|Previous Section||Home Page|
Mr. Mellor : I am grateful for what the hon. Gentleman says. It is a tribute to the people of Wales that once investment has arrived it is so successful. Demanding companies such as the Japanese companies have found the Welsh work force extremely attractive and are investing more and more on the basis of their experience. Wales has attracted that investment by virtue of the skills and application of the people of Wales and the assistance that the Welsh Office and other agencies have given, but the key point is that now that Wales has achieved the most diversified economy that the Principality has ever had, it would be foolish to put that at risk by electing a Government who would fail to retain that international confidence.
Mr. Soames : What words of comfort can my right hon. Friend offer to major corporations that are willing and anxious to make substantial investments in this country but dare not do so at present because of their horror at the possibility, however, unlikely, of the election of a Labour Government? Will he confirm that if and when the Conservatives are re- elected we shall continue with the policies of enterprise and endeavour that have restored the prosperity of this nation?
Mr. Mellor : I am glad to hear a regional voice from the Conservative Benches, too, and I agree with my hon. Friend. The key questions that people ask concern the impact of a minimum wage on British labour costs and the impact of Labour's tax increases on the effectiveness of British management and the ability to work in Britain rather than overseas. Those issues are the key to the maintenance of our position as a receptacle of major international investment.
Mr. Lamont : The United Kingdom proposals for a hard ecu have stimulated debate in the intergovernmental conference on economic and monetary union. A number of other countries have put forward proposals based on similar ideas to harden the ecu. Negotiations in the conference are continuing.
Mr. Michie : As no one now takes the hard ecu proposal seriously-- some think it a joke and others a mere diversion--would it not be wise to drop it and negotiate instead on the more substantive issues?
Mr. Lamont : The hon. Gentleman is talking complete nonsense. On Monday I discussed the hard ecu with the French Finance Minister, who was certainly interested in the idea. Not just France but other countries want to see some form of hardened ecu or a common currency before stage 3, and this whole area of debate was stimulated by our original proposal. I do not know whether the hon. Gentleman claims to be an expert, but he is talking complete nonsense.
Mr. Janman : While I agree with my right hon. Friend's proposals for a hard ecu plan, does he agree that moving to a 2 per cent. band in the ERM would make it more likely that we would have a single currency imposed on us?
Mr. Chris Smith : The Chancellor will be aware that in yesterday's debate on Europe the Financial Secretary and the Foreign Secretary--the same has been true of the Chancellor today--were conspicuously careful to talk about a "hardened" ecu rather than a hard ecu. There is, of course, a world of difference between a tightening of the existing basket calculation for the ecu and the institution of a parallel currency for use throughout the Community. Has there been a shift in Government policy on the issue and, if so, is it true that the hard ecu proposal as it stood before is now where it should have been before--dead in the water?
Mr. Lamont : The hon. Gentleman is also talking nonsense. These are not different ideas that are a world apart--there are various degrees of hardening the ecu along a spectrum. These ideas all have a lot in common and we are not the only country to have expressed an interest in a parallel currency. I assure the hon. Gentleman that the discussions on some variant of the existing basket ecu are continuing and that other countries are interested in them.
Mr. Alton : Does the Minister agree that there has been a massive increase, producing that £51 billion figure, in the last decade and that the Policy Studies Institute is correct to say that about 6 million people in Britain are having great difficulty meeting payments on mortgages or other loans? What steps do the Government propose to take to encourage more responsible borrowing and in particular the establishment of credit unions? Does he accept that our nation of savers has increasingly become a nation of debtors and that many families are now in grave difficulties?
Mr. Maples : There certainly were some substantial increases in consumer borrowing in the mid-1980s, but I am happy to say that in the past 12 months the rate of growth of consumer credit has been under 10 per cent. I think that the hon. Gentleman will take encouragement, as I do, from the fact that the savings ratio has almost doubled from levels of around 5.5 per cent. to nearly 11 per cent. in the last quarter of last year. The problem is largely correcting itself, but we have to leave borrowers and lenders free to make those decisions for themselves and not tell them that they cannot do what they want to do ; they must take into account the risks of incurring certain levels of debt and whether they can afford to service them.
Mr. David Shaw : Can my hon. Friend say whether current levels of consumer debt reflect an increased and improved standard of living in this country since 1979? Can he say what would happen to consumer expenditure if a Govenrment were returned who promised to increase income tax and to spend an extra £35 billion per year in public expenditure?
