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Mr. Tom Pendry (Stalybridge and Hyde) : Before my hon. Friend gets away from the dancing in the streets of Halewood--he is one of the most perspicacious Members in the House--will he say whether that dancing took place because a general election is approaching and people knew that a Labour Government would soon be elected ?

Mr. O'Hara : Indeed. Not only that, but the sun came out in response to the news that at last we were going to have a general election. I planted a tree and my constituents cheered and wished me well in the coming election.

Mr. Battle : Spring time for Labour.

Mr. O'Hara : I thank my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) for allowing me to make that extra point. I was quoting unemployment figures for Knowsley, South and mentioned the figure of 101 job vacancies, which is pathetic when one realises that 65 jobless people chase every vacancy. Taking the figure 30 modifications ago, 99 people without jobs in Knowsley, South chase every vacancy in our jobcentres.

If the Budget is such a good measure to cure the recession now, why could not the Government have introduced such measures when the estimated public spending borrowing requirement was only £8 billion rather than £28 billion ? A cartoon published by Credit Lyonnais, which hon. Members may have seen in the press, showed the Chancellor and the Prime Minister as Batman and Robin in a helicopter, showering £5 notes on the ground and shouting, "Holy £28 billion, and it is not even reaching the streets yet !" That is what the Government are about.

The Budget is not about tackling the recession but is a desperate scramble to rally wavering Tory voters in the marginal constituencies, cunningly targeted on small business men who feel comprehensively cheated and let

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down by the Government's mismanagement in the past. It provided too little, too late for those tens of thousands of people who had already been made bankrupt and whose businesses had failed. It was cunningly targeted on those in danger of having their houses repossessed, but it gave too little too late for those hundreds of thousands who have already lost the roof over their heads. It was cunningly worked to deceive those pensioners who have been callously robbed by the Government for 13 years. It gave them, as a sop, entitlements that were theirs by right in a blatant attempt to steal the Labour party's clothes. I heard Conservative Members refer to shooting Labour's fox. The fox analogy is appropriate : it is a foxy Budget, if cunning is the defining characteristic of a fox. The Labour party is proud of its long-held commitment. It does not use advantageous ploys, like those of the Government, when addressing the problems of pensioners' poverty. As for the proposed 20p rate of income tax, I marvel at the Government's remarkable conversion to the principle of regression after 13 years of punitive and progressive taxation. It was a glance--one might say a wink--towards the principle of regression as the last minute of the last hour of the last day of the Government approaches.

The cunning, cynicism and blatancy of the Budget takes one's breath away. It is the Budget of deferred accounts and post-dated cheques. Those who will pay the post-dated cheques are the recipients of the phantom benefits put on offer. The Budget tinkers with the margins of recession. It says nothing about the thousands of unemployed residents of Knowsley, South who are doomed to live on income support. It says nothing about investment in training. In my district, as elsewhere in the country, the training budget has been cut. We have the farce of trainers being added to the queue of jobless. The Budget contains nothing on the construction industry, transport infrastructure or charting our way out of recession. There is no strategy : it is a Budget for the moment--the ad hoc Budget--and the moment is that of the imminent election. The Budget contains no strategy, just tactics--ducking and weaving. "Si monumentum requiris" said Wren, "circumspice"--if one wants monuments, one should look around. Monuments to the Government's incompetence lie all around us in the ruins of recession. The electorate will not be deceived by the exercise in chicanery that constitutes the Budget statement and will treat it with the contempt that it deserves.

The chairman of the Conservative party, the right hon. Member for Bath (Mr. Patten), launched his double whammy last week, and it fell flat. The Labour party would need an octopus in boxing gloves if it were to present in a poster the octuple whammy that is Conservative party policy. That policy encompasses high taxes, high interest rates--which have only been brought down to 10 per cent. from 15 per cent. to which they had been increased-- the poll tax, unemployment, repossessions, cardboard cities, business failures and multiple debt. I have covered the boxing gloves on every leg of an octopus and have enough left to put a kangaroo in the ring with it. We also have crumbling schools and the crisis in the national health service and on the railways and roads. The Conservative party is not the party to talk about whammies.

