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premium and every day one hears of companies, particularly smaller ones, poaching skilled people from their larger competitors. With that in mind, I urge on the Government two sets of policies which I believe still to be crucial if we are to improve the supply side of the economy. The first set concerns training. There is no doubt that the new training and enterprise councils--one has been set up in Wyre Forest entitled CETEC, the Central England training and enterprise council--will do an enormous amount to ensure that the £18 billion spent by private industry and the £3.5 billion spent by the Government on training will be devolved to where it will be used best and more efficiently.Equally, the improvements made by the Education Reform Act 1988, devolving more power to colleges and polytechnics, which can thereby improve their links with industry, will result in them providing courses that are more in tune with the needs of industry. Equally, it is good to see that the Government are still committed to doubling--albeit the figure has improved dramatically over the past 10 years, with 1 million people in higher education--the participation rate in higher education, when it fell under the previous Labour Government. All those things are very important.
The one area in which training seems to be missing out is the small business sector. It is good that 1,200 new companies are formed every week. The problem is that those companies need skilled labour and they are often not training themselves but poaching from other companies. Ninety per cent. of training is done by firms with more than 10 employees, while firms with fewer than 10 employees account for one third of industrial output. So we must do something to ensure that smaller companies have an incentive to do the training audits and the training and therefore produce their own skilled people. I believe that a form of accelerated tax relief might well be in order.
The second set of policies that is extremely important--as has been recognised in the Budget--concerns increased participation of women in the work force. Already in this country we are extremely well developed--if I may use the expression--with regard to the number of women in the work force ; 44 per cent. of the work force are women. Indeed, I am told that between 1987 and 1988 there was a net addition of 474,000 women to the work force, 81,000 of whom were part-time, so the vast majority were full time. Between 1988 and 1989, 516,000 women were added to the work force, and the number is going up all the time.
The contribution of women is vital ; there is no doubt about that. By 1995 there will be 1 million fewer 18 to 25-year-olds than there were in 1985, so we need all the skilled labour, whether women or men, that we can lay our hands on. Separate taxation will be an encouragement to women to come into the work force, and flexible working and home working are things that the companies can arrange in their own interest.
In that regard, the proposal for workplace nurseries is excellent but, like my hon. Friend the Member for Fulham (Mr. Carrington), I do not think that it goes far enough. Only 2 per cent. of working mothers--about 2,000 at present--can take advantage of workplace nurseries. The proposal set out by the Treasury in the Budget militates against small firms that cannot organise their own workplace nurseries. It discriminates against women who are not provided with a workplace nursery by their own firm but who send their children to private nurseries. As
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my hon. Friend the Member for Fulham said, it also discriminates against self-employed women, who are becoming a more important part of the work force.I appreciate that there is a delicate balance between encouraging parental responsibility, encouraging women to look after their own children and making sure that delinquency is minimised as a result, and improving the supply of women to the work force and therefore the efficiency of the work force. But I believe that the Government would not err, especially given that the arrangement that they are at present considering would cost only £10 million a year, according to the Budget details, if they gave tax assistance for direct payments by firms to private nurseries on behalf of their employees. In addition, I believe that expenses up to a certain limit per child for self-employed women should be regarded as deductible.
Both sets of policies, concerning training and increased access for women, will be crucial in improving the non-inflationary growth potential of the economy. The only disappointing part of the Red Book was that it talked about a maximum non-inflationary growth potential for our economy of 2.75 per cent. We have just been told that the economy has been growing at 3 per cent. a year over the past eight years, on average. I think that we ought to be able to grow considerably faster than that. It is only by supply side measures of this type that that will be achieved.
In the long term, the most imaginative schemes in the Budget are those for savings. Labour Front-Bench Members talk about support for savings, but the Labour Government diminished the real value of savings by an inflation rate that touched 27 per cent. in their last year in power. They imposed an investment income surcharge and hiked up taxes so that people could not save out of their disposable income. But now, pretending that they have changed their spots, Labour Members are proposing further taxation of investment income, in terms of national insurance contributions being levied on investment income. That is hypocritial nonsense.
