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Column 230factories and the subsequent sale of the Rover group, which cost the taxpayer about £100 million. We await the eventual report on that. Even more outrageously, the undervaluing of assets in privatisation sales is accompanied by about £16 billion of debt write-offs.
A fortnight ago we debated the Government's plans for tax relief on private medical insurance schemes for pensioners. About 90 per cent. of the £40 million that the scheme is supposed to cost is deadweight costs. In other words, that is money that the taxpayer is giving to people who already have such schemes and who do not need persuading into them.
When we challenge the Government on their management of the economy, they come back to us with two things. First, we get cod versions of Labour history from people who think that "The Ragged Trousered Philatelist" is about an impoverished stamp collector. Secondly, we have new and imaginative facts from the Chief Secretary. My hon. Friends know the sort of thing--that we have a trade surplus with the Cook islands and more telephones per household than Algeria. The Chief Secretary's most recent list includes boasting about a 40 per cent. increase in business investment in the past three years. If the same fact is put the other way round, it means that business investment as a share of national output is at an all- time high. However, as my hon. Friend the Member for Nottingham, North (Mr. Allen) pointed out, that presentation of the Government's case looks a bit grim in view of what is said in CBI News and the Bank of England Quarterly Bulletin which have set out a more pessimistic view of the future.
Company profitability and VAT registrations are all relevant facts in their own way, but if one is boasting about one's skill in managing the economy, I should have thought that one would stoop to mention things like the balance of payments, inflation or interest rates. When Sir Winston Churchill said,
"Never was so much owed by so many to so few",
he was not talking about mortgage interest repayments, although if he were serving on the Government's Front Bench now he could have been.
The previous Chancellor wanted inflation to be his judge and jury. Two things can be said in defence of the previous Chancellor--and because the Chief Secretary did not come to the aid of his former boss, I shall. The first thing is that, although he may well have said that inflation would be his judge and jury, he never said he would hang around for the sentencing. The second thing that can be said in his defence is that with interest rates being so high and with inflation not yet under control, it is only right that a Chancellor who always commended prudence should make sensible provision for himself in an uncertain world. What can be wrong with that? Understandably, his successor has told the House :
"There should be no doubt in anyone's mind. We will bring the economy back on track, as a preparation for prosperity in a decade of promise."--[ Official Report, 23 January 1990 ; Vol. 165, c. 758.] What happened to the last decade? What does the Chancellor mean by "back on track"? Back on track from where?
In keeping with his stealthy devaluation, the new Chancellor replaces the bombastic complacency of his predecessor with a quiet, dull grey, low cunning that is all his own and, although it is bad news for Britain--
Column 231Mr. Tony Blair (Sedgefield) : It is a compliment to the right hon. Gentleman.
misunderstanding about it, I am very fond of the Chancellor. However, although it is bad news for Britain, I predict that as we enter the Chancellor's "decade of promise", low cunning and shabby pragmatism will be characteristic of the Government's approach in the early years of that decade in the run-up to the next general election. 9.39 pm
The Financial Secretary to the Treasury (Mr. Peter Lilley) : I begin by congratulating the hon. Member for Newcastle upon Tyne, East (Mr. Brown) on the knighthood that he was awarded on the Order Paper at the beginning of this week. The speech that he gave today shows that that was clearly well merited because it surpassed in its wit even the speeches of his right hon. and learned Friend the Member for Monklands, East (Mr. Smith). Unfortunately, he has also learnt from the right hon. and learned Gentleman how to make a speech that is entirely devoid of substantive content. I congratulate the hon. Member for Derby, South (Mrs. Becket) on her first outing--like me--as a Front Bencher speaking in a public expenditure White Paper debate. Her speech was admirable, particularly in its content. It was meaty and I intend to get my teeth into it later.
My right hon. and hon. Friends will want to join me in congratulating my right hon. Friend the Chief Secretary to the Treasury on his success in the public expenditure round, which culminated in the White Paper. By chance I stumbled across the Lamont clan motto which, I discovered, translates, "Neither spurn nor spare". The Chief Secretary has certainly neither spurned the chance to spend more on priority services nor spared waste, inefficiency and bids that exceed the country's ability to pay.
