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Maria Eagle: Does the hon. Gentleman recall the effect of Conservative economic policies on manufacturing employment between 1979 and 1981, particularly in Liverpool, which I remember well at the time? They destroyed 24 per cent. of manufacturing jobs and one sixth of all jobs in Liverpool.

Sir Peter Tapsell: I remember that clearly because I resigned as a Treasury Front-Bench spokesman on the

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issue and spent the period from 1979 to 1981 attacking Lady Thatcher's Government and Lord Howe's chancellorship precisely on the grounds that their monetary policy was far too tight. I publicly described the 1981 Budget on the day that it was delivered as being economically illiterate. When Sir Alan Walters was eventually appointed as her economic adviser by Lady Thatcher, his first report to her confirmed exactly what I said and she changed her policies.

Getting things wrong once is not a good argument for getting them wrong a second time. We made great mistakes over the exchange rate mechanism and excessive monetarism, but, apparently, this new Government have learnt nothing. They are the Bourbons of modern times--they have learnt absolutely nothing--and, as the Talleyrand of the House, I am trying to remind hon. Members that we faced some of those problems before, and the wrong answers were given. For goodness' sake, do not let us do so again.

One of the great problems is that people develop a commitment to a general theory. During my time in the House, the theories have changed. First, we had socialism, then corporatism, then monetarism and now we have Euro-federalism. One of the great advantages of an Oxbridge training, which is under considerable attack from Labour, is that it develops in one a mood of intellectual scepticism at an early age. I was deeply sceptical about all those four "isms". We really should aim for a situation in which all "isms" are "wasms" and in which we concentrate on good, sound Government by experienced Ministers rather than thinking that all the world's problems can be solved by one theory.

Finally, every Government ought to aim at four things simultaneously. I am thinking of the 1944 all-party White Paper at the end of the war. People go on as though the Labour Government invented everything after 1945 and one would not think that there had been a Beveridge report on the social services, a Willink report on the health service or anything of the sort. George Isaacs and Nye Bevan did a good job, but a lot of work was done for them beforehand. They inherited the blueprints for the post-war welfare state, including the educational structure, which was based on Rab Butler's Education Act 1944, and it was built on plans that had been drawn up under Churchill's wartime Government, largely by Conservative Ministers.

The 1944 White Paper on employment stated that one must aim simultaneously for stable prices, a high level of employment, a healthy balance of payments and an expanding economy. If one gives a particular instruction to the monetary authorities--now the Bank of England--as this Government have and tells them that they have to give a 2.5 per cent. rate of inflation overriding priority, those other three aims will all be put at risk and this Government will come to the ignominious end that I am longing to see.

5.39 pm

Mr. Michael J. Foster (Worcester): It is perhaps in the nature of debates on a censure motion, but Ministers will be grateful to the hon. Member for Louth and Horncastle (Sir P. Tapsell), and the faces of Opposition Front Benchers show that they were not too keen to hear his relatively interesting contribution.

The Government are hoping to achieve long-term economic stability. Businesses share that aim; they want to avoid boom and bust, with the peaks and troughs of

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economic activity. I think that everyone in the House will understand the analogy of a small ship that does not want deep, heavy waves, because there might be the occasion when one rides the crest like a surfer and has super-success but, more often than not, businesses will be wiped out when the wave crashes down.

Between 1991 and 1993, nearly 70,000 companies were liquidated: wiped out. In the same period, there were 170,000 business failures.

Mr. Gibb: Will the hon. Gentleman comment on the Dun and Bradstreet report, published today, showing that business failures among small companies have increased by 25 per cent. under the Labour Government?

Mr. Foster: The popularity of the new Labour Government among business people is as high as it has ever been.

Stability in the economy is a great aid to planning. Certainty is essential when we plan long-term investment in new technology, in research and development, or even in people. That is why I welcome the news that long-term interest rates are at historically low levels. We must acknowledge the fact that there will be some variation in our economy. We are not operating in a closed economy. The essence of good government is to avoid economic shocks and destabilisation.

