House of Commons Hansard Debates for 1 Dec 1993

Mr. Barry Legg (Milton Keynes, South-West) : Lord Wilson said that a week was a long time in politics. Less than a week ago, in the debate on the Loyal Address, I spoke about the economy. I am grateful to you, Mr. Deputy Speaker, for calling me again this evening. When I spoke last week, I urged a reduction in the control totals, action on the Budget deficit and a more confident stance by the Government on economic policy. Yesterday, when my right hon. and learned Friend the Chancellor of the Exchequer presented his Budget we made significant progress in all those areas. The control totals for next year were reduced by some £3 billion. As my hon. Friend the Member for Colchester, North (Mr. Jenkin) said, many Conservative Members had argued for that throughout the summer months right up to the Budget. The reduction is sensible in that it takes into account the lower inflation which has been achieved and brings greater discipline to the Government's finances. That is particularly important, but the Government have made only a beginning. I am sure that my right hon. Friend the Chief Secretary to the Treasury has struggled long and hard to reduce the contingency reserve and to ensure that it is not consumed in the main estimates of departmental spending. With a sensible budgetary framework in place for the coming 12 months, it is up to Ministers to ensure that those targets are achieved.

The overall increase in the control total allows for an increase in cash spending of 2.7 per cent. That is a not insignificant sum when inflation is at such a low level. However, it will require a cultural change for Ministers and civil servants. The Times today published photographs of Ministers who had supposedly won and those who had supposedly lost in the spending round. As usual, the press regarded those who had contained their budget and

Column 1118

achieved savings as losers. There needs to be a fresh philosophy in the Government so that those who play a part in achieving more cost-effective public services are recognised and rewarded. There also needs to be a change in attitude among civil servants. Tight budgetary targets have been set. Now they must be achieved. This afternoon, my right hon. Friend the Chief Secretary referred to Lord Howe's Budget of 1981 and drew comparisons between it and my right hon. and learned Friend's Budget yesterday. It should be remembered that the 1981 Budget provided for public spending to fall by 4 per cent. in real terms over the subsequent three years. Today, my right hon. Friend presented public spending projections for real increases of 0.25 per cent. per annum. Despite Lord Howe's good intentions, he could not achieve the 4 per cent. reductions over the following three years and public spending increased in real terms by some 5.7 per cent.

Mr. Ian McCartney (Makerfield) : Unemployment rose by 2 million.

Mr. Legg : That was coming out of recession and into a period of sustained growth.

With a firm Budget set for next year, Ministers will have to work extremely hard to ensure that those spending plans are adhered to. Comments about efficiency and lower overheads must be made into realities.

The other welcome changes in the spending figures for next year are reflected in reductions in debt charges and in cyclical spending. That shows the merits of our overall policies. By getting down the overall level of borrowing we are driving down debt charges, and by coming out of recession we are getting a reduction in cyclical spending.

The Budget is being well received in the markets. Today, both the equity market-- [Interruption.] --and the gilt-edged market responded positively to my right hon. and learned Friend's measures. Opposition Members may not care about the equity market or the gilt market, but I am afraid that they are living in the 1970s. The gilt market is important to the Government and to every business.

Today, long-term interest rates fell and the gilt market rose. That is good news for Government finances and for every business. Whether in the service sector or in the manufacturing sector. The long-term interest rates set by the markets determine the price at which businesses can borrow and plan for the medium and long term. That lies at the heart of our policies and is an aspect of economic policy that the Opposition choose to ignore completely.

The strategy of balancing the books in the medium term has now been established by my right hon. and learned Friend. When I spoke in the Queen's Speech debate, I said that the concept of reducing the public sector borrowing requirement towards balance over the medium term was too vague a policy objective. Yesterday, that changed. My right hon. and learned Friend introduced plans in the Red Book to balance the books. [Interruption.] Opposition Members may not like that, but if they open the Red Book and look at the figures, they will see plans to reduce the PSBR to zero. That will be good for the country, for the Government's finances and for business throughout the country. Yesterday, my right hon. and learned Friend did not spend much time talking about monetary policy. Previous Chancellors have tinkered with monetary indicators, such as M0 and M4. My right hon. Friend the Member for

Column 1119

Kingston upon Thames (Mr. Lamont) widened the bands for both those indicators to such an extent that they had little meaning as instruments for determining monetary policy. Yesterday's statement about underfunding the deficit next year by £7 billion was, however, significant and a welcome development in terms of monetary policy. It will help the liquidity of many businesses, which is vital to their expansion.

My right hon. and learned Friend rightly made disparaging remarks about forecasts. Many of our forecasting institutions and economists run forecasts based on models that do not reflect the matters that drive the British economy in the 1990s.

