House of Commons Hansard Debates for 2 Dec 1993

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assemblers or even hill farmers, who are no longer able to earn a decent income, if the Government cannot provide a minimum level of support to ensure a decent standard of living?

Even housing has been attacked in the Budget. In Wales, where there is a desperate shortage of housing to rent in rural areas, Tai Cymru--Housing for Wales--is being given less money to build. What on earth can be the justification for that?

In the Budget, we wanted to hear a strategy, not for the Conservative party or to call off the wreckers on the Tory Back Benches, but for the country for the years to come. If we had seen a real strategy for employment, our happiness would have been far greater than our regret at a Government success which might have deprived us of the opportunity of further by- election and election successes. The Liberal Democrats thought that the Government might have learned the lessons of their by-election defeats and the marvellous victories of my hon. Friends the Members for Newbury (Mr. Rendel) and for Christchurch (Mrs. Maddock). We would have willingly said to the Government "Well done" if they had produced a strategy that would have enabled unemployed and poor people to look to the future with greater confidence. Regrettably, they did not do so. In due course, the Chancellor will be judged on results and not on rhetoric.

7.39 pm

Mr. Roy Thomason (Bromsgrove) : I join others on the Conservative Benches in congratulating the Chancellor on his excellent Budget. I shall not repeat the words of praise that have emanated from others, but entirely support them.

The Chancellor was seeking to achieve twin targets of low inflation and growth. I listened with interest to the comments of the hon. Member for Kingston upon Hull, East (Mr. Prescott). As I understand his argument, he wanted to reduce unemployment but did not take too kindly to growth, and he did not accept that the Budget would lead to growth. I do not understand how he expects unemployment to be reduced other than by virtue of growth in the economy.

I listened to the hon. Gentleman attack the rising share prices in the City. He seemed to think that the confidence of City investors in Britain and from abroad showed that there was something wrong with the economy, instead of being, as it is, a declaration of support. I also listened to the hon. and learned Member for Montgomery (Mr. Carlile) who followed the traditional course of Liberal Democrat spokesmen by being a manic depressive. That party gets incredibly excited for short periods, then goes into a deep decline. Today was a time of such decline. We heard doom and gloom, we were told that interest rates would rise substantially thus depriving people of the advantage of the new investments that they could make.

We were also told that the Government should not eat into contingency reserves. The whole point of having contingency reserves is to have money available to support public services at a time of high inflation, when it is necessary for Government to divert resources because of emergencies. When we have stability in the economy, there is no need for such high reserves.

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If the hon. and learned Member for Montgomery had thought about the targets of the Budget and about the success on which it was building, he would have appreciated that my right hon. and learned Friend the Chancellor was correct to reduce the contingency reserve. But doom and gloom will not allow that.

The hon. and learned Member complained about reductions in house building. He should have told the House that the Government have pledged that the Housing Corporation will build 20,000 more houses than planned. As a result of lower prices, we are creating more house building ; that is what he should have told us. But that is not good enough for hon. Members on the doom and gloom Benches.

I congratulate my right hon. Friend the Secretary of State for the Environment on his allocation of local government funds today, pursuant to the announcement in the Budget. He has said that there is to be more money available for local government. Although, clearly, there will be some pressure on general levels of council tax, my right hon. Friend has acknowledged in the distribution of grant the needs of particular areas, especially those with growth problems and on the urban fringes, of which my own authority is one.

I am delighted that Bromsgrove will be allowed to spend about £1 million more than it did last year, and that it will receive that same amount in extra grant, so that the council tax in my constituency can remain broadly the same, if the local authority chooses to spend at its new increased standard spending assessment level. That is welcome, and it is an acknowledgment of the needs of individuals and areas which is typical of this Government. There have been complaints from local government that the level of increase is inadequate. Those who criticise fail to appreciate that 70 per cent. of local government expenditure is based on wages and salaries. It is for local government, as it has done on occasions in the past, to ensure that it gets maximum value for money and that it limits pay rises to a level which can be afforded by the nation as a whole. I see no reason why local government should not contain its wage expenses.

I pay tribute to the work of much of local government in delivering value for money ; that drive must continue. We must look for extensions in competitive tendering and for more productivity in local government. Today's Audit Commission report points to fraud running at £25 million a year in local government. That is clearly one area in which action must be taken, and I hope that local government will note the Audit Commission's comments in seeking to deal with the problem.

