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Our Government's policies are delivering the longest sustained economic growth for 200 years. That is the product not of chance or good fortune, but of the tough decisions for the long term that we have taken since we took office in 1997. The first of those decisions, which the Opposition never had the political courage to implement, was the independence of the Bank of England and our fiscal rules. The Conservatives opposed both. I understand that they have recanted on the former and now support the independence of the Bank of England, while having the bare-faced cheek to lecture us about decisions taken in the phase of the political, as opposed to the economic, cycle, as my hon. Friend the Member for Warrington, South (Helen Southworth) pointed out sotto voce when the hon. Member for Tatton made that bizarre assertion.
The hon. Gentleman will no doubt tell us that he has always supported the independence of the Bank of England. I fancy that examination of his record shows no such thing. Will he stick to our fiscal rules? I suspect that another general election defeat will be necessary to bring the Opposition round to that conversion.
Mr. Boateng: I give way, as long as the hon. Gentleman promises, cub's honour, to answer my question, rather than going off on some frolic of his own, which I fear he is about to do, from the look in his eye.
Mr. Osborne: We have made it clearI am surprised the Chief Secretary did not noticethat we adopt the Government's fiscal rules, but we propose a fiscal projections committee that would be independent of the Treasury. That is supported by the Governor of the Bank of England and the National Audit Office, and I suspect it has some sympathy among Treasury civil servants. I recommend it to the right hon. Gentleman, and I recommended it to the Financial Secretary when we debated it in Committee.
I am grateful to the hon. Gentleman. He throws light on at least one aspect of Conservative party policy and I welcome his conversion to our fiscal rules. That makes it more difficult for him to promise increased public spending while promising to address what he describes as the structural deficit and to make tax cuts. We will no doubt explore that further in the course of the debate.
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On the basis of that solid platform of macro-economic stability we are able to deliver historic levels of investment in public services. It has enabled us to focus new resources on priority areas that matter most to honest hard-working familieshospitals and schoolsand across our public services. On health, spending will increase to £92 billion in 200708, compared with £33 billion in the last year of the Conservative Government. That additional spending has already delivered 77,000 more nurses and 19,000 more doctors.
On education, with which the hon. Gentleman dealt at some length, albeit with too little accuracy, spending will be £12 billion higher in 200708 than in 200405. We have already delivered 28,500 more teachers since 1997. I shall address in detail some of the assertions made by the hon. Gentleman when he suggested that that was not money well spent and questioned the productivity of our education policies.
Mr. Boateng: Before I come to healthwhere the right hon. Gentleman, the former Secretary of State for Health, may be able to throw some light on our deliberationslet us consider what has been achieved in education. Between 1997 and 2004, the percentage of 11-year-olds achieving expected standards in literacy and numeracy rose from 63 per cent. to 78 per cent. in English and from 62 per cent. to 74 per cent. in maths. That fell slightly short of what were stretching and demanding targets of 85 per cent. and 75 per cent. respectively, but it is an improvement on the time when the Conservatives had the stewardship of the education systema dramatic improvement, as one of my hon. Friends says. The proportion of 16-year-olds achieving five or more GCSEs rose from 45.1 per cent. in 1997 to 53.7 per cent. in the last year for which we have figures. Conservative Members should not decry that; we should be thanking teachers, parents, local education authorities and the Government for that. It is the partnership between all of those that has resulted in real improvement in the life chances and opportunities available to our young people. All of that would be put at risk were the Conservative party ever to have stewardship of the economy.
I am grateful to the Chief Secretary for giving way again. I should like to take him back to the argument that we were having in answer to the question posed by my hon. Friend the Member for Witney (Mr. Cameron). The right hon. Gentleman gave an interesting reply when I asked him to confirm that the Government's own Red Book set out plans for an increase in the percentage of national income accounted for in tax. He said that it did not matter, because our percentage taken by tax is below the levels of other European countries. Is it therefore the Government's policy to raise the tax burden until it is in line with that of other European countries? Would it not be a more intelligent tax policy for the Government to recognise that a relatively low tax burden, compared with that of other European countries, is an important source
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of competitive advantage for the British economy, the safeguarding of which should be a high priority for the Government?
Mr. Boateng: As the right hon. Gentleman knows, we have consistently argued within the European Council for tax competition rather than tax harmonisation. That is now and has always been our policy. But I am interested in his foray into tax policy, because if we are talking about tax, and the Conservative party seems anxious to do so, reference should be made, as it always is, to the dividend tax credit on pension funds. I can remember when the right hon. Gentleman was Financial Secretary, and I think that it was then, when the Tories cut rates of dividend tax credit on pension funds and advance corporation tax in 1993 from 25 per cent. to 20 per cent., that the right hon. Gentleman, to no less a journal than The Guardian, said:
That is why I urge the right hon. Gentleman to reflect a little on precisely what is proposed by his own Front-Bench spokesmen when they lay out their tax options, because I think that he will find, applying the rigour and scrutiny that he no doubt acquired when he was Financial Secretary, that the sums of his right hon. and hon. Friends simply do not add up.
Geraint Davies (Croydon, Central) (Lab): Does my right hon. Friend accept that what is important with regard to the point made by the hon. Member for Witney (Mr. Cameron) is not the share of GDP that is taxed, but the share that is taxed as borrowing, in the light of the fact that borrowing is deferred tax that has to be paid? Will he accept that the previous Conservative Government, rather than increasing tax 66 times, massively increased the amount of borrowing and therefore the future liabilities of future generations, while this Government have massively reduced borrowing and increased investment by putting into jobs 2 million people who are paying tax rather than drawing dole; and the debt payments are lower because interest rates are lower as well?
The truth of the matter is that the Conservative party's sums do not add up, yet they continue to raise the promise of tax cuts. We know what value to put on those promises. This was the party, after all, that invented the
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poll tax, and if ever there was waste and bureaucracy it was in that tax, and this was the party that put VAT on fuel.
We take the issue of efficiency seriously. That is why we have set out clear plans based on detailed and rigorous evidence that will deliver at least £20 billion worth of efficiency gains by 200708money that will be reinvested in the front line to support essential public services, such as schools, hospitals and the police. That is value for moneybetter outcomes; investment in front-line services; savings at the centre, including a gross reduction of more than 80,000 civil service posts and a relocation of 20,000 public sector posts away from London and the south-east. We are making progress in delivering those efficiency gains to free up resources to recycle them into front-line priorities. Across government, £2 billion has been saved through better procurement, deals and use of e-auctions. The Department of Health has negotiated savings on medicines that will free up some £1 billion a year for the NHS, again for use on the front line from 200506. The Department for Transport will deliver savings of around £140 million in 200405 as result of improved Highways Agency contracting and other measures. Crucially, the Ministry of Defence will deliver over £400 million in savings through improved defence logistics.
What we have not heardit may be that we will get a clearer take on this when the James report is published, not in the form of a slide presentation in a battered folder but[Interruption.] I hear protests that it is brand new. Well, some savings should be made there. The hon. Member for Tatton should recycle his own folders rather than lecturing us about chairs.
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