House of Commons Hansard Debates for 28 Feb 1991

Mr. Lamont : I agree with the right hon. Gentleman that the behaviour and control of stocks is extremely important. The control of stock levels in British industry is one of the many ways in which British management and industry have improved dramatically in the past decade. The real fall in imports shows that the sharp move into a profound deficit in the current account was the product of excess demand in 1987 and 1988.

Mr. Nicholas Winterton : Does my right hon. Friend accept that the strength of manufacturing industry is a good sign of the strength of a country's economy? Does he accept that our manufacturing base is far too small, is continuing to decline, and that unless it is regenerated, the prospects of prosperity and a sound economic future for this country are grim?

Mr. Lamont : I agree with some parts of my hon. Friend's question-- manufacturing is an extremely important part of the economy, although not the only one. It is important for our external trade, which is why the Government are keen to encourage it.

Mr. John Smith : Does not the Chancellor of the Exchequer think that it is alarming that the Government predict a fall of 7 per cent. in manufacturing investment this year?

Mr. Lamont : The right hon. and learned Gentleman should recognise that there has been an increased boom in recent years in this country, and investment is at a high level. Business investment in this country has improved dramatically--by more than 40 per cent. in the past few years. It is not surprising that when the economy slows down, investment falls from its former high level.

Business Taxation

12. Mr. John Greenway : To ask the Chancellor of the Exchequer what representations he has received on the taxation of businesses.

Mrs. Gillian Shephard : I have received a large number of such representations.

Mr. Greenway : While recognising that high rates, which are essential for the defeat of inflation, are causing difficulties for British business, does not my hon. Friend agree that businesses can also be helped by fiscal policy? Has she seen the Budget submission by the Institute of Directors calling for a further reduction in corporation tax as a means of promoting recovery and stimulating investment, including much of the inward investment that is placing the country in such good stead?

Mrs. Shephard : I have seen the representations from the IOD, which will be considered by my right hon. Friend in the run-up to the Budget. I feel sure that the IOD will have welcomed yesterday's interest rate cuts. However, I remind the institute and my hon. Friend the Member for Ryedale (Mr. Greenway) that the Government have a good record on reducing taxation for businesses. Corporation tax was

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reduced from 52 to 35 per cent.--one of the lowest rates in the industrialised world. We have the most favourable corporation tax regime for small businesses in the EC.

Mr. Battle : Is the Minister aware that, overshadowed by the poll tax, the uniform business rate is hammering business into the ground and into the red as the bills come in? That tax was directly imposed by central Government, not local government, and the Government are responsible for its imposition and collection.

Mrs. Shephard : Over the past 10 years, rate poundages rose by 37 per cent. more than rises in the retail prices index, mostly due to the irresponsible rate rises imposed by Labour-controlled councils. Now, increases are limited to the RPI, which means they are more predictable and help business to plan. As a whole, business will be paying £1 billion less in 1991 than they would have done under the old system, which has to be good news.

Interest Rates

14. Mr. Beaumont-Dark : To ask the Chancellor of the Exchequer if he will state the medium-term interest rates in the United Kingdom, Germany, the United States of America and Japan.

Mr. Norman Lamont : At close on 27 February, five-year Government bond yields were 10.1 per cent. in the United Kingdom, 8.5 per cent. in Germany, 7.6 per cent. in the United States and 6.4 per cent. in Japan.

Mr. Beaumont-Dark : Does my right hon. Friend accept that, because of the cost of the reunification of Germany, which is costing hundreds of billions of deutschmarks more than the Germans said it would, and the fact that Germany will not allow inflation, German interest rates, which affect us all, are about 2 per cent. higher than they would have been without the reunification costs? May there not come a time when--so that our interest rates can come down--Germany should go in for a system of realignment of its deutschmark rate, not just against the United Kingdom currency, but against Europe's currencies so that fairness prevails and we have proper and sensible lower interest rates, as we would have had without reunification?

Mr. Lamont : I am sure that my hon. Friend will understand that I cannot comment specifically on the realignment of the deutschmark. It is true that the reunification of Germany has imposed considerable costs on the German economy. It has pushed up interest rates and inflation and has also led the German Government to increase taxes. As my hon. Friend said, that has immense implications for monetary policy in all European countries.

Mr. Chris Smith : How on earth can British business and British industry compete in an increasingly challenging world when they face interest rates that are substantially higher than those of our major competitors? When will the Government realise that placing such exclusive reliance on high interest rates to control demand may control demand eventually, but it may also cause severe harm to the supply side of the economy?

