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Mr. William Cash (Stafford): On a point of order, Madam Speaker. In connection with the Council's own resources decision and the European Communities (Finance) Bill, which we shall consider tomorrow, I thought that you would be interested in the following account. In April 1994 the Select Committee on European Legislation considered the own resources decision that was about to be made, and, against the background of the Government's explanatory memorandum as provided by the Paymaster General of the day, in paragraph 10.5 of our report we wrote:
"In the light of the Paymaster General's account of the Government's position and the conclusions already reached in the Council, we do not feel that there is practical advantage in further consideration of this proposal. We take it that, as unanimity is required, this amended proposal cannot be proceeded with in the face of the Government's opposition. If this amended proposal were to be further changed, we would expect a further round of Scrutiny to be initiated. Were the Government to change its view on the present unamended proposal we would expect to be informed before any decision were taken in the Council."
As you will know, Madam Speaker, a resolution of the House dated October 1990 clearly says that there would not in any reasonable circumstances be any removal of a reserve imposed by resolution of the House through the Select Committee on European Legislation, if a matter of such importance were to be considered in the Council of Ministers.
I believe that there was no such reference back to the Select Committee before the Chancellor of the Exchequer went to Brussels and agreed to what had been decided by other member states on the own resources decision. I should therefore be glad if you, Madam Speaker, considered that point. It seems to me that there has been a prima facie breach of the resolution of the House of October 1990.
Madam Speaker: I am interested in the hon. Gentleman's point of order, but it seems to me to be a matter of interest rather than material for a point of order. It is something that the hon. Gentleman might raise in debate--tomorrow perhaps--to extract a reply from the Government Front Bench.
Mr. Ian Bruce (South Dorset): On a point of order, Madam Speaker. Earlier today the Government announced the single regeneration budget, which I believe is about £4 billion over the next three years. The Department of the Environment has written to every hon. Member--either to all 651 of us or at least to all those affected--to tell us the good news, but, unfortunately, because of the volume of the document, the House authorities have not been able to distribute the information through the Members' notice board, and most hon. Members do not know that the document is tucked away near the office of the Liberal Democrats.
I wonder whether you, Madam Speaker, could look into the matter. I have already spoken to the Deputy Serjeant at Arms and asked him to ensure that the material is
Column 158distributed, so that in future we can all be given such good news. It must be good news when £2.7 million is to come to Portland, in my constituency, to help regenerate jobs.
Madam Speaker: The hon. Gentleman appears to be behaving like Pat the Post. I am sure that the Serjeant at Arms, who normally takes care of such matters, will ensure that the document is distributed as soon as possible. Copies for 651 Members represent a great volume of mail for our board to deal with, and I am sure that it will all be distributed as speedily as possible.
Order read for resuming debate on Question[29 November] .
Motion made, and Question proposed ,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide--
(a) for zero-rating or exempting any supply, acquisition or importation;
(b) for refunding any amount of tax;
(c) for varying any rate at which that tax is at any time chargeable; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.--[ Mr. Kenneth Clarke.]
Question again proposed.
Madam Speaker: I must tell the House that I have selected the amendment in the name of the Leader of the Opposition to the first Ways and Means motion. It may be convenient if, at this stage, I also announce that I have selected the amendment in the name of the Leader of the Opposition to the motion on public expenditure, which is being debated together with the Budget resolutions.
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): The economic policies othe Chancellor, of which this Budget is an essential part, are long term. The first priority for a successful industrial and commercial policy is to establish economic conditions within which enterprise can flourish. The single most important part Government can play in fostering growth and improving competitiveness is to provide a stable macro-economic background.
The Government's overall economic objective is to promote sustained economic growth and higher living standards. Last week, my right hon. and learned Friend the Chancellor presented the Government's taxation and spending plans for the next three years, enshrining those guiding principles. This was a Budget that concentrated on securing a healthy, lasting recovery. This was a Budget to reduce long-term unemployment and to get us out of debt. It offers the best prospect that the British people have faced for decades to enjoy the benefits of growth which does not pass through illusory boom to painful bust. Overhauling the tax system every year can often make good newspaper headlines, but it can also have an unfortunate effect on the economy. Our priority is, as it must be, to ensure sustained, low-inflationary growth, which is our best chance of delivering the higher living standards that our people expect and deserve. Low inflation and sound public finances are an essential prerequisite for a successful and expanding economy. They are not optional extras.
