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Column 178in unemployment, when we all know that unemployment is soon likely to rise and, anyway, spending per head is falling.
There seem to be two possibilities. The first is that the Government, and they alone, still refuse to accept the proper role of public spending in oiling the wheels of the economy. The second, and even more disreputable, reason is that they are making that choice to which the Chief Secretary referred in his evidence to the Select Committee, when he said that a major reason for cutting public spending was not that it was inflationary or intrinsically undesirable, but to make room for income tax cuts. The Government are leaving themselves room for an income-tax cutting and, they hope, election-winning Budget in 1991.
The Government are making the choice that they have consistently made throughout their period in office. When it comes to a choice between the national interest, the future well-being and prosperity of our country and the electoral interest of the Conservative party, the country can whistle. The Confederation of British Industry can whistle for more investment in the infrastucture, schools can whistle for repairs or enough teachers, the employed and the unemployed alike can whistle for the training opportunities which are giving our competitors more and more of an edge over us. Where, even with the restraints on investment that such a policy imposes, choices remain, they will be dictated by the Prime Minister's dogma.
I shall lay down a number of extremely simple but pertinent parameters about public spending. First, the Opposition reject the simplistic view that there is always, and in every circumstance, merit in reducing public spending as a percentage of national income. For example, West Germany spends a higher proportion of its GDP on public spending than we do, and does so successfully. Secondly, on each occasion, the level of public spending should be judged according to a balanced assessment of the nation's current needs and what can prudently be afforded, bearing in mind the American saying that one sometimes has to spend a buck to make a buck and--[ Hon. Members :-- "Ah!"] There is nothing very exciting about that. We should also bear in mind that proper and prudent public investment may be not only non-inflationary, but counter-inflationary. Many comments in the Select Committee report, as elsewhere, show that our long-term economic problems, for example balance of trade, cannot be resolved without investment--some of which must come from the public sector. We are determined to make only the most limited of firm spending commitments-- those that we must and can afford. Beyond that, we shall set out the direction of public investment and the priorities and choices of a Labour Government, emphasing throughout that we will not spend more than the country is earning or can prudently afford. The real question for the country, as for the House, is about the way we use the fruits of growth as they become available, where they are diverted, what needs they seek to meet and what choices are made.
Our priorities are clear : immediate relief for those who have suffered most--the pensioners and families with children--and the fostering of much- needed investment in our future, not by Government alone, but by forming a partnership and giving a lead to those many groups in our society who see the gaps opening up and wring their hands in despair at the Government's indifference and inaction.
Column 179Mr. Tim Smith : On 22 January, in the debate on the Social Security Bill, I asked the hon. Member for Birmingham, Ladywood (Ms. Short) about the cost of Labour's package for the disabled. She said that the Labour party would provide detailed costings of its entire programme before the next election. When can we expect that?
Mrs. Beckett : I do not think that the hon. Gentleman was listening. What I said was clear and simple--what we are promising after the next election is-- [Interruption.] Perhaps the Chief Secretary would let me finish. What we are promising is an increase for pensioners and an increase in child benefit. Everything else that is regarded as a desirable aim is also listed, quite clearly and specifically, as something that we hope to do as resources allow. There is an excellent document that I can recommend to the hon. Gentleman. It has quite a nice beige cover, costs only £2.50, and is available from the Labour party at 150 Walworth road. It is called "Meet the Challenge, Make the Change". The hon. Gentleman will find it interesting.
Mr. Norman Lamont : What is the point in the Labour party's listing things that it thinks are desirable but which it might not implement? Is it not the height of dishonesty to include in a document undertakings that there is no firm intention to carry out?
Mrs. Beckett : I am not sure that I follow the Chief Secretary's argument. I thought that he, in his speech, and other Conservative Members, in their interventions, had demanded as comprehensive a list as possible of the things that a Labour Government might want to do in the next 30 years. Clearly, they do not want to know what we are promising to spend in the immediate future and thereafter. The Chief Secretary should make up his mind.
Mr. Norman Lamont : The hon. Lady is saying--and we have heard this before--that things in a Labour manifesto might not be implemented by a Labour Government. Surely things in the Labour party's programme ought to do things that the party intends to do--not things that it might do.
