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Loyal readers of my pamphlets will know that I have previously accorded that title to the Prime Minister, as in his first Parliament as Prime Minister he abolished grant-maintained schools, downgraded city technology colleges, scrapped GP fundholding and ended patient
choice; he then spent his subsequent Parliaments reintroducing grant-maintained schools, which were renamed foundation schools, city technology colleges, which were now called city academies, GP fundholding, which was called practitioner commissioning, and patient choice—which, because the Government could not think of another name for it, they have reintroduced as patient choice. Therefore the Prime Minister has been a Duke of York and will be remembered, primarily, as that.
That point helps to answer the central question behind the Budget: where has all the money gone? Reorganisations—especially pointless and unnecessary ones which reverse previous reorganisations—are hugely expensive. Palms must be crossed with silver, as Nye Bevan remarked when he introduced the reforms that led to the creation of the national health service. Vested interests must be bought off. In every change, bureaucracy and unions find opportunities to boost pay, reduce work loads, increase the number of posts and reduce overall productivity.
That is one reason why so much money has been spent to so little effect, but the Budget speech highlights a second reason why this Chancellor has wasted money on an industrial scale, as my right hon. Friend the Member for Witney (Mr. Cameron) said. A Chancellor who measures success by how much money he spends, rather than by the results achieved, ends up spending a lot and achieving very little. The Chancellor set himself the wrong measure of performance, and as a result he has succeeded only in spending money and not in improving services.
The third reason why there is so much waste is that the Chancellor has a centralising nature. That is not only because he is a Stalinist—he is a believer in the central doctrine of Stalinism, which is bureaucratic centralism—but because he is new Labour and new Labour has a preoccupation with tomorrow’s headlines, as he has demonstrated. New Labour is preoccupied with wrong-footing the Opposition, spin and media manipulation. In order to do such things, it is necessary to centralise. If what is wanted is a continual flow of news manipulated from the centre, the decisions must be made at the centre; it is necessary to indulge in micro-management, setting targets, ring-fencing budgets, detailing regulations and having detailed management controls in the public sector. The Government have, of course, done all that.
Let me give an example that comes from my own experience of visiting a national health service hospital. Hon. Members will recall that the Government got a good headline when they announced their waiting list target. They got another good headline when they announced ring-fenced waiting list budgets for every hospital. They got yet another good headline when they announced that waiting list managers would be appointed to every hospital. So they got three good headlines, but the consequences in the hospital I visited were as follows. The waiting list manager spent his ring-fenced waiting list budget on carrying out operations on Sundays in order to get the waiting list down. It might be thought that that was an expensive way of doing that, as higher rates had to be paid to locum surgeons, but one would expect more operations to be done and waiting lists to be reduced. However, at the end of Sunday all the equipment needed to be sterilised and it was impossible to employ spare
sterilising teams on Sunday. Therefore the equipment had to be sterilised on Monday, which meant that no operations could be carried out on Monday. The money for that did not, however, come from the waiting list manager’s budget; his budget was ring-fenced. It came from the budget of the rest of the hospital, so he did not worry. As a result there were no extra operations and no other achievements, but a vast sum of money was spent.
That was a waste of money, which is bad enough, but there was a second consequence which was worse. A surgeon to whom I spoke had established a dedicated open-wound operating theatre and a ward served it that was kept scrupulously clean to avoid any risk of contamination by methicillin-resistant staphylococcus aureus—MRSA—or any other infection. However, the waiting list manager had to manipulate the waiting list, and some patients were getting dangerously near one of the thresholds, which meant that he might not meet a particular target. So he insisted on dumping some of his patients on that ward, including one with MRSA, another with a liver infection, and a third with another such problem.
My consultant informant said that he could not operate in those circumstances. He was told by the hospital authorities that he must—they had targets to meet. He said that that would put the health of his patients at risk. He was told that this was a P60 matter, and that he would have to think about it hard. Happily, he has a private income from a medical invention of his, so he was able to call their bluff. He simply gave all the patients a form, saying that if they wanted to go ahead with the operation immediately, they should fill it in and remove any liability that he might have—but that he could advise them to do that only if they were feeling suicidal. So none did. No operations were carried out and their lives were saved.
