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9.10 pm
Mr. Iain Duncan Smith (Chingford and Woodford Green): This has been a long and fascinating debate. I am sure that the Secretary of State will agree that, as ever, we are in the peculiar circumstance of both winding up and leading off on a completely separate debate--linked but different. Obviously, I want to talk about welfare reform and social security in particular, and I expect that the Secretary of State will want to do the same, but clearly some of the contributions from both sides of the House require, rightly, some reference.
My right hon. Friend the Member for Henley (Mr. Heseltine) made a powerful, fairly broad-ranging speech, much in character. He is a man who has been noted in the past to prefer the broadsword to the rapier. In this case it was a fistful of broadswords, and dynamic, too. It was nice to see him back after a short absence from the Chamber.
The hon. Member for Southwark, North and Bermondsey (Mr. Hughes), who is not in his place, made several points. Of most interest to this side of the House was his point about how there has always been rationing in the NHS. [Interruption.] Here he is. He spoke boldly about rationing, and reaffirmed, I think from a sedentary position during my right hon. Friend's speech, that there has always been rationing. He said that we must recognise to what extent that has been the case, rather than play games around it. That was a powerful point and well made.
My hon. Friend the Member for Lichfield (Mr. Fabricant) made a good speech. He was proud to announce that all his area was covered by GP fundholders, and believed that they were proud of it. I would be, too. I have a large number of fundholders in my constituency, and I know that the system has worked. The Government should build on that system rather than tear it down, but that is a record for another day.
My hon. Friend the Member for Vale of York (Miss McIntosh), before she departed to talk about turkeys--I do not intend to follow her down that road, and would have some difficulty in recognising how we got there--made the important point that much of the change to the commissioning process will add to bureaucracy and create the costs from which the Government say they will save money. That in turn will create problems. She made the point particularly well.
As ever, I listened with great interest to the speech of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), the Chairman of the Select Committee on Social Security, whom I see in his place. He is one of about three Members who referred to social security and welfare reform during the debate. He had to, the hon. Member for Newbury (Mr. Rendel) had to as well, and the hon. Member for Gedling (Mr. Coaker) did, although he did not have to--I shall come to him in a second.
Among other points--I shall come to them in the course of my speech--the hon. Gentleman spoke about working families tax credit and means testing. Powerfully, he asked the serious question: where are we going on means testing? I think that there is clarity now; he says that there is not. I shall be interested to hear what the Secretary of State says in reply.
My hon. Friend the Member for Poole (Mr. Syms) made a powerful plea for haemophiliacs to be treated specially, particularly those who suffer from hepatitis C. I hope that the Secretary of State listens to that heartfelt point.
The Member for Warrington, North (Helen Jones) said that she was a child of the health service. Most of us would admit to that, and proudly so. She seemed to want to attack the Conservative Government on their process of spending on the NHS. She glossed over the fact that health service spending in real terms fell under the previous Labour Government for the only time in its 50-year history.
My hon. Friend the Member for West Chelmsford (Mr. Burns) made a detailed speech, giving chapter and verse. He asked a series of questions--I know that Ministers who were present will have taken them down and passed them to the Secretary of State for answer; I hope that he has them--about how waiting lists have risen inexorably in his constituency. I thought that he spoke powerfully. Perhaps his most powerful point concerned mental health. On that, the hon. Member for Gedling (Mr. Coaker) made an excellent speech, showing that he cares about welfare reform. He said that he agreed with my hon. Friend that mental health is seen as a Cinderella, and should be treated more seriously.
I agree with the hon. Member for Gedling in one sense: no one should accuse the Secretary of State--as some did in the previous Parliament--of being out to crush people into poverty. No one in the House could or should be accused of wanting to do that. There are clear differences about approaches to solving problems, to which I shall come in a moment. I do not make such a charge. Whatever the Secretary of State is doing is done in good faith. He believes that he is right. He is wrong, but we will hear more about that dispute in due course. I do not believe that there is a hidden agenda to produce more poverty.
Only three hon. Members spoke on social security and welfare reform, mostly on the same aspect. It is worth quickly reminding ourselves--I do it endlessly--what the Prime Minister said before and just after the general election. On 7 April 1997, he said:
We must start by asking exactly what the Government took over in budgetary terms that underscored the Prime Minister's commitment. His commitment was based on what was clear in the Red Books then and now: the budget for social security as a proportion of gross domestic product was falling. In the last financial year, it fell by 1 per cent. Over three or four years, the budget was on a downward trend. The Government admit that, and it is in their Red Book. The social security budget was stable in the short term, and, to all intents and purposes, under control.