The new scheme is radical. It goes far beyond any suggestions that I have seen in the past for tax advantages for savings. Indeed, the only suggestion that I have seen, which was worth thinking about, was by Professor Mervyn King of the London school of economics, who talked about tax-free retirement accounts, where one would not be able to get one's hands on the capital after five years, as in the Government scheme, but not until one was 60. So the scheme is radical, it will be very popular and I believe that it will be economically useful. Indeed, it is very good value for the taxpayer at £200 million a year.
This is a fair, sensible and intelligent Budget, based upon the sound economic achievements of the past 10 years. The blather, huff and puff and political sleight of hand that we heard from the hon. Member for Dunfermline, East (Mr. Brown) are not worth talking about in the same breath. Unlike him, this Budget takes up the economic challenges facing this country properly and seriously, and we commend it to the House.
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7.27 pmMr. Doug Hoyle (Warrington, North) : I shall not detain the House as long as the hon. Member for Wyre Forest (Mr. Coombs) did ; I am sure that a lot of his hon. Friends will be very pleased about that. Tory Members have been whistling in the dark, keeping their fingers crossed and hoping that everything will turn out all right. The euphoric days of the past are well behind them now and they are in some kind of trouble. The Budget was not designed to solve the problems of the country. It was designed for the Mid- Staffordshire election today and for the local elections, in the hope that it would keep up the morale of the party and somehow or other get people who are deserting the party in droves to vote for the Conservatives. It will not have any lasting effects at all. Nowhere does it face up to the problems. It is a tinsel Budget, tinsel in the shop window, with no substance.
If we were a European football team playing in the European League, we should be at the bottom. The goals against us would be remarkable--the highest level of inflation, the highest deficit and the lowest level of growth. The directors would by now be saying that they have every confidence in the manager, and we all know what that means. It is what the Tory grandees have been saying about the Prime Minister, and it usually means that it is time for the person to go. We can well understand why that in happening. As the Chancellor of the Exchequer said, inflation is starting to go up. It will go up to 9 per cent., which was almost its level when the Government came to power, so what have all the sacrifices of the past 10 years been for? Inflation is going up again. [Interruption.] I know that the hon. Member for Epping Forest (Mr. Norris) likes to mumble from behind, but what have the sacrifices been for? We are now facing all the problems that we were assured time after time that various Tory Chancellors would solve. None of the problems has been solved, and we are no nearer a solution than we were before.
It was remarkable today that the Prime Minister claimed as a success story a £1.4 billion deficit for last month. She claimed it as a success story because the figure had come down from £2 billion. Even on the Chancellor's own figures--he talked about a £15 billion deficit for the whole year--that month's deficit would lead to an annual deficit of £16.8 billion if it were repeated throughout the year. Where is the success story there?
We now know that there will be very little growth in the economy. The Chancellor said that growth would be about 1 per cent. overall, yet to listen to the Secretary of State for Trade and Industry today, one would think that we had a remarkable growth record and that we were doing better than most of our competitors. Here again, we are bottom of the league.
The Chancellor talked about the manufacture of television sets as a success story and said that we did not have a deficit in them. He was really talking about Japanese-manufactured television sets. From time to time, Conservative members wax eloquent about how the Japanese companies that have settled here in the motor industry will get rid of our deficit in European trade. They fail to say that we destroyed our own British television set industry just as we have largely destroyed our indigenous motor manufacturing industry. In research and development, we are dependent on other nations.
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We have been hearing about employment prospects all afternoon from Conservative Members. An article in The Times today says : "Bubble may burst on work prospects soon' ".According to a survey carried out by Manpower,
"only one in four employers intend taking on staff in the next three months."
The economy is starting to run down. That was the Chancellor's fear when he worked out the Budget. If he did too much, he would have pushed us into recession, which is a real problem. He has preferred to do nothing, which will not lead to economic growth.
Conservative Members often talk about the Japanese. I wish that they would study the way in which the Japanese do things. At present, there is an upturn in shipbuilding, for example. However, we cannot take advantage of it. We are still closing two of our most modern yards. I am sorry that the Minister for Industry has gone because he is trying to pick up the pieces in Sunderland. What is happening in Japan? The Japanese have put their yards into mothballs and now that there is a pick-up in shipbuilding--
Mr. Barry Field (Isle of Wight) : Does the hon. Gentleman realise that there is no spare capacity in the Japanese shipyards for an order before 1993 and that, in South Korea, inflation is running so high that the yards there have priced themselves out of the shipping market?
