House of Commons Hansard Debates for 7 Nov 1991

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It would be foolish for any Conservative Member to pretend that mistakes have not been made. No Government have not made mistakes in their career. Sometimes those mistakes can be rectified and, indeed, we have gone a long way towards rectifying the mistakes that I believe were made about two years ago.

We have also shown that it is possible to expand services and maintain strong control of public expenditure. We have shown beyond peradventure that only with a strong economy can we expand the services that people want expanded.

We are seeing a new agenda being set for the 1990s. We have transformed the economy of Britain and done much to undo the damage done by the disastrous policies pursued in the 1970s, which led us into the position that we faced in 1979. We are seeing the benefits of that transformation flow through. Improved services are required, but they can be provided only with a strong economy and a Government who are determined to provide a strong economy. That means a Government who are not afraid to take tough and sometimes unpopular decisions.

We have taken those decisions many times. My right hon. Friend the Chancellor and his colleagues have shown their determination not to indulge in some cynical pre-election giveaway but to keep the economy firmly on track. A change in philosophy has brought about the transformation in the economy. My right hon. Friends show every sign of continuing to apply that philosophy with great benefits to the British people and the economy of Britain.

We cannot return to failed policies. They failed in the past and are doomed to fail again. When is a priority not a priority? I suggest that it is when everything is a priority. By definition, priorities stand out from other items. However, Opposition spokesman after Opposition spokesman says that every spending area is a priority. They do not seem to have learnt anything whatever from the past.

A study by Liverpool university's economic model shows that if Labour's policies were pursued they would result in declining growth, growing inflation, unemployment and worsening incentives. It estimates the cost to be at least £29 billion per year. It says : "it hardly seems possible that they can so comprehensively ignore the lessons of the past decades these lessons are :

1. that high borrowing and its accompanying money supply growth lead to inflation.

2. that worsening incentives, whether by taxation or regulation, reduce economic growth".

We are already seeing, in industry, the City and many other areas, shudders of horror at what it would mean if the Labour party were elected to government and pursued one half of the wild spending plans that it has put before us so far. However, Labour's Treasury spokesmen signally refuse to admit to the cost of those plans. They will not say what their proposals would cost. We have tried to cost the proposals. We have tackled Opposition Treasury spokesmen on whether they would back up the spending pledges. They have failed to do so.

In his speech yesterday, my right hon. Friend the Chancellor showed that the economy is firmly on track. I listened this morning, as I am sure that many hon. Members did, to the "Today" programme on the BBC. In the usual way, it had to scour the corners of the country to find Oliver Twists asking for yet more. As my right hon. Friend the Chancellor said this afternoon, it does not

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really matter whether we have given enough or whether we should give more or less. The fact is we have increased our spending programmes. When the Government do things which they are constantly urged to do, not only by the Oppposition but by other people, they receive little credit. I get tired of that.

I welcome yesterday's statement, because it sets out firmly the Conservative party's intentions not only for the general election year but for future years. It shows how we see the economy going and that prudent policies which are working will continue to work. The Conservative party puts that firmly before the British people. We must expose the prospectus-- if, indeed, it is a prospectus--that the Labour party put before the British people. We must show clearly that it is not costed and will not be costed. The only yardstick by which we can measure it is past performance. On past performance, the Labour party fails on every single count. My message to my colleagues on the Treasury Bench and all my right hon. and hon. Friends is that, during the next months, we must expose this sham. There is no quick and easy way to economic recovery, as the Labour party pretends, whether in manufacturing industry or elsewhere.

The Labour party must come clean and tell the electorate how it would create an economic recovery. It must cost its programmes so that the electorate can make a judgment. If the Labour party does not come clean and cost its programmes and continues to be unwilling to do so, the electorate will make their judgment. They will judge the party on its record, and that will mean that the Labour party will lose at the next general election.

