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7.3 pm

Mr. Brian H. Donohoe (Cunninghame, South): I, too, will be brief. Somebody once said--the comment may well have been made by an official in the Treasury--that there were

Given the Chancellor's Budget statement last week, we are now in a position to say that there are lies, damned lies, statistics and--courtesy of the Chancellor--pre-election Budgets.

There is no doubt that the calculations contained in the Budget would do justice to accountants who ruthlessly exploit tax loopholes and whose activities the Chancellor now seems to see the merit in clamping down upon. Why has that recognition taken so long?

The political dust has now settled on the Budget statement and millions of voters who will determine the result of the next general election have had an opportunity to assess the impact--or rather lack of impact--of the Chancellor's measures on them and their families.

The business sector--the driving force of the economy, so we are told--has also had an opportunity to consider the measures announced by the Chancellor. Its response so far has been one of deep distrust of the direction in which the Government are taking the country.

My constituency contains Irvine new town--a new town that is still haunted by the old problem of high unemployment--and has been hit hard over the past three years by a series of job loss announcements and factory closures. We have also had to put up with staff cuts in local hospitals, the Ayrshire Central hospital, where there were major cuts, and the Crosshouse hospital, where there were even deeper cuts over the past year. Yet we heard

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this afternoon from the Secretary of State for Health that we are supposed to believe that there has been an increase in the moneys available to health trusts. In my constituency, the opposite has occurred. About 200 people have lost their jobs because of the cuts that the Government have created.

There have been direct job losses and it has become more difficult for the smaller companies to survive that supplied larger companies on a subcontracting basis. We have seen Unitex, Amkor Anam, Connor Peripherals, ICI and Escom disappear or announce major job losses in my constituency. The list seems almost endless. However, the constituency is supposed to be in a hot spot for jobs.

I am talking of companies that took hundreds of jobs with them when they folded or cut production as a result of the Government's discredited economic policies. However, despite closure announcements--most recently of the Robert Wilson and Sons canning factory in Kilwinning, with the loss of 285 jobs--the Government's response to the business sector's problems has been minimal, if there has been anything worth while at all.

Last week's Budget continued the trend of Government inaction, with business people in my constituency deeply concerned that the Chancellor has put the short-term political interests of the Tory party, and its need to win the general election next year, ahead of the country's long-term interests.

Business people want to see tax cuts, but they also know that, if their own business is to succeed, they need a highly trained work force, and they need the Government to invest in the industrial and transport infrastructure to allow them to compete. Most of that money has gone amiss in my constituency. In Ayrshire, we still lack a major road link to the national motorway network; indeed, the best road out of Ayrshire is still a B road. That is rather strange in an area that is supposed to be a developing part of the country.

Business wants to see a low-taxation economy, but not at the expense of the overall well-being of the economy. Tax cuts as pre-election bribes do not fool those in the business sector, who do not believe the Chancellor's claims about increases in expenditure on education. They welcome relief from increases in business rates, but they will not forget that it was the Government who increased business rates in the first place.

The experience of the business community in my constituency--be it large employers or small businesses--is that, despite the Conservatives' claim to be the party of business, their policies have made it more difficult to get on with doing business in a way that benefits their companies and creates jobs and wealth. Business in my constituency is surviving not because of the Government, the Chancellor or his Budget statement but despite them.

Last Tuesday, the Chancellor had an opportunity of trying to get the economy and the country back on track by taking decisions that would have supported business. Instead, he chose to try to win the Tory party another general election, secure in the knowledge that, if he failed, he would not be faced with having to take the difficult decisions that will be caused by his cavalier approach to public finances.

The Chancellor said last week at the start of his Budget statement that he was not going to play Santa Claus or, at the other extreme, Scrooge. At the Dispatch Box last Tuesday, he was not so much a Scrooge or Santa Claus

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Chancellor as a wild west gambler, with a glass of Scotch by his side and a cigar hanging from his mouth, playing a game of high-stakes economic poker at the last chance saloon. As the reaction of voters over the past seven days has demonstrated, his Budget bluff has not worked at all. Voters have not forgotten the 22 Tory tax rises that the Conservative Government have introduced; nor have businesses forgotten the economic recession that was caused the last time the Tories played fast and loose with the public purse in the run-up to the 1992 general election.

