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Column 1184
Porter, Barry (Wirral S)Porter, David (Waveney)
Powell, William (Corby)
Price, Sir David
Rhodes James, Sir Robert
Rost, Peter
Sayeed, Jonathan
Shaw, Sir Giles (Pudsey)
Shaw, Sir Michael (Scarb')
Shelton, Sir William
Shepherd, Colin (Hereford)
Shersby, Michael
Smith, Tim (Beaconsfield)
Spicer, Sir Jim (Dorset W)
Stewart, Andy (Sherwood)
Stewart, Rt Hon Sir Ian
Sumberg, David
Summerson, Hugo
Taylor, Ian (Esher)
Tebbit, Rt Hon Norman
Thompson, D. (Calder Valley)
Thompson, Patrick (Norwich N)
Thorne, Neil
Thornton, Malcolm
Townend, John (Bridlington)
Viggers, Peter
Warren, Kenneth
Watts, John
Wells, Bowen
Wheeler, Sir John
Whitney, Ray
Wolfson, Mark
Tellers for the Noes :
Mr. Robert G. Hughes and
Mr. Stephen Day.
Question accordingly negatived.
Mr. Michael Brown (Brigg and Cleethorpes) : On a point of order, Mr. Deputy Speaker. With regard to the Division that has just taken place, will you confirm, as is usual practice, that the names of those Labour Front- Bench spokesmen who vote for the ten-minute Bill that has just been introduced, about which its promoter, the hon. Member for Coventry, North- East (Mr. Hughes), said that if a Labour Government were re-elected, there would be an abolition of--
Mr. Deputy Speaker (Mr. Harold Walker) : Order.
Mr. Brown : And that Labour Front-Bench spokesmen who voted in favour--
Mr. Deputy Speaker : Order. If the hon. Gentleman persists again in disregarding the instructions of the Chair, the Chair will have no alternative but to exercise its disciplinary responsibility.
Several Hon. Members : On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker : Order. I shall deal with one point of order at a time. The point of order raised by the hon. Member for Brigg and Cleethorpes (Mr. Brown) was clearly bogus.
Mr. David Ashby (Leicestershire, North-West) : Further to that point of order, Mr. Deputy Speaker. Sometimes the Opposition can change the subject matter for discussion on an Opposition day. As we have now seen 18 Opposition Front-Bench spokesmen vote for a change--
Mr. Deputy Speaker : Order. I am not prepared to listen to any more of this bogus nonsense.
Mr. Tony Marlow (Northampton, North) : On a completely and utterly different point of order, Mr. Deputy Speaker. The hon. Member for Macclesfield (Mr. Winterton), who I understand is a Conservative, was elected as Chairman of a Select Committee on Health on the basis of Opposition votes only. I wonder whether you can tell the House, Mr. Deputy Speaker, whether that has ever happened before or whether it is unique.
Mr. Deputy Speaker : Order. The Chair is becoming more and more irritated by the irresponsible points of order that are being raised. We have very important business before us and we should get on with it.
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Opposition Day
[19th Allotted Day]
Government Economic Policies
Mr. Deputy Speaker (Mr. Harold Walker) : Mr. Speaker has asked me to announce to the House that he will impose the 10-minute limit on speeches made between 7 and 9 o'clock and that he has selected the amendment in the name of the Prime Minister.
5.7 pm
Mr. John Smith (Monklands, East) : I beg to move,
That this House deplores the failures of Government economic policy, which have caused a deep and damaging recession, steeply rising unemployment and sharply falling levels of output and investment ; notes with concern that the United Kingdom is at the bottom of the league tables for growth, investment and job creation of the Group of Seven leading industrial nations in 1991 and is predicted to remain at the bottom in 1992 ; and calls upon the Government to take immediate action to promote economic recovery and an early end to recession by lowering interest rates, by stimulating investment in manufacturing and in the regions, by fostering innovation and new technology and by initiating an extensive and sustained training programme to tackle serious skill shortages and to help combat rising unemployment.
