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Mr. Darling: I am grateful for what the hon. Gentleman has said. Over the past few weeks—and, indeed, in my previous capacity as Secretary of State for Trade and Industry—I have been struck by how advanced many developments are in this country, and the collaboration between universities and the health service is something that I want to encourage. The Prime Minister and I were at University college
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London this morning, and saw an excellent example of the way in which such collaboration is producing treatments and diagnostic skills that simply were not there just a few years ago. It is not only cutting the amount of time for which patients have to be in hospital to receive their treatment, but enabling more effective treatment to be provided. Yes, the Cooksey budget was identified as being a separate budget, and I think it very important for that to be the case. Sir David spent a great deal of time looking into the issue, and I was determined to ensure that he was given the funds that he needed.

Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): Rather disturbingly, neither Opposition Front-Bench spokesman sought to match the Chancellor’s excellent achievements, or his projections on overseas aid to help some of the world’s poorest people in the world’s poorest countries. Does the Chancellor agree that when the Government achieve the figure of 0.7 per cent. of gross national income by 2014—as I believe they will—it will be consistent with our millennium development goals, and that when the Government achieve it, as some Scandinavian countries already have, it will not be beyond their horizons to build even on that?

Mr. Darling: For many years, in the House and outside, my right hon. Friend has campaigned for an increase in the amount that we contribute to overseas aid. I remember wondering years ago—before I was in the House, and during my first 10 years here—whether we would ever be able to get back on track to meet our international obligations. Now we are back on track, and have been able to bring forward the date for our commitment of 0.7 per cent. of gross domestic product.

As my right hon. Friend knows, the Prime Minister and his predecessor spent a great deal of time at Gleneagles securing international agreement and persuading all countries to join us. I am absolutely committed to meeting our international obligations. I only hope that there is cross-party support for that—although I am bound to say that, given their spending commitments, it is not clear to me how on earth the Opposition could possibly meet them.

Sir John Butterfill (Bournemouth, West) (Con): Do the Chancellor’s estimates for public sector debt in total include the liabilities of private finance initiative and public-private partnership schemes? If they do not, can he tell us what the figure would be if they did?

Mr. Darling: I think the hon. Gentleman will find all that spelt out in the pre-Budget report that I have published today. As for whether PFI projects are classified as being on or off the Government’s balance sheet, that is a matter for the Office for National Statistics.

Mr. Neil Turner (Wigan) (Lab): I congratulate my right hon. Friend on finding money to put into health and education rather than giving tax cuts to the extremely wealthy, but despite the excellent progress we have made, inequalities still exist in our country. Will my right hon. Friend use his position to ensure that the greatest proportion of the additional money that he
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gives to the Department of Health and the Department for Communities and Local Government goes to the areas with the most inequalities?

Mr. Darling: I very much hope that we shall continue to reduce those inequalities in all that we do, whether in local government or in the health service. It is important that we in central Government do our bit. That is why I said to the hon. Member for Twickenham (Dr. Cable) that although we clearly have difficulties to overcome with tax credits, they are clearly a very good way of putting money into the pockets of families who need that help.

It is sometimes forgotten that there is another big thing we can do to deal with inequalities. As my hon. Friend knows full well from the area that he represents, getting people into work makes a massive difference to their prospects. I worry about the Opposition’s proposals and the instability that they would create, because the inevitable result would be that, sooner or later, unemployment would go up. That has happened in the past, and we do not want it to happen again.

Sammy Wilson (East Antrim) (DUP): The gloom that was evident on the faces of the Members behind the Chancellor today when he talked about the pre-Budget report will be reflected in Northern Ireland. It is predicted that growth will fall by 50 per cent and that growth in public expenditure in Northern Ireland will be 1.2 per cent, as against the 1.9 per cent. generally that is announced in the report. That will have an impact on the economy. In light of that, will the Chancellor consider proposals to change fiscal policies, for example, in Northern Ireland, which will help the Northern Ireland Executive to grow the private economy to fill the gap left by the reduction in public spending?