I now turn to the obscenity referred to by the hon. Member for Bury, North (Mr. Burt) : the Government's sudden conversion to social welfare after 13 years of not

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only destroying the economy but--in the last minute of the last hour of the last day, in a blinding flash of inspiration--discovering that social welfare for the people ground down in Knowsley, South is as important as private wealth creation. Never was nemesis better deserved, and never was it more certain to be delivered than on 9 April.

9.3 pm

Mr. Ian Taylor (Esher) : Having listened to the speech of the hon. Member for Knowsley, South (Mr. O'Hara), I think that, even were the sun to shine on Halewood, he would see only the gloom. That is not at all how I view the implications of the Budget. In the short time allowed me, I do not have scope to go into the detail on those Budget items that my constituents and I welcome. The Chancellor correctly targeted such prudent tax cuts as he could make on those most in need. I enthusiastically welcome the new 20p rate because it will most benefit those who are beginning to earn and to be taxed at the bottom of the scale, and those working part time whose income is most disproportionately affected by a lower tax on lower earned income. I welcome all those measures ; the alternatives which might have been available to my right hon. Friend in other circumstances are to be discounted--he did what was right at this stage.

I strongly welcome the help for pensioners on income support. Businesses in my constituency will benefit from the changes in the uniform business rate- -I have received many representations about it, but not because it is wrong as a system. Hon. Members from the north of England should bear in mind that constituencies in the north, not those in the south, have tended to benefit. The burden of the UBR often affected people who wanted to sell their property, because the transitional relief could not be passed on with the property. That meant that sales were difficult, or if a company had ceased business it was difficult for another to occupy its premises.

I shall concentrate on the broader Budget judgment, as my hon. Friends have eloquently analysed the taxation aspects of the Budget. I wish to mention some of the weak-willed people in the City who have allowed their worries to overtake their judgment. I readily admit that I am an adviser to two City institutions, which is not to say that they always accept my advice. Often they appear not to. In a difficult situation my right hon. Friend the Chancellor has created an extremely responsible framework for the Budget. He made a clear commitment to maintaining our position in the exchange rate mechanism and a further commitment to joining the narrow band at the DM2.95 level. There could be no clearer signal that a Conservative Government mean to maintain a stable exchange rate and will continue to reinforce sound monetary policies. My right hon. Friend's statement on M0 clearly underlined that. We need have no worries that a Conservative Government will allow the currency to decline, thereby creating further inflationary pressures, so the City should take careful note of the Budget commitments.

Certainly the public sector borrowing requirement is much higher than any Government would wish, but as a percentage of GDP it is a great deal less than it was under the last Labour Government--and much less than it would be under a Labour Government if the country unfortunately got one after 9 April. Labour is committed

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to forgoing privatisation proceeds, which will instantly add a further £8 billion to forecasts of the public sector borrowing requirement for next year.

The key point about the PSBR under a Conservative Government is that the rise which has occurred since the autumn statement forecast is due to a decline in revenues from taxation. That is both important and positive. It has not been due to a giveaway in the form of tax cuts ; the proportion due to tax reductions in the Budget was small--less than £2 billion net. The rise has not been due to additional public expenditure either. We still work in this strange system--I am delighted that my right hon. Friend the Chancellor is to reform it--in which we announce our public expenditure plans separately from our revenue-raising plans. The public expenditure plans, including a large increase in spending on key social services, were announced last autumn, since when the recession has led to a decline in tax revenues, which in turn has led to an increased PSBR. I said that this was a positive point, because when the economy begins to pick up again the buoyancy of tax revenues will also pick up speedily. That will lead to exactly what the Chancellor predicted--a rapid fall in the PSBR. The City should therefore take good heart from the fact that my right hon. Friend the Chancellor has set up a reasonable framework in the Budget. Because the PSBR, even at this level, will be fully funded, that will lead to a rapid recovery in Government revenues when the growth in the economy that all the independent forecasters believe is upon us starts. My right hon. Friend the Chancellor set out another factor in his speech which is not widely talked about but is critical to understand because it gives the lie to the Opposition's claims that we are borrowing to bribe. We are not. We are borrowing at this stage of the recession, with a commitment to balance the budget over the cycle, and at the same time we are financing £30 billion of public sector asset creation.

