The text of Mr Major’s comments during the Autumn Statement, made on 14th January 1988.
Mr. Gordon Brown (Dunfermline, East) This has been an interesting and informative debate in which we have had a maiden speech by the hon. Member for Wimbledon (Dr. Goodson-Wickes). He concentrated, appropriately for his position as a doctor, on many of the issues facing the Health Service. His speech was eloquent and excellent in its delivery, even if it concentrated on the silver linings of the Health Service at the expense of the dark clouds on the horizon.
The debate was also dignified by speeches from the Chairmen of the Select Committee on Treasury and Civil Service and the Public Accounts Committee. The debate has been graced too by speeches from my right hon. Friends the Members for Blaenau Gwent (Mr. Foot) and Bethnal Green and Stepney (Mr. Shore) and from my hon. Friends the Members for Durham, North (Mr. Radice), Gateshead, East (Ms. Quin) and Great Grimsby (Mr. Mitchell).
The debate may be remembered most for the interesting speech by the right hon. Member for Shropshire, North (Mr. Biffen) who suggested that the 1p or 2p that might otherwise have gone to tax cuts would be better spent on the National Health Service, the amount being £2.5 billion if reckoned at 2p. He has done more in a few minutes to speak up for the traditions of one-nation Toryism than the Chancellor has done in eight long years as a member of the Conservative Government.
When we face one of the biggest crises in the National Health Service in its 40-year history, when we still have 2.5 million unemployed and 5 million on supplementary benefit, and when 8 million are dependent on these benefits and 16 million are on low incomes, one might have thought that the Chancellor would at least have paused this afternoon to consider some of the tasks that remain undone. One would have thought that the self-congratulation might have been interrupted to take note of the poverty, deprivation and misery in our midst, and that we might have heard from the Chancellor, if not a promise or a commitment, at least the offer to consider using some of our national resources to relieve poverty, further to reduce unemployment and to help the National Health Service, which is in such need.
But the truth about the Government has been revealed, as my right hon. and hon. Friends have said so eloquently. Even though the Government have the money – with the windfall of North sea oil revenue being higher than expected, money available to them by good fortune rather than by good management – even though they have been made aware from both sides of the House of the needs of the people, even though to secure re-election they made certain promises and even though they can see for themselves the employment benefits of spending and investing the money, the Government refuse to spend enough on Britain. Money that was once withheld on grounds of financial prudence is now withheld for reasons that can only be described as ideological. Again and again in the last eight years the Government have said that they would spend if they could. Now they can, and they will not.
If the economy is as successful as the Chancellor has said, why cannot he spend sufficient money to provide a decent level of pensions for 9 million pensioners? Why has he had to freeze child benefit for the 7 million mothers and 12 million children who depend on it, and why for the first time in 40 years has he had to introduce charges for a visit to the optician and dentist to raise £170 million?
If the economy is fundamentally far stronger than it has ever been, as the Chancellor said at the new year, and if we are to look forward to long-term sustainable, secure growth and rises in living standards, why by the one test of these economic prospects – the level of investment in training, in education, in research and development, and in machinery and plant – have the Government done worse and why are they still doing worse than all our major competitors? Why as a result of the Autumn Statement will the Government continue to do worse in the next three years?
Why are we investing less in ourselves – as a share of our national income – than all our major competitors, including Japan, which appears to be investing 50 per cent. more than we are? Why is no other country in the industrialised world, with the exception of Belgium, investing less in its economy? Why are we investing less as a share of our gross national product in the oil-rich 1980s than we did in the 1960s and the 1970s?
If the Chancellor will not listen to me, will he listen to the Confederation of British Industry, which had this to say a few weeks ago about our growth rate: The momentum will not be sustained without much higher levels of investment in research, development and training, as well as fixed capital. And, if he will not listen to the CBI, will he not listen to the Engineering Employers Federation, which said in its Budget submission “We believe the level of investment expenditure in the UK to have become disturbingly low … What concerns us is that growth will be unsustainable without increased investment, training and research and development”.
Faced with that record of low investment generally, might we not have expected the Chancellor to be telling us in his Autumn Statement how he is to bridge that gap in all those major areas, how he is going to make up that investment shortfall, especially when we know that in the public sector we invest 40 per cent. less per head than is invested in Germany and 200 per cent. less than is invested in Japan?
