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I want to examine the details of the pension Bill. The principle is almost certainly right. We need to address a serious issue on pensions. Given the contribution that the Government have made to the problem, it will be hard to sustain the view that they should make no contribution, even by way of guarantee, to underpinning a fund. It will be enlightening to hear Ministers explain why well run businesses that have a strong commitment to their pension funds should pick up not only a proportion of the cost of their own fund guarantees, but a proportion of the cost caused by the profligacy of other funds. It will be interesting to hear how the Government defend that proposal.
As my right hon. Friend the Member for West Dorset (Mr. Letwin) said, this country is in grave danger of moving into a situation in which some people's pensions are adequateand rightly so, because they have made a contribution over the yearsand other people's pensions are inadequate. The legislation that the Government intend to introduce will be measured against the criteria of how it deals with that problem.
The hon. Member for Peterborough (Mrs. Clark) and I have received numerous letters from constituents recently about the Triplex pension fund that operates primarily in our constituencies. It will not deliver to the people who have paid into it for most or all of their working lives. Constituents have asked me whether there will be a retrospective element to the intended legislation. I try to be honest with my constituents, so I wrote back to say that I thought it highly unlikely that the Government would introduce retrospective legislation. As a former Minister, I understand why that is, but the Secretary of State needs to understand that there is increasing anger out there. There is increasing anger among the people who are being deprived of their life savings and who are being told that everything will be all right from 2005, but that the provisions of the House are such that we cannot move any faster. That argument no longer carries weight with pensioners or those who are saving for their pensions.
I hope that the Secretary of State will take these points seriously. He is already beginning to hear from the pensioners who are rebelling about the increased taxation that they now face. I have been in this place for 25 years and I find it fascinating that pensioners are leading the charge against the 70 per cent. increase in council tax that has occurred in the six years of this Government. Colleagues on this side and, I expect, colleagues on the other side of the House are starting to receive letters from pensioner constituents who have never rebelled about anything in their lives. However, those pensioners are saying that they simply will not pay any more.
I think that I welcome the legislation, but I will want to read what it says. However, I say to the Secretary of State that there is a crisis now. Spinning out of the Queen's Speech debate needs to be action this day as well as action in the future.
Kevin Brennan: On a point of order, Mr. Deputy Speaker. Can you confirm that, even though there is a 10-minute limit on speeches, injury time is available to those hon. Members who wish to take interventions?
Mr. Deputy Speaker: Yes. I hope that the whole House now understands that that is the case. If an intervention is made, the intervention does not count against the time available to the hon. Member speaking. He is given an extra minute for that intervention. He is given an extra minute for the second intervention but, after that, no further allowances are made.
Mr. Butterfill: Further to that point of order, Mr. Deputy Speaker. Can you also confirm that the debate is time-limited in that it must finish at 6 o'clock? If too many colleagues take interventions of the sort described, some Members will not get to speak at all.
Denzil Davies (Llanelli) (Lab): The Government rightly deserve creditperhaps they have not been given much in the debatefor the prudent, if I may use that word, way in which they have managed the British economy over the past six and a half years. They have been able to maintain a reasonable growth rate of about 2 to 2.5 per cent. combined with low inflation and low unemployment. That compares very well with most, if not all, our major competitors.
We should also realise that the Government have managed to attain such reasonable growth despite the relentless pressure on Britain and all the older capitalist countries of the west that now comes from global competition and free trade. To a great extent, that pressure comes from the far eastfrom China and, to a lesser extent, India. China has discovered capitalism, but perhaps the Chinese always knew about it. China is now using the instruments of global competition and free trade to boost the potential of its enormous economy and to put inexorable pressure on the capitalist economies of the west.
I get the impression that western Governments now increasingly shape their economic policies mainly to try to withstand the tide of globalisation and to try to maintain their economies in the face of it. Over the past few years in Britain, we have witnessed a decline in our manufacturing industry because manufacturers must reduce their costs to compete but cannot put up their prices because of the pressure on those prices. We therefore have lower levels of investment. If one cannot make a profit, there is no money to invest. The service sector thought for years that it was immune from such problems because it was not an internationally traded sector. However, as we know, that sector is coming under similar pressure, with jobs being exported to low-cost countries.
