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5.32 pm
Mr. Denzil Davies (Llanelli): The Government's economic strategy is set out clearly and succinctly in the Gracious Speech and my right hon. Friend the Chancellor repeated some of it this afternoon. The central objectives are high and stable levels of economic growth and employment and prudent management of the public finances in accordance with the codes and rules of fiscal stability. Moreover, as we have heard, monetary policy--that is, interest rates--is controlled by the Bank of England's Monetary Policy Committee.
That pious and godly couple, Mr. Stability and Miss Prudence, are still our role models. They would never be tempted to stray from the paths of righteousness and grace, but, if they ever were so tempted, rigorous rules are in place to ensure that they did not do so.
I was intrigued by the phrase
My right hon. Friend went on to say that, in what he described as the "famous" 1944 White Paper, full employment was defined as high and stable levels of employment. Off I went to the Library to find the famous 1944 White Paper, but life is never easy. Apparently, two relevant White Papers were published in 1944. Perhaps both were famous, but which was the more famous is a subjective decision. The first, published in June by the coalition Government, was called "Full Employment". I am sorry that not many Liberal Democrats are in the Chamber, because five months later--a bit late; he had tried to get it out sooner--came Mr. Beveridge's White Paper, if it can be described as such. It was entitled, rather pompously, "Full Employment in a Free Society".
The Chancellor, very wisely, was referring to the coalition Government's White Paper, which described full employment as "high levels of employment"--a clever description, because it does not require the use of percentages. Mr. Beveridge, who was more certain, and perhaps more bold, described full employment as occurring when unemployment stands at 3 per cent. Indeed, Mr. Beveridge made some great claims for his version of full employment. He claimed that it was consistent with socialism, capitalism and some strange dogma, or theory, which he described as a liberal-collectivist via media. What on earth that means, I do not know. No doubt there is another sermon in it somewhere. However, when I saw it I thought, "Eureka! I have found the antecedents of the third way." [Interruption.] I see that the hon. Member for North Cornwall (Mr. Tyler) is pleased about that.
The Chancellor was not tempted to followMr. Beveridge, but stuck to "high employment" as his definition. His lecture also came close to extolling the 20 years following the 1944 White Paper as a golden age of low unemployment and low inflation. He also praised other aspects of the 1944 White Paper. He praised the call for greater productivity--well, nothing changes. He praised the call for work over idleness--again, nothing changes. He called, as the 1944 White Paper did, for a responsible attitude towards wage bargaining. Some of us, such as my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) might shudder at that phrase, with its echo of an incomes policy, but perhaps the world has changed since then.
However, the Chancellor did not touch on the fiscal and monetary policies that underpinned the 1944 White Paper. Despite the fact that the policies set out in the 1944 White Paper and the Chancellor's current policies aim for high employment and stable growth, the Chancellor has a different fiscal and monetary policy. The White Paper referred to the need for total expenditure to be used to maintain full employment as well as improve public services.
Those who drafted the White Paper would have given short shrift to all the codes and rules of fiscal stability--the so-called, rather pompous, golden rule, and the absurdly named growth and stability pact. All the attempts to entrench those rules into a kind of economic constitution and to put it beyond a nasty and irresponsible democracy would not have appealed to the people who drafted the White Paper.
The same applies to monetary policy. The people who drafted the White Paper would have had no truck with monetary committees of central banks determining interest rates. In fact, they lived through an era in which central bankers entirely failed to deal with economic traumas. There seems to be a paradox. On one hand, we have the goal of high and stable growth, and on the other, we have monetary and fiscal policies that seem entirely different.
My right hon. Friend the Member for Ashton-under-Lyne said that the Chancellor had done well and that the goals of high and stable growth and employment had gradually been achieved. I agree with that. If growth is high and unemployment and inflation are low, surpluses will be created, even at present taxation levels. There will inevitably be more money in the Exchequer, but I worry that the Chancellor has hemmed himself in with his rules of fiscal stability. I fear that he will feel unable to use the surpluses to benefit the public services. He may feel trapped and unable to break the rules that he has placed upon himself, but our public services need a lot of money.
