House of Commons Hansard Debates for 7 Dec 1993

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Mr. Heseltine : My hon. Friend will be well aware of the recent White Paper of our right hon. Friend the Chancellor of the Duchy of Lancaster in which he made clear the Government's view that the £6 billion public sector research and development programme had to have a considerable pressure to look after the interests of the wealth-creating community. That is something that I very much welcome.

All the changes that I have listed come on top of the increase announced in the March Budget to the loan guarantee scheme. The number of loans guaranteed was about 40 per cent. higher in the first six months of 1993 than was forecast before the changes were announced, and the value in lending in that period, at £55 million, was higher than for the whole of 1992-93.

I can tell the House today that I have decided to increase my Department's budget for smaller businesses by £8 million. The House is familiar with our plans to bring together training and enterprise councils, chambers of commerce, local authorities, enterprise agencies, central Government Departments and private sector organisations in the business link organisation.

To enable the TECs to continue to play a key strategic role in organising the provision of business support services, I am pleased to announce that I have increased their budgets to nearly £33 million. The first business links have opened in Birmingham, Leicester and Congleton. My aim is a national network within two to three years. I am increasing start-up funding by £14 million. I intend to trial a new consultancy brokerage service from January for introduction nationwide early in 1995. That will open up to public access the considerable wealth of data and project management experience that has been accumulated on United Kingdom business consultants for the enterprise initiative consultancy scheme. Increased funding will ensure that consultancy support for small and medium-sized firms will continue beyond the life of the present consultancy scheme in the form of a flexible consultancy and diagnostic service. I shall be publishing a prospectus and guidelines for the service in January.

My Department will provide extra funding to business links to support the appointment of innovation and technology counsellors who will work with firms and help them to identify local, national and international sources of technical help. We also intend to restructure the design services that we provide to industry to bring them closer to companies. That package of new services will further enhance the business link movement, providing businesses with high-quality support tailored to their individual requirements. The House will know of the warm welcome for the Chancellor's announcement that my Department is producing a consultative document setting out options to address the problem of late payment--including legislation and a national standard.

We have heard the views of the hon. Member for Dunfermline, East (Mr. Brown), who has told us that this is not a Budget for business, not a Budget for industry and not a Budget for employment. A month ago the Labour party held a conference on

"Helping Small Businesses to Succeed".

The conference was further entitled "Into the Growth Corridor". Labour invited three organisations to set out their views--the CBI, the Forum of Private Business and the Federation of Small Businesses.

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Having heard the hon. Member for Dunfermline, East give his view on the relevance of the Budget for industry, it seemed to me that it would not be unreasonable to examine those self-same organisations' views on the Budget. After all, if they were good enough in the eyes of the Labour party to advise it on its entire strategy for small businesses, they ought to be able to form a reasonable judgment about a Budget. The CBI had this to say :

"The Budget should provide a sound basis for continued non-inflationary recovery".

The Federation of Small Businesses said :

"We could not have expected more".

The Forum of Small Businesses said :

"This Budget is a great encouragement to us all".

It is, indeed, a great encouragement to us all. So far from entering the "growth corridor", the Labour party is once again in the slow lane, overtaken by events and overwhelmed by the arguments. The hon. Member for Dunfermline, East set out his alternative approach in the Daily Mirror :

"I'd scrap VAT on fuel, go for jobs, stop tax cheats and invest to rebuild Britain."

That, he claims, is his economic strategy. I think that my right hon. and hon. Friends will prefer the words of the right hon. Member for Chesterfield (Mr. Benn) :

"I do not think that members of Labour's Front Bench would have even two ideas about what to do with the economy if they came to power a series of soundbites glued together and called an economic policy is not an economic policy."--[ Official Report, 20 May 1993 ; Vol. 225, c. 420.]

I never thought to hear myself say it, but the right hon. Member for Chesterfield was right. He is welcome in our Lobby tonight. I commend the Budget to the House.

4.12 pm

Mr. Robin Cook (Livingston) : Before turning to the Budget, let me echo the earlier satement of the President of the Board of Trade in relation to the importance of GATT. I entirely endorse the right hon. Gentleman's argument about the importance of ensuring that, over the next seven days, everything possible is done to meet the deadline. There should be no illusion that on this occasion a fresh deadline can be set. GATT is an issue of importance not only to Europe and to America but to the third world which requires access to their markets. If there is something offensive about the spectacle of the past 48 days, it is 100 nations gathered in Geneva while the two big blocs slog it out in Brussels without the participation of the third world. I very much hope that, if the United States chooses to make a sticking point of airbus, there will be no concessions from Europe that will put in jeopardy any part of the production of that project or detract from its importance.

