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imagine a Labour Government proposing direct Government intervention by renationalisation, or another similar proposal.

Mr. Campbell-Savours: No.

Mr. Ottaway: No? Fair enough. A Labour Government could offer tax incentives to industry.

Mr. Campbell-Savours: Yes.

Mr. Ottaway: They could cut corporation tax.

Mr. Campbell-Savours: Yes.

Mr. Ottaway: Finally, they could encourage savings and discourage consumption. It is interesting that the Borrie commission rejected the final three proposals, and the only one which it was prepared to look at was renationalisation.

Mr. Campbell-Savours: We are the Labour party.

Mr. Ottaway: I know--

Madam Deputy Speaker: Order. I do not expect to have to remind Members twice of the same fault.

Mr. Campbell-Savours: On a point of order, Madam Deputy Speaker. I am sorry to intervene, but there must be a little give and take during a debate. You are excellent in the Chair, but I would ask for a little flexibility, as I am not in any way being discourteous to you.

Madam Deputy Speaker: We simply cannot conduct a debate on the basis of cross-Floor arrangements, simply because it is very confusing. At the very least, Members ought to think about the Hansard reporters.

Mr. Ottaway: We are deeply indebted to the Hansard reporters, and I apologise for the rapport that the hon. Member for Workington and I have been generating.

The point that I was trying to make was that, of the four proposals extolled by the Borrie commission, the one it was most prepared to look at was renationalisation. As the hon. Member for Workington said--improperly, from a sedentary position--"We are the Labour party." He was implying that the Borrie commission was not binding on him. The Opposition have said that on a number of occasions, and that is fair enough.

If the Opposition want to have any chance of winning votes in the south- east of England and in the midlands--the battlefield of British politics--I suggest that they leave the commission proposals as a consultative document and not look at them at all. Otherwise, they will make absolutely no progress.

Mr. Campbell-Savours: I thank the hon. Gentleman for his advice.

Mr. Ottaway: I am always pleased to hand out advice to the Opposition, and I hope to continue to do so. I remember an occasion in the 1980s, when the late John Smith was a shadow trade and industry spokesman and I was a fairly green Member, when I was going on about the shipbuilding industry, and he asked what I would do about it. I felt rather flattered that an Opposition spokesman should ask me for my opinion, and yet again I am pleased to give the Labour party advice.

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This debate has been brought about in difficult circumstances. Like my right hon. Friend the Member for Shropshire, North (Mr. Biffen), I do not mourn the loss of VAT on fuel. The circumstances in which that loss has been brought about are regrettable, but I do not believe that either the Budget or the Government has been blown off course by recent developments.

Mr. Marlow: On a point of order, Madam Deputy Speaker. As you know, there is to be an important debate tomorrow on fisheries. I understand that it is normal for Government motions to be put down by half past two, but, as of now, no motion has been put down. Many colleagues would like to table amendments which could strengthen the Government's position. I do not know whether this has anything to do with the authorities of the House, but it would be much appreciated if something could be done to get a motion put down quickly.

Madam Deputy Speaker: My understanding is that a motion can be put down at any time until the House rises. I have no doubt that the hon. Gentleman's point will be taken on board by those more able to deal with it than I.

6.58 pm

Mr. Mike O'Brien (Warwickshire, North): Far be it from me to intrude on private grief, but while listening to the hon. Member for Croydon, South (Mr. Ottaway) attack his unwhipped colleagues I was struck by the thought that perhaps the hon. Gentleman and many of those Conservative Back Benchers who voted for 17.5 per cent. VAT on fuel would, in due course, thank those unwhipped rebels for saving them from having to defend that policy during a general election campaign.

Afterwards, I thought the better of that, because people will remember those Back-Bench Conservatives who wanted the 17.5 per cent. VAT to be imposed on fuel and who voted for it. They will also remember those Conservative Back Benchers who, when they stood for election in 1992, advocated tax cuts, but delivered the biggest tax hike in history in last year's Budget. When they go to the electorate next time, they will have to answer the question, "Why should we believe you this time when you did not tell us the truth last time?" The Chancellor's revised Budget is better than the original one, but that is not due to his decision, but because he could not convince enough of his own Back Benchers to stay with him, so they voted for the Labour amendment. The way in which the Chancellor sought to proceed with imposing 17.5 per cent. VAT on fuel demonstrated how out of touch he is with the reality of life for ordinary people. He never really understood the depth of anger that ordinary people felt at the imposition of VAT on fuel and the reasons for it.

