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Personal Statement

Madam Speaker : We now have a personal statement. I remind the House that a resignation statement is heard in silence and without interruption.

3.31 pm

Mr. Norman Lamont (Kingston upon Thames) : This is not an easy statement for me to make today, but I am sure that the House will understand that and that I can rely on the traditional tolerance and generosity of hon. Members.

To give up being Chancellor of the Exchequer in the circumstances in which I did is bound to be an uncomfortable experience, but I have also been a Treasury Minister for almost seven years, a longer continuous period than anyone else this century. Indeed, I have been the only person ever to have held the three offices of Financial Secretary, Chief Secretary and Chancellor of the Exchequer. I should like to pay tribute to the officials with whom I worked all those years. In my opinion, they are equal to the best in the world, and I am astonished how, when things go wrong, often it is the civil servants who are blamed when it is we politicians who make the decisions and it is we politicians who should carry the blame. When the Prime Minister told me two weeks ago that he wished to make changes in his Government, I of course told him that I appreciated that he had a very difficult task. He generously offered me another position in his Cabinet, but, in my opinion, it would not have been right either for him or for myself if I had accepted. If he wished to change his Chancellor, it was surely right that I should leave the Cabinet. Perhaps I can make it clear that I wish the Prime Minister well and hope that his changes will produce whatever advantage for him and the Government he intended.

It has not been easy being Chancellor of the Exchequer in this recession, continually and wrongly described as the longest and deepest since the war or, even more inaccurately, since the 1930s. It is certainly not the deepest recession since the war and, when the figures are finally revised, it may turn out not even to have been the longest. But it is a recession which has affected many areas which have not experienced such severe recession before ; and that was bound to have an adverse effect on the fortunes and popularity of the Government.

This recession was not caused by Britain's membership of the exchange mechanism. The recession began before we joined the ERM--and, incidentally, before I became Chancellor--and a large part of the fall in output occurred in late 1990 and early 1991, far too soon to be influenced by our membership of the ERM. No, this recession has its origins in the boom of 1988 and 1989. That boom made the recession inevitable.

But the recession is now behind us, and so I am able with confidence to wish every success to my right hon. and learned Friend the new Chancellor. He inherits, I believe, a fundamentally strong position. As Mr. Lloyd Bentsen, the United States Treasury Secretary, said in a generous letter to me last week, Britain is the only European country likely to experience any significant growth this year ; and inflation is at a 30-year low. Since the war only two Conservative Chancellors have been responsible for bringing inflation down to below 2 per cent. Both of them


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were sacked. In my view, that tells us a great deal about the difficulties of reducing inflation in a democracy as lively and disputatious as ours.

I am delighted to hear from the Prime Minister that policy will not alter. My right hon. and learned Friend the Chancellor will understand if I say that he thus comes to the Treasury at a most favourable time. Much of the hard work has been done and he should be able to enjoy increasingly encouraging trends for a long time to come. I am sure that my initiative in bringing the autumn statement and the Budget together into one December Budget is a reform that will last, and I wish my right hon. and learned Friend well with what is a massive task.

I have been privileged to present three Budgets. All three achieved the objectives that I set for them. The first drew the sting of the poll tax ; the second, by introducing the 20p income tax band, helped us to win the election ; the third, unpopular though it undoubtedly was, made a significant step towards reducing our budget deficit. That, as I have frequently observed, is the greatest threat to our long-term position.

Having put up some taxes, it is vital that the Government now turn their attention to public spending. Last year, I set up a new system for controlling public spending. I believe that it gives my right hon. and learned Friend the means to do what is necessary. I am sure that he has the will. We do not want more tax increases. We need tight control of public spending. My right hon. and learned Friend will have my full support if he is robust in tackling that problem. I should now like to say a word about Britain's experience of membership of the exchange rate mechanism. Although many people are either for or against membership of a fixed exchange rate system, there are many others, including, for example, Alan Greenspan, the chairman of the United States Federal Reserve Board, whose views about fixed versus floating exchange rates have never been theological. My views are not theological either. I have always believed that one could run an economy on either a fixed or a floating rate basis, although at times one might be more appropriate than the other.