Is it not the case – and I expect detailed answers from the Chief Secretary when he replies this evening – that, far from narrowing, that gap will widen as a result of the Autumn Statement: £100 million a year less in local authority direct investment each year until 1990; £800 million a year less in public sector capital investment each year until 1990; a 2, 3, 4 per cent. decline in the amount of money invested by the Government in our economy? No wonder the CBI has also said that the cuts in public sector capital spending must be reversed. The Government’s argument throughout all this is that spending has been sufficient, even when all the evidence from doctors, teachers, industrialists and public servants has been the opposite.
If the Chancellor believes that spending is sufficient, has he looked at the state of our schools? One million of our primary schoolchildren are being educated in classrooms built before the first world war, on which, as a result of the Autumn Statement, only 2 per cent. of the money needed for vital repairs is to be spent. Has he visited our hospitals, where two thirds of the wards were built in the days of the voluntary and charity hospitals and even now nurses are having to leave their patients to run flag days to raise money for vital equipment and repairs? Has he seen the condition of our inner cities and our regions? Has he looked at our roads and railways? Does he not understand that what we do not invest in infrastructure today we shall have to spend on more unemployment tomorrow?
Nowhere is the need for greater investment more clear than in research and development, science and innovation. Prior to the last election the Government promised that they would spend more money in this area. They promised more support for single industry research. They commissioned and received the Bide report on information technology. They gave the impression that they would sponsor further space research. They promised £200 million for the collaborative programme in electronics called LINK. But since the election there has been not a penny more for single industry support, which is now abolished; not a penny more for space research, as, further, we pull out of the European programme; not a penny more for the second stage of Alvey, for which the demand was for £400 million and which is to receive around £30 million; not a penny, after 13 months, for the LINK programme in electronics.
Is it not a scandal that, 13 months after the Prime Minister announced the creation of the LINK programme in electronics, not a penny has been spent, especially when the Prime Minister said as she announced it in December 1986 that it was essential that advances were rapidly exploited”? The Government claim that they are spending more when they are spending less, as a Government, on industrial research and development. Perhaps that is what the Department of Trade and Industry meant when it claimed recently in its press release that it was helping to translate science fiction into fact”. All this has happened since the Prime Minister took personal responsibility for our research and scientific effort.
Education, promised more in the Autumn Statement and at the election, receives less after we take into account the election year teachers’ salary commitments and redundancies in our universities. The vast majority of British young people leave school at the earliest opportunity without qualifications. Half as many workers in Britain have technical qualifications than their counterparts in the United States, Japan and West Germany. A lower proportion of our people are in higher education than in any European country with the exception of Portugal. If we followed the example of Japan, the United States and West Germany, 500,000 more pupils would stay on at school. One million more pupils would leave with higher grade qualifications and there would be 500,000 more people in our universities and colleges.
We are now doing worse than countries far smaller than ourselves. South Korea, with a population of 50 million, has 1,200,000 university and college students, yet Britain, with a bigger population, has only 800,000. Our best prospect now appears not to try to stay level with Japan, but to keep up with Taiwan, not to beat West Germany, but to stay up with South Korea. Are Conservative Members proud of the fact that, instead of pursuing the ambition to have the best educated, best trained, best qualified working population in the world, we are spending much less than most of our European competitors on education?
The cuts are nowhere more obvious and alarming than in the Government’s policy towards our regions. The latest Government figures show that more than one million jobs have been lost since 1979 in the north, Scotland and Wales. The latest Government figures published in December show that the real value of manufacturing investment is still 35 per cent. lower in the north than it was in 1979, 33 per cent. lower in Yorkshire, 30 per cent. lower in the north-west and 27 per cent. lower in Wales. Most damaging of all is the high permanent unemployment, emigration and forced depopulation in one part of the country when we have overheating, congestion, skill shortages, pressure on the green belt and escalating house prices in another part of the country. That is neither good for the regions nor for the country as a whole.
What is the Government’s reaction? On Tuesday they published a White Paper which makes a virtue of the fact that they will cut automatic regional aid which was worth £800 million in 1979, £200 million this year and will be worth nothing in the future. They plan to replace it with private consultancy services, one-stop shops and advisory services whose chief feature is that they will benefit the more prosperous regions more than they will ever benefit the disadvantaged regions. What has happened to the bipartisan tradition in regional policy? Regional policy was started by a Conservative Government when unemployment in the regions was 4 per cent. to 5 per cent. The Government are now abandoning it when unemployment is still about 14 per cent. to 15 per cent. in most of our industrial regions.
