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Ms Harman: A tax credit for family leave would sit well with the working families tax credit and the child care tax credit. I pay tribute to my hon. Friend the Member for Bradford, North (Mr. Rooney) for his long-standing campaign on the issue, which arose--I hope he will not mind my telling the House--from the fact that his father asked for time off work when his wife was having a child. He was not allowed time off, but took it anyway to care for his children: he was then sacked and was unemployed for two years. The law remains the same to this day, and that is why it is right to change it in legislation that will be introduced under the Queen's speech.

Mrs. Teresa Gorman (Billericay): I am listening carefully to the right hon. Lady's speech. Before she leaves the impression that all employers are ogres and all employees are wonderful people, may I pray in aid a great supporter of the Labour party, Carmen Calill? She was a rampaging feminist in her younger years and became the editor of Virago and then HarperCollins. She once described to me the almost impossible situation she faced in employing many women. She had to let them go from key roles for long periods and could not replace them, because she had to keep their jobs open. The right hon. Lady extols the virtues of more legislation that would restrict employers, but can she explain how she expects employers to cope with the practical aspects of all those wonderful ideas?

Ms Harman: The practical implementation should follow extensive consultation with employers, including those who have implemented family-friendly employment for years. We should draw on the experience of the Americans, who went from no family leave to full family leave with no effects on competitiveness.

Fourthly, I suggest that the Government should ensure that time off work is available for those caring for young children and also for those caring for elderly or disabled relatives, as in the United States. As our population ages, more and more people--mostly women, but a growing number of men--try to combine paid work with their caring responsibilities. We want and need them to be able to do both. The Government are taking a radical and modernising step by introducing for the first time a legal right to family leave. I warmly congratulate them.

5.28 pm

Mr. John Major (Huntingdon): I can tell the right hon. Member for Camberwell and Peckham (Ms Harman) that returning to the Back Benches has its charms. I speak with some experience, and I hope that she also learns to love the experience. Back Benchers need not be unthinking lobby fodder, and I hope that the right hon. Lady will join the army of Back Benchers who have a proper role to play in ensuring that the Executive always reflects parliamentary opinion first and foremost.

Let me say at the outset that I approve of some of the policies that the Government have followed in the past 18 months and propose to introduce. That is not surprising, as some of them were policies that I followed. Others are similar to policies that I was following, but have been redesigned a little.

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Let us ease aside from the belief that there is a sharp difference on every issue between the Government and the Opposition parties. That is not so. It is the Opposition's role to concentrate on the points on which we disagree, but there are some areas of agreement. The fact that there is agreement on some issues is one of the strengths of this parliamentary system.

This is in many ways a rather unusual Queen's Speech, particularly for the second year of a Parliament, in that its theme is difficult to discern. The Secretary of State bravely suggested that it was modernisation and fairness, and who could disagree with the principle of the right sort of modernisation and fairness? Nobody asks for the reverse. However, we must consider whether the Queen's Speech contains the hard-backed policies that will achieve that in an advantageous way. That is a point with which many Opposition Members might disagree.

The Secretary of State made some intriguing remarks, often off script and occasionally in response to interventions, either proper or from a sedentary position. He said one or two things with which I agree strongly. He spoke about collective rights within the European Union, but said that there are different practices in some countries. He clearly meant the different historical, industrial and commercial practices, many of which we find in the United Kingdom. Unless I misheard him, he spoke warmly of the principle of subsidiarity, which I had the privilege of enshrining in the Maastricht treaty some years ago. I strongly agree with him about that.

However, the Secretary of State touched on weaker ground, on which I notice that he did not take an intervention. Although I agree with the principle of subsidiarity and with the fact that we are different in some respects, the fact that the Prime Minister agreed to the social chapter in Amsterdam shows clearly that almost everything in the social chapter is determined by qualified majority voting, not by unanimity.

That means that, even though the Secretary of State may oppose it, it is entirely possible, indeed probable, that legislation will be passed in the European Union that our Government would not pass for the reasons that the Secretary of State set out, but that he would not be able to block. It is the practice in other European countries, it is enshrined in the broad principles of the social chapter, and it will be decided by qualified majority voting.

Yvette Cooper: Will the right hon. Gentleman give way?

Mr. Major: Let me make some more progress.

