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Mr. Nigel Evans : Which of the 47 industries that have been privatised since 1979 would the hon. Gentleman bring directly back into public control?
Mr. Barnes : It is difficult suddenly to produce such a list. For one thing, we are in a mighty economic mess with a public sector borrowing requirement of £50 billion. If industries were taken back into public ownership, the resultant compensation would impose an extra burden. However, some public utilities could begin to be returned to public control. They are natural monopolies which capitalist economists such as Marshall at the back end of the 19th century used to describe as requiring a great deal of public regulation in their operation. That principle should be put back on the agenda as an advance of collective provision.
It is interesting that the public sector borrowing requirement is to be allowed to let rip during the next year
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and is to be tackled only in the subsequent two years. During the first year, some extra moneys are to be collected for distribution in different areas. Those extra moneys are to come from the freezing of allowances, not just this year but in the subsequent two years. According to the Red Book, the freezing of allowances at the level determined by the Budget is to become permanent.Excise duty provisions also have a knock-on effect. The increase in petrol prices has an impact on almost everything that depends on transport, such as food prices. Income from that and from the change in mortgage interest tax relief will go towards meeting the cost of widening the 20p band, which will take place this year and in the two subsequent years. That will result in more money being collected through income tax than would otherwise be the case, because allowances for each of the following two years have been frozen while a £500 band has been added to the 20p provision.
Many people who were paying tax at 25p in the pound and would have been taken out of tax if no change had taken place other than the development of the thresholds will find themselves having to pay 20p which will be pushed down further year by year.
The Financial Secretary to the Treasury (Mr. Stephen Dorrell) : I am sure that the hon. Gentleman does not want to mislead the House. I can confirm that, in all the revenue projections in the Red Book in respect of 1994-95 and beyond, the assumption underlying those figures is full indexation in accordance with the statute.
Mr. Barnes : The figures on allowances and basic rate limits which are frozen show an income this year of £660 million, in the following year £920 million and in the year after that £960 million. It is now said that in the last two years such sums will be indexed. However, even allowing for that and the omission of indexing this year, the extension of the principle about which I am talking remains, even if the details need to be adjusted.
This year, another £300 million will be collected as a result of the freezing of the allowances and the 20p band provision. Next year, it will be £210 million and the year after that it will be £110 million. Therefore, more money will be collected through the income tax provisions than previously and there is a knock-on effect from year to year, despite the Minister's clarification of the figures in the Red Book.
Other measures include VAT relief on bad debts and cuts in business tax and rates, but the biggest changes are to be left until the following years-- most significantly, the massive VAT increase on domestic fuel, and the national insurance contribution increases. We may need some more statistics to check out the point that I am about to make, but if we take into account the amounts of money that will have to be paid in the next two years by consumers, who are also, in different ways, earners, in the form of income tax contributions, VAT payments, excise duties--which continue during the subsequent two years--and national insurance contributions, the amount of money raised is equivalent to an increase of 4p on the basic rate of income tax in 1993-94 and almost 6p--5.66p recurring--in 1995-96.
Not only is that a massive amount to be taxing people, but it is being done in a most regressive way. It is not done
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by extending income tax by way of a progressive increase in the number of bands, but in a way that continues the principle of the poll tax--the most regressive form of taxation that could be imagined--and extends regressive provisions. All that is done without any investment or improvement in the economy.Only the Heathrow Express, crossrail and the channel tunnel provisions were mentioned earlier. They may be important projects, especially for London and the south-east of England, but where are the equivalent measures that will spread through the rest of the economy? Such projects were supposed to trigger developments throughout the nation. There was supposed to be some sort of ripple effect. Some stones need to be thrown into the pool elsewhere so that the ripple effect reaches other areas of the economy.
Mr. Tony Banks : If those transport infrastructure decisions go ahead rapidly, as I hope that they will, there will be a big spin-off for manufacturing industry in parts of the country other than in London--for example, those manufacturing rolling stock.
Mr. Barnes : I was not arguing against the plans and provisions. I was saying that this is all that we get in terms of investment, despite the fact that we move from deficit of £35 billion to a deficit of £50 billion. Surely what we wanted was the expansion of such arrangements to ensure growth in the economy and so that the knock-on consequences could be taken into account.
