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Private Finance Initiative
8. Mr. Elletson: To ask the Chancellor of the Exchequer what has been the impact on the public finances of financing capital projects under the private finance initiative rather than entirely from public funds. [18527]
Mr. Waldegrave: The PFI is delivering better value to the taxpayer, better services to the public sector and new business opportunities for the private sector. The PFI entails real transfer of risk and responsibility to the private sector, and on that basis has been shown to improve value for money. That is why it was endorsed by the IMF as a
- "welcome innovation that has the potential to increase the efficiency with which services are provided to the public".
Mr. Waldegrave: Yes. There is fundamental confusion about that in the Labour party. Its document "Renewing the NHS" states:
- "We strongly disapprove of the Government's efforts to dragoon hospitals and health authorities into tying themselves up in long-term private finance contracts."
Mr. Waldegrave: "Hear, hear," says the hon. Gentleman, most helpfully. That is the truth. Labour Members are, and always have been, against real PFI in the health service. They always say that they are against any transfer of management responsibility, and that it is necessary for real PFI.
Mr. Timms: Why has none of the major hospital PFI schemes yet been completed? The Government said in the Red Book that there would be £2.5 billion-worth of investment under the PFI next year, but only £1.3 billion had been committed by last December. What is the present shortfall in the amount committed to the PFI,
and what will the Government do to bridge the gap and provide desperately needed investment in hospitals and other public services?
Mr. Waldegrave: The deals are big, complex and very important, but they will be sorted out. The hon. Gentleman may like to watch this space.
Mr. Stephen: Does my right hon. Friend really believe in Labour's apparent conversion to the merits of private finance, given that, only six months ago, its deputy leader thought that PFI was a furniture store?
Mr. Waldegrave: To be fair to the deputy leader of the Labour party, he claims to have invented the PFI. Unfortunately, however, he did not: he invented something very different. He just thinks that letting public authorities borrow is private finance. It is not; it contributes to the public sector borrowing requirement. That is the fundamental misunderstanding in the Labour party.
European Single Currency
9. Mr. Alan W. Williams: To ask the Chancellor of the Exchequer if he will make a statement on how adherence to the criteria for joining the European single currency would affect the United Kingdom economy. [18529]
Mr. Oppenheim: The Maastricht convergence criteria of low inflation and sound public finances make sound economic sense in their own right, with or without economic and monetary union. They will continue to form the basis of the Government's policies.
Mr. Williams: Has not the Chancellor lost the argument in the Conservative party over monetary union? Are not the Tories being increasingly driven by Euro-sceptics into supporting a complete withdrawal from the European Community, which would cost 3.5 million jobs?
Mr. Oppenheim: As I understand it, new Labour's policy is exactly the same as ours. As soon as we changed our policy and said that we would have a referendum on economic and monetary union, Labour poodled along behind us on that policy, as on so many others. Is the hon. Gentleman also arguing, for the sake of symmetry, that the many Euro-sceptics in his party--including the 50 who signed a letter condemning Labour's policy--have driven the Labour party into exactly the same position as us?
Mr. Forman: Under a responsible Conservative Government, would not one answer to the question be that adherence to the Maastricht criteria would have little effect on the British economy, because we are very likely to meet those criteria whether we are in or out of EMU? Is there not a strong pro-European case for saying that EMU should not go ahead on the timetable that is now being talked about unless it does so on the basis of a very small homogeneous core of countries?
Mr. Oppenheim: My hon. Friend is absolutely right. It looks as if we will meet the Maastricht criteria. We have lower debt than any other major European Union
country, and our debt has been lower every year under the present Government than in any year under the last Labour Government. Our borrowing is running at half its level under the last Labour Government, our inflation is below the EU average and our unemployment is lower than that in any other EU country. We have done all that while looking very likely to meet the Maastricht criteria.
Contrast that with the position of other countries such as France and Germany which are suffering terribly by having to meet those criteria. The reason for that is that they have not made the structural reforms that we have made in the teeth of bitter Labour opposition. Those reforms have meant that three quarters of the competitiveness gap with Germany has been closed over the past 18 years. It is no wonder that new Labour's unique selling proposition to the electorate is, "Those guys have made such a mess of things that we shall copy all their policies."
Mr. Mike O'Brien:
When the Exchequer Secretary speaks about "our" policy, which "our" does he mean? Does he mean the Foreign Secretary, who says that he is hostile to a single currency, or does he mean the Chancellor, who has always said that he is a supporter of economic and monetary union? Who now speaks for the Government?
Mr. Oppenheim:
I could ask the hon. Gentleman exactly the same question. Who speaks for new Labour on Europe? Is it the right hon. Member for Livingston (Mr. Cook), the shadow Chancellor or the leader of the Labour party? For the hon. Gentleman to suggest that there are no divisions whatever in the Labour party, when 50 of his colleagues signed a letter condemning Labour's policy on Europe, is ridiculous. He has dodged--[Interruption.] I am relieved that the hon. Member for Reigate (Sir G. Gardiner) has decided to stay on Government Benches. No doubt he recognises the success of Government policies.
10. Sir Colin Shepherd:
To ask the Chancellor of the Exchequer what is his current estimate of the amount of income tax raised from individual investors' dividends on shares in the privatised utilities. [18530]
Mr. Jack:
We estimate that more than 5 million individuals may have a taxable dividend entitlement arising from their shareholding in privatised companies, but we do not keep records of the amount of income tax derived from dividend payments made in respect of any one company.
Sir Colin Shepherd:
Does my right hon. Friend agree that the tax derived would be much less if there were a windfall tax? Would not the 5 million shareholders who would pay for that tax through reduced dividends also have the value of their shares reduced accordingly?
Mr. Jack:
My hon. Friend is entirely right, and his assertion was supported by Professor Littlechild when he gave evidence to a Select Committee. He said that shareholders would be the first in line if there were a windfall tax of whatever amount. Whether it was £3 billion, £5 billion or £10 billion, it would be a dawn raid on the shareholder-owners of this country's privatised companies.
Public Borrowing
11. Sir Irvine Patnick: To ask the Chancellor of the Exchequer what representations he has received from the Chartered Institute of Housing regarding his policy on the level of public borrowing. [18531]
Mr. Waldegrave: The chief executive of the Chartered Institute of Housing wrote to my right hon. and learned Friend on 3 March asking for a large increase in Government spending on housing, and my right hon. and learned Friend will reply shortly.
Sir Irvine Patnick: As my right hon. Friend will be aware, some organisations, including the Labour party, advocate the spending of capital receipts. What effect would such spending have not only on the public finances but on cities such as Birmingham and Sheffield?
Mr. Waldegrave: That same chief executive of the Chartered Institute of Housing recently secured what I take to be an unbreakable pledge from Labour that it would release the accumulated receipts of local authorities. On a phased basis, that would probably amount to about £2.5 billion a year of additional net borrowing in the economy. That ends up as nonsense because, as my hon. Friend hints--I suspect that as a former local authority leader he knows--in Birmingham, for example, there are no accumulated receipts. Therefore, there would be no gain at all to Birmingham. In Surrey, there would be huge additional spending. That would be an extremely odd and foolish way to deal with housing policy.
Mr. Fraser: Has the Minister made any calculation of the extent to which public expenditure would be reduced by not having to place so many families in private accommodation at exorbitant rents, with 100 per cent. housing benefit?
Mr. Waldegrave: Any such calculation, which would be difficult to make, would be dwarfed by the increasing borrowing and spending to which the hon. Gentleman's colleagues on the Labour Front Bench are committed. They have found no answer. They have pledged themselves to an additional minimum £2.5 billion--it might be more--net borrowing.
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