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authorities are concerned. One is the environment, in particular the redevelopment of the older industrial areas, which have been identified as the key to the region's future. Interestingly enough, that was the subject of my maiden speech in this place 29 years ago. I recall that my right hon. Friend the Member for Morley and Leeds, South was kind and gracious enough to join me for that occasion. Secondly, training is critical to the region if it is to catch up with foreign competitors' skill levels as the single market approaches and to make the best use of the declining numbers of young people who will be seeking work in the next few years. Thirdly, good communications will also be vital to the region, because they are undoubtedly a prerequisite to success as the momentum of the single market builds up.The final judgment on the Budget must turn on competence and on how far the Government can be trusted to steer the country out of a recession, which domestic misjudgments have made uniquely severe. The Government must be found wanting in three crucial aspects. First, after 13 years of administrative responsibility, many of Britain's fundamental economic problems remain--the level of structural unemployment, especially in the Yorkshire and Humberside region, a deficiency of investment, an inadequate manufacturing base, a shrunken one in Yorkshire and Humberside, and a poorly educated work force.
Secondly, no one recalling the 1980-81 recession could really have expected that the country would ever again be called upon to go through all that. Yet we are now doing it all over again and no one can say that, as yet, it is working.
Thirdly, the cost of money is too high for an economy in recession--the single biggest factor holding back recovery. Sterling stays weak and in its turn denies the opportunity for any adjustment of interest rates, because traders believe that Britain is still prone to slipping back into the bad old days of demand management. One suspects that yesterday's Budget has confirmed their fears. A PSBR of £28 billion, rising next year to £32 billion--it will be surprising if those figures are maintained and not adjusted upwards--has wrecked the Conservative Government's claim to be the party of fiscal prudence and thereby hopes of much lower interest rates.
We not only have a deeper recession than foreseen, but a worse fiscal state than the pessimists feared.
Mr. John Townend (Bridlington) : I accept what the hon. Gentleman says about the need for lower interest rates, but I am surprised that he makes that point while extolling the virtues of ERM. Does he not agree that the Government are constrained by membership of ERM? If we had not been members, it would have been possible to reduce interest rates much earlier.
Sir Patrick Duffy : If we were within the narrow band, I would find it difficult not to agree, but there is much room for movement. The truth is that we are too low down--we are only just off the bottom. One need only look at what happened to sterling after the Budget. It made earlier gains, but lost most of them after the Budget. That was not coincidence.
We need an interest rate cut and a firm grip on public finances. What we have got, however, is a Conservative Government. That is why we are likely to have sustained
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high interest rates and a burgeoning public sector deficit. The Chancellor has not delivered a relevant Budget, and he will not deliver the ballot.I recall, as did my right hon. Friend the Member for Morley and Leeds, South, that the experience of the great slump in the 1930s provided the first impulse towards political interest, political involvement and political activity. We both come from similar backgrounds with similar families. Our fathers were miners. They were the same kind of men--both Celts. In appearance, they could have been brothers. They had the same kind of background of bitter industrial experience, but they were never bitter men.
It was that early impulse that eventually led both of us to gain privileged membership of the House of Commons.
It is poignant--perhaps worse, it is ironic--that in our final speeches we should both recall the slump of the 1930s and wonder whether we are now in a similar slump. As I said in an intervention which my right hon. Friend kindly made possible in his speech, in its present configuration and perhaps soon in its length and breadth, this recession more closely resembles the great slump of the 1930s than any recession in the past 50 years.
My right hon. Friend the Member for Morley and Leeds, South and I arrived in the House at the same time. We arrived in good company, through by- elections, just after Guy Barnett as a result of a by-election in Dorset, Neil McBride as a result of a by-election in Swansea, East, John Silkin as a result of a by-election in Deptford, Brian O'Malley as a result of a by- election in Rotherham, and Gregor Mackenzie as a result of a by-election in Rutherglen. With the exception of Gregor, all the others--who were good Members of the House and became Ministers and good friends--died prematurely. I have never doubted that they were casualties of the parliamentary warfare of the 1970s. My right hon. Friend and I still grieve for them. My right hon. Friend and I have spent most of our membership of this House on the Opposition Benches, but we feel deeply privileged to have trodden the flagstones of this historic Palace. To have moved within walls that have nurtured and inspired the history of all the peoples of these islands is the greatest privilege that the people of this country can confer on any individual.
My last words to you, Mr. Deputy Speaker, are that you were my Member of Parliament and my Deputy Speaker and I could not have been better served. We have both been fortunate and I thank you for all your courtesies and your friendship.
Mr. Deputy Speaker (Mr. Harold Walker) : I am grateful for the hon. Gentleman's kind remarks.
Mr. Speaker originally announced that he was imposing a cautionary limit on speeches between 7 o'clock and 9 o'clock. In view of the small number of hon. Members seeking to catch my eye, I shall withdraw Mr. Speaker's imposition of a 10-minute limit, accompanied by the request that hon. Members show restraint in the length of their speeches, to ensure that all those who wish to take part have an opportunity to do so.
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7.4 pmMr. James Hill (Southampton, Test) : I am pleased to follow the hon. Member for Sheffield, Attercliffe (Sir P. Duffy). He has had a most distinguished career here, having been president of the North Atlantic Alliance, which was a close-knit reason why we were able to communicate--I was in the Council of Europe at that time. We also had a thin wall between our two offices, so he could hear my singing and I could hear his dictating to the rest of Europe. It will be a sad day when we lose so many able people at the election.