7.26 pm

Mr. Richard Caborn (Sheffield, Central) : I do not know whether the hon. Member for Crosby (Mr. Thornton) has read the amendment tabled by my right hon. Friend the Leader of the Opposition. The amendment sets out a framework for manufacturing. It is interesting to see several Conservative Members now reading the amendment. The Gracious Speech offered nothing to the 7,500 unemployed people, or 21.7 per cent. of the population, in my constituency. The Gracious Speech does nothing for manufacturing industry in Sheffield. The hon. Member for Crosby referred to manufacturing industry.

The manufacturing base in Sheffield was just recovering from the first recession in the early 1980s only to be hit by the second recession. I do not know where some Conservative Members obtain their advice or whom they consult, but if they spoke to some of the industrialists in Sheffield and south Yorkshire, which was a major manufacturing area and a centre of excellence in engineering and steel, they would find that people are extremely disgruntled. They believe that the Government have abandoned manufacturing industry and allowed it to be opened up to competition from companies in European countries and elsewhere which had support from their Governments. That was graphically illustrated by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), the shadow Chancellor. He set out clearly where the Government had abrogated their responsibility to manufacturing and for wealth creation. The social consequences of that decline in manufacturing have been

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picked up not only in my area but in many industrial areas by the local authorities. They have had to do so with reduced budgets. For example, Sheffield has to cope with a substantial reduction of £30 million in its budget, yet it must deal with all the social problems that have arisen from the decline of the manufacturing base.

Mr. Gregory : Why does the hon. Gentleman continue the Labour party's obsession with manufacturing? If he truly represented the people of Sheffield and south Yorkshire, he would give at least a cursory glance at the service sector. He has a major part of the Midland bank in the area and the area is a major centre for tourism. Yet we never hear from him or the Labour party about that. Instead, Labour Members constantly run down that part of the country and the electorate who work in the service sector.

Mr. Caborn : I am pleased with that intervention. I hope that the hon. Gentleman will take great care to listen to my speech because I shall cover many of the matters to which he refers. I think that he will agree that the Government have not supported industry in those sectors either.

As the amendment outlines, we need to create a framework within which commerce and the service sector as well as industry can flourish. That was once again graphically outlined by documentation on manufacturing industry put before the country by the CBI just before its conference. Yet again, the Government have ignored the advice. Yesterday, in the autumn statement, and today, they have walked away from the solutions that the CBI was asking to be implemented.

Like many other cities, Sheffield has tried in the face of adversity to develop a partnership not only between local commerce and industry but also including local authorities, the academic institutions, representation from the community, the development corporation and the TECs. That partnership has been operating for about six years, and it embarked upon a programme to find the highest common factor in the city rather than aiming for the lowest common denominator.

In the past three or four years, it has developed the infrastructure of the area--the airport and the supertram. Technology transfer has been developed. There is a new technology centre and science park, which is a partnership between the university, the polytechnic, the chamber of commerce and the local authority. Cable is another development, and Sheffield has developed an investment trust--the Hallamshire Trust--and Meadow Hall, a major service sector development. The partnership covered all those areas.

The development was an attempt to diversify away from a purely manufacturing base, to try to develop service industries, to introduce technology transfer into the structure and to ensure a transport system that was adequate to carry people and goods in and out of the area. There has been a combined effort, even in the face of all the obstacles that have been put in the way by the Government.

After a fairly meticulous survey throughout the country, about five years ago Sheffield decided to develop a centre of excellence for sport. We spent £150 million to

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develop some of the best sporting facilities in the world--the swimming complex in Sheffield is ranked as the best in the world--and we ran the world student games.

What was the Government's attitude? At first the Secretary of State for the Environment wrote to say that he would support the development but that there would be no financial commitment to it. After embarking on the project, we got little support from the media or from central Government. On 14 July 1991, we staged the largest sporting event that has taken place in the world this year. There were 6,000 participants and 100 countries were represented. When Princess Anne opened the games on 14 July 1991, seven Sports Ministers from around the world were present and more than 100 embassies were represented in Sheffield on that day. The International Olympic Committee was represented, and there were experts from around the world representing most of the 11 sporting disciplines to be performed in the following 10 days.

