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12 Feb 2003 : Column 915—continued

Dr. Fox: Germany!

Kali Mountford: The hon. Gentleman is disparaging Germany, but I seem to recall that it is one of the G7

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countries, and one of the four biggest economies in the world. It is another economy that we once aspired to be like, along with that of Japan.

Mr. Howard: Is the hon. Lady seriously suggesting that we want to aspire to be like the German economy? In its latest unemployment figures, 400,000 more people were put out of work, and nearly 5 million people are out of work altogether. Its growth forecasts have recently been reduced so that they show barely any growth at all. Is the hon. Lady seriously suggesting that we should aspire to be like the German economy?

Kali Mountford: I realise that the shadow Chancellor never really wants to hear anything that I say, and that he has probably been half asleep while I have been speaking. I was saying that we used to aspire to be like countries such as Germany and Japan, but we now fare far better than them. They had the strongest economies in the world, but they are now a long way behind the United Kingdom. [Interruption.] The right hon. and learned Gentleman obviously does not want to hear this, but the UK economy is stronger than the German economy. During his time in government, however, it certainly was not. That is my point.

Mr. Flight: Will the hon. Lady give way?

Kali Mountford: How can I resist?

Mr. Flight: I thank the hon. Lady for giving way. May I ask her for her views on why the German economy has gone off the rails so much? Will she not concede that part of the problem is that the private sector has withered because the burdens that have been put on it have been too great for it to sustain growth under them?

Kali Mountford: The hon. Gentleman is forgetting the great number of people who went to Germany after the Berlin wall was pulled down, which was an effort for peace that we all wanted but which had a great economic impact on the German economy. There were outflows from that. Every country has to go through the economic cycle and, to be fair to the German economy, it is at the downward end of its economic cycle now. That is one of the problems for convergence, because the cycles simply do not match up at the moment.

Roger Casale: Does my hon. Friend share my surprise that this Opposition day debate has been called one week after interest rates were cut to their lowest level in 50 years, and on the very day on which unemployment figures have fallen by 36,000 to a new historic low? That is the day on which the Opposition have chosen to discuss the Government's failure in economic management.

Kali Mountford: The key fact that my hon. Friend mentioned is the job figures. A Conservative Member tried to imply earlier that the new jobs in the economy were somehow detracting from the manufacturing sector, and that they were poor, part-time jobs that nobody really wanted. But we have to consider those jobs against the background of average earnings. Earnings have risen year on year over the last few years. In the public sector, earnings have risen by 5.7 per cent.

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in the last year. I do not call that peanuts. In the economy as a whole, earnings have risen by 4.9 per cent. If those jobs were rubbish, we would not be seeing that level of increase in overall earnings.

Mr. Bercow: Will the hon. Lady give way?

Kali Mountford: If I must.

Mr. Bercow: I am very grateful. Given that the hon. Lady referred earlier to housing, what assessment has she made of the effect of the change, during the last Parliament, in the rules on the use of capital receipts from the sale of council houses on the size of interest repayments on local authority debt?

Kali Mountford: The hon. Gentleman is digging a hole for himself. I was a member of a council at a time when capital receipts were not allowed to be spent on housing in any way, shape or form.

Mr. Bercow: Debt?

Kali Mountford: If the hon. Gentleman will let me finish, I will tell him that the whole point of housing receipts was that they ought to have been ploughed back into housing. This Government have insisted that, at the very least, that money should be released for investment in social housing and, most importantly, in improving the quality of that housing.

Mr. Laws: Will the hon. Lady give way?

Kali Mountford: I have not quite finished my point, but since the hon. Gentleman and I have been old friends on the Select Committee, I cannot resist him this time.

Mr. Laws: I am most grateful to the hon. Lady. I agree that it is important that the receipts from the sales of social housing should be able to be reinvested. Is she not, however, somewhat concerned and embarrassed that, since her Government came to power in 1997, the number of social housing starts and completions has halved from the level at which it stood in 1996–97?

Kali Mountford: I point the hon. Gentleman to the Local Government Bill that is going through Parliament now, and to the housing strategy that has been announced by my right hon. Friend the Deputy Prime Minister. I would be embarrassed if that money had not been invested in improvements to the housing stock, over whose deterioration Conservative Members presided. If we do not invest in housing—in terms not only of numbers but of quality—there will be no social housing available and nobody would want to live in it anyway.

It is an important aspect of the economy that we get the housing strategy right. While there is scope for more house building, we must also look at properties that are hard to let because they are in undesirable areas or simply empty because people have moved out to new areas. That relates to some of the differences in the

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growth of the economy between one area and another, which we need to look at. We need to ensure that prosperity is spread equally and fairly across the whole economy, through all sectors and regions and to all people.

I cannot imagine that the hon. Member for Yeovil (Mr. Laws) would agree with the Conservatives' strategy for improvement. I am sorry to embarrass the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) again, but that strategy includes a 20 per cent. cut across the board. That simply does not cut it with me. At one point, I even heard a Conservative Member argue that that 20 per cent. cut would be implemented only on Government services. Well, we have been there before, and I have been there before in this speech. Would a cut in public services that related only to bureaucrats—these supposedly sinister creatures of the night—imply that their jobs were not worth while? Are the Conservatives seriously saying that civil servants do not do a good job? As an ex-civil servant, I do not think that that is the case.

I simply do not believe that the proposed 20 per cent. cut would be aimed only at those bureaucrats. It would have to be aimed at the people who keep the whole system running. It would have to be aimed at the local education authorities. [Hon. Members: "Why?"] I am simply considering bureaucrats here, so as to be helpful. Let us consider the managers of our primary care trusts. Now, there is a reform and a half that the right hon. and learned Gentleman never even dreamt of. If we are looking at reform, and at spending money wisely, we could do no worse than to point to that. With a 20 per cent. cut, the primary care trusts would not have the money to spend on their managers—the people who keep their drug budgets down and who invest wisely in their patients' future.

Paul Farrelly (Newcastle-under-Lyme): My hon. Friend has obviously read her John Maynard Keynes. Does she agree that under the Chancellor's handling of the economy we have been prudent in squirreling away capital receipts for a rainy day—the proceeds of the mobile phone auctions, for example—whereas the Conservatives not only squandered those receipts, but counted them, using dubious accounting, as negative expenditure?

Kali Mountford: My hon. Friend is right. When we have sunshine we squirrel money away, and when we have a rainy day it is there to spend. We are now seeing expenditure in the form of largesse of which Conservative Members would never have dreamed. Moreover, going by what we have heard today, they would not have approved of it and certainly do not aspire to it. Conservative Members do not want to invest in public sector services. Clearly, they do not believe in Keynesian economics, but even if they did I expect that they would get it wrong.

I congratulate the Chancellor on getting this country through some stormy waters in difficult times. That is something of which to be proud, not to denigrate, as Conservative Members continually do.

3.30 pm

Mr. David Cameron (Witney): I draw the House's attention to my entry in the Register of Members' Interests.

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I am pleased to take part in the debate and to follow the hon. Member for Colne Valley (Kali Mountford). She spoke with great passion and at some length, but I enjoyed listening to her. It has been a controversial and heated debate; I fear that my contribution may be slightly less so. I intend to be constructive by trying to solve a genuine mystery—where has all the money gone? In our experiences in our constituencies, we have all seen a large amount of Government money being spent, yet, although there have been some improvements, performance in many public services has remained flat or, in some cases, has gone down. My right hon. and learned Friend the shadow Chancellor gave the most telling figure of the debate—in the past two years, there has been a 22 per cent. increase in health spending, but a mere 1.6 per cent. increase in activity.

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