Mr. Lamont : British business men will not be able to compete unless we have a level of inflation that is competitive with that of Germany, the United States and

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Japan. Inflation matters much more for competitiveness than interest rates alone and, as is often pointed out, a 1 per cent. reduction in interest rates is of less significance to business than a 1 per cent. reduction in labour costs. There are many things within the control of businesses, but the key must be to get inflation down.

Sir Ian Lloyd : The Chancellor will know better than most that there is a constant search for the explanation of differences in comparative economic performance. What significance does he attach to the fact that last year, for the first time ever I believe, expenditure on research and development in Japan exceeded investment in new plant?

Mr. Lamont : I am not familiar with the figures cited by my hon. Friend, but it is true that high industrial expenditure--high expenditure in relation to turnover by firms--is a vital ingredient of economic success. That has been a feature of the Japanese economy for many years.

North Sea Oil

17. Mr. Roy Hughes : To ask the Chancellor of the Exchequer what is the cumulative total of all taxes from North sea oil since 1979 in 1989-90 prices.

Mrs. Gillian Shephard : The total over the period since 1979-80 is estimated at around £94 billion.

Mr. Hughes : Since Britain is back in recession and facing a huge trade deficit, since our industrial training is poor by any standards and since investment in manufacturing is declining yet again, does not it appear that North sea oil revenues have been largely squandered? Is not that a major indictment of the Government after nearly 12 years in office?

Mrs. Shephard : It is extraordinary that Opposition Members continue to knock British achievements. North sea oil revenues have contributed to the reduction of overseas debt and of the public sector borrowing requirement as a share of the gross domestic product, thus freeing resources for private investment. Our net overseas assets rose from £12 billion at the end of 1978 to £112 billion at the end of 1989. That is the highest proportion of all major countries as a percentage of GDP and it is no mean achievement.

Inflation

19. Mr. Burns : To ask the Chancellor of the Exchequer what is the latest forecast for the year-on-year rate of inflation at the end of 1991.

Mrs. Gillian Shephard : The autumn statement forecast is for a sharp fall in all items on the retail prices index. Inflation should fall to 5 per cent. by the fourth quarter of this year. Most outside commentators currently predict lower inflation than that. My right hon. Friend will publish a new forecast with the Budget.

Mr. Burns : I am grateful to my hon. Friend for that answer. Has she read the speech by the president of the Confederation of British Industry who suggested that employers have a role to play in helping the battle against inflation by keeping down average wages? Will my hon. Friend impress on employers the need in the battle against inflation to keep down average wages throughout the economy?

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Mrs. Shephard : My hon. Friend is absolutely right. I am glad that the message is also being conveyed by the CBI. It is essential that wages be kept down as part of the continuing battle against inflation.

PRIME MINISTER

Engagements

Q1. Mr. Robert Hicks : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister (Mr. John Major) : This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Hicks : I am sure that the whole House will wish to pay tribute to those who have been involved in the successful liberation of Kuwait and especially to our own armed forces whose courage, professionalism and inspiration have been an example to us all. We offer our deepest sympathy and gratitude to the families who have lost their loved ones.

Does my right hon. Friend agree that very real problems still exist in that part of the world and that it is incumbent on all nations, through the United Nations, to ensure that a middle east peace conference is established at which all the issues, including Israel, the Palestinians and the rest, can be discussed? Does he agree that we should give every encouragement to the Arab nations to formulate their own security arrangements for the future?

The Prime Minister : I am grateful to my hon. Friend. I shall, of course, be making a full statement on those matters very shortly. The fact is that Kuwait has been liberated and that one of the most remarkable military campaigns of recent years has been concluded. I want to pay the warmest possible tribute to the commanding officers of all nations out there and especially to General de la Billiere, who has commanded our own troops with such skill. I entirely agree with my hon. Friend. We must now look to the future and secure peace, especially by the means mentioned by my hon. Friend.

Mr. Kinnock : May I say to the Prime Minister that today, in this Parliament and throughout the country, we share the feelings of satisfaction at the defeat of aggression, and the feelings of sorrow at the deaths and misery caused directly as a result of that aggression? Does the Prime Minister agree that the only fitting memorial to those who have made the ultimate sacrifice is to build, through the United Nations, lasting peace and lasting justice?

The Prime Minister : I share the emotions expressed by the right hon. Gentleman and the conclusion that he reached.

