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Dr. Keith Hampson (Leeds, North-West): Did the hon. Gentleman notice a leader in The Independent last week attacking Labour-controlled local government for spending unwisely? Is he aware that council tax payers in Leeds not only face a doubling of the rate of council tax, but the city's debt is now so huge that it costs more than £60 million--the cost of the royal yacht--each and every year in Leeds? Let us have none of that fiction from the Opposition. That is the reality of Labour in power.

Mr. Prescott: I assume that the Government would not want to put forward their record on the national debt. The Government have been responsible for a worse increase in the national debt than any local authority has in its debt. [Interruption.] That is true and I am quite prepared to defend that statement. Not every local authority is perfect. There are not many Tory-controlled local authorities about which to make judgments. One remaining one is Westminster, but I do not think that the hon. Gentleman would like me to compare Westminster's record with many other local authorities.

Some local authorities are good and some bad, and that is not necessarily a matter of their political control. Some can be efficient and some inefficient. That is the nature of it. I am not concerned with whether some are efficient and some less efficient, or whether that is related to their political control; my argument is that the Government have made it much more difficult to deliver services in the local authority areas as a result of Government changes in public expenditure to deal with the debts resulting from their policies.

The Chief Secretary to the Treasury (Mr. William Waldegrave): I thought that I heard the right hon. Gentleman say that the Labour Government had a better record than the Conservatives on the national debt. The national debt in the Conservative Government's worst year was better than that in the Labour Government's best year. Had the level of borrowing under the Labour Government continued, the national debt would now be just about exactly twice what it currently is.

Mr. Prescott: I did not say that. [Interruption.] I did not. The point is a fair one. The Chief Secretary is talking

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about the debt under different periods of government. Debts are related to receipts, and in the period to which the right hon. Gentleman refers, there were considerable receipts from oil and privatisation. Had the Labour Government had such receipts, they would not have had to borrow. Therefore, as usual, the Chief Secretary tells only half the story which, as we all know, is consistent with his record.

Several hon. Members rose--

Mr. Prescott: Let me make some more points. I have been giving way to hon. Members.

Mr. Graham Riddick (Colne Valley) rose--

Mr. Hartley Booth (Finchley) rose--

Mr. Prescott: Let me make some progress. [Interruption.] What has the other manager of the Tory party, the Minister without Portfolio, got to say? I will give way to him if he wants. Does he want to speak? No. Clearly, the Deputy Prime Minister is in control; that has decided it once and for all.

When the Deputy Prime Minister was talking about the pension proposals, which the House will have an opportunity to debate next week, I thought that it was a bit much when he said that the Government's projection was for savings of £40 billion by the year 2040. The Government cannot get their projections right over two or three years. How can the right hon. Gentleman come to the House and offer us a projection about public expenditure savings of £40 billion by 2040? The record is clearly against him when he makes such projections. I shall come to some of the evidence in a moment. First, let us examine the other projections that have been made by the Chancellor and the Government, because they are relevant.

I will take no lectures from Tory Governments about pensions. They are the ones who divorced pensions from earnings--[Interruption.] I am talking about the Government's record. They are the ones who broke the link with earnings. Between 1945 and 1950, Labour brought in the first universal pensions scheme of the kind that we have today. The state earnings-related pension scheme, too, was introduced by a Labour Government. We were the people who established decent pension provision within a welfare system, under a Labour Government. The record of the Conservative Government has always been to undermine the pensioners in this country. That is clear.

Several hon. Members rose--

Mr. Prescott: I want to finish this point. When we established the Borrie commission, the Government made it clear that they were critical of Labour's discussions about the problems facing the funding of pensions. We were attacked for suggesting the possibility that SERPS might be changed. The Government's accusation was that there would be no SERPS in the proposals. Yet it is the Government who have done the U-turn, and are about to ditch not only SERPS but the right to a basic state pension. The Government have always attacked the rights of pensioners, and they are continuing to do so.

Mr. Quentin Davies (Stamford and Spalding): The right hon. Gentleman has attacked the Government for

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bringing to an end the link between average earnings and the old-age pension. Does he mean that a Labour Government would restore that link? If a Labour Government would have no such intention, is it not pretty shoddy and hypocritical to imply that they would?

Mr. Prescott: It is a fact of life that the Conservatives made that break--and every Conservative Member voted for it. Make no mistake, we have not made a commitment to restore the link. [Hon. Members: "Oh."] No, because, as hon. Members will hear from me, we have decided our priorities for public expenditure and taxation, and the electorate can make a judgment on them.

After 18 years, there are so many things that the Government have undermined. The same point can be made about the health service, prescription charges, and charges for spectacles and teeth. The Government have constantly put a health tax on the people of this country. We could not possibly hope to reverse all the damage that they have done in 18 years. All that we can do is to present to the electorate our priorities for public expenditure and tax, as we are doing now.

Mr. Davies rose--

Mr. Prescott: I have not finished on pensions yet.

When the Government decided to make the first attack on SERPS and allow people to contract out into private pension schemes, it cost us billions of pounds to subsidise the transfer from the public into the private sector. Nearly 3 million pension holders were denied a proper pension because the value of their pensions was reduced. The private sector--

Mr. Davies rose--

Mr. Prescott: Wait a minute.

The private sector totally failed the pensioners, and the taxpayer paid the price for it. That is always the case with the Tories on pensions.

Mr. Davies: Why criticise the Government for breaking the link between earnings and pensions if the Labour party has no intention of restoring that link? Is that not a thoroughly deceptive way in which to conduct an election campaign?

Mr. Prescott: It is still a fact that the Conservatives broke the link. [Interruption.] We shall have a debate in the House about it next week. The Government have set down a day for a debate on the pensions system, and that is the proper time to discuss it. I simply make the point that, again, public expenditure was involved in another pension fraud by the Government--and now they propose to put even more of our pensions into the private sector, which totally failed the people who were conned into transferring from public into private pension schemes last time. What motivates the Government to propose changes in pensions? As I have tried to point out, it is certainly not a desire to protect pensioners. History is clearly against the Government, and the taxpayer always ends up paying the bill.

The Deputy Prime Minister made certain statements about what savings would be made in public expenditure--the subject of the debate--by the year 2040, but the

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Government's record on forecasting and on managing the public coffers is a classic case of incompetence: I do not know how else it can be described.The Government say that they can save £40 billion in 50 years' time, but let us look at their projection record over shorter periods for the borrowing requirements arising out of their public expenditure programme. In 1993 the Government said that the borrowing requirement would be £32 billion; it was actually £45 billion. In 1994 they said that it would be £25 billion; in fact it was £36 billion. In 1995 they said that it would be £19 billion; it was £32 billion. This year it was supposed to be £6 billion, but in fact it is £26 billion.

The Government's sums have been about £60 billion out over just three or four years and those mistakes amount to more than the £40 billion that the Deputy Prime Minister projected would be saved in 50 years' time. He cannot even get his sums right over four or five years, so who could believe anything that a Minister in the present Government says on the subject?

With such a bill, we can see why the national debt has doubled. In 1992 the Government misled the public about the true state of the public finances, and certainly misled them on taxes. It is no wonder that the public in general, and the electorate in Wirral in particular, have lost faith in them, as we saw in the by-election last Thursday.

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