I now turn to business investment. I welcome the help that my right hon. and learned Friend the Chancellor has given industry by creating a low-tax economy and by giving assistance to the self-employed in VAT limits

Mr. Prescott : A low-tax economy?

Mr. Thomason : That comment comes ill from an hon. Member in a party that has consistently committed itself to increasing the level of taxation for business and for individuals.

Ms Eagle : Will the hon. Gentleman admit that his Government's Budget figures demonstrate that taxation collected this year, as a proportion of gross domestic product, is 34.5 per cent., and that it will go up by 1998, on the Government's own figures, to 38.5 per cent.? When

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the Labour Government left office, the figure was 34.25 per cent. The Tory Government are a Government of high taxation, and their claims of low taxation have been exposed for the scam they are.

Mr. Thomason : I take note of the fact that, under the terms announced by my right hon. and learned Friend, the proportion of public expenditure will be reduced from 45 per cent. to 41.5 per cent. We shall have less government and not more government. The Labour party consistently argues for more and more and more public expenditure, and for more taxation.

There is a need to increase productivity, and much has been achieved to date by British industry. Management has been transformed in the past 14 years ; much was done in the Thatcher years. We now have industry that is competitive. We have a work force who identify with the objectives of the employer in ensuring common success, not just for the shareholder and the manager, but for the whole work force. That transformation has been achieved on the back of a series of legislative proposals, and will be continued in the spirit of the Budget.

We also see delivered in the Budget an opportunity to improve the skills of the work force. There is new training for apprenticeships, and there is education investment. Better standards will be attained so that the new generation will be fit for the workplace. However, in the international league, Britain's productivity levels still lag behind those of some countries.

We need high growth and high investment. The two go together, which the hon. Member for Kingston upon Hull, East has difficulty in understanding. He complained about being likened to prehistoric animals. When I heard some of his comments, I understood the relevance of that criticism. High growth and high investment, running together, lead to improvements in productivity. We need to ensure that there are adequate margins to allow for investment. The call I hear again and again from British industry is that it wants to invest more so that it can then achieve a level of productivity second to none.

We have a problem with short-termism, as even Opposition Members may agree. I hope that future Chancellors will have the opportunity to address that problem as the economy moves forward. We need to ensure that pension funds do not look just for immediate, short-term gains. We want the banks to be more flexible. We want less constraint on venture funds. Against that, we need to ensure that London maintains its position as a leading international financial centre, and we should not do anything that interferes overtly with that. Short-termism leads to the search for a quick return rather than to long-term planning, and there is not sufficient incentive for plant investment. We sometimes invest in the wrong sort of business asset--in land rather than in plant. A pressure that is especially important for smaller businesses is the need for high capital repayment on loans which can hinder their cash flow.

I welcome the steps that the Chancellor has taken to deal with some of those problems, but I hope that he will go further in the years ahead. I hope that he will look critically at opportunities, when he can afford them, for capital allowances to be given. I hope that he will consider whether it would be appropriate for United Kingdom pension funds to bear tax on short-term gains. I wonder

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whether he will consider the liquidity requirements of banks, which might encourage them to look at equity investments and longer-term loans.

Above all, what is needed for a long-term investment strategy for British industry is stability. The Budget is an important step in producing that stability that industry requires. Entrepreneurs need encouragement. Family businesses want equity partners. Business starters require long-term help and industry must have new plant to boost productivity. We are on the road to economic success, and we need to ensure that we achieve it through long- term investment. 7.50 pm

Ms Angela Eagle (Wallasey) : I listened carefully to the speech of the hon. Member for Bromsgrove (Mr. Thomason). He must be one of the few people to have visited Eurodisney, as he seems to have spent all his life in fantasyland. I do not recognise the society that he described.

I noted the lack of response on the prickly issue of tax rises when I questioned him on the overall tax burden. It is an untypical occasion in that it is our first ever unified Budget. Unfortunately, it is leading to a depressingly familiar mixture of wrongheaded ideological economic bigotry from the Government, and cynicism that is so glaring that only the British Conservative party seems to be capable of it.

The Budget is also revealing because Budgets are a time for choice. They reveal the Conservative philosophy behind what they do, their views on society, for which we shall soon call them to account in the run-up to the next election. The Budget is cynical because of the utter betrayal of all the Conservative party's election promises, none more so than on taxes. That is what this Budget represents. We must go back to the Budget before the last general election in 1992 and see how the Conservative party then presented the economic state of the nation. First, there was a tax-cutting Budget. When we look at the Red Book from that time, we find that the deplorable state of the economy was either conveniently not noticed or wilfully covered up. I shall leave it to individuals to decide who caused the mistakes.