Mr. Hoyle : I am pleased that the hon. Gentleman makes my case for me. Instead of closing the shipyards in Sunderland, we should be bringing them back into production to take advantage of the upturn in the market about which the hon. Gentleman is talking. The South Koreans are, of course, now having to charge more sensible prices. That is why the Japanese have benefited and why their shipyards are working to capacity. We cannot do that. We are left with Harland and Wolff and one yard in Scotland. Those are the only places where we can make the vessels now in demand in the world market, yet we could have used the two yards in Sunderland. It is a pity that we did not put them in mothballs. It would have have been better if we had put the Trade and Industry Front Bench--especially the Secretary of State after his performance this afternoon--into mothballs.
Mr. Tony Banks : They are the only balls he has.
Mr. Hoyle : I bow to my hon. Friend's superior knowledge of the Secretary of State's anatomy, but I know that British industry is not safe in the Secretary of State's hands or in those of his ministerial team. We are in a mess.
The Chancellor recognised on Tuesday that he is striking a fine balance. To be successful, he not only needs a fair wind, but the world economic policies must be right. He is dealing with matters over which he has no control. Yet listening to the Secretary of State for Trade and Industry, one would have thought that everything in the garden was blooming. He never learns anything. All that I can say for him is that even when one thinks that he has given a truly awful performance one can guarantee that the next one will be even worse. That is the problem.
Time is short for us. There is more than 50 per cent. import penetration in important sectors of industry. Not long ago, we heard from Conservative Members that the electronics industry was one of the sunrise industries which would save our economy. Now we have a large and increasing deficit in electronics. I have already mentioned the motor industry, in which there is more than 50 per
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cent. import penetration. We are now trying to ensure the survival of the last British company in the motor car industry.The hon. Member for Wyre Forest has a great interest in the textile industry. He knows that that industry is facing more than 50 per cent. import penetration as well. Is the hon. Gentleman waiting for me to give way?
Mr. James Cran (Beverley) : Do not encourage him.
Mr. Hoyle : He needs no encouraging. He had a fair crack earlier. Like me, he is concerned about what will happen to the textile industry and he mentioned the unfair competition in relation to Turkey and other countries. It would be a tragedy if we destroyed the last remnant of the textile industry because of high imports. Our record on training in Britain is abysmal, as we provide almost no training and much of it is not real training. The Government take people off the unemployed lists, but those people turn up again months later having had no real training. There is a contrast between school leavers in this country and school leavers in West Germany. In West Germany, 90 per cent. find a job. Most of them obtain apprenticeships which lead to qualifications. It is no wonder that we are falling behind.
The hon. Member for Wyre Forest talked about small firms and said that they do not provide training, but poach skilled employees from other firms. If they will not play their part, we should make them pay something towards real training. The Government are giving up their training role and relying on the voluntary sector, but we know that the private sector will not train people. The good firms which train people lose them to small firms which attract them by offering slightly higher wages.
We have also heard about the invisibles today. We used to depend on the invisibles. Not long ago Conservative Members used to say that it does not matter about manufacturing because we have the invisibles.
Mr. Tony Banks : They are really invisible now.
Mr. Hoyle : As my hon. Friend says, we cannot see them now--they are completely invisible. They are in defecit and there is no sign of an improvement. The problem has been caused by hot money and high interest rates, and the invisibles have suddenly vanished.
Mr. Roger Gale (Thanet, North) : Just like Labour policies.
Mr. Hoyle : I wonder whether the hon. Gentleman is talking in his sleep again. It will not be very long before he can have a long sleep. I am afraid that his seat is in some jeopardy, but we will miss him in this place, if only for his remarks which none of us can understand.
Invisibles were supposed to save the present Government and, presumably, future Conservative Governments, but they have vanished. We have not yet faced the rigours of the single market and what might happen to our insurance or banking systems. Frankfurt may even bid to take over from the City of London.
