Commons Sitting of 6 March 1997

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS

  PRIVATE BUSINESS
  SOUTHAMPTON INTERNATIONAL BOAT SHOW BILL
  Read the Third time, and passed.

Oral Answers to Questions
  AGRICULTURE, FISHERIES AND FOOD

    Cattle Cull
    Mr. Rendel: To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of the number of cattle to be slaughtered in Berkshire during the selective cull.
    The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Tony Baldry): It is not possible to give an estimate of the number of cattle to be culled on a county-by-county basis.
    Mr. Rendel: Is the Minister aware that because of the indecision and dithering over the cull, some farmers are now likely to go over quota this year, because they simply do not yet know how many of their cattle are likely to be culled—and even when the numbers are known, the valuations have not yet been done? Will the Minister provide compensation for those who go over quota?
    Mr. Baldry: I find that a surprising question, because when the National Farmers Union and the Country Landowners Association asked us to get on with the selective cull, they knew full well the situation as regards milk quota. Farmers have managed to organise milk quota year on year for many years, and if anything, quite recently we tended to be under quota. Of all the many questions that arise from the selective cull, that is not one that I see as a real issue.
    Sir John Cope: Does my hon. Friend agree that the total number of cattle to be slaughtered under the cull has been vastly exaggerated, especially by Liberal Democrat spokesmen, and is unlikely to rise above 100,000?
    Mr. Baldry: One of the characteristics of the whole bovine spongiform encephalopathy debacle has been a gross over-dramatisation of the situation by all the Opposition parties, not least the Liberal Democrats. In fact, less than 5 per cent. of the national dairy herd is likely to be affected by the selective cull—a maximum of 100,000
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    animals. Even that estimate makes assumptions about all the animals that are traceable, and about a full uptake of animals born in the voluntary year. Some of the suggestions that we have heard—from the hon. Member for North Cornwall (Mr. Tyler), for example—to the effect that one third of the dairy herd will be affected by the cull, are simply ludicrous.

    Fishing
    Mr. Austin Mitchell: To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the level of United Kingdom fishing relative to current multi-annual guidance programme targets; and what proposals he has to achieve those targets.[17546]
    Mr. Baldry: Definitive figures for United Kingdom performance are under discussion with the Commission. Once the Commission agrees figures for the United Kingdom performance, I expect us to be within a handful of points of our targets for the end of December 1996.
    Mr. Mitchell: I am grateful for that totally obscure reply. Will the Minister undertake to argue that the level of cuts likely to be demanded of the British fleet is totally unacceptable? Will he undertake to build a blocking minority against MAGP No. 4, which should not be considered until Europe has accepted our proposals to do something about the quota hoppers who now make up about one fifth of the British fleet? Will he further undertake to reject the Commission's latest proposals, which are dominated by Dutch self-interest in an unacceptable way, especially in the light of the huge Dutch fishing overshoot? Will he undertake to ensure that something is done about industrial fishing, and oppose the proposed days-at-sea limit and the proposed 30 per cent. cut to be imposed on us?
    Dr. Godman: Good speech.
    Mr. Baldry: It was a good speech—and the hon. Member for Great Grimsby (Mr. Mitchell) is even wearing a sober tie.
    I do not think that there is much difference between the hon. Member for Great Grimsby and me on the issue. We have made it clear that we will not contemplate any further reduction in the United Kingdom fishing fleet until the issue of quota hoppers is dealt with. What the hon. Gentleman described as my opaque answer meant that we are almost up to our target for MAGP No. 3—we are practically where we should be on that—and we are saying that the United Kingdom does not intend to move forward on No. 4 or to do anything else with it, until the issue of quota hopping is resolved. As the Prime Minister has made clear on several occasions, that is a priority that we seek to achieve at the intergovernmental conference. I hope that everyone on the Opposition Benches will also signal that it is the clear intention of the whole House to ensure that Britain achieves a result on quota hopping at the IGC.
    Mr. John Greenway: Do the guidance targets contain anything about the size of lobsters landed off the north-east Yorkshire coast? Is my hon. Friend aware of a proposal to increase the minimum size landed at Filey

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    from 85 mm to 87 mm? That does not sound much, but it would decimate what little fishing there is left in Filey. Will my hon. Friend promise to look into that?
    Mr. Baldry: That is a bit broad for a question on decommissioning, but I shall certainly look into the issue of lobsters in Filey and, if necessary, I would more than welcome a visit to my hon. Friend's constituency.

    Food Labelling
    Mr. Simon Hughes: To ask the Minister of Agriculture, Fisheries and Food what steps his Department is taking to ensure that food labelling is comprehensible to the public.[17547]
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Angela Browning): The law requires that mandatory information on food labels should be easy to understand and that all other information should be true and not misleading. We regularly consult consumer and other organisations and we commission surveys to identify where label information could be improved.
    Mr. Hughes: I accept what the Minister says about consulting regularly. Will she look at the report produced last week by the National Consumer Council, which agrees with my view that most food labelling is twaddle, merely giving a list of chemicals, or Latin, or words that nobody understands? There is regulation for descriptions of nutrition—a claim that a food is low fat, for example, has to be regulated—but anybody can put "gives you a healthy diet" on a product, because health matters are not regulated. Can we start again and produce food labels that ordinary people such as me can understand when we go to Tesco?
    Mrs. Browning: I assure the hon. Gentleman that I shall study the report with great care. The Food Advisory Committee is also looking at nutritional and health claims, particularly the latter. The issue can be confusing. The Ministry produces some literature to guide people through it. I agree that labelling must be clear and accurate.
    Sir Cranley Onslow: Is my hon. Friend satisfied that everything possible is being done at national and European level to provide adequate warning for those susceptible to allergies, such as that caused by peanuts, that can have fatal consequences?
    Mrs. Browning: I assure my hon. Friend that we have pressed the European Commission to propose changes to labelling to help those who suffer from peanut allergies and similar conditions. I am also working on a programme for this year to put more information into the public domain, particularly for food processors. Many people find that there is more labelling for products that obviously contain nuts, but the processed nut is often not immediately obvious. That is the potential danger for people with such allergies.

    Organic Products
    Mr. Tony Banks: To ask the Minister of Agriculture, Fisheries and Food what his Department is doing to encourage the production and marketing of organic products.
    The Minister for Rural Affairs (Mr. Tim Boswell): As well as aid for conversion to organic production, we provide free advisory services and fund the United Kingdom register of organic food standards, together with substantial organic research and development programmes and around £1 million of marketing grants to date to a range of organic interests.
    Mr. Banks: The Minister's reply is complacent. Instead of allowing people to be poisoned with stinking meat and pesticides, why do we not do more to encourage the growth of organic products? Is the Minister aware that 70 per cent. of the organic food eaten in this country is imported? We are at the bottom of the European Union league on the organic aid scheme, spending less than half the European Union average. What do the Government have against organic food? Why are they so prejudiced against it? Are they prepared to let people be poisoned by rotten stinking food when they could have healthy organic food?
    Mr. Boswell: It is a pity that the hon. Gentleman spoils a good case with which I have some sympathy with hyperbole with which I have no sympathy. He cannot rightly assert that the food offered in this country, organic or otherwise, is rotten and stinking. If it were, it would not be permitted. The Government wish to encourage the production, the marketing and the consumption of organic food for those who want it. To that end, in addition to the measures that I referred to a moment ago, I have participated in a seminar held by our market task force on encouraging greater awareness of the market possibilities—an important incentive for the organic sector.
    Mr. Mark Robinson: Does my hon. Friend agree that it is the marketing of British produce, organic and otherwise, that is extremely important and which the Ministry does support and should support? On organic produce, does he also agree that it is up to consumers to decide what they want to buy and eat?
    Mr. Boswell: I could not agree more. I can tell my hon. Friend that within the sector challenge scheme, which has been set up recently, two of the strong contenders going forward for final consideration are for organic marketing aid improvement schemes.
    Mr. William Ross: Does the Minister recall that for at least the first half of this century most food was produced with a low level of artificial fertilisers and practically no sprays and that the farming community, encouraged by Governments of all shades, went over to high production through the use of modern fertilisers? Will the Minister give an assurance that, if we are to move back to organic food production, not only profit levels but food production levels will be maintained in this nation?
    Mr. Boswell: The hon. Gentleman makes some fair points. I just about remember the first half of this century

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    when I was a lad, when there was a much lower level of inputs in farm production. The use of science to continue to produce safe food but to a greater intensity has expanded production. More extensive use of the organic sector would curtail production and we need to have all those factors in mind. The relevant points are to offer consumers choice and opportunity so that they can decide what they wish to consume, and ideally, that the British farmer should be able to produce it for them.

    Common Agricultural Policy
    Mr. Wilkinson: To ask the Minister of Agriculture, Fisheries and Food what proposals he has made to the European Commission on the reform of the common agricultural policy to accommodate the agricultural interests of those countries which have applied to join the EU.[17549]
    The Minister of Agriculture, Fisheries and Food (Mr. Douglas Hogg): I have regular and frequent contacts with the European Commission and other member states on reforming the common agricultural policy. We have consistently argued that early decisions leading to a more market-oriented CAP are essential to facilitate EU enlargement.
    Mr. Wilkinson: My right hon. and learned Friend should represent urgently to Commissioner Fischler for the completion by July of the agricultural review of the common agricultural policy which the Commission is undertaking. It is essential that we move to a system of national support and away from European Union-wide support since the CAP is costing the average family in this country £26 per week in additional taxes and food costs. To do so would be compatible with the entry of the applicant countries to the EU. To maintain EU-wide support in the event of their entry would cost an inordinately large amount.
    Mr. Hogg: That is an important point. I am not in favour of the repatriation of the common agricultural policy, but I agree that there is scope for much more subsidiarity than there is now. I also agree with the point underlining my hon. Friend's question, which is that the European Union really has to address the question of reform speedily and preferably before the negotiations on enlargement begin
    Mrs. Golding: What proposals is the Minister making to reduce the burden on the British people caused by the unfairness of the common agricultural policy? Does he realise that the reason why his Government have made so little progress is that they are as unpopular and distrusted abroad as they are at home?
    Mr. Hogg: The hon. Lady misunderstands the position. Within the Agriculture Council there is no enthusiasm for reform of the CAP. In truth, I think only Sweden, the Danes, to some extent the Dutch, ourselves and the Commissioner are in favour of fundamental reform, otherwise there is substantial opposition. It is because of that substantial opposition that we are not making more rapid movement towards reform.
    Mr. Rowe: Does my right hon. and learned Friend agree that one of the reasons why the common agricultural
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    policy is somewhat distrusted is that there is no faith in the inspections that are carried out nationally, and that as part of the reform of the CAP it would be a good idea for international teams of inspectors to go up farm paths and ensure that the rules are being observed as scrupulously in one country as in another?
    Mr. Hogg: My hon. Friend makes an important point, in the sense that there is no doubt that the United Kingdom generally enforces European law, regulations and directives more robustly than many other countries. There is certainly scope for trying, through the Commission and its inspection agencies, to tighten the workings of the common agricultural policy. We, in the context of BSE, for example, have been pleased to welcome many inspection visits from the European Commission and member states.

    Bovine Spongiform Encephalopathy
    Mr. Cousins: To ask the Minister of Agriculture, Fisheries and Food when he now forecasts, on the basis of existing policies, the last new case of BSE in Britain to occur.[17550]
    Mr. Douglas Hogg: In August, an independent team lead by Professor Roy Anderson confirmed that BSE was in sharp decline and would virtually die out in the United Kingdom around 2001 as a result of measures already in force. It is not, however, possible to predict precisely when the BSE epidemic will be over.
    Mr. Cousins: Does the Minister accept that that prediction was made on the basis of applying to BSE in cows a statistical model derived from the spread of AIDS in humans, and that it must in any event be subject to an extremely wide margin of error? Would not he be wise to add those cautions every time that the prediction is mentioned, to avoid damaging yet further Britain's agricultural industry?
    Mr. Hogg: The hon. Gentleman is right in the sense that all predictions are somewhat uncertain. He will find that in my various statements I have tended to use the phrase, "in 2001 or thereabouts", because it is perfectly true that there is likely to be a tail beyond 2001 and we do not know how thick that tail will be. The disease is declining by 40 per cent. year on year and we expect that in all substantial respects it will die out around 2001 or thereabouts, but of course I agree that there must be caveats and provisos.
    Mr. Alexander: Will my right hon. and learned Friend comment on a statement that I received today from Mr. Douglas Gascoine of Newark livestock market, of which I hope that I just succeeded in giving him notice, to the effect that, while the European Union has banned our meat, Germany is exporting to us meat from cows more than 30 months old, with the cord attached and including the specified offal? Given the fact that our meat is banned on health grounds, what action can the Ministry take to ensure that those countries that ban our meat do not export to us the very agents that caused BSE in the first place?
    Mr. Hogg: My hon. Friend makes an important point, and I am grateful to him for his courtesy in giving me

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    prior notice of what he wanted to ask. He has identified a serious matter. I have frequently said in the House that British beef is the safest and best in Europe, and I believe that to be true; one of the reasons for that is that we have in place a range of measures—abattoir control measures, controls on feedstuffs and the over-30-months rule—that are not to be found universally in the European Union.
    We want the European Union to accept, for example, the abattoir controls on specified offal that we have in place. That would meet my hon. Friend's point, and I regret that the Council did not accept it in December. I very much hope that the Commissioner will make such proposals again in a month or so; if so, we shall support them.
    Dr. Strang: May I remind the Minister that measures to keep the BSE agent out of our cattle feed were put in place in 1988? Is he aware that the head of his Ministry's beef and sheep division stated that because of the lax controls it was not until August 1996 that we could be certain that contaminated feed was no longer reaching our cattle? Does he agree that as a result of the Government's failure to enforce the measures many more cattle will die of BSE, the dreadful epidemic will last longer and the taxpayer will have to pay a beef tax of £3.5 billion?
    Mr. Hogg: Professor Anderson's report, of which the hon. Gentleman knows, identified 1994 as the date when, in all probability, contaminated feedstuffs were no longer available in substantial quantities to cattle. It is true that from August last year, we made it a criminal offence to possess meat and bone meal on farms. Looking back with hindsight, there are probably a number of things that we could have done between 1988 and 1995 that we did not do, but at all times we acted in accordance with the best advice and tried to make judgments that were both reasonable and proportionate on the basis of the information then available. I do not accept the criticism, but I accept the facts to which I referred.

    Common Fisheries Policy
    Dr. Godman: To ask the Minister of Agriculture, Fisheries and Food when he last met the Fisheries Ministers from other member states of the European Union to discuss matters relating to the reform of the common fisheries policy.[17551]
    Mr. Baldry: At the December Fisheries Council, we discussed a number of matters relating to the reform of the common fisheries policy.
    Dr. Godman: The severe restriction of industrial fishing is a long-overdue reform. An outright ban is perhaps impossible. In any case, we can continue fishing grenadier and blue whiting. Does the Minister agree that pout and sprat fishing should be banned completely? When he goes to Bergen, will he argue for a restricted total allowable catch of sand eels in grounds such as the Wee Bankie and Buckie Man's bank?
    Mr. Baldry: I have made my views on industrial fishing known in the House on many occasions. We have had many discussions with the fishing industry and I am pleased that the Scottish Fishermen's Federation and others recognise that we need to move beyond a
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    precautionary quota for sand eels to an actual quota in areas such as Wee Bankie. Ministers will certainly propose that at the forthcoming Bergen conference. The evidence of the impact of industrial fishing is such that we need to ensure that it is not destroying the fish chain upon which so many fishermen, both north and south of the border, depend.
    Mr. Ian Bruce: My hon. Friend knows that much of the pressure on the common fisheries policy results from people's worries about cheating on quotas. What have Ministers been able to do to secure enforcement of quotas by other countries? Has he anything to say about British fishermen cheating on quotas?
    Mr. Baldry: It is unacceptable if other member states do not apply the rules as rigorously as we do. At our behest, the Commission has been very active in ensuring that we have a Community inspectorate of member states' fisheries that seeks to ensure that the rules are applied as rigorously by other member states as they are by us. We will continue to seek to ensure that the Commission enforces those regulations throughout the European Community; otherwise, a mockery is made of having a common fisheries policy.
    Mr. Morley: On reform of the CFP, I want to return to quota hopping. The Minister said that it will be pursued vigorously at the intergovernmental conference and we support that approach. However, many quota hoppers have legally bought their licences from UK fishermen as part of the free market approach that the Government have supported. Will the Minister support attaching conditions to licences? That might make things more difficult for overseas buyers and make it more attractive to maintain licences in regional fisheries.
    Mr. Baldry: The hon. Gentleman misses the point. Our difficulty is that the European Court of Justice has deemed that under the treaty and present law, we cannot do that. [Interruption.] No, we cannot do it. The European Court paid far too much attention to the idea of a single market and freedom of association, and failed to take sufficient account of national fishing quotas. That is why we must ensure that there are treaty changes. I welcome the cross-party support for securing that at the IGC. That is the only way that we can be confident of eliminating quota hoppers once and for all.

    Beef Ban
    Mr. Jacques Arnold: To ask the Minister of Agriculture, Fisheries and Food what steps his Department is taking to bring about the lifting of the EU ban on British beef.[17552]
    Mr. Charles Kennedy: To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on progress towards the lifting of the beef exporting ban.[17554]
    Mr. Jessel: To ask the Minister of Agriculture, Fisheries and Food what is his policy on the ban by European member states on British beef.[17557]
    Mr. Douglas Hogg: On 25 February I wrote to Commissioners Fischler and Bonino explaining how the

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    United Kingdom has fulfilled the preconditions laid down under the Florence agreement and I submitted our proposals for a United Kingdom export certified herds scheme, together with a paper setting out its scientific basis. The scheme would be the first step in lifting the export ban. I pressed for urgent and constructive discussion of our proposals at the relevant committees.
    Mr. Arnold: My right hon. and learned Friend will know that the beef rearing industries in Latin America have relied for many decades on obtaining the best breeding stock in the world from Britain. As they have had to rely all this time on second best, and as we have complied with the five principal conditions of Florence, is it not high time that this disgraceful and unfair ban was lifted?
    Mr. Hogg: My hon. Friend is right. There are perhaps two points worth making. Of course we are against the generality of the ban, for all the reasons that I and my right hon. and hon. Friends have expressed from the Dispatch Box, but there is a particular wrongness about exports to third countries. That is what my hon. Friend is highlighting. I could not agree more.
    Mr. Jessel: Is it not ridiculous for the European Commission in Brussels to imply that British beef is safe for British people, but dangerous for people in every other country in the world? The ban upsets the livelihood of our farmers and is costing our taxpayers £3 billion. As the policy was welcomed by the shadow Minister of Agriculture, Fisheries and Food, the hon. Member for Edinburgh, East (Dr. Strang), is not the moral that we should have as little to do with either the hon. Gentleman or the European Commission in Brussels?
    Mr. Hogg: I do not think that I would want to be quite so unkind as my hon. Friend, but there is a lot of substance in what he says. He makes two important points. One is the enormous cost of this business—£3.5 billion committed over three years, which is powerful testimony to the importance that a Conservative Government attach to British agriculture. When we debated the matter some 10 days ago, it was plain that the Labour party would never have invested that amount of money in support of British agriculture.
    Mrs. Dunwoody: Is the Minister aware that, no matter how much faith British housewives have in British produce, if there is even the slightest suggestion that his Ministry is continuing to obscure basic reports that affect the hygiene of British products, far from protecting our farming community or anyone else, he will constantly undermine the quality of our exports anywhere in the world?
    Mr. Hogg: The hon. Lady would be right if what she said was true. There will be a statement after questions, with your permission, Madam Speaker. I shall deal more specifically with the point that the hon. Lady has raised. Our policy throughout the BSE crisis, both before and after 20 March last year, has been to be wholly open and candid with the public and the House, for the kind of reason that the hon. Lady has just identified.
    Mr. Pike: As the Minister is in a conciliatory mood today, does he accept that it is not the National Farmers
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    Union's change of policy but the Government's delay in implementing what they agreed at Florence that has meant that an end to the beef ban is still not in sight?
    Mr. Hogg: I have never blamed the NFU for changing its position. There is no doubt that the selective cull is a serious interference with other people's property or that the cull is extraordinarily difficult to justify in any scientific or objective way. Its only justification is, that if we do not do it, we will not get any progress in lifting the ban. The NFU did not want a selective cull. I understand that. I do not criticise it for that. That was its position for much of the summer. It was only well into the autumn that the NFU came to adopt the position that it now does. I am not critical of it; I am merely describing the facts.
    Mr. Nigel Evans: Is my right hon. and learned Friend aware that I am proud to be wearing my NFU tie at questions today? It was presented to me by farmers on Friday night after a very good beef dinner in my constituency. Does he accept that they told me that they want the European ban lifted as quickly as possible and that they see it as nothing more than politics? They also want to see some fast food joints—if I can use that description—lift the British beef ban. They believe that fast food stores such as McDonald's could show a clear lead if they started selling British beef again.
    Mr. Hogg: My hon. Friend is a splendid example of how good British beef can be for one. He has a serious point: it is extremely regrettable that a number of major restaurant chains and also public authorities, for a variety of reasons—none of them good in science—have been reluctant to sell British beef. That is nonsense because all beef products of every kind that are sold in the United Kingdom from British beef must satisfy the most stringent tests. In terms of quality or safety, there is no distinction of any kind to be drawn between a British beefburger and a British steak. Both are of the highest quality and of total safety.
    Dr. Strang: May I remind the Minister that it was the Prime Minister who told the House of Commons that all the conditions would be met for the beef ban to be lifted by November last year, and that the lifting of that ban was in the Government's hands? May I remind him that no part of that ban has been lifted and that the Government dithered and delayed over the implementation of the Florence agreement? Is it not clear that the Government must accept responsibility for the delay in lifting the beef ban?
    Mr. Hogg: We have complied with the five preconditions set out in the Florence agreement. We have discharged our part of the bargain and we have every reason to expect the Europeans to discharge theirs. They now have an opportunity to do so because they are in possession of our export-certified herd scheme proposals.
    Mr. Nicholls: Does my right hon. and learned Friend agree that when farmers in Teignbridge try to make up their minds whether the Labour party has anything to offer them in terms of farming policy, they would do well to remember that the hon. Member for Edinburgh, East (Dr. Strang) approved the imposition of the ban in the first place? Can my right hon. and learned Friend also tell

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    me what I should say to farmers in Teignbridge when they witness how their businesses have been devastated by the imposition of the ban, while we are still apparently either unwilling or unable to stop the importation of foreign meat products which have not been produced to the same safety standards as our own?
    Mr. Hogg: My hon. Friend makes an important point, which is similar to that made by my hon. Friend the Member for Newark (Mr. Alexander). There is no doubt that we need to get in Europe a comprehensive regime to govern cattle feed rations and the removal of offal; we should also introduce a 30-month rule.
    On the first part of my hon. Friend's question, he is right that the hon. Member for Edinburgh, East (Dr. Strang)—not just once, but on at least two separate occasions and possibly more—defended the imposition of the ban and expressed the hope that we would have done the same had we been in the position of the French. Should the hon. Gentleman ever be in a position to try to ask for the ban to be lifted, he will be in some difficulty because the French will merely quote his words back to him.

    Quota Hopping
    Mrs. Ewing: To ask the Minister of Agriculture, Fisheries and Food what discussions he has recently held with his counterparts in Europe to discuss quota hopping; and what recommendations he will make to the Amsterdam EU summit.[17555]
    Mr. Baldry: We have tabled a proposal in the intergovernmental conference to tackle quota hopping. We take every opportunity to make clear to fellow European Community Ministers the need to find an effective and permanent solution to quota hopping. We shall, of course, do so again at the Amsterdam summit.
    Mrs. Ewing: Does the Minister understand that there is a desperate need to have collective discussions within the Fisheries Council, because he earlier mentioned the possibility of treaty changes? Is he actually saying that amendments will be made to the treaty as a result of any representations made by the Government? Will he assure us that there will be a meeting between the United Kingdom Government, the Dutch presidency and the Spaniards to resolve the issue so that we can reach an IGC conclusion?
    Mr. Baldry: I think that we have kept the House fairly well informed on what we are doing. Some time ago, we tabled an amended protocol to the treaty. Those treaty changes will be part of the IGC negotiations; they are not something that is necessarily within the competence of the Fisheries Council. It is something to be determined within the IGC. My right hon. Friend the Prime Minister has made it clear on a number of occasions that one of our clear negotiating objectives at the IGC is to achieve the elimination of quota hoppers once and for all.
    Mr. Gallie: Difficult though discussions on fishing are in Europe, have there not been some successes for British fishermen, and would not Britain's strong voice on these issues diminish to a Scottish whimper if the hon. Member for Moray (Mrs. Ewing) and her colleagues got their way?
    Mr. Baldry: It is a self-evident truth on this issue, as on practically everything else, that we are stronger as
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    a United Kingdom than we would be if we were sundered and severed into various parts. There have been successes for the UK fishing industry and we achieved a number of successes at the December Fisheries Council. Only recently, the Commission announced that it had agreed to our proposals for regional committees to investigate fishing and the first of these will be set up in relation to the North sea. For the first time, that will give real fishermen a voice in what happens in the common fisheries policy and it is this Government who have achieved that for fishermen, not only in the UK, but throughout the whole of Europe.

    Beef Ban
    Mr. Cox: To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of the cost to the United Kingdom to date of the European beef ban on United Kingdom exports; and if he will make a statement.[17556]
    Mrs. Browning: The UK beef market has been affected by the European Union ban on exports of beef, together with a fall in beef consumption. Since 1 April 1996 the overall cost of the BSE eradication and compensation schemes amounts to £949 million. Forecast expenditure on BSE-related measures in 1997–98 and 1998–99 is £1,010 million and £580 million respectively.
    Mr. Cox: Is the hon. Lady aware that the figures that she has given are for ever on the increase? That is a clear indication of the total incompetence with which the Government have handled this issue. We have suffered the loss of the European beef market and the cost of the slaughter of cattle; yet despite all the promises and all the talk, there is—as we heard in earlier exchanges—no prospect of the beef ban being lifted. Where do the British agriculture industry and beef industry go from here? What further costs are we to bear?
    Mrs. Browning: I am sorry that the hon. Gentleman did not hear me correctly: £580 million is clearly less, not more, than £1,010 million and therefore the figures are on a declining scale, year on year. There is a commitment to the industry and to the related parts of the industry chain that we will ensure their future by putting public money behind them. It is a matter of regret that the hon. Gentleman and his party do not consider the industry important enough to support its future in that way.
    Mr. Fabricant: Does my hon. Friend think that the beef crisis was helped or exacerbated by the shadow Secretary of State for Health, the hon. Member for Islington, South and Finsbury (Mr. Smith), asking whether it was true that members of the Spongiform Encephalopathy Advisory Committee were not feeding British beef to their children and grandchildren?
    Mrs. Browning: The hon. Member for Islington, South and Finsbury (Mr. Smith) and his colleague the hon. Member for Peckham (Ms Harman) played an important role at the beginning of the crisis. However, their attempts to thwart the beef industry have not succeeded and I am pleased to say that many retailers are reporting that domestic beef sales are higher than they were before March last year, despite the actions of the Opposition.
    Mr. Campbell-Savours: May I have a straight answer, without the usual ministerial wriggles? Is it not true that,

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    if Labour's policy in 1990 of an animal identification system had been in place, there would have been no cull, the taxpayer in this country would have been millions of pounds better off and the BSE crisis would have already ended?
    Mrs. Browning: No—the hon. Gentleman is trying to rewrite history, as is his custom. Of course we want to have traceability and animal identification—that is an important part of transparency in the industry—but to suggest that those methods could have rewritten history in respect of contaminated feed is wrong.

    Bovine Spongiform Encephalopathy
    Sir Colin Shepherd: To ask the Minister of Agriculture, Fisheries and Food what is the trend of reported BSE cases in the last three years.[17558]
    Mrs. Browning: The number of suspects being reported reached a peak of more than 1,000 cases a week in 1993, fell to about 800 in 1994 and is now about 120 a week and still falling.
    Sir Colin Shepherd: I thank my hon. Friend for that very encouraging report to the House. Is it not precisely because of the robust and tough action taken by the Government that outbreaks of BSE in this country, measured in terms of the number of reported cases, are decreasing—not increasing, as they are in the remainder of the European Union? While my hon. Friend is considering that, will she reflect on the fact that throughout the entire BSE crisis the Labour party has not made a single constructive proposal?
    Mrs. Browning: My hon. Friend is absolutely right. It is clear from the way in which the figures are coming down—a 40 per cent. reduction year on year—that the Government's policy of dealing with contaminated feed and dealing with this disease has been absolutely right. Of course there is more to be done, but there are encouraging signs that the disease is now on the wane.
    Mr. Jamieson: Can the Minister explain to the House why the Secretary of State for Defence stated in a written answer to me recently that Her Majesty's armed forces eat mainly foreign beef and not British beef?
    Mrs. Browning: The armed forces do eat a good proportion of British beef. However, my hon. Friend the Minister of State for the Armed Forces has given me a great deal of information to enable me to take out to the British suppliers the figures on which the armed forces buy their beef to discover whether those figures can be matched competitively, and I regret to say that they cannot. [Interruption.] The hon. Gentleman says, "Ah!" so presumably competitive tendering is not part of the Labour party's policy any more: old Labour, new Labour—they still believe in centralisation.

  PRIME MINISTER

    Engagements
    Ql. Mr. Simon Coombs: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.[17575]
    The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Coombs: Can my right hon. Friend confirm that the "basic pensions plus" proposals announced yesterday not only guarantee the value of the state pension, but offer the prospect of a much improved pension with a valid& of as much as £175 per week to a person on average earnings? Does that not contrast starkly with the Labour party's plan to cut the value of the state pension by £20 per week?
    The Prime Minister: I entirely agree with my hon. Friend about the impact of the proposals that I announced with my right hon. Friend the Secretary of State for Social Security yesterday. Those proposals will guarantee that everyone, whether in the new scheme or out of it, will continue to receive at least the basic state pension, increasing in line with inflation. I think that the response that we have heard from some quarters—including some, although not all, Labour Members—shows that those people do not understand what is proposed. [Interruption.] A moment ago, the hon. Member for Newcastle-under-Lyme (Mrs. Golding) asked, "What is this point about £20 being cut off the state pension under Labour's plans?" Perhaps she should consult the hon. Member for Peckham (Ms Harman), who said in a letter to my right hon. Friend the Secretary of State for Social Security that she anticipated a lower level of basic state pension, to compensate for reducing the retirement age to 60. That cut, unless there is more expenditure—which the shadow Chancellor says that he would not allow—would be the equivalent of £20 per week.
    Mrs. Golding indicated dissent.
    The Prime Minister: There is no point in the hon. Lady shaking her head. That is what her hon. Friend has in mind.
    Mr. Blair: May I put to the Prime Minister two specific questions arising from the report by Mr. Bill Swann on hygiene in abattoirs? First, why was that report not published on 31 March 1996, as Mr. Swann was told that it would be? Secondly, why did Ministers not see the report and act on it?
    The Prime Minister: I think that the right hon. Gentleman's questions, as he will discover when he hears the statement a little later, are based—[Interruption.] I am assuming that, in view of the right hon. Gentleman's interest, he will be here for the statement; I am making an assumption. The right hon. Gentleman's questions are based on what he supposes is in a report which, I believe, he has not read.
    There is no suggestion of the report being suppressed. It was produced by officials. It was drawn up by the Meat Hygiene Service. It was very widely circulated. It was circulated around the trade and elsewhere. [Interruption.] I am sorry that somebody did not receive it. Ministers did not receive it—that is true. It was a working document. [Interruption.] This is exactly the point. The report was drawn up for the Meat Hygiene Service as part of its

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    work to ensure the highest standards of hygiene in slaughterhouses. It is a routine report, of which there are many, not normally shown to Ministers and not shown to Ministers on this occasion, but circulated to the people who had an operational need to know about it.
    Mr. Blair: That is the most extraordinary explanation. This is Mr. Swann's report. I have read it. It is 54 pages long and contains 81 recommendations. May I point out to the Prime Minister that on page 19 the report states that there is a serious concern about contamination, that the contamination may lead to the spread of the E. coli organism and that action should be taken immediately? If the Prime Minister says that the report was not shown to Ministers, I ask him why not. With 54 pages and 81 recommendations, it was sufficiently serious, was it not? Does he not think in retrospect that, given the seriousness of the report, it would have been better if it had been shown to Ministers so that it could have been acted on in the interests of the public?
    The Prime Minister: The point that the Labour leader perhaps genuinely does not understand—[Interruption.]
    I have got beyond page 81—a very quick read this morning. I think that the right hon. Gentleman may genuinely not understand, so I shall make the point again. The report was a working document, drawn up for the Meat Hygiene Service and circulated to its staff. The Meat Hygiene Service is implementing the recommendations in the report, as the right hon. Gentleman noted.
    This is the way in which such matters have been handled for a very long time—[[Interruption.] I say to the right hon. Gentleman that there are huge numbers of such working documents every year. If they all came to Ministers for Ministers to read every one, nothing else would be done. The right hon. Gentleman has been in opposition so long that he does not understand that. The report was circulated to the people who needed to take action and I am advised by those people that they have implemented the action.
    Mr. Blair: Whether the report should be shown to Ministers must depend on its seriousness. If it is serious, it should be shown to Ministers. May I point out to the Prime Minister that Mr. Swann was told that it would be published precisely because it dealt with serious issues?
    The Prime Minister's latest explanation is that the recommendations have been implemented. May I quote to him what Mr. Swann said this morning on the radio? He was asked whether everything that he had recommended had been carried out: answer—no. He was then asked whether some of the recommendations that had not been carried out were important for hygiene and safety: answer—yes.
    This is a serious report which reveals serious problems of contamination. We know about the problems with E. coli, but the report was not even shown to Professor Pennington, who is in charge of the E. coli administration. When will someone in the Government take responsibility for the proper and competent administration of our affairs?
    The Prime Minister: When will the right hon. Gentleman realise that when he behaves in this fashion, what he does—[Interruption.] I am sorry to say
    1020
    that it is true: he exaggerates problems that exist before he has heard the statement, irrespective of the interests of the meat industry, in exactly the way in which the Opposition have behaved on previous occasions. I have to say to the right hon. Gentleman that that, in advance of the statement, is the height of irresponsibility.
    I repeat for the right hon. Gentleman that the report was provided for the Meat Hygiene Service, which was established to improve safety for the consumer and opposed by the Labour party when we established it. Yet again, the right hon. Gentleman is trying to stir up public concerns that are being dealt with by a public watchdog which he and his colleagues opposed when it was established. His party has stood in the way of every change made to improve hygiene standards. That is absolutely true. If the Opposition had had their way, responsibility for slaughterhouse hygiene would still be in the hands of 300 local councils applying the rules in 300 different ways. The hygiene service is raising standards, and the right hon. Gentleman is raising scares.
    Mr. Jacques Arnold: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.[17576]
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Arnold: Has my right hon. Friend noticed the knowledgeable speech given in the House of Lords yesterday in which it was said that our economy is doing rather well, particularly in comparison to the last 18 years—[Interruption.]—and even more so in comparison to the economies of Europe? That speech was by the noble Lord Barnett, the last Chief Secretary to the Treasury in a Labour Government. Did my right hon. Friend note that Lord Barnett said quite clearly that taxes may be increased without increasing the rates? What is more, he said that he expected any future Labour Government to do just that.
    The Prime Minister: The noble Lord Barnett, being a life peer and therefore not threatened by the plans of the Leader of the Opposition and the Labour party, has clearly let the cat out of the bag as to what he thinks about Labour's spending plans. As a former Chief Secretary, he knows that they do not add up and that there is a £12 billion black hole in the middle of Labour's plans. He knows that the Labour party cannot sign up to Budget book figures and then disown the policies that would achieve those figures unless it plans to put up taxes, cut expenditure or find some other way of dealing with the great black hole in its plans. It is not, as the shadow Chancellor likes to imply, a Tory scare: we now know the truth as a result of what the last Labour Chief Secretary to the Treasury has said.
    Mr. Callaghan: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.[17577]
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Callaghan: Is the Prime Minister aware of the crisis in the hospitals in the north area of Manchester since

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    four out of five hospitals were closed by the Government? Is he aware that since Christmas the North Manchester General hospital has accepted only accident and emergency cases, and that two weeks ago eight people remained on trolleys for 23 hours because there were no beds available for them in that hospital or in any other hospital in the region? Is that not a national disgrace and a scandal, and what does the Prime Minister intend to do about it?
    The Prime Minister: One thing that I am doing to improve the quality of the health service is promising to provide extra resources for each year of the next Parliament, as we have done for the past 18 years. I notice that there is no comparable pledge from the Labour party. Year after year, we have dramatically increased the resources made available to the health service. We operate policies such as compulsory tendering, which brings more money into the health service, and we have abolished a whole tier of regional government in order to provide extra money for the health service. All those policies were opposed by the Labour party, which will not provide extra resources for the health service.
    Mrs. Currie: Did the Prime Minister see today the launch of Europe 97 by the all-party European Movement? Will he join me in welcoming this important effort—which has the backing of the unions, major industries, the Confederation of British Industry and the European Commission—to put the facts about Europe and the benefit of our membership of the European Union to the people of this country rather than the fictions about its dangers?
    The Prime Minister: I have not yet seen the document to which my hon. Friend refers, but I will certainly obtain a copy and look forward to reading it. It is important that the important debate on Europe is conducted on the basis of facts, not fiction, and that people fully understand precisely the implications of policies followed across Europe in each individual country and by the Commission and, of course, in our own country.

