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7.6 pm
Mr. Michael Fallon (Sevenoaks): It is a pleasure to follow the hon. Member for Newcastle upon Tyne, North (Mr. Henderson). He has always been a strong advocate
for the north-east, and I am delighted to hear him issue a challenge to his own Government of the kind that he used to issue to the Conservative Government when he was in opposition.
I do not share the hon. Gentleman's enthusiasm for the Queen's Speech. It left me unmoved, and it left my constituents unmoved, because there was nothing in it to bring forward the financing of the replacement for the ageing Pembury and inadequate Kent and Sussex hospitals. The new single-site hospital that we have long been promised in west Kent has been delayed for another year. There was nothing in it to provide additional funding for police numbers in Kent, which have been cut under the Government, or to assist us to bear the burden of asylum seeking in Kent, which falls on my county more than on any other and is now a serious drain on the resources of the police and social services.
Instead, the Queen's Speech was packed with fussy Bills that will do little to stimulate our economy or to improve competitiveness. Contrary to what the hon. Gentleman said, the Government do not understand business. I shall give some examples from the Queen's Speech on the economic side. The great glory of internet trading was not a Department of Trade and Industry scheme: it was not DTI legislation or an Act of this Parliament. How do the Government propose to regulate it? The Electronic Communications Bill contains 17 pages of heavy-handed legislation. Even the Select Committee on Trade and Industry has described it as unnecessary and irrelevant. It should have had a lighter touch, but the Government have overcooked it.
The deregulation Bill is extraordinary. It is a deregulation Bill to provide less regulation. We have not seen it yet. We have had deregulation speeches, but we have not seen the Bill. We have not had any deregulation from the Government. In 1995-96, which was the last full Session of the Conservative Government, 39 deregulation orders were laid before the House. In the Session just concluded, only four deregulation orders were laid before the House. The Government talk about deregulation, but they do not propose deregulation measures.
There will be a Bill to introduce Partnerships UK, the new state investment bank. The Government assured me in a written answer on 16 July that there were no plans for a state investment bank. Now they are publishing a Bill, and Partnerships UK will be given the power to invest, to have grants from the Exchequer and to make selected investments. If it looks like a bank and behaves like a bank, it probably is a bank. We know what happened to the great National Enterprise Board. It was supposed to pick winners but, if anything, it picked losers.
There is nothing in the Queen's Speech for small businesses, except the new small business service that is being established this year. Just as business links had been established, were up and running and understood by the small business community, they are being torn up and we will have a new small business service. That is notwhat small businesses want. Small businesses in my constituency complain about taxes and red tape. They do not want more Government offices; it is the little things that bother them--the charges for various inspections, the level of business rents and, above all, the burden of regulation.
Let me give three examples. First, small businesses are often hit not by the main effect of the regulation that we pass in the House, but by the side effects. Secondly, they are sometimes hit by the interaction between one regulation and another: for instance, the holiday arrangements under the working-time directive clash with the arrangements for the national minimum wage. Thirdly, there is the cumulative weight of all the new burdens.
As the right hon. Member for Camberwell and Peckham (Ms Harman) tried to remind us, each of those burdens is perfectly defensible on its own terms. Who is against paternity leave, and the various other rights involved? They are all highly desirable in themselves, but they are all expensive, and they will all have to be paid for. It is the weight of those burdens, when combined, that sinks our small businesses. Suddenly, one day, the little corner shop is not there any more.
Ministers and bureaucrats have no understanding of the pressures on small businesses, and no such understanding is reflected anywhere in the Queen's Speech. There is no understanding of the difficulties involved in taking on the very first employee in a business that employs only three or four people, coping with the problem of an employee who is unexpectedly pregnant, dealing with redundancy or preparing for the first VAT inspection. Those are the factors that bear down on small business, but nothing in the Queen's Speech brings any comfort to small business men in my constituency.
I must tell the Government that, during the first half of the current Parliament--now concluded--they have implemented all their policies in a relatively benign economic environment. They inherited a sound economy from us, and they have been governing in a relatively benign climate ever since. They have set up a new monetary policy framework, but I am not yet convinced that it is the right framework. Even in good times, it has proved to be a peculiarly fussy arrangement. My hon. Friends may care to note that, in the two and a half years since the establishment of the Monetary Policy Committee, it has changed rates 14 times. In the same period, the Federal Reserve has changed rates only six times. I suspect that the Monetary Policy Committee meets too often and that its fingers are too itchy, and I am not at all sure that its relationship with the Treasury is as clear as it should be.