This is a sound and prudent Budget which will take us out of the recession. It shows that only a Conservative Government is capable of running the economy successfully. I am sure that the electorate will understand that on 9 April.

9.10 pm

Mr. Tony Blair (Sedgefield) : The test that the country applied to the Budget was whether it would bring economic recovery to Britain--and the answer is no. The test that the Tory party applied to the Budget is whether it would bring political recovery to the Tory party--and the answer is again no. It has failed both the high test of public interest and the low test of party advantage. It has failed because it does nothing to promote investment in industry, nothing to rectify the appalling damage done to training by cuts in Government spending, nothing to increase economic confidence, nothing to assist the construction industry and nothing to reduce unemployment or even to stop it rising.

Almost before the cheering of Conservative Members--at least of those who were not still sitting in a state of shock from hearing the borrowing requirement--in

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support of their Chancellor had ceased, the Budget as a work of political art began to unravel. In the City, as Morgan Grenfell said :

"It will have a tiny effect on the economy as a whole." As Mr. Lyons of DKB International, said :

"This was not a Budget for recovery."

As Mr. Gardner, managing director of ICL UK, said :

"As the managing director of a large company it did little for me. There were no real measures to break the capital expenditure block ; nothing to encourage large companies to spend more money." It is not hard to fathom the reason for the scepticism and downright hostility of large parts of industry and taxpayers alike. The vast majority of people know that, when our health service is in crisis, our school buildings are crumbling, our crime levels are rising and our transport system has become Europe's sick joke, borrowing to finance tax cuts rather than to spend on good services is not a sensible use of money. Many in industry who see the daily ravages of a recession that they were promised would never happen, but is now the longest for decades, know that, unless the Budget deals with the fundamental problems of the British economy, it fails. Above all, unless and until we halt the rising tide of business failures and unemployment and begin to turn that tide, we cannot get economic confidence moving and we therefore cannot get economic recovery.

Mr. Ian Bruce (South Dorset) : The right hon. and learned Member for Monklands, East (Mr. Smith) yesterday asked me to read the newspaper reports about minimum wages. I have taken his advice, and I read from the Employment Gazette that the average hourly wage a year ago was £7.57. If one simply applies 6 per cent. to that, the average wage in Britain this year will be £8. As the shadow Secretary of State for Employment, will the hon. Gentleman be advising the right hon. and learned Gentleman that the pledge of £3.40 is out of date and the Labour party should be pledging a £4 minimum wage?

Mr. Blair : The hon. Gentleman must tell us why the Conservative party, as the Secretary of State for Employment said today, is still pledged to abolish wages council protection for some of the lowest-paid in our society.

Mr. Howard : The hon. Gentleman must not misrepresent what I said, which I shall repeat. I have said it endlessly before and I shall repeat it again. Our position is that we shall keep wages councils under review, but we see no permanent place for them in the system. That is what I said before and that is what I say again. The hon. Gentleman must not misrepresent me.

Mr. Blair : That was an extraordinary intervention. I assume from that that the right hon. and learned Gentleman is pledged to remove the wages councils. Is he? Let me give him the opportunity to make his position clear. Let him give us an undertaking that, if re-elected, the Conservatives will not abolish the councils.

Mr. Howard : We read from Mr. Hammond's book this afternoon about the hon. Gentleman's failure to understand the minimum wage. The hon. Gentleman fails to understand the meaning of the simple English word "review". It means that we are not committed to keeping wages councils and we are not committed to abolishing

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wages councils. We shall keep their future under review. Does the hon. Gentleman understand the meaning of that simple English word?

Mr. Blair : I thought that I had asked a simple question. Can the right hon. and learned Gentleman not give us such an undertaking? He cannot, because the Conservatives will abolish the councils if they are returned.