The Chancellor's Budget was bad for the millions who are unemployed, particularly the young and long-term jobless, who still have no real hope of a job. It was bad for taxpayers on low and average incomes, who are still paying the price of previous Tory tax rises. It was bad for British business, which needs investment to support it, not short-term decision making in the interests of the Tory party. It was bad for everyone, it seems, except the Tory party, which will have to wait only six months until the next general election before electors vote to evict it from office.

7.11 pm

Mr. Graham Riddick (Colne Valley): I join my hon. Friend the Member for Ryedale (Mr. Greenway) in welcoming the freeze on business rates that will apply to hundreds of thousands of small businesses throughout the country, many of which are in my constituency. They will very much welcome that move.

I am sorry that my right hon. Friend the Secretary of State for Health is not in the House at the moment, because I congratulate him on his excellent speech and performance. He wiped the floor with Opposition Front Benchers. It was a very impressive performance. In response, the right hon. Member for Derby, South (Mrs. Beckett) said that the national health service was falling apart. Perhaps she should come to Huddersfield to see the £10 million that has been invested in the Huddersfield NHS trust over the past 18 months. We have seen a new urology department, a new A and E unit, and a host of other developments that have taken place in recent months and years. I receive many more complaints about my local Labour-controlled council than about the local national health service.

I have heard the Labour party refer to the so-called 22 Tory tax rises so many times now. We just heard the same claim made by the hon. Member for Cunninghame, South (Mr. Donohoe). What are these 22 Tory tax rises? Yes, it is fair to say that, during the recession, tax revenues fell and it was necessary to increase some taxes at that time. But what are the 22 tax rises? I had a look and discovered that, within the 22, the Labour party has incorporated four fuel duty increases over the past few years, as though no Government would have increased fuel duty. Of course a Labour Government would have done so, as indeed would any other Government, so it is somewhat facile propaganda.

Looking a little further down the list, I notice that the Labour party has included the insurance tax, not once but four times, because the insurance tax applies to more than one item. That is like me saying that when the previous Labour Government increased income tax, there were 100 new taxes, because income tax applied to dustmen, solicitors, Members of Parliament and a host of others. That would be a ludicrous thing to say, yet the Labour party keeps peddling that nonsense in the hope that if it says it often enough people will believe it.

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The truth is that the Labour party believes in high spending and high tax. My hon. Friend the Member for Dover (Mr. Shaw) asked an interesting question in the last Parliament about tax under previous Governments. The answer that he received revealed that every Labour Government in history--with the exception of the first Labour Government, in 1924, who were in power for only nine months and therefore did not have time to do this--have left office with tax at a higher rate than when they came to power. It does no harm to remind people of the income tax that the previous Labour Government forced people to pay. People paid income tax at 50 per cent. on an income of £9,000 a year, and at 75 per cent. on incomes of £15,000 a year.

Those incomes were worth more in real terms in those days than they are today, but we are talking about very high levels of income tax, and, as we all know, the top rate of tax was a massive 97 per cent. I have no doubt that if Labour manages somehow to win the next election, nothing will change. We would see exactly the same thing happen again. A Labour Government would increase taxes as they always have in the past.

We should congratulate my right hon. Friend the Chief Secretary on his investigation into the Labour party's spending plans. As always, the Labour party intends to spend much more of taxpayers' hard-earned incomes. Indeed, the Labour party has made 89 firm policy pledges involving increases in public spending. The total cost came to some £30 billion. Those pledges are contained in this excellent document. I challenge any Opposition Member to deny that a Labour Government would seek to increase overseas aid, rejoin UNESCO, establish regional business development agencies in England, establish a business development bank, restore public ownership of the railways, increase spending on house building--about which we heard from the hon. Member for Sheffield, Attercliffe (Mr. Betts)--end council tax capping, establish a network of women's refuges. The list goes on and on, and I have no doubt that if Labour came to power, we would see those commitments put into place. They would, of course, cost the taxpayer a fortune.

I shall look at the wider issues of the Budget. There are a number of challenges and objectives that the Chancellor had to fulfil, but his overriding task was to do nothing to undermine the stability of the economy or the economic growth that the country is currently enjoying. Governments can do all sorts of things. They can spend money--always other people's money of course. They can raise taxes, to ludicrous levels, as we saw when Labour was last in power. They can pass laws through Parliament, and no one should underestimate our ability to introduce disruption and change through passing laws. The one thing that Governments cannot do is to create and generate wealth. Only companies, entrepreneurs and the people who work for them can do that. Only wealth creators can generate the revenues that Governments are only too ready to spend. Only wealth creators can produce the prosperity that we all want to see enjoyed by the people of this country.

