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Mr. John Biffen (Shropshire, North) : I declare an interest as a director of Glynwed International plc, J. Bibby and Sons plc and Charterrail Ltd., all of which are directly involved with British industry.
It was a delight to listen to my right hon. Friend the President of the Board of Trade. It was a vintage performance and it was a privilege not to have to go to a party conference and engage in a standing ovation to hear such a speech--it was brought to us here and I thank my right hon. Friend for that.
I follow up my compliment by saying how much I appreciated my right hon. Friend's emphasis on the Government's growing success in respect of inflation and productivity. My right hon. Friend knows, as all Conservatives know, that the Government's economic fortunes are intimately connected with all their fortunes. The problems, from dentistry to Maastricht, will be enveloped in a sombre veil if they are played out against the experiences of economic underperformance. I very much hope that my right hon. Friend's optimism in this respect is well-founded.
I am sure that my right hon. Friend will understand if I speak candidly about how I see the prospects for the economy. I am delighted that we have moved away from the ministerial optimism that seemed to prevail for a while shortly after the election, when one felt that the spectre of Herbert Hoover and his presidential slogan "prosperity around the corner" was still apparent. Nobody feels that that applies now.
There is bound to be some anxiety about why measures are not being taken to remedy what is clearly the most protracted recession since the war. The things that inspire caution in the Treasury are fear that measures may be ill-timed and not reversible and fear that they will have consequent inflationary implications. I understand that judgment, but it needs a little further consideration.
Of course there are powerful inhibiting factors. The first concerns public spending. It cannot be adjusted as though it were a contra-cyclical element in economic management. Broadly speaking, we have tried to proceed with Budgets that run over a period and are not subject to short-term change. I am prepared to bet that the present public spending round will confirm that judgment. I have reason to believe that it will produce spending ahead of last year's and that it will reflect underlying and undeniable social demands for spending on education and health and other parts of social expenditure--albeit exacerbated by the recession.
The second aspect of the economy in which there is little room to manoeuvre is revenue. There was a time when it was fashionable to think in terms of being able to use it as a short-term weapon of economic management. We had the regulator to deal with indirect taxation. That has now lapsed--it is no longer formally available and it is certainly out of fashion, and all who lived through that experience will understand why.
The problem is much wider. We have it on the authority of the Prime Minister that value added tax is not to be altered or widened and that its rates are not to be increased, so a major area of indirect taxation has been, to some extent, insulated, making economic manoeuvring more difficult.
The pressures in respect of income tax are that it should be rigorously contained, so the Tory pattern of taxation
Column 49does not admit of much manoeuvre. We are confronted with high borrowing and, as the recession unwinds much more slowly than we should have liked, borrowing levels will persist. That is not very agreeable. I do not allocate blame, but I believe that this type of analysis has to be made in a House of Commons debate of this character so that we may judge as dispassionately as possible what the best course of action is.
Although a policy of masterly inaction may have some merit, I do not believe that the politics of the situation will admit of it--nor would the economic situation. That is why I turn to what I know is distressing for my right hon. Friend the President of the Board of Trade : the final element in the economic equation, interest rates. The bank base rate of 10 per cent., giving a real interest rate of 5.7 per cent., seems profoundly high for an economy in the state of ours--output is static and Ernst and Young's Item Club in The Times of today prophesies that in the year ahead the economy will contract by 0.6 per cent.
No one could argue that there is much pressure on capacity : I would argue the reverse. There is clear evidence of spare capacity in the economy. Against that background, what would happen to inflation if there were a cut in interest rates? That is a calm and unemotional question. It is not an objective question, because it contains a political judgment. What would such a cut do for personal savings? Would it trigger a credit boom? One can only give an instinctive and highly judgmental answer. However, all the evidence points to the fact that there is great caution in respect of consumption. People are rebuilding their savings. I do not believe that they are poised ready for an expansion in credit reminiscent of a decade ago. What effect would such a cut have on the corporate side? Would it set off a great expansion of corporate investment? I do not believe that that is the case. The hon. Member for Coventry, North-West (Mr. Robinson) has experience of industry and he would echo my judgment. The serious devastating problems in the corporate sector involve costs. The tangible gain from the change that I am advocating is that it would provide some relaxation on the costs of the corporate sector and on industry more than any other aspect of our total economic activity because credit plays a rather greater role in that respect. I am advocating a modest change and step. However, I believe that it would be welcome and would be highly relevant in trying to develop the policies prosecuted by my right hon. Friend the President of the Board of Trade. If, at the end of the day, we are told that such a change cannot be made, not because of inflationary considerations, which I have tried to address, but because of exchange rate considerations, I must state that, having established a fixed exchange rate around which we dance as if it were a totem, we will re-create for ourselves the difficulties of the 1960s which hon. Members will recall. The Labour Government were crucified by the way in which they had to pay regard to a fixed exchange rate. I began by referring to a rather austere American, Mr. Herbert Hoover. To maintain the transatlantic link, I shall conclude by quoting a very exotic American, Mr. William Jennings Bryan. He became considerably agitated about economic guidelines in the great debate about gold and said,
"Man was not born to be crucified on a cross of gold."
