(Urgent Question): To ask the Secretary of State for Health what plans he has for the future of the NHS IT programme, and if he will make a statement.

I want to begin by challenging the myth put around by the hon. Gentleman that the NHS IT programme has been a waste. The programme has changed the way in which the Government pay for IT by creating a contract whereby we pay for what we get from suppliers only when it is fully delivered. Indeed, we have been praised by the National Audit Office for creating such a contract.

The national programme comprises a number of key elements that are already essential to the delivery of front-line services. For instance, digital X-rays and scans, which facilitate faster safer care, are in place in 100 per cent. of hospital trusts; electronic prescriptions are now the norm in general practitioner systems; choose and book—the electronic booking service—provides choice and convenience for patients; GP2GP—the electronic transfer of health records between GP practices—will in time support our policy of abolishing practice boundaries, giving patients more choice; and we also have the summary care record, whereby key information from the patient’s GP record, including current prescriptions and reactions to medicines, can be made readily available.

To put it simply, the programme is a key part of delivering modern, safe, joined-up health care. It is supporting the ongoing reform of the NHS by giving choice and convenience to patients. The NHS could not function without it. However, in the current climate it is right to look again at efficiencies and value for money on all big projects, and at the Chancellor of the Exchequer’s request—and that is what the Minister of State, Department of Health, my right hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien) and I have been doing across my Department.

As part of that, I have looked closely at options for savings on the NHS IT system; it was to those that the Chancellor referred yesterday. The details of those discussions with the IT companies are commercially sensitive and ongoing, but I can give the House this update. My aim in conducting this exercise has been to ensure that the elements of the IT programme that can deliver most benefit to patients and front-line staff are taken forward, while cancelling certain additions to the system where it makes sense to do so.

Let me be absolutely clear: we have no intention whatsoever of cancelling the programme overall, not least because it is already making the NHS safer, more efficient and more convenient for patients. However, we are discussing with our suppliers potential reductions to the scope of the systems and the cost savings that could be generated. In addition, we are looking seriously into the internal savings that can be made from the costs of running the programme. In the light of that work, I can confirm to the House that we are working towards achieving a reduction of £600 million in the lifetime costs of the programme.

That means that we will now pare back the programme to the core elements that have been identified as critical by clinicians. Our aim is to give trusts more flexibility and choice of IT systems, within a framework provided by existing contracts, to keep the benefits of a national approach. Specifically, that could include the IT systems that clinicians have told us are most important to them, such as electronic prescribing; enabling local innovation to take place by linking national systems with those provided by local service providers; and allowing the NHS to design IT systems to fit its local needs.

The programme has already provided benefits, and we believe that this approach will accelerate the delivery of benefits to front-line services and patients across the NHS.

Oh dear, Mr. Speaker. Rarely have we seen a more abject example of the Government’s incompetence. They took central control of NHS IT— £7.5 billion in central contracts and £5 billion in associated costs on top of that. Seven years on, they are over budget and under-delivered. The electronic patient record is four years late at the very best—if it will ever happen. Everyone told them that big IT projects had to be user led, but that one was not. We told them that the system should be decentralised, with local procurement and patient control over health records, but they did not listen. Now the Chancellor of the Exchequer says it has to stop. The Secretary of State is clearly not in charge. The Government got it wrong and the Treasury is now belatedly putting a stop to the continuing disaster.

Let me ask the Secretary of State some questions. Will he now stop the centralised care record system and allow local procurement of care record systems to national standards? Will he allow general practitioners and hospital trusts to be purchasers of their own IT hardware and software from open sources of supply? Will he now be open about the contractual situation with the three local service providers, and about whether, as we suspect, it would now be possible to abandon the existing contracts without penalties—in either direction—because the costs of fulfilling the contracts to the companies exceed the value of the contracts to them? That could deliver up to £4 billion, unspent under those contracts, for support for front-line IT and other services in the NHS.

Will the Secretary of State now have the grace to acknowledge the Government’s failure, the billions of pounds spent without delivery, the spiralling opportunity costs of delays, the confusion and frustrations over IT and choose and book, but—worst of all—the resulting lack of IT innovation in our hospitals, when it has the potential to be of such benefit to patients in managing their care and minimising errors in treatment? Will the Secretary of State just admit that they got it hopelessly wrong?

Let me begin with a phrase that the hon. Gentleman used towards the end of his contribution, about the “lack of IT innovation” in hospitals. I do not know how many he has visited recently, but I do not understand how he can make such a comment on the Floor of the House. The step change in the quality of images available to clinicians is evident to anybody who looks at the NHS today, and because people all around the hospital can view clear images, that has been a real benefit for patient safety across the NHS. I simply do not believe that there has been no innovation or improvement in services. Indeed, clinicians—not Ministers—have today spoken in favour of the changes brought about by the national programme for IT across the NHS—[Interruption.]