When we set the Government's forecast for social security spending against what they set themselves as a target, we see that, in the first year in which their policies really come into effect, 1999-2000, the budget leaps by 5 per cent., and that it goes up over the following three years in their general spending programme, pushing social security spending up to around 13 per cent. of GDP by the end of the Parliament. That does not cover falling growth rates. If the growth rate falls below one 1 per cent., the figures will go up, because, as the Secretary of State knows, it is a demand-led budget.
The total increase over three years to the end of the Parliament is £37 billion, which matches health and education spending, calculated in exactly the same way.
That does not fit with the Prime Minister's rhetoric when he first took over and made those serious pledges. We must consider what the Government have done to arrive at this position.
First, there are the Government's proposals, some of which have already been implemented, relating to the spend-to-save programme. The problem is that much of that is already beginning to fail. Let us remind ourselves what the Chancellor said in 1997:
There is the £5 billion for the new deal, including the new deal for lone parents, which was raised through a windfall tax. We are now discovering, bit by bit, that the programme is failing to achieve its objectives. The cost per job, as stated in the press today, across all programmes is about £11,000; and the forecasts for the next three years suggest that that is likely to be the case until the end of this Parliament. In addition, about 25 per cent. of those who enter work through new deal programmes are out of work again within six months. It is clearly not a fully sustainable programme, but it is an expensive one, which is beginning to fail.
The second part of the equation, which has yet to be implemented but is included in the Queen's Speech, is the working families tax credit. As the Government admit, that is clearly set to increase spending by £1.5 billion a year. The Government tried to move that figure out of the social security budget and into accounting adjustments, but no one, including the House of Commons Library, believed that that was the right way to go about things, so that sum has been put back in, and we can see that it raises social security spending, not lowers it.
The Labour manifesto stated:
If there are no targets--no departmental targets, no Treasury targets--how can the voters who elected the Government in 1997 have any confidence that the money they are spending under the spend-to-save programme is money well spent? Without targets, spend to save will rapidly become an incomplete equation--or, more likely, a case of spend to tax. That is the exact opposite of what the manifesto promised.
The spend-to-save strategy clearly implies that the Government must save more money than they spend on their new programmes. If they spend £5 billion on the new deal and a further £1.5 billion per year on the working families tax credit, surely the Secretary of State
agrees that they will save at least that amount during the lifetime of this Parliament before moving on to fight another election--or perhaps they do not believe that they will save anything. The Secretary of State should tell us that much at least, as he leads off for his Department in the Queen's Speech debate.
However, I recall the Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), stating during our last Social Security Question Time:
"as we get the welfare bills down . . . then we can release more money into education and health and the services where we really want them."
After the general election, he said:
"I have asked Ministers at the Department of Social Security to look in detail at how we can make far-reaching reforms that tackle insecurity and poverty as well as reducing the social security bills."
It is not fair to judge the Government on someone else's agenda; we must judge them on their own, and find out when they will meet their pledge or whether they will meet it at all.
"Central to Labour's medium-term approach to public spending must be radical reform of the welfare state . . . to unlock the possibility of reducing social security costs".
Like the Prime Minister, the Chancellor links social security costs to other spending. However, when we look at what the Chancellor and the Prime Minister have allowed to happen, we see that they have presided over an increase in spending.
"And because efficiency and value for money are central, ministers will be required to save before they spend. Save to invest is our approach, not tax and spend."
Yet when have the Government ever given us their targets for savings, in line with that manifesto pledge? Perhaps the Secretary of State for Social Security will enlighten us. How and when will the Government cut the cost of welfare, and by how much? That is important, because it was a manifesto pledge, so I should like to know how they will do it. Perhaps the Secretary of State can tell us.
"The working families tax credit . . . is not intended to create . . . jobs."--[Official Report, 16 November 1998; Vol. 319, c. 593.]
That is not what the Government have been telling us, and it certainly is not what they have been telling the general public: the Government were going to save money, because people would be going into new jobs because of what the Government were spending money on. That is now clearly not the case.
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