Commons Sitting of 24 February 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  SCOTLAND

    Nurses
    Dr. Reid: To ask the Secretary of State for Scotland how many nurses in Scotland have left the National Health Service in each of the last 10 years; and if he will express that number as a percentage of the total number employed in each of those years.
    The Secretary of State for Scotland (Mr. Malcolm Rifkind): The number of nursing staff in the NHS in Scotland increased from 53,000 to 63,250 whole-time equivalent over the last 10 years. Information about nurses leaving the service could be made available only at disproportionate cost.
    Dr. Reid: It is amazing that the Secretary of State does not know how many nurses leave the profession every year. It is estimated that, every year, 30,000 trained nurses leave the profession. Does the Secretary of State think that that is because morale is at rock bottom? Why are thousands of devoted health workers in Scotland taking further action today? Is it because, as his colleague the Minister with responsibility for health in Scotland pretends, they are all Militant clones, or because they care a damned sight more about the Health Service than do the Minister and his colleagues?
    Mr. Rifkind: First, with regard to morale in the Health Service, it is perhaps significant that when the Royal College of Nursing met my right hon. Friend the Minister for Health it did not raise the matter of morale among nurses. As the hon. Gentleman knows, many of those who leave the nursing profession leave temporarily or for personal or family reasons. It is surely significant that, under this Government, there has been a major increase in the number of nurses and that the real income of nurses in Scotland has increased by 30 per cent., whereas it fell by 21 per cent. in real terms under the Labour Government.
    Mr. Fairbairn: Will my right hon. and learned Friend note that today's day of action has nothing to do with soul baring by the nurses? It is a strike by NUPE, which is anxious to keep up its numbers and is unwilling to have competitive tendering. The whole purpose and thrust of the day of action is not to keep viable patients alive but to keep moribund unions alive.
    Mr. Rifkind: My hon. and learned Friend is quite right. It will be interesting to know the Opposition's view on the damage that is being done to patients in Scotland by the
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    industrial disruption that has been taking place over the past few weeks. For example, we understand that between 11 February and 23 February, in the Glasgow Royal infirmary and in Stobhill hospital, more than 330 operations were either postponed or cancelled as a result of industrial action; in Lanarkshire, more than 100 operations at Law and Strathclyde hospitals were postponed because of a 24-hour walk-out by non-nursing staff; and there were reports that more than 250 operations in Lothian were cancelled because of industrial action. It will be interesting to know whether Her Majesty's Opposition approve of the damage that is being done to patient care by industrial action of the kind that we are seeing.
    Mr. Ernie Ross: The Secretary of State will know that nurses, ancillary workers and manufacturing workers are on the cobbles today because of serious concern about the National Health Service in Scotland. What comment would he make to a staff nurse who earns £65 a week less than a policeman earns?
    Mr. Rifkind: The point that I would make to her is that her income has increased considerably under this Government, whereas it declined under the Labour Government. Those in the National Health Service who say that they are interested in the welfare of patients have a strange way of showing such interest if their actions result in operations being postponed or cancelled and the greatest discomfort to patients. If Opposition Members have the interests of patients at heart they should follow the lead of the Royal College of Nursing, which has never allowed grievances, real or imaginary, to result in harm to patients in Scotland or anywhere else. That is what real interest in the NHS is all about.
    Mr. Bill Walker: Does my right hon. and learned Friend agree that what has come through clearly in the dispute is that the real professionals—members of the Royal College of Nursing, who care about patients—attend to their duties, as they are doing today? It is important to recognise that patient care is what matters, and not the care of trade unions, as my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn) said.
    Mr. Rifkind: My hon. Friend is absolutely right. There has been a great deal of interest in waiting lists in Scotland over the past few weeks. It is significant that two things have happened with regard to waiting lists: first, that the Government have been able to make available an extra £3.6 million, which has reduced waiting lists; and, secondly, that industrial action by ancillary and other staff, which appears to be supported by Opposition Members, has led to the cancellation of hundreds of operations, which will undoubtedly add to waiting lists in the weeks and months to come.
    Dr. Moonie: Does the Secretary of State realise that the industrial action in Scotland today is due directly to his folly and incompetence and that of his ministerial colleagues and their failure to recognise the depth of feeling against the damage caused by the Government? Does he not realise the contribution that low pay makes to ill-health in Scotland? Will he, even at this late stage, change his mind and act to the benefit of Scotland, instead of to its detriment?
    Mr. Rifkind: The hon. Gentleman should understand the alleged purpose of today's industrial action. The trade unions have told us that it is not about low pay; it is about the Government's policy of competitive tendering. That is a means of ensuring that resources in the National Health Service will, so far as possible, be made available to help patients rather than anyone else.
    Mr. Kirkwood: Will the Secretary of State accept that, for my part, I do not believe that industrial action is appropriate at this stage? If he wants to do something about the morale of nurses and support the work of the Royal College of Nursing, he should consider the problems of recruiting nurses in future because of demographic changes. He could do much to help and raise the morale of nurses if he would tell us the Government's reaction to the Project 2,000 proposals and put extra resources into the clinical regrading and restructuring that is necessary. That would keep nurses in the profession and prevent problems about recruitment in future.
    Mr. Rifkind: I note the point that the hon. Gentleman made in the latter part of his question. Only a Liberal could analyse today's action on the basis that the Liberals were against industrial action at the present time.
    Mr. Neil Hamilton: Will my right hon. and learned Friend confirm that operations in Scotland are not being cancelled because of a shortage of nurses, but that they will be cancelled as a result of this politically motivated action by public sector unions with their snouts in the trough of taxpayers' money attempting to preserve their own privileges? Will he confirm that, because fewer than half the Scottish Labour Members are present today, the rest are on strike?
    Mr. Rifkind: My hon. Friend must not draw too many conclusions from that. During the debate on Ravenscraig and the steel industry yesterday, only the hon. Members for Glasgow, Garscadden (Mr. Dewar), for Motherwell, North (Dr. Reid) and for Motherwell, South (Dr. Bray) chose to be present during the opening speeches and for most of the debate.
    Mr. Harry Ewing: Is the Secretary of State proud of the fact that he is the only Secretary of State in the history of that great office to provoke the caring nursing profession into strike action? Is it only because he has now lost his own self-respect that he does not resign?
    Mr. Rifkind: I remind the hon. Gentleman that, far from the nursing profession being on strike, the Royal College of Nursing has reported that since the beginning of the present industrial action there has been a large influx of nurses into the Royal College of Nursing from other unions. That has happened on a larger scale in Scotland than in any other part of the United Kingdom.
    Mr. Dewar: Is there a Scottish Office Minister among the ministerial group set up by the Prime Minister to review the funding of the National Health Service? If not, why not? Will the Scottish Office be bound by any scheme dreamt up by the right hon. Lady in this important and sensitive area? The Opposition unanimously feel that the day of protest in Scotland today is fully justified—[Interruption.] It has been caused by the obstinacy of the Secretary of State, who insists on a policy of irrelevant privatisation, and by the continuing crisis over the funding of the Health Service. Does the right hon. and learned Gentleman accept that the Select Committee on Social
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    Services has calculated that a 2 per cent. increase in real terms in the Health Service budget is necessary for it to stand still? In the right hon. and learned Gentleman's commentary on public expenditure, published this month, he says that a 1 per cent. increase is necessary to stand still, yet the figure for the hospital and community service programme shows that that figure is not being reached. Is it true that, having set his own criteria, he has failed to meet them and that that is the reason for the justified discontent in the Health Service?
    Mr. Rifkind: I am glad that we now have that on record. The hon. Gentleman, with all the authority of the position that he holds in the Labour party, says that he and his colleagues are fully behind the disruption of the NHS. Presumably, they are accepting —[Interruption.] — full responsibility for the operations that are being postponed or cancelled as a result of that disruption. In the light of the hon. Gentleman's comments, I hope that in the weeks and months to come we will hear no more sanctimonious claptrap and synthetic concern from him about the length of waiting lists in Scotland and the problems of those who require operations under the NHS.

    Hospitals
    Mrs. Ray Michie: To ask the Secretary of State for Scotland how many new hospitals are to be built in Scotland within the next five years.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Forsyth): The current building programme includes 34 major developments providing 4,484 new beds. Of those, two are being commissioned, 11 are under construction and 21 are being planned. By the end of 1992 our continuing programme of hospital building will have enabled a further 15 of those schemes in planning to have been completed. This represents the biggest ever capital investment programme in the history of the National Health Service in Scotland.
    Mrs. Michie: Can the Minister tell me what has happened to Oban hospital? Is he aware that people in that area have been waiting for that hospital for well nigh 30 years? Back in the 1950s and 1960s money was promised for that hospital, but it was reallocated. A former Conservative Secretary of State, now Lord Campbell of Croy, promised that money in 1972. Indeed, one of the Minister's predecessors promised that money a year before the general election. We understand that the site for the hospital has not even been bought. I should be grateful if the Minister could tell me, so that I can tell the people of Oban, when the hospital is to be built.
    Mr. Forsyth: Approval was given for the new hospital at Oban in May 1986. It is now up to the Argyll and Clyde health board to progress the scheme to the next stage of planning. I should have thought that the hon. Lady would welcome the fact that we have announced our decision to build a new hospital at Campbelltown in her constituency at a cost of £4·2 million. She is right to point out the years that have gone by under successive Governments when neither of those hospitals progressed, but this Government have brought them to fruition.
    Mr. Douglas: Will the Minister with so-called responsibility for hospital building in Scotland reflect on his decision, announced today, about hospital building in Fife? The decision is tantamount to government by diktat.

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    Despite four years and more of appraisal by the Fife health board, which came down unanimously in favour of option C, the Minister has sought, by diktat, to reverse that decision. It appears that the Minister believes that he knows best. When the Minister assumed office, would it not have been better if he had sacked all the health boards of Scotland and said that his office had subsumed all responsibility for hospital building? At least that would have been honest.
    Mr. Forsyth: I am extremely surprised by the hon. Gentleman's remarks. He came to see me a matter of weeks ago and asked me to make a quick decision. Now he criticises us for having taken a decision that will result in a substantial improvement in hospital facilities in his constituency and in the rest of Fife.
    Mr. Buchanan-Smith: Does my hon. Friend accept that it does not necessarily make the best sense and use of resources for hospitals if, as in Grampian region, attempts are made to close viable and popular rural hospitals and to centralise? Will he ensure that that aspect is considered in relation to new hospital building?
    Mr. Forsyth: As I have said to my right hon. Friend on previous occasions, the proposals which Grampian health board has to consider regarding the rationalisation of maternity services will be subject to consultation. My right hon. and learned Friend and I will consider all arguments that are put forward, including those advanced by my right hon. Friend.

    Domestic Rates
    Mr. Worthington: To ask the Secretary of State for Scotland what estimates he has of the effect on the percentage increase in domestic rates in Scotland in 1988–89 of restricting the non-domestic rates increase to the annual inflation rate.
    The Minister of State, Scottish Office (Mr. Ian Lang): Non-domestic rates will not be indexed until domestic rates are abolished in 1989–90. Therefore, no such estimates have been made.
    Mr. Worthington: The Minister's answer does not surprise me. Roughly translated, it means that he cannot be bothered to work it out. Is the Minister aware that his attitude of studied indifference to the consequence of his policy resembles that of Marie Antoinette, because, in effect, he is saying, "Let them eat cake"—[Interruption.]
    Mr. Speaker: Order. Will the hon. Gentleman ask his question?
    Mr. Worthington: Does the Minister agree that in 1987–88 the average rate increase for Scotland was 13 per cent., and that if a poll tax had been in force and a business rate had been indexed at 4 per cent., the average poll tax increase across Scotland would have been 25 per cent.?
    Mr. Lang: I am anxious to help the hon. Gentleman, although it is a hypothetical and artificial calculation. If the new system were in place and if Strathclyde were to peg expenditure and increase the non-domestic rate by the rate of inflation, it would be able to reduce the community charge by about 5 per cent.
    Sir Hector Monro: Does my hon. Friend agree that the Opposition and the Convention of Scottish Local Authorities have created a scurrilous campaign on the
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    community charge and its effects on the non-domestic rate? Will he point out to the Opposition that the non-domestic rate, tied to a rate of increased inflation, will be of immense advantage to businesses in Scotland, because they can plan ahead knowing the maximum rate increase? That will be a tremendous advantage to the industrial future of Scotland.
    Mr. Lang: My hon. Friend is absolutely right. In the current year non-domestic rates rose by 15 per cent. when inflation was at about 4 per cent. That illustrates the extra burden that the non-domestic sector has had to bear. It is important to keep down non-domestic rates, in order to preserve jobs.
    Mr. Andrew Welsh: Will the Government impose the uniform business rate system throughout the United Kingdom in 1990, or will it be applied only to Scotland as most people suppose? Is the Minister aware that the present unfair disadvantage to Scottish businesses through the rating system in commercial and financial terms compared with England will be mild compared with the problems posed for Scottish businesses if the UBR is implemented only in Scotland and not throughout the United Kingdom?
    Mr. Lang: The hon. Gentleman has got it the wrong way round. The uniform business rate is coming in south of the border in 1990. Until we are able to harmonise the practice and the law on valuation between England and Wales and Scotland, it will be impossible to contemplate any move towards a national United Kingdom rate. In the meantime, index-linking gives excellent protection to the non-domestic sector.
    Mr. Allan Stewart: Does my hon. Friend agree that in a year when the Government are increasing aggregate Exchequer grant by more than 8 per cent. there is no justification for any local authority increasing the rate above the rate of inflation? My hon. Friend said that there were considerable advantages to business men from index-linking. Will he comment on the rumour that the discussions between the Scottish Assessors' Association and the Inland Revenue valuers—[Interruption.]
    Mr. Speaker: Order. I cannot hear what the hon. Member is saying.
    Mr. Stewart: Will my hon. Friend comment on the rumour that the talks between the Scottish Assessors' Association and the Inland Revenue valuers are not progressing without difficulties? Does he agree that it is essential that those talks should be completed before revaluation north and south of the border in 1990?
    Mr. Lang: My hon. Friend is alsolutely right about the 1988–89 RSG settlement. There was an increase of 8·2 per cent., which was well above the rate of inflation. It was based on local authorities' own budgets for 1987–88, inflation and allowances for other factors. The talks between the Scottish Assessors' Association and the Inland Revenue are making progress, but the issues on which they are engaged are complex and it would be a mistake to rush the talks.
    Mr. Maxton: Following the question of the hon. Member for Angus, East (Mr. Welsh), what assessment have the Government made of the damage that will be done to Scottish industry by a uniform business rate operating in England and Wales for several years before

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    it operates in Scotland? When they finally introduce a scheme for Scotland, will it be linked into the United Kingdom scheme, so that there is one United Kingdom scheme and one uniform business rate across the whole United Kingdom, or will it be a separate Scottish UBR?
    Mr. Lang: A separate Scottish UBR is not part of our programme. It is impossible to make firm estimates of the effect of what goes on south of the border until after the 1990 revaluation. It is important that local authorities should control their expenditure because high and growing local authority expenditure has greatly damaged the business sector in the past.

    Cervical Cancer
    Mr. Wray: To ask the Secretary of State for Scotland what are the figures for deaths in Scotland caused by cervical cancer for each year since 1975.
    Mr. Michael Forsyth: The figure for 1975 was 244 and for 1986 it was 199. I shall arrange for the details to appear in the Official Report.
    Mr. Wray: Does the Minister agree that the Government have a deplorable record in dealing with this disease? They have allowed it to manifest itself, and their proposed scheme to provide a smear test for women between the ages of 20 and 65 over a five-year period is absolutely useless. It is time that they showed some compassion for the 2,000 needless deaths in the United Kingdom and the 200 deaths each year in Scotland since they have been in Government. They should support a scheme and spend the additional £20 million needed, bearing in mind the £5 billion that they spent on defeating the miners.
    Mr. Forsyth: I am sure that Professor Strong and the other professionals who drew up the report on which we set up our screening for cervical cancer will be interested to hear the hon. Gentleman's views on the validity of their work. The Government have established a call and recall system for all women between the ages of 20 and 60 in Scotland, and it will be operational by the end of this year. I note the criticism that the hon. Gentleman makes of previous Governments for having taken no initiative in this direction.
    Mrs. Fyfe: Does the Minister agree that a five-year span is inadequate? Is he aware that widespread opinion is that three years is a proper length of time between tests and that, if the Government were less insufferably complacent about spending on the NHS, that could easily be arranged?
    Mr. Forsyth: I am grateful to the hon. Lady for pointing out that the Government opted for five rather than for three years. The reason is that 90 per cent. of deaths caused by cervical cancer are among women who have not been screened. We took the view that it was important to set up an effective call and recall system and to have the software in place, rather than to choose an over-ambitious recall period. We shall examine the length of time in the light of circumstances. I should have thought that the hon. Lady would have the grace to acknowledge that the Government have made considerable progress in this area.
    The following is the information:
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    Deaths in Scotland caused by cervical cancer:

    Number

    1975

    244

    1976

    214

    1977

    225

    1978

    203

    1979

    224

    1980

    187

    1981

    201

    1982

    208

    1983

    213

    1984

    227

    1985

    214

    1986

    199

    Farmers
    Mr. Malcolm Bruce: To ask the Secretary of State for Scotland when he last met the executive of the Aberdeen and Kincardine branch of the Scottish National Farmers Union to discuss the problems facing farmers in north-east Scotland.
    Mr. Michael Forsyth: My noble Friend the Minister of State met representatives of the Aberdeen and Kincardine branch on 12 November 1987.
    Mr. Bruce: Does the Minister recognise that the state of the agriculture industry in the north-east of Scotland is in particular difficulties and extraordinary circumstances? Does he acknowledge that particularly in the pig-rearing sector, which accounts for half of Scotland, the Government's failure so far to introduce a devaluation of the green pound or an adjustment in monetary compensatory amounts is causing genuine anxiety? What assurance can he give that the Government will press for an early and substantial devaluation?
    Mr. Forsyth: The Government are well aware of the strong feeling among farmers about the green pound, and we shall certainly take that into account when we consider the extent of any green pound devaluation to be negotiated in the context of the annual Community price-fixing negotiations later this spring. I am sure the hon. Gentleman is aware that the devaluation that the United Kingdom secured under the 1987 price fixing substantially improved our competitive position in relation to our main competitors.
    Mrs. Margaret Ewing: Has the Minister had an opportunity to study the excellent document produced by Dr. Dalton in November 1987, which outlined the critical position of farmers, especially in the north-east of Scotland? How can we take any encouragement from his reply when Scottish Office Ministers do not attend our debates on agriculture, when Opposition Members argue strongly for support for that vital industry, which, in Grampian region, is responsible for 30 per cent. of the region's total output?
    Mr. Forsyth: I am surprised at the tone of the hon. Lady's question. Surely she is aware of the initiative that was taken by my noble Friend in consultation with the National Farmers Union of Scotland? They have established a short-term joint counselling initiative to offer advice to farmers who are experiencing financial difficulties. The initiative involved not only the Department and the SNFU, but the Scottish agricultural colleges and the Scottish clearing banks. It is now well

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    under way. I am not certain what the hon. Lady meant by her criticism about Ministers attending debates, but perhaps we can settle that later.
    Mr. Andy Stewart: On behalf of my relatives, who are all farmers in Scotland, may I ask my hon. Friend to tell the House by how much the Government have increased expenditure on agriculture in Scotland during the past five years?
    Mr. Forsyth: I shall write to my hon. Friend.

    Forestry
    Mr. Hardy: To ask the Secretary of State for Scotland what action he is taking to amend forestry policy in regard to the protection of areas of ecological importance, and in particular the flow country of Caithness and Sutherland.
    Mr. Rifkind: I refer the hon. Gentleman to the statement that I made to the House on 25 January, by way of a written answer, covering the protection of areas of ecological importance in the peatland of Caithness and Sutherland.
    Mr. Hardy: Does the Secretary of State accept that Britain's conservation bodies, whether public or private, remain deeply concerned about the damaging scale of blanket afforestation in those areas, which seems likely to continue? Does he accept that the local, national and international interest suggests that greater priority should be given to the ecological importance of those areas, rather than to maintaining tax regimes which may assist a few people of celebrated importance?
    Mr. Rifkind: I advise the hon. Gentleman that the Government attach importance to the ecological significance of the flow country of Caithness, which is precisely why we made the announcement that we did. The policy that we announced was welcomed by the Nature Conservancy Council, but it is significant that it was welcomed also by Highland regional council and the Highlands and Islands Development Board. We seek to achieve two legitimate objectives: to meet the ecological criteria, which we have done on a scientific basis, and, at the same time, to take account of the livelihood of those who live in that part of Scotland and who have a legitimate interest with regard to their livelihood and the work opportunities that are available to them.
    Mr. Macdonald: With regard to the relationship between ecological forms of land use and forestry, does the Secretary of State accept that crofting is one of the most environmentally sensitive forms of land use? How can he justify taxpayers' money being given hand over fist to speculators who, frequently, are not resident in the Highlands and Islands, to engage in commercial forestry, whereas crofters are excluded from such access to commercial forestry? When will he progress from expressions of high sympathy for the crofters to doing something about that situation?
    Mr. Rifkind: The opportunities that are available to crofters are similar to those that are available to, for example, tenant farmers elsewhere in Scotland. The hon. Gentleman will appreciate that his tax question is a matter for my right hon. Friend the Chancellor of the Exchequer.
    Sir Russell Johnston: Is the Secretary of State aware that I very much welcome the answer that he gave to the
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    hon. Member for Wentworth (Mr. Hardy), that we in the Highlands must consider not only ecological protection, but work and jobs. In return for that generosity, given that there are only five Conservative Members of Parliament present who represent Scottish constituencies, will the right hon. and learned Gentleman assure us that he might find some way of keeping quiet the raucous invasion from south of the border?
    Mr. Rifkind: Whether in the Highland region or other rural areas, it is always essential to take into account the legitimate needs of the local community and the wider economic importance of forestry in Scotland. For example, we would not be able to have the major £250 million investment in a papermill at Irvine but for the availability of spruce in Scotland to service the requirements of that factory. We need to achieve a proper balance, and the announcement that we made in January, which has been welcomed by the Nature Conservancy Council, shows that we have achieved what many might have thought impossible — the reconciliation of those two interests in a constructive way.
    Sir Hector Monro: Does my right hon. and learned Friend accept that 100 per cent. of the Conservative party is here and there is present a miserable percentage of the Liberal party, mixed, and all at odds with each other, anyhow? Does my right hon. and learned Friend agree that his announcement last month was an acceptable compromise in the interests of all concerned, the Nature Conservancy Council, the sites of special scientific interest and the Highlands regional council, and aimed at creating employment? In addition to those important aspects, will my right hon. and learned Friend also bear in mind that, in the general context of the whole of Scotland, the most important issue is the beauty of the land, and we do not want too much blanket afforestation keeping away tourists and others who want to see Scotland as it really is?
    Mr. Rifkind: I entirely agree with my hon. Friend. The Forestry Commission is to be commended on showing much greater sensitivity to those objectives in recent years. For example, it has insisted on broadleaved planting as part of a more general planting. There may still be improvements that can be made, but most objective commentators would accept that the Forestry Commission, and, indeed, those in the private sector involved in planting, have taken far greater account of environmental considerations in recent years than used to be the case.
    Mr. Home Robertson: Is the Secretary of State aware that we, for our part, would strongly support the properly planned expansion of forestry in Scotland, but will he come clean about the position of the Scottish Office on the grotesque development of blanket tax incentives for blanket afforestation? Is he aware that, for once, his hon. Friend the Member for Stirling (Mr. Forsyth) was right when he told the House of Commons, in an Adjournment debate on 26 January 1987, that a new generation of absentee landlords was exploiting that tax shelter? Will he, just this once, listen to his hon. Friend and acknowledge that those tax incentives should be drastically overhauled before any more damage is done to the Scottish countryside or to the reputation of the forestry industry?
    Mr. Rifkind: I acknowledge that the hon. Gentleman can speak better on behalf of absentee landlords than most

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    of us, but fiscal matters are for my right hon. Friend the Chancellor of the Exchequer. If we, like the Opposition, wish to see a proper planting programme and the benefits to the Scottish economy that forestry represents, we must ensure that whatever system exists there will be a proper planting programme and a proper availability to the wood pulp and other comparable industries of the raw materials that they require.

    Public Expenditure
    Mr. Kirkwood: To ask the Secretary of State for Scotland if he will place in the Library a copy of his commentary on Scottish public expenditure; and if he will make a statement.
    Mr. Rifkind: Copies of the Scottish Commentary were placed in the Library on Wednesday 17 February.
    Mr. Kirkwood: Will the Secretary of State confirm that there are no assumptions in the commentary dealing with the pay increases or other allowances that are expected in the fiscal year 1988–89? Does he accept that that makes it difficult for health boards, for example, to plan next year's finances, particularly when there is no reference to any special allowance for nurses' pay review awards? Will the Secretary of State undertake to use his influence within the Government to ensure that, whatever the review body recommends, once the Government have taken a decision and made an award they will fully fund it, so that the local health boards in Scotland will not have to use their own resources to meet in part the pay review award?
    Mr. Rifkind: The Government have an excellent record on implementing the recommendations of pay review bodies. Obviously, I cannot anticipate what the pay review body will say. We shall have to consider that at the time on the basis of the criteria normally applied.
    Mr. Hayward: Will my right hon. and learned Friend confirm that expenditure next year on health in Scotland is to increase by £225 million, or 8.6 per cent., and that that will contribute to the preparation for the replacement of the acute hospital at Ayr?
    Mr. Rifkind: Yes, my hon. Friend is absolutely correct. The Health Service is in fine fettle in Scotland. That might explain why the industrial action today is not about the resources of the Health Services, but is about this controversy over competitive tendering.
    Mr. O'Neill: Will the Secretary of State take account of the amount of public expenditure which has been put into the Castlebridge mine, which is in my constituency and forms part of the Longannet complex, whose future is endangered by the foolhardy programme of tendering for importing foreign coal? Does he agree that the flexible attitude adopted by British Coal and by the local mineworkers union in that area suggests that that investment should have a long-term future and should not be endangered by short-term rushes towards privatisation of the South of Scotland Electricity Board?
    Mr. Rifkind: Naturally, we hope that the difference of view between the SSEB and British Coal will be resolved amicably, but the hon. Gentleman should appreciate the difficulties for all parties involved. There are difficulties for British Coal, for reasons with which the hon. Gentleman will be familiar, and for the SSEB, which has an obligation to its consumers, particularly its industrial
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    consumers. The House is anxious that Scottish industry should be as competitive as possible and that Ravenscraig should not be put at a disadvantage. The hon. Gentleman must know that Ravenscraig, which is the largest user of Scottish electricity, clearly has an enormous interest in tariffs in Scotland being as low as possible. The SSEB must also take that factor into account.
    Mr. Harris: Just in case anyone outside the House might be tempted to take seriously the latest manifestation this afternoon of whining and whingeing by Opposition Members from Scotland, will my right hon. and learned Friend confirm that public expenditure per head in Scotland is, on average, higher than in England? Will he also confirm that spending on the Health Service amounts to £454 per head in Scotland, compared with £365 per head in England?
    Mr. Rifkind: The level of Health Service expenditure in Scotland is determined by the Secretary of State from within the overall block available to him. It has been the practice of successive Secretaries of State to take into account the particular health requirements of Scotland and to make generous provision for health expenditure. A further £225 million will be available for that purpose next year.
    Mr. Dewar: Does the Secretary of State accept that there are few signs of an amicable resolution of the coal dispute and that there is genuinely widespread disappointment at the negative stance taken by the Scottish Office on that matter? As the Secretary of State has a statutory responsibility for electricity supply, is he satisfied that it is in the public interest to substitute foreign imported coal for that produced domestically? If that occurs, what impact will it have on jobs and on stability of supply? Does he recall that, in a widely published speech last Friday to the CBI in Scotland, he listed coal as one of the group of important industries providing vital jobs? Does he not think it important to stop the hands-off negative approach and to do something to protect those jobs?
    Mr. Rifkind: The hon. Gentleman must address himself to the difficult problems that must be resolved. He has not expressed any view today about the implications for consumers, including industry in Scotland. Last night he spoke eloquently about his devotion to the interests of the steel industry in Scotland. He must know that the most crucial question affecting industry is the cost of the power that it uses. When the Electricity Board and British Coal have certain interests in common, and certain differences of view, it is much more sensible to allow those two boards to come to a conclusion as to what is required than for the Government to interfere in what is ultimately a matter to be determined by those involved in the industry.

    Council House Sales
    Mr. Forth: To ask the Secretary of State for Scotland what were the numbers of applications to buy public sector housing during 1987; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): Returns made to my Department show that about 39,000 applications to purchase public sector houses were made during 1987. This continuing high level of applications is making a major and welcome contribution to diversifying ownership of housing in Scotland.
    Mr. Forth: I thank my hon. Friend and welcome those figures. Will he tell the House what is the rate of owner-occupation in Scotland? Is he satisfied with the rate of progress being made in that direction, and does he think that the excessively low level of council house rents in Scotland is perhaps a disincentive to people to consider buying their council houses?
    Lord James Douglas-Hamilton: Council house rents have risen considerably, although they are still much lower than those in England. Sales have been running at an extremely high level. Now, 10·3 per cent. of public sector house stock has been sold since 1979 and about 107,000 public sector tenants have purchased their homes. We have now reached the stage where fewer than half of all homes in Scotland a re rented from the public sector. We can justly call that a Scottish success story.
    Mr. Graham: Why do the Government have double standards? Is the Minister aware that a Ministry of Defence worker in my constituency who applied to purchase his house was denied the 49 per cent. discount that he would have received on a council house, and received a discount of only 30 per cent.?
    Lord James Douglas-Hamilton: There are certain exclusions. This is a matter primarily for the Ministry of Defence. The same also applies to certain police houses. There are exemptions on certain grounds, but, overall, we are very much in favour of the right to buy and we wish to extend it wherever possible.
    Mr. Bill Walker: Does my hon. Friend agree that the figures that he has given on the sale of council houses last year and before show clearly that the Opposition, who fought the 1980 Bill tooth and nail, do not care, in the same way as they do not care about patient care? Does my hon. Friend further agree that our policies will continue to produce the results?
    Lord James Douglas-Hamilton: It will always be remembered that the Bill that we introduced was called the Tenants' Rights, Etc. (Scotland) Bill. That was to the credit of my right hon. and learned Friend the present Secretary of State.

    Education (Strathclyde)
    Mr. Michael J. Martin: To ask the Secretary of State for Scotland what steps he is taking to improve education facilities in Strathclyde; and if he will make a statement.
    Mr. Michael Forsyth: The provision and improvement of education facilities in Strathclyde is primarily a matter for the regional council, taking account of available resources and, where, appropriate, the wishes of parents.
    Mr. Martin: The Minister and the Prime Minister intervened in the proposed closure of Paisley grammar school. I do not begrudge that school remaining open, but the hon. Gentleman must know that in my constituency, Colston, Rosemount, St. Bede's and St. Rock's are all supported wholeheartedly by the parents, who want to keep them open. Why is the Minister making flesh of some schools and fowl of others? Why is he not prepared to intervene to help out those schools?
    Mr. Forsyth: The hon. Gentleman mentioned schools in his constituency. He will know that St. Bede's is a denominational school, and the case may come to my right
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    hon. and learned Friend for his consideration. I have already answered a question by the hon. Gentleman on that subject. As for non-denominational schools, where travelling distances are not excessive, and where the schools operate at less than 80 per cent. capacity, it is entirely a matter for Strathclyde regional council, with which I should have thought the hon. Gentleman had some influence.
    Mr. Allan Stewart: Is my hon. Friend aware of the volume of correspondence that I am receiving from parents in Strathclyde, who want the Government to give them the chance to consider whether to opt out of the Strathclyde regional council system? Why is my hon. Friend so reluctant to move on the matter? Is he further aware that all parents, pupils and ratepayers in Strathclyde have a right to reasonable decision-making? Is it not a disgrace and an outrage that today Strathclyde regional council will be adjourned because Labour members are too indolent to attend, as they wish to wave NUPE banners rather than do the job for which they were elected?
    Mr. Forsyth: The events of today and recent months, and the conduct of their elected representatives, will give the people of Strathclyde something to think about. With regard to opting out, my right hon. and learned Friend the Secretary of State has said that we will consider any arguments that are put forward in Committee on the Bill, but my hon. Friend will recognise that we have no history of school boards or parental involvement in schools in Scotland—
    Mr. Forth: It is time that my hon. Friend had some.
    Mr. Forsyth: I say to my hon. Friend, who intervenes from a sedentory position, that the forthcoming Bill will give Scotland an opportunity to make progress on that matter.
    Mr. Buchan: Has the Minister read the devastating document issued by the Joint Committee on Statutory Instruments condemning his squalid set of regulations? It said that the regulations were illegal in the sense that they did not comply with the Act, and that they were defective in the sense that they could not be corrected or understood. Should he not apologise for his part in the squalid conspiracy that led to the sequence of events, withdraw the regulations and have an early debate on the behaviour of himself in going over the head of the Secretary of State, in alliance with the Prime Minister, and his intervention in the proper, legal behaviour of Strathclyde regional council?
    Mr. Forsyth: As the hon. Gentleman knows, there will be an opportunity to debate the regulations. His account of the criticism of the regulations is somewhat exaggerated. The House will have a proper opportunity to consider the matter. The validity of the regulations is not in doubt. I imagine that the people of Paisley must be astonished to be represented by a Member of Parliament who has campaigned so hard to prevent one of the most successful schools in his area having an opportunity, should Strathclyde decide to close it, to have the decision reviewed by the Secretary of State.
    Mr. John Marshall: Will my hon. Friend comment on the schizophrenia of Opposition Members? The hon. Member for Glasgow, Springburn (Mr. Martin) asked for Government intervention, and the hon. Member for Paisley, South (Mr. Buchan) objects to Government

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    intervention. Will my hon. Friend comment on the fact that Strathclyde regional council has the worst record in education of any of the Scottish regional councils? Is he happy that one pupil in four leaves Strathclyde schools without any qualification, a record basically equivalent to that of ILEA? Does he believe that the same treatment would be suitable for Strathclyde as is being accorded to ILEA?
    Mr. Forsyth: My hon. Friend is right to point to the problems in Strathclyde. I understand that management consultants have been called in to help sort them out. As to the paradox that he identifies, it is a paradox that Labour Members are in favour of no Government intervention to save popular schools from closure, but call for Government intervention to keep open schools which are half empty and which parents do not support.
    Mr. Norman Hogg: Is it not the case that the Joint Committee on Statutory Instruments has revealed that the Government's instrument concerning school closures is ambiguous, badly drafted and in breach of the rules and protocols of the House? Does he not accept that the heavy-handed diktat which he has applied in this case has created a shambles? Is it not time to call a halt and to withdraw the regulations so that the confusion which surrounds the matter can be clarified?
    Mr. Forsyth: The criticism of the regulations was that we had not observed the 21-day rule. We did not observe it for the reason which we explained, which was that the region should know the position. As to the regulations being unclear about who decides, it is clear from the context of the main regulations and the parent Act that it is up to the local authority to decide whether it must refer a case to the Secretary of State. I am sure that the people of Scotland will note that the hon. Gentleman, the official spokesman for the Labour party on education in Scotland, does not want the parents of Strathclyde to have the opportunity, should Strathclyde decide to proceed with closure, to have that decision reviewed.
    Mr. Buchan: On a point of order, Mr. Speaker. In view of the grossly inadequate nature of that reply, I give notice that I shall raise the matter on the Adjournment. [Interruption.]
    Mr. Speaker: Order. It is perfectly in order for the hon. Gentleman to do that.

    Horse Sales
    Mr. Harry Greenway: To ask the Secretary of State for Scotland what steps he is taking to implement in Scotland the recommendations of the Farm Animal Welfare Council on conditions at horse markets and sales; and if he will make a statement.
    Mr. Michael Forsyth: The Government's response to the council's report on the welfare of livestock at markets, announced in October last year, accepted that legislation should be introduced to cover horse markets and other sales. Proposals for a new order and code of practice to apply throughout Great Britain are now being prepared.
    Mr. Greenway: Is my hon. Friend aware that the standards for cattle markets and sales are much higher than those for horses and ponies? As the Farm Animal Welfare Council has pointed out, those applying to horses and ponies are very unsatisfactory. Would my hon. Friend
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    and Scotland like to set an example and make the proposed voluntary code statutory, so that horses and ponies receive better treatment?
    Mr. Forsyth: I know of my hon. Friend's interest in the matter: indeed, he has a constituency interest. Our preference in general is to legislate only where there is a clear need for statutory safeguards. Guidance to those using and operating markets is, we feel, more a matter for codes of practice. However, the detailed proposals will be issued for consultation in the summer, and I am sure that my hon. Friend's arguments will be taken into consideration.
    Mr. Ron Brown: Was there not a lot of horse trading going on when Guinness took over Distillers, which was an illegal and corrupt act—
    Mr. Speaker: Order. That is the wrong sort of horse.

    Hospital Services
    Mr. Ernie Ross: To ask the Secretary of State for Scotland what responses he has had from health boards to his draft circular on the privatisation of hospital services; and how many were in favour.
    Mr. Rifkind: A letter of 11 December from the Scottish Home and Health Department set out the steps which boards are to take to test the cost-effectiveness of their support services by putting them out to tender. All boards have agreed to implement these instructions.
    Mr. Ross: The Secretary of State will know that in Scotland today 50,000 people—not only Health Service workers, but workers from the manufacturing sector, miners and dockers — are demonstrating against the Government's cynical refusal either to fund the nurses' pay award properly or to fund technological changes in hospitals—[Interruption.
    Mr. Speaker: Order, please.
    Mr. Ross: Those workers are on the streets because of the Government's cynical determination to ignore Select Committees of the House when they try to assist the Secretary of State, and the comments of his hon. Friend the Member for Stirling (Mr. Forsyth) last night implying that patient care was suffering due to the lack of emergency cover because of the current stoppages. The Government are determined not to fund the Health Service properly, either through salaries or through facilities required by technological change.
    Mr. Rifkind: I noted the hon. Gentleman's comment that those taking part in industrial action included people with no direct connection with the National Health Service. He might like to know—[Interruption.]
    Mr. Speaker: Order. Hon. Members must allow the Secretary of State to answer the question.
    Mr. Rifkind: The hon. Gentleman might like to know that I understand that there was also a demonstration outside the offices of the Scottish TUC, with a placard reading "Stop the strikes and not the operations". He may also have noted the rather quaint advertisement that appeared in The Scotsman yesterday from Edinburgh district council, which, under the slogan, "Improving services and creating jobs", informed the public that it would be a waste of time telephoning the council today because no one would be there to answer the telephones.
    Mr. Buchanan-Smith: Will my right hon. and learned Friend confirm again, in the hope that it may penetrate the deaf ears opposite, that any savings made through contracts going out — and indeed, any savings in efficiency — can be devoted by the health board to patient care in its area? Does not the Opposition's attitude show a callous disregard for the real concerns of patients? Will my right hon. and learned Friend make that clear to the public in Scotland and to others outside the House, even though, inside the House, the Opposition will not acknowledge it?
    Mr. Rifkind: My right hon. Friend is absolutely correct. NUPE and COHSE have shot themselves in the foot by the industrial action that they are promoting. It will be in the best interests of those in the in-house services in NHS hospitals if they believe that they are providing the best service at the least cost to the NHS. They will then have nothing to fear from competitive tendering. As long as Opposition Members help to forment industrial disputes in the NHS, they will have themselves to blame for the problems faced by the service.
    Mr. Lambie: What statutory powers does the Minister have to instruct members of health boards to put out contracts to privatise hospital services?
    Mr. Rifkind: Health boards, whether under this Government or any previous Government, are agents of Government, and it has always been the practice of health boards that they carry out the policy of the Government of the day.
    Mr. Allan Stewart: Does my right hon. and learned Friend agree that efficient workers have nothing to fear from competitive tendering? If the unions are as upset as they seem to be, must there not be an awful lot of inefficiency around?
    Mr. Rifkind: My hon. Friend is correct. As has been said on numerous occasions, every penny saved by competitive tendering goes directly towards reducing waiting lists and helping patients in the NHS. If the Labour party is opposed to competitive tendering, clearly it is opposed to concentrating help, wherever possible, on patient care.
    Mr. Norman Hogg: Is it not the case that the Secretary of State has no one to blame for today's events other than himself and his Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth)? These events have been brought about by his endeavours to thrust upon the health boards in Scotland his alien doctrines. Is it not also the case that what he is proposing has no support among the people in Scotland, and that public opinion stands four square behind those who are taking action to protect the NHS which he and his hon. Friends seem hell-bent on destroying?
    Mr. Rifkind: As competitive tendering in England has already resulted in the transfer of over £100 million to patient care in the NHS, why the hon. Gentleman should oppose comparable benefits for patients in Scotland he has yet to explain. The House and the people of Scotland will have heard the hon. Member say that the Labour party stands four square with those whose actions today are resulting in the postponement and cancellation of much-needed operations. They will pay attention to the comments of the Opposition in future.
    Mr. Harry Ewing: On a point of order, Mr. Speaker.
    Mr. Speaker: No, I will take it after the private notice question.

VAT (European Court Ruling)
3.31 pm
Mr. Nigel Spearing(by private notice): To ask the Chancellor of the Exchequer if he will make a statement concerning the decision of the European Court of Justice to require the Government of the United Kingdom to impose value added tax on certain categories of spectacles.
The Economic Secretary to the Treasury (Mr. Peter Lilley): As I told my hon. Friend the Member for Banbury (Mr. Baldry) yesterday, this ruling arises from the EC sixth directive on VAT, which was adopted in 1977. The Government will abide by the court's decision, but we need to study the judgment in detail—and consult interested trade bodies—before we can make any firm decisions about how to proceed. The United Kingdom has a treaty obligation to implement rulings from the European Court. Any amendment to United Kingdom law imposing taxation would have to be proposed to, and approved by, the House of Commons.
I want to make it clear that the court's decision has nothing whatever to do with the European Commission's proposals for the approximation of VAT rates. These are no more than proposals, and would require new legislation which could be adopted only with the unanimous consent of all member states. The Government have made it abundantly clear that we could not consent to proposals which deprived us of our right to apply zero rates.
Nor does this case have any bearing on the current infraction proceedings taken by the European Commission against the United Kingdom's zero rating of construction services, fuel and power and certain other goods. This concerns a different article of the sixth directive. The legal arguments are entirely different.
Mr. Spearing: Does the hon. Gentleman agree that this is the first occasion in over 300 years that any person or body has imposed a view on this House or the British Government concerning the taxation of our people? Therefore, are not this judgment and any resulting proposals of the Government of more constitutional importance than of health or financial importance, important though they be?
Secondly, in his answer yesterday in columns 140 and 141, the Minister said, as he has now, that the Government will ask the House to pass such legislation, even though it is against the will of both the Government and maybe of the House. If Parliament decides not to pass such legislation, it will be in breach of the treaty. What primary legislation will the House need to amend in order to avoid such an imposition?
Finally, the Minister may be correct in saying that the case that is pending on fuel and industrial building has no connection with the legal arguments, but does he agree that stemming from the sixth directive, the primary legislation and powers for such imposition also exist for those matters?
Mr. Lilley: The hon. Gentleman is correct to say that this raises constitutional issues, but he is not correct to say that it is unprecedented. He will recall that on an earlier occasion the British Government was obliged under the treaty of Rome, and as a result of a court ruling, to alter
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the balance of taxation between beer, wine and spirits. We are restricted in the laws that we can pass by the rulings that we have agreed with our partners in Europe.
The hon. Gentleman asked what primary legislation would have to be changed to free us from our obligations to enforce the rulings of the European Court. That would, of course, infringe the treaty of accession. Article 171 of the treaty of Rome requires us to adopt the rulings of the European Court of Justice.
Mr. Terence L. Higgins: Clearly, Britain must stand by its treaty obligations. However, if a court in this country makes a ruling on the scope of VAT which the House wishes to change, we have the power to do that. What mechanism exists for making such a change in the circumstances that my hon. Friend has outlined?
Mr. Lilley: My right hon. Friend is right to point out that the British Parliament can overrule decisions of British courts. If we wished to change decisions of European courts made under European directives, we should have to obtain the consent of our partners.
Mr. Ronnie Fearn: My concern is for the poorer people who claim benefit in our community. May we have an assurance that the extra charges that they will now have to foot will be met by extra allowances? Can the voucher system be revised so that that is catered for too?
Mr. Lilley: I can reassure the hon. Gentleman that the poorer members of society are already eligible to receive vouchers for spectacles. Of course, they receive hearing aids free if there is medical need for them. Consequently, they will not be affected by the decision in any way.
Mr. Teddy Taylor: Now that the Commission has found and taken advantage of this backdoor method of obliging the British Parliament to impose taxes that it does not want to impose, will my hon. Friend say whether we shall be obliged to levy VAT on gas, electricity, water, sewerage, protective clothing and footwear for industry and all new industrial and commercial buildings, at an estimated cost of £350 million a year, if the European Court makes a similar judgment in a few weeks' time?
Will my hon. Friend urge his legal colleagues to look into the Government's constant assertion that we have a long-time right of veto? Is it not true that under the Single European Act that right of veto lasts until 1992? If by that time we have not agreed to a uniform, harmonised method of VAT, the Commission will be perfectly entitled to go to the court and require us to impose VAT across the board because we have not fulfilled the conditions of the Single European Act.
Mr. Lilley: On the last point, I can reassure my hon. Friend, who has fought an honourable and long battle against the legal basis on which this decision has been taken, that there is no question of our freedom to impose zero rates being time-limited by 1992, or any other date.
I cannot agree with my hon. Friend that this ruling is a back-door method. It was carried out in open court, and the European Court considered the matter over a long period in a perfectly formal and normal way. Just as in this country our courts have to interpret the detailed application of our laws, in Europe the European Court of Justice has the responsibility for interpreting the detailed application of EC directives.