The facts about our economic situation are not encouraging. In this month's Economic Outlook from the Organisation for Economic Co-operation and Development, which surveys the economic circumstances and prospects of the major industrialised countries, can be found independent and official confirmation of the depth and severity of the recession that we are now enduring. The United Kingdom is bottom of the growth league of both the Group of Seven countries and the European Community. The United Kingdom is bottom of the investment league of the Group of Seven countries and of the European Community and it is now bottom of the employment growth league of the Group of Seven, the EC and the entire OECD. That means that we have the worst record for job creation in the whole of the industrialised world. Even more depressing than the OECD assessment for this year is that next year, 1992--when, according to the Government, we should be well into recovery--the United Kingdom will remain bottom of the G7 leagues for growth, for investment and for employment growth.
An examination of the OECD's growth league reveals that the United Kingdom has been at the bottom in 1989, 1990 and 1991, this year, and that it is forecast to remain at the bottom for a further unprecedented fourth year-- next year in 1992. For four successive years, we will have been at the bottom of the growth league. Not only has that never happened to our country before ; it has never happened to any G7 country before.
That is the international measure of what Conservative policies have done to our economy. The national perspective is no more encouraging. According to the Government's own figures, manufacturing output is falling at an annual rate of 6 per cent. ; investment in manufacturing is down by 14 per cent. and that figure could well be an underestimate. Business failures are now at record levels and unemployment is rising inexorably : the most recent figures represent the 15th successive monthly increase. Only last week, the European
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Community predicted that unemployment in 1992 would be double the 1990 level--that it would again be above 10.8 per cent., or 3 million.Before the Government seek to discount that European Community prediction-- as, I am sorry to say, their apologists have sought to do in a pretty brazen fashion--let me remind them that, far from being isolated, exceptional or extravagant, it is corroborated by a range of similar forecasts from City institutions, including UBS Phillips and Drew, Midland Montagu, Societe Generale, Yamaichi and Lloyds bank. All those institutions warn of a prospective rise in unemployment to 3 million.
Only this morning, on the "Today" programme, the chairman of the Association of British Chambers of Commerce said that he believed that we were heading for 3 million. He also said that the Government's prediction of a recovery in the second half of this year was false.
Sir William Clark (Croydon, South) : Have the right hon. and learned Gentleman and his colleagues made any estimate of the number of jobs that would be lost if a minimum wage policy were introduced?
Mr. Smith : We have heard some fantasy from the Secretary of State for Employment and other apologists for the Government, who have told us about prospective job losses. I wonder whether they will look at the facts instead of the fantasies. The OECD carried out a study, on which the Government have partly relied, of the operation of the minimum wage in France. According to that study :
"The adult employment elasticity with respect to the minimum wage appears to be zero."
The hon. Member for Croydon, South (Sir W. Clark) should reflect on why 11 other countries in the European Community are able to operate a minimum wage and at the same time to have much better employment performance records than ours.
The hon. Gentleman should also realise that we must consider the issue from the point of view of justice. The other day, I received a letter from one of my constituents, Mr. David Smith--no relation, although no doubt he would be honoured to be one--of 32 Livingston drive, Plains, near Airdrie. [Interruption.] Perhaps Conservative Members will listen to the letter before rubbishing it.
Mr. Smith wrote :
"I have been employed as a security guard with Securiguard Services Limited for four years. During that time I have never had a wage rise. My hourly rate is £1.83 per hour for a 60 hour week 12-hour shifts, some guards do 15-16 hour shifts. I get paid every 2 weeks and my take home pay is £210 for 120 hours."
That is a scandal, and the fact that it is permitted to happen should be on the conscience of the nation. Poverty pay is a scandal in this country. That is why Labour is determined to introduce a national minimum wage, to raise the United Kingdom to the level of the other civilised countries in the European Community.
Mr. Bob Dunn (Dartford) : If the right hon. and learned Gentleman consults the Register of Members' Interests he will see that I have none. I thank him for giving way so early.
As the right hon. and learned Gentleman knows, some of his shadow Cabinet colleagues have made spending commitments that have been costed at £35 billion. Will he confirm that all those commitments are Labour policy? If they are not, which have been cut or dropped?