Those games were the first multi-sport event in the world to include athletes from the new nation of Namibia. That event on British soil was the first time that 200 young people marched under the flag of the new Germany. However, no senior Minister from the British Government was present--not even the Minister for Sport. When the Canadian Sports Minister asked, "Where is the Prime Minister for the biggest sporting event in the world this year?", we said, "We have not even got a senior Minister here."

I am telling the hon. Member for York (Mr. Gregory) what Sheffield, South Yorkshire and the north of England did--gave a window of opportunity to the world and left a legacy in Sheffield, and we shall reap the fortunes of it in years to come. The Government could not even acknowledge that type of development among the public and private sector, the academic institutions and 6,000 volunteers who made the event happen. Had it not been for the presence of my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell), the shadow Minister for Sport, the attitude of many sporting organisations from around the world would have been much worse. He at least smoothed over some troubled waters and said that, even if the Government did not support the event, at least the majority of the British people did.

I raise the subject because, as the amendment says, there needs to be a new structure within the regions to carry out the regeneration that the Labour party stands for and has been advocating for the past two or three years. A delivery mechanism is necessary. Many projects in the north of England such as the world student games are being stifled by centralisation of power. That applies not merely to central Government but to the media and to major decision-makers because they are domiciled in London or in the south-east. A branch line of the civil service exists--a few puppets are put in an area and they feed back to central Government. All the decision-making is here. It is not influenced by what is happening in reality in the regions where wealth creation exists whether in the service sector or the manufacturing sector. The amendment challenges the structures that govern us, the structure of how decisions are made, decisions that impinge on industry and commerce in the regions.

The centralisation of power has once again been graphically underlined because hon. Members have been

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talking about public expenditure--where will we get money from and where will it be spent? The North of England Regional Consortium studied the distribution of public expenditure. I shall not bore the House with all the figures, but some should be given and probably the most graphic are the figures for expenditure per head of population. In the north of England in 1989-90 total public expenditure per head of population was £1,707. In the south-east it was £1,876. If one takes investment-led expenditure by the Departments of Defence, Trade and Industry and Transport, more devastating figures emerge. The 1989 figure for the north of England is £248 per head, whereas it is £546 in the south-east. There is a major disparity in the distribution of public expenditure and, moreover, between 1981 and 1990 the trend was worsening.

The overheating in the south-east has been aided and abetted by the Government's decision to continue that trend. That is in stark contrast to what is happening in the rest of western Europe. Every country outside the United Kingdom has gone for some form of devolution or regional government. The West German experience has been mentioned many times, and it has been suggested that that is the way that we should proceed. If one studies the West German experience closely, one finds that the lander structure has asisted the development of wealth creation and of manufacturing industry far better than the centralised structure that we have in the United Kingdom.

The amendment begins to tackle the north-south divide and to make proposals that may start to regenerate the under-utilisation of the north of England. We have to stop this debacle. We have to stop the Secretary of State for the Environment going round the country like a modern-day Haile Selassie, dropping crumbs from the master's table in the form of city grants. We are a modern industrial nation, but authorities are having to bid for a small pot of money. It is like a Dutch auction. We are trying to regenerate our industrial base in the north of England. Surely civil servants and those in London are not the fount of all wisdom. There are industrialists and people in commerce, local authorities and the trade unions in the regions who know what is required for the regeneration of their area. Yet the Government pay them scant regard.

The amendment is constructive. It lays the framework that the CBI and British chambers of commerce have asked for--not to pick winners and losers, but a structure in which industry can operate. It would give industry a fighting chance. Industry is asking for no more and no less than what is happening across western Europe.

In support of that argument, Howard Davies, the controller of the Audit Commission, in his article in the Financial Times of 28 October, said :

"Yet the European Commission is open about its desire to create a Europe des re gions. There's a European Assembly of Regions and regional and social policy are oriented towards regional needs. It's certainly arguable that without some sort of regional structure, the UK will be increasingly disadvantaged with no way of influencing Community regional policy."

