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and infrastructure. It is important to continue to bring down unemployment, and we should give priority to that. A typical breakdown of unemployment statistics shows that the last employment of a half to two thirds of those currently on regional unemployment registers is likely to be some form of construction-related activity. It is as important as that. Ironically, it has always been a British failing that, whenever there is a squeeze, and whenever a certain amount of money needs to be found in the system, the construction capital cost side is most likely to suffer. Yet it has the most immediate impact on creating employment and the most immediate potential for reducing unemployment and creating job opportunities. The Federation of Civil Engineering Contractors Association concludes :"Despite a number of optimistic comments in the Press, it was never seriously expected that there would be any figures for infrastructure investment plans higher than those in the Autumn Statement last November, even if the Chancellor is now looking at a prospect of a 1988-89 budget surplus up to £5 billion higher than was expected when his public spending plans were drawn up. The whole system has now become too rigid for that. So, at the same time that there is still a widening gap between the nation's needs for infrastructure investment and the Government's plans for spending on infrastructure, there is another widening gap between those plans and what--in the view of a growing number of commentators--"
--including many Conservative Members--
"it could safely afford to spend on investment without prejudice to its stated economic objectives."
The fact that they are not willing to do so suggests that the only obstacle now is political prejudice. That again is an area where the Government should be giving a change of direction and more positive emphasis.
Equally, further employment opportunities exist in terms of the environment and the many schemes at local regional and national level that could be run and could harness the talents and abilities currently not being used. This would not only have the beneficial effect of reducing unemployment and increasing economic activity but would also have beneficial social and environmental effects by way of the reduction of pollution, the saving of energy and the like. The Government should begin to give greater attention to reducing our skill shortages by putting people back to work and encouraging the growth of small businesses. I hope that they will recognise eventually that that is a more positive way to try to move supply back into line with demand. It is not the only way ; other initiatives can be taken. For example, in regions of high unemployment, why not look at the possibility of specially targeted reductions in employers' national insurance contributions to try to stimulate employment in black spots? None of this has been looked at, and that is a sad reflection.
I want to touch on one area of defence of which the hon. Member for Horsham spoke. I certainly subscribe to his comments concerning European defence design and procurement policy, which without a doubt has been woeful in terms of the open-ended and cost-plus types of contract that have hitherto been common. Clearly, there is a need for action here. At a time when the new President of the United States will be seeking to begin to persuade the Congress to endorse in a bipartisan spirit his general strategy with regard to the United States deficit, and as feeling is clearly building up more and more among Republicans and Democrats about the huge burden which
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the Americans shoulder through their military presence in the form of both manpower and machinery in Western Europe, we have to brace ourselves, along with the other western European NATO members, for higher defence expenditure if the Americans begin not, I hope, to disengage but perhaps slightly to reduce their level of financial and perhaps physical commitment on the continent of Europe. I hope that the Government will not be averse to defence expenditure increases should that burden begin to move on to the British economy, in common with the economies of other western European members of NATO, in due course.For all these reasons, therefore, we cannot support the rather self- congratulatory and somewhat complacent tones of the Chief Secretary, and as a result will not be supporting the Government. I will finish on a specific item. There has been very severe flooding in the Highlands of Scotland during all this week. Hon. Members may have seen press and television reports. A strategic rail link in the town of Inverness has been completely washed out, which has severe implications for the movement of haulage and passenger traffic in that part of the country. An entire valley in my own constituency, the Conon valley, is currently flooding. In Fort Augustus, in Inverness-shire people have had to be evacuated from their homes because of flooding conditions. In the constituency of my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston), where the bridge is located, there has been further flood damage. In a rural school in the village of Kingussie in Speyside a quarter of a million pounds worth of damage has been done in the last few days.
I am not straying from the debate, because the Minister of State, Scottish Office visited what is frankly a bit of a disaster area, in every sense, yesterday. He said that, although he could not give any commitment at the time, he would be looking very sympathetically to see whether additional public expenditure would be available to help bail out and assist the Highland regional council, the district councils and individuals, such as landowners, tenants and so on, who have suffered considerable disruption, distress and direct personal loss. I hope that the Minister will take note of that, as we should be extremely grateful for a swift response--probably not by the conclusion of tonight's debate, but I hope not too long thereafter--as to what the expenditure commitment by central Government might be. Certainly, if there is any approach to the Treasury from the Scottish Office I hope that there will be a sympathetic and constructive response, because help is drastically needed.
On that particularly woeful but extremely important point I rest my case in this debate.