The President of the Board of Trade has just opened the last day of the Budget debate. I must say that I preferred to today's reading of the brief the rather more lively speech that he made in our debate a fortnight ago, when he gave us one of his diverting impressions of a conference speech-- half Winter Gardens, half old-time music hall ; nothing at all to do with the running of Government. The high point of that act--because "act" is a more appropriate word than "speech"--was the tearing up of a socialist manifesto. I had hoped for a sequel today. He has disappointed me. After Tuesday's Budget, I should have thought the most

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appropriate highlight to conclude the Budget debate would have been tearing up the Conservative manifesto, but the Chancellor did that last Tuesday.

I heard the Chancellor being interviewed on Sunday. He was asked whether, by the end of the Parliament, income tax and other taxes would have gone up or down. He replied,

"I do not have a clue".

I congratulate the Chancellor on his candour and express my appreciation that he has served so long at the Treasury without allowing his forecast to be affected in any way by Treasury jargon. However, that is not what members of his party said at the last election when they were asked about tax.

When the Prime Minister was asked whether national insurance would go up he did not say,

"I do not have a clue."

He did not say what the President of the Board of Trade has just said--that they would reduce taxes as rapidly as was prudent to do so. He said,

"I have no plans to raise the level of national insurance". When he was asked whether he would extend the scope of VAT, he did not say,

"I do not have a clue."

He said,

"We have no plans and no need to extend the scope of VAT.". When, only a few days before polling day, he was asked whether public spending would go down if they were elected, he did not say, "I do not have a clue. Ask me after polling day."

He said,

"You can rule out any prospect of that.".

I find it strange that the Minister at the Department of Trade and Industry responsible for deregulation should have complained that sales of Tipp-Ex have been constrained by some local authorities cataloguing it as a dangerous fluid. Smith square must be ankle deep in Tipp-Ex by now, as the Conservatives blank out the promises that they made before the last election. The Red Book tries another tactic to blank out the DTI Budget ; it is not so much Tipp-Ex as heavy overprint.

At first glance, I was much impressed by the President's skills as a negotiator with his colleagues at the Treasury. The Budget of his Department over the previous Red Book shot up by £1 billion. Then I noticed footnote 4. Under the present Government, I have learnt that it always pays to read the footnotes. Footnote 4 tells me that the figures for his Department now include the nuclear levy collected by the electricity companies and paid direct to Nuclear Electric without passing through his bank account. Strip away that nuclear levy and we strip away the entire £1 billion increase.

In real terms, the spending on industry of the Department of Trade and Industry will not increase, but will fall over the next three years by 12 per cent. in real terms. I have to say frankly and generously to the President that I have not had time to adjust the calculations for the extra £16 million over five years that he has just announced for energy conservation, but they will not materially alter the figures that I have just given the House. That does not include the total elimination of support for public sector industries for which the President is the nominal sponsor, such as the Post Office. The Red Book sets a new profit target for the Post Office for 1994-95. That profit target is now three times larger than when it was first announced in 1991. Let us not pretend that the new profit target set by the

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Chancellor last Tuesday--it was not mentioned in the Budget speech, but it is in the Red Book--is the result of careful research on the business plan of the Post Office.

We rang up the Post Office on the day of the Budget when we saw the Red Book and asked about the increase in the profit target. At the other end of the line there was a silence followed by the reply, "I have a brief on the impact of the Budget on the Post Office, but it says nothing about an increase in the profit targets. I shall have to get back to you." It was Thursday before they got back to us. There can be only one conclusion : nobody at the Post Office knew about the increase until Tuesday's Budget. That increase reflects not the ability of the Post Office to pay an increased profit, but the need of the Chancellor for the extra cash from that industry. In considering the Budget let us leave aside that increased profit from the Post Office. We might as well leave it aside, because, obviously, the President has agreed to the demand for an increase in the profit level ; without an agreement he would not get a penny.

If we compare the President's budget with that of the other Departments on the same page in the Red Book, we find that next year, out of 18 Whitehall Departments, the Department of Trade and Industry will come in at 17th in the spending league. It is saved from bottom place in the Government's spending priorities only by the Department of National Heritage. Given the Government's propensity to close factories and to reopen them as museums of industrial archaeology, not even that placing may be safe.

