House of Commons Hansard Debates for 23 Jan 1990

Madam Deputy Speaker : Order. May we leave eastern Europe for the time being and return to the Autumn Statement?

Mr. Hanley : How kind you are, Madam Deputy Speaker. Nevertheless, it is relevant to point out that in eastern Europe we have seen the death of Communism and the rise of the enterprise culture mirroring our own experience. We have emerged from our own mini-revolution, that of 1979. We had our problems during the winter of discontent. Ours was a bloodless revolution, but its effects will be felt as deeply as those of the revolutions in eastern Europe.

Mr. Allan Rogers (Rhondda) : Will the hon. Gentleman give way?

Mr. Hanley : I will, but this is the last time that I will accept an intervention from across the Floor.

Mr. Rogers : May I ask the hon. Gentleman to dwell a litte more on the figures relating to owner-occupancy, of which he seems to be making a good deal? My constituency has the highest rate of owner-occupancy in Great Britain, but it is also the poorest, by any economic indicator. Owning a home does not mean sharing in the current great revolution in the acquisition of wealth ; indeed, many of those who own their homes will become extremely poor as a result of the Government's recent policy of raising interest rates.

Mr. Hanley : I will not speak about the hon. Gentleman's constituency, nor would the House like me to do so. Other hon. Members will be speaking. What I will say is that anyone who has decided to buy his own home, and is struggling to cope with interest rates that are higher than any sane person could possibly enjoy, is making a worthwhile effort. Although some will find the struggle impossible, many more will find that, in the long run, it is worth the effort for their family's sake.

Although millions of people have mortgages, everyone in the country is affected by inflation--people who own their homes and people who do not ; people living in council houses, and pensioners living in council flats. The battle against inflation must take precedence.

Dr. Marek : Will the hon. Gentleman give way?

Mr. Hanley : No, I will not give way any more. Other hon. Members wish to speak. The hon. Gentleman is a charming fellow and I would love to give way to him, but we can chat later.

Let me summarise some of the more important points that have been made. First, our gross domestic product is at its highest-ever level : it rose by 4 per cent. in 1987 and 1988, and a further 2 per cent. increase is forecast for 1989. We have experienced eight successive years of sustained growth averaging 3 per cent. and we need that growth if we are to increase expenditure on essential services. Moreover, the United Kingdom has grown far faster than any other major European country during the 1980s--well ahead of Germany and France--and that growth was vital. Manufacturing output is also at its highest-ever level.

We were talking about investment earlier. The Autumn Statement forecasts a 9 per cent. increase in 1989, and

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business investment will have increased by 40 per cent. in the three years to that date. That shows the extent of confidence in the present Government and their economy. Under the Labour Government, investment averaged between a quarter of 1 per cent. and 1 per cent. annum. That was the measure of confidence in them. There was no confidence, especially when the IMF had to bail them out. Total investment growth in the 1980s was higher in Britain than in any other European country, although we were near the bottom of the league in the 1960s and 1970s. That is reflected in real take-home pay. Between 1978-79 and 1989-90 the real take-home pay of the average married man with two children went up by one third. I admit that that is part of our problem as we are creating an economy in which people get more money.

The problems were exaggerated when the Government tried to repair the potential damage of the October 1987 slump. I remind my right hon. and hon. Friends on the Treasury Bench that, understandably, they were fooled by the depths of that recession. Anybody could have made that mistake in the interests of the nation, and newspapers have been trying to talk every mini -slump into a major slump ever since. It is now a sport to say in newspapers and on television that the stock market will crash on Monday. On that occasion, which really was a black Monday, the Government tried to inject money into the economy to save misery and prevent a slump from occurring. But the slump was not as big as we thought and the recession that we expected afterwards did not happen. However, I am prepared to forgive the Government for that because we learnt our lesson and it will not happen again.

Real wealth and prosperity have increased under this Government. Real personal disposable income is now at a record level and is 5.5 per cent. higher than it was a year ago. I mentioned that the extra yield for the wealthy has produced more taxes to pay for essential services.

One person who has not received the plaudits that he deserves today is the Chief Secretary to the Treasury. We have talked about the Chancellor, who is doing an excellent job, but the Chief Secretary created the Autumn Statement and calculated the levels of expenditure in many difficult areas, trying to balance the demands of one Government Department with those of another.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) picked out three figures from the list in the Autumn Statement and said that the Government had cut here, here and here. He did not mention any more for the simple reason that there are no more. The Government have increased expenditure in 23 out of 25 headings in the Autumn Statement. In only two headings--the Department of Energy because of electricity privatisation, and the EEC--will there be any reductions in 1990-91. It should be clear to anyone that the successful running of the economy has meant that we have been able to increase expenditure in many important sectors. I have a list of all the extra services that are being provided because the economy is being run well enough to provide them.