    Lockerbie
    Mr. Dalyell: To ask the Prime Minister if he will discuss with President Clinton the relevance to the Lockerbie inquiry of the publication of the report by the
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    United States Inspector General into laboratory practices and alleged misconduct in explosives-related and other cases.[17578]
    The Prime Minister: I understand that the report has not been published. As the Minister of State, Foreign and Commonwealth office, my right hon. Friend the Member for Richmond and Barnes (Mr. Hanley), made clear on 28 February, we understand that there is nothing to suggest that the report will reflect in any way on the Lockerbie case, but if anything relevant emerged froth it, the Government would evaluate the implications carefully.
    Mr. Dalyell: Against the background set out in that Adjournment debate, have the Government asked the Americans how it is that their forensic expert, James Thurman, has been found to have fabricated forensic evidence? If the Prime Minister asked the Americans, what did they say?
    The Prime Minister: Yes, we have made inquiries about that, as the hon. Gentleman may have anticipated. The United States authorities have confirmed that the Federal Bureau of Investigation has transferred Mr. Thurman to other duties while the activities of the FBI laboratories are investigated. However, we are further advised that the case against the two Libyans does not depend in any respect on any evidence that Mr. Thurman may give.

    Engagements
    Dr. Michael Clark: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.[17579]
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Dr. Clark: Is my right hon. Friend aware that my constituency has the highest number of home owners in the country, at a fraction under 90 per cent.? As we now have low inflation, low interest rates and very attractive mortgage rates, what advice would he give—as we approach a general election—to my constituents and to home owners throughout the country?
    The Prime Minister: As my hon. Friend says, we have stable prices, low mortgage rates and a rapidly improving economic situation that is unmatched anywhere in Europe. The advice that my hon. Friend should give to his constituents is to stick to the policies that have created that and not put it at risk by following policies adopted on the continent which have led to a quite different outcome.

Meat Hygiene Service (Report)
3.32 Pm
The Minister of Agriculture, Fisheries and Food (Mr. Douglas Hogg)rose—[Interruption.]
Madam Speaker: Order. Will hon. Members leaving the Chamber please do so quickly and quietly? We have business to conduct here. Minister, when you are ready.
Mr. Hogg: It may be helpful if I make a statement about the report by the Meat Hygiene Service on the state of hygiene in slaughterhouses, which has been the subject of much comment in the press this morning.
The facts are as follows. The Meat Hygiene Service came into existence on 1 April 1995 as a Ministry of Agriculture, Fisheries and Food agency, and took over responsibility for enforcement of hygiene rules in slaughterhouses that had previously rested with local authorities.
One of the targets for the agency, approved by Ministers and announced to Parliament, was to carry out a review of the state of hygiene in each individual slaughterhouse in Great Britain. It was required to complete that assessment by the end of March 1996. The purposes were threefold: first, to create a comprehensive benchmarking of standards and practices within the British fresh meat industry; secondly, to allocate resources to a function previously performed by local authorities; and, thirdly, to drive up standards across the board and in individual plants.
The Meat Hygiene Service conducted its review by appointing hygiene advice teams to visit each slaughterhouse in the country to assess its score and make recommendations for improvements: a mark was given to each slaughterhouse to serve as a benchmark against future progress.
The final outcome was a comprehensive assessment of the state of hygiene that had been found and a long list of recommendations for future action. The report in its final form was always intended as an internal working document, to be used by the enforcement authorities, so it was not formally published. However, it was presented to the Meat Industry Forum—the leading representatives of meat industry organisations, with whom the Meat Hygiene Service holds regular discussions—and was the subject of frequent discussions with the industry and others. The fact of the review was also explicitly referred to on page 18 of the annual report on the Meat Hygiene Service's first year of operations, which was presented to Parliament on 17 July 1996, and placed in the Library of the House.
I will deal with some specific criticisms which have been made. Was the report turned down? The facts are as follows. Hygiene assessment teams of MHS staff prepared reports on individual plants. An editorial board, chaired by the MHS head of operations, and made up of professional staff who had all been part of advisory teams, asked Mr. Swann to compile a report on red meat.
Mr. Swann's first draft was regarded as rather unsatisfactory and not fully reflecting the views of others who had taken part in the review. Mr. Swann was asked to recast his contribution, but was not willing to do so. The editorial board then asked another senior member of
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Staff to redraft the section on red meat. The revised and condensed version covering both red meat and poultry was put to the industry representatives last year. The final report reflected the majority judgment of the professional veterinary staff who carried out the review.
It is said that important recommendations were not acted on, but that is untrue. Individual reports were made on specific plants and were discussed with individual operators.
Meat Hygiene Service staff are present in every slaughterhouse. In their continuing discussions, they are in a position to ensure that necessary improvements are carried out. All their work is carried out under the over-arching supervision of the State Veterinary Service.
One specific point of concern is in relation to E. colinamely that cattle should not be delivered to slaughterhouses in a dirty condition. It is quite clear that concerted action is needed by the enforcement authorities, by slaughterhouse management and by farmers, to ensure that cattle are presented for slaughter in the cleanest possible condition. The MHS has taken action. For example, ante-mortem checks are carried out on all cattle and are being tightened up. Further action is in hand. The MHS is preparing clear visual operational guidance on the standards expected and how to achieve them. It will be issued this month.
Our purpose in creating the MHS—a policy that was bitterly opposed by Opposition parties—was to drive up standards within abattoirs and the slaughtering industry. The preparation of the report and its follow-up is part of that process. Standards are constantly improving, and they are substantially better now than they were when the service was provided, to varying standards, by more than 300 local authorities. That is a tribute to the MHS, and to the Government for insisting on its creation.
Dr. Gavin Strang: Does the Minister accept that, for many years, we have realised how vital it is to have high standards of hygiene in our slaughterhouses, and that, following the discovery of bovine spongiform encephalopathy, it was even more important to achieve those standards because of a possible link with Creutzfeldt-Jakob disease?
Does the Minister agree that the report produces alarming evidence showing just how badly the Government enforced the controls in our abattoirs to keep BSE, E. coli and other diseases out of our food? Spinal cords were not being removed, bovine specified offal bins were unmarked, and there was a major problem of faecal contamination, which could infect carcases with E. coli, salmonella and other organisms. The report also draws attention to important worries about animal welfare.
Can the Minister confirm that the report is thorough and substantial, and, indeed, that it cost some £1 million to produce? Can he confirm that it makes 81 major recommendations on abattoir practices? Can he confirm that all those recommendations are now being implemented? Can he assure us that the problems identified by the hygiene advice teams are being addressed? Does he agree with the report about the need for a proper national strategy in relation to contamination in abattoirs? When will that strategy be implemented?
May I point out to the Minister that this final report is dated December 1995? He needs no reminding that it was in March 1996—March last year—that Ministers were

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advised of the probability that the new variant of CJD was linked with BSE. Surely, against that background, we had a right to expect that Ministers were leaving no stone unturned to ensure that the highest standards were being implemented in our abattoirs. Surely Ministers had a responsibility to examine the situation assiduously, to ensure that all the regulations were being properly enforced—and it should be remembered that the BSE regulations were introduced as long ago as 1989.
If Ministers were carrying out that proper examination, how could they be unaware of this major report? It is not a routine report; it is not a casual document containing a few minor criticisms. It is a devastating critique of practices in our abattoirs. How was it that Professor Pennington, who has been conducting the inquiry into the tragic outbreak of E. coli in central Scotland, was unaware of the report? Why was it never shown to him? How was it that Richard Cawthorne, a United Kingdom abattoir monitor and owner, and president of the European Meat Association—he was on the radio this morning—did not see the report?
We are advised that the report was due for publication in March 1996, but it was never made public. It really is not good enough for the Minister to say in his statement that there was a reference to this major report, which was completed in March 1995, in a document that came from the Meat Hygiene Service to the House of Commons, and was placed in the Library just as the House rose for the summer recess. He has not answered the question—and his right hon. Friend the Prime Minister has not answered the question—why on earth was the report not made public and put in the public domain? How can we be confident that Ministers are acting on these matters if they do not make such reports public?
Why cannot the Government understand that, on food safety matters, we have to be open and up front on everything? Is this matter not further evidence of the need for an independent food standards agency, with food safety as its No. 1 priority? Secrecy only undermines consumer confidence in the safety of our food. Yet again, another episode is leading the public to lose even more confidence in the Government on the subject of the safety of our food.
Mr. Hogg: The hon. Gentleman did not make the slightest effort to listen to what I said. I shall deal with his general points first, and then his particular points. He said that it is vital that we have proper controls in abattoirs. I entirely agree, and that is why we introduced the Meat Hygiene Service. It is true that, when practices were controlled by local authorities, they were not as good as we would wish. It is regrettable that the hon. Gentleman voted against the establishment of the Meat Hygiene Service, because it is the instrument for a national approach to the problems.
On many occasions, the hon. Gentleman referred to the document prepared by Mr. Swann in December 1995 as the final document. It was not a final report: it was not a report at all. It was a first draft requested by the editorial board, which comprised people who were all—I think—engaged in the assessment that was being carried out.
When the first draft was presented to the editorial board, the members—the professional peers of Mr. Swann—decided that the report was not satisfactory, for the reasons that they advanced, because they had
1026
carried out the assessment. They asked him to redraft it. He decided not to do so. I do not blame him, and I am not trying to be critical of any individuals. His peers asked him to revise it, and they thought it needed changing because it was not satisfactory. That he declined to do.
The editorial board then asked another expert, who had already prepared one of the chapters, to do the chapter on red meat. The chapter on red meat represented the considered view of the majority of the veterinary experts engaged in the assessment. That report was extensively circulated around the members of the industry to whom the matter was relevant, because they sat on the Meat Industry Forum. They had copies of the report, and discussed it on many occasions. My hon. Friend the Parliamentary Secretary discussed it and related matters on 22 occasions in 14 months.
The hon. Member for Edinburgh, East (Dr. Strang), if he had wanted to, could have asked for a copy of the report, because it was explicitly referred to on page 18 of the annual report, which he clearly has not read. Before he speaks again on such issues, I suggest that he seriously considers what is said in advance, especially given that he had a copy of my statement in advance.
Sir John Cope: Does my right hon. and learned Friend agree that all the criticisms of hygiene and practices in abattoirs disclosed in the report are, in so far as they are the responsibility of regulators, the responsibility of local authorities, which were the regulators until shortly before the report was compiled? The creation of the Meat Hygiene Service brought the practices under the purview of the national Government, and enabled all the recommendations that my right hon. and learned Friend mentioned to be put into practice to improve the abattoirs, compared to their standards when they were run by the local authorities.
Mr. Hogg: My right hon. Friend is wholly right about that. There is no doubt that the control of abattoirs and slaughterhouses, when it was conducted by local authorities, was not as uniform in its application as one would have wished. The desire for national, uniform standards was the reason why the Government introduced the Meat Hygiene Service, which was wrongly opposed by the Opposition parties. The final condensed report that was given to the industry was part of the process whereby the Meat Hygiene Service assessed the nature of the problem with a view to driving up standards. That is exactly what is happening. That is a positive tribute to the Meat Hygiene Service and to the Government who set it up, and a positive condemnation of those who opposed its setting up.
Mr. Paul Tyler: First, I sincerely commiserate with the Minister on his injury. Would he like to take this opportunity to dispel the wicked media rumour that he shot himself in the foot?
Does the Minister agree that the central issue is not whether the report was published in full, but whether its trenchant recommendations have been implemented in full? May I refer him to the particular replies given by his right hon. Friend the Prime Minister a few moments ago? He said that the recommendations were drawn to the attention of all those who had an "operational need" to be aware of them. He then went on to say that they were drawn to the attention of all those who "needed to take action".

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Why, in those circumstances, did Professor Pennington tell us this morning in terms that he was not aware of the report or its recommendations, and that he had no knowledge that there were any recommendations at all which were relevant to his inquiry into the E. coli outbreak?
Mr. Hogg: Professor Pennington has indeed said that he himself did not see the final report. It is, however, clear from our inquiries that the group was aware of the exercise being undertaken by the Meat Hygiene Service.
With regard to the implementation of the recommendations, a number of activities have gone on in parallel. Perhaps the most important is that, when the meat hygiene advice teams visited each plant, they prepared a plant report which was additional to and different from the other documentation that we have been discussing. Each plant report was discussed, where discussion was necessary, with the plant operators, so it formed the basis of an operation plan within that particular plant. A copy was also sent to the regional managers of the Meat Hygiene Service. Therefore, specific plants were dealt with on a plant-by-plant basis as a result of the assessment.
More general lessons were also learned, and discussed with the industry through the forum, which had the final report in front of it and discussed it on many occasions. Hon. Members have been asking for a national policy to ensure that clean livestock enters abattoirs. That is why we set up the Meat Hygiene Service. It has insisted on that policy through its in-plant controls. This general document, which will be attached to the operators' manual, will be published shortly, and will add to the documentation available.
Mrs. Teresa Gorman: Has my right hon. and learned Friend thought about the policy of transporting animals substantial distances to the larger abattoirs, which means that they often arrive much dirtier than when they went to the little local abattoir, when the farmer had already hosed them down? Will he consider the policy of closing all our small abattoirs, because at least outbreaks there do not travel over such a wide geographical area?
Mr. Hogg: I am afraid that I cannot entirely agree with my hon. Friend, because part of the policy of driving up standards in this area has been to ensure that abattoirs and slaughterhouses comply with the rules, and a number of those to which my hon. Friend refers did not comply with the rules, and that is why they were closed down. They did not provide the kind of standards that the Meat Hygiene Service wished to see in our abattoirs and slaughterhouses.
Dr. Jeremy Bray: Does the Minister understand that there is a difference between Professor Pennington's team knowing that the work was going on—
Hon. Members: Sit down.
Madam Speaker: Order. The Minister has my permission to stand at the Dispatch Box. I hope that he
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will not be kept there too long, and that questions will be short and to the point. I know that he will give short answers.
Dr. Bray: Is the Minister aware that there is a difference between Professor Pennington's team knowing that the work was going on, and his being sent a copy of the final report and recommendations? Is he further aware that Dr. Ahmed, the consultant in public health medicine in charge of the outbreak control team dealing with the E. coli outbreak in my constituency, has widely been giving the advice that it must be assumed that 20 per cent. of the fresh beef sold in Scotland today is contaminated with E. coli? What action has been taken on the report?
Mr. Hogg: It is for the chairman of any inquiry or review team to determine the evidence that the team wants to receive. It is for him to determine the lines of inquiry that he wishes to pursue. The Ministry of Agriculture, Fisheries and Food has always been ready to provide any information, evidence or material to the group. Indeed, I think that a specific offer was made by the veterinary service. Moreover, a member of the ownership group of the Meat Hygiene Service is on the Pennington group, so it is clear that the group was perfectly well aware of what was going on—the report and the fact of the review. It is for Professor Pennington to call for material that he deems relevant to his inquiry, and we would be happy to respond.
Mr. John Greenway: Is not the issue at stake the following: it is extremely unlikely that, had we not created the Meat Hygiene Service, a report of that nature could ever have been prepared, because there was no mechanism at a national level for local authority-supervised abattoirs to be required to carry out such hygiene checks? As for independence, can the Minister assure me that all meat hygiene inspectors are qualified veterinary surgeons, and are being properly briefed on what needs to be done to ensure that there is no outbreak of E. coli in any of our local abattoirs, where none has taken place thus far?
Mr. Hogg: My hon. Friend has made a serious point. When the controls were administered by 300 local authorities, before the creation of the Meat Hygiene Service, it was not possible to have an overview of what was happening in slaughterhouses—and, a fortiori, it was not possible to have a national policy to improve them. The setting up of the Meat Hygiene Service has enabled us to know precisely what is going on throughout the country, and through that knowledge, and through the existence of the agency, which was opposed by the Opposition, to drive up standards. That is a very serious improvement, attributable to the Meat Hygiene Service and to Government policy.
Mr. John Garrett: Given the increase in E. coli infection foreshadowed by the report, why did the Minister subsequently cut by £2 million the funding for food safety research being carried out by the food research institute in Norwich, which specialised in examining the causes and effects of E. coli poisoning?
Mr. Hogg: We always have to judge at any one time what are the chief priorities for scientific research. As a matter of policy, we have substantially increased

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the spending on research into BSE, in accordance with the wishes expressed in the House and with the peer assessment by those who know. I think that that was widely welcomed in this country.
Mr. Nicholas Winterton: Is my right hon. and learned Friend aware that I took part in a Wednesday morning Adjournment debate on the Meat Hygiene Service initiated by an Opposition Member? The hon. Gentleman and I reflected the concern and unhappiness felt by many within the meat industry about the cost and the bureaucracy of the Meat Hygiene Service. Is it not odd, therefore, that the Opposition now seek to take what I regard as irresponsible advantage of the situation, in a manner that does no good to the consumer or to the industry?
In fact, perhaps even against my wishes, the Meat Hygiene Service, which has been responsible for revealing the problem, was set up against the wishes of the Opposition. Should we not make that obvious to the people of this country?
Madam Speaker: Order. I hope that, after that, questions will be short and to the point. They are much too long; they are comments and speeches, not questions. We must move on. We have another statement after this.
Mr. Hogg: Few hon. Members are more powerful than my hon. Friend the Member for Macclesfield (Mr. Winterton). He is right to say that the Labour party opposed the instrument by which the facts are being known and the improvements carried out. That is an absurd position for the Labour party.
Mr. Alex Salmond: Does the Minister accept that Professor Hugh Pennington is not just an eminent scientist, but a truthful and mild-mannered man? He told me this morning that he had no knowledge of the report, had not seen it and was extremely angry about it. Does the Minister not think that the House should believe him? Does he not find it incredible, against the background of 20 fatalities in Scotland, that no civil servant from MAFF or the Scottish Office thought to provide the report to Hugh Pennington? Is that not a comment on the atmosphere of secrecy over which the Government and all ministerial teams preside?
Mr. Hogg: That is nonsense. Of course Professor Pennington is a man of the utmost distinction. If he says that he has not seen the report, I am not saying he has. However, people in his group knew of the existence of the review. It would have been passing strange if they did not, because it is referred to in the annual report. [HON. MEMBERS: "Where?"] Page 18. I am glad that hon. Members have got it. They will find an explicit reference to the review on page 18, paragraph 4.
Mr. Tony Banks: It does not say what it said.
Mr. Hogg: It was open to the hon. Gentleman to ask for a copy of the review. He did not read it at the time, and he is now kicking himself.
Mr. Quentin Davies: Does my right hon. and learned Friend agree that it is fatuous
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to suggest that any Minister can read every report produced by his Ministry, let alone every report produced by every agency under the aegis of his Ministry? It may be that some of his officials should have drawn his attention to the report or to passages in it, but if he was left in ignorance, it was hardly his fault, was it?
Mr. Hogg: Reference has been made to a report prepared by Mr. Swann. No report was prepared by Mr. Swann. He prepared a first draft, which his professional peers—and nobody else—found unsatisfactory. They wanted him to change it because it did not reflect their views, although they had helped to carry out the assessment. He decided not to do that. Consequently, another report was prepared—shorter and simpler to read—which was widely circulated in the industry. It is referred to explicitly as "the review" on page 18, paragraph 4.
Mr. Alan Williams: I accept that the Minister may not have seen the report, but is he seriously suggesting to the House that, when he and his fellow Ministers came to the House to answer questions and make statements about E. coli, there was nothing in their background briefing on the contents of the report? If there was nothing, should not his civil servants be sacked? If there was, and he failed to tell the House, should not he be sacked?
Mr. Hogg: There is a serious misunderstanding here. The Government have known for a long time about the problem of, for example, faecal contamination of carcases in abattoirs. That was expressly referred to in the other place by my right hon. and noble Friend Lord Howe, when talking about poultrymeat and other regulations. The problem has existed for some time. It is one reason why the Meat Hygiene Service was set up.
We have discussed the recommendations to carry on the various works. I have had discussions with the Meat Hygiene Service, and my hon. Friend the Parliamentary Secretary has had discussions with the industry on many occasions.
Mr. David Nicholson: Does my right hon. and learned Friend have a view about why the earlier, and it seems unsatisfactory, draft of the report, which appears to have been lurking around since the end of 1995, should have been given to the press in March 1997? Does he agree that people involved in farming and the meat industry will not easily forgive those who, for purely political reasons, seek to generate a fraudulent panic about the safety of British meat?
Mr. Hogg: I suspect that many farmers and others will agree with my hon. Friend. What is absolutely certain—this is the crucial point—is that there was full discussion of the report, which was the majority view of the professionals who carried out the assessment.
That full report—28 pages of it—was put before the industry forum, which includes the National Farmers Union and others and all those in the meat industry. They had copies of it, and it was discussed. The carrying out of the review is referred to in the annual report, which was laid before the House and which has been placed in the Library of the House. Any hon. Member who wanted a copy of the document had only to ask, and we would have been pleased to send one to them.
Mr. Tony Banks: On the radio this morning, the Parliamentary Secretary said that she had not seen a copy of the report, and that it had not been drawn to her attention. With the benefit of hindsight, to which the Minister referred earlier, does he accept that it would have been better if the report had been drawn to the attention of Ministers?
Mr. Hogg: It is for Ministers to lay down policy. The implementation of the policy is the responsibility of the agency. In this case, the agency was doing three things: first, it established the benchmarks by which one can identify progress in the future; secondly, because it was taking over responsibility for functions previously held by local authorities, it determined the allocation of staff, both regionally and plant by plant; and thirdly, it wanted to use the process as the mechanism for driving up standards. All those things come into the category of implementing policy.
I have the highest confidence in the chief executive of the Meat Hygiene Service. He knows his function, which is to tackle this sort of problem. He will keep Ministers informed about the detailed implementation to the extent that he deems necessary, but he is primarily responsible for the implementation of the policy, and I have every confidence in him.
Mr. Mark Robinson: Does my right hon. and learned Friend share my disappointment at the way in which the matter has been reported, particularly on television programmes today? The sight of filthy animals going into abattoirs caused me to telephone Southern Counties and Romford Meats to ask what it would do if it was presented with animals in that condition. I was told, unequivocally, that any such animals would be sent straight back to where they came from.
Mr. Hogg: That is absolutely right. If one looks at the report, which was circulated among the industry and was the subject of discussion within the industry, one can see that great weight is placed upon the ante-mortem inspections. It is made plain in that document that, if cattle are presented in a filthy state, they will be rejected. It is important for everybody in the industry to understand that, if cattle turn up at an abattoir in the state to which some people have referred, they will be sent straight back to where they came from.
Mr. Harry Barnes: On several occasions, the Minister has mentioned page 18, paragraph 4 of the Meat Hygiene Service report. Will he confirm that that survey makes no reference to the report under discussion—either the draft report or the subsequent report—and talks merely about a "national review" taking place? That review could presumably have led to a report later. If that is to be interpreted as a report, why are Opposition Members guilty of not having read the report, when Ministers are held to be innocent for not having seen it or had it presented to them?
Mr. Hogg: The hon. Gentleman has not done me justice. I said in the statement that the fact—only the fact—of the review was explicitly referred to on page 18 of the annual report.
Mr. Tony Banks: We have all got it.
Mr. Hogg: I am glad that everyone has it. The hon. Gentleman should read it. In case he cannot understand it, I shall read some of it for him. Paragraph 4 on page 18 says:
"MHS Hygiene Advice Teams (HATs) involved two-person teams of experienced OVSs and MHIs who, during 1995/96, assessed, through individual plant audits—"
the point that I made to the hon. Member for North Cornwall (Mr. Tyler)—
"standards and inspection processes at all licensed premises throughout Great Britain. This national review provided the first comprehensive benchmarking of standards and practices within the fresh meat industry"—
and it goes on. I have never heard of a review that does not generate a document.
Mr. Harry Greenway: Have there been any prosecutions as a result of the report? I believe that there have. If so, is that not evidence of its great value in driving up standards as my right hon. and learned Friend said, and would not reports of such prosecutions have provided an opportunity for the Opposition and anyone else to pick up information about the report? Should not Professor Pennington have done that also?
Mr. Hogg: The report and the process have indeed driven up standards; that is plain from the report that was discussed by the industry forum. I do not know the number of prosecutions offhand, so I shall write to my hon. Friend. I can tell him, however, that I have told the chief executive of the Meat Hygiene Service that, if the facts justify it, he must not hesitate to prosecute.
Mr. Paddy Tipping: Will the Minister tell us clearly when he read the annual report of the Meat Hygiene Service, a copy of which was placed in the Library before the last summer vacation? Why, when he read it, did he not call for a copy of that damning report? He cannot have it both ways: he cannot argue that Opposition Members should have asked for the report when he himself never asked for it.
Mr. Hogg: I have already made the position plain. Ministers are responsible for policy. In this class of case, the implementation of policy is the responsibility of the Meat Hygiene Service. I am absolutely confident in the quality of that service and in the competence of its chief executive. I am happy to leave to him the responsibility for implementation, which is a role imposed on him by Parliament.
Mr. Michael Fabricant: Does my right hon. and learned Friend agree that some people in the west midlands and Staffordshire—the owners of abattoirs that have had to close or have had to have a great deal of money spent on them to bring them up to the standards required by the Meat Hygiene Service—will be pretty sick of this debate? They will know that Her Majesty's inspectors went in and made such closures as

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a result of that review. Is it not further the case that, if it had been left to the Labour party, there would have been no Meat Hygiene Service and no review?
Mr. Hogg: My hon. Friend is entirely right. It is true that, if it had been left to the Labour party, we would have had no Meat Hygiene Service, no report, no review, no discussion, and standards would not have been driven up. It is also true—there is a certain irony here—that most of the complaints that I have received are not about low standards and so forth, but about closing small abattoirs because of the higher standards. The plain truth is that we are driving standards up, and, as a consequence, some small abattoirs have been closed.
Mr. Gordon Prentice: The charge, surely, is that the annual report of the Meat Hygiene Service, which was published in June last year, gave no warning—least of all to people who, like me, are interested in the matter—that there was anything so bad in our slaughterhouses. I have read the Swann report, and it makes chilling reading. The Minister said that the purpose of the report was to establish benchmarks in the slaughterhouse industry. How many slaughterhouses were not up to standard in December 1995, and how many in March 1996, when the BSE crisis broke? He should have the figures at his fingertips.
Mr. Hogg: The review process had three purposes: first, to establish benchmarking and to take an overview of the state of the industry, which had previously been in the hands of the local authorities; secondly, to determine the allocation of resources; and thirdly, to drive up standards, both nationally through national practices, and on a plant basis, by on-plant discussion with the plant operator, based on the plant report. There is no doubt that the effect of that process has been greatly to improve standards.
If the Labour party had had its way, this business would still be in the hands of the local authorities; we would not be having this discussion; standards would be as they were when they were in the control of local authorities; and we would all be much worse off.
Mr. Richard Alexander: Is it not regrettable that some people are willing to use food scares to embarrass the Government, and, in doing so, unnecessarily alarm members of the public? Was there not a typical example of that this afternoon, when the Leader of the Opposition stirred it for all he was worth but did not even stay to hear the facts from my right hon. and learned Friend?
Mr. Hogg: My hon. Friend is right to draw attention to that. The Leader of the Opposition asked my right hon. Friend the Prime Minister three questions on the report and then walked out, even though he knew that a statement was coming. If he was seriously interested in the matter, and not merely trying to make cheap political capital, he would have listened to the facts. He did not, and the country will judge him accordingly.
Mr. D. N. Campbell-Savours: Can I tell the Minister that the Leader of the Opposition is one of the few Members who has read the whole report? The Minister has all his Ministers with him. Did any Minister
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or civil servant issue an instruction. write a letter or send a memo to anyone suggesting that this report be given only limited circulation because of the danger of it generating concern among the British public?
Mr. Hogg: I had hoped that, by explaining the process, I would have answered questions such as this. [HoN. MEMBERS: "Answer."] Mr. Swann carried out, along with others, assessments of abattoirs. He was asked by the editorial board, which comprised his peers, to produce a first report. That editorial board found, in its professional judgment, that the draft report was unsatisfactory. It asked him to make changes; he declined. At that point, it commissioned another expert, who was also involved in the assessment—he had done the poultry section—to do the red meat section, and that he did. The report that emerged and that was subsequently circulated to the industry represents the majority view of the veterinary experts who carried out the review, and no other.
Mr. Tam Dalyell: May I ask a troubling constituency question? West Lothian council and I endlessly, over three years, wrote to and met Scottish Office officials about the outbreak at Redhouse dairy in Blackburn in my constituency, which was the first E. coli 0157 outbreak in recent times. Are we to understand that neither the hon. Member for Aberdeen, South (Mr. Robertson), nor the Earl of Lindsay, the Minister responsible for agriculture, nor the Secretary of State for Scotland was alerted to the report?
When my hon. Friend the Member for Edinburgh, East (Dr. Strang) asked, very properly, about the figure of £1 million, the Parliamentary Secretary shook her head. What were the costs of the report, and why was it not brought to the attention of Scottish Office Ministers, who were faced on a day-to-day basis with the entreaties of West Lothian council and others who were affected?
Mr. Hogg: The cost, speaking off the cuff, was not £1 million. I think that it was £454,000, but if I am wrong, I apologise, and I will write to the hon. Gentleman. On the report's availability, the final report—the one that was circulated to the industry—was made available to all concerned, including the Scottish Office.
Mr. Andrew Miller: Am I right in saying that, when the Minister placed the document to which he referred in the House of Commons Library, he assumed that there was another document associated with it? Is he telling the House that that is what the paragraph to which he referred means? Does he ever ask for such documents to be brought to his attention, or has he published a paragraph in that report which he did not understand? Is that not an indictment of him?
Mr. Hogg: I have never said that a copy of the final report was laid in the Library. What was laid in the Library was the annual report, which states in terms in paragraph 4 on page 18 that a review was carried out. As anyone who knows anything about government knows full well, a review generates a report. If anyone wanted the report, he had only to get on the telephone and ask for it. I would have sent him a lordly number.
Mr. Paul Flynn: Have we not seen today a deplorable exhibition of casuistry by the Minister,

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who admits that he has received a report in his Department which cost half a million pounds and made the most serious complaints about the state of the meat hygiene industry? He was unaware of the seriousness of the report, and neither he nor his Ministers asked to see the report. Is that not a confession of incompetence?
Does the Minister not think that the country is getting fed up with the weekly promulgation by members of the Government of their doctrine of ministerial infallibility? Why is it that everything that goes wrong is the result of the work of officials, and everything that goes right is the result of the work of Ministers?
Mr. Hogg: Just occasionally, Opposition Members should try to get their minds around the simplest of propositions. Just to encourage them, I will repeat it. Policy is a matter for Ministers. As this is a particular case, the implementation of policy is a matter for the agency. I have total confidence in the chief executive. He has put in hand a process which has informed the industry what needs to happen and is driving up standards. Had the matter been left as the Labour party wanted it, there would have been no improvement of any kind.
Mrs. Ann Winterton: Most consumers will have welcomed the establishment of the Meat Hygiene Service and its drive for higher standards, and will have noted that its inception was opposed by the main Opposition party. Can my right hon. and learned Friend assure me and all other United Kingdom consumers that meat and meat products that are imported into Britain are slaughtered and transported to the same high standards that apply in this country?
Mr. Hogg: I have always said, because I believed it, that British beef, as now is, is the best and safest in Europe. The reason for that is the rules we put into place, such as the 30-month rule, controls on cattle rations and controls in abattoirs. I want to see, and I am pressing for, similar regimes in Europe. Until the Europeans have put those things in place, I shall continue saying and believing that British beef is the best and safest in the Community.