That public anger was compounded not only by the reality of 8 per cent. VAT on fuel and the prospect of 17.5 per cent. VAT, but by the decision of companies like British Gas to charge people with bank accounts less than those who do not have them, because that latter group pay in a certain way. That decision angered an awful lot of pensioners, as did the 75 per cent. pay increase, equivalent to £740, 000, paid to one British Gas boss. Although the Prime Minister said that he too felt that that increase was unjustified, he refused to condemn it. If workers had been

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asking for 2 per cent. pay rises instead of a 1.5 per cent. settlement, no doubt the Prime Minister would have pronounced them a danger to the country. The 75 per cent. increase was an appalling example of bosses following the dictum, "Do as I say, not as I do." The Chancellor does not seem to have appreciated or understood the anger in the country caused by that pay increase and the proposed VAT increase. He paid the price for that misjudgment. The Chancellor and his colleagues should now not only admit that it was wrong to propose to increase VAT on fuel to 17.5 per cent., but they should urgently implement the Prime Minister's own wish to make a law to allow shareholders to control directors' salary increases. Perhaps they should go further by allowing shareholders to reduce directors' salaries at each annual general meeting if those directors have cut jobs or failed to make the company prosper.

The Government should also intervene to put an end to the British Gas wheeze of offering cheaper bills to those who hold bank accounts. That policy penalises the poor and pensioners who may never have had a bank account and who do not want one now. Many people feel angry about that decision because of its implications for civil liberties. A middle-aged business man came to my surgery the other day and said that he did not want a bank account because he paid his bills within seven days. He wanted to know why he should be penalised in that way.

Dr. Reid: I agree with my hon. Friend that the depth of the resentment felt against the direct debit discount offered by British Gas is far more widespread than that company and hon. Members appreciate. Can my hon. Friend think of any good reason why that discount should not be offered to all those who pay their bills on time rather than just to those who pay by a particular method, which is exclusive to certain sections of the community?

Mr. O'Brien: It is obvious that British Gas aims to increase its profits at the expense of poor people and those who do not have bank accounts. That is unacceptable and the Government should take action to prevent it.

Mr. William Ross (Londonderry, East): Has the hon. Gentleman any evidence that British Gas pays all its bills within seven days of receiving them?

Mr. O'Brien: I have no evidence that it does and I suspect that it may not.

The compensation for the 8 per cent. VAT on fuel needs to be extended. As well as his package of tax rises, the Chancellor also cut the amount of help that he is giving to pensioners to compensate for that VAT. The right hon. and learned Gentleman's bribe on Tuesday night to the hon. Member for Brighton, Kemptown (Sir A. Bowden) seems to have been forgotten. He has also cut into the compensation package that he first announced in last year's Budget and which he confirmed last week. He attempted to take away any gains that pensioners might have received, because he could not raise VAT on fuel to 17.5 per cent.

From April 1995, single pensioners will receive just 20p instead of the 50p that they had been promised. The total compensation for a single pensioner will be 70p while pensioner couples will receive £1.05. The Chancellor's claim that that will be enough to compensate all pensioners completely ignores the fact that heating costs vary enormously both according to household type

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and by regions. The right hon. and learned Gentleman could and should have been more generous and kept his original promise to pensioners.

Many vulnerable people will receive no compensation for that 8 per cent. VAT on fuel, which remains unchanged. Low-paid workers, who get maximum help with housing benefit, will be offered no help with their gas and electricity bills. That will leave the poorest 20 per cent. of households 85p a week, and £44 a year, worse off as a result of VAT at 8 per cent. The compensation scheme also excludes many on unemployment benefit. Households headed by someone who is unemployed will be £1 a week-- £52 a year--worse off. It also fails to address properly the needs of the disabled, because those on disability living allowance will not receive any compensation.

