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Since we are having a succession of valedictories, I shall try not to be sentimental, maudlin or moralistic. We are talking about the Budget, however, so perhaps I may begin by talking about the two great elephants in the room that have not been raised: the great debate about the value of the renminbi that is taking place in the United States and China, and Germany's role in assisting the European economy. Those two things will have more impact on growth in the United Kingdom than anything mentioned in the Budget, and we should occasionally put our decisions in the context of those wider questions.
I want to talk about public services because I note that one of the Government's super-pledges relates to safeguarding public services. My party uses similar terminology, but my problem is that I do not know what that means. What a wonderful word "safeguard" is; it is rather like the word "appropriate" because it can mean anything. At best the word is misleading, and at worst it is probably mendacious, because no public services will be safeguarded in the sense that they will be immune from pressure over the next few years.
The crunch for local government will come not this year but in 2011-12 and 2012-13, because the comprehensive spending review takes care of the present year. However, if there is a cut in grant of something like 5 per cent., which is not an unreasonable assumption, given the pressures that we are under and the fact that local government is not one of the "safeguarded" services, serious decisions will have to be taken and there will be serious consequences. Recession drives up demand. It drives up demand for free school meals. It drives up demand from self-carers who fall back on welfare because they can no longer finance their care, and it drives up the cost of home-school transport. Those are only three areas in which recession inevitably pushes up costs.
We must also consider demographic demand-we do not need to go into the familiar argument of what an ageing population means-and the fact that recession leads to income being constrained from things such as tourism, and car parking and planning charges. Many local authorities depend heavily on those charges to maintain a relatively modest council tax, or at least to mitigate its impact. However, the council tax is not a buoyant tax. We have already heard about house building, and a low level of house building means that there is no buoyancy in the council tax. Local government will therefore face a huge problem, even with the best will in the world.
If one then looks at the longer term, however, and considers the three big factors driving costs, the situation becomes much more difficult. First, there are the consequences of what we might call the baby P issue. Whenever there is one of these ghastly episodes where a child has suffered appalling mistreatment and has died, the impact on the reactions of social services departments is bound to come through, in the sense of them playing safe and not taking risks, and that enhances demand-and rightly so; one understands that. Secondly, there is the demographic time bomb of adult care, plus the special demands of high-dependency cases, which will now impact much more severely. Thirdly, there is the old question of the waste and landfill targets; as they are winched up, the costs for local government get higher and higher.
Those are three huge, emotional, high-volume and high-cost issues. Add that to the recession and we see that local government is facing the perfect storm. We can talk until we are blue in the face about safeguarding public services, but they will not be safeguarded. Nobody can, and nobody will, safeguard them. Some services can be hit harder than others, but even then we have to be careful, because there is no point in saying, "We're going to make a special case of the health service" if the consequence is that social services get particularly badly hit. So many of the outcomes in health depend on effective social services. They have to be treated together. If we dislocate the pair of them, what is gained on the swings will be lost on the roundabout. It is easy enough to talk about co-operation between health and social services; it is easy to talk about primary care trusts and social services working together, and there are some outstandingly good places where that has happened, such as Hertfordshire, but it is much easier to talk about it than to deliver it everywhere.
I was a Local Government Minister, and was regarded as a rather benign and tolerant one, compared with what came after. It is wonderful how, in retrospect, one gains an aura of tolerance. I hope that that continues throughout one's career. As we are in a reflective mood, I should like to make two points about which I feel very strongly indeed. First, we must not let the whole notion of devolution slide under the pressure of the recession and the recovery. The pressure on Government is always to try to keep control-to say that other people cannot be relied on to exercise the same sort of control that the Government can. Given the volume of local government expenditure as a proportion of gross domestic product, it is understandable that that instinct seems to burn deeply in the heart of Government, but there are very good arguments against it. The main one is not ideological; it is that Britain is now the most centralised state in western Europe, and it does not work very well. It is an efficiency argument.
If one sits on the Public Accounts Committee, as I have for a number of years, one sees, week after week, a parade of catastrophically bad spending by the state. It is all very well talking about the active state, or the benign state, but it is a jolly inefficient state most of the time. We need to look hard at passing that power down to elected representatives-to representative government. We should be careful about empowering non-representative groups, because there can be tyranny on a small scale, just as there can on a big scale. Those on the receiving end do not care whether the tyrant is big or little; the fact is that the actions are tyrannical. Let us pass power down to representative government.
I hope that when my party comes to look at regional structures, it will do what I think is a very conservative thing: invite local government to bid, with a price, for the powers that we want to remove from other organisations. Groups should get together and say, "Yes, we could deliver the competences of the regional development agency," or "We could deliver the competence in training and skills." I never understood why the RDAs were not given the competence of training and skills, given that economic development is supposed to be at the core of their purpose. Let us trust local government to bid for those powers, to say how it will deliver them, and to say how much that will cost. We should then let it get on and do that. That is an accountable system.
My second reflection is perhaps somewhat more controversial. One of the reasons I came into politics was a feeling that my generation had inherited a country that was in rapid transformation and, in many ways, had not come to terms with it. Britain was the sick man of Europe in my youth, when I was at university. When I was 18, in 1962, Dean Acheson, the American Secretary of State, made a speech in which he said:
"Great Britain has lost an Empire and not yet found a role."
I am leaving this House 48 years after Dean Acheson made that speech, and I believe that that dilemma for the United Kingdom remains unresolved.
We cling to an increasingly asymmetric relationship with the United States. I would not want us not to have a particular relationship with the United States, but increasingly we cannot sustain it on the basis of that old idea that something very special is at its heart. The current President has less interest in that idea than some-perhaps less than any other-of his predecessors whose roots went back to Europe.
We are perennially reluctant Europeans, yet no sane party has come up with a plan B on Europe. I look forward to seeing, from the perspective of my greenhouse, the changed reaction towards Europe of Conservative Back Benchers if they sit on the Government Benches, as opposed to the Opposition Benches, given my party leadership's decision to have constructive engagement on Europe, and its extraordinarily elegant and, from my point of view, extremely welcome climbdown on the referendum pledge.
I know that Europe has huge problems. In a sense, its bluff is being called: how can one create an economic union without the political union that goes with it? But the ability of the Europeans to cobble something together that works is absolutely astonishing. In a sense, there is something rather British about being able to put something together on an improvised basis that manages to carry on.
We talk about punching above our weight, but a person can only punch above their weight for a certain number of rounds, and then they get flattened. I do not want us to punch above our weight. I want us to work out what our weight is and punch at it. I do not want to go a gram above our weight. We send our young soldiers to die in Iraq and Afghanistan, but we do not have the means to sustain over a long term the total support that means that we can carry through those missions with complete success. If we are honest, we ended up in Iraq, in Basra, not in a glorious episode, but in a somewhat humiliating one. When it comes to the intervention in Afghanistan, I want to be able to say that we will see things through, so that I can say that those young people did not die in vain. If we cannot sustain those operations in the long term, we should not embark on them.
I would say to an incoming Government: look hard at the UK. Look at us from the outside as well as from the inside. Turn the telescope around sometimes, and look through both ends. What can we really do? What is it reasonable to ask our citizens to sustain? What is the effective power or weight of the United Kingdom in the modern world, where we spend all our time talking about the impact of globalisation? In the end, of course things boil down to budgets and economic performance, but we need to look honestly in the mirror of our national identity and national capability. If we do that, the next Government will perhaps be able to answer the challenge that Dean Acheson set 48 years ago, which, in many ways, has governed my political life.
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