| Previous Section | Home Page |
Column 366
in 10 Downing street. He may even, by a temporary legislative diktat at Westminster, abandon caring and compassion in his legislation. But he will never persuade the British people that caring and compassion should not be right at the centre of social policy in this country.This is a Government who made promise after promise to win the previous election. A promise not to devalue was broken. A promise of an immediate post-election recovery starting on Friday was broken. The promise that every teenager would have a job or training, broken ; the promise of tax cuts year on year, now broken ; the promise of no rises in VAT, broken ; the promise that they would balance the books, broken ; the promise that there would be no spending cuts, now broken ; the promise that national insurance would not go up, broken. Ten broken promises that mean that the Conservative party will never be trusted again.
This is the Prime Minister who, as Chancellor, created all the necessary conditions for continuing recession and who subsequently, as Prime Minister, has sacked a Chancellor whose main offence was that he had only obeyed orders--a Prime Minister who gave the orders and even now assures us that they will not be changed, a Prime Minister who has no strategy whatever, and a Prime Minister who, when pressed on all the difficulties that face our country and economy, pleads only that we should trust him, when the record shows that he has no credibility.
This is a Government with no industry policy because they are short- termist, no policy for the homeless unless it can capture tomorrow's headlines, no interest in pensioners unless an advertising agency tells them that it matters, no policy for the long term because it is not on the agenda of their party posters, and no strategy for the unemployed because they have simply written them off as voters. What is clear now from the debate is that no strategy for economic and social recovery exists within the Conservative party. What is clear is that the whole Tory party now doubts whether the Chancellor and the Prime Minister can get a strategy together. The Chancellor said that we were in a dreadful hole. The former Chancellor says that the Conservative party deserves to lose without a strategy. There is only one change that can benefit Britain--it is to change the Prime Minister and the Government, and it should happen now.
9.31 pm
The Chancellor of the Exchequer (Mr. Kenneth Clarke) : I begin by thanking the hon. Member for Dunfermline, East (Mr. Brown) for welcoming me to the Dispatch Box. I look forward to facing him for some considerable time to come. I have heard him speak on this subject before. I have listened to debates, I have heard that speech before, and I have no doubt that I shall hear it many times. It is the speech that he always gives. It is an extremely good foil to the speech by the right hon. and learned Member for Monklands, East (Mr. Smith). I put them both into the same category : good on jokes, very weak on content. That is true every time they go to to the Dispatch Box.
At 9.18 pm--after 18 minutes of the speech that we have heard before--the hon. Gentleman paused and asked an unusual question, "What should we do now?" That is a question to which he never returned. "What is truth? said jesting Pilate ; and would not stay for an answer"
and we were back into the lists that we have had before.
Column 367
The hon. Gentleman has an intriguing and forceful speaking style. He does great damage to the Dispatch Box, but it is certainly a very vigorous delivery. He has a particular technique of launching into lists--there is a strategy for this, a strategy for that and a strategy for something else, rapped out in rapid Scottish tones. He has about as much policy content as the average telephone directory, and that has been the case every time I have heard him deliver this particular speech.If I may say so--it is a modest claim, given the competition that it faced- -I thought that the best parts of the hon. Gentleman's speech came when he was quoting me. He has done the usual research. His attack on our broken promises and all the rest of it were half-sentences taken from shredded speeches that somebody delivered on a wet night somewhere in Dudley, and then quoted out of context in order to maintain the pretence that we have broken our promises. I will return to our promises and I will say how we are delivering them. Given the copious nature of the hon. Gentleman's research, I am relieved that he had to go to a Welsh conference in 1987, which I dimly recall visiting, and that he gave a quote about which I have no regrets at all.
It is a few years since I last spoke in the House on economic subjects. I was last on the Economic Policy Committee of the Cabinet in 1985-87, when I used to reply to Budget debates. Nothing was quoted from that. The hon. Gentleman had to go to the Welsh conference to find something that he thought was wrong. In Budget debates when I debated with the hon. Gentleman's
predecessors--sometimes with the right hon. and learned Member for Monklands, East--we had the same arguments. Those years--1985 to 1987--were the finest of the Thatcher decade. We had emerged from a recession. When we began the recovery, the Opposition laughed at the idea of recovery.