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There is no question of this ruling having a direct bearing on the entirely separate infraction case which is currently before the court and which has to do with zero rates on the goods and services that my hon. Friend listed. We still await that judgment. We have argued the United Kingdom's case vigorously and it will be some months before we know the court's ruling. The case will be separate and distinct, based on separate legal arguments and coming under a different part of the directive. Whatever ruling the court reaches, we have an obligation to enforce it in Britain. My hon. Friend is correct in that respect.
Mr. Peter Shore: This is a test case which clearly establishes the supremacy of the European Court and European institutions over this sovereign Parliament, or what was a sovereign Parliament. Is not the Minister's reaction wholly inappropriate? He is trying to pretend that this is not a major judgment and a major change in our expectations. Ought he not now to be looking at the treaty of accession and the European Communities Act 1972 under which we consented to join the European Community so that he can identify amendments which would give us a remedy for external tax impositions?
Mr. Lilley: I am sure that the powers exercised by the European Court came as no surprise to the right hon. Member, who during the referendum warned, as he saw it, the country against accepting these powers. He is right to say that fundamental changes amounting to an ending of our membership of the European Community would be required to exempt us from the powers of the European Court when interpreting the laws of the European Community.
Mr. Hugh Dykes: Will my hon. Friend dismiss with contempt the hysteria of the last of the anti-EEC Mohicans who remain the the Chamber? Has he seen the remarkable leader in today's Evening Standard, which is not known for its passionate European views, which states:
"Britain has much to gain and nothing to lose from bringing her indirect taxes into line with Europe."?
Mr. Lilley: I read most of the newspapers, but I have not read the Evening Standard today, so I will not comment on that article.
I shall not dismiss with contempt the views of my right hon. and hon. Friends or of Opposition Members who have honourably opposed our membership of the European Community. They are free to do so. They have rightly drawn attention to the fact that some of the consequences of our membership are displayed in this ruling.
Mr. Win Griffiths: Will the Minister place in the Library a copy of the arguments that were deployed before the European Court of Justice, so that we can see whether there is any truth in the reports in some papers that the problem lies with the way in which the Government have reduced support for the National Health Service in the provision of spectacles so that spectacles were no longer regarded as being provided in the NHS but as medical supplies which the public were able to buy?
Mr. Lilley: I am happy to place in the Library the ruling of the European Court, and the hon. Gentleman will see that his allegations are entirely without foundation. The matter is not even mentioned in the ruling by the court.
Mr. Robin Maxwell-Hyslop: I congratulate my hon. Friend on quoting the precedent of the cider and beer tax ruling as against wine, and remind him that the whole point of the Government's response was that, instead of increasing the tax on beer and cider, they agreed to a loss of revenue by decreasing the tax on wine. On that precedent, which he voluntarily quoted, will he now do away with any National Health Service charges for spectacles and testing which would be subject to VAT under this direction, on the exact precedent which he has quoted?
Mr. Lilley: My hon. Friend will be pleased to be reminded that people who are in receipt of vouchers, who constitute about one quarter of those for whom spectacles are prescribed and dispensed, will not be affected by the ruling in any way, so there is no reason to do as he suggests.
Mr. Michael Foot: As the Minister seemed to approve the suggestion that the Government's attitude is supported by one newspaper, can he give us an absolute assurance that we shall not have, by any similar method, the imposition of VAT on books or newspapers?
Mr. Lilley: I can give the right hon. Gentleman the assurance that I did not place any weight on the newspaper article, which I had not read. In so far as the right hon. Gentleman's question concerns matters which are properly for the judgment of my right hon. Friend the Chancellor of the Exchequer, I shall leave it to him.
Sir Peter Emery: Although it may be implied from his answer, will my hon. Friend reinforce the Prime Minister's assurance that VAT will not be placed on food?
Mr. Lilley: I can certainly assure my hon. Friend to that effect. It is in no way connected to our right to retain zero rating on all such goods and services, including food, as we promised at the election.
Mr. Bob Cryer: Will the Minister confirm that our obligations under the treaty of Rome restrict the rights of the United Kingdom Parliament? Therefore, is not the Government's only option to introduce legislation into the House of Commons to repeal section 2 of the European Communities Act 1972? That Act places on the United Kingdom the obligation of imposing additional value added tax and other charges. Is it not important that the Government introduce appropriate legislation? As the Minister said, the charge is not unprecedented. It is irrelevant whether legal arguments are different. Other charges in the pipeline are to be imposed by the Common Market on our country. The majority of people are determined that we should leave the Common Market in the not-too-distant future.
Mr. Lilley: The hon. Gentleman is probably right to point to the legislative route that will be necessary to undo the ruling. I remind him that the directive that is now being implemented and determined by the European Court of Justice was unanimously adopted by member states of the EEC in 1977, and therefore was wholeheartedly supported by the Labour Government of the day.
Mr. William Cash: Does my hon. Friend agree that the rhetoric of Opposition Members is empty and vacuous? They have failed to take account of the point that my hon. Friend has just made. In 1977, they failed to exercise the veto that led to the requirement being imposed upon Parliament. Will he reiterate the point that the Government have not the slightest intention of adopting a provision of the kind that was put up by Lord Cockfield in the Commission, which is unaccountable and unelected?
Mr. Lilley: My hon. Friend is quite right. We have no intention of accepting proposals that would deprive us of the right to retain zero rates. He was right also to point out to the House the contradiction in Opposition Members' views. They originally supported the directive, the consequences of which they now oppose.
Mr. Max Madden: Does the Economic Secretary agree with the view that was recently expressed by Lord Cockfield to the Select Committee, to the effect that no member state of the EEC has the right to veto the introduction of VAT within that member state, but has a right only in respect of the rate of VAT charged?
Mr. Lilley: Lord Cockfield pointed out to the Committee that the treaty states that member states shall unanimously agree such measures as they consider necessary to bring about an internal market. Whether it is necessary in order to achieve that desirable end to approximate taxes is open to dispute. We dispute that it is necessary, and we shall certainly not give our support to proposals which we cannot accept.
Mr. Patrick Cormack: Will my hon. Friend confirm that nothing in the judgment affects the Chancellor's right to decide at what level VAT shall be levied on any item? Therefore, there is absolutely no need for anybody to panic and think that spectacles will cost 15 per cent. more.
Mr. Lilley: My hon. Friend is correct. Spectacles and the other goods concerned already bear VAT up to but not including the retail distribution point. Therefore, the effect of the judgment is to require Britain to extend VAT to the
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retail margin. The National Association of Optometrists calculates that, at most, it will involve increasing the sale price of spectacles by 3 to 4 per cent. Of course, it is open to retailers to absorb the costs.
I remind the House that since we abolished the opticians' monopoly, the cost of spectacles to the final consumer has gone down by considerably more than that amount — [Interruption.] It is rich of Opposition Members to criticise our abolition of that monopoly when our action has reduced prices by more than the potential increase that we are discussing.
Mr. John Smith: Does not the Minister appreciate that the Government's way out of this practical difficulty is to supply corrective spectacles free of charge, as VAT would then not be leviable, whatever decision the European Court reached? Does not this incident underline the great importance of being careful about entering into obligations? Will he give an absolute guarantee to the House that the Government will veto all the proposals for VAT harmonisation?
Mr. Lilley: The right hon. and learned Gentleman knows full well that vouchers are available to those on supplementary benefit, family income supplement, children under 16, and students under 19 in full-time study. There is no problem with respect to those people.
However, I was interested—and I think that all hon. Members were interested — to hear the right hon. and learned Gentleman's implied slur on the previous Labour Government when he stressed the need to take great care when accepting obligations of this kind. I believe that the right hon. and learned Gentleman was a member of the Cabinet which entered into the obligations, the consequences of which we are now seeing. Is he saying that that Cabinet did not take due care?
Several Hon. Members rose——
Mr. Speaker: Order. I have noted the hon. Members who have not been called. I am sure that we will return to this matter on other occasions and I will bear those hon. Members in mind. We have an important debate today during which many of these matters may be canvassed.

Points of Order
3.51 pm
Mr. Gavin Strang: On a point of order, Mr. Speaker. You will recall that yesterday I raised a point of order about the Prime Minister's reply to my question. The Prime Minister stated that the contract between the South of Scotland electricity board and British Coal would come to an end on 31 March this year.
I understand that you, Mr. Speaker, have the discretion, in a matter of major public interest, to waive or moderate the sub judice rule. However, as I understood it, it was not on those grounds that you ruled that the Prime Minister was in order. I wonder whether you have had the chance to look more closely at this matter. I believe that papers were lodged with the Court of Session earlier this week. Can you advise the House on whether you can expand, amend or clarify the ruling?
Mr. Speaker: I have kept in close touch with these matters. I am informed that there has been no change since yesterday and that the matter is not yet fully before the court.
Mr. Alexander Eadie: Further to that point of order, Mr. Speaker. You will recall that I raised this issue with you yesterday and my comments are reported in column 163 of the Official Report. You said in response to my hon. Friend the Member for Edinburgh, East (Mr. Strang) that you believed that the matter was not sub judice.
I believe that I gave you a copy of a press release from British Coal which states that legal action was taking place after papers were lodged with the Court of Session in Edinburgh on Monday. I am rather puzzled by your ruling that the matter was not sub judice when the Prime Minister spoke on this matter yesterday.
As I said in my point of order yesterday, a dangerous precedent has been established because the Prime Minister advanced a case from the Dispatch Box which the South of Scotland electricity board's lawyer will be making in the courts. It is very damaging for a counsel to be able to present in evidence to the court a statement made by the Prime Minister.
Of course, I took the issue further than that in my point of order. I suggested that, although you had been adopting the practice of not taking points of order until after questions, there was a classic example yesterday of a situation where the Prime Minister should not have been allowed to get away with it as the issue was already before the courts.
I know that you, Mr. Speaker, are giving this matter fair consideration according to the procedures and past practices. However, in the light of what I have submitted to you in writing, the Prime Minister was clearly in the wrong to quote the brief from the SSEB when we know that the papers were already lodged with the court. I ask you, Sir, to give the matter due consideration.
Mr. Speaker: On the second part of the hon. Gentleman's comments, may I say that what he said yesterday and again today is not a matter of order, but concerns whether the Prime Minister gave the right answer. That cannot be a point of order; it is a matter of argument. I believe—I hope that the House will agree—
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that it is not right that points of order should be used as a vehicle to carry on Question Time. I am, of course, giving careful consideration to the matter.
I can only rule that a matter is sub judice when a date has been set by a court. No date has yet been set and I am informed that the situation has not changed since yesterday.
Mr. Harry Ewing: Further to that important point of order, Mr. Speaker. Mine may be considered a niggling point and I accept that. When I sought to raise a point of order with you at 3.30 pm, you told me that you would take points of order after the private notice question. My point of order has now changed. The purpose of taking points of order after other matters has succeeded today because the Member to whom I wanted to refer in my point of order has left the Chamber. Because I respect and agree with the procedures of the House, I will not now raise that point of order. However, that makes it much more important that you now consider the time at which points of order are taken.
Mr. Speaker: Is the hon. Gentleman saying that the point of order that he was going to raise about a Minister's answer had anything to do with order?
Mr. Ewing: Yes, it had.
Mr. Speaker: It had not. The hon. Gentleman has said that his point of order concerned a Minister who has left the Chamber. Clearly, by definition, the hon. Gentleman was raising not a point of order, but a point of argument that he had with the Minister.
Mr. Ewing: Further to that point of order, Mr. Speaker. In a sense you are provoking me and I am surprised at you. To clear any doubts from your mind, may I say that I was not going to refer to a Minister or a ministerial answer, but wished to raise, as a matter for explanation, your selection of questioners. One hon. Member was called three times during Scottish Question Time, and I was about to inquire whether you kept calling him in the hope that eventually he would have something sensible to say.
Mr. Speaker: That is a perfectly legitimate point of order and one which I would gladly have fielded.
Mr. Chris Mullin: On a point of order, Mr. Speaker. Yesterday I raised with you the refusal, last Thursday, of a Home Office Minister to answer questions from eight hon. Members on the ground that the matter was sub judice. Yesterday you were kind enough to make a ruling that, as far as the rules of the House were concerned, the matter is not sub judice. As we have the pleasure of the company of the Minister today, I wonder whether you would be kind enough to repeat that ruling, as I understand that his Department is still declining to answer questions on the sub judice ground. Perhaps you would make it clear to him, Mr. Speaker, that the sub judice rule is not something behind which Ministers who are unwilling to face questions from hon. Members, should shelter.
Mr. Speaker: I am sure that that point has been heard. I draw attention to my comments in yesterday's Hansard.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 11 MARCH
Members successful in the ballot were:
Mr. Patrick Thompson
Mr. George J. Buckley
Mr. Edward Leigh

Security Services (Parliamentary Scrutiny)
3.59 pm
Mr. David Winnick: I beg to move, That leave be given to bring in a Bill to ensure effective Parliamentary scrutiny of the security services.
It is not part of my argument that there is no necessity for the security services. Even without large-scale terrorism and attempted spying by foreign powers, there would remain the need to provide protection for the state and its citizens. However, it is necessary to have complete confidence that the security services carry out their duties in a completely politically impartial manner. Indeed, they are required to do so by the Maxwell-Fyfe directive published in 1952. Paragraph 4 of that directive states:
"It is essential that the security service should be kept absolutely free from any political bias or influence and nothing should be done that might lend colour to any suggestion that it is concerned with the interests of any particular section of the community or with any other matter than the Defence of the Realm as a whole."
As it has been questioned that such political impartiality has always operated, the security agencies have become the subject of controversy. Those doubts existed before Wright's book. In my view, and in the opinion of my right hon. and hon. Friends, there should be a full judicial inquiry into Wright's statement that MI5 officers, including himself, were involved in the attempted destabilisation of the Labour Government in the mid— 1970s. The sooner such an inquiry takes place, the better.
At the moment, there is no meaningful parliamentary accountability for the security services. Ministers are not willing to answer questions that relate to security services, therefore such questions cannot be tabled in the first place. Unlike what occurs in some other democracies, no one could argue that Parliament has any real say in these matters.
In many respects the security services are a law unto themselves. Certainly their intrusion into civil liberties must concern all those who value our democratic rights. For instance, there were the disclosures of a former employee of MI5, Miss Cathy Massiter, who resigned in protest at the work she was asked to undertake. I shall give an illustration of the sort of work which led to her decision to leave MI5. She told us publicly that anyone who was on the national executive of the National Council for Civil Liberties, who worked for that organisation, or who was an active member to the degree of being a branch secretary, would be placed on permanent record, and routine inquiries were instituted to identify such people and police help was sought.
It is no use putting a question to the Home Secretary about that. He simply would say that he was not in a position to comment either way. Are such routine inquiries still being made into the National Council for Civil Liberties? Is that a wise and correct way of spending public money?
My hon. Friend the Member for Peckham (Ms. Harman), prior to coming to the House, was the legal officer for the National Council for Civil Liberties. There is, we are told by Miss Massiter, an MI5 file on her. Presumably there is a file on her because she was a full-time employee of the National Council for Civil Liberties. As I asked on a previous occasion, was my hon. Friend considered to be a subversive? Was she out to overthrow

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parliamentary democracy? Is that the proper way in which public money and time should be spent? Did the Prime Minister or the Home Secretary know that files were being kept on such people? Labour Members would be happy if all Conservative Members were as committed to parliamentary democracy and civil and democratic liberties as my hon. Friend the Member for Peckham.
What happened with the NCCL also occurred with CND, yet successive Tory Ministers have told us that campaigning for nuclear disarmament is perfectly legitimate. If that is the case, when a former editor of the CND journal resigned after some disagreement in the organisation, why was he asked questions by the special branch about the private lives of leading officials of CND? Why was he asked about the leadership style of the general secretary of CND? Why was he asked about who lived with whom and who was active in the organisation? That smacks more of a police dictatorship than a parliamentary democracy.
All that criticism does not come only from one side of the House. May I remind the House that the right hon. Member for Old Bexley and Sidcup (Mr. Heath)—he should know about such matters because as former Prime Minister he was head of the security services—in the debate on the Official Secrets Act only last month gave us an illustration of some people employed in the security services. If they saw someone on the tube reading the Daily Mirror their reaction would be to say, "Get after him, that is dangerous. We must find out where he bought it." I should like to know how many other such people are employed in the security services? How many Wrights are there who cannot make a decision between legitimate dissent and genuine subversion?
Miss Massiter deserves public credit for the manner in which, as an employee of MI5, she came to the conclusion that she could not carry out the work asked of her, and in my view she did the honourable thing and resigned and made her views known publicly.
We know from her disclosures about MI5 that there is a branch F which is subdivided. F2 investigates trade unions, F7 looks into teachers, lawyers and journalists, and F4 apparently puts agents into organisations. There does not seem to be any F grouping that looks into the City, the stock exchange or multinational companies.
We need to be sure that those who hold responsibility in the security services can and do make a distinction between mainstream legitimate dissent and a few extremist groups such as the National Front, and other Fascist or racist organisations or ultra-revolutionary groups. Can anyone believe that when Wright was holding a senior position in the security services he was capable of making such a distinction? How many other such officials remain employed in the security services?
The time has come for parliamentary accountability, in my view by way of a Select Committee. In that way the security services would no longer be a law unto themselves.
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I see no reason why a Select Committee should not be set up. I also see no reason why those Conservative Members who state that they are in favour of parliamentary democracy should be opposed to any such committee being established. Those who are given the task of combating subversion and defending our democracy must be accountable for their actions.
As long as the security services are the subject of the controversies that I mentioned today, that is not useful for their own good or for their image. I imagine that there must be a number of people employed in the security services who believe that we should have such parliamentary accountability as exists in a number of other western democracies.
The only change that has come about in the past flew months has been the appointment of Sir Philip Woodfield as staff counsellor to the security services. I and a number of my hon. Friends wrote to Sir Philip Woodfield and asked him if he would have a meeting with us. We were asking only that the newly appointed adviser to the security services should have a meeting with Members of Parliament. I received a courteous reply, but the answer was no.
For all those reasons, I believe that I should be given permission to bring in my Bill, and that the reforms and changes for which I have argued should be carried out.
Question put and agreed to.
Mr. Speaker: Who will prepare and bring in the Bill?
Mr. Winnick: It is unanimous. I believe that the Select Committee should be established in the very near future—
Mr. Speaker: Order. The hon. Gentleman has made his speech. Who will prepare and bring in the Bill?
Mr. Winnick: I was going to say that the whole House—
Mr. Speaker: Order. Who will prepare and bring in the Bill?
Mr. Winnick: A distinguished list, Mr. Speaker. Bill ordered to be brought in by Mr. David Winnick, Mr. Peter Archer, Mr. Andrew F. Bennett, Mr. George J. Buckley, Mr. Tam Dalyell, Mr. Michael Foot, Dr. John Gilbert, Ms. Harriet Harman, Mr. Eric S. Heffer, Mr. Max Madden, Mr. Chris Mullin and Ms. Marjorie Mowlam.
Mr. Speaker: Second Reading what day?
Mr. Winnick: Unless there is a Select Committee then, 29 April.
Mr. David Winnick accordingly presented a Bill to ensure effective Parliamentary scrutiny of the security services: And the same was read the First time; and ordered to be read a Second time upon Friday 29 April and to be printed. [Bill 100.]

Public Expenditure
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.
4.10 pm
The Chief Secretary to the Treasury (Mr. John Major): I beg to move,
That this House takes note of the White Paper on the Government's Expenditure Plans for 1988–89 to 1990–91 (Cm. 288—I and II).
The broad lines of policy on public expenditure were announced last November in the Autumn Statement and were debated in the House last month. That debate enabled the House to consider the trends in public expenditure and the way in which priorities had changed between programmes. The public expenditure White Paper before us today builds on that and provides a more comprehensive account of what the Government are spending, the service that they are delivering, and their efforts to secure even greater value for money. What the White Paper does not provide is a new statement of policy. I suspect that that was not fully appreciated last month when many people affected to be disappointed that it did not contain fresh expenditure plans. Frankly, it would have been extraordinary if it had, only weeks after our plans were announced in the Autumn Statement.
The public finance cycle is clear. It begins with the Budget and the medium-term financial strategy in the spring. That sets out our taxation and borrowing policies. It continues with the public expenditure survey to determine future spending plans. These are set out in broad terms in the Autumn Statement. It concludes with the public expenditure White Paper, followed by this debate, which provides an opportunity to consider the Government's management of taxpayers' money. We are helped in this by the report from the Treasury and Civil Service Select Committee, which makes a number of interesting observations and recommendations. The Government will respond to these as soon as possible, and I shall refer to a number of them shortly.
It is crystal clear that the strength of public finances has created the conditions for a sound economy, and that the soundness of that economy has fed back to the public finances. The crisis so lovingly and frequently predicted by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has failed to arrive yet again. Like Bunter's postal order, that crisis is forever in the post. In reality, rising real incomes and corporate profits are boosting the revenue side of the account.
But a growing economy also brings benefits for expenditure, and that is perhaps less well understood. Nationalised industries are producing better results—for example, the rising profits of British Steel and the increasing passenger revenues of British Rail. Falling unemployment is reducing the growth of social security spending and a buoyant economy is enabling central Government, local authorities and new towns to step up their disposals of surplus assets. These are a combination of changes that few people would have predicted accurately a few years ago.
The lower borrowing that has resulted from these changes is reducing the costs of servicing the national debt. Debt interest has now fallen from its peak of 5¼ per cent. of GDP in 1981–82 to about 4¼ per cent. this year. We expect it to fall still further, and this will enable us to speed
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more on priority programmes. It is worth putting that in context. If the PSBR had remained at its 1978–79 share of GDP, cumulative borrowing would by now be about £80 billion higher, with increased debt servicing costs of about £8 billion a year. That would be the equivalent of an extra 7p on the standard rate of income tax, just to finance the debt. None of that extra revenue would have gone on education, social security or health; it would all have gone to our creditors. That would have been the result of the policies that the Opposition still cling to with such hide-bound affection.
We are in the fortunate position that we have dumped those policies. That is one of the principal reasons why our economic performance is so strong, but it will stay that way only if we continue with the policies that brought us to this point in the first place. I offer the House the assurance that that is precisely what we propose to do.
In the survey of public spending conducted last year, we added £4·5 billion to the planned programme expenditure in 1988–89 and £6 billion in 1989–90, while, at the same time, thanks to a growing economy, still reducing public spending as a proportion of national income. That proportion has already fallen from 43 per cent. when we took office to 42 per cent. now, which is a decrease of more than 4 per cent. from the peak to which it rose in 1982–83.
But that has not meant cuts, because national income has risen over the past eight years by 19 per cent. The proportion of spending to GDP is set to fall further, to 41 per cent. by 1990–91. But with a growing economy that further fall does not mean cuts either. This is in stark contrast to the rising share of national income absorbed each year by public spending in the 1960s and 1970s and it is a welcome contrast, indeed, for taxpayers.
The plans contained in this White Paper show that, within the constraint that we have set ourselves, we have been able to strengthen priority services, such as health, law and order, education, defence and the inner cities.
In its report, the Select Committee has raised some important issues which need to be addressed on the Health Service, and I shall respond to these, but let me first put the position in proper context. Measured in all sorts of ways, the National Health Service is not in crisis but is expanding, improving and becoming more efficient, as the programme of cost improvements has clearly demonstrated. Indicators of health show significant improvements in life expectancy in recent years — I should have thought that this was a good output measure —and large reductions in deaths from a wide range of conditions, and indicators of the number of treatments show large increases in patients treated, whether as in-patients, out-patients, or day-patients. Since 1978 the output of the hospitals service has increased by over 20 per cent. or about 2·5 per cent. a year, and treatments are now being widely offered that barely existed a decade ago. I suspect that little of this would have occurred if the Government had not provided increasing resources. But we have.
Total spending on the Health Service has risen by 32 per cent. more than inflation. It has risen, too, as a proportion of public spending, and will continue to do so. It has risen as a proportion of national income. Gross capital spending, which was cut very savagely indeed by the Opposition when in government, has increased by 42 per cent. in real terms, helped partly by rising capital receipts.
Mr. Dafydd Wigley: The Chief Secretary has described an optimistic picture of the Health Service, yet in counties such as mine five hospitals are about to close largely because of the non-funding of the nurses' wage award. Given the change in circumstances since the White Paper was originally drawn up, and as it appears that more money is available now than the Government believed was available then, will the Chief Secretary confirm that the Government could absorb the entirety of the wage awards without throwing their strategy off course?
Mr. Major: My remarks were not optimistic so much as realistic. They were a factual assertion, and nothing in what I said is not clearly and demonstrably fact. I shall turn to the hon. Gentleman's second point in a few moments, if he will be patient.
Mr. Ian Gow: If it were true that the Labour party was the party that cared about the Health Service, and if ours did not care, how is it that we are spending a higher proportion of total public expenditure and a higher proportion of GDP on the NHS than did the Labour party, which claims to care so much about the NHS?
Mr. Major: My hon. Friend has made a telling point. Indeed, I would not adequately be able to explain that point if I were a Member of the Opposition. Perhaps part of the explanation—nobody doubts that the Opposition care—lies in competence and in the fact that, with the reducing level of national debt, we have a far smaller deadweight cost in interest on that national debt. That absolutely reinforces the policies that my right hon. Friend the Chancellor of the Exchequer has followed in recent years.
In one of the most crucial areas of the National Health Service, the hospital and community health services, which are of great concern at the moment to many hon. Members, and to many beyond the House, current expenditure will have increased in 1987–88 by around 10 per cent. — well over twice the rate of inflation in the economy generally, and, what is more, faster than any measure of rising prices in the health sector specifically.
If one allows for that and also for the benefit of the cost-improvement programme,
"the margin available for service development"
will have increased by nearly 3 per cent., comfortably ahead of even the most pessimistic estimate of demographic pressures. Therefore, it rapidly becomes evident that current difficulties faced in the Health Service are not simply questions of funding; and funding alone will not solve those difficulties.
Mr. Barry Jones rose—
Mr. Major: If the hon. Gentleman will forgive me, I shall give way in a few moments.
The Government have recognised that there are important issues to be examined. We must consider whether there are other ways of delivering health care which meet people's expectations. In doing so, I offer the assurance that we propose to preserve the principle that a high standard of health care must be available for all regardless of means. That principle is not at risk in the fundamental review of the management and funding of health care in this country that we have set in hand.
As well as those fundamental issues, the Select Committee was particularly concerned in its report at the
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uncertainty faced by health authorities, which have to plan their budgets before the review body recommendations are finalised and before consequent decisions on funding are known.
I understand and sympathise with that concern and with the dilemma facing health authorities. The Government have examined the problem to see whether there is a way of resolving it without abdicating responsibility for the control of public expenditure. We are not prepared to commit ourselves in advance to accepting review body recommendations unreservedly or to funding resulting awards in full — nor should or would any responsible Government. Those decisions can be made only when the recommendations have been received and studied.
However, what we cart and will do is remove this uncertainty for health authorities in the future. Therefore, we have decided in future years to bring forward the timetable for the review body reports, so that decisions can be made on them well before the beginning of the financial year. We hope that review bodies will be able to submit their reports in time for decisions on them by the end of January or, at the latest, by mid-February.
Mr. Barry Jones rose——
Mr. Terence L. Higgins: I welcome enthusiastically my right hon. Friend's statement, which will make great improvements in the future. However, for this year, can he give any information of the date by which a decision is likely to be made, so that health authorities need not make premature decisions on the issues that he has mentioned?
Mr. Major: I am grateful to my right hon. Friend for his welcome, especially in his capacity as Chairman of the Treasury and Civil Service Select Committee. I shall turn to the specific point that he mentioned in just a second.
Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that this statesmanlike decision will be widely welcomed, because one problem facing all health authorities is that of making their spending decisions before pay awards? Because of the special problems that face them this year, can the Government find their way clear to say that they will fund, for this one year until the new scheme comes in, the pay award that they agree—I repeat that they agree?
Mr. Major: I am grateful to my hon. Friend for his welcome. I shall deal with the position this year in a few moments.
Mr. Barry Jones rose——
Mr. Eric Forth: Before my right hon. Friend leaves that point, may I ask whether he is aware that some of us find the implication of what I think he said a little disappointing? It appears that we are to continue indefinitely to face a system of national monolithic pay bargaining and rate setting. Will my right hon. Friend concede that at least as part of the review that is taking place we should look at decentralising decision-making within the Health Service, and at greater flexibility in pay-setting in order to recognise the great variety of regional requirements, and skill and specialist requirements?
Mr. Major: I understand what my hon. Friend has in mind, part of which is being considered by the review body this year.
Mr. Barry Jones rose——
Mr. Major: I give way to the hon. Gentleman.
Mr. Barry Jones: I am grateful to the right hon. Gentleman for giving way at last. In his intervention, my hon. Friend the Member for Caernarfon (Mr. Wigley) made an important point about Wales. None of us know of any health authority in Wales which, in our judgment, is anything other than underfunded. I advise the right hon. Gentleman that Opposition Members met his right hon. Friend the Secretary of State for Wales last month to tell him of our deep concern because we are certain that soon, if not now, the Secretary of State for Wales is to make a case to the right hon. Gentleman and to the Treasury for more funds for the Welsh Health Service. When the right hon. Gentleman receives that demand, will he please give it a fair wind?
Mr. Major: I certainly cannot prejudge any comments that may or may not come to me from my right hon. Friend. However, I advise the hon. Gentleman that I would consider with great care anything coming from my right hon. Friend the Secretary of State for Wales.
I should make it clear that the new timetable will affect the reports of all the review bodies—the Nurses and Midwives Pay Review Body, the Doctors and Dentists Pay Review Body, the Armed Forces Pay Review Body and the Top Salaries Review Body. It will mean, in particular—I hope that the House will welcome this — that the outcome of salary awards will be known to Health Service treasurers before they finalise their budgets for the coming year. I hope and believe that that will remove a great deal of uncertainty for them in each future year.
We cannot, at this late stage, bring this year's reports on to this timetable, but we propose to try to minimise the period of uncertainty. In particular, it would be difficult to press the review body for nurses to hasten its report, because this year, as the House knows, it is considering a number of important and complex issues, including a new clinical grading structure. This seeks to reward skill and responsibility and to give better pay and career prospects to those nurses who choose to stay in areas of direct patient care, rather than move into administration. This meets precisely the point that so many Health Service professionals have drawn attention to in recent weeks. The review body will also be looking at special pay differentials needed to cope with localised recruitment difficulties—many hon. Members may also welcome that.
As I have said, we wish to minimise the period of uncertainty this year. Yesterday my right hon. Friend the Prime Minister reminded the House that last year the Government received all the reports of the review bodies between 1 and 14 April and announced all decisions on implementation and on funding by 23 April. She stressed that if, as we expect, the reports come in at a similar time this year, the Government will, for their part, be equally swift in announcing their decisions. We hope, therefore, to be in a position to announce firm decisions no later than the end of April.
In short, the position is as follows: first, we are carrying out a fundamental review of the management and financing of health care; secondly, the timetable for future review body reports will be brought forward so that the Government can announce their decisions well before health authorities finalise their budgets; and, thirdly, we
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hope that this year we will be able to announce our decisions on the review body recommendations and the financing of them no later than the end of April.
Decisions on review body pay in the Health Service are therefore only a matter of weeks away. As I have said, we hope to be in a position to announce our decisions by the end of the first month of the forthcoming financial year. In my judgment, it would be premature and unacceptable, therefore, to put into effect service reductions on the grounds of uncertainty. Moreover, the concerns of nurses, over the level of their pay, the structure of their pay and their career prospects, are all being comprehensively and speedily addressed, and the results will soon be known.
In the light of those assurances, there is one further point that I wish to add. In recent weeks only a small minority of nurses have decided to take part in industrial action. I hope that that minority will now realise that the strikes in the Health Service are unnecessary and damaging to the very service that they care about. If they continue, public and patients will draw the conclusion that the motives for such action cannot wholly lie in genuine concern for the Health Service or the pay and conditions of those who work within it. The action in Scotland today in unnecessary, pointless and damaging to patients, and it will not affect the Government's judgment on how to deal with that issue.
Mr. Nicholas Fairbairn: Does my right hon. Friend appreciate that the Opposition have claimed to support the so-called action in Scotland today, that it is a strike organised by the National Union of Public Employees to try to keep up its role of resisting competitive tendering, and that it has nothing to do with patient care or funding for the Health Service, but is increasing waiting lists, cancelling operations and making a sham of any claim that the Opposition may have to care for patients in Scotland?
Mr. Major: My hon. and learned Friend makes a pertinent point extremely well. Patient care is being damaged in Scotland today and operations are being postponed. It is extraordinary that that action should have the support of Opposition Members, who in recent weeks have accused the Government of not caring about the Health Service.
The requirement to test the efficiency of domestic and catering services by competitive tendering has released over £100 million for patient care in England in recent years. My right hon. and learned Friend the Secretary of State for Scotland and the Government are determined to ensure that that happens in Scotland as well.
Mr. Gordon Brown: Does the Chief Secretary agree that his much-trumpeted announcement has committed not a penny of extra money to the NHS? Does he accept that it is a wholly inadequate response to the immediate problems that are faced by health authorities, and that, without the commitment of extra money, he will do nothing to allay the uncertainties of health authorities, which are now having to discuss whether to close wards and cancel operations? Will he end the uncertainty today by giving an assurance that he will accept in full the nurses' and ancillary workers' pay award, and that he will fund that award in full? Will he give us those assurances to end the uncertainty?
Mr. Major: I detect the tang of sour grapes in that intervention. The hon. Gentleman clearly does not realise

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that the central part of the Treasury and Civil Service Select Committee's report asked the Government to deal with that uncertainty, and that is precisely what we have done. I have already answered the second part of what the hon. Gentleman said. As to the much-trumpeting of the statement, the fact is that it was trumpeted to no one at any stage at any time, and the hon. Gentleman looked as surprised as anybody else.
Mr. Brown: Will the Chief Secretary answer the central part of my question? Will he end the uncertainty facing health authorities by agreeing that he will accept in full the nurses' pay award, and that he will fund it in full?
Mr. Major: If the hon. Gentleman reads Hansard, he will discover that I dealt quite specifically and in detail with that point when, clearly, he dozed off a few moments ago. I trust that the hon. Gentleman will be more accurate when he makes his speech later than he has been about what I have said in the past few moments.
Mr. Brown: Will the right hon. Gentleman answer the question? Will he accept in full the recommendation of the nurses pay review body, and will he fund it in full?
Mr. Major: I have no intention of repeating what I said before simply to pander to the inadequacies of the hon. Gentleman's attention a few moments ago.
Mr. Tony Baldry: Do not those interventions demonstrate clearly that the Opposition are incapable of understanding the facts about the NHS even when they are told them repeatedly, and seem incapable of understanding that the NHS will receive more money next year— £1·1 billion more; the largest cash increase ever? That increase alone is larger than the budget of the Department of Trade and Industry. Can we send all Opposition Members a large postcard with those facts on it so that they can read it at their leisure?
Mr. Major: I entirely agree with my hon. Friend. Judged by the inaccuracies of documents that the Opposition have recently published about making Budget day NHS day, I doubt whether, even if they were given the facts, they would understand or use them accurately.
Dr. John Reid rose——
Mr. Major: I shall give way for the last time.
Dr. Reid: Is it not the case that in 1985 a suggested pay award of 8 per cent. for nurses was dealt with in two stages to reduce the effect to 5 per cent.? Is it not the case that in 1986, when the nurses were awarded almost 8 per cent., the Minister delayed it for three months to reduce it to 5·7 per cent.? Is it not the case that the only time that the Minister and the Government have made a full award to the nurses was last year, when there was a general election? Will the Minister pay the nurses in full this year—yes or no?
Mr. Major: Before the hon. Gentleman makes such ill-judged interventions, he would do well to acknowledge the fact that nurses today are infinitely better paid under this Government than they ever were under any previous Government.
Let me return to the industrial action. If such action continues, either generally or in Scotland specifically, it will not influence the Government's decision. We propose to proceed as I have described in the past few minutes. I
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reiterate the message that I first gave when the White Paper was published—there need be no expectation of a public expenditure package in the Budget.
In its report, the Treasury and Civil Service Select Committee drew attention to a number of other points to which I wish briefly to refer. It recognised that the Autumn Statement is now the primary vehicle for announcing the main results of the survey and that, as a result, the White Paper has, to a considerable extent, been upstaged. The Committee's resulting suggestion that much of the material from volume 1 should be incorporated into the Autumn Statement is attractive and has a great deal to commend it. We shall therefore consider that carefully and sympatheticaly, despite the obvious technical problems that would need to be overcome. We shall certainly bear in mind the Committee's strong support for that proposal.
The Committee also suggested that volume 2—now over 400 pages of information—should be published as separate departmental booklets, as the Estimates are now. We shall consider that proposal sympathetically, along with the corresponding proposals that were made by the Public Accounts Committee last year.
I sense that parliamentary opinion is running in favour of such change. The Treasury is already investigating a number of possibilities, and as soon as that work is complete we shall put the proposals before Parliament.
If we change the way in which information is reported, there will be consequences for the way in which it is debated. One possibility would be for the broad lines of expenditure policy to be debated as part of the Autumn Statement, for Select Committees to consider the departmental booklets and For one or more of their reports to be chosen for debate in May or June. All that will need further consideration, which we shall give as speedily as possible.
The Select Committee also invited me, in its report, to set out the public expenditure effect of the agreement that has been reached on the future financing of the EC.
Dr. Jeremy Bray rose——
Mr. Major: With great respect, I did say that I had given way for the last time, and I must stick to that.
The agreement concludes a far-reaching review of the Community's finances and policies. It provides effective and legally binding controls on spending, effective measures to reduce agricultural surpluses, and the preservation of the United Kingdom abatement as agreed at Fontainebleau, and there is to be no oils and fats tax.
In so far as domestic public expenditure is concerned, the agreement is likely to increase our net payments to Community institutions by some £200 million to £300 million a year. This is compared with what would have happened with a continuation of the 1·4 per cent. VAT ceiling — the assumption that underlies the public expenditure White Paper. Compared with the effective level of spending in 1987, which was already in excess of the 1·4 per cent. VAT ceiling, the increase will be smaller, at around £100 million to £200 million a year. In response to the specific question of the Select Committee, I confirm that the extra expenditure will be met entirely from the reserve and will not involve reductions in agreed domestic programmes.
The timing of the future financing agreement means that the 1988 Community budget will not be adopted before the end of the current financial year, so the

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Community's emergency financing arrangments, known as provisional twelfths, will continue into 1988–89 rather than end in 1987–88, as assumed in the White Paper. This will increase our net payments to the Community in 1987–88 by about £240 million, mainly because our abatement in the first three months of 1988 is being made at the rate of the 1987, not the 1988, budget.
When the 1988 budget has been adopted, however, perhaps in May, we shall benefit from a much higher abatement, and the increased abatement will be backdated to the beginning of January. This will reduce our net payments in 1988–89, compared to the figure in the White Paper, by the same amount as the increase in 1987–88—around £240 million. Thus, in 1988–89 itself, the effect of the future financing package on our net payments will be very broadly offset by the effect of the delay in the adoption of the 1988 budget.
I am acutely aware that the breadth of public expenditure is such that, in the interests of allowing as many hon. Members as possible to speak in the debate, I have not been able to mention many important matters. I have not had time to mention the extra £240 million a year that we have added to the plans for spending on science and technology. Nor have I mentioned the £1·5 billion addition to our plans for capital expenditure in each of the next two years. I have not mentioned the extra £630 million that we are providing for education. That is £270 million more, even after taking account of the amounts allowed for teachers' pay and academic restructuring.
I have not referred to the extra resources that we are devoting to the inner cities and to the increased resources that we are attracting into the inner cities through creating a partnership with the private sector. I suspect very strongly that those increases will not find a place in the speech that we are about to hear from the hon. Member for Dunfermline, East (Mr. Brown), either.
Those public expenditure increases have been made possible only by the sound state of the public finances and the healthy condition of the economy. I confidently predict that the complete and abject failure of the Opposition to understand those simple truths will again be in evidence today. They seem to view the hard-won progress of recent years as a kind of windfall, just as I suppose they imagine that the economic failure that toppled them was sheer bad luck. If they do not understand why the economy is doing so well, the public do, as they have shown very clearly on three memorable occasions, in 1979, in 1983 and in 1987, and as I suspect they will do again at an unspecified future date.
The Opposition will again talk of cuts where there have been increases. They will air their obsession with pounds spent rather than output achieved, and this, surprisingly, despite the awful illustration of ILEA, which spends more and achieves less than any other education authority in the country. All those points that they will make are as familiar as they are flawed. The public are not fooled, and I trust that the House will not be fooled either.
4.44 pm
Mr. Gordon Brown: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
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"deplores the under-investment in areas vital to the future of Britain which results from the public expenditure plans; urges Her Majesty's Government to take additional action to reduce unemployment and to strengthen Britain's productive and competitive performance; condemns the Government's antipathy towards public expenditure on vital community services; and in particular calls on Her Majesty's Government to recognise the strength of the evidence to two Select Committees and from the health care professions that the National Health Service is inadequately resourced, and to make extra provision in the Budget to end the funding crisis faced by the National Health Service and hospitals in particular."
The Chief Secretary's speech was characteristically full of statistics and typically overflowing with input and output measures. It was complete with the statutory Tory Central Office references to the last Labour Government. It was completely oblivious to the £60,000 million windfall benefits of North sea oil that the Government have been lucky enough to enjoy. Not a penny in extra cash is being offered for any part of the National Health Service. No health authorities will be better off as a result of any announcement that the Chief Secretary has made.
Mr. John Townend: Will the hon. Gentleman give way?
Mr. Brown: I shall give way in a moment.
The Chief Secretary's speech leaves completely unanswered the main public expenditure question of concern to the whole nation—the underfunding of our National Health Service.
Mr. John Townend: Will the hon. Gentleman give way?
Mr. Brown: I shall give way in a moment.
If the economy is doing as well as the Chief Secretary says, if public finances are as sound as he tells us, if the Chancellor of the Exchequer is facing his Budget with unique opportunities available to him, why cannot the Goverment afford to respond to the British Medical Association, the Royal College of Nursing, the National Association of Health Authorities and the recommendations of two Select Committees, and offer proper and adequate funding to the Health Service?
This week, uniquely, 100 doctors and consultants in Ilford have placed an advertisement in their local newspaper, saying that they cannot guarantee that patients will be able to get the hospital treatment they deserve.
Mr. Fairbairn: Will the hon. Gentleman give way?
Mr. Brown: I shall give way later.
In addition, new information has become available this week about the £5 million that is needed to employ the cardiologists that we need in our hospitals, the £25 million that is needed to keep open all the children's cancer wards, the £30 million that is needed to make available nationwide the cervical cancer screening service. This week, behind closed doors, many health authorities are wondering how they can budget for the future settlements next year. They are no wiser today about how far the Government are prepared to fund the nurses' pay settlement, the doctors' and dentists' pay settlement or the ancillary workers' pay settlement.
Mr. John Townend: If this matter is so vital to the nation, will the hon. Member for Dunfermline, East (Mr. Brown) explain why only about 16 Labour Back Benchers are present? What will he say to my constituents in Bridlington who have waited 40 years for a new hospital