Clearly there is support for the type of structure described in the amendment of my right hon. Friend the Leader of the Opposition. What Tory Members have said does not hold with industrialists, chambers of commerce or, indeed, the British people.

Several Hon. Members rose --

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Mr. Deputy Speaker : I call Mr. Gregory.

Mrs. Audrey Wise (Preston) : On a point of order, Mr. Deputy Speaker. As there is now a special report from the Select Committee on Health about the breach of privilege, may I ask you to confirm two points of procedure? First, am I correct in thinking that the matter will go automatically to the Select Committee on Privileges? Secondly, what is the position of the hon. Member for Esher (Mr. Taylor), parliamentary private secretary to the Secretary of State for Health, who has disclosed only this week that he was in possession of confidential information as far back as July, pending the reference to the Select Committee on Privileges?

Mr. Deputy Speaker : As I understand it, the hon. Lady is saying that there may have been a breach of privilege. If that is so, I recommend her to follow the normal course : to write to Mr. Speaker and inform him of the matter so that he can consider it.

Mrs. Alice Mahon (Halifax) : Further to that point of order, Mr. Deputy Speaker. What is the position of the Secretary of State for Health, who acknowledged that the report was in the wrong hands and ordered its destruction, with reference to the Select Committee on Privileges?

Mr. Deputy Speaker : That would be a matter for the House to consider, if the Committee reported to the House. If there is an allegation of a breach of privilege, the correct procedure is to write to Mr. Speaker.

Mr. Bob Cryer (Bradford, South) : Further to those points of order, Mr. Deputy Speaker. I have not fully understood them, but is it true that they are about a leak from the Select Committee on Health, involving a Tory Member who is linked to the Department of Health, to weaken a report that was critical of hospital trusts? If that is the case, it is more than simply an individual breach of privilege ; it undermines the whole Select Committee system that the House set up for the purpose of scrutinising and examining Departments. It seems from my hon. Friends' remarks that a Tory Member has conspired with civil servants to leak information and even to arrange for amendments to be tabled to the report, which were then backed by Tory Members. I should be grateful for your guidance, Mr. Deputy Speaker, but it seems that all hon. Members who voted for those amendments in the knowledge that they were part of a shabby conspiracy should also be dealt with by the Select Committee.

Mr. Malcolm Thornton (Crosby) : Further to that point of order, Mr. Deputy Speaker. As the Chairman of a Select Committee that has suffered from the effects of a leak, I should like to ask for your advice. Is it not the case that there is a procedure which this House has laid down and which should be followed in this case? When the procedure is followed, the appropriate Committee investigates the matter and then makes appropriate recommendations. The matter raised is not a point of order that should be pursued in this way at this time.

Mr. David Hinchliffe (Wakefield) rose --

Mr. Deputy Speaker : Is this on the same point?

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Mr. Hinchliffe : On a different point of order, Mr. Deputy Speaker. As a member of the Select Committee on Health, my central concern is that we may well have witnessed--

Mr. Ian Bruce (South Dorset) : What is the point of order?

Mr. Hinchliffe : I shall come to the point of order. It seems that the Department of Health may well have drafted amendments that were moved in July by a Tory member of the Committee--[H on. Members :-- "What is the point of order?"] My point of order is this : will the Secretary of State for Health make a statement on this matter? The House has a right to know whether his senior officials and his parliamentary private secretary were directly involved in this shabby affair.

Mr. David Winnick (Walsall, North) : Further to that point of order, Mr. Deputy Speaker. You gave the advice to my hon. Friend the Member for Preston (Mrs. Wise) that the matter could be taken to the appropriate Committee and that she should write to Mr. Speaker. This is more serious than that. Surely it is a matter for the House to decide as early as possible.

