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Mr. Smith: I know of not one economist, independent or otherwise, who challenges the figures that I have just given--37.4 per cent. last year, 37 per cent. this year, 36.8 per cent. next year.
As a result of falling levels of debt and lower long-term interest rates, interest payments this financial year are projected to be almost £4 billion lower than in the previous year. That money, which is now available for front-line services, would not have been available under the previous Government.
Having come this far, we will not relax our grip. We have a long-term commitment to stability, not just a month-to-month commitment. We will not repeat the mistakes of the late 1980s when the then Chancellor, Nigel Lawson, spent the proceeds of growth before he had earned them. In 1988, he gave away massive tax cuts and two years later plunged Britain into the deepest recession of modern times. The public finances nose-dived out of control.
We will not make the same mistake as that Conservative Government. We will take nothing for granted. We will not spend money that we do not have or have not earned. This commitment to fiscal stability and effective public spending for the long term has been doubly strengthened by our reforms to the public spending framework. Our new three-year spending plans, set out in
the comprehensive spending review, give Departments and our public services the certainty and stability they need in order to plan beyond the one-year time horizon.
Mr. Edward Davey (Kingston and Surbiton): Can the right hon. Gentleman confirm--[Interruption.]
Mr. Deputy Speaker (Mr. Michael Lord): Order.
Mr. Davey: Can the right hon. Gentleman confirm that those three-year spending plans are set in stone?
Mr. Smith: I am grateful for that question from the Liberal Democrat representative. As I was saying, we have firm fiscal rules, we are not relaxing our grip, and the comprehensive spending review targets stand. That is as clear an answer as the hon. Gentleman could wish for. Through those plans, based on a platform of stability in public finances, we have been able to commit significant extra investment to our key public services at the same time as meeting the tough fiscal rules. That has meant an extra £40 billion over three years for education and health--£40 billion that was opposed by the Conservative party, which described our spending plans as mad, reckless and irresponsible.
Mr. David Ruffley (Bury St. Edmunds): The Chief Secretary will recall that the Prime Minister addressed the parliamentary Labour party on 7 May 1997 at Church house, saying that he wanted proposals for reducing the social security bills. In the light of that remark, can the right hon. Gentleman explain why social security spending will increase from £97.3 billion last year to £112.3 billion at the end of this Parliament?
Mr. Smith: I was not aware that the hon. Gentleman had been at Church house--perhaps he was anticipating his former colleague, my hon. Friend the Member for Witney (Mr. Woodward).
Mr. Ruffley: Why has it gone up?
Mr. Smith: Judging from the remarks the hon. Gentleman is making from his sedentary position, I cannot judge how far he subscribes to big tent politics, but I shall give him the benefit of the doubt.
At the general election, we promised to cut the costs of economic and social failure. We are doing so. When in Opposition, we were challenged about what we would cut to reduce the deficit. I recall being challenged on that point by the right hon. Member for Wells (Mr. Heathcoat- Amory). We said that we would cut unemployment in order to bring down the deficit, and that is exactly what the Government have done. Some 700,000 more people are in jobs, long-term youth unemployment is down 60 per cent. and the rest of long-term unemployment is down by more than half. As we get people into work, they benefit, their families benefit and--
Mr. Ruffley: Will the Minister give way?
Mr. Smith: I have given way already to the hon. Gentleman, and to just about all of his hon. Friends present in the Chamber. I want to make some progress.
The Conservatives opposed our spending £40 billion on health and education. They said that it was madness, that it was reckless and that it was irresponsible. The record also shows their plans to privatise the health service. The Conservative health spokesman--the hon. Member for Woodspring (Dr. Fox)--has said:
- "We will have to find other ways of getting the treatment required by perhaps having medical insurance."
- "The problem with the NHS is that we do not charge for much of what we do."
Mr. St. Aubyn: Will the Minister give way?
Mr. Smith: I have already given way to the hon. Gentleman.
Under the previous Government, the increase for the final three years was £10.5 billion. [Interruption.] By contrast, we are delivering an increase in health funding of £21 billion. [Interruption.]
Mr. Deputy Speaker: Order. May we please have an end to comments from a sedentary position from both Front Benches and Back Benches?
Mr. Smith: Thank you, Mr. Deputy Speaker.
In the final three years of the previous Government, growth in education spending was £7 billion. By contrast, we have committed additional education spending of £19 billion. That is what we mean when we say that education is our top priority.
NHS spending rose by an average of just 2.9 per cent. a year during the entire Conservative period in office. The Labour Government will achieve yearly real growth averaging 4.9 per cent. over the comprehensive spending review period. That will help to deliver modernisation of the NHS; the largest hospital building programme in NHS history; fast, modern, convenient services such as NHS Direct--the 24-hour telephone helpline--and NHS Direct online; and improvements to hospitals and general practitioners' premises.