Some of us should start a campaign for fair taxation. The anti-poll tax campaign had a "Can't pay, won't pay" slogan. We should have a "Can pay, want to pay" slogan for the fair taxation campaign. The equalising impact of income tax should be taken into account when determining areas of expenditure. No fairer tax has been devised. All other forms of taxation are regressive. The whole package should be considered to see whether it is progressive or regressive. In recent years, we have moved rapidly under this Government away from fair forms of taxation towards unfair forms of taxation. That development should be changed. Fair taxation to make the resources available for growth of the economy needs be be put in the forefront.
Mr. Lidington : Would the hon. Gentleman care to tell the House, since he has obviously given a great deal of thought to the tax structure, how many bands he would introduce, at what levels they would start and at what levels they would end? Would we eventually get back to the good old days of socialism, when we had a top rate of 98p in the pound on unearned income and 83p on earned income?
Mr. Deputy Speaker (Mr. Michael Morris) : Order. I hope that the hon. Gentleman will not be tempted down that route. A number of hon. Members wish to speak this evening.
Mr. Barnes : I was preparing to finish when the hon. Gentleman intervened. When I am Chancellor of the Exchequer and allowed a two-hour introduction, I will certainly spell these things out in great detail. One of the worst things that occurred in terms of the high band of taxation was when we had a Budget that changed the level from 60 per cent. to 40 per cent. That was an absolute
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give-away and a disgrace, while other areas of our economy were being hit very hard. Provisions to take into account such a top rate need to be reintroduced.8.32 pm
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : I rise in a totally confused and bemused state.
Mr. Tony Banks : He should be the Chancellor.
Mr. Clifton-Brown : I have listened to the whole debate today, and have tried to secure some clarity and light from the Opposition Benches. It was not until I saw the hon. Member for Newham, North-West (Mr. Banks) climbing up in the rafters, trying to find the metaphorical light switch, that I suddenly realised that the hon. Member for Derbyshire, North-East (Mr. Barnes) was telling us it all. He was telling us really good, old- fashioned socialism--clause 4, renationalisation, a centrally planned economy, the lot. It was no longer a socialist dream of reform coming to fruition ; it was back to the old nightmare.
I watched with interest the recent television programme in which the hon. Member for Holborn and St. Pancras (Mr. Dobson) was busily telling us how he would save 20,000 jobs in the defence industry. I am very interested in employment in the defence industry because in my constituency it is of key importance. I studied his last election manifesto with great interest, and I seem to recall that it told us that he would reduce expenditure on defence to the lowest level among our European allies. I believe that that would involve a cut of some £7 billion in our defence budget, which would mean the elimination of the Air Force, the Army or the Navy.
I congratulate my right hon. Friend the Chancellor on an excellent Budget. It meets his twin objectives of a continuing recovery this year and a return to sound public finances within the economic cycle. It is a very ingenious Budget ; it is a big Budget that contains a great deal. It sets the trend for fiscal and monetary measures over the next two to three years, and for the next autumn statement, when I hope that my right hon. Friend will take the opportunity, as the Chief Secretary to the Treasury is doing at the moment, to make a thorough review of public finances and see where we can hold them to their present level.
We have three ways of reducing our public sector borrowing : we can--as is undoubtedly happening with the increase in employment prospects and the reduced interest rates from the
Bundesbank--encourage the recovery which has already started and which will bring in large extra tax receipts ; we can reduce public expenditure ; and we can raise more money. I hope that my right hon. Friend will do all three, as he has done by producing a fiscally neutral Budget this time, looking forward to raising£6.5 billion next year and £10.5 billion the year after.
It was interesting that, on Tuesday, my right hon. Friend projected a growth rate of 1.25 per cent. this year and over 3 per cent. next year. If that happens--I have no reason to doubt it--we will have one of the highest growth rates in the industrialised world. We have heard a lot from Labour Members about creating employment, but the only true way to create employment is to encourage growth in the economy. If it was a question of spending more money, we would have the highest rate of employment in the western world, because our public
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sector borrowing requirement as a percentage of gross domestic product is rising far faster than it should. That is why my right hon. Friend has taken the measures that he has.I want to comment on one or two of the fiscal measures in the Budget that even Labour Members might have been magnanimous enough to admit have some merit. There cannot be an entire Budget that takes two hours to introduce without a single measure that they might consider had some merit.