Column 160A stable macro-economic environment is vital to give business the confidence it needs to invest in the future. Inflation is the enemy of investment; it erodes profits and encourages safety-first, short-term attitudes. That is why the Chancellor set a target for underlying inflation of 1 per cent. to 4 per cent. and aimed for the bottom half of that range. Underlying inflation is, at 2 per cent., at its lowest level for a generation. It has been below 3 per cent. for 13 consecutive months, the longest run since 1964.
Our public finances are firmly on track to be in balance by 1998 and in surplus by the end of the decade. Total Government spending is set to fall by £28 billion over the next three years. That is not just the effect of low inflation, welcome though that is. It involves real spending cuts to reduce further the amount of national income taken by the state.
Mr. William Cash (Stafford): Does my right hon. Friend agree that the gas and fuel tax is being imposed largely because the time that we spent in the exchange rate mechanism when we should have got out led to a massive increase in our public sector borrowing requirement? It went up to £50 billion with the accumulated social security and other costs. In fact, this new tax, which amounts to a breaking of our tax pledges in the manifesto in terms of both tax and public expenditure, is being imposed simply to retrieve the mistakes made as a result of remaining stubbornly in the exchange rate mechanism when we should have come out.
Mr. Heseltine: I am afraid that I must say that many of my hon. Friend's speeches are fairly repetitious. One would think that the whole of human history started and ended with our leaving the exchange rate mechanism.
The Chancellor has explained clearly the overall balance that his judgment in the Budget is intended to achieve. I am now setting out what I believe to be the important background to that. That background, coupled with the continued flow of good economic forecasts, provides one of the most optimistic scenarios for industry and commerce that many of us can remember.
The House is all too familiar with obligatory attempts by the Opposition to undermine any announcement or statement that portrays this country in a favourable light. What the Opposition cannot ignore is the massive vote of confidence from the outside world when it confirms its judgments about what is actually happening in the British domestic economy. The Organisation for Economic Co-operation and Development predicts that the UK economy will be the fastest-growing major economy in the European Union this year. Our exports have soared to all-time record levels, inward investment is transforming our older, more traditional, workplaces and nation after nation is copying the ideas developed here to privatise our industries and deregulate our practices. It is this that gives the lie to the Leader of the Opposition's assertion in his opening speech on the Budget that we have no long-term strategy.
It is clear for all who want to see that we are delivering a strong and prosperous economy. What is more, we are putting in place the conditions to ensure that it remains that way. The Labour party simply cannot understand that the UK's economy has been transformed over the past decade.
Column 161power, we have lost more than half our manufacturing jobs--more than 166,000 jobs. In the first half of 1990, we lost 30 per cent. of manufacturing investment. In 1994, we have lost 30 per cent. of manufacturing investment in Britain. Is the Minister saying that the glory hole is round the corner? We have heard that, yet the Tories are going on and on with their mismanagement of our manufacturing base.
Mr. Heseltine: The way in which the hon. Member seeks constantly to run down the achievements of the Scottish people is immensely dispiriting. The Scottish people are attracting massive inward investment from some of the world's most advanced high-technology companies. Anybody who goes to Scotland and sees what is happening in Glasgow and Edinburgh, to the central belt and to silicon glen, knows perfectly well that the Scotland depicted by Labour Members is far divorced from the reality of what is being achieved north of the border.
It is clear, for all who have their eyes open enough to see, that we are delivering a strong and prosperous economy. What is more, we are putting in place the conditions to ensure that we keep it that way. The hard reality is that the Labour party simply cannot understand the way in which we have brought about that remarkable transformation and improvement.
Mr. Heseltine: Let me explain to the Labour party exactly what has so transformed our economy over the past decade and a half. In the 1980s, productivity grew faster in this country than in any other major industrialised country. Investment in plant and machinery has risen by 54 per cent. since 1979. Business investment has risen by 35 per cent. over the same period. Wherever one travels outside the country, people pay tribute to the transformation that has taken place in British economic performance. Our industrial and commercial managers know just how exciting a prospect that is for their products and their services out there in the world markets. Here in the United Kingdom, the Opposition, day after day, undermine and underplay our achievements and our resolve to build on them.
