House of Commons Hansard Debates for 13 Feb 1990

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matter when it does not have to be honoured until after the election? The hon. Member for Newcastle upon Tyne, East (Mr. Brown) nods. "Goulditis" has got everywhere. The symbolism of Labour policy is, "Do not ask us to explain the percentages or the ideas ; just take it on faith, and we will show you after we get in."

I realise that many hon. Members wish to speak. I have found the debate very useful--it has enabled me to bring up my little constituency points-- but I think that before long we shall have to take another look at the community charge and the arrangements with local government.

8.42 pm

Mr. John Battle (Leeds, West) : Introducing the debate, the Chief Secretary was at pains to argue both that the Government were operating a policy of tight spending controls on public expenditure, and that public expenditure was increasing. He gave some examples of savings and spending in what he considered the most important areas, but used his figures selectively, presenting a contradictory image of public spending at once rising and falling.

Significantly, the Chief Secretary forgot, or rather neglected, to mention what the White Paper makes clear--that a massive £7 billion has been taken out of the housing budget in the past 10 years. Both public and private housing has suffered from the removal of grant, assistance from housing associations, improvement areas and so forth. Investment in Britain's entire housing fabric--not just council house building--has been undercut. There is no real reason for the Government's action apart from their blind opposition to council housing, illustrated in the Chief Secretary's response to an intervention from me.

Britain's housing has borne the brunt of the cuts, as the White Paper demonstrates. Between 1979 and 1989-90, it has been slashed by 67 per cent. --£7 billion. Nevertheless, the Chief Secretary had the nerve to refer to Government measures to tackle the scandalous increase in homelessness. The money that they are providing is a pittance compared with what they have taken out of the budget for building and improving housing which is desperately needed for homeless people.

Paragraph 11 of the chapter of the White Paper on the environment tells us that even the £250 million that the Government claim to be spending on emergency measures to tackle homelessness over the next two years includes the cash payments that will be used to bribe remaining tenants into owner- occupation. While paragraph 2 claims : "The Government's overhall aim in its housing policy is that a decent home should be within reach of every family,"

the allocations in the housing budgets fall somewhat short of that.

The housing cut reveals the Janus-face of Conservative public expenditure philosophy : it faces both ways at the same time, immobilising development in provision. The Government are trying to cover up a lack of investment in housing and other forms of infrastructure, and the consequent poverty of development. That is the price that must be paid for the squandering of our oil revenue and public assets, the bulk of which ended up in the pockets of the wealthiest 5 per cent. in the form of Budget tax cuts.

It is plain to everyone but the Government that, ideologically blind as they are, they have based their policies on the crude antithetical view that private is good and public must be bad. They have attempted to deride

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and undermine the public sector to such an extent that everyone is now paying the price of that dichotomy. I do not believe that opposing public provision is a new philosophy ; I do not even believe that it is a great Conservative insight thought up in the past 10 years. In fact, it was tried in the United States.

I seem to remember the passing of the great Proposition 99 in California under Governor Reagan, who suggested that there should be no public fire service, but that everyone should arrange fire cover through private insurers. The public fire service was duly abolished. When two houses were burnt to the ground in Beverley Hills, the owners thought that they could easily replace them by claiming on their insurance. They were shocked to learn that the insurance companies would not pay out because there was no sufficient fire cover at the time. It was not long before California reinstituted its public fire service.

It seems stupid to embark on such circular processes--abolishing public provision, discovering that it is needed and reintroducing it. The way in which the private sector has been set against the public sector is a consequence of the Government's total commitment to--their blind faith in-- the idea of a free-market economy. Despite the frequent use of the phrase, in practice markets are not really free. The Chief Secretary has often referred to the need for a level playing field, and Conservative Members demand fair trade. There are many other contradictions. Water is sold off at well below its market value, and British Aerospace is offered sweeteners. It is clear that the market does not operate freely ; it is fixed, and there is intervention.

Mr. Eric S. Heffer (Liverpool, Walton) : Does my hon. Friend agree that the Government are actually opposing the ideas of early Conservative Governments and local authorities? In the past, Conservative authorities created the water services for huge cities, built the parks and got the first housing schemes off the ground. If I were a Conservative, I would be rather proud of those early Conservative authorities.

The present Government, however, are a crowd of nutcases. They even turn against their own basic philosophy. I find that incredible until I look at the Government Front Bench and at the right hon. Lady who usually sits there. Then I am not so surprised ; they are all mad.

