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Mr. Butterfill: Would it not also be profoundly inflationary, thereby ensuring that interest rates would have to remain high, and the pound would remain uncompetitive?
Mr. Redwood: It would certainly mean that interest rates would have to remain high or go higher if the Government lose control of wage settlements. I am sure that, privately, the Chancellor is apprehensive about that. It is important, therefore, that he gets some sense into his colleagues over their wages policy.
Mr. Bercow: My right hon. Friend just informed us of the Chancellor's view about the potentially damaging impact of a high minimum wage. Is my right hon. Friend aware that the Chancellor's view is in conflict withthat of the Minister of State, Department of Tradeand Industry, the hon. Member for Makerfield(Mr. McCartney), whose McCartney curve tells us that a higher minimum wage is good for the economy because it will boost consumer expenditure? Is that another example of the splits in the Government?
Mr. Redwood: My hon. Friend has put his finger on an important point. His example also shows a breakdown of collective responsibility. On this occasion, the Chancellor is right. He is clearly the senior Minister in the argument; he should instruct the Minister of State that the official Government line is that higher wage settlements are unhelpful, and that a realistic minimum wage is crucial to the attempt to retain some control over wage settlements.
If the President of the Board of Trade introduces a minimum wage that really does lift wages at the bottom, everyone will want a pay rise to protect differentials. I hear that members of the Cabinet, including the right hon. Lady, wish to retain their differentials over junior Ministers. If people on £100,000-a-year packages want to keep their differentials over others who are fairly well paid, surely people on £15,000 or £20,000 a year will
want the same, and they will have a better case. The Chancellor must be very worried that he will have to face not just the cost of rises at the bottom of the income scale, but the understandable request of many higher up the income scale for a similar percentage increase in their pay, with all the consequences that he identified.
Both the Chancellor and the Prime Minister say that we need flexible labour markets to compete successfully. The Confederation of British Industry agrees, and, again, I find myself in agreement with the Chancellor. Why, then, is the President of the Board of Trade doing all that she can to make our labour markets less flexible? When will she make up her mind about compulsory union recognition? Will she give in to the union bosses, and say that 50 per cent. of those voting should decide the issue, or will she be more cautious and leave it at 50 per cent. of the work force?
It will be a defining moment for the right hon. Lady when her left-wing friends discover whether there is any of the old crusader remaining in her, or whether she is selling out. Her silence again today on that crucial issue speaks volumes about her unhappiness in this Government of the spin doctors, by the spin doctors, for the spin doctors.
The Chancellor, the great meddler, is en route to becoming the great betrayer. When his party was in opposition, he huddled in the House of Commons Library, ransacking the statistics for any bad figure that he could alight on. That would make his day: it was being so miserable that kept him going. It is normal for Ministers to whistle a happy tune, even if they are whistling in the dark. Now, it seems, this dour Chancellor sits in the Treasury, out of sight, still dissecting every statistic and, like Jeremiah, rubbing his hands at every piece of bad news.
The Chancellor warns us that, if we drink, it is bad for us, so he will tax it. He warns us that, if we drive, it is bad for the environment, so he will tax it. He tells us that, if we save for the future, it is bad for social justice, so he will tax it. He tells businesses that, if they make profits, it is bad for inflation, so he taxes that too.
Of course all Governments must impose some taxes, but sensible Governments do not enjoy imposing them. The only point at which the Chancellor cheered up during my speech was when I was talking about higher taxes: he obviously gets a kick out of them. Nor do a sensible Government moralise over every tax that they do impose. This Government like taxing. They enjoy the sense of power that it gives them. They would tax more and more if they thought that they could get away with it, and they use taxes to meddle endlessly in our lives and those of our businesses.
Even when it comes to reforming welfare, it is industry that is asked to do the work. I do not believe that business can cope easily with working out and implementing family tax credits. People in hard-pressed companies do not want to become a different kind of Child Support Agency, and to make all the inquiries that they would need to make to meet the Chancellor's requirements.
