. Members :-- "Hear, hear."] Hon. Members are agreeing with me. I did
Column 578not think they would. So let the Minister take it on board and let us have something done about it. That is one thing that will help to get waiting lists down.
The Government will start making excuses about beds not being available. That may be the case, so let us put more beds in. In the last 10 years the Government have set about taking beds out, so let us put them back. Then, if there is still a problem of shortage of beds, we should provide a proper service in the community so that, if people have to leave hospital early, at least they will be looked after properly.
I am opening an exhibition in my constituency tomorrow afternoon on behalf of the Central Nottinghamshire district health authority, the object of which is to let people know exactly what is available in the way of community services. They will get a message from me as to what the Government have done about community services. It is shocking. They have been cutting the money for services which people require.
The Government should be spending more money on education. We now have a shortage of teachers. Is there any wonder, under this lot? They cut university places drastically, for a start. I remember Lord Joseph standing at the Dispatch Box talking about what he was going to do about education. He did it, all right, and as a result we have a shortage of teachers.
The Secretary of State for Education and Science ought to come and have a look at my constituency and see the number of schools built in the 1890s. They are falling down and the Government should be spending money on them. Yet, in the rich constituencies of the Chancellor of the Exchequer and his right hon. and hon. Friends, they are opening a new school every five minutes. That is wrong. Those are plush, green Conservative areas. What about areas in which the workers live, such as my constituency? We want a fair share of the cake and we are not getting it.
The Chancellor stood at the Dispatch Box and bragged about how they were going to help the pensioners and the lower-paid, but with all the increases that are coming along, that help which the Government say they are going to give the pensioners and the lower-paid will be cancelled out. As you know, Mr. Speaker, I have just been doing a hell of a stint on the Electricity Bill. Electricity was up 9 per cent. last year and will be up 6 per cent. next year. This is paid by the lower-paid workers as well, not just by people who have plenty in their pockets, into which the Government keep pouring more and more. Those poorer people have to find money for these increases in prices, and in addition increased water charges are on the way. There was the announcement made yesterday. I think that the right hon. Member for Shropshire, North (Mr. Biffen) was right when he said that this lot will get kicked out next time if they do not change their ways. But, make no mistake about it, they will not change their ways, because of the leadership from No. 10, No. 11 and, yes, No. 12, for the Patronage Secretary is backing them up and making sure that they do not. I know all about that, because I am in the Whips Office on the Opposition side, so I know what he is up to at No. 12. Then there are dental examination and eye test charges. All that will be borne by the lower-paid and those people who do not qualify for that little bit extra.
The Financial Secretary made a statement not many days ago about taxes being paid generally. We are paying
Column 579more taxes now than we were in 1979, yet Ministers stand at the Dispatch Box and say how well they are doing for the economy and the people.
The cost of privatisation is an enormous burden on ordinary folk. The rich will fill their pockets from it ; it is the lowr-paid and the pensioners who will pay for it. This is a shocking state of affairs and it is time, as the right hon. Member for Shropshire, North said, for the Government to change direction ; otherwise, they will get booted out. I look forward to that day. The enormous cost of privatisation is all coming out of the taxpayers' pockets, including the pockets of those poor beggars at the lower end of the scale who are still paying taxes.
They also have to pay for all the advertising. I saw the advertisement yesterday for BUPA. My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) stood at the Dispatch Box and held up for all to see an advertisement for BUPA with the Chancellor's face on it. It was really ugly. When I looked at it I thought that for a start he needed a size 42 bra. That is how it looked. In Committee this morning we were talking about the cost of advertising. I suggested that the Government might use the young lady who has been on the front pages of the newspapers for the past few days. The lass is electrifying, but she will be very costly, according to the reports, so if the Government use her it will cost the taxpayer a few bob.
You have given me my 10 minutes, Mr. Speaker, and I have enjoyed them. I hope that you have too. You are a great friend of hon. Members, you have to look after them and you have looked after me this afternoon. At the next general election, I look forward not to returning here, but to remembering where I had been and how much I had enjoyed myself. I hope that at the next general election we get rid of that lot, return to power and really work for the nation. 6.20 pm
Mr. Richard Page (Herefordshire, South-West) : It is always a pleasure to follow the hon. Member for Ashfield (Mr. Haynes) who is good value for money, but I hope that the House will excuse me if I am a little more temperate and conciliatory.
I support the Government in much of their general policy and I was delighted at the improvements in the Budget for small businesses and share ownership schemes. However, I am concerned about our manufacturing industry. This is the second Budget that should have done more to push forward the recent improvements in production and investment.
