House of Commons Hansard Debates for 12 Mar 1992

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amounts to 40 employment action programme places for a typical constituency, yet in some constituencies there are 10,000 people out of work. That is scarcely even tokenism, and is hardly even cosmetic. The Secretary of State has certainly not taken action commensurate with the scale of the problem, but after 9 April the Secretary of State may have a greater concern for the interests of the unemployed.

Our argument is clear : unless we tackle unemployment and the fear of unemployment, we cannot and we shall not have a swift economic recovery. As long as the fear of rising unemployment is there, people will hesitate about spending, about moving home and about investing their savings. As long as that fear is there, many of our shopping centres will remain quiet or empty, the housing market will be slow to recover and investment will continue to falter. It is not just the unskilled or the semi-skilled but the skilled and the white collar workers who are now anxious, with reason, about the economy. We cannot move the economy swiftly out of recession unless we diminish the fear of unemployment. We cannot diminish that fear unless we have a Government who are prepared to start to bring down unemployment. Who influenced the shape of the Budget that the Chancellor put before us on Tuesday afternoon? Certainly it was not the unemployed. They were never consulted, and they will not be the beneficiaries of this Budget. Was it industry? Many sectors of industry were not consulted and do not feel that they will benefit from many of the Chancellor's proposals. Was it the regions? There is to be no action on regional policy. Who sketched and drafted this Budget? Was it the people at the Treasury or was it, more likely, the people at Saatchi and Saatchi? The Tory party's secret weapon is the double Saatchi. The Budget owes less to manufacturing industry than to the advertising industry.

I have been checking up on Saatchi and Saatchi and on what it has been saying not just on behalf of the Conservative party but on behalf of many other people. In the advertising industry, Saatchi and Saatchi has an unenviably notorious record for complaints made, for prosecutions initiated and for verdicts handed down by the Advertising Standards Authority.

I have here a letter from the head of the Advertising Standards Authority-- not about the one or two prosecutions for misleading the public, or the half-dozen prosecutions for not telling the truth, but about the 71 prosecutions that were upheld against Saatchi and Saatchi : twice as many complaints as have been upheld against any other agent. Let me read out what the head of the Advertising Standards Authority said about the organisation upon which the Conservative party relies. She said that it was disappointing to find Saatchi

"producing quite so many complaints. It is too many complaints too often. It is not a very good record. They need to pay greater attention to detail, show firmer control of substantiation and take more copy advice when they are dealing with sensitive areas." What has been the substance of the complaints against Saatchi and Saatchi? It has been prosecuted for advertising products that are no longer available. That ideally qualifies Saatchi and Saatchi for talking about certain services in the national health service under this Government. It has been prosecuted for advertising old products that are described as new. Again that ideally qualifies Saatchi and

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Saatchi for presenting Majorism at the election. It has been prosecuted for advertising products that fall below the standards claimed on billboards, such as the claim about economic recovery. These are the prosecutions that have been brought against Saatchi and Saatchi in the last few years. It has been prosecuted for advertising considered inadmissible because of misleading, restrictive, dishonest or undisclosed terms of offer. We have yet, however, to see the Conservative party's manifesto.

The persistent offence which best qualifies Saatchi and Saatchi to represent the Chancellor of the Exchequer and the Government in their present plight is that of advertising products at give-away prices and advertising them only in the last few days of the period on offer.

Miss Emma Nicholson : Will the hon. Gentleman give way?

Mr. Brown : I shall give way later.

What is the basis of this perfect, indeed enduring, relationship between Saatchi and Saatchi and the Conservative party? I have read the memoirs of Lord Young. One must go to him for his description of what happened during the last election when advertising was being prepared for the campaign. The Secretary of State for Employment may not remember this, but others will remember wobbly Thursday, or panic Thursday, when Maurice Saatchi wobbled. However, as Lord Young said, he steadied him by the lapels. Let me quote what Lord Young said to him. Then we shall see the truth behind the relationship between Saatchi and Saatchi and the Tory party, and who benefits. " Now look, Maurice' "--

Lord Young said to him, taking him by the lapels--

" how much are you worth? How much are your companies worth? Do you know what you will be worth this time next week if we lose the election? You will be broke, we will all be broke. I'll be broke.' " That is the relationship between Saatchi and Saatchi and the Government.