In 1990-91 an extra £2.5 billion will be available for the National Health Service, representing an increase of 5.5 per cent. in real terms. Opposition Members will carp about the fact that wages in the National Health Service are going up faster than elsewhere, that there are more people to care for, and there is more this and more that. There is more this and more that, but the Government have come up with more money. Spending on the National Health Service has increased by 40 per cent. since the

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Government took office. There are now 10 per cent. more outpatients, 20 per cent. more inpatients and 60 per cent. more day cases treated in hospital than there were in 1979. The staff has increased from 440,000 to 520,000 and that does not come cheap. Those people deserve to be paid well and they are being paid the money that they did not get under Labour. The Labour Government had to reduce expenditure because they could not run the economy. Gross capital spending in the National Health Service is 55 per cent. higher than it was in 1978-79. That means that the Health Service is half again as big as it was, while under Labour expenditure fell by 30 per cent. Opposition Members talk about spending on the poorest. This year social security expenditure is running at £1 billion a week, which is an increase of 36 per cent. in real terms.

Mr. Rogers : That is the Government's fault. They created the unemployment.

Mr. Hanley : The hon. Gentleman says that it is our fault because we created the unemployment, but we have reduced unemployment by 3 million people. A Labour Government could not have achieved that as they would seek minimum wages and minimum hours. We have an enterprise culture.

The list of expenditure shows increases in services that really matter. Expenditure on British Rail and London Regional Transport, which affects all Members of Parliament, is going up by £2.2 billion in the coming year. Expenditure on Network SouthEast has increased by £1.2 billion. The British Rail spending programme is now £3.5 billion. Expenditure is higher than ever on housing and on the environment, but spending on defence has increased by only 1 per cent. I remind the warmongers on the Opposition Benches that defence comes fourth behind the National Health Service. That was not the case under Labour. For the first year ever National Health Service expenditure outstrips defence expenditure, and not before time. We have been able to maintain the economy to pay for essential services. I was saddened by the response to my intervention during the speech of the hon. Member for Durham, North (Mr. Radice), who is an intelligent and reasonable man. I asked him exactly what would be his party's plan if he thought that ours was so inadequate. He said that we should join the exchange rate mechanism as soon as possible. But that was all he said. He said that he would explain, but he did not say how Labour would pay for its spending plans. He did not say how Labour would tackle inflation ; he did not say how Labour would pay for the confiscation of the industries that have been privatised ; he did not say how Labour would pay for any of the massive expenditure that the hon. Member for Blyth Valley was talking about ; he did not explain how Labour would pay for giving child benefit even to the wealthy and pay back the backlog.

The hon. Gentleman did not say what the standard rate of income tax would be or what company tax rates would be under Labour. He did not say how many new national taxes a Labour Government would have to create. He certainly did not say what Labour would introduce in place of the community charge or how people would be hit by Labour's plans to alter mortgage tax relief and what that would do to the cost of living. He certainly did not explain how Labour would reintroduce price controls,

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import controls, mortgage controls and controls on house buying or car ownership. He did not say what limits he would set for Government spending or Government borrowing. He did not say how much the proposals would cost. The simple reason is that the hon. Member for Durham, North is an intellectual who will remain a political academic because he will be serving only in theory and will never have to put his policies into practice.

The Government have achieved what people said they could not. They have increased Government expenditure in almost every single Government Department--23 out of 25 this year--and have reduced income tax at the same time by generating a healthy economy. That is the most responsible course of action that any Government could take. 8.47 pm

Mr. Terry Fields (Liverpool, Broadgreen) : If I asked any worker in Liverpool how he knew when the Tories were telling lies, I would get the answer, "As soon as they open their mouths". Tonight we have been listening to distortions, lies and misrepresentation. Not one Tory Member has spoken without injecting into his speech what Labour was doing in government over a decade ago, when our debate tonight is on the Chancellor's Autumn Statement and Labour's amendment about what we plan for the future.