In view of the serious allegation that civil servants were involved in framing amendments which were then put to the Select Committee in the name of a member of that Committee, and if the Secretary of State was in any way involved, may I suggest that he should make a statement? Even if he was not directly involved, he is responsible for his Department. A request should be made to the Secretary of State that he should make a statement tonight. We should not wait until next week.

The Select Committee system was established in 1979 on the basis that the Committees would be separate from the Ministries. If, however, they have become merely a forum in which the Secretary of State can use some Members for his own party's purposes, it is a serious matter. The Secretary of State should come here tonight to explain what has happened.

Ms. Harriet Harman (Peckham) rose--

Mr. Deputy Speaker : Order. I will hear the hon. Lady, but I remind hon. Members that they are interrupting an important debate on the Loyal Address.

Ms. Harman : Further to that point of order, Mr. Deputy Speaker. We are facing an unprecedented situation. Would it not be right for the Minister to come to the House? It seems that the Government, having lost the arguments on the health service with their own Back Benchers, sought to interfere with the Select Committee to block its report on opting out. Should not the Minister be here to explain the complicity of his parliamentary private secretary in the activities surrounding this report?

Mr. Deputy Speaker : All I can say to the House is that, if it is alleged that there has been a leak from a Committee, there are well- established procedures for either the Committee or the House to deal with it, depending on the circumstances of the case. There is nothing more that I can say now.

Mr. Roger King (Birmingham, Northfield) : Further to that point of order, Mr. Deputy Speaker. Is it in order for copies of the report to be widely circulated on the Opposition Benches? Even the hon. Member for Peckham

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(Ms. Harman), the Opposition spokesman on health, seems to have a copy of the document. Is it on general release for all colleagues?

Mr. Deputy Speaker : Order. We have had a very good run on this. From what has just been said, the matter may be automatically referred to the Privileges Committee. We cannot take the matter further now.

Several Hon. Members rose --

Ms. Dawn Primarolo (Bristol, South) : On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker : Order. I said that I shall take no more points of order. An important debate has been interrupted--

Ms. Primarolo : On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker : Order. I have done all I can to assist the House and explain the automatic procedures in such cases.

7.50 pm

Mr. Conal Gregory (York) : I return to the important matter of the Gracious Speech. I am sure that the House welcomes the opportunity to discuss the economy in detail.

The Government's approach to the economy is in stark contrast with that of the other political parties represented in the House. The Government are clearly committed to reducing inflation. Since we joined the exchange rate mechanism, interest rates have fallen from 15 to 10.5 per cent. and inflation has fallen from 10.9 to 4.1 per cent.--close to the level in Germany. Although the Opposition do not want to hear these words of wisdom, that means that in the past year, Britain recorded the largest fall in inflation in the European Community, which is no mean achievement. Manufacturers and those leading the service sector in insurance, banking, tourism and legal services, rightly fear that a forthcoming Labour Government would immediately opt for devaluation, and the rest of Europe recognises that genuine worry.

The Gracious Speech was heard against the background of encouraging reports from the Confederation of British Industry, the Association of British Chambers of Commerce and the Institute of Directors. Their combined view was that the end of the recession was in sight. Indeed, exports have risen to the point where the trade deficit with Europe has been eliminated.

The amendment in the name of the Leader of the Opposition refers erroneously to the Government pursuing policies that would damage investment. Quite the contrary : only the Conservative programme will ensure investment and reinvestment. It is in stark contrast to the Labour party's policy, because the Labour party is pledged by clause 4 of its constitution to renationalise companies such as British Airways, BAA, British Steel, British Gas, Rolls-Royce and even British Telecom.

Such socialist policies would be disastrous for Britain. They would mean stealing shares from employees, who had owned them perhaps for the first time, reversing companies' efficiency, putting union barons in control in place of competent managers, and raising taxes to record levels to pay for the dogma of greater socialist control. Not

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content with that, Labour's policies would reduce the scope for individuals to invest in the British economy, which is the envy of the western world.

