§ The Chancellor of the Exchequer (Mr. Gordon Brown)The long-term funding that we announce today for Britain's public services is possible because the bills of economic failure in unemployment and debt have been radically reduced; the state of our public finances is strong; and, despite uncertainties in the global economy, inflation is under control, interest rates have been low and stable, and employment and growth continue to rise.
In this period, with global financial markets of greater instability, our task and our determination, as always, is to remain vigilant and committed to sustaining monetary and fiscal stability, with the strength to take the right long-term decisions for Britain.
I can tell the House that, over the economic cycle, we will not only meet all our fiscal disciplines and rules, but we are on track to meet our fiscal disciplines and rules with a margin for prudence even on the most cautious case—[Interruption.]—and even on the most cautious assumptions. Indeed, it is so that we can steer a course of monetary and fiscal stability across the economic cycle that we have reduced net debt from 44 per cent. of national income in 1997 to 30.4 per cent. last year, which is in contrast to 41 per cent. in America, 53 per cent. in the euro area and almost 60 per cent. in Japan.
As we set out in the Budget, Britain's debt has been reduced to the lowest level of national income in the G7, and the lowest of all our major European competitors. Having last year paid off more debt in one year than all previous Governments in the last 50 years, I can report that this year debt interest payments will be lower as a share of national income than they have been at any time in the last century, since the first world war.
Twenty years ago, debt interest payments consumed 4 per cent. of our national income. Debt interest is now half that, at 2 per cent., which is a saving worth £20 billion a year. Those extra resources have made it possible to recruit more nurses, more doctors, more teachers and more police than at any time in the past two decades.
Twenty years ago—indeed, 10 years ago£1.6 per cent. of national income was spent on the costs of unemployment. Today. I can again report that this year we will spend just 0.4 per cent.—savings worth a further £10 billion a year.
It is through maintaining a steady hand on the public finances at all times that we are able to meet our fiscal rules and match our reforms with new resources, so that efficient, strong public services play their part in delivering a modern Britain of greater opportunity and greater security not just for some, but for everyone.
I can report to the House that, holding strictly to the total spending envelope I set out in the Budget, we are raising departmental spending from £240 billion this year to £263 billion next year, £280 billion in 2004-05, and £301 billion in 2005-06—in total, by 2006, there will be £61 billion a year more for improved public services.
Ten years ago, only 50p of every pound of additional expenditure—50 per cent.—went to the public services, the rest having to be spent on debt and social security, whereas in this review almost 80p in every additional pound is going directly to improving public services, and 22 of the remaining 20p—20 per cent.—most is being spent not on debt interest and unemployment, but on improved pensioner and children's benefits.
In each area of service delivery, from housing to education, from policing to defence, we are tying new resources to reform and results, and developing a modern way for efficient public services, which includes setting demanding national targets; monitoring performance by independent and open audit and inspection; giving front-line staff the power and flexibility to deliver; extending choice; rewarding success; and turning round failing services.
I can also tell the House that over the next three years, as we reverse the backlog in investment, our projections from 2006—other than the commitments to health paid for by national insurance—are based on real-terms increases in spending on public services at 2½ per cent. a year.
With this review's decisions we will not only continue to address past decades of chronic underinvestment in education, health, transport and housing, but rise to new challenges in a changed global environment—international challenges including the essential duty of fighting terrorism, and challenges here at home as global economic competition brings vastly increased opportunities but also increased insecurities. The role of Government is—by expanding educational, employment and economic opportunity, and by encouraging stronger communities—to enable and empower people to make globalisation work for their families and their future.
First, to respond to global insecurities and the new fight against terrorism, the Secretary of State for Defence is announcing that the budget for our armed forces, who have served our country overseas with courage and distinction not only in Afghanistan but recently in Kosovo, Macedonia and Sierra Leone, will rise from £29.3 billion this year to £32.8 billion by 2005-06. That rise of £3½ billion a year is the largest sustained real-terms increase in defence spending for 20 years.
Since the tragic events of 11 September, international co-operation and, led by the Prime Minister, Britain's international engagement have assumed a new importance, so the Foreign Office's and Foreign Secretary's budget will rise from £1.3 billion this year to £1.5 billion by 2005-06. Within that budget we will strengthen the work of the British Council, whose budget will rise from £157 million a year to £185 million by 2005-06. The budget for the BBC World Service, whose 160 million-a-week audience is now its largest ever, will be £38 million a year higher by 2005-06.
When it comes to meeting the urgent moral challenge of combating international poverty, the question for us is how a strengthened commitment by our country can inspire a step change in aid from all the richest countries so that we can fulfil the millennium development goals: to halve world poverty, cut child mortality by two thirds and deliver primary education for every child. The Secretary of State for International Development is announcing a rise in United Kingdom aid from the £2 billion that it was in 1997 and the £3.3 billion that it was last year to £4.9 billion by 2006. That is the biggest ever rise—a 35 per cent. real-terms increase since 2001, and a 93 per cent. real-terms increase since 1997. By raising the contribution figure of 0.26 per cent. of national income that we inherited and today's 0.32 per cent. figure 23 to 0.4 per cent. by 2006, and by untying aid and targeting aid on the poorest countries, we are ensuring that more money goes towards tackling poverty than has gone towards it at any time in the history of British aid.
Starting with our dialogue with churches and nongovernmental organisations next week and proceeding to September's Johannesburg summit—at which the Prime Minister and the Deputy Prime Minister will be present—and the International Monetary Fund and World Bank meetings later in the month, we want this new finance from our country to be an engagement and a signal for a new $50 billion international financing facility involving all rich countries: a new alliance against poverty which recognises that by meeting our moral obligations to the poorest of the world we advance opportunity and security for all the world.
At the heart of our spending decisions this year is a set of major economic reforms that will expand our national wealth so that Britain can become more productive and prosperous, and we can make the most of the new opportunities of the global economy. Invention and innovation are the key to long-term national competitiveness, so in partnership with the Wellcome Trust—which I thank—we will create and fund a new national centre for excellence in science teaching. After a rigorous selection of priorities within the industry budget and a move away from the old loss-making subsidies of the past, I can announce a 10 per cent. real-terms annual rise in the science budget and, by 2005-06, an extra £1¼ billion a year for British science.
Britain must not make the mistakes in science education in the next generation that we made in the last, and so to fund a new generation of young British scientists, we will implement the Roberts report—which means on average, a £4,000 rise in science post-doctoral Research Council pay, with the average stipend for Research Council PhD students rising to more than £13,000 by 2005-06. Even after inflation, that figure is twice what it was in 1997.
We will encourage a third role for universities beyond teaching and research—the commercialisation of new discoveries. The higher education innovation fund will rise to £90 million a year by 2005-06, to ensure that more British inventions become British manufactured products, creating British jobs.
To remove barriers to productivity growth in the north and in the south of our country, the Deputy Prime Minister will this week announce reforms to our planning system, including new business planning zones to ensure development and to create jobs in high-unemployment areas. He will also announce new funds and plans for meeting housing needs south and north—throughout the country—ensuring that we make good use of the space in our existing towns and cities, while protecting valuable countryside around them.