Mr. Michael Connarty (Falkirk, East): The Engineering Employers Federation report before the Budget showed that manufacturing investment by volume had fallen by 24 per cent. since 1990 and that engineering investment had fallen in every quarter since the last quarter of 1989. In fact, Mr. Tim Melville Ross of the Institute of Directors said that the Budget was a missed
Column 162opportunity, that it merely tinkered at the edges of business and that it did not deal with the fundamental long-term growth needs of our manufacturing industry.
Mr. Heseltine: It is obvious that the hon. Member has not followed the latest surveys of industrial confidence, which tell a totally different story. We have, in fact, a fast-growing, low-inflation economy with a competitive currency. The challenge for the Chancellor is to keep in place the disciplines that have brought that about. The Budget has been widely praised precisely because he has achieved that objective.
The Chancellor has added to the comprehensive improvements in our export credit arrangements in a further set of changes to enable our companies to compete overseas. He has announced changes in our insolvency law which will encourage a rescue culture in the United Kingdom. At the same time he has made some constructive improvements to help with incentives that will encourage the availability of finance for small businesses. He has raised the value added tax threshold for small businesses and helped them also by reducing employers' national insurance contributions for low earners. He has eased administrative burdens on 100,000 small businesses by increasing the threshold for making quarterly returns to the Inland Revenue. In addition, he has introduced a £600 million package of transitional relief for uniform business rates, which again will be of special benefit to smaller companies.
Perhaps the most unexpected and particularly welcome development in economic policy has been the growing awareness that, unlike all earlier economic revivals in this country, we are now enjoying an improvement that is based on export growth. We can add to that the latest CBI forecast of investment intentions, which shows that companies expect to see a growth of over 11 per cent. in manufacturing investment next year. The House will recognise why we have the economic background for which we have so long striven but hitherto failed to achieve and good grounds for believing that the exciting trends that are now under way will continue.
Perhaps the most interesting example is that a year ago commentators were confidently predicting a widening trade deficit as imports were sucked in as a result of a consumer-led surge in activity. Consumer demand has risen by 2.3 per cent. over the past 12 months. But while total imports have increased by 4 per cent., exports have risen by 11 per cent. The current account deficit is expected to halve this year and to continue falling next year. Our underlying exports to the European Union are up 17 per cent. on a year ago, although the European economies have grown by only 5 per cent. in nominal terms. The upturn in economic activity in Europe means expanding markets and opportunities for our exports. Consequently, as the recovery has strengthened, growth has come increasingly from exports.
The markets of the Pacific include many with consistently high economic growth rates. It is especially encouraging to see that our exports to China grew by 47 per cent. between 1992 and 1993. More recently, our exports to Malaysia in the year so far have grown by 42 per cent., to South Korea by 31 per cent. and to Singapore by 22 per cent. It is in competition with others that we can really see whether we are making progress. For decades, our world share of manufactured exports by
Column 163volume fell back. We halted that decline by the mid-1980s. Since then our share of manufactured exports has broadly held.
Recently our exporters have been able to take advantage of the pick-up in activity. Our market share for manufactured exports is set to increase this year, and it is expected to do so again the year after. Manufactured exports are expected to rise by nearly 10 per cent. in 1994 and by 8 per cent. in 1995.
Mr. Michael Fabricant (Mid-Staffordshire): My right hon. Friend referred to exports to China. Does he agree that the measures taken in the Budget to strengthen ECGD support to China, Indonesia and other countries will assist exports in that direction?
Mr. Heseltine: My hon. Friend is absolutely right. My right hon. and learned Friend the Chancellor of the Exchequer has been extremely helpful to our exporters by consistently improving the competitive terms of ECGD. That is a fact that has been widely admired and praised by the companies on which our exports depend.
