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Mr. Salter rose

Phil Hope rose

Mr. Clarke: Let me make some progress if I may, because obviously others wish to speak and I obviously do not wish to continue to engage in further exchanges in which people try to attribute to the Conservative party policies and motives that are a myth, have always been a myth and are not what we are supposed to be debating today.

Mr. Dawson rose

Phil Hope rose

Mr. Clarke: I have said that I will give way again soon, but I shall make some progress first.

Having arrived at those basic propositions, Labour Ministers are having more than a little difficulty with them. One difficulty that they have to contend with is that they are finding it necessary to repair the damage that their predecessors in office did during the first four years of Labour Government. I cannot range over the whole field, but I probably give the Home Secretary the prize for being the Minister who is most rapidly disowning just about every policy of his predecessor in office from the same party. But the idea that the present Secretary of State for Health says a word that resembles any word ever uttered on the subject of health by the right hon. Member for Holborn and St. Pancras (Mr. Dobson) is fatuous. The current Ministers are finding it necessary to reverse policies, return to where they started and alter the agenda.

Nowhere is that process more striking than on the question of funding. I have said that I believe that public services improvement depends on funding and structural reform, but the Liberal Democrats' arguments on funding must be addressed. The Liberal Democrats are the only people left, I hope, who will continue to mislead the public by trying to persuade them that the only debate that we need have on these issues is about who can spend more. That debate is characterised by sterile arguments in which party representatives say, "We spent more than you did" and

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arguments about who increased spending by how much in a given year. We hugely increased the resources going into health—and most of the other public services—over our period of office. The real question is at what rate resources should be increased. In answering that question, it is essential to bear in mind the real economy and the wealth of the country. The answer to that question represents the actual division between the parties.

The Government did make one terrible error in funding in the first Labour period in office, about which I have always agreed with the more sensible Liberal Democrats. The first two years were a complete disaster and the funding arrangements that the new Secretary of State for Education and Employment and the new Secretary of State for Health accepted were a disaster from which both services are still reeling. [Laughter.] Labour Members are busily laughing, but they invented the completely bogus claim that they took over the previous Government's spending plans, which they most certainly did not. The only decision that the new Chancellor took and imposed on his colleagues was to cancel the anticipated annual spending rounds on which the Red Book had been based.

Anyone who says that Labour did what a Conservative Government would have done is presumably claiming that, having produced a Red Book in 1997, we would not have had an annual spending round and that we would not have revised or increased the figures. As someone who lived through every annual spending round for 18 years, I can only say that we never did that for 18 years and, when we settled the Red Book in 1997, not a solitary man or women in office thought that we would not revise or increase the figures. The then Secretary of State for Education and Employment, my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard), is sitting in front of me. I know her well, and if I had suggested to her when I was negotiating in 1997 that she would have to live without a change in those figures in 1998–99, she would have gone to the then Prime Minister and said, "Either he goes, or I go."

That fatuous proposition was imposed on naive Ministers by a Chancellor who was desperate to show the City that he was tougher than I was and that he was the iron Chancellor. Well, he ain't tough now—he is pouring out money. We have had two lean years, followed by four years of plenty, as the Government try to restore the damage, but a public spending round is coming up and that rate of increase cannot be easily achieved. A bitter spending battle will take place in the next month between the public service Ministers and the Treasury about the next three-year cycle. The Chancellor hints that he cannot maintain spending without increases in taxation and the Prime Minister will not hear of any increase in taxation, so the Labour party's policy on funding the public services is not out of the wood yet—a large number of difficulties remain to be resolved.

The Minister for Local Government (Mr. Nick Raynsford): The right hon. and learned Gentleman is clearly in denial. May I just remind him that at a recent meeting that I had with representatives of local government, they contrasted the continuous increases in spending since this Government came to power in 1997 with what happened when the Conservative party was in government? They specifically referred to a meeting that occurred in the period that he has just described in which the then Minister for Local Government, the right hon.

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Member for Skipton and Ripon (Mr. Curry), came into the meeting and told them quite openly, "We have been stuffed by the Treasury." Would the right hon. and learned Gentleman like to recall the reality of those years and acknowledge that this Government operate quite differently?