Mr. Edward Davey:
Will the hon. Gentleman give way?
Mr. Fallon:
I hope that the hon. Gentleman will forgive me if I do not. Time is short.
The Chancellor boasts that he set up an independent operation. He also boasts to the House that we had low interest rates throughout last year. Today, The Daily Telegraph quotes him as backing high interest rates. The Chancellor set up an independent system, but he claims credit when interest rates are low, and now he will claim credit when they have gone up again. I suspect that such a quasi-independent monetary framework spells trouble for him.
Let me now deal with fiscal matters. The tax burden continues to rise. It rose during the last years of our Government--there was a recession, and unemployment costs had to be met--but it should be falling, not rising, during a time of growth. This afternoon, the Chancellor
refused to answer a question about the overall weight of the tax burden, but we will keep asking that question until we are given an answer.
As the tax burden continues to rise, overall spending programmes continue to increase. The pre-Budget report gives the game away. I see no mention in the report of any serious receipts from asset sales. What happened to the great doomsday register? The Government were going to add it all up, and see what they could sell. They have even removed the line about privatisation receipts: if hon. Members look at table B15, they will see that it is not in the report. The Government's privatisation programme, and all the profits that they were going to scoop up from asset sales, have been delayed. Everything has become confused.
Mr. Ronnie Campbell (Blyth Valley):
As will be clear from my accent, I, like my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), will be concentrating on the north-east of England.
My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) spoke of the north-south divide. I was down there only the other week, because my daughter moved there some years ago: she was one of those who migrated from the north-east in an attempt to find happier grounds, and I am pleased to say that she succeeded. A few weeks ago, my wife and I helped her to move house. The house cost her £160,000; in my time, it would have cost £50,000 on a good day.
That sums up the challenge that the Government face in regard to house prices. When we were down there, one gentleman told us that he had already made £30,000 on a house that he had bought two years ago. Inflation is really kicking in, and the fact that interest rates have risen affects the whole picture. That is the shame of the matter: in regions such as mine, the north-east, house prices have not risen enough to enable people to reap the benefits of interest rate rises--although, as we read in today's Evening Standard, there has been a 30 per cent. price increase in London.
I do not know what the answer is. Could regional interest rates be introduced? I very much doubt it, but at least we could talk about it. The north-east did not cause the problem; why should we have to pay for it? As the south-east created the inflation problem, with all the house-buying and gazumping, perhaps it should have to pay. That may not be a very good argument, but it is the only argument that I can produce at the moment.
My hon. Friend the Member for Newcastle upon Tyne, North mentioned the Barnett formula, which was devised 20 years ago by a Treasury Minister who is now in the other place for poor old Scotland and poor old Wales.
At that time--it was in Harold Wilson's day--Scotland was experiencing a poor economic cycle. As for the north-east of England, in those days we had 40 pits, we had shipyards building ships, and we had steelworks in Consett and in various other places. We were enjoying an economic upturn, while Scotland and Wales were at rock bottom.
The Government were a bit afraid of the Scottish national party at the time, as it was making some headway, so they devised the Barnett formula to deal with the arguments in favour of independence for Scotland. It applied the formula to Wales as well. It got them out of the mire, and we have had it ever since. Unfortunately, during the intervening period, the north-east of England has lost all its mines except one, which is teetering on the brink, as well as its shipyards--although I understand that we may start building ships on the Tyne again. I look forward to an announcement to that effect. I know that some roll-on roll-off ships are planned, and I anticipate a subsidy for shipbuilding on the Tyne and the Tees. I understand that it could create 1,000 jobs per ship on the Tyne.
Scotland got the formula. It was good for Scotland and it should be good for us. We in the north-east ask Ministers not to do away with the formula in Scotland and in Wales, but to devise it for us. If it was good enough for Scotland when it was on its knees--we supported introducing the formula there--it is good enough for the north-east of England. We are on our knees at the moment.
It is estimated that, without the Barnett formula, the north-east is missing out to the tune of £2 billion a year. That is a lot of money for the north-east of England. If we can get an extra £2 billion a year in the north-east economy, we will do wonders.
