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Mr. Oliver Letwin (West Dorset) (Con): What we have just heard is a manifesto for fat Government and fake savings. The last time the Chancellor told us that he was going to make tens of thousands of cuts in the civil service was three months ago. Why has he been adding to civil service numbers since then? What the review really means is more bureaucracy, more targets, more initiatives, more taskforces, more centralisation, more regulation, more borrowing and more taxes.

The Chancellor told us about waste—£21.5 billion of waste—yet the entire spending review is about spending more money. Why is the Chancellor the only person in Britain who thinks that the way to waste less is to spend more? [Interruption.] People up and down the country
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will be asking themselves this question: who was it that wasted all that money? Who was in charge when 52,000 civil servants were added to Whitehall? [Interruption.]

Mr. Speaker: Order. That is enough of that noise. I will not tolerate it, and someone might well be expelled from the Chamber for making it.

Mr. Letwin: Who was in charge when the number of senior managers in the national health service increased three times faster than the number of nurses? Who was in charge when the Home Office built a new building—for £311 million—that is not even big enough to accommodate all the extra civil servants that have been hired? Who is the mystery man who was in charge of all that waste? The Prime Minister knows the answer: it is the Chancellor of the Exchequer.

The Chancellor told us today that he has wasted £21.5 billion—and not a word of apology. Now, he sets himself up as the great wastefinder-general. Does anyone think that he will succeed? Not the Minister for Energy, E-Commerce and Postal Services, who said:

Not the Minister for Local and Regional Government: when he said that it would be a miracle if the Government found the savings, the right hon. Gentleman was not only honourable, but right.

Why do the latest figures on public sector employment show that of 88,000 extra jobs in education in the last recorded year, only 14,000 were for teachers and teaching assistants? Now, that is a miracle. The Chancellor first announced massive reductions in the number of Department for Work and Pensions staff two years ago. Why has the number of DWP staff increased by 3,500 since then? That, too, is a miracle. The Chancellor said two years ago that his new smart procurement initiative would save £750 million on defence procurement, so why did the defence procurement budget overrun by £3 billion last year? That is not just smart—that is definitely a miracle.

When will the Chancellor acknowledge that while Ministers have been preaching about obesity, their Departments have been getting fat on taxpayers' money? When will he accept that if government is really going to cut out the flab what is needed is a complete change of lifestyle? The fact is that fat Government is not fit enough to deliver.

Why, after £305 million a year of spending on the new deal for young people, are there still 1 million young people not in work, not in training and not in education? Why, after an increase of £30 billion in NHS spending, are there still 1 million patients on NHS waiting lists? Why, after the Chancellor has doubled spending on the Home Office, are there still 1 million violent crimes a year? Why, after all that spending, can he not even match our commitment to 40,000 extra police officers?

The only thing that the Chancellor's fat Government have delivered is fat taxes. He is planning to spend £1 million a minute of taxpayers' money by 2007. As the Governor of the Bank of England has pointed out, the Chancellor cannot go on borrowing to pay for that big
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spending. When will the right hon. Gentleman admit that he is spending beyond his means and that his policies mean third term tax rises under Labour?

I confidently predict that in a moment or two when the Chancellor stands to respond, he will—with huge bravura—proclaim that his vast expenditures of other people's money contrast with so-called Conservative cuts—[Interruption.] Yes, Labour Members are already cheering at the thought, so may I tell them about those Tory cuts? We will cut bureaucracy. We will cut inefficiency. We will cut the quangos. We will cut the regulations. We will cut the armies of interferers who do nothing good for the people of this country. We will cut borrowing. We will cut waiting lists. We will cut failure in schools. We will cut crime. We will cut this big, fat Labour Government down to size.

Mr. Brown: The shadow Chancellor does not seem to realise that administrative spending is falling substantially as a result of our proposals. He also does not realise that as a result of his statement, while we are spending more on defence—£33 billion—he will be telling the shadow Defence spokesman that he can only spend £30 billion—a £2.6 billion cut. While we are spending £14.8 billion on law and order—I have the figures and the right hon. Gentleman has announced them—the Conservatives would spend £1.6 billion less. While we are spending £12.8 billion on transport, they would spend £1.8 billion less—£11 billion. While we are spending £5.3 billion on international development, they would spend £4.5 billion. The shadow Chancellor cannot escape the consequences of his statement. He announced that outside health and education there will be real reductions in spending in all other Departments.

