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Madam Speaker: Who the Conservative party or the Labour party employs is certainly not my concern. I have far too much to do here and much more important things than that to worry about.

Mr. Gerald Bermingham (St. Helens, South): On a point of order, Madam Speaker. You will recall that, last night, Government business terminated at 10 o'clock because of the failure of their managers to move the 10 o'clock business motion. As a result, the Home Secretary has--naturally--deemed it wise to criticise all hon. Members for not wanting to carry the Bill through, thus denying protection to citizens of this country. Should he not be brought before the House and asked to apologise to hon. Members, as his own party's actions led to the cessation of business?

Madam Speaker: The procedures last night were properly carried out. I was in the Chair to see that they were conducted correctly.

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Orders of the Day

Finance Bill

[Relevant document: The Third Report from the Treasury Committee of Session 1996-97 on The 1996 Budget (HC 129-I & II).]

Order for Second Reading read.

Madam Speaker: I have selected the amendment standing in the name of the Leader of the Opposition.

3.45 pm

The Chief Secretary to the Treasury (Mr. William Waldegrave): I beg to move, That the Bill be now read a Second time.

In his four Budgets, my right hon. and learned Friend the Chancellor of the Exchequer has put Britain firmly on course for a sustained period of rising prosperity and falling unemployment. The United Kingdom's economy is in far better shape both in absolute terms and in relation to our neighbours than it has been for many years. We are enjoying a more favourable combination of strong growth, low inflation, falling unemployment, strong export performance and low mortgage rates than we have seen for a generation. The Budget and the Finance Bill will maintain that performance. I should like to remind the House of what has been achieved.

The economy has been growing continuously since 1992 and has grown more strongly overall than in any other major European country--outpacing France and Germany for the past four years. We are set to outpace those two countries again, I am glad to say, for the next two years, which will bring the gap in gross domestic product per head that opened up in the 1960s and 1970s between France and the UK down from 8.5 per cent. to 6 per cent., and between Germany and the UK down from 11.5 per cent. to 8.5 per cent. If we can continue that performance, the gap will be closed once and for all. Incidentally, if such performance comes about, as most forecasters think it will, it will be the first time since the second world war that we shall have outpaced those two countries for six consecutive years.

Claimant unemployment has fallen from a peak of 10.6 per cent. of the work force at the end of 1992 to 6.9 per cent., and is at its lowest for almost six years. That reminds us of the forecasting skill of the right hon. Member for Dunfermline, East (Mr. Brown), who famously said in 1993:

"unemployment will rise this month, next month and for many months afterwards."--[Official Report, 17 March 1993; Vol. 221, c. 289.]

It went down from that day onwards.

Mr. Dennis Skinner (Bolsover): It is about time that we put the unemployment figures in the correct perspective. Is the right hon. Gentleman aware that, on 17 November, the Murdoch Tory newspaper, the News of the World, said that the Government's figure for unemployment, which then stood at 2 million, was totally bogus and that the real figure was at least 4.1 million? That was said in the editorial of a Tory paper and has been proved time and again in almost every constituency where surveys have taken place, including mine, where a

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house-to-house survey of the number of people out of work as opposed to the number claiming unemployment benefit revealed unemployment of about 50 per cent. in three Bolsover wards. The reason why the Government are able to produce bogus figures is that they do not count people on jobseeker's allowance; they keep them out of the figures, yet such people are genuinely trying to get work. The 31-time fiddled figures represent what the Government stand for. They will fiddle anything in order to try to get re-elected.

Mr. Waldegrave: The weakness of the hon. Gentleman's argument is that whichever measure one takes--the labour force survey or the work force in employment survey--all the internationally agreed surveys show that Britain's performance has been better than in other comparable countries. I do not accept that we have fiddled the figures, but if all the countries in western Europe have fiddled the figures, our performance is still better than theirs. I doubt that if the Labour party by any misfortune came to power, it would change the figures and add on 2 million or 3 million, or whatever the hon. Gentleman claims has been knocked off. I suspect that that would not happen.