Despite the tremendous strides in job creation that the Government have made in recent years, there are still too many people out of work. Despite the significant increase in the standard of living over the past 17 years, too many of my constituents are on low wages. That is why it was

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crucial that the Chancellor did nothing to upset the equilibrium of the economy, and in that objective he was successful. He has done nothing to threaten higher inflation. Public spending is firmly under control, and he has achieved that while increasing spending on the key public services of health, education and law and order. I very much welcome that. The Chancellor has done nothing to increase the risk of an interest rate rise.

However, I am concerned about one matter. A consensus seems to be developing in the City that inflation will start up again, and that interest rates will have to be increased. I am suspicious of such a consensus. The last time that there was a consensus, it was on the need to join the exchange rate mechanism. The Treasury, the Foreign Office, the Confederation of British Industry, the Trades Union Congress and all the political parties said that it would be a jolly good idea to go into the ERM, and we all know what a disaster that was. It cost hundreds of thousands of jobs in this country.

The Red Book reports that most commodity prices have levelled off, and many have fallen in recent months. Wage pressures are subdued. The latest CBI survey suggests that inflationary pressures in manufacturing remain subdued, and that producer-output prices are low, with little pressure for increases. It is important that we watch the monetary indicators. It is interesting that that arch monetarist, Professor Patrick Minford of Liverpool university, who has so often been right in the past few years, believes that the City has got it wrong. I support his view. It may have got it wrong on this occasion, because many people underestimate the extraordinary structural transformation that the Government have achieved.

The labour market has been deregulated, labour costs have reduced, and we have made crucial trade union reforms. The old nationalised industries used to put their prices up at the drop of a hat. Many of the large price increases of the 1970s and early 1980s were pushed through by the nationalised industries. We have now privatised them, and they are rejuvenating themselves. They are subject to more competition. If they are monopolies, their prices are regulated. The City consensus has underestimated the marked increase in competition, not just in the United Kingdom but from overseas.

The trend growth could now be higher than it has been in the past because of the structural changes and improvements that have been made. My message to the Chancellor is that, although he has to keep a watchful eye on inflation, he should not be hurried into premature interest rate rises.

Our overall economic outlook is bright. Growth is strong and unemployment is falling. Indeed, unemployment is lower in the United Kingdom than it is in all our major European competitor countries. It will shortly be below 2 million, while in Germany the figure is 4 million and rising, and in France it is 3 million and rising. In my constituency it has fallen by 640 since the beginning of the year.

However, two dark clouds on the horizon are casting a shadow over our success. First, Conservative Members cannot, sadly, dismiss out of hand the possibility of the Labour party winning the next election. Secondly, we face growing meddlesome interference by the European Union, and the danger that this country may be involved in a

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single European currency. The two are intertwined, because the Labour party seems prepared to swallow most, if not all, of the rubbish that comes out of Brussels.

Last week, the Chancellor said that it was a happy coincidence that the United Kingdom will meet the convergence criteria, and will thus qualify to join a single currency. That is the one area on which I do not agree with him. It is an unhappy coincidence that we may meet the convergence criteria, because if we did not, there would be no chance of us entering a single currency.

That issue is proving to be highly divisive in the European Union. I dread to think what it would be like if the single currency came into being. Other countries have massaged the convergence criteria. If we were in a single currency, the United Kingdom would lose control of its monetary policy, and ultimately of its tax policy and its economy. Our experience of the ERM shows us that monetary policy would not necessarily be run in accordance with the needs of the British economy. My constituents do not want a single currency; nor do I. I will do what I can, as a Back-Bench Member, to prevent the United Kingdom from scrapping the pound and adopting a single currency.

You asked, Madam Deputy Speaker, for short speeches, so I shall draw mine to a conclusion. The Budget has done nothing to damage the enterprise economy that the Conservative Government are developing, which is yielding higher economic growth and lower unemployment than in all our major European competitors. It is crucial that we do not allow the European Union or the Labour party to ruin that enterprise economy.

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