Because a successful rural economy is vital both to rural areas and to our entire economy, the Secretary of State for Environment, Food and Rural Affairs is announcing today that she will implement the core recommendations of the Curry report to promote sustainable farming. To make this possible, and to improve Britain's flood defences, her budget will rise 24 from £2.5 billion this year to £2.9 billion in 2005-06—an annual average real rise of 2.7 per cent. a year after inflation.
To secure balanced development in every region—tackling regional weaknesses, and building on regional manufacturing and industrial strengths—we must decentralise decision making out of Whitehall. I can announce that our nine regional development agencies will now have a strengthened local role in transport, tourism and housing. To pilot further devolution from Whitehall for services to small businesses and adult skills, and to reverse decades of indifference and neglect of our regions in this country, the budgets for RDAs will rise from £1.6 billion a year to—by 2005-06—£2 billion a year, as local people make more of the decisions about meeting local needs.
Addressing the long-term underinvestment and neglect of transport is vital both to economic prosperity and to the quality of life. To deliver the 10-year transport plan, the transport budget will rise from £7.7 billion this year to £11.6 billion in 2005-06—in total, over the next three years, a 12 per cent. real-terms increase. The Transport Secretary will also consult on the long-term need to increase airport capacity in our country.
To secure a more competitive environment and to root out anti-competitive practices, the budget of the Office of Fair Trading will increase from £34 million this year to £55 million by 2005-06. We are determined that everything is done to ensure the highest corporate standards, and next week, in the light of Enron, the Secretary of State for Trade and Industry will put before the House the interim report on accounting and auditing reform.
There are now 1.5 million more men and women in work than there were in 1997. Unemployment in Britain is today lower than in Japan, lower than in America, and lower than in every other major European country, and for the first time for 50 years Britain has the lowest unemployment of any major industrialised nation. However, because we will never be complacent as long as people who can work are out of work, we need further reforms that match rights and responsibilities to help people acquire more flexible skills and new jobs, so that they can succeed in the changed global economy.
Having ensured in the last five years that 1,750,000 men and women have benefited from the new deal, the Secretary of State for Work and Pensions will roll out nationwide by 2006 the successful Jobcentre Plus one-stop service that will help young and adult unemployed, lone parents and the disabled who are seeking work to find the jobs that they need.
Having already raised further education student numbers to 4 million and raised modern apprenticeships from 75,000 in 1997 to 220,000 today, the Secretary of State for Education and Skills will announce new money and tough targets to reform further education, improve workplace skills and expand modern apprenticeships to more than 300,000 young people in 2004. To ensure that British business has the skills it urgently needs today, the Home Secretary will expand the work permit system for key workers from 50,000 in 1997 to an expected 175,000 next year.
While, overall, there are 60,000 more small businesses than there were in 1997, even more British people should have the opportunity to become self-employed and to start 25 their own firm. So the corporate tax cuts in the Budget and the stamp duty exemptions for high unemployment areas are matched in this review with new help for start-up businesses by raising the Small Business Service budget and by extending and increasing the phoenix fund from £100 million to £150 million.
To meet our long-term aim that in every area of the country every school pupil is introduced not just to the world of work but to the world of business, we will fund an expansion of enterprise education from less than 1,000 schools today to all our 3,500 secondary schools.
One of the greatest challenges of the future is to protect and safeguard our environment through sustainable development and to advance towards the 2010 targets—20 per cent. less carbon dioxide emissions, 10 per cent. of electricity from renewable sources—the spending review will, in addition to financing the £100 million fund for the development of renewable technologies, provide in 2005–06 an additional £38 million for sustainable energy initiatives.
Let me now turn to the public service investments this spending review makes to help those who contribute through public service to build stronger, more secure communities. We know that an enterprising economy with opportunity for all requires a fair society where there is security for all. But we also know—those of us who believe in the importance of public services—that we have a special duty to ensure that public money is spent wisely and efficiently and we are as determined to secure value for money as we are to secure money for our services.
So, first, the Government are today publishing new public service agreements setting out agreed outcome targets and reforms for each Government Department. Secondly, with independent audit and statutory inspection, Departments and agencies will be fully accountable for performance against targets: so, in addition to the new police standards unit, we are creating the health and social care inspectorates and a reformed criminal justice inspection regime and a single housing inspectorate.
In each service area, the review's decisions promote choice and devolve responsibility, authority and flexibility from the centre out to local and regional decision making—down to primary care trusts, which this Labour Government created, to head teachers and governors in schools, to police commanders on the front line, and to local service providers. One essential feature of this year's spending decisions is that voluntary, charitable and community organisations will also receive significantly increased funding to support their chosen role in delivering local services. Just as sustained economic growth demands responsibility in setting private sector pay, so too a sustained commitment to better public services demands responsibility in setting public sector pay.
When a service is underfunded, or when it is underperforming, people are let down. So while public service providers who perform well will be given more resources and more authority to innovate, in this review Departments have set as a condition for more resources that failing institutions will be dealt with early and decisively. Poor-performing schools will be subject to takeover by new leadership or by a neighbouring school, or closed and reopened as a new school. Failing local education authorities will be subject to takeover by high 26 performing authorities. Poorly performing colleges will be subject to loss of funding from learning and skills councils, with provisions for necessary college mergers. Poor-performing social services and housing departments will have new directorates and senior managers. Poor-performing local authorities will first be subject to a recovery plan to tackle bad performance and, if that is insufficient, subject to new managers or takeover of functions. Just as my right hon. Friend the Home Secretary is taking power for police reform, prisons that underperform will need to improve or face new management drafted in. However, in every case, at the same time, we will incentivise and reward success with high-performing institutions receiving new resources and greater autonomy—new freedoms and more flexibility.
So just as in the Budget resources for health were matched by reforms in health, so too behind each decision we are making today—from housing to crime, from urban renewal to education—the Government's standard is clear: for more given in resources more is required in results. This is the vision for public services, and on that basis I can announce new investments that will improve our services and strengthen our communities.
After long decades of persistent neglect that have left Britain's housing stock inadequate and substandard, since 1997 we have increased our investment in housing from £2.3 billion to £4.8 billion this year. And now, as the demand for new and better housing grows in a growing economy, it is time for a step change with the most sustained rise in housing investment for 25 years.
On Thursday, my right hon. Friend the Deputy Prime Minister will make a statement to the House on his reforms: new homes for social tenants and key workers—including low-cost home ownership in London and the south-east—and plans to tackle homelessness and upgrade old properties in all regions where housing need exists. To pay for this, we will by 2005-06 invest £5.9 billion a year in housing. Since 1997, this will mean a 105 per cent. real-terms increase in the housing budget over and above what the previous Government did.
Neighbourhood renewal is not just about bricks and mortar. It is about renewing community life, and this depends upon more economic activity, more businesses and more jobs. Having raised investment in economic and social regeneration in 88 hard-pressed neighbourhoods of our country to £300 million this year, we will increase the neighbourhood renewal fund to £525 million a year by 2005-06.
As we sign public service agreements with our local authorities to match resources to reform, my right hon. Friend the Deputy Prime Minister will set out details on Thursday of an annual real-terms rise for local government of 4.2 per cent. a year over and above inflation—well above the average settlements until 1997.