This is the implication of detailed micro-management—waste and reduction in quality, instead of improvements and enhancement of quality. Nothing that we heard in this Budget suggests that the Chancellor or the Government have learned the lessons of 10 years of spending and wasting. The Budget is a Budget for short-term headlines and long-term waste. It is a Budget of Conservative appearance, but socialist substance. It is a Budget that cuts rates, but increases the burdens on the British people. It will be remembered for the latter.
5.21 pm
Mr. Paul Goodman (Wycombe) (Con): It is a pleasure to speak in this second day of the Budget debate, and it is an equal pleasure to follow my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) who, at the beginning of his remarks, made a point that had been very much on my mind this afternoon. Yesterday, when the Budget statement was delivered, the Government Benches were packed with Labour Members and they cheered the Chancellor to the echo, but today, only three could be bothered to turn up to speak on the Chancellor’s Budget.
Mr. Goodman:
Indeed. Could it be that they have worked out something about the Budget that the
Chancellor did not tell them yesterday? I suspect that the answer is yes, and I shall come to that point later.
However, we have had some good speeches. As one would expect from a member of the Education Select Committee, the hon. Member for Warrington, North (Helen Jones)—the only Labour Member who is actually here—made a detailed speech on education. She said that spending should be focused on the curriculum and teachers; we will doubtless all agree with that. She also said that poverty can be a greater barrier to progress in schools than ethnicity. To judge by my own constituency experience—I have the largest number of Muslim voters of any Conservative Member of Parliament—she is absolutely right.
The hon. Member for North Durham (Mr. Jones), who is not in his place, gave us a tour of his constituency, where all appears to be well in the national health service. I have to say that that is not my and my hon. Friends’ experience, nor was it the experience of the hon. Member for Rochdale (Paul Rowen). In a short speech, the right hon. Member for Leicester, East (Keith Vaz) paid a gracious tribute to my right hon. Friend the Member for Hitchin and Harpenden and touched on one of his passions: the European Union. I do not know whether he is still an enthusiast of the euro, but if he is, the Chancellor will doubtless enjoy the opportunity to talk to him about it.
My right hon. Friend the Member for Fylde (Mr. Jack) made—as one would expect from an ex-Treasury Minister and the Chairman of the Environment, Food and Rural Affairs Committee—an expert speech. He discussed in some detail his own research into the Treasury’s lack of assessment of the value of its tax cuts, and his research into mortgage rates in Britain. If he wants to speak to me about his ideas on taxation and air travel, I will be very happy to listen. I will now commit my colleagues, without having consulted them, and say that if he wants to talk to any of them about inheritance tax, they will see him. I am sure that they will be pleased to hear that.
My hon. Friend the Member for Sevenoaks (Mr. Fallon), as one would expect from a member of the Treasury Committee, concentrated on the state of the NHS, as did my hon. Friends the Members for West Suffolk (Mr. Spring) and for Billericay (Mr. Baron). The latter made an interesting point about waiting times and used a particular statistic to which I intend to come later. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) gave us a forensic analysis of the Chancellor’s record, and I am sure that the Chancellor will enjoy discussing that with him when my hon. Friend questions him in the Treasury Select Committee. We all know that the Chancellor looks forward to those occasions very much indeed.
This is the Chancellor’s 11th and final Budget. He wishes to be Prime Minister—an honourable aim. He wants to take the country in what he genuinely believes is the right direction. We can all surely agree on what the right direction means—improved competitiveness, better productivity growth, a manageable tax burden, borrowing that is under control, strong savings and value for money in the public services. We need all those things if the British economy is to flourish in the competitive and globalised world economy of this 21st century. For after all we must not, amidst all the headline-grabbing frenzy of yesterday’s Budget
statement, forget the starkness and seriousness of the international challenge that confronts the British economy. We must at least try to raise our eyes from this debate and look ahead and look abroad.