The speech of the hon. Member for Derby, South suggested that, as shadow Chief Secretary, she has adopted as her motto, "Neither cost nor control". She gave no hint of having costed her colleagues' proposals, let alone having brought them under control.
The White Paper represents an achievement in three respects. First, public spending as a proportion of gross domestic product is back at the lowest level it has been since the mid-1960s and is one of the lowest in Europe. As my hon. Friend the Member for Beaconsfield (Mr. Smith) said in a powerful speech, that gives us a great competitive advantage as we enter the Europe of the single market.
Secondly, my right hon. Friend has kept spending, as a percentage of GDP, within the plans laid down by his predecessor last year. Thirdly, despite that, he has been able to increase resources allocated to priority sectors. There is now nearly £3 billion more for the NHS, one of the biggest increases ever. There is an extra £1.8 billion for transport over the next two years. Capital investment by central Government and public corporations is set to rise by 7.5 per cent. in real terms.
Opposition Members, including the hon. Member for Nottingham, North (Mr. Allen), are genuinely baffled by how we repeatedly succeed in finding more money for priority areas, while still keeping within our overall planning targets. The answer is straightforward enough. First, we have a growing economy. Secondly--linked with
Column 232that--we have falling unemployment and declining losses in the remaining nationalised industries. Thirdly, we have sound public finances resulting in the repayment of debt.
The repayment of the surplus this year, last year and the year before accounts for a reduction in the interest burden of about £3 billion a year for ever. The extra £3 billion that we have been able to make available to the NHS can be said to come from that source. Certainly it would not have been available to a Labour Chancellor because Labour is in the business of piling up debt, not unloading it.
The great majority of Opposition speakers mentioned transport and the infrastructure. However, there is a sharp contrast between the rhetoric that we heard today from the Opposition and the actions of the Labour party when it was in government. I looked up what the last Labour Government public expenditure White Paper had to say on the subject. We all know that in the previous years they had cut public expenditure on transport by 40 per cent., but were they then planning for the ever-expanding needs that hon. Members now take for granted? The White Paper is succinct. It says :
"A broadly constant level of expenditure, below that of earlier years, is planned for roads and transport."
It is equally bleak for the infrastructure as a whole. It says : "The share of capital expenditure in public expenditure as a whole is now lower than in the early 1970s The amount of investment needed in roads and water is now less than in the early 1970s." It is a different tune now. By contrast, this Government have reversed the cuts that the Labour Government introduced and are planning a massive but balanced increase in spending on transport over the next three years. On national roads, in England alone, we shall be spending £5.7 billion, in addition to territorial budgets. On rail and other forms of mass transport we are planning to spend no less than £5.9 billion.
The other subject that came up repeatedly in the speeches of the Opposition Members, as one would expect, was the National Health Service. A year ago the Leader of the Opposition declared that the National Health Service needed another £1 billion a year to solve its problems. My right hon. Friend the then Chief Secretary managed to secure about £2 billion in extra resources, so this year the Leader of the Opposition declared that the service needed £3 billion more than was planned. Once again he has been capped, and the additional funding for the pay review awards, plus the £2.5 billion already announced, means that the National Health Service will have nearly £3 billion of extra resources in 1990-91. If the Leader of the Opposition declares yet again that a larger sum is needed, he will make himself even more foolish than usual, but it is a racing certainty that he will.
Those huge increases have posed the Opposition a serious problem : how can they describe as cuts increases that match their most extreme demands? But they have risen to the occasion, and they now argue that the increase, if one excludes all its components, is not an increase at all. The hon. Member for Derby, South was at it today. She dismissed what is called the extra inflation in NHS costs. But that is largely the result of pay awards rising faster than prices. It is true that Labour did not succeed in getting nurses' pay to rise faster than prices, but there is no reason why Labour should dismiss the achievement when we secure it. The hon. Lady dismissed expenditure on the Health Service review. I am advised by my hon. Friends that on this subject the hon. Lady has little to offer. The fact is that expenditure on the Health Service review is
Column 233financing 100 extra consultant posts. Do the Opposition not want those posts? It is financing an improved medical audit. Are the Opposition uninterested in the quality of health care?
