House of Commons Hansard Debates for 25 Nov 1993

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small firms which could do more to create jobs. However, the evidence is that our approach is the right way to create more jobs and that the approach of those on the Opposition Front Bench is antediluvian.

I was interested in the remarks of the hon. Member for Kingswood, which echoed those of the hon. Member for Dunfermline, East, that the way to economic recovery is to cut unemployment. That blinding insight is rather as though the medical profession had suggested that the way to reduce measles was to cut down on spots or the way to reduce colds was to cut down on sneezing.

Change is necessary to reduce unemployment ; a policy to reduce unemployment is no policy at all. For those reasons, the Government are moving in the right direction, but I hope that they will keep the objective of reducing unemployment central to their economic policy. 8.17 pm

Mr. Eric Illsley (Barnsley, Central) : The Chancellor asked why Labour Members were debating the economy a few days before the Budget. The answer is that we want to draw attention to the number of pledges that the Government have broken in relation to VAT on fuel and other items.

It is incredible that the Chancellor stood at the Dispatch Box and denied that the Government had broken any pledges, especially when we are about to have VAT on oil and gas and we are contemplating VAT on books, newspapers, food and children's clothing. VAT is a tax which affects the least well-off in our society and the£50 billion public sector deficit that the Government have created will have to be paid for by people who can ill afford it.

The Gracious Speech mentioned measures to bring the budget into balance and I shall concentrate on one or two measures that have been canvassed today. One example is the proposal to harass single mothers, who are to be taken out of benefit although the Government's evidence shows that single parents did not jump housing queues or get pregnant on purpose and that they are not responsible for the ever-increasing levels of crime in the country.

The Government intend to save money by harassing people on invalidity benefit. We are to have a review of eligibility for benefits simply as a way for the Government to save money. The Child Support Agency was set up to find absent parents. It was revealed only recently that that agency has been set targets which it is seeking to meet by finding parents who already make regular payments to their former partners. They will now have to pay sometimes as much as three times their previous contribution, not to the child of the former relationship but to the Treasury coffers. The children will not receive any of that extra money because the parent with responsibility for the child is usually in receipt of income support.

Mr. John Marshall (Hendon, South) : Will the hon. Gentleman give way?

Mr. Illsley : No, I shall not give way. Some Conservative Members have spoken for as long as 25 minutes and I shall not waste time by giving way to the hon. Gentleman who I do not think has been in the Chamber all that long.

Court settlements where one parent gave up the right to a property are being ignored and the parent is being

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required to pay additional money to the agency. In my constituency, new relationships are being torn apart when one partner to a relationship has to make such payments to the agency.

The Queen's Speech mentions the sale of British Coal. How much that will raise is debatable, bearing in mind the current rate of pit closures. It is ridiculous to contemplate the sale of British Coal at a time when all will agree that the market for coal is deteriorating rapidly. Only a handful of collieries, if any, are likely to be left by this time next year.

All Britain's coal requirements can be met by imported coal and opencast mining, so we no longer need collieries. It is sad that collieries are being closed when even National Power is talking about coal gasifiers being put on new gas-fired generators within 20 to 30 years. We shall need to turn coal into gas to put through the new combined-cycle stations. That is a disgrace. It is a crying shame that the President of the Board of Trade did not take action with regard to the French interconnector, licences for new gas-fired stations and the nuclear subsidy in order to assist the British coal industry.

British Coal's unwillingness to allow collieries to go out to licence or to be bought, its lack of any sensible rationale, shows its desire to slim down the industry in advance of a management buy-out--a small industry sold off to the chairman and his fellow directors at some time in the future. So far, the Government have issued no consultation documents on any of the residual liabilities after privatisation. Those include concessionary coal, responsibility for subsidence and for the Coal Industry Social Welfare Organisation, a major owner of land and buildings throughout Britain.

The Gracious Speech refers to the further contracting out of local authority services, despite continued evidence of poorer services from the private sector and the fact that we are awaiting the government's review of standard spending assessments.

My local authority has some 70 per cent. less finance than other metropolitan ved of finance so that it will be forced once again to put services out to tender, which will mean a restriction of those services in the future?