One would not have known from any of the Conservative speeches today that the country faced a crisis. We are on the threshold of the single European market which offers great challenges. If we had the right training and the right enterprise in which help is provided
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for industry, and if we had the right transport system, we could meet those challenges. Unfortunately, we are getting none of those from the Government.The Government will blunder into 1992 and the single European market and we shall be decimated because we are not providing the training. We are also providing no research. If we want to compete with West Germany and Japan on research for civilian purposes, we must spend 50 times as much as we are spending now. Similarly, we need 50 times as many industrial research scientists as we have now. I rather surprised the Minister for Industry by explaining that Siemens of Germany trains more qualified graduate electrical engineers than are trained in the whole of the United Kingdom. That is a sorry story. We are not prepared for the single European market. The Germans, French and Italians are far better prepared and their industries are in better shape than ours. We must also face the Japanese and the Americans. However, there is complacency on the Government Benches about the problems that will beset us when we enter the single European market. We should be able to welcome that market just as we should be able to welcome the fact that eastern Europe is opening up. There are great opportunities for British industry in that area if we are equipped to enter it. Unfortunately, we are not so equipped.
Manufacturing industry is being crippled by high interest rates. It will be investing less, when it should be investing more. We are not providing the training required for a modern industrialised society. The balance of trade will not come right for the Conservative Government, although they have had the advantage of oil, which the Labour Government did not have.
The Chief Secretary to the Treasury (Mr. Norman Lamont) : Nonsense.
Mr. Hoyle : I know that the Chief Secretary to the Treasury likes a fight--that has been well recorded. He has to say, "Nonsense," because he is on the Treasury Bench, but he must be aware that we are ill prepared to meet the challenges in Europe. If the Chief Secretary says "nonsense" again, he is more short-sighted than I believed him to be. He knows that I am right and that he has presided over the decline of British industry. In the early 1980s, the Government destroyed industry and we lost one third of our manufacturing industry. When the Government refer to a boom, they have very little basis for such a claim.
There is not much hope so long as the Government remain in power. Their ideas and policies belong to the 1980s, not to the 1990s. The sooner we have a general election the better, even though we shall lose some of the familiar faces on the Conservative Benches. The sooner we elect a Government who will be responsible and believe in industry and training and will meet the challenges the better--and that Government, of course, will be a Labour Government.
7.46 pm
Mr. Roger Gale (Thanet, North) : Some hours ago, my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) reminded me of a parliamentary truism by
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telling me that the best way to keep a secret in the House is to include it in a Back-Bench speech during the Budget debate. Listening to the hon. Member for Warrington, North (Mr. Hoyle) it became abundantly clear that by this time in the Budget debate just about everything that can be said has probably been said by hon. Members on both sides of the House. That is probably why the Press Gallery is empty. Nevertheless, I want to raise several points on behalf of my constituents.I thank my right hon. Friends the Chief Secretary to the Treasury, the Chancellor of the Exchequer and the First Lord of the Treasury for listening to our representations and for increasing the capital allowed against community charge rebate claims.
Many of my constituents are retired and have sold family homes and invested in smaller homes, houses, bungalows or flats. They prudently put the remainder of their money aside as savings to provide for their old age in the certain expectation that they will have bills to meet over many years. They have found it offensive that their prudence has been reflected in the amount that they have been required to pay in the past while others, some of them couples living together, have been allowed much larger capital sums in the bank. The measures in the Budget on savings will be extremely welcome to many of the people in that category. I am delighted that the Government have recognised the need for prudence and thrift and have tried to recognise and encourage the culture of thrift.
I wish only that my right hon. Friends had gone further and, while reconsidering, had looked again at the uniform business rate and in particular at its effect on mixed hereditaments. Many small hotel and guest house owners and shopkeepers in my constituency own or live in mixed hereditaments. They will bear a disproportionate burden of increased taxation because they will have to pay increased business charges as well as community charges. I hope and believe that as the regulations and legislation are reviewed, my right hon. and hon. Friends in the Treasury will find it possible to take account of the genuine needs of a relatively small, but significant, number of business people.
