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When will the Government ensure that they do not place additional burdens on business, such as the increase in national insurance, fuel tax and regulations? Our manufacturing strategy should be to support all companies, and especially our large companies, in encouraging innovation so that small and medium-sized companies can be the little acorns for the future. As we know, from small acorns large oak trees ultimately grow. If the future of this country is to be built on modern manufacturing strength, when will the Government encourage industry instead of disincentivising industry
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and manufacturing through increased regulation and taxation-including national insurance, which is another form of taxation that is a disincentive to employment?

Why is the Ministry of Defence purchasing aircraft from the United States when an adapted Nimrod MRA4 could fulfil the role, saving several hundred excellent highly skilled jobs at BAE Systems in Woodford, which has been an important part of the UK aerospace industry? Only this week, the Secretary of State for Defence notified me that the Government have finally decided to buy the Rivet Joint, a Boeing aircraft that is 40 years old and has been lying in the desert for many years. Why buy that instead of the Nimrod which could provide jobs in Woodford for people in my constituency and others in south Manchester and north-east Cheshire?

I give the Government credit for some of the assistance that they have given to the manufacturing sector through some additional investment allowances in the Budget. That is fully justified and one way in which industry, especially manufacturing industry, can be helped. Despite receiving unprecedented and valuable bail-outs from the taxpayer, the banks et al are providing little or no meaningful assistance to hard-pressed manufacturing via increased lending.

The plight of small to medium-sized businesses is a serious one, given that the commercial banks are still-I have evidence of this in my own constituency-refusing to lend to struggling businesses, which are after all the powerhouses of the modern economy. As I have indicated, individual businesses in the Macclesfield constituency continue to find it difficult to secure the affordable credit that is so vital for their survival. So often, the difficulties that they are facing have not been of their creation. They did not, in the main, cause the credit and economic crisis that the world has experienced, and we do not want these businesses to go out of business.

The problems faced in my constituency, however, are repeated throughout the north-west. There is still widespread concern about the difficulty of arranging bank loans, despite the assurances being given by the Government. There is evidently growing competition, too, from manufacturers abroad, which are also suffering from reduced orders and overcapacity, and are now therefore flooding the market in the UK with goods at less than cost price. That is affecting manufacturers in this country producing for both home trade and export. Given that about half of UK manufacturing output is exported, surely it is important that the world economy moves forward as well. It is very important to us that we work with the rest of the world. It is important that we co-operate-and that co-operation should extend beyond the European Union-so that we can achieve growth and jobs for the future. That will benefit not just the economy of this country, but, I believe, the economies of countries overseas.

It came as bad news for the UK when its trade gap with the rest of the world widened unexpectedly in January to its largest since August 2008. Exports saw their sharpest drop in more than three years, according to the Office for National Statistics. The UK's trade gap in goods and services widened to £3.8 billion compared with £2.6 billion in December. I put this question to those on the Treasury Bench: when will the Chancellor recognise the value of our manufacturing industries to
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the stability and future success of the UK's economy? When will he reverse the crippling £16 billion in constantly changing regulations and £7 billion a year in new taxes introduced by this Government? And when will he recognise that manufacturing-I repeat this for the third time-is one of the only sources of sustainable, non-inflationary economic growth, and therefore the key to getting out of this damaging recession?

With loose monetary policy and sterling, the manufacturing sector can-and, I hope and pray, will-return to positive, year-on-year growth by the later months of this year. As for the road to recovery for the wider economy, first, the huge budget deficit-I say this both to my own party and the Government-must be tackled. The next Government will, I think, continue to ignore this problem at their peril. The incoming Government must act immediately on the deficit and stabilise long-term interest rates. No areas of the Budget should be ring-fenced. Of course there will be priorities, but priority should, inevitably, be afforded to national infrastructure and defence, both of which are of long-term strategic importance to the nation.

Sadly, no programme of responsible cuts, efficiency savings and restructuring can ignore social security and health care. I am sure that everyone here, including the right hon. Member for Rother Valley, who chairs the Health Committee, would agree that there is room for savings within the health service bureaucracy. I was personally opposed to having providers and purchasers in the health service. It was a very costly innovation, those many years ago, by the then Conservative Government, and I think that a lot of that money, which has been spent on management, could have gone on patient care and nursing.

I declare an interest as an honorary vice-president of the Royal College of Midwives, like the hon. Member for Leyton and Wanstead (Harry Cohen), who I hope will catch your eye, Mr. Deputy Speaker, in a few minutes. I believe that we need to spend more money on what I call genuine patient care-not just treatment but care. Despite the fact that I have not been involved with the Health Committee for many years, I continue to take a considerable interest in health care in this country.

As a country we urgently need to establish a medium-term plan to reduce the size of the state, which today accounts for-I say this to the hon. Member for Luton, North (Kelvin Hopkins)-almost half the UK economy. Let us not forget that progress will be dependent on growth, but no economy can successfully grow in the long term with such an over-dependence on central Government and the state. I can say with some confidence that my constituency will, I trust, play its part in that recovery.