6.55 pm
Dr. Charles Goodson-Wickes (Wimbledon) : It is with some hesitation that I address the House in an economic debate, conscious of the wide array of talent on such matters on both sides of the House and the existence of a degree of knowledge much greater than my own. We are debating the Government's expenditure plans and I would not be sitting on the Government side of the House if I did not believe that the creation of wealth--a misrepresented cause if ever there was one--was a prerequisite for the prudent management of the economy generally. Unless the wherewithal is produced--and by
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that I mean the products, the jobs, the reinvestment, the exports and the taxes--there is really no legitimate basis to the debate. The alternative, of course, is to go back to the bad old days of the International Monetary Fund bailing us out, when the right hon. Member for Leeds, East (Mr. Healey) became what The Times described as "the shy pioneer of Thatcherism"--a description which I fully endorse.It therefore follows that the cake must be as large as possible before it is subdivided. I thus congratulate my right hon. Friend the Chancellor on his management of the economy, which has produced as healthy a situation as we have ever experienced. I congratulate him particularly not for wearing compassion on his sleeve but for acting to ensure that funds, for example, to the Health Service have not only been increased but are about to be better managed as well, to the benefit of the patient, first, as a human being and, secondly, as a consumer.
I shall concentrate on two issues : first, self employment and, secondly, home ownership.
The problems of unemployment and all its associated social evils have caused all of us in the House much anguish. The fall in unemployment, for which the Government must take much credit, has been associated with a rise in the number of self-employed people. This welcome increase, from just under 2 million in 1979 to almost 3 million in 1988, tells its own story. As ever, the Government have provided the climate, and the inherent ability and energy in the British character has done the rest. The prophets of doom about the enterprise allowance scheme have been proved wrong to the extent that fully 74 per cent. of the businesses so set up are still in business one year later. Employment for many others has been secured thereby and the expenditure earmarked for such projects by my right hon. Friend has indeed ensured value for money for the taxpayer. However, I should like to put to him two apparent anomalies the correction of which may be both fiscally neutral and involve marginal increases in expenditure, to the benefit of society as a whole. First, a self-employed person--and I have to declare an interest as I have become self-employed during my own career--
Dr. Goodson-Wickes : I stand corrected, but I believe that in this House we are not self-employed as seen by the taxpayer.
As a self-employed person I belong to the group of people who attract the highest rate of tax, at 40 per cent. However, if a self-employed person incorporates, he or she is taxed at 35 per cent. The consequent pressure to incorporate brings with it exactly the sort of problem that the Government, I suggest, are dedicated to avoid--the generation of bumf and bureaucracy. Perhaps my right hon. Friend would look at this matter anew.
The self-employed cannot get the same funding rate for their personal pensions as those available to people employed by others. Up to the age of 51, only 17.5 per cent. of earnings can be so utilised, rising to 27.5 per cent. at the age of 61. That contrasts starkly with around 30 per cent. as the norm for funding through a company. It is only natural that at the outset of a venture a self-employed person has so much to occupy his mind that pension planning is a very low priority. Even if he does get round to it, I will show that he does so at a disadvantage.
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I understand that the conventional wisdom is that an alteration in the rate might produce tax havens for the better off. However, speaking as a layman, I imagine that the lowering of the income tax burden and tax in general, a trend to which I look forward to seeing continued in the forthcoming Budget, would make such a set of circumstances much less attractive and less important in the context of the economy as a whole.There are parallels with the lack of freedom for those in employment to make individual pension plans when their employers have company schemes. If the employee opts out, he has Hobson's choice of losing around 10 per cent. of his salary which is paid by the company in pension contributions. If SERPS is being re-examined critically, should not that other anachronism be tackled as well?
In short, I am against any system under which people are discouraged from making their own pension provision and feel that Government expenditure in tax relief thereon is amply justified. For those of us brought up in the welfare state, it is difficult to break the shackles both psychologically and in fact. However, from personal experience I can state that forcing an individual to study the options concentrates the mind wonderfully. It makes sense morally and financially to encourage the trend towards more personal pension provision which has already increased from involving about 225,000 people in 1979 to nearly 1,250,000 in mid-1988.
The likelihood of long-term dependency on the state must be reduced by that trend. That argument is strengthened by demographic changes which in the years ahead will mean a smaller working population maintaining an increasing number of dependants. The icing on the cake is the encouragement of savings at a time when the Government are keen to seek that development as part of the concept of popular capitalism. It may be a truism that in the Western world conventional savings tend to increase only if there is little faith in the economy. If the Government's supreme success has been the response to the lifting of exchange controls, there is a certain irony in the low level of savings which is a peculiarly difficult index of achievement to explain.
I also want to consider the further promotion of home ownership. There is a danger at the moment that the high levels of interest rates are causing hardship to those who, through the Government's initiatives, have become home owners for the first time. It is perhaps only during this Government's term of office that Sir Anthony Eden's dream of a property-owning democracy has seen such a dramatic advance. In nine short years the number of owner- occupied homes has risen from 11.5 million to 14.6 million, giving 65 per cent. of the population a material stake in the country and putting the United Kingdom near the top of the western European league table of home ownership.
