Examination of Witnesses (Question Numbers
200-219)
RT HON
ALISTAIR DARLING
MP, MR DAVE
RAMSDEN, MR
MARK BOWMAN
AND MR
ANDREW HUDSON
30 MARCH 2010
Q200 Mr Fallon: I just want to be
absolutely clear, you are ruling out any change that would not
index automatically any of the benefits this September?
Mr Darling: What I said to you
was that I have made no proposals of the sort that you describe,
cutting back or disadvantaging people like that at all. The judgments
I reach in relation to pensions and all the rest of it will continue
to be governed by fairness, and I point to what I have done in
the past and that is where people would have been worse off had
we followed rigorously the normal indexation rules I made sure
that did not happen. I have no intention whatsoever of disadvantaging
people who on any view are on a modest income. Indeed, everything
I have done so far, especially when it comes to raising money,
has been at the top end of the income scale, not at the other
end.
Q201 Mr Fallon: But would it not
be less evasive just to say now that all benefits and pensions
and credits will be automatically indexed?
Mr Darling: That is what happens
and that has happened throughout the time that we have been in
government.
Q202 Mr Fallon: What about the departmental
spending totals? Why can you not come clean on those?
Mr Darling: Because we have not
had a spending review yet. I repeat the point that I have made
on many occasions at this Committee and elsewhere, that had I
done a spending review in the course of last year, as many were
urging me to do, the assumptions that I would have to have made
on unemployment, on debt interest and so on would have been very
different from the assumptions that I have made this year. Given
that spending runs until April 2011 (at least that is our intention),
you would have to do a spending review before this autumn, but
things are getting more settled now than they were 12 months ago
and when you do that spending review you decide on your overall
spending envelope so you then know what your DEL limit is and
that is driven to a large extent by your judgment as to what your
AME spending is likely to be. That position has not changed at
all.
Q203 Mr Fallon: But your officials
confirmed to us yesterday that there would be savings or cuts
of as much as £15 billion to £20 billion in the NHS
budget annually. Would it not be more honest to come clean on
those cuts before the election?
Mr Darling: No. What you are talking
about are the efficiency targets that we have set every department,
Health included.
Q204 Mr Fallon: Those are budget
cuts, are they not?
Mr Darling: I certainly do not
think efficiencies are budget cuts if you are doing something
more efficiently. Indeed, as I understand it, there is now something
of a cross-party agreement on the fact that efficiencies are necessary
and they can be carried out in frontline services without damaging
the services they are providing. Take the NHS. We are committed
to protecting about 95% of its spending in real terms. Nobody
is arguing that each hospital or doctor's practice or any aspect
of the NHS cannot be more efficient; of course it can be more
efficient. There may be some things that you decide not to do.
For example, I think it was last autumn we decided that we were
not going to proceed with one aspect of an IT system in the Health
Service. You may have to take decisions like that. What matters
is that you can protect the outcomes, for example the pledge that
people will be referred to see a specialist within two weeks if
they are suspected of having cancer, or some of the waiting time
targets and so on, so yes, you can be more efficient. Efficiency
is rather like painting the Forth Rail Bridge. It is something
where, when you have finished the process, you start it again.
You can always be more efficient. I do not think my officials
at any stage suggested that we were going to "cut" health
spending in the way that you describe.
Q205 Mr Fallon: They said though
that you were going to remove £20 billion from the Budget.
Mr Darling: No, I do not think
they said that either. As I say, I was not here, and because the
transcript did not arrive until I was otherwise engaged I have
not read exactly what they said, and they will correct me or you
will correct me if I am wrong about this. In relation to the NHS,
for the protected parts of it these savings will be available
to be recycled to spend in the Health Service. Is that what you
said?
Mr Ramsden: That was the point
I was making yesterday, Chair, that the Budget documents refer
to the NHS delivering annual efficiency savings of £15 billion
to £20 billion by 2013-14, and I explained that those savings
which arise at the frontline will be recycled into patient care
to enable the NHS to continue to meet pressures and improve services
consistent with the level of funding that the Government committed
to.
Mr Darling: Mr Fallon, you will
find this set out—you maybe have it in front of you—in
paragraph 6.14 of the Red Book. This is where I assume you got
the figure of £15 billion to £20 billion efficiency
savings from. It then goes through in headline terms some of the
things that will help contribute to that. As I said to you, that
money will be available in the protected parts of the budget to
be recycled so that what you save in being more efficient you
can spend on better treatments, better outcomes.
Q206 Mr Fallon: So it is not a budget
reduction?
Mr Darling: No. It is being more
efficient with what you have got.
Q207 Mr Fallon: It is either a reduction
in the budget or it is not.
Mr Darling: By being more efficient
you can spend that money in the Health Service. The NHS budget
will go up in line with inflation over the next Parliament. That
is the undertaking that we have given.
Q208 Mr Tyrie: Could I follow up
a little on this, Chancellor? Can you think of any precedent for
a government going into an election? A moment ago you were saying
you agreed that your cuts were going to have to be heavier than
those of the Thatcher administration. Can you think of any precedent
for a Government not setting out its full plans?