Mr. Battle : I cannot comment on the state of mental health of Conservative Members. However, in my own city it was not Labour councils which built housing, took away back-to-back houses or instituted a common sewerage and drainage system. Those things were done because if there had remained only private provision for them the whole of the city would have been polluted. There was a need for public provision, and that was recognised and implemented. It seems that for the past 10 years the Government have decided that the market is all and that there should be no planning whatsoever. But the tide is turning. Conservative Members have learnt to recognise that there is a need for intervention to protect the environment. I was once surprised to meet a small demonstration outside the House. A gentleman had a placard saying, "Justice in Berkshire". I asked him why he stood there with that placard, and he said, "Well, it's like this, there is a builder about to build." He owned a property, a house with a large garden, with poplars at the end of it, but the

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market said that the land at the end of his garden could be sold for a price. He said that he wanted the Government to give the local authority the power to stop the building to protect his view. It seems that all are coming round to the view that there should be intervention in planning. There is a move away from the market towards public planning co-ordination. The free-market model is being left behind as a theoretical myth, and it is universally being seen as such.

Mr. Hind : The hon. Gentleman's thesis is that there is no role for the public sector, as far as the Government are concerned. He will notice that at present 37 per cent. of gross domestic product is spent on public sector provision. That is a much larger percentage of GDP than the 43 per cent. spent by the last Labour Government in 1978-79. What we recognise, and what he fails to realise, is that many things have been done by the public sector in the past that can be done better by the private sector. However, the public sector still has a major role to play, hence the 37 per cent. of GDP, otherwise it would probably have been much lower.

Mr. Battle : I would be interested to find out the number of times that Conservative Members have used the word "public" as a derogatory term in the House. What is interesting and welcome is the shift towards the view that the public sector has a role. But most people's experience of housing, infrastructure, roads and hospitals shows them that there is still a desperate need for public investment in those facilities.

The reality of a policy that claims to idolise the free-market model has been high interest rates, high inflation, a huge trade deficit, the rundown of the manufacturing industrial base in constituencies such as mine, and millions of people in Britain paying the price for the Government's economic experiment.

The public expenditure White Paper reveals that the cost of mortgage interest to the Exchequer--never mind to those people who have to pay higher mortgages--has increased from £5.5 billion to £7 billion between 1988-89 and 1989-90.

Expenditure on the Export Credits Guarantee Department was £347 million and, as it says in the White Paper, in chapter 4, paragraph 106, it was due to

"the increase in short term sterling interest rates."

In other words, high interest rates and high inflation are the stark question marks over the failure of the free-market economic system. It is worth hon. Members remembering that Monday in October 1987, when the stock markets around the world lost a quarter of their value in less than 48 hours, and the foreign exchange rates became highly unstable. The effect of the recent rumour that President Gorbachev was to resign also underlines the volatility of the market and brings into question the validity of the expression the "efficient market hypothesis" according to which current prices reflect all publicly available information.

We are entitled to ask what has been Government policy in the face of the extreme volatility of the market. In 1981 the Government said that they were leaving the exchange rate to the free working of the markets. By early 1987 it was clear that the Treasury was responding to the weakness of the foreign exchange rates by altering domestic interest rates. In practice, domestic monetary

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policy had been abandoned to external considerations, and the operation of an unannounced exchange rate target.

In 1988 there was yet another change of tack. Concern about overheating in the economy meant that interest rates were once again directed towards meeting domestic objectives. There is another glaring contradiction at the heart of Government economic policy--the long-running tension between the internal and external calls on monetary policy--which still remains to be resolved.

Today in The Times the right hon. Member for Blaby (Mr. Lawson)--the former Chancellor of the Exchequer--spells out : "since I ceased being Chancellor no new measures have been taken." That means that the stalemate that we discussed throughout the whole of last year still remains. I suspect that the current Chancellor is waiting with his head down for something to turn up, or for the dark clouds to blow over. The former Chancellor puts it in a nutshell when he says that in practice the Government have abandoned all their former policy objectives. He said :

"In politics, the unexpected always happens and you just have to see how events unfold."

The Government's economic policy is characterised by sitting out the market, and that is in line with their short-term investment strategies. That short-termism characterises the stock market and money markets. All we now get is short-term, day-to-day management and the abandonment of longer term objectives. In practice future investment is sold short.