Mr. O’Brien, you have developed a bad habit of chuntering away from a sedentary position on the Opposition Front Bench, in evident disapproval of the answer from the Minister. The question has been asked: the answer must be heard.

Before I was so rudely interrupted, I was saying that it is clinicians who have come out today to say that they value the improvements that the national programme for IT has brought. The hon. Gentleman would do well to listen to those voices before he comes here and makes sweeping statements suggesting that that programme has brought no benefit to patients.

The hon. Gentleman said that the programme was over budget and under-delivered. In my statement I mentioned the views of the National Audit Office, and I hope that he will acknowledge that the programme has been praised by the NAO. Its 2006 report said:

“The Office of Government Commerce considered there to be many good features in the procurement process for wider application to government IT procurement. These included elements of contract innovation, which it has built on to develop its good practice guidance.”

It is simply not true to say that this programme is flawed and has not delivered benefits: it has delivered considerable benefits to the NHS and has improved the way in which the NHS contracts for IT. We get what we pay for, and the NHS has learned the lessons of IT failures in the past.

The hon. Gentleman said that the programme was over budget and under-delivered: it is not, and never has been, over budget. The last NAO report confirmed that the cost of the original contracts had not changed and that the overall programme costs, including NHS costs and the costs of additional items such as payment by results and the 18 weeks, are substantially unchanged from the figure of £12.4 billion in the earlier NAO report.

The hon. Gentleman asked about the care records system. That will be a matter for local choice—[Hon. Members: “Ah!”] I said in my statement that we wanted to create a system in which acute hospitals had more choice and flexibility in relation to their IT requirements within a national system. He seems to reject the benefits of a national system across the NHS, but we do not. We believe that there are significant benefits from a national health service having a programme of IT that can link up clinicians across the system. We further believe that it is safer for patients if their records can be accessed across the system.

Let me finish with a comment on the hon. Gentleman’s plans for IT in the NHS.

Order. I do not think that we need to go into that. I know that the Secretary of State has been provoked by quite a lot of sedentary chuntering, which I have just deprecated, but may I urge him to be economical in his replies? I am keen to get Back Benchers in as well.

The Secretary of State was provoked into whistling in the dark by claiming that the programme had been a success. He quoted the NAO report, but did not the Public Accounts Committee conclude in January that the programme was, among other things, “very disappointing,” and

“not providing value for money,”

that estimates of costs were “unreliable”, and that the system had “little clinical functionality”, as well as reporting

“understandable concerns about data security”?

That does not sound to me like a system that is going well. Is this not the classic case of an IT programme that is too big, too expensive, too late and insufficiently planned? By building the system from the top down, the Government have smothered the option of local schemes with interoperability, which would, I agree, have been a better solution.

Do the enormous compensation counter-claims by suppliers of which we read represent a contingent liability against the NHS? If so, does that mean that they will be paid at the expense of front-line services? The Government’s dithering over cancellations of quite large elements of the scheme has resulted in eye-wateringly large amounts of money being sunk in a scheme that has produced nothing like the benefits claimed for it, but which has, I am afraid, used a great deal of NHS money for very little result.

The hon. Gentleman also seems to have misunderstood the very nature of the contract. It was an innovative contract that meant that the NHS paid only once it received the system and the system had been passed over and was operational. That was a step forward in how the NHS paid for IT systems.

The hon. Gentleman quoted the NAO at me, but the NAO recognised the improvement in contracting that came with the system. If he is saying that it is not right, in the current climate, for me to take a look at the system and see whether we can make savings, then quite honestly I disagree with him. It is right that we should look at the system again in the current climate and, where we can, make savings.

Let us be absolutely clear: we are being led by clinicians on this issue. They are saying to us that they value the improvements in patient safety and the reduction in errors that have come with the national IT programme. The British Medical Association issued a statement today to that effect, and I think that I would prefer to listen to the BMA than to the hon. Gentleman.

We can make savings and pare the system down to the core elements that have been identified as important by the clinical community. If I may, let me give the hon. Gentleman a specific example of those changes. We have made a big investment in GP systems. GP systems are working well across the country and have high levels of satisfaction. GPs are happy with them and they are internationally recognised. Recognising that, we have agreed that we will not now go ahead with the replacement of further enhancements to that system, because people are happy with it. It is working well, and technology makes it possible for those parts of the system to talk to other parts.

We are looking at the system again in a new financial context, but the technology also makes possible other developments that were not available to us when the programme began. It is right that we should always re-examine the system in the context of current developments.

In rejecting the siren voices from those on the Opposition Benches, who clearly know very little about computer systems, may I ask my right hon. Friend to undertake some research into the productivity gains that some of the systems have produced? As a customer of the health service over a number of years and from discussions with consultants, I can say that it is unambiguously clear that massive improvements have been made. However, they need to be studied and published, so that people understand properly the value of that incredibly sensible investment.

