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Mr. MacShane: The right hon. Gentleman lavished praise on all the Conservative Back Benchers who have spoken, but was scornful about me--[Hon. Members: "Ah."]. Given that most Conservative Back Benchers who spoke praised excessively the speech of the shadow leader of the future Opposition, the right hon. Member for Wokingham (Mr. Redwood), can we have the Chief Secretary's comments on the contribution of the right hon. Member for Wokingham, who is in favour of the Treasury kids?
Mr. Waldegrave: It never occurred to me that the hon. Gentleman needed any help from me in blowing his own trumpet, but I am quite happy to say that his short--eccentric, but short--speech was remarkable.
I will indeed come to the point about my right hon. Friend the Member for Wokingham. My right hon. Friend made a number of extremely helpful suggestions, and I have to tell the Labour party that those suggestions will be useful to me in my job as Chief Secretary. Some of them I had already, with his help, and some of them--he will give me credit for--I might have spotted myself. But in saying that we shall return to the subject of public expenditure seriously this year, he is right, and we shall do that. I am grateful for his support, but I am also grateful for the support of everybody on the Conservative Benches.
My hon. Friends the Members for Wyre Forest and for Bury St. Edmunds spoke about the outstanding performance of the economy in attracting inward investment. I think it was my hon. Friend the Member for Wyre Forest who referred to my friend, Professor Bhattacharyya, who, quite rightly, says that the investment that is coming here now may give the lie to the rather cheap line that Opposition Members try to put, that it is sweatshop investment. It is not. It is high-quality, high-tech investment. People come here because they know that we have highly skilled people, that we have a competitive market, that we believe in liberal free trade, and that we welcome them, unlike some other countries that are not so welcoming. We shall continue to do that.
The CBI today, in a useful report, made those points, and said:
Mr. Paul Flynn (Newport, West):
On the minimum wage, will the Chief Secretary explain why, two years ago, a British semi-conductor plant, which was on the site adjacent to where 6,000 Korean semi-conductor jobs are to come in my constituency, left to go to two countries--it is still prosperous and still producing semi-conductors--that have the social chapter and the minimum wage? Why was that?
Mr. Waldegrave:
For its long-term development, it seems to have been a strange decision. I suspect that it would have done better to have stayed in the hon. Gentleman's constituency.
The right hon. Member for Sedgefield (Mr. Blair), the Leader of the Opposition, is, as always, beginning to get cold feet. He likes to give the feeling of the smack of firm government, but he caves in under pressure. That is an interesting point about him. He has already caved under the pressure of my right hon. Friend the Secretary of State for Scotland on devolution. He caved on the pensions pledge, which caused the formidable Lady Castle to say that she will come and haunt him. I suspect that being haunted by Lady Castle may cause him to do another U-turn on that matter.
I understand that he has done a U-turn on the tube strike today. Interestingly, he is trying to signal to business that he is going to do a U-turn on the social chapter, but he has made such a pig's ear of it that it is clear once again that he does not understand the social chapter--and most of it goes through under qualified majority voting, which he has pledged to expand. I do not think that that attempted mini-U-turn will cut much ice.
Labour is clear on only one thing--that it will reverse the policies that have led to our competitiveness. It will reverse them through the minimum wage, the social chapter and the restoration of the trade union power that has been properly limited by law in this country. To obtain testimony to that, and to the strength of the underlying changes that we have made and their connection to inward investment and job creation, it is best--as it often is--to seek an independent observer from abroad. People often see this country more clearly from abroad.
Here are some quotations.
On public spending, the president of the BDI said:
Mr. Henkel ended by saying that the Leader of the Opposition
Here we need no lessons from Labour Members. They argue to the spending lobbies that they will increase spending. I do not have time to quote from the piles of material that I could produce--[Hon. Members: "Go on."] All right, I shall quote from just a few.
Then the Labour party says that taxes are too high. It put up a sign at Piccadilly Circus saying that Tories tax too much. First it says that spending must be higher; then it says that our taxes are too high; then it says that our borrowing is too high. It is not possible to believe all three propositions at the same time.
We know perfectly well--and, to be fair, so do the Liberal Democrats--which pledge the Labour party would break. It would spend more, and tax more. To be fair to the Liberal Democrats, they are nearly brave enough to say, "We accept that, and we would put taxes up." They do not cost their programme properly, but they are willing to engage in the argument. The official Opposition are simply not brave enough to do that. They are fairly criticised for that.
Borrowing and taxing would rise again under Labour. On average, borrowing under the Labour Government ran at 7 per cent. of GDP. In their best year, it was about 3.5 per cent., which we achieved last year. In their worst year, which is far more typical, it was 10 per cent. That is what Labour would achieve again if the country ever entrusted the national finances to it.
"We have a leaner and more competitive industrial base both in manufacturing and in service sectors . . . Our Labour markets have become more flexible and responsive."
The report reiterated the hostility of business to European social policies. It said that business wants our opt-out from the social chapter to remain, as it will, and argued:
"Business opposes a national minimum wage, which would undermine flexibility and is a poor way to tackle poverty."
That is what the CBI said today. Those are the policies that have produced the flexibility and good results that we have seen coming through.
"Excessively high German labour costs are costing more and more German jobs . . . There is really no call for a minimum wage in our economic system."
Those are not my words, but the words of Hans-Olaf Henkel, president of the German BDI, who--helpfully--spoke to Tony Blair when he went, as the Daily Mail said, to cuddle up to Mr. Kohl.
"In Tony Blair's home country, unemployment has dropped in absolute terms by 20 per cent. since its peak in the eighties. In West Germany it has risen by 10 per cent."
"One of the Governments"--
he meant the United Kingdom Government--
"has steadily reduced state influence. The other"--
Germany--
"has done no such thing.
In all those claims, the president of the BDI was right. That is proof that the stereotype suggesting that Germans have no sense of humour is false--although I know it to be false anyway. The fact that Mr. Henkel teased the Leader of the Opposition with that speech--to the point at which, I understand, he made his excuses and left--shows that Mr. Henkel not only knows the truth but has a sense of humour.
In Germany, the ratio of public spending to GNP has risen to 50 per cent. In Great Britain, it has fallen to 42.2 per cent.
In Germany, average taxes on retained profits are 64.9 per cent. In Great Britain the figure is 33 per cent."
"knows one thing too: Great Britain has become the most attractive location in Europe. Although the German market is twice the size of Britain's, foreigners have invested ten times more in Great Britain than in Germany since 1985. I am sure he does not want to alter this."
In their hearts, Labour Members know that the economy is in good shape. The Leader of the Opposition clearly knows that his policies were damaging, which is why, characteristically, he is beginning to equivocate about them again. In his latest policy document--which the Independent on Sunday described as a mighty whimper at his enemies--he began to try to obfuscate them further. That is why Labour Members have not talked about the economy today, but have shifted to an attack on public spending, debt and tax.
"The first action I would take would be to refuse to abolish the community action programme".
That was said by the right hon. Member for Dunfermline, East.
"Why don't you"--
that is, the Secretary of State for Health--
"fight to restore NHS dentistry. Because that's what Labour will do".
That was said by the right hon. Member for Derby, South (Mrs. Beckett). The Home Secretary must
"continue compensation under the Criminal Injuries Compensation Scheme as it operated before 1 April 1994".
That was said by the hon. Member for Blackburn (Mr. Straw). And so on, and so on. Hundreds of clear spending pledges have been made.
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