HC Deb 19 June 1986 vol 99 cc1187-90
10. Mr. Winnick

asked the Chancellor of the Exchequer if he has any plans to review the Government's policy on the level of public spending on the Health Service, education and housing; and if he will make a statement.

11. Mr. Weetch

asked the Chancellor of the Exchequer if he has any plans to review Government policy over the level of public spending on health, education and housing; and if he will make a statement.

Mr. MacGregor

The level of all public spending programmes will be reviewed as usual in this year's public expenditure survey.

Mr. Winnick

Is the Minister aware that all the evidence shows that most people consider that the first priority should be more public spending on health, education and housing? They are right, of course. Do the outrageous remarks on council housing by the Minister for Information Technology represent Government policy, or were they just remarks of a Minister who wants to show himself to be a stupid clown?

Mr. MacGregor

I think that what people want are realistic and prudent public spending programmes, with the right priorities and value for every pound that is spent, and that is what the Government have been delivering. In two of the main areas that were picked out by the hon. Gentleman — education and health — he knows that expenditure per pupil on education has risen substantially in real terms under this Government, whereas it fell by 2 per cent. in real terms under the last Labour Government. Equally, we have devoted particular priority to health, where expenditure in real terms is up by 24 per cent.

Mr. Weetch

Is the Minister aware that the infrastructure in these three sectors is in a very poor state in various parts of the country? May I underline the fact that it is a better policy option to have significant expenditure in these three sectors than to reduce the standard rate of income tax to 25p?

Mr. MacGregor

The hon. Gentleman knows that in housing, for example, where he has particularly in mind the infrastructure, because of the very substantial and welcome switch to the provision of housing in the private sector, and through owner-occupation, we have cut down the amount of money that is involved in new council house building. The renovation programme has been increased substantially, in real terms, under this Government, which was a necessary and sensible priority. The hon. Gentleman will know that there are many people throughout the country who, rightly, strongly believe that the present level of direct taxation on people of average and below average incomes is still too high.

Mr. Ralph Howell

Does my right hon. Friend accept that one of the prime objectives of the Conservative Government in 1979 was to cut both taxation and public expenditure? May I draw his attention to the answer that he gave to me only a few days ago, which proves that public expenditure, in real terms, increased by 11 per cent. in 1984–85, and is forecast to be 8 per cent. above the 1979 level in 1985–86? Is this not proof that the Government have not succeeded in cutting public expenditure? May we have an assurance that they will do so in future?

Mr. MacGregor

I am sure that my hon. Friend will accept that, rather like steering an oil tanker, it takes a considerable time, once one has tried to change direction, for the results to show through. I am sure he will welcome the fact that, as a proportion of our gross national product, public expenditure is now at the 1978–79 level and is planned to come back almost to the levels of the 1960s.

Mr. McCrindle

Taking a slightly different point of view from that of my hon. Friend the Member for Norfolk, North (Mr. Howell), will my right hon. Friend accept that many of us welcome indications that desirable increases in the level of spending on health, housing and education may now be becoming progressively acceptable to the Government? Will he also accept that those who take that view in no way wish the Government to turn their back on tax cuts, but merely seek a desirable balance, in the belief that that is the wish of the majority of the population?

Mr. MacGregor

I believe that a desirable balance is what this Government have been achieving. We have managed to achieve reductions in direct taxation and to obtain higher real spending in the priority areas which we have chosen, which accord with those of my hon. Friend.

Mr. Hardy

Will the Minister try to keep in step with the Prime Minister? She has observed that in recent years Britain has moved toward private affluence and public squalor, illustrated by the litter-strewn conditions of most parts of Britain.

Mr. MacGregor

When the Prime Minister drew attention to the fact that there was too much litter around she was drawing attention to a phenomenon that has been common in Britain for many years. Many people share her view about the desirability of cleaning up areas to which she drew attention.

Mr. Galley

In view of my right hon. Friend's comments about balance, he may be able to accept that there are some sound arguments for very modest and carefully targeted increases in expenditure on hospitals, education and housing improvements. I say modest and carefully targeted. If he is able to accommodate any small increases in this year's public expenditure review, what will he do to ensure value for money and prevent additional resources going down the plughole of waste and rising pay, and ensure that they are used to provide better patient care, better educational standards and better housing stock?

Mr. MacGregor

In earlier exchanges I outlined my priorities for getting better value for money for every £1 spent. That applies just as much to the Health Service as elsewhere. This year, as a result of value-for-money drives, we expect to devote about £150 million of extra funds to patient care. I can assure my hon. Friend that value for money will continue to be an important part of my attitude towards public expenditure. He also spoke about the danger to public expenditure of excess pay, meaning that that could lead to reductions in service or reductions in capital programmes. That is a message that we shall constantly have to drive home. If too much of the planned public spending total goes away in excess pay, less money is available for other services.

Mr. Terry Davis

Is the Chief Secretary aware that his answers will bring no comfort to all the people who, while they are waiting for operations, see hospital wards being closed, and that they will being no comfort to teachers, parents, students and everyone else anxious about education? They will bring no comfort to all the people who are desperately trying to find somewhere to live, or are living in totally unsuitable accommodation. Will he now admit once and for all that it is possible to spend more money in ways that will not only improve those essential services for the benefit of the community as a whole, but will provide some jobs for some of the people who are unemployed?

Mr. MacGregor

The hon. Gentleman ought to be aware that, because of the priorities we have given to things like this, the waiting lists are down considerably compared to what they were when we came to power. The number of patients being treated is up considerably, by about 19 per cent. Considerable extra effort is going into the Health Service and the same applies to education. The hon. Gentleman drew attention to students. There are now 80,000 more students in higher education than there were seven years ago.

Mr. Dorrell

Will my right hon. Friend confirm that for the large majority of our people provision for health and education comes exclusively from the public sector? We on the Government side want to see health provision and education improved for all the people, and is it not a necessary consequence of that that we want to see efficient public expenditure improved in those areas?

Mr. MacGregor

I should have thought it was clear that the drive that we are making, especially in the Health Service, to get greater efficiency in public expenditure is being taken very much with that in mind.

Mr. Kennedy

When the Minister is reviewing the Government's public expenditure on the Health Service, will he take the opportunity this year to do something about the fraudulent mechanics by which the rate of inflation that is applied internally in the Health Service is not the rate of inflation that the Government use as a means of calculating the real level of their expenditure on the Health Service? The Government use RPI, but everyone knows that the internal Health Service inflation costs are significantly higher than that.

Mr. MacGregor

The hon. Gentleman may not recall the period in the 1970s when public expenditure was getting out of control. One reason for that was that it was always planned in volume terms. Planning in cash terms and using the GDP deflator as an indicator is an important ingredient of proper public expenditure control.