Public Services

HL Deb 15 January 2003 vol 643 cc201-3

2.51 p.m.

Lord Tebbit asked Her Majesty's Government:

What calculations they have made of the recent rate of price or cost inflation in the provision of public services, notably healthcare and education.

Lord McIntosh of Haringey

My Lords, since the late 1970s, public expenditure has been planned and controlled at current prices, and a measure of general price inflation in the economy has been used to adjust spending plans for inflation when required.

Lord Tebbit

My Lords, I thank the Minister for his reply, but that was not an answer. Is he aware that his colleagues frequently claim that expenditure on such services as health and education has increased by approximately one-third under the present administration; but as we all know, output, let alone quality, has scarcely increased at all? Does not that suggest that the rate of inflation in the public services is about 6 per cent, in contrast to that in services provided by the private sector, which is probably less than 2 per cent?

Lord McIntosh of Haringey

No, my Lords. The answer to the noble Lord's Question was clearly implicit in what I have just said. We do not make these calculations, and we have not done so for more than 20 years. The noble Lord's government did not make these calculations, because the calculations did not work. There are measures of output; they are provided in the Blue Book, and are produced by the Office for National Statistics. They do not give a measure of the effectiveness of public spending.

Education, for example, is measured in terms of pupil years. If you increase expenditure, it can be a question of either doubling the income of teachers or halving class sizes. It will appear in the same way in the statistics and yet the real outcome, rather than the output, is very different.

Lord Saatchi

My Lords, this is one of those special parliamentary occasions when a Minister comes to the Dispatch Box and clears up one of the great mysteries of the age. What we all want to know is how the Government have achieved a modern miracle—to raise billions of pounds in extra tax, spend it, and produce results which are invisible to the naked eye.

Perhaps I may offer the noble Lord an explanation which he can shortly say is complete nonsense, and then tell us the real reason. Is not the reason—exactly as my noble friend Lord Tebbit says—that 59 per cent of all the sums spent by the Government on public services is disappearing in wage and cost inflation in the public sector; and that the sum left over is too small to make a difference? If that is not the real reason, will the noble Lord say what is?

Lord McIntosh of Haringey

My Lords, the noble Lord really must get out of the habit of answering his own questions. For the reason I gave in reply to the supplementary question of the noble Lord, Lord Tebbit, measures of output of the simple kind that the noble Lord, Lord Tebbit, and apparently the noble Lord, Lord Saatchi, would wish, do not measure the quality of the public service provided.

Let us stay with education as an example. Is the noble Lord seriously saying that the increase in the number of teachers is not an increase in quality? So far as concerns health expenditure, is he saying that the increase in the number of doctors and nurses is not an increase in quality in the provision of health services? If those on the Benches opposite are saying so, let them say it to the teachers, the doctors and the nurses.

Lord Newby

My Lords, does the Minister accept that, in the 1990s, pay in the private sector rose by 51 per cent, whereas in the public sector it rose by only 42 per cent? Will he further accept that, in the year to October 2002, public sector pay rose by 3.8 per cent, compared to a 3.6 per cent rise in private sector pay? Finally, will he accept that if there is a problem in regard to improved outputs in the public sector, it cannot be laid at the door of excessive wage payments?

Lord McIntosh of Haringey

My Lords, I do not have the noble Lord's figures in front of me. I have no reason to doubt them—and, if I do not doubt them, I have no reason to doubt his conclusions.

Baroness Gardner of Parkes

My Lords, will the Minister tell the House whether, in terms of inflation in healthcare, there is a continuing disproportionate increase in the amount having to be set aside by the National Health Service for legal liabilities?

Lord McIntosh of Haringey

My Lords, unfortunately, the noble Baroness is entirely right. The growth in litigious activity in this country is greatly to be regretted. It is costing the public sector a great deal of money and is one factor that is putting a brake on reform alongside the increase in resources, which is the key to our approach to the public services.