Previous SectionIndexHome Page

Mr. Letwin: As the Chancellor knows, the international finance facility has cross-party support.

To return to the point that the right hon. Gentleman was making about Ministry of Defence budgets, and as he was using this opportunity to convey some information to the House, may I ask him for clarification? When he said, if I caught him correctly, that £520 million would be set aside, did he mean that that would be done from the contingency reserve, or was that to be added to total managed expenditure?

Mr. Brown: This is in the reserve. It is the special reserve that we have set up for the Ministry of Defence to deal with the issues of Iraq. I hope that the Conservative party and other parties in the House will welcome that.

Mr. Tom Clarke (Coatbridge and Chryston) (Lab): My right hon. Friend made an appeal for cross-party support on aspects of international development. Does he agree that the standing of the House and of politicians would be greater if all parties endorsed his objective in reaching a target of 0.7 per cent. of GDP, which is universally supported?

Mr. Brown: My right hon. Friend has taken a huge interest in these matters over time. I am grateful to the shadow Chancellor for his support for the international finance facility. I am grateful particularly to Lord Griffiths, on the part of the Conservative party, who has been pushing forward the proposal internationally and working closely with us. I hope that over time all political parties in the House will come to accept that to meet the 0.7 per cent. target, with a timetable for doing so, is the best way forward. In my view, it is certainly the best way forward for Britain as we try to persuade the rest of the world, including all countries of the G7, to support further development aid.

We hope that during the course of next year, in the year when we are the president of the G8, we will make substantial progress on debt relief, on more funds for health, for the global health fund in particular, and on
1 Dec 2004 : Column 650
the IMF. I should add that we hope that by the end of next year we shall have the conclusion of the Doha trade development round—a round specifically in the interests of the poorest countries of the world.

Mr. Blunt: Will the Chancellor give way?

Mr. Brown: No. I want to move forward now. I want to take up the question that was posed by the shadow Chancellor about the fiscal policies of all parties.

The Liberal party has been making commitment after commitment on spending over the past few months. I believe that I have a duty to remind the Liberal shadow Chancellor, notwithstanding the fact that hardly any of his colleagues are in the Chamber, of the promise that he made on 4 March. He said:

that is, 41 per cent. of GDP at the time that the hon. Gentleman made that proposal. Presumably he would be cutting public expenditure this year.

Dr. Vincent Cable (Twickenham) (LD): The Chancellor has been reminding the Conservatives of the distinction between a year and a cycle. That is a distinction that we understand.

Mr. Brown: If the hon. Gentleman wants public spending at 41 per cent. of GDP, or wants to give the impression that this is a decision that he is making over the cycle, perhaps he should have said that. That is not what he said and it is not what the leader of the Liberal party said on the same day, which was about the need to

Dr. Cable: Broadly.

Mr. Brown: Oh, just a few billion here and there. The usual Liberal policy.

We are owed some precision from the Liberal party on these matters in this debate. If it is going into the election giving the impression that 41 per cent. is the correct figure, it will have to be honest with the electorate that it would be cutting public spending. At the same time, I look at all the proposals that have been put forward by the Liberal party—abolishing tuition fees, introducing maintenance grants, introducing free long-term care, introducing 10,000 more police officers, cutting council tax bills, extending off-peak travel—

Dr. Cable: Hear, hear.

Mr. Brown: The hon. Gentleman is saying "Hear, hear".

The list adds up to more than £10 billion. That is money that the hon. Gentleman cannot afford if he would freeze public expenditure. The money that we had last year has risen. As everybody knows, it has been rising this year and it will rise next year and the year after. Only last week, in the Queen's Speech debate, the Liberal environment spokesman, the hon. Member for Lewes (Norman Baker), said that he wanted more
1 Dec 2004 : Column 651
funding, and he regretted the fact that the Government had not provided it. He said that the Liberals would allocate Government money for endangered species— yet another example of Liberal party expenditure. That is like the Liberal shadow Chancellor.

Dr. Cable: Will the Chancellor give way?