Business of the House
4.23 pm
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): With permission, I should like to make a statement about the business for next week.
MONDAY 10 MARCH—Opposition Day [7th allotted day] (first part). Until 7 pm, there will be a debate entitled "Public Responsibility for Social and Economic Justice" on a motion in the names of the Scottish National party and Plaid Cymru.
Second Reading of the Building Societies Bill.
TUESDAY 11 MARcH—Remaining stages of the Finance Bill.
WEDNESDAY 12 MARcH—Until 12.30 pm, debate on the first report from the Scottish Affairs Committee on the removal of tariff rebate subsidy on Northern Isles Freight, followed by a debate on the first report from the Select Committee on Agriculture on the United Kingdom dairy industry and the common agricultural policy dairy regime. That will be followed by debates on the motion for the Adjournment of the House.
In the afternoon, there will debates on motions on the Representation of the People (Amendment) Regulations, the Representation of the People (Scotland) (Amendment) Regulations, the Representation of the People (Northern Ireland) (Amendment) Regulations, the Local Elections (Northern Ireland) (Amendment) Order, the European Parliamentary Elections (Amendment) Regulations and the European Parliamentary Elections (Northern Ireland) (Amendment) Regulations. Those are the regulations about which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked me last week.
Remaining stages of the National Health Service (Primary Care) Bill [Lords].
At 10 pm, the House will be asked to agree all outstanding excess votes, the spring supplementary estimates, and the defence votes A.
Proceedings on the Consolidated Fund (No. 2) Bill.
THURSDAY 13 MARCH—Debate on future pensions policy on a motion for the Adjournment of the House.
FRIDAY 14 MARCH—The House will not be sitting.
Once again, I am able to give the House only limited information about business for the following week.
MONDAY 17 MARCH—Committee and remaining stages of the Building Societies Bill.
Remaining stages of the Birds (Registration Charges) Bill.
The House will also wish to know that, on Wednesday 19 March, there will be a debate on structural funds and cohesion policy in European Standing Committee B.
Details of the relevant documents will be given in the Official Report.
[Wednesday 19 March:
European Standing Committee B—Relevant European Community documents: 11382/96, Structural Funds; 12614/96, Cohesion Policy. Relevant European Legislation Committee report: HC 36-xi (1996–97).]
Mrs. Ann Taylor: I thank the Leader of the House for the limited information that he has, once again, been able to give us. He will recall that, last week, he told the House that the Easter recess would be
"in the vicinity of Easter."—[Official Report, 27 February 1997; Vol. 291, c. 452.]
Does that mean that there will be an Easter recess? If so, surely the sooner the dates are announced, the better. Will the right hon. Gentleman also confirm that the Select Committee on Standards and Privileges can meet during any recess?
Last week, the Leader of the House promised to draw to the attention of colleagues our request for a debate, before its privatisation, on the future of the Building Research Establishment. In view of the alarming facts that have been unearthed by my hon. Friend the Member for Greenwich (Mr. Raynsford) about that privatisation and the contradictions contained in answers to parliamentary questions on the matter, surely we should have such a debate before the contracts are signed.
The Leader of the House has announced that next week the House will debate amendments to the regulations that govern elections. Have the Government considered improving the arrangements in polling stations, to reduce the number of spoilt ballot papers? Is the right hon. Gentleman aware that the last time the general election was held on the same day as local elections, the number of spoilt papers for general election candidates rose threefold, mainly because electors voted for more than one candidate, as they are sometimes entitled to do in local elections? As we know that local elections will be held on 1 May, including those for the new unitary authorities, what steps are the Government taking to reduce the possibility of an unusually high number of spoilt ballot papers, should the general election fall on the same day?
Finally, may I thank the Leader of the House for arranging the debate on pensions, to be held on Thursday of next week, as I had intended to ask him once again whether we could have such a debate? May we hope that the Secretary of State for Social Security will confirm during that debate that the Government's proposals on pensions will mean the abolition of the basic state pension and the abolition of the state earnings-related pension scheme—SERPS—and that the Government intend to spend billions of pounds of taxpayers' money on privatising the pensions of millions of people? We welcome the debate, because it will be an opportunity to warn the young and the old alike that one cannot trust the Tories on pensions.
Mr. Newton: On the Easter recess, I thought that my statement last week was admirably clear, and I am certainly not in a position further to clarify it this afternoon. On the Standards and Privileges Committee, the hon. Lady knows the answer to her question, as we were together responsible for the regime under which it operates: it can, of course, meet during a recess.
On the question of the future of the Building Research Establishment and the associated points that the hon. Lady made, she will not be surprised to learn that I am not in a position to promise a debate, but I shall ensure that her comments are examined by my right hon. Friends in the relevant field. On the matter of spoilt ballot papers, I am not in a position to confirm whether the general election
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and the local elections will coincide, but I am sure that, were they to do so, my right hon. and hon. Friends in the Home Office who are responsible for electoral matters would consider her remarks with care.
Lastly, on pensions, to be perfectly honest I am slightly surprised that the Opposition were thinking of asking for a debate on pensions, because it is increasingly clear that they have no policy of their own on pensions. It is also clear that they do not understand our policy and therefore mis-state what that policy is.
Sir Roger Sims: May I remind my right hon. Friend of the correspondence between us on the topic of the report of the national commission of inquiry into the prevention of child abuse, of which I was a member? Given the importance of that issue and current public interest in it, may I ask my right hon. Friend to find a slot between now and the end of this Parliament, to give the House an opportunity to debate the report and its recommendations?
Mr. Newton: I greatly respect the interest that my hon. Friend has taken in those matters over many years. As he has referred to the letter that he wrote to me, he will recall that I have indicated to him informally that I thought that a Wednesday morning application might be the best way. I ought to admit that I have some slight reservations about whether this is an appropriate time for such a debate, while there is such a large and important inquiry into such matters going on in Wales. It may be that when that report appears—it certainly will not be in this Parliament—would be a more appropriate time for a debate.
Mr. Simon Hughes: If I was right to think that the House might sit until Maundy Thursday and that we might come back for two days on 7 and 8 April to fit in for a 1 May election, would the Leader of the House consider whether we might use that time to the full and pick up the debates that we normally have before the end of the Session, but which we have not yet had? Those debates are: foreign affairs, especially with Hong Kong issues on people's minds; Northern Ireland, in the light of the ending of the talks yesterday; women's issues, which we had last year; and London, which we are promised every year.
Mr. Newton: All I can say is that, were the hon. Gentleman's speculation to become reality, I would consider his and other suggestions.
Sir Ivan Lawrence: My right hon. Friend will be aware of the disgraceful way in which two members of the Labour party tried to destroy the Jurisdiction (Conspiracy and Incitement) Bill, which was promoted by my hon. Friend the Member for Eastbourne (Mr. Waterson). In view of the fact that the House has been rising early recently and given that it will doubtless continue to do so on some evenings in the future, will he consider the possibility of the Government taking over the Bill, which the Government have backed and which would have the overwhelming support of anybody in this country who wants to stop Britain becoming a haven for the most serious international criminals?
Mr. Newton: Of course, I understand my hon. and learned Friend's point and I note his suggestion; but he

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will be aware that it has been settled policy, not only in my time, but over the past nearly 18 years, that the Government—however strongly they approve of proposals in private Members' Bills—have hesitated, to put it mildly, before picking and choosing about providing Government time for one Bill rather than another.
Mr. Dennis Skinner: Does the Leader of the House accept that, if the Government did change their mind and bring forward that Bill and give it time, they would be giving time to the Government's own Bill, which they handed to a Back Bencher to promote on a Friday? Will he bear it in mind that, if they did that, it would give some of us a chance to explain that we were not against the provisions on drugs or certain other aspects of the Bill, but against the part of the Bill that deals with freedom fighters and that would land them in gaol at the whim of the Attorney-General? If that part of the Bill were taken out, he could have a guarantee from me and other Labour Members that we would give the Bill a clear run.
The Government could not find more than 20 Members last Friday. Within hours of that wonderful Wirral by-election success for Labour, the dispirited forces on the Conservative Benches were apparent to all and, at twenty minutes to 10, this lousy, rotten Government did not even have more than 20 people to carry their legislation through.
Why do not the Government resign?
Mr. Newton: I take it that the hon. Gentleman has just delivered the speech that he would have delivered last Friday, had he not deprived himself of the opportunity to make a speech by the procedural device that was employed. I cannot say that I am happy to have done so, but I have listened—enthralled, as always—to what the hon. Gentleman has said.
Mr. Nicholas Budgen: Has my right hon. Friend seen the results of a recent MORI poll, commissioned by Zee television, an Asian network, which show that 62 per cent. of the Asian residents of this country who were polled by MORI held the view that the current immigration and asylum regulations were too lenient?
Does not my right hon. Friend agree that we owe it to the whole nation—including the Asian community, which has been so successful here—to have a proper debate and discussion about the Opposition's proposals fundamentally to relax the immigration rules, and especially the primary purpose rule? Do we not owe it to everyone to use the House to discuss something that is of real importance and concern?
Mr. Newton: It is certainly the case that we regard the primary purpose rule as an essential safeguard to prevent abuse by people using marriage as a means of obtaining settlement in this country but, beyond that, I would want to emphasise, as my right hon. Friend the Prime Minister did in responding to my hon. Friend on Tuesday, that our approach rests very much on pursuing calmly and
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dispassionately, in as non-partisan a way as possible, the firm but fair immigration policies that underpin the improvement in race relations in this country.
Mrs. Gwyneth Dunwoody: Would the Leader of the House like to come to the House next week with his colleagues from the Department of Transport to make a statement about the reasons for the marked lack of urgency in their approach to ferry safety? It will soon be Easter, which is usually regarded as the beginning of the holiday season, when many people will travel on ferries without being certain that safety standards are being maintained that would prevent a repetition of the appalling Zeebrugge accident. May we have some urgent action on that matter?
Mr. Newton: The hon. Lady, who is expert in those matters, knows that a great deal of action has taken place; as it happens, regulations to introduce a higher survivability standard for roll on/roll off passenger ferries will come into force next month.
Mr. Julian Brazier: Following the earlier question by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), may I urge my right hon. Friend to hold a debate on the workings of the new law that we sensibly introduced, to require employers to check that their employees have valid work permits or some other legal reason for working if they are not British citizens? I further urge on him that there is a very grave danger that, were that law to be repealed at the moment when the minimum wage was introduced, we could have what several of our continental partners have experienced—spiralling domestic unemployment on one hand and, on the other, an ugly growth of illegal and dangerous sweatshops, where illegal immigrants were exploited by unscrupulous employers wanting to undercut that wage rate.
Mr. Newton: My hon. Friend makes several additional points and comparisons with what is happening elsewhere, but I cannot sensibly seek to add to what I said to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) a few moments ago.
Mr. Tam Dalyell: Forgive me for intruding into a Front Benches' china shop and, I suspect, a legal mire, but I raised with the Leader of the House a month ago the statements on television, so far unchallenged, of Mr. Mohammed Al-Fayed who said, parading banknotes, that Members of Parliament could be hired like London taxis. Although I do not doubt the good faith of the Front-Bench negotiations and the legal difficulties, the House of Commons is in some difficulty. As we go into an election, people see that the statements from Mohammed Al-Fayed, which are deeply damaging to Parliament, are unchallenged. May we have an assurance that an attempt will be made to resolve the matter? The Standards and Privileges Committee can meet during the recess, but is unlikely to do so, for understandable reasons.
Mr. Newton: The hon. Gentleman referred to negotiations as if that was a usual channels matter between the two principal parties in the House, but it has nothing to do with that. The hon. Member for Dewsbury

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(Mrs. Taylor) and I speak to each other, as we are both members of the Standards and Privileges Committee, but much of the material relevant to the hon. Gentleman's comments is currently under examination by the Parliamentary Commissioner for Standards, who will produce a report. I have no doubt that he is working as hard as he can.
On a related matter, the hon. Gentleman may not yet be aware of the fact that a substantial report by the Parliamentary Commissioner, also connected with suggestions made by Mr. Al-Fayed, in this case relating to the Home Secretary, was published one hour and 10 minutes ago. The hon. Gentleman might wish to look at it.
Mr. John Wilkinson: Will my right hon. Friend initiate an early debate on the terms of reference and competencies of the local government ombudsman? That would enable the Secretary of State for the Environment to judge the strong arguments in favour of strengthening the power of redress of the ombudsman against such malpractices as the advertisement—three months in advance of the public inquiry, let alone the granting of planning permission—of a tender worth £3 million for the construction of social housing on a recreation ground on green chain land in my constituency.
Mr. Newton: My hon. Friend will understand that all I can say is that I shall ensure that the attention of my right hon. Friend the Secretary of State for the Environment is drawn to what he said.
Ms Janet Anderson: Is the Leader of the House aware that this Saturday, 8 March, is International Women's Day? May I remind him that it has become customary to have a debate in the House at this time of the year about matters of concern to women, and that last year that debate was held in Government time? Can the Leader of the House explain why the Government have not been willing to allocate time this year, and will he reconsider, in view of the insulting remarks of the hon. Member for Welwyn Hatfield (Mr. Evans) about women?
Mr. Newton: The hon. Lady has added to the rather long list given to me earlier by the hon. Member for Southwark and Bermondsey (Mr. Hughes), of subjects that we seek to debate at more or less annual intervals. I shall bear in mind the subject that the hon. Lady wants us to debate in the near future, but she will understand that there are a number of other uncertainties.
Mr. Graham Riddick: May I back up the calls of my hon. Friends the Members for Wolverhampton, South-West (Mr. Budgen) and for Canterbury (Mr. Brazier) for a debate on race relations in Britain, so that I can point out that the firm control of immigration over the past 18 years has contributed significantly to the vast improvement in race relations? For example, an Asian constituent of mine said to me only last week that his community has not had to put up with
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the violence and intimidation from skinheads over the past 18 years that was so prevalent in the 1970s, particularly when the previous Labour Government were in office.
Mr. Newton: I shall take note of my hon. Friend's suggestion, along with the similar suggestions made earlier by my two other hon. Friends.
Mr. Paul Flynn: As today is the 10th anniversary of the entirely predictable and avoidable deaths of 194 people on the Herald of Free Enterprise, how can the Leader of the House be happy that pretty basic new safety regulations will come into force in a month, 10 years and one month after that disaster?
Is it not horrific that the ferry industry is already trying to circumvent those regulations? Four ferries should have been subject to the new safety regulations this year, but two are to be sent down to the Mediterranean, where they will not be subject to the regulations, and the regulations will not apply to the other two ferries. Is it not a disgrace that the new safety regulations are being avoided? Sixty ferries—which is 60 per cent. of the ferries using British ports—will not have new safety features installed in them for five years, until October 2002. We urgently need a debate on those matters, as ferry transport is the only form of passenger transport in which, when a disaster occurs, the systems are not changed to failsafe, but are allowed to fail in the future as they have in the past, dangerously and lethally.
Mr. Newton: Although I cannot promise a debate, I can point to the fact that my right hon. Friend the Secretary of State for Transport is due to answer questions on Monday. The hon. Gentleman should, perhaps, have acknowledged that a wide range of measures has been introduced over the past 10 years to contribute to the improved safety of ferries. In his question he provided part of the answer: clearly, this is a matter in which, if possible, it is best to proceed internationally, which takes a good deal of time. The UK has been at the forefront of negotiations for improved standards. The Stockholm agreement on ferry safety is a major achievement, whose requirements go significantly beyond those applicable in the rest of the world.
Mr. Hartley Booth: Having heard the question of my hon. Friend the Member for Chislehurst (Sir R. Sims), and that of the hon. Member for Rossendale and Darwen (Ms Anderson) concerning a possible debate on women, will my right hon. Friend consider, as an alternative, a debate on children? Children are of enormous importance to everyone and the responsibility of virtually every Department. We frequently receive in our postbags complaints about the Government arising from lack of co-ordination in other areas, but the Government have a fine record on their policy on children. As an alternative to last year's debate on women, would it not be appropriate to have a full-scale Government debate on children?
Mr. Newton: I acknowledge, not least as a former Minister in that area, the importance of the subject that my hon. Friend has raised, but I am bound to say that with the list of requests for debate that I have received in

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the past 20 minutes, it is not just the Standards and Privileges Committee that would be sitting during any recess.
Mr. Harry Barnes: On Wednesday, we are to debate regulations on the representation of the people. Would not that be a good opportunity to discuss the state of the electoral register in the run-up to the general election, and to see whether it is in as bad a state as it was last year and whether there are millions missing from the register? In preparation for the debate, will the Government publish the number of people who are on the electoral register?
Answers are being given in connection with Northern Ireland. In reply to a question on Scotland, I was given the wrong figures—last year's. I cannot get the figures for England and Wales until the end of March. I understand that there are five returning officers who have not yet submitted their figures. May we have provisional lists, and could those areas be contacted to find out the details?
Mr. Newton: I cannot add to what I told the hon. Gentleman last week, to which he referred. I am sure that his remarks about the five returning officers will be examined by those responsible for producing the figures as soon as possible.
Mr. Geoffrey Clifton-Brown: May I ask my right hon. Friend for a debate on the training of our national firefighters, so that I could draw the attention of the House to early-day motion 608, tabled by the hon. and learned Member for Montgomery (Mr. Carlile)?
[That this House notes the internal publication of a report on Health and Safety at the Fire Service College, Moreton in Marsh, Gloucestershire; further notes that the report was in response to recent accidents at the college; is concerned that the report made observations concerning risk to those at the college; agrees with the report that 'burning people, exhausting them or otherwise putting them at risk is not high on the objectives of the training programme' at the college; is surprised that in his Answer of 20th January to the honourable Member for Montgomery, Official Report, column 430, concerning health and safety at the college, the Parliamentary Under Secretary of State at the Home Office, the honourable Member for Bolton West, made no reference to the report or the problems the report identifies and expressed himself satisfied with the health and safety situation at the college; and calls on the Government immediately to assess the needs of the Fire Service College so that full health and safety measures are implemented.]
The hon. and learned Gentleman scurrilously put on the record and quoted from an internal report that was produced for the Fire Service College in my constituency, without giving any warning to the college or to me as the constituency Member. Does my right hon. Friend agree that such a debate would allow me to bring to the attention of the House the outstanding qualities of the Fire Service College, which were recognised in an answer given to me today by the Home Secretary? The finances of the college have been radically overhauled, so it now faces a certain
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future and can go out into the national and international market and sell itself on the excellence of the training that it provides.
Mr. Newton: My hon. Friend's question gives him an opportunity to make those points about the college. I share his surprise—I think that that is the appropriate word—that the hon. and learned Member for Montgomery (Mr. Carlile) should have tabled such a motion without consulting the constituency Member or checking the facts with my right hon. and learned Friend the Home Secretary or the college.
Mr. Tony Banks: May we have a debate on the export of live animals for slaughter? In that respect, I draw the right hon. Gentleman's attention to early-day motion 615.
[That this House calls attention to the transportation of sheep from Dover on the MV 'Caroline' on, or about, Friday 7th March; notes that the vessel is chartered by Live Sheep Traders of Dublin and operated by Mr. Roger Mills of Framlingham, Suffolk, who himself has a conviction for keeping animals in an unfit condition; further notes that the old cull ewes will be making a sea crossing of between 9 and 12 hours, subsequently to be moved via Holland or Belgium to the killing fields of Paris where they will be ritually slaughtered for the festival of Eid; believes the journey times, conditions of transportation and method of killing to be unacceptable to public opinion and contrary to EU law; and calls upon Her Majesty's Government to take immediate steps to prevent this barbarous trade from taking place.]
Is the right hon. Gentleman aware that old cull ewes will be crammed on to MV Caroline and exported from Dover to France, where they will be taken to fields outside Paris and ritually slaughtered? Would he be interested in seeing the photographic evidence that I have of ewes giving birth while their throats are cut and they are bled over ditches? Is not that an obscene and disgusting trade? If we cannot debate the issue, will the right hon. Gentleman draw it to the attention of Ministers, to ensure that the trade does not continue?
Mr. Newton: I think the hon. Gentleman knows that I share his general view about the importance of animal welfare matters. Enforcement of the slaughter rules in Paris is clearly a matter for the French authorities, but I assure him that we are in touch with them about it.
Mr. Jacques Arnold: My right hon. Friend will be aware that parents at eight out of nine secondary schools in Gravesham and at a further three schools in the borough have voted for those schools to become grant-maintained. May we have a debate next week on grant-maintained schools? I wish to express the growing concern of those parents that Labour would overrule their decision and claw back 15 per cent. of education funds from the schools, to the central bureaucracy of the local education authority.
Mr. Newton: My hon. Friend's best bet is probably the return to this place of the Education Bill from another place.
Mr. John Gunnell: The Leader of the House may be aware that Imperial Metals

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is to close Yorkshire Alloys Ltd., which provides more than 400 jobs in my constituency and more than 200 jobs in Smethwick. Will he note the fact that the company exports to the tune of £25 million a year, which would be a serious loss to the British economy, and is also an important contributor to defence sales in this country? Will the right hon. Gentleman ensure that Ministers are made aware of the situation so that, when I seek an opportunity to raise the matter again in the House, they will be able to provide some answers concerning the reaction of Government Departments—particularly that of the Ministry of Defence and the Department of Trade and Industry—to that important occurrence?
Mr. Newton: I certainly take note of such matters myself. I have hastily scanned the rather large number of ministerial colleagues on the Front Bench, who are clearly fascinated by today's business questions, and I am glad to say that a Department of Trade and Industry Minister is present to take direct delivery of that point.
Mr. John Marshall: When will my right hon. Friend make time for the annual summer economic debate? Could summer come early this year, so that we may reiterate the statement of the noble Lord Barnett that the economy is doing well, and so that I, as the father of two teenagers, might welcome the fact that job opportunities for school leavers in this country are much better than those in Germany, France, Spain and Italy, where they have been decimated by the minimum wage?
Mr. Newton: I am not in a position to pre-empt or predict the speech that my right hon. Friend the Deputy Prime Minister will make in a few moments, but I should be surprised if my hon. Friend did not hear a little reiteration of Lord Barnett's comments.
Mr. Nicholas Wintertonrose—
Madam Speaker: Was the hon. Gentleman in the Chamber when the Leader of the House made his statement?
Mr. Winterton: I was indeed.
Madam Speaker: I am sorry; I did not see the hon. Gentleman. I shall accept his word.
Mr. Winterton: My constituency of Macclesfield has one of lowest levels of unemployment in the country under a prudent Conservative borough council. The United Kingdom has a prudent Conservative Government and what is cited by the Organisation for Economic Co-operation and Development, the International Monetary Fund and the European Commission as the strongest economy in Europe. In support of my hon. Friend the Member for Hendon, South (Mr. Marshall), could we debate the economy and taxation before the Dissolution of Parliament, so that the House can give mature consideration to those issues and compare the Government's record with what is on offer from the Opposition parties?
Mr. Newton: If I may say so, Madam Speaker, I think that such an opportunity will arise as soon as hon. Members stop asking me questions.

Point of Order
4.55 pm
Mr. Max Madden: On a point of order, Madam Speaker. I have notified the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) of my intention to refer to him this afternoon in relation to his allegation against me last night, which appears at column 960 of Hansard, that I had invited the IRA to the House. As you will recall, Madam Speaker, the allegation was made in connection with admissions by the hon. Member for Torbay (Mr. Allason) regarding references to Ms Roisin McAliskey. I regard the allegation as extremely serious and totally unfounded. I have written to you about the matter, Madam Speaker, and I should be grateful to know what action you intend to take, as I regard the withdrawal of the allegation by the hon. Member for Fermanagh and South Tyrone as most important.
Madam Speaker: The hon. Gentleman knows that I was in the Chair for much of the debate last night, when I heard all the exchanges and the points of order that were raised. I thought that he made his position very clear at the time by way of a point of order. I read the debate this morning, and I am still of that opinion.

Public Expenditure
[Relevant document: Minutes of evidence taken before the Treasury Committee on 5 March (HC355).]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brandreth.]
4.56 pm
The Deputy Prime Minister (Mr. Michael Heseltine): No serious commentator can doubt the Government's commitment to containing the levels of public expenditure, while a glance at the Labour Benches shows clearly the total absence of any Opposition interest in the subject. In 1975–76, public expenditure absorbed more than 47 per cent. of our gross domestic product, which included massive subsidies to the nationalised industries. That figure was broadly in line with other European economies, and it went hand in hand with high levels of taxation. We had punitive levels of direct taxation—a basic rate of 34p in the pound, rising to 98p for high earners—and, as one would expect, a level of inflation significantly worse than that of our principal international competitors. The average for the period 1974 to 1979 of 15.5 per cent. sounds like an incredible figure today.
The Government's consistent prime objective has been to lower the level of public expenditure and to provide incentives through the tax system to encourage a faster-growing economy. In the next financial year, we are set to meet our target of reducing public expenditure below 40 per cent. of GDP. On the continent, the figures remain conspicuously higher: 49 per cent. in Germany, 52 per cent. in Italy, and 53 per cent. in France. That contrast has led to a quite different performance in this country from that of earlier decades.
In the 1960s and 1970s, we outpaced only Switzerland and New Zealand of the 25 Organisation for Economic Co-operation and Development countries in the growth of GDP per head. Since 1979, the United Kingdom has grown at a faster rate than Switzerland, France, Canada, the United States and another eight OECD countries. Since 1992, we have enjoyed the longest, strongest and steadiest recovery of any major European economy. Furthermore, according to the OECD, this country is set to be the fastest-growing major European economy not only in the year just ended, but in the next two years as well.
The other hallmark of that period is that, while the Conservatives in government have battled determinedly to achieve those successes, every significant reform that has led to such a desirable product has been resisted by the Labour party. Labour resisted our tax cuts, trade union reform, and each and every privatisation of the loss-making, or, indeed profit-making, nationalised industries. It resisted every change until we have proved that it works.
One can judge the quality of Tory initiatives by the vociferousness of Labour's opposition. If we get a bad headline in the Daily Mirror, that means that we are on a right track. If we get a yah-boo reaction from a Labour spokesman, that initiative becomes tomorrow's policy. Best of all, if we get downright opposition from the right hon. Member for Sedgefield (Mr. Blair) to an initiative, it is halfway to being in the Labour party's manifesto.
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If I needed any final commendation of the brilliant initiative announced yesterday by my right hon. Friend the Secretary of State for Social Security, it was Labour's knee-jerk reaction to it. We proposed to reduce public expenditure by £40 billion a year. We showed how we could increase significantly the funding available for investment, and as a product of that, offer an old-age pension of £175 a week, in a major, far-sighted reform of state pension funding. What do we get? New Labour, old Labour—every variety of Labour—on the airwaves searching for fat cats under the bed. It was a classic and typical response, and the louder they shouted, the more convinced I became.
Contrast our initiative with Labour's exploded initiative for pension reform. The leader of the Labour party lands in Singapore to proclaim that he has found the ultimate stakeholder pension scheme—whizz-bang, all-singing, all-dancing, and, above all else, run by the state. There is a small snag: the rate of return since 1980 on the state-run Singapore compulsory scheme is 2 per cent. above inflation. The rate of return on the British pension funds over the same period is almost 10 per cent. above inflation—collapse of stakeholder pension proposals.
Since the previous election, bruised by the humiliation of one electoral reverse after another, the Labour party has sought to recreate its popular support on the basis of expenditure pledges. So far, by our calculation, there have been £30 billion-worth of them. Not one has been renounced by the Labour party. Hardly any have ever been clearly shown as being funded in any coherent way, with the exception of one or two to which I shall come.
Nobody listening to what Labour has had to say should have the slightest doubt—those are not small commitments lightly given, or Conservative central office trying to misinterpret the words—that those are categoric, black and white statements.
The Leader of the Opposition said:
"We will give Britain a publicly owned, publicly accountable British Rail."
There is no hesitancy, no doubt, no qualification there.
We calculate the cost of restoring the railways to public ownership at £920 million a year. What figure do Labour provide? Or does it now admit that the privatisation of the railways is proving as successful and as irreversible as all the other privatisation measures?
Mr. John Prescott: It is costing twice as much.
The Deputy Prime Minister: If it is costing twice as much, why does not the right hon. Member for Kingston upon Hull, East (Mr. Prescott) stand and say that the Labour party will halve the cost, and tell us how it is going to do that? The fact is that it has no idea of how to run a railway, or, indeed, a whelk stall.
The right hon. Gentleman has a very clear commitment on a statutory national minimum wage, which we can explore. He told us that—again, this is black and white, no qualification—there should be, and there will be, a statutory national minimum wage. The right hon. Gentleman nods his head.
Mr. Prescott: Absolutely.
The Deputy Prime Minister: Right, well let us therefore parade in evidence the right hon. Gentleman's

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election address of 1992. Very helpfully, he did something that is rare for the Labour party and costed the minimum wage. He argued for a statutory minimum wage of about £3.40 an hour. He will not deny that. It was in his election address. If there is any doubt—[Interruption.] I had only a little time to do a back-of-the-envelope calculation today, but I have calculated that £3.40 an hour in 1992 would be £4.26 an hour now. Is that the figure, or was £3.40 in 1992 too high and therefore £3.40 today would be adequate, even allowing for inflation? Or is there another figure? Is there any figure? We saw the energetic nodding of the right hon. Gentleman's head—I think that even he knows that when he nods his head it means that he is agreeing with what I am saying—[Interruption.]
Mr. Prescott: That was extremely funny.
The Deputy Prime Minister: It was extremely funny.
The problem is that the right hon. Gentleman has given a whole new meaning to the saying, "Economics first and foremost, stupid". The annual cost of a minimum wage of £4.26 an hour is £3,700 million. I do not say that that is the figure that Labour has in mind, but it must have some figure in mind, so why cannot it tell us what it is?
The shadow Secretary of State for Education and Employment has been helpful again. He said:
"We will offer teachers of long standing a sabbatical period out of school at public expense."
He was quite categoric. Labour must have done some calculations. How many teachers? That is not difficult to work out. How long a period? Anybody can get a slide rule. What is the cost? We think that it is £1,300 million a year.
Then the shadow Chancellor told us that, under Labour, the tax and benefits system and the benefit tapers must be addressed. The cost of reducing the tapers would be £1,800 million a year. Let me show hon. Members how that massive confidence trick is pulled.
About a fortnight ago when I was on television with the right hon. Member for Kingston upon Hull, East, he was asked: "Should anyone, regardless of age, have access to free eyesight and dental tests as a matter of routine?" It was a perfectly reasonable question, and a matter of high politics. I have no complaint about that. He replied: "Yes, I think it should be a right." Anyone listening to that might have thought that yes meant yes, and that if it was to be a right, a Government of which he was deputy leader—and now, as I read in The Sunday Times Secretary of State for the Environment —would give it legal backing.
I hardly said a word on that particular point, but I was amazed a day or two later to read, "Three more Tory lies". I had not said anything. It was the right hon. Gentleman who said that it would be a right. The article said:
"Lie one. Labour will spend £216 million on free eye and dental tests. John Prescott gave no such spending commitment. The Tories have deliberately misquoted him. This proposal is not in our early manifesto. New Labour, new life for Britain."
We never said that it was. He just said it a fortnight ago, conveniently in the middle of the Wirral, South by-election.
Mr. Prescottrose—
The Deputy Prime Minister: Of course.
Mr. Prescott: The Deputy Prime Minister will recall that, in that debate, I was asked by a person in the
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audience whether I believe, as he rightly reported, that eye and dental tests should be free in the health service. Those were not the exact words, but that was the intention of the question. I said that that should be the aim of a national health service—[Interruption.] The Deputy Prime Minister can check the record if he likes.
I said that it should be the aim of a health service that was introduced by a Labour Government who gave those pledges and commitments in 1945. That was what we brought to this country and that should be our aim. I was then asked whether that was a commitment and I made it clear that it was not a commitment, but an aim. When the Government sought to reduce the rate of taxation to 20p, they said that it was an aim, not a commitment. What is the difference?
The Deputy Prime Minister: We have achieved that for a large number of people. The right hon. Gentleman does not even know that we have reduced the rate of income tax to 20p for a large number of people. The shadow Chief Secretary is looking closely at his papers. It is embarrassing for the Opposition when the deputy leader of the Labour party does not even know the minimum rate of taxation. It is no wonder that they keep him under wraps for most of the time. However, the right hon. Gentleman has been extremely helpful and we must take his comments extremely seriously—[Interruption.] My hon. Friends must be fair to the right hon. Gentleman.
It is important that we should not mislead or misquote anyone or omit anything from the record. Helpfully, I have the quotation from the BBC programme "Close Up North" on 20 February 1997. The words are here and I shall put them on the record. The right hon. Gentleman said:
"Yes. I think it should be a right."
When he was told:
"You've got to find the money to finance it",
he said:
"I agree, and we have to deal with that particular argument."
If you had been listening, Mr. Deputy Speaker, as an elderly person—[Interruption.] I was making no reflection on you, Mr. Deputy Speaker; I was trying to recall the person who asked the right hon. Gentleman that question. If I recall, it was an elderly person who was concerned to find out whether there would be free eye tests under a future Labour Government. If I had asked that question, I would feel that I had been conned by the right hon. Gentleman.
It is a technique. Whatever cuts or adjustments we have made, the Opposition have criticised them. They have made pledge after pledge, amounting to £30 billion, but they never answer the question: where will the money come from?
The Opposition have made one or two interesting commitments. They pledged that income tax rates would not rise under Labour, but that did not fully convince a sceptic electorate, so they made a new pledge that the Government's public expenditure plans would remain in place for the next two years. The fact that they consistently voted against them has been swept to one side. They are now committed to the levels of departmental expenditure set out in the Red Book, with the exception of the deputy leader of the Labour party who does not know the basic rates of tax, but has probably been briefed by the shadow Chief Secretary.

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The position is quite incredible. As my right hon. and learned Friend the Chancellor of the Exchequer pointed out, there is a £12 billion black hole in Labour's expenditure plans. If the Opposition retain our figures, they will have to carry out the reforms that we have factored in and allowed for in preparing the Red Book figures. Their reaction last month to our proposed privatisation of London Underground suggests that new Labour's late conversion to Tory policies still does not embrace privatisation, despite the evidence of the past 15 years. Will the deputy leader of the Labour party confirm that a Labour Government would proceed with the privatisation of the national air traffic service and the sale of other assets that would raise £1.5 billion in proceeds that are included in the Red Book figures?
Mr. Tam Dalyell: Before we step off the underground, can we be told who will pay for all the repairs that are desperately needed to the crumbling tunnels of the underground?
The Deputy Prime Minister: That is a simple question to answer. The whole point of privatising the underground is to raise the funds to pay for the necessary renovations. If the underground is crumbling, how does the Labour party propose to pay for renovating it? That is the question and there can be no answer unless a Labour Government would proceed with our plans to privatise the underground and use the funds in large measure to carry out urgent repairs and improve standards, as we are determined to do.
Of course the Opposition would have to go further. Last November, they opposed our reforms of the social security system. That is a perfectly legitimate option. The shadow Secretary of State for Social Security condemned the Budget changes to bring the structure of benefits for lone parents into line with that for two-parent families. The hon. Member for Peckham (Ms Harman) spoke eloquently and I have no complaint about her explanation as to why the Labour party opposed a change that would produce revenues that are factored into the Red Book figures. She said:
"This move will increase the poverty suffered by children in Britain today and will do nothing to help get lone mothers who want to work, off benefit and into work."
That is a clear statement of the hon. Lady's position on the policies included in the Red Book.
My right hon. Friend the Secretary of State for Social Security has generously asked the hon. Lady many times to clarify her position. He wrote to her and her reply had only one point of major interest: it completely avoided the question. However, the proposal would raise £60 million.
Labour has also opposed our proposals in respect of the private finance initiative in the national health service. The hon. Member for Peckham, keeping at it, voiced new Labour's approach to all the modernisation and described it as
"The latest scheme for privatising the NHS, more accurately called the privatisation initiative."
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She appeared to show a sad misunderstanding of the PFI and Labour support for it. The right hon. Member for Kingston upon Hull, East has claimed that he invented the whole idea some years ago.
Mr. Prescott: It is in Cabinet papers. The right hon. Gentleman discussed it and gave it the name "the Prescott option".
The Deputy Prime Minister: I am giving the right hon. Gentleman some credit. He should be proud of it.
What emerged from the hon. Lady's approach is that, deep down, Labour has a gut detestation of anything that involves a relationship with the private sector. She also drew attention to another cost in Labour's plans. According to the Red Book estimates for the Department of Health, nearly £500 million over the next two financial years involves PFI. If Labour is in favour of it I understand that, but if it regards it as some hideous Tory innovation, how would a future Labour Government be able to accept our public expenditure figures?
The Opposition do not speak with one voice on the subject. The hon. Lady might have done well to speak to the hon. Member for Sheffield, Brightside (Mr. Blunkett). As one would expect, he received high praise from the shadow Chief Secretary, who described his ideas as follows:
"An imaginative use of the public-private partnership has been suggested by David Blunkett to tackle the £3.25 billion school repair backlog."
Let us consider what happens when imagination gets hold of public finances. The hon. Member for Brightside envisaged local authority schools borrowing from the private sector—from the banks—to increase capital spending on schools. The problem is that such borrowing by local education authority schools would count as public expenditure. If it continued for 10 years, it would add another £320 million a year to the costs not accounted for in the Red Book.
Labour's policies are littered with such mistakes. Let me use the example of local authority receipts for house building and the extension of student loans. Labour has set out plans for student loans, but its proposals would make sure that the loans were included within the definition of public expenditure. That would lead to an increase in expenditure of £950 million a year.
Perhaps the biggest and bravest of all the announcements is that which centres on the phased release of local authorities' capital receipts. If the capital receipts that are there were released over five years, they would amount to about £2.6 billion a year. I will not inflict my views on the House; I will give the views of The Economist, which said:
"This is a piece of creative accounting which lets Labour pretend that allowing councils to spend money they have raised selling homes will cost nothing. In fact, if they spent this money, councils would no longer have it to cut debt, and would have to borrow more on the market."
That is a wholly independent and accurate assessment of the position.
The first problem with the proposal is that it actually adds to public expenditure. That is only the start, however. Where are these capital receipts? They are all in the wrong places. Inner cities would not benefit very much. Thirty-six councils have no capital receipts to

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release. Although it could be argued that there is plenty of need in Birmingham, there is not a penny to be released there. There is bad news for the hon. Member for Blackburn (Mr. Straw), and the cupboard is bare in Hackney, Newham and Southwark.
There are, of course, receipts to come in some areas—the prosperous suburbs. That is very convenient for the Labour party, but not, of course, for new Labour. This is old Labour: this is Herbert Morrison. This is called building out into the Tory marginal constituencies. Releasing receipts where the receipts actually are serves a new political purpose—not a social purpose, or an economic purpose. On the assumption that it costs £40,000 to build a council house, Crawley will have 2,200 new council houses, Newbury 1,600, Bromley 1,500, Surrey 1,300, and Malvern Hills and West Dorset 1,000 each. The policy and the targets are wrong.
That leads me to the new panacea. Labour calls it a windfall tax. Perhaps we have been a bit slow: it is not a windfall tax at all, but a tax on jobs, savings and pensioners. I cannot say how much it will be, because Labour will not tell us, and will not tell us which company will be taxed and when. Whenever the tax comes, however, it will affect pensioners, savings, jobs and investment. There is no such thing as a cost-free tax, plucked out of the air without doing any damage.
The fact is that Labour is blithely uninterested in the effect of this latest tax on gas, electricity and water prices, jobs, consumers, pensioners and shareholders. What a dramatic contrast that is with the policies that we introduced so painfully in order to achieve the dramatic results that the country is now enjoying. Today, we have the conditions that are right for businesses to thrive, for investment and for the creation of real jobs. The figures are as eloquent as one could possibly ask. There are 1 million more small businesses than there were in 1979, and we have the lion's share of all the inward investment coming into Europe. There has been a remarkable and continuing fall in the claimant count of unemployed people over the past four years. We have viable businesses, proper jobs and the best outlook for the country for a generation. What is the Labour party offering?
Let us look at what Labour is offering in a bit more detail. It is offering three new policies. There is a programme for the young unemployed, of which the main elements are a job subsidy for the long-term unemployed and the abolition of the 16-hour rule. I confess at once: we all know that it is perfectly possible to pay employers to offer temporary jobs to the unemployed. That is what used to happen in the 1970s. In the nationalised industries, subsidy after subsidy was paid to loss-making companies such as British Leyland and British Steel to keep them afloat, and to enable them to employ more people than the market justified. That was madness then, and it would be madness to revert to it now. Paying billions of pounds in subsidies to employers to take people off benefit for a couple of years, parcelling them up into some new parallel, artificial economy, is retrograde, and would destroy British competitiveness.
Such action is also foolish. What happens when the money runs out? Money has been taken from the utilities and—let us assume that Labour's case is right—new employment for those affected has been created for a short time. The money, however, is supposed to be a one-off—a windfall. What happens when those who have taken it
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must face the fact that they have used it? The cycle begins all over again. Where will the new subsidies come from? From the employers, who then say, "We can no longer afford to employ the people whom you have been subsidising"? Will there be another one-off levy on some other sector of the economy that happens to be doing well, or happens to have offended against the ideology of the Labour party? All the young people will be back where they started—back on the dole.
Let us be clear. Labour's policies start by reducing overall demand in the economy. Labour will take money from the utilities, take money by means of the minimum wage, take money from the social chapter, and use it in part to subsidise 250,000 young people. There will be higher taxes, no extra demand, but 250,000 more young people in jobs. What will happen to those whose jobs the young people take, who are displaced because subsidised labour are available to do the work more cheaply for the employer than those currently employed in the companies that would take the young people on? There is no answer to that question. There will be no higher demand in the economy, just a switch from people who are now employed at market rates to a group who are temporarily employed at subsidised rates.
It is not good enough for the state to shovel people en masse into employment, and simply hope that it will be all right on the night. It does not work. We have proved that time and again, and I cannot say how strongly our experience justifies our indignation at Labour's policy. We have been more successful in rebuilding our urban areas in the renaissance of the great towns and cities of this country, and drawing jobs, opportunities and wealth back into those areas, than any other Government in modern times. That can be done only by changing the climate, so that it is attractive to those who can afford to invest—those who can make the choice, and live, build or buy their homes and create jobs in such areas. That is the way in which it must be done, and we have shown throughout urban England and the rest of the United Kingdom how successful it has been.

