[Relevant documents: First report from the Treasury and Civil Service Committee of session 1990–91 on the 1990 Autumn Statement ( House of Commons Paper No. 41), first special report containing the Government's response ( House of Commons Paper No. 212) and the second report on the 1991 Budget ( House of Commons Paper No. 289), so far as they relate to public expenditure.]
I beg to move,
That this House approves the Government's Expenditure Plans for 1991–92 to 1993–94 (Cm 1501 to 1520); and congratulates the Government on continuing to maintain its medium term objective that public spending should, over time, take a declining share of national income, while value for money is constantly improved and resources are concentrated in areas of high priority.
Although the documents referred to in the motion were published some time ago—in February—the debate is timely because, in the past few days, we have heard much about the fact that the Opposition want to fight the next general election on the issues of public spending and taxation. That is welcome news, because we can be proud of our record on public expenditure and taxation.
I am glad to have another opportunity to spell out our achievements on public spending and how we have increased spending in priority areas, while at the same time rooting out inefficiency and getting better value for money, thus keeping public expenditure under firm control. There is a marked contrast between our policies and those of the Opposition, who resist and resent value-for-money concepts in the public service and set out their stall with reckless promises to spend more on just about everything —[Interruption.] I am glad to see that the hon. Member for Newcastle upon Tyne, East (Mr. Brown) is laughing derisively. There will be plenty more for him to laugh derisively about, although he may be unconvincing. However, I am sure that he is grateful for this public recognition—indeed, he is thanking me for it, quite appropriately.
We are debating the new departmental reports that replace the departmental chapters of the public expenditure White Paper. Their introduction marks the culmination of several years' consultation among the Government, the Public Accounts Select Committee and the Treasury and Civil Service Select Committee. I am glad that the luminaries of those Committees are in their place today, and I thank both Committees for their work in seeking to improve the quality of financial reporting to Parliament. I hope that they feel that those departmental reports represent a good step forward in that regard. I know that the Treasury and Civil Service Select Committee is holding an inquiry into those new arrangements, and I look forward to seeing the outcome of its deliberations.
There is much more information in those reports on objectives, output, value for money—all the issues about which taxpayers and their parliamentary representatives will be concerned. They will show them the value they get for their money in terms of effective delivery of high quality services.
Ten years ago, following the disastrous experiences of the late 1970s, my predecessors had to strive to bring public expenditure, especially the costs of administration, under control and to establish the fundamentals for the proper management of the public sector. The main emphasis had to be, first, on reducing the size of the Civil Service, and then on introducing a proper system of controlling costs. At the same time, the financial management initiative signalled the Government's concern to have effective public services.
Since then, as budgeting and management information systems in Government have improved, both the Treasury and the spending Departments have been able to focus more attention on the quality and effectiveness of public services. The control of public expenditure will always require hard decisions, but those decisions are becoming steadily better informed as Departments prepare and often publish much more information about their services.
Providing citizens with steadily improving services requires constant attention and initiatives from the Government. That is why I welcome—I hope that the whole House also welcomes—the initiatives proposed by my right hon. Friend the Prime Minister for a citizen's charter, which will take the reforms of the past decade even further. The principles that have been enunciated are as follows: defining what the public can expect from public services; simplifying access to them; greater responsiveness to consumer needs; performance incentives and penalties for those who fail to deliver; publicly declared standards of services; greater accountability to the customer; and stronger complaints and redress procedures.
If we all care about public services—that should not be controversial, because we should all do so—we must realise that there is no point in having them unless they offer an effective public service. Perhaps one of the problems that bedevils debates on such issues is that we are all too obsessed with input and do not care enough about output. What matters is what the input produces in terms of effective and good quality public services. We intend to make early progress on fleshing out the proposals and turning them into concrete improvements.
What Opposition Members say illustrates one of the clearest differences between the Government and the Labour party. We are clear, while it is not, that there is no soft option of simply spending more money to compensate for inefficiency in the delivery of services. In addition, it is not realistic to set ideal targets for levels of service. We must seek to obtain quality of service which is good enough to meet the legitimate expectations of people who, in recent years, have become used to tremendous improvements in the quality and responsiveness of private sector suppliers. As my right hon. Friend the Prime Minister said just two years ago, when he occupied the post of Chief Secretary, "shoddy public services are no longer an option".
I have much sympathy with the theory behind what the Minister is propounding and have thought about the subject a lot over the years. However, will he give an example from the documents before us of a single output objective for next year or the year after in terms of the quality of service?
I know of the hon. Gentleman's work on the Treasury and Civil Service Select Committee, and that he is interested in the subject and has worked hard to play his part in advancing the discussions. There are commitments throughout the documents. With the 'next steps' agencies, we are committed to the establishment of the employment service and to setting criteria on and targets for the speed and effectiveness with which clients are dealt with. Such issues are at the heart of the 'next steps' approach, which is geared to the establishment of better performance through the establishment of targets and the rigorous monitoring of them.
I have read the documents, and that is certainly not my recollection of what is contained in them, but I am only too happy to set out the measures in writing. I have had the duty of looking at and giving an opinion on the targets set. I hope that we shall be able to proceed on that—I would welcome the opportunity to do so. Such matters should not be part of a partisan debate; they are about giving a more effective service.
As ever, I am impressed by my right hon. and learned Friend's insistence that we get quality service and ensure that public expenditure targets do not run away with us. Has he noticed that Mr. Jacques Delors has been saying that he would like substantial increases in the amount of money transferred to other parts of the European Community? That money would have to come from, among other sources, British taxpayers. Does he agree that something must be said to Mr. Delors to disabuse him, and show him that that cannot be allowed to happen and the British Government will stick to the sound policies that they have sustained during the past ten years?
Mr. Jacques Delors is every bit as much under scrutiny by the Treasury as any Secretary of State in a rampageous spending Ministry. Keeping the public expenditure commitments of the European Community and our contributions to them under control, is a much as priority as keeping domestic expenditure under control. No Department is allowed to feel that Euro-expenditure is a free lunch, allowing it spending arrangements that it would not get through the domestic debate.
With the greatest respect, I am ready to proceed with my speech, despite the imploring and fetching body language of the hon. Gentleman. Perhaps I shall give way to him later. I am glad to have aroused some interest in my speech at last. A little earlier I was worried that I was losing people. I am not sure whether the revived interest is due to me or to others, but I shall take the credit for it.
Concentrating on improved efficiency and value for money has played a vital role in our success in keeping total spending under firm control, as any responsible Government must if they are not to inflict an intolerable burden on taxpayers. In the 1960s and 1970s, public expenditure shot up from about one third of national output to 49 per cent. in the 1970s, and the size of the state and the bureaucracy that went with it grew and grew. It has been a major achievement to have brought public spending down to about 40 per cent. of national output in the 1980s. We remain committed to that approach.
I hope that my question is relevant. Does the right hon. and learned Gentleman accept that people are complaining all over the country about the appalling delays and difficulties in transport, health, housing, and about street crime and beggars in the streets? I do not remember begging and street crime in the London area before 1979 being anything like as bad as now. People understand that much of this is the result of underfunding. The gimmicks that the Chief Secretary has been talking about will not resolve those difficulties until more money has been spent.
Because of our success in achieving eight years of sustained growth at more than 3 per cent. in the 1980s, it has been possible to increase public expenditure by nearly 20 per cent. in real terms while reducing the share of the national cake that it consumes. Public expenditure on all the services that the hon. Gentleman mentioned has substantially increased. Believing that they may be relevant to the debate, I intend to deal with some of these very figures.
For instance, the hon. Gentleman mentioned law and order. Expenditure on law and order services has doubled in real terms since 1979, and there has been substantial expenditure on motorway building and other such projects, which I shall particularise later. The hon. Member for Walsall, North (Mr. Winnick) will also remember that, during his previous sojourn in the House, he sat on the Labour Government Back Benches while dreadful cuts were made in spending on almost everything that he has just mentioned. Was he as outraged then as he is by our record? I have not checked.
When considering the flurry of charge and countercharge between the parties on public expenditure and taxation, it is always worth consulting the book before looking into the crystal ball. The book shows clear differences between this Government's achievements in the 1980s and those of the Labour Government in the 1970s. Because of the eight years of continuous growth at more than 3 per cent. which our policies made possible, we were able to raise public expenditure—[Interruption.]
The right hon. and learned Member for Monklands, East (Mr. Smith) talks to me about growth and says that Labour's record on growth was better. As he wants to compare growth records, let us do just that. The Labour party says that its growth record is better than ours, despite the fact that we have been the beneficiaries of the windfall of North sea oil. However, the growth in non-oil GDP—taking North sea oil out altogether—was 1·2 per cent. between 1974 and 1979, but between 1979 and 1990 it was 1·9 per cent. That figure should have wider currency, and I am glad that the right hon. and learned Gentleman has given me an opportunity to give it such currency.
I have given the right hon. and learned Gentleman the non-oil GDP figures. He wants to be punctilious, so I shall be so. The right hon. and learned Gentleman's problem is his unwillingness to attend to detail, but I shall be happy to travel through the detail with him. I said that there were eight years in the 1980s with continuous growth of over 3 per cent. In order to get the figures on which the right hon. and learned Gentleman relies, he has to credit us in the first two years of one administration with having to recover from the situation into which the Labour Government plunged us. The idea that a Government influence growth from the moment they are elected is nonsense.
No comment on those years excuses what happened thereafter. We remember negotiatiations with the IMF, the sight of the right hon. Member for Leeds, East (Mr. Healey) being heaved off his plane, and the massive cuts in public expenditure that followed. It would be stretching poetic licence to blame those matters on the Government led by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). The hon. Lady has tried similarly impossible arguments in the past.
No; I must press on with my speech.
Spending under us has risen by 19 per cent. in real terms, while the burden of public expenditure was kept under tight control. That meant that the real-terms increase in general Government expenditure at 1989–90 prices was nearly £34 billion, equivalent to total spending on the national health service. Notwithstanding the priority that Labour rhetoric attaches to it, public expenditure fell by 2·5 per cent. in real terms during the Labour years. Under us, it has increased by 19 per cent.
We have been able to reduce the basic rate of income tax from 33p to 25p, and in the Budget measures currently being debated in Committee, we propose that next year the rate of corporation tax be reduced to 33p, whereas in 1979 it was 52p. Labour says that tax rates cannot be cut while increasing provision for public services. Our record shows that we can do that and have done it while running honest public finances. Under Labour, the public sector borrowing requirement in 1975–76 was 9·5 per cent. of gross domestic product, equivalent to almost £60 billion at today's prices. The average PSBR in the Labour years at 1989–90 prices was £25·6 billion, or 6·75 per cent. of GDP.
Over our term in office from 1979 to 1991, the PSBR averaged £6·4 billion, or 1·75 per cent. of GDP. For a period of three years, about £26 billion of Budget surplus was used to reduce the national debt, thereby saving annual interest charges, which have to come out of public expenditure and must take priority over other public expenditure commitments, amounting to £2·5 billion this year. That is the benefit and reward of running prudent public finances.
The Chief Secretary is a former Minister for the Arts. Will he acknowledge that at least during the term of a Labour Government Edinburgh university was not reduced to selling its treasures, such as the Audubon book on birds? If matters are as the Chief Secretary makes out, how is it that, in order to find the wherewithal to continue academically, one of the great European universities has to sell its treasures? There is a crisis here. Will the Treasury look at it?
That assumes a lot about the management which had led to that situation. As far as I know, the problem may not lie at the door of the Government, and the hon. Gentleman, who I know is fair, will realise that I have no detailed knowledge of that, but I shall certainly look at the matter.
Mr. Skinner That is why my hon. Friend asked the question.
I am sure that is why he asked the question. Equally, there are aspects of the hon. Gentleman's constituency of which my knowledge might not be great.
I referred earlier to growth, and I have noted the Labour party's suggestion that a growth rate of 2·5 per cent. under a future Labour Government could be taken for granted. When one considers the non-oil gross domestic product figure that I quoted earlier, I suspect that "it ain't necessarily so".
The Labour party criticises us for attaching importance to reducing the share of national wealth consumed by public expenditure. Recently, it has seemed to get close to suggesting that every penny raised from future growth should be spent on public expenditure, and that it would otherwise be wasted. That is an astonishing concept, which seems to be coming back into favour in the Labour party just as it has fallen out of favour in eastern Europe.
Enormous public benefits flow from leaving more resources at the disposal of individuals and companies within a free economy. They stimulate individuals to greater effort, and remove the curse of the brain drain. Another statistic which we should not let slip from our minds is that there was a net outflow of nearly 70,000 professional people and managers during the years of the Labour Government. There has been a 30,000 net inflow under the Conservative Government, and that has led to a greater contribution to income tax from the higher rate payers.
There is also ample scope for business investment. To listen to the Labour party, one would think that its record on that was something to be proud of and that the Conservative party's record was something of which we should be ashamed. [HON. MEMBERS: "Hear, hear."] Labour Members shout, "Hear, hear," so it is just as well that I have come to the House with the record. It shows that, at constant 1985 prices, comparing like with like— —
The Treasury has indeed been burning the midnight oil. If it were burnt a little more in Transport house, some of the errots that have disfigured the Labour party's figures would not exist. The right hon. and learned Member for Monklands, East comes out with more dodgy figures than a weight-watchers' convention.
At constant 1985 prices, business investment—I shall get to this point by hook or by crook—[Interruption.] I wish to appeal to all sections of my audience. At constant 1985 prices, business investment in 1974 was £35·3 billion. By 1978, after falls in 1975 and 1977, business investment was effectively stagnant at £35·9 billion. The equivalent figure for 1988 was £52·3 billion, for 1989 it was £56·1 billion and for 1990 it was £55·4 billion.
When Labour points to a decline in business investment in recent months, it will be aware that it is a decline from the historically high levels achieved in the previous two years under the Conservative Government. That represents a tremendous increase in investment from that prevailing in the late 1970s.
I should also mention our achievements in investment in infrastructure. In 1990–91, total public sector spending on asset creation is expected to be about £30 billion. Under this Government, public sector investment has risen in real terms—I hate having to return to this point, but respect for the truth compels me to do so—[Interruption.] I am glad that hon. Members are still following my argument. Under the Labour Government in the 1970s, investment fell by about a quarter in real terms. That was not a laughing matter then, and it should be a continuing embarrassment to the Labour party.
I will certainly give way in a moment.
Earlier, in an intervention, the hon. Member for Walsall, North asked questions about roads and other public expenditure projects. It is tedious to go through them all, but the planned spend on motorways and national roads in the two years between 1991–92 and 1993–94 is 25 per cent. higher in real terms than in the past three years, and that comes after substantial growth in spending under this Government.
In this financial year, planned spending on motorways and trunk roads is more than double the level of 1979–80 in real terms. Furthermore, under the last Labour Government that investment fell by 40 per cent. If one wants a contrast, that one is as good and effective as any available.
Does the Chief Secretary accept that some of the most crucial spending on infrastructure work is undertaken by local authorities—for example, in education, housing, road repairs and the environment? Yet such spending has fallen as a proportion of gross domestic product under the Conservative Government from 3·6 per cent. to 1·8 per cent., which is a scandalous under-investment in our future.
I can assure the hon. Gentleman that expenditure available to local government has increased under this Government. As he knows, prioritisation has had to take place. One of the major differences between the hon. Gentleman's side of the House and ours is that the Opposition seem to assume that the best way to achieve success in government is for every budget to increase. The answer is that one achieves success by rigorous prioritisation. The problem for the Labour party is that everything is a priority, so one ends up with nothing being a priority, as I shall seek to demonstrate.
Nothing illustrates more clearly the difference between the record of the parties and the emptiness of a good deal of the rhetoric than the national health service, and I make no apology for mentioning it only one day after the House spent some time debating the issue.
Yes, he will intervene by hook or by crook—whether they are hooked figures or crooked figures, he will tell me.
As I have already said, total expenditure on the national health service has increased from £8 billion to £32 billion—a tremendous increase. Since we took office, the percentage of GDP devoted to health has increased from 4·5 per cent. in 1978–79 to 5·2 per cent., and the share of public expenditure devoted to health as a result of the prioritisation that I mentioned has increased from 12 to 14 per cent.
Under us, health is the second largest budget. That was not the case under Labour. We have achieved an average real increase of 3·2 per cent. a year and gross capital spending on English hospitals and other health facilities has increased by 53 per cent. To put that achievement in concrete terms, the amount spent every year for each person in the United Kingdom, at constant prices, has risen from £390 in 1979 to £570 today—a massively increased investment for every man, woman and child, in a health service that we certainly recognise as vital for all of us.
Let us compare that with the record of the last Labour Government.
I should like to finish this passage and then I shall give way, if the hon. Gentleman wants to take issue with me on the health service.
In 1977–78 Labour cut real spending on the NHS by 2·5 per cent. It is true that, during their period in office, real spending increased, but it was at less than half the rate that we have managed, and they cut real capital spending by no less than 16 per cent.
One does not have to travel too far in this country to see evidence of the massive increase in hospital building, renewals and renovations in today's health service.
I am still on the subject of the health service. I shall certainly give way; I have not forgotten the hon. Gentleman—I know that he takes an interest in these matters.
I want to spend a moment or two considering Labour's claims about the future of health service expenditure. The 1979 Labour manifesto called for increases in the percentage of GDP devoted to health—an implicit acceptance that 1974 to 1979 was a period when the Labour Government underfunded the NHS. Apart from the slashing cuts to the hospital building programme, there were also cuts in the pay of national health service employees. Nurses' pay went down by 21 per cent.
Moving forward to the 1987 election, Labour continued to say that the national health service was underfunded. A point that I hope will not be lost on those on the Opposition Front Bench is that, at that point, the Leader of the Opposition was calling for a 3 per cent. real-terms increase in spending on health. Labour fought the last election on the basis that the underfunding of the NHS would be addressed by a 3 per cent. real terms increase in spending every year.
Let us look at what has happened in the last five years. We find that this Government have increased spending on health not by 3 per cent. in real terms but by 3·5 per cent. in real terms, yet Labour still says that the NHS is underfunded. What does it propose to do about it? As usual, there is muddle and confusion. At one moment the Leader of the Opposition told the interlocutor-general, Mr Walden, that there will not be an immediate increase. Later, he said that spending on health will rise in line with gross projections of 2·5 per cent. per annum and that it will take its share of the £20 billion crock of gold that he magically conjured up for his audience last Wednesday —"just like that," as the late Tommy Cooper used to say. How much we could do with him now in order to demonstrate the inadequacies of the Labour party's policy.
What sort of a policy is it? If that policy of a 2·5 per cent. increase in real spending on the NHS had been pursued since 1979, spending this year on the NHS would be £2·6 billion less than it actually is. Therefore, Labour's analysis—that the only problem with the NHS is underfunding and that anything that the Labour party proposes will put it right—is plainly wrong. At every stage, the Labour party proposes a scale of increase that it less than that which we have achieved. An unholy alliance has allegedly built up between the Labour party and the British Medical Association, but did the Labour party rush to say—if I have got this wrong, someone will intervene—that it will immediately given the BMA the £6 billion that it thinks is necessary? Silence is golden when it comes to that line of argument.
The Government have therefore arrived at the irresistible conclusion that, if we have increased expenditure on the health service by 3·2 per cent., in real terms, every year for more than 12 years—that of itself is not enough to put everything right, although it has led to very major improvements in the NHS—then we must address issues such as organisation, efficiency, better value for money and improved responsibility when it comes to the needs of patients.
What would the Labour party do about those issues? It has nothing to say about them. Although the Opposition condemn the status quo as inadequate, they suggest no effective alternative policies for change. The hon. Member for Livingston (Mr. Cook) delighted his many admirers in the House yesterday. He is ever so bright-eyed, bushy-tailed and aggressive in the House when these issues are debated, but I want to know when he intends to show similar forthrightness when he talks to the health service unions. When is he going to get them to allow him to outline policies to improve efficiency and effectiveness in the NHS? That is where he should be exercising his formidable strength of character and rhetorical powers. Until he is willing to say boo to the unions' goose, his fiery oratory here will be merely the big boom of an empty drum.
Why is the proportion of Britain's gross domestic product spent on health less than that spent by the United States, Germany and Italy? As a share of GDP, does the Minister want that amount to increase or decrease? He tells us about output figures, but why will the Government not set targets to bring down increasing waiting lists?
Is the hon. Gentleman really commending to me the system in the United States, where 10 per cent. of gross domestic product is spent on health care, yet 33 million people are without health cover? That is the spuriousness of international comparisons. The hon. Gentleman falls precisely into the trap that I identified earlier, of confusing input with output. If, when I was Minister of Health, I had obtained £1 billion from the Treasury and had literally burnt it at the Cenotaph, which lies conveniently between the Treasury and the Department of Health, allegedly I would have increased the proportion of GNP devoted to health, and we would have had a better health service. That is the nonsense of it. The whole House should realise that.
Before my right hon. Friend leaves the health service, surely the way to clarify some of the problems in Labour party policy would be to drop a note to the Leader of the Opposition, asking him to clarify the figures. I had it in mind that my right hon. Friend had done so but I have not been able to find a copy of the reply. My right hon. Friend must have received a response; perhaps he would like to tell the House what was in it.
I shall not give way; I have to get on.
I want to deal with last Wednesday and the antics of the Leader of the Opposition about the £20 billion. His speech was heavily trailed. The astonishing thing was that what one learned about it the night before was not built on in the speech itself. The commitment is in four lines on a piece of paper. It does not tell us many things which we have waited a further week to be enlightened upon; we still do not know.
Was the £20 billion announced in full awareness of the Government's expenditure plans? On the radio on Monday, the shadow Chancellor seemed clear that it was not in addition to the Government's expenditure plans. The Leader of the Opposition yesterday was ridiculing the Government's expenditure plans, saying that they were based on nominal money, not real money, so the Government's expenditure programme did not amount to much. Apparently the right hon. Gentleman is now saying that the £20 billion may be on top. Is it cumulative? Is it £20 billion added up, with little contributions here and there?
I gather that the shadow Chancellor gave a press conference today at which he talked about £4 billion a year over five years. Or is it the final year cost? The right hon. Gentleman shakes his head. I think that we should be told, if the Opposition are setting themselves out to be credible on these vital public finance issues and to manage their public expenditure as the legacy of previous Labour Governments made clear. There is nothing more fundamental to issues of confidence in Government than that.
No doubt the hon. Member for Derby, South (Mrs. Beckett) has come to the House aware of the extraordinary hole in the centre of Labour's mint on the issue and will want to address it at great length. I look forward to being told exactly what the Leader of the Opposition was up to when he said what he did. I do not think that people will understand if we are not told the answer to that question.
We have published our plans in the Red Book. We will increase spending by £26 billion in cash over the next two years. We plan in cash, not in funny money. In today's money, allowing for inflation, that provides for significant growth in real terms. Everything is set out in the Red Book, including assumptions for growth, inflation and the PSBR. One thing is clear. Labour cannot magic extra public spending painlessly out of growth dividends.
Of course there will be growth. The record shows that there is more likely to be growth under us than under Labour [Interruption.] Oh, yes. I have given the non-oil GDP figure; let the hon. Gentleman argue with that in due course. As I say, we have taken account of it in our published plans which are on the record for all to see.
There will be extra spending; that too is on the record. If Labour wants to spend more than that—apparently, despite attempts by the shadow Chancellor to restrain him, the Leader of the Opposition does—it has two simple choices: either it has to put up taxes to pay for it or it has to find the money by allowing the PSBR to stay up, and even go up. If Labour does that, it will go back to the bad old days of the 1970s; the bill would have to be paid, and taxes would have to rise.
We already know that the chap on £20,000 a year—the deputy head teacher, the police sergeant—[AN HON. MEMBER: "The nurse."]—yes, some senior nurses—and middle management will have their marginal rates increased by 9 per cent. There will have to be tax increases, but the right hon. and learned Member for Monklands, East has still not told us about the exciting ideas for different bands of tax—between 20 per cent. and 50 per cent.—which would allow many sly increases to the basic rate man. I suspect that, with Labour's expenditure plans in such disarray, the average taxpayer would if Labour were elected, be carried across more thresholds than Elizabeth Taylor or Zsa Zsa Gabor.
I shall deal with the muddle and confusion into which Labour's public expenditure proposals have been plunged. Aneurin Bevan said that socialism was the language of priorities. In today's Labour party, everything seems to be a priority. In February last year, the hon. Member for Derby, South propounded what I call "Beckett's law", which states that Labour has only two spending priorities —pensions and child benefit. That was a desperate attempt to impose some discipline on the extraordinary range of public spending commitments poured forth by Labour's spokesmen. That was in February 1990, but let us consider the language of priorities since then.
I begin with the right hon. and learned Member for Monklands, East. In Blackpool on 1 October 1990, he said:
education and training will be a key priority for Labour because they are vital to the success of the economy.
In February 1990. the hon. Member for Dunfermline, East (Mr. Brown) said on Radio 4:
We accept that there have got to be priorities and I can say now that as far as the Labour party is concerned, bridging the skills gap is going to be a priority.
The right hon. and learned Member for Monklands, East proceeded to Leeds yesterday and told the chamber of commerce:
The Labour party believes strongly that more rather than less expenditure on developing human capital within the British economy is an urgent priority.
The hon. Member for Derby, South will no doubt tell us how that fits in with Beckett's law.
In March 1990, the right hon. and learned Member for Monklands, East told Tribune:
growth and investment in manufacturing should be a key priority
the Government should directly support growth in manufacturing industries, and in new technology, and in the skill of our people".
The hon. Member for Cynon Valley, (Mrs. Clwyd) told
Labour Party News:
As Shadow Secretary of State, I want to see Britain reach the UN target of 0·7 per cent. of GNP as a top priority.
This morning, on Radio 4's "Today" programme, the hon. Member for Sedgefield (Mr. Blair) once again said that training would be one of Labour's priorities. Those who heard the interview will know that he repeatedly denied the assertion of my right hon. Friend the Secretary of State for Employment that he was in any way constrained in saying that by Beckett's law, which appears to have become utterly redundant.
However, things get worse. Labour's Janus-faced approach to these issues has been exposed. The Opposition Treasury Front Bench team have been on the prawn cocktail circuit in the City reassuring people: "Labour doesn't mean it; we are frightfully responsible these (lays." But all Labour's spending spokesmen have been going around the country spewing out to every interested group that wants to know any number of spending commitments.I only have time for three—[HON. MEMBERS: "More."] There will be time for more.
Something that must have frightened the Labour party more than anything was a headline in—[HON. MEMBERS: "The Sun."] No, not in The Sun but in The Independent of Friday 10 May 1991. This is a quality debate. The headline stated: "Meacher tells of pension plans". That is enough to send shock waves the length and breadth of the Labour party. In 1987, the verb "to meach" was coined. It means to make extravagant additional commitments hourly. The hon. Gentleman was sat on for that. Some people thought that he was no longer with us when, like something out of "The Munsters", he lurched back into the pages of' The Independent with a whole raft of expenditure plans on pensions—the status of which the hon. Member for Derby, South will tell us all about, no doubt.
The principal rival of the hon. Member for Oldham, West in the "meaching" stakes—although it is a hotly contested status in the Labour party these days—is the hon. Member for Kingston upon Hull, East (Mr. Prescott), who leads for the Opposition on transport matters. Labour has a little list of the people who will pay more tax; I have a big list of all the things on which the Opposition say they propose to spend it.
Let me tell the House just one of the commitments given by the hon. Member for Kingston upon Hull, East. By the way, it is not ancient history; it appeared in Hansard on 22 April 1991, and it is well worth listening to:
the Government have the overriding"—
note the use of the word "overriding"—
responsibility to see that there is a high-speed rail link from the tunnel not only to London but to areas beyond—the midlands, the north, Wales and Scotland."—[Official Report, 22 April 1991; Vol. 189, c. 760.]
