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House of Commons
Thursday 15 June 1995
The House met at half-past Two o'clock
PRAYERS
[ Madam Speaker-- in the Chair ]
PRIVATE BUSINESS
Accommodation Level Crossings Bill
[Lords] ( By Order )
Queen Mary and Westfield College Bill (
By Order ) Orders for Third Reading read.
To be read the Third time on Thursday 22 June.
City of Westminster Bill
[Lords] ( By Order )
London Local Authorities (No. 2) Bill
[Lords] ( By Order ) Orders for consideration read.
To be considered on Thursday 22 June.
Oral Answers to Questions
TREASURY
Small Business
1. Mr. Jenkin: To ask the Chancellor of the Exchequer what progress has been made with measures to help small business announced in his 1993 and 1994 Budgets. [27001]
The Chief Secretary to the Treasury (Mr. Jonathan Aitken): My right hon. and learned Friend's Budget measures to help small firms are making good progress, particularly in regard to the enterprise investment scheme and venture capital trusts.
Mr. Jenkin: When Ministers consult small businesses with regard to the next Budget, will my right hon. Friend take on board the views of the vast majority of small businesses, which have no interest in a single European currency? Could that be because they experience the reality of doing business as small firms, and know that we export less than 8 per cent. of our gross domestic product in goods and services to the hard-core countries of the European Union which are likely to participate in a single currency? Will my right hon. Friend assure me that those firms will not be treated as right-wing xenophobes?
Mr. Aitken: Like my hon. Friend, I have noted the views of the Federation of Small Businesses, which makes a great contribution to our domestic economy and our performance as not just a European but a world trading nation.
I hope that the federation will take some comfort from what my right hon. Friend the Prime Minister said about the single currency on 8 June, namely that
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"the circumstances may not ever be right".-- [ Official Report , 8 June 1995; Vol. 261, c. 316.]Encouraging signals have also come from President Chirac's Government. All those signs suggest that the prospects of economic and monetary union are receding into more distant and uncertain horizons; but when any decision is made, it will be made on the basis of what is in Britain's best national interests and in accordance with our constitutional arrangements.
Mr. Skinner: Is the Chief Secretary aware that very few people will take any notice of his answers about anything? When he went to a board meeting of BMARC--a small business--he sat there not even knowing what was being done. He was paid £10,000 a year for not asking questions; two of his mates got done £2,000 for asking questions. What kind of a show does the right hon. Gentleman think he is running?
Mr. Aitken: I might as well retort that nowadays the hon. Gentleman does not seem to know what his own Front Benchers are doing. I am, however, glad to have a chance to repeat to the House that I stand by my statement on 30 March that I was given not the slightest indication or information, as a non-executive director, that any of the contracts that were going to Singapore would in any way be for onward shipment to Iran or anywhere else. I welcome the new inquiries that are taking place, and I am certain that at the end of the day they will clear my name completely.
Mr. Congdon: Does my right hon. Friend agree that small businesses will provide an increasing number of jobs over the next decade and beyond? Is it not vital, therefore, to ensure that we continue to have low interest rates and low inflation to provide the right economic framework to enable those businesses to prosper?
Mr. Aitken: My hon. Friend is right: small businesses are the life- blood of Britain's economy. There are some 3 million of them, and they create employment for some 50 per cent. of the work force. They depend, as much as any other part of the economy, on a stable economic framework in which there are sound public finances, low inflation and sustainable growth --all of which conditions have been put in place by my right hon. and learned Friend the Chancellor of the Exchequer.
Economic and Finance Council
2. Mr. Soley: To ask the Chancellor of the Exchequer what decisions were reached at the last meeting of ECOFIN. [27033]
The Chancellor of the Exchequer (Mr. Kenneth Clarke): At its last meeting, on 22 May, the Council reached political agreement on a proposed investor compensation directive. We agreed that the conditions were now met for the disbursement of the 85 mecu loan to Ukraine which was first agreed in December 1994 and we reached agreement in principle to a further loan of up to 200 mecu, subject to conditionality. Lastly, the Council adopted a regulation to delay revaluation of the Belgian franc within the agrimonetary system.