Mr. Deputy Speaker, it has been a huge honour to serve our country, my constituents in Macclesfield and this House for almost 39 years. This is my valedictory speech; I hope that it has been constructive. I have loved being in this place. I hope that the authority of Parliament can be restored, and that the authority and independence of Back Benchers can grow-

Stephen Pound (Ealing, North) (Lab) rose-

Sir Nicholas Winterton: I am happy for the hon. Gentleman to intervene. He is a great friend to me, and when I stood for Speaker in 2000 he acted as my seconder. I respect and admire him for that courageous decision.


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Stephen Pound: It was a decision that did not make me an enormous number of friends, but may I tell the hon. Gentleman that that love is reciprocated very widely in this House?

Sir Nicholas Winterton: I am very grateful indeed to the hon. Gentleman-my friend-for that very generous comment.

I wish this House success. I hope that Back Benchers will exercise increasing authority in future. I thank the Speaker, the Deputy Speakers and the staff of the House for the courtesy that they have always extended to me. I wish my successor, whoever that might be, happiness and good fortune, and I bid farewell to this House.

Several hon. Members rose -

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I was overwhelmed by the climactic end to that speech, but it is certainly no disrespect to the hon. Gentleman, whose reputation as a parliamentarian is well recognised, if I mention that if everyone speaks for that long, not everyone will be called. It would therefore be helpful if hon. Members could keep an eye on the clock.

2.47 pm

Kelvin Hopkins (Luton, North) (Lab): May I say what a great pleasure it is to follow the hon. Member for Macclesfield (Sir Nicholas Winterton)? I am deeply sorry that he is standing down. He is far too young and still has far too much energy. He should stay with us for many more years-I hope that I will be here too, but that is another story. Despite coming from a different segment of the political spectrum, I find myself in agreement with him on so many issues, and particularly manufacturing, on which I also speak. He is absolutely right about the importance of manufacturing to the economy. Manufacturing is too small a sector now. We need to keep what we have and expand it for the future, so that we can get a more balanced economy, with manufacturing playing a much larger part in our long-term economic health. I congratulate him on his speech and, in particular, his emphasis on manufacturing. I am sorry that he is choosing to leave us.

However, I do not always agree with the hon. Gentleman on the economy. I support the Chancellor, who was absolutely right to dismiss the Conservatives' demands for immediately making deep public spending cuts, which would simply cause a loss of jobs and hit the pensions and pay of public sector workers, as well as public services themselves. Some public services, on which some of the most vulnerable people in our society depend, are already suffering from the squeeze. This very week I went to a seminar on care. Even now, people are not getting the care that they need or deserve, whether at home or in residential care. I am seriously concerned about that. We need to spend more on care, not less. Children's services could also be seriously affected by the squeeze on public spending by local authorities and, perhaps, the health service. Over the past year or two, we have seen a number of serious failures in children's services, which are not helped by squeezing spending. I want more spent on children's services and social services generally, so that the most vulnerable can get the support and care that they need.
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If we were to go for serious cuts, we would be forced into serious deflation and a depression. In fact, we need to do the opposite to generate growth and employment.

Indeed, some months ago the Conservatives chose a tactic to try to embarrass the Government and to panic them into imposing cuts just before an election. That would have had a serious effect on the economy and, no doubt, led to our suffering at the polls. What has actually happened, however, is that the Conservatives have shot themselves in the foot or scored an own goal, whichever metaphor we care to use.

Stephen Pound: It is difficult to do both.

Kelvin Hopkins: Indeed, it would be difficult to do both at the same time. My hon. Friend is most helpful.

People have now recognised that they would feel threatened by the Conservatives, rather than by ourselves, should they win the election. We have emphasised the importance of sustaining employment, and we have had some success in doing that, but we need to go much further and generate more employment. Generating employment is the solution not only for everyone's quality of life but also for the deficit. The serious cause of the deficit is that our unemployment is too high. If it were to go down and we were to return to full employment, we would get much more back in tax revenues and pay out much less in benefits.

There was a quotation in The Times this morning from Anatole Kaletsky, whom I am sure everyone reads. He said:

He went on to quote the Leader of the Opposition's speech yesterday:

I do not think that the right hon. Gentleman will be the First Lord of the Treasury, but Anatole Kaletsky does. I also think that that prospect would be more than troubling to most ordinary people; it would be quite frightening. The Conservatives have made a big mistake, tactically and politically, as well as threatening to derail our economic recovery.

Anatole Kaletsky also recognises-although I was there before him-that there has been a genuine shift in the Treasury's laissez-faire philosophy towards the more interventionist industry policy advocated by our noble Friend, Lord Mandelson. I very much welcome that change of direction, and I would like to push it much further. Indeed, in the past year, the General Motors plant in Luton, which produces the excellent Vauxhall Vivaro, has been given a secure future through the intervention of the Secretary of State for Business, Innovation and Skills. He has been very helpful in providing financial support to General Motors in Britain, and the plant now has a secure future.