The Government's policies are absolutely clear to those people who are paying the price in higher mortgage rates or who are forced into part-time, temporary, low-paid jobs. As the former Chancellor said in his article this morning :

"The capitalist system is seen as something rather grubby. If you say nobility is associated with low pay, then it is a very easy transition to say that those who do what they are doing for the money are ignoble."

I suspect that it is usually the other way round. Those people on low pay are usually denigrated, marginalised and expected to survive, without proper protection or adequate supplementary benefits under this Government. Some 9 million people are in low-paid jobs. The wages councils have been abolished and the unemployed are forced to take jobs regardless of how low the wage is. The result is that in some sectors wage rates are falling, particularly in part-time, temporary work. And the guru ghosts of the new right, such as Professor Roger Scruton, are now advocating that the Government reintroduce the Victorian value of child labour. He wrote recently : "Many a 14-year-old, set to work as a builder's apprentice, an electrician's mate or a stable hand will learn far more than he could ever at school If the pay were sufficiently low--and children are willing to work for quite paltry sums--there would be no lack of employers ready to offer it."

It is significant that there was no reference in that article to the great Victorian campaigns against the exploitation of children or the appalling health and safety conditions in which people had to work. I wonder how many Government Members would consent to that and put their own children out to work in such circumstances.

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The point lays bare the model of the free market as being intrinsically and inevitably exploitive. It generates, in practice, a two-tier economic model and on the lower tier people are low- paid, unprotected part-time workers.

Government economic policies as they now stand certainly seem to us to be theoretically threadbare. The Government seem to be drifting aimlessly and waiting without any clear sense of direction or comprehensive and consistent strategy. Even a former Member of the House, the Right Hon. Enoch Powell, referred to earlier, in an article in British Rail's InterCity journal, spelt out that it is the Government who have caused inflation, not credit cards or wages. And all the key objectives set by the Conservatives some 12 years ago remain unachieved.

In an article published in the Salisbury Review last September, entitled "One cheer for Mrs. Thatcher's economic achievement", E. J. Mishan writes :

"The Conservative Government's economic achievement is impressive enough when judged by its own declared priorities ; somewhat less impressive when judged by reference to familiar economic criteria ; least impressive when viewed in a broader social context which encompasses the quality of life."

I submit that the practical daily experience of millions in Britain under this Government's economic policies is that the real quality of their lives, private and public, has been eroded as a result of those policies. So, while the Chief Secretary invites us, as he did when moving the motion on this public expenditure White Paper, to support it, I urge the House not to give its approval. In the interest of those who experience Britain under these policies and feel that the quality of their lives has been eroded as a result, I urge hon. Members to vote against it.

9 pm

Mr. Tim Smith (Beaconsfield) : Although the immediate prospects of the United Kingdom economy are not, in my view, encouraging, I think that there is every reason to be optimistic about the prospects for Britain in the 1990s. There are three specific factors which I want to draw to the attention of the House and which I believe constitute substantial evidence to support my proposition.

The first--and it was referred to in an article in The Independent on 31 January headed "Workshop of the world again"--is the very good prospects indeed for British exports. It is pointed out that in the fourth quarter of last year exports were 23 per cent. up in value on the same period in 1988 and, Hamish McRae said :

"That is an absolutely astonishing performance".

He went on :

"The good news about exports is that it shows that, despite the fact that we have vacated large areas of the manufacture of internationally traded goods, we are still able to increase vastly what we sell abroad."

I believe that there is every reason to be optimistic about our export performance, and Hamish McRae suggested that, whereas the 1980s were the decade of oil and services, the 1990s will be a decade of manufacture.

The CBI has been much quoted, and I think it was probably the same copy of the CBI News as was quoted by the hon. Member for Nottingham, North (Mr. Allen) that contained an article by its director of economic affairs, Dr. Sentance, in which he said about exports :

"In 1988 and 1989 export growth averaged 7 per cent. a year--double the average growth from 1971-1987."

He went on :

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"non-oil exports have been growing more rapidly than imports--in the three months to November, they were 14 per cent. up in volume terms on a year ago."

He added : "With oil production recovering, as long as the world economy remains fairly buoyant, and continues to help export growth, there could be a very significant improvement in the current account deficit during 1990."

Mr. John Smith (Monklands, East) : It is still substantial.