Mr. Soley: Have there been any discussions at all in ECOFIN about the political framework that would be necessary to operate a single currency?
Mr. Clarke: ECOFIN has made quite a lot of progress talking about the technical issues that surround the
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proposal to move to economic and monetary union. Obviously, there are considerable political implications in that and ECOFIN is composed of Ministers of Finance who discuss the politics of it, but these are early days. It is when the framework becomes clearer, the timetable becomes clearer and the number of states that comply with the convergence criteria becomes clearer that the political debate will no doubt deepen.Mr. Wilkinson: As the mechanistic and regulatory impediments to a true, single, integrated market remain since the last meeting of ECOFIN, will my right hon. and learned Friend, when he goes to Brussels on Monday for its next meeting, say clearly to his counterparts on the Council that they really ought to get rid of the bottlenecks and impediments to free trade in the Community and pay less attention to harmonisation of exchange rates?
Mr. Clarke: I agree with my hon. Friend that the completion of the single market with the removal of all regulatory and other impediments to free trade and fair competition between the member states is extremely important. As he knows, the British Government have taken the leading part in that, and it was really following the Single European Act and the actions we took after that that the British paved the way for the creation of the single market. We intend to complete it. Anything that improves the workings of the market and removes barriers to or distortions of trade is, in my opinion, welcome.
Mr. Gordon Brown: Given the Chief Secretary's stated opposition this afternoon to the principle of a single currency and given the Prime Minister's statement earlier this week on the principle of a single currency that he is persuadable--and persuadable against it by the very group the Chancellor of the Exchequer accused this morning of right-wing xenophobia--will the Chancellor now confirm his position on a single currency? Is he, as he always was, in favour of the principle of a single currency--yes or no?
Mr. Clarke: I think the hon. Gentleman should consult an ear, nose and throat specialist, because he did not seem able to hear clearly what I said last night about my inflation target and I do not think he was quite able to hear what my right hon. Friend the Chief Secretary said a few moments ago, either. The position is that we negotiated an opt-out at Maastricht, which means that we were left free to decide for ourselves in due course, if and when the situation arose, whether to join an economic and monetary union.
We are now taking part in the discussions on what form that monetary union may take and, in due course, if any states go ahead, Britain will decide one way or the other. The decision, in my opinion, ought to be taken on a hard-nosed judgment of British interests, judged when we see what the details are. That is the principle on which the party of which I am a member fought the last general election and it is the policy recently restated by my right hon. Friend the Prime Minister. It is plainly the only sensible policy to pursue until we see whether economic and monetary union is going ahead in the EU.
Inflation
3. Mr. Knapman: To ask the Chancellor of the Exchequer for how long the underlying rate of inflation has been at or around its current level. [27034]
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Mr. Kenneth Clarke: The retail prices index figures published this morning show that underlying inflation was 2.7 per cent. in May. Inflation has now been below 3 per cent. for 20 months, which is our best performance since 1961.
Mr. Knapman: I congratulate my right hon. and learned Friend on his speech at the Mansion house last night. Does he agree that the careful control of inflation is absolutely essential for the promotion and protection of the prosperity of middle England, especially those on lower incomes?
Mr. Clarke: I entirely agree with my hon. Friend. Anyone who aspires to govern this country and deliver the sustained recovery, without a return to boom and bust, that I think the population want must have a clear objective for inflation and must be capable of delivering it. We have a clear objective. We have been delivering low inflation. Those who criticise us appear to be incapable of making any useful contribution to the debate whatsoever.
Mr. Malcolm Bruce: Does the Chancellor accept that his 2.7 per cent. figure for underlying inflation is above his long-term target and that the Bank of England said last month that it would continue to be above his long -term target in two years' time? If that is the case next month, will he take action--yes or no? When he said that he was putting inflation back in the box, did he omit to tell us that there was no lid on the box?