What about the promises to the inner cities? They are now in danger of moving from depression to recession, without ever having enjoyed an intervening period of recovery. Where is the new investment that will benefit the inner cities? Does the Minister not realise that the small amounts given by the Prime Minister to urban development corporations, city action forces and inner city task forces have already been taken away in cuts in rate support grant, and regional aid, and further cuts, even at the heart of the urban programme?
I do not know how Conservative Members can deny that. At the election the Secretary of State for Trade and Industry made a great virtue of the fact that the programme for the inner cities would have to be self-financing. The Chief Secretary said: We will not succeed by spending money”. The British economy was not to have performed like that. It was to be quite the reverse. I shall finish the quotation: We can only tackle the problems of the inner cities by direct action to encourage local initiative, by giving people the opportunity to be self-reliant. Does closing schools in the inner cities provide the opportunity to be self-reliant? Does cutting the number of beds and wards in hospitals give patients the opportunity to be self-reliant?
Did the Government ever intend to do anything for the inner cities? We are told that on election night the Prime Minister said that something had to be done for the inner cities. But when it was suggested to the Prime Minister when she visited the north-east a few months ago on her walkabout that she had said that something had to be done for the inner cities, she said: That was not quite what we said. Notice the royal “we”.
We said that we wanted to win back those inner cities to our cause. That was not a commitment to jobs in the inner cities, just to votes in the inner cities. Success is to be judged not by how much people in the inner cities were assisted, but by how much the Tory party in the inner cities was assisted.
Is that not the old trick – to hold out as long as possible by denying that there is a problem in the inner cities, the Health Service, or the education service or anywhere else, and then to turn out a huge and grand new initiative more to do with public relations than public policy changes?
Is that not what happened to the enterprise zones, announced with a great flurry in 1979 and quietly abandoned by the Government with a press release on Christmas eve? Is that not what happened with the great new initiative for 20 city technology colleges announced in October 1986 by the Secretary of State for Education, only four of which have been designated and none of which has been opened?
What about all the other initiatives? Remember Britain 2000 and Mr. Richard Branson of Virgin Records? Mr. Branson was brought in to clean up the litter. Mr. Branson cleaned up; the litter remained – government not by grand and great design, but government by gimmick and government by gesture. We do not get job campaigns for our inner cities and regions, simply advertising campaigns.
As we near the next election, the Prime Minister will return to the inner cities and, just as she did with unemployment, she will declare the problem of urban deprivation to be solved, no doubt after 19 changes in the definition of “inner city”. The nation knows that the inner city crusade is a crusade without cash. The problems of the inner cities and regions will last until domesday if the Government’s policies are all that confront them.
What of the National Health Service which has been mentioned by so many people this evening? When we know that the NHS needs at least an additional 1 per cent. above inflation for demography; when it needs another 1 per cent. to keep pace with technology; when we know that, to make good the shortfall that exists at the moment and to make up for the nurses’ salary awards that were never properly funded, another 1 per cent. is needed; when we know on the Government’s own figures, given by them to Select Committees and in documents that are available to the House, that the minimum that the Health Service would need is an increase in real terms above inflation of more than 3 per cent., what is the proposal in the Autumn Statement? What is the proposal, stripped of its pretensions, after taking into account the announcement just before Christmas of another 100 million this year?
When the Health Service needs at least an extra 3 per cent. above inflation, the Autumn Statement proposes 0.7 per cent. That is the best that the Autumn Statement can do. We find ourselves with one quarter of the money that is needed. [Interruption]. The Chief Secretary says that he will give the figures. The statisticians in the Treasury will now be at work. The figures are clear in the Autumn Statement. One should take account of the fact that spending is to rise by £100 million this year, and if that is not compensated for next year by another announcement there will be a cut.
The Government used to tell us that they would spend if only they had the money. Now they have the money and they still refuse to spend. It is not a shortage of cash in the Treasury that is depriving the Health Service of resources; it is a shortage of compassion and concern on the part of the Government. It is not the absence of money; it is the absence of morality in the Government. If they do not accept what we say, let them look at the evidence around the country. I shall not take the most publicised versions of what has been going on in different areas and communities. All one needs to do is to listen to the health authorities, the doctors and the patients.