Mrs. Beckett : I will not take the hon. Gentleman's advice about what ought to be in a manifesto. I presume that in 1979 he fought the general election on a manifesto that contained nothing about increasing value added tax to 15 per cent.--almost doubling it. I can assure him now that the Labour party will not play a con trick of that kind on the British electorate.
Mr. Peter Viggers (Gosport) : The hon. Lady is walking delicately round the subject of public expenditure and Labour's future expenditure plans. Is she aware that her party's transport spokesman has said that our public transport system is in need of public investment on a massive scale? Does that mean that transport is near the top of the list of priorities for a Labour Government, or is spending on a massive scale just par for the course?
Column 180As we get near an election and see what room there is for manoeuvre, we may be able to make a better assessment of what the ranking order should be. There is no question about the overall priorities of an incoming Labour Government. As I have already said, there is an immediate commitment to the very poorest, who have suffered most under this Government and have had precious little sympathy from Conservative Members. There will be an indication of the direction in which we believe that investment can prudently flow.
Our message to the electorate is quite straightforward. One clear, cold look at the stewardship of the present Government points to the need for a new set of stewards. Here is our job application, our damage assessment : "Frankly, you have been robbed. We cannot return all your property ; some of it has gone for good. We cannot overnight repair all the damage and undo all the neglect ; some of the scars will always show. But we can make a start. Together we have already taken the first step. We know--all of us know--the scale of the problems and the needs. We can begin to rebuild. We can begin to repair. We can begin to reinvest. Give us the tools, and we will do the job."
Sir Anthony Meyer (Clwyd, North-West) : I am very grateful to you, Madam Deputy Speaker, for having called me at such an early stage in the debate. I am sorry if my contribution is one that will prove to be excessively modest in relation to the position that I have been allotted.
In my view, the Chancellor of the Exchequer has made an excellent start in the high office that he now holds. I am sure that he would be the first to admit that almost as important as having wise policies is conveying the impression that those policies are wise and that they are supported by a united Government. It was the impression of the ill-concealed differences between my right hon. Friend the Member for Blaby (Mr. Lawson) and the Prime Minister over economic policy--most notably over entry into the exchange rate mechanism--that had so damaging an effect on confidence and on sterling. It had a more damaging effect than any possible mistakes that the former Chancellor may be held, with hindsight, to have made. By and large, the present Chancellor, by keeping his mouth shut when it is not necessary to open it, has avoided any appearance of conflict between himself and the Prime Minister. This has undoubtedly calmed nerves. The trouble is that there has to be rather more than the usual element of guesswork in assessing whether there has been any fundamental change in economic strategy. It is now accepted wisdom that pure monetarism was abandoned a good while ago, and that we are now in a twilight zone where the ostensible policy still relies almost entirely on interest rates but where, nonetheless, there is a growing feeling that the present Chancellor may be more ready to employ fiscal means than were any of his predecessors. But until the Chancellor delivers his Budget we will not know whether that is true.
I have never made any secret of my support for the judicious use of public expenditure to stimulate industrial investment, particularly in the regions. Of course, we in Wales have a Secretary of State who has been an outstandingly successful proponent of that idea. During the current financial year we have had about £3.7 billion of public expenditure-- representing an increase of 9.8 per
Column 181cent. over the previous year. This has undoubtedly helped in a major regeneration of industry, urban renewal and rural development throughout the Principality, and has resulted in a truly massive volume of inward investment. A quite disproportionate amount of investment, particularly from Japan, in the United Kingdom has come to Wales. The effects of my right hon. Friend's policy are very widely appreciated throughout the Principality. Magic worker though he is, it has taken the electors a little time to appreciate the merits of this policy. However, I assure him that they are widely appreciated throughout the Principality.