There is a simple way to demonstrate the Government's relative priorities for industry. Fifteen years ago, for every £1 spent by the Government backing industry, 43p was spent supporting farmers. Next year, for every £1 spent backing industry, £2 will be spent to support farmers. That is a candid statement of the relative priorities of the Conservative party.

Mr. Heseltine : The hon. Gentleman totally ignores the very large increases in export credit guarantees. He totally ignores the fact that British Steel is now profitable in the private sector while it was loss making in the public sector.

Mr. Cook : I do not ignore the point about that industry in the private sector. The figures that I am quoting are about departmental ministerial spend and not about public corporations. Nor do I ignore the Export Credits Guarantee Department changes. If the President cares to consult the Red Book, he will discover that even after the changes in the ECGD, the Red Book sets a higher profit level for the whole of the ECGD. Even in the Budget, the Government propose to make more profit from export credit while Governments in the rest of Europe use export credit to support exports rather than to support their own finances.

The President has helpfully brought us to the point that the real competition is not with other Whitehall Departments, but with other countries in Europe. In that respect, the President finds himself at the bottom of the league again. The President provides less support per head to industry than any other European country. Italy provides three times as much while France and Holland provide twice as much. Germany and Spain provide half as much again.

Why do we provide the weakest support for industry ? Is it because we have the strongest industry ? Why is it that every one of the countries that I have mentioned runs a surplus in manufactured trade with us ? Every one of them

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has seen a large increase in manufacturing output during the lifetime of this Government. Every one of them has seen bigger growth in manufacturing investment over the same period.

We have the weakest industrial base, but it receives less help from our Government. If it is not going to receive any help from the President, what help will it receive from the Chancellor? What industry wanted from the Chancellor was help with investment. That was the single major preoccupation of the submissions made by industry to the Chancellor before his Budget. Those submissions were made by the Confederation of British Industry, the Engineering Employers Federation and the Machine Tool Technologies Association. They all urged the Chancellor to extend capital allowances to encourage investment. They all got the problem right.

The real reason why we should worry about the future of our industry is that we are not investing in that future. If we compare investment in Britain with the other advanced nations of the world, Britain comes in sixth out of the seven members of G7 and 23rd out of the 24 members of the Organisation for Economic Co-operation and Development. We can forget Japan where investment is double our level. On the latest figures, Britain is investing less than Turkey, Portugal and Ireland.

The Conservatives used to boast about an economic miracle. They are a little more coy about referring to it now. The illusion of that economic miracle was always very simple. Over the Conservatives' period in office, they have increased the proportion of the economy going into consumption by 5 per cent., mainly at the expense of investment which, over the same period, has decreased by 3 per cent. The objective of any economic strategy for Britain to recover must be to reverse the trend that the Conservatives have encouraged of people consuming now rather than investing for the future. That must be the test of a Budget.

Mr. Rod Richards (Clwyd, North-West) : In the light of what the hon. Gentleman has said, does he agree with the hon. Member for Caerphilly (Mr. Davies), who said last Wednesday that he was proud of the economic achievements of the last Labour Government?

Mr. Cook : The hon. Gentleman merely underlines my point. Manufacturing investment under the previous Labour Government was 10 per cent. higher in absolute terms and it was actually 50 per cent. higher than the proportion of GDP, and that in circumstances of great economic difficulty. If the Government had maintained the level of investment in manufacturing under the previous Labour Government, manufacturing capacity would now be 30 per cent. greater. That is the point that the hon. Gentleman can find as the best intervention to make in defence of the Government.

Mr. Richards : Will the hon. Gentleman give way?

Mr. Cook : No. The hon. Gentleman has had his chance.

On that test, reinforced by the hon. Gentleman's intervention, the Government get nil points for their Budget. There is nothing in the Budget to help industry to invest. Industry did not receive capital allowances to support spending investment. Instead it received a £700 million bill for sick pay. That is how the Budget went about helping industry.

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Not only do the Government offer no help to industry to invest ; they do not even lead by example. How can they expect industry to take a long-term view and invest in the future when they see the Government taking the short-term view and cutting public investment in the short term? I know--the President of the Board of Trade reminded us-- that the Chancellor announced some projects that will go ahead with private finance. We know them well--we have heard their go-ahead announced in every Budget over the past five years. The extension of the docklands light railway was first announced in 1989. I have no doubt that we will hear it announced again next year, when Tory Back-Bench Members will cheer. But the cheering on Tuesday masked the fact that, in the meantime, the investment programmes for which the Government are directly responsible were being cut. Spending on housing investment is down £500 million as a result of the Budget. As a public spending decision, it is spectacularly inept. We must consider its context. It is a cut in the context of a record number of construction workers who are unemployed. My apologies, Madam Deputy Speaker, it just slipped out--a record number of construction workers who are job-seeking, and a record number of homeless families, no doubt shortly to be given a respray by the copywriters and be renamed "home seekers".