Mr. Clarke: If the Liberal party or the Labour party would give us any figures at all as a basis for their economic policy, we should be able to judge whether they were capable of getting within 0.2 per cent. of anything. The current position is that we have delivered the best record on inflation since the early 1960s. That is one of the principal reasons why our economy is growing and our prospects are looking so much better. Last night, I made it quite clear that I would set policy for the foreseeable future on the basis that we were aiming at inflation of 2 per cent. or less. We aim to get there by the end of this Parliament and we shall aim to keep it there thereafter. That is a clear policy, and we are showing ourselves capable of delivering it.
Mr. John Townend: I, too, congratulate my right hon. and learned Friend on the speech that he made last night, and especially on his statement that he wanted to follow the iron lady and become the iron Chancellor who is not for turning. Does he accept that I also welcome his warning to fellow Cabinet colleagues and, indeed, to Back-Bench colleagues, that he wants to cut taxes, but that he can do so only if he can cut spending?
Mr. Clarke: My hon. Friend and I agree strongly on that point. The Government are showing that they are capable of controlling public spending in order to achieve our low taxation goal. We think that we shall have a more successful and competitive economy, with more prosperity and more secure jobs, if we can reduce the proportion of national resources taken by the state. It is yet another sphere in which, as far as I am aware, we do not have the slightest indication from the Opposition about what proportion of GDP they think should be taken by the state, what their objectives are for taxation or
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precisely what their views are on public spending, or at least how those of the Treasury relate to those of other Opposition spokesmen.Mr. Gordon Brown: Will the Chancellor explain his extraordinary memorandum to Conservative Back Benchers last night? Why, having told the City that he would keep within his 4 per cent. inflation target all the time, did he say to his Back Benchers that he might meet it only most of the time? Why does he say one thing to the country and another in secret to the Conservative party?
Mr. Clarke: The document to which the hon. Gentleman referred was not especially secret. The policy that it sets out is exactly the same as that about which I spoke last night. The inflation target is 2 per cent. or less which will, in practice, deliver inflation within a range of 1 to 4 per cent. That is the policy that we have been pursuing successfully, and I projected it forward.
Will the hon. Gentleman explain his extraordinary silence on the whole matter? He cannot even reply to letters from me in which I asked what inflation target he has in mind or whether he agrees with the decision that I took on interest rates more than a month ago. There is no piece of paper containing any details of any Labour policy on any these issues.
Mr. Dunn: The Government have made known their inflation target. Will my right hon. and learned Friend the Chancellor confirm when he last asked the shadow Chancellor to make known his inflation target and say what response he received?
Mr. Clarke: I think that we should take a leaf out of the Opposition's book and ask the Leader of the Opposition to hold an independent inquiry into whether the shadow Chancellor has an economic policy and, if he claims to have an economic policy, whether he is prepared to put a figure to it. At the moment, I find myself facing shadows, but invisible shadows who will not put forward any proposition of their own. The hon. Gentleman has lost his way on economic policy.
Fiscal Policy
4. Mr. MacShane: To ask the Chancellor of the Exchequer what meetings he has had in 1995 with the Trades Union Congress to discuss fiscal policy. [27035]
The Financial Secretary to the Treasury (Sir George Young): My right hon. and learned Friend has had no meetings so far this year with the TUC to discuss fiscal policy, but does expect to meet representatives of the TUC in the autumn before the Budget.
Mr. MacShane: May I put it to the Minister that, if this country is to make any serious progress on its economic policy, discussion with the body that represents 7 million people in industry on a regular, not corporate, basis is necessary and would be useful and that, until there is a renewal of dialogue across the industrial divide, Britain cannot expect fully to prosper?