If the argument for interest rates suggests some real action for members of society infinitely more hard pressed than
Column 50any hon. Member, they will wonder what world the Front-Bench spokesmen occupy when so little was said about the problem of interest rates bearing upon the whole range of industry.
It is not just the privilege of Front Benchers, committed to the exchange rate mechanism, to decide that those matters are not available for wider discussion because of the implications that the whole thing is so horrific and horrendous, fundamental and revolutionary that it cannot be addressed. A system of fixed exchange rates on a Community basis is the apex of centralism. If we are moving towards a more relaxed view so that decisions can be taken more at the periphery--towards, dare I say it, subsidiarity-- the argument for this country being master of its own exchange rate in partnership with its sister Europeans is valid. I hope that my few words will eventually, in their subversive way, convince even my right hon. Friend the President of the Board of Trade of that. 5.23 pm
Mr. Simon Hughes (Southwark and Bermondsey) : It is always a privilege to follow the right hon. Member for Shropshire, North (Mr. Biffen) who turned what was becoming a debate about one President into a debate about several Presidents. He introduced an analysis with which, in large measure, I do not disagree--apart, that is, from its conclusion. I agree with the need for flexibility of manoeuvre and with the paramouncy of considering interest rates as an element of that. However, we should not do that in the structural ways that the right hon. Gentleman described.
The areas where there is no disagreement in the debate are interesting. There is now no disagreement between the Government and Opposition parties' Front Benches about the extraordinary, unique and difficult situation. The Government accepted the analysis set out in the Opposition motion. The Government broke ranks with the Labour party only in arguing about what should be done, although I do not believe that they argued very effectively about that. However, there appears to be no internal or external dissent about the extent of the recession, its depth and the fact that it is the worst since the war. We all have to accept the difficulties that we face.
It is also accepted that there are no short-term fixes. No one now imagines that things will be different in a matter of weeks or months. It is noticeable that, in his most recent pronouncements, the Chancellor of the Exchequer is no longer talking about turning corners in the next six months. He is now talking in much longer time scales than that.
The Chancellor made a much more realistic analysis last month. He said :
"In two or three years' time, I believe that people will look back and see that it was during this critical period that the right decisions were taken."
We can argue whether the right decisions are being taken, but there is no argument that it will take two or three years before there is recovery and that this is the critical time.
What is the agenda? What are the possible ways out of the recession? The newspapers have today confirmed the depths to which we have sunk. We are at the bottom of the league in comparison with our G7 partners meeting in Munich today. In comparison to the other Organisation for Economic Co- operation and Development countries, it is clear that no one is going to have a lower growth rate than ours, which is forecast at zero for this year.
Column 51The tragedy is that the President of the Board of Trade ruled out many things. He reminded us of some things that will happen automatically. However, his speech appeared to be one for the Tory party conference, as the right hon. Member for Shropshire, North said. It was not a speech to encourage industry. The President of the Board of Trade said nothing to make people outside this place believe that the Government have a strategy to carry us forward. It is a wait-and-see policy, and a wait-and-see policy is no policy at all. The President of the Board of Trade said that we must continue down the road of privatisation. That has competitive benefits and is now increasingly accepted around the world, as he rightly said. He said also that we must follow a low inflation road. It is right that we should keep inflation as low as possible. He also said that we must keep wage increases down and that is right. There can be no dissent about that. He ruled out devaluation and I accept that because that is not the way forward.
The President of the Board of Trade also highlighted the importance of the GATT round. That is fundamentally important and I wish the Government and the Prime Minister well in their attempts to remove the blocks that are preventing the GATT agreements being reached which would liberate world trade to our benefit and, as the right hon. Gentleman rightly said, to the benefit of the developing world as well.
I also agree with the analysis by the President of the Board of Trade that the single market, which will come into force at the end of the year, will provide more opportunities. However, that is happening anyway. It is not the result of Government policy since the general election. It was signed, sealed and delivered by the noble Baroness Thatcher in 1986.
So far, so good, but that is still not new policy. We heard no new policy to address what remained the unspoken issue on the Tory Benches before the general election. If there are to be more than 3 million unemployed sooner rather than later and if the figure is to rise steadily not just next year, but until the next general election, we must ask whether that is a price worth paying. My colleagues and I do not believe that it is. We believe that by reducing unemployment by taking various targeted measures, we will simultaneously restore the dignity of work and the economic capacity of the country to produce, export and earn and therefore save the money that is much more wasted by paying people not to work at all. There are small signs that some things might be improving, but I do not think that we can read much into them. We have to accept that the position is indeed at its worst, and that we have to find some remedies to make it better.
I shall show with one or two examples from this capital city of ours how dire the position now is. Insolvencies in the capital city are already considerably up in the first six months of this year compared with all of last year. There are parts of our capital city--my constituency is one-- with more than 20 per cent. unemployment. One in three males in inner urban working areas such as mine now are out of work, at a time when all the other indicators of economic progress are unhelpful.
