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Mr. MacShane: I am grateful to the right hon. Gentleman. I have been listening with great interest to what is perhaps his valedictory speech. I congratulate him on his remarks because it is rare indeed to hear from the Opposition a considered discussion of the problem of euro entry. Perhaps he should address his remarks to those on the Opposition Front Bench and to his own party leadership because until we have a rational discussion across the Chamber and the nation that is not dictated by The Sun and the Daily Mail and their venomous anti-Europeanism, we cannot have a discussion at all.
Mr. Major: When I hear the hon. Gentleman praising me, I feel the slide of a knife in my ribs.
Mr. Alex Salmond (Banff and Buchan): Is it a familiar feeling?
Mr. Major: Of course not. It is not remotely familiar. That is a disgraceful suggestion.
The other point that I would make in response to the hon. Member for Rotherham (Mr. MacShane) is that, although I may be terribly old fashioned, I came into the Chamber today believing that the debate was to be about the Government's programme and policies. I did not think that it would be about the Opposition's programme, or about any distorted version of that programme that it may be convenient for the Chancellor to allege might be implemented in certain circumstances.
The Chancellor, rather like Fanlight Fanny, looks at our programme through the wrong end of a telescope, on a very dark night, standing on a stool, and through a clouded window. Anything that the right hon. Gentleman says about our policies we may routinely assume to be the opposite of the reality. There was much evidence of that today, and the right hon. Gentleman is very good at it. He is able to say that which is not so with such conviction that he convinces himself that it is so--but it is not. The Conservative party that I joined--I look forward to campaigning for it in the next general election, in the hope and belief that it will win--bears no relation to the party painted in such lurid colours by the Chancellor of the Exchequer.
I see that the Chancellor is smiling. He may well smile: he has done a good afternoon's work, and enjoyed himself jolly well. He has not defended his own policies, but has talked about ours instead. He did not get past page 3 of the prepared speech given to him by his advisers. He was also able to use up 49 minutes, which was necessary because not too many Labour Members are waiting to speak later on.
The Chancellor has had a really super afternoon, which he is thoroughly enjoying. He has safely moved on and ditched poor old Prudence, who was useful once but is no longer. We must continue to remind the right hon. Gentleman of Prudence, because she will yet be an embarrassment to him when, in the very near future, he comes to prepare his Budget. Prudence may be the only person in the country who will not be given a tax handout of some sort when the Chancellor addresses the House on Budget day.
I return, briefly and finally, to the question of the euro. My prediction is not shared by many people, but I stand to be judged on it. It seems to be more likely than not that, over the next year, the euro will recover in value against the dollar, the yen and sterling. It is worth noting, in passing, that that will help sustain the price stability that was the objective demanded of the European central bank by the Maastricht treaty. The treaty was often misunderstood, but that provision was absolutely clear.
All such issues, and the conclusions that follow from them, are material to our consideration of whether sterling should one day--although not in the near future--enter the eurozone. In a mature debate on the future of our economy and currency, all those issues would be aired.
I was rather disappointed that the Chancellor should have aired other issues and spoken rather intolerantly about our policies, rather than address an issue that he hopes will go away in the period before and during the next election. I can tell him that it will not go away, as it is of abiding interest to far too many people for that to be possible. However, no mature debate is being held. The current Government have enjoyed a massive majority in the House of Commons for four years and, frankly, it is time that such a debate were held.
The hon. Member for Rotherham said that this might be my valedictory speech. He may wish it to be but, unless the election is held very speedily, I promise him that it is not going to be my valediction. However, it is certainly my valedictory contribution to a debate on a Queen's Speech. With your permission, Madam Deputy Speaker, I shall use the latitude that the debate allows to say something about the House of Commons and the way in which it operates these days.
The House of Commons has always had a certain mythology about its past. I have been here for only 20-odd years, but I am in no doubt that the complexion of the House has changed in that time, to the disbenefit of democracy and of the nation at large. It is not good for the House that only a handful of enthusiasts take part even in significant debates, and that it should be so often bypassed when statements come to be made.
Moreover, although all Governments have used guillotines, it is not good for the House when placing them at the necks of innocent pieces of legislation becomes too frequent and callous. It is not in the interests of the House of Commons that we should be able to go in the No Lobby, on a day when we happen to be here, and vote on issues that we do not understand after debates that we did not attend.
None of what I have set out is in the interests of democracy. If we were really interested in re-establishing democracy, there are things that we could do. There are many ways to reform the House of Lords other than the way in which it has been reformed, and they should have been implemented. Standing Committees of both Houses should be used to examine treaties--such as Nice, for example, or the Maastricht treaty of many years ago--both before and after they are negotiated. Standing Committees could also be used to look at the creeping constitutional change that is undermining the House. Those matters are what we need to be looking at.
I shall conclude with a prediction that gives me no pleasure at all but which I fear will be realised. It is that turnout at the next general election will be very sharply down, and that it will be below the level recorded in any general election for a very long time. No hon. Member ought to want that to happen, and it is not something to be proud of. If such matters were in the forefront of the Government's mind and covered in the legislation proposed for the few weeks available before the election is called for late April or early May, perhaps the Queen's Speech would have been better and more relevant than the one that the Chancellor nearly debated this afternoon.
6.26 pm
Mr. Nigel Beard (Bexleyheath and Crayford): In assessing the economy today, it is useful to consider the history of economic policy in Britain over the past few years.
In his great work on the English constitution, Walter Bagehot observed that civilisations ultimately decline because they fail to understand the institutions that they have created. For the whole of the 20th century and much of the 19th century, industrial economies seemed to be just such institutions, and a lack of understanding of them could indeed endanger the democracies that nurtured them.
