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Mr. Boateng: My hon. Friend, who served his constituency so well for so many of those Conservative years, and who made that case on so many occasions in the House from the Opposition Benches, makes an absolutely true point: cities and towns such as Burnley suffered degradation of their infrastructure, under-investment in schools and under-investment in health, which this Government have turned around. Under the spending plans unveiled by my right hon. Friend the Chancellor on Monday, we will continue to turn that around, with increased investment in health and education, but going beyond that in ways that we will no doubt explore during this debate.
As the Chancellor said in his statement on Monday, resources have been, and will remain, linked to reform. We are committed to maximising efficiency within the public sector and to reducing administrative costs, while continuing our ambitious programme of public service delivery. We recognise that we have a duty to ensure that public money is spent efficiently, securing value for all. Therefore, on the basis of the evidence drawn from Sir Peter Gershon's rigorous 12-month review, and over and above our economic stability, growth and strong public finances, we have announced efficiency savings that will free up more than £20 billion a year by 2008. That will mean even more resources going from backroom functions to front-line services.
Mr. Michael Fallon (Sevenoaks) (Con): The Chief Secretary says that he is committed to greater efficiency. Can he explain why the administrative costs of Whitehall, which he inherited at 4 per cent., have gone up in every single year in which he has been in government?
Mr. Boateng: The hon. Gentleman makes a profound error in that intervention as the percentage is now falling, and will continue to fall to 3.7 per cent. of total spend. Let us compare and contrast that with 5 per cent. and more during much of the period in which the Conservatives had stewardship of the economy. That is perhaps not his strongest point as, on reflection, he would be happy to admit.
Mr. Kenneth Clarke (Rushcliffe) (Con): The right hon. Gentleman gave a figure, which startled my hon. Friend and I, that costs were falling to 3.7 per cent. How much of that is because of the recent reclassification of quite a bit of Home Office spending and one other Department's spending, which has suddenly ceased to be classified as administrative spending and has been moved to front-line spending? Were we to keep a consistent definition, he would agree that administrative spending has been rising, as my hon. Friend suggested.
Mr. Boateng:
The point that I made clear is that as a percentage of total spend, what we are experiencing is a fall, which will be to 3.7 per cent. by the end of this spending review period. The right hon. and learned Gentleman's point, however, is one that I would be only
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too happy to explore. Although what I have said is absolutely true, and we will see that fall, he, as a former Home Secretary, will recognise that it was always nonsense to classify a group of people such as prison officers, who are very much on the front line of our criminal justice service, as in some way equivalent to those working in back offices and providing administrative services. That was a reclassification that was long overdue—I notice him nodding in consent—but it makes no difference to the figures that I have given.
Mr. Andrew Tyrie (Chichester) (Con): Will the Chief Secretary give way?
Mr. Boateng: No, I am afraid not.
On Monday, the Chancellor announced details of planned efficiency savings: a gross reduction in civil service posts of 84,150, and efficiency savings in local government allowing for an additional reduction of some 20,000 posts; the merged Inland Revenue and Customs and Excise, which has increased planned gross reductions from 14,000 to 16,000; a total of 20,030 civil service posts to be relocated to the regions, which has been called for by Members on both sides of the House because it brings real benefits to all those outside London and the south-east whom they represent; and a real terms fall in administration costs and plans to deliver some £6 billion in procurement savings by 2008.
Therefore, while Conservative Members talk of fat Government, planned administration costs, which rose to more than 5 per cent. of total spending under the previous Government, will instead fall to a record low of 3.7 per cent by 2008.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The right hon. Gentleman has just reiterated the Chancellor's announcement of a very big figure that he expects to receive from savings. If he does not achieve those savings, will public expenditure be cut, or will taxes be increased to make up the shortfall?
Mr. Boateng: The hon. Gentleman knows well that the departmental limits are set, and that we are committed to meeting our fiscal rules. We have met them, and we will continue to meet them in this cycle and the next. The sum to be released by efficiencies—£20 billion a year by 2008—will mean even more resources going from backroom functions to front-line services. I thought that he—as he usually takes a progressive outlook on those areas and is usually hot for efficiencies—would see that as a welcome commitment and one that, far from dividing us, ought to unite us on the sense that it clearly represents.
In this spending review, not only will we continue to address past under-investment, of the sort to which my hon. Friend the Member for Burnley (Mr. Pike) referred, but we will also invest to equip Britain to rise to the new challenges of the changed global environment: internationally, through investment not only in defence but in international aid and development; and here at home, with investment in the key drivers of our current and future prosperity and in our public services.
In contrast, the shadow Chancellor, who I am sorry to see is not in his place this afternoon, but I can well understand why because he must have rather a lot on his
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mind because the sums do not add up—[Interruption.] The hon. Member for Hertford and Stortford (Mr. Prisk), who works so hard for his party, chuckles, but he knows that the sums simply do not add up in terms of the Conservatives' spending plans—
The Chancellor of the Exchequer (Mr. Gordon Brown): Cuts.
Mr. Boateng: As my right hon. Friend the Chancellor says, those plans mean cuts. That is what it is all about.
Members do not have to take our word for that. On 16 February this year, the shadow Chancellor made his position very clear. He told the Bow Group:
"I have agreed with my Shadow Cabinet colleagues that the baseline for spending across all of these departmental budgets will be 0 per cent. growth for the first two years".
We know what that means. I look forward to hearing any member of the shadow Treasury team say otherwise. Two years of cash-freezing departmental budgets would mean real-term cuts for every Department. Police numbers would be cut and crime would increase. Local government spending would be slashed, which would drive up council tax and force the closure of vital local services. Transport would be cut, which would undermine our infrastructure. The international aid budget—including programmes for Africa—would be cut. Defence would be cut, which would put our national security at risk.
I paused at that point because I expected at least one Opposition Front Bencher to leap to his feet and deny that what I had said was true. They do not stir. No, I see a slight stirring—but now even that has subsided. They cannot even look each other in the face. They certainly cannot look their Front-Bench colleagues in the face, because they have all complained about the impact of the shadow Chancellor's words on their own budgets. We can well understand why.
Let us explore the reasons for the element of confusion and chaos among Conservative spokespersons about their spending plans. We will invest more in the security of our nation. There will be a real-terms increase in the budget for our armed forces from £29.7 billion this year to £33.4 billion by 2007–08, to support their commitments abroad and to enable us to modernise and adapt our defence to meet the threat posed by the rapidly changing global security environment.
Mr. Tyrie: Will the Chief Secretary tell us by how much the Government intend to cut defence in real terms?
Mr. Boateng: We are providing a real-terms increase of some £3.7 billion by the end of the spending review period. It beggars belief—or perhaps it does not—that Conservative Members cannot distinguish between a cut and growth.
Mr. Gordon Brown: Perhaps the hon. Member for Chichester (Mr. Tyrie) will read out the figures.
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