All hon. Members must be aware from their post-bags of the present cash flow difficulties among our constituents. We all look forward to a time when interest rates are reduced, once inflation, the most cruel tax of all, is again under control. I deplore the fact that various financial institutions have advanced sums at a ratio quite inappropriate to the income of the borrower. I trust that their irresponsibility will be examined should repossession be threatened. On a more long-term basis, I urge the extension of the already well-proven business expansion scheme into the provision of the purchase rather than the renting of
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residential properties. I want to suggest two areas of great need that might benefit from an injection of private enterprise : starter homes for young people at an early and financially fragile stage in their careers and community housing for those on lower incomes. I know that business expansion schemes are being considered under those headings, but have yet to be introduced. The provision of starter loans for first-time buyers will always be difficult, but it is the key for the whole residential property market which is experiencing particular difficulties at the moment. Whereas such schemes might be judged to be outside the spirit of the legislation as assured tenancies may be involved in a move towards subsequent purchases, private money could be brought to bear without generating new inflationary pressures or otherwise distorting the market. With regard to community housing, it may be possible to bring BES funds to support housing associations. Although the returns for the investor will be low, security would be immensely greater and a new type of investor may be attracted in large measure.In asking my right hon. Friend the Financial Secretary to the Treasury to look carefully and favourably on those schemes when they are introduced, I do so only in political terms as I have no financial interest in them. I believe that those new ideas will fit well with the Government's well- established philosophy.
I end with the following quotation from a politician of the gentler sex :
"The limits of the possible constantly shift, and those who ignore the limits are apt to win in the end. Again and again the laughable idealism of one generation evolves into the accepted commonplace of the next."
Those are not the words of my right hon. Friend the Prime Minister, but of the late Baroness Wootton of Abinger, who was not well known for her Conservative views. I hope that my right hon. Friend will consider my suggestions, if not limitless in implications, at least constructive in the context of Government expenditure.
7.6 pm
Mr. Rhodri Morgan (Cardiff, West) : I want to begin by seeing whether the debate can get away from the crude nostrums whereby Conservative Members have implied that all public expenditure is bad and all private expenditure is good. Alternatively, they have suggested that all public expenditure carried out by the Conservative Government is evidence of running a tight ship while expenditure carried out by previous Labour Governments was evidence of the Cabinet being infested by a team of drunken sailors. That simply cannot be true and there is no evidence for it. If Conservative Members persist in believing that it is true, I shall provide the evidence to show that the quality of public expenditure under this Government reveals that the drunken sailors are with us today. I shall show what is happening under this Conservative Government and the alleged efficiency of the tight ship accountants who are supposed to be running the economy.
When I say that, I do not mean that all public expenditure by this Government over the past 10 years has been bad. I simply criticise the doctrine of unilateral original sin with which the Government have been trying to put their case tonight. The Government have tried to
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state that all their public expenditure is tightly controlled, thoroughly justified and that it produces a real rate of return for the economy. They suggest that what happened between 1974 and 1979, and even under the Conservative Government run by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), there was no control over public expenditure which went wild and was used for all sorts of things which did not pay. That is not true. There is very little evidence that public expenditure is somehow superbly run today because of the way in which the Government manage tight control. This "public bad, private good" has produced a very strange attitude which has landed the Government in considerable difficulties. Conservative Back Benchers like the hon. Member for Crawley (Mr. Soames) are beginning to squeal about the lack of public expenditure in certain areas, for example, on commuter rail services or road expenditure in the south-east which they recognise has been neglected and must be pushed forward simply to keep pace with the demands which can be met only from the public sector. If Tory hon. Members think that public expenditure is invariably tightly controlled under the Government by chucking the drunken sailors out and getting the few accountants in, let me give them a few examples of public expenditure which is seriously defective in quality. Two days ago the Secretary of State for Education and Science was proud to announce a major programme, costing £35 million over five years, allegedly to build up Britain's effort to solve the great global problems, including the greenhouse effect, by concentrating the oceanography effort of the country in a centre of excellence at Southampton university. The laboratory is to be removed from Wormley in Surrey to Southampton, and Research Vessel Services, based at Barry, is to be relocated in Southampton. The public expenditure total over three years was given as £17 million, but the commitment announced at the press conference in Cardiff that morning by the director of the Natural Environment Research Council was £35 million. That is a massive expenditure commitment to oceanography and to the solution of the greenhouse effect.What about the quality of the expenditure? Will the money be spent on the right things? Oceanography requires boats. Good oceanography requires up-to -date boats. All of that £35 million is to be spent on things other than boats. Professional oceanography cannot be done without up-to-date boats. The £10 million which would be required to modernise HMS Discovery, the flagship of British oceanography, is not being spent on the boat. Money is being spent on a new laboratory rather than on the boat. That is one example of where the quality of public expenditure is characterised by the hands-off attitude of the Government.