The issue is not the desirability of the project but its cost and affordability and the priority that it is to be given.
I want to know what the hon. Member for Derby, South thinks the hon. Member for Kingston upon Hull, East meant by "overriding responsibility". Just so that people should not be tempted to joke about the matter, I should explain that we are not talking about billions of pounds; that pledge would involve tens of billions of pounds. We are not messing around with little numbers here.
We must get on, and I certainly want to finish my remarks—[HON. MEMBERS: "Shame"]—but I cannot resist ending my speech with a reference to the visit of Mr. Andrew Rawnsley of The Guardian to Monmouth in connection with the by-election campaign. Mr. Rawnsley writes:
If much of what Mr. Evans says is gobsmacking, Mr. Edwards"—
who is, of course, the Labour candidate— —
appears to have been gobstoppered. You get the impression that he would not go to the lavatory before checking with Neil Kinnock for permission.
The House should bear in mind the fact that Mr. Rawnsley was writing in The Guardian. [HON. MEMBERS: "More."] Hang on a minute; we have not even got to the best bit yet. Mr. Rawnsley continued:
But it became apparent that when Labour lobotomised this candidate, they did not quite finish his reprogramming. Did he expect Labour to renationalise the water companies? 'Er,… urn … oh,' the candidate said, eyes flashing with panic. 'Yes,' he finally gulped. 'Not on day one,' came a stage whisper from the shadow minister, Ann Taylor. 'Yes,' Mr. Edwards amplified.
What does all that mean?
Not a lot—the hon. Lady is absolutely right. To the aficionados of the renationalisation of water—[Interruption.] This is a typical tactic. For the benefit of those geared to the renationalisation of water, a genuflection is made in their direction—"Water will be renationalised." To those concerned about financial probity, "Not a lot," says the hon. Member for Derby, South. To make sense of all this and to avoid getting into a muddle, Labour Members will not have to renationalise water; they will have to walk on it.
I have as little faith in my chances of doing that as I do in those of the right hon. and learned Gentleman. My remark referred to the article by Mr. Rawnsley. I do not think that his comments mean anything at all, given that Mr. Rawnsley has made it plain that the Conservative candidate is a gift to the speech writers, whatever he may be to the electorate.
I can tell the hon. Lady this: our candidate is an estimable man, and one of the main reasons why he is estimable is that he does not make reckless public expenditure commitments.
Before my right hon. and learned Friend concludes, I should perhaps tell him that, the other day, I had the pleasure, with my friend the hon. Member for Great Grimsby (Mr. Mitchell), of interviewing the hon. Member for Derbyshire, South—[HON. MEMBERS: "Derby, South."] The hon. Member for Derby, South (Mrs. Beckett) was able to tell us more about the Labour party's spending plans for the health service, which appears to be an overall, overriding, key, superior, first-class, top priority—as opposed to an ordinary priority. She explained that Labour would abide by the commitment to increase the pay of all lower-paid staff to at least half—I think that this is the terminology—the median pay of an industrial worker. This, she thought, would have no effect on differentials. None the less, all health service pay would be fully funded, and the commitment to increase spending on the health service was additional. Apparently, these commitments to extra spending relate only to patient care, and pay is on top of that. My right hon. and learned Friend can add that to his impressive list.
I am grateful to my right hon. Friend. The spotlight is being shone on Labour's expenditure plans, and the Opposition Front-Bench Treasury spokesmen are finding it impossible, as the water gushes over the feeble dam that they have erected, to maintain—that they are responsible. That is demonstrated by every single statement about spending priorities, and it will be a key issue for the future.
I am sure that the hon. Lady will have answers to all these questions, so the best thing I can do is make way for her. The contrast between the Government plans that we are debating today—carefully prioritised, sustainable and targeted where spending is needed most—and the cloud-cuckoo-land ambitions and total incoherence of the Opposition's plans is striking and dramatic. It is on that basis that I commend these reports to the House.
On a point of order, Mr. Deputy Speaker. Is it in order to point out that, despite the fact that this is a vitally important debate, the Opposition have managed to muster only 10 Back Benchers and a dog—and the dog is worth more than the rest of them put together. This poor attendance is despite the fact that public spending is what Opposition Members are meant to be good at.
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
regrets the continued decline of the public services under this Government; regrets the Government's refusal to provide a proper level of support for the United Kingdom's manufacturing base and for the provision of training; and furthermore condems this Government's clear intention to
learn nothing from the recession into which this neglect has plunged the country, and to continue to put tax cuts before public investment".
I am most impressed by the Conservative turnout to support the Chief Secretary to the Treasury. I had no idea that he needed such support. My hon. Friends are working very hard in Monmouth to ensure that the Government's public spending plans are carefully scrutinised.
This debate, entertaining though its tone has been, is meant to be a review of the record and intentions of the Government's spending programme, in the pretty dim light cast on them by the publication of the departmental reports as a follow-up to the broad predictions of the autumn statement. In the House today, as on television at the weekend, the Chief Secretary asked, "Why look in the crystal ball when you can read the book?", serenely unaware, evidently, that in all too many state schools these days the problem is first to find the book. What he meant, of course, was unexceptionable. He meant that we should look at the facts, the evidence, and not just what is written in the departmental reports, or the autumn statement, or the autumn statement supplement, or, indeed, the Red Book. He wants us to look at what is written in those books, but also at the facts of the vast improvements that he claims have occurred in public services.
This debate is bedevilled by two factors. The first is the Government's determination to be all things to all people and to face both ways at once. Perhaps even more serious is their terror of finding themselves trapped into rational debate about the choices that confront this country in the years ahead. The first factor has led the Government—in their determination to please all audiences—into the ludicrous position of boasting to Tories how they have kept public spending down, and to the electorate that they have increased it. The Chief Secretary was at it again today.
The Government's terror of admitting that there could ever be any merit in anything that Labour says has put them into an even more extraordinary position. They claim to detect wild extravagance in our proposals, and then—sometimes on the same day—they condemn us for proposing to spend less than they would have done.
As my hon. Friend says, the Chief Secretary managed to do both in his speech today.
To support their case, such as it is, the Government fling about different and fairly meaningless statements and figures. It is hardly any wonder that the phrases "creative accounting" and "being economical with the truth" both came into common usage under the present Government.
Let us look first at what the spending plans show. There are wild variations in the Government's cash figures. The Chief Secretary did not refer to them with such gusto today, but there has been mention of £26 billion here and £40 billion there—all in cash terms. However, between the public expenditure White Paper published in February 1990 and last November's autumn statement, there was a leap in the planning totals for the current year of £9 billion in cash terms, and for next year, of £11·6 billion.
It is for that reason that more interesting and relevant are the spending figures in real terms when inflation is taken into account. What they indicate is that despite the figures of £26 billion and £40 billion that the Chief Secretary quoted for different periods the planning totals have changed very little since 1985.
In presenting his autumn statement last November, the then Chancellor of the Exchequer said:
Since 1984–85, while the economy has grown by nearly 20 per cent., total public spending has risen scarcely at all in real terms."—[Official Report, 8 November 1990; Vol. 180, c. 117.]
That means that, even in 1988–89, during the boom years to which the Chief Secretary referred—they seem to be the only years 'to which he wanted to refer—public service investment at best stood still. The departmental figures show that in the three years ahead covered by the current plan, there will be either a standstill or a decline in real terms in the budgets of the Departments responsible for industry, employment, transport, housing, education, and overseas aid.
That picture is borne out by what little clear information we can glean from the departmental reports. Support for industry has been halved since 1978–79, and is due to fall still further, until it is one third of the level that the Government inherited. Since 1985, the industry budget has been cut from more than £2,000 million to a planned £730 million for 1993–94. That means a cut in collaborative research and development, technology transfer, consultancy budgets, and regional and export support. That is even before the Government implement their insane plan to sell off the Export Credits Guarantee Department, even if the only people who will buy it are our competitors.
I refer the hon. Lady to the table on page 26 of the "Autumn Statement", which details public spending in real terms over the past 25 years. In 1974–75, that figure had reached £180 billion, but by 1978–79, it had fallen by £5 billion to £175 billion. That is Labour's record. Since then, public spending has risen to £209 billion in the current year. If we want a real indication of what would be likely to happen in the event of a Labour Government, perhaps we should consider that party's past record.
It will take me a few moments to find the table to which the hon. Gentleman referred, but his remarks do not in any way controvert the point that I was making. As the Chief Secretary was kind enough to remind the House, while the Government enjoyed all the benefits of North sea oil and what have been described as the miracle years of growth, public spending stood still—and only now is it forecast that it will possibly rise.
As to training, an even more extraordinary picture emerges in the present period of recession. There is a real-terms cut in employment and training programmes of £365 million, of which £120 million was quietly restored recently—still leaving a net cut of £245 million. That was also the picture last year. Then, the Government asserted that it was perfectly all right for training investment to fall because unemployment was falling. In itself, that was a dishonest argument, because not only was the overall figure falling in real terms, but there was a cut in training per head—including support not only for the young and long-term unemployed but for those suffering from disabilities.
This year—with unemployment undoubtedly soaring —we should surely expect employment and training budgets to rise. Certainly not. The budget continues to be cut, but now the Government have a new excuse. This year, cuts are being made not because of falling unemployment, but because, to quote the Department's document,
Training is not always the best way of getting the long-term unemployed back to work. For the long-term unemployed, the Department has reviewed existing programmes and expanded employment services.
The impression is given that, although training provision is being cut, other efforts are being expanded. There are two things wrong with that assertion. Cash cuts in training for the unemployed this year total £597 million. Cash increases in the other employment services that are to be provided total just £36 million—representing a net cash cut of £560 million.
Also revealing is the change in the content of the Department's report. Those right hon. and hon. Members who are familiar with these debates may recall that in 1989, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) drew attention to a helpful chart in the transport document, which distinguished between roads that had been improved and those that had deteriorated—and which presented a very bad picture. By 1990, that helpful little diagram no longer appeared in the relevant document.
Last year, I pointed out that a table in the relevant document showed an overall cut not only in training but in the training budget per head. Guess what? That helpful table is not included in this year's document either. That puts the House in a dilemma, and perhaps we may look to you, Mr. Deputy Speaker, or to someone else, to assist us. How can we continue to sustain such debates over the years if, every time that we cite useful pieces of information, they disappear?
The Government's programme also includes a provision of £60 million to help the elderly with private health insurance, and £300 million for reforms that are being implemented without pilot projects being undertaken, and within a time scale that will probably mean that much of that money will be wasted. The budget for city technology colleges is on much the same scale as all the money that the Government are making available for the rest of the nation's schools.
It was strange that the Chief Secretary referred in his television interview on Sunday to the waste of surplus school places. Six hundred surplus places in secondary education exist in my own city of Derby, because, despite efficient tertiary reorganisation, approved by the Department of Education, it is not always easy to match exactly numbers of pupil places. However, the Government are proposing to add another 900 to those existing 600 surplus places, by opening a city technology college in Derby. That would seem to make likely the closure of another school—but it is unlikely that such a closure will go ahead.
One of the main reasons for the surplus places is the Government's opt-out programme. Even when a school is opting out only because the local authority, obeying the Department of Education and Science, wishes to remove surplus places, the Department is likely to approve the opting out. It was incredible that the Chief Secretary complained about that waste of public money—which it is —when it is the Government who have made it impossible for economies to be made.
The Chief Secretary was characteristically delighted with himself and made some funny jokes—or that is what he intended—but does my hon. Friend agree that in the real world, such as in Derby, Monmouth and many other places where by-elections and local elections have been held, people are fed up with the delays, difficulties and cuts to which she referred? Although the Chief Secretary was able to persuade about 30 Conservative Back Benchers who listened to his speech, he seems unable to convince the country, including Monmouth.
My hon. Friend is right.
Apart from the opt-out scheme, there are various black holes in the Government's spending plans into which about £6 billion net of public expenditure will have disappeared, such as personal pensions and the £10 billion or more that was spent on the poll tax, for which not a single extra teacher, home help, caretaker, firefighter or police officer has been provided.
The hon. Lady is obviously concerned about education. Will she explain to teachers who are earning more than the basic wage how she will compensate them for removing the upper limit on national insurance, or is that yet another expenditure pledge that the Labour party will fail to meet?
Will the hon. Lady acknowledge that the Red Book forecasts an increase in public spending of £38 billion in cash terms over the next three years? To avoid keeping the House in suspense any longer, will she solve the mystery to which my right hon. and learned Friend the Chief Secretary alluded? Is the Leader of the Opposition's promise of an extra £20 billion over the lifetime of a Parliament in addition to or instead of that £38 billion, or does she not know?
Only Conservative Members could make a mystery out of that. I assure the hon. Gentleman that I shall deal with that point, too. [Interruption.] If I were a Conservative Member, I would not laugh quite so heartily. I am prepared to answer those questions when I reach the logical point in my speech. [Interruption.] I am not in the slightest concerned about Conservative Members.
Whatever may be obscure, hidden or difficult to find in the Government's plans, one thing is crystal clear: the Labour party is saying that we will not spend more than the economy can afford but that we will put every penny that the economy can afford into investment and public services.
The Government's record and their forecasts show a consistent but completely different picture. From 1982–83 to last year, the trend has been of steady decline in the proportion of our wealth spent on public services. Plans for the coming year—there is a helpful table in the Red Book—show that, although there has been a temporary rise because of the recession, the Government intend that the proportion of our national wealth spent in the public sector should begin to fall again as early as next year.
The Government are not prepared to put as much as the economy can afford into such investment and services in the future any more than they were prepared to do in the past. They are still making the same choice, to which the Chancellor has often referred. He said in his speech the other day at the Adam Smith Institute:
I occasionally read in the press that this Government has gone soft on public spending. That is complete nonsense.
That is not the message that the Chief Secretary was trying to convey today. The Chancellor continued:
the need to reduce the size of the public sector remain at the top of the Government's agenda. It is only by keeping spending under control that we will be able to deliver the income tax cuts to which we are committed.
There could be no clearer statement of the choice that the Government wish to make.
The Labour party argues that the extra resources that the Government have earmarked for tax cuts should go into public spending.
Has the hon. Lady taken careful note that the Government's expenditure plans for the next five years would not permit them to achieve the reduction in income tax to 20p in the pound, to which they have often referred? The electorate should not believe them, and the hon. Lady should not build her spending plans on them.
I would not dream of building anything on the figures published in the Government's documents. The hon. Gentleman is correct, but he assumes that the figures given by the Government for their spending programme mean very much. I shall return to that point.
The Labour party has identified the fact that, in many respects, we would make different choices from those made by the Government of which the city technology college programme is an example. We believe that such money would be better diverted to nursery education, which would benefit a greater section of the community. We have identified ways in which the Government waste money, such as on the poll tax. We have identified the fact that there are revenues from growth in any normal year and that we would use all of them.
We have stated without equivocation the tax changes that we propose, of which the principal measures are the increase in the top rate of tax to 50p in the pound, not at the threshold where the present top rate applies, although even that affects about only 6 per cent. of the population, but on a slice of income well above the band at which the top rate applies—in practice at a minimum of £27,000. [HON. MEMBERS: "Where and when?"]
Conservative Members ask where and when that rate would apply. I shall remind them of an exchange in the House last year. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) asked the then deputy Prime Minister, the right hon. and learned Member
for Surrey, East (Sir G. Howe)—sadly, he is no longer in that capacity—to explain the income tax proposals that would be in the next Budget. The right hon. and learned Gentleman replied:
In all the questions asked by shadow spokesmen over many years that one beats all records for stupidity. One matter that Chancellors of the Exchequor like, properly, to reserve to their Budget statement is the level at which Income tax will be fixed". [Official Report, 7 June 1990; Vol. 173, c. 784.]
He also referred to bands, rates and so on. [Interruption.]
I would not dream of saying to Conservative Members who are shouting that that is the most stupid question that I have ever heard in the House; I am content to rest on the words of the right hon. and learned Member for Surrey, East.
I do not see any hon. Member who usually makes a serious contribution to these debates. They only want to make silly points, so I do not propose to give way to them.
The Labour party has made it clear many times that the top rate of tax will be charged at 50p in the pound. [Interruption.] Conservative Members should want this on the record. It will be charged at 50p in the pound at a level of income well above the present rate at which 40p is charged. [Interruption.] That is all I am prepared to say.
The hon. Member for Brigg and Cleethorpes (Mr. Brown) is showing his ignorance. The top rate of tax cannot apply now to incomes below £27,000, and he is saying £25,000. [HON. MEMBERS: "What about the police?"] I shall deal with policemen in a moment; Conservative Members should not be so impatient.
The Labour party has said clearly that it will lift the ceiling on national insurance contributions. That change, and the introduction of a 50p in the pound rate of tax, will cover the specific spending pledges that we have made on pensions and on child benefit—an increase of £5 for a single pensioner and of £8 for a married couple, arid the full increase of child benefit to £9·55 per child.
I am coming to that later in my speech. If the hon. Gentleman will be kind enough to bear with me, and—unlike the hon. Member for Lancaster (Dame E. Kellett-Bowman) who was calling out earlier—stay for the rest of my speech, I shall address the point that he raises.
I want to set the picture in context. The overall picture includes tax and national insurance changes, pensions and child benefit increases and following that, on the programme side, priorities for investment such as training and education. The Chief Secretary managed on five separate occasions to say in different ways that we have a commitment to make training a priority. That has never been a secret.
On education, we are saying that it is more than time that the percentage of our national wealth devoted to education should begin to increase again, having declined under the Government.
Beyond those early priorities, and by as much as the economy can reasonably afford, we shall address the issues of underfunding that we recognise, for example, in the national health service. A great distance arises between ourselves and the Government on the national health service. We recognise that there is certainly an element of underfunding in the national health service, as there is in the education service. In the face of all the evidence, the Government continue to deny that any problem exists.
That brings us back to the many extremely foolish comments made in public by Conservative Members. Incidentally, they are not the same as the comments that they make in private. Secretaries of State continually stop me and complain that they cannot get my right hon. Friend the Leader of the Opposition to make extravagant spending commitments.
I return to the point that I was about to make about the balance between our spending proposals and our overall approach to public spending. The Government's problem —it is a serious problem and I understand it—is that they find it impossible to attack what we are saying, which is straightforward and sensible—[Interruption.] They are reduced, with increasing desperation and implausibility, to inventing what they would prefer us to be saying and attacking that instead.
I now come to the point made by the hon. Member for Berwick-upon-Tweed (Mr. Beith) about what the Government's spending plans indicate. As the hon. Gentleman said, when an election is approaching the Government always say that they will ease up on public spending. In 1983, they had a pre-election spending boom. In July 1983, after the election, they had to have an extra Budget in which the then Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson), announced that spending had got out of hand and had to be reined back. It took until 1985–86 for the Government to attain that goal.
In 1987 the Government realised that the same trick would not work twice, so they tried a new one. They did not have a pre-election boom in spending, but by a remarkable coincidence, they had a pre-election forecast of increases to come. As the hon. Member for Berwick-upon-Tweed has already identified, that is precisely what the Government are doing in this year's autumn spending statement. But what happened when the election was safely over? The forecast for 1987 and the subsequent years was an increase in public spending in cash and in real terms. I have no doubt that the Chief Secretary of the day defended that in just the same terms as the present Chief Secretary used today.
Once the election was safely over in 1987, there was a cash increase, I admit. But there was a real-terms fall in public spending in the first year of almost £1 billion. In the second year of the plans, where the forecast before the election had been for a real-terms increase of £3 billion, there was a real-terms cut in public spending of £9 billion. That was a turnround of £12 billion in real terms once the election was safely out of the way. The Chief Secretary wonders why we doubt the figures in this year's autumn statement.
In these debates, we find ourselves in the position of a new board that has just completed a takeover deal, or almost done so. We know that we are inheriting a mess. We know that the accounts are extremely dodgy, but we do not know exactly where and how the bodies are buried and how great the difficulties are. In those difficult circumstances, some idiot keeps asking us what dividend we will declare at the end of the first year. That is the position in which Conservative Members are putting themselves.
We have already said more and been more honest than the Government, who have a history of obfuscation and deceit. In this debate on public spending, they began by trying to claim that we could not do anything at all without raising the basic rate of tax. The Financial Secretary to the Treasury did so and the Chief Secretary to the Treasury did so. We cannot mention tuppence ha'penny of expenditure without someone saying, "How much will that put on the basic rate of tax?" The insistence that one cannot do anything without raising the basic rate of tax is a lie which we have nailed. That is exactly the point which the Leader of the Opposition, my right hon. Friend the Member for Islwyn (Mr. Kinnock) addressed in a speech which was extremely clear. He said bluntly and specifically that, in any normal year, revenues accrue from growth in real terms.
Not for a second. Only a moment ago, Conservative Members were asking me to answer the point. I am doing so.
My right hon. Friend the Member for Islwyn also said that a moderate estimate of the increase that would accrue with 2·5 per cent. growth over five years was about £20 billion. Conservative Members will know that several commentators have estimated that it would be more. However, we wish to be moderate in our observations. My right hon. Friend made it plain that, if one obtains 2·5 per cent. growth in real terms over five years, one obtains revenues of about £20 billion without a ha'penny going on the basic rate of tax. That is the point. If there is less growth, the revenues are smaller. If there is more growth, the revenues are greater.
No, not until I have finished the point. I must put this clearly on the record. Conservative Members obviously do not wish me to put it on the record.
It is clear from what my right hon. Friend the Member for Islwyn said and it is indisputable—indeed, as The Independent said, it is "unexceptional"—that, with grow at that the level of 2·5 per cent., revenues accrue without raising income tax. The Conservative party has tried to propagate the lie that revenue cannot be increased without increasing income tax. That lie has been nailed.
If we are to be the first Labour Government not to do so, we shall be. [Interruption.] The previous Labour Government cut the rate of tax. I have not checked back through the records to see whether there is any accuracy in the Minister's insinuation, but if there is, it will make a change. I shall come to the Minister's accuracy in a moment.
I repeat the point that I have made. Conservative Members seek to say that one cannot have revenues unless one raises the basic rate of income tax. That is a lie. They know it and it will be a lie no matter how many times they repeat it.
What happens to the hon. Lady's expenditure plans if her taxation plans kill growth? When she has increased taxes and killed growth, how will she finance expenditure?
I shall come to what happens to growth in a few minutes, if the hon. Gentleman will allow me. [Interruption.] I shall come to the point immediately.
When Conservative Members had failed to justify the argument that one cannot increase spending without increasing taxes, we then went through the farce of their claims that one obtains growth sometimes, but not under Labour Governments. Indeed, the point that the hon. Member for Hampshire, North-West (Sir D. Mitchell) has just made ties in with that. He implied, as the Minister did, that because Labour Governments have sometimes raised taxes, they do not achieve growth.
I have here the figures for gross domestic product—[Interruption.] [HON. MEMBERS: "Order."] I am sure that Conservative Members are anxious to hear this because they have been asking for these figures for some time.
I have the figures for the gross domestic product, at constant 1985 prices, for the past 43 years. They show a fall in GDP in real terms in only five of those years. The first was in 1973–74, when we shared office with the Conservative Government; the second was in 1975, when we were in office, but, according to the arguments of the Chief Secretary to the Treasury, that makes no difference because the first two years do not count. The third occasion was in 1980. Perhaps we shall take half the blame for that, as the Minister gives us the first two years of the 1974–75 figure. The fourth occasion was 1981 and the fifth was 1991.
Whatever happened to rates of tax or other parts of the economy, Conservative Members must know that those are the facts. It is not only untrue but pathetically untrue to try to pretend, as they have done recently with ever-increasing volume, as the quality of their argument has deteriorated, that there has never been growth under a Labour Government. The Financial Secretary to the Treasury, who boasted about how he checks his figures, was the first to make that statement, but it is not true. When he first said it, I made the charitable assumption that he had been caught on the hop, had come out with a smart remark and had realised subsequently that it was nonsense. That could happen to anyone but it seems to happen to him more than most.
However, the Prime Minister was not caught on the hop when he said, on 9 May:
The reality is that the Labour party would never deliver any growth whatsoever to fund increased public expenditure. It never has and never would".—[Official Report, 9 May 1991; Vol. 190, c. 820.]
The Prime Minister was certainly not speaking off the cuff, yet his remarks were totally untrue.
The figures show that, under the last Labour Government, for example, on whom an oil price increase was inflicted from outside these shores, which quadrupled oil prices without increasing revenues from oil, the average rate of growth was 2 per cent. Under this Government, taking the whole period and not the periods that they choose to select, growth is 1·75 per cent. So they are in no position to criticise us.
Conservative Members keep attacking the Labour party's position and saying that we are being less than honest.
On the subject of honest accounting, I invite honest John Major to step forward. On Wednesday, 23 May 1990, he was set on by the then Chancellor of the Duchy because he was attacking Labour's spending plans. An unkind and improperly briefed journalist then asked the thenChancellor of the Exchequer—the right hon. Member for Huntingdon (Mr. Major)—about his taxation spending plans. The Independent of that date said:
Mr. Major declined to pledge that the Tories would not abolish the married man's allowance, or to put a date on reducing basic rate tax to 20p.
In July 1990, the then Chancellor said to the Welsh Conservative party:
Let me give you a flavour
of some of these terrible Labour pledges.
They intend to freeze the married couple's allowance. That would make all married couples in this country, 24 million people, worse off.
In March 1991, the Chancellor said:
I am not proposing to increase the married couple's allowance for couples under 65 or the allowances that are linked to it."—[ Official Report, 19, March 1991; Vol. 188, c. 179]
So much for honest John on the married couple's allowance.
In July 1990, the same honest John attacked the Labour party for its proposal to
meddle with mortgage interest relief"—
by which he meant our intention not to allow extra relief above the basic rate of VAT.
On the Frost programme in January 1991, Mr. Frost said, in a straightforward manner, that mortgage interest relief had been safe in the hands of the previous Prime Minister, the right hon. Member for Finchley (Mrs.Thatcher)
even with higher rate taxpayers".
He then asked:
Is it safe in your hands …?
The present Prime Minister answered:
The matters you're moving into now, and I can give you very clear answers, but you're moving now into matters that are budgetary matters, but we have no plans to change … what happened in the past, but I can't give you guarantees about this or any other matter. That is not to indicate that there are going to be changes … I can't give you guarantees about that anymore than anyone else could.
Mr. Frost then summed up the Prime Minister's reply as:
Right, no guarantees but at the moment, as of now, we have no plans to change that",
and the Prime Minister said "That is correct".
In March 1991, in his Budget statement, the Chancellor of the Exchequer proposed that mortgage interest relief
should be allowed only at the basic rate."—[Official Report, 19 March 1991; Vol. 188, c. 178.]
So much for the honesty and frankness of the Conservative party in putting its plans before the country.
No, I shall not give way.
The Conservative party has made much of our plans for the top rate of tax, and 50p is well above the current top rate. I shall repeat the figures, because the hon. Member for Brigg and Cleethorpes (Mr. Brown) does not seem to be very well informed. He thinks that the top rate of tax applies at £25,000. The current top rate of tax of 40p in the pound affects 6·5 per cent. of taxpayers and does not apply in practice to incomes below £27,000. That is for a single person with only one personal allowance and no mortgage. Beyond that, those with a married couple's allowance or a mortgage will probably pay the present top rate at £30,000 or more.
The right hon. and learned Member for Surrey, East said that only an idiot would try to ask any Chancellor or shadow Chancellor to say what the rates and bands of the tax system should be. I rest content with the right hon. Gentleman's judgment.
No, I shall not.
