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Sir Cranley Onslow (Woking) : That was a very noisy speech from the hon. Member for Dunfermline, East (Mr. Brown), but it told us damn all about Labour party policy. It told us a lot about the hon. Gentleman. It showed how frustrated he is not to be a participant in the leadership campaign, and it proved that we shall receive no answers from him during either the leadership or election campaigns. The hon. Gentleman is an ambitious young man. He puts me in mind of another Brown, George Brown. The hon. Gentleman's long-term economic strategy is very much an echo of George Brown's national plan and it is about as much use to the British economy.

I do not want to speak at length and I rise to draw attention to two matters that have not been covered in speeches or that are not directly covered in the motion or the amendment. The first involves the need, if the economy is to be successful, for the whole of Government to focus on all the issues that are in Britain's long-term interests. My first point is addressed as much to my right hon. and learned Friend the Secretary of State for Defence--who is not present--as to Treasury Ministers, who I hope will take note of what I say.

There can be no doubt about the importance of the defence industry to the United Kingdom economy and to the aerospace industry in particular. Since the end of the cold war, markets have become even more competitive, but the importance of the aerospace industry has not diminished. That makes it all the more important that national defence needs and national industry needs should be weighed together. It means that we should think even more carefully before committing ourselves to defence procurement programmes that run counter to long-term economic considerations.

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The RAF's problem on the Hercules replacement is a case in point. The short-term argument may favour buying American. The long-term advantage must lie with a European solution. The American company Lockheed's campaign to sell its C-130Js to the RAF is not an altruistic one. Some of its advertising claims are so far-fetched that they sound almost desperate. Let us take an example from a newspaper that I am sure you study, Mr. Deputy Speaker, the Evening Standard . Last Thursday, an advertisement boasted that the "C-130J carries all military equipment required to be air transported for the British Armed Forces."

Anyone who knows what the requirements of the British armed forces are likely to be knows that that statement is a gross exaggeration. Lockheed says that the C-130J means £7 billion in revenue for UK companies and

"re-affirms UK leadership in key aerospace technologies". One might calculate that the Hercules C-130J would bring us £7 billion if one believed that every one of the 2,100 Hercules flying all over the world would be replaced by a C-130J, but all hon. Members know that that is hardly likely to happen. As for reaffirming key technologies-- a phrase that means nothing to me in English ; it may mean something in American, but we are not told what-- the C-130J has nothing significant in the way of air-frame innovation about it. The House must remember that an alternative is on the horizon--the future large aircraft, or FLA, which is a European joint venture. It really would meet our defence needs in the next century and would bring great benefits to our industry and our whole economy. It is important that we should weigh that in our minds when that decision is made.

Where do the true interests of our economy lie when such a decision is made ? Can defence factors alone, especially when we remember that future British operations are most likely to be as part of a joint or allied United Nations force, outweigh the country's long-term economic interests ? In this case, and no doubt in others, I am sure that economic considerations must come first and that the British economy cannot remain strong, whatever the broad sweep of policy, unless such considerations are borne in mind. We cannot fight Britain's corner, and we cannot have a healthy economy, if we reduce ourselves to the status of sub-contractors to the American defence industry, at the cost of destroying our own.

My second point is about another area where urgent Government action is needed--the threat to various sectors of our industry from state aids given by other European Governments to their own inefficient and uncompetitive industries. I could cite the steel industry as a case in point, where our interests are threatened by state aids to state-owned European companies. I could cite the airline industry, where Air France is a notorious example of a bankrupt operation being propped up by the French taxpayer at the expense of competition from airlines such as ours, where private enterprise and private investment rule the day. Instead, I want to focus briefly on a different industry--the aluminium industry, which is an important feature of our economy.

The British aluminium industry faces over-supply in a fiercely competitive market, for two reasons : imports of aluminium from the Commonwealth of Independent States following the collapse of internal demand and the activities of several loss-making state-owned companies, principally

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in Austria, Spain, Italy and France. All those companies have severe trading losses, coupled with an outflow of funds. AMAG--Austria Metal--recorded the country's largest-ever corporate loss on 14 July of £755 million, following what the company described as

"a catastrophic loss in 1993".