We must ask whether the increase in taxes on cigarettes, beer and car fuel was really necessary. Surely, as hon. Members have already said, £1 billion was within the margin of error in the Budget. Not only that, but as the Chairman of the Public Accounts Committee has already said, the margin of error in previous Budgets in the past decade averaged around £10 billion. The Chancellor had his own rather large margin of error in last year's Budget. He told us then that the PSBR deficit was £50 billion and that he needed to impose VAT at 8 per cent. on fuel to reduce the PSBR over the year to £38 billion. In fact, he had his figures wrong, because the PSBR was £46 billion--£4 billion less than forecast. The estimate for the outturn this year is not £38 billion but £34.5 billion. The loss of £1 billion was therefore well within the margin of error in this year's Budget. The current Budget forecasts also gave the right hon. and learned Gentleman plenty of room for manoeuvre. For months the Chancellor has been trumpeting an on-going trend of lower unemployment. The Red Book cites an unemployment figure of 2.4 million people, spread over a number of years. That is the normal way in which the unemployment figures are recorded and I do not quarrel with that. The Budget Red Books do not try to estimate or predict our future levels of unemployment.

The departmental budgets have been set according to that Red Book figure. For most of the Departments that will cause few problems, but for unemployment-sensitive Departments, such as the Department of Social Security, it means that, according to table 6.5 on page 119 of the Red Book, the DSS budget will increase from £67 billion to £70 billion and up to £79 billion in 1997-98.

If the unemployment rate was to fall to 2 million during next year there would be plenty of room for the DSS budget to change. It is clear that that would have an impact on the overall PSBR. The £1 billion that the Chancellor was looking for would therefore be found easily.

I accept that other things might happen, for example, that inflation or interest rates may rise. We know from evidence to the Treasury and Civil Service Select Committee that there is leeway in the Red Book for interest rate rises in the future. There may also be inflationary pressures caused, for example, by the increasing cost of raw materials. There remains enough flexibility within the PSBR, however, to meet the targets within the margin of error without raising the extra £1 billion from new taxation.

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The real gap is not in the PSBR, but in the Chancellor's credibility, to which he alluded in answer to a question from the Chairman of the PAC earlier today. The tax rises have been introduced to protect the rather ragged reputation for financial prudence that the Chancellor liked to have. Last week's defeat was a humiliation for the right hon. and learned Gentleman, but it is all the greater when we remember the spectacle in the closing stages of the debate. Then, the right hon. and learned Gentleman tried desperately to buy off his the hon. Member for Kemptown with £120 million. He did that not because he believed that it should be done--or he would have done it himself earlier--but because he had been forced into it. He lost anyway. VAT on fuel was bad politics and bad economics, and pursuing it in the Budget showed the bad judgment of the Chancellor and the Prime Minister.

The City knows that the Chancellor and his Conservative predecessors cannot be trusted on the economy. That is not just because of the Lawson boom, the two harrowing recessions or withdrawal from the ERM but because of the pre- election tax cuts which went wrong after 1987 and 1992. That is why there were feverish midnight telephone calls to the Governor of the Bank of England after the Chancellor lost the vote.

Those calls were an attempt to bring forward by 45 minutes the meeting scheduled for the following morning, so as to get an interest rate rise announced as quickly as possible. The City had to be steadied by Steady Eddie in case it started to panic because it did not trust the Chancellor. Only that meeting with Steady Eddie George, the Governor of the Bank of England, and the raising of interest rates prevented severe problems.

Ordinary mortgage payers and businesses are paying higher interest and higher taxes because the Chancellor lost last week's vote through bad judgment and his ragged reputation had to be saved. Perhaps it would have been better if the person responsible for the bad judgment had gone and interest rates had not had to rise. The other reason for the Chancellor's decision to recover the £1 billion is that he secretly harbours fears for the economy. I share those fears, and the Governor of the Bank of England sees them as great difficulties. The economy lacks capacity. It is coming out of recession quicker than expected and that brings its own problems. The damage that has been inflicted by two Tory recessions and the neglect of manufacturing over 15 years mean that its capacity for recovery is constrained. Unless investment rises sharply the capacity buffers will be hit some time next year or shortly thereafter, and inflation will take off. The hon. Member for Croydon, South (Mr. Ottaway) was right to say that inflation has not been licked and is always there. The Chancellor knows that, and that is the reason for his decisions.

Mr. Ottaway: Why did the hon. Gentleman's Front-Bench spokesman say that the increase in interest rates was a mistake?

