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Mr. Malcolm Bruce: Will the Chief Secretary confirm that the bulk of the expenditure is to be provided through local authority funding rather than direct Government funding, and that the Government's proposed allocation to local authorities represents no increase in real terms compared with last year? Is not the net effect that education funding will have to come from cuts in local services and an increase in council tax?

Mr. Waldegrave: There are two separate issues. There is a large increase in central Government grant--the aggregate external finance grant--of almost £1 billion and there is an increase in standard spending assessments. The

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hon. Gentleman should wait for the Secretary of State for the Environment's statement tomorrow. It will be possible for all education authorities to spend the increase on schools, whatever their budget.

We are launching two new challenge funds to lever in private money to improve school buildings. As I have said, we have £880 million more for schools. The two principal English Opposition parties--to my knowledge the same thing is happening in Scotland--have been--

Mr. Gordon Brown: Not in Scotland.

Mr. Waldegrave: No doubt, different things have been going on in Scotland. The two Opposition parties have been co-ordinating campaigns in the English counties, and probably in Scottish counties, on education spending. I am sure that most of my hon. Friends will have noticed such campaigning.

We have provided £880 million more and it is fair to ask whether the Opposition want to provide more or less. Perhaps the Labour party wants to provide less because it is now a tax-cutting party. It is now outbidding us on tax cuts, so it might want to spend less. Does it want to spend more? That is a fair question. The Member for Dunfermline, East walked straight past all the questions asked by my hon. Friends and I expect that he will walk straight past this one. Does he want to spend more than £880 million on schools this year? That is not a difficult question, but I do not think that we will get an answer.

The same is happening on crime. Since we came to office, spending on law and order has more than doubled in real terms. Over the past two years, recorded crime has fallen significantly for the first time in modern years. That is no accident. Police manpower has increased by over 20 per cent. since 1979. Our plans provide for a further 5,000 policemen on the beat over the next three years and almost 4,000 extra prison places. We have consistently backed the police since 1979 and the Budget does so again.

Can anyone believe that Labour would spend more? Would it spend less? Will we get an answer? I think that the hon. Member for Dunfermline, East nodded. That may be a spending pledge on the police. We should note it. He is now shaking his head, so I think that pledge has been withdrawn.

Our other consistent priority has been health. Next year, current spending on the NHS will go up by about £1.3 billion--over 1.6 per cent. in real terms. The private finance initiative will bring in at least an additional £165 million in private sector investment. I expect it will bring in even more. As always, the NHS will keep what it can save. The hospitals' target in efficiency gains next year is 3 per cent. or £650 million. That means about £2 billion in a tight spending year in extra resources for patients in the national health service. That is the mark of our commitment.

Every Labour spokesman competes with us on health spending. However, when the Labour party was in government, it cut nurses' pay. It is the only party in the history of the NHS to cut spending in real terms. The only year that that has happened since the foundation of the health service was 1977-78. However, our record on health spending is better--we beat the Labour party on health spending. We can do that only because we are tougher on spending on lower priorities. The hon.

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Member for Bristol, South (Ms Primarolo) said as recently as last year that she wanted to spend--rather like the Liberals on education--the product of a penny on income tax on the NHS.

Ms Dawn Primarolo (Bristol, South): We did not say that.

Mr. Waldegrave: I did not mean "we"; the hon. Member for Bristol, South herself said that she would like to spend the product of 1p on income tax, or about £1.6 billion, on the health service. Since she is now in the Treasury team, she has forgotten about that. She has blotted it out of her memory. The remarkable transformation in the political position of the hon. Member for Bristol, South has been observed with astonishment by those of us in other parts of Bristol in the past few years.

Ms Primarolo: Read out the quotation then.

Mr. Waldegrave: I will send the quotation to the hon. Lady. The Government have a clear strategy. [Interruption.] The hon. Lady is presumably saying that she does not want more spending on health.

Ms Primarolo: That is not the point.

Mr. Waldegrave: It is the point. Does the Labour Front-Bench team want more spending on health or not? I may be mistaken that a couple of years ago the hon. Lady wanted more spending on health. I thought I was complimenting her because as she was--and still is in reality--a good tough left-wing politician, she would have wanted more spending on health. I am now told that I have misquoted her. I apologise and I withdraw that. The hon. Lady did not want any more spending on health. I entirely withdraw those allegations. We are none the wiser as to whether the Labour Front-Bench team wants more spending on health. We will not learn that.

The Budget, like its predecessors, is a Budget for jobs and growth. We are keeping public spending down as a share of GDP and keeping taxes down. We believe that that is the way to get more jobs, a more secure economy and better prospects of sustained growth. We point to the success of the economies that follow that line. Keeping public spending down is fiscally responsible; it continues the process of lifting the total burden of government from industry; it helps to make employing people cheaper; it helps incentives for work by taking many of the lower-paid out of tax; it cuts the burden on small business; and it makes Britain Europe's enterprise centre.

