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7.48 pm

Mr. Jimmy Hood (Clydesdale): The hon. Member for Milton Keynes, South-West (Mr. Legg) started his speech by being delighted at the prospect of another 18 months of this Government. He went on to make a speech that made him sound like a man in a condemned cell who is delighted with a reprieve. He might be delighted if he gets 18 months, but at the end of the day the condemned man will come out of that cell and will be no more.

I compliment my hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chancellor, on an excellent speech and on his imaginative and refreshing approach to Labour's quest for fairness and social justice.

I heard some comments from Conservative Members about reviewing history. Some of them were trying less to review history than rewrite it. I especially welcome the commitment of my hon. Friend the Member for Dunfermline, East to taxing millionaires who evade tax-- something that Conservative Members do not want to talk about.

I also welcome my hon. Friend's decision to impose a windfall tax on public utilities. Let us remember that we are talking about what were good public industries, which were taken out of public ownership and turned into private monopolies and which have made millions of pounds of profit off the backs of the consumer. Directors dip their dirty snouts in the trough of sleaze and we do not hear one word of criticism from the Tories.

I particularly thank my hon. Friend the Member for Dunfermline, East for nailing the lie that this is the Government of low taxation. I welcome his initiative on the 10 per cent. rate of tax for the low-paid. He has caught the Conservatives out on that. If the Chancellor of the Exchequer's response to the shadow Chancellor's speech proved anything, it was that the Government are rattled by my hon. Friend's initiative. I compliment him on that.

Mr. Jacques Arnold (Gravesham): Will the hon. Gentleman give way?

Mr. Hood: No, I will not give way. Conservative Members did not let me intervene earlier and the hon. Gentleman was shouting and making noises, so he can sit down.

We know that the Government's real agenda is to cut taxes next week as a bribe for the general election. However, we know, as night follows day, that the real agenda is to get over the election if they can and then hype the taxes up again. I have heard some wonderfully interesting things tonight. The hon. Member for Ryedale (Mr. Greenway) spoke about needing to put money back through tax cuts into the pockets of consumers, but who took the money out of their pockets? Who increased income tax by 7 or 8 per cent. since 1992? Then Conservative Members stand up and say that we need to put money back. Conservative Members have robbed the taxpayer and wasted the taxpayer's money, but what do we hear from them--that they are the party of good management. As the opinion polls show, we are about to see what the people think of the party of so-called good management.

I want to discuss economic and monetary union and, in particular, the single currency. I share some of the concerns about the convergence criteria laid down by the

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Maastricht treaty. However, in response to the discussions on the single currency that we have had during the debate on the Queen's Speech, I should say that I am no believer in throwing the baby out with the bath water. Unlike the Government's response, which is driven by a right-wing agenda from the right-wing sceptics, Labour's response is constructive, correct and in the national interest.

In my capacity as Chairman of the Select Committee on European Legislation, I am fortunate to meet politicians from other member states as they visit this country and I visit theirs. There is equal concern in those countries about the single currency and monetary union. However, the Government are keeping us out of the debate because they are, sadly, the Government of the opt-out and the lock-out. They are locking us out of a constructive part in the debate that needs to take place in Europe about a single currency.

I shall give an example of the responses that I have had from politicians from other member states--especially new member states. A few weeks ago, I visited Finland and Sweden, which have had different experiences since joining the Union. In Finland, food prices have gone down 10 per cent. and in Sweden they have gone up by 10 per cent. That had something to do with the state of their economies when they joined the Union. They are equally concerned about the impact of monetary union but they are keen to be part of a single currency if it happens. That is the opposite of the Government's position. The Government are not taking part in the constructive debate.

The Government and the sceptics sometimes say that the single currency is a matter of sovereignty. I have never been persuaded by that argument. Where was the Government's concern about sovereignty when they imposed the poll tax on Scotland a year before they imposed it on England? There was no mention of the sovereignty of the Scottish people because we did not want the poll tax. The Government knew that but it was shoved down our throats and down the throats of England and Wales the next year. There was no question of sovereignty then. It was a case of, "This is Parliament. This is where decisions are made. We are the Government, we are going to have it whether you like it or not."