The mark of a decent society is the dignity that it accords to its elderly, so my right hon. Friend the Secretary of State for Work and Pensions is announcing the extra resources necessary to deliver, from October next year, the pension credit to nearly half of all pensioner households. This will be worth up to 14 extra per week for single pensioners. It is a measure for which I hope there will soon be all-party support. Following the Pickering and Sandler reports, a consultative Green Paper on pensions will be published in the autumn, and my right hon. Friend the Secretary of State for Health will 27 announce how the extra 6 per cent. real-terms growth in social services budgets will improve community care for the elderly.
Britain's disabled need and deserve a better deal too, so I can also announce that having created the Disability Rights Commission to oversee and enforce the rights of disabled men and women, we will raise its budget to 2006 by 14 per cent. in real terms.
I have said to the House in the past that our children are 20 per cent. of our population but 100 per cent. of our future. So, to realise our goals of nursery education, better child care and a sure start for the very young, we are announcing today, after a major interdepartmental review, details of a new integrated budget for children for child care and early years learning. It will be worth, by 2005-06, a total of £1½ billion a year. Following the review, there will be new ministerial arrangements for child care policy.
By October 2004, every three and four-year-old who needs it will have a nursery school place. We are also expanding the successful sure start experiment to meet the needs of up to 400,000 children. We will now increase investment in child care with funding for an additional 250,000 child care places.
Parents have said to us that communities are far stronger and children far more secure where there is a focal point in a community for a wide range of children's services, so I can announce that we will fund the creation of children's centres across the country, providing services for an additional 300,000 children by 2005-06.
At the heart of the next stage of children's services are voluntary and community partnerships, which are increasingly a vital link between the needs of children and the help that they receive. In each of our constituencies, there are hundreds of voluntary and community organisations. Throughout the country, hundreds of thousands of volunteers help millions of people, giving everyone in Britain, at different times in our lives, the chance to serve, and to get the balance right between what we can do for our country and what our country does for us.
To enable the vitality and independence of the charity, community and voluntary sector to grow and flourish, the Chief Secretary is announcing details of a new three-year fund of £125 million for voluntary organisations to draw on for their public service work. I can also confirm that the budget for the children's fund—helping volunteers and charities that assist vulnerable children—will be £200 million a year to 2006. There will be an additional £25 million over three years to support the growth of local parental support, and we are also extending the £20 million support to community amateur sports clubs, not just for one year, as we have announced previously, but for each year to 2006.
Since museums were opened free to the public, attendances have risen by 75 per cent. The Secretary of State is announcing a budget increase for culture, media and sport—including additional funds for tourism—and the budget will rise from £1.3 billion in total this year to £1.6 billion by 2005-06. With this increase, Britain will maintain free access to national museums, invest in regional museums, and expand local creative arts partnerships. To open up sport to all, not only will there 28 be additional support for sports clubs but funds for much-needed investment in school sports facilities and new finance for extra sports coaching in the years up to 2006, in time for the next World cup. Similar allocations are necessary in Scotland, Wales and Northern Ireland.
Stronger communities must be safer communities, where rights are matched by responsibilities. We are therefore committed to getting more police out on the streets and to making crime fighting more effective. With his new reforms in place, the Home Secretary will announce details of the rise in the Home Office budget from £10.7 billion this year to £13.5 billion by 2005-06—an increase of nearly £2.9 billion a year by 2005-06 to ensure that, in addition to police numbers rising next year to 130,000, reforms to speed up the asylum system can be made, internal security will be strengthened, and the criminal justice system can tackle both crime and the causes of crime. The long-term vision for the criminal justice system—how we match policies for opportunity with policies for security—will be set out by the Home Secretary when he publishes the criminal justice White Paper.
Ministers in the devolved Administrations will make separate announcements outlining their plans to allocate the additional £4.1 billion a year set aside by 2005-06 for all devolved functions in Scotland, the £2.3 billion a year more by 2005-06 for Wales, including continued funding to 2006 of objective 1, and the £1.2 billion a year more by 2005-06 for Northern Ireland, including funding of the European peace initiative.
Finally, I turn to education. What happens in our schools in this decade will shape our society and our economy for much of this century. We cannot equip children for the 21st century in classrooms built in the 19th century. Capital investment to modernise our schools, which was raised from £680 million in 1997 to £2¼ billion last year, will therefore be raised again—to £4½ billion a year by 2005-06. That represents a 400 per cent. real terms increase since 1997, backing up our additional 20,000 teachers in the classrooms.
The increased funds for investment, improved access and excellence in further and higher education—including our universities, and building on the 100,000 extra students since 1997—and the reforms essential to meet our targets will be announced by the Secretary of State for Education and Skills, but we can achieve our goals for further and higher education only if we persuade more young people to stay on at school. Thirty years ago, the school-leaving age was raised to 16, but Britain cannot reach its full potential as long as nearly a quarter of 16 to 19-year-olds are not in education or training, and Britain, for decades, has suffered the worst drop-out rate from school of any industrialised country.
The Secretary of State for Education and Skills has set out her reforms to the curriculum for 14 to 19-year-olds. We must ensure now that no one is prevented, through lack of income, from staying on for the qualifications that they undoubtedly need.
Already in a third of England, income-related education maintenance allowances have substantially raised staying-on rates at school. So I can announce that, from September 2004, we will extend this successful experiment to all the country, with education maintenance allowances worth up to £1,500 a year for those who stay 29 on and study. We will fund this major advance in educational opportunity from savings that we have made from our success in reducing unemployment and debt.
Demanding the highest standards is the modern route to realising opportunity. Those of us seeking improvements in education are determined that the numbers in the education budget are matched by the reforms necessary to secure better results in schools all across the country. As we said in detail in our 1997 manifesto, resources and reform are equally important—one cannot be achieved without the other.
Having helped teachers and children achieve a step change in standards in our primary schools—today, we have 75 per cent. of children achieving the expected literacy standards at the age of 11 compared with just 57 per cent. five years ago—the Secretary of State for Education and Skills will tomorrow announce reforms to raise standards, enhance choice and diversity and to tackle poor pupil behaviour in our secondary schools so that schools can develop the talents of all. We will back these reforms with new resources.
In the 2000 Budget, the Government introduced a single payment direct to schools starting at £15,000 that year for primary schools. I can announce that to help deliver schools reforms, the details of which will be set out by the Secretary of State for Education and Skills, the typical primary school will receive £50,000 next April—£10,000 higher than this year—and will receive £50,000 each April for each of the next years to 2005-06.
Head teachers of the typical secondary school, who this April received a payment of £115,000, will receive next April a payment of £165,000. That is £50,000 more and it will rise to £180,000 in the next April and for each of the following years to 2006. Over three years, for the typical secondary school, a total of £500,000 in direct payments will be paid to every head teacher to be used for each school's priorities.
We must also back the good leadership that is raising achievement levels in the most challenging areas and we must help schools that are behind to catch up, as we set minimum targets for improved standards at 14 and 16. So, for 1,400 secondary schools, we will match demanding new performance targets with an extra annual payment of an additional £125,000 direct to each school and head teacher.
For these 1,400 schools, combining the leadership incentive grant and the direct payments that I have already announced means that the budget for head teachers will rise to £300.000 a year. Over three years, that is almost £1 million to allow our schools to replace weak leadership, to attract the best teachers and to improve their facilities.