The Government have only £35 million to spend so it may seem that they could not afford expenditure on the boat. We may ask why they are spending money on the laboratory rather than on the boat, or on bricks and mortar rather than on the raw science to collect data. It is the serious problem which the Americans regard as the GIGO principle--garbage in, garbage out. If we do not have good data from a modernised boat which can collect deep water samples, using winches with modern hydraulics, what is the purpose of having a beautiful new laboratory?
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That is an example of a public expenditure choice which is seriously defective, not in quantity, but in quality. It is an example of the way in which Ministers refuse to get involved in judging whether the Advisory Board for the Research Councils has got its priorities right.Mr. James Paice (Cambridgeshire, South-East) : I find it difficult to follow the hon. Gentleman's argument. He seems to think that the Government, through their Ministers, should make every investment decision down to the £10 million to which he has referred. £10 million is a lot of money but it is only a tiny percentage of £150 billion of expenditure. Is the hon. Gentleman telling the House that Ministers should use their judgment, with whatever background they have, to decide how to allocate £35 million expenditure rather than, as the Government have been doing, giving the responsibility to people with greater technical knowledge who will be in a better position to decide how the money is best dispensed?
Mr. Morgan : I wonder what the hon. Gentleman thinks Ministers are for. They receive information from trade unions or from people in an industry to warn them about the problems. The example that I give is a good one. Ministers were well aware of the importance of the choice between the laboratory and the boat ; they were warned not only by my hon. Friends but by people with knowledge, in trade unions and elsewhere. If the hon. Gentleman thinks that Ministers are incapable of offering a view, he does not understand how public expenditure is run. The permanent secretary of the Department of Education unfortunately is the accounting officer for all of the Department's expenditure, and the Minister is the person who is accountable to Parliament. The Minister is accountable for the quantity of public expenditure and for its quality. Now and again that involves making choices.
In the example that I gave, if the choice had to be between a laboratory and a boat, Ministers got it wrong. If the choice was between spending £45 million and £55 million, I still say that they got it wrong because they spoiled the ship for a ha'p'orth of tar. They will have a beautiful new laboratory and a boat which is said, by the people who run it, to be rotting. That is the boat which we will send out into the oceans and on which we will depend for the British contribution to the solution of a serious global problem--the detection of the cause of the greenhouse effect. Everyone, including the Prime Minister, agrees that that is a most serious problem.
Mr. Paice : I have no knowledge of the £10 million which the hon. Gentleman believes should be spent on a boat, but does he accept that any Minister is surrounded by advisers from all sorts of backgrounds who can give him technical advice on which he will make a decision? We understand that the hon. Member believes that the wrong decision was made, but he seems to be suggesting that, because he thinks it was the wrong decision, the Minister made it wilfully, disregarding all the advice. Does he accept that any Minister can act only on the technological advice that is given to him? If a Minister makes a decision which favours one sector of advice, it will inevitably be against the advice of other people. That does not necessarily mean that the Minister's decision is wrong.
Mr. Morgan : That is a cop-out. I am not sure whether the hon. Gentleman is saying that the Minister made the
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right decision or that Ministers should never take decisions when potential problems have been drawn to their attention by the people who are involved at the sharp end.I shall give another example. The Chief Secretary mentioned in his opening remarks that expenditure on the nationalised industries was falling and that this was a sign that they had boosted their productivity and had become more efficient. He seemed to suggest that they were memorials to the greater pressure to which the Government had exposed them as regards public expenditure. We have heard all that before.
What are the facts? The Government spend money on giving grossly discriminatory tax breaks to industries when they are privatised but not if they remain in the public sector. Conservative Members are shaking their heads ; I am about to give an example which may change their minds.
Let us consider British Steel which has been privatised. In the act of privatising British Steel, the Government have forgone taxation on the next three years' profits of about £180 million per year. BS has been given a tax break by the Government. This year its profits will be about £550 million. Normally it should pay about £200 million in corporation tax. How much corporation tax will it pay? The amount is £20 million, which is roughly the equivalent of the dividend which it will pay. In effect the taxpayer will pay the dividend.
