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Mr. Barry Gardiner (Brent, North) (Lab): The hon. Gentleman has just suggested that it is important to review recent documentation and assess it properly. Would he therefore care to review the statement by the shadow Chancellor on 16 February, in which he said that there should be a "zero per cent. growth" in the defence and Home Office budgets? Would he care to compare that with the view of the shadow Defence Secretary, who said that that would be a savage cut? Which is it? Is the shadow Chancellor going to cut the defence budget or the Home Office budget?

Mr. Willetts: I have already clearly explained what my right hon. Friend the shadow Chancellor said in his statement on our public expenditure plans. We can see from the Secretary of State's brief speech, and from interventions, that the Government do not have a programme to reform public services, to tackle the crisis in our pensions or to avert the tax rises that would be inevitable if they were in office for a third term. Instead, we have spin, spin, spin from the Government.

Mr. Webb: Before he was interrupted, the hon. Gentleman was saying that the Government's programmes to get lone parents off welfare to work had been unsuccessful. To fill the hole in his pensions policies

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he aims to save £400 million a year by getting lone parents with secondary school-age children back into work. What research evidence makes him think that he can raise £400 million by doing that?

Mr. Willetts: We have clear evidence that when lone parents are older and their children are of secondary school age, for them to go out to work is in the best interests of the children, as outcomes for them are better We know from the introduction of jobseeker's allowance that nothing beats a simple, clear requirement that people should actively seek work. The Government have skirted that issue ever since they took office, but we would address it directly with our reform. That is the difference, and it is an important one.

I turn to the main activity in which the Chancellor has been engaged in his Budget, and in which he has engaged again today—

Mr. Patrick McLoughlin (West Derbyshire) (Con): Before my hon. Friend moves on, will he say something more about savings, the issue that he has just addressed? It is disturbing that people are not being encouraged to save. Why, despite all the words used by the Chancellor in the past, are there no measures to encourage saving in the Budget?

Mr. Willetts: My hon. Friend is right. We have just about the lowest savings ratio on record, and the Red Book shows that there is no prospect of improvement. The Budget documents show the savings ratio as 5.25 per cent. in 2003, 5 per cent. in 2004 and 5.5 per cent. in 2005–06. Those are historically low levels.

Mr. Andrew Smith: Does the hon. Gentleman accept that in 1989 it was 4.9 per cent., which is the lowest level of all?

Mr. Willetts: The Secretary of State knows that the savings ratio under this Government has fallen from the 10 per cent. that they inherited from us to approximately 5 per cent. now. There are no measures in the Budget to do anything to reverse that. The average savings ratio since 1997 is lower than it was during our period in office, and that serious problem needs to be tackled.

I shall challenge the Chancellor on the new sport in which he is engaged— fox hunting. He wishes to shoot our fox; that was the spin put on the Budget. We were told that that was its purpose: it had nothing to do with improving the performance of the British economy or avoiding future tax increases, but was all to do with shooting our fox. The Chancellor is engaged in an activity more redolent of my hon. Friend the Member for Mid-Sussex (Mr. Soames) than of Labour Members, but they are all engaged in fox hunting.

Let us get on the trail and see whether, by suddenly discovering the importance of reducing the overhead costs of government, they have carried out the brilliant political manoeuvre that they think they have. For years, the Chancellor has denied that there is a problem with waste and inefficiency; it is Opposition Members who have pressed for action on the problem of waste and inefficiency in our public services. Now, the Chancellor takes great pride in turning up and announcing in the Budget that he has suddenly realised

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that there is a great problem with waste, overhead costs and excessive numbers of civil servants, which he is going to reduce.

Will the Secretary of State for Work and Pensions provide a little more information about the announcements that were made? On the day of the Budget, he announced that he would reduce the number of civil servants, and said on the radio:

"I haven't ruled out the possibility of some compulsory redundancies."

The Chancellor said in his Budget statement that

"the Secretary for Work and Pensions is announcing today for his Department a gross reduction of 40,000 staff posts, a redeployment of 10,000 posts to new priorities, and thus an overall reduction over four years of 30,000 posts."—[Official Report, 17 March 2004; Vol. 419, c. 331.]

