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David Taylor: As my hon. Friend knows, I admired his ministerial skills at the Dispatch Box and regret that he is not there now. However, my county of Leicestershire is a two-tier authority, and there is a paucity of evidence, after a long time, that replacing two tier with unitary produces any long-term savings, when one considers the overall costs involved. I disagree with my hon. Friend.
Mr. Dhanda: My hon. Friend is a good friend and we will not fall out over the matter, but I believe passionately in the point that I am making. There is strong evidence for it, supported by people of all political parties. For example, Shropshire is a Conservative authority, with a Conservative leader who drove the process because he believes that £15 million a year will be saved. Another example is Cheshire, where I believe £17 million of savings will be made. It is also common sense. In a two-tier authority, one authority is responsible for the roads and the other is responsible for the road humps; one is responsible for the pavements and another is responsible for the shrubs on them.
John Howell (Henley) (Con) rose—
Mr. Dhanda: I will not turn today into a discussion purely about unitary authorities, but I am happy to take the hon. Gentleman’s intervention.
John Howell: Does the hon. Gentleman accept that the £15 million that he mentioned is a projection and that one cannot tell for at least 10 years after two-tier authorities have become unitary whether there are any savings? When those changes have occurred, there have been no significant savings.
Mr. Dhanda: That is simply not the case. I urge the hon. Gentleman to take a look at the Library paper that I have. I cannot find the figures right now, but it mentions far quicker returns—in two or three years—for local authorities.
Mr. Dhanda: Everything is predicted when it has not actually happened, but it is common sense to politicians and, more important, to the people we serve. The system is simpler.
I recall that, when I was a Minister, I responded to debates, in which Members—I will not name them, but hon. Members can find them if they go through Hansard—talked about changes and said, “Oh my goodness, if I lose my district authority, I cannot lobby it on this issue”, when the county rather than the district authority was responsible for the matter. Two-tier authorities cause genuine confusion, among not only our constituents, but many politicians.
Again, I can give an example from my time in office. I saw some of the great work that happens in the fire and rescue service. In places such as Lincoln and the south-west and in many areas, more and more co-responding is happening, whereby retained firefighters, especially in rural areas, do a terrific job in ensuring that they are first on the scene of an accident. They have saved countless thousands of lives, including in Leicestershire, in recent years. However, the system has not been rolled out effectively throughout the country. I would like a
much stronger protocol between the Department of Health and the Department for Communities and Local Government to roll out co-responding.
Let me give a specific example. My wife was with our two-year-old at Hucclecote library near my home, where, on a Tuesday morning, there are nursery rhymes for the kids. One Tuesday, a whole group of young mums and their children were there. One of the mums felt faint and collapsed. The child, understandably concerned for its mother, was beside itself. The group of mums looked after the child and called 999. It took some time—I think in the order of 20 minutes—for an ambulance to arrive, but there is a fire station just round the corner and they are all fitted with defibrillators these days.
We need closer working between the Department of Health and fire and rescue services to make use of the fact that—again, according to the House Library—the ratio of fire service staff to ambulance workers is some three or four to one, with 42,324 full-time equivalent firefighters in this country and some 17,000 ambulance workers. If we cannot get the two Departments to agree a good protocol on that, it would make sense to move fire and rescue services to a different Department. If we moved the fire service to the Department of Health, we could bet that the linkages between the fire and ambulance services would work much better. We would save far more lives, as well as saving a lot of money. We can reform our public services, making them better and saving money and lives as well.
Finally, a couple of weeks ago I wrote a piece for ePolitix in the run-up to the Budget. I was asked what I would like to see in the Budget. A range of MPs will have put forward their ideas, but one thing that comes up in my surgeries quite a lot is this. I have constituents who are frustrated because their parents are going into care, but the care system is very expensive and their savings are drawn down, which means as a consequence that what will be handed on to the next generation is reduced. The care system is becoming more expensive as our demographics change. In 30 years, we are likely to have four retired people to every working person in this country.
I would like the Government to consider—and, come the Queen’s Speech, even introduce—a Bill that allows for tax relief or grants for those who would like to create granny annexes in their homes to look after elderly relatives. Not only would that make a difference through savings for the Government, which it undoubtedly would, but it would help to create a more caring society.
Kelvin Hopkins: Would it not be simpler just to accept the royal commission recommendation of 10 years ago that all long-term care be made free of charge and paid for out of taxation, just like the national health service?
Mr. Dhanda: My hon. Friend makes a good point, which we could probably have a debate about on another day—indeed, it is probably a debate that he himself may wish to have with those on the Treasury Benches.
The point that I am making in all three examples is that the Chancellor is quite right. He is right to invest and right to talk about efficiencies in the years to come. I would like the Government to go even further and spell out some of those efficiencies, because I think that we can indeed find efficiencies. We can improve our public services and save money, and we can do that by investing in better government.
7.23 pm
Mr. Nicholas Soames (Mid-Sussex) (Con): May I warmly endorse the sensible and humane idea put forward by the hon. Member for Gloucester (Mr. Dhanda) about building on facilities for elderly people, so that they may be better looked after? Indeed, I am sure that some such step will inevitably be taken in the future and that it will be much welcomed in all parts of the House.