During that time, I have met the Secretary of State twice and put my case to him directly. I have also written to him at length on a number of occasions not
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only to emphasise the importance of preserving excellent manufacturing plant such as the General Motors plant in Luton but to say that manufacturing matters much more than our Government have recognised, unfortunately, until recently. I have told him that we need to rebuild manufacturing, and he has been saying all the right things about that in recent months. I like to think-perhaps I flatter myself-that some of our conversations and correspondence have helped to tip him in that direction. He is concerned about the degree of foreign ownership, for example, and about the balance of trade, and I think that he is right to be so.

Germany has almost religiously defended its manufacturing sector, and it has kept hold of its balance of trade surplus for several decades, much to its advantage. I think that we should follow Germany's example. It is also interesting to note that, when the European Union starts to threaten Germany's strength, it suddenly turns out not to be quite so pro-EU as we thought it was. Indeed, Angela Merkel has suggested this week that if member states cannot hack the rules of the eurozone, they should be expelled from it. Is this the beginning of the end for the eurozone, I wonder?

Perhaps we could get back to much more sensible economic arrangements in which countries manage their own economies and choose their own fiscal and monetary policies and their own exchange rates according to their needs. That would be a much more sensible way of proceeding, rather than ramming together weak and strong economies and hoping that the weak ones will suddenly take on the strength of the strong ones. That does not happen. The best example, of course, is Argentina, which signed up to a fixed rate with respect to the dollar and for 10 years wrecked its economy as the middle classes took all their money out, leaving a wrecked economy behind. Eventually, the country recreated its national currency, separated from the dollar, massively devalued and has spent a long time trying to rebuild the damage done by that stupid mistake. I think the euro has the same problem.

That is almost an aside, but we were sensible to keep outside the euro. I have many times asked Conservative Members to congratulate the Prime Minister on his very sensible decision to keep us out, which has been advantageous. I am sure that they appreciate it, although they will not give him as much fulsome praise as I do-not publicly, anyway.

Clearly, there is a deficit, but focusing on the deficit now is not what we should be doing. We should be focusing on economic growth, as that is what will bring down the deficit. The deficit has two components. The first is cyclical. If we have rapid economic growth, unemployment comes down and that cyclical problem disappears. A structural deficit perhaps remains, if we accept this analysis. In the longer term, when the economy is stronger, we can address that structural deficit. It might mean cutting public spending for some people, but for me it means raising taxes, income or revenues to close the gap.

How do we cut the substantial tax gap? Estimates from a group led by the Public and Commercial Services Union, the Tax Justice Network, War on Want and others suggest that there is tax gap-the gap between what the Treasury should receive and what it actually
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receives-of £120 billion a year, which is a staggering amount of money. The TUC estimates suggest that tax avoidance costs us £25 billion a year, while tax evasion costs us £70 billion a year. The debts owed to Her Majesty's Revenue and Customs, which does not have the resources to collect them, amount to £28 billion.

I attended a meeting in the Palace of Westminster about two weeks ago in which PCS members working in HMRC said that if they had more officers, they could collect more tax. Some 12 years ago, I paid a visit to my local VAT inspectorate office. I must say that I was very impressed as it was doing a good job, but there were not enough people employed there to do the job properly. I was told that every new tax inspector collected five times their own salary in taxes. It seemed to me that it would be logical to have more tax inspectors to collect a lot more tax. When I wrote to the Treasury at that time, I received a fatuous reply, saying that it was trying to reduce costs by cutting staff, but doing that means reducing income by far more than the cost of the staff.

I urge my Front-Bench colleagues even now to think seriously about employing more tax inspectors, perhaps paying them a bit better and raising their morale so that they do a good job and collect more of that £120 billion that we are not collecting at the moment. Even if we collected only a quarter or a fifth of that amount, all our problems would almost disappear overnight and we would have more to spend on the things that I think we should be spending on-free long-term care, much higher state pensions, more investment in transport infrastructure and so forth. We still have serious problems with public transport. London is one of the poorest of the major cities in the world when it comes to public transport, as revealed quite recently when measured internationally.

There is a lot more we could do with this amount of money. Most of this uncollected money is owned by relatively rich people and companies, but they do not spend much of it. Those who have studied economics at a modest level will remember the propensity to consume. Poor people, pensioners and families tend to spend all their money, so it goes straight back into the economy as soon as they get it, which generates demand. Rich people-even Members of Parliament-may not spend all theirs. Very rich people put it in the Cayman Islands or even Belize. When they put it in other places, it does not help our economy. These people have a low propensity to consume. The more we give to the less well-off, the more we generate for the economy.

Stephen Pound: A marginal propensity to consume.

Kelvin Hopkins: A marginal propensity to consume, as my hon. Friend rightly says. A simple redistribution, without changing overall levels of income from rich to poor, helps the economy. I urge my right hon. and hon. Friends to bear that in mind if they want to ensure that the recovery continues on its strong course.


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