My right hon. Friend managed to secure an extremely generous allocation of Government support for local government expenditure throughout the Principality. Thereby it has been made possible for most local authorities in Wales to keep their community charge within bounds. It so happens that the county that I represent and part of my constituency have both, in their separate ways, been clobbered very heavily by the change in the formula used for assessing the Government contribution to the revenue support grant. The county of Clwyd is having to make a rate precept of no less than £223 per person, which is terrifyingly higher than is regarded as acceptable as an average throughout Wales. I do not think that much of this can be attributed to extravagance or mismanagement. A great deal of it is due to the reduction in the level of the revenue support grant coming through this new formula. Still worse, the district of Rhuddlan in my constituency, which has been exceptionally well managed, is having to increase its share of the poll tax from £35 to £53--a 50 per cent. increase--purely as a result of the new formula. That is clearly not within the province of my right hon. Friends on the Front Bench, but it shows that, even where the general level of Government support for local government finance is adequate, there is still a margin of error. Therefore, a reasonable settlement for most local authorities almost inevitably involves considerable unfairness for a few. I had intended to allude to the possible effect on local government finance of the severe flooding in my constituency yesterday when the sea wall broke. However, to my delight, I find that that is entirely the responsibility of British Rail because the wall runs within a few hundred feet of its railway line. I can rejoice in that, but ultimately that may not be for the benefit of public expenditure. We can debate endlessly the right level of public expenditure. There is no doubt that tight control of public expenditure is vital and that the Government's record throughout has been immeasurably better than that of their Labour predecessors and infinitely better than is likely to come from any Labour successor if, God forbid, there ever should be one. But some public expenditure is necessary. However far we go with privatisation, there will always be things that people cannot buy out of the money that an increasingly indulgent tax collector leaves in our pockets. There are things that cannot be provided by the play of market forces.
For Socialists, if such creatures still exist after the recent upheavals in eastern Europe, the answer is simple : public expenditure can meet pretty well all of our needs, and those needs that cannot be met by public expenditure are somehow less serious, almost frivolous. When it comes to
Column 182saying how that level of public expenditure will be financed out of wealth generated by the economy, the Labour party, and in particular the hon. Member for Derby, South (Mrs. Beckett), becomes extraordinarily unconvincing. Nothing that has been said by any Labour party spokesman gives any ground for believing that a Labour Government would ever take the firm decisions that are necessary to enable the process of wealth creation to go ahead.
But somewhere between the doctrinaire excesses of what sometimes appears to be the Government's attitude that all public expenditure is somehow wasteful, that public bodies are splashing around taxpayers' hard-earned money, and the Labour party's contention that there is a bottomless pocket from which public expenditure can finance just about everything there has to be a happy medium. I believe that the Chancellor is steering such a middle path, but when the Chief Secretary says, as he said this afternoon, that we do not want to see public investment crowding out private investment it leaves me a tiny bit queasy.
In my constituency--this is not a particularly good example--private investment is roaring ahead in the massive provision of retirement homes for elderly people, not resident in the area already, but to be attracted into the area by that massive provision of retirement homes. One of the most hideous buildings that I have ever seen now damages the front at Colwyn bay. It is a vast block of unwanted, unused old people's flats. Planning controls have proved an extraordinarily ineffective way of preventing some of those developments. It is all very well to say that market forces should prevent such a thing happening, but they do not. They happen through market forces. At the same time that that unwanted private development is roaring ahead, many of our schools are in a physically deplorable state. I am sure that more clear-cut examples could be found in other constituencies.
In conclusion, I repeat that we in Wales have benefited to an extraordinary extent from the skill with which two successive Secretaries of State for Wales--I say this in homage also to my noble Friend Lord Crickhowell, who preceded my right hon. Friend the present Secretary of State for Wales-- have achieved a skilful balance between the tight controls operated by the Government and a measure of interventionism which has brought great benefits to the Principality and to my constituency.
Mr. Robert Sheldon (Ashton-under-Lyne) : It was a pleasure to hear the hon. Member for Clwyd, North-West (Sir A. Meyer) enunciating the traditional Tory view which is at present dormant in the Conservative party.
I want particularly to refer to the speech made by my hon. Friend the Member for Derby, South (Mrs. Beckett). She made two points that were of great importance. First, she pointed out the particular problems that arise from the decrepit nature of so much of our industry and the various structures of our society. She also dealt with the prudent way in which she will act as the Chief Secretary in the next Labour Government. The prudence lies in the fact that she intends not to spend until the money has been earned. That is a lesson that all of us must welcome. We look forward to her carrying it out.
In particular, I want to mention our failure to maintain our inheritance. Our public buildings, roads, estates and hospitals were set up by previous generations and those
Column 183institutions grew with the passage of the years. We have seen a failure to maintain them properly, and the inability to prevent the decay of so many of our assets which previous generations have produced for us.