Since the recession began, unemployment has risen by 70,000 in the east midlands, 80,000 in the north-west, 400,000 in the south-east and 100,000 in the south-west. Employment has fallen by over 500,000 in the south, 170,000 in the west midlands, 80,000 in Humberside and 73,000 in the north- west. The vacancy levels become worse month by month. The tightening labour market means that there are 23 people chasing every vacancy in the south- east. Over 40 are chasing every jobcentre vacancy in London and 33 are chasing every such vacancy in the west midlands.

Many of the unemployed fear that they will never work again. Men in their 40s who are made redundant are told that they are too old even to be considered for a job. Women who have raised a family and look forward to returning to work are now unable to obtain qualifications or work. Many young people have neither work nor training. They are denied even the basic right to benefit. They are shunted from dole queue to training queue to benefit queue. It is not these people who have let down the Government : it is the Government who have let down these people.

The most significant part of the Chancellor of the Exchequer's statement was that unemployment will continue rising for many months to come. Surely we are entitled to ask in a Budget debate before an election, "How many months and how many people?" Will the number of unemployed increase by 200,000, 300,000 or 500,000? Until when will unemployment rise? Will it be until the middle of the year, the autumn or the end of the year? While there remain hundreds of thousands in fear of losing their jobs, unemployment will blight their prospects and the prospects of the entire economy.

The impact of such a devastating situation in the labour market is not confined to the personal tragedy of those who are made redundant or unemployed : it is felt throughout the economy. The housing market is not merely stagnant : it is declining. The February edition of Greenwell tells us that there was a 12 per cent. fall in construction activity up to the end of 1991. It is forecast that new construction will fall by 10 per cent. this year. No wonder that the January edition of Building , the chief magazine of the building industry, stated :

"It is not the job of this magazine to tell its readers how to vote, but imagine if construction companies had the franchise--and had to exercise it in the best interests of their shareholders. Their vote would be cast for Labour."

That is what is being said within the construction industry. Why is the housing market failing? The answer is that, while householders, especially in the south, are worried about their jobs, they will not sell and they will not buy. Even those who are not at risk find the market too cold and stay out.

Take consumer spending. A report soon to be published by PA Consultants on the problems of consumer spending says :

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"Three factors are responsible for undermining the prospect of consumer-led recovery : rising unemployment, fear of unemployment for those still in work and falling house prices."

The message is clear. If there is no stop to rising unemployment, there is no start to economic confidence. If there is no beginning to economic confidence, there is no end to the recession. That is why unemployment today is a problem not just for the unemployed but for the whole country. That is why, when we propose measures to tackle unemployment or to halt the rise in business bankruptcies, we do so not just out of compassion for the unemployed, not just out of sympathy for those who have sweated and toiled to build up businesses and now see them collapsing, but because helping the unemployed is helping all of us. That is the message of the Budget.

But the crime is not simply one of omission. It is not just that the Government have refused to increase help for the unemployed in the recession : they have cut it drastically. Since 1988, the Department of Employment's budget has been cut by more than £1.5 billion. Last year, as unemployment soared, the special measures for the unemployed were cut again. So outstanding has the Secretary of State been at the helm of the Department of Employment, so enthusiastic has he been in its cause, that now apparently, according to the most recent newspaper reports, the Tories want, if re-elected, to abolish the Department of Employment. Is not that typical of the Tories? Instead of abolishing unemployment, they abolish the Department responsible for helping the unemployed.

The Government's response, announced last June as an emergency measure, was employment action. I believe that there are barely 20, 000 people on that scheme--less than half last month's rise in unemployment. Why is the Government's response to unemployment so pathetic? As the chairman of the Conservative party, in one of his rare moments of frankness, said :

"The question is how much unemployment affects people's voting intentions and I don't think that there is very much evidence that it has all that much impact."

The reason why there were no measures in the Budget to help the unemployed is that the Conservative party does not care about the unemployment.

