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6.12 pm
Mr. Richard Page (South-West Hertfordshire): It is a sad but well-known fact that, when anyone becomes a Member of Parliament, he or she loses one ability and gains another. First, they lose the ability to say, "Sorry, I made a mistake. I apologise." Secondly, they try to grab any form of advantage and claim credit for it, even though they have little or no ownership of it.
The examples are numerous. The classic one is when Lord Lawson as Chancellor of the Exchequer had the economy literally in his hands. He pumped money into it and the public went on a spending spree as if there were no tomorrow. They were aided and abetted by the banks and building societies, which gave mortgages of 100 per cent. or even 110 or 120 per cent. We know what happened. The tales of woe were legion and we had negative equity.
I followed with interest what the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said about interest rates and the effect that they are having on house purchases. In London, prices are going through the roof. I read in this evening's newspaper that they have increased by more than 30 per cent. this year.
That is one side of the coin. The right hon. Gentleman did not speak of the other, which is the effect that interest rates have vis-a-vis overseas competition and what that is doing to our exporters and our manufacturers. This is a problem that the Chancellor has to face, and I have some sympathy for him. However, when Lord Lawson was doing what he was doing and when the results became clear, I think that a few sorrys should have been expressed, just as they should have been when we ceased shadowing the deutschmark.
I have no objection to shadowing the deutschmark provided that we have the same productivity and efficiencies as Germany. However we were not in that position then and the results were inevitable. It was clear that it would all end in tears, and it did. I am a little worried that the same will happen tomorrow.
Following those setbacks, it was to the considerable credit of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my right hon. Friend the Member for Henley (Mr. Heseltine) that they formulated and followed sensible policies to address them. My right hon. and learned Friend controlled public expenditure rigorously and controlled interest rates, and my right hon. Friend the Member for Henley launched an annual White Paper on competition and competitiveness. He addressed the issue and showed just how far we were behind some other countries, notably Germany and the United States. He also tackled our rates of efficiency and productivity and, as a result, they started to increase and we began to record some significant improvements.
We left a golden legacy to the Labour Government in May 1997. The success of the economy since then owes a great deal to the work of my two right hon. Friends. The Government too often forget that the economic strategy of the Conservative Government has underlain the low inflation and falling unemployment that we have enjoyed over the past two and a half years.
The Prime Minister and the Chancellor of the Exchequer both claim credit for the present state of the economy. Of course, there is an element of schizophrenia involved. On the one hand, it is said that the Government have followed Conservative spending policies--that is cited almost as a mantra when there are any complaints about whether enough money is going into one sector or another. On the other, the Government claim credit for a huge and novel economic success.
I know that the Government have been very good at introducing stealth taxes. I shall not go through the figures again and again--
Mr. Page:
I shall not do so because they have been put on to the record and, to answer my hon. Friend, because I have only five more minutes to complete my speech.
Mr. Ronnie Campbell (Blyth Valley):
Will the hon. Gentleman give way?
Mr. Page:
I shall not give way to the hon. Gentleman because of that shortage of time--it is moving against us.
The stealth tax figures have been endorsed by the Library and by the British Chambers of Commerce. We can see the regulatory burdens that are being imposed on small businesses.
I am worried that a rich legacy is in danger of being squandered. The excessively high rate for sterling via-a-vis our overseas competition means that our foreign competitors inside and outside the European Union are finding it easier to sell to us while our exporters are finding it harder to sell to them. I shall not read out the entire press release from the EEF/Robson Rhodes third quarter Business Trends Survey report, but the headline is, "Pound still too strong for exports". A number of people are saying that as well as myself. Countries such as Germany are able to secure productivity gains without suffering adverse effects on their currencies.