By 2050, it is estimated that China’s share of world trade will have risen from roughly 18 per cent. to 24 per cent., but North America’s will have fallen by 2 per cent. to 23 per cent. The EU’s is set to fall by almost half, from 22 per cent. to a mere 12 per cent. So the choice is clear. Even to maintain our position—to keep up with US rather than EU growth rates—we have to compete to prosper, if we are to meet the challenge of the 21st century. The economy must travel in the right direction.
So we need improved competitiveness. However, according to the World Economic Forum, since 1997 we have dropped from fourth place in the competitiveness league to 10th. Nor is that a one-off. The Institute for Management Development’s global competitiveness survey tells the same story. In it, we have dropped from ninth to 21st. Eleven Budgets on, the Chancellor has taken our competitiveness in the wrong direction.
We need better productivity growth. From 1992 to 1997, our annual productivity growth was 2.6 per cent. Between 1997 and 2001, it fell to 2.1 per cent. and between 2001 to 2005 it fell again, to 1.5 per cent. Eleven Budgets on, the Chancellor has also taken productivity growth in the wrong direction.
We need an overall tax burden that is going in the right direction, but our tax burden is—hon. Members have guessed it—going in the wrong direction. In 1997, it was £270 billion. Eleven Budgets on, it is £517 billion, a rise of no less than 41 per cent. in real terms—the highest tax burden in the history of the British economy. Business taxes alone have risen by £50 billion since 1997 and this year’s Budget will take them up again, by an extra £1 billion next year, as my hon. Friend the Member for Tatton (Mr. Osborne) said earlier, and by £1.8 billion the year after.
With all that tax, one would have assumed that borrowing was under control. But we look at the Red Book and see that over the next five years the Chancellor is planning to borrow another £153 billion. Each year he will borrow more than the entire budget for schools. Let us not forget that the £153 billion figure is only the Chancellor’s forecast. This Budget is actually the seventh one running in which he has had to come to the House and admit that his Budget borrowing forecast was wrong.
Mr. Jack: Did my hon. Friend, when he was crafting his excellent remarks, ponder the fact that the Chancellor made much of the level of growth that he anticipated in the British economy and that one would have expected in the circumstances that money would be repaid, not borrowings increased?
Mr. Goodman:
I was pondering that point not only while I was crafting my remarks but while I was listening to the opening speeches this afternoon. One would certainly have expected that, and one would also have expected the Chancellor to admit to the House
yesterday that, in growth terms, Britain comes in at 22nd out of the EU’s 27 members. Instead, he referred only to the G7.
We need strong savings, and the Chancellor is especially culpable in that regard. In opposition, he told pensioners:
“I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved: the end of the means test for our elderly people.”
So what happened to means testing? When we left office, 37 per cent. of pensioners were means tested; now, the proportion is 45 per cent., and climbing. What happened to saving? Since 1997, the personal savings ratio, as set out on page 255 of the Red Book, has fallen by half. No wonder the right hon. Member for Birkenhead (Mr. Field) has said:
“When Labour came to office we had one of the strongest pension provisions in Europe and now probably we have some of the weakest.”
Above all, as so many Conservative Members have said, we need value for money in our public services. We do not dispute that we have had the spending: an extra £175 billion since 1997. Money has been poured into the health and education budgets, but where has it all gone? Staggeringly, and according to the Treasury’s public finances databank, out of every £10 that the Chancellor has spent, only £1 has gone on investment.
Let us take the NHS. The Chancellor scarcely mentioned it yesterday, and he certainly did not announce his comprehensive spending plans for it, so I shall do so today. As my hon. Friend the Member for Billericay said, only a quarter of the Chancellor’s NHS spending has gone on improving front-line services. Productivity in the NHS has fallen during each year since 1997.
“Given the record levels of public investment, our public services should now be reaching world-class levels—we shouldn’t be seeing only incremental changes.”
Those are not my words: they are the words of another of the Chancellor’s close friends, the right hon. Member for North Tyneside (Mr. Byers).
So after 11 Budgets, the Chancellor has given us competitiveness that is not better, but worse; productivity growth that is not higher, but lower; a tax burden that is not lower, but higher; borrowing forecasts that are discredited, and a golden rule that is now completely derided. Above all, his mania for means-testing has delivered lower savings, with over £100 billion missing from pension funds since his raid on them during his Budget of 1997, 10 long years ago.