Mr. Tim Smith : The deficit is still a very substantial one ; the right hon. and learned Gentleman is absolutely right. But I believe that we now have the right conditions for a substantial improvement. This is the difficult part ; the easy part, in a sense, is damping down imports. The difficult part has always been improving Britain's export performance. I believe that we are now seeing a major improvement in Britain's export performance.

The second factor--and this addresses one of the points made by the hon. Member for Leeds, West (Mr. Battle)--is the way in which the quality of investment has improved during the 1980s. One of the reasons, perhaps the main reason, for this is that such a high proportion is now investment made by the private sector. Indeed, in an article in The Times, Tim Congdon estimated that in a couple of years' time private sector investment would account for 90 per cent. of total investment in the United Kingdom ; so we can say once again that we are a genuinely capitalist economy. I am sure that Opposition Members think that we are concerned about that because of some blind ideological reason, but there is a much better reason : private sector investment is much more likely to be well directed. We have only to look at eastern Europe and the recent history of European economies to see the truth of that observation. The state is not very good at making investments, and much investment has been wasted in eastern European economies. Under the last Labour Government the National Enterprise Board demonstrated that private sector investment is of much better quality. That bodes well for the 1990s. The third factor that has been much discussed in today's debate is public expenditure as a proportion of gross domestic product. Again, there is a good reason why it is important to reduce that. At least some Labour Members seem incapable of taking that on board, but it is possible to increase public spending in real terms and at the same time to reduce it as a proportion of GDP. That is exactly what has happened in the past 10 years and the figures speak for themselves.

Mr. Heffer : The hon. Gentleman referred to the National Enterprise Board under the last Labour Government. Is he not aware that the real problem was that the National Enterprise Board constantly had to save capitalist private enterprise firms from collapsing? That was not its original role. We had to save British Leyland and many other private enterprise companies from collapsing. Rolls-Royce was brought under public ownership by a Conservative Government. That was not the role envisaged for the National Enterprise Board. Some of us were critical of the fact that it was not carrying out its proper role. It should have been creating new public enterprise companies to compete in the market. The hon. Gentleman should realise that we had collapse after

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collapse. Shipbuilding and many other industries would have collapsed totally if public enterprise had not stepped in and taken them over.

Mr. Smith : That illustrates my point very well. The National Enterprise Board devoted a great deal of time to saving companies, many of which almost certainly should not have been saved because the investment would have been better directed to new enterprises. It is not the job of the state to pick winners. Private investors make better investment decisions and produce a better-quality investment. The hon. Gentleman has proved my point beyond any doubt.

We have had much discussion about what the next Labour Government will do about public spending. One way of assessing what the next Labour Government will do is to look at the performance of the last Labour Government. In their first year of office the last Labour Government increased public spending from £150 billion to £169 billion, and in the next five years they gradually cut it back so that at the end of that period the figure was £164 billion. That was the performance of the last Labour Government ; a huge increase in the first year followed by a series of cuts in every successive year. That is exactly what will happen next year if we have the misfortune to have a Labour Government. We shall have a huge unsustainable increase in public spending in the first year and after that we shall have the IMF at our door exactly as we did last time.

It is important to reduce public spending as a proportion of GDP because if we leave a larger proportion of resources for the private sector to invest that will produce a better rate of economic growth. There was a very good article in The Spectator the other day, headed,

"We're doing better than Europe"

by Tim Congdon in which he shows how the reduction of Government spending is placing Britain in "a virtuous circle" of prosperity. He turned the argument about a twin-track Europe on its head. He concluded that as a result of the Government's achievement in reducing public spending as a proportion of GDP,

"if Mrs. Thatcher's policies continue, the 1990s will see a two-speed Europe. A lowly taxed, lightly regulated and debt-free Britain will outpace the highly taxed, heavily regulated and debt-burdened nations of the inner core."

I think that he is right. For those three reasons, the economic prospects of the United Kingdom economy are good.

The acid test of that is not what I say but what investors do. Overseas investors are moving into this country at a rate that we have not experienced for many years. They are putting their money where their mouth is. I am talking about not only the Japanese but the Americans and Germans.

We can have endless debates on how much we should spend. Spending money is easy, and Labour Governments have been good at it, but the difficulty is creating the wealth in the first place, and Conservative Governments are very good at that.

9.9 pm

Dr. Norman A. Godman (Greenock and Port Glasgow) : In what I promise will be a brief intervention, I wish to make a somewhat unfashionable plea for the continuation of certain financial subsidies to two maritime industries--shipbuilding and fishing.