Sunday trading was also mentioned in the Gracious Speech. Most hon. Members have been lobbied to death on the issue, so I do not intend to spend long on it, but it would be nice if the Government would bring forward an option giving employees security, making work on Sunday voluntary and providing premium payments for such work. At present, the big supermarket chains are leading the way towards total deregulation. I have been lobbied by local shopkeepers, whose small businesses are likely to suffer from such deregulation. Already, companies such as Rumbelows and Sainsbury are making it clear that Sunday will be part of the existing working week. The hon. Member for Hendon, South (Mr. Marshall) shakes his head, but he will know that Rumbelow's has now altered all its shopworkers' contracts, making Sunday part of their working week. Again, there will be no chance of premium payments for people who work on Sundays.

The hon. Member for Eastleigh (Mr. Milligan) said that deregulation would reduce industry's costs. I am extremely concerned about some aspects of the deregulation Bill. I

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mentioned yesterday that the deregulation task forces have no local authority involvement. Trading standards officers throughout Britain, the people best placed to determine which regulations are redundant and which need enforcing, were excluded from the consultation. One idea to be canvassed is that flame resistant fabric coatings will no longer be a requirement, with the result that children's nightclothes will no longer have to be flame resistant--an incredible deregulation exercise. A company in my constituency has increased employment during the past year or so by about 150 employees. It manufactures chemical coatings for foam furniture. That company will have a bleak future if we deregulate safety regulations for such flame-resistant coatings. That could lead to a loss of jobs in my constituency--not decreased costs, but the closure of the factory and the loss of all the jobs, quite apart from the fact that we are increasing the danger to the average consumer by allowing furniture and clothing which is not flame resistant.

Another area of concern is the deregulation of market franchise rights at the whim of a member of a deregulation task force who may be involved in private markets. The market in my home town was granted a royal charter in the 13th century. It is one of the biggest markets in the north of England. Yet the Government will seek to deregulate it, despite the fact that regulation enables a balanced provision of market trading within the area. Having a regulated market means that we avoid unscrupulous market owners and the type of weekly car boot sales that give no protection against buying faulty or stolen goods.

Market traders are happy with the current market franchise rights. They are protected from private markets where rents are undercut and where they lose business. If the market in my home town loses its royal charter, trade there will fall off. We are doing all we can to encourage trade to come into my constituency rather than lose it to the large shopping malls springing up nearby, but deregulation will make a complete mockery of that. Before introducing a Bill, the Government should have sought a consensus with Opposition parties as to which regulations could be easily done away with.

The Government have backed down on the Sheehy report, but they still intend to go ahead with the removal of local accountability for police forces throughout Britain. There is also the threat of the amalgamation of forces which may mean that my force in South Yorkshire will extend as far as Lincolnshire and the east coast. That is opposed by most people within the area and by the police authorities and it is a measure that the Government should withdraw. The Gracious Speech contains no measures to reduce unemployment or to try to rescue the economy. We have already heard how fragile the current recovery is--if, indeed, there is any recovery at all. The measures included in the speech are a ragbag of deregulation and a decrease in health and safety provision which pander to the self-interest of the business community. All in all, it is a poor programme for the forthcoming year.

8.29 pm

Mr. Jacques Arnold (Gravesham) : I will refer briefly to the comments of the hon. Member for Barnsley, Central (Mr. Illsley). I thought his speech contained the most

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disgraceful scaremongering which will put fear into householders who buy the furniture that is produced in his constituency. The company's employees will also now fear for their jobs. The hon. Gentleman might bear in mind that the safety regulations were brought in by this Government.

In respect of deregulation, Ministers have said clearly that they will not put health and safety requirements presently in regulations in jeopardy. The hon. Gentleman's speech was a remarkable piece of scaremongering, and I hope that employees of the firm in question note what the hon. Gentleman said in the House and not just what is released to the Barnsley newspapers.

Today's debate takes place against a new background in the economy which contrasts considerably with the background of a year ago. Inflation has been below 2 per cent. for the longest period since the 1960s, and is at its lowest for 30 years. Interest rates are at the lowest level that we have enjoyed for many years. It is worth noting that that has lifted £11 billion from industrial costs, and has saved the average mortgage payer £160 per month.