I could not agree more with my hon. Friend. For instance, the widespread use of the choose and book system in general practice makes it much easier for GPs to have direct access to referrals in secondary care. I would argue that that cuts out significant amounts of time in the referral process. It is also better for patients, because they can see in their GP surgery, and have explained to them, the options open to them in booking a secondary appointment. I agree entirely with my hon. Friend: there are huge productivity gains to be had for the NHS and it is right that we press on with the system.

I am left gasping by this woeful performance. The Secretary of State talked about GPs doing well, but GP Systems of Choice was the reason why they were doing well—and that system came before the national programme. It is also no accident that he referred to digital scanning. That was added to the programme in September 2004, and it is an example of something that worked; it had nothing to do with central patient records. I could go on about this for ages, but you would not let me, Mr. Speaker. Can the Secretary of State explain how the NHS could not operate without the system, as he says, while at the same time the Chancellor of the Exchequer says that it is of no value to the front line? Which is it?

I said clearly that there are elements of the scheme that can now be pared back. I also made it clear that one of those elements was the enhancement to the GP system, which is unnecessary because GPs are happy with how the system is working now. If the hon. Gentleman is saying that there have been no benefits for hospitals from the PAC—picture archiving and communications—system, I do not agree with him. There have been significant benefits for patient safety and the reduction of errors. The strong support from clinicians for the system that they now have refutes what the hon. Gentleman has just said.

In conducting the review, will the Secretary of State also look at the business service authority’s plans to outsource its IT infrastructure? In doing that, it has ignored the views of the work force about where the greatest savings could be made.

My hon. Friend raises a separate issue, and I promise to come back to him with a detailed reply. It is important in the coming period for the NHS to make savings from back-office functions. That is the right thing to do in the current climate, so that we can put every possible support into the NHS front line. I will give my hon. Friend a detailed answer on shared business services.

The history of this Government’s involvement in major IT projects has been woeful, as was confirmed by the latest Public Accounts Committee report. For future reference, will the Secretary of State explain why this major IT programme was imposed from the top, rather than being user led?

It was both. There was a clear drive to improve IT across the NHS, and I make no apology for that. To support the reform in the NHS that this Government wanted to see, we needed a better IT system that reflected a national health service, and could be interoperable across the huge NHS system. Choose and book has facilitated the policy of giving patients choice, and I have mentioned the GP2GP system in which whole patient records can be transferred electronically. That will soon support the abolition of practice boundaries, so that people can have a full choice of GP. We are supporting reform in the national health service, but we have listened at all times to the voices of the clinicians. That is why they have come out today and strongly supported the system.

A quarter of all prescriptions go to pharmacies electronically; I think that that involves about 155 million prescriptions. How will my Friend’s statement today affect the future of the electronic prescription service?

My hon. Friend is right to focus on the potential benefit of electronic prescribing. In my view, it could be further developed. He cites a figure for electronic transfer between GP surgeries and pharmacies, and I think that there is scope for further progress so that we could move to a paperless system for prescriptions. I will give him an update in due course, but this is an important area that is working. As I said in my statement, where the system is working, we will press on and ensure that we derive full benefits for the NHS front line.

If there is any further delay in the summary care record, will the Secretary of State look at the work being done by Coventry university and the City university, London? They are producing a most exciting, cheap, simple, personalised smartcard with an extendable memory stick, which could solve most of the problems of the summary care record.

I can give the hon. Gentleman an assurance that I will take a look at that particular system. As I said to the hon. Member for Somerton and Frome (Mr. Heath) a few moments ago, as we hear of good practice around the system and as developments in technology make it possible for new developments to be considered, it is always right for us to reflect on them to see whether we can improve the system. Knowing the hon. Gentleman as I do, I suspect that that initiative has the strong endorsement of clinicians and has been led by clinicians, so I give him the assurance that I will take a further look at it.

Of the NHS IT programme, the Secretary of State said earlier today in the House that the Government would “only pay once it has been received and is operational”. As a measure of the proportion of the NHS IT programme that is operational, will the Secretary of State tell the House what percentage of the cost has been paid by the NHS so far?

I have a precise figure, but it is not in front of me right now. I can tell my hon. Friend, from memory, that I believe that about 40 to 50 per cent. has been paid out so far. While the overall contract value has not changed, with this contract we pay only as we receive the benefits. I will come back to my hon. Friend with the precise figures. As of today, however, we are making clear our intention to make £600 million savings from the overall contract value, which will be achieved by paring back elements of the system that we do not believe are any longer necessary.

Will the Secretary of State please say what the effects of the proposed cuts will be on the interoperability of the English and Welsh NHS IT systems? This has already been a cause of concern to, among others, the BMA in Wales.