We shall build on all that. We are already doing so, with the single regeneration budget, city challenge and a range of partnerships between the public and private sectors, which have never been seen in this country during this century. That is a remarkable tribute to the Government's policies. What is Labour going to do? It is not just about some cosy gesture to try to buy a quarter of a million votes from young people; it is much worse than that. Labour's policies for the urban areas—the stress areas—are all about destroying the climate of opportunity: the job-creating opportunities on which those areas depend. Let us take the destruction of the grammar schools. We all saw what happened.
Mr. Prescott: You closed 400.
The Deputy Prime Minister: Is the right hon. Gentleman saying that he will keep the grammar schools open? Is he saying that?
If anyone wants to know why we have a vicious circle of decline in the most stressed areas of the country, it is because the Labour party's social engineering persuaded any parent who could exercise choice to leave those areas and move to the leafy suburbs where the comprehensives were just as socially polarised as the old grammar schools

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and secondary modern schools were. Hon. Members should not ask me whether that is right or wrong; they should ask the leader of the Labour party, who did exactly the same. He could afford to choose. He did not care about the rancid Labour local authority that he had left behind, with some of the worst levels of performance in factor after factor. He turned his back on it, just like hundreds of thousands of middle-class families have done, leaving stress and a vicious circle of decline. The Tories came riding to the rescue of those declining areas with policies designed—
Mr. Andrew Miller: This is a hustings speech.
The Deputy Prime Minister: These are the hustings—let us have no illusion about it. As I have said before, "You have heard nothing yet."
Mrs. Ann Taylor: Turn round.
The Deputy Prime Minister: If the hon. Lady wants it full frontal, she is very welcome.
What is the way out for the Labour party? It has said that there will be no increase in direct tax rates. It has said that it will stick to the Red Book, but it is so screwed to the floorboards by that commitment that it cannot meet its genuine ambitions. The shadow Chancellor has therefore come up with the oldest trick in the world. He is going to audit the books. There has never been a new, amateur chairman for the most browbeaten company who did not say when taking over the job of the outgoing chairman, "I am going to open the books and have an audit." Five minutes later, he sucks his teeth and says, "Oh, I never knew how bad it is. I can't believe it is that bad. They never told me. They never warned me."
The fact is that the books are open. We have not had to change our policies once we have set the public expenditure figure. Year after year, the only reason for changing policies is if one wants to cut something or raise more taxes. The excuse will be to try to blame the outgoing Government. That is as stark a threat as any that could be conceived. We stick to our policies and our Red Book forecasts, and there is no need for a new Budget at any time in the next 12 months.
The right hon. Member for Kingston upon Hull, East is sometimes helpful, but he should try a little harder. He has said:
"Labour would be absolutely stupid"—
Has the House got that?—
"to give any indication of what tax rates might be."
If I were out there trying to win power in a general election campaign and I intended to cut the rates and put taxes down, it would not be stupid to tell people. It would be sensible to let them in on the secret and share the good news. It would be stupid to tell them only if the tax rates were going to go up.
The right hon. Gentleman carried on being helpful, when he said:
"We are not prepared to make any statements about the matter of allowances and taxes, and it is quite proper for us to do so."
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It may be proper for him, but unfortunately it seems improper for his colleagues. The right hon. Member for Dunfermline, East (Mr. Brown) told us that there would be no increase in income tax rates. When the hon. Member for Oldham, West (Mr. Meacher) heard that, he was most helpful and he said of the shadow Chancellor:
"He was careful to exclude other forms of tax".
Mr. Nicholas Winterton: National insurance.
The Deputy Prime Minister: I have not come to that one yet. The hon. Member for Oldham, West continued:
"There is capital gains tax, inheritance tax and all the allowances and the share option schemes. So it isn't quite as bleak as it seems."
Labour's deputy Chief Whip has been extremely helpful. He said:
"Gordon has made the position completely clear on the rates."
We understand that. The rates are apparently going to be fixed, but the deputy Chief Whip did not want anyone to get too depressed. He continued:
"There are something like 200 different allowances and he is not going to go through them all, setting them before coming into Government. He has got to have some room for manoeuvre."
That is what he said.
Mr. D. N. Campbell-Savours: Will the right hon. Gentleman give way on that point?
The Deputy Prime Minister: I will not give way, because I have only one more point to make. The country has been clearly warned by the Government and it has been warned by independent commentators, but last night, Lord Barnett added his voice and his experience, as a former Chief Secretary in a Labour Government. He has been through it. He has lived through the experience and he knows what the Labour party is all about. When he warns the country that he does not believe that another Labour Government could stick to the tax levels and achieve their policies, I tell the country, "Listen, before it is too late."
5.34 pm
Mr. John Prescott: The Deputy Prime Minister made it clear what this debate and the series of Adjournment debates initiated by the Government are about. They are the hustings and the preparation for a general election. Presumably, that is why he spent so little time talking about the Government's record and so much on the Opposition's case. We will enter the debate, because public expenditure is important.
We thank the Government for the third Opposition debate that they have initiated, following the debates on the windfall levy—which the Deputy Prime Minister mentioned—and on constitutional reform. We are debating public expenditure now, and I understand that we shall have a debate on pensions next week. All those critically important issues will be at the heart of the political debate up to the general election. Therefore, it is right and proper to have those debates in the House.
While it is good practice to have the debates and rehearse our election arguments, I am not sure that it is a good practice for the Deputy Prime Minister, in view of

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the Government's record. Given their record on taxation, it was a bit much for the Deputy Prime Minister to talk about cons in relation to the Opposition's proposals. The Prime Minister and the then Chancellor said in 1992 that they did not want to see VAT increased or to increase the overall burden of taxation. I will not give the exact quotations, but I have them here.
Those commitments were given at the time of the election in 1992, and if anyone was conned, the electorate were conned by the Government's statements on taxation. We have seen 22 increases in taxation and an increase in VAT, even though the Government promised the electorate that that would not happen. They lied to the electorate, and the verdict given in the Wirral is a clear indication of how people feel about believing what Ministers say.
Mr. William Cash: The right hon. Gentleman knows perfectly well that one of the reasons why taxation increased, including VAT on gas and fuel, was the mistake—which has now been openly admitted—over the exchange rate mechanism. Will he and the Labour party now state that they will never enter the exchange rate mechanism, which brought such terrible tragedy to the British nation?
Mr. Prescott: The hon. Gentleman makes an interesting point, because it was the Prime Minister who said that he had no intention of devaluing or of leaving the exchange rate mechanism. The Tories were the party of non-devaluation. We were supposed to be the party of devaluation, if one listened to the Tories' rhetoric. Of course they devalued, despite all their promises, and at great cost. The cost was £15 billion, with an overall net cost of £2 billion for the taxpayer.
We have made our position clear on the single currency and the exchange rate. When the decision on the single currency has to be made, we will allow the people to make a decision. I believe that that is the Government's position, although they are divided on the issue. There are many Ministers on the Government Front Bench. The Foreign Secretary is not here, but the Secretary of State for Health is in his place. He told us that he had a confusion of thought about the matter. Clearly there are many different views in the Government and they are now paying the price with the electorate for that confusion.
Today we are debating the important subject of public expenditure. The size of public expenditure and its priorities determine security and progress in our society. Debates about those priorities are the essence of a democratic society. How we raise that money and spend it forms the basis of general elections. But the big political question is how to obtain the right balance. That is the matter to which the Deputy Prime Minister was addressing himself. He had his view of the correct balance, but the Opposition are more concerned about social justice, which is relevant to the arguments on a minimum wage. There are clear differences between us.
Eighteen years of a Tory Government have thrown the public finances into turmoil. We are not yet sure of the full extent of that turmoil and whether we are out of the woods. This year the public sector borrowing requirement is £26 billion, and the party that considers itself to be the guardian of the national debt has doubled it since 1990. Those are not my figures: they are the
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results of the Government's public expenditure priorities. Interest payments on that debt alone cost each taxpayer £1,100 a year.
Not only is the nature of that expenditure a matter for concern, but we have witnessed its terrible cost to our communities in the breakdown of social cohesion. We are clearly not a nation at ease with itself, although that might have been one of the declared aims in the early stages of the Government. It is a matter of fact that we have a record level of homelessness, that education and health standards have declined and that crime has doubled. [Interruption.] That is not in doubt, is it? I can understand that hon. Members do not want to believe such figures, but they are Government figures which I want to use for the purposes of this debate.
Poverty has doubled and there is mass unemployment in Britain today. [Interruption.] More than 1 million is mass unemployment, 2 million is worse and 3 million—the Government's record—is an indictment of a Government who say that they are concerned about unemployment. Mass unemployment is millions out of work, which has been the Government's record in their 18 years in office. I am astounded that, despite all their fiddling of the figures, the Government cannot accept that what we have today is still mass unemployment however it is defined.
That mass unemployment has caused massive problems in the public finances because of the cost of welfare expenditure, unemployment pay and social security payments. That is why we have difficulties in our public finances today. They are not the result of economic success, but the result of the failure to achieve the kind of economic growth and prosperity that could result in lower unemployment.
The Labour party's argument is that after 18 years there can be no excuses, no blaming a Labour Government of 1979. What we are asked to judge today is the Government's record. The responsibility lies fairly and squarely with this Tory Government.
This week we have had vivid reminders of the importance of public expenditure. What is important is not just how much is spent but how wisely and how fairly it is spent. Today we have seen in the newspapers alone issues that considerably affect public expenditure and reflect the Government's priorities.
I take as one small example Gulf war syndrome, which was clearly due to public expenditure on insecticides to protect our soldiers. [Interruption.]Yes, that was the judgment at that time, although the truth of the matter has been concealed by the Ministry of Defence. But the Government's treatment of those soldiers has been influenced more by the public expenditure consideration of the cost of compensation for the victims of Gulf war syndrome than by a judgment of what is fair. [Interruption.] Yes, that is at the heart of it.
We have debated in the House the beef scandal, about which we have heard more this afternoon. We put some of the blame for that on the Government's deregulation policy. That beef crisis alone has cost us £3.5 billion of public expenditure.
The Deputy Prime Minister also referred to local government finances. The Government's treatment of local authority finances has been deplorable. The Government have shifted the financial burden of public expenditure on to local authorities. In 1979 the

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Government carried 61 per cent. of that cost; today it is 52 per cent. The real effect of that on people's lives has been to force up the council tax and threaten local services. Moreover, the share-out between the councils has lacked any consideration of fairness. If the Government had given every council the same grant per head as Westminster, 94 per cent. of councils would be charging no council tax. That has more to do with party political considerations than social justice.
That is the issue, and it goes a long way to explaining why the number of councils under Tory control has gone down from 235 in 1979 to 13 now. That is the result of decisions taken by the electorate. I presume that the electorate made their judgment on the basis of the Government's role in providing their local services. So definite was their rejection of the Government at national and local level that the Tories now control only 13 councils, allowing the Liberal Democrats to claim that they are second in local authority representation.
Dr. Keith Hampson: Did the hon. Gentleman notice a leader in The Independent last week attacking Labour-controlled local government for spending unwisely? Is he aware that council tax payers in Leeds not only face a doubling of the rate of council tax, but the city's debt is now so huge that it costs more than £60 million—the cost of the royal yacht—each and every year in Leeds? Let us have none of that fiction from the Opposition. That is the reality of Labour in power.
Mr. Prescott: I assume that the Government would not want to put forward their record on the national debt. The Government have been responsible for a worse increase in the national debt than any local authority has in its debt. [Interruption.] That is true and I am quite prepared to defend that statement. Not every local authority is perfect. There are not many Tory-controlled local authorities about which to make judgments. One remaining one is Westminster, but I do not think that the hon. Gentleman would like me to compare Westminster's record with many other local authorities.
Some local authorities are good and some bad, and that is not necessarily a matter of their political control. Some can be efficient and some inefficient. That is the nature of it. I am not concerned with whether some are efficient and some less efficient, or whether that is related to their political control; my argument is that the Government have made it much more difficult to deliver services in the local authority areas as a result of Government changes in public expenditure to deal with the debts resulting from their policies.
The Chief Secretary to the Treasury (Mr. William Waldegrave): I thought that I heard the right hon. Gentleman say that the Labour Government had a better record than the Conservatives on the national debt. The national debt in the Conservative Government's worst year was better than that in the Labour Government's best year. Had the level of borrowing under the Labour Government continued, the national debt would now be just about exactly twice what it currently is.
Mr. Prescott: I did not say that. [Interruption.] I did not. The point is a fair one. The Chief Secretary is talking
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about the debt under different periods of government. Debts are related to receipts, and in the period to which the right hon. Gentleman refers, there were considerable receipts from oil and privatisation. Had the Labour Government had such receipts, they would not have had to borrow. Therefore, as usual, the Chief Secretary tells only half the story which, as we all know, is consistent with his record.
Several hon. Members rose—
Mr. Prescott: Let me make some more points. I have been giving way to hon. Members.
Mr. Graham Riddick rose—
Mr. Hartley Booth rose—
Mr. Prescott: Let me make some progress. [Interruption.] What has the other manager of the Tory party, the Minister without Portfolio, got to say? I will give way to him if he wants. Does he want to speak? No. Clearly, the Deputy Prime Minister is in control; that has decided it once and for all.
When the Deputy Prime Minister was talking about the pension proposals, which the House will have an opportunity to debate next week, I thought that it was a bit much when he said that the Government's projection was for savings of £40 billion by the year 2040. The Government cannot get their projections right over two or three years. How can the right hon. Gentleman come to the House and offer us a projection about public expenditure savings of £40 billion by 2040? The record is clearly against him when he makes such projections. I shall come to some of the evidence in a moment. First, let us examine the other projections that have been made by the Chancellor and the Government, because they are relevant.
I will take no lectures from Tory Governments about pensions. They are the ones who divorced pensions from earnings—[Interruption.] I am talking about the Government's record. They are the ones who broke the link with earnings. Between 1945 and 1950, Labour brought in the first universal pensions scheme of the kind that we have today. The state earnings-related pension scheme, too, was introduced by a Labour Government. We were the people who established decent pension provision within a welfare system, under a Labour Government. The record of the Conservative Government has always been to undermine the pensioners in this country. That is clear.
Several hon. Members rose—
Mr. Prescott: I want to finish this point. When we established the Borne commission, the Government made it clear that they were critical of Labour's discussions about the problems facing the funding of pensions. We were attacked for suggesting the possibility that SERPS might be changed. The Government's accusation was that there would be no SERPS in the proposals. Yet it is the Government who have done the U-turn, and are about to ditch not only SERPS but the right to a basic state pension. The Government have always attacked the rights of pensioners, and they are continuing to do so.
Mr. Quentin Davies: The right hon. Gentleman has attacked the Government for

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bringing to an end the link between average earnings and the old-age pension. Does he mean that a Labour Government would restore that link? If a Labour Government would have no such intention, is it not pretty shoddy and hypocritical to imply that they would?
Mr. Prescott: It is a fact of life that the Conservatives made that break—and every Conservative Member voted for it. Make no mistake, we have not made a commitment to restore the link. [HON. MEMBERS: "Oh."] No, because, as hon. Members will hear from me, we have decided our priorities for public expenditure and taxation, and the electorate can make a judgment on them.
After 18 years, there are so many things that the Government have undermined. The same point can be made about the health service, prescription charges, and charges for spectacles and teeth. The Government have constantly put a health tax on the people of this country. We could not possibly hope to reverse all the damage that they have done in 18 years. All that we can do is to present to the electorate our priorities for public expenditure and tax, as we are doing now.
Mr. Davies rose—
Mr. Prescott: I have not finished on pensions yet.
When the Government decided to make the first attack on SERPS and allow people to contract out into private pension schemes, it cost us billions of pounds to subsidise the transfer from the public into the private sector. Nearly 3 million pension holders were denied a proper pension because the value of their pensions was reduced. The private sector—
Mr. Davies rose—
Mr. Prescott: Wait a minute.
The private sector totally failed the pensioners, and the taxpayer paid the price for it. That is always the case with the Tories on pensions.
Mr. Davies: Why criticise the Government for breaking the link between earnings and pensions if the Labour party has no intention of restoring that link? Is that not a thoroughly deceptive way in which to conduct an election campaign?
Mr. Prescott: It is still a fact that the Conservatives broke the link. [Interruption.] We shall have a debate in the House about it next week. The Government have set down a day for a debate on the pensions system, and that is the proper time to discuss it. I simply make the point that, again, public expenditure was involved in another pension fraud by the Government—and now they propose to put even more of our pensions into the private sector, which totally failed the people who were conned into transferring from public into private pension schemes last time. What motivates the Government to propose changes in pensions? As I have tried to point out, it is certainly not a desire to protect pensioners. History is clearly against the Government, and the taxpayer always ends up paying the bill.
The Deputy Prime Minister made certain statements about what savings would be made in public expenditure—the subject of the debate—by the year 2040, but the
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Government's record on forecasting and on managing the public coffers is a classic case of incompetence: I do not know how else it can be described. The Government say that they can save £40 billion in 50 years' time, but let us look at their projection record over shorter periods for the borrowing requirements arising out of their public expenditure programme. In 1993 the Government said that the borrowing requirement would be £32 billion; it was actually £45 billion. In 1994 they said that it would be £25 billion; in fact it was £36 billion. In 1995 they said that it would be £19 billion; it was £32 billion. This year it was supposed to be £6 billion, but in fact it is £26 billion.
The Government's sums have been about £60 billion out over just three or four years and those mistakes amount to more than the £40 billion that the Deputy Prime Minister projected would be saved in 50 years' time. He cannot even get his sums right over four or five years, so who could believe anything that a Minister in the present Government says on the subject?
With such a bill, we can see why the national debt has doubled. In 1992 the Government misled the public about the true state of the public finances, and certainly misled them on taxes. It is no wonder that the public in general, and the electorate in Wirral in particular, have lost faith in them, as we saw in the by-election last Thursday.
Several hon. Members rose—
Mr. Prescott: No, I want to make some progress. I have given way to several hon. Members.
Mr. Jacques Arnold rose—
Mr. Prescott: I never give way to that hon. Gentleman.
Mr. Arnold rose—
Mr. Prescott: The hon. Gentleman will not be here much longer.
We have heard lots of talk about a successful economy. But despite all that talk, which we heard yet again from the Deputy Prime Minister today, the past 18 years have not been as successful as he claims. In the Budget debate, the Chief Secretary to the Treasury attacked what he called the European social model. The right hon. Gentleman's idea of the countries that could be considered part of that model was a bit limited. Nevertheless, I believe that the European social model in the post-war period, to its credit, was the most successful economic model that we have witnessed in any developed economy—successful in growth, in investment and in prosperity, while at the same time securing full employment and social justice. That is to the eternal credit of a European social model that was managed both by the left and by the right. It was not a socialist creation: it was managed by Governments of all political parties, and it secured full employment and social justice.
Mr. Waldegrave: The right hon. Gentleman is making a serious and correct point. When the Germans, in particular, followed the economic advice of Ludwig Erhard, which nowadays would be called Thatcherism, they did extremely well.
Mr. Prescott: The right hon. Gentleman could also look to other European social models under socialist

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direction, which were equally successful in the development of their economies. The point that I am making is that that model saw a role for Government that accepted responsibility both for full employment and for dealing with the problems of inflation. The creation of wealth marched alongside social justice, whether the Government were German, Swedish or Danish. Throughout Europe the model was successful.
Of course there are great difficulties for that model at the moment. [Interruption.] I am trying to make a point about that. At the heart of the argument, as with Keynes, is the amount of money that is put into the economy and into public expenditure. What might have been all right in the 1950s, 1960s and 1970s is in grave difficulties in the 1990s, with a different global economy and all sorts of other factors that are changing.
It is important for us to recognise that fact, because the restraints that affect our public expenditure are considerable when one seeks to balance inflation, employment, borrowing and public expenditure. That is the problem for all Governments today, and I concede that it has changed. However, that model was far more successful than the competitive pre-war model that gave us mass unemployment and great poverty. The deregulated model that the Government are beginning to develop carries with it mass unemployment on a scale associated with the pre-war period.
That argument will go on between us. We are debating the role of public expenditure. I have no doubt that public expenditure—the total amount of it and its quality—can affect prosperity and levels of employment and has some relationship to economic activity in the country.
Mr. Michael Stephen: The right hon. Gentleman complains about the national debt. Is he aware that the entire western world is even now just recovering from the worst economic recession since 1929? I trust that even he does not seek to lay the blame for that at the door of the British Government. Yes, it has been necessary to borrow, but does the right hon. Gentleman accept that it has been possible only because we paid off most of the national debt during the early years of the Conservative Government?
Mr. Prescott: That is confusing. During three years of apparently successful growth, we have been borrowing more heavily. In the cycle of decline and expansion, a country usually borrows less when it is growing faster. Why has the debt increased at what is claimed to be a time of great growth?
All world economies are faced with considerable debt. In a global economy, there are billions flooding around. There are real problems in dealing with that kind of flexibility. Time and again—
Mr. Booth rose—
Mr. Riddick rose—
Mr. Prescott: No; I want to make some progress.
Time and again, we hear from the Tories that the British economy has outperformed other European models. The argument is that we have discovered the ideal
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model, which is far better than the European social model. I recognise that there are difficulties for which we have to make some adjustments.
Mr. Michael Fabricant: On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker (Mr. Michael Morris): I hope that it is a point of order for the Chair.
Mr. Fabricant: It is, Mr. Deputy Speaker. I would like some clarification. I notice that while the deputy leader of the Labour party is talking about the European social model, only half a dozen Labour Back Benchers—
Mr. Deputy Speaker: Order.
Mr. Fabricant: Are we quorate?
Mr. Deputy Speaker: Order. That has nothing to do with the Chair.
Mr. Fabricant: I thought that we might not be quorate.
Mr. Deputy Speaker: Order.
Mr. Prescott: I hope that the hon. Gentleman is not losing his hair in this debate.
I should like to deal with the argument that somehow Britain has produced an economic model that is leading the way and is better than what we see in the European economy. I took the trouble to look at some of the figures from the Organisation for Economic Co-operation and Development, Eurostat, the House of Commons Library and parliamentary answers. In the latest European prosperity league, we are ninth out of 15. Our growth rate since 1979 puts us 13th out of 15. On investment, we are 15th out of 15. On inflation—the issue on which the Government make considerable claims—the United Kingdom lies 1 1 th out of 15. On long-term interest rates, we are 11th out of 15. Our record on unemployment since 1979 puts us ninth out of 15. On those six key economic indicators, the UK remains in the bottom half, if not the relegation zone.
Those statistics do not reflect the success of the British model. The Government have failed on so many counts that they should withdraw Chris Woodhead from the schools and send the Office for Standards in Education inspectors into the Tory Cabinet to look at its competence. That is what happens in education to those at the bottom of the league.
If Conservative Members do not like those foreign figures, we can draw on the evidence of the Deputy Prime Minister's competitiveness White Paper. It shows that on purchasing power parities, we have fallen from 13th to 16th in the world prosperity league. Those are the Government's figures. That is a great boast. The Government somehow claim that in 18 years we have produced a successful British model and have the audacity to tell the rest of the world to follow it.
Mr. Riddick: Will the right hon. Gentleman give way?
Mr. Prescott: No, I must make progress. I am already behind time.

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Stability is important in modern economies. We all agree that the cycle of boom and bust damages the economy. We have had two deep recessions during the Government's period of office. The February edition of the Lloyds bank economic bulletin says that
"since 1980, the UK has the worst record for economic stability amongst the 14 largest industrial countries."
That seems to be a pretty damning indictment of a Government from a bank that is not anti-Tory. The Tories have had 18 years to put the economy on an even keel. The record is not as given to us by the Deputy Prime Minister.
The one thing that the Tories might claim to have increased is exports. The audacity of that claim is that exports have increased since they devalued the economy. The Prime Minister said:
"The devaluer's option would be a betrayal of our future and it is not the Government's policy."
He called it a soft option. That seemed like a pretty clear policy. Did he con people when he said that the Conservatives would not devalue? Within days of that promise, he devalued the pound. Exports went up, but so did imports, because we did not have the capacity to deal with the demand that came from devaluation. We were taken to the bottom of the trade deficit league, with the exception of Spain. Does the Chief Secretary disagree? No. Okay. However one measures them, the Tories' claims for the economy are far from proven and their policies have been expensive for the taxpayer. The devaluation cost something like £2 billion.
The Government make another great claim on unemployment. I hear Conservative Members making it, as though they can live with this country's levels of unemployment and think that that is a success. They took it to 3 million from 1 million and then brought it down to 1.5 million and claimed great success. Even on their projections, apparently we shall still have 1.6 million unemployed by the year 2000. Presumably they are not attempting to get anywhere near the record of a Labour Government if they are elected for a fifth term.
Mr. Waldegrave: Will the right hon. Gentleman remind us who said that any fool knows that if we have a minimum wage there will be a shake-out of jobs?
Mr. Prescott: I will come to the minimum wage, but I made the quote. [Interruption.] I made the quote.
The Minister without Portfolio (Dr. Brian Mawhinney): You said it.
Mr. Prescott: Did the right hon. Gentleman not hear? "I" means me. I know that he may be getting confused, but "I" means me, John Prescott.
I should like to deal with unemployment first. I promise to come to the minimum wage. Of course we welcome people being able to get a job. If more people have been returning to work, we welcome that. Any fool would welcome that. However, it is hard to accept the Government's claims at face value. What they say is happening to the level of unemployment is hard to determine, because we cannot believe the figures. I believe that there are lies, damned lies and Tory statistics. That is true for most areas. After 32 changes to the count, no less an authority than the Royal Statistical Society has said:
"The claimant count cannot be trusted."
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Why should the public believe in figures that even Tory Ministers do not believe in?
Everybody knows that, as employment spokesman, I constantly attacked the figures and whether they could be believed. I offered to agree with the Government on putting some honesty back into the figures. Some changes were made, but even the figures now produced by the Government cannot be believed. The Minister of State, Department for Education and Employment made it clear when the most recent figures were announced that we could not believe half of them because of the special reasons that he gave. The employment figures and the level of unemployment are not as Ministers tell us. Apparently, Ministers feel moved to make it clear that we cannot believe the figures that are given. The Minister said:
"The nearest we can come to is that about half these figures we are giving each month are genuine."
The Minister is saying that we should not believe the unemployment figures. I rest my case.
Mr. Barry Legg: I note that the right hon. Gentleman does not believe that the unemployment figures are accurate. What changes would a Labour Government make to unemployment statistics?
Mr. Prescott: The first would be to make them honest.
Mr. Legg: What would Labour do?
Mr. Prescott: I have made a number of proposals. The Minister is saying that the Government are having to adjust the figures to project what he thinks is the real level of unemployment. I have given Ministers a number of papers on the technical details of how to make the figures more honest. My record is clear. The fact that we cannot accept the published unemployment levels is one of the problems of getting any kind of movement towards honesty.
Tory Chancellors have often committed themselves to cutting public expenditure, so why have they failed to do it? Despite all the promises through every election, they have not done it. I would be interested to hear from the Deputy Prime Minister why they have not. Did the Tories con the electorate in every election when they said that they would cut public expenditure?
Mr. Waldegrave rose—
Mr. Prescott: The Deputy Prime Minister can think for himself. Would he care to tell us why he did not keep that promise?
The Deputy Prime Minister: What the right hon. Gentleman is saying is not true. The level of public expenditure as a proportion of GDP is falling and it is scheduled to reach our target figure of 40 per cent. We are on target for a balanced budget by the end of the century. If there was a shadow of doubt about the validity of our figures, the Labour party would not have accepted them.
Mr. Prescott: My question is based on the Government's figures. They are the same as they were in 1979. I want to know why they promised to cut public

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expenditure but did not do so. I have heard that promise constantly from Tory Members, but they have not done it. I could help the Deputy Prime Minister by explaining why they have not kept their promise; they are paying out huge sums for unemployment because of the failure of their policies. It is a simple answer, but it is difficult for the Deputy Prime Minister because he keeps talking about a successful economy.
Mr. Waldegrave rose—
Mr. Prescott: I will not give way again. [HoN. MEMBERS: "Oh."] All right then.
Mr. Waldegrave: This is an important point and I think that the right hon. Gentleman might have misunderstood the figures. Of course the figures have a cycle, which is based on a trend. The trend was upwards until the late 1970s and it is now clearly downwards. The peak was at 47 per cent. in the 1970s, 45 per cent. in the 1980s and 43 per cent. in the 1990s. No statistician doubts that the trend is downwards.
Mr. Prescott: Targets and trends, but in reality things are no different. I believe that the Chief Secretary to the Treasury is the man who told us that he wanted to achieve a figure of 35 per cent. for public expenditure. I do not know in what year he is predicting that that will be achieved, but in 18 years the Government have made no difference to the level. We have had ups and downs, but we have had ups and down in unemployment and every other economic indicator. It is called boom and slump and that is what we have seen from the Government.
The Deputy Prime Minister has talked about a black hole in the accounts and the waste of resources. Can he tell us why we are prepared to spend £450 million to privatise the railway system when, only this week, a report showed that it has cost us billions of pounds more than we have got back in receipts? Hon. Members laughed when I mentioned the railways earlier, but the reason for the high cost is that we have doubled the level of subsidy to the private sector. The Government said that that would not happen, but it is costing the taxpayer twice as much and we are paying out more than we get back in receipts. Would not it have been better to use those millions, or in some cases billions, of pounds to invest in the railway system instead of pursuing the ideology of privatisation?
The beef tax cost us £3.5 billion and the poll tax cost us £14 billion. That was a total waste of money. Many promises were made about the poll tax, but it cost us £14 billion. A total of £1.5 billion has been spent on extra bureaucracy in the health service. Those are all examples of waste.
Let me tell the Deputy Prime Minister about the minimum wage and the effect on jobs. Since I made the statement to which he referred earlier, a great deal of work has taken place in America and here which shows that my fears about higher unemployment are not true. If hon. Members want to see that research, I will send it to them.
There is another point about the minimum wage which I would have expected to concern Tory Members. I worked in kitchens as a commis chef and it was a wages council industry. I lived on wages council payments.
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The Government abolished the wages councils and deregulated. Despite what the Government have said, in those deregulated industries there has been a fall in wages and it has cost far more to pay for the wage subsidy needed to achieve what the Government have determined is a proper level of income. That has cost the taxpayer £3.5 billion.
Why do Tory Members not find it offensive to have to find £3.5 billion to pay to employers who hire people at rates of £1.50 an hour, telling them to nip along to the Department of Social Security to obtain the subsidy to make up their wage? The same employer under a regulated system was paying more and the taxpayer did not have to contribute. That is the hypocrisy involved in the Tories' view of the minimum wage. If they were concerned about the taxpayer, they should ask those questions.
Mr. Fabricant rose—
Mr. Prescott: I will not give way. I know about this because I have lived it. [Interruption.] All right, I will give way.
Mr. Fabricant: The right hon. Gentleman mentioned the model in the United States. He will be aware that the US model is a percentage of an average wage in the United States. That would be the equivalent of a minimum wage in the United Kingdom of about £2.50 per hour. Is that what the right hon. Gentleman is suggesting? What rate is he suggesting? That will determine the rate of unemployment.
Mr. Prescott: We have made it clear that the rate will be determined by the minimum wage commission that we will establish. [Interruption.] What is wrong with that? It is employers who have said that they would like to give evidence. They are concerned, as are the trade unions. We will establish a commission and when the rate is determined, we will come here and there will be a debate. We will be the Government then and you lot will be in opposition.
We see the distortion of many of Labour's plans. The Deputy Prime Minister has been talking about a Labour spending plan of £30 billion. Then, the Bill and Ben of the advertising industry announced on posters that the figure was £12 billion, but we are now back to £30 billion. I wish they would decide what the figure is. In our defence, I shall quote what was said by The Financial Times when we offered our rebuttal of the Tories' claims. It said that the charge that it is £30 billion is
"riddled with inconsistencies and exaggeration…with little or no grounding in fact."
We believe that the Tories are wrong to make such accusations about us. We wonder why the Chief Secretary to the Treasury always seems to be at the scene of the crime when these posters and pamphlets are launched. The right hon. Gentleman sometimes has to explain his position, which can be confusing, but I prefer the explanation given recently by the Secretary of State for Health. He made the mistake of talking about the Government's position on the single currency. He said that his "thought processes were blurred". That is a new approach and it could characterise many of those in the Government.

