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Budget Resolutions and Economic Situation

I accept that there has been a growth in employment. That is true in almost all industrialised countries. However, in fairness to the hon. Gentleman, if he looks at the pattern in the last year, he will see that it has begun to reverse itself quite dramatically, compared with other major industrialised countries. If we look at the difference in household incomes between the richest 20 per cent. and the poorest 20 per cent. in 1997 and today, we can see that it is 10 times. The amount is identical. There has been no change. According to the same Office for National Statistics data, the lowest-income households are paying a higher share of tax and receiving a lower share of benefits than they were in 1997. That has come about at a time of a massive increase in public expenditure. That expenditure has not, of course, resulted in a transformation of public services. That is at the heart of the criticism of what the governance of this country has been all about. People are asking, ““Where has all the money gone?”” The truth is that the Chancellor has not taken anything like the tough and radical decisions of his predecessors, which were often controversial and sometimes, indeed, divisive. The Chancellor has poured money into the public sector and has swollen public sector employment, but without effective prioritisation and consultation to achieve measurable better outcomes. I am afraid that, as we now know, that is coming to an end, because the rate of growth in public expenditure is going to be less than the rate of growth in the economy overall. Of course, the Chancellor had no alternative but to do that, so the bonanza in public expenditure is about to end without the reforms that were necessary to produce a massive increase in the quality of our public services. I suggest that there have been three main factors behind the economic growth that has occurred under the Chancellor. I have touched on the massive increase in public expenditure. We have also seen the trebling of house prices, so this is growth led by consumption. Household debt in 1997 was 100 per cent. of disposable income, but it is now more than 160 per cent., and the figure is rising. There has also been a substantial increase in the population of this country. Productivity has not matched economic performance to the extent that it should have done. We are suffering the highest current account deficit in our entire history, with a third of that figure being filled by our service industries. We are hugely and increasingly dependent on our financial services sector. As my hon. Friend the Member for Sevenoaks (Mr. Fallon) pointed out, however attractive London has been as a centre for the financial services industry, the mobility of that sector is much greater than that of manufacturing, so we must watch with great concern the burden of taxation and regulation. Productivity was considered to be one of the most demanding issues for the Chancellor when he assumed office, but our productivity is less than that of France, Germany and the United States, partly because of the huge expansion of the public sector. Indeed, one in four of the new jobs that have been created in this country have been in the public sector, and our tax burden has risen appreciably under this chancellorship—it is certainly higher than that in the United States, Germany and Japan. Much of our lack of performance on productivity has come about because of poor performance in the public sector. The International Monetary Fund describes what the Chancellor has done as the"““most aggressive fiscal expansion of any G7 country””." The heart of the problem is that expenditure on the public sector has cost the taxpayer a staggering amount, yet the functional mismanagement in the public sector has, at times, been absolutely grotesque—we only have to look at the mismanagement of our health service and the financial difficulties that have resulted to realise that. If one is the guardian of the public purse, one is entitled to invite Cabinet Ministers with departmental responsibilities to ensure that the management of such huge sums is appropriate. Let me relate my experience during my time as a Member of Parliament. When I was first elected in 1992, we had the West Suffolk health authority. We were then told that we needed a pan-Suffolk health authority. More latterly, we were told that economies of scale and management were not the important thing and that we needed the management of health to be close to communities. We thus got five primary care trusts, which became three primary care trusts, and now we are back to having a Suffolk-wide health authority all over again. The cost of that has been grotesque and the events have ill served the people who depend on the health service.