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Mr. Alistair Darling (Edinburgh, Central): The article to which the right hon. Gentleman refers was written by Niall Ferguson, but it was not the view of The Independent. Niall Ferguson is a commentator, and he is entitled to his view. The right hon. Gentleman should not suggest that the newspaper, editorially, took that view.
Mr. Waldegrave: That strikes me as the feeblest intervention of the afternoon. I thought that the hon. Gentleman was going to point out a serious mistake. Muddling up The Daily Telegraph and The Independent would have been a serious mistake. I do not think that Opposition Members like what Niall Ferguson wrote.
Labour has now joined in the competition for low taxes, but it has no ideology, no theory and no idea of what that is for. We had about £1 billion of extra spending from the hon. Member for Islington, South and Finsbury (Mr. Smith), who opposed all the savings that my right hon. Friend the Secretary of State for Social Security had made. I think that that is the way in which Labour is proceeding. Its practice is to oppose and sneer at all the savings, and to tell the lobby groups that it is against them, but then to back off and, when its members have lunch with people in the City, say that that was not spending.
For us, the Budget process starts with the tight control of public spending. We have always fought to keep state spending down. We have always believed that one can provide the services that people want without putting an intolerable strain on the taxpayer. We have always linked that to our fundamental political belief: that in the end big government is not only inefficient but threatens freedom. We do not--as the Opposition do--collect shopping lists of expensive commitments from the lobbyists and pressure groups and then ask the taxpayer to foot the bill. We start with the taxpayer.
In July, the Cabinet asked the special committee on public spending--EDX--to re-examine public spending. We did so. We found savings. They were not easy. There is very little Government spending that does not have some defender or nothing to be said in its favour, or the House would not have voted it in the first place. But we succeeded.
Mr. Harry Barnes (North-East Derbyshire):
The Red Book tells us that public expenditure is to go down by
£3.25 billion. Elsewhere, reserves have gone down by
Mr. Waldegrave:
That is a perfectly fair point to probe, but I do not think that the hon. Gentleman is right. We have not broken the reserve in any recent years. This year the underspend looks like being about £750 million or £800 million. We thought carefully about a reasonable figure for the reserve, and I can assure the hon. Gentleman that we have one.
We succeeded in finding public spending savings. My two predecessors did not make my task easier; they had helped the Chancellor to cut projected public spending in his previous two Budgets by £43 billion. None the less, in this year's public spending round, we have gone further and the total has gone up to £53 billion.
For 1997-98 alone, we cut the public spending control total by £3.2 billion from the ceilings that the Cabinet endorsed at the start of the spending round. That is about 1 per cent. in real terms. It is also £12 billion lower than when we first set plans for that year, two Budgets ago. This year, we predict an underspend of about £¾ billion. Spending this year will be only about ¼ of a per cent. higher in real terms than in 1994-95. Over the whole period of the public expenditure survey, our plans represent tighter spending control than at any time since just after the war, when the Attlee Government were demobilising.
Doing it this way--by real spending control--means that tax cuts are sustainable. In fact, spending controls bring a double benefit: they let people keep more of what they earn; but they also mean government that is smaller, more efficient and less of a burden on people and industry.
As a result of the drive to greater efficiency, we have been able to cut the cash cost of running Government in each of the next three years. Compared with £15.1 billion this year, next year we will spend £300 million less on Government running costs, the year after £530 million less and the year after that £860 million less--a cash cut of more than 5 per cent. In real terms, the figures are even more impressive. By 1998-99, the annual cost of the civil service will be nearly £2 billion--more than 12 per cent.--lower in real terms than today.
Mr. Denis MacShane (Rotherham):
If public expenditure and the cost of the civil service are going down so dramatically, why, in a written answer that I received today, has the cost of chauffeurs for Ministers gone up by 50 per cent. since 1991? Will the Chief Secretary set an example and occasionally catch the bus?
