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Madam Speaker: I am sure that the hon. Gentleman does not believe everything that he reads in the press, but he is correct in recalling May 1997, when I informed the House of my decision that Members who do not take their seats should not have access to the facilities of the House. This summer, the European Court of Human Rights rejected on all counts a challenge to that decision. It is true to say that one or two Ministers have been to see me recently. The House would not expect me to divulge any conversations. Others may divulge conversations of that nature; I do not. Should Ministers now wish the two Sinn Fein Members to have access to some of our facilities, it would be for the Government to bring a motion to that effect for debate and decision by the House. I am the servant of the House and if it approved such a motion, I would of course ensure that it was put into effect.
BILL PRESENTED
Disqualifications
Mr. Secretary Straw, supported by the Prime Minister, Mr. Secretary Prescott, Mr. Secretary Mandelson and Mr. Mike O'Brien, presented a Bill to remove the disqualification for membership of the House of Commons and the Northern Ireland Assembly of persons who are members of the legislature of Ireland
(the Oireachtas); and to disqualify for Ministerial office in Northern Ireland persons who are or become Ministers of the Government of Ireland: And the same was read the First time; and ordered to be read a Second time on 10 January 2000, and to be printed. Explanatory notes to be printed [Bill 41].Public Expenditure
1.22 pm
The Chief Secretary to the Treasury (Mr. Andrew Smith): I beg to move,
- That this House welcomes the action taken by this Government to build a platform of stability for the British economy, in contrast to the boom and bust of the past; welcomes the new monetary policy framework put in place by this Government, which is delivering stability and steady growth; notes that the Conservative Party opposes Bank of England independence; welcomes the new public spending framework which is delivering an additional £40 billion for health and education; notes that the Conservative Party is opposed to this extra investment; welcomes the fact that this Government is doubling public sector net investment after so many years of neglect; welcomes this Government's programme of reform in the public services and thanks public and voluntary sector workers for their contribution to delivering strong public services for all.
This is the last major debate to be held on the Floor of the House this century and we have an opportunity to discuss the Government's modernisation of our public finances and public services. However, we should also take a look at the past couple of decades and the Conservatives' record on public expenditure. When we came to office we inherited not some golden economic legacy, as Conservative Members would have us believe, but an economy flawed by serious and fundamental weaknesses.
Britain was set to repeat the same old cycle of Tory boom and bust. Inflation was set to rise sharply above target, borrowing had risen to £28 billion and the national debt had doubled. Just servicing that debt cost the British taxpayer some £25 billion every year, or more than is spent on schools, or on housing and law and order put together. Over the previous economic cycle, Tory budget deficits totalled a staggering £149 billion. The last Tory Government also managed to deliver the highest level of public sector borrowing since the second world war--some £50 billion, or 8 per cent. of gross domestic product.
Mr. Andrew Tyrie (Chichester): I have made this point before in the House, but the right hon. Gentleman is new to his job and obviously does not yet know the facts. The Conservative Government were just about the only Government in the world during their nearly 20 years of office to reduce the debt stock as a proportion of GDP. Every other country in the Organisation for Economic Co-operation and Development saw an increase in its debt stock. The Chief Secretary's remarks merely reflect one point in the business cycle--a cycle that he claims he will abolish.
Mr. Smith: It may be one mere point to the hon. Gentleman, but that £25 billion could and should have been spent on public services. Our first priority was to deliver a platform of economic stability and to leave behind the boom and bust of the past.
Mr. Geraint Davies (Croydon, Central): My right hon. Friend might be interested to know that the chief
economist of the National Westminster bank recently told me that interest rates in the previous economic cycle ranged between 7 and 15 per cent., but in this cycle the range is between 5 and 7 per cent. That means that the peak under this Government is the same as the trough under the previous Government. Does not that underline the fact that we have got rid of boom-and-bust economics, partly through giving independence to the Bank of England, and partly through the prudence of the Treasury team?
Mr. Smith: My hon. Friend is absolutely right. Securing economic stability is the essential precondition to delivering the high growth and employment that the Government want to achieve. As my hon. Friend noted, we took courageous steps: we put in place a new, modern monetary policy framework and we made the Bank of England operationally independent, thus ensuring that decisions on interest rates are taken in the best long-term interests of the economy, not for short-term political reasons. We also set a clearly defined and symmetrical inflation target.
I remind the House that the Conservative party remains opposed to the Government's monetary policy framework and Bank of England independence. The Conservatives threaten to take Britain back to the bad old days of Tory boom and bust.
We have also put in place an equally coherent and modern fiscal and public spending framework, based on clear fiscal rules. Our first and golden rule is that we balance the budget over the cycle. Secondly, our sustainable investment rule means that we borrow only for investment and that, as we do so, debt is held to a prudent and stable level.
Mr. Oliver Letwin (West Dorset): Will the Chief Secretary clarify for me a point of information that I find continually interesting? He makes a measurement across an economic cycle: where are we on that cycle now, and when will it end?
Mr. Smith: The calculation of where we are in the cycle is performed against a baseline, and the Government's figures are independently audited by the National Audit Office. That is part of the transparent and accountable fiscal framework that the Government introduced to replace the irresponsibility and boom and bust of the Tory years.
Our policy making is transparent to an unparalleled degree. In monetary policy, the Bank of England Monetary Policy Committee operates an open system of decision taking, publishing minutes and votes and reporting in full to Parliament. The same openness and disclosure are evident in fiscal policy. Key fiscal assumptions are independently audited, and far more information than ever before is published to ensure properly informed debate and scrutiny.
That rigorous adherence to the new fiscal framework is delivering significant results already. As a result of our prudent and cautious assumptions, which are audited by the National Audit Office, we are firmly on course to balance the budget over the cycle. We are therefore firmly on track to meeting the first of our fiscal rules, which I earlier termed the golden rule.
The Government believe that the second fiscal rule--the sustainable investment rule--can also be realised. Other things being equal, we believe it desirable to reduce the debt ratio to below 40 per cent. of gross domestic product, so that debt is at a sustainable and prudent level.
National debt doubled under the previous Government. By contrast, over the past three years, debt as a share of national income has fallen from 44 per cent. to 42 per cent. It is estimated that it will fall to 38.2 per cent. at the end of this financial year, and to 37 per cent. in the following year. Over the economic cycle, therefore, the Government are on course to keep debt below 40 per cent. of our national income, so we are firmly on track to meet the second fiscal rule, too.
Mr. Nick St. Aubyn (Guildford): In this spirit of transparency over fiscal matters, will the Chief Secretary confirm that the burden of taxation has transparently risen by 2 per cent. of gross domestic product since his party came to power?
Mr. Smith: I took Conservative Members through this last Thursday. We can go through it again, but I will not allow them to make the charge that the tax burden is rising. Let me give the figures again for tax and social security as a share of GDP: last year it was 37.4 per cent., this year it is 37 per cent. and next year it will be 36.8 per cent. The tax rate is falling, not rising.
Mr. Tim Loughton (East Worthing and Shoreham): If the Minister is so keen to give us these fiddled figures yet again for a two-year period, can he quote a single independent economist who agrees with him that--apparently--the rate of tax as a percentage of GDP will have fallen by the end of this Parliament? Can the right hon. Gentleman name a single economist who agrees with the premise that he is trying to peddle yet again?
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