I tried to persuade my noble Friend Lord Lawson that it was not worth resigning over the ERM in 1988. Although I probably would not have joined in 1989, I did not believe then that a fixed-rate system was doomed to break up. Presumably those who hold that view blame my noble Friend Lady Thatcher for committing us to a policy that was bound to fail. But I do not take that view now, and I did not take it then. When I accepted the office of Chancellor, I accepted the policy, believed that it could be made to work, and did all that I could to make it work. It certainly enabled us to get inflation down dramatically. Indeed, without the ERM, I doubt whether the Government would have had the courage and determination to get inflation down ; that is a point to which I shall return.

The reason why our policy on the ERM ultimately broke down was that German policy developed in a way which, in my view, was mistaken and which was not anticipated--not least when German interest rates were put up last year. As members of the ERM, we were forced to respond in a way that meant that our own policy became increasingly over-tight. I became increasingly concerned last summer that our policy was too restrictive and that our membership of the ERM was impeding recovery.


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I raised with the Prime Minister the idea that we might suspend our membership temporarily at some future date if recovery were being prevented. He made it clear that he did not want to do that. Probably he was right. I accepted it. In any case, it would not have made any difference. We were talking about the distant future and we would have been overtaken by the same events in September that ultimately hit us. But I would not want the country to believe that these matters were never under consideration or that we were not aware of what was happening in the economy outside.

That perhaps explains why I did not do one thing that some have argued and urged might have enabled us to remain within the exchange rate mechanism-- to put up interest rates in the summer of 1992. Because of the position of the domestic economy, I did not believe that that was an option. Furthermore, I did not believe that it would have been credible, and I am sure that I was right.

People have frequently asked me why we did not devalue within the system. I did not devalue because it would have meant higher interest rates at a time when we needed lower interest rates. One solution might have been a revaluation of the mark against all other currencies in the ERM, thus making room for lower German interest rates. I was not opposed to that, but, unfortunately, my friend and colleague, the late Pierre Beregovoy, the French Finance Minister was, despite my efforts at persuasion, implacably opposed to such a move.

I do not believe that any question of rejoining the ERM should remotely be on the agenda during this Parliament. Fortunately, my right hon. and learned Friend the Chancellor has already announced his policy. I am only thankful that, despite the residual doubts of some of my colleagues, I insisted on getting my own way and on keeping the ERM out of Maastricht as a treaty obligation. I need hardly remind the House how difficult our position would be today if the Maastricht treaty obliged us to rejoin the ERM.

Some argue that the credibility of the Government was destroyed on 16 September. But once I had reconstructed our policy, that was not the view of the markets, or of the stock exchange, which touched an all-time high not so long ago, or of the foreign exchange markets, where the pound's recovery has been strong enough to worry some business men--nor was it supported by that crucial indicator, long bond yields, which are lower than for some time and lower today than in September.

Markets and business men are cynical. They know that, in a fixed exchange rate system, there are certain things that Finance Ministers have to say. Credibility and confidence depend not on words but on objective conditions. I am glad to say that those objective conditions today are better than they have been for many years. On the crucial question of credibility, I want to take this opportunity to give my right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor some advice. Nothing would be more effective in establishing the Government's credibility than if my right hon. Friend would have the courage to establish an independent central bank in this country. The time has come to make the Bank of England independent. It is my greatest regret that, after two and a half years of trying, I failed to persuade the Prime Minister of this essential reform.

Now that we are outside the ERM, the need is even more urgent. Britain is one of the few countries where


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monetary policy remains firmly in political hands, and the pressures on politicians to take policy decisions for political reasons can be quite irresistable. With an independent bank, we could have lower interest rates for a given exchange rate. Policy would be more credible and it would give us the necessary discipline for keeping inflation down on a permanent basis.

