House of Commons Hansard Debates for 12 Mar 1993

Hansard

House of Commons

Friday 12 March 1993

The House met at half-past Nine o'clock

PRAYERS

[Madam Speaker-- in the Chair ]

The Economy

9.34 am

Dr. Lynne Jones (Birmingham, Selly Oak) : I beg to move, That this House has no confidence in the Government's management of the economy which has simultaneously created the longest recession since the 1930s, an uncontrolled balance of payments deficit and a growing public sector borrowing requirement with inflation only kept down by mass unemployment ; regrets that the Government's latest solution to this is further dismantling the welfare state and turning Britain into a low-wage, low-tech economy ; and therefore proposes instead to bring the country's financial and military commitments into line with its resources as a medium-sized European power, to curtail the short-termism of the financial institutions and to increase investment in manufacturing to internationally competitive levels by ensuring future policy, including that on taxation, organisation and regulation of financial institutions, exchange rates and interest rates, is dictated by the need to develop the domestic productive economy, not the financial operations of the City of London, harmonising over five years United Kingdom military spending to the European Community's average proportion of GDP, thus eventually releasing £7 billion a year and investing at least an additional £10 billion a year released from the above measures, the reversal of tax cuts to the very wealthy and from an initial and temporary increase in borrowing, in infrastructure and education and in the revitalisation and modernisation of domestic production, thereby laying the foundation for sustained economic growth and the restoration of full employment.

I shall begin with a quotation :

"The ERM is not an optional extra, an add on to be jettisoned at the first hint of trouble. It is and will remain at the very centre of our macro economic policy."

That was said by the Chancellor of the Exchequer on 10 July 1992. Between then and 16 September, black Wednesday, the right hon. Gentleman strove, sought, fought and finally yielded. He yielded so fast that he did not even have time to inform his right hon. Friend the Chief Secretary to the Treasury, who on that very day wrote to my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) informing him that the Government were as committed as ever to the ERM.

Shortly afterwards, Parliament was recalled and the Prime Minister spoke then of what he considered to be the essential requirements for economic recovery : low inflation, low taxes, free trade and freedom from interference by Government. It is strange that there was no mention of exchange rates or the ERM and no mention, as there is now, about the need to do something about our manufacturing industry. We are back to the well- known monetarist formula.

Of course, those events are well known and have been well documented. They are part of the reason for the motion. The Government's economic policy is in tatters. There have been 14 years of Conservative mismanagement. At the 1987 general election we were presented with the British bulldog, the economic miracle that the

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Conservatives had brought upon us. That soon collapsed. Before the last election we were told that green shoots were appearing everywhere.

I am reminded of the radio programme that I listened to when I was a child. It was called "Twenty Questions" and the clues were animal, vegetable or mineral. We have had the animal and the vegetable, and we are now left with lead-weighted boots--Government inertia. The Government are transfixed, unable to move, not knowing what to do about the mess that they have brought us to. Conservative Members tell us that it is just a symbol of the worldwide recession ; it is happening everywhere.

I should like to quote from an interview on "Newsnight" between the Prime Minister and Jeremy Paxman during the last general election : "The Prime Minister : The principal cause of the start of the recession was the monetary policy immediately after the stock exchange crash in the late 1980s.'

"Mr. Paxman : You used the words "principal cause" there.' "The Prime Minister : I think that was the principal cause of the difficulties, yes." '

During that interview, perhaps by mistake, the Prime Minister let slip the real cause of the problem that he, as Chancellor of the Exchequer, had a good deal to answer for.

Mr. James Paice (Cambridgeshire, South-East) : Perhaps the hon. Lady will recall that, immediately after the stock exchange collapse, my right hon. Friend the then Chancellor--Lord Lawson--reduced interest rates to prevent the worldwide slump that was universally expected. The then shadow Chancellor, now the Leader of the Opposition, exhorted him to reduce interest rates even further and kept on with that proposal. Does the hon. Lady think that the right hon. and learned Gentleman was right or wrong? Would such a policy have made things better or worse?

Dr. Jones : In addition to reducing interest rates, other policies that the former Chancellor let rip, including major tax cuts, introduced major problems into the economy.