The company has apparently cost the Austrian taxpayer £15 billion in the past decade. However much all of us may welcome the probable accession of Austria to the European Union, it cannot make sense that we should tolerate such state subsidy to an industry that is being run so catastrophically.

Inespal of Spain lost £158 million in 1992, and suffered similar losses in 1991. The position has since worsened. Alumix of Italy lost £220 million before extraordinary items in 1992, and 1993 is not likely to show any improvement.

The aluminium interests of Pechiney of France, which is 80 per cent. state- controlled, recorded a loss before extraordinary and finance items of £35 million in 1993. Part of the state's share is invested in the nationalised Electricite de France, which granted concessionary power rates for Pechiney's Dunkirk smelter. That is a typical example of the state aids that continue within the framework of the EU, with Brussels apparently unable do anything to prevent it. It is vital for the British economy that the Government act to ensure fair competition and an end to distorting state aids.

Our aluminium industry is entirely in the private sector. It employs an estimated 40,000 people, and has a turnover of £3 billion. It is a strong exporter. In 1992, it exported goods to the value of £608 million ; in 1993, the figure was £615 million. The industry has suffered badly in the recession, losing many thousands of jobs, and this, again, is a factor that must be borne in mind by a Government who want to see a strong economy with strong industries.

I make those points not to criticise Government policy ; indeed, I wholly support it. I thought that the Chancellor of the Exchequer was quite restrained in his failure to quote the Governor of the Bank of England on the state of our economy. The Governor is on record as saying that never in his professional life of 30 years has he known a time when the conditions for sustained non-inflationary growth were more favourable in the British economy. That is due to the skill and persistence with which the Chancellor and his colleagues have pursued their policies. They have my full support, and they deserve that of the House.

5.54 pm

Mr. Tony Benn (Chesterfield) : If this debate is to be intelligible to people listening to it, or to those who might read it, it would be helpful if we tried to relate what is said here more directly to what is happening outside.

I do not believe that this is an incompetent Government. I have been in the House for 44 years. I think that the situation that confronts our people is exactly what the Government wanted. I shall come to the details of that-- the applause that greets every statement, such as the Chancellor's statement and the statement on homelessness, proves it.

I do not think that they are an uncaring Government. That may surprise you, Mr. Deputy Speaker, but a Government who give such massive tax cuts to the rich

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must care for somebody. Clearly, they do not care for the majority, who have been loaded down with the highest increase in tax on the poorest people. I met a ticket collector on the train last weekend--I have known him for some time--who came from Aden and who lives in a house with five children and his mother. That household paid £8,000 a year in poll tax. It was a big house with a number of adults, but that was the figure he gave.

The point that I am putting to the House is that I do not believe that the Government have an economic strategy. I think that they have a political strategy, and everything that has happened is intelligible to me if I realise what that political strategy is. How could a Government who inherited the enormous revenues of the North sea have spent every penny on unemployment ? I do not know whether hon. Members ask unemployed people what they did before--ships' captains, ships' engineers, tool makers, draughtsmen--but the other day I was driven in a minicab by a doctor.

We are the only country in the world that could have used the North sea oil revenues to de-industrialise instead of to re-equip, or to have allowed our social fabric to be destroyed. I am talking about the infrastructure, the state of our public services. To close the pits, with 1,000 years of coal under our territory, was not an economic act in favour of nuclear power, which costs three and a half times as much as coal, but an act of vengeance against the trade union movement.

The sale of the Rover Group to a widow in Bavaria who owns 66 per cent. of all BMW shares is regarded as a triumph. What logic is there in saying that it is wrong for Britain to own the Rover Group but all right for a widow in Bavaria to do so ? It is a political strategy. I am trying to explain as best I can, because I have been here many years and have seen many Governments in power, that I think that the policy of the Government is to reverse the balance of wealth and power back to where it was in Victorian times. There certainly was a different breed of Conservative after the war : Winston Churchill, after all, was an old liberal. Harold Macmillan wrote a book in 1938, "The Middle Way", for which he might now be expelled from the Labour party because of its radicalism.

