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Mr. Michael Howard (Folkestone and Hythe): I draw attention to my entry in the Register of Members' Interests and thank the Chancellor for advance sight of his statement.

I am delighted that relations between the Chancellor and the Prime Minister have improved so much since the pre-Budget report. So cordial have they become that they cancelled all their engagements at the end of last week to spend more time together. Indeed, they have not spent so much time with each other since the last time the Government were in turmoil. [Interruption.]

Mr. Speaker: Order. Let the shadow Chancellor speak.

Mr. Howard: Britain's schools, hospitals and other public services can and must be improved, but to do that we need real reform. Is not it the lesson of the past five years that more money without real reform will not work? We read yesterday that the Chancellor himself had "been disturbed" by the Government's record on failing to deliver, and who could fail to sympathise with him? After all, he provided an increase of 23 per cent. in funding for education, but last year the proportion of children meeting numeracy standards actually fell; he spent 26 per cent. more on law and order, but crime is rising again, with street crime soaring by 31 per cent.; and he allocated almost 30 per cent. more to the NHS, but waiting lists are going up again.

How frustrating that must all be for the Chancellor. He even set in place a whole panoply of public service agreements, targets and monitoring arrangements so that all the extra money would deliver improvements in services. But what happened? The Government failed to meet their own targets: they failed on health care; they failed on violent crime; they failed on truancy; and our public services have been getting worse. The only mystery in all this is why the Chancellor does not realise that coming back to the House today and making exactly the same promises that he has made year after year, based on exactly the same approach, will lead to exactly the same results. Why has the Chancellor not learned the lessons of his past failures? After six Budgets, five years in office, three spending reviews and countless promises, is not it abundantly clear that the Chancellor and his colleagues simply do not know how to bring about real reform and the improvements in public services that we all want to see?

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The Chancellor makes great promises about our public services. He says that the

will allow

but that is what he said in 1998. He says that the money will

but that is what he said two years ago.

Of course, he also promises change and modernisation in our public services. In fact, he promised reform no fewer than 21 times in his statement, but that was his statement four years ago. He has promised reform every year since. So where is the reform? Where is the modernisation? Where is the change?

Why did the Government last year send schools 17 pages of documents for every working day? Is that reform? How can teachers be expected to cope with that? Why does the Home Secretary now want police officers to fill in forms in duplicate every time they stop—stop, not search—someone in the street? Is that the kind of reform that the Chancellor had in mind? Why has productivity in the NHS fallen? Why are there now more bureaucrats than beds? Is that the reform that patients want?

Yet the Chancellor is at it again. Another year, another spending review. The same old promises, the same old failure, year after year. Does not he just deliver higher taxes? Has not he recently announced his rate tax increase? Then he preens himself and boasts about reducing public debt. One does not have to be a genius to reduce public debt if one taxes every man, woman and child in this country an extra £40 a week and imposes a £100 billion hit on pension funds. Is not it becoming clearer and clearer that money alone is not the answer?

What is the result of the Chancellor's failure? When public services fail, is not it those on the lowest incomes who get hit the hardest? Is not it those in the inner city who cannot escape from the failing school, the hard-pressed hospital or the crime-ridden estate? The Chancellor likes to talk about fairness, but what is fair? [Interruption.]

Mr. Speaker: Order. Hon. Members are far too noisy. It is unfair to the shadow Chancellor; he should be given a hearing.

Mr. Howard: What is fair about making promises to the most vulnerable sections of society and breaking them year after year? The Chancellor is at it again. Another year, another spending review. The same old promises, the same old failure.

May I ask the Chancellor about the assumptions underlying his plans, which he barely mentioned? Has he read the recent warnings of the newly appointed economic adviser to the Department of Trade and Industry, who said:

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In light of those comments, does he stand by the growth forecasts outlined in the Budget and the economy's performance since then? Indeed, what confidence can we have in any of his figures when he so casually cooks the books on borrowing and debt, as he has done, Enron-style, in the case of Network Rail?

The Chancellor has today barely mentioned something that he normally says a great deal about—productivity. Perhaps that is not altogether surprising as the latest figures show a fall in productivity in the first quarter of the year. Indeed, under five years of Labour government, Britain's productivity has grown less than half as fast as it did under the last five years of Conservative government.