In my bemused and confused state, there was just one chink of light, and that was cast by the hon. Member for Birkenhead (Mr. Field). I first met the hon. Gentleman when I was lying next to him in a Blue Circle cement bag, when we were sleeping out on the tiles. It was a cross-party venture. I was rather sorry when the hon. Gentleman said that we were not doing anything for the homeless, because, as he knows only too well, we have introduced a huge range of measures on their behalf--rough sleepers initiatives, initiatives to help the non-governmental organisations, rents above shops initiatives, rents to mortgages initiatives, and many others.
The hon. Gentleman had some very good ideas, and I am sure that one thing of which he would approve in our Budget is the arrangement to take people out of the tax net altogether. Of course, the former Chancellor, Lord Lawson, started this process by taking 3.5 million people out of the tax net, and my right hon. Friend the Chancellor continued this process last year by introducing the new 20 per cent. tax band.
The extension of that tax band this year will benefit some 4.9 million taxpayers, and I calculate that next year, with the further extension, it will benefit 1 million taxpayers. These are very large numbers of people at the lowest income level who will benefit by not having to bear such a high burden of taxation as hitherto. The principle of widening that 20 per cent. band is fundamentally right. My hon. Friends believe that distorting tax reliefs should be gradually reduced. Therefore, I thoroughly welcome my right hon. Friend's measures to limit mortgage interest relief at source to the 20 per cent. tax band. It will raise a very useful sum of money to be deployed elsewhere. I also thoroughly welcome the reduction of the married person's allowance to the 20 per cent. tax band.
One of the most far-reaching reforms that my right hon. Friend announced concerned the self-regulation and current year basis of assessment for the self-employed. He has introduced a truly visionary measure which follows his consultation paper which, as I told him at the time, I greatly welcome. I urge him to examine the American system carefully. It could be a complicated system to introduce, but it could benefit 8 million self- employed people, so it is extremely important. The American model is simple to operate. Let us face it. We want the self-employed people out there earning a living and benefiting the country and the system will be of no benefit if it is too complicated for them to operate.
I ask my right hon. and hon. Friends to consider the following bold initiative to encourage self-employed people to take up the new system. As the new system will save civil servants in the Inland Revenue a great deal of time, my right hon. Friend might offer people an incentive to use the system. How about offering a £300 reduction to anyone who is prepared to change to the new system? That
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would be worthwhile in terms of the administrative costs that the Inland Revenue will save in sorting through the tax returns of 8 million people.Other measures might have been welcomed by Opposition Members, such as those relating to gifts to charities. The reduction in the gift aid to charities from £400 to £250 a year seems thoroughly worthwhile and we now have the equivalent of the old covenanting system. There are other measures to help charities, such as the increase in the payroll giving scheme from £600 to £900 a year. As we gradually reduce our tax take as the economy recovers, and as prosperity returns to Britain, we need to encourage individual responsibility, which certainly includes giving to charities.
There was one measure to encourage self-reliance that I regret my right hon. Friend did not introduce. I am sorry that the hon. Member for Birkenhead is not in the Chamber, as I agree with him about pensions. We need to reduce reliance solely on the state pension and encourage occupational and private pension schemes. I am sorry that my right hon. Friend did not choose to increase the cap on earnings-related tax relief on private and occupational pensions. I hope that he will consider that in the near future.
I now move on to measures for businesses. We have had a thoroughly worthwhile Budget for businesses which will encourage small, medium-sized and large businesses to succeed. My constituents will welcome in particular the increase in stamp duty and another year of freezing the uniform business rate. They will particularly welcome the increase in the turnover limit for the cash accounting system for VAT purposes from £500,000 to £350,000.
I am a business man, and I understand these matters only too well. After the Keith report--here I am a little critical of my right hon. and hon. Friends--Customs and Excise were given quite unnecessarily draconian powers as regards penalties. I very much welcome the changes that have been introduced.
During my right hon. Friend's speech I was looking carefully around the Chamber and I noticed right hon. and hon. Members on both sides of the House nodding off during the complex provisions on advance corporation tax. I welcome those provisions, not least the reduction from 25 per cent. to 20 per cent. on dividends paid which will increase the cash flow of British industry by £2 billion. That is a significant amount of money.