The Government decided to forgo the tax because they wanted to launch British Steel successfully into the private sector. They will also forgo the tax for the next two years because City advisers told them that that was necessary to boost BS as an investment which would go down well with the investment analysts. That is spending money like a drunken sailor. There is no evidence that BS could not afford to pay the proper rate of corporation tax. Why should it not pay its taxes like every other company? Why should it have a tax rate of 5 per cent., effectively, when everyone else has a tax rate of 35 per cent.? Forgoing taxes of £180 million is an example, perhaps not of drunken sailors at work in the Government, but of dogma in the Government.
The Government's attitude of "private good and public bad" means that they knock off taxes to be paid by companies that they have privatised because they believe that they are good. The Government should be asking, "What is the proper rate of corporation tax for a company in the steel industry?" They should not ask how much they can knock off the taxes of a company that they are privatising, which then becomes a memorial to Conservative dogma.
Mr. Jacques Arnold : In the hon. Gentleman's example, does not the taxpayer, rather than forgoing the tax, actually receive the money up front? The new shareholders of British Steel paid the taxpayer money to receive shares in that company. The price reflected what was going, including any tax break of the sort that the hon. Gentleman was talking about. The taxpayer has had his money, with jam on it.
Mr. Morgan : That is an example of precisely the Conservative dogma that I was talking about. If people will buy British Steel only if it is virtually tax free, so that the dividend comes from tax forgone under the public expenditure proposals, dogma overtakes good sense. Why
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cannot British Steel be privatised and pay normal corporation tax? Why is it treated with the benefit of £180 million of tax forgone by the Government?British Coal is not treated in that way. It still pays £440 million a year in taxes and interest rates because it has not been privatised and is not given special tax treatment. The accounts are left as they were. Why are benefits given to privatised companies but not to others? They are all businesses, so why should one receive special treatment? The answer is that it fits the Government's dogma. It has nothing to do with the quality and control of public expenditure. If it fits Government dogma, the money is there ; if it does not, a tight control is kept.
My third example comes from higher education. In the "shrinkage" phase of public expenditure on higher education, when it was popular to bash universities, universities were squeezed. They came close to bankruptcy and were merged with others or taken over.
Whereas the last Labour Government set up the Open university, this Government almost brought about the first closure of a university, University college, Cardiff. At the last minute, it was taken over by the University of Wales institute of science and technology. Does that mean that all of a sudden there will be an improvement because of the rationalisation and merger of two university colleges where before there was only one? Does the quality of public expenditure improve? The evidence suggests that it does not.
I cite as an example an extraordinary process that has been taking place for the past 12 months. Twelve months ago the rationalisers or cost-cutters --I would say the accountants, but I might offend the hon. Member for Dover (Mr. Shaw)--decided to rationalise two universities. It was meant to be a big rationalisation exercise involving overlapping departments, so a top personnel officer was hired. A former union organiser for the Association of University Teachers was appointed at a salary far higher than ever previously paid for a personnel officer--a high professional salary of some £32,000 per year.
Less than 12 months later the personnel officer has disappeared from the scene. He was given two years salary as a pay-off, so the exercise has cost £100,000. That was an example of cost-cutters at work, and it shows that they do not always get it right. They wasted £100,000 on a personnel officer who was consequently given the sack. The cost-cutters refused to say that they have sacked the personnel officer. They say that he has been suspended on full pay, that he is on leave and that he is not at the university any more. When cost-cutters start, they throw money around like drunken sailors and sometimes make mistakes.
A further example involves the roads programme. The Government make great play of this programme and say how well it is going. However, it is not going well at all in Wales. Anyone who knows south Wales will know its key road is the M4. There is one missing link in the M4, from Port Talbot to what some call Lon Las and pub-goers call the Bowens Arms. I call it the Baglan to Bowens Arms link, but the official title is the Baglan-Lon Las link. That missing link has been promised for the last 11 years. I asked the Welsh Counties Committee--which looks after the roads on behalf of the local authorites and liaises with
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the Welsh Office highways department-- exactly what had happened to the missing link. My mother lives in Swansea and I live in Cardiff and I frequently use the road. I shall read the answers that I have been given about these wonderful tight-ship runners of the economy, who have nevertheless, devoted expenditure to priority areas such as the M4.The letter from the Welsh Counties Committee said :
"The Baglan-Lon Las Road was included in the first Roads in Wales' published in 1978 and identified as a dual two or three lane road to start in 1981-83' at a cost of £28.3 million in 1977 prices. In the next issue, for 1980, it was described as being prepared with a view to starting 1984-87' at a cost of £45.6 million at 1979 prices. In the 1983 edition, it is described as expected to start between January 1986 and December 1988' at a cost of £74.13 million at 1982 prices, and appears to have been reduced somewhat to a dual two-lane road. By the time of the 1985 version, it was described as expected to start between January 1988 and December 1990' at a cost of £87.65 million in 1984 prices."
