Home Page

Column 581

Student Loans Company Building

(Government Liability)

3.31 pm

Mr. Jack Straw (Blackburn) : On a point of order, Mr. Speaker. I have given you notice that I wish to raise the question of parliamentary approval for the costs of the Student Loans Company building in Glasgow. Last Wednesday, the Secretary of State for Education and Science presented to Parliament a minute giving details of what was described as a contingent liability or guarantee on the rent of the building. The rent for one year is about £1 million and other costs, too, are guaranteed. There is no statutory authority for this expenditure. It has never been authorised by the House. "Erskine May" makes it clear that the procedure for presenting a minute to Parliament concerning contingent liabilities arises only in respect of liabilities that are genuinely contingent. "Erksine May" makes it clear that, where an objection is laid, approval should be withheld for 14 days pending consideration of that objection. The Opposition have laid such an objection, which stands as motion No. 42 in the Remaining Orders of the Day.

Three important questions arise from the use of the procedure by the Secretary of State for Education and Science. First, the liability that he has identified is not contingent, as the procedure requires, but is an absolute liability. The procedure arose from the 1976-77 report of the Public Accounts Committee, which made it clear that there should be a procedure for registering liabilities that were genuinely contingent and unquantifiable. An example given was the previous Conservative Administration's nationalisation of Rolls-Royce.

At that stage, the Government's liabilities were genuinely conditional and unquantifiable, whereas the liability of the Exchequer for the costs of the Student Loans Company Ltd. building in Glasgow are absolute. The Government have said that they will pay all the costs of administration. No contingency arises. We are dealing not with a contingency but with expenditure. In those circumstances, how can the procedure conceivably be used to override proper parliamentary scrutiny of the substantial decision that lies behind it?

The second question is--

Mr. Speaker : Yes, but make it brief please, because there is an important debate before us.

Column 582

Mr. Straw : There are two further questions, Mr. Speaker, and I have given you notice of both of them.

Is it right for the procedure to be used when there is a Bill on the same issue before Parliament--in other words, to be used to by-pass parliamentary scrutiny?

My third question is : now an objection has been made, in the terms of my right hon. Friend's motion, how can Parliament hold the Secretary of State to account for what would otherwise be an arbitrary exercise in power without statutory authority?

Mr. Speaker : I am grateful to the hon. Member for having given me notice of this point of order, as that has enabled me to give careful consideration to the matters that he has raised.

In answer to the hon. Gentleman's first point, I am satisfied that the proposed guarantee is properly described as a contingent liability. The direct obligation is being incurred by the Student Loans Company Ltd., but there is a guarantee and that is why the need for a specific departmental minute has arisen.

The hon. Member's second point was that the matter would best be dealt with by including it in the Education (Student Loans) Bill. I am sure that he will recognise that that is not a matter for me, but something he should argue during the proceedings of the Bill. The hon. Member's third point was to ask what happens next. The procedure was introduced in 1977 in response to a recommendation from the Public Accounts Committee. Its purpose was to draw specific attention to new guarantees, and to provide a breathing space during which objections to what the Government propose can be made direct to Ministers. Thereafter, the Government bear responsibility for what they decide and are answerable to this House in all the usual ways. There is no automatic follow-up procedure, but what has been done is fully in conformity with the practice in force since 1977.

Mr. Straw : I am grateful to you for that answer, Mr. Speaker. Am I to understand from that that the "consideration" specified by "Erskine May" is a consideration made not by the House but by the Minister?--in other words, despite the motion from my right hon. Friend, that the Minister is to act as judge and jury in his own cause?

Mr. Speaker : The house will have to judge that in debate. I have carefully looked into the question the hon. Gentleman has raised. It is wholly in conformity with a long-standing practice, and resulted from a report by the PAC.