Mrs. Beckett : I hope that the Minister will try to be accurate. It is not 100 posts this year. The money to which I referred is the money for this year. This year only one third of those posts--30 to 35--will be provided.
The hon. Lady talked about the spending attributable to what she dismissively called demographic factors. Nothing could be more spurious. "Demographic factors", in commonsense language, means people living longer, fitter lives. That is happening partly because of the very expenditure that we have committed to the Health Service. People live longer because they receive medical care, not vice versa. The hon. Lady tried to pretend that there had not been an increase and that the statistics could be dismissed. She at least ought to know better because in her own city we have seen completed in recent years at the Derby city hospital an obstetric, gynaecology and maternity unit costing £18.3 million. Secondly, Derbyshire royal infirmary stage 2 cost £12 million. Thirdly, Ilkeston community hospital cost £6.3 million. What gratitude from the hon. Lady. We have heard a great deal about the Opposition's concern about training. I welcome the agreement that is beginning to emerge about the antiquity of the training problem and the importance of training for our future.
It is increasingly accepted that, on training, this country has suffered, not just for years, not just for decades, but probably for a century, from three problems. There has been too little vocational training for school leavers who do not go on to higher education, too few of them entering higher education and too few of those who enter higher education qualifying in science or engineering.
What the Opposition do not like is that the Government have a track record of addressing those problems with vigour and increasing success. By contrast, when Opposition Members were in power they failed to do anything. Since they have been in opposition, they have denigrated and opposed every step taken and they have backed the unions when they have tried to prevent us from introducing constructive proposals for education and training.
The hon. Member for Derby, South was a junior Minister, although she probably prefers to forget it, in the Department of Education and Science in the previous Labour Government.
Column 234Government of which the right hon. and learned Gentleman and the hon. Lady were members. She may be able to confirm that the Labour Government considered a proposal to deal with the lack of vocational training for school leavers similar to the youth training scheme, and turned it down because their priorities were the ideological ones of forcing through the rest of the comprehensivisation programme, in no way improving training for our school leavers. I note that she does not deny that. She cannot, because Labour did nothing to solve that problem. But we have done so. We have achieved a vast increase in the proportion of people going into higher education and we have increased the proportion who achieve qualifications in science and engineering. The proportion of British graduates in science and engineering combined exceeds that of all other major countries, not excluding Japan.
In one sense, this has not been a proper debate, although we have had some admirable contributions.
Mr. Lilley : It has not been a good debate because real debate requires an alternative, and the Labour party has failed to give us an alternative to our public expenditure White Paper. It has refused to respond to two questions posed by my right hon. Friend the Chief Secretary : how much would the Labour programme cost and how much
Dr. Godman : The Minister will recall that the Chief Secretary promised to answer my question on negotiations with the Department of Agriculture and Fisheries for Scotland and the Ministry of Agriculture, Fisheries and Food on the funding of the decommissioning scheme.
Members of the Opposition Front Bench will be grateful for that intervention. They have once again failed to respond to the two questions : how much would Labour's programme cost and how much extra tax would it require? Labour Front-Bench Members are in a peculiarly embarrassing position. Their initial aim after the election was to steer clear of any spending commitments if possible, but they have failed. The rest of the party forced them to take on board a welter of commitments when they agreed the policy review. Recently I wasted a shining hour or two reading it and encountered no fewer than 170 potential spending pledges, and that is only a start.
Despite the best efforts of the hon. Member for Derby, South in her role as shadow Chief Secretary, each new party document that issues from the Opposition Front Bench contains more promises. Even in this debate we have had plenty more calls from every Opposition Member, Front Bencher or Back Bencher, for more expenditure on everything : training, education, research and development, science, health, and so on. The hon. Lady herself gave every impression, unless my ears
Column 235deceived me, of demanding more spending on health, training, research and development, investment and transport.
I could not help thinking how bizarre the public spending round would be if ever the hon. Lady were to become Chief Secretary to the Treasury. It would be a case of her going round to the spending Departments' Ministers and knocking on the door demanding that they spend a little more money but I happily give way to the hon. Lady.
Mrs. Beckett : I am not sure that "happily" is quite the right word. The hon. Gentleman has been too clever by half. If he looks at the commitments that I said the Government should not have cut, and at the choices that the Government should not have made in spending terms, he will find that they balance almost exactly.