For this Government, reform and resources go together. and we know that to demand reform when one would deny resources is a betrayal of our children. So I can announce the total new resources for education. Compared to growth of less than 2 per cent. a year in the 18 years to 1997, there will be a real-terms rise for education in England, even after inflation, of 6 per cent. a year for each of the next three years. That is the biggest sustained rise in education spending in a generation. The education budget for England, which was £29 billion in 1997 and is £45 billion this year, will rise year on year over the next three years to £49 billion, then £53 billion and then £58 billion: education, education, education. By 30 2005-06, this means £15 billion more a year for UK education; £13 billion more in England. Spending per pupil, which was just £2,700 a year in 1997 and £3,500, last year, will rise to £4,900 per pupil by 2005-06 which, after inflation, is 50 per cent. more per pupil than in 1997.
I challenge anyone in this House to claim that public services are their priority and then to say that £4,900 per pupil is too much to invest in our children and our country's future. We have presented a Budget for the health service and a spending review for education: as we promised, schools and hospitals first. I commend this statement to the House.
§ Mr. Michael Howard (Folkestone and Hythe)I draw attention to my entry in the Register of Members' Interests and thank the Chancellor for advance sight of his statement.
I am delighted that relations between the Chancellor and the Prime Minister have improved so much since the pre-Budget report. So cordial have they become that they cancelled all their engagements at the end of last week to spend more time together. Indeed, they have not spent so much time with each other since the last time the Government were in turmoil. [Interruption.]
§ Mr. SpeakerOrder. Let the shadow Chancellor speak.
§ Mr. HowardBritain's schools, hospitals and other public services can and must be improved, but to do that we need real reform. Is not it the lesson of the past five years that more money without real reform will not work? We read yesterday that the Chancellor himself had "been disturbed" by the Government's record on failing to deliver, and who could fail to sympathise with him? After all, he provided an increase of 23 per cent. in funding for education, but last year the proportion of children meeting numeracy standards actually fell; he spent 26 per cent. more on law and order, but crime is rising again, with street crime soaring by 31 per cent.; and he allocated almost 30 per cent. more to the NHS, but waiting lists are going up again.
How frustrating that must all be for the Chancellor. He even set in place a whole panoply of public service agreements, targets and monitoring arrangements so that all the extra money would deliver improvements in services. But what happened? The Government failed to meet their own targets: they failed on health care; they failed on violent crime; they failed on truancy; and our public services have been getting worse. The only mystery in all this is why the Chancellor does not realise that coming back to the House today and making exactly the same promises that he has made year after year, based on exactly the same approach, will lead to exactly the same results. Why has the Chancellor not learned the lessons of his past failures? After six Budgets, five years in office, three spending reviews and countless promises, is not it abundantly clear that the Chancellor and his colleagues simply do not know how to bring about real reform and the improvements in public services that we all want to see?
31 The Chancellor makes great promises about our public services. He says that the
biggest ever investment in health and educationwill allowus to build modern public services to renew Britain",but that is what he said in 1998. He says that the money willimprove our schools, our health service and our transport system and make our streets safer",but that is what he said two years ago.Of course, he also promises change and modernisation in our public services. In fact, he promised reform no fewer than 21 times in his statement, but that was his statement four years ago. He has promised reform every year since. So where is the reform? Where is the modernisation? Where is the change?
Why did the Government last year send schools 17 pages of documents for every working day? Is that reform? How can teachers be expected to cope with that? Why does the Home Secretary now want police officers to fill in forms in duplicate every time they stop—stop, not search—someone in the street? Is that the kind of reform that the Chancellor had in mind? Why has productivity in the NHS fallen? Why are there now more bureaucrats than beds? Is that the reform that patients want?
Yet the Chancellor is at it again. Another year, another spending review. The same old promises, the same old failure, year after year. Does not he just deliver higher taxes? Has not he recently announced his rate tax increase? Then he preens himself and boasts about reducing public debt. One does not have to be a genius to reduce public debt if one taxes every man, woman and child in this country an extra £40 a week and imposes a £100 billion hit on pension funds. Is not it becoming clearer and clearer that money alone is not the answer?
What is the result of the Chancellor's failure? When public services fail, is not it those on the lowest incomes who get hit the hardest? Is not it those in the inner city who cannot escape from the failing school, the hard-pressed hospital or the crime-ridden estate? The Chancellor likes to talk about fairness, but what is fair? [Interruption.]
§ Mr. SpeakerOrder. Hon. Members are far too noisy. It is unfair to the shadow Chancellor; he should be given a hearing.
§ Mr. HowardWhat is fair about making promises to the most vulnerable sections of society and breaking them year after year? The Chancellor is at it again. Another year, another spending review. The same old promises, the same old failure.
May I ask the Chancellor about the assumptions underlying his plans, which he barely mentioned? Has he read the recent warnings of the newly appointed economic adviser to the Department of Trade and Industry, who said:
The Government may be about to embark on too much spending which it will not be able to finance … The expectation is that taxes quite soon may have to go up again"?32 In light of those comments, does he stand by the growth forecasts outlined in the Budget and the economy's performance since then? Indeed, what confidence can we have in any of his figures when he so casually cooks the books on borrowing and debt, as he has done, Enron-style, in the case of Network Rail?The Chancellor has today barely mentioned something that he normally says a great deal about—productivity. Perhaps that is not altogether surprising as the latest figures show a fall in productivity in the first quarter of the year. Indeed, under five years of Labour government, Britain's productivity has grown less than half as fast as it did under the last five years of Conservative government.
On Britain's productivity gap with the United States, the Chancellor's own advisers now say, in typical new Labour phrasing, that recent years may have seen "increased room for catch-up". Does not that phrase just sum up new Labour? Will not that be the Government's epitaph? On health, on education, on transport and on law and order, are not they masters at producing increased room for catch-up? Are not they masters at promising the earth, at trying to spin their way out of failure and at substituting subterfuge for substance? Here the Chancellor is again. Another year, another spending review. The same old promises, the same old failure.
Of course there are some aspects of today's announcement that we welcome. We will support measures to defeat terrorism and the associated rises in spending on defence, and we welcome the increase in the budget for international development. We shall carefully study a number of the other proposals that the Chancellor announced, but there are some aspects of his statement about which we have specific concerns.
The Chancellor indicated how he intends to pay for the new education maintenance allowances. Will he confirm that he will retain child benefit in full for 16 to 18-year-olds? He makes promises about housing. Will he confirm that the amount of affordable housing has fallen under the Labour Government, and that the total number of houses being built in this country is the lowest in peacetime since 1924? Why did he not mention in his statement his latest proposal to redistribute council grants to favoured areas that the Labour party controls, eventually leaving the south-east of England with a £200 million shortfall?
Will not the new panoply of prescriptive controls that the Chancellor has announced today lead to the greatest increase in centralised bureaucracy for a generation? In providing better public services, there is a better way. That means learning the best lessons from other countries where there are no waiting lists, where crime is falling and where school standards are way above ours. It means moving decision making closer to the people, the families and the communities affected. It means trusting people to know what is best for their area—trusting the teachers, the police officers and the doctors to get on with their jobs without constant interference and meddling from Whitehall.