Unemployment has been dropping steadily for months. In my constituency, 300 fewer people are unemployed than was the case at the peak last April. Notable improvements have been made in our balance of trade, and it is interesting to note that exports of our manufactures are up by 15 per cent. in volume terms on a year ago. The United Kingdom has the highest growth in the European Community. The scene is now set for a long period of growth and stability. We have great scope for growth, and a pool of talent among the unemployed. That is not least due to training programmes which have been instituted by the Government. However, that potential could be impeded by a blot on the landscape, and that is the scale of the current budget deficit which looms large at £50 billion. That subject was ignored almost entirely by Opposition Members.

It is worth remembering that the budget deficit needs to be financed. Week in, week out, the Treasury must go to the City with its cap in its hand to get each extra billion pounds. That just cannot go on. Eventually the Treasury will be met with a higher price demand, which will mean higher interest rates. That would be disastrous for our industry and our home owners. If we end up with the City saying no, our only recourse will be to go to the International Monetary Fund. That may have been good enough for the Labour Government in 1976, but it is not an option for the present Government. We are not a banana republic, but a major economy. The Labour party may allow us to go to the IMF, but we should not, and that is why we must take steps to close the deficit.

We must ask ourselves why we can finance the deficit. First, Conservative Governments have had a long-standing reputation for sound finance. My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) announced in his last Budget a package of tax increases which was worth £10 billion and which will take effect in April 1994. That shows the City and the financial community that we are in earnest. Secondly, during the recession the call for investment funds in the City has been depressed, leaving much more scope for the Treasury to raise the necessary funds.

We must realise that, as recovery progresses, the taking up of funds by private industry will increase. That will limit the ability of the Treasury to pick up funds, and would

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create extra pressures for higher interest rates. If we are to sustain the recovery, we must cut the deficit to clear the way for private investment.

We heard nothing from the hon. Member for Dunfermline, East (Mr. Brown) about genuine ways to cut the deficit. As a starting point, the hon. Gentleman would have to tackle that £50 billion, to which he could add a further £37 billion which, of course, was the cost of the promises the Labour party made at the general election. The Opposition said that it was not in the business of cutting promises, so let us add that figure to bring the total to £87 billion. Let us further extend it. The hon. Gentleman's opposition to the widening of the VAT net and the extension of national insurance contributions would cost another £10 billion. Therefore, a Labour Chancellor would have to finance a deficit of £97 billion.

The hon. Gentleman's colleagues such as the hon. Members for Kingston upon Hull, East (Mr. Prescott) and for Holborn and St. Pancras (Mr. Dobson) spray promises of vast spending left, right, and centre, so the hon. Gentleman would be in the business of trying to raise £100 billion. He did not address the present £50 billion, and certainly did not address £100 billion.

Mrs. Margaret Beckett (Derby, South) : Not long before the general election, I had a conversation in a bar in this place with a junior Minister. He said to me that he was fast getting to the stage--and, in fact, had reached it--that he would rather "see you and Smith trusted with the nation's finances rather than that bunch we have in charge." Listening to the hon. Gentleman's arithmetic, I know just what he meant.

Mr. Arnold : I was not in the bar with the right hon. Lady. All I say is that if she were to tot up the figures, she might realise the scale of the problem.

The hon. Member for Dunfermline, East did not try to tackle the deficit either at current levels or at the level the Labour party's policies would take us to. It is worth recalling that the deficit would have been wider still if this Government had not taken some sound decisions during the past 14 years.

Take the nationalised industries, for example. In the last year of the Labour Government the nationalised industries took £6.5 billion at today's prices in grants and borrowing alone. British Steel alone took £1.8 billion in that year, and the National Coal Board took £1.6 billion. Today most of those industries are privatised and are no longer a weight on the Exchequer. Indeed, they are profitable and contribute many billions of pounds to the Exchequer through taxes.

Mr. William O'Brien (Normanton) : The hon. Gentleman refers to the costs of some of the public utilities. Will he take into consideration the fact that the poll tax cost this country £17.5 billion? Will the hon. Gentleman address that point?