This country was the first to go into recession, a recession which is now the longest lasting since the 1930s. Since our membership of the ERM begun and ended, unemployment has risen twice as fast as it has in the rest of the EC.

The tragedy of all this is that, unlike the recession in the 1930s, the people most affected are our young people. In Birmingham, the unemployment rate among 18 and 19-year-olds is 33.2 per cent. The Government do not even bother to collect the unemployment rate among 16 to 17-year-olds.

In 1992, according to Dun and Bradstreet, 67,767 businesses folded. We are in a mess. I can give a list of jobs lost in the last 12 months in Birmingham : 160 jobs lost to the Carlyle Group, due to closure ; 200 jobs lost to Trans-European Airways ; 100 jobs lost from the Concentric Group ; 100 from George Stubbings ; 100 from Proton (UK) ; 100 from Hills Precision ; 135 from Raybone Chesterman ; 400 earlier last year from South Birmingham health authority, and another 400 from North Birmingham health authority, and more to come from health authorities ; 124 from the BBC ; 250 from Avery Guidex. Now, because of Government cuts in local government expenditure, 1, 000 people are likely to lose their jobs as a result of problems in the budget of

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Birmingham city council. Last but not least, 670 redundancies have already been announced from Leyland DAF. This is just in Birmingham alone.

Last year, we had the much-heralded autumn statement. The Chancellor put in a little bit of money here and there, but what he gave with one hand he took away with the other. There have been minor improvements in some of the indicators, but the commentators on industry talk about the recovery being fragile, very modest, pretty anaemic and variable, and say that they are wary of the talk of green shoots.

The autumn statement predicted growth of less than 1 per cent. for this year. The hon. Member for Mid-Staffordshire (Mr. Fabricant) asked the Secretary of State for Employment to make a statement on the effect of the autumn statement on unemployment. At first, the right hon. Lady was evasive, but when the hon. Member pressed her, asking how many jobs would be created as a result of the autumn statement, all that she could say was that it was "hoped" that the autumn statement would protect existing jobs.

The autumn statement did nothing to create jobs. It put a little bit extra money into the car industry, because it resulted in larger car sales, but that was only a modest increase. We wait for next week's Budget to see how the Chancellor will take back the £700 million that he put into industry.

On present predictions, unemployment is expected to remain at 3 million to 3.5 million until the end of the century. Goldman Sachs says that we need an average of 2.5 per cent. growth if we are to keep unemployment at current levels. The Cambridge economic forecast talks of economic growth at a mere 1.7 per cent., and a continued decline in manufacturing.

Since 1990, our gross domestic product has fallen by 2.5 per cent. Other countries have seen the effects of the recession, but in Germany there has been growth in that period of 5.3 per cent. As I learnt in the past few days during a visit to Germany with the Select Committee on Science and Technology, its GDP is 50 per cent. bigger than ours. That of France grew by 6.1 per cent. and that of the EC as a whole by 4.5 per cent.

There is a massive deficit in British trade with Japan, despite the talking up of the odd million pound's worth of sales. There is a £900 million deficit in cars, a £2.7 billion deficit in electrical goods, a £1 billion deficit in computer equipment, a £846 million deficit in telecommunications and sound equipment and a £855 million deficit in white goods.

It seems to the Opposition, and to commentators at large, that the Government's sole economic policy is that of attracting foreign investment. During my visit to Germany, a Conservative Member asked the Economics Minister of Baden-Wu"rttemberg, which we were visiting, whether he would welcome Japanese investment in his state. He nodded his head in a declining manner, and the Conservative Member said, "Well, you don't really need it, do you?" They do not need it, but we seem to.

Many people are predicting that our manufacturing sector is now too small to produce sufficient exports to lead our economy out of recession. I have already spoken of the trade imbalance with Japan, and 55 per cent. of our new car registrations are for imports.