There is not much left to say on the Budget except to point out that inflation has fallen from 11 per cent. to about 4 per cent. We have brought interest rates down from 15 per cent. to the present 10.5 per cent. and I hope, despite the exchange rate mechanism and the doom and gloom that we heard today, that there will be a decrease of at least 0.5 or even 1 per cent. to encourage everyone who has had to borrow money during these difficult times. I hope that that will be announced before the general election. The convention is that that cannot be announced during the election campaign.
One of the great lessons that I have learnt is that strikes have always been the most dangerous aspect of industrial progress. I think particularly of the port of Southampton, where a whole year passed without a single ship entering or leaving the port. There was a series of strikes, almost one after the other, by British Rail workers, crane drivers, the dock labour force and so on. Ultimately, although I love the port of Southampton, it was not pleasant to see the absolute desolation, so I was pleased when we privatised Associated British Ports. After that, there could be only one conclusion--the Government had to do away with the national dock labour scheme and all that that entailed. We were then able to compete with the new giant port of Felixstowe on the level playing field on which we all insist when dealing with Europe.
The Southampton port's growth denies Opposition claims that people are not investing. The port has just agreed to invest £15 million on improvements and business has been and is extremely buoyant. Last year, more than 400,000 container units went in and out of the port. Considering that the port has only three container-ship jetties, that is an enormous number.
We have a tremendously buoyant business in car exports and imports. In 1991, the throughput in cars amounted to 300,000 and two thirds of those were new cars leaving this country, so the port of Southampton proves conclusively that there is still life in the United Kingdom. I sometimes wonder whether those who do not look at the minutiae of industry and its problems realise the effect that their doom and gloom have on business throughout the world.
The 5 per cent. reduction in car tax means that more cars will pass through the port of Southampton. Let us hope that British and British-Japanese manufacturers in this country can still compete with all other marques of cars being imported from other parts of the world. All established dock workers, whether crane drivers, office workers or stevedores, will welcome that reduction. When the national dock labour scheme was done away with and the stevedores received their redundancy payments of about £20,000 to £25,000 if they had served a fair amount of time, 450 of them sensibly invested that money in a
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co-operative stevedoring business. They had the good sense to take on one of the dock managers to help and guide them, and it is now a flourishing business.The old disputes are forgotten--even the old salaries are forgotten. Most of those in the industry are doing extremely well because they now work in partnership. They will welcome the 20p rate, even though it applies only to the first £2,000. I was wondering whether, if the other political parties had stated their polices here today, they would have kept the 25p and the 40p rates intact. I very much doubt whether they would. It is a happy Budget in that, although it does not give back a great deal, it does it in such a way that there is no increase in taxation.
If we are to go down memory lane, I point out that I am a former president of the Motor Schools Association of Great Britain. That does not seem of great rank in these illustrious circles, especially when compared to the role of president of the North Atlantic Alliance, but I felt that it was a way of involving myself in that industry's problems. For a long time, one of its problems was that when a new driving school car was purchased, the VAT could not be deducted. Now, in one fell swoop, taxi and car hire firms, and driving schools can recover the VAT on their cars. That policy will operate from 1 August, and will cost £50 million, spread over 1992-93. That is a welcome aspect of the Budget, which I do not think has yet been mentioned, and as a former president of the Motor Schools Association I am pleased to be able to state it clearly to anyone with a small business involving taxis, hire cars and so on.
Another small item in the Budget that people will tend not to mention is inheritance tax. Now, the old guvnor of a small business or small farm can sign over the business before he dies. We have long waited for that, and I am sure that no one here would wish that, every time the owner of a small business died, everything had to be sold up to pay the inheritance tax on the business. I am grateful for that aspect of the Budget. One of my constituents is a newsagent--the policy is not aimed too high--and he is worried about leaving the business to his family. Now he will have the freedom to do so. The proposal on car tax was helpful. I had lunch with the Ford Motor Company only about three or four weeks ago--it was not a bribe. Its representatives were in the doldrums, as are those of General Motors and many other car giants in the world. We are suffering not merely a British recession, but a world recession. Suddenly, overnight, due to the imaginative 5 per cent. cut in new car tax, those businesses are beginning to take advantage of that proposal by reducing their prices, which can only be good. After a home, a car is probably the second biggest item for a family--and why not? Why should it be only Ministers who drive around in new Montegos? Why should not the average family man do so? The concession will be extremely useful.
I have talked about the port and the car industry in my constituency, and the difficulties of the system. We cannot do everything at once, but we have done a little to help many of my constituents. We have provided extra help for pensioners on income supplement. It does not involve a great deal of money--many hon. Members would think that they could not buy a meal with it, but the money must be seen in the context of those who receive it. The amounts involved are £2 for a single person and £3 for a couple, which will be welcomed by all my constituents in that
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category. For the over-65s, the income tax allowances have been lifted in line with inflation, which will also be welcomed. When talking about one's own constituency, the difficulty is that one tends to become emotional. That is especially true if, like me, the Member was born in the constituency and, like me, had a grandfather who was, unfortunately, killed in the boiler room of the Titanic. I have links with my constituency, as we all do. My mother, who lived there, died only a couple of years ago. We do not normally like the carpetbaggers, but we sometimes have to put up with them. I believe that, if one is a Member of a home constituency--born, bred and educated there--one almost becomes part of it ; it is a living thing.Mr. Roy Beggs (Antrim, East) : I share the hon. Gentleman's sentiments in respect of his port and constituency in Southampton, as I have a similar constituency in Antrim, East with the second busiest ferry port at Larne. Does the hon. Gentleman agree that those who are deeply interested in the future of British shipping would have liked the Budget to contain measures to encourage British shipping and get British crews back on to British ships? Perhaps we should continue to press Governments so that, next time round, such action will be taken.