I want to deal first with the civil estate, the estate owned by the Government. It is the Civil Service buildings, Department of Social Security offices, the Government Departments, police stations and so on. We have 8,000 properties held on trust by the Government ; 110 million sq ft of property, worth about £3 billion--a desk estimate--in 1982. It is probably worth much more now. Offices account for about two thirds of that and storage and specialised buildings, such as the courts of law, the remaining third. The need to maintain that valuable inheritance is obvious to us all.
It was obvious to the Public Accounts Committee, as was made clear in its thirtieth report of 1983-84 entitled "Building maintenance expenditure in the United Kingdom". On 21 May 1984 it took evidence from Mr. Gordon Manzie, as he then was, who had just been appointed chief executive of the Property Services Agency, and Mr. Geoffrey Chipperfield, who spoke on most of the matters because he had been in post much longer. The PSA did not seem able to distinguish between essential and desirable works. In question 3338 I said :
"there is some widespread inconsistency in distinguishing between the essential and the desirable work. There does not seem to be a clear distinction between what is essential and what is desirable How do you decide which should have priority when you are unable to distinguish between essential and desirable work?"
Speaking on behalf of the PSA, defending the ability to maintain the structures that it holds on our behalf, Mr. Chipperfield said : "We entirely accept the criticism of the report here that we have not instituted adequate guidelines from the centre in order to guide our regions and areas and districts on what things they should take into account when deciding on the categorisation of maintenance expenditure. At the moment we are working hard to produce such guidelines which we will be issuing to our offices in the course of the year."
That was 1984.
The Public Accounts Committee took evidence again in 1988 and that was set out in our third report of the 1988-89 Session. Our report deals with the six years of backlog of maintenance which is priority 1 and priority 2. Following our earlier report the PSA did distinguish between what was essential, where there was clear decay coming into buildings held on our behalf, and what was less essential. We took evidence on 15 June 1988 and questions 4865 to 4867 say :
"How long will it take you to clear this backlog?"
Sir Gordon Manzie replied :
"If we maintain the kind of level of spend that we have at the present time our aim is to clear the backlog by the middle of the '90s."
I went on to say :
"So you reckon you have somewhere between six and seven years of backlog."
Sir Gordon Manzie said :
"That is priority 1 and 2."
I said :
"That is a very large backlog."
Sir Gordon Manzie agreed.
The backlog has been allowed to grow. We question the Treasury as to the justification for not allowing the PSA to have more resources for maintenance work. The Treasury stated that it was for the PSA to decide its priorities from within its total budget. Nevertheless, it accepted that
Column 184constraints on funding had been a factor which had prevented the PSA from doing some things which would have been desirable if more funds had been made available.
Now, four years later, we are not discussing optional matters ; we are talking about an attempt to prevent further decay of the value of the estate. I refer to our third report, paragraph 30 :
"Maintenance requirements for which the PSA are responsible are categorised into four priorities. Priority 1 : Unavoidable services to meet statutory obligations, which cannot be deferred for health and safety reasons, or which if not undertaken will seriously affect the crime department's operations and function.
Priority 2 : Essential services which cannot be deferred without risk or serious penalties in terms of dilapidations and/or increased costs."
We found that allocations were sufficient to cover only 80 per cent. of priority 1. That is really appalling. We are not talking about gilding any lilies ; we are talking about matters which can lead to serious consequences for health or affect the operations of the Department itself.
Then there is priority 3--urgent services which it is desirable to undertake. Nothing was done about essential services that could not be deferred without risk or serious penalties ; action was taken only in regard to 80 per cent. of that crucial priority, where legal action could have been taken against them. The PSA now tells us, four years later, that following recommendations made by our predecessors it has improved the procedures for identifying and recording maintenance requirements, which included inspection arrangements. Its forward maintenance registers were now up to date. We managed to get it to do that.
Despite the fact that the PSA had been spending approximately £80 million a year, the backlog on priorities 1 and 2 over these years had risen to £125 million. In addition, there was a backlog on priorities 3 and 4 of approximately £50 million. The position has become worse.
The terrible thing about this is, as anybody who is familiar with property knows, that it is not just a question of a stitch in time saves nine. The value of money lost through failure to take essential action is a serious matter.
That is precisely what is happening to the civil estate--the buildings which the Government own, and which they are allowing to decay. The assets that are held in trust for British people have been declining because of that.