Mr. Barry Sheerman (Huddersfield): The right hon. Gentleman might like to know that many of us recently met representatives of the Engineering Employers Federation from Yorkshire. They are not entirely critical of the Government, but they are extremely concerned that the Budget did not deliver much help to those engaged in the engineering world. They are extremely worried that a rather neutral Budget will be coupled with an increase in interest rates, which would be damaging to what they might see as any improvement.
Mr. Heseltine: The hon. Gentleman makes a selective point. He fails to reflect on the confidence that is being indicated. I mentioned the CBI's survey and quoted figures that appear in it. Confidence is felt by British exporters across a wide area. If the hon. Gentleman cares to examine the record that is being achieved by British exporters in manufacturing and engineering, he will see that that is one of the most exciting backgrounds that we have had for many a long year.
Mr. Ian Bruce (South Dorset): My right hon. Friend has rightly pointed to the expansion in manufacturing in this country and to our exports. However, that is only part of the picture. If we consider the most successful economies of Japan and America, it is clear that the number of people employed in manufacturing industry is shrinking rapidly. They are being replaced by people in knowledge-based services and industries which are related to manufacturing. If we look only at investment in manufacturing, we do not look at the whole picture. The strength of our economy is that we have knowledge-based industries coming through.
Mr. Heseltine: My hon. Friend is perfectly right and that is why I referred to business investment. As anyone who studies these matters is fully aware, the reclassification that is taking place as manufacturing companies out-source their procurement into the service industries is making a mockery of much of the historical figure base. The important aspect is to consider the overall position in the economy.
Column 164The Hong Kong economy, one of the most dynamic economies in the world, is now down to 15 per cent. manufacturing because the whole basis of manufacturing has shifted to the southern province of China. No one would question the vibrancy of the Hong Kong economy. We must take the broad view. There is no doubt that in our economy today we are losing jobs in manufacturing, but a very exciting future is on offer to us as we attract throughout the United Kingdom a larger and larger proportion of the investment into the European Union. Our manufacturing exports are rising and are on a rising trend which is likely to improve our position in world trade. Our exporters have earned that success by keeping their costs down and by raising their productivity. Over the past year, manufacturing productivity has risen by 6 per cent., far outstripping the growth in earnings. As a result, unit wage costs have actually fallen by nearly 1.5 per cent. That is the biggest fall since records began in 1970. Our manufacturers have also succeeded in improving their performance in domestic markets so that while exports continue to rise, imports are little changed. Our current account deficit has fallen sharply this year. In the last quarter, it stood at less than £0.7 billion compared with £3.1 billion for the same period a year ago. An improving balance of payments is remarkable at a time when the economy is growing so strongly.
In support of that, the Government have put in place the most comprehensive export support strategy that we have ever seen in this country. That has been done in partnership with the private sector. There are now 108 middle managers seconded by Britain's leading companies into my Department to support our exporters across our 80 principal markets. We are now recruiting another 70 experienced exporters to bring the rapidly growing chain of Business Links into direct contact with our overseas markets.
It is no wonder that today the commentators are talking of closing the balance of payments gap. It is particularly satisfying that all those trends that I have described are now feeding through into the employment market.
Mr. Heseltine: Because the Government are determined to maintain the disciplines that have enabled the Chancellor to produce a Budget which has gained the confidence of the markets and which are essential prerequisites to maintaining the growth upon which future prosperity depends. That is in stark contrast to the policies that the hon. Member for Bolsover (Mr. Skinner) has advocated and supported all his life.
The clearest sign that things are beginning to work as the whole House would wish is that unemployment has been falling for nine successive months and is now more than 300,000 lower than a year ago. It is nearly 500,000 lower than two years ago. The United Kingdom is the only major economy in Europe where unemployment has fallen over the past year. The welcome measures that my right hon. and learned Friend the Chancellor announced in his Budget last week to help the long-term unemployed back to work will ensure that that rapidly improving picture continues to improve further.
Column 165There has been much debate over the past few days about energy prices. I should like to set the debate in context. The Opposition have always said that there was no way of freeing the utilities from state control. They said that they were "natural monopolies" and that there was no alternative to public ownership. As usual, they were wrong.
