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Lord Bethell: My Lords, before the noble Baroness sits down, perhaps I may say that I did give her notice of the point that I raised on the voting rights of Gibraltarians in European elections. Has she a note on that?

Baroness Symons of Vernham Dean: My Lords, I am sure that in the enormous volume of excellent briefing that the Foreign and Commonwealth Office has given me, I probably have such a note. But perhaps I may write to the noble Lord and place a copy of my answer in the Library of the House as it is such an important issue.

5.39 p.m.

Baroness Hooper: My Lords, I have been fortunate and have visited some of the dependent territories, but by no means all of them. This afternoon, however, I feel that I have had a whirlwind tour because between us I believe that we have touched on every dependent territory. I thank all noble Lords who have participated in the debate, who have given us the benefit of their specialised knowledge and who have made some most constructive suggestions. I congratulate the noble Earl, Lord Iveagh, on his masterly maiden speech. I feel sure that all those contributions will be much appreciated by all those who read Hansard--and not only in the dependent territories.

I am glad that we were not too constrained by time. I am sure that if they had realised that, other noble Lords who may have wanted to participate would indeed have been present to express their point of view. As there is a little time remaining, perhaps I may pick up on one or two points which have been made, some of which were to be anticipated. Nevertheless, it is important to draw the Government's attention to them and to ask for an early response. Indeed, I am grateful for the response that we have been given.

It is clear that the impact of the Government's policies in other fields which are outside the direct responsibility of the Foreign and Commonwealth Office--obviously, that covers the European Community--is also important. I refer, for example, to defence policy and to the slimming down of garrisons, as well as to various constitutional proposals within the United Kingdom, not to mention law and order issues both in terms of the regulation of financial services and the battle against drugs, all of which could have an impact on the dependent territories. It is important that they are given a high profile to ensure that their importance is appreciated throughout government.

I believe that today may have marked the Minister's first reply to a debate from the Front Bench--it is certainly her first reply to a balloted debate--and I congratulate her on covering so much ground and on giving us so many positive answers and assurances. Perhaps I may pick out one or two of her responses and say how glad I am that she has given the dependent

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territories the go-ahead to pursue bilateral relations with individual EU countries. If I heard the Minister correctly, the dependent territories may also try to alter their status within the Commonwealth. I believe that the noble Baroness said that there was nothing to prevent that, so I hope that the dependent territories will have the Government's support in doing that.

Finally, my plea to the Minister is that she maintains the momentum which has, I hope, been created by this debate. When she returns to the Foreign and Commonwealth Office, I hope that the noble Baroness will convince her ministerial colleagues and any officials who may need convincing that all the issues and suggestions raised in this debate should be given the highest possible priority. This is a good time to consider a fresh start. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

Comprehensive Spending Review

5.43 p.m.

Lord Haskel: My Lords, with the leave of the House, I should now like to repeat a Statement made by my right honourable friend the Financial Secretary in another place. The Statement is as follows:

    "With permission, Madam Speaker, I would like to make a short Statement about our approach to public spending in the medium term and the Comprehensive Spending Review promised in our manifesto.

    "We set out our spending plans for this year and next in our manifesto. We made it clear that tough decisions would be needed but that such an approach was essential. We shall maintain that approach. This Statement looks beyond the next two years to the medium term.

    "We will deliver prudent and sound management of the public finances to provide a stable platform for investment and growth. And we will ensure that public spending achieves the objectives we have set ourselves--objectives which are based on our key principles of opportunity, fairness, employment and investment. To achieve that, we must put the public finances into proper shape.

    "Since 1990, public sector debt has almost doubled as a proportion of national output. In 1994 we were told there would be Budget balance in 1998-99, in 1995 we were told it had slipped a year to 1999-00, and last year it slipped again to 2000-01. As a result, after five years of growth, we are still borrowing to cover our current spending; the current deficit was about £20 billion last year and the last Budget forecast that we would stay in deficit for the next two years despite making some questionable assumptions. In order to rebuild public trust in the management of the public finances, my right honourable friend the Chancellor has asked the National Audit Office to review the forecasting assumptions he set out in the House on 20th May.

