House of Commons Hansard Debates for 10 Jul 1995

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economy. Conservative Members have admitted that in other debates, so I do not see why the Government's official papers conveniently ignore it.

The Minister of State, Department for Education and Employment (Mr. Eric Forth): I trust that the hon. Gentleman is not trying to make connection between manufacturing output and the number of people employed in manufacturing. That would seem strange in this world of productivity. Surely he must acknowledge that most of the successful economies in the world have undergone a reduction in the number of people employed in manufacturing while increasing their manufacturing output and exports--as we are doing.

Mr. Miller: That is not my point. I shall come to that in a moment in the context of my own constituency, which is a manufacturing base with severe employment problems resulting from Government policies. The document that I have been quoting is an interesting read. One important paragraph has been referred to in a number of debates, here and during the Committee stage of the Pensions Bill, which finished its stages last week. It is the paragraph referring to the funding of an elderly population:

"In the West, governments play a key role in the provision of pensions. Ageing populations create pressure for higher expenditure on pensions, leading to higher taxes falling on fewer workers. And yet, in a world of global markets and capital flows, governments cannot increase taxes significantly without damaging national competitiveness. In these circumstances, individuals will not be able to look to the state to fund improvements in their living standards in old age."

That is an important statement. In other debates, Conservative Members have made several attempts to explain away the meaning of that paragraph--but they fail to look at the whole picture. The same page includes an interesting graph, based on World bank projections that show the ratio of people aged 65 and over to the working population. The graph shows that Britain will have an increasingly old population, but the analysis in the document fails to draw the right conclusions from the rest of the graph. It shows that many of our key competitors, especially those in the Pacific rim, face, in the next century, a massive problem with funding their aging populations. That is because the sections of their populations aged 65 and over are set hugely to increase as a proportion of their general populations--much more so than in this country. It is thus disappointing to find no analysis of the effects of this change on our competitiveness. It is a shame that the Government have missed an opportunity to describe what may result.

Page 34 lists the top 20 manufacturing industries, ranked by sales/UK demand in 1992. One pair of figures stands out from all the rest, showing a remarkable success, compared with the other industries listed, of our pharmaceutical and aerospace industries. There are some lessons from history to be learnt at this point. These are two industries with a well- established relationship with the state over the years, covering the expensive research and development of their products. That is why it made sense for them to invest in the longer term. The aircraft industry received launch aid; the pharmaceutical industry established a market because of its connections with the national health service. Consequently, the two industries thrived far more than the others referred to in the chart.

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To show how obvious that point is, the footnote at the bottom of the chart tells us that at the bottom of the list are motor cycles, with 1992 sales equivalent to only one seventh of United Kingdom demand. The Minister will know, with his background of responsibility for education, exactly where the primary research was undertaken for modern motor cycle engines. It was carried out in a British university.

It was a great sadness--with hindsight I think that we would all agree-- that none of the major British companies picked up the benefits that came with research and the evolution of the light alloy engine. The new industry could have been ours had the combination of the private and public sectors worked together more effectively to realise the potential that exists in the United Kingdom.

As for comparisons with other countries, how can we make progress while dogma drives policy? We fail straightforwardly to take into account Britain's interests when policy decisions are taken that bear on the structure of our economy. The results of incompetence over the past few years will have an effect on poverty and divergence, as described by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). How do the Government think that we shall see improvement when their policy is to promote poverty pay and conditions? Many families will never escape from the trap that the Government have created. Low-wage pressure is creating social consequences that have been recognised by the Secretary of State. In my constituency--I respond to the question asked by the Minister in an

intervention--there is the major manufacturing town of Ellesmere Port, where productivity improvements have been dramatic. Vauxhall, which was near to closure, is now enjoying daily productivity gains. The company's product range is incredibly successful. The transformation is welcome, of course, but, irrespective of the company's share of the market, the reality is that it is unlikely that the work force will increase significantly in the near future. Other manufacturers have significant shares of the market. They are competing for the same market and for world markets. The fact that Vauxhall has succeeded in turning round the company at Ellesmere Port and making it a world quality plant is a credit to the company, Vauxhall, the parent company, General Motors, the work force and the trade unions within the company.

