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Mr. Ian Stewart (Hertfordshire, North) : Does my right hon. Friend agree that it would not have been possible to allocate considerable extra resources to priority areas of expenditure, and at the same time to exercise general constraint over total public expenditure, had it not been for the saving of debt interest, which is the direct result of responsible budgets over many years? Will he not hesitate--in support of tight monetary policy--to introduce an austere Budget in the spring if necessary, recollecting that tight monetary policy is most effective in bringing down inflation when it is coupled with tight fiscal policy?
Mr. Major : I shall introduce next spring the Budget that I think is right for the country in the circumstances that prevail then. My hon. Friend is entirely right about debt interest. There is a saving between this year and next year of £2 billion in debt interest because of the prudent and successful manner in which the economy has been run in recent years. That means that this taxpaying generation will be the first for 200 years to pass a smaller level of debt on to the next generation.
Mr. Jack Ashley (Stoke-on-Trent, South) : Is the Chancellor aware that, although the House is properly and understandably divided on macro- economic issues, we are almost completely united in wanting the Treasury to provide full and immediate compensation to haemophiliacs affected by the AIDS virus. As a former Minister with responsibility for the disabled he must understand that, and as Chancellor of the Exchequer he is in a powerful position to do something about it. Will he help please?
Mr. Major : The whole House knows the sincerity with which the right hon. Gentleman speaks on these matters. However, this is a matter for my right hon. and learned Friend the Secretary of State for Health. The Government made £10 million available to the Macfarlane Trust last year and the Department of Health has always made it
Column 370clear that if representations were made that further contributions were necessary, it would be prepared to consider them.
Mr. John Townend (Bridlington) : May I congratulate my right hon. Friend on keeping a firm control on public spending this year despite all the pressures. I am sure that his statement will reinforce the Government's policy to bring inflation down and will be welcomed in the City. What is the level of the contingency reserve for next year? Is he satisfied that it will be adequate as it has been overspent by £1 billion this year? Will he consider returning to the practice of looking at broad money when fixing monetary policy?
Mr. Major : I entirely agree with my hon. Friend that the control of public expenditure is vital, and we will maintain that control in future. I have set a figure of £3 billion for the reserve for the first year of the account, £6 billion for the second and £9 billion for the third. That is smaller than in the past because some local authority expenditure will no longer come out of the reserve as it is now dealt with outside the planning total, but within general Government expenditure. The overspending of the reserve this year was overwhelmingly due to an overspend by local authorities on current and capital accounts of £2.75 billion and a shortfall in privatisation receipts of £0.75 billion.
Mrs. Edwina Currie (Derbyshire, South) : Is my right hon. Friend aware that during his excellent statement the faces of the Opposition Members slowly became glummer and glummer? The extra £2.6 billion for the National Health Service must mean that spending on health in this country will be at record levels. Is it not time that we took the Opposition's claim that we are out to destroy the NHS, wrapped it in £2.6 billion and stuffed it down their unwilling throats?
Mr. Major : I have less forceful tendencies than my hon. Friend. However, I certainly accept the thrust of her points. It is perfectly clear that good news is bad news for the Opposition. Their expressions showed that only too clearly today.
Mr. Jim Sillars (Glasgow, Govan) : Will the Chancellor confirm that his forecast of an increase in gross domestic product of 1.25 per cent. next year is based on a number of assumptions, perhaps the most crucial being the level of sterling which the Treasury document refers to as remaining near or close to present levels? Will he allow the market to determine that, or will he try to buck the market, as did his predecessor? Has that fatal issue at the heart of the Government yet been reconciled?
Mr. Major : General Government expenditure is expressed in cash and the figure that I gave for it was £5.5 billion. I said earlier that our exports had done extremely well, notwithstanding the level of the exchange rate in recent months. I believe that a firm exchange rate is an important component of our anti-inflation policy.
Mr. Nicholas Budgen (Wolverhampton, South-West) : Is it not significant that in his main statement my right hon. Friend said nothing about the exchange rate? Is it not ironic that during this last year, while the Government have been proudly proclaiming that the pound will not fall, it has in fact fallen by 10 per cent. against the deutschmark? Is it not possible that the Government are moving towards being able to proclaim publicly that it is not possible for them or any Government to decide the external value of the pound?