Conservative Members suggest that the combination of national insurance and top rate tax changes would be damaging and would cause a brain drain, with middle management fleeing the country. If that is true, why are they all still here? Why did they not leave the country before 1988? They were paying 60p in the pound until mid-1988. Under a Labour Government, some—not as many—would be paying perhaps 59p in the pound.
The hon. Member for Esher (Mr. Taylor) is keen for me to talk about national insurance contributions, and I am happy to do so. He asked about the impact of national insurance contributions on teachers.
The ceiling of national insurance contributions for teachers is £20,300. The average salary for teachers in primary education is £16,279 and the average salary for teachers in secondary education is £17,166.
Between 10 and 15 per cent. of teachers at most would be affected by the change in national insurance contributions. It is impossible to assess exactly how many would be affected because they would be affected only if they received either London or incentive allowances, or both. Most of the people who will rise above the ceiling when they receive those allowances are in groups just above the national insurance contribution ceiling so the effects on them are small. An article in the Daily Mail said that the change would be a disincentive and great blow for somone earning slightly above the ceiling, but the loss for the example they gave would be about £50 or £60 a year, which is less than the cost of buying the Daily Mail for a year.
Many teachers in my constituency will be fascinated by that answer, because they are highly qualified teachers—some of them are even headmistresses. They will notice that the Labour party's plans to remove the upper limit on national insurance will cost them several hundred pounds at the levels they earn. If the hon. Lady believes that that is an isolated incident in the south—east, she should look closely at teachers right across the country who will be similarly affected. Some 2·11 million basic rate tax payers in this country will be savagely impacted by what the hon. Lady proposes for the upper rate national insurance.
That was a lot of huffing and puffing, but it does not alter the fact that the figures on schoolteachers show that, on average, their salaries are £16,000 for those in primary education and £17,000 for those in secondary education. Some teachers, but not very many, will be affected by lifting the national insurance contribution ceiling.
Just a moment.
We have never denied that some teachers will be affected; nor have we tried—unlike Conservative Members—to conceal from them the impact that the changes will have. We want teachers to know what a Labour Government would propose and we want them to know where the money will go. Many of the teachers whose income is near the ceiling and will rise above it, will be net gainers from the switch from national insurance contributions when the sum is pooled into child benefit —another fact that the hon. Member for Esher forgot. A small number of teachers will be affected, and only if they receive incentives.
I want to finish this point, but I will give way to the hon. Gentleman eventually.
Conservative Members also mentioned nurses. I do not know why they bother with all this fuss because we know —they must know in their heart of hearts—that only a small number of people in those employment categories will be affected. I do not know who Conservative Members think that they are conning. When the people who work in teaching, nursing and the groups that Conservative Members mentioned, hear the figures, they think, "I do not earn that—what on earth are they on about?" There is no point in Conservative Members trying to deceive people.
A typical staff nurse earns between £10,000 and £15,600 a year—no more than 3 per cent. of all nurses, even including London weighting, could possibly be affected by the abolition of the ceiling. About 12 per cent. of police officers—the other group mentioned—might possibly be affected by the abolition. Most ordinary police officers would not be affected by the change.
The hon. Member for Stamford and Spalding (Mr. Davies) accused me of asking rhetorical questions. I do not recall asking Conservative Members any questions at all, but I shall ask them one now. Why should a police constable pay national insurance contributions on his earnings, while his superior—a police inspector or police sergeant—does not? What is right or just about that? Will Conservative Members defend that?
I am astonished that the hon. Lady does not understand the answer to that. We are talking about a national insurance contribution scheme that has a ceiling on the amount of pension that can be paid. It is a contributory scheme, and it is right that the contributions should be related to the amount of pension.
The hon. Gentleman talks about what has happened to the pension ceiling. He has picked a particularly unfortunate case. It was precisely the difference between the pensions and earnings of police officers that was so severely affected by this Government, who made unilateral cuts and changes in breach of contract. From the hon. Gentleman's point of view, it is a great pity that he brought up that case. The Government have treated police officers very badly over pensions.
My basic point is simple. At present, we have a system where there can be two people living in one household who earn £20,000 each and pay national insurance contributions on the total £40,000 income, and next door one person who earns £40,000 pays national insurance contributions on half that income. That is unjust and illogical.
This Government increased those national insurance contributions from 6·5 to 9 per cent. This Government have lifted the ceiling on employers' contributions, thereby loading the effect on business costs right through the earnings range. This Government have applied national insurance contributions to company cars.
I do not know why the hon. Gentleman seeks to make such silly points. He knows perfectly well that we are discussing the fact that we are going to raise the ceiling.
Last week I challenged the Chief Secretary and asked him whether, as the Government had lifted the ceiling on employers' national insurance contributions and were making criticisms, would he give a categorical undertaking that the Government would not, in this Parliament, or in the unlikely event of their having the opportunity in the next, lift the ceiling on employee contributions? Will he give us that undertaking?
The Prime Minister made criticisms of the married couple's allowance and the extra mortgage interest relief—and then the Government implemented that policy—
I am perfectly prepared to give way if the hon. Gentleman is prepared to tell me whether the Government will lift the ceiling on national insurance contributions. If he is not prepared to do so, I shall not give way but shall wait for an assurance from Ministers. They charged us about the married couple's allowance, they attacked us on mortgage relief and are now attacking us on national insurance contributions, but what about all the poor nurses and teachers about whom they made such a fuss a moment ago?
I have one last thing to say about national insurance contributions. Not only do all the people involved know that we are making this proposal, but they know that we are pledged to do it and they know where the money is going. The money is going to pensioners and families with children—where it is very much needed. People can make their decision in the light of the very clear choice that we are setting before them. Labour's policies involve no deceit and hiding.
The hon. Lady says that people know where the money is going, but do they understand that the Labour party regards education as its first priority, training as a key priority, Government support for manufacturing investment as a key priority and spending 0·7 per cent. of GNP on overseas aid as a top priority? To which of those priorities is the money going? Is it to go to them all? Will the hon. Lady answer the question that my right hon. and learned Friend the Chief Secretary asked her? Are those matters all priorities? If not, which are not priorities?
I suggest that the Financial Secretary should read Hansard and see what I said earlier. I have already answered that question twice and see no point in answering it for a third time.
I shall now return to the Government's plans because I have been speaking for long enough. They contain the flaw at the heart of the Government's case, which is that there is a choice between cuts in income tax and cuts in public services or increases in value added tax—or, under this Government, both.
On the "Today" programme the other morning, the right hon. Member for Shropshire, North (Mr. Biffen) was asked about the demands of the welfare state and what he described as the Government's ambitious programmes for cuts in direct taxation. He said that it was quite simple:
Any attempt to reduce income tax to 20p in the pound will have to be phased over a considerable period of time and in my view, it is as likely to be in the context that we decide that we're going to be taxed more in our spending capacity and less in our earning capacity and as evidence for that I
would point just to the recent Budget, where the decision was taken to increase VAT and to increase excise duties but not to increase income tax.
I understand that the principal contribution to economic affairs of the right hon. Member for Islwyn (Mr. Kinnock) is an annual consultation with his abacus, but does the £20 billion which has suddenly been manufactured include the money to be used to renationalise the water companies?
The hon. Gentleman knows that I have already addressed the point about the £20 billion several times. The hon. Gentleman knows that we are saying that that is an illustrative figure of the revenues that come from growth without having to raise taxes.
The hon. Member for Stroud asked me about water. We have made it extremely plain that, although we think that, in the long term, the water industry belongs in the public sector, it is not one of the policies that we expect to implement soon after coming to power. We intend to tighten regulations and try to ensure that the water industry is responsive to public need.
There is a question mark in the much longer term over the pattern of control of the water industry. There are those who argue that there should be more regional control than control from the centre. That question would arise in overall discussions about the shape of regional government and the powers that may be devolved from central Government. The hon. Gentleman will readily recognise that the debate about the shape of the industry is a matter for the longer term.
There is a strong possibility that the Government will increase VAT to pay for their income tax cuts—that is, if they do not now say that they will discard them, which is always a possibility. Income tax cuts have to be paid for either by cuts in public services or by increases in VAT, national insurance contributions or something else. Lest anyone imagine that Conservative Members have no track record on the issue, let me remind the House of what the right hon. and learned Member for Surrey, East said in the general election campaign on 21 April 1979. He said that he would like to correct "inexcusable errors" in a Labour party-political broadcast of the time; and added:
We have absolutely no intention of doubling VAT.
Seven and a half weeks later, almost to the day, in his Budget, he raised VAT from 8 to 15 per cent. I concede that that was not exactly doubling it, but if the Financial Secretary wishes to tell the British people that the Government will not raise VAT to 22 per cent., but they might raise it to 21 or 21·5 per cent., or even to 23 per cent., all of which are compatible with denying that they intend to raise it to 22 per cent., I am sure that the British people would be interested to hear it.
Let us come back to reading the book, as the Chief Secretary earlier invited us to. The Government boast—the Chief Secretary was at it today—that they have funded public services not just adequately but generously. They must believe that their funding is generous, because they have so often, even in the boom years, put in less Chan the economy could afford. Under this Government, the inspectors have identified dilapidation in schools that will cost £3 billion to £4 billion to put right. Under this Government, for the first time ever, paper sheets and pillow cases have appeared in hospitals; and waiting lists have soared. Under this Government, some trains have become not just a disgrace but death traps.
The Labour party promises no miracles and no magic wand. We tell the electorate bluntly that it will take years to repair the damage and restore the neglect of these years, and that many of the scars will always show. I do not usually use large chunks of other people's words in my speeches, but I read a Daily Mirror editorial on Friday which should be shared with the House, especially with Conservative Members, who almost certainly do not read the Daily Mirror. That editorial did what the Chief Secretary asked us to do and looked around at the consequences of 12 years of Tory rule:
Look at the rising toll of the unemployed and be thankful for the present figure, for it will not stop increasing before it reaches three million.
Look at the schools whose walls are crumbling and whose pupils lack the textbooks to teach them the basics of learning and be grateful that they are being taught anything at all.
Look at the homeless in the centres of London, Manchester and the other great cities of these islands and wonder why they don't go out and get a mortgage.
Look at the traffic perpetually stuck in jams because spending on the road system has been neglected and ask why they can't be bothered to walk.
Look at the squalor of British Rail, the late trains, the dirty carriages …which itself is an eloquent testimony …
Look outside your door at the rubbish in the streets, the lamps which don't light, and the police who are not there. Examine your bills for water and gas and electricity, all outrageously increased because the Government wanted to privatise to feather the nests of its friends.
Look at the profits which have been made in the City of London and then look at the losses of those living in bed and breakfast hostels because they have been evicted.
Look at the endless queues for the NHS, while doctors and nurses are being sacked.
Feel the pain of those who need operations but cannot get them, at least not for years.
Look. Feel. See. Use your own experience, your own knowledge.
We want the people of this country to read the book of the Government's record.
I will not give way. I am on my last sentence.
We share the Chief Secretary's view that the people of this country should read the book of the Government's record, as set out in their public expenditure history and forecasts; and when they have read it, they should resolve to turn a new page and elect a new Government.
In the public expenditure White paper the Government have set out clearly their plans for the coming years. Like many other Members, I came to the House this afternoon in the hope that the hon. Member for Derby, South (Mrs. Beckett) would explain with equal clarity what the Labour party planned to do if they got into Government. I am sorry to say that we have been seriously disappointed, because, although several of my hon. Friends intervened to ask pertinent questions, and the hon. Lady said that she would deal with those matters later in her speech, in the end she managed to avoid answering them. So I must ask her some of those questions again.
Over the past hour we have been waiting for an explanation of some of the extraordinary things that Opposition economic spokesmen have said on behalf of their party. I do not know whether the Leader of the Opposition can be classed as one of the Labour party's economic spokesmen, but in view of his role it is fair to assume that what he says carries the authority of the party that he leads.
The first matter which the hon. Lady made even more unclear than it was before she spoke was the status of the £20 billion that the economy would yield for public expenditure in relation to the Government's published expenditure plans. That £20 billion is much less than the figure in the Government's public expenditure plans. If the labour party is substituting that figure for the Government's, what will it cut to get spending down to £20 billion from the £38 billion Government figure? The hon. Lady has not explained that, although she was repeatedly asked to do so.
I must intervene to save the right hon. Gentleman more embarrassment. I made it plain that there is no direct comparison—and certainly there is no comparison between the figures that he mentions. The £38 billion that he cites is cash, whereas the £20 billion is in real terms.
I made it absolutely clear that our figure had nothing to do with the figures in the White Paper. It is an illustration of the fact that 2·5 per cent. growth over five years would yield about £20 billion in revenues. No suggestion of a comparison was made by my right hon. Friend. Only Conservative Members, through stupidity or malice, are trying to make such a connection.
I have told the right hon. Gentleman this four times and I will tell him a fifth. My right hon. Friend the Leader of the Opposition was responding to the lie put about by Conservative Members that the only way to get revenues for extra public spending was by increasing the basic rate of income tax. That is not true and it never has been true. I trust that it never will be true—unless the Government stay in power for longer and we have a recession every year.
In a normal year, there is growth. With 2·5 per cent. growth, on a moderate estimate, there can be £20 billion for spending. If there is less growth, there is less money; if there is more growth there is more money. We can get more revenues, therefore, without raising the basic rate of tax. [Interruption.] The Financial Secretary says that we have never done that, but he knows that it is untrue. Is he trying to ruin his reputation? He must realise that members of the general public who are economically literate and follow such debates are well aware that there is growth under every Government, whether Labour or Conservative. He makes a fool of himself by pretending otherwise.
I am grateful to the hon. Lady for her lecture. I did not need it, because I know a fair bit about these matters. The Leader of the Opposition claims that £20 billion will be available for public expenditure out of growth. Does that substitute for the hon. Lady's commitment to public expenditure out of growth that is already contained in Government figures? If the Leader of the Opposition has not explained that to the shadow Chief Secretary, it is no wonder that the Opposition are getting a bad press on their handling of their economic plans.
The hon. Member for Derby, South should have clarified matters, but she avoided the question whether revenue from future growth in the economy is regarded by the Opposition as extra money that is available for public expenditure. If it is not, why on earth is she, as shadow Chief Secretary, allowing her colleagues to go up and down the country saying that every single area of public expenditure that they can think of is a top or key priority?
My right hon. Friend speaks about Opposition spending pledges. In the presence of the hon. Member for Derby, South (Mrs. Beckett), the hon. Member for Kingston upon Hull, East (Mr. Prescott), the shadow spokesman on transport, said in Derby at the beginning of the month that a Labour Government would electrify the main line all the way to the midlands to bring benefits to Derby. Presumably that is a first-line priority pledge. Does the hon. Lady deny that?
I do not know what the hon. Lady will deny or confirm. The hon. Member for Kingston upon Hull, East (Mr. Prescott) said that this was an overriding priority. Is an overriding priority greater than a top priority and is a top priority more or less important than a key priority? We have heard that water privatisation has a low priority.
They are sensible in relation to the available resources. They are a continuation of record public expenditure carried out over 12 years during which we have been able to reduce the rate of income tax and reduce, and for a time eliminate, borrowing, of which we inherited a great deal from the last Labour Government. Through careful control of overall public expenditure, we have been able to increase public expenditure in key areas.
Does my right hon. Friend agree that the hon. Member for Derby, South (Mrs. Beckett) should reply to the important point made by my hon. Friend the Member for Surbiton (Mr. Tracey) about a pledge made in Derby in the hon. Lady's presence? Many people in the east midlands suspect that it is the sort of pledge that Labour, if it ever came to power, would riot be able to redeem. Would there be a firm pledge by an incoming Labour Government that the midland main line would be electrified? The hon. Lady must say yes or no to that question.
I will happily give way to the hon. Lady if she wishes to respond. She does not. Did the hon. Member for Kingston upon Hull, East consult the hon. Lady before he said that such a major commitment was an overriding priority? What about the other commitments? Did the hon. Lady speak to the hon. Member for Copeland (Dr. Cunningham) before he said that education was Labour's first priority? Which comes first, a first priority or an overriding priority? One would think that an overriding priority would take precedence over even a first priority.
The right hon. and learned Member for Monklands, East (Mr. Smith) says that education and training are key priorities. If Labour's spending commitments are to appear credible, the Opposition must tell us whether they categorically repudiate all the priorities spread about the country by Labour spokesmen. If those priorities are not commitments, spokesmen have no right to say that they are key, top and overriding priorities.
The same thing always happens under Labour Governments. As soon as they are elected they go on a spending binge, because before elections all their spokesmen go round the country saying that more spending on this and that is a top, a key, an overriding or a first priority. They cannot be held at bay. It is not possible for a Labour Government to finance such spending commitments without increasing the burden of taxation.
The Opposition have an extra difficulty. They have said that they would not proceed with our plans for privatisation which, over the next three years, will produce £5·5 billion each year. That is a total of £16·5 billion and almost gobbles up the Opposition's £20 billion before they have even started. Where will a Labour Government get that money? They will either have to cut spending in other areas of public expenditure, raise taxes or increase borrowing. That is because the Opposition have not focused on the fact that a public expenditure programme must be identified in advance and must be within the means of the Government to fund it. Everything that the Opposition have said about priorities fails to meet those criteria. It is completely dishonest to speak about top priorities when there is no intention in the foreseeable future of doing anything about them.
Much of the hon. Lady's speech was devoted to the White Paper. She said there was not enough expenditure on health, education and transport, and she was robustly supported by her hon. Friends. The hon. Member for Walsall, North (Mr. Winnick) said that much more should be spent on transport, health and education. The hon. Member for Sheffield, Brightside (Mr. Blunkett) said that a great deal more should be spent on local government. How would a Labour Government cope with that, when the Opposition say that they are committed to spending on only two matters and that all the others are for the birds?
Anyone who reads Lord Barnett's book about the experience of the Labour Government in the 1970s will see that any Labour Chief Secretary will find pressure to increase public expenditure irresistible. Those irresistible pressures to increase public expenditure would inevitably result in financial problems which could be solved only by tax increases or by borrowing. If public sector borrowing is increased to fund such extravagant commitments, the debt service burden will increase not only immediately, but for all the years ahead. That adds to the increases in public expenditure to which Labour is committed.
One reason why we have been able to restrain public expenditure in recent years and have been able to devote more money to useful functions in the public service instead of to debt interest is that we have reduced the public sector borrowing requirement and have repaid a substantial part of the national debt. As soon as the process goes into reverse, it becomes not a virtuous circle but a vicious one, and public expenditure increases year by year to service the extra money borrowed.
The hon. Gentleman will surely concede that the documents that we are debating do precisely that—they put the process into reverse. The documents show a substantial public sector borrowing requirement for reasons that arise out of the recession.
The hon. Gentleman's final words explain the position. My right hon. Friend the Member for Blaby (Mr. Lawson) explained a few years ago that the Government's policy, over time, was to have a balanced budget. In some years of the economic cycle there will be a surplus, but in others there will be a deficit. Public expenditure cannot be increased in absolute terms without increasing taxation or borrowing to pay for it.
In recent years, the Labour party has said that interest rates are too high and should come down whatever their level has been. If the amount of borrowing is increased, there will have to be higher interest rates than would otherwise be the case. That is an inevitable consequence which again increases the burden on public expenditure. It is likely that the Labour party's solution would be the same as in the past. There would be major increases in taxation on incomes.
I well remember that, during the first general election campaign in 1974, the right hon. Member for Leeds, East (Mr. Healey) said that he would raise taxes on the rich and squeeze them until the pips squeaked. He did not say at that time that his definition of the rich included those with below average earnings. That is always the way, because the majority of taxpayers are at the lower end of the scale. If a significant amount of extra money is to be raised from income tax, it is not sufficient to pile on high rates at the top end. If extra revenue is to be raised, taxes have to be increased throughout the scale. That is what the Labour party did in the 1960s and 1970s, and the only reason why it did not do so in the 1980s was that it was not in a position to do so.
The hon. Member for Derby, South told us to examine the evidence of the past. However, Labour Governments have traditionally and invariably increased public expenditure sharply and increased tax rates on average incomes. That would happen again. The hon. Lady has shown that the arithmetic in the Labour party's financial plans cannot be trusted. It says that it could spend more without increasing the tax burden on ordinary people. That is a false prospectus. The Labour party has been rumbled in the House and it will be rumbled in the country. What happened in the past could happen again.
High public expenditure and high taxation are a way of life for the Labour party. It has said nothing today to change our view of what it would do if it were ever in power again.
First, I shall refer to the form of the public expenditure document, because nobody else is likely to and because I believe that, as in architecture, form should follow function, but the function of the reports is to obscure the facts. It is remarkable that we conduct these debates as if the departmental reports made any sense at all. I shall shortly demonstrate that they do not.
I am in the 23rd year of a campaign to require the Treasury and other Departments to set out not only what they are spending in each programme, but their objectives and the outcomes of past programmes. I first raised the issue with the Procedure Committee in 1969, and in that year the first public expenditure White Paper had 81 pages, with one page each for health and welfare and one page for defence, and very helpful it was too.
This White Paper has 1,500 pages in £20 volumes. It costs £200, so some university departments are unable to afford it. If one adds the estimates, the appropriation accounts, the next steps agency report, the next steps agency framework documents and the trading fund reports, 3,000 pages are now produced annually on spending. But there is hardly more information that we had in 1969.
There is no reason why the estimates and the appropriation accounts could not be organised in columns against each of the spending programmes. The first year's programme is next year's estimates, and last year's completed programme is last year's appropriation account. That would save 28 volumes of information.
When Treasury officials were asked in the Select Committee on the Treasury and Civil Service why there had to be 28 extra volumes, they could not answer. They had never asked the Committee whether the information was required in the estimates or the Public Accounts Committee or the Comptroller and Auditor General whether the information was needed on the appropriation accounts.
Many of the reports are drab, with a few hazy graphs. Of all the Departments, the Home Office has produced a volume which would not look out of place in the reception area of an advertising agency. Graphic graphs are printed over pictures of prisoners at work, over what appears to be a fire in a chip pan, over computers, with a signed foreword topped by a photograph of a smiling Home Secretary. The report by the Office of Arts and Libraries, which has a spend of £500 million, has 34 pages—20 per cent. longer that the report by the Ministry of Defence which spends £22,000 million.
The report from the Ministry of Defence is largely narrative, with virtually no analytical back—up. It says that its efficiency programme to improve the cost of that great Ministry by 2·5 per cent. a year is going well, and it gives us some descriptive examples such as cancelling the overhaul of nine aero engines. A Department that spends £22,000 million tells us that it had forgone the overhaul of nine aero engines. The report does not provide any basis for parliamentary scrutiny of efficiency. It tells us that its new management strategy will be set out in a departmental plan which will include objectives and performance measures, but it fails to tell us whether that plan will be published.
The best report is that of the Inland Revenue, and it is called a management plan. It sets out its purposes and aims, its management strategies, its capital spending by project and such efficiency indicators as the cost per pound collected in revenue, the cost per taxpayer, and a wide variety of measures of past and future performance.
Elsewhere, the information can only be described as haphazard and whimsical. The reports usually set out in great detail what they are spending, but there are few meaningful indicators of their targets or what has been achieved in the past. A few examples will give the flavour. The Minister for the Civil Service gives the ratings on, for example, accommodation and catering given to the Civil Service college by its students. However, it does not mention or report any progress on equal opportunities policies in the service—a matter for which it has responsibility.
The Department of Employment record no objectives for youth or employment training, and I am not surprised, given the cuts in those services. It gives no information on the placement of young people gaining qualifications or jobs. It explains that those targets will be agreed later with training and enterprise councils, as if it had no responsibility whatsoever for setting them.
The huge report of the Department of the Environment—the largest, at 178 pages—sets out page after page of detail on future spending, but contains no past analyses or future targets for the improvement of, for example, the quality of air or water. It reports its interest in preserving the landscape, but fails to report the extent of damage or destruction to sites of special scientific interest. It mentions the extent of homelessness, but offers no indication of how much it expects to reduce it. We are told at length of the Department's spending on inner cities, but we are given no clue to what improvements it is aiming at in quality of life for their residents.
The Department of Social Security report informs the reader of the ways in which take—up rates for benefits can be calculated, but gives no analysis of what they are, or of how they might be improved.
There are many useful statistics in the Department of Health's volume—statistics on the costs of its services, the number of out-patient attendances, the average length of in-patient episodes, immunisation take—up rates, general practitioner list sizes and prescription costs. It contains mortality rates for a number of diseases, and targets for coronary grafts, hip replacements, cataract operations and bone marrow transplants. Unfortunately, all those series of figures end in 1989 or 1990, so there are no indicators of how the Government expect them to improve. We are told what special funds have been allocated to reduce waiting list sizes, which is a key indicator, but we are given no idea by how much the Department expects them to be reduced.
Those of us who have argued for the past 20-odd years that public expenditure White Papers should set out as many spending programmes as possible, and should give the social and economic indicators which will enable us to know the objectives of spending, can only record dismay at all this, as these first departmental reports are ridiculous. They either mean that Departments are trying to swamp the reader with meaningless numbers or, what is more likely, they simply poured into them any old figures that they had to hand—except for the Treasury, which reported virtually nothing.
The Treasury's slender report has an interesting selectivity; it grandly informs the reader that one of its objectives is to maintain a general oversight of the financial system and to help maintain its integrity. Another aim is to manage Government debts and financial assets effectively and prudently. That is very worth while, and we understand that those are two of the Treasury's jobs. Therefore, one might have expected the report to include some measures relating to City failures and the effectiveness of investor protection, or to the Treasury's competence on debt management and custody of assets. However, a suggestion to that effect in the Treasury and Civil Service Select Committee was greeted with surprise by Treasury officials.
On the other hand, the Treasury report tells the reader about the productivity of pay clerks in the Chessington computer centre, and offers an unintelligible graph, showing the caseload of clerical staff in the pensions administration office. The Treasury does not tell us anything about its grand duties of safeguarding Government's debts and financial assets, but tells us in great detail what some poor clerk achieved in the Chessington computer office or the pensions administration office. That is typical of the amateurism that has always run through the British civil service, especially the Treasury, whose mandarins are only too happy to apply measurement to the work of their clerical staff, but not to themselves.
The presentation of statistical indicators reaches a somewhat eccentric peak in the report of the Welsh Office, which is one of the best of the departmental reports. There is a section on "Indicators of a Healthy Lifestyle," between 1985–88, which records the percentages of the Welsh population using semi—skimmed milk and eating fruit daily.[Laughter.]
There is promise of more to come, as the section on indicators of health tells us that the Department is considering the production of an indicator on emotional health and relationships. In a future report, we shall see a performance indicator of emotional health and family relationships among the people of Wales, but the Treasury will not tell us how it proposes to manage the nation's assets.
Really, these reports are merely a mandarin's playpen —they do not make any sense at all. They threw in any statistic they could find, and it is ridiculous that we are expected to treat them seriously.
Last week in the Treasury and Civil Service Select Committee, the Treasury said that each report set out for each Department a set of ordered priorities and the criteria by which policy changes are assessed, but it could not find an example of either. There is no example of either in any of those in the departmental reports, yet they are required of Departments by the Treasury.
Not surprisingly, the Treasury also told us that the division concerned with applying quality controls to these reports does not have a management accountant in its employ, and it hopes to seek the advice of management accountants from somewhere else. It is no wonder that this kind of information is nonsense.
Our Select Committee would be well advised to take this matter seriously. We are being swamped with information in reports which carefully omit the information we need if we are to scrutinise the work of the Departments.