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to replace two old hospitals? They did not get that hospital under the last Labour Government because they cut the capital building programme, but they will get that hospital this year. It is opening in two weeks' time, after expansion of the budget provided by the Government.
Mr. Brown: I am glad that the hon. Member for Bridlington (Mr. Townend) has expressed the concern that is felt throughout the nation about hospitals, nurses and facilities that are needed. Perhaps the Chief Secretary will explain why, when faced with the underfunding problems of the Health Service, the Cabinet, last Thursday, should have issued an unprecedented pre-Budget statement. According to that statement, as a result of the cash crisis, the Government will not consider forgoing tax cuts in the Budget for the top people in the country, nor will they forgo changes in capital gains tax or inheritance tax. That statement told us specifically that we could not expect extra funding for the National Health Service in the Budget.
Mr. Fairbairn: Will the hon. Gentleman give way?
Mr. Brown: I shall give way in a moment.
Is it not typical of the Government's distorted sense of priorities that they should take the one Budget priority which unites all decent opinion throughout the country —the funding of our National Health Service—and, by an unprecedented act of malice, eliminate it from consideration in the Budget.
Several Hon. Members rose——
Mr. Brown: They then claim that the reasons for not mentioning the Health Service in the Budget are purely technical, as if taxes and spending are not inextricably linked and as if, in 1985 and 1986, the Chancellor of the Exchequer had not announced in his Budget extra money for employment measures.
The reality is that, until 15 March, the Chief Secretary and the Chancellor will tell us that they cannot invest any more money in the National Health Service because of what the Budget is there to do. After 15 March, after the tax cuts, the Chief Secretary and the Chancellor will tell us that they cannot invest in the NHS because of what the Budget has done.
Several Hon. Members rose——
Madam Deputy Speaker (Miss Betty Boothroyd): Order. The hon. Member is obviously not giving way at this moment. Hon. Members should desist from trying to intervene for a while.
Mr. Brown: The truth is that—[Interruption.] I wish that Conservative Members would listen. They might have addressed some of their questions about the funding of pay awards to the Chief Secretary when he spoke.
The truth is that no Chancellor has faced his Budget with so much money but with views that are so out of touch with the decent instincts of the British people. This is the Government who keep telling us that it is the people's money, not the Government's money. It is the people who must choose, not the Government. Is there any doubt about what the people would choose? They would choose to invest in the NHS.
Mr. Forth: As the hon. Gentleman develops his remarks, will he give the House and the country a commitment that a future Labour Government wil reopen any ward that has been closed, eliminate all NHS waiting
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lists and meet any pay demands in full? If he gives that commitment, will he tell the House what it will cost the economy and the taxpayer? If not, will he tell the House what he would do with the NHS?
Mr. Brown: That is exactly the question that the hon. Gentleman should be asking the Chief Secretary.
We are committed to funding the NHS properly. That is why, last Wednesday, in the light of the evidence that we have taken from the British Medical Association, the National Association of Health Authorities and the Royal College of Nursing, and in the light of the evidence available to the Select Committee on Social Services and the Select Committee on the Treasury and Civil Service, we announced that the proper sum required is about £2,000 million. That is money that the Chancellor should make available in the Budget.
It is not as if the Government are investing inadequate sums in the NHS so that they can invest more in other public services. Perhaps the Minister who is to reply to the debate will tell us why, in a year that is claimed to be one of unparalleled prosperity for Britain and at the same time as the Government are discussing the scope for tax cuts in the Budget, in the public expenditure White Paper the Government have cut the real value of the budgets of half a dozen Government Departments.
Perhaps the Minister will tell us why this year the Government have frozen the value of child benefit and will remove 1 million pensioners in April from all help with rent and rates, and why they have forced 4 million of our poorest households to pay rates for the first time, no matter how poor they are. Will the Minister explain why the Government have imposed dental charges and are imposing charges for eye tests, despite the Prime Minister's assurance in previous years that charges would never be introduced, and why, last week——
Several Hon. Members rose——
Mr. Brown: I am not giving way. I shall give way to the Minister. I am happy to give way to him.
Mr. Major: Before the hon. Gentleman continues his misleading litany, perhaps he will explain to the House, if the Government are as he describes, why the increase in programme spending next year is £4·5 billion, with a further £6 billion in the second year of the survey?
Mr. Brown: Will the Chief Secretary tell me what was misleading in what I said about the withdrawal of rent and rate support and about the introduction of charges for eye and dental treatment? Will he tell us why, if the Government are so flush with money, last week, in new regulations on the social fund, the Government imposed a state charity fund, which will force thousands of our citizens to beg and borrow for vital necessities? The state is withdrawing from responsibility for the relief of poverty and passing it to the soup kitchens of the Salvation Army.
Mr. Fairbairn: The hon. Gentleman mentioned the fact that some doctors were in doubt as to what operations they might or might not be able to perform. Will he reflect on the fact that he and Scottish Back-Bench Labour Members are today supporting a strike which will guarantee that hundreds of operations cannot be performed? It is a political strike to frustrate more funds going to health care. It does not seem to me to support the principles that the hon. Gentleman is putting forward, when unions vote against the use of the £3·6 million of

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extra funds for operations, transplants and ophthalmic units. That has been given to Scotland in the past few weeks, thanks to the Government's success.
Mr. Brown: The hon. and learned Gentleman shows the difficulties that I have as a Member of Parliament in representing all my constituents. Will not the hon. and learned Gentleman put the pressure that he wants to bring to bear on the Minister? In Scotland, as a result of the Government's policies, waiting lists are 8,000 higher than in 1979. The number — [Interruption.] Conservative Members should listen. Waiting lists are 8,000 higher in Scotland than they were in 1979 and the number of acute beds in Scottish hospitals has been reduced by 2,000. That is the state to which the Government have brought the NHS.
Several Hon. Members rose——
Mr. Brown: I should like to refer to the detailed evidence and recommendations of the Treasury and Civil Service Select Committee. In a non-party political way, I want to congratulate the Chairman of the Committee on the excellent work that his Committee has done. As the Chief Secretary did, we welcome the proposal that many of the public expenditure White Paper details should be included in the Autumn Statement. It is entirely right that decisions should be announced as quickly as possible and not delayed until the publication of a public expenditure White Paper in January.
I wish that the Chief Secretary had dealt with this matter in more detail, but we also welcome the Committee's view that greater use of price indices to give a proper value of the volume of expenditure should be part of the public expenditure White Paper exercise. That factor is of distinct relevance to the NHS. The cash figures show a rise, but inflation is 3·5 per cent. and the GDP deflator is 4·25 per cent., and the relative price effect to take account of NHS pay and prices is about 6 per cent. It is small wonder that the cash figures do not reflect the real position in the NHS.
We welcome the Select Committee's recommendations about the timing of the nurses' and other pay reviews, and the fact that the Government have taken them up. It makes absolutely no sense for health authorities to begin their budgeting year in the first week of April, for the pay review board to report in the second week of April and for the Prime Minister to make an announcement in the third or fourth week of April. That would make it impossible for health authorities to plan ahead. The problem is that nothing that the Chief Secretary has said today makes life easier for health authorities faced with cash problems at the moment.
The facts in the report of the Treasury and Civil Service Select Committee were of great interest. They showed that the Chancellor had before him about £5,000 million more in revenue than he originally expected. Not only that, but the figures showed that, after higher than expected asset sales were taken into account, the net underspending was about £1,300 million—£100 million less on the Foreign Office budget, £200 million less on trade and industry, £400 million less on transport, and £700 million less on housing.
Next year, the Chancellor is likely to receive about £7 billion more in revenue than was anticipated, yet the clear
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message of the Chief Secretary's speech is that, even when this year he has spent less than originally expected and has received more than originally anticipated, and even when next year he will receive more than was projected, he still refuses to make a commitment to invest in the National Health Service or in any of our other great public services. It is not financial constraints that prevent the Chief Secretary and the Chancellor from acting, but the ideological constraints that they have placed upon themselves.
I ask the Chancellor and the Government to consider two areas where I believe that there is a developing consensus throughout the whole country, which extends beyond the Labour party to the British Medical Association, the Royal College of Nursing and the National Association of Health Authorities, and includes many Conservative Members.
Indeed, I was interested to read the Budget submission of the Tory Reform Group. The Chancellor may not like to listen to what the Tory Reform Group says. It is interesting that its patrons include the Secretary of State for Education, the Chancellor of the Duchy of Lancaster and the Home Secretary; of course, its president is the Secretary of State for Wales. The Tory Reform Group says:
"The Budget … will be judged not by the size of the nest egg, nor by the Government's ability to accumulate it—but by the way in which they choose to use it … If this is the situation, it all becomes a question of priorities and high on that list will be education, employment, social services, the inner cities and, above all, health.… It would be deeply offensive to many people, in all parties, if the major 'bonus share' in this year's Budget were to go to those on higher incomes until or unless the most pressing needs of the NHS are also met."
Mr. David Winnick: I cannot speak on behalf of the Tory Reform Group, but is my hon. Friend aware that when I visited the Queen Elizabeth hospital in Birmingham at the beginning of January, I went into the section dealing with cancer patients where I was shown two wards with 14 beds for cancer paitents which had been closed in the last year? When I wrote to the chairman of the regional health authority, he replied that, with the financial crisis facing the west midlands, there was no alternative. Does that not give the lie to those who argue that there is no crisis in the National Health Service?
Mr. Brown: I agree with my hon. Friend. The letter which had to go out from the Minister of Health to the chairmen of health authorities in December said that it would not be possible to transfer resources to the priorities which had been identified by the Government because of the cash restraints. It is not just the Tory Reform Group, which is patronised by a number of Cabinet members, which believes that the Budget should be used to help the National Health Service.
There may be some doubt about what lay behind the speech of the Secretary of State for Social Services at the Young Conservatives' conference. What is clear is that the Secretary of State believed that the Treasury had stopped him getting the best settlement for his budget. He said:
"It seemed to me clear, as many have said, we needed more resources, and I secured from the Chancellor increases on top of what we had in the last eight years … 11 per cent. in real terms, but I did not think that was enough in terms of the changes I would like to see … I wanted to see additional resources above and beyond what I secured."
If the Secretary of State for Social Services is right—he speaks with all the honesty of a Minister who was

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defeated on the issue—what weight can we put on the words of the Chief Secretary when, addressing the Select Committee on the Treasury and the Civil Service, he said:
"We reached a bilateral agreement on the programme and that tends to suggest an agreement means consensus … Every colleague had the opportunity of making whatever points he or she wished to make."
Who is telling the truth—the Secretary of State for Social Services, who said that he was defeated, or the Chief Secretary, who said that there was no battle? Perhaps there is no contradiction. Is it that the Secretary of State for Social Services fought so valiantly for his budget that no one noticed? Is it that the Treasury had simply stopped listening to the Secretary of State for Social Services a few weeks ahead of the rest of the country? Or is it that the Treasury is determined to stand up to the Department of Health and Social Security and has a different agenda, seeing in the current problems of the National Health Service an opportunity to narrow the scope of a public service?
Is it not the case that, when the Secretary of State for Social Services agreed with the presidents of the royal colleges of medicine that more cash was needed for health care, the Chief Secretary replied that that could come from the private sector? Is it not the case also that the main item being considered as part of the internal Health Service review is the expansion of the private sector in medicine? The electorate was not told about the review. Consultation will clearly he a charade. The review will be dominated not by the professionals in health care, who are not even included in its membership, but by people who use the National Health Service only as a last resort.
The Under-Secretary of State, the hon. Member for Derbyshire, South (Mrs. Currie), in the speech in which she urged people to give up second holidays, when millions cannot afford the first, said:
"There are many of us around now that feel that the time is right to look at radical new solutions to take us into the next century, solutions which revolve around the private sector playing a far bigger part in health provision in the future … We could be asking it to grow to £2 billion or more in a comparatively short space of time … We are talking about a thumping big growth of that sector the like of which we have never seen in this country before … We will have to consider whether they can do it by themselves or whether they will need help. And I don't just mean tax relief or whatever."
Is it not clear that for the Government the crisis in the National Health Service—for that is what it is—is not a challenge to statesmanship, not a call for compassion and care, not a call to avoid needless suffering in hospitals, but a new opportunity for the private sector, with an agenda to push more and more patients into the private sector and bring private profit right to the heart of the NHS, the one great public service that has so far resisted the Government's obsession with privatisation?
The NHS is to be considered for privatisation not because it is inefficient — there is no evidence that, compared with the private sector, the NHS does not secure far better value for money, is administratively far less expensive and is far more cost-effective than any private sector hospital—not because the private sector can offer a better deal, but simply because the NHS is there, next in line after electricity, water, coal, steel and the privatisation of local authority services. It is for Conservative Members the last great public service still to be captured by the speculative forces of the City. The
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response to eight years of neglect in health care is to withdraw the public sector systematically from a solution to the problems that the Government have created.
Mr. Forth rose——
Mr. Brown: I am not giving way to the hon. Gentleman again.
There is another area where there is a developing consensus in the country which excludes the Government. People are increasingly realising that the Government must invest more in training, in education, in research and development, in science and in innovation to ensure long-term economic efficiency and industrial success. As a nation we are already investing less in ourselves in the oil-rich 1980s than we did in the 1960s and 1970s. We are investing a smaller share of the national income than any other European country, with the exception of Belgium. The CBI has just reported that the shortfall in investment has serious implications for business competitiveness.
What sense does it make for the Government, who should be bridging the investment gap in those vital areas, to compound the problem by announcing, in the small print of the White Paper on public expenditure, cuts in the real value of capital investment in just about every Department?
There are cuts of £14 million in the capital programme for education and science; of £30 million in transport; of £90 million in trade and industry; of £120 million in housing; of £48 million in Scotland; and of £38 million in Wales. In real terms, capital investment has been significantly increased only in the Home Office prison building programme, because we need to build more prisons to cope with the increased crime levels. As the evidence to the Treasury and Civil Service Select Committee states, capital investment is to fall in real terms by 5 per cent. in central Government over the next three years, and by 14 per cent. in local authorities.
Mr. Kenneth Hind rose——
Mr. Brown: I am not giving way again.
We know that more people leave school early without qualifications, and that our work force contains fewer people with technical qualifications than those of most of our major industrialised competitors. But the Government will not act, even when they recognise that there is a shortfall in the investment going into those vital areas, even when in other countries the public sector fills the gap and spends more, and even when it is admitted that market forces of themselves cannot do the job properly.
Was it not Sir Francis Tombs, the personal scientific adviser to the Prime Minister, whose Engineering Council said yesterday:
"Normal market forces will not work to make up the severe shortfall and provide the skills base needed by modern industry and commerce"?
Even when the Government know that there is a short age of investment and the market will not fill the gap, they refuse to back public sector investment to the extent that they should. We need a Government who open doors to young people; to provide opportunities, break down barriers and help young people up the ladder of opportunity. Instead, we have a Government who, by failing to invest to the same degree as our competitors, are slamming doors shut in the face of many young people who need the best possible technical training and skill qualifications if we are to succeed in the modern world of the future.
Mr. Ian Taylor rose——
Madam Deputy Speaker: Order. The hon. Member for Dunfermline, East (Mr. Brown) has already said that he is not prepared to give way at this stage.
Mr. Brown: The same is true of the problems that we face in research and development, problems that are not answered in detail in the public expenditure White Paper or in anything that the Chief Secretary has said. Let us take the science budget. After the pay awards and the new spending announced for AIDS research, it receives no extra money. Professor Sir David Phillips, chairman of the advisory board for the research councils, has said that decisions by the Government are
"leading progressively to an unstable situation".
The board says that the budget
"does not provide the means to move our nation's scientific capability towards the twenty first century".
The Medical Research Council faces for tomorrow the same problems faced by the National Health Service today. Referring to the shortfall of £40 million in medical research funds, Professor Colin Blakemore, head of physiology at Oxford university, has said:
"In my gloomiest moments I think we have lost the future".
Professor Leslie Iversen, head of the United Kingdom neuroscience laboratories, has said:
"We are committing national suicide".
The Government admit that the private sector is not doing the job. The Secretary of State for Trade and Industry has said that our private sector research and development is a smaller proportion of gross domestic product, and is growing more slowly, than that of our major competitors. In other countries, as the CBI has pointed out in its agenda for 1988, far more money is spent on research and development. But even when it is recognised that market forces will not do the job by themselves, the Government are not increasing the research and development budget in the way that is necessary to guarantee economic efficiency and industrial success for the future.
When will the Government set aside their antipathy to everything public and their obsession with everything private? When will they realise that the public sector exists not because of decisions by previous Labour Governments, but because there are national responsibilities, which the private sector cannot or will not undertake and market forces alone cannot perform in the national interest? Only because of the success of 100 years of collective provision in education, training, health and transport have people forgotten the chaos, the uneven patchwork of provision, the undercapitalised industries, the obsolete equipment and the gaps and shortages in a whole range of public services, which led people to demand public intervention as a necessary way of improving our economy in the first place.
What is perhaps most worrying about the Government's stance in these few weeks in the run-up to the Budget is that we are being asked to sacrifice the certain, unmistakable, concrete benefits of overdue and necessary public investment in our National Health Service, and in other public services vital to the economy, for the unproven and unprovable, the untested and untestable, benefits of top-rate tax cuts for the very few.
The Government are not yet satisfied, having already reduced the top rates of taxation, given away £13,000 million in tax cuts to the very rich and created a whole
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series of tax concessions that are available only for them. The Government are not satisfied that those in the top range of the income scale can set £40,000 against tax for the business expansion scheme, and that limitless tax reliefs are available in forestry—usually for planting the wrong trees in the wrong place for the wrong reason.
They are not satisfied even when, in the heart of the most deprived inner-city areas, enterprise zones have become tax shelters for the very rich to make a great deal of money without even setting foot in those areas. They are not satisfied that, when the basic rate for a nurse, a car worker or a teacher is 27p in the pound and utterly unavoidable, the effective tax rate for many wealthy people can be as low as 10p in the pound.
How, in those circumstances, can the Government defend putting money aside for further tax cuts for the very rich? Would it not be the triumph of dogma over common sense for the Government even to contemplate abolishing capital gains or inheritance tax, at the cost of more than £1,000 million to the nation—money that, if properly invested, could ease the problems in our hospitals and health centres, and go a long way to restoring the vitality of many public services? Would it not be the triumph of greed over the national interest if the Government were to proceed with their plans to reduce the top rate of taxation from 60p to 40p or 50p in the pound, when the money that would be lost to the nation——
Mr. Neil Hamilton rose—
Madam Deputy Speaker: Order. The hon. Member for Dunfermline, East made it clear earlier that he was not giving way. The hon. Member for Tatton (Mr. Hamilton) has only just come into the Chamber, yet again.
Mr. Brown: Would it not be the triumph of greed over common sense if the Government were to use the £1,600 million that would be lost in top rate tax cuts—money that could make good the shortfall in the NHS finances identified by the all-party Social Services Committee only in the last few weeks? What justification can the Government have for giving more to people who are already wealthy, when the NHS and other public services are waiting for vital funds?
Several Hon. Members rose——
Mr. Brown: I am just finishing my speech.
When I see the ever-lengthening queues of the elderly and the sick waiting for hospital treatment which they cannot now rely on obtaining; when I see pensioners so poor on £39·50 a week that they have to choose between heating and eating; when I see families in such distress that many children, in the 1980s, are going to school ill clad and hungry; when I see households so destitute that they will now have to beg and borrow from a state charity fund which will not even offer to help them in the first instance; and, on the other hand, when I see unused and under-used resources—money that is being sent overseas when it should be invested here, money squandered in speculative activities in the City when it could be used more productively in industry and money going to a rich few on the basis that as their incentive they must get richer while the poor need the spur of their poverty to escape; when I see needs that can be met only by public intervention to redress the economic imbalance and social injustices and at the same time Government resources being misdirected, I see the challenge facing a Government in a democratic

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society. It is a challenge to meet those unmet needs by using those under-used resources that, because of their antipathy to public investment and services, this Government refuse to meet. It is a challenge that, in the interests of social cohesion, should be taken up. It is a challenge that clearly will be met only by a Labour Government.
5.20 pm
Mr. Terence L. Higgins: Iain Macleod, under whom I served my apprenticeship on the Opposition Front Bench, when faced with a concession from the Government, had a favourite expression—I never shoot Santa Claus. It is a dictum that the hon. Member for Dunfermline, East (Mr. Brown) might take to heart. The speech of my hon. Friend the Chief Secretary contained a considerable number, not only of concessions, but of important improvements in the way in which economic forces might be handled.
With great warmth and enthusiasm, I express my appreciation for the way in which my right hon. Friend has responded, and responded so quickly, to the views expressed by the Treasury and Civil Service Select Committee.
Some of these issues are of great political importance to our constituents. If one gets one's report accepted in such a way, one should tear up one's notes and make a different speech, but I shall retain a certain amount of what I was going to say.
I welcome my hon. Friend's response on documenta-tion and the procedures of the House for debating these matters. We have seen substantial improvements in our procedures since the beginning of the decade, and particularly in the balance between the Executive and Parliament, not least by the establishment of the departmental Select Committee system, combined with the important arrangements that we now have for debating items of public expenditure under the Estimates day procedure.
In the report that the Select Committee has just produced, we are seeking to build on those two major reforms in an important respect. We suggest that the documentation should be improved. The Select Committee advocated, and my right hon. Friend has accepted, a change in our arrangements whereby more detail is provided in the Autumn Statement, and then the main bulk of the enormous public expenditure, volume II, is divided into departmental reports. If that can be achieved, the extent of parliamentary scrutiny and accountability of the Government will be greatly improved, and that will be an important change.
If we go along that route, it will have important implications for the way in which we debate these matters. This may even be the last of the public expenditure White Paper debates in the present form. It has never been a particularly popular debate. When it was a two-day debate, it was disastrous. The Whips used to spend their time finding Members to speak. If we can have closer scrutiny on a departmental basis, while at the same time continuing the improvements in Estimates days, this will be a great change and an improvement in the way in which we debate our procedures.
The documentary side has essentially been accepted by my right hon. Friend the Chief Secretary. The procedural side has important implications for everyone in the House, not least the Opposition, and we have put forward our
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proposals as a Green Paper rather than as a White Paper. None the less, I hope that they will be carefully considered and that changes can be made.
My right hon. Friend the Chief Secretary has responded to certain important aspects of the Committee's report. Much of it is concerned with the problems that arise in the assessment of priorities within the financial year. We draw particular attention to these problems in paragraph 36. We say:
"One objective of the White Paper and related documents must be to enable departments and those implementing their policies to plan ahead, but this is manifestly being frustrated in some cases by the way in which pay settlements are treated each year."
We took the NHS as a good example, pointing out that district health authorities do not have a firm basis from which to plan for the future. As I understand it, my right hon. Friend the Chancellor of the Exchequer is essentially proposing to accept what we suggest in paragraph 37—that is, to alter the timing or the pay review bodies and to bring forward the timing when the Government announce their decision on whether they accept the recommendations of the review bodies, and on funding, so that those who have to plan for the year ahead will know what the situation is before the year begins.
That is a very significant change and one of great importance for the health authorities and all other responsible bodies. The rapidity of the Government's response is to be welcomed. It may be that my right hon. Friend the Chief Secretary was going to say all this anyway, without the Select Committee's report, but, on the other hand, it is possible that that might not have been the case. He is also suggesting for this year that the results, particularly of the nurses' review body, about which we are all greatly concerned, will be announced before the end of April, and my right hon. Friend showed clearly that he thought it would be premature of health authorities to go ahead and announce savings elsewhere in the Health Service until that was done. I certainly agree with him in that respect.
I can refer to a constituency case. Worthing health authority is carrying out widespread public consultations on a long list of savings that may need to be made if the nurses' review body and other pay settlements are not funded in full, and that is causing considerable concern. My right hon. Friend is right to say that decisions should not be taken on that basis until we know what the position is on funding, and he has made it clear that he hopes that that will happen by the end of April.
It is sometimes suggested that we need not fund the pay settlement in the Health Service in full, because that will somehow encourage efficiency in the Health Service. Because of demography and other factors, the pressure that the Health Service faces is great enough to encourage it to seek every possible improvement in efficiency. On the other side of the coin, if even greater pressure is imposed upon it so that it has to make savings elsewhere, typically, it closes wards. Nothing is more inefficient than closing wards where all the overhead costs continue and the savings are small. I understand the point that my right hon. Friend the Chief Secretary made, and I am putting forward a powerful argument that, when the settlement is finally decided in April, the full amount of the funding should come from the reserve and not from savings elsewhere in the Health Service.

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The Select Committee also referred to a related and broader point about priorities within the Health Service. There is a danger that, when a particular Department finds that it has to make a substantial increase in resources, and that is accepted by the Treasury and the Government, if that increase cannot be met from the reserve, it is right that the matter should be looked at across the board to see whether savings should come from some other Department than from the Department which, it has been agreed, should have more resources. If not, we cannot be sure that we have the right allocation of resources.
The letter that the Treasury sent to the Committee in answer to the point that we raised about these issues made it clear that in previous years—on the Health Service, for example — the Cabinet had not looked across the board for where the savings should come from. It is understandable that, if someone comes to the Cabinet once the expenditure round is finished and tells its members to look for savings elsewhere, the Cabinet will make a rapid decision not to do that and to find the savings in the Department that needs the extra money. But that is not the best way of ensuring that our resources are properly allocated.
Much of the problem in the Health Service has been that resources have been badly allocated between different districts within regions. During the long period when the Labour Government were supported by the Liberal party, and when there were cuts in the hospital building programme, it was difficult to move resources from the districts that were said to be overfunded on the RAWP formula to those that were underfunded. One of the beneficial effects of the big increase in Health Service resources that has been made is that it is now much easier to make such a redistribution from one district to another, because it does not then involve a proportionate cut in the parts of the region that were previously overfunded on the RAWP formula. That is one of the Government's successes in the Health Service.
The Select Committee's report also addressed the issue of how to appraise the allocation of resources in the past. The relative price effect, rather than the cash figures deflated by the GDP deflator, is a better way to measure what has happened. It may not be the right measure on pay from the nurses' point of view, but it is the right way of asking whether we have allocated more real resources to this or that use. That provides the basis for the future. There has been some misunderstanding about this on the part of the Treasury, which is worried about the cash limit system being undermined. Neither I nor the Committee believe that that will happen, and there is an argument for using the relative price effect in the future.
We shall have to read carefully what the Chief Secretary said this afternoon about the EEC. It was a complex statement, but he again responded immediately to the Committee's suggestion that the position on the EEC should be clarified.
Overall, I believe that my right hon. Friend made an excellent response to a series of constructive suggestions; I congratulate him on the way in which he made his speech and on its content.
5.32 pm
Mr. Giles Radice: It is a great pleasure to follow the right hon. Member for Worthing
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(Mr. Higgins), because he is an excellent Chairman of the Treasury and Civil Service Select Committee, and it is due to his wise chairmanship that we have produced an excellent and constructive report that will help the House to come to a view on public spending, and on what has happened and what should happen.
The background to this debate and to the run-up to the Budget is that, despite a year in which output growth has been at its highest since the early 1970s, and in which revenues are likely to be much greater than forecast last year, the Government refuse to sanction the necessary increases in Health Service spending. Such increases would, as most objective observers agree, help to solve the current crisis in the National Health Service.
Mr. Quentin Davies: Before the hon. Gentleman proceeds to all the strictures which I do not doubt he is about to deliver to the Government, will he, in passing, be generous enough to pay tribute to them for the two achievements to which he referred — the growth rate that we have enjoyed, which is unprecedented for a generation, and the buoyancy of revenue? Will he for once give a little credit where it is due?
Mr. Radice: I note that the hon. Gentleman did not mention North sea oil. As for the growth rate, the Chancellor told the Select Committee that it was not sustainable beyond one year, as the hon. Gentleman will remember.
Buoyant revenues are excellent, but how should they be used? That constitutes part of the argument between the Opposition and the Government. Some Conservative Members would like the revenues to be used to increase National Health Service spending. Most observers find it difficult to understand how, given the increase in revenue and the good year that the economy has had, the Government have got themselves into such a pickle over Health Service spending. The Select Committee report helps to shed some light on what has happened.
First, it is clear that the Treasury bounced the Cabinet into its decision on public spending, with a highly conservative estimate of what revenue was likely to be. It is obvious that the Treasury had a good idea last autumn that revenue was running well ahead of forecast, yet no account of the buoyant revenues was taken when the public spending total was determined. If revenue determined expenditure, as successive Chief Secretaries have told the Select Committee it does, and as the Government claim, total spending could be up to £10 billion more than the Government have decided. Even without the revenue increase, spending could be at least £1 billion or £2 billion higher and still remain within the Government's target of reducing public spending as a proportion of GDP.
The Committee's second point was that Government procedures for determining public spending did not allow the Government to develop a coherent view of competing priorities. As we said:
"A series of bilateral negotiations with individual Ministers does not add up to collective decision making."
I also suspect — I refer to the point made by my hon. Friend the Member for Dunfermline, East (Mr. Brown) in his excellent speech — that the process of bilateral negotiations was fatally undermined last year by the failure of the Secretary of State for Social Services to press for sufficient funds for the Health Service. As we saw from

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the example of Sir Keith Joseph, as he then was, it makes it easier for the Chief Secretary and lets the Cabinet off the hook if a Secretary of State fails to bat for his own budget.
So, partly because the Treasury bounced the Cabinet on revenge, and partly because the responsible Minister failed in his duty, the Government have got themselves into an appalling mess over the National Health Service. Yet, as everyone knows, money is running out of the Chancellor's ears. He will have at least £10 billion more revenue than he told the House—and his own colleagues—he had last year. The Government have the extra money—and more — to begin to help solve the National Health Service crisis, but they refuse to do so.
Finally, I want to consider whether decreasing public spending as a proportion of GDP is any longer—if it ever was—a suitable policy objective. This is in part a political argument. The Opposition believe that a civilised, prosperous nation such as Britain needs a substantial level of public spending and public investment in basic infrastructure such as roads, transport, lighting and sewerage, in basic services such as health, education and housing and to provide a basic income for people in sickness, unemployment and old age.
Conservative Members tend to be far more sceptical about public spending. They argue that many of the public services can be provided by private enterprise and that extra revenue should be given back in tax cuts so that people can spend the extra as they want. I believe that that is the Treasury argument. They argue, too, from a historical point—that in the 1970s public spending was out of control and that public spending increases at that time led to inflation.
I do not want to get into that old debate, except to say that the main reason for the public spending increases as a proportion of GDP in the 1970s was the impact of the recession on revenue. If hon. Members doubt that, they should remember how Government spending rose as a proportion of GDP at the height of the recession, between 1980 and 1982. It is interesting that, when the Government quote figures about the proportion of public spending compared to GDP, they do not take figures from the time of a Labour Government — they have to take figures from 1982, when public spending rose to 46 per cent. of GDP. It was a case not of profligacy on the part of the Government, but of the impact of the recession on revenue spending.
There is little evidence to suggest that increases in public spending in 1974–75 led to the inflationary surge of that period. I have studied this carefully. The main engine of inflation was the burst in commodity prices, the oil shock and the accompanying pay explosion.
In any case, the situation today is very different from that in the mid-1970s.—[Interruption.] I do not think that we were responsible for the Barber boom. Public spending has declined sharply as a proportion of GDP. It is now about 42 per cent., compared with nearly 47 per cent. in 1982–83. Output growth this year is the best since the 1970s, as the hon. Member for Stamford and Spalding (Mr. Davies) said. Although it is expected to decline in the coming year, it should still be in the region of 3 per cent. —the figure the Chancellor told the Select Committee the British economy ought to be able to sustain for several years. In these new circumstances, the question becomes: why on earth should public spending not grow in line with growth in GDP? The House should consider that proposition seriously.
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Now that public spending is down to 42 per cent. of GDP, why are the Government planning a further decrease, as is suggested in the White Paper? The only rational argument for continuing the decline of public spending as a proportion of GDP is that it will allow taxpayers to have more money to spend as they like. That is the only argument that we hear from the Conservative party, but there is no economic justification for it. Yet we know from public opinion polls and the pattern of expenditure in other similar countries that, as people grow more affluent, they prefer to spend more on health and education.
There is therefore a strong case for allowing public spending to rise in line with growth. That is not inflationary or fiscally irresponsible. Increases in public spending would not be financed by increased borrowing or by increased taxation, but would come from increased output.
The great advantage of such a shift in policy would be that it would enable the education budget, for example, to be increased substantially. We know how important education is for the country's future. Such a shift would also allow Health Service spending to rise more in line with increases in costs and changing needs in the NHS. It would also allow badly needed investment in infrastructure projects to go ahead.
The tragedy about the Government's stance is not only that it has no economic justification, but that it is rapidly creating a country in which private affluence and public squalor exist side by side. Any hon. Member who doubts that has only to travel around the country and then go to France, West Germany or Scandinavia to see the contrast.
However, I live in hope. I have noted that, since 1983, to a far greater extent than they admit to their followers, the Government and the Chancellor have shifted their economic policies in a more pragmatic direction. It is essential for the future of the country that, on this vital issue of public spending, which is basic to our civilisation, the Government change direction.
5.45 pm
Sir Peter Hordern: The speech of the hon. Member for Durham, North (Mr. Radice) followed closely that of the hon. Member for Dunfermline, East (Mr. Brown). They are both in a predicament which they must get out of themselves. We cannot do that for them. They want more public expenditure, but they are unable to say quite how it will be found.
Mr. Radice: I said growth.
Sir Peter Hordern: The hon. Gentleman said that public expenditure could increase at the same pace as the national economy grew, but experience shows that only if public expenditure is a smaller proportion of gross domestic product can the economy grow. As the economy grows, more is available for public expenditure as long as the proportion taken by public expenditure is always reducing. Both hon. Members are in difficulty, as they have to criticise the level of public expenditure and output.
I listened with interest to the remarks of the hon. Member for Dunfermline, East about the Health Service. Anybody who has followed these matters for some time recognises that expenditure on the Health Service has increased in both money and volume terms. I have heard the hon. Member speak in previous debates. I remember

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a winding-up speech in which he said that nurses were leaving the service. That is true; but many more are entering it. It is natural that nurses should leave to get married, for example.
It is the partial description of what happens with public expenditure which does the Opposition great harm. The volume of public expenditure is increasing all the time and' its nature is always improving. I believe that the Opposition will appeal only to an ever-declining proportion of the population if that is the line that they pursue.
I should like to draw attention to the report of the European Court of Auditors, which is relevant to the public expenditure White Paper by virtue only of the amount we pay into the European Community. I do not know whether my right hon. and hon. Friends have read the report, but it is an indictment of the process of financing the EC. In my time in business, I have seen some very doubtful reports, but I have seldom seen such a display of deferred expenditure—the "cheque in the post" attitude—which the Court of Auditors has been obliged to reveal.
It is difficult for somebody who is not on the Treasury Select Committee to know exactly what the process is. As I understand it, the European Court of Auditors writes its report, the European Parliament debates it, and then it goes to the Council of Ministers. It makes proposals to the European Commission, which is not entitled to take any action. The result is that all we see is a report from the European Select Committee on the European Court of Auditors' report. That is not a satisfactory way of going about our affairs.
Mr. Higgins: It is debated.
Sir Peter Hordern: As my right hon. Friend says, it is debated.
should like to see a Treasury minute, similar to those in respect of public accounts, relating what the Government propose to do and what they propose to recommend in the Council of Ministers. It is an important point. Whatever happens about the decision that was arrived at yesterday by the European Court, the European Community will bulk ever larger in our debates. Such a poor form of restraint on the finances of the European Community is intolerable.
Mr. Ian Taylor: I entirely endorse what my hon. Friend has said about the problems of Community budgets and negative reserves. Did he welcome the Prime Minister's statement last week, when she categorically said that, under the revised form of the budget agreed at the recent Brussels summit, such practices will no longer be allowed?
Sir Peter Hordern: I hope that my hon. Friend is correct and that my right hon. Friend the Prime Minister will be able to see that all goes well. I have known it to happen that my right hon. Friend the Prime Minister does not always get her own way within the European Community. The matter to which my hon. Friend the Member for Esher (Mr. Taylor) referred must be examined. I would rather see it addressed in the usual way by Treasury minute, so that we may see what the Government propose to do about it.
Everyone agrees that health is the most important aspect of public expenditure. It is certainly the most
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rapidly growing part of any programme within the public expenditure White Paper. Everybody believes that that is a good thing. Looking back over the history of public expenditure White Papers, it is evident how programmes change. A few years ago, when the Labour party was in power, trade and industry formed a substantial part of public expenditure, but that programme is declining, largely because of changes in philosophy and in the regional grant system. Another change is the decline in the amount of pubic sector building. Anyone who looks at that figure will recognise the great advance that has taken place in private sector repairs, maintenance and building, and the level of construction generally.
If one is to obtain a fair picture of the economy at the moment, one must take into account not only the decline in public sector building, but the great advance that has taken place in construction, repairs and maintenance in the private sector. Nevertheless, in trade and industry, and especially in building and construction, the public sector has declined. And it will continue to decline because of the increase in the number of owner-occupiers. That appears to be a natural trend, which is reflected in the huge increase in the number of people who own shares.
It is inescapable also that more and more people will wish to provide for their own health, however good the National Health Service is. Ultimately, they will not accept that what they spend on health should be controlled by what the Government think is appropriate. Health is becoming more of an individual responsibility. People of all political persuasions are increasingly questioning the capacity of any Government to confine their desire to pay for their health and provide for it within a nationalised monopoly system. It is increasingly the role of employers to provide for the health of their employees. Employers will wish to take out separate health schemes for their employees.
Already about 5·25 million people are covered by private medical schemes. Another aspect, which will be an increasing problem, is the number of elderly and retired people. There was a time when a substantial proportion of such people were cared for in local authority homes. That number has substantially declined. Hon. Members should look at the increase in the number of those who are looked after in voluntary private homes. In 1976, there were 46,000 such people. In 1986, there were 112,000.
Mr. Archy Kirkwood: They are provided through local authorities.
Sir Peter Hordern: The hon. Gentleman is perfectly correct. Many are provided and paid for by local authorities, but that is not my point. Because of the Government's generosity, that will continue to happen. Such services are provided by the private sector, whether or not they are paid for by local authorities.
Of course, the population is living much longer. As far as I know, nobody proposes that there should be a vast extension of the number of publicly owned nursing homes. There is greater private provision of homes and health services for the elderly. The present trend is certain to increase.
We must take account also of rapid advances in medicine. The other day I asked what were the 10 most common operations. The tenth most common operation is a hip joint replacement. In 1984, the latest date for which figures are available, there were 53,000 hip joint

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replacements, costing £3,300 each—that is £150 million.Ten years ago, such a cost would not have arisen. There were no such things as hip replacement operations. As medicine progresses, there will be more and more necessary, complicated and expensive operations.
That leads me to doubt whether the National Health Service can any longer be confined within the public expenditure programme as such. After all, when the Government weigh up one public expenditure programme against another, it is comparatively easy to limit, say, agricultural spending, trade and industry spending, or other parts of the public programme. But in the National Health Service, some of which is demand-led—I refer to family practitioner services — there is no control. As advances in medicine continue, there is no sensible control. Perhaps we shall go on for a few more years, but certainly what we spend on national health as a public expenditure programme will no longer be tolerated by people if it is to be compared with what is spent in other public expenditure programmes.
It is not as though the Government actually run the National Health Service. They run the Department of Health and Social Security. That is a different matter. The National Health Service is at arm's length. It has always been my complaint that the DHSS does not know what goes on in the NHS. The information available to it is poor.
I noticed that, for that part of the NHS for which the DHSS is responsible, there is to be an increase in manpower this year from 94,700 to 102,900. How did that get past my right hon. Friend the Minister? The Government are directly responsible for that figure. It has nothing to do with the Health Service recruiting administrators, or anything like that. It cannot be a misprint in the papers. On the whole, the number of people directly employed by the DHSS in the National Health Service has been declining for some time. What is the reason? It is a substantial advance. It is most unlike my right hon. Friend to let that slip through. I expect a satisfactory answer.
I wonder whether a state monopoly is the best way of providing for health services. No other country tries to do it, and none would dream of doing so. A monopoly of health service provision is no longer to be tolerated.
The weakness in the argument about higher charges —which some people would like to see— is that they would fall most severely on the poor who need to use the services. Another alternative that has been mentioned involves tax concessions to those who want to opt out of the National Health Service. That would only result in a greater charge on the Treasury and therefore less money would be available for the health services, however they are provided. I am not in favour of those alternatives. Any new scheme must allow the poorest access to the best in health care. There should be a national scheme to provide that care, while allowing greater choice.
A very interesting article appeared in Economic Trends in October 1987. It showed the proportion of public expenditure to GDP over many years. It showed that in 1890 public expenditure was 9 per cent. of GDP; in 1913 it was 12·1 per cent.; in 1923 it was 25·7 per cent.; and in 1975 it was 48·8 per cent. —the highest point that it has reached.
It is evident that the blocks of public expenditure have risen. Just before the first world war, public expenditure was low. Between the wars it rose and it has risen again,
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although it is now declining thanks to the efforts of my right hon. and hon. Friends. If there is a rapidly growing demand for a public service like the Health Service, it will inevitably mean a further large increase in public expenditure as time passes if it is to be kept within the programme. The demands cannot be resisted. At the moment, health demand is rationed. That is unsatisfactory and does not happen in other countries.
I believe that an alternative system should be tried. I believe that health services should be provided through a national health insurance scheme. The advantage of such a scheme would be that if it were provided the poorest would have access, as they have at present, to the best treatment. However, because there is a limit—a flat rate amount which is paid at the top level by high earners—the high earners should not have the same right of access to the same health facilities. High earners should be allowed only half the cost of health facilities that they receive. If that happened, the better-off would be inclined to insure themselves for their health needs through private health insurance schemes. That is what happens at the moment in Canada. Inevitably that would lead to the introduction of private health insurance schemes as direct competitors with the National Health Service.
There should be a system, like that operating in Medicare, of testing and costing each operation in the National Health Service. If that was applied, hospitals carrying out operations would be remunerated on the basis of operations carried out and not on the basis of a budget which causes ward closures as hospitals are penalised for carrying out too many operations. I hope that that fundamental change will be considered. Indeed, I understand that that idea is being considered in the present fundamental review of the Health Service.
The advantage of that scheme is that the provision for health would fall on the patient and the doctor. The doctor would be able to say where the patient should be treated. There would be no restrictions on treatment within the national health insurance scheme or in a private hospital. The costs would be regulated in the way in which I have described. If such a scheme was in operation, there would be no need for district or regional health authorities. That whole great apparatus of control would disappear and the new system would contain elements of the systems operating in France, West Germany and the United States. There are clear and obvious advantages in such a scheme.
Inevitably people would pay more for their health services. I see no reason why they should not do that. I object to people being constrained in what they wish to pay for their health by being part of the public expenditure programme. In future that will be a growing and intolerable restraint. I therefore hope that my right hon. and hon. Friends who are carrying out the review will consider this alternative carefully.
I congratulate my right hon. Friend the Chief Secretary to the Treasury and all those responsible on drawing up the public expenditure White Paper, on the clarity with which these matters are being pursued and on the enormous volume of information given in the report. Better still, I want the constraint of public expenditure within GDP to continue and also a growing volume and value of services within a growing GDP.
6.5 pm
Mr. Archy Kirkwood: I listened with great interest to the hon. Member for