Mr Darling: It is only relatively
recently in the great scheme of things that governments have set
out three-year rolling programmes of spending. The previous governments
used to do this on an annual basis.
Q209 Mr Tyrie: Can I clarify that,
Chancellor? Forward three-year plans for public expenditure were
made throughout the Conservative years.
Mr Darling: There was an indicative
total but what was new was we gave each department and other public
sector bodies how much they had in each Budget for a three-year
period. That three-year period runs out in April next year. What
I was going to say to you was that what is pretty unprecedented,
certainly in recent times, is the depth of the downturn, and that
is why it would not have made any sense when you had all that
turbulence, all that uncertainty, to do a spending review in the
last year. Even if we had not had a recession, in the normal course
of events spending reviews tend to be done in the year before
they come to an end, for obvious reasons.
Q210 Mr Tyrie: You are the Government
though, Chancellor. Do you not think it is reasonable for the
electorate to expect you to have made a bit more effort to work
out where this considerable pain is going to fall?
Mr Darling: At the risk of repeating
myself, I think it would not have been sensible to do a spending
review in the last 12 months. We did at the PBR say there were
some areas that we wanted to protect, the Health Service and schools
and so on, but I have always been clear that we needed to do a
spending review before the current period runs out, and, as I
say, people are pretty clear generally that we are going to have
to make some quite difficult decisions. In times of uncertainty
it does not make any sense, especially halfway through the spending
review period, to make these plans. I seem to remember in 1992,
whatever was set out by the then government before the election
turned out to be rather different immediately after it.
Q211 Mr Tyrie: So you feel a better
idea therefore is not to say anything at all?
Mr Darling: A better idea is to
be straightforward with people, explain why you have taken your
decisions and why you believe your judgment is right, whether
it is on supporting the economy, reducing the deficit or public
spending. That is what people expect.
Q212 Mr Tyrie: These savings in the
Health Service are £15 billion to £20 billion annually.
Do you really think that is something the electorate will find
plausible?
Mr Darling: Yes. The NHS has a
budget of about £100 billion and I do not think it is unreasonable
to put very demanding targets on it. Indeed, there is fairly robust
agreement both within the NHS and, as I understand it (as of yesterday
at least), between the major political parties that these are
deliverable.
Q213 Mr Tyrie: Just to be clear,
when that question about the cuts from the Thatcher administration
came last night there were two unequivocal answers, one from George
Osborne and one from Vince Cable. We are clear, are we not, Chancellor,
that if you were to be re-elected and put back in the Treasury
you would be cutting public expenditure faster and deeper than
Mrs Thatcher?
Mr Darling: What I said when I
was asked the question, and let me see what I said when asked
it by Mr Robinson of the BBC last week, was that the spending
review would be the toughest for decades.
Q214 Mr Tyrie: Is that a "yes"?
Mr Darling: It is what I said.
Q215 Mr Tyrie: I think everyone is
asking you to go a little bit further than what you said and answer
the question that was asked of you last night.
Mr Darling: I appreciate, for
understandable reasons on my part, your obsession with Lady Thatcher,
but I choose my words carefully and I said, "This is going
to be tough, it is going to be difficult, but I think we can do
it in a way that you say you can protect frontline services and
you can do it in a way that does not damage the fabric of our
economy".
Q216 Mr Tyrie: So when the interviewer
said last night, "So the answer from all three of you is
yes", as his summary of your three replies, he was mistaken?
Mr Darling: No, you are, rather
pointlessly, I think, dancing on the head of a pin here. Surely
what is of concern to people—
Q217 Mr Tyrie: I am not quite sure
who is doing the dancing. It sounds to me like you are doing the
dancing, Chancellor. Why do you not just say yes like the other
two participants in the debate did?
Mr Darling: What I said last week,
last night, today, and I will say it next week as well, was that
the spending review will be tough; it will be the toughest for
decades", and that is what I said in the Budget speech.
Q218 Ms Keeble: I want to ask about
the fiscal consolidation as well. If the spending review is going
to be after the election in the autumn then presumably the papers
would have to be published quite soon after the election. There
must have been some thinking going on about what the scale of
spending reductions would look like.
Mr Darling: It is set out that
in cash terms between now and the end of the forecast period we
would be reducing spending by £78 billion. We have also set
out what we have proposed on tax, which is about £19 billion,
and then there is the balance coming from reductions in expenditure.
The thing that has not yet been decided and which will determine
the answer to the question, "How much are you going to cut?",
is how much we as a Government think we can spend over the next
three-year spending period. We have not done that, for all the
reasons I have set out.
Q219 Ms Keeble: What I wanted to
ask about was, given that you must have some figures, and indeed
I asked your officials yesterday about this, what then happens
if you have to take out an extra £6 billion because somebody
decides not to do the National Insurance contribution increase,
which is one of the key platforms, is it not, of your plan?
Mr Darling: Yes. The answer is
that if you make a commitment to forgo income from a tax and you
do not compensate for that because of the £6 billion of efficiencies
that you think you might get but you have not got in the bank,
it means that if you do not get them in you either have to cut
something else to the tune of £6 billion (it is actually
£6.6 billion by the end of the period) or you have to put
up another tax. It is a simple mathematical calculation.
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