About two years ago I expressed my concern about the state of our manufacturing industry and said what I thought would happen to the balance of payments. I was reassured that I was worrying about nothing, but today there is a huge balance of payments deficit and 8 per cent. inflation. Inflation has been brought under control by the use of one lever, and I have no doubt that the squeezing of demand will reduce our current high deficit and choke off the import of foreign goods, but it will not eliminate the balance of payments deficit completely. I see nothing in the Budget to prevent the same balance of payments deficit that we face today re-emerging when interest rates drop and demand rises. If nothing is done, I envisage the emergence of an economy behaving like a car with kangaroo petrol, bouncing forward and backwards in a cycle of stop-go reminiscent of the 1950s and 1960s.
Column 580At the beginning of the decade I supported the Government's industrial policy and helped to push it towards making industry more independent and more self-sufficient, pulling it away from that teat of state support. With the improvements that flowed from management starting to manage, the privatised state industries became major contributors to the current account surplus, from the sales and from the fact that the Government no longer needed to find billions of pounds to prop up lame-duck nationalised industries. But nothing is for ever, and the time has come for a further boost to our industrial strategy.
The excess demand in our economy produced the expected results of rising inflation and a widening trade deficit when British industry has been selling all that it can make. Industrialists are human beings. When they are faced with excess demand over production they are not under so much pressure to hold down prices. Consumers faced with non-supply or slow supply of products and money burning a hole in their pockets readily turn to buying foreign goods.
If there were evidence that British industry was growing at a sufficient rate to meet the demand that will be rekindled when interest rates have dropped, I would be relaxed about advocating any change. I certainly do not sneer at the improvements that have been made towards productivity and investments, as Opposition Members have done. But unfortunately, I consider the rate of improvement in our industrial sector to be considerably below the level required. Last year's expenditure way outstripped the capacity of our industrial base to satisfy it, so imports soared. January's results reinforced that position. To put the problem into perspective, manufacturing output last year would have had to rise by some 24 per cent. to meet the increased demand in the home market. Industry managed an 8 per cent. growth.
Much play has been made of the improvements in productivity and manufacturing investment. I welcome them--I certainly do not knock them-- but we should examine those figures not in isolation but in comparison with the world stage, because we compete on the world stage. Recent OECD figures show that we still have a productivity gap of 30 per cent. against the United States and 25 per cent. against the rest of Europe. The figures covering investment by our manufacturing industries in machinery and equipment as a percentage of GDP, or our gross domestic fixed capital formation as a percentage of GDP compare badly with our foreign competitors. Let us not forget that the majority of countries with which we have a £15 billion deficit last year belong to the EEC. The figures are available for everyone to see, so I shall not go through them all, but will select a few examples.
Although I welcome the improvements, investment by manufacturing industries in Britain has yet to reach 1979 levels. In domestic gross fixed capital formation costs as a percentage of GDP, we are at the bottom of the list of 23 major industrialised countries. It is significant to note that, in all those figures, the Japanese invest 50 per cent. more than the average in fixed capital formation and in machinery investment. There is no sign that, if demand is allowed to expand, British industry will have the capacity to meet it. Leaving aside my concern that present interest rates could slow down capital spending as much as we hoped they will slow down consumption, I ask the Government
Column 581to look further than the current short-term problems and set in place an enhanced strategy to further increase the capacity of British industry. The problem can be tackled only by the Government putting out strong signals. It cannot simply be left to the market. So often, industry's horizons are dominated by the short-term and medium-term levels of investment. The Government have to look further.
Like every other nation we have our strengths and our weakness and our national characteristics. It is a matter of puzzlement and concern that for some reason British industry and commerce does not pay as much attention to training, research and investment as do our foreign competitors. The results reflect that lack of attention. The Government recently announced a major shake-up in training in which industry will be involved, and they are to be congratulated on that welcoming initiative, but stronger signals and inducements have to be set for research and capital investment which will require a strategy to identify our exporting priorities and provide appropriate measures to support them. We have to consider initiatives such as the "Better made in Britain" campaign run by Sir Basil Feldman. I know that the Government have given it great support but they could suport it still more. In the critical sector of information technology, we have to look more closely at discouraging reliance on computer components imported from the far east. It must be wrong to have higher levels of import duty on silicon chips than made-up circuit boards. We are a value-added economy and having duties the wrong way round is not the way to make things work.
The third vital ingredient is a coherent industrial strategy for research and development. By that I mean that the tax structure must be adjusted to push, persuade, cajole and force industry into supporting basic and applied research.
Budgets should seize opportunities to persuade our manufacturing industry that it is always easier to retreat from areas of policy than to devise and carry through constructive new schemes. Our rivals abroad are exporting vast quantities of goods into this country. They show that it can be done. Sooner or later, we must do that as well, in order to survive.