Mr. Darling: Perhaps I could make a general point to the hon. Gentleman, which I might equally make to the Welsh and Scottish nationalists— [Interruption]—well, I certainly see a Scottish nationalist— [Interruption.] Two of them, indeed. The devolved Administrations all have their Barnett entitlement in full. There have been no changes to the basis on which that is calculated. They get the money as they always have done. However, that is not the whole story, because money spent nationally on, for example, tax credits, pensions and defence is also money that is spent in Scotland, Wales and Northern Ireland.

On the particular point that the hon. Gentleman made, I strongly agree that we need to encourage more private sector investment in Northern Ireland. I am sure that he will agree that at the moment public sector investment and public sector spending in Northern Ireland is disproportionate; it is much higher than any of us would like. He will also know that we asked Sir David Varney, who has been working on his report, to look at those things. However, a lot of things in Northern Ireland need to be looked at to encourage investment. One in particular is education and skills. When we ask business people in Northern Ireland what they want, they say that they want to ensure that when they set up businesses, they have the work force with the necessary skills, as well as investment, infrastructure and other factors.

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Paddy Tipping (Sherwood) (Lab): Will the Chancellor confirm that he can afford free health checks, better health and a better future for the many by resisting the temptation to go back to the past by offering unsustainable tax thresholds for inheritance tax for the very few?

Mr. Darling: My hon. Friend makes a good point. Free health checks for people are a very good policy. I am sure we can all think of individuals who are alive today who might not have been if they had not happened to go to the doctor for a check-up. Doing that as a matter of routine seems to be eminently sensible, not just for them but for the good of the country as a whole. There is no doubt that if a party gets itself into a position where it promises to cut taxes by £5 billion and it has no idea where to get the money, sooner or later it will find that it cannot pay for the health service, education or anything else.

Mr. Edward Leigh (Gainsborough) (Con): Why was more not made today of efficiency gains? Since 2001, the Public Accounts Committee has made some 2,500 recommendations in more than 300 unanimous reports. Most of those recommendations have been accepted by the Government, but many of the lessons are not being applied across Whitehall. In the light of the sheer size of the Government budget, does the Chancellor accept that an efficiency gain of just 2 per cent. in the use of resources would generate £8 billion-worth of savings every year? That would be enough to lead not only to increased spending on priority areas, but to a real reduction in the overall burden of taxation. Finally, does he agree that any Government or party that promised to return to the people a share in the proceeds of growth as well as a share in the proceeds of efficiency would be on to an election winner?

Mr. Darling: It is funny that the hon. Gentleman should say that, because at the last election the Conservatives said that they could get lots of savings out of paperclips, and it did not turn out to be the election winner that they thought it might be. When we started to look at what was being proposed, we found, just as we are finding now, that one did not have to look too far to see that promises were being made on the basis of money that had not yet been saved. That way lies the very instability that I have talked about.

On the hon. Gentleman’s more serious point, I agree that Government can always be more efficient. I said in my statement that our review identified £30 billion-worth of savings, which Departments will have to accomplish because if they want to meet the spending that they have set out they will have to find that efficiency saving. Following the Gershon report, £20 billion has already been saved; I have not the slightest doubt that all Government Departments, and the public sector generally, can always do more, and the pressure that the hon. Gentleman’s Select Committee brings to bear on Departments in this regard is useful.

Mark Durkan (Foyle) (SDLP): Will the Chancellor confirm—so that I can welcome the fact—that the new improved child element of child tax credit will benefit some 130,000 families in Northern Ireland? On the wider issues, did an earlier answer that he gave indicate
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that in spite of significantly improved allocations to health, education and social housing, there will not be any translated increase in the Barnett allocation to Northern Ireland beyond what the Chancellor’s predecessor promised to the Northern Ireland parties back in the spring?