I have been talking to secondary school head teachers in my constituency. The most frightening statistic that I
Column 52have heard since the general election is that, as presently analysed, of secondary school leavers this year, fewer than 3 per cent. are going into jobs and only about 2 per cent. so far are going into training. I have no idea whether that is a common pattern, but, if that is the economic base upon which we are planning to build our recovery, there is something fundamentally wrong indeed.
What can be done? We do not believe that it is particularly productive to examine things that could have been done some years ago but have not ; we have to look at what could be done now. The right hon. Member for Shropshire, North referred to the exchange rate mechanism as the apex of centralism.
We believe that it is possible to have a package of measures which provides the room to manoeuvre that the right hon. Gentleman rightly says is necessary but without breaking ranks entirely, as the right hon. Gentleman would argue--perhaps not surprisingly, given his views in the past. If we left the exchange rate mechanism, the danger is that the pound would plummet, interest rates would potentially go up to support the pound, or the pound would fall so much that the consequences for inflation would be bad. There are severe risks with that extreme solution, and I know that the Secretary of State and the Government have not accepted it either.
Alternatively, if we reversed our policy of opting out of EMU, if we moved sterling into the narrow bands, and if we gave the Bank of England independent control over interest rates, interest rates would not only be likely to come down to give us the competitiveness that we need and industry the boost of additional resources that it currently does not have, but it would bolster the credibility of anti-inflation policy at the same time. It is interesting that the London Business School has recently come around to that view as well. It would then be as part of a package that interest rates would be cut, but it would not be as part of a political fix mechanism, which always undermines the credibility of such an action.
Another important matter relates to the other side of the coin. The public spending round is coming up. I argue as strongly as I can to the Government that to be unnecessarily tough in the public expenditure round will be the worst of all possible worlds. Our social infrastructure desperately needs the extra investment for which spending Departments are bidding. It desperately needs investment in training, education, public transport, housing and so on. More public expenditure, not less, is needed. We therefore have to allow that money to be spent, but not at the expense of either seeking to put up taxes, which would be the wrong way forward, or of giving ourselves further difficulties of another sort. We have to make sure that we do that in a way that gives us the long-term recovery that everybody has said that we need.
I end my remarks by saying why we should not cut public expenditure at this most crucial moment, when we are trying to get out of our deep economic hole. Our national debt is at an historically low level, relatively to others and absolutely in terms of its level in the past. Even if we ran a deficit for the first half of the 1990s, we would still be unlikely to reach the average of our competitors in Europe. There is no good economic reason at the moment for seeking to reduce our national debt if the alternative is to put money back into the economy, which in turn will help us to build and compete our way out of recession.
Even with the more realistic non-Treasury growth forecasts for the next few years, we should be able, without
Column 53great difficulty, to meet the public finance side of the Maastricht convergence criteria. We should keep that as an objective of Government economic policy.
Private sector savings are high. I agree with the right hon. Gentleman that there will be personal reluctance to spend that money. I do not think that there will be a consumer boom. People have learnt the lessons of the 1980s and will hang on to their finances for retirement or for later investment. Spending is more likely in the corporate sector than in the private sector. But it will not be difficult, because of the high level of private sector savings, to finance the PSBR over the next year. If savings are high, if there is no financing problem, current and forecast levels of PSBR will not lead to pressure on interest rates. Therefore, if the Government drop their unrealistic target of balancing the budget over the medium term in favour of a savings target, we could have a credible package of non-inflationary fiscal policies which would allow the public and private sectors to collaborate in getting us out of the recession that we all want to end as soon as possible.
We accept that there will be a long haul and that constraints will be imposed on us by the international economic framework, but we do not accept that the Government can do nothing new to put forward a package to the country and show us a way out of the recession at home. The speech by the President of the Board of Trade contained no indication of new thinking nor of any commitment by the Government to reduce unemployment or seriously end the recession. The Government's position is not a policy to end the recession ; it is an abdication of responsibility by a Government who have a responsibility to do something about it.
Mr. Warren Hawksley (Halesowen and Stourbridge) : I shall respect the wishes of Madam Speaker, who has called for hon. Members to be brief, as many hon. Members wish to speak. As a retread, I have an advantage in paying tribute to my predecessor, Sir John Stokes, in that I have seen him in the House. During his years in the House he commanded great respect from all hon. Members. In the constituency he increased his majority, which is something that we all hope to do. He began by winning the former Labour seat of Oldbury and Halesowen in 1970, and by the time he fought his last election in 1987--admittedly with some help from the boundary commission-- he had built a majority of more than 13,000. Hon. Members can appreciate how popular he was with the electorate.
It is probably in the House and in the country at large that Sir John was even more respected. He was one of the characters of the period. There are fewer characters in the House than there used to be, and he was certainly one of them. I like the description that I read of him as
"a traditional right-winger and superpatriot."
That just about covers his expertise on many issues, although I rather liked the comment of Andrew Alexander, who described him as "the most amiable of hangers."