There is a counter-argument. Some honest and intelligent people take a different view; they include the right hon. Member for Chesterfield and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), as I read in the Evening Standard. People such as Professor Layard and Professor Wynn Godley take a different position. They argue that higher spending, even with higher tax, will achieve what is needed better. That is a perfectly logical and coherent position, but one with which the Government disagree. That is the ever-present argument between left and right.

We have not heard those counter-arguments today from the hon. Member for Dunfermline, East. We have heard no alternative political position whatever. All that we have had is the Labour party advocating more spending when

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it talks to the lobbies; less spending when it talks to the City and it wants to look respectable; and income tax at 10 per cent. when it talks to the media. That fools no one.

There are two explanations for what Labour is up to. The first is that it has not really changed its policy at all, but knows that it cannot be elected if it shows its true high-spending colours. That is what the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) hopes when she says that she wants

"Labour to win and Gordon can say anything he likes if he thinks that it is going to win the election; but when Labour is in power they will be looking for other priorities apart from tax cuts."

That is what the hon. Lady hopes and believes, but that ascribes such low motives to the hon. Member for Dunfermline, East and to the Labour party that I cannot subscribe to it.

The second interpretation is less Machiavellian and more charitable and therefore the one that I believe. It is that Labour simply has no idea of the implications of what it is doing or saying. All that matters is to look good, like Robert Redford in the film "The Candidate". The hon. Member for Dunfermline, East would be splendid in the role. He might lose a little weight, but he would look very good. The Labour party just strings out the soundbites and who cares if they are contradictory. Like the great Tom Lehrer's song on Wernher von Braun: "Once the soundbites are up who cares where they come down. That's not my department says Gordon von Brown."

Let us compare a few soundbites. The hon. Member for Peckham (Ms Harman) said on the private finance initiative:

"It is a privatisation initiative. Its not privatisation by the back door, its privatisation by the front door."

That is for the scares on health privatisation. On the other hand, the right hon. Member for Sedgefield (Mr. Blair) said:

"The PFI is right in principle. We have supported it, and in many ways we have been advocating it.--[Official Report, 28 November 1995; Vol. 267, c. 1077.]

The right hon. Member for Kingston upon Hull, East (Mr. Prescott) said, "We initiated it." Those are the soundbites for the City and commentators. The hon. Member for Dunfermline, East has said

"We also see limited application in provision"--

he is being very statesmanlike here--

"for private finance for publicly-led projects in education and health."

That is not what the hon. Member for Peckham says.

The soundbite for those who want tax cuts is "7p up for 1p down". That is a neat slogan. But when it comes to spending, they want more on every major programme, as we heard again today. Do they want to cut borrowing faster or slower? They do not know.

We have just heard the hon. Member for Dunfermline, East promise to do away with a list of taxes which my right hon. and learned Friend the Chancellor had to introduce to bring public borrowing down. He liked none of them, and we had lots of nods and winks that they would all go. Where would the money come from? Having given itself such a contradictory set of slogans, no wonder that the best that new Labour can do is to abstain on the principal issue of this Budget: our judgment that the time has come to return to lower taxes. That is the

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result of new Labour. It is firmly based on new principles, but when it comes to the big issue, it manages to come to the decisive conclusion to abstain. That is wonderful.

I shall be interested to see whether Labour Members abstain on the cutting of whisky and beer duties. I expect that they will. We had no answers because they have not decided what to do, which is rather surprising. Nor have Labour Members decided what they will do about the 20p savings rate of tax. They walked straight past that question, too. We had no answer on that or anything else.

To use the words of Dr. John Wells, an honest adviser to an honest man, the late John Smith:

"the Shadow Chancellor has been engaged in the truly astonishing feat of trying to present Labour as the Party of low taxation and public borrowing . . . it is breathtaking. For if a party of the centre-left has any simple guiding economic principle, it must surely be that it stands for a more active state than right wing--and for a bigger share of Government spending in national income".

That is surely right, which is why my right hon. Friends and I are in the Conservative party. We believe in a smaller state and in less Government spending. What anybody thinks that they would support that by backing the Labour party now is as much a mystery to Dr. Wells and me as it must be to the right hon. Members for Chesterfield and for Sparkbrook--an unlikely but formidable alliance.

One thing that I can say for sure is that, if this country were to find itself with a Labour Government elected on such a basis--having promised lower taxes and higher spending, with no theory or ideology of any kind to guide them, and no consistency or plan--it would find itself in a world where the soundbite would avail it of nothing. It is called the real world. Labour would be a broken-backed Government within six months, as they always have been before. Today's speech by the hon. Member for Dunfermline, East was not in the real world. By contrast, my right hon. and learned Friend's Budget, like him, is honest, straightforward, robust, and well founded in a commonsense application of sensible principles. That is why Conservative Members wholeheartedly support it.

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