Mr. O'Brien: It was increased at that time because of the Chancellor's error of judgment in trying to pursue the policy of increasing VAT to 17.5 per cent. He could not even convince his own Back Benchers. The rise need not have occurred at that time. I understand that the minutes of the meeting before the one last week between the Chancellor and the Governor will be published in two weeks. At that time, the Governor

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foresaw difficulty in the economy and its capacity, and pointed out that it might be necessary to raise interest rates at some stage. However, the rush and the feverish phone calls before the vote and almost immediately after it to bring the meeting forward were caused exclusively by the Chancellor's misjudgment. That is why people are paying higher interest rates.

The recoveries in Canada, Australia and the USA started before our recovery. The USA is already hitting inflation problems despite interest rate rises and despite the fact that the recession there was not as bad as ours. The economy is ill prepared for recovery and the Bank of England has accepted that. The Governor said as much in giving evidence to the Select Committee on the Treasury and Civil Service.

The Governor voiced concern about a lack of capacity in the economy and pointed to survey evidence of business men who feel that they must be operating above normal capacity. That must be taken into account. He said that delivery times were direct evidence that capacity problems might be on the horizon; that the situation had to be closely monitored; and that it was a matter of feeling our way towards our capacity limits. The Governor was clearly concerned and warned that, if there were pre-election tax cuts next year, he would have to consider or perhaps demand interest rate rises. Conservative Members should be careful about thinking ahead and saying to themselves, "Perhaps the Chancellor has tax cuts up his sleeve to be announced just before the election," because the Governor gave fair warning that he would ask for interest rises to compensate for such cuts.

The Chancellor decided to damp down the recovery, and it seems that his objective was to prevent us from hitting the capacity buffers too soon. That was another reason for him pressing ahead with his tax rises. He realises that the economic news is not as good as it appears, that there are tangible dangers on the horizon, and that he may not be able to deliver tax cuts to his Back Benchers in the next Budget. He tried to damp down the recovery in this and the previous Budget, and the new tax increases on cigarettes, car fuel and alcohol have two main purposes. The first is to protect the Chancellor's battered reputation and the second is to slow down the economy to respond to weaknesses that have been caused by the failure of Government policy over the past 15 years.

The tax cuts are unjustified, and the way in which the Chancellor decided to raise money is open to question. Perhaps he can justify tax increases on cigarettes and petrol and perhaps even on wine, but the increase on beer and whisky is worrying. The Treasury and Civil Service Select Committee recently published a report about problems in the brewing industry. Although it did not advocate a reduction in duty, it warned of the serious problems caused by imports from abroad. The Chancellor's tax gift to smugglers could have been avoided. Even if he felt that there was no margin for error in the Budget, he could at least have recognised that the increase in the tax on beer and whisky would cost jobs and increase smuggling crimes.

There was some leeway, and the damage that the Chancellor has caused to an important sector of the economy and the effect of his measures on law and order could be considerable. To say that we will be more

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effective against smugglers while cutting Customs and Excise staff beggars belief. If those people were not made redundant but were employed in intelligence gathering, the Government's policy would be much more credible. The one Tory who got it right was the vice-chairman of the party, John Maples, who said:

"The Conservatives have let voters down, they have been in government too long, are complacent and have lost a sense of direction. They fail to fulfil promises, are clumsy at implementing policy and `shoot themselves in the foot'."

Shooting himself in the foot was precisely what the Chancellor did in his Budget. The Budget and the mini-Budget are not about Britain's future, but about attempting to salvage the Chancellor's reputation and the election prospects of the Conservative party. The price of that salvage operation will be paid by families who will have to meet the extra taxes that the Government will impose in the next year and by home owners who, because of restrictions in benefit, not only feel insecure about losing their jobs but fear that they will lose their homes as well. A price will also be paid by industry, which has been ignored for much too long by the Government.

Although they do not yet realise it, the real victims of the Budget, the mini-Budget and the Budget that preceded them are Conservative Members who will for ever be tagged with promising no tax rises and then voting for them, who promised prosperity but were prepared cynically to undermine it, and who hope to win the next election, but will lose it.

