Comprehensive Spending Review

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 25th June 1998.

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Photo of Bill Rammell Bill Rammell Labour, Harlow 12:00 am, 25th June 1998

When he expects to announce the results of the comprehensive spending review. [46151]

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

As I made clear last June when I announced the comprehensive spending review, its results will be published before the summer recess.

Photo of Bill Rammell Bill Rammell Labour, Harlow

When the outcome of the comprehensive spending review is announced, will particular attention be paid to the need for increased investment in social housing? The first phase of the release of capital receipts brought about a 33 per cent. increase in investment in one year, but my right hon. Friend the Chief Secretary will be aware that that must be viewed in the context of a 62 per cent. cut between 1992 and 1997 under the previous Tory Government. In fact, no area of public expenditure was hit as hard as social housing in 18 years of Conservative government. In the light of that, will the Chief Secretary reassure the House that the need for such investment, which affects some of the poorest people in society, will be a high priority for this Government?

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

The previous Government paid little attention to the needs of public sector housing. This Government have arranged for some £900 million of additional investment to be made available for the maintenance, repair and improvement of the public housing stock since the election. It is interesting to note that public sector investment fell from 8 per cent. of national income in the 1960s to 2 per cent. in the 1980s and 0.8 per cent. in the 1990s. As my right hon. Friend the Chancellor made clear in his statement two weeks ago, we are determined to ensure that the fabric of society will benefit from the level of public sector investment being improved prudently, and housing will be able to share in that benefit.

Photo of Nick Gibb Nick Gibb Shadow Spokesperson (Treasury)

Clause 1 of Labour's contract with the people says that Labour will cut social security spending and transfer the savings into education. Given the huge planned increase in social security spending, will the Chief Secretary now apologise to the British people for breaching that contract?

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

As the hon. Gentleman ought to be aware, the Government have taken several initiatives to ensure that people get off the dole and back into work. The welfare-to-work programme funded by the windfall tax on the privatised utilities is enabling many young people and long-term unemployed to get off the dole, so that they no longer cost the public money, and into work, where they start to make a contribution for themselves and their families.

The measures that we have taken to introduce the working families tax credit and reform the tax and benefit system will ensure that work pays, and will enable many more people to work and contribute. The Government have introduced several measures that encourage work and will reduce the number of people who are out of work. That will enable us to redirect resources into the public services that we need.

On education, the hon. Gentleman will be aware that we ended the assisted places scheme, which was a classic example of the few benefiting at the expense of the many. We have arranged for that money to be put into the education system to cut class sizes, which will help thousands of young children whom the previous Government neglected.

Photo of Mr Derek Foster Mr Derek Foster Chair, Employment Sub-committee

My right hon. Friend will be aware that Labour Members cannot wait for the spending review to hear further good news for education and health. Is he further aware that my right hon. Friend the Chancellor's recent far-sighted and shrewd statement on public investment was widely acclaimed in the northern region, because he gave Newcastle airport freedom to invest to underpin its future? I now urge him to go further and give the same full commercial freedom to the Post Office so that it can invest to underpin its global competitiveness.

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

My right hon. Friend will be aware that the Government are reviewing the position of the Post Office, as we made clear in our manifesto that we would. He is right to say that Newcastle airport, and Manchester airport, are to be given greater commercial freedom. These are profitable corporations, able to trade without having to rely on public funds. We are determined to make changes to the system so that organisations that can trade profitably and independently are given the commercial freedom that they need.

The Government are certainly committed to increasing investment in health and education. We have already increased the amount available to education by about £2.5 billion since the election, and a further £2 billion has been allocated to the health service. That is all much-needed investment. In the not too distant future, the comprehensive spending review will further set out the Government's spending priorities for the rest of this Parliament and beyond.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

Even before the spending review, the Chancellor has already announced that he has abandoned the tight expenditure policies that he so proudly announced last year. Instead, public expenditure will now rise at the fastest rate since the 1960s—by 2.75 per cent. above inflation every year, and by more if all the fiddles and changed definitions are taken into account.

Does the Chief Secretary agree that this return to tax-and-spend policies will put more pressure on inflation and on the Bank of England to increase interest rates further, thereby pushing the manufacturing and exporting sectors even further into recession? Is the Chief Secretary content to preside over one policy that creates a boom and another that simultaneously creates a bust?

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

The right hon. Gentleman will be aware that a significant fiscal tightening was announced in my right hon. Friend's Budgets of the past two years, and confirmed again in his recent statement. It is a bit rich of the Tory party to criticise our proposals, when the Conservative Government presided over an economic regime that resulted in interest rates of more than 15 per cent. and inflation of more than 10 per cent.; and when they doubled the national debt in the space of six years, with the result that £25 billion a year is spent servicing that debt when the money could be better spent on public services.

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

Conservative Members do not like being reminded of their legacy, which we have had to clear up.

My right hon. Friend announced that our approach is to ensure stable public finances so that we can increase sustainable spending on public services. We will also ensure that current spending is met by income that we raise, and we will borrow only to invest prudently. That is what the former Government never achieved. We have sorted out the mess that they left us.

I notice that the shadow Chancellor last night addressed the Carlton club political committee and observed not only that taxes are lower in Britain, that corporation tax is down to 30 per cent. and that our long-term interest rates are lower than ever; he also said: government debt here is likely to be lower than most others. If he was willing to endorse us last night, he ought to be willing to do so this afternoon.

Photo of Dr George Turner Dr George Turner Labour, North West Norfolk

My right hon. Friend will know that many Labour Members represent rural constituencies because the Tory party neglected their need for financial investment. My part of England is isolated from the national road network and our public transport is the worst imaginable. Will my right hon. Friend assure me that the spending review will, for the first time in two decades, take into account the needs of the rural as well as those of the urban economy?

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

My hon. Friend is quite right. For 18 years, the previous Government largely neglected rural areas. It is only in the past few weeks that the Tories have taken an interest in them—which is why so many of their former colleagues find themselves out of work: they were not aware of what the Tory Government were doing to rural areas.

The comprehensive spending review will address those problems. We made a start in the last Budget, recognising some of the problems that people faced with rural transport and the lack of it in many areas. When the Tories start complaining about our prudent spending plans for the next few years, when they accuse of us of going on a spending spree or of having too loose a fiscal policy, they really must tell us, what do they want to cut? Are we spending too much on health, too much on education, too much on transport? They must answer those questions.

The Government are determined to improve education standards in urban and rural areas throughout the country. We want to increase spending on health. We want to ensure that we have a transport system that is fit for this country as we move into the next millennium. The previous Government could never, ever do that, because of their approach to public spending and their incompetence in economic management.