HC Deb 08 November 2001 vol 374 cc358-60
10. Ms Claire Ward (Watford)

What assessment he has made of the impact of the events of 11 September on the forecast level of funding of (a) defence and (b) public services. [11337]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

It is too early to estimate the likely costs of military operations and other relevant measures, but as my right hon. Friend the Chancellor has made clear, the Government will meet the costs of measures related to our response to international terrorism while continuing to deliver our spending plans within our fiscal rules.

Ms Ward

I thank my right hon. Friend for that reply. Will he give an assurance that he will listen carefully to all requests from our military in these difficult times, and to our right hon. Friend the Secretary of State for Defence? Despite Opposition calls for tax cuts and reductions in public services, will my right hon. Friend give a commitment to a 5 per cent. increase for all our public services in years to come?

Mr. Smith

As we have made clear, because we planned our public spending on prudent and cautious assumptions and strengthened the public finances, we can say confidently that we will meet our international obligations while honouring our spending plans, which Conservative Members want to cut. On the commitment to our military, as the Chancellor made clear, the cost of military and humanitarian action will be met. When we give our forces a job to do, we support them.

Mr. Edward Davey (Kingston and Surbiton)

If it is too early to publish an assessment, will the Chancellor and the Chief Secretary give the House an undertaking that they will prepare and publish such a study when the pre-Budget report is made at the end of this month? If the study shows that taxes need to rise to underpin the public finances, will the Government give an assurance that they will use only a fair tax, not regressive stealth taxes, to put the public finances right?

Mr. Smith

I can assure the hon. Gentleman that the relevant information that is available will be published in the pre-Budget report. Any additions to the departmental expenditure limits will be reported to Parliament through the supplementary estimates procedure, in the usual way. I will not be drawn down the path of speculation, however tantalisingly he invites me. Those are matters for the pre-Budget report, the Budget and, in due course, the spending review.

Mr. Harry Barnes (North-East Derbyshire)

If the events of 11 September require growing expenditure on humanitarian aid, military action, tackling world poverty and the economic consequences, is not it time to acknowledge that we are playing a new ball game? Should not we re-examine Labour's general election commitment to no income tax increases? Should not we begin to consider progressive taxation? Democratic socialism is often an answer to many problems.

Mr. Smith

I am sure my hon. Friend agrees that democratic socialism is about keeping our promises, and we will keep each and every promise that we made in our manifesto.

Mr. John Bercow (Buckingham)

Given that money raised in taxes to pay for defence and public services should be spent on defence and public services, and that the Chief Secretary has a duty to ensure that Departments get what they need and use what they get, is not he ashamed of the scandal of the past four years and the fact that the Ministry of Defence, the Department for Education and Skills and the Department of Health failed to spend no less than £5 billion that was allocated to them—money that would have paid for 60 new Challenger tanks, the salaries of an extra 20,000 teachers and a further 70,000 heart by-pass operations?

Mr. Smith

This is my first opportunity to congratulate the hon. Gentleman on his appointment and his well-earned promotion to the shadow Cabinet.

The Opposition cannot say at one and the same time that the country cannot afford our spending plans and that they want more to be spent. On the Ministry of Defence, thanks to the sound management of the economy and the prudent and cautious basis on which we planned public expenditure, the Government are increasing the real resources available to our forces, which the previous Government cut. As a result of the spending review, the MOD budget is going up from £23.570 billion to £24.980 billion by 2003–04. There could be no clearer proof that we are backing our armed forces and the MOD.

The hon. Gentleman refers to the underspends. The way to plan military, health and education expenditure is to plan properly for the future and allow end-year flexibility so that Departments can properly work out expenditure from one year to the next, without the ridiculous end-year spending surge that occurred in the past. The figure for the MOD was 0.3 per cent.

Mr. Speaker

Order.

Kevin Brennan (Cardiff, West)

Does my right hon. Friend agree that, because of the prudent management of the economy, we are in a flexible position and can afford to proceed with our plans for public services, even if there is a downturn following 11 September? Does not that contrast with the previous Government, who brought Britain to the brink of bankruptcy?

Mr. Smith

Indeed. Having exercised you with the length of my previous response, Mr. Speaker, I shall keep this one brief. The answer to my hon. Friend is yes.