With our exchange rates, we know that our markets are more open to other countries' exporters without us enjoying that comparable benefit. Of course, that is not true for all EU countries. Some of them are not
experiencing productivity gains, and that will build up huge tensions within the euro zone. That problem will have to be resolved in some way or another. That being so, I think that it is exceedingly wise to resist the blandishments to go rushing in at this stage. Let us stand back and wait to see how the tensions will be released. We should certainly spend some time looking at our own economic cycle before even considering getting involved in the euro.
I do not think that the Government have been able to tackle the significant and difficult problems that we have had with our service and manufacturing sectors. There are DM3 and 10 pfennigs, or nearly 10 pfennigs, to the pound. It was a figure way over that which turfed us out of the exchange rate mechanism. It is not surprising that, over the past 12 months, we have seen the loss of 157,000 manufacturing jobs. No productivity gain and no improved cost controls in manufacturing can compensate for that loss. I well remember the Labour party criticising the Conservative Government in the early 1980s over manufacturing losses. A few "sorrys" from Labour Members are due now to those who have lost their jobs in manufacturing. Certain hon. Members, on the Government Benches in particular, know what is going on in their constituencies and are desperately worried about how to make some form of recompense or offer alternative employment to those who have lost their jobs.
The managing director of Nissan UK was quoted in The Sunday Times as saying:
It is not just manufacturing industry that is facing problems. We must consider what is happening to small firms. As a former Minister with responsibility for small businesses, I know how important they are to the economy. We have witnessed the failure of the much-vaunted statutory right on late payment. It does not seem to have done the trick, although I would love it to solve the problems. We did not believe that it would be practical and sadly, that seems to be the case.
Small businesses have learned from the experience of extra regulation, compulsory union recognition and all the other burdens imposed on them. The Forum of Private Business estimates that, on average, an extra £4,500 is needed each year to meet the cost of red tape.
I was glad to learn that the Government will introduce a Bill to enable the Post Office to improve its services and to compete more effectively, both domestically and overseas. Post Office reform will help to build a "knowledge-based economy", harnessing new technology, according to the Prime Minister a week ago.
I fully support a more competitive Post Office, but it cannot be a truly competitive player domestically until it, too, faces free competition in its protected UK market, and until its accounts are subject to independent regulation, so profits from its monopoly sector may
continue to be seen to cross-subsidise competitive activities against its private sector rivals. That cannot be fair.
The Post Office should be set free to compete internationally. I do not believe that what the Government propose will let the Post Office be a world player. It will not be enough to allow the Post Office to invest or to borrow up to £75 million a year at commercial rates to make financial purchases. Last year, buying the third largest parcel carrier in Germany cost between £200 million and £300 million. We know that the Post Office cannot buy a significant player on the continent or in the United States with an annual sum of £75 million.
I welcome the announcement in the press release that
The Post Office has been a political football for years. It is time to set it free in the same way as BT. For example, we must consider how the Post Office can compete against Bundespost, which is buying up company after company while under Government protection, so that, when it is privatised, it will be a global player.
When we privatised BT, we stole a march on the German telecom business. The Germans have made up their minds that they will not allow the same thing to happen to their postal service and, unless we get our Post Office geared up and in a powerful enough position to have relationships with overseas countries and companies, we will be in trouble.
"The UK is uncompetitive at these"--
current--
"exchange rates."
It is difficult to believe that our present position is sustainable. I hope that it is, but I worry that it is not. Exporters are bearing losses and holding down overseas prices, using hedging techniques to hold on to markets, as well as shedding employees. That process cannot go on indefinitely. Some adjustment is necessary, and I suspect that it may be earlier, rather than later.
"the Government further pledged that it will approve commercially robust proposals from The Post Office for larger investments in projects within the scope of The Post Office's strategic plan."
Part of me welcomes that, but it also sends a shudder down my spine. We are back to politicians trying to second-guess how an industry should be run. We must not forget that, in the early 1980s, the nationalised industries had their hand in the taxpayer's pocket for £50 million every week. When those industries were privatised and went out into the free market, they paid into the Exchequer £50 million every week. I do not believe that the Government breathing down the neck of the Post Office is the way forward.
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