One has only to listen to the consultants in Birmingham who, on Monday, had to form a committee to save the Health Service; to listen to the Cornwall health authority, which yesterday had to close a 79-bed hospital to save £500,000; to listen to the Greater Manchester health authority, which says it cannot even pay its salary bills and whose cash is running out – any other authority in that position would have been declared bankrupt; to listen to the people from the midlands whom the Prime Minister refused to meet this afternoon; to listen to the Shropshire health authority, which is faced with a decision to close 10 hospitals with a loss of 367 beds; to listen to them all to know that waiting lists are at 850,000 throughout the whole of the United Kingdom, we have lost 46,000 beds since 1979, 30,000 nurses are leaving the Health Service every year, and if the Government do not spend the money that is required, the Health Service faces the rest of 1988 with a crisis on its hands.
The position of the Government and of the Prime Minister is that the private sector must be encouraged to bridge the gap, even when she knows that the National Health Service is more efficient, less administratively expensive to run and that, in a unique way, it combines economy with equity. Even though all those things are known, and the Prime Minister knows that the public want to spend money on health – and want it spent on the National Health Service – she refuses to invest any more. She would prefer private money being used ineffectively to public money being used productively. She believes in the private sector, not because it is more efficient – it is not – but because it is the private sector. She opposes the extension of public provision, not because she thinks it is inefficient, but merely because it is public. In that way, she would reduce our great National Health Service, which is internationally admired and the envy of the world, to the economics of her corner grocer shop and the morality of the worst ethics of the stock market. Thereby denying people the security of a national service and replacing it with the uncertainty of dependence on free market forces, she then parades that choice as an extension of freedom.
My right hon. and hon. Friends have said today that the Chancellor faces a choice. We are told that he is considering reducing the top rate of tax for the top 4 per cent. of the population, at a cost of £850 million. Why does he not spend that money properly on the National Health Service, education and the public services? We are told he is considering abolishing capital gains tax, which is paid by the top people in this country, raising just over £1 billion. We are told that he is considering abolishing inheritance tax, which raises £1 billion from those who are rich enough to inherit sums of more than £90,000. Is it not clear to the Chancellor that the wish of the country and of the vast majority of its people is that, instead of tax cuts to make the rich few who will benefit from them richer, the money should be spent on our Health Service, public investment and the expansion of our public services?
No Government have had the advantages of North Sea oil revenues of £60 billion of windfall money that this Government have enjoyed. During these past eight years, no country has lost so many jobs in productive industries or has invested so little a share of its national income in its industry or public services, with the result that no country faces the future so ill-prepared for the problems of the 1990s or the 21st century. If the Germans had discovered oil, would they have closed down the Ruhr and invested all the money abroad? Would the Japanese have closed down their computer industry and put all their money abroad?
The message to the Chancellor from the country is clear. As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said earlier, the Chancellor may have changed his tune about the importance of the money supply and about the wisdom of leaving interest rates and exchange rates to the vagaries of free market forces, but on the issue of public investment, especially investment in the National Health Service, he has refused to learn from his mistakes. Even when he has the money and knows the needs, even when the Prime Minister has made promises, and when we can see the employment benefits of investing in the National Health Service, in education and the industries of this country, the Chancellor refuses to invest more in Britain. His is a message of dogma and ideology. What this country needs is realism and common sense, and for that it will have to look to the Labour party.
The Chief Secretary to the Treasury (Mr. John Major) The hon. Member for Dunfermline, East (Mr. Brown) has just made his debut as an Opposition Front Bench spokesman on the economy. He spoke with considerable eloquence and passion, but what he said was a welter of misleading and half-understood statistics, almost all of which were wholly inaccurate.
The hon. Gentleman had much to say about jobs, but nothing to say about falling unemployment. If the hon. Gentleman read the Autumn Statement, he clearly did not understand it. He referred to social security cuts, but made no acknowledgement of the £48.5 billion that is made available in the Autumn Statement. He referred to education restraint, with no acknowledgement of the extra £630 million over last year’s provision.
