Examination of Witnesses (Questions 380-399)|
13 DECEMBER 2006
Q380 Mr Newmark: Let us move on to
another favourite of yours, Chancellor, PFI. Actually I will not
go on to PFI, I will just wrap up with an assessment of your 10
years with some comments from your colleagues.
Mr Brown: This dispassionate,
objective Committee continues its work!
Q381 Mr Newmark: The Rt Hon Member
for Sheffield Brightside has said of your record, "The tax
credit system is in a shambles", the Rt Hon Member for Birmingham
Edgbaston has said, "We have had excessive spending, rising
taxes and excessive micro-management", the Rt Hon Member
for Birkenhead candidly notes that, when Labour came to office,
we had one of the strongest pension provisions in Europe and now
we probably have one of the weakest, and last, but not least,
your friend, the Rt Hon Member for Darlington, admits that the
inequality gap is stubbornly and persistently wide and that poverty
has become more entrenched on your watch. Chancellor, whose judgment
do you trust, theirs or your own?
Mr Brown: The judgment of the
facts, that two and a half million more people are in work, that
more than a million children
Q382 Mr Newmark: So you do not trust
Mr Brown: a million children have
been taken out of poverty, a million pensioners have been taken
out of poverty, we have had the longest period of growth under
a single government in the history of this country since the industrial
revolution and we have moved from being seventh out of seven,
and I hope that people will note this, in the G7 when your Government
was in power in 1997, we were below Italy, we were below France,
we were below Germany, we were below Japan and we were below Canada,
to a situation where in the last two years we have been above
Germany, above France, above Italy, above Japan and above Canada
in terms of income per head. Now, that is progress for this country
which I think most ordinary citizens would recognise and they
would particularly recognise it when they know that interest rates
are not at 15%, as they were under your Government, they are at
5% and they know that inflation is not at 10%, as it was for a
long period under your Government, inflation, the CPI, is actually
2.6% and moving towards 2%.
Mr Newmark: So all of your colleagues
are wrong and you are right?
Chairman: Chancellor, you probably thought
you had more friends before you came in here!
Q383 Jim Cousins: Chancellor, in
your Pre-Budget Report statement, you specifically mentioned that,
with public sector call centres, you were going to save £400
million which is a cut in costs of 25%. Can you tell the Committee
how many jobs lost that might imply and whether that would involve
any outsourcing either to the private sector or offshore?
Mr Brown: It is basically co-ordinating
the use of government call centres and avoiding any duplication.
I think you would agree that that is a good thing to do. As far
as the jobs are concerned, we have published our figures for Civil
Service job reductions and there are 85,000 job reductions going
to take place; 45,000 jobs have gone and another 40,000 jobs are
still to go. Obviously, for the years after 2008 we will publish
Q384 Jim Cousins: Sir David Varney's
report tells us that there are 55,000 jobs in public sector call
centres, so cutting costs by 25% would seem to, possibly, indicate
a cut of 12-15,000 jobs. You cannot confirm that?
Mr Brown: The job reduction figures
within the Civil Service are 85,000 by 2008; we have already achieved
45,000, so 40,000 jobs are still to go.
Q385 Jim Cousins: That is correct.
In the present public expenditure planning cycle you have referred
to the cut of 85,000 jobs45,000 which have presently been
achieved, 40,000 more to be achieved by the end of 2007-08but
in the Pre-Budget Report there are clearly flagged up future public
spending cycle indicators for a number of government departments,
including the Department for Constitutional Affairs, and quite
a high rate of cost-saving in a number of high-employing government
departments, like the Department of Work and Pensions and HMRC.
What additional level of job cuts do those indicator savings represent?
Mr Brown: There will be more jobs
to go. I can assure you that in the next spending round, once
we met the Gershon targets, we will have to reduce Civil Service
Q386 Jim Cousins: This Committee
has already had an indication from the Head of HMRC of an additional
12,500 job cuts on top of the 12,500 that are built into the 85,000
that you have referred to. That indicates a level of public sector
job cuts for the present and future public spending cycle of well
over 100,000, does it not?
Mr Brown: I can confirm that 84,500
was the jobs figure for Gershon and that another 12,500 jobs on
top of that would be scheduled to go within the Inland Revenue
in the next public spending period.
Q387 Jim Cousins: The policy for
public sector pay set out in the Pre-Budget Report clearly involves,
in the immediate pay round, a cut in real take-home pay, does
it not? Paragraphs 631 to 633 of the Pre-Budget Report.
Mr Brown: We have submitted evidence
to the pay review bodies suggesting that settlements should be
based on the inflation target of 2%. I think that is both fair
and right. If we are going to maintain our record as a low-inflation
economy then there needs to be discipline in public sector pay
settlements. Of course, the individual pay that any teacher, nurse
or civil servant would receive depends not only on the settlement
itself but on other contractual agreements, including increments
for length of service.
Q388 Jim Cousins: In addition to
that, you have also set out a public sector pay policy in the
Pre-Budget Report which points to a break-up of the national pay
bargaining systems and the locking-in of low pay in the English
regions to public sector pay, too. That is clearly set out in
the Pre-Budget Report in the paragraphs I have referred to.
Mr Brown: We have had this discussion
before, but what we want to achieve is more local pay flexibility.