I am afraid that I will have to reply later to the hon. Gentleman about whether the changes that we are announcing today will have any impact on hospital administration in Wales, but I give him an assurance that I will come back to him on that subject.

We all listened with interest to the Secretary of State’s excuses, and with some disbelief to his comments. However, can he advise us whether the taxpayer is likely to face any contractual penalties after his statement today?

We have relationships with the commercial sector here, and as I said in my statement, some are commercially sensitive. We want to deliver a successful system, while also recognising that the companies involved have contractual commitments. We are working through those issues; that is why I gave a broad update on the discussions. I am sure that the hon. Gentleman would accept that I cannot go into much more detail. Let me make one further point: this is about delivering a system that is affordable, but also does a good job. We are not going to do it on the cheap, as the hon. Member for South Cambridgeshire (Mr. Lansley) suggests. I fear that the proposal to hand over the job to Google or Microsoft, or whoever else the Opposition have in mind, would simply not do a secure job for the NHS. If the hon. Gentleman wanted to do things on the cheap, I think that he would pay the price later.

It is absolutely unbelievable that the Secretary of State can come to this House without knowledge of the contingent liability to the NHS resulting from the cancellation of the contracts. Will he please say now what the contingent liability is, and stop dodging the question?

That is not what I said; perhaps the hon. Gentleman was not listening or paying attention. We have a contractual commitment and, as I said to his hon. Friend the Member for Bexleyheath and Crayford (Mr. Evennett) a moment ago, the discussions are commercially sensitive. I am afraid that I am not going to go into those details on the Floor of the House today, although if I can provide the hon. Gentleman with any further details through correspondence, I will do so.

With permission, Mr. Speaker, I would like to make a statement on “Putting the Frontline First: smarter government”, a Command Paper that I am presenting to Parliament today.

This Government are very proud of Britain’s public services and Britain’s public servants: our doctors and nurses, who treat 1 million people every 36 hours; our police teams, who have brought down crime by a third; the teachers and support staff in our schools, who have helped record numbers of young people get record exam results this year; our job centre staff, who have helped 2 million people move off unemployment since last November; and, of course, our armed forces, serving with such distinction in Afghanistan and around the world.

We always knew that with the right backing, Britain’s public servants could transform the quality and standards of public service in this country, and over the last decade they have—not by some happy accident, but by the work of careful design and determined investment. NHS investment has doubled, education investment is up by 60 per cent. and investment in public order and safety is up by 50 per cent. All that was achieved while over-delivering by 20 per cent. on our Gershon review savings of £26.5 billion in the three years to 2008.

Thanks to that effort, we have reached a point at which the investment gap that we inherited in 1997 has been fixed. We have not only reached but exceeded international averages for spending on education and health. We are at a turning point. In the decade ahead we can capitalise on the great strengths that we have created, and set out a new way of driving standards in public services up, while we drive the deficit down.

I am laying before the House today a Command Paper showing how the Government will set about that task in the years to come. It draws together more than 12 months’ work from literally thousands of people across public life, the private sector, charities and voluntary groups. I particularly thank Sir Michael Bichard, Sir Tim Berners-Lee and Nigel Shadbolt, Martha Lane-Fox, our efficiency advisers Gerry Grimstone, Lord Carter of Coles, Martin Read and Martin Jay, and those from across the third sector who have advanced the relationship between Government and civic society.

Today’s Command Paper summarises what we have learned from that work, but our starting point is a relentless focus on standards. We are ambitious for Britain’s future: we know that we can do well in the years to come. However, we know that if Britain’s families are to do well in the future, they will need first-class public services to support them. We will make first-class standards in public services not a privilege for the few but the right of all, by setting out—in health, education, policing and, in time, social care—new entitlements to high-quality public services, backed where appropriate by the force of law.

To help citizens to hold local services to account, we will revolutionise the free availability of comparative information on police efficiency, hospital costs, and Government and local authority spending. We will ensure that services, where they can, fit in with the demands of modern life by putting more services online, and we will redouble our efforts to persuade more people to use the internet. Today I can announce the provision of a further £30 million with the aim of getting 1 million more people online by 2012. We will free public data created using taxpayers’ money, including Ordnance Survey mapping and boundary information. We will make it easier for civic society to contribute to public life by pressing ahead with a new social investment bank, and by testing social impact bonds.

Our second principle will be to free up the front line to innovate and collaborate by cutting back on ring-fenced budgets and national targets. I am therefore setting out today 10 steps that I, with the Secretary of State for Communities and Local Government, have drawn up to provide local councils with a range of trading, joint-venture and regulatory flexibilities. I believe that if we set in place strong rights to high standards and free up the front line to innovate, we can cut overhead costs at the centre.

We are already on track to deliver £30 billion of savings between 2008 and 2011, but today I am setting out steps to save £12 billion more, and in the pre-Budget report we will set out further difficult choices that will have to be made if we are to halve our deficit over four years.