I had hoped that, as well as limiting the amount of income tax that can be reclaimed from the 20 per cent. band, my right hon. Friend would have left it at the 25 per cent. band as that would have been simpler to administrate. As the measure raised only £200 million, my right hon. Friend could have raised the money more easily elsewhere. In conclusion, much has been made in the past few days of the imposition of VAT on fuel and energy costs. I know only too well that after the Rio summit containing the convention on climate change we have to stabilise our emissions of carbon dioxide and other greenhouse gases at the 1990 level by the year 2000. That is an extremely tough target.
If we are to meet our international treaty obligations--Opposition Members always play green until it comes to hitting their pockets and then they are not quite so keen
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--we have to introduce severe measures. Energy is one of our industries with the highest emissions of those gases. If we can encourage people to insulate their homes better and use less energy sensibly we shall go a long way towards meeting our Rio targets. Opposition Members moan and groan, but if my right hon. Friend the Chancellor had really wanted to be unkind he would have imposed the 17.5 per cent. VAT from midnight on Tuesday and given people no time to adjust. He has been extremely generous in giving everybody plenty of time to plan. There are generous insulation grants available and people can move to more energy-efficient ways of heating their homes. By imposing an 8 per cent. tax next year and a 17.5 per cent. tax the year after, my right hon. Friend has given everyone plenty if time to adjust. I am sure that Opposition Members would have squealed and moaned just as much had he imposed VAT on newspapers, sewage, books, children's clothes or food.We have to be prudent about the economy and raise a substantial amount of money to reduce the PSBR. I believe that we have had an excellent Budget. It was a Budget for growth, for exports and for allowing us to take the maximum advantage of the single market. Above all, it was a Budget for jobs. I want to create jobs just as much as any Opposition Member and I believe that the Budget will put us on course for recovery and creating as many jobs as we can in the western world.
8.47 pm
Mr. Tony Banks (Newham, North-West) : It really is a bit much for the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) to try to dress up a tax on the poor--which is precisely what a 17.5 per cent. VAT charge on fuel, albeit delayed, actually means--as though it was an environmental measure to be applauded. One can only assume that, if he wanted to go a bit further, logically, too many people are breathing too much air and no doubt the hon. Gentleman could come up with a very good scheme to stop them doing so.
The hon. Gentleman went out of his way to praise former Chancellors who took 3.5 million people out of tax. He could have congratulated the present Government on taking another 4 million people out of tax by rendering them unemployed.
I have many criticisms of the Budget, but who does not? All honest people will have criticisms to make. That is not to say that there was nothing good in it, and I pay tribute to all those good things now and move hastily on to the main part of my speech.
I am grateful that this is the last time that we will have a great Budget setpiece, now that the Government are moving towards a unified statement. At least that will mean that future Chancellors will have to eat their words only once a year rather than twice a year. I found it offensive from the Chancellor's statement onwards to hear the accusation that, when we criticise the Government's economic policies, we are somehow running Britain down. Such accusations are wholly unprincipled : they represent the last refuge of a scoundrel. The Government have dragged Britain down. When we say so, we are merely attacking the incompetence of the Conservative Government, and we are certainly not criticising or running down the country in which we live and suffer the incompetence of the Government's
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economic policy, along with so many millions of our fellow citizens. The country deserves something better than an ideologically fixated Government, made up of economic illiterates, but I am afraid that the country will have to wait for the change that only a general election can bring.I have to confess that I have a grudging liking for the Chancellor of the Exchequer. I try to dislike him, but I find it difficult. I like him ; it is rather like having Arthur Daley in charge of the Treasury. He is a likeable rogue. I would regret it, but I fully expect one day to wake up and read that he had been nicked around midnight, halfway up a drainpipe, probably at the back of Kensington palace, clutching a bottle of champers, 20 fags and a box of Cadbury's Milk Tray. He will no doubt give us a good laugh when he goes. In the meantime, he is giving us a lot to think about, and much misery to be shared round.
I will not begrudge the Chancellor today's glimmer of good news that unemployment has fallen by a few thousand. That is true for the country as a whole, but not for the capital city. Unemployment in London has gone up. We are still inexorably heading towards 500,000 unemployed in the capital. The right hon. Member for Brent, North (Sir R. Boyson) was right to argue the case for London having assisted area status.