Mr. Major : As my hon. Friend will know, the exchange rate is not mentioned as a matter of course in the Autumn Statement year upon year. The present exchange value of sterling is almost precisely the same as it was two years ago.
Mr. Brian Sedgemore (Hackney, South and Shoreditch) : Does the Chancellor of the Exchequer understand the concept of the warranted rate of economic growth? If he does, can he explain why it is so much lower in 1989 than it was in 1979? Will the deliberations of the Select Committee on the Treasury and Civil Service on the Autumn Statement be helped or hindered by the appearance before it of the former Chancellor of the Exchequer and the former chief economic adviser to the Prime Minister?
Mr. Major : The hon. Gentleman's latter point is most certainly not a matter for me. I certainly look forward to making an appearance before the Treasury and Civil Service Committee and all the delights that that usually provides. The hon. Gentleman will be well aware of the economic growth in recent years, and we have forecast further growth next year.
Mr. Timothy Raison (Aylesbury) : Is my right hon. Friend aware that there will be a warm welcome for two increases in real terms which he did not mention this afternoon--those for the arts and for overseas aid?
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : One of the right hon. Gentleman's first observations when he became Chancellor was that if it is not hurting it is not working. How many more people will not be working as a result of the estimated decline in growth from 3.5 per cent. to 1.5 per cent?
Mr. Phillip Oppenheim (Amber Valley) : Bearing in mind Opposition Member's correctly placed emphasis on manufacturing industry, will my right hon. Friend remind them that manufacturing output actually fell under the previous Labour Government, whereas it has risen substantially, especially in recent years, under this Government? Will he comment on the balancing item, which shows that our balance of payments deficit is not nearly as bad as the figures indicate?
Mr. Major : My hon. Friend is certainly correct about the statistical difficulties of the balance of payments, although it is difficult to draw conclusions as to the precise extent to which the balance of payments deficit is
Column 372overestimated. That it is overestimated is certain, but I suspect that most of the balancing item relates to capital rather than current, so I would not care to give an estimate of the extent to which it is inaccurate.
Mr. Peter L. Pike (Burnley) : The Chancellor talks of reducing the trade deficit from £20 billion to £15 billion as though it would be an achievement. Does he recognise that investment in a key manufacturing region such as the north-west is 36 per cent. less in real terms than it was in 1979? Does he recognise also that he will do more to improve that great deficit if the Government do two things--first, take a positive approach to manufacturing industry and, secondly, take a positive approach to the regions, which would also be in the best interests of the nation as a whole?
Mr. Major : The regions have been doing extremely well over the past few years. The hon. Gentleman should bear in mind that the tremendous growth in investment is certainly welcome in terms of improved productive capacity in this country, but, in the short term, it is widening and not narrowing the trade deficit. In the medium term, it will undoubtedly narrow the trade deficit, and we welcome it from that point of view. The hon. Gentleman is entirely wrong to say that manufacturing investment has been falling. It has been rising, and rising substantially.
Mr. Patrick Cormack (Staffordshire, South) : Is my right hon. Friend aware that the genuine and general welcome to the increased expenditure for the National Health Service will grow throughout the country if he heeds the plea that has already been made this afternoon on behalf of haemophiliac AIDS victims? Will he please talk to our right hon. and learned Friend the Secretary of State for Health and urge him to devote a significant proportion of that money to providing adequate compensation and not merely welfare payments to those people?
Mr. Major : I do not think that I have anything to add to my answer to the right hon. Member for Stoke-on-Trent, South (Mr. Ashley). We all share the sympathy and concern that has been mentioned, and no doubt my right hon. and learned Friend will approach me if he thinks that it is necessary to do so.