After so many years of neglect, the comprehensive spending review also heralded a doubling of public sector net investment. The rise, by 0.5 per cent. of gross domestic product, in net investment over this Parliament compares with a 1.5 per cent. cut during the final Conservative Parliament. Gross investment will total nearly £30 billion a year by 2001-02, providing new resources for the renewal and modernisation of the UK's infrastructure. On top of that, new money is coming in under the private finance initiative. Since the general election, we have turned the PFI around. We have signed deals worth £5 billion--more in two years than during the whole five years of the last Tory Administration.
The PFI is now working in sectors such as health where it had not worked before. Looking ahead, we expect to sign deals worth more than £11 billion in the next three years in such diverse sectors as schools, hospitals,
local authorities, defence and property management. That represents more than 20 per cent. of total net public sector investment over the period.That is all a significant increase in resources for our front-line public services, but it is all investment for reform. The Government's public service agreements are at the heart of the new approach. Published a year ago, PSAs are a contract with the people, a promise of lasting improvements in Britain's public services. PSAs establish tough, measurable policy and efficiency targets that Government will deliver in exchange for the extra investment that we make. Our extra investment in schools and hospitals--worth £40 billion--must result in £40 billion worth of improvements.
In the next spending review, to be completed next year, we want to go further in ensuring that policies and services are designed and delivered in a more integrated, flexible and customer-centred way, but for that to happen we need to enhance the Government's capabilities for designing and delivering cross-cutting policies and programmes. Problems such as crime and social exclusion cannot be tackled by Departments acting in isolation. Departments need to work with each other to develop coherent and consistent policy and to ensure that it is delivered coherently and consistently.
We must learn to work with others to build a new culture of partnership. We must reach out to service providers in local government, the voluntary sector and the private sector, and we must consult service users themselves. [Laughter.] Conservative Members should not laugh. If they had done a bit more consultation with service users when in government, they would not have left the public services in the mess they were in at the general election.
The cross-cutting reviews that we undertook in the previous comprehensive spending review were successful, bringing forward radical and innovative new approaches--from the national drugs strategy, which is investing an extra £211 million over three years and tackling the causes of drug misuse, to the new sure start programme, which will improve services for young children and families, in which we are investing £450 million over three years.
In next year's spending review, we will build on that success. In consultation with Departments and local government, we have identified 13 cross-cutting reviews to be conducted between now and next summer. The reviews will help us to achieve our goal of reducing child poverty by half by the end of the next decade, on our way to ending child poverty within 20 years.
Already our measures are lifting at least 1.25 million people out of poverty, 800,000 of them children. Not only are we helping children out of poverty at home, but by means of the measures that my right hon. Friend the Chancellor of the Exchequer has announced, we are, through debt relief, tackling poverty in the world's poorest countries.
Our cross-cutting reviews will ensure that every child and every family is given the best opportunities to fulfil their potential. A cross-cutting review of welfare to work will consider how we can move towards employment and opportunity for all. In addition to last year's review of services for children, we have reviews looking at young people at risk and at old people. Just as we promote work for those who can, we will improve security for those who cannot.
To last year's reviews of illegal drugs and the criminal justice system, we have added a new review of crime reduction, exploring radical new options for tackling the causes of crime. We are building on the review of local government finance in the last comprehensive spending review, and have added new reviews that look at service delivery in deprived areas and in the countryside.
We have established a review of science and research to consider how public support for them can better address the needs of the economy at large. Two further reviews will look at cross-cutting issues overseas: how Britain can best contribute to conflict prevention, and how it can help to secure nuclear safety in the former Soviet Union.
For nearly all those reviews, we have nominated a lead Minister and established an interdepartmental team. The reviews will draw on relevant expertise from outside, and within, Whitehall. That approach will produce a modern spending review for a modern Government. In the review, we shall continue to match investment with reform--increasing the amount available for the NHS, for education and for other priorities in our public services.
The Labour Government have made the choices necessary to deliver stable and sustainable public finances. We have been steadfast in our priorities, which are the nation's priorities. As a result of prudence and a commitment to investment in return for reform, a total of £40 billion will be invested in the nation's priorities--health and education. We are a Government committed to adopting new and innovative approaches for service delivery. We are committed to prudence and stability in our public finances. We are committed to public services, not only with value for money but with the highest quality of service, truly fit for the 21st century.
As the Government mark the achievements and the promise of our public services, we record our thanks, and those of the House, for the contribution made by public sector workers. Their commitment makes those services possible. We thank the 140,000 doctors, nurses and ambulance staff, the 50,000 firefighters, the 126,000 police officers and all other workers in councils, utilities and the voluntary and private sector who will be working over this Christmas and on millennium eve. We thank them and wish them a happy new year.
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