| Previous Section | Index | Home Page |
The Chief Secretary to the Treasury (Mr. Alistair Darling): Did the right hon. Gentleman oppose the measure proposed by his then right hon. Friend, Norman Lamont, in 1993 to reduce advance corporation tax from 20 to 15 per cent?
Mr. Dorrell: My former colleague did not do that--the Chief Secretary should get his details right. He reduced ACT from 25 to 20 per cent. because we had a stated policy of reducing the basic rate of tax to 20 per cent.--and we were well on the way to delivering that. The Chief Secretary should read his brief. I am sure that he will make more telling interventions when they are rehearsed.
The Government's pensions policy can have only one of two effects: either it will reduce the value of pensions paid to pensioners, and therefore the Chancellor is directly raiding the living standards of Britain's pensioners, present and future; or it will more likely increase the cost of employer-provided pensions. The latter is the slightly better outcome from the pensioners' point of view. However, the Secretary of State for Education and Employment is responsible for promoting employment. We are supposed to believe that the Chancellor has introduced a Budget for employment. How does he believe that he will promote employment by raising pension contributions and, therefore, raising the cost of employing people?
Mr. Dorrell:
The hon. Gentleman's timing is not good as I am about to move on to my third point. He has missed his opportunity: I have finished my second point and he will have to wait until I begin my third point.
The Chancellor's third objective is to boost employment. How does he plan to achieve that aim in this Budget? Let us look at the Government's record on boosting employment. What has Labour done to create jobs in Britain since its election? The first thing the Government did was sign the social chapter. What will that do? It will raise costs and reduce the number of jobs.
Mr. Dorrell:
Paternity leave is not a cost-free activity. That is how it will raise costs. Secondly, the Government
Against that background, we are asked to judge the benefits of the welfare-to-work proposals in the Chancellor's Budget speech. The truth is that his welfare-to-work proposals are a pale attempt to temper the damage that will be done by the Government's other policies. This country's recent record on youth unemployment stands comparison with that of any other European country. In the past four years, the number of unemployed aged between 18 and 25 has halved. It has fallen from just over 800,000 to just under 400,000--a reduction in youth unemployment of 100,000 every year for four years. The number of 18 to 25-year-olds unemployed for more than six months has fallen from 417,000 to 178,000.
I welcome the fact that the Government have focused their attention on the need to ensure that youth unemployment in Britain continues on the downward trend that the previous Government established. I also welcome the fact that the Government regard that as a serious and important policy objective. In the Budget, the Government committed £3.5 billion of public expenditure to enhancing that downward trend of youth unemployment. I look forward to seeing whether their public spending programme achieves a greater reduction than 100,000 a year in the next four years: they cannot do so after that, because they will have run out of unemployed people in five years. We shall see whether that £3.5 billion enhances the rate of job creation for young people, or whether it is money being burnt. That money may be burnt in an attempt to deliver a desirable objective, but it will be wholly ineffective.
The Chancellor of the Exchequer is clearly unconvinced by the logic of his own argument. In the Budget forecasts, he used the estimates of my right hon. and learned Friend the Member for Rushcliffe, the previous Chancellor, for the analysis of the black hole that he asked us to believe in. The Chancellor made it clear that he does not believe that unemployment will continue to fall, because he reinstated the traditional basis of forecasting, which is flat unemployment. He clearly does not believe that unemployment will fall faster as a result of the welfare-to-work proposals.
We then come to the Chancellor's fourth objective.
Mr. Radice:
Will the right hon. Gentleman give way?
Mr. Dorrell:
The hon. Gentleman's timing is perfect. I shall give way to him before I conclude my remarks if he finds a better point at which to intervene.
The final aspect of the Chancellor's objectives was his intention to deliver improved public services. In particular, we were asked to consider the extra money provided in the Budget for education and health. The Prime Minister has repeatedly said that the welfare-to-work package will release money and thus
allow extra spending on education. That proposal does not stand up, given the evidence of any welfare-to-work package anywhere in the world. The Chancellor has clearly seen that evidence, because he recognises the need to provide extra money for the welfare-to-work programme and for education. For him, there is no question of a trade-off: he has provided more for schools and more for hospitals.
That proposal was the only element of last week's Budget that every Labour Member clearly understood: there was a lot of waving of Order Papers and a throaty roar. It was clear and simple: more money for public services. Labour Members--indeed, many of my hon. Friends--welcomed the fact that more money was being made available to provide better schools and better hospitals. It is not quite as simple as that. The Chief Secretary will be able to pay for that within the spending total only if he imposes a 1.5 per cent. spending cut on everything else.
In the debate last week, the Secretary of State for Education and Employment, my hon. Friend the Member for Maidenhead (Mrs. May) and I discussed the extent to which the money for education could be guaranteed for schools. That exchange showed how flimsy the Chancellor's construct is, even on the subject of extra spending on education. My hon. Friend asked the Secretary of State whether she had correctly understood that
Mr. Campbell-Savours:
That is how the previous Government used to do it.
Mr. Dorrell:
I am relying on my experience. The purpose of my intervention last week was to discover whether the Government intend to ensure that this money actually gets to schools, or whether they are relying on a system that I know fairly well, as the hon. Gentleman implied. The truth is that the Government are putting the money into local authorities and hoping that some of it will get through to schools. I am sure that some of it will, but I am certain that £835 million of it will not.
The Secretary of State for Health must be hoping that the education committees will not get all of the money that is going to county councils; otherwise it would be bad news for the national health service. It would mean that social service departments would not be able to deal with the increasing demands placed on them. It would also mean that no account has been taken of the extra demands of the police and fire services and the other elements of local authority services.
The headline increases in health and education are welcome. The 2.25 per cent. increase for health is welcome, and if we keep going long enough, we may get the figure up to the 3 per cent. that we scored over 18 years. The yardstick is a 3 per cent. real-terms average. Furthermore, that is the expectation in the national health service, as the Secretary of State well knows. A real-terms growth of 3 per cent. was achieved between 1979 and 1997. We look forward to the words of support for the national health service that Ministers like to use being backed up by action that reflects our record during 18 years in office.
Mr. Dobson:
I do not know whether the right hon. Gentleman is claiming credit for everything in the past 18 years, but for the three years during which he was Secretary of State for Health, the real-terms increases were 0.5 per cent. this year, 1.3 per cent. the previous year and 1.8 per cent. the year before that, so he should not gib at an increase of 2.35 per cent.
"the money will not be ring-fenced to ensure that it goes to the education budget: instead, it will be allocated to the authority's general budget and it will be up to councillors to determine whether it goes to schools."
The Secretary of State replied:
"I am delighted that I have been so clear that the hon. Lady has got it".--[Official Report, 3 July 1997; Vol. 297, c.439.]
So there we are. There is no extra money for schools in the Budget. There is an extra allocation for standard spending on education and extra money for authorities, but the authorities are completely free to choose how they spend it.
| Next Section
| Index | Home Page |