Mr. Hendry: And Government policy.

Mr. Miller: It was partnership that made it happen.

The hon. Member for High Peak (Mr. Hendry) said from a sedentary position, "And Government policy." Would he like to tell me how Government policy helped Vauxhall when the world-beating V6 engine plant came into place? I can tell him--this is the truth--that the Government did nothing to assist that project. If it had not been for the work force and the parent company, the project would not have been developed in the United Kingdom. Cynical remarks from a sedentary position are not worth a light.

Mr. Hendry: Will the hon. Gentleman give way?

Mr. Miller: I shall not give way to the hon. Gentleman. I shall listen to his speech.

Mr. Hendry: On a point of order, Mr. Deputy Speaker.

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Mr. Deputy Speaker (Mr. Michael Morris): I hope that it is a point of order and not a point of argument.

Mr. Hendry: Is it in order, Mr. Deputy Speaker, for the hon. Member for Ellesmere Port and Neston (Mr. Miller) to ask me a question and then refuse me permission to answer it?

Mr. Deputy Speaker: That is entirely in order.

Mr. Hendry: It is bad manners.

Mr. Forth: It is a debate.

Mr. Miller: The Minister says that this is supposed to be a debate. I gave way to the hon. Gentleman and answered his question. I shall continue to respond to his intervention. The Minister did me the courtesy of making an intervention and not a sedentary interjection.

In the same area, the Shell petroleum refinery has shed thousands of employees during a period of increased productivity. The problem with the examples of Vauxhall and Shell, and other near-by manufacturing companies, is that the housing surrounding them was developed because of the evolution of the manufacturing sector in the town. The highest unemployment is now to be found in that housing. As a result, it represents the areas of greatest social strain. The position is not unusual in manufacturing towns throughout the country. There is a belt of wealth creators in the manufacturing sector and increasing productivity, which is usually accompanied, but not always, by falling employment demands. The housing in manufacturing areas contains the greatest levels of unemployment. That creates potential for social tensions, which the hon. Member for Stratford- on-Avon talked about thoughtfully. My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) and my hon. and learned Friend the Member for Leicester, West (Mr. Janner) also talked about it. The Government must bear in mind the important social tensions that arise.

I was depressed when I opened an Employment Agency office in Neston in my constituency. The Department of Employment invited me to open the office but I think that it assumed that the leafy suburbs of the pretty town of Neston would be Conservative strongholds. It forgot to examine the parliamentary boundaries when it issued the invitation. Neston is extremely attractive and has historically had lower levels of unemployment than elsewhere in my constituency. Unfortunately, unemployment had been rising in the town. I was deeply touched by a conversation with a graduate in the jobcentre. He was reading the cards and trying to find a job that suited his skills. He told me, however, that he was no longer looking only for a job that suited his training and education. He was looking for any job that would enable him to sustain his family's existence. As he had given three years of his life to benefit from a university education, and the state had contributed significant sums to help him obtain his degree, that was deeply sad.

I listened with interest to comments about changing technologies and set them against a speech made by a former Under-Secretary of State for Social Security, the hon. Member for Wanstead and Woodford (Mr. Arbuthnot) at a recent conference on government and computing. He described with great eloquence what the Department of Social Security is doing in terms of

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investment in information technology to handle a growing problem. It was a very articulate presentation from somebody who clearly has a detailed interest in information technology. What he did not say, however, was what the Government are doing about data collection; why it is needed; why we have a set of rules and regulations that mean that the Government collect data several times over rather than utilising the skills of all the civil servants involved to help people who are in the various traps that have been created by poverty.