Column 583

Points of Order

3.37 pm

Mr. Ron Brown (Edinburgh, Leith) : On a point of order Mr. Speaker. Will you explain why Mr. Paddy Meehan's book cannot be mentioned in this place? He has a point of view that should be heard, whether you or I agree with him, and he has expressed his view in print. He says that he was fitted up by the security forces. He has a lot to say, and one should bear in mind the fact that he received a free pardon some years ago--

Mr. Speaker : Order.

Mr. Brown : Mr. Speaker--

Mr. Speaker : Sit down, please. There is an important debate following this. Please let me deal with this matter.

When I call an hon. Gentleman to ask a question, I expect him to ask a question on his own account. The hon. Member was trying to draw attention to somebody else's comments in a book-- [Interruption.] I gave the hon. Gentleman the opportunity to ask his own question. He must relate it to his own experience, even if he draws attention to something that he has read.

Mr. Brown : It is very important--

Mr. Speaker : I am sure that it is a very important book, and no doubt we should read it.

Mr. Edward Leigh (Gainsborough and Horncastle) : May I ask your advice, Mr. Speaker? I see from page 161 of the Order Paper that there has been an amendment to the Queen's Speech in the name of the right hon. Member for Chesterfield (Mr. Benn). As that amendment seems to differ from that placed on the Order Paper by the Leader of the Opposition, and as it takes precedence on the Order Paper, will we have the opportunity to vote on it, because it is an important issue?

Mr. Speaker : I have not announced my selection yet. STATUTORY INSTRUMENTS, &c.


That the Food Protection (Emergency Prohibitions) (Contamination of Feeding Stuff) (Wales) (No.3) Amendment Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. Garel-Jones.]

Column 584

Orders of the Day

Debate on the Address

[ Sixth Day


Order read for resuming adjourned debate on Question [21 November].

That an humble Address be presented to Her Majesty, as follows : Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.-- [Mr. Gow.]. Question again proposed.

The Economy Mr. Speaker : Before I call the right hon. and learned Member for Monklands, East (Mr. Smith), I must announce that I have selected the amendment in the name of the Leader of the Opposition. I have also selected, for a second Division, later in the evening, the amendment in the name of the right hon. Member for Yeovil (Mr. Ashdown).

Mr. Anthony Nelson (Chichester) : On a point of order, Mr. Speaker.

Mr. Speaker : Order. I am still on my feet.

There is great demand to take part in this debate, which is the final day of the debate on the Queen's Speech, so I propose to put a 10 minute limit on speeches made between 6 pm and 8 pm but, as I have said on previous days, I hope that those called before and after that time will stick broadly to that limit.

Mr. Nelson : On a point of order, Mr. Speaker. May I revert to the point of order made by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), as this is a matter of interest to the House? When an amendment calling for full-blooded Socialism, withdrawal from Northern Ireland and the repeal of all trade union legislation has been tabled, is it not right, as the eyes of the country are upon the splits in the Labour party, and as the amendment appears to have precedents, that the House should be given an opportunity to vote on it and the country should be given an opportunity to see the division in the Labour party?

Several Hon. Members rose --

Mr. Speaker : Order. Let me deal with one point of order at a time. The order in which amendments appear on the Order Paper is immaterial to my selection, which I have already announced.

Mr. Eric S. Heffer (Liverpool, Walton) : On a point of order, Mr. Speaker. While I understand the efforts being made by Conservative Members to suggest that there are splits in the Labour party, I must say that some of us would welcome the opportunity to vote on what we believe.

Mr. Speaker : I have not selected that amendment.

Several Hon. Members rose --

Column 585

Mr. Speaker : I hope that this is not a continuation of this spurious point of order, because--[ Hon. Members :- - "It is not spurious."] I have announced my selection, and I cannot go back on it.

Mr. David Wilshire (Spelthorne) : On a point of order, Mr. Speaker. May I ask you to reconsider that selection, in view of the comments of the hon. Member for Liverpool, Walton (Mr. Heffer)? Should not the public have the right to know how many other Opposition Members are full-blown Socialists?