Having last year been chairman of the national campaign for capital punishment, I feel that, to a certain extent, I am following in his footsteps, and that is a great pleasure.
History could have been changed if, in 1937, by the time Sir John was already president of the monarchist society, he had been slightly more successful in the election for the presidency of the Oxford University Conservative
Column 54Association. He lost that election by seven votes. The person who won is now the Father of the House, my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). How history might have changed had Sir John won that battle many years ago.
I rather like to describe my constituency, similarly to my previous constituency of The Wrekin, as very mixed. It has many commuters. It has old and new industries. It is typical of many west midlands constituencies. It was interesting to read Sir John's maiden speech in 1970, in which he made two particular points about his constituency as he saw it. The first was the need for further reconstruction. The second was the problem of roads. I regret to say that 22 years on, despite the actions of successive Governments, my constituency still has the same needs.
Until last May we had a Labour council. It refused even to tackle the problems created on the roads by the Merryhill shopping centre--one of the largest in Europe. The council was not prepared to provide the necessary infrastructure and put decent roads into the area. Within weeks of the Conservative council taking office, the plans to build new roads had been resurrected and put into the transport programme which will be sent to the Minister shortly. The council has now also encouraged a bid for City Challenge. We are one of the candidates to be considered by the Department of the Environment shortly. Now that we have a prudent Conservative authority, it should be successful in that bid. The money would be the pump priming that the Government should provide. I do not believe that the Government should necessarily have responsibility for putting large sums of money into the economy.
The Opposition motion drags up all the ills that it could possibly find in the economy. But it fails to consider one of the most important aspects of the recession--that it is not home made. How do the Opposition explain the fact that socialist Governments elsewhere are suffering from the recession? They do not try to do so. The problems of the economy were demonstrated by the comments of one of my constituents whom I met just before the election. He is in heavy industry and exports 60 per cent. of his products around the world. He has been exporting for about 40 years. He said that this was the first recession in which all his markets were down at the same time. Previously, if the British market did not do well, one of his export markets, either Europe, Australasia or the far east, was still fairly successful. This time he found for the first time that none of his markets was providing a demand for his items. The west midlands has suffered more than most areas during the present recession. We have the fastest rising level of unemployment. Our output has fallen more than that of other regions. But we have some advantages. Our labour costs are lower than in many other areas--70 per cent. lower than in Germany. Our production costs are 20 per cent. lower than those in Germany.
You may ask, Mr. Deputy Speaker, what I want for my constituency from the Government and the Department of Trade and Industry. I do not want them to throw money at the problem. I do not believe that that would help. They should ensure that we control inflation and maintain our greatly improved industrial relations. The Opposition would have us believe that industrial relations have improved by accident. But that is not the case. Last year
Column 55we lost the fewest working days through strikes since records began over 100 years ago. That has happened not by accident but as a result of Government policies since we have been in office.
On Friday my right hon. Friend the President of the Board of Trade proposed a revamp of the Department of Trade and Industry. He was right to offer services to more people. People need expertise, advice and help and it should be easily available. After I lost my seat in The Wrekin five years ago I set up a hotel with my wife and continue to run it with her. We experienced the problems of commerce and of running a business. That helped me considerably in the period that I was out of the House.
We developed a derelict ruin into a hotel and restaurant which within two years got into the "Good Food Guide". We needed Government help and we received it in two ways. It was pump-priming help. We were entitled to enterprise allowance. That was one method of helping us over the initial few weeks and months. The second form of help was from the Welsh tourist board. We received section 4 help, which unfortunately is not available in England. I know that people in tourism hope that consideration will be given to reintroducing that help as a pump-priming exercise in England. It can and should be means tested and given to those who have the greatest need for it. That is the way in which the Government could give more help. My right hon. Friend the Member for Shropshire, North (Mr. Biffen) rightly pinpointed interest rates. As one who borrowed to set up a business, I know that the current level of interest rates, although considerably lower than it has been, discourages the development of industry and in particular small and middle-sized companies. We must not let the European exchange rate mechanism stop us from doing what we believe is best for British industry.
It is no coincidence that within weeks of the general election result people started to believe that confidence and enthusiasm were returning to industry. That happened because the alternative frightened industry. The feeling that things were beginning to get better was highlighted in the west midlands not only by engineering employers, whose business trends were the most encouraging since November 1989, but in the west midlands business survey carried out by the Wolverhampton Business school in conjunction with the Warwick Business school and Price Waterhouse. It received encouraging responses. However, both the survey and the report from the engineering employers said that it was early days and that expectations might be clouded by the euphoria caused by the Conservative Government being returned in the general election. I wish to highlight a few points from the west midlands business survey. The survey was completed in May 1992. The forecasts that firms made for the next six months were, indeed, the best that they had made for sime time : 66 per cent. expected sales to increase ; 33 per cent. expected employment to increase ; 66 per cent. believed that general business conditions in the west midlands would improve. I notice that the hon. Member for Wolverhampton, South-East (Mr. Turner) is not in his place. He interrupted earlier to make a comment about interest rates. It was interesting that a report by a body in Wolverhampton said :
Column 56"Continuing the low rate of inflation has taken over from lower interest rates as the most important factor leading to improvements in general business prospects".