On top of that, the Chancellor himself, in the very speech in which he goes ahead and cuts his construction contracts, tells us that construction prices have fallen by a quarter. In this context, one does not have to be a Keynesian to recognise that this is the time to boost recovery by putting people back into jobs building the homes that people need ; one just needs to be mean. All that one needs to do is recognise that a housing programme at present would be at a bargain-basement price. Surely, whatever other failings the Government have, they are mean enough to see that that makes common sense when construction prices are cheap.

It is not as though Government investment is running out of control. General Government investment has never been lower as a percentage of GDP. It is half the level it was when the Government came to office and it is a third of the level of the peak in the mid-1970s. For a decade and a half Britain has been saddled with a Government who have neglected the public assets of Britain. That is why tens of thousands of commuters had to get out of their tube trains last week and stumble along the tunnel, because of a fault in cabling that is so old that it should be in an industrial museum. That is why at the weekend we had the national humiliation of learning that modern and sophisticated French locomotives cannot run comfortably on British railways because the track has not been modernised for 70 years. Yet the Government cut the transport budget because they want to cut the deficit.

The Chancellor and his colleagues are right to be preoccupied by the deficit. The Government have the best possible reason to be preoccupied by the deficit--the best possible reason being that they created the deficit. That is an impressive achievement : the biggest Government deficit in history. It is bigger than it was when the previous Labour Government had to call in the IMF and bigger even

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than in 1941, when half the GDP was being channelled through the Government's war effort. That is the Government's achievement.

The Chancellor of the Exchequer (Mr. Kenneth Clarke) : As the hon. Gentleman is the first Opposition Front-Bench spokesman to mention the deficit during this Budget debate, I have tried to keep a running total of the spending claims that he has made in the past 10 minutes. How many billion pounds would he propose to add to the spending plans that I announced in the Budget?

Mr. Cook : I should be interested to hear the Chancellor's estimate of my spending commitments because I am not aware that I have made a spending commitment in the past 20 minutes-- [Interruption.] The right hon. and learned Gentleman cannot evade the fact that he has cut the housing budget by pretending that it is opposed by a Labour commitment to increase spending. Why, when he could be getting those houses cheaper and putting people into houses, is he not prepared to put people back into work?

Mr. Richards : Will the hon. Gentleman give way?

Mr. Cook : No. Let me finish responding to the Chancellor first, because the Chancellor and the Chief Secretary deserve some attention being paid to the deficit, now that they have commenced this exchange.

The Government achieved the deficit. Indeed, we have it from the fascinating, interesting information of Mr. Bill Robinson, adviser to the Chancellor's predecessor, where the deficit came from. He sets out entertainingly in a pamphlet how the deficit mushroomed under the Government's policies : £22 billion from the extra costs of unemployment as a result of their economic strategy ; £20 billion as a result of the tax cuts of 1988, which they now find that they cannot afford ; and £4 billion as a result of the introduction of the poll tax, which has left us with a permanently lower level of income from taxation.

The Government must explain how they have managed the nation's finances and policies so incompetently that they have given Britain a record deficit. Last week, they announced that they wanted to introduce an objective test of capacity to work. With such a record, they should be thankful that they are not subject to an objective test for capacity to work ; otherwise, their Benches would be empty.

Mr. Cash : Does the hon. Gentleman accept that, however much some Conservative Members have criticised the Government for their economic policies on the exchange rate mechanism, we utterly condemn the manner in which he and all Opposition Members supported those policies and the move towards economic and monetary union? Should not he, too, accept some of the blame?

Mr. Cook : The Opposition are sufficiently grateful for the hon. Gentleman's interventions over the past year to allow him that attempt to work his passage back to the Front Bench.

Having given us the worst deficit on record in the past half a century, the Treasury's stroke of genius now is to propose the record reduction in demand in the past half a century : £8.5 billion taken out in tax ; and £3.5 billion taken out in reduced spending. That is a total annual deflation of £12 billion, and more the year after.