Mr. Arnold : I was not going to address it, but I will. That £17.5 billion went into spending by local government on education, social services, and the rest of the services. The figure which the hon. Gentleman dredges up is the total amount which was put into local government finance, the overwhelming majority of which went into services-- even under Labour councils.

While on the subject of public utilities, it is worth noting the impact of privatisation on prices to consumers.

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Since British Telecom was privatised in December 1984, the price of calls in real terms has fallen by 14.9 per cent. Since the privatisation of British Gas in December 1986, the real price to consumers had dropped by a startling 20.2 per cent. Even in the short time since the regional electricity companies were privatised in December 1990, prices to consumers have dropped in real terms by1.4 per cent.

Those facts should also be considered in the context of VAT on energy. The purpose of VAT on energy is twofold : for tax-raising reasons to which I have alluded, and for meeting the Rio earth summit commitment to reduce carbon dioxide emissions by 10 million tonnes. VAT on fuel will make a significant contribution to achieving that. All hon. Members know that, but I was somewhat surprised by the cynical reaction and the opportunism that has been shown. Before the previous Budget, when VAT on fuel was announced, the Labour spokesman on the environment told Green Magazine that Labour was thinking of a number of other "small but effective" tax measures which included increasing VAT on "environmentally unfriendly products." Of course, that was said before the Budget and the public reaction to it. Post -Budget, of course, political cynicism and opportunism have been all the rage among the Opposition. That was best summed up by the Leader of the Opposition on Radio 4 in October.

"We wouldn't go back to zero-rating, it's as simple as that but the Labour Party will be voting against VAT on domestic fuel". In other words, the Opposition will vote against it to obtain votes but they would hang on to it for dear life because they know that it is the right and necessary thing to do.

The Liberal Democrats, whose Members, of course, are not here, are no better. This afternoon, the right hon. Member for

Berwick-upon-Tweed (Mr. Beith) attempted to rush past the matter, but he cannot overlook the fact that in his party's 1992 election manifesto the Liberal Democrats were absolutely clear about their policy, which is somewhat unusual for them. They said :

"We will support a Community-wide energy tax on all energy sources".

Then, however, the Newbury and Christchurch by-elections occurred and, needless to say, the Liberal Democrat candidates were against the very energy tax that their party had supported.

What is the Liberal Democrats' position today? They have published a very glossy new document called "Facing up to the Future". I went to the Library to acquire a copy. The section entitled "The Environmental Challenge" contains some lovely apocalyptic quotations. It states :

"Human-made emissions of greenhouse gases are now causing climate change at ten times the rate of any other period in the planet's recent history. Melting of the polar ice caps, thermal expansion of the oceans, rising of sea levels and disruption of weather patterns are expected as a consequence Depletion of the ozone layer, originally detected over Antarctica, now occurs over Europe in the spring and summer. Increases in skin cancer and in damage to animal and plant species will result."

I read further to find what the Liberal Democrats would do. They would do nothing. They have no proposals : they refer to the issue in apocalyptic terms but then duck it. That is always the way with the Liberals, I suppose.

What of the other environmental organisations that are usually so vociferous--for example, Friends of the Earth and Greenpeace? They could be described as the dogs that did not bark in the night. For many years, they have

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complained about emissions from the burning of sulphurous coal, but when the reduction in the burning of such coal was announced in the past year or so, where were those two environmental organisations? They were conspicuous by their silence ; and the same is true in relation to VAT on fuel.

I searched hard for statements on VAT on fuel by Friends of the Earth and Greenpeace but the best that I could do, with the help of the Library, was a joint letter from the two groups to The Independent on 13 July. It is noticeable that the letter, signed by Friends of the Earth, Greenpeace and a number of other organisations, mentions organisations

"some of which are against the imposition of VAT on domestic fuel and some of which are in favour of the measure."

It does not specify which are in favour. The groups are right to express concern about the impact on poorer pensioners and the less well-off, but the letter does not mention the environmental advantages to be gained. I should expect organisations such as Age Concern, the Child Poverty Action Group and the Royal Association for Disability and Rehabilitation to worry about pensioners and the less well-off, but the environmental organisations did not offer strong support.