The adjustment of £7 billion to monetary policy--that is, 1.25 per cent. of gross domestic product--will be an important stimulus to the economy, which counters any suggestion from hon. Members that this is a contractionary Budget.

Spending plans have been reduced, but they do not result in an overall cut in expenditure--spending has been brought into better balance.

Confidence will flow from the Budget. I mentioned the reaction of the markets today, which the Labour party seemed to pooh-pooh. Unemployment will continue to fall and my right hon. and learned Friend's estimates for GDP growth in the Red Book have been modestly set. The output gap in the United Kingdom economy is probably at a significant level. Unused facilities, resources and people exist to take up the slack in the economy. I believe that we shall see above-trend growth over the next few years.

The overall success of the measures will not depend purely on monetary policy or on the Government being able to manage their machine more efficiently. Success will also depend on having a coherent long-term strategy for reducing the state's role, in step with people's aspirations. I was pleased that my right hon. and learned Friend yesterday reinforced our commitment, as a Government and a party, to reducing public spending as a proportion of GDP. That is one of our main priorities over the remaining period of the Parliament and in the run up to the end of the century.

My hon. Friend the Member for Colchester, North drew attention to the fact that many of the most successful economies in the world today have much smaller lower public sectors than the United Kingdom. I believe that my right hon. Friend the Chief Secretary also drew some parallels in his opening speech. Japan has a much smaller public sector as a proportion of national wealth--32 per cent. of annual GDP. The United States' public sector is about 35 per cent. of its GDP. Opposition Members will be interested to learn that the hon. Member for Dunfermline, East (Mr. Brown) seems to be a convert to the concept. In his speech on the Gracious Address last Thursday--it appears in Hansard at column 602--the hon. Gentleman gave Taiwan as an example to be followed by Britain. He said that a larger proportion of young people went into higher education in Taiwan than in the United Kingdom. He seemed to suggest that we should follow the example of Taiwan. His suggestion probably reflects his usual intellectual laziness. Taiwan has a much smaller public sector, which has something to do with its economic vitality.

Column 1120

What is more, if the hon. Gentleman had bothered to do any homework, he would have found that all further education in Taiwan is financed by private loans--there is no state help for higher education students in Taiwan. I look forward to seeing the hon. Gentleman in the Lobby when we vote on issues relating to student grants. It is important to have a long-term strategy to reduce the size of the public sector as a proportion of national wealth if we want to have a successful economy.

I welcome the changes announced in the Budget on social security payments. My right hon. and learned Friend the Chancellor presented a generous and significant package to help with VAT compensation. The package was much more generous than any of the estimates that I saw in the press or from the Labour party. The total package is worth £1.25 billion, which is a success for grey power.

My right hon. and learned Friend the Chancellor announced changes in the level of retirement pensions over and above the inflation rate. He gave the House an assurance that that was a one-off measure and could not be repeated in later years, which was a wise and sensible assurance for him to give the House. Politicians must take fully into account the changing demography of British society. Demography has certainly changed enormously since Beveridge established the welfare state in 1945. At that time, those over 65 represented one in every seven of the population of working age. As we heard this afternoon from my right hon. Friend the Secretary of State for Social Security, there is now one person over the age of 65 for every three people in the working population. Therefore, the demography has changed.

The economics are also changing fundamentally--Opposition Members would do well to recognise that. Many elderly people retire on substantial occupational pensions which have grown significantly during the 14 years of Conservative rule. Those pensioners will have been pleased to see the developments in the markets today. They have become more wealthy and will have an opportunity to receive higher occupational pensions in future. In considering policies for the elderly and the social security budget overall, we must take into account demographic and economic changes that have occurred over the past 50 years.

I welcome the introduction of the job seeker's allowance and the new incapacity benefits. The aim of seeking to concentrate help on those most in need is the appropriate policy for any responsible Government. As my hon. Friend the Member for Colchester, North said, spreading universal benefits widely across the whole population weakens the amount of resources available to direct to those most in need. A high priority for Conservatives is to ensure that those in need receive proper allowances.

I support the proposals to equalise retirement ages announced yesterday, which was a common-sense solution to the E have equalised retirement ages at 65. The social security budget still shows substantial increases over the coming years. Opposition Members who suggest that Ministers are undermining the welfare state should turn to the Red Book and look at the spending figures on social security, education and health--all of which are increasing in real terms.

Column 1121

The renewed commitment that we have heard from my right hon. and learned Friend the Chancellor to reduce public spending overall as a proportion of GDP is vital. A sound financial foundation and a sound financial example set by the Government will heighten the prospects for enterprise and initiative within the economy as a whole in coming years and produce substantial economic benefits for Britain and its people.