Mr. Temple-Morris : Does my right hon. Friend agree that if politicians do half as good a job in sustaining the peace as the armed services have done in winning the war, we shall not be doing at all badly? In sustaining that peace, will my right hon. Friend differentiate between the Iraqi people on the one hand, and Saddam Hussein and his Baathist clique on the other? Does he further agree that the

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longer that Saddam Hussein and that clique remain in power, the more difficult it will be for all nations to have a charitable attitude towards Iraq?

The Prime Minister : I agree with my hon. Friend. We have never opposed the Iraqi people ; it is their leadership and Saddam Hussein who have been the enemy on this occasion.

Q2. Mr. Home Robertson : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Home Robertson : Will the Prime Minister pay tribute to the 300 service men and their five minesweepers from the Rosyth naval base on their skilful achievement in the long and hazardous task of clearing mines for the allied fleet? Is he aware that the Minister of State for the Armed Forces said on Tuesday that Rosyth naval base was the "easiest and most suitable" target for closure, in spite of the assurance given by the Prime Minister to the House on 5 February? Is that the kind of welcome home that our returning heroes can expect from Ministers in this Government?

The Prime Minister : I willingly join the hon. Gentleman in paying tribute to the men from Rosyth and the Royal Navy who have done such a magnificent job in sweeping the northern Gulf of mines. I do that with the greatest warmth and willingness. As the hon. Gentleman knows, for I have told the House before, a whole range of possible options concerning the armed forces generally is being considered to reduce the cost of defence support. In the case of the Royal Navy, that is bound to mean the closure of some naval establishments. At this stage the Ministry of Defence is looking at various possibilities and studies are being carried out. It is essential that those studies are carried out before any decisions of any sort can be made. I repeat my assurance to the hon. Gentleman : no decisions whatsoever have been made about the future of Rosyth.

Q3. Mr. Devlin : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Devlin : My right hon. Friend will be aware of the profound joy and relief among families of service men in the north of England at the news of the ceasefire today and, in particular, at the extremely low level of casualties. Will he confirm that the troops will be brought back from the middle east as soon as possible and be replaced by a United Nations peacekeeping force?

The Prime Minister : We shall certainly be bringing our own troops home shortly. Precisely what will happen thereafter is a matter yet to be determined. No doubt I shall have more to say about that shortly.

Mr. Ashdown : May I associate myself with the words of other hon. Members on the role of our armed forces? The use of their professionalism and skill has been put to the service not just of the freedom of Kuwait but to the rule of international law and the authority of the United Nations. May I also pay tribute to the Prime Minister for the calmness and authority with which he has led the nation at

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a difficult time? Is his view about the future the same as mine? If the coalition invests the extraordinary victory in the United Nations, we will have created a powerful instrument not just for peace in the middle east now, but for peace in the world in the future as well.

The Prime Minister : I agree with the right hon. Gentleman. I am grateful to him for his kind words. The attitude taken by the Leader of the Opposition and by the right hon. Member for Yeovil (Mr. Ashdown) has led to a unity in the House which can have been only a comfort to all our troops.

Q4. Mr. Speller : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Speller : Will my right hon. Friend accept the congratulations through me of the people of north Devon on his leadership over the past few months? Now, as he turns his view towards domestic problems, will he see whether he can right some of the inequalities that have bothered people about the community charge? In particular, will he consider the case where a husband and wife both have to pay community charge even though only one is at work?

The Prime Minister : I am grateful to my hon. Friend. As he knows, we are examining the community charge and we will make announcements on that when our examination is concluded.

Mr. James Lamond : Is there any chance of Governments at the United Nations applying the same energy and enthusiasm to trying to stop the sale of arms to dictators like Saddam Hussein throughout the world, in which case it might not be necessary to sacrifice young men such as those who were sacrificed in the recent war?

The Prime Minister : The hon. Gentleman knows that there has been an embargo by this country on sales of arms to Iraq for a considerable number of years. My right hon. Friend the Member for Finchley (Mrs. Thatcher) imposed a strict embargo on sales to Iraq many years ago.

Visits

Q5. Mr. David Shaw : To ask the Prime Minister when he next expects to visit Dover, Deal and south- east Kent.

The Prime Minister : I am making plans for a series of visits to all parts of the country and very much hope to include Kent among them.

Mr. Shaw : Will my right hon. Friend confirm the commitment of his Government to completing the dual carriageway A20 into Dover and-- [Interruption.]

Mr. Speaker : Order. It is a perfectly legitimate question.