Mr. Speaker : Let us get on with the debate ; then no doubt we shall all hear.

Mr. Barry Field (Isle of Wight) : On a point of order, Mr. Speaker. You are most jealous in guarding the rights of Back Benchers. It has come to the House's attention and that of the nation that the hon. Member for Liverpool, Walton (Mr. Heffer) feels compelled not to stand at the next general election--

Mr. Speaker : Order. I have already dealt with this matter and announced my selection. Arguments on this issue can be advanced when we get to the debate.

3.43 pm

Mr. John Smith (Monklands, East) : I beg to move, at the end of the Question, to add :

But humbly regret that the Gracious Speech seeks to continue economic policies which have caused the largest balance of payments deficit in our history, the highest interest rates among the leading industrial nations, and the highest rate of inflation of the principal countries in the European Community ; and call on the Government to adopt a strategy for the regeneration of British Industry, and in particular its manufacturing sector, based on a commitment to regional economic development, support for the introduction of new technology through the promotion of research and development, and a sustained investment in education and training to reverse the appalling skills deficit which continually undermines the prospects of economic recovery.

I should like to begin with a word of apology to the Chancellor of the Exchequer. In all the flurry of events consequent upon the resignation of the former Chancellor and the ups and downs of recent weeks, I fear that I omitted formally to congratulate him on his accession to his new, and most recent, high office. It occurred to me today that I could and should put that omission right in the first economic debate in this Session of Parliament. So I extend my congratulations to him.

There is another reason why I should take the opportunity now. Events on the Government Benches continue to move apace. The hon. Member for Clwyd, North-West (Sir A. Meyer) is clearly a force for glasnost and has caused an outbreak of what I can only describe as democratic fervour in the Conservative party, and it seems to be as heady a brew there as it is in eastern Europe.

After glasnost, as we know, comes perestroika. That opening of the political Pandora's box can afflict even those who thought that they were previously unassailable. So I can understand the feeling of nervousness and uncertainty that is evident in the behaviour of Conservative Members.

So concerned are they by the political as well as the economic events, that the Prime Minister has sought to reassure them that the election will not be held next year or even the year after that.

Mr. David Winnick (Walsall, North) : Or at all.

Column 586

Mr. Smith : Even the Prime Minister, despite some confusion about her own ambitions--to which I heard a reference from my hon. Friend the Member for Walsall, North (Mr. Winnick)--and which has left most of us bewildered, will have to face the electorate, and however reluctantly, at the latest in 1992.

These are all signs of a Government who have lost the confidence of the people and are running scared. They have lost the confidence of the people because of the economic situation which they have created. At the end of 10 years of Thatcherism, we have, at £20 billion, the highest balance of payments deficit in our economic history, we have a rate of inflation higher than any of our European competitors, and we have the highest interest rates among the leading industrial nations.

Mr. Tim Devlin (Stockton, South) : In view of what the right hon. and learned Gentleman has been saying, may I ask how he explains recent polling evidence that, even when the Conservative party is in the doldrums, more people have confidence in it to solve the nation's economic problems than they have in the Labour party?

Mr. Smith : The hon. Gentleman makes a highly selective interpretation of some parts of polling data. I hope that he will take fully on board the fact that the latest poll I saw showed the Labour party 13 points ahead of the Conservative party in the estimation of public opinion. That might just weigh with him in his consideration of events.

The Government have lost the confidence of the people, and, what is worse, we seem set to enter the 1990s, as the Autumn Statement makes painfully clear, with the prospect of low growth, rising unemployment, falling investment and, even after all that, a balance of payments deficit at the end of the year predicted at £15 billion.

Those who might have hoped for early relief from the burden of high interest rates, including the millions of people who are locked in mortgage misery, will note with concern from the Autumn Statement that it appears, as City and press commentators have noted, that the Government assume that interest rates will remain at about their present level for at least the year ahead.

