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EU Institutions
14. Mr. John Healey (Wentworth): If he will list his proposals for the reform of the European Union's institutions. [48714]
18. Mr. Gareth R. Thomas (Harrow, West): What proposals he is putting forward to reform the European Union's institutions. [48718]
The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): At this stage, the Government have no formal proposals for reform of the institutions. However, we are examining future developments in the European Union and how Britain should approach them.
Mr. Healey: Is not Britain's gross domestic product per head now the fourth lowest in the European Union? Does my hon. Friend accept that the reform of the European structural funds must fully reflect the structural problems in the United Kingdom? What reassurance can he give areas such as South Yorkshire that there will be an increase in the United Kingdom's take of European structural funds in general and an increase in objective 1 funding in particular?
Mr. Henderson: I thank my hon. Friend for that question. If we are to proceed with the enlargement of the European Union, structural funds must be available to help the economies of central and eastern Europe to develop. That will augur well for our exports. The rest of the funding available to the European Union has to be allocated among the existing member states. A fair solution must be reached, taking account of priorities such as those that my hon. Friend mentioned in South Yorkshire.
Mr. Thomas: Is not one reason why the Conservatives failed to deliver any significant reform of EU political institutions the intemperate and extreme language used by the present shadow Foreign Secretary and his colleagues on most matters European? Will my hon. Friend assure me that he will continue to press for measures to improve the environment in areas such as the common agricultural policy?
Mr. Henderson: My hon. Friend is right. I am sure that the House realises that a Government cannot negotiate with their EU partners unless they have established a relationship. Each country emphasises its priorities, and, through a process of negotiation, deals have to be reached for the European Union. Those involved must be committed to the European Union and feel that a fair settlement has been reached. That is vital for reform of the common agricultural policy, to which I have already referred.
Comprehensive Spending Review
3.30 pm
The Chancellor of the Exchequer (Mr. Gordon Brown): The Government's central objectives are high and stable levels of growth and employment and sustainable public services, built from a platform of long-term stability. To achieve this, two fundamental economic reforms have been undertaken for the long term: to take monetary policy out of party politics through operational independence for the Bank of England; and to impose a new framework of financial discipline by applying fiscal rules that achieve a current budget balance and prudent levels of debt to national income.
Last May, we imposed a two-year spending limit, and we have kept to this limit. We promised to cut public borrowing, and it has been cut by £20 billion. That fiscal tightening will be locked in to next year. To meet our fiscal rules, and in line with cautious and published assumptions, audited by the independent National Audit Office, we plan current surpluses for the next three years of £7 billion, £10 billion and £13 billion. As a proportion of national income, debt will fall below 40 per cent. By the end of this Parliament, debt interest payments will be £5 billion a year lower than if we had simply left borrowing at the level inherited from the previous Government.
In the last economic cycle, under the previous Government, the current budget deficit averaged 1.5 per cent. of national income--the equivalent of £12 billion a year extra borrowing. During the 1990s, national debt doubled. Over this economic cycle, and for the first time for decades, Britain is set to have both a current budget in balance and a sustainable approach to debt--an approach that is among the most prudent of our G7 partners, and more prudent than that of our predecessors.
All the allocations that we make this afternoon are made within and subject to this overall financial discipline, which I set out in the "Economic and Fiscal Strategy Report", published last month. Through our new deal for the unemployed, we are tackling the bills of economic failure. Under the plans published today, the growth in social security spending for this Parliament will be significantly lower than in the previous Parliament.
Working within that framework, the comprehensive spending review has examined the most effective use of public money across and within each Department. I am grateful to my right hon. Friend the Chief Secretary to the Treasury, and to the Public Expenditure Committee of the Cabinet, for all their work.
By looking not just at what Government spend but at what Government do, the review has identified the essential modernisations and savings. The review's first innovation is to move from the short-termism of the annual cycle to the drawing up of public expenditure plans not on a one-year basis but on a three-year basis. The review's second conclusion is that all new resources should be conditional on the implementation of essential reforms: money, but only in return for modernisation; Government moving out of areas where they need not be; and, in areas where public service matters, Government setting clear targets for modern, efficient and effective services.