We have introduced competition wherever possible. There are now 36 companies supplying electricity--twice the number before privatisation. Forty companies now supply natural gas. There was only British Gas before privatisation. Where competition was not possible, we introduced tough and transparent regulation to replicate market pressures.
Let us consider the results. Productivity in the industries has leapt. The electricity generators have increased their labour productivity by more than 50 per cent. since 1990. Improved efficiency has led to higher rates of return. Before privatisation, the regional electricity companies were accustomed to rates of return on their capital employed as low as 1 per cent. to 2 per cent. Last year, they earned a rate of return of 20 per cent. As a result, investment has shot ahead.
Real investment in the electricity industry has increased by more than 10 per cent. since privatisation. That can be compared with the record of the last Labour Government when the investment programmes were cut by 25 per cent. between 1974 and 1979.
No one has any doubt about the fact that they would rather not see price increases, but let us get the issue into perspective. Under the Labour Government, electricity prices in real terms rose by 22 per cent. in five years. Under the Conservatives, and allowing for the full impact of VAT, the equivalent figure today would be about 17.5 per cent. in 15 years.
The improvements are not restricted to electricity. Between 1974 and 1979, real industrial coal prices rose by 30 per cent. Between 1979 and 1994, they fell by nearly 50 per cent. Between 1974 and 1979, domestic coal prices increased by 18 per cent. Since we came to power, they have been held broadly stable in real terms.
British Gas has increased its level of investment by 200 per cent. in real terms since privatisation. Customers, too, have seen major improvements, with falling prices and improved service quality. The average gas consumer has benefited from a fall in real prices since privatisation of 23 per cent. before VAT.
Let me demonstrate what that means. A rough calculation shows that the average domestic gas bill in the last year before privatisation was £422 in today's money. Including the full effects of VAT, today that average bill would be £382 and that is before any discount under the new direct debit proposal.
Industrial customers have also benefited. Their real gas prices have fallen by 35 per cent. since privatisation. Between 1974 and 1979, far from falling by 35 per cent., their prices rose by 75 per cent. What does that mean? It means that faced with the increased prices under a Labour Government with a nationalised industry, Labour tried to hide the fact that prices were going up by making the industries bear the heaviest burden and pass the price increases on to their customers. Industry took the blame as opposed to the Labour Government. However, that did not make the slightest difference because the prices had
Column 166to be paid by the consumer. That is the stark difference between what has happened under this Government and what happened under the previous Labour Government.
Mr. Andrew Mackinlay (Thurrock): While the President is taking us on this tour of the public utilities which have been privatised, will he respond to his Parliamentary Private Secretary, the hon. Member for Croydon, South (Mr. Ottaway)--Tarzan's monkey--who, a few nights ago in the Chamber, criticised the greed of the East Surrey water company for its high profits and high prices? Will the right hon. Gentleman note that his own Parliamentary Private Secretary criticised the greed of privatised water companies and their excessive charges, and that he criticised Ofwat for doing nothing? What is the right hon. Gentleman going to do about those excessive charges for water, gas and electricity?
Mr. Heseltine: I shall tell the hon. Gentleman why we have seen increases in water prices. It is because, from 1976 to 1979, the Labour party slaughtered the capital investment programmes of the water industry, not because it wanted to but because it got the economy into such a mess that international bankers did it. In the same way, it cut electricity capital investments, because it had no choice. They were public sector programmes, and they were cut to ribbons. I am fascinated to see that Opposition Members think that that is funny. We are now seeing expanding investment programmes in the water industry to make good the deficiencies left behind by the Labour party.
Dr. Robert Spink (Castle Point): Does my right hon. Friend welcome the decision of the chairman of British Gas to bring forward the direct debit discount scheme, which makes gas even cheaper for my constituents? Will he call on the chairman of British Gas to extend that discount scheme to all prompt payers, not just those who pay by direct debit?
