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National Audit Office (Extension Of Powers)

Volume 173: debated on Tuesday 5 June 1990

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4.44 pm

I beg to move,

That leave be given to bring in a Bill to extend the powers of the National Audit Office so as to permit the office, on an application by a national political party, to cost that party's election commitments.
In 1983, the Labour party lost the general election after producing what was described as the longest suicide note in history. In the past 18 months, it has produced a series of policy documents, which can best be described as the longest shopping list in history: a shopping list that is notably without prices.

My Bill would enable the Labour party, through an independent office, to cost its promises. It could cost not only the direct effect of its pledges, but the hidden costs—the knock-on effects on the British economy. The Labour document "Meet the Challenge: Make the Change" would perhaps be better described as "See the charges and count your change". The document lists no fewer than 171 promises, which would cost the British taxpayer and the economy dear. However, only two of the promises have a price tag, and those are priced at £1·5 billion less than the stockbroking firm UBS Phillips and Drew calculates. It calculates that the total bill to date of Labour promises made in the two documents—"Meet the Challenge: Make the Change" and "Looking to the Future"—would be £19·5 billion.

The Public Policy Unit, in its report on Labour's plans, says:
"It is impossible to estimate precisely how much Labour's commitments would cost and, because it is deliberately vague as to when their policies would be enacted, it is difficult to estimate the scale of the inflationary pressure which would build up."
The authors go on to point out:
"Local Government spending, for example, which amounts to £40 billion can impose a terrific drain on Government resources and there is some doubt as to whether a Labour Government could control, or would have the will amongst its ranks to control local government spending."
Labour, as always, remains a high-spending, high-taxing party. It has voted against every reduction in income tax since 1979. Had tax rates remained at 33p in the pound, as Labour wanted, a married man on average earnings would today be paying £20 a week—or £1,000 a year—more to the Chancellor. The biggest con in Labour's proposals is that it promises the earth, yet pretends it will not hurt. Even on Labour's own vague figures, a 50p top tax rate plus a 9 per cent. national insurance would mean that someone earning £18,200 a year would pay more tax, which would lead to higher bills for 3·5 million people.

However, the reality is far worse than the Labour party will admit. The City firm CSFB calculates that a childless couple on £6,000 a year would lose £4·10 a week; that the freezing of the higher tax rate would drag more people into Labour's new higher rate tax bands; and that single people, and many couples, earning £17,000 a year or more would have a dramatic increase in marginal rates—for example, a married man on £24,000 a year with two children would be £24·84 a week worse off under the Labour's tax proposals.

The Public Policy Unit report concurs with the CSFB finding:
"Not even the most punitive taxes on the better off will raise enough revenue to finance all of this."
It continues:
"The results of some of Labour's more punitive tax proposals may well be to cause people to question what point there is in earning extra income if the majority of that money is taken away even before they even see it."
Like the Bourbons of old, Labour has learnt nothing and forgotten nothing. Under the Government, the reduction of the top rate of tax to 40p in the pound has led to an increase in the percentage rate paid by the top band tax payers, which has risen from a quarter to nearly a third of all tax revenues. Under the Labour proposals, taxpayers in Scotland would face an additional threat from a tax-raising Scottish Assembly.

As for local government taxation—the hon. Member for Normanton (Mr. O'Brien) is a Labour spokesman on local government—we shall wait with interest to hear Labour's proposals. We are not prepared to take any criticism from a party that cannot produce any alternative to the community charge. Labour's proposals for a roof tax would lead to massive increases in taxation.

On Labour's own calculations, the imposition of a national minimum wage at 50 per cent. of male earnings would mean wage increases for 4 million people—one sixth of the work force. Given that about one third of public spending is on wages and salaries, that would have a considerable impact on the public sector. The impact on other groups of workers would be for the newly empowered trade unions to demand wage rises throughout the economy.

Labour's policies would place new and crippling burdens on industry. It proposes a new state bank—the British investment bank—which would offer low-cost, long-term finance to firms unable to raise money from commercial banks. Nor would pension funds be safe, as their trustees would be encouraged by changes in the law to take the interests of their regional economies into account. In addition, there would be a range of regional and, where appropriate, local investment banks for Britain's nations and regions. Those, together with local enterprise boards and something called British Technology Enterprise, would have the power to take shares in existing companies.

Some would call all that a throwback to the 1970s, when Mr. De Lorean successfully conned the then Labour Government out of a cool £80 million. Others have pointed to the late and unlamented Greater London Council-controlled Greater London enterprise board, which so successfully lost ratepayers' money. Frankly, the origins are even older—way back in the 1940s, with the men in Whitehall knowing best. As Sir John Harvey-Jones, the former chairman of ICI, said succinctly:
"Whenever Government directs industry the thing invariably comes to grief … Governments which try to pick winners are not very good at it."
Labour's promise to renationalise British Telecom and the water industry, with the gas and electricity industries also in its sights, would not only rob millions of ordinary people who had invested some of their hard-earned savings in the success of those industries of their dividends but, by excluding the dividends, would cause share prices to plummet, enabling Labour to renationalise on the cheap.