Mr. Howard : Can the hon. Gentleman confirm that the message that he wants to send to the country is that there is so little in the Budget that he can criticise that he is spending all his time talking about the Conservative party's advertising agents?

Mr. Brown : The Secretary of State for Employment has the audacity to rise on that point when he did not even mention unemployment in his speech.

Let us be absolutely clear about the scale of the problem that this country faces. In 1992, investment--which has already fallen--will fall again. Business investment, which has already fallen, will fall again. Construction and housing investment, which has fallen, will fall again. Having been bottom of the league in the European Community for investment in 1991-- [Interruption.] Conservative Members do not like it, but they are going to hear it--this country will be bottom of the league again if current policies continue. Moreover, having been bottom of the league in the European Community for industrial production in 1991, we shall be bottom of the league again, if current policies continue. Having been bottom of the league for losses in manufacturing employment in 1991, according to the European Community we shall be bottom of the league again, not just in 1992 but in 1993.

Anybody who listens to what the trade associations throughout the country are saying knows of the problems

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that industry faces in holding on to people. Does the Secretary of State for Employment deny the accuracy of the forecast by the Engineering Employers Federation, that 70,000 people employed in the engineering industry alone are in danger of losing their jobs this year? Does he deny the forecast from the Retail federation that more than 10,000 jobs are at risk? Does he deny that more than 50,000 jobs in the construction industry are at risk? Is the CBI right to claim that 200,000 jobs in manufacturing alone are at risk and could be lost this year?

The failures that began under the Government in 1987 and 1988 were compounded in 1988, 1989 and 1990. Our argument is that the Prime Minister and the Chancellor have failed to correct those policies in the Budget. Having said that unemployment will rise, will the Chancellor tell us, under his forecast, for how many months it will rise?

Mr. Norman Lamont : The right hon. Gentleman chose to quote from what he called the Retail federation. Why does he not quote what the Retail Consortium really said about the Budget? The director general of the Retail Consortium said :

"The retail sector was looking for a Budget which would boost consumer confidence and revitalise small business while retaining sound financial good sense. We believe this Budget fits that bill." That is what was really said.

Mr. Brown : Does the Chancellor deny that the Retail federation and other organisations in this country are predicting job losses this year? Does he deny that the scale of the job losses predicted is of the order of 200,000 in manufacturing and 400,000 in total if we include retail jobs? When we know that those are the forecasts for job losses from industry, why did we have a Budget that took no action to deal with the problems that we face?

Mr. Howard : Surely the hon. Gentleman knows that the only question that we should be addressing is which policies are best designed to create jobs. He knows that the national minimum wage would wantonly destroy countless jobs in the retail trade. Why does he not abandon that job- destroying policy?

Mr. Brown : It is interesting that the Secretary of State said nothing about unemployment when he spoke, and now--

Sir Nicholas Bonsor (Upminster) : On a point of order, Mr. Deputy Speaker. Hansard will clearly show that, when my right hon. and learned Friend the Secretary of State for Employment was speaking, he did mention unemployment and said specifically--

Mr. Deputy Speaker : Order. That is not a point of order for me.

Mr. Brown : The key question in the debate is whether there will be a substantial economic recovery as a result of the measures in the Budget. The Chancellor admitted in his Budget statement that unemployment will rise. The Red Book makes it clear that investment will fall in 1992. Does the Chancellor agree with the forecasts from the trade associations including the CBI, the Engineering Employers Federation and others that 200,000 manufacturing jobs will be at risk this year if current policies continue, and that 400,000 jobs are at risk throughout the

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economy? The Chancellor refuses not only to answer the question but to take any measures to act directly on the unemployment that the Government have created.