Germany and France have broken the growth and stability pact because they need to borrow more money, presumably to try to create growth. They are also being encouraged to dismantle their excellent systems of social welfare. Apparently they are being toldwhether it is right or notthat they cannot compete in the modern world of global capitalism with the excellent social welfare structures that they have.
The United States has thrown out the whole economics textbook for its economy. As the Chancellor of the Exchequer informed us, it has a massive public sector deficit of 5 to 6 per cent. and a corresponding balance of payments deficit. Despite its public sector deficit, it is cutting taxes, and the chairman of the Federal Reserve has announced that he will not raise interest rates above 1 per cent. whatever happens to the economy. He is absolutely terrified about what is likely to happen.
On top of that, we must consider the devaluation of the dollar and, of course, the fact that the United States has started down the road of tariff restrictions and restrictions on imports. We know about the situation for steel and textiles and I hope that the steel restrictions will be lifted. It might give many Labour Members a warm feeling to criticise a Republican President of the United States for imposing steel tariffs but if the next President is a Democrat, his constituencyNew Jersey, Michigan, parts of Indiana and Illinois, and Ohio and Pennsylvaniawill demand much more protection than it has of a Republican President.
Deep down, the British establishment is perhaps not terribly interested in British manufacturing, but that is not the case for the United States. The Americans will fight to preserve their manufacturing industry. They will certainly fight to preserve their steel industry, given its strategic importance for their defence and armaments sectors. Additionally, over the past 15 to 20 years the United States has apparently encouraged what is even by its standards massive immigration, especially from south America. Some immigration has been legal and some has been illegal. That process has kept down costs and enabled the country to competejust aboutand to meet the tide of cheaper imports. It is not really
The British economy has been unable to attract the same kind of new entrants into its labour market through immigration. However, there have been new entrants into the market in the past 20 years because women who did not previously have jobs have entered it. Many earn fairly low wages and, in a way, that contributes to keeping down costs. My right hon. Friend the Chancellor has introduced the tax credit system. As a rather old-fashioned Member who was in the House in the 1970s, I baulked a little at the idea of subsidising wages, but we live in a different world, so perhaps global pressures have caused that. The tax credit system effectively subsidises wages. The way in which it does so in the private sector means that private sector employers do not have to pay such high wages because the Government pay the difference, which keeps down costs in the global economy. If the pressure on wages increases, the gap will become greater unless the Government are able to maintain the difference through the credit. I do not know how long such subsidies can continue but I hope that they continue for a long time, even though pressures will be put on Government borrowing. The addition of such a pool of new entrants to the British labour market cannot continue because women usually take jobs immediately these days.
Economic commentators and others suggest that we should reconsider immigration as a way to keep down costs, and we have also heard about that from the Home Office. I do not know the extent of the immigration that we would need to achieve that or whether sufficient people would come here from eastern European countries after they join the European Union. I do not know whether immigration could create the low cost base that Britain needs to compete or whether we could create the growth rates to pay for such immigration. We must face those issues in the light of global competition.
Over the past two decades, globalisation has attained the status of what the ancients called the most high godit is certainly the most high god of finance, business and economics. In the past, anyone who tried to question the divinity of that god was called nasty names and portrayed as a nihilist, an anarchist, a clapped-out Marxist or a weirdo. The high priests of the god did not show much sympathy for poorer countries that often suffered from the effects of globalisation. However, I can detect a change because it seems that western capitalist countries are beginning to suffer from the stern theology of the most high god of globalisation. As the traditional stimuli of economic growthlow interest rates, taxation, devaluation and new entrantscease to work as stimuli, more direct action might have to be taken. I hope that we can recognise that so that we can create reasonable measures to ameliorate the damaging effects of globalisation while keeping some of its more beneficial attributes.