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Mr. Swayne: I know that I am looking very well on it, but I think that I was 16 when the first electronic calculators came along. I certainly recall slide rules being compulsory in exams. There were two questions in our maths O-level that we had to do using a slide rule, and a couple that we had to do using logarithms. Of course I am not saying that technology has no place. I am just saying that I am sceptical. I said at the beginning of my speech that I had taught A-level economics for about seven years. At that time, I could have had the advantage of an electronic blackboard, had I had the will to use it. However, the reality was that it was an extremely sophisticated and expensive piece of equipment that actually produced no advantage whatever over the blackboard and chalk, except that it was more expensive. Frankly, I felt that the money could have been better spent elsewhere.
Much of the Government's determination to spend money is misplaced. So much is being borrowed, and so much could be better spent. I am confident that our propensity to find savings rather greater than the further £12 billion identified in the Government's Gershon report is entirely realisable. Our determination for Government expenditure to grow by 2 per cent. less than the Government would have it grow is also an entirely laudable and achievable objective.
Mr. Kelvin Hopkins (Luton, North) (Lab): It is always a pleasure to follow the hon. Member for New Forest, West (Mr. Swayne), and I was greatly entertained by the last part of his speech in particular. I must be older than him, because, before electronic calculators came in, I used to use an electro-mechanical calculator, which was like a vast electric typewriter. The last time I saw one, it was in a glass case in the Science museum. I am clearly almost from the stone age.
I would like to congratulate the Chancellor on a sensible Budget. I do not think that it will be remembered for very long, because Budgets are not. Harold Wilson memorably said that a week was a long
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time in politics, and I am afraid that Budgets, like everything else, are forgotten fairly quickly. What will not be forgotten, however, is the fact that we have had a strong economy for a remarkably long time and that, under the Chancellor, it has been managed extraordinarily well for the past eight years. We hope that it will continue in that vein for a long time to come. I might wish to debate some of the Budget's detail with my right hon. Friend the ChancellorI would like to include some more radical measures, for examplebut his reputation will be unmatched by others who have gone before and, no doubt, by some who will follow.
We have taken too much notice of the possibility of a deficit, and argued about what size a deficit might be. Any Opposition coming up to an election will naturally be alarmist about these things, but I do not believe that missing the objective of the golden rule by a few billion is a great tragedy in the history of economics. I would refer hon. Members to a fine book by J. K. Galbraith entitled "The World Economy since the Wars", which recorded that, in the second world war in particular, America borrowed like there was no tomorrowit might have seemed as though there was no tomorrowand finished up with the strongest economy that the world had ever known. Borrowing and having a deficit are not, of themselves, tragic. Indeed, with our gross borrowing at such an historically low level, there would not be a serious problem for the British economy even if the Chancellor broke his golden rule.
If the Chancellor did break the golden rule, and if, after being re-elected, he chose to raise taxes on the better off, I personally would not object. I know that that is not in his mind, but I would not object at all to such a proposal. Indeed, it would be very sensible. In fact, I would go somewhat further in spending some of the largesse of the wealthy on providing better public services and better pensions for people who are less well off. However, that is my view and I recognise that it does not represent the Government's view. I am perhaps a bit more traditional in that regard. With views like these, it is unlikely that I shall ever be promoted to the Front Bench, but I like to say what I believe to be the truth.
I should also like to congratulate the Bank of England on its management of monetary policy. I was sceptical about its independence, but it has been a success, not because of independence but because of the way in which it has managed monetary policy. I hope that I shall not upset too many people by saying that the Bank of England has managed monetary policy rather better than the Treasury would have done, because it has been more expansionist. I would guess that, by and large, it has set interest rates at about 0.5 per cent. lower than the Treasury would have done. The economy has therefore grown more quickly and demand has been sustained, which is a very good thing.
David Taylor: I endorse my hon. Friend's praise of the Bank of England's success in delivering monetary policy objectives. Does he believe, as I do, that that stands in stark contrast to the stability and growth pact surrounding the euro, and points up yet again the extreme undesirability of entering that seriously flawed arrangement?
As so often before, I agree entirely with my hon. Friend. In fact, he takes me to my next point,
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which is that, if the Bank of England had not managed monetary policy very well, the Government could take it back and manage it themselves. However, they would not be able to do that if we had made the mistake of joining the eurozone. I am glad to say that my right hon. Friend the Chancellor has steered us well clear of it for eight years, and I hope that he continues to do so.
There is a danger of being a bit too cautious. We have had a symmetrical inflation target that was slightly higher than the asymmetrical inflation target on the continent of Europe, certainly in the first part of the eight years of this Labour Government. That has meant that we have been able to have a slightly more relaxed monetary policy. However, I believe that there is more scope for relaxing monetary policyand keeping an eye open for opportunities to do so in the futureso as to ensure that demand does not fall.
Sustaining consumer demand in the economy is fundamental to keeping employment high. When employment is high, tax revenues are high, benefit payments are lower, and the economy works well. That is the kind of economy that we had from the end of the second world war until the mistakes of the 1970s were made. We are now moving back in that direction, and I hope that my right hon. Friend the Chancellor will not press the Bank of England to be too cautious with monetary policy so as to cause the economy to deflate, or to make the terrible mistakes that have been made in the eurozone.