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Horsham (Sir P. Hordern). I have no objections in principle to the private sector participating and playing a part in health care concurrently with a National Health Service based on a properly resourced tax-funded system. I have no objection to the proposed Government review looking at all these matters carefully and scrutinising the proportion of expenditure that we devote to public expenditure in general and to the National Health Service in particular.
I cannot agree, however, with the hon. Gentlemen's conclusion that we should move away from a tax-based National Health Service at this stage because I believe that that would lead inevitably to a two-tier system. Once a system is designed specifically for the poor, it will inevitably become, almost by definition, a poor system.
If we were debating these matters against a background of straitened financial circumstances, there might be more force to the hon Gentleman's argument, but we have heard in the debate that the Government are relatively well off in terms of public finance at the moment. I accept that that is not an excuse for profligacy, but we have an opportunity to make modest and prudent increases and improvements to the level and way in which we disburse public expenditure. That should be the focus of this evening's debate.
I want to consider in detail some of the points made by the Chief Secretary to the Treasury. He began by saying that, of course, the economic situation has improved. However, it would have improved automatically under any Government who were able to derive the benefits from North sea oil over the period of tenure of the past two Administrations. The revenue from North sea oil alters the situation. Comparisons between previous Governments and their stewardship and custodianship of the NHS have to be undertaken bearing in mind they start from two different bases. We are not comparing like with like when we take account of the current impact of North sea oil.
Nor should we ignore the fact that benefits in the form of revenue and capital accrue from the Government's current privatisation programme. I agree that parts of that programme are legitimate disposals, but I fear that the majority of the programme of sales of assets is a political mistake. However, we cannot ignore the fact that the Government have received the benefit of those proceeds.
The complaint has been made before—and I make it again now — that even if we do agree with the privatisation programme, trying to use the benefits, as the Government have, by treating them as negative capital expenditure, does nothing to improve the explanation of exactly what is happening in terms of the detail in the public expenditure White Paper and the Government's published expenditure programme. Treating those privatisation proceeds as negative public expenditure is tantamount to fraud and a great mistake.
The Chief Secretary to the Treasury said that benefits were derived from having lower debt costs and more efficient nationalised industries. He should tell that to his right hon. Friend the Secretary of State for Energy, who has just announced a 15 per cent. increase in electricity prices over the next two years. Clearly that increase is a prelude to moving the electricity industry out of the public sector and into private ownership at the expense of many old-age pensioners who rely on electricity as their single and exclusive form of heating. That particular part of the
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Chief Secretary's speech will be cold comfort to many of my constituents and other pensioners up and down the country in cold winters to come.
I wish to underscore and support what was said by the hon. Member for Durham, North (Mr. Radice) when he spoke of the proportion of GDP that should be devoted to public expenditure. I believe that the Government are duty bound to say at what stage the reduction will stop. I believe that there is indeed a case for prudently constraining public expenditure and that there is no case whatsoever for being profligate.
The hon. Member for Horsham gave us a history lesson about public expenditure levels in 1890 and identified that the proportion of GDP spent on public expenditure had inexorably increased — 48·8 per cent. of GDP was the highest percentage rate achieved. According to the Chief Secretary, that proportion will be reduced to 41 per cent. in the fiscal year 1990–91. Will that be the end? Is it the Government's intention to try to constrain the percentage of GDP spent on public expenditure still further?
I would certainly deplore any such reduction, and I believe that we should work on the formula suggested by the hon. Member for Durham, North to maintain that proportion as the economy expands and grows. Indeed, we should be able to increase expenditure now because of the current healthy state of the economy. The Treasury has received windfall income from the continuation of increased company profits, from higher oil prices and as a result of the further growth of the economy. All that is welcome.
Against that background, I can see no case for the Government continuing to adopt the stand that inexorably, year on year, the proportion of GDP spent on public expenditure should be reduced. Such a policy would inevitably have unacceptable costs. I accept that there will be adjustments. The hon. Member for Horsham mentioned that the DTI programme had receded, as has the housing programme. We could have a political argument on whether such adjustments are right or wrong, but the Government have a duty to let the country know their long-term plans for public expenditure.
The Chief Secretary mentioned the hospital and community health services. I do not believe that we do our case any good by using exaggerated and hysterical language. I do not believe that the entire NHS is in crisis, but I firmly believe that there are important sectors, especially the hospital services, that require urgent attention.
The right hon. Gentleman said that in the fiscal year 1987–88 the Government had provided for an increase of 10 per cent. in the hospital and community health sector. If we accept that the current rate of inflation is about 4·5 per cent. — that is the Government's assumption — we must also bear in mind that the nurses' pay award, which was made just before the election as a result of the pay review body's recommendations, was 9 per cent. However, for some specialty nursing grades, the pay award was nearer 12 per cent.
If we also assume that there is a need to allocate 2 per cent. of funds for service development factors, the total does not add up to the money that the Chief Secretary has boasted has been devoted to the hospital and community health sector. I am sure that Treasury Ministers will correct me if I am wrong. If the Chief Secretary checks his

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figures, he will see that it is clear that the hospital and community health sector will suffer further expenditure constraints in its budget for the current fiscal year.
The budget deficit does not take account of the cumulative effect of the cuts to which reference has been made by the Select Committee. I am sure that the House looks forward to studying the report of the Select Committee on Social Services. This Committee has taken evidence from the National Association of Health Authorities and from the King's Fund. They all agree that the cumulative effect of the current underfunding of the hospital and community health service is a deficit of about 1·9 billion. This represents a substantial loss for any one sector within the Health Service to sustain, and there is cause for concern.
The Chief Secretary spoke about the new procedures for announcing the findings of the pay review body in January to allow the health authority budgets to be more properly and accurately drawn up before the start of the new financial year. I welcome that, and I welcome also the comments that he made about the points raised by the Select Committee. The Committee has raised important matters. I wish them a fair wind and look forward to early results.
The right hon. Gentleman said that he was aware of the industrial dispute in the Health Service occurring in Scotland this very day. It is true that there is a great deal of anxiety in the Scottish Health Service. This anxiety has less to do with the issue of funding of the Health Service, and more to do—as he well knows—with the directions issued by the Scottish Home and Health Department to the 15 area health boards of Scotland requiring them to adopt competitive tendering. I believe that that is a great mistake.
I am in favour of allowing boards to engage in competitive tendering if they believe that it is right. I am also aware of the political difficulties encountered where such boards have steadfastly set their faces against such a course. However, the Government's requirement for enforced competitive tendering is inimical to the long-term interest of the Scottish Health Service. I believe that the result will be that the dedication, commitment and previously high morale of the staff will be seriously eroded. The Government have effectively said that those members of staff are not doing their job properly and that private contractors can do it better.
One of the most valuable commodities of the NHS is the commitment of the staff. The Government's adoption of the tactic of competitive tendering, which obliges health boards to adopt such a system and ignores the savings that have been made—the most recent estimates suggest that some £50 million has been saved in the past three or four years—is a step which is retrograde, negative and ill-advised.
The right hon. Gentleman said that he believed that nurses are better paid now than they ever have been. However, if one considers the increases that have been devoted to nurses' pay awards it is clear that, if one takes the figures for 1979–80, the Clegg award—intended to make up for many years of underfunding and paid in one instalment — distorts all the statistics for nurses' pay. Indeed, that award makes the figures appear more generous than they are. Comparing nurses' pay with the equivalent pay for professions outside, in the private sector, a different picture emerges. They are suffering badly in comparison with the private sector.
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In conclusion, I wish to put forward a number of positive suggestions which I believe must be considered urgently within the next few months. One of my chief concerns about the White Paper under discussion is that there is no obvious provision for any increases in pay review awards or the clinical restructuring of the nursing profession. Having read the evidence given to the Select Committee by the Chief Secretary I have no reason to believe that there is any more money available for this financial year.
That would be a great mistake. I appreciate that the Budget may not be the appropriate vehicle for making expenditure announcements, because the Budget is about deriving revenue, but the Government must find the opportunity to provide extra resources to fund the pay awards. The Government are now under a lot of pressure.
I do not say that the Government should willy-nilly accept and pay the amounts in the conclusions of the pay review body, but I do say that if the Government decide to reduce the pay review award they can still—as they have in the past—underfund the amount of money to be paid. They have said that £X should be paid, and have paid only X minus a significant amount, leaving the health authorities and the health boards to find the balance out of their own resources. That is not acceptable this year. If the Government adopt that tactic, it will be extremely difficult for them to justify it.
The right hon. Member for Worthing (Mr. Higgins) mentioned the relative price effect. As a statistical procedure, that would be a much better way of evaluating what has happened historically in terms of volume. I have read the evidence that the Chief Secretary gave to the Select Committee. Using that as a prognostication, the relative price effect could drive a coach and horses through his cash-limited plans to keep down expenditure. I understand that, but there is no excuse for refusing to adopt the relative price effects statistics historically to examine how the profession and the services are changing.
I make a plea that some money be found for the system of clinical grading and restructuring that is so long overdue within nursing. One of the main problems in the Health Service is that key nursing posts are not properly remunerated and do not take properly into account the skills of those nurses. It would not cost an awful lot of money. It might cost upwards of £200 million. Perhaps that sounds a lot of money, but that money would be very well spent, and it has to be spent soon. Even if the decision were taken today to introduce incentives to keep nurses in the profession, to encourage them to work and to maintain the morale within the profession, it would take a long time to implement such a scheme and to get nurses promoted to those positions, so that they could work in the intensive care children's wards that have been in such trouble recently.
More than anything else, if the Government were able to make a firm commitment to move in that direction, that would boost the morale of the whole nursing profession. Important things can and must be done. There are important aspects of the 'White Paper that relate to regional development and housing that cause me some concern, but the National Health Service rightly has been the focus of the debate.
The amendment in the names of my right hon. and hon. Friends rejects the reduction of public expenditure each year inexorably as a proportion of GDP. We believe that the revenues that are available would allow prudent

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additional expenditure in the Health Service, education, housing and regional policy. Such job-creating investment would be much wiser than substantial further cuts in personal taxation, which will serve only to exacerbate the problems of overheating in parts of the domestic economy.
6.22 pm
Mr. John Townend: I am surprised that the Liberal party spokesman on Treasury matters, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), does not seem to be aware how the figures have been arrived at. He mentioned that they contained nothing for pay awards. He should appreciate that, under all the headings, amounts for pay awards are based on an estimate of inflation. There is also a contingency reserve of £3·5 billion. In previous years, wage settlements in excess of the amount in the public expenditure White Paper have been paid out of the contingency reserve. I am surprised that the hon. Gentleman did not appreciate that.
I congratulate my right hon. Friend the Chancellor and his colleagues on the excellent way in which they have managed the economy. It was a little unfair of the hon. Member for Roxburgh and Berwickshire to say that the improvement in our economy is due principally to North sea oil. We have had seven years of economic growth. I believe that the Government can take credit for the reform of industrial relations, which has reduced the number of days lost in strikes to 2 million compared with 29 million under the previous Labour Government. The Government can take credit for reducing taxation and encouraging enterprise. That is nothing to do with North sea oil.
Productivity in our manufacturing industry is rising faster than that of any of our industrial competitors. As a result, there has been a dramatic recovery in corporate profits. The tax from those profits is now pouring into the Treasury at an unprecedented rate which gives the Chancellor an opportunity in the Budget that no Chancellor has had for 50 years. He has the opportunity in the same Budget to fund the increases in public spending set out in the White Paper, which amounts, in cash terms, to another £9·7 billion—a real increase of 1·25 per cent. That will enable him to produce a balanced Budget, or even to have a negative PSBR, and pay back some of the national debt, which will reduce the burden of interest charges to the public in future. He will have the opportunity also to reduce taxes.
The very success of the Chancellor's policy is one reason why we are having such a politically orchestrated campaign demanding a massive increase in spending on the Health Service, with many people suggesting that there should be no reduction in taxation. The big spenders and special interest groups have got the smell of money in their nostrils. As a result, their demands for more spending grow more strident every week. I congratulate the Chief Secretary on standing firm. Like him, I am opposed to those demands. First, we have already allocated an extra £1 billion to the Health Service. That has not yet been spent. It would be foolish to increase that when we are about to embark upon a fundamental investigation of the Health Service. There is also a lot of waste in the Health Service budget of £20 billion.
Earlier today I mentioned in an intervention that a new hospital has been built in Bridlington, and is about to open. It has replaced two older hospitals. It is remarkable
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that all the furniture in that hospital is brand new, despite the fact that only two years ago the hospitals were re-bedded. Would any private sector operator or someone opening a new office block throw away all the desks? If someone were opening a new factory, would he throw away all the machinery? I am pleased to say that only this week the regional health authority told me that, because of the pressure on the Health Service, it has changed that policy.
My second reason for opposing those demands is that the Conservative party has fought three successive elections as the party that intended to reduce the tax burden on the British people. Despite the reductions in previous Budgets, the standard rate of taxation on the low-paid is now 27p in the pound, to which must be added a 9p national insurance levy. That makes a marginal rate of 36p for poorer people coming into tax. That is far too high and must be reduced. We have promised to reduce the standard rate by 2p in the pound. We must not miss that opportunity this year.
We should also use some of the available resources for a radical reform of the personal taxation structure. In particular, we should achieve equity between married women who have jobs and those who stay at home to look after their families. That would mean a move towards transferable allowances, which would be very expensive. In 1988, the tax system should stop treating women as if they were their husbands' chattels. Married women's investment income should no longer be aggregated. It is nonsense that if a married women with a reasonable investment income divorced her husband and lived in sin with him they would pay less tax. We should stop encouraging young people to live in sin. It is a scandal that young married couples get tax relief on a £30,000 mortgage, yet if they live in sin they can claim tax relief on a £60,000 mortgage.
A Conservative Government should never allow marriage and morality to be penalised by the tax system. I am not prepared to sacrifice in the forthcoming Budget those important objectives so that another £2 billion or £3 billion can be poured into the bottomless pit of the Health Service with no guarantee that patient care will improve. Indeed, it is extremely likely that most of it will be gobbled up by wage increases.
Despite the remarks of Opposition Members, 42 per cent. is too high a proportion of GDP to go on public spending. Several points particularly worry me. The social security budget is for £48·5 billion and we still do not have adequate control of some of that massive budget. In some cases, we do not even know the cost of benefits to certain people. Recently I tabled a written question, asking the Department what the cost to the Exchequer was of social security payments made to citizens of the Irish Republic. The answer was, "We do not know." I thought that that might be reasonable and that perhaps the Department did not differentiate between one country and another, so I asked what was the total cost to the Exchequer of social security payments paid to non-United Kingdom citizens. Again the answer was, "We do not know."
The next day I read in a newspaper that hundreds of Nigerians were registering as students at a bogus educational establishment and were using social security payments for their fees. That is appalling and action should be taken to ascertain the cost—I am amazed that we do not know the cost — and to stop subsidising feckless foreigners.

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There is an unfair imbalance in public expenditure between the four countries of the United Kingdom, and the Select Committee referred to this matter in paragraph 11 of its report. We have now received a paper from the Treasury which provides some illuminating figures. Naturally, some expenditure cannot be allocated, but that which can shows that in England we spend £1,967 per person from public funds, in Scotland £2,518, in Wales £2,235 and in Northern Ireland no less than £2,939.
Mr. Tony Favell: What about Bridlington?
Mr. Townend: I shall deal with Bridlington in a minute.
Northern Ireland is clearly a special case, but the arguments that Scotland and Wales should have a higher level of expenditure than England because they are less prosperous must be challenged. Without doubt, Scotland is now more prosperous than many parts of England, particularly the north of England, such as Yorkshire and Humberside, where my constituency is situated.
We on the Select Committee asked the Treasury to provide a breakdown of public expenditure per capita for the English regions. It is not available, but the Treasury supplied some illuminating figures for certain services. They are a little out of date, because the last year for which they are available is 1984–85. What was most interesting were the figures for health expenditure. In Scotland, the figure amounted to £350 per person, whereas in Yorkshire it was only £260. That imbalance must be rectified on the ground of equity, and in the process the Government may make some savings in public expenditure.
Mr. Wigley: Does the hon. Gentleman realise that the high level of per capita expenditure on social security in Wales is a result of unemployment? In my constituency, we have 24 per cent. unemployment. The costs associated with that will come right when Government policies start working in Wales. Does he accept that the items that are not broken down by the Treasury include defence and procurement expenditure, 57 per cent. of which is spent in south-east England?
Mr. Townend: The hon. Gentleman is making my point. My figures related to health, not social security. The position in the north of England is no better than that in Wales, so it is not right or equitable that Scotland and Wales should get such a high level of per capita spending at the expense of the north of England.
Mr. John Watts: Will my hon. Friend acknowledge that there is a reason other than equity for looking at the disparity in expenditure between England and Scotland? The point was made by the hon. Member for Dunfermline, East (Mr. Brown), who said that the Health Service in Scotland was facing growing waiting lists, despite the significantly higher level of expenditure per capita on health that Scotland enjoys compared with England.
Mr. Townend: My hon. Friend makes a good point. The other reason why this happens is that Scotland, Wales and Northern Ireland have a Minister in the Cabinet who gets a hand in the till on their behalf, whereas we in the north have not.
My one small criticism is the cost of the EEC to the United Kingdom. I am grateful that the Government have provided us with costs, but over the years this settlement will clearly be expensive to the United Kingdom. I would be less than honest if I did not say I was disappointed that
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the Prime Minister gave in and agreed to the new proposals. That will enable the Commission to increase spending by some 25 per cent. I wonder what my right hon. Friends on the Front Bench would say if an hon. Member suggested that we should increase our public spending by 21 per cent. I can imagine their horror.
Finally, I hope that my hon. Friend the Minister will convey to the Chief Secretary our view that his task is difficult and that we appreciate that he is under great pressure. Despite my feeling that expenditure should be reined in a little more, he is probably being as tough as he can be in the circumstances, and he certainly has our wholehearted support. I only hope that one day, when he becomes the Secretary of State in a big spending Department, as I am sure he will, he will not change the view that he has put forward in the House today.
6.37 pm
Mr. Nigel Griffiths: The Chief Secretary gave one of the shortest speeches on record in defence of his Government's expenditure plans. He danced from stepping stone of statistic to statistic while the torrents of industrial and economic chaos raged below. He could not leave the Dispatch Box for his seat on the Bench fast enough. He scuttled from one set of topics to another as quickly as possible. No wonder, when spending in Scotland on industry, housing and health is projected to fall. No wonder, when the budget of the Scottish Office will fall by £69 million next year and by £317 million by 1991. Would that Scottish unemployment were falling at the same rate.
It is a disgrace that neither the Chief Secretary nor his colleagues showed any contrition over the appalling state of the NHS in Scotland. The hon. Members for Bridlington (Mr. Townend) and for Slough (Mr. Watts) whined, as is the wont of many Conservatives, about the higher costs of the NHS in Scotland. I invite both hon. Gentlemen and their hon. Friends to visit my constituency and learn some of the facts, such as that in Scotland the average health authority covers twice the area of a health authority in England and Wales. As a consequence, costs, including overheads, are higher.
The reality behind that level of spending in Scotland is plain for all to see. In hospital wards in my constituency, old people have been left lying in bed in the morning because nurse shortages have reached critical levels. However, the Government are not planning to do anything to reduce long-term hospital waiting lists, which are now standing at a record 81,000 in Scotland. The Government have done nothing to increase the number of National Health Service beds, which have been cut by 5 per cent. in Scotland during the past decade.
The Government are precipitating the crisis in the National Health Service, not only in Lothian but throughout the country. Tomorrow, Lothian health board is to discuss 500 job cuts to balance its budget. Those job losses will not be restricted to non-medical staff, bad though that would be. Mr. Winston Taylor, the general manager of Lothian health board, has spelt out that no group among surgeons, nurses, consultants, doctors and ancillary staff will be excluded from those cuts. That is happening in a health board that the Minister responsible for health in Scotland has said is the third best funded in the whole of the United Kingdom. In Scotland, the Government are investing 1 per cent. less in health than is needed to keep pace with costs.

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Of course, the Government have a magic solution to health problems in Scotland—privatisation. That policy has less support in Scotland even than in the Tory Reform Group. Seven out of 10 Scots reject privatisation, which has been condemned by the chairmen of the health boards who have been appointed by the Tory Secretary of State, such as Mr. Hector MacKenzie of Argyll and Clyde health board. However, the Government still persist in that policy, knowing that it will bring chaos, but caring not a whit, and no wonder, because no Cabinet Ministers use the National Health Service when they are ill.
What has the Chancellor promised for higher and further education? He has promised more—more cuts. Is it not bad enough that the university budget in Scotland, and in the rest of the United Kingdom, has been cut by 13 per cent. in the past four years alone? University budgets in Scotland have been cut by more than one fifth. The Government's public expenditure plans offer nothing to Glasgow university, which is already suffering a cut of 8 per cent. The Government's plans do nothing to enhance the reputation of Edinburgh university, which has lost 11·5 per cent. of its budget. The Government offer only despair to Aberdeen university, which has lost one quarter of its budget in four years. This week, the Edinburgh university court is meeting to discuss further cuts of nearly £3 million. That is the reality behind the Government's public expenditure plans.
We know that the Chancellor is not alone in taking pride in those facts. Japan is rejoicing about them. That country has more than double the number of university places that are made available to young people here. The Chancellor is receiving support from the United States of America, France, West Germany and even Taiwan. All those countries are pulling way ahead of us in providing university places and investing in their young people.
Even if the Government are not committed to placing university funding on a proper footing, surely they should at least respond to the requests for assistance in persuading private industry to invest in universities? I know that that topic is dear to the hearts of the Chancellor and his Cabinet colleagues. I welcome the relief in taxation on one-off grants to universities from companies and some review of the VAT that is still levied on gifts of equipment to university departments and laboratories. If the Government can do no more, they would at least gain a little respect by conceding those small benefits.
Housing barely rated a mention in the Chief Secretary's speech. The Government's plans have brought despair to housing authorities and to the millions of people who live in overcrowded, substandard and inadequate accommodation. About 330,000 council houses in Scotland need modernising, and the figure runs into millions for the United Kingdom as a whole. Some have dangerous electrical wiring; in others, windows are rotting in their frames. More than 300,000 Scots and millions of people in the United Kingdom live in homes that need urgent and major structural repairs. In many, water seeps down the walls; dampness destroys the fabric of the buildings, rots funiture, clothes and bedding and eats away at children's lungs.
However, the statement makes less than £465 million available to housing in Scotland—that is a 2 per cent. cut—and it represents only half the money that every housing expert in Scotland agrees is needed. Every local
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authority, housing association and residents' group has begged the Government to use some of their windfall money to invest in our housing, with all the jobs that would flow as a consequence.
Today, when everyone in Britain is begging the Government to invest in our industries, services and people, Conservative Members have spoken like the tired old politicians that they are, ignoring the facts that stare them in the face—[Interruption.]— laughing with scorn at the problems facing millions of people, not only those on the dole in this country, but those who live in the substandard houses that I have mentioned.
People who are begging for jobs visit their job centres, but the Government know that the jobs simply are not there. Again, I extend an invitation to the hon. Member for Bridlington, who is sneering and laughing, to visit the job-centre in my constituency——
Mr. John Townend rose——
Mr. Griffiths: I shall give way to the hon. Gentleman in a moment. I invite him to come to the jobcentre in my constituency to see the shortage of jobs and then to watch the dole queues.
Mr. Townend: I am obliged to the hon. Gentleman for giving way. I was laughing at the comment that he made about myself and my colleagues being old and tired politicians; I was not laughing at the arguments that the hon. Gentleman was making. However, I remind him, as a young man, that one is not always as old as one looks. One is as old as one feels.
Mr. Griffiths: I am sorry that the hon. Gentleman has not chosen to hide his ignorance under a bushel.
The fact is that the Government have brought despair and misery, and have done so for years, with the excuse that the money was not available and that the cuts were necessary. Now, when we find that the money is available, we see the real face of the Government—the uncaring face. Now that the money is available, not only will they not invest in our housing and take people off the homeless lists, but they will not invest in our Health Service to keep people off the waiting lists. In fact, as we all know, their investment is in those who have high incomes and high capital and savings. The Government's concern is to ensure that people who want to invest in forestry gain more respect in terms of tax concessions than individuals who want to invest in their own jobs and go to work.
On 15 March, the Government have a chance to put the nation's resources to good use. We hope that they will, but, sadly, we fear that they will not.
6.47 pm
Mr. Richard Alexander: I begin by congratulating my right hon. Friend the Chief Secretary to the Treasury on his most able and lucid speech. I agreed with virtually all that he said. I hope that nothing that I say in my brief remarks will detract from that. In presenting his statement, my right hon. Friend must surely have had one of the easiest tasks of any Chief Secretary for some years, because a buoyant economy has enabled progress to be made in almost every area. That certainly includes the Health Service. However, as has been voiced in many quarters, and not only today, the reality is that there is an acute problem in many areas, not because of mismanagement or overspending, but because of serious underfunding in many areas.

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As an example, I take one of the health authorities covering my constituency, Bassetlaw district health authority. During the past two years it has consistently improved its services at the same time as reducing its costs by more than £250,000. That has been done by testing many of its services against competitive tenders in the private sector, reducing duplication of services and reducing its administrative and clerical staff. All new posts are seriously scrutinised. That is the background.
Unlike many Opposition Members, I am not seeking an open-ended commitment to the funding of wage awards in the public sector in the Health Service, but the fact is that last year the funding of only 90 per cent. of the pay awards that were nationally agreed put my authority, and no doubt many others, in extreme difficulty. Expecting the health authorities to make up that shortfall by paying the extra 10 per cent. of salaries for doctors, nurses and other ancillary workers has meant a shortfall in my health authority of some £700,000 this year.
I agree with the Treasury and Civil Service Select Committee that if wage awards are accepted by the Government they should be funded directly by the taxpayer. Our health authorities, and mine in particular, would not be in the sorry state that they are today if such wage awards were funded directly. To expect them to find sums of this order, after their year's allocation has been made, is to put them in an unfair and unrealistic position if, at the same time, they are expected to balance their books.
In my constituency, as a direct result of that, the casualty department in Retford hospital was closed about two weeks ago and an elderly persons' ward is to be closed. Here is not the place to go into detail about the hardship that that will cause my constituents, but it is the place to tell my right hon. Friend of the great damage which the serious underfunding of pay awards is doing to the public's perception of the Government's total health care provision.
It gives me no pleasure to say so, but it gives me even less pleasure to attempt to justify to my constituents the closure of a casualty ward when we hear from the Government that our plans for the expansion of the NHS will improve patient care. I accept that statement, but it is difficult, in the light of realities, particularly of under-funding, to explain the one in the light of the other.
There will be calls from the Opposition to make 15 March National Health Service day. I hope that both sides of the House will resist that temptation. What the public do not realise, and the Opposition should realise, is that Budget day is for raising or lowering and collecting taxes and revenue. We hope that there will be increased expenditure on the NHS next year, but the fact is that how we spend our revenue is not a matter for the Budget.
Nevertheless, it would unacceptable to the public generally if my right hon. Friend the Chancellor of the Exchequer should choose to reduce income tax without at the same time giving some broad indication, this year above all, of how that reduction in taxation might be accompanied by some extra funding in other areas. The public are not always wrong. They have a legitimate expectation of Budget day, and this year, above all, we should be thinking about fulfilling some of their expectations for the NHS.
Where does my right hon. Friend the Chief Secretary's statement today leave my casualty ward and my old people's ward in Retford hospital? The nub of any
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Member of Parliament's problems is how his constituency is affected. Do the expenditure plans mean that I shall be standing here in a year's time saying that they have been re-opened? I very much hope so. If I cannot say that, and if other communities at local level cannot do so either, our fine words, proposals and expenditure plans are bound to ring hollow to the constituents whom we are here to serve. As a loyal supporter of the Government and their policies—there is probably none more loyal—I hope that I shall never have to say that.
6.55 pm
Ms. Joyce Quin: I am grateful for the opportunity to speak in the debate, particularly as I am a member of the Treasury and Civil Service Select Committee and so have been involved in the preparation and adoption of the Committee's report on the Government's public expenditure plans. As many hon. Members have said, the report contains many useful points which I hope the Government will take on board. The Chief Secretary referred to some of them, but others need to be referred to, and I hope that I shall be able to do so in the course of my speech.
First, I want to say a few words on the Government's general strategy. In their introduction to the public expenditure White Paper, the Government proudly claim to have consistently reduced public spending as a proportion of GDP. I was glad that the Select Committee none the less incorporated an amendment which pointed out that our public spending as a proportion of GDP is already lower than that of most European countries. According to the statistics that I have seen, it is lower than that of any other EEC country with the exception of Spain. During the past few years, Spanish public expenditure has been increasing and so will probably overtake ours in the next couple of years.
It is also true that in particular sectors, such as health, the average share of all health spending of GDP for OECD countries is about 9 per cent., as against only 6 per cent. in the United Kingdom. If our Government were to reach 9 per cent. of spending on health within the NHS, that would mean an additional £12 billion for the Health Service. Perhaps the Government will take that point into consideration.
Mr. Watts: Will the hon. Lady acknowledge that the figures that she has quoted, I think accurately, were for all spending on health services and that in the other OECD countries there is a much higher proportion of privately funded health expenditure than there is in Britain and that the proportion borne by taxpayers in other OECD countries is broadly the same as it is here?
Ms. Quin: There is indeed a mixed pattern. What the hon. Gentleman says is partly true, but there is no reason why, given the amount of money that the Government have available, expenditure on the Health Service should not be substantially increased. That point has been made by many hon. Members today and that view is shared by some Conservative Members, as was clear from the deliberations of the Select Committee.
My hon. Friend the Member for Durham, North (Mr. Radice) asked, rightly in my view, how long the Government would maintain their commitment to reducing public expenditure as a proportion of GDP. Do they intend to keep that as their goal in perpetuity? Do

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they have an optimum level which they hope to achieve, or is it a matter of dogma which they will somehow adhere to with no long-term ideal in mind? Like many other speakers, I do not understand why the Government should keep to that tired old approach when the circumstances in respect of the amount of money available to be spent have changed. That point must be emphasised, particularly in the run-up to the Budget.
There appears to be an assumption that cuts, or reducing public expenditure, are good per se. I do not share that assumption, particularly given the present obvious needs in our country. The Government are inconsistent in many of their basic tenets regarding public spending because Ministers have frequently said that revenue determines expenditure. If that is so, when revenue is on the increase and all that extra money is available, why cannot the Government determine expenditure in the public sector?
The Treasury and Civil Service Select Committee's report states that, even if the Government's guidelines were adhered to, it would be possible to increase the planning total by £1 billion or £2 billion without undermining the Government's criterion. Therefore, why will not the Government go down that road? They still appear likely to adhere to their belief in tax cuts as the way forward, yet their figures show that we are not heavily taxed by comparison with other countries and, therefore, there is not a great burden of taxation which needs to be reduced.
Labour Members have spoken eloquently about the needs of the National Health Service and the need fully to fund the nurses' and ancillary workers' pay increases. I agree with everything that they have said in that respect, but there are other examples of underfunding when one considers the Government's public expenditure and their public expenditure plans. Capital spending is the poor relation in their spending plans.
That was pointed out to the Select Committee in written evidence supplied to us. Paragraph 60 of the Select Committee report refers to the decline in capital spending and the projected decline — 5 per cent. for central Government capital spending, and 14 per cent. for local authority capital spending. Nevertheless, I am glad that the Select Committee adopted an amendment which I proposed, that capital spending should be related to needs and, in particular, the need to renew the nation's infrastructure and to provide for its long-term effectiveness.
Many estimates have been made about the amount of money needed to renew our infrastructure. I have seen the figure of £92 billion suggested. That covers the total backlog of repairs in housing and schools, the NHS, roads and water supplies. The reference to water supplies is particularly important because we are faced with the need to renew our out-of-date infrastructure in the water industry and to comply with EEC directives on improving our water quality standards. The Government have failed to come up with a figure for the sum needed to carry out that necessary work. Compliance with European directives would be most helpful in that respect.
The hon. Member for Bridlington (Mr. Townend), who is no longer present, raised the issue of obtaining from the Treasury a regional breakdown for Scotland, Wales and the English regions. A regional breakdown is necessary,
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although not for the reasons put forward by the hon. Gentleman. He appeared to imply that unjustified subsidies were being given by the English to Scotland and Wales. I want to see a regional breakdown because, in an absurdly over-centralised country such as England, we can see what is spent in the different standard planning regions in those countries. That information should be available to us, and the Treasury is well able to provide it, if it has the political will to do so.
In a recent debate about the Government's proposals for regional development grants, my hon. Friend the Member for Sedgefield (Mr. Blair) made many telling points about the amount of public money spent in the south-east of England compared with other regions of England. According to figures in The Economist last April, the highest spending in public administration, defence, education and health in England occurs in the south-east —£884 per head of population. I should like to know whether those figures accord with the Treasury's views. It is important for the inhabitants, particularly of the least prosperous regions of the United Kingdom, that those figures should be made available.
At present, the Labour party has a "Labour listens" campaign. I should like to suggest to the Chancellor of the Exchequer and his team that they embark on a "Treasury listens" campaign because, if they did so, they would find that the message that they receive from the general public about taxation and public spending is very different from the message that they are putting forward. It is clear from many opinion polls that the public want to see a properly funded Health Service and that they see that as a greater priority than cutting taxes, particularly those of people who are already well-off.
I hope that the Chancellor of the Exchequer will listen to people and will come up with a Budget that does not favour the already favoured few but provides benefits for the necessary public services upon which we all depend for the future.
7.6 pm
Mr. Patrick Ground: The hon. Member for Gateshead, East (Ms. Quin) asked many pertinent questions about the work of the Treasury and Civil Service Select Committee, but it is difficult to believe that it should come as a surprise to her that the Conservative party and the Government believe that the country is heavily taxed by comparison with our main industrial competitors. That is evident merely by comparing the level of tax rates in this country with those of the United States, Japan, France and West Germany.
I challenge the hon. Lady's comment about spending money merely because it is available. I hope that she will agree with me that everyone in the House wishes the right amount to be spent on the Health Service, regardless of whether sums of money happen to be available in any particular budget. It is certainly in the interests of all politicians that the appropriate amount should be spent on the National Health Service.
I agree with the hon. Lady that we should be listening to what people think about the matter. The main issue of the debate is whether a major additional sum should be spent on the Health Service. Opposition Members suggest that we should spend an additional £2 billion over and above the additional complement to the Health Service contained in the expenditure plans.

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I wonder whether hon. Members are listening to their constituents accurately and sensitively on this issue. When I discuss with constituents the size of the increase in expenditure on the Health Service since 1979, they are surprised. When I tell them that each family is spending £31 a week out of taxation on the Health Service, they are surprised. It is right to say that the expenditure plans before us for next year involve additional expenditure of £1·50 per family on the Health Service. According to my calculations, expenditure of an additional £2 billion would mean an additional £3 per week for each family. I question whether our constituents want such a large increase to be taken from their pay packets without any choice.
A great campaign has been launched in hospitals in my constituency, as in many others, and many of the letters that I receive from constituents say that they are concerned about waste in the Health Service. They are also rightly concerned about the amount of theft and widespread pilfering. They are concerned about the huge number of administrative staff in the Health Service — over-administration. One letter to me said that we should increase expenditure on the Health Service and that person was prepared to contribute more to it. He suggested that everybody should pay an additional 10p per week for it. I question whether our constituents want to have to pay automatically the additional amounts that have been implied in speeches during the debate.
The Opposition tender such advice to the Government, but one must look at what they did when they were in office. They did not go wild spending money on the Health Service. They set up a Royal Commission, which spent a good deal of time deliberating. It delivered its verdict after the 1979 general election. This is one statement from the report:
"It is misleading to pretend that the NHS can meet all expectations. Hard choices have to be made. It is a prime duty of those concerned in the provision of health care to make it clear to the rest of us what we can reasonably expect."
Listening to Opposition Members, I believe that it is not clear how much more we can expect from the additional £2 billion expenditure that they propose. Listening to the health authorities in my area and to the health administrators, I find it difficult to see what they think they are delivering now with the money that is available, and it is impossible to get a clear idea of what one would obtain with more expenditure.
There are the most extraordinary variations in what is being provided in the Health Service throughout the country. Many things that are provided on the NHS are highly questionable. In Charing Cross hospital, sex change operations are performed. People come from many parts of the country to have them. The variations in community dentistry and family planning between different health authorities are striking, and are not accounted for by differences of quality or requirements in the areas concerned.
I support the efforts that have been made by the Government to get a clearer idea of the services that should be provided and to improve the allocation of resources. I welcome the statement, in the first volume of the document before us, that pilot schemes for the better management of clinical resources are under way.
I remind hon. Members that the Griffiths report in 1983 said:
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"Concern with levels of service, quality of product, meeting budgets … motivating and rewarding staff, research and development and the long-term viability of the undertaking"
were crucial matters. The report said that the NHS
"still lacks any real continuous evaluation of its performance against criteria such as those set out above."
Apart from profit, those are all criteria which the Griffiths report said any successful private business would follow during its work, and which it would regard as crucial.
I remind the House that the Griffiths report stated categorically that it was necessary to
"involve the clinicians more closely in the management process consistent with clinical freedom for clinical practice. Clinicians must participate fully in decisions on the use of resources."
From my observation of the Health Service, I believe that that is simply not happening in most parts of the Service. The report stressed the need for closer involvement of doctors, which was
"so critical to effective management at local level."
I have endeavoured to follow the progress of the pilot schemes that were mentioned in the Griffiths report, through the various circulars that have been issued by the Department of Health and Social Security. It looks as if they are running into great difficulties. In several cases, they have plainly failed and run into great problems because the new material, the new management information, was produced not visibly for the benefit of the medical staff, but for the benefit of the administrators. Apparently, considerable resentment has arisen between the medical side and the administration, which, in some cases, has led to the modification or even abandonment of the process. There is tremendous scope for improvement in the Health Service with the involvement of the professionals in the crucial decisions of management which have to be taken in the course of the service.
In the West Middlesex hospital—one of the hospitals serving my constituency—the consultants have found it necessary to pay for an advertisement in the local newspaper to express their views about the way in which the Health Service is being run. That is indicative of the fact that they are not able to exercise proper influence in the management of the health authority. They do not feel that they have an influence. Inquiries reveal—they are confirmed by the administration — that they are not playing the role in management decisions which was envisaged in the Griffiths report and which it is clear from all the subsequent reports is crucial to the proper running of the service. Indeed, one consultant told me that he felt that there was a division in the Health Service between authority and knowledge and that many of those taking the decisions did not have the necessary knowledge to decide on priorities.
Therefore, I was interested to read an account by Ian McColl in The Times of 16 February of what happened in Guy's hospital. I believe that Guy's hospital has been carrying out the experiment suggested in the Griffiths report and that effectively the doctors have taken over the management of the hospital. Mr. McColl said that between 1974 and 1978, the finance department had expanded from 30 to 90 employees, precisely at a time when computers were being introduced, which should have led to economies. He said:
"When the hospital became part of Lewisham and North Southwark district health authority the district's finance

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department contained 200 people. Its performance was considerably improved when its numbers were reduced to 105 as a result of a sustained campaign by surgeons."
He described the restrictive practices of the nurses in preventing him from operating on someone who needed an operation for which no staff was necessary. He described how the surgeon got round the problem:
"He brought the patient with her physiotherapist daughter to the hospital, put them into surgeon's clothes and walked into an empty operating theatre. There he carried out the operation under a local anaesthetic without the patient suffering a single twinge of discomfort. She then climbed down from the table and was driven home to an awaiting gin and tonic, delighted to have bypassed four sets of hospital workers. Next day the nurses filed a complaint against the surgeon for behaving inhumanely to the patient."
It takes a professional with experience and knowledge to find his way though professional restrictive practices. It takes a professional, or perhaps a group of professionals, with experience and judgment to make sensible decisions about what is important and unimportant in the services provided by a department.
Mr. Nicholas Brown: I am no specialist, but what on earth would have happened if something had gone wrong?
Mr. Ground: The surgeon was prepared to take the responsibility; indeed, a surgeon takes the responsibility anyway. It was not for the nurses to lay down regulations. Here someone took responsibility for the operation and rightly saw his way through a lot of nonsense.
There is a great deal of nonsense in the National Health Service. It requires professionals to make choices about what is important and unimportant. If it is left solely to the administrators, or to the administrators operating in an atmosphere of hostility and alienation from the professional staff, correct decisions will not be made. Therefore, I urge the Government, notwithstanding the difficulties, to persevere with their inquiry and research and to ensure that more sensible decisions are made and that the aspirations of the Griffiths report are continually borne in mind so that we will have better value for money and more suitable use of the resources of the Health Service.
If that process is followed, the Health Service will be in a better position to say how much more is required and what services can be provided. At present it is virtually impossible to say from the information available what services can be provided or what other services could be provided with an additional £x million. It is important that the Government should persevere with the inquiry. It is wholly in tune with the approach of constituents who are looking for better value from the National Health Service and who do not necessarily want to pay vast sums for it out of their limited resources.
7.25 pm
Mr. Dafydd Wigley: I agree with one or two points made by the hon. and learned Member for Feltham and Heston (Mr. Ground). We should decide on the absolute level of service that we want from the Health Service, as opposed to fixing a figure and fitting everything else in. I am not sure that I agree that the message I am getting from my constituents is the same as the message that the hon. and learned Gentleman is getting from his. As someone who lived in Heston for four years, I have
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some knowledge of his constituency as well as mine. I have no doubt that, faced with the choice in my county of Gwynedd, where five hospitals are scheduled for closure because of the financial crisis of the health authority, my constituents would rather retain income tax at its present level than have a reduction in income tax and face cuts in Health Service provision. We face real cuts in the service, not just rationalisation, in my county, as the health authority has acknowledged.
I accept what the hon. and learned Gentleman said about the cost of administration in the Health Service. In my area much of the increase in administrative costs has arisen in recent years. The Government have been in office for nine years. If the administration of the Health Service is in such difficulty, the Government should look into their own court to put things right.
The procedure that we follow on public expenditure and budgeting causes problems. This has been touched on earlier in the debate. In an article by Sarah Hogg in, I think, The Independent recently, under the heading
"When two bites at the Budget are rather worse than one",
she made a perceptive comment:
"The first and long-standing problem is Britain's Budget is extraordinarily misnamed."
Later, she said:
"Under this curious system, spending departments compete for cash before the Treasury decides what to do with the rest."
That is part of the problem that we face. The White Paper was published in the autumn, and now there is the possibility for more money being available, but the Government are determined to keep to the spending programme that they laid down.
From the comments of the Chief Secretary in opening the debate, it appeared that he was unwilling to give a commitment that money will be available to fund in full the increase in nurses' pay, because he does not know how much that will be. However, on 15 March the Chancellor is prepared to make a decision about reducing income tax. In other words, the Government's priority is not to ensure that the NHS provides an adequate service, with an adequate cash availability as determined at the end of April or when the figures are available, but rather what the Government want to do politically on Budget day about the public sector borrowing requirement and income tax rates. I should have thought that that priority was wrong.
I concede immediately that the Government are taking a sensible step in changing the procedure for the future so that these things will be better phased. That is welcome and long overdue. Having said that, I should have thought that within the ambit of the figures we are talking about it would be possible for the Government to say now that they are prepared to fund in full any wage award.
After all, the wage award that we are discussing is not thousands of millions of pounds. The press mentions £300 million, £400 million or £500 million. I should have thought that it was within the scope of the contingency reserve and flexibility on the PSBR for the Government to give such a commitment, and then to be that much more cautious, if necessary, about tax reductions. Tax levels could be adjusted next year, or even in next autumn's statement. Surely that would be more sensible than making the level of service dependent on residual cash availability.
The hon. Member for Bridlington (Mr. Townend) pointed out that people in Wales and Scotland, and possibly in regions of England, were getting too much