This week, the National Audit Office reported the Treasury as saying that it was satisfied with performance indicators in 26 of the 34 Departments. In other words, the Treasury is perfectly happy with what we are getting. I guess that these reports are the state of the art as far as the Treasury is concerned, and we are not going to get any more. Select Committees should watch that carefully.
I shall refer only to one programme as an example of the content of the White Paper, because it is of special concern and it is referred to in our amendment. The report of the Department of Employment reveals a real—terms cut in youth training of £100 million in the next three years, at a time when the automatic pilot running our economy will take unemployment to 2·5 million this autumn, and it is quite likely that it will reach 3 million this winter.
If ever an increase in spending were needed, it is needed now. That is a typical counter-cyclical investment; one pours money into training when the economy is down, so that when it revives one has a properly skilled work force who are capable of taking advantage of the revival.
In my constituency, there is great concern about the effects of cuts in employment training. Employment training courses have been cut from one year to 26 weeks. Mr. Bill Wood, the vice-chair of the association of training organisations in my area, has said:
The whole thing is a shambles … The unemployed people are just the fall guys.
Growing redundancies have meant that many people who need retraining, on ET, no longer fall within the Government's guarantee of access to training, and many unemployed people will receive none.
The recession also means that there is much less opportunity for work experience placements, which have almost dried up in my constituency. Since 1989–90, there have been constant cuts in the basic rate of funding for each training week. That is supposed to be replaced by output-related funding, but only a quarter of trainees in Norwich complete their full entitlement of training to gain recognised qualifications, so they do not qualify for output-related funding.
Most trainees have special needs and cannot reach the vocational qualifications, on which funding depends. They have special needs, which are simply not recognised by the funding of training. In other words, training schemes are being cut and fewer people are being trained. Training programmes should be a high priority for public spending, and the Government are not giving them that priority. When the recession ends, we shall be in the more competitive world of 1992, and our workers will be much less equipped to face the challenges from our competitors.
The Government's attitude to training is folly, but it is part of a wider folly. The Department of Trade and Industry budget, in the first year of this programme. loses 20 per cent.—£250 million in real terms—in 1991–92, when support for industrial innovation is needed more than ever. Government spending on education is to fall by 5 per cent. in real terms in the same year—1991–92. Education spending has fallen from 5·5 per cent. of gross domestic product in 1979 to 4·6 per cent. of GDP in 1990. What a thing to have to admit at this time, when we need skilled workers and properly educated young people. Instead of doing that, the Government are cutting and cutting the education budget.
Last weekend, I attended the court of the univeristy of East Anglia. The vice—chancellor made it clear that standards would have to fall because, with no increase in funding, there would have to be another 8 per cent. or so increase in the number of students. Apart from being useless from a management point of view, these departmental reports are useless in every other way.
It is amazing that the Treasury has never caught on to how to organise management information, even though budgetary control was invented in 1919. One would have expected that by now we should have had a budgetary control system that would give the results of Government spending, compared with the objectives. The departmental reports show a fundamental neglect of public investment in training, industry and education—just the programme areas in which we need to invest for our future if we are to remain in the first rank of European nations.
I do not intend to take up immediately the points made by the hon. Member for Norwich, South (Mr. Garrett) but I listened with great interest to what he had to say about this series of reports. The first issue that I wanted to raise was exactly that—their sheer weight, size and cost.
First, however, may I refer to something that the hon. Member for Derby, South (Mrs. Beckett) said? She referred to the whole philosophy of cuts. I cannot help but reflect on the fact that on almost every occasion in recent years when we have held debates such as this, the definition of the term "cut" has become more and more complex, difficult and political. If a child's £1 pocket money were raised to £2, he would probably regard that as an increase both in money and in real terms. If, however, he went home and said that his little friend Frederick had got an increase of £2 in his pocket money, he would probably regard his own increase in pocket money as a cut in real terms. I believe that that sort of psychology is being bruited about for political purposes. It is reasonable that that should happen in a political debate.
My right hon. and learned Friend the Chief Secretary put his finger on the most important subject that can be discussed in this debate: that all this points to the need for quality and effectiveness in public expenditure. As he said, there is no escaping the difficulty of such decisions. but they must be better informed.
There are two aspects to that better information, one of which I shall summarise briefly. Trained statisticians know —there are many thousands of them in Government service, and thousands of them in industry—that many of the figures bruited about in economic debates concerning employment, unemployment, gross national product, and so on are subject to what are known as statistical limits of error. It is a very precise and well defined term. What it means is that we cannot rely on such aggregates in the case of something like gross national product, where we are talking about £560,000 million and that figure being accurate to, plus or minus, about 5 per cent. If my arithmetic is correct, 5 per cent. of £560,000 million is something like, plus or minus, £28 billion. All the figures, therefore, that try to conclude that there will or will not be £20 billion available in the near future and that it will or will not be allocated in this way, should be subjected to the most cautious qualification.
I turn to the main matters that have arisen in the past and that will continue to arise concerning the vast and almost incomprehensible question of public expenditure. They give rise to what I believe to be three dangerous myths. The hon. Member for Norwich, South touched on this, because he is interested in parliamentary scrutiny. First it is a dangerous myth that Parliament at the moment continues to be an effective controller of the public interest when it comes to expenditure. Secondly, there is the growing impact of the pervasive but unrealistic myth of so—called underfunding—again, something on which there are many political views. Thirdly, perhaps the most serious misconception of all is that a pound redistributed via the fiscal and social security system is equal in value and public merit to a pound denied, for example, to basic science or fundamental research, technology transfer, the recognition and encouragement throughout our society of excellence, and the public's perception of its real interest. I suggest that these are very different values.
May I begin with a visible and physical illustration of what I mean by Parliament's inability to control public expenditure, to which the hon. Member for Norwich, South referred? In voicing it, I do not wish for a moment to denigrate what I believe to be the immense and continous effort of the Chairmen and members of the Public Accounts Committee and the Treasury and Civil Service Select Committee on the subject. They do extremely valuable work. In fairness, however, it ought to be added that much of that work is done by the overworked Clerks who serve those Committees.
Here is the record—20 volumes. I believe that the hon. Member for Norwich, South has added a few more volumes to that number. I worked it out that they amount to 1,400 pages. costing over £200. They were published a couple of weeks before the Budget and they set the pattern well ahead to 1993–94. I imagine that I was not alone in being appalled, if not surprised, when my right hon. Friend the Leader of the House announced that they could not be discussed before the Budget. This, he implied— correctly—was for next year's Budget and beyond— tablets not of stone but of software and printers' ink.
Some assiduous Members—doubtless many of them are much more assiduous than I—may since publication have read from cover to cover one or two of these reports. Some of them may have written to the Minister concerned expressing critical or constructive views on the detail. Those views will vary widely. Moreover, what is regarded as constructive in this House will also vary widely. None the less, that is our task. Some hon. Members may rest content with a wet towel, a stiff brandy and the 122-page summary that costs about £17. If any hon. Member has read the lot and written to several Ministers, I should gladly give way to his or her intervention. This is part of the massive information overload that is generated by a system that probably went beyond the control of any single individual or any institution—certainly of this place—at about the time of the first world war.
What do we control, if anything, here? I suggest that for this House it is a very eclectic choice. We grumble about the total expenditure of particular Departments and suggest, according to our political preferences, that defence should give way to health, or social welfare, or vice versa. We tend to exhibit—as I shall doubtless do in a few minutes—particular predilections for particular projects or forms of expenditure. We also have furious discussions about the distribution of expenditure between central and local government, and even more furious discussions about the major boundary between public expenditure as a whole and private expenditure. We look on it as a residual that should be either increased or reduced.
Inevitably and very properly, with a Budget of this size we concentrate on waste and abuse. We are often well informed by bodies such as the Public Accounts Committee and the Audit Commission about outstanding examples of waste and abuse. We read in the national press this morning of one example: a ship which should have cost £27 million, but ended up costing about £70 million. That was a vast increase in cost and a waste of resources.
These are familiar and well-trodden paths. Anybody who has been a Member of Parliament for some time could easily write the speeches on either side of the argument.
What, then, do we not do that is both desirable and practicable? I believe that the limits are very severe. They are the limits of time, comprehension and the sheer volume of data. Within those limits, however, I should like there to be a much more critical analysis of the expenditure boundaries between Departments. These are the great no-go areas of public and political debate—certainly of parliamentary debate.
We should not wait until overclaims—there will never be underclaims—are settled behind closed doors by a so—called Star Chamber committee consisting of Ministers whose experience and dedication to the public interest are supposed by definition to confer on them an objectivity which overrides political, personal, or vested interests. It may in some cases well do so, but it asks an awful lot of any human being. As I have argued in a letter to the former Prime Minister, and subsequently to my right hon. Friend the Chief Secretary, the House should be represented on that committee, and the arguments between the claimants should be known outside the so-called inner circle.
Although the House receives nothing like the analytical and statistical support which is supplied to the United States Congress by the congressional budget office and by the general accounting office—we do not have anything like those large, substantial organisations which serve not the federal Government but Congress—Parliament must ask itself whether it can justify its present impotence when any Government of any party can say to us in effect, "Take it or leave it."
Under our system, as opposed to that in the United States, we have to live with a paradox. I have discussed this before. We have both to sustain the Government in power constitutionally and monitor their claims on and disbursement of the public purse. When that proportion hovers between 40 per cent. and 50 per cent. of gross national product, now well over £200 billion—I think the figure is £270 billion and rising—we should as an institution be much less squeamish about defending an expenditure of, say, £10 million which had the effect of improving national performance by a mere 1 per cent. That would be £5 billion of GNP, or £2 billion of public expenditure. A figure of £10 million, for example, added to the budget of this place would be very badly spent if we could not see an improvement in national performance of that order of magnitude.
As I see it, that will need two things, neither of which will be popular. It will require Governments of all parties to concede that the divergence between constitutional theory and practice is now too great. The House has an obligation and a responsibility which it is not discharging. A great deal more than lip service is required. It requires Parliament to equip itself with a far more powerful and pervasive engine of analysis and inquiry.
The hon. Member for Norwich, South mentioned the inadequacies of these volumes. I think that this is the first time that I have seen a bilingual public document, with 124 pages in Welsh. I wonder how many people will read the Welsh issue. An example of waste is that all the maps and diagrams are duplicated. That is a minor point, but it should not happen. The more major points which the hon. Gentleman made relate to public scrutiny. We require a far-reaching change in what might be described as our political culture.
The second is much more difficult and will go against a much deeper grain. It requires all of us, some of us, or a considerable number of us, to accept that our primary responsibility here is to examine, monitor and, where necessary, modify the performance of Government. Policy must become our preoccupation. We must concentrate on policy—that difficult area of government—rather than on all the minutiae which increasingly dominate the life of the average Back Bencher, rushing back to his constituency to deal with dogs, pavements, drains and quarrelsome neighbours.
It will be argued vigorously that the assiduous Member can do both. Some undoubtedly do; they are very assiduous indeed. That such a Member can, by working 70 hours a week, combine the role of policy maker, performance auditor, local ombudsman and welfare officer, is a suggestion which I find difficult to accept. I will be convinced by that argument when hon. Members, challenged as I challenged them earlier, rise to say that they have read the whole of the public expenditure analysis and papers, and have made active and effective representations to Government on matters which they consider of outstanding significance. That day is quite a long way off.
I have a great deal of sympathy with what the hon. Gentleman says. I believe that we should be better resourced, so that we could examine more closely the spending programmes and policies of Government. Unfortunately, the hon. Gentleman and I have a problem —that none of the Select Committees has ever ventured beyond the one-off examination of the occasional policies of a Department. None of them has ventured into examining the management of the Departments for which they are responsible. None of them has ventured into examining the expenditure of the Departments for which they are responsible.
Furthermore, we now know from the recent report of the Select Committee on Procedure that none of them thinks that it needs more staff. In other words, most of our colleagues have narrowly defined their role on the matters about which the hon. Gentleman is talking. The hon. Gentleman may tell me how he and I might attempt to change the culture of this place.
If the hon. Gentleman is so concerned about the load on hon. Members—he listed the constituency matters with which a Member may have to deal—why does he think that so many of his colleagues have outside employment as well?
As to the work of Select Committees, I was not aware of the collective view on resources to which the hon. Gentleman has referred. I thought that there was a general view that they could do with a little more in the way of resources. Certainly that would have been my conclusion at the end of a 15-year stint as Chairman, first, of the Sub-Committee on Science and secondly, of the Select Committee on Energy. They need not a dramatic increase but a significant increase. I thought that our dedicated Clerks were from time to time grotesquely overworked. It was the limit of their capacity, as well as the reading time available to Members, which often determined that we could not extend our scope from the one or one and a half inquiries which we undertook to something which had come up and which should perhaps have demanded our immediate attention.
From my immediate experience in that area, I cannot accept that we never looked at management. We regarded our primary responsibility as an examination of policy. We examined the estimates carefully. There were a number of debates on the Floor of the House in which some aspects of the estimates of the Department of Energy were crucially and critically examined. I would certainly argue that that responsibility of Select Committees should continue. The hon. Gentleman and I share the view that it should be enlarged and reinforced.
I do not think that that is necessarily an argument against what I was driving at earlier, which is that the House as a whole, this great institution of Parliament, should no longer present itself to the country, as we are inclined to do, as, in Bagehot's terms, controlling the public purse. We do not. We elect a Government which may control the public purse in ways which, depending on our political views, may or may not please us, but the House does not do so. I do not believe that that is a necessary condition. It is a condition which has grown, partly because of the reasons that I have given, such as the enormous information overload, and also because of the political culture which I described earlier, which suggests that we should keep ourselves busy in other ways and keep ourselves out of the hair of the Administration. I am not talking in a party political sense; I have seen that across the board.
In regard to underfunding—a concept beloved by the hon. Member for Walsall, North (Mr. Winnick), who, I am sorry to see, is not in his seat—we are all familiar with this pervasive and meaningless euphemism. Every one of the 20 documents describes underfunding. The third world is underfunded. Aid to the third world is underfunded. Every charity that I know could easily disburse twice its income. Most companies could invest twice their available capital or make good use of a substantial additional tranche of working capital. The world's richest communities—we must include ourselves, as well as north America, western Europe, Scandinavia and possibly parts of the middle east—cannot meet all the claims on their vast but limited resources.
Needs, as the eminent American economist Kenneth Boulding said, are always defined in such a way as to outstrip supply. If we were to redistribute the entire wealth of all incomes above a national average and capital over, say, £50,000—ignoring the destructive effect of such policy on wealth creation—the funds made available would be swallowed up in a short time by underfunded institutions or communities in a few months at the most.
Inflation generates a wide perception of underfunding, and politics has much to do with perception. Inflation is a process which is designed, and certainly has that effect, to leach value out of currency and ultimately to match demand and supply at the higher price. One of the most pernicious modern practices in the realm of public expenditure—it is especially apparent in local authority budgets—is to forecast an amount for inflation and to include a substantial amount in the budget for it. In biological terms, it is the equivalent of injecting the patient with a live virus.
I should like to see that practice proscribed, although I concede that, at least in the transition period, it would pose immense difficulties. But what a discipline it would impose, even if it gave rise to procedural difficulties. My understanding of such matters may be limited—most of us have a limited understanding of some area of life—but for a quarter of a century, I have watched the relentless and inexorable way in which the political system has sought to outwit the economic reality and, time after time, has fallen flat on its face. That is why I deplore any attempt by any party, now or at any time, in government or out of government, to put large tranches of public expenditure up for auction, as it were.
We know that an annual rate of inflation of 1 per cent. in the United Kingdom is as clear a sign as we can have that our gross national product of £560 billion will be £5,600 million—1 per cent.—short in real terms of what we have, as a nation, collectively produced. Moreover, it is not a problem that can be solved by taxation, even assuming a zero effect of high taxation on output.
The last time that I looked at the figures, about 4·3 million people earned more than £15,000 a year. Their total income after tax was £79 billion, of which £23 billion had been paid in tax. If that tax figure were doubled to £46 billion—or 58 per cent. of the total—it would hardly cover the annual expenditure of one of the major spending departments. I remind the House of the figures: £60 billion for the Department of Social Security, £22 billion for the Department of Health, £22 billion for the Ministry of Defence, and, lastly, although not on the same scale, £6·7 billion for the Department of Education and Science.
I shall now deal with the science budget. I mention the Department of Education and Science because it is important to relate the total of £6·7 billion, of which just less than £1 billion is for science, to the total figure of £217 billion. Government—funded civil science as a whole, allowing for the research and development undertaken in the other Departments is—I am being generous in taking the upper limit of the Government's figure—not more than £3 billion, although many would argue that the figure is much lower.
Civil science is the most crucial area of national expenditure. First, it influences the structure and much of the content of our wealth—creating system 15 to 20 years ahead. Secondly, there is in my experience no way to compensate for failure in this area in the type of society in which we live—it is increasingly technological and science based. Thirdly, our principal competitors have clearly recognised that fact. I draw the House's attention to the conclusion reached by the Natural Research Council of the United States in a fascinating paper entitled "Science, Technology, and the Future of the U.S.-Japan Relationship". It concludes:
the United States and Japan, both super-powers in science and technology—
must tap into the expertise of the other. In the future, neither country will have the resources …to support large research projects in all fields.
The paper goes on to state that, from a United States political perspective—I suggest that it is equally valid and true from our political perspective—
the need to integrate objectives across policy areas is now apparent. It will be necessary to combine scientific, economic, and security goals in pursuit of the national interest."
A top priority for the United States should be to expand the flow of technology from Japan … A prerequisite … is for the United States to maintain and expand leadership in at least enough fields of science and technology to ensure that both countries will continue to be `players'—sometimes rivals, sometimes partners, but both on the front line.
That applies 100 per cent. to western Europe, and therefore it applies even more to us as part of western Europe. That is what our competitors think about the subject.
Fourthly, scientists are among the most gifted and important individuals in our society, and, like entrepreneurs, they have a high potential mobility. One pound withdrawn from a leisure centre's budget may stop someone swimming tomorrow or next year; a pound withdrawn from a crucial experiment or from work on microbiology or on ion implantation could mean that in 10 years, a virus such as AIDS gained mastery of the human race or that an industry abroad will set levels of quality and performance which we cannot match because our perspective was too short and we did not do the right things at the right time, which is now.
I do not argue that science in the United Kingdom is underfunded, because that is not a justifying criterion. I have condemned that as a criterion—everything is underfunded. I am arguing that a system that allowed us to shut down a key nuclear research facility for £8 million while we spent £156 million last year on new leisure centres is a system that does not encourage us to make a rational allocation of national resources. To put it another way, it is not only not encouraging us, but actively discouraging us from making such a rational allocation.
The analysis in the statistical supplement of expenditure trends per head is most revealing. The totals are £2,431 per head on public expenditure in the United Kingdom, of which £1,426 a year is spent on health and social security and £421 on education and science. Out of that total, approximately £20 per head is spent within that Department on civil science and approximately £60 per head on all Government—funded research and development. The expenditure total for all Government Departments brings that figure up to £103 per head and, as I understand it, that includes the funding of our universities.
I argue that that figure is relatively and absolutely too low. The thrust of the activity is declining and is seen to be declining by the science community. I know that the science community is a beneficiary and is arguing a case that it believes to be vital to its own interests, but there are times when one must be able to discount the special pleading and say that there is something behind that pleading which is in the national interest. It is the height of folly to ignore or to treat with apparent contempt reports such as that by the Lords Select Committee on the science budget.
I argue that there is no real science budget. The table on page 49 of the general paper is a classic example of what has been described as the fallacy of aggregates. For example, an elephant weighing one tonne plus one mosquito weighing one ounce give an average weight of half a tonne and half an ounce. That is totally meaningless, and I need go no further.
Evidence that the science budget is an orphan within the Department of Education and Science is provided in the analysis of a recent issue of New Scientist, which suggests that, in its attempt to meet its 1992–93 cash limit, the Department of Education and Science is arguing that
the science budget would have to accept larger cuts than the rest of the education budget even though it has already reached the point when it can no longer support existing commitments".
It is suggested that my right hon. and learned Friend the Secretary of State
will have to choose between schools or science.
That is a desperate state of affairs.
I hope that my right hon. and learned Friend will be able to deny that report completely on two grounds. First, research and development is not an alternative to education but a fundamental part of its structure and the basis of the education that a society such as ours will require in the 1990s and the next century. Indeed, it is what we require now, and we do not have enough.
Secondly, any nation that allows its science to depend on the financial crumbs from the educational budget table is a nation that has its priorities wrong. Research and development should be the first and not the last claim on a nation's resources at any time—not least in a recession —and I am confident that, if there is unavoidable stringency, somewhere along the vast front of public expenditure—a planned £217 billion—savings of one tenth of 1 per cent. could be found, without pain to fund an additional £217 million on the science budget.
In its admirable analysis of the issue, the House of Lords Committee reached the following conclusion:
It is incomprehensible to us that a whole area of UK science should have to be precipitately abandoned as part of a series of crisis measures and we roundly condemn the policies and practices which have put so much at risk.
So, most regrettably, do I.
Secondly, the Committee concluded:
Research Councils are. now being required to make choices about scientific endeavour which are too big to be left to Councils—
the research councils—
alone without political guidance as to what is required of the science base in the context of present spending plans.
The Lords Committee suggests that the Cabinet Committee on Science and Technology, over which I believe my right hon. Friend the Prime Minister presides, should involve itself in the public expenditure survey for science, as it was set up specifically to deal with "science matters across Government". I agree.
Let me reinforce my judgment with three graphic illustrations, all of which come from a German Government document, the "Report of the Federal Government on Research 1998". Unfortunately, technology does not permit me to display my illustrations on a screen for all hon. Members to see, but I think that they will be able to understand the thrust of my remark. My first example concerns the table dealing with research and development expenditure and scientific performance level. Britain's performance is indicated by a yellow arrow in the bottom left-hand corner. The red arrow represents Japan's performance. Far up, in the right-hand corner, a green line shows the performance of the United States. Great Britain's performance is shown as starting well but then declining. Japan's performance is shown as overtaking us very rapidly indeed.
My second example comes from the table in the same document on research and development expenditure and technological performance level. Japan's performance is represented by a red arrow and is shown to have climbed to the roof. It is followed by that of Germany. Great Britain is again in the bottom left-hand corner of the picture, as is France. My illustrations come from completely unbiased information published by the German Federal Government, whose statisticians have no axe to grind in any sense.
The third chart to which I shall refer shows the shares of Ministers in research and development expenditure of the federal court. We have no Minstry of science and technology but Germany has a federal Ministry for Research and Technology and that Ministry's budget occupies a large area at the bottom of the chart. The federal Ministry of Education and Science, on the other hand, occupies a narrow band. The Ministries of Economics, Defence and so on account for the rest of R and D expenditure.
The sum within the discretionary spending of Dr. Riesenhuber, the Minister, is equal to the total Government-funded civil R and D in the United Kingdom. I know that the place is larger, but my point is that we lack that coherence and cohesion. The documents illustrate a singular point. Nowhere in our documentation have I seen a statement that matches that of Dr. Riesenhuber or graphs from which such a stark and compelling conclusion can be drawn.
The third example is, in my judgment, the most significant, as it reveals the size and scope of the Federal Ministry for Research and Technology, with a budget of DM 7·6 billion by comparison with that for education and science. In 1988, its budget alone—DM 7·6 billion was almost equal to the whole of Britain's Government-funded civil research and development.
There is the key to the Germany's future and to ours and to the survival of western Europe. We will have no excuse if, in 10 years' time, someone consults Hansard and says, "We were told this not once but many times and we did nothing. Now it is too late and Britain's scientific pre-eminence—and what tremendous pre-eminence—has over it the sign `RBC'—ruined by complacency."
Newton's biographer, Sir David Brewster, referred to an "elaborate document" in which Sir Isaac Newton—who, I remind hon. Members, was twice a Member of the House—recommended
the systematic endorsement of science".
Sir David wrote:
Were the British Parliament to try this question at its bar, and summon as witnesses the wisest of their race, what name, or what constellation of names could countervail against the High Priest of Science when he proposes to rebuild its temple upon a broader basis and give its arches a wider span and its domes a loftier elevation!
I wonder what Sir Isaac Newton would have to say today.
I do not know whether Sir Isaac Newton would have been called, given that our debate has been going on for well over three hours and we have heard only five speeches so far. No doubt he would have made a compelling point and followed the hon. Member for Havant (Sir I. Lloyd) in underlining the need for investment in science. To hear his speech, however, we should perhaps have had to make rather more rapid progress.
The style and character of the debate have changed markedly since we heard some rather bad-tempered exchanges not from the Front Benches but from the Back Benches. I rather enjoyed the Chief Secretary's jokes and I thought that the hon. Member for Derby, South (Mrs. Beckett) made a most stirring and effective defence of her proposals on national insurance contributions. She put her case extremely well. Those who contributed to the somewhat bad-tempered atmosphere of the proceedings have since left for tea, and we may not see them again.
There is an air of unreality about much of the debate. Much of the earlier part of our proceedings was based on the mistaken and disproven belief that Governments can predict with reasonable accuracy what will happen to public expenditure under their stewardship and that potential Governments can predict with reasonable accuracy what resources they will have and what they will do with them. Political parties have to set out plans and work out costings to show that it is at least theoretically possible to do what they propose. But things never work out like that, and Governments have an amazing incapacity to know what will come next and predict at all accurately what effects it will have on public finance.
I could give a number of examples. Take the Government's decision to offer incentives to people to contract out of the state earnings-related pension scheme. That move was much more powerful in its consequences than the Government had bargained for. I leave aside entirely the question whether it was a good or a bad thing, but national insurance contributions were reduced by almost £2 billion more than expected. That is a pretty big hole to make in any budget.
Similarly, the poll tax affair ended up in local authorities spending and borrowing much more than the Government had forecast in I989–90—by a figure of around £2 billion. That is already up to a fifth of what the Leader of the Opposition thinks he can safely predict we will get from increased growth and therefore be able to spend in various ways.
Governments get things amazingly wrong. Let me give another example. In 1989, the Red Book forecast a cumulative public sector debt repayment of £19 billion for the ensuing three years. Now the Government forecast a cumulative borrowing requirement of £19 billion for the same three years—in other words, a difference of £38 billion from the amount originally indicated. That is an enormous divergence. I do not blame the Government particularly for it, although I blame them in the sense that the factors are a response to a recession that they should not have caused in the first place. One of the necessary responses is to allow automatic stabilisers to take effect and to engage in more borrowing. But this means a huge divergence—a divergence larger than the amount that the Leader of the Opposition expects will be available for various purposes.
When we turn to the figures about which the Leader of the Opposition talked we have again to make growth assumptions. En some respects, those assumptions are less ambitious than the growth assumptions that the Government make. The Government have forecast that in the latter years of their forecast period—the equivalent of another Parliament—the growth rate will be 3·5 per cent. That is much above the level envisaged even by the Labour party. But actual growth figures rarely correspond to what is forecast.
There is irony in the exchanges in which people say, "We can provide more growth than you can." For at least the past 40 years—year in, year out—the British economy has grown at 2·5 per cent. per annum. One side tells us that the raw-blooded capitalism of the nation has been released by the Tories; the other side tells us that compassion, decency and fairness have been released by the socialists. It seems that the British people, on the whole, treat both claims with complete indifference and have continued to increase their GNP at a rate of about 2·5 per cent. per annum.
There is much in what the hon. Gentleman says. However, he is averaging growth figures over a period. We are now in a recession and do not have that kind of growth. But there is indeed a great deal of well-justified scepticism around.
Let us follow that argument to its logical conclusion. If growth averaging 2·5 per cent. has been a feature of Governments of both complexions over the past 40 years—the compassion from our side following periods of Conservative government—surely the hon. Member for Wolverhampton, South West (Mr. Budgen) is saying that it is about time the Labour party came to power and played its part in the cycle.