That is important. That is why the Government are right to move slowly. If the Government became involved and did too much there would be a great danger that the economy would move forward too fast. It has overheated before. A slow movement out of recession would be more desirable than the Government forcing a faster movement. I look forward to supporting the Government's amendment tonight and voting against the Labour party's motion, which offers no hope for Britain and should be rejected.
Mr. Alan Keen (Feltham and Heston) : I have two things in common with the hon. Member for Halesowen and Stourbridge (Mr. Hawksley). This is my maiden speech and, like the hon. Gentleman who said that he met somebody who worked in heavy industry, five weeks ago, I also met somebody who had a job. I do not intend to answer the points made by the President of the Board of Trade, but when he slipped up and spoke of experts, instead of exports, going up by 5 per cent. I thought that that could only be receivers and bailiffs.
I begin by paying tribute to my predecessor, Patrick Ground QC, about whom I heard nothing but good from the electorate during the election campaign. His party should be grateful to him because he fought Feltham and Heston three times before winning it in 1983 and he doubled his majority in 1987. It was no fault of his that he lost it this time. He is a most honourable and likeable man. I should like also to refer to his predecessor, Russell Kerr, many of whose colleagues are still Members of Parliament. Russell was known for his sense of fun and his dedication to his principles and ideals. He will never be forgotten.
This is not the first time that I have worked in Whitehall. I felt nostalgic when I came here in April because I first came here in 1960 at the invitation of Her Majesty the Queen as I was serving in the armed forces. I must have been more important than I am now because I got a desk and an office on my first day. I shared it with seven others, but it had three windows looking out on Whitehall and two into a yard on Horseguards. Two soldiers on horses guarded me every day. My career has gradually slipped away since those days, but the compensation is that I have been told that now that I am a Member of Parliament I cannot go any lower-- unless I cross the Floor of the House.
This debate is a suitable one in which to make my maiden speech because, like many working people, I have been affected by the economic and industrial policy. No doubt some hon. Members would like to know how it is that somebody who was born in Lewisham in south-east London and who has lived near Heathrow for 30 years should speak with such an obviously Middlesbrough accent. The answer goes back 70 years. My mother, who started work at 14, found, at the age of 16, that there was no work for her. She was forced to come to London where she worked as a servant for many years. She told me many times about the difficulties of coping with personal problems so far away from family and close friends. In one of those crises, she took me, aged three weeks, back to Middlesbrough. I am proud to have spent my childhood, school days and the beginning of my working life on Teesside. That was one generation.
Column 57When I finished my Army service in 1963, I also found that, in order to get satisfactory work, I had to stay in the south. I worked in Brentford and settled in Feltham. That is two generations. People may say that things must be better today, but if one wants to see the third generation, one has only to go into the pubs in the west end and listen to the accents on both sides of the bar. One will hear Geordies, Scots, the Welsh--people from all the regions in the United Kingdom. They are here because they cannot get jobs in their home towns. They are the lucky ones. If one goes a short distance further, down Kingsway and the Strand and the Embankment, one will see hundreds who have no jobs, no homes, no hope, no future. I do not know what sort of country we are and what sort of House it is that allows that to happen.
The regions are used to high unemployment, but the ratio of jobs to the unemployed in Feltham and Heston is now worse than it is in Newcastle, Sunderland, Middlesbrough and even Jarrow. Youth unemployment in Feltham increased by 145 per cent. last year. Unemployment has gone up by almost 200 per cent. in the past two years. Unemployment in London is higher than the national average for the first time. I do not know what will be done to put that right. When I first worked in Brentford in 1963, on what was known as the Golden Mile, west London had a flourishing engineering industry, renowned throughout the country. When Trico finally moves away from Brentford in a few months' time, there will be not one major manufacturer left on that Golden Mile. Watneys in Isleworth closed its gates last Friday and called time for the last time. That is gone--a place where fathers and sons worked together, with grandfathers before them. In Heston, Fairey Engineering, one of the premier high-tech companies, closed its gates a few months ago, leaving a highly skilled work force searching for jobs in a non -existent manufacturing centre. In Feltham, the Hecta engineering training centre which once had 250 people passing through at the same time now has only 40 and its future is in great jeopardy. Something must be done.
Of course we want international trade and are pleased by the number of international headquarters buildings in Hounslow, attracted there by Heathrow airport. The people to whom I talk want to have again the pride of being able to buy British goods in British shops. We must do something about that. I do not know what has happened in the past 10 years. I do not know what the policies are, nor what action will get the manufacturing industries producing again. I do not know where the investment incentives are to assist our manufacturing companies to modernise and lay down new plant and equipment.
Feltham is proud of Heathrow airport and the jobs that it brings, but we pay a heavy price in pollution, noise, traffic jams and one of the highest accident rates in the country. Sadly, the people of Feltham and Heston are telling me that they do not mind about the noise at Heathrow, they want all the expansion that is possible so that they can have jobs and keep their houses. Let me make it clear to those in the pleasant areas of Barnes, Putney, Richmond, Twickenham and Chiswick that they will have to do something about the recession or, while they may not suffer in their pockets, they may soon be suffering in their ears.