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public expenditure. The White Paper will be of more comfort to him than to us in Wales. What we heard a few moments ago from the hon. Member for Edinburgh, South (Mr. Griffiths), also applies to Wales. The figure for the planning total in Wales shows a decrease for 1990–91 from the 1987–88 outturn, whereas the overall planning total in the same table shows an increase from £141,000 million to £151,000 million—an increase of some 7 per cent.
In other words, we are facing a decrease in the Welsh Office departmental budget, which deals largely with health and personal social services — the budget for which in the United Kingdom as a whole, according to the DHSS figures, is increasing from £18,000 million to £19,000 million—with education in Wales—in England, the education budget has been increased—and also with housing, the budget for which in England has been increased from £2,350 million to £2,620 million. There is also an increase in England for the Ministry of Agriculture, Fisheries and Food.
We have grave misgivings about the effect of the White Paper in Wales. As I said in an earlier intervention, the Dwyfor area in my constituency has an unemployment rate of 24 per cent. That is not a tolerable level, and Government intervention is needed to overcome it. However, over recent years, the funds available for regional policy have been run down. Wales has seen a reduction from £154 million in 1981–82—at 1986 prices—to £30·5 million in the 1987–88 financial year, and the figure for next year is £24·8 million. This means that it will he approximately one sixth of the 1981–82 level, at the very time when we need more money to help to provide jobs.
Conservative Members have referred to the cost of the recently negotiated EEC package. In the grant settlement for lesser developed regions in the EEC, although the overall figure has been doubled, there has been a tacit understanding that the money will go on limited areas only —perhaps to Spain and Portugal and, within the United Kingdom, to Northern Ireland. We fear that there will not be enough money available to compensate, in areas of high unemployment, for the worsening position that will arise for example, from changes in the agricultural regime.
I feel, as does my party, that the White Paper provides inadequate money to deal with the need to regenerate the economy in Wales. I know that my colleagues in the Scottish National party are also concerned that, while United Kingdom expenditure is expected to increase, Scottish Office expenditure is expected to decrease by £300 million by 1990–91.
Let me add — this is particularly geared to the comments of the hon. Member for Bridlington—that in Wales personal income per head is also well below the United Kingdom average. The United Kingdom average was taken as 100 in 1975, when the figure for Wales was then 90·5. By 1985, the gap had increased, and we were 12·5 per cent. below the figure for the United Kingdom. [Interruption.] I accept that the same would be true for the west midlands, as I see the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) commenting on my remarks. Part of the change in that area is also due to structural unemployment.
Specific Government action by way of public expenditure is needed to try to overcome the problem. Income tax reductions will not be adequate, because they do least in the areas with the lowest incomes.
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The main theme of today's debate is the priority that we should or should not give to the National Health Service. In his Budget statement last year, the Chancellor said:
"We have now reached what I judge to be its appropriate destination—a PSBR of 1 per cent. of GDP. My aim will be to keep it there over the years ahead. This will maintain a degree of fiscal prudence".—[Official Report, 17 March 1987; Vol. 112, c. 818.]
If we retained a PSBR of 1 per cent. of GDP, that would give the Government the flexibility that they need to fund in full the nurses' pay settlement. It would help to meet the other requirements of the medical fraternity—on whose behalf representations have been made by the British Medical Association and others—for an additional £1·5 billion for the NHS.
The background to the hospital closures in my county was made clear by the consultants appointed by the Welsh Office, who said that the financial problems of the Gwynedd health authority had arisen from a shortfall of £2 million in the funding of wage awards over the past two or three years. There was a further estimate of a £750,000 shortfall in the coming year. We read in the Financial Times of 14 January that the Secretary of State for Social Services has acknowledged that the NHS needed more cash. The Chief Secretary virtually acknowledged that earlier in the debate when he suggested, with a nod and a wink to health authorities, that they should not go ahead with closures and reductions in services because of the possibility that by the end of April it might be possible to fund the wage award in full.
Surely Budget tax reductions can be made a little more prudent so that enough money is at hand for a total commitment, to be given now, as to full funding and for the Health Service to know that it will be adequately financed for the coming year. Surely some of the sillier closure decisions—not just in my patch, but throughout the United Kingdom—can be replaced by a coherent approach to the future of health care.
Mr. Ground: Is the hon. Gentleman really saying that he thinks there is a serious risk of five hospitals that serve his area being shut without any replacement?
Mr. Wigley: I shall not go into too much detail, as other hon. Members wish to speak, but I have in my hand one of several consultative documents which deal with the future of Caernarfon cottage hospital, whose closure is proposed. The hospital is greatly valued by the community, as cottage hospitals generally are. People want to retain such facilities, which are close to them. It is important for the Treasury to note that some 40 or 50 people who would be going to the hospital for short-terrn care—people who live alone with disabilities or in old age—will probably have to go into institutional care if that cottage hospital closes. They will probably have to go into private nursing homes, which will cost the Treasury between £200 and £250 a week per person in supplementary pensions. In other words, it will cost about £10,000 a year per person and for 50 people, a total of £500,000 per annum. That is twice the saving that will result from the hospital's closure. However, the saving will affect the Welsh Office budget, whereas the expenditure on supplementary pensions will come out of the DHSS central budget.
The Economic Secretary to the Treasury (Mr. Peter Lilley): If these people need only short-term care in hospital facilities, why will they need long-term care in private facilities?
Mr. Wigley: For a simple reason. These people either live alone and have nobody to look after them, or they have relatives to look after them. Without respite care—I am sure that the hon. Gentleman will have heard of that — which is relevant both to the elderly and to the disabled, they could not continue to live at home. These estimates have been given by the general practitioners in the area at the consultation meeting, arranged by the health authority, which we had two weeks ago. The doctors said that these people would have to go into some form of institutional care and, given that the other hospitals are full, the only possibility would be private sector homes, and almost all those people are dependent on supplementary pensions. The Government would have to pay from another pocket to provide a saving of half that expenditure for the Welsh Office.
I did not intend to go down that avenue, but I was invited to do so by the hon. and learned Member for Feltham and Heston, and I can set out the details for the other hospitals if he wishes me to do so. However, I think that I have said enough to underline the nonsense that occurs when decisions are taken in isolation. Decisions should be taken in the overall context of the various departmental expenditure responsibilities of central Government and as part of a long-term coherent pattern of decisions in both capital and revenue expenditure, and not as a short-term expedient to meet the cash crisis that is hitting the Health Service. That is the background to this debate, and that is the message that the Treasury should take from the debate.
7.41 pm
Mr. Anthony Beaumont-Dark: There is no doubt that the Government have shown, through the Treasury team in particular, tremendous political judgment and courage, and a great deal of skill. As with all politicians, there has also been a good helping of luck, without which skill and good judgment rarely come to anything. Because of that, my right hon. Friend the Chancellor finds himself, as against his plans laid out a year ago, when he talked about a PSBR of £4 billion, in one of the most enviable positions of any Chancellor. Not only can he, quite rightly, pay back borrowed money to the tune of a few billion pounds; he can also cut taxation and change the basis of taxation, which has been so airy-fairy and unjust. He can spend a few billion on that and then he can also decide on what to spend another billion or two that he has to spare.
The decisions that we all make, whether we in our private lives or Governments, are not just fiscal and economic, but moral. That is what politics is all about. One comes into politics to make decisions about what one wants — whether it is defence, housing or health. Whatever the problems, they raise moral and political issues.
My position on what should happen to some of this money has always been clear. It is most irritating when people talk about destroying the Health Service or deliberately starving it. When Nye Bevan was the first Minister of Health on that long road in the adventure of freeing people from the worry of ill health, the first budget
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for the Health Service was £150 million. Under a Government who, according to some people, wish to destroy the Health Service, its budget is £22,000 million. When we came into office, it was £7,000 million.
That does not mean that anybody is destroying the Health Service. However, it is still not enough. One could always use the argument, "How long is a piece of string?" There is no doubt that if the budget suddenly went up to £30,000 million in one year there would still be somebody saying, "But my daughter is waiting for an operation," or, "My husband needs an operation," or, "My varicose veins need operating on." Whatever sum we spend will never be sufficient for everything, yet some people in high places keep on giving figures as though they will act as a Chinese good luck charm and people with complaints will go away.
In the report of the Treasury and Civil Service Select Committee, we recommend that the Health Service should be rigorously investigated. I backed that recommendation because two things have to be done. They are not decisions that we in this House alone can make. They are decisions in which people beyond our boundaries—the taxpayers — will have to be involved, because the sums are so large. That is why anybody who suggests that the investigation into the Health Service should be internal does not understand some of the decisions that will have to be made. They involve more than politicians and doctors. If wars are too immportant to be left to generals, there is no doubt that the running of the Health Service is too important to be left to doctors, nurses and administrators.
Medicine has advanced greatly. Let me give two examples of the sort of problems with which so many of us in Parliament, whether in government or not, have to grapple. Let us think of a young girl—if she were my daughter, no amount of money would be too great to keep her alive because she is a human being—who will have £100,000 a year spent on her. Is it spent to keep her alive or to keep her in existence? For somebody who has had a heart transplant, £3,500 a day is spent on anti-rejection drugs. A few years ago, one might have talked about going to the moon as being more likely than people having heart and lung transplants.
That is why the investigation that we shall need so that we take people with us on the need for these costs will have to transcend parliamentarians throwing figures like confetti at a wedding. We need to make decisions, because the growth of the private sector is not enough. I subscribe to it and, thank God, of late it has been a waste of money, and long may that be so. Private health alone will not be able to cope with the nation's health. Anybody who thinks that it can is living in a different world. At least 70 per cent. of health care will have to be provided by us as taxpayers.
When Governments or politicians say that £22,000 million is enough, I think of what happens at the Queen Elizabeth hospital, where cancer beds are being closed. A sister there, known affectionately as Ike, each morning acts as a god. She rings one person and says. "Yes, you can come," and rings another and says, "No, you can't come in." The chances of survival for somebody who comes in are 80 per cent. but for somebody who cannot they fall to 55 per cent. Those are the decisions that sisters and doctors make each day, in spite of the £22 billion—as against the £150 million of the happy days of Nye Bevan's launching of the Health Service — that we are now spending.

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These are not the decisions of a mean Government. How can they be mean, when the money allocated has increased by as much as it has? But parliamentarians are human beings. In God's name, we are sent here as human beings to talk on behalf of other human beings because we care for the system, we like our people and we enjoy our areas. It is our duty to tell the Chancellor and the Treasury team, who have done so well, that they face a happy morning because the money that is available means that we can now do two things.
We can properly and rigorously investigate where the Health Service is going in the next 20 or 30 years. It may not be as well administered as it should be, but I saw figures in a letter to The Times showing that our management costs are 4.5 per cent. They are 12 per cent. in France and 21 per cent. in the United States. Of course, there may be too many administrators and porters—let us examine those things. We are running ambulances that cost more than hiring a Rolls-Royce. Let us examine that, too. It is right that we should, because this concerns other people's money. That is tomorrow's problem — it certainly needs examining—but today people have their needs.
By all means, let us reduce taxation. The Government very properly did that and it fuelled the economic recovery that is going on now. Let us go on reducing taxation; we can do that on the Government's own figures. Let us, as all prudent Governments want to do, reduce borrowing. On the Government's figures we can do that, too, but still, if we have the moral will and the commitment to our people, we can also give extra money for the nation's health. In the end, however much wealth one has, without health one is dead. In the final analysis, it is not increased expenditure that matters—not even if it is a 30 per cent. increase. When one is dead, one is 100 per cent. dead.
We have the money; let us make sure more people live. All things are possible this year. If we have the will, we have the ways and the means.
7.52 pm
Mr. John McFall: The public expenditure White Paper must be seen in the context of 1979, with that year being used as a benchmark. The Government manifesto of that year stated that the state takes too much of the nation's income, and that its share should be readily reduced. The question on all our lips today is: to what level? The report of the Treasury and Civil Service Select Committee does not accept that public expenditure should be reduced further; nor does it accept the underlying assumption that a reduction of public expenditure is in itself desirable.
In the past, the Government have said that revenue determines expenditure, which I consider erroneous. However, if it is true, we should take them at their word. If we believe the estimates that are going around, that between £5 billion and £12 billion is ready and waiting for the Chancellor's Budget, the Government are not even obeying their own dictum. Their perversity of approach is manifest; it is nothing more than a blind act of faith.
The public expenditure White Paper shows an antipathy to the public services. According to the manifesto of June 1987, the White Paper plans to spend £1.3 billion less this year than the Government promised at the election. Only the other week on the radio waves the Home Secretary lectured us on morality. I suggest that
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there is a selective myopia in the Government's non-recognition of their moral duty to supply what is required for the greater good of the people of the country.
Public opinion is overwhelmingly in favour of such investment. Only last week an opinion poll in The Daily Telegraph said that 70 per cent. of people would pay more tax if they were comfortable in the knowledge that all was well with the National Health Service.
The reams of statistics that the Prime Minister grinds out at the Dispatch Box are not convincing. The debilitating effect of the lack of provision in the health and social services is daily manifesting itself. The Prime Minister's rhetoric should be contrasted with the veracity of the statement by the Secretary of State for Social Services, who spoke to the Young Conservatives conference at Scarborough only two weeks ago. He said:
"It seemed to me clear that, as many have said, we needed extra resources."
If the Secretary of State for Social Services, who is supposed to be at the helm of his great Department, can see that for himself, what do the people who use the services daily think? There is a link between the Secretary of State's comment and the gut response of the public, as shown in the opinion poll that I mentioned.
Mr. Watts: Will the hon. Gentleman continue the quotation, as my right hon. Friend the Prime Minister had to for his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) during Prime Minister's questions last week, as far as the bit when the Secretary of State explains whence he was going to obtain the additional resources — charges for dental and optical care? Will he also explain that the Secretary of State's comments were in context of primary health care, not hospital services?
Mr. McFall: He said:
"I secured my discussions with the Chancellor for the next three years through the public expenditure run, increases on top of all of the last eight years of something like £570 million … But I did not think that was enough."
The Government say that they are increasing the health budget by £1 billion next year, but the public expenditure plans are meaningless unless proper allowance is made for inflation—and it is not.
The commentary on public expenditure for Scotland was issued on 17 February. It states that the health budget must stay 1 per cent. ahead of inflation merely to keep pace. But the Secretary of State for Scotland announced that the budget would be only 0.7 per cent. greater than inflation, which leaves a shortfall of 0.3 per cent. Translated into cash terms, Scotland's health budget will be £85 million short next year.
Let us also examine the waiting lists in Scotland, taking 1979 as our benchmark. Waiting lists then were 71,247. In March 1987 the waiting list was 81,324, an increase of 26 per cent. in eight years. The availability of beds has fallen by more than 3,000 — by 5 per cent. Comparing the waiting lists increase with the decrease in availability of beds, we can only conclude that, whatever the Government say they are spending on health in Scotland, it is not enough. In my health authority area, waiting lists have increased and there are fewer beds.
Scotland today experienced a protest by nurses and ancillary workers. More than 15,000 protested in Edinburgh. There were more than 20,000 in Glasgow and 5,000 in Dundee and almost 10,000 in Aberdeen, making a total of more than 50,000. The protest is not galvanised

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or led by a minority. It involves people who regard the Health Service as our most precious public asset and who perceive that the Government have nothing but wanton disregard for it. The turnout is a tribute to what the people of Scotland feel about their Health Service.
There is a debate about privatisation in Scotland. The Minister has put out a circular demanding health boards to put their services out to tender. But let us be clear: privatisation is not about quality. It is about the lowest common denominator of provision. In my constituency, the Vale of Leven district general hospital has been asked to put its catering services out to tender. Two years ago, management and unions made an agreement for the following three years. One year of the agreement has yet to run, but, in spite of local agreements, the Minister has seen fit to intervene and order the health board to put services out to tender. That is not an act of concern for the Health Service but sheer dogmatism.
There is no enthusiasm for privatisation in Scotland. It is regarded as a distraction from the main issue, which, as in England and Wales, is resources. If it stands still, the health budget is too small to cope with the demand, whether it arises out of demographic change, increased services or increased medical sophistication. I suggest that the Secretary of State is being dogmatic—nay, obtuse—when he claims that public expenditure in Scotland is rising.
The Secretary of State is clearly being obtuse, because somebody has knocked his proclamation on the head; that somebody is none other than the Chancellor of the Exchequer, whose figures show that Scottish Office funding will fall by £70 million by next year and by £317 million by 1990–91. The commentary on public expenditure for Scotland makes a bleak story. No area is spared. Spending on Scottish industry is down in cash terms by £2 million, from £120 million to £118 million. Once inflation is taken into account, that deficit becomes £7.5 million, so the opportunity for investment in infrastructure in Scotland is seriously diminished.
Housing has suffered. Since 1979, investment has decreased by 64 per cent. In Scotland, investment will drop next year by £84 million. The commentary reveals that, whereas in 1979 8,607 houses were completed in Scotland, only 3,500 were completed in 1987—a cut of more than 100 per cent. Whereas there were 7,871 house starts in 1979, there were only 3,900 in 1987—a cut of almost the same magnitude. Notwithstanding the fact that the Scottish housing programme is in crisis, the Government have decided to cut, and cut again.
Nor is education spared—£38 million has been lost. We have already heard about cuts in universities from the hon. Member for Edinburgh, South (Mr. Griffiths). My region is considering school closures because it has pared spending to the bone and has no other option. The Government's inner-city programme has been described, aptly, as a crusade without cash. But every aspect of their policy is a crusade without cash, because each capital investment programme except that for prison building is being cut.
In addition, it is a crusade without heart or concern, in which people are absent from the main stage erected by the Government. We should forget statistics for a moment and consider people and what the White Paper does for them. Sadly, it does nothing for the overall benefit of individuals.
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Quite simply, the policies we see enunciated are not the politics of caring—they are nothing but the politics of pain and, because of that, the White Paper should be rejected.
8.5 pm
Mr. Neil Hamilton: Listening to the hon. Member for Dumbarton (Mr. McFall), it is difficult to recognise the true situation in Scotland, especially with regard to health. We did not learn from his speech that my right hon. and learned Friend the Secretary of State for Scotland announced a couple of weeks ago that there would be an increase of 8.6 per cent. in spending on health in Scotland, of an extra £225 million.
The hon. Member for Dumbarton did not compare what is happening now with 1979. He did not tell us that the number of day cases in Scotland has risen by 95 per cent., that the number of operations performed has increased by 41 per cent., that the number of in-patients treated has gone up by 15 per cent., that the number of patients treated in bed has gone up by 20 per cent. and that the number of out-patient attendances has gone up by 8 per cent. In Scotland, the Health Service has advanced significantly. Spending is up by 27 per cent. in real terms. I hate to think what it would be like if we had the crippled economy that we inherited from Labour in 1979. I dare say that those figures would have been quite the opposite.
I have the honour to stand here as a member of the Conservative minority on the Treasury and Civil Service Select Committee. My right hon. Friend the Member for Worthing (Mr. Higgins) has achieved that level of seniority which puts him above and beyond party politics, and my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) defies conventional classification. I know that he will take that in the spirit in which it is intended. That means that there are four gallant Conservative supporters of the Government, who I am sure the hon. Member for Walsall, North (Mr. Winnick) would say are slavish Thatcherites, who are left to hold the fort.
One thing which I welcome greatly about the White Paper is its continued commitment to reducing the proportion of gross national product taken by public expenditure. There are good reasons for continuing with this pledge for the foreseeable future. I am happy to say that, when we considered whether to insert an amendment to the effect that we did not accept the underlying assumption in the White Paper, that reducing public expenditure is in itself somehow desirable, it was rejected. We can therefore infer that it is a shared assumption that it is a good thing to carry on reducing the proportion of GNP taken by public expenditure.
The successful economies are the low-tax economies, low public spending economies. It is not possible to reduce taxation unless public spending is kept under control. I believe, as the election result last year showed, that such a course is popular in the country.
Much has been made of the fact that this year a considerable amount of money is available to the Chancellor to increase spending, cut taxes, or reduce borrowing. What a splendid thing it is that the argument over the public expenditure White Paper this year, as indeed for several years, is not about how to make real spending cuts, as was the miserable position in which we

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found ourselves in the latter part of the 1970s, but how to spend the windfall that Opposition Members are at a loss to explain, except in terms of good luck.
We would not have that windfall to distribute today were it not for the prudent policies that the Government have followed in the past nine years—sometimes during difficult periods — which have kept public spending within bounds, allowed us to reduce the tax burden, and give the incentives that have produced growth in the economy.
I agree with what my right hon. Friend the Chief Secretary said in evidence to the Select Committee. It would be wrong, just because this year may be exceptional —we do not know what will happen in future—simply to have a one-off dollop of cash thrown around within the public services. My right hon. Friend expressed it rather more eloquently than I have. His words deserve wider currency than perhaps the arcane report that the Committee has produced. He reminded us that
"the converse of rushing to spend what seems to be increased revenue would be rushing immediately in-year to make very substantial in-year retrenchments if revenue falls short of your expectations. That has happened in the past … it is not an attractive way to conduct affairs. It is better to have a smoother flow … I would argue that that is a prudent way to proceed in terms of public expenditure if one is interested in ensuring that you have a regular and consistent flow of public expenditure rather than a jerky pattern. which does no good either for individuals or for programme expenditure plans."
Every business must have a plan for several years and try to plan for its expansion in an orderly way. One should not simply go up and down with the tide. One should try to make one's expenditure increases stick year by year, rather than have to make real cuts in one year and unforeseen increases in another.
In addition to cutting taxation, our great opportunity this year is to use much of the surplus to continue to reduce the burden of debt interest upon public revenues. In the past nine years, we have been successful in reducing the burden of debt. In 1982–83, we spent 5 per cent. of gross domestic product on financing the national debt. In 1988–89 that has been reduced by 1 per cent. to 4 per cent. That means that we are saving about £3,500 million a year, which, of course, can be spent on improvements in the National Health Service, and so on.
According to the White Paper, by 1990–91 we plan to reduce that proportion of gross domestic product still further, to 3.5 per cent., which will be the equivalent of £5 billion a year, spent not just on interest, but, for example, on real patient care in the Health Service. That is one reason why we have been able to make a £1.1 billion increase in spending on the Health Service this year.
During the past few months, there has been what we can only call an hysterical campaign about the Health Service. That can easily be explained. Labour Members are clutching at straws. They are able to complain about a crisis in the Health Service only because they are unable to complain about a crisis anywhere else in the economy. Before the last election, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) desperately attempted to drum up some potential crisis lurking in the background, in the vain hope that he would be able to gull the public into believing that the Labour party would be elected. All that he seems to have done—perhaps rather more effectively than Lord Whitelaw has done—is to go around the country stirring up apathy, because the election result was not satisfactory to him.
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Today, the Health Service is in crisis in political terms only because there are no bigger or better alternative crises. There is always some crisis. There must be something to give vigour to political debates. When we consider the increase in spending and the amount of patient care that has been provided during the past nine years, we cannot say that the National Health Service is in crisis.
That is not to say that it is perfect. It is a long way from being perfect, and in its present form it is nowhere near perfectable. The National Health Service is failing in many respects. It is disappointing that there are no ideas on the Opposition Benches about how the Health Service can be improved, except by the most crude mechanism of increasing the amount of money that we spend on a defective system.
Dame Elaine Kellett-Bowman: Does my hon. Friend agree that the letters that he has received are mostly from those who are on the payroll of the National Health Service? I have received few letters from patients. Most of the letters that I have received have stated that the Service is excellent.
Mr. Hamilton: I have had the same experience. I receive letters about the Health Service. Many letters have been prompted by the publicity that the arguments have received on television and in newspapers — often presented in the most tendentious and inaccurate terms.
It is no good thinking that we can solve the problems of the Health Service simply by increasing the amount of money that we spend on it. The Health Service is more like a leaky steam engine, with my right hon. Friend the Secretary of State for Social Services, the fireman, year by year shovelling bundles of pound notes into the engine to get up steam. So much power is lost through the holes in the engine that the proportion of extra speed that it is able to generate, relative to the quantity of fuel, is small. The more money that we put in on that basis, the less effective the Service becomes.
I reject the notion that the people of this country are prepared to pay considerably more money to continue to fund the Health Service in its present form. If we ask somebody whether he believes that more money should be spent on the Health Service, the answer will be yes, because he wants more health care. It is a question without cost, and a question without cost is not a real choice. It is a most unscientific way of inquiring into public attitudes to choice.
I know of only one survey that has gone into the matter in a proper scientific way. In a book called "Welfare Without the State", published not long ago, the Institute of Economic Affairs Ltd. published the results of a survey, which it has carried out every 5 years since 1963, on attitudes among the general public about whether they wish to see more money spent on public services or on tax cuts. The results are interesting. When asked in early 1987 whether they would prefer to pay higher taxes to spend more money on the Health Service, 55 per cent. of people said yes. That figure would be higher today as a result of the publicity that the Health Service has received in recent months.
When they were asked how much more they would be prepared to pay in higher taxes, the figure dramatically altered. The vast majority of people are prepared to see more money spent on the Health Service only if other

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people pay the taxes. It will be a small minority — probably 10 to 15 per cent. Opposition Members are free to look at the figures if they take the trouble to go to the Library and examine the document. A small minority of people in this country are prepared to forgo real increases in disposable income to put more money into a service that, in the nature of things, cannot overcome its deficiencies simply by the amount of money that is provided.
Mr. McFall: How does the hon. Gentleman explain the Gallup poll in an issue of The Daily Telegraph last week? When people were asked whether they were willing to pay more, 67 per cent. said yes. The poll was quantified and related specifically to the NHS—£1 a week, £2 a week, £3 a week, and even more. Overall, 67 per cent. said that they would pay more. That was a specific question.
Mr. Hamilton: I regret to say that, unlike the hon. Gentleman, I do not subscribe to The Daily Telegraph. However, I would be prepared to examine the figures from that poll.
Dame Elaine Kellett-Bowman: Actually, most of the people interviewed said that they would give only £1 a week. That is less than the increase that the Government will give.
Mr. Hamilton: My hon. Friend is right to state that the £1.1 billion projected increase in the White Paper is virtually equivalent to one penny on income tax. I suspect that many people are unaware of that. There are many ways in which we can improve the Health Service and increase the quality of patient care without having to increase the amount of money that we put into it through tax-funded revenues.
To give an example of the degree of public misconception of the position, the health authority in my area has received a 60 per cent. increase in spending since 1982–83. However, this year wards are being closed and waiting lists are lengthening in exactly the same way as hon. Members have described tonight. A 60 per cent. increase in spending in cash terms over six years can by no stretch of the imagination be called a cut.
What causes these so-called cuts and reductions in provision, happens when an authority is unable to manage its budget year by year. That may occur for a variety of reasons. I believe that the main reason is that the authority does not have the information to hand to enable it to monitor spending against budget adequately and effectively throughout the year. I believe that that happens in authorities throughout the country and that it explains much of the hysteria over recent months about so-called cuts in the Health Service.
One of the glaring absurdities of the existing system is that there is a two-year gap between doing work and being credited with payment for that work. For example, Macclesfield is treating 14 per cent. more of its residents now than it was treating two years ago, while Manchester is still receiving the credit in revenue terms for that. Macclesfield will get the benefit in two years' time.
Mr. Allan Rogers: The hon. Gentleman has presented his argument in an extremely clever way, no doubt as a result of his training and background. Will he explain, without reference to his manipulation of figures,
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why wards are closing, operating theatres are not being used and there is a shortage of nurses? The hon. Gentleman is familiar with my constituency and, if he would like to visit it, he can witness those things happening. However the hon. Gentleman may adjust or manipulate the budget or the figures, the point is that the service is not being provided. It would be wrong to suggest otherwise.
Mr. Hamilton: I agree that it appears that wards are being closed and that there are cuts in the service. However, any business which must operate to a budget must try to adjust its expenditure smoothly and not spend the entire revenue by the ninth month of the year. Because authorities cannot discover accurately the costs that they are incurring in the early part of the year, there are panic measures at the end of the year when the authorities discover that they are running out of money and will not be able to pay the bills. If there was a more even spread of expenditure and better management, there would be fewer problems.
I am not saying that the Health Service is perfect or that the existing waiting lists are acceptable—they are not—but there are many ways in which the position can be improved.
Mr. Quentin Davies: Does my hon. Friend acknowledge that, in each successive year since 1979, there has been a real, substantial increase in the number of nurses employed in the Health Service? That does not appear to be a decrease in provision.
Mr. Hamilton: My hon. Friend is quite correct to comment on the enormous increase. Indeed, tens of thousands more nurses are employed in the Health Service now than 10 years ago. I notice that Opposition Members are always keen to stress how many nurses are leaving the Health Service, but they are not so keen to state how many administrators and ancillary workers are not leaving it. If Opposition Members were more interested in that figure, the problems with the Health Service might be considerably reduced.
There are many ways in which the effectiveness of the Health Service can be improved. I hope that we will get away from this national wage bargaining system in the Health Service, which has bedevilled the budget year by year, and opt for a more market-oriented system where regional and specialty differences are taken into account. We have a long way to go before we get rid of the existing restrictive practices within the Health Service which prevent new working techniques from being introduced. There are still absurd unbreachable overlaps between technicians, nurses and porters. We can use the manpower, which accounts for 70 per cent. of the cost of the Health Service, more effectively than at present.
Many marginal services could be provided more effectively. I cannot understand why we must provide highly expensive taxi services using ambulances which, as my hon. Friend the Member for Selly Oak said, cost more to run than a Rolls-Royce. Many false choices are made under the present system. For example, because remedial care is visible, any cuts in its provision provide a potent force for putting pressure on the Government. On the other hand, preventive care, which in the long term will considerably reduce pressure on the Health Service, is not

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visible and increases are not made in that because that is not politically advantageous. The emphasis is very often wrong within the system because of its structure.
I believe that the hon. Member for Caernarfon (Mr. Wigley) had a point in some respects when he said that we should concentrate more on community hospitals and facilities. The move towards large district general hospitals at the expense of cottage hospitals and wider provision through doctors' surgeries has been greatly overdone. There is poor cost awareness within the system. Supplies are often used once and then thrown away. Tests and treatments are carried out which are of marginal value. Capital items are treated as free gifts and not properly accounted for. Expensive pieces of equipment lie idle until they become obsolete. They are then given away to the Third world as part of the aid budget. There are many ways in which the existing system is abused and we must do something about that.
I was very pleased to see the headline in The Times yesterday:
"GPs and their patients may he privatised."
According to the article, a series of radical health plans may be considered by Ministers today. I hope that we will follow the route of the health maintenance organisations which have been very successful in the United States.
The Opposition have not been able to provide a convincing case for spending more money on the Health Service. They were completely floored by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) who challenged them to quantify the extent of underfunding. What do they mean by underfunding? My hon. Friend asked whether they would be prepared to give a commitment that they would reopen all wards, abolish all waiting lists and agree in advance to fund all nurses' pay awards if, to our misfortune, they ever won a general election and had responsibility for these matters. The hon. Member for Dunfermline, East (Mr. Brown) was completely unable or unwilling to answer that question. He knew that the unpalatable answer was that he could not responsibly give such a commitment.
Opposition Members are not only playing with words in these debates, but, for a cynical and political purpose, are taking advantage of people who are sick and suffering. They cannot match this Government's record of increasing provision for the Health Service, and they know it. Therefore, they have given up all hope of providing any convincing alternative to our proposals, and, happily, the people of this country have given up all hope of the Labour party getting back into office.
8.29 pm
Mr. Win Griffiths: Having listened to the hon. Member for Tatton (Mr. Hamilton), one wonders in which world he is living. The problems that we see every day on our doorstep result from the underfunding of the Health Service and they are a daily reminder of the desperate need for more resources to be made available to the NHS.
The hon. Member for Talton wanted such under-funding to be quantified and there are a number of ways to do that. For example, let us consider my constituency's area health authority, Mid Glamorgan. It has worked out a budget for the coming financial year that tried to take account of inflation and the possible costs of pay awards to nurses and other Health Service workers. It came up with a figure that was some £3 million less than the amount
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then allocated by the Welsh Office. The Welsh Office thought it had done that health authority proud because the increase in funds was 5.1 per cent. more than last year's spending.
We are well aware that the increases in pay for the nurses and other hospital workers will be much more than the sum allocated by the Welsh Office, yet the Government have given us no guarantee that they will completely fund that pay award. The major problems faced by the Health Service in the past few years have been due to the underfunding of nationally negotiated pay awards.
Let us consider another example of underfunding in the Mid Glamorgan health authority that occurred two years ago, yet the effects are still being felt. In July 1986 the Mid Glamorgan health authority had a guideline for capital expenditure. However, in January 1987 the Welsh Office cut its allocation by more than £9 million. At a stroke, the authority had to revise its capital expenditure programme under which it was planned to provide the facilities that the area was sadly lacking.
Bridgend has a splendid new district general hospital that is providing effective and efficient services. It is just about the cheapest hospital in which to be treated in Wales. However, instead of the second phase of its development being started in 1991—at the moment it is a split-site hospital that costs hundreds of thousands of pounds extra to run a year—it may be 1994, 1995, or never before it is stated. It depends on the amount of money that the Government are prepared to give to fund the cost of the pay awards in the Health Service.
The Government say that money is available, and they appear to be committed to tax cuts. However, that money could be used to help fund the Health Service. We are not suggesting — as the hon. Member for Tatton tried to make out—that we should ask people to pay more money. It is a simple request to hold back on major tax cuts and to use the money to fund the Health Service.
At the start of the financial year—not in the ninth month of the financial year and not as a result of bad management — the Mid Glamorgan health authority already knows that, on the basis of the money allocated by the Welsh Office, it will have to find £5 million to make up for the cuts — on top of cuts already carried out. Despite the fine record of Health Service staff in treating more patients, the unpalatable fact for Conservative Members is that there are longer waiting lists and there is a crisis in the Health Service. The Government can throw as many statistics as they like at us about the wonderful extra funding. However, the plain fact is that there are more unwell people who need treatment and there are more people dying who need care.
The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) spoke about the economic recovery that has been engineered by the Government. However, it has resulted in a level of unemployment which is still more than double the 1979 level. Even if the present rate of reduction in unemployment continues, it will be 1992 or 1993 before we get back to the 1979 level of unemployment. What a wonderful economic recovery.
Let us consider what the Government have done with regional spending. Let us consider some of the facts and figures behind the British economy. Today in Wales, compared with 1979, there are about 100,000 men and 40,000 women who are no longer in full-time employment. Regional spending in Wales has been reduced from £265

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million in 1979 to £149 million in 1987. The public expenditure White Paper proposes further cuts in future years.
Dame Elaine Kellett-Bowman: The hon. Gentleman and I served on the same Committee in the European Parliament which dealt with regional spending. Does he maintain that the money spent was cost-effective in jobs? In my part of the world, and certainly in parts of Cheshire, I found that vast sums were being spent on capital spending, but, far from increasing the number of jobs, the number was reduced. That spending was not helping to increase regional employment; there were merely cash handouts regardless of the merit of the project.
Mr. Griffiths: That is one way to consider investment that keep jobs in an area.
In my European constituency of South Wales, in Baglan bay there is a chemical works that over the years has received considerable funding from the Government. Because of changes in the chemical industry, there has been a reduction in employment. Nevertheless, there are still many hundreds of workers employed in that plant and they would not have those jobs without Government grants.
In the county of Mid Glamorgan nearly 29,000 men and women are unemployed and there are 1,907 advertised job vacancies. In my constituency of Bridgend and that of my hon. Friend the Member for Ogmore (Mr. Powell) there are more than 7,000 men and women unemployed and there are 397 job vacancies advertised in the jobcentres. In 1979, the amount of regional aid spent in the Bridgend travel-to-work area was more than £62 million; this year it is £8 million. We need more public expenditure in such areas to create more jobs to take people off the dole. The dole is one type of public expenditure that we should try to cut.
The hon. Member for Tatton tried to claim that there was a crisis only in the NHS, but let us consider the spending on education. Apart from the two financial years before the general election, public expenditure in education has been on a downward trend. Judging from the White Paper, it is apparent that education spending for the next few years, in real terms, is also on a downward trend as a percentage of national output. Apart from one year, there has been a downward trend throughout the 1980s.
Yet Government spending plans include a reduction in the proportion of the money spent on education. They plan to reduce local authority spending, but at the same time they are to increase spending on administration in the Department of Education and Science by 8.6 per cent. in real terms next year. One wonders why. They will increase in real terms expenditure on the assisted places scheme by more than 10 per cent., yet the increase in spending on the under-fives will be less than half that increase. The increase for primary education will be less than one third and there will be no increase at all in spending on secondary education. Provision for transport will go down by 3.3 per cent. and provision for milk and meals—carrying on the honourable tradition of the Prime Minister— will be reduced in real terms by more than 8 per cent.
The Government's spending targets suggest that, even if they make a minimum commitment to maintaining the
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value of teachers' salaries, extra spending to take account of other needs of the education service will be less than 2 per cent. —well below the projected rate of inflation.
The Government are to spend more money on repairing school buildings. They have been told in the schools survey of last November that they need to spend between £2.5 million and £3 million to put our schools back into a good state of repair. However, that extra money to be spent on school buildings will be at the expense of the maintenance budgets for colleges and other higher education institutions. Therefore, the crisis in the schools in the 1980s may partially be dealt with by the 1990s, but then there will be a crisis in the colleges and institutes of higher education because of the cutbacks that are being made now.
In real terms, capital expenditure will go down by nearly 4 per cent. The Government are proud of being able to talk about tax cuts. If they really want to help people who need help, they should provide for investment in our schools, hospitals and factories so that people can live decent lives. It is amazing that the public expenditure White Paper does not contain any reference to the Education Reform Bill currently in Committee. That Bill makes some quite significant changes to the shape of spending on education, yet there is no evidence of them being taken into account in the public expenditure White Paper.
Unfortunately, the public expenditure White Paper throws a shadow over the prospects in the Budget for investing in Britain's future, because, for the sake of short-term gains in tax cuts, we are to lose the long-term gains which could have led to an improvement in people's health, education and lifestyle by providing more jobs. That is what people want when they come to our surgeries. Let the Government deliver it, if they say that they have the money.
8.43 pm
Mr. John Watts: In 1979, the Government's target for public expenditure was to reduce it in real terms. By 1983, the target was level funding to keep public expenditure constant in real terms. Currently, we have the most lax of targets that the Government have adopted—that is, to reduce public expenditure as a proportion of GDP. If that were the Government's only target, and if that were the only constraint to be observed, it would be far too lax to be the basis of a prudent fiscal policy.
It is clear from this year's public expenditure White Paper that there is no predisposition to spend up to the ceiling permitted by the policy guideline. Certainly the current target is more achievable than those which have preceded it and those which have been achieved since 1984–85, when public expenditure was absorbing 46.25 per cent. of GDP. This year it is down to 42.5 per cent. and it is destined to fall further, to 41.25 per cent. by 1990–91.
The hon. Member for Durham, North (Mr. Radice) claimed that there was no economic justification for the policy objective of reducing expenditure as a proportion of GDP. It may be a pure coincidence, but the decline in the share of public expenditure over the past few years has coincided with accelerating economic growth and falling unemployment. This accelerating growth has created the buoyant tax revenues that allow those of a spending disposition to indulge in the luxury of advising my right hon. Friend the Chancellor on how to spend the "windfall", as they describe it.