The £50 billion deficit on the PSBR, with which we are so concerned at this time, was absent from the figures and was much lower than those in the Red Book at that time. It was only after the general election that the small and conveniently underestimated deficit on the PSBR suddenly ballooned to £50 billion and became the centrepiece of the strategy for the two subsequent Budgets that we have had this year in the aftermath of the general election. We have a Chancellor who boasts about cutting the PSBR figure placed before the electorate in the Red Book by no less than £8 billion. That is £8 billion fewer for public services, schools, hospitals, investment in our crumbling infrastructure, welfare protection, transport, and so on. In the Budget, 3 per cent. of GDP was taken out of the economy. By any stretch of the imagination, that is a massively deflationary package.

The Howe Budget in 1981, which caused such a catastrophic depression, was openly described as a deflationary Budget for taking a mere £1.8 billion of expenditure out of the economy. Taken with its

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predecessor in March, there is no description for the Budget other than massively deflationary, and we must be worried about that. The two Budgets must be taken together. Only then can one see the colossal switch in Government expenditure and values facing us now. It is a huge pincer movement. There has been a £23 billion overall increase in taxation. Who would have believed that from looking at the Conservative party election manifesto?

As I tried to explain to the hon. Member for Bromsgrove, the GDP share taken in taxes, based on the Government's figures, is forecast to go up from its present 34.25 per cent. to 38.5 per cent. by 1998. I must point out once more for the record that, in 1979, when the last Labour Government left office, the share of GDP taken in taxes--the overall tax level in the economy--was 34.75 per cent. Income taxes are to be raised, albeit surreptitiously, by £5.2 billion, through the freezing of allowances, changes to the married couple's allowance and changes in national insurance contributions, all of which are the opposite of the pledges that were given during 1992 and will add the equivalent of 3p to basic income tax rates. The Conservative Government do not raise income tax rates directly--they do not have the guts or the courage to do that. They raise them surreptitiously and try to claim that tax rises are not going on. But the facts are there. When people look at the deductions from their pay packets from next April, and as the tax increases begin to bite in the following years, they will understand, more than the Government believe, precisely what is involved in the Budget package.

It has been estimated that we have also taken back with the massive rises in taxes almost all the tax giveaways that were such a feature of Conservative Governments in the 1980s. But they have not been taken back from the people who received them in the first place. As I pointed out, almost a third of the money given away in tax increases in the 1980s--some £9 billion--went to the top 1 per cent., while only £4.5 billion went to the bottom 50 per cent.

That is why in the past 14 years of Conservative government there has been a reversal in income distribution, so that the difference between rich and poor, and the number of people who are now poor, is back to the level it was when General Booth first invented policy statistics and began to measure them in 1886. That is a deplorable record of which the Government should be ashamed.

As well as massive tax rises, we are seeing swingeing cuts in the welfare state. That is another way in which the Chancellor is trying to balance the books, which are so unbalanced by the Government's economic mismanagement. We have heard much in the debate about changes in the benefit system and the way that it will affect some of the worst-off people. That very much reflects the values of the Conservative Government : do not take back the massive tax giveaways that were given to those who are already rich, but instead tax those on invalidity benefit, and introduce VAT on fuel so that some of the poorest people in society can be taxed to pay for the economic mismanagement ; but whatever one does, do not tax those who can afford to pay it.

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We have heard announced in the Budget a vicious three-year squeeze on the public sector, which involves public sector pay and provision. I seriously doubt whether those spending targets can be kept. If they are kept, as a result of decisions taken in the Budget we shall have a public sector that is increasingly dilapidated and unable to replace essential goods, services and infrastructures.

We must also remember that the public sector has been grossly neglected over the past 14 years. It is already in a weakened state. The fairness of introducing a public sector pay freeze and expecting it to last for three years, on top of the annual freeze on the 1.5 per cent. increase for those who work in the public sector, beggars belief. It will be extremely difficult for the Government to make their pay policy stick.

Mr. Clifton-Brown : The hon. Lady argues that the Budget is deflationary. Therefore, I can only assume that she wishes to increase public expenditure. If that is the case, which of the many taxes aired by the Labour party would she increase?