Mr. Shaw : Will my right hon. Friend confirm that his Government is committed to completing the A20 dual carriageway into Dover and to completing the A2 dualling between Lydden and Dover? Furthermore, will he send his best wishes to Bob Bale, Trevor Povey and all my constituents who have been fighting for Britain in the Gulf?

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The Prime Minister : I am happy to send the best wishes that my hon. Friend suggests. My hon. Friend has raised his first point with me before, both privately and publicly, and I am happy to confirm that part of the A20 between Folkestone and Dover is under construction and, as my hon. Friend is aware, a scheme for the improvement of the A2 entered the road programme last year.

Engagements

Q6. Mr. Eastham : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Eastham : With the welcome end of the Gulf war, will the Prime Minister ensure that the same endeavours are used to reduce hospital waiting lists, which now stand at 980,000, as were used to open wards and provide beds for possible casualties? If he bothers to visit Ribble Valley during the by-election will he try to explain why the waiting list for beds there has doubled during the past four years and now stands at 4,380?

The Prime Minister : As the hon. Gentleman should know, the health service is now treating more people more efficiently than ever before, not least due to the reforms introduced by the Government and the funding provided by them.

Q7. Mr. Dykes : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Dykes : I thank my right hon. Friend for his incisive and decisive War Cabinet leadership which has led to success in the Gulf and I add my words of admiration for the unsurpassed and brilliant performance of our armed forces. As I have RAF Bentley Priory in my constituency, from which the Battle of Britain was directed 50 years ago, I particularly think of the performance of the Royal Air Force. Will my right hon. Friend confirm that the particularly brave performance of the Tornado pilots in low flying on the Iraqi airfields did, contrary to rumours, substantially neutralise many of the Iraqi airfields and prevent the Iraqi air force from fighting?

The Prime Minister : I can certainly confirm that. The bravery of the Tornado pilots in the early part of the campaign played a material part in ensuring that casualties in the land war were so few. I am happy to pay tribute to all those pilots.

Mr. William Ross : Will the Prime Minister give an assurance to the House that considerable expense will now be put to trying to find a better means of identifying friendly ground troops?

The Prime Minister : That is a matter to which we shall certainly give attention. The House will understand the tragic occurrence that leads the hon. Gentleman to ask that question. It is certainly a matter which will have the most careful examination.

Q8. Mr. Arbuthnot : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

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The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Arbuthnot : In view of the recent murder of an innocent civilian by the IRA and the attempted murder of the War Cabinet, does my right hon. Friend agree that now is not the proper time to water down the prevention of terrorism Act?

The Prime Minister : I very much agree with my hon. Friend. The prevention of terrorism Act has served us well in recent years and for the moment we still require it.

Mr. Mallon : On this historic day when people throughout the world can again savour peace, may I as an Irishman express the anger and revulsion felt by the vast majority of Irish people at the murderous attempts on commuters in Victoria and other stations? Does the Prime Minister agree that the contrived security alerts that we saw again yesterday are causing enormous suffering and disruption to thousands of people going to and coming from work? Does he share my view that to kill and to heap suffering on people in furtherance of political ends is a sad and cynical perversion of the very concept of patriotism?

The Prime Minister : I agree with the hon. Gentleman. It is wickedness beyond belief, and it deserves the contempt of everyone.

Q9. Dr. Twinn : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Dr. Twinn : May I join in the warm congratulations of the House to my right hon. Friend for his conduct of the war? In looking to the future, will he bear in mind the problems caused by the division of Cyprus and the fact that United Nations Security Council resolutions have still not been implemented there?

The Prime Minister : I shall certainly put my mind to that problem. I share my hon. Friend's hope that the Cyprus question will be resolved. Indeed, I am sure that everyone in the House wants to see that. I do not believe that question of Cyprus can be directly related to the Gulf conflict.

Q10. Mrs. Alice Mahon : To ask the Prime Minister if he will list his official engagements for Thursday 28 February.

The Prime Minister : I refer the hon. Lady to the reply that I gave some moments ago.

Mrs. Mahon : Has the Prime Minister had time to read the recent Amnesty International report on the people of East Timor? Will he now make a commitment to the achievement of a peaceful and just world by banning the sale of weapons to Indonesia, given that that country has illegally occupied East Timor for 15 years and has committed the most atrocious acts of violence against its population? Is not this a good time to do something about the evil of the arms trade?

The Prime Minister : I have not read the Amnesty International report to which the hon. Lady has referred, but I shall certainly seek to do so and reflect upon what she has said.

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