The road has still not started. The last promise that we received from the Welsh Office was that if the road--of some three miles--were broken up into four sections for four separate lettings, the final contract would not start for another two years. That is the key road for getting economic development off the ground in Swansea or further west, or for anyone who frequently travels from Cardiff to Swansea. Yet the link has been delayed again and again because of the incompetence of the highways department of the Welsh Office and its inability to control public expenditure so that promised road programmes are not delayed as on those four occasions.
Another example of the Government's rhetoric of "tight-ship" public expenditure is Government advertising. When the Government see the potential for an advertising programme, the drunken sailors come back in and accountants move out. Unlimited expenditure is allowed for newspaper advertising, with provincial and London newspapers simply awash with full- page Government advertisements for health programmes. They are no longer information advertisements for training programmes, privatisation programmes or Action for Enterprise. They carry almost no information but are solid propaganda advertising and are totally uncontrolled.
I do not know what the total amount spent on Government advertising in newspapers is. I do not suggest that newspapers have become afraid to criticise the Government because they depend on Government advertising, but it is fair to point out the danger of that happening. With the dripfeed of continuous advertising, in the end the threat of withdrawing that advertising is serious. That is particularly true if the private advertising boom comes to an end as it seems to be doing. It could raise serious constitutional and civil liberty issues.
What should the Government spend their money on that they are not spending it on at the moment? I raised the question earlier in an intervention in the speech of the Chief Secretary. I shall tell him why I raised it because he may be mystified why the hon. Member for Cardiff, West should raise a question on the Brompton and national heart hospital. Traditionally, the national heart hospital is a flagship hospital, particularly, as the Chief Secretary said, in bypass cardiac surgery, and carries out a national role. It tends to perform more complicated operations than those performed in the main regional centres of cardiology, such as Cardiff and Newcastle. Five years later
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when an operation has become routine in the national heart hospital, it is experimented and built on in the big regional hospitals. The national heart hospital has traditionally served south Wales for many heart operations. This year for the first time it has started to turn away patients coming from south Wales. I went there to find out why it was turning away Welsh patients. I was told that it was because it could no longer carry out the operations even for those within the local catchment area in the home counties. The hospital could not carry out operations that it felt obliged to do because nobody else would do them in the home counties, and it had to turn away cases from south Wales.One could say that was all right because the services in Cardiff could be built up. But I must tell the Chief Secretary that the situation that I have described at the Brompton hospital, where stagnation was reached in 1984 with 1,200 bypass operations a year and staggered on at the same level until only 1,100 operations were performed this year, is reflected in Cardiff. Far fewer people have operations in Cardiff. Since before the 1983 general election we have been waiting for the Welsh Office to get its act together and to fulfil an election promise to double the number of heart operations in Wales in the National Health Service, from 600 to 1,200 a year. But not a brick has been laid on brick ; not an intensive care unit bed has been hauled into a ward. Bypass operations are stuck at 600, even falling to 550 in Cardiff this year. This sort of thing does not happen in Germany or America or other countries. I know that the hon. Member for Dover will say that it is the wonder of private medicine, or of hybrid state and private medicine.
Mr. David Shaw (Dover) : I am grateful to the hon. Gentleman. The minute that he mentioned the United States of America I was reminded of my visit to Houston medical centre last August, where I witnessed a coronary operation carried out by Dr. Denton Cooley, who does about 4,000 coronary operations a year in a very impressive private sector hospital. I asked him whether there were trade unions in the hospital and his reply of course was no, not in his hospital.
Mr. Morgan : The hon. Gentleman is raising some important points, but it would be the greatest fantasy to imagine that anything that stops further expansion at the Brompton so that it could carry out the 100 operations a year that are needed has to do with the presence of trade unions. There is simply not enough money to carry out these operations in the Brompton. It used to get a sufficient allocation, now it does not. That position has been contributed to further by the house price boom in the south-east, and the product of the Barber-boom "mark two" that the Government produced in last year's Budget. They cannot keep intensive care unit nurses and medical laboratory technicians in London. On £8,000 a year, what chance does a technician have of getting rented or private accommodation? These issues hamstring the National Health Service. Basically, there is simply a lack of money for expanding the service.
Mr. David Shaw rose --
Mr. Morgan : I am sorry, but I am about to finish and I am not giving way any more.
The Government are sitting on a cash mountain, rather like the British General Electric Company. After GEC has
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shrunk and rationalised, how does it find the spirit to set the resources free when it wants to expand into electronics, defence equipment and microchips? The company's feet seem to be trapped in clay. The same applies to the Government's cash mountain. They no longer know what to do with it. They will not spend the money on what they should be spending it on. They are trapped purely by their own dogma into spending on advertising, which does nothing but reinforce their own dogma.Our message is that the Government have not improved the quality of public expenditure. Their wayward attitude has been adopted to achieve a turnround. After managing a shrinking economy now that oil prices have come down, the Government say they are back on a path to growth and need to expand railways and spend more money on the roads. But all of a sudden they find that the skills, the training and the attitudes are not there. Control over the quality of public expenditure is not there to get it right.