I also want to say that the Tory comments about there being a black hole in Treasury accounts really are nonsense. Compared with the pastthis point has been made by my noble Friends in the other placeour deficits and surpluses are negligible and of small account. Britain has a much stronger economy, with lower gross borrowing and gross debt than any other country in the developed world, and has been a tremendous economic success, perhaps in contrast with what went on in the 1980s.
The important thing is to keep the economy buoyant, not to worry too much about 0.5 per cent. more inflation. Is that dangerous talk? I do not know, but 0.5 per cent. more inflation is far less important than maintaining high employment, high growth and high prosperity.
It is another Tory myth that this country is highly taxed. That is just not true. The Organisation for Economic Co-operation and Development table shows that our tax burden, as it is called, is much lower than that in most of the most developed countries. The idea that low taxation is somehow essential for a successful economy is, again, complete nonsense. The two strongest economies, arguably, are Sweden and Norway, which have some of the highest taxation in the world. Indeed, Sweden is the highest taxed in the world, but it is competitive and prosperous with a strong welfare state. If I had to wish Britain to drive in any particular direction, it would be that of Sweden.
Interestingly, at the last general election, Sweden's Conservative party chose to campaign on tax cuts and spending cuts. It was rejected by the electorate and that campaign helped the Social Democrats to get back into power. Indeed, the Swedish Conservative party has
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changed its policy: it is not campaigning for tax cuts or for spending cuts any more, because it knows that they are unpopular.
So, Sweden is ahead of us. The difference between Swedish and British taxation is of the order of 15 per cent. of GDP, which is a staggering amountmore than £150 billion a year. I am not suggesting that we suddenly start to have Swedish levels of tax, but there is scope for a little more taxationparticularly for the rich, provided it is progressiveand for a little more spending on the things we think are important. Norway, compared with Britain, has an extra £90 billion of tax. The figures for Norway are quite a long way from those for Sweden, but it still has a strong economy.
If one wants confirmation that the Norwegian economy is very strong, one should look at the Chancellor's booklet entitled "Long-term global economic challenges and opportunities for Europe", which was published with the Budget. Chart 2.9 on page 18 shows GDP per person employed against employment rates. The country furthest from the originin other words, the strongest economy on those measuresis Norway.
Norway is not only outside the eurozone; it is not a member of the European Union. I am not suggesting that these things are necessarily related, but that is at least an interesting correlation and Norway is not tied into the deflation of the eurozone. The only point on which I agree with the hon. Member for Ruislip-Northwood (Mr. Wilkinson) is that we at least can choose our own economic policy in Britainour Chancellor and the Bank of England are doing very well in that respectand we do not have to submit to the mistaken policies of the European Central Bank and, indeed, the European Commission.
The wisest decision of our Chancellor has been to keep us out of the eurozone, although he probably would not want to pursue that argument too strongly for fear of causing dissension among one or two colleagues. I do not mind saying that because I am a Back Bencher, and I know that one or two colleagues on the Back Benches take a similar view.
The German economy, in contrast with that of Britain, is in serious trouble and has the highest unemployment since 1933, which is a significant date. The Germans are in a bind: they cannot devalue their currency because they are tied into the euro; they cannot reduce interest rates because they are set by the ECB; and they are being told constantly that they must tighten their fiscal policy as well, which is madnessit will drive them further into economic depression. We have all the advantages, being outside the eurozone, and let us not make the terrible mistakes that the Germans did, not just in joining the eurozone, but in joining the euro at a high parity for their currency. They then had to raise interest rates as well.
We have a strong economy, and I congratulate the Chancellor on his management of it so far. I would love him to be a little more adventurous and progressive in his taxation policies, but that is an argument for another day.
I want to say a few things about education, which is ostensibly the subject of today's debate, rather than macro-economics. I have a profound interest in education. I was in education, like many members of my
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family, and I am a vice-chair of governors of Luton sixth-form college. Since being elected to the House, I have campaigned for the Government to recognise that there is a funding gap, which has not yet been closed, between sixth-form colleges and school sixth forms. Sixth-form colleges are not quite the same as further education colleges: they do not get external funding from business and they depend on public spending.
It is not just unfair, but foolish, for us not to sustain sixth-form colleges. I believe that they are the geese that lay golden eggs in our education system. They have every possible advantage for sixth-form education, and I invite Members to come to Luton to see the sixth-form college. I am probably alone among Members in having two such colleges in my constituency, both of which got grade 1 in their inspection and have been given beacon status.
Luton sixth-form college has a remarkable record of achievement, of which I am very proud, although I may say that I can take no credit for it, being merely a governor. However, those colleges have not been given the funding they require, and they could do a better job if they had it. Classes are sometimes too large and the teachers less well paid than in the schools. I am not suggesting that school teachers should be less well paid, but there should at least be parity for sixth-form colleges. They should have at least the same pay.
I urge Ministers to press the Chancellor again to provide more funding for sixth-form colleges in particular to close the funding gap with school sixth forms. As I said in a debate last week, sixth-form colleges are so successful that, in urban areas in particular, some schools with sixth forms ought to pool their sixth forms to create new sixth-form colleges because they work so well.
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