Consider the absurdity of not acting on unemployment. There are now 150,000 homeless people in Britain, possibly as many as 2 million in substandard homes, and thousands of families in bed-and-breakfast accommodation costing hundreds of millions of pounds. Only today, the King's Fund report into health care in London showed that buildings were so dilapidated that some were fit only for demolition. Spending on school buildings in Britain is less than half that of the OECD average. There is a backlog of billions of pounds-worth of repairs. Our pensioners often live in cold and badly insulated accommodation, forced to pay high heating bills because they cannot afford the capital cost of insulation. Thousands of environmental improvements are needed in our local communities. Councils want to carry out the work, but cannot find the resources to do so. When we know that unemployment is damaging our economy, when we know that the unemployed are anxious, if not desperate, to work, and when we have a collapsing infrastructure in need of urgent repair, what sense does it make to cut help to the unemployed rather than marry the unused human resources with the unmet needs of our community?

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For the past three years, however, the Government have not merely been cutting help to the unemployed : they have betrayed our future in the cuts in training and skills. They have instigated a savage programme of cutting investment in training and skills. For months, the Secretary of State has denied that that is so. For months, he has told us in debates in the House that no such cuts have taken place. But on Tuesday, the same day as the Budget, the Government published their up-to-date estimate of the labour force.

Not only did it show the catastrophic drop in employment, not only did it show that, on international definitions of unemployment, there are nearer 3 million than 2.5 million unemployed : it showed that, during the past three years, 112,000 places have been cut from Government training programmes for young people and the unemployed. As some of my hon. Friends have already said, all over Britain programmes have collapsed, trainees are being turned away, and training providers are being closed. What other party anywhere in Europe but the British Conservative party would be so cruel and short- sighted as to cut investment in training just when it is most needed?

What would we say about a private sector company which borrowed money to pay higher wages and then cut investment in training? We would say that it was feckless, irrational and bound to fail--and that is what we say about the Government. Now, in the depths of the recession, we should be increasing investment in training and skills so that, when recovery comes, it is British firms which benefit, British order books which are full, and Britain which is prosperous. I shall ask the Secretary of State a specific question. On 6 December 1989, the then Secretary of State for Employment made a speech in which he set out what he called a framework of national objectives, within a time frame that he described as essential for the upgrading of skills. The Government set themselves a specific target for the upgrading of skills. By the end of 1995, all employers, of whatever size, were to be given the kitemark seal of approval as investors in people --the sign of training excellence.

It is now March 1992. How many employers have received the kitemark? There are about 100,000 major employers, so, although the target was for employers of all sizes, will the Secretary of State tell us how many of the 100,000 major employers have so far received the kitemark? I shall tell the House the answer, as the right hon. and learned Gentleman is being coy. In the whole country, 38 employers have received the kitemark. Is that right or is that wrong? It is right. That is why, under present Tory policies, this country is so ill prepared.

The Tories cannot understand that modern economy requires an active partnership between Government and industry to make it successful. All through the 1980s, they have ignored the importance of industrial policy, and of building a strong industrial base. Even now, in the depths of the recession, what do they do to stimulate the economy? Again they attempt to cut taxes in order to boost consumption, while at the same time cutting investment in training--and this time they borrow to fund the tax cuts.

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That is the worst of Thatcherism without even Thatcherism's compensation of fiscal rectitude. One might almost say that it is Margaret without Prudence. That is the difference between the present leader of the Conservative party and his predecessor. For the right hon. Member for Finchley (Mrs. Thatcher), the task was to manage her political party in the interests of her political philosophy. For the present Prime Minister, the management of his party is his political philosophy.

The problem for the Conservatives is that they have lost Thatcherism but they have not yet found Majorism. Let me spare them the trouble of looking for it : it does not exist. That is why they have spent the past 18 months attacking Labour rather than advancing their own ideas. They do not dare to defend the philosophy of the first 11 years of their Government, and they have not had the wit to put anything in its place.