Mr. Maples : It is certainly clear that as living standards have risen and disposable income has risen--as we heard earlier, it has risen by about £75 per week for a person on average earnings--in the past 10 years, people have felt free to take on more debt. That has undoubtedly enabled them to spread spending over a longer period rather than simply relying on their earnings. My hon. Friend is absolutely right. If they had to pay an extra £20 a week in taxation--to finance that £35 billion worth of extra spending--their living standards and borrowing ability would be severely restricted.
11. Mr. Strang : To ask the Chancellor of the Exchequer if he will revise his estimate of the likely deficit in the current year to take account of the Central Statistical Office's recently published figures of the balance of payments current account for the first quarter of 1991.
Mr. Strang : I put it to the Minister that in the medium to long term we cannot depend on an invisible surplus to offset a visible deficit of £12 billion, which is the Chancellor's estimate for the current year. Among other things, is not the huge gap between our imports and exports a reflection of the extent to which huge swathes of our productive industry have been wiped out by Government policies?
Mr. Maples : I do not think that that is true. For most of this century this country has run a visible deficit, which has been counterbalanced by a surplus on invisibles, and we think that that surplus will continue. I do not agree with the hon. Gentleman. If he studies the performance of manufacturing exports, and exports in general, he will find that what he is saying is not true. Exports have been rising faster than imports for three years. He may find it interesting to know that during the last Labour Government manufacturing exports grew at an average of 2 per cent. per year while under the present Government they have grown at an average of 4 per cent. per year.
Sir Peter Tapsell : Is it not a fact that there have been a number of examples in the past when the original figures for the balance of payments and for invisible earnings subsequently proved less good than the reality? Is anything being done to avoid those unnecessarily pessimistic statements in the first instance?
Mr. Maples : My hon. Friend makes an extremely good point. First estimates of invisibles are liable to substantial revision and in the past few years have nearly always been revised upwards. The initial monthly projection is based on very little information and it is unwise to pay any attention to it. We are taking considerable steps to try to improve early estimates of invisibles, which are published quarterly. When my right hon. Friend the Prime Minister was Chancellor, he introduced a programme of reforms which are being put into place by the Central Statistical Office and we believe that they will soon start to show some improvement. Nevertheless, it is extremely difficult to measure.
Mr. Smith : Given that the Government's first, second and third priorities are supposed to be tackling inflation but our inflation is above the European average and, what is more important, almost twice the average of other exchange rate mechanism countries, what hope do the Government have of tackling unemployment and restoring manufacturing industry?
Mr. Lamont : The hon. Gentleman might have acknowledged that in the lifetime of this Government the average inflation differential between this country and the EEC has been under half of 1 per cent. whereas during the lifetime of the last Labour Government it was about 4 per cent. We have got inflation down to levels far below those ever achieved by the last Labour Government, or which would ever be achieved by Labour in office.
Mr. John Browne : Does my right hon. Friend agree that most people praise the Government for reducing inflation, but that it means that real interest rates are rising in the face of a deep recession? What prospects can my right hon. Friend offer us of reducing real interest rates in those circumstances while Britain remains a member of the exchange rate mechanism?
Mr. Madel : Will my hon. Friend consider an anomaly in the White Paper on further education which states that, once its provisions are made law, colleges of further education will no longer be able to recover value added tax on the education that they provide? At present, local education authorities and colleges of further education can recover VAT under section 20 of the Value Added Tax Act 1983. Should not that continue, as both types of institution are providing similar courses of study to people of similar ages?
Mrs. Shephard : That question is probably one for my right hon. Friend the Secretary of State for Education and Science. However, in the recent White Paper, "Education and Training for the 21st Century", the Government acknowledge that removing further education in sixth-form colleges from the control of local authorities would have implications for the colleges' ability to recover VAT. The White Paper also suggested that that factor would be taken into account when setting the total funding for the new sector.
The Prime Minister (Mr. John Major) : This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today. This evening I shall depart for Luxembourg for the European Council meeting tomorrow.
Sir Michael Neubert : Does my right hon. Friend agree that a vast expansion of the Common Market regional fund would do little or nothing to bring about a convergence of the European economies, but would merely make the poorer parts of the Community dependent on hand-outs from Brussels? Is he able to say how much such a proposal, which is supported by the Labour party, would cost the average British family?
The Prime Minister : I am not able to give my hon. Friend a costing on that, because it would depend on the scale of the funds transferred from north to south, but I can confirm that expanding regional funds would certainly involve increased taxation in this country and in a number of other northern countries. The only credible way to bring about economic convergence is control of inflation and the right economic policies.