Mr. Waldegrave:
That sounds like a good subject for a Chief Secretary to look at, and I thank the hon. Gentleman for his helpful indication of where I might look for further savings in next year's expenditure round.
The savings that we have made will not reduce standards of public services. The citizens charter and the competing for quality review have shown that standards can rise with lower costs. We have already carried out 1,000 competing for quality reviews across Government, covering 70,000 staff. More than £1 billion-worth of business has been won by the private sector, with significant reductions in the costs to the taxpayer. The programme of fundamental expenditure reviews and
senior management reviews have led to 20 per cent. cuts in senior staff in major Departments and contributed to the drive for greater efficiency across Whitehall. Other reductions come from better procurement, rationalising functions and reducing the span of Government through privatisation.
Those reductions build on the Government's considerable success in the fight against excessive bureaucracy: holding down running costs and the number of civil servants. There are now 506,000 civil servants-- fewer than at any time since the war, 65,000 lower than at the previous election and more than 30 per cent. lower than in 1979. Numbers will continue to fall as a result of those reductions and should be well below 500,000 next year.
I heard the hon. Member for Edinburgh, Central mutter about quangos--quite rightly. They are the next target. Central Departments are just one part of the Government machine that we are committed to modernise. Circling each Department are large numbers of satellite bodies, which are commonly described as quangos. They come in all shapes and sizes. Some spend money and run programmes on behalf of Ministers. Some provide services themselves. Some are regulatory and raise income from fees. The great majority consume taxpayers' money.
The Government have already had considerable success in reducing the number of quangos and improving the efficiency of those that remain, but we intend to make further efforts. We shall review the way in which the administration costs of quangos are controlled. We need to ensure that they are exposed to the same discipline as Departments. We shall consider the scope for further reducing the number of quangos. All are at present subject to periodic review. That process will continue. But we shall look at them in groups to see whether there can be overlaps that can involve removal of whole organisations. We shall help Departments with the effective management of quangos. The efficiency unit in the Cabinet Office will undertake a scrutiny aimed at generating practical guidance on how to improve that efficiency.
The hon. Member for Dunfermline, East spoke about the private finance initiative, and my hon. Friend the Financial Secretary, who leads on that subject, has been talking about the PFI today. In 1979, the public sector was the owner of many loss-making industries, nationalised by Labour after the war, and which Government should never have owned. Our privatisation programme transformed many of them into efficient world-beating companies, like the present British Steel. Today, we face the challenge of achieving similar improvements in services that the Government have a duty to provide, services for which we must keep responsibility: roads, hospitals, prisons, and a whole range of other things. That is where the PFI can be extremely powerful.
That policy is now central to the next stage of the reform of government in Britain. Government are often not the best manager and provider of services, whether they are people-intensive or capital-intensive. A huge prize of more efficient provision, giving better value for money, is available if we can harness business management expertise at every stage, to design, build, finance and operate public services. This gives an opportunity to free the public sector to do the things that
it is best at, for example, an NHS that is focused on core clinical services rather than the maintenance of boilers and the management of car parks.
The PFI is gathering momentum and projects are demonstrating good results. We will have about
£5 billion-worth of deals signed by the end of this financial year. The scepticism--as exhibited by Opposition Front-Bench Members--that accompanied its growth has been just like that in the early 1980s on privatisation. Opposition Front-Bench Members will find that the programme will work and, in due course, they will probably come to support it. [Interruption.] As they say, some of them support it already. Some of them advocate it, and one even claims to have invented it--the deputy leader of the Labour party.
We are on course to deliver projects that are worth about £5 billion by the end of March, and there is much more to come. It is not just about capital spending; it is about making the Government more and more a purchaser of public services rather than a provider of capital assets. But even as it is, the policy will maintain publicly sponsored capital at about £22½ billion a year through the survey period--a level, which, in real terms, is higher than almost at any time in the 1980s.
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