It is not the Government's fault that our health service can no longer be described, perhaps with slight exaggeration, as the best in the world. Our health service no longer competes with the best standards of care in other European countries. Nor does our education system, despite the assistance that the Government have given. Far more money is required, especially for the centres of excellence that would enable us to compete in a global economy with the Harvards, Stanfords, Cal-Techs and MITs. Whether we call those centres of excellence or of elitism, we must compete with them in a global economy. We are not putting enough money into that.
There is great pressure on pensions, not only to restore the link between pensions and earnings but to raise the basic pension. Perhaps those who have not put savings aside and who can pass the means test will have their pensions increased, but those who have saved, but not much, find themselves on the same basic pension as those who have not. We are in danger of creating a two-tier system in which those who have not saved get a bit more, but those who have saved a little fall behind. That causes resentment among my constituents.
Substantial sums are required for the care of the elderly. Carmarthenshire social services department is under great pressure to provide residential care. In many cases, elderly people remain in beds in acute hospitals until someone dies or a room otherwise becomes available in a private residential home. The social services department simply does not have enough money to put all the elderly into residential homes. That puts considerable pressure on the health service.
Our transport infrastructure needs enormous sums of Government money if we are to put it right and to compete. I am not being profligate or trying to waste money, but there is a great need for money. Surpluses--some exist already and more will arise--should be used to improve the public services.
Sir Teddy Taylor (Rochford and Southend, East):
I had wanted to raise three brief points in the debate, but, having heard some of the speeches, I must point out to the Government that there are two sides to every argument.
Although my right hon. Friend the Member for South Norfolk (Mr. MacGregor) always makes wonderful speeches, I was horrified to hear him talk about the need to solve the problems of agriculture, and pig farmers in particular, by providing more subsidies. I have been through a bit of a nightmare over the European Union, and it horrifies me to hear from those who landed us in the common agricultural policy, which is the greatest protection racket ever devised by man. It wastes more money than any other public policy I can think of. I am sure that that money could solve all the problems of Carmarthenshire and of the elderly and the disabled, yet those who landed us in that nightmare say that the answer is more subsidies.
The Government should consider the money that the European Union spends on agriculture. It is at its highest level ever. We must add to that the money spent by Great Britain--about £5 billion last year--and all that spent by other national Governments throughout Europe. The result is a nightmare--the massive over-production of food that we do not know what to do with.
For example, demand for meat on the continent is falling by about 2 per cent. a year, and in Britain it is falling by 1 per cent. a year. Having created that shambles that we cannot get out of, we are told that the answer is simply to provide more subsidies. At some stage, the European Union or the Government will have to face up to the fact that we have created a monster in the CAP. Unfortunately, we know it cannot be reformed because of the way the EU works, but the last thing in the world that we want to do is to try to solve the problem by spending more money.
I ask people to think of the money that is spent on destroying food. I hope that my right hon. Friend the Member for South Norfolk would love to come with me to one of the great occasions where we spend vast amounts of taxpayers' money destroying food. Last year, more than 1 million tonnes of food were destroyed. I am sure that lovely cauliflowers are grown in Norfolk but, last year, 170,000 tonnes of them had to be destroyed to help agriculture.
"high and stable levels of economic growth and employment".
I thought that I would delve deeper into the sacred texts to find its antecedents. I began with the Mais lecture given by the Chancellor a few months ago--the occasion when Chancellors can show their intellectual prowess to the bovver boys in the City. In that lecture, the Chancellor reaffirmed his commitment to the splendid goal of high and stable levels of growth and employment. I have no trouble with that objective, which the Chancellor pointed out was first set in 1944. Most hon. Members probably know that, but I was surprised to learn it.
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