Treasury and Work and Pensions

Most of us in the House, whatever our party, would agree that it would be foolish to rule out the option for ever, which I think is the right hon. Gentleman’s option. I am not sure that that fits with the views of those on the Conservative Front Bench. Let me return to the issue of stability. The Chancellor is absolutely right—and this is a sensible place to start—to say that we are in a successful economy and that we should be proud of that. I have never quite understood why the Conservatives have such difficulty saying that and claiming some of the credit, rather than arguing that we are in a constant state of economic collapse. The British economy is in good shape and, as the International Monetary Fund said recently, our rate of growth is somewhat above the G7 average and certainly more stable. The issue is not whether that happens—it clearly is happening—but whether it can be sustained. The question is whether the growth that we have at the moment is sustainable or more similar to the experience that we had in the 1950s, which I grew up with as a teenager, when we also had more than a decade of stable growth, low unemployment and low inflation. However, we were building up imbalances in the economy and they eventually spilled over in the form of balance of payments crises. We cannot have them any more because we have a floating exchange rate. None the less, serious imbalances are building up in the British economy and it will be a major challenge for the Chancellor and whoever succeeds him to deal with them. One of them relates to public expenditure, which is growing significantly faster than the British economy. We have no quarrel with the increase in public expenditure that has occurred—or much of it; much of it has been valuable—but there is an issue of sustainability. The other big challenge is that of personal debt. On public expenditure, the Chancellor challenged the Conservative spokesman about some of his spending commitments, and he was right to do that. However, the Chancellor is also making major spending commitments that will be difficult to sustain over the difficult periods ahead. Public expenditure will not be able to grow much faster than the British economy over the next period. I want to take the Chancellor over some of the spending commitments that the Government are entering into and challenge him to justify them. He started his speech by referring, I think with some pride, to the spending that the Government were undertaking on what he called security. That includes the war in Iraq. We have a different perspective on that, because we regard the £4 billion spent on that war as having been wasted. He may say, ““That’s water under the bridge. Let’s look at the future.”” Last weekend, the Chancellor committed the Government to spending an extra £100 million on reconstruction. One might say, ““Fine. That’s good. Whatever our views on the war, surely we are in favour of reconstruction.”” I am challenging that. I do not know whether the Chancellor is aware, but a few weeks ago, the Iraqi Government committed themselves to the latest big tranche of spending: a total of $40 billion, which is more than £20 billion, in reparation payments. That is Iraqi oil money. It is not being used for reconstruction or to raise standards for people in Iraq; it is being used to pay reparation for damage supposedly incurred in the first Gulf war. Much of it is going to Kuwait, not just for the damage that was inflicted by Saddam Hussein but for continuing penalty payments. Bizarrely, much of it is going to private companies such as Halliburton, Bechtel and even Kentucky Fried Chicken. They are being paid compensation for profits that they lost as a result of the first Gulf war. My question to the Chancellor is: why should the British Exchequer—the British taxpayer—be plugging holes in the Iraqi budget when the Iraqi Government are making those enormous, obscene payments? There is no justification. Let me take another heading under the issue of security. The National Audit Office recently produced a compilation of defence estimates: the 20 biggest projects under the Ministry of Defence—20 big projects costing £20 billion. It was subsequently presented by Lord Drayson as a great success story. However, it emerged from the analysis that the projects were collectively £2.6 billion over-budget and cumulatively 36 years behind schedule. Clearly, if there is going to be a tightening of Government spending, some of that stuff will have to be looked at. We have argued, for example, that some of the third tranche of the Eurofighter project, which is estimated to cost £16 billion—although we do not really know, because the figures have been concealed under commercial secrecy—has to be scrapped. The Government are going to have to face up to that too. Sooner rather than later, we want an analysis of where that spending is going. To take another set of spending commitments, I have recently been trying to trawl through parliamentary questions about what is happening in relation to Government computer projects. The projects currently in operation that I have had a reply about—about half—have a cumulative overrun of 47 years. The overrun costs are enormous. Much of that expenditure has to be analysed critically. We would question the usefulness of continuing to press ahead with the full NHS IT project at a time when the NHS budget is under a great deal of pressure. We have had a debate about the principles of the ID cards scheme. The Home Secretary referred to it in his contribution to the debate on the Queen’s Speech. However, we need to ask questions about the costs and who will pay for the scheme. The Government have never properly answered that. It has always been understood that as long as the scheme was voluntary, it would be paid for by user charges. However, when the former Home Secretary, the right hon. Member for Norwich, South (Mr. Clarke), was in post, he indicated that when the scheme became compulsory—as it would in the next Parliament—it would be made free or would be heavily subsidised at a cost of somewhere between £5 billion and £20 billion. We have never had a proper explanation of where that money is going to come from, how it will be accounted for, or how it can be justified. My colleagues and I thought that the Prime Minister’s energy report, which was published by the Cabinet Office in 2003, was an admirable summary of all the issues involved in energy policy. It covered the ground well. Security of supply, energy poverty and the environmental cost were well balanced. The report came to the conclusion that new nuclear power was unnecessary. A year later the policy changed and we now have an open-ended commitment to supporting new nuclear power. Again, it is unclear how that will be funded. Much of it will happen through the charging policies of the electricity utilities. The Government appear to have entered into a new set of commitments in relation to decommissioning and, possibly, the acquisition of land for the new plants to be established. Again, that has to be factored into public expenditure.