Mr. Dennis Skinner (Bolsover) : Is the Chancellor of the Exchequer aware that, 10 years ago, one of his predecessors said that the Tory Government were inviting the British people to ride in a solid gold Cadillac called monetarism? The right hon. Gentleman has had to attend the House today with another vehicle, a junk bond economy vehicle. The economy is now being put into reverse. He is asking the British working classes to tighten their belts to save the economy. Instead he should take back the £26.2 billion which, cumulatively, has gone into the pockets of the wealthiest 1 per cent. of the population. If he wants another £1.3 billion, why does he not stop water privatisation? There is some money there which he could transfer to the Health Service.
Mr. Major : As the hon Gentleman may have heard mentioned a few moments ago, we have just transferred a substantial amount of money-- £2.6 billion--to the National Health Service, which is a substantial increase in real terms. If the hon. Gentleman wants to remind people
Column 373about 1979, I can remind him about the substantial reduction in capital expenditure on the National Health Service which occurred in the period up to 1979.
Mr. Donald Thompson (Calder Valley) : Does not my right hon. Friend agree that there is no part of the economy or services which, between now and 1979, could be compared to the advantage of the Opposition? That is why the Opposition select various overseas examples from countries which often have worse underlying economies than ours.
Mr. D. N. Campbell-Savours (Workington) : With the announcement in the past few hours that there was a 1.1 per cent. reduction in manufacturing output in September, and with the problem of an unclosable trade gap, why do the figures--published by the Government and just made available in the Vote Office--show a steady reduction in support for trade and industry over the next three years? Surely that is exactly where the money should go, and yet, in all the projections, the budget allocations and the planning totals are down for subsequent years.
Mr. Major : The hon. Gentleman is entirely wrong. Industry does not want handouts ; it wants the right economic tax structure and bases, which is what it has. The output figure to which he referred is a one month's figure and is known to be an erratic indicator. Output has not fallen during the past three months.
Mr. John Butterfill (Bournemouth, West) : Does my right hon. Friend accept that, at a time of economic restraint, most people are glad that he has been able to concentrate on investment for the future and provision for the sick and needy? Does he share my concern that the Labour party did not welcome the huge investment in housing but instead requested that it should be given to the municipal authorities? Does he share my suspicion that the Labour party wishes to recreate the feudalism of the massive municipal council estates? Has the Labour party perhaps learnt that those who we have set free through the right to buy are no longer voting Labour?
Mr. Jim Cousins (Newcastle upon Tyne, Central) : Does the Chancellor accept that his statement today showed a cut in spending on science compared to last year's plans and no real growth for next year? What would he say to the scientific community, whose hopes of sustained investment in Britain's long-term economic future will have been dashed?
Mr. Major : I do not accept what the hon. Gentleman says because he is wrong. There is to be an 8 per cent. increase in science expenditure in the coming year which is on top of a 24 per cent. increase--I take that figure from memory--last year.
Column 374billion for the forthcoming year, which shows that the tight fiscal stance, alongside the high cost of money, is bearing down on the inflation rate? Will he note the welcome given to the targeted increases in public expenditure, particularly in areas which will affect the supply side of the economy, such as transport? Will he confirm that these increases in public expenditure are not inflationary, particularly when the cost-benefit analysis shows that their benefit to the economy will be greater than their cost?
Mr. Major : My hon. Friend is entirely correct. The increases are affordable and targeted on priority areas. My hon. Friend slightly underestimated the public sector debt repayment figure, which is £12.5 billion.
Does the right hon. Gentleman accept that today's statement will mean continued misery for millions of people who are repaying mortgages and who will continue to face high interest payments? Does not the Chancellor recognise--with his background, perhaps he should--that there are so many people who could never afford a mortgage, the homeless and the near- homeless, who are desperately in need of rented accommodation, whose problems will certainly not be resolved in any way by the small amount of rented accommodation that the Chancellor has predicted will be available. Do the Chancellor and the Prime Minister understand the problem? Will they be visiting homeless people and those in bed-and-breakfast accommodation this coming Christmas?
Mr. Major : It was precisely because of concern about people in difficult circumstances that the targeted increases in the new homelessness package were brought about. They should be a significant help. I entirely understand the difficulty that high mortgage rates are creating for many people. However, if it is necessary to bring down inflation and to use monetary policy to do so, we must do that. If inflation gets out of hand, everybody will be hurt--home owners and non-home owners alike.
