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Mr. Dalyell: If the Chief Secretary imagines that the Germans will abandon the social chapter and they do not, surely the time will come, sooner or later, when our partners will say that the British cannot go on having their cake and eating it, and there will be consequences in our relations with our trading partners that may not be very comfortable.

Mr. Waldegrave: I am not entirely sure that I understand the hon. Gentleman's point, but if he is saying that the European compulsion on the Germans would be such that they could not liberalise their markets in the way

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in which they now know they must, so that instead they put the same costs on us, there would indeed be severe difficulties. It is thanks to the opt-out that the Prime Minister negotiated that that danger is greatly minimised.

Happily, powerful forces are at work in Germany--arguing quite the contrary to what the Labour party thinks that they are arguing--and beginning to say, like the head of the BDI, that they have to liberalise their markets, that they have to lift the costs off industry, and that they have to make Germany competitive again, and then Germany will once again become a formidable competitor. I have no doubt about that. The quicker that happens, the better, because competitive trade is a positive sum game. We all benefit if the German economy grows fast.

Mr. Darling: Will the Chief Secretary give way on that point?

Mr. Waldegrave: Briefly.

Mr. Darling: This is a debate that the Government chose to hold, so let us have a debate.

Does it not strike the Chief Secretary and the right hon. Member for Wirral, West (Mr. Hunt)--whichever bit of the Wirral that we did not win--as a contradiction that the social chapter has nothing whatever to do with the rigidities in the labour market of which many people in other member states are critical? Nobody wants to import those rigidities. Indeed, the whole thrust of what the Chief Secretary and his right hon. Friend were saying is that many people in Germany, France and Spain recognise that those rigidities have to be addressed to make those countries competitive. Does not that suggest that, far from writing them into the social chapter, there is a movement in Europe to recognise that the competitive threat in the future will come not from intra-Europe but from other parts of the world? Nobody wants to import those unnecessary rigidities into this country.

Mr. Waldegrave: The hon. Gentleman has made--with his customary style but on this occasion without his usual intelligence--my exact point: the Labour party is probably signing up to that policy just when it is falling to pieces in the hands of the people who invented it. I thought that that was what I had just said. Perhaps the hon. Gentleman would like to think about it a little.

We have managed to follow a policy that has brought the long-term spending trend down at the same time as protecting our principal priorities for spending. Spending on health has gone up in real terms every year since 1979. That did not happen under the last Labour Government. One year, Lord Barnett was compelled to make a real cut in the NHS budget. As has been pointed out, spending per pupil in nursery, primary and secondary schools has risen in real terms by 50 per cent. since 1979. Spending on law and order has doubled.

Although my hon. Friend the Member for Wantage is not in his place, I must comment on his most interesting speech. He gave us some extremely wise advice. He gave Front Benchers a warning that I hope we will all heed--that we should rule out nothing before the Dearing committee reports, as we may need to make fundamental changes in the financing of higher education.

The Labour party has opposed all the reforms that have enabled us to match the expenditure increases with a declining trend of public spending. My right hon. Friend

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the Deputy Prime Minister spoke about privatisation, so I shall not cover the issues again. There was a touching moment when an Opposition Member spoke about the selling of income streams. That applied in one or two cases, but mostly it was the selling of loss making. There has been a huge turn-around. There is now a benefit to the taxpayer of about £2.5 billion a year in tax receipts whereas there had been a huge burden on the taxpayer. Of course, Labour opposed all those measures.

The civil service is smaller. For the first time since the second world war it is now below 500,000. There has been a range of positive reforms, including the single regeneration budget challenge funding principle which the hon. Member for Ellesmere Port and Neston did not much like--or at least I took that to be his argument. Those methods of challenge funding have led to far greater productivity, as has the partnership between central and local government in the projects in which they are investing.

Our plans are sustainable. The plans in the Red Book maintain spending increases of about the same level over the next three years as those we have achieved in the past three. There is not the slightest chance that Labour could match them.

As we have already pointed out, Labour Members pretend not to understand the difference between our counter-arguments in respect of £12 billion and £30 million. In the first two years in which Labour has allegedly committed itself to our figures, there is a hole in expenditure and income which would leave a Labour Government £12 billion adrift. If Labour introduced any additional spending plans in those years, the gap would be worse.

I believe that £30 billion over five years is a perfectly reasonable estimate. One of the more independent commentators, Peter Riddell of The Times, took me to task on that issue. He said that I was exaggerating the extent of Labour's spending commitments and that the figure was nothing like £30 billion. He estimated that, over five years, a Labour Government would probably spend about 3 per cent. of GDP more than the Conservatives. As 3.5 per cent. of GDP would amount to £30 billion, we do not seem to be in any disagreement.

Labour has opposed every one of our major saving measures, including the criminal injuries compensation scheme which saves £200 million, measures relating to asylum seekers which save £300 million, housing benefit reforms which save £600 million and measures affecting benefits for single parents which save £200 million. Labour denounced all those reforms, often virulently.

