Previous SectionIndexHome Page

Mr. Tyrie: May I make a point about the alleged margins built into the spending plans? The Chief Secretary seemed to be completely unaware that his Government had announced the lowest level of reserves as a proportion of gross domestic product that had ever been announced, certainly in living memory. The margin, in as much as it exists, was dangerously small even before the growth forecast was drastically altered a few weeks ago.

Mr. Heathcoat-Amory: My hon. Friend is right. The comprehensive spending review was already risky, and, with the halving--at least--of the growth forecast, it has gone into the danger zone.

Maria Eagle: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: I will give way in a moment.

It is no good saying, as the Chief Secretary did, that all will be revealed in the pre-Budget statement. We had a pre-Budget statement last year, and there was nothing worth while in that. Meanwhile, savers and borrowers want to know what will happen to Government debt. Businesses need to plan. Will all the growth in the economy be pre-empted by the public sector? Will the Government have to go on putting up taxes on businesses? People want answers to those questions today. The figures exist in the Treasury; why are they not being given to the House of Commons?

Maria Eagle rose--

Mr. Heathcoat-Amory: Perhaps the hon. Lady has an answer.

Maria Eagle: It is not my responsibility, but I am grateful to the right hon. Gentleman for giving way to me at long last. Perhaps that represents the triumph of persistence.

Given his concern about excessive commitments to public spending, can the right hon. Gentleman explain just what the Opposition would cut?

Mr. Heathcoat-Amory: I have made that clear to the hon. Lady, but she need not take it from me; she can read the record. Back in July, we were saying that locking into a three-year commitment of that magnitude was irresponsible, given the Government's abject and continuing failure to deliver on their promise to reform the welfare state.

I am not asking the Government to do anything that we did not do. Over the past four years, social security expenditure has been stable, under the Conservatives and in relation to the expenditure forecasts that we left behind. During those four years, it rose by a total of only 1.5 per cent. in real terms. All the Government had to do was continue what we were achieving; instead, in their own comprehensive spending review, they have committed themselves to an annual real-terms increase of

26 Oct 1998 : Column 42

3.3 per cent. in the social security budget. That, when added to all the other expenditure commitments, is reckless and unsustainable. We said so at the time, and we have been proved right.

What does the Chief Secretary do? He does not give us any new figures; he has no plan to sort the matter out. Instead, he simply blames business for everything. Meanwhile, job losses mount. Productivity is the new problem. It used to be the Asians who were at fault; then it was the Russians; then it was the banking system. The new problems are all caused by greedy management and lazy workers. Meanwhile, on the shop floor in our constituencies, in businesses and workplaces, job losses mount. I believe that the hon. Member for Gordon (Mr. Bruce) mentioned the Ernst and Young report, which predicts half a million extra job losses over the next two years.

Mr. Campbell-Savours: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: I have already give way to the hon. Gentleman. I hope that he will forgive me if I do not prolong my speech by taking more interventions from him.

The Prime Minister's remarks last week were nothing short of scandalous. He dismissed all talk of job losses or the possibility of a recession as "idiotic hysteria". That was itself an interesting commentary on the Bank of England's own Monetary Policy Committee, which had said in its minutes for the month before that the chances of a United Kingdom recession had increased.

It is not only the Bank of England that has said that. In a circular sent out a few days ago, Goldman Sachs said:

Chase Manhattan says that a

    "UK recession is now very likely in 1999".

NTC, the independent research group, says that, according to its figures, there is a

    "strong likelihood of recession in the second half of 1999."

Mr. Bercow: Will my right hon. Friend give way?

Mr. Heathcoat-Amory: Yes, for the last time.

Mr. Bercow: Does my right hon. Friend agree--especially in the light of the reports from which he has just quoted--that the Chief Secretary was guilty of gut-wrenching complacency in respect of the increased regulatory burden that British business will undoubtedly face in the lifetime of this Parliament? Was it not extraordinary that, in a 30-minute oration, the Chief Secretary failed even to refer to the European Commission's prediction that the country would slump to the bottom of the European growth table next year?