When we took the tough decisions that were necessary to make this country more competitive and entrepreneurial, the Opposition opposed every one. They stopped asking for debates on the economy. We did not have Supply days any more because we had sustained recovery, when Britain created more jobs than the rest of Europe put together and when we created a more competitive economy. That is the process through which we are going again for the same goal, and the Opposition have learnt nothing whatever from their experience. This political row today--I always enjoy such rows--is not directed by the Opposition at the things that matter to men and women outside the House. Our constituents know that unemployment has come down a little. They want to hear from us how we are going to get unemployment down and make them feel more secure in their jobs. Our constituents know that we have got inflation down to European levels. They want to know how we are going to keep it there to keep our competitiveness.
Our constituents know that, thanks to a recession that has been more prolonged than anybody expected, we are borrowing money beyond the level that we should. We are spending more than we are raising. They want to know how that can be tackled. In an hour of entertaining rhetoric from Opposition Front-Bench Members, they did not have a single answer to any one of those questions.
Let us deal with the reality of where we are. The hon. Member for Dunfermline, East did not touch on the difficult but encouraging position that the economy is in.
Column 368
Let me give a short list of my own. Retail price inflation has fallen to a 30-year low. Underlying inflation is lower here than in Germany, lower than in America and lower than the European Community average. Retail sales have been at record levels ; in the three months to April this year, they were up 3.2 per cent. on the year earlier. Car production has been rising ; in the three months to April this year, it increased 14 per cent. on the previous three months.Unemployment has fallen for three months in a row ; it started falling just after the hon. Member for Dunfermline, East predicted a continued increase in unemployment. Manufacturing output is now growing at its fastest rate for five years. Manufacturing exports reached record levels at the end of last year. Manufacturing investment rose strongly in the last three quarters of this year and non-oil gross domestic product has grown by 0.7 per cent. in the first quarter of this year.
That is the economic inheritance that I have received from my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) working in partnership with my right hon. Friend the Prime Minister. That is the achievement of the Government's policies, both before we entered the exchange rate mechanism, while we were in the ERM and since we departed from it. It is an achievement that no socialist Government in Europe can match for certain, and no semi-socialist Labour Government in Britain would have got near to.
Mr. Brian Wilson (Cunninghame, North) : I have a genuine inquiry. In view of the litany of triumphs that the Chancellor has recited, does he have any idea why his predecessor was sacked and he was parachuted into his place?
Mr. Clarke : I have described the state of the economy--a matter to which the Labour party has not addressed itself for the past 10 and a half hours.
Quotations have been given--one was given a moment ago. During the past six months, my right hon. Friend the Prime Minister and I have spent much time defending my right hon. Friend the former Chancellor against attacks on him from outside which have always disregarded the present state of the economy. We are now committing ourselves to improving it further. The first issue that the Labour party should have addressed--but has not--is how to sustain that recovery--
Mr. Peter Mandelson (Hartlepool) : This is even making the Prime Minister's speech sound good.
Mr. Clarke : The hon. Member for Hartlepool, who is laughing at me so loudly, was practising public relation techniques when we last emerged from a recession. If he thinks that what we have achieved so far and will achieve again is done simply by investing in a lot of plastic red roses and smart suits, he has another think coming. The Labour party talks only of our manifesto and promises. I do not think that we shall ever hear anything again about the fatuous promises that it made at the last election. If I had been facing him from the Opposition Benches the hon. Member for Dunfermline, East would be talking not about the state that I have just described but about the consequences of adding about £35,000 million worth of extra public spending to the deficit that we now suffer as a result of the recession.
Column 369
I was misquoted by the right hon. and learned Member for Monklands, East, who should have been at the Press Gallery lunch where I spoke. I take seriously the commitments that we made in our manifesto, which are credible and deliverable--they will be delivered. The political technique of taking half-quotations out of speeches and using them out of context is no foundation for a credible Leader of the Opposition or shadow Chancellor.I want to consider the issues contained in our manifesto, depart from the tone of debate set by the Opposition and return to some factual demonstrations. The manifesto said that we would increase funding for the national health service in real terms--we have. Spending is set to increase by 1 per cent. in real terms this year and capital spending is at the record level of £2 billion. The manifesto said that we would protect pensions against inflation, as we have done for the past 13 years--we have. Due to the way in which we have done so, pensions and other benefits increased by 3.6 per cent. this April. Inflation today is just 1.3 per cent.