One recalls with a shudder the view held by travel agents of British Airways before denationalisation. They rated it even lower than Ethiopian Airways. Today, the denationalised BA is a flag carrier which is envied throughout the world. Similarly, the chance of finding a clean working public telephone was slim under Labour. Today, consumers find British Telecom's services vastly improved. In the days under Labour, who would have thought that they would find a British Telecom that would compensate for delays in receiving telephonic messages? Competition and denationalisation together have achieved that.

However, it is not only in large companies that Labour would aim to reverse our recovery. Yesterday, the hon. Member for Dagenham (Mr. Gould) made the extraordinary comment :

"There will be no provision for capping in any legislation"--[ Official Report, 6 November 1991 ; Vol. 198, c. 472.]

that Labour introduces. That was not a throwaway remark but obviously a considered one. When my right hon. Friend winds up the debate, will he say whether he agrees that such a spendthrift policy would mean no control over the loony left? We could expect the excesses of Camden in cities such as York. Just imagine studies by Karl Marx becoming the subject of a council presentation. Such are the heroes of the far left that they could even invade local government working.

For far too long, public services have not been adequately accountable. The citizens charter should reverse that, because it will ensure that the individual counts. My right hon. Friend the Prime Minister's initiative will certainly be attacked by the trade unions, which foresee their cosy world being put under the spotlight. Sadly, I predict confrontation between the Government and trade union barons like the newly elected Transport and General Workers Union chief, who is an avowed communist. Instead of seeing the benefits of the charter, union activists in York simply carp. One despairs that they will ever act constructively and champion the cause of the individual, rather than big brother.

The Gracious speech referred to plans to denationalise British Rail. Such a move is long overdue. It would benefit users--passengers and freight operaters--rail employees and taxpayers. We have already seen the success of those parts of British Rail that have become independent. I refer to British Rail Engineering--BREL--Golden Rail, Sealink, the former BR hotels, and on-station catering.

My right hon. and learned Friend the Secretary of State for Transport suggested last month that British Rail need not wait for the enabling Bill to accept competition. British Rail already accepts limited links with the private sector. In its publication, "Future Rail", it calculated private sector investment in freight as some £3 billion and has joint ventures in, for example, parcels, property development, station retail and catering outlets. Such collaborative arrangements are welcome, but do not ensure full competition, participation by employees in greater productivity or fair value for taxpayers.

Let the House consider a key part of British Rail that has been denationalised--BREL. In contrast to the days of the old socialist era, when BREL was under their control, its order books in York, for instance, are now full. There is today a spirit of confidence and export orders are

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being won. Let the House compare the figures for the basic weekly pay of BREL shop floor employees with the basic rate for staf at British Rail's maintenance division. Staff in the denationalised part of the company enjoy between 24 and 31 per cent. higher pay, although they do comparable jobs in comparable pay bands for the same 39-hour week.

In addition, when BREL was released from the shackles of the state sector and was privatised, most employees were awarded free shares which, according to their most recent valuation, were worth more than £450. Yet the Labour party threatens to renationalise such parts of British Rail, forcing staff in York and elsewhere to take a substantial drop in their earnings.

Although Conservative Members are disappointed that British Rail has not used its resources efficiently, we are not prepared to see its poor performance continue. That is why the Government announced yesterday that they have added almost £1 billion extra to their plans for British Rail for 1992-93. That means that British Rail's total external finance-- borrowing and grant--will amount to more than £2 billion next year, which is substantial support. Indeed, it is greater investment in British Rail than in the days of steam. The high increase in taxpayers' support announced yesterday will allow British Rail to proceed with investment despite lower forecasts for revenue and asset sales. This will include the new passenger rolling stock through the channel tunnel from London and the north as well as freight wagons and infrastructure works.

Let us now see British Rail place its orders for better rolling stock-- which can be built at its carriage works in York--and organise better on- train services, with catering in evidence on every train. I travel on trains frequently and I have yet to come across a train journey on which, throughout its length--unlike American and French trains--catering is available all the time.