First, we will reduce the costs of the senior civil service. I am announcing today that we will reduce senior civil service costs by 20 per cent. by 2012-13, and seek to move 10 per cent. of civil service posts that are currently in London and the south-east to other parts of the country in the medium term.

Secondly, Bill Cockburn, chair of the Senior Salaries Pay Review Body, will review senior pay across the whole of the public sector, reporting to Government in time for next year’s Budget. In the meantime, I will personally review all proposals for salary offers above £150,000 set by Government.

Thirdly, we are publishing today plans drawn up by all Secretaries of State to increase the administrative efficiency for which they are accountable in human resources, IT, collaborative procurement and asset management. I am also publishing benchmarking information for all central Government Departments and major agencies, showing exactly where we will focus to deliver £9 billion of efficiency savings over the next few years. I am also today setting a goal of saving £1.3 billion by putting services online, halving the consultancy bill and reducing our marketing spend by a quarter.

Fourthly, I am announcing today the first results of a comprehensive review of arm’s-length bodies, which will report by the time of the 2010 Budget. We will save £500 million a year from changes introduced by the review, and as an interim step we will abolish or rationalise 123 arm’s-length bodies, subject to the necessary consultation and legislation.

Finally, I believe that, as part of this new future, the Government must either sell or transfer to different owners the things they no longer need to own. I am therefore publishing today an asset portfolio listing the state-owned assets that Government can commercialise over the medium term. It includes options for the future sale of the Tote, the student loan book, the Dartford crossing and the high-speed rail link, and potential alternative forms of ownership of British Waterways agreed by myself and the Secretary of State for Environment, Food and Rural Affairs. Our policy will also include a new approach for testing where publicly owned assets should be transferred for use by the third sector.

The Government believe this country is both richer and fairer for the strength of our public services. We will never compromise on high standards, but neither will we ever compromise in our search for value for money. Today’s Command Paper sets a new path for the future that draws on the strengths created through a decade’s work, and I commend it to the House.

I am grateful to the Chief Secretary for letting me have a copy of his statement in advance—not that it, or the Prime Minister’s speech this morning, tells us anything much that we have not heard before. The paper is a series of reheated announcements that underline Labour’s failure over 12 years to get to grips with public service reform and to cut the waste and inefficiency that have been allowed to multiply.

We were told that all services would be available online, but Tony Blair pledged in 2000 that all services would be available online by 2005, and they were not. The Government tell us they will roll out a “tell us once” service for births and deaths, but they have already told us about “tell us once” three times. There is also the reannouncement of the sale of the Tote: that is a 1997 manifesto commitment that has been reannounced several times since, most recently about six weeks ago at that Dispatch Box. The story is the same for crime mapping, ring-fencing, NHS tariffs, e-auctions, and so on and so on. In addition to the reheated announcements, there is the usual sprinkling of stolen policies: the quango cull that the Leader of the Opposition announced in July this year, and the high-level sign-off for top public sector salaries.

There are also the pledges to undo some of the damage the Government themselves have done during their 12 years in office. The Prime Minister said in this morning’s speech that the Government will cut marketing and communications spend by 25 per cent.—after more than quadrupling it since 1997. Since 2000, they have poured billions of pounds of taxpayers’ money into unreformed public services, borrowing and spending like it was Monopoly money, and talking about efficiency but never delivering it.

That has happened not because the Government do not understand—the Prime Minister said in a speech to the Institute of Directors in 2001:

“The efficiency we seek in the private sector we demand in the public sector…Government at every level—national, regional and local—must raise its game.”

It is also not because they did not have good advice—tens of thousands of man-hours spent on reviews and report writing have identified tens of billions of pounds-worth of potential efficiencies. But the Government have not been able to translate that into real cashable savings. Gershon identified £21.5 billion-worth of savings, and while the Chief Secretary has just claimed some fantasy figure for delivered Gershon savings, the National Audit Office says the Government only delivered £3.5 billion in real, hard cashable saving. That is less than 0.1 per cent. of total public spending over the period in question.

Today, Sir Peter Gershon has joined our public services advisory board, along with Mr. Bernard Gray, the author of the defence procurement report whose conclusions were so damning that the Prime Minister tried to suppress it, and Dr. Martin Read, whom the Chief Secretary has just mentioned and who chaired the Government operational efficiency review. They will advise us as we develop our agenda for a truly radical, bottom-up reform of public service delivery, based on the principles of transparency, alignment of incentives, freedoms to innovate and support for change. They will help us to deliver a genuine culture change in Government and public services by ensuring that efficiency gain and productivity improvement become a central part of the day-to-day business of our public sector, not some alien imposition visited upon it whenever an election is approaching.