Sir George Young: As I said, my right hon. and learned Friend looks forward to meeting the TUC against a background of the discussions leading up to his Budget. He had two meetings with the TUC last year, at the first of which there was very constructive dialogue about what the Government were doing on training, which received
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wide support from the TUC, and also what we were doing on the industrial finance initiative. When the TUC comes to discuss fiscal policy with my right hon. and learned Friend, at least there is a policy to discuss.Mr. Butterfill: When my right hon. and learned Friend meets the TUC in the autumn, will he take that opportunity to explain to it the extraordinary damage that would be done to our economy were we to adopt a national minimum wage? It would create massive unemployment, particularly in the holiday industry, which is so important to my constituency.
Sir George Young: I am sure that my right hon. and learned Friend would wish to make that point in a courteous but firm way. I was interested to see, in The Guardian on Monday, that the general secretary of Unison conceded that, were we to move towards a minimum wage, at the level at which he preferred, there would be job losses. There have been some estimates that there could be up to 800,000 job losses. My right hon. and learned Friend, who minds about unemployment, will indeed make that point to the TUC.
Mr. William Ross: Will the Minister give me an assurance that the fiscal policy that he is going to follow is a United Kingdom fiscal policy and that the blandishments from Dublin to the effect that there should be 25 per cent. value added tax and 10 per cent. corporation tax in Northern Ireland will be resisted?
Sir George Young: Yes, what my right hon. and learned Friend said at the Mansion house, the economic policy that he puts forward, is an economic policy for the United Kingdom.
Inflation
5. Mr. Clappison: To ask the Chancellor of the Exchequer what representations he has received concerning the control of inflation. [27036]
Mr. Kenneth Clarke: I have received many representations about the control of inflation. These reinforce my commitment to our objective of permanently low inflation.
Mr. Clappison: Is my right hon. and learned Friend aware that consumers and business men in my constituency will welcome the long-term commitment to low inflation that he has given; but when he hears the hon. Member for Dunfermline, East (Mr. Brown), will he exercise just a little caution, bearing in mind not only that the hon. Gentleman will not say what his inflation target is but that the one policy he does have--the introduction of a minimum wage--would cause inflation of its own accord, and that the last time the Labour party held office, inflation moved within a range of between 7 per cent. and 27 per cent. per year?
Mr. Clarke: My hon. Friend does well to remind us of the record. The fact is that the hon. Gentleman does not say whether he would have a higher inflation target for the next Parliament, thereby loosening policy, or whether he would have a lower target, thereby tightening policy. He does not say that he agrees with the Government--which I suspect is the case-- because he cannot think of anything else to do. If he indicated anything else, he would have to answer my question about what his views are on interest rates.
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I do not think that the hon. Gentleman believes in a minimum wage. I do not think that his leader does. This sits in a quite silly fashion compared with the current speeches that they are making about the principles of economic policy. I do not know why they do not stop refusing to put a figure on that. They will not put a figure on anything. Why do they not just drop it and adopt the shadow, at least, of our policy without giving it any substance?Mr. Sheldon: Although the control of inflation must be a prime objective, in what he called his occasionally combative discussions with the Governor of Bank of England, will the Chancellor forcefully point out to him that there are other matters, such as investment and economic growth, that must be considered also?
Mr. Clarke: I do not regard low inflation as an aim in itself, and nor does the right hon. Gentleman, but low inflation is an essential precondition to getting prosperity and secure jobs, and the economic success, which other countries, such as Germany and Japan, have enjoyed in the past because they have enjoyed stable economic conditions. That is why the Governor and I are agreed on pursuing the targets that I have set out. The Governor welcomed what I said last night, and I quote:
"The Chancellor has restated the Government's monetary policy objective-- permanently low inflation--quite unambiguously this evening. I very much welcome that."
I look forward to continuing to work with the Governor to deliver that low inflation aim.
Mr. Brandreth: Does my right hon. and learned Friend agree that among the key groups who welcome low inflation and targeted low inflation are the elderly and the prudent? Does he recognise that in the year, for example, when my own father retired on a fixed income, inflation topped 27 per cent. under the previous Labour Government, and that retired and prudent people today will welcome a governing party that has a firm, precise and deliverable target for low inflation?