8.58 pm

Mr. John Garrett (Norwich, South) : The Chancellor's Budget judgment is that the economy needs a huge deflationary increase in taxation and an unprecedented cut in public expenditure just as we are coming out of recession. I assume that that is known as the new economics, but it is not an economic formula known to me in other circumstances.

The tax increases that will hit the ordinary taxpayer in the spring can only be called a tax bombshell, which will fall not only when the economy is slowly recovering when it should be gathering pace, but just before the local and European elections, which will bring just retribution to the Conservative party.

A family on average earnings will lose no less than £30 a month as a result of the action of a Government who are pledged to reduce the tax burden. By 1995-96, a married person earning £25,000 a year will lose £74 a month--£900 a year. That is also a formula for delaying recovery. But the full weight of the new tax-benefit regime will fall on invalidity beneficiaries, the unemployed and the nearly poor, who will, for example, have to pay VAT on domestic fuel without compensation.

I welcome the £28-a-week child care allowance, although it will not go very far. It is a useful antidote to the hysterical speech on the social cleansing of single mothers and scroungers that the Secretary of State for Social Security made at the Conservative part conference. Some 200,000 low- paid workers will be pulled into taxation for the first time as a result of freezing allowances, so that the weakest will again get it in the neck.

The increase of £1.6 billion in health spending is quite inadequate to cope with growing waiting lists and increased demand. The Secretary of State for Health said that she expects 2.25 per cent. in efficiency savings. I hope that she will tell us where those efficiency savings will come from. She really means that savings are coming from the standard of living of health workers.

Costs in the health service are driven by new technology and drugs, which far outstrip a 1.6 per cent. funding increase. Our health service is phenomenally efficient by international standards, and it cannnot be squeezed any more. Frozen pay in the health service and other public services simply means redundancies.

In my constituency advice surgeries, the biggest and most intractable problem is housing. In what was once an exceptionally well-housed city, there is now real housing stress and hardship. We can look forward to a substantial worsening of the situation. The cut of £300 million to the Housing Corporation, followed by another reduction of the same amount in the following year, will lead to a fall in the number of completions of some 13,000 dwellings and the loss of 30,000 improvements. It will lead to increases in housing associaton rents and a fall in work for the building industry.

Column 1122

The effect on local authority housing will be worse. Local authorities will take a £860 million cut next year, and that will mean more redundancies and substantial cuts in services that have a direct impact on the less well-off. New starts by housing authorities and housing associations in the last year of a Labour Government were more than 100,000. Today, new starts are 36,000. Public investment in housing has fallen by more than 20 per cent. in real terms since the end of the 1980s, and it is now lower than for the past 30 years. I have never understood why the funds received from council house sales could not be used to build more rented housing. That would create jobs and provide homes. There has been a huge growth in poverty, noticeably in my formerly prosperous constituency where unemployment is now some 15 per cent., while 140,000 taxpayers on incomes of more than £80,000 a year have had an unbelievable bonanza of income tax cuts. We are heading for an American-type society, in which there is a vast gap between rich and poor. The differentials between the well-off and the poor are greater now than at any time since records were started in 1886.

There has been a steady weakening of our productive capacity. Investment is a smaller share of national income than at any time for nearly 40 years. Britain is 23rd out of the 24 OECD countries in terms of the share of national income devoted to investment. We are not investing for the future of our industry. Investment for each manufacturing worker is half that of Germany and Japan, and a third of that in America. With private and public investment still falling, that is a recipe for continuing depression in our economy. All the policies embodied in the unified Budget depend for success on the eventuality of a recovery from recession over the next three years which is capable of offsetting rises in taxation and cuts in public services and infrastructure.

I am one of the few people who take an interest in the form of national accounts. The Budget is much less unified than one might think. It is really a standard Budget with less detail than usual, and simply a presentation of public spending heads. It will be followed by departmental spending reports which set out costs but never set out the outputs or objectives of spending, and estimates which are more or less meaningless for management purposes. I am pleased about the shift to an accrusals basis of public spending. I remember proposing it to a Procedure Committee in 1969, but the Treasury then opposed it as impractical.

Much more work has to be done on our national accounts, given that, as Robin Butler said in an answer to a question by me in the Treasury Committee a week or so ago ; we are moving from a central Government of 30 main Departments to a Government of 30 ministerial headquarters, 150 agencies, more than 1,000 quangos, trusts and boards and countless thousands of contracts that are all managed by companies that are out to make a profit.