Mr. Hill : That is an interesting point. Like the hon. Gentleman, I have been to the London General Chamber of Shipping and received its information packs. I know that flagging out has depleted the British fleet. I know that, sometimes, ships are flagged out so that cheap, overseas labour can be employed. Years ago, when I was in the European Parliament, I was very much for the scrap and build policy. That was thought almost revolutionary in those days, but it would have meant that ships that did not measure up to the highest safety standards and were perhaps not governed by fuel economy could be scrapped and rebuilt. Whether it comes from Europe or the British Government, there must be more understanding of the problems of running a merchant ship.
When we consider Taiwan--soon China, too, will have one of the great fleets in the world--we can see the competition which will be difficult to beat. Those countries pay less and have new ships--some of those countries have been in the shipbuilding business for only 15 or 20 years, so they have good, modern fleets. Something must be done, whether in future by the European Commission--which we may object to--or by Governments getting together. In this country we cannot buy a ship off the rack ; there is no prebuilding. We have to place an order and might receive it in three of four years. Very few can survive in that way.
If a future, successful Conservative Government are in office, perhaps we shall be able to look deeper into this matter. Flagging out brings with it many evils. I am not being sentimental ; in the port of Southampton it was always the "red duster". There are evils in all our fleets, dispersed throughout the world. There are ships owned by British companies that we never see. They are flagged out, they go to Florida or on cruises in the Mediterranean, and they have their repairs done in places like Athens. All this is a problem for Governments of the future.
The day of Government intervention in shipping is over. Governments never seem to get it quite right. Keen European though I am, I would be against too much
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intervention by the European Commission in this delicate matter. Sometimes the Commission plays a ducks and drakes game--there is not always complete fairness.I would like to think that a successful Conservative Government of the future, well supported, I hope, by Northern Ireland Members, will examine the problem raised by the hon. Member for Antrim, East (Mr. Beggs).
I still remember my maiden speech, although I do not suppose that anyone else does. I described everything happening around the port. Were I to make the same speech now, I would have to explain that everything has grown. The university has grown ; the general hospital has grown to be the second largest in the United Kingdom. We have a first-class medical school. There are exciting high technology developments, and we have a science park. There are new marinas in the docks and--unheard of before--shopping parades in the port. Southampton is a prosperous city which just needs a kick- start. Opposition Members do not believe that this Budget offers that kick- start. They will have to wait and see. I think that it is the beginning of the way out of the recession. Someone told me that we were last into the recession and would be first out. Actually, we were the first into it and it looks as though, with the United States, we may emerge from it last--
Mr. Eric Martlew (Carlisle) : Will the hon. Gentleman give way?
Mr. Hill : Let me finish what I was saying--good heavens alive, what is happening to the House?
Not all businesses go into a recession at the same time and not all of them come out of it at the same time. Some businesses are already beginning to flourish. First-time buyers of property are beginning to be active ; there are "sold" boards in my constituency. As with cars, so with properties--the recovery is beginning.
Mr. Martlew : If the hon. Gentleman said, as I believe that he did, that we were first into the recession and we were going to be the last out, does he not accept some of the blame for that as a member of the Conservative party?
Mr. Hill : Recessions are a law unto themselves. Anyone who has been in business will know that everyone wants to buy certain goods but not others. I remember that I took up a Parliamentary Fellowship Trust position with a large conglomerate that owned 200 companies throughout the United Kingdom. One of those companies made giant presses. As an ordinary business man I asked about break-even figures for the company. I was told that it could sell nine presses a year. I asked about the figure for the world market, and was told that it was 17. The position was clearly impossible. People have to be alive to changes in the business world, whatever business they are in. I am an investment manager. I know exactly what is going on in business--if I did not, I would not make any money. Investment is the right way forward, but that does not necessarily mean Government investment. It means private sector investment, and that can come from any country.
I do not know whether there was resistance in northern and southern Ireland to foreign capital arriving in years past. The Republic was given a jolly good kick-start by it. It enabled the Republic to get its accounts together so that
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it could join the EC. Over here, there was terrific resistance to foreign capital. The unions held talks about whether we could allow one union for one factory. I wish that we had had one union in the port of Southampton all those years ago ; instead, we had about a dozen. We resisted foreign investment for as long as we could. Now, people are building on green-field sites in some parts of the country in highly successful ventures-- [Interruption.] I do not know whether you were signalling to me, Mr. Deputy Speaker, or just wanting to know the time. Of course one must be obedient to Deputy Speakers, so I conclude by saying that this has been an extremely good debate so far. I am happy with the Budget. It has certainly done a power of good for my more poorly paid constituents, and I hope that when I go back to my constituency to do canvassing they will be appreciative. Several Hon. Members rose --Mr. Deputy Speaker : Order. May I re-emphasise my earlier appeal for brief speeches? I had hoped that the hon. Gentleman, given the 10-minute limit that was to have been imposed, had a 10-minute speech in his hand.