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Mr. Smith : The hon. Gentleman asks me about Labour's spending commitments in the context of the Conservative party's expensive summer campaign which, although it has been conducted all over the country, does not seem to have had a very dramatic effect on public opinion, judging by the national opinion poll that I saw this morning.I prefer to recall what was said the day after that campaign was launched. Nomura Securities said :
"It is trivially simple to ascribe inevitably arbitrary numbers to areas where the Labour Party would like to increase spending, assume that all this spending occurs at once and arrive at a huge PSBR. This is absurd."
I shall not embarrass the Chief Secretary to the Treasury by reminding him too often that The Independent observed : "Mr. Mellor's shocking arithmetic also implied a precision about Government plans which the gilts market would find amusing." It is pretty rich for the present Government to disparage economic forecasts by others, in view of their own abysmal record. Let us examine their forecasts for recent years in regard to four key subjects : inflation, the balance of payments, growth and investment. This is important, because the Government ask us to believe their forecasts for the immediate period ahead.
The 1988 Budget forecast that, over a period, inflation would be at 4 per cent. As we know, after that inflation took off, more than doubling to reach 10.9 per cent. in October 1990. That was an error of 210 per cent. The projection on the balance of payments was equally unreliable.
Sir Ian Stewart (Hertfordshire, North) : When did the right hon. and learned Gentleman, or any Labour spokesman, suggest that it was necessary to take monetary action to control inflation? If he cannot point to any such occasion, how does he think his own economic policy could be credible in the context of reducing inflation if he ever became Chancellor?
Mr. Smith : The hon. Gentleman should read the debate on the autumn statement of 1988, made during an important period in the development of the present circumstances. During that debate, on 14 January 1988, I said to the present Chancellor of the Exchequer :
"Tax cuts would feed straight through into increased consumer expenditure, particularly in the prosperous areas, and increase overheating of parts of the economy, exaggerating regional imbalances and, above all, adding a further twist to the increasing balance of payments deficit."--[ Official Report, 14 January 1988 ; Vol. 125, c. 485.]
That is what happened.
Sir Ian Stewart rose--
Mr. Smith : Surely, having asked me a question, the hon. Gentleman will do me the courtesy of allowing me to reply.
I am determined to get back to my speech at some stage. Let me tell the Conservative Members to whom I have given way, however, that they do not seem to understand that inflation was caused by the present Government's inflationary own goals. We warned them repeatedly of the consequences.
Several hon. Members rose--
Mr. Smith : I really must move on. I have given way very generously to Conservative Members, and I have a serious point to make.
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There was an equally unreliable projection on the balance of payments, another important criterion which Conservative Members do not want to hear about. In 1988, the Government predicted a deficit of £4 billion ; the outcome was a deficit of £15.2 billion. That was an error of 280 per cent.As for growth, in the 1990 Budget the present Prime Minister, then Chancellor of the Exchequer, forecast growth of 1.5 per cent. between the first half of 1990 and the first half of 1991. Perhaps I am being excessively fair to him : he hinted in his Budget speech that it could be higher. On that occasion he said :
"growth should return in 1991 towards its sustainable rate of around 2.75 per cent."--[ Official Report, 20 March 1990 ; Vol. 169, c. 1013.]
We know that growth over that period, from the first half of 1990 to the first half of 1991, was minus 3.1 per cent. Even if we take the Prime Minister at his generous--from our point of view--estimate of 1.5 per cent. growth, that is an error of more than 300 per cent. The Prime Minister, again when Chancellor, forecast in his 1990 autumn statement that fixed investment would decline by 1.75 per cent. in 1991, but in this year's Budget, only four months later, the present Chancellor was forced to revise the forecast by announcing a prospective fall of 9.75 per cent.--an error, which they managed between them, of 450 per cent.
Having regard to that record, why should we believe the Government when they tell us that recovery is round the corner? After all, did not the present Prime Minister tell us in his autumn statement of 1990 that
"the British economy is coming back on track"?