I understand that the Secretary of State for Employment, who is in her place, has supported that case. I am going only by newspaper reports, but it seems that there has been an argument about it in Cabinet between her and the President of the Board of Trade. It will not be much use to the right hon. Lady to have my support, but she should know that among Conservative and Labour Members, and among Conservative and Labour councils in London, there is unanimity about assisted area status.
We have an unanswerable case. We have the largest concentration of unemployment in the country. If we use the labour force survey, which the Secretary of State seems to prefer, London has the largest number of unemployed and the highest percentage rate of unemployment in Britain. In areas such as Hackney, Haringey, Lambeth, Newham, Tower Hamlets and Southwark, unemployment rates are well in excess of 20 per cent. and have been for a considerable time. If one becomes more particular in the examination and starts looking, for example, at unemployment among black males between the ages of 20 and 24, the unemployment rates are up to 70 per cent.
Unemployment is a big problem in London, and anything that the Secretary of State for Employment can do to bring relief will be much appreciated. In two and a half years, London has lost over 250,000 jobs. There are 56 people, twice the national average, chasing every job vacancy in London. Our case for assisted area status is overwhelming and it has all-party support.
Other hon. Members want to speak, so I will not delay the House, but I want to concentrate on one aspect of the Budget speech which had particular reference to London--the transport element. The Heathrow-Paddington link is to go ahead. That is good news. It is noticeable that that is a straightforward partnership scheme between the British Airports Authority and British Rail. They were able to get their act together, probably because the Government were not much involved. That is the way it should be.
When we come to transport infrastructure decisions in which the Government are integrally involved, we run into difficulty. We were promised that public money had been earmarked for crossrail. We understood that the project
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was secure, but now it is to be pushed on to the back burner as the financial package is re-examined. One way to finance crossrail would be to dump the M25 widening scheme in Surrey and transfer the money to the crossrail project. I believe that the sums involved are almost exactly equal. That would be good for the environment and much better for the south-east than widening the M25.As to the channel tunnel fast link--some fast link. We are not sure where the link will end, and we do not know how it will be paid for. As to the route, I have been given by my hon. Friend the assiduous Member for Thurrock (Mr. Mackinlay) a copy of tomorrow's Thurrock Gazette, which announces the line of the route. I understand that the Kent Messenger has also leaked the route.
My hon. Friend the shadow Secretary of State for Transport, the hon. Member for Kingston upon Hull, East (Mr. Prescott), is at the moment doing his head-butting thing outside, in an angry mood, because newspapers and television companies apparently have got information about the route before the House has had an opportunity to discuss it. That is shameful. The Secretary of State for Transport is to make a statement some time next week, but as the information has leaked into the public domain, it would be only decent if a Minister came to the Dispatch Box to make a statement.
My hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) asked why we should concentrate on transport decisions affecting London and the south -east. I pointed out to him that they are not of importance just to the south-east. There will be an enormous spin-off for manufacturing industry throughout the country if the decisions are made speedily. It would mean more rolling stock and investment in manufacturing output other than in London. London's industrial base has fallen dramatically. London used to have one of the great concentrations of industrial employments ; now it has one of the smallest concentrations in the European Community.
We are still waiting for the Jubilee line extension to the east, again mentioned by the Chancellor, by the Minister for Transport in London and by the Secretary of State for Transport. How many times will it be announced as something the Government favour? When will we see a sign of the scheme going ahead? It is a strange way to run a railroad. When the line is started eventually, we should call it the green shoots railway because it is always being promised but it never turns up.
If investment decisions are good, they are good investment decisions, period. They are as good for public investment as for private investment. Recession is the time to make those decisions, because investment decisions on transport infrastructure will help advance the upturn in the economy ; they will prepare the way. They would form the basis for the prosperity that we hope will return one day to manufacturing industry and the economy generally.
We need speedy decisions on such projects. We do not want to have the Government launching and relaunching them all the time while there is no apparent move to get the railroads built and the rolling stock ordered. We must prepare the way for economic recovery through these decisions. They would provide valuable public assets for the 21st century. We want no new excuses or delays from the Government : we want action.