The Civil Service remit guidance requires departments to consider
local pay as part of the business case they submit to the Treasury
every year. All groups covered by the review bodies have an obligation
to consider local pay in their terms of reference. Now, I think
that is the right thing to do and that will continue to be the
policy of the Government; just as you take into account London
Weighting you take into account local pay conditions. You are
absolutely right, Mr Cousins: first of all, there will be a reduction
in Civil Service numbers in the next spending review period, and
that will be in thousands, not in hundreds; secondly, public sector
pay will have to meet the inflation target and be founded on that,
and thirdly we are committed to greater local and regional pay
Q389 Jim Cousins: Do you think, Chancellor,
that you can achieve the higher levels of public sector productivity
that, absolutely correctly, you are trying to achieve against
a background of threatening the sack to large numbers of workers,
squeezing their take-home pay and breaking up the national pay
Mr Brown: The issue for the public
services is getting value for money. There is and will continue
to be an increase in the numbers of nurses and doctors and people
working in the health service, and in schools through teaching
assistants and teachers, and if we can save money through administrative,
clerical and what you might call back-office jobs being replaced
as a result of new technology and get more resources to the front
line, I think every one of your constituents will want to support
that rather than criticise that. That is the best way that we
can deliver better and high-productivity public services.
Q390 Jim Cousins: The economic base
of the city I represent is in the public sector, and I represent
a very large number of low-paid, public sector workers. To be
honest with you, Chancellor, I am fearful of their reaction to
the package of proposals you are setting out.
Mr Brown: Newcastle, as you know
as well, is a fast-changing city; it is an education centre with
large numbers of people attending university; it is a big research
centre, with stem cell research based in Newcastle; it is a big
entertainment and leisure centreand that is not public
sector work, that is private sector workit is a financial
and retail centre for the region, and actually known throughout
the United Kingdom for that. All these things are contributing
to the success of your city, and that is why the growth rate of
a city like Newcastle has been very high in recent years and,
I believe, focused on all these different sectors that are doing
well, will continue to be high, but what we are not going to do
is to shirk from the big decisions that are needed to make the
public sector more efficient in future years and ready to get
resources to the front line, including to nurses and nursing in
your hospitals and including to better teaching and better support
for teachers within your schools.
Q391 Jim Cousins: However, if the
threat of redundancy and the squeeze on pay produces a crisis
of confidence and performance in the leadership and management
of the public sector, both at a political level and at an official
level, is that not going to make it very difficult to achieve
the productivity gains you are seeking?
Mr Brown: I have always found
that the people you are talking about, the nurses, the teachers
and the public sector professionals and, indeed, the ancillary
workersthe home helps and carersknow themselves
what needs to be done. People know that where technology is changing
and other companies and other organisations are replacing, if
you like, administrative and clerical jobs and getting more resources
to their front line, so too must the public services do this.
So we must not shirk from the change that is necessary to secure
value for money in our public services and to get resources to
the front line, which I think will be welcomed in your constituency,
particularly when it is getting resources to policing, nursing
and medical services and to education.
Q392 Mr Gauke: Chancellor, can I
ask what new capital spending commitments with regard to schools
were made in the Pre-Budget Report?
Mr Brown: Considerable. What we
announced was public spending for schools right through to 2010-11.
We have never announced before both the figures for the overall
resources for education and the overall resources for schools.
I do not know whether you want me to give you the exact figures,
but we gave a figure, for the first time, for 2008-09, 2009-10
and then we gave a figure for the whole of education expenditure
for 2008-09, 2009-10 and 2010-11. These were new figures. In addition,
of course, I put more money into individual schools' budgets for
this year so that, on average, the typical primary and secondary
school pupil will have £200 per head. So all these were new
announcements that meet our commitments on education in a way
that I think can be summed up as the biggest capital investment
programme in our schools and education in the history of our country.
Q393 Mr Gauke: Let us take those
two areas in turn. First of all, capital spending. According to
the evidence given to us by the Institute of Fiscal Studies, there
is only £0.1 billion, in 2006-07 terms, in respect of capital
investment that had not previously been announced before the Pre-Budget
Mr Brown: That is not correct.
The overall effect of the education announcements in 2006-07 are
these: about £170 million set aside for education; £120
Q394 Mr Gauke: What was new?
Mr Brown: That is new.
Q395 Mr Gauke: That is not what the
Mr Brown: No. £170 million,
on which there were Barnett implications, and I think £120
million or so went to English schools in addition to what had
already been promised in the Budget to be a rise for next year.
So that was totally in addition. We put more money into the Every
Child a Reader programme, which is now going
Q396 Mr Gauke: Can we stick to capital,
just for the moment?
Mr Brown: You can talk about capital
but I wanted to sum up all the new announcements. You will give
me a chance to mention all of them later.
Q397 Mr Gauke: I am sure I will.
Yesterday I asked one of your officials, Ms Brivati, the question
of what new capital expenditure was announced in the Pre-Budget
Report that related to schools? The reason why I asked that
Mr Brown: 2006-07 or 2008-09 or
Q398 Mr Gauke: Going ahead, what
new announcements were made in respect of capital? The evidence
we have had from the IFS is that there is only £0.1 billion,
and that, they believe, relates to colleges, not to schools. Do
you dispute that figure?
Mr Brown: No, because I made an
announcement for money going direct to schools for 2006-07
Q399 Mr Gauke: Let us stick to capital.
The capital spending
Mr Brown: A lot of that is capital.
Do you think it is capital or do you think it is not capital?
A lot of it is capital.