Today, we begin, not, as all spending announcements over the past 30 years have traditionally begun, with annual allocations, but by setting out the new three-year objectives and targets for each service. Therefore, the results that we are demanding, the new standards of efficiency that will have to be met to ensure that every penny is well spent, the procedures for scrutiny and audit that will be set in place, and the reforms that we have agreed, are all based on a modern and clear understanding that Government should do only what they have to do, but do what they do to the highest standard. I shall set out the essential changes.
First, each Department has reached a public service agreement with the Treasury--essentially a contract for the renewal of public services. In each service area, the contract requires reform in return for investment. The new contract sets out the departmental objectives and targets that have to be met, the stages by which they will be met, how Departments intend to allocate resources to achieve those targets and the process that will monitor results. The Prime Minister has decided that that continuous scrutiny and audit will be overseen by a Cabinet Committee, continuing the work of the Ministerial Committee on Public Expenditure. Money will be released only if Departments keep to their plans.
Secondly, the contract will stipulate new three-year efficiency targets for the delivery of services. Targets will range between 3 per cent. and 10 per cent; their terms will be made public. The purpose of the efficiency targets is to ensure that more resources go directly to front-line services: patient care in the health service, classroom teaching and fighting crime--a policy of promoting front-line services so that, by securing greater value for money, we secure more money for what we value.
Thirdly, in addition to efficiency targets, we have embarked on a programme of radical reform. To achieve our priorities, difficult decisions and choices have had to be made. We have already reformed student finance; we have begun welfare reform, matching rights with responsibilities; and, as a result of the comprehensive review, further reforms will be announced in legal aid, in procedures for asylum, in child benefit, in youth justice and with the withdrawal of unjustified subsidies. Further reforms will be announced by Ministers in forthcoming statements.
In defence and in the Foreign Office, we have achieved the changes necessary to provide us with the defence and diplomatic capability we need, while making necessary savings by, for example, reducing the number of warships and establishing a new public-private partnership for the Defence Evaluation and Research Agency.
Fourthly, for central and local government, we have agreed a programme for releasing assets we do not need, to fund £11 billion-worth of additional new investment in health, education, transport and other capital projects that we urgently need. With a number of further announcements today, our policy of promoting public-private partnerships is extended into new areas, including national science policy, urban policy and overseas development.
Fifthly, while we are raising capital investment for three years to tackle the backlog of underinvestment that was bequeathed to us, current spending will grow by no more than 2.25 per cent. We must ensure that public
sector pay settlements are fair and affordable, and do not put at risk our target for public service improvements in each of the next three years, for which we have budgeted.
In line with three-year allocations, the independent pay review bodies will report not just to the Prime Minister but to the departmental Ministers who have to meet those public service improvement targets and who will respond to the recommendations.
Consistent with the three-year allocation, we are announcing a further strengthening of the pay review system. Having spoken to the chairmen, the Prime Minister has confirmed that their remits, in addition to the responsibility to recruit, reward and motivate staff--and therefore their role--will be strengthened with three responsibilities. Their recommendations will take account of affordability--in other words, the current departmental spending limits; of the Government's inflation target of2.5 per cent.; and of the need to achieve the Government's targets for output and efficiency.
That reform offers the opportunity for the public services to manage their pay and conditions more directly, but also gives Departments the responsibility to ensure that pay settlements cannot be determined without regard to the demands of the service. In that way, as in every other organisation, pay decisions will now be made in relation to the overall objectives of the service.
Perhaps the most important advantage of conducting a comprehensive spending review is the opportunity that it allows for individual services to put in place a substantial reallocation of resources within Departments--from bureaucracy to front-line services, from dealing with the symptoms of problems to dealing with their causes--and to consider a co-ordinated approach that breaks free from the old departmental fragmentations and duplication.