Ms Eagle : I shall come to the deficit shortly and explain what I believe should be the principles for dealing with it. I hope that the hon. Gentleman will wait until I get to that part of my speech. None of the massive increases in taxes and vicious cuts in public spending was mentioned in the Conservative party manifesto. The manifesto claimed that the Conservative party was the party of low taxation ; a claim that has been exposed for the cynical farce that it is. The Conservative party boasted about increasing public expenditure, yet as soon as the Conservatives have their greedy hands on the reins of power, they do the opposite.

The Prime Minister's promises--they have been much quoted in the House, so I will not repeat them--have been exposed for the cynical sham that they are. Soothing pre-election noises about the welfare state have been replaced with fundamentalist new brutalism, which was rampant at the Tory party conference. It is fairly clear from looking at the position of the Conservative party at the moment that the right of the party is on the rampage, and it is led by those in the Cabinet whom the Prime Minister one accused of being of doubtful parentage. They are beginning to get their way. The lunatics have taken over the asylum and they are in the driving seat. The Prime Minister is either with them and agrees with them, or he is too weak to stop them. In the next few months, we shall be able to judge which of those conjectures is true.

There is nothing new about the Conservatives' ability to play fast and loose with their election pledges. At the last general election, there was a famous and effective Conservative party smear about Labour's so-called tax plans. Hon. Members will remember all those posters saying things like "Labour's tax bombshell" on all those free poster sites given by the tobacco advertisers so that the Tories could put their propaganda around the country. The Conservatives claimed that, under Labour, a car worker earning £12,000 a year would be £359 a year worse off and an electrician earning £30,500 would be £563 worse off. As a result of the Budget, by 1996, a car worker will be £520 worse off and an electrician £570 worse off. I hope that the electorate will bear those illustrative figures in mind when they next consider which way to vote at a general election. The electorate will never trust the Conservative party again.

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The willingness to deceive the electorate is nothing new for the Tories. The Prime Minister and his Cabinet colleagues are just following a discredited tradition that has existed for a long time in the Tory party. Recently, I was shuffling through a book shop when I came across a book entitled "My Style of Government : The Thatcher Years" by Nicholas Ridley. It was the late Lord Ridley's memoirs, which I got for £2.99 off a discount rack, presumably because the market was working. I want to quote a couple of his pearls of wisdom. First, writing about the run-up to the 1979 election, he said : "They"--

the British electorate--

"were not invited to switch to a Government with clearly spelt out superior alternative policies. Margaret Thatcher was careful not to articulate them too clearly in public for two very good reasons. First, she was not at all assured of her colleagues' support for what she wanted to do. Second, it is never wise for an opposition leader to expose his or her detailed policies to the possibility of ruthless dismemberment by the Government."

Later, he said :

"Thus, the full nature of Thatcherism was not known to the electorate in 1979. Nor was it fully understood within the Parliamentary Party."

The Prime Minister has carried on that tradition and taken it further. Rather than hiding what he aims to do, he has said that he will do the opposite. That is progress in the Conservative party. There is general agreement that the £50 billion deficit in the PSBR must be tackled, but there is no Government analysis of where the deficit came from. It is almost as if it just descended from above and landed on the Government and they now have to think of a way to deal with it. In reality, it is here because of the failure of their farcically named economic miracle. It is descended directly from the failures of their 14 years in power.

There is also £100 billion worth of North sea oil revenue to be taken into consideration. They have given it away in tax cuts for their rich friends, leaving British industry unmodernised and in a weakened state. The OECD recently said that two thirds of the public sector borrowing requirement is cyclical--it is unemployment related. The figures show that £27 billion of the deficit goes on paying to keep people on the unemployment registers, where they are unproductive.

Typically for the Conservative Government, they have decided that if close to half their deficit is a result of unemployment, they should cut benefits. They attack the victims and the symptoms but never the causes. Given the structure of the deficit, a job strategy should have been at the heart of the Budget. Noticeably absent from this Budget, as it was from the March Budget, is any such strategy. Most of us would welcome the sprinkling of supply-side policies, but they are irrelevant given the size of the problem.