The only pit in the area is Ellington colliery. About 400 men work there. We are not sure what will happen to it. A guy from Italy with various connections to some dubious people wants to buy it. I do not know why. He says that he wants to take the coal to Yugoslavia and the middle east. He can get coal cheaper on the spot market. He can go to Poland to get coal cheaper, so we do not know why he wants to buy the pit and take British coal all around the world. We will have to wait and see. He is in for buying the pit, which could save jobs and save the lads.
Talking of the lads who work at the pit, all they want is a job. They do not care who owns the colliery. The Government say that they will not step in to help the pit; they will not subsidise it. The lads are not bothered if the guy from Italy is a bit of a gangster, or whatever, as long as their jobs are safe.
It is estimated that, if the colliery closes, the plans fall through and the 400 jobs are lost, £40 million will be taken out of the south-east Northumberland economy. That is a lot of money to take out of the economy. Redundancy money is not the same as it was a few years back. It is a private industry now, so only a pittance is paid.
Another argument involves the standard spending assessment for the north-east of England. Local government receives subsidies from the Treasury. I praise the Newcastle newspaper that has, for a long time, been
running a campaign on the Barnett formula and SSAs. The headline "North losing millions to the south" sums it up. It says that councils in the north are losing up to 1.4 billion in SSAs. Those were set under the Tory Government. Unfortunately, when they came to power, my Government said that that they would keep the SSAs for the next three years. We have tried to change them, but obviously the Government will stand fast to Tory programmes. Conservative Members have not lost everything yet: we are still on one of their programmes, which disadvantages north-east councils and advantages those in London and elsewhere in the south.
I should like to give a few figures to back the case up. It is important that figures are given. Ministers might want to challenge them. Perhaps they have some figures of their own that they want to put forward in a reasonable way.
I give the figures for public spending per head of population. In Northern Ireland, it is £133; in Scotland, it is £120; in Wales, it is £114; in London, it is £108; in the north-east of England, it is £98. We can see that the regional money to the areas for development--inward investment--is still low; we are still down.
Of course, we have to remember that Wales and Scotland have the Barnett formula--the only two areas to have it. I do not know what Cornwall thinks. I have seen the figures for Cornwall, but I am sure that the hon. Member for North Cornwall (Mr. Tyler) can argue his case himself. If we had Barnett, we would be up with Scotland and Wales. That is where we want to be--up with Scotland and Wales, with the same money and help.
Regional selective assistance is given. Scotland receives £152 million. Again, the figure is adjusted because of Barnett. Wales receives £106 million. The north-east receives £41 million. When those figures are bandied about and we see the state of north-east England, we will realise that there is a gross miscarriage of justice. Employment is not increasing there. It might be increasing in other parts of the country. The Government come to the Dispatch Box and sing their praises, but it cannot sing the praises of the north-east--not on the new deal.
The new deal is a good idea. It gets people into work, but there is not always work at the end of it. However, at least it gives a start and assists the areas that need help.
My hon. Friend the Member for Newcastle upon Tyne, North mentioned education, which is very important. We cannot educate our kids. We are going into a new era. Heavy industries, as we know them, are dying; we recognise that in the north-east of England. We have lost them all. Obviously, we look to diversify, but I give more Barnett figures. Let us look at those figures: Education spend per head of population in inner London is £1,527; in Wales, it is £1,021; in Scotland, it is £1,388; in north-east England, it is £966. That is the education grant that we get because, again, we are not part of the Barnett formula. We see what Barnett has done in the past 20 years. It has given great advantages to Wales and to Scotland, while other regions have not received the same amounts and have fallen behind. We have fallen behind on that level.
This afternoon, late on, a Liberal Democrat gave me some more figures, which I appreciated. I got them in the Tea Room. They are very interesting. In 1999-2000, Northumberland received £2,240 per primary school pupil from the Government. Kensington and Chelsea got £3,315. Northumberland got £2,879 per secondary
school pupil. Kensington and Chelsea got £4,130, so we can see an enormous difference, even in education. That is only one example, but we looked at different places in London and elsewhere and they all received more; spending in Kensington and Chelsea was the furthest ahead. Northumberland is well behind Hertfordshire, according to the figures on spending per pupil. Again, in education, the north-east is losing out.
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