In a joint letter to The Times on 27 March, in which the organisations are semi-submerged, they state :

"The decision to impose VAT on domestic fuel has led to considerable public debate and concern regarding fuel poverty. Along with increased transport fuel costs, higher energy costs will be an essential component of an integrated strategy aimed at paying a truer price for energy use (for example due to pollution damage) and encouraging greater energy efficiency and conservation."

Having said that, it was rather churlish to continue :

"The Budget measures barely scratch the surface of this issue". Are the organisations in favour of taking steps or not? They cannot welcome even those which they claim barely scratch the survace. Those organisations are right to express concern about the elderly and the less well-off, and all hon. Members share that concern, but we well remember what the Chancellor of the Exchequer said last month :

"No sensible person should condemn the tax before they have even seen our package of help for those least able to pay".

The Government have also made it absolutely clear that extra help will be given--through income-related benefits--to poorer pensioners and other people on low incomes to pay higher fuel bills as soon as they arrive. This help will be additional to the automatic increase in pensions to reflect the impact of an increase in fuel bills on the RPI. We shall look forward to hearing the details shortly after the Budget.

I enjoyed the Chancellor's speech this afternoon. As it continued, I saw something that I had also observed in my early days in the House in the mid -1980s when the economy was growing strongly : members of the Opposition Front Bench fell silent. They were gobsmacked by the nasty feeling that the political situation was slipping away. After only a few months, our right hon. and learned Friend the Chancellor has shown that he is master of his new brief, whereas the hon. Member for Dunfermline, East does not have a brief, let alone a shadow Budget, to parade in this debate on a subject chosen by the Opposition.

I found my right hon. and learned Friend's candour about the events of last autumn, and since, in relation to the

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exchange rate mechanism and economic and monetary union most refreshing. Yes, in an ideal world, there certainly should be convergence of the European economies. That would be good, but economic policy should be set for Britain's interest and, to that end, we need to retain a sound British currency and a sound British economic policy. To achieve those, we need a central bank the Bank of England--under the control of a Chancellor of the Exchequer. It is a cop-out to hand monetary policy to uncontrolled bankers, although, were we to have a Labour Government, it would be an improvement. However, Britain expects a Conservative Government to run a sound monetary policy in conjunction with responsible fiscal and other economic policies. We cannot have the luxury of passing the buck. I should like to make a Budget plea on the issue of late payment, which was raised by my hon. Friend the Member for Eastleigh (Mr. Milligan). Like other hon. Members, I have companies in my constituency which have carried out their contracts properly, largely in the construction and contracting business, only to have payment delayed to the point where they have collapsed. It is an outrageous state of affairs, and it is high time something was done to ensure that such companies are paid on time and without prevarication by smart alec treasurers in major companies.

I have been encouraged by today's debate, and I look forward to the recovery broadening and strengthening.

8.47 pm

Mr. William Ross (Londonderry, East) : I am sure that the House has listened with considerable interest to the speech of the hon. Member for Gravesham (Mr. Arnold). Like other hon. Members, I should like to venture after him into the subject of value added tax on domestic fuel. It is a large topic and we have not yet discussed the insulation of existing dwellings and why and how we should upgrade the standard of those dwellings and those yet to be built. That is where the real savings in fuel and improvements in efficiency can be made but no one has yet thought it worth while to mention that aspect of the problem. However, it is too large an issue for what remains of this debate.

The debate was supposed to centre on economic conditions and I shall, in the main, speak about them, although I confess that the hon. Member for Newry and Armagh (Mr. Mallon) has also sparked other thoughts in my mind, and I shall return to them if I have time. The Gracious Speech informed us that the intention in the coming year is to reduce public expenditure as a percentage of GDP, an interesting observation as it is currently down to what it was 14 or 15 years ago, to move back towards a balanced budget-- there is certainly some moving to be done there--to keep permanently low inflation, and to increase tax on income.

The Budget will no doubt start those processes next week, and I believe that the road towards their realisation will be financially painful for the taxpayer ; it cannot be otherwise. The exact means by which the revenue- expenditure gap, now so large, will be closed is still a matter for conjecture, and will remain so until the Chancellor of the Exchequer finishes his speech next week. First, I shall glance quickly at the consequences of the change in timing caused by the amalgamation of the autumn statement with the Budget. That matter was explored and widely welcomed on both sides of the House when it was first announced, and in the spring Budget

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debate. However, as always, time and experience have brought to light consequences not foreseen by politicians. Those consequences may have been foreseen by Treasury officials, who perhaps do not think about political implications, but politicians--not least those on the Front Bench--should think about them. I must assume that politicians did not foresee the political implications, because nobody thought it worth while to mention them.

