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Mr. Bill Walker : Will my right hon. Friend remind those European enthusiasts on the Opposition Benches that an energy tax is part of Europe's policy ? Will he also remind them that the Government have been elected since 1979 on a policy of diverting direct taxes to indirect taxes, and that VAT is an indirect tax ?
Mr. Betts : Has the Chancellor read any of the reports produced recently which show that income disparities grew during the 1980s ? For example, the "Economic Trends" survey shows that the poorest 20 per cent. of the population saw their share of disposable income fall from 10 to 7 per cent. during the 1980s ; and the Institute of Fiscal Studies report shows that the poorest 10 per cent. of the population saw their real incomes fall by 15 per cent. during the 1980s. Does the Chancellor accept that all those reports show that the increase in unemployment, the transfer from high-paid skilled jobs to low-paid unskilled jobs, and the switch to indirect taxation have hit the poorest in the community the hardest and are responsible for the increased disparity ? Will he accept Government responsibility for those matters, and will he explain to the House whether they are a result of Government incompetence or a deliberate result of their economic policies, for which he and his colleagues should be thoroughly ashamed ?
Mr. Clarke : Many of the studies to which the hon. Gentleman refers in his question are, in my opinion, a complete misuse of the statistical information available to us. Average incomes have increased by 35 per cent. in the time that the Conservatives have been in office. The increase has obviously varied at different levels, but average incomes for all sections of society have increased by about 35 per cent. in real terms. That is after a period when they were very static, in the 1970s. It is true that there has been a widening of incomes, although there have been increases at all levels
Mr. Clarke : It is true. That is why we are giving such priority to raising education standards, raising the level of skills and putting in place the new system of national vocational qualifications. In a modern economy, there will be a widening of that gap, and one has to give more people the skills that they require.
The research that the hon. Gentleman mentioned, which talks about the bottom 10 per cent., is totally misleading. That group always includes many people who declare that they have had absolutely no income of any type during the year. They include self-employed people who have accounts for that year showing a loss. If one examines individual groups, all wage- earners' real incomes have increased. People on benefit have done better. Pensioners' incomes have increased by 40 per cent. The 1980s was a period when, throughout the social spectrum, people in this country became very much better off.
Mr. Paice : Is not what really matters to those people on lower incomes the absolute income, not the comparison with higher levels, which is simply the politics of envy ? Can my right hon. and learned Friend tell me whether there is anywhere in the world where a policy of making the rich poorer has succeeded in making the poor richer ?
Mr. Clarke : I can remember one country, which is the United Kingdom, where a policy of trying to do that did immeasurable harm to the economy, and immeasurable harm to the incomes of most groups in the country, during
Column 939the 1970s. It is obvious, from the questions that Labour Members ask, that the Labour party would revert to that policy again if ever it had the chance.
Ms Harman : In view of the anger and dismay in the country about the prospect of VAT on gas and electricity increasing from 8 to 17.5 per cent. in April, is the Chancellor prepared to reconsider that increase on VAT on gas and electricity, or is he still determined to press ahead with it ?
Mr. Clarke : The increase has already gone ahead. It has been accompanied by compensation for poor groups and all retirement pensioners, although, as my right hon. Friend the Paymaster General said, not all of them appreciate that it was added to an uprating which was quite low because inflation is now so low. Parliament has approved the second stage of the introduction of VAT on fuel, and it will be accompanied by a parallel package of compensation, which will again ensure that all retirement pensioners and all people on benefit will be compensated for the costs.
Mr. Gill : My hon. Friend will be aware that Britain's gross contribution to the European Community Budget is already the equivalent of more than 3p on the standard rate of income tax. He may also be aware that the amount of Britain's net contribution to the European Budget almost exactly equates to the amount that the Irish Republic draws out of the Community. Does he agree that curbing expenditure in that area would not only be extremely popular with the electorate, but would create the scope for the tax cuts to which the Government are committed ?
Mr. Dorrell : I entirely agree that curbing European Community expenditure is an important part of total budget discipline. That is why my right hon. Friend the Prime Minister took the line that he did at the Edinburgh summit, where, as the Chancellor said earlier, we achieved a substantial reduction in the ceiling on the Budget that the Commission were seeking. It is also the reason why our party negotiated the rebate in the early 1980s under my right hon. Friend Baroness Thatcher, which was opposed by the Labour party. It is also why we oppose, root and branch, the proposals adopted by the Labour party in the recent European election--to increase Community expenditure.