What happened under the surface was the creation of a new breed of Conservatives--I do not want to attach them to the name of a particular Minister-- who greatly resented the growth in the strength of labour, the growth in local government and the development of democracy because they believed that it created a welfare state that threatened their wealth and power.

In fairness, when the Government were elected, they made many statements along the lines that the unions and local government were too powerful and that the welfare state was too big. The Government have been determined to break that political advance and to reverse it and they have done that by various well-known methods. First, they have legislated to make effective trade unionism virtually illegal. Legal safeguards for trade unions in Britain are now less than those provided by the International Labour Organisation.

Trade unions cannot defend their members. They are forced to hold ballots before they take industrial action. However, there is no ballot in respect of capital. If the foreign owner of a British company wishes to close a factory for ever, he does not have to ballot anyone. If a trade union wishes to defend the wages and conditions in

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a factory by way of industrial action for a single day, it must hold a ballot. The Government's action was deliberate.

Local authorities have been virtually destroyed. In addition to the terrible sight across the river of county hall with a Japanese flag flying over it and a sign saying, "Removal", the destruction of local government has been a conscious policy because local government had been a means by which people could band together to buy collectively what they could not afford individually in terms of housing, health and so on.

Unemployment is the Government's major policy. Unemployment is deliberate. That is why I did not say at the beginning of my remarks that the Government are incompetent. They know exactly what they are doing. Unemployment performs essential functions in a capitalist society.

Mr. Julian Brazier (Canterbury) : Will the right hon. Gentleman give way ?

Mr. Benn : I will give way in a moment after I have finished my point. I hope that we will not have a lot of knockabout.

Unemployment undermines the trade unions and it lowers wages. If one goes to an employer and says, "I can't live on that money," he will say, "Well, there are 2 million or 3 million people who will take your wage." There are people on disgracefully low wages in Britain today. People with no trade union protection are earning less than £2 an hour. Such wages are advertised.

Because unemployment lowers wages, it boosts profits. It also performs the very valuable function, from the point of view of the Chancellor of the Exchequer, of limiting imports. We do not see an unemployed person in a Honda car, with a camcorder, on his way to a holiday in Spain. Unemployment is a weapon.

Reference is made to days lost as a result of industrial disputes. I wonder whether the Chancellor has ever asked his economists to add up the number of days lost in industrial disputes and to compare it with days lost through unemployment. Every day we lose 3 million days through unemployment. Unemployment is a Government policy. Homelessness is also a Government policy. Whenever one sees someone in a cardboard box, that is a warning : "Don't quarrel with your employer because if you do, and he sacks you, you will be dispossessed and made homeless as well." I listened to the statement about homelessness that was made earlier today. The homeless, like the beggars, are now the victims of that policy. Homelessness is the warning : "Don't cause trouble." When the Government say that they want to encourage home owners, they really mean home buyers. There is an enormous difference between a home buyer with a mortgage and a home owner who does not have one.

The dependency culture--which is a phrase that should be redefined--to which the Government are committed means that one is absolutely dependent on one's employer, and has to take the wages, conditions and short-term contracts that he offers because if one does not, one is likely to lose one's job and mortgage and be thrown out onto the street.

Mr. Brazier : Will the right hon. Gentleman give way now ?

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Mr. Benn : I will give way quickly, but I am making a serious point.

Mr. Brazier : I am most grateful to the right hon. Gentleman. He said that unemployment fulfils certain purposes in a capitalist society and he went on to give some examples. What role does 23 per cent. unemployment fulfil in socialist Spain ?

