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Public Expenditure

Volume 301: debated on Thursday 27 November 1997

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2.

If he has plans to set a target for public spending as a share of gross domestic product. [16586]

We have no plans to set a target for public spending as a share of GDP.

Does my right hon. Friend recall that the previous Government wanted permanently to reduce public spending as a share of GDP? Does he further recall that the dogma of that ambition was exceeded only by the incompetence of their attempt to achieve it? Can he tell the country that the days of dogma are gone, that spending on high-quality public services will be a first claim on a growing economy, and that, even under an iron Chancellor, fiscal prudence will never be confused with fiscal parsimony?

My hon. Friend is right in that the previous Government ended up spending almost exactly the same share of the national income at the end of their 18 years as they did at the start. He is also right in saying that, although the amount that they spent did not change, what the money was spent on did change. They had to spend more and more on mopping up the failures that their misguided policies created.

The objective of our comprehensive spending review is to examine each and every penny that the Government spend. The test for this Government is not just how much is spent but where it is spent and to what effect. I agree with my hon. Friend that public spending is extremely important for building economic prosperity—important in economic terms and important in social terms; but it is fundamental that we achieve the long-term stability and sustainable public finances that will allow the economy to grow as well ensuring that we have the wealth to provide the services that we all want.

Should we conclude that the threats to benefits for disabled people and the lengthening hospital waiting queues, alongside massive increases in taxes, rising interest rates and slowing economic growth, are somehow a price worth paying for achieving the criteria for economic and monetary union?

The hon. Gentleman is, as ever, obsessed with Europe. He sees Europe behind just about everything. The country will remember that the Conservative party systematically denigrated those on benefits and systematically undermined the benefits system without regard to the consequences. We are determined to build a stable economic platform so that we achieve growth and so that the finances of the country are put on a sustainable long-term footing so that we can provide the very services that hon. Members—certainly Labour Members—want to see in the future.