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Baroness Hogg: My Lords--

8.44 p.m.

Lord McIntosh of Haringey: My Lords, surely the noble Baroness, Lady Hogg, is not going to deprive me of the pleasure of responding to those contributions. I was described as being in a plight. Having read that Statement, I am a happy man. I am happy because all the things that I have worked for throughout my life in politics are starting to work out. I shall show that not only is the Statement in pursuit of our ideals and objectives; it is the right way to protect our economy and our society.

The noble Lord, Lord Saatchi, asked why the population was not falling about. Apart from the obvious answer that we cannot afford the services of M&C Saatchi, I wonder whether he has looked at the opinion polls recently. I wonder whether he has noticed that, for the first time since polling began, three years into a Parliament, the government party is significantly ahead. Of course there is criticism of the Government's style. If the papers cannot get at the substance, they have to criticise the style. That is what they have been doing and good luck to them; it is their job. We do not have to take that very seriously in this House. The Government should not be deterred from pursuing their economic and social policies by the tittle-tattle that has been going around in the press for the past few weeks and months. If the question is why there is a lack of gratitude, I answer that the people of this country are more sensible than the people who provide them with their news and gossip.

The noble Lord, Lord Saatchi, has three solutions for his non-problem. First, he says that people do not believe the figures. He did not provide very much evidence for that. He looked at the difference between petrol tax and pensions and pointed out that, in September 1999, a forecast produced a lower increase for pensions than an actual figure produced for an increase in petrol tax. He did not look at 1998 or 1997 or observe that there has been an almost even balance during this Parliament, with the balance being in favour of higher rises for pensions. Unless the noble Lord has more evidence than that, we should not take too seriously his claim that people do not believe the figures. He rightly went on to say that we should not be cynical.

The noble Lord's next point was about the gap between available income--that is, growth in the economy--and public spending. There is no gap between the projected growth in the economy and in public spending. The figure for public spending is 2.5 per cent, which is the same as a neutral view of growth. In any case, there is a margin of error so that the fiscal rules will still work even if growth is only 2.25 per cent.

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I ask him to look back at the Red Books of Conservative governments over the 1990s, when the forecasts for growth and income from taxes were grossly exaggerated year after year.

The noble Lord described this as a comprehensive taxing review. We shall come on to taxing in due course. He did not notice that we have stopped using the word "comprehensive".

The third question was what we were doing with the money. The noble Lord made a curious argument about the number of public sector jobs rising, citing in evidence the Wednesday Society supplement of the Guardian. He did not look in the Nursing Times, The Times Educational Supplement or any of the journals that advertise jobs for people in the front line of public services. If he looks at the real figures he will find, for example, that there are 5,000 more doctors than there were when we came to office and 10,000 more nurses. There are many more examples. If the party opposite seeks to make progress by revising the Parliament Act 1911, I do not think they can be taken seriously as economic critics.

The remarks of the noble Lord, Lord Taverne, were even more interesting. He argued that, because we accepted the Conservative spending plans not only in the first year, about which had no choice, but also in the second, that somehow represents what he called "stop-go" in public expenditure.

The noble Lord ought to look back at his own party's manifesto for the 1997 election. He ought to look at Liberal Democrat targets for public expenditure on education, health, policing and a whole series of public expenditure issues. What he will find, time after time, is that the Liberal Democratic Party is the party of low public spending. It ill becomes the Liberal Democratic Party now to complain when the prudent management of the economy shows that we can, within strict fiscal rules and without abandoning prudence in any way, surpass the objectives which the Liberal Democratic Party thought it proper to put before the people in May 1997.

8.50 p.m.

Lord Lipsey: My Lords, did my noble friend by any chance notice the opinion poll in the Economist, the Angus Reed poll, which indicated that voters in Britain, uniquely in the world, put higher public spending ahead of lower taxes in their list of priorities? Does he therefore agree that the Chancellor has today set out excellent terrain on which the Government can fight the next general election against an Opposition whose attitude to public services and public servants was so graphically displayed by the noble Lord, Lord Saatchi?

Lord McIntosh of Haringey: My Lords, it is not for me to go further than I have done in analysing the achievements and motives of noble Lords opposite. I respond to them only because they say these things and it is open to me to respond. I do not think that it is open to me to respond when my noble friend makes equally valid points. Certainly, the value of public service was

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allowed to decay very seriously over the past 20 years. We are seeking to restore it, and I believe that in these spending plans we have the means to do so.

Baroness Hogg: My Lords, I must offer an apology to the Minister, first, for interrupting him, and secondly, for missing the beginning of the Statement. I can assure him that I had read the Statement and indeed listened to it in another place.

Perhaps I may ask the Minister to elucidate a couple of points in this well-padded but in some ways uninformative document produced by the Treasury. Perhaps I may raise one point on which I gave the Minister notice. There is talk in the Statement, rightly, of increases in public expenditure. However, before turning to the statistical annex to the document and looking at what is actually happening as a result of this announcement in the year that is just beginning, I find that, so far as the Chancellor of the Exchequer is concerned, charity seems to begin at home. The only department whose expenditure is increasingly significantly in this year as a result of the plans set out in the Statement is the Chancellor's department. Will the noble Lord explain why that is the case?

A more general point on which I should be grateful for the noble Lord's explanation is the relative weight of the figures given today for real terms increases and for cash figures. We heard a great deal in the Statement about increases in real terms over a period of up to three years. In the document, however, figures are given in cash terms. Therefore, without wishing to labour the point, will the Minister say to which of those the Government are committed? This is particularly relevant, if I may give an example, when we look at the figures for defence. There is a great deal of talk in the Statement about the first real terms increase in defence spending. When we look in the document, we discover that the real terms increase averages 0.3 per cent over the next three years. If it is the cash numbers to which the Government are committed, it takes only a small variation in the rate of inflation over this period for this real terms increase to disappear. If on the other hand it is the real terms increase to which the Government are committed and they have moved away from a long period of cash budgeting, we should be told explicitly that these real terms increases are precisely what the Government are committed to.

When we come to the measurement of inflation in relation to all the increases, perhaps I may ask the Minister one more question. It relates to an Answer that he gave me recently at Question Time on how inflation is measured. I asked him why it was the case the new statistics commission had had excluded from its remit a consideration of the measures of inflation collected in relation to the retail prices index. His response was that when the commission was set up, he was sure that it would be able to look at whatever it wanted. I wonder whether he can confirm that to me, because the Treasury tells me otherwise.

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Finally, I rarely disagree with the noble Lord, Lord Lipsey, but he cast some aspersions on the attitude--

Lord Bach: My Lords, will the noble Baroness give way? I am sorry to interrupt her, but the convention is fairly clear. Comments and questions for no more than two or three minutes from each Back-Bencher is considered the norm--

Lord McIntosh of Haringey: If that.

Lord Bach: "If that", my Lords, as my noble friend with much more experience than I tells me. I wonder whether the noble Baroness would mind winding up her questions now.

Baroness Hogg: My Lords, I shall certainly do so, and I shall take up my point with the noble Lord, Lord Lipsey, later. I ask the Minister to have reference to the comment of the Secretary of State for Education on civil servants before casting aspersions elsewhere.

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