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    "The public has a right to know not just that total spending is affordable and prudent but that their money is being spent on their priorities; that it is being spent efficiently; and that the spending is effective. The Government spend over £300 billion, equivalent to over £5,000 a year for every man, woman and child in the country. We will reorder that £300 billion to meet our objectives, which were endorsed by the people on 1st May.

    "Public spending needs to be clearly focused. And we will achieve that objective. There is no better time for a root-and-branch reappraisal of public spending priorities than at the start of a new government. We showed the way when we were in opposition. We said that we would provide nursery places for all four year-olds. We will find the money by scrapping nursery vouchers. We promised to cut waiting lists in the NHS. We will release the funds by releasing savings from red tape and bureaucracy. We promised to reduce class sizes for five, six, and seven year-olds. We will find the money to pay for it by abolishing the assisted places scheme. And we have already made a start in delivering these promises just weeks after the election.

    "We will continue this approach in government, stripping out ill-targeted spending programmes that benefit only the few, and redirecting spending towards the priorities of the many.

    "The Comprehensive Spending Review which I am announcing today will carry on that process. It will set out clear objectives for all departments. It will examine how we can achieve our objectives of modernising the welfare state, getting people into work, improving standards in education--in short, delivering our manifesto commitments as efficiently and effectively as we can. Every department will scrutinise its spending plans, in detail, from a zero base, and ask: how does each item of spending contribute to the Government's objectives as set out in our manifesto? Why are we spending this money? Do we need to spend it? What is it achieving? How effective is it? How efficiently are we spending it? Every objective will be costed--and departments' effectiveness in achieving them will be scrutinised. We will make sure we know how much we are spending on each objective--and that we can demonstrate to the public what we have achieved as a result.

    "We will consider how best to provide services: what should be provided by the public sector, the private sector, or a combination of both in public-private partnerships. As my right honourable friend the Prime Minister has said, "What counts is what works."

    "As well as looking at spending in each department separately, we will also look at issues which cross departmental boundaries. These cross-departmental reviews will ensure we are not hidebound by the existing structure of government. The review will be co-ordinated by the Ministerial Committee on Public Expenditure, which will look at spending across departments. We will look in particular at

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    departments' efficiency at making the best use of their assets. We have asked departments to draw up an inventory of their assets--something no government has ever achieved before. We need to know what the Government own and whether they need these assets. If not, we shall reallocate the proceeds where they are needed most.

    "This review will be thorough and far-reaching. All departments and all Ministers will be involved. It will take 12 months to complete, and its conclusions will inform a new set of public spending plans for the rest of this Parliament--a set that reflects our priorities and meets the country's needs beyond that. It will take the long term view.

    "The review process is already under way. Terms of reference for the departmental reviews will be published shortly. The Government have already shown their determination to achieve their objectives. The Comprehensive Spending Review will provide us with a clear sense of direction and the long-term view that every government needs. We will ensure that the Government spend public money wisely and fairly, so that public spending matches the people's priorities."

My Lords, that ends the Statement.

5.51 p.m.

Lord Mackay of Ardbrecknish: My Lords, I am sure that the whole House is grateful to the noble Lord, Lord Haskel, for repeating this Statement. I very much appreciate the trouble to which he has gone to get up to speed with a Statement from a department for which he has no ministerial responsibility. I am a little puzzled as to why the responsible Treasury Minister is not here to deliver the Statement this afternoon.

If I had seen this Statement earlier in the day I am not sure that I would have troubled the scorer in having it repeated (to use a cricketing term). It is simply a series of soundbites and statements with which we can all agree.

    "We will deliver prudent and sound management of the public finances to provide a stable platform for investment and growth".
I suspect that I too said that on innumerable occasions.