7.35 pm
Dr. Ian Twinn (Edmonton) : I join my hon. Friends in congratulating the Treasury Bench on the good news in the Autumn Statement, and the public expenditure White Paper. It was a welcome message that the sound financial management that the Treasury has overseen since 1979 has been rewarded. It has not been an easy path, no one would suggest that it has, but the message has been widely welcomed in the country over three general elections. I have had the honour to fight and win at a general election on two occasions. It has been clear to me on the doorsteps before and during elections that the economic policies of the Government have been a major factor in their success. The Government have never shirked taking measures that are painful in the short term. Indeed, we would not be the Government today if we had shirked carrying out those painful short-term measures. In 1979, the newly elected Government inherited the inflation that the Labour Government brought upon this country. We were highly and irresponsibly overborrowed, overtaxed and overregulated. We had to take some very painful measures.
The good management of the economy in those years allows us today to talk about an impressive array of public investment projects which have been announced in the past few years. These are good in themselves. Contrary to the opinion of the hon. Member for Cardiff, West (Mr. Morgan), public expenditure is not regarded as a bad thing on the Conservative Benches. But irresponsible public expenditure clearly is bad.
Even more heartening to the Conservative Benches than the public expenditure projects that we have heard about in the past year or two is the fact that they are complemented by investment in the private sector. Industry is busy investing again in its future. The strict controls and cuts in public expenditure that we faced in 1979 to put right the damage done by the Labour Government were painful, and were indeed opposed by hon. Members on both sides of the House. All hon. Members had pet projects, which they would rather not have seen cut, but we had to accept those cuts in the national interest. Now this country is increasing its public expenditure again. Thankfully, it is reducing as a percentage of the total national income. We are allowing more of the taxpayers' money to remain with them so that that money
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can be responsibly spent, on an individual or commercial basis. We again undertake public spending. These projects are very popular in the country, and very popular with my constituents.I am not somebody who would normally be associated with demanding increased public expenditure. However, in Edmonton these projects are of great benefit to my constituents. I would argue strongly for increased public expenditure on public street lighting, which is perhaps a matter of concern to you, too, Madam Deputy Speaker. It can have a great impact on safety on the roads and for pedestrians. I must praise Treasury Ministers for what they have done. But clearly the fact that we can consider public investment now does not give us an excuse to relax. The Chancellor said during the Autumn Statement that things can still go wrong. One of the Government's greatest assets is international and domestic confidence that they will take strict and harsh action, if that proves necessary. But we do not want to spend the money just because it is there to spend. We want to spend it in a responsible way. Perhaps that is the key difference between the Government and the Opposition, whose attitude is that, if money is there, it should be spent, whatever the objective. We believe that our country's wealth should be spent wisely and responsibly. It should be spent on reinforcing the enterprise culture, so that we may move away from the dependency culture which many right hon. and hon. Members born into the welfare state have grown up with. The Government's success has been in persuading voters that that is the right path to take--
[Interruption.] Opposition Members may look shifty and smile to themselves--
Ms. Armstrong : I am not smiling. I am angry.
Dr. Twinn : The electorate have rejected the policies of the hon. Lady who is muttering to herself on the Opposition Benches. She well knows that her party's policies hold no sway in the country today. We believe in an economy in which initiative is rewarded.
Ms. Armstrong : This is a disgraceful speech.
Dr. Twinn : The hon. Lady may not recognise initiative when she sees it, but the electors do.
Ms. Armstrong : How much more of this?
Dr. Twinn : Does the hon. Lady wish me to give way to her?
Ms. Armstrong : Not me--but there are many others waiting to speak.
Dr. Twinn : The country's wealth must be used wisely, so that the best value is achieved for money that, as has been said, is confiscated from taxpayers, who expect the Government to behave responsibly in spending it.
Because the economy is flourishing, we can plan ahead and not indulge in stop-go public expenditure policies that were a feature of the 1970s, which are wasteful and destructive both of the incentive to be a productive economy and of individuals, in that they deter people putting their best efforts into it. Stop-go policies are destructive also of the money itself. Government Departments, local authorities and the private sector need
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to plan ahead in the medium to long term, and the firm foundation that the Government have given the economy now makes that possible. The Government have also accumulated reserves, so that they can respond responsibly when there are sudden changes of needs and priorities.Taxpayers' money must also be used wisely to reinforce the major programmes of capital expenditure that the Government are now starting. The Government's diligence is to be congratulated. We can now undertake programmes that, a year or two ago, we thought would be a long time coming. I refer to major public investment in the Health Service, with £2 billion this year, and another £2 billion the year after, being spent on Health Service buildings alone. I refer also to major investment in the roads infrastructure, in the rail network, in London Underground, in the law and order programme, and in prison building.