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There has to be an alternative to the Conservative Government's stagnating policies. The motion sets out that alternative. First, there is an urgent need to look at

"the short-termism of the financial institutions"

and to develop policies to ensure that banks and financial institutions work with industry, as we learnt that they do in Germany. In Germany, industrial concerns retain far more of their equity. Their dividends are far lower, they reinvest in their companies, and the banks have a long-term interest. In this country, large companies find it easy to raise equity, but they seem to spend most of it on takeover bids rather than on restructuring industry and developing investment for the future.

The Government have the responsibility for devising a financial structure in which the mistakes of the market, all too evident in the past 14 years, can be minimised and a fiscal policy that encourages investment. The Engineering Employers Federation and many industrialists have commented on the fact that existing tax arrangements have an anti-investment bias. The Government reduced corporation tax, but at the same time dramatically reduced the capital allowance for manufacturing investment. One industrialist called this "supporting the casino economy".

We need to encourage a manufacturing partnership between industry and finance. Businesses should be supported as growing concerns rather than as property collateral. There need to be incentives to invest. This can be done with the banks, perhaps by offering some kind of Government support and guarantees. I hardly dare to say it, but there is also a strong argument for the creation of a national investment bank.

When we were in Germany, despite the fact that it has an image of being run by right-wing conservative Governments, I was struck by the fact that they have a socialist approach to some of the market issues. Many of the banks are stateowned. We met representatives of the bank institutions and they talked to us about their policies in partnership with industry.

The German Government support industry. The Minister of the Department of Technology to whom we spoke and his officials were anxious to ensure that we understood that there was a partnership based on market considerations. The firms concerned would usually be asked to put up money themselves in return for Government money on a one-to-one basis. We were all impressed-- Government and Opposition Members--by the technological infrastructure, the relationship between firms and the support that is provided, mainly through the state. We saw the Fraunhofer institutes, which have been set up to undertake basic research and to study technological applications. At the same time, the institutes work with industry. With some contracts, industry pays; with others, services are provided virtually free of charge to small businesses.

The House of Lords Select Committee on Science and Technology recommended that something similar should be set up in the United Kingdom--the Faraday centres. That idea has not got off the ground, because the Government are interested in encouraging such developments only if there can be funding through the existing science budget. In a recent interview, the Prime Minister made much of the fact that we now have a Cabinet Minister with responsibilities for science. It should be remembered, however, that the science budget was cut as a result of the autumn statement. The Chancellor of the

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Duchy of Lancaster has advanced no strong argument in support of that budget. He has not said that the budget should be increased to set up the Faraday centres that were recommended by the House of Lords Select Committee.

We have the Link projects with universities and business, but the support for them is a mere £100 million from the Department of Trade and Industry. Even less is provided by the Ministry of Defence, which should be examining ways of diversifying out of defence research. We saw the Steinbeis institute, which was set up with little public funding. That funding was used as a pump primer. It was offered on a non-profit-making basis. It provides technological advice and services to German industry through centres based throughout Germany.

We saw the Institute for Micro Electronics, which is doing for Germany's industry what the Japanese have done for theirs in the development of microchips. The Germans have decided to fight back and not let the Japanese take over the market. They have decided to develop their own industries. It is a pity that our Government have not adopted that approach.

During the Administration of the then right hon. Member for Finchley, now Baroness Thatcher, Britain's share of high-tech exports fell from 11.2 to 9.2 per cent. That was a reversal of the trend in the 1970s when the Labour Government adopted the sort of policies that have now been developed successfully in Germany. It is-- [Interruption.] Conservative Members do not like the truth. They do not like to hear that the economy grew far faster under a Labour Government.

There are so many developments that the Government should be encouraging, many of which depend initially on public investment. That has been demonstrated by the Governments of Germany, Taiwan and Singapore. Indeed, Singapore leads the world in technological infrastructure. It expects to have a national grid of high-tech optical fibres very soon. Other newly industrialising countries are setting up programmes to strengthen their science base. Unfortunately, that is not happening in the United Kingdom, and we are the poorer for it. If we are to compete in the world, we must develop a partnership between the Government and industry to develop new technological projects. We must have intelligent vehicle and highway systems. We must develop information technology and biotechnology. We must provide more training.

