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(1) Standing Order No. 13 (Arrangement of public business) shall have effect for this Session with the following modifications, namely:
In paragraph (4) the word 'eight' shall be substituted for the word 'ten' in line 43; in paragraph (5) the word 'fifth' shall be substituted for the word 'seventh' in line 45;
(2) Standing Order No. 90 (Second reading committees) shall have effect for this Session with the following modification, namely:
In paragraph (2) the word 'fifth' shall be substituted for the word 'seventh' in line 23; and
(3) Private Members' Bills shall have precedence over Government business on 13th December, 17th, 24th and 31st January, 7th, 14th and 28th February and 18th April.
SITTINGS OF THE HOUSE
Ordered,
That--
30 Oct 1996 : Column 658
(1) Standing Order No. 11A (House not to sit on certain Fridays) shall have effect for this Session with the following modification, namely:
In paragraph (1) the word 'eight' shall be substituted for the word 'ten'; and
(2) the House shall not sit on the following Fridays:
8th and 22nd November, 21st February, 7th, 14th and 21st March and 4th and 11th April.--[Mr. Wood.]
Orders of the Day
Debate on the Address
[sixth day]
Order read for resuming adjourned debate on Question [23 October],
That an humble Address be presented to Her Majesty, as follows:
Question again proposed.
Most Gracious Sovereign,
We, your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.--[Sir Norman Fowler.]
The Economy
Madam Speaker: I have selected the amendment standing in the name of the Leader of the Opposition. The amendment standing in the name of the right hon. Member for Yeovil (Mr. Ashdown) will be called at the end of the debate for Division. Speeches between 7 o'clock and 9 o'clock will be restricted to 10 minutes.
3.54 pm
Mr. Gordon Brown (Dunfermline, East): I beg to move, as an amendment to the Address, at the end of the Question to add:
- "but note that since 1979 the Government has broken each one of its central promises: to reverse national economic decline, to cut unemployment which stood at one million when it took office, to raise investment in the United Kingdom's manufacturing industries, to cut tax, spending and debt and to build a cohesive society; regret the absence from the Gracious Speech of measures that will strengthen the supply side of the economy, expand the United Kingdom's long term capacity, ensure high levels of sustainable growth and heal social division; call for a new employment policy which moves people from welfare to work, a new education policy which equips people for the future, a new industry policy for investment that will increase small business and high technology investment in all regions of Britain; and note that these measures are the only sure way of ensuring opportunity for all and a durable recovery that will keep inflation and interest rates low, and bring long term prosperity for all."
That cannot be justified or explained by saying that we have lower interest rates than our competitors, and that Britain is merely catching up. We do not have the lowest rate in Europe or even the second, third or fourth lowest. Interest rates are already higher in Britain than in 10 other European countries. We are 11th out of 15 for interest rates in Europe. Only Spain, Portugal, Greece and Italy have higher rates.
The rise, which is from a higher base than that of other European countries, comes from domestically created problems which are internal to the British economy, and which the Government must explain in the debate. The rise cannot be justified by the huge strength of the economy. The Chancellor has already downgraded his
growth forecast for this year from 3 to 2.5 per cent., and in his Budget it may have to be admitted that growth is even lower. The Government are not putting up interest rates because of what is happening elsewhere or because of their success. They have been forced to push up rates because they do not believe that they can meet their inflation targets.
The rise has occurred because, as we have been saying for the past four years, unless a recovery is based on solid foundations, a country cannot sustain anything other than sluggish growth without rising inflationary pressures. As we know, it is the same old British disease returning under the Government.
The rise was inevitable, because the recovery has not produced the investment-led and industry-led growth that the Government predicted. It is the inevitable result of the policy of a Government who have failed to tackle the fundamental weaknesses of the economy. As a result, inflationary pressures are ready to undermine it. That is why the Government should have implemented before now the policies set out in our amendment. We have proposed those policies on many occasions, and they are right for the British economy.
What is the nature of the economic recovery that has led to these higher inflationary pressures? It is not the industry-led recovery that we were led to expect in 1992. Industry has failed to expand in the way that it should if we are to have a sustainable recovery. Industrial production fell in the past three months. It is only 0.6 per cent. up on a year ago. Despite all the successes of individual companies, industrial output in the economy at this stage of the cycle is still weak.
It is not a manufacturing-led recovery, either. Output has fallen over the past three quarters, and is less than 0.5 per cent. lower than a year ago. Despite some great individual success stories by many of our companies because of their efforts, manufacturing output is weak. At this stage, the recovery is not showing massive export growth, despite the devaluation of the pound. The summer economic forecast predicts that imports will grow faster than exports, and we still have the second worst trade deficit in the European Union.
Most of all, the recovery is not investment led. We have been warning throughout about the failure of investment to rise throughout the last years of recovery. Private sector investment has been growing more slowly since the recession than in any recovery this century. At a similar stage of the cycle in the recovery of the late 1970s, investment had risen by 20 per cent. In the recovery of the early 1980s, it had risen by 30 per cent. In this recovery, it has risen by just 6 per cent., and manufacturing investment is falling. It is lower than it was a year ago. Small wonder that the Bank of England reported this year that investment growth has been weak in the recovery.
Look at the complacency of the Chancellor of the Exchequer on investment. Every time, he and his predecessor predicted that there would be an investment recovery that would allow the economy's capacity to be strong enough to sustain growth. We were told that, in 1993, business investment would rise, and it fell by 2.5 per cent. Business investment was to rise by 7 per cent. in 1994, and it rose by only 2 per cent. It was to rise in 1995 by 10 per cent., and it rose by only 1.5 per cent. It is to rise this year by 7.5 per cent., and we wait to hear what the figures are.
This summer, we had the spectacle of the Deputy Prime Minister, faced with all those figures, publishing his competitiveness report and trying to tell us that, in a modern economy, because the record was so poor, investment levels were of no great significance.
I tell the Chancellor of the Exchequer: prudence is absolutely critical to the economy, which is why the interest rate rise was necessary--the one that he has been forced to make--but prudent economic management depends for its success on the firm foundation of a strong economy that is investment rich, and which he has failed to achieve. Without investment-led growth and the export-led and industry-led recovery that was promised, we get to the problems that the Chancellor faces today.
Mr. John Redwood (Wokingham):
When a 10-year-old child can close a school in Labour Nottinghamshire and all the Labour party can do nothing to reopen that school, why should we believe that the right hon. Gentleman has any answers to our economic problems?
Mr. Brown:
We must be fair to the right hon. Gentleman. Like the Secretary of State for Education and Employment, he is speaking in a personal capacity. He was the man who coined the slogan, "No change, no chance". What does he think about what is happening to the economy today?
Let us be absolutely clear that the economic fundamentals that a modern economy needs, in addition to the platform of stability that we support, are high investment in industry and in skill, and high productivity through creating employment opportunity. That is why our amendment contains exactly the proposals that the Government should be implementing.
First, the Government should be implementing a policy for investment.
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