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5.40 pm
Mr. Nigel Forman (Carshalton and Wallington): I shall begin as I think will become customary in such debates--by declaring my interests as they appear in the Register of Members' Interests. For the avoidance of doubt, they are the Institute of Chartered Accountants, Salomon Brothers International plc and HFC Bank plc.
The debate has been notable, apart from the opening speeches, for how low-key it has become. It is becoming so low-key that it is almost off the keyboard. I wondered whether to start with a joke, as my hon. Friend the Member for City of Chester (Mr. Brandreth) did recently, before his elevation to the Front Bench, to liven things up. I heard a joke the other day that I shall share with the House; it might amuse the Gallery.
Mr. Roy Hughes (Newport, East):
On a point of order, Madam Deputy Speaker. Is the hon. Gentleman allowed to refer to the Strangers' Gallery?
Madam Deputy Speaker (Dame Janet Fookes):
Technically, probably not, but if that is the worst crime that is committed in the Chamber, I shall not be unhappy.
Mr. Forman:
I am grateful for your generous protection, Madam Deputy Speaker. I thought that my
The hon. Member for Motherwell, South (Dr. Bray) essentially made several points in his interesting speech. He felt that the Budget did not have sufficient leverage over the labour market, and he wished to see unemployment falling further and faster to the levels that we were used to in the 1950s and 1960s. I understood that point, but the labour market is becoming more competitive and flexible, and more open to global market forces. It is important, therefore, for any Government to concentrate on a wide definition of supply side policies.
I agree with the hon. Member for Motherwell, South that, in order for those policies to be properly and successfully implemented, they have to be defined broadly to include many of the elements that he mentioned. He was rather scathing about the lack of light that was thrown on monetary policy in the Budget statement and elsewhere. I merely refer him to paragraphs 2.05 to 2.11 of the Red Book, which, though succinct, set out the Government's monetary policy clearly.
The hon. Member will know that the arrangements on monetary policy are now far more transparent than ever before. The minutes of the monthly meetings between the Governor of the Bank of England and the Chancellor are published six weeks later. The hon. Member and others who take an intelligent and close interest in those matters are now much better served with useful information to make a sensible analysis of the progress of Government monetary policy.
Dr. Bray:
The hon. Member is fair in saying that I would like greater transparency, but one consequence of that greater transparency is that we see the holes in the argument. There are some very big holes that could quite easily be filled.
Mr. Forman:
If the hon. Gentleman catches your eye, Madam Deputy Speaker, in a subsequent economic debate, he will want to develop those thoughts. I shall not follow that line now.
I regret slightly that the hon. Member for Peckham (Ms Harman) has left the Chamber. I sought to intervene in her speech, but I was unsuccessful. She made some remarkably prejudiced and old-fashioned statements about the health service. The House will be aware that the Government have had a commitment, which they have meticulously honoured, to increase NHS spending in real terms year on year.
Will the hon. Member for Bristol, South (Ms Primarolo), who used to shadow health matters, give a similar commitment on behalf of the Opposition? If she is not prepared to do so, many of the Opposition's criticisms of our attitude to and behaviour on the health service remain rather hollow. Would she like to clarify the matter?
Ms Dawn Primarolo (Bristol, South):
Get on with it.
Mr. Forman:
The Opposition are not prepared to put their money where their mouth is.
There was something very dated about what the hon. Member for Peckham said about the health service when she tried to argue that it was being eroded at the edges, disintegrating and collapsing--whatever her verb was. She seemed to base her whole view on the assumption that public services must be provided by public sector employees in order to be real public services. That is clearly not true, in this country or any other.
The hon. Lady also seemed to feel that capital expenditure projects in the public sector should always be magically provided by public sector employees and firms. That is obviously not true, because for years private sector firms have been responsible for tendering for public sector projects, and have done a very good job. The private finance initiative is merely a logical and sensible outgrowth of that, and is nothing more sinister.
Ms Eagle:
My hon. Friend the Member for Peckham (Ms Harman) meant that she was worried that the private finance initiative would not fill the gap caused by the huge cuts in public investment announced in the Budget. Is the hon. Member confident that the private finance initiative will not only fulfil all the capital programmes that would have been initiated without the cuts, but will do better? That is how we will judge the success of the PFI.