The Government talk a great deal about their various schemes. I shall take the youth training scheme as an example. The Government put £56 a week per person into that scheme. Out of that must come the £29 or £35 that is paid to the young person who is receiving training. What sort of quality training can be obtained for that sort of input? When the redundancies were announced at Leyland DAF recently, walking down the line that day with members of the work force were two youth trainees. Their training depended on having an industry where they could get work experience. In any event, they would not have received much training from the paltry amount of money that the Government put into the scheme.

It is becoming increasingly difficult for the TECs to place people on Government schemes in industry so that they might obtain the necessary experience. The Government abolished the body that was responsible for training in the engineering industry and replaced it with a training authority, which has no statutory power to impose a compulsory training levy. The Government are

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thinking of abolishing the compulsory training levy that is available to the Construction Industry Training Board. That possibility is much feared by the construction industry, which wants the levy to continue. It knows that it needs good-quality, trained people.

We must ensure that people receive high-quality training that leads to proper qualifications. Again, we can learn from the countries of the Pacific rim. Taiwan is rapidly developing its education systems, including higher education. We need skills, but what is happening? Yesterday, we heard of the redundancies at Rolls-Royce. I have already mentioned Leyland DAF. Our most skilled workers are being sent down the line, and the Government sit idly by and let it happen. According to the Organisation for Economic Co-operation and Development, in the 22-country league table of the developed nations skilled workers, we occupy 21st place.

Mr. Oliver Heald (Hertfordshire, North) : The hon. Lady has referred to Rolls-Royce. One of the reasons for that company making redundancies is the significant drop in demand for military aircraft following the end of the cold war. It is proposed in the motion to release £7 billion a year from defence spending. How will that help the Rolls-Royce workers, people in my constituency and the constituents of the hon. Member for Barrow and Furness (Mr. Hutton), who rely on defence spending?

Dr. Jones : I thank the hon. Gentleman for reminding me of the terms of the motion, but I assure him that I am familiar with them. I shall be discussing the issue that he has raised later in my speech. The motion represents a radical change in our economy. It would lead to a radical increase in investment in a productive economy. We propose to find the extra money by following at least three different routes, which are set out in the motion. It is right that defence cuts are proposed. The three routes include increased taxation for those who have benefited most from the Government's tax reductions. The richest 10 per cent. should pay their share. Taxing those people a little more is unlikely to have any effect on demand within the economy. In fact, money would be re-routed to those on lower incomes and would be reflationary.

We talk about an increase in borrowing. There must be an increase in the short term while we undertake the restructuring of our industry. That means changes in our defence industry.

Mr. Don Foster (Bath) : Is the hon. Lady aware that she has the full support of the Chancellor of the Duchy of Lancaster? During the general election he made the very same point about the need to increase borrowing.

Dr. Jones : It is now widely recognised throughout Europe that we have to spend our way out of recession. That is classic Keynsian economics, and that is what I am advocating this morning. There has been talk about defence jobs. Since the end of 1991, 2, 000 jobs have been lost at the Defence Research Agency ; 400 at FMRO Portsmouth ; 475 at Portland naval base, with the base to close by April 1996 ; 250 at RAF Chilmark ; and 500 at RNAD Trecwn. The rundown of USAF Upper Heyford commences next year, with the loss of more than 1,000 jobs. More than 100 jobs are to go at Royal Ordnance, with a review pending of the total numbers employed and the number of sites. Some 10,000

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jobs have been lost at BAe Military Aircraft ; 4,000 at BAe Dynamics ; 1,200 at GEC Marconi ; 500 at GEC Ferranti ; 1,000 at Rolls-Royce Military Engines ; 600 at Westland ; 2,000 at Dowty ; and 700 at Smiths Industries. All those add up to more than 32,000 jobs already lost as a result of changes in defence spending.

What have the Government done about that? Absolutely nothing. They have allowed skilled workers to lost their jobs. We need those skills. We must invest in new technologies and use the skills of those whom the Government are prepared to put on the scrap heap. That is why there needs to be a restructuring of the economy. There can be defence cuts over that period-- for example, we could start by cutting the £1.5 billion spent on imported equipment. That would not affect jobs in this country. The cost of each job in the defence industry is about twice the cost of jobs elsewhere.