The hon. Gentleman referred to inner cities with no acknowledgement of the fact that this year’s public expenditure plans will bring total urban spending to £500 million a year, which is two and a half times more in real terms than the amount spent by the Labour Government at any time during their period of office. The hon. Gentleman made no reference to the substantial growth of initiatives that the Government have produced in recent years for the inner cities, such as urban development corporations, urban development grants, urban regeneration grants, enterprise zones, the inner city initiative and Estate Action. None of those initiatives has reached the hon. Gentleman. I do not know where he has been for the last few years, but I dare say that Rip Van Winkle is better informed than the hon. Gentleman about what is going on.
The hon. Gentleman referred to investment, but made no mention of the fact that in the economy as a whole investment was at record levels last year. Indeed, in the first three quarters of 1987 it was up 3.5 per cent. on the previous year’s record figures. All those facts were overlooked by the hon. Gentleman in his welter of misleading statistics.
However, until the hon. Gentleman’s speech we had had an interesting and thoughtful debate, which was marked by several excellent speeches, including an extremely eloquent maiden contribution from my hon. Friend the Member for Wimbledon (Dr. Goodson-Wickes). My hon. Friend paid a warm and generous tribute to his predecessor, Lord Havers. We all join my hon. Friend in wishing the noble Lord a full recovery soon from his recent illness.
My hon. Friend called for more publicity for payroll giving to charity. I congratulate him on turning his maiden speech towards a most important and interesting topic. I shall certainly draw his remarks to the attention of my right hon. Friend and I hope that those in industry and commerce who deal directly with payroll giving will take my hon. Friend’s remarks to heart.
My hon. Friend has the triple attributes of being an occupational physician and barrister and a former serving officer in the Army. I have no doubt that the House will make ample use of his knowledge and talents in all of those areas, and will look forward to hearing from him on many occasions.
It is not often that events in the world economy take centre stage in British politics, but the effects in world markets and the responses of the major countries have justifiably and understandably raised serious questions in people’s minds. It was, therefore, entirely appropriate that my right hon. Friend the Chancellor should have devoted so much of his opening speech to those issues.
While the fall in stock markets and the instability of the dollar have made the outlook more uncertain, this is clear to those who wish to see it. The British economy has the strength to weather any external difficulties that might arise. That strength is founded on the sound public finances that we have set out clearly in the Autumn Statement. The statement sets out our broad plans for public expenditure. The House may wish to know that the public expenditure White Paper, which will give our detailed plans, and better inform the hon. Member for Dunfermline, East, will be published next Wednesday. I am sure that we will then have the opportunity to debate it in the normal way, once the Select Committee has concluded its consideration.
The right hon. and learned Member for Monklands, East (Mr. Smith), who is at present enjoying a no doubt fascinating conversation with his hon. Friend the Member for Wrexham (Dr. Marek), spread his net quite widely. I shall turn to his comments on the National Health Service in a few moments.
When the right hon. and learned Gentleman hinges his remarks on opinion polls, as he did, perhaps I may remind him of an opinion poll last June that left him in Opposition and the Government in power with a substantial majority. Before he starts lecturing the Government about opinion polls and public attitudes, he might remember the result of the election just a few months ago.
It was generous of the right hon. and learned Gentleman to assume that my right hon. Friend the Chancellor might have a fiscal adjustment available for his Budget. That is not only generous, but curious too, as before that June opinion poll the right hon. and learned Gentleman and his hon. Friends were repeatedly telling the country to expect higher taxes and public expenditure cuts.
I am gentler than my right hon. Friend the Chancellor, so I will not quote the explicit words of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). [HON. MEMBERS: “Go on.”] No, I am much too gentle for that. The fact is that the Opposition were wrong about public expenditure and they have changed their minds about our tax prospects. If the Opposition were so wrong and have changed their minds so rapidly on those issues, I am not sure why they should assume that they are right now in anything that they say.
Before I respond to the right hon. and learned Gentleman’s remarks, I wish to deal with the strength of our public finances, as set out in the Autumn Statement. Much of what has been said today reinforces the fact that the background to the debate is extremely favourable. Growth in manufacturing output continues to rise and there is a secure outlook for investment and inflation.