The Conservatives cannot escape their record, because we shall not allow them to escape it. The country will be reminded of the 13 years in which the Tories have given us two recessions in a decade, ending with the fastest rising unemployment, the lowest output and the sharpest fall in investment in Europe. And they have the nerve to call that an economic miracle. We shall remind people of the 13 years in which the Government sold our public services, spent the proceeds but still inflicted higher charges on our consumers. We shall remind the public of the 13 years in which the Government have received--alone out of all previous Governments and of all present competitors--the God-given bonus of North sea oil : £100 billion flowing into the Exchequer but squandered on a boom that is now a bust. That is the record of 13 years of Conservative government. The Government talk of being the taxpayers' friend. Let me remind them that it was not the Labour party that doubled value added tax but the Tory party ; that it was not the Labour party but the Tory party that introduced the most hated and least competent tax of modern times--the poll tax that has cost every family in Britain £1, 000, not to pay it but just to get rid of it.

The questions that the country now asks are these : when the Tory party has got things so wrong, why should the public now trust it to get things right ? Why should we trust those who created unemployment now to reduce it ? Why should we trust those who scorned the manufacturing base of this country now to build it ? Why should we trust those who cut training now to increase it ? Why should we trust Tory party politicians--who, even as the mistakes were being made, congratulated themselves on an economic miracle-- now to rectify those mistakes rather than repeat them ?

That is why it is time for change, time to turn back the rising tide of unemployment and put our people back to work. It is time to make investment in the education of our children and our work force, so that this country can succeed. It is time to reinstate the national health service as a great public service of which we can be proud. It is time to give our young people hope and to give our elderly the comfort in old age that they deserve. It is time to build Britain as a land of opportunity for all our people, not just for a privileged few. It is also time to recognise that we are not just individuals, stranded in helpless isolation, but members of a community. It is time, in other words, for change--time to turn this Government out, and time for Labour.

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9.32 pm

The Chancellor of the Exchequer (Mr. Norman Lamont) : This has at times been a heated debate, which I suppose is hardly surprising on the eve of an election, but it is at least worth recalling that there is one measure in the Budget which commands the support and respect of Members in all parts of the House. I refer to the decision to bring expenditure and taxation together in future Budgets. I believe that that measure has the support of the Labour party. It is a far-reaching reform which will provide us with a much more rational system and much better control of public spending. Above all, it will lessen much of the pressure for tax reliefs, which have given us such a complex and unnecessarily complicated tax system. I was pleased that a number of right hon. and hon. Members felt able to support that measure.

The hon. Member for Sedgefield (Mr. Blair) managed to drag up a few quotations from business men and implied that this Budget had not been well received by the business community. I do not know what newspapers the hon. Gentleman has been reading. Obviously, he does not regard the Confederation of British Industry as a representative organisation in any way. The director-general of the CBI said : "This is a prudent and positive Budget-- reflecting the prime importance of keeping inflation under control."

That was the verdict of the CBI and also of the Association of British Chambers of Commerce and of the Institute of Directors. The Budget has been well received by manufacturing industry.

It was a Budget for sustained recovery and prosperity. It will enable the people of this country to do as well in the 1990s as they did in the 1980s. Above all, it was a Budget to deliver real help to business. Within the scope available to me, I was able to cut car tax by half. I know that that was welcomed by my hon. Friends and some Opposition Members. It was also warmly welcomed in the car industry. Many dealers and manufacturers have already said that the halving of car tax is having a good impact on business. That measure seems to have been warmly welcomed. The Society of Motor Manufacturers and Traders said :

"The Chancellor has appreciated the importance of boosting the domestic car market. We believe about 70,000 extra sales should result."

That was the verdict of the SMMT which, unlike the hon. Member for Sedgefield, regards the Budget as good for business and for the motor industry in particular.

The chief economic adviser of the Retail Motor Industry Confederation said :

"This is the stimulus the industry needed."

I was also able to give immediate help to industry and businesses, big and small, by ensuring that no businesses will see a real increase in business rates this year. That will help some 600,000 business premises in this country. All my hon. Friends know that that measure has been welcomed by small business men and women up and down the country. It is exactly what business was looking for. The Association of British Chambers of Commerce said :

"Relieving the burden on business of UBR increases will be of enormous help to businesses, particularly in the South."

