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Mr. Michael Jack (Fylde): Will the hon. Gentleman give way?
Mr. Bercow: Will the hon. Gentleman give way?
Mr. Radice: I shall give way, for the last time, to the right hon. Member for Fylde (Mr. Jack).
Mr. Jack: Given the hon. Gentleman's anger about Mr. Kavanagh's misreporting, does he propose, as Chairman of the Select Committee on the Treasury, to invite that journalist to give evidence to his Committee and to explain that misreporting, so that we may all understand a little better how The Sun operates?
Mr. Radice: I think that The Sun has had quite enough publicity for that barefaced lie, so I certainly shall not do as the hon. Gentleman suggests.
It is absolutely true that Oskar Lafontaine, who has been so heralded by the hon. Member for Louth and Horncastle--never was a socialist so praised by a Conservative; normally one has to be dead to be praised, but apparently in this case one has to be German and a Keynesian--has said that he thinks that there should be a minimum rate of corporation tax. However, that is not yet a proposal of his own Government. I can state quite categorically that there is no question of Britain adopting German rates of corporation tax. Any proposal would have to be agreed unanimously and seven member states--not just Britain--have low corporation tax regimes, so it is hardly likely that those seven countries would agree to put up their corporation tax to German levels.
A code of conduct for business taxation was signed last December, a fact not commented on by those who criticised it--[Interruption.] Well, one person may have mentioned it, but no one else has. My hon. Friend the Financial Secretary chairs the group on the subject, which will be reporting soon. The so-called tax harmonisation scare has little to do with the single currency, but everything to do with the single market, which emerged from the Single European Act. The Conservative party introduced that legislation and the vast majority of Euro-sceptics voted for it, so let us not hear too many complaints from them when those issues are raised.
Sir Raymond Whitney (Wycombe):
I am sure that the hon. Member for North Durham (Mr. Radice) will not be surprised to learn that the passages of his speech with which I had the most difficulty were those dealing with the domestic economy. He suggested that the statistics on the likely growth rate of the economy over the next few years are flimsy and should therefore be disregarded.
Mr. Radice:
I did not say that.
Sir Raymond Whitney:
If I have misrepresented the hon. Gentleman, I beg his pardon. I understood him to say that the statistics were flimsy.
Mr. Radice:
I said that all forecasts are just that--forecasts. We cannot foretell the future.
Sir Raymond Whitney:
We certainly agree that forecasts are forecasts and that we have to handle them carefully, but we also have to govern the economy and I would suggest that the way not to govern the economy is to rely on the forecasts put forward by the Chancellor of the Exchequer. The hon. Member for North Durham also referred to spending and I understood him to say that he wants even more spending--again, I hope that I do not misrepresent him--although he is happy with the Chancellor's spending proposals. It seems to me that the spirit of Keynesianism is alive and well on the Labour Benches, although my hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) might have something to say about that.
I am sorry that the Chancellor of the Exchequer is unable to be here and I endorse the point made by my hon. Friend the Member for Louth and Horncastle that the right hon. Gentleman's absence is quite extraordinary. In my experience, which is rather shorter than my hon. Friend's, it is a unique omission that we do not have the benefit of the Chancellor's presence. Because the economy is at such a delicate and important juncture, it is crucial that the Chancellor should come to the nation and, indeed, the House, tell us what is going wrong, and give his explanation for it.
Preparing for the debate, I did a little research into the years running up to the election in May last year, and what a different song the gentleman who is now the Chancellor of the Exchequer sang then. In one famous--even notorious--speech, we were told about new ideas and the "new economic approach" to be vouchsafed to us. He spoke about
The Government's forgetfulness of the realities of 1 to 2 May 1997 was echoed today by the Chief Secretary, as it was in the Gracious Speech, when we heard that the Government had
The growth forecasts are a serious embarrassment, even to the Chancellor of the Exchequer, who as we all know does not embarrass easily. Nevertheless, he still insists that growth, which will clearly be less than 1 per cent. next year, will somehow and miraculously have risen to--I must get it right, as I do not want to do the right hon. Gentleman an injustice--2.25 per cent. in 2000. As one leading international bank said, that forecast is "hopelessly optimistic". Not even the Prime Minister believes that forecast--as he demonstrated in his speech at the Lord Mayor's banquet and, it is reported, in his speech to the parliamentary Labour party.
It becomes increasingly clear that the Government's promises--about which we hear daily--about the growth in public sector spending over the Parliament cannot be met. The Government allege that growth will continue at 2.75 per cent., year on year, throughout the Parliament. As my right hon. and hon. Friends have pointed out, something has to give. It will mean either higher taxation or massive inflation, and that is the real challenge facing the Government. It is bad news for the economy, particularly when we are facing turbulence, which is an international phenomenon.
One of the tragedies of this Government's record is that £37 billion of that increased spending--almost as much as the combined increase in the health and education budgets--will be allocated to social services. Meanwhile, the pressures on industry and the manufacturing and commercial sectors--which create the wealth on which the growth will be built--will increase as a result of the Government's actions. Increased taxation and the so-called "fairness at work" legislation will create further pressures. We all want fairness at work, but we know
from bitter experience that trade union powers can be easily misused. Ensuring the rights of one worker may mean putting another out of a job. Industry is facing that and other existing pressures.
The pressures on individuals have been well documented. Most notable is the damage that the Chancellor of the Exchequer has done to pensions. I believe that the penny has yet to drop with the British public. When it does, it will have a serious political impact--as it should. It is particularly ironic that that attack on pensions and thrift has occurred at a time when Ministers are stressing the importance of personal private pensions. The lacuna in the Gracious Speech is what the Government plan to do about personal pensions. There was very little information about that in the Gracious Speech, and none at all in Ministers' speeches during the series of debates about it.
I take no pleasure in offering this gloomy perspective of the state of the economy, but it is undoubtedly true. Even more alarming is the bigoted complacency of the Government--most notably, of the Chancellor of the Exchequer. Receiverships and bankruptcies are increasing and the recession is in prospect. Barclays bank's latest briefing states:
"the growth of post-neo-classical endogenous growth theory and the symbiotic relationships between growth and investment in people and infrastructure".
1 Dec 1998 : Column 721
We were promised
and he referred to
"a new understanding of how labour markets really work",
"a new agenda for the future".
That future has now arrived and it is a fairly worrying state of affairs. The Conservatives' legacy has been squandered. I know how sensitive Labour Members are to reminders of that economic legacy, but it is important that they should be reminded regularly of it. They inherited the longest period of low inflation for 50 years and faster growth and lower unemployment than any other economy in western Europe, but the forecast for next year is that we shall be at the bottom of the growth cycle.
"reduced . . . borrowing by £20 billion in its first year".
What do they think happened on 2 May 1997? Do they think that a bonanza occurred, that a tree covered with lollipops and bananas was suddenly produced and down fell borrowing? That £20 billion reduction reflects the success of the economy and the legacy from the previous Government that the present Government constantly deride. That is the reason why Treasury receipts are riding so high and how that £20 billion reduction in Government borrowing, about which we have heard time and again, was achieved. I hope that all Ministers will be prepared to recognise that reality in future.
"Forward-looking survey data are pointing to a deep recession".
During the Queen's Speech debates, the Government have offered no solutions and demonstrated the emptiness and vacuity of new Labour and the third way, about which we know nothing. The theories that the Chancellor of the Exchequer offered before the election--his endogenous theories to which I referred--have been shown to be empty and naive offerings. The Chancellor must come to the House and acknowledge and accept the reality facing us in the coming year.
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