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Westminster Hall

Tuesday 16 May 2000

[Sir Alan Haselhurst in the Chair]

Economic System

Motion made, and Question proposed, That the sitting be now adjourned.--[Mr. Jamieson.]

10 am

Mr. Tony Benn (Chesterfield): On 23 April 1901, Keir Hardie, the then Member for Merthyr Tydfil, moved the following motion:


I want to look back to the roots of socialism, to celebrate what it is about and to see what relevance it may have to today's society. In doing so, I am bound to refer to some of its origins. The Bible has led to many revolutionary ideas--for instance, that we were and are all equal in the sight of God--which is why, in 1401, the House of Commons passed the Heresy Act, which condemned any lay person reading the Bible to be burned at the stake for heresy. The Bible has always been a controversial document. At the time of the peasants' revolt and the English revolution, people started thinking of common ownership, based on the life of the apostles.

Socialism is essentially about the moral values that guide society, about democracy and about internationalism. Its history in England is interesting to me because it goes back deep into the past. In 1832--that may seem a long time ago, but it was only 18 years before my grandfather was born--only 2 per cent. of the population, all rich men, had the vote. The progress associated with socialism since then includes the Rochdale pioneers, who believed in co-operation; Robert Owen, the first man to call himself a socialist; the birth of the trade union movement, when the Combination Acts were repealed; the Chartists, and later the suffragettes, demanding the vote; the demand for representation in Parliament through a Labour representation committee; and, finally, the idea that if people had the vote they would have some democratic control over the economy as well as the political system.

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If one considers the ideology or the basis of those ideas, Adam Smith and Karl Marx had something in common. Adam Smith said that the rich are the pensioners of the poor; that the rich live off the back of the poor. I do not want to shock the Chamber, but Karl Marx--the first philosopher to study British capitalism--identified a marginal difference of economic interests between those who slogged their guts out creating the wealth and those who happened to own it. Both believed in self-organisation.

The programme of socialism is sometimes associated with nationalisation. Nothing could be further from the truth. The first nationalised industry in Britain was the Church of England, which was nationalised by Henry VIII. Next, Charles II nationalised the post. When I was Postmaster General, I wondered why. I found that he wanted to open everyone's letters, and he could do that only by creating the Royal Mail.

In June 1914, Winston Churchill nationalised British Petroleum. He paid £2 million for a commanding majority shareholding because he thought that the oil should be in the hands of the people. The BBC was nationalised by the Conservative party. Imperial Airways was nationalised by the Conservative party. The Army and the police, both of which are nationalised, have no relation with socialism whatever. I hope that Members will put out of their mind the idea that socialism is about running everything from the top.

The idea of socialism is of common ownership and that things are best done by co-operation. The Co-operative movement was based on that principle. Municipal ownership is a form of socialism. I pay tribute to the Liberal party, which, in the 19th century--when Joseph Chamberlain ran Birmingham--introduced the municipal ownership of housing, gas, electricity, transport, opera, art galleries and airports. I learned to fly at the municipal airport in Birmingham.

The idea evolved that poor people, who could not afford by their own wealth to acquire the things that they needed--education, health, housing and transport--could buy them with their votes. The welfare state was the final development of this idea. In fairness to Lloyd George, the Budget that he introduced as Liberal Chancellor of Exchequer laid the foundations of the pension system.

Although socialism is widely held by the establishment to be outdated, the things that are most popular in British society today are little pockets of socialism, where areas of life have been excluded from the crude operation of market forces and are protected for the benefit of the community.

One of the great impetuses in the post-war years for the advance towards the welfare state--with its socialist inspiration--was the argument, which I remember well because I made it myself, that if the nation could plan for war, it could plan for peace. We had full employment during the war. If we could plan to have full employment to kill people, why could we not plan to have full employment in peacetime, and so be able to build the houses and provide all the nurses and teachers that we needed? This idea was strongly entrenched and was in some ways non-controversial.

What might be called caring conservatism--I use the phrase in a general spirit--was the idea in the minds of Winston Churchill and, before him, Harold Macmillan

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in the 1930s with his book "The Middle Way". The idea was carried on by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). The right hon. Gentleman's powerful words, the


If one looks at the people who have described themselves as socialists in the last century, one finds two different types. I have mentioned what we were able to achieve in this country guided by the ideas that I have outlined. The Soviet Union had no democratic basis whatever for its socialism. It was born in revolution and suffered greatly in the war. In the end, the Soviet Union crumbled because, although the Soviet Communist party, which called itself socialist, was overwhelmingly the largest party, it did not have the consent of the people.

The other type are the Social Democrats, who abandoned socialism altogether. The most powerful advocates of capitalism today are to be found among the Social Democrats. I do not want to be controversial, but it is a fact that there are no more powerful advocates of market forces and globalisation than those in the party that describes itself as new Labour.

Although globalisation has brought a great deal of industrialisation, it has also produced acute poverty in the third world. The gap between rich and poor is wider now than a hundred years ago. There is the grossest exploitation of people in third world countries. People here can invest their capital in the third world, where wages are lower, and then lay off people in Britain--who then go on to unemployment benefit--and make their profits in much poorer countries.

Globalisation is said to be a form of internationalism. However, capital can be exported to another country to benefit from lower wages, but people from other countries who want to come here to benefit from increased wages are shut out by immigration laws. It is a limited, one-sided form of globalisation. Conflicts as deep as those that are caused by the division of wealth and poverty inevitably lead to war.

We made great advances towards democracy from 1832 to the end of the European empires and the creation of the welfare state, but the power in a globalised economy is unaccountable. Major multinational companies are not accountable to the people whom they employ or to the nations in which they work. I spent my life as a Minister negotiating with oil companies and large multinationals that were more powerful than nation states. Indeed, they operated in this country like a colonial power.

Such activities have severe implications for our political system, and we must consider what has become of politics. The idea of representation has been replaced with the idea of management. I represent the interests of the people of Chesterfield as best I can and I also represent my convictions. People know what my convictions are when they vote and can get rid of me if they do not agree with them. But now we are all being managed on behalf of a global economy. Someone once

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said that, if we do not control the economy in the interests of the people, we have to control the people in the interests of the economy. That process is going on at a great pace.

We are told about our international competitors as if competition were at the core of a peaceful world; that is not a view that I share. The lack of accountability has a profound effect on the emerging democracies in the third world. They are often denied the benefit of the hundreds of years of parliamentary experience from which we gained. However, even in this country, the power of the multinationals is increasingly becoming such that Governments tremble before them. I was in the Cabinet in 1976 when we crumbled before the International Monetary Fund, which had serious consequences for the party and the Government.

We are now moving into another aspect of the political consequences of globalisation--the third way. The idea is that it would be better for all the good people at the top to get together. The project is a coalition of people who believe that there is a common view at the top and that that is the only way in which to manage the economy. It is a one-party state. As a Minister, I visited Moscow and met the central committee of the Communist party and the commissars. They had not been elected. I then went to Brussels and met the commissioners. They had not been elected. I met representatives of the central bank. They, too, had not been elected. The reduction of democratic control as a result of globalisation is a serious problem, and Europe is part of it.

I fear the consequences that will arise if people do not believe that they are represented. One consequence is apathy. If people do not vote because they do not believe that it makes a difference, the consequences for the legitimacy of the Government who win are profound. Low turnout is one aspect of that apathy. Clinton was elected by one in five of the American people; four out of five did not register, did not vote or voted against him. A low turnout, accompanied by cynicism, is a recipe for conflict and repression.

My age allows me to recall what happened in Germany before the war, where a despairing people turned to Hitler, who blamed the Jews and the trade unionists for their problems. He told the people that he would give them full employment, and by God he did--he rearmed them, and we had a war as a result.

It is necessary to say plainly and clearly that peace without social justice is impossible. We cannot have a peaceful society or a peaceful world if the principles of social justice are secondary to the search for profit. A society that is built around people and not profit is what lies at the heart of the socialist idea.

In the debate to which I referred at the outset of my remarks, Keir Hardie concluded:


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I want to leave time for what will be a full debate, so I shall conclude on the policies that may follow from the ideas that I have advanced. First, we must expand the public services and ensure that they are publicly funded. In the immediately post-war years, the idea of national insurance was based on that of universal benefits. I do not believe that it is right for people to be means-tested before they are entitled to benefits for which they have paid, either through national insurance contributions or taxation. That is especially true of the need to link pensions with earnings. I am proud to have been in the Cabinet that made that link and I am distressed that it was reversed, at a cost of about £30 a week to pensioners. That provides a good example of what should be done.

We should have expanded public services for the provision of health care and education, which should be open, so as to allow every child access to the full range of knowledge in schools that are comprehensive in what they offer. Also, there should be access to the media, which does not usually cover the concerns of those who do not have wealth and power. I should add to that list the legal services, which are very expensive but absolutely necessary.

The second item on my list is the revitalisation of local government. I referred to the great Liberal achievements of the 19th century, and there are many examples of such achievements in the 20th century. Local government should have the funding that it requires, the right to raise its own money--if it can persuade its electors to give it that money--and general powers that are not tied up by specific grants that local authorities administer but do not decide.

Thirdly, if we are genuinely interested in the idea of full employment, it is essential that we support manufacturing industry. For most of my life as a Minister, I tried as best as I could--sometimes successfully, but generally not--to reverse de-industrialisation. In 1948, Britain launched 48 per cent. of all the ships launched in the world. In 1970, we had the largest motorbike industry in the world. In 1974, we had the largest machine tool industry and the largest car industry in Europe. That has all gone.

It is in the national interest to protect ourselves from invasion from abroad. We would resist anyone who tried to bomb our car factories, but if somebody buys and closes those factories, it is regarded as an inevitable consequence of globalisation. I do not think that that is a sustainable position. The same is true of privatisation. I hesitate to quote Harold Macmillan, but he said that privatisation was selling the family silver. That is not an example that would come immediately to mind for most families, but it was a vivid description of the sale of our natural assets.

We must have civil liberties. I refer not just to legal liberties and an end to discrimination, but to the acceptance of trade union rights. It is amazing that we talk about a global economy but that we do not legislate to implement the rights given to trade unions in the International Labour Organisation. I have introduced a Bill on the matter--the House may want to consider it--as such legislation is necessary.

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We need a fairer tax system. I cannot understand why any Government should ring fence the rich and say, "Whatever we do, we will not ask you to pay more", when people on benefits are continually being faced with demands to open the books and be examined in an attempt to deal with benefit fraud. My hon. Friend the Member for North-East Derbyshire (Mr. Barnes) may wish to raise the question of the Tobin tax, which would tax international transactions and could provide billions of pounds for international development.

It is often argued that no one has any power over multinationals, but I do not believe that. Multinational companies spend millions of pounds on trying to win popular support through advertising campaigns because they know that it is necessary to retain the goodwill of host Governments. I believe that it is necessary to treat multinationals as international agents and to negotiate with them as if they were countries.

We must have stronger environmental laws. Keir Hardie was a passionate environmentalist, who complained about the rain forests in the United States being cut down. He was also a great believer in animal rights. On one occasion, Hardie was followed home from the House of Commons by a journalist from The Daily Mail, who hoped to find out to whom he talked in the street--no doubt, in an attempt to uncover some scandal. The journalist said that he patted all the horses that he saw in the street. Being a miner, Hardie appreciated the value of the pit pony.

We need to end the arms trade, which is far more serious than the drugs trade that receives so much attention. The arms trade allows arms manufacturers to arm both sides in a conflict. Then, when those arms are used, the world demands a ceasefire. I sometimes wonder whether the idea is to discover which arms work best so that more can be sold afterwards, as we saw in the case of the Exocet that sank HMS Sheffield during the Falklands war.

Finally, we should try to build the United Nations as an embryonic, democratic institution, in accordance with the aspirations of the Chartists, who wanted to establish democratic government in Britain. If we are to have a global system, it must be a worldwide system, but it must be based on democratic accountability. My conviction is that the UN is being bypassed by NATO, whereas the UN should have responsibility, through the General Assembly, for controlling multinationals, which cannot be disciplined in any other way. The World Trade Organisation and the IMF should also be accountable to the United Nations General Assembly. That would be true internationalism rather than globalisation.

Those are my convictions. I am a socialist and I became a socialist through experience. After 50 years in the House and many years as a Minister, I realise the way in which power is exercised to shape our society. As I leave the House of Commons and approach a new political life at the end of this Parliament, I shall want to put those arguments to the electors as a non-candidate when the election comes, because I honestly believe that the ideas have much more support than the British establishment, any Government or the House yet realises.

All progressive change has come from underneath, and it might be worth remembering that there is a different tradition from those ideas with which we are

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presented every day. If we remember that, we might make more progress in winning public support for what needs to be done.

10.23 am

Mr. Robert N. Wareing (Liverpool, West Derby): It is a privilege to follow my right hon. Friend the Member for Chesterfield (Mr. Benn), whom I congratulate on securing this much-needed debate. Although we often debate individual issues in the House of Commons, this debate about the philosophy of socialism, which brought many right hon. and hon. Members into the Labour party, is not before time.

Coming into the Chamber this morning, I passed through the exhibition in Westminster Hall. Inscribed on one of the portraits were the words


Working men and women struggled for the vote in the 19th century because they realised that peaceful change--a peaceful revolution against the semi-feudal system in parts of the countryside and the abuses of capitalism in the cities--could be achieved only by changing Parliament and obtaining representation. They saw the inequalities in society which, although they may not be as stark in Britain today, still exist.

My right hon. Friend referred to the taxation system. The fact that the highest rate of tax paid by most people in this Room is 40 per cent. of their income makes one wonder why people such as the Duke of Westminster pay only that rate. Clearly inequality exists in matters of raising revenue.

The struggles of the 19th century brought about the political democracy of today. However, democracy and socialism are indivisible. Despite the democracy in our civil society--our right to elect councillors to local authorities and to elect Members of Parliament--industrial autocracy remains. People in Birmingham can vote for the city council and their Members of Parliament, but in their day-to-day lives at Longbridge they have no say in the management of the firm and in the way in which capital is allowed, as my right hon. Friend said, to flow across the frontiers. The workers in our country--unlike, incidentally, those in the country of BMW--have no right to be properly consulted about changes in management and so have little control over the wealth created by their hard work.

Ministers--whether Labour or Conservative--who have been asked to intervene when factories have been closed in our constituencies have often replied that those are commercial decisions taken by private firms and that they cannot interfere with them. I would argue against that. Those decisions lead not only to job losses for employees; they have implications for the taxpayer because they lead to social costs. That is why, whenever a private firm decides to make part or all of its work force redundant, the state has a responsibility, acting on

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behalf of the people who elected the Government, to intervene. The Government will have to meet the social costs of factory closure by raising taxation.

Socialists oppose the philosophy of economic liberalism which, to a large extent, was reintroduced to this country by Margaret Thatcher. The traditional conservatism of the earlier part of the century and the more compassionate conservatism of Harold Macmillan, mentioned by my right hon. Friend--one-nation Toryism--was not socialist, but it was very different from the Thatcherite philosophy. Economic liberalism perpetuates the class system.

Opponents of socialism will often say that the philosophy is not perfect and that we have had instances of dictatorship. My right hon. Friend referred to the Soviet Union. Socialism is no safer from abuse by bad, unscrupulous and dishonest people than any other system. However, the idea does not lose validity because of that. Hitler called his party a national socialist party and, in the Soviet Union, the Communist party referred to the Union of Soviet Socialist Republics. People might say that socialism has failed because of the aggression of the Nazis and because of the communist system that was installed in the Soviet Union. However, does Christianity lose its validity because of the inquisition, or because of the part that religious bigotry has played in the conflicts in Ireland? Of course not. Christians have an ethical and moral worth, as do socialists.

As far as ordinary people are concerned, we say that we live in a free country. The Americans--and Britons too, I suppose--often call the part of the world in which they live the free world. They talk about themselves as defending the free world. However, freedom loses its meaning if a person has no way of exercising it. The freedom to speak that very rich people have is, in many ways, the same as the freedom to speak that poor people have. However, the poor do not have the means to exercise that freedom in the fullest way and do not have the same opportunities as the rich to have a good life and a good lifestyle. We should address ourselves to that matter, as should the Labour Government. The market has a place in the economy but it should never be the master. Planning is an essential ingredient of socialism; the market must succumb to the higher values of the country.

It should be ensured that everybody has the right to free education. The position regarding tuition fees absolutely appals me. I was a lecturer for a quarter of a century before I became a Member of Parliament, and I saw the way in which students had to struggle even when they had maintenance grants. Now we see a situation in which many people will be deterred from entering higher education because of tuition fees.

Let us take a family with two children as an example. The parents pour so much money into the eldest child so that he might go to university or to a training college. The second child comes along, scores high marks in his A levels and is just as qualified as the first child to go to university. However, because of the tuition fee burden, the parents must encourage that child to do something that will not involve severe costs.

Some might think that the beliefs in socialism that the Labour party held throughout the 20th century are no longer the principles and values that we should preserve in the 21st century. I say to them that there is just as

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much evidence today of the need for a redistribution of wealth; that is as much a basic tenet of socialist philosophy today as ever before. I hope that hon. Members will consider the facts given by my right hon. Friend the Member for Chesterfield and agree that we should move away from the greed and grab society that has arisen since 1979.

10.34 am

Mrs. Ann Cryer (Keighley): Last week, my right hon. Friend the Member for Chesterfield (Mr. Benn) mentioned that he had secured a debate on socialism--its subject had to be described as wealth, poverty and the economic system, which is almost an Adjournment debate in itself--so that some of us might celebrate the centenary of Keir Hardie's debate on socialism. In 1901, the then hon. Member for Merthyr Tydfil said:


The debate continues, and last Tuesday some Labour Members dared to suggest that national air traffic control was not a suitable subject for a monopoly conducted for the benefit and in the interests of its principal shareholders. We argued not for outright state ownership, but for a trust along the lines of the Canadian national air traffic services. We won the argument but not, sadly, the vote.

I want to talk about socialism, as reflected by my own family and constituency, and the political organisations that have been committed to it. The Keighley Labour Union was founded in October 1892, seven years before Keir Hardie's speech, by a local school teacher called Herbert Horner. That was probably a response to Isaac Holden, a Liberal, being returned to Parliament unopposed and the Manningham mill strike, just down the road in Bradford, which had ended the previous year. Horner was elected to the town council in 1894, the year after the founding conference in Bradford that created the Independent Labour party. That strong, socialist, almost evangelical movement really tried to build a Jerusalem among the dark satanic mills.

Keighley was one of the hundreds of northern towns that responded to the new movement by establishing a socialist Sunday school, a choir and a Clarion cycling club--almost an alternative socialist culture. Philip Snowden, who was to become a member of the first Labour Cabinet in 1929 and the party's financial guru, was a product of that early Keighley ILP. This year, we are also celebrating the centenary of the formation of the Labour representation committee from the ILP, the Fabian society and--temporarily--the Marx-inspired Social Democratic Federation.

The affiliation of the trade unions introduced the financial stability and the mass base that the ILP had lacked. The 1924 and 1929-31 Labour Governments demonstrated that the middle classes need not fear them. During that period, Keighley was represented by

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its first Labour Member of Parliament, H.B. Lees-Smith, a well-regarded politician who fought the seat six times, winning four times and dying in office in 1942. The next Labour Government was, of course, the Attlee Administration of 1945, which transformed the commanding heights of the economy into public ownership. Bevan established the national health service and Jim Griffiths introduced national insurance, which laid the foundations of the welfare state. All that was too much for Ivor Thomas, the Member of Parliament for Keighley from 1942. He became the Shortly Floorcross of that generation when he joined the Conservatives. One wonders what the Keighley party and constituency felt at that time.

During the years in opposition, Keighley was represented from 1950 to 1959 by Charlie Hobson, who won three elections and lost one, by only 170 votes, to Marcus Worsley of the aristocratic Yorkshire family. Hobson was a power station engineer who was brought up in Leeds and ended his days as a Government Whip in the House of Lords. The days of hope returned to the party with the election of the Wilson Government in 1964 and again in 1966. Harold Wilson's enthusiasm for the "white heat of the technological revolution" carried his party and country with him, and in Keighley the aristocrat was replaced by a semi-skilled engineer called John Binns. Capital punishment was abolished in 1965, thanks to the lifelong crusade by Sidney Silverman from just across the border in Nelson and Colne. In 1967, the first race relations legislation was introduced and Barbara Castle made child benefit worth collecting--and I benefited from that.

The 1974-79 Government started off in the right direction with the Health and Safety at Work, etc. Act 1974. My late husband was on the Standing Committee considering that Bill and, although he felt that it contained too many "as far as reasonably practicable" aspects, he was proud to have been associated with it. He was the Member for Keighley and hung on in 1979 with a majority of 78 votes, against most expectations, to be defeated in 1983 when the party received its lowest share of the vote since 1918, and constituency boundaries were radically changed. The present Government have already done many things that we can be proud of--particularly the introduction of the minimum wage legislation.

I look back with great pride on the parts played by my dad and my grandma in the early years of the ILP in Rossendale, particularly her work with the women's suffrage movement. I hope that in another 50 years my six grandchildren will approve of what we are doing now. One thing, however, is certain. I will always take great pleasure from the fact that I was one of the 101 women Labour Members who broke the gender mould of Parliament. Keir Hardie campaigned for women's suffrage and I am sure that he, too, would be delighted by our presence.

10.41 am

Mr. Jeremy Corbyn (Islington, North): Like others, I shall be as brief as possible, because this is an important debate in which many hon. Members wish to speak.

We should pay tribute to my right hon. Friend the Member for Chesterfield (Mr. Benn) not simply for introducing the debate, but for his far-sighted view of

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socialism and his ability to transcend the understanding of the history of socialism and the needs of future generations and the present generation. I first heard him use his description of multinational corporations treating Britain as a colonial vassal state at a fringe meeting at the 1970 Labour party conference. His analysis of the defeat of the Labour Government of 1964-70 was markedly at odds with that offered by others who had lost ministerial positions. My right hon. Friend described the situation and our lack of power over multinational capital; others sought to blame the electorate.

My right hon. Friend also demonstrated the need for an understanding of history. The enthusiasm with which young people listen to what he says shows that history can be made interesting and exciting. If we do not understand where we come from historically, how on earth can we understand where we are going?

This Saturday, I shall visit Burford in Oxfordshire as part of a commemoration of the opposition of the Levellers to Cromwellian forces at the end of the English civil war. The Levellers said that they had no quarrel with the Irish and therefore were not prepared to be shipped across to Ireland to suppress them. Therefore, they rebelled and, for their pains, were imprisoned and shot in the churchyard. Cromwell was using robust methods at that time.

I want to take a stage further the sense of history that previous speakers have described--the struggle of the British working class, the development of the trade union movement and the impoverishment of the British people by the brutality of 19th-century capitalism--and to suggest that we consider those matters on a global level. At the start of the 21st century, we have unparalleled access to technology and information. It has never been easier to find out what is happening anywhere in the world. The technology is incredible. But why does the average time that people work in this country go up every year rather than down? Surely the genius of technology should be used to improve everybody's living standards, and reduce their tension and their average working week.

When I cycle here from the area in which I live, which takes about half an hour, it is with a sense of shame that I pass people who spent the night in shop doorways, are begging outside stations or spend their days wandering around the streets of London, hoping that someone will give them something to eat or something to do. None of that is necessary. The levels of wealth that exist in this country are obscene. I invite hon. Members, after we have finished our proceedings, to walk down to the back of the Savoy hotel, where they would see a couple of hundred people sleeping on the pavement. Inside the hotel, they would see people spending £50 per head on dinner. The obscenity of that kind of gap between the rich and the poor must be addressed.

On a global level, the situation is worse. A quarter of the world's population live on the brink of starvation, while half live a very poor existence. In many African countries, adult life expectancy is less than 50 years. In Russia, male life expectancy is currently falling to a similar level. In the coastal regions of Nigeria, the

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exploitation of oil that has resulted from the harshness of the economic system has led to untold levels of brutality against the people.

I suspect that the real cause of the brutal conflicts in Sierra Leone and Liberia is the presence of diamonds and the wishes of those in the international diamond trade to get their hands on them. Such mineral exploitation has also led to environmental destruction in Indonesia, Papua New Guinea, parts of Africa and large areas of Latin America. That will haunt us all, because there is no hiding place from global warming or from international and global pollution.

My message is simply this. If we are to ensure that the planet survives this century and those that follow, we must deal with the gap between the rich and the poor--which leads to conflict and warfare--and environmental destruction. We must also have a political system that ensures that those issues are addressed. The tragedy of the latter part of the 20th century and the beginning of the 21st century is that national Governments have lost a large amount of their power over economic management and economic thinking.

That power is not going to an international organisation with a democratic base, as my right hon. Friend the Member for Chesterfield described the United Nations. Instead, it is going to a series of global corporations that owe no allegiance to any national Government or democratic base. We are told that the WTO, the World Bank and the IMF--an unholy trinity if ever I heard of one--know best, and that the most important goals for every poor country in the world are to cut public expenditure, and increase income from the public through taxation--and, in the case of most of Africa, school fees and charges--so that they can become part of the international global system.

A hundred years ago, the trade union movement recognised the importance of international solidarity. In Britain, the Netherlands, Germany and the United States, workers are losing their jobs. In Indonesia, Thailand and Bangladesh, workers are being told that they cannot have a wage increase, social security or a pension system because they will price themselves out of the market. The case for international labour standards is overwhelming. The ILO, which was established at the end of the first world war, provided a way forward. I look to a future in which it is more powerful and more able to impose minimal conditions to prevent the obscenity of child labour and the ghastly competition in so many parts of the world between the poor and the poorest.

In this country, socialism has had an enormous influence on the Labour party and on popular thinking. The national health service is a product of socialism. The campaigns against debt are a form of socialist thinking, as were the introduction and development of public sector housing and the national insurance and social security systems.

Society has to have a moral basis. My right hon. Friend the Member for Chesterfield alluded to the influence of religious thinking, especially of Christianity, on socialist ideals. Socialism must also be a moral force that states that everyone deserves the right to a decent standard of living, to contribute to society and to benefit from the work of everyone else when they are sick or too old to work. That has to be the moral basis of society.

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On a global level, the moral basis must be that we have no right to destroy the planet's environment, or to assume that our wealth can be created on the basis of the impoverishment of others in distant lands. We all live on one planet, and if it is to survive it must be run on a moral basis. The moral basis of the greed of multi-national corporations will lead not to the planet's survival, but to its destruction.

10.50 am

Mr. Alan Simpson (Nottingham, South): I congratulate my right hon. Friend the Member for Chesterfield (Mr. Benn) on securing this debate and on reminding us that it is legitimate and proper for us to address the question of socialism at a time when we are encouraged to assume that it died with the arrival of Margaret Thatcher.

My approach to the matter stems from childhood discussions in the family, which were not overtly political. I remember my uncle sharing his liking for music hall jokes with us. He frequently told one that everyone laughed at, but which I never really understood. It went: "I say, I say, I say. My dog doesn't like pork sausages." Someone else would ask, "Why doesn't your dog like pork sausages?" The response was: "Because he's never had them!" The danger in relation to a debate about socialism is that we have been told the same; that society would not like it, because we have never had it. My right hon. Friend rightly said that it is perfectly legitimate for us to aspire to systems we might like if we ever had them.

It is also to my right hon. Friend's credit that he suggested that we look for socialism in the births section of the public announcements, rather than in the deaths section. Inherent in the challenge that socialism presents is the presumption that markets cannot be trusted and that they are, by their nature, amoral, inequitable and undesirable. We ought to challenge the mythology of markets. In my constituency, a market of sorts exists in two of the inner-city areas. Turf wars are taking place between rival drug gangs, members of which are in the habit of shooting each other. Such activity is based on a market of despair and drug dependency. However, anyone who says that we should step back and not engage with that because it is all part of the magic of the market merely exposes the fact that markets have nothing to do with civilising processes in society.

Socialism sets out three challenges that offer a genuine alternative to the politics of despair and alienation. They are the notions of full employment, universal welfare and the legitimising of markets by redistribution. Redistribution in the market process is not an aberration or an unavoidable cost to the system. It is what gives markets their ethics.

I shall summarise the challenges that Keir Hardie might have wanted to set before us today, were he to revisit the debate. We must define a different sense of common ownership as the centrepiece of 21st-century politics. It might begin beyond our own shores. I was fortunate enough to meet some people who were involved in the world's largest co-operative--the Amul co-operative. It is based in India and comprises 18 million of the world's poorest people. Those people work together to meet not only their own dairy produce needs, but those of the whole of India. They took on the

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wealth and might of the Nestle corporation, which wanted to supply India with dried milk, responding to the challenges made by Gandhi and Nehru by supplying their own fresh dairy produce as a co-operative. If 18 million of the poorest people on the planet can get together to take on multinational capitalism, why has the debate about common ownership and co-operatism in this country sunk to the level of local exchange trading schemes and neighbourhood food co-operatives? We must think about common ownership and co-operatism on a larger scale.

We might consider too the example of the Gamin bank in Bangladesh. I was excited to read recently about popular banking services in New York, set up by people in the Catholic Church who were so appalled by the disappearance of access to banking services for the poor that they set up their own people's credit bank. Indeed, I was so excited about it that I ran to tell my right hon. Friend the Member for Chesterfield. He said, "I am pleased that you are excited about that. I remember that I introduced the legislation to set up the Girobank, which was designed to do exactly the same for people in this country." As with so many inspiring ideas, I catch up with them only 20 or 30 years after my right hon. Friend has put them in place.

There are other cases, such as the blood transfusion service that we must also catch up with. Many people, including myself, "bank" with the blood transfusion service, but we never ask how much is in the account or about interest rates on offer. We just do it as a gift; assuming that, if we all do so freely, there will be enough in the common pot for everyone's needs. The Labour party should have the courage to revisit such schemes and understand their importance.

We are, in many ways, behind the times in the food security debate. In recent months, Parliament has debated the question of GM foods, as opposed to food sustainability and how we might return to agriculture, rather than agribusiness. Afterwards, I was collared by someone from the National Farmers Union who said, "Of course, we could deliver safe and sustainable food supplies to the major cities and, probably, meet most of that demand from our own domestic productive capacity--but you would have to force us to do things differently and to form food co-operatives." I thought that I must be drunk. What was the NFU doing, demanding the enforcement of the co-operative principle? When I asked why, I was told that, at the end of the war, Britain had made a mistake by setting up food product boards, whereas the French had required the creation of food co-operatives. This ensured that the rural food-producing hinterland as a whole could guarantee safe food supplies for cities in a way that individual farmers could not. If the NFU is championing the reintroduction of the co-operative principle, it should not be too radical or revolutionary for the parliamentary Labour party to follow suit.

We could also consider the model of common ownership offered by the Henry Doubleday seed library. Parliaments cave in to an internationalism that demands that we allow global patents on the earth's biodiversity. Only if corporations own such patents, they say, can we supply seeds to the developing world, allowing people to grow food and get out of poverty. Yet the Henry Doubleday seed library offers people seeds for free, so that they can be borrowed and returned and shared with

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others. Ownership of the seed base is not the central issue. It is a question of how we propagate to broaden the base of biodiversity, on which we will all be dependent.

The central theme, which my right hon. Friend forces us to address, is that socialism will be the defining element of genuine political debate in the 21st century. It will be transformed, in ways that Keir Hardie did not understand, by Kyoto and beyond. Keir Hardie was keen on animals and the environment, but he would be horrified by our failure to address the need to bring about reductions of at least 60 per cent. in carbon emissions. We cannot leave such matters to the very markets which are responsible for the current chaos.

I hope that hon. Members and others will accept the invitation to go down the path that was tentatively and generously advanced by my right hon. Friend. In error, I thought that he had persuaded the Labour party to go down that path during the general election when I saw a huge poster emblazoned on a hoarding in the constituency in which I was campaigning. The poster consisted of a picture of the former international athlete Carl Lewis on the starting blocks in a pair of high-heeled shoes--he has good legs--above the slogan "Power is nothing without control". The question for the Labour party and the Labour Government is, although we are in power, to what extent are we in control? Are the public, who voted us in, in control of their economic destinies?

This is the most exciting agenda that Parliament will address and debate in the 21st century. I suspect that much needs to be done to catch up with those outside this place who have already begun the debate, but we owe a debt of gratitude--as ever--to my right hon. Friend the Member for Chesterfield for pushing us in that direction.

11.1 am

Mr. Steve Webb (Northavon): I understand that it is customary to congratulate right hon. and hon. Members on securing Adjournment debates, but I shall break with tradition by thanking the right hon. Member for Chesterfield (Mr. Benn) for raising an issue that is as much about political philosophy as specific policy. In my short experience in this House, I have found that we have too little opportunity to participate in such debates. Those who have contributed to this morning's debate have brought vision, passion and principle--commodities that are also in short supply.

I do not know who should be most worried--other hon. Members who have spoken today, or me--by the fact that I have much in common with what I have heard this morning. I agree with many of the arguments advanced by the right hon. Member for Chesterfield. For example, with regard to the power of multinationals, I am on the Euro-sceptic wing of the Liberal Democrats, which is probably not the most Euro-sceptic place to be. The one defence for active participation in Europe is that single nation states often cannot match multinationals and are in hock to them. On being elected to a minor body, one tends to think that, on election to the next step up, one will at last have power and influence. However, it suddenly becomes apparent that that is not how matters work.

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I agree with the right hon. Gentleman's diagnosis, and with a good deal of his concluding manifesto. The need to ensure the expansion of public services and their proper funding is at the heart of our own manifesto, which we are willing to back with a call for progressive taxation. I note that the hon. Member for Liverpool, West Derby (Mr. Wareing) used the word "redistribution"--a word that I, too, am not afraid to put on the record. We believe in revitalising local government, and, as the right hon. Member for Chesterfield said, local people should have greater control over how local taxes are spent.The civil liberties agenda is one with which we are associated, and for which we have been willing to stand up in this Parliament, despite the attitude of the popular media.

The right hon. Gentleman also mentioned the need for a fairer tax system, and we see no reason why the top rate of tax should be 40 per cent. In the past, many of those who are now Ministers criticised the Lawson Budget of 1988, which reduced the top rate from 60 per cent. to 40 per cent. However, now that they have the opportunity to do something about that cut, they have chosen not even partially to reverse it. That is regrettable.

Mention was also made of stronger environmental laws. I was intrigued to hear of the environmentalism of Keir Hardie, and I am grateful to the right hon. Gentleman for making that point.

It makes sense briefly to identify two aspects of the right hon. Gentleman's analysis with which we in the Liberal Democrats do not entirely agree. It struck me that we may differ somewhat about the role of the state. I agree with him that real change comes from underneath, but I am not sure about the extent to which socialist values and ideals have been put into practice. I agree with the hon. Member for Nottingham, South (Mr. Simpson), who suggested that a socialist state may not yet have been established; there may be good reasons for that. The adjectives that spring to mind when I think about socialism are top-heavy, controlling, manipulative and coercive. That is why, in 1992, I chose to join the Liberal Democrats rather than the Labour party.

My second and perhaps more fundamental disagreement involves my belief that human nature consists of a desire to co-operate and an instinct to compete, which can be harnessed to benefit. As an example, let us examine the telecommunications industry. Although the right hon. Gentleman said that socialism is not the same as nationalisation, I presume that British Telecom's profits mean that he would be more comfortable with a publicly owned telecommunications industry.

During the 1970s, when BT had no competition, the industry was characterised by long waiting lists even to get a phone installed--today, that appears prehistoric. The industry is now competitive and, in many respects, the choices and options that are available are much better and there have been social welfare benefits. I do not suggest that the private market does not need to be heavily regulated and, in some instances, the current regulatory system may not be severe enough. One misreads human nature if one believes that people's competitive instincts, as well as their instinct to co-operate, cannot be harnessed for benefit.

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Although we support the idea of co-operation, our distinctive contribution to this debate involves echoing the right hon. Gentleman's key point that progress comes from underneath. We also believe that the state's role should enable and facilitate, but not control, those who are on the ground, and that harnessing the instinct of competition can be used to society's benefit, provided that it is properly regulated.

11.6 am

Mr. Howard Flight (Arundel and South Downs): I, too, congratulate the right hon. Member for Chesterfield (Mr. Benn) on securing this debate on political philosophy. Last week, when I was debating at the Cambridge union, I was greatly disappointed by the absence of an appreciation of political philosophy among young people.

As a relatively new boy in the House, I have observed the right hon. Member for Chesterfield to be a great parliamentarian--a man of great integrity, principle and clarity, and a great democratic patriot. I agree with many of his comments. I am grateful for the tribute that was paid to a strong element of the Conservative party, whose history reveals it to be sensibly collectivist.

The right hon. Gentleman and I share views about the European Union and the European currency. His speech on the reform of the House of Lords was the most persuasive of all hon. Members' contributions. I agree with him also about the need to revitalise local government and that the global economy, with which we have to live, needs a stronger United Nations and institutions of global regulation.

On a lighter note, the right hon. Gentleman and I are the two most notorious smokers in the House, and we may agree that smokers should not be excessively persecuted.

Like the right hon. Gentleman, I am an historian; I spent four years in my youth studying economic and social history. That background may have led me to support the other side of the argument. My grandfather, who was born 120 years ago, was a great campaigner with Keir Hardie. When I was growing up, we had discussions and debates about his life and times, and about the contemporary issues.

The capitalist process of creative destruction enabled the developed nations to achieve political democracy and higher living standards and to establish sensible collectivist organisations. Because they fail, other economic systems never raise people's living standards to a level at which they can achieve such things.

West Sussex is hardly the "dark satanic mills", but hon. Members may know that Blake lived at Felpham in West Sussex. The fulling-mill, which his house looked on to, led him to coin the phrase about the satanic mills, so it was a direct experience and not an observation on the evils of the industrialisation of his age.

There are two key points. The first is that, with the lack of discipline caused by the profit motive--or even of the discipline to survive and make the necessary change--public bodies are inevitably inefficient and tend, if anything, to get worse over time rather than to deliver and adapt to the times. Secondly, the capitalist system self-evidently produces the greatest prosperity for the greatest number of people. Even in our own age,

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it is observable that the United States has created more prosperity for its people than the more socialist and less democratic systems of continental Europe. It is interesting that the last decade also showed not only that the United States can supply short to medium-term growth, but that equality of incomes has narrowed rather than widened; the dot.com millionaires are not the only ones to have benefited from the improvements.

I also accept that the capitalist system needs to be disciplined and controlled. The great prophet of the market, the late Enoch Powell, made the point forcibly when he said that the market should do its bit, but that it should be properly constrained and that the rules should be right. It is not a belief simply in unfettered markets. I share the view that means testing has gone too far in this country, producing much injustice and many undesirable behavioural reactions. I will even accept the famous phrase about the unacceptable face of capitalism; there are capitalist practices that are unacceptable and need to be prevented.

In addition to the efficiency argument, I also quote the Gladstone argument. Gladstone was wary of collective capitalism because he felt that it took away from people the duty to do good and to behave properly as citizens, and that it cast all responsibility on to the state. There is still much in that. I am a great supporter of the voluntary sector and believe that charity is a great achievement of Anglo-Saxon society. It seems to me that things are often done better by the private sector or the voluntary sector than by public sector bodies. My vision is of a nation where everyone has a decent ownership stake, not just in their houses but, ideally, in some of the businesses for which they work--a pot of private capital that gives them freedom and independence from the state.

I take some issue with the comments about the developing world and multinationals. I lived and worked in India in the 1970s and spent part of my early life studying India's history. Although it is a simplification, it strikes me that India suffered greatly from a closed socialist system after independence. At independence, its exports and its gross national product were much greater than those of Japan. If one compares the two 45 years later, India had been a terrible relative failure and Japan, warts and all, a substantial success. Indeed, India needs investment in technology and the know-how of multinationals. I was astonished to learn that, in the chemical industry in the late 1970s--even with minuscule labour costs by European standards--India could not compete internationally because its technology lagged so far behind. Like it or not, global contact is needed to keep the technology up.

I cannot help feeling that the right hon. Member for Chesterfield privately must be slightly unhappy with the present Administration because they hardly follow the socialist principles that he has supported. Surprisingly, during the Major Administration, inequality of wealth and of incomes decreased, but the gap has widened since 1996. The Government seem to woo rich business men and court the City. They seem to believe in co-operation at the top between Government and the capitalists who make things happen. I find that deeply suspect, as important conflicts of interest, which cannot be ducked, seem to arise in those areas. Capitalist business has its job to get on with as efficiently as it can. Governments exist to represent the nation. The conflict of interest

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between them cannot be fudged. Whether housing or wider issues are involved, it is unhealthy to think that everyone can settle down and come up with the right solution.

The Government have used the spin of America's encouragement of entrepreneurship but, to my mind, they have found almost the worst of both worlds. The approach is so hedged that it does not work as it does in the States to boost growth and to create prosperity. Equally, however, principles with which the right hon. Member for Chesterfield will not agree are advocated. People in the poorer sections of society now spend 33 per cent. of their incomes on consumption taxes, whereas the figure is only 15 per cent. for the better-off. That state of affairs has arisen from the massive increase in consumption taxes in the past three years on petrol, drink and cigarettes.

It is not surprising that the growing army of pensioners, who have different patterns of consumption--a significant part of which is accounted for by the items I mentioned--and pay high council tax, which is increasing, were extremely disappointed with their modest pension increases.

I was a product of the way in which students were financed in the Macmillan era after the war. Like the hon. Member for Liverpool, West Derby (Mr. Wareing), I think that imposing tuition fees was a great mistake. It is almost the biggest stealth tax of the lot, affecting ordinary families who need to organise the financing of their children through higher education.

My observation is that the Government are the most elitist of my lifetime. They are driven by the priorities of the politically correct and the professional middle classes. They are sadly out of touch with the people who work at Rover and Dagenham, and with the growing body of pensioners. Most importantly, I hark back to the democratic issue. The right hon. Member for Chesterfield always puts proper democratic consultation first, whether in the context of reform of the House of Lords or what the country does economically. I fear that we are drifting too much to the European model by undemocratic processes, and towards the concept that the right hon. Gentleman mentioned of the elite at the top getting together because they know best. That will invariably bring about the wrong solution.

11.18 am

The Economic Secretary to the Treasury (Miss Melanie Johnson ): I thank all the right hon. and hon. Members who have taken part in the debate for their wide-ranging contributions. I recognise the considerable role that my right hon. Friend the Member for Chesterfield (Mr. Benn) has played in the affairs of Parliament. I gather that this is his first debate in this new, modernised arrangement and I welcome him. I suspect that few hon. Members present would dispute that the previous Government's legacy was an increase in poverty and in income differentials in the United Kingdom.

I pay tribute to what my right hon. Friend said about Keir Hardie and remind him that Keir Hardie made four or five pledges in 1900 and 1901. At least two of those were for the reform of the House of Lords and the

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introduction of a national minimum wage. Neither of those was carried out by the Labour party in government or indeed by anyone else over the ensuing century, until the present Labour Government, elected in 1997, achieved both.

I agree with my right hon. Friend that values are important. I would argue that the same or similar values drive us today as have always driven our party in government. On 8 May, my right hon. Friend the Chancellor of the Exchequer set out in the James Meade lecture at the London School of Economics the Government's economic and social goals for the country. I will reiterate his main points because they relate directly to the debate. He set out the Government's five objectives: increased prosperity and higher productivity, employment opportunity for all, improving educational attainments, ending child poverty and improving public services.

The need for economic stability underpins all those objectives. Monetary and fiscal stability are a necessary precondition for national economic success. That is why the Government have introduced a new long-term framework for monetary and fiscal policy--a radically different monetary framework based on independence, openness and transparency. A number of hon. Members here support these notions. The Government have also introduced an important fiscal discipline with clear, open and consistent rules.

Hon. Members have mentioned the role of work. The importance of work in helping to tackle poverty must be borne in mind. All the evidence shows that work and the availability of work are vital in addressing poverty, particularly in the UK. Some--including, I think, my right hon. Friend the Member for Chesterfield--referred to the goal of full employment in their remarks. My right hon. Friend the Chancellor recently reiterated the relevance of full employment as a political and economic goal. Full employment now means full employment for both men and women. When the original goal of full employment was set out, it meant full male employment. The Government have a more ambitious goal--one that recognises the increased role of women in our society. I second the remarks of my hon. Friend the Member for Keighley (Mrs. Cryer) about the value of having 121 women Members in the House. We are both delighted to be counted among them.

The Government are building a new and modernised welfare state to increase work opportunities--a welfare state that, in addition to its traditional and necessary function of providing security to people who cannot work, promotes work, ensures that work pays and gives people the skills that they need to secure better jobs. As my right hon. Friend the Chancellor said, in the past 20 years unemployment has been the primary cause of poverty in Britain. Compensating people for their poverty through benefits is not enough. Our task must be to deal with the causes of poverty, and the best form of welfare is work.

The UK has established a new leadership role in the various international forums promoting both multilateral and unilateral action to tackle third world debt. As a result, in part, of our initiative--and that of my right hon. Friends the Chancellor and the Secretary of State for International Development in particular--

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there is a new emphasis on the reduction of poverty and on health and education programmes in the international forums in which these issues are debated.

We have also argued strongly for reformed financial architecture, which relates to the nature of the global system. We need to tackle the way in which financial systems and economies work on a global basis. We are doing that by developing and reforming financial institutions to enhance transparency. That involves strengthening financial regulation and the macro-economic policies of financial systems in emerging markets. It is important to try to prevent crises from occurring, to manage them better when they evolve--that includes involving the private sector--and to promote social policies that protect the poor and the most vulnerable. There is plenty of evidence that the Government have been at the forefront of that process.

My right hon. Friend the Member for Chesterfield touched on the nature of peace without social justice. He said that people come first--they certainly do for the Government. Our initiatives since 1997 have made society much less unequal. We will invest an extra £7 billion a year in children's financial support, almost 50 per cent. of which will go to the poorest 20 per cent. of families. A family with two children and a single earner on an average income will have become £2,600 a year better off in real terms between April 1997 and April 2001. About 1 million pensioners have been £20 a week better off since 1997. We have spent an additional £6.5 billion on pensioners in this Parliament. That is substantially more than would have been spent had the earnings link been restored. We have used the money differentially to help the poorest pensioners, which is in line with the wishes of some hon. Members who have spoken today.

We have also invested substantially more in our public services, including education and health. An extra £2 billion has been allocated for health care in 2000-01, which will produce an average real-terms growth of 6.1 per cent. over the next four years. That will

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be the longest period of sustained high growth in the history of the national health service. The NHS is one of the Labour party's achievements in government. It continues to receive a huge amount of support.

We are tackling the gap between the rich and the poor in a variety of ways--some of which I have outlined--including the introduction of the working families tax credit, the reforms of the national insurance system, the introduction of the 10p starting rate for income tax and the national minimum wage. Before tax and benefits, the top fifth of households received an average income that was 17 times greater than the bottom fifth when we took office. The Government's involvement and intervention have reduced that ratio to 4:1. We have made substantial gains.

My hon. Friend the Member for Keighley touched on the importance of child benefit. Between 1997 and 2001, child benefit for the family with one child will rise by £4.45, which is 26 per cent. above inflation for that period. Income support for each child under 11 in the poorest families was nearly £16.90 when we came to office; it is now £30.95--almost twice as much. The maximum financial support for a child under 11 in a low-paid working family will rise by £26.90, which is 97 per cent. above inflation.

Those achievements are part of the Government's proud record in tackling poverty. They address the issues raised by hon. Members today. Passion and principle are important, but they should be directed towards practical changes that are beneficial to people, both in the UK and across the globe, in their ordinary working lives. Our current approach to prosperity and fairness is right, as both must be secured. We must develop enterprise, as it enables us to generate employment, tackle poverty and invest in public services. That is why we are moving forward in the right direction. It is clear that the historic ambition--

Madam Deputy Speaker (Mrs. Gwyneth Dunwoody): Order. It is time for the next debate.

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