House of Commons Hansard Debates for 16 Dec 1993

Mrs. Jackson : My direct question is : what will the Government do that they did not do in the Budget to support this country's core manufacturing industry, so that the jobs of highly skilled workers and engineers in our constituencies are not lost?

Mr. Portillo : The House heard my right hon. and learned Friend the Chancellor say earlier that unemployment fell last month. It fell across the country and, incidentally, it fell in Sheffield. The engineering industry depends on the success of other British industries, for instance, our car industry. As a result of the competitive conditions that we have sustained in Britain, we are attracting the bulk of investment into the European Community. That is because we have maintained competitive rates of taxation and that, in turn, is because we have imposed restraint on public spending. British industry has responded magnificently, improving its productivity in manufacturing by more than 4 per cent. in the past year and reducing its unit wage costs, while those costs have risen in Japan and Germany. That has given British industry a real competitive edge. The hon. Lady should be celebrating that, not carping.

Mr. Jenkin : Does my right hon. Friend agree that the prospects for our balance of trade have significantly improved since we withdrew from the exchange rate mechanism a little more than 12 months ago? Does he further agree that if we were to enter a single currency in the EC, which would involve huge costs to sustain both it and the disparities in the EC, Britain would be made less competitive and it would be bad for our balance of trade?

Mr. Portillo : The prospects for our balance of payments have been altered in recent months. I do not know whether my hon. Friend is aware that the deficit for 1992 has been revised downwards, from £12 billion to £8.5 billion, and that our forecast for the two years ahead has also been revised down, from £17.5 billion to £9.5 billion in 1993 and from £18.5 billion to £9.5 billion in 1994.

I believe that the really important factor is not any change from moment to moment in the exchange rate but

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the underlying improvement in competitiveness which is due to higher productivity and the control of unit wage costs. A single currency is not currently on the European agenda.

Inflation (NHS)

9. Ms Lynne : To ask the Chancellor of the Exchequer what account he took of the level of national health service inflation in determining his allocation of resources to the Department of Health.

Mr. Portillo : The Government reached a view on the appropriate level of national health service spending, taking into account the GDP deflator and the scope for efficiency improvements.

Ms Lynne : Is the Minister aware that the British Medical Association says that the real inflation figure in the national health service is 3.9 per cent? Does he agree that the announcement in the Budget will therefore lead to a decrease in NHS spending power?

Mr. Portillo : I calculate that in the year ahead the NHS will be able to treat 4 per cent. more patients than this year. Once again, I urge the hon. Lady and other hon. Members to concentrate on outputs, not inputs. Surely what matters is how many people get treated, not how much money gets put in.

The hon. Lady underplays the tremendous scope in the NHS for improving efficiency. Last year, the northern region was able to increase its efficiency by nearly 4 per cent., as was the Oxford region, with the west midlands region only a little behind--the Mersey region was very close, too. For all those reasons, we can increase both efficiency and the number of patients who are treated.

Mr. Marland : Does my right hon. Friend agree that the way to solve a problem is not necessarily to throw money at it but to get better value for money? Is he aware that the NHS trusts in Gloucestershire are doing just that? Gloucester Royal hospital will treat nearly 250, 000 people this year--it is a trust. The Gloucestershire ambulance service, also a trust, is continually improving its service to patients, too.

Mr. Portillo : The reforms that my right hon. Friend the Secretary of State for Health and her predecessors have introduced have transformed the ability of the health service to provide efficient health care and to ensure that ever more patients are treated well and efficiently. The hon. Member for Rochdale (Ms Lynne) was wrong to talk about a rate of inflation in the health service. Inflation in the health service is largely a matter of pay in the health service. That pay is under the control of management in the health service, and so it should be.

Taxation

10. Mr. Jon Owen Jones : To ask the Chancellor of the Exchequer what estimate he has made of the impact of the average family's tax bill of all the increases in taxation announced in his Budget last month.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell) : On average, the main tax-related changes proposed in my right hon. and learned Friend's Budget will cost households around 90p a week from April 1994 and an additional £1.80 a week from April 1995.

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Mr. Jones : Is the Minister aware that, during the election campaign, my constituency was covered with posters announcing the so-called "Labour tax bombshell"? Since then, there has been a Tory tax explosion. Will the Minister explain why his party lied during the election about its tax proposals?

Mr. Dorrell : We saw earlier this afternoon the exact nature of that Labour tax bombshell. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) stood at the Dispatch Box and called for increased public expenditure without giving the House any indication of how he intended that expenditure to be paid for. We will listen to the Labour party on the subject of lower tax when it tells us how it would finance its spending programmes.

PRIME MINISTER

Engagements

Q1. Mr. Callaghan : To ask the Prime Minister if he will list official engagements for Thursday 16 December.