    "The public has a right to know ... that total spending is affordable"--
too right it has--

    "[and] that their money is being spent on their priorities, that it is being spent efficiently, and that the spending is effective".
"Efficient and effective spending" were words that passed my lips on a fair number of occasions when I spoke from the opposite side.

    "Every department will scrutinise its spending plans in detail".
Of course they did. They did it every year; it was called the public expenditure round.

    "We will ensure that the Government spend public money wisely and fairly".
The number of occasions on which I said that when I led for the Department of Social Security was almost without number.

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Perhaps I may deal with some of the other parts of the Statement to see whether they have any meaning. I look at the part that deals with the public sector debt which appears quite early on the first page of the Statement. I draw the noble Lord's attention to table 4.2 in the red book which shows the public sector finances. The noble Lord will see the decline in the PSBR forecast in the last Budget. Is he able to confirm that the decline is faster than is predicted in table 4.2, partly because revenues have been a good deal more buoyant and partly because unemployment has fallen at a very fast rate, including another 18,000 in the announcements today?

I should like to know whether the critical words in the Statement about the borrowing requirement mean that the Government intend to take steps to make it fall faster than table 4.2 indicates, even as revised on the basis of the better figures recently produced. If so, how will they achieve that? Will they cut government spending or increase taxation? In the Budget on 2nd July will taxes be increased in order to cut the borrowing deficit quicker? Does that include income tax, against the background of election promises to the British people that income tax would not be increased? Perhaps the noble Lord can put flesh on the bones of that particular part of the Statement.

Further on the Statement refers to a review of government assets and the work of government to be shared between the public and private sectors. One wonders how this Statement--which, if it means anything, gives support to the private finance initiative--squares with the considerable cut in the PFI hospital programme that one reads about in this morning's Financial Times. As I have said before from this Dispatch Box--in this new configuration, as I have described it--how is that to be squared with the views of the Scottish Labour Party and some Ministers in the Scottish Office on the Skye bridge? They continue to attack that project of privately-funded infrastructure. If the Statement meant anything, I should have thought that that would be something that they should applaud. If so, will they tell their friends in Scotland to stop attacking that example of privately-funded infrastructure?

Perhaps the noble Lord can also tell me whether I am to read into this review of the assets that, for example, there will be a halt to the PRIME project in the DSS which is about the disposal of assets. That project is now under way. When one looks at the decision on national air traffic control, does it mean that the Government intend to proceed with the privatisation of that activity?

I have another question that perhaps looks forward to next week's debate on the referendum in Scotland and Wales and all the other debates to come. The Statement says that all departments and Ministers will be involved in this review. Further, it states that every department will scrutinise its spending plans. I presume that that includes the Scottish Office. If the Scottish Office scrutinises its spending plans, what happens if it comes to a different conclusion from that arrived at according to the Barnett formula? Let us assume for a moment it concludes that spending in Scotland is markedly ahead

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of spending in England; indeed, the same is true in Wales. If it concludes that spending in Scotland from that zero base does not meet what the Barnett formula suggests should be given to Scotland, will the Barnett formula be reviewed down the way to make sure that the Scottish budget is reduced to meet the spending plans arrived at from this zero base?

Finally, I refer to table 2.1 in the red book which is the important table indicating the Government's general expenditure as a percentage of GDP. If the noble Lord refers to that he will see that on our spending plans that percentage of GDP was predicted to drop to 40 per cent. in 1997-98 and then to proceed downward until it reached 36.75 per cent. in 2001-02. Nothing is said about that important part of the test of government expenditure; that is, affordability, effectiveness and sensible control of government expenditure. Is this review to be consistent with table 2.1 of the red book? Further, are the Government determined to get government expenditure down below 40 per cent.?

These are serious questions that require answers. They should have been answered in this Statement. Instead, the Statement looks like many of the other answers given both in this House and the other place. When one comes to asking about policy, all the answers are about reviews. It looks like the Windmill policy--the review that never closes.

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