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8.57 pmMr. Jacques Arnold (Gravesham) : I have been in the House on and off throughout the debate. I listened with a twinge of sympathy to the speech of the hon. Member for Holborn and St. Pancras (Mr. Dobson). It was obvious that he had prepared a speech with his characteristic polish. It was to be a long, self-indulgent gloat over the inexorable rise in unemployment, so we can imagine his feelings when he heard of the welcome drop in unemployment, down nationally and down in Gravesham, to the pleasure of my constituents. In his characteristic style he must have expressed his feelings with a cry of "We woz robbed". Instead, at such short notice, he has had to rely on the immature scribbles of a research assistant to prepare his speech.
Our debates have been a feast of words, but there has been a ghost missing from the feast. There has been almost a conspiracy of silence among the party leaderships on that ghost, the exchange rate mechanism. The ERM was doubtful at the best of times. It became even worse when it was used to fix exchange rates. It might have been good at the time the exchange rate was fixed, but within days it all came out of line with the relative performances of different economies and, therefore, their currencies, thus putting pressure on the exchange rate. It was like a pressure cooker whose vents had been stopped up : it was bound to explode.
That pressure was added to by the thoroughly irresponsible way in which the German Government carried out reunification and absorbed and converted the ostmark into the deutschmark. The consequence was that German economic policy required higher interest rates which, in turn, were inflicted upon Germany's ERM partners. Since golden Wednesday we have been out of the ERM. We have been free. We have set our own economic policy. The others remain trapped. The high interest rates imposed because of German policy have led to their economies being crucified. If we want to see real difficulties, let us look at the economies of France, Spain, Italy, and so on--the countries which remain within the exchange rate mechanism.
This debate has a whiff of hypocrisy about it. If the Government favoured an exchange rate mechanism which had that impact, so did the Opposition. I remember hearing in this House the Leader of the Opposition taunting the Government, saying that the Government believed that we should be in the ERM wide band but that the Labour party believed that we should be in the narrow band and that, with its socialist comrades on the continent, it would adopt the single currency. The leader of the Liberal party was not far behind. I could quote what he said, which was exactly the same thing.
A fashion was created for high interest rates. That fashion created the recession. We now have the freedom to set our own exchange rates and to lead our own destiny. The fact that we are leading our own destiny is leading to lower interest rates, growth and the good news today on unemployment.
The results of our ERM policy, supported by the Opposition, inevitably created a large deficit. On Tuesday we heard my right hon. Friend the Chancellor of the Exchequer courageously plan to eliminate the deficit. It is hypocritical of the Opposition not to address the problem
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of how to cope with that deficit. We have heard not a word about that from those who sit on the Opposition Front Bench.There is one aspect of closing the deficit gap by increasing taxes to which I intend to refer--the imposition of VAT on domestic fuel bills. In June last year this country signed the United Nations framework convention on climate change. It commits all developed countries which are party to the convention to take measures aimed at returning their emissions of carbon dioxide and other greenhouse gases to 1990 levels by the year 2000. What are we doing about that? The objective is to reduce the emissions of carbon dioxide by 10 million tonnes.
Steps are already being taken by industry, commerce and the motor industry, not least through fiscal encouragement. They have already resulted in the elimination of 7 million tonnes of emissions. The task must now pass to domestic households to make up the missing 3 million tonnes. The announcement of the imposition of VAT on domestic fuel from April 1994 provides a lead time within which individuals can prepare to save energy by the more efficient heating and insulation of their homes. The minor works assistance scheme, available through local councils, will help people to do that. The Government also have time to prepare for the protection of the less well off and the elderly who will face higher bills. That is why I welcome today's clear commitment by my right hon. Friend the Prime Minister.
There is much good news in the Budget. In particular, I welcome the measures to improve the Export Credits Guarantee Department. The cut in ECGD insurance premiums is very welcome. Also welcome is the £1.3 billion increase in ECGD capacity. I noted in particular the statement of my right hon. Friend the Chancellor of the Exchequer about limiting that increase to what he termed the fastest growing and most important markets around the world. It will not surprise my colleagues on the Treasury Bench if I draw attention to the fast-growing markets in Latin America. The economies of the Latin American countries rose, on average, by 3 per cent. in both 1991 and 1992. That growth rate is accelerating. An Organisation for Economic Co-operation and Development report on the economic outlook published in December 1992 showed that last year both Argentina and Chile were likely to exceed 7 per cent. growth, Mexico and Colombia 2 per cent. growth, and Brazil was expected to have a trade surplus of 15 billion US dollars. There are big opportunities for British exporters. Let us back them up with the proper application of this increased ECGD capacity.