Mr. David Winnick (Walsall, North) rose--

Mr. Robert Sheldon (Ashton-under-Lyne) rose--

Mr. Waldegrave: No, I have dealt with the point and I shall proceed.

Inflation has been below 4 per cent. now for four years and we are set to meet our underlying target of 2.5 per cent. or lower. Those figures represent the achievement of the British people, given the right framework of stable and responsible policies. They show that Britain continues to win more jobs and has higher living standards and, if we stick to the policies that we have, we shall continue to do so.

Mr. Winnick: If all is so rosy in the garden and if everything is as fine as the Chief Secretary is painting it, why are the Government the most unpopular since the end of the war and why is it that the Government are so terrified of moving the writ for the Wirral, South by-election? Why are the people not appreciative of what the Chief Secretary has told us?

Mr. Waldegrave: The hon. Gentleman must await the day and he will find that the British people will respond to the facts. I am not saying that everything in the garden is perfect. It would be foolish of any Minister to stand here and say that, but the policies followed by the Government are leading us in the right direction in the crucial sectors of long-term growth, low inflation and jobs. Governments on the continent of Europe who respond to the same arguments as the Labour party about minimum wages and social contracts and chapters have systematically higher unemployment. The issue is one of comparisons between real policies in the real world, and the hon. Gentleman's party is on the wrong side of the argument.

It is not only members of the Government who say what I am saying. It is also the view of the Organisation for Economic Co-operation and Development, which I

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know the hon. Member for Walsall, North (Mr. Winnick) respects. In the OECD's Economic Outlook, published last month, it said:

"The prospects for achieving sustained output growth and low inflation are the best in 30 years."

That is also the view of the International Monetary Fund, which has described Britain's economic performance as "enviable".

Our success derives from the supply-side reforms of which British firms and employers have taken advantage, but which were opposed by the Opposition in every critical respect. The Leader of the Opposition may now campaign up and down the country by saying that the greatest achievement--of modern times, as far as I can make out--was Lady Thatcher's trade union reforms and that he wishes to imitate her success in other areas, but he and all his hon. Friends opposed those reforms root and branch. The House discussed one of the Leader of the Opposition's damascene conversions on defence earlier and that is yet another one.

Mr. Sheldon: The Chief Secretary will be aware that the trade-weighted exchange rate has risen from 83 to 96--an increase of about 15 per cent. Clearly, that has had a great effect on import prices and has helped to keep inflation much lower than it would otherwise be. The ordinary method of computing the effect is to apply the four to one rule--for every 4 per cent. increase in import prices, inflation increases by 1 per cent. and the reverse is true when import prices fall. What is the Chief Secretary's estimate of what inflation would have been if the exchange rate had not increased? Does he agree that the retail prices index would have been somewhere between 2.5 per cent. and 4 per cent. had not the Government had the advantage of the rise in the exchange rate?

Mr. Waldegrave: The right hon. Gentleman's question is complex and has a lot of conditionals. Inflation was down before the exchange rate rose, and the policies of my right hon. and learned Friend the Chancellor had inflation under control before then. There are some, such as the right hon. Gentleman, who say that the proportion is about four to one, but there are others who doubt that. Those matters are part of the equation that my right hon. and learned Friend must take into account when he considers the overall balance of the economy and interest rates.

It is because of our determination to counter the threat of inflation and the resolute approach to the public finances that we have adopted in this and previous Budgets that we have such a satisfactory set of background conditions. In fact, Britain's strong economic performance is obvious to everyone--except, allegedly, to Opposition Members. As a matter of fact, I suspect that it is pretty obvious to them as well. The proof of that is that they do not have an alternative set of economic analyses or policies to offer, which makes me suspect that, in their heart of hearts, they recognise that the underlying basis of policy is about right. I doubt that a single Opposition Member believes in his or her heart of hearts that if Mr. Kinnock had been elected in 1992, unemployment

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would now be below 7 per cent. and falling, inflation would be on target for 2.5 per cent. and Britain would be in the fifth year of non-inflationary growth.

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