What was the effect of the poll tax? We have heard a lot about the plight of the taxpayer. It cost the taxpayer £14 billion to bail the Government out of the poll tax-- the equivalent of £300 per man, woman and child. This is the same Government who tell us about sovereignty. We are not going to forget the poll tax or the Government who imposed it. When the general election comes, the Government will find that out.

Let us consider the exchange rate mechanism and whether we should go back into it. I remember how and when we went into the ERM. We went into it because the Prime Minister was corralled at an intergovernmental conference by the then Chancellor, Lord Lawson, and the then Foreign Secretary, Lord Howe, and threatened with their resignation if she did not join the ERM. She agreed but, as an act of spite to get her own back, she took the country into the ERM with a grossly overvalued pound. She wanted to impose her tool of high interests rates to keep inflation down as an act of spite. The million householders who now live in negative equity know the impact of that economic policy, because it was that single

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act, more than anything else, that hyped up interest rates and the problems of home owners. It is important that we remember that.

Conservative Members do not want to discuss the time when the right hon. Member for Kingston upon Thames (Mr. Lamont) was laughing in his bath. The former Chancellor of the Exchequer was singing in his bath just after he had wasted £15 billion in one day trying to prop up sterling and increased interest rates by 50 per cent., from 10 to 15 per cent. He went to his bath, had a glass of champagne, laughed and said how relieved he was. The British taxpayer carries that burden to this day. That is the burden that we are going to leave on the Government. When the general election comes, we will not rewrite history in the way that I have heard it rewritten tonight; we will remind people about the history of the Government and it is that history that will defeat them.

7.57 pm

Mr. Jacques Arnold (Gravesham): I find the comment of the hon. Member for Clydesdale (Mr. Hood) on the exchange rate mechanism rich. I sat in this Chamber when the Conservative Government decided to join the ERM. I heard the Opposition spokesman say not only that we should be in the ERM but that we should be in the narrow band. If it was a fiasco that cost the sort of money suggested by the hon. Gentleman--that is disputable--we would have had that loss and very much more had there been a Labour Government at the time.

That is exactly the sort of the comment we had from the shadow Chancellor earlier this afternoon. I wonder how many hon. Members timed the shadow Chancellor. He took 43 minutes and his speech was an absolute smokescreen because there is a total lack of economic policy laid down by him on behalf of the Labour party.

The hon. Gentleman spent nearly 50 per cent. of his time on the subject of corporate governance--that is the correct name for it. We may ask why. The reason ties in with the Labour party's obsession with the politics of envy. The hon. Gentleman wallowed in what he called sleaze for an immense amount of time. He talked about top people's pay and perks and he offered us no solution. Why? The reason is that these issues are very complex and quite beyond his tiny mind. Nevertheless, they are important. They must be dealt with and that is precisely why my right hon. Friend the Prime Minister appointed the Greenbury committee to go into the matter in the greatest detail. Such matters should be got right because they are a serious problem, but one to be solved by the stock exchange, by corporate investors and by the shareholders who are the very people who are being ripped off.

The matter is complex, and it is no wonder that the shadow Chancellor did not dare to tackle it. The Greenbury committee itself got it wrong. It declared on Monday and by Thursday it admitted that it had got it wrong on a matter of detail which hit ordinary people. To suggest that the matter is simple is wrong; it is not and it must be tackled properly.

For most of the remainder of his speech, the shadow Chancellor ran down Britain. He mocked the way in which this Conservative Government coped with the recession. The problem was serious because we faced the worst recession since the 1930s. Our tax revenue was down. How did our Conservative Government respond to

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that? What did their predecessors, the Labour Government in the recession of the 1970s, do? They cut spending, they scrapped the hospital building programme, they cut the pay of nurses and they axed the pensioners' Christmas bonus. Is that what Labour would recommend to deal with the problem?