Mr. Forman:
One never knows--this is true of all public expenditure planning--whether projects pencilled in for years two and three in any public expenditure planning exercise will actually materialise. If the hon. Lady cares to look at chart 6.5 in the Red Book, she will see that the private finance initiative has delivered rising sums of money for capital projects in the health service;
£170 million in 1996-97; £200 million in 1997-98; and £300 million in 1998-99. The projections are best estimates, but they are made on the basis of commitments and indications already given. I believe that they will probably turn out to be an underestimate rather than an overestimate of what is achieved.
Mr. Kevin Hughes (Doncaster, North):
The hon. Gentleman has made the point that those figures are just estimates. Does he not agree that the Government are using the private finance initiative scheme as a form of deferred payments? They are cutting capital expenditure because they know that it takes a couple of years for the hospitals or other buildings to be built. Only then will the public purse have to pay for the rents of those buildings. The PFI is a deferred payment scheme to get the Government through to the next general election.
I was just about to mention something that is relevant to what the hon. Gentleman said. If he cares to look at table 6.4 of the Red Book, which he may have in front of him, he will see that the outturn figures for total public sector capital expenditure have increased--that is in the past tense--from £17.6 billion to £20.9 billion. The Government's record over the latest period for which we have figures shows that such expenditure has increased and that the Government are committed to public sector capital expenditure. The Government merely want to supplement it, and they want the private finance initiative to play a new and growing role.
I have allowed myself to be slightly distracted by some interventions, Madam Deputy Speaker, partly in the hope of enlivening the debate for you and other people so that
we may have a more interesting time. However, I wanted to focus my remarks on an important quotation from the Chancellor's Budget statement, which sets the tone for the whole of his speech and his approach to budgetary policy. He said:
That quotation accurately sums up the attitude of my right hon. and learned Friend the Chancellor. In my opinion, he struck a good balance between the need to cut taxes when it is prudent and sensible to do so and to increase public expenditure on the priority sectors--the sectors about which the public really care, such as education, health and the police.
I fondly hope, as did my right hon. Friend the Member for North-West Hampshire (Sir D. Mitchell), who spoke earlier, that the responsibility of the Budget will make possible further interest rate cuts in the not too distant future, especially if growth next year turns out to be as subdued as many independent forecasters believe that it will be--in other words, if, as is likely, the official Red Book forecast of 3 per cent. growth does not materialise.
The Chancellor is to be commended for what he did not do in the Budget as well as for what he did. Chancellors are always lobbied, and sometimes it is sensible for them to learn the gentle art of saying no. My right hon. and learned Friend did not give in to the cry for a windfall tax on utilities, which would have been all wrong and would have penalised success and profit.
My right hon. and learned Friend did not give in to hard lobbying for a package to help the housing and construction market. As he rightly said, a great deal more good can be done for that market by a low-interest-rate, low-inflation policy than can be done by any special package of measures, which is usually distorting and ends up in the price of the assets concerned. I commend him for that.
It is worth the House recalling, if it does not already know, that half a point off base rates is worth the equivalent of a five-point increase in mortgage tax relief to home owners, so half a point off base rates--which I confidently believe may be possible, perhaps in the first quarter of next year--will do every bit as much good for the housing sector as five points more on mortgage interest tax relief and, furthermore, will help the rest of the economy. If all business people are confident that interest rates are low and are likely to get even slightly lower, it is healthy for investment and helps to breed confidence.
My right hon. and learned Friend chose the right major objectives. I remind the House--I know that last Tuesday seems a long time ago--what they were.
The first objective was security for the elderly, especially in relation to long-term care. The second objective was a boost to capital ownership. I am especially pleased about the measures taken in the Budget on
employee share ownership. I pay tribute to my hon. Friend the Financial Secretary for his considerable efforts in that regard. I know that he is sympathetic to that good cause.
"In the rapidly changing world of technological advance and a more flexible labour market"--
already mentioned by the hon. Member for Motherwell, South--
"the British people need to be prepared and equipped to embrace change in a flexible way. They will be more willing to do that if they know that high-quality schools, health care and a safety net for the unemployed, the disabled and the old are there if and when they need them."--[Official Report, 28 November 1995; Vol. 267, c. 1058.]
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