Mr. Robert Hughes (Aberdeen, South) : The Chancellor has made great play about how business is happy about the changes to the UBR. Will he tell the House who introduced it in the first place?

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Mr. Lamont : We are keeping the UBR. We believe that it will be much better for business in the long run. It is warmly welcomed by business and by the CBI and the Institute of Directors. They know that it stops irresponsible Labour local authorities from bankrupting businesses by extravagant spending.

I was also able to make other detailed changes which will be of particular help to small businesses. I was able to alleviate the VAT penalty regime-- something that small business organisations have been asking for for years. At modest cost, I was able to take the radical measure of exempting small businesses entirely from inheritance tax. That means that in future businesses will not have to be broken up on death. That was welcomed by the Union of Independent Companies, which said :

"The greatest thing in the Budget is the encouragement to the owners of independent businesses that they can keep their companies intact."

The Labour party talks about all its plans for business. There is no enthusiasm in the business community for the Labour party. The hon. Member for Sedgefield tried to pretend that business has not supported the Budget. It has supported the Budget, and the statements from business are clear. Business men appreciate low inflation and the fall in interest rates. They know that the fall in interest rates in the past year will eventually feed through into increased consumer demand, which the hon. Member for Sedgefield mentioned. Like his hon. Friend the Member for Dunfermline, East (Mr. Brown), the hon. Member for Sedgefield has obviously not read what was said by the director general of the Retail Consortium, who 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 the bill." The chairman of Dixons-- I hesitate to quote this--said : "It was an intelligent and sensible Budget a confidence building Budget."

Mr. William McKelvey (Kilmarnock and Loudoun) : Is the Chancellor aware of what the Scotch Whisky Association said about the incredible 28p increase on the price of a bottle of whisky? Although I understand that the Chancellor has said from the Dispatch Box that he would fight extremely hard to harmonise the prices of spirits in Europe, he knows perfectly well that he may not be there to do that--the strong chance is that he will not. He has lumbered my hon. Friends on the Labour Front Bench with the prospect of going to Europe to argue for the harmonisation of whisky prices with one hand tied behind their backs. It was certainly stupid of the Chancellor to put 28p on the price of a bottle of whisky because that widens discrimination against spirits.

Mr. Lamont : As the hon. Gentleman said, I have made clear my absolute determination to fight for the Scotch Whisky Association in Europe and made clear our position. That is a very good reason why the Scotch Whisky Association will back and support the Government. The economy is poised for recovery. That is not just my view. Take the view of the chairman of Williams Holdings, one of the largest industrial groups in this country, who said :

"I think we are coming out of the recession the election will signal the end of the recession."

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Take the words of the chairman of the Confederation of British Industry's distributive trades panel, which today published some very good figures showing the seventh successive month, according to the distributive sales survey, in which retail sales have increased. The chairman said :

"There has clearly been an underlying increase in retail trade since last summer, making the seventh successive increase recorded by the survey."

The Government know and have done what is required to build a strong economy. Low inflation was not mentioned by the hon. Member for Sedgefield, by the shadow Chancellor or by the hon. Member for Dunfermline, East. It was not mentioned by the Leader of the Opposition when he spoke in the Budget debate or when he made his party conference speech.

Low inflation underpins everything. Only low inflation can enable business to compete, can enable savers to put money away with confidence, and finance investment. There can be no prosperity and no sustainable recovery without low inflation. Low inflation is what the Government have delivered. Inflation is now below the European Community average. We have also had some excellent figures for producer output inflation--an extremely important measure of competitiveness and a very good indicator of future inflation. We confidently expect that inflation will continue to fall throughout this year, and producer price inflation is expected to decline to 1 per cent. by mid-1993. That will be the lowest level achieved for decades, as a result of the policies pursued by the Government. Mr. John McFall (Dumbarton) rose --

Mr. Paul Flynn (Newport, West) rose --

Mr. Lamont : I shall give way in a minute.