Mr. Allen McKay (Barnsley, West and Penistone) : I agree with the hon. Gentleman about the increase from £8,000 to £16,000 of capital. The change will benefit a few of my constituents. More would benefit if the Government also reconsidered the taper between £3,000 and £16, 000. Many people who think that they will receive help will not receive it. Is not it also a fact that the more that we alter the position, the more the people who do pay will have to contribute unless there is help from the Treasury?
Mr. Gale : I hear what the hon. Gentleman says. The Treasury has considered the matter. I believe that the concessions in the Budget will affect a significant number of people positively. Above all, the concessions will send out the right signal. In the past we have said to perhaps too many people that it is no longer worth saving or, if one sells one's house, putting the money aside. It was better to some extent to spend the money and rely on benefit. The message that is now being sent is a Conservative message and the right one. It is the message that it is worth providing for one's old age by putting a capital sum aside, that people will benefit fully from doing so and will not be
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penalised for having a relatively small sum of money in the bank. I hear what the hon. Gentleman says, but I believe that the Treasury has got the balance right.My last point is a matter already raised by my hon. Friends the Members for Fulham (Mr. Carrington) and for Wyre Forest (Mr. Coombs). Tax concessions have been offered on workplace nurseries and playgroups provided by the employer. It is a particularly welcome step in the right direction. I have many constituents who have children and would like to return to work. I have several employers in my constituency who would like to entice married ladies with children back to part-time or full-time work, depending on the ladies' personal circumstances. Employers have found that those ladies have been dissuaded from returning to work because of the additional burden of taxation that they will face.
I agree with my hon. Friends the Members for Fulham and for Wyre Forest that we have not gone far enough. As I understand the new regulations, and as they have been explained to me by Inland Revenue officials, we shall remove from personal taxation the benefits of workplace nurseries and playgroups provided by an employer or a group of employers who have joined together to provide a communal creche facility. The relevant factor in that equation appears to be that the employer must have a stake in the workplace provisions.
In my constituency, we hope that, in the near future, a 170-acre business park will be constructed. It strikes me that it would make eminent sense for the developer to include in the heart of the business park a workplace creche. Under the proposed regulations, unless each and every employer has a stake in that creche, it will not qualify for tax relief. That seems to be an oversight. I agree entirely with my hon. Friend the Member for Fulham, who took the matter a stage further. He said that a significant number of ladies, sometimes single ladies, would dearly like to set up in business and be self-employed. They find it impossible to do so because they cannot provide care for their children while they work. I hope that the Government will reconsider the matter and at the least permit employers, and particularly small business men who might not have the resources or space to provide creche facilities, to contract out child care for the children of their employees while they are at work.
I entirely accept the potential dangers of allowing tax relief to the employee on money paid for the purpose of buying child care, but I can see no reason why it is not possible to extend the scheme further so that the small business man can buy care from a private child minder or nursery. That would make a significant difference and bring into this new pool of people to whom we wish to give opportunities, the employees of small business men as well as those of larger companies that may take advantage of the concessions. My hon. Friend the Member for Wyre Valley was right to highlight the potential dangers of encouraging too many ladies to return to work too soon. A delicate balance needs to be struck between encouraging ladies to return to work and make the most of the opportunities that will be available in coming years, and creating a generation of child-minded or latch-key children. We all accept that that is a delicate balance, but there are social advantages, particularly for lone parents--male and female --in extending the opportunity to go out to work to those who find that their entire lives are spent at home. We should offer them not only the financial but the social advantage
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of getting out of the house for a few hours a day, perhaps in part-time work, in the knowledge that not all the money that they earn will be eaten up in providing care for the children whom they have to place in either a nursery or creche while they are at work. I welcome the announcement. I believe that it will be positive. I ask my right hon. Friend the Chancellor of the Exchequer to re-examine the possibility of extending the facility further to enable small businesses and the self-employed to take advantage of a worthwhile concession.7.56 pm
Mr. John Battle (Leeds, West) : One point that has not been made so far in the Budget debate is that at the heart of the Budget there is a huge silence about the real problems of increasing low pay in Britain.