This Conservative Government stuck to their growth programme in education. We are now spending, over and above inflation, more than 50 per cent. more per pupil on our schools. We are spending, over and above inflation, more than 60 per cent. more on our national health service. The Government safeguarded the pensioners from inflation right the way through the recession.

Let us remember what the Labour party did to the pensioners. Labour changed the basis of calculation of the uprating to earnings and away from inflation. Why? The reason was that earnings lagged behind inflation under a Labour Government. They thought that the pensioners should be hurt as much as the rest of the public.

We kept up our spending increases on health and education and we safeguarded the pensioners. How did we do it? We borrowed. Why could we borrow? We could borrow because Conservative Governments have a sound reputation for sound finance, unlike Labour Governments. We should remember that the Labour Government of the 1970s could not borrow in the markets because of their rotten reputation for unsound finance. They had to go with a begging bowl to the International Monetary Fund. This country queued up with third-world countries at the IMF. Is that the kind of Government to whom the Labour party wishes us to return?

We kept our reputation. How did we do so? We kept our reputation because we demonstrated how we would close the deficit in Government finances. We have cut spending plans by £45 billion in the past two years or so and we also increased tax. I hear Labour Members gloating about increased tax; they believe in it, we do not. However, responsibly, taxes had to be increased without flinching despite the unpopularity of that move.

We are now through that phase. We had 4 per cent. growth last year, and our economy is growing faster than that of France, Germany and Italy. Our inflation rate, which has been under 4 per cent. for three years, is the best for a generation. Government spending is under control and unemployment is down by 710,000 from its peak. In my constituency of Gravesham, it is at its lowest since April 1991.

We should compare those figures with our European partners. Unemployment is serious and rising in France. In Spain, 20 per cent. of the work force are unemployed. Under Spain's socialist Government, who abide by the social chapter, 30 per cent. of young people are unemployed. Is that what we want? The whole gamut of economic indicators, be they exports, investment, manufacturing output or consumer spending, is steadily increasing. If all is going so well, where is the feel-good factor? Why is it not yet here? The reason is the tax impact on the working family, the burdens on enterprise and the massive hangover from which the property market is suffering following the 1980s which hit the value of people's homes.

I shall now deal with the tax impact on the working family. It is a fact that since 1979, for a single person earning, the tax burden has gone down by one tenth. Organisation for Economic Co-operation and

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Development figures show that the tax and national insurance burden on the single earner is 26.5 per cent., which is slightly higher than the figure for the United States, but way below European Community levels. Our tax burden on the single earner is very much lower than that of our European partners.

However, the tax burden on the married couple has shown no reduction over that period. In Britain, there is a 24.1 per cent. burden of tax and national insurance. That is very much higher than the figure for the United States, with its 19 per cent., and very much higher than the figures for France, Italy and Canada. We have a higher tax burden on the family than is the case in any of the other G7 countries, bar one.

We should redress the balance in this Budget. We in the Conservative party believe in the working family, which is the bedrock of Britain. With the economy growing the way it is, now is the time to look at how we should put back the money in the taxpayer's pocket, whence it came in the first place. We should restore the married couple's allowance to the standard rate band, which would cost the Exchequer £2.4 billion, but there should not be an increase in the additional personal allowance for single parents with children other than those who are widowed, thus providing a disincentive to illegitimacy and divorce.

We should introduce a capacity for non-working mothers to transfer their basic allowance to their working husbands. In 1993-94, there were 9.1 million male married taxpayers and 5.8 million tax-paying wives. That would suggest that 3.3 million wives could transfer their allowances, providing their families with young children with a tax saving of 25 per cent. on the basic allowance of £3,445. That would mean a saving of £861 in the pockets of families, which would have a significantly greater impact on the less well-off earning families. We should concentrate on that idea.

We must also concentrate on doing everything to support enterprise. What made this country great? It was our entrepreneurs who went out into the world to trade and invest. After all, the flag followed trade. That investment abroad is having a massive impact on our cash flow balances into this country. We are the biggest investor in the United States. We are a major player in the international markets and those investors should be supported. Next week's Budget is the opportunity to start giving back to people their own money. We should target families, small businesses and home owners.

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