Column 1131Mr. Kinnock : In view of the fact that the Bundesbank decided today not to raise German interest rates, does the Prime Minister agree that now is the time to cut British interest rates?
"we will not be using interest rates for controlling demand." Mr. Kinnock : The Prime Minister should try to answer a very basic question--especially since every responsible organisation and person concerned with the fate of British industry and British home buyers is calling for a reduction in interest rates. Did the Prime Minister read the reports published earlier this week from Shelter and the Council of Mortgage Lenders, stating that repossessions are at a record high, that hundreds of thousands of families are in deep mortgage arrears and that, in the words of the council's director, "Worse is yet to come"?
The Prime Minister's policies are hitting every class of people and every corner of the country--[ Hon. Members :-- "Speech."] Yes--on behalf of every mortgage payer in Britain. How can the Prime Minister justify continuing with policies that punish the British people for the failure of his own policy?
The Prime Minister : The right hon. Gentleman neglected to mention that, because we have succeeded in reducing inflation and have moved prudently, we have been able to cut interest rates five times, by a total of 3.5 per cent., without risking an inflationary devaluation in the exchange rate mechanism. That has meant about £50 a month off the average mortgage for mortgage holders.
Mr. Kinnock : Unemployment is rising, firms are closing and the recovery about which we have heard so much is now going to take longer and be much slower than anything the Prime Minister has promised. How many more homes and how many more enterprises must be lost before the right hon. Gentleman stops pushing the country further into a slump?
The Prime Minister : The right hon. Gentleman should return to the real world and recognise the commitments that he made when he committed himself to the fact that the exchange rate mechanism was the right policy. On the one hand, the right hon. Gentleman wants to say that it is right to have exchange rate stability, but on the other he makes the inconsistent claim that he wishes to reduce interest rates whenever he finds it convenient to do so.
Mrs. Gorman : When my right hon. Friend goes to speak to the women's Conservative conference later this afternoon will he bear it in mind that its delegates are delighted with the measures that the Government have been taking to improve the lot of women? The steps that we have taken include flexible working hours, more flexible nursery arrangements and better tax arrangements. Will my right hon. Friend the Prime Minister and the Government continue to acknowledge the great
Column 1132contribution that women make to this country, not least by increasing women's representation in the honours list --
The Prime Minister : As my hon. Friend knows, the vast range of policies that we have followed in the past few years clearly shows the importance that we give to the contribution made by women to this country. We shall continue to promote such policies.
Mr. Mitchell : As the Prime Minister struggles to get his deck-chair up in a busy day of deck-chair wrestling, will he think about this week's trade figures, which show a large and increasing deficit? Can he cite any country which, when in the depths of a recession, showed an increasing balance of payments deficit?
The Prime Minister : As the hon. Gentleman should know, first, the trade deficit is on an improving trend and secondly, the underlying export volumes in the quarter to May were at an all-time high--3 per cent. up on the previous quarter and double the rise in import volumes.
Mr. Mans : Does my right hon. Friend agree that it is Conservative policies of competitive tendering, housing action trusts and the abolition of the national dock labour scheme that are coming to the aid of the city of Liverpool and clearing up the mess that successive Labour and Liberal administrations have inflicted on that city?
The Prime Minister : Conservative legislation certainly offers Liverpool a much better deal. What has happened to Liverpool has been because it followed Labour policies for so long--often, I fear, with the assistance of the Liberal party. The effects of that can be seen by everyone in Liverpool and beyond.
Mr. Morley : What hope can the Prime Minister give to constituents who work for as little as £1.70 per hour? Why is it that under the Government boardroom fat cats like the chairman of Wessex Water have had their salaries increased from £47,000 to £100,000 per year while the charges for consumers have increased by 28 per cent? Is Majorism simply extortion by the few and exploitation of the many?
The Prime Minister : A few days ago I made perfectly clear my opinions of people who provide themselves with undesirably large increases. As for people on very low incomes, a minimum wage would leave them with no income but unemployment.
Mr. Peter Griffiths : Has my right hon. Friend had time today to note the report in the press of a Nottinghamshire miner who earned £35,000 last year, being among the one in three in that area who earned more than £20,000 last year, much to the credit of the miners, their union and their work rate? What would be the effect on that miner's take-home pay if the Labour party's spending plans were put into practice?