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What is the Government's position on the continuation of the European Community shipbuilding intervention fund? We are reaching the end of the period of the sixth directive, and I should like to know where the Government stand on the continuation of that important subsidy.

The aim of the shipbuilding intervention fund is to narrow the gap between the price that a European Community shipyard can offer a would-be customer and the cost of a ship built in south-east Asia. If we are to retain our shipbuilding industry, it is essential that the European Community retains the shipbuilding intervention fund. The next directive should increase the subsidy. The industry will require that essential form of assistance if we are to retain anything of what was once, especially in the north-east of England and Scotland, a magnificent industry. All that is left is a remnant of it, but it is still an important employer of highly skilled labour in areas of the United Kingdom that have high unemployment. My constituency is a classic example of that. Unemployment in Greenock and Port Glasgow is twice the national average, yet it would reduce substantially if the Government allowed Scott Lithgow designated status vis-a-vis the intervention fund. I hope that I receive an answer to that from the Minister.

Parts of the catching sector of the United Kingdom fishing industry are in a terrible state. I am seeking from the Government and the European Community a maritime counterpart of the agricultural set-aside scheme. Paragraph 67 of Cm. Paper 1003 shows that the set-aside scheme will cost £22 million in 1990-91, £33 million in 1991-92 and £44 million in the following financial year, making a total of about £99 million. The Government--and I asked the Chief Secretary to the Treasury a question about this earlier--should be introducing a decommissioning scheme, which would allow our fleet to be restructured fairly and humanely.

Paragraph 80 on page 23 of Cm. 1003 entitled "Structure of the fishing fleet" is misleading in what it says about the European Community's instruction to reduce the size of the fleet. In reality, the United Kingdom registered fleet will have to be reduced by about 23 per cent. between now and the end of 1991. I estimate that that reduction, as a result of the European Community's multiple annual guidance programme, will involve the loss to the fleet of between 500 and 800 vessels. What is to happen to those vessels, their owners and crews?

Many of the vessels in Scotland are owned on a share basis, under which the fishermen who crew them are not simply company employees ; they are parts of small businesses. If the EEC and the Government can, rightly, assist farmers, particularly the more disadvantaged farmers, why can they not assist fishermen? Many middle-aged fishermen would happily tie up their elderly vessels and come ashore for good if there was in existence a decent decommissioning scheme of the kind introduced some years ago by the Danish Government.

The need to introduce such a scheme for our fishermen has been dodged by the Ministry of Agriculture, Fisheries and Food and ducked by the Scottish Office. It is nothing short of a scandal. Because of the savage reductions in

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quotas, particularly of North sea haddock-- quotas are necessary if we are to conserve the stocks of valuable fish-- many of our fishermen will be ruined.

I know of one fisherman whose vessel has been taken over by the Sea Fish Authority, as a result of which he and his family have had to leave the home in the north-east of Scotland in which they have lived for many years. Had a reasonable decommissioning scheme been in operation, he might have retained his home.

The calamitous situation facing fishermen in the north-east of Scotland applies equally to fishermen in the south-west and north-east of England and elsewhere. I hope that there will be discussions between Treasury Ministers and their counterparts at the Ministry of Agriculture, Fisheries and Food and the Scottish Office with the aim of introducing a decommissioning scheme that is as fair-minded as some of the schemes of compensation offered to hill and other farmers in less-favoured areas.

Such a scheme would assist fishermen and vessels, for not only are there elderly vessels but some of our fishermen are reaching an age when they are too old to be fishing in bad weather. Fishing is a young man's occupation. Many fishermen would happily come ashore if they received financial assistance from Brussels and the Government. The British Government owe it to our fishermen to introduce such a scheme in the near future.