We will not endorse the Chancellor's failed approach to public services. We will not support the policy of money without change—but before the Chancellor launches another of his scare campaigns, let me point out that that does not mean that we are against spending more on education and other services. However, we are against his plans to spend more without real reform. As his record shows, that simply does not work.
33 When the Chancellor replies to questions and statements from the Opposition, he likes to start—he always does—by saying that he will answer all our points in full; then, he does not answer any of them. In his response today, let him answer only this one question. Why does he think that he can get away, year after year, with making the same old promises and proposing the same old failed answers? Why does he refuse to accept that if we are to give this country the services we deserve, it is time for real reform?
§ Mr. BrownThe shadow Chancellor says that he supports the increased funding for action against terrorism and for international development, but by his silence he has not supported the increased funding for education, health, housing, transport, the Home Office, policing and all the major public services in this country. When the Leader of the Opposition said on radio today that there would be not a penny more for public services, what he meant was that all talk of general reform is designed to obscure a policy of cutting public spending.
I defy Opposition Members to go back to their constituencies this weekend and explain why they do not support the additional payments for primary schools, the £165,000 for secondary schools, and the 6 per cent. real-terms increase in education spending. Let them explain why they do not support our health service reforms and our money, and why they are considering charges for visits to hospitals and GPs. After all the talk of concern about public services and poverty, a speech, a visit to a council estate and a night in a homeless shelter, what has happened is that compassionate conservatism has given way to the usual uncaring conservatism that everyone associates with the Conservative party.
The Conservatives will not match us on health and education, despite the fact that at the last election they said that throughout the following Parliament they would support our plans on health and education. Every Opposition Member must explain to their constituents why, having said in their manifesto at the last election they said that they would support our education and health plans, they are not doing so.
The shadow Chancellor raised the issue of the economy and what is happening to it. We stand comparison with his record as Employment Secretary. It is not simply the fact that interest rates at the moment are 4 per cent, but went up to 15 per cent. when he was Employment Secretary. It is not simply that inflation is 2 per cent, but when he was Employment Secretary he reported it at 10 per cent. If one is dealing with the ups and downs of the economic cycle, would one prefer to do so under a Government who have cut debt and debt interest payments to the lowest level for many years, as against a Government who were responsible, when he was in the Cabinet, for £50 billion of borrowing and a doubling of the national debt?
The shadow Chancellor said that we have come back to report that there is a need for more reform. Exactly—there is need for more reform, but the reforms that we have made—
§ Mr. Iain Duncan Smith (Chingford and Woodford Green)Five years of promises.
§ Mr. BrownIs the Leader of the Opposition saying that we have not improved numeracy results for 34 11-year-olds? Is he saying that we have not met our literacy targets? Instead of 500,000 people in school classes of more than 30, there is none today. Is he saying that that is not an achievement? Is he opposing the fact that there are 20,000 more teachers in schools and 100,000 more students at university and that we are reforming secondary, further and higher education? In five years, we have made more reforms than the Conservatives made in their 18 years.
As for economic reform, we made the Bank of England independent, which the Conservatives opposed. We created the Financial Services Authority; they opposed it. We created an independent Competition Commission; they opposed it. We created the new deal of rights and responsibilities; they continue to oppose it. We will therefore not take any lectures about the conduct of economic policy from the Opposition.
On planning reforms, the Deputy Prime Minister will announce on Thursday—Opposition Members will, and should, welcome this—reforms to the planning system that will speed up planning and put more resources into making the planning system more effective. It is a tragedy that nothing was done during 18 years of Conservative government. As for housing, we are doubling the housing budget, having already doubled it. The housing reforms that we are making, which will be announced on Thursday, should be welcomed by Opposition Members as well Government Members.
Waiting lists, which the shadow Chancellor also raised, are down by 100,000 on 1997. There is no point in his trying to lecture us on the national health service—he would cut the NHS budget. He said that all of us in positions of responsibility should be judged on our performance. He, remember, had ministerial responsibility for financial services at the start of the pensions mis-selling. He was Minister for Local Government when the poll tax was introduced. He was Employment Secretary when unemployment went up by 1 million, and was Home Secretary when crime doubled.
§ Mr. Paul Goodman (Wycombe)Answer the question.
§ Mr. BrownThe question is whether the Conservatives can ever stand before the country again as a serious party if they are not prepared to finance education, health and decent public services. May I tell the shadow Chancellor that at the last election, to win his seat in Folkestone, he said that the Conservatives would spend more on education and health. He cannot face his electors with a policy of cuts in education and health. He should go back to the drawing board and think again.
§ Matthew Taylor (Truro and St. Austell)Watching the Conservatives today is like watching the charge of the Light Brigade. Unlike them, we welcome the spending increase for hospitals and schools. We believe that the British people will do the same, and the polls suggest that even Conservative supporters will.
After two years of cuts and five years of phoney figures, no longer the same old failures: at last Labour is admitting the truth. Public services were failing because they were starved of funds, but why then did the Chancellor cut income tax just two years ago? Why did he allow the share of national income going to education to fall in the last Parliament as a whole? Why did Labour not tell the truth about its tax plans at the general election? No wonder people do not trust Labour.
35 Conservatives voted against the tax rise; today they oppose the spending rises, so now we know for sure: Conservatives want fewer teachers, fewer doctors, fewer nurses. No wonder the British people do not
§ Mr. SpeakerOrder. The hon. Gentleman is putting questions to the Chancellor of the Exchequer, not to the Conservatives.
§ Matthew TaylorOn our side, the money is welcome. We had the courage to argue for it at the election. The question now is whether the Chancellor is spending it well, and there the signs are bad. There is not more reform but more control. Why is there more control from the centre, more red tape and more control freakery? What is the Chancellor afraid of? Why will he not trust local people with local school and hospital decisions, and trust communities with their hospitals and schools?
Here we have it—quangos for health, quangos for social services, quangos for police. The Chancellor may be able to control his Cabinet colleagues, but he cannot control every classroom and he cannot run every hospital ward. It is time to trust the teachers with their classes, the doctors with their patients and the nurses in their wards. The Chancellor has given them the money, and now he should give them the freedom to do their job, answerable to the patients and the community, not tied up in red tape and quangos answerable only to the Chancellor.
§ Mr. BrownI am surprised at the Liberal shadow Chancellor saying those things. First, we are devolving power to primary care trusts. We are devolving power to schools. We have just announced the biggest payments direct to head teachers. Equally, we are devolving power to both regions and localities in terms of housing, social services and so on. I should have thought that he would welcome the inspectorates that we have set up to ensure that there is proper public information about how various organisations are meeting the standards expected of them.
Once again, while I welcome the fact that the hon. Gentleman supports the additional public spending, the Liberal party wants us to spend more—[Interruption.] Last week, the Leader of the Liberal party was standing in the House of Commons demanding that more money be spent on community care. The week before, more money was requested for other purposes. In comparison with what the Liberals promised at the last election, by 2006 we will be spending £9 billion more than they promised on education, £25 billion more than they promised on health, £6 billion more than they promised on transport, and £1 billion more than they promised on international development.