When I was on the Public Spending Committee last year with my right hon. Friend the Member for Kingston upon Thames, we bore in mind the fact that we had said that we would go for capital investment in the roads programmes, housing associations, British Rail and London Underground. We have done all that. Funding for the roads programme has been maintained this year in spite of the fact that construction prices are much lower and allow for even more work to take place. We have given £750 million worth to the housing associations and investment in British Rail will be about £1,000 million this year. What was the Labour Government's reaction-- [Interruption.] What was the reaction to those achievements which were obtained last year in a tight public spending round? The Labour party's reaction was the same that it has given this year --to trot out during a tight public spending round complaints that we were to stop inflation-proofing pensions, cut this for the sick and that for the poor. The Labour party does it every year. I have been not only an Economics Minister but a Health Minister, and I cannot count the number of times it has claimed that we will stop prescription charge exemptions for pensioners.
The right hon. and learned Member for Monklands, East even brought out the hoary old chestnut about how we will charge for visits to GPs. That was a revisit to shabby triumphs. The Labour party won the Vale of Glamorgan by- election by claiming that we were going to charge for visits to GPs, and another John Smith lost the constituency once the health reforms were in place and Labour's accusation turned out to be untrue--
Mr. Gordon Brown rose--
Mr. Clarke : I am impressed by the way in which the bodyguard leaps in to protect his right hon. and learned Friend, who today did not repeat a solitary thing that he promised at the last election, let alone make up his mind about what he wants to do next. At the end of the Maastricht debate, he did not know whether he was going to vote yes or no. At the end of his inquiry into proportional representation, he decided not to plump one
Column 370
way or the other and to hold a referendum. He does not know what to do with clause 4--keep it, scrap it or, as the hon. Member for Blackburn (Mr. Straw) suggests, rewrite it.The Opposition's jokes are highly entertaining, and I have to confess that, although it is the duty of the Minister to struggle to keep a straight face, I sometimes fail to do so. Sometimes I struggle to keep a straight face when I see the wholesale lack of commitment to any sort of policies on the part of the Labour party.
I should like to turn to a matter dealt with seriously by my right hon. Friends the Members for Shropshire, North (Mr. Biffen), for Worthing (Sir T. Higgins) and for Horsham (Sir P. Hordern) and by my hon. Friend the Member for Havant (Mr. Willetts). They dealt with the Budget deficit, a subject on which there was deafening silence from the Opposition.
At the heart of our manifesto was a pledge to control public spending--one of the reasons why we get returned to office. We have to return the Budget to balance and over time we have promised to reduce the share of the national income taken by the state. It is generally acknowledged that the public sector borrowing requirement of £50 billion is too high, and it will be my day-by-day task in the months ahead, with my right hon. Friend the Chief Secretary, to deal with it.
The overwhelming cause of this large borrowing is the fact that the recession went on longer than expected--not just longer than the Government expected, but longer than almost every forecaster and business organisation expected. The Labour party was no more on target than the forecasters--it always accepted the figures in the Red Book.
We may enjoy ourselves in debate, but to us falls the responsibility of tackling a projected PSBR of £50 billion, which lies like an iceberg in the path of the recovery which we hope to sustain and about which we have heard nothing positive from the Labour party.