Low inflation provides the crucial building block for the growth that Britain can enjoy in the 1990s. The facts are that we have low inflation and our unit labour costs are expected to grow at a lower and slower rate in 1992 than those of any other of our large competitors.

Mr. McFall : Following the question of my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey), the Scotch Whisky Association does not support the Government. I have a press release in my hands which states that the association reacts with "anger and dismay" to what the Government have done. The increase of 28p on the price of a bottle favours the institutionalised discrimination against Scotch whisky which has happened in Europe. The Chancellor has been lucky to meet representatives of the Scotch Whisky Association.

If the Chancellor is unfamiliar with Scotland's most famous product, I will give him a bottle of the best malt whisky from my constituency--Speakers Choice whisky. That will at least give him some consolation on the morning of 10 April.

Mr. Lamont : There is certainly one thing wrong with what the hon. Gentleman said--the best malt whisky comes from Orkney and nowhere else. The hon. Gentleman appears to be saying that it is wrong to index the duty on alcoholic drinks. If that is Labour party policy, it is extremely interesting to know.

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Mr. Bill Walker (Tayside, North) : I would not wish the House or the country to be misled. When the Government came to office in 1979, the Scotch whisky industry was in the doldrums. It had massive stocks and was running up losses. It was in difficulty and was laying people off. Today, the Scotch whisky industry is in much better shape and, although there may be differences about some aspects of taxation, there is no question but that the Scotch whisky industry wants a Conservative Government, just like the rest of the people.

Mr. Lamont : My hon. Friend is absolutely right, but he might have added that the Scotch Whisky Association has done very well in the past decade in the sense that the duty on Scotch whisky has not been indexed.

I want to deal with one point in particular that was raised by the hon. Members for Sedgefield and for Dunfermline, East and by the right hon. and learned Member for Monklands, East (Mr. Smith). They said that they felt that it was wrong to borrow to finance tax cuts, as they put it. They seem to have completely forgotten that that was exactly what their right hon. Friend the Member for Leeds, East (Mr. Healey) did in 1978. In 1978 he cut taxes and increased the PSBR to a level well above that which it will reach next year in today's money. Furthermore, he not only introduced a reduced rate band but cut 1p off income tax at the same time--yet the Opposition are anxious to call us irresponsible. The hon. Member for Dunfermline, East said that it would be all right if the PSBR were used for investment. He seems to have ignored one simple fact : public sector investment in the coming year will total about £30 billion--more than the PSBR itself.

It is right to cut taxes because our tax cuts are sustainable. They will last and they can be afforded. This country is now in a strong financial position. We have one of the lowest ratios of debt-to-GDP of any industrialised country in the world. We have the lowest ratio of debt-to- GDP of any country in the European Community other than Luxembourg. We are the only G7 country to have reduced its debt-to-GDP ratio in the past decade. We are going to maintain our position as a country with a low debt- to-GDP ratio, and that is not endangered by what we are proposing in the Budget.

What has been remarkable has been the way in which the Opposition have been so coy about their own policies. They told us that they were going to present an alternative Budget. One might have thought that the moment to present an alternative Budget was during the Budget debate in the House-- but no, they do not want to do that. Even before the election was called, the right hon. and learned Gentleman had made it clear that he was not going to announce his alternative Budget until next week, after the Budget debate had finished. The Opposition are always afraid to have an argument. They told us that they were going to spell out their spending plans on a costed basis, but they also dropped that. Why could the right hon. and learned Gentleman not come to the debate on the Budget to present his alternative Budget? We shall be waiting with interest--

Mr. John Smith (Monklands, East) : As the right hon. Gentleman is interested in public debate, will he engage in a face-to-face debate with me on television?

Mr. Lamont : Yes, absolutely, I will--delighted.

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Mr. Smith : When?

Mr. Lamont : Any time. As the right hon. and learned Gentleman knows, he is always inviting me up to debates with him run by his daughter at Glasgow university. I have debated with him many times and I shall look forward to doing so during the general election.

Mr. Smith : I am grateful to the Chancellor for accepting that public invitation. Why is he willing to do so while the Prime Minister is frightened?

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