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Public Sector Bodies (Debt)

11. Mr. Brian Binley (Northampton, South) (Con): What recent assessment he has made of the transparency of the classification of public sector bodies' debt. [62335]

The Chief Secretary to the Treasury (Mr. Des Browne): The classification of a given body and its assets and liabilities as public or private sector is a matter for the Office for National Statistics, acting in its capacity as    an independent statistical agency and using international guidelines. Further, the UK Government are one of the few Governments in the world who have a statutory obligation to report liabilities in the same way as private companies and whose accounts are subject to independent audit.

Mr. Binley: I had hoped that the Chancellor would answer the question, but will the Minister be very kind and tell the House what benefits the taxpayer gets from not knowing how much public money is currently off balance sheet thanks to PFI?

Mr. Browne: The hon. Gentleman should be well aware that off-balance-sheet accounting is assessed in circumstances in which the assets belong to the private sector and so the debt that is financed is a liability of the private and not the public sector. Consequently, it is not appropriate to consider it as a debt for the purposes of the sustainable investment rule, but that does not mean that those assets are not used to the advantage of the delivery of public services. In every single constituency up and down our country, there are the advantages of PFI investment in delivering public services.

Ed Balls (Normanton) (Lab): Has my right hon. Friend taken the opportunity to examine proposals to move PFI and contingent liabilities, breaking with best international practice and the practice of past Governments of all parties in this country, on to the Budget—[Hon. Members: "Balance Sheet."]—and the balance sheet? What impact does he think that that would have on the prospect for public investment in our country?

Mr. Browne: My hon. Friend is perfectly correct to identity that particular area. The Opposition argue that such movement on to the balance sheet would put the country in a position in which it could not meet the sustainable investment rule and thus could not invest further in public services and our infrastructure. That would be the effect of us not being able to treat those accounts in such a way.

Mr. Mark Francois (Rayleigh) (Con): In a Committee prior to Christmas, I pressed the Economic Secretary to reveal the Government's estimate of the proportion of gross domestic product represented by their off-balance-sheet debt. He said that he would write to me, but I am still waiting for the letter. I pressed him again in a debate on 7 March, but I have still not had an answer, and we have not had an answer today. Is not the real reason why the Government will not reveal the estimate that they know full well that it would fatally undermine their sustainable investment rule if they were to do so?
 
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Mr. Browne: I understand that the hon. Gentleman has had his answer, but clearly he does not accept it. As he knows, it is for the Office for National Statistics to compile the number for the purpose of the public sector finances, not Her Majesty's Treasury. That is its job and that is why that is done independently.

Hugh Bayley (City of York) (Lab): Since the Labour Government came to power we have had record investment in schools and the health service. PFI is building four new primary schools in York, we have just got approval through conventional finance for rebuilding the first secondary school in York for 40 years and we have had £30 million of new investment in our hospital. Does the Chief Secretary remember the days when the Conservatives supported the private finance initiative, and will he give a commitment that the levels of investment that we have had from the Labour Government in schools and hospitals will continue for as long as we are in power?

Mr. Browne: My hon. Friend is right. There was £600 million of investment in schools when the Conservatives were in power, but there is now investment of £6 billion. The reason why they no longer support such investment in the public services is that they affirm to the third fiscal rule, which would require them to strip it out.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I must apologise to the House for, in the absence of Mr. Afriyie, getting the sequence wrong. I hope that I may have the co-operation of Ministers and hon. Members, in particular, to ensure that we at least get to Question 10.

Economic Growth

5. Michael Fabricant (Lichfield) (Con): What assessment he has made of the correlation between overall tax levels and economic growth; and if he will make a statement. [62327]

The Chief Secretary to the Treasury (Mr. Des Browne): The Government's macro-economic framework has consistently delivered stability with strong growth and low inflation, thus establishing a track record that has been internationally acknowledged. Gross domestic product has now grown for 54 consecutive quarters and inflation remains at historically low rates. The Government's approach to taxation balances the need to finance better quality public services, deliver fairness and promote sustainable development, while ensuring that the UK benefits from the advantages of being a lightly taxed economy.

Michael Fabricant: A few moments ago, the Paymaster General said that tax had fallen under this Labour Government. The Institute for Fiscal Studies says that the total tax receipts have increased from 37 per cent. of GDP in 1996–97 to 39.3 per cent. now. Who was right and who was wrong?

Mr. Browne: My right hon. Friend the Paymaster General was, of course, talking about tax rates. These comparisons are extremely interesting, so if the House
 
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wants comparisons on the tax burden, let us have some. The tax burden is actually lower now than it was during the entire period between 1981 and 1988, under Margaret Thatcher, and well below the peak tax burden in 1984. According to the experts at the Organisation for Economic Co-operation and Development, the net tax burden on the average working family in the UK today is half what it was when we came to power. Of course, the amount of tax collected rises fastest when the economy is doing well. For example, the lowest tax burden of the past 30 years was in 1993–94, when the economy was barely growing, unemployment was above 3 million, millions of families faced negative equity and wage settlements were at a 25-year low.