Mr. Teddy Taylor (Southend, East) : I congratulate my right hon. Friend the Chancellor on his sound and sensible address, but will he tell me whether he is concerned or worried about the alarming increase shown in table 11 of Britain's net contribution to the EEC, which has increased from £1 billion in the last financial year to £2, 000,030,000, which is £3 per week for each British family? Will he carry on the excellent work of the Prime Minister in seeking to reduce that crazy high figure that is costing every family in Britain far too much?
Mr. Major : I certainly noticed the figure to which my hon. Friend refers, but he will know that it is substantially less than it was before its renegotiation by my right hon. Friend the Prime Minister.
Mr. Stuart Bell (Middlesbrough) : Will the Chancellor of the Exchequer note that his predecessor regularly came to the Dispatch Box at the time of the Autumn Statement to tell us that he was wrong about inflation, wrong about the money supply, wrong about the trade deficit and wrong about the state of the economy? Is it not a fact that those wrong forecasts in the past have now led the Chancellor of the Exchequer to come to the House today to say that 1990 will not be an easy year? Will he confirm that, with inflation touching 6 per cent. in a year's time, with growth rates at 1.25 per cent. next year, and with the balance of payments moving from £20 billion to £15 billion, the British public will think that these last 10 wasted Tory years are the years that the locusts have eaten?
Mr. Major : The hon. Gentleman is wholly wrong. If he looks at the record of my right hon. Friend the Member for Blaby (Mr. Lawson), he will see, first, the most remarkable supply-side changes in the economy to have been delivered at any stage this century and, secondly, a far higher living standard across every range of income in this country than existed a few years ago. That is a record of which my right hon. Friend the Member for Blaby can be justly proud.
Mr. Robert Adley (Christchurch) : Is my right hon. Friend aware that those of us who remember the record of the Labour Government from 1974 to 1979 are little short of amazed at the effrontery of the right hon. and learned Member for Monklands, East (Mr. Smith)? Would it not be useful, as we are looking back to 1979, to look back a little further, and to recognise that the events that we are now seeing in East Germany are at last releasing the people of the countries of eastern Europe from the miseries of the Weimar Republic, where all this trouble started, when there was a Government who could not control inflation? Is that not something that the British people should ponder?
Mr. Major : It is entirely true that, when people in eastern Europe are given a choice between Socialism and free markets, they choose free markets. It would be deeply embarrassing for the Opposition if I were to remind them of the period leading up to 1979 and of the significant cuts that they made in public investment ; but if I am tempted, I am prepared to do so.
Mr. John P. Smith (Vale of Glamorgan) : I was interested to hear the right hon. Gentleman say in the Autumn Statement that there will be an increase in benefits and that about 1.5 million families will get help. Can he tell me whether my constituents, Mrs. Hewson and her son, will benefit from that? That lady came to my surgery in tears the other week to explain that she receives an income of only £58 per week to keep herself and her son. She has been burgled and food taken from her pantry. She went to the Department of Social Security and got a loan that she cannot afford to pay back. I have just been told on the telephone that her benefit has now been stopped entirely. Will that lady benefit from the statement?
Mr. Major : It is impossible for me to comment on the particular circumstances of Mrs. Hewson, but I am sure that if she is in difficulties her local branch of the Department of Social Security will do everything that it can to help her.
Column 376The hon. Gentleman may know that, as I said in my statement, 500, 000 long-term sick and disabled people will gain from the disability package ; 200,000 people deferring pensions will now be able to draw whatever earnings they have, following the abolition of the earnings rule, and 2.25 million poorer pensioners will gain from the October income support and housing benefit increases.
Several Hon. Members rose--
Mr. Speaker : Order as the House knows, there is an important debate after this in which a great many hon. Members wish to participate. I shall call six more Back-Bench Members from both sides of the House, and I am afraid that we must then move on. I shall certainly bear in mind those hon. Members whom I have not been able to call when we come to debate this matter in the Queen's Speech.