Mr. Heseltine: I am extremely grateful to my hon. Friend, who brings me precisely to the point that I now make. British Gas is shortly, as the House knows, to be affected by legislation which has been promised in the Gracious Speech, and we are going to introduce yet further competitive pressures into that industry. In fact, the private sector, which of course will seek the opportunities that that will make available, is talking not about price increases in a few years but about price reductions, and in terms of prices 10 per cent. lower than we would otherwise see. My hon. Friend is absolutely right, but British Gas has already said that, some time toward the middle of next year, it intends to extend the direct debit benefits for prompt payers into a much wider category of people. Once again, we can see that gains are being distributed between customers, shareholders and taxpayers and, in the case of water and electricity, among those who care about the quality of the environment as well. Having listened to the speech of the Leader of the Opposition last week, I was amazed at the lack of integrity that underlay the case that he put forward. At no stage were his standards lower than when he spoke about regenerating economic activity in our inner cities, coal communities and steel communities. I remember Labour's inner-city policies of 1979. They consisted of a slush fund at the discretion of the Secretary of State for the Environment which was used to add to the public
Column 167expenditure programmes that were already in place--a little more on this road scheme, a little more on that school programme or on a minor environmental project.
The long-term decline that characterised our older inner cities or industrial areas had been completely ignored by the Labour party. The tinkering at the edges of the programmes that I have mentioned was actually tinkering with programmes which themselves were part of the reason for the long-term decline of urban areas.
Dr. John Cunningham (Copeland): Almost by accident, the right hon. Gentleman has stumbled on one of the issues of the debate, which is integrity. What about the integrity of himself and his right hon. and hon. Friends--the promise of the Prime Minister in the House, the promise of the Prime Minister to the British people in the general election campaign, and the promise of the previous Chancellor of the Exchequer, the right hon. Member for Kingston upon Thames (Mr. Lamont), not to increase VAT or to extend its scope? Was there any integrity in those promises?
Mr. Heseltine: I shall come to the question of integrity-- [Interruption.] I shall refer, three pages on, to integrity, and then we will have a few questions to ask about the Leader of the Opposition, what he believes in and what he stands for.
Dame Elaine Kellett-Bowman (Lancaster): Does my right hon. Friend accept that more than one third of the national health service budget goes on pensioners and that the increase in VAT almost exactly mirrors the increased spending on the national health service? Does my right hon. Friend accept that, taking also into account the fact that pensioners will receive substantial assistance with the payment of bills, pensioners, above all, will benefit from the increase in VAT, regardless of what they have been led to believe by the Labour party?
Mr. Heseltine: My hon. Friend is right to express concern. The whole House will be preoccupied to make sure that we have the most successful and fastest-growing economy that we can afford, because that is the only way in which we will be able to enhance the living standards of our pensioners.
The Leader of the Opposition sought to suggest that, in some way, the Labour Government were preoccupied with the regeneration of our inner cities. The truth is that, within our inner cities today, a transformation of historic proportions is under way.
London's east end is home to one of the biggest urban regeneration projects to be found anywhere in the world. The banks of the Mersey, the Tyne and the Tees, and the centres of Birmingham, Leeds, Salford, Manchester and many other cities are being transformed as the Government's philosophy of creating partnerships between the public and private sectors brings new life and new investment into our most hard-pressed areas. All the ideas that have made that transformation possible have been introduced by Conservative Governments--for example, the derelict land grant, urban development
Column 168corporations, enterprise zones, city challenge, regional challenge, housing action trusts or English partnerships. All of them and more are replacing the inertia and inadequacy of Labour councils with a new dynamism and new hope.
The Leader of the Opposition was at his most revealing when he said that people are fed up with privatisation. What an extraordinary admission. He is the man who is trying to persuade his party to repeal clause 4, all for a cause with which he now concludes that the people are fed up. I say to the Leader of the Opposition: if people are so fed up, why does he not stick to the principles that he has espoused all his life, and take those industries back into state ownership?