That is what many civil servants heard on their radios, but we know what the Government think about such sudden announcements of redundancies, as the Secretary of State for Trade and Industry said:

"I am not prepared to have our workers hear on the radio that they will lose their jobs or find that they have already lost their jobs through a text message."—[Official Report, 14 January 2004; Vol. 416, c. 822.]

The Secretary of State for Trade and Industry is so het up about such announcements that she will penalise employers who do such appalling things. The Government have introduced legislation to fine employers who announce redundancies without proper consultation, and she said:

"I want these changes to lead to a 'no surprise' culture"—

the Chancellor has not caught up with that, has he?—

"where employers and employees discuss common ground and find solutions to mutual problems. I want to see an end to the climate where people only hear about job losses from the media over their breakfast."

What, then, is the Chancellor up to, announcing redundancies in this way?

Mr. Stephen Pound (Ealing, North) (Lab): Like many honest citizens, I was immensely impressed by a recent photo opportunity involving the Leader of the Opposition in which great phalanxes of cardboard cut-outs wearing bowler hats symbolising imminently redundant civil servants were paraded for the cameras. Would the hon. Gentleman disassociate himself from that?

Mr. Willetts: That was a recruitment freeze. We know how to do these things properly, which is the point that we are making—but I am afraid that the Government do not. The Secretary of State for Work and Pensions has the defence that the announcement was not new. The Chancellor did not say so, but that is what we have discovered. I have been digging in the departmental spending plans, and in the latest annual report the Secretary of State said:

"The strategic aim is to reduce the Department's workforce from just 131,000 whole-time equivalents in post at April 2003"—

the figure is about the same now—

"to around 112,000 by March 2006 as the benefits of a significant programme of change and modernisation are realised."

That is what the Government were going to do 18 months ago, but we now know that those plans date back as far as 2002, which is when savings were first

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announced. What have they been doing in the two years since they first announced that 18,000 jobs were to be cut? A departmental spokesman was asked how many of those 18,000 job losses had been implemented since 2002, and she replied:

"That 18,000 was only a proposal."

The cut was "only a proposal", so the Government have not done anything about it. The Secretary of State must tell us why we should believe him this time when he claims that he is going to do something about it. He says that the savings are all due to the miraculous use of IT, but I warn him that his Department's record on saving money and staff through the effortless and efficient introduction of IT system leaves something to be desired.

The new computers at the Child Support Agency are still not working. Are we going to save money in that way? Will we make savings with the computers that delivered the new child tax credits so smoothly? The national insurance recording system did not send out any notification to people telling them to pay their voluntary national insurance contributions. Will the superb efficiency of that IT system be the means by which money is saved? The Government do not know how they are going to save the money, which is why for the past two years they have been announcing 18,000 staff reductions, yet have not achieved a single one.

Mr. Salmond: I have been listening closely to this part of the hon. Gentleman's speech, and I am still not clear whether those on the Tory Front Bench think the Minister is sacking too few civil servants, or too many.

Mr. Willetts: We want an efficient civil service, and I believe that it is possible to reduce staff numbers in the Department for Work and Pensions. Let me tell the hon. Gentleman, and Ministers, how it can be done. The only real way is not through gimmicks, proposals from which no action follows, or empty hopes based on IT systems. The only way is to reform the benefits system. That is how to save money. I shall give the hon. Gentleman some figures.

The average weekly administrative cost of delivering a payment of income support—one of those complicated means-tested benefits that the Chancellor loves so much—is £4.20. The administrative cost of delivering the basic state pension per week is 55p. The cost is hardly more than one tenth, if instead of complicated means-tested benefits, straightforward and simple benefits are paid through the basic state pension. The reason why the Chancellor cannot deliver savings is that he is always making the benefits system more complicated and spreading means-tested benefits. If he reformed the benefits system as we propose, it would indeed be possible to make savings. One makes savings by making tough decisions on the reform of benefits.

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