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Let me make it clear that there are no hidden Labour spending plans of either £30 billion or any other figure that the Tory party chooses to claim. The real question must be about the Tory figures. The Red Book assumes that there will be £4 billion from privatisation receipts. We do not know where those receipts will come from. The only thing mentioned by the Deputy Prime Minister was air traffic control.
Mr. Waldegrave rose—
Mr. Prescott: Wait a second. I assume that the Post Office is not to be included.
Mr. Waldegrave rose—
Mr. Prescott: I will give way because I cannot have the right hon. Gentleman scratching his head any more.
Mr. Waldegrave: The right hon. Gentleman has obviously not read the Red Book. The first £2.5 billion comes from the second-tranche sales of Railtrack. Even if the Labour party was in office, it would get that sum. There is £1.5 billion next year of which £500 million is predicted to come from the national air traffic service. If the right hon. Gentleman was in power, would he sell NATS?
Mr. Prescott: No—[Interruption.] Wait a minute. There is no doubt that the receipts from past privatisations will be part of our Treasury. Judgments about any further revenue from privatisations will be made at the appropriate time. Is the Post Office to be part of the privatisation receipts? I assume that the answer is no.
The Deputy Prime Minister indicated dissent.
Mr. Prescott: Okay. Is the privatisation of London Underground to be part of the receipts? There is £2 billion involved in that. Are we right to assume that the money raised in the sale of London Underground will be used for investment? That is what was said in a letter from the Secretary of State for Transport to the Prime Minister. Is that correct?
The Deputy Prime Minister: The right hon. Gentleman knows that the answers to those questions have already been provided. The London Underground receipts, and any policy consequences of the Royal Mail, are not included in the Red Book figures, but it is clear that significant figures are included—£1.5 billion—so the right hon. Gentleman must either privatise or find the money somewhere else. It is apparent from his speech that he has not the first idea which is the answer.
Mr. Prescott: It is not absolutely clear where all the receipts will come from. No doubt that will be part of the debate in the election.
Mrs. Gwyneth Dunwoody: My right hon. Friend might like to know that there is some confusion on the Government Benches. I have just received an answer from the Minister for Transport in London. I asked:
"if he will list the total amount payable to Her Majesty's Government for the sale of Railfreight Distribution."
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The answer reads:
"The British Railways Board has yet to finalise the sale of Railfreight Distribution."
Another answer on another specific case reads:
"I will answer these questions shortly."
Far from the confusion being on our side, the real problem is that the people who are selling the assets have no idea what they will get for them.
Mr. Prescott: My hon. Friend makes a telling point. The Secretary of State for Transport, in his letter to the Prime Minister, was concerned about whether the money was to go to the Treasury or to his Department, or to be used for investment; that was the heart of the letter, and we shall watch any developments with interest.
Usually the Government take the line that the private finance initiative principle should be extended. We have all discussed the PFI, but the Government have not been very successful in implementing it, and certainly not on the scale that they envisaged. As I understand it, the financial agreement for the hospital that was announced at the last Budget—we were promised one every month at the time of the Budget before last—has not yet been completed. Perhaps the Chief Secretary can tell us whether the financial agreement for the first hospital has been completed.
Mr. Waldegrave: I believe that the process leading to a successful conclusion is imminent, and I am sure that the right hon. Gentleman will welcome it. Let me put the question back to him: is he in favour of the PFI in the health service? The hon. Member for Islington, South and Finsbury (Mr. Smith) is not, and has said that it is privatisation. The PFI cannot take capital projects into the private sector unless there is a transfer of management control. As I understand it, the right hon. Gentleman and the hon. Member for Islington, South and Finsbury have both ruled that out.
Mr. Prescott: It is clear that, while there are ups and downs and targets, the target to which I referred has not been achieved. The Tories promised at the Budget before last that there would be a hospital every month under the PH; by the last Budget there had not been one; it was then announced that the agreement had been signed that day; and now we are told that it has not been completed, so we know that it was just a charade and a con.
We have always made it clear that the PFI in the health sector is more concerned with capital and buildings than with clinical services. The Chief Secretary knows the arguments well.
Mr. Jacques Arnold: On a point of order, Mr. Deputy Speaker. The hospital to which the right hon. Gentleman refers is the one that will serve my constituents. I can assure him that the contract has been signed.
Mr. Deputy Speaker: Order. That is nothing to do with the Chair.
Mr. Prescott: Thank you, Mr. Deputy Speaker. It has nothing to do with the hon. Gentleman's hospital either: it was in Norwich. The hospital announced by the

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Chancellor has still not been completed, and people wait in beds in the alleyways because of the inadequacies to which I was referring.
I have been a fan of the private finance initiative, because it was helpful to use capital investment by private funds in public industries when they were nationalised. I advocated it for quite a time, but it was The Economist that described the inadequacies of the PFI programme implemented by the Government as "a dog's breakfast". The programme has failed to get the important resources from the private into the public sector.
I will pray something else in aid of the PFI. The Chief Secretary must know that in 1994 the Government, led by the Deputy Prime Minister, tried to privatise the Post Office. We ran an effective campaign against that privatisation and the public made it clear that they did not want it.
In November 1994 the Chancellor of the Duchy of Lancaster wrote to the Prime Minister about a meeting to discuss how exactly they might privatise the Post Office. They had various options before them, one of which, "the BP option", was to allow the Government to have shares in a company and let it borrow privately. The second option was called "the Prescott option". That is an interesting name for an option on a Cabinet paper. I bet not many people around the table wanted to put their hands up to vote for that. However, the minute makes it clear that quite a few were in favour of it.
The minute says:
"'the Prescott option' would be to allow the Post Office the sort of commercial freedoms proposed by the Opposition, while retaining its full public ownership. This could be achieved without legislation."
Why did the Government reject it? The minute says:
"many colleagues took the view that 'the Prescott option' would seriously undermine our whole approach to privatization in the past and in the future: no-one was prepared to argue strongly in its favour."
They were not prepared to accept that a publicly owned industry could borrow privatization and Treasury rules that prevented it.
The idea is not unique: British Airways did exactly the same thing when the Deputy Prime Minister was Secretary of Transport. The Government haul out different rules for different industries. There is no reason why the Prescott option could not have been accepted.
Mr. Douglas French: Will the right hon. Gentleman give way?
Mr. Prescott: No, I want to make this point.
If the Government's option is no longer to privatise the Post Office, there must be another option. Does that mean that the public sector Post Office can now borrow privately? That was the Prescott option, and if that is what the Government intend to do, it is an interesting comment on what they said last week—that if the public vote Blair, they will get Prescott. Now, if they vote Major, they get the Prescott option on the Post Office anyway.
My proposal is now in a Tory party manifesto. Is that the Government's intention? If so, they could have done that for every public sector industry, creating greater
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investment and more jobs and improving public services. Their failure to do so exposes their ideological obsession with selling off assets at great profit to their people in the City, at the direct expense of the taxpayer and at some cost to public expenditure. That is the charge that we lay against them. The Deputy Prime Minister does not seem prepared to give us an inkling of what the formula for the Post Office will be.
The Deputy Prime Minister: There are 20,000 post offices in the country and 19,000 of them are in private ownership.
Mr. Prescott: Presumably the right hon. Gentleman means that a publicly owned company is a plc—a public limited company. It is still publicly owned, is it not?
The Deputy Prime Minister: There are 20,000 post offices in the country and 19,000 of them are in private ownership. That is nothing to do with the Government.
Mr. Prescott: The right hon. Gentleman understands the point that I am trying to make. The Cabinet discussion was not about corner-shop post offices, for God's sake; it was about the Royal Mail and the Post Office as we know it and about how services can be guaranteed and expanded. That is clear in people's minds.
We agree that the Government can get a proportion of the necessary funds from private finances and we have made it clear that a Labour Government will not increase either the basic or the top rate of income tax. With the exception of our windfall levy on privatised utilities, Labour's spending plans do not involve any extra taxation.
The Deputy Prime Minister: I heard the right hon. Gentleman saying two totally different things: first, that income tax rates would remain as they are and secondly that there would be no other increases in taxation. I want to be absolutely clear that that is what he said. As I understand it, the only pledges that have been given involve income tax rates.
Mr. Prescott: We will not increase the income tax rates, including the top rate. The Deputy Prime Minister talks about allowances and other matters, but past Chancellors, the present Chancellor and the Prime Minister have always made it clear that they do not give details of changes before a Budget. That applies as much to us as to the Chancellor and the Government.
The Deputy Prime Minister: The right hon. Gentleman is saying that every other tax level is up for grabs under a Labour Government.
Mr. Prescott: Let me quote the Chancellor, because this is precisely our position. He said:
"People have to wait until the final Budget judgments I make. What I am certainly not prepared to do is go for some ideological theory that at no stage from now on will we ever increase any tax. I have never served in a Government of that kind; I would never vote for any Government that said that."?

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That is the position of the Government, the Chancellor, and of anyone with any sense. We have made clear, and the Deputy Prime Minister was fair enough to repeat it, exactly what our position is.
Mr. French: Will the right hon. Gentleman give way?
Mr. Prescott: No, I must wind up; I have been far too long. [HON. MEMBERS: "Hear, hear."] Perhaps I should wind up on that point.
We have put forward our proposals, we have costed them carefully and we have indicated our priorities. We have made it clear that the release of capital receipts from the sale of council houses will provide self-financing expenditure for improving housing stock. We have said that the money allocated from the windfall levy will go on jobs and skills for 250,000 people. As soon as they take office, a Labour Government would need to audit the Treasury. The Deputy Prime Minister made great play of that, but it is only right that we should do it because we cannot believe half the figures that we have been given. It is fair to say that there should be an audit.
Mr. Waldegrave rose—
Mr. Prescott: I am going to go on.
The Tories tell us that spending limits can be met without raising taxes. None of our pledges requires higher taxes other than the windfall levy to create jobs. In government, we will cut out the waste, inefficiency and wrong priorities in the £300 billion Tory spending bill to meet Labour's priorities.
Mr. Waldegrave rose—
Mr. Prescott: No, I am going to carry on.
As a start, we will use our windfall levy on the privatised utilities to put 250,000 unemployed young people back to work. We think that that is a top priority and we intend to implement it. That will release resources to invest in education and front-line services, instead of increased public expenditure on the welfare bills of failure. Other spending plans will be paid for by re-ordering existing priorities. The bureaucracy in the health service—
Mr. Waldegrave rose—
Mr. Prescott: I have gone on too long. The right hon. Gentleman agreed with me when I said earlier that I would sit down.
On education, we have made it clear that we will cut class sizes to 30 for six and seven-year-olds, financed by abolition of the assisted places scheme. All those arguments were heard during the Wirral by-election. People there gave their judgment. Their message to the Government is: enough is enough and time is up. Soon the people of the whole country will judge us in a general election. What we say today will be judged in that election. This debate, called by the Government to deal with Opposition policy, will only confirm the view of most people that they have had enough of this Government and want a Labour Government to take their place.
6.32 pm
Mr. David Hunt: I congratulate my right hon. Friend the Deputy Prime Minister on a brilliant speech. He set out the ingredients of a winning general election campaign. The economic figures were remarkably robust. Many of us cannot recall such consistently good economic figures for a generation. That would be thrown away if there were a change of Government. He also exposed the inadequacies of the Opposition, which were exemplified by the speech of the right hon. Member for Kingston upon Hull, East (Mr. Prescott). We had some fun with him, particularly when he departed from the script carefully prepared for him by my long-standing friend, the hon. Member for Hartlepool (Mr. Mandelson).
Now and again, the right hon. Member for Kingston upon Hull, East assumed virtual reality, especially in a series of comments in which he said that, while the Government may have targets, the reality remains the same. He never sought to answer a point that fills me with anger. We may laugh at him, but what he said could be serious for the country.
The right hon. Gentleman is trying to pretend that he could walk into a position—we are not sure which—in a Labour Government, were Labour to win, and—against the background of the policies that he set out—would be able to stop the country falling into the economic ruin it fell into under the previous Labour Government. Last time, things were so bad that the Labour party then failed to win a general election for 23 years.
The right hon. Gentleman mentioned the Wirral by-election, but the last Wirral by-election was 21 years ago next week. Before my constituency was split into Wirral, South and Wirral, West, there was a by-election. He kept referring to the Wirral by-election, so I shall tell him what happened at it.
The country was in a serious economic mess. The Labour Government had inherited unemployment of 500,000, and trebled it to nearly 1.5 million, without tackling any of the economy's deep-seated problems. Inflation was rising fast towards 30 per cent. That was why Labour changed the link for pensioners from prices to earnings. It was done not to increase pensions, but so that pensioners would not get the increases they should have got for prices that were roaring ahead. [Interruption.] If the right hon. Gentleman could desist from calling me a twit—
Mr. Prescott: It was said by another hon. Member.
Mr. Hunt: I heard the right hon. Gentleman.
Madam Deputy Speaker (Dame Janet Fookes): Order. I think that that proves my point about the valuelessness of seated interventions.
Mr. Hunt: The fact that the right hon. Gentleman has not sought to answer a point raised during the Wirral, South by-election makes me especially angry. I remember the Wirral by-election, because I remember the state of the country at the time. However, during the Wirral, South by-election, he went on the BBC's "Close Up North" programme. He has not responded to the question that was put to him, but I am willing to give way at any stage of this analysis. His only comment in his speech in

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discussing free eyesight and dental tests was that Labour would present the electorate with its priorities on public expenditure. He did not seek to explain the context of his remark on television, but merely referred to Labour's public expenditure priorities.
In his last general election manifesto, the right hon. Gentleman said that he would restore free eye tests and dental checks. I am sure that the member of the audience who put the question knew the right hon. Gentleman's track record: that he had always fought for that right—not an aim, but a right, a restoration.
For the sake of accuracy, I have managed to get a transcript. I have a video of this programme, and I offer the right hon. Gentleman the opportunity to watch it. I have not found many takers for such an opportunity. I would be happy for him to see it, because he would see that his body language could have left no one in the audience in any doubt what he was saying. The audience member asked:
"Should everyone, regardless of age, have access to free eyesight and dental tests as a matter of routine?"
The right hon. Member for Kingston upon Hull, East answered:
"Yes. I think it should be a right."
Not an aim, a right. He went on:
"You've got to find the money to finance it".
If I had heard the so-called deputy leader of the Labour party say on live television, "You've got to find the money to finance it," I would have concluded that he was trying to communicate to the electorate of Wirral, South that the money would be found to finance it. That would not have been an unfair analysis. I feel very angry indeed that, following that broadcast, the Labour party issued a statement saying that the right hon. Gentleman
"gave no such spending commitment: the Tories have deliberately misquoted him."
I am a devotee of the election manifesto of the right hon. Member for Kingston upon Hull, East. I have a copy here. I saw him shake his head when my right hon. Friend the Deputy Prime Minister said that the right hon. Gentleman had pledged a statutory minimum wage of about £3.40 an hour. He shook his head and said no. Under the headings "Labour's Way" and "The Economy", alongside some pretty pictures—if I can describe them as such—of the right hon. Gentleman, his manifesto refers to
"a statutory minimum wage of about £3.40 an hour."
The right hon. Gentleman cannot continue to have it both ways. He promises the electorate in his manifesto and promises the electors of Wirral, South one thing, and then comes to the Dispatch Box and says the opposite. If he had wanted to make sure that the electors of Wirral, South and the people watching that television programme knew exactly the position, he could have said, "By the way, this proposal is not in our early manifesto."
Mr. Alistair Darling: Will the right hon. Gentleman give way?
Mr. Hunt: No. I have said that I will give way to the right hon. Member for Kingston upon Hull, East. For the sake of the record, I should say that I noticed that the hon. Member for Edinburgh, Central (Mr. Darling) has
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spent much of the debate so far trying to brief the right hon. Gentleman. I seek no apology for that, but will he excuse us if we point the finger at him when we ask who is making the policy of the Labour party, and ignore the deputy leader? We are talking about the deputy leader of the Labour party on live television making a clear commitment without qualification.
Mr. Darling: The right hon. Gentleman was a member of the Cabinet at the time of the last election. He will recall that the Conservative party had stood on an explicit platform of cutting tax year on year. He was in the Cabinet when that promise was made, and it was broken. He is in no position to lecture anyone.
Mr. Hunt: We were in a recession that had continued for longer than anyone, including the hon. Gentleman, had expected. The context of the world recession has been set out in the speeches that we have already heard. When it came to a balance between cutting NHS and education spending—crucial and critical spending—or increasing taxes, I had no hesitation in going for increasing taxes. The hon. Gentleman seeks to deflect me from my point. I will not be deflected. I shall return to it in one moment. I take pride in the fact that, although there have been tax increases to maintain and increase public expenditure on critical services such as the NHS, there have been 25 tax reductions.
Mr. Darling: Can the right hon. Gentleman refer us to the precise passage in the 1992 manifesto in which it was made clear that the pledge to reduce taxes year on year was qualified to the extent that, if it turned out that there was a recession, the pledge would not be kept?
The Conservatives knew all about the recession at the time of the last election. The Prime Minister is on record as saying the day after the election that he knew that his Government would be deeply unpopular. Where in the 1992 manifesto is there any qualification of that pledge? Is not the truth of the matter that the right hon. Gentleman and his colleagues deliberately misled the British people and fought an election on tax promises which they knew they could not sustain? That is why no one trusts them, and why they lost Wirral, South.
Mr. Hunt: That is untrue and incorrect. There was no question of any such deliberate intention. I have clearly said that, when it came to a choice between cutting public expenditure and increasing taxation to maintain critical levels of spending on crucial public services, I had no hesitation in approving tax increases. Of course we had to increase taxes, in view of the background economic situation.
Mr. Jacques Arnold: Does my right hon. Friend agree that the significant difference is that the Government faced the realities of coping with the economy under the pressures of a world recession, whereas the Opposition have responsibility for nothing, and their policy changes from one week to the next? The only difference is that the hon. Member for Hartlepool (Mr. Mandelson) has overruled the deputy leader of the Labour party.
Mr. Hunt: I am grateful to my hon. Friend, but it is difficult. We still have not received an answer from the right hon. Member for Kingston upon Hull, East on

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the specific points that I have put to him. I do not know whether the hon. Member for Edinburgh, Central will be replying to the debate, but perhaps he could have one of his characteristic conversations with the right hon. Gentleman, and perhaps the right hon. Gentleman will give us a reply before the end of the debate.
Mr. Clive Betts: Will the right hon. Gentleman give way?
Mr. Hunt: I should be happy to give way to the right hon. Member for Kingston upon Hull, East, but he has not sought to intervene.
I am angry that things were said in the Wirral, South by-election that were patently untrue. I warn the right hon. Gentleman that I am carefully monitoring what electors tell me was said to them by a series of Labour Members of Parliament by telephone and on the doorstep. I have given one example, and the right hon. Gentleman has not sought to deny it. I have the transcript and the video. It is shameful that he misled the electors in that way.
The right hon. Member for Kingston upon Hull, East said in his speech that there were great difficulties with the European social model at the moment. According to the right hon. Member for Livingston (Mr. Cook), that model will be our economic policy under a Labour Government. I do not know whether the right hon. Gentleman has disclosed to the Opposition spokesman on foreign affairs that he believes that there are great difficulties with the model, but it is the model that this poor country will face if it were ever to elect a Labour Government.
There is another example of deliberate misleading. I have here a survey by Merrill Lynch entitled "UK economics: weekly perspectives". Under the heading "The Social Chapter: does it matter?", it says that the key question for Britain is whether we should have the social model or the British enterprise model, which has proved so successful. Merrill Lynch poses several questions. It says:
"supporters of membership sometimes also argue that signing the Social Chapter should have little, if any, adverse effect on the flexibility of the UK's labour market."
It says that the claim is made that
"once in, the UK can veto measures it does not support. As Mr. Blair said at the CBI, 'Each piece of legislation will be judged on its merits. I have no intention whatever of agreeing to anything and everything that emerges from the EU'".
That was from 14 November 1995.
Merrill Lynch then proceeds to analyse over several pages whether that statement by the Leader of the Opposition is true. The conclusion of that independent body is that the statement is "not true". That is a nice way of saying that someone has told an untruth. The paper says:
"Some areas of social policy are outside the Social Chapter, others are subject to majority voting. But on a series of key issues, votes are on QMV and the UK would have no veto. The UK would have to go along with the majority."
I had the privilege to serve in the Cabinet as Secretary of State for Employment, and I attended Employment Council meetings. I know the dangers of signing up to the social chapter, and I shall just give one or two examples from other countries. Indeed, their Employment Ministers
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used to share their frustration with me because they were subject to the following provisions of the social chapter. In Belgium, for example, all planned overtime must be notified in advance to the authorities. In Spain, overtime is limited to—
Mr. Prescott: This is not directly to do with the social chapter.
Mr. Hunt: Yes, it is.
In Spain, overtime is limited to under two hours a week, which is equivalent to 80 hours a year. In Sweden, parents are entitled to a minimum of 450 days of paid leave between them following the birth of child.
Mr. Prescott: That is nothing to do with the social chapter.
Mr. Hunt: The right hon. Gentleman may shout that from a sedentary position, but when I was Secretary of State for Employment, fighting the United Kingdom's interests in the Social Affairs Council, there was a proposal that we should introduce a parental leave regulation. The acceptance of such burdensome provisions was intended to bring us into line across Europe. I vetoed that proposal. If this country had signed up to the social chapter, I would not have been allowed to exercise that veto.
We always had informal working lunches with our opposite numbers on the Social Affairs Council, when my colleagues used to say to me, "I wish we had a veto. I wish we had the courage of the United Kingdom to stand out against the European social model." The right hon. Member for Kingston upon Hull, East admits that there are great difficulties with that model at the moment. Could he please have a word with his colleagues on the Labour Front Bench and persuade them to back off from their commitment to sign up to the social chapter? Indeed, all our partners in the European Union would like us to do that. They, too, would like to resile from the social chapter.
I have met many European partners who have told me, "If only we had the same flexible labour market as the United Kingdom. We would then see our unemployment rate coming down as it has done in the United Kingdom."
I listened to the right hon. Gentleman, and I am extremely depressed, disillusioned, and still angry. The sort of nonsense that he is peddling really means that voting Labour at the next election will mean voting people out of a job.
6.51 pm
Mr. Robert Sheldon: Much of the debate so far has been about guessing Labour's future expenditures, but we have the facts about the Government's expenditures. After 18 years, there are a load of facts about how they have projected their expenditures, not necessarily in the interests of the country, and where they have been excessive in their expenditures and not received value for money.
My right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) quite rightly referred to the possibility of an audit on the Treasury. When I first became Chairman of the Public Accounts Committee, the Treasury suggested that it could do an efficiency audit on

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the National Audit Office—a move which I did not welcome. I countered that by suggesting that perhaps the NAO might first do an efficiency audit on the Treasury. We never heard anything after that.
It might be thought surprising that the Government have given a day to debate expenditure when they are so vulnerable, because the facts are there to see. I understand that an annual debate on expenditure is necessary to determine priorities and to get the views of Members. I agree with the suggestion that we should get rid of the autumn Budget, with its expenditure implications, because that presupposes that we can do a trade-off between revenue and expenditure.
We know that that has not happened, because no one outside the Government can propose increases in taxation. There is no possibility of increasing expenditures, either. One is left with a phoney debate about the relationship between income and expenditure. As a result, we have messed up the parliamentary year. The sooner we revert to a spring Budget, as suggested by my hon. Friends, the better.
I should have thought that, given the facts on the Government's expenditure, they would want to keep them quiet. They might have thought about debating that record on a Friday afternoon, approaching the summer recess, when it would not be exposed. Let us look at the record of Government expenditure. Let us not look to the future, about which very little is known, when we can consider the past and present, about which a great deal is known.
All Governments have expenditures that they have come to regret, but this is the first occasion when a day has been set aside unnecessarily just to consider certain types of expenditure that need to be questioned. First, I should like to refer to central Government net debt interest. In 1979–80, the net debt was £8 billion—I agree that that was in the then current terms—and today it stands at £24 billion. Is a leap from £8 billion to £24 billion a sensible use of public expenditure? The Government have had to spend that money because of the way in which the economy has been run. That expenditure is wholly unacceptable, and not very prudent.
The eighth report of the PAC dealt mainly with fraud and corruption. I was pleased when the then Financial Secretary, the right hon. Member for Ealing, Acton (Sir G. Young), gave a full endorsement of the report's proposals. I welcomed very much the November issue of "Regularity and Propriety", which contained everything that the PAC wished to see. It is important to note that that was wholly admirable.
It was important that the eighth report should ensure that the levels of fraud and corruption were looked at carefully, but it also drew attention to the inadequate stewardship of public money and assets. We referred to
"Failure by departments to establish effective monitoring of non-departmental public bodies which they fund and sponsor, leading to failure to detect waste and irregularities."
We referred to
"Inadequate oversight by those in authority…failure to ensure that delegation of responsibility is accompanied by clear lines of control and accountability, leading to the waste of large sums of public money."
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We also drew attention to the
"Failure to take prompt corrective action when things begin to go wrong."
We made a blanket criticism of many of the things that had gone wrong.
Let us consider the actual detail of what has happened. I will not go back into the long distant past; I will confine myself to something rather more recent. The Pergau dam, for example, cost £234 million of public money. How was the decision made to spend that amount? Did we get value for money? We found out that an assessment of the dam was made by two people, who were sent to Malaysia to study the site on behalf of the Overseas Development Administration. They spent just two days there, and then came back and said, "It's okay." After just a two-day visit, the decision was made to spend £234 million. I am not even certain that they got to the site.
I note, of course, that that project had political overtones. One should not forget the famous note of dissent from Sir Tim Lankester, who pointed out that it represented an unreasonable expenditure of public money. That was his right, and when he came before the PAC he could claim that the fault did not lie with him because he had been overruled. We found that the path led to the Minister for Overseas Development, the Foreign Secretary and the Prime Minister. It then became a matter with political overtones. Nevertheless, it did not represent a good example of spending public money.
Then let us consider the Ministry of Defence's management of fire risks. The tale of the major weaknesses in its fire risk policy is almost unbelievable. In 1983, there was a conflagration at the Army store depot at Donnington, when £170 million of Government stores of various kinds went up in smoke.
The elementary fire precautions had not been taken. The PAC produced a stinging report on that failure, and received assurances that there would be improvements. Then, in 1988, another fire occurred at Donnington—the same place, the same sort of fire. There was £180 million-worth of damage this time; it was more expensive because some of the stores had been replaced, although we presume that they would not have replaced those stores that were not quite so essential.
In 1996, we looked at the problem again. There had been two fires in the same place and there had been a failure to take the obvious precautions, yet in 1996 we found that the Ministry of Defence did not even have a full record of the buildings it occupied, let alone whether they were at risk of fire. That, after 15 or 16 years of Conservative government. If the Government were really anxious about public expenditure and the control of public expenditure, they should have been looking at such matters. The Government did not lack reports—the problems did not come out of the blue—but they failed to take the action that had been recommended and strongly urged.
Let me turn now to part of the works programme for the management of the Trident programme, referring to Faslane, the Clyde base which services submarines. Construction of that base was started before the designs were completed—a risky task, which, when involving £1 billion, becomes even more serious. In 1984, the programme was expected to cost £694 million—£1.1 billion at 1994 prices. The total spent up to 1994 was, in fact, £1.9 billion—a stupendous overrun of £800 million.

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Why did that happen? It happened because of inadequate management and inadequate practices. The PAC report stated that the Committee was "astonished"— a word that is rarely used by the sober members of that Committee—by the ways in which the money had been spent. The PAC is experienced in the ways of the world, but its examination led to that strong language being used. At the peak of the work, and at one time—this is unbelievable—1,000 consultants from 67 firms were employed, at a total cost of £360 million. How did people get into the base with 1,000 consultants milling around? I could not believe that money had been spent in that way, but the Committee found that it was true.
So there we see another example of public money being wasted by a Government who are supposed to be concentrating on matters of public expenditure. I know that all Governments have made mistakes of that sort, but they do not come to the House on a Thursday afternoon and have a debate on them. They leave the matter quiet, and hope that people will not notice. They hope that, when they say that certain matters will be put right later, we will accept their assurances.
Mr. David Hunt: I recall that the right hon. Gentleman served in the last Labour Government with Joel Barnett, now Lord Barnett. Has he had an opportunity to read the speech that Lord Barnett made yesterday in the other place, in which he praised the Government's handling of the economy, and said that Labour would do no better and that it would need more tax?
Mr. Sheldon: My noble Friend did not say that—the right hon. Gentleman is misquoting him. Lord Barnett is my dear friend of long standing; I have a great attachment to him, so I always listen to what he says with great interest. What he said was that, at the moment, the economy is doing well—but what is to come? How can we be sure that that will continue?
My noble Friend speaks as one who, when he was Chief Secretary to the Treasury, wanted to increase expenditure on health and education, and he still hopes for improvement. As he rightly points out, improvements are possible without increasing expenditure, but they will be much smaller than he would wish—we must all agree with that. If we want very big improvements, it is obvious that we must increase expenditure; only smaller improvements can be achieved out of the modest increases in expenditure that come from savings elsewhere in Government programmes, but that method nevertheless offers some opportunities.
To return to the subject of the debate, the PAC issues about 45 reports a year, most of which are highly critical of the way in which the Government have spent taxpayers' money. For example, it is an astonishing fact that vehicle excise duty evasion is increasing. It increased by 18 per cent. during the period of the PAC's most recent report, and is now estimated at about £163 million a year.
That is a substantial sum of money, but the problem is made even worse by the operation of the Driver and Vehicle Licensing Agency, which admits that there are some 23 million unlicensed vehicles on the register. The agency does not know whether those vehicles exist or whether they have been scrapped—it does not know what has happened to them. That makes it difficult to run a licensing organisation of that sort.
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There are many other examples that I could quote. During my period as Chairman of the PAC, it has produced about 550 reports, and I shall pick out one or two recent subjects. First, there is the question of organised fraud in social security. That involves not the individual who claims a little more than he or she is entitled to, but bands of criminals going around manufacturing books, whose activities cost about £1 billion a year. We must do something about that. Then there is bovine spongiform encephalopathy, which is costing about £3.5 billion. Some of those difficulties might have been anticipated and some of the expenditure saved.
The Financial Secretary to the Treasury (Mr. Michael Jack): I have been listening with care to the right hon. Gentleman's speech. Does he not agree that action is being taken through the Benefits Agency and Post Office Counters Ltd. arrangement to deal with many of the fraud matters to which he referred? Would he also agree that not all the reports from the Public Accounts Committee and the National Audit Office are bad? Some have praised Government expenditure—for example, a recent report praised value for money in respect of privatisation receipts.
Mr. Sheldon: No doubt there have been several in which criticism has been muted or even absent. However, the right hon. Gentleman will be aware of the constant criticism of the privatisations. The PAC does not look at policies—we take the policy for granted, and ask whether we got value for money. Again and again, in respect of nearly all the privatisations, we have pointed out that there were ways of getting better value for the taxpayer—for example, by selling the asset in tranches.
One should not sell off the whole of asset at one go; one should take one's time and see what the market will bear, in the same way as one sells one's gilt-edged stocks—the right hon. Gentleman will understand that one does not sell them all on 1 January, but feels out the market and sells according to the state of the market. That method was never used in the privatisations, although it was employed to a certain extent when British Telecom was privatised. So many privatisation issues were made without the full value of the asset being obtained.
In passing, I make the point that the suggestion of selling in tranches came from a Conservative Member, the right hon. Member for Horsham (Sir P. Hordern). We made use of his valuable suggestion; it is a pity that the Government did not use it more fully.
To return to other examples of Government mistakes, there were the expenditures on the poll tax and on the Child Support Agency. There was the scandal of the works of art at the Ministry of Defence, when 200 out of 900 valuable works were missing. I understand that other Governments might have a similar record to the one held by the Conservative Government, but for a Government to hold a debate on the subject when such a debate is not essential suggests that they have something of which to be proud. They have nothing of which to be proud.
The record on the spending of taxpayers' money is not good. If the Government felt that the debate was necessary, they might have kept it a little quieter.

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The purpose was to expose the plans of my right hon. Friends, but instead the Government have exposed their own record.
Mr. Alex Salmond: On a point of order, Madam Deputy Speaker. This afternoon, Ministers heard the Minister of Agriculture give the House the impression that the slaughterhouse document that was the subject of the statement this afternoon had been passed to the Scottish Office. That seemed remarkable, given that the Scottish Office had established an inquiry by Professor Hugh Pennington and that the professor had not had sight of that document. It now appears that Scottish Office officials are briefing the press to the effect that the Scottish Office did not have that document.
There seems at the very least to be substantial confusion between these two Departments as they pass the poisoned chalice to one another. May I expect that on Monday, if not sooner, we might have a statement from the Secretary of State for Scotland or the Minister of Agriculture, clarifying the matter and saying who was responsible for not giving the copy of that vital document to Professor Hugh Pennington to assist in his inquiry into E. coli 0157?
Madam Deputy Speaker: As the House will know, the Chair is not responsible for the accuracy or otherwise of the words of any Member of the House—indeed, were they to be responsible, I doubt that anyone would be found to occupy the Chair—but I have no doubt that those sitting on the Treasury Bench will have heard the hon. Gentleman's words, and perhaps this matter can be pursued another way.
7.10 pm
Sir Archibald Hamilton: I start by apologising to my right hon. Friend the Chief Secretary for the fact that I shall not be here for his winding-up speech tonight, as I have a long-term engagement that I cannot avoid.
Public expenditure has always been notoriously difficult to control, and it is sad that we still have not got away from the ethos that causes people to believe that a "good" Secretary of State is one who obtains a generous settlement from the Treasury in the public expenditure survey round. The Treasury is always painted as the enemy, and the press does not much help by criticising Ministers who have been seen to lose out in battles with the Treasury.
It is a small regret of mine that during my long and very enjoyable time in the Government, I was never a Treasury Minister, but as a taxpayer I know where my interests lie in this battle, because it must be in the interests of all taxpayers to have a Government who control public expenditure, provide good services and, where possible, lower taxes.
I am always amazed by the attitude of the right hon. Member for Kingston upon Hull, East (Mr. Prescott). In some remark about the provision of personal pensions, he said that that was an area which had cost the Government money. That is not true. What happened is that people who were prepared to pay money to provide their own pensions received tax relief and kept a little bit of their
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money, which otherwise the Government would have taken. Opposition Members' attitude seems to be that all our money belongs to the Government, and they are extremely generous to allow us to keep some of it. That is a major difference in the attitude of the two sides of the House to people's money.
We all know that Britain has an impressive record on inward investment. The total inward investment stock stood at £150 billion last year, and it is a credit to British industry that our investment abroad stood at an even higher figure—£214 billion.
There are many reasons for our great record on inward investment, not least the trade union reforms, which have transformed industrial relations, and a very well-educated work force. There has been deregulation and privatisation. A very important factor has been our relatively low public expenditure and taxation—relative, that is, to western Europe. It must be a matter of congratulation to my right hon. and learned Friend the Chancellor and my right hon. Friend the Chief Secretary that our public expenditure is 8 per cent. below the European Union average.
However, we are in danger of being complacent. It has been said many times tonight that we live in a world marketplace. We do trade, and must trade, with countries outside Europe. Public expenditure of 41.5 per cent. of gross national product, although it is reducing to 40 per cent., is not especially good if comparisons are made with many of the other countries with which we trade.
The fact that our western European partners are even worse should be no reassurance. Federal and state taxes as a percentage of GNP are 33.3 per cent. in the United States and 36.2 per cent. in Japan. In many of the young economies in the far east that are becoming extremely assertive, the figure is probably about 30 per cent. I know that they have young populations and do not have the problems of aging people that we have in western Europe, but those are the countries with which we must compete, and it is important that we start to bring our public expenditure down to their levels. I hope that we shall set ourselves new targets. I hope that, having hit 40 per cent., we shall start bringing our public expenditure down to 35 per cent., to enable us to compete with the world at large.
The right hon. Member for Kingston upon Hull, East made noises about the social model not working very well in western Europe at the moment. That must be one of the understatements that we have heard tonight—an understatement to beat all understatements. France and Germany are suffering from appallingly high wage costs, very high social costs heaped on top and very high public expenditure. As has been proven in this country, those countries want proper Conservative Governments, because it is crucial to liberate their markets, to denationalise their industries—it is amazing how much industry in France remains in state hands—to regulate their trade unions and to improve industrial relations. It is also crucial that they move much of the burden of social provision from the public to the private sector.
Germany's problems are very great. It is already exporting many of its manufacturing jobs to eastern European countries such as Poland, Hungary and the Czech Republic, and those problems can only get worse when those countries eventually join the European Union.
I congratulate my right hon. Friend the Secretary of State for Social Security on the plans that he has unveiled to reform pension provision. Such reform will have a

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significant impact on public expenditure, albeit far in the future. Once again, where Britain leads, Europe should follow, because the pension liabilities of some of our European partners, which will start to come to the fore in about 2015 or 2020, are horrific. Some of them will have to find moneys equivalent to 50 per cent. of gross national product then. They cannot sit and do nothing; they must start taking action now. In Chile, where the pension provision system was changed by General Pinochet 20 years ago, the effects are starting to come through only today. It takes a very long time indeed for such changes to work their way through.
Any Government of this country must limit the totals of public expenditure, and that means that there must be constant pressure to contract out services, with all the political significance that that has. It means that, in many cases where sections of the public sector have been moved into the private sector, there are redundancies, and sometimes people are paid lower wages, but I am afraid that those are some of the consequences of the competitive pressures of the marketplace being brought to bear.
We must continue with the privatisation programme, and I sincerely hope that we shall consider privatising the Post Office, because unless it is privatised, it will go nowhere. It is already falling drastically behind in the world communications market and it needs to invest in a mass of new technology. The money for that investment cannot possibly be found from the public purse. As we have seen, there are vast pressures on public expenditure. The investment that the Post Office needs is so large that it could never be afforded by the public sector. I do not believe that there is some squirmy way of getting out of the problem by creating a hybrid, halfway between the public and the private sector.
The Post Office must be denationalised and opened up. It must be given all the opportunities that were given to British Telecom when it was privatised, to invest in all the latest technology, to expand, to compete abroad and to become a serious international company. If we do not denationalise the Post Office, it will simply die on its feet. There is no alternative.
I am delighted to hear that we are to denationalise London Underground. Once again, there is an organisation in desperate need of investment. There is no way that that investment will come from the public purse. The sooner we get it into the private sector, the better, so that it can receive the investment that it needs.
There is clearly more to be done with prisons and hospitals.