The Prime Minister (Mr. John Major) : This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Callaghan : Is the Prime Minister aware that, exactly one year ago, a man who was suffering from mental illness climbed into a paddock of a zoo and was savagely mauled by lion? Despite the public dismay and concern over that incident, there are still thousands of mentally ill people who are tramping the streets of our major cities. They often live in cardboard boxes and are unable to look after themselves. Does the right hon. Gentleman agree that that is a national disgrace? Will he tell the House what action he will take to get those people off the streets and into places of care and protection?

The Prime Minister : As the hon. Gentleman knows, a great deal of action has been taken--most noticeably in London--to get many people, both those suffering from the ailment to which the hon. Gentleman refers and others, off the streets. That has been remarkably successful, and we will continue with that policy.

Mr. Lamont : Does my right hon. Friend recall his admirable speech at the Conservative party conference in which he said that the Union between Ulster and Britain was of immense importance to the Conservative party? Did not that echo his comment during the election that he stood with passion and commitment for the unity of this country? Is my right hon. Friend aware that that stands a little oddly beside his statement that this country has no strategic interest in Northern Ireland? Will my right hon. Friend therefore declare today that he believes in the Union, that he wants it to persist and that he believes it has been in the interests of the people of this country?

The Prime Minister : I do not believe that it stands remotely oddly with the joint declaration which I set before the House yesterday. The joint declaration reaffirms in unmistakeable terms the commitment that we have consistently given to the people of Northern Ireland, and I reaffirm that again now.

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Mr. John Smith : Does the Prime Minister agree with the Chancellor of the Exchequer who told the Treasury Select Committee yesterday that the tax increases in this year's Budget were the equivalent of an increase of 7p on income tax?

The Prime Minister : What my right hon. and learned Friend said yesterday was that the aggregate sum of money raised after three years would amount to a crude equivalent of 7p. As the right hon. and learned Gentleman knows, that takes no account of growth in the economy and many other matters. When the right hon. and learned Gentleman talks about taxes, perhaps he might contemplate some of his proposals for new taxes. He is committed to eight more taxes, without any indication of how he would fund his spending promises or meet the debts that occurred as we helped vulnerable people through the recession.

Mr. John Smith : Does not the Prime Minister realise that the Chancellor told the Select Committee yesterday that the increases would amount to between £15 billion and £17 billion? Is there anything more crude than promising not to increase taxes before an election and putting them up by £15 billion afterwards?

The Prime Minister : The right hon. and learned Gentleman clearly does not realise that he is referring to the cost of Budget measures over the next three years. He is obviously deficient in understanding and has produced an entirely spurious one-off tax increase. I can understand why. I quote what the acting general secretary of the Fabian Society wrote about the right hon. and learned Gentleman in the "Labour Review". [Interruption.] I hope that the Opposition will laugh in a moment because this is what was written about the right hon. and learned Gentleman and his party :

"If the characteristics being exhibited by the Parliamentary Labour Party were translated into the conduct of a single individual, she or he would certainly be in therapy."

Mr. John Smith : May I put a straight question to the right hon. Gentleman. [Interruption.] I know that his party does not want to hear it. Does he deny that before the last election, the Conservative party promised not to increase taxes?

The Prime Minister : Does the right hon. and learned Gentleman deny- - [Hon. Members :-- "Answer the question."] Does he deny what his hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) said about unemployment? He has had nothing to say today about unemployment, nothing about inflation and nothing about the eight taxes to which he is committed. [Interruption.]

Madam Speaker : Order. The House must settle down. I want to hear the Prime Minister. [Interruption.]

The Prime Minister : The Opposition do not, because they will not like it. Let us hear from the right hon. and learned Gentleman about his proposed taxes on tourism and development, his payroll tax, his education tax and the fact that he wants to have the same level of corporation tax as our competitors in Europe. What about his pollution tax and his windfall tax? The man does nothing but propose new taxes day after day.

Mr. Richards : Is my right hon. Friend aware that small businesses in my constituency are absolutely delighted with the Chancellor's Budget and that, together with low

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inflation, low interest rates and increasing confidence, they are looking forward to a period of steady growth in the foreseeable future?

The Prime Minister : I have no doubt that that is the case. It is largely the growth and success of small businesses that are bringing down unemployment, and have been doing so month after month throughout this year. When unemployment figures go up, that is the only issue that concerns Labour Members. When those figures start coming down, apparently it is matter of no importance whatsoever.