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The Treasury and Civil Service Select Committee report points out that expenditure could be £1 billion or £2 billion higher next year without breaching the policy constraint of a declining proportion of GDP. That is merely a statement of fact, based upon arithmetic. "Could" does not mean "should". There is no virtue in public expenditure, and a Government do not become more virtuous just because they spend more money. Conceivably that might be the case if the Government had substantial financial resources of their own to disburse beneficently.
The process that leads to public expenditure involves taking away from individuals income or capital that belongs to them and spending it in ways that the Government choose. Therefore, the Government must accept a duty to take in taxation only what is essential. The Chancellor has a choice of spending more on public services or "spending" on tax cuts. Cutting taxes is not a method of spending. It involves leaving more money with the individual to whom it belongs and, in my submission, that is fundamentally different from choosing to spend it in some other way.
Too much of the recent discussion about public expenditure has been concerned with the volume of expenditure, the financial input, rather than with the output of services that are generated by that financial input. The hon. Member for Dunfermline, East (Mr. Brown), when pressed extremely hard by a number of my hon. Friends, finally was forced to quantify the further funding needs of the NHS at an extra £2 billion. The hon. Member for Dumbarton (Mr. McFall) adduced the argument that the public are willing to pay more in taxation to fund increases in expenditure on the Health Service. He quoted a Gallup poll in The Daily Telegraph last week. Perhaps he was a little economical with the truth.
As my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) confirmed, 67 per cent. of those interviewed said that they were prepared to pay more in taxes if it was to be spent on the National Health Service. That applied to expenditure of £1 per week. When the question arose whether people would be prepared to spend £3 a week extra — my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) explained that this would be the broad cost to a family of an increase in expenditure of £1.5 billion, which is less than the hon. Member for Dunfermline, East suggested—the number of willing respondents fell to only 16 per cent. Only one person in six covered by the Gallup survey was prepared to contribute in extra taxation an amount somewhat less than that which the hon. Member for Dunfermline, East suggested was necessary to fund the NHS.
In adducing the need for this increase in funding, the hon. Gentleman gave no thought to the efficiency with which the existing £22 billion of resources is spent. There is plentiful evidence of the scope for increasing efficiency. The national average cost of treating a patient in a major acute hospital in 1985–86 was £724. The costs within that average range from £467, which is 35 per cent. below the average, to £1,231, which is 70 per cent. above the average. The average length of stay in hospital after general surgery ranges from three days in the health authority which deals with its patients quickest, to 11 days in the one which is the most tardy.
To give a further example, last weekend St. Bartholomew's hospital hired the operating theatres at a
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London independent hospital and shipped its surgeons there to perform operations to reduce the waiting list, making use of the additional funding that the Government have provided for reducing waiting lists. The district general manager admitted in a radio interview that it was cheaper for the health authority to hire the theatres of a private hospital than to use the operating theatres in the NHS hospital.
One must ask why that should be. I can only conjecture that part of the answer must be the hordes of additional porters, receptionists, administrators and so on who are required to be present before anyone can do anything in a NHS hospital. That is the type of constraint which clearly does not apply in the private sector. Each example shows the possibility of achieving a much greater output of health care for the existing expenditure of £22 billion.
This year's White Paper contains about 1,800 measures of output and performance, but, as Treasury officials admitted in evidence to the Committee, less than half these are performance indicators which relate inputs to outputs. Public expenditure is planned to rise by £4.5 billion next year, but the expected output for that increased input is nowhere quantified in the White Paper. It is essential to our ability to judge whether value for money is being achieved that such targets should be set.
Furthermore, the indicators chosen should be used on a consistent basis from year to year. It should be an immutable principle that, if a target is adopted in the White Paper for one year, the following year there should be a comparison of the performance against that target. If that is not done, those of us with a suspicious turn of mind might be led to believe that it is those targets that are achieved that are reported on in subsequent years, and that those which are not are ignored. That is not the way to report on the efficacy of public expenditure.
I know that several hon. Members wish to speak, so I shall draw my remarks to a close. As the Chancellor of the Exchequer contemplates his Budget, he is right to reaffirm the view that the buoyancy of the economy and the tax revenues are not reasons to have a more relaxed view of public expenditure. His priorities should be, first, to eliminate the need for any PSBR, not for any doctrinaire reason, but for a practical one. As my right hon. Friend the Chief Secretary explained earlier, reductions in the levels of borrowing since 1978–79 are now saving us £8 billion a year—the equivalent of 40 per cent. of the total budget for the NHS.
Secondly, it should be a priority to reduce the burden of income tax at all levels. A 25p in the pound basic rate should not be the end of our aspirations: 2p off the basic rate is the minimum that our constituents now expect. On past experience, reductions in the higher rates of tax have not involved a reduction in revenue, as Labour Members have suggested, but have increased the tax take from those who pay higher rates, not just in cash terms, but in real terms. That knowledge should give the Chancellor of the Exchequer the courage to remove at least another 10p from the higher rates. Perhaps we could have a 25p, 35p, 45p profile.
Thirdly, there is a unique opportunity, as my hon. Friend the Member for Bridlington (Mr. Townend) suggested, to reform the taxation of married women to end discrimination against those who stay at home to care for children. The Budget on 15 March should not be an occasion for announcements of increased spending It is an opportunity to slash taxation and borrowing.
8.55 pm
Mr. Doug Henderson: The Government tell us that there must be tax cuts because we must provide greater incentives. Hon. Members will all agree that tax cuts will stimulate demand in the economy, but we will differ on whether tax cuts lead to greater incentives. During the last Parliament, the Treasury commissioned a study at Stirling university, under Professor Brown. I know that Treasury officials feel uncomfortable at the results, which show clearly that whether or not one reduces taxation, that will not provide an incentive for the average person. If anything, if taxation is increased, people feel that they need to work harder to make up their take-home pay. No nation and no person will volunteer for high taxation.
The Prime Minister continually reminds us at Question Time of her admiration for the Japanese economy, and perhaps we should admire it. Nations such as Japan are not so stupid as to believe that public expenditure should be cut to fund tax cuts. Japan's medium-term forecast for the budget that is being considered in the Diet estimates that real growth between 1986 and 1990 should be 2.7 per cent. per annum. At the same time, the Japanese Government estimate an increase in Government expenditure, of 3.7 per cent.
Clearly the Japanese believe that certain action must be taken on public expenditure if the economy is to be successful. They believe that at this time public expenditure can be increased by more than the rate of growth. The Japanese people are far too practical to give up investment in tomorrow, in education and training, in research and development, and in industrial aid, just to pay off their rich friends today. When Conservative Members, such as the hon. Member for Tatton (Mr. Hamilton), make comparisons with successful economies worldwide, I wish that they would get their facts right.
There are, of course, two views about the role of public expenditure in our country. One view, which is relatively uncontroversial—or at least it used to be—is that, when we have the resources, we should spend money on those things that people believe lead to a better society, such as the Health Service and housing. The Chancellor and the Treasury officials know that this year revenues can match expenditure. We all know the inadequacies of the National Health Service; even the hon. Member for Tatton conceded that point. The Secretary of State for Social Services has admitted that he needs to spend more money if he is to meet the objectives that he feels are important, but Treasury officials are still not allocating the necessary resources.
It is often said that Governments should put their money where their mouth is. On the question of Health Service expenditure, this Government will not do that. In saying that, I know that the Financial Secretary to the Treasury will recognise that the officials of the Department of Health and Social Security are not usually shy in this respect, but on this matter they are very shy.
Such is the Government's lack of compassion, and such is their support for privilege, that they will neither put their money nor their mouth on the line for those who are suffering because of the crisis in our National Health Service. Thousands of people up and down the country are waiting in pain because they cannot get a hospital bed. There are terrible cases in different parts of the country of families losing their loved ones—we have heard recently
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from the midlands about families losing their young loved ones—as a direct consequence of Government action and their inadequate provision for the National Health Service.
I know that time is short, but I want to make some brief comments on the second important role of public expenditure. There is a relationship between public expenditure today and the prosperity of our economy tomorrow. That view of public expenditure relates to the way in which it can directly affect prosperity. We need a public expenditure commitment if we are to make provision for the future in education, but the White Paper makes it clear that there are no scheduled increases for the period 1987 to 1991. The importance of a public expenditure commitment to science is recognised, but there is to be a 6 per cent. cut in the science programme between 1987–88 and 1990–91.
That view of the public expenditure commitment recognises the importance of it in relation to training, transport and our regional economy. I think that most of us would recognise that the economy is somewhat overheated in certain parts of the south, but there is dreadful under-capacity and under-utilisation in most parts of the country. Therefore, surely it makes sense to recognise—I hope that we do—that we cannot address the problem of levelling out economic activity throughout the country unless we have a public expenditure programme. Yet regional aid has been cut by 39 per cent. since 1979 and the White Paper schedules a further 6 per cent. cut from the industrial budget.
For all those reasons, I believe that the Government should think again. If tax cuts are the option that is chosen because of the weakness of our economy, that will undoubtedly lead to an increase in imports of manufactures, which will have a subsequent and damaging effect on our balance of payments. What we should be doing, with whatever resources are available— we can argue whether that amount is £2 billion, £5 billion or £10 billion—is investing in those areas that are important to the economy, to the people, and to tomorrow.
I ask the Financial Secretary to think again and not to wreck tomorrow and the future. I ask him to think about what our competitors abroad are doing; about the needs that we all recognise as necessary in education and in training; and to consider the disparities in our regional economies. Most of all, I ask him to think about the crying need for extra resources in our Health Service. The Financial Secretary should think again, and I look forward to his response.
9.3 pm
Mr. Quentin Davies: I should like, in the brief time that I have, to deal with a major curse which bedevils the consideration and management of public expenditure in Britain. That major curse is national pay bargaining. That is such nonsense that, if we did not live in Britain and were not familiar with it, I doubt whether anybody would believe that such a system was in place. An educated man or woman from Mars with some knowledge of economic affairs and principles and no prejudices of mind would be completely horrified by our system.
That system amounts to a collective decision on our part to prevent ourselves from benefiting from the existence of a rational pricing system. In collective pay bargaining, we have set up an insuperable obstacle to the

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establishment of equilibrium in Britain's labour market. We could not have devised a more efficient means of bringing about in Britain the co-existence of pockets of unemployment and larger pockets of potential overheating and the regional disparities about which Opposition Members understandably frequently become excited.
Let me take a specific example of the pernicious impact of the system in that great county of Lincolnshire, a portion of which I have the great honour to represent. This year, we have been forced to give pay increases of 10 per cent.— twice the level of inflation—to unskilled county council workers. There was no productivity agreement, not even a bogus productivity agreement; and that occurred in a county where there is still significant unemployment in precisely that category of unskilled work.
The effect of that is, first, an enormous waste of public and ratepayers' money, and that is to be greatly regretted. Unfortunately, that is not the end of the damage. There is the enormous economic cost. Sadly, there is also the great cost to employment because the county council cannot afford to employ as many people as it otherwise would have done. It either pays the increases and reduces employment to the extent that it can, or increases rates, which of course reduces household incomes, domestic consumption and the margins of business enterprises, thereby having a further deleterious effect on the level of employment.
A great deal of the debate has focused on the NHS. Local government and the NHS are the largest employers in Britain, and it is in those two areas that we see the greatest damage done by the absurdity of national pay bargaining. I put it to the House this evening that much of the agitated debate that we have had on the matter of fully funding or not fully funding, of health authorities being able to plan forward or not being able to plan forward, would never have arisen in the first place were it not for the collective nonsense that we have enforced upon ourselves.
We know why we have to face this nonsense. We know how difficult it is to get rid of it. It is a piece of primitive medieval nonsense, but, as in other medieval dramas, a dragon prevents us from doing the right thing and ridding humanity of it. The dragon is the powerful trade union movement — Opposition Members cannot deny this —with nationally based hierarchies, power structures and overheads which are determined to perpetuate the present system, whether or not that is in the interests of their members, and of course it is not.
My right hon. and hon. Friends on the Treasury Bench in this Government and the two previous Governments have shown that they are not lacking in those chivalrous virtues of courage and resolution which are necessary from time to time to slay the dragons which threaten Britain's vital interests. My great hope is that they will not fail to identify and to tackle this particular dragon in the course of this Parliament. Our public expenditure accounts will be greatly relieved thereby and we shall be able to go further forward in building Britain's prosperity, having removed a self-inflicted burden which I regret that we have suffered for far too long. Away with this nonsense, and let us not delay in tackling it.
9.9 pm
Mr. Nicholas Brown: I am grateful to the members and officials of the Treasury and
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Civil Service Select Committee for their second report on the Government's public expenditure plans. I should like to echo the thanks expressed from the Dispatch Box by my hon. Friend the Member for Dunfermline, East (Mr. Brown).
The report makes some important and less contentious points about the presentation of the information before the House and about the implications for the format of our future debates. I welcome the work of the Select Committee in that regard. I appreciate the measured contribution of the right hon. Member for Worthing (Mr. Higgins), the Chairman of the Select Committee. I hope that I do not get him into too much trouble by saying that. I was impressed by what he said about the relative price effect as a useful measure of real changes in public expenditure, although I am sure that the Financial Secretary to the Treasury will say that that is self-serving, in view of the way in which the debate has gone.
On the main item of the debate — the question of public expenditure and its effect on the National Health Service—the Select Committee said:
"We do not accept the underlying assumption in the White Paper that reducing public expenditure is in itself somehow desirable. Indeed there is a strong argument that, given the present state of many of the essential public services, spending should be increased. We have particularly in mind the NHS and the acute need for new public sector housing construction and improvement work, as well as grants for urgent repairs for older owner-occupied dwellings. Certainly, given the choice between reducing income tax or public spending on essential services, we are firmly of the view that it is the latter course that should be pursued."
Labour Members wholly endorse that view.
Mr. Higgins: I am puzzled by what the hon. Member has just said. That is not in the report.
Mr. Brown: I have the report here. I am referring to a majority resolution at the back of the report.
Mr. Higgins: Will the hon. Gentleman give the exact reference? He will find that it is an amendment which was not carried.
Mr. Brown: I am reading from page xviii of the report, which states that the Committee divided and that the Ayes were five and the Noes were four. That suggests that the amendment was carried.
Mr. Watts: Will the hon. Gentleman give way?
Mr. Higgins rose—
Mr. Brown: I have made my point. I shall take the intervention from the Chairman of the Select Committee.
Mr. Higgins: I am sorry but, if the amendment had been carried, the hon. Gentleman would have found it in the body of the report. I do not have a copy of the report here, but he will find that it is not in the body of the report. He needs to consider the sequence of events in the proceedings.
Mr. Brown: The best that I can do is to read what is written here. The report states that it commands the support of the majority of the people. Let me end the argument by saying that it most certainly expresses the view of Opposition Members. I hope that that at least will not be contentious.
Mr. Higgins: Will the hon. Gentleman give way?
Mr. Brown: I shall not give way. It would only cut into my time.

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The majority of the arguments today have concentrated on that point. So far, 20 hon. Members have spoken, excluding myself and the Financial Secretary. Twelve hon. Members have expressed some reservations about the Government's approach to public expenditure in the Health Service and have called for an increase in spending. Only eight hon. Members have wholly endorsed the Government's point of view.
Mr. Higgins: I must put it clearly on the record that the passage which the hon. Gentleman quoted is not in the report.
Mr. Brown: It is a resolution which, according to the report, was carried. [Interruption.] All that one can do is take up the matter afterwards. I read what is written in the report. If the Chairman of the Committee says that it is not so, I willingly take his word for it. Of all the things that we have to quarrel over, I do not want to get bogged down in a quarrel over that. Let us quarrel about something meaningful.
The Chief Secretary said that there should be no expectations of a public expenditure package in the Budget. He expressed surprise that Health Service workers were taking industrial action. He described the strike in Scotland as unnecessary, pointless and damaging to patients, which I am sure is his view.
Before being elected to the House, as many hon. Members know, I was an officer of the General and Municipal Workers Union. In that capacity, I attended meetings of our members who were nurses working in the National Health Service — meetings at which they discussed and rejected industrial action. I speak from personal experience, and I can assure the House that such meetings are fraught.
There is real concern, as much as has been expressed in the House today, about the nature of the job that nurses do, about the future of the Health Service and, above everything else, about care for the patients. To suggest that members of the nursing profession would take industrial action frivolously or do so out of casual motivation is wholly wrong. The issue is debated tensely in the profession and feelings run high on both sides of the argument. Always the dominant factor in the debate is nursing care.
The nurses who have taken industrial action do not feel that it is unnecessary and pointless. They feel that they have been taken for granted by a Government who do not value them. It is impossible not to note with cynicism the fact that the only year when the nurses received a decent pay award was, by coincidence, the general election year. That state of affairs has bred cynicism in the nursing profession.
There seems to be a view among Conservative Members that reducing expenditure in relative terms will make the NHS more efficient. That is not so. All that it will do is make it smaller. The Chief Secretary referred to tendering for services, and to the £100 million of savings that the Government have achieved by putting cleaning contracts and so on out to private tender. He did not say that those savings have been achieved almost entirely through wage reductions, not through any other efficiency exercise.
The argument that we used to hear from Conservative Members was that no more money was available for the Health Service, but the Government were doing their best
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with the money that was available. The argument has moved on now. There is potential for more money to be spent on the NHS, so the argument now from some Conservative Back Benchers is that no more money is needed. One hon. Gentleman asked what we would spend the money on, and another recommended efficiency savings that would involve getting rid of some of the ancillary staff.
Many Opposition Members have quoted specific examples from their constituency experience. My hon. Friend the Member for Bridgend (Mr. Griffiths) gave constituency examples. I should like to give one from the northern region. The retinal eye service at Sunderland Royal infirmary is the only one of its kind in the north-east of England. Vitreoretinal treatment is virtually an emergency procedure. There should be no waiting list. About 240 people are waiting for a first appointment in the north-east. The regional health authority recognises the need for an extra surgeon and back-up staff, but it cannot pay for them. Indeed, it does not even have enough funds for its present expenditure commitments. Therefore, one of the three out-patient clinics is to close so that the surgeon can concentrate on the 37 cases awaiting surgery.
The tragedy is that the surgeon has already reached the stage where he has attempted to operate but has been unable to save a patient's sight because he had to wait too long. In other words, because of under-resourcing of the National Health Service in our wealthy, advanced industrial society, we have allowed one citizen to lose his sight and are probably condemning more to the same fate. I cannot believe that the people would tolerate that for the sake of a reduction in the basic rate of income tax. The case surely offends against every decent human instinct. It is all the more shocking because it is not an isolated example.
Do the Government accept the need for more National Health Service funding? As my hon. Friend the Member for Dunfermline, East pointed out, the Secretary of State for Social Services, addressing the Young Conservatives, said something different from the Chief Secretary. My hon. Friend the Member for Dumbarton (Mr. McFall) also referred to the speech to the Young Conservatives, helpfully reading us an extract. My hon. Friend the Member for Dumbarton gave the Chief Secretary a chance to clarify the position and to say whether he or the Secretary of State for Social Services was accurately describing the Government's financial mechanisms. If the Chief Secretary would like to do so now, I will willingly give him the opportunity.
My hon. Friend the Member for Durham, North (Mr. Radice) and the Financial Times of 21 January 1988 put it differently. The Financial Times said:
"One of the ironies of the present row is that it is thought that had … the Health Secretary pressed last Autumn for more money … he would have got it."
Whether or not that is so, it is not a flattering reflection on the efficiency of the Secretary of State for Social Services. Of course, it is an indication of the power wielded by the Treasury—not that we needed that.
Much of the debate has concentrated on the Health Service but my hon. Friends the Members for Gateshead, East (Ms. Quin) and for Edinburgh, South (Mr. Griffiths) rightly referred to housing in Scotland and in England. Probably one of the most iniquitous examples of the

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Government's public expenditure policy has been the continuation of the 20 per cent. rule for local authority capital receipts.
Local authority housing investment programmes have a current allocation of 74 per cent. of their 1979 allocation, yet the figures of the Department of the Environment show, as my hon. Friend the Member for Gateshead, East pointed out, that £19 billion is needed to repair and remedy the public sector housing stock. Not only will the Government not provide for the repair of council housing stock, but they will not let councils spend their own money on it. If all that were not sufficient injustice to inflict on council house tenants, the Government have swamped the housing benefit changes with an inflation plus 5 per cent. rent rise designed to push up the real level of rents for tenants.
I should like to get myself a reputation for respectability among Conservative Members by quoting from February's Bank of England Quarterly Bulletin, which sounded two cautionary notes, one on personal consumption and the other on levels of company investment. The bulletin highlights a growth in personal consumption of 5·7 per cent. in the third quarter of 1987 and compares that to a 3·4 per cent. growth in real personal disposable income for the same period. It says:
"There must, however, be some question about the sustainability of growth of domestic demand in this country at a rate above that currently being achieved by most other major countries."
The Bank of England points to this trend being paralleled by a sharp fall in the personal savings ratio. The level for the third quarter is estimated to be lower than that of any period since 1959. It is a trend that encourages expenditure on imported consumer goods, with its consequent effect on the balance of payments. All the available evidence suggests that public expenditure is less import-intensive than tax cuts. Surely the underlying problem is that British demand is not being met by British goods and services. At a time when the Government are contemplating tax cuts, it is ironic that a former Chief Secretary to the Treasury, the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), is warning the Government—he is quoted in today's papers — to adopt a cautious approach. Indeed, he is pressing for a further rise in interest rates.
Let me make a second point, from the same respectable source. The bulletin states that companies are highly profitable, but goes on to make the point that capital spending has risen only a little so far:
"Given the level of profitability and the apparently high degree of capacity utilisation, it may appear surprising that business investment has not been growing more strongly."
The level of company investment surely gives a guide to the future success of industry, yet it has been a feature of the last five years that that link between profitability and investment has been broken. Surely the Government have a duty to supplement and encourage the investment programme of industry, both private and public, and, in particular, research and development.
I accept that that would require an increase in public expenditure. To further my bid for respectability, however, I should like to quote from the first report of the Select Committee on Science and Technology, prepared in the other place. The key conclusions are as follows:
"Two conclusions about the support of civil science and technology emerge unmistakably from the evidence. First, the advance of science and technology must be a central objective of government policy. The Government has, in the words of
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Sir David Phillips, a general responsibility to support science and technology because this is fundamental to the social and economic well-being of the country … The Committee strongly agree. Secondly the overwhelming weight of opinion from almost every sector of the research community and from the private sector is that R & D in many fields is underfunded, and in some cases seriously underfunded. It may be objected that much of this opinion is based on self-interest or sectional concern. But the Committee are persuaded that the case has been made out."
The Committee is persuaded, but the Government are not.
There is another major item of public expenditure which has not attracted much comment tonight but to which it is surely right to refer because of its prominence in the overall spending figures. Substantial changes are proposed in the spending plans for social security, which mean that the main losers will be pensioners, devising rules for social funds that will make claimants compete for a severely rationed amount of help.
The new rules not only introduce a loan element, which will comprise up to 70 per cent. of the total social fund budget, but suggest that officers should refuse a loan to claimants who will be too poor to pay it back. That is hardly an efficient targeting of aid. Only a Government wedded to a savage concept of Victorian values would refuse citizens welfare benefit if the social fund officer believed that the claimant should more properly approach a charity.
The Government have safeguarded themselves and their officials from charges of injustice in individual cases, not by ensuring that there will be justice, but by abolishing the right of appeal to a social security appeal tribunal. That cannot be fair. The Government claim to target help more efficiently, but let us consider the efficiency of this: only six local DHSS offices will receive social fund allocations above the level spent in 1986–87. They are Dunstable, Lewisham, the Isle of Wight, Thanet, Exeter and Bognor Regis. Does anyone really believe that that is targeting aid where it is needed?
The north of England, which must inevitably be mentioned, has a cash allocation of only 16·4 per cent. of the sum spent in the region's supplementary benefit single payments in 1986–87. There is not much help, efficiently targeted or not, in that figure.
We have made our views known and we have moved an amendment. It deplores under-investment, as a result of public expenditure plans, in services and technologies vital to the future of Britain. We urge the Government to take additional action to reduce unemployment. We condemn the Government's antipathy to public expenditure on vital community services. In particular, we call upon the Government to take note of the evidence, from two Select Committees and from health care professionals, that the NHS is inadequately funded and that they should make extra provision in the Budget to end the funding crisis faced by our Health Service and especially by our hospitals. I commend the amendment to the House.
9.30 pm
The Financial Secretary to the Treasury (Mr. Norman Lamont): As the hon. Member for Newcastle upon Tyne, East (Mr. Brown) said, we have had the benefit not only of the White Paper but of the report of the Treasury and Civil Service Select Committee. A number of points in that report have been echoed in various speeches, particularly that by my right hon. Friend the Member for Worthing (Mr. Higgins). He referred, for example, to possible alterations in the two-volume presentation of the report.

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The Committee has suggested that as much as possible of the material from volume 1 should be incorporated into the Autumn Statement. That approach has a great deal to recommend it, although some problems need to be overcome. The Committee has also suggested that volume 2 should be split into separate departmental booklets, as the Estimates now are. That might be of some disadvantage to libraries, but we shall be considering this and replying in full to the Committee and to my right hon. Friend.
My right hon. Friend also made the point that, if the White Paper were divided as he suggested, and the overall policy content of volume 1 were absorbed into the Autumn Statement, it would call into question the need for a separate debate on public expenditure plans in February. Again, we shall reply on that point.
My right hon. Friend also spoke about the relative price effect. I appreciate that he was not suggesting that we should abandon the discipline of cash limits. Rather, he was saying, ex post, that if we were looking at programmes and trying to analyse the volume effect within the Departmental programme—a point supported by the hon. Member for Newcastle upon Tyne, East — then perhaps the relative price effect had a part to play. We shall certainly consider that point, but, as my right hon. Friend knows, the use of the relative price effect in the past has acted against the discipline of cash limits, although I know that that is not what my right hon. Friend is suggesting.
My hon. Friend the Member for Slough (Mr. Watts) made a number of comments about the different input and output indicators. Again, I do not necessarily disagree with many of his points. However, he will appreciate that we are at an early stage of the development of the indicators, and I am sure that he will agree that the White Paper, by having the indicators, is an improvement on previous White Papers.
My hon. Friend the Member for Horsham (Sir P. Hordern) raised a couple of points. One related to the European Court of Auditors' report. We shall shortly be having a debate on that, and he will have the opportunity to put his point directly to my right hon. Friend the Paymaster General. The debate will be immediately preceding the discussion of the Court of Auditors' report at the Economic and Financial Council in Brussels.
My hon. Friend also asked about staff in the DHSS and whether there had been an increase in numbers. There has been an increase, but a small one. It is not quite as he said, because, of the figures that he was quoting, one was the year average figure and another was the figure at a particular point in time. I shall write to him and explain the point in more detail.
The control of public expenditure has been at the heart of the success of the Government's ecomomic policies. The facts of that success are evident for all to see. Only yesterday, the figures for the output measurement of GDP showed an increase of almost 5 per cent., the largest increase in output since 1973.
Mr. Rogers: Come on, Fast Eddie. Enter the Japanese Olympics.
Mr. Lamont: The hon. Gentleman is not so far wrong for once. Our economy grew faster than that of Japan in 1986, and it is expected that it will have done so in 1987.
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In 1985, 1986 and 1987, our economy grew faster than Germany's too. The fact that our economy is now outpacing traditionally stronger economies underlines how complete and dramatic the transformation of our economy has been.
Mr. Quentin Davies: Does my right hon. Friend agree that, in coping with this important and, I am afraid, somewhat inconvenient fact for the Opposition, it is a bad argument to say that we have had a wonderful windfall from North sea oil? We have heard it several times in the course of the debate, but it works against the Opposition's case. North sea oil, which in 1985 accounted for 5 per cent. of GDP, now accounts for 2·5 per cent. If we had not had North sea oil, our current growth rate would be even higher than it is because North sea oil has brought down the average GDP rate.
Mr. Lamont: I am grateful for my hon. Friend's intervention. Sometimes the strength of the oil economy has had an impact on the exchange rate, which has not had such a good effect on the manufacturing sector and the non-North sea oil economy, which was my hon. Friend's point.
Mr. Win Griffiths: The Minister referred to the wonderful economic recovery that we are now undergoing. When does he expect unemployment in Britain at least to be back at the levels of 1979? When does he expect unemployment to be below that of Japan and West Germany?
Mr. Lamont: Unemployment has been falling rapidly; indeed, there has been the largest fall since figures began to be compiled. I am at least much more confident and optimistic than the Member for Dunfermline, East (Mr. Brown), who, at the end of 1986, in an article in The Guardian, said:
"The Government simply cannot reduce unemployment by present economic policies."
Since then, there has been a record fall in unemployment.
Our economy is undoubtedly strong, but there is one worrying factor, one bearish sign. Even the official Opposition are beginning to admit that the economy is growing strongly. For years we have held debates in which they have reinterpreted every economic indicator and tried to show that the economy was not growing when it was. Now they are admitting that it is growing and, given their usual sense of timing, if it becomes too well known that they think that, it will undoubtedly cause a sharp collapse in the financial markets.
The fruits of our success are also apparent in the White Paper, because the Government have managed significantly to increase different departmental programmes at the same time as having managed to reduce — and continuing to reduce — public expenditure as a proportion of GDP. Contrary to what the hon. Member for Newcastle upon Tyne, East said, that, as far as I could see, was and is welcomed by my hon. Friends. It is not unconnected with the success, growth and strength of our economy.
In reviewing the individual departmental programmes, the hon. Member for Dunfermline, East said that four or five programmes were not growing as much as the average. The hon. Gentleman seems to have a curious idea that every programme can grow faster than the average. He did not name a programme. He might have mentioned education, health, law and order or social security, which,

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despite the fall in unemployment, will all enjoy significant real increases. Other important budgets, although they may not be for major Departments, will also enjoy significant increases. Government support for the arts, aid, and, contrary to what the hon. Gentleman said, science and technology, will show a real-terms increase.
Such significant growth has been possible partly because of growth in the economy and, as my right hon. Friend the Chief Secretary to the Treasury said, partly because we have reduced borrowing. The Opposition have spent seven years urging us to increase borrowing to reflate the economy. It is a blandishment that we have resisted, and we have been amply justified by events.
The White Paper illustrates another reason why we are right. The reduction in borrowing has caused a reduction in debt interest, which has meant that expenditure in Departments and on services on which the Opposition are keen has been able to increase more quickly than public expenditure as a whole.
Opposition Members talk about the Treasury being awash with money. We recently received an interesting letter from a member of the public who said that, the next time a member of the Opposition Front Bench talked about the Treasury being awash with money, we should firmly remind them that that was not an excuse that could be levelled against them. Submerged in debt would be a more accurate description of Labour's management of the economy.
When urging my right hon. Friend the Chancellor to spend immediately whatever money he might have available, Opposition Members say only that they do not understand how the success has been achieved. That is not perhaps surprising. We cannot expect them to understand the Government's policies, but we might expect them to understand the Labour Government's policies. They were the opposite of ours and had precisely the opposite effect. Whereas we have cut taxes and increased revenue, they put taxes up to a confiscating level, increased spending massively, drove people into the black economy, drove companies abroad, and brought the economy to a shuddering halt, as a result of which there had to be savage public expenditure cuts, especially in the NHS and its capital spending. There were real falls in the living standards of people who worked in the NHS as a result of the reckless policies which Labour pursued.
Mr. Winnick: The hon. Gentleman is boasting about the Government's record. Did he listen to the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) who made the same point as I did in an earlier intervention — that between 35 and 40 wards at the Queen Elizabeth hospital, where cancer patients are treated, were closed only last year and that there is tremendous pressure from people who want to go to hospital or people who are trying to get their loved ones into hospital, but who cannot be admitted? Should we tell them that the Government are doing all right?
Mr. Lamont: I was about to consider the NHS. Before I deal with the hon. Gentleman's intervention, I should like to say something about another matter raised by the hon. Member for Dunfermline, East. He attacked the Government's record on making resources available for training. If any one programme has received large allocations of money since 1979, it is training. No
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Government have put so many resources and so much policy thinking into training as this Government have. Since 1979, training has doubled in real terms.
Of course, the hon. Gentleman approaches the problem of training just as he approaches every area of policy—it is only a matter of money. He did not for a moment acknowledge that what my right hon. Friend the Secretary of State for Education and Science is doing with his Education Reform Bill will have a profound impact on the quality of our work force and make more skilled manpower available to industry. The core curriculum, which will make technology one of its subjects, will be of considerable advantage to British industry.
A large part of the debate has been about the National Health Service. It is certainly not surprising, as it is the only subject that the Labour party feels safe talking about. My hon. Friends and I welcome the prominence that Opposition Members have given to the National Health Service. They have brought to the forefront ideas that could not be discussed before—ideas that are now on the political agenda and can be discussed in the Government's fundamental review of the Health Service.
I have no doubt that Opposition Members intended to expose the Government. Their campaign has exposed many of the issues and inadequacies that go right to the heart and nature of the National Health Service. For that reason, we should be profoundly grateful to Opposition Members for widening the debate on the Health Service.
Mr. Nicholas Brown: What message does the right hon. Gentleman have for the people of the northern region—admittedly, a small proportion — who will lose their sight because the unit to which I referred has not been properly funded?
Mr. Lamont: I would say to the hon. Gentleman, as I would say every time a particular case is put to me, that today everyone, whatever his condition and problem, has a better chance of receiving adequate treatment than in 1979.
The hon. Member for Dunfermline, East complained that my right hon. Friend the Chief Secretary used too many statistics in his speech. Whenever we debate health issues, Opposition Members always attempt to place us at a disadvantage. They say that we must not bore them by reciting our statistics about patients who are treated and new hospitals that are built. It is all very well to tell us that we must not cite statistics, but they reserve to themselves the right to publish in booklets, with red crosses on the front, misleading statistics about the Health Service. When they tell us that they will go on peddling their statistics but that we are not to peddle our statistics about the Health Service, although they are all honourable men and women, they put me in mind of the former American President who commented that if his opponents would stop telling lies about him he would stop telling the truth about them. That is a good basis on which to have a truce about the swapping of statistics on the National Health Service.
There may be arguments about what is achievable in the National Health Service with a given level of spending. One point is indisputable and undeniable. The Government, for all their determination to control public spending, have given a higher priority to the National Health Service than the Labour party did when in Government. We have increased spending on health as a proportion not only of public spending but also of GDP.

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While we have been in office, GDP has been growing strongly. It has been growing strongly, absolutely and proportionately, under this Government. The Labour Government reduced spending on health as a proportion of a GDP that was stagnant and falling.
Many hon. Members have mentioned the uncertainty caused in the Health Service by the uncertainty of wage awards and what they are likely to be. That problem is not unique to the National Health Service. It faces every Government Department, commercial organisation, private sector company and nationalised industry. Other costs, in addition to wage costs, create uncertainty for the management of the Health Service.
Hon. Members on both sides of the House, and particularly my right hon. Friend the Member for Worthing, gave a warm welcome to the announcement by my right hon. Friend the Chief Secretary to the Treasury about the timing of decisions on the review body awards, which will be brought forward so that decisions can be taken at the end of January or mid-February. It was agreed that uncertainty will be removed from the district health authorities as a result of my right hon. Friend's announcement. They will be better able to understand the outcome and what they have to deal with. The Government have given a commitment to reach a decision by the end of April. There will be no great uncertainty this year and there will be no need for individual area health authorities to make cuts because they do not know what the funding position will be.
Nevertheless, the hon. Member for Dunfermline, Easst continued to press the point and say that the Government should give a commitment now that they will fund nurses' pay totally. No responsible Government could possibly give the commitment that he demands while the review body is still deliberating and in advance of its conclusions.
In the past four years, we have had an excellent record on nurses' pay. Furthermore, we have funded nurses' pay and, with the findings of the review bodies for other professions, we have funded 90 per cent. of the wage awards. The area health authorities have had to find only 10 per cent. of the wage increases, and that 10 per cent. amounts to only 0·5 per cent. of the total cost.
I do not believe that it was wrong to give the authorities that incentive to make them aware that they must balance the needs of wage costs against other costs. Nurses have no cause for complaint against this Government. Since this Government have been in office, nurses have seen their real take-home pay increase by 30 per cent. No doubt that is why there has been an increase in the number of nurses by 47,000 to more than 400,000.
None the less, we are told that there are still unmet needs. If we have done all these things — increased resources, put in all the money—and if there are increased numbers of doctors and nurses, why are there still sick patients and unmet needs? That is a good question and it deserves a good answer. Opposition Members have given their answer. Indeed, perhaps Opposition Members are anticipating imminent careers as television evangelists and that is why their answer lies in a quotation from the Book of Proverbs:
"Money answereth all things."
Unfortunately, that is their answer not just to this problem, but to all problems.
386
The Opposition's demands for the Health Service have been increasing all the time. On 26 November 1987, the hon. Member for Peckham (Ms. Harman) said that the crisis would be solved if the National Health Service was given another £200 million. The hon. Lady made it clear that she was talking only of hundreds of millions, not billions, of pounds. Yet on 14 January the right hon. and learned Member for Monklands, East (Mr. Smith) said that the NHS needs an extra £1·3 billion. Three days later, the hon. Member for Livingston (Mr. Cook) said that the NHS now requires an extra £2 billion, and that was confirmed by the right hon. Member for Islwyn (Mr. Kinnock), the Leader of the Opposition.
I am amazed at the modest speed at which the Opposition have escalated their demands. If they believe that £21 billion is inadequate for the NHS, what makes them convinced that £22 billion or £23 billion will solve all the problems for ever?
Labour Members are interested in money, but they are far less interested in value for money and in the management of the NHS. My hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) made an excellent speech, in which he referred to a number of management deficiencies in the NHS. He also referred to an extremely interesting article by a consultant and director of surgery at Guy's hospital, Professor Ian McColl. My hon. and learned Friend detailed some of the points that Professor McColl made. Perhaps it would be of interest to the House to hear part of what Professor McColl said in that article:
"No one needs to die for lack of an operation in the NHS. Behind the cases which hit the headlines generally lie management faults, inefficient bureaucracy and restrictive practices. These failings, rather than lack of money, are responsible for the low morale throughout the service. Pouring in extra cash, or legislating for yet another reorganisation, is not the answer. We need to concentrate on making the present system work."
I have no doubt that Professor McColl's words were not particularly well received by his NHS colleagues—they were certainly different from some of the things we hear. However, precisely because Professor McColl has been prepared to speak out and pose a number of questions, it is all the more worth while studying them as they deserve answers.
Let us consider the end-of-year closure of beds by district health authorities. That is something that, quite rightly, causes distress to hon. Members on both sides of the House. District health authority managements carry out such closures because they say it is the only way in which to regain control of their budgets. If we had proper financial control within the district health authorities, would it always be necessary to take such dramatic end-of-year measures? Certainly the opinion of Professor McColl is quite clear:
"Too often no one knows until the end of the financial year whether the budget will balance. When the news finally breaks that there is a deficit of, say, £1 million, panic reigns. In the mistaken belief that they can save the necessary funds, the administrators close a large number of beds, and so provoke the doctors into waving shrouds and attacking the Government for alleged underfunding."
The management and administration of the NHS are important, but we have heard not one word from the Opposition about that. They are not interested in ideas about collaboration between the public and the private sector; they are not interested in ideas about developing an internal market or ideas about competitive tendering.

387
However, perhaps I do them an injustice because we all know that they are very interested in the idea of competitive tendering. They are totally opposed to it, and that is why today, when they have sat in the Chamber pretending to fight for the NHS, they have, at the same time outside the Chamber, encouraged the Scottish TUC to institute a day of action to strike against patients. How can a strike against the Health Service ever be justified? It is a strike that hurts patients; and it is simply against the release of resources that would give a better, proper deal for patients.
Labour Members have pressed for a large-scale injection of funds into the NHS. They forget that we no longer live in a world in which mini-budgets occur every month or every second month. We have one Autumn Statement that deals with public expenditure and one Budget that deals with taxation. It is that steadiness and that strategy that have brought us our economic success.
The NHS is important, but it is not the only programme in the White Paper. Indeed, there are another 450 pages in the White Paper, although one would not believe that having listened to Labour Members. The continued support for the Government and the success of our strategy are vital, and the individual programmes and plans in the White Paper are basic to that success. I urge my right hon. and hon. Friends to support those programmes.
Question put, That the amendment be made:—
The House divided: Ayes 220, Noes 327.

Division No. 193]

[10 pm

AYES

Abbott, Ms Diane

Cook, Frank (Stockton N)

Allen, Graham

Cook, Robin (Livingston)

Alton, David

Corbyn, Jeremy

Anderson, Donald

Cousins, Jim

Archer, Rt Hon Peter

Cox, Tom

Ashley, Rt Hon Jack

Crowther, Stan

Ashton, Joe

Cryer, Bob

Banks, Tony (Newham NW)

Cunliffe, Lawrence

Barnes, Harry (Derbyshire NE)

Cunningham, Dr John

Barnes, Mrs Rosie (Greenwich)

Darling, Alistair

Barron, Kevin

Davies, Rt Hon Denzil (Llanelli)

Battle, John

Davies, Ron (Caerphilly)

Beckett, Margaret

Davis, Terry (B'ham Hodge H'l)

Beggs, Roy

Dewar, Donald

Bell, Stuart

Dixon, Don

Benn, Rt Hon Tony

Dobson, Frank

Bennett, A. F. (D'nt'n & R'dish)

Doran, Frank

Bermingham, Gerald

Duffy, A. E. P.

Blair, Tony

Dunnachie, Jimmy

Blunkett, David

Dunwoody, Hon Mrs Gwyneth

Boateng, Paul

Eadie, Alexander

Boyes, Roland

Eastham, Ken

Bradley, Keith

Evans, John (St Helens N)

Bray, Dr Jeremy

Ewing, Harry (Falkirk E)

Brown, Gordon (D'mline E)

Ewing, Mrs Margaret (Moray)

Brown, Nicholas (Newcastle E)

Faulds, Andrew

Brown, Ron (Edinburgh Leith)

Fearn, Ronald

Bruce, Malcolm (Gordon)

Field, Frank (Birkenhead)

Buchan, Norman

Fields, Terry (L'pool B G'n)

Buckley, George J.

Flannery, Martin

Caborn, Richard

Flynn, Paul

Callaghan, Jim

Foot, Rt Hon Michael

Campbell, Menzies (Fife NE)

Foster, Derek

Campbell, Ron (Blyth Valley)

Foulkes, George

Campbell-Savours, D. N.

Fraser, John

Cartwright, John

Fyfe, Maria

Clark, Dr David (S Shields)

Galbraith, Sam

Clay, Bob

Galloway, George

Clelland, David

Garrett, John (Norwich South)

Clwyd, Mrs Ann

Garrett, Ted (Wallsend)

Coleman, Donald

George, Bruce

388

Gilbert, Rt Hon Dr John

Millan, Rt Hon Bruce

Godman, Dr Norman A.

Molyneaux, Rt Hon James

Golding, Mrs Llin

Moonie, Dr Lewis

Graham, Thomas

Morgan, Rhodri

Griffiths, Nigel (Edinburgh S)

Morley, Elliott

Griffiths, Win (Bridgend)

Morris, Rt Hon A. (W'shawe)

Grocott, Bruce

Morris, Rt Hon J. (Aberavon)

Hardy, Peter

Mowlam, Marjorie

Harman, Ms Harriet

Mullin, Chris

Hattersley, Rt Hon Roy

Murphy, Paul

Haynes, Frank

Nellist, Dave

Healey, Rt Hon Denis

Oakes, Rt Hon Gordon

Heffer, Eric S.

O'Brien, William

Henderson, Doug

O'Neill, Martin

Hinchliffe, David

Orme, Rt Hon Stanley

Hogg, N. (C'nauld & Kilsyth)

Owen, Rt Hon Dr David

Home Robertson, John

Patchett, Terry

Hood, Jimmy

Pendry, Tom

Howarth, George (Knowsley N)

Pike, Peter L.

Howell, Rt Hon D. (S'heath)

Prescott, John

Howells, Geraint

Primarolo, Dawn

Hoyle, Doug

Quin, Ms Joyce

Hughes, John (Coventry NE)

Radice, Giles

Hughes, Robert (Aberdeen N)

Randall, Stuart

Hughes, Roy (Newport E)

Redmond, Martin

Hughes, Sean (Knowsley S)

Rees, Rt Hon Merlyn

Hughes, Simon (Southwark)

Reid, Dr John

Illsley, Eric

Richardson, Jo

Ingram, Adam

Roberts, Allan (Bootle)

Janner, Greville

Robertson, George

John, Brynmor

Rogers, Allan

Johnston, Sir Russell

Rooker, Jeff

Jones, Barry (Alyn & Deeside)

Ross, Ernie (Dundee W)

Jones, Ieuan (Ynys Môn)

Rowlands, Ted

Kaufman, Rt Hon Gerald

Ruddock, Joan

Kennedy, Charles

Salmond, Alex

Kilfedder, James

Sedgemore, Brian

Kinnock, Rt Hon Neil

Sheerman, Barry

Kirkwood, Archy

Sheldon, Rt Hon Robert

Lambie, David

Shore, Rt Hon Peter

Lamond, James

Short, Clare

Leadbitter, Ted

Skinner, Dennis

Leighton, Ron

Smith, Andrew (Oxford E)

Lewis, Terry

Smith, C. (Isl'ton & F'bury)

Litherland, Robert

Smith, Rt Hon J. (Monk'ds E)

Livingstone, Ken

Soley, Clive

Livsey, Richard

Spearing, Nigel

Lloyd, Tony (Stretford)

Steel, Rt Hon David

Lofthouse, Geoffrey

Steinberg, Gerry

McAllion, John

Stott, Roger

McAvoy, Thomas

Strang, Gavin

McCartney, Ian

Straw, Jack

Macdonald, Calum A.