The truth is that the Government have been wrong this year and throughout the five years during which the Chancellor has been at the Treasury, when the Secretary of State for Trade and Industry--he has not appeared today-- was at the Treasury and when the Prime Minister, with only a few months exception, was a Minister at the Treasury making economic policy.

What is their defence for the failures of the past few years? Were they not consulted when the wrong decisions were made? Were they not involved in making them? Did they advise differently? What is their defence for the mistakes that have cost thousands of people their jobs? What is the Prime Minister's alibi? We know that the Secretary of State for Employment has an alibi. He was not in the Treasury. He was involved in another crime at the time--the poll tax. We know that the Secretary of State for the Environment was not in the Treasury. He was not even at Westminster at the time. He was touring the country trying to win the leadership of the Conservative party. There is no doubt who was in the Treasury during those years. It is not just the Chancellor but the Prime Minister who will have to answer to the electorate for the mistakes that have been made. The Prime Minister was wrong in 1988 when he said that he would have a balanced budget--he has failed to deliver it. He was wrong when he predicted that the trade deficit would fall substantially in 1988 and 1989 and it did not. He has been wrong ever since. He was wrong when he told us that there would be no recession, when he told us that there would be an early recovery and when he told us that the recovery had arrived. He had to admit in the House only a few days ago that we were still in the midst of the recession.

The failures that the Government refuse to address are the failures not just of the past three, four or five years but of the past 13 years. Let us be absolutely clear about the extent of the Government's failure. Despite all the talk, all the boasts and all the rhetoric from Ministers, and despite all the statistics that Saatchi and Saatchi produce and put on billboards and in leaflets for them, no other country in the European Community has such a poor record of manufacturing investment since 1979. Our record is worse than that of Greece, Spain and Portugal. The real value of manufacturing investment under a Conservative Government, even with the unparalleled advantage of North sea oil, has fallen.

What of manufacturing growth? From being second bottom in manufacturing growth since 1979, we are now incontestably bottom of the league. In Japan, manufacturing has managed to grow by more than 60 per cent. outside the EC. In Germany, manufacturing has managed to grow by nearly 30 per cent. In this country, the growth rate for manufacturing has been one tenth that of Japan, and substantially below that of Germany.

That is why we need a policy that addresses the problems of under- investment. That is why we need a policy for the regions. It is absurd that we have a Minister responsible for regional policy who says that regional policy is a "phoney activity" of Government. The Government will pay the price for that when it is told to the electorate during the campaign. That is why we need a Government who are prepared to take seriously the problems of investment in the country's infrastructure.

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I invited the Chancellor to look at our hospitals and schools. There are 7 million children being taught in schools where, according to independent reports, repairs are long overdue. There are thousands of pupils in schools with only outside toilets. Classrooms are still accommodating and teachers still have to teach more than 40 children at a time. The Secretary of State for Education and Science even admits that standards are not as good as they used to be, and that we lag behind our competitors abroad in the number of school leavers participating in further education.

The Secretary of State for Education and Science is prepared to tear up the pledge made 20 years ago by the right hon. Member for Finchley (Mrs. Thatcher) that there would be nursery education for all. In Britain in 1992, parent-teacher associations are reduced to having to write to parents asking them to make donations and begging for money for equipment and even for money to employ teachers. All that is a scandal that the Conservatives cannot defend. That is not educational autonomy. The pay-as-you-learn education policy is educational neglect. There was nothing in the Budget for education or training. There was nothing for the unemployed and nothing for the health service.