Mr. Lilley : That is absolute nonsense. The only number of any size that the hon. Lady specified was the alleged costs which she asserted had resulted from the privatisation programme. Without the privatisation programme, the Labour party would be deprived of revenues far in excess of any costs she referred to and it would have a black hole that it would be incapable of filling.
During the debate the hon. Lady, in response to excellent questions from my hon. Friend the Member for Beaconsfield, dropped a bombshell. She declared that not only would those promises not be costed before the election, but they would not neceessarily be implemented afterwards. She revealed a core manifesto. It consists of just two pledges : higher pensions and better benefits for families with children. Everything else--every other item-- would depend on circumstances, happenstances and maybes.
I do not want to misrepresent the hon. Lady, but will she confirm that there is no firm Opposition commitment to spend on any other items apart from those two? Is there no firm commitment for extra spending on health, no firm commitment for extra spending on training, no firm commitment for extra spending on transport, and no firm commitment for extra spending on infrastructure? I look at the worried faces among Opposition Back-Bench Members and I realise that the pledges that they forced the party to accept, to "Meet the challenge, make the change", have now been disowned.
Now I know what the right hon. and learned Member for Monklands, East meant when he told The Times that there might be room only for what he calls "symbolic commitments". Labour's calls for more spending on health are, after all, purely symbolic and if ever a Labour Government were elected, patients could look forward to being treated in symbolic hospitals, we should be defended by symbolic tanks, and the ambulance men could, no doubt, look forward to a symbolic pay rise from the Labour Government. I shall happily give way to the right hon. and learned Gentleman if he wishes to disown his remarks. He does not.
The other extraodinary remark made by the hon. Lady was that not one of Labour's pledges and promises would be costed until after the next general election. That is extraordinary, not only in terms of democracy and common sense ; it flatly contradicts the commitment of her
Column 236own leader, and it was a commitment not lightly given. In the preface to Labour's document, on page 8 the right hon. Member for Islwyn (Mr. Kinnock) wrote :
"At the time of the next General Election, we will set out the accurate costs of our manifesto proposals in the light of the economic situation we are likely to inherit and the priorities which we consider most urgent."
That promise has now been rendered purely symbolic, I gather. There is to be no costing exercise, no attempt to explain to the people the issues on which they will be voting. The fact is that we shall not let the Opposition get away with it, and it is not only us, but some Back-Bench Opposition Members who will not let them get away with it. I remember the hon. Member for Brent, East (Mr. Livingstone) saying :
"You can be miles ahead in the polls, but when you get to the last three weeks people think, Could I afford a Labour Government?'" He added :
"If you can't tell people where the money is coming from, they won't vote for you".
At the heart of the debate lies the question : does control of public expenditure matter? Conservative Members believe that it is crucial. Opposition Members appear to be willing to accede to any remotely plausible demands for more money. We have seen where that leads. We saw where it led in 1976, when the brokers' men from the IMF were called in.
There is a positive face to public expenditure controls : they make for a more dynamic economy. Ultimately it is everyone's right to spend his own money as he wishes, but the Opposition would take away that right. They have seen Socialism destroyed, but they are not prepared to admit it as they face the electorate in the next general election.
Question put , That the amendment be made :--
The House divided : Ayes 209, Noes 274.
Division No. 73] [10.00 pm
Abbott, Ms Diane
Archer, Rt Hon Peter
Ashdown, Rt Hon Paddy
Ashley, Rt Hon Jack
Banks, Tony (Newham NW)
Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Benn, Rt Hon Tony
Bennett, A. F. (D'nt'n & R'dish)
Bray, Dr Jeremy
Brown, Nicholas (Newcastle E)
Bruce, Malcolm (Gordon)
Buckley, George J.
Campbell-Savours, D. N.
Carlile, Alex (Mont'g)
Clarke, Tom (Monklands W)
Cook, Robin (Livingston)
Cunningham, Dr John
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham Hodge H'l)
Duffy, A. E. P.
Dunwoody, Hon Mrs Gwyneth
Evans, John (St Helens N)
Field, Frank (Birkenhead)
Fields, Terry (L'pool B G'n)