9.19 pm

Mr. Christopher Gill (Ludlow) : I wish to speak to appendix F of Cm. 1021 and draw the attention of the House to the reliefs and allowances against the six main Inland Revenue taxes. Those six taxes raise a total of £76.3 billion against which there are no fewer than 88 reliefs and allowances, which cost the Revenue £80.3 billion. I instance particularly capital gains tax, where the yield is £2.1 billion but the reliefs against it are no less than £7.8 billion. What conclusions are we to draw? Apart from the conclusion that we still have too many taxes, that those taxes are too complicated and that too many of the nation's best brains are engaged on tax matters at a time when industry is crying out for professional people in accountancy and legal services, not to mention the problems the Revenue itself has in recruitment, my real concern is about the complicated network of reliefs through which the Government effectively bribe taxpayers with their own money--because taxpayers' money is effectively the only money that the Government have--to do the politicians' bidding. There is nothing new in that ; it has been going on for centuries. The question is whether that is consistent with consumer choice and the free market economy of Tory philosophy. If politicians decree that there will be mortgage interest relief, which costs £7 billion, and that there will be exemption from capital gains tax for those investing in property, which costs £7 billion, we must not be surprised at the result. Money will inevitably be sucked out of savings into bricks and mortar. The proof of that is in the eating. We see inflated property values and a massive increase in personal borrowing.

Money spent is indisputably more inflationary than money saved. There is a widely held view that savings are too low. In fact, they are at a record low level. My real fear is that we will not resist the temptation on 20 March to

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introduce yet another relief for savers. That would be wrong on every count. It would deal with the effect, not with the cause. It would further complicate the tax system and repeat many of the mistakes of the past. The answer for the future must surely be not more reliefs but fewer reliefs on fewer and lower taxes to bring about a position where to buy a house, to invest in stocks and shares, to purchase a pension or simply to put one's earnings into old-fashioned savings is an equal bet.

No one can doubt the beneficial effect of savings upon any economy and particularly upon inflation. To my right hon. Friend the Chancellor I simply say, now is the time for courage. We must not abandon the winning formula. My right hon. Friend should continue the drive for fewer, lower and less complicated taxes, particularly for those on lower incomes. Above all, he should encourage individual citizens to back their own judgment by progressively dismantling the multiplicity of reliefs and allowances that distort individual choice.

9.23 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East) : I congratulate the hon. Member for Ludlow (Mr. Gill) on his critique of the Government's private medical insurance tax relief. I am sure that when he had an opportunity he at least contemplated voting against the Government. The debate has been good. When the Chancellor of the Exchequer opened the debate on the Autumn Statement, he said :

"This is probably the last occasion that the House will have to debate the economy before the Budget, which I can now inform the House will be on Tuesday 20 March."

As Treasury forecasts go, his remarks were at least broadly in line with other Treasury forecasts. I am sure that he did not intend to tell the House that the details of the Government's expenditure plans had no bearing on the management of the rest of the economy, but that was the impression that he gave. Clearly he did not mean to say that because he went on to say :

"Proper control of public spending--tight control--remains central to the Government's economic strategy."--[ Official Report , 23 January 1990 ; Vol. 165, c. 749.]

In winding up the debate, the Chief Secretary made a similar point. He said :

"It is because our finances are in order that we have been able to do three things simultaneously"--[ Hon. Members :-- "Oh!"]-- comma--

"control spending, reduce taxes, and give much needed funds to priority sectors."--[ Official Report , 23 January 1990 ; Vol. 165, c. 831- 32.]

This debate is an opportunity to test whether the Government have controlled spending, reduced taxes and given much-needed funds to priority sectors. When the Chief Secretary says that he will give much-needed funds to priority sectors, it is an implicit criticism of the previous Chief Secretary, who deprived those priority sectors of the funds that the present Chief Secretary says are "much needed". Let us examine the Government's claim to have reduced taxation as a total share of gross domestic product. As the Opposition have often said, the tax burden--direct and indirect--has risen from 34.25 per cent. in 1978-79 to 37.5 per cent. in 1989-90. Perhaps the Chief Secretary was referring to direct taxation alone, but, if so, it is still the case that, under the present Government, a family--with two children--earning 50 per cent. of the average national income is paying more tax and national

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insurance now than it did in 1978-79. It must now be evident that the Conservative party's tax cutting has been highly selective. It has been designed to restore or redistribute wealth to where the Conservatives believe that it belongs--with the wealthy.

The Conservative Government are not truthfully committed to an anti-poverty strategy. They are supported by people who believe that it is an anti- poverty strategy to round up their poorer constituents and take them to Scotland's poll tax warrant sales to look for bargains. The Government do not realise just how unacceptable the social divisiveness of their tax and public expenditure policies are to most decent people.

The personal conduct of one or two former members of the Government does not help very much. Matters are not made easier for an ambulance worker whose annual pay rise is being resisted by the Government when he realises that the amount that he is claiming for the entire year is the equivalent of the wages of the previous Conservative Chancellor of the Exchequer for three and a half hours. Such a situation does not make for social unity. I accept, of course, that I may be understating the position as I have allowed the former Chancellor only half an hour for lunch.