§ Mr. John McFall (Dumbarton)May I commend the Chancellor for a huge boost to public services? In particular, I single out the education maintenance allowances, to which the shadow Chancellor referred and which will increase the incentives for young people in disadvantaged areas to stay on in education after 16. Can the Chancellor assure me that there will be no black holes down which the money will go, and that the reforms are essential for the benefit of the economy as a whole? Does 36 he agree that those who govern or wish to govern must be clear, transparent and honest about the money that they will spend and where that money will come from?
§ Mr. BrownI am grateful to the Chairman of the Treasury Committee. I think that what he says is very important. I am rather surprised that the shadow Chancellor and shadow Chief Secretary have chosen to abandon the House of Commons at this very point, when it is not only our proposals that are under scrutiny, but theirs as far as public spending is concerned.
On the point made by my hon. Friend, yes, we will extend education maintenance allowances. I believe that there should be widespread support in all parts of the House for more people being able to stay on at school and for there being no financial barrier to their doing so. The condition of the education maintenance allowances—this relates to his point about value for money—is that this is not money given in return for nothing; it is given in return for young people staying on at school, studying for qualifications and making a go of it in their final years at school so that they can get college and university qualifications. I look forward to visiting the Treasury Committee to talk about this and other matters.
§ Mr. Kenneth Clarke (Rushcliffe)I congratulate the Chancellor on his ability to use the word "prudence" at least once without an apparent blush of shame or regret, as he used to cite her more frequently. Will he confirm my understanding on two points: first, that this is the biggest rate of increase in public spending that has been announced since the early 1970s, or for 30 years, since pre-International Monetary Fund intervention days; and, secondly, that it is being announced at a time when the outlook for the real economy—indeed, the global economy—and its ability to create wealth and grow is probably more uncertain than it has been for a very long time?
Does the Chancellor justify that with his constant citing of the levels of national debt and the present levels of deficit, which I am sure he realises are the result of an American-led western boom that led to his under-forecasting revenues and finding that he was over-forecasting spending? Does he not agree that in three years' time, where he should be looking in prudence, debt will be higher, deficits will be growing and interest rates will probably not be as low as 4 per cent.? If we have had a period of low growth or worse, he will face tax increases or unhealthy public deficits, or both, and a difficult time for the real economy. This review is a gamble; it is spend, spend, spend. That is popular today—it always is and always was when it happened in the past—but those of us with a concern for the national interest must have our fingers crossed that at least some of it comes off.
§ Mr. BrownThat is exactly what the former shadow Chancellor and Chancellor said when we talked about the 2000 spending review—that it was unsustainable, that we would not be able to finance it, that it would cause inflation and that we would not be able to meet our commitments.
§ Mr. ClarkeI said that the Government would have to put up taxes.
§ Mr. BrownThe right hon. Gentleman said that it would be inflationary and unsustainable, and that has not been the case at all.
37 As far as taxation is concerned, we put it to the country a few months ago that, after the Wanless report, it was necessary if we were to finance proper health service spending up to 2008 and to make that new decision, that we had the national insurance rise in place. If the former Chancellor, who believes in the national health service, unlike so many of his colleagues on the Conservative Benches, looked at the figures, he would support what we are doing in relation to the NHS.
The problem about the former Chancellor's position is that he wants to return to the old annual Budgets of the 1990s and the annual spending rounds in which spending was set in November, but then had to be changed during the year as a result of all sorts of different events. We are taking a far more long-term approach, and the reason why we can do so is that we have reduced national debt to a realistic level. If debt were at 44 per cent., the level left by the former Chancellor when we came into power, we could not do what we are doing today, but debt is down to 30 per cent., not least because we used the proceeds of the spectrum sale to pay off large amounts of national debt. I may say to him that if Opposition Members complain that we have not been fast enough in delivering all the improvements in public services that we want, it is precisely because we had to deal with the record of the Conservative Government under whom debt was at 44 per cent. and the borrowing requirement was nearly £30 billion. Inflation was rising when we came in and interest rates had to be put up.
§ Several hon. Members rose
§ Mr. Deputy Speaker (Sir Alan Haselhurst)Order. However important the statement is, questions to the Chancellor cannot go on indefinitely. To get in as many as possible, I call on hon. Members to make their questions single and brief, and for equally crisp answers.
§ Mr. Tam Dalyell (Linlithgow)What contingency plans have been made for an attack on Iraq and rocketing oil prices?
§ Mr. BrownMy hon. Friend is Father of the House and makes his points in his usual way. As regards the defence budget, we make very cautious assumptions at all times about what is likely to happen to oil prices.
§ Sir Peter Tapsell (Louth and Horncastle)Implicit in the Chancellor's statement was the decision to follow Germany, France and Italy in breaching the rules of the European growth and stability pact. Did he note last week's stern warnings from the president of the Bundesbank and the International Monetary Fund that these across-the-board increases in Government expenditure without the prospect of matching growth will bring the viability of the euro into serious question? Will he take that risk into account when he examines his five vague economic tests?
§ Mr. BrownTrust the hon. Gentleman to make the public spending announcements on education, health, transport and public services generally into a question about Europe. On the stability and growth pact, he is well aware of our views about the fiscal rules that we believe 38 are appropriate to a modern economy and the debate that is being held in Europe about that. It is interesting that at the last election, the hon. Gentleman's manifesto said:
Waiting times to see a consultant have lengthened. Secondary classes are larger. There is a growing shortage of teachers.Surely he must support additional investment in health and education, as did his party at the last election, and should not he be telling his Front Benchers that the policy of opposing our investments in health and education is a road to electoral suicide?
§ Mrs. Anne Campbell (Cambridge)I thank the Chancellor for his statement and warmly welcome his assertion that housing and transport are particularly important parts of the infrastructure, especially in areas where there is a vibrant and healthy growing economy, as in Cambridge. Does he think it feasible for local authorities to set a target of 50 per cent. affordable housing in any new housing development, because that is what we desperately need in areas such as mine?
§ Mr. BrownI am grateful to my hon. Friend. The interest that she has taken in science over many years has been a powerful influence on the Government's determination to get more resources into the science budget. On housing, she will know that I said that a statement was to be made by the Deputy Prime Minister on Thursday. He is committed to more affordable housing, especially in areas of great housing demand, of which my hon. Friend's is one. She will have to be patient and wait until he makes his statement on Thursday.
§ Mr. Nicholas Soames (Mid-Sussex)Does the Chancellor accept that although many Conservative Members and others welcome the increases in overseas aid and science, and some of those in education and health, my right hon. and learned Friend the Shadow Chancellor was right to say that the increases are not only unsustainable, but positively incontinent? Will the Chancellor tell the House precisely what have been the gains in productivity, especially emanating from the health service, since his last announcement of this type?
§ Mr. BrownI have to tell the hon. Gentleman that when he looks at the health service, he will see that waiting times are coming down. When he looks at in-patient and out-patient waiting lists, he will see that they are down on what they were in 1997. When he looks at the building of new hospitals, they are proceeding apace. When he looks at the recruitment of nurses and doctors, he will see that we are getting them into the key specialties. When he looks at the accident and emergency units in our hospitals, he will see that we have repaired and renovated 95 per cent. of them over the past few years. I agree with him about one thing—more investment is needed, in education as well as in health. I am grateful that he has distanced himself from the position of his Front Benchers, which is to oppose investment in health and education.