Mr. Simpson : Does the Minister accept that arguably the greatest success of the policies that the Government have pursued in forcing down wages has been that the poorest paid people have been made increasingly dependent on means-tested benefits, and are paying marginal rates of tax of 97p in the pound ? Does he accept that that is the strongest argument now for paying those people decent wages, instead of inflicting punitive marginal rates of tax on them ?
Column 940the lowest incomes, I believe that it would recognise the obvious truth that has been shown by every report on the subject : the way to improve the living standards of the low income groups is to promote job creation, and any Government who are serious about that must conclude that to adopt the social chapter and a minimum wage is to march resolutely in the wrong direction. This Government are serious about wanting living standards to rise across the income scale, and we are pursuing policies that will deliver that.
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. Enright : Given the 16 per cent. increase in productivity since the last pay settlement achieved by the signalling staff, how does the Prime Minister justify spending £500 million and cramming money into the pockets of already wealthy bankers and PR men, when a mere 1 per cent. of that would give those signalling men a living family wage ?
The Prime Minister : The hon. Gentleman has overlooked the fact that the signalling men are demanding an 11 per cent. pay rise with no productivity or restructuring. That is self-evidently not a reasonable claim in present circumstances. I very much regret the fact that they rejected the Railtrack offer, and that therefore there has been continued suffering for rail travellers.
What we should like to know clearly--yes or no--is whether the Opposition believe that these strikes should continue.
Mr. Michael Brown : Does the Prime Minister recall the speech that he made at the Conservative party conference in 1992, when he asked who had ever heard of a cricketer, Len Hutton, turning out to play for the county of Humberside ? Is he aware that on the table of the Secretary of State for the Environment is a recommendation to the Local Government Commission, supported by just about every Labour and Conservative Member representing Humberside, and every Labour and Conservative councillor in the area, welcoming the report ? Will he urge the Secretary of State for the Environment to get rid of the county of Humberside and to implement the recommendations as soon as possible ?
The Prime Minister : I am sure that my right hon. Friend will have heard that plea. I think that there are many hon. Members on both sides of the House who would like the return of traditional areas and areas of local government that people will recognise and understand as having historical interest.
Column 941for Fiscal Studies has shown that the gap between the best paid and the lowest paid in Britain today is wider than it has been for 100 years ?
The Prime Minister : The hon. Lady yet again tends to concentrate on every occasion on the politics of envy and redistribution instead of the politics of growth and job creation. When she learns that there is more to prosperity than envy and redistribution, she may be in a position to lecture others.
Mrs. Beckett : I am sure that the whole country will note that the Prime Minister failed to condemn either the pay increase or the widening pay gap. But surely he is aware that Government figures show that every ordinary British family, including the lowest paid of all, are paying more taxes now than they were when the Government came to power--with the sole exception of the kind of people who award themselves pay increases of £800 a week. How can that be right ?
The Prime Minister : Of course, average real incomes are substantially up for people at all levels of income, as the right hon. Lady should know. But since the right hon. Lady returns yet again to tax, perhaps she would care to comment on the remarks of the hon. Member for Kingswood (Mr. Berry) who said recently :
that is the Labour party
"cannot put trust and tax on top of the agenda and then duck the economic issues."
That is what the right hon. Lady does.
Mrs. Beckett : What are certainly up for every ordinary British family are the taxes that they pay under this Government. As a result of the Government's economic failure, Britain today is a country of low wages, low skills, high crime and higher taxes. Whatever happened to the Prime Minister's promise to build a nation at ease with itself ?
The Prime Minister : It is actually a nation of low inflation, increasing growth and falling crime. The right hon. Lady has been promising to set out her position on a number of issues and today she certainly has. She has published her own policy document and it enlightens a great deal. If any hon. Member would like to know more about it, I invite them
Mr. Rowe : Will my right hon. Friend give a clear and categorical assurance to the House that he will not allow himself to be discouraged from his pursuit of a classless society by the growing probability that both the leading opposition parties will be led by public schoolboys ?
Mr. Hill : Does the Prime Minister remember those happy Labour days of 1969 when he came to live in my Streatham constituency at the charming Primrose court when the unemployment rate in Streatham stood at one in 50 ? Thanks to his Government's policies it now stands at a shocking one in five. Is the Prime Minister be surprised to learn that there is no great demand in Streatham for a blue plaque to commemorate his stay at Primrose court ?
The Prime Minister : I do not know how much the hon. Gentleman knows about Lambeth at that time in the late 1960s, but if he had checked a little more carefully he would have known that just a few months before the date that he quotes the Labour-controlled Lambeth council was swept from office, going from 57 to three in the local elections.