I warmly congratulate my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) on a magnificent, sparkling, “three rounds with the heavyweight champion of the House of Commons” speech. I also congratulate the right hon. Member for North Tyneside (Mr. Byers) on making an extremely courageous and important speech that will be much commented on in the years to come as—to steal a quotation from my hon. Friend the Member for Lancaster and Wyre (Mr. Wallace), who is sitting behind me and who I am sure was going to use it—a eulogy for new Labour.
We live in a precarious age. We are going through one of the greatest financial crises—indeed, the greatest—for generations. To bring that home, we all have families in our constituencies—there are certainly many in my constituency—and local firms that are paying a serious and high price for the failings of this Prime Minister and this Government. Of course it would be wrong to say that the Government have achieved nothing. There are considerable achievements to their name, and so there should be, given the amount of money that he has spent. However, if one looks across the years, one sees the most terrible evidence of taxpayers’ money being wasted and the grossest incompetence in the public sector.
It has taken this Prime Minister just 12 years to squander what really was a golden inheritance, which he seized in 1997. Our economy is truly in near ruins. The pensions of many of our people have been pillaged and our reserves have been sold. Three hundred and ninety-five tonnes of gold were sold at an average price of about $270 an ounce, which was a terrible, terrible mistake. He has presided over a decade and more of grotesque financial mismanagement.
I found a quotation that I used in the Budget debate on 23 March 2006, in those golden days, as they seem now. I quoted an article in The Times by Lord Rees-Mogg, who is incidentally the father of not one, but two Conservative candidates at the next election, both of whom I propose to carry into this Chamber on a shield when they are elected. This is what Lord Rees-Mogg said about the then Chancellor and now Prime Minister and how he had debauched the British pensions industry. He said that the Chancellor
“took all the big decisions on pensions. He has wrecked the system of private pensions. He has wrecked the system of public pensions. He has destroyed the system of savings. He has tapped pensions by deliberate stealth.
He has impoverished generations of old people, past, present and to come. The Chancellor’s pension policy has been one of the great scandals of British financial history. He should be ever held responsible.”—[ Official Report, 23 March 2006; Vol. 444, c. 470.]
I have news for the House: he will be held responsible.
The Prime Minister has borrowed for the future on a huge scale, but has little to show for it, except for having left many of my constituents terribly burdened by debt. Tax receipts have now collapsed by £50 billion and the Government are already planning to spend £80 billion extra a year. How can that make sane economic sense, when the conditions are as they are?
Restoring prudence and good financial order will, of course, be the work of the next Government, but it will make life very hard. Presumably the Prime Minister is trying, in a highly partisan Budget—no one should be under any illusion that it was not one—to make a poison pill, so that it is harder for everyone concerned and much worse for the future Government.
David Taylor: Will the hon. Gentleman give way?
Mr. Soames: No, I will not. I do not mean to be rude, but I have a short amount of time and I must press on.
Indeed, for the Budget to be denominated as “Building Britain’s future” is, to my mind, a seriously disappointing joke. We are left with the biggest peacetime tax burden in our history and the most complex tax system in the world, having recently overtaken India for having the longest and most complicated tax system. The truth is that personal balance sheets are heavily over-borrowed, that bank balance sheets are seriously over-lent and that the Government’s balance sheet is in a truly desperate state.
Even if we leave aside the Chancellor’s fiscally ludicrous growth assumptions and his other obviously unreliable forecasts, the Government have failed in this Budget in so many areas—areas where we need to succeed in the 21st century and take those steps that will repair and reinforce our economy in a global world, which the next Conservative Government will deal with.
Going back to that Budget debate of 23 March 2006, in which I was responding to the Paymaster General, a large chapter of that Budget was called “Meeting the productivity challenge”. The Government have failed dismally to meet that challenge. We must strengthen the skills base of this country. The United Kingdom is woefully bad in that regard, and there is nothing in the Budget that will seriously drive forward our competitiveness. There are not enough of the necessary skills available to our companies, and we compare very poorly with our competitors. Too much of good people’s talent is wasted.
The science and innovation base in this country, although improved, is nothing like good enough. Nowhere near enough was done in the Budget, and an important opportunity has been missed to improve this vital sector, and to help our competitiveness and productivity. The Budget also did nothing to improve the framework for Britain to be a successful enterprise economy. This Budget was indeed a bad day for Britain’s place in the economic world. We have people of great talent—business men in companies of all sizes—but the Government simply put too much on their shoulders. The entrepreneurs and business men of this country are asked to bear too much.
The Government have really hindered our movement towards a greatly simplified tax and regulatory regime. In a globally competitive and highly mobile environment, that is very bad news. I also see no evidence anywhere of strategic thinking on planning and infrastructure. There is no evidence in the Budget of the Government taking a more active role in supporting high-tech manufacturing and engineering, as advocated by two of our greatest industrialists, Sir John Rose of Rolls-Royce and Sir James Dyson. They both, quite rightly, advocate that we create a more balanced and productive economy that is not so reliant on the three motors of finance, property and public spending for its future growth.
