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Shona McIsaac: What about literacy and numeracy hours?
Mr. Tyrie: Those are forms of regulation and direction from the centre which I am not convinced will do the job. We have to look carefully at the structure of education, perhaps even before we look at further funding. As I said, countries that spend less seem to do better and countries that spend more seem to do worse--and by a huge margin.
For those who doubt that, I strongly recommend, if they can bear it, that they look at the OECD publication "Education at a Glance". I am afraid that they cannot really take it in at a glance: it is several hundred pages of dense statistics with some explanatory tables, but I am sure that it will go down very well when the family is becoming a little stressed over Christmas. Reading "Education at a Glance" will do everyone the world of good.
I shall make some general points on economic management. Labour Members probably will not want to hear the fact that the Government were elected partly
because they promised not to change our policies. Labour promised to stick with our policies; they made firm commitments not to increase taxation and said that they would implement Conservative spending policies--not merely on aggregate but Department by Department. They stuck to the spending promise, more or less, but they broke the tax promise--the subject of several recent exchanges in the House. On monetary policy, they decided to become more Catholic than the Pope by making the Bank of England independent and handing it the policy.During the past year and a bit, there has been some slippage from what the public thought would occur. They thought that there would be continuity of the policies that had brought success. I referred earlier to the statistics on long-run economic success that started in the 1980s and 1990s after 20 years of decline. Those statistics had got through to the British electorate. They were aware that the economy was no longer a basket case and that they no longer lived in a banana republic in the making, but in a reasonably prosperous country--one that is comparable to most of the top European countries.
The electorate were prepared to vote for a change of Government only if they were sure--
Mr. Andrew Love (Edmonton): Because the Conservatives were awful.
Mr. Tyrie: It might be true that the Conservatives gave the electorate the odd reason for not voting for them. However, voters were prepared to take that risk only once they were sure that there would be continuity of economic policy. The clearest example of that was in 1992 when the economy was in something of a mess. The electorate overwhelmingly rejected Labour, because Labour had not yet learned its free enterprise lines.
The Government have slipped away from the policies that they were elected to implement. There have been sharp spending increases, but insufficient clarity as to how they will be paid for. There have been sharp increases in taxation. A nonsense rhetoric of boom and bust has developed. When it began, I assumed that it was an election slogan or mantra, but I have become rather worried that some Treasury Ministers--from whom I exclude the Financial Secretary to the Treasury--have come to believe it. If they really believe all that stuff about putting an end to boom and bust, that would be most worrying, because, as we are all aware, the business cycle has been with us for hundreds of years--certainly since writing on economics began. At present, we are probably experiencing an upswing, but there will be a downswing. I do not know when it will occur--if Wall street crashes, it may come next week, or it could come in a few years. However, there will be a downswing; I am absolutely sure of that.
I am also worried that, although Labour have learned the language of the supply side, they have not implemented it--they have learned the lines, but their policies show that they are not convinced of them.
Mr. Letwin: My hon. Friend raises an interesting point as to whether Treasury Ministers--I second his exemption--are beginning to believe that rhetoric. In that
context, was it not pretty odd that we received no sensible answer to my questions to the Chief Secretary about what the economic cycle is, where we are in it and when the current cycle will end?
Mr. Tyrie: I agree with my hon. Friend. I gave a tentative answer to those questions. I have been putting those questions to Treasury Ministers for more than two years, but I have still not received an answer. Chief Secretaries come and go; one or two of them made a stab at an answer--perhaps the fact that they did so was one of the reasons the Whips decided to move them on. The point is basic and obvious; eventually the Government will have to acknowledge it. I cannot imagine why they are digging themselves so deeply into this hole.
I pointed out that Labour had learned their supply side lines, but had not implemented a policy. I shall not go over all the points at which regulation on business will undoubtedly reduce economic performance--for example, the social chapter, the minimum wage, the working time directive, the increases in business taxation and much else besides. I am concerned because I have the sense that growth is being taken for granted; there is a failure to grasp the importance of keeping a close eye on what creates economic prosperity. That is redolent of the 1960s. The great mistake of social democrats in the 1960s was to take growth for granted and to assume that the most important issue was how it could be distributed. Indeed, it was argued that redistribution would generate further growth through infinite supplies of extra funding to education.
Mr. Letwin: The Swedish model.
Mr. Tyrie: Indeed. Even if we doubled education spending, I am not convinced that there would be a sharp improvement in education performance.
I have noted my concerns on tax, spending and the supply side. I am also worried about accountability on the economic numbers. There has been a fundamental change to accounting principles. There has been an increase in off-balance sheet finance. There has been a huge number of changes of definition. I shall not bore the House by listing them all, but it is well worth reading some of the information produced by the Library. Those of us who had at least a vague understanding of these matters now find them extraordinarily difficult to grasp. We have such concepts as "annually managed expenditure", "departmental expenditure limits", "public sector current balance net investment", "general government net borrowing", "public sector net borrowing", the "net cash requirement" and the "total managed expenditure--TME". There are a range of such phrases; it requires considerable thought to work out exactly what they mean.
In the past, the Treasury's flagship publication--the Red Book--had chapters with clear headings, such as "Income Tax", "Business Tax Measures", or "Excise Duties". People had a vague idea of their meaning. However, if we want to find those topics in the current Red Book, we have to look under headings such as "Raising Productivity", "Increasing Employment Opportunity", "Building a Fairer Society", or "Environmental Measures". Anyone who
wants to work out what is being done and has an understanding of previous Red Books would find it extraordinarily difficult to read the current one.
Mr. Ruffley: Does my hon. Friend deprecate the way in which new Labour, Millbank jargon and rubbish have been introduced to what should be a serious, technical Treasury publication?
Mr. Tyrie: I agree that the Red Book should be a serious Treasury publication. I am sure that many people understand these matters better than I do, but as I helped a little to draft previous Red Books in the 1980s, I have an idea of what they used to contain. We used to listen carefully to the comments of the Select Committee on the Treasury as to how the Red Book could be improved each year. The current Red Book is not a satisfactory document to have been produced by any Government as an explanation for their Budget proposals. I hope that the Government will not repeat this presentation-oriented effort, but will try to stabilise their definitions so that we can monitor the economy more carefully.
I have referred to my anxiety about various matters, such as the rhetoric about ending boom and bust, the meddling with the accounts--partly for presentation and partly from the desire to try something new--and the introduction of meaningless economic rules, such as the golden rule. I have met no one who believes that the golden rule has the slightest economic merit. Apart from members of the Labour party, no one believes in it. The German Government used to have a golden rule, but in effect they have scrubbed it. The Bundesbank has rubbished it--no one believes that it has any real meaning or effectiveness. I worry that all the measures and the rhetoric that the Government have put out are becoming a substitute for thinking through the key issues that economic managers should address in the 21st century.
I do not expect that the Minister will have all the answers, but I wish to raise a few matters that he might like to think about. For example, do the Government accept that the process of globalisation, particularly in capital markets, is likely to lead to a greater amplitude in the business cycle rather than to the end of boom and bust? There is a strong argument to suggest that greater liberalisation of capital markets and the introduction of many new financial instruments will have that effect.
On the Bank of England's independence, much more thought must be given to the increase in weight and importance of fiscal policy that the granting of independence on monetary policy triggers. Again, much greater clarity on the meaning of the published numbers is required if we are to build market confidence.
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