I accept that we need to look to the past, but there are none so blind as those who will not see. The proposals put forward by the Chancellor and the Government are totally irrelevant to the needs of the majority of people in Britain today. We are looking over a precipice. We are looking over the edge of a major financial crisis in Britain and internationally. We are contemplating an international crisis of finance and business confidence in the United States. The problems there are well documented. Such is the interrelationship between international capitalism around the world that, as my hon. Friend the Member for Blyth Valley (Mr. Campbell) said, if America sneezes we catch pneumonia and we will follow America as sure as night follows day. The boom in the States, which has relevance and is mirrored here, has been fuelled by credit. Today, money is being given away to enable people to buy cars so that the system can be kept going. [Interruption.] No, I do not want to go to America. The euphoria that greets the statements by some Tory Members bears no relation to the absolute crisis in the advanced industrial countries, which are facing rises in inflation even as we speak. What of the British economy? The Government's friends in the Financial Times and in The Sunday Times are saying, quite rightly, that we are going back to the good old days of the stop-go cycle in Government policy. We keep having the Thatcher miracle thrust down our throats. What is the Thatcher miracle? What does it mean to millions of workers in this country, to unemployed people, to people like my hon. Friend the Member for Blyth Valley, who is waiting for treatment for his gallbladder but cannot have it? To those people the Thatcher miracle is absolutely meaningless.

After 10 years in office the Government talk about wage restraint and blame working people for the crisis in the capital system, as Conservative Governments have done

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historically and as, unfortunately, has been done by some Labour Governments also. It is the same old blackmail : "You are pricing yourselves out of jobs. One man's pay rise is another man's job loss"--all the usual nonsense. At the same time, we read in the pages of the Financial Times and the other more serious newspapers of this country about the state of the economy and about the vast number of millions of pounds being made on the stock market where many a person has no work to do and sheds not a drop of sweat. It is referred to as the casino economy--and quite rightly so. That is what it is all about. People spin the wheel and take their chances. They gamble on the markets in the hope of taking the loot. That has no relevance to the economic and industrial situation in this country, yet it is the game that they are playing. As usual, of course, according to the Government, it is the workers who are responsible. We have problems about investment. It is not just the loony Left that is talking about this. I would remind the House of a House of Lords inquiry of 1984, which this Government have disregarded totally. The report of that inquiry referred to the manufacturing base and to the service economy and all that it means for the future prosperity of this country and those who live and work in it. Of course, that continues to be disregarded by this Government. The squeals and screams that are being heard now are coming from the bosses and are echoed by Tory Members because profits are starting to fall. During the boom period they could afford to give working people a few crumbs in the shape of decent wage rises. But now the reality of what the economic future of this country holds for them is hitting them in the face, and they are looking for scapegoats.

Look at the economy and then look at the stock market. A report in The Independent on 4 January appeared under the headline "Shares Hit Record amid Hope of Loan Rate Cut."

The article says that the previous record for sales of shares was set on 16 July 1987. What it does not say is that that record of July 1987 preceded the stock market crash by 15 months. Of course, the record set on 4 January this year must be seen in the context of the fact that only yesterday £8,000 million--70 points--were knocked off shares in this country. That, of course, is reflected in America, where the Dow Jones index fell by 77 points. But these statistics are meaningless when one gets down to the reality of how ordinary working people in this country are affected. Nevertheless, we have to explain what is taking place.

Daily we hear Tory Members say that Socialism is dead. I am not straying into eastern Europe ; I am talking about the economy of this country and thinking of the Socialist measures that will resolve the problems of the mass of people here. Even in the United States--the arch exponent of capitalism--pressure is now being put on George Bush for state intervention in the infrastructure because big business and those people who should be paying due regard to the infrastructure are doing nothing about it. In America there is now talk of pump-priming by the state. That is something that the Government here refuse to do.

The Autumn Statement will do absolutely nothing for millions of people in this country. It will do nothing for old-age pensioners, to whom my hon. Friend the Member for Blyth Valley has referred. It will do nothing for the disabled, or the sick and infirm, or the single parents, or the unemployed, or the low paid, or young people, who,

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under this Government, have no future because all that they are given is phoney schemes and exploitation. Wages councils have been done away with, and people are put at risk of death and disfigurement on schemes where there are no health and safety provisions. Students have also been attacked in the form of cutbacks in loans. There have also been cutbacks in education provision. We have heard during this debate how home owners have been attacked with mortgage rate increases. Doctors have been abused, as have ambulance drivers, nurses, lawyers and, in particular, working-class families. We are talking about inflation. Consider a place like Liverpool, whose city treasurer has estimated that the poll tax, at minimum, will be £476 for every person over 18. The authorities there will be told to cut back on staff. But sacking people will only increase unemployment, poverty and deprivation. Water rates are going up, as are transport and travel costs and gas prices--a whole catalogue of further burdens on working-class people.