Mr. Benn : I am addressing the situation here. Felipe Gonzalez is not someone with whom I find myself in very close ideological contact. The hon. Gentleman should address himself to the Chief Secretary to the Treasury because Felipe Gonzalez follows the Chief Secretary's policies and was properly rejected by the Spanish electorate.

I hope that the House will listen to me. My point is that legislation, unemployment, homelessness and the erosion of democracy are Government policies. All the quangos that have been set up are designed to replace elected people. We heard much talk about giving the unions back to their members, but by God, when it came to the real centres of power, power was handed over to the quangos.To coin a phrase, Maastricht is the last quango in Paris. It is the last quango in Brussels. Maastricht is a huge unaccountable body with enormous power over us.

As I have said, I have been paid to watch the Conservative party for 44 years. I know what it is up to. What amazes me is why the rest of the people accept a policy that is so manifestly unfair and damaging to them and to the country. The answer is that the policy was put across with considerable skill, using language which misled people about what it was.

For example, we were told that the Government would reduce state power. I have never known a state so powerful as ours is now : there were some 10,000 policemen at Wapping, police were used in the miners' dispute, the police are controlling everyone, and huge MI5 and MI6 buildings are being constructed and used. State power has simply been transferred from attempting to protect the public against exploitation to protecting the people who support the Government against any challenge to their power.

I have referred to the word "customer" in the House on several occasions. To be a customer, one must have money. If one has no money, one cannot be a customer. The people in cardboard boxes are not customers. They desperately need houses, but they do not have the money to turn their need into a demand. Therefore, a word has been devised and injected into the citizens charter, which is all about depersonalising and dehumanising a huge and growing section of society--those who are so poor that they cannot get what they need. I am afraid that the result of all that--this is where the politics comes into it--has been to widen the group of people who have totally rejected the philosophy of the 1980s. One could make the miners out to be unpopular if one had the Daily Mail or the Daily Express on one's side. One could attack the print workers. However, the Government have now turned on the public servants.

The Chancellor of the Exchequer is making a great mistake if he thinks that civil servants and local government workers believe that market testing has anything to do with efficiency. Not only has a huge layer of bureaucracy been set up to carry out that artificial market testing, but if better value for money is achieved, it is on

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the basis of lower wages and poorer conditions for those performing the services, and rocketing incomes for the managers who favour privatisation because that is how they double, treble and quadruple their incomes.

We should not underestimate what the Government have done to the prison service. I went across to Westminster Central hall the other day with my hon. Friend the Member for Bolsover (Mr. Skinner), who received a standing ovation from the prison officers. He asked me afterwards what he had said wrong. I told him, "You said nothing wrong, Dennis. You spoke of the prisons as a public service." We should not think that the police are not concerned. When I was at the Durham miners' gala 10 days ago, a sergeant said to me, "Mr. Benn, 10 years ago I thought you were dangerous. Now I agree with everything you say." The police are also being attacked. I welcome them on the picket line now because I say, "Next year it'll be Group 4 Security and you will be on our side." The police know that that is the case.

I believe that there is a widespread rejection of the Government's policy. Although we tend to speak in the House in economic debates in the jargon of economics, most people know what it is all about. It is about the return to Victorian conditions when the country was run by a handful of wealthy and powerful people and the rest of the people were on the floor.

Mr. Wolfson : Will the right hon. Gentleman give way ?

Mr. Benn : No, I will not give way. I am making a point. I hope that hon. Members will listen because I want to keep within the 10-minute limit, although we have not yet reached 7 pm.

The answer to all this is repression. The Government introduced the Criminal Justice and Public Order Bill because they know that they are sitting on an explosive situation. Therefore, the police are to be used to prevent matters from getting out of control.

As to the economy, the Chancellor controls nothing. In respect of my hon. Friend the Member for Dunfermline, East (Mr. Brown), who I hope will soon succeed the Chancellor, the Chancellor made much of the point that the economy is controlled by international capital. That is the way it was intended that it should be controlled. Capital has been wholly liberated to move where it likes, and labour and Parliament have been restricted.