On Britain's productivity gap with the United States, the Chancellor's own advisers now say, in typical new Labour phrasing, that recent years may have seen "increased room for catch-up". Does not that phrase just sum up new Labour? Will not that be the Government's epitaph? On health, on education, on transport and on law and order, are not they masters at producing increased room for catch-up? Are not they masters at promising the earth, at trying to spin their way out of failure and at substituting subterfuge for substance? Here the Chancellor is again. Another year, another spending review. The same old promises, the same old failure.

Of course there are some aspects of today's announcement that we welcome. We will support measures to defeat terrorism and the associated rises in spending on defence, and we welcome the increase in the budget for international development. We shall carefully study a number of the other proposals that the Chancellor announced, but there are some aspects of his statement about which we have specific concerns.

The Chancellor indicated how he intends to pay for the new education maintenance allowances. Will he confirm that he will retain child benefit in full for 16 to 18-year-olds? He makes promises about housing. Will he confirm that the amount of affordable housing has fallen under the Labour Government, and that the total number of houses being built in this country is the lowest in peacetime since 1924? Why did he not mention in his statement his latest proposal to redistribute council grants to favoured areas that the Labour party controls, eventually leaving the south-east of England with a £200 million shortfall?

Will not the new panoply of prescriptive controls that the Chancellor has announced today lead to the greatest increase in centralised bureaucracy for a generation? In providing better public services, there is a better way. That means learning the best lessons from other countries where there are no waiting lists, where crime is falling and where school standards are way above ours. It means moving decision making closer to the people, the families and the communities affected. It means trusting people to know what is best for their area—trusting the teachers, the police officers and the doctors to get on with their jobs without constant interference and meddling from Whitehall.

We will not endorse the Chancellor's failed approach to public services. We will not support the policy of money without change—but before the Chancellor launches another of his scare campaigns, let me point out that that does not mean that we are against spending more on education and other services. However, we are against his plans to spend more without real reform. As his record shows, that simply does not work.

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When the Chancellor replies to questions and statements from the Opposition, he likes to start—he always does—by saying that he will answer all our points in full; then, he does not answer any of them. In his response today, let him answer only this one question. Why does he think that he can get away, year after year, with making the same old promises and proposing the same old failed answers? Why does he refuse to accept that if we are to give this country the services we deserve, it is time for real reform?

Mr. Brown: The shadow Chancellor says that he supports the increased funding for action against terrorism and for international development, but by his silence he has not supported the increased funding for education, health, housing, transport, the Home Office, policing and all the major public services in this country. When the Leader of the Opposition said on radio today that there would be not a penny more for public services, what he meant was that all talk of general reform is designed to obscure a policy of cutting public spending.

I defy Opposition Members to go back to their constituencies this weekend and explain why they do not support the additional payments for primary schools, the £165,000 for secondary schools, and the 6 per cent. real-terms increase in education spending. Let them explain why they do not support our health service reforms and our money, and why they are considering charges for visits to hospitals and GPs. After all the talk of concern about public services and poverty, a speech, a visit to a council estate and a night in a homeless shelter, what has happened is that compassionate conservatism has given way to the usual uncaring conservatism that everyone associates with the Conservative party.

The Conservatives will not match us on health and education, despite the fact that at the last election they said that throughout the following Parliament they would support our plans on health and education. Every Opposition Member must explain to their constituents why, having said in their manifesto at the last election they said that they would support our education and health plans, they are not doing so.

The shadow Chancellor raised the issue of the economy and what is happening to it. We stand comparison with his record as Employment Secretary. It is not simply the fact that interest rates at the moment are 4 per cent, but went up to 15 per cent. when he was Employment Secretary. It is not simply that inflation is 2 per cent, but when he was Employment Secretary he reported it at 10 per cent. If one is dealing with the ups and downs of the economic cycle, would one prefer to do so under a Government who have cut debt and debt interest payments to the lowest level for many years, as against a Government who were responsible, when he was in the Cabinet, for £50 billion of borrowing and a doubling of the national debt?

The shadow Chancellor said that we have come back to report that there is a need for more reform. Exactly—there is need for more reform, but the reforms that we have made—

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