We are prepared to face the inevitable--that we are a middle-ranking European power. We should be reducing our defence expenditure to the average in Europe ; and we should be using the resources released, on a sensible strategic basis, to make the sort of investment being made by the Taiwanese Government. British Aerospace has moved to Taiwan because its Government are prepared to invest--

Mr. Bernard Jenkin (Colchester, North) : Countries in the far east have been so successful because they have extremely flexible labour forces, they do not have strong trade unions and they do not have all the paraphernalia of the European social charter. Is the hon. Lady recommending that we impose on our labour force the same labour regimes that are imposed in the far east?

Dr. Jones : I thought that someone might suggest that. It is the policy being advocated by Conservative Members, who want us to reduce our standards and turn Britain into a third-world country. In fact, third-word countries are improving standards for their workers. Workers in Germany have far better conditions than those in Britain, yet their productive capacity is much higher. Conservative Members constantly talk about abolishing wages councils and minimum wages, as though those policies would be good for employment. There is no evidence that a continual decline in the standard of conditions for the work force leads to greater employment.

I tabled parliamentary questions asking the Government to justify their assertion that a minimum wage policy would lead to loss of employment. In reply, the Government cited 26 references in support of their case. I asked the Library to look into the detail of those references and it transpired that, of those 26 references, only 10 showed some positive link between minimum wages and unemployment. The remainder showed no such link ; indeed, they showed the reverse. When I studied the 10 references purported to show a link between minimum wages and unemployment, one showed that minimum wages could create jobs. There are a number of reasons for that, but they are beyond the grasp of Conservative Members. The Government's answers to my parliamentary questions clearly show that there is no basis for their assertion that minimum wages

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lead to higher unemployment. On the contrary, they lead to greater buying power within the market and a stimulation of the economy.

Mr. Jenkin : Will the hon. Lady comment on the recent OECD report, which pointed to higher levels of unemployment in France and suggested that there was a firm link between its national minimum wage and the rate of unemployment?

Dr. Jones : There are many other reasons why France has problems with unemployment, including perhaps the fact that it advocates policies not dissimilar to those being advocated by Conservative Members. There is a misnomer in the labelling of European Governments. The French Government purport to be socialist, yet they follow monetarist policies. The German Government purport to be conservative, yet they adopt social market economics.

Ms. Diane Abbott (Hackney, North and Stoke Newington) : Does my hon. Friend agree that one reason why France has such high unemployment is that it is still within the European exchange rate mechanism, with the high interest rates that go with that? On the point about wage levels, it was not a Labour Member or some radical, but the right hon. Member for Old Bexley and Sidcup (Mr. Heath) who said that if Britain signed the Maastricht treaty without agreeing to the social charter, Britain would become the sweatshop of Europe. What sort of future is there for a Britain that competes only on the basis of low-cost labour rather than skill?

Dr. Jones : I agree with my hon. Friend, who makes her point forcefully.

I have referred to the Government's failures and how we should look to the future and begin to restructure our industry. We must increase public expenditure by £10 billion a year. I hope that the Chancellor will advocate such proposals in this Budget next week, but I doubt whether he will. Indeed, he will probably reverse some of the fundamentals of economic success that the Prime Minister mentioned in September--for example, low taxation. Meanwhile, we will continue to press for greater investment.

In the short term, the Government should begin to co-operate with local authorities and halt the cuts that they are imposing on them ; they are the cause of concern in many Conservative councils. I understand that the Prime Minister recently met representatives of local councils, including Lady Anson, the leader of the Association of District Councils. He told them that there needed to be a strong role for local authorities. If he wants to convince us that he really meant those words, he could start by reconsidering the budgets imposed on local authorities, which have forced many of them to shed thousands of jobs. I have already said that 1,000 jobs are to be lost in my city in addition to all the other redundancies.

There is an urgent need to invest in housing. The Institute of Housing recognises that there is an £8 billion backlog of repairs to council houses as well as a massive backlog in the private sector, where repairs and renovations are also needed. The institute estimates--and it has been supported in this by no less a person than the Duke of Edinburgh--that we need to build 100,000 homes each year to cope with demand, compared with the current figure of 30,000.

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Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : The hon. Lady talks about raising £10 billion of public expenditure.

Mr. Ken Livingstone (Brent, East) : He looks as though he could chip in a bob or two.

Mr. Clifton-Brown : I was interested to hear the hon. Gentleman's remarks on the radio this morning ; perhaps he is a convert to the capitalist system.

Will the hon. Lady explain how that £10 billion is to be raised? Surely it was the platform of raising taxes that lost Labour the last general election.

Dr. Jones : The hon. Gentleman could not have listened to what I said. I explained the source of that finance. There will be some increased taxation for those who have enjoyed the biggest handouts from the Government. I was returned at the last general election with the confidence of many people who would have paid higher taxes under a Labour Government. I am totally committed to a progressive tax system that is seen to be fair.

I am concerned that my right hon. and hon. Friends on the Front Bench seem to have gone away from that principle, but it is one to which I hold. The eight people out of 10 who would have been better off under our policies would agree. They would consider that a fairer system than extending value added tax to other items, which it is widely rumoured is in the Chancellor's thinking for next week's Budget.

Mr. Clifton-Brown : When the top marginal rate of tax was reduced from 60 to 40 per cent. the total tax take from that group of income earners increased. Under the hon. Lady's system, she would have difficulty raising the kind of money that she seeks.

Dr. Jones : During that period there were increases--high inflation, increased salaries, and so on. A comparison of British tax rates shows that they are out of line with competitor countries, such as Germany, which have higher tax rates and are doing far better than Britain.

Mr. Jacques Arnold (Gravesham) : I believe that I have the statistics that the hon. Lady is fumbling around for--the proportion of the income tax take paid by those in the top band rose from 25 per cent. of the total to 29 per cent. It is not a question of the absolute amount and inflation, with which the Labour party is very familiar ; the point is that the proportion rose. Can the hon. Lady explain that?

Dr. Jones : Income increased, and more people were in that tax band. There is no evidence that the economy has been successful as a result of such tax cuts. The contrary is true.

Mr. Bryan Gould (Dagenham) : Conservative Members might recall, though they would probably prefer to forget--and certainly members of the Government Front Bench do--that to substantiate the argument that tax cuts would provide an incentive a man named C. M. Brown was commissioned by the Treasury to conduct a major study. It was naturally hoped that it would demonstrate the correctness of the Government's views. It did not. We heard nothing more of that study, and I suspect that no Conservative Member has ever read it.

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Dr. Jones : There is much accepted wisdom on the Government Benches. Conservative Members think that something is the case, but the facts prove otherwise.

Investment is sorely needed in other parts of this country's infrastructure and would be welcomed by many industrialists. Representatives of the Confederation of British Industry in Birmingham with whom I have talked are totally opposed to the Government's plans for rail privatisation. They want a decent transport infrastructure provided through British Rail, investment, and a countrywide transport policy.

We see instead proposed projects cancelled or postponed. When will the Jubilee line be completed? When will we be allowed to build the midland metro in Birmingham, which is much needed if the council's efforts to improve the city's infrastructure are to be successful? We need a light railway. Incidentally, I would not have advocated the kind of project investment that was made in Birmingham, but those projects were supported by the council's Conservative opposition and sanctioned by the Government.

If that huge investment in the city centre is not to be wasted, it must be followed up with other infrastructure investment. Derelict land could be reclaimed. Projects would create jobs while the kind of restructuring to which I have referred was under way.

Will the Government be bold and advocate such policies to create full employment? That is the only way forward if today's appalling unemployment levels are to fall--and those high levels are all that we can look forward to under current policies.

On 16 September, because the Chancellor would not listen to reason, continued down a blind alley, refused to do what was required and what was on offer to him--a realignment of the pound within the ERM--he was willing to throw £5 billion of taxpayers' money down the drain. It was completely wasted. Let us spend £10 billion to get the economy back on its feet and to get Britain back to work.