I do not want to reopen the argument about the ERM, which I voted against when the Labour national executive met before the last election. Nor I do not want to raise the question of the central bank. However, if there is a central bank--my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) has often pointed this out--a future Chancellor will have no power. Indeed, at the moment, if sterling drops three decimal points, the Secretary of State for Health pops up and closes three hospitals and confidence is restored.

It is a facade to pretend that the Chancellor is running the economy. The Chancellor is responding to forces that he has helped to liberate because he himself does not really believe that an elected Chancellor should have any control over the world economy. We can add to that GATT and the World Trade Organisation, a wholly undemocratic body accountable to nobody, which will have the power to force

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nations which sign GATT to abandon certain environmental protections and other matters because they interfere with free trade. GATT and the central bank are part of that mechanism, and little scope for action is left.

I hope and believe that, with the new Leader of the Labour party, whoever he or she might be, on Thursday, and with the new Government after the next election, we shall adopt totally different objectives. Governments should be judged by their objectives and not by their techniques, playing a game that they do not control. Everybody in Britain should have useful work available at a living wage throughout their lives. That should be an objective of policy.

When I was 17, the then Government had a marvellous employment policy. When one was 17, one received a very nice letter from the Government, saying, "Will you turn up on your birthday ? You will receive free clothes, free accommodation, free food and free training. All that you have to do is to kill Germans." They had a lovely youth training scheme in Germany, too. The Germans were asked, "Will you join the German army ? You will receive free accommodation, free food, free clothes and free training if you will kill the British."

If we can do that in wartime for destructive purposes, nobody will persuade me that we cannot have full employment in peacetime, to build the infrastructure, to clean the rivers, to print schoolbooks, to reduce the size of classes and so on--of course we can, but it is not profitable to do it, and that is why it is not done.

People are entitled to a home. Why should there be a rat race between the really homeless and the temporarily homeless for a little bit of housing ? We should build houses--there are 500,000 building workers. What I have discovered is that it is so long since the case for socialism was made that people have forgotten the argument against it. When I say, "There are 500,000 building workers, so why do we not use them ?" people say, "What a marvellous idea. What is the reason ? There must be some reason." Of course they have forgotten the reason because that case has not been put, but, if it is put, it will have enormous political support.

People are entitled to lifelong education. I am for raising the school leaving age to 95--I always have been. When I first spoke in favour of raising the school leaving age to 90, I had a letter from a pensioner from Liverpool who said, "I have just received an Open university degree at 92. Tony, will you raise the school leaving age ?" Education should be alongside one throughout one's life. One goes into education just as one goes into a library to learn what one wants, when one wants, and comes out when one has learned it. That is education, not stuffing people like turkeys to get into selective schools to obtain better jobs.

People are entitled to health care that is free at the point of use. We have never had a free health service. Aneurin Bevan did not introduce a free health service. He introduced a health service that was free when one needed it and which one paid for when one was well. For those who are doubtful about socialism, it was the most socialist and most popular thing we ever did, and we had the resources to do it.

People should have dignity when they retire. I say "dignity" rather than "a quiet life" because many old people have much to offer. We should spend less on the means of war and more on the means of life. Hon. Members do not comment that the Japanese and Germans are so strong because they make civil goods. We can sell

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a few missiles to a sheikh, while the Germans and Japanese pour out civil production, but we have to plan if we are to do that, just as at the end of world war 2 Beaufighters stopped coming out of the Bristol Aircraft Corporation in Bristol, and about six weeks later prefabricated houses started to be built. That had to be planned ; it did not happen as a result of market forces. I am in favour of an incoming Government committing themselves to such matters. Do not tell us that public expenditure is evil, because we dealt with unemployment by public expenditure before the war. We took people off the dole and put them into factories producing tanks, guns and ships. They did not receive dole money : they received wages, and they paid tax and paid for the war. There were no market forces. My granny never bought a Spitfire. I never saw a tank in the back garden. My auntie never had a sten gun. The Government bought those things. If we can do that for defence, we can do it for civil and manufacturing reconstruction.