We have to cut the £27 billion cost of keeping people on the dole, not by cutting unemployment benefits but by creating jobs and getting people back to work. The fatal flaw in the job seeker's allowance--it is a revealing name for the benefit, which causes cynical, hollow laughs among unemployed people--is that it blames the victims of unemployment for their situation. It does nothing about demand in the economy and it almost blames people for being on the dole. On average, 22 people chase every vacancy. When the Secretary of State for Employment went into the job market after leaving university, there was a job for every person looking for one. The situation has since deteriorated

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markedly. Nobody would disagree with supply -side measures that make it easier for people to look for jobs, but behind the unwritten strategy is the assumption that jobs are there for them to take. Twenty-two people chasing every vacancy shows that the jobs are not there. Therefore, we must do something to stimulate demand. The Budget is predicated on several dubious assumptions. The first is that the rather modest growth rates that the Budget predicts will be unaffected by its deflationary aspects. After the Howe Budget, which was less deflationary than this, growth plummeted. This time, there is no credit boom to fuel economic recovery, as there is a mountain of debt caused by the deregulation of the financial institutions that the Government introduced in the early 1980s. Secondly, the Budget assumes that world trade will recover rapidly and grow, and possibly also that there will be a deal on the general agreement on tariffs and trade. Both those assumptions are dubious and not a predictable enough basis for an entire Budget strategy. Thirdly, the Budget assumes that the public sector squeeze will stick, but there will be real troubles with that, and rightly so. The Budget punishes victims and makes the wrong choices. It has the wrong economic and political philosophies behind it. We shall condemn it and vote against it for those reasons.

8.7 pm

Mr. David Lidington (Aylesbury) : I listened with care to the hon. Member for Wallasey (Ms Eagle). She thought that the public sector deficit was far too high, but she did not want to put up taxes or cut public expenditure. She glided gently over public borrowing. Whatever his critics would say about the late Lord Ridley, they would never accuse him of intellectual incoherence, and the hon. Lady and her hon. Friends might do well to learn the lesson of intellectual coherence from the life and politics of Lord Ridley, rather than taking up one or two of his tactical hints, which they seem to have done successfully over the past few weeks.

I wanted to begin my speech on a non-partisan note. One of the fruitful disciplines of having a unified Budget is that it provides an institutional discipline for Whitehall Departments to think carefully about priorities within the context of the Government's overall programme and to consider how the policies of each Department relate one to another. The example that I had in mind was transport. I was pleased that at the margins of the announcements of my right hon. and learned Friend the Chancellor was the decision to ring-fence money so that the crossrail project could proceed on its next stage. As my right hon. Friends know, I hope that that means that the Government are backing the project whole-heartedly and I look forward to the next stage and its eventual completion.

My right hon. and learned Friend the Chancellor announced measures that will affect transport policy. I welcome the decision to make it easier for the private sector to become involved in the planning and financing of infrastructure projects. That may have the beneficial side effect of making it more transparent to judge the cost and benefit of road schemes compared with rail schemes, which traditionally have been calculated using different analyses.

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I also welcome my right hon. and learned Friend's decisions on petrol duty and an experimental road-pricing scheme. Those decisions raise difficult questions. My hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) said that A roads or minor local roads might be swamped with traffic if a motorway toll charge were so high as to force traffic off that motorway. The road-pricing and petrol duty measures will reduce congestion and pollution, but they would have the inevitable effect of biting hardest on poorer drivers, the ones most likely to be forced off the road.

The Budget provides us with a very welcome opportunity to develop a transport policy that is in line with the Government's environmental objectives. I was glad that my right hon. and learned Friend, in announcing his measures for the financing of transport and taxes on transport, referred to the United Kingdom's international obligations to reduce emissions. I hope that the debate that has been initiated by the Budget statement will be fruitfully taken further, both in the House and in the country at large.

I am aware from the controversy over the proposed A418 in my constituency of the difficulty that policy makers inevitably face in reconciling the competing demands of economic growth, the need for good communications, including good road communications, and the need to maintain a civilised environment in towns and cities and in the countryside, the beauties of which people can continue to enjoy.

Mr. Peter Ainsworth (Surrey, East) : Given that we accept a degree of hypothecation in the road tolling proposals, does my hon. Friend agree that it would be helpful if the money raised by road tolls was not ploughed straight back into the motorway system but applied to transport infrastructure projects generally--with, of course, the assistance of the private sector?