The Chancellor would have hoped, 10 years on, to present this Budget ahead in the polls. Instead, he is behind in the polls. So what does he do? Well, with his borrowing forecasts missed, his spending out of control, his tax burden rising and his popularity falling, he has been forced to take a last, desperate gamble.
The Chancellor hopes that, if he says that he will cut one income tax after raising over 100 others, he will fool the voters into thinking that he has somehow been transformed from Stalin into Milton Friedman—that he has somehow turned into a tax-cutter. However, as we all know only too well, what this Chancellor gives away with one hand—I will not say one “clunking fist”, as that is the Prime Minister’s language—he grabs back with the other.
There will be a cut in the standard rate—if it happens—next year, but there will also be a stealth tax on lower earners as the Chancellor scraps the 10p band and leads them deeper and deeper into the tax credit maze. There will be the raising of the top tax threshold, but also a hit on professionals, such as doctors, as a result of the rise in the national insurance ceiling.
The Chancellor got the media headlines on Budget day, but a hangover the day after as it emerged, as my hon. Friend the Member for Tatton noted earlier, that 3.5 million families will lose out. He hopes that people will notice the tax cut but not the tax rise. We feel that that approach is—to borrow another term from 10 Downing street—“psychologically flawed”.
For the truth is that the British people have seen through this Budget already. It was not a tax cut Budget, but a tax con Budget. Perhaps we should not complain. After all, in his final Budget, the Macavity of Downing street is paying us the ultimate compliment. He has no option. If he is to rein in his spending and borrowing, he has no choice but to tread the path that we have already marked out for him. We told him to remove the VAT restriction on academies. Only a few weeks afterwards, in the Budget he was forced to follow our lead—Conservative policy.
Mr. Bob Ainsworth: Why not congratulate the Chancellor?
Mr. Goodman: We told the Chancellor radically to reform corporation tax. Only a few days afterwards, in the Budget he was forced to follow our lead—Conservative policy again. We certainly congratulate him on that. We told him to grow his spending slower than the economy. In his Budget, he is finally sharing the proceeds of growth—Conservative policy. [ Interruption. ] I can tell the Government deputy Chief Whip that if the Chancellor keeps following Conservative policy, we shall of course congratulate him.
As the Chancellor has paid us such a tribute by borrowing a few of our clothes, perhaps we should be a little generous. After all, he is fully entitled to argue that having failed to take the economy in the right direction as Chancellor now, borrowing our approach to get him on track, he will take the country in the right direction as Prime Minister. He is fully entitled to claim that he can rise to the challenges of the 21st century and that the Budget will allow him to turn over a new leaf—greeting his colleagues with a cheerful smile and a listening ear, winning the trust of his most senior civil servants and bringing about a new open style of government, in which decision making is a shared responsibility animated by a generous spirit of give and take.
I do ask the House to listen not to the views on that matter of a mere Opposition spokesman, but to those of the Chancellor’s colleagues—and not just the right hon. Member for Birkenhead, whom I mentioned earlier; and not just the right hon. Members for North Tyneside and for Darlington (Mr. Milburn), who collaborated last year to sabotage the Chancellor’s Budget. I bet the Chancellor cannot wait for them to turn up this year.
Mr. George Osborne: What about the right hon. Member for Norwich, South (Mr. Clarke)?
Mr. Goodman: My hon. Friend is ahead of me. Their accomplice, the right hon. Member for Norwich, South described the Chancellor as “deluded” and said of him:
“It’s a controlling thing. He thinks he has to control everything”.
I have still not finished with the Chancellor’s colleagues—there are so many. What about the Secretary of State for Work and Pensions, whom the Chancellor could not even bear to name-check in his Budget speech? The Secretary of State said that the Chancellor would make “a—blank—awful Prime Minister”. It is not just all those colleagues. No less a person than the former Cabinet Secretary and head of the civil service said of the Chancellor—well, he said many things but I shall quote just one—that he has
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