7.19 pm

Mr. Nigel Evans (Ribble Valley): I am extremely grateful for the opportunity to take part in this evening's important debate. We all know the reasons for the second Budget. Sequels never measure up to original movies and the same applies to the second Budget, but one has to appreciate the fact that we never wanted a second Budget. I found it peculiar to listen to Opposition Members saying how dreadful it was that the Government were raising taxes on fuel to 17.5 per cent. They condemned us for doing so and said that the compensation package was simply not enough. I looked through some old newspapers going back to May 1974, which reported shocking rises in electricity prices. On one occasion there was a 30 per cent. rise and an article in the business section of The Observer of 5 May 1974 stated that a 30 per cent. increase announced in the Budget speech by Mr. Denis Healey took account only of fuel price increases of 300 per cent. on oil and 45 per cent. on coal and ignored the uncomfortable fact that the industry was already heavily in the red even before the oil crisis and the miners' strike.

During the period 1974-79, electricity prices rose on average by 2 per cent. every six weeks. Electricity prices rose by 30 per cent. above the rate of inflation, which averaged 15.5 per cent. I tried to recollect what compensation package was in place for pensioners and those on fixed incomes during those bleak days. Of course there was none. Exactly the same applied to gas bills and other prices that pensioners and people on fixed incomes had to meet because of runaway inflation.

The position is very different today. I received a letter from NORWEB dated 9 December that mentions standing charges being reduced by £1.50 each quarter--or £6 a year--from 1 January 1995. It says that that decrease, on top of the decrease already announced earlier this year,

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was more than enough to offset the rise in VAT. People--certainly those in the north-west--have been more than compensated for VAT increases and there is additional compensation for many people on fixed and low incomes.

The hon. Member for Warwickshire, North (Mr. O'Brien) spoke about discounts for British Gas consumers who have standing orders, but not for those who pay their bills diligently. I agree with him, and I hope that British Gas moves quickly to ensure that many consumers who pay their bills on time are not penalised simply because they do not pay by direct debit. I hope that British Gas will soon announce that it will heed the voices of many hon. Members on both sides of the House on this issue.

Mr. Mike O'Brien: I am grateful to the hon. Gentleman for endorsing my view, which is shared by many hon. Members. Has he made representations to Ministers to ensure that they put as much pressure as possible on British Gas to make those changes? Will Ministers make public statements condemning these practices? It would weigh heavily with the shareholders and directors of British Gas if the Minister said exactly what the hon. Gentleman has just said.

Mr. Evans: I have already made representations to British Gas. It is not a party political matter; I am sure that all hon. Members have made representations on behalf of their constituents. I have received many letters, particularly from pensioners who are extremely keen to pay their bills as soon as they get them. They are not used to having reminders sent, as they pay their bills on time. I hope that will be recognised quickly by British Gas.

The Chancellor talked about the various alternatives for making up the shortfall because the second tranche of VAT on fuel would not be applied. He dismissed them one by one for various reasons. He then considered the three areas where the Chancellor decided the extra revenue was to be raised: tobacco, petrol and alcohol, which are targeted in every Budget.

I must declare an interest, as I have a retail business in Swansea that sells tobacco products. I am also an executive member of the all-party beer group. I have no interest to declare on petrol. I understand that there is a hand-rolling tobacco product called Drum, which is the third best selling hand-rolling tobacco in the country. It is not sold legally anywhere in Britain for copyright reasons, as it would conflict with another brand called Duma, but it is coming into the country in large quantities. The Chancellor was quite right to recognise that specific problem, and no extra funds were sought from hand-rolling tobacco.

I also accept that the Chancellor has decided to raise extra revenue from tobacco products because of the health reasons, which have been listed time and again in the House. That is one reason why in the past I have raised the problem of the European Community subsidising tobacco production and I hope that sooner rather than later we can eradicate the subsidy to growing tobacco in the European Community. It seems quite absurd to pay people to grow tobacco products in other parts of the European Community and at the same time to impose taxes on British consumers to deter them from smoking it. I hope that we can do something about tobacco subsidies.

Mr. Bernard Jenkin (Colchester, North): The story that my hon. Friend tells about tobacco growing in the European Community at the European taxpayers' expense

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is worse than he describes, because the tobacco we subsidise is of such low quality that nobody in the European Community smokes it; it is exported to third-world countries, where it poisons the lungs of much poorer people. We buy in much higher quality tobacco from elsewhere, which adds to the lunacy of the situation.

Mr. Evans: I can only agree with my hon. Friend. I do not believe that European taxpayers' funds should support social services in Greece and other countries that are in receipt of such funds to grow tobacco. Surely we should be looking to trying to get them away from growing tobacco if it is such a low grade as my hon. Friend says and get them doing something else.