Those changes make nonesense of Government accounts and wreck the accountability of Departments to, for example, the House and its Select Committees. That is worth mentioning. Public expenditure planning is simply becoming impossible as a result of those changes in the machinery of government. Unfortunately, the machinery of government has changed much faster than the machinery of scrutiny that Select Committees can bring to bear.

Column 1123

To return to the Budget judgment, as I started, it seems to me to be an exceptional gamble on recovery. It is a Budget that hits the poorest hardest. It depends on massive cuts in public expenditure, which were hidden in the Budget statement and will become apparent only when the settlement with local authorities is made. It imposes taxation on the greater part of our fellow citizens, and I very much doubt that that gamble will come off.

9.5 pm

Mr. Tony Banks (Newham, North-West) : It is always a pleasure to follow my hon. Friend the Member for Norwich, South (Mr. Garrett). I agree with every word that he said.

May I say, for the record, that I was absent from the debate earlier because I was attending a meeting of the Procedure Committee and I returned immediately after the meeting finished. One of the papers that we considered there was about the impact of a unified Budget. Although the Committee is naturally very supportive of a unified Budget, as we all are, we need to monitor the date carefully and to observe its impact, because there have been some complaints, especially by retailers, that in the run- up to Christmas it is not especially good for business to have to try to second-guess a Chancellor of the Exchequer, and consumers have the same problem. We ought to consider that carefully and perhaps think about another date if we feel that there has been some adverse impact on commerce and consumer patterns.

In recent weeks and months we have got used to hearing the phrase about getting "back to basics". The Prime Minister is very fond of using it. Two points occurred to me about that phrase. First, the Conservatives have been in power since 1979, which is 14 years. If we are to get back to basics, therefore, we need to ask who took us away from basics in the first place. Secondly, what on earth does the phrase mean? What are basics? When did basics begin, when did they end, and when was the golden age of basics?

I must admit that it is a very evocative phrase but, rather like its author, the Prime Minister, it defies objective definition. It can mean totally different things to different people. That is precisely the trick. Everyone can agree with it without contemplating the problem of ever having to agree with anyone else, because no one really knows what it means. It is a phrase that says it all but, at the same time, says nothing. It is vintage John Major.

I decided to try to get into the mind of the Prime Minister, a task that some people may say does not require the abilities of a Harry Houdini, but I am a little more charitable about the Prime Minister because, in my opinion, if the Prime Minister has in mind a golden age it must mean Brixton and getting back to the basics of the 1950s.

I can connect easily with that sort of image because I was also brought up in Brixton in the 1950s. We lived in a London county council home. The Majors, of course, lived in a privately rented mansion flat, as I understand, and we always used to envy them greatly. They were well-known nobs in the area, Mr. Deputy Speaker, I can tell you. It was, however, a time of great security, I am sure, for both of us although, mercifully, we were blissfully unaware of each other's existence.

Column 1124

There was little or no street crime in Brixton at the time. As kids we were able to play in the streets--I am sure that the Majors did not, because that was a working-class practice only. If anyone was unfortunate enough to be knocked over when we were playing in the streets, you could bet your bottom dollar that he would be knocked over by a car that was designed and built in Britain. It would be an Austin or a Morris Oxford ; or, if he was very lucky, or perhaps unlucky, he could be knocked over by a Jowett Javelin. How I longed to be run over by a Jowett Javelin.

There were no beggars in the streets of Brixton in the 1950s, there was no one pushing drugs. Truancy was almost inconceivable and anyone who did it found that the school inspectors or the educational welfare officers would soon come round to talk with his parents. To own a television in Brixton in the 1950s was a big deal. Anyone owning a black and white television was thought of as either being on the fiddle or a bit of a flash git, as my granny used to say. There was no real violence portrayed on the screen, nor were the minds of the young polluted by the obscenity of the violent sick videos and computer games that we have today.

To complete the idyllic picture of the Prime Minister's golden age of basics, this is the clincher. During the 1950s Surrey won the cricket county championship every year for six successive years ; and Chelsea recorded its only league championship in 1954-55. It must have been the golden age of basics for the Prime Minister. I was lucky ; I saw every match that Chelsea played in the great year of 1954-55.

However, when the Prime Minister recalls those times, he always manages to forget two things. First, unemployment in 1953 was 356,000 nationally--1.7 per cent. of the working population. London now has more unemployment-- about 500,000--than we had nationally in the 1950s. There are now 2.8 million unemployed people in Britain--and that is the fiddled figure. If we take the 29 changes or fiddles into account, probably about 4 million people are unemployed.