There was an exchange earlier on between my right hon. Friend the Member for Gorton and my neighbour the hon. Member for Wirral, South (Mr. Porter) about the cards to be used in the Department of Social Security. None of that will be of any relevance unless the Government address the real issue of why data are being collected. It should be to help the applicant, not to hinder. The whole process of data collection in that area is, in my view, totally upside down. If the Government introduced a mechanism whereby data were collected through positive interviews instead of through the rather cumbersome forms that are used at the moment, we would not need to get into the kind of debate that is going on.

The Department is studying whether it is feasible to introduce optical character recognition into form processing. That is an important piece of technology and is valuable in terms of speeding up and making things more efficient. Instead of looking at that technology, why do not the Government look as well at the basic reason why those questions are being asked?

It is my contention--one can see this throughout the Benefits Agency and the Employment Service--that information is being collected in an attempt to trap people into admitting that they are defrauding the system in one way or another. It would be a far more efficient and better use of civil servants' time if the assessment at the various agencies was done by positive interview instead of through the cumbersome forms that currently exist. Reference has been made in the House time and again to the 34-page disability living allowance form. I think that there are 32 pages for the new incapacity benefit. All that nonsensical data collection is designed to entrap people. If all that were reversed and the resources that that would release were put into collecting data face to face, first, one would remove fraud from the system much more effectively than by the current auditing methods, and secondly, it would ensure that the elderly lady to whom my right hon. Friend the Member for Gorton referred would have got her benefits through positive interview at the outset instead of being frozen out by the crazy way in which the system currently operates.

On training, the Government have, on a number of occasions, referred to what they intend to do, and it compares poorly with what happens in other countries. It is not simply what the Government are doing directly, where they always seek to claim credit. What they fail to look at is the way in which they "incentivise" the private sector to make a more positive contribution. One visit that I have made as a member of the Science and Technology Select Committee will stand out in the my mind, that to the Stuttgart area the year before last, when we went to a machine tool company.

We asked the company what was happening in terms of investment in research and development and in training, during what was obviously a difficult period for that part of Germany. As hon. Members on both sides

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of the House will acknowledge, the enormous costs of integration of the eastern La nder, with the general western recession that was going on, had put some of its high quality, high-cost products, such as Mercedes and so on, in difficulty for the first time in a long while. It was interesting that when asked what it was doing in terms of R and D and of training expenditure, the machine tool company responded by saying, "Increasing them, of course." It could not understand why on earth we felt it necessary to ask that question. It is feasible for that company to do that within the structure of that particular regional economy because the combination of the role of the state and the private sector, working together in a much closer partnership than exists here, creating an environment in which it is possible for companies to convince their bankers that they have a serious future in the middle of a recession and that they can invest during that recession on the key facets of R and D and training.

I wish to comment on the remarks that were made about the minimum wage. The hon. Member for Surrey, East claimed that the Labour party policy would put his small shopkeeper out of existence. How can he really say that when he does not know what the level will be? It does not make a great deal of sense, because, equally, if he went to his small shopkeeper and scared him in the way in which he is trying with that story, and said, "Corporation tax is going to affect you next year and it will be three times the level it is now," the small shopkeeper would say, "But that is going to put me out of a job." Mr. Peter Ainsworth rose --

Mr. Miller: It is easy for Conservative Members to use something that will scare. The hon. Gentleman must admit, and I invite him to do so when I give way to him, that it would be unreasonable for us to say to the Chancellor, "Please tell us what the absolute rates of income tax will be for all bands in the 1996 Budget." It is equally easy for people to say that it is different, but it is not. It is an economic fact that the judgment can be made, based only on the information that is available at the time.

Mr. Ainsworth: I am grateful to the hon. Gentleman. It was not me who was claiming that that gentleman's business viability would be threatened, but the shopkeeper himself. I was not able to confirm that to him, because I did not know. The point that I was trying to make was that he, with millions of others who would be affected by a national minimum wage, has a right to know the level at which Labour would introduce a minimum wage. It is reprehensible of the Labour party to threaten a minimum wage without having the guts to say where it would clock in.

