Spending Review

Part of the debate – in the House of Lords at 4:48 pm on 15th July 2002.

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Photo of Lord Newby Lord Newby Liberal Democrat 4:48 pm, 15th July 2002

My Lords, we on these Benches in general welcome the principles which underlie the Comprehensive Spending Review; namely, the need for greater levels of expenditure on our main public services and, secondly, the need to raise levels of general taxation which provide for that. That was the basis on which we fought the election (incidentally, it was not the basis on which the Government fought the election) because we believed that the key concerns of all sectors of British society—prosperous Britain, middle Britain and poorer Britain—had to do with the quality of public services which they were receiving. The quality of private goods and services they bought were often much higher than the public goods and services from which they benefited and, as with consumer goods, they wanted better quality services and were prepared to pay for them.

As consumers of public services we all want to know two principal things. First, how well will our taxes be spent; secondly, how fairly will our taxes be raised?

Today is not primarily about raising taxes, although the level of planned increase in expenditure raises important issues about what happens if the Government's growth targets are not met and also what happens at the end of the period. Have we reached nirvana at the end of the CSR period or are further expenditure and tax increases planned?

Today's key questions relate to how effectively the increased expenditure is distributed. In my view it is hardly surprising that up to now we have not had much to see for the increased spending under this Government, at least in some services. In 1999 many institutions were in debt, and in the case of schools, many of them illegally so. Many staff, particularly at the lower end of the scale, were extremely badly paid. I cannot disagree too strongly with what the noble Lord, Lord Saatchi, said on Friday in criticising the Government for allowing public sector pay to increase compared with private sector comparators. The Tories, as an act of policy, held down public sector pay disgracefully, and a correction was sorely needed. So much of the increased expenditure of the past three years has been making up the ravages of what went before.

For the period of the CSR, very large additional amounts will be spent and we must see results. The Government seek to improve their effectiveness by organisational change and, even more importantly, by targets. Why should we believe that the targets will be more effective in the future than in the past? A large proportion of the targets set under the Government's public service agreement have simply not been met. The 1945 Labour government believed that the gentlemen in Whitehall knew best; this Government tend to believe that only the gentlemen—it is still nearly always gentlemen—in the Treasury know best and they are setting down ever more targets for hard-pressed public sector workers to follow.

How do the Government believe that the changes that they seek can be met by micro-management from Whitehall? What kind of sense provides for no political accountability, for example, in the health service between the lowest organisational level and the Secretary of State? Why, for example, did the Government in the recent White Paper on regional government envisage that in health and in education, to name but two, there would be virtually no role for regional assemblies? When the Statement says that they seek to reverse decades of indifference and neglect of our regions by modest increases in the budgets of RDAs, who are they kidding? People across the regions need to be engaged; it cannot be done simply by giving a little more money to unelected RDAs.

On the subject of local democracy, is it a coincidence that the only time the phrase "local authority" appears in the Statement is when the Government explain what they will do with local authorities that appear to have failed? On the general matter of delivery and the allocation of resources, why does the review contain no review of the Barnett formula? Why is there no attempt to match grants for the English regions to their specific needs?

On education I have two questions. First, when the Government talk about 1,400 secondary schools receiving an additional payment of £125,000 direct to each school, they refer to schools that will,

"match demanding new performance targets".

What on earth does that mean? Does it mean that those schools are failing schools which they want to improve? Does it mean that they are specialist schools that they want to become beacons? Does it mean that they are educational priority schools? The paragraph is typical government speak which, frankly, is completely incomprehensible at first sight.

Secondly, where does the CSR leave the Government's plans for 50 per cent of school leavers to attend university? Why will the Government not admit that the negligible increase in numbers applying to universities in England last year—less than 1 per cent—was because many potential students from poorer families feared that a debt of £12,000 to £15,000 at the end of their studies was insupportable?

In the absence of a greater willingness on the part of government to devolve decision making in public services, to set professionals free to manage without constant interference from Whitehall and to give local communities greater say, our fear is that the justifiable increases in expenditure in this review will not be most effectively spent and that the case for well-funded, universally available public services will be seriously damaged. The challenge for the Government is to prove that fear unfounded.