Mr. Nigel Forman (Carshalton and Wallington) : Is it not clear that my right hon. Friend's combination of a well-judged fiscal and monetary policy will be successful in bringing down not only the rate of inflation as measured by the RPI, with all its deficiencies, but also the rate of asset inflation, which has been such a powerful engine of the excessive domestic demand that our policies are now deisgned to curb?
Mr. Major : I entirely agree with my hon. Friend. There is absolutely no doubt that the growth in asset inflation, especially in housing, has added to the extent of the credit boom and the consequent problem with inflation. My hon. Friend is quite correct.
Ms. Hilary Armstrong (Durham, North-West) : Is it any wonder that Opposition Members are concerned about the implications of the Autumn Statement when we know that the money allowed to local authorities for the education of 92 per cent. of the nation's children will not rise next year even in line with inflation ; and that at the moment schools are having to implement the new national curriculum, with all its additional resource implications, and to face new testing procedures, again with additional resource implications, and that there are severe teacher shortages up and down the land? What hope, what help, has the Chancellor offered to teachers and to children today?
Mr. Major : As it happens, a considerable amount of help, with a 10 per cent. real increase in education and science provision in the next year ; a large increase in support for students and for the fabric and equipment in our schools and colleges. Capital spending per schoolchild is up 8 per cent. in real terms over recent years and local authority capital spending on education is up 25 per cent. in real terms, with three quarters of that money provided by central Government. That is the help that the hon. Lady has overlooked.
Mr. Charles Wardle (Bexhill and Battle) : Is not my right hon. Friend's determination to control inflation the best possible news for this country? However, will not his projection of a £15 billion trade deficit depend to some extent on the strengthening of the surplus on invisibles? Will he tell the House the basis on which he calculates that improvement?
Column 377net figure substantially. We think that that will improve significantly in the next year. My hon. Friend is entirely right in intimating that control of inflation must have primacy.
Mr. Bob Cryer (Bradford, South) : In view of the help that the right hon. Gentleman claims has been given to education, will he tell me why, in Tory-controlled Bradford, there are still 500 rotting temporary classrooms and why children in my constituency have to be bussed from three temporary classrooms, which are now long overdue for repair, to another school where the classrooms are wind and watertight? Is he saying in the Autumn Statement that there will be an injection of money into our education system so that the crumbling schools of Victorian Bradford, which have expanding school rolls, will be able to provide permanent extensions so that the temporary shanty town can be removed?
Mr. David Madel (Bedfordshire, South-West) : My right hon. Friend has announced welcome increases in spending on public services. Does he agree with me that that will go a long way towards ensuring that the rate of unemployment continues on a downward trend in the next financial year?
Mr. Major : Unemployment has fallen dramatically, but it is even more relevant that there are 2,750,000 more people in employment than in 1983. The future level of employment will depend on the future of wage settlements.
Mr. Toby Jessel (Twickenham) : Is my right hon. Friend aware that the 11 per cent. increase in expenditure on the arts is warmly welcomed, as a flourishing arts sector draws visitors to Britain whose spending helps the balance of payments? It must be right to build on our strengths, and to give the lie to any suggestion that the Conservative party does not care about the arts.
Mr. Major : My hon. Friend will also be pleased to hear that the arts programme is a three-year programme, which will provide a firm basis for forward planning by subsidised bodies. It allows for real growth of 7 per cent. next year and a further 2 per cent. the year after.
Mr. Ron Brown (Edinburgh, Leith) : On a point of order, Mr. Speaker. Is it a breach of privilege for a Member of the House to be blackmailed by a known criminal--Dermot Redmond, of 21 Charles road, St. Leonard's-on-Sea, Sussex? Is it in order for that to happen, bearing in mind that he is using information stolen from the House by a former employee? Can the right hon. Gentleman give me some help and advice because, take it from me, other hon. Members could find themselves in the same position?
Mr. Speaker : I hope that no hon. Member is being blackmailed. If the hon. Gentleman is alleging a breach of privilege, it is best that he writes to me in the usual way, and I will carefully examine the matter.
Several Hon. Members rose --
That leave be given to bring in a Bill to encourage the fitting of catalytic converters to all new motor cars.
Just over a year ago I introduced a Bill, under the same procedure, to encourage the use of unleaded petrol. At the time, sales of unleaded petrol were less than 2 per cent. of sales and fewer than 1, 500 filling stations sold unleaded petrol. Now, sales account for over 30 per cent., and over 80 per cent. of garages stock unleaded brands.
My intention was to speed up the transfer towards the use of unleaded petrol, and to cut the amount of lead in the atmosphere--that amount is now well below what it was a year ago.
My Bill is designed to reduce other emissions from vehicles. Apart from lead, car exhaust emissions contain carbon monoxide, hydrocarbons and nitrogen oxide, which are associated with photochemical smog, acid rain and health risks, such as respiratory problems.
The latest European Community directive on small-car emissions means that all new cars will have to be fitted with a catalytic converter by 1 December 1992, and new models will have to be fitted with one five months prior to that date. Directives on larger cars are likely to repeat the small-car emissions standards and time scales.
I should like those standards to be applied sooner in Britain. We should not wait until the last minute to make those changes. My Bill provides that all new models would have to be fitted with a catalytic converter by 1 July 1990, and all new cars the following year. To help the move towards cleaner car exhaust emissions, the Bill provides for tax incentives for car manufacturers and car owners to fit catalysts.
A reduction in new car tax, equivalent to 80 per cent. of the extra cost of fitting a catalyst, would apply to all new cars where work was carried out by the manufacturer. For owners of cars that can be fitted with a catalyst, a refund of the annual vehicle licence fee would meet most of the extra cost.
The catalyst is a relatively inexpensive item, which costs between £50 and £100 for most family cars. In addition, a stainless steel exhaust, and in most cases, fuel injection equipment has to be fitted. The total cost for most cars works out at under £400. Fuel injection equipment results in greater engine efficiency, which usually cancels out any loss of economy from the catalyst. A stainless steel exhaust gives savings in exhaust replacement costs over the lifetime of the motor car, and second- hand cars with catalysts normally command higher prices.
Column 380It has been suggested that fitting a catalyst will increase carbon dioxide emissions. That has to be balanced against the reduction in carbon monoxide and nitrogen oxide emissions, which are both greenhouse gases. Carbon monoxide has a greater effect on global warming than carbon dioxide.
The final part of the Bill calls for the adoption of strict limits on emissions from diesel engined vehicles. Diesel engines do not require lead additives in their fuel and their emissions are generally less polluting than petrol engines, but they produce higher levels of particulates, mainly hydrocarbons, which cause an unpleasant smell and considerable soiling in built-up areas. Of greater importance is the reduction, which they cause, in visibility and the formation of photochemical smog. Recent studies have shown that the fumes are likely to be carcinogenic, as well as causing respiratory problems in some individuals.
The European Community has not tackled the problem of diesel engines effectively. European emissions standards for diesel engine vehicles are well below those proposed in the United States of America. The Bill would set limits for emissions from diesel-engined vehicles, in line with the standards the United States Government are bringing into force in 1991 and 1994. They would cover all diesel-engined vehicles and would lead to improvements in engine design, better fuel quality, a reduction in the sulphur content of the fuel, and the eventual fitting of improved catalytic traps. Cleaner car exhaust emissions result in a cleaner and healthier environment. The Government are rightly committed to such an environment. We must not delay reducing emissions from petrol-engined vehicles and we must bring standards up to those in Germany and the United States of America.
We are in a strong position to give a lead to the European Community by tackling the problem of emissions from diesel-engined vehicles now. Let us reinforce our commitment to the environment by doing so.
Question put and agreed to.
Bill ordered to be brought in by Mr. Keith Mans, Mr. Andrew Mitchell, Mr. Simon Burns, Mr. Ian Taylor, Mr. Jacques Arnold, Mr. Anthony Coombs, Mr. James Cran, Mr. Julian Brazier, Miss Ann Widdecombe and Mr. Steve Norris.
Mr. Keith Mans accordingly presented a Bill to encourage the fitting of catalytic converters to all new motor cars : And the same was read the First time ; and ordered to be read a Second time upon Thursday 16 November and to be printed.--[Bill 221.]