My right hon. Friend promised that I would deal specifically with public expenditure, and I propose to do so. Our plans include cash increases in the planning total of £2.5 billion and £5.5 billion in the next two years, much of which is directed specifically to priority programmes. I emphasise for the right hon. and learned Gentleman’s interest that they are increases, not cuts, in public expenditure. Our plans also show a welcome and rapid fall in the share of national income taken by public expenditure, with the trend set to continue from 44 per cent. of gross domestic product in 1986-87 to 41.25 per cent. by 1990–91. That will be of special pleasure to my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), who expressed his concern to ward off inflationary pressures and urged caution in our fiscal stance. I agree without qualification that prudence and caution are vital and I know that the Chancellor will have heard my right hon. and learned Friend’s remarks with great interest.
Public borrowing this year is also down, to 0.25 per cent. of gross domestic product – £1 billion – which is noticeably better than earlier expectations and the lowest for 18 years. This is in sharp contrast to elsewhere in the industrial world, where the ratio of Government debt to income has been rising. Here, as an act of policy, we have bucked the trend, and our debt interest payments have decreased from 5.25 per cent. of GDP in 1980-81 to 4.25 per cent. this year. Lest that seem an arcane statistic, I shall point out that the decline, which is set to continue, means that within our medium-term plans we are able to spend more on priority programmes and less on debt interest.
The 1 per cent. reduction in debt interest amounts to £4.5 billion – precisely the sum by which next year’s spending is increased before taking account of reserves. I hope that it is not too unkind to remind the House that if borrowing had stayed at the same proportion of national income that we inherited, the increased servicing cost this year would have been £8+ billion — nearly 7p on the standard rate of income tax. That is where increased borrowing would have got this Government and the taxpayer, and that statistic was noticeably missing from the speech of the right hon. and learned Member for Monklands, East.
Nor did the right hon. and learned Gentleman make any mention of his pre-election claims of higher taxes and lower public expenditure if the Government were reelected. Nor, interestingly, in view of the way that he twitted my right hon. Friend the Chancellor about not covering all aspects of policy, was there any reference to the new economic strategy that the leader of the Labour party commissioned from the shadow team six months ago today. It may be that the future of other policies launched yesterday encouraged the right hon. and learned Gentleman to remain silent. In any event, Labour policies remain a secret after six months, while the alliance’s have become a catastrophe after six hours.
The debate has repeatedly returned to public expenditure priorities, and the right hon. Member for Blaenau Gwent (Mr. Foot), his right hon. and learned Friend the Member for Monklands, East, my right hon. Friend the Member for Shropshire, North (Mr. Biffen) and a number of other right hon. and hon. Gentlemen referred specifically to the National Health Service. My right hon. Friend the Member for Shropshire, North set out some intriguing principles for the reform of the National Health Service and I have no doubt that they will be widely read and considered, although they seemed to receive no endorsement from Opposition Members who still live in a time of many years ago.
Few people would doubt the genuine affection in which the National Health Service is held. It has been manifested in recent weeks in calls for greater funding and I will return to that point in a moment. First, I wish to refer to Opposition Members who in recent years have repeatedly claimed that the Government simply do not care about the National Health Service.
Miss Marjorie Mowlam (Redcar) The Minister’s performance is absolutely pathetic.
Mr. Major Not only is this not true, but remarks like that simply trivialise and debase what ought to be an important national debate – and the hon. Member for Redcar (Miss Mowlam) illustrates the point far more eloquently than I can. I have no doubt that Opposition Members care about the National Health Service, and I have no doubt that their predecessors cared 10 years ago when they imposed on the Health Service the largest capital cuts it has faced at any time in its history. So the question is not about who cares – we all care – but about how to achieve the quality and quantity of service that we all wish to see. In that, money cannot be the whole answer. The pressures are clear.
The hon. Member for Walsall, North (Mr. Winnick) is present with us. Lord Wilson of Rievaulx once referred to the hon. Gentleman as the silliest man in the House. Clearly, that was one of the noble Lord’s characteristic understatements.
The pressures on the NHS are clear. Demographic changes, an aging population, medical improvements and greater expectations have all led to the calls for greater funding. If we are genuinely concerned not about making political points but about getting the best possible Health Service, that cannot be the whole answer. [Interruption.] It is interesting that the Opposition are not genuinely interested in the Health Service but only in making partisan political points about the Health Service.
The House is familiar with the growing resources devoted to the service, the increasing number of patients treated and the increasing number of medical staff employed. [Interruption]. I see that the hon. Member for Walsall, North is making his usual intellectual contribution; he is welcome.