The Leader of the Opposition gave us a rather good example of how the Opposition operate in these matters. On "The World At One" he was asked whether he would stick to our plans to make savings of £200 million--

Mr. Malcolm Bruce: Will the Minister give way?

Mr. Waldegrave: If the hon. Gentleman will let me finish the argument, he may wish to comment on what the right hon. Gentleman said.

When he was asked whether he would stick to our plans that save £200 million by the end of the period, the Leader of the Opposition said no. Reasonably enough, we took that to be a pledge that he would replace that spending.

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Labour then issued a piece of paper headed, as so many of them are, "Lies". It said that the latest lie put out by the Conservatives was that

    "Labour will spend £170 million on stopping changes to lone parents' benefits."

It does not seem unfair to me that if the Leader of the Opposition answered that question no, we should assume that his answer carried some weight. The only person who appears to be lying, although that is inconceivable--the person accused in that Labour document, at any rate--is not me but the Labour leader. That is how Labour operates: it has one answer for one audience, and another answer for another audience.

Mr. Bruce: Does the Chief Secretary not acknowledge that it is perfectly reasonable for Opposition parties to oppose a change but not necessarily be committed to reversing it? After all, they are trying to prevent the change from being made in the first place.

Given the vast expenditure on consultancies that has ballooned under the present Government, to which the Chairman of the Public Accounts Committee drew attention--more than £1 billion--and the massive increase in spending on publicity and advertising, does the Chief Secretary think that it might be more appropriate for those people, rather than single mothers, to take a little of the spending cut?

Mr. Waldegrave: The hon. Gentleman makes a fair point. I cited the change that the Labour leader mentioned only because he said in public that he would reverse it.

I find what the hon. Gentleman said--and what was said by the distinguished Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne--very encouraging. As Chief Secretary, I know that there are plenty more savings to be made. That is why we can implement our plans: that is why the plans in the Red Book are realistic. That is why there should be no doubt that we will continue our record of the last three or four years of maintaining the growth of public spending well below the growth of the economy.

People are beginning to accept that Labour will tax and spend more highly. The hon. Member for Oldham, West (Mr. Meacher) let the cat out of the bag, supported by the deputy Chief Whip, and, yesterday, by a distinguished contribution from that wise man and good friend Lord Barnett, whose speech I read very closely. He knows what will happen if there is a Labour Government: they will tax and spend more. Of course, he would probably welcome that, because he has probably stuck to his old principles.

The fact that there are so many other taxes, as well as income tax, that a Labour Government could put up led the hon. Member for Oldham, West to say that the position was less bleak than it seemed. I found that most enjoyable. In the more robust and ordinary language of The Sun,

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    "Mr. Brown still has a lot to tell us. Like where the money for his colleagues' spending pledges will come from."

The truth is that we have won the argument about how to manage economies. Labour Members have broadly accepted our argument: they do not understand it, but they no longer argue against the liberal economics that most of them came into politics to oppose. We have won the argument about spending, and the argument about the economy. As The Guardian put it,

    "There is no doubt that if Mr. Blair wins the election he will inherit the most healthy economy any Labour Government has ever had. This time it won't be possible to blame the previous administration for any subsequent failures"--

although the Labour party is attempting to use the alibi of the books' not being open, and so on.

Lord Desai wrote:

When the "Today" programme put that quotation, or a similar quotation, to the right hon. Member for Dunfermline, East (Mr. Brown), he said, "Oh well, Lord Desai is only a Lord." That is not Lord Desai's fault; it was the Labour party that made him a Lord.

The battle of ideas has been won by the Conservative party. Now, interestingly, we are also winning the battle on pensions. Let me remind Opposition Front Benchers--who are talking more nonsense to the square minute about pensions and the future of the welfare state than I would have believed imaginable--of what Whistler said to Oscar Wilde. When Oscar Wilde said, after Whistler had said something witty, "I wish I'd said that," Whistler replied, "You will, Oscar, you will." I predict that, in six months, a year or two years, the Labour party will be following us down the path to funding the old-age pension.

The debate has been fascinating for the dearth of ideas offered by the Opposition. The only contributions of any intellectual merit that we are hearing from Labour on these matters come from the hon. Member for Birkenhead, and not, I fear, from Front Benchers. Nevertheless, we have enjoyed debating with them today. Nothing is more enjoyable that debating with the right hon. Member for Kingston upon Hull, East (Mr. Prescott)--although I thought today that he was not quite at his best. He was in no danger of being criticised in the words of the quotation about Asquith that my right hon. Friend the Member for City of London and Westminster, South produced. It was said that Asquith's elegance of style--or was it his clarity of style?--made it difficult for him when he had nothing to say. The right hon. Gentleman did not find that the clarity of his style made it difficult for him to say nothing. This has been a good debate which, intellectually and on every other level, has been won by the Conservative side of the House.

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