In the concluding statement of his Budget speech, the Chancellor said :
"this is a saver's Budget It helps the less well-off. It sets the right course for the '90s."--[ Official Report, 20 March 1990 ; Vol. 169, c. 1026.]
I confront that claim with two facts. First, the figure for average weekly savings in west Yorkshire is one of the highest in the country, at £5.84 a week. That is higher than any other region in Britain, apart from the north-west. It is a strange irony that the areas that save the most and give the most in charitable donations receive some of the lowest pay in Britain. West Yorkshire is one of the lowest-paid regions. Only 28 per cent. of the people have an income of over £245 a week, and that is after 10 years of this Conservative Government.
I challenge the Chancellor's notion that his Budget helps the less well- off. It is not a Budget for social justice. It does nothing to root out endemic poverty, particularly among those in low-paid work. The minor alterations to the capital rules for access to social security benefit are no big deal for the poor.
The detailed measures in the Budget simply tinker at the margins. They go no way towards tackling the structural factors underlying the British economy as a result of the Government's policies of the past decade. If anything, they reinforce the current trend towards a two-tier economy, with those in relatively secure, full-time work, with rising incomes, in one tier and those in temporary, part-time, low-paid work, trapped in the low- wage economy, in the bottom tier. The long-term structural trend towards part-time work in the service sector is directly linked to the decline and erosion of the manufacturing base to which my hon. Friend the Member for Dunfermline, East (Mr. Brown) referred.
We are therefore entitled to ask, "What does the Budget do for the those on low pay?" The short answer is that, after 10 years, the better-off have become even better off as a result of the Government's tax-cutting policies. This is the 1990
start-of-the-decade Budget that offers absolutely no help to the 7 million people in Britain who are on low pay and who pay taxes. This start-of-the- decade Budget contains tax cuts for companies, charitable donors, savers and the City, but it does nothing to assist the poorest wage earners to meet the extra costs of higher rents ; higher mortgages ; higher gas, electric and water charges ; higher prescription charges ; or the cost of the poll tax. The Government and their policies are directly responsible for
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all those increases. This start-of-the- decade Budget ensures that the 1990s will be the decade of the low-paid if the Government remain in office.The Budget is tough, but it is particularly tough on those in low-paid work who pay taxes. As a result of the Budget and the poll tax combined, the direct tax burden on a family of four on half average earnings is proportion-ately three times as big as it was in the financial year 1978- 79. When the poll tax bites in April, a family on half average earnings will be about £1.80 a week worse off because of the Budget. Overall, two out of three households will lose and nearly 60 per cent. of households earning less than £75 a week will lose money.
Many more people will be drawn down into dependence on means-tested benefits. About 5,000 will be drawn into income support, and 1.19 million people will be drawn into housing benefit as a result of the high poll tax charges that the Government are imposing. As tax allowances have not kept pace with earnings, 85,000 more people will be drawn up into the tax net, which means that they will be caught hard in the poverty trap.
What did the Chancellor do to ease the burden on the low-paid or to help the less well-off, as he claimed? He made matters worse, The poor will not be better off, because the changes in the Budget have to be coupled with the effect of the poll tax. The London School of Economics has a computer model--TAXMOD--which has been used by the Low Pay Unit to analyse the combination of the Budget changes and the introduction of the poll tax in terms of the gainers and losers in our society as from 1 April this year. It shows that those on a weekly income range of between £150 and £175 a week--on an average income of, say, £162.50 a week--will lose the most because of the Budget. On average, they will lose £2.54 a week. All those on wages between £75 and £275 a week will lose between £1 and £2.50 a week. In other words, a family on about half average earnings will lose £1.80 a week. A household with earnings equivalent to the Council of Europe's decency threshold of £160 a week will lose £2.54 a week on average.
Such is the crushing burden of the introduction of the poll tax that, coupled with the effect of the Budget, 64 per cent. of households in Britain will lose as much as £15 a week from 1 April 1990. Nearly 60 per cent. of households earning below £75 will lose ; nearly 60 per cent. of home owners will lose and 56 per cent. of tenants will lose. For heads of households who earn £157 per week, the changes will mean a weekly loss of £10.