7.26 pm
Mr. Bruce George (Walsall, South) : I come to the debate with a curious mixture of happiness and sadness : happiness because the call to arms has at long last arrived ; sadness because I see colleagues departing and making valedictory speeches. My right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) and my hon. Friend the Member for Sheffield, Attercliffe (Sir P. Duffy) both have enormous experience in the House but are retiring. It will be sad to see them go, and sad to see colleagues departing who have no intention of departing. Whether this is to be my own valedictory speech, only the good people of Walsall, South will be able to determine. I hope that they will show the same good sense this time as they did on five previous occasions.
I was fortunate enough to have the last Adjournment debate of the 1974-79 Parliament. The Minister who replied was the late Guy Barnett. The debate was about what had happened in the previous five years in my constituency. I am pleased to be able to speak again now at what I hope will prove to be the fag end of the Conservative Government. That provides me with a good perspective from which to look back on the past 13 years, and to compare the policies of those 13 years with those of the previous five--all against the background of this Budget.
When I spoke at the end of the 1974-79 Parliament I was able to mention unemployment in my constituency of 5 per cent. and council house starts at 1,000 per year. There were 12,000 crimes per year. I mentioned big companies in my constituency such as GKN, Rubery Owen and Charles Richards, which I said had fine prospects. I said that Eaton Axles and F. H. Lloyd had high investment programmes. That 1974-79 period was wrongly assessed by contemporaries and historians. It was hardly an idyllic period for government but, according to many people, Labour's defeat in 1979 ushered in a new dawn. Few Governments came into office with such advantages as the next one--the bonanza of £100 billion worth of North sea oil, the sale of much of the public sector to the private sector and higher taxation--but they blew it. I now look back 13 years later and see unemployment in my constituency not 5 per cent.
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but 12 per cent. officially and, in reality, probably half as high again. In the west midlands, 40 people are chasing every job. Council house starts stand not at 1,000, but at zero, and there are 12,000 unmodernised houses with no chance of being modernised because the council has only enough money to modernise between 50 and 75 a year. The companies about which I spoke--GKN, Rubery Owen, Charles Richards, Eaton Axles, F. H. Lloyd, and many others--have all gone. Of those companies which remain, some are now in receivership, some have been rationalised and reorganised, and some are hanging on by their fingertips.In the country, there are record bankruptcies, cripplingly high interest rates--for companies in my constituency and elsewhere, these interest rates have been killers--prices have doubled and the pound in our pocket in 1979 is now worth about 40p. There have been two recessions and growth is the lowest since the war, lower than under the 1974-79 Labour Government and much lower than under the 1964-70 Government. My constituency and elsewhere have seen manufacturing output plummet, great divisions between regions, enormous disparities of income and the creation and consolidation of a large underclass. We have seen sleaze and corruption and now a PSBR requirement of a staggering £28 billion and rising--add to that the huge trade gap, and one sees the enormous consequences of the past 13 years.
At the turn of the century, one politician called my town of Walsall the town of 100 trades. The number is now probably far less than that as a result of Conservative Governments, history and the decline of the region's fortunes. Many industries are in decline. What we have left are leather goods, metal manufacture, machine tools, iron castings, motor components and, in Willenhall, locks. It is amazing that so many industries are in severe decline. We need to sustain existing industries and to attract newer and high-tech industries to the town. I do not want the town to become nothing more than a town of warehouses, superstores, leisure complexes and what is left of the smokestack industries which have survived the crises of the past 13 years. I want to see increased investment in manufacturing industry, in equipment, in training and in marketing. We do not want simply to neglect manufacturing industry as has happened during the past 13 years.
It is essential that we have better training. It is important that local authorities are used in creating and sustaining industry, providing guidelines, investing in housing programmes and providing better and more relevant education. Those are some of the things that are needed, but above all we need the election that is about to come, which will give us a new Government, a new Budget and a new set of policies.
The industrial revolution began in the west midlands two centuries ago. Until about 20 years ago, the region was the engine of the British economy, but now we are in deep decline. We have seen two major recessions and manufacturing output has plummeted. During the past 13 years, employment in manufacturing has declined by 372,000 and an even sharper decline has taken place recently.
John Owen, president of the Engineering Employers West Midlands Association, has published his presidential review of the previous 12 months. When that gentleman's company in my constituency was desperately seeking
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assistance in 1980 to prevent its collapse, which eventually took place, I went with him to see the then Minister of State at the Department of Industry, the right hon. Member for Chingford (Mr. Tebbit). We asked for assistance, but we were simply told that the derelict land clearance scheme could be used to grass over the site when the factory eventually closed.John Owen, in his report, which is worth quoting, said : "Now, at the end of 1991, as my Presidential term draws to a close, it is even more disappointing to record that engineering industry in the West Midlands has experienced perhaps its worse recession ever ; and, significantly, there is no convincing evidence that the recession is over nor indications of impending recovery. It would be accurate to state that for many companies manufacturing output has stabilised at a very low and unacceptable level ; that would account for five companies out of ten. Four out of ten continue to report a deterioration in their business trends ; and only one out of ten reports an improving trend or more buoyant circumstances. Expectations for recovery extend into the second half of 1992 ; confidence is low and employment prospects are not good." The Budget will not reverse that decline, nor was it intended to--it was intended as a recovery Budget for the Government rather than for the country. I note from today's Financial Times that the average score for the Budget from six experts was five out of 10. I welcome some aspects of the Budget, but I warn the electorate to beware of Normans bearing gifts. The Chancellor told us yesterday that responsibility for the economy belonged to industry. It would be wrong and unfair to put all the blame for the failures of industry on the Government, but one must remember that the Government have been in office for two thirds of the past 60 years--all of the 1930s, I exclude the 1940s because of exceptional circumstances, almost all the 1950s, almost half the 1960s, just about half the 1970s and all the 1980s. During that period of tenure, our economy has declined. We have gone from being a powerful economy to being the 13th largest economy in the western world and our position is dropping. The Conservatives have much to feel responsible for. The Budget was less than a spectacular success. The Prime Minister said that the Budget was well received and that it was a popular Budget throughout the country. That proves that life in the bunker can distort one's view of what is happening outside.
