Rt Hon Lord Lilley

    Date of Proceeding: 22.03.2007
    Reference: 458 c1036-9
    Member: Lilley, Peter
    Title: Budget Resolutions and Economic Situation
    Description: I apologise for having been absent from the Chamber for a while. I had to attend a meeting of the trustees of the Parliamentary Contributory Pension Fund-on behalf of Members who are present, of course.

    It is a pleasure to follow my hon. Friend the Member for Billericay (Mr. Baron). I am indebted to him, as is the whole House, for the devastating figures that he gave showing that, after 10 years and a doubling of public expenditure, the waiting time for operations in the national health service has declined by only five days-from 78 days to 73-and that the median waiting time has actually increased. I predict that those figures will not be mentioned in the winding-up speeches, but I hope I am wrong.

    The newspapers told us that this would be the last Brown Budget. In fact, it was the first instalment of the first Osborne Budget and the last instalment of the last Lawson Budget. It was the first instalment of the first Budget of my hon. Friend the Member for Tatton (Mr. Osborne) because it was he who advocated the cut in the corporation tax rate which the Chancellor has made, and it was the last instalment of Nigel Lawson’s last Budget because he set out his ambition to establish a simple two-rate taxation structure with a top rate of 40p and a bottom rate of 20p.

    As you will remember, Mr. Deputy Speaker, when Nigel Lawson made that announcement in his Budget speech it produced uproar. For the first time in history, the Budget debate had to be suspended by your predecessor and could not continue until Labour Members had calmed down, such was their horror at the prospect of an income tax system with just two rates, 40p and 20p.

    I wonder whether those who were so appalled then were among those who cheered yesterday when their own Chancellor announced, rather implausibly, that that had been his long-term ambition too. Perhaps they dwelt on the subject overnight. That may explain why only one Labour Back Bencher is present today to support the final instalment of Lord Lawson’s Budget, which-in that respect, at least-Conservative Members welcome.

    In short, this sounded like a Conservative Budget with Conservative tax cuts, coming from a tax-raising Chancellor. Let us be clear about this, however: Conservative Budgets cut not only the rates of tax but the burden of tax, and this Budget increased the burden of tax. We should take account not just of the measures on page 209 of the Red Book-Budget measures which themselves increase the overall burden of taxation-but of those on page 210, which show all the measures introduced since the last Budget but not included in this Budget. Then we see that the total burden of taxation is rising by £2.5 billion this year, and by £3 billion in the subsequent year. This was a tax-raising Budget of the sort that we have come to expect from a Chancellor who taxes by stealth.

    How has the Chancellor achieved the illusion of cutting taxes while increasing the overall tax burden? Largely by scrapping measures that he himself introduced. He introduced the 10p starting rate; now he has scuppered it. He said that he was halving the rate of tax imposed on the working poor; now he has doubled it. He reintroduced allowances on capital expenditure; now he is reducing them. He reduced the corporation tax rate on small companies; now he is raising it.

    The Chancellor of the Exchequer spent his first four Budgets marching his troops up the hill towards a 10p tax band, a 20p small business rate and capital allowances for manufacturing. Now he has marched them back down again, leaving all that behind. He has been described-by my hon. Friend the Member for Tatton, I think-as the Prince of Wales waiting to be King. Actually, he is the Duke of York, who marched his troops to the top of the hill and marched them down again.

    Loyal readers of my pamphlets will know that I have previously accorded that title to the Prime Minister, as in his first Parliament as Prime Minister he abolished grant-maintained schools, downgraded city technology colleges, scrapped GP fundholding and ended patient choice; he then spent his subsequent Parliaments reintroducing grant-maintained schools, which were renamed foundation schools, city technology colleges, which were now called city academies, GP fundholding, which was called practitioner commissioning, and patient choice-which, because the Government could not think of another name for it, they have reintroduced as patient choice. Therefore the Prime Minister has been a Duke of York and will be remembered, primarily, as that.