Tory Members know nothing about how to resolve this problem. They are making a fast buck on their own behalf. No wonder they put up a smokescreen by referring to Labour's record. Just consider the consultancy positions and directorships that they hold. They are doing very well. It is only the working-class people of this country--the masses who create the wealth that Tory Members and the people that they represent can spend--who are doing anything about the situation.

There has been a 50 per cent. reduction in the infrastructure in this country in the past decade. That has meant decay in our hospitals. Hospitals in Liverpool are being closed down. At Question Time today, my hon. Friend the Member for Liverpool, Riverside (Mr. Parry) and I asked about the Park hospital. Geriatrics and people who are psychologically unfit are being thrown on to the streets to live in cardboard boxes, wander around and get themselves into trouble. Instead, they should have the benefit of proper care.

Today I was told about a man working for the local authority in Liverpool. He has been told that he will have to wait four years for a heart operation. To have it done privately he would have to pay £2, 500. He is a cleaner, and the workers in his yard are talking about collecting money to pay for the operation so that he will not die during the waiting period. Yet the Government tell us that the Health Service is doing well and that they are investing in it. Half of them do not even use the service, so they do not know about its inadequacies, but we and our constituents use it, and we know at first hand that there is no proper health service as we knew it in the past.

During this Government's period of office more and more people have become alienated. With hindsight, we have to say that we in this country once had a far-sighted ruling class. In its place we now have the most economically ignorant, crude and short-sighted Government ever to look after the interests of big business. I am not being disparaging about other countries when I say that there is more manufacturing industry in India than there is in Britain, and I am not being chauvinistic when I say that Britain, once the workshop of the world, is now the warehouse of the world, full of foreign imports. That is the reality of the British economy.

Following the stock market crash we have been left far behind our major competitors such as France and

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Germany. The Government's policies, as set out in the Autumn Statement, will mean more poverty and debt for the ordinary working people of Britain.

The hon. Member for Richmond and Barnes (Mr. Hanley) talked about Britain's home-owning culture, but he did not give the true facts. In 1987, 23,000 homes were repossessed by the building societies compared with only 2,000 in 1979. The Prime Minister tells people to go out and buy their council houses, but if they get into debt or become unemployed as a result of the Government's policies they are punished by being made homeless. When they want a council house there is none. That is the home-owning culture that the Government have created. Building society loans are crippling as a result of the Government's policies.

As some of my comrades want to say a few words, I shall cut my remarks short. We are being kidded by the Government, but more and more people are seeing through their policies. They can see through the lies and distortions that we get daily from the Dispatch Box and from Conservative Members. The working people, the wealth creators in Britain, know the reality of what is going on. They know that there are no long-term prospects for them under the Tory Government. People ask about the Labour party's policies, but my outlook is different from some of my good colleagues on the Opposition Front Bench. We should not be going down the road of the Wilson or the Callaghan years, trying to manage a mixed economy. I am in the Labour party because I am a Socialist. I believe in the Socialist transformation of society. We cannot control what we do not own and we will take the money off Conservative Members' friends in the City. We will take over their banks and their insurance companies. We will take over the commanding heights of the economy. When they want compensation we shall treat them as they treat the poor and the unemployed- -we will means test it.

Capitalism has failed not only here but internationally. Increasingly, workers will come to the only conclusion, that they must take their destiny in their own hands, just as the workers in eastern Europe are doing. They are not saying that they do not want Socialism or Communism ; they have never seen either. They have thrown off Stalinism because they want to run their own lives. The British workers applaud what they are doing and will be going on to the streets themselves because the Government's policies will bring about social convulsions.

9.1 pm

Mr. James Hill (Southampton, Test) : We have heard an almost classic speech from the hon. Member for Liverpool, Broadgreen (Mr. Fields). It was almost 15 to 20 years old ; an example of class warfare at its worst. Once again, he was trying to arouse the emotions of his constituents, making them more radical and militant. But to Conservative Members the hon. Gentleman's ideas were almost laughable simply because they are part of history. Events in central Europe should convince even the last of Militant Tendency supporters that this is a changing world and that politics have moved on. The Opposition Front Bench have accepted that.