The motion refers to

but those increases have raised the base rate only 1.5 percentage points, from 6 to 7.5 per cent. As regrettable as that may be, we should consider what happened when the Conservative Government were in charge of the economy. In one day alone, they raised interest rates first by 2 per cent., and then by a further 3 per cent. The base rate was in double figures for four consecutive years; in 1989, it peaked at 15 per cent., remaining between 13 and 15 per cent. throughout 1989 and 1990, yet Conservative Members have the brass neck to criticise the Labour Government, under whom interest rates have peaked at only 7.5 per cent.

In Worcester, business has welcomed the new Labour Government. On our first anniversary, BBC Television came to find out what Worcester woman, Worcester man and Worcester business people thought. Mr. Noel Duffy, finance director of Dolphin Computer Systems, said how much he applauded what the Government were doing for business.

A stable economic environment will be essential in addressing the fundamental problems that we inherited from the previous Government. The most obvious problem is that economic growth is more often than not associated with wage-push inflation. That effect is caused partly by skills shortages, as workers can bid for higher wages when they know that their skills are in demand and there is no competition from other skilled workers.

The Government are addressing that serious supply-side problem. A Japanese-owned manufacturing tool company, Mazak, has its European headquarters in Worcester. It has great difficulty in explaining to its Japanese owners that, when it takes on new workers, productivity does not immediately go up and it takes six

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months before there is any noticeable increase. That is because the workers who are being taken on do not have the skills or education standards of their German or Japanese counterparts.

I am pleased to say that the Government are addressing such problems. The university for industry will enable people in work to train and to develop their skills, and will give access to the best possible management practice. Individual learning accounts will enable people to take the time to bring themselves up to speed with new skills. That is good for their motivation, for the business, which will benefit from greater productivity, and for the economy as a whole. The new deal will give quality training to unemployed people and bring them back into work, not only making work pay for them but making taking on workers pay for businesses.

We have endeavoured to improve education standards across the board, with nursery provision for all four-year-olds; the pledge on small class sizes for five, six and seven-year-olds; a focus on literacy and numeracy; and encouragement for more young people to go into further and higher education. That is all absolutely essential if we are to solve the problems that we inherited.

For many years, the economy has been troubled and unable to grow without causing the bust part of the business cycle to come into play. We intend to tackle that problem through a stable economic plan and I hope that, after 20 years of Labour government, we shall be able to look back on what will truly be a golden legacy.

5.47 pm

Mr. Shaun Woodward (Witney): It is incredible that the Chancellor has chosen to be elsewhere for such an important debate. That shows some contempt for Parliament, and may say a great deal to businesses that have been looking to him for leadership. Everywhere, we see signs that the economy is in severe difficulties, but he cannot be bothered to come to the House.

Over the past few weeks, report after report, including the most recent one from the Organisation for Economic Co-operation and Development, has warned of real danger in the economy, yet the way in which the Government and their Back Benchers have responded this afternoon shows complete contempt for the warnings that have been offered. The economy is in real peril. While the Chancellor fiddles, the economy burns.

It is an extraordinary fact that inflation has almost doubled in the past year, yet Government Members want to talk about history. The reality is that the economy requires leadership and attention today, but the Government are deaf to all pleas. Mortgage interest payments have increased by almost 30 per cent. since the Government came to power, but they are deaf to our arguments. We have seen excise duties increase by nearly 20 per cent., but Labour wants to talk about tax rises under the previous Conservative Government. We have seen dramatic increases in council tax bills, but the Government choose to ignore the consequences.

It is hardly surprising that the result of all those increases is that wage settlements have increased. The average family must pay nearly £1,000 more a year because of the Government's tax increases, and the only way to fund that is to ask for more money. Meanwhile, the Governor of the Bank of England tells us that the economy is closer to overheating than it has been for a

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long time. Do the Government pay any attention? No. They prefer to talk about history than take responsibility for dealing with the economy now.

The Governor is not alone. Other members of the Monetary Policy Committee say the same. Soon--probably on 9 July--interest rates will rise once again. The inflation target has been missed 12 times out of 13--a pretty impressive record. Yet the Government prefer to talk about the time before they came to power instead of taking responsibility for their appalling economic choices over the past year. That is why headline inflation is up from 2.4 per cent. last April to 4.2 per cent. today.

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