HC Deb 28 November 1995 vol 267 cc1057-8

In each of my three Budgets, I have reduced public spending plans substantially. This year, I have once again kept a firm grip on public spending, helped by my right hon. Friend the Chief Secretary. My right hon. Friend and I have at least three things in common. We have both been in charge of big spending Departments, so we are both poachers turned gamekeepers. Neither of us could be described as adopting the slash and burn approach to public spending. But we are both convinced that the share of national income taken by the state in public expenditure must be reduced to below 40 per cent. if we are to remain competitive in today's world. It is essential to give the private sector more room to generate the jobs, the investment and the wealth that will make people and their families more prosperous.

That goes hand in hand with our commitment to a modern welfare state. In the rapidly changing world of technological advance and a more flexible labour market, the British people need to be prepared and equipped to embrace change in a flexible way. They will be more willing to do that if they know that high-quality schools, health care and a safety net for the unemployed, the disabled and the old are there if and when they need them. That is why we are modernising the welfare state so that it underpins the British economy, and does not undermine it. We are changing the welfare state to ensure that it serves the needs of today, not of 40 years ago; that it serves those who genuinely need it; and that it is affordable to the taxpayer.

Those objectives are being achieved in the face of huge pressures for higher public spending that come rolling in year after year. But this Budget proves that we can have good-quality public services and spending control. Unlike our critics, we understand that good services depend not only on how much one spends, but on the way that one spends it.

That realistic but socially responsible approach has guided me this year. I have limited the growth of spending overall. But I have also provided more money for the public services that the British people care about most—schools, hospitals and the police. To pay for that, my right hon. Friend the Chief Secretary and I have found savings elsewhere from our continuing drive to modernise government.

Let me deal first with the priority areas where I have been able to increase spending plans.

Mr. Dennis Skinner (Bolsover)

Having cut them last year.

Mr. Clarke

None of them was cut last year. That was an ill-thought-out and inaccurate interjection.

I shall turn to what we are doing to the national health service. This Government are committed to the national health service. I am proud that since 1979 spending on the NHS has increased by more than 70 per cent. in real terms. We are continuing to deliver our commitment to increase spending on the NHS in real terms. That is what we said that we would do, and we are doing it.

Public spending on the national health service will increase by over £1 billion next year. In addition, patients will benefit from improvements in efficiency, including reductions in NHS management costs. All those savings—around £650 million next year—will be ploughed back into patient care. Privately financed projects will bring nearly £700 million of extra investment over the next three years without in any way undermining the fundamental principle that health care should be free at the point of service. It is no good the word "private" producing curls on the lips of Labour Members. The money is on top of the additional £1 billion of public expenditure, and it all represents additional resources for our free national health service.

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