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Mr. Ian Bruce: Is not the hon. Gentleman being too generous to the Government? Surely all the figures assume that public sector employees--such as those who work in education and the health service, both of which
we want to expand--will accept a pay rise at the rate of inflation rather than the real rise that people who work in the rest of the economy are enjoying.
Mr. Malcolm Bruce: The hon. Gentleman anticipates the development of my speech. I am explaining what the figures suggest, although I am not sure whether things will turn out that way in reality. I say as an aside that it is unreasonable for a Government who say that they are committed to the development of education and health to deny the people on whom those services depend a real increase--or, indeed, even a maintenance of living standards--when the economy is growing. That is unlikely to be sustainable.
The Chancellor has not kept to his pledges. The Labour manifesto said:
In November 1997, the Chief Secretary made another pledge that has been broken. He said:
Only an extra £500 million has been allocated to the national health service in 1998-99: much less than the £2.25 billion identified in our alternative Budget. [Laughter.] Hon. Members may snigger but, when he was Chancellor, the right hon. and learned Member for Rushcliffe chided Labour for not having the courage to produce an alternative Budget, which the Liberal Democrats have consistently done. He said that any Opposition worth their salt would produce alternative proposals, but of course the Conservative party has not done so, now that it is in opposition.
Taking the GDP deflator effect into account, the Budget is worth only about £400 million more for the national health service. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) put his finger on it. Given the huge pressures from the recent below-trend funding for the health service, and the millennium computer problem, which will definitely prove serious for the national health service, the extra funding is entirely inadequate to substantiate the Government's claim that they will save the service and deliver a cut of 100,000 in hospital waiting lists. We do not think that that Red Book promise is likely to be fulfilled. If it is, it can be only at the cost of severe cuts elsewhere in the NHS, with damaging consequences.
With the higher inflation expected in 1998-99, the NHS will receive only about 2.5 per cent. more in real terms. Under the Conservatives, the average real-terms increase was 3.1 per cent., although the last two years were not
quite so good. The present Chancellor, in his 1988 autumn statement response to the then Chancellor, Nigel Lawson, said:
The £2 billion extra that the Government boast will be spent on health is to be spent over two years and, taking inflation into account, represents only about £650 million more than the Tory plans. Judging by his outbursts, I know that those figures and that analysis have irritated the Prime Minister. He seems to take the view that the Government live in a changing world where figures can be adjusted, adapted and updated, but that Opposition parties cannot respond in kind.
If the Prime Minister wants to compare like with like, he might consider that the Labour party's pledge for spending on health and education, at the time of the general election, was for £100 million on each. We welcome the fact that the Government have approved that spending, but it is not enough to deliver on their pledges.
The Budget announced £250 million extra for education, £100 million of which is to be directed towards tackling skills shortages in key areas and promoting lifelong learning. Those are worthy aspirations, but schools are to receive only £100 million extra. Taking the deflator into account, the Budget gives education a net real addition of only £150 million.
That cannot reverse the decline in the percentage of GDP spent on education under Labour, in breach of its manifesto commitment. The manifesto said:
The additional funding is woefully inadequate. It will not tackle immediate needs and certainly has no real ambition for a Government who claim that education is their top priority. The Government talk about £2.5 billion extra for schools, but that is what they propose to spend over the entire five-year Parliament, when they should spend it this year if they have any ambition to deliver quality education.
Not only the Liberal Democrats have spotted the Government's U-turns on the environment. On Budget day, Charles Secrett, executive director of Friends of the Earth, said:
Mr. Bruce:
Like the hon. Member for South Dorset (Mr. Bruce), the hon. Gentleman anticipates my speech. If he has a little patience, he will get the answer.
The Government made a clear promise to produce a Green Book alongside the Red Book. The Financial Secretary repeated it when she said:
The Budget contained no serious environmental measures: no carbon tax or home energy insulation scheme, and a cut in VAT on home energy insulation materials limited to certain Government grant schemes. That may be welcome, but it is very small.
The Government have made proposals to reduce vehicle excise duty for fuel-efficient cars, but those proposals are still on the drawing board. The Government propose a reduction of £50 per annum, which is probably not enough to make much difference. According to the Red Book, the Government are "interested in introducing" a lower rate for the least polluting cars. That is a very vague statement.
The Liberal Democrats proposed recycling money from higher petrol duty into cuts for smaller-engined cars. Had the Government made that connection, we might have taken a different approach to that aspect of the Budget. However, the Government have done nothing in that direction--they have merely talked about it--and they have increased fuel taxes by an extra £1.1 billion in 1998-99 or £3.3 billion over three years. That is simply a blow to rural motorists and a tax for everyone, and there are no offsetting fuel efficiency incentives or, as we would wish, tax cuts elsewhere.
I should like to clarify the situation for the hon. Member for Buckingham (Mr. Bercow), following his intervention. We Liberal Democrats have a rule in our environmental tax policy that environmental taxes should be offset by corresponding tax cuts elsewhere. Under the Conservatives and now under Labour, such measures are simply another way to raise taxes and pretend that they are being green. We do not support such deception.