After the Chancellor's major trailer for the high-speed rail link through Kent one assumed that the announcement of the route would follow very quickly. It was therefore with some disappointment that we found that the statement was to be made not on Wednesday but next week, which is the last week before the deadline. It is becoming apparent why the statement was not made on Wednesday. In a very busy Budget week, the Government had apparently pencilled the statement in for Wednesday ; in accordance with the usual channels practice of the House, they advised the main Opposition party so as to enable it to field its spokesman. That is a normal courtesy, but what happened? Thinking about the fancy speech of its Treasury spokesman and about the importance that the Labour party attaches to Kent, the Opposition said, "No, we will not have it on Wednesday."
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The hon. Member for Kingston upon Hull, East (Mr. Prescott) said recently on Radio Kent, "Quite clearly, if the Government hadn't aborted the statement on Wednesday, the Labour party would have withdrawn normal co-operation and gone in for trench warfare." What is the consequence of that? The hon. Member for Newham, North-West (Mr. Banks) has referred to his hon. Friend the Member for Kingston upon Hull, East, Labour's transport spokesman, as being outside, head-butting with the media. What is the hon. Gentleman head-butting about? He is head- butting about so-called leaks of the route--leaks which may or may not be true--but he is head-butting the people of Kent, the people who are worried about the rail link.What we want is a definitive announcement from the Secretary of State. We could have had a statement on Wednesday but for the action of the Labour party. As a result not least of a question that I put to the Leader of the House earlier today, we are to have it early next week, as originally planned. The Labour party should not be playing party political games with my constituents. Next week the Secretary of State will be here to answer questions put by Kent Members. What happened today was quite shameless.
The Budget contains much that is painful and some good news. Above all, however, it indicates plenty of courage. It tackles the problems of Britain today--something that the Opposition have patently failed to do--and deserves our support.
9.7 pm
Ms Angela Eagle (Wallasey) : Listening to the Chancellor's ponderous and technical speech on the Budget, I was reminded of two Tory election posters. The first appeared on the streets in 1979. It depicted a long dole queue and carried the words "Labour isn't working". Let me remind the House that that was a time when unemployment stood at just over 1 million--a level to which it has never returned in the 14 years of the Tory party's stewardship of the economy, though the figure has often been 3 million. Then there was the Labour tax bombshell poster of the 1992 election campaign. When I was reminded of those two posters, I realised that I was listening to a Chancellor from a political party which is prepared to devalue the political currency as much as he has devalued the pound.
On Tuesday, the right hon. Member for Shropshire, North (Mr. Biffen) said :
"I stand here, shamelessly, as a taxing Tory."--
[Official Report, 16 March 1993 ; Vol. 221, c. 202.] I was driven to wondering whether the right hon. Gentleman had done the same in April. Certainly the Tory party did not. The voters will remember for a very long time the Government's cynical and shameless Budget and their behaviour surrounding it. It is the equivalent of George Bush's, "Read my lips : no new taxes", and it will come back to haunt them.
Lord Gilmour, in his book Dancing With Dogma, summed up the Government's stewardship of the economy in the past 14 years in a way that I cannot better. He said :
"The Thatcher era saw a grim failure of economic management. The two worst slumps and the most irresponsible boom since the war is a record nobody should be proud of."
As my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said so well, billions of pounds of
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North sea oil revenue have also been squandered to finance mass unemployment as our industrial base has been sacrificed on the altar of monetarism and Thatcherite orthodoxy by a Conservative party in thrall to the City. Also thanks to their free market dogma, we have seen the deregulation of credit, which unleashed a massive credit boom and caused household debt to rise from about £10 million in 1979 to a staggering £52,894 million last year. That represents £2,300 for every household in Britain. There will be no recovery of confidence or anything else as long as there is such a massive debt overhang and the constant threat of unemployment, which stifles our prospects for recovery.The Tory Government's monumental irresponsibility and economic incompetence seem to be matched only by their capacity for self delusion or deliberate deception, one of which they have practised on a grand scale. Even Lord Lawson, now safely retired and out of the way, refutes his own ludicrous claims of an economic miracle, which he attributes to rather too good a dinner one night before he returned to the Chamber. I note that he now has the dubious pleasure of being the latest in a long line of scapegoats paraded to explain the Government's colossal economic failure.