The Government's second claim is that they are giving much-needed assistance to priority areas. The Government claimed as priorities the Health Service and transport, and homelessness and museums were also mentioned. My hon. Friend the Member for Derby, South (Mrs. Beckett), in an excellent speech, made it absolutely clear that the total sum that may be available for patient care is only £500 million, in spite of all the Government's claims to be giving substantially more money, and she set out why that was the case. It is possible to say that that meets the description of providing extra resources, but one can hardly say that it is targeting much-needed resources to priority areas. Surely the public's grievance about the funding of the NHS is that patient care is not being funded adequately--not that reviews are not being funded adequately.

The same is true of transport, another target of much-needed resources. The Government funding for British Rail--one assumes that that is still part of the transport infrastructure--is being cut by £22 million next year and by £124 million by 1992-93. Much-needed resources will have to come from asset sales, borrowing or fare increases.

In 1986, Britain invested 0.09 per cent. of our GDP in the national railway infrastructure, compared to Germany's 0.36 per cent. No doubt the Government will claim, as they did in the previous debate on the economy, that the Germans envy that. If the Germans could cut investment in their railways to the level that the British Conservative party has done, no doubt they would feel happier than they do now.

Our roads are so congested that the Confederation of British Industry estimates that in the south-east alone the cost to British industry is some £15 billion per year. Every class of road in Britain is in a worse state now than it was 10 years ago.

I pay tribute to the Public Accounts Committee, even if the Chief Secretary found it difficult to do so, and to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). My right hon. Friend pointed out that the long-term cost to the Exchequer of the way in which the Department of Transport has handled the split between

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road maintenance and new roads is considerable. The contribution that the PAC has made to the debate is considerable. I, at least, pay tribute to it.

Some cynics say that the road network was bound to be given extra resources because it was in such a dire condition. Other cynics say that the reason why it was given extra resources was that the previous Chief Secretary to the Treasury thought that he might be moved to the Department of Transport. When he found out that that was not the case, it was too late to claw the money back. I do not accept that. I have known that the present Chancellor of the Exchequer was destined for greater things ever since we served together in the Committee stage of the Rates Bill in 1984. As Government Whip he sought to curtail the length of my speeches with offers of bars of chocolate. That gritty pragmatism, in his own surfing metaphor, led him to ride the waves, peaks and troughs of economic decision-making. The only problem with that image is that there is no such colour for the Chancellor's shorts as dayglo grey.

I have discussed the Government's priorities. It is only right to consider what is not a priority. Education is not a priority. An editorial in The Independent said on the topic of public expenditure plans for education :

"In real terms, that means cutting expenditure on education for the next three years. That is incredible. The Government's attitude to education seems dictated by atavistic prejudices of the business culture--prejudices which have directly contributed to the country's long-term economic performance. There is a contempt for teachers, seen as an unproductive class of persons, corrupted by socialism." That is The Independent's view of the Government's approach. I know that the Conservatives take education seriously. That is why they have their children educated at private schools. For the Government to allow expenditure on education, as a percentage of GDP, to fall from 5.5 per cent. in 1987-89 to 4.8 per cent. in 1988-89 is a national outrage, as my right hon. Friend the Member for Llanelli (Mr. Davies) said. It serves only to accentuate the already widening economic and social divisions in our country.

The same is true of higher education. It takes a peculiar form of narrow sectarian meanness and utter incompetence to devise a scheme for student loans that will cost the Treasury more money this year than paying out the grant increases. The Government's student loans scheme does not make any sort of financial sense until the next century, if at all. The only thing that it will achieve is to dissuade working class youngsters from going into higher education. If that was the only example of the Government's lack of control over sensible public spending, one would let it go as an aberration. But it is not an aberration. My hon. Friend the Member for Derby, South referred to the total cost of advertising, underwriting and debt write-offs associated with the privatisation programme and to the £1.5 billion bill for installing National Health Service computers. That money was spent, not on improving patient care, but on tracing various mathematical calculations through the NHS. The deadweight cost of introducing the poll tax is £443 million, with recurring costs of £235 million. In anybody's language, that is just a waste of money. My right hon. Friend the Member for Ashton-under-Lyne will be aware of the scandal surrounding the sale of the royal ordnance

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