More than 1 million people are on waiting lists for the national health service throughout the United Kingdom. In some cases, people still have to wait two years for operations that they know they could have within days in the private sector. Two of the country's leading children's hospitals have lost faith in Government funding and have had to launch huge appeals for millions of pounds--not for extras, but for essential development. Disgracefully, in the Budget the Government have approved the transfer of £80 million from the health service to private medicine. A terminally ill cancer patient who needs radiotherapy for pain relief has had to wait four months--too long--to get it. I say-- [Interruption.] Conservative Members will listen to what is happening to the national health service. The reason they need to be told is that they do not use it.

Mr. Norman Lamont rose --

Mr. Brown : I am not giving way again. I have given way three or four times to those on the Treasury Bench.

Up and down the country, the principles of the NHS are being eroded by the Government as surely as hospitals are crumbling, and the Government must shoulder the blame. It is interesting that, when we mention the words "unemployment", "education" and "health", the Government cannot react in any other way than to try to shout speakers down. That is what happens.

This country does not want a Britain in which one can be turned away from an opt-out hospital because no one is prepared to pay, but a Britain--

Mr. Roger King (Birmingham, Northfield) : That is untrue.

Mr. Deputy Speaker : Order. I must level at Government Back Benchers the advice that I offered earlier. We conduct our affairs not by bawling across the Floor of the House, but by reasoned debate. I very much hope that hon. Members, particularly senior Ministers, will set a better example.

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Mr. Brown : The Chancellor is getting anxious because, as we can see from the press, this will be one of his last public appearances before the election on 9 April. As we know, the Budget was under wraps for two months, but for the next three or four weeks it will be the Chancellor who will be under wraps.

Mr. Norman Lamont rose --

Mr. Brown : I am not giving way again.

The country does not want a Britain in which parents have to raise funds for the basic essentials, but one in which every classroom has books for children to learn and no one has to pay to learn. We do not want a Britain in which literally millions are condemned to a life without either the training they need or the jobs they deserve. What we want is a Britain in which, no matter where one is or who one is, one will have a chance to learn and to develop skills with the highest quality training. We do not want a Britain in which, by Act of Parliament, the poor must literally beg and borrow from a state charity social fund. What we want is a Britain in which compassion, fairness and justice are the values of the Government as well as the values of the people.

The British people have rejected the values of the Government who brought us the poll tax, the social fund, cardboard cities and the commercialised NHS. On top of all that, the Government have brought us abject economic failure. The country will reject this last-ditch Budget from a beleagured Cabinet that is trapped by time, failure and, now, by the certainty of defeat. They are the men who, by their mismanagement, have put thousands out of their homes, tens of thousands out of their businesses and millions out of their jobs. Now is the time for the people of this country to put them out of office.

Several Hon. Members rose --

Mr. Deputy Speaker : Order. Earlier, Mr. Speaker advised that I should apply the 10-minute limit to the length of speeches between 7 o'clock and 9 o'clock. However, given reasonable restraint, we might be able to get by without it.

5.43 pm

Sir William Clark (Croydon, South) : The hon. Member for Dunfermline, East (Mr. Brown) did not once mention the increase in public expenditure that was announced in the autumn statement or the increases in public expenditure, in real terms, on roads, health and so on since 1979. Many of us listened with bated breath when the hon. Gentleman called for more expenditure on this, more expenditure on that and more on the other, but not once did he say where he would find the money.

We have been promised that, next week, the right hon. and learned Member for Monklands, East (Mr. Smith) will unveil the plans of a Labour Government. I hope that they will be spelt out in clear terms because the Labour party's fudge on public expenditure is beyond belief. The only time that the hon. Member for Dunfermline, East roused Labour Members was when he attacked Saatchi and Saatchi. For the life of me, I do not understand what Saatchi and Saatchi has to do with this Budget.