Let us consider defence. I refer to the sixteenth report of the Public Accounts Committee entitled "Control and Management of the Defence Estate". The estate consists of approximately 500,000 acres, 3,000 sites, including barracks and houses for soldiers, and 137,000 married quarters. The replacement value of all this property was thought to be £50 billion. The market value would be very much less, especially if it is in remote parts of the country--about £7 billion. Paragraph 18 reads :
"We are concerned about the alarming increase in the maintenance backlog from £125 million for 1987 to an expected £269 million at 1 April 1989 and in particular the under-maintenance of many married quarters. We trust that the introduction of competition and choice in maintenance will enable the Ministry to secure the highest possible level of effective maintenance from the funds available and reduce the backlog."
We repeated the earlier recommendations that this should embrace maintenance and spend-to-save schemes and allow funds to secure the optimum return.
Paragraph 20 reads :
Column 185"The Estate has some 137,000 married quarters, of which about a third are overseas but the vacancy level had continued to increase from 17 per cent. (13,876) in 1986 to 19 per cent. (15,228) in March 1988. The Ministry told us that the vacancy position had worsened." It has far more vacant sites than any local authority has as a proportion of the stock. Before complaining about the local authorities' activities, the Ministry should see what it is doing itself.
In July 1988 the Ministry sought the advice of consultants, who reported that in July 1988 the service's performance in managing married quarters was poor. Anybody who knows anything about this aspect would accept the criticism of that report.
The Committee looked at this matter in its ninth report, during the Session 1986-87, and found not only that many properties were empty, but in the London area--an area where one would not expect to find difficulty in letting property--the Ministry of Defence had 2,000 vacant properties, although more than 1,900 single or unaccompanied service personnel were in receipt of lodging allowance. Any strategy for maintaining the value of that which we own ought to embrace maintenance and--as my hon. Friend the Member for Derby, South pointed out--the principle of spending to save.
There is an argument for spending to save. Money can be borrowed for the purpose. It is a far better investment to stop the decay of properties. This is the best investment of all, because it is a year later, after the rain has got in and the property is decaying, that the really expensive bills are incurred.
Mr. Sydney Bidwell (Ealing, Southall) : Surely some of the storm damage would have been less if there had not been neglect? Would my hon. Friend respond to that? It would not be all that difficult to assess how much less the damage would have been.
Mr. Sheldon : I am sure that that is right. The storm damage affected particularly those properties that have been falling into neglect. This wanton neglect, about which little is done, is the falsest of all possible economies.
Another area of neglect is the roads and motorways, to which my hon. Friend the Member for Derby, South referred. This was mentioned in the nineteenth report for 1985-86. The Committee found that the cost of maintaining roads was not only leading to excessive delays about which we all know, but to unwarranted expenditure which needed to be incurred at a later date. Those who travel on our motorways will know that my journey to Manchester, for example, takes three hours when I leave here at night after a 10 o'clock vote and up to seven hours on Friday evenings.
Paragraph 19 of the report says :
"The liability for maintenance is increasing yearly as new road schemes are completed and added to the network, and older roads need major repair or resurfacing as heavy traffic takes its toll. While expenditure on maintenance might therefore have been expected to take up a larger share of its programme, it had in practice remained fairly constant at around 25 per cent. of total expenditure." The report does not deal with road construction, which is a disgrace. Roman roads have lasted for years, even centuries, but after only a few years cones can be seen up and down the motorways.
Dame Elaine Kellett-Bowman : It is true that I suffer as a result of the motorway, but I do not drive a Roman chariot ; nor do I exceed the speed limit, as the right hon. Gentleman clearly does. My right hon. Friend the Secretary of State for Transport has already taken action to prevent ridiculously unnecessary coning, and he is eager for us all to let the regions know when it happens. The right hon. Gentleman is right : the cones are a disaster.
Mr. Sheldon : The hon. Lady is extraordinarily gullible. I shall forget what she said about my exceeding the speed limit, although I do not do so, and I feel that she ought to withdraw her remark. Four years ago I was given an assurance by the Minister for Roads and Traffic that the level of the cones would be improved. I have been told that again and again, but anyone who believes it had better think again.