I was greatly amused yesterday to be told that interest rates might go down if interest rates go down in Spain. It is one thing to have to kow-tow to Germany, but now we are looking for straws in the wind in Madrid. That is a sign of how we have declined as a nation. We heard this afternoon the argument that it was wrong to attack Japanese investment, and I welcome Japanese investment, but it is unfortunate that there is not enough indigenous investment. The reasons for Japanese investment in Britain are complicated. One is clearly the desire to slip into a country so as to circumvent the restrictions of 1992. Secondly, the Government are receptive to inward investment. Thirdly, the Japanese are attracted by low wages. That is why there is so much inward investment. I do not want to take the argument to an extreme, but in the same way one would invest in a third world country where labour costs are relatively low. Fourthly, the Japanese are keen to invest in this country because, like us, they know about suicidal tendencies, and perhaps they recognise the same tendencies in us.
As a west midlands Member, I welcome the limited assistance that has been provided for the motor vehicle
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industry--although, as a certain rugby commentator would say, they must be ringing the bells in Paris, Milan, Tokyo, Taipei, Seoul and almost everywhere else tonight. Clearly, the boost to the British motor vehicle industry will give a boost to the motor vehicle industry of every other country.My constituency contains much small industry, and I feel that some benefits have been conferred on small manufacturers ; but I do not believe that the Budget will increase confidence. The economic advantage is marginal, and what is really crushing is the unacceptably high level of interest rates.
Over the past 13 years, a number of myths have been destroyed. One is the myth that the Conservative party is the party of fiscal responsibility, efficiency, competence, law and order, and defence. This is not the occasion on which to discuss the way in which the Government have perceived issues affecting defence and national security, and have acted on those perceptions ; but I should like an opportunity to discuss that with any hon. Member who argues that the present Government are fiscally responsible, efficient, competent or preservers of law and order--and I hope that I shall have such an opportunity.
As for my colleagues who are going their separate ways after the general election, I wish them well. Whatever happens, the new Parliament will be very different from the one that I entered in the early 1970s. I know that, as with the world of football and the theatre, the old guys who were around when one first arrived are always more significant than the present generation, but I see in the departure of many of my colleagues the departure of men and women who are highly competent. We can only hope that a future generation of politicians will be able to perform as ethically and, to an extent, as honestly and competently as some of their predecessors. We now depart for the pre-election campaign. The judgment of the Budget will be set against judgments about the competence of Government and Opposition, and I trust that the people will see that the time for change has come.
7.42 pm
Mr. John Townend (Bridlington) : This is a rather sad debate, because we are losing a number of right hon. and hon. Members at the election. Four or five have spoken today. I pay special tribute to two Opposition Members--the right hon. Member for Morley and Leeds, South (Mr. Rees) and the hon. Member for Sheffield, Attercliffe (Sir P. Duffy), two fellow Yorkshire Members. They have been highly respected by Conservative Members, and I, as a Yorkshire Member, have always been shown personal kindness and consideration by them. They were particularly helpful when I first entered the House. In my opinion, those two Members epitomise the best in the Houses of Parliament : Members on opposite sides treating each other with respect. Although we disagree about politics, I thank them both for the help that they have given me. They will be a loss to the House. I am also sad that my right hon. Friend the Member for Hertfordshire, North (Sir I. Stewart) is leaving. He was a Treasury Minister in the golden era of monetarism, between 1983 and 1987, when he played a distinguished
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role. He will be sadly missed, as will my hon. Friend the Member for Somerton and Frome (Mr. Boscawen) : he, too, has played a significant part in the House.In reply to the hon. Member for Walsall, South (Mr. George), let me say that it is not really the Opposition's place to criticise the decline of manufacturing industry when referring to the automobile industry, or to express regret about Japanese investment. The British car industry was in a very strong position at the end of the war ; it later destroyed itself with inferior management, militant trade unions, restrictive practices, too many unions, go-slows and a refusal to accept new technology and new machinery. If the British car manufacturers had been able to secure the same deals from the trade unions that the unions, in desperation, gave the Japanese, we would have a much stronger car industry today.
One of the Government's great achievements was their introduction of a new industrial environment. They did that by reforming the trade unions and encouraging investment, and as a result most Japanese investment in Europe came to this country. Over the next few years, we shall be able to re- conquer the motor car markets of Europe through those Japanese companies.
Let me say to those who criticise Japanese companies that, in my view, they are no different from the American Ford and General Motors, or from the French Peugeot. We all regret the fact that they are not British companies, but it is better to have 80 per cent. of the cake than no cake at all. It is interesting to note that the Italians and the French are petrified by the onslaught on their car markets that they envisage over the next four or five years. That is why they have gone to such lengths to ensure that cars produced in the Japanese-owned British factories are not classed as Common Market cars.