Mr. Clarke: If the present Chancellor is to maintain the level of health and education funding, he will have to stuff quite a lot of Whitehall Departments to avoid causing immeasurable damage to this country and raising taxation to an insupportable level. That is the job of a Chancellor. The right hon. Gentleman looks happy because he is responsible for local government, and the Government have taken the cap off local government spending and told those involved to go out and get the money through the community charge. I have to tell him, however, that the residents of my constituency are seeing the community charge increase year by year, beyond their capacity to pay. [Interruption.] I am in favour of capping local government expenditure, and in my opinion every party that wins government eventually gets converted to capping it, so I have not changed my mind.

Phil Hope rose

Mr. Clarke: I shall not be diverted. Let me get back to my proposition, which, I am glad to say, no one has risen to challenge and with which one hon. Member rose to agree. What I described—it is a wonder of wonders, given what the Secretary of State for Health says—is a set of the basic propositions on which the Government will have a second go at structural reform of the public services, but they will have some difficulty with their own people, as has been made only too clear in this debate.

I shall resist the temptation to gloat—welcome is any sinner who repents. I shall try to be constructive because it is important to realise that someone—it is more likely to be someone who sits on the Conservative Benches—has eventually got to deliver those propositions in a serious, joined-up and worked-out way. That includes, for example, depoliticising many of the key decisions that take place. That is why we privatised, why we brought in the private sector and why we tried to devolve.

I always used to think it absurd that, whenever a site had to be chosen for new hospital, there would be a Conservative policy, a Labour policy and a Liberal policy in the locality on where the hospitals should be built. Whenever some new rolling stock needed to be ordered, one party had one proposition on where it should be ordered from and the other party went about it another way. That is an absurdity, and it is one reason why those public services for which Governments are most responsible are bedevilled. One has to allow patients' needs, pupils' and parents' needs, passenger priorities and the views of those who have responsibility for managing and delivering the services in the locality to have some freedom from the kind of political knockabout in which every Labour Member, including Ministers, who has spoken in this debate so far has found it irresistible to engage. Let me try to be constructive, but I am bound to be sceptical.

My scepticism about the Government's ability to deliver has been strengthened in the past hour just by listening to Labour Members. I believe that I am right to

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say that they have been converted in principle to what I have said, but the conversion is more dramatic than that of St. Paul on the road to Damascus for most of those on the Government Front Bench. I can remember most of them sounding off when those propositions were first introduced to an extremely unwilling Labour movement, and they have not all been converted by their first four years of centralised planning, initiatives, spinning and re-presenting, and so on.

What about the poor Transport Secretary? He—alas, poor soul—has not noticed that St. Paul has seen the light. No light has struck him. He is left—for a very short time in future, I suspect—wandering off down the same road, holding himself out to the Labour party as a hero who has renationalised the railway industry. However, the small print shows that he has not renationalised anything; he has just put the infrastructure company into a state of limbo for 12 months and made it more expensive and more difficult to raise the private sector capital that he needs. Only the Liberal Democrats are left with the policy of tax and spend and the reactionary old left agenda. A lot of Labour Members love to recall their old battles and wish that their party was back where once it was.

Let me put some more flesh on the bones—which the Liberal Democrat spokesman certainly did not do for any of his proposals. Let me give some examples of why I think that funding is not the problem and how we shall make progress. First, the basic proposition that we have to bear in mind when listening to what the Secretary of State for Health says is that the purchaser-provider divide has been left in place. That is the key to the reforms; it sounds very technical, but it would have a very practical and very human consequence if it could be put properly into practice. The Labour party called it the internal market and used to denounce it. When the right hon. Member for Holborn and St. Pancras was Secretary of State for Health he used to claim that he had abolished the internal market, but, fortunately, he never did any such thing.

The Government's proposition is now that primary care trusts—the successors to GP fundholders—will be responsible, they say, for disposing of 75 per cent. of this country's health budget by 2004. We are told that the PCTs will be given much more freedom, that they will be monitored and that their performance will be managed by the new strategic health authorities that are being put in place and will take over by April 2002. If the Government make that change without causing chaos and confusion, it sounds like a promising step back in the right direction. That is what the temporarily silent Labour Members call the internal market, and it is being taken further by the present Secretary of State than I was ever able to go—thanks to obstruction in the Vale of Glamorgan and elsewhere—when I was in office.