First, it has been put to me that the general unwillingness of the population to go out and spend money in the high street over the past two or three months is partially due to the change in timing. People looking forward to a Budget in fairly stringent financial times have in their hearts and minds a fear of the unknown. Such fear is a powerful factor influencing human behaviour. People wonder what they will have left when the tax increases are announced.

Until that unknown is resolved, which cannot happen until next week, people are unwilling to spend their money. They have held tight to it, and high street spending over the past month or two has slowed down and even dropped. Whether cash will be released when the Chancellor has finished his Budget speech has yet to be decided. I believe that, however good or bad folk may consider the Budget to be, they will still spend a certain amount of money for Christmas, so traders may yet get all the money back ; it may simply have been dammed up.

The second and more serious consequence for any Prime Minister, whatever party may form the Government of the day, is that in future we shall be locked into having general elections in spring or early summer. I have already referred to the reason for that--the fear of the unknown. The impending Budget will make it difficult for any Prime Minister to choose an autumn election unless circumstances are extremely favourable, which rarely happens. The Government would be open to attack on every side. The Opposition would attack, and scaremongering and fears would be fed by comments from every side. No sensible Prime Minister would be willing to go for an election in October, which in the past has been one of the favourite times. The election could not be held after the Budget, either. Who wants a snowman's election? We had one many years ago in Northern Ireland, and we do not especially want to be out electioneering in December, January or February again. In future, elections will take place in March, April and May ; that will be the sensible time. However, it will also be far enough away from the Budget for any good to have been dissipated, and close enough to the next one to allow the scaremongering to start again. So, politically, the decision on timing may not have been the happiest.

During the coming year, we shall see the 1 per cent. increase in national insurance contributions. In effect, that is a 1 per cent. increase in income tax, and it is only a forerunner of what will have to be done to national insurance contributions over the next few years. The aged population is steadily increasing, and that trend will continue for many years. The change in the balance of the population between age cohorts-- between those who are working and those who have stopped working--will have profound consequences which it will not be easy to resolve.

One sees all sorts of straws in the wind in the financial press about changes in the funding of pensions. Any such development will require a great change in the way in which people prepare for their old age, and that will have

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to be a generational change ; it cannot come about quickly or easily. There is no quick fix, and the sooner the facts are faced and the necessary effort made to educate the public, the better it will be for all of us. The problem will not go away.

The finance required to support the number of people older than the normal working age will represent a large element of our national income in future. I put it in those terms because I do not think that it matters much whether the necessary sums are provided through a system of state pensions or through private schemes. In the end, that money will have to be provided by the working population at the time. Unlike the Japanese, we have not managed to play an immense part in industry overseas to help pay for our pensions.

That is only one obstacle which has to be overcome if the Government are really to reduce public expenditure as a percentage of GDP, not to mention their commitment to return to a balanced budget. Given the present £50 billion deficit, cuts in the growth of public expenditure are certain. I must say in passing that it seems better to me for a Government to find their expenditure overshooting than to be accused of having a cut a year or two down the road, but whether they would be prepared to put up with the temporary problems created by an overshoot is another matter.

Tax increases next week are certain. Even if we do the best that can be done both now and in the longer term, the best hope of meeting the Government's present commitments and those that will face any future Government must lie in faster economic growth and increasing employment. As has been said time and again, that is the best way of getting rid of a large part of social expenditure.

This week's cut in interest rates was belated and, I believe, too small-- perhaps the Chancellor is saving something for next week. Much more is needed--at least another 1 per cent., to bring the real interest rate down to continental levels, will be necessary at the beginning of next week. When I read that the Chancellor was saying that he now meant to leave such decisions to be made by the Bank of England, I was horrified. I was certain that he had painted himself into a corner, and that he would soon find himself not so much painted into that corner as entombed in it. However, sure enough, the paint has dried a little and today I noted the Chancellor tip-toeing gently away from Bank decisions and asserting once more that he was the one making the decision. That was not quite what we read in the press, and no doubt it will be made clear to us later which account was correct.

