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Mr. Andrew Miller (Ellesmere Port and Neston): The right hon. Gentleman referred to the problems that our constituents face when chasing around office after office. Does he accept, therefore, that the previous Administration made a mistake when they demerged the jobcentres and benefit offices?

Mr. Portillo: The hon. Gentleman needs to focus on the future.

Mr. Miller: I asked a straight question--answer it.

Mr. Portillo: I am not going to get into it. I believe that everyone in this country--bar the Chancellor of the Exchequer, perhaps, but certainly including the hon. Gentleman's constituents--knows that bureaucracy has increased enormously in the past four years. I do not claim for a moment that the increase in bureaucracy began only four years ago. I am not in the Chancellor of the Exchequer's black and white school in which it is said that everything that happened before 1997 was perfect. However, the Government's neglect of the problems of regulation and bureaucracy is extraordinary.

The Chancellor has already massively increased the cost of government, and he plans to go on increasing it during this Parliament. Whatever he may have said for party political reasons during the election campaign, he knows perfectly well that the Government could save billions of pounds, which they currently waste, if he would only put the same effort into controlling bureaucracy as he puts into bullying his colleagues.

Richard Burden (Birmingham, Northfield) rose--

Mr. Portillo: I am sorry, but I was only picking up what Mr. Alastair Campbell said when he described the Chancellor as an out-of-control colossus--not an expression that I would apply to him at all.

Richard Burden: I am listening intently to the right hon. Gentleman's new measured tones and his emphasis on looking to the future, but I want to find out exactly what he is now saying about public services. Now that we are beyond the cut and thrust of the election campaign, can he tell the House whether he has changed his mind about any of the Conservative's public spending plans and statements? Has there been any change from what he said during the election campaign? Has there been any change at all in his new guise?

Mr. Portillo: Obviously, the hon. Gentleman had that question written for him before I delivered the last paragraph before he rose in his place, because I have just very clearly said that when spending £400 billion a year--£12,000 a second--of the public's money, it simply is not credible to go to the country and say, "We cannot possibly spend a penny of this money better. We are spending every penny of your money perfectly." The hon. Gentleman's constituents know perfectly well that that is not true. If he went around his constituency claiming that schools and hospitals would close if we tried to save

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£8 billion out of £400 billion, it may account for the fact that so many fewer people voted for him this time than last time.

Mr. Bob Blizzard (Waveney): Will the right hon. Gentleman give way?

Mr. Portillo: Yes, but I obviously ought to make progress at some point; I do not want to test the patience of the House.

Mr. Blizzard: The right hon. Gentleman has just referred to the ideas on trying to save £8 billion from the Government's Budget. He claimed that he could save that money many times during the election campaign. Clearly, not many people believed him. On the few occasions those plans were put under scrutiny by media commentators, they fell apart. Let me however accept for the moment that he believes that he could have saved £8 billion from Government spending. If he is committed to public services, why did he not commit that illusory £8 billion to public services rather than tax cuts?

Mr. Portillo: Well, I shall come to the reason for that in a moment. The reason is that--[Interruption.] I am giving the House a preview of the bit that I shall come to. As the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) said, the point is that this Government have made the poorest people in society poorer. [Interruption.] Well, the hon. Lady said it, and she was right. One of the reasons why the poorest people have got poorer is that they have borne the brunt of the stealth taxes imposed by the Chancellor of the Exchequer--but I shall deal with that point in a little more detail in a moment.

There are real concerns about the balance of the economy. Consumer spending is strong, but the savings ratio has halved and Britain's share of world exports is down. We have a record balance of payments deficit, and the Chancellor predicts in the Red Book that it will continue to grow. Balance of payments deficits can be funded so long as people are confident that the economy is doing well. Those things can change very suddenly, but there is absolutely no sign that the Chancellor is concerned in any way. That lack of concern about the balance of payments deficit may prove very unfortunate for the Chancellor, as well as the country.

A strong economy is the pre-condition to any Government's plans. Economic stability allows families, too, to realise their ambitions to buy a better home, to make provision for their retirement, to provide opportunities for their children. The tax increases of the past four years have blunted our competitiveness, and people can see no evidence that those tax increases have led to improved public services. I have never heard the Chancellor say that lower taxes make a country more competitive and that higher taxes do the opposite. Perhaps he would like to tell us this afternoon whether that is his belief. We hear the Chancellor talk about reducing taxes for business, but the director general of the CBI has said:

The funny thing is that, around the world, Governments of every political persuasion are busy cutting the taxes in their economy, and it is the Chancellor who is swimming

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against the international tide. Britain's taxes rose by the equivalent of 10p in the pound on income tax during the previous Parliament.

Now, the Government plan rises in public spending during this Parliament faster than the average growth rate of the economy. During the entire election campaign, the Chancellor refused to tell us whether such above-trend rate growth in public spending was the plan for the next two years or the longer term. Is he just turning on the tap now in order that he can turn it off almost immediately, or is he planning for public spending that will, of necessity, require higher taxes? Whenever one asks him those questions, he tends to resort to talking about his rules, but his rules allow him to tax and spend as much as he likes. The only rule is that, as he spends, he must raise taxes in order to match it.

During the election campaign, the Chancellor considered it a terrible affront that we should ask him which taxes he was thinking of raising during this Parliament. The question was wholly legitimate, since tax rises are indicated by the rate of public spending growth to which he is committed. He repeated his promise during the election campaign not to increase income tax at either the standard or higher rates, but will not make other commitments. He will not even make commitments relating to other taxes on people's incomes, and will not say whether he will raise or abolish the ceiling on national insurance contributions, which, effectively, would lead to a 50 per cent. tax rate on middle-income Britain. He had another opportunity in the House today to make clear what he intended. Raising the issue has at least brought to his face the first smirk of the afternoon.