The truth is that our front-line public services can be protected for future generations only by genuine reforms—reforms that will close the productivity gap and ensure that those services are affordable for future generations. For 12 years, Labour has demonstrated that it can talk about efficiency but it cannot deliver. The Government’s record speaks for itself. Between 1997 and 2007, according to the Office for National Statistics, public sector productivity fell by 3.4 per cent. while private service sector productivity grew by more than 20 per cent. That is a measure of the scale of Labour’s failure on public sector efficiency. When the Government have failed so comprehensively for 12 years, why should anybody believe that they will succeed with this mishmash of reheated announcements and stolen clothes in the dying months of their rule?

The Government are ducking the hard questions. The Chancellor is talking about reducing spending while the Prime Minister is making new spending pledges at his party conference and the Schools Secretary and the Transport Secretary are telling us that their budgets will not be cut. Will the Chief Secretary confirm today that there will not be a departmental spending review before the Budget in the spring? Is that what the Chancellor of the Exchequer was telling us yesterday?

As the Chief Secretary has adopted a raft of our policy proposals, let us see whether he will match some of our pledges. Will he, for example, match our pledge to cut by one third the administrative cost of Whitehall bureaucracy and quangos during the lifetime of the next Parliament, saving £3 billion a year for the front line? Will he cap the biggest Whitehall pensions, as we have pledged to do, so that the taxpayer will not contribute any further to pensions that are already worth £50,000 or more? Will he give some clear purpose to these efficiency savings by matching our pledge to deliver real-terms spending increases year on year to the national health service, protecting our most important public service?

The Prime Minister said in his speech this morning that

“there will be no hiding place for Ministers or civil servants who fail to drive increasing efficiencies”.

Let me tell him that there is no hiding place for a Prime Minister who has not only failed to deliver value for money in public spending, but been the roadblock to real reform for a decade. Today’s offering is too little and, for the Prime Minister and his Government, it is too late.

May I say for future reference that the response from the Opposition Front-Bench spokesman was longer than the statement itself, and we really do not want that to happen again?

I shall be brief in my reply, Mr. Speaker. That was an extraordinary response. The hon. Member for Runnymede and Weybridge (Mr. Hammond) claims that there has been no reform in public services. Crime down by a third is reform. He says that there is no reform, but exam results are 50 per cent. better for our young people. That is real reform. He says that there is no public service reform, but getting people in to hospital in four and half weeks instead of 18 months is real reform that the public care about.

The hon. Gentleman prayed in aid the NAO. The truth is that when the NAO considered the Gershon savings, it said:

“Projects across the Programme are making”

real

“improvements to the efficiency of public services.”

It went on to say that all of the £26.5 billion savings met the most robust category in its conclusions. The hon. Gentleman went on to talk about productivity and tried to pray in aid some contributions from the ONS. Of course, the ONS said:

“These are experimental statistics and work continues to develop the measures.”

I know that there is a taste for experimentation among some people on the hon. Gentleman’s team. I hope, however, that it does not extend to the selective use of statistics.

The hon. Gentleman talks about our matching his plan to save £3 billion from Whitehall. We are saying that we will save £12 billion, not only from Whitehall but from the wider public sector, over the next three to four years. Of course, there are a few proposals that I have examined in drawing up these efficiency plans today. I could, for example, have set out proposals to scrap ID cards, which I was told by some quarters would save £2 billion. In fact, on closer inspection, it turns out that that would save no more than £50 million to £100 million. I was told that abolishing regional development agencies would save “a huge amount.” It turns out on closer inspection that it would save merely £180 million. I was told that capping public service pensions at £50,000 would save hundreds of millions of pounds. In fact, it turns out that it would save but a small fraction of that. I was told that taking child credits away from families who earn more than £150,000 would save £400 million a year, but it turns out that it would save only £45 million a year. I was told that bringing forward changes to the retirement age could save £13 billion a year, but it would make no impact whatever on the deficit in the next Parliament.

The truth is that every one of those proposals was put forward by the Conservatives, but it turns out that none of them was worth the paper it was written on. No wonder the hon. Member for Runnymede and Weybridge has had to hire a group of Government advisers to answer an SOS—stand up our savings—from the shadow Chancellor, and no wonder he told us this morning that the front line would suffer under the Conservatives, because he has nothing else to pay for the £10 billion-worth of tax cuts that he has promised to people who are rich enough not to need them.

Much of the statement is uncontroversial and, indeed, blindingly obvious. Let me start with the efficiency savings. Is not there a basic problem with announced efficiency savings in Government? If they knew that there was inefficiency, why had not they dealt with it already? To what extent is this new?

Let me pick up on a particular item to clarify what the Government are doing. They say that they are cutting the consultancy budget by 50 per cent., but 50 per cent. of how much? What is their consultancy budget? There are estimates that it could be in the order of £20 billion. We discovered on Friday that they are paying more than £100 million a year for consultants who are advising on the bail-out of the banks alone, so what is the consultancy budget that is now being cut by half?