Taylor, Mrs Ann (Dewsbury)

McFall, John

Taylor, Matthew (Truro)

McGrady, Eddie

Thompson, Jack (Wansbeck)

McKay, Allen (Barnsley West)

Turner, Dennis

McKelvey, William

Vaz, Keith

McLeish, Henry

Wall, Pat

McNamara, Kevin

Warden, Gareth (Gower)

McTaggart, Bob

Wareing, Robert N.

McWilliam, John

Welsh, Andrew (Angus E)

Madden, Max

Wigley, Dafydd

Mahon, Mrs Alice

Williams, Rt Hon Alan

Marshall, David (Shettleston)

Williams, Alan W. (Carm'then)

Marshall, Jim (Leicester S)

Winnick, David

Martin, Michael J. (Springburn)

Wise, Mrs Audrey

Martlew, Eric

Wray, Jimmy

Maxton, John

Meale, Alan

Tellers for the Ayes:

Michie, Bill (Sheffield Heeley)

Mr. Ray Powell and

Michie, Mrs Ray (Arg'l & Bute)

Mr. Alun Michael.

NOES

Aitken, Jonathan

Arnold, Jacques (Gravesham)

Alexander, Richard

Arnold, Tom (Hazel Grove)

Alison, Rt Hon Michael

Ashby, David

Amery, Rt Hon Julian

Aspinwall, Jack

Amess, David

Atkins, Robert

Amos, Alan

Atkinson, David

Arbuthnot, James

Baker, Nicholas (Dorset N)

389

Baldry, Tony

Franks, Cecil

Banks, Robert (Harrogate)

Freeman, Roger

Batiste, Spencer

French, Douglas

Beaumont-Dark, Anthony

Fry, Peter

Bellingham, Henry

Gale, Roger

Bendall, Vivian

Gardiner, George

Bennett, Nicholas (Pembroke)

Gill, Christopher

Bevan, David Gilroy

Gilmour, Rt Hon Sir Ian

Biffen, Rt Hon John

Goodhart, Sir Philip

Biggs-Davison, Sir John

Goodlad, Alastair

Blackburn, Dr John G.

Goodson-Wickes, Dr Charles

Bonsor, Sir Nicholas

Gorst, John

Boswell, Tim

Gow, Ian

Bottomley, Peter

Gower, Sir Raymond

Bottomley, Mrs Virginia

Grant, Sir Anthony (CambsSW)

Bowden, A (Brighton K'pto'n)

Greenway, Harry (Ealing N)

Bowden, Gerald (Dulwich)

Greenway, John (Ryedale)

Bowis, John

Gregory, Conal

Boyson, Rt Hon Dr Sir Rhodes

Griffiths, Sir Eldon (Bury St E')

Braine, Rt Hon Sir Bernard

Griffiths, Peter (Portsmouth N)

Brandon-Bravo, Martin

Grist, Ian

Brazier, Julian

Ground, Patrick

Bright, Graham

Gummer, Rt Hon John Selwyn

Brittan, Rt Hon Leon

Hamilton, Hon Archie (Epsom)

Brooke, Rt Hon Peter

Hamilton, Neil (Tatton)

Browne, John (Winchester)

Hampson, Dr Keith

Bruce, Ian (Dorset South)

Hanley, Jeremy

Buchanan-Smith, Rt Hon Alick

Hannam, John

Buck, Sir Antony

Hargreaves, A. (B'ham H'll Gr')

Burt, Alistair

Hargreaves, Ken (Hyndburn)

Butler, Chris

Harris, David

Butterfill, John

Haselhurst, Alan

Carlisle, John, (Luton N)

Hawkins, Christopher

Carlisle, Kenneth (Lincoln)

Hayes, Jerry

Carrington, Matthew

Hayhoe, Rt Hon Sir Barney

Carttiss, Michael

Hayward, Robert

Cash, William

Heath, Rt Hon Edward

Channon, Rt Hon Paul

Heathcoat-Amory, David

Chapman, Sydney

Heddle, John

Chope, Christopher

Heseltine, Rt Hon Michael

Clark, Hon Alan (Plym'th S'n)

Hicks, Mrs Maureen (Wolv' NE)

Clark, Dr Michael (Rochford)

Higgins, Rt Hon Terence L.

Clark, Sir W. (Croydon S)

Hill, James

Clarke, Rt Hon K. (Rushcliffe)

Hind, Kenneth

Colvin, Michael

Hogg, Hon Douglas (Gr'th'm)

Conway, Derek

Holt, Richard

Coombs, Anthony (Wyre F'rest)

Hordern, Sir Peter

Coombs, Simon (Swindon)

Howard, Michael

Cope, John

Howarth, Alan (Strat'd-on-A)

Cormack, Patrick

Howarth, G. (Cannock & B'wd)

Couchman, James

Howe, Rt Hon Sir Geoffrey

Cran, James

Howell, Rt Hon David (G'dford)

Critchley, Julian

Howell, Ralph (North Norfolk)

Currie, Mrs Edwina

Hughes, Robert G. (Harrow W)

Curry, David

Hunt, David (Wirral W)

Davies, Q. (Stamf'd & Spald'g)

Hunt, John (Ravensbourne)

Davis, David (Boothferry)

Hurd, Rt Hon Douglas

Day, Stephen

Irvine, Michael

Devlin, Tim

Irving, Charles

Dickens, Geoffrey

Jack, Michael

Dorrell, Stephen

Jackson, Robert

Douglas-Hamilton, Lord James

Janman, Tim

Dover, Den

Jessel, Toby

Dunn, Bob

Jones, Gwilym (Cardiff N)

Durant, Tony

Jones, Robert B (Herts W)

Dykes, Hugh

Kellett-Bowman, Dame Elaine

Evans, David (Welwyn Hatf'd)

Key, Robert

Evennett, David

King, Roger (B'ham N'thfield)

Fallon, Michael

King, Rt Hon Tom (Bridgwater)

Farr, Sir John

Kirkhope, Timothy

Favell, Tony

Knapman, Roger

Fenner, Dame Peggy

Knight, Greg (Derby North)

Field, Barry (Isle of Wight)

Knox, David

Finsberg, Sir Geoffrey

Lamont, Rt Hon Norman

Fookes, Miss Janet

Lang, Ian

Forman, Nigel

Latham, Michael

Forsyth, Michael (Stirling)

Lawrence, Ivan

Forth, Eric

Lawson, Rt Hon Nigel

Fowler, Rt Hon Norman

Leigh, Edward (Gainsbor'gh)

Fox, Sir Marcus

Lennox-Boyd, Hon Mark

390

Lightbown, David

Shaw, David (Dover)

Lilley, Peter

Shaw, Sir Giles (Pudsey)

Lloyd, Sir Ian (Havant)

Shaw, Sir Michael (Scarb')

Lloyd, Peter (Fareham)

Shephard, Mrs G. (Norfolk SW)

Lord, Michael

Shepherd, Colin (Hereford)

McCrindle, Robert

Shepherd, Richard (Aldridge)

Macfarlane, Sir Neil

Shersby, Michael

MacGregor, Rt Hon John

Sims, Roger

MacKay, Andrew (E Berkshire)

Skeet, Sir Trevor

Maclean, David

Smith, Tim (Beaconsfield)

McLoughlin, Patrick

Soames, Hon Nicholas

McNair-Wilson, M. (Newbury)

Speed, Keith

McNair-Wilson, P. (New Forest)

Speller, Tony

Major, Rt Hon John

Spicer, Sir Jim (Dorset W)

Malins, Humfrey

Spicer, Michael (S Worcs)

Mans, Keith

Squire, Robin

Marland, Paul

Stanbrook, Ivor

Marshall, John (Hendon S)

Stanley, Rt Hon John

Marshall, Michael (Arundel)

Steen, Anthony

Martin, David (Portsmouth S)

Stern, Michael

Mates, Michael

Stevens, Lewis

Maude, Hon Francis

Stewart, Allan (Eastwood)

Mawhinney, Dr Brian

Stewart, Andy (Sherwood)

Maxwell-Hyslop, Robin

Stewart, Ian (Hertfordshire N)

Mayhew, Rt Hon Sir Patrick

Stokes, John

Miller, Hal

Stradling Thomas, Sir John

Mills, Iain

Sumberg, David

Miscampbell, Norman

Summerson, Hugo

Mitchell, Andrew (Gedling)

Tapsell, Sir Peter

Mitchell, David (Hants NW)

Taylor, Ian (Esher)

Monro, Sir Hector

Taylor, John M (Solihull)

Montgomery, Sir Fergus

Taylor, Teddy (S'end E)

Moore, Rt Hon John

Tebbit, Rt Hon Norman

Morris, M (N'hampton S)

Temple-Morris, Peter

Morrison, Hon Sir Charles

Thatcher, Rt Hon Margaret

Moss, Malcolm

Thompson, D. (Calder Valley)

Moynihan, Hon Colin

Thompson, Patrick (Norwich N)

Mudd, David

Thorne, Neil

Neale, Gerrard

Thornton, Malcolm

Needham, Richard

Thurnham, Peter

Neubert, Michael

Townend, John (Bridlington)

Newton, Rt Hon Tony

Townsend, Cyril D. (B'heath)

Nicholls, Patrick

Tracey, Richard

Nicholson, David (Taunton)

Tredinnick, David

Nicholson, Emma (Devon West)

Trotter, Neville

Onslow, Rt Hon Cranley

Twinn, Dr Ian

Oppenheim, Phillip

Vaughan, Sir Gerard

Paice, James

Viggers, Peter

Parkinson, Rt Hon Cecil

Waddington, Rt Hon David

Patnick, Irvine

Wakeham, Rt Hon John

Patten, Chris (Bath)

Waldegrave, Hon William

Patten, John (Oxford W)

Walden, George

Pattie, Rt Hon Sir Geoffrey

Walker, Bill (T'side North)

Pawsey, James

Walker, Rt Hon P. (W'cester)

Peacock, Mrs Elizabeth

Waller, Gary

Porter, Barry (Wirral S)

Walters, Dennis

Porter, David (Waveney)

Ward, John

Portillo, Michael

Wardle, Charles (Bexhill)

Powell, William (Corby)

Warren, Kenneth

Price, Sir David

Watts, John

Raffan, Keith

Wheeler, John

Raison, Rt Hon Timothy

Whitney, Ray

Rathbone, Tim

Widdecombe, Ann

Redwood, John

Wiggin, Jerry

Renton, Tim

Wilkinson, John

Rhodes James, Robert

Wilshire, David

Rhys Williams, Sir Brandon

Winterton, Mrs Ann

Riddick, Graham

Winterton, Nicholas

Ridley, Rt Hon Nicholas

Wolfson, Mark

Ridsdale, Sir Julian

Wood, Timothy

Rifkind, Rt Hon Malcolm

Woodcock, Mike

Roberts, Wyn (Conwy)

Yeo, Tim

Roe, Mrs Marion

Young, Sir George (Acton)

Rossi, Sir Hugh

Younger, Rt Hon George

Rost, Peter

Rumbold, Mrs Angela

Tellers for the Noes:

Ryder, Richard

Mr. Robert Boscawen and

Sackville, Hon Tom

Mr. Tristan Garel-Jones.

Sayeed, Jonathan

Question accordingly negatived.
Main Question put and agreed to.
Resolved,
392
That this House takes note of the White Paper on the Government's Expenditure Plans for 1988–89 to 1990–91 (Cm. 288—I and II).

Housing Support Grant (Scotland)
10.15 pm
The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I beg to move,
That the draft Housing Support Grant (Scotland) Order 1988, which was laid before this House on 3 February, be approved.
It may be for the convenience of the House if we discuss also the next motion:
That the draft Housing Support Grant (Scotland) Variation Order 1988, which was laid before this House on 3 February, be approved.
Full details of the housing support grant settlement are set out in the report which accompanies the draft housing support grant order, and, in view of the time constraints on this debate, I shall not burden the House with excessive detail. I will, however, explain the thinking behind the proposals.
We have again had consultations with the Convention of Scottish Local Authorities on the formula for the distribution of housing support grant this year. I should like to place on record our thanks to the convention for its contributions. In the housing support grant settlement for 1988–89 the Government have continued to concentrate resources on those authorities which, in our view, require them. The formula change approved by Parliament last year, involving the use of lower rate fund contributions, is again incorporated, to the benefit of local authorities. We have estimated eligible expenditure at £308·2 million on all local authority housing revenue accounts for 1988–89, and relevant income at £253·6 million. Housing support grant will therefore total £54·6 million. This will be distributed among the 25 authorities which we believe would otherwise incur deficits on their housing revenue accounts in 1988–89.
Local authorities' expenditure on housing is of course very sensitive to changes in interest rates, and we are again applying an average rate of interest to authorities' individual volumes of debt — 10·2 per cent. has been assumed in this settlement for 1988–89. If, however, in practice, interest rates prove to be significantly different from our current assumptions, we will bring forward an appropriate variation order in due course. [HON. MEMBERS: "When?"] There have been plenty of precedents. There have occasionally been precedents for two variation orders.
The 1987–88 variation order before the House reflects a similar undertaking given at this time last year. Because average pool interest rates have fallen from 10·4 to 10·1 per cent. during the year, authorities' loan charges are lower and housing support grant payable is reduced by £4·6 million to a revised amount of £41·9 million.
The cost of managing and maintaining the housing stock is the other major item of expenditure on housing revenue accounts. For 1988–89 we have uprated the management and maintenance provision in the 1987–88 settlement by 10 per cent. We believe that this is extremely generous on top of the 7 per cent. increase included last year. It is more than double present inflation rates and should allow real growth on repairs expenditure in 1988–89. The new figure is £333 per house for management and maintenance and £270 million in total.
On the income side, we are assuming for the purposes of the settlement that rents will increase by £1·60 per week
394
over 1987–88 order levels, bringing rents to £17·45 in order terms. Taking those housing support grant assumptions together with the Government's decisions on rate fund contribution limits, with which I shall deal shortly, we estimated in December that average council house rents would rise by about £1·65 per house per week in 1988–89, giving a Scottish average of £16·30.
Mrs. Maria Fyfe: Will the Minister explain the basis for his assumption about rate increases in the coming year?
Lord James Douglas-Hamilton: A complex formula is worked out with COSLA. I am under a statutory obligation to negotiate with COSLA, and a complex formula is worked out and taken into account for distribution.
Mrs. Fyfe: Will the Minister explain that complex formula for the benefit of hon. Members who know nothing about it?
Lord James Douglas-Hamilton: It is highly technical, but, if the hon. Lady wishes me to give a detailed analysis, I shall be happy to do so in my winding-up speech. The formula takes into account, for example, the number of high-rise flats in a district council area.
The Government must take difficult decisions about the total resources which the country can afford to devote to housing, against the competing pressures upon public expenditure as a whole. Although I am pleased to have been able to increase housing support grant, as I have already outlined, our policy objective continues to be to reduce the total of indiscriminate subsidies to enable us to devote greater resources to investment in the stock.
Between 1981 and 1985, many authorities, by keeping rents unnecessarily and artificially low, and by requiring ever-higher contributions from ratepayers to balance their housing revenue accounts, chose to forfeit £112 million of capital expenditure consents which could, and should, have been used to carry out modernisations, to deal with dampness, condensation and so on. Since we took the statutory power to limit rate fund contributions, first exercised in 1985–86, that unacceptable trend has been reversed. We have reduced the rate fund contribution aggregate from an outturn of £139 million in 1984–85 to a statutory limit of £22·2 million for 1988–89, in the order.
Dr. Norman A. Godman: Will the Minister give way?
Lord James Douglas-Hamilton: I should like to get on, as many hon. Members wish to speak.
Mr. John Home Robertson: The Minister is talking about the order concerning rate fund contributions. Is he aware that some doubts have been raised about whether the order is ultra vires? Will he comment on that, and on the apparently incompetent drafting of the order?
Lord James Douglas-Hamilton: The Select Committee on Statutory Instruments has expressed a doubt about the vires. Obviously, if that doubt were substantiated another order would be introduced. I wish to make it clear that I am referring to the housing support grant orders and not to any other orders, although I am referring to the subject in general, as the subject is discussed with COSLA in its entirety.
Mr. Bill Walker: The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) asked about the formula. I was a little concerned about that, so I went to the Vote Office and found that the formula is in the orders before us tonight. I should have thought that the hon. Lady would have a copy of them.
Lord James Douglas-Hamilton: I am grateful for my hon. Friend's perceptive comment.
We have increased capital allocations on the housing revenue account block by more each year than the rate fund contribution reductions required. For 1988–89 the rate fund contribution limit aggregate is £21 million lower than for 1987–88. and that has contributed substantially to the £24·5 million increase in the provisional HRA allocations announced for next year compared with 1987–88.
In setting an aggregate limit to rate fund contributions of £22·2 million we have consulted widely about the implications of the individual limits set. [Interruption.] This is important for district councils. The provisional limits that we announced in November took account of the number of council houses in each authority, but they also included additional amounts to ensure that where local authorities had raised rents over the past three years by more than the Scottish average, implied average rent increases would be restricted to a maximum of £2 per house per week. We subsequently invited representations. In considering the representations that we received, we looked very closely at the implied rent increase and rent level in 1988–89 in each authority. Of course, rent implications for the 56 housing authorities vary widely, but we increased the rate fund contributions limit for 12 of the 20 authorities which submitted representations.
Dr. Godman: Will the Minister give way?
Lord James Douglas-Hamilton: May I continue? Perhaps I shall give way a little later. I was mentioning that 12 of the 20 authorities received an increased rate fund contribution limit — [HON. MEMBERS: "Name them."] I can easily give hon. Members the names later.
The concessions that we made were calculated as follows. First, we used more up-to-date assessments of income and expenditure. In the case of local authorities which had raised rents over the past three years by more than the Scottish average, further concessions were needed to restrict rent increases to £2 per week.
Secondly, we increased the rate fund contribution limits of the authorities with current rent levels above our implied average Scottish rent for 1988–89 of £16·30. The concession was calculated so that their maximum rent increases should be restricted to £1·65 per week. Finally, as in the previous year, we set an upper threshold figure for rent levels. Rate fund contribution limits were increased for three authorities to ensure that they need not raise average rent levels above £18·75 per week, that being the upper limit. That is approximately last year's upper limit, plus the average rent increase figure we now predict for 1988–89. In our calculations, as I have said, we assumed that authorities would spend 10 per cent. more on management and maintenance than last year. Taking all those figures into account, we calculated that average rent increases next year across Scotland as a whole would be about £1·65 per week. If authorities were to choose to
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increase expenditure on management and maintenance by less than 10 per cent., the average rent increase required would naturally be less.
Since we notified authorities of our final decisions on rate fund contributions and housing support grant, most councils have taken their own decisions about rent increases for next year. The information that I have received so far, which covers virtually all authorities, suggests that the average will in fact be around £1·62 per week. This is very similar to the figure that we had estimated and will take average council house rents in Scotland to some £16·25 per week in 1988–89. I do not think that that is unreasonable. The £16·25 average next year is well below the current year's average council rent of £17·40 in England and Wales.
Mr. Nigel Griffiths: Will the Minister advise the House of the relationship that the rent increase bears to inflation, and whether it will have an inflationary effect?
Lord James Douglas-Hamilton: It was essential to concentrate on increased standards of management and maintenance to improve the housing stock. That was why we assumed a 10 per cent. increase in management and maintenance expenditure. I accept that that may be above inflation, but we believed that the improvement of the housing stock in the public sector was so important that that was fully justified. As I mentioned, the £16·25 average next year is below the current year's average council rent of £17·40 in England and Wales. It is also below current rent levels in housing associations, the Scottish Special Housing Association, new town houses and the private sector in Scotland.
Although local authority rent increases have been higher than inflation over the last few years — because they started from a very low base—let me remind the House that registered rents in Scotland rose faster between 1979 and 1986 than local authority rents, by 180 per cent. against 164 per cent. Of course, if tenants have genuine difficulty in meeting their housing costs, relief is available to them through the housing benefit system. The assistance is targeted directly at those households which need it arid is reflected in the level of housing benefit payments in Scotland of some £570 million in 1986–87. For 1987–88 the figure is £664 million. [Interruption.] We will have figures as soon as they are available.
In conclusion, let me emphasise that the figures included in the orders before the House tonight are designed to reinforce our policies for housing in Scotland.
Dr. Godman rose—
Lord James Douglas-Hamilton: I am not giving way. I want to give plenty of opportunity to hon. Members to speak in this brief debate.
Reductions in rate fund contributions and housing support grant, taken together, are evidence of our continuing resolve to concentrate on using the resources available for housing on capital investment. The reduction in rate fund contributions will offer further relief to hard-pressed ratepayers, and has contributed towards announced increases in capital expenditure. These increases, together with the 10 per cent. increases for management and maintenance expenditure built into the calculations of both housing support grant and rate fund contributions, will ensure that tenants benefit through a higher standard of housing provision.

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We have consulted widely on the orders. I am satisfied that the figures they contain are fair and reasonable. I commend the orders to the House.
10.31 pm
Mr. John Home Robertson: The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), in his inimitable way, says that he has consulted widely on the orders. He was kind enough earlier in his speech to place on record the Government's thanks to the Convention of Scottish Local Authorities. Perhaps I might place on record the fact that COSLA does not think much of the Government or the orders.
There is something dreadfully predictable about Government statements on housing. I do not know why the Minister, his predecessor or any Conservative Member bothers to try to dress up the sorry story of housing in Scotland so as to make it sound as though the Government were doing something positive. The House is not impressed, people in Scotland are not impressed, and I doubt whether the Minister believes what he is talking about. This evening we have had the usual attempt to present a rosy picture of a package which represents a further cut in funding for housing in Scotland, regardless of the growing crisis of homelessness, overcrowding and decaying housing stock.
I intend to concentrate on the main housing support grant order for 1988–89. The variation order, which we are also debating, simply lops £4·5 million off last year's housing support grant to take account of fluctuations in interest rates, which shows how much the moneylenders make out of public sector housing in Scotland in a good year. For what it is worth, we acknowledge that there is to be an increase in rate support grant in the coming year from last year's figure of £47 million to £55 million. Of course, a significant proportion of that increase is likely to be swallowed by higher interest rates, as the Minister acknowledged. So we have a small increase, but the Government cannot deny that their objective is to do away with housing support grant altogether.
Mr. Allan Stewart: Hear, hear.
Mr. Home Robertson: I am glad that the hon. Member for Eastwood (Mr. Stewart) has confirmed that, with all the authority of an ex-Minister in the Government.
The Government have already run down housing support grant from well over £200 million a year in 1979 to less than a quarter of that figure last year. Only one third of Scotland's public sector housing stock is supported by housing support grant, and fewer than half of our local housing authorities receive any housing support grant at all. Only 14 of Strathclyde's 19 district councils receive it, and none goes to any district council in Fife, Central region, Lothian region or Tayside region.
Housing support grant, however, is only one part of the equation. There is also the question of housing capital allocations, and the rate fund contribution to the housing revenue account. We are supposed to be debating rate fund contribution tonight, but we understand that there is a suspicion that the Housing Revenue Account Rate Fund Contribution Limits (Scotland) Order 1988 may be ultra vires. It seems that the Government are becoming particularly slap-happy with their statutory instruments
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nowadays, and that they may have been found out—not for the first time—by the Select Committee on Statutory Instruments.
Obviously, it is up to the Select Committee to decide what to do about the matter, and we want to preserve our position, so I shall not say much about the rate fund contribution issue. I shall, however, say that the threat arbitrarily to halve the rate fund contribution from £44 million to £22 million is harmful, and an unwarranted interference in the freedom of Scottish local authorities to determine their housing policy.
The cumulative effect of all the Government's proposals is to cut the total resources available to public sector housing in Scotland in the coming year by another £49 million, to £284 million. As usual, the Government are seeking to conceal the cut by including in the calculation a mass of other factors, such as an assumption that councils will increase their income from the sale of council houses to £60 million. That starts from a fundamentally dishonest premise; local authorities are being compelled to sell those houses for a fraction of their value. It also prompts the questions whether the projected purchases will materialise, and — most significantly — whether enough sales will be completed in time for the proceeds to be used during 1988–89.
Even if we accept the Government's analysis of the figures for housing spending—which of course we do not—we would still find an overall cut of 2 per cent. in real terms in Scotland's public sector housing budget. As Opposition Members know, the real position is considerably worse than that.
I understand that the funds available for home inprovement grants to the private sector are also being cut by 16 per cent., from £147 million to £123 million. I should love to know how the Minister squares that with the Government's much-vaunted commitment to encourage the private sector and owner-occupation in Scotland.
The orders, combined with the Government's proposals for rate fund contribution restrictions—which may or may not return to the House in due course, depending on whether the Government can get the drafting right—are all part of a strategy to increase the rents paid by Scottish tenants. As my hon. Friends who are serving on the Standing Committee considering the Housing (Scotland) Bill will recall, a parallel debate took place there yesterday, when the Minister defended clause 38 of the Bill, which removes all restrictions from the rate of increase in private sector rents in Scotland in the interests of encouraging landlords and regardless of the impact on tenants. The housing support grant orders are driving council house rents inexorably upwards too, and the Minister knows that. In 1980, the average council house rent in Scotland was £4·92 a week. By last year, it had trebled to £14·65 a week.
Mr. John Marshall rose——
Mr. Home Robertson: I would be very willing to give way to a member representing a Scottish constituency, but I am not aware that the hon. Gentleman's constituency contains any district council tenants, so I am not clear about his interest in the matter.
It is, I believe, quite likely that council house rents somewhere in Scotland will shortly exceed £20 a week—and this from a Government who claim to be crusading against inflation. They have been intervening to force up

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rents at more than double the rate of increase in earnings, and almost three times the rate of inflation. So much for their anti-inflation policy. On top of this there will be the poll tax and the social security changes in April, all of which make up a recipe for great and growing hardship for a large number of households in Scotland.
Sadly, district councils in Scotland have precious little control over this escalation in rents. Housing costs to local authorities have increased by over 35 per cent. since 1980, but meanwhile Government interference with grants has directly increased rent levels in Scotland by 107 per cent. Tonight's orders will again increase rents by about £3 a week—more than double the rate of inflation this year.
Tenants in Scotland know very well that their councils are fighting to increase standards and keep rents reasonable, but this absurd Minister, with all the authority that can be conferred by a pitiful minority of 10 Scottish Members of Parliament, is imposing cuts and the restrictions that are forcing standards down and rents up. It is interesting to contrast this with the growing value of subsidies to owner-occupiers with mortgages, the majority of which is flowing to the south-east of England. Scottish council tenants are subsidising prosperous owner-occupiers in the home counties through their taxes, on the poll tax principle of robbing the poor to pay the rich.
Mr. Bill Walker: Earlier, the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) made an intervention in the speech of my hon. Friend the Minister concerning calculations and how the figures were arrived at. In his calculations, and on the basis of his proposition about subsidising, is the hon. Gentleman including all the housing benefit calculations and figures? If he is not, he is feeding rubbish in and getting rubbish out.
Mr. Home Robertson: The profile in The Scotsman has gone to the hon. Gentleman's head. I am talking about subsidy to public sector housing in Scotland, and comparing it with the indiscriminate subsidies to other sectors. The Minister condemned indiscriminate subsidies, but the Government are happy to hand them to owner-occupiers.
Mr. Alex Salmond: Is the hon. Gentleman aware that the total subsidy to English private housing is some 80 times Exchequer expenditure on Scottish public housing? Is that an equitable percentage?
Mr. Home Robertson: I tend to be a bit suspicious of figures quoted by the Scottish National party, but I shall look into those figures as they sound interesting.
We remain committed to a fair system of mortgage tax relief, but we must insist on a return to a more appropriate level of grant for public sector tenants in Scotland. We urgently need investment in public sector housing in Scotland. Our deepening crisis is a national scandal. Last year, no fewer than 30,000 Scots became homeless, and 200,000 people are stuck on housing waiting lists, which is a tragedy for all those families and young people. We have the shocking situation that one in four of the people of Scotland live in overcrowded accommodation.
The housing stock is decaying. Of 843,000 council houses, over 356,000 need to be modernised, over 88,000 need to be rewired, over 234,000 are affected by damp and over 153,000 need major structural repairs. The situation is geting worse every year, as the Government know because they are not prepared to provide the subsidies and
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create the necessary financial framework to overcome these problems. The Government are imposing more cuts and introducing the half-baked Housing (Scotland) Bill in the vain hope of reviving the defunct private rented sector in Scotland.
We recognise that the Government are hopelessly out of touch. They represent, I suppose, less than one seventh of Scotland's constituencies and are neither willing nor able to communicate with the majority of Scottish public opinion. But Scotland was trying to make a point to the Government on June 11 last year. Among other things, our people resoundingly rejected the strategy of cuts in, and restrictions on, housing investment. They certainly did not vote for madcap experiments such as Scottish Homes or born again Rachmanism, which the Government seem to support in their Housing (Scotland) Bill. The Scottish people voted to endorse their right to live in decent, secure homes on fair terms in their communities. This order does not begin to measure up to that objective, and if the House has any respect for the nation of Scotland it should reject it.
10.46 pm
Mr. Allan Stewart: I congratulate the hon. Member for East Lothian (Mr. Home Robertson) on his brass neck, as a well-known millionaire absentee landlord, in refusing to give way to my hon. Friend the Member for Hendon, South (Mr. Marshall) on the ground that my hon. Friend had no Scottish council tenants in his constituency. It is easy for the hon. Member for East Lothian to attack mortgage relief. He is one of the lucky people who do not need mortgage relief to purchase a house. His speech contained one piece of interesting news, namely, that the Labour party in Scotland is still completely opposed to discounts for tenants, however long they have rented their public sector houses, who wish to turn their houses into homes of their own.
My hon. Friend the Minister fully explained the strategy behind the orders, and I fully support it, but why should a Back Bencher such as I support the continuation of housing support grant in Scotland at all? It is a selective handout from the taxpayer to particular areas of Scotland. It is a handout from which none of my constituents in Eastwood, Barrhead or Neilston benefit in any way. II is a movement of resources from Barrhead and Neilston to Glasgow. Why should I support that?
Mr. John McAllion rose—
Mr. Stewart: My hon. Friend the Minister rightly emphasised the increase that he is planning For management and maintenance. The hon. Member for East Lothian referred to rents. The average rent in Scotland will be about £16·25 a week, which compares with an average in England and Wales of about £17·40. Why is this justifiable, given that average incomes in the north of England and in Scotland are roughly the same? Is that riot a clear and continuing disincentive for people in Scotland to buy their council houses?
My hon. Friend also rightly pointed out that the Government have reduced the rate fund contribution from an outturn figure of £139 million in 1984–85 to £22·2 million in the orders for 1988–89. That is £22·2 million too much. There is no justification in theory for a continuing subsidy from ratepayers to particular tenants. It is right that resources should be concentrated on capital, on management and maintenance and on investment.

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I hope that when my hon. Friend winds up the debate he will be able to confirm that this is the last time that the House will consider a rate fund contribution order or a successor to it. Next year, when the community charge will have been implemented, there will be no justification, on social or economic grounds, for this wholly indiscriminate subsidy from those who pay the charge in favour of certain tenants in some local authority areas. I support my hon. Friend's general strategy, with those reservations on the detail. I hope he will be able to confirm that that is the Government's intention for next year.
10.50 pm
Mr. Menzies Campbell: It seems to be accepted on both sides of the House that the orders will do nothing for housing in Scotland. I do not think that I am alone in thinking that the Minister's heart was hardly in it when he opened the debate. Perhaps I might remind him of his former trade as an advocate. He gave all the impression of a man about to address the jury who has passed a note saying that his client did it after all.
The Minister's presentation was a triumph of expediency over reality, because the Government know—or ought to know—that there is a crisis on its way in housing. One in seven people live in overcrowded conditions. Thousands of houses have inadequate amenities and suffer from decay and disrepair. The Minister need only drive through the council house estates in his own constituency, which I have had occasion to do recently, to see clear evidence of that.
Since 1979, capital expenditure by local authorities on housing has been reduced by 27 per cent. We should consider housing support grant, rate fund contribution, the reduction in net capital allocation and income from sales when asking ourselves what the financial consequences of the orders will be. The result will be a 2 per cent. reduction in real terms in expenditure on housing in Scotland in the coming year.
The Government's behaviour is shoddy and uncaring. Others will be able to speak more eloquently of the problems in urban areas, but, in rural areas, the problems are frequently no less. North-East Fife district council is now Liberal-controlled, but it used to be Conservative-controlled. It has sold 2,179 houses, or 24 per cent. of its stock. It has sold a greater proportion of its houses than any other local authority in Scotland without objection and without cavil about the discount. It has followed the Government's policy in spirit and to the letter, but that earns it no support. It earns no help. It does not even earn a meeting with the Minister. Some 2,946 families are on the waiting list and 2,322 are in immediate need. There is nothing in the orders that will help the council to deal with the problem of those who are in immediate need.
Mr. Allan Stewart: Does the hon. and learned Gentleman agree that he could have made that point if he had been here for question 8 during Scottish wuestions this afternoon? Why was he not here?
Mr. Campbell: I suppose that, after a while, one learns that there are those to whom one should give way and there are those to whom one should not. The hon. Gentleman seems to have put himself rather more firmly than he is accustomed to doing anything into the latter category.
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The Government propose a rate fund contribution of nothing for north-east Fife. The sale of one quarter of the stock in north-east Fife has severely reduced its rent revenue. As a consequence, a relatively small number of tenants have to meet an increasing burden of interest charges on the council's housing account. Rents have had to be kept high to meet that burden and to provide for necessary repair and maintenance. Hon. Members should be in no doubt that the council and I accept that there is a need for repair and maintenance. It is all the more acute because of the aging nature of the housing stock in northeast Fife and in many other places in Scotland.
It is often said that immigration cases are the most tragic and difficult for Members of Parliament to deal with. In my short experience as a Member for Parliament, in many respects, housing cases may rival them. The Minister should come to my surgery when people come to me with complaints about their inability to obtain council houses. Perhaps he could read to them the prepared brief that he read to the House. He should listen to the response, which I suspect would be peremptory, vulgar, and, possibly, monosyllabic. Better still, the Minister should meet the district council of north-east Fife. He has just declined to do so.
It is most curious that a responsible local authority that has carried out the Government's policies to the letter is incapable of having a meeting with the Minister responsible for housing to discuss with him the very problems that have arisen because of that authority's willingness to carry out the Government's policy.
The orders do nothing for the problems of those in north-east Fife who require houses, and they do nothing for north-east Fife district council's management difficulties in relation to its existing housing stock. The truth is that the orders only compound the problems. For that reason, the Minister will find no comfort from my colleagues and me.
10.56 pm
Mr. Bill Walker: We began the debate by referring to calculations, statistics and figures. I am sure that they are interesting. The hon. and learned Member for Fife, North-East (Mr. Campbell) told the House that the Liberals' figure for overcrowding was one in seven, yet the Labour figure, which was given just a few minutes earlier, was one in four. That is not the narrow kind of discrepancy that one would expect. There are many divisions in the Opposition. Members of the alliance are unable to get their figures and their act together. The hon. Member for East Lothian (Mr. Home Robertson) is living on borrowed time on the Opposition Front Bench. It is only a matter of time before one of the more able hon. Members behind him sits in his place. The hon. Member for East Lothian, with his acres and estates, being an absentee landlord, would probably find that his image is more in keeping with the Scots' image of aristocrats.
Labour Members continually refuse to face the fact that, when they came to office, the Government recognised that Labour, at local and national level throughout Scotland, had bought votes with a policy of cheap rents. That policy meant that inadequate funds were going into housing coffers to maintain housing stock.
Mr. Nigel Griffiths rose——
Mr. Walker: I will give way to the hon. Gentleman in a minute, if he will wait to hear what I have to say.

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Unless sufficient funds go into housing coffers, the Department will be unable to maintain its housing assets. There are two ways of getting funds into housing coffers. The first is through rents. The second is through public support in whatever form that takes. I deliberately said "in whatever form it takes" because housing benefit is one of the many forms of support.
Mr. McAllion: The hon. Member will recall that the Minister, when he opened the debate, said that the Government were very concerned to use the resources available for housing on capital expenditure and for that reason they were switching resources from housing support grant and rate fund contributions towards capital expenditure. The hon. Member seems to be arguing that, rather than switching those resources to capital expenditure, the Government are switching them to housing benefit and are pauperising people living in council houses. That seems to be the tenor of his argument.
Mr. Walker: The hon. Gentleman is one of the individuals whom I expect to see sitting on the Opposition Front Bench in place of the hon. Member for East Lothian, if only because I believe that he attempts to do his homework a little more carefully. He does not indulge in the same vitriolic personal attacks which I believe are abusive and wasteful. In this case, I am sorry to say that the hon. Member for Dundeee, East (Mr. McAllion) seems to have got it wrong, like so many Opposition Members.
Mr. Norman Hogg rose—
Mr. Walker: The hon. Member is always very courteous and I will give way to him in a moment.
The hon. Member for Dundee, East must recognise that the Labour party has never got its act together properly on the difference between capital account and revenue account. He knows full well that that was one of the problems with the Labour clubs in Dundee. It was typical of the fact that the Labour party cannot differentiate between the various sources of funding and expenditure.
Mr. Hogg: The hon. Gentleman clearly has a grasp of how best we can be promoted to the Opposition Front Bench. How does he account for the fact that he is where he is—and where he was in June 1979?
Mr. Walker: By choice—[Interruption.]
Mr. John Maxton: Will the hon. Gentleman give way?
Mr. Walker: Only two people in the House know the truth of that, and I am one of them. The other is in 10 Downing street. Not many people can say that. Not many people can claim that they believe firmly in what they are doing and in the value that they place on what they are doing for their constituents over and above personal ambition. I hold the hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) in high regard and believe that the Labour party never properly or fully appreciated his abilities as a Whip and particularly as Deputy Chief Whip. If the Labour party had the sensible arrangement that exists on the Conservative Benches, the hon. Gentleman would have been appointed a full Whip because he was so good at it.
The Government's policies are working towards a position where, when the community charge is introduced, we will no longer have to bring these orders before the
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House. I hope that this will be the last time that we will have to consider them. They do nothing for my constituents and, like my hon. Friend the Member for Eastwood (Mr. Stewart), I recognise that this evening we will do nothing for our constituents. For far too long our constituents have been subsidising the profligate, vote-buying policies of the Opposition, through various forms of taxation.
11.3 pm
Mr. Harry Ewing: While listening to the hon. Member for Tayside, North (Mr. Walker) I was astonished at my right hon. and hon. Friends laughing when he said that he is where he is—where he was in 1979— by choice. The question is: whose choice? The answer is, the Prime Minister's.
When I heard the Minister reading his brief, I understood clearly for the first time what Ruth Wishatt meant when she wrote in The Scotsman today:
"If he did not have a sore back, he would not see the present Scottish Ministers in his way."
When introducing the orders, the Minister clearly displayed himself as one of the Ministers whom the hon. Member for Tayside, North would not see in his road. I am only grateful that I do not have to make the choice between them.
This type of debate suits the Minister because it is not about the formula by which the housing support grant is calculated, because the Minister does not understand it.
Lord James Douglas-Hamilton: The following facts have to be taken into account when considering the distribution of grant to authorities: estimated loan charges, supervision and management allowance per council house, additional allowances for some council houses in low-stock areas, basic repair and maintenance allowance per council house, supplementary allowance in recognition of certain additional needs, such as high-rise houses, allowances to represent other expenditure, a basic income factor per council house, estimated rate fund contributions and adjustments to represent other income factors. The actual details of working out the formula, which has been carefully done in conjunction with COSLA—I have had several meetings with that organisation—are complex.
Mr. Ewing: I know that the formula is complex for the Minister to understand because it has taken him 45 minutes to give the House that information. My hon. Friend the Member for East Lothian (Mr. Home Robertson) asked for it during the Minister's opening speech, but he simply could not give it.
The Minister referred to adjustments for other income factors, which cover an extremely wide area. They cover factors such as the level of unemployment in the housing authority areas. The Minister has simply not taken account of the level of unemployment in many Scottish areas. Average income is another factor that must be taken into account when calculating housing support grant.
In the past five years the housing support grant for Falkirk district council, as a result of this order, has dropped from about £4 million to not a penny piece. Unemployment and the inability to earn wages in that area has increased from 15 per cent. to 19 per cent. of the adult population. Therefore, as the housing support grant has been reduced, unemployment has increased. The Minister and his civil servants have taken absolutely no account of the economic factors that prevail in that area.