We must study the hidden costs for industrial relations. Labour would bring back sympathy strikes and flying pickets. It makes no mention in its policy document of the right of trade union members to elect their leaders by secret ballot. The effect on the economy would be absolutely disastrous. As in the past, Labour is in the hands of the trade unions when it comes to industrial relations.

The right hon. and learned Member for Monkland, East (Mr. Smith) and the hon. Members for Dunfermline, East (Mr. Brown), for Redcar (Ms. Mowlam) and for Islington, South and Finsbury (Mr. Smith) have eaten their way around the City of London—and to what effect? The Times Business News on 25 May reports Mr. Roger Bootle of Greenwell Montague as saying:
"The difficult thing for Labour is how to reconcile an anti-inflation policy with its undoubted spending ambitions."
Mr. Neil Mackinnan of Yamaichi Securities, an economic consultant to Labour, conceded that the City was probably still sceptical about Labour's taxation and tax policies. All those post-prandial tummy upsets and all the Alka Seltzers, only to be told that. Perhaps those hon. Members should have left it to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). He, at least, would have enjoyed the lunches, if not the duty.

The Labour party's proposals include its defence policy. It is many years since the words "Labour party" and "defence" have sat comfortably with each other. Labour is led by a leader who is a committed member of the Campaign for Nuclear Disarmament—an organisation whose constitution begins with the words:
"The aim of the Campaign for Nuclear Disarmament is the unilateral abandonment by Britain of nuclear weapons, nuclear bases and nuclear alliances."
Labour now speaks of a peace dividend. That is barefaced cheek from people who have opposed all the measures that have brought the Societ Union to the negotiating table. "Looking to the Future" contains no figures for what the Labour party will do, but we know from its last party conference that it is committed to a reduction of £5 billion in the defence budget.

The hon. Gentleman might say, "Not enough," but £5 billion is one third of the total defence budget. Perhaps he will tell us whether the Navy, the Army or the Air Force will be scrapped.

The reality is that, every time a Labour spokesman opens his mouth, uncosted promises come tumbling out. In every vote in this House, whether on cuts in income tax, denationalisation, the repeal of the archaic dock labour scheme or trade union reform, Labour has consistently voted against efficiency and reform. It was ever thus. Labour politicians who have dedicated a lifetime's service to the creation of bureaucracy, nationalised industries and Government interference cannot change their spots, whatever the advice or instruction of Mr. Mandelson. It would be only a skin-deep change, because underneath they would remain the same old—

Order. The hon. Gentleman has exceeded his time.

4.54 pm

It is a great pity that one of the few opportunities for Back-Bench Members to oppose or to introduce measures has been prostituted in the way that it has this afternoon. I regret that the very good name of the National Audit Office has been dragged into this. It is an impartial and highly professional body that has produced numerous reports exposing Government inadequacies and waste in a number of areas.

The hon. Member for Pembroke (Mr. Bennett) sought to repeat a joke that might have been good the first time around, but which has fallen flat the second time. He should consider the scope of his Bill. Had it gone a little further, a number of Opposition Members might have been prepared to support it. However, the hon. Gentleman stopped short of looking at the Government's record before the last three general elections. It would have been a marvellous Bill had it been on the statute book in 1979. We could then have costed some of the commitments that the Government have enacted while they have been in power—not merely the financial cost and the waste, but the social cost. With a large number of their commitments, it is too little, too late.

Why was not the commitment to almost double VAT costed? Indeed, why was it not even in the 1979 manifesto? Why were not the commitments on income tax and other indirect taxes costed? The tax burden on the individual has risen, not fallen. The Government myth of reduced taxation has been exposed. Why did not the Government include in their manifesto, and why did they not cost, their intention to reduce the real value of child benefit? Why was not the National Audit Office invited to cost the Tory manifesto so that their false claims could be exposed?

As my hon. Friend the Member for Normanton (Mr. O'Brien) asked, why was not the poll tax costed? Why were not the financial effects of the poll tax on every household costed and made clear to the British people? Why was not the National Audit Office asked to do that job? Despite its great professionalism, the National Audit Office could not have carried out such an audit, because even the Secretary of State for the Environment has his knickers in a twist on that issue.

