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Mr. Laws: Will the hon. Gentleman give way?

Mr. Borrow: I shall be more than delighted.

Mr. Laws: Is the hon. Gentleman in a position to give us a guarantee that the Government will go ahead and order all the Eurofighters?

Mr. Borrow: I was at the Wharton factory before Christmas when the Secretary of State for Defence visited it, at the time when the second tranche of the contract for the Eurofighter was being signed.

Mr. Laws: It was the third.

Mr. Borrow: The contract that I was concerned about was the second tranche of the Eurofighter. The Liberal Democrats have pledged to tear up that contract and to sack thousands of workers in Lancashire. I will ensure that the people of Lancashire are aware of that commitment.

I want to finish by briefly discussing the proposed cut in the housing budget. In areas such as mine, which have full employment and high house prices compared with other parts of the north-west, a particular economic constraint is imposed on businesses. Many employers in such areas are struggling to recruit people because there are no affordable properties for them to buy. There is a
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need for more social housing and for more affordable houses to buy. Such a change can come about only if the Government intervene in the market, which will require a budget of some sort. The Office of the Deputy Prime Minister has a crucial role to play and it can make a difference in areas such as mine by allowing housing associations to build new properties for rent, and by allowing local agreements to be reached on the building of more affordable properties.

At a time of economic success, it is very easy to ignore many of the ingredients of it and to think that bodies such as the DTI and issues such as housing are not very important, but they do affect the continuation of that success. I have listened with interest to the Conservatives and I am sure that my constituents will take the same view as those in the vast majority of constituencies, namely, that the Conservatives' proposals are truly incredible. They will prefer to vote, when election day comes, for a party with a proven track record of low unemployment, low inflation, low mortgage rates and good public services.

2.52 pm

Mr. Francis Maude (Horsham) (Con): I declare the interests that appear against my name in the register.

This is an important debate and I enjoyed the speech of the Chief Secretary to the Treasury, albeit not as much as I normally do. He is usually very flamboyant, but today he was much more restrained. I offer him this personal advice: if he carries on in that vein, there is a serious danger that at some stage he will achieve gravitas, which would do his reputation no good at all.

The Chief Secretary inadvertently gave a certain amount away when he got himself into a great state about the form in which the James report has been produced. He held it up with disdain—virtually between finger and thumb—seemingly saying, "This is only a PowerPoint presentation, a mere set of slides. Feel the width of that compared with the Gershon report! Gershon is printed on heavy quality paper and it has a shiny cover. It is altogether a superior product." In a way, that was a paradigm of new Labour. Here we are discussing waste, but for the Chief Secretary the only issue arising from a comparison of Conservative and Labour approaches to waste is the way in which the reports are produced. A glossy report full of heavyweight paper is a proper report on waste, but a PowerPoint presentation—golly!—could not possibly be the goods.

What matters is not the form in which a report is produced but what one does with it. We should consider the significance of what has happened in the months since the Gershon report was unveiled with due ceremony and all the glitz that goes with any new Labour presentation. Instead of much-vaunted cuts, public sector employment has steadily risen month after month. The report is an emblem of new Labour: lots of spin, a glossy cover and heavy quality paper, but no action behind it.

The Financial Secretary to the Treasury (Mr. Stephen Timms): I am listening with interest to the right hon. Gentleman's comments about the James report.
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Perhaps he will help us by saying whether there is in fact a report behind the published PowerPoint presentation, or is it true that, as Professor Colin Talbot said on "Newsnight", callers to Conservative central office are told that it will not be published because

Mr. Maude: I am given to understand by my hon. Friends on the Front Bench that the James report exists in exactly that form. I commend the work that they have commissioned and done on this report, which is the most serious undertaken by an Opposition on this important subject for a very long time. The report certainly is available.

Mr. Laws: This is a useful opportunity to clarify whether there is a report. Is the report that is published on the website—admittedly, it is fairly extensive, running to 173 pages—the James report, or is it simply a summary of a detailed piece of work?

Mr. Maude: It is flattering that the hon. Gentleman should ask me that question, but I am the humblest of Back Benchers and know nothing of these matters. However, I am assured by my colleagues on the Front Bench that that is indeed the report. It is a very serious piece of work, and it will bear all manner of scrutiny.

The Gershon report's approach and the manner in which it was unveiled—but then not implemented—is a mirror-image of this Labour Government's approach to tax. In their early days, they were very keen on this issue. The hon. Member for South Ribble (Mr. Borrow) mentioned speaking to people on the doorstep during the 1997 election. We all remember the Prime Minister saying in clear terms that the incoming Labour Government had no plans to increase tax at all. There were no ifs, buts or qualifications: he was perfectly clear. However, they had such plans all along—they must have, because they were implemented almost immediately. As the Prime Minister had made that stark commitment, tax increases had to be introduced by stealth—hence, the first raft of stealth taxes.

The smoke and mirrors of the Gershon report and the Gershon process is the converse of that approach: it is public spending by stealth. The Government say, "Of course we are not increasing public spending overall. We are cutting out all this waste and getting rid of lots of public servants." However, each week The Guardian runs a thick supplement full of advertisements for public sector jobs. So this is all about recycling: taking waste and recycling it into the front line. However, although money is going to the front line it is not coming out of such waste, because Gershon simply is not being implemented. It is a classic example of smoke and mirrors from the Chancellor, in an effort to cover up the fact that public spending is rising sharply and unsustainably. Such spending will place an increasing burden on the economy, making it much more difficult to deliver the growth that the Government hope for and that is essential if the country is to become increasingly prosperous.