The one absolutely basic national interest in this country is that one should be able to earn a living--that applies to farmers but not to manufacturing industry--and pay fair taxation. I do not know why people are so worried about our tax argument ; I mentioned it in an intervention on the Chancellor.

There are only two questions about taxation : what is it for and who pays ? If the Government tax a pensioner VAT on fuel, even on his standing charge, and use it for a Trident, that is mad. I go around Chesterfield, where a family of four pays £32 a week on weapons before they have paid the rent. I ask, "Aren't you spending a bit too much on weapons ?" They say, "No, we're not." I say, "Oh yes, here is your share." Do they feel more threatened by vandalism due to unemployed lads on their housing estates or by a nuclear attack by Kim Il Sung's son in North Korea ?

The balance is absolutely wrong. If we put forward the argument with credibility and conviction, there will be enormous support for it, and I hope that it is noticed where the voices are louder than mine. If we are to do that, we must have more democracy and we must seek the powers to do so.

I do not know how the next Labour Government will cope with the Brussels Commission. However, I do know that my right hon. Friend for Islwyn (Mr. Kinnock), who I gather has moved to an office of profit in the Commission-- whether it involves his immediate resignation is a matter for the Clerks, not for me--will tell us that we cannot take action to deal with those matters because that would involve interfering with market forces. That is what Maastricht is all about.

Therefore, when we present the argument--I shall have to do so in Chesterfield, if I am reselected, which I hope I am--there must be an element of truth about it. We can talk about objectives, but, as old Clem Attlee used to say, and it was in our 1945 manifesto, the test is not one's aspirations but rather whether one has a workmanlike plan for dealing with the matter.

A workmanlike plan for dealing with unemployment, which would be the greatest thing that we could do for this country, for men and women and for old and young, would involve intervening in the economy to prevent our future being handed over to the speculators and the gamblers who now control it. The people listening to the debate might be

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more interested to hear that issue discussed, rather than to hear the exchange of quotations, of which many are to be found in Hansard .

It will be terribly difficult to return to full employment in a technological age. We shall not do it by raising the school leaving age, and we shall certainly not do it by raising the retirement age for women by five years. We must have, perhaps, a shorter working week and we must make all sorts of changes, but people want to know how it will be done, because their vote and support will be determined by that rather than by the false idea that somehow in this House we can so manipulate the world economy as to create the conditions that we want.

We live under the control of international capital and, until that is in some way discussed, challenged and altered, our discussions may be no more relevant than municipal discussions when a council is faced with a standard spending assessment imposed by the Department of the Environment.

6.17 pm

Sir Terence Higgins (Worthing) : It is always a pleasure to hear the right hon. Member for Chesterfield (Mr. Benn). If time allows, I should like to answer many of his points, but there is one matter about which I am deeply concerned, so I shall concentrate my remarks on that.

I greatly enjoyed the speech of my right hon. and learned Friend the Chancellor of the Exchequer, not least because the summer forecast contains much good news and provides a firm basis for further progress. However, I am bound to say that my enjoyment was tinged by the old adage, "Absence makes the heart grow fonder." I think that I am right in saying that my right hon. and learned Friend has not spoken in a debate in the House since 9 December. I cannot, in only 30 years--not 40 years, like the right hon. Member for Chesterfield--remember an occasion when a Chancellor has gone so long without addressing the House. He has made many speeches outside, but he has not made a single speech in the House since then.

As my right hon. and learned Friend the Chancellor rightly pointed out, we have had an enormous number of Supply days, none of which was devoted to the economy. Perhaps that is understandable, given the satisfactory general management of the economy that forms the background to today's debate ; nevertheless, it is extraordinary that there has been no Opposition day debate on the economy for such a long time.

My right hon. and learned Friend suggested that the shadow Chancellor was not anxious to debate such matters. I had the impression that perhaps it was only every six months that he managed to cook up enough jokes to conceal the fact that he was not going to give any answers to questions about the Opposition's real policy on central issues of economic management --although, of course, we hear plenty of talk about peripheral matters.