Mr. Miller: I am sorry if I misrepresented the hon. Gentleman. I would not want him to get into difficulties with his small shopkeeper. I invite him to go back to the small shopkeeper and say to him honestly, "I cannot, as the hon. Member for Surrey, East, give you any guarantees about the level of any form of Government taxation or minimum or maximum wages." It is impossible for such guarantees to be given. Those figures can be developed only at the time, in consultation with the social partners involved. Therefore, it is quite impossible to talk about a figure at this time.

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Mr. Jim Cunningham (Coventry, South-East): Does my hon. Friend agree that, in a recent interview on NBC television, President Clinton of the United States said that he would look to Congress for an increase in the minimum wage? Does my hon. Friend also agree that, when we had the minimum wage before, small shopkeepers did not go out of business, regardless of the level?

Mr. Miller: I did not hear the interview with President Clinton. However, on my most recent visit to the United States, I was impressed by the way in which the local minimum wage, at state level, was seen as a benefit to, and a stabilising factor in, the economy. It was considered that it had resulted in the state being less responsible for the eradication of poverty than was the case in this country. It is ludicrous that, in this country, the state has to sustain those who are paid poverty wages by their employers.

Mrs. Gorman: Does the hon. Gentleman agree that it is a fundamental law of supply and demand that if prices go up, consumption goes down? That applies to labour just as it does to tomatoes, beef or mortgages. If one increases wages artificially to a level that, by definition, is above a level of which some people disapprove, some will lose their jobs. The jobs will not melt away, they will be lost.

Mr. Miller: I presume, then, that the hon. Lady would have voted against the Equal Pay Act 1970. The truth is that that legislation, which on her theory would have had the same effect, did not reduce the amount of work available to women. I have heard the hon. Lady say, time and again, that the Government's success has been to increase the number of women in employment. The Government simply cannot have it both ways.

Mr. Jim Cunningham: Is not the hon. Member for Billericay (Mrs. Gorman) really arguing for something that her party has repudiated for the past 16 years--a prices and incomes policy?

Mr. Miller: My hon. Friend finds it difficult to follow the logic of the hon. Member for Billericay (Mrs. Gorman). As usual, she is somewhat confused. I shall not repeat the words used to her by Viscount Cranborne earlier this month. She is clearly confused, which must be a point on which Ministers and I would agree.

I refer the House to the last two lines in the Government's amendment, which asks the House to recognise that

"improving opportunity and the reward for effort is less socially divisive than encouraging dependency and the politics of envy." The opportunity will come only when the country has the opportunity to vote for a new Government. The reward will come when my right hon. Friend the Member for Sedgefield (Mr. Blair) is in No. 10 Downing street. Conservative Members will be those experiencing the dependency culture because of their politics of envy-- [Hon. Members:-- "Yours."] It is their politics of envy that we shall soon see. They will envy us being in government while they are not. A good number of Conservative Members who have contributed to this debate will be the unemployment statistics of the future and we shall then see where the envy really is.

7.53 pm

Mr. Alan Duncan (Rutland and Melton): We have heard a lot of curious economics from Labour Members in this debate; perhaps none more puzzling than the

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speech, which lasted for 40 minutes, of the hon. Member for Ellesmere Port and Neston (Mr. Miller). He stated some curious concepts, which will astonish any Conservative Member who has a greater foundation of understanding of what really rules in the true world of economic decisions.

I can well understand why the hon. Gentleman was inclined to throw something of a tantrum when my hon. Friend the Member for High Peak (Mr. Hendry) called on him to explain the significant success of Vauxhall--a major supplier and a major employer in his constituency. The hon. Gentleman was too churlish to pay tribute to the Government and their policy of allowing enterprise to thrive, which must be given much of the credit for the success of that company. The motor car industry has been a stunning triumph in the past 15 years. It has gone from an industry of subsidised, bankrupt concerns to one of massive employers and tremendous export successes the world over. That triumph has generated jobs, security and profitability in the constituency of the hon. Member for Ellesmere Port and Neston. The time has come when the hon. Gentleman should admit where so much of the credit properly lies.

