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Mr. Richard Spring (West Suffolk) (Con):
It is a pleasure to follow the hon. Member for Glasgow, North (Ann McKechin), who made a number of telling points, picking up on the equally telling points made by my hon. Friends about globalisation and the dangers of
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protectionism, which is rising greatly in some parts of the European Union—greatly to the disadvantage of the competitive position of Europe overall.
It was interesting that the latest edition of The Economist, which has generally been favourable to the Government, has the headline, "Gordon Brown's Do-Nothing Budget". An article in the magazine stated that
"there are worrying signs of deterioration . . . an unsustainable boom in consumption and the housing market . . . the economy toils under the growing burden of taxes and regulation that he has imposed".
I want particularly to deal with the latter point.
I think we would all agree that there is a certain imbalance in the structure of the British economy. The importance of the financial services industry has become utterly pre-eminent, as the decline in manufacturing and manufacturing employment has taken place in this country. The Chancellor has appointed a panel to look at the financial services industry—some great and good individuals who will meet somewhat infrequently—but our real concern, which we must really examine, must be that the burden of regulation does not become too oppressive in this country. Unlike manufacturing, which is difficult to move, it is much easier for the financial services industry to move to Shanghai, for example, to locate the headquarters of a bank. It is not only the tax regime that we have to worry about, but the regulatory burden.
In the past few years, a culture of regulatory self-protection has grown up in this country. Instead of appointing a panel, the Chancellor should have looked carefully at the functioning of regulation, especially across the economy and the vital financial services industry. There should be an additional, fundamental remit for the Financial Services Authority on competition and competitiveness. The FSA should have independent directors, principles-based direction and a moratorium on EU regulation, accompanied by mutual recognition of other regulatory systems.
The British Chambers of Commerce has expressed disappointment that the Chancellor did not produce specific targets across Departments for the reduction of regulation on business. After all, 2006 is meant to be the year of delivery for deregulation. The BCC argues that the cost of regulation has grown by some £50 billion since 1998. The Government have not sought an official measurement of the administrative cost of regulation imposed on business, which disproportionately affects small businesses. The obsessive micro-management that has become a characteristic of this Government is a beanfeast for lawyers and accountants.
It is worth remembering what the Labour manifesto said in 1997, which echoes the powerful point made by my hon. Friend the Member for Havant (Mr. Willetts) earlier:
"The myth that the solution to every problem is increased spending has been comprehensively dispelled . . . More spending has brought neither greater fairness nor less poverty. Quite the reverse . . . The level of public spending is no longer the best measure of the effectiveness of Government action in the public interest . . . New Labour will be wise spenders not big spenders."
The irony of that manifesto commitment when set against this and recent Budgets cannot be lost on anybody.
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The most extraordinary aspect of the Budget was that the Chancellor failed to mention the health service, which accounts for a huge part of the budget, even once. Indeed, the next day he was interviewed on the BBC, and when asked why he did not mention health, he said:
The Chancellor is not known for his sense of humour, but that is absolutely mesmerising. This Government are obsessed with re-announcing spending, and the Chancellor came into office double and treble-counting spending statistics. The truth is that health spending will rise by 2008 to some £94 billion out of £552 billion, yet there will be fewer beds in the NHS than there were in 1997, and despite that great spending, we have a massive spending crisis.
I do not wish to personalise any remarks directed at the Secretary of State for Health, who has an unenviable job because the NHS is a huge monolith controlled by Whitehall. However, as she has rattled out the endless statistics about the health service in the past few months, I have been reminded of Madam Ceaucescu announcing massive increases in potato production in Romania. The Secretary of State was interviewed yesterday on television, and said that the devastating cuts in employment in the NHS, the reductions in wards and beds and the hospital closures were all to do with improving patient care. It was like the Tsarina in pre-revolutionary Russia believing that everything was marvellous because the Potemkin villages had been put up—unrelated to any reality.
The truth is that the NHS has concentrations of real problems because of a funding formula that actively discriminates against parts of the country. In my constituency, for example, we have a per capita spend next year of £1,051. For the Prime Minister's constituency the figure is £1,442 and for that of the Secretary of State for Health it is £1,306. Even for that of the Secretary of State for Education and Skills it is £1,245. It is curious that all the spending has moved towards the urban parts of our country, especially the north. In the south we have devastation and cuts, with all the implications that flow from them.
Peter Luff: I am listening with rapt attention to my hon. Friend, but I would not like him to leave the House with the impression that only the south has a problem. The problem is rurality. I have done a lot of work on the health service funding formula, and it is clear that it discriminates against rural areas, wherever they are.
Mr. Spring: I accept that point, although I also recognise that the problem appears greater in the southern half of the country, even in areas of high population. That is exacerbated by the fact that the tremendous changes in the bureaucratic structures of the health service have played a huge part. If the Chancellor is to give out huge sums of money, they should be followed by changes in the organisation and structures of the health service.
Kitty Ussher (Burnley) (Lab): The hon. Gentleman suggests that the problems are worse in the south. Will he admit that in the past southern health trusts have overspent and been bailed out by northern health trusts, but we never knew that until the reforms had effect?
Mr. Spring:
I invite the hon. Lady to visit my constituency and see the devastating effect of ward
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closures and the threats to community hospitals on the demoralised and upset staff, who are voting with their feet. The successive changes to the formula have moved funding away, linked with a lack of recognition of the age profile in certain areas. Of course the huge increases in spending need to be monitored, and that too is ultimately the responsibility of the Chancellor.
One of our local papers recently had the headline, "Staff exodus in NHS feared". People are leaving the health service because they feel so anxious about their jobs. The chief executive of my local PCT wrote in a local paper the other day that the PCT was "fully aware" of staff being stressed. There is no point in rattling out vast sums of money without recognising the devastating impact of the effect of the spending formula. It is causing real distress, and I dare say the Chancellor recognises that, which is why he left out any comment on a situation that is making headlines all over the country. People are desperately concerned about it. It is the price we are paying for not reforming our public services. The tax burden has increased, but we are not getting value for money out of the huge increases in the spending of taxpayers' money that we have seen in the past few years.
In conclusion, I shall return to how The Economist sees matters. It states:
"Mr. Brown's reversion to tax-and-spend, together with the ever-rising burden of regulation, is starting to do increasing damage to work incentives and business interests. The price for past excess, both by consumers and by the chancellor, will be future slower growth. As the feel-good factor fades, the politics of plenty will give way to the politics of austerity."
We know about the declining competitiveness and productivity and the effect of micro-management, and all its consequences for the wealth of our country. The Economist concludes:
"The chancellor was fortunate to inherit a strong economy whose public finances were improving sharply. If Mr. Brown's inheritance as prime minister is a weakening economy and a chronic budget deficit, he will have only one person to blame: himself."
8.19 pm
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