As a result of interdepartmental reviews, services for asylum seekers will now be managed by one Department rather than five, and the three Departments responsible for criminal justice will work together to one set of objectives. Children's services, the urban regeneration budget and our approach to tackling fraud will all be reorganised, achieving both efficiencies and savings, and other reforms will be announced by Ministers in the next few days.
Our prudence has been for a purpose. It is because we have set tough efficiency targets and reordered departmental budgets that our top priorities of health and education will receive more new money than the other 19 Government Departments combined. To accommodate that, we have had to take a firm line with other spending programmes and rigorously to select priorities. As a result, more than half of today's allocation will be invested in health and education--so there will be additional resources, but they represent money in return for modernisation.
I now turn to the allocations to individual services. Here, the main conclusion of the spending review is that it is not only a social duty for Government to invest in good public services to improve our social fabric, and to tackle poverty and deprivation by extending opportunity, but that most people in Britain, apart from a small and extreme minority, agree that it is also in the economic interests of our country to create an infrastructure of opportunity and to invest in education, science, transport and strong communities, so that individuals can make their contributions to the economic well-being of this country.
Invest in the education of our children, and we are investing in our future. In the old economy, it was possible to survive with an education system that advanced only the ambitions of the few; the new economy demands an education system that advances the ambitions of all. However, the investments that we make will take place only in exchange for further modernisation and reform.
The Secretary of State for Education and Employment has agreed not only to set numeracy and literacy targets for 11-year-olds, but to set Government targets for nursery education, for cutting truancy, for higher attainment by teenagers, for improved standards of teaching, including a qualification for head teachers, for greater efficiency in further and higher education, and for the inspection of schools. In return for investment there will also be further reforms in teacher training and in the administration of school budgets.
At every stage, we are linking new investment with reform, and it is on that basis that the Secretary of State for Education and Employment will tomorrow announce the biggest single investment in education in the history of our country. For that service, and for other services, there will be separate announcements, based on the Barnett formula, for Scotland, Wales and Northern Ireland.
In the last three years of the Conservative Government, the growth in education spending was £7 billion. I can confirm that, for the next three years, additional education expenditure will total £19 billion. In total, we shall spend £3 billion more next year, £6 billion more in 2000 and £10 billion more in 2001. That is what we mean by "Education, education, education"--honouring our manifesto commitment to the British people.
In the 18 years of the Conservative Government, spending on education rose on average by 1.4 per cent. a year. Education spending will now rise in real terms by an average of 5.1 per cent. a year until the end of the Parliament.
We said that we would devote a rising share of national income to education, and we have. Spending on education will now rise to 5 per cent. of national income. Today, about 1 million children are still being taught in classrooms built before the first world war. Some6,000 schools are already being refurbished this year. Over the Parliament, capital investment to re-equip our schools will now double. Following our reforms in student finance, there will now be an expansion in the numbers of students in higher and further education by the end of this Parliament--more than 500,000 additional students.
We said that we would meet our class size pledge for five, six and seven-year-olds. Under the proposals that my right hon. Friend the Secretary of State for Education and Employment will announce tomorrow, our pledge will be met as we promised.
Investing in education is essential to secure both a fairer society and an efficient economy. If our country is to be equipped and prepared for the competitive challenges ahead, the Government also have an economic responsibility to invest in science and innovation, in our transport infrastructure and in building safer and stronger communities. Net public investment will be doubled as a result of the Government's new fund for investing in Britain's future, but in every area, investment is
conditional on further reform. It is the development and application of ideas and inventions in science that hold the key to improved national competitiveness in the future.
As a result of a reduction in subsidies that can no longer be justified, and also as a result of £400 million in support from the Wellcome Foundation--which I thank for its generosity--the Government are able to announce the biggest ever Government-led public-private partnership for science for this country. A total of £1.1 billion will now be available to provide the modern facilities for science research and teaching at our universities and to support science teaching and research throughout the country. This innovative step change in our approach to science will lay the foundations for putting Britain at the forefront of the next generation of scientific and industrial research.