You will appreciate, Mr. Deputy Speaker, that I have been in the House since 1959. With the exception of three or four years when my service was broken, I have taken part in practically every Budget debate. In 1979, I was

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elected chairman of the Conservative Back- Bench finance committee and, since then, I have taken part in every Budget debate. Towards the end of one's career, one looks at the transformation that has occurred. In 1979, under the previous Labour Government, the standard rate of income tax was 83 per cent. in the pound. If one happened to have investment income, the rate was 98 per cent. Now, however, the top rate is 40 per cent. I should have thought that one should continually remind people of that transformation which has been achieved since 1979, when the Conservative Government took office. Not only have we increased public expenditure in real terms but, at the same time, we have reduced the taxation charges for the higher bands. In addition, the standard rate of income tax, once 33 per cent., is now 25 per cent. and it will go down to 20 per cent. We have also done much to help businesses and manufacturing industry because the corporation tax, which stood at 52 per cent. in 1978- 79--a real crippler--is now down to 33 per cent.

The Government have also abolished many taxes and they have disappeared from the statute book. The composite rate and the investment surcharge have gone. However, I understand that if there were to be a Labour Government, that tax would come back because Labour intends to add national insurance contributions to investment income, which, in itself, is an investment surcharge under a different guise. We have abolished the differential between husband and wife in terms of taxation and that has proved a great boon to all families. The land development tax, the investment surcharge estate duty, dividend control and exchange control have all gone. We must admit that the current recession is much deeper than was thought not only by the Conservative party but by many pundits in the City and throughout the world. However, there are some good signs and I should like to point out some of them. When one has an international economy such as our own, one cannot wave a magic wand to make everything all right. However, the economic signs are looking promising.

Wage rates have come down tremendously and are now moderate. The number of production days lost through strikes is lower than it has been for many years. Inflation, which was nearly 11 per cent., is now just about 4 per cent. and it will fall further. That has been a great boon to everyone whether on low pay or on a middle-range income. It is a bit much that Labour Members should criticise us about the inflation rate, but I do not hear them say much now that it is standing at 4 per cent. They do not like to be reminded that inflation rose to between 25 and 26 per cent. when they were supposed to be in charge of the economy. That inflation rate was a killer. Anyone with small savings had up to 26 per cent. of them eroded each year and that, too, was a crippler. The Labour party has a lot to answer for.

It is claimed that the production rate in manufacturing industry has not increased. However, the statistics show that that rate is now 15 per cent. higher in real terms than it was in 1980. Productivity and investment have increased by 50 per cent. and exports have increased by 60 per cent. Let us make an international comparison. Twenty-seven of the top 50 performing companies in the European Community are United Kingdom companies. That is not a bad record ; it is one that should be mentioned.

The Opposition do not like privatisation, but it has several advantages. Industries such as steel, the National Freight Corporation and the other privatised industries

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have been turned into far more profitable organisations. In many cases--for example, steel--a loss-making industry has been turned into a profit-making industry. That is good for the economy and means that the Chancellor's receipts are that much greater.

It is wrong and regrettable that--for, I suppose, party political purposes- -so many right hon. and hon. Opposition Members always talk down the British economy. They give the impression that nothing pleases them more than bad news and bad trade figures so that they can say that our economy is a shambles. We must remember that it is not only the United Kingdom that is in recession--we need only to consider Australia, West Germany, Italy, France and the United States which have all suffered. Therefore, one should not blame only the British Government for the world recession.

A foreigner to this country may ask why we have the highest rate of inward investment of any country in the European Community. The Japanese and the Americans would not invest here if they thought that their investments were at risk. They come here because they know that we are competitive and that they can have a profitable outfit. Let us consider the increase in the number of the self-employed. The number of people in work today has been compared to the number in 1979. My right hon. and learned Friend the Secretary of State for Employment was right to say that it is regrettable that unemployment has increased--it will probably climb a little in the next few months--but it is plateauing out. There is no easy way to make unemployment fall. My right hon. and learned Friend's devastating demolition of the statutory minimum wage was so logical that I do not understand how any Opposition Member can continue to believe that it would do anything for the economy. It is not only my view but that of the Confederation of British Industry, the chambers of commerce and the trade federations that the minimum wage would jeopardise employment.