I welcome the Secretary of State for Education and Employment back to the House. I am sure that he made the right decision to return. I hope that when, the right hon. Gentleman replies to the debate, he will explain how the Government propose to protect Britain from legislation of which they do not approve, but which would otherwise be imposed on us by qualified majority voting under the agreement made by the Prime Minister in Amsterdam.

Mr. Mandelson: If he does not mind my saying so, the right hon. Gentleman is being very defeatist. Surely, when one is in the councils of Europe, it is possible to use the power of persuasion to convert people to one's point of view. That is much more effective than standing on the

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sidelines bellowing at people through a megaphone. For example, over the past 18 months, we have achieved a darn sight more on the ban on British beef by having our arguments listened to and through the power of persuasion than the right hon. Gentleman's party achieved on most issues during 18 years in office.

Mr. Major: The right hon. Gentleman's idea of political persuasion is to bend someone's arm behind their back.

If what the Secretary of State said is true, perhaps he can explain why the Chancellor of the Exchequer is not a member of the Committee considering the euro. Despite the fact that sterling is one of the great currencies of Europe and that our European colleagues want sterling to enter at some stage--as do the Government--the Chancellor of the Exchequer is not welcome at the meetings. The Government still say that persuasion works. In reality, one can persuade from time to time. I persuaded our European partners to give us the opt-out on a single currency that the Government now use. I note that I received no acknowledgement of, or gratitude for, that. Of course, it is possible to persuade sometimes, but often it is not.

The Secretary of State spoke earlier about not accepting legislation that we do not wish to accept. I remind him that he has signed up to an agreement under which he may not be able to prevent damaging legislation.

Mr. Paul Keetch (Hereford): Will the right hon. Gentleman give way?

Mr. Major: If the hon. Gentleman does not mind, I should like to make some progress.

The Secretary of State spoke about convergence and the euro. Of course, what he said is right. Of course, it must not be artificial. He gave the impression that my right hon. Friend the Member for Charnwood (Mr. Dorrell), who asked a question, was talking about artificiality. Europe has spent the past few years seeking to converge the real elements of its economy. Many in Europe have done so. They have taken significant decisions on public expenditure and taxation in order to seek convergence.

The right hon. Gentleman did not deal--the Government will have to deal with this one day--with how we are to avoid the convergence of taxation, if we are to proceed with the euro. The Chancellor says that he will not accept the convergence of taxation, and I agree with him. I will stand shoulder to shoulder with the Chancellor on the question of not accepting the convergence of taxation, and throwing away the advantages of a relatively low-tax United Kingdom economy, because that is one of the reasons for the inward investment and the relative prosperity that we have gained over other countries in recent years. However, we need to know exactly what the Government intend to say about that. I understand the difficulties, but the Government will need to be clear soon.

The Secretary of State said, intriguingly, that we shall join the euro when it is in our interests to do so. That seemed familiar to me. I seem to remember hearing that somewhere before. In fact, I seem to remember uttering that expression. It was about the time when the present Prime Minister was accusing me of not being clear about

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whether we would join the euro. However, if he will forgive me putting it this way, I notice that the Prime Minister, who accused me of sitting on the fence, is now seated squarely on the adjacent spike. That is a wise place for him to be, but he might acknowledge--it would make for a more graceful occasion if he did--that the policy that he criticised before was a wise one that he, equally wisely, is following now.

Let me deal with something that underlies all the ambitions of the Government and the Opposition for the well-being of this country. Many of the artificial arguments that we have across the Chamber are arguments not about ends but about means. For example, the big argument about the social chapter is not about whether workers should have better rights. The Government believe that the social chapter is right and that it enshrines more rights for workers. Our argument is not that we do not wish workers to have rights, but that we feel that, as a result of the social chapter, other workers may not get jobs that they should have. Let us deal with the reality of the substantive debate between us. There is no disagreement on objectives.

The economy is crucial to whether those objectives can be met. So much depends upon that. A wise former Chancellor of the Exchequer said that money is the root of all progress. Given how often the £40 billion is mentioned, we can see that that is undoubtedly the case.