This week we have had a major announcement concerning expenditure on the sciences and about the money that will be spent on environmental research. That is something close to my heart, as is the major investment in our polytechnics over the past three or four years. That may have been at the expense of other education sectors, but perhaps that is because the polytechnics have been willing and eager to respond to the Government's challenge to use public investment wisely, to produce a return for the country.
I turn to the ways in which the public expenditure White Paper affects my own constituency. On the macro side, tax cuts are important and are particularly welcome. I hope that they are not finished yet, and that we may hear further good news in next month's Budget. Tax cuts have helped stimulate growth, and have brought more employment and improved incomes for my constituents. They spend that extra money in the way they see best-- perhaps on their homes or on company shares. Alternatively, it is saved. Share ownership has increased magnificently under the present Government. When I go door-knocking in my constituency, I find that people take an interest in the economy that they did not do before privatisation of previously nationalised undertakings.
Higher interest rates are not such good news, and, unlike some of my right hon. and hon. Friends, I do not pretend that my constituents welcome them. They find them painful, and anyone who has embarked on a mortgage in the last year or two will know just how painful. There are right hon. and hon. Members in that same situation. Others, like myself, will remember first entering into a mortgage in the 1970s, under a Labour Government, when our incomes were squeezed equally severely, and when we found it difficult to meet mortgage repayments.
There is another side to high interest rates, because many people are enjoying a greater return on their savings. That is particularly important to the elderly members of our society, who find that their capital is increasing in real terms, by comparison to the situation under the last Labour Government, when savings were effectively confiscated. My constituents recognise that the Government are, by imposing high interest rates, acting responsibly in controlling the evil of inflation. If the Government did not do that, my constituents and I would be much worse off.
I turn to specific items of expenditure affecting my constituency and the constituencies of my hon. Friends the
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Members for Enfield, Southgate (Mr. Portillo) and for Enfield, North (Mr. Eggar), which are also benefiting from Government expenditure. Expenditure on the London Underground is of importance to Londoners commuting to work. There is also encouragement to be had from the central London rail study and the possibility of new rail services for the capital. Anyone who works, lives or travels in London knows that its roads, although not as full as the media speculators like to pretend, are becoming uncomfortably busy, and investment in public transport is welcome. There is to be serious investment also in Docklands and in other London areas.Edmonton has seen the transformation of its local hospital service, with major public investment in the North Middlesex hospital, which serves Tottenham as well as my constituency, and in Chase Farm hospital in Enfield. They are being improved with the construction of major ward blocks. At the North Middlesex hospital, £8 million has been spent on two major developments since 1985, with another £2 million annually on smaller projects. When the Opposition criticise the Health Service, my constituents look at their local hospitals and, while acknowledging that things could be better, and that the old Victorian buildings could have been pulled down sooner, they can see for themselves that the Opposition's claims are untrue.
Mr. Morgan : The figures that I gave the House are not untrue.
Dr. Twinn : I invite the hon. Gentleman to visit my constituency, where he can see for himself the impact of the public investment there. A year or two ago, the hon. Gentleman might have found it difficult to enter my constituency. Edmonton is famous on London travel news as the location of two major traffic jams. One occurs where the Great Cambridge road crosses the north circular, and the other is at the Angel. These are stationary lanes of traffic. The Government are now spending £26 million on digging up my constituency and the constituency of my hon. Friend the Member for Southgate so that the traffic may flow freely again. We have a further £60 million committed to speed the traffic, by dual carriageway, through my constituency--aiding the industry there--and into the constituency of my right hon. Friend the Member for Chingford (Mr. Tebbit). The north-south road being built in my constituency--again funded purely from the public sector, to the tune of £100 million--will facilitate industry in Enfield, Haringey and Hackney. Traffic from the East End following the Lea valley will be enabled to get into and out of London efficiently, cutting the cost to industry and securing retention of jobs in London--something that is very important to us all. If we did not have the good economy that allows expenditure of the magnitude of £100 million on industrial spine roads in London we would be losing even more jobs than have already been lost as the result of the bad management of the local authorities in central London. Both of these schemes represent very important investment for local employment and local growth.
Let me put in a plea for a little extra public expenditure. There is a rather beautiful park in my constituency. It is called Pymmes park, and I am very keen that it should be preserved. The north circular road is about to lop a large lump off the front of the park. The Conservative council in Enfield, being a public-spirited council, paid for
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