Mr. John Battle (Leeds, West) : Will the right hon. Gentleman reflect on the remarks made to me recently by the Korean ambassador about the investment by Samsung in the north-east? He expressed surprise that in real terms the wage rates in the north of England are now lower than those in Korea and that people in the north had less protection from trade unions than people in Korea. What does the right hon. Gentleman deduce from those remarks?

Sir William Clark : I am not familiar with the economic circumstances of the Koreans. If the Korean gentleman believes that, he should talk to people from the United States and Japan who will tell him that our wage rates are very competitive and are not lower than those elsewhere. The hon. Gentleman makes accusations about the Koreans, but I should not have thought that one could possibly compare the Korean economy with that of this country.

The public sector borrowing requirement is really an overspend. People in the House and elsewhere often speak in initials but people outside the House do not know what we mean when we talk about the PSBR. We should spell it out in easy terms--it is an overspend. The Government receive money and spend a proportion of it. As they do not receive sufficient to cover their spending, there is overspending. It looks as though the overspend in the

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current year will be about £14 billion and it is projected that next year it will be £28 billion. That means that over the two years it will be £42 billion.

In considering any economy one must examine what has happened in previous years. If we look back one year to 1991 we find that we repaid £26 billion--so over three years my right hon. Friend the Chancellor has overspent about £16 billion. Over three years, £14 billion plus £28 billion equals £42 billion, less £26 billion which gives

Mr. Campbell-Savours : The right hon. Gentleman rightly draws the attention of the House to this matter, but has he studied the cumulative figure? By 1996-97 it will be £110 billion. When the Minister of State was asked today by one of my hon. Friends about the relationship between that increased borrowing--and, in particular, next years's doubling of the borrowing--and interest rates, she said that there was no relationship. Does the right hon. Gentleman--he is the chairman of the Conservative Back- Bench finance committee--believe that there is no relationship between the doubling of the PSBR and interest rates?

Sir William Clark : I shall come to that in a moment, but let me finish my analogy. The £28 billion and £14 billion equal £42 billion. We have repaid £26 billion, so there has been an overspend of £16 billion in three years, which is just over £5 billion a year. That is about 2.5 per cent. of gross domestic product, which is well within any guidelines on how much a Government can borrow.

Sir Nicholas Bonsor : It is extremely important to consider the overall national public sector debt which, as my right hon. Friend will recall, has fallen from 50.6 per cent. of GDP in 1979 to 28.5 per cent. today. That is a significant cut and, even taking account of the increases forecast in the Budget, it will not return to the same proportion of GDP as in 1979. I am sure that my right hon. Friend will agree that the figures must be viewed in the context of overall borrowing and not considered merely on an annual basis.

Sir William Clark : I am grateful to my hon. Friend because he makes the point more succinctly than I could have done. I agree that if we consider the national debt as a proportion of GDP, it is way below that of our competitors. If we wish, we have a tremendous leeway of borrowing capacity.

The hon. Member for Workington (Mr. Campbell-Savours) spoke about 1996. That is too far ahead for us to judge what the effect will be. One must be fair--the extrapolation of what might happen in 1994, 1995, 1996 or 1997 is bound to have changed--

Mr. Campbell-Savours : It is in the Red Book.

Sir William Clark : It may be in the Red Book. Something has to be put in the Red Book, and that is what is thought today--it is all based on estimates. Anyone who knows anything about business will understand the analogy of cash flow. The cash flow of any company in any country changes every three to six months.

Mr. Wallace : The right hon. Gentleman speaks of the uncertainty of making predictions. At Prime Minister's questions today the Prime Minister in reply to my right hon. Friend the Member for Yeovil (Mr. Ashdown)

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seemed to say that as a result of the Budget there would be a balance over the period of the cycle. Does the right hon. Gentleman also reject that analysis?