Mr. Alan Milburn (Darlington) : What about VAT ?

Sir Terence Higgins : As I was responsible for the original zero- rating of fuel, let me say a word about that. In practice, the taxing of fuel has proved to be an appalling socialist measure : we are now taxing the entire country's fuel, and redistributing almost half the money to the lowest paid and pensioners. I am surprised that Opposition Members have not cottoned on to that.

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What worries me is this. We have not heard from my right hon. and learned Friend the Chancellor in more than six months because we now have a so-called unified Budget. The question was debated for many years--for instance, by the Armstrong committee back in 1978, and by the Procedure Committee which I chaired in 1983. All were certain of one thing : if a unified Budget was to be introduced, the procedural aspects would have to be examined very carefully.

Before the last general election, a White Paper was finally produced. Its publication, however, was overlooked because of the election itself. The next thing we knew was my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) telling us, in his 1993 Budget speech, that there would be a unified Budget in the autumn. I feel bound to say that, in procedural terms, the move was pretty disastrous. Because the procedural aspects had not been thought out properly, we had to guillotine two Bills on the same day. The Opposition--rightly, in my view--were very concerned. The usual channels broke down, the operation of Select Committees was inhibited and the general work of the House was disrupted. We must not let that happen again this year, but it is far from clear how we are to avoid it.

In particular, as a result of that change, opportunities to debate the most important area of policy--economic policy--have been seriously eroded.

Mr. Butterfill : Will my right hon. Friend give way ?

Sir Terence Higgins : No ; I want to develop this point. In recent years, the normal pattern has been for the autumn statement to take place-- understandably--in the autumn, followed by debates on the White Paper just after Christmas and debates on Budget measures until this time of year. The Chancellor of the Exchequer has appeared at various points in the sequence, and on each occasion has also appeared before the Treasury Select Committee. The introduction of a unified Budget has greatly reduced the amount of time available for the House to debate such matters, which has important implications in terms of accountability.

It is astonishing that the Opposition have not kicked up a row, but it is not just a question of what they think ; it is a question of the House and its future. Sooner or later--in 20 years, perhaps--we shall change sides. We may suddenly find that there are very few occasions on which to debate the economy, with which the Conservative party has always been passionately concerned.

It is doubtful whether we should return to the old arrangement, although in some respects it might be better than what we have now. We must examine the possibilities carefully. The Government have saved a good deal of parliamentary time ; in a sense, today's debate is a mere sop. I believe that we should keep the detailed debates that take place on estimates days, but that we should also have more time in which to debate Select Committee reports on expenditure, because Select Committees are responsible for examining the policy, administration and expenditure of their Departments.

Since we reformed the system 12 or 15 years ago, it has been very difficult for Select Committees to examine expenditure because of the form of the estimates. Following the reform of the estimates procedures, much of

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the data are now in the annual reports of the Departments : for the first time the Committees can really look at them, and for the first time the House has an opportunity to examine the expenditure of individual Departments in detail. I believe that the time that has been saved should be devoted to a number of days on which the expenditure details of the reports can be debated, on the basis of the Select Committee reports.

Mr. Butterfill : Will my right hon. Friend give way ?

Sir Terence Higgins : No. I am about to make a point that is related to what I have just said, and I do not want to interrupt the flow of my argument.

lthough we are told that we have a unified Budget, in fact it is no such thing. In the autumn statement and Budget debates, we have always discussed both sides of the equation--public expenditure and taxation--and there has never been a problem. Now the two have been brought together. Last year, the amount of public expenditure detail that was presented at the time of the autumn Budget was not very great, and I doubt whether it will be this year either.