No, it is the turn of the Liberal Democrats. It is time we had a chance to do what we can with the limited growth that the nation is able to achieve. We have certain proposals that we believe would improve the chance of increased growth. However, I shall state the case no more ambitiously than that.
I was analysing some of the assumptions that are made in all these arguments, and I pointed to the Government's growth figures. But let me underline something else: that the Government's own forecasts are nothing like sufficient to achieve the 20p income tax target that the Government have frequently set. No wonder the Chancellor has started to back-pedal. On the basis of the figures that we are debating today, he certainly cannot achieve that target. But it is also rather strange for the official Opposition to say that, if they come to power, the 5p cut will not take place, as they will spend the money in certain ways. But the 5p is not there. It is not available in the projected revenues that the Government have put before us. Even allowing for the inaccuracy of those figures, it is unreasonable to assume that we could confidently arrange to spend the money at some time in the future.
The Government say, "Never mind. We have managed the economy so well that we have achieved massive increases in expenditure on the services about which everybody is most concerned." They have, for example, increased real-terms expenditure on the health service more markedly in the past few years than in earlier years. Indeed, there were cuts in earlier years, but recently—particularly in the last couple of years-the Government have sought to achieve a real—terms increase. But even that figure has to be regarded with some caution. If one examines what is involved, one sees that it does not allow for the higher inflation that the national health service experiences in its costs than is to be found in retail price figures. This is based partly on increases arising from sales and efficiency improvements, some of which cannot be projected continually into the future. One cannot go on selling surplus property; eventually one runs out of property to sell.
The increase does not take account of the growing numbers of people in the age groups in greatest need of health care. In that respect, a per-head figure would be more relevant. Nor does the increase take account of the pressures of new technology on the health service. It is perfectly reasonable for the Government to point out that, in the last couple of years, they have achieved real-terms increases, but they might just mention these other points at the same time, for they help to explain why, down in the hospital ward, things do not seem like that at all. In the case of cleaning standards, food standards, the number of nurses on duty and night staffing, many hospitals could tell a tale of stringency and of people working in extremely difficult conditions. The explanation lies in the inability of these increases to match the problems that I have described.
Another unreal feature of the debate on public expenditure is privatisation revenues. If there were to come into office a party that insisted that it would cease all privatisation currently taking place, would introduce no privatisation of its own, and might even renationalise some of the privatised industries, something would have to be done about the £5,500 million for each of the next five years represented by privatisation. In Government accounting, that counts as negative expenditure. In other words, all the money that the Government, in their forecasts, propose to spend has subtracted from it the money expected to come in from privatisation. That has to be taken into account. The official Opposition do not intend to engage in a great deal of privatisation—indeed, quite the contrary—so they cannot simply assume that they have £20 billion to add to what the Government have already spent, unless they subtract a figure for this revenue.
The speed at which we shall get revenue is itself in doubt. It will depend on such things as when the Government decide to sell off the remaining British Telecome shares. The income from that sale will be very substantial, but we do not know when it will come. There are many uncertainties in that area, but what is certain is that the existing public expenditure forecasts must be reduced by the amount of privatisation revenues that one assumes a Labour Government would not seek in any way to obtain.
At a time of recession and unemployment, it is deeply disturbing that, in all these Government figures, the Department of Employment and the Department of Trade and Industry are conspicuous for spending reductions. Surely investment in education and training is necessary if growth is to be produced. Training and education are not particularly inflationary. We do not generate inflation by increasing the training programme. It is a very sensible type of investment in which to engage during a recession and at a time when there are inflation worries. But the Government have cut training expenditure at times when it was most needed. A year or so ago, they even argued that they could afford to cut training investment because unemployment was falling. By the same mistaken logic, they could at least give themselves an excuse to make substantial increases in training expenditure now.
We argue that expenditure on training and education is a precondition for increased growth, for the production of the sort of dividend that other politicians are looking for opportunities to spend. Training is not one of the things that can be paid for after the growth has been achieved. We cannot afford to wait. I maintain that we shall not get the levels of growth that are necessary unless we have a more skilled work force. That is why we argue that, if it should be necessary to add a penny to the rate of income tax in order to provide an adequate training and education programme, we should be prepared to do so. We hope that it will not be necessary, but we are certainly not prepared to say that there would be no increase in taxation in any circumstances—even if the training and education needs could not otherwise be met.
There are other areas of expenditure that will have to depend on the achievements of growth and the buoyancy of revenue. The kind of improvements in social benefits and in the health service that my right hon. and hon. Friends and I—and I assume, the official Opposition—would like to see will depend on achieving a successful economy and sustainable growth. Some expenditure—particularly expenditure on training and education—has to be undertaken in order to achieve growth. The public should not believe any party that claims it will never cut taxes, or which pretends that it can improve underfunded services while reducing taxation. I believe that the public probably realise that.
I am glad to follow the hon. Member for Berwick-upon-Tweed (Mr. Beith), who is a long—standing member of the Treasury and Civil Service Select Committee, of which I am the newest member. I am glad also that he devoted much of his speech to Labour's failure to meet the effective challenge made by my right hon. and learned Friend the Chief Secretary in what was not only a colourful and entertaining but an effective speech, in which he exposed the growing contrast that the public perceive between the Government's economic policies and those of the Labour party.
It is very much in my personal vested interest to maintain a good relationship with the hon. Member for Derby, South (Mrs. Beckett), so I should not want to say anything that might upset her. However, she utterly failed to meet the challenge by my right hon. and learned Friend the Chief Secretary when he referred to the various confusing statements made not only over the past few days but for weeks by the Leader of the Opposition, the hon. Member for Derby, South and a variety of shadow Cabinet members, in making high-priority public commitments in respect of their specific areas of responsibility. I hope that, when the hon. Member for Newcastle upon Tyne, East (Mr. Brown) replies, he will make an effective answer to my right hon. and learned Friend the Chief Secretary.
Day by day, the Labour is coming out in its true colours, as the party of high spending and high taxation. Its pursuance of those policies when in office in the 1960s and 1970s was one of the main reasons why this country subsequently found itself in such profound economic difficulties. It is important that not only Parliament but the country should draw its own conclusions, and distinguish between party policies.
There is no getting away from the fact that the hon. Member for Derby, South made a commitment that under Labour, there would be an early increase in pensions and child benefit, and that further commitments would play their part later. Other shadow Ministers have also made plain their own priorities. The first priority of the hon. Member for Copeland (Dr. Cunningham) is education; of the right hon. and learned Member for Monklands, East (Mr. Smith), education and training; and of the hon. Member for Cynon Valley (Mrs. Clwyd), dramatic increases in overseas aid. The right hon. and learned Member for Monklands, East has also identified renewed growth in manufacturing investment as a key priority.
The hon. Member for Berwick-upon-Tweed (Mr. Beith) rightly drew attention to Labour's apparent commitment to renationalising the water industry, and to not proceeding with the Government's policy of privatisation if they achieved office in the next five years. Neither was taken into account in Labour's calculations.
Let us compare the Conservative Government's 12 years in office with the Labour Administration of the 1970s. Putting aside the present downturn in the economic cycle, it is clear that, under the present Government, there has been sustained economic growth, and record investment—which is important for the country's future. Over a period of time, there has also been a reduction in direct taxation, and public expenditure has taken a declining share of gross domestic product.
Although my party is sometimes a prisoner of its own rhetoric, there have also been substantial increases in carefully selected areas of public expenditure. In 1979, 1983, and thereafter, we gave the highest priority to turning the economy around, reducing the proportion of expenditure taken up by central Government, encouraging and proceeding with privatisation, and promoting greater competition within the economy. It was perfectly right to do that, but the public's perception is that we have paid no attention to other sectors of the public services. That is simply not true.
As was said by my right hon. and learned Friend the Chief Secretary, health and education expenditure as a proportion of GDP has increased from 4·5 per cent. in 1979 to more than 5 per cent. Expenditure on law and order has doubled in real terms. In the arts—the sector that I once served as a Minister—there has been an increase of more than 50 per cent. in real terms in expenditure on libraries. My right hon. and learned Friend also described the dramatic real increases in spending on roads and the infrastructure. So we are in a sense prisoners of our own rhetoric, and it is important to get the right perspective.
The hon. Member for Norwich, South (Mr. Garrett) devoted much of his speech on describing how one can best scrutinise public expenditure and challenge Government targets and performance, and he was right to do so. However, that debate is not one which matters very much. The focus has been too much on the quantity of money put into the public services, and not enough on improving their quality using a given sum of money. Labour says that the answer is to throw more money at the public services, but we should be equally concerned with improving their quality.
The Government's recent reforms and their establishment of executive agencies have resulted in discrete and clear-cut services. Targets are set for them, annual reports have to be made, and their performance can be judged by the House and by its Select Committees. That is a remarkably significant and important reform. I was glad that the right hon. and learned Member for Monklands, East said in a recent speech that Labour supports that development. It is important that it should do so. However, Labour spends little time suggesting ways in which the overall quality of public services, such as health or education, could be improved. Rather, Labour says that one should simply throw money at those services to solve their problems—which is quite wrong.
We must not underestimate the importance of the changes that are occurring in the civil service. By next year, 285,000 civil servants will be working within executive agencies in which their work, targets and performance can be properly scrutinised. For those agencies to be effective, they must enjoy the maximum degree of decentralisation and the greatest possible delegation of authority. The Treasury and the parent Departments must allow them to get on with the job and to carry on with their operations as effectively as possible, within the resources agreed. I was concerned by the results of a survey published by Price Waterhouse in March, which indicated that there is a feeling among those working in the agencies that there is still too much interference by Government Departments in their management. I hope that, when my hon. Friend the Financial Secretary replies to the debate, he will assure me that it is Government policy to delegate authority fully and properly within given resources.
Given public demand, there will never be sufficient resources from the taxpayer for public services. There will always be pressure for more resources for health, education and roads. It is the duty of any Government to try to create a climate in which resources can be raised by the private sector and by other means to supplement the support of the taxpayer. In the past 12 years, private sector resources to charitable bodies have doubled in real terms, which is a great achievement. The Government should always be looking for new ways of raising extra resources to enable the public to play a fuller part in helping to pay for services for which, in the foreseeable future, it is less likely that the Government will be able to give much taxpayers' support.
I welcomed the announcement that my right hon. Friend the Chancellor made in the Budget to increase the overall sum given to the Football Trust for sport and the arts. It is odd that part of the money given to the Football Trust should go to the arts, but I hope that that new venture will succeed. By making available about £60 million a year for sports and the arts, I hope that it will prove to be another way of adding extra resources for sectors that will otherwise receive little support from the taxpayer.
That must not be seen as a substitute for a national lottery, which I should like to see introduced in the 1990s. In Europe, £12 billion is spent on lotteries. Ireland recently introduced a lottery, which makes available about £500 million for expenditure on the environment, sport and the arts. We should establish an independently run lottery system that allows for capital expenditure on improving sports facilities and on refurbishing theatres for the fabric of the nation, and for endowment funding of sport, the arts and the environment.
We must make it clear that a lottery would not be a substitute for the Football Trust as it would operate on a larger scale and would raise much larger sums. I hope that, when my hon. Friend the Minister replies, she will be able to offer some encouragement for the introduction of a national lottery in the near future.
I believe that the Government are on the right course for the management of the economy. We must stick firmly to reducing inflation and to returning to the successful period of sustained growth that we achieved in the 1980s.
When the Tories were fighting the general election, I remember seeing all over the country a big Saatchi and Saatchi poster that said, "Labour isn't working". It showed a queue of people, which represented 1 million unemployed people. Today, more than 2 million are unemployed. What have the Government done to get this country back to work?
Public expenditure is a dirty word to Tories. They have sold off the country's assets, and their privatisation policy has robbed the ordinary men and women who worked hard to make this country rich. The Government seem to go about like pirates, ripping off and selling off businesses that were owned by the country. I always thought that public expenditure was used for the good of the country —to improve the quality of life, to ensure that our elderly people receive decent pensions, that our children received a decent education and that our workers worked in decent, comfortable surroundings while producing the goods that make the country viable.
The Government's obsession with the public sector has driven them to do exceptionally mad things. It does not matter who they hurt in their quest to dismantle the public sector. It does not matter whether elderly people are living in poverty. The Government have no compassion, and I shall give the House some examples of that later.
Privatisation, instead of increasing jobs, invariably led to more job losses, higher prices and to the workers who make a company strong, healthy and attractive to buy being thrown on the scrap heap. People in the City, and the asset strippers, made more and more money.
The price of food and phone charges have rocketed. The price of gas and electricity, which are essential to the quality of life of people on low incomes, has increased. The Government, the engine of free enterprise, should be renamed the "engine of the free giveaway to their friends". They have concentrated on stripping and dismantling industries to ensure their power base, with their people having the money and controlling each of us. The sale of the royal ordnance factories was a classic example of a company that was worth billions of pounds being given away for £140 million. The sale of the Rover Group was a pathetic disgrace. The gas and water industries were given away and the electricity industry is to be hived off to the Tories' friends.
The classic error of the Government is their blatant attack on local government.
Earlier, Tory Members were baying like dogs when my hon. Friend the Member for Derby, South (Mrs. Beckett) was trying to speak. I come from a hard school. If the hon. Gentleman continues to try to butt in, I will not give way. I will give way when I am ready.
The Government's underfunding of local government has been one of their most tragic errors. Their underfunding of the national health service has cost them by-election after by-election. The underfunding of local enterprise companies is incredible, as they say that they want to see healthy, trained and educated young people.
What have public expenditure cuts in the national health service meant in Renfrewshire? Waiting lists are growing daily. Thousands upon thousands of people are desperate for not only operations but consultations to find out what is the matter with their health. Recently a friend of mine was suffering from a terrible pain. It took all kinds of meetings before it was discovered that he had a spot on his lung. [Interruption.]I see the hon. Member for Northampton, North laughing. It is no laughing matter. If he had any spots on his lungs and it took weeks on end to get an X-ray and an appointment with the consultant, he would not find it a laughing matter.
No, I wish to continue.
In local government we see that schools are falling down. In my area there are some very good schools, but others desperately need public expenditure. They need more money to make the schools better and a fit place for the children. In some schools rain comes in through the roof and the windows are not watertight or windproof. Local government is striving with its limited money to provide a service.
Crime is raging throughout Britain. Since the Government came to office we have seen a horrific escalation of crime. There has been an escalation in drug taking. The Government peddle the idea that they are prepared to put more money into dealing with drugs, yet they do not provide more task force police to tackle drug abuse in our communities. I shall come back to that because I believe that public expenditure should be directed to problems which cause tremendous anxiety. In my constituency the police take so much time trying to prevent drug taking and catch drug pushers and dealers that other crimes such as burglary, car theft and crimes which feed the drug industry are rocketing. The police need more resources, yet the Government hide behind their hatred for local government and do not direct the resources necessary to allow our police to do an effective job.
I remind the House of the consequences of cutting the number of home helps. The numbers have been cut because of the disastrous poll tax which has forced people to look more closely at budgets. The budget for services such as home helps has been cut. It makes me sick. In Strathclyde, as a result of the expenditure cuts and the lack of money for local councils, we are considering the possibility of cutting fares for the elderly.
We have terrible problems of pollution. The Government should spend enough money to bring the water up to EC drinking standards. Our beaches are the worst in Europe. It is right for the people in the environmental world to call us the dirty old man of Europe. That is not something of which I am proud. It is a terrible day when one cannot walk along the promenade at Blackpool because one is frightened to get a whiff of the pollution, which could cause gastro-enteritis or some other illness. The Government should face up to their responsibilities and ensure that there is enough money to cope with the damage being done to Britain.
Our infrastructure is falling down. If one walks about with one's eyes closed one will bump up against walls which should have been fixed and replaced. For example, in my constituency there is a quarry with a road alongside which has a wall running beside it. The wall is always being broken down for many reasons. The local authority does not have the money to repair it. But the wall must be repaired so the local authority will repair it. But everything takes time because the Government keep savagely cutting and cutting.
Recently in Scotland we had the launch of the local enterprise companies. My goodness, what a fiasco. The Minister walked about with a big smile and the television cameras came along. The LECs were supposed to regenerate local employment prospects. They were supposed to ensure that local kids would be re-educated and retrained to meet the new Europe of the 1990s. That was what it was all supposed to be about. But it means a 32 per cent. cut in the budget compared with the year before. In factual terms it means that 7,000 young people will not receive training. Adult training schemes will be cut by 17,000 places.
A young man of 18 wrote a letter to me. The letter would bring tears to the eyes of any parent. It should bring tears to the Government. The young man was studying on one of the training programmes to be a plumber. We need plumbers. That young boy was thoroughly enjoying his plumbing training. He was on day release to a college. Incidentally, he was working not for a wage but for the buttons that the Government put up for these kids. Nevertheless, the young man was doing the training because he saw a possibility of becoming a plumber and getting into the big world, possibly down here to the south-east to build houses. Perhaps he could get a job fitting pipes for the moneyed folk who can afford central heating. But that young boy's job was terminated because the Government gave insufficient money to launch the local enterprise company and allow the young people in training to finish their courses.
The training places of thousands of people have been cut. We must not forget the men and women who were training these young people to equip them and give them some chance to earn a living. I live in Scotland, where over 200,000 people are unemployed. The Government have fiddled the figures 28 times to bring the total down to 200,000. But I shall not quarrel with them. I simply remind them that unemployment is a scourge. If it came to their families, they would know what that scourge means. It means that families on low wages cannot afford holidays. I use the word holiday lightly. Many such families cannot afford to eat properly, look after themselves properly or heat their houses in the winter. Yet the children continue to strive to obtain training against all the obstacles that the Government put in their way.
The young man to whom I referred is called Pat Campbell. He lives in Linwood. I shall come back to Linwood later. I have pleaded with Scottish Office Ministers to fund training at the same level as the previous year, with an increase for inflation, to ensure that the kids can finish their training. That would be to show compassion. Surely the Government should use their hearts for that. Surely those young people have a God-given right to finish their training. Surely young Pat Campbell could become a plumber instead of being cut off in the prime of his life. By goodness, he is no academic. He is just someone who makes Britain what it is well worth living for—a working-class young boy. Pat Campbell has been dumped.
I received a letter from an elderly, disabled woman who relies on an electric wheelchair. When I hear the Government saying how well funded the national health service is, it makes me sick. That woman cannot even go to the toilet without the help of her electric wheelchair; indeed, she can go nowhere without it. She wrote to tell me that her wheelchair broke down. It did not automatically stop but took the woman around in circles, which terrified her. However, someone managed to rescue her and take her home. When she contacted the health service to repair her wheelchair, and explained that it was essential for her to get to the toilet, the bedroom and the kitchen, she was given no priority.
When I heard the Minister tonight, I felt that he was like a mugger robbing the old men and women to whom I refer, because that women had to wait five days before someone came from the health service to fix her wheelchair. The job took five minutes. She waited five days for a five-minute job, during which time her whole life was turned topsy-turvy. The health service is facing cuts, expenditure squeezing and all that crap which ensures that the quality of life for my elderly, disabled constituent has been put in jeopardy. No one can state that the health service is not under threat.
This week is the anniversary of an event that hurts me—the closure of the car plant in Linwood. Some folk may not be familiar with that town, but I live up there. The town developed because of the car factory, which employed 9,500 men and women but closed 10 years ago, practically to the week. Where are those 9,500 workers now? Droves upon droves of them have never worked since the factory closed. Many are now dead and buried because they contracted illnesses through the savagery and imposition of unemployment and the fact that they were no longer able to work for a living and provide for their families. Those conditions destroy health, and I had many friends who were affected in that way.
Ten years on, the Government have done nothing to introduce an alternative industry in Renfrewshire. If it were not for the local Labour—controlled council's efforts to attract industry, nothing would have been done. The way in which it goes about it must be punishing to body and soul. It is led by a fine young fireman, Owen Taylor. I do not say that he is a splendid young man simply because he is a Labour councillor. He looks at every opportunty to attract industry and jobs to the area. This week, he said to me, "Tommy, what are we going to do about the anniversary of the plant closure?"
I see that the hon. Member for Wolverhampton, South-West (Mr. Budgen) is smiling. You should come to my constituency and you will not smile at the tenacity and will power of the people there. The people there will shake hands with you and probably buy you a pint, because I doubt whether you would buy them one. They, at least, have some compassion.
I apologise, Madam Deputy Speaker.
The closure of the factory and the loss of 9,500 jobs has caused difficulties in the community because we could never replace that many jobs. However, I am impressed by the tenacity of the local people, who hope that some day their young people will have the chance to go down the road to work and that the young men will come home with pay and the old men will retire gracefully having earned at least some wages. That would be an honest and realisable dream if the Government were committed to stopping the 2 million unemployment figure from rising continually. But the Government have a mad obsession with reducing inflation. They do not care about people but keep inflation down at the expense of the dole queue.
My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) and I have another serious problem at the other end of my constituency in Inverclyde, where one of the finest marine engine building companies in the world is facing takeover. My hon. Friend has been fighting to keep that industry alive not only in Scotland but in this country and to protect the jobs of a fine collection of superb quality engineers, who made Scotland renowned throughout the world. He has challenged the Government to say something sensible about keeping that engine company going because to allow it to be taken over is ludicrous.
I am grateful to my hon. Friend for his remarks about the campaign in which we are engaged to retain the last marine diesel engine builder of its kind in the United Kingdom. The takeover of that company by Kvaerner Industries of Norway is particularly disgraceful and squalid because of the decision to remove from employment 12 young apprentices. As one who served an apprenticeship in a shipyard, I believe that the last people to be dismissed from a firm when it hits hard times should be the apprentices. Surely the Minister will agree that, with indentured apprenticeships, management has a moral obligation to ensure that such young lads are encouraged and enabled to complete their apprenticeships. The decision in Greenock is a disgrace. I am glad to say that my hon. Friend and I will continue to fight against such squalid managerial decision-making—the first of its kind that I have encountered in the United Kingdom shipbuilding industry.
I am grateful to my hon. Friend for that telling intervention. It was helpful to express the problems imposed by a Government who are reluctant to save this country's manufacturing capacity.
The Inverclyde area has seen a rapid decline of a once great industry—shipbuilding. The Government seem to forget that we are an island and our marine capacity is being stripped. All kinds of foreign competitors—
I am grateful to you, Madam Deputy Speaker, for rescuing me from one of the most boring and tedious Members in the House.
Training is of vital importance. We would hope that our skilled engineers and experts who make the whole country work well—not just in London and the City—could compete with their counterparts in the rest of the world. In order to buy bread for food, we need workers to produce goods. If we shut down manufacturing industry, we shall have nothing to sell. We cannot sell a £1 note—somebody must produce goods to sell to make the £1 note.
Public expenditure in my district sometimes gives me terrible worries. We have seen the rapid decline of all the factories in my region and the introduction of the Government's enterprise zone. I shall not mock the enterprise zone—I wish it success. Unfortunately, it is not a success because there is insufficient money to get it going properly. We have asked the Minister to spend money so that we can get the enterprise zone going and possibly get some work into the district, but our campaign seems to fall on deaf ears. Many local people work voluntarily to try to bring employment into the district, but if they do not receive the necessary finance from the Government, they will not be able to achieve anything.
Lack of public expenditure in Scotland has caused massive housing problems. We have damp housing which is unfit to live in. The council does not have sufficient money to bring council houses up to the proper standard. Homelessness has escalated because there is insufficient money to deal with the problem. We need new homes that people can afford to buy and rent. We need jobs. We need to attack poverty and we need money to buy goods, which are not free. If someone takes shop goods for nothing, he will end up at the police station. Poverty will be eliminated only if the Government spend money, and they must realise that.
I recently finalised a promise that I had made to my 13-year-old son. Some time ago he was in hospital for a while and I promised that I would buy him a bike as soon as he was fit to ride in the fresh air. I took my son over to the bike shop and got a shock to find that bikes cost £200 and more. I thought about a former Minister's nutcase statement—"Get on your bike" in search of a job—and wondered if he realised that a bike costs £200 or even £500. I nearly fell off my bike when I found out. I bought my son's bike with pleasure, but I thought about the many young people from families on low incomes. When I was a young boy, my family was on a low income, but I had a bike and could get about. If young people today are on low wages, what do they do? They can no longer have the pleasure of a bike if it costs £200.
In Scotland, literally thousands of our men and women, and their families, leave our shores in search of work. We hear stories from Australia, New Zealand and America about how well those people are doing. They would love to come home and ask whether there will be any jobs for them if they do and whether we have got rid of this Government yet. We will get rid of them. There are literally thousands of Scots men and women who wish to come home. I wish to see them come home, and I believe that the only way to get them home is to get rid of the Tory Government. I am determined to see Scottish men, women, sons and daughters come home, enjoy our country and live a decent quality of life under a Government who care. I believe that a Labour Government would offer that.
We were given a revealing performance by the hon. Member for Derby, South (Mrs. Beckett), the shadow Chief Secretary. She was evasive and declined to take interventions. She was even more obviously evasive in the way that she declined to answer the questions that Conservative Members were able to put to her during her speech. She was markedly indecisive and apparently entirely unable or unwilling either to establish an order of priority in her policies or to set the so-called list of Labour party priorities—which has now become a list of a myriad of objectives—in order of relative importance. My right hon. and learned Friend the Chief Secretary was absolutely right to remind her of Aneurin Bevan's well—known phrase about the language of socialism being the language of priorities. The hon. Member for Derby, South certainly traduced that language and abandoned that Labour party tradition this afternoon.
While on the subject of language, I think that it is more than disingenuous to distinguish between an increase in taxation and an increase in employee national insurance contributions, when one plans to remove the ceiling on employee national insurance contributions, while not removing the ceiling on benefits. The last link between contributions and benefits would be abolished under the Labour party's present plans, and the last vestige of the Beveridge—
The last vestige of the traditional Beveridge system, the link between contributions and benefits—the concept of national or social insurance—would effectively be destroyed by what the Labour party proposes. We would end up with increases in taxation. Let us call a spade a spade: the Labour party is proposing an increase in income tax—nothing more, nothing less.
If the hon. Gentleman is so convinced of the intellectual validity and respectability of his point, why did he not make it to the Government when they removed the ceiling on employers' national insurance contributions?
As I always endeavour to do when speaking in the Chamber, I used my words advisedly. I said that the Labour party would remove the last vestiges; I did not imply that the Beveridge system still exists in its original integrity—of course it does not, and some of us may regret that more than others. I do not know that the Labour party has fully taken on board the purport of what was proposed this afternoon by the hon. Member for Derby, South and what has recently been proposed by other Labour party economic spokesmen and women.
It was striking that the hon. Member for Derby, South displayed no clear understanding of the role of public expenditure in economic management. I have always believed that there are three respectable approaches to public expenditure management. One is the doctrine to which hon. Members on both sides of this House were devoted throughout the 19th and early 20th centuries—that public expenditure should be balanced in the same year by public revenues. That is the doctrine of the balanced Budget. It was dear not only to people in this country but to people throughout the western world, including those in the United States until the new deal.
There is no doubt that the disciplines of that doctrine had a positive effect. Under its influence, the western world underwent its initial great industrial transformation. Nevertheless, that was also a period of sharp fluctuations in the economy, and of deep recessions and slumps. There is no question but that the doctrine of the balanced budget contributed materially to those sharp fluctuations and to the depths of the slumps and recessions. In a recession, when incomes fall, naturally Government revenues fall too, as the tax take from the economy falls. If Governments respond to that by reducing their expenditure, demand is further reduced in the economy, and the slump will be deeper.