However, worse even than the effect on individual incomes is the effect of the Budget when a combination of incomes is taken into account. Hon. Members should bear it in mind that the loss to a married couple will be £2.07 per week and that households with children will lose £2.35 per week. In other words, married couples with children will lose the most.
A detailed analysis of the effects of the Budget and the poll tax combined shows that this is tantamount to an anti-family Budget for those in poverty or on low pay. In real terms, there is a heavy tax burden increase on those with children, who also have increasing prices to pay, not least as a result of the loss to families because of the freeze
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in child benefit. In Yorkshire alone, 1,090,000 children will lose out as a result of the Government's failure to uprate child benefit.Before we are told about workplace nursery tax--welcome though the concession is--let us make it absolutely clear that four in five couples where the wife works will lose an average of £2.79 a week anyway, which will begin to eat into that concession.
During his speech, the Chancellor stated :
"we tax people on low incomes who should not be taxed", and that following the removal of composite rate tax for non-payers with savings,
"tax will fall on those who should pay it, and will not fall on those who should not pay it."--[ Official Report, 20 March 1990 ; Vol. 169, c. 1023.]
Although the Chancellor made that statement, he did absolutely nothing about it in the Budget itself. The Budget retains the Government's built-in bias against the low-paid. In case some may think that that is an overstatement of the Government's policy, I remind the house of the Government's policy as stated in their White Paper, "Employment for the 1990s", which was published in December 1988. Chapter 3 was entitled "Barriers to Employment : Pay". Pay is obviously, therefore, regarded as a barrier to employment. The Government are pricing people into work, regardless of whether those people can afford to live on the rate that they are offered. That is part of the Government's deliberate policy to manufacture low pay. That policy was made even more explicit in a recent speech by the Under-Secretary of State for Industry and Consumer Affairs. In his address to the February conference of the Confederation of British Industry on the subject of "the Japanese electronics industry in Britain", the Minister declared that one of the great advantages for Japanese industrialists investing in Britain was the
"low cost of the workforce".
He said :
"Britain has one of the lowest labour costs in the EC--one half of the costs in Germany and one third of the costs in France or Italy. Only Greece, Portugal and Spain are cheaper. The workforce is also skilled and flexible since it is not limited by rigid labour laws. For example, women are permitted to work the same hours as men including--unlike in some countries, including Japan--a night shift." It is not the welcome that we are worried about ; it is the terms of that welcome to the Japanese. The Minister welcomed them to a low-wage economy in which women are allowed to work a night shift although that is not allowed in Japan. So much for family values. Boasting about low wages is an insult to many of the people whom I represent and to hon. Members who represent other constituencies in west Yorkshire.
In my constituency, some home workers earn £4.50 for knitting a sweater that can take about 30 hours, while others pack cards for catalogue companies and earn 50p an hour or less. According to the Yorkshire and Humberside Low Pay Unit, although the average male adult full-time earnings are £269.05 a week, the average female adult full-time earnings are only £182.03 a week. In Leeds, 12,000 men and women earn below £100 per week ; 54,000 men and women earn less than £140 a week, and if the overtime earnings are excluded, the figure rises to 68,000 people.
About 6,000 women in Leeds work part-time for less than £2.20 an hour ; 15,000 work for less than £2.50 an hour and 30,000 work for less than £3 an hour. That is a damn sight less than hon. Members earn per hour. In other
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words, the structural shift from manufacturing to service work has a parallel shift from full-time to part- time work, and concomitant with that shift is an increase in low-paid work and family poverty. On 14 November 1989, I tabled a parliamentary question asking for a breakdown of the employment trends in Leeds during the 1980s, based on the standard industrial classification. The figures clearly show that between 1981 and 1987 the total number of jobs fell by about 7, 000-- full-time jobs fell by 8,600 and part-time jobs increased by 1, 400. The number of manufacturing jobs fell by 13,900, and there was no increase in the number of full-time jobs for men in the service sector. Of the 10,000 new jobs in that sector, 7,000 were full-time jobs for women--paid at a lower rate than men--and a further 2,000 were part-time jobs for men, with the final 1,000 being part-time jobs for women. Therefore, there was no overall increase in employment. Indeed, there was no real increase in part- time employment for women. The new jobs in the service sector simply replaced those lost in manufacturing.There is a switch from men to women, but with that has come a reduction in pay because women generally are paid less than men. The Government might claim that the vacancy columns show that there are hard-to-fill vacancies, but that is because those jobs are extremely low paid. Despite the doctored unemployment figures, the figure for my constituency is 7.8 per cent., with pockets within that standing at 20 per cent. Some 10,583 people--16 per cent. of my
constituents--are on income support ; 2,800--4 per cent.--are on family credit. What are their prospects under the Budget?