Kelvin Hopkins (Luton, North) (Lab): Tax levels in Denmark, Sweden and Finland are substantially higher than in Britain. Public spending in those countries is substantially higher than in Britain. The quality of public services in those countries is very high and the levels of poverty are low. Their levels of economic growth are higher now than before. Will my hon. Friend reject the nonsense that is spoken by Opposition Members?

Mr. Browne: I am happy to reject the nonsense that is spoken. I am happy also to point out to my hon. Friend that we have doubled investment in health and in education while at the same time holding down tax rates. The key to continued investment in our infrastructure and the support of services, while holding down tax rates, is to increase employment. There are 2.3 million more people in the tax system, potentially paying tax, than there were when we came to power in 1997.

Mr. Andrew Mackay (Bracknell) (Con): Does the Minister agree with his colleague, the Minister for Higher Education and Lifelong Learning, the hon. Member for Harlow (Bill Rammell), who this week said that taxpayers had reached the limit of what they could pay for public services? I see that the Chancellor of the Exchequer is helping the Chief Secretary, so I will carry on a little longer until the message has got through.

Mr. Browne: My understanding from my colleague, the Minister for Higher Education and Lifelong Learning, is that he denies that he said what is being attributed to him and that he was talking about adult learning grants. He is a member and a supporter of a Government who have cut tax rates, increased investment and increased employment.

Judy Mallaber (Amber Valley) (Lab): As we have indeed had a remarkable period of growth year on year for 10 years, will my hon. Friend assure me that he will invest the proceeds of that growth in education in science and research so that we can continue to achieve such growth? Will he note that although we have doubled investment in education, we are still behind some of our major competitors, such as America, in terms of national income? On a recent trip to India, I saw how quickly that fast-growing economy was expanding its education service. Does my hon. Friend agree that the growth in our economy should be invested in education so that we can increase growth in future?
 
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Mr. Browne: My hon. Friend has made a number of important points. She sets them in a globalised environment and sets out the challenge that we all face. I can reassure my hon. Friend and others. As my right hon. Friend the Chancellor said when he delivered the Budget statement, we shall continue in our stewardship of the economy, pre-Budget reports and Budgets, to get the balance right between investment, tax and borrowing. We will do that to ensure the continued progress and development of our economy and of social justice in the United Kingdom.

Mr. David Laws (Yeovil) (LD): Was the right hon. Member for Darlington (Mr. Milburn) right to offer the Government the constructive and helpful advice and warning this week that 1 million more people than in 1998 now face marginal tax rates of more than 60 per cent.?

Mr. Browne: We have reduced the number of people on high marginal tax rates since we came to power. We will continue to develop our policies to respond to the challenges that face us. Our policies have delivered for the poor, and particularly for the poorest in our society, by bringing children out of poverty as well as pensioners, and the hon. Gentleman well knows that.

Jonathan Shaw (Chatham and Aylesford) (Lab): Has my hon. Friend met Mr. Andrus Ansip recently, the Prime Minister of Estonia, where they have the flat tax? Has he considered such a flat tax and its impact on the British economy?

Mr. Browne: I have already expressed my view on Estonia, which I think was attractive to the shadow Chancellor at the beginning of his post. Strangely, I do not think that he has mentioned Estonia in the past few months in an analogy to the substantially more developed economy of the United Kingdom. The House knows my position on that. It is not an appropriate analogy and Estonia's position in relation to the rest of the European Union facilitates its ability to be able to run its tax system as it does.

Mr. George Osborne (Tatton) (Con): Was the junior Education Minister, the Minister for Higher Education and Lifelong Learning speaking for the Government when he said that people are now taxed to the limit?

Mr. Browne: I have already told the House that my hon. Friend did not say what is being attributed to him. He was talking about adult learning grants.

Mr. Osborne: If the right hon. Gentleman will not agree with the junior Education Minister, does he agree with Sir Derek Wanless, the Chancellor's health spending guru, who said on the radio this morning that the money spent on the NHS should have been spent much better? Does he think, like Sir Derek Wanless, that the results that we have got from that money are extremely disappointing?

Mr. Browne: I am delighted to share with the House some of the results that we have got from that money—that unprecedented investment in the NHS, which I remind the House the hon. Gentleman and his party
 
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opposed root and branch. I will give some examples of what has been achieved: 662,000 more heart operations, compared with 1997–98; 1 million more elective admissions each year, including 35,000 more heart operations—a rise of 88 per cent.; 465,600 more cataract operations—a rise of 89 per cent.; 21,000 more hip fracture operations—a rise of 34 per cent.; and 29,600 more knee replacements—a rise of 108 per cent. I am distinctly proud of that achievement.

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