The Chancellor says that next year will not be easy. Does he think that 1989 was easy? Does he think that people found it easy to find £70, £80, £90, £100 extra each month to pay for the homes in which they live? Sadly, the millions in mortgage misery are paying the price of the Government's failed economic policies.

There is little recognition in the Gracious Speech of the true nature of Britain's economic situation. Last year the Gracious Speech told us that the Government's policies would "bear down on inflation". The Government went on to assure us that the problem was only a "temporary blip" on the path to zero inflation. A year later, we see what credence we can attach to such glib denials of reality. But, then, complacency is the hallmark of this Government, and nowhere more so than in their persistent refusal to recognise the gravity of the balance of trade deficit, which has been deteriorating steadily throughout the decade. It may have been masked in the early years by the windfall benefits of North sea oil--a bounty of £78 billion, which the Government have never properly acknowledged-- but relentlessly, as the Government's

Column 587

neglect of manufacturing industry was perpetuated, the deficit has grown, until 1989 we find ourselves with a record level of £20 billion in the balance of payments.

Each year, it has been under-estimated by a complacent Government heedless of the consequences of their policy. They were heedless, too, of the warnings given years ago about what would happen if they persisted. It has been a commonplace in the speeches from Opposition Members that the neglect of manufacturing industry would lead inexorably to balance of payments problems. I shall remind the Government that the same message was given to them from another source and from another place. Just over four years ago in 1985--significantly half way through the present decade--the House of Lords Select Committee on Overseas Trade in a special report warned the Government of the neglect of Britain's manufacturing industries. The report said :

"Unless the climate is changed so that steps can be taken to enlarge the manufacturing base, combat import penetration, and stimulate the export of manufactured goods, as oil revenues diminish, the country will experience adverse effects".

It went on to identify as among those adverse effects : "an adverse balance of payments deficit of such proportions that severely deflationary measures will be needed."

It predicted the risk of

"the economy stagnating and inflation rising, driven up by a falling exchange rate."

Seldom has there been such a chillingly accurate prediction.

Mr. Julian Brazier (Canterbury) : Will the right hon. Gentleman give way?

Mr. Smith : Let me finish this point.

It unfolded in anticipation the reality of Britain's economy today. So let us have no excuse from the Government that they have been somehow blown off course by unexpected events or adventitious circumstance. They did not listen then, just as they do not listen now.

The Government's reaction to the considered and careful reasoning of the Select Committee was given by the former Chancellor the right hon. Member for Blaby (Mr. Lawson) in his Mansion house speech of 1985. Not one to mince his words, the former Chancellor rounded on their Lordships and said :

"The Government wholly rejects the mixture of special pleading dressed up as analysis and assertion masquerading as evidence which led the Committee to its doom-laden conclusion."

The style and manner of that attack will be familiar to students of the Government. All criticism is gracelessly repelled and all critics immoderately abused. They are always ready to ignore the messages and shoot the messengers.

The House is well able to judge who was right, in the light of the outturn of events. The Government ignored the threat to manufacturing industry and under-estimated and dismissed the balance of payments consequences. We now know that the House of Lords Select Committee was devastatingly accurate and the Government were completely wrong. We are experiencing an adverse balance of payments deficit of record proportions--the highest in our economic history. Are not interest rates at 15 per cent. a severely deflating measure? The economy is stagnating. Leaving oil aside, it was forecast to grow in the Autumn Statement by only three quarters of 1 per cent. next year. Inflation is rising--it has risen to a six-year peak--and the

Column 588

exchange rate has fallen by 10 per cent. against the basket of currencies since the beginning of the year. Those are precisely the forecasts made by the House of Lords Select Committee in 1985. One might have thought that a Government would have been chastened by such an experience, but there is no sign that any lessons have been learnt.

Mr. Brazier rose --

Mr. Smith : I will give way to the hon. Gentleman in the hope that at least one Conservative Member might have picked up the point.