Mr. Clarke: I agree with my hon. Friend. He echoes the views of what I call middle England, which, for the benefit of Scottish nationalists, is middle Scotland as well. Those people who wish to work and to be responsible for their families, to save and to feel secure in their family finances, need low inflation. The experience of high inflation is that it destroys savings and creates instability in society. It robs the elderly and gives money to the improvident and those who borrow. It is also very destructive for investment and long-term economic prospects. For the past 20 months, we have delivered the best record on inflation that this country has seen since the early 1960s. I set out last night the Government's determination to continue to deliver that.
Mr. Ashton: I take it that it is in order to ask a question from the Government crib sheet which has been handed to Conservative Back Benchers and which my hon. Friend the Member for Hemsworth (Mr. Enright) found in a telephone box. Is the Chancellor aware that my constituents would prefer sound economics to soundbites on the management of the economy? Why does the Chancellor have to write down all these soundbites for all the people behind him?
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Mr. Clarke: The hon. Gentleman has made an extremely good point. I assume that those who are responsible for that are in Conservative central office, and I shall ask them next time to distribute a similar sheet to Opposition Members so that they can find some questions to ask, because the shadow Chancellor of the Exchequer does not have a policy that is worth leaving on a piece of paper in a telephone box and he is giving no guidance whatever to those behind him.
Mr. Forman: I preface my question by saying that I have not had a chance to visit a phone box. However, I have a question for my right hon. and learned Friend. Is he aware that his counter-inflation policies have a real test behind them--market credibility? The record shows that the markets believe in that credibility and in that of the Governor of the Bank of England and the aim of getting inflation down and keeping it down. Is not the real contrast between my right hon. and learned Friend's sound policies, which will add to future growth, and those of the Opposition, that his have the ring of clarity whereas those of the hon. Member for Dunfermline, East (Mr. Brown) are surrounded by a number of obscurities?
Mr. Clarke: The Governor, in his speech last night, said that we seemed to be on course to see a peak of interest rates in this cycle of about half or less of the peak they reached in the previous cycle. My hon. Friend is right about market expectations on inflation and interest rates, which are coming down steadily as well. That is of real value to business, to investment and to people with mortgages who want to know what might happen to future interest rates. As we deliver, we are building confidence in a sustained recovery with low inflation, and it would be absolute folly to put all that at risk, certainly under pressure from a policy which is not represented by a figure on a piece of paper.
Mr. Darling: May I refer the Chancellor again to the private note that he sent to Conservative Members? It is printed on Treasury notepaper and the accompanying note is in the same type face as the Treasury press release. Therefore, it is not just a "piece of paper", as the Chancellor said. When he told Conservatives privately that the inflation target would be met only "most" of the time, was he giving Back Benchers a nod and a wink that he will take risks with inflation if that is needed to try to win the next election for the Conservative party?
Mr. Clarke: If the hon. Gentleman is going to get our briefing notes, he might read them and quote them properly. He paraphrases in the most loose and untidy fashion and he got it wrong. The inflation target that is set out in that note is the same as the target set out in my speech --2 per cent. or below. As I explained in my speech last night, in practice one does not deliver one figure every month: there is fluctuation, sometimes down and sometimes above, but setting policy every month at that target should deliver inflation of between 1 and 4 per cent. The target is 2 per cent. or less and that is the basis on which I shall set policy month by month when I have discussions with the Governor. It could not be plainer, it is as plain as a pikestaff, and the briefing said nothing different from that. It is the only policy going in this country at the moment. Fortunately, it is delivering considerable success.
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Unemployment
6. Mr. Booth: To ask the Chancellor of the Exchequer what assessment he has made of the economic benefits of falling unemployment. [27037]
Mr. Aitken: Unemployment has fallen by 661,000 since December 1992. Our assessment is that this has made a major contribution towards the Government's aim of promoting rising prosperity for all.