I support what was said by my hon. Friend the Member for Southampton, Test (Mr. Hill) about the Government's great achievements in the industrial resuscitation of our great ports. My constituency borders Hull, which, when I was a boy, was the third port of this country. The dockers went on strike, and engaged in go-slows and demarcation disputes ; the port went from third to fourth and, eventually, to 15th. Along with my hon. Friend the Member for Test and others, I urged the Government to grasp the nettle and abolish the national dock labour scheme. After many years, they did so, and the port has now begun to prosper again. My hon. Friend the Member for Boothferry (Mr. Davis), who is now sitting on the Front Bench, also played his part. Trade to the port is now up by 40 per cent. A container terminal that was lying idle because a decent manning agreement could not be secured has reopened, as has Alexandra dock, which has been shut for three or four years.
I strongly welcome the move in the Budget to bring together decisions on public spending, Government borrowing and taxation. The Treasury Select Committee, on which I am privileged to serve, has urged such a move for some time. I believe that that will prove a real advantage, and that it will help the Treasury to control spending Ministers. Throughout my time in the House, I have felt that one of our great problems is controlling spending Ministers, whichever party is in government.
That move will bring the Government much more into line with industry. Our way of hanging on to traditions really is archaic. Who in industry would consider
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producing an annual financial budget for the expenditure side of a profit-and-loss account, and then deal with the sales side six months later?We face a world recession, whatever anyone says. America is in a deeper recession than we are ; Australia is worse off than us ; France is heading for a worse position than us, and has probably already got there. Even the great economic powers--Japan and Germany--are moving into recession.
In my northern constituency, male unemployment is at 21.5 per cent. : I know what recession means. Our economy needs a stimulus. My first choice, of course, would be a monetary stimulus, but I accept that the Chancellor's hands have been shackled by membership of the exchange rate mechanism, and that he cannot drop interest rates by 2.5 per cent. None the less, it ill behoves Opposition Members to criticise the Government for the level of interest rates, given that, month after month, they called for us to join the ERM. In view of those restrictions, the Chancellor has produced a very well drafted Budget. As he could not give a monetary stimulus, his only alternative was to give a fiscal stimulus to help the recovery, and he has done that to the extent of £2 billion.
It has been said today that that is not enough to provide a stimulus. It must be considered in the context of the increases in public expenditure announced in the autumn statement. Spending in the coming year will increase by no less than £22 billion--10 per cent.--which is double the rate of inflation. Expenditure on the health service in the past two years--from last year to next year--will increase by no less than £5.2 billion.
We are all seeing the benefit of that in our constituencies. In my constituency, there was a very old hospital. Government after Government have promised since way before the war to rebuild it. This Government have done that, and it is now one of the finest community hospitals in the country. It does not end there. There was another old hospital, the Alfred Bean hospital, in Driffield in my constituency. That has been completely renovated and had many new additions. Now we have two of the finest community hospitals in the country, with dedicated staff providing a service that is better than ever.
Mr. William O'Brien (Normanton) : I am interested in the hon. Gentleman's contribution, and I am following his speech carefully. He said that some of the money that has been spent on the health service has been used in his constituency to provide two new hospitals. Imagine what we could have done with the £14.5 billion that the Government used to prop up the poll tax. Surely the hon. Gentleman should take into account the money that was wasted on the poll tax and the way in which that could have been channelled into building hospitals, schools and so on. Will he comment on that?
Mr. Townend : I find that incredible. Every year, Opposition Members call for more support for local government. Local government spending, financed by the Government, has increased by about £14 billion. If we suggested taking that away from local government and spending it on the health service, Opposition Members would complain bitterly. Our increase in expenditure on the health service has been massive, and everybody knows it.
I find it strange that Opposition Members should criticise the level of the PSBR this year. It has increased
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partly because of all the extra expenditure. If the Opposition did not want it to increase, they should have opposed the expenditure. Far from opposing it, they have proposals to spend more. Whenever Labour representatives appear on the television, whether they are dealing with education, pensions, health, overseas aid or whatever, they have one answer--more expenditure. That expenditure totals £37.5 billion. Opposition Members cannot get away from that. They have either lied to the public or they will have to borrow that money or put up the standard rate of tax by 10p.Mr. O'Brien : The hon. Gentleman is misguided, particularly when he refers to local government. I remind him that, in 1979, rate support grant to local government was 67 per cent. This year, it is 25 per cent. The reduction in the amount that has been pumped into local government is substantial. The £14.5 billion had to be used for the poll tax because so much money has been taken from local government previously. Will the hon. Gentleman accept that, under this Government, local government has had a rough time and that there is no future for it if they are re-elected?
Mr. Townend : I have probably had far more experience of local government than the hon. Gentleman. I was leader of a county council. As always, the Labour party never gets its figures right. The correct figures, on page 61 of the public expenditure White Paper, show that Government support for local authorities in 1991 was £42.5 billion ; in 1991-92, it was £53.3 billion, an increase of 40 per cent. ; and in 1992-93, it will be £58.5 billion. We have lavished money on local authorities. Unfortunately, many Labour authorities have wasted that money.