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The theory--or what passes for an economic theory on the part of the Government--is that the animal spirits of the business men will be so released when they are freed from the oppressive weight of public spending that they will bound forward eagerly and expand the output of spin dryers, video recorders and CD players to fill up the hole that the Chancellor has blown in the economy.

However, one awkward fact does not fit that theory : who will buy all that extra output? It will not be those who work in the public sector, because they will receive no net increase in their purchasing power for three years. A fifth of the total work force who, for the rest of the Parliament, will not have an extra pound to add to demand in the economy, will not buy many spin dryers, video recorders or CD players. Nor will they be bought by people surviving on invalidity benefit. Having listened to Ministers in the past seven days, I have noticed a curious mental block in their speeches when they discuss invalidity benefit. For the past seven days, they have described cuts in invalidity benefit as cuts in Government spending. The end effect on the economy of the impact of a cut in invalidity benefit is not a cut in Government spending but a cut in the private spending of people who must subsist on invalidity benefit. They never did buy many CD players, but now they will be unable to replace the washing machine or renew the kettle if it has a dangerous flex.

Taxpayers will not block up the hole in that purchasing power. I must warn Conservative Back Benchers that someth What distinguishes this Budget from others is that the people whom Conservative Members represent have been clobbered just as much this time. For once, the married, mortgaged, motoring middle classes must face the biggest burden of this century's biggest tax bill. From next April they will need every penny they have to spare to pay the equivalent of 5p on the standard rate of income tax. Their problem is that there will not be enough pennies to go round. They will face a reduction in their net disposable income. Yet the Red Book predicts an increase in consumer expenditure of 2 per cent.

That is the economics of Paul Daniels. It beggars belief that a nation that has seen its income cut will respond by increasing its spending. After all, it need only look at the Government. The Government have just said that nothing is more important than eliminating the Government deficit and then they have the nerve to expect everybody else to expand their private deficit in order to keep the economy afloat. If they do not do that, where will British industry sell all that extra output?

When the Chancellor was telling the Cabinet about the Budget arithmetic last Tuesday, did the President tell the Chancellor that if he went to any meeting of industrialists he would find that their main complaint about managing a company in Britain is that demand goes up and down far faster and farther than any manufacturing process can adjust to cope with it? Did he remind the Chancellor that the Confederation of British Industry industrial trends survey revealed that for three years uncertainty over demand has been the chief constraint on investment? Did he even ask the Chancellor whether engineering the biggest drop in demand for half a century was a smart move?

Mr. John Townend (Bridlington) : Will the hon. Gentleman accept that over the past year there have been

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large reductions in interest rates and, consequently, large reductions in mortgage repayments? Will he accept that, therefore, a large section of the community have had large increases in their disposable income because the monthly outgoing on their mortgage has dropped dramatically?

Mr. Cook : I shall give the hon. Gentleman three figures to take away and think about. The Red Book predicts that inflation next year will be about 3 per cent. It also predicts that the increase in earnings will be 4 per cent. The hon. Gentleman will see that there is less than 1 per cent. of disposable income left between income increases and inflation increases. If he looks at the Government's proposals for tax increases, he will see that from next April the people in middle-income groups who vote for him face an increased tax bill of 3 to 4 per cent. of their income. They face a serious drop in disposable income.

The hon. Member for Bridlington (Mr. Townend) has anticipated a point that I was coming to. I am hardly surprised that many commentators, peering down the hole that the Chancellor has just quarried in the economy, have concluded that there is another cut in interest rates coming. There had better be another cut in interest rates to boost demand. If the Chancellor cannot produce one, when the tax increases bite next April, there will be a serious danger of the economy tumbling down a black hole.

Mr. Heseltine : I am listening carefully to the hon. Gentleman. It is apparent that he has taken no account of the point behind the question of my hon. Friend the Member for Bridlington that there have been substantial reductions in the costs of interest to ordinary home owners, which, of course, have an effect on the availability of their real disposable income. In industrial terms alone, interest rate cuts have reduced industrial costs by £12 billion in a year. Patently, none of that has had any effect on the mind of the hon. Gentleman.

Mr. Cook : I am astonished that the President should refer to the benefits to the housing market in this week, which began only yesterday with a declaration in a new survey by building societies that the number of home owners stuck in the negative equity trap has increased by one fifth. If the President seriously imagines that those extra people caught in negative equity will rush out and increase their spending to make good the loss of demand, he is not living in the real world.