Mr. Booth: As unemployment in Finchley has fallen by 16 per cent. over the past year, I am grateful to my right hon. Friend for his assessment of unemployment. Has he taken time to look at unemployment in France and Spain, and do not the very much worse figures in those countries exist because they have adopted just the sort of policies that the Labour party would impose on us?
Mr. Aitken: My hon. Friend is right to highlight the fact that in Britain unemployment is falling faster than in any other major country in the European Union and that it is far lower than in France and Spain. Youth unemployment is 50 per cent. higher in France and 250 per cent. higher in Spain than in Britain. My hon. Friend asks why those differences, which are so much in our favour, have occurred. The answer is that those countries have the minimum wage; we do not. Those countries have a social chapter; we have opted out of a social chapter. Those countries have rigid labour markets; we have deregulation. We have Conservative free market, supply- side reforms and policies, whereas France and Spain have continued to cling to the same tired old socialist policies that the Labour party still espouses.
Ms Armstrong: I am sure that the right hon. Gentleman recognises that many of the problems that he has identified have led in this country to job insecurity, which I know is a matter about which he himself is concerned. Has he noticed that a survey said yesterday that more people in work are increasingly insecure about the future and worried about losing their job? Does he not understand that that insecurity, coupled with the still far too high unemployment levels, mean that much of the Government's strategy for economic growth is put under threat?
Mr. Aitken: That is a feeble retort to the case that I made in the supplementary answer to my hon. Friend the Member for Finchley (Mr. Booth). As he reminded us, unemployment in his constituency has come down by 16 per cent., so people are not feeling so insecure in Finchley. Since December 1992, unemployment in Durham, North-West, which the hon. Lady represents, has come down by nearly 1,000 people--a fall of 23.3 per cent., so she does not have much to complain about.
Mr. Gallie: In response to the hon. Member for Durham, North-West (Ms Armstrong), does my right hon. Friend agree that the greatest threat to workers' jobs would come with the election of a Labour Government and that therein lies the greatest feeling of insecurity?
Mr. Aitken: My hon. Friend is absolutely right. There are many Labour policies, such as a minimum wage, that will destroy jobs. He represents a constituency in Scotland and he will be well aware that the policies for a tax-raising Scottish Assembly are absolutely guaranteed to scare away the magnificent flow of inward investment projects that are coming into Scotland at a rate of two a week--
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they will go as soon as there is a tax- raising Scottish Parliament. All the extra policies, such as the minimum wage, and all the high expenditure will destroy jobs faster than anything else.Housing Market
8. Mr. Corbett: To ask the Chancellor of the Exchequer if he will make a statement on the financial implications of the state of the housing market. [27039]
The Paymaster General (Mr. David Heathcoat-Amory): For the average mortgage holder, housing costs are £1,600 per annum lower than in 1990.
Mr. Corbett: The Minister's complacency about the housing crisis will appal millions of people. With cuts in tax relief on mortgages costing £20 a month and, from October, another £20 a month for people on income support, why is it that the Government keep on hurting home owners rather than helping them?
Mr. Heathcoat-Amory: I am not the slightest bit complacent about people who find themselves with negative equity, but I am entitled to point out that, as a result of lower inflation and lower interest rates, since 1990 the average mortgage holder is £130 a month better off. The best long-term policy to help those existing householders and people who wish to own their houses is sustainable growth, with its consequence of rising earnings, combined with low inflation, which is what we are delivering.
Mr. Rowe: Did my hon. Friend experience, as I did at the height of the housing boom, large numbers of constituents saying how extremely worried they were about the prospects of their children being able to get on the housing ladder? Do not steady and reduced house prices make it much easier for young people to get started?
Mr. Heathcoat-Amory: My hon. Friend is right. The conditions of the housing boom--such as those that we experienced--are not the friend of householders, especially young people who wish to own their houses. Although there is a problem of negative equity at present, its extent has reduced. Indeed, we should remember that last year almost 500,000 people became house owners for the first time.