Mr. Fabricant : Is not it the case that being at the heart of Europe and fighting one's corner for Europe are not mutually exclusive and, if the Opposition say that it is, is not that both false and weak ? Is not it also the case that when it comes to exercising the veto or the threat of veto, other countries have used it far more often than we have and, when it comes to abiding by European directives, in the league of large countries, Britain comes top, France comes third and Germany comes bottom ? Is not Germany's threat of the beef embargo a good example of that ?
The Prime Minister : As my hon. Friend intimated, there is a long history of vetoes by other member states--some on the Commission presidency itself. Being at the heart of Europe means fighting for the best interests of this country and of Europe. It emphatically does not mean agreeing with everything that our partners propose. Frankly, that is not the way that Europe works. It is not how our partners behave, how they expect us to behave or how we will behave. Wherever appropriate, we will stand up for the interests of this country and of Europe, and for the nature of Europe that we believe everyone across the continent wants.
Mr. Clapham : Is the Prime Minister aware that figures provided by the Department of Social Security clearly show that the number of miners who fail tests for bronchitis and emphysema is well over 90 per cent ? Does he share my concern that there is a need to review the regulations, not in five years or two years but immediately ? Will he tell the House that he is prepared to set in train an immediate review of the bronchitis and emphysema regulations ?
The Prime Minister : As the hon. Gentleman may know, the Government accepted and implemented in full the Industrial Injuries Advisory Council recommendation to add those diseases to the prescribed list. I am sure that was right. The recommendation was made and accepted.
Sir Dudley Smith : Is my right hon. Friend aware that President Reagan never looked back after he fired striking air traffic controllers ? In view of the wilful neglect by Labour Members to do anything to help the travelling public, will my right hon. Friend consider doing the same with the striking signalmen ?
The Prime Minister : We are currently hoping to see a settlement that would end those unnecessary strikes at the earliest date possible. At the moment, Railtrack and the Rail, Maritime and Transport union are in negotiation and I hope that they will reach agreement soon.
Mr. Alton : Does the Prime Minister share the sense of horror felt by right hon. and hon. Members in all parts of the House at the massacre of half a million Rwandans and the displacement of 2 million others ? Is there not some personal initiative that he could take to ensure that the 5,000 troops promised by the United Nations one and a half months ago are now all deployed, refugees are evacuated and those responsible for the genocide are brought before international courts and tried for war crimes ?
The Prime Minister : Anyone who has seen the dreadful pictures from Rwanda will share the hon. Gentleman's sense of horror and revulsion. I strongly support the proposal currently being considered by the Security Council, to establish a committee of experts to investigate allegations of war crimes in Rwanda and then take appropriate action. As I am sure the hon. Gentleman knows, the special rapporteur on Rwanda appointed by a special session of the European Commission of Human Rights is now in the country. We expect his report tomorrow and I hope that action can swiftly follow.
Mr. Arnold : My right hon. Friend will be aware of our ambition to continue on the path of cutting the basic rate of tax. Has he contrasted that with the ambition of the hon. Member for Kingston upon Hull, East (Mr. Prescott) ?
The Prime Minister : Our policy is entirely clear. Our overriding aim is to sustain the recovery that is now clearly evident--but when it is prudent to do so, we will certainly seek to cut tax rates again. I heard what the hon. Member for Kingston upon Hull, East (Mr. Prescott) said about tax a day or so ago. I am delighted that he set out his position--something of a novelty, in respect of tax, for Opposition Members. I hope that all other contenders will honour their previous promises and set out what they would do about tax.
Mr. Griffiths : Does the Prime Minister recall telling his right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) last Monday that he regretted using the veto on Mr. Dehaene, and that it would have been avoided if the pre-conference preparations had been as thorough as they were in 1984 ? Was the Prime Minister suffering from selective amnesia or being economical with the truth in failing to tell the House that in 1984 his predecessor vetoed Claude Cheysson and supported Jacques Delors, who, unlike the Prime Minister, believes in giving workers legal protection from sweatshop employers ?
The Prime Minister : The hon. Gentleman--perhaps by accident--is not telling the whole story. In 1984, there was a great amount of private consultation, and a number of countries--not just this one--indicated privately, not openly in the Council meeting, that they were unable to accept a particular candidate. My point was that if that sort of negotiation had taken place it would not have been necessary to apply the veto publicly, as I did. I hope that the hon. Gentleman now understands that.
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