Public Expenditure

HC Deb 24 February 1988 vol 128 cc309-92

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 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 (Caernarfon)

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 (Eastbourne)

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 (Alyn and Deeside)

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 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 (Worthing)

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 (Birmingham, Selly Oak)

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 (Mid-Worcestershire)

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 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 (Perth and Kinross)

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 (Dunfermline, East)

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 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 (Banbury)

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 (Motherwell, North)

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 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 (Motherwell, South)

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 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 (Dunfermline, East)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 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 (Bridlington)

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 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 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 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 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 (Walsall, North)

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 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 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 (Lancashire, West)

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 (Esher)

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 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 (Tatton)

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 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 (Worthing)

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 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.

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 (Durham, North)

It is a great pleasure to follow the right hon. Member for Worthing (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 (Stamford and Spalding)

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 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.

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 (Horsham)

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 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 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 (Roxburgh and Berwickshire)

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 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, 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 (Roxburgh and Berwickshire)

I listened with great interest to the hon. Member for 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 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 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.

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 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 (Bridlington)

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 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.

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 (Stockport)

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 (Slough)

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 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 (Edinburgh, South)

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.

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 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 (Newark)

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.

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 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 (Gateshead, East)

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 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, 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 (Feltham and Heston)

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.

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: 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 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 (Newcastle upon Tyne, East)

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 (Caernarfon)

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 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 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.

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 (Birmingham, Selly Oak)

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 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.

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 (Dumbarton)

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 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 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. 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 (Tatton)

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 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.

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 (Lancaster)

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 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 (Rhondda)

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, 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 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 (Bridgend)

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 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 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 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 (Slough)

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.

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 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 (Newcastle upon Tyne, North)

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 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 (Stamford and Spalding)

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 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 (Newcastle upon Tyne, East)

I am grateful to the members and officials of the Treasury and 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.

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 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 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 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.

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. 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, 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 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. 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.

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.

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

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)

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

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, 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).