The Chief Secretary said that he is personally going to vet pay of more than £150,000 a year. He is going to be a very busy man. How many people in the public sector are paid more than £150,000 a year, whose salary he will vet personally? Are we talking about GPs and dentists, heads of quangos and the dozens of people in the BBC who are paid more than the Prime Minister? Whom does he mean and how many of them are there? Are we talking about hundreds or thousands of people?

The Chief Secretary also suggested that he will save lots of money by reducing the number of targets for, and the amount of, monitoring of local government. That is admirable, but I understand that the Government currently spend £1 billion to £1.5 billion on various audit bodies, notably the Audit Commission, in overseeing local government. How much of that budget will be saved and how many officials who are employed in overseeing local government will no longer be required? If he is genuine about restoring autonomy to local government, why does not he consider ideas such as giving them significantly greater freedom over the business rate system?

Let me make a specific point. The Chief Secretary says that the Government are to give away, free of charge, data from the Met Office and the Ordnance Survey. That sounds straightforward, but those organisations survive by selling data, so if they have to give their data away for free, how will they function as organisations, especially now that the Government plan to privatise them? How can the Government privatise organisations that do not have any income?

I am grateful for the hon. Gentleman’s welcome for at least some of these measures. I think that there is a direction of travel in some of the reforms that Liberal Democrat Members will welcome, not least the move towards greater freedom and flexibility for local authorities. When he has had time to study the report in some depth, I think that he will welcome some of the flexibilities that we have talked about. On Wednesday, my right hon. Friend the Chancellor will announce further measures, which attempt to bring a degree more freedom from the regime of inspection and performance setting that has helped to drive up service standards over the past 10 years. We will be able to retire some of that regime in the years to come, and there will be significant savings as a result. It is right that many of the relevant reductions in targets should wait until the next comprehensive spending review, so that the plans that are drawn up reflect the resources that are provided.

The hon. Gentleman asked some specific questions that I will try to answer. First, he asked about consultancy bills. My goal is to save about £512 million from the consultancy bill by 2011-12, by reducing it by 50 per cent. He asked about pay, and I reiterate that we have asked Bill Cockburn, the chair of the Senior Salaries Review Body, to draw up proposals on how to bring greater transparency to the system of setting senior sector pay and how to make sure that value-for-money bodies such as the Audit Commission and others are given a greater role in scrutinising those offers. The simple answer is that I believe that too many people are paid more than £150,000, and my goal is to exert downward pressure. That is partly why I say that we should cut the costs of, for example, the senior civil service by 20 per cent. in the next couple of years.

On data, we must get the balance right. Organisations such as Ordnance Survey can make a great deal of money by supporting specialist engineering and mapping companies with high-quality data. Ordnance Survey runs one of the best—if not the best—mapping services in the world. When there are opportunities to make available information such as low-resolution maps or boundary data, the public should be able to get hold of it free of charge.

Does the Chief Secretary agree that some of the biggest public expenditure is on late intervention and is the cost of failure—of prisons, magistrates courts, welfare benefits and so on? Does he therefore accept my welcome to the green shoots in the Green Paper, including the social investment wholesale bank—perhaps we can tidy up the names—and the social impact bonds? Those constitute early intervention and are cheaper and much more efficient because they ensure that society benefits from the consequences of success, rather than suffering those of failure.

May I put on the record my personal thanks to my hon. Friend for his work in not only championing new approaches to early intervention, but bringing pressure to bear on finding innovative forms of social finance? Social impact bonds appear in today’s Command Paper partly because of his work in lobbying for such change. In my authority of Birmingham, we have found that investment in early years can produce savings later in life. I think that Birmingham city council found that for every pound invested in early years, something like £4 could be saved in the criminal justice system later. Sometimes, different agencies from those responsible for early intervention reap the rewards of such intervention. Social impact bonds are a new way of bringing some of the incentives back into line. It is therefore right to test them out.

The Prime Minister said this morning that in health, schools, policing and social services, there had been

“excessive salaries and unjustified bonuses”.

Why were they allowed?

The hon. Gentleman knows that in the British administration a great deal of flexibility is given to, for example, local authorities. That is why it is right to look hard now at not only what constitutes the right level of pay for senior executives in different parts of the public sector, but the legislative changes that may be required to enable Ministers, when necessary, to exert downward pressure. I do not think that such legislative power is currently available in some parts of our public life, such as universities, further education colleges or local councils, but we have asked Bill Cockburn and his advisers to tell us a little more about that.

I am delighted that my right hon. Friend is looking to scrap or rationalise 123 quangos for starters—not before time. One chief executive of a quango told me that he was on £1,000 a day. That is disgraceful when there are public sector workers at the bottom who are paid £10,000 a year. We need to protect them and keep them in work to keep the economy going, and we need to ensure that we get rid of some of the fat cats.

