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Mr. Campbell-Savours: There was a momentous occasion when our people made their position on the

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matter absolutely clear: it was at the time of black Wednesday in October 1993. Conservative Members forget very quickly indeed.

Mr. Davies: The point is well made.

The Conservative party pretends that it is the friend of the home owner. Under the previous Government, home owners suffered the biggest negative equity in history and there were more repossessions than during the highland clearances. No wonder the Prime Minister said what he said, which Conservative Members have taken out of context. When the housing market was in chaos because of the short-termism of Conservative policy, naturally he said that that was not the time to reduce MIRAS, particularly given the wider economic problems that they had created, but the situation has changed.

Conservative Members talk about trust and say that, before the election, they did not know precisely every detail of what Labour was going to do. Of course they did not. There is no historical precedent for that. A newly elected Government will not have a plan for all the five years of the Parliament, detailing everything that they will do. We gave the thrust of what we were going to do, which was about putting people back to work, creating conditions for economic strength and creating a fairer and better Britain to face the new millennium.

Mr. Bercow: Will the hon. Gentleman give way?

Mr. Davies: Yes, I am happy to do so, because I am running out of things to say.

Mr. Bercow: I am grateful to the hon. Gentleman. I will wager that I have marginally more to contribute to the exchange between us than he has to offer in reply. The hon. Member for Workington (Mr. Campbell-Savours) referred to white Wednesday. I can state beyond peradventure that, in the context of the interests of home owners, I would not wish to see a return to the extended recession mechanism, but will the hon. Member for Croydon, Central (Mr. Davies) tell the House whether, in his judgment, re-entry to the extended recession mechanism would assist or hinder home owners?

The Second Deputy Chairman: Order. I remind the House that the amendment refers to mortgage interest payments, and I would be extremely grateful if hon. Members on both sides of the House confined their remarks to that matter.

Mr. Davies: The extended recession mechanism is a code name for the Conservative party, I presume. I will take your advice, Mr. Lord. We do not want to delay the Committee. All I say in passing is that one of the problems that we face is that exchange rates are too high because of the dilly-dallying and delaying of various decisions.

Mr. Damian Green (Ashford): Are exchange rates too high now?

Mr. Davies: As perhaps the hon. Gentleman should know, Britain is quite high in its economic cycle relative

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to Germany. In addition, the financial markets are concerned about moving towards European monetary union on 1 January 1999, by which time the convergence criteria will not be met by all parties, particularly Italy and Spain, so Britain is being used as a safe havenfor money. That is unfortunate for many British manufacturers, particularly those in the midlands, but the answer is not just the Chancellor and the Prime Minister being tough, insisting on the right convergence criteria and not supporting premature entry without it; it is also about providing pricing stability, which we have established through giving the Bank of England more independence, to ensure stability for manufacturers.

The shadow Financial Secretary and I were with the chairman of Ford today, and he was saying that he wants stability. He is getting that from the new Labour Government.

Mr. Boswell: Will the hon. Gentleman give way?

Mr. Davies: I was going to end there, but as the hon. Gentleman is here, I shall give way.

Mr. Boswell: Although I thought that we had an interesting time at Ford, I do not recall the conversation to which the hon. Gentleman refers, but it has just occurred to me that he must have uttered at least 400 words since my hon. Friend the Member for Ashford (Mr. Green) asked him whether exchange rates were too high. I should have thought that it required only one word--yes or no--but I have not heard it yet.

Mr. Davies: I do not know whether this says anything about the hon. Gentleman, but the chairman of Ford chose to sit at my table, not his. Because of that, the hon. Gentleman would not be aware of all the comments were made. Obviously Ford does not represent the British economy. It has a mixed view of different exchange rates because it spends on inputs and outputs and it acts on a European and global basis, but we had an enjoyable time.

I shall not dwell on the matter any further. The point is simple. The amendment does not stand up to any interrogation. It does not command much Opposition support, as we have seen from both the quantity and the quality of commentary. Moreover, the Budget, in terms of the financial markets, share values and the British public's level of confidence, has been given the thumbs up. I am happy to suggest that hon. Members do not support the amendment.

Mr. Tim Collins (Westmorland and Lonsdale): I greatly enjoyed the speech of the hon. Member for Croydon, Central (Mr. Davies), for two reasons. He said that the Prime Minister is a friend of home owners. I suspect that the only home owner of whom the Prime Minister is a sincere friend is any home owner who can stump up 675,000 readies to buy his luxury home in Islington.

The other point that I greatly enjoyed was the hon. Gentleman's statement that the shadow Chancellor of the Exchequer should be criticised for not commenting on interest rate movements. When my hon. Friend the Member for Buckingham (Mr. Bercow) pointed out that the present Chancellor failed to comment on any interest rate movement throughout the past five years, the hon.

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Gentleman said that politicians should not jump up and down and comment about interest rate movements. A little consistency in his speech would have helped.

Like me, the hon. Member for Workington (Mr. Campbell-Savours) is a Cumbria Member. He said that the economy is palpably overheating and had been clearly overheating for some months, so everyone knew that tax increases would be necessary, whoever formed the Government after the general election. People who believe that the economy is overheating must have been confused by the Labour party's constant references throughout the past year or 18 months to the idea that we were still in a recession.

If it were palpably obvious that the UK economy was overheating, I wonder why it was that, whenever figures came out showing that interest rates were moving in the right direction and, in particular, that unemployment was coming down, the Labour party's reaction was not to say, "That is further proof that the economy is overheating", but, "Those figures are all fiddled. Unemployment is not falling at all." How is that consistent with this palpable vision of an overheating economy?

A point with which the hon. Member for Workington might agree is that, whatever the state of the economy in London and the south-east, it is very difficult to sustain the case that the economy is overheating in our part of the country. He knows that I am fortunate enough to represent one of the more prosperous parts of Cumbria, but we both know Barrow--it is not far from our constituencies--and he would agree that, if one told people there that the UK economy was overheating and needed to be damped down, one would be greeted with a hoarse laugh. There is still great unemployment in the area, and there is no real evidence of anything other than the first rosy fingers of dawn rising over the horizon for economic growth. It is difficult to sustain the case that the economy is overheating and that the first action of an incoming Government must be to wallop £13 billion of tax increases on to that economy.

8.30 pm

Mr. Campbell-Savours: Do I presume from that that the hon. Gentleman is prepared to accept that there is overheating, but only in one part of the country--the south-east? If it is the case that property prices are higher in that region, may I presume also that he supports our position on stamp duty?

Mr. Collins: The hon. Gentleman would not expect me to support the Government's position on stamp duty. He said that all voters across the UK knew for a fact that the economy was overheating and that taxes would have to rise, whoever won the election. That is not sustainable.

There is another important reason why people did not believe that interest rate rises and then tax rises would be necessary after the election. People will recall the great public relations stunt performed by the Prime Minister when he was Leader of the Opposition. A large poster was displayed which said that Labour pledged not to increase income tax rates for five years. The poster was signed "Tony Blair". The hon. Member for Workington may have had a similar experience to me in terms of people's responses on the doorstep during the election campaign. People took that poster and the series of pledges--including those referred to by my hon. Friend the Member for Teignbridge (Mr. Nicholls)--to mean that there would be no tax rises at all.

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I tried to explain during the election campaign that the poster meant not that the Labour party was promising not to increase any taxes, but merely that it would not increase the basic rate and the higher rate, but could increase direct taxes in all sorts of ways. People replied, "Mr. Blair has said that he will not put up taxes at all." That is what the public believed, and that is the basis for any spurious mandate that Labour may believe that it has.

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