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Dr. Jenny Tonge (Richmond Park): I accept the hon. Gentleman's point about the length of time that it takes to train a nurse or doctor, but is that not more reason why the Government should have put more money into the health service at the beginning, and not stuck to Conservative spending plans?

Mr. Levitt: I find it odd that someone who is committed to a 1p rise in income tax to invest in

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education, health, transport and everything else says that we should have found more money. That money has been provided, and it has been invested in a sustainable way.

Those of my hon. Friends who know me best know that sycophancy is not something that I adhere to. I am a scientist by training and I like to look at issues objectively. I have looked very hard at the Government's spending commitments in the two days since they were published and I can sum them up in one word--brilliant.

3.35 pm

Mr. Matthew Taylor (Truro and St. Austell): I am impressed that 30 schools in the constituency of the hon. Member for High Peak (Mr. Levitt) have new buildings. I shall reflect on the benefits of his seat being a marginal Labour gain at the last election. The picture has not been the same in my patch. I have been in touch with head teachers in Cornwall, and the great majority have had to cut staff since the election.

I want to examine how, on the one hand, the Government talk about huge increases in public expenditure and, on the other, the experience over the past three years is of teacher losses, growing class sizes, longer waiting lists and cancelled appointments--problems that led some Labour Members to resign ministerial posts and complain that the Government were out of touch. Even the Prime Minister has complained that he is losing popularity. That is because in the early years of the Parliament, the Government did not follow a progressive agenda of sustainable investment in public service; they followed a Conservative Budget plan that even the last Conservative Chancellor described as eye-wateringly tight. We know that even he would not have followed that plan in practice because the annual expenditure reviews at the time would have released more funds.

Expenditure on public services as a proportion of national wealth started high and followed a smooth curve over the past few years, ending up where it started. It is like the grin of a Cheshire cat; there is nothing to support it. That is why the Government are in great difficulty, and there is a difference between what they have said they will do about expenditure and people's experience on the ground.

That is an election headache for Labour Members, because even the funds that have been announced will take expenditure, as a proportion of national wealth, only back to the level that they inherited from the right hon. Member for Huntingdon (Mr. Major). For the most part, that expenditure will not take effect in time for an election. It is noticeable that the Government's announcements seem to wipe the slate clean of the £19 billion for education and £22 billion for the health service that we heard about two years ago, at the time of the last comprehensive spending review. That is hardly surprising because that money was never there, and it certainly has not been delivered.

Dr. Ladyman: Before the hon. Gentleman hits the moral high ground, I point out that my hon. Friend the Member for High Peak (Mr. Levitt) misled the House: the Liberal Democrat manifesto did not promise 1p on income tax for health spending; it promised £350 million for health spending from a change in national insurance

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contributions. How many hospitals in Cornwall would that money have built if it had had to be spread over the whole country?

Mr. Taylor: We also promised a steady 2 per cent. real increase in health spending thereafter, which the Government have not delivered. The key difference between what Labour has delivered and the Liberal Democrat manifesto is that we would have guaranteed upfront investment at the beginning of the Parliament, and not waited for later economic growth. We did not calculate in economic growth. We guaranteed immediate extra expenditure on health and education and for pensioners and others. That upfront expenditure is the gap between Labour's credibility and what it is saying about public expenditure.

Just look at the figures. In the first period of this Parliament, from 1996-97 to 1999-2000, there was a fall of almost 3 per cent.--2.9 per cent.--in the proportion of GDP being invested in public services, and the increase that has just been announced for the next year will be only 1.3 per cent. of GDP. In other words, at the time of the next general election, it will be lower than when the Government came to office.

Those figures hold even when social security is excluded. The Government make great play of the fall in unemployment allowing them to release extra expenditure, but if social security spending is excluded, the fall in proportion of GDP was 29.1 per cent. to 27.1 per cent., now rising in 2001-02, the probable general election year, to just 28.2 per cent.

The net result is that over this Parliament, public sector spending will grow over the first four years to the general election by 1.1 per cent. in real terms per year. That is worse than under John Major or even Baroness Thatcher. The growth announced in the Chancellor's new comprehensive spending review is real growth, but it comes on the back of an unprecedented squeeze in public service. That is at the root of the problem that the Labour party faces. Even on the new plans, current spending growing at only 2.5 per cent. a year is less than for most of the period under the Conservatives.

The Government like to say that the rate will be 3.5 per cent., but a large chunk of that is the increase in capital investment. That is a problem for the Government, but it is an even bigger problem for those on the Conservative Front Bench. At least the Government are now speaking of a real, sustained increase in public expenditure. Those on the Conservative Front Bench must explain how they will come up with £16 billion of cuts in public services, when we are currently spending less than the previous Prime Minister spent as a proportion of national wealth, and less than Baroness Thatcher spent as a proportion of national wealth when she was Prime Minister. If Baroness Thatcher could not do it, is the present leader of the Conservative party capable of delivering it?

On public sector net investment, the Government are trumpeting large increases in capital investment, but the problem for them is that in 1999-2000, public sector net investment is the lowest proportion of GDP since figures started. I have been looking through the figures, which go back on a roughly comparable basis as far as 1963-64, and none have been lower than the Government are currently delivering. On average, under the Government,

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it will be 0.6 per cent. of GDP, compared to 1.5 per cent. under John Major, a drop of 60 per cent. in capital investment, and in no year--

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. As the hon. Gentleman has made the slip twice, may I remind him how he must refer to another hon. Member?

Mr. Taylor: I apologise, Mr. Deputy Speaker. I should do better.

The drop of 60 per cent. in capital investment will be reversed. The Chancellor has trumpeted that, but even in 2003-04, we will not reach the level of public sector net investment achieved in 1992-93, and by the end of this Parliament it will only just exceed the level when the Conservatives left office, with a huge fall in between.

It is true that debt has been substantially reduced. Pensioners were given a miserly 75p increase in March, yet a £2.5 billion surplus in social security funds was used not to increase that miserly pension rise, but to pay off national debt. They must wonder why a pension, which is among the lowest in the developed world, is not to go up, whereas we are to continue paying off debt that is the lowest of any G7 country. It seems an odd priority for a progressive Government, and I suspect that hon. Members will find over the next few months that pensioners are extremely angry about the fact that they got nothing from the distribution of the benefits of growth, which the Labour manifesto promised they would share.

In 1997 Labour decided for electoral reasons to adopt a Conservative Budget plan for two years or more--an electoral decision which proved unnecessary. I do not believe that the Labour party was right to think that it could not win seats without doing that. Indeed, Liberal Democrat gains show that they were wrong to take that view. Nevertheless, Labour decided to deliver a Conservative Budget. The Conservatives were out of office, but the Conservative Budget plans were still in government. The results have been appalling for pupils, patients, parents, and public services as a whole.

On crime, the Conservatives promised 1,000 extra officers in their 1992 manifesto, and 5,000 in 1995. In reality they delivered a reduction, and the Labour Government have continued to oversee reductions. A pledge of 5,000 extra officers has translated into almost 2,500 fewer since the general election. No wonder crime is rising.

Mr. Casale: I am grateful to the hon. Gentleman for giving way. Does he share my amazement, and that of my hon. Friends, at the speech of the right hon. Member for Wells (Mr. Heathcoat-Amory) who, speaking for the Opposition two days after the announcement of £43 billion extra for the public services, hardly mentioned health and did not mention education at all? Will the hon. Gentleman take the opportunity of going on the record and welcoming those public service increases?

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