Budget Resolutions and Economic Situation

Part of Amendment of the Law – in the House of Commons at 6:18 pm on 18th March 2008.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee, Chair, Public Accounts Committee 6:18 pm, 18th March 2008

I agree and I want to suggest a modest reform in our procedures that might tackle the problem that my hon. Friend identifies. We have the best system in the world of post facto audit but one of the least effective Budget scrutiny systems. I shall deal with that in a little more detail before I sit down.

I do not take issue with the rosy portrait of reform that the Budget statement presented for the sake of blind opposition. There is no point in that. We all believe in reform and I welcome, for example, the proposal that long-term recipients of incapacity benefit should attend assessments of their fitness to work. That is good, but hon. Members listening to the Chancellor would be forgiven for thinking that his £30 billion of savings a year are already in the bank. They are not. We have prepared numerous reports on the existing efficiency programme. The record on reform to date shows that savings are easy to predict but harder to achieve in practice. My hon. Friend Mr. Hammond, the shadow Chief Secretary, knows that well as he prepares for government.

There are many wise men and women in the House today, but another, John Locke, wrote that

"an unerring mark of the love of truth is not entertaining any proposition with greater assurance than the proofs it is built upon will warrant".

To put it another way, experience tells us that the Budget is counting on chickens with a poor record of hatching. As a giver of candid advice, I therefore say to those on the Treasury Bench, as many of us have many times, that public faith in public services will not withstand public failures to deliver genuine reform, which is what we need and want.

The price of failure to deliver productivity gains and efficiency savings will be paid in higher taxes and higher borrowing. That price is paid by us all, but, as I said in last year's debate, the burden is felt most by those who can least afford to bear it—the poorest and most vulnerable members of society.

As hon. Members know, I believe that there is a strong moral case for lower taxation, especially for those least able to pay. Some hon. Members agree and others have yet to see the light. However, I believe that few hon. Members would dissent from the equally strong moral case for removing inefficiency and waste from public services. That is the case that we fought to further in our Committee.

To give them credit, those on the Treasury Bench accept more than 90 per cent. of our recommendations, and hundreds of millions of pounds are consequently saved. That is an example of what parliamentarians can achieve when we work together, especially when we are supported by the National Audit Office. However, our scrutiny of public spending happens only after the event, to revert to the point that my hon. Friend Tony Baldry made. We can encourage those who come next to imitate the good and avoid the bad, but we cannot head the problem off at the pass. That is true of many issues.

Today, the non-doms issue was mentioned. Evidence on that is mixed. I have heard anecdotal evidence to suggest that many middle-income earners are leaving the country. I welcome the concessions in the Budget statement, but, in a sense, I disagree with my right hon. and learned Friend the Member for Rushcliffe, who speaks with all the authority of a former Chancellor, because I believe that pre-Budget scrutiny would help resolve such issues.

We have debated the taxation of family cars. The public are only just waking up to the fact that their small family cars, not the large gas guzzlers, will be taxed. There was insufficient debate about the cost of the Iraq war and the Afghanistan operation. There is nothing more boring than listening to people saying, "I told you so", and my right hon. and learned Friend and I voted against the war. However, it has cost the Government £5 billion and it has cost the US Government $3 trillion. Another £2 billion is set aside for what will happen in Afghanistan and Iraq. All such issues need to be debated more often and in more detail in the House as the Budget goes through.

Let us consider what happens in Congress in the US. I believe that opportunities to unleash the collective wisdom of the House are far too limited compared with what happens in Congress, where the President proposes, but Congress disposes. There are literally hundreds of hours of line-by-line debate on the Budget. What emerges from Congress is different from the President's proposals. Our powers in the House are far too limited. It is true that we have the Budget debate and three days of debate on the Supply estimates. However, the Budget confirms spending plans that are set out in the comprehensive spending review, of which there is almost no systematic scrutiny. The estimates are debated only after the beginning of the year in which the spending takes place. There is therefore little opportunity to influence the Government, even if they are listening.

Hon. Members who serve on departmental Select Committees will also recognise the difficulties because they have so much more to do on policy issues. They have difficulty in consistently devoting sufficient time to spending proposals—indeed, they hardly consider them. Parliament was created hundreds of years ago primarily as a financial watchdog on the Government. It sat mainly during the whole Budget process. That power has atrophied and there is a huge scrutiny gap.

Let me suggest a modest solution. I believe that the House should establish a Select Committee on the Budget, with the normal powers of Select Committees—I ask for no more—but with the specific purpose of considering the Government's spending plans. To allow the good sense and good faith of Members to have the greatest influence, hearings should be held well before plans take on the formal force of estimates. After all, voting against the supply of funds is tantamount to bringing down the Government. I do not suggest that; there is no nuclear option here. We need far less than that. My proposal would not shake the foundations of the constitution, nor would it significantly inconvenience the Executive. The Government would need to produce spending reviews by the summer recess—a feat achieved in 2002 and 2004, and missed last year only because of the then Prime Minister's extended goodbye. Annual updates would not be difficult to provide. The NAO would be willing—I know, because I have asked—to assist the House by analysing the information and providing a commentary for the Committee to consider at hearings each autumn.

I hope that the Liaison Committee will shortly have the opportunity to consider my proposal. I hope that the Government's attitude will be welcoming. Two years ago, in the regular debate on the work of the Public Accounts Committee, which assimilates events that, sadly, too few hon. Members turn up for—I encourage them to do so—the then Financial Secretary to the Treasury, John Healey, recognised that the scrutiny of public spending is fundamental to our democracy. He also said that

"we need to introduce a more systematic and challenging parliamentary scrutiny of spending plans."— [ Hansard, 18 July 2006; Vol. 449, c. 289. ]

I hope that the commitment given by the Treasury then to work with Parliament holds good today. Indeed, I know that it does, because the Treasury is doing a lot of useful work.

Establishing a Budget Select Committee would reinforce the rights and privileges of this elected House. It would also reflect the truth in the words of Benjamin Disraeli, that

"all power is a trust; that we are accountable for its exercise; that from the people, and for the people, all springs".

Establishing such a Committee might even help the Chancellor in his quest for those savings from the public purse on which the success of the Budget so obviously depends.