Against that background, it is incredible to suggest that a Labour Government, if there ever were one, could come anywhere near matching the Conservative record on reducing taxes and controlling spending. Labour surprised me by suggesting that it could keep within the control totals set out by my right hon. and learned Friend the Chancellor for the next two years. As has been pointed out already, included in those figures are privatisation receipts of £1.5 billion. Where will the money come from, if Labour is not prepared to entertain privatisation?
It is fallacious to suggest that if £2.5 billion-worth of council house sales receipts are spent, somehow that is new money that does not count against the public expenditure totals. That is not the case. The fact is that if the money is drawn down, it will have to be replaced,
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because it represents loans to councils. All local authority spending, on council houses or anything else, goes towards the public expenditure totals. If the money is spent, it will still count and will be extra public expenditure, so it would not be possible to keep within the totals for the first two years.
The minimum wage will have a devastating effect on the public sector. It is usually suggested that the minimum wage should be brought in at £4.26 per hour. That is what everyone seems to think would be a significant minimum wage, if it were to happen. It would be a significant cost to the public sector—£3.7 billion. Once again, that would increase the pressures on public expenditure upwards.
The impact of a minimum wage would be much greater than its effect on the public sector wage roll. It would victimise those in our society who are least well educated and least skilled, and older people who are incapable of learning new skills. I have never understood how it can be argued that a labour market is different from any other market. If one shoves up the price of labour, one employs fewer people, because businesses cannot afford to employ them, or because they use automation and machinery instead. The effect is to push up the cost to the public sector by putting many people who were in employment on to the dole, where they claim income support and become a burden on the taxpayer.
It is incredible to suggest that socialists, whether old or new Labour, have changed their attitude to spending other people's money. Labour councils are some of the highest-spending councils in the country, and have been restrained only by the fact that their expenditure has been capped. Even that restraint would go, if we had a Labour Government. Immense extra sums would be spent by councils, if the capping restrictions were removed.
To anyone who has observed the political debate over the past few years, it is remarkable to hear any Labour party spokesman speak of restraining public expenditure, when all the attacks on my right hon. and hon. Friends on the Front Bench have focused on the fact that they have been cutting it. We hear nothing but the constant refrain of cuts on this, that and the next thing.
Public expenditure is extremely high in Britain. It is quite wrong for the Government to be accused of cuts, especially as most areas of public expenditure have grown. Moreover, it indicates a mindset. If Labour spokesmen are so concerned about cuts, can they be serious about restraining public expenditure, if they ever had the chance to do so?
What about taxation? What realistic chance is there that a Labour Government would cut tax? We inherited a standard rate of 33 per cent., with 83 per cent. being the top rate, and on top of that an unearned income surcharge of 15 per cent. It is almost unbelievable that some people were paying 98 per cent. of their income in tax, but that is what we inherited in 1979. Conservative Governments brought down taxes by stages. What did Labour do? It voted against every one. When my noble Friend Lord Lawson, in his Budget in 1988, reduced the top rate to 40 per cent., there was an outcry from the Opposition, as if an iniquitous crime was being committed, by bringing our rates down to an internationally competitive level.
It was not only on taxation that Labour consistently voted against what the Government were trying to do. Labour voted against every privatisation brought before the House. When one considers the record of success, it is

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extraordinary that the income to the Government from taxation receipts from the privatised industries is greater than the sum that was being paid out in subsidies to those industries before privatisation.
Labour was wrong about privatisation. It was wrong about the sale of council houses, and voted against that. Labour voted against trade union reform, and it was wrong on that. Labour has been wrong on every major decision taken by the Government and by the House. Why should Labour ever be right? Why should Labour ever be trusted by the people of Britain?
7.26 pm.
Mr. Malcolm Bruce: I was interested to hear the right hon. Member for Epsom and Ewell (Sir A. Hamilton), who made many fair points in defence of the Government's record, but seemed to be remarkably unconcerned about the social fallout from the massive changes that have taken place during that period. There is a fear among people that constant change, constant privatisation, the constant shedding of labour and the constant attempt to drive down public expenditure, all of which might be legitimate, nevertheless create significant social casualties, to which the Government have at times seemed rather indifferent.
An interesting fact, which brings that into sharp relief, is that the total number of extra people who have been claiming unemployment benefit since 1979, and the cumulative cost of those extra benefits, almost exactly equals the entire value of the taxation receipts from North sea oil and all the privatisation yields. That is why, at the end of 18 or 19 years, the Government's overall tax take is slightly higher than it was under the last Labour Government, and tax cuts have not been achieved across the board.
There have been changes in tax rates, and the burden of taxation and its impact have been changed, but the overall take has not significantly changed. That is because such an upheaval cannot be achieved without both social and economic costs. I am not saying that the changes were wrong or that benefits did not flow from them, but the Conservative party occasionally seems a little unconcerned about the people caught in the maelstrom, who have no control over the situation in which they find themselves.
For the record, I want to point out that my party—the Liberals, as well as the Liberal Democrats and the Social Democrats—did not oppose every privatisation. We did not oppose the privatisation of BP or British Airways. We were concerned about the way in which British Airways was privatised, to the disadvantage of other airlines and with the eventual destruction of British Caledonian and a number of other airlines. Similarly, we did not oppose in principle the privatisation of British Telecom, the electricity companies and British Gas.
However, we were concerned about the lack of competition and the consequences of privatising those companies in a monopoly state. We believe that those privatisations cost us a great deal, and their consequences have not yet been fully addressed. That is not to say that there will not be benefits at the end of the day. Nevertheless, the privatisations could have been conducted in a manner that advantaged the taxpayer: a greater yield could have
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been secured, as the Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), pointed out, and the consumer might have also had a real choice.
We actively supported much of the legislation reforming the trade unions—indeed, we pressed the Government for such reform on several occasions. We were ahead of the Government in calling for the abolition of the closed shop. I vividly remember calling for the abolition of the dock labour scheme in this House on a Monday, and the Government announcing on Thursday that that would occur. The port of Aberdeen was then paralysed by a dockers' strike, and the Prime Minister prayed in aid my remarks to justify her decision.
I put those facts on record because, although this is billed as a public expenditure debate, the tax implications and the changes that are taking place are part and parcel of it. I am somewhat intrigued by the Government's tactics regarding business planning. This is the third or the fourth Conservative Opposition day. I do not know how many more there will be but, by the time the House reconvenes in May, I am sure that the Conservatives will be well practised in the art of opposition—which is just as well because they will experience it for many years.
There is consensus across the parties that we need to control public expenditure not just in the interests of regulating borrowing, bringing down inflation and keeping taxation low, but because we know that the efficient targeting of public expenditure enables the effective delivery of public services to those who need them most. A specific aim of Liberal Democrat policy is to continue to bear down on, and control, public expenditure. We have made a commitment to hold non-education and non-health expenditure below the level of real gross domestic product growth in order to allow us to concentrate first on increasing real expenditure on education and health and secondly on reducing borrowing. That clear priority has been costed into the Liberal Democrats' alternative Budget, and it will also be costed into our manifesto programme.
Like Conservative Members, we were intrigued—indeed, somewhat astonished—by the shadow Chancellor's announcement that there would be no changes in income tax rates under a Labour Government, and that he would adopt the Conservatives' spending envelope for the next two years. I doubt very much whether the Conservatives really intended to adopt their spending envelope for the next two years—especially as they had tended to review it twice a year.
We part company with both the Conservative and the Labour parties in our belief that certain areas of public service expenditure are now so seriously deprived of funding that they cannot maintain acceptable provision at current spending levels. We accept that quality education and health are not all about money. However, we do not believe that it is possible to see real and significant improvements in standards and to achieve specific objectives without injecting additional resources.
We believe that every three to four-year-old child whose parents wish it should be entitled to nursery education. Both the other parties claim to support that concept, but neither is prepared to fund it. We believe that it should be funded from this year. We want to reduce class sizes, starting with the first three primary classes.

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We want to increase expenditure on books and educational equipment and improve the physical quality of the teaching environment in schools.
We have identified that expenditure as totalling about £2 billion a year, or £10 billion across a Parliament. We do not believe that that investment can be delayed any longer or that it can be funded by an increase in borrowing—which we all agree is too high. We believe that that investment could be funded by reversing the decision to cut the standard rate of income tax by a penny, which the Government announced in the last Budget. The Liberal Democrats have made a clear, unequivocal commitment to returning the standard rate of income tax to 24p in the pound in order to fund that expenditure.
I visited Wirral—where I have some family connections—the day before polling. I was interested by the number of people—many of whom were lifelong Conservative voters—who told me, "We shall certainly vote against the Conservatives. We are absolutely determined to get rid of this Government and we shall vote Labour to do that." However, quite a few added, "But we are not sure that voting in a Labour Government will make any difference." The Labour party has boxed itself in to such an extent—in the light of its record, I understand the reasons why—that people wonder whether it will be able to deliver the much-needed extra investment in education. Education was an issue in that by-election.
Those are perfectly honourable debating points: it is a matter of priorities and of legitimate choice. The Labour party is setting out its stall—I do not complain about that—and the electorate are entitled to make their own judgment. I contend that the people of this country believe that it will not be possible to improve the quality of education and maintain the quality of the health service within the existing spending priorities and via the modest changes that are on offer. When one says, "Whichever Government get in, taxes will go up," people just nod; they are resigned to that fact.
The sad thing is that people do not believe any of us any more. Their experience, particularly over the past five years, is that politicians will say almost anything to get elected and renege on their promises once that happens. That is a sad sign of the decline in the relationship between politicians and the electorate. We must try to re-establish that confidence. We should tell people honestly what can and cannot be achieved. I do not take issue entirely with the Labour party: I accept that Labour Members are trying to be honest about what may be achieved. However, there are some gaping holes when it comes to how Labour's pledges will be honoured.
At present, Conservative politicians are fond of attacking the credibility of Opposition spending and tax programmes, which distracts attention from their own policy. However, upon examining the Red Book and reading the speeches of the Prime Minister and his Ministers, I find it hard to believe that the Conservative party has a credible tax and spending programme for an entire Parliament—which is all right, because it will not need one. Nevertheless, I think that the public do not find it credible either. Most Conservative attacks on the Opposition are designed to distract attention from the fact that the Red Book forecasts do not maintain a credible scenario beyond the first two years.
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The Conservatives' promises depend on achieving some very optimistic forecasts. That is a significant point. The Chancellor assumes that, between 1992–93 and 2000–2001—that is the basis of his overall working assumption—there will be eight years of continuous economic growth at above 2 per cent. per annum. That has never happened in recorded British economic history.
Mr. Jack: We have never had a Chancellor like this before.
Mr. Bruce: It is all very well to say that. When challenging Opposition politicians, Conservative Members are fond of saying, "First, create your growth." However, the Tories are basing their spending plans on a level of growth that has never been produced. If they deliver it, they will be able to spend it; if they do not, their forecasts and promises are empty. That is the real situation.
There is also an element of modifying the books. When forecasting expenditure commitments, one traditionally assumes a flat unemployment situation—that is, one assumes that unemployment will remain at the same level as the previous year. The Government assume falling unemployment for the first year. I hope that they are right, but a change of forecasting technique has enabled them to claim that there is extra room for manoeuvre; all that they have done is changed the rules, to massage the figures so that they look slightly more acceptable. If they are unsuccessful, their promises will not add up. That is why the public are increasingly disillusioned about what the Conservatives have to say.
We all need to review certain base areas of Government expenditure provision. The Government's big idea on pensions, which they announced yesterday, is not so big really, because all the parties agree in principle that we have to do something about funding the earnings-related aspect of pensions in the long term if we are to deliver it. We all have reason to be ashamed that the basic state pension is inadequate and that it will be unsustainable even to provide an inadequate basic pension for many people who do not have alternative provision. All the parties agree on that. The Governments's proposals—at least with modified details—are within the ball park of what we all can agree.
It is a cheek for the Government to announce, after 18 years, without debate, and six or eight weeks before a general election, "We", one party, "are about to introduce the biggest overhaul in pension provision ever achieved." As they freely admit, they are looking to operate the programme over 30 to 40 years. If there is one matter on which all the parties should co-operate, it is how to fund pensions—something that will have to be managed by successive Governments of different political complexions. It simply is not good enough for one party to claim that it can sort out pensions on its own. I anticipate the debate next week, so I shall not dwell on that further.
We have to review the way in which further and higher education is funded, because the reality is that Government funding has been like a roller coaster: massive expansion, then a panic, then a sudden contraction, which has resulted in inadequate resources. There is nothing in place to ensure the proper management and sustained expansion of further and higher education to the quality that we need.

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The right hon. Member for Kingston upon Hull, East (Mr. Prescott), the deputy leader of the Labour party, argued about the extent to which the Government have passed on debt to local authorities. Apart from anything else, that has created conflict between central and local government, which is not healthy for the proper delivery of good-quality public services. It is simply preposterous for the Government to suggest that every council in the country is profligate, incompetent and disreputable in its delivery of public services.
The Government know that that is not true, and so do the public. There is a variation in quality in how councils deliver services, but the Government have consistently increased their expectations of what councils will do, while reducing the allocation of funds from central taxation. At the same time, they have reduced the ability of councils to raise their own revenue. Fifteen years ago, councils controlled 50 per cent. of their revenue; they now control 15 per cent. The Government have in effect taken the revenue from councils and used it to disguise their own incompetence, and refused to allow councils a realistic allocation of resources.
The Government have financed much of their programmes by selling off capital assets, but we are running out of capital assets to sell and mechanisms by which to sell them that give a good deal to the taxpayer and a good service to customers. I am prepared, as is my party, to consider any reasonable and realistic proposals. There is a proposal to privatise London Underground, but at a very low price in relation to its capital assets, and that does not answer the question of how one will sustain the service in the long term. If it is to depend on continuing massive taxpayer subsidies, there will be many questions about why private companies should be allowed to fund their profits from taxpayer subsidies.
I do not accept that it is not possible to fund publicly owned enterprises out of the private sector without increasing the cost on the public sector borrowing requirement. Risk-bearing bonds for specific projects are a perfectly reputable, well-established way of financing specific developments that do not need to be charged to the PSBR. It is the Government's ideological drive to privatise but not to explore the ability to bring in the private sector in a risk-bearing but worthwhile way to the mutual benefit of both parties. The job of the private sector is to bring the benefits of management and risk analysis. The job of the public service is to ensure that we deliver adequate services. It is perfectly possible for the two to be combined.
As we move towards a general election, the public will have before them two parties offering something that the public know that they cannot deliver: falling borrowing, falling taxes and rising public services. I have said on numerous occasions that there are not many people on earth who have learned how to walk on water, and none of them is on either of the Front Benches. The reality is that people want a presentation of what the priorities are; how they will be paid for; what can be done; and what cannot be done. That is exactly what they will get from the Liberal Democrats.
7.45 pm
Mr. Robert Jackson: Earlier today the House enjoyed a dress rehearsal for the general election debate ahead, although the right hon. Member for
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Kingston upon Hull, East (Mr. Prescott) will be in trouble with the hon. Member for Hartlepool (Mr. Mandelson) if his soundbites are as long as his speech.
At the risk of being a party pooper after all the excitement earlier—there is a pervasive air of unreality in the debate between the two Front Benches on public expenditure—I wish to say something about that and then to spell out in detail the implications that it has for higher education, to which the hon. Member for Gordon (Mr. Bruce) referred in an excellent speech. The unreality lies in the fact that both Front Benches seem to believe, first, that it is impossible to raise taxes, apart from Labour's one-off exception—the so-called windfall tax—secondly, that public borrowing must be reduced, not least to meet the Maastricht criteria and, thirdly, that it is possible at the same time to maintain public services free to their users at present standards or at even higher standards.
I believe that that is, to put it charitably, an unrealistic conclusion because most public services are labour intensive and their nature is such that machinery cannot easily be substituted for human labour. The price of labour in the public sector is largely determined by independent pay review bodies, operating on the principle of comparability with the private sector. Accordingly, the cost of public services will tend to rise roughly in line with those in the rest of the economy. However, if public borrowing is to be reduced and taxes cannot be increased, either the cost of labour in the public sector must be brought down, by abandoning the comparability principle, or the number of public sector employees must be reduced. Either way, the quality of public services will fall if my assumption—that technology cannot so easily replace labour—is correct and the funds for public investment in new technology are tightly constrained.
It is the proud boast of my right hon. Friends on the Government Front Bench that the ratio of public spending to gross domestic product in Britain has fallen to some 41.6 per cent. in the present financial year, and that it is scheduled to fall still further in future years. By ruling out increases in both taxes and public borrowing, the Labour Front Bench has implicitly accepted that Britain will continue to have the lowest public expenditure to GDP ratio in Europe. Well and good. I have no fundamental quarrel with that project, although I am not sure that it will carry public support when the implications are properly understood. As responsible politicians, we have a duty to face up to those implications, even eight weeks before a general election.
In spite of the remarks by the right hon. Member for Kingston upon Hull, East about the European social model, the position on both sides of the House appears to be that Britain's true comparators are not the countries of continental Europe with public expenditure to GDP ratios of roughly 50 per cent., but rather the United States and Japan with public expenditure to GDP ratios of 33.3 per cent. and 36.2 per cent. respectively.
It must surely follow that our aspirations in terms of public services should match those of the Americans and the Japanese rather than those of the continental Europeans. Alternatively, we must resign ourselves to running public services that lack the private sector-driven buoyancy of their equivalents in the United States and Japan and are increasingly degraded and slummy compared with those on the continent.

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What is the way forward? If the present Front-Bench consensus prevails, we are surely obliged to look at the way in which health, education and other public services are financed in the United States and Japan. Let me pick out one feature. In almost every case, services which in Britain and elsewhere in Europe are provided at public expense free to the users are funded in the United States and Japan on a mixed public-private basis. In my view, the only way forward consistent with our aspirations to keep a low public expenditure to GDP ratio and to maintain high-quality public services is to put them on a new financial footing based on a mixture of public and private funding.
I do not want to venture any general observations about how it should be done, except to say that we must recognise how astonishingly inept we have been in the past at handling the issue, notwithstanding the recent welcome innovation of the private finance initiative.

Every ideology—left, right and centre—has conspired to produce the result that in Britain services are either wholly private—in which case almost anything goes—or wholly public, in which case the Treasury rules, usually to the most obscurantist degree. We face a real effort of imagination—almost of self-overcoming—if we are to succeed on the road we really must take.
The best that I can do in the time I have today is to turn to one sector of public spending in which we are perhaps closer than in any other to embracing the idea of public-private co-operation: higher education.
In the universities, even at the height of the welfare state consensus, there always remained an element of private finance in the shape of the deemed contribution by parents to the maintenance of their student children. At the end of the 1980s, I had, as a Minister, something to do with the introduction of a further source of private finance through loans to students to enable them to finance part of their maintenance by anticipating their future earnings after graduation. Although the policy was fiercely resisted at the time, it is now seen to have been right and there is a emerging consensus that students and/or their parents should be expected to contribute further. A committee chaired by Sir Ron Dearing is deliberating on the matter and is expected to report in the mid-year—safely after the election.
I now come to what I consider to be the essential issue—whether, as some suggest, increased private contribution to higher education costs should continue to be limited to maintenance costs only, or whether it should be directed to the funding of higher education proper. In line with my previous argument about the implications of the attitude of Members on both Front Benches to tax and spending, I would plead with Front-Bench Members at least to keep the option open during the election campaign.
One reason for my request is that the additional finance that will be required to maintain higher education of an acceptable quality will not be forthcoming simply by shifting into university funding the residual public spending of some £1.3 billion which at present goes to student support, if that were to be the deal on offer. Sir Ron Dearing and his colleagues will make their assessment of what will be required and it would be wrong and, above all, unnecessary for Front-Bench Members to prejudge the matter before the committee reports.
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I said earlier that in Britain every ideology conspires to make us bad at managing private-public partnerships. The debate about higher education funding provides a good example in the shape of the widely held notion on both sides of the House that education must be free, so tuition costs at university must always be met by the taxpayer with nothing expected from students and their families. The great principle of universal free university education is absent in the United States and Japan, where the great private universities and the state universities charge tuition fees. It is also a comparatively recent innovation in Britain, where a deemed parental contribution to tuition fees remained until the late 1970s.
The notion that university education must be free to users has no philosophical justification. There is a logical link between the idea of compulsory education and the principle of state funding. If the state imposes an obligation upon parents, it has a duty to ensure that parents—or at any rate poor parents—can meet that obligation. Outside the limits of compulsion, however, it seems to me that there is no moral obligation on taxpayers to pay for education. The only considerations are those of expediency, such as at what price for education do undesirable consequences emerge in terms of participation rates or access by all social classes. Can it really be true, as the exponents of free higher education sometimes seem to argue, that the price of education to the student has to be set at zero to bring about any desired level of participation?
Is university education so poorly esteemed among the working classes, for example, that any price above zero will make it unattractive? One has only to ask those questions to know the answer. Practical experience since the introduction of student loans has demonstrated that requiring students to contribute to their costs while studying is compatible with higher participation rates in general and in detail with higher participation rates from the less advantaged social classes.
Two further fallacies underlie the ideology that although their maintenance might be paid by students themselves, tuition should not. The first is that there is a meaningful distinction to the student and his family, but in practice each student will have only one budget in which what matters is the size of his total outgoings rather than their various purposes. The second is that while tuition is a fixed cost, maintenance is a discretionary variable—as if the geographical distribution of our universities and the range of their courses were such that all students had an equal discretionary ability to save costs by living at home.
That brings me to equity, which must always be a central value in our public expenditure policies. Not only is it inequitable and unrealistic to assume that more than a fraction of students have the discretion to continue to live at home; there is also a marked inequity in the idea that the additional contribution we envisage from students should be towards maintenance rather than tuition.
If the entire cost of student maintenance has to be met by student borrowing, the effect will be to eliminate the contribution that is now expected from better-off parents, and amounts to some £800 million. Making students liable for all their maintenance costs would be socially regressive, in the same way as Shirley Williams' abolition of the parental contribution to tuition fees in the late 1970s.

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Still worse, if our main concern is to restrain the growth of public expenditure, the policy of requiring the student to contribute more to his maintenance rather than to tuition costs must be relatively expensive, at least until that distant date when income from the loans scheme will exceed expenditure on it.
As such a high proportion of the student body is from better-off families, the Treasury will incur substantial up-front costs as parental contributions are replaced by student borrowing. If, however, the parental contribution to student maintenance were retained alongside a private charge for tuition, most better-off families would continue to use their own resources to assist their student children to pay the bills.
In debates about public expenditure, it is all too easy to frame one's arguments solely in terms of the balance sheet, and that is how I have argued so far. We also have to recognise a deeper truth—that the way in which we pay for services can have implications for the way in which they are provided. Let me again apply that insight about public expenditure to the specific case of higher education.
There is a curious paradox in British universities today. In every other area of public policy, there is a healthy all-party consensus that decentralisation is desirable, that local units should be encouraged to get on with the job and that morale in public services depends on local initiative and local responsibility. In our universities, however, the whole trend of the last 20 years has been in the opposite direction. As the cost to the state of higher education has risen, the state and its agencies have, perhaps inevitably, become more and more directive and intrusive in their relations with the universities. The effects are well known to all who know the universities: a growing sense of powerlessness, and a pervasive demoralisation. The balance sheet may look good to the Treasury—more, much more, higher education at lower, much lower, unit costs—but what, meanwhile, is happening to what we think that we are buying?
Here we move beyond the question of resources to more fundamental questions, about the conditions in which activities such as university teaching and learning survive and flourish. I believe that what is needed is a greater measure of autonomy and local responsibility than the present state-dominated and state-accountable funding arrangements allow. Not only are more resources required for that, but, more fundamentally, those resources should be private, not public, and those who provide them should be accountable not to politicians and bureaucrats but to the users who benefit—or hope to benefit—from what they are paying for.
That is not to say that I am calling for a complete privatisation of the universities. That would be impracticable, and, in view of the importance of the public interest in higher education, it would also be undesirable. What I am pleading for in the funding of higher education is a mixed financial system, analogous to, for example, the system in the university of California. If we are to approximate to the American ratio of public expenditure to gross domestic product, let us at the same time adopt the admirable American system of higher education funding, in which the taxpayer's contribution is complemented by student fees so that the autonomy of
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universities is underpinned by the margin of financial manoeuvre that is secured by some 10 to 20 per cent. of income outside state control.
In the interests of social equity, the state should of course act to enable students to pay such fees. The student loan scheme should be extended—preferably outside the public sector borrowing requirement—to enable students to borrow up to a certain overall limit, both to maintain themselves and to pay their contribution to the costs of tuition. Beyond that the state should not intervene, except perhaps to insist that "means-blind" admission policies should be followed as a condition of state funding. In particular, the state should resist the temptation to try to fix the level of student fees. As the purpose of the policy should be to underpin university autonomy, the matter of fees should be left entirely to the autonomous institutions. It should be an essentially private transaction between universities and their students.
I make no apology for taking advantage of a debate on public expenditure to make a speech that is mainly about university finance. Not only is higher education an important branch of public spending in quantitative terms; it is also a striking example of how the way in which public spending works can affect the quality of the services being purchased. Our universities are like the proverbial goose that lays the golden eggs. So much do we appreciate the eggs that we are directing more and more effort to their mass production at the lowest possible cost-to-benefit ratio. As a result, the gold is rapidly turning to ever-thinner plate, and we are on course to create a university system that is over-centralised, over-bureaucratised and increasingly lacking in quality. In a country which has to live by its wits, that is unacceptable, and the first step towards putting the matter right must be to recognise the unreality of the assumptions about public expenditure, on both sides of the House, that have brought us to this pass.
8.3 pm
Mr. Andrew Miller: It is a great pleasure to follow such a thoughtful speech as that made by the hon. Member for Wantage (Mr. Jackson), although I disagreed with some of his conclusions, especially the one relating to his Californian example. The way in which the economy works in that part of the United States is so fundamentally different from the way in which it works here that I am not sure that it would be possible to import the system. Nevertheless, the House should heed the hon. Gentleman's thoughtful comments.
A few minutes ago, a telephone message was passed to me, consisting of some of my daughter's interim examination results. I am rapidly putting money aside for to fund her university education.
The debate began with what appeared to be a campaign to secure shadow Cabinet places under the next Labour Government. I want to deal with two specific issues, one of which was not dissimilar to a point raised by the hon. Member for Wantage. The first is public funding for science, which used to be—and doubtless still is—of great interest to the Chief Secretary to the Treasury; the second is the funding of local authorities. There are serious anomalies in the Government's attitude to both.
In his usual robust fashion, the right hon. Member for Wirral, West (Mr. Hunt) spoke about the Wirral, South by-election, and made a number of comments about the

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European dimension. A week ago today, I attended a party in Hulme hall, Port Sunlight, to celebrate a magnificent victory. The last time I was in that hall, I was negotiating with Unilever on the creation of a European works council—that was during my previous life. Unilever, one of our most successful companies, has agreed to set up works councils to cover the various divisions of its operations, and now recognises that there are benefits to both company and employees in keeping the organisation moving.
I return to the public funding of science. As most people will know, during the past two days, the Science and Technology Committee has been considering the subject of a sheep called Dolly, which has probably had more jokes made about it than any other sheep that has ever existed. Some important issues were raised. In a public hearing today, the Roslin institute gave extremely important evidence to the Committee.
What worries me is that, in our drive to lower the headline public expenditure figures, we are not looking behind that headline and at the detail. As a result, confusing messages are emerging. The Roslin institute has links with not only the Ministry of Agriculture, Fisheries and Food but the Home Office, the Department of Trade and Industry and the Department of Health, and the funding structure is very confused. We were shocked to hear today that the institute, which is doing very valuable work relating to animal husbandry and future medical benefits, is suffering massive cuts. It is rather ironic that the Minister of Agriculture should be limping with a broken limb today, given that one of the 30 per cent. cuts was in bone biology. We are missing the point. A long-term investment strategy should be adopted in such areas to ensure that the public get the best value for money.
One of the great problems—the Chief Secretary will recognise it from his days as a Science Minister—is the long gestation period of such research. It has been especially difficult to create the right financial structure in the United Kingdom to generate private sector companies that will support the type of innovative companies that exist on the west coast of California that do research in, for example, human genetics, and will give more support to the work of the public institutes and the universities. One company, PPL, works closely with the Roslin institute, but such companies are rare in this country.
Our venture capitalists seem to lack the confidence to support research in areas in which the Government might pull the plug. For example, tremendous work is being done with transgenic sheep, an area of research that may yield clear therapeutic benefits for cystic fibrosis sufferers. That will be of great benefit to individuals and, of course, to the public purse, because supporting those who suffer from complex genetic illnesses costs significant sums. Financially and morally, we should try to create the environment in which such research can take place.
Sadly, because headline cuts are needed to satisfy the soundbite politics of the Chancellor, we have not addressed the long-term strategic needs properly. The work that is the subject of the Select Committee's inquiry will receive a 50 per cent. cut in this financial year and is projected to lose all its funding from the Ministry of Agriculture, Fisheries and Food in the following year. That is shortsighted, and it will have two effects. First,
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it will mean that the Roslin institute has to cut its major research programmes that could be beneficial to animal husbandry and human health. Secondly, people will lose their jobs and, potentially, become a burden on the state. The entire team might be headhunted by countries with a more innovative approach to the public funding of science. The team could go and work on the west coast of the States, because of the different funding environment. I hope that the Government can give some reassurance to those people. The bizarre tabloid headlines of the past week may have woken the Treasury up to the need to continue funding for that research because of its long-term social benefits.
I shall now consider the problems experienced in Ellesmere Port and Neston, which the district auditor believes to be a well-run local authority. Again, the Government are missing the point about some serious problems. Extraordinarily, given the language that we often hear from Tories, the Government are missing the point about the relevance of investment. That shows in a wide range of areas. The Government have deployed various arguments to explain why they have changed the freedom of local authorities to establish their spending base. The Government now decide the total spending, the planning fees that local authorities can charge, and what they can borrow. Local authorities have to compete with other local authorities for additional resources, such as the single regeneration budget. The projects on which SRB money should be spent are also decided by the Government. That is bizarre. I do not understand how someone 200 miles away can determine the best strategic approach for the redevelopment of a town centre.
Last night, the council set a budget figure for 1997–98 that I predicted almost precisely when I commented on the Chancellor's local government figures in the Budget. The increase in the council tax is some 6.4 per cent. The district council collects the money for the county and the police authority, and those two institutions take up some 83 per cent. of the funds collected. Locally, we began the budget process with a Government decision that we needed to spend some 3.2 per cent. less than last year, despite inflation increasing by 2.5 per cent. The reduction of 3.2 per cent. in what we are supposed to spend is almost the highest reduction in the country.
The reduction in spending does not take account of comments made by the district auditor, or of programmes to promote inward investment and to raise housing standards. We all know the correlation between poor housing and poor health. Because of the inflexibility of the funding decisions, the programme of work to renovate pre-cast reinforced concrete properties has been halted, even though it would provide financial advantages for the local authority and the central Exchequer in the long term. If the programme remains stagnant for much longer, the authority will have to demolish properties because they will be beyond economic repair. That is not a good use of public money.
Similarly, there is less flexibility on business rates. Hon. Members who do not live in areas with heavy industry perhaps do not understand the problem. The petro-chemical complex that stretches from Runcorn to Ellesmere Port is a hazard site, and significant funds have to be invested to boost fire service protection and to deal with the environmental health issues that arise from public worries about pollution, yet we derive no benefit from the business rate, which is drawn down to the centre.