There was no homelessness in Brixton in the 1950s. Local authorities at that time were building 239,000 homes. In 1992, local authorities built just 4,600 homes. It does not take a PhD in housing administration to work out why Britain has a housing problem. In Brixton in the 1950s, in the Prime Minister's golden age of basics, security was based on employment. People had security, and jobs and a stake in society. When people have employment, they have something worth keeping. They have something that gives them a stake in our society. It is not surprising that street crime, truancy, single-parent families--all the things that are pointed out as problems in our society--did not exist in the same measure because people had the security of jobs.

The Chancellor's Budget speech contained little or nothing that really addressed the problem of unemployment. The only job that the Budget addressed was the job of the Prime Minister, which the Chancellor clearly covets. There he stood, all beer belly and hush puppy shoes, playing to the one electorate that really matters, the only one he needs for the future-- the electorate behind him of Tory Members of Parliament who will be voting for a new leader of the Conservative party probably some time next year, and he obviously wants to be in the frame when that happens.

Column 1125

The Chancellor could have done a great deal for jobs in Britain and for London in particular. He could have done it by expanding the budget of the Department of Transport instead of reducing it by one fifth between now and 1996-97.

Last week in London we suffered one of the worst breakdowns in the Underground system that any city in the world has experienced. It was the worst one I can ever recall in London. It led to headlines such as "Enough is enough" in the Evening Standard. On Wednesday 24 November, about 20,000 people were trapped in the tunnels in trains and people were stuck in lifts. Millions of people failed to get to work or arrived at work late.

The Secretary of State for the Environment said that Londoners should stop whingeing. Instead of whingeing, they should storm No. 10 Downing street to do something about the calamitous state of London transport. How dare the Secretary of State tell Londoners that they should stop whingeing when we have such a crappy, clapped-out Underground system as we have today? He is lucky. If he thinks that we are whingeing, if he comes anywhere near my part of town in the east end of London, where we were without the Central line until Monday this week, Londoners are more likely to string him up than to start listening to his admonitions about whingeing.

It is all right for Ministers in their chauffeur-driven cars, with their red boxes and their civil servants brushing dandruff off their shoulders, moving around in the luxury that surrounds them while millions of Londoners struggle every day to make sense of an Underground system or a public transport system that is palpably breaking down. It ill behoves Ministers such as the Secretary of State for the Environment to say that Londoners should stop whingeing.

The Monopolies and Mergers Commission said that £700 million to £750 million a year is needed to produce an acceptable modern metro system. The previous Secretary of State for Transport promised £700 million a year for London Underground by 1993-94. However, one year later, that funding was cut by about 30 per cent. in the Budget. We are talking about cutting a budget that was estimated only to be able to keep things going and then make some improvements. To cut the budget by 30 per cent. means that so much work cannot be done now. That is why London Underground broke down so badly. It turned out that the electrical fault lay in cabling that was 70 years old in some cases. We should not have a system that has 70-year-old cabling. We have rolling stock which badly needs replacing--

Mr. Jenkin rose --

Mr. Banks : I will not give way to the hon. Gentleman because he spoke for ages and bored hon. Members rigid, especially me. I know the hon. Gentleman's father well. To show family values, the old man goes to the House of Lords and the son comes to the House of Commons. The Tories know all about family values. [Interruption.] The hon. Gentleman should sit there and take it because I can tell him about this place. There is no more unreceptive an audience than when it is made up of people who are simply waiting for the hon. Gentleman to shut up and sit down so that they can get up and speak. I have three minutes and I shall relish them, and the hon. Gentleman will sit there and listen.

The Chancellor could have said something about the Northern line. It is called the misery line [Interruption.] If

Column 1126

the Chief Secretary, with the bouffant hair, travelled on the Northern line instead of in his swish car, he might push forward the proposals to modernise the Northern line. Crossrail is now uncertain in London, and the Jubilee line extension is not the highest priority.

It is nothing to do with the transportation needs of Londoners--it is all to do with saving the bacon of Canary wharf and the developments of the London Docklands development corporation. It is developer-led ; it is not consumer-led in terms of the transport needs of London. When will we get the channel tunnel rail link? The Chancellor could have talked about that. That has been pushed back. Transport investment means jobs in the construction industry and in rolling stock manufacturing outside London. It saves billions of pounds in terms of congestion. If we had a modern metro system, people would use it instead of private cars. The Confederation of British Industry estimates that congestion costs London £10 billion a year.

A good public transport system brings environmental improvements. No economy can prosper without an efficient transportation system. Investing in London and national transport systems makes a great deal of economic, social and business sense. Anyone in the House who travels on London transport knows that its infrastructure is a disgrace.

The Government had a wonderful opportunity to say something positive in the Budget about investment in London transport's infrastructure and they failed. They have betrayed Londoners, and Londoners will get an opportunity to show what they think about the Conservative party and the Government when we get round to smashing the Conservative party in the local elections in May.