The hon. Member also made a curious comment in which he equated days lost through strikes--a thing of the past--with days lost now through unemployment. No one can deny that a day spent on the dole is a waste-- primarily for the individual, but also for the productive capacity that the individual would be able to display if he were employed.

What I did not hear at all from the hon. Gentleman was a proper solution to the predicament in which these people find themselves. Is he saying that the money spent on the dole should be transferred to a jobs subsidy? Is he saying that there should be subsidies for investment to get everybody back to work? What is he really saying about the market for labour? Does he have a solution to the plight of the unemployed over and above what the Government are doing, which is successfully reducing the number who are unemployed?

Mr. Miller rose --

Mr. Duncan: I happily give way, although the hon. Gentleman would not give way to my hon. Friend the Member for High Peak.

Mr. Miller: What I was saying--

Mr. Jacques Arnold (Gravesham): You had 45 minutes.

Mr. Miller: I am replying to the hon. Member for Rutland and Melton (Mr. Duncan).

I referred to the German economy, and I said that there was a far more successful partnership there between the private sector and the public sector, which created an environment in which the banks could be far more confident in the way in which they worked. I invite the hon. Gentleman to look at such examples before ridiculing my comments.

Mr. Duncan: When my hon. Friend the Member for High Peak and I were in Germany 18 months ago, the major employer, Mercedes, was laying off 15,000 of the 40,000 employees. Daimler now faces a loss, for the first time in living memory. There are many problems with the

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German economy. It is a great sadness that the likes of the hon. Member for Ellesmere Port and Neston will not give credit where credit is due, which would help the sense of security which is not as robust as it should be among the likes of his constituents, and, indeed, mine.

The hon. Member also said that there would be a problem with old age, and that that would have economic consequences in the United Kingdom. Indeed it will. He did not, however, then say that Britain has £500 billion- worth of pension funds under management, which is more than the figure for the rest of the European Union countries put together. We have made greater provision for old age than any other country in a comparable western setting.

Mr. Miller: Will the hon. Gentleman give way?

Mr. Duncan: I will not give way just now; I shall give way in a moment, if the hon. Gentleman persists.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) drew on the wisdom of R. H. Tawney in saying that tadpoles needed to turn into frogs. I was tempted to intervene, by and large to agree with him. He said that he wanted agreement in the House to rid the country of low pay, poverty and inequality. Well, I am in very generous mood, and I am content to agree with two out of his list of three. As he well understands, I consider that his obsession with inequality is an utter diversion, which detracts from the energies that are needed to rid the country of low pay and poverty.

The hon. Member for Garscadden wants tadpoles to turn into frogs. Whenever I see a frog, I am inclined to kiss it in the hope that it will before my eyes turn into the noble Baroness Thatcher. I have so far been unsuccessful. But she at least understands the difference between socialism and conservativism. I never saw more ferocity in Baroness Thatcher's eyes than when she explained to me that the difference between the two sides of this House was that she--and that means the Conservative party--liked to lift people up to their full potential, while the socialists wished to level them down. No debate on aspects of social security is complete without a proper exchange between the hon. Member for Garscadden and me, but I regret that he was not prepared to give way to me at any stage today. [Hon. Members:-- "He did."] He did not give way to me. The hon. Gentleman usually makes supremely confident speeches, but for the first time-- [Hon. Members:-- "He did give way."] No, the hon. Gentleman referred to me, but he did not give way.

The hon. Gentleman's attempt today to defend his party's policy of the minimum wage was the first time that I have ever seen him look uneasy at the Dispatch Box. I have never seen the hon. Gentleman equivocate so unhappily as he did in attempting to describe the proper consequences of this misguided policy.