Paragraph 20 of the nineteenth report states :
"To achieve value for money in road maintenance it is important to resurface at the optimum time, to prevent undue deterioration leading to premature reconstruction, which can be nearly three times more expensive."
Surely it is desirable to save nearly 300 per cent. by investing in preventive maintenance--or, rather, in maintenance to deal with damage that has already been caused.
The report refers to
"a backlog of 60 miles of motorway maintenance by the end of 1984-85"--
the position has become much worse since then--
"and possibly as many as 220 single carriageway equivalent miles." Paragraph 23 states :
"We consider it most unsatisfactory that maintenance of roads has been starved of funds for many years. More funds are now to be made available",
we said optimistically.
"We consider it imperative that they should maintain roads in good repair and avoid the need for premature and extremely expensive reconstruction of either motorways or trunk roads due to lack of timely maintenance."
The hon. Member for Lancaster (Dame E. Kellett-Bowman) should remember the vexed question of the M25. That was probably one of the most disgraceful examples, but it is outside my area.
Mr. Sheldon : No ; I have already given the hon. Lady her chance. The twenty-eighth report updates information about the backlog of maintenance of motorways and trunk roads. Let me quote from paragraphs 8 and 9 :
"In July 1988 the Department estimated that as a result of their cut back in maintenance funds--
the Department actually cut the funding--
"they would be able to deal with less than half the equivalent miles of road which they had intended to renew. They told us that the result would be to increase the size of the backlog and therefore the amount of maintenance needed in later years. Further deterioration caused to roads by a lack of maintenance would also lead to extra costs later."
After four years, the position was still worsening. We hear the same promises year after year, and we see the same results--sometimes rather worse results. In that instance,
Column 187money was taken from the road renewal and maintenance schemes and was spent on one or two new roads, and the same has been done several times since then.
The potholes referred to by my hon. Friend the Member for Derby, South are almost like those to be seen in an undeveloped country. There are some not far from here, and drivers must keep their eyes peeled to avoid them. It is a scandal. The PAC does not examine the underground and overground railways --they are outside our purview, more's the pity--but I am aware of the problems.
There is also the problem of dilapidation in the National Health Service, which is referred to in the fortieth report, dated 1987-88. The NHS owns about 50,000 acres, and 2,000 hospitals, the estimated value of which is about £13 billion, and we do not even know the condition of some of those hospitals. The report states : "We are concerned that surveys of the condition of NHS property are not reliable or generally kept up to date. In view of the value of the estate we are surprised that the use of space within buildings has not generally been assessed Overall, we are not satisfied with the assurances".
The report identifies health and safety as a major problem and states :
"We therefore expect the three health departments to monitor compliance with standards rigorously through their review processes."
Paragraph 25 states :
"The maintenance expenditure required to bring NHS properties in England to a level regarded as the minimum acceptable standard had last been estimated at about £2 billion".
Paragraph 27 states :
"the proportion of the estate in adequate or better condition had increased to 68 per cent".
That means that 32 per cent. was in an unacceptable or inoperable condition.
We are talking about essential repairs, not minor ones. The worst of it was, however, that we did not know the full extent of the problem. Only 113 of the 191 area hospital boards replied to the questionnaire with which they were issued, and it is at least arguable that those that did not reply could present an even worse picture. Money is best used to prevent existing problems from getting worse. If a roof tile has gone, for instance, it is essential to replace it at an early stage ; once the rot has set in, much more expenditure will be involved.
I have referred to the civil estate, the defence estate, the roads and the National Health Service ; our first report, in Session 1988-89, dealt with the museums. The nation's historical, cultural and artistic heritage is of enormous value to us. We gained that heritage when we were a wealthy country. We shall never be as wealthy, in comparison with other countries, as we were in the last century and the century before that. Our heritage was acquired at enormous expense to us as a nation ; its value is incalculable, and much is irreplaceable.
The Victoria and Albert museum has accepted that its care of the valuable books and manuscripts was a national disaster. We found that it was highly likely that a number of the most valuable collections had not been properly catalogued, and it is even possible that some pilferage has taken place. Much of that criticism could apply to other museums and art galleries elsewhere in the country. In all those instances, the story is one of decay --do not let us cloak it in any other language. We are failing to maintain our fabric. I have not dealt with matters that the PAC does not consider, such as roads and streets in towns,