Why did not the National Audit Office produce a few calculations, perhaps using the Treasury model, on the cost to the nation of high interest rates? As my hon. Friend the Member for Normanton said, they would have made interesting calculations, especially in relation to the high mortgage levels. In my constituency, that cost—not costed in the Tory manifesto—amounts to an additional £200 a month on average for every mortgage holder. No doubt it is the same in other constituencies.

Why was not the effect of the ridiculous sporadic and crazy exchange rate policy on British industry costed? What about bankruptcies? Why was not the demise of the Raleigh company in my constituency costed? It started in 1979 with 11,000 employees but now has only 1,000. What was the cost for those 10,000 former employees—not merely in dole, not merely in misery, but in lost taxation?

Why did not someone in the Tory party think up this marvellous Bill before now? It does not even touch upon the social costs. It is a little joke; a little sprat. The old-age pensioner has seen the real value of the pension decline. How can we cost the misery that that has created? How can we cost the cuts in benefits for the disabled and the unemployed—those who have lost their jobs as a result of the Government's incompetence? Perhaps the great professionals at the National Audit Office could cost all that. It would be a job well worthy of their talents.

The National Audit Office could evaluate the cost of pit and factory closures and the decline in our manufacturing industry. One third of our manufacturing industry has been disposed of by the Government. The shipyards have been closed. When we look around us, we see the immense cost in human resources of giving away our international competitive position.

The Government go on about waste, and rightly so. They can teach us a lot about waste. They have wasted £48 billion of North sea oil revenue. It has been frittered away abroad and given away in income tax cuts to try to compensate for the indirect taxation—VAT, national insurance and so on.

The hon. Gentleman asks why we do not cost our programme. I have to say:
"It would be irresponsible, and anyway impossible, to say … precisely how much it will cost. We do not have the advice which is available in government from professional advisers; we do not know what the world situation—or the domestic economic situation—will be when we come to office".
[ Interruption.] Conservative Members may laugh, but that is a quote from "The Right Approach" written by the Conservative party in 1976. I am grateful to my hon. Friend the Member for Rhondda (Mr. Rogers) for pointing that out to me. I shall send the Member for Pembroke a copy of that document so that he can memorise the quote.

The National Audit Office produced a good report a couple of weeks ago on the Government's failure to collect income tax. If an old lady gets 2p extra on her pension or in benefit to which she is not entitled, a team of people come looking to see whether she is scrounging on social security, but £5 billion is lost to the Inland Revenue and nothing is done about it, and that does not include tax evasion. If we are talking about costing programmes and failures, let the National Audit Office report on that sort of loss, which is totally unaccounted for by the Government.

Were such profligacy, waste and incompetence the responsibility of a local councillor, he would be surcharged, and rightly so. He would probably be bankrupted and have his home taken away from him and his assets and property arrested. But here, such people are promoted. They become members of the Cabinet and, as my hon. Friend the Member for Bolsover (Mr. Skinner) pointed out from a sedentary position 10 minutes ago, they end up with knighthoods or stacks of rewards from the City.

If we are to look to the future, I would extend the hon. Gentleman's Bill in a number of areas. I would cost the Government's promise to save the 72 marginal Tory seats that are being pumped up with additional revenue to keep their poll tax low. I would ensure that the National Audit Office examined the Tory party's accounts. It seems a little slow in putting those accounts into Companies house. I would ensure that the National Audit Office examined every company's accounts so that we could see that companies such as British Commonwealth, which is sliding down the tubes at the moment, donate six-figure sums year after year to their friends in the Conservative party.

Let us cost the Conservative party's programme—the poll tax and the privatisation of water, electricity and of British Telecom. Above all, let us ensure that the real financial and social cost of every item in the Tory party manifesto is exposed. In that way, the British people, with the assistance of the National Audit Office, will be able to make a choice at the next general election.

Question put and agreed to.

On a point of order, Mr. Deputy Speaker. We have just heard an extraordinary speech from the hon. Member for Nottingham, North (Mr. Allen) in opposition to the Bill, but in his closing comments he urged support of it. Is it not the case that a Member can oppose a ten-minute Bill but not speak in support of it?

Further to that point of order, Mr. Deputy Speaker. I am clearly opposed to the Bill, because it does not go far enough. It does not include past spending commitments which have been concealed by the Conservative party.

What has happened is quite in order. If an hon. Member seeks to oppose a ten-minute Bill, he must shout, "No." It is not necessary for him to go further than that, and that was done in this case.

Bill ordered to be brought in by Mr. Nicholas Bennett, Mr. Donald Thompson, Mr. David Martin, Mr. Alan Amos, Mr. Alistair Burt, Mr. Gary Waller, Mr. Robert Jones, Mr. Colin Shepherd, Mr. Gwilym Jones, Mr. James Pawsey, Mr. William Hague and Mr. Geoffrey Dickens.