The 2 p rise in petrol imposed in the first Budget was quite substantial and will hit many motorists, particularly in rural areas such as my constituency. I do not particularly welcome the extra penny imposed by the second Budget. I have already received my first letter from a constituent who has a transportation company, who writes that the Budget measures are causing increases

"of over 2 p for every mile a truck moves".

It is not good news, not only for businesses but for people who live in rural areas who will have to find that extra money. I shall make the bulk of my comments about alcohol. In an Adjournment debate on 11 May 1994, I raised the problem of alcohol being smuggled into Britain from the rest of the European Community. It was a problem then and it is a greater problem now, but the duties imposed on alcohol in the second Budget are neither here nor there. A penny on a pint of beer will not greatly exacerbate a problem that already exists.

The Chancellor commented on the existing problems of which he is aware. Obviously, the penny increase is not a move in the right direction. I believe that we must direct our attention to how we can eradicate smuggling, which costs the Exchequer money and, I believe, costs jobs in the brewing industry and in the retailing of alcohol in pubs.

The indicative level that is now set on various items of alcohol and tobacco and the single European market have presented Customs and Excise with a bit of a problem. Many people return to the country with very large amounts of alcohol--not so much tobacco, but certainly alcohol--and say that they are having parties, that Christmas is coming or that there is yet another wedding in the family. Customs and Excise is hard-pushed in many instances to say that those excuses are not real, so the problem will increase if we do not address it. The industry proposed its own solution--a massive cut in the duty on beer. The Brewers and Licensed Retailers Association produced a document called "A Real Alternative", which I found quite compelling reading. It suggests that extra revenue would come from increases in food sales and from people using amusement machines in pubs and that extra employment in pubs would lead to people being taken off the dole, as a result of which the Exchequer would not be paying out money in social services and would, over three years, raise extra funds rather than lose revenue. I hope that the Exchequer will look at those proposals again.

I heard what my right hon. and learned Friend had to say about the harmonisation of duties, but I believe in subsidiarity and wish him well in trying to encourage the French to raise their duties on beer. If they do not wish

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to go down that route, it will be extremely difficult to push them. The differential on duty is so large--it is seven times higher here than in France--that it will take the French a long time to reach our level. If we do not address the problem of smuggling in the short term, we may find that, because so many jobs have been lost in the brewing industry, by the time we get to harmonisation it will be extremely difficult to make up those jobs again.

David Kay, a director of one of my own brewers, Thwaites, wrote to me the other day to express his fears about job losses in the north-west. I know that everybody thinks that the problem of smuggling means that beer just comes in and stays in the Kent area. That is not so. He suggested to me that as much as 18 per cent. of the beer that is coming in finds its way to the north-west. It is not just a problem for Kent.

Mr. Mike O'Brien: I agree with the hon. Gentleman that we need to deal with the problem of smuggling, but not by adopting the brewers' proposal of a 50 per cent. cut in excise duty on alcohol. The brewers suggested that there might be a greater return to the Exchequer if that were allowed, but that would come from an increased consumption of alcohol. That would put a greater burden, perhaps, on the health service--from people with health problems as a result of the increased consumption--and on the forces of law and order. Although I am not averse to some reduction, York university suggested that one of the main causes of beer price rises has been problems within the industry itself rather than simply excise duties. A lot can still be done within the industry and a lot can be done by the Government to deal with smuggling.

Mr. Evans: I understand fully what the hon. Gentleman is saying, but the industry is not simply trying to increase beer consumption in this country, which is already high. It is saying that 1 million pints of beer a day is being imported from France and that if we could only reclaim that share for the British market it would be a substantial boost to our brewing industry. If it means that people have to make more visits to the pub instead of drinking at home the beer that they brought back from Calais, and if they drank the same amount of alcohol, they would still be spending more money. Extra people would still be employed in the pubs and, instead of being closed, pubs would remain open. I hope that my right hon. and learned Friend will look at the proposals again.