Over the past 50 or 60 years, the view has been taken that the doctrine of the strict, balanced Budget can be economically damaging when pedantically applied. There was a time, from the 1930s to the 1960s, when a new doctrine, a new orthodoxy, emerged: that it was the responsibility of Government to adopt proactive and counter-cyclical policies. When there was a recession they were to increase their spending deliberately, borrowing so as to be able to do so. When times improved and the economy boomed, and incomes and therefore tax revenues began to rise again, Governments would reduce expenditure and use some of the balance of that revenue to repay the borrowing.
This was the classic Keynesian doctrine of deficit spending. We have learnt that that doctrine was not very effective in achieving its objectives, either. It, too has been shown to be essentially not a counter-cyclical or anti-cyclical policy but a pro-cyclical policy. Instead of increasing stability, it tends to increase the volatility of an economy. Instead of reducing the depth of recessions and the extent of inflationary booms, this doctrine tends to exacerbate them.
The reason for that is simple. Unfortunately, it is not possible for any man or woman consistently to second-guess the economy, any more than it is possible for anyone consistently to second-guess the individual markets that make up an economy, or for any mortal consistently and correctly to predict the weather.
As a result, by the time a Government have decided that recessionary conditions have arisen and it is appropriate to start deficit spending, the turn in the economy may well already have taken place, so that, when the spending comes through, instead of mitigating the recession it makes the boom more inflationary. That is especially true of investment spending, because of the long lead time between the decision to engage in it, the identification of the right objects of the expenditure, and the increase in demand which it brings about.
There are at least two other problems with Keynesian deficit spending, as our experience since the second world war has shown. First, it is in the nature of Governments —I fear that perhaps it is in human nature—that the increase in spending in a recession will always be much greater than the reduction in spending in a boom. The net effect of such intervention is therefore inflationary. We have, of course, suffered considerably from that over the past 20 or 30 years. The second factor is that, if it is known that Governments intervene deliberately and proactively in that way, agents in the economy will anticipate such action and discount it. The theory of rational expectations has taught us a lot about that, so we have become wiser in that respect, too.
I believe that the right policy is the third policy, which has been explicitly adopted by my right hon. Friend the Chancellor of the Exchequer. It is not to adopt a proactive, counter-cyclical, or a proactive, pro-cyclical policy on public expenditure, but to adopt a policy that is neutral with regard to the business cycle. Such a policy looks through the business cycle and allows the operation of what are known as automatic stabilisers. For example, in a recession, because welfare spending tends to increase Government spending all other things being equal, thiswill naturally tend to rise, whereas revenues will tend to fall. Hence, a deficit is likely to arise.
Will the hon. Gentleman tell us where all this theoretical philosophy comes in, and what it does, for people in Scotland and the rest of Britain? Does he realise that 10 million people are living in poverty now, 2·5 million of them children? What are we to tell people who lose their homes, whose homes are repossessed-there are now 24,000 of them in Scotland and England? What are we to tell the 25,000 small business people who lose their businesses? When the Government took power in 1979, there were 344 small business insolvencies in Scotland. The latest available figure, for 1990, is 4,756 No doubt the figure for 1991 will break all records How are we to explain to all those people, and to the 70,000 people on waiting lists—
Order This is an intervention, not a speech. The hon. Member for Stamford and Spalding (Mr. Davies) must be allowed to make his speech in his own way.
The hon. Gentleman has asked me a series of questions, but they all have the same answer, so it is easy to deal with his intervention. There is not and never will be a final solution that will obliterate all human poverty and disappointment, but there is a great difference between sound and unsound economic management. Unsound economic management will engender far more human unhappiness than sound economic management. If the hon. Gentleman neglects some of the principles of sound economic management—I fear that, if the Labour party in its present state of mind ever came to power, that is what it would do—the problems to which he has drawn attention would be exacerbated.
The Government have been on the right lines in adopting what I call a neutral policy and allowing the operation of the automatic stabilisers which inevitably mean that we tend to move into fiscal deficit in a recession and to run a surplus in a boom. That has happened over the past few years.
I have set out three intellectually and historically respectable approaches to the management of current expenditure. But there is a fourth approach—spend, spend, spend, regardless of the state of the trade cycle and of the effect on the economy. This approach involves going on spending until one runs up against the final obstacle and exhausts either the ability to tax or the ability to borrow. That policy has been practised in many parts of the world—notably in Latin America, generally with disastrous consequences, to which I should like to draw the attention of the hon. Member for Glasgow, Provan (Mr. Wray). Countries that were prosperous before the war, such as Peru, Uruguay and Argentina, have been ruined by this policy.
In this country, there is a well-founded suspicion about the Labour party. When it was in power in the 1970s, it too adopted the policy, and went on spending until it ran out of borrowing power. That is why the International Monetary Fund had to come here in 1976, like a team of official receivers entering a bankrupt company. That is exactly what it was. There is considerable and justified disquiet about the Labour party, and it existed before the great confusion engendered by its statements in the past two weeks.
The hon. Gentleman used the phrase "spend, spend, spend". The Chief Secretary said that the Government have greatly increased public expenditure. Does that show that Government policy is to spend, spend, spend? The hon. Gentleman spoke about good and bad economic administration. Would he say that the Japanese and German economies are badly run? Those countries each have a good balance of payments, while ours is excessive and rising.
Japan has a healthy fiscal surplus, and to that extent we have the same fiscal stance as the Japanese. The German economy is coming out of surplus because its fiscal and balance of payments surpluses are disappearing. However, that is a separate matter and it is not germane to my argument.
It is plain that the hon. Member for Derby, South (Mrs. Beckett) does not subscribe to any of the first three classic approaches to public expenditure management that I have outlined. Twice, she specifically protested that the Government had run a surplus during the boom years of 1988 and 1989. Running a surplus would have been a natural consequence of the Keynesian approach or the neutral approach of which I spoke. Is the hon. Lady's approach the fourth approach—it is certainly not a balanced Budget—or is it a new model, a new solution, to the problems that have fascinated those who are responsible for public finance for at least 150 years?
In the past week, I have begun to suspect that Labour has invented a new fifth model, which I shall call the theory of random numbers. An Opposition Member thinks of a number during a television interview, and one of his colleagues thinks of another number the next day in the House. A third colleague will then try to clear up the mess by coming up with another number in a television interview a day or two later. That is Labour's contribution to the vital matter of public expenditure policy. The figure of £20 billion has simply been thrown out, and the hon. Member for Derby, South signally failed to justify it or to relate the figure in any way to Britain's capacity to finance it.
The British people will not hand over Britain's economic management to a party which obviously cannot decide between competing objectives and cannot establish clear priorities, which cannot weigh up the consequences of its proposed actions and will not state simply and clearly its concept of public expenditure within economic management. Labour no longer knows what it is saying or doing.
The speech by the hon. Member for Stamford and Spalding (Mr. Davies) was in two parts. The first part was a serious academic analysis and I tried hard to follow his argument. The second part degenerated into political knockabout. That was because, in the last period of this Government, he seeks to get himself elevated.
The hon. Gentleman castigated the Labour party as some sort of replica banana republic, using phrases such as "spend, spend, spend". He should look at the serious work being carried on in the Labour party. I could take the criticisms more seriously if his party, which has had well over a decade in Government, had bequeathed to society an efficient economy flowing with goods and respected abroad. It would help if unemployment were diminishing, and we had healthy public services and a healthy private sector. The fantasy propounded by Conservatives does not in any way accord with the facts of our economy and industry.
One would hardly think from what we have heard that growth has been unspectacular and that we have had two, perhaps three, recessions. In my constituency, unemployment is double the rate that it was when the Government came to office in 1979. I represent a constituency in the midlands which has historically been in the forefront of manufacturing. Britain has lost 2 million manufacturing jobs, and many of those were in the industrial west midlands. In view of the way that the economy has plummeted, lectures by Conservative Members are most unfair.
Parliamentarians deal in a disgraceful way with issues such as this. We read in the text books about parliamentary control of this and that, but we have abysmally abdicated our responsibilities for controlling public expenditure. Despite reform of the Select Committee system, the National Audit Office and parliamentary procedures, in terms of controlling the Executive, this is probably the weakest legislature in the democratic world.
There is growing legislative power in eastern Europe, and the countries there are well ahead of us in controlling their Executives. I have been to conferences on parliamentary control and it is with acute embarrassment that I tell parliamentarians from other countries how supine we are in dealing with the Executive and how seldom we vote on serious issues like this. This matter is of all-party interest and we ought to get to grips with control of expenditure. I am a member of the Select Committee on Defence, which is one of the better Select Committees, but the way in which we seek to deal with defence expenditure is lamentable.
I entirely agree. I have criticised the Government, but much of my criticism could be levelled at hon. Members. If we got together on an all-party basis and took a more serious interest in the minutiae of estimates and expenditure, we would be able to do a much better job. Select Committee dealing with expenditure are no more than amiable seminars.
I partly agree with my hon. Friend. Even if we were able to extricate ourselves from Europe we would not be able to control our Executive in the sphere of public expenditure. I welcome the way in which the expenditure plans are now being published—it is a great step forward—but that in no way increases our control.
Public expenditure reflects differences in political philosophy. I was in Parliament during the 1970s. It was not an idyllic period to hold office. The Labour Government had no majority and we were in the middle of the oil shocks. It was exceedingly difficult to manage the economy in those difficult years, but lessons have been learnt. Any Government who offered limitless expenditure to improve services left, right and centre in a pre-election period would rightly be diminished in the eyes of the electorate. Any party aspiring to office must act in a responsible manner in opposition if it is to be taken seriously. Despite the criticisms that I have heard from Conservative Members, the Opposition are being realistic and are not seeking to enter into an auction with the Government. We are seeking realistically to present to the electorate the way in which we shall seek to manage the economy in the future.
The effect of Government policies in my constituency is unemployment at 10 per cent. and rising. Unemployment in the west midlands rose last month by 12,000 to 7·7 per cent. I regret that we may be returning to the situation that existed in the early 1980s, when, almost every time the telephone rang in the hon. Member's office, it was feared that it would be a personnel manager or a trade union representative telephoning to say that there were to be major redundancies or a factory closure. There has been a vast increase in the number of bankruptcies. I want to see the small business sector survive, but the small entrepreneur, allegedly well represented by Conservative Members, is going through a difficult period and suffering greatly.
Training is surely the key to our future economy. A few weeks ago, I visited an excellent training scheme run by the National Association for the Care and Resettlement of Offenders which was being closed by the local training and enterprise council because money was tight. The scheme was worth preserving and I spoke to management and trainees who were very upset that it was about to bite the dust. Thankfully, the people who were losing their places in that scheme were to be absorbed elsewhere.
From the press today, I see that the Government are considering stepping up the number of jobs deliberately created in order to mop up more of the unemployed in this pre-election period. The Government have closed schemes, in some places irrevocably, but perhaps in the next few months new schemes will emerge as the Government, in their electoral panic, seek to create jobs.
I want to dwell on one area which shows the difference in philosophy between the Government and the Opposition, and that is the sphere of police manpower and expenditure. A report by the National Audit Office on promoting value for money in provincial police forces says:
Spending on the police has risen by nearly 50 per cent. in real terms from 1979–80 to the present.
I welcome that. I welcome the fact that over a 10-year period there has been an increase of some 10 per cent. in the number of police officers. According to my rather limited mathematics, that means an increase of 1 per cent. each year. But in terms of output, the situation is serious. I do not want to involve the hon. member for Aldridge-Brownhills (Mr. Shepherd) in my political speech, but we went on an all-party delegation to the Home office a year ago seeking additional police officers. I remember the occasion vividly, but for the wrong reasons.
If one looks not at expenditure but at output in my area and that represented by the hon. Member for Aldridge-Brownhills, one sees that crime increased by 23 per cent. last year. Even though there has been a significant increase in expenditure, it has not, in H division of the west midlands, Walsall, been reflected in any significant increase in manpower. The way in which the police have been compelled to cope with a vast increase in crime has been grossly inadequate. I want to see more public expenditure, but it must be public expenditure properly applied. An increase in public expenditure unrelated to intelligent and sensitive decision-making is anathema to me.
I fear that the Government's hostility to the public services is partly reflected in the way in which they deal with the police. The Government have not sought to privatise the police force directly, but they are doing so indirectly by allowing the private security industry to burgeon and to assume more and more responsibilities that should be the exclusive responsibility of the official police force. Now we have two police forces, one accountable to Parliament and to Ministers and the other accountable to no one except shareholders, should they exist. The consequence is a private police force that is more numerous than the official police force, but where efficiency is low, criminality is high and accountability is zero. I fear that that is the way in which the Government approach the question of public order. More money has been spent, but, bearing in mind the enormous increase in the work load, the Government have gone about things the wrong way.
Like many hon. Members, I received a circular letter from my opponent, no doubt a wheeze of Tory central office, attacking Labour Members on education. The Government will reap the rewards of their education policy. I will not dwell on the national health service because the Government will hear quite enough about that in the obituaries after the Monmouth by-election.
I looked carefully at the departmental report of the Ministry of Defence in the Government's expenditure plans. Its figures belong to "Alice in Wonderland". The Government's problems in defence matters are enormous, far worse than the problems in other Departments, for a number of reasons. First, defence expenditure is falling and the Government do not know how to reconcile the demands for a peace dividend—and the enormous pressure upon them from the Treasury—with an uncertain international situation where there are so many imponderables such as in the middle east, the Soviet Union and eastern Europe, where we do not know how they will develop.
Civil servants in the Ministry of Defence are being compelled to make cuts that prudence dictates they should treat more cautiously than the Treasury is allowing them to do. Decisions that might be irrevocable should not be taken at this moment. We can plan for what may well be a substantial decrease in defence expenditure, but at the moment it would be wise not to make any precipitate decisions.
The Ministry of Defence has tried to go down the route of greater competition, contractorising, reorganising and setting up management surveys, but the end product has not been sufficient to match commitments and resources. Thank God that we were successful in the Gulf and that casualties were so low, but I fear that the corollary to the Government not wanting to appear to be cutting defence expenditure in the 1980s was that our forces were extended beyond the limits of their capability. Had the 100-hour war in the Gulf been more serious, I fear that some of the consequences of that policy would have been dramatically and disastrously exposed.
I am a member of the Select Committee on Defence which visited Kuwait a month ago just after the conflict ended. We all know that, in order to run 150 Challenger tanks—not the finest tanks—effectively in the desert during that war meant using virtually every single tank that we had in west Germany for spare parts.
Our guys and women in the Army, Air Force and Navy did magnificently, but they were let down, although thankfully that fact was not exposed. There has been a policy of cutting back on infrastructure and logistics and of not replacing worn-out equipment and cancelling projects. Fortunately, we were not exposed because of the failures of that policy and I rejoice in that. The Government face a dilemma; if they are to cut expenditure we will have to cut commitments. It is a great dilemma —trying to maintain commitments and to maintain the fiction that nothing has changed, while defence expenditure has fallen under this Government from a percentage of GNP in the mid-fives, to a percentage in the mid-fours.
The pre-election period may be short, but it is more likely to be lengthy, and it is a period in which political parties will have to explain their philosophies and policies—I hope that they will do so realistically. The electorate is sophisticated and any political party that seeks to convince the electorate that it is able to resolve all our problems instantaneously will be quite rightly rejected.
In the past couple of years, the Labour party has done a great deal of work to present its policies and elaborate upon them—far more work than is often done when in opposition. When we eventually face the electorate, we will have prioritised. It will not be a case of one person announcing his or her priorities and the Government getting their civil servants to work out how much it will cost. We shall have to prioritise. The failures of the Government and the economy will not be remedied overnight and any political party that seeks to pretend that that is so will be very foolish. I am delighted that the Labour party is not likely to fall into that category.
I should like to take up the last argument of the hon. Member for Walsall, South (Mr. George), who said that he believes that our activities in the next few months will increasingly be devoted to explaining the differences between the philosophies of the various parties in the House. I shall confine my remarks to two matters: first, to offer a few reflections on growth and the extent to which it can be created by Governments; and, secondly to say a few words on interest rates and the dispute which is arising between the Governor of the Bank of England and the Chancellor.
May I start on my first point by complimenting the Chair upon the way in which those who have contributed to this debate have been called? We have had a wide-ranging debate, illustrating the inexorable pressures on public expenditure. There was a dramatic peroration to the speech by my hon. Friend the Member for Havant (Sir I. Lloyd). As I listened to him, I reflected on the fact that my right hon. Friend the Member for Shoreham (Sir R. Luce) sits for the seat which was once represented by the Whig playwright, Sheridan.
On one occasion, Sheridan got over-excited in the House—he drew a dagger and began to direct it towards his heart. Fortunately, the House was not overawed by that somewhat histrionic gesture. The equivalent of my hon. Friend the Member for Northampton, North (Mr. Marlow) was sitting on the opposite Tory Benches. As Sheridan's knife fell to the ground in the dramatic last moments of the scene, the Tory opposite said to him, "Hey, you've dropped your penknife." Some of the force of the drama diminished in the face of those laconic remarks.
My hon. Friend the Member for Havant demonstrated that even Tories can from time to time add to the pressure for public expenditure. However, I thought that the pressures upon public expenditure were demonstrated most dramatically by the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) and in the intervention from his hon. Friend the Member for Glasgow, Provan (Mr. Wray). Each and every member for the Opposition has demonstrated their desire for massive increases in public expenditure in this debate. I am sure that in the course of the next few months it will become plain that the grass roots of the Labour party want more and more public expenditure. They are perfectly entitled to demand that. However, it will not do for the leaders of the Labour party to say that all that expenditure will, in substance, be paid for out of growth.
The Tory party asks, quite reasonably, how will it be paid for? Is it going to be paid for by increased taxation? Are the Opposition going to borrow more, and will that lead to higher interest rates? Or will they print money? "No," says the Labour party, "in substance, we will deal with it by growth."
Growth has been the great cop-out of post-war politics. You, Madam Deputy Speaker, will remember the Wilson and George Brown dash for growth, which was brought to a dramatic halt by Mr. Roy Jenkins, one of the best and most iron of Chancellors. You will also recollect Lord Barber's dash for growth between 1972 and 1974. To some extent, that was checked by the right hon. Member for Leeds, East (Mr. Healey) in 1976. However, it would be too much to hope for that British politics should have learnt from those few mistakes.
You will also recollect, Madam Deputy Speaker, that the next dash for growth was in 1978, when the predecessors of G7—I think that they called themselves G5—made a worldwide co-ordinated dash for growth with a universal reduction in interest rates. That had a major effect, in that it had to be corrected in the massive depression between 1979 and 1982. That was not good enough, because by 1985 the Tories had forgotten their mistakes and from 1986 to 1988 there was another dash for growth, although it was never so described.
While there was the appearance of very much higher growth of between 4 and 5 per cent., my right hon. Friend the then Chancellor used to keep on saying that he had cracked it, and that there was an economic miracle-low inflation at about 3 per cent. and high rates of growth at 5 per cent. He never mentioned that he was allowing the money supply to increase by more than 20 per cent. per annum. Those high levels of growth were merely the early signs that he had over-expanded the economy by an excessive increase in the money supply.
Governments may come and Governments may go, but those of us who received part of our political education from, for example, Lord Joseph, remember how compellingy he argued that it was the duty of Government to hold the ring and, most of all, to ensure that money was sound, but it was neither their duty nor was it given to Government to create growth, that that is created by individuals, who may create growth from time to time in the most unpropitious circumstances.
Ironically, when circumstances become more pro-pitious—for instance, after a major increase in labour productivity because of our trade union reforms, or more efficient capital because of the abolition of exchange controls—they may decide that they do not want necessarily to go on making more money. They may come to the conclusion that they have made enough.
The evidence is clear that, year in, year out, the British economy will provide no more than 2· per cent. of real growth. If the Labour party intends to claim at the hustings that it can increase public expenditure out of growth. a 2·5 per cent. real increase in public expenditure will not be enough. When its leaders go up to Scotland, they will find the hon. Member for Renfrew, West and Inverclyde at the back of the hall, asking, "What are you going to do about my hospital? What are you going to do about my industry? What are you going to do about this, and what are you going to do about that?" That will become the cry.
Will this 2·5 per cent. per annum be enough for all that? It will not bring in the new Jerusalem, or make it possible to transform Britain into a fairer or more equal and prosperous place. If the Labour party wants to increase public expenditure, which it is perfectly entitled to do, it must campaign on the basis that it will be done either by higher taxes or else by higher borrowing, since 2·5 per cent. growth per annum will not do the trick.
I am grateful to the hon. Gentleman for allowing me to intervene. He has a cult following on our side of the House, and I freely confess to being a member of it. I enjoy his contributions to our debates. I was with him right up to his last point. The Labour party does not intend to make a dash for growth. We intend to make slow, steady and orderly progress and to use the fruits of that progress for public expenditure. Our tax policies have already been clearly and carefully set out. There is no hidden or further agenda, as the hon. Gentleman tries to imply.
I hope that I have dealt with that point. I fear that, under the pressure of the demands from, in particular, a very large caucus in Scotland, promises will be made that more can be delivered than a growth of 2·5 per cent. per annum can supply. If such a promise is made, that is the way to disaster.
May I say a few words about what the popular papers describe as a dispute between the Governor of the Bank of England and the Chancellor of the Exchequer about reducing interest rates? I am one of those who would wish greater independence to be exercised by the Governor of the Bank of England, but not because I want this country to go into any form of Euro-bank.
I want this country to return to a freely floating exchange rate. When we return to it, I can see that there will be a question as to where the discipline in our economy resides. I believe that a more independent bank will be the answer to that problem. We read tonight about the Governor's speech yesterday. It seems to me, having obtained a copy of the speech, that it has been somewhat hyped up by the press. None the less, the Governor suggests that he is sceptical about further reductions in interest rates.
I think that on this issue the balance of argument is in favour of the Government further reducing interest rates as quickly as possible. The Government have got themselves into a most appalling jam by having joined the exchange rate mechanism. We are at the whim of foreign speculators in currencies. We are forced to have as the principal determinant of the level of our interest rates the position that our currency has in the exchange rate mechanism. We have also advanced fallacious arguments about the circumstances in which we can reduce interest rates.
The Chancellor keeps saying, "We'll be able to reduce interest rates when the retail price index comes down," but that has nothing whatever to do with current economic conditions. If the RPI is falling—I believe that it will fall substantially in the near future—that has nothing to do with current economic conditions: it is a reflection of the squeeze that was imposed some 18 months ago.
Therefore, in deciding what should be the current level of interest rates, we ought to look at the most up-to-date statistics. We ought to see what is the state of credit in the economy now, not what the state of credit in the economy was 18 months ago. I believe that the three most important indicators point to the necessity of a further reduction in interest rates.
The first is broad money. You, Madam Deputy Speaker, will recollect that that used to be the complete bible for the Conservative Government. Between 1979 and 1982, it used to be the standard to which every economic decision was referred. We have torn up that bible, but I have retained a copy for my own use.
It is plain that broad money, which was once increasing by 21 per cent., is now increasing only by just over 7 per cent. That suggests a considerable credit crunch. Secondly, the Government's narrow money indicator is M0. They believe that narrow money ought to be increasing by between 0 per cent. and 4 per cent. per annum. It is now increasing by over 2 per cent. per annum. When one recollects that at the height of the boom in 1988 narrow money was increasing by 8 per cent., one can see the extent to which there has been a real reduction in credit.
My third point relies on the most recent figures for bank lending. At the height of the boom, bank lending was increasing by between £5 billion and £6 billion per month. It was a massive boost to house prices and asset prices. In the last recorded month, bank lending increased by only £700 million—a massive reduction. Those three factors —together, I agree, with anecdotal evidence—show that there is a credit crunch.
The Government are entitled to say, "We want to reduce inflation." Theoretically, it is possible to reduce inflation so fast and so fiercely that money appreciates in value against other assets, but if people are to adjust to a reduction in inflation, what is surely required is to allow it to be done gradually, as was envisaged in 1979 by the medium-term financial strategy.
There is every evidence that the Government, simply because of having been caught in the ridiculous ERM, are, if anything, reducing credit too fast. Therefore, the balance of argument is in favour of a further reduction in interest rates at this time. That does not mean, of course, that we will not have to have an increase in interest rates later perhaps. All I am saying is that the best and most up-to-date evidence of what is happening at present and not what happened 18 months ago shows that there is a credit crunch which should be relieved by further reductions in interest rates.
I was spurred to take part in the debate by the opening speeches. The Chief Secretary seemed to indicate that the Government have run out of steam and are fast running out of time. As the speech of my hon. Friend the Member for Derby, South (Mrs. Beckett) progressed, there was a determined attempt by Conservative Members to disrupt it and to distort the proposals of the Labour party on growth, taxation and spending.
I want to comment on a few of the many issues covered in the debate. When he is replying, I want the Financial Secretary to tell us what will happen to the funding of local government expenditure next year and how poll tax bills will be kept down. He will say that the Chancellor indicated in his Budget that the percentage of local government funding to be met nationally was being changed, but one has to recognise that there will be massive increases in local government expenditure, arising from community care and other things to be introduced next year, as well as inflation and other factors. It is already clear that, if poll tax bills are to be kept anywhere near this year's level, we are talking of substantial additional government funding.
When the Government introduced the poll tax, they claimed that it was to help the pensioner living alone, as opposed to the family next door where, there might be three or four wage earners. The Government now have to answer why, in constituencies like mine, the single pensioner will be paying double the amount paid under the rates whereas, because of low rateable values, three or four people living next door will pay much less. Hundreds of my constituents are very angry about what the Government have done.
Growth is important in relation to what a Labour Government would do. The Government's motion talks of reducing expenditure in relation to the gross national product. We want to see public expenditure and value for money, but we recognise that growth will play an important part in our plans. We have grave regrets because the Government have failed to recognise the importance to the nation of manufacturing industries that have suffered so considerably in recent years. In the latest recession, there are severe attacks on the service sector, but again the recession is affecting manufacturing industries very badly.
Lancashire is very dependent on manufacturing jobs, with aerospace providing major employment. British Aerospace at Preston has announced 3,000 redundancies. The same group has also announced some 400 redundancies at the royal ordnance factory at Blackburn. Yet that company has probably benefited more than almost any other from the policies of the Government. It has benefited from three privatisations—its own, the privatisation of the Rover Group and the privatisation of the royal ordnance factories which are under the British Aerospace umbrella. It has had assistance with launch aid for the airbus and it is heavily dependent on Government contracts for defence. Yet, while it is announcing massive redundancies, large parts of its work are being contracted overseas.
When I raised the matter with the Minister for Industry he said that it is not a matter for him but that it is up to market forces and is purely a matter for the company; he said that he did not intend to intervene. In another letter on another issue, he told me that aerospace was not an industry of great national importance. If the Government regard aerospace, which is high-technology, modern industry as of little national importance, that shows why we have suffered so much industrial decline under the 12 years of Conservative Government since 1979. The Government must take a much more positive approach to industry in their final period in office. Certainly it is something that our policy will recognise.
In our amendment we recognise the importance of training and investment in people. When one talks of training, one has to link with it the importance to the nation of education. Investment in people through education and training is the biggest single investment that the country can make. One sad fact is that our record in education and training is abysmal and appalling compared with the performance of other countries with which we are competing. It is no wonder that we are doing so badly.
In regard to the national health service, hospitals in my constituency are in the process of trying to opt out. There will be strong resistance. When the matter was before the council, a unanimous resolution by all parties, including the Conservatives, condemned the opt-out proposals for the Burnley, Pendle and Rossendale health authority.
