Finance Bill

If we had a faster growth rate, I would expect the amount spent on public services to go up faster than if we had a lower growth rate and operated under the Economic Secretary’s kind of model, so public services would not be short-changed. But yes, of course the proportion spent on public services would fall; his arithmetic is clearly as good—or as bad—as mine. The proportion would fall, but that would be in the context of a rising total of public spending. Ironically, the faster the economy grows, the more quickly the proportion spent on the public sector falls, but the better the increases in public spending. That, to me, is success. There was a period when the current Chancellor of the Exchequer followed exactly that kind of model; he kept public spending under some kind of control, and public spending fell as a percentage of national income because there was some growth in the economy. If he had reinforced that with more competitive tax rates, we would now face a very different position. We would be able to afford the public spending level to which the Chancellor has moved, but it would be lower as a proportion, because the economy would be bigger. It is a great pity that we missed that opportunity. The Chancellor’s work has fallen into three parts. The first part was perhaps a bit tight on public spending, but it was very good in getting borrowing down, and in getting the public finances into good order. We could have used that as a launch pad for faster growth. The second phase was a pity; he overdid public spending and did not get value for a lot of the extra money that he injected into public services. The third phase will be the least pleasant, because all sorts of clamps will have to be placed on public spending, including the control on nurses’ pay. Obviously, that is not popular with nurses, and it will cause tensions within the labour movement.