Many other measures could help pubs. I was involved in the Committee that considered the Deregulation and Contracting Out Bill, as were many other hon. Members present. We tried to save the head on a pint of beer, and to prevent extra costs from being imposed on pubs. I am delighted that the Bill was enacted, but I hope that we shall look at licensing hours generally. That is one area on which I hope that we can harmonise further with the European Community, as it is quite absurd in this day and age that some pubs, particularly where they do not affect people around them, have to close at 11 o'clock, forcing people to go out to clubs where they have to pay an entry fee. It is absurd that we have such archaic and antique licensing laws. I hope that we can look at those matters to support some of our hard-pressed pubs.

Earlier this year I went on a trip to Calais to have a look at the problem that currently exists there. I visited some of the cash-and-carries to see for myself the scale

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of business for people who buy alcohol and bring it back. I went to a few of the well-known ones--EastEnders, Beers R Us--which display signs all over the place showing where they are. Even Sainsbury's has opened within one of the hypermarkets in Calais, trying to encourage the British shopper to buy beer and alcohol from it.

What disturbed me most was not the consumers going around with their trolleys buying beer and alcohol, but the heavy goods vehicles inside some of those cash-and-carries, which were being loaded up with beer by the pallet load. They had offloaded their various goods in France, Spain or wherever, and were loading pallets of beer before coming back to Dover. That beer was destined not only for Kent but, as the tarpaulin suggested, Scotland, north Wales, Yorkshire and the north-west. It is finding its way all over the country. I was quite shocked to see that such a business is going on.

Yesterday's papers reported what they called "Victory for the Bootlegger". They mentioned a big surge this weekend in illicit trading, with more than 100,000 Britons flooding across the channel to Calais to buy supplies from supermarkets and cash-and-carries. They say:

"Since European trade barriers came down two years ago, anyone can buy limitless amounts of cheap alcohol".

Ian Brading, a senior purser on P and O's Pride of Burgundy, estimates that 80 per cent. of the 4,000 people he ferried to Calais on Saturday were travelling there only for the beer. He said: "On some return trips we have 50 vans, all heavily loaded." That shows the extent of the problem, which will get worse. Many of those ferry companies are putting on cheap trips to Calais to try to encourage people to use them. As part of the enticement they spell out to people the gains that can be had from taking a visit across to Calais, buying some beer and bringing it back.

A few weeks ago I went to Dover and chatted with some Customs and Excise officers. I was able to see one of their warehouses. It was packed full of drugs that they had seized and tobacco and alcohol. I talked about the problem of HGVs and of Transit vans. I understand that it is difficult to hire a Transit for the weekend in Kent because they have already been taken for that business. If people are stopped and the vehicle is seized, they think that it is far better to have a hire vehicle seized rather than one's own vehicle. Smugglers are already learning that trick. Others are bringing their Transits across, driving some way out of Dover, loading the alcohol on to a larger van and then getting straight back on to the next ferry, thus ensuring that the larger vehicle is full before driving off to another part of the United Kingdom.

Only last week we witnessed the success of a Customs and Excise operation: 28 former Yorkshire miners were arrested for smuggling alcohol and then selling it on. I believe that that is just the tip of the iceberg. In the newspaper article from which I quoted, officers suggest that for every £1 worth of alcohol that they stop at ports of entry another £9 worth is getting through. As last week's case showed, organised groups are involved, but many individuals are giving it a go, having read in the newspapers about the amount of alcohol that can be brought back to this country.

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Sometimes Customs and Excise officers come across the vehicles involved after police have stopped them just outside Dover because they are overloaded. People are so greedy that they fill the vans that they have hired, or their own Transits, with as much alcohol as possible.

I saw one boat arrive at Dover and watched the passengers disembark. Customs officers stopped two Transits, both of which were packed with alcohol. One driver trotted out the old excuse that it was "for Christmas", but all the alcohol was taken out of the van. I thought that I was generous and that my family liked to drink, but either that man's family consisted of about 200 people or he was very generous indeed, and his family would remain inebriated throughout the Christmas period and probably into March.

I did not accept that excuse, and neither did the Customs officers, but they did not have anything to go on until they found a shopping list in the van. It would otherwise have been difficult for them to prove that that person had not imported the alcohol for his own consumption. I think that they are doing a superb job, and would be loth to think that their numbers will be reduced at ports of entry. Harmonisation of alcohol duties is a possible solution to the problem: it might remove the incentive to load up in France. I also support the idea--mentioned by the Chancellor--of initiating more high-tech methods of detection, such as profiling. As the authorities know what sort of people are smuggling alcohol, it should be possible to build up a dossier and subsequently to stop them from doing so. We should, however, ensure that customs officers remain at the ports of entry. The channel tunnel now provides an extra route for those who wish to bring in alcohol, and officers will be switched to the tunnel to deal with that problem. More people than ever will travel to France--especially now that Christmas is coming--and I hate to hazard a guess at what may happen. If 1 million pints a day are coming in now, the amount will be that much more in 12 months' time unless we ensure that enough Customs officers are provided to prevent the current widespread smuggling.