The reality is that the Chancellor and the Government are elected to a position to take decisions by themselves in the best interests of the country, as they perceive them at any particular time. Whenever the buck arrives on their desk, they should deal with it. Given the Chancellor's behaviour in his previous incarnations, I always believed that he was a man who was prepared to stand up and take it on the chin, and to make the necessary decisions. It troubles me that if the remarks attributed to him earlier this week are correct, the only thing that can be downstream is a European central bank--which would find much less favour on this Bench than on most, not least because the Chancellor's words earlier today indicated that German decisions in respect of the exchange rate mechanism reflected Germany's interests rather than those

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of any other country. That is evident to those of us who take a sceptical view of a European central bank in any event.

The Government must create the conditions that will spawn a high-income, high-productivity economy, which in turn implies a considerable increase in our manufacturing capacity. We have not replaced the capacity lost in the early 1980s, and priority must be given to investment in restoring that capacity and to exports--not least those outside the EC, where we seem to be doing rather better than with exports within it. We should build on that success and not become too dependent on Europe, but look to the wider world and make full use of the sea lanes that are open to us.

The Government might make a start by considering the hundreds, perhaps thousands of aging ships around the world and reviewing the recommendations for building new ships made by those in the shipping industry, for that would spawn an enormous amount of engineering work far beyond the confines of any individual shipyar many of the products used in that industry are made in France, Germany or elsewhere and imported into this country-- products that we used to make ourselves, and which could be made here again, given some encouragement in the proper places.

Others will have their own ideas, and the Government should be generous enough to acknowledge that right hon. and hon. Members on this side of the House also want a prosperous and happy United Kingdom as we rush towards the end of this turbulent century. That returns me to my earlier remarks about the speech of the hon. Member for Newry and Armagh, who took considerable credit for his party's willingness to talk to Sinn Fein--which as far as anyone on these Benches is concerned is to talk to the IRA : if there is a thread between them, it is well nigh an invisible thread. The hon. Gentleman went on to say that we on this Bench should talk to the Protestant paramilitaries. It is not all that long since spokesmen for the hon. Gentleman's party were wrongly accusing us--both in the House and outside it--of talking to the Protestant paramilitaries, and condemning us for doing so. The hon. Gentleman's party is now only too willing to urge us down a road that it once condemned because its members have talked to a group of the most murderous thugs in the western world. The House would do well to keep in mind the underlying reason for the urgings of the hon. Member for Newry and Armagh.

The hon. Gentleman also drew attention to the situation in Cyprus, and said that a British Minister stated recently that there should be one Government for Cyprus. The hon. Gentleman forgot to mention that so long as this nation was the protective power in Cyprus the situation which now prevails in that country did not exist. It was only when those who wanted union with Greece murdered our soldiers and fought us tooth and nail, so that the Greeks could take over the whole island, that the present situation was spawned and bore its evil fruit. That is an exact analogy of the situation in Ulster. That lesson should be learnt not only here but farther afield.

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The hon. Member for Newry and Armagh condemned my right hon. Friend the Member for Lagan Valley (Mr. Molyneaux) for his remarks the other day, when he drew attention to the unease that has spread to what might be described as the middle class in Northern Ireland. He did not seem to think that the middle class was affected. My right hon. Friend the Member for Lagan Valley may have been wrong, but my experience suggests that his remarks were accurate.

After yesterday, we can say one thing with certainty : there are people in Northern Ireland who are uneasy. Their attempt to import a large cargo of firearms is a direct reflection of that. It should concern us all. It concerns me and those whom I represent that such a thing should have happened. As the hon. Member for Belfast, East (Mr. Robinson) said, it was a preparation for war. Why would people take such action if they were not afraid of their long-term position in this nation ?