The Chancellor now plans to subject one half of Britain's pensioners to the indignity and nuisance of means testing. During one passage in his speech, I think that he meant to say that he was planning that people should have retirement in dignity, but it sounded like retirement indignity. I am afraid that the latter is indeed what the Chancellor is planning for. This is the man who promised that he would remove means testing from pensioners altogether.

The proposed increase in means testing has important social consequences. The Queen's Speech promises us a pension credit, but that is made necessary by the penalties for saving that the Chancellor has introduced. Indeed, the pension credit itself will increase penalties further up the income scale.

The Chancellor has spoken today about his plans to tackle child poverty, and that is of course a very laudable aim. However, in referring to the hon. Member for Hackney, North and Stoke Newington, I ask again whether that is credible from this Government, since the Chancellor's stealth taxes have hit the poorest hardest. Since 1997, the poorest fifth of households have seen the sharpest rise in the share of their incomes that must be passed to the tax man. As the Chancellor has said, this Parliament will see huge changes in credits payable to families. We on the Opposition Benches will study those proposals very carefully, but I fear that the Chancellor will, as usual, create a system that is too complicated for people to understand and full of anomalies and perverse incentives. Characteristically, he cannot resist meddling: he cannot resist micro-management. He wants to live everyone's life for them.

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During the last Parliament, the Chancellor had to show that he could manage the economy better than his Labour predecessors. Given the fiascos of previous Labour Governments, that was not so very difficult. However, he failed completely on his principal promise, which was to improve the public services.

We in this country used to be able to say that Britain had the best health service in the world. We cannot say that now. People in pain are being made to wait far too long before getting the treatment they need. Many people in this country have to wait more than a year for heart surgery, compared with two months in either Germany or France. In modern Britain, people with heart disease die while waiting for their operations. Britain's children do less well at school than children in Germany or France. Extraordinarily, the proportion of adults in Britain who are unable to read and write is among the highest in the industrialised world. In education, as in health, we should be willing to look humbly at what other countries have done to see how we can do things better.

Whole communities today feel defenceless against crime. Criminals lord it over residents in some of our worst estates. Many women are afraid to go out at night and many elderly people are afraid to go out at all. Our transport system is failing us. Our roads are congested and our railways are chronically unreliable. No one could reasonably have expected the Government to transform our public services overnight, but people had hoped for some improvement and they have seen no sign of it. The Prime Minister was careful during the election not to repeat his claim that we had 24 hours to save the national health service, but he can never resist giving a hostage to fortune: now he promises that services in this country wil become of world standard. That is the yardstick by which he will be judged.

The size of the Government's majority allows them to make whatever reforms they consider necessary to the public services. Who could possibly stop them? They have an entirely free hand. If the Government can deliver changes that make a real difference to people's quality of life, the Opposition will support them; but if the Government cannot do that, they will be completely out of excuses.

The Government have targets for recruiting more doctors, more teachers and more police officers. A target makes a good soundbite during a general election, but it is no substitute for a policy. The Government are struggling to retain the professionals that we have in service today. The GPs have threatened to walk out of the health service, there are teacher shortages, and police morale is being undermined.

I ask the Government to recognise that it is their own interference that has driven our public servants to despair. Labour's style of government--the style of government that seeks a headline every day for a new initiative every day--drives to distraction the unfortunate people who are supposed to implement Whitehall's bright ideas while trying simultaneously to deliver a service that works to the public. Our professionals today are longing to be left alone to work effectively in their chosen vocations.

We live in the age of the internet, at a time when people have unlimited access to information. Ours is a less deferential age in which people expect to use their

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initiative and to be able to innovate. The time of national plans and centralisation is over, but the Government show absolutely no sign that they recognise that. Just as businesses see a Government who talk deregulation while imposing countless new regulations, so public servants see a Government who talk decentralisation but hand down ever more directives to them.

The Government themselves now aim to be the nurse, the teacher, the police officer and even the parent in every home. True, they now promise greater freedom for teachers and say that more money will be given directly to head teachers. That is what the Conservatives have long advocated, but the Government have always been scornful. If the Government's is a genuine conversion, we shall be delighted, but is it genuine? Can we believe that of a Government who organised the abolition of grammar schools, scrapped grant-maintained schools merely because they had been invented by the Tories, and scrapped the assisted places scheme merely because Labour believes that if not everyone can get on a scheme, no one should be allowed to do so?

The Government spent much of the election campaign claiming that they would reform health care. There were hints that they would be willing to build new partnerships with the private sector, breaking down the absurd ideological division between the two sectors. We Conservatives have long advocated a practical approach based on getting the best possible treatment for patients, but over the years the Government have simply misrepresented our policy and derided us for it. If the Government have now been converted, I welcome that. But again, can we believe them? In the previous Parliament, Health Ministers abolished GP fundholders just because the Tories had invented them. The Secretary of State for Health described work by consultants in the private sector as

This very day, he is out briefing again, emphasising the negative aspects of co-operation between the two sectors in health. It was he who proposed that consultants should not be allowed to practise in the private sector within seven years of signing a contract with the national health service.

That takes us back a long way. Even Nye Bevan, when he set up the NHS in 1947, recognised that it needed the support of consultants with a mixed practice in the private and public sector, which is why he introduced pay beds in NHS hospitals, so that consultants could treat their private patients there and the NHS could afford to use their skills. Under the present Health Secretary, we have moved backwards from Nye Bevan's stance.

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