§ Mr. Bill O'Brien (Normanton)I congratulate my right hon. Friend on his statement, which is designed to improve the quality of life of everyone in this country. On behalf of local government, may I ask him about the modernisation of housing? Will local authorities have some input into that modernisation programme? Will he consider carefully the authorities in the special interest group of municipal 39 authorities—SIGOMA—where underachievement owing to poverty and deprivation is a major problem and crime hotspots need to be tackled.
Will my right hon. Friend consider giving funding to the hospice movement to ensure that there is no closure of hospice beds?
§ Mr. BrownI will pass on to the Secretary of State for Health my hon. Friend's concern about support for the hospice movement. He rightly points to the neglect of housing over many years and the need for neighbourhood renewal as well as an attack on crime. We are a third of the way towards fulfilling our targets for decent housing. However, as my hon. Friend knows, considerably more remains to be done, and that is why we have provided the extra funding.
On improving the neighbourhoods in the areas that he described and their concerns about local government funding, we announced increases in the budget of the neighbourhood renewal fund. My hon. Friend also mentioned crime. The Home Secretary will make a statement on the criminal justice White Paper, and I believe that he will be able to show the extra resources that are going towards fighting crime.
My hon. Friend represents the interests of his constituency with great determination, and he pointed to some of the increases in investment, housing and policing that the White Paper includes.
§ Mr. David Trimble (Upper Bann)The Chancellor announced an increase of £1.2 billion in three years' time in Northern Ireland. Although we naturally welcome that, I understand that it includes several adjustments, some of which are technical, and the right hon. Gentleman will appreciate that we shall therefore suspend judgment on the detail until we have had an opportunity to study it.
The Chancellor knows that we inherited a pattern of expenditure in Northern Ireland that meant significant underinvestment in public utilities. We need and welcome his continued support for our efforts to achieve change and reform.
At the beginning of his speech, the Chancellor said that he hoped to provide for more doctors, nurses and police officers. He referred to funding for the Northern Ireland Office and said that the Government were providing resources for the ongoing recruitment programme of policemen and the establishment of a new training college. We are more than 500 officers short in the full-time establishment, and the number is dropping. Yet there is a serious problem of maintaining law and order and security in Northern Ireland. Will the resources that have been provided fully fund the additional officers that we need to reach the modest establishment targets that Patten set? Will the extra resources fully fund the new police training college?
§ Mr. BrownI am grateful to the First Minister for his questions. We discussed some of those matters when we met last week, and I was delighted to visit Northern Ireland a few weeks ago when we launched the economic initiative. I applaud the right hon. Gentleman and his Ministers for all their efforts to achieve economic growth and modernisation in Northern Ireland. The settlement is 40 based on the Barnett formula, and he knows that it is worked out carefully to fulfil the needs of Northern Ireland, Scotland and Wales. There is extra funding for the European peace initiative in Northern Ireland. I shall raise the right hon. Gentleman's questions about the Northern Ireland Office with the Secretary of State for Northern Ireland, and we shall be in touch with him.
§ Mr. Mike Hall (Weaver Vale)My right hon. Friend's statement will be enthusiastically welcomed in my constituency, which is the home of Daresbury laboratory, a world-leading scientific research facility. Will he consider the centre for accelerated science imaging project as soon as possible? Daresbury laboratory is designed to secure its future. Will he give it his backing?
§ Mr. BrownMy hon. Friend always makes a persuasive case for his constituency. He knows that such decisions are not for the Treasury but for others. However, my hon. Friend rightly said that the science budget had been increased. It will greatly help the north-west region that he represents so well, and other regions of the country. The 10 per cent. increase in the science budget and the extra £1¼ billion by 2005-06 in partnership with Wellcome Trust, which is contributing an extra £250 million, means that we can start to build for the next generation in science. What I have seen in the north-west offers great hope for the future. Science in the region will expand as a result of the measures.
§ Mr. Geoffrey Clifton-Brown (Cotswold)The Chancellor plagiarised a phrase that I used at Prime Minister's questions three weeks ago when he said that the mark of a civilised society was the way in which we treat our elderly. Why has he sanctioned a mechanism whereby taxation can be transferred from the south to the north? Why should an elderly person in Cheltenham have his funds transferred to someone in Cleveland? Why should parents in Gloucester have their funds transferred to a school in Gateshead? Surely everyone who pays taxes deserves equal treatment. Will the Chancellor ensure such equal treatment?
§ Mr. BrownWe are one United Kingdom, and I should have thought that the hon. Gentleman would welcome what we are doing for the elderly. We are raising the basic pension, and the winter allowance—which the Conservatives opposed—free television licences for the over-75s, and the new pension credit are among the other measures that we have taken to help today's pensioners. The hon. Gentleman should be in favour of what we are doing, and, so far as community care is concerned-1[suspect that that is part of the issue that he is raising—the 6 per cent. increase in real terms of the social services budget in this three years' budgeting is far more than any Conservative Government ever did.
§ Caroline Flint (Don Valley)I certainly welcome the reforms of the national child care strategy proposed in my right hon. Friend's statement, and I hope to explore that matter further in my Adjournment debate on Wednesday. On the education maintenance allowance, which Doncaster has piloted, does he recognise and accept that this is not just about investment in 16 to 19-year-olds? By providing the allowance, we can help those who are socially excluded from university education to gain the 41 qualifications necessary to apply. Will my right hon. Friend ensure that we not only monitor take-up at 16 but examine whether there is an effect on the numbers who then apply to university after staying on at school after 16?
§ Mr. BrownI am grateful to my hon. Friend and I wish her well in her debate on child care. I hope that the figures we have announced for the additional investment in child care will be matched by the creation of child care businesses, and by more local authorities and other organisations getting involved in the business of providing child care. I also hope that the money available will be quickly converted into the child care places and the carers that we need.
Education maintenance allowances are an innovation that has worked in the third of the country in which they have been piloted. The staying-on rate at school has increased from 5 per cent. to 8 per cent. This has been proven to be a worthwhile experiment, and any barrier to staying on at school that can be removed is worth removing. What my hon. Friend says about further and higher education and the applicability of this measure is obviously something that she will persuade Education Ministers to look at.
§ Mr. Nick Gibb (Bognor Regis and Littlehampton)Will the Chancellor tell us by how much debt interest will rise over the next five years, first in cash terms, and, secondly, in real terms? Will those figures include an estimate for interest on the increasing amount of off-balance-sheet debt that the Chancellor is accumulating?
§ Mr. BrownOn the hon. Gentleman's point about off-balance-sheet debt, we have done what no other country has done—[Interruption.] Conservative Members should be congratulating those who were Ministers in the previous Conservative Government, because we have consistently published—
§ Mr. Eric Forth (Bromley and Chislehurst)Cooking the books.
§ Mr. BrownWell, if the right hon. Gentleman wants to accuse the previous Government, whose practices we have followed, of cooking the books, it shows how out of touch with that Government he was—as we thought. So far as contingent liabilities are concerned, we publish all the details on that matter and we have had discussions about it in the Select Committee on the Treasury. [Interruption.] It is all very well for the Conservatives to shout about contingent liabilities, but we are following the practices that have been pursued by previous Governments, and have done so over the last few years. The table on contingent liabilities is regularly published. So far as debt interest is concerned, it is a share of gross domestic product and will remain at around 2 per cent. over the next few years.