Sir William Clark : No, I do not. One cannot make definite predictions about what will happen four years hence. Just taking the past three years--

Mr. Campbell-Savours : Will the right hon. Gentleman give way?

Sir William Clark : No, I want to get on.

Mr. Campbell-Savours : But it is interesting--

Sir William Clark : Of course it is interesting. I am delighted that the hon. Gentleman finds this interesting, but the debate should not be a dialogue between us. Perhaps afterwards we could have a cup of tea and go into the matter.

Mr. Campbell-Savours : Let me intervene once more, very briefly--

Sir William Clark : No, no. I have given the hon. Gentleman a lot of licence, if I may put it that way, and I wish to turn to the taxation proposals.

We had a reduced rate band in the past and it has been reintroduced in the Budget. The first £2,000 of taxable income will be taxed at 20 per cent. rather than 25 per cent. I cannot for the life of me understand how anybody could oppose that. The pension exhausts all the personal allowances of a retired pensioner, whether single or married, who must pay 25 per cent. on any sum over it. My right hon. Friend the Chancellor proposes that an individual will pay only 20 per cent. tax on the first £2,000 over the personal allowance. I hope that I am right in saying that this is a step towards the goal set down by my right hon. Friend the Member for Blaby (Mr. Lawson). The Conservative party and the Conservative Government are committed to getting the standard rate of tax down to 20 per cent.

That compares with what we are promised by Labour politicians. We know that under a Labour Government the top rate of tax would be 50 per cent. and that the investment surcharge would be 9 per cent., making a total of 59 per cent. In addition, an investment surcharge of 9 per cent. would be levied on the investment income of those who do not happen to be in gainful employment or who are not necessarily enjoying a pension which has always been considered as earned income rather than investment income.

The car tax reduction will be a great boon to the car industry, one of our key industries. It is extraordinary how some people run down British industry given the amount of Japanese investment in our car industry that will come on stream in 18 months' to two years' time. When it does, the United Kingdom will again be a net exporter of motor cars. The action on the unified business rate is welcome. It will help small businesses in particular. In addition, the concession on inheritance tax is good for business.

I have always thought that the rule of thumb for economics is that in good times we start to repay our debts and in a bad year it is fair and right to borrow to give an impetus to the economy. In the long run, that will generate taxation back to the Treasury. As I said earlier, the Chancellor of the Exchequer stressed the amount of extra investment in the infrastructure, schools and the rest.

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On 9 April the electorate will face the stark choice between a high taxation Government or a low taxation Government. At the moment we are on the road to prosperity. It would be a catastrophe to change course.

6.4 pm

Mr. James Wallace (Orkney and Shetland) : At times during the speech of the right hon. Member for Croydon, South (Sir W. Clark) we heard a somewhat typical reaction from Conservative Members. The right hon. Gentleman rightly pointed out what was good about the economy--for instance, that inflation was relatively low and set to decrease--but everything that was good was the result of the Government and all the failures were someone else's fault. He blamed the failures not least on the French, other foreigners and whoever else might be responsible for the recession. Those who are unemployed, those who face unemployment and those who have the fear of unemployment hanging over them know where the blame lies. The head of the Government was Chief Secretary to the Treasury and Chancellor of the Exchequer before he became Prime Minister. His fingerprints are well imprinted on the recession.

When I heard that the Secretary of State for Employment was to open today's debate, I thought that he would tell us how this is a Budget for jobs, which he predicted when the unemployment figures were last announced, but so far no one has been able to see how that is so. The hon. Member for Dunfermline, East (Mr. Brown) quoted the right hon. and learned Gentleman's statement following the release of the unemployment figures on 13 February and said that during the afternoon they had been somewhat glossed over by a Treasury official. I do not know whether the hon. Gentleman is aware of this, but on a programme for Central Television recorded later that evening, in which the Secretary of State and the hon. Member for Sedgefield (Mr. Blair) and I took part, the Secretary of State again said that we would have a Budget for jobs. None of us can work out what has happened to that Budget for jobs.