The extra £500 million over three years for public transport is welcome, of course, but it will not revolutionise our transport system, and I doubt whether it will offset the cuts in local authority transport budgets. Today, £4.5 million of rural initiatives was announced for rural transport in Scotland. People are pointing out that local authorities do far more than that to support rural transport, and it is not at all clear whether those initiatives can make a difference. I urge people to bid for the schemes but, if they are successful, to put pressure on the Government to put in a lot more before too long.
As time is pressing, I must say that we welcome the welfare reform package, but are disappointed that nothing is being done for pensioners--not only we, but pensioners, are disappointed. We commend to the Government our proposals, which would not deal with the whole problem, but giving an extra £5 per week to those over the age of 80--up from the present derisory 25p--would at least show a commitment to helping the most elderly and vulnerable pensioners. We shall want to probe the details of some of the other measures in the Budget, but we genuinely applaud the Government's direction and hope that the delivery will match the rhetoric.
The £1.4 million for working families tax credit is a substantial injection, but not everyone will be better off. Indeed, the Red Book points out that the number of families with high marginal deduction rates of 60 per cent. or more will increase by 33 per cent., to more than 1 million, which demonstrates the difficulties when one moves the thresholds. One may help people at the bottom end, but unfortunately one creates another category that needs help further up the scale. I hope that the Government will ultimately find ways to deal with that. When we debate the 10p rate of tax, we might be able to engage on more efficient ways to help people on low incomes.
At this stage of the Budget, it has to be said that there are some losers, for example, a married man with no children will lose part of his married couple's allowance with no corresponding benefit, but Budgets do not please everyone, I guess.
There are concerns about how fraud can be avoided and how the working families tax credit will be evaluated. It has been suggested that people might get round the system by taking in each other's children and finding a way to claim benefit in that way.
Finally, on a macro-economic point, I found the exchange on exchange rates interesting. The right hon. Member for Wokingham (Mr. Redwood) clearly enjoys opposition. He has a talent for it--after all, he only has to attack. He is not so good at telling us what he would do. How cheerfully the right hon. Gentleman disowns the Conservative party's policies both in government and in opposition. Obviously, he has been practising for opposition for the past 10 years. He opened his comments by saying that the exchange rate was too high, but gave no idea of how the Conservatives would bring it down. He tried to explain that they would not have got there in the first place.
The right hon. Member for Ashton-under-Lyne hit on the one issue that the right hon. Gentleman ignored, which is the euro effect. That we are not committing ourselves to the euro is an additional factor that encourages people to hold sterling and to force it up. I would not have expected the right hon. Member for Wokingham to endorse that policy, although I was interested that the right hon. and learned Member for Rushcliffe was not keen to answer my question about the operation of the independent central bank either. On that issue, the Conservatives would do best to keep quiet. Being the party of devaluation is a new role for them.
"For the next two years Labour will work within the departmental ceilings for spending already announced."
That pledge was broken in 1997, when Labour reallocated moneys within budgets. We have no quarrel with that, as we pushed the Government to do it, but they broke a specific pledge.
"The Government are committed to holding to the Control Totals for 1997-98 and 1998-99."--[Official Report, 13 November 1997; Vol. 300, c. 622.]
Yesterday, the Government had to acknowledge that public finances for 1998-99 are so tight that they have increased the 1998-99 control total by £1.5 billion, using a carry-over from 1997-98 caused by slower growth. That is not necessarily wrong, but it makes a mockery of the Government's claim that they are sticking to the established spending plans. In reality, there has been a continual redefinition of Labour's election pledge on spending, demonstrating how ridiculous and arbitrary the whole process has been.
"Opposition Members welcome any additional resources for the National Health Service and any plan to break down the appallingly high waiting lists. However . . . When health costs are rising faster than even ordinary inflation, the sum that the Chancellor has provided today will barely cover the basic inflationary pressures that the health authorities face, far less deal with their huge backlog of structural repairs."--[Official Report, 1 November 1988; Vol. 139, c. 826.]
We expect waiting lists and waiting times to go on rising, breaking Labour's early pledge, which in any case has become merely a long-term aspiration.
"We will increase the share of national output spent on education",
but planned Government spending on education as a percentage of GDP is set to fall, from 4.5 per cent. in 1996-97 and 4.4 per cent. in 1997-98 to 4.3 per cent. in 1998-99. That is simply a betrayal of the manifesto pledge.
"This was a major missed opportunity. Labour is rapidly forfeiting its claim to be a green government . . . this Budget is about as green as a smog alert. The Government cannot meet its manifesto and Kyoto promises with this Budget."
23 Mar 1998 : Column 78
Friends of the Earth was offended by the Government's U-turn in committing themselves only to the European Commission's 8 per cent. carbon dioxide emission reduction target by 2010, rather than to the 20 per cent. target in the manifesto.
Mr. Bercow:
The hon. Gentleman appears to endorse the comments of Friends of the Earth, so we could be forgiven for thinking that he believes that the Government did not increase road fuel duty enough. Will he clarify whether the Liberal Democrats support the increase in road fuel duty or believe that it was too little?
"We have every intention of keeping that promise from the first full Budget."--[Official Report, 10 July 1997; Vol. 297, c. 1062.]
That commitment seems to have re-emerged as a single green page--page 78--in the Red Book.
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