We should also support the officers who are working in the United Kingdom, visiting pubs, clubs and car boot sales where they believe that trading is taking place. Some people have an image of an Arthur Daley type who nips across to Calais, brings back a bit of booze and sells it to his neighbours. There is nothing wrong with that, they think. But the problem is much larger.

Our Customs and Excise officers should liaise more with their French counterparts, sharing information, so that they can exercise more intelligence in stopping heavy goods vehicles that they see loading with pallets of alcohol. Obviously they cannot stop every vehicle, as I saw when I watched the flood of vehicles coming off that ferry, but I think that more should be stopped. If people thought that they had more chance of being stopped, they would be deterred.

Much has been said this evening about the Budget, and the second Budget. Some hon. Members believe that we are storing up tax cuts for the next Budget and the one after that. I hope that that is true, because in 1992 I was elected as a member of a Conservative party that supported low tax rates. I hope that, as the economy grows and we have the capacity to cut taxes, we shall do so. I shall look carefully to see which Lobby Opposition

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Members enter tonight, for that is the clear blue water that exists between the Labour party--and the Liberal Democrats- -and the Conservatives: the Conservatives believe in lower taxes.

I hope that the Chancellor will consider the specific problem of Customs and Excise. We must say no to the bootlegger's charter and the stripping of Christmas beer money from British tills--indeed, to the stripping of that money at all times of the year. We must say no to the loss of brewing jobs. We must tackle the problem head on: we cannot allow it to continue for another 12 months.

7.46 pm

Dr. John Reid (Motherwell, North): Following the speech of the hon. Member for Ribble Valley (Mr. Evans), I am tempted to say, "The case for the prosecution rests." I have never heard such a frank confession of what the Conservative party is up to. The hon. Gentleman made it absolutely plain that the Conservatives were taking money out of people's pockets in this year's Budget in order to give it back in next year's, in tax cuts. Let me say, with all respect to the hon. Gentleman, that as we approach Christmas I would not like to be a member of his family: I can imagine his children having their pocket money stopped in October or November, so that it could be given back to them on Christmas day in the guise of a generous gift. I have come to treasure occasions such as this. Although the Chancellor shows the normal lack of substance and clarity, there are always one or two little jewels from Conservative Members for us to preserve in our memories for future reference. We heard two such gems today from the hon. Member for Croydon, South (Mr. Ottaway), who unfortunately is not present: I assume that he has gone to rest after his efforts to explain the Government's economic and fiscal strategy.

The hon. Gentleman said, "If it ain't broke, don't fix it." That was his comprehensive analytical explanation of the Government's failure to do anything in the Budget. I must say, again with all respect, that anyone who can look at the British economy--at the scattered ruins of our manufacturing industry, the piles of bodies on the unemployment register, the death of investment in all industry and the manufacturing deficit that has piled up for the first time in our industrial history--anyone who can look at those 15 years and say, "It ain't broke" will certainly not win first prize as observer of the year.

The second little gem from the hon. Gentleman took the form of advice. He quoted not the Chancellor, the Chief Secretary or the Prime Minister, but Oscar Wilde. He said, "As sure as eggs is eggs, only two things are certain under a Conservative Government." As predicted by Mr. Wilde, one was death and the other was taxation. Out of the mouths of the sucklings on the Conservative Benches comes the truth, dripped down to us in, perhaps, a moment of weakness or a sudden surge of honesty. Conservative Members are telling the British people that, as the next election approaches, if they want a prediction about taxation they should look not to a Prime Minister under pressure or the promises of a Chancellor, especially if it is raining and they are within 100 miles of Dudley, but to Oscar Wilde.

The Chancellor of the Exchequer has managed to combine fiscal ineptitude with political crisis. He has also led the Government into the worst political defeat over three decades of any Chancellor. In the face of that defeat,

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