While my right hon. Friend the Prime Minister and I have been in general agreement on interest rate policy, I do not believe that even the timing of interest rate changes should ever be affected by political considerations. Interest rate changes should never be used to offset some unfavourable political event. To do so undermines the credibility of policy and the credibility of the Chancellor. When my resignation was announced 10 days ago, the reaction of many was that it was a delayed resignation, a resignation that should have happened on 16 September. On that day, and during the subsequent days, I did of course consider my position carefully with friends and colleagues. I was anxious to do what was right for the country and for the Government. Sir Stafford Cripps, who is rightly regarded as an honourable man, did not resign after devaluing the pound. On the other hand, Lord Callaghan, also an honourable man, did.

There are three principal reasons why I decided to stay in office. First, the events of last September were very different from those of 1967. They affected not just this country, but most of Europe. The Finance Ministers of no fewer than nine countries were forced to eat their words and either devalue or float. Five floated ; four devalued ; one both devalued and floated. In none did the Finance Minister resign or, to the best of my knowledge, come under any pressure to resign. Indeed, in one country the governor of the central bank was actually promoted : he became Prime Minister.

Secondly, membership of the exchange rate mechanism was the policy of the whole Government ; and as the Prime Minister said, I was implementing Government policy. Our entry was not a decision in which I myself played any part. It was, however, a decision made after a whole decade of fierce public and private argument--a decision made by the previous Prime Minister, the present Prime Minister and the present Foreign Secretary.

Thirdly, I did not resign because that was not what the Prime Minister wanted. When the Prime Minister reappointed me after the general election, I told him two things : first, that I did not wish to remain Chancellor for very long ; and, secondly, that he did not owe me any debt or any obligation. On 16 September he made it clear to me in writing that he had no intention of resigning himself, and that I should not do so either.

Of course, I discussed the question further with the Prime Minister subsequently. In all those discussions he emphasised that he regarded the attacks on me as coded attacks on himself, so I decided that my duty and loyalty was to the Prime Minister and that I should remain in office.

Two and a half years ago, I did play some part in helping the Prime Minister into the position that he occupies today. I have always believed, and still believe, that in supporting him then I made the right choice, and I now wish to say one thing to him ; it goes to the heart of the way in which the Government conduct themselves. There is something wrong with the way in which we make our decisions. The Government listen too much to the pollsters and the party managers. The trouble is that


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they are not even very good at politics, and they are entering too much into policy decisions. As a result, there is too much short-termism, too much reacting to events, and not enough shaping of events. We give the impression of being in office but not in power. Far too many important decisions are made for 36 hours' publicity. Yes, we are politicians as well as policy-makers ; but we are also the trustees of the nation. I believe that in politics one should decide what is right and then decide the presentation, not the other way round. Unless this approach is changed, the Government will not survive, and will not deserve to survive.

It is a great change to return to the Back Benches after 14 years in government, Madam Speaker, but I have always been proud to be a Member of this House and not just a Minister. Today, when I walked through Westminster Hall and up the stairs into the Lobby, I felt exactly the same pride and excitement as when I first entered this House 21 years ago. I look forward with anticipation to the great parliamentary events and battles that lie ahead.

Madam Speaker : The ten-minute rule motion is not to be moved. We now come to the main motion of the day on the conduct of Government economic and social policy.

Mrs. Ann Winterton (Congleton) : On a point of order, Madam Speaker. Is it in order for the hon. Member for Ealing, Southall (Mr. Khabra) not to move his Bill when there are so many right hon. and hon. Members present who wish to demonstrate the overwhelming opposition of the House to any attempt to legalise euthanasia?

Madam Speaker : It is perfectly in order. The hon. Gentleman does not wish to move his motion. It is not a Bill ; it is a motion. If he does not wish to move the motion, he is entitled not to do so.

Mr. Harry Greenway (Ealing, North) : On a point of order, Madam Speaker. It has come to my notice that the hon. Member for Ealing, Southall (Mr.Khabra) may seek to move his private Member's Bill from behind the Chair tomorrow. Would that be an abuse of the House or would it be acceptable?

Madam Speaker : It is not an abuse of the House--quite the contrary. A number of hon. Members in recent times have done precisely the same.


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Pit Closures

3.51 pm

Mr. Mark Fisher (Stoke-on-Trent, Central) : On a point of order, Madam Speaker. I ask for your help in protecting the rights and responsibilities of hon. Members. As you know, the miners who were made redundant in pits last week have been declared voluntarily redundant, and that means that they do not have mortgage protection insurance which they would have if they were made compulsorily redundant.

On behalf of myself and other Members of Parliament representing pits that were closed, I sought to take up this matter with the chairman of British Coal. He declined to meet us. One of his senior executives said, in a personal capacity, that the reason for that spiteful and vindictive move by British Coal, threatening the homes as well as the jobs of those miners, was "political"--his word. That means that the only way in which hon. Members can pursue the matter is through the House.

Would it not be right for the President of the Board of Trade to explain to the House why the Government made that vindictive move--exactly the sort of short-term move that the former Chancellor of the Exchequer has been talking about--bringing huge discredit on the Government and great fear and insecurity to men who, through no fault of their own, are losing their jobs and are now threatened with losing their homes as well?

Madam Speaker : The hon. Gentleman has already raised this matter with me through points of order on two previous occasions this week. As he knows, the matter is not in my hands. I have not been informed that any Minister wishes to make a statement to the House.


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Orders of the Day

OPPOSITION DAY

[13th Allotted Day]

Government Economic and Social Policy

Madam Speaker : I inform the House that I have selected the amendment standing in the name of the Prime Minister.

3.52 pm

Mr. John Smith (Monklands, East) : I beg to move,

That this House condemns the Prime Minister's betrayal of election promises and commitments on economic and social policy ; deplores the Government's intention to make the users of public services pay the price of Conservative economic and financial mismanagement ; further deplores the failure to make changes in policies towards unemployment, industry and the skills revolution ; and calls for new policies in these areas to strengthen British industry and the British economy, to end mass unemployment and to improve public services.

Before we embark on our debate, right hon. and hon. Members will have in their minds the statement that has just been made by the ex-Chancellor of the Exchequer. I had the opportunity to cross swords with him many times when he held the illustrious office from which he has so recently departed, and I commend him for the dignity of his statement. It was, if I may say so, as effective a speech as any he made when he was in office.

The right hon. Gentleman was wise to be wary in his endorsement of the Government's policies. What will no doubt be remembered by most of those who listened to his statement today was the revealing insight into the style and purposes of the Government from which he has so recently departed.

I must confess that it flicked across my mind when I was listening to the right hon. Gentleman that there might have been the odd political influence affecting him at the time of the 1992 Budget, especially if it is compared with the 1993 Budget--but let that pass. He was no doubt, as he constantly reminded us, acting on orders. The orders no doubt came from the pollsters and other people who appear to have such great influence on the Conservative party's policies. People will remember for some time his reference to being in office, but not in power.

When we think about the general election, we remember vividly that the Prime Minister and his colleagues made clear and specific promises to the electorate. It is reasonable to suppose that they were returned to power because people believed their promises. We now know how very few would vote for the right hon. Gentleman and his colleagues if there was an election today. There are reasons why the right hon. Gentleman has the lowest rating of any Prime Minister since polls began. The first and most important is that the right hon. Gentleman and his colleagues have cynically betrayed their pledges to the British people.

We heard a great deal about tax from the Tories at the general election. The Prime Minister promised tax cuts year on year. There were frequent promises of lower taxes from the Prime Minister, from the ex-Chancellor and from the present Chief Secretary to the Treasury. I do not know whether they meant them or whether they were told by the


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pollsters to say them, but they certainly said them. On 31 March, only 10 days before polling day, the right hon. Member for Kingston upon Thames (Mr. Lamont) said on Channel 4 news :

"We will not have to increase taxes. I cannot see any circumstances in which that will be necessary."

There were pledges on specific taxes as well. At an election press conference on 27 March, just a few days before polling day, the Prime Minister said :

"We have no plans and no need to extend the scope of VAT." We know how sincere all that was. In this year's Budget, those promises were spectacularly overturned and those pledges were shamefully betrayed.

I need not remind a suffering public that, from next April, VAT will be imposed on household heating bills at 8 per cent. In the following year, it will be hiked to 17.5 per cent. Tax increases in that Budget amounted to a staggering £17.5 billion. So it is not tax cuts year on year ; it is tax increases year on year.

What a shocking betrayal of the people. Millions of families will have to find those billions of pounds from their household budgets. I very much doubt whether those at the bottom of the scale--those on income support-- will have their benefit properly increased to meet the full extra costs that they have to bear. I know even more clearly that there will be no relief for the millions of families and pensioners who are just above income support level. The stark truth is that every family in the land will have to foot the cost of this Government's perfidy.

Mr. Alan Howarth (Stratford-on-Avon) : The right hon. and learned Gentleman referred to cynicism, and talked about style and purpose. It would be helpful to the House if he could comment on this. He has made it clear that a Labour Government would not reduce public spending. Indeed, his party is committed to policies that would increase public spending. At the same time, the shadow Chancellor has said that a Labour Government would not increase taxes. Will the right hon. and learned Gentleman therefore explain to the House how the Labour party, if it were in government, would pay for its policies? Mr. Smith : The hon. Gentleman brings to our attention the parlous state of our public finances. What we need to do above all is to deal with public finances, bring down unemployment and get back on course for economic growth-- [Interruption.]

Madam Speaker : Order. Hon. Members on both sides of the House must settle down-- [Interruption.] Let us have order below the Gangway. I call Mr. Smith.

Mr. Smith : The hon. Member for Stratford-on-Avon (Mr. Howarth) knows perfectly well that the main reason why we have such a high public sector borrowing requirement is the cost of unemployment, which is the result of Government policies. It does not matter whether it is the fault of the right hon. Member for Kingston upon Thames (Mr. Lamont) or the Prime Minister, as the right hon. Member implied : the fault lies with the Conservative party.

Mr. John Townend (Bridlington) : Does the right hon. and learned Gentleman really think that a deficit of £50 billion this year can be brought down by the reduction in unemployment that 2.5 or 3 per cent. growth would create? If he is opposed to public spending cuts, why does he not


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admit that the only alternative would be massive increases in taxation? His arguments today have justified the Government's public spending policy.

Mr. Smith : If that is so obvious, why did the Prime Minister say during the election campaign--when he knew the exact state of our public finances--that there was no need for increases in taxation? He said that there would be tax cuts and no cuts in public expenditure, which would be maintained. Of course, there is an explanation for that, to which I shall return. We were not told the full truth about our public finances at the last general election.

I shall now return to the promises made by the Conservative party. Incidentally, I hear that the Chancellor--the new Chancellor of the Exchequer--has been entertaining the Press Gallery at a lunch today, saying that it does not matter what one says during an election campaign : what matters is what is contained in the manifesto. His theory seemed to be that one could say whatever one liked during the campaign--if it was not in the manifesto, it did not matter. I hope that that will be repudiated.

The Chancellor of the Exchequer (Mr. Kenneth Clarke) : I did not say that.

Mr. Smith : I am glad that the right hon. and learned Gentleman says that. I think that there are plenty of people who attended the Press Gallery lunch who are now in a good position to report it. I am glad that we have achieved some degree of agreement--that someone is responsible for what he says during an election campaign. On 28 January 1992, not long before the campaign, the Prime Minister told the House :

"I have no plans to raise the top rate of tax or the level of national insurance contributions."--[ Official Report, 28 January 1992 ; Vol. 202, c. 808.]

To be fair to the Prime Minister, he has kept one half of the promise--the half that applies to those at the top of the income scale.

How can the pledge that the Prime Minister made in the House possibly be squared with the increase of 1 per cent. in national insurance contributions that is to be imposed on every wage and salary earner in this country? What is the difference between 1 per cent. extra national insurance and another 1p on income tax? There is a difference, but a difference that adversely affects the lower-paid. Both policies are clearly taxes on income, but national insurance hits the lower-paid harder as it starts lower down the income scale than income tax and there are no allowances to be set against its liability.

What did Mr. Chris Patten--now Governor of Hong Kong, then chairman of the Conservative party--tell us about national insurance on 23 March 1992, during the election campaign? He said at a press conference :

"Raising national insurance contributions would be a back-door stealth tax."

We now know what the stealth was. It is the oldest trick in Tory politics to promise one thing and do another. That trick did not arrive with the pollsters during the past year or two ; it has a much longer and more distinguished ancestry than that.

The Conservatives did not tell us in the election campaign that, in their first post-election Budget, they would freeze all personal allowances and bring 300,000 of


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the lower-paid into the income tax net. There we have it : national insurance increases, soaring VAT and a freeze on personal allowances--not quite the double whammy that we kept hearing about from the Governor of Hong Kong. It turned out to be the Tories' triple whammy, perpetrated on the British taxpayer.

Now we see clearly what the Tory tax strategy is, as we can review the Tories' long period in office. During the 1980s, when they were flush with cash from North sea oil, the biggest and best handouts went to the rich. When the Government have come unstuck in the 1990s, it is the lower-paid and ordinary taxpayers who pay the price of their incompetence. It is like the old Victorian value : "It's the rich wot gets the pleasure, it's the poor wot gets the pain." It is not only on tax that the Government have broken their word. Let us look at their pledges on public spending. Time and again, we were told during the election campaign that the Red Book set out the detailed plans of the Government's expenditure programme, and that it was based on sound public finances. The Government vehemently and continually denied that there would be any post-election cuts in public expenditure, a subject drawn to the public's attention occasionally by some of my percipient colleagues. The Prime Minister told us on 30 March, only 10 days before polling day, at a major election press conference :

"If we were going to cut public expenditure, we would have done it before and I don't believe it is economically right. I have said that in the past, and there is no need to do it whatsoever. So you can rule out any prospect of that."

Those words could not be much clearer : any prospect of public expenditure cuts emphatically ruled out--before the election. We now know what a false prospectus that was, and I hope that everyone, especially those conned into voting Tory last year, will keep that clearly in mind as cuts in public service unfold in the months ahead. We also know that the Prime Minister and his colleagues, especially the former Chancellor, massaged the public borrowing figures downwards in the 1992 Red Book.

The Financial Times ofr borrowing requirement in the five years to 1996-97, to pull them down if possible to zero by the end of the period. Despite-- probably--valiant efforts inside the Treasury, its officials did not quite make it to zero, but they got the figure down to £6 billion at the end of the period. This was the projection for the PSBR before the election.

After the election, the £6 billion mysteriously jumped to £35 billion in the 1993 PSBR projection. The Government were correctly condemned by the Treasury and Civil Service Select Committee for what it called the former Chancellor's

"cavalier approach to massaging or falsifying statistics for political reasons."

Even the deputy editor of The Spectator --I do not think that he can be accused of left-wing scaremongering, which is the major objection to the Labour party at the moment--felt obliged to comment on the 1992 Budget in his issue of 20 March this year, as follows : "The Budget executed a great deceit on the electorate. Since the election campaign of a year ago, honest dealing by the Tories has been rare. The first 1993 Budget provided evidence of the cynicism behind the smirks and mock sincerity on the faces of the First and Second Lords of the Treasury."


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What is the consequence for the nation of all this? It has been signalled clearly enough, especially by the Chief Secretary to the Treasury. Public expenditure cuts are now being secretly planned ; not only will they totally overturn all the solemn assurances given by the Prime Minister before the election, but they will gravely undermine the crucial public services which are vital to the security and well-being of millions of our fellow citizens.

Will the axe fall on pensioners entitled to exemptions from prescription charges, which are now at a record £4.25 an item? [Interruption.] That may be amusing for Conservative Members, but it is not for millions of people who are gravely worried that it might occur.

Will it be hotel charges of £30 a night for overnight stays in hospital? Will it be a payment for visits to GPs or, as predicted in The Guardian of 5 June, will there be savage cuts-- [Interruption.] I do not always support The Guardian or agree with everything it says--it would be surprising if I did, given what it sometimes says--but it was right to refer to the internal memorandum from the Department of Social Security, which talked precisely about cuts in invalidity benefits. There will possibly be cuts in housing benefit and in invalidity and sickness benefits.

Mr. Tim Smith (Beaconsfield) rose --

Mr. John Smith : Perhaps the hon. Gentleman can clear up the matter.

Mr. Tim Smith : The Leader of the Opposition is indulging in the most disgraceful and irresponsible speech, and he knows it. He is frightening the most vulnerable people in our society. Is he aware that, as long as he fails to answer the questions that were put to him about the public sector borrowing requirement, the people of this country will conclude that he does not have the guts to tackle the most difficult economic question facing this country and that he is not fit to be Leader of the Opposition, let alone Prime Minister?

Mr. John Smith : Every time we refer to the Government's likely cuts, we are told that we are scaremongering. That allegation appears in the amendment to the Opposition motion. No doubt it has been drawn to the hon. Gentleman's attention that he might make that point during the debate. He has done it.

The hon. Gentleman used to be connected with a Conservative party organisation and, on the issue of scaremongering, I should like to draw his attention to a document with which he may be familiar--the Conservative campaign guide for 1992. I have been able to obtain one of the few remaining copies that has escaped the central office shredder. I am glad to have it, and I can make it available to hon. Members who want to consult it.

No doubt that guide was used by Conservative Members during the campaign. Page 12 states that there will be no increases in VAT. The material part states :

"Following a series of unfounded and irresponsible scares from the Labour Party, the Prime Minister "--

the words "Prime Minister" are in bold letters, so at least he is given status in the campaign guide--

"has confirmed that the Government has no intention of raising VAT further."

The document also refers to a statement in the House, and says : "There will be no VAT increase. Unlike the Labour Party, we have published our spending plans and there is no need to raise VAT to meet them."


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For good measure, the document quotes the right hon. and learned Member for Putney (Mr. Mellor), who, as Chief Secretary to the Treasury, said that the Government had no intention of widening the scope of VAT. Was it fair comment that the Labour party was scaremongering at the time of the last election?

Mr. David Shaw (Dover) : Will the right hon. and learned Gentleman give way?

Mr. Smith : No. I am dealing with the last intervention. I thought that Conservative Members might think that this was scaremongering. That nasty Labour party was once again maliciously misinterpreting the honest and decent intentions of these credible and straightforward Ministers. The public know exactly what happened when the Conservatives were returned to office, and they will not be fooled so easily again. VAT went up by 8 per cent., to 17.5 per cent., affecting every family in the land. Gosh, weren't we irresponsible to allege that? Weren't we wicked to make such scurrilous accusations against such honest and decent people?

Let me tell the Prime Minister that what scares the country is not what Labour predicts, because we are quite accurate in our predictions, but what the Government are capable of doing. The Government are prepared to promise anything to get elected and then to betray each and every promise afterwards.

Although the betrayal of election pledges is bitterly resented throughout the country, it is only one of the reasons for the contempt in which the Government are held. Since the general election, we have seen one catastrophe piled on another. Not even the most inventive or ruthless scaremongering among my hon. Friends would have had the audacity to allege that any Government could be so consistently incompetent, so hopelessly accident-prone and so foolishly inept.

I select but a few of the Prime Minister's recent triumphs : the billions of pounds lost in the panic and fiasco of black Wednesday ; the grievous damage to our energy resources which the disastrous pit closure programme has inflected upon the country ; the shady double dealing in the Matrix Churchill affair ; the hopelessly bungled scandal of the education tests ; and the disaster waiting to happen in the privatisation of our railways.

In response to the plummeting popularity of the Administration itself, revealed at Newbury and in the shire county elections, we have the Prime Minister's botched reshuffle. If we were to offer that tale of events to the BBC light entertainment department as a script for a programme, I think that the producers of "Yes, Minister" would have turned it down as hopelessly over the top. It might have even been too much for "Some Mothers Do 'Ave Them".

The tragedy for us all is that it is really happening--it is fact, not fiction. The man with the non-Midas touch is in charge. It is no wonder that we live in a country where the grand national does not start and hotels fall into the sea.


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