It is unfortunate that we in this Chamber always talk in jargon. Today I heard several references to fiscal and monetary policies and the supply side. To people outside, that does not mean a thing. As the Treasury Front Bench

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spokesmen will know, people are interested in their expectations. They are already convinced that their circumstances are much better than they were 10 years ago, but they are still looking for more. We have heard that there is 68 per cent. home ownership in the United Kingdom, the highest in Europe, but nobody ever mentions that. Those people do not rely on local government for housing ; they do their own maintenance and take pride in their property. At the same time they are anxious to leave their property to their children when they have paid the mortgage.

Not one Opposition Member made any conclusive statement on the Labour party's future policies. The majority of speeches from Opposition Members were confidence destroying and, as anyone in business knows, confidence is essential in business. If people do not have confidence they do not invest or they invest outside the country. People realise that the market place now is not just the United Kingdom or, indeed Glasgow or anywhere else ; it is world-wide.

The strength of our economy was shown by our recovery from the major stock market depression. The stock market is probably healthier for being culled then. The lesson which every member of the Opposition Front Bench should note is that the market place cannot be worked in isolation. We cannot attract investment in isolation. We must rely on the large companies in the world to invest in Britain, and they will invest in Britain only if they have confidence. No amount of talking down the economy will create that confidence. If there is a lack of confidence now, it is because the Opposition have no policies to put forward. They have nothing to say about how they would run the economy. That is why the market place is extremely sensitive.

I give the House a horrifying scenario to consider. What will happen if that crowd on the Opposition Benches comes to power? The market place will go bananas. That is no slur on anyone. I am sorry to say that confidence will be exactly the same as in 1974 and 1964. I did not agree with the remarks of the hon. Member for Berwick-upon-Tweed (Mr. Beith). He suggested that if we joined the exchange rate mechanism of the European monetary system we should begin to do as well as Germany overnight, and that our interest rates and inflation would tumble. The German Bundestag would dominate the scene through the Bundesbank. That is not what we want. We did not join the Community to have our full range of fiscal policies controlled. The problem is that if we joined the ERM when our inflation and interest rates were high and the playing field was not level, we should be hostage to fortune and to all those on the continent who would welcome us but take advantage of our weaknesses. That is the problem. I am as much in favour of joining the ERM as anyone. However, it must be done at the right time, and now is not the right time.

I should like to make a few comments on how industry could be helped. The investment in plant and machinery that companies can write off against taxation each year should be increased from 25 to 40 per cent. I do not know whether hon. Members remember the halcyon days when it was 100 per cent. That was a tremendous incentive to do what the Opposition recommend on the supply side.

Sir William Clark : Corporation tax of 45 per cent.

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Mr. Hill : Exactly. A reduction in employers' national insurance contributions would be another worthwhile move which would not create inflation and would help industry to invest more in plant. We could also increase investments in transport infrastructure. We are already doing that in no small way. However, in my constituency of Southampton we have had to wait years for the necessary motorways. I know that hon. Members are fed up and sick and tired of me saying this, but we still do not have the M3, although Southampton is a major port.

We must watch local authority rates carefully. The uniform business rate will cause much heartburn, perhaps not to the bigger companies that are spread throughout the United Kingdom, but certainly for the smaller companies that are situated in highly-rated areas. Therefore, the problem is not quite as simple as Opposition Members would have us believe. The careful juggling--because that is what it is--of the uniform business rate and of the investment world, and the creation of an area of confidence so that people will want to invest in the United Kingdom, must be the best possible way forward. I hesitate to say this, but I do not think that the banks--certainly not the big five--are as co-operative or as compassionate as they should be with some of our smaller business men. If we are to have a great deal more trouble because smaller business men cannot meet their uniform business rate and are unable to keep going, the banks should take a more lenient view.

I realise that my time is nearly up. Indeed, I am waiting for you, Madam Deputy Speaker, to nod at me. In conclusion, the Government are doing an excellent job. The Treasury team is excellent. I believe that they are what is known as a "vintage year." I hope that the Opposition will eventually begin to make speeches boosting the economy and boosting confidence and that they will not always be such a dog in the manger.

9.11 pm

Mr. Allan Rogers (Rhondda) : I shall speak only briefly because the debate needs to be wound up and the weaknesses and shortsightedness of the Government's forecasts have been more than adequately highlighted by my right hon. and hon. Friends.

I was impressed by the Chancellor's speech. I thought that he had worked hard at it. Obviously, the Tory drama school told him to gee-up and do a lot better. It was definitely a brighter shade of grey. However, I was sorry that he did not give way to me on one point. I wanted to question him when he made a remark about the quality of investment and said something like, "Never mind the quality, see the width." The Chancellor talked about the quality of investment. It was extremely interesting to discover that by "quality of investment" he meant the amount of money that could be made on an investment in the shortest time.