My predecessor, my right hon. Friend the Member for Kingston upon Thames, said only recently that as a Conservative Chancellor he hated borrowing almost £1 billion a week. I agree with him. Any Conservative Chancellor hates that and would be determined to tackle it. If Labour had won the election and had carried out its election pledges, it would cheerfully have borrowed much more and, when tackled about it, would have said that it would be paid for out of growth--the best the Leader of the Opposition can come up with. We have set out how we will tackle the deficit --through a combination of economic growth, the tax increases announced in the last Budget and tight control of public spending. Every sensible man and woman in the country knows in his or her bones that the Government have a duty to contribute to that. A continued deficit on such a scale would put at risk the conditions for recovery that we have worked so hard to achieve. Britain is not by any means the only developed country facing this problem. However, we are the only major European economy showing the signs of growth that I have outlined. Budget deficits are a feature of the last world recession and they are hitting other countries more strongly than ours. For example, in Germany, projections for the deficit have been increased to DM70 billion and the German Government expect their economy to contract this year. The Commission is not increasing its expectation of
Column 371
growth in Germany, as it is for Britain. It expects that economy to contract, and that will undoubtedly mean higher future deficits. In Fraw the average, we have limited economic growth, our interest rates are the lowest in the EC and our competitiveness has markedly improved.Mr. Ronnie Campbell : Will the right hon. and learned Gentleman give way ?
Mr. Clarke : No. I apologise to the hon. Gentleman.
The improvement in our competitiveness is one of the Government's finest achievements during our period of office and it has stopped Britain being the sick man of Europe, as it used to be, into, throughout and out of every parliamentary Session. That is not due only to the depreciation of sterling since September. Even in the recession, we are in a good position compared with many of our competitors, because productivity is increasing, earnings are growing at their lowest rate for 25 years and our costs are falling, whereas costs in our competitor countries-- [Interruption.]
Mr. Campbell : Will the Minister give way?
Mr. Campbell rose --
Madam Speaker : Order. The hon. Gentleman must resume his seat.
Mr. Clarke : Our forecast for growth this year has been increased since the autumn statement from 1 per cent. to 1.25 per cent. Almost every independent forecaster--lastly and most recently, the European Commission-- has increased the estimate for growth this year. I am cautious. I do not say that the recovery can be expected to unfold rapidly. Prudent economic policies will be needed to sustain it and many things must happen to world conditions as well.
The Government stand ready to share the credit for a strong recovery when we have achieved it, but not before. Nevertheless, we currently have the prospect of increased growth, higher tax receipts and less pressure on public spending.
Mr. Campbell rose --
Mr. Clarke : I shall give way shortly. I am trying to discover whether the Liberal Democrats have a serious answer. Growth will obviously contribute--our own forecasts show that--but even a strong recovery will not in itself restore public finances. No sensible observer believes that growth in itself will solve the deficit. Only the right hon. and learned Member for Monklands, East believes that, as he revealed in a shallow interview on the "Today" programme. He said that Labour was against cutting public spending or raising taxes. Labour is not in favour of doing anything in particular. That is the traditional position of the Liberal party. Let us see if it is moving closer to us.
Mr. A. J. Beith (Berwick-upon-Tweed) : The new Chancellor knows that that is not our position, because he heard my right hon. Friend the Member for Yeovil (Mr.
Column 372
Ashdown) argue that rises in income tax may be necessary as part of a means of tackling the debt. Does the Chancellor intend to devote some of the remaining minutes of the debate to answering the serious criticisms of the conduct of Government policy made by the right hon. Member for Kingston upon Thames (Mr. Lamont), especially what he said about decisions on interest rate policy and about the way in which such future decisions would be made?Mr. Clarke : Throughout my speech, I have set out medium and long- term objectives. I have said repeatedly since becoming Chancellor, as I said before that, that the conduct of policy of any kind should not be based solely on the pursuit of short-term popularity. Every Government since I have been in the House have been unpopular during most of the time that they were in office, but the British public have the common sense to know that their Governments must sometimes go through such periods. I am setting out the medium-term objectives that will be purposefully pursued. We had all this talk about raising income tax at the last election. I share the views of my hon. Friend the Member for Beaconsfield (Mr. Smith) on income tax. As my right hon. Friend the Prime Minister pointed out, before the election the Liberals committed themselves to raising fuel taxes and green taxes. They talked about the anomaly of VAT on fuel. All that heroic being in favour of taxes is about the same as the heroism of the Liberal party on every other subject. They vote against it when it comes before them. That is how they look a difficult decision squarely in the eyes.
Mr. Gordon Brown : Given that the Chancellor puts such a premium on promises, will he confirm that the Prime Minister said that there would be no increase in VAT? Having said that the country was in a dreadful hole and that we needed a new agenda, will he summarise the changes in economic policy that he proposes?