The hon. Member for Newry and Armagh said that he was speaking from a nationalist position. I and those who sit with me also speak from a nationalist position. We speak from the position of the British nation resident in Ulster. We are intensely proud of our membership of that nation. We are not prepared to give it up or to have it undermined. We are not prepared to accept a system of governance for our Province that will be used to undermine our place in this nation and take us into a nation and a society that we and our fathers have detested and in which we will have no part. That view should be made clearly and bluntly in case anyone thinks that our resolution is weakening.

We are British and we intend to remain so. That is the position of the Unionist People. They have shown what they believe over many years and will go on showing it. They will continue to elect Members such as myself and those who sit with me to represent their views in this House.

9.7 pm

Mrs. Margaret Beckett (Derby, South) : The Government's programme, as embodied in the Queen's Speech, was rightly described by my right hon. and learned Friend the Leader of the Opposition as thin. Tonight, after six days of debate, we know clearly why. The real debate on the real agenda is taking place elsewhere, behind closed doors, away from the public gaze. That debate is about whether to get rid of state pensions, how to tax us even further by stealth and how to break up the national health service.

The purpose of the Queen's Speech is to give the Government an opportunity to address the state of the country, to set goals and put forward proposals on the role that Government can play in meeting those goals. The purpose of this Queen's Speech has been to conceal those goals and to fob us off with rhetoric, sound bites and scapegoats.

Instead, the nation awaits, with some trepidation, the real Conservative programme that may begin to emerge in next week's Budget. It will be set, of course, against the background of the ticking time bomb left by the former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont). That time bomb is made up of the biggest tax hike in British history and is brought to us by a Government who fought an election promising no new taxes, no tax increases, no extension of VAT, no increase

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in national insurance and no change to mortgage tax relief. We were promised cuts in income tax "year on year", to quote the Prime Minister, and no cuts in public expenditure.

The Government have been more economical with the truth than they have been with our public finances. Furthermore, they fiddle the figures. The figure that they gave for public borrowing before the general election was £20 billion adrift of the post-election reality, a reality of which they must have been aware.

That borrowing--£50 billion of it--is not to fund investment in Britain's future ; it is to pay off the cost of the Government's incompetence. Over and over again, Opposition Members warned the country of just these dangers.

But what about Conservative Members ? How many of them voted for tax cuts before the last election ; how many of them will vote for tax increases now ? How many of them warned of VAT on energy before the election ? How many will vote for VAT on energy now ? How many of them warned of increases in national insurance before the election ; how many will vote for such increases now ? How many Conservatives warned of cuts in mortgage interest relief ?

I am waiting for volunteers from the Conservative Benches--I will give way readily to any Conservative who wants to intervene. [Interruption.] Here comes a volunteer now. Does the hon. Member for Gravesham (Mr. Arnold) want to tell us that he warned his constituents of cuts in mortgage interest relief before the election ? But will he vote for cuts in it now ?

Did any Conservative Member warn of tax increases through freezing allowances--because they will all vote for that today ? How many of them, if any, warned the British people that they would be stung to the tune of £8.50 a week if they voted Tory ? How many of them will vote for tax increases of £8.50 a week ?

Earlier today, the Chancellor accused my hon. Friend the Member for Dunfermline, East (Mr. Brown) of searching for material in what he called the most unlikely places, by which he meant the election addresses of Conservative party candidates--a remark more candid than flattering. Every Conservative Member won his seat on a false prospectus, and they know it-- and so do the British people. To give him his due, the Foreign Secretary seems a little shamefaced about this false prospectus. In the debate on Friday he said :

"Words come back to haunt us if we cannot live up to the promise that they contain. We must be able to deliver what we undertake and not to undertake what we cannot deliver."--[ Official Report , 19 November 1993 ; Vol. 233, c. 114.]

I cannot believe that the right hon. Gentleman said that. I can believe that it is what he really thinks, but if so, why is he still in the Government ?

By contrast, a far more authentic note is struck by the Chancellor's cheerful shamelessness. His reaction to the charge that the Government were elected on a false prospectus is as different from the Foreign Secretary's as it is revealing. Today, the Chancellor said that the Government gave no commitment whatsoever not to increase taxation. I could barely believe that he said that, and if I had not heard it with my own ears I would find it extremely difficult to believe.

I remind the Chancellor of what the Government said :

"We will not have to increase taxes. I cannot see any circumstances in which that will be necessary".

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