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1.47 pm

Mr. David Heathcoat-Amory (Wells): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"notes that, according to Government figures, the burden of taxation has risen from 35.3 per cent. of GDP (1996/97) to 37.4 per cent. by April 1999; condemns this increase in the burden of taxation since the Government took office and the increase in business regulations which has accompanied it; condemns the Government's failure to achieve the promised improvements in public services while at the same time waste in the public sector has increased; and, while welcoming the Government's health and education spending increases, regrets that these have not been accompanied by the promised reform of social security expenditure which is set to rise by more than £30 billion over the next three years."

This is the first occasion on which I have debated with the present Chief Secretary, the right hon. Member for Oxford, East (Mr. Smith); I congratulate him on his appointment to that important post. He is the fourth Chief Secretary since the general election. I hope that he serves for a slightly longer time than his predecessors--although not for too long. The other Chief Secretaries have come

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and gone in various circumstances. During their terms, they all created considerable confusion in the public finances. Perhaps each of them tried to apply his own accounting principles--albeit with unhappy results for the rest of us. I hope that the right hon. Gentleman will try to wipe the slate clean and will at least present what is going on in a reasonably coherent way.

Let us start with some common accord, as this is the last debate that will take place in the House this century--indeed, this millennium. I certainly join the right hon. Gentleman in thanking those public sector and other workers who will keep all the services going over the holiday season.

The Conservatives can take pride in the fact that the century now drawing to its close is definitely the Conservative century--one that has witnessed the triumph of free market economics and policies--

Kali Mountford (Colne Valley): Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: I shall give way to the hon. Lady later.

I can assert, without disagreement from either side of the House, that this century has seen the triumph of market economics and of the economic policies advanced by the Conservative party. That has undoubtedly demonstrated the fact--first stated by Adam Smith--that the wealth of any country depends not on its natural resources, its climate or even its political influence in the world, but on the system of voluntary exchange and the market specialisation that flows from that. That system, properly encouraged and regulated, has led to the fantastic increases in the general standard of living, among all our people, that we have witnessed this century.

The same process has also exposed socialism not just as a system that is hopelessly inefficient at generating wealth, but as one that takes away human freedom. It is one of the achievements of this century that it has consigned socialism to the dustbin of history. Now the--[Interruption.] If any spokesmen for socialism are lurking on the Labour Benches, we will be very pleased to hear from them at this belated stage.

Caroline Flint (Don Valley): I was interested in the right hon. Gentleman's reflection on the Conservative contribution to this century. Is he aware that Winston Churchill was in favour of a minimum wage? Is it not the case that, given the chance, the right hon. Gentleman would abolish the national minimum wage and, in doing so, give 2 million people a pay cut?

Mr. Heathcoat-Amory: None of what the hon. Lady said contradicts the points that I was making. Indeed, she has drawn attention to the fact that the Labour party's contribution to the process has been at best most undistinguished. The Chief Secretary has been in the House for 12 years. Let us not forget that, for the first 10 years, he did his best to hold up the economic reforms that he now regards as essential and to pour sand into the free enterprise machine that he is now proud to inherit.

The hon. Member for Don Valley (Caroline Flint) has not been in the House quite so long. However, I strongly suspect that she also spent the first part of her political

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career opposing all the necessary reforms that were advanced by the Conservative party and opposed by the Labour party.

Kali Mountford rose--

Mr. Heathcoat-Amory: I promised that I would give way to the hon. Lady.

Kali Mountford: I thank the right hon. Gentleman for giving way. Does not the poor attendance of Conservative Members reflect their lack of enthusiasm for this subject? Is that perhaps due to the trebling of poverty under the previous Government?

Mr. Heathcoat-Amory: I have all the help from my hon. Friends that I could possibly wish for.

I now come to the first undisputable fact in the debate--again, it was not contradicted by the hon. Member for Don Valley--which is that during our term in office, the Conservative party built up a world-class economy, with falling unemployment, low inflation, falling public debt, high growth and a globally competitive economy. That is the golden economic legacy to which the Chief Secretary referred.

The House should not accept my view alone. The report of the Organisation for Economic Co-operation and Development published in December 1996, before we left office, said:

"the prospects for achieving sustained output, growth and low inflation are the best in 30 years."

That was the legacy that we bequeathed to the present Government.

Mr. Andrew Smith: Why does the right hon. Gentleman think he lost the election?

Mr. Heathcoat-Amory: It was not the policies that lost us the election. If they did, why has the Labour party tried to adopt our policies? If there is so much wrong with the policies--[Interruption.] So, we do have some critics of the policies that the Labour party has adopted.

Dr. Phyllis Starkey (Milton Keynes, South-West): When the right hon. Gentleman suggests that it was not the previous Government's policies that the electorate rejected, is he not dangerously close to suggesting that the electorate do not know what they are doing?

Mr. Heathcoat-Amory: As I have just said, if the hon. Lady believes that, she is criticising those on the Government Front Bench who have done their best--although failing in practice, I am afraid--to adopt the economic programme and policies that we bequeathed to them.

Several hon. Members rose--

Mr. Heathcoat-Amory: I shall make a little progress before I give way again.

The electorate are discovering that the enterprise machine needs to be maintained by people who understand the enterprise economy, not by those who have adopted it in the past two years as a matter of political

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expediency. The enterprise economy that the Government took over is now being eroded. They are committed in principle not only to the euro but to the entire European Union social democratic model of high taxes, high costs, a heavy regulatory burden, and all the damage that will flow from those things.

In economics there is of course a time lag between cause and effect, but already the damage is becoming apparent. The World Economic Forum reported in the summer that this year the United Kingdom has fallen from fourth to eighth place in the global competitiveness league. That is a better indicator of what is really happening in the economy than all the waffle that we heard from the Chief Secretary in his opening speech.

Mr. Geraint Davies: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: I cannot resist the hon. Gentleman.

Mr. Davies: Is it not the case that during the 18 years of Conservative Administration there was a benign global economic environment in which the right hon. Gentleman oversaw two massive recessions, whereas now, at a time when a quarter of the world is in recession and the Conservatives predicted recession here, 750,000 more jobs have been created? How does the right hon. Gentleman explain that?

Mr. Heathcoat-Amory: That is all nonsense. We lived through two global recessions. It is the hon. Gentleman and his party who have had the benign economic world outlook of which to take advantage.

We can all agree that to debate these issues properly we need the facts, and the prime source of facts about the economy must inevitably be the Government. The Chief Secretary referred to a transparent fiscal policy. I have to say that it is so transparent that it has become practically invisible. In the past weeks and months, Ministers have demonstrated a complete inability to recognise even their own facts and figures about the economy. The Chief Secretary was at it again today when he talked about the tax burden.

We know that the additional tax burden on the British people, both announced and implemented, amounts to £40.7 billion over this Parliament. That figure comes from the House of Commons Library, and is based on Government statistics. Doubtless the Government will disown that figure, however, so let me give them another: the OECD reported on 2 November that of 29 countries that it had surveyed, the United Kingdom had the fastest increase in its tax burden this year. The Chief Secretary may disown that figure, too, but he cannot disown the Government's own Budget documents.

I refer the Chief Secretary to page 165 of the "Pre-Budget Report", which states that, when the Government took office, 35.3 per cent. of gross domestic product was taken in tax. On page 150 of the report, it is recorded, on the same basis, that the burden of tax for the year just ended--this is a fact, not an estimate--is 37.4 per cent. of GDP. The House will agree that 37.4 is higher than 35.3, so the burden of tax has increased.

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