The Prime Minister : I am certainly aware of the very high earnings of many Nottinghamshire miners, which I welcome. Much of that is the result of increased productivity, and it is well earned. It is unfortunate that those miners would face extra taxation as a result of their hard work and success if the Opposition's tax policies were ever put into operation.
Mr. Fatchett : Further to the Prime Minister's reply to my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley), may I ask the right hon. Gentleman whether he has seen the report in today's issue of The Daily Telegraph that John Baker, the chief executive of National Power, has enjoyed an increase of £115,000 since 1 April, which is an 85 per cent. increase in his salary? The Prime Minister has condemned such increases. Will he use the powers in the Government's prospectus for the sale of National Power and PowerGen, or is the right hon. Gentleman yet again all talk and no action?
The Prime Minister : The hon. Gentleman should read the prospectus more carefully. It makes it perfectly clear that we have given an undertaking not to interfere in the commercial decisions of a company. It is interesting to note that the hon. Gentleman thinks it a light matter to break the contract into which we have entered.
Mr. Coombs : Will my right hon. Friend confirm that it is widely accepted that minimum wage legislation would destroy upwards of 1 million jobs? Will he also confirm that such minimum wage legislation would have an impact upon the weakest in society--the disabled, the unskilled and the young, precisely those sectors of society which Labour professes to champion but which it is now so cynically betraying?
The Prime Minister : I entirely agree with my hon. Friend, and I think that the vast majority of people also agree with him. The latest staging post for the Opposition's stance on this matter was set out rather hilariously in a letter this morning from the hon. Member for Sedgefield (Mr. Blair), who said :
Column 1134"I have not accepted that the minimum wage will cost jobs ... I have simply accepted that econometric models indicate a potential jobs impact".
Those words would make a weasel blush.
Mr. Wigley : Is the Prime Minister aware of the dismay in Wales last week when the Government published their Green Paper on the future structures of government? That dismay arose because there was nothing in the Green Paper about the all-Wales level of democracy, despite the fact that the Assembly of Welsh Counties, the Association of Welsh Districts and every political party in Wales except the Conservatives support that, and that three of the six Welsh Conservative Members also support such a policy. Will the Prime Minister look at this again to try to get some all- Wales democracy?
The Prime Minister : I am interested in what the hon. Gentleman says. As he knows, our policy has not been to go in the direction that he proposes. I shall examine and discuss the matter with my right hon. Friend the Secretary of State for Wales, but it is unlikely that we shall change our present posture.
Mr. Bottomley : Will my right hon. Friend turn his mind to the fate of 12-year-old Maria and 10-year-old Anna Gordievsky? Will he continue to take every opportunity to make plain to the President of the USSR, to visiting Russian Members of Parliament and to the world's press that one of the ways in which we shall judge the new USSR is whether the KGB will let those two young children come to Britain to join their father?
The Prime Minister : I assure my hon. Friend that I have personally taken this matter up with President Gorbachev in the past. I shall do so again when next we meet, and the matter is frequently raised by my right hon. Friend the Foreign Secretary with his counterpart and at official level with the Soviet authorities.
Mr. McMaster : Is the Prime Minister aware that in a recent answer to a parliamentary question, the Under-Secretary of State for Scotland with responsibilities for industry, the hon. Member for Eastwood (Mr. Stewart), revealed that 76 per cent. of manufacturing jobs in the Paisley postcode area had been lost between 1979 and 1989? He will be aware that things have become far worse since. Does he agree that that is an unacceptable level of economic and social disaster, or does he agree with the Chancellor of the Exchequer that it is a price well worth paying?
The Prime Minister : All levels of unemployment are a matter for distress and regret. The only way to ensure that we create jobs that are permanent and are sustained is to have the right economic policies to get inflation down, and to keep it down. There is no other way of ensuring job security for the future. It may sometimes be difficult and uncomfortable, but it is the right policy, and it is the policy to which we shall stick.
Column 1135The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.
Mr. Cash : Does my right hon. Friend accept that he will go to the summit tomorrow with the good wishes and goodwill of all Conservative Members? Given the clearly expressed views of the House yesterday and his own views against the federal super-state, does he agree that the Opposition abdicated their national duty by dividing the House on the matter yesterday?
The Prime Minister : I am always grateful to have my hon. Friend's support on these matters. I agree about the irrelevance and irresponsibility of the position that Opposition Front-Bench spokesmen took yesterday. It was adequately described in many national newspapers this morning.
|Next Section (Debates)