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Economy (North-West England)

4. Mr. Elletson: To ask the Chancellor of the Exchequer if he will make a statement about the economy in the north-west of England. [9519]

Mrs. Angela Knight: The north-west is sharing fully in the success of the British economy, which is enjoying a combination of low inflation, falling unemployment, low mortgage rates and rising living standards not seen for a generation.

Mr. Elletson: I thank my hon. Friend for that reply. Does it not show that, thanks to the Government's economic policy, north-west England is now one of the most competitive and successful economies in the most competitive and successful country in western Europe? Would it not be crazy to throw all that away on new Labour, new failure?

Mrs. Knight: My hon. Friend is correct. Unemployment in the north-west has fallen to its lowest level for more than six years and average weekly pay is the second highest in the country. May I turn my hon. Friend's attention to some of the figures relating to Blackpool? It is, as he knows, the country's premier tourist resort, with more visitors per year than Portugal and more hotel beds than the whole of Greece. The Labour party's recipe of a minimum wage, the social chapter and more red tape would damage jobs in my hon. Friend's constituency and would damage the United Kingdom's tourist industry.

Mr. Sheldon: Is the hon. Lady aware that chambers of commerce in the north-west have stated that they are more concerned about the level of interest rates and a competitive pound than about anything else? Although I welcome the decision by the Chancellor of the Exchequer to overcome the fears of the Governor of the Bank of England, will the hon. Lady ensure that my points about the competitive pound are fully taken into account, bearing in mind the need for manufacturing industry in the north-west of England?

Mrs. Knight: I can assure the right hon. Gentleman that that is one of the factors that my right hon. and learned Friend the Chancellor takes into account when setting interest rates. The right hon. Gentleman will also be aware that we receive many representations from business, commerce and individuals about all aspects of the British economy. I can assure him that they are delighted by our inflation performance. They are also delighted that our interest rates are low, mortgage rates are at their lowest level for almost 30 years, more people are in work and we have a lower unemployment rate than any other major European country. That is the sort of economy that we have created in this country--one in which companies can prosper and thrive and individuals can expect jobs and achieve improved living standards.

Mr. Nicholas Winterton: I welcome the influence of my right hon. and learned Friend the Chancellor of the Exchequer and his resistance to the blandishments of the Governor of the Bank of England when urging him to increase interest rates. Such resistance has made a direct contribution to the healthy economic situation in

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north-west England. In my constituency of Macclesfield, unemployment is down to 3.2 per cent. and we have recently had the fine announcement of the second runway at Manchester airport. Only last October, Vauxhall announced investment of more than £300 million in Merseyside, which I hope will go some way to offset today's unfortunate announcement by Ford at Halewood--a decision that I deeply regret.

Mrs. Knight: I agree with my hon. Friend that any job losses are regrettable. In its statement today, Ford says that it is improving the plant's competitiveness to secure its long-term future, but the future for everyone in this country is a stable economy--an economy and economic policies that ensure the job creation that we are currently witnessing. Recently published figures show that we are creating about 10,000 jobs a week; we are prepared to continue to do so. It is vital for everyone in the country.

Mr. Milburn: Will the hon. Lady confirm that earlier today the Chancellor described the loss of jobs in the north-west at Ford's Halewood plant as a case of

"You can't win them all"?

How can she defend such complacency when the loss of quality manufacturing employment is such a devastating blow, not only to the north-west but to the whole British economy?

Instead of sitting back and doing nothing, will the Minister agree to make a statement to the House on the impact of those job losses on the people of the north-west and the economy of that region?

Mrs. Knight: That question was uniquely silly, especially the quotation that the hon. Gentleman attributed to my right hon. and learned Friend the Chancellor of the Exchequer. As I said, all job losses are regrettable. I find them regrettable, as do my right hon. and learned Friend and the Government.

I hope that the hon. Gentleman will support Ford's measures to improve the plant's competitiveness to ensure its future, and that he will be pleased by the enormous investment that Ford has made in this country. I look forward to his supporting the economic policies that have created and continue to create jobs in this country; unemployment is falling here, but is rising in every other major European country. That ability to create jobs results in this country's success and provides big opportunities for everyone, including people on Merseyside.

Taxation

5. Sir Ivan Lawrence: To ask the Chancellor of the Exchequer if he will make a statement on the level of taxation in (a) the United Kingdom and (b) the rest of the European Union. [9520]

Mr. Jack: The overall burden of taxation on the economy in the United Kingdom was 35.75 per cent of GDP in 1995-96. This represents one of the very lowest levels in Europe and is below that of France, Germany and Italy.