I listened with particular interest to the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman), because I have heard him speak on the topic before. As we saw tonight, he speaks on the predicament and plight of his constituents with evident passion, and rightly so. But where we part is not in failing to recognise the plight of his constituents and in wanting to do something about it, but in the solutions that we would deploy to try to address the problem.

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The Manchester of today is a far cry from that of a century ago, when the aptly named Manchester liberalism released all the strengths and energies which built the marvellous buildings, established the municipal pride and introduced new-found wealth into a proud city. Those energies now seem sadly to have been lost. I do not think that the constituents of the right hon. Member for Gorton are victims of 15 or 16 years of Conservative government. Rather they are victims of municipal socialism, which has gradually risen in the past 50 years. I have yet to receive from the hon. Member for Garscadden a detailed critique of my book, which I am sure he has read with great relish from cover to cover. The book's main thesis--as the hon. Gentleman will know--is that many of the problems we face today were not caused by the past 20 years, and that one needs to go back a century to trace the gradual and pernicious advance of collectivism into all the nooks and crannies of an individual's life, so that all the intermediary institutions which gave us the power and strength to make people richer, freer and more self-reliant have been displaced. One element of that is the gradual advance of taxation and the scale of it. While I shall not dwell deeply on the book, which was published a matter of weeks ago, I shall quote from a bit of it. My fellow author Dominic Hobson and I wrote:

"In a modern economy without large concentrations of personal wealth which can be taxed for redistribution to the poor, the heavy burden of direct and progressive taxation is arguably far more unfair than any number of regressive indirect taxes. This was well-put by a young Labour MP in the House of Commons nearly fifty years ago. `As we get . . . more and more to the stage where men will start life equal as far as possible and will rise by merit in the sphere in which they can offer the maximum contribution to the country's welfare, I do not think we ought necessarily to persist in a system of taxation which will tax higher remuneration at a higher rate. Indeed, in a fully developed Socialist economy, I would expect to see indirect taxation replacing direct taxation as the main source of revenue, because in a Socialist society, where men start equal and rise by merit, there is no point at all in giving them a substantial wage to reward the contribution they are making to the national economy, and then taking it away by taxation.'--[ Official Report ,1 November 1946; Vol. 428, c. 1004.]

His name was James Callaghan, and it was his privilege as Prime Minister to preside over the highest rates of income tax in the history of his country. When he joined the Inland Revenue as a Civil Service clerk in 1929, the poor did not pay income tax at all. Their main interest in the annual Budget, as Callaghan later recalled in his memoirs, was whether or not it increased the excise duties on beer, cigarettes and tea. It is a measure of what has happened since that they are now having to pay for those pleasures out of taxed income."

We will spend £94 billion on social security in the next fiscal year, but that great roundabout of money--a money-go-round--does not appear to have worked, as we still have people in poverty. Yet there seems to be insufficient readiness on the part of Opposition Members to look to this enormous budget and to try to work out how it could best be directed. There is too much call for more of the same, when what we have got is not solving the problem.

Like the hon. Member for Garscadden, I want to solve the problem of poverty. But why is it that we will spend £94 billion and we will still have the problem? The first thing to say when looking at poverty is that some of the slogans have bedevilled and, I fear, trivialised the debate.

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Opposition Members have pumped for all its worth the slogan "the rich are getting richer and the poor are getting poorer", but it is an illogical slogan. It is cleverly designed to imply that it is because the rich are getting richer that the poor are getting poorer. It is designed to say that Opposition Members have a claim on the money of the so-called rich in order to solve the problems of the so-called poor.

Indeed, so perverse has the morality which is attached to the slogan become that those who believe in socialism have raised to the status of a moral act the belief that it is somehow right, decent, proper and morally superior to expropriate other people's money for the alleviation of poverty, and that that is somehow better when it is done collectively than when individuals do it themselves. I find that profoundly perverse, and the nub of the debate is whether that slogan has any merit or value.