Mr. Winnick Does the Minister use the NHS?
Mr. Major The answer to the hon. Gentleman’s question is yes.
For next year, the net increase for the whole of the National Health Service is £1.15 billion and a similar increase is already committed in the public expenditure plans for the second year in the public expenditure programme. To that £1.15 billion must be added the proceeds of cost improvements programmes, income generation schemes and, to supplement capital programmes, the resources raised by surplus land sales.
We are witnessing extensive public examination of the resources put into the Health Service and I believe that we need equally careful consideration of what we get out of the Health Service as a result of the money that we put into it. Some of what we get is familiar and welcome: the extra medical staff responsible for patients, the extra 1 million in-patient cases, the extra 500,000 day cases and the extra 3.75 million out-patient cases. Those improvements in the service are concrete evidence that the Government have put in extra resources for care and that they have been used.
As the right hon. and learned Member for Monklands, East and my right hon. Friend the Member for Shropshire North acknowledged, Governments alone cannot meet the infinite demands for health care.
We have to ask some uncomfortable management questions of the NHS if we are genuinely to confront the difficulties of getting the best possible patient care for the resources that are made available. Why are general surgical beds in some parts of the country empty for nearly seven days between patients but occupied again in less than half a day in other parts of the country? That question deserves an answer. Why does it cost more in some hospitals than in others to do the same operation on the same type of patient? Why can so few health authorities tell us what a particular operation costs? Why do general surgery patients spend two and a half days in hospital before their operations in some health districts while in others they spend less than a day? Why, when there are said to be nursing shortages, do four-hour overlaps on nursing shifts still exist? Those genuinely concerned to improve the quality of our health care believe that those questions, as well as the question of resources, need to be addressed.
Moreover, those questions need an answer before we or the Opposition can know that shortage of funds is the problem. If the answers are unsatisfactory, the case for looking first to improve value for money becomes unanswerable.
Mr. Winnick Will the Minister give way?
Mr. Major No, he will not.
That is why, when responding to the problems arising this year, we insisted that the extra funds were accompanied by an improvement in the arrangements for monitoring Health Service performance and why I believe that the results of that monitoring should be published in the interests of getting the best patient care.
Mr. John Smith The Chief Secretary to the Treasury is aware that yesterday the heads of the three royal medical colleges met the Secretary of State for Social Services, who gave them certain assurances. Will the right hon. Gentleman say whether, in real terms, any extra money, on top of that committed in the Autumn Statement and in statements since, will be given to the National Health Service?
Mr. Major The right hon. and learned Gentleman anticipated what I was about to say in a couple of paragraphs’ time.
We all wish to ensure that patients are treated as well and as speedily as possible. If we are to do that we cannot and should not exclude medical practice and medical efficiency from consideration in the future. It is neither acceptable nor credible simply to blame the level of funding.
The right hon. and learned Member for Monklands, East referred to press comments following the meeting between the Secretary of State for Social Services and the presidents of the three royal colleges. I cannot answer for those press reports, but I can confirm that my right hon. Friend made it clear to the presidents that we had recognised the need to increase resources for health care in the public expenditure round that we have just concluded. Furthermore, last month we announced an additional £100 million for the National Health Service for the current year, and next year we plan to make available a record £21 billion, which is 32 per cent. more in real terms than under the last Labour Government.
We are launching the new income generation scheme and taking powers to increase health authority powers. As my right hon. Friend the Member for Shropshire, North said, we see the private sector as having an important role to play in the provision of health care. That is what my right hon. Friend made clear to the three presidents, and he did not suggest to them that further sums were about to be added to this year’s public expenditure settlement.
The increase in public expenditure in real terms for the next year, in terms of the specific increase identifiable in the public expenditure White Paper, is around 2.1 per cent. With the income generation scheme and other schemes, that is likely, based on precedent, to be raised to a real-terms increase of about 3 per cent. in the next year, which is precisely the sum that the hon. Member for Dunfermline, East said was needed. That is the sum that will be available in the next year for the public expenditure settlement that has just been concluded.
The Autumn Statement shows that the National Health Service has been a major beneficiary, with an increase of £700 million over plans in England. There have been other significant additions to the programmes that I have mentioned and other programmes as well.
Mr. Winnick Will the Minister give way?
Mr. Major No.