The hon. Gentleman should be more accurate. There is no question of any hospital opting out of the national health service. Hospitals may become hospital trusts. Does not the hon. Gentleman agree that the mess that the London hospitals have got into is on their own heads? Hospitals in the north-west, particularly those in Lancaster, are extremely well run. Although we may apply for trust status, we have no intention of laying off staff. Will not the hon. Gentleman join me in saying that it is high time London put its house in order and that we in the north-west got the money that London has had too much of in the past?
The hon. Lady fails to recognise the funding shortages that exist in the north-west region. I made a sad mistake in giving way to her. When I agree with something that the hon. Lady says, that day will go down in history. I went to Lancaster community health council earlier this year because the hon. Lady and the other Conservative Members from that area refused to go.
I wanted to make a point about Christie hospital, which has opted out—1 will use that phrase although Conservative Members object. Christie hospital, the major cancer hospital in the north-west and a hospital of international reputation, has made it clear that it will give priority for treatment to patients living in district health authority areas that can give the hospital financial support. If an authority can pay towards the opening of another ward, the hospital will give the people of that area preferential treatment. That is appalling.
My health authority, which has had to consider the closure of the third hospital in Burnley within three years, cannot afford to give money to Christie for another ward. That is appalling discrimination. It means that patients will not be treated on the basis of need, a point that the Prime Minister was trying to make and that was hotly disputed only last week, but will be treated only on the basis of the area in which they live and whether that health authority can assist the hospital.
I shall deal with two other issues, the first of which is rural housing. The documents state that there will be additional provision for housing associations in rural areas, but they fail to recognise the major need for affordable housing which local authorities in rural areas must be able to tackle. Housing in rural areas is a great problem and the Government must give more assistance to tackle it.
Secondly, I shall deal with overseas aid. I do so because Conservative Members have attacked that issue several times in this debate. We have talked about the 0·7 per cent. of gross national product which is the target figure at which we should aim. During the Government's period in office, the figure has dropped from above 0·5 per cent. by about 0·2 per cent. to just more than 0·35 per cent. That is an appalling record. If they do nothing else, the current problems in Bangladesh and the problems with the Kurdish people should bring home to us that we have a responsibility to tackle problems not only in this country, but elsewhere in the world where there is poverty, starvation and other problems that could be solved if nations such as ours did a little more to tackle them. It is right for us to strive towards the 0·7 per cent. target. We should not wash our hands of these problems and a Labour Government would try to solve them as rapidly as possible.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made a speech in classic style, the excellent first half of which I endorse. I am saddened that he continued to speak when I thought that he had sat down. Once again he seemed not to have read my contributions to the debates about the benefits of joining the exchange rate mechanism, but I shall ensure that he gets copies of Hansard containing the relevant sections. My hon. Friend will then understand that many of his worries about monetary policy and the lack of discipline would have been solved if we had joined the ERM in 1985.
The first part of my hon. Friend's speech was extremely good and pertinent and I am sad that the hon. Member for Derby, South (Mrs. Beckett) was not present to hear it. However, I am delighted that the hon. Member who will reply for the Opposition—the hon. Member for Newcastle upon Tyne, East (Mr. Brown)—enjoyed it and took note.
We are not saying that there will not be extra revenues from growth—of course there will. The hon. Member for Derby, South was wrong to accuse us of saying otherwise. However, we are saying that that level of growth will be insufficient to meet the expenditure plans—all of them priorities—that the Labour party has already announced. The revenues from growth alone will be insufficient, no matter what the level of growth. There will always be more top priorities for the Labour party.
The question is, to which priorities will the Labour party be truly attached, or, if to them all, by how much will taxes increase under a Labour Government? That is a reasonable request to put to Labour Front-Bench spokesmen and we should be told what will happen.
The reality is—the electorate should listen carefully, and Labour Front-Bench spokesmen might also benefit from listening—that if the Labour party is incapable of generating from growth the money required for its priority plans, it will have to play on the fiscal level. Regardless of the uncertain buoyancy of tax revenues and the other issues about which I could argue if I had the time, the public should be aware that the Labour party will be forced to increase taxes.
It might have been possible for Labour to say that it would merely remove the upper limit on national insurance, but it has already said that and it has already precommitted the revenues from that to two of its top, top priorities. The other issues that are part of the national debate can be funded only by an increase in the basic rate of taxation. The Labour party should forget the top rate of taxation—that yield will not solve its problems. But let the top rate taxpayer be warned that top rates will increase. The hon. Member for Derby, South made that clear today. That is a warning, but basic rate taxpayers should take particular notice because they will be the ones chiefly to be hit, and they will be hit twice: by the national insurance upper limit being removed and by the increase in the basic rate. There are 2·1 million basic rate taxpayers, but 3·8 million people will be affected by the increase in the national insurance limit. Therefore, a significant proportion of the population should be careful about the prospect of the return of a Labour Government.
The hon. Member for Derby, South did not seem too concerned. She concentrated on the average of various categories of people such as teachers. They may be the average, but that implies that a considerable number of people earning above the average in professions that we regard highly will be hit—doctors, teachers and many others whom the Labour party like to think are high on its list of priorities, but who are certainly high in our esteem. Under Labour's new tax plans, those people will lose at least several hundred pounds more than they would have paid under the community charge. I hope that they will take careful note of that fact.
Another reason why taxes will have to rise under Labour is that Labour will voluntarily forgo the proceeds of privatisation which, under Government plans, are expected to bring in about £5·5 billion in each of the next three years. The Labour leader thought that the growth rate under a Labour Government would generate £20 billion over five years, but he is prepared to forgo three times £5·5 billion.
Labour's sums start not to add up if they are considered carefully, but there is worse—specific pledges within the lifetime of a Labour Government to renationalise. The cost of renationalising the national grid, for example, is difficult to estimate, but it could be half a billion pounds or much more. There are many other estimates of what Labour Back-Benchers—although Labour Front—Bench spokesmen are rather coy about it—would like to renationalise and those costs would soak up the growth balance. On top of that, there are spending pledges or social commitments which will pre-empt any growth. The minimum wage would be introduced up front before growth had any impact on the generation of further revenues. In the health service alone, that could cost £175 million in the first year and that will come out of patient care. Labour's alternative is to leave the expenditure unfunded.
In 1975, I co-wrote for the Bow Group a pamphlet entitled "Under some Delusion". Incidentally, I co-wrote it with the person who is now the prospective Conservative candidate for Berwick-upon-Tweed. I am rather sorry that the hon. Member for Berwick-upon-Tweed (Mr. Beith) is not in his place to hear one of the last public expenditure debates before the election. He may not be here after the election to appreciate such debates—if, as I expect to happen, my friend wins and becomes the admirable representative of that constituency.
The title of the pamphlet derives from a quotation from Edmund Burke to the effect that people give up their liberty only under some delusion. The delusion is that money taken from people into the hands of Government suddenly becomes virtuous as a result of that very process —that a financial transmogrification occurs. The Labour party fundamentally believes that £1 taken from an individual and spent by the Government is not only capable of doing more but is somehow morally better. The Conservative party has long known that that is simply not the case. If we did not know it, we are called to order from time to time by the Audit Commission and Select Committees, and told that money spent by the Government is not even necessarily spent efficiently.
The job of Governments is to concentrate on those things that have to be done by Governments and not on things that Governments are likely not to do as well as business or private individuals—certainly not as well as private individuals who take a personal interest in the way in which they spend their money, either generally or on charities.
The danger is that Labour would take us back to the bad old days. When Labour left power in 1979, our public sector borrowing requirement was £12 billion—6 per cent. of gross domestic product. Our public sector borrowing requirement is now 1·75 per cent. of GDP. That level is tolerable and leaves sufficient flexibility in the economy. A high public sector borrowing requirement, on the other hand, has significant adverse ramifications for private sector funding and interest rates.
The Government have shown that they are managing the economy properly and do not require increases in income tax. I see that the hon. Member for Derby, South is now in her place and I remind her that, under Labour, such increases would be inevitable. The proper management of the economy does not require increases in income tax. Such increases are not required to increase tax receipts. Tax receipts have risen from £43·8 billion in 1988–89 to £55·5 billion in 1990–91. What is important is not increasing taxation rates but increasing the amount of enterprise and incentive in the economy, thereby creating wealth such as that which has enabled the present Government to increase public expenditure substantially while at the same time reducing the percentage of GDP that it represents. That is a remarkable achievement and one whose merits the Labour party has, sadly, still to learn.
Let me make one or two final points—
I shall make two final points.
First, it is important not to be dogmatic about the percentage of GDP taken by public expenditure—provided, that is, that the general target is a secular decline over a number of years. I endorse the comments made by my hon. Friends about the use of automatic stabilisers during a period of recession, which seems to me to be extremely relevant. I know that there will be criticisms in the media about the use of the reserve in this year's Budget —and, indeed, other criticisms. We should not be deterred, however, because it is already clear that the Government's long-term target is a balanced Budget and because, during this recession, it does not matter whether the percentage hovers above 41 per cent.
Secondly, we must continue to prioritise within public expenditure. I know a little about health and I am happy to note that the percentage of GDP spent by this Government on health is higher than that spent by Labour. That underlines the fact that not only do we run the economy better; we actually deliver the goods to the people. As we can spend more, as a percentage of GDP, on health, Labour will soon find that it does not have such a winner as it thinks in the public debate on health issues.
Whatever the level of public expenditure, it is important to spend the money efficiently. I therefore welcome the work of the Audit Commission and pay tribute to my hon. Friend the Member for Gedling (Mr. Mitchell) and others who have highlighted that aspect in several speeches.
In the next Parliament—when we continue to be in government—we must ensure not only the proper management of the economy but the efficient management of public expenditure so that, in several of our high priority areas, such as health and education, we can ensure that there is better and more effective expenditure for the benefit of patients and school children. We must ensure that that is so for any given overall level of public expenditure. That is the task that we are setting ourselves and the task that we will achieve. I look forward to the Conservative Government continuing the implementation of their policies.
I sat through several hours of debate on the Football Spectators Bill. One of the problems that we faced was to find a definition of "hooligan". Those of us who sat through the speech of my hon. Friend the Member for Derby, South (Mrs. Beckett) today were given a prime example of hooligan behaviour. The words and actions of Conservative Members were the words and actions of hooligans. The reason for such behaviour is simply that the Conservative Government are coming to the end of their time. These are the last few months of an Administration who have run into a great crisis and have run out of ideas. The Conservative party changed its leader and, therefore, the Prime Minister, but it retained all its policies—policies that have destroyed the lives of many thousands of my constituents in Leicester.
I want to speak very briefly about a number of aspects of the Government's public expenditure programme. I make no apology for saying that public expenditure should be increased in certain areas of Government policy. One such area is policing. Leicestershire has the worst crime record in the country. That is not because of lack of activity by the police. Indeed, I pay tribute to the work of the chief constable, Michael Hirst, and his officers. The reason for the lack of person power to police Leicestershire properly is that, despite the pleas from both sides of the House—pleas to Ministers during debates, and at meetings with Ministers, the most recent of which was with Lord Ferrers—the Government still refuse to provide the county with the police officers that it needs so desperately. As a result, the crime rate has escalated.
Only two weeks ago we asked that the Government make provision for the construction of the new police station on the Hamilton estate. We pointed out the dire need for a new divisional headquarters in the eastern part of the city.
The Government's response was that there is not enough money. They would not even look at the scheme until 1994–95. Residents of the outer estates of Leicester —places like Thurnby Lodge, Nether Hall and Northfields —complain about the high level of vandalism. This cannot be curbed without greater public expenditure, and that means greater expenditure by the Government.
Only this week we received the welcome news that Leicester City football club has remained in the second division. Yet the manager and chairman of the club say that they do not know how much longer they can remain solvent while they have to meet the huge cost of policing their matches. There is a need for increased Government expenditure to help clubs like Leicester and others that are not fortunate enough to have big gates.
As hon. Members know, Leicester is the centre of the footwear and textile industries. In 1979 those vital industries employed 440,000 people; by 1990, according to the Government's own figures, the number was down to 233,000—a loss of more than 207,000. That has had a tremendous effect locally. It has affected not only the people who have lost their jobs but the families of those people. The Government's plans contain no proposals to help those two industries. There is no incentive to invest. Every week we hear about another textile or footwear firm that is suffering because of the Government's policy of high interest rates.
Later tonight we shall have a debate about education. Recently I did a survey of schools in my constituency. If one adds together the number of years those schools have been waiting for repairs, one gets a total of 200. Schools, such as Abbey school—whether in the inner city or on the outer estates—need resources to get rid of some of the 60 mobile classrooms currently in use.
The same applies to the crisis in housing. Over the past 10 years Leicester city council has been robbed of £20 million of Government support for its housing programme. It cannot build any more houses. It is not allowed to spend for that purpose the money that it raises from the sale of council houses. As a result, I and other local Members of Parliament, at our surgeries every week, meet young couples in a state of great anxiety because they are unable to secure the housing that they need so desperately. That is not the fault of the city council, which works hard to ensure that transfers are effected as quickly as possible, and there is no question of a vast number of properties remaining empty. The reason why additional housing cannot be provided, and why so many people in the outer areas cannot obtain transfers, is that not enough money is spent by central Government.
There is so much more that I should like to say. There needs to be greater expenditure on the health service, and I want to know when the Government will impose surcharges on those Ministers who initiated the poll tax. If that had been done by local government, legislation would have been rushed through the House to surcharge the councillors responsible.
In the few moments left to me, I make a special plea on behalf of nuclear test veterans. As the House knows, a constituent of mine, John Hall, is dying of leukaemia—which he contracted while serving on Christmas Island. I have met the Prime Minister and other Ministers, and recently launched an appeal in Leicestershire to support John Hall and other nuclear veterans. I believe that some money could be found in the Government's programme to pay compensation to people such as John Hall.
By this time tomorrow, the Monmouth by-election will have been decided. I predict that Labour will take Monmouth, and it will do so because the people of Monmouth are fed up with the Government. My plea today is that the people of Leicester and the rest of the country should be given the same chance to pass their verdict on this, the most disastrous of Governments.
As is quite often said these days, public expenditurre is good in many respects. Obviously one has to be careful how one spends the money. There are two purposes to public expenditure. The first is to care for and to help those who are unable temporarily or, sadly, permanently, to care for themselves. That area of public expenditure is one that this Government have built up. We have managed to refresh the parts that previous Governments have not reached.
The second is to ensure the provision of effective and adequate public services. That is not done by public expenditure alone. Today, I visited the channel tunnel. That service, facility and infrastructure will be made available, but it has not been paid for by the public. That is a totally refreshing change from previous Governments, who felt that everything of that kind should come out of the taxpayers' pocket.
Another area of public services is the water authorities. They are now in the private sector. The public—the people of this country—paid to buy them. So the taxpayer has had the money for those services, and now that those services are generating profits, they are providing the taxpayer with money yet again.
The Opposition go on about public expenditure—about spending more money, and about more plans for spending public money. They are going to buy the water authorities back. They are going to find more taxpayers' money to pay for that, and then they will lose the taxation on the profits in the future. So it is not what you do—it is how you do it.
One of the most important areas of public expenditure, recognised by both sides of the House—it is just the philosophy with which we approach it that is different—is the health service. Our approach is that we want to get more care for the cash. However much money we can make available—and we on this side of the House have made more money available than Labour did in the past or could in future—we want to make sure that it generates as much care as possible.
That is the reason we are going for hospital management trusts. A trust hospital will have control over its own destiny. It will run itself. It will manage itself, which will give it an incentive to be more effective and efficient. Not only that, but it will have a far greater awareness of the costs of what it does. By having that awareness of the costs, trust hospitals will be able to do more treatment for any given amount of money. They will want to have more people to come to them. They will want more business—more work, more care, more patients, more treatments and more effective use of our money. They will give more care for the cash.
The Opposition have talked ad infinitum about cuts and closures, but they do not tell us about the wards and the new hospitals that we open or about the additional treatments. Since the Government took office, they have increased the resources to the health service by more than a half. Is that a cut? Since the Government took office, the number of doctors and nurses has increased—8,000 more doctors and 53,000 more nurses. Is that a cut? Since the Government took office, treatments, operations and in-patient treatments have increased by a third. Is that a cut?
We have plans to increase the effectiveness and efficiency of the health service. The Opposition tell scare stories and take matters out of context. They tell us that they will not proceed with our reforms, so they will not achieve improvements in efficiency. Where will they get the resources from? We have been told that they will not increase taxation, apart from the 10 per cent. and 9 per cent. increases, and that they will obtain the money from growth. The money that will come from growth is already committed to old-age pensions and child benefit. Therefore, there will be no extra money for the health service and no improvement in that service.
We would return to the days of the previous Labour Government, when the International Monetary Fund was involved. Then there were cuts in the health service and in the amount of money spent. It was a question not of priorities and decisions about who should be treated, or of doctors and hospital management, but of the National Union of Public Employees and the Confederation of Health Service Employees, who were the Opposition's paymasters. The career of the Leader of the Opposition depends on the unions. He is more concerned about receiving the approval of NUPE or COHSE than about providing an effective and efficient health service. They decide his destiny and his position as Leader of the Opposition.
The Government have rightly given more resources to the health service and the public sector. We have rightly encouraged the private sector to provide facilities that would not otherwise be provided. We have rightly managed to boost the amount of money to the taxpayer rather than reduce it.
By contrast, if the Opposition took office they would do what they did before: they would try to improve services, but they would not have the systems to do so. They would not make the reforms that we have made. They would either borrow money, as my hon. Friends have said, or, once again, mug every taxpayer and take money out of their wallets and handbags. We must avoid that.
I have been told by those who must be obeyed that I should be brief.
Amid the electioneering that is taking place here and elsewhere, the ordinary, decent people we represent have to continue to meet the challenges and deal with the problems they face in their everyday lives. I should like to consider whether the public expenditure plans come anywhere near matching the needs, interests and expectations of my constituents. I should like the Minister to ensure that my remarks are passed on to his ministerial colleagues. I have made similar requests before, and he has courteously done precisely that.
The unemployment rate in my constituency is 12·9 per cent. Thousands of people are unemployed, some of whom are categorised as long-term unemployed. Among its objectives, the Department of Employment's glossy brochure states:
To help people to get jobs … To provide particular help to people who are long term unemployed … to make sure that unemployed people in receipt of benefits are available for and actively seeking work".
The unemployed people I represent are anxious to find work. In Scotland, the age-old Scottish solution is being applied to unemployment. It is the solution of migration and emigration. I want the Government to establish the restart programme. I must tell the Government that, in Greenock and Port Glasgow, those programmes are being handled with appalling sensitivity by Department of Employment and Department of Social Security staff. People who have been unemployed for many months are extremely sensitive to any "instructions" that they receive from the local benefit office, the local job centre or the DSS. They should be treated much more compassionately and sensitively.
Mrs Susan Coyle in Port Glasgow told me the other day that several of her friends have been treated in a disgraceful—she said "squalid"—way by officials as a result of the legislation which has introduced among other things the restart programme.
The Department of Social Security brochure claims among other things that the DSS claims to
Provide a good service to customers—one which is professional, efficient, responsive and fair
Ensure correct payments are made i.e. that benefit recipients are paid their correct entitlement".
That simply does not happen in the experience of many of my constituents.
About two years ago, over 1,800 shipyard workers and dockers applied for disability benefit in respect of the industrial injuries of vibration white finger, industrial deafness and other ailments. Many of those men are still waiting for the claims to be processed. The Department of Social Security in Stranraer, Greenock and Port Glasgow has treated those men with disgraceful insensitivity. Yet south of the border in the Sunderland area of the north-east of England, such claims have been dealt with much more speedily, efficiently and, dare I say it, generously. If people in the north-east of England can be treated in that way, the claimants on the lower Clyde should be treated with equal compassion and sensitivity. I hope that the Minister will pass my remarks on to his ministerial colleagues.
I am sure that the whole House will wish to know that United won the European cup winners cup with a score of 2: 1. I hope that that is right. I say that to get my speech off to a popular start.
The Chief Secretary got off to a traditionally raffish start to his address by referring to the timing of our debate. I was a little perplexed by that. In 1987, we had the debate on expenditure plans in February. We had the same debate in 1988 in February. In 1989, it was in February. In 1990, it was in February. This year, we are having the debate on 15 May.
I wonder why the Government delayed the debate. The suspicion among Opposition Members was that some new announcement, perhaps on training, was planned to claw back the Government's disreputable public expenditure position. But the Government have not managed to make such an announcement. As a substitute, they have had to settle for second best. They have scheduled today's debate on the eve of the Labour victory in Monmouth. But, of course, it was not their intention to give us a chance to praise ourselves before the voters went to the polls. The intention was that today's debate should act as the culmination of a 10-day campaign which the Conservative party has conducted on the Labour party's public expenditure and tax policies.
I shall give way in a moment.
The response that met the speech of my hon. Friend the Member for Derby, South (Mrs. Beckett) must be attributed to absolute hysteria, which was clearly induced by fear. I shall now give way to an hon. Gentleman who has more to fear than most.
I am quaking in my shoes. The hon. Gentleman should not place his bets on the election results yet. Some of his colleagues lost money at the last election by predicting that I would lose my seat.
Will the hon. Gentleman clear up a point that was not adequately explained during earlier exchanges? Last year, the hon. Member for Derby, South (Mrs. Beckett) told the House clearly and categorically that a future Labour Government would have only two spending priorities—pensions and child benefit. Since then, a succession of Labour Front Bench spokesmen have trooped through the Chamber and said that employment, training, trade and industry, health and overseas development would also be priorities. Will the hon. Gentleman tell the House, clearly and unequivocally, who is right?
My hon. Friend the Member for Derby, South is undoubtedly right on matters of public expenditure. The hon. Gentleman will see shortly, once we are in government, that the Labour party Treasury team intend to keep a firm grip on public expenditure, for reasons that are perfectly obvious to everyone who has taken part in this debate so far.
That is absolute nonsense. When we ask the Government what the basic rate of income tax will be in the Chancellor's next Budget, they say that that is a stupid question. Yet when a shadow Minister is at the Dispatch Box, they expect him to spell out the Labour party's entire expenditure programme and to say precisely what priority will be given to which commitment. The Labour party has set out honestly and candidly its taxation policies and the areas of priority.
I asked a fair question. The hon. Gentleman has just said that the hon. Member for Derby, South was right when she said that there were only two priorities. I simply asked whether he is saying that all the other Front-Bench spokesmen were wrong to claim that there were a range of other priorities.
The Financial Secretary is going from bad to worse but, fortunately, his interventions will shorten his time, not mine. I say that in case anyone thinks that I am being foolishly generous in allowing him to intervene. He is relying on the misrepresentation of one of his hon. Friends.
Misrepresentation is becoming a stock in trade for the Financial Secretary. On the BBC "One O'Clock News" on 8 May, he said:
2½ per cent.—Labour Governments don't get that growth—the sort of growth we had in the 1980s".
That turns out to be completely wrong. First, from 1964 to 1969 under a Labour Government, the British economy grew at the rate of 2·8 per cent. a year; under Labour from 1974 to 1979, despite the quadrupling of world oil prices, the economy grew at the rate of 2 per cent. Secondly, in the 12 years of Conservative party rule, and despite the £100 billion-worth of oil revenues available to the Government, the economy has grown at only 1·75 per cent. a year—we are indebted to the Economic Secretary for that figure. Every Labour Government since the second world war has had higher average annual growth rates than their Conservative counterparts. It is hopeless for the Financial Secretary to suggest otherwise.
However, the Financial Secretary has one excuse—the Prime Minister has also been at it. I do not know what has happened to the modern Conservative party. They have gone from the iron lady to the tin man, from Boadicea to Frank Spencer. On 9 May, the Prime Minister said:
The reality is that the Labour party would never deliver any growth whatsoever to fund increased public expenditure. It never has and never would and any suggestion that it would is sheer wish fantasy.
The Prime Minister continued:
The extra £20 billion that Labour promises is spending that it could never deliver out of growth which it has never previously provided when in government."—[Official Report, 9 May 1991; Vol. 190, c. 820, 822.]
That is factually inaccurate. We are happy to argue the issues with Conservative Members in a civilised way, but not on the basis of rant, which is all that is on offer.
We have said that we shall remove the ceiling on employees' national insurance contributions, which will affect people earning more than £20,000 a year. We have told the electorate that we intend to do that. Conservative Members do not seem to be aware of the phrase "marginal tax rates" and act as though the effect filters down to every penny an individual earns. We have given our statement, and the electorate will contrast that with a Conservative party that did not say that it would raise employees' national insurance contributions in 1981 by 2·5 per cent., not just for top rate earners but every national insurance contributor in the country.
Time is working against me in this debate. A number of Opposition Members made significant contributions, and one theme that came through more strongly than any other was Opposition Members' concern for the national health service. My hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) rightly cited individual cases.
I shall describe an individual case, not just because it is important in itself, but because it is significant in relation to what is happening in the national health service. At the end of last week, I was telephoned by my general practitioner. One of my doctor's patients is an 83-year-old widow who has had a bowel tumour and a colostomy. She has been in hospital for radiotherapy but, sadly, the tumour is still there. She suffers from cataracts, cannot read, and is taking morphine to relieve the pain. The medical judgment of her medical practitioner is that she should be given a course of radiotherapy as an in-patient in Newcastle general hospital to try to alleviate the condition or at least relieve the pain.
At first, her specialist agreed that she would be given an appointment in ten days' time. But then the appointment was withdrawn because Newcastle general hospital— which is still operated by the health authority; it has not opted out—has decided that no patients from Newcastle will be admitted to Newcastle hospital for radiotherapy and treated as in-patients. The reason for that has nothing to do with clinical judgment; it would be impossible to make such a decision based on clinical judgment in advance of seeing the patient. The reasons for the decision are organisational and financial.
The radiotherapy service has lost 15 beds, but demand for the service has increased. In order to provide a service to the entire region, the hospital has contractual arrangements with neighbouring authorities that provide an income for Newcastle health authority, because the money has to follow the patient. The problem is that such money will not follow patients in Newcastle, because the health authority has to pay money to itself and it does not intend to do so. Therefore, there is no money to follow a citizen in Newcastle—just misery.
I shall not substitute my political judgment for that of a medical practitioner. The House will be relieved to know that my constituent has been given treatment. When I got in touch with the hospital and said that I intended to raise the matter in the House, it decided that her condition had deteriorated and that she now qualified for clinical treatment. Members of Parliament representing all parts of the country will be put in the impossible position of having to act as welfare officers, putting representations to hospital managements to ensure that elderly people get the sort of treatment that they should be entitled to in the first place.
I shall finish my point, and then give way to the right hon. Gentleman.
The citizens of Newcastle are being told that none of them will be treated as in-patients. This might leave the local health authority in the absurd position of having to buy a safe house in Wallsend, over the border, and to move people who need in-patient treatment out of the district so that they can get into their own hospitals. I do not say that that would actually happen. Such an arrangement would be absurd, but it would be compatible with the market forces that the Conservatives encourage. The situation is outrageous. I cannot believe that this country would refuse an 83-year-old woman in such circumstances in-patient treatment under the NHS.
I cannot comment on the hon. Gentleman's constituency case, but I am glad that he has been able to play a part in ensuring that the lady gets her treatment. If he feels so strongly about the funding of the NHS, will he tell us by how much his party would increase expenditure on it above the figures in the White Paper?
Conservative Members seem to think that the health service is already properly funded. None of them has suggested otherwise. Indeed, the implication of tonight's motion is that the Conservative party's priority is tax cuts, not further public expenditure. The Opposition amendment says that the resources available from growth and from the tax changes that we have honestly announced to the electorate—the Conservative party never did that—should be used for our spending priorities, which embrace the NHS.