I want to look at the proposals for small businesses, as I have the honour to be the chairman of our Back-Bench committee for small businesses. The Government have done more than any other in history to help small businesses. As a result, more small businesses have been created since 1979 than at any other time. We accept that small businesses have suffered under the recession. I made representations to the Treasury on behalf of small businesses, and I am delighted that my right hon. and hon. Friends have listened. Perhaps the most significant proposal for small businesses in the long term--I have heard no comment on this from the Opposition, and I am interested to know whether they would implement it--is to exempt most business assets from inheritance tax. That will be of enormous help to family farms and businesses and will affect the regions tremendously. We need more control over the destiny of our businesses in the regions. That is what family firms do. In the past, because of excessively high rates of inheritance tax, and before that of capital transfer tax or death duties, when somebody died, particularly if they died out of turn, many good local firms had to sell. They always sold to a bigger firm or a national or multinational firm. The decision making and reinvestment go from the area and, as soon as there is a slump, it is the branch factory that is closed. I have faced that in my constituency over the past three weeks. In my constitutency is a firm called Bridport Engineering. It was bought out years ago and is now a subsidiary of an American company with another factory in Leicester. The machine tool business is bad, and the Bridlington factory has been closed down, and all the
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production transferred to Leicester. If that had been a locally-owned company with the management living in the town, I accept that there would have been redundancies, but the factory would have been kept open, and after the recovery the men would have been taken back. My right hon. Friend's proposals are the most historically significant help that small businesses have had this century. I challenge Opposition Front- Bench spokesmen to say whether they will oppose them.I am delighted with the other measures taken to reduce VAT penalties, particularly for minor mistakes. The level of penalties for what were often arithmetical mistakes was farcical. I strongly welcome the requirement for contractors to pay their bill from suppliers promptly and for larger companies to state in their annual report how quickly they pay their bills.
I hope that my right hon. and hon. Friends on the Front Bench will take note of the fact that I do not think that that will be as effective as they hope. The large suppliers of large companies are equally powerful, and they will probably have to be paid on time. If small suppliers are not paid on time, it will probably show in the figures, because the figure in the annual accounts will be an average.
I am delighted with the easing of the burden of the uniform business rate. For my constituency, I am particularly pleased that the transitional relief can be transferred to a new occupier. The fact that the transitional relief stopped on change of ownership meant that many shops and warehouses were left empty. That is bad for an area : it gives it a dilapidated appearance, and people will not look at those properties. That will no longer be the case. Does the Labour party support those proposals?
I strongly support the 20 per cent. rate of income tax. It helps the low paid and is a signal of the Government's intention progressively to bring down the standard rate to 20p. I find it strange that the Labour party is so paranoid about tax cuts. It seems to hate the idea of giving the people a little more of their own money to spend as they wish. The Labour party likes bureaucracy. It thinks that the man in Whitehall knows best. Is there anybody in the country who really believes that, if we had had a Labour Government since 1979, the standard rate would now be 25p? Most people believe that it would still be 33p or more.
I represent a constituency with many old-age pensioners. The £3 a week for married couples on low incomes will be welcomed. We need to reduce interest rates, even within the ERM. As soon as the election is over and the fear of a Labour Government has disappeared, there might be scope to reduce interest rates. It is highly important that we do so.
I strongly support the Government's policy of a balanced budget. I accept what table 5.1 says, but I have been a member of the Treasury and Civil Service Committee for many years and have seen slippage year after year. A balance will not be achieved by 1994, but when Treasury Ministers are re- elected they will have to keep a tight control on public sector spending, especially public sector wages. One reason why our public sector borrowing requirement is so high is that many public sector wage settlements have been higher than inflation, and considerably higher than those in the private sector.
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I believe that this first-class Budget will win us the election and that I shall again be here, with my 17,000 majority, chivvying Treasury Ministers to continue good, sound monetary policies. 8 pmMr. William Ross (Londonderry, East) : At times, this has been a rather noisy day in the House. It then became sleepy, but the hon. Member for Bridlington (Mr. Townend) livened things up somewhat. It has been a day of some sadness. At least four speeches have been made by right hon. and hon. Members who will leave the House after the election, two of whom served in the Northern Ireland Office. The right hon. Member for Morley and Leeds, South (Mr. Rees) made a most powerful and moving speech about the conditions in his constituency, which he became a Member of Parliament to correct. I have no doubt that when the right hon. Gentleman became a Northern Ireland Minister he discovered that, although political divisions in Ulster ran rather differently from those in Leeds, South, many of the same problems existed in many parts of the Province. As his career in the Northern Ireland Office progressed, I know that, being a Celt, he became steadily more Unionist in his view, no doubt believing that that was the best way to protect the interests of the people of Ulster. The debate has been interesting in a number of ways. We are discussing the last Budget before the general election--the launching pad for the election--and it would be difficult to think of a Chancellor who had been handed a worse hand of cards to play. However, he made the most of that poor hand. We could debate at length whose fault it was that he had a hard hand but I shall try to express my view on that before I sit down.
The new Budget date seems sensible. All hon. Members will welcome that because at least we shall know where we are at the beginning of the year. I regret that more was not done to increase industrial output, because although service industry is valuable, real wealth is created by manufacturing industry. The hon. Member for Bridlington was happy about Japanese investment, but I am not happy about the ownership of industry not being in the hands of citizens of the United Kingdom because our own people should reap the benefit of the brains and skills that they bring to bear on any industrial problem. That is a sore point with me, so I regret that more help was not given to increasing industrial production and bringing new products to market.
The new tax band may complicate matters. It will certainly ease the burden on many of the most poorly paid people but, like all tax changes to the lower end of the scale, to some extent it will be self-financing because there will be a change from social security benefits to earned income. Therefore, many people will not be much better off. None the less, it is welcome. I hope that we shall widen the 20 per cent. band and drop the start point of the 40 per cent. tax band to a lower level.
We welcome the halving of car tax, which will help many workers in the car industry. But against that we must set another burden that is inadvertently placed on the poorer section of community who buy second-hand cars which cannot be converted to run on unleaded petrol. They must now bear the extra cost of leaded petrol. The help with rates for business will be welcome.