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I cannot speak with authority about any other district council areas. However, my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) could confirm that the Inverclyde and Port Glasgow area is one of the most devastated of the United Kingdom. That area's allowance to make a rate fund contribution to the housing revenue account is a disgrace and takes no account of its economic circumstances.
Dr. Godman: It is my considered opinion that the Government are utterly indifferent to the plight of many thousands of people that I represent.
Mr. Ewing: My hon. Friend speaks with greater authority than either the Minister or myself about the problems in his own area. It is significant that only last weekend it was widely reported in the media in Scotland that there was a vigil outside New St. Andrews house by people from the Inverclyde area complaining bitterly about their plight and seeking to draw the Secretary of State's attention to their problems.
However, I shall return to the orders. The Minister totally failed, certainly in the case of Falkirk district council, and I suspect of many other district councils, to take account of economic circumstances. That is one of the main criteria to which the Minister should pay heed when calculating housing support grant.
I turn briefly to the ability to make a rate fund contribution to the housing revenue account. That is no business for the Government. They should not be interfering in whether a district council makes any contribution from the rate fund to the housing revenue account. If a district council chooses to make no contribution from the rate fund to the housing revenue account, that is a matter between the district council and its electorate when the district councils are elected in the first week of May this year. Equally, if a district council decides to make a substantial contribution from its rate fund to its housing revenue account, that also is a matter between the district council and its electors in the district council elections in May.
The Minister has absolutely no business to interfere in what is a local government matter, but that has been the hallmark of the Government. As people in Scotland continue to elect Labour councils, including in the capital city of Edinburgh, the Government take the huff and pull into the centre the freedom of local authorities to decide their own domestic housing policies.
The Minister, in a significant remark during his speech, told the House about the way in which registered rent had risen between 1979 and 1986 compared with the increase in local authority rates. The Minister should know—and I would caution him that he should be better briefed—that registered rents have risen by such a percentage because Rachmanism has run riot. Registered rents throughout Scotland apply to furnished housing. Racketeers are charging astonishing rents, and the rent officers are registering them at a very high level. When the hon. Members for Tayside, North and for Eastwood (Mr. Stewart) complain about housing benefit, they should take a good close look at how much of that housing benefit is finding its way into the pockets of the racketeers who are bleeding young couples dry in furnished accommodation, for the simple reason given by my hon. Friend the Member for East Lothian.
Mr. Bill Walker: The hon. Gentleman and I have similar back problems. The hon. Gentleman will recognise that I have never complained about paying housing benefit because that benefit goes to the individuals who are in need. It does not subsidise the property.
Mr. Ewing: I really do not have the time to conduct a teach-in. For the benefit of the hon. Gentleman, housing benefit does not go to the individual; it goes straight to the local authority; and in the case of private rented accommadation it goes straight to the private landlord. That is where the bulk of housing benefit goes. As my hon. Friend the Member for East Lothian said, many young couples who cannot get local authority housing are living in rented accommodation at very high rents, and I have just given the reason for that.
This is the fourth time today that I have heard the hon. Member for Eastwood speak. He was called three times at Question Time and again in this debate. I live in hope that he will eventually say something sensible, but so far my hopes have not been fulfilled.
Last year in the United Kingdom 64,000 council houses were taken back because those who had bought them could not keep up the mortgage payments. In Scotland—the Minister should have the figures—6,000 council houses were returned to building societies and local authorities because those who had bought them simply could not pay the mortgage. In Falkirk a couple went to their building society, threw the keys on the counter and told the society that the house belonged to it. They are now housed by Falkirk's district council in accommodation for the homeless. That is what is happening.
These orders, coupled with the Housing (Scotland) Bill, are removing rights from local authority and SSHA tenants and compelling them to buy, whether or not they want to do so. That is what Conservative Members are up to and that is why I shall willingly join my right hon. and hon. Friends in the Lobby to vote against these orders.
11.16 pm
Mrs. Maria Fyfe: Tonight we have had a good laugh at the speeches made by Conservative Members, and we cannot help but laugh when confronted with such buffoonery. We are discussing a serious subject which is no laughing matter, but we just cannot help ourselves, considering some of the contributions.
We are talking about the conditions in which people live and the housing that they must accept for want of anything better. In these orders the Government are cutting in half the rate fund contributions, which, as my hon. Friend the Member for Falkirk, East (Mr. Ewing) said, are provided entirely by local ratepayers. Not a penny of it comes from central Government, and it is simply not their business how much or how little a local authority contributes. Nevertheless, two or three years ago the Government intervened to force these cuts willy-nilly, thereby making it even more difficult for councils to operate any sort of sensible housing account.
Where does the formula come from, for example, to justify cutting Glasgow's rate fund contribution by £6,500,000 for the current year? The Minister has not explained how the formula works. Are the figures plucked from the air and then cut? As has been pointed out, not a penny comes from the Government.
Presumably the Government have read COSLA's submission on this. It points out that the introduction in

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1984 of statutory rate fund contribution levels is an intrusion into the affairs of local government and a further unacceptable erosion of local democracy. Since then the rate fund contribution limits have decreased from £112 million, or 18 per cent. of total costs, to £22 million, or 3 per cent. of total costs for next year. So if the hon. Member for Eastwood (Mr. Stewart) thinks that there should be no rate fund contribution whatever, he is certainly well on the way to getting what he wants.
Mr. Allan Stewart: Not quickly enough.
Mrs. Fyfe: Net capital allocation has been cut by £35 million. Capital receipts have increased by £60 million, but even the Government admit that that figure is a guess. There is no means of knowing whether that will be provided. When one considers that attempts to buy council houses tend to dry up as people fall increasingly into unemployment, and those who have attempted it have to give it up as a bad job, it is clear that we cannot realistically expect any vast increase in capital receipts, yet the Government write in that figure. Again, where is the explanation? Where is the Government's explanation of the formula for arriving at this figure?
Even what the Government are doing for the private sector is nonsense. To reduce the grant by £24 million makes me wonder what feedback Conservatives are getting from their surgeries. People tell me that they do not feel that there is any point applying for a grant, as they know that the money has dried up. Conservatives need only look around them at the state of the private sector to see that there is obviously a great deal of need for the repair grants to continue. To cut them as they have done is highly irresponsible and will do great damage to private sector housing stock.
Let me concentrate on Glasgow's needs. Every hon. Member present must know that Glasgow had to seek an independent review of the state of its housing. Having appealed year after year to the Government to take a serious look at Glasgow's housing, the council had to invite independent and highly respected people to conduct that investigation. It must be about two years since that report came out, but what are the Government doing in response to Glasgow's housing needs?
How will the formula benefit Glasgow? The rate fund contribution was cut by £6·5 million, but not a penny of that is Government money anyway. The housing support grant has been raised from the current year to next year, but it is still only half the 1980–81 level. It comes nowhere near meeting the needs of Glasgow. Even previous Tory Governments accepted that Glasgow needed a far better level of housing support grant than this Government will give it.
If I make no other point tonight that gets through the heads of Conservative Members, I must make it clear that capital allocation is not a resource given to the council. The hon. Member for Eastwood said—I hope I quote him correctly—that resources should be concentrated on capital. After all his years in government, does he not know that all that the Government are doing in setting a capital allocation is allowing the council to spend its own ratepayers' money? Not a penny comes from the Government. Capital receipts are simply what the council gets from selling its housing stock. Again, not a penny of that comes from the Government. All that they are doing is reducing the good housing stock, but not getting any money in to replace it.
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How is Glasgow supposed to pay off its massive debts? I remind Conservative Members that 40 per cent. of Glasgow's entire spending goes to pay off housing debt because of Glasgow's vast programme to clear slums and build houses after the war. Quite apart from the vast debt to be cleared, which is a millstone round Glasgow's neck, people live in intolerable housing conditions. Some houses are so damp that people are forced to shut off the bedrooms and sleep in the living room. Some have dangerous wiring and loose slates that take years to replace.
The Minister recently paid a visit to Maryhill. He was pleased to open a pleasant new housing association development, with a beautiful set of houses, with reasonable rents, which were a pleasure for anyone to move into. But he was not so willing to go a few yards up the road to see how people live in Ruchill, for example. The council cannot afford to do anything about the general environmental conditions of the people who live there. The Government are happy to be associated with the nice housing, but will not do a damned thing about the state of affairs for many thousands of people in Glasgow.
In conclusion, I can only say that the anger of the people of Glasgow has certainly been shown politically against the Government time and again. The Government have the cheek to talk about us buying support. What do they think they are doing when they keep on subsidising mortgage tax relief hugely, year after year, with no fancy talk about formulae to justify it? We want the same fair deal for council tenants.
11.24 pm
Mr. Nigel Griffiths: This is a black day for housing in Scotland. It is a black day for the 350,000 families who live in houses, with rotting windows and leaking roofs, which require modernisation. It is a black day for the 88,000 tenants living in houses that require rewiring. Many houses have wiring that is positively dangerous; some have rooms without electric sockets and others have kitchens with barely adequate electricity supplies. It is also a black day for the 153,000 houses that need major structural repairs and for those tenants who have to live in them. It is a black day for the 234,000 Scottish families who have to live in damp houses.
We have had an unedifying lecture from the Minister about the fact that two thirds of Scottish councils no longer receive any help from the Government or the taxpayer. We know that the combined cut in the rate fund contribution and the housing support grant this year is £14 million. We know that, under the Conservatives, almost no help has been given for housing those families—30,000 people in all—who, particularly at Christmas and in the winter, do not have a home of their own or a roof over their heads. The Conservatives have cut support to those families to an all-time low so that fewer than half the Scottish councils now receive help in housing the homeless.
That contrasts with the situation under the last Labour Government when 56 out of 56 district and island authorities received some support to help those who needed houses. Do Conservative Members wish to challenge that? They are prepared to sit and snigger among themselves. They will not get up on their feet and challenge those figures because they know that they are correct. Under the Labour Government, every Scottish council knew that the homeless people in its area could obtain some help.

409
What have the Tories done? They have ensured that no ratepayer or taxpayer has to spend any money to help the homeless. They have narrowed down the field so that only one third of local authorities in Scotland receive any help towards housing the homeless and that, within that one third, only council tenants bear the burden of helping those homeless families. That is the reality of eight years of Tory rule.
The orders perpetuate and exacerbate that policy. The homeless are now receiving help from the smallest number of people ever. It is not the better-off home owners, in Edinburgh and Glasgow, for example, who are being asked indirectly, through taxes, to help those homeless families, but the council tenants. The hon. Member for Tayside, North (Mr. Walker) said that council tenants are among the poorest people. That is why they receive the housing benefit that he supports.
Unfortunately, the Secretary of State for Social Services does not support that policy. After 11 April, millions of people, including 1 million pensioners, will suffer as a result of cuts in housing benefit. All Opposition Members and the vast majority of the people in this country feel some compassion for those who are down-and-outs, but the people who are being asked to dip into their pockets are council tenants whose earnings are below average and who form the poorest section of the population. That is the effect of the order which the Minister presented so proudly from the Dispatch Box. The poorest people of this country are being asked to help those who are even less fortunate than themselves. It is a great tribute to the people of this country that the poorest are willing to do that. People in my constituency are willing to help.
The hon. Member for Tayside, North said that Labour is buying votes by helping council tenants. That is far from the truth. The hon. Gentleman just has to open his eyes, even though that is difficult for him, and look around. Only a tiny minority of people in south Edinburgh own their own houses, but Labour's new heartlands are in Marchmont and Morningside.
Mr. Sam Galbraith: The largest amount of home ownership in Scotland is to be found in my constituency. It has the smallest number of council houses. That gives the lie to the suggestion by the hon. Member for Tayside, North (Mr. Walker) that Labour is buying votes through providing council houses. Our support is coming from home owners.
Mr. Griffiths: That point is well made.
Mr. Bill Walker: On a point of order, Mr. Deputy Speaker.
Mr. Griffiths: I hear the cry, "Point of order." I shall happily give way if the hon. Member for Tayside, North wants to make a bogus point of order.
Mr. Walker: I called out "Point of order" because I thought I heard the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) suggest that I was lying.
Mr. Griffiths: No Opposition Member would allege that the hon. Member for Tayside, North has the brains to lie, to tell the truth or to think anything out.
The problem is that council tenants, the poorest people, are being asked to foot the bill for homelessness in
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Scotland. Since 1979, Eastwood has lost £330,000 of grant to help the homeless. Eastwood district council matched the Government's contribution towards housing the homeless, but the Government are welshing on that partnership. Since 1979, Nithsdale has lost £1 million in housing support grant, much of which went towards housing the homeless. Kyle and Carrick, where the Secretary of State for Defence saw his majority slashed to fewer than 200, has had its budget slashed from £9 million to nothing by this Government. Edinburgh, the city that I am proud to represent, has lost £22 million under this Government.
I have received a letter from the Scottish Council for Single Homeless that spells out the effects of the housing support grant cuts in Edinburgh. There is a deficit this year of £330,000, and there will be a deficit of over £330,000 in the next financial year. That deficit will have to be met from the housing revenue account.
How does the Minister expect Edinburgh to provide that money when there is to be no support from the Government or the taxpayer? There is no answer to that question. The Government are not giving even a penny towards the provision of hostels. Both the Minister and the Secretary of State for Scotland take great pride in opening hostels, sheltered housing units and other showpieces that are largely local government and Labour council initiatives. They go along at the last minute and take the credit, but they give precious little support to those initiatives.
If the Government need to be convinced about that, they need refer only to the Secretary of State for Scotland's answer to me last Friday about Housing Corporation expenditure in Scotland between 1974 and the next financial year. They will see that under the Labour Government the Housing Corporation, from which so many Scottish housing associations receive money, was provided with enormous bounty. In real terms, spending increased fivefold under Labour. Under this Government, spending has barely increased by 50 per cent. in eight years.
When the Labour Government were in office, spending on housing associations and the Housing Corporation rose by 87 per cent. in 1975, 36 per cent. in 1976 and 46 per cent. in 1977. This spending increased in each year after that while the Labour Government were in office. We know that under the Conservative Government the projects that Ministers boast about have had their budgets cut. In 1984, the Government cut the Housing Corporation's budget. It was cut again in 1985, followed by a further cut in 1986. It is only in recent years that they have managed to increase the corporation's budget. A 2 per cent. increase in real terms has been squeezed for 1988–89.
The nub of our argument is that the Government have tried to steal the credit for what was done by the Labour Government. They have tried to denigrate the great work that was carried out by the Labour Government between 1974 and 1979. During that period there was a fivefold increase in spending within the private sector and housing associations. It is a disgrace that the work of my colleagues in the previous Labour Government is being denigrated. The lies must stop now. I challenge the Minister to challenge my figures, he having made a poor attempt to do so in Committee.
Even when we move from the co-operative and housing association sectors into what might be described as the

411
Government's strong points, such as repair grants and the help that is given to home owners, we are aware of their woefully inadequate and pitiful record. This year, help given by the Government to home owners throughout Scotland will be cut by 16 per cent. The Minister knows that in south Edinburgh there will be thousands left on the waiting list, for 90 per cent. grants were nothing more than an electoral gimmick. It was made in the year before the 1983 general election, only to be dropped almost the day after the election by my predecessor.
The Government's housing record is abysmal. Notes are being passed to the Minister from the civil servants' Box. The only one that we want him to read this evening is, "I resign."
11.37 pm
Mr. Andrew Welsh: There have been contributions of fervour and feeling on a subject that is deserving of them. That cannot be said of the two token contributions from the Conservative Benches, which have been virtually deserted.
I do not have to declare an interest, because Angus district council gets precisely nothing from the Government in terms of housing support grant. It receives nothing, zero, zilch or nil, and it is allowed to provide a similar amount in rate fund contributions. All housing improvements within the area of the district council fall on the shoulders of council house tenants. They receive no help from central Government. Housing support grant in Angus fell from £4·37 million to zero within three years. The Government do not understand the effect that such a dramatic reduction in resources has on a local authority that is endeavouring sensibly to plan its housing policy.
Prudent authorities are treated with the same contempt that is shown to authorities which the Government consider to be bad boys. Indeed, prudent authorities sometimes receive the worst treatment. Prudent budgeting is no safeguard against a Government who are so biased against local government.
It is ridiculous that housing policy in Scotland is being determined by the resources that can be raised from the selling of council houses and not by the needs of the people. It is clear that the Government's policy, in partnership with the private sector, is to starve Scottish authorities of the funds that are required to provide adequate housing for the Scottish people. Resources are being squeezed from councils. Only 25 authorities in Scotland are receiving help from the Government, and that number will dwindle to nil in the coming years. The figures show that two thirds of the total housing stock receives no central Government financial support. Yet local authorities should be a major engine in any drive to solve Scotland's housing problems.
The fall in the Government's support for Scottish housing contrasts starkly with their support for the political heartlands in south-east England, where huge public subisidies are given through mortgage interest tax relief. With 30 per cent. of the United Kingdom population, south-east England receives 50 per cent. of total relief, equivalent to well over £1 billion. Would that that money were spent in Scotland on our housing needs.
Specifically on the variation order, I ask the Minister how taking £707,000 from Roxburgh district will help its housing position, or how the £94,500 clawed back from Annandale and Eskdale will help that district. Indeed, how will the money taken from Argyll and Bute district do
412
anything to help solve its rural housing problems? Based on a technical adjustment for interest rates, it would be better for these sums to remain within the housing system in each of the districts. In other words, the money is going in the wrong direction.
The calculations sum up the Conservative Government's attitude towards one of Scotland's major and long-lasting problems. [Interruption.] In view of the groaning on the Labour Benches, may I point out that I do not take long on my speeches, but I have the right to speak, and I will finish this speech. If hon. Members allow me to continue, I will finish promptly. If there have been delays, blame should be pointed in the direction of other hon. Members.
The Government's rate Fund contribution is merely another way of stopping local independence of decision-making. It seems scarcely credible in the middle of a Scottish housing crisis, with homelessness and waiting lists increasing, with the cessation of public authority house building, and with dampness and other massive problems facing us, that these orders are before us to cheesepare sums of money which could otherwise be spent on helping to solve the problems. A proper Scottish house conditions survey could have been funded by the money that the Government are taking from Scottish local authorities, but nothing is happening.
We have a clear indication that the Government are going in the wrong direction. Instead of dealing with Scotland's housing problems by injecting more resources, they are squeezing money out of Scotland's private and public housing systems. These are technical documents which once again betray the Government's failure to deal adequately with Scotland's housing needs.
11.42 pm
Lord James Douglas-Hamilton: In response to the hon. Member for Angus, East (Mr. Welsh), may I say that Angus district council has decided not to increase rents next year.
The hon. Member for Edinburgh, South (Mr. Griffiths) raised again the question of improvements grants. For 1987–88 Edinburgh received a non-housing revenue account allocation of £8·5 million, plus £26 million which was earmarked for dealing with the grant backlogs. Glasgow had a share of that. The council's provisional non-HRA allocation for 1988–89 consists of £9·5 million, plus £14·5 million, earmarked for grant backlogs. In other words, the basic allocation on the non-HRA is up by £1 million if we take out the backlogs.
The hon. Member for East Lothian (Mr. Home Robertson) said that much of the increase in housing support grant is due to interest rates. That is not so. The interest rate assumed for next year, 10·2 per cent., is only 0·1 per cent. above the rate for this year. The reason for the £12 million increase in housing support grant for 1988–89 is increased management and maintenance which is necessary to ensure that the housing stock is well looked after.
Sums spent on housing in Scotland in the public sector will increase from 1987–88. The planned gross capital expenditure was £719 million. That will go up to £748 millon. Hon. Members should not doubt that. In view of what has been said tonight, it should not be forgotten that the Government have again increased the provision for capital investment in Scottish housing. Although the housing revenue allocations for 1987–88 stood at record

413
levels, the provisional allocations for 1988–89 are nearly 7 per cent. higher than the equivalent allocations for the current year. Of course, with the major disposals of stock to the private and voluntary sector, even greater investment is now being made in what was seen hitherto as local authority stock.
More local authority dwellings were improved last year—some 58,000, which is more than in any of the previous 10 years. More than 298,000 local authority dwellings, about a quarter of the stock, have been included in modernisation schemes costing about £1 billion—
It being one and a half hours after the motion was entered upon, MR. DEPUTY SPEAKER proceeded to put successively the Question already proposed from the Chair and the Question on such of the remaining motions relating to Housing (Scotland) as were then made, pursuant to order [19 February].
Question put:—
The House divided: Ayes 203, Noes 137.

Division No. 194]

[11.45 pm

AYES

Alexander, Richard

Goodhart, Sir Philip

Alison, Rt Hon Michael

Goodson-Wickes, Dr Charles

Amess, David

Gow, Ian

Amos, Alan

Gower, Sir Raymond

Arbuthnot, James

Greenway, John (Ryedale)

Arnold, Jacques (Gravesham)

Gregory, Conal

Arnold, Tom (Hazel Grove)

Griffiths, Sir Eldon (Bury St E')

Ashby, David

Griffiths, Peter (Portsmouth N)

Aspinwall, Jack

Grist, Ian

Atkinson, David

Ground, Patrick

Baker, Nicholas (Dorset N)

Gummer, Rt Hon John Selwyn

Batiste, Spencer

Hamilton, Neil (Tatton)

Beaumont-Dark, Anthony

Hampson, Dr Keith

Bellingham, Henry

Hanley, Jeremy

Bendall, Vivian

Hannam, John

Bennett, Nicholas (Pembroke)

Hargreaves, A. (B'ham H'll Gr')

Bevan, David Gilroy

Hargreaves, Ken (Hyndburn)

Blackburn, Dr John G.

Harris, David

Bonsor, Sir Nicholas

Haselhurst, Alan

Boscawen, Hon Robert

Hayes, Jerry

Boswell, Tim

Hayhoe, Rt Hon Sir Barney

Bottomley, Peter

Hayward, Robert

Bottomley, Mrs Virginia

Heathcoat-Amory, David

Bowden, Gerald (Dulwich)

Heddle, John

Braine, Rt Hon Sir Bernard

Heseltine, Rt Hon Michael

Brazier, Julian

Hind, Kenneth

Bright, Graham

Holt, Richard

Brittan, Rt Hon Leon

Hordern, Sir Peter

Bruce, Ian (Dorset South)

Howard, Michael

Buchanan-Smith, Rt Hon Alick

Howarth, Alan (Strat'd-on-A)

Burt, Alistair

Howarth, G. (Cannock & B'wd)

Butler, Chris

Hunt, David (Wirral W)

Butterfill, John

Hunt, John (Ravensbourne)

Carlisle, John, (Luton N)

Irvine, Michael

Carlisle, Kenneth (Lincoln)

Jack, Michael

Carrington, Matthew

Janman, Tim

Carttiss, Michael

Jessel, Toby

Cash, William

Jones, Gwilym (Cardiff N)

Clarke, Rt Hon K. (Rushcliffe)

Jones, Robert B (Herts W)

Conway, Derek

King, Roger (B'ham N'thfield)

Currie, Mrs Edwina

Kirkhope, Timothy

Day, Stephen

Knapman, Roger

Dorrell, Stephen

Knight, Greg (Derby North)

Douglas-Hamilton, Lord James

Knox, David

Dover, Den

Lang, Ian

Durant, Tony

Latham, Michael

Field, Barry (Isle of Wight)

Lawrence, Ivan

Forman, Nigel

Leigh, Edward (Gainsbor'gh)

Forsyth, Michael (Stirling)

Lennox-Boyd, Hon Mark

Gale, Roger

Lightbown, David

Garel-Jones, Tristan

Lilley, Peter

414

Lloyd, Peter (Fareham)

Shaw, David (Dover)

Lord, Michael

Shaw, Sir Giles (Pudsey)

Macfarlane, Sir Neil

Shaw, Sir Michael (Scarb')

MacGregor, Rt Hon John

Shephard, Mrs G. (Norfolk SW)

MacKay, Andrew (E Berkshire)

Shepherd, Colin (Hereford)

McLoughlin, Patrick

Sims, Roger

Mans, Keith

Skeet, Sir Trevor

Marland, Paul

Smith, Tim (Beaconsfield)

Marshall, John (Hendon S)

Soames, Hon Nicholas

Marshall, Michael (Arundel)

Speed, Keith

Martin, David (Portsmouth S)

Speller, Tony

Maude, Hon Francis

Spicer, Sir Jim (Dorset W)

Mawhinney, Dr Brian

Spicer, Michael (S Worcs)

Maxwell-Hyslop, Robin

Stanbrook, Ivor

Mayhew, Rt Hon Sir Patrick

Stevens, Lewis

Miller, Hal

Stewart, Allan (Eastwood)

Mills, Iain

Stewart, Andy (Sherwood)

Mitchell, Andrew (Gedling)

Stradling Thomas, Sir John

Mitchell, David (Hants NW)

Summerson, Hugo

Monro, Sir Hector

Taylor, Ian (Esher)

Morrison, Hon Sir Charles

Temple-Morris, Peter

Moss, Malcolm

Thompson, D. (Calder Valley)

Moynihan, Hon Colin

Thompson, Patrick (Norwich N)

Neale, Gerrard

Thorne, Neil

Needham, Richard

Thornton, Malcolm

Neubert, Michael

Townend, John (Bridlington)

Newton, Rt Hon Tony

Tredinnick, David

Nicholls, Patrick

Viggers, Peter

Nicholson, David (Taunton)

Waddington, Rt Hon David

Nicholson, Emma (Devon West)

Walden, George

Oppenheim, Phillip

Walker, Bill (T'side North)

Paice, James

Waller, Gary

Patnick, Irvine

Ward, John

Peacock, Mrs Elizabeth

Wardle, Charles (Bexhill)

Porter, Barry (Wirral S)

Warren, Kenneth

Porter, David (Waveney)

Watts, John

Portillo, Michael

Wheeler, John

Powell, William (Corby)

Whitney, Ray

Raffan, Keith

Widdecombe, Ann

Raison, Rt Hon Timothy

Wilkinson, John

Redwood, John

Wilshire, David

Renton, Tim

Winterton, Mrs Ann

Rhodes James, Robert

Winterton, Nicholas

Rhys Williams, Sir Brandon

Wolfson, Mark

Riddick, Graham

Wood, Timothy

Rifkind, Rt Hon Malcolm

Woodcock, Mike

Roberts, Wyn (Conwy)

Yeo, Tim

Rossi, Sir Hugh

Young, Sir George (Acton)

Rost, Peter

Rumbold, Mrs Angela

Tellers for the Ayes:

Sackville, Hon Tom

Mr. Richard Ryder and

Sayeed, Jonathan

Mr. David Maclean.

Scott, Nicholas

NOES

Alton, David

Cook, Robin (Livingston)

Archer, Rt Hon Peter

Cousins, Jim

Ashton, Joe

Crowther, Stan

Barnes, Harry (Derbyshire NE)

Cryer, Bob

Barron, Kevin

Cunliffe, Lawrence

Battle, John

Davies, Ron (Caerphilly)

Beckett, Margaret

Davis, Terry (B'ham Hodge H'l)

Bell, Stuart

Dixon, Don

Bermingham, Gerald

Doran, Frank

Blair, Tony

Duffy, A. E. P.

Boyes, Roland

Dunnachie, Jimmy

Bradley, Keith

Eadie, Alexander

Brown, Nicholas (Newcastle E)

Eastham, Ken

Brown, Ron (Edinburgh Leith)

Evans, John (St Helens N)

Bruce, Malcolm (Gordon)

Ewing, Harry (Falkirk E)

Buckley, George J.

Ewing, Mrs Margaret (Moray)

Callaghan, Jim

Fields, Terry (L'pool B G'n)

Campbell, Menzies (Fife NE)

Flynn, Paul

Campbell, Ron (Blyth Valley)

Foster, Derek

Campbell-Savours, D. N.

Foulkes, George

Clark, Dr David (S Shields)

Fyfe, Maria

Clay, Bob

Galbraith, Sam

Clelland, David

Galloway, George

Clwyd, Mrs Ann

George, Bruce

Cook, Frank (Stockton N)

Godman, Dr Norman A.

415

Golding, Mrs Llin

Meale, Alan

Graham, Thomas

Michael, Alun

Griffiths, Win (Bridgend)

Michie, Bill (Sheffield Heeley)

Hardy, Peter

Millan, Rt Hon Bruce

Harman, Ms Harriet

Morgan, Rhodri

Henderson, Doug

Morley, Elliott

Hinchliffe, David

Mowlam, Marjorie

Hogg, N. (C'nauld & Kilsyth)

Murphy, Paul

Home Robertson, John

Nellist, Dave

Howarth, George (Knowsley N)

O'Brien, William

Howells, Geraint

Patchett, Terry

Hughes, John (Coventry NE)

Pike, Peter L.

Hughes, Robert (Aberdeen N)

Powell, Ray (Ogmore)

Hughes, Simon (Southwark)

Quin, Ms Joyce

Illsley, Eric

Redmond, Martin

Ingram, Adam

Reid, Dr John

John, Brynmor

Roberts, Allan (Bootle)

Jones, Barry (Alyn & Deeside)

Robertson, George

Kennedy, Charles

Rogers, Allan

Kirkwood, Archy

Ross, Ernie (Dundee W)

Lambie, David

Rowlands, Ted

Lamond, James

Ruddock, Joan

Leadbitter, Ted

Salmond, Alex

Lewis, Terry

Skinner, Dennis

Livsey, Richard

Smith, Andrew (Oxford E)

Lloyd, Tony (Stretford)

Smith, C. (Isl'ton & F'bury)

Lofthouse, Geoffrey

Smith, Rt Hon J. (Monk'ds E)

McAllion, John

Soley, Clive

McAvoy, Thomas

Spearing, Nigel

McCartney, Ian

Steel, Rt Hon David

Macdonald, Calum A.

Strang, Gavin

McFall, John

Taylor, Mrs Ann (Dewsbury)

McGrady, Eddie

Turner, Dennis

McKay, Allen (Barnsley West)

Vaz, Keith

McKelvey, William

Wall, Pat

McLeish, Henry

Wardell, Gareth (Gower)

McTaggart, Bob

Welsh, Andrew (Angus E)

McWilliam, John

Williams, Alan W. (Carm'then)

Madden, Max

Wise, Mrs Audrey

Mahon, Mrs Alice

Worthington, Tony

Marshall, David (Shettleston)

Wray, Jimmy

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Tellers for the Noes:

Martlew, Eric

Mr. Frank Haynes and

Maxton, John

Mr. Nigel Griffiths.

Question accordingly agreed to.
Resolved,
That the draft Housing Support Grant (Scotland) Order 1988, which was laid before this House on 3rd February, be approved.

Housing Support Grant (Scotland)

  HOUSING SUPPORT GRANT (SCOTLAND)
  Resolved,
  That the draft Housing Support Grant (Scotland) Variation Order 1988, which was laid before this House on 3rd February, be approved.—[Mr. Kenneth Carlisle.]
  11.55 pm
  Mr. Bob Cryer: On a point of order, Mr. Deputy Speaker. I understand that the Opposition Front Bench is not to move the prayer on the Order Paper. That is due to the fact that the Joint Committee on Statutory Instruments has not yet completed its consideration of the relevant order because the Committee
  416
  has asked the Department for an explanation of the vices of the instrument, which is important. It is important, too, to acknowledge the Opposition's position in ensuring that before a prayer or any other motion on an instrument is debated the Committee has the opportunity to complete its consideration and report to the House.
  It is not a Standing Order that an instrument should be debated when it is reported to the House by the Joint Committee, but if the Opposition believe that a prayer should be laid against an instrument the Government should give them time in which to report it to the House. It would be unfair if the Opposition did not move a prayer in order to allow consideration to be completed and the Government did not then allow time for it to be moved in subsequent proceedings.
  Mr. Deputy Speaker (Sir Paul Dean): The hon. Gentleman realises that it is not for me to comment on the substance of what he has said. On the procedural point, the House is indebted to him for putting that view on the record.

  EUROPEAN LEGISLATION
  Ordered,
  That Mr. Richard Caborn be discharged from the Select Committee on European Legislation, and Mr. George J. Buckley be added to the Committee.—[Mr. Kenneth Carlisle.]

PETITIONS

  Rating Reform
  11.58 pm
  Mr. John Home Robertson: Now that the House has dealt with a measure designed by Scotland's minority Tory administration to force up rents in Scotland, I take this opportunity to present a petition signed by 417 residents of the burgh of Cockenzie and Port Seton calling for the repeal or the legislation that is set to impose a grossly unfair poll tax on the people of Scotland.
  The legislation has been overwhelmingly rejected by the Scottish electorate and it is still not too late to avoid the injustice and the chaos of the poll tax. I strongly support this appeal for the repeal of this dangerous legislation.
  I have another petition on the same subject which I have been asked to submit. It is signed by 80 members of the Edinburgh 7/131 branch of the Transport and General Workers Union, which includes some of my constituents. The petition warns that the poll tax would discriminate against poor people in Scotland and favour more prosperous areas, so it would be likely to do great damage to the social fabric of our nation.
  Once again, I join the petitioners in urging the House to reject this damaging legislation.
  To lie upon the Table.

Hospital Complex (Downpatrick)
Motion made, and Question proposed, That this House do now adjourn.—[Kenneth Carlisle.]
12 midnight
Mr. Eddie McGrady: I am pleased and grateful to have this opportunity to speak about the crisis that faces the Downpatrick hospital complex in my constituency. I am also glad to see that the Minister responsible has returned to full health—the theme of the debate is good health.
When I applied for the debate, it was to ask for the provision of sufficient capital to rebuild what is known as the Downe hospital at Downpatrick—a building which is 104 years old and was built for another purpose entirely. We have since had an announcement from the Eastern health and social services board, which is responsible for the Downe unit of management, that it has been notified of a budget which is totally deficient for its purpose of supplying an adequate hospital and medical service to the entire board area. The board has said that it will face a deficit in 1988–89 of £7·6 million, not taking into account the fact that, in the next fiscal year, it must meet a wage and salary increase. The consequence of that shortfall is that the board is frantically—perhaps indecently—trying to close hospitals and wards to meet its unrealistic budget.
This is an old debate. It is 20 years old. I have had this argument with the Eastern board for that time. We are still without any capital programme to provide what it was recognised was needed as long ago as 1965. Notwithstanding that, we are now faced with the closure of a maternity hospital and the decimation of acute surgical wards. The hospital problem in Downpatrick has changed in the past couple of weeks, from seeking capital expenditure, to stemming the rot of closures and cuts.
I have the privilege to speak on my own behalf and on behalf of the entire community of Downe, of whatever political persuasion. I have received the unanimous support of the medical and paramedical members of the community.
Some 23 years ago, in the debates in Stormont and the then Department of Health, it was recognised that the Downe hospital needed to be replaced. Funds were earmarked for the enterprise. Unfortunately, we had only talk, and the money was redeployed to the Masserene hospital in Antrim.
A couple of years ago it was with a sense of déjà vu that, when I was seeking £6 million or £7 million of investment in that aging structure, we were told that no capital was available. Yet, out of the blue, £33 million suddenly became available for a hospital. Will hon. Members believe that again it was a hospital in the Antrim area? I do not begrudge money being well and usefully spent in the Antrim area, but our long-term approved need was not met in any way by the health board or by the Department.
In considering the problem, it is important to note the background against which I speak. Down is a rural area of 646 sq km, with a scattered population of 82 persons per sq km. It has no railway system, a poor bus service, and a road system that is still in the 18th century. Geographical features have a considerable impact on the delivery of health and community care services. None the less, the people of Down expect reasonable access to medical and surgical services.
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That expectation was recognised by the Royal Commission on the National Health Service, which, in its 1979 report, stated:
"A fundamental principle of the national service must be an equality of provision, so far as this can be achieved without an unacceptable sacrifice of standards."
It went on to state:
"If inflexibility is to be avoided health authorities should implement national policy in the context of their particular geographical and demographic constraints."
That is the basis on which I urge the Minister to reconsider the Down district.
All rural areas have a service centre to which the rural community looks. At the moment that service area is the town of Downpatrick. I ask that a good hospital service be provided in that town. The alternative is totally inconceivable. It would mean that 40 per cent. of the entire area of the Eastern health board would be devoid of any real hospital and medical services.
In addition, there is an influx of inhabitants during three months of the year. Hon. Members may, or may not, know that the county of Down is the most beautiful and most tourist-oriented county in Ireland. It is not surprising—indeed, the Department of the Environment accepts this—that 1·2 million persons visit the area during a 12-week period. This means that, on a day-to-day basis, there are 11,500 extra people. On top of that, there are 900,000 overnight stays within that 12-week period, which means that another 9,800 people are resident in the area during the summer months. That is a total population surge of about 21,000.
Tourists and short-term stay people require medical services, just as the rest of the community do. In addition, injuries and accidents related to sailing, climbing, horse riding and other vigorous tourist pursuits put a greater demand on services than that which is normally expected in such a rural community. Again, the Royal Commission's report states:
"Hospitals must be accessible to the population they serve."
Another aspect of the background of Down relates to socio-economic factors. It is a poor, deprived area, which, in parts, has 21 per cent. unemployment. Other hon. Members may quote similar pockets of unemployment. There are other socio-economic factors.
The 1981 census of the Down district, as distinct from other local government areas in the Eastern health board district, produced certain facts. The census showed that the district had the highest average number of persons per household; the highest number of persons per room; the lowest percentage of households connected to the public water supply; the lowest percentage connected to public sewers; and the highest birth rate. I will add that, thankfully, it has the lowest perinatal mortality rate, due entirely to the presence of the maternity hospital. The district has a higher proportion of the population in the higher dependency bracket—the under-14s and those over 65 years of age. I am proud to boast that it also has the highest natural increase in population of all the districts.
In addition to those socio-economic factors, 32 per cent. of householders have no car. Of those in employment, 25 per cent. must commute outside the district. That adds another considerable dimension to the number of households without a motor car during the working day. Because of the lack of transport and the lack

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of a transport system, people cannot avail themselves of the hospital service unless that service is within a reasonable and convenient distance.
All those factors show a great need for an available and local service in the local hospitals, but what is being planned for the areas? There are plans for the closure of the maternity hospital and the destruction of our acute and surgical wards. Our maternity hospital was opened during 1981–82. Since then it has achieved a bed occupancy of 78·4 per cent., which is the third highest of the maternity units in the Eastern board area. However, the hospital has been singled out for closure simply because it has not reached that magical figure demanded by the authorities of 1,000 throughput births a year. Anyone would think that we were talking about cattle instead of human beings.
The total number of births in the district in 1986–87 was 1,073. Unfortunately, 355 were misdirected — in my opinion — to other maternity units. That statistician's delight, that bureaucratic blunder of 1,000 births, must not stand in the way of making adequate provision for the mothers-to-be, who very often will have to travel considerable distances from mountainous areas, but I doubt whether that will have occurred to the authorities.
I have no doubt that infant mortality will increase again to its previous levels. Infant mortality in the Down district was reduced to 5·34 deaths per 1,000 births, against a Northern Ireland average of 13·4 and a United Kingdom average of 11·4. That, if no other, is a justifiable reason for the maintenance and continuation of our maternity hospital.
What savings will be made? If those patients are placed elsewhere, they will need the same treatment and care, but with additional transport costs, additional stress and psychological factors that will probably extend the stay in hospital and so increase costs. There is no monetary sense in the matter at all. A monetary budget that takes no cognisance of the needs and welfare of the patient is flawed in the medical sense.
The other factor is the proposal to cut our surgical beds by almost 50 per cent. In practice that means that upwards of 1,000 people in the Down area who have received acute medical services in the past will have to go elsewhere, with the same costs for transport, the same stress, the lack of visitation and the psychological deprivation and new surroundings that I said would occur if the maternity unit were to close. The real effect will be to end the viability of the hospital as an acute hospital service.
I have not mentioned the fact that there is a large psychiatric hospital in the area, which, in turn, is dependent upon the maternity and surgical hospitals. Who, or what, is going to service the mentally ill and the seriously mentally retarded in that psychiatric hospital? The services are already being run down. Our ambulance service was transferred in 1986. Ear, nose and throat services and optical specialties were transferred in 1987. The financial administration organisation is to be transferred in 1988.
We are suffering from the past and continuing policy of the board and the Department — a desire for centralisation. Presently, centralisation is the god of medical administration. It is interesting to note that this week an eminent surgeon at the Royal Victoria hospital, who is one of the chief proponents of centralisation, in relation to Downe district hospital, said:
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"This issue in this case is again not between peripheralisation and centralisation, but the extreme difficulties that would be involved for patients if Downe hospital were closed."
I am a layman, but it is clear that the medical opinion of Downe is unanimous and firm. The following observations have been made:
"1. We feel it is extremely unwise to make major policy decisions about the provision of services based solely on financial considerations.
2. The arguments about the pros and cons of retaining a maternity unit in Downpatrick have been rehearsed many times already, but the medical advice has been clear throughout, namely that the maternity services should be retained in Downpatrick because of its geographical isolation.
3. Closure of the maternity hospital would remove obstetrics and gynaecology from the GP rotational training programme of the unit. This programme is vital to the junior staffing of medical, surgical, geriatric and gynaecology departments."
It is also said that a 50 per cent. reduction in the number of acute surgical beds would mean that the unit would be unable to function effectively and therefore would be subject to future closure. It is also believed that the provision of existing facilities represents the minimum viable size of the unit.
I have expressed my grave concern about the effect of the proposals for the Down district. I ask the Minister to intervene directly to exercise his authority to prevent the gross deprivation of medical, maternity and, ultimately, psychiatric care. I ask the Minister and his Department not to stand aloof from the decision-making process of the Eastern health board. The Minister must not hide behind the departmental argument that it is for the board to decide. He must exercise his right to oversee the medical services for the Down district. The Minister and the Department must ensure that. Downe receives equality of provision that is of an acceptable standard.
I am sure that the Minister is already in receipt of two reports from independent sources — one from PA Consultants and the other from Coopers and Lybrand. One deals with the need for the services and the other the costing of a modest, modern hospital for Downpatrick. I ask the Minister to consider urgently the points that I have made and that I know would receive the support of hon. Members if they were applied to their particular areas.
I ask the Minister to intervene to stop the closures and, at a reasonable date in the future, to lay aside a modest sum for the replacement of a 104-year-old building.
12.18 am
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Richard Needham): I thank the hon. Member for South Down (Mr. McGrady) for commenting upon my health. My general practitioner was on holiday and therefore I have not made any use of the NHS, but I am glad to say that, at least for my benefit, I have fully recovered.
I understand the hon. Gentleman's concern, and he has expressed it in his usual forthright and eloquent way. He has raised two separate issues: the question of Downe hospital and the maternity unit.
As to the immediate threat, the hon. Gentleman will be aware that the Eastern board has issued a consultative document and it contains a wide range of possible options. As the hon. Member for South Down has said, this is not the first time that the matter has been discussed. The board will not take any decisions on the issue until there has been an opportunity for discussion. I appreciate that the time

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scale is fairly short. The end of the original time scale will not bring an end to the debate about what options the board is to adopt. The debate will have to continue.
Since the options are to be adopted by the board, I cannot go in any substantive way into the points that the hon. Gentleman has raised on the board's arguments or his own. As the hon. Gentleman is aware, it is the role of the board to make a determination and to judge the arguments. I cannot overrule that. I have listened very carefully to the hon. Gentleman because if the board comes forward with proposals the Department will have to consider them carefully.
The hon. Gentleman raised some points which gave me cause for concern. I do not think that the hon. Gentleman can compare the proposals for Antrim with those of Down. The proposals must be considered on their merits. If the merits of the case are such that Down should have a rebuilt hospital, that will be considered, as the case for a new hospital at Antrim was considered. Nor do I find it particularly persuasive for the hon. Gentleman to argue that, because there is a large influx of tourists into a most beautiful part of Northern Ireland, facilities should be built which would be used for only two or three months of the year. As he rightly pointed out, we must build facilities to serve the population.
I understand the force of the hon. Gentleman's criticism, but the board has to live within its budget for the next year. The budget that we have had to place upon the board, the 5·2 per cent. increase, means that it will need to make savings of 2 to 3 per cent., which, as the hon. Gentleman said, is approximately £7 million. That means that the board will have to make difficult decisions. Clearly some of those decisions will not be popular.
We have to consider a point of principle in maintaining the acute services for Downpatrick. I appreciate the force of the arguments that the hon. Gentleman put so eloquently about the numbers involved in the population of the eastern area and the distance that people would have to travel were there to be a significant change in the acute care, but I hope that the hon. Gentleman will accept that there are problems in keeping a high-quality hospital open to small, dispersed and mainly rural communities.
It is not a question only of capital funds being made available for a new hospital. Even if we were to make the capital investment — I appreciate that the hon. Gentleman strongly believes that that capital investment should be made available—that is not the only problem. We are talking not only about buildings, but about the scarcity of staff, equipment and skills. It is not possible simply to buy those skills.
An acute hospital with modern facilities must be large enough to sustain adequate levels of junior medical staff.
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Otherwise consultants must put up with a heavy on-call commitment, and that cannot be satisfactory to maintain a service. An acute hospital of that sort must be viable in terms of capital costs, staff—the Downpatrick hospital has good, immensely dedicated consultants who work extremely hard—and the future. One must consider its capacity to attract, keep and train junior medical staff and to give them a range of specialties. Clearly, regional centres of excellence are bound to be more attractive. I am not saying that the argument for an acute hospital at Downpatrick is not necessarily strong, but it must be seen in the round and remembered that this is not only a question of money.
The hon. Gentleman suggested that the figure 1,000 had been grabbed from the sky; it has not. To have a successful and efficient maternity unit there must be a certain level of throughput. There must be sufficient clients for good paediatric cover, proper facilities and intensive care, and to allow staff to exercise and develop their skills. If there is a reason for doubt about the future of the Downpatrick maternity unit, it is that only 60 per cent. of mums in South Down use it. The hon. Gentleman said that mothers were misdirected, but I am not clear who misdirected them, whether their GPs, consultant gynaecologists or themselves. The unit has a capacity for 300 more babies a year than are born there. Many mums are voting with their feet for whatever reason. If the hon. Gentleman and community leaders want to keep that unit open, it is crucial that those who would naturally use it do so. It is questionable whether hospitals such as Downpatrick acute hospital and the maternity unit are viable if they are not properly utilised.
This debate has raged for many years. The Eastern board, in its area strategic plan, stated clearly that services would be maintained during the current planning period to 1992. I understand the hon. Gentleman's concern to reconcile that commitment with the problems of making the 2 or 3 per cent. savings to meet its 1988–89 budget. I can assure him that before any final decisions are made I shall want to explore this closely with the board chairman. If the board finally adopts a firm proposal which in any way affects Downpatrick, I shall make absolutely certain that it makes financial sense for the services involved.
I hope that the hon. Gentleman will accept that the Department will study closely any proposals from the board. This is not merely a question of funding; it concerns how the services are run on behalf of both the clients and staff so that the staff can give the quality of service that the people of Downpatrick deserve.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Twelve o'clock.