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Mr. Martin Salter (Reading, West): Will the right hon. Gentleman give way?

Mr. Maude: No. I am going to make progress.

Even a Treasury publication shows that the consensus of outside forecasts is well below the Chancellor's forecast--for next year, the year after and the year after that. Only a handful of old faithfuls, headed by the chief economist at the Trades Union Congress, believe the complacent nonsense that the Chancellor hands out.

The downturn was triggered by Government policy blunders and has been prolonged by their refusal to acknowledge the problems that they created. They made four basic blunders: the reckless spending spree--

Several hon. Members rose--

Mr. Maude: I think that Labour Members are all on question No. 2, which I have already answered.Social security spending is set to increase by £37 billion over the next three years, which is almost as much as the increases in health and education spending put together.

Mr. Derek Twigg (Halton) rose--

Mr. Maude: The Labour party committed itself in its manifesto to cutting social security bills and the Prime Minister said the same immediately after the general election. Perhaps the hon. Gentleman will explain what went wrong. Why has the Prime Minister's clear pledge in absolute terms to cut social security bills resulted in an increase in social security spending of £37 billion?

Mr. Twigg: The right hon. Gentleman has been asked this question many times. Will he tell us what the Conservative party would cut out of the £40 billion if they were in government?

Mr. Maude: None of it. We have said so many times. I am sorry that the hon. Gentleman could not answer my question, which was: what went wrong with the Prime

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Minister's clear pledge to cut social security bills and how has it turned into a £37 billion increase? He cannot answer it.

The second blunder was the attack on savings, which fuelled spending and kept interest rates higher than they need have been, and the 17 tax rises, which have stoked inflation and put up interest rates. The Government have piled new costs on to businesses when they are least able to cope. Interest rates are higher than they need be and businesses are less able to withstand the downturn. What of the £40 billion in extra taxes and costs--no less than £1,500 per person employed?

Mr. Salter rose--

Mr. Maude: I will not give way, as I must make some progress.

The Government's measures are also boosting inflation, as the Bank of England has said. The problems in the economy are getting worse and the Government simply will not accept them. Their new favourite topic is productivity. The Prime Minister, like the Chancellor and the Secretary of State for Trade and Industry, without a day's--

Mr. Barry Sheerman (Huddersfield) rose--

Mr. Maude: I will not give way. I intend to make progress.

The Prime Minister, the Chancellor and the Secretary of State for Trade and Industry, without a day's business experience between them, have even had the impertinence to lecture business. The Prime Minister has said, "Be honest. Your fundamental problem is not high interest rates or a high pound; it is too few first-class managers." There is Labour's scapegoat, productivity and bad management.

What does the Chief Secretary to the Treasury think that the chairman of BMW meant--I raised this in our last debate on the subject, but did not receive an answer--when he said in 1995:

What has changed since then? Now, BMW is having to be bribed by the Department of Trade and Industry to keep Longbridge open. It is the same plant, management and work force, but a different Government, and that is what has changed. They are a Government who have increased costs on business and made productivity worse. That is why barely a day goes by without more jobs lost and more business failures--[Interruption.]

Madam Speaker: Order. The right hon. Member for Horsham (Mr. Maude) has made it clear that he will not give way for a while, so hon. Members should not persist in trying to intervene for the time being.

Mr. Maude: Last Friday--black Friday--no fewer than 4,200 job losses were announced, including job losses in BMW, which was lauding Britain's productivity to the skies barely three years ago. Today, it has been announced that 1,250 jobs are to go at Courtaulds Textiles. That is what is going on in the economy. The Government should admit it and take steps to mitigate the effects.

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The Queen's Speech was curiously silent on another important subject--

Several hon. Members rose--

Mr. Maude: No. I am making progress. The Speech contained much about the Government helping to prepare the European Union for historic challenges--talk of working with European partners to promote economic reforms and of preparations for the introduction of the euro--but nothing about the principal European issue of the day. If it were not so damaging to the country, a certain innocent pleasure could be had from the spectacle of the Chancellor tying himself in ever-tighter knots over European tax harmonisation. On that issue, as on so many before, the Government are trying to have it both ways and to be all things to all men.

When the right hon. Gentleman is in Britain, he says that tax harmonisation is not the way forward for Europe and that Britain's tax decisions will be made in Britain. However, according to "The New European Way", which he has signed and which, apparently, was not drafted a million miles away from him,

In Britain, he says that no one is proposing any change in value added tax, but the European Commission has published a policy document entitled "A Common System of VAT", which states that the present system has to be replaced and advocates the abolition of the VAT-free circulation of goods, so there is such a proposal.

The Chief Secretary to the Treasury (Mr. Stephen Byers): I regret the fact that the right hon. Gentleman did not read out the paragraph to which he referred, because he omitted some important words. For the record, I draw his attention to the words that he missed out. The document clearly states:

I regret his failure to mention why that was necessary.

Mr. Maude: I am grateful to the right hon. Gentleman for amplifying and confirming my point: there is a clear commitment in Labour policy documents to taking further a process of tax co-ordination and harmonisation that can only increase Britain's taxes to continental levels.

Mr. Paul Marsden (Shrewsbury and Atcham): Will the right hon. Gentleman give way?

Mr. Maude: I am not giving way now, but I shall in a little while.

In Britain, the Chancellor says that the central issue for Europe is not tax harmonisation. However, Mr. Monti, the European tax Commissioner, says:

The Government cannot continue to have it both ways. Why cannot the Chief Secretary make an unequivocal statement on where the Government stand? The

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Government seem to inhabit a parallel universe, where they have not done what they have done and where they did not say what they said.

I would like the Chief Secretary to answer three key questions. First, does he agree with his colleagues on the continent that the single currency will tend to lead to tax harmonisation? The German Finance Minister thinks so. Mr. Lafontaine said:

The Austrian Finance Minister thinks so, too. He said:

    "EMU will make it imperative to start co-ordinating the sphere of taxation. The Social Democrat Governments will also have to look at harmonising price and wage policy."

The French Finance Minister thinks so. He is confident about it; I do not know who has been tipping him the wink. He said that Britain would be

    "won round to tax harmonisation by the end of the German presidency"

in the middle of next year.

That is what the Chancellor's continental colleagues think. They have a clear opinion on the issue. What does the British Finance Minister think? Does he agree with them that the road to economic and monetary union also tends to lead to tax harmonisation--yes or no? A simple nod or shake of the head will do. The Chief Secretary nods; he agrees. [Interruption.] He is being particularly helpful and illustrates my point perfectly. Asked whether he agrees, first he nods and then he shakes his head.

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