The unified Budget means that we now have far less time in which to debate public expenditure. We have lost the White Paper debates, which, although they were never very satisfactory, at least gave us some time in which to discuss that subject. We do not have a truly unified Budget, in the sense that a proposed increase or cut in public expenditure is balanced against a proposed increase or cut in taxation. The House, of course, is inhibited from proposing increases in either tax or expenditure--that is reserved for the Government--but, in a unified Budget, a trade-off between the two would be necessary. It is also true, however, that there is no real unified Budget within Government. I suspect that the Secretary of State for Health, for example, does not go along to the Chancellor and say, "I must spend another £2 billion on the health service ; please put 2p on income tax." It does not work in that way. As we know, there is an expenditure round which is debated bilaterally ; it may be dealt with by a Committee, and, if the matter is in dispute, it may go to the Cabinet. The Chancellor then decides what to do about taxation. I believe that it is very dangerous to take such action without considering the procedural aspects. I suggest that the estimates days should be retained for more expenditure debates, and that more of the time that has been saved should be devoted to debating Select Committee reports more generally.

One of the Chancellor's remarks gave me considerable cause for concern. He said that the policy of countries across Europe, and his own policy in particular, was to cut the deficits incurred during the recession ; he implied that the right approach was to increase taxation, against the present level of unemployment. I think that that is rather a dangerous concept. We still do not know the extent to which our deficit is cyclical and the extent to which it is structural ; but, unless the Chancellor was implying that there has been a huge increase in the structural deficit which he needs to cover by increasing taxation, I am very doubtful about his proposals. He is in danger of slowing down the recovery and affecting the balance in such matters. Even in 1995, the deficit is forecast to be about £28 billion and there will be some problems funding that.

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The issues are complex and I do not have time to deal with them now. One passage in the Chancellor's speech contained a dangerous statement. It could have been an off-the-cuff remark, but if it was drafted in advance, it needs to be re-examined closely, perhaps by the Treasury Select Committee.

The introduction of the unified Budget has eroded the ability of the House to hold the Government to account and that is a dangerous state of affairs.

6.30 pm

Mr. A. J. Beith (Berwick-upon-Tweed) : I share the reforming zeal of the right hon. Member for Worthing (Sir T. Higgins) and his desire to make the unified Budget what it should have been and what he intended it to be when he played his part in introducing some of the reforms. It should have been a process through which we would have more effective Budget-making, with tax and revenue reviewed together, and more accountability. That is not yet the result of the change and I very much agree with the right hon. Gentleman about that matter. I can understand the Chancellor wanting to dwell on the good indications contained in the present economic figures, but that is no excuse for the staggering complacency of much of his speech. It was the equivalent of the Italian fans getting out the champagne bottles when the whistle blew and the score was still 0-0. In the case of the British economy, there is more than a penalty shoot-out still to come. To make matters worse, we know more than the Italians about what could go wrong in the next stage.

From experience and our knowledge of the British economy's weaknesses, we have a pretty fair understanding that the favourable signs that we have had so far will not, by themselves, see us through the next crucial stages of recovery from a very deep recession. We shall face severe pressures. It is a known fact that the United Kingdom economy has scarce capacity in transport, skills, housing and industrial investment and that those become pressure points when growth begins again.

Growth is apparently buoyant, which I welcome, and it has been less affected by the scale of the tax increases than I feared. That fact is a significant feature in the political debate--indeed, it qualifies what the right hon. Member for Worthing said concerning his fears about what would happen if the Chancellor relied too heavily on tax increases to deal with the continuing deficit next year. So far, the evidence shows that the tax increases have had less effect on growth in the economy than some of us might have expected.

Present growth is stimulated by consumption, however, and not investment, which is what many of us feared. The risk is that inflation will develop again. It is all very well to point to the statement in which the Governor of the Bank of England described the favourable features of the present economic situation. It would also be easy to point to his warnings that interest rates may have to rise if inflation starts to increase again.

The Chancellor has ratcheted taxes to an all-time high and now has the political objective of cutting them again. If growth restores public finance sufficiently to allow tax cuts, those very cuts may over-stimulate the economy. If it is prudent to cut taxes because revenues have been sufficiently boosted by growth, the Chancellor will face the

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