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The local authority is charged with the duty of collecting it, but it does not get its fair share back. Under the previous rating system, there was an element of equity. I believe that Shell was the biggest ratepayer in the county at the time, and that money was available to help boost the shortfall on fire safety and environmental protection issues. Again, we have found ourselves somewhat disadvantaged.
The result of the financial programme is that repairs have been postponed and staff have been reduced—including, I have no doubt, people from the direct works department, which generates a profit and is certified to BS5750. It has been able to get out into the marketplace and win some exciting tenders, but is being stymied by this process. We expect increased charges, even for services that affect our elderly population, such as bus passes. The programme of minor improvements is slowing down and the issue of balances is close to being a joke because the balances are almost non-existent.
How the calculation works and, as I have suggested locally in the past year, the fact that the Government seek to blame the local authority for its council tax rise, is clear when we see how the council tax calculation is made. Of the average increase of about £19.28, the local authority is directly responsible for only 8p. That is extraordinary when we see the Government again running the headline about the successes that they claim will emerge from the Budget.
All the Government have succeeded in doing in both the examples that I have cited is to pass the buck elsewhere. First, the headline cuts in public science will result in long-term disadvantages to the country as well as potentially higher expenditure on unemployment. Secondly, we are seeing an attempt to blame local authorities for something over which they have 8p in £19.28 responsibility. That is not a fair burden of blame. The real blame lies on the Government Benches.
We have heard today a number of examples of how the iniquities in society have grown worse as a result of the processes with which we are currently faced. The right hon. Member for Epsom and Ewell (Sir A. Hamilton) referred to the minimum wage, but he failed to address the other side of the coin. He did not seek to justify employers squeezing down wages and sending people down the road to gain family credit and income support. That is not a proper use of public money. We should set much higher standards than that.
We have also heard about people's rights. The Deputy Prime Minister referred to my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), to deal with what he was alleged to have said in a television interview. My right hon. Friend quite honestly said that he believed that people have rights.
I have referred at length to people who I believe have rights. For example, the people who will benefit from the long-term work at the Roslin institute have rights. The people in my constituency living in poor housing have rights. We as politicians should address those rights. That is where the Deputy Prime Minister missed entirely the point of my right hon. Friend's contribution. We must address the needs of those categories of people and we have a social responsibility to do our best to do that.
8.25 pm
Mr. Peter Brooke: The hon. Member for Ellesmere Port and Neston (Mr. Miller) paid a compliment to my hon. Friend the Member for Wantage (Mr. Jackson), to whom I thought the House owed a genuine debt for using this occasion for so elegant an analysis of a subject very important to our national future, following so swiftly on the Adjournment debate on the same issue initiated by our mutual hon. Friend the Member for Buckingham (Mr. Walden), at which my hon. Friend the Member for Wantage was also present. It is an index of the House's occasional serendipity that the hon. Member for Ellesmere Port and Neston should have followed on a directly analogous topic. I shall, however, be briefer.
I apologise to the House for my absence from the debate for an hour, of which I advised Madam Speaker in advance. I have for the past 20 years been a trustee of a third-world trust, and chairman for the past 10 years or so, and the timing of our trustees' meetings is dictated by the availability of our director, who is often in the third world. I meant no discourtesy to the House.
This is the first time that I have revisited a public expenditure debate since July 1989. Had that year's Government reshuffle—what I choose to call a shuffle—occurred in September 1989 rather than in July, I should have become the longest-serving junior Treasury Minister since 1979.
Today's are arcane matters, yet they constitute 40 per cent. of our national economic activity. In the third of a century between 1945 and 1979, each ratchet of the economic cycle, regardless of who was in government, found us at the end of each relevant ratchet with the economic indices of inflation and unemployment worse than they had been at the end of the prior respective ratchet. My own public expenditure responsibilities during my four years in the Treasury were restricted to assisting the then Chief Secretary in certain regards detailed in the document "Ministerial Responsibilities" of that era. My role was essentially that of Oddjob, the title assigned by the noble Lord Healey to his then Chief Secretary, the noble Lord Barnett, in 1974.
However, I derive vicarious pride, taking a long perspective, from the fact that the high point of public expenditure in the mid-1980s was down to 45.5 per cent. as a percentage of national income and is down to 43.5 per cent. so far in the 1990s, by comparison with 47.25 per cent. in the 1970s. That is a wholly beneficent trend, markedly different from the post-war third of a century that I mentioned earlier, and reflecting the admirable control of public expenditure by Conservative Governments since 1979.
In terms of the current public expenditure plans, I will dwell for a moment on education where, in succession to my right hon. Friend the Chief Secretary, and a little before my hon. Friend the Member for Wantage, I served as Minister with responsibility for higher education in the early 1980s. I have noticed that the Leader of the Opposition has said that his party's priority is education, education, education. My right hon. Friend the Chief Secretary and I inherited from the Labour Government an age participation rate in higher education of one in eight. It is an index of the economic success and the imagination of the Government that, despite our rigorous control of public expenditure, the higher education ratio has now

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reached one in three. I share with the Leader of the Opposition an enthusiasm for expenditure on education, but I would respect him the more if he gave occasional credit for the scale of the achievement by the higher education sector over the past 18 years.
Earlier this week, I attended a rather scrappy conference put on by some bishops, about what they called the forgotten 30 per cent. I mean no disrespect to the hon. Member for Newham, North-East (Mr. Timms), who spoke there, when I call the conference scrappy. That description is a reflection of its unfocused format.
I am proud that the Government have increased public expenditure per pupil by 50 per cent. in real terms over the past 18 years. I hope that, in the coming years, the increased spending on schools in the present plans will lead to an improvement in performance by the bottom 30 per cent., to match the advances by the top 30 per cent. that I have just mentioned.
Sadly, the commonplace objection to selection in schools—that it condemns many to secondary modern education—has not insured us against an unsatisfactory level of performance among the bottom 30 per cent. in comprehensive schools.
In Northern Ireland, where there is 34 per cent. selection, deliberate attention to the bottom 30 per cent. achieved, at least for a period, an improvement in that sector swifter than any such improvement in Great Britain. That proves that improvement at that level can be effected by the application of intelligence and effort.
I have one last thing to say about the present public expenditure plans. I realise why my right hon. Friend the Chief Secretary finds it necessary to cut public expenditure in small Departments in the same way as in large. Large Departments would complain if he did not. But value for money is a key motivator of the Government, and my right hon. Friend will recall his time at the old Department of Education and Science, which I mentioned earlier.
I do not know about my right hon. Friend, or, indeed, about my hon. Friend the Member for Wantage, but during my time there, my detailed knowledge about expenditure in the area of my responsibility was far greater than it could ever have been when I was Secretary of State for Northern Ireland. I dare say the same might have been true when my right hon. Friend was at the Ministry of Agriculture, Fisheries and Food, or at the Department of Health.
Because of the greater familiarity with what one is spending, and thus the ability to be much more in control, in a small Department, I share the unhappiness of some of the clients of small Departments, because cutting those Departments causes them disproportionate damage, yet makes very little difference to the greater sum of things.
Having been rigorously objective about the Government's plans, I shall allow myself a moment of self-indulgence to comment on the public expenditure plans of Her Majesty's loyal Opposition. I appreciate that "plans" is an imprecise word to describe the aims and aspirations to which Opposition Front-Bench spokesmen periodically allude.
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Earlier tonight we heard the deputy leader of the Labour party, the right hon. Member for Kingston upon Hull, East (Mr. Prescott), deliver an exegesis of his views on eye tests. As Lewis Carroll wrote:
"'When I use a word', Humpty Dumpty said in a rather scornful tone,`it means just what I choose it to mean'".
It is noticeable that some of the pledges from which the Opposition claim that they have resiled have been repeated not once but twice, many of them since November last year, when they originally alleged that they had not been pledges at all. We cannot reasonably be blamed if we recall the words of the Bellman, another of Lewis Carroll's characters:
"What I tell you three times is true".
The line that clear statements about the Opposition's intentions, with clear spending implications, were simply jeux d'esprit, or thoughts collected in a ramble through the woods, does not retain credibility if the risk-laden words are spoken time and again. Nor is disingenuousness about public accounting rules, as in the case of council house receipts, halfway to being an amulet. Labour spokesmen may convince themselves that they are protected by Humpty Dumpty definitions, but it is certain that the financial markets would exact an instant punishment for such disingenuousness.
Of course I acknowledge the fact that Treasury Ministers must make assumptions. Conservatives see virtue in learning from the past. In 1974, the Labour Government made assumptions that underestimated by £4 billion, in 1974 sterling, the level of their public sector borrowing requirement, on which they built their spending plans. From that, so many of their subsequent difficulties flowed. It is unreasonable of the Opposition to deny the Government the right to make assumptions about the Opposition's stated intentions of substance.
The Labour Government did not learn from their mistakes. After everything that they had done between 1974 and 1976, their public expenditure White Paper dated February 1976 began:
"we intend broadly to stabilise the level of resources taken by expenditure after 1976/77".
Those words are worth recording in the light of what happened later that year, and worth measuring against the pious words that the shadow Chancellor has latterly been uttering about his present intentions.
My right hon. Friend the Deputy Prime Minister referred to the privatisation of London Underground. The responses of the Opposition on the day that my right hon. Friend the Secretary of State for Transport announced that were embarrassing. They were inept, irrelevant and primaeval. However, all was explained within a week, when Conservative Members received a letter from Mr. Jimmy Knapp explaining why he was against the privatisation. His very opposition has implications for the public finances.
The vacuum on health policy in the Labour party is equally embarrassing, and this time it cannot be covered up by promises about increasing public expenditure. The vacuum has been there a long time, but it was previously concealed by public expenditure promises. As was once said of Mr. Asquith:
"his well known lucidity of style was a positive disadvantage when he had nothing particular to say".

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As for pensions, the Opposition's knee-jerk reaction to the announcement by my right hon. Friend the Secretary of State for Social Security was the vividest of demonstrations that, to mix my metaphors, beneath the skin-deep pieties, the leopard has not changed its spots.
The Opposition will say that, despite their policy vacuum, they enjoyed the confidence of the electorate in the Wirral. They have paid us the compliment of adopting, hip and thigh, the commanding policies of the Government on economic management—but their attitudes to markets remain profoundly ambiguous.
The Opposition's imprecise statements about public expenditure have smacked of a communitarianism from the other side of the Atlantic, and of Michel Albert's propositions from this side of it, with their moral feel-good factor. However, the trouble with those theories is the fact that they blunt the rigour of markets, and are incapable of accurate calibration.
I appreciate the fact that those theories are, in part, a reaction to the wilder intellectual propositions of the new right in the United States. Forty years ago, in a course at the Harvard business school entitled, "Business Responsibilities in American Society", I was brought up to believe in the tenet that a private corporation has responsibilities to customers, to employees and to the community at large, as well as to shareholders. All hon. Members have in their constituencies hundreds of companies that pursue exactly the same policies, from many motives, of which intelligent self-interest is not the least.
It is, I fear, the miasma of communitarianism towards which a patently under-prepared Opposition seek to seduce the country. That is why this debate, and the Deputy Prime Minister's powerful exposé, has been so valuable.
When I was in the Treasury, we had a saying that that which could not be measured did not exist. That proposition was once put to the test by the Foreign Office, which we all know and love, when there was concern about whether Mr. Ernest Bevin, who was then Foreign Secretary, would be able to get through the doorway between the main spare bedroom and the main spare bathroom in the Brussels embassy.
A telegram was sent to London saying:
"Please verify diameter of Secretary of State".
The reply demonstrated what many of us had long feared—that the Foreign Office is more literate than numerate:

"Unable verify diameter but circumference is 60 inches".
An inability to measure precisely is a hazard in the public finances, too. I quoted earlier the Bellman in "The Hunting of the Snark"—whose ending the House will recall. It is because the Opposition are pretending to be a Boojum, but we suspect that they are really a Snark, that we shall revisit this subject time and again before polling day.
8.38 pm
Mr. Stephen Timms: I am pleased to be following the right hon. Member for City of London and Westminster, South (Mr. Brooke). I was
1104
pleased, too, that he drew attention to the conference that he and I attended at Central hall, Westminster, earlier this week, which addressed the issue of the forgotten 30 per cent. Whatever the defects of its format may have been, it directed attention to a proper concern about the state of our nation.
The stark central fact facing the next Government, as they consider their policies for public expenditure, will be that Britain is more unequal today than it has ever been this century. The very rich have done brilliantly since 1979, but the hardest-up 10 per cent. are 17 per cent. worse off. That inequality is getting worse. Britain is becoming more divided and more troubled every day. At the coming election, the question facing every voter is whether to let that situation carry on getting worse, with the Conservative promises to scrap inheritance tax and capital gains tax—which are paid overwhelmingly by well-off people—or to elect a different Government who will put fairness first and will stop the huge handouts to the rich.
There is no doubt about the size of the task that we face. Study after study has found a growing gulf between the wealthiest and the poorest in Britain. The Institute for Fiscal Studies found in 1994 that the gap between the highest and the lowest wages in the United Kingdom was the biggest since records began. It reported that the wages of the top 10 per cent. of male earners rose from 1.67 times the median wage in 1979 to twice the median in 1993. Meanwhile, the wages of the lowest-earning 10 per cent. fell over the same period from 69 per cent. to 58 per cent. of the median.
Since 1980, earnings inequality has risen faster in Britain than in any other industrial country apart from the United States. We have the third highest proportion of low-paid workers after the United States and Canada. The top 20 per cent. of earners take 67 per cent. of total income, while the proportion taken by the bottom 20 per cent. has fallen from 14 per cent. to 9 per cent. The bottom 10 per cent. take just 2.5 per cent. of total income.
In a survey last year, 90 per cent. of people, including a majority even among the highest-earning groups, said that they believed that the gap between the highest and the lowest incomes was excessive. People know that that inequality is wrong. The Catholic bishops' recent document, "The Common Good", pointed out that a society in which the gap between the top and the bottom is so great is not meeting the common good. Having engineered the conditions in which inequality flourishes, the Government have stood aside and watched, refusing at times even to admit what has happened.
The Government's policies on public spending over 18 years have left a deeply divided nation. Crime flourishes as legitimate economic opportunities become scarcer and young people turn to other means to earn a living. The Deputy Prime Minister said—12 years ago, admittedly—that
"Against a background of high unemployment, the invitation to crime becomes more appealing. Idleness becomes a resentment that gives crime an indefensible normality."
He was right. I hope that he is as concerned as I am that in my borough of Newham in east London, 39 per cent. of young people under 25 are without a job and 45 per cent. of households contain nobody in employment.
The heart of my argument is that that yawning inequality harms everybody, not just those at the bottom of the scale. Through our taxes, we all pay for

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unemployment and the price of economic failure. We all suffer if people are scared to go out at night because they think that they might be mugged. We all have to pay for the extra security to protect our homes from burglary. It is a remarkable fact that, whereas in 1979 we spent twice as much on education as we did on the costs of unemployment, today we are spending more on unemployment. We must shift that priority back. The central objective in our public expenditure policy must be to address the deepening inequality.
I was interested to see an article in Monday's Financial Times by a former United States Secretary of Labor. Under the heading, "The menace to prosperity. Widening inequality poses a threat to the US and other societies", he rightly pointed out that
"there is no escaping the underlying moral question, which is also a political one … Are we, or are we not, still in this together?"
I have three central criticisms of the Government's public expenditure policy over the past 18 years, which has brought us to the position that we are in. First, too little has been spent on investment and too much on consumption. Secondly, too much has been spent on welfare and too little on education. Thirdly, in a rather different category, there has been too much secrecy around the decisions on how Government finances are spent.
There is a striking graph in last month's Bank of England inflation report, showing the proportion of gross domestic product committed to fixed investment in each year since the 1950s. It shows that since 1992, the proportion spent on fixed investment has been at its lowest levels since the mid-1950s. We have a desperately bad record on investment.
Mr. Brooke: I realise that the hon. Gentleman is talking in absolute sums, but I am sure that he would be the first to acknowledge that the absolute sum does not necessarily determine the return on the money.
Mr. Timms: I entirely accept that. My point is that the proportion of our GDP that goes in investment has been very low, particularly since 1992. That has made a big contribution to the problems that I am describing. My right hon. Friend the deputy leader of the Labour party pointed out—I think that I heard him correctly—that we are 19th out of 19 for investment in the OECD.
That is particularly true of public expenditure. The point has been made tellingly recently by Yvette Cooper of The Independent. Although the overall level of public spending as a proportion of GDP has not changed much in the past 20 years, the composition of it has. We are spending far less public money on investment—that can be explained only in part by privatisation having reduced the need for public investment—and far more on current consumption.
Yvette Cooper points out:
"Such low levels of investment (in both public and private sectors) are brewing up problems in the long term. Across the board from physical infrastructure to teenagers, from council houses to social insurance, money that could have been invested to give a return has been diverted to current expenditure instead. Sooner or later that was bound to cost us more."
On privatisation, she goes on:
"when assets were sold income streams were lost too, yet the money raised was not invested. Privatisation proceeds were used for tax cuts and to meet current spending bills instead. The gap between the value of the state's physical assets and its financial liabilities … has deteriorated badly as a result".
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After what has happened, it is no wonder that Britain has had trouble meeting its bills and that the Government have been forced to raise taxes significantly since 1992.
The Government's principal response to the problem of inadequate publicly sponsored investment has been the private finance initiative. There are many questions about the way in which that initiative has been implemented and its effects so far. I have a number of questions for the Chief Secretary to the Treasury. The Treasury Committee said in January that it was sceptical about whether the £2.5 billion due to be spent under the PFI in the coming financial year would be achieved, given that by December only about half that amount had been committed. How much of that £2.5 billion has now been committed? According to the Red Book, even assuming that that figure of £2.5 billion is achieved, total publicly sponsored capital spending is due to fall by £300 million next year. Will the figure be even lower, because the £2.5 billion of PFI expenditure will not be achieved?
Another problem with the PFI is the undue secrecy that surrounds the deals. I shall come back to that point later when I talk more generally about the way in which the Government conduct the economy. I believe that hon. Members need to see the details of the deals that have been done, to establish the extent to which value for money has been achieved and to scrutinise properly the spending of taxpayers' money. The excuse for withholding the details from Parliament on the ground that the negotiating position of Departments' future deals would be compromised, is a licence for unnecessary secrecy.
I wonder whether the Chief Secretary will be able to say more about how the Government can justify that defence for secrecy. Will he confirm that the details of the Treasury building PFI redevelopment project will be released as soon as the final contract is signed? Many questions are being asked about that project.
In an earlier intervention, the Chief Secretary haltingly confirmed that not one of the major hospital PFI projects that have been announced has completed the financing deal. At the same time, transport projects under the PFI are surging ahead and apparently yielding 15 per cent. savings, which I welcome. That raises a concern about the extent to which spending priorities are being distorted by the PFI process. I wonder whether the Chief Secretary is concerned that some Departments where projects are well suited to the PFI model, such as Transport, are able to grab the lion's share of investment, while other key Departments are left starved of the necessary investment.
I am also concerned about the monitoring of future PFI commitments. The Department of Health said that it is not collecting the details of PFI commitments incurred by NHS trusts. If that is so, how are the commitments being monitored?
The fundamental problem with the PFI is that far too many square pegs are being bashed into round holes. We need a well-defined set of project types for which private finance is appropriate and those for which it is not—it must be understood by contractors and Departments—instead of the present assumption that everything should be privately financed unless it proves impossible to do a deal.
Another failing to which I want to draw attention is the fact that we spend too much money on welfare and too little on education. In 1978–79 we were spending

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6 per cent. of our GDP on education and training and 2.5 per cent. on income-related benefits. Last year we were spending 5.6 per cent. on education and training and 5.5 per cent. on income-related benefits. Given what was said about education by the right hon. Member for City of London and Westminster, South, I believe that it is important to emphasise that the proportion of our GDP being spent on education has fallen. This year, we shall be spending more on income-related benefits than on education and training. Those figures eloquently make the case for a windfall tax. We need to make a serious investment to shift people off welfare and into work, so that we can reduce the amount of GDP being spent on benefits and increase the amount going to education and training.
My third criticism is about the undue secrecy in the process. I believe that I am right to say that it was the current Secretary of State for Defence who announced in 1992 the process of fundamental expenditure reviews. We have only the haziest idea about what has happened to those reviews since that time. Very little has been published. The Treasury has published the results of its review and I congratulate it on doing so. The Department of Social Security has published a couple of background papers from its review, but beyond that, hardly anything has appeared.
There are big choices to be made about the future of our nation. We need a debate about what should be funded through taxation. Why are such debates permitted only in a closed Cabinet Committee? That is in nobody's interest. The Chief Secretary agreed with me yesterday in the Treasury Committee that there should be material in the public domain from the fundamental expenditure reviews, but it has not happened.
The next Government must do things differently and be much less secretive about such processes, because better policies will result. We could avoid such half-baked proposals as those which emerged yesterday on pensions. Pensions is a topic on which there needs to be consensus, not the bouncing about of semi-finished proposals.
I hope that we can go further and employ techniques such as citizens' juries or surveys using new communication technology and the world wide web. In that way, we can solicit proposals and views, to ensure that our policy proposals on spending are balanced, well thought through and, where appropriate, based on consensus.
Geoffrey Hulme of the Chartered Institute of Public Finance and Accountancy proposed recently that there should be the publication in early summer of information on departmental spending performances and plans. It could include information on how much average households in different income bands contribute to taxation and what they receive in services. Select Committees could comment on how the priorities should be adjusted.
It would be a bold step to publish the key elements of the dialogue between the Treasury and spending Departments, but discussions between the Chancellor and the Governor of the Bank of England are now published, which would have been unthinkable a short time ago. I hope that the new steps that I have suggested could be taken, because there would be great benefit from wider parliamentary and public discussion.
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The problems that I have identified with Government public spending policy are that we have had insufficient public investment and too much consumption, too much spent on welfare and not enough on education and far too much secrecy in decision making on public spending. The consequence of those problems is the deeply divided Britain that we have today. We need to set a new course for public spending policy, so that we can start to repair the damage that has been done.
8.56 pm
Mr. Alistair Darling: I am grateful to my hon. Friend the Member for Newham, North-East (Mr. Timms), who delivered a typically thoughtful speech. I shall return to one or two of his comments later.
As many hon. Members, at least those from the Opposition, have observed, today has been another Conservative Opposition day. Two weeks ago, we had the Prime Minister debating our policies on the constitution—a debate in which we were happy to join—and this week it is public spending. Next week, we were to debate another Opposition policy, that on pensions. It is an indictment of the Government that, rather than debate their policies, their record or their proposals if they were to secure a fifth term, in the dying days of this Parliament and possibly the dying days of this Government, they are reduced to debating our policies.
The fact that the Deputy Prime Minister opened the debate speaks volumes about the Government's current negative approach to politics. One might have thought that the Chancellor would expound the Government's position on public spending, but we got the Deputy Prime Minister instead. A good proportion of Ministers was with him—not in their Departments running the country or preparing for the future, but as part of a crowd scene, a large doughnut for a tired and uninspiring performance.
It is no surprise that, over the past few months, the nation has been treated to the sight of a tired lion lying down on a poster: clearly, the picture was taken in Conservative party central office where the lion had listened to what was going on and, having drawn its own conclusions, was simply waiting for the Conservatives to fade into opposition. They have given up and are fading away.
The contribution of the right hon. Member for Epsom and Ewell (Sir A. Hamilton), who is sadly no longer here, was perhaps typical of the Conservatives' attitude: they simply deny the past and deny their record. Perhaps the right hon. Gentleman took his lead from an article that the Prime Minister wrote in the Financial Times about 10 days ago. The article was not by a Tory Back Bencher or a junior member of the Government, but by the Prime Minister, no less, yet it simply denied the past and the Government's record to try to claw back some ground.
The Prime Minister said that we had a low-tax environment, even though the Government have increased taxes on 22 occasions since the last general election. He had the gall to say that he had broken the trend towards big government, yet, as we have heard many times this evening, the share of Government spending has remained remarkably constant over the past 18 years at 42 per cent. of gross domestic product. He went on to say that he had put the growth of social security benefits on a downward path, yet they have increased by 88 per cent. since the

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Government took office. He said that the debt burden was under control, yet he has doubled debt since becoming Prime Minister.
The Prime Minister then repeated the same old bogus Conservative allegations about our proposals and said that we had not denied or withdrawn them. He knows full well, as does the Chief Secretary, that the bogus allegations about our policies have been denied right from the start, because they are nonsense, and the Tory party knows it.
My understanding is that the Tories' starting point was to get a figure that they could use against us and then to look around for a way of validating it. That is typical of the way in which they attack us. Last November, they had a figure of £30 billion; it dropped to £12 billion 10 days ago; and now it is back up to £30 billion. Their attacks have no credibility and their entire credibility is flawed because no one believes what they say on tax or about their own spending record. It is not surprising that no one believes the Conservatives when they attack our record.
My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said in an excellent speech that we do not have to use our imaginations or to fantasise because we know the Conservatives' record. To use his phrase, a load of facts are there for everyone to see. Let us compare what the Government said in the past about public expenditure with their record.
In 1979, the Conservative election manifesto said:
"The state takes too much of the nation's income; its share must be steadily reduced."
The share that the state takes today is 42.5 per cent. and it was 42.25 per cent. when we left office.
In 1996, the present Chancellor pledged that he would get public spending down. He should examine his record: he has never achieved that aim. The only time that the Government reduced the share of public expenditure was during the three years of the unsustainable Lawson boom of the late 1980s.
In a rare moment of candour—I understand that it was a semi-private occasion—the Prime Minister said in Chelmsford last October that the
"economic blot on the horizon"
that concerned him was
"the size of the fiscal deficit. That is a problem."
Indeed, it is a problem. All the evidence shows that to be true. The under-performance of the economy has pushed up the cost of social security and other public spending programmes associated with economic failure. That is why the share of public spending is almost exactly the same as it was 18 years ago.
As my hon. Friend the Member for Newham, North-East said, public investment programmes, which are essential to underpin a successful economy, have been cut to stave off an even worse deterioration in the public finances. The private finance initiative—the partnership between the public and private sectors, which I and my right hon. Friend the deputy leader of the Labour party so warmly endorse—has not effected a reduction in public spending because of the Government's failure to manage the programme.
The result of that failure has been that the tax burden has grown. On present plans, it is set to rise up to the end of the decade. The surge of borrowing in the 1990s over
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which the Prime Minister has presided has left us with a legacy of vastly increased debt service costs. My right hon. Friend the Member for Ashton-under-Lyne, during his excellent chairmanship of the Public Accounts Committee, has drawn attention not only to economic failure, because of the failure of Government policies, but to a legacy of Tory waste.
My right hon. Friend gave some examples, and I want to draw the attention of the House to one or two about which we did not hear much from the Deputy Prime Minister. The BSE crisis cost the taxpayer £3.5 billion. The poll tax cost nearly £4 billion in administration alone. The Chief Secretary to the Treasury has something to say about that. I understand that one of the ways in which he worked himself back into favour with Lady Thatcher was by being one of two Ministers who were willing to write out on the back of an envelope a replacement for the rates system. We got the poll tax.
The British public had to pay for those failures, whether in agriculture, taxation or the cones hotline, which perhaps sums up the Prime Minister and will be his enduring contribution. That is a testament to the failure of the Prime Minister and to the inability of the Conservatives to control public spending or manage it appropriately. Imagine, a cones hotline that resulted in each telephone call costing £5,000; what an indictment of the Government.
Capital spending also suffered. It is worth reflecting that, under the last Labour Government, £1 in every £6 was spent on investment. Under the Tories, investment has accounted for only £1 in £13. That is an indictment of the Government, because public sector capital spending is one way in which Government can assist economic activity. In 1992, the former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), claimed that he was protecting capital programmes, despite cuts in other expenditures. However, the Government's record shows that he did not live up to his promises. Publicly sponsored capital expenditure will be 12 per cent. in real terms, below its peak in 1992 and 1993.
The Government have broken their promises on investment and we are paying a heavy price for it, because the cost of economic failure has to be met by higher taxation and higher borrowing. The Government have no positive proposals on that. Instead, in the brief moments that we touched on our proposals to get people off welfare and back into work, which must be good economically and socially, the Government would not engage in the debate. They are not interested; they are prepared to write off a generation and pay the cost of that failure; or rather they expect the British people to pay it.
The cost to the country has been dear. Our borrowing has increased substantially. As my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said, it is worth bearing it in mind that the Government have had to borrow £66 billion more than they promised to borrow at the time of the last general election. In each year since that election, the Government have failed miserably to meet their borrowing targets. No wonder people do not believe their promises on borrowing, taxation or spending. That is a testament to failure.
I admire the right hon. Member for City of London and Westminster, South (Mr. Brooke) for his loyalty, which is no more than one would expect from a senior Member of

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his stature. However, if he cared to look at the Government's record over the past few years, he would see that we are paying a heavy price for the failure of their economic policies. The interest on Britain's debt means that we are spending more on servicing debt than on defence. What an indictment of a Conservative Government.
Mr. Brooke: Will the hon. Gentleman give way?
Mr. Darling: In a moment. Perhaps the right hon. Gentleman will attend to this question as he faces the electorate, as I believe that he intends to. How will he explain to electors that each household in his constituency is paying, on average, more than £1,100 to service the debt that his colleagues have run up over the past few years?
Mr. Brooke: Given the comparison that the hon. Gentleman made between debt and defence, does he recall that, under the last Labour Government, more people were employed by the Inland Revenue than by the Royal Navy?
Mr. Prescott: That is even truer now.
Mr. Darling: As my right hon. Friend says, that is probably truer now, especially as the largest cuts in the defence budget were made by the Conservatives. Despite everything that they have said about defence being safe in their hands, rather like the national health service, they have sliced into the defence programme.
The right hon. Member for City of London and Westminster, South must know that probably the second largest demonstrations in the past 18 years—the largest were those against the poll tax in places such as Tunbridge Wells—were those against the cuts in the regiments. I particularly remember those in north-east Scotland. He did not answer my point about debt. The Government's failure to keep their promises on spending has resulted in increasing borrowing, increased debt servicing costs and, of course, a major increase in taxation.
In the old days—when I first became a Member of the House and, I am sure, when my right hon. Friend the Member for Kingston upon Hull, East became a Member—whenever a debate took place on the economy, the one thing about which every Conservative Member spoke was tax. We have not heard a word about it tonight. No wonder, because taxation has become rather an awkward subject for the Conservative party.
In 1992, the Prime Minister said that the difference between the two parties was clear; the Conservatives would cut direct taxes. That did not happen. He said, in a memorable phrase:
"We have no plans and no need to increase the impact of VAT",
but VAT has now been imposed on domestic gas and electricity. No wonder people around the country take with a large pinch of salt the Government's claim that they do not want to extend VAT to food or anything else. At the last election, they said that they would not extend VAT, yet they did.
The Prime Minister said that he did not see any need to increase the burden of taxation. Yet the House will recall that he admitted the day after the election to his
1112
closest circle of colleagues that, within 12 months, the Tory Government would be deeply unpopular. He knew it because he knew that the prospectus on which the Government had fought the election would not stand up. He knew that they would have to put up taxes. Yet the Government did not tell people that that was what they proposed to do.
The Government's own Red Book confirms that the burden of taxation has risen since 1979 when they took office from 35 per cent. to 36.25 per cent. this year. Indeed, most people earning less than £70,000 a year will be paying more tax under the Tories. The tax bombshell that the Tories were proud to warn about at the last election has blown up in their faces. That is one of the reasons why they are losing by-elections and heading for defeat at the next election. They stood explicitly on a platform of cutting taxes, yet they increased taxes. More tax on income, more tax on spending and more tax in total. After 22 Tory tax rises, a typical family is paying more than £2,000 more in tax.
Mr. Bernard Jenkin: Will the hon. Gentleman give way?
Mr. Darling: The hon. Gentleman has not been in all night. As he has taken the trouble to come in for the closing speeches, perhaps he would like to get his name in the credits.
Mr. Jenkin: Does the hon. Gentleman support the European social democratic model?
Mr. Darling: My right hon. Friend the Member for Kingston upon Hull, East made the important point that if one compares Britain's growth record in the past 18 years with that of other countries in Europe, one sees that many of our competitor countries have done much better than us. As my right hon. Friend acknowledged, France and Germany have particular difficulties at the moment. We had particular difficulties four or five years ago. What people in Britain find dispiriting and depressing is how much Conservative Members now gloat about the difficulties that other European countries have.
I remind those Conservative Members who are still here that we trade with the rest of Europe. It is not in the interests of Britain to see Europe remain in recession. The sooner it recovers, the better it will be for Britain. What sort of a Government are so torn by internal fighting within their ranks that they invite the British people to delight in the misfortunes of other countries? What sort of outward-looking country is that?
Let us return to tax. Those of my colleagues who served on the Standing Committee which considered the Finance Bill will recall that we were deeply disappointed that the Chief Secretary to the Treasury did not see fit to join us this year. As I did not see him around the House and found that he was not included by the Tory party chairman in the line-up at press conferences called to denounce us, I took the trouble to smoke him out. I went to his constituency to try to find him. He was not there. They were all crying out, "Where's Wally?" There was no sign of the Chief Secretary.
I did find something. I found the last copy of the Chief Secretary's manifesto from the last election. It is a collector's item. It is so valuable that I have brought only

1113
a copy into the Chamber. The original is now in a safe. There is only one copy because he has retrieved them all. I know why he did that, because his comments at the last election typify the difficulty that the Tory party has got itself into. The House will recall that, then, all the Conservatives said that they would cut taxes, but the Chief Secretary went a little bit further than that. He said not only that tax would be cut but that it would be cut
"with 5 pence more to come".
How wrong can one get it? The Government put taxes up by '7p, so to get tax down by 5p more, they would have to make cuts for many a year. That typifies the Government's attitude—promises lightly given, with no intention of delivering them.
Although the right hon. Member for Epsom and Ewell referred to the high penal rates of taxation over which Governments of the past of both political colours have presided—very much in the past—he had little to say about the high penal rates of effective taxation that face people coming off benefit into work. Is there not a contrast between the unfunded pledge of the Tory party to abolish capital gains tax and inheritance tax at a cost of £4.5 billion, with half the gain going to fewer than 5,000 people—that is the Government's promise to the British people—and our objective to lower the starting rate of income tax to reduce the barriers in order to get people off benefit into work? That is good for them and extremely good for public finances because people will stop claiming benefit, and start paying tax. That makes for a better and more efficient country.
The costs of economic failure are substantial. The deep feeling of insecurity which permeates all levels of society, no matter how people are placed and no matter what their earnings, is having economic as well as political effects. Nearly 11 million people have had a spell of unemployment since 1990. People know that they should worry about their future, partly because the Government are simply drifting along with no clear sense of where they are going or what their role is, let alone the role of the country in the future.
Of course people are quite right to be worried about the Government and what they would do if they carried on creating economic failure. Before Christmas, the Chief Secretary and I took part in a television programme when the right hon. Gentleman said:
"There's no secret that the Conservatives, right back to 1979"—
have preferred to raise tax through indirect taxation. The lessons are quite clear.
As for the future, the Chief Secretary is, as ever, helpful. No doubt the House will be familiar with the interview he gave to "Milton Keynes on Sunday" a short while ago. The reporter asked:
"Are you going to tell us: 'Read my lips; no new taxes?'
Mr Waldegrave said: 'No, I won't do that. One cannot tell what may happen which would need some action.'"
He has learnt since the last election—no more promises of 5p more to come. Now he says that he cannot tell what may happen—indeed he cannot, because he knows the Government's record. He also knows something else. We have heard a lot about spending commitments, and it is worth reminding the House that the Tory party has been making a number of spending commitments, but it cannot say where the necessary funding will come from.
At the end of January, the Prime Minister announced what he called a "sharematch" initiative, which is meant to extend employee share ownership. I support that,
1114
but where will the £50 million come from? He has also said that he intends to reduce the uniform business rate, but that could cost anything between £500 million and £1.5 billion. The Government's decision on the royal yacht told us a lot about their strategy and their attitude to public spending. That decision was designed, as the Secretary of State for Defence said, to wrong-foot the Opposition, but that was something else that blew up in his face. The Government want to extend the number of cadet corps in schools, but that will cost £1.5 billion. Where will the money come from? [Interruption.] The Chief Secretary says that they have given no costings for that. The Government are always attacking us and claiming that we have given no costings.
Mr. Waldegrave: Will the hon. Gentleman give way for a second?
Mr. Darling: Do not worry, it will be just for a second, but in a moment. Will the right hon. Gentleman tell us the exact cost of implementing the proposal to extend the number of cadet corps in schools? Where will that money come from?
Mr. Waldegrave: It is not that it has not been costed, but that we have made no new policy in that area.
Mr. Darling: It was in The Daily Telegraph. The Government have made no secret about it; it was all over the news outlets. Talk about hinting, giving an impression and failure to deny. The Tory party was quite happy to give the impression that it wanted to extend cadet corps. Perhaps it is an aspiration. Perhaps it is an aim. Whatever it is, we do not know the cost of it.
That is typical of the Government's attitude to tonight's debate. The Deputy Prime Minister, the Chief Secretary and the Prime Minister have on numerous occasions on television and radio made bogus allegations against us, yet when we ask them where money is to come from—for example, to fund pensions with a cumulative cost of £150 billion, to fund the royal yacht, or to extend all the schemes that the Conservatives come up with and will continue to come up with between now and the election—they cannot tell us. In their heart of hearts, they know that the game is up and that no one will ever ask them again where the money will come from. They know that what awaits them after the election is not running the country but squabbling among themselves and fighting for the succession to whatever is left.
I was surprised that the Deputy Prime Minister did not treat us to his usual exhortations and encouragement, saying that we face the best economic prospects for a generation. I do not know of what that generation is—a normal generation is 10 or 15 years, but he might be talking about a generation of fruit flies for all I know. The fact is that, when we compare this country with others in Europe and the rest of the world, we realise that we are not doing as well as the Conservatives would have us believe.
We have one of the highest inflation rates in Europe—our long-term inflation rates are higher than most of our competitor countries. Yes, unemployment has been falling, but only one person in three coming off the unemployment list has actually found employment. The Conservatives claim that living standards are rising, yet