It is clear from what I am saying that we need a partnership between industry and Government. We need
Column 58long-term planning and, in the air transport industry, international planning. We do not want a planning application for the expansion of Heathrow to be put in as soon as the furore over the last one has died down. There must be long-term planning. The British people have seen enough of this free-for-all. Yes, we want efficiency, and we understand that it is necessary to have competition which forces management to greater cost cutting and efficiency. This can be achieved whilst at the same time retaining sensible public control over major decisions to ensure responsible environmental policies. I do not advocate interference on a day -to-day or even week-to-week basis with management. However, the public are beginning to demand they be involved in making decisions in such mammoth organisations. It is possible to compete in the hot house of free enterprise while still being democratic.
Worker co-operatives throughout the country survive, sometimes perhaps with difficulty, in competition with private firms. That happens not just at the small end of industry ; look, for example, at the Co-operative movement. It has a turnover exceeding £10 billion, more than 133,000 staff and policies of healthy food, responsible animal farming and ethical investment. Competitive edge and democracy go hand in hand. Compare that with Thames Water, which operates with no competition, no democracy and no choice for the public. It has only high salary increases for those at the top, high price increases for the users, and, at £50,000, a large sum for the Conservative party. The British expect and deserve much better than that. 5.58 pm
Mr. Barry Legg (Milton Keynes, South-West) : Thank you for calling me to make my maiden speech, Mr. Deputy Speaker. Before doing so, I must pay tribute to the maiden speech by the hon. Member for Feltham and Heston (Mr. Keen). It demonstrated a wit and eloquence that I hope that we shall hear often in the House. I hope that his broad experience is available in the House on many future occasions so that we can benefit from it.
I know that it is customary for one to refer in a maiden speech to the traditions of one's constituency and to one's predecessors. As a new Member of Parliament for a new seat in a new town, I am struggling somewhat on predecessors, history and tradition. The part of Buckinghamshire in which Milton Keynes, South-West lies has had many varied and distinguished Members of Parliament over the centuries, ranging from Disraeli to Robert Maxwell. Milton Keynes itself, however, has had only one Member of Parliament and that was Bill Benyon. I know from my work in the constituency of the high regard in which he was held. Both in the House and among local people he was seen as an example of what a good constituency Member of Parliament should be. No case or no problem was too small for him. During my time as a prospective parliamentary candidate and since, I have met many people who have been helped or who know somebody who has been helped by him. Over the years I shall aspire to maintaining his record.
The Milton Keynes constituency does not have a great deal of history. The ancient road of Watling street runs directly through it and many armies on the march have traversed that road. Indeed, it is believed that Boadicea
Column 59was defeated by Suetonius within the environs of my constituency. My constituency may be able to lay claim to having had the biggest bloodbath in British history.
Although the history and traditions of the constituency are somewhat light, I have the advantage of representing a constituency that is a microcosm of Britain today. The employment and industrial structures of Milton Keynes closely mirror the national employment and industrial structures. More than 70 per cent. of employment is in the service industries. That should be borne in mind when we listen, as we often do, to Opposition proposals that centre on subsidies and assistance to manufacturing industry only. A large number of small businesses exist in my constituency. More than 65 per cent. of all businesses are small with 20 or fewer employees. During the past 13 years, those businesses have grown and done extremely well because of the Government's measures to help small businesses grow and to provide employment.
I have good news for the House this evening : during the past few months, unemployment in Milton Keynes has been falling. Previously, as in most parts of the country, the level rose, but to nowhere near the level in the early 1980s. Throughout the 1980s, Milton Keynes and many towns and cities like it developed a stronger, much better balanced economy. As a result, unemployment is falling ; in Milton Keynes, it is below the regional and national averages.
Many overseas companies have invested in Milton Keynes, often from the traditional areas of the United States, Germany and France. However, some of the newer overseas businesses are coming from areas such as South Korea. That shows where there is strength in the global economy : in the Pacific rim and the co-called dragon economies. Growth rates are much higher there than anywhere in western Europe. Earlier in the debate the hon. Member for Dunfermline, East (Mr. Brown) gave us growth rates in western Europe and described how Britain's rates ranged against them. During the past 10 years, growth rates have been low in Germany and strong in the far east. We must ask ourselves why that is the case. The answers are straightforward. Those far east economies are highly deregulated and have low levels of taxation. No far east economy is trying to impose a social chapter, to reduce the working week to 48 hours or to seek a four-week minimum holiday period ; nor is it believed that the already excellent levels of economic growth can be improved by a single currency.
The years of the German economic miracle have gone. Recent economic developments there mean that we shall not see a resurgence in growth such as Germany experienced in the 1950s and 1960s. The level of social provision has increased and a minimum wage has been imposed in the eastern part of Germany as part of the process of unification. Because of that, and because of the inaccurate conversion of the east German currency to equal the west German currency, we will see low levels of growth in Germany throughout the 1990s. That will have adverse consequences for the rest of western Europe.
