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9.7 pm
Ms Sally Keeble (Northampton, North): I am grateful to be called in this debate.
In their amendment, the Opposition have set out to criticised the Government for failing to take steps to protect jobs and help businesses. In doing so, they are exercising selective amnesia. They cannot stand only on their six-month record in the run-up to the election. They must stand on the record of their entire 18 years in government, which was not a golden era for the British economy.
In the 1980s, an enormous recession forced the collapse of manufacturing. I saw a steel foundry in Birmingham stripped down and sent off to the third world, and virtually the entire work force of the car industry put on the dole. Unemployment rose so fast that the welfare state
collapsed and all Department of Health and Social Security offices shut. It was not the then Tory Government who saved jobs or helped businesses, but a Labour city council, which met the challenge of regenerating the local economy.
In the 1990s, recession in inner London, we saw unemployment rise to 35, 40 and 50 per cent. in key areas, and the creation of a divide between rich and poor that was a disgrace to this city. Measures on unemployment introduced by the Tory Government were aimed at producing headline figures and did not deal with long-term structural problems in inner cities. That is why the new deal is so right.
The new deal targets attention--money and personnel--at the real problems: the long-term unemployed and young people who grew up as a second generation of unemployed in what we call the Tories' golden legacy. Any such legacy went to the selected few and not the many, which is why the economic measures in the Queen's Speech are so important. In conjunction with the steps that the Government have already taken, they will ensure not just stable growth but that the benefits of that growth will be extended to the many.
Our policies for education will give people the skills that they need to participate in the economy; the working families tax credit will ensure that work pays; and the child care tax credit will give many women the first chance to go out to work. In particular, I emphasise the reforms that the Government are making to financial services regulation, which will ensure that more people are empowered to benefit from the economy.
Mrs. Thatcher wanted more people to invest, but she failed to provide the security that people needed to do so with confidence. The Government are encouraging investment by the public--for example, by extending employee share ownership and introducing individual savings accounts--and providing more security by, among other things, passing the financial services and markets Bill.
Let me consider just two forthcoming measures. I am sure that the ability to take civil proceedings in cases of market abuse will help to restore confidence in the probity of the City, which, in turn, can only help to encourage people to invest. A second measure to place the various forms of financial regulation under a single umbrella will benefit the interests of the public by making it easier for them to obtain redress when things go wrong.
The biggest financial commitment that most of my constituents will ever make is the purchase of a home. In the dying days--literally--of the previous Government, I toured housing estates in my constituency to study the problem of repossession. House after house was boarded up--another sad testament to the so-called golden legacy of Tory Britain. By unifying and simplifying regulation, and by providing more safeguards for that most basic of investments, the Government will protect people's long-term financial security, and the long-term future of the financial services industry.
The drive behind the Queen's Speech is to build a sound economy; ultimately, that is what my constituents will judge the Government by. Measures set out in this year's Queen's Speech will ensure that those benefits are extended to the majority of people in our communities. I commend it to the House.
9.11 pm
Mr. Christopher Fraser (Mid-Dorset and North Poole):
Tonight's debate has been rehearsed many times and we have discussed the economy many times, but this time the debate is vital, because our country's future depends on getting the economy right. The debate also affords us the opportunity to examine the Gracious Speech, and to anticipate the effects of the Government's proposals for our economy for the next year--so it is very timely.
It is important to pose a series of questions relating to the Government's handling of the economy, and specifically their guiding principles of economic management. Does the Government's approach--and the proposals in the Queen's Speech--make it easier for firms to produce goods at lower cost? Does it make it easier for companies to invest? Does it reduce the tax burden on individuals and companies? Does it make it easier and cheaper for firms to take on staff? Does it make it easier for individuals to invest in their own future?
I fear that all those questions must be answered in the negative. The raid on pension funds; the increased regulation of financial services; the flunked welfare reforms; the increased trade union recognition; the extension of maternity leave to 18 weeks; and the introduction of the working families tax credit add up to a package of damage which can only increase costs and regulation and destroy the competitiveness of the British economy--the economy that the previous Government fought so hard to maintain. All that before we even address the minimum wage and the social chapter.
I believe that most members of the Treasury team have never run a business--except, of course, the Paymaster General; at times, he must wish that he had run several fewer businesses. I have run a business: I know what it is like to run one in hard times. It has been difficult on occasions--difficult for small and medium businesses, which must now face the current economic climate. Those businesses were the backbone of the country's economic success in the 1980s.
The Government must ensure that small business is at the forefront of their economic policy. Let me tell Labour Members that the smaller companies, which represent the bulk of employment and economic activity, are voicing grave concern. As we know, business confidence is at its lowest for 18 years. People and businesses are extremely nervous--in my judgment, rightly so--because times have been tough for them. The international economy has, of course, been a factor, but they have suffered from high interest rates and the high pound and they have suffered in many other ways, as a result of the Government's so-called social legislation.
The Government tell us that the minimum wage and the social chapter are good for those who are in work. Perhaps that is right, but not if the effect of the Government's measures is to pile on costs, make the company uncompetitive, lead to closure and put workers out of a job. The minimum wage and the social chapter are useless for those who are out of work and for those who are seeking to enter employment. The policies that they need are ones that help companies grow through efficiency and by exporting successfully through deregulation and low tax. In short, these are policies that would build on the success that the economy was enjoying before Labour Members got their hands on the levers of power.
Labour has given away one of the levers--the control of interest rates--to the Bank of England. We hear this every Wednesday when the Prime Minister comes here to answer questions. The right hon. Gentleman tells the House each week that the Opposition are against independence for the Bank of England. Each week, he invites my right hon. Friend the Leader of the Opposition to answer his questions. One wonders sometimes whether the Prime Minister would prefer to be on the Opposition Benches asking questions rather than having to suffer the inconvenience of answering questions.
The point of Bank independence is not whether the Opposition are in favour or against it, but that the Government have created a mess of their own making. It was their decision to give independence to the Bank, as it was their decision to set the Bank a narrow remit. It is their choice to pack the Monetary Policy Committee with people with no real experience of the sharp end of business. A serious consequence of their actions is the current state of the economy. It is a cop-out for the Government continually to question the Conservative position on this issue. It is the Government who have to answer for their actions.
To compound the situation, the Chancellor of the Exchequer signed up to the "The New European Way", which commits the Government to the harmonisation of European Union tax policies. By doing so, the right hon. Gentleman has thrown in his hat with the new German Government, who are pledged to take forward economic harmonisation during their European presidency. Having signed that document, how can the Chancellor of the Exchequer declare himself opposed to the harmonisation that it advocates? It does not wash to declare a common system of value added tax and a withholding tax on cross-border savings as being no more than scare stories invented by the Opposition.
We are told that the Chancellor of the Exchequer will use the veto to protect British interests. As has already been said, however, the Financial Secretary to the Treasury chairs a working group of EU Finance Ministers which is drawing up plans to end so-called powerful tax competition among member states. How are we to believe the Chancellor of the Exchequer's protestations when the interim report is said to include more than 80 measures to address what has been described as unfair tax competition, and when some of which, if reports are true, are measures introduced by the Government? The Chancellor cannot have it both ways. He must now make very clear to his colleagues in Europe the promises that he has made to the British electorate that
" tax harmonisation is not the way forward for Europe. Britain's tax decisions will be made in Britain."
The Chancellor of the Exchequer must make clear how he sees the future for personal taxes and for corporate and business taxes. After all, the European tax Commissioner believes that the United Kingdom is "fully on board."
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