If there is a great yearning for the triumphant recapture of the commanding heights of the economy, why is the right hon. Gentleman burning the text books, hauling down the flags and preparing his own children for the heady world of competitive selection? Dreary egalitarianism may be good enough to feed the boyos in Bolsover, but the closer the leaders of the left get to the pinnacles of power, the more they yearn to turn their children into tiny Tory tots. Anyway, just suppose for one instant that the people are fed up, which I wholly reject: does that constitute the standard by which political leadership should be judged? Have the fearless leaders of yesterday's socialism now been replaced by a leader so much reduced by their failures that he casts about to determine which way the crowd is running so that he can dash in front and shout, "Follow me"? It certainly looks like it. The Leader of the Opposition is so ashamed that he denies that he ever was a member of CND. He spent the 1980s arguing that we should get out of Europe. By the 1990s, he has become so mesmerised by the social chapter and the minimum wage that he cannot sell out to Europe fast enough. What a story. On privatisation, grant-maintained schools and clause 4--a veritable Henry V. Yesterday, he was urging his dear friends once more into the breach. Today, he is stuffing the holes in the wall with all that is left of his dumped convictions.
I tell the Leader of the Opposition and the Labour party that privatisation has brought about one of the most successful industrial revolutions in the country's history. It has turned
producer-dominated monopolies into world-class companies. It has opened up competition, created choice, brought down prices and stimulated investment. It has broken up London-dominated monopolies and restored power to the provinces. It has led to vast improvements in productivity. It has played a part in leading British exports to the highest levels that we have ever known. It has led to a worldwide revolution in attitudes in virtually every significant country in the world. But all that the Leader of the Opposition can say is that "people are fed up".
The truth is that the only people with cause to be fed up with the success of privatisation are the trade unions, which have seen their power base destroyed as the prop of taxpayers' money was pulled from under them. The only people with cause to be fed up with privatisation are Opposition Members, because they have lost the industrial playthings which they manipulated and mismanaged so grossly. In the process, they have sat for 16 years where they naturally belong--on the Opposition Benches. This Budget will play its part in keeping them there.
Column 1695 pm
`other than in respect of value added tax on fuel and power for domestic or charity use'.
It is quite clear that, whatever the President of the Board of Trade came to the Chamber to do today, he did not come to defend the Chancellor of the Exchequer's decision to impose 17.5 per cent. value added tax on people's fuel bills. Indeed, had it not been for my intervention, he probably would not have touched on the subject at all.
Claims about the impact of Tory Budgets often look forlorn, if not foolhardy, in retrospect. This year's Budget looked tawdry from the start. We have had enough Tory Budgets--17 in 16 years--to make a long-term judgment on that score.
Last week the Chancellor set out his priorities: keeping the economy on track, job creation and greater prosperity, and the prevention of the emergence of a deprived underclass--I wonder where he has been for the past 16 years--in order to strengthen the economy in the longer term. Fairness was not one of his priorities; clearly, self-delusion was.
We have heard those claims before. In 1983, Lord Howe said: "This is a Budget for that recovery".--[ Official Report , 15 March 1983; Vol. 39, c. 157.]
In 1986 Lord Lawson said:
"these are . . . routes to more jobs, and jobs that last."--[ Official Report , 18 March 1986; Vol. 94, c. 166.]
However, they did not. The President's claim in his speech this afternoon that the British economy has been "transformed" has a rather jaded ring because that is exactly what Lord Lawson said in his Budget speech in 1988. He said:
"The plain fact is that the British economy has been transformed."--[ Official Report , 15 March 1988; Vol. 129, c. 993.] He went on to claim an economic miracle, and of course then came the crash. The right hon. Gentleman is making the same mistake. In 1992, the right hon. Member for Kingston upon Thames (Mr. Lamont) claimed:
"This year's Budget is a Budget for recovery".
He went on to say:
"Over the past decade our belief in low taxation has brought unparalleled growth".--[ Official Report , 10 March 1992; Vol. 205, c. 745-61.]
They were bogus claims of economic miracles by false prophets which, in reality, did not stand the test of time.
Far from lowering taxes, the Tories have literally created a tax mountain out of a molehill. From last week's Budget we know that in 1996-97, taxes will take up a record 36.3 per cent. of the average earnings of a couple with two children. That is how far the Government have got with lowering taxes. When Labour left office, the comparable figure was 32.2 per cent.
Having created their tax mountain, Tory Budgets have devastated manufacturing industry--indeed, here Tory policies have made a molehill from a mountain. Their bust-boom-bust policies have reduced the contribution of manufacturing to gross domestic product by a staggering seven percentage points since 1979. The manufacturing contribution has decreased from 28.5 to 21.7 per cent. of