10.16 am

Sir Fergus Montgomery (Altrincham and Sale) : I congratulate the hon. Member for Birmingham, Selly Oak (Dr. Jones) on her luck in the ballot, but I cannot congratulate her on much more. As she spoke, I kept thinking, "Come back, Sir Anthony Beaumont-Dark, all is forgiven." We heard this morning only the same old dreary socialist platitudes that we have heard time and again--gloom, doom and despondency. The hon. Lady produced some carefully prepared statements about the economy's fragile recovery. I will quote back to the hon. Lady other carefully prepared statements which give the counter point of view.

Sir Michael Angus, president of the Confederation of British Industry--the hon. Lady bragged that she talks regularly to the CBI in Birmingham--said :

"The UK economy is starting to grow again the chances are that this time around, the green shoots will stay above ground."-- [Laughter.] Those are not my words, but the view of the CBI president. The Association of British Chambers of Commerce quarterly economic survey stated :

"The economy has seen an encouraging spurt in export growth which appears sustainable Business confidence has surged in response to the Autumn Statement, the stability of the fourth quarter and the success of exporters."--

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[Laughter.] Good news is always greeted with gales of laughter from Labour, while bad news produces longer and longer faces on Labour Members.

Mr. Livingstone : It is amazing to suggest that there has been a surge of business confidence in response to the autumn statement. My constituency has the benefits of a Conservative-controlled council under a Conservative Government. Since the election, there has been a dramatic increase in unemployment in the constituency of Brent, North--which is held by a Conservative--and in the two Labour seats in the south. That unemployment is fuelled by lunatic national policies and massive privatisation and job losses by the council, to produce 25 per cent. male unemployment. If there were any green shoots, the goats have eaten them already.

Sir Fergus Montgomery : If I had realised that the hon. Gentleman was going to deliver his whole speech, I might not have let him intervene. The hon. Lady and her party are still living in the past, which is why last April Labour lost its fourth successive general election and the electorate wiped the smirk off Labour's face in a very convincing way.

Of course unemployment is a terrible problem. I was born and raised in the hungry 1920s and 1930s on Tyneside

Mr. Livingstone : The hon. Gentleman has done very well.

Sir Fergus Montgomery : I thank the hon. Gentleman--it was mostly due to Conservative Governments. The Opposition Front-Bench spokesman, the hon. Member for Newcastle upon Tyne, East (Mr. Brown) knows the area where I was born very well. There was tremendous unemployment. I was born in the constituency represented by the Opposition deputy Chief Whip, the hon. Member for Jarrow (Mr. Dixon), and I remember as a child watching men standing aimlessly on street corners--a spectre which I have never forgotten. One of the most awful things for anyone to endure must be to be unemployed and desperately want to work ; I do not want mass unemployment any more than anyone else.

Unemployment is not a problem in this country alone, although that was the message that the Opposition tried unsuccessfully to put across at the last election. They gave the impression that we were the only country in the world having problems, that everywhere else was a land of milk and honey and only Britain had massive unemployment.

If there is an easy answer, why has no one found it? The hon. Member for Selly Oak talked blithely about France, but there are more than 3 million unemployed there. The French go to the polls this month and I believe that the hon. Lady's French comrades will get a terrible hiding ; according to every opinion poll, they are going to be massacred. President Mitterrand will be left in splendid isolation with a right-wing Government instead of his French comrades to support him.

Spain, Canada, Ireland, Finland and Australia all have a higher percentage of unemployment. Tomorrow the Australians will go the polls and the chances are that the Australian electors will tell their Labour Government where to go--I sincerely hope so.

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Mr. Nicholas Brown (Newcastle upon Tyne, East) indicated dissent.

Sir Fergus Montgomery : The hon. Gentleman shakes his head--we could have a bet on it. Perhaps Mr. Keating is playing the republican ticket to distract people's attention from the state of the economy in Australia. Perhaps he thinks that that will do the trick. I believe that the Australians are cleverer than that.

Mr. Nigel Evans (Ribble Valley) : Has my hon. Friend read recent reports about the number of people who lost their jobs and become homeless in Germany, which at one time was the powerhouse of the European Community? Since losing their jobs and homes they have frozen to death on the German streets.

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