The glummest faces in the Chamber are those of the shadow Defence Secretary and the shadow Foreign Secretary, because they know exactly what will happen. I will tell the shadow Chancellor what waste is about. Waste was 3 million unemployed. Waste was the poll tax. Waste was two recessions under the Conservative Government—[Interruption.]

Mr. Speaker: Order. I do not like to interrupt, but Members are getting very excited.

Mr. Brown: It was the shadow Defence Secretary who said that the cuts proposed by the shadow Chancellor were unacceptable. Other shadow Cabinet Ministers know that the Tory party of Robert Peel is now about cutting the police. The Tory party of Winston Churchill is proposing to cut defence. The Conservative party will sooner or later have to face the fact that its policies make it weak on defence, weak on law and order and weak on infrastructure investment. As far as health and education are concerned, we know what its policy is—it is to transfer money out of the health service into the private sector and out of the school education sector into the private education sector.

The shadow Chancellor had better go back to his drawing board and think again. Unless he can tell us that his cuts will not be imposed on those Departments, the public will draw the conclusion that we all draw, and Conservatives will have to explain in every constituency how many community support officers, how many police, how many wardens, how many home helps, how
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many carers, how many NHS nurses and how many teachers will be sacked. That is the problem that the Tories now have.

Dr. Vincent Cable (Twickenham) (LD): May I start by saying that there are elements in the statement with which I agree? I welcome the sustained commitment to more resources for education, health, law and order and foreign aid, in marked contrast to the Conservatives. I also welcome the fact that the Government have taken up our proposal to put the Treasury at the head of Government Departments to be relocated to the provinces. It is a timid programme but the Chancellor has put the Treasury at the head of it, at last.

Fundamentally, the statement is about reducing the rate of growth of public spending. Hence we have the mock battle between the Conservatives' slash and burn versus the Chancellor's somewhat more cautious trim-and-singe approach to public spending. However, conceptually they are the same. They are both arguing that we can have lots of good things—more public services or tax cuts, or both. It is all going to be funded by the magic ingredient that is called cutting waste.

I am happy to subscribe to an agenda for cutting waste, if it can be genuine and if it can be found. It strains credibility when the Government argue that they can suddenly produce a rate of growth of productivity in the public sector of about 2.5 per cent. a year. Even the Treasury does not believe in it. It put out a statement last week on this new productivity target, saying

the Treasury will not be adopting it.

If the Treasury does not believe in the Government's productivity target, why should anybody else?A more fundamental question is: if this waste is so easily available, why has it not been dealt with already? Had it been, we would have decent pensions and there would be no university tuition fees.

Our approach is different. We believe that, in order to fund priority areas, clear choices have to be made. That is why we argue that, in order to have decent state pensions without means-testing, a lot of money has to be found. We argue that we should take industrial subsidies and other subsidies and cut them, making a clear political choice. If more money has to be found for the police force, some of the Home Secretary's extravagancies, such as the £3 billion identity card scheme, must be cut. If more money has to be found for early years and primary schools, the Treasury's extravagance, the baby bond, must be cut.

One of the things that was very striking about the Chancellor's statement was that it contained no reference whatever to the Prime Minister's enthusiasm for choice in public services. The phrase was not even mentioned. [Hon. Members: "It was."] If the Chancellor did mention it, can he be a little bit clearer? What choice in public services means is building in spare capacity. How much spare capacity is he building into the next spending plan to allow for choice, and how much will that cost?

The core of the Chancellor's proposal was the loss of public sector jobs. Anybody who has worked in the private sector or has had anything to do with it will be amazed that he has entered into a competition with
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those on the Conservative Front Bench for headcount reductions. Employing Ministers and senior civil servants costs 10 times as much as hiring tea ladies, but when there is a headcount reduction, it is the low-paid staff who get sacked. Will he spell out clearly how many Ministers and senior civil servants there are among the 84,000 redundancies?

Can the Chancellor explain how the 40,000 cuts in the Department for Work and Pensions will operate? If there is not going to be a reduction in complexity and means-testing, is it not inevitable that our pensioner and other constituents will find the service even more inefficient than they do already?

In conclusion, the search for waste, desirable though it may be, is evading the key issue—choosing the areas of government from which the Government can withdraw and then deducing the manpower implications, rather than starting with an arbitrarily chosen headline cut in numbers and then working out what the implications for services will be.

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