1115
the Chief Secretary admitted last year that people's take-home pay had fallen over the previous few years. In addition, there is the overlay of job insecurity—it is only the President of the Board of Trade who says that that is simply a myth. We are told that we have the fastest growth rate in Europe, yet if we look at the record for the Conservatives' period in office, we see that growth has been less than was achieved by the last Labour Government. A substantial part of inward investment comes, not from new companies coming in and setting up, but simply from takeovers of privatised utilities.
By staging this debate, which has now petered out, the Government have demonstrated their bankruptcy of thought. They have nothing more to say. They continue to make wild allegations and empty promises, but they are doing so before an increasingly sceptical public who know that their record on growth, inflation and borrowing is one of failure. After 18 years, people are entitled to a change: they are looking for a Government who have a clear idea, not only of the role of the Government, but of the role of the country in Europe and in the world; a Government who are prepared to end the drift; a Government who are prepared to enter into partnerships between public and private sectors; and, above all, a Government who have at heart the interests of the many, rather than the few. People do not believe the Conservatives and they do not trust the Conservatives. They are looking for a change and that is what they will get with a new Labour Government.
9.22 pm
The Chief Secretary to the Treasury (Mr. William Waldegrave): The hon. Member for Edinburgh, Central (Mr. Darling) overran his speaking plans by about 85 per cent., which I suppose will be the sort of overrun in the expenditure plans if he ever becomes Chief Secretary, so I shall not emulate him in that respect. He might profit by reading the speeches and articles of his hon. Friend the Member for Birkenhead (Mr. Field) on the truth about security of employment and pensions—a subject to which I shall return later. The hon. Member for Birkenhead has the sense and the courage to recognise that the measures introduced yesterday are basically right.
My right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) made the point that the fundamental shift that has occurred during the course of this Government is that the worsening cycles that took place during the 1950s, 1960s and 1970s have been reversed. In every one of those cycles, unemployment was higher at the worst point and inflation was higher at the subsequent recovery point than in the previous cycle. In 1975–76, Mr. Peter Jay, the then son-in-law of the then Prime Minister, wrote a series of famous articles in The Times warning that if that worsening widening of the cycle continued, we would face catastrophe. I believe that his then father-in-law began to pay attention, because there was a change in atmosphere towards the end of that Government—a change in which the present Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), probably played a part.
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Since then, that worsening series of troughs and peaks has steadily evened out. I agree with the hon. Member for Edinburgh, South—
Mr. Darling: Central.
Mr. Waldegrave: I beg the hon. Gentleman's pardon. I agree with the hon. Member for Edinburgh, Central that we should take no delight in the problems on the continent of Europe, our major trading partner. The quicker that a recovery is found there, by a return to the roots of liberal economics on which those countries established their success after the war, the better for all of us. They now find themselves in the position in which we found ourselves once upon a time: each trough is deeper in terms of unemployment, each recovery higher in terms of inflation. We have reversed that trend in this country. It is part of my argument that part of the reason for that is that we have turned round the trend in the growth of public expenditure.
The hon. Member for Edinburgh, Central is extremely skilful at focusing on the short term. I want to direct him to the wider picture. As my right hon. Friend the Member for City of London and Westminster, South said, under Labour and Conservative Governments in the 1950s and 1960s, the trend of public expenditure was up, as it was in other countries. It works equally well whether one measures that growth from peak to peak or trough to trough or draws the average line. The peak in the 1950s was 37 per cent., that in the 1960s was 42 per cent., that in the 1970s was 47 per cent., that in the 1980s was 45 per cent. and that in the 1990s was 43 per cent. The troughs reveal the same pattern. Unquestionably, there has been a long-term turn-around in that trend line.
Other European countries marched in step with us upwards and continued upwards after 1979. That is why they now find themselves with public expenditure as a proportion of gross domestic product at 50 per cent. and in some cases 60 per cent., with the big countries at 50 per cent. or slightly higher, whereas we have separated from that pack and have returned to a clear trend line, which will be continued if a Conservative Government are returned to power.
Through the 1980s, the underlying level of spending fell by about 4 per cent. of GDP—about £28 billion. The hon. Member for Gordon (Mr. Bruce), the spokesman for the Liberal Democrats, laid before us a strategy on these matters. It may be my fault, but it was the first time that I had heard it. It was a clear strategy—relatively clear, at any rate. He said that he wanted to hold the growth rate of all public expenditure programmes, except two, below the trend growth rate of the economy. If the growth rate of the economy is about 2½ per cent., which may be slowly but surely increasing, most programmes should be kept below that. The hon. Gentleman would finance the remaining two—health and education—with higher taxes, but their trend growth should be higher.
Broadly, I take it—I may be simplifying slightly—that the hon. Member for Gordon believes that the proportion of GDP spent by the public sector should be broadly in tune with overall growth in GDP as a whole, with some programmes growing more slowly but two programmes growing faster. I may be putting words in the hon. Gentleman's mouth, but perhaps that means that Liberal Democrat policy is that public expenditure should broadly

1117
shadow the growth in the economy, so it should stay at about 42 per cent. That is a perfectly legitimate policy; I shall posit some arguments as to why it is not a good one, but it is at least a policy.
As usual, the Labour party obscured things. Labour Members made brilliant debating points on the short term—brilliant knockabout stuff about what someone said on Tuesday that was contradicted by someone three years before, and so on—but presented no underlying policy.
The hon. Member for Kingswood (Mr. Berry) has a policy all right, because he, I believe, is a proper socialist. I guess that he wants the public sector to take a bigger role. I do not think that I would be putting words in his mouth to say that. [Interruption.] I just happened to notice the hon. Gentleman there, and I thought that I would record for his constituents the fact that he was there. I suspect—I may be wrong—that he is someone who actually believes in the public sector.
Nobody knows what the policy of the Front Bench is. [Interruption.] The hon. Member for Gordon says that the hon. Member for Kingswood is deeply offended at being accused of being a socialist. I apologise for that. The hon. Member for Edinburgh, Central, however, has no policy. He did not match the commitment of the hon. Member for Gordon. He did not say that he thought that the share should be roughly what it is now, that it should go up, that it should go down—he did not say where it should go. We are, as usual, at sea with regard to the fundamental philosophy and principle of the Labour party on this matter, as on practically every other matter.
Our policy is clear, and I will state it. We will continue what we have undertaken since 1979. We will continue with that downward trend in public expenditure. Of course the hon. Member for Edinburgh, Central can point out that at a certain point in the cycle it will be higher than at other points, but there is a clearly downward-trending line.
Mr. Darling: Can the Chief Secretary tell us the percentage of spending that he is aiming for? That would be helpful.
Mr. Waldegrave: I shall return to that. There is a difference between short-term targets and what one intends in the future, but I would hope that the growth of public spending could be kept below the growth of the trend rate of the economy as a whole over time.
Mr. Miller: What percentage?
Mr. Waldegrave: That depends how far ahead one looks. The hon. Member for Edinburgh, Central thinks that he is being frightfully clever by trying to prove a difference between me and the Chancellor. He thinks, rightly, that I said that it would be splendid if we could achieve 35 per cent. whereas the Chancellor spoke about 40 per cent. next year. There is nothing clever about that. We will achieve 40 per cent. and then we will go on with the trend line.
Mr. Darling: I am not trying to be frightfully clever, as the Chief Secretary puts it. He will recall that two or three years ago he said that he was one of those in the Tory party who believed that the figure that should be aimed at was about 35 per cent., and that the Chancellor
1118
referred to those people as being from the slash and burn school. There is a significant difference between 35 per cent. and 40 per cent. We are entitled to hear from the Chief Secretary where he wants to get to in percentage terms. Does he still adhere to his figure of 35 per cent. or not?
Mr. Waldegrave: It is not rational to talk about a fixed end target. One must examine the growth of the economy over time, and the relationship. I am speaking the same sort of language as the Liberal Democrats, who were not trying to score silly points, but were setting out a policy.
Mr. Miller rose—
Mr. Waldegrave: I was going to refer to the hon. Member for Ellesmere Port and Neston (Mr. Miller). We have heard two kinds of speeches. We heard thoughtful and interesting speeches about the nature of public expenditure and the relationship between public expenditure and the economy—for example, from the hon. Member for Newham, North-East (Mr. Timms), but outstandingly from my right hon. Friend the Member for City of London and Westminster, South and from my hon. Friend the Member for Wantage (Mr. Jackson), who is no longer here and has explained to me why he cannot be present.
The hon. Member for Ellesmere Port and Neston, if I may say so, made a more old-fashioned speech. He took two areas of spending which he likes and lobbied for them. He said that he wanted more spending on science. We have a good record on spending on science. It will encourage him to know that research and development expenditure in the United Kingdom is 2.19 per cent. of GDP. The figures are from 1994, which is the last year for which the comparative figures are available for all the other countries. The UK figure was above the Organisation for Economic Co-operation and Development average of 2.15 per cent. and above the European Union average of 1.91 per cent. Spending on the science base has been protected and has increased in real terms.
The speech of the hon. Member for Ellesmere Port and Neston was a bid for more local authority spending and more science spending. Fine. It showed the difficulty that the hon. Member for Edinburgh, Central would have if he ever found himself in my office, because no one speaks from his Back Benches, as my right hon. and hon. Friends do, with an instinctual commitment to the control of spending. All his Back Benchers speak for lobbies and for increased spending—quite honourably, but that is what they came into politics to do.
Mr. Miller: I hope that the right hon. Gentleman will read my speech in -Hansard. My argument in the context of the Roslin institute is that the Government structure for that institute means, first, an increase in health costs; and, secondly, other problems such as unemployment. The key to the institute's success must be creating the right financial infrastructure that allows the public and private sectors to work together successfully. That structure has not been established, yet we are seeing cuts now.
Mr. Waldegrave: As always, the hon. Gentleman's argument requires more money. If he were to sit in my chair for a week or two, he would find that every spending

1119
bid was couched in those terms—I expect that the right hon. Member for Ashton-under-Lyne remembers that. When I was in the private sector, my company used to sell things to the Government. We would argue, "If you don't buy our products, people will be unemployed and it will be more expensive for you." That seemed to be a jolly good way of trying to sell our products. However, the Labour Government at the time were not much convinced by our arguments, and I am afraid that the Opposition would remain unconvinced by the hon. Gentleman's assertions.
Our belief in cutting spending does not derive from the advice of our public relations people. Labour's PR people have advised it that Labour lost the last election because it was perceived as a high-spending party, so Opposition Members now try to disguise their underlying beliefs. Our belief in low spending derives from our fundamental philosophy: we believe that the index of spending by Government is a good indicator of whether the balance between Government and the individual and Government and private institutions is correct. When spending gets too high and goes on growing, we believe that it damages individual liberty and independent institutions.
We believe also that it is economically beneficial to diminish the weight of public spending, and there is increasing evidence in support of that view. An interesting paper published by the International Monetary Fund in 1996 showed that the best and safest way of balancing budgets was achieved not by increasing taxes, but by cutting spending. That delivers longer-term balance to fiscal affairs, with all the attendant benefits. A separate IMF study—I shall be happy to send these publications to any Labour Members who wish to read them—made the more fundamental point that small Governments exhibit greater regulatory efficiency and inhibit less the functioning of labour markets, the participation in the formal economy and the innovativeness of the private sector. To put it in ordinary language: they produce more jobs.
I agree entirely with the hon. Member for Newham, North-East, the bishops and everyone else that job creation lies at the heart of the debate about the proper way to run an economy. My right hon. Friend the Deputy Prime Minister completely demolished the Opposition's old-style, subsidised jobs proposal. The hon. Member for Edinburgh, Central claimed that we would not debate that issue, but it was debated to such good effect this afternoon that my right hon. Friend demolished the Opposition's argument totally and there was no comeback possible from the deputy leader of the Labour party on that point.
In the first half of my political life, I watched Labour Governments trying to subsidise jobs and creating long-term unemployment. The trick did not work then, and it will not work now. The Opposition argue that they would somehow miraculously turn history upside down and tax one group of companies—which would inevitably destroy jobs in those companies—in order to invent subsidised jobs elsewhere. They could not do that. They would go down the social chapter route, destroying jobs with the minimum wage—as the deputy leader of the Labour party had the honesty to admit—and destroying jobs by joining in a whole range of job-destroying
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initiatives that come from central Europe. They would end up with higher unemployment, and thereby the central core of Labour's argument would be destroyed.
The argument as to who is better at creating jobs is almost being proven experimentally—in so far as we could ever have such an experiment. We watched countries in Europe—especially Germany—lead the way after the war with good, basic liberal economics, as the deputy leader of the Labour party said. That is what Ludwig Erhard said and what he stood for. However, when asked about this matter at the end of his life, he said that he regretted confusing the issue by talking about the social market. He said, "I wish I had not said that, because markets did the magic in Germany," and that is true.
Germany has now got itself into a cycle where it has placed such weight on its employers and put such costs on employment that it is destroying jobs, not creating them. The head of the German BDI—in the presence, I think, of the leader of the Labour party—made a famous speech contrasting the difference between the Government in Germany and the Government in Britain, to the favour of the latter. He knew very well what the situation was. Herr Henkel said:
"One of the Governments,"—
the United Kingdom Government—
"has steadily reduced state influence. The other,"—
Germany—
"has done no such thing … In Germany, the ratio of public spending to GNP has risen to 50 per cent. In Great Britain, it has fallen to 42.2 per cent … In Germany, average taxes on retained profits are 64.9 per cent. In Great Britain the figure is 33 per cent."
My right hon. Friend the Member for Wirral, West (Mr. Hunt), in an eloquent speech, made those points extremely well.
Labour has a fundamental misunderstanding. It has an extraordinary capacity to pick up the wrong ideas at the wrong time. When there was real danger to this country from enemies, Labour Members were pacifists—the present leader of the Labour party came in on the Campaign for Nuclear Disarmament ticket—but when there are no such immediate threats, they become very brave warriors, and they are now very much in favour of nuclear weapons, the armed forces and so on. When the German model was working, they were against it. They did not care for it then, but now it has stopped working, and because it has gone wrong, with their absolutely compelling eye for picking up the wrong idea at the wrong time, they are in favour of it.
I am afraid that that is the story of Labour's policy on almost every principal area. Labour Members pick up yesterday's ideas just when they have stopped working.
Mr. Dalyell: If the Chief Secretary imagines that the Germans will abandon the social chapter and they do not, surely the time will come, sooner or later, when our partners will say that the British cannot go on having their cake and eating it, and there will be consequences in our relations with our trading partners that may not be very comfortable.
Mr. Waldegrave: I am not entirely sure that I understand the hon. Gentleman's point, but if he is saying that the European compulsion on the Germans would be such that they could not liberalise their markets in the way

1121
in which they now know they must, so that instead they put the same costs on us, there would indeed be severe difficulties. It is thanks to the opt-out that the Prime Minister negotiated that that danger is greatly minimised.
Happily, powerful forces are at work in Germany—arguing quite the contrary to what the Labour party thinks that they are arguing—and beginning to say, like the head of the BDI, that they have to liberalise their markets, that they have to lift the costs off industry, and that they have to make Germany competitive again, and then Germany will once again become a formidable competitor. I have no doubt about that. The quicker that happens, the better, because competitive trade is a positive sum game. We all benefit if the German economy grows fast.
Mr. Darling: Will the Chief Secretary give way on that point?
Mr. Waldegrave: Briefly.
Mr. Darling: This is a debate that the Government chose to hold, so let us have a debate.
Does it not strike the Chief Secretary and the right hon. Member for Wirral, West (Mr. Hunt)—whichever bit of the Wirral that we did not win—as a contradiction that the social chapter has nothing whatever to do with the rigidities in the labour market of which many people in other member states are critical? Nobody wants to import those rigidities. Indeed, the whole thrust of what the Chief Secretary and his right hon. Friend were saying is that many people in Germany, France and Spain recognise that those rigidities have to be addressed to make those countries competitive. Does not that suggest that, far from writing them into the social chapter, there is a movement in Europe to recognise that the competitive threat in the future will come not from intra-Europe but from other parts of the world? Nobody wants to import those unnecessary rigidities into this country.
Mr. Waldegrave: The hon. Gentleman has made—with his customary style but on this occasion without his usual intelligence—my exact point: the Labour party is probably signing up to that policy just when it is falling to pieces in the hands of the people who invented it. I thought that that was what I had just said. Perhaps the hon. Gentleman would like to think about it a little.
We have managed to follow a policy that has brought the long-term spending trend down at the same time as protecting our principal priorities for spending. Spending on health has gone up in real terms every year since 1979. That did not happen under the last Labour Government. One year, Lord Barnett was compelled to make a real cut in the NHS budget. As has been pointed out, spending per pupil in nursery, primary and secondary schools has risen in real terms by 50 per cent. since 1979. Spending on law and order has doubled.
Although my hon. Friend the Member for Wantage is not in his place, I must comment on his most interesting speech. He gave us some extremely wise advice. He gave Front Benchers a warning that I hope we will all heed—that we should rule out nothing before the Dearing committee reports, as we may need to make fundamental changes in the financing of higher education.
The Labour party has opposed all the reforms that have enabled us to match the expenditure increases with a declining trend of public spending. My right hon. Friend
1122
the Deputy Prime Minister spoke about privatisation, so I shall not cover the issues again. There was a touching moment when an Opposition Member spoke about the selling of income streams. That applied in one or two cases, but mostly it was the selling of loss making. There has been a huge turn-around. There is now a benefit to the taxpayer of about £2.5 billion a year in tax receipts whereas there had been a huge burden on the taxpayer. Of course, Labour opposed all those measures.
The civil service is smaller. For the first time since the second world war it is now below 500,000. There has been a range of positive reforms, including the single regeneration budget challenge funding principle which the hon. Member for Ellesmere Port and Neston did not much like—or at least I took that to be his argument. Those methods of challenge funding have led to far greater productivity, as has the partnership between central and local government in the projects in which they are investing.
Our plans are sustainable. The plans in the Red Book maintain spending increases of about the same level over the next three years as those we have achieved in the past three. There is not the slightest chance that Labour could match them.
As we have already pointed out, Labour Members pretend not to understand the difference between our counter-arguments in respect of £12 billion and £30 million. In the first two years in which Labour has allegedly committed itself to our figures, there is a hole in expenditure and income which would leave a Labour Government £12 billion adrift. If Labour introduced any additional spending plans in those years, the gap would be worse.
I believe that £30 billion over five years is a perfectly reasonable estimate. One of the more independent commentators, Peter Riddell of The Times, took me to task on that issue. He said that I was exaggerating the extent of Labour's spending commitments and that the figure was nothing like £30 billion. He estimated that, over five years, a Labour Government would probably spend about 3 per cent. of GDP more than the Conservatives. As 3.5 per cent. of GDP would amount to £30 billion, we do not seem to be in any disagreement.
Labour has opposed every one of our major saving measures, including the criminal injuries compensation scheme which saves £200 million, measures relating to asylum seekers which save £300 million, housing benefit reforms which save £600 million and measures affecting benefits for single parents which save £200 million. Labour denounced all those reforms, often virulently.
The Leader of the Opposition gave us a rather good example of how the Opposition operate in these matters. On "The World At One" he was asked whether he would stick to our plans to make savings of £200 million—
Mr. Malcolm Bruce: Will the Minister give way?
Mr. Waldegrave: If the hon. Gentleman will let me finish the argument, he may wish to comment on what the right hon. Gentleman said.
When he was asked whether he would stick to our plans that save £200 million by the end of the period, the Leader of the Opposition said no. Reasonably enough, we took that to be a pledge that he would replace that spending.

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Labour then issued a piece of paper headed, as so many of them are, "Lies". It said that the latest lie put out by the Conservatives was that
"Labour will spend £170 million on stopping changes to lone parents' benefits."
It does not seem unfair to me that if the Leader of the Opposition answered that question no, we should assume that his answer carried some weight. The only person who appears to be lying, although that is inconceivable—the person accused in that Labour document, at any rate—is not me but the Labour leader. That is how Labour operates: it has one answer for one audience, and another answer for another audience.
Mr. Bruce: Does the Chief Secretary not acknowledge that it is perfectly reasonable for Opposition parties to oppose a change but not necessarily be committed to reversing it? After all, they are trying to prevent the change from being made in the first place.
Given the vast expenditure on consultancies that has ballooned under the present Government, to which the Chairman of the Public Accounts Committee drew attention—more than £1 billion—and the massive increase in spending on publicity and advertising, does the Chief Secretary think that it might be more appropriate for those people, rather than single mothers, to take a little of the spending cut?
Mr. Waldegrave: The hon. Gentleman makes a fair point. I cited the change that the Labour leader mentioned only because he said in public that he would reverse it.
I find what the hon. Gentleman said—and what was said by the distinguished Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne—very encouraging. As Chief Secretary, I know that there are plenty more savings to be made. That is why we can implement our plans: that is why the plans in the Red Book are realistic. That is why there should be no doubt that we will continue our record of the last three or four years of maintaining the growth of public spending well below the growth of the economy.
People are beginning to accept that Labour will tax and spend more highly. The hon. Member for Oldham, West (Mr. Meacher) let the cat out of the bag, supported by the deputy Chief Whip, and, yesterday, by a distinguished contribution from that wise man and good friend Lord Barnett, whose speech I read very closely. He knows what will happen if there is a Labour Government: they will tax and spend more. Of course, he would probably welcome that, because he has probably stuck to his old principles.
The fact that there are so many other taxes, as well as income tax, that a Labour Government could put up led the hon. Member for Oldham, West to say that the position was less bleak than it seemed. I found that most enjoyable. In the more robust and ordinary language of The Sun,
1124
"Mr. Brown still has a lot to tell us. Like where the money for his colleagues' spending pledges will come from."
The truth is that we have won the argument about how to manage economies. Labour Members have broadly accepted our argument: they do not understand it, but they no longer argue against the liberal economics that most of them came into politics to oppose. We have won the argument about spending, and the argument about the economy. As The Guardian put it,
"There is no doubt that if Mr. Blair wins the election he will inherit the most healthy economy any Labour Government has ever had. This time it won't be possible to blame the previous administration for any subsequent failures"—
although the Labour party is attempting to use the alibi of the books' not being open, and so on.
Lord Desai wrote:
"Labour's biggest obstacle is the economy. It is in great shape. There is steady growth and low inflation."
When the "Today" programme put that quotation, or a similar quotation, to the right hon. Member for Dunfermline, East (Mr. Brown), he said, "Oh well, Lord Desai is only a Lord." That is not Lord Desai's fault; it was the Labour party that made him a Lord.
The battle of ideas has been won by the Conservative party. Now, interestingly, we are also winning the battle on pensions. Let me remind Opposition Front Benchers—who are talking more nonsense to the square minute about pensions and the future of the welfare state than I would have believed imaginable—of what Whistler said to Oscar Wilde. When Oscar Wilde said, after Whistler had said something witty, "I wish I'd said that," Whistler replied, "You will, Oscar, you will." I predict that, in six months, a year or two years, the Labour party will be following us down the path to funding the old-age pension.
The debate has been fascinating for the dearth of ideas offered by the Opposition. The only contributions of any intellectual merit that we are hearing from Labour on these matters come from the hon. Member for Birkenhead, and not, I fear, from Front Benchers. Nevertheless, we have enjoyed debating with them today. Nothing is more enjoyable that debating with the right hon. Member for Kingston upon Hull, East (Mr. Prescott)—although I thought today that he was not quite at his best. He was in no danger of being criticised in the words of the quotation about Asquith that my right hon. Friend the Member for City of London and Westminster, South produced. It was said that Asquith's elegance of style—or was it his clarity of style?—made it difficult for him when he had nothing to say. The right hon. Gentleman did not find that the clarity of his style made it difficult for him to say nothing. This has been a good debate which, intellectually and on every other level, has been won by the Conservative side of the House.
Mr Richard Ottoway (Lord Commissioner to the Treasury): I beg to ask leave to withdraw the motion. Motion, by leave, withdrawn.

FINANCE BILL
Ordered,
That, notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions, more than one stage of the Finance Bill may be taken at any sitting of the House.—[Mr. Ottaway.]

BUSINESS OF THE HOUSE
Ordered,
That, at the sitting on Wednesday 12th March, notwithstanding Standing Order No. 14B (Proceedings under an Act or on European Community documents), the Speaker shall put the Questions on the Motions in the names of Mr. Secretary Howard, Mr. Secretary Forsyth and Secretary Sir Patrick Mayhew relating to Representation of the People and Secretary Sir Patrick Mayhew relating to Northern Ireland (Local Elections) not later than one and a half hours after the start of proceedings on the first such Motion; and these Motions may be proceeded with, though opposed, after Ten o'clock.— [Mr. Ottaway.]

CONSOLIDATED FUND BILL
Ordered,
That, at the sitting on Wednesday 12th March, any Consolidated Fund Bill ordered to be brought in and read the first time shall be proceeded with as if the Second Reading thereof stood as an Order of the Day, and Standing Order No. 54 (Consolidated Fund Bills) shall apply.—[Mr. Ottaway.]

Avon Ring Road
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ottaway.]
9.54 pm
Mr. Roger Berry: I am pleased to have the opportunity to raise a subject of enormous importance to tens of thousands of my constituents—the urgent need to complete stage 2 of the Avon ring road. I am grateful that the Minister is here to respond.
Proposals for the Avon ring road around the eastern fringe of Bristol between the M32 and the A4 have been implemented progressively since 1986. One last section remains to be constructed, which is known formally as stage 2. It will run between Shortwood to the north and the A420 at Warmley to the south. Locally, we refer to stage 2 of the Avon ring road as the missing link. Some three quarters of the ring road is in place, but the link between Shortwood and Warmley is missing. It is therefore clear that I am not seeking to make a case for building a new road. The decision whether to construct the Avon ring road was, rightly or wrongly, made many years ago.
The issue I wish to raise this evening is when a road that is three quarters complete will be finished. The road has a beginning and an end, but it has nothing in the middle for more than a mile and a half. The overwhelming majority of my constituents who are affected want to see the road completed as quickly as possible.
It is not difficult to see why. Because the ring road has a gap in the middle, heavy vehicles are diverted on to residential roads that are totally unsuitable for such traffic. The inevitable consequence is that the lives of thousands of local residents have been made a misery. Heavy lorries pound up and down narrow residential roads in places such as Mangotsfield and Warmley, and the results are obvious, including noise, fumes, environmental pollution and the daily risk to life and limb. On behalf of my constituents, I say, enough is enough. The situation has got to stop.
The strength of feeling on the issue is clear for all to see. There have been countless petitions to the local authority, as Avon county council and, more recently, as South Gloucestershire council. There are regular demonstrations in support of completion, and I recently delivered more than 1,000 individual letters to the Secretary of State for the Environment calling for urgent action.
Naturally, some are opposed to the completion of the ring road. Those people are in a small minority. They are certainly a minority of those who have written to me on the issue. Most of the opponents seem to live outside my constituency, a safe distance away from the residential roads where heavy lorries pound back and forth. Two of the major objectors live eight miles away, in Bath. The people who live locally face a nightmare of gigantic proportions.
Those who do not want the ring road to be completed try to invoke the arguments against road building. Those are familiar arguments that I will not comment on further, but, as I have said, this is not a matter of building a new road. The choice is not whether or not to have a new road but whether to complete a road that is already three quarters built or to leave it as it is. Do we allow the crazy

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situation to remain whereby the road comes to an abrupt end whether one is travelling southward or northward, so that traffic is inevitably diverted on to residential roads, causing enormous environmental damage?
I make no apology for claiming the environmental high ground for the case for the completion of the ring road. There are other cases of this kind, but those of us who would describe ourselves as concerned about the environment cannot possibly say that the environment is improved by having a gap in the ring road, with all the environmental damage that that causes for thousands of families with lorries going up and down residential roads, compared with the situation if the ring road were completed. It certainly is not.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ottaway.]
Mr. Berry: Many conservationists, such as the Council for the Protection of Rural England, support the completion of the Avon ring road. No one in their right mind wants to build more roads unless the benefits clearly outweigh the costs. But, as the CPRE has said, in this particular case, the environmental benefits of completing the ring road far outweigh the costs.
The critics of completing the road have invoked a second argument, saying that the Bristol-Bath cycleway and footpath is under threat. That is simply untrue. In fact, under the agreed scheme, there will be greater provision for cyclists, and there should be no difficulty making temporary arrangements during the construction period.
In addition to the urgent need to close the so-called missing link in the ring road, to remove heavy traffic from residential roads, it is necessary for local business development and employment in the area that the road should be completed. For example, it is needed for the new development at Emerson's Green. Many businesses have located in my constituency in Kingswood and nearby on the assumption that the road would be quickly completed. It is no exaggeration to say that, if the road is not completed, many of my constituents will run the risk of losing their jobs as their firms locate elsewhere where communications are better.
I make those points not because I believe that there is any disagreement on the case that I have put forward between me and the Government—I do not believe there is—but because, inevitably, there is some debate locally, and I want to put my strongly held views firmly on the record. There is an overriding case in terms of the environment for completing the ring road and removing the misery that exists for many people in my constituency.
The situation can be briefly summarised. Just over a couple of years ago, in October and November 1994, there was a public inquiry to consider objections to the various orders and applications necessary for the project to go ahead. A year later, in October 1995, the Secretaries of State for the Environment and for Transport confirmed those orders and applications. At the time, that seemed to many of us a rather excessive delay, but it was nothing compared with the delays that were to follow.
Next, a legal challenge was lodged in the High Court by a Mr. Nicolson and a Mr. McNeeny, both of whom live eight miles away in Bath, and who therefore do not
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have to suffer the misery inflicted on my constituents. They both also, as it happens, obtained the benefit of legal aid to pursue their action, a matter to which I shall refer briefly in a moment.
The precise reasons for that legal challenge need not detain me. They are well known to those with an interest in the matter, but the purpose was pretty obvious, and it has been clearly stated: it is to frustrate the wishes of local residents to have the road completed.
As a result of that legal challenge, I made representations to the Secretary of State for the Environment, asking him to do all he could to expedite the High Court hearing.
At the end of February last year, the Under-Secretary of State for the Environment, the hon. Member for Croydon, Central (Sir P. Beresford), sent me an encouraging reply. He told me:
"Avon County Council as the promoting authority for the scheme have applied to the Court for an expedited hearing and I can assure you that my Department are giving every possible support to that request … you may rest assured that we will do everything in our power to avoid unnecessary delay."
I was indeed encouraged by that.
However, I was disappointed when the High Court hearing due to commence on 18 July last year had to be aborted. Why did that happen? As I was subsequently informed by the Under-Secretary of State, it was caused by the late submission of affidavits by the Department of Transport. Two drafts were made available only on the day of the hearing, 18 July.
Inevitably and regrettably, therefore, the High Court hearing had to be postponed—a further delay. The hearing finally took place in November, following which the High Court gave the go-ahead to complete the missing link. As soon as that happened, along came the solicitors acting on behalf of Mr. Nicolson and Mr. McNeeny, who lodged notice of an appeal.
So on to the Court of Appeal we go, in this sorry saga. Again, I immediately wrote to the Under-Secretary of State for the Environment urging the Government to do all they could to expedite the appeal.
I see that the Minister for Railways and Roads is to respond to the debate tonight, so I must explain that I wrote to the Department of the Environment because that Department had just met representatives of South Gloucestershire council to discuss the local government finance settlement. In that discussion, the question of the ring road had been raised, and South Gloucestershire was awaiting a response.
Although I did not raise the matter with the Department of Transport, I understand that the letter that I sent to the Department of the Environment on 24 January has been passed to the Minister who is to reply. In fairness to him, I must acknowledge that he received the letter only on 21 February. I hope that he will respond favourably to my request.
As things stand, we see a sorry state of affairs. The appeal has been entered on the appropriate Court of Appeal list, and I am advised that a target date 12 months ahead is anticipated for the hearing. After all the delays that we have had on stage 2 of the Avon ring road, further delays are unacceptable.
I therefore ask the Government above all to respond positively to the request in my letter to the Department of the Environment dated five or six weeks ago. I hope that

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they will respond, and will do all in their power to expedite the Court of Appeal hearing. We cannot wait another 12 months for a decision. South Gloucestershire council, with which I have worked closely on the matter, has already applied for expedition of the hearing date. Its grounds for doing so have my strongest possible support, and I shall place them on the record.
First and foremost, as I have repeatedly said, there is an urgent need to complete the ring road to relieve damage to the residential environment caused by heavy traffic using roads totally unsuitable for that purpose. Secondly, it is necessary to complete the ring road to facilitate wider economic benefits, such as the Emerson's Green development, which I have already mentioned, and to reduce the number of accidents.
Thirdly, there is a need for certainty to avoid further unnecessary expenditure on short-term relief measures. Inevitably, with all those delays, the local authority has had to spend substantial sums on such measures. Clearly that is nonsense, and we need to get the matter sorted out so that that is no longer necessary.
Fourthly, there is a need for certainty to allow transport supplementary grant applications to be processed for the next financial year, and to allow tendering procedures to be commenced. Certainty is also needed to remove the blight on private properties affected by compulsory purchase orders.
I have referred in passing to one aspect of the appeal that has caused enormous anger among my constituents—an anger that I share. The applicants, Mr. Nicolson and Mr. McNeeny, have been awarded legal aid. I have made representations to the Legal Aid Board expressing my profound concern about that.
South Gloucestershire council has made similar representations of a more detailed nature, asking the board to review its decision to grant legal aid in the case. In the council's view, legal aid is not justified, either on the legal merits or in respect of the proper use of public funds. I look forward to the Legal Aid Board's review. Constituents who want legal aid for divorce proceedings or to get the Coal Authority to accept responsibility for local mine shafts have enormous difficulties obtaining it. As all hon. Members know, it is incredibly difficult for constituents to get legal aid. I find it astonishing that those two gentlemen have been granted legal aid. I hope that the Legal Aid Board will review that as a matter of urgency.
After the previous debate, I am not sure whether I can deal with funding without some embarrassment, because am calling for increased public spending. A road cannot be built without being paid for. South Gloucestershire council's transport policy and planning submission for 1997–98 included a bid for £8.3 million to fund stage 2. In December last year, the council received its TPP settlement. Supplementary credit approval for a mere £1 million was reserved, for a scheme costing £25 million. That is insufficient to begin construction this year, whatever happens in the Court of Appeal. In addition to the commitment that I hope to hear this evening from the Government to seek to speed up the Court of Appeal hearing, it is essential that they clarify their position on funding.
A £25 million scheme will have to be funded largely from Government grants. If it is based on local authority borrowing, it will cost £3 million a year simply to service the debt. The local authority has a capped budget and has
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just made £10 million of cuts in services, including education and social services. It cannot afford to fund the ring road.
My constituents are suffering in their tens of thousands because of delays in completing the missing link in the Avon ring road. I ask the Minister to respond positively to my request that the Government should do all that they can to expedite the Court of Appeal hearing. I also urge the Minister to give South Gloucestershire council the assurances on funding that would enable the Avon ring road to be completed as a matter of urgency.
10.11 pm
Sir John Cope: I rise briefly to support what the hon. Member for Kingswood (Mr. Berry) has said. More of his constituents are affected than mine, but some of mine are affected in ways similar to those that he has outlined.
The debate is not about road building in principle. I detected some hesitancy about road building in principle in some of the hon. Gentleman's remarks. I agree that we should be selective about which roads are to be built. For example, I was against the A46 improvements that were proposed not long ago, not far from the scheme that we are discussing.
Local people all support the completion of the ring road. It is important for my constituency and for the hon. Gentleman's constituency. It is also important for the whole of the south part of Bristol. As the hon. Gentleman rightly said, it is important for the completion of Emerson's Green, the new development in the north part, and to ensure that it is a success.
Like the hon. Gentleman, I find it extremely irritating, to put it mildly, that the two objectors keep getting legal aid to delay the scheme. I find that decision of the Legal Aid Board difficult to understand.
I support the hon. Gentleman's comments. I would like the road to be completed as soon as possible. I reinforce his pleas to my hon. Friend the Minister in support of that objective.
10.14 pm
The Minister for Railways and Roads (Mr. John Watts): The hon. Member for Kingswood (Mr. Berry) and my right hon. Friend the Member for Northavon (Sir J. Cope) have both explained the history of the scheme and the frustration which they and their constituents feel at the lack of progress in implementing what is obviously a vital missing link. Coupled with that is the frustration of their constituents at seeing their money as taxpayers being recycled through legal aid and used to thwart their wishes. The hon. Member for Kingswood will understand that I cannot comment on legal aid policy.
The hon. Gentleman and my right hon. Friend have said that the opponents of the scheme live a comfortable distance away from the problem. In this age of acronyms, I have one of my own for such people. They are not NIMBYs—not in my back yard—but what I describe as NIYBYs—not in your back yard. They tell those who suffer from traffic congestion that they should be denied a solution to their problems.
The hon. Gentleman will be aware that the lack of progress is not in the hands of the local authority or my right hon. Friend the Secretary of State for Transport. It is

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the further legal action by Mr. Nicolson and Mr. McNeeny which is causing the delay. However, I can tell the hon. Gentleman that my right hon. Friend the Secretary of State has also applied to the court for an expedited hearing. We believe that it is important that the issue should be resolved quickly.
On funding, I can reassure the hon. Gentleman in the light of today's earlier debate, that, although he might have thought he was, he is not in fact asking for an increase in the total of public expenditure. The funding for the road would come out of the existing baseline of my Department. When it is able to be funded and can go ahead, it will not be adding to the control total. He will not be adding to the criticisms that my right hon. and hon. Friends were heaping upon other members of his party earlier.
On the funding of the scheme, we are satisfied that it continues to meet the Department's criteria for transport supplementary grant under the TPP system, and, subject to the outcome of the current legal processes, the normal rules will apply. That means that, unless there is any
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significant change in the nature of the scheme, and as long as work progresses satisfactorily and the costs remain reasonable after it has passed its final legal hurdles, we will fund it through to completion in the normal way.
The amount allocated to the project for 1997–98 is, as the hon. Gentleman said, only £1 million. That is a recognition that the delay caused by the further legal challenge is likely to prevent a much greater rate of spend in that financial year. It is not an indication that we have lost the will to support the project, but it shows simply that the phasing of expenditure will be less in 1997–98 and more in the subsequent years.
I hope that my response has given the hon. Member for Kingswood the assurance he needs, personally and for his constituents. I join him in hoping that the legal issues are resolved rapidly. At that time, the authority will be in a position to go out to tender and start the construction. The hon. Gentleman has my assurance that funding will continue through to completion on the basis that I have set out.
Question put and agreed to.
Adjourned accordingly at seventeen minutes past Ten o'clock.