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Animals (Electric Shock Collars)

Mr. David Rendel accordingly presented a Bill to ban the manufacture, sale or use of collars which administer electric shocks to animals: And the same was read the First time; and ordered to be read a Second time on Friday 7 March, and to be printed [Bill 57].

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Opposition Day

[Fourth Allotted Day] [Second Part]

Economy and Public Services

Mr. Speaker: I inform the House that I have selected the amendment tabled in the name of the Prime Minister.

12.46 pm

Mr. Michael Howard (Folkestone and Hythe): I beg to move,

That this House acknowledges the serious concern about the current state of the UK economy, including economic imbalances, the failure of the Chancellor of the Exchequer to meet his economic forecasts, the ever higher taxes, the disproportionate fall in the UK stock market, the decline in productivity growth, and the crisis in funded pensions; recognises the harm done to business and the enterprise culture as a result of increases in red tape and business tax since 1997, now estimated to cost up to £15 billion a year; is shocked by the Chancellor of the Exchequer's complacency on these matters; is concerned that the forthcoming rise in National Insurance contributions will have further adverse effects on jobs, incomes and economic confidence; notes that tax revenues have already risen by £36 a week for every man, woman and child since 1997; deplores the fact that, despite substantial increases in taxes and Government expenditure, the lack of real reform means that the promised improvements in public services have not materialized, with a recent rise of 22 per cent. in NHS funding leading to a rise of just 1.6 per cent. in the number of patients treated, with one in four children leaving primary school unable to read, write and count properly, with a crumbling transport system, and with only one crime in every 40 resulting in a conviction; and calls on the Government to end its cycle of tax and spend and fail.

For the avoidance of doubt, I draw the attention of the House to my declaration in the Register of Members' Interests.

This debate is taking place just before Valentine's day, and it is appropriately timed. It is being held at a time when the British people's love affair with new Labour is coming to an end, when the unblinking loyalty of Labour Back Benchers is reaching breaking point, and when the sham marriage of the Chancellor and the Prime Minister—a marriage in which one partner thought that the pre-nuptial agreement would lead to No. 10 Downing street rather than the Back Benches—is falling apart. It did not have to be this way. If we had a Government who delivered, we would not be having this debate today. But they have not delivered; they have repeatedly broken their promises to those who have seen their personal pensions halve since Labour took office, to mortgage payers whose endowments will not match their liabilities, and to investors who have seen the stock market fall to a level far below what it was in 1997. Labour told all those people that things could only get better. What of the promises to those who rely on our hospitals and schools? They, too, have been failed by this Government.

Anyone listening to the Chancellor of the Exchequer could be forgiven for thinking that none of this mattered. He found time last week to deliver an Olympian address to the Social Market Foundation. In it, there was barely a word about the chronic failure of all too many of our public services, and barely a word

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about the serious imbalances in the British economy. Instead, he told the foundation that his policies were taking the country

"along the road towards a Britain of opportunity and security for all".

As the economics editor of The Guardian pointed out this week, either

"he has started to believe his own rhetoric, or he is living in a parallel universe".

The very week of the Chancellor's speech was another black week for the British economy. On Monday, BDO Stoy Hayward said that its optimism index of British business had fallen for four quarters in a row. On Tuesday, a Confederation of British Industry survey showed the highest proportion of firms operating below capacity for 20 years, and found that manufacturers' confidence had fallen in every region of the United Kingdom. On Wednesday, there were figures showing the weakest new business activity for a year. On Thursday, an interest rate cut was seen as such a sign of concern about the economy that share prices actually fell, and Friday saw the sharpest fall in manufacturing output and the highest number of insolvencies for a decade. If the Chancellor had not been living in his parallel universe, none of this would have come as a surprise.

Phil Hope (Corby): Speaking of parallel universes, will the right hon. and learned Gentleman confirm that, if his party were in government, it would introduce a 20 per cent. cut across the board in public spending? Yes or no?

Mr. Howard: Of course we are not going to do anything like that—we never said we would. We said that we would look to save money from the money that is wasted by the present Government, and they do waste far too much.

I want to return to the Chancellor of the Exchequer's parallel universe. After all, if one imposes burdens on business through taxes and red tape that the CBI estimates as costing up to £15 billion a year, why should anyone be surprised that corporate profitability is at its lowest level for nine years, that business investment has fallen more sharply than it has since records were first kept more than three decades ago, or that the rate of productivity growth has halved?

Several hon. Members rose—

Mr. Howard: I shall not give way for the moment.

If those burdens on business include a £5 billion a year tax imposed on pension funds, why should anyone be surprised when funds offload UK equities in favour of overseas equities and the UK stock market falls further and faster than those in the United States and France?

