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8.7 pm

Mr. Bill Rammell (Harlow): I am grateful for the opportunity to speak in this debate, and I broadly welcome the Budget. Like its predecessor delivered under my right hon. Friend the Chancellor of the Exchequer, the Budget demonstrates more clearly than ever that the Government have shot the Tory fox on the economy.

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I apologise for the metaphor, but I use it deliberately. Since I first became politically conscious, I and everyone else in the country have been told--by the Conservative party and conservative newspapers--that Labour could not be trusted to run the economy. We were told repeatedly in the 18 years of Conservative rule that a Labour Government would lose control of the economy, that there would be a run on the pound, and that unfinanced public spending would cause interest rates to go out of control. In short, we were told that Britain would dissolve into economic chaos.

Four years have passed since the last election, and things look a little different. We have the lowest inflation for 30 years, and the lowest unemployment rate for 26 years. Real incomes are rising and the public services are receiving more investment than has been the case in my adult lifetime. In short, the Government have achieved a degree of economic stability and success that has not been achieved before.

We should not underestimate the political significance of that. It means that people who had previously shared the Labour party's values and beliefs, but who did not trust us on the economy, are now able to support us. Like many of my colleagues, I am canvassing regularly at the moment. I am finding that people who voted Conservative in 1997 because they could not trust Labour on the economy are now coming across and saying that they will vote Labour at the next general election. I believe that the Conservative party has yet to face up to the significance of that change. Perhaps it will in May or October, or whenever the election is held.

The manner in which we have managed the economy has enabled us to invest much more money in key public services. In the face of that, the Conservative party must do much better in answering the difficult questions on public spending. Whether they are talking about cuts of £8 billion or £16 billion--and there are plausible reasons for saying that, in government, they would require cuts of £16 billion--the Tories must do better in telling us where the cuts would fall.

The shadow Chancellor's earlier exchange on industrial injuries compensation was very instructive. I understood him to say that that would be an additional burden on business but that the Tories would compensate business elsewhere. The net effect of that would be zero. They could not then claim that the abolition of industrial injuries compensation would be part of their proposed £8 billion savings.

Mr. Letwin: Has the hon. Gentleman ever heard about the distinction between public expenditure and taxation? If we reduce public expenditure in one dimension and reduce taxation on business to compensate, do we not achieve a diminution of both?

Mr. Rammell: We still have to make the sums add up. Including that cut within the Conservatives' overall plans to reduce spending by £8 billion clearly demonstrates that it is not sustainable or justifiable. That would lead to having to cut the core public spending plans for schools, hospitals and the police service.

Mr. Letwin: Will the hon. Gentleman give way?

Mr. Rammell: No, I will not.

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There is another more fundamental objection to the Conservatives' claim that they will match our spending on schools and hospitals. Why should we believe them? Even if their tax and spending plans were to add up, which I do not believe is the case, they had 18 years in power--the longest period of uninterrupted rule enjoyed by one party in this country in the past century--yet they never once attempted to deliver the increases for our schools and hospitals that this Government are delivering. I think that the public judge politicians not by what they say but by what they do, and by its record, the Conservative party is condemned.

Mr. Letwin: Will the hon. Gentleman give way?

Mr. Rammell: I will give way a little later.

The Budget confirms that we are prudently and cautiously giving the greatest help through the tax and benefits system to those people who need it most. Some people might call that redistribution. The hon. Member for Bury St. Edmunds (Mr. Ruffley) was clearly harking in that direction in his impassioned speech. I prefer to call it fairness. I think that the British public waned in their support for the principle of fairness for a time during the 1980s, but that they now support it again. The Institute for Fiscal Studies has recently confirmed this by saying that the reforms since 1997 have been strongly progressive and that the proportional post-tax income gain is highest for the bottom decile households. That refutes the shadow Chancellor's claim that the poorest households are hit by tax increases under this Government. The evidence shows that those households are gaining most overall, which I welcome.

I contend that because of our successful management of the economy and because we have delivered fair taxation, we are now able to deliver a significant increase in expenditure, particularly in the spending on our schools and hospitals. I was astonished to hear the shadow Chancellor talking about cuts in schools. He quoted from a letter written to him by someone who was clearly a member of the Conservative party, decrying what was happening in our schools. The Liberal Democrats expressed a similar view. My experience of talking to head teachers in primary schools in my constituency is completely the reverse. I was talking to a head teacher of a school in Harlow a couple of weeks ago, who told me that in 25 years of teaching, she had never known so much money to go to schools. That is the experience of teachers and head teachers across the primary and secondary sectors.

Let us look at the figures for capital spending. Some £686 million was spent on capital repairs of schools in 1997. Today, the expenditure figure is £2 billion and is heading towards £3 billion. That is the most substantial boost to spending on capital infrastructure in schools for more than a generation.

The same is happening in the national health service, with a third real-terms increase in spending in the coming five years. It is the biggest sustained increase in health service spending since 1948. I say that deliberately; I recently asked the House of Commons Library to produce a table on health service spending year on year since 1948 and to identify the percentage change over the previous years at 1999-2000 prices.

The table clearly shows that the projected level of sustained increase between 1999 and 2004 has not been achieved in any five-year period since the establishment

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of the national health service. That is a real contrast with what went before. Under the previous Government, there were years in which they delivered significant spending increases, but that normally happened in the run-up to an election. In 1987-88 there was an increase of 4.3 per cent; in 1991-92 there was an increase of 7 per cent. However, those increases were never sustained or carried through. Two years after those increases were delivered, the increases were only 0.6 per cent. and 0.8 per cent. respectively--effectively that spending was at a standstill. Under the previous Government, there were large increases in spending in the run-up to elections, but the tap was turned off as soon as they were safely back in power.

That practice is a real contrast with what is happening under this Government. We are sustaining increased spending year on year in a way that no previous Government have done. That gives me grounds for optimism. We are beginning to get things right in the national health service unlike what happened in the past. I see that in the health service in my constituency, where there is a walk-in health centre, faster cardiac care and cancer care and shorter waiting lists. Real increases are benefiting real people.

It is worth labouring the point that the improvements are genuine. I detect a developing political and press agenda in which it is claimed that those increases are not real. The Government are accused of over-spinning the increases. In fairness, I think that in the first comprehensive spending review, we over-egged the pudding slightly. We have learned from that experience and now our claims are genuine. The polar opposite is apparent from the comments of some newspapers and political parties, which argue that an increase in spending is not real even when it is manifestly genuine.

At the weekend, The Sunday Times said that the national health service was a net loser in the Chancellor's Budget, contradicting my right hon. Friend's claims that he had given it more cash.

Mr. Letwin: Will the hon. Gentleman give way?

Mr. Rammell: No, I will conclude this part of my argument before I do.

When I read that article, I referred to the Budget Red Book for last year and this year. The Red Book shows that in 2000-01, £46.6 billion was spent on the national health service. For this year, the figure is £46.7 billion. The figure is £50.5 billion for 2002-03 and £54.5 billion for the following year. Given those figures, how any newspaper can claim that that is equivalent to a net loss for the national health service is beyond me. It does no credit to any newspaper or political party to make such a claim.

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