Any one who travels on our roads and railways knows that, after years of neglect and under-investment, Britain suffers from an overcrowded, under-financed, under- planned and under-maintained transport system. So for transport, also, we propose reform--a new investment strategy that will involve a network of public-private partnerships--like those for the underground, the channel tunnel rail link and air traffic control--and a commitment to more integrated planning of public transport. In return for those innovations, there will be £2 billion more investment. From a 25 per cent. decline in transport investment in the last Parliament, there will be a 25 per cent. increase in the next three years for investment in public transport and also to meet our environmental objectives. Full details will be set out by my right hon. Friend the Deputy Prime Minister in the transport White Paper next week.
Economic success and social cohesion depend on safer and stronger communities. That is why we will now invest more in the prevention of crime. That is why today we also propose a policy reform to tackle the underlying causes of poverty in the most hard-hit estates. It is because we are announcing major modernisations that will put legal aid on a fairer footing and will reform youth justice, that more resources can be made available for policing and, for the first time, substantial resources for innovative, evidence-based crime prevention work that can reduce crime. Measures to tackle drug abuse will have a new priority, with a 25 per cent. increase in funding. Further details, including targets that will have to be met, will be announced by my right hon. Friends the Home Secretary and the President of the Council.
To build stronger communities, it is clear that we need to renew housing stock. To cut out waste and to ensure the best use of resources, the Deputy Prime Minister will impose new guidelines for greater efficiency in construction and repair. Following the Egan report, a new housing inspectorate will audit housing management in every local authority.
With the help of those reforms, we will be able not just to tackle homelessness, but to renovate 1.5 million homes in our country. To do so, we will now allocate, from capital receipts, £3.6 billion. Our commitment to the environment also recognises the need for responsibility in the use of energy, so there will be a new programme of home energy efficiency.
We are committed to a comprehensive programme of welfare reform. Since coming into office, we have introduced the new deal for the unemployed, the reform in finance for students, the working families tax credit and a new approach to child benefit. The Prime Minister has set up a welfare review which led to the welfare Green Paper, and a long-term framework for the provision of future pensions and for the reform of disability benefits will be announced later this year.
Last week we announced reforms in the Child Support Agency, and yesterday we announced new measures to combat social security fraud. The social security budget--which rose faster in the last Parliament--is set to rise by far less in this Parliament. The number of single parents on income support has fallen below 1 million for the first time in years as we have cut the bills of unemployment. Some 60,000 young people have already signed up for the new deal.
Today, I can announce further changes in welfare policy. The new deal for the unemployed is based on opportunities matched by responsibilities. It is now time to extend that approach to communities by tackling the underlying causes of their poverty. For our most deprived estates, the key problems are not just poor housing, but lack of employment and economic opportunity. In exchange for long-term targets for improving skills, educational qualifications and business start-ups in those areas, a total of £800 million will be allocated to a new deal to lift up our most deprived communities. A new deal helping the unemployed to become self-employed will be launched by the Prime Minister on Friday.
A further reform will make it possible for thousands more young people to stay on in school and to go on to further and higher education. We have to raise Britain's appallingly low staying-on rates, and a new educational maintenance allowance--linked to attendance and based on parental income--will be piloted for 16 to 18-year-olds. If, as we expect, the new maintenance allowance succeeds in encouraging more young people to stay on in education, we plan to introduce it nationally, using the money currently spent on post-16 child benefit.
As the interdepartmental review of children's services has uncovered, we spend £10 billion on young children, but we do so in an unco-ordinated and piecemeal way. Thousands of the youngest children--especially those under three--are missing out. Plans for a sure-start programme for the youngest children will be announced later this month, bringing together quality services for the under-threes and their parents--nursery, child care and playgroup provision, and post-natal and other health services. One new feature will be to extend to parents the offer of counselling and help as they prepare their children for learning and for school.
That is a significant step in the development of family policy for our country--supporting family life, encouraging stable families, and building on our national child care strategy. The Home Secretary's group will bring forward new recommendations on family policy soon.