The truth is--and the Budget proves it in no uncertain terms--that the failure is a Tory failure, caused by dogma and incompetence. As yet, there is no sign of an end to it. The scale of the failure can be summed up by the three structural deficits revealed in the Red Book. The first is the public sector borrowing requirement, estimated at £35 billion this year and set to rise to a massive £50 billion next year.
The second is the balance of trade, £17.5 billion this year rising to £18.5 billion next year. In the depth of a continuing recession, that is quite unprecedented. The third is unemployment which hovers between 3 million and 4 million, depending on whether one believes the real figures or the Government's altered statistics. In any event, the figure represents 10 per cent. of the work force. That is a triple whammy if ever there was one.
Unemployment is not only a symptom of recession and economic failure but is a contributory factor to that failure. It is a scourge which must be eliminated, but, unfortunately, as today's debate has proved, we have a Government who, during their long and disastrous management of our economic affairs, have scarcely even bothered to pay lip service to the view that unemployment should come down, let alone targeted it as a problem to be solved.
I believe that the Government decided early on that they could get away with mass unemployment and not be punished by the electorate. They have shown no concern. Despite billing the Budget as a Budget for jobs, they have done nothing. The costs of unemployment to the economy are considerable. Three million unemployed, or 10 per cent. of the work force, cost about £27 million--or £9,000 per person on the dole--in lost tax revenues and increased social security payments. As for the gross domestic product, unemployment costs up to £66 billion in lost production. If we had that production, the deficit--massive as it is--would disappear.
In the north-west, 334,700 people are out of work. The cost to the Exchequer of unemploymnent in that region alone is £3 billion. The social costs are incalculable, and the personal tragedy involved has been referred to many times, at least by my colleagues. Unemployment is
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economically inefficient and morally unjustified. Unlike the Government, we believe that it is a legitimate concern of Government to minimise it, so was the creation of employment at the core of the Budget's strategy? I looked and looked, but, it must be said, it was not.We had to wait until the Chancellor was well over an hour and a half into his speech to hear employment referred to for the first time. The Government's so-called employment package consists of two measures. At the micro-economic level, there is supply-side tinkering, involving five new initiatives, but not one job has been created. At the micro-economic level there is nothing but forecasts of a continuing rise in the number of jobless. The Red Book's unemployment forecast says :
"The rate of increase should start to slow down again as the economy recovers ; though since the level of unemployment typically lags behind the cycle in activity it will be some time before it starts to fall again."
The detail in the Red Book reveals that despite the supply-side measures, which must be welcomed, although they are minuscule compared to the size of the problem, the forecast is that an extra 200,000 people will be unemployed by the end of the year, and that the level of about 3 million will persist for the next two or three years.
The projection for growth this year--1.25 per cent.--is not enough to prevent a continuing rise in unemployment. The only other policies designed to create employment are essentially indirect, such as the deregulation and general freeing up of business taxes that have often been mentioned by Conservative Members. However, there is no guarantee that deregulation will create more jobs. Those policies could lead to an increase in profitability or dividends--we have seen that British business likes to pay increased dividends rather than create more employment. There is no guarantee that there will be any more employment as a result of that side of the Budget.
The overall expenditure on supply-side measures is a paltry £125 million. We lost £5 billion in an afternoon to try to save the Chancellor's face, yet all that we can spare for the tragedy of the 3 million unemployed, many of whom have been on the dole for a long time, is £125 million. One speculator made £1 billion in one day last September. The level of waste in which the Government indulged during that folly puts the employment measures, trumpeted though they are, and welcome though some of them are, in the perspective that they deserve.
Like my hon. Friend the Member for Birkenhead (Mr. Field), I was amazed when I examined the strategic aims of the Department of Employment and found that no mention was made of full employment, merely of creating a flexible and efficient work force. It is not good enough for the social fabric of the country if that is all that the Department of Employment exists to do. The references to the unemployed said simply that the Department would provide training to give people a better chance of getting jobs.
That deals only with the supply side. There is almost nothing to stimulate demand. In Wallasey we have almost 6,000 people unemployed, and only 75 notified vacancies. People can be trained until they are blue in the face, but the vast majority of them still will not succeed in getting jobs, because the jobs are not available. There must be measures on the demand side to create employment.
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