Britain can learn from some aspects of the German economy, especially from the control of inflation. I greatly admire the way in which the Bundesbank has consistently controlled inflation. When its president, Professor Schlesinger, visited this country last year and spoke to the
Column 60London chamber of commerce on 21 June, he set out how Germany had managed to keep its inflation low during the previous 20 years. His recipe was setting and adhering to broad monetary targets. That is what produced low inflation in Germany.
In 1986 and 1987, broad monetary indicators here, in the form of sterling M4, were growing at 15 per cent. At that time, conventional opinions, by the Treasury and the Bank of England, were that the figure had little meaning and was a side-effect of financial deregulation. However, some economists warned that 15 per cent. monetary expansion meant that we were getting into serious economic difficulties, with rising inflation and an overheated economy. In retrospect, we can all see that they got it absolutely right. Monetary aggregates are now growing at their slowest rate since the 1950s. Broad money, sterling M4, is growing at 5 per cent. Like my right hon. Friend the Member for Shropshire, North (Mr. Biffen), I believe that the present risks in the British economy are all on the down side and that we are more likely to face further deflation than further inflation unless we take significant action to ease monetary policy.
Public expenditure is the other area in which our economic policies may be somewhat out of balance. It is some time since the Treasury has forecast the likely levels of the public sector borrowing requirement and public expenditure, but the independent private sector is producing many forecasts which are extremely worrying. They show, for example, that the PSBR for 1993-94 may be of the order of £40 billion. That would be well beyond any convergence criteria laid down in the Maastricht treaty. Our borrowing requirement would be some 6 to 7 per cent. of GDP.
I welcome the Government's commitment in their amendment to firm control of public expenditure. Public expenditure provision for 1993-94 allows for an 8 per cent. increase. If we are to believe newspaper reports that there are bids on the table to add a further £15 billion to£16 billion to that already ample provision, Ministers will face a great deal of work during the recess to bring that side of our economy back into balance. I wish them well in their efforts. The hon. Member for Southwark and Bermondsey (Mr. Hughes) did not seem to be at all concerned about an expanding PSBR and thought that it could continue to expand because of the small national debt. I doubt that that is the case, especially when our financial policies provide for full funding of that deficit. Expanding the borrowing requirement further will not stimulate the economy.
All Conservative Members are committed to firm control of public expenditure and low taxation. Those have been the central principles of Government since 1979, and our policy of low taxation was one of the central reasons for a Conservative Government being returned for a fourth term. I hope that we shall continue vigorously to pursue our policies and to control public expenditure as firmly as possible. I hope that we shall maintain our commitment to low taxation, because that will deliver economic growth to the private sector and ensure that the Government are re-elected for a fifth term.
Column 616.10 pm
Mrs. Audrey Wise (Preston) : It is a privilege to follow three maiden speeches. In accordance with custom, I am pleased to congratulate all three hon. Members on their fluency. I am also pleased that the tradition of completely anodyne and bland maiden speeches seems to be dying. None of the three hon. Members was afraid to make telling and hard- hitting points, and I welcome that. My hon. Friend the Member for Feltham and Heston (Mr. Keen) endeared himself to me by his complimentary reference to Russell Kerr. Many hon. Members and many people in the Labour movement remember the good work carried out for us by Russell and Anne Kerr. I was taken by not only my hon. Friend's wit, which has already been commented upon, but the coherence of his vision of what the House should be about. I welcome him and look forward to hearing many more of his speeches.
Obviously, I have much less in common with Conservative Members. However, in common with the hon. Member for Halesowen and Stourbridge (Mr. Hawksley), I had to make a second maiden speech. It is a bit strange to make a speech as what might be called an experienced maiden, which is something of a contradiction in terms. The hon. Gentleman's analysis of the west midlands was interesting. He spoke about the terrible fall in the economic standing of the area and described what he called an advantage, low wages. Whether low wages are an advantage depends of one's point of view, and many of the hon. Gentleman's constituents would not think it much of an advantage. I have not often visited the constituency of the hon. Member for Milton Keynes, South-West (Mr. Legg) although I pass through it all too often on my way to the House. The hon. Gentleman spoke about Boadicea. That reminded me that I once went to Milton Keynes to address what might be called a counter-meeting, a fringe meeting at the opening by Mrs. Thatcher of an impressive shopping centre. One of the aims of the counter-meeting was to draw attention to the deficiencies of the ambulance service in the area. I hope that there is now a better service to match the handsome shopping centre. The President of the Board of Trade engaged in a peculiar exercise in logic when he admitted that we were in a recession but that it was not our fault because the whole world was in recession. Later, he took us on a world tour to prove that the rest of the world was following the same policies as those of his Government. He said that the whole world was in a mess but as the rest of the world was doing what this Government were doing, the Government would continue to do it. That is not a very impressive exhibition of logic, because if the rest of the world is in a mess by doing what we are doing, we should be searching for something else to do. I should like to suggest one or two options.