At the heart of our review has been a determination that we fulfil our duty to the oldest members of our society. First, pensioners will benefit most from a better health service, but it has always been wrong that charges are levied on pensioners for the eyesight tests that they
regularly need to preserve sight and to protect against disease. From next April, eyesight test charges for pensioners will be abolished.
Secondly, elderly people who rely heavily on public transport need a fairer deal to enable them to be more mobile. In his transport White Paper, the Deputy Prime Minister will announce plans for nationwide help with transport for the elderly.
The elderly fear their winter fuel bills. As a result of the cut in VAT, our winter fuel payment and other changes, average pensioner fuel bills are up to £100 lower this year. Later this week, my right hon. Friend the Secretary of State for Social Security will announce our further plans for help with fuel bills for the rest of the Parliament. She will also announce further financial proposals to help pensioners who need help. Here, too, we are prepared to make reforms that will help alleviate poverty. From next April, every pensioner and pensioner couple will have a minimum income guarantee.
We shall also set a tax guarantee that no pensioner will pay income tax unless their income rises above a specified level. The Government will also announce measures to ensure that more people automatically receive the income they are due. As a result of the proposals, thousands of pensioners will be relieved from poverty. A total of £2.5 billion will be set aside for this important programme.
Further reforms in other services have made possible new investments that improve the quality of community life. As a result of cutting quangos and wasteful bureaucracy, and a new targeting of resources, £290 million extra will be invested in museums, the arts and sport during the next three years--not just repairing the damage of the previous Government's cuts, but a real increase of 5½ per cent., making possible improved access to museums and galleries in Britain.
As a result of asset sales in areas where spending is no longer needed, the Foreign Office budget will not only ensure more resources for the proper representation and promotion of Britain abroad, but my right hon. Friend the Foreign Secretary is announcing today that our support for the BBC World Service will be raised by a total of £44 million during the next three years. [Hon. Members: "Hear, hear."]
For 20 years, overseas aid has been falling as a proportion of national income. Under our Government, it will now start to rise again. Because of a decision to sell a majority stake in the Commonwealth Development Corporation, raising substantial funds in so doing, and because of a new decision to target overseas development assistance on health, education and anti-poverty programmes, my right hon. Friend the Secretary of State for International Development will announce today that Britain will, during this Parliament, increase overseas aid from the low of 0.25 per cent. of national income--the Budget figure that we inherited--to 0.3 per cent. of national income.
Britain will enter the millennium at the forefront in pressing for debt reduction for the poorest countries, and aid, which was falling by 2 per cent. per year under the previous Government, will now rise in each of the next three years.
I come finally to the NHS. The NHS is compassion in action--what its founder Aneurin Bevan rightly called
Yet half the beds in health service hospitals are in accommodation built before the first world war, three quarters of ward blocks are hand-me-downs from the days of charity, voluntary and municipal hospitals, and investment in the health service is long overdue. We also recognise the care, responsibility and dedication of doctors, nurses and all staff to NHS patients.
My right hon. Friend the Secretary of State for Health will announce on Thursday in the House targets that tackle inefficiencies in hospitals and cost overruns, simplify management structures and give a new emphasis to long-term planning. On quality, all hospitals will be required to publish league tables measuring the success rates of their treatments. During the lifetime of this Parliament, more than £1 billion will now be saved from red tape and put into patient care, in part by scrapping the costly and time-consuming internal market.
On the 50th anniversary of the NHS, the Government will make the biggest ever investment in its future, giving the health service for the first time for decades the long-term resources that it needs. Under the previous Government, the increase for the last three years was £7 billion. For the coming three years, I am announcing an increase in health service funding of £21 billion.[Hon. Members: "Hear, hear."]
Health Department spending rose by an average of 2.5 per cent. a year during the last Parliament. Next year, it will rise by 5.7 per cent.; the year after that by 4.5 per cent.; for the rest of the Parliament, we will achieve yearly real growth averaging 4.7 per cent.
"the most civilised achievement of modern government."
The final conclusion of the comprehensive spending review is that it is fair and efficient to provide the best health service we can on the basis of need, not ability to pay, and under this Government health services will never be left to the hazards of private or charitable provision.
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