There is no hint of a recession, no intimation of falling output and falling investment or of the rising unemployment which was to come. Indeed, in that same autumn statement, only eight months ago, he told us :
"We shall be back into growth next year at an accelerating rate."--[ Official Report, 8 November 1990 : Vol. 180, c. 125.]
We know what happened and we know how absurd was the prediction of his successor as Chancellor that the recession would be "short-lived and shallow".
Given that nearly every prediction by the Government has turned out to be not only wrong, but absurdly wrong, and given that they are uniquely responsible for causing the recession with all its sad repercussions, why on earth should anyone believe them when they tell us now that recovery is on the way?
At the International Monetary Fund meeting in April this year, the Chancellor told us, as reported in the Financial Times of 30 April, that the recovery would be
"somewhere around the end of the second quarter."
That is the second quarter of this year ; we are now in the third quarter of this year.
The Chancellor of the Exchequer (Mr. Norman Lamont) indicated dissent.
Mr. Smith : I am surprised that the Chancellor seems to indicate dissent. Whether he knows this or that about economics, I hope that he knows that we are in the third quarter of this year. We might start from agreement on that point.
Today, the survey by the Association of British Chambers of Commerce confirms :
"The country is still in the grip of deep recession and the economy will continue to shrink for some time."
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[ Hon. Members :-- "Read on."] I shall be happy to read the whole lot, if hon. Gentleman want that ; it goes on for page after page. I can read out the regional quotes, too. Yorkshire and Humberside chambers of commerce state :"Business confidence has taken a severe knock in the region." The North West chambers of commerce state :
"The rise in confidence seen in the last quarter appears to be slipping away."
The London chambers of commerce state :
"Confidence remains firmly negative in the manufacturing sector."
The Southern chambers of commerce state : "confidence has fallen considerably." [ Hon. Members :-- "Read on."] The South West chambers of commerce states :
"Confidence in the manufacturing sector has taken a decided downturn."
I am surprised that Conservative Members want more of that evidence.
To drive the point home, the president of the association, Mr. Miles Middleton, today said :
"This survey substantiates our prediction that a return to growth was unlikely this year. The country's businesses are still suffering and look set to suffer well into next year. We are not yet seeing a recovery, merely a tail off in the rate of decline ... It is still premature to speak of a recovery. The current economic climate remains harsh and recessive."
The message could not be clearer.
The Chancellor is always on the hunt for what he chooses to call either vague or faint stirrings. Last month on TV-am he claimed to detect these stirrings in the housing market. He told Mr. David Frost :
"It may be slow at first. It will begin in certain sectors, probably in the housing market These are just vague stirrings at the moment, but the signs are there."
The broadcast and those comments in particular provoked an angry reply from the president of the Housebuilders Federation, Mr. Upsall, who wrote the following day to the Chancellor of the Exchequer. The president may be more capable of detecting any vague or faint stirrings in his industry. He said :
"I noted your comments on the Frost Programme on Sunday"-- the letter was written the day after--
"about the slight indications you saw of an end of the recession. You cited the housing market as providing some evidence of this claim.
I have consulted widely within the housebuilding industry and I have to tell you that there is no foundation whatsoever for your assertion. This conclusion is also widely shared by estate agents. You and your colleagues in Government should be fully aware that on the evidence of the housing market, the recession is deepening, not receding. Purchaser confidence has been totally eroded by unemployment or the fear of it and, as a result, lower mortgage rates have done nothing to improve sales, which have in fact slackened since a brief upturn in the market in March.
There will be no recovery in the housing market until an end to the recession is in sight and this will not occur until interest rates are further and substantially reduced. There is no doubt that your reliance for so long on high interest rates is driving the country deeper into recession, creating unnecessary unemployment and eroding the investment basis for any recovery."
I have in my possession the reply which the Chancellor sent to Mr. Upsall. I shall not bore the House by reading out the tedious defence which he deploys. We shall no doubt get it later when he makes his speech. I shall spare the House that. Bearing in mind what Mr. Upsall said, I could not but bring to the House what the right hon. Gentleman said in his reply.
"Thank you for your letter of 3 June regarding my interview with David Frost. I am always pleased to hear first
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