Mr. Ashdown : May I draw the Prime Minister's attention to the fact that 1.25 million people are close to starvation in beleaguered central Bosnia, many of whose lives will be further put at risk in the bitter cold yet to come if the local power station at Kakanj is allowed to cease operations? Is he aware that, without vital supplies, that will happen in 20 days' time? Is he further aware the vital supplies provided by Britain are now being blockaded by the Serbs and Croats? Will the Prime Minister see what urgent action could be taken to make the provision of those vital supplies a test case for the Geneva convention on free passage of convoys so that those lives could be saved?

The Prime Minister : As the right hon. Gentleman knows, we are committed to the aid effort through the winter. We have made it clear, to pick up a point that will concern many hon. Members, that we still need to see the opening of Tuzla airport. We have so far provided more than £150 million-worth of assistance, and more than 2, 300 troops are delivering that assistance, day after day, under the most difficult conditions. We are examining what we can do to deal with the present difficulties in Bosnia. The co-operation of parties on the ground will be needed to enable us to deliver the humanitarian assistance that we are prepared to deliver and fund. Throughout the conflict, our record has been second to none, and we will continue to do all that we can to ensure that people receive supplies throughout the winter.

Mr. James Hill : My right hon. Friend knows that the economy is beginning to emerge. We are reducing unemployment every day and there will be more money in the coffers by the time of the next Budget. Does he agree that more money must be allocated by the Treasury to the Home Office to enable the pledges given by my right hon. and learned Friend the Home Secretary to be carried out, not only on the neighbourhood watch security patrols but on the numbers of police required? In Hampshire, for instance, we asked for 120 extra police and were given only five this year. Does my right hon. Friend agree that all those measures are part of the Conservative philosophy and that, in the not-too-distant future, money will be available to fund them?

The Prime Minister : My right hon. and learned Friend the Home Secretary announced measures not very long ago which, if carried out, will enable approximately 5,300 police officers to move from dealing with administrative work out to the front line to deal with the matters that my hon. Friend mentioned. That action has been taken within the expenditure levels agreed by my right hon. Friend the Chief Secretary.

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Q2. Mrs. Bridget Prentice : To ask the Prime Minister if he will list his official engagements for Thursday 16 December.

The Prime Minister : I refer the hon. Lady to the answer that I gave some moments ago

Mrs. Prentice : Does the Prime Minister agree with the Chancellor on the subject of stopping tax abuse? The right hon. and learned Gentleman said in his Budget speech that claims that more money might be found in that way were much exaggerated. Does the Prime Minister agree with the Public Accounts Committee, which found another £1 billion tax loophole for the aristocracy? Would not the Chancellor be better employed closing such tax loopholes than stinging every family in the country for an extra £10 a week as a result of his tax-raising Budget?

The Prime Minister : The hon. Lady should know that my right hon. and learned Friend closed a number of genuine loopholes in the Budget. That will yield about £2 billion over the next three years. The loopholes so beloved of the Opposition Front Bench are not loopholes generally but measures such as ending relief on capital gains inheritance--which would leave less for parents to hand down to children--and reforming the rules applying to non-domiciled status foreigners, which is the Opposition's latest idea. All the main parties agreed, when that measure was reviewed in 1989, that the existing rules should remain because they made Britain an attractive business location.

The Opposition's loophole campaign is a smokescreen to hide the fact that they have no idea how to fund their policies. They are trying to convince people that they could do so by closing tax loopholes, but what they would do is take away measures that assist industry and introduce those that would cost jobs and assist our competitors.

Mrs. Angela Knight : Does my right hon. Friend agree that the general agreement on tariffs and trade provides

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important trade opportunities, not just for countries such as Britain but for developing countries? Removal of the trade barriers will give them the chance of export-led growth to benefit their economies and bring about prosperity.

The Prime Minister : Yes, I entirely agree with that. My hon. Friend will know that, at the Commonwealth conference, we agreed that a number of Commonwealth countries--including less-developed and developing countries-- would send a mission to the main Governments around the world in the GATT negotiations, to ensure that there was a satisfactory settlement. I noticed yesterday that Malaysia, on behalf of the less-developed countries, had hailed the round as a victory for common sense.

Q3. Mr. Worthington : To ask the Prime Minister if he will list his official engagements for Thursday 16 December.

The Prime Minister : I refer the hon. Member to the answer I gave some moments ago.

Mr. Worthington : Why have the Government put 7p on income tax, or its equivalent?

The Prime Minister : The hon. Gentleman is clearly not very good at listening, or he would have heard the answer a good deal earlier, but I will tell him what the Government have done.

The Government have got interest rates down to the lowest levels for 16 years ; inflation at the lowest level for 26 years ; unemployment falling, while it rises everywhere else in Europe ; growth that is faster than in any other country in Europe ; a GATT deal to benefit industry ; retail sales up ; and a whole range of other economic improvements. That is the Christmas message to bring a smile to people's faces next year--not the misleading questions asked by the Labour party.

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