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As a farmer in Northern Ireland, where farmers are owner-occupiers, I give a particular welcome to the inheritance tax changes. They offer real relief to everyone in small business and the farming community. The Government are to be praised for making that change, especially as in the 1970s we had to live with the capital transfer tax introduced by the previous Labour Administration, to which many hon. Members objected. This is one of the best things that has happened to the farming industry in many years. It is welcome and the Chancellor is to be congratulated on that aspect of the Budget. What causes everyone who thinks for a moment the deepest concern, however, is a PSBR of £28 billion, or 4.5 per cent. of gross domestic product. We are returning to the situation that prevailed in the dying years of the Labour Administration. I well understand that some Government expenditure is not easily reduced, especially social expenditure. In the past, it was possible for a Chancellor to cut capital expenditure, not least on construction works. As unemployment is so bad, it has been decided that that is not possible. The deficit also reveals another sad tale. Not only will revenues fall but unemployment will continue to rise for quite a long time. Huge sums must be hidden in those figures to cover the cost of that unemployment. The Government will undoubtedly be hoping for recovery and for the business cycle to turn upwards yet again. There are signs that that is happening in the United States, which has experienced a W-type recession rather than a U -type. We hope that there will not be a third dip before the recession finishes.In 1980-81, the PSBR was 5.3 per cent. of gross domestic product--13.2 per cent. of revenue. We shall return to those levels next year or the year after. We went from a PSBR of 5.3 per cent. of GDP in 1980-81 to a surplus of £14.5 billion in 1988-89. That shows what good housekeeping can do, albeit at some cost. In the coming year, the deficit will be £28.5 billion. According to the Revenue, by the end of 1995-96 we shall have accumulated an extra debt of £104 billion, and in the year after that it will rise to £110 billion. A debt of that magnitude is very serious and is bound to have the most dreadful consequences for the years in which the debt is run up to those astronomical levels, but it will also influence what the country can do in the years after that.
Time and again, we have heard the Prime Minister and the Chancellor talk about the balance in the business cycle, but it has already been drawn to the House's attention that no one can judge the length of that cycle in years. I suppose that it is as long as a piece of string, and can vary as much as the lengths of various pieces of string. At best, the Government expect an improvement by the late 1990s, but that is a very long cycle from the previous peak in 1988. Whenever the business cycle turns, with the best will in the world it will be a lot harder to climb the financial stairs down which the Government tripped so eagerly in the past few months and getting back on level ground will be a very painful operation. And even when we get there, how long will it take us to repay the £104 billion? The lower inflation is, the more real that £104 billion becomes. I hope that we are not going to get out of this situation by using inflation. Surely, whatever Government are in power, we shall make an effort to keep sound
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money. Therefore, we are talking about a real £104 billion, not a £104 billion which is halved or quartered by allowing inflation to soar.In an intervention, the right hon. Member for Bethnal Green and Stepney (Mr. Shore) drew attention to the straitjacket of the 3 per cent. of gross domestic product contained in the Maastricht agreement. Only one hon. Member said, "Hear, hear" to his conclusion, and that Member was me. The right hon. Gentleman did not get much support from his colleagues or from Conservative hon. Members, for the good and simple reason that he spoke of something about which neither Front Bench wanted to hear. He uttered words which both Front Benches want to sweep under the carpet until the election is safely over and until the country has been sold out and is so deeply enmeshed in the Common Market that it will never have any freedom of action.
In recent weeks, the Chancellor has made it clear--this was thrown at him across the Dispatch Box yesterday--that, even if he had known the exact course of the recession, he would not have behaved any differently. As we are in the exchange rate mechanism, surely he should have said that he could not have behaved any differently and that he merely had to defend the value of sterling within its band, come what may. We are now back where we were a long time ago--a point that I had hoped that we had finally left behind us--and constantly trying to rig the exchange rate to buck the market. It did not work before and I cannot see it working this time.
If the Chancellor had thought about it--I am sure that he has because he is a fairly canny lad--I am sure that he now wishes that he had had the power to lower interest rates in the past 18 months for the benefit of British industry, for the recovery, and for the Conservative's electoral prospects. If we could go back a year or so, would there still be a cry to go into the ERM if the Government could have accurately forecast how the recession would develop? Would not that reduction of interest rates have been a far wiser way to spend the time, rather than wrestling in these past weeks with how to rig the exchange rate? The Chancellor could have dropped interest rates and we would not have been in such a deep recession because the recovery would have started a great deal earlier.
Would the Chancellor have introduced this Budget if the election were a month behind him rather than a month ahead? The answer must be no, absolutely not. He would have behaved very differently. Would he not have taken the type of action taken by the right hon. and learned Member for Surrey, East (Sir G. Howe) whenever he found himself in the same circumstances in the early 1980s?
If the Labour party wins the election, when will it introduce its Budget proposals? What will its different and extra expenditure be? I cannot see any means by which it can easily cut that which has already been decided. If the Government win the election, will we have another Budget before the year's end which will be more in keeping with the canny Scot who gave us the Budget yesterday, or at any rate the canny Scot standing behind him like a shadow as he uttered his words? I believe that that prudent man will have to tax or cut to balance the books. He will have to find where he can tax and cut because, come what may, the books must be balanced at some time.
Whichever party wins--whether the hon. Member for Derby, South (Mrs. Beckett) changes place with the hon.
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