One good thing is that at last the Government recognise the key role of primary care providers in the health service, which is always forgotten in such debates. One of the great strengths of the British health system is the general practitioner. A huge range of other people are involved in delivering primary and community services. The Government's proposal will do what we in the Conservative party always wanted to do—put the GPs back into the driving seat in relation to local priorities—so long as the Secretary of State generally lets go and allows them to do that. The proposal will repair some of the damage done by the abolition of GP fundholding—

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GP fundholding would have been better than the current policy, but let us proceed with what we have. I hope that Ministers can protect the proposal from the Treasury—Mr. Wanless and all—because it never likes such a degree of devolution. It likes central control and, as the Chancellor is working on his policy for the health service, I have a feeling that the proposal may run into difficulties.

I am sceptical about the Government's abilities to deliver their promises for devolution given their position on the purchaser-provider divide, but I have some questions for them. How much genuine devolution of responsibility will there be? How much genuine competition and choice will they allow to take place? What incentives will they give to the Cinderella services and to prioritise the treatments that are required? The Government are made up of lifelong control freaks who are trying to put devolution into practice. On their past form, I do not think that they will succeed.

How will the Government manage the confusion and overload that their repeated conversions have imposed on the system and that are causing widespread disillusion and despair in the service? They believe in permanent revolution. Even though this conversion may be one of the more desirable ones, they are handling the abolition of the health authorities, the setting up of the new primary care trusts and the negotiation of GPs' contracts with those who manage the service. There is a fantastic amount of overload and, if one talks to people in the service about it, one learns that their reaction is one of total despair that such a great deal of work is being thrown upon them.

What about all the recent burdens imposed on people in the service and with which they are meant to contend while they carry out the revolution and introduce the new internal market by early next year? What about all the local modernisation reviews that they were asked to carry out last year? The NHS Modernisation Board is supposed to be supervising all that. What about contracts with Downing street? Only in December last year, the Downing street delivery unit set more than 100 targets and milestones for the service to achieve. What about the public service delivery targets that have been agreed with the Treasury and what about—heaven help us— Mr. Wanless, who only two or three months ago dominated the Chancellor's pre-Budget statement with a new blueprint for the health service? I am not sure that a great deal will be devolved.

On 10 December 2001, an article in the Financial Times described the state of affairs that the Government have produced. It explains why I am sceptical about their ability to deliver devolution. The report states:

That was said just weeks ago and explains why the Labour party's conversion has not reached the point at which it will be able to deliver on its promises.

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I will not go on about the hospital service. The Government accept the private finance initiative, and more than 100 hospitals are being modernised or refurbished. That Conservative policy was opposed by Labour when it was in opposition. However, the benefits are now being delivered by this Government.

The Government have even welcomed the idea of private sector management, but their approach to it is extraordinary. Private sector management is held up as a kind of punishment to be imposed on failing hospitals. The idea of giving more freedom to hospitals and providing them with a little more competition and choice is complicated by the ridiculous star system and the endless demand for streams of statistics, priorities and targets that Conservative Members have already said cause so much difficulty.

For the first four years in government, the Labour party did damage and it is only just beginning to realise how it has to swallow every word it has uttered and to return to reform. It is like the Vandals and Huns who sacked Rome. They are now trying on the togas and trying to erect the pillars in the right place. However, as they all say different things on different occasions, they will not succeed. They must correct the public misconceptions about reform of services that they did a great deal to create.

My prediction is that the Government will not succeed. They began this Parliament in the same foolish way as they began the last one. The Prime Minister immediately raised expectations that he has no prospect of delivering. He will not deliver them in this Parliament and he may not ever deliver them unless he undergoes a further considerable conversion on how to go about reform.

A Conservative Government will eventually be able to return to their agenda and they will find that the political climate has been changed by the utterances of the past few months. Labour politicians will no longer be able to deny the basic tenets of reform in the way that they did in the past. However, at the present rate of progress, better public services of the standard that we deserve may take a generation to achieve. So far, the Labour Government have done more harm than good and I see precious little sign of real progress in the right direction.

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