I was interested in the fact that my hon. Friend the Member for Surrey, East (Mr. Ainsworth) raised the question of hypothecation, because my right hon. and learned Friend the Chancellor also referred to it in his announcement. Another unintended consequence of a unified Budget, from the Treasury's point of view, is that Ministers collectively will be bound in future to consider the Government's priorities, not only on spending but on what is the best means of raising the revenue with which to finance those expenditure priorities. I know that to speak in such a way is to challenge one of the most hallowed doctrines of Treasury theology, but I confess to being a fully paid-up member of the heretics and blasphemers tendency when it comes to that belief. I have already referred to the tension that inevitably exists between the priority to be given to economic growth and environmental needs.

Hon. Members have rightly spoken about the problem of unemployment. I welcome the Chancellor's Budget and agree with the plaudits given to my right hon. and learned Friend by Conservative Members by the business community and by observers in the media. When people look back on the Budget of autumn 1993, they will judge

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its effectiveness in terms of how far it was seen to promote the chances of more British men and women moving into productive employment in the medium term.

In my constituency, unemployment is still way below the national average-- for which my constituents and I are grateful--but it is still high by Aylesbury's historic experience. Although I welcome the fact that unemployment has fallen in recent months, it is still too high and needs to be further reduced.

I welcome the initiatives in the Budget to foster and develop businesses, particularly small businesses. If every small family business could be enabled to take on one additional employee, that would make an enormous dent in the national unemployment level. My right hon. and learned Friend's announcement about late payments and statutory audit requirements will be warmly greeted by business men and women in my constituency.

The tax changes to encourage investment and reinvestment in family enterprises are also welcome, particularly the tax concessions for investment in the proposed business link schemes announced by my right hon. Friend the President of the Board of Trade.

One lesson which we have learnt as a country during the past few years is that it is all well and good to encourage businesses to start up--it is healthy that we should do so--but a number of people go into business without equipping and training themselves for the difficulties and challenges that that will bring. The business link scheme promoted by the Department of Trade and Industry is an important way in which the Government will be able to focus support and advice on small businesses during the crucial early years and months of their development.

I hope that the Department of Trade and Industry will soon give approval to Thames Valley Enterprise's bid to set up business link offices in Aylesbury and in two other towns in the Thames Valley area.

I welcome the measures that have been announced to improve the quality of the British work force and the priority to be given in the Government's public spending plans to education and training and to the apprenticeship scheme announced by my right hon. Friend the Secretary of State for Employment. As that scheme develops, he will be able to draw on the good practices of the many Government, voluntary and business initiatives up and down the country, including the scheme run by the Aylesbury industrial training group, which is an active client of Thames Valley Enterprise.

Despite the predictable criticism from the Opposition, there is everything to applaud about the principle of the job seeker's agreement. It is surely common sense that when an unemployed person presents himself or herself at a jobcentre, he or she should not only sign on and obtain a list of potential job vacancies or employers to approach but discuss a plan, tailored to individual experience and expectations, which he or she will be able to follow in his or her search for work.

There are measures that can be taken to improve the effectiveness of the job seeker's agreement and to ensure that, when it is introduced, it will be positively welcomed by unemployed people. It is important to ensure that Employment Service staff are adequately trained in developing such agreements with their clients. I know that my right hon. Friend the Secretary of State, like every other Minister, has a finite kitty from which to draw, but I urge

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him to look again at the time that we allow to elapse before such measures as job clubs are available to those who are unemployed. Constituents of mine who have been unemployed for a long period tell me that they were at their most enthusiastic, determined and creative about finding new work in the weeks and months immediately after they were made redundant. By the time unemployed people qualify for extra help of the kind that we have understandably targeted on the long-term unemployed, much of that initial drive, commitment and self-confidence has dissipated. I hope that my right hon. Friend the Minister will consider whether there are ways of giving people some of that assistance at an earlier stage in their unemployment. Finally, I want to refer to the international scene. Despite what Opposition Members have said, the fact that the United Kingdom expects 2 per cent. growth at a time when our main continental markets are stuck deep in recession is something of which the Government and, more particularly, British industry, should be very proud. We should be looking not merely for a cyclical upturn in our main European markets but to long- term competitiveness in British industry and in industry throughout the European Community. We are talking about competing not just with Germany, America and France but with the fast-developing economies of the far east and, behind them, south Asia and Latin America.

Too often, the rise of the far east tiger economies is seen simply as a challenge to our way of life. That challenge certainly exists and increases the need for a flexible labour market and for an economy in Britain and Europe that fosters innovation and efficiency. The rise of Asian prosperity also presents a tremendous opportunity because it means that hundreds of millions of people in the world are now beginning to have the opportunity, for the first time ever, to buy consumer goods and services that people in western Europe have generally taken for granted for many years. It would be an act of madness for the European Community to connive at policies of protection that would cut us off from those millions of customers precisely at a time when we should be able to sell them the goods and services that we produce.

