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Lord McIntosh of Haringey: My Lords, the noble Baroness did indeed, in the corridor a few minutes before I entered the Chamber and before I had a chance to check any figures, draw my attention to the figures for the Treasury. As she well knows, the Treasury is a very small organisation with well under 1,000 staff and very few capital assets. The expenditure under that heading is largely for the Inland Revenue and Customs and Excise. The test for that is surely how much it costs to collect each £1 or each £1 million of taxation or excise duty. I shall gladly write to the noble Baroness on the subject, but I think she will find that the cost of collection in those terms is not rising.

The noble Baroness asked whether the figures that I quoted are indeed real terms figures. Yes, they are. Every time that I said they were real terms figures, I referred to "real terms" in the light of forecast inflation. As the noble Baroness well knows, although her party does seem to be willing to admit it, inflation has been exceptionally stable over the past three years. While not giving any absolute assurance that it will continue to be stable, the policies of price stability appear to be working. So far as concerns the changeover from cash to resource accounting, we are still in the middle of it. These figures are presented in resource account terms. The noble Baroness will observe that resource expenditure and capital expenditure are separated out in the White Paper for each department. But there are still elements which it has not been possible to allocate as between capital and revenue, and those will fall into annually managed expenditure rather than departmental expenditure limits. It is the custom of this House that I should reply to only two questions, and I have done so.

Lord Ezra: My Lords, accordingly, perhaps I may put two questions to the noble Lord. First, I was amazed at his remark on the Liberal Democrat approach to public expenditure. I have spent a number of years in this House and throughout that period I

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have pressed very hard for increased expenditure on infrastructure. A basic theme of our thinking has been affordable increases in public expenditure. Perhaps the Minister will comment. Secondly, I should like to draw the Minister's attention to the difficulties that manufacturing industry presently faces, on which we shall have a short debate later. Will the noble Lord indicate what proportion of the extra expenditure announced today will be of direct benefit to manufacturing industry?

9 p.m.

Lord McIntosh of Haringey: My Lords, I do not claim to be an expert on the expenditure plans of the Liberal Democrats. If any noble Lords on those Benches look at their manifesto for May 1997, they will find that their expenditure targets fall below the plans which the Government have announced today. The noble Lord, Lord Ezra, is a doughty defender of tax and spend, and I admire him for that. He should look at his own publications first.

As regards manufacturing industry, a very useful and sensible question has been raised which will be answered by my noble friend Lord Sainsbury in a following debate. I say to the noble Lord that there is direct support for manufacturing industry in the White Paper. I gave the example of the promotion of the Small Business Service as evidence of that. Most of the things that we are doing for manufacturing industry do not occur here, but in the Budget which is concerned with taxes. The fact that we have among the lowest rates of corporation tax and 100 per cent capital allowance for investment in information technology, and so on, is evidence of that although those provisions do not appear in this Statement.

A whole range of government expenditure on education, health, transport and other things is for the benefit of manufacturing industry. If people are to be available to work in manufacturing industry and if the industries are to be successful, they have to have investment, particularly in education and training, provided for in the spending plans.

Baroness Gale: My Lords, I congratulate my noble friend the Minister on bringing such good news to the House tonight. Part of that good news was investment in education and in our children's future and the continuing crusade by the Government to lift children out of poverty. Those factors are very good news. I especially thank the Minister for bringing to the people of Wales the good news of the biggest increase in public spending in Wales. I was particularly pleased to hear about Objective 1 funding for Wales. Does the Minister agree that that funding will go to parts of North Wales, west Wales and in the Valley areas, in which I am particularly interested as I live in the Valleys? Does he agree that that is one of the most deprived areas in the country? Objective 1 money will be of great assistance. I am sure that this settlement will be warmly welcomed by the people of Wales.

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When they hear of it tonight and of Objective 1, there will be "Songs of Praise" to the Government from the people of the Valleys of Wales.

Lord McIntosh of Haringey: My Lords, I should have liked to hear that. It could not have come from anywhere better. My noble friend is right to draw attention to Objective 1 funding. We do not ourselves determine that funding any more than we have determined Objectives 2 and 3 other than by putting forward a good case. The really significant point about the Statement--this is the first time that it has ever happened--is that we have guaranteed that we shall provide the matching funding from public funds to ensure that we do not lose any European funding. We shall cover the full forecast increase in structural fund receipts. That has been a bone of contention in the more deprived regions of our country for many years. Quite a change is being made here and I am glad that my noble friend recognises how important that is.

Lord Sheppard of Didgemere: My Lords, I find it difficult to comment on the quality of spend because, understandably, there are so many things still to come. I hope that the transport strategy to be announced on Thursday has some numbers attached to it. Even more important than numbers, I hope that there is some action in the strategy. We have had a great number of words in the past three years. I do not know what it is like in Wales, but the economy of London is really suffering. The business economy is suffering. The business community has stated quite clearly what we need. A great deal of the money can come from the private sector. Shall we hear fewer words on Thursday and have some action on solving some of our transport problems?

Lord McIntosh of Haringey: My Lords, the distinguished service of the noble Lord, Lord Sheppard, in promoting business in London is well known. It is outstanding. The whole country is grateful to him and his colleagues for it. I have not seen the transport plans. I do not know what the balance will be between words and figures. Taking this White Paper as an indicator of what is going to happen at inter-departmental level, I believe the prospects for a sensible, action-based, realistic series of transport plans to be announced on Thursday are rather good. The noble Lord, Lord Sheppard, and I will both have to wait and see.

Lord Desai: My Lords, at £1 billion a minute, perhaps I may ask my questions quickly. I join many others in welcoming the increase in DfID's expenditure. I welcome the fact that the Government have now met the target of 0.3 per cent of GDP for foreign aid. Can my noble friend assure me that that figure will be sustained for the future? In addition, I welcome the cross-departmental initiative in helping conflict resolution. Can my noble friend assure me that the Government will keep to that innovation?

Lord McIntosh of Haringey: My Lords, I thought that my noble friend was going to ask more than two

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questions. I should have had to deny him as I denied the noble Baroness, Lady Hogg. He was very restrained and I am grateful to him. We have announced today public expenditure figures for the years 2001 to 2004. There can never be any indication of what will happen after that. Even announcing the figures three years in advance is a very considerable improvement on what has been the habit of governments of all parties--this is not a party point--over many years.

My noble friend points out that we have achieved the first target that we set ourselves for international development and aid as a percentage of gross domestic product. I am sure that he and others will press for that to continue beyond the year 2004. I am sure that Clare Short will be very sympathetic towards that. I can confirm that in both cases the amounts of money which are to be allocated to international aid and conflict resolution will continue throughout the period of the spending review. That is as far as any government can ever go about future expenditure.

Lord Davies of Oldham: My Lords, does my noble friend agree that the characteristic feature of the proposals is the emphasis on investment? Is my noble friend aware of the contrast between that and the circumstances 20 years ago when the government were also well funded through increased oil revenues but used them to reduce taxation and not invest in the necessary services of the country?

Lord McIntosh of Haringey: My Lords, in a sense what is proposed for investment expenditure is an understatement rather than the reverse. What we now propose, and flagged up in the 1998 comprehensive spending review, is a doubling of public expenditure on investment as opposed to revenue. The changeover from cash to resource accounting makes it possible for the first time to identify investment and for investment expenditure to be amortised over the life of the assets created by investment. Beyond that, our success in encouraging the private finance initiative, and the only two large private/public partnerships for the London Underground and National Air Traffic Services, indicates that the total amount of investment in public projects, including public and private investment, will increase beyond the figures given in the White Paper.

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