There we have the substantial difference between the Government and the Opposition--I am not sure why the hon. Member for Croydon, South (Sir W. Clark) is grinning. If the tablets are not working, I can recommend Ex-lax. The big difference between the Government and the Opposition is that we believe that money should be used to create jobs and wealth for the country, whereas the Government and the Chancellor believe that money exists

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to create money. The investment made in this country now might be bigger and may have greater returns, but, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) so eloquently showed when he responded to the Chancellor's speech, that investment is in car parks, supermarkets and the service sector. It is a vital part of our economy, but is not at all helpful to our balance of payments problems. All that we are building are warehouses and supermarkets in which we can store and sell the goods that we are importing.

Mr. Eddie Loyden (Liverpool, Garston) : The Chancellor's comment that caused me most despair today was his evaluation of public expenditure versus private expenditure. The Chancellor almost dismissed public expenditure as being a dirty word and a dirty habit. Does my hon. Friend agree that education, health and social services, and all the things that make good provision for our quality of life, are dismissed by the Tory party as the work of the devil?

Mr. Rogers : I thank my hon. Friend for that intervention. I should now like to speak briefly on one aspect of the Autumn Statement, if only to highlight some of the rubbish in it. I refer to the defence expenditure plans in paragraphs 122 to 124, and specifically to the allusion in paragraph 124 to

"measures taken to increase value for money from the equipment programme."

The Government's record in defence procurement and in the defence economy is appalling. The fact that they claim some credit for it in the Autumn Statement is a cheek. It is a phrase trapped in the Ministry of Defence word processor. It comes out every year to order, usually to cover some incompetence, and generally accompanied by equally predictable rhetoric fom the rally-round-the-flag brigade. They are swarthed in references to national security and say, "You cannot have this or that information". If anyone ever criticises the Ministry of Defence or a Minister, he is accused of criticising Britannia.

Britain has fundamental defence problems, and nowhere in the Autumn Statement is there anything likely to do something about them. We are talking about an industry that sustains more than 500,000 jobs. The measures taken by the Government have resulted in a gross mismanagement of Britain's defence economy and taxpayers' money. I hope that in future months we will have the opportunity to take the matter further.

9.16 pm

Mrs. Margaret Beckett (Derby, South) : On 22 November last year, Sir Terence Burns, the Government's chief economic adviser, told the Treasury and Civil Service Select Committee that

"there is a great deal of uncertainty"

in the economy. That should probably be the motto for this Autumn Statement. As for the Government, whose policy stance it is supposed to outline, the more one attempts to scrutinise the Autumn Statement, the more it becomes apparent that it represents not so much a stance as an uncomfortable shuffle on to one foot and then on to the other. From the admitted uncertainty about the economy to

the--apparently--greatest certainty of the economic forecasts is one of those steps. I will be fair to the Chancellor, as he insisted that those forecasts are prone to

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error. However, he also insisted that they represent the best estimate that the Treasury can make--falling interest rates, but not yet ; falling trade deficit, but not yet ; falling inflation rates, but not yet ; and 3 per cent. inflation in three years' time. As a number of hon. Members have said, the Government said that they would achieve that figure last year, the year before, and the year before that. I do not want to be unfair to the Government, but somewhere along that trail they were predicting zero inflation, although I am not sure in which year that was. A number of hon. Members have said that repetition in the face of failure has not added to the credibility of that forecast.

Uncertainty returns in a flood on examination of the reality of our underlying economic strength. The Opposition, including my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), and others in industry and finance have highlighted fears about our levels of investment, especially in manufacturing, the wealth-creating sector, and about our world performance in that most vital of areas, only to be constantly told by Government apologists about great increases in output and investment in recent years. I want to put it firmly on record that the Opposition are pleased to see any hopeful signs that manufacturing is recovering from the near-fatal blows that that sector took under this Government in the early 1980s. When the Government imply that there is little further cause for concern--even before we had the most recent output figures--they are being more than a little misleading.

The hon. Member for Horsham (Sir P. Hordern) quoted a figure that he has quoted before--the percentage change in manufacturing output between 1979 and 1988. The hon. Gentleman did not point out that on those figures the United Kingdom came 18th out of 20 OECD countries. Moreover, although our share of world exports this year is estimated to rise against the growth in world trade, after a poor year in 1988, and the long-term picture shows a rise in the volume of exports since 1979--this is a figure which the Secretary of State for Trade and Industry quoted with some glee the other day--that is far exceeded by the rise in imports, which the hon. Gentleman neglected to mention, at well over twice the level of exports. This position is not likely to be remedied without substantial investment.