Mr. Barry Gardiner (Brent, North): The shadow Chancellor said that he had said nothing of the sort, referring to the hon. Member for Arundel and South Downs (Mr. Flight). Does he agree that the Leader of the Opposition, in referring to the hon. Member for Arundel and South Downs, said, "He is looking to see if

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he can get to that figure. He believes it is a rational target to look at."? Either the shadow Chancellor agrees with the hon. Member for Arundel and South Downs or he believes that he, too, is living in a parallel universe. Which is it, and if the hon. Gentleman is in a parallel universe why does not the Shadow Chancellor get rid of him from the Front Bench?

Mr. Howard: Let me try to explain the matter to the hon. Gentleman in words of one syllable. We believe that a great deal of money is being wasted by this Government, and every day more evidence becomes available that that is so. [Interruption.]

Mr. Speaker: Order. The hon. Member for Brent, North (Mr. Gardiner) intervened on the shadow Chancellor. He should have the courtesy to allow him to reply. That goes for all hon. Members—it is far too noisy.

Mr. Howard: We believe, to complete my answer to the hon. Gentleman in words of one syllable, that we have a duty to the British taxpayer to examine and to remove the waste that has come from the policies of the present Government. The more that the hon. Gentleman and other Labour Members bleat about that, the less credit they will be given by the electorate.

Now I want to talk about what the Government are doing. I remind the House that as the Chancellor was delivering his Olympian address to the Social Market Foundation last week, 15 new regulations were being introduced, as they have been on every working day, on average, since the Government took office. That is the real world. That is the world in which British business has to live. That is the world in which 95 per cent. of company leaders say that regulation has increased over the past five years. That is the world in which Britain has fallen out of the top 10, down to 16th, in the world competitiveness league. It is a world in which the Government have steadily, relentlessly and remorselessly undermined the ability of British business to win orders and to create jobs.

What is the result of all that? In the real world, Britain has recorded a trade deficit in every month since January 1998, and this week the deficit in goods in 2002 was shown to be the largest since records were first kept—in 1697. In the real world, as the director general of the British Chambers of Commerce said this week,

"The UK economy is obviously losing its competitive edge in the international marketplace."

Kali Mountford (Colne Valley): I do not want to remind the right hon. and learned Gentleman of the cuts that were made and the many jobs that were lost when his party were in government, but, on the balance of trade, would it not be reasonable to compare the balance of trade of this nation with that of all other nations? If he looks at the records, they will show that the balance of trade here is exactly equal to that of the Organisation for Economic Co-operation and Development and the European Union as a whole.

Mr. Howard: It is reasonable to look at our record today compared with our record in the past. The fact that we have the biggest deficit since 1697 indicates that

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not everything in the world is as wonderful as the Chancellor of the Exchequer suggests that it is in his parallel universe.

In the real world, pensions are in crisis. The value of personal pensions has halved in the past five years. Fewer than four in 10 final salary schemes are open to new members, and half of those are contemplating closure. Of course, for those living in a parallel universe the Chancellor's decision in 1997 to tax the dividend income from pensions savings at £5 billion a year—equivalent to £400 per contributor per year—had absolutely nothing to do with that lamentable performance.

According to the Chancellor, none of this matters. He says that what he refers to as "the fundamentals" are all doing fine. Of course, we are all pleased that unemployment overall continues to fall, but does the Chancellor recognise that manufacturing employment also continues to fall, that it has fallen by 600,000 since Labour took office, that manufacturing output fell by 4 per cent. last year, and that both manufacturing output and manufacturing investment are at lower levels than they were in 1997, when this Government took office? Is it the sign of a fundamentally sound economy when manufacturing has been teetering on the brink of recession, while consumers are saving less and have built up higher debts than ever before? Indeed, the Labour-dominated Select Committee on the Treasury highlights the imbalances in our economy, which it describes as "potentially serious and increasing".

Not only is the economy unbalanced, but the Chancellor's forecasts for growth, which he said were cautious and prudent, had to be downgraded. He boasted at the weekend that growth in 2002 was 1.7 per cent., but he had forecast 1.6 per cent. He somehow forgot to mention that in his Budget he had forecast growth of between 2 and 2.5 per cent. The 1.6 per cent. was his downgraded forecast made on 27 November. If the Chancellor is reduced to boasting that he got right a forecast that he made on 27 November for the calendar year 2002, that shows just how far his reputation has fallen.

The Institute for Fiscal Studies says that even if the Chancellor's growth forecasts are correct, he will still have to borrow more than he currently plans. By 2005–06, it expects a £4 billion deficit on the current Budget, compared with the Chancellor's forecast of a £5 billion surplus. Yet, over five years, his own figures on borrowing have already leaped from £30 billion in the 2001 Budget to £66 billion later that year, to £72 billion in last year's Budget, and to more than £100 billion in the latest pre-Budget report.

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