Mr. MacShane: Will the hon. Gentleman give way on that point?

Mr. Duncan: I am prepared to take the risk.

Mr. MacShane: When the hon. Gentleman worked in Singapore, between 10 per cent. and 18 per cent. of all his income went into the Singapore central provident fund, which was set up by the Singapore Government to raise money from all salary earners to provide for the general lifting up of the conditions of the people of Singapore. Does he welcome the fact that a far smaller proportion of his income is taken by the British Government in the area of providence and insurance?

Mr. Duncan: I am not sure that the hon. Gentleman's comparisons are right. Certainly, if we could get tax levels down to 10 or 15 per cent., it would be a miraculous step forward, but that will not happen here, and it is not quite what is happening in Singapore. There is a contrast between the countries in the balance between the priority given to investment and the priority given to consumption, in the way in which money is spent by the state.

There is very little social security in Singapore, but the warmer temperature and cheaper food mean that those necessities are easier for people on lower incomes to acquire. The proportion given directly to cash handouts in welfare in Singapore is small compared with the amount that goes into investment that is taken from the pool of what is raised in taxation. So the hon. Gentleman's comparison is defective.

My hon. Friend the Member for Surrey, East (Mr. Ainsworth) drew on an argument that is critical to the defective slogan that the rich are getting richer and the poor poorer. The statistical analysis from which the premise is drawn is deficient. The implication is that a fixed series of people are poor and are getting poorer as the rich get richer.

As my hon. Friend pointed out, the report of the Institute for Fiscal Studies makes it absolutely clear that although, in comparative terms--as a ratio of the poor to the rich--a category of the poor is getting poorer, it is not true to say that the same people are affected all the time. If one traced a sample, one would find that those people had been able to work themselves up the ladder, but by taking a sample that is different every time, the conclusion is drawn that the poor are getting poorer.

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As the IFS says:

"All these statistics actually tell us is that the poor in 1991-92 were typically poorer than the poor in 1979. Not that people at the bottom in 1979 had got worse off."

In point of fact, the slogan that the poor are getting poorer and the rich richer contains so much deception, deceit and inaccuracy that, if the Opposition want to be true to their consciences as they are for ever calling on us to be, it is time they revised the words they so often use.

The hon. Member for Garscadden chided and taunted me, saying that he believed it was my view that inequality does not matter. By and large, that is my view. The obsession with inequality has become a red herring, which diverts energy from a proper attack on poverty and low pay. If one irons out inequality and makes that one's target, one is merely homing in on those who are identified as being rich. In terms of solving the problems of the poor, the arithmetic would not add up. If it does not add up, there is no purpose in the objective beyond trying to make a philosophical point and employing it with envy and venom, which is sad to see and entirely counter- productive. Lord Callaghan said in this House nearly 50 years ago that he would much rather see a proportionate tax or a tax on expenditure than a vicious progressive tax on income, and I agree. One of the first rules of economics is to understand the difference between stocks and flows. The socialist will look at the stock--the cake--and say, "It's unfair. I've got to divide it." But it is the old lesson of the golden goose. Economic prosperity comes from a continuum--a dynamic. If it is undermined by slicing it in half, for a one-off redistribution, the energy will be sapped, and the dynamic will be the lesser for it. The obsession with inequality is

counter-productive and puts a brake on the wealth-creating energy, which, in the long run, is what one needs to solve the problems of poverty and low pay.

The hon. Member for Rotherham (Mr. MacShane) mentioned Singapore. This country has a balance of Government spending that is biased too much in favour of consumption and too little in favour of investment. Even the hon. Member for Brent, East (Mr. Livingstone), in an economic analysis document that I received in the post this morning, said that the problem with the British economy is that there is not enough investment. He is right. At the same time, however, he and many of his hon. Friends will be calling for immediate increases in the amount of money given to those they deem to be in need. One cannot have it both ways.