The right hon. Member for Hertfordshire, North (Mr. Stewart) should not be surprised that Labour Members feel so strongly about the NHS. During my visit to Monmouth, I found, as did other Opposition Members, that the health service was the biggest single issue that was raised. If Conservative Members are not willing to take that from me tonight, they will hear it from the electorate in the Monmouth by-election tomorrow.
Conservative Members who have spoken in the debate have concentrated on the Labour party's public expenditure and taxation plans. Despite the fact that the Governments public expenditure plans are the subject of the motion, Conservative Members did not seem to want to discuss them, or the documents in which they are set out. They preferred to discuss fictional versions of British history when the Labour party was in power—perhaps I should call that period current affairs rather than history —and hysterical versions of what they think will happen under the next Labour government. References to present Government policy seemed almost forbidden. They were not interested in that.
The obvious explanation for that is that, if the Government intend to reduce direct taxation—that has been their theme since 1979—the money has to be found from somewhere. We know where that money will be found: the Conservative party will adopt the same solution as it did in 1981, despite having pledged in 1979 to do no such thing. It is the same solution in 1981 and increased it again by 2·5 per cent. in this year's Budget. If Conservatives seriously intend further to reduce direct taxation they will further increase indirect taxation.
I have heard no convincing denial of the Conservative party's secret plan to increase VAT. I shall give way if any Conservative Member wishes to make a straight denial. That is a generous offer, but it has not been taken up. I am surprised and a little disappointed by that. Surely somebody could manage at least a ritual denial of the sort that we had in 1979, when the then shadow Chancellor said that such an allegation by the Labour party was a wicked lie. He said that the Conservatives had no intention whatever of doubling VAT. It could be argued that he did not double it, and such a semantic point would remove some of the difficulty, but not all of it.
The debate about the Labour party's public spending and taxation policies was started about 10 days ago in the Daily Express by the Chief Secretary. At that time, Labour and the Conservatives were said to be running neck and neck in the opinion polls on Monmouth. Now Labour is well ahead in those polls, and a victory tomorrow in Monmouth is staring us in the face. If the Chief Secretary continues to attack us like that, the Opposition will soon be sitting on the Government side, and the Conservatives will be sitting over here.
Traditionally, this debate enables the House to do two things. First, it is an important annual episode in the execution of the House's role in scrutinising Government spending. It also enables the House to probe policies on public spending.
My hon. Friend the Member for Havant (Sir I. Lloyd) and the hon. Member for Norwich, South (Mr. Garrett) spoke about the format of the reports that are before the House. In reply to my hon. Friend, I do not think that the House is powerless in controlling and scrutinising public spending. It has an important role and, traditionally, the House has rightly taken it seriously. My hon. Friend said that he wished that the House had the same resources as the United States Congress. However, the size of America's budget deficit does not inspire a great deal of confidence in the scrutiny and control of public spending on the other side of the Atlantic.
The way in which the Government report to the House has developed very much in consultation with Select Committees, and has been guided by what those Committees have sought. We shall continue to consult, amend and improve the form of financial reporting to reflect the desires of the House.
The second function is to enable each side to probe policies, the way in which money is raised and spent, and the important division in philosophy between the Government and the Opposition. As the debate has illustrated, it sometimes seems that Labour's approach to public sector spending is rather like feeding a slot machine. They seem to think it inevitable that the more coins they put in at the top the more chocolate bars will emerge at the bottom. It does not quite work like that, especially when Labour is in power either in government or in councils. In such cases the slot machine becomes rather like a fruit machine, a one-armed bandit, because most of the money remains inside. That is not surprising because, after all, Labour is in hock to the public sector unions.
Yesterday, it was pointed out in the House—I do not think that it has been refuted—that a third of the parliamentary Labour party is sponsored by the Confederation of Health Service Employees and the National Union of Public Employees. I am not suggesting that that inevitably colours the attitudes of Labour Members—
I am reassured to hear that, but we shall be interested to hear the refutation. The suggestion was made in the House yesterday and it has not been refuted. Certainly, the majority of the parliamentary Labour party behave as though they were sponsored by COHSE and NUPE. That is why one can be morally certain that a Labour Government would ensure that the extra money raised from taxpayers will stick in the pockets of those who work in the state bureaucracies, instead of being translated into better services for citizens.
That is what we are seeking to change. We aim to make the public sector—central and local government, nationalised industries and the health service—work more efficiently so that the money supplied by the citizens as the taxpayer is translated into ever better services for the citizen as the user of them. The Prime Minister has initiated the most radical overhaul ever of the public sector, applying private sector market disciplines right across the board. [Interruption.] Let us hear what the Labour party has to say. We shall apply market disciplines, giving choice to the users of services and introducing competition wherever possible.
I assure the hon. Gentleman that we are determined that the provision of public services will get better. We do not share the hon. Gentleman's blithe and dogmatic assumption that the only way to improve public sector services is by putting ever more money into them. That is why we have introduced wide-ranging reforms across the public sector and we shall continue to do that.
Introducing a commercial attitude to the public sector does not mean that everything will be sacrificed to short-term profit. The private sector does not flourish or create customer loyalty by treating its clients badly. It flourishes and creates loyalty because people have a choice. If they do not like what they are given, they can go elsewhere. Every change that has been introduced into the public sector has been aimed at delivering quality services.
Let us consider the introduction of executive agencies —'next steps' agencies—which are designed to improve efficiency and to give managers more control and more powers to enable their organisations to deliver better services. Let us consider one or two examples, even though I accept they are not in the mainstream of the provision of public services. The process has only just begun and there is a long way to go. It will be interesting to see whether the Labour party supports the process.
For example, in Companies House productivity rose by 6 per cent. and real unit costs fell by 5 per cent. in the first year that it was a 'next steps' agency. The average time taken to process documents was 12 days compared with 25 days in the previous year. In the vehicles inspectorate agency, cost efficiency in its four main functions improved by 4·5 per cent. against a target of 3·7 per cent. In Her Majesty's Stationery Office value-for-money improvements of 8·6 per cent., 12·6 per cent. and 12 per cent. have been achieved in its different functions. That is just an example of the sort of benefit that can be gained for the public sector and for the citizens, who will get the services that they expect the Government and the public sector to provide by making the money supplied by the taxpayer buy ever better services for the citizen.
One of the agencies is the Employment Service. How does reducing the number of employment offices from 2,000 to 1,000 increase the service as unemployment is obviously increasing? How is that a saving?
By the Employment Service becoming more efficient in the way in which it provides services for consumers; by ensuring that money goes further—which it does.
As regards the national health service, it is a pity that the hon. Member for Newcastle upon Tyne, East (Mr. Brown) did not give an answer to the question asked by my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart), who made an outstanding speech.
The Labour party has argued repeatedly that the only thing wrong with the health service is that it does not have enough money in it. In 1987, the Labour party argued that it was underfunded and that it needed to be funded to the extent of 3 per cent. real growth per year. We have increased its real spending by 3·5 per cent. a year, but the Labour party says that it is still underfunded and that that is the only thing wrong with it. Labour cannot admit that there might be anything wrong with the way in which the NHS turns that money into patient care. We have steadily introduced a series of reforms into the NHS which are specifically designed to ensure that patient care increases and becomes ever better.
What about competitive tendering, which has provided savings of £120 million—money which has all gone into patient care? The Labour party says that it would abolish it, which means that £120 million would be taken out of patient care. Is that an example of how to make the health service provide better services for patients? Will the hon. Member for Newcastle upon Tyne, East say that he is not going to get rid of competitive tendering?
I understand the hon. Gentleman's arguments about efficiency. As he studies these matters, I expect that he will have seen the report of the National Audit Office, which will tell him that a third of all the costs consumed by the social fund are spent on administration. Is that an example of Conservative efficiency?
I am sorry to say that the hon. Gentleman did not answer the question which we put to him about whether he would continue with competitive tendering in the health service, which has delivered better care for patients. Or is the Labour party so constrained by COHSE and NUPE that it is not able to contemplate the continuation of a policy which has yielded so many benefits for patients?
Direct care staff have increased from 59 per cent. of all staff in the health service to 67 per cent., which means more people in the health service are concerned with the direct provision of patient care. The number of doctors and nurses has increased dramatically—53,000 more nurses and midwives and 8,000 more doctors and dentists. That has been possible because the health service operates ever more efficiently and provides ever more treatment for ever more people. Every year, the health service has treated more people, more effectively.
Another example are the educational reforms, to loosen the control of bureaucracy and to give more control to parents. Grant-maintained schools, local management of schools and open enrolment are all designed to give more power to parents to insist that schools provide better schooling for their children. The money that they put in as charge payers and taxpayers comes out in better schooling for their children.
What is Labour's response to those reforms, which are designed to provide better care and better schooling? What did the hon. Member for Blackburn (Mr. Straw) say about grant-maintained schools? "On day one, we'll stop it. We'll turn the clock back," he said. As every day goes by the Labour party reveals itself as the real party of reaction, the party which wants to turn the clock back, the party which cannot conceive of the fact that local authority services can be provided by anything other than local authorities. All the public sector services have to be provided by people employed by the state. Services have to be provided by bureaucracy. The Opposition hate anything that gives to patients and parents real choice—the choice to control their destiny and what happens to them—because that takes people out of the power of the state and gives them independence and choice. The Opposition cannot stand that.
As for local authorities contracting out, just look at the city of Westminster. It has saved £4·1 million a year.
The hon. Gentleman referred to contracting out in hospitals. In my constituency, 400 employees of the Monklands district general hospital recently had their employment terminated because of contracting out. The company that now provides the services is offering the people whom it employs poorer wages and different hours but, most significant of all, no superannuation whatsoever. Does the Minister think that that is right?
The right hon. and learned Gentleman could not have better demonstrated where his real loyalties lie. They lie not with the patients who seek care in hospitals but with those people who are employed by the state. He could not better have demonstrated why we object to his approach to the national health service.
And the Minister could not more clearly have demonstrated where the Government's loyalties lie. I am proud to represent people in my constituency who work in my local hospital. It is absurd and disgraceful that they should lose their jobs and be offered other jobs without the possibility of superannuation. The Minister is on the side of employers who deny rights to my constituents.
The fact is that the Government are on the side of the patients who are treated in hospitals and of patients who are treated by general practitioners. We are on the side of parents who send their children to the schools of their choice. We are not on the side of the state and of the public sector unions who still hold the Labour party in thrall. The right hon. and learned Gentleman should be a little more careful about the way in which he opens up his party to criticism.
During the debate we have asked the Labour party a lot of questions but we have had precious few answers. During my right hon. and learned Friend's speech this afternoon I counted 13 questions to the hon. Member for Derby, South (Mrs. Beckett). She half-answered two of them. That seems to me to leave a deficit of 11. We are still waiting to hear what the answers are. I gave the hon. Member for Newcastle upon Tyne, East another opportunity to let us know the answers to those questions.
What is the answer to the question about priorities? Does Beckett's law still apply, or do all the other Labour party Front-Bench spokesmen have authority to offer top priorities, key priorities, overriding priorities? What are the priorities? What would a Labour Government spend their money on?
Is the hon. Gentleman going to intervene and tell us what the priorities are, or is he, as the hon. Member for Derby, South said earlier, going to give us the answers later? I suspect that they will be given much later. They will certainly not come when the Labour party is in government because it will never have the chance to be in government.
How will the Labour party fill the gap left by the proceeds of privatisation, forgone by its dogma? How will it raise the extra £5 billion? Will it mean an additional 2·5p on income tax? Will it mean £5 billion off spending? Will it mean borrowing extra money—a burden on future taxpayers? When shall we get the answers to those questions? What about the Leader of the Opposition's additional £20 billion? Does that come out of the growth that we have already provided for and already assumed for our services? When will there be answers to these questions?
The fact is that Labour are so obsessed with input that they don their motley as they go round the country, throwing around commitments to spending here, buying off an interest group there, and then they put on their dark suits to persuade the public that they do not really mean it. The fact is that we have seen enough of Labour promises. Labour are rattled, rumbled and wrong. They have made their promises, which are like pie-crust; they are made to be broken. People will not believe them.
|Division No. 144]||[10 pm|
|Abbott, Ms Diane||Gilbert, Rt Hon Dr John|
|Adams, Mrs Irene (Paisley, N.)||Godman, Dr Norman A.|
|Allen, Graham||Golding, Mrs Llin|
|Alton, David||Gordon, Mildred|
|Armstrong, Hilary||Gould, Bryan|
|Ashdown, Rt Hon Paddy||Graham, Thomas|
|Ashley, Rt Hon Jack||Griffiths, Nigel (Edinburgh S)|
|Ashton, Joe||Griffiths, Win (Bridgend)|
|Banks, Tony (Newham NW)||Harman, Ms Harriet|
|Barnes, Harry (Derbyshire NE)||Heal, Mrs Sylvia|
|Barnes, Mrs Rosie (Greenwich)||Henderson, Doug|
|Battle, John||Hinchliffe, David|
|Beckett, Margaret||Hogg, N. (C'nauld & Kilsyth)|
|Beith, A. J.||Home Robertson, John|
|Bell, Stuart||Hood, Jimmy|
|Bellotti, David||Howell, Rt Hon D. (S'heath)|
|Benn, Rt Hon Tony||Howells, Geraint|
|Bennett, A. F. (D'nt'n & R'dish)||Hoyle, Doug|
|Bermingham, Gerald||Hughes, Robert (Aberdeen N)|
|Blair, Tony||Hughes, Simon (Southwark)|
|Blunkett, David||Illsley, Eric|
|Boateng, Paul||Janner, Greville|
|Boyes, Roland||Kaufman, Rt Hon Gerald|
|Brown, Gordon (D'mline E)||Kirkwood, Archy|
|Brown, Nicholas (Newcastle E)||Lambie, David|
|Brown, Ron (Edinburgh Leith)||Lamond, James|
|Buckley, George J.||Leighton, Ron|
|Caborn, Richard||Lestor, Joan (Eccles)|
|Callaghan, Jim||Lewis, Terry|
|Campbell, Menzies (Fife NE)||Livingstone, Ken|
|Campbell, Ron (Blyth Valley)||Livsey, Richard|
|Campbell-Savours, D. N.||Lofthouse, Geoffrey|
|Carlile, Alex (Mont'g)||Loyden, Eddie|
|Cartwright, John||McAllion, John|
|Clark, Dr David (S Shields)||McAvoy, Thomas|
|Clwyd, Mrs Ann||Macdonald, Calum A.|
|Cohen, Harry||McKelvey, William|
|Corbett, Robin||McLeish, Henry|
|Corbyn, Jeremy||McMaster, Gordon|
|Cousins, Jim||McNamara, Kevin|
|Cryer, Bob||McWilliam, John|
|Cummings, John||Madden, Max|
|Cunliffe, Lawrence||Mahon, Mrs Alice|
|Cunningham, Dr John||Marek, Dr John|
|Dalyell, Tam||Marshall, David (Shettleston)|
|Darling, Alistair||Marshall, Jim (Leicester S)|
|Davies, Rt Hon Denzil (Llanelli)||Martin, Michael J. (Springburn)|
|Davis, Terry (B'ham Hodge H'l)||Martlew, Eric|
|Dewar, Donald||Maxton, John|
|Dixon, Don||Meacher, Michael|
|Dobson, Frank||Meale, Alan|
|Doran, Frank||Michie, Bill (Sheffield Heeley)|
|Douglas, Dick||Michie, Mrs Ray (Arg'l & Bute)|
|Duffy, A. E. P.||Mitchell, Austin (G't Grimsby)|
|Dunnachie, Jimmy||Morris, Rt Hon A. (W'shawe)|
|Dunwoody, Hon Mrs Gwyneth||Morris, Rt Hon J. (Aberavon)|
|Eadie, Alexander||Mullin, Chris|
|Eastham, Ken||Nellist, Dave|
|Ewing, Mrs Margaret (Moray)||Oakes, Rt Hon Gordon|
|Fatchett, Derek||O'Brien, William|
|Fearn, Ronald||O'Neill, Martin|
|Field, Frank (Birkenhead)||Owen, Rt Hon Dr David|
|Flannery, Martin||Paisley, Rev Ian|
|Foot, Rt Hon Michael||Patchett, Terry|
|Foster, Derek||Pike, Peter L.|
|Foulkes, George||Powell, Ray (Ogmore)|
|Fraser, John||Primarolo, Dawn|
|Fyfe, Maria||Quin, Ms Joyce|
|Galloway, George||Randall, Stuart|
|Garrett, John (Norwich South)||Rees, Rt Hon Merlyn|
|Garrett, Ted (Wallsend)||Reid, Dr John|
|George, Bruce||Richardson, Jo|
|Robertson, George||Straw, Jack|
|Robinson, Geoffrey||Taylor, Mrs Ann (Dewsbury)|
|Rooker, Jeff||Taylor, Matthew (Truro)|
|Rooney, Terence||Thompson, Jack (Wansbeck)|
|Ross, Ernie (Dundee W)||Vaz, Keith|
|Ruddock, Joan||Wallace, James|
|Salmond, Alex||Wareing, Robert N.|
|Sedgemore, Brian||Watson, Mike (Glasgow, C)|
|Sheldon, Rt Hon Robert||Welsh, Andrew (Angus E)|
|Shore, Rt Hon Peter||Williams, Rt Hon Alan|
|Sillars, Jim||Winnick, David|
|Skinner, Dennis||Wise, Mrs Audrey|
|Smith, Andrew (Oxford E)||Worthington, Tony|
|Smith, Rt Hon J. (Monk'ds E)||Wray, Jimmy|
|Spearing, Nigel||Tellers for the Ayes:|
|Steel, Rt Hon Sir David||Mr. Frank Haynes and|
|Steinberg, Gerry||Mr. Allen McKay.|
|Adley, Robert||Clark, Rt Hon Sir William|
|Aitken, Jonathan||Colvin, Michael|
|Alexander, Richard||Conway, Derek|
|Alison, Rt Hon Michael||Coombs, Anthony (Wyre F'rest)|
|Allason, Rupert||Coombs, Simon (Swindon)|
|Amery, Rt Hon Julian||Cope, Rt Hon John|
|Amess, David||Cran, James|
|Amos, Alan||Currie, Mrs Edwina|
|Arbuthnot, James||Curry, David|
|Arnold, Jacques (Gravesham)||Davies, Q. (Stamf'd & Spald'g)|
|Ashby, David||Davis, David (Boothferry)|
|Aspinwall, Jack||Day, Stephen|
|Atkins, Robert||Devlin, Tim|
|Baker, Rt Hon K. (Mole Valley)||Dickens, Geoffrey|
|Baker, Nicholas (Dorset N)||Dicks, Terry|
|Banks, Robert (Harrogate)||Dorrell, Stephen|
|Batiste, Spencer||Douglas-Hamilton, Lord James|
|Beaumont-Dark, Anthony||Dover, Den|
|Bellingham, Henry||Dunn, Bob|
|Bendall, Vivian||Durant, Sir Anthony|
|Bennett, Nicholas (Pembroke)||Eggar, Tim|
|Benyon, W.||Evans, David (Welwyn Hatf'd)|
|Bevan, David Gilroy||Evennett, David|
|Biffen, Rt Hon John||Fairbairn, Sir Nicholas|
|Blackburn, Dr John G.||Fallon, Michael|
|Blaker, Rt Hon Sir Peter||Favell, Tony|
|Body, Sir Richard||Field, Barry (Isle of Wight)|
|Bonsor, Sir Nicholas||Finsberg, Sir Geoffrey|
|Boscawen, Hon Robert||Fishburn, John Dudley|
|Boswell, Tim||Fookes, Dame Janet|
|Bottomley, Peter||Forsyth, Michael (Stirling)|
|Bottomley, Mrs Virginia||Forth, Eric|
|Bowden, A. (Brighton K'pto'n)||Franks, Cecil|
|Bowden, Gerald (Dulwich)||French, Douglas|
|Bowis, John||Fry, Peter|
|Boyson, Rt Hon Dr Sir Rhodes||Gale, Roger|
|Brandon-Bravo, Martin||Gardiner, Sir George|
|Brazier, Julian||Gill, Christopher|
|Bright, Graham||Gilmour, Rt Hon Sir Ian|
|Brooke, Rt Hon Peter||Glyn, Dr Sir Alan|
|Brown, Michael (Brigg & Cl't's)||Goodhart, Sir Philip|
|Browne, John (Winchester)||Goodlad, Alastair|
|Buchanan-Smith, Rt Hon Alick||Goodson-Wickes, Dr Charles|
|Buck, Sir Antony||Gorman, Mrs Teresa|
|Budgen, Nicholas||Gorst, John|
|Burns, Simon||Grant, Sir Anthony (CambsSW)|
|Burt, Alistair||Greenway, Harry (Ealing N)|
|Butcher, John||Greenway, John (Ryedale)|
|Butler, Chris||Gregory, Conal|
|Carlisle, Kenneth (Lincoln)||Griffiths, Sir Eldon (Bury St E')|
|Carrington, Matthew||Griffiths, Peter (Portsmouth N)|
|Carttiss, Michael||Ground, Patrick|
|Cash, William||Grylls, Michael|
|Chalker, Rt Hon Mrs Lynda||Hague, William|
|Channon, Rt Hon Paul||Hamilton, Neil (Tatton)|
|Chapman, Sydney||Hampson, Dr Keith|
|Chope, Christopher||Hanley, Jeremy|
|Churchill, Mr||Hannam, John|
|Clark, Dr Michael (Rochford)||Hargreaves, A. (B'ham H'll Gr')|
|Hargreaves, Ken (Hyndburn)||McNair-Wilson, Sir Michael|
|Haselhurst, Alan||McNair-Wilson, Sir Patrick|
|Hawkins, Christopher||Madel, David|
|Hayes, Jerry||Malins, Humfrey|
|Hayhoe, Rt Hon Sir Barney||Mans, Keith|
|Hayward, Robert||Maples, John|
|Heath, Rt Hon Edward||Marland, Paul|
|Heathcoat-Amory, David||Marlow, Tony|
|Hicks, Mrs Maureen (Wolv' NE)||Marshall, Sir Michael (Arundel)|
|Hicks, Robert (Cornwall SE)||Martin, David (Portsmouth S)|
|Higgins, Rt Hon Terence L.||Mates, Michael|
|Hill, James||Maude, Hon Francis|
|Hind, Kenneth||Mawhinney, Dr Brian|
|Holt, Richard||Maxwell-Hyslop, Robin|
|Howarth, Alan (Strat'd-on-A)||Mayhew, Rt Hon Sir Patrick|
|Howarth, G. (Cannock & B'wd)||Mellor, Rt Hon David|
|Howell, Ralph (North Norfolk)||Meyer, Sir Anthony|
|Hughes, Robert G. (Harrow W)||Miller, Sir Hal|
|Hunt, Rt Hon David||Mills, Iain|
|Hunt, Sir John (Ravensbourne)||Miscampbell, Norman|
|Hunter, Andrew||Mitchell, Andrew (Gedling)|
|Irving, Sir Charles||Mitchell, Sir David|
|Jack, Michael||Moate, Roger|
|Jackson, Robert||Monro, Sir Hector|
|Janman, Tim||Montgomery, Sir Fergus|
|Johnson Smith, Sir Geoffrey||Moore, Rt Hon John|
|Jones, Robert B (Herts W)||Morris, M (N'hampton S)|
|Kellett-Bowman, Dame Elaine||Morrison, Sir Charles|
|Key, Robert||Moss, Malcolm|
|King, Roger (B'ham N'thfield)||Moynihan, Hon Colin|
|Kirkhope, Timothy||Neale, Sir Gerrard|
|Knapman, Roger||Neubert, Sir Michael|
|Knight, Greg (Derby North)||Nicholls, Patrick|
|Knight, Dame Jill (Edgbaston)||Nicholson, David (Taunton)|
|Knowles, Michael||Nicholson, Emma (Devon West)|
|Knox, David||Norris, Steve|
|Lamont, Rt Hon Norman||Onslow, Rt Hon Cranley|
|Lang, Rt Hon Ian||Oppenheim, Phillip|
|Latham, Michael||Page, Richard|
|Lee, John (Pendle)||Patnick, Irvine|
|Leigh, Edward (Gainsbor'gh)||Pattie, Rt Hon Sir Geoffrey|
|Lennox-Boyd, Hon Mark||Pawsey, James|
|Lilley, Rt Hon Peter||Peacock, Mrs Elizabeth|
|Lloyd, Sir Ian (Havant)||Porter, Barry (Wirral S)|
|Lloyd, Peter (Fareham)||Porter, David (Waveney)|
|Lord, Michael||Powell, William (Corby)|
|Luce, Rt Hon Sir Richard||Price, Sir David|
|McCrindle, Sir Robert||Raffan, Keith|
|Macfarlane, Sir Neil||Raison, Rt Hon Sir Timothy|
|MacGregor, Rt Hon John||Rathbone, Tim|
|Maclean, David||Redwood, John|
|McLoughlin, Patrick||Rhodes James, Robert|
|Riddick, Graham||Thornton, Malcolm|
|Ridsdale, Sir Julian||Thurnham, Peter|
|Roberts, Sir Wyn (Conwy)||Townend, John (Bridlington)|
|Rossi, Sir Hugh||Townsend, Cyril D. (B'heath)|
|Rumbold, Rt Hon Mrs Angela||Tracey, Richard|
|Ryder, Rt Hon Richard||Tredinnick, David|
|Sackville, Hon Tom||Trippier, David|
|Sainsbury, Hon Tim||Trotter, Neville|
|Sayeed, Jonathan||Twinn, Dr Ian|
|Shaw, David (Dover)||Vaughan, Sir Gerard|
|Shaw, Sir Giles (Pudsey)||Viggers, Peter|
|Shaw, Sir Michael (Scarb')||Wakeham, Rt Hon John|
|Shelton, Sir William||Walden, George|
|Shephard, Mrs G. (Norfolk SW)||Walker, Bill (T'side North)|
|Shepherd, Richard (Aldridge)||Walker, Rt Hon P. (W'cester)|
|Shersby, Michael||Waller, Gary|
|Sims, Roger||Walters, Sir Dennis|
|Skeet, Sir Trevor||Ward, John|
|Smith, Sir Dudley (Warwick)||Wardle, Charles (Bexhill)|
|Smith, Tim (Beaconsfield)||Warren, Kenneth|
|Speller, Tony||Watts, John|
|Spicer, Michael (S Worcs)||Wells, Bowen|
|Squire, Robin||Wheeler, Sir John|
|Stanbrook, Ivor||Whitney, Ray|
|Stanley, Rt Hon Sir John||Widdecombe, Ann|
|Steen, Anthony||Wiggin, Jerry|
|Stern, Michael||Wilkinson, John|
|Stevens, Lewis||Wilshire, David|
|Stewart, Allan (Eastwood)||Winterton, Mrs Ann|
|Stewart, Andy (Sherwood)||Winterton, Nicholas|
|Stewart, Rt Hon Ian (Herts N)||Wood, Timothy|
|Sumberg, David||Woodcock, Dr. Mike|
|Summerson, Hugo||Yeo, Tim|
|Tapsell, Sir Peter||Young, Sir George (Acton)|
|Taylor, Ian (Esher)||Younger, Rt Hon George|
|Taylor, Teddy (S'end E)|
|Tebbit, Rt Hon Norman||Tellers for the Noes:|
|Temple-Morris, Peter||Mr. David Lightbown and Mr. John M. Taylor.|
|Thompson, D. (Calder Valley)|
|Thompson, Patrick (Norwich N)|
That this House approves the Government's Expenditure Plans for 1991–92 to 1993–94 (Cm 1501 to 1520); and contratulates the Government on continuing to maintain its medium term objective that public spending should, over time, take a declining share of national income, while value for money is constantly improved and resources are concentrated in areas of high priority.