    That point helps to answer the central question behind the Budget: where has all the money gone? Reorganisations-especially pointless and unnecessary ones which reverse previous reorganisations-are hugely expensive. Palms must be crossed with silver, as Nye Bevan remarked when he introduced the reforms that led to the creation of the national health service. Vested interests must be bought off. In every change, bureaucracy and unions find opportunities to boost pay, reduce work loads, increase the number of posts and reduce overall productivity.

    That is one reason why so much money has been spent to so little effect, but the Budget speech highlights a second reason why this Chancellor has wasted money on an industrial scale, as my right hon. Friend the Member for Witney (Mr. Cameron) said. A Chancellor who measures success by how much money he spends, rather than by the results achieved, ends up spending a lot and achieving very little. The Chancellor set himself the wrong measure of performance, and as a result he has succeeded only in spending money and not in improving services.

    The third reason why there is so much waste is that the Chancellor has a centralising nature. That is not only because he is a Stalinist-he is a believer in the central doctrine of Stalinism, which is bureaucratic centralism-but also because he is new Labour and new Labour has a preoccupation with tomorrow’s headlines, as he has demonstrated. New Labour is preoccupied with wrong-footing the Opposition, spin and media manipulation. In order to do such things, it is necessary to centralise. If what is wanted is a continual flow of news manipulated from the centre, the decisions must be made at the centre; it is necessary to indulge in micro-management, setting targets, ring-fencing budgets, detailing regulations and having detailed management controls in the public sector. The Government have, of course, done all that.

    Let me give an example that comes from my own experience of visiting a national health service hospital. Members will recall that the Government got a good headline when they announced their waiting list target. They got another good headline when they announced ring-fenced waiting list budgets for every hospital. They got yet another good headline when they announced that waiting list managers would be appointed to every hospital. So they got three good headlines, but the consequences in the hospital I visited were as follows. The waiting list manager spent his ring-fenced waiting list budget on carrying out operations on Sundays in order to get the waiting list down. It might be thought that that was an expensive way of doing that, as higher rates had to be paid to locum surgeons, but one would expect more operations to be done and waiting lists to be reduced. However, at the end of Sunday all the equipment needed to be sterilised and it was impossible to employ spare sterilising teams on Sunday. Therefore the equipment had to be sterilised on Monday, which meant that no operations could be carried out on Monday. The money for that did not, however, come from the waiting list manager’s budget; his budget was ring-fenced. It came from the budget of the rest of the hospital, so he did not worry. As a result there were no extra operations and no other achievements, but a vast sum of money was spent.

    That was a waste of money, which is bad enough, but there was a second consequence which was worse. A surgeon whom I spoke to had established a dedicated open-wound operating theatre and a ward served it that was kept scrupulously clean to avoid any risk of contamination by methicillin-resistant Staphylococcus aureus-MRSA-or any other infection. However, the waiting list manager had to manipulate the waiting list, and some patients were getting dangerously near one of the thresholds, which meant that he might not meet a particular target. So he insisted on dumping some of his patients on that ward, including one with MRSA, another with a liver infection, and a third with another such problem.

    My consultant informant said that he could not operate in those circumstances. He was told by the hospital authorities that he must-they had targets to meet. He said that that would put the health of his patients at risk. He was told that this was a P60 matter, and that he would have to think about it hard. Happily, he has a private income from a medical invention of his, so he was able to call their bluff. He simply gave all the patients a form, saying that if they wanted to go ahead with the operation immediately, they should fill it in and remove any liability that he might have-but that he could advise them to do that only if they were feeling suicidal. So none did. No operations were carried out and their lives were saved.

    This is the implication of detailed micro-management-waste and reduction in quality, instead of improvements and enhancement of quality. Nothing that we heard in this Budget suggests that the Chancellor or the Government have learned the lessons of 10 years of spending and wasting. The Budget is a Budget for short-term headlines and long-term waste. It is a Budget of Conservative appearance, but socialist substance. It is a Budget that cuts rates, but increases the burdens on the British people. It will be remembered for the latter.