My right hon. Friend the Prime Minister referred in a celebrated recent article to some of the current preoccupations of the European Community as having all the quaintness and degree of efficacy of a tribal rain dance. The image that comes to my mind when I look at some of the goings-on in Brussels is one drawn from Galsworthy. It is of a group of elderly Forsyte aunts with a rather complacent view of past success and present wealth punctuated by the occasional querulous and disapproving comment about all those uncouth, self-made men in the new neighbourhood down the road who are rather getting ideas above their station. That is too often the reaction of EC civil servants and political leaders in some of our partners countries to the challenge and opportunity in the far east.

The Budget will be of great benefit to Britain's recovery from recession. Clearly, too, the continued prosperity of the British people does not rest alone on the Budget and the measures that will follow it. It rests perhaps above all else on the success of my right hon. Friends in fighting a battle of economic ideas both in the United Kingdom, against the forces of reaction on the Opposition Benches, and on a European scale--a battle for deregulation, for free markets and for free trade. I wish them well and I wish them every

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success in that task, for the prosperity of our nation and of the entire European continent depends crucially on their success. 8.34 pm

Ms Glenda Jackson (Hampstead and Highgate) : It is with some pleasure that I follow the hon. Member for Aylesbury (Mr. Lidington)--not because of the logical cohesion of his speech, but because of his disingenuousness in asking the Secretary of State for Employment to ensure that job seekers will welcome an agreement that will be imposed upon them, knowing that, if they refuse to sign it, they will not have their benefit reduced by six months but will receive no benefit at all.

As a Member who represents a London constituency, I awaited this year's Budget with some anticipation, not least--despite initial difficulties in obtaining a copy--because of the consultation document produced by the Secretary of State for the Environment earlier this month, entitled "London, Making the Best Better". I had read with interest how the Government would deal with crime in our capital, raise standards in education, improve housing and the transport system and, in the words of the Secretary of State,

"ensure a fair and open society for people of all backgrounds." It was therefore with some regret that I noted the difference between that document and the words uttered by the Chancellor of the Exchequer.

In my constituency--unlike that of the hon. Member for Aylesbury-- unemployment is at heights that have never before been recorded. In some parts of London, unemployment is above not only the national but the European average, with 22, 26 and, in some parts of London, as many as 37 job seekers pursuing the same job.

Earlier this afternoon, the Secretary of State for Employment stated that the whole purpose behind the job seeker's agreement was to ensure that the job seeker pursued a job with all possible effort. As we are now a full member of the European Community, that presumably means that British job seekers will be expected to seek jobs on the continent of Europe. I wish that I had had the opportunity to ask the Secretary of State whether the financial provision that would make that possible will be furnished even though unemployment benefit is to be reduced.

Getting to the continent--indeed, getting around our capital city and these islands--is becoming increasingly difficult if one depends on public transport. The Chancellor pledged that British Rail and London Transport investment would be maintained at levels substantially higher than in the 1980s.

I am sure that no hon. Member will need to be reminded of which Government were responsible for the scandalously low levels of investment to which the Chancellor referred ; nor that investment in our rail network is lower than it was in the 1970s, the 1960s or the 1950s ; nor of the response of London Underground to the Chancellor's announcement about their forthcoming levels of investment. London Underground stated :

"There is not a limitless seam of self improvements to be mined and only so much can be achieved with an aged system, where many assets are way beyond their design life."

Compare that with the words of the Secretary of State's glossy brochure :

"London is developing to meet the challenges of the next century. Next year, Parisians will be able to get to London in around three hours using the Channel Tunnel."

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What fantasy world is it that the Secretary of State is thinking of in which chic Parisians are whisked to and around a modern vibrant London on a modern state-of-the-art transport system?

Suppose that Parisians wished to visit London--and, following the kind and welcoming words that the Secretary of State for Social Security uttered at his party conference, what foreign national would not wish to visit this sceptred isle--what sight would greet them? Air that one can chew on, doorways that double as bedrooms and a transport system parts of which were designed not for the 21st century but in the 19th century.