Whatever the colour of the Government of the day, it is in the nature of all Governments that public spending tends to increase. In "Yes Minister", Sir Humphrey described this as the "politician's syllogism". Something
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must be done and this is something; therefore, we must do it. For any politician, the "something" that comes most easily to hand is public spending. It is very easy to spend public money, and then to claim that one has done something and that the problem identified is being addressed. But simply spending money does not solve problems. The effect on public services of the very large amounts of money that this Government have spent since they took office illustrates that point. Such spending simply has not translated into anything like proportionate improvements in the quality of such services; rather, it has translated into burgeoning waste, which is why the James report is so credible. A great deal of money has been misspent, and a lot of surplus money is being wasted that could be saved.

Of course, it is easy to spend money; it is much more difficult to make it translate into improvements. I believe that, over time, the state should take and spend a smaller proportion of the nation's income. That provides not only a stronger economy, but a stronger, more cohesive society. People do not just do more for themselves and their families: they do more for each other and for their communities. It binds society together. I do not believe that this is a better country if people think that they can contract out all their social obligations to the state. We are a better people than that. We want to carry responsibilities ourselves, not only for our families but for our neighbours, our communities and our society.

The trend in the proportion of the nation's income spent by the state—up or down—changes only very gradually. I strongly support the proposition that a Conservative Government would seek to put that proportion on a downward trend. No cuts in public spending would be involved, because it would increase year on year, as it always does and always will do. The key figure is the proportion of the nation's income that is taken and spent by the state, and that has to fall if we are to have a healthy country.

The Chief Secretary gave us some statistics about where Britain stands in relation to other European nations, but the countries that have shown the most vigorous economic growth in recent years include Australia, where the state's percentage of the nation's income is in the low 30s, and Ireland, which has shown the most dynamic growth in the European Union and where the state's share of the nation's income is again in the low 30s. The US is in a similar position. In some of the world's most vigorous economies—the Asia-Pacific region shows vigorous growth, for example—the state takes a much smaller share of the nation's income than is the case in this country.

I make no apology, therefore, for believing in a smaller state. That is why I did not find the Government's proposals on university tuition fees as objectionable as some of my colleagues did. The proposals would increase people's personal responsibility. The scheme was bungled to accommodate the diehards on the Labour Benches and will not deliver what it promised, but the principle behind it is sound. The state should do a little less and people should take more responsibility for their own destinies and lives.

The Government go on about the golden rule, and the Chancellor might just about be able to claim that he has stuck to his definition of it. It is a good rule and I am glad that my right hon. and hon. Friends are committed to
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retaining it, but it puts no constraint on the size of the state. If Labour wins a third term and if the Chancellor remains in his post—two very big ifs—he will have to increase taxes substantially if he is to stick to the golden rule, because he has built into the public spending plans an increase that is otherwise unsustainable. If that happens, the burden that will be placed on the wealth-creating economy will be increasingly hard to bear and will act as a constraint on the very economic growth on which the Government's plans depend—not to mention the prosperity of the country.

I have heard new Labour Members and Ministers argue that what is important is the way in which public money is spent and what is delivered, not how much is spent—as so many of their colleagues seem to believe. My hon. Friend the Member for North Essex (Mr. Jenkin) intervened when the Chief Secretary referred to the concept of earned autonomy—the most repellent phrase in the new Labour lexicon. Apart from the fact that it is a contradiction in terms, the idea has built into it an assumption that the gentleman in Whitehall knows best. It means, "We will give you a little bit of independence, if you behave yourselves, but don't worry, because you will always be on the end of the string. And there'll be a twitch on the string if we think that you are abusing your autonomy." However, if we seriously believe that people who are elected by their local communities to run local government are better able to judge what is right for those communities than we are at the centre, we have to accept the possibility that, in some cases, autonomy will not be used well. It is not a risk-free option. If we do not allow the possibility that autonomy might be used to make mistakes, we suppress the possibility that autonomy will be used in unpredictable ways to find better, more interesting and more dynamic ways to do things. Innovation depends on that, and progress stems from it. It is certainly where progress comes from in the private sector and it should do so in the public sector, if the strings are cut and genuine, unearned autonomy is granted.

Occasionally, we see straws in the wind that hint that the Government are beginning to understand that principle. They pulled back to the centre control over hospitals, GP practices and schools—by getting rid of grant-maintained status—but they are now paying lip service to the idea of removing central controls. Practice commissioning sounds to many of us like GP fundholding, although the Government do not wholly believe in it so it will not work as well as it should. Foundation hospitals are not a bad idea, but again the proposals have been adulterated to accommodate the diehards on the Labour Benches. Foundation hospital status will not, therefore, give local managers the ability to run things themselves.

Money will be spent well, and innovation and best practice will develop and spread, only by letting go of the strings and getting rid of the risk-averse culture. Whitehall is a natural home for the risk-averse culture and it is the job of politicians to alleviate its effects. The Government have tended to accentuate it, and that is why we have had a huge increase in public spending without a proportionate increase in the quality of services.
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