There are obviously some complicated parts of public administration in this country. For example, the health service is a big and important organisation, which spends somewhere north of £90 billion a year. We want first-class people running such organisations. However, in such times, it is incumbent on senior leaders in public life to show leadership on pay. The Government have therefore said to the pay review bodies that we expect a pay freeze for the senior civil service, and pay awards of no more than zero to 1 per cent. for civil servants more generally.

The Chief Secretary has talked about reducing senior civil service costs by 20 per cent. by 2012-13. What has he planned for redundancy costs? Will redundancy be voluntary or involuntary?

Obviously, we hope to achieve most of our cost savings through voluntary redundancy, natural wastage and so on, but I certainly cannot stand here today and rule out the possibility of compulsory redundancy. The hon. Lady will know that we introduced reforms last week to the compensation arrangements available to civil servants, which are projected to save something like half a billion pounds over the next couple of years.

The Chief Secretary will remember—and you will, too, Mr. Speaker—that about six weeks ago, I asked him about this crackpot proposal to privatise the Thurrock-Dartford crossing. I asked how it was going to be done and what his brief said, and he held up a blank sheet of paper. He will understand why I am irritated. What is the answer to my question of six weeks ago, and how is he going to do it, bearing in mind that tolling is only allowed under the European directive as a mechanism against congestion? It is not a cash register for the Treasury. How does he propose to sell this and offer the purchaser some return? I just do not understand it; it is crackpot—daft.

I am grateful to my hon. Friend for that question.

What is the answer?

The answer is that there is no European or other legal impediment to the proposal that we have introduced for the future of the Dartford crossing. My hon. Friend will know that it remains within the Government’s power to regulate tolls on the crossing.

Will the Chief Secretary do me a very great favour? Will he read an account of Britain after 12 years of Labour rule written in plain, simple English, shorn of the jargon with which his statement was laden? It is “Bog-Standard Britain” by Mr. Quentin Letts.

Sometimes I am forced to read the words of Quentin Letts, but I tend to avoid it when I can.

Will my right hon. Friend reflect on the exchange that took place earlier today about disability living allowance, and look at this as an opportunity to re-examine business processes and why we do things in a particular way? There are lots of areas in which we can make significant productivity gains by making delivery more customer-focused. DLA is a classic example, but the relationship between, for example the Department for Work and Pensions and housing benefit is another, and there are many others in which a more customer-focused approach would benefit not only the customer but the Treasury, too.

My hon. Friend is right and, as I said, I am particularly grateful to Sir Michael Bichard and public servants across 65 local authorities and a number of constabularies and primary care trusts who are looking at how we can bring together the administrative services run by central and local government to eradicate exactly the kind of inefficiency to which my hon. Friend points. We will have more to say about how we take those findings forward in the Budget next year.

I thank the Minister, both for the statement and for giving us early sight of it. Some of the measures are sensible, not least the ending of ring-fencing for council budgets. The Scottish Government have already done that. At its heart, though, this is £12 billion of additional cuts, some beginning next year, over and above the 10 years of austerity promised by Lord Mandelson. Given that even the CBI has argued that additional fiscal tightening should not take place until 2011-12, lest it risk a fragile recovery, what steps has the Minister taken to ensure that the cuts in the document do not lead to the weakening of recovery from recession?

If we want to grow our economy in the years to come, we have to make sure that we have strong public services in this country that stand behind families who want to get on in life. The hon. Gentleman knows that if we want to raise standards in public services at the same time as halving our deficit, we must make sure that our economy grows and that we make the right decisions on public spending and on tax. That is a presentation that my right hon. Friend the Chancellor will make to the House on Wednesday, but the hon. Gentleman will surely admit that if we want to raise standards and investment in front-line services, it is right to look for inefficiencies that we can cut at the centre of government, and today’s plan sets out a way to do that.

I am very pleased that my right hon. Friend has decided to keep standards at the top of his agenda and to axe many of the targets and inspectorates that maintain those standards, but can he elaborate on how he expects consumers of monopoly suppliers who know no other standards to raise those standards? What role does he see for professional external scrutinisers in maintaining or raising standards?

There are two ways in which we can exert greater popular pressure to push up standards in front-line services. The first thing that we can do is set out a range of guarantees to high-quality public services. That means, for example, the right to see a cancer specialist within two weeks if a specialist is worried that a patient has cancer, the right to a good local police team and the right to one-to-one tuition for a child who is falling behind at school. With those rights in place, it is much easier to judge whether public services are delivering for consumers. That is why, in today’s Command Paper, we have set out steps to free up the kind of comparative information that allows people to see how services in their area are doing compared with others, and whether they are performing in a more efficient way than others.

Neither in the statement nor in the earlier urgent question has the Minister made it clear how much he will save on the NHS supercomputer. The NAO says that the Government have spent £3.6 billion already. Can he confirm that that figure from the NