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6.12 pm

Mr. Ivan Lewis (Bury, South): We have heard perhaps the final contribution of the former Prime Minister, the right hon. Member for Huntingdon (Mr. Major), so it is appropriate for me to say a few words in response. If we put politics to one side, most of us would accept that he is basically a decent man, but he found himself leading a political party that was unleadable. Indeed, much of his time was spent standing up to the right-wing, extreme elements that now control the modern Conservative party, so it must be difficult for him to make speeches from the Opposition Benches these days.

It was, however, curious to listen to the right hon. Gentleman's analysis of the economic situation in Britain. He was clearly anxious to rewrite the legacy of his stewardship of the economy. Listening to him, one would have thought that his Government had a reputation for economic competence and that he had led them to a barnstorming victory on 1 May 1997, but history records something very different. It shows that Black Wednesday was the beginning of the end of the Tories' claim to be the party of competent management, economically and more generally. That Government left the country with national debt that had doubled. They left the country extremely insecure, socially divided and very unhappy, and that is why the right hon. Gentleman led his party to the worst election defeat in living memory. That is no reflection on him as an individual or on his decency; it is a reflection on the record of the Government whom he led, and more specifically on their economic incompetence and the social division that they created.

The right hon. Gentleman made one useful contribution to the debate of which the Government should take note. In his condemnation of the use of the terms "Mr. Boom" and "Mr. Bust" to describe the Leader of the Opposition and the shadow Chancellor, he spoke of "sneer and jeer" politics. I am sure that Labour Members would regard "Mr. Sneer" and "Mr. Jeer" as equally appropriate descriptions of the Leader of the Opposition and the shadow Chancellor, so I thank the right hon. Gentleman for that idea.

Labour Members would agree with much of what the hon. Member for Harrogate and Knaresborough (Mr. Willis) said, although, like every Liberal Democrat Member, he asked for more and more public spending. There is never any reckoning of how that is to be paid for, and account is never taken of the need for a stable economy and for economic prudence as the foundation of public spending.

I shall give an example of Liberal Democrat contradiction from my area. The right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) recently said that we cannot have high levels of public spending and low levels of taxation, and that it is important that politicians are honest about the fact that they must put up

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taxes if they want to increase spending. Last week, the Liberal Democrat group on Bury council proposed an amendment to the Labour-controlled council's budget to reduce council tax. They displayed none of the honesty recommended by their national leader; they did not say that reasonable, fair taxation is necessary to pay for decent services. They made a nakedly political move to pander to an audience.

Throughout the country, Liberal Democrats at a local level are inconsistent with their national leadership. They do not merely have different policies in different towns--sometimes they have different policies in different streets. Is it not about time that they were honest with the British people about how they would pay for the increased public expenditure for which they continually ask?

Mr. Allan: Before the hon. Gentleman awards us the monopoly on complaints about local taxation, I hope that he will refer to Labour opposition groups, such as the one in Sheffield, who attack Liberal Democrat-controlled councils for their council tax rises. Does he not accept that it seems to be a traditional role of the opposition in local government, whatever party they represent, to attack the ruling group for its council tax rise? Will he pay attention to the proposals published in the Liberal Democrats' alternative Budget, which clearly point out where additional funding at a national level would come from?

Mr. Lewis: The hon. Gentleman's party says that it is different; that is the whole point of the remarks of the right hon. Member for Ross, Skye and Inverness, West. He tries to pretend that the Liberal Democrats are somehow separate from politicians in other parties, and that they are more honest, straighter and tell the truth. Yet in Bury, the Liberal Democrats did exactly what their national leader tells us is unacceptable and misleading--they called for a council tax reduction purely to pander to local opinion at the time and without any regard for the consequences for local services. The Liberal Democrats cannot continue to have it all ways.

The Budget has been warmly welcomed by my constituents. It demonstrates that the Government have honoured their pre-election promises to the British people. To be specific about the fundamental pre-election promise, the Budget continued the rebuilding of the country on the foundations of economic stability and social justice. The Government have always aimed to combine encouragement of individual ambition and aspiration for families who want a decent life and to do well for themselves with a commitment to community solidarity, to public services and to the idea that we achieve far more together than we ever do alone. The Budget is responsible and it ensures that we are able significantly to invest in the people's priorities. It would never have been possible without the tough choices made by this Government early on in our Administration.

The Conservative party seeks to pretend that we have continued its economic policies and that, had it continued in government in 1997, the economy would have been as strong as it is now and the fundamentals would have been in place. I shall give three specific examples of why that is arrant nonsense and of where this Government had to make distinctive and difficult choices.

The first decision was to give responsibility for the setting of interest rates to the Bank of England's Monetary Policy Committee. That option was available to Tory

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Chancellors for many years, but they declined to take it. This Government took the decision to prioritise paying off the national debt. That is a distinctive choice, which Governments do not have to make. In fact, the Conservative party doubled national debt while in office.

Mr. Peter Brooke (Cities of London and Westminster): Will the hon. Gentleman give way?

Mr. Lewis: I shall give way in a minute.

This Government chose to make the payment of national debt central to their economic strategy. Yes, we chose to stay within tight spending limits, but that did not mean that we did not spend considerably more in the first two years of the Parliament on health and education--we did. [Hon. Members: "No you did not."] Yes we did. However, the overall Government spend stayed within previous limits. It is interesting that the Conservative party says that that is the best example of our continuing its economic policies, yet the right hon. Member for Huntingdon said that the Conservatives would not have done so had they been in government post 1997.

Mr. Brooke: I feared that the hon. Gentleman would get to a point where my intervention would be irrelevant. As he has said that the previous Government doubled the national debt, will he remind the House of the national debt in 1979 and of that in 1997? I think that he will find that it did not double during that period.

Mr. Lewis: I thank the right hon. Gentleman for his intervention. I was referring specifically to the period between 1992 and 1997, when he was a leading and respected member of the Government. It is important that people who served in that Government take responsibility for their record and legacy, and do not seem to have a collective fit of amnesia.

This Government made distinctive and difficult decisions in their early days that led to today's economic stability. It is wrong to pretend that the economic strength of our country, which the right hon. Member for Huntingdon was honourable enough to acknowledge, was created by accident or chance. We, as a Government, recognise that it is also due to the enterprise of the British people and their contribution to that economic growth and success. If this Government had not laid such foundations, we would not now be able to use that economic stability to invest in our country's future.

Let us consider the outcome of those policies of economic stability and competence. One difficulty for Conservatives is that they cannot cope with the fact that the British people now see the Labour party as the party of economic competence. The Conservative party finds it difficult to stomach the fact that the British people recognise that the Labour party has travelled a tremendous distance and demonstrated--not just promised--in four years that it can be trusted to manage the economy. The outcome of the policies is clear. We have the lowest inflation for 30 years and we have low interest rates. The average family now pays £1,200 per household a year less for their mortgage than they did in 1997. That is a significant contribution to household income. The Government have created 1 million new jobs, and we have the lowest unemployment for 26 years.

We should remember that it was not so long ago that we were being told that mass unemployment was a price worth paying for low inflation. For a long period during

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the reign of the Conservative party, the British people were told that they could not have low unemployment and low inflation at the same time because it was managerially impossible. In fact, I think that it was Lord Lamont who said that unemployment was a price worth paying. That was an insensitive and disgraceful comment, and this Government have demonstrated that unemployment is not a necessary price to pay for the creation of a low-inflation Britain. It is a Labour Government who have delivered low interest rates, low inflation and low unemployment.

All that does not mean that there are not job losses--of course there continue to be people who lose their jobs. In recent weeks in my constituency, I have seen the sad loss of the East Lancs paper mill, which had offered a number of very important jobs and played an integral part in the community of Radcliffe, which is an important part of my constituency. What is important now to those who have lost their jobs is an opportunity to get another one, and that there will be investment in their area and community to give them hope, so that they are not consigned to long-term unemployment.

In the 1980s and 1990s, far too many people were consigned to the scrap heap of unemployment. In some families, three generations of people were never given the opportunity of a job and of engaging positively in society and in the community in which they lived. There continue to be job losses in certain sectors, but if one maps what happens one sees that the majority of people who find themselves out of work are very quickly able to reskill, retrain and find alternative employment opportunities.

Indeed, one of this Government's great successes has been the incentivisation of work through the new deal, which gets young and long-term unemployed people off benefit and into work. There has been a cultural shift in the social security system and economic strategy. Many people used to be better off not working. Low-paid jobs were available, but people were not able to secure work that provided a decent income for themselves and their families. This Government have created an environment that incentivises work and makes it pay. That in itself constructively engages many people in the community, so that they can make a positive contribution to the economy.

It is essential that our economic and social policy is relevant to all parts of the country. That is why the establishment of the regional development agencies was so important. They look at the strengths and needs of each region and ensure that we invest according to their sensitivity, history and future needs. Of course, the Conservative party is committed to abolishing RDAs, which would be disastrous in areas such as the north-west, where we are beginning to see the coming together of a local strategy between the public and private sectors, working with central Government to lay the foundations for continued economic growth and prosperity while at the same time tackling the fundamental social exclusion that has built up over many years. To ditch regional policy and, more specifically, to abolish RDAs, as the Conservatives would if they had their way, would be a lost opportunity.

One of the most incredible facts revealed in the Budget is the statistic on national debt: in one year, this Government have paid off more debt than was paid off in the preceding 50 years added together. That is a major achievement. I say that not because it is a good soundbite

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or because it sounds good politically but because I believe that we should analyse the way in which the state spends its money and how it prioritises that spend.

Under the Conservative Government, in 1997, 42p in every pound of taxpayers' money was spent on paying either unemployment benefit or debt interest repayments. Only 58p in every pound remained to be spent on front-line services such as education, health and the fight against crime. Now, only 16p in every pound is spent on debt repayment and unemployment benefit and 84p in every pound of taxpayers' money is available to be spent on services that matter to people. There has been a massive change and a fundamental shift in the management of the economy since the 1997 election.


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