There is nothing in the Budget to suggest that the Government understand that the economy of the future must be built on the more solid foundations of savings and investment, as my right hon. Friend the Leader of the Opposition so powerfully set out yesterday. This Budget does indeed fail the test of time. It fails to rise to the level of events. It does nothing to improve our position in the global context, and nothing at all to improve the dismal condition of our skills base. It does very little to improve the knowledge-based economy. Worst of all, it sends a terrible message about our competitiveness and our productivity.
7.33 pm
Kelvin Hopkins (Luton, North) (Lab): It is a pleasure to follow the hon. Member for Mid-Sussex (Mr. Soames), although I am afraid that I have a slightly different view of the world from his. However, he was right to say that we should have a more balanced economy. I would suggest that we need a bigger focus on manufacturing in particular.
David Taylor: Does my hon. Friend regret, as I do, that in the minutes available to the hon. Member for Mid-Sussex (Mr. Soames) he declined to take an intervention in which I could have pointed out that the proportion of gross domestic product taken by the Conservatives in taxation in the 11 and a half years from May 1979 until the fall of Mrs. Thatcher was six clear percentage points higher than it was in the 10 years when the present Prime Minister was Chancellor?
Kelvin Hopkins: I thank my hon. Friend for that interesting intervention.
For the past 11 or 12 years I have been a critic of the Government’s economic policy, and I have spoken about it many times. Indeed, in my maiden speech I said that I had come into Parliament to oppose neo-liberalism, among other reasons. I have done that fairly consistently since then, and I think that I was right to do so. The globalisation and neo-liberal deregulated capitalism that we have experienced have caused the desperate problems that we are now facing. The system is inherently unstable, and has promoted inequality within and between nations. We need to focus on the world economy, and to look again at what we have been doing for the past 30 years.
Neo-liberalism also slows growth. Between 1945 and 1970, when we had full employment, the rate of growth was higher on average than it has been since then. We have also had four major recessions since then, which we did not have in that more regulated, faster growing world immediately after the second world war. The Chancellor’s early, gloomy prediction that this might be the worst recession for 100 years—perhaps even worse than the 1930s—were right. That is still the case. This is certainly the biggest recession that I have experienced, and I am sure that that is true for everyone else.
It was a terrible mistake to abandon the post-war arrangements that were hammered out at Bretton Woods. That included abandoning national economic controls, especially on international financial flows. When I taught economics at a modest level, I used the water analogy to explain the circular flow of income. I am sure that those Members who have studied economics will remember
that. I also used a water analogy to illustrate the world economy. I would portray the world economy as a large tank of water. Without any constraints, water could be moved about very quickly, which could result in big waves that could wash over the sides and even tip the tank over. If we construct baffles within the tank—the boundaries of nation states can act as baffles—we can slow the rate of movement between the different parts of the tank so that it does not tip over and we do not get the tsunami effect that we are now seeing. National economic restraints have to be re-imposed. Indeed, I believe that they are being re-imposed as we speak. We need to rebuild that more sensible world that actually worked in the post-war era, in which, I am happy to say, I grew up. We had full employment and many other beneficial features of society.
The Chancellor has made some forecasts, but he was perhaps unwise to do so because some of them have already been challenged and some might even be wrong. It is hazardous to make forecasts at a time such as this. Even now, we still do not know how bad the American banking crisis is going to get. In recent days, I have read leaked reports about stress tests that have been carried out on American banks, and they are really quite frightening. We are certainly not out of the woods yet, and even now there could be further massive destabilisation in world finance.
What is astonishing about recent forecasting is that no one in the Treasury or the Federal Reserve saw the crisis coming. I have to say that I did see it coming; it was not very difficult. I used to write a monthly column in a left-wing journal called Socialist Campaign Group News, which sadly no longer exists—
Mr. Graham Stuart: Funny, that.
Kelvin Hopkins: It was not required reading for other Members, I guess. Nevertheless, writing a monthly column for 10 years without a break was a good exercise in ensuring that I was thinking through what I was talking about on economics. Long ago, I predicted that building economic growth on an asset-priced bubble and a mountain of credit card debt would fail badly. It might also interest Opposition Members that in 1990 I predicted—and wrote about—the collapse of the exchange rate mechanism strategy. That was just before we joined the ERM, and I got that prediction exactly right as well. I am sure that those Members who now regret our joining it realise that that led directly to the election of a Labour Government, which I am sure they also regret.
Whatever the forecasts, it is necessary to take the right policy steps. After years of resisting some of those steps, I believe that they have now moved in the right direction in some respects. Interest rates have been cut, for example, and the Monetary Policy Committee has finally caught up with the correct predictions of David Blanchflower, who, sadly, is leaving the MPC this week. He was on his own in saying that we had to cut interest rates because we were facing a serious recession with mass unemployment on the horizon. He was absolutely right, and that was only a few months ago.
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