The bottom line of this Budget, added to the Government's first Budget, is that we are all worse off. Companies are much worse off; families with mortgages and cars are worse off; people relying on pension savings
are worse off. The typical family is more than £1,100 a year worse off following the five mortgage rate rises, the cut in mortgage interest relief at source--the Chancellor hangs his head in shame, as well he may, but this is all true--the petrol taxes that he has increased, and the pensions tax.
Less than a year ago, in that golden age, a litre of petrol cost 54.9p in a good garage. Today, it costs 65.9p, despite a big drop in the oil price. That is all the Chancellor's own work. He does not know, because he now has his tank filled on the firm, but if he had to go out and fill his own tank he would find out. He is lucky that we no longer hear about the price of a gallon, because he has put that up by a massive 40p.
I am told by those who smoke that last May a packet of 20 cigarettes cost around £2.95. Today, it costs £3.35. Again, that is all the Chancellor's own work. Today, a young person saving for a pension must put aside £120 a month, while £100 did the job last May. That is a huge increase in the cost of taking a prudent view of the future and wishing to make provision.
The Budget sandbags the farmer as well as the industrialist. Labour moves seamlessly from having high sterling to banning T-bone steaks. It is determined to destroy rural businesses. [Laughter.] I am glad that Labour Members find that amusing. The butchers to whom I have spoken do not find the ban on T-bone steaks at all amusing. It has cut away a piece of their business when they are already under pressure. Labour Members representing rural areas should listen to what businesses are saying in those areas.
What do villages say about Labour? The pharmacist fears for his business as the Competition Bill threatens to knock his prices. The butcher struggles to stay out of gaol when his customers demand beef on the bone. The newsagent wants to know if Labour Members are going to abolish the newspaper boy. The publican can get no sense out of the Department of Trade and Industry on what business he can do with the brewer under the new competition measures that the right hon. Lady proposes. The farmer whose income has already been halved faces an even grimmer year with high sterling and high petrol prices.
Country dwellers need their cars, and they are particularly hard hit by the petrol price rise. The Chancellor's £50 million sop for regional transport will do little to help. In his haste to attack car owners and manufacturers, he appears not to have understood the difference between engine size and fuel omissions, and is still in a muddle about exactly how to raise all the money that he wants. And what about the tax on new cars which was announced in a press release in January? The Leader of the House told the Opposition that it would appear in the Budget, but it has not--yet manufacturers have been told by letter that it will apply.
That is the reality of Labour government--tax by stealth; no stability, just permanent uncertainty. Then we are all meant to feel grateful because income tax rates have not gone up. Under the Conservatives, they used to come down Budget by Budget. The standard rate fell from 33p in the pound to 23p. Why should anyone feel better as a result of this Budget, which contained no such welcome change?
The exporter struggling with the pound at DM3.06 still has to struggle after the Budget, and cannot now look forward to a change of policy: he has no hope. The
manufacturer struggling against ever-cheaper foreign goods now knows that he must cut his operations, as the Government have nothing to offer him. The unskilled person seeking a job knows that he must hurry before the minimum wage starts to price people out of work, according to the Chancellor's own statements. The home owner knows that the five mortgage rate rises are here to stay, and that he may be in for more. The saver knows that saving for pensions will remain a dearer business. Labour is not making it better; it has made it worse. Labour is bad for business.
The media strategy of the Budget was handled better than the economic strategy. That is not good but dangerous, and people should not be taken in by the weeks of bombardment threatening every industry and individual in sight with higher taxes. They will discover that some will be spared, while some will face the ordeal of consultation before the extra taxes are imposed. There have been threats to the house building industry, threats to the sand and gravel industry, threats to the oil industry, threats to savers, threats to home owners and threats to car owners. There are to be all sorts of extra taxes, and people do not feel especially grateful that some of them have been dropped--at least temporarily--from the Chancellor's Budget strategy.
We should not feel grateful for what the Chancellor has not done; we should look at what he has done. We should remember what he said in opposition about manufacturing and the importance of industry. In a chapter of his book "Where There is Greed", entitled "Manufacture or Die", he wrote:
"It is our ability to produce manufactured goods and compete in our own and in world markets that is central to our industrial and economic performance".
Those are fine words, but he has not lived up to any of them. The very people whom he praised in that book now bear the brunt of his Budgets and his failed strategy.
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