Mr. Heathcoat-Amory: My hon. Friend is right. All the warnings and all the independent research are dismissed as idiotic hysteria by the Prime Minister.

My hon. Friend is also right in saying that this concentration on failures of productivity shows a breathtaking hypocrisy. We have this from a party that

26 Oct 1998 : Column 43

opposed, with its allies, the Liberal Democrats, every one of the industrial and trade union reforms and privatisations that transformed our economy during 18 years of the Conservative Government. Those policies are being copied throughout the world, yet that same Labour Government are at it again. They lecture British industry about competitiveness and productivity and then bring in the job-destroying measures to which my hon. Friend has referred. As promised, they believe in the three Rs, which we are rapidly learning stands for regulation, regulation and regulation.

To take just one, on the Government's own figures, the working time directive will add some £2 billion a year to business costs. Everyone knows that distribution and freight charges are an important component in the cost of a manufactured item. We have among the highest distribution costs in Europe. Why? It has nothing to do with failures of industry, or the haulage industry in particular. The Government have ratcheted up fuel duties in both their Budgets and they are singling out diesel duty for yet more, higher increases.

According to Library figures, the extra costs of motoring, over and above what we calculated in our forecast, will amount to £9 billion in this Parliament, yet the Government have the nerve to tell industry to sharpen its act. The Government are piling on such extra costs and extra taxes every day.

The only consolation to the Government is that, possibly, they have the Liberal Democrats on their side. Here, I refer briefly to the weasel-worded Liberal Democrat motion, which recognises

Is that some bizarre code? Can the Liberal Democrats now talk to the Government in coded language only? Have all relations broken down? Are we to suppose, therefore, that those words have within them some coded support for the Government's high-tax policies and the £20 billion-plus extra business taxes that the Government are loading on to industry in this Parliament?

Helen Jones: Given his concern about taxation, perhaps the right hon. Gentleman could explain how it is that his party voted for amendments to the last Finance Bill that would have given us £6 billion--worth of extra spending? Which taxes would he have raised to pay for that?

Mr. Heathcoat-Amory: The hon. Lady is wrong. I do not believe that she attended all the debates--[Interruption.] If she was there, no one noticed it. She might have missed the fact that on the Finance Bill we were proud to oppose the extra taxes that the Government and their Liberal Democrat allies tried to load on to individuals and businesses.

Mr. Loughton: Will my right hon. Friend give way?

Mr. Heathcoat-Amory: I hope that my hon. Friend will forgive me. I must make progress.

I want to mention interest rates because they have been mentioned by Labour Members. They are higher than they need to be precisely because of the Government's

26 Oct 1998 : Column 44

persistent and continuing failure to bring their tax and spending policies into line with their monetary objectives. The best example of that was the attack on savings in their first Budget, the notorious £5 billion-a-year raid on pension funds. That was the last thing that the economy needed at that time. It meant that the entire burden of controlling inflation was transferred from fiscal policy to the Bank of England.

Of course, at the time, the Chancellor said that it was nothing to do with him--all those nasty interest rises were due to the Bank of England; he could not control the Bank. However, last month, he was going around the world--but not this country--telling everyone else that we needed a co-ordinated cut in interest rates. Frankly, he has to decide: does he control interest rates and, if he is urging all these lower interest rates, why has he signed up in principle to joining the European central bank in Frankfurt? If that happens, it will be illegal even to seek to influence the level of European interest rates ever again.

Last week in the Chamber, we had the hilarious spectacle of Labour Back Benchers complaining about the Governor of the Bank of England. They wanted him to be sacked because he had pointed out that the United Kingdom was a single currency zone, so interest rates for the north of England were set in accordance with conditions in the country as a whole. Those same hon. Members, however, want to join a single European currency, in which case it would not be British conditions that determined the interest rate, but conditions in continental countries, which would be very different. Matters would be 10 times worse if we did that.

Next Section

IndexHome Page