I accept that there has been a welcome boost for the car industry. That was very necessary, although I would not necessarily have adopted the measures in the Budget. More should perhaps have been done to promote environmental objectives at the same time. Nevertheless, the boost is welcome. There has also been a welcome boost for the small business sector, to which I shall return. Clearly--no one has sought to deny this--the Budget will do nothing to stem the rise of unemployment which has been going on for almost two years. The figures this month will almost certainly show that unemployment in this recession has risen by more than 1 million people. That is 1 million individuals, with their families, all of whom feel the blight of unemployment in a very real way.

We have heard that the great centrepiece of the Budget is the reduction of the tax rate to 20 per cent. on the first £2,000 above personal allowances. But the unemployed do not have the earned income to benefit from that in any way. It has been argued that the tax cuts are intended to help the low paid. The Institute of Fiscal Studies, which the Secretary of State for Employment was pleased to pray in aid during his speech, has said that the measure is an inefficient way of targeting help on the low paid. It would be far more effective to use the same sum to increase personal allowances.

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I do not know whether anyone has done the calculation, but for many people the additional income that will derive from the tax cut will mean that they will no longer qualify for as much family credit as they do now. Some people will be taken out of family credit and will lose benefits--such as free prescriptions. [Interruption.] If the Minister is about to say that that is not accurate, I shall be only too pleased to hear it.

The Economic Secretary to the Treasury (Mr. John Maples) : I am only too happy to give the hon. Gentleman the figure. The cost of the tax cut is about £1.8 billion, £20 million of which will be clawed back in lost benefits. That is 1 per cent. of the total, which is a very small amount.

Mr. Wallace : The Minister points out that the tax cut costs £1.8 billion, but the cut is not concentrated solely on the low paid. The highest paid will also enjoy it. It is not £1.8 billion being enjoyed by the low paid from which £20 million has been taken away. There will be an impact on the higher paid as well.

Mr. Battle : This is a debate in which I take great interest. I put the point about the low paid to the Chief Secretary yesterday and in reply he gave me the figure that the Economic Secretary gave just now. If Parliament lasted longer, I should be tempted to table parliamentary questions to draw out the true figures. If £617 million is being spent on family credit, the percentage works out at 3 per cent., not 1 per cent. as the Government claim. If we take into account access to other benefits, the little gain that the low paid have left is wiped out.

Mr. Wallace : I hear what the hon. Gentleman says. I have no doubt that he has gone into the figures in greater detail than I have. There will be some among the low paid who will lose out through losing family credit and through losing further entitlements such as free school meals and free prescriptions.

As has been said, the impact of the Budget on the public sector borrowing requirement shocked the House. I heard the Chancellor mention the figure of £28 billion for 1992-93, which was far higher than I had expected. When I looked at the face of the right hon. Member for Finchley (Mrs. Thatcher), I realised that it was also considerably higher than she had expected.

As the Chancellor introduced one small measure here and another small measure there, and even after he had announced the 20 per cent. tax band, I kept waiting for the big idea which would explain that level of borrowing. The Chancellor then sat down and one was tempted to say, "Is that it? Where is the big idea?" The truth is that the borrowing requirement is so high because of the depth of the recession, because of the transferred payments that have to be made, such as unemployment benefit and social security benefit, and because of the loss of revenue. The extent to which the Chancellor will have to borrow emphasises the depth of the recession.

The right hon. Member for Croydon, South has said that he thinks that borrowing is quite acceptable if it gives the economy an impetus, and I agree with that as a principle, but I believe that the real question in the debate is whether the Chancellor's proposals are sufficient to give an impetus and whether they have been targeted in the right direction. We believe that to borrow principally to finance consumption, which is what one does through tax cuts, is not nearly so effective an impetus as borrowing to

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