Mr. Clarke : I remember that occasion well. At the last election, before the Labour party moved on-- [Hon. Members :-- "Answer that quotation."]--I will answer the quotation. It illustrates perfectly the point that I was making 20 minutes ago about taking half-quotations out of context. I do not know why the hon. Gentleman returned to it.
Mr. Brown rose--
Mr. Clarke : It is no good the right hon. and learned Member for Monklands, East looking at the Transport house brief : he must listen to the context.
That particular phrase had a nice little clip put round it. At that stage in the general election which we were all fighting, the Labour party was telling the country that our plans meant, if necessary, to raise the rate of VAT to 22.5 per cent. The Labour party ran a great scare on 22.5 per cent. VAT before the party moved to the more elevated ground of Jennifer's ear to try to show their concern for the great public services of the country.
Mr. Brown : Will the Chancellor give way?
Mr. Clarke : No. Jesting Pilate must wait for the answer this time. That quotation was dealing with raising the rate. We have not raised the rate.
Mr. Brown rose--
Column 373
Mr. Clarke : Going back to the manifesto, it contains no word about VAT or national insurance contributions. We have not broken our manifesto pledges. I helped to write the manifesto and I confirm what my right hon. Friend the Prime Minister said. We will deliver that manifesto and getting the wealth-creating economy right is part of it.
Mr. Brown : Will the Chancellor give way on that point?
Mr. Clarke : No. [Interruption.]
Mr. Brown : What about the deficit?
Mr. Clarke : The hon. Gentleman does not want to know about the deficit. He has left me three minutes to talk about the deficit. We have raised taxation. My right hon. Friend the Member for Kingston upon Thames was right to make the impact of that taxation begin to fall next year, so that the recovery could be sustained for longer. The Labour party is against that. It would restore the tax increases in the Budget, thereby adding £6,000 million to the deficit.
The only solid piece of policy in the opening speech was talk of allowing local authorities to spend all their capital receipts. That would add another £6,000 million to the public sector borrowing requirement. When will they ever learn?
We have raised taxation and now we shall look seriously at public spending. We are looking fundamentally at the budgets of health, social security, the Home Office and education. We are about to agree a public spending remit. That is serious government. It will require tough decisions. That is how Conservative government got us out of recession before and that is how we will get out of recession again. I am delighted that some of my right hon. and hon. Friends were urging the need for tough decisions today. I am sure that, in due course, they will be voting for those tough decisions to deliver what we must do, because we cannot rely on the Opposition. Six letters and they are anybody's. Any lobby will get their support, although usually it is more fundamentally the lobby that is dominated more by the GMB and the other trade unions than by those who actually sponsor them.
It will be hard work, earning our living as a country in the 1990s. We have the beginnings of recovery--we must sustain it. We have set out a medium/long-term strategy, for the results of which we are prepared to answer at the next election.
These debates are all very entertaining, but as my best joke was stolen some time ago, it is the parties opposite that must go back to the dark room and think precisely what contribution they really want to make to serious economic discussion in this country.
Question put :
The House divided : Ayes 278, Noes 302.
Division No. 291] [10.00 pm
AYES
Abbott, Ms Diane
Adams, Mrs Irene
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Allen, Graham
Alton, David
Anderson, Donald (Swansea E)
Anderson, Ms Janet (Ros'dale)
Armstrong, Hilary
Ashdown, Rt Hon Paddy
Ashton, Joe
Austin-Walker, John
Banks, Tony (Newham NW)
Barnes, Harry
Battle, John
Bayley, Hugh
Beckett, Rt Hon Margaret
Beggs, Roy
Column 374
Beith, Rt Hon A. J.Bell, Stuart
Benn, Rt Hon Tony
Benton, Joe
Bermingham, Gerald
Berry, Dr. Roger
Betts, Clive
Blair, Tony
Blunkett, David
Boateng, Paul
Boyce, Jimmy
Bradley, Keith
Bray, Dr Jeremy
Brown, Gordon (Dunfermline E)
Brown, N. (N'c'tle upon Tyne E)
Bruce, Malcolm (Gordon)
Burden, Richard
Byers, Stephen
Caborn, Richard
Callaghan, Jim
Campbell, Mrs Anne (C'bridge)
Campbell, Menzies (Fife NE)
Campbell, Ronnie (Blyth V)
Campbell-Savours, D. N.