9.19 pm

Mr. David Blunkett (Sheffield, Brightside) : I had a fleeting hope that the elusive Secretary of State for Health would turn up this evening to give us the benefit of her wisdom.

Mr. McCartney : She is out partying.

Mr. Blunkett : No, she is not out partying. She will be out doing a bit of late-night Christmas shopping, taking advantage of especially late opening hours in the build-up to Christmas. Instead, we have the Paymaster General and my old sparring partner, the bouffant boy, the Chief Secretary to the Treasury. I am delighted that the Chief Secretary is here tonight because his hand is on the tiller in terms of the ideology that is being followed.

Mr. McCartney : The "Portiller".

Mr. Blunkett : Yes, his hand is on the tiller as the "Portiller" and potentate of what is likely to happen to this country. A clear ideological thrust is hidden by how the "beer-swilling Chancellor" manages to freeze duty on beer and spirits, but places the duty on others to meet the Budget deficit.

Those who are unemployed through no fault of their own now find that their benefits and the time in which they can expect to receive back their own money are reduced. Six months is a poor return for people who have paid for years, through national insurance contributions, for the benefit to which they are entitled.

Column 1127

Conservative Members have undermined the Beveridge principle that people who pay in should have a right to benefits- -not a benevolence, something handed down by others or something passed across because they happen to be in distress. They have undermined the key principle of full employment and the ability of those who have a job to contribute back into the Exchequer as well as look after themselves and their families. They have undermined individuals' responsibility for themselves and their families to earn a living through hard, rewarding work in order to contribute to themselves and their loved ones, but also to put back into the community, through contributing to tax and national insurance, money that can then sustain decent public services.

The crunch of the ideological difference between us is that Conservative Members, led by the Chief Secretary, believe that public expenditure is bad and undermines the fabric and backbone of society. They believe that a free -for-all, free-market economy in which people "do it yourself" in terms of gaining benefits and buying insurance is the direction in which this country should go. That mirrors in part the United States' experience, with insecure work, insecure prospects and a lack of stake in a community that values itself--a society in which people are threatened and their stability is undermined to ensure that they are willing to take lower and lower wages to manage to survive on the breadline.

If that is the sort of society we want, we shall continue with the policies that were enunciated yesterday. But if we want to build a society that believes in itself and can use its intelligence, rational thinking and experience of history to build up public services, the community and a sense of belonging so that people value those around them and understand their interdependence with others, we shall turn instead to the policies enunciated by the leader of the Labour party and the shadow Chancellor today.

The Budget deficit is entirely of the Government's making. It is their policy that has deliberately thrown away the receipts from North sea oil, the gains that were made through the hard work of the people in the pits, the steelworks and the engineering industry. The engineering industry is clinging on by its fingertips in the city part of which I have the proud pleasure to represent.

When reporters from the BBC ask people for their opinion on the Budget, do they ask the engineering industrialists of the north and Scotland ; or the people who produce wealth by manufacturing products that can be sold overseas ; or the people whose livelihoods depend on key public expenditure on essential services ; or the people who produce equipment and materials-- not rubber ducks, plastic gnomes or somebody else's champagne corks, but real things that people want to buy and can be sold abroad? Of course they do not. They ask what the City of London thinks about it, what happened to the index and whether people are confident. They do not ask the people who produce the real wealth of the country. We have lost touch with the reality of what is taking place on the ground.

The Government's claim yesterday that the health service had received a boost from the Budget was fraudulent. The Government knew perfectly well that what they were expecting from those working in the service, and those receiving its services, was a sacrifice to keep it going. If we take out the inflation figure, using the GDP deflator,

Column 1128

the actual increase is 0.9 per cent. If we take from that the amount that is being asked for in savings, £450 million--the same amount that was asked for in the current financial year, and mirrored savings of a similar amount that were requested in the previous financial year--we get a totally different picture.

Mr. Portillo : Savings produce more.

Mr. Blunkett : The Chief Secretary says that savings produce more. In other words, it is necessary to cut the service to reinvest in it. The Government produce saving targets, which the service can have back if it makes the savings.

The savings are not on senior managers' salaries, which have gone up by 211 per cent., or on those who have awarded themselves an average pay increase of 9 per cent. this year--ranging up to 137 per cent. in the case of one very favoured Conservative friend, who was the chief executive of Guy's hospital until it was merged. It is not the people at the top who are being asked to save, but the people who will have their pay frozen in the coming year. It is those people who will be asked to save to fund the service. If the Chief Secretary strongly believes in what his right hon. Friend the Secretary of State for Health is doing, perhaps he will do us the honour of telling us so tonight.