Sir Ivan Lawrence: Does my hon. Friend--whose honour Conservative Members very much welcome--agree that taxation must be a matter for member states,

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that our policy has enabled us to achieve lower personal and business taxation, details of which I invite him to give us, and that it is not in Britain's interests to give up that control?

Mr. Jack: I thank my hon. and learned Friend for his kind personal comments. On his last point, I hope that I can satisfy him by reminding him of what my right hon. and learned Friend the Chancellor said to the House of Lords in the EMU inquiry on 28 March 1996:

"I personally strongly take the view that taxation policies are decisions for the member states of the European Union and should remain so."

I believe that to be a clear statement of our policy.

My hon. and learned Friend invited me to give the House information on tax on business as a percentage of GDP. In the United Kingdom it is 8 per cent., in Germany 9.4 per cent. and in France 16.8 per cent. At a personal level, in the United Kingdom it is 17 per cent., in Germany 27 per cent., in France 26 per cent. and in Italy 24 per cent., which clearly shows what an attractive place the United Kingdom is to do business and earn money, with tax at such a low percentage of GDP.

Mr. Spearing: Do not considerable disparities persist between VAT in different nations of the Community? For instance, do not France and Germany impose a minimum of 15 per cent. VAT on children's clothing, fuel and water?

Is the Minister aware that, under article 99 of the Maastricht treaty on European Union, such disparities must change? Has he not seen the document that has been sent to the presidency, and to Her Majesty's Government by the Commission, requiring or suggesting a further tranche of harmonisation, including decision by qualified majority voting and central collection and dispersion? Why did the Chancellor of the Exchequer, despite the conversation on Radio 4 this morning, make no reference to that?

The Exchequer Secretary to the Treasury, who is sitting next to the Chancellor, wrote a memorandum, which is publicly available in the Vote Office, describing that outrageous suggestion and signed it. Would it not have been better if the Chancellor had seen and signed it?

Mr. Jack: I do not know what to make of the hon. Gentleman's question. He accuses the Chancellor of not dealing with the central issue, but for once Radio 4's "Today" programme concentrated on asking the Chancellor about the excellent performance of the British economy. My right hon. and learned Friend offered good information about inflation, low interest rates and falling unemployment--the things that really matter in this country to those who are working and exporting to the rest of Europe.

Mr. Redwood: Will the Minister confirm that the British Government would veto any Franco-German proposal to make taxation a matter of common concern within the Community institutions? Will we stand against any compulsory increase in income tax to bring this

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country into line with France and Germany, and will he confirm that higher income tax would not be a price worth paying for a single currency?

Mr. Jack: That, I think, is a hypothetical question--[Interruption.]--for the very simple and straightforward reason that no such proposal as my right hon. Friend describes exists.

Mr. Mike O'Brien: Will the Minister confirm that the Chancellor has told the House:

"one of my options must be to extend the VAT base. The main candidates are food, children's clothes, transport, sewerage and newspapers."? Furthermore, he said:


"A powerful case for each of them can be made".--[Official Report, 30 November 1993; Vol. 233, c. 940]

In 1979 and in 1992 the Tories promised not to extend VAT: whereupon they doubled it and put it on fuel. How can anyone trust the Tories on VAT?

Mr. Jack: We started the day looking into the gutter and we have just had another example of the kind of gutter, negative politics that the Opposition told us they were not going to indulge in.

Let us look at the record. My right hon. and learned Friend has never made a secret of the fact that he favours a broad-based taxation system with low marginal rates--possibly an idea that the Opposition do not understand. Today they have completely fabricated a claim that we have some intention of levying VAT on food. Let us nail that right now, and remind the House that my right hon. and learned Friend has said:

"It has never crossed my mind to put VAT on food and it hasn't crossed my mind now."

His policy and position are thus quite clear.

Sir Teddy Taylor: Will the Minister remind the Opposition that the sixth directive, which called for harmonisation of VAT, was agreed in 1977 when there happened to be a Labour Government? Does he agree that the real threat of VAT on food could arise only from a European Court challenge to a legal procedure that the Government have been using since 1 January--and that that could happen whether a Conservative or a Labour Government were in office?

Will the Minister finally agree that the late and much respected John Smith would never have indulged in the untruths and deviousness that we witnessed this morning?

Mr. Jack: I entirely agree with my hon. Friend's last point. The House will have taken careful note of his other points; but the greatest threat to our position in respect of Europe comes from the Opposition.

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