What is the Chancellor's forecast for the next three years? In 1999, it is 1 to 1.5 per cent., a year later it is 2.25 to 2.75 per cent. and a year after that, by a remarkable geometric progression, it is 2.75 to 3.25 per cent. Forecasting is very difficult. Let us make it clear that the Chancellor does not do the forecasts personally. It is very difficult for the statisticians who do the forecasts and, to be frank, they are more often wrong than right, both in the Treasury and almost everywhere else. I am sure that, on this occasion, the forecasts presented by the Chancellor--I do not know whether they were the forecasts given to him--are wrong. If that is so, there are difficulties ahead for a wide range of policies to which the Government are committed.

I suspect that the Prime Minister is less certain than the Chancellor about the forecasts. The Prime Minister's speech at the Lord Mayor's banquet was very different in tone from the Chancellor's statement to the House. The difference was striking. The Chancellor was cocky, confident and certain of his forecasts and the Prime Minister was warning us of difficult times. I believe that the Prime Minister was wiser to be cautious than the Chancellor was to be confident.

We are told regularly that the Prime Minister and the Chancellor are two souls in the same political body. We are usually told that when they have just disagreed, when their spin doctors have just disagreed or when they have contradicted one another. We are told that they work together, and I am sure that they do so, if only to keep a close eye on what each other is doing.

The Chancellor's forecasts are crucial, so let us consider them. I have made the point that forecasts may be wrong, but the increasing trend of view among businesses and others who have made later forecasts is that we shall not have growth of between 1 and1.5 per cent. next year. Growth will be substantially below

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1 per cent., perhaps at 0.5 per cent. or conceivably even lower, although I doubt that we shall go into recession, except perhaps technically and briefly.

In the second year, the Chancellor forecasts growth of 2.25 to 2.75 per cent. I can only assume that, as part of the new deal's job creation programme, Mary Poppins has become a Treasury forecaster, and that, for year 3, she has been replaced by Hans Christian Andersen with the fairy-tale proposition that we shall have between 2.75 and 3.25 per cent. growth.

The forecasts defy logic. The rest of the world is dipping, and growth is being cut. Growth is being cut in our markets at a time when, although it has dipped a little, sterling is still strong and presenting difficulties in export markets. Sterling is strong and our markets are diminishing, but, as the world cuts its growth forecasts, we, remarkably, will grow at an accelerating rate year upon year. What has the Chancellor of the Exchequer been taking? What hallucinatory forecasts drift past him as he prepares to come before the House?

The truth about the economy is that it is slowing. The underlying economy is very strong. We must be in no doubt about that: we are not in deep difficulties. However, the economy is slowing for several reasons. Inflation is low, essentially because--although the Secretary of State will not wish to hear it--the previous Government took unpopular measures that the Government opposed when they were in opposition and that, for a time at least, have put inflation in repose. Inflation is never dead, but it is lying low for the time being. Interest rates will fall a little further, as they should because the economy is pretty slow and pretty flat. That is the good news.

The rest of the news is perhaps less good. Borrowing will grow, or taxes will rise, or there will be a combination of laxer borrowing and higher taxation. Growth will continue to fall. How far it will fall, we cannot be certain, but it will be way below the Chancellor's forecasts. It will fall for two reasons. The first is beyond the Chancellor's control. There is a slowdown around the world, and we cannot insulate ourselves against that. When markets slow down, we slow down. We cannot blame the Chancellor for what is happening around the world. Like all his predecessors, he must deal with that problem, but it is not his fault, except to the extent that we have limited influence for collective action through the G7.

However, there are also domestic mistakes. The Chancellor has made a series of mistakes, such as the 17 tax rises, many of which were mean-spirited. The tax rises on pensions, on investment and on savings were unwise from the point of view of the economy. Fiscally, they were good for the Treasury, but they were bad for the real economy of which the Secretary of State spoke earlier.

There will be a price to pay for those tax rises. The best that the Chancellor can hope for is that the Government forecasts will be proved foolish over a long period. The worst that may face him is that there will be a shock somewhere else in the world. It may be China devaluing, or the yen sinking further, or--heaven forbid--another collapse of some sort in south-east Asia, or something unexpected of which none of us has thought. One more such item will mean a significant further slowing of the world economy, and the Chancellor cannot protect us

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from that. Yet he left no leeway a few weeks ago in the confident forecasts of growth and expenditure that he led the House to expect.

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