Paragraph 3.48 of the Red Book states :
"With output growth expected to be low in 1990, the sharp rise in employment of the last few years is likely to tail off and unemployment may rise. But the employment and unemployment outlook depends crucially on wage settlements."
The message is absolutely clear--that there is more unemployment to come, so cut wages ; women's work and work in the service sector will be all. It is a return to the classic Tory message.
A survey in The Sunday Times covering the top 250 companies in Britain showed that their directors had pay rises of 28 per cent. during the past year, and that their average pay was £221,000 a year. That is a startling contrast to the average pay of £10,206 for their employees. We are entitled to ask why the poor and those with low wages are kept down and effectively priced out of our society while the rich are encouraged to become richer.
Since 1979, the bottom 50 per cent. of British society have lost £8.50 per family because of the Government's tax changes, while the top 10 per cent. have gained £40 per family. That is not a version of trickle- down economics ; it is more a direct redistribution from the poorest to the richest. We must not forget that the Social Security Act 1989 put in place the very mechanism that will cause people to accept jobs whatever the low wage offered. If this Government's so-called economic miracle is to be measured by anything, it should be by their exclusion of the poor and the low-paid in society. The Budget reinforces the Government's deliberate policy to push down wages and to shift from the one-nation approach, involving a jobs-for-all social democracy, to a two-nations approach in which there is a clear structural rift between the rich and the poor. The
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Budget underlines the fact that the 1990s will be the decade of low pay. It is too late for the Government to change their economic strategy. The only option for the people of Britain is to change the Government.8.14 pm
Mr. Michael Irvine (Ipswich) : Page 16 of the Red Book shows a chart which sets out the course of house price inflation since 1983. There was an acceleration in prices towards the latter part of 1987, and in 1988 there was a significant surge. I believe that that significant surge in house prices had a great deal to do with our present difficulties, acting almost as an engine for inflation in other parts of the economy.
Home owners, as holders of rapidly appreciating assets, realised that they could borrow against those assets, and they also felt more inclined to borrow. The growth of credit then fed upon itself. House prices were driven up beyond the reach of first-time buyers. People mortgaged themselves to the hilt to buy homes and, having done so, then felt the need to press for greater wage increases. Again, that meant inflationary pressure.
There were other effects. Companies in my constituency and throughout the south and south-east found themselves short of skilled labour. They tried to recruit from other parts of the country where the labour market was less tight, but found that the high cost of housing in the south and south-east was a great deterrent to such recruitment--and so the rigidity of the labour market was reinforced. Part of the reason for the tendency towards house price inflation--which has been a feature of past economic booms, including the economic boom of the past three years--is the incentives for home ownership. I am all in favour of retaining existing incentives, because home ownership is excellent and should be encouraged, but we must face the fact that there has been an imbalance.
For too long, the incentives, the advantages and the tax breaks have been excessively loaded towards home ownership. A redress of that imbalance is badly needed. That is why my right hon. Friend the Chancellor was so right to shift the emphasis to other forms of personal saving, giving them the incentives and tax benefits that have been enjoyed by home owners. That is a significant move, which will benefit the economy, and perhaps, when the economy booms again will reduce the risk of house price inflation taking off as it did in the last boom.
My right hon. Friend's theme of thrift fitted in well with his announcement of the capital limit for community charge benefit being raised from £8,000 to £16,000. If my correspondence and my experience of my constituency surgery are anything to go by, the original £8,000 limit was a source of great grievance and resentment. People thought of it as a tax on thrift and a penalty levied on those who had worked hard and saved for their old age, whereas those who had blown it, those who had spent their income rather than saving, benefited from rebates.
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