Between 1980 and 1983 manufacturing investment in this country fell back to levels not seen since the mid to late-1950s. Mercifully, since then we have had the recovery about which the Chancellor took the trouble to intervene to remind us. That recovery returned investment to 1.7 per cent. above the level that it reached in 1979--before the miracle-workers took over.

It is suggested that next year world trade in manufactures will grow by 6.5 per cent. and that United Kingdom manufactured exports will also grow by 6.5 per cent., which at first sight might imply that we shall hold our share of world trade. But the forecast for total United Kingdom growth in manufacturing output is only 1.5 per cent. What kind of economic miracle is it where we can deliver a growth in manufacturing output of only 1.5 per cent. when world trade is growing by 6.5 per cent.?

Mr. Beaumont-Dark : Does the hon. Lady understand that many of us are very concerned with industry and its profitability and that I have also suggested to my hon. Friends changes that I would like to see? I ask yet again in this long debate, a great deal of which I have heard, about

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the Labour party's backing for the EEC social charter and its added cost to industry. The hon. Member for Birkenhead (Mr. Field), who is an honourable man, as I am sure everyone agrees, said that if we had a minimum wage and backed the social charter it would cost 400,000 jobs and add 4.4 per cent. to the costs of industry. Does the hon. Lady agree with that or not?

Mrs. Beckett : My hon. Friend the Member for Birkenhead (Mr. Field) is, as the hon. Gentleman said, a very honourable and a very nice man in many ways, but his figures are sometimes wrong, and this is one of those cases. Forecasts for investment in manufacturing are also far from rosy-- [Interruption.] The hon. Gentleman asked a question and he got a straight answer. What is the matter with him?

The Central Statistical Office forecasts an increase in manufacturing investment in the coming year of no more than 1 per cent. in real terms--a prospect which worries the CBI, the TUC and many commentators far more than it apparently worries the Government. But then the Government's attitude to investing in our future is as far from clear as it is implicitly unhealthy. The point of the Autumn Statement is that it is supposed to tell us something about the overall size of the Government's public expenditure plans, with all that they may or may not mean for investment in our future. To quote one of the Select Committee's advisers, Mr. Brian Reading, "Is the planning total"

for public expenditure,

"the right size? Is its allocation appropriate' ?"

Mr. Reading then goes on to say :

"Neither of these questions can be answered on the basis of the information provided in the Autumn Statement."

Although we all recognise that the changed definitions and classifications used in the presentation this year create difficulties, I am bound to say that I agree not only with Mr. Reading but with the Select Committee when it observes that parts of the Autumn Statement can probably be fully understood only by those who compiled it. I thought that the Committee was very restrained in its remarks in this respect and others, no doubt following the lead of the right hon. Member for Worthing (Mr. Higgins), who is always a model of courtesy. I was especially impressed by its restraint when I read the exchange between the Committee and officials, particularly the ones when the Committee sought to get straight answers about data on local capital investment only to be told that they could not interpret the figures because they had not been given all of them. Not having been present, I cannot judge whether that observation was made gleefully, remorsefully or simply in a "Good God, what did you expect" sort of tone. If I had been a member of the Committee--which, I understand, asked for all the relevant figures and until that moment was under the impression that it had received them--I should have been extremely cheesed off.

But we should all have known better. The Select Committee wanted all the figures so that it could draw its own conclusions about what is really happening in the economy--about whether and to what extent we are really investing in our infrastructure--and that, of course, is the last thing the Government want.

We can deduce from the Autumn Statement that in the coming year the Government plan to spend less than they

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had originally intended to spend but more than they spent last year. We can also see that most of the increase will be swallowed up either by inflation throughout the economy or by even higher specific inflation in areas such as health care, despite the Government's claims to have acknowledged and met the demand for proper provision in those services.

But the question of real importance, not just for the House but for the country, remains an open question : whether and when the Government will recognise and accept their responsibility to play their proper role in investing in our future--the reponsibility accepted and the role played by the Governments of all our major competitors. On one score there is little doubt. The Government want the public to think that they have accepted that role. Their press releases and public relations address the real concern that they know the public feel at the way in which we are falling further behind our partners and competitors. The hon. Member for Suffolk, South (Mr. Yeo) mentioned those matters and told us how much more the Government were spending.