Let us see more developments at railway stations. British Rail is one of the largest property owners in the United Kingdom, but its lack of imagination is deplorable. In the whole of Britain, there is only one railway station at which one can cash a cheque. Compare comparable cities-- for example, York with Utrecht. At the railway station in Utrecht, one can find perhaps 250 shops, offices and restaurants to which people want to go. Is there a railway station anywhere in the United Kingdom to which one would take one's partner for a special lunch or evening out? There is not, and that will not be conceivable so long as British Rail stays shackled in the state sector.

Despite British Rail's lack of progress, the Conservatives are committed to the railway industry. We have given it the taxpayers' support it deserves and have not starved it of the working capital and investment in the way the socialists did. The paymasters of the Labour party--in this context, the NUR and ASLEF--deplore such success, deplore the idea of the staff having shares and deplore the export achievement and lack of dependence on the closed shop.

Looking introspectively and backwards, Labour refuses to say how far it will borrow, how much it will borrow and by how much it will increase taxes. Labour's policies could never achieve the Conservative success in terms of higher living standards. It is right to consider the Gracious Speech in that context.

Under Conservative rule, the real take-home pay of the average family man with a wife and two children has risen by over a third, compared with less than 1 per cent. under Labour. The Gracious Speech builds on that success,

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ensuring a stable, non-inflationary recovery, a form of success which allows the individual to take some responsibility. That should be heartily welcomed.

8.2 pm

Mr. Peter Shore (Bethnal Green and Stepney) : The hon. Member for York (Mr. Gregory) began by referring to membership of the ERM and attributed to our joining a number of beneficial results, which he cited. I shall comment on our experience in the ERM, an aspect of our economic situation which has not received the degree of attention it deserves. I shall also refer to certain developments in the economy in the period since we joined the ERM and make certain deductions from them.

The hon. Gentleman referred to what he called our current account deficit having been effectively eliminated during the last two years. As he knows, the figures show that for this year we shall have a deficit on current account of £6.5 billion, that for next year we have a forecast deficit of £9.5 billion, that in 1990 we had a deficit of £14 billion and that in 1989 we had a deficit of £20 billion.

In other words, in a four-year period we have loaded ourselves with debt on external account, in our current account transactions, of no less than £50 billion. That is, for the most part, short-term money because it has been attracted in to cover those monumental trade deficits. In no period of British history--under Labour, Liberal or Conservative rule--have we fallen so grievously into deficit in our overseas current account and trading account. It gives me no pleasure to recite those facts because they are extremely serious, not only for the present but for the future.

Mr. Quentin Davies (Stamford and Spalding) rose

Mr. Shore : No, I will not give way.

The problem is not reflected simply in that appalling accumulated trade current account deficit.

The hon. Member for York went on to cite the falls in MLR or interest rates since we joined the ERM. He rightly said that from 15 per cent. in October 1990 it has now fallen to the considerably lower level of 10.5 per cent. But he omitted to set alongside that another highly relevant figure, which is that, when we had an MLR of 15 per cent., we had an inflation rate of 10.9 or, for ease of reference, 11 per cent., whereas today we have an MLR of 10.5 per cent. and an inflation rate of just over 4 per cent.

It is the difference between the rate of inflation and interest rates that gives the real effect of interest rates. The gap between the rate of inflation and interest rates of just over a year ago, when we joined the exchange rate mechanism, was a 4 per cent., as it were, real interest rate charge on borrowers. Today, 13 months later, the gap is 6.5 per cent. That is the real burden of interest rates on borrowers. In other words, far from the pressure of high interest rates easing, they have increased their squeeze, not only on domestic but on business borrowers, too. That has been a most unwelcome development.

We must take account of the fact that since October 1990, when we joined the ERM, our unemployment rate has risen by 50 per cent. Month after month there has been an appalling sequence of figures, from 1.6 million in October 1990 to 2.4 million today, and it will undoubtedly rise further.

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