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8.1 pm

Mr. Michael Fallon (Sevenoaks): I shall begin with the nature of the comprehensive spending review process. The Chancellor often likes to make out that he has pioneered the concept of a long-term rational basis for public spending, but it is not quite like that. This spending review is the third in only four years. It comes just 15 months after the last spending review came into effect. Add to that the constant topping up of public spending programmes in each successive Budget and, indeed, in each successive pre-Budget report and we are a long way away from the sort of three-year fixed programme that the right hon. Gentleman likes to convey.

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The public spending arrangements that we now have are not, as the Chancellor maintains, so very different from the ones that we did have. Of course, it is true that since Plowden we have had annual reviews, but even those reviews posited figures for years two and three. Now, it is true that the third year of each successive CSR is simply rolled into the first year of the next one. The Chancellor would be more convincing had he started off by saying that he would put this process on to a two-year framework into which much else was added in between.

This review has one odd feature, which is that the Chancellor was boxed in from the start by the enormous hole that emerged from the last review—the need to set up and implement the Wanless report and to yank up health service spending to the European averages. That meant in turn that he became in hock to the Department for Education and Skills and to the Home Office, which looked for similar increases. In turn, that has clearly skewed spending increases elsewhere.

When we get into the detail of the announcements that are following the spending review, it may well be that the increases for defence and for local government are not really as generous as they might at first appear. That would not matter so much—the national health service, schools and crime would be top of anyone's list and, indeed, they would be top of mine—if Ministers had not pretended that this entire process was the result of rigorous, rational review that really did match results with resources and reform with money. In fact, as we discovered in the hearings of the Treasury Committee last week, no Department was penalised and no money withheld. Even the much-disgraced Ministry of Agriculture, Fisheries and Food received a substantial increase in funding.

Fundamentally, politics has driven this spending review: how to square the large post-Wanless increases given to the health service with the obvious commitment of the Government to make education a top priority and the equally obvious need to do something about rising public concern about crime. Let us not be under any illusions: this was a very political spending review, driven entirely by new Labour preoccupations.

On the spending programmes, the first and most obvious comment—it has already been made—is that much of the extra spending will go on people. If it goes on front-line people, that is good news, obviously. We are desperately short of nurses. To confirm that, we have only to look at the use of agency nurses and their predominance on night shifts as well as the ridiculous state to which the Government have reduced the health service—flying nurses in at the same time that they are flying patients out.

Of course, every head teacher would like a greater choice of teachers when selecting for a particular post. Every area commander wants more police in his division and out on patrol. If the money goes on those front-line people, I for one will be cheering. I have two great fears, however. First, the extra spending that is already flowing through from the last review seems to be going on the back line—on advisers, liaison people, co-ordinators and systems managers. If our public services really are in the firing line, one only has to pick up the Wednesday jobs section of the Guardian to see that there are some pretty well-staffed chateaux right behind the front lines.

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Some of those jobs are very worthwhile; others are more dubious. The one thing that we know for certain is that every pound spent on advisers, or administrators—on their cars, conferencing and so forth—is a pound less that is spent in the classroom, the hospital ward or out on police patrol.

The hon. Member for Kingston and Surbiton (Mr. Davey) has already articulated my second great fear. The Chancellor is overdoing it on inspectors. There are far too many inspectors. Of course, the public services should be accountable, but we will end up destroying any sense of profession—the element of trust that supports the sense of profession—if we over-inspect. The Chancellor set up four new inspectorates. Someone pointed out that they would amalgamate other inspectorates. The Government have already created dozens of new commissions and inspectorates. Far from amalgamating them, I would have liked him to ease off.

Mr. Salmond: I have been looking up the hon. Gentleman's background. Apart from working in the Conservative research department, he was a director of European Consultants Ltd. When he was doing that, was he working in the front line or the back?

Mr. Fallon: I was working in private industry and contributing to the funding of public services. I think that I have as much business experience as the hon. Gentleman, whom I am glad to see back in the Chamber.

On targets, the claim that these are actual programmes rather than simply political decisions rests fundamentally on all those public service targets. There is nothing wrong with performance targets. Any business needs and has performance targets, business plans and personal performance measures in place, as I hope that the hon. Gentleman will agree. Here as always, however, the Government blunder along. First, we had more than 600 public service targets, which were introduced a couple of Secretaries of State ago. Just a year later, those were thinned down and now they have been changed again.

What is wrong with those targets? First, they are ludicrously imprecise. Indeed, the Chairman of the Treasury Select Committee gave us some examples from the Foreign Office. Some of them are woolly and they are easy to implement or they are incapable of measurement. Secondly, as the hon. Member for Kingston and Surbiton said, they are not yet properly externally audited. It is by no means clear how the Audit Commission will ensure that that external audit is put in place. That still means that the Treasury can virtually audit itself at the moment. Thirdly, the targets are always being changed. The White Paper that sets out public service agreements for 2003 to 2006 states:

That shows that the targets are simply what the Government say they are. They mean what the Government say they mean. Given that no penalties apply, we are in "Alice in Wonderland" territory. The targets mean only what the Treasury says they mean and at the end of day, no one loses any money—all shall have prizes.

Finally—I know a lot of other hon. Members want to catch your eye, Mr. Deputy Speaker—I want to look at the impact of the public spending programmes in west

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Kent. We have some of the most expensive housing outside London. It is difficult for us to recruit and house key public sector workers. I welcome the key workers scheme but I would have welcomed it even more if the Government had not in the first five years cut housing association budgets by almost exactly the amount that they have put into the scheme.

The Deputy Prime Minister has announced swathes of new housing for north Kent. The new housing will have to go somewhere. We have to take our share of it but I would have welcomed that announcement if it had been accompanied by a proper recognition that one cannot announce thousands of new houses without first considering the infrastructure. If the Government are going to go down the route of huge new towns, they have to look at the way in which the money is allocated and ensure that the schools, roads and surgeries are put in place first. If there is to be a big increase in housing, they need to look again at the rules governing spending to ensure that the houses are not built and occupied before the infrastructure and support for communities are put in place. At the moment, it is the other way round.

Mr. Tom Harris: I do not want to pre-empt the climax of the hon. Gentleman's speech but would I be right in saying that his argument is leading us implausibly but inexorably to the conclusion that a future Conservative Government—sorry, a hypothetical Conservative Government—will be able to maintain public spending at the levels set by the Chancellor simply by cutting bureaucracy?

Mr. Fallon: It is certainly one of the conclusions that the hon. Gentleman should draw. I have always thought that cutting bureaucracy is important. It is important for central Government above all to keep bearing down on bureaucracy if we are going to get the money into the front line.

The next example from west Kent is law and order. We need more police on patrol. Last Saturday evening, I was in West Kingsdown, a village on the A20; some hon. Members may know it. The village was delighted that a new rural warden had been appointed to help with community safety, but that warden was paid for by Kent county council. The police authority does not have sufficient funding. We need more police locally, not just rural wardens, and more police on patrol.

The impact on council funding is perhaps the biggest threat of all to the successful implementation of some of the spending programmes in my part of west Kent. As hon. Members will know, particularly those representing southern England, another review was slipped out just a few days before the spending review: the formula grant review, under which—the Government are honest enough to put the figures in the illustrative tables at the back of the document—southern shire counties such as Kent and Essex could lose substantial funding. Indeed, the Government recognise that to the extent that they have already proposed damping mechanisms to ensure our councils in the south do not lose more than a specific amount in any particular year.

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