What will be the increased charges and tax on the sick, through increased charges for prescriptions and dental treatment, and the withdrawal of exemption for certain groups in those categories? Perhaps the Chief Secretary or the Paymaster General will stand up and tell us when the announcement about the increased charges to those using the health service will be made, and how much the increase will be.

Mr. Portillo : We are not standing. We are listening to the hon. Gentleman's speech ; we will be talking about Labour's policy later.

Mr. Blunkett : The Chief Secretary wants to talk about Labour party policies. He wants to talk about anything except Conservative party policies. He does not want to talk about the fact that there will be a reduction of £175 million in real spending on the health service in the coming year. By the Government's own statistical records, 1.5 per cent. of the health budget will be taken up by demographic change and changes in medical technology.

We are talking about a £175 million cut in the amount available for spending on the health service. That is not counting the £290 million for every 1 per cent. saved by freezing pay for the average nurse or doctor, and not counting the fact that the Government are virtually doing away with the pay review bodies. Evidence given to the Department of Health suggests that national pay bargaining should be replaced by local productivity agreements based not on what we understand to be fair remuneration for the average decent day's work by a nurse or doctor, but on what the evidence now describes as performance-related pay.

Mr. Portillo : I am driven to intervene in the hon. Gentleman's speech by the old relationship between us. I know that he wishes to conclude this part of his speech and to deal with Labour party policy. Before he does so, however, let me tell him that the amounts that we have added to the health service budget for the coming year will enable the service to treat 4 per cent. more patients. That

Column 1129

is in addition to a 60 per cent. increase in the number of acute patients receiving treatment since 1979, when the Conservatives came to power. Those are the facts. The hon. Gentleman should be concerned with the treatment of patients--with output rather than input.

Mr. Blunkett : I agree that it is a scandal that the Conservatives have lengthened the waiting list by 100,000 since the general election alone ; that it has exceeded the 1 million mark in England alone for the first time ; that waiting times went up by 25 per cent. in the first six months of the current financial year ; and that the number of complaints rose by 37 per cent. last year.

The Secretary of State for Wales would take issue with the Chief Secretary on whether the Government could judge whether there would be a 4 per cent. increase in the number of patients treated. He rightly pointed out that the Government do not refer to patients as patients nowadays ; they call them "episodes of care". They do not count patients. An "episode of care" may mean someone changing from one ward to another, or returning from theatre to a different bed in the same ward. The Government do not know whether there will be a 4 per cent. increase in the number of patients treated, because there are no indicators to provide the information.

The Government speak of "episodes of care", and of "provider units" rather than hospitals. They speak of "job seekers" rather than the unemployed. We are given everything except the truth. As the Secretary of State for Wales rightly pointed out in Monday's Times, we hear of "down-sizing" rather than mass redundancy. The Government engage in doublespeak ; they speak with forked tongue ; they say one thing and mean another.

The Government are cutting public spending, having promised that they would increase it. They have increased taxes, having promised that they would cut them. They are fraudulent, they mislead, and they have bamboozled the electorate ; but they will do so no more. The electorate are wised up : they understand what is happening. A £1,000 million cut in housing provision will take its toll. That 8 per cent. cut will have an impact not only on those who are poorly housed or have no homes, but on all who want others to be decently treated--who believe in a health service which, as well as merely treating patients, prevents ill health from occurring in the first place. We are against the Government's Budget because it imposes spending reductions on those least able to bear them. That is why we have continued to oppose the imposition of VAT on domestic fuel bills. The low- paid families--mothers at home with their children, for instance--will be hit by it, and there is no compensation for those who are just above the benefit level. They are earning and struggling : they get up at 6 am to gents now. They are the people whom the Government have targeted with a tax on insuring their homes and their futures, and with a tax demanding that they should not expect--through national insurance--the comfort and security of the surrounding community when things go wrong. They should not expect support when the Government's policies make them unemployed ; instead, they should take out private insurance. They should have to look after number one, if they can. That is

Column 1130

the united state vision of the future from a Chief Secretary to the Treasury who is obsessed with cutting public spending.