I do not have the slightest doubt that, if we fail to obtain interest rate cuts and we find the economy tumbling down that black hole in April, we will hear the Chief Secretary congratulating the Government on having had the courage to take the painful decision to jump into that hole. The Government have shown courage and I remind my hon. Friends of the courage that they have shown.

Mr. Kenneth Clarke : The hon. Gentleman has set out the first economic policy that we have heard from the Opposition Front Bench. Plainly, he is in favour of increasing public spending. Plainly, he would make no increases in taxation. Plainly, he would agree with the hon. Member for Dunfermline, East (Mr. Brown) that big reductions should be made in interest rates to boost demand.

If the hon. Gentleman held my position, what would he say to the gentleman from the International Monetary Fund

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when he turned up and berated the hon. Gentleman for following the type of economic policies which used to get Latin American banana republics into trouble?

Mr. Cook : The Chancellor presides over a bigger Government deficit than there was when the IMF came in under Labour. [ Hon. Members :-- "That is not true."] It is true. The Government's financial deficit as a proportion of GDP is bigger than it was in 1975. Members of the Treasury team cannot distinguish between the Government's financial deficit and the public sector borrowing requirement. The financial deficit as a proportion of GDP is higher than it was in 1975. If hon. Gentlemen have not grasped that elementary distinction, they should go back to the Treasury and learn more of the job.

I will now speak about the courage that the Government have shown.

Mr. Graham Riddick (Colne Valley) : Will the hon. Gentleman give way?

Mr. Cook : I am not giving way again--I have given way repeatedly. The Government have shown courage to take the painful decision to take on the unemployed, who will be now given only half the time to seek a job before they lose benefit. That is at a time when in towns which are represented by Opposition Members there are 25, 30 or 40 people seeking a job for every vacancy.

We all know of constituents who have applied over 100 times for a job. No Opposition Member would not have welcomed a Budget that gave those people hope of a job in place of benefit. None of us will not greet with anger a Budget that cuts their benefit without offering that job.

The Government have shown courage to take on people who are on low wages. Some 180,000 will enter into taxation for the first time because the Government have failed to increase the tax threshold. By definition, people on the lowest incomes--incomes of £100 a week--will now be carried over the tax threshold because the Government would rather tax them than have the courage to impose higher taxes on the well-off.

Mr. Riddick rose --

Mr. Cook : The Government have also had the courage to take on the hospital porter and the school janitor.

Mr. Riddick : Will the hon. Gentleman give way ?

Madam Deputy Speaker (Dame Janet Fookes) : Order. Is the hon. Member for Livingston (Mr. Cook) inclined to give way or not ?

Mr. Cook : I have given way a number of times, and I have made it clear that I am moving to the conclusion of my speech.

Madam Deputy Speaker : In that case, the hon. Member for Colne Valley (Mr. Riddick) must remain quiet.

Mr. Riddick : The hon. Gentleman is afraid of me.

Madam Deputy Speaker : Order.

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Mr. Cook : The hon. Gentleman's suggestion that I am afraid of him makes almost credible the statements which we have heard from the Chancellor during the debate.

The Government have shown the courage to take on the hospital porter and the school janitor, whose pay will be frozen for three years. Of course, they tell us that the pay of some people in the public sector will go up. They say that not everyone will have their pay frozen, and that it is just the overall total which has been frozen.

The problem is that we all know who will find a way round the freeze. People such as the chief executives of trust hospitals have seen their pay rise by 9 per cent. The problem with a pay freeze is that the powerful and the well paid will most likely get round it, while the powerless and the poor run up against it. That is the courage that the Chancellor showed on Tuesday.

However, if one group of people last week showed more courage than the Chancellor, it was the Government Back Benchers who had the courage to cheer the right hon. and learned Gentleman's speech. When the right hon. and learned Gentleman produced a fall in the disposable income next year, they cheered it. When he produced a public spending plan which would leave their local authorities with less to spend for every pupil at school, they cheered it. When he produced a tax bill which will take £10 a week from each of their constituents who are on an average income, they cheered it. When the right hon. and learned Gentleman graded the tax bill so that from next April anyone on a Member of Parliament's pay will lose over £70 a month, Conservative Members still cheered it. I warn them that their constituents will not cheer next April when the bills fail to be paid. They will want to know why their Member of Parliament cheered. Their constituents may remember that that was not what was promised at the general election, and they may not forget that at the next election. They may decide to borrow one of the stirring phrases used by the Chancellor, and say that "the time has come" to sort out the Conservative Government once and for all, and to do it by throwing out the Tory party which they can never trust again. 4.46 pm

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