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Mr. William Cash (Stone): Does my right hon. Friend agree that it is absolutely essential not only to receive answers to his questions but to be told the reasons behind the Government's decisions? Is he not tempted to imagine that the Government are perhaps attempting to subscribe to the Maastricht criteria, and that that is why they are getting themselves into such intense difficulty? Furthermore, does he think that that will come back to haunt them once the public discover that they have been
deceived by Ministers into accepting a series of public expenditure cuts to comply with the principle of economic and monetary union? Ministers will not deny it.
Mr. Heathcoat-Amory: I always admire my hon. Friend's ingenuity in inserting a European aspect into any debate. He has made some effective points in his own way.
Last week, after the Budget, Labour Members were waving their Order Papers. However, I think that it has now sunk in--certainly among the public, and perhaps among Labour Members--that, in the Budget and the Finance Bill, not only have the Government broken their promises but there will be no more money for public services.
Some hon. Members are probably thinking that the Chancellor will have to give way on public expenditure. That is very old Labour thinking and I hope that they are cautious about expressing it too openly in the presence of a Labour Whip. If more money does come their way, it will simply mean that the Government have broken another promise. Not only will they have increased taxes and inflation, they will have broken their promise to bear down on the public finances.
Mr. Nigel Beard (Bexleyheath and Crayford):
Thank you, Mr. Deputy Speaker, for giving me the opportunity to make my maiden speech in this debate.
My constituency of Bexleyheath and Crayford is the London constituency that is furthest east on the south bank of the River Thames. Dartford lies to the east, and the London borough of Greenwich lies to the west. The A2, the main trunk road between London and Dover, forms the southern boundary. The River Thames, which is the northern boundary, is bordered by the flat open expanse of the Crayford marshes.
There are close ties with neighbouring areas of Kent. Indeed, in the past, gipsies from Kent and surrounding areas have regularly congregated on Crayford marshes. One of my predecessors, the late Norman Dodds, was known as the gipsies' Member of Parliament.
Many residents of Bexleyheath and Crayford were born and brought up close to where they live now. They work in one of the small or medium-sized businesses in the London borough of Bexley or commute to central or other parts of London. There are four railway stations in the area--Crayford, Slade Green, Barnehurst and Bexleyheath--on lines that connect London with various parts of Kent.
William Morris, the 19th-century pioneer of designs that are still popular a century after his death, was a resident of Bexleyheath. His house, aptly named the Red house, still stands as memorial to a man who was not only a poet, designer and business man, but a pioneer socialist.
Another of the area's famous sons, by adoption, is the Father of the House, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). He began his long and distinguished political career in 1951 as the Member of Parliament for Bexleyheath, an area now largely in the constituency that I have the honour to represent. The start of his political career hung by a very fine thread with a majority of 113 over the sitting Labour Member of Parliament, with a communist candidate getting more than 400 votes. No doubt before too long, one can expect an academic paper entitled "Britain in Europe: the Effect of the Communist Candidate in Bexleyheath in 1951".
The defeated Labour candidate was Ashley Bramall, who went on to have an impact on education in London as the chairman and leader of the Inner London education authority over 20 years. He contributed to my campaign, and was pleased to see the seat return to Labour for the first time since he won the by-election in 1947.
I hope and intend to increase the frequency of Labour's success in this area from once every 50 years to once every four or five. I am sure that the Budget presented by my right hon. Friend the Chancellor of the Exchequer will set a course to make that virtually a certainty.
I had two immediate predecessors--Sir Cyril Townsend, the Member for Bexleyheath, and Mr. David Evennett, the Member for Erith and Crayford, who fought the general election. Sir Cyril entered Parliament in 1974 after worldwide service in the Army. That was echoed in his interest in foreign policy during his period as a Member of this House.
Mr. David Evennett came to Parliament in 1983, having spent periods teaching and at Lloyd's of London. He continued his interest in education as a member of the Select Committee on Education, Science and the Arts between 1986 and 1992, and he was a regular visitor to schools in the constituency of Erith and Crayford. He was an active member of the congregation of St. Paulinus church. It comes hard, after 14 years in the House, to face unexpected defeat. The grace with which David Evennett accepted that and wished me well as his successor was widely admired on election night and throughout the constituency.
The Budget's emphasis on help and encouragement for small and medium-sized businesses is very relevant to Bexleyheath and Crayford. What has happened to manufacturing industry in the area typifies what has happened nationwide over the past 20 years. There were several major engineering companies in the area--Vickers, Fraser and Chalmers and, not far away, the Woolwich arsenal. All have closed, and now the economy depends on small and medium-sized businesses and on commuting.
There is a lack of skilled employment opportunities in an area where many families traditionally saw sons following fathers into engineering apprenticeships. We have to regenerate opportunities for people to use their skills and talents to the full. Unless we do that, we shall not raise the long-term rate of economic growth of the country as a whole and, individually, people will not realise the standard of living that they aspire to and will lack the satisfaction of having their abilities fully and usefully employed.
The majority of new opportunities are likely to come from small and medium-sized businesses which, in order to expand, require stability of economic outlook,
well-trained employees and investment. On all three counts, the Budget and the Finance Bill hit the nail on the head.
A greater proportion of small and medium-sized companies need to be based on high technology so that they can compete internationally. In that context, 1,000 people employed with a bike, a bucket and a ladder, to quote the phrase that my hon. Friend the Member for Bolsover (Mr. Skinner) used recently, is not the same as 1,000 people employed in trail-blazing electronics or biotechnology companies.
The keynote of the Budget is to raise business investment and thereby raise the level of economic growth. That is right. That investment needs to go into capital equipment for manufacturing industry where, during the 1980s, the rate of depreciation of capital was faster than the rate of renewal. In other words, the capital base was wasting away.
There is also a need to raise the level of investment in civil research and development. Reputable studies have shown that, in any country over any reasonably long period, 60 per cent. of the growth in gross domestic product depends on the use of capital and labour, but 40 per cent. depends on technological progress. That is effectively confirmed by a report of the Organisation for Economic Co-operation and Development, which concluded that the differences between the economic growth rates of member countries could be explained almost entirely by differences in the level of investment in research and development.
Those are clear pointers as to what the United Kingdom needs to do to pull itself up the economic growth league. But only two weeks ago, the Department of Trade and Industry published the "Research and Development Scoreboard", which showed that the trend is entirely in the opposite direction.
In 1996, the ratio of research and development spending to sales in the UK was lower than in any other major industrialised country. Among the top 300 companies in the world that spend on research and development, the average ratio of research and development spending to sales was about 4.3 per cent.; for British companies in that 300, it was about half that average, at 2.3 per cent., and the trend was downwards.
Nothing much has changed, therefore, since the House of Lords Select Committee on Science and Technology's report in 1991 concluded that British businesses gave dividends priority over capital and research and development investment to a far greater extent than any other member of the OECD. In the early 1990s, Britain's average dividend yield was 40 per cent. higher than in the United States of America, 150 per cent. higher than in Germany and 10 times the level in Japan.
The Government have had the courage to address a fundamental, long-standing flaw in the British economy by encouraging the redirection of profits away from overlarge dividends into research and development and capital investment.
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