Canavan, Dennis
Cann, Jamie
Carlile, Alexander (Montgomry)
Clapham, Michael
Clark, Dr David (South Shields)
Clarke, Eric (Midlothian)
Clarke, Tom (Monklands W)
Clelland, David
Clwyd, Mrs Ann
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cook, Frank (Stockton N)
Cook, Robin (Livingston)
Corbett, Robin
Corbyn, Jeremy
Corston, Ms Jean
Cousins, Jim
Cox, Tom
Cryer, Bob
Cunliffe, Lawrence
Cunningham, Jim (Covy SE)
Cunningham, Rt Hon Dr John
Dafis, Cynog
Dalyell, Tam
Darling, Alistair
Davidson, Ian
Davies, Bryan (Oldham C'tral)
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham, H'dge H'l)
Denham, John
Dewar, Donald
Dixon, Don
Dobson, Frank
Donohoe, Brian H.
Dowd, Jim
Dunnachie, Jimmy
Dunwoody, Mrs Gwyneth
Eagle, Ms Angela
Eastham, Ken
Enright, Derek
Etherington, Bill
Evans, John (St Helens N)
Ewing, Mrs Margaret
Fatchett, Derek
Faulds, Andrew
Field, Frank (Birkenhead)
Fisher, Mark
Forsythe, Clifford (Antrim S)
Foster, Rt Hon Derek
Foster, Don (Bath)
Foulkes, George
Fraser, John
Fyfe, Maria
Galbraith, Sam
Galloway, George
Gapes, Mike
Garrett, John
George, Bruce
Gerrard, Neil
Gilbert, Rt Hon Dr John
Godman, Dr Norman A.
Godsiff, Roger
Golding, Mrs Llin
Gordon, Mildred
Graham, Thomas
Grant, Bernie (Tottenham)
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Grocott, Bruce
Gunnell, John
Hall, Mike
Hanson, David
Hardy, Peter
Harman, Ms Harriet
Harvey, Nick
Hattersley, Rt Hon Roy
Henderson, Doug
Heppell, John
Hinchliffe, David
Hoey, Kate
Hogg, Norman (Cumbernauld)
Home Robertson, John
Hood, Jimmy
Hoon, Geoffrey
Howarth, George (Knowsley N)
Howells, Dr. Kim (Pontypridd)
Hoyle, Doug
Hughes, Kevin (Doncaster N)
Hughes, Robert (Aberdeen N)
Hughes, Simon (Southwark)
Hutton, John
Illsley, Eric
Ingram, Adam
Jackson, Glenda (H'stead)
Jackson, Helen (Shef'ld, H)
Jamieson, David
Janner, Greville
Jones, Barry (Alyn and D'side)
Jones, Ieuan Wyn (Ynys Mo n)
Jones, Jon Owen (Cardiff C)
Jones, Lynne (B'ham S O)
Jones, Martyn (Clwyd, SW)
Jones, Nigel (Cheltenham)
Jowell, Tessa
Kaufman, Rt Hon Gerald
Keen, Alan
Kennedy, Charles (Ross,C&S)
Kennedy, Jane (Lpool Brdgn)
Khabra, Piara S.
Kinnock, Rt Hon Neil (Islwyn)
Leighton, Ron
Lestor, Joan (Eccles)
Lewis, Terry
Litherland, Robert
Livingstone, Ken
Lloyd, Tony (Stretford)
Llwyd, Elfyn
Loyden, Eddie
Lynne, Ms Liz
McAllion, John
McCartney, Ian
Macdonald, Calum
McFall, John
McKelvey, William
Mackinlay, Andrew
McLeish, Henry
Maclennan, Robert
McNamara, Kevin
McWilliam, John
Madden, Max
Mahon, Alice
Mandelson, Peter
Marek, Dr John
Marshall, Jim (Leicester, S)
| Next Section
| Home Page |