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Mr. Robert Walter (North Dorset) (Con): To some extent, this has been a sad debate, because we have heard the final speeches of my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) and my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman). As always, they made very good, well informed and witty speeches, and we shall miss them. My hon. Friend the Member for Chipping Barnet and I have become very good friends over the past eight years. He made some rather incisive comments about the beginning of the national health service, which he could remember. I do not quite remember it, because it was brought in just one month after my birth, although my mother always said that its introduction had nothing to do with that event.
As today's debate is on trade and industry, perhaps I should start by referring to our appalling trade deficit. The latest figures for last year show that our deficit on trade in goods was in excess of £57 billion. That is catastrophic for the nation. My hon. Friend the Member for Chipping Barnet reminded us that the first election he fought was in 1964. A key issue in that election was our deteriorating trade balance. If today's electorate were as well informed on the trade picture as they were then, I suspect that this Government would be done for in much the same way as the Government were done for in 1964.
The situation today is deteriorating. Imports have increased in volume terms over the past four years by some 12.5 per cent., whereas the export volume figure has decreased by 0.3 per cent. That is a poor situation to be in, and companies in my constituency are doing their best to fight that trend. Flight Refuelling Ltd makes the fuel systems for virtually every commercial airliner in the world, while Farrow and Ball, the paint maker, sells its excellent products on every continent. Marden
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Edwards produces packaging machinery—I am afraid that a lot of it is exported to pack the goods that are then imported into the United Kingdom. William Hughes produces springs, a very unsexy product, but we sit on those springs almost every day, as it supplies springs to every car maker in Europe to go in the seats of motor cars.
In relation to our trade picture, the important macro-economic point is the Government's complacency. I sit on the Treasury Committee, and on a number of occasions I have raised with both Treasury officials and the Chancellor of the Exchequer our trade deficit and current account deficit. They are at pains to point out to me that, in real terms, we have had deficits like this in the past. That may be so, but the difference now is that we have consistently had a deficit in virtually every year this Government have been in power, and the deficit has been increasing. We no longer have a cyclical trade position but a current account that is permanently in deficit and shows no signs whatever of improving, and the Government seem to have no sense of urgency about addressing that problem.
I want to consider the housing market and some of the Government's policies with regard to it, particularly the incentive to first-time buyers that the Chancellor introduced in this Budget. I do so with a sense of caution, however, as the International Monetary Fund, whose advice the Chancellor likes to ignore, in its latest article IV consultation on the UK economy, issued as recently as 8 March, stated:
"Perhaps the greatest near-term risk to the outlook was the possibility of a sharper-than-expected drop in house prices . . . even though the correlation between changes in house prices and changes in consumption may have weakened since 2002, the ratio of consumption to disposable income had risen over the past decade alongside increasing housing wealth."
The Red Book contains few figures on house prices. If we want to find any sort of analysis, we must go to the Treasury's website to find a section called "Supplementary charts and tables", which shows the ratio of earnings to house prices. That is a fascinating chart, as it reflects the entire United Kingdom. My concern is not the entire United Kingdom, but the regional picture.
Some of us may recall that, last autumn, the Joseph Rowntree Foundation did a fascinating analysis of the ratio of earnings to house prices, which showed that in London that ratio was in most instances of the order of 5:1. Outside London, in my region, the south-west, the ratio was also of the order of 5:1. In other parts of the south-west region, however, it was even higher. There are two districts in my constituency, north Dorset and east Dorset, and the figures for east Dorset show that the mean house price for a two or three-bedroomed dwelling, which is what most families need, was £203,000, and the ratio of house prices to average incomes was 5.35:1. Given an average or mean house price of £203,000, I wonder what benefit the Chancellor thinks that his £120,000 threshold will bring to those seeking to get on to the property ladder in London, the south-east or the south-west. I suspect that the only people who will derive any benefit are in the north, so in
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my view such a benefit will be available only to those who are perhaps supporters of the Labour party. It will do nothing for those who—
Andrew George: The hon. Gentleman will doubtless be aware that among the other districts in the Government's south-west zone—I do not call it a region—that suffer from large differentials between house prices and very low earnings is my constituency, which includes west Cornwall and the Isles of Scilly. Although I agree with his analysis, does he agree with me that one of the best ways, among many others, of helping local people is to develop policies that constrain the very high levels of second home ownership that exist in places such as west Cornwall and, no doubt, parts of his constituency? Second home ownership is fuelling price increases, and as a result houses are way out of the league of what local people can afford.
Mr. Walter: I thank the hon. Gentleman for his intervention. There are many measures that the Government could implement to encourage those who need to get on the property ladder. I am always reluctant to suggest that we should introduce measures to restrain prices, but I can say that all Dorset's local authorities have moved to a 90 per cent. council tax on second homes, the proceeds of which will be used to provide affordable housing.
I want to make two further points before I sit down, the first of which the Chief Secretary to the Treasury can perhaps help with in his reply. The Government have re-opened negotiations on the plan to reform public sector pensions. If that were to lead to a retention of the status quo, whence would the anticipated savings be derived? On the other hand, would we be looking at an increase in projected public expenditure as a result of future, larger pension bills?
Finally, I want to discuss chapter 3 of the Red Book, entitled "Meeting the productivity challenge", and in particular subsection 19, entitled "Leading regulatory reform", which states that
Two of the stated areas of action in that regard are
There will be a sound round of applause from all parts of the House for that provision on gold-plating—an issue that we have discussed on many occasions. The third area of action listed in subsection 19 is
"because around half of all significant new regulations affecting UK businesses originate in the EU."
I read that with interest, because according to this morning's Financial Times, the Minister for Europe said that that is not so. He
"debunked the 50 per cent. figure as typical of the tendency of 'anti-European politicians [to] tell more myths and fantasy about Europe than you can find in Harry Potter or The Da Vinci Code'."
The Minister for Europe also referred to work of the House of Commons Library, which shows that of those regulations that are passed in this House through secondary legislation, only 9 per cent. actually come from Europe. That implies that 91 per cent. of the regulations under discussion originate from the Government Front Bench, that they have very little to do with Europe and that the Government seek to hide behind the European regulatory framework in order to excuse regulations that they themselves decided to introduce, completely independently of the European Union. The Government should answer that question, and, if the story in the Financial Times is not true, we shall doubtless hear from the Minister for Europe.
6.5 pm
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