I welcome again the Government’s reaffirmed commitments on official development assistance. Will the Chancellor confirm that they will hold, no matter what the uncertainty brings, and will he colour in what that means in terms of the Department for International Development’s budget for education and the fight against AIDS, tuberculosis and malaria?

Mr. Darling: I am happy to hear a slightly different view from Northern Ireland in relation to Government expenditure, because increasing expenditure for Northern Ireland to £10 billion is very good for Northern Ireland. I can also tell my hon. Friend that, of course, the money that I announced to help us meet our target of getting 100,000 children out of poverty covers children in Northern Ireland—as it does children in the rest of the United Kingdom. I am sure that the tax credit increase will be welcomed by many families living in Northern Ireland, and my hon. Friend is right to welcome that.

My hon. Friend is also right to welcome the increase in the money that DFID will receive for overseas aid. However, the allocation within the Department is a matter for my right hon. Friend the Secretary of State for International Development, who will no doubt want to make further announcements in due course.

My hon. Friend highlights the fact that we have been able to make and confirm such allocations. We know that we will be able to deliver on them, because we have been running the economy and not making uncosted and irresponsible promises. Being unwilling to play to the gallery can at times be unpopular, but it is the right thing to do in the long-term interests of this country.

Stewart Hosie (Dundee, East) (SNP): The Chancellor confirmed a number of things today, such as that the growth rate will fall and borrowing will remain high at about £30 billion. However, he failed to confirm that 75 per cent. of his PFI liability was off balance sheet—hiding the numbers—and he did not tell us what research and development spending was this year. Instead, he said there would be another report, which I will look at with some interest. However, we know that R and D spending for the future has been lamentable. Nor did he tell us, although it has been published, that the balance of trade deficit is some £45 billion—a direct consequence of the 1 million lost manufacturing jobs.

The Chancellor did, however, tell us two things, and I have questions about those. He spoke about Crossrail and the Olympics. There will be Government funding of at least £5 billion for each of those projects. Will he confirm that that will be subject to the Barnett formula? He also said that the Scottish departmental expenditure limit would rise to £30 billion by 2010. That would appear to amount to a 1.4 per cent. annual rise for each of the three years, but can he confirm that, with the shaving of more than £300 million off the Scottish baseline figure, that amounts in real terms to
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barely a 0.5 per cent. rise for each of the next three years? If that is the case, when his own report states that

because of factors such as “resilient demand”, and oil revenues are flooding into the Treasury, is it not shameful that a mere trickle of barely a 0.5 per cent. rise in real terms is returning to Scotland?

Mr. Darling: Let me respond to the various points the hon. Gentleman makes. First, most people might think that an increase of the budget in Scotland to £30 billion was not only the right thing to do, but that it also provided the Scottish Executive—even one currently led by somebody whose ambitions far exceed his ability to deliver them—with sufficient resources to spend on health, education, transport and many of the other things that Scotland needs. Scotland got its full share of Barnett expenditure; absolutely nothing has changed in relation to that. That means, for example, that Scotland—as well as Wales and Northern Ireland—also got its Barnett share of the expenditure on Crossrail. Although Crossrail is largely a railway line and tunnel in the middle of London, Scotland got the Barnett consequentials of it.

I would have thought that the nationalists—whose own policy would mean that the sums would not be available, because of all the disruption that would be caused to Scotland by tearing it away from the rest of the United Kingdom—would be able to see that, on any view, the settlement is very good, especially when they consider the amount of public spending per head of population in Scotland compared with that in the rest of the United Kingdom.

I shall say one other thing. As an Edinburgh MP, I follow closely what is happening in the Scottish Executive. It is increasingly clear to me that the reason why the nationalists are blustering and complaining so much is that they cannot afford, and are not able to deliver on, the promises that they made earlier this year.

Mrs. Ann Cryer (Keighley) (Lab): Can my right hon. Friend comment on the plight of some of my constituents who are former council house tenants? They are having the greatest difficulty in getting the trust to do any repairs or improvements to their properties. Is there anything in the report that might help those constituents?