The other pernicious effect of the despotism of democracy, in which we all compete for votes by promising to spend other people's money, is that people's expectations have been raised to unrealistic heights. The sad and horrible truth about our democracy at the moment is that so many politicians' promises will never be met from the resources made available by people paying their taxes later. It is time that we took stock of what can be afforded and shifted the balance between consumption and investment, to plan properly for the future and for the burden on those in work. As the hon. Member for Ellesmere Port and Neston said, the ratio between those in work and the elderly is going to change adversely, and we must provide for that now. If we promise that too

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much can be delivered straight away, we will never meet the expectations of those who are working their way through the system now.

Mrs. Gorman: Does not my hon. Friend agree that Hong Kong would be a better analogy to support his argument than Singapore? In the former, an open and free labour market and productivity, coupled with low taxes and amazingly high savings levels, has produced phenomenal growth--so much so that the majority of people there enjoy a higher standard of living than many people in Europe.

Mr. Duncan: I totally agree, and that is where I would like to see us heading. We have reached a point where we are minority shareholders in our own incomes. The best part of 50 per cent., or more, is taken by the state. Once one reaches that point, it is difficult to reverse the process. Doing so is the challenge that we, as politicians, face in the years ahead. If we can reverse the process, we will do more for the poor and the low- paid than anything a socialist Government could ever do by simply raising the taxes of those who are earning--a one-off, declining tax--supposedly to give to those in need, which will draw us all down.

I must dwell for a moment on the minimum wage, which is a great concept for a party in opposition, because it appears to promise those who feel deprived a better income, but it all depends on the level. My hon. Friend the Member for Surrey, East mentioned a shopkeeper. The hon. Member for Ellesmere Port and Neston would not say what the minimum wage would be for the shopkeeper in Surrey, East.

If the wage is below what is already being paid, it is a policy that is not worth the name, because it does not deliver any benefits. It is merely an undelivered promise that in no way raises a wage. If it is higher than what a shopkeeper is prepared to pay an assistant, it is bound to have a detrimental effect.

It is astonishing that that dichotomy has not been properly analysed, and that the Opposition will not commit themselves to a number. No number, no policy. It is meaningless. If it is below the equilibrium market price for labour, it is a complete irrelevance. If it is above, it is a tax on jobs, which will drive people out of work.

It is a lie to convey to the low-paid the impression that they would somehow be better off and that the policy would not cost anyone their job; it would. It is going to cost jobs. If it does not, it will make people work illegally.

Mr. Peter Ainsworth: My hon. Friend touches on the nub of the argument about the minimum wage. The policy is technically, but also philosophically, flawed, in that it involves the intrusion of politics into the arrangements that business people, whether large businesses or small shopkeepers, make with their staff.

Mr. Duncan: My hon. Friend is absolutely right. It is high time that those responsible for writing in the newspapers and broadcasting on television properly dissected the true effects of that cretinous policy with a forensic accuracy. It is cretinous because, if the wage is low, it is nothing, and if it is high, people will be out of work or driven to work illegally.

Yet the hon. Member for Ellesmere Port and Neston said that it would be a wonderful system, because, if we raise wages, people will pay national insurance

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contributions and will be off benefit. That is a cost to someone. It will be a cost to the employer or the employee, and it will drive people out of work.

The hon. Member for Garscadden said that people in his constituency say that they cannot buy things or do things. Too many people are in that predicament. The wish to solve it is an objective that is shared--I hope he will take this in good faith--by both sides of the House. But to say that greater intervention, a minimum wage, higher taxation and an anti-business culture, which we have seen in so many aspects of what the Opposition say, will make things better is patently absurd.

We have a lot of catching up to do. In the years since the war, we have spent too much before we had it and invested too little. If we do not reverse that balance, as we have started to do dramatically in the past 15 years, we shall be back to the bad old days, and socialism will drag us and the poor down even further.

8.20 pm

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