The Chief Secretary said that he would ring me on election day and he did. He was confident while he sat in an Italian restaurant. Next time, I shall ring him and I shall have a different message--that £16 a week on the budget of every family in the country will have spelt doom for the Conservative party's election chances. The cuts in education at school level--not what was announced yesterday, but what will be in the revenue support grant--the reductions in real spending, in real people's lives, in libraries, in schools, in care of the elderly, in social services and, as I have already mentioned, in housing will have spelt doom. The cuts will have to fall in local government. The cuts will fall in the day-to-day budget of every man and woman who know that the increase in taxes will bear on them. The Labour party was honest and said that it would take from the national insurance contributions that the very rich avoid once their incomes exceed £22,000. The Government said that they would not raise national insurance contributions and instead levied them on those below the £22,000 level and thereby protected those above. Mr. Deputy Speaker, the Government have done it on every occasion

Madam Deputy Speaker : Order. Perhaps I ought to tell the hon. Gentleman that it is now Madam Deputy Speaker in the Chair.

Mr. Blunkett : I only wish that I could tell the difference, Madam Deputy Speaker, as I wish that I could tell the difference between the Chief Secretary and the Secretary of State for Health, but I do not get close enough to either of them to be able to do so. In fact, it is now almost a year since the Secretary of State for Health had the temerity to debate with me over the Dispatch Box. Considering the catalogue of disaster that is hitting the health service, it is no wonder that she has been afraid to come to the Chamber since 26 January.

Take the announcement yesterday of a private sector investment in the Fazakerley hospital in Liverpool by SAS, the Scandinavian airline. It was fitted up by the previous regional chairman, who told the local trust to get ready for a £15 million investment through the health service, and, at the last minute, pulled the plug. He then came along with, guess what, a scheme, not a tender or a contract or an open bid for a 100-bed hospital, but a private deal--just like the appointment of the chairman of the Scarborough trust.

Nepotism, corruption, fiddling and fixing are rife--from the west midlands, where £10 million was squandered on a golden handshake and a "thank you" letter to the chairman of the region, to the squandering of £63 million in Wessex, to the £600,000 squandered by St. Thomas's hospital, whose director of finance and business manager flew to America to investigate the First Response company run by Richard Saig--since arrested- -and failed to discover that the company was simply an answerphone. It is funny that he managed to travel first class to Grand Rapids, but never managed to discover that the company was an answerphone only. No action was taken. Nor was action taken when the estates division of the South West Thames region was sold off and one man made a £900,000 killing.

Column 1131

It is not the patients, the citizens, the low-paid or those who struggle to pay taxes who are the benefactors of yesterday's announcements in the Budget ; it is the fixers, the friends of the Conservative party, the better-off, the people who do not need the health or education services or public housing or decent public transport, because they can buy their way out of the public squalor with the temporary and narrow private affluence that some people have gained from the past few years of Conservative government. We have a different vision of the future, which is fairness in tax, fairness in the distribution of wealth and investment in public services. It is restoring confidence in people's right to a job and to decent treatment at work. It is ensuring that those who are unemployed do not have national insurance snatched away from them and that they do not have their rights taken away by a Budget that targets those who can ill afford to pay and protects those who can best afford to pay.

9.39 pm

The Paymaster General (Sir John Cope) : It hardly seems fair to intervene in the dialogue between my right hon. Friend the Chief Secretary and the hon. Member for Sheffield, Brightside, (Mr. Blunkett), but that is what I am supposed to do. I am sorry that the hon. Gentleman has not been able to secure an Opposition day for so long to raise the matters that he wanted to discuss with my right hon. Friend the Secretary of State for Health. I shall come back to what he said later in my remarks.

I want first to respond to some of the comments made earlier in the debate yesterday and today, especially about the matters for which I have responsibility under my right hon. and learned Friend the Chancellor of the Exchequer. My hon. Friend the Member for Bolton, North-East (Mr. Thurnham), who spoke yesterday, was disappointed that there was not a cut in beer duty to compensate for the cross-border effects. I noticed that the hon. Member for Brightside had the opposite opinion and believed that beer duty should be increased, but never mind.

Others also said that the effect of excise duties on the cross-border price of alcohol and tobacco in the single market was something that we ought to take into account. It is, indeed, something that my right hon. and learned Friend the Chancellor took into account in the Budget for the first time in a major way. He will have to give consideration to it in every future Budget.

There is a considerable difference in duty between the United Kingdom and some of our neighbours on the continent. The issue tends to be seen only in terms of our continental neighbours across the channel. Yet we also have quite a long land border with the Irish Republic. Land borders are, by their nature, much more susceptible to cross-border shopping than sea borders. Irish excise duties are basically higher than ours and the problem there is one for the Irish Republic rather than us. It is part of the whole picture of alcohol and tobacco duties, and our traders in Northern Ireland benefit from the present position.

The main attention has been on the opportunities for buying alcohol and tobacco across the channel. As the House will have realised, that is and will be a feature of Budgets, as my right hon. and learned Friend said in his Budget speech. There have been well-publicised stories in the press about firms just across the channel selling drink

Next Section

Home Page