§ Tony Wright (Cannock Chase)On any test, this is a make-or-break statement for public services. If we do not begin to see world-class public services as a result of this kind of spending announcement, we are never going to see them. Much therefore hangs on what my right hon. Friend has said today. Will he say a little more about what he rightly described as the need to ensure that, when 42 people see the money going in, they can connect it to the results coming out? That is the only way that we are going to get sustained support for this strategy. There is a difficulty if people cannot see the improvements in a measurable and demonstrable form, or if there is no independent evaluation of them.
§ Mr. BrownI am grateful to my hon. Friend, who has always taken an interest in the workings of government and in how we can improve them. In our first term, it was obviously crucial that we ensured that there was a proper framework for economic stability, and that we got people back to work and increased employment. The money that is now flowing into public services has been made possible by achieving that. The question is, how do we get best value for money? I insist that we need the independent and statutory inspection that my hon. Friend has described, so that people can see for themselves—through proper accountability—whether services are delivering.
Equally. in dealing with failing institutions, it is incumbent on us, as people who believe in the public services, to take early and pre-emptive action when organisations, institutions and services are not delivering as they should for the people. That is why I have read out to the House a number of measures proposed by individual Departments for dealing with failing institutions. I look forward to further discussions in the House about how all these reforms—the public service agreement targets, the devolution of responsibility, the independent audit and inspection, the proper rewards for success and the penalties for failure when institutions do not serve the public—can be pushed through. I should have thought that, instead of laughing at those reforms, the Conservatives would welcome them.
§ Mr. George Osborne (Tatton)May I ask the Chancellor the question put by my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), which he failed to answer? How much, in cash terms, will debt interest payments rise in the next five years?
§ Mr. BrownIt is estimated that debt interest payments in 2005-06 will be £22.8 billion. In rough terms, that is half what they would be if we had the debt levels that we had under the Conservative party 10 or 20 years ago.
§ Margaret Moran (Luton, South)I warmly thank my right hon. Friend for listening to those of us who were calling for increased investment in housing, especially given the atrocious legacy of housing need that we inherited from the previous Tory Government. By 1997, there was a £19 billion disrepair backlog, 2 million were in negative equity, homelessness had doubled and local authority housing investment had halved. Is my right hon. Friend aware that, in areas such as mine, there is no space for further new building of social housing? Would he consider ways in which we can ensure that local authorities bring back into use private long-term empty property? In Luton, there are seven private empty properties for every homeless family. That would be a productive way of tackling the housing need that was left by the previous Tory Government.
§ Mr. BrownI am grateful to my hon. Friend. Since I first met her, she has been anxious to put forward the case 43 for proper housing policies. Representing that city, she has been active in pursuing the case for better housing. The suggestion that she has made is a matter for the Office of the Deputy Prime Minister, who is considering innovative ideas to tackle the shortage of houses in some parts of the country and the substandard housing in others. My hon. Friend should put her suggestions to him. There will be a statement to the House on this matter on Thursday.
§ Mr. Alex Salmond (Banff and Buchan)Now that the Chancellor has abandoned double and treble counting, he has announced increases of 6 per cent. a year for English education and 7 per cent. for English health. Does he accept that the knock-on effect in Scotland and Wales will be increases in those vital budgets of little more than half those amounts? Will he tell us definitively whether he intends to accede to the demands of the Deputy Prime Minister and the other anti-Scottish forces in the Cabinet and on the Back Benches and scrap, review or revise the Barnett formula, or does he think that the restrictions on the rate of increase will do the job for him?
§ Mr. BrownI am surprised that the hon. Gentleman is arguing for more public spending when his party has been going round the country telling us not to raise the oil taxation that is necessary to fund increased public spending. I would think more of the former leader of the Scottish National party if he matched the spending that he is demanding with an ability to support the necessary revenues. As for support for education in Scotland, the outstanding fact that he should never forget when he tries to throw percentages at us is that spending per head in Scotland is higher than spending per head in England.
§ Harry Cohen (Leyton and Wanstead)Does the Chancellor acknowledge that, for public services to improve, public service workers' pay needs to improve? Some of them do a top job, but are very low paid. Will the Chancellor say what is in this settlement to enable fairer pay for public service workers?
§ Mr. BrownPublic service pay is a matter for local government management in negotiation with local government workers. My hon. Friend knows that a real-terms rise is proposed in the salary negotiations that have been taking place. When the issue of low pay is raised, everyone should remember that what we have done with the tax credit system since 1997 is to help low-paid workers—whether it be through the working families tax credit or now through the employment tax credit that is being introduced. Many low-paid workers are being told by their unions that they are worse off, but some of them are £50 a week better off.
§ Mr. David Cameron (Witney)The Chancellor is announcing how he will spend future tax revenues, which are wholly dependent on the performance and growth of the economy. Can he confirm that he still forecasts that
44 the British economy will grow by more than 3 per cent. next year? Given the pause in growth that we have had this year, is he happy with that? The executives at Worldcom and Enron overstated their revenues. Is the Chancellor guilty of the same crime?
§ Mr. BrownI am surprised that the hon. Gentleman, of all Conservative Members, should indulge in such short-termism: as he knows, and as happened when he was advising a Conservative Government, we publish forecasts twice a year. We have published our forecast in the Budget, and we will publish our forecast in November in the pre-Budget report.
The hon. Gentleman should also know—I find that the Conservatives are not willing to be up to date at all on this—that the fiscal rules we have set are set over a cycle, and will be met over the cycle. That means that borrowing for necessary investment can take place, but it also means that we must have a current balance. As I have said, there is a margin for prudence in the figures that I announced in the Budget, and we are uprating from today.
The hon. Gentleman—this Conservative Member—should be congratulating us on the fact that unemployment in his constituency is now 0.7 per cent. He should also remember, when he asks about public spending and whether we can afford it, that in his election commitments he said:
The UK spends just 5.8 per cent. of our national income on health care, compared to 9.8 per cent. in France. We need more public investment".
§ James Purnell (Stalybridge and Hyde)I welcome my right hon. Friend's announcements on housing. Will they cover areas with substandard housing such as Hattersley in my constituency?
Does my right hon. Friend agree that a mantra of reform without investment is just code for cuts, and shows that the Conservatives are the party of spin and we are the party of delivery today?
§ Mr. BrownThe fact that the Conservatives talk of reform in general, while the shadow Chancellor gave no details of any single reform during the 20 minutes for which he spoke today, surely proves to anyone who is prepared to listen that talk about reform is simply camouflage for the real Conservative policy of public spending cuts. Back Benchers must be thinking twice about what the shadow Chancellor says. The Conservatives promised higher spending on health and education at the last election and said that they would match our plans during the Parliament. Now Conservative Members are being told by the shadow Chancellor and their leader that the policy of the Conservative party is cuts in health and cuts in education.
§ Several hon. Members rose—
§ Mr. Deputy SpeakerOrder. I have time-restricted business to protect. I remind the House that there will he a debate on public expenditure next Tuesday.