John Maynard Keynes was the intellectual critic of the prevailing laissez-faire economics of the early 20th century. His view was that to avoid instability it was essential for central Government to regulate demand. Thus, as the trade cycle carried an economy to recession, Governments should spend to create the demand to counteract it. As the trade cycle moved up to a peak, Governments should restrain demand to avoid overheating the economy and prevent subsequent inflation as too much money chased too few goods.
Reginald Maudling, at the beginning of the 1960s, attempted to create growth in the economy simply by creating more demand. It did not work, but resulted in the
economic crisis that faced the Wilson Government in the 1960s. Likewise--but even more so--in the early 1970s, Anthony Barber thought that by increasing demand he could cause the British economy to grow irrespective of its ability to supply. Supply did not follow but increased oil prices did. As a result, one inflationary pressure reinforced the other to create the appalling inflation of the 1970s. The greatest casualty of this era was Keynesian economics which was presumed--falsely, in my view--to lead automatically to inflation.As a reaction to this excess came Thatcherism and Reaganomics, which, in essence, were a return to laissez- faire economics. The trouble was that there was a return to the overriding weakness of laissez-faire economics--a propensity to instability.
Mrs. Thatcher became Prime Minister in 1979 and, immediately, taxation was increased at a time when the economy was moving towards recession. So deep was the recession that resulted that 25 per cent. of UK manufacturing industry disappeared. That was some mistake.
The world economy recovered as oil prices declined, so much so that, in the second half of the 1980s, the then Chancellor of the Exchequer, Nigel Lawson, gave generous tax concessions. The inevitable boom in demand happened, which the economy could not satisfy. Inflation occurred, and high interest rates followed from that. The result was that the economy went bust in the early 1990s, as it had in the early 1980s, the early 1970s and the early 1960s--on all those occasions under a Conservative Administration.
The economy going bust was not just an economic abstraction; it meant that many small companies went bust. It meant that there were 3 million unemployed, in contrast to 1 million today. It meant negative equity so families could not afford to move house and were in dire distress because of their finances. It meant interest rates of 15 per cent.--and an average of 10 per cent. over the period of Conservative Government--compared with an average of 6 per cent. during this Government's period in office.
As the 1997 election drew near, an attempt was made to disguise that record with a Government spending spree. It did not work electorally, but the incoming Labour Government were left with a gap of £29 billion in the public finances that had to be made good. Had there not been a period of putting the public accounts right, even at the expense of public services, the International Monetary Fund would have been on the doorstep, and Labour's cherished five-year programme could have been vetoed by the financial markets.
It is to the great credit of my right hon. Friend the Chancellor that he had the understanding, foresight and tenacity to deal with that complex situation. Indeed, he has done more than that. He has introduced a new philosophy for managing the economy, which avoids the regular boom and bust of Conservative Administrations.
I have heard Opposition Members asking sarcastically whether Labour's claim to have abolished boom and bust means that it has abolished the trade cycle, too. Of course, it does not mean that. What has been stopped is a form of economic management that increased taxation in the trough of the cycle, which deepened recession, and reduced taxes at the top of the cycle, creating a boom.
Conservative economic policy succeeded in magnifying the undulations of the trade cycle into the familiar boom and bust.The other characteristic of 18 years of Tory economic policy was a reckless neglect of public investment. The result is the rundown appearance of hospitals, the poor maintenance of schools and the total neglect of public transport.
The artificial Treasury impediment on public investment, known as the Ryrie rules, has been abolished in favour of new fiscal rules, namely the golden rule and the sustainable investment rule. These rules facilitate public investment while ensuring that interest payments on debt never become the millstone that this Government inherited, at a time when debt interest payments were greater than the whole education budget.
The attention of Departments to the value of capital assets and their maintenance will be focused by the recent introduction of resource accounting. That will ensure that maintenance and depreciation are properly taken into account in determining budgets.
The Opposition have made much of the fact that growth in the economy was forecast, in the July spending review, to be 2.5 per cent. in real terms, but that total Government spending will increase by 3.3 per cent. They therefore say that the spending programme is not sustainable and that they will cut it. However, the July spending review makes it clear that current spending will grow at the same rate as the growth in the economy, and that growth over and above that is capital spending, which will satisfy the golden rule and the sustainable investment rule as it doubles over the next three years.
If the Tory party were to cut the growth in public spending but not cut spending on health or education, as they propose, they would have to cut capital spending that is vital, particularly for the improvement of public transport. Tory policy can only mean continuing dilapidation of public buildings and increasing congestion in our cities, as well as likely cuts in health and education, compared with the Government's programme.
The public sector's record on controlling large capital projects is poor, partly because such projects come along only infrequently for any one part of the public sector. Consequently, experience in design and project management is not built up. Unless that problem is faced, there is a danger that too high a proportion of increased investment will not give value for money. That is a major justification for projects to be undertaken as some form of public-private partnership. The private partner should have expertise derived from experience in similar projects, and so be in a better position to ensure performance and to shoulder the risks of delay and overspending. After all, one cannot shake off the fact that the Jubilee line extension, under different project management arrangements, was £1.5 billion over budget and 18 months late.
In the past, public finance initiative projects tended to be justified because they avoided public borrowing. Under the new fiscal rules, that is no longer necessary. Now, the overwhelming argument for PFI or public-private partnership schemes is that they offer risk reduction in the capital project while leaving subsequent operational control in the public sector.
The Government's management of the economy is a triumph. It brings to an end a century of flawed or uncomprehending macro-economic policy and successfully launches us into a new century with a new political and economic understanding.
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