Mr. Brown: I am happy to do so if the hon. Gentleman can clarify the matter. If he is setting public expenditure at 41 per cent. and at the same time he wishes to spend at least £10 billion more, what is the message going out to Liberal candidates? They cannot go round the country saying that they support more spending when they are outside Westminster, when the hon. Gentleman's rule is that spending would have to be cut. This is not a question of Liberal party policy nationally being that there should be more spending, it is a question of cutting the share of public spending in the national income. I hope that I can give the hon. Gentleman the opportunity to clarify that.

Dr. Cable: I am delighted to have the opportunity to do so. The Chancellor is absolutely right that we have a set of spending commitments that amount in total to about £10 billion a year. Half that would be generated by the higher rate of tax. As someone who has argued in favour of social justice over the years, surely the right hon. Gentleman would be in favour of that. That is 50 per cent. tax on earnings over £100,000. The other £5 billion a year comes from cutting other elements of public spending, which undoubtedly include some of the things that the right hon. Gentleman believes in passionately, like the Department of Trade and Industry and the baby bond scheme. However, we would cut them to finance priority spending.

Mr. Brown: That is extremely illuminating. The hon. Gentleman will cut public expenditure by £5 billion. I think that he owes the House and the country an explanation of where these cuts will be made. He is also saying that he will increase public expenditure by £5 billion through a tax change. Yet at the same time he says that the share of public spending in national income will fall. I suggest to the House that his figures do not add up in any way. He is claiming that he will spend less, while in every part of the country the Liberals are committing their party to spend more.

Then we come to the issue of Gershon. To endorse the principles of the Gershon review, the hon. Gentleman said in his alternative budget that the Liberals

There is £20 billion also. He would use the Gershon savings to cut the deficit. We have already written in these savings in our public spending figures. The hon. Gentleman is promising the country another £20 billion of cuts that he cannot deliver. It is about time Liberal Members went back to their constituencies and thought again.

I now come to the Conservative party's plans for public expenditure.

Mr. Letwin: Will the Chancellor give way?

Mr. Brown: I will give way when the shadow Chancellor has a chance to confirm what I am about to say.
1 Dec 2004 : Column 652

The right hon. Gentleman said one Sunday that, over a six-year period, he would provide the ability for us to spend about £35 billion less per year

These are the figures. There are cuts of £6 billion in the first year, £14 billion in the second year, £19 billion in the third year, £24 billion in the fourth year, £29 billion in the fifth year and £35 billion in the sixth year. On top of that, the right hon. Gentleman must find additional money. He has allowed his shadow Cabinet colleagues to get out of control. He has allowed them to promise spending commitments all over the place that he has no way of funding.

Will the right hon. Gentleman confirm that he has to find money to fund 40,000 extra police officers? He would have to find money to fund 20,000 extra prison places. He wants to link the basic state pension to earnings. He would have to afford that over a period. There would be a tenfold increase in drugs rehabilitation places. Only this week there was a new £200 million spending commitment on schools. There is also a national parenting scheme, 20,000 extra special constables, a 15,000 increase in social housing, 10,000 student bursaries, offshore processing and detention centres. I could go through the whole list of spending commitments.

When Lady Thatcher was Leader of the Conservative party in the 1970s and was facing the 1979 election, her policy was not to make any spending commitments. However, the shadow Chancellor is not only promising to cut public spending with a headline figure of £35 billion but has to find another £15 billion to pay for the spending commitments that he has allowed his shadow Cabinet colleagues to make. There is a gap between the Conservative party's spending commitments and the real world, and it must find £50 billion of cuts, which cannot be achieved by savings on paper clips in the civil and public services.

The right hon. Gentleman tells us that those cuts can be achieved by efficiency savings throughout the civil service, but that £50 billion is not the only sum that he has to find—he must also account for the £20 billion of Gershon savings. If a Conservative Administration were in power tomorrow, they would be looking for a total of £70 billion of efficiency savings. That is the state of play for the Conservative party. I am happy, if he wishes, to allow him to correct the figure of £50 billion of efficiency savings plus the Gershon savings that would have to be accounted for if he were in government tomorrow.

Next Section IndexHome Page