Ms Primarolo: Did the Paymaster General hear the unfortunate comments by the Chancellor on the "Today" programme this morning when he ruled out any special measures to help home owners? Will he confirm that that complacent view will continue and that there is to be no assistance for home owners in the present housing crisis?
Mr. Heathcoat-Amory: My right hon. and learned Friend is not the least bit complacent about this issue, but he is right to point out that the best long-term help that we can deliver to households, as to others sectors of the economy, is sustainable growth with low inflation, which is exactly what we are delivering.
Dr. Spink: What would be the impact on the housing market and interest rates if my hon. Friend were to follow the Labour party's policy on inflation--or does he not know?
Mr. Heathcoat-Amory: My hon. Friend is right. High inflation, with the consequence of high interest rates,
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would crucify householders with outstanding mortgages. We must never allow the Labour party to be given a chance.Interest Rates
9. Mr. Simon Hughes: To ask the Chancellor of the Exchequer what is his policy on interest rates. [27040]
Mr. Kenneth Clarke: Interest rates are set to deliver permanently low inflation and ensure that the present healthy recovery is sustained.
Mr. Hughes: Is not the truth somewhat different? Has not the Financial Times got it right when it says that the Chancellor has fudged policy on interest rates and that he is keeping interest rates down, stoking the economy and preparing for short-term tax cuts as his preferred solution?
Mr. Clarke: The hon. Gentleman has just arrived in the Chamber out of breath and did not hear the rather lengthy exchanges that have already taken place about all this. The inflation target is 2 per cent. or less. I set monetary policy to achieve that target. Given that there are always unpredictable things from month to month, that policy will keep inflation between 1 per cent. and 4 per cent. We have set that target for the end of this Parliament and we are well on course to deliver it. Now we are going to sustain it throughout the next Parliament as well.
Tax cuts are a legitimate aim. To be a competitive economy, we need to continue to be a low-taxation economy. But we can do that only when spending is under control--it is being kept under control--and when it is in the interests of the economy we can then cut tax.
Mr. Mans: Does my right hon. and learned Friend agree that one way to ensure that interest rates are higher than necessary is to have no policy on inflation, no policy on public expenditure and no policy on taxation, like the Labour party?
Mr. Clarke: I rather imagine that if the hon. Member for Dunfermline, East (Mr. Brown) ever met the Governor of the Bank of England he would ask him for a quick little note on what monetary policy is for and how one ought to approach it. When the hon. Gentleman sets out his propositions and they are put alongside the spending promises of all his shadow colleagues, it is quite obvious that high inflation will be only one of the extremely bad consequences of having a Labour Government.
Mr. Foulkes: Is not it true that, on interest rates, the Chancellor pays more attention to the representations of Tory Back Benchers in marginal seats than to the Governor of the Bank of England? [Interruption.] Is not that more to do with his medium-term aspirations to be Leader of the Opposition than the long-term interests of British people?
Mr. Clarke: I take first and foremost the advice of the Governor of the Bank of England. I listen to the advice of my Back-Bench colleagues who understand economic policy and specialise in it. I do not get any advice from the Labour party because it does not seem to have any opinion on the subject. My policies have delivered the best record of inflation that this country has seen since
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the early 1960s. We are well on course to deliver permanently low inflation for the rest of the decade.Public Spending
10. Mr. Amess: To ask the Chancellor of the Exchequer if it is his policy to reduce public spending as a percentage of gross domestic product. [27042]
Mr. Aitken: Yes. The Government's policy, unlike that of the Labour party, is to reduce the share of national income taken by the state.
Mr. Amess: I welcome my right hon. Friend's robust commitment to controlling state expenditure. Will he confirm that that is in marked contrast to new Labour, which apparently has no commitment to increase spending, taxation or borrowing, but which in reality can be relied upon to increase all three?
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