But the Select Committee pointed out, as did the hon. Member for Berwick- upon-Tweed (Mr. Beith), that although one of the few things that the Autumn Statement makes clear is that expenditure on training is being cut again in real terms, as it was last year--which is extraordinary in view of the damaging effects of skill shortages on inflation, if on nothing else--the Department of Employment was issuing press releases claiming credit for a cash increase. Whatever the statements made for public consumption about spending increases funded by the Government's economic miracle, in the comparative privacy of the Select Committee deliberations, faced with the stern countenances of the hon. Members for Wolverhampton, South-West (Mr. Budgen) and for Bridlington (Mr. Townend), the Chief Secretary cracked and gave the game away-- [Interruption.] In the years from roughly 1984 to 1985, said the Chief Secretary, "planned increases in real terms did not actually materialise I do not think the sort of step change we have now would be very different."

Nor do I. He continued :

"The additions to last year's plans are rather less than the rise in inflation."

The hon. Member for Bridlington drew attention to the fact that this is the lowest level of Government spending since 1967. That is not quite what it says in all those ministerial letters to our constituents, or in those brave speeches boasting of the Government's wonderful spending record. In terms of accuracy, the Chief Secretary's version of events is more to be commended.

In 1987, taking investment as a percentage of GDP--broadly, as a percentage of our national income--we were 23rd out of 25 OECD countries. In 1988, the peak year of the investment cycle--the so-called investment boom that we enjoyed recently under the Conservatives--we were 18th out of 23 OECD countries. That lack of investment can be shown by the most simple and incontrovertible evidence--the daily experience of British people.

The Government claim to have put an extra £2.6 billion into the National Health Service, and the hon. Member for Croydon, South (Sir W. Clark), who appears to be getting somewhat agitated at this point, quoted some even more dubious statistics about the Government having, between 1979 and 1988, increased spending on the NHS by 45 per

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cent. in real terms. I know that the hon. Gentleman got that figure from the Prime Minister. He should seek a more reliable source for his statistics.

On the basis of the old planning total, at the best, using the GDP deflator, which is the average measure of inflation in the economy, one might come up with a figure in real terms as high as 31.6 per cent., which is rather different from 45 per cent. Using the NHS deflator, the one that matters for available spending in the NHS, one comes up with a figure on the old planning total basis of 13.9 per cent.--1.3 per cent. a year while this Government have been in office--which is substantially below the spending needed to meet the increasing demographic and technological demands.

That ties in with the experience of our constituents. If the hon. Member for Croydon, South would prefer a measure of NHS expenditure that includes patient charges and asset sales, on the GDP deflator, one might reach a figure of 36.7 per cent. Again, using the figures for inflation in the NHS, the figure comes out nearer to 17 per cent., which is 1.6 per cent. a year- -still well below what is required to meet increasing needs in the NHS.

Mr. Hanley : The hon. Lady referred to the National Health Service deflator. Does that mean that when the Government give a generous pay settlement to the nurses the deflator increases and, therefore, the settlement might as well not have been given, according to the hon. Lady's figures?

Mrs. Beckett : I shall treat the hon. Gentleman's remarks with the contempt that they deserve.

The Government claim in this Autumn Statement that they have put an extra £2.6 billion into the NHS. Although we have not, as far as I am aware, had a reply, we query whether more than a small part of that--perhaps £500 million--is available to improve services, especially when one takes account of increased prices, of the Government's creative accounting and of the accountancy procedures themselves, to which much of the money will go on a scale that is not only wholly impracticable, but which seems far in excess of what would be needed for prudent management and more like what would be needed to introduce full-scale charging into the NHS.

The Government claim to be increasing investment in housing, but housing starts have fallen by almost half in the past year, while bankruptcies in the construction industry have soared. Once again, we are running to stand still. The Government are increasing investment in transport, but the subsidy to Network SouthEast is being removed. If there is one area in the country where people do not need a financial inducement to travel by car, it is the south-east. Some may find these statistical niceties, technicalities and different specifications bewildering. They should not, thereby, conclude that they are not able to judge who is and who is not basically right. Just walk into a local hospital ; just get on a Network SouthEast train or a Tube--a traumatic experience if ever there was one ; just read the notes from the head of the local school, begging for funds to give our children even the most basic education ; just ask charities such as the Salvation Army about the young homeless, or the Family Welfare Association about families without cookers or beds, or the citizens advice bureaux, about the growing queue of people with debts they cannot handle because they believed that there was an

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