Were Ministers out of the country last Thursday and Friday? Did not they witness or were not they told of the chaos which was caused when a fault in a 70-year-old cable--a cable laid before most of the Government were even born--shorted out and plunged half the underground system of our capital city into chaos and darkness? Following that incident, I contacted officials of the Northern line, which serves my constituency. The officials informed me that that line has cables of a similar age and condition across their network. The officials added that, earlier in the previous month, a train had derailed near Balham, when more than 1,000 yd of track disintegrated. They added that, due to a lack of resources, the modernisation of a line that first opened in the 1890s would have to be shelved. Today, the British Tourist Authority stated in the Evening Standard that investment in the Northern line--because of its link with the new Waterloo terminus--was vital for tourism in the capital. What has been the response of the Government to those derailments, power failures and continously shelved projects? The response has been to underfund London's transport budget in 1994-95 by £400 million.

How on earth can that be regarded as making the best better? Sixty per cent. of the signalling on Network SouthEast must be replaced within the next 10 years, and 2,000 miles of track must be renewed to avoid increased journey times. Over one quarter of the network's 6, 000 coaches need to be replaced by 2002.

What was the Chancellor's response to those requirements? He cut investment in the rail industry by £247 million. Yesterday, the Chancellor was referred to in a number of media broadcasts as "the magician". That is clearly because he has completed the feat of sawing in half Britain's railway investment. Unfortunately, this feat is no illusion, and the pieces do not come back together again. We heard a great deal yesterday about the burden that the nation is shouldering as a result of the public sector borrowing requirement. The Chancellor said that his overriding task was to place public finances on a sound footing. We heard nothing about the costs to the economy and to the Exchequer of allowing our transport system to decline to rack and ruin.

Perhaps, when the Minister winds up, he will outline how much revenue the City of London loses every year as a result of traffic congestion. Perhaps he would like to outline how much it would cost London Underground if all those who were trapped during last week's failure claimed compensation under the citizens charter.

Perhaps the Minister could estimate the attractiveness of the Central line to a foreign investor who is weighing up

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whether to sight his business in this country or in another European capital. Perhaps he could explain the environmental benefits of a road-building programme which will cost the taxpayer more than total expenditure on the railway industry, London Transport and the Civil Aviation Authority.

On Tuesday, the Chancellor claimed that any critic of the Government's car tax who claimed also to support the international agreement to curb carbon dioxide emissions would be sailing dangerously near to hypocrisy. I would respectfully suggest that any Chancellor who claims to support both public transport and the environment, and who then embarks on a £2 billion road programme, has sailed so far beyond hypocrisy as to be now watching it vanish below the horizon.

The brochure "Making the best better" is littered with the phrase, "What is going on?" Probably that is the only phrase that is applicable both to that document and to the Budget. What indeed is going on in relation to the Government's transport strategy and their policy, such as it is, towards unemployment? I think that hon. Members and the people of this country have a right to be told. 8.35 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : I am grateful to you, Mr. Deputy Speaker. I know that other hon. Members want to speak, so I will attempt to be brief. It is good to follow the erudite speech of the hon. Member for Hampstead and Highgate (Ms Jackson), but I suspect that in my remarks we shall part company. Any prudent Chancellor should set himself realistic objectives, and then expect to be judged by them. The present Chancellor set three key objectives--sustainable recovery, a climate for jobs and for growth, and low inflation. He said that the Budget would achive those, and would ensure sound public finances to secure a lasting recovery and rising living standards.

The Chancellor is to be congratulated on delivering a Budget that is capable of delivering all of those objectives. The previous Chancellor, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), left two important legacies. The first was the unified Budget, which combined spending and tax raising, and the second was the separation of revenue and capital expenditure. The first of those is important, because it has ensured that economic management is now more efficient.

My right hon. Friend the Chief Secretary to the Treasury is to be greatly congratulated on holding public expenditure at the level he has simply by tightening the use of the contingency reserve, which is normally available as a surplus to Departments at the end of each year. The second is important because for far too long this country has spent too much of its wealth on consumption and not enough on capital projects.

In that connection, I warmly welcome the maintenance of the capital programme at £22 billion over the next three years. Unlike the Labour party, our Chancellor decides what is prudent to spend and then decides how to raise the funds. Labour does exactly the opposite. It thinks what it might like to spend, and then decides which taxes to raise to pay for that.

I warmly welcome the fact that the PSBR will shrink as a proportion of GDP from 7.5 per cent. this year to almost zero by the end of the century. That will be a remarkable

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