Mr. Darling: There is certainly more funding available, and I have made a change to the treatment of repairs for VAT purposes. However, if my hon. Friend sees me or drops me a note, I shall be interested to learn from her what the particular problem is. It may be a problem with money in the past, or some other problem. We have certainly made money available overall; perhaps the change in relation to VAT that I have made today will help.

Mr. John Redwood (Wokingham) (Con): Can the Chancellor tell us the current total borrowing figure for the public sector, adding in all the off balance sheet obligations under PFI/PPP, the guaranteed loans in parts of the public sector and the unfunded pension
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liabilities? I know that he is a strong admirer of transparency, and expects such accounting from the private sector.

Mr. Darling: As I said earlier, borrowing this year is lower than we expected. On public expenditure generally, and borrowing and PFI, the borrowing figures are set out in the Red Book, as I said. However, I wonder about this: one of the things that I thought good about the report that the right hon. Gentleman commissioned for his leader was his commitment to the necessary public investment in transport, for example.

We can deliver on our commitments, not only for transport but for health and education, only because we have been prepared to finance that partly directly by Government and partly through PFI. I have never understood the enthusiasm of Conservative Members who speak about PFI as if they wanted to see it end. I think that both that investment and the way in which we have financed it are absolutely justified; otherwise, we would never get the investment that the right hon. Gentleman himself called for in his report.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): Does my right hon. Friend agree that the resilience of the British economy in the face of international problems, such as when the dotcom bubble burst a few years back, the soaring prices of oil and raw materials and, more latterly, the collapse of the sub-prime market in the USA, is due in no small part to sound public finances and the robust economic model that the Treasury has pursued in this country? Will my right hon. Friend undertake to ensure that that is maintained as a priority? Secondly, in light of the additional investment being put into our public services in spite of
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the international difficulties, will he ensure that we also look at productivity gains to add value to the extra money that we are still able to put in?

Mr. Darling: I agree with my hon. Friend that it is important to increase productivity in both the private and the public sector, and that the expenditure that I have been able to announce today is possible only because we can pay for it. We can do that because we have been careful to balance what we promise to spend with the money that we think that we can gather in—something that cannot be said of the Opposition.

Mr. Julian Brazier (Canterbury) (Con): The Chancellor tells the House that the economy is sound, but will he remind us of the last time the savings ratio was so low? In how many other European countries is household indebtedness at British levels, and in which other countries has there been a run on a bank recently?

Mr. Darling: I am sure that the hon. Gentleman knows that, both here and in other countries, the savings ratio falls when the economy is growing and inflation is low—but that is not to say that we do not need to do more to encourage people to save more. As for personal debt, it is true that some people have borrowed quite a lot of money to finance things, but the overall level of household assets exceeds the level of indebtedness by a considerable margin. Finally, on the subject of the strength and resilience of our economy, I think that the hon. Member for Canterbury (Mr. Brazier) will find that our economy is much stronger and more resilient now than it was when he was sitting on the Government side of the House.

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Point of Order

5.1 pm

Mr. William Cash (Stone) (Con): On a point of order, Madam Deputy Speaker. During Foreign Office questions, the Foreign Secretary said that he had placed papers in the Library—and also in the offices of the European Scrutiny Committee and the Foreign Affairs Committee—that supposedly gave sustenance to his argument that the so-called red lines have remained as the Government interprets them. However, I have made inquiries of all the offices involved and have discovered that no such text has been received. Furthermore, even though the Foreign Affairs Committee is sitting tomorrow, there is no indication that the Government’s assertions—which run contrary to yesterday’s report from the European Scrutiny Committee—have been justified by any legal experts, whether external or otherwise.

Madam Deputy Speaker (Sylvia Heal): The hon. Gentleman is an experienced Member of the House, and will no doubt know what I am about to say—that that is not a point of order for the Chair. However, his remarks will have been heard on the Treasury Bench, and I shall certainly make sure that some inquiries are made.

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