I am not surprised at the President of the Board of Trade's admission that we are in recession, because in the past six months more than 236 businesses have collapsed every working day. The gap between north and south is increasing, with all the consequences for social cohesion. The GDP gap per head in the north-west compared with the south-east, excluding Greater London, rose from 10.3 per cent. in 1979 to 19.8 per cent. in 1990. There is zero growth in manufacturing. There is a high savings rate, not because people are happy with their lot and have no wish to spend but because they fear for the future. Retail sales
Column 62are flat, not least because of the high savings rate. The CBI estimates that there was a fall in investment of 19.5 per cent. between 1989 and 1992. It is not surprising that the President of the Board of Trade had no alternative but to admit that we were in recession.
It is not only Labour Members who think that the Government have some responsibility for the recession. Roger Humber, the director of the House Builders Federation, says in the federation's latest journal :
"The economy is overhung by high interest rates an exchange rate fixed by ERM against the D-Mark which few can now find credible, Despite this, the Chancellor tells us there is no prospect of cuts in interest rates nor of any devaluation within ERM to facilitate such cuts.
And yet, more and more voices are being raised asking what is being achieved by such policies. We approach three million unemployed. Retail spending is not rising Industry will not invest when faced with these interest rates and, in any event, the banks now won't and can't lend, as their liquidity is seriously threatened by the collapse of Olympia and York, It is difficult, therefore, to see what current policies are achieving, when they will lead to success or what the measure of that success will be."
The director of the House Builders Federation is absolutely right. The spectrum of opinion that he represents shows that not only Labour Members are worried and fearful about the situation into which the Government are getting us.
I come from and represent Preston but do not need to deliver a "come to sunny Preston" speech because this is not my maiden speech. However, every time I speak in the House I remember my constituency and try to represent it. We in Preston are alarmed about several matters. We are alarmed about the situation facing British Aerospace. We are alarmed about the European fighter aircraft. I believe that money spent on defence should be spent in this country to save jobs in this country, and should be spent on defensive defence. I put a fighter aircraft in that category and I want the EFA to be supported.
It is a disgrace, however, that we in this country depend to such an extent on the narrow technological base of the defence industry. We depend on it not only in my district but in the country at large. The Germans can consider what they should do about the EFA in the light of all the circumstances, as they see them, because they operate from a much wider manufacturing base than we do. We depend so much on one sort of industry that we are constantly in danger. Although I support the EFA project, I do not believe that, in the long term, it is sensible to earn one's living by depending on the arms industry and arms exports. I worry about that, and believe that it is the Government's responsibility as well as that of British Aerospace to widen this country's technological base. We should have been talking about diversification in the arms sector a long time ago.
Nevertheless, Preston still has other industries. GEC makes trains, at least when there are any trains to make, which is not very often. We have heard much from the Government about how it would be wrong to throw public money about. However, they throw public money about when they fail to act to reduce the need to pay unemployment benefit. That is a waste of public money which could be better utilised helping to provide jobs for those who need them.
The Government huff, puff, bluff and fudge around the Jubilee line, the prospects for which have been damaged by what has happened at Canary Wharf. They should have
Column 63pump-primed with £40 million to extend the Jubilee line, to create 3,000 construction jobs in London and a great many jobs in manufacturing elsewhere. I hope that jobs will be created in Preston when trains are needed for the extended line. However, instead of doing that, the Government prefer to engage in a game of bluff with the private sector and do not care that people will be laid off instead of engaged in constructive work on a project that is all set to begin.
I would be more impressed by the Government's attitude towards the recession if they showed any sign of forming a coherent approach to industrial, economic and financial policy to enable people to be usefully employed. Such a policy would be perfectly possible. A Government who say that they can do nothing, and claim that it is a world disease, should not have run for office. If they can do nothing, what are they doing in government?
The President of the Board of Trade said that industry should become more competitive. That is an insult to many of our working and skilled people, and to some managements. GEC gained a Queen's award for exports, has splendid quality control systems and produces a good range of products, second to none. It needs a shop window, and orders to be placed in this country by London Transport and British Rail. Without those factors, Government talk of international competitiveness is merely so much hot air.
I am not impressed by the sort of society that the Government are building. I can give an illustration to show the way in which the Government and their privatisation polices are taking us. I have recently learnt that North West Water in my constituency, which has paid massive increases to its top officers, is trying to make customers pay their bills. That is fine --I think that people should pay their bills. But, if a customer is not on the telephone and cannot be telephoned directly, one of the techniques used by North West Water to try to contact its customer is to telephone his or her neighbours. That shows the sort of society in which we live. Water supplies are being disconnected and neighbours are being telephoned by North West Water in efforts to chivvy customers into paying their bills. I believe that most, if not all, of the customers will not pay, not because they do not want their water supply disconnected but because they cannot pay. They cannot pay because our society is becoming increasingly impoverished.
The amendment tabled by the Prime Minister mentions the long term. In the long term we are all dead and, at the rate the Government are going, so is the British economy.