The plans for education have been increased by £600 million, providing additional funding for universities, for basic science and for improving the condition of school buildings. There are additions for law and order, in particular to provide for an expansion in the prison building programme that will amount to almost £400 million in the next financial year.
We have also, contrary to what was said, made substantial additions to our capital plans. Next year capital spending will be about £22 billion, which is £1.5 billion more than we had previously planned. Of that increase, spending by nationalised industries accounts for about £660 million, and spending by local authorities, particularly on housing, another £560 million.
Priorities have been the theme of much of the debate. The Select Committee report, for which I thank my right hon. Friend the Member for Worthing (Mr. Higgins) and his colleagues, posed two important questions – how are priorities determined and what is the mechanism by which they are set? My right hon. Friend the Member for Worthing echoed those questions and I strongly suspect that he will follow them up when the Select Committee takes evidence on the public expenditure White Paper. I am delighted that he did so, for not only do they lie at the heart of successful planning and control of public expenditure, but they reveal clearly the difference between this Government and the Labour party.
For the Government, the setting of priorities means establishing the total public spending that can be afforded in the light of the need to keep borrowing down and to meet the Government’s objectives for taxation, and then choosing what can be afforded for individual programmes and costing them. The approach of the Labour party is quite different but quite simple. It is a philosophy of, “Give them the money and to hell with the consequences, however inflationary they may be.”
The right hon. and learned Member for Monklands, East has made that plain. He wrote in Tribune some time ago: I’m not sure it’s important to cost everything. Later he said: I’m cautious about writing down bits of money, they get added up by the Conservatives. Until the right hon. and learned Gentleman learns that it is necessary to cost everything and add it up, he is not fit to be an Opposition spokesman, let alone Chancellor of the Exchequer – not that he is likely to get the chance, with their policies.
The Select Committee, to its credit, is looking for something a good deal more sophisticated, although it veers to the opposite extreme of searching for the philosopher’s stone. I fear that that does not exist. There is no magic mechanism for comparing the merits of extra spending on one programme as against another. In the end, the judgment must be political. What there can be is a full appraisal of spending options, with an assessment of output so that the judgments can be informed judgments.
Mr. Winnick This is rubbish.
Mr. Major The hon. Gentleman is a specialist on rubbish. The prospect for reviewing policies is continuous, but the public expenditure survey is designed to draw the threads together year upon year.
Mr. Winnick That is all he is good at.
Mr. Speaker Order. The hon. Member must not shout across the Chamber.
Mr. Major It is clear that the legacy of the noble Lord has upset the hon. Gentleman.
I know that my right hon. Friend and the Select Committee are uneasy that Departments are expected to look first to their own cash provisions to finance new initiatives. I make no apology for asking a Minister seeking additional resources to see what in the first instance he can contribute from his own programme to offset the savings. If savings cannot be found, his bid will have to be considered alongside those from other Departments and against the possibility of making reductions in existing programmes. To allow Departments to post off bids to the Treasury without having searched for offsetting savings would substantially weaken public expenditure control, and I have no intention of permitting that to happen.
We have heard a little today about cuts, but not as much as we often do. The dog has barked less loudly than usual. It may be that the Opposition are beginning to realise that it is possible to increase spending, reduce borrowing and cut taxes if we pursue policies that lead to an expanding economy. I remind the Opposition what real cuts look like: a 30 per cent. reduction in capital spending on hospitals and a 40 per cent. reduction in roads capital spending – the product not of this public expenditure survey but of those conducted by Lord Barnett.
Let me tell the Opposition what Tory “cuts” look like: a 36 per cent. increase in National Health Service capital spending, a 30 per cent. increase in the roads programme, and further increases in the coming years. Our cuts have been in borrowing and inflation, not in hospitals and roads. The cuts we have seen have been cuts by the Labour party in Labour headquarters in Walworth road and in the axing of that most enjoyable publication “Labour Weekly” only weeks after reporting that Labour lost the election on economic issues. “Labour Briefing” also has little affection for the Labour party, as it clearly shows.
The Autumn Statement reflects the greatly improving prospects for the economy. Public spending and borrowing are under control. Inflation is low and will remain so, investment is rising, unemployment is falling and there will be growth this year and next year. The Autumn Statement is a further signpost on the route to prosperity, and I commend it to the House.