HC Deb 28 January 1999 vol 324 cc456-9
2. Mr. Ivor Caplin (Hove)

If he will make a statement on his plans for public spending on health and education for the next three years. [66515]

The Chancellor of the Exchequer (Mr. Gordon Brown)

The Government's spending plans for the next three years on health and education were set out in the comprehensive spending review White Paper, "Modern Public Services for Britain: Investing in Reform". We are providing money for modernisation, and we will invest an extra £40 billion in health and education in the coming three years.

Mr. Caplin

May I give my right hon. Friend some figures about local services? The comprehensive spending review will bring £30 million to local health services in Brighton and Hove, and already more than £1 million has been spent on local schools. That is desperately needed finance on health and education, which we were denied under the previous Government. The Labour party wants a just and fair approach to public spending, which the comprehensive spending review provides. Will my right hon. Friend confirm that this party intends to continue that approach in the forthcoming Budget?

Mr. Brown

First, I can tell my hon. Friend that this Government's third Budget will be announced in the afternoon of Tuesday 9 March. Secondly, on health and education expenditure, the average spending per constituency on education over the next three years will be £200 million, and on health, the average in the same period will be £236 million. In May, the electorate will be able to choose between a Conservative party that would not spend that money—and which says that our plans are reckless and mad—and a Labour party that will invest in health and education, and keep its promises.

Mr. Malcolm Bruce (Gordon)

If the reports of above-inflation increases in pay for nurses and teachers are correct, they are to be welcomed, after years of basic and phased awards. However, does the right hon. Gentleman accept that the amounts being reported amount only to a catch-up, not to real increases? Will he ensure that the funding for the increases is transferred from the contingency reserves to ensure that the quality of education and health elsewhere is not cut?

Mr. Brown

I shall answer the question about pay, but let me point out to the Liberal Democrat Treasury spokesman that, whereas his party's election manifesto asked that £1.8 billion a year be spent on education, to a total of £5 billion over three years, the Government will spend £19 billion—four times as much—over the same period.

The Liberal Democrat manifesto also said that the party would spend £700 million a year on the health service, and a total of £2 billion over the next three years. I can tell the hon. Gentleman that the Government will spend £21 billion over that period—10 times as much. I shall take no lectures from Liberal Democrats about meeting our fiscal rules and increasing public expenditure.

On public sector pay, I can tell the hon. Gentleman that we shall continue to be disciplined on public spending across the board. We will meet our fiscal rules and show the firm discipline set out in our three-year plans. The Government's policy has always been driven by the need to recruit, retain and motivate in the public services. However, we will not compromise our hard-won reputation for economic competence and fiscal prudence.

Mr. Barry Jones (Alyn and Deeside)

I acknowledge the major increases that my right hon. Friend has earmarked for school services, but will he tell us how the Government will ensure that every extra pound allocated goes into the classroom and towards the provision of teachers? Does he audit the expenditure of the moneys by local education authorities? Sometimes the impression is that my right hon. Friend allocates the money, but that it does not go straight into school services.

Mr. Brown

My hon. Friend raises an important point. Not only have we allocated £20 billion to education and £20 billion extra to health, but we have set in place public service agreements that will ensure proper monitoring of the targets and value for money.

The Conservative Opposition said that it was wrong for the Government to scrap the assisted places scheme and to put that money into cutting class sizes for children aged five, six and seven. However, 100,000 pupils now benefit from that measure, and we will keep our promise that all children will be in classes of fewer than 30 pupils. Equally, we will keep our promises to improve numeracy and literacy, to increase the staying-on rate in schools, to get half a million more people in further and higher education and to provide lifelong education. We will do exactly the same for health. The Government will not only invest the money but, as my hon. Friend requested, we will ensure value for money.

Mr. Roy Beggs (East Antrim)

May I welcome the Chancellor' s announcement of expenditure on health and education over the next three years? The £200 million will make up for a shortfall on past spending in Northern Ireland. Will the Chancellor seek to ensure that trusts budget properly for community care so that we can overcome bed blocking and make proper use of residential care?

Mr. Brown

My right hon. Friend the Secretary of State for Health is making sure that health and social services organisations work together, and I am sure that that will also be the case in the Northern Ireland Office. I was pleased to announce a few months ago our Northern Ireland initiative to help underpin the peace process with economic improvement. Every person who is long-term unemployed in Northern Ireland will benefit from the new deal, and Northern Ireland will pioneer the extension of the new deal to that group. In addition to extra money for health and education, we are ensuring that opportunities are available for the hon. Gentleman's constituents to get back to work.

Mr. Bob Blizzard (Waveney)

Has my right hon. Friend read today's report from the Institute for Fiscal Studies, which concludes that the Government are on course to meet their borrowing and spending targets, and will avoid recession? The report comes in the same week in which a KPMG report on my part of the country concluded that Norfolk was in good shape to face any increased business pressures from the continuing effect of the strong pound and turbulent world markets. I read yesterday of a similar outlook for business in London. Is my right hon. Friend encouraged by that evidence that his policy of economic stability is working despite the efforts of the Conservative party to talk us and wish us into recession?

Mr. Brown

We are steering a course of stability in a troubled world economy. The measures that we have put in place, including the independence of the Bank of England—opposed still by the Conservatives—were the right measures to create a long-term framework for monetary and fiscal stability. My hon. Friend is right about the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude), who said that our plan to spend £40 billion on health and education was a reckless spending spree. The right hon. Gentleman said that we had lost control, that we were spending through the roof year after year, and that it was madness to embark on our spending programme. I ask Conservative Back-Bench Members to tell the shadow Chancellor that they agree that health and education deserve the extra £40 billion.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

There are widespread rumours, most recently in yesterday's Mirror, that in order to fund higher social security spending, the Government intend to abolish tax relief on mortgages, which would cost the average mortgage holder £240 a year in extra taxes. Is that yet another example of the Government's creeping stealth taxes, or can the Chancellor reassure home owners that he has no such plan?

Mr. Brown

First, the shadow Chancellor is already on record as proposing the abolition of mortgage tax relief. Secondly, social security spending rose by 4 per cent. a year under the Conservative Government, to pay for unemployment. Under us, it is rising by less than 2 per cent. a year for the next three years.

The difference is that we are investing in proper services for the elderly and for children. The Conservatives wasted money paying the bills of unemployment. The Conservative Treasury spokesmen should be applauding the Government: the first 200,000 people are joining the welfare-to-work programme, 50,000 young people have jobs and youth unemployment has fallen by 41 per cent. However, they are against even the new deal. The Conservative party is not fit for Government, and it is not fit for Opposition either.