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Mr. Michael Clapham (Barnsley, West and Penistone): The hon. Gentleman talks of windfall gains. Is he aware that, in the four years since 1992, 87,740 jobs have been lost in the utilities alone? Does he consider that a gain? Does he agree that a windfall tax provides a way of creating the jobs that the utilities have neglected to create, and makes possible a process similar to that taking place in America, where utilities work with Government to create jobs?
Mr. Legg: The hon. Gentleman has hit on an important factor. The Labour party criticises the fact that the utilities have increased their profits, but the reason why they have been able to increase their profits is that, like all the industries that were formerly in the public sector, they were chronically inefficiently run as nationalised concerns. The state runs businesses badly; the privatised companies now secure a reasonable return on their capital, because they have become efficient.
If the Labour party does want to reverse the current policy and return those companies to the public sector--if it believes that state ownership creates jobs and wealth--I shall be interested to hear the winding-up speech from the Opposition Front Bench, but I do not think that Labour will go that far. I think that Opposition Front Benchers realise that, once again, Conservative policies have been successful, and that privatisation has been a great success for this country.
In debates of this kind, we normally talk a great deal about macro-economic policies, GDP deflators and growth rates of 3.5 per cent. We hear a good deal of technical jargon. Let me give a few instances of what big numbers and macro-economic policies mean at local level. In the past two and a half years, an extra 8,737 jobs have been created in Milton Keynes. That is a net increase over that period. The number of people employed in Milton Keynes has risen from just over 90,000 to just under 99,000. Those are not low-quality jobs, as Opposition Members would sometimes try to make us believe; they are high-quality jobs in technology, computers and electronics--jobs that are providing good standards of living for people in Milton Keynes.
The Labour party also likes to try to paint a picture of industrial decline. Again, the local picture does not support that. Since the last general election, the total amount of factory and warehouse space in Milton Keynes has increased by more than 2.2 million sq ft. Our manufacturing capacity has expanded significantly, and our retail outlets are now doing the same. An investment programme in our city centre will run to £100 million. Since the last election, the private sector in Milton Keynes has invested over £1 billion.
Mr. David Trimble (Upper Bann):
When the Chancellor of the Exchequer announced the Budget, my colleagues and I gave it a general welcome--basically because, in that Budget as in the Bill, the Chancellor had been restrained in his tax cuts. We were glad that he had not given in to the urgings of some of his colleagues for radical, deep cuts. Some of my own colleagues, indeed, doubted that there was a case for any tax cuts in the current economic circumstances.
Furthermore, at the time of the Budget the Chancellor boasted that he had significantly tightened the Government's fiscal stance. Subsequent examination has shown that the picture is not quite as clear cut as it appeared then, but we agreed with what appeared to be the judgment: that a tightening of the fiscal stance was necessary at that point. We still consider that necessary, in fact, because of the prospect of undesirable upward pressures on inflation. The object must be to try to restrain any such pressures.
As the hon. Member for Milton Keynes, South-West (Mr. Legg) suggested, we can choose whether to deal with that situation by means of monetary policy or by other means. The hon. Gentleman's speech foreshadowed interest rate increases, but the problem with such increases is that they penalise industry. One of the reasons why we have found the Chancellor's conduct in office in the past few years so attractive is the fact that he has resisted regular pressures for increased rates from the Bank of England. From the point of view of industry, that is very commendable. We do not want interest rate increases, because of the burden that they would place on industry.
That is not to say that we want inflationary pressures to result in inflation. The alternative to interest rate increases is a reduction in the borrowing requirement, either through expenditure cuts or through increases on the revenue side, and, on balance, that is the course that we would have favoured. It would have been much better for industry to tighten fiscal policy in order to avoid any need for interest rate increases. We applaud the Chancellor's restrained and responsible approach, but we think that, if anything, he should have taken it more wholeheartedly, to avoid that danger.
Mr. Legg:
I am interested in what the hon. Gentleman is saying. He does not want monetary policy to be tightened. Can he tell us the size of the fiscal adjustment to the public sector borrowing requirement that he thinks would be necessary to off-set any tightening of monetary policy?
Mr. Trimble:
I would be delighted if I were in a position to do so, but I frankly acknowledge that I am not. There is no point in my producing figures from the top of my head--far too much of that goes on here--so I shall not give way to the temptation with which I have been presented.
The implication behind the hon. Gentleman's question, however, is that it would be uncomfortable to follow the course that I have suggested. In some respects it would
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That brings me to my next worry about the present economic situation--the steep increase in the value of sterling that has taken place in recent months. That has been mentioned during the debate, but there has been a significant increase in the value of sterling compared with other currencies. That appears already to be affecting industry. It is bound to affect it significantly. I have been told by business men in my constituency and elsewhere of the impact that the value increase is having on their businesses. Saying that they have been forced out of certain export markets is perhaps pitching it a little too high, but, even in recent months, they have faced significant difficulties with regard to some export markets.
Therefore, the economic prospects are not terribly good in terms of the likely news in the next few months. We are threatened with interest rate increases. Some of our industries will face difficulties, particularly with regard to exports. That will affect payments and so on, so the position is not encouraging, particularly because, as I have said, it appears on closer examination that the tightening of the fiscal stance is not as good as it appeared at first sight.
I notice in particular that, in paragraph 17 of its report, the Treasury Committee welcomes
In any event, as the Select Committee goes on to observe,
Like some other hon. Members who have spoken, we regret that there will not be a further opportunity to revisit the issue of value added tax on domestic fuel and heating. As hon. Members will know, some of my colleagues supported the attempt at an earlier stage to pave the way for another vote on VAT on fuel. That has not succeeded, so we do not have the opportunity to raise the issue at present, which is a pity because we feel that that measure was ill-advised. I understand that it is not now possible to return VAT on domestic fuel to zero, but, in so far as VAT on fuel can be reduced, the opportunity should have been taken.
"the Chancellor's determination in keeping downward pressure on the PSBR . . . However . . . part of the offset to the tax cuts comes from increased revenues from measures designed to secure the tax base and the effectiveness of these is very uncertain . . . we reserve judgment on whether the means chosen will actually succeed."
I agree with that.
"the target year for the deficit to return to zero has been pushed forward by another year",
so on closer examination it is not quite as virtuous or as rosy a picture as it first appeared. None the less, we acknowledge that the Chancellor has endeavoured to act responsibly.
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