Mr. Brazier : The right hon. Gentleman has mentioned the rate of inflation four times already in his speech. Will he tell the House whether at any time in the future he expects the rate of inflation to reach the average level that it was under the previous Labour Government?

Mr. Smith : I thought that it might occur to Conservative Members to make such a point. It occurred to me also when I was reading the Prime Minister's contribution during the Gracious Speech debate. On 21 November the Prime Minister said :

"When growth has been too fast, inflation re-emerges. It emerged in 1973 and it has re-emerged now."--[ Official Report, 21 November 1989 ; Vol 162, c. 28.]

The House should note the significance of that. Inflation emerged in 1973, before the 1974 Labour Government were elected. It was there with the Barber boom, just as it is here with the Lawson boom. It is not only that : Conservative Members conveniently ignored the oil price throughout the entire 1970s. They also conveniently ignore the fact that they have had almost the lowest commodity prices on record throughout the 1980s. Above all, since the Prime Minister, whom most of her colleagues follow slavishly, has given the clue that all this happened in 1973, her colleagues should amend their scripts accordingly.

Mr. David Clelland (Tyne Bridge) : Will my right hon. and learned Friend help the hon. Member for Canterbury (Mr. Brazier) to further his education by telling him that, when the Conservative Government headed by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) came to power in 1970, the rate of inflation was 5.9 per cent. and that, when they retired in 1974, it was 13.1 per cent. and rising fast?

Mr. Smith : I am grateful to my hon. Friend. A great deal of education is required about the history of inflation in this country ; if for no other reason, this debate is helpful in that respect.

Mr. Tim Smith (Beaconsfield) : Why does the right hon. and learned Gentleman continue to criticise the performance of British manufacturing industry when its profitability is higher than it has been for 25 years, its investment has risen by 40 per cent. and its productivity has risen by 20 per cent. over the past three years, when manufacturing exports are up by 11 per cent. on the figure a year ago and by 40 per cent. in comparison with 1985--the year to which the right hon. and learned Gentleman referred? Why does he continue to run down British manufacturing industry?

Mr. Smith : I do not want to run down what is left of British manufacturing industry ; I want to run down the Government who put such obstacles in its way. It might

Column 589

have occurred to the hon. Gentleman that there is something regrettably wrong with the situation in this country--

Mr. Philip Oppenheim (Amber Valley) : Will the right hon. and learned Gentleman give way?

Mr. Smith : I cannot give way to the hon. Gentleman when I am answering another hon. Member. The hon. Gentleman should expect me to answer his colleague properly before he tries to intervene. The hon. Member for Beaconsfield (Mr. Smith) knows perfectly well that there must be something wrong with our manufacturing sector. Many of the leading figures point out constantly that the present size of our balance of trade deficit is a major factor in the highest balance of payments deficit in our history.

Mr. Oppenheim rose--

Mr. Bill Walker (Tayside, North) : As the right hon. and learned Gentleman is a Scottish Member like me, he will realise that one of the major exporting industries in the United Kingdom is the whisky industry, which today is doing better than it has ever done. He will be aware that the distilleries that closed under the Labour Government are now reopening. He will also realise that the £1,000 million-worth of exports by the Scottish whisky industry is a record. That is what is happening under this Government. Perhaps he can explain how it can do that if the Government are so wrong.

Mr. Smith : The hon. Gentleman puts a fetching point to me. I am unlikely to disagree with anyone who seeks to find solace in whisky, especially as it is, as the hon. Gentleman stresses, such a genuinely important industry and an important contributor to our balance of payments and to employment in the United Kingdom. I wish it every success. However, I regret that, over the full scope of the manufacturing sector, in far too many areas, we are in a trade deficit which should not have been allowed to occur.

Mr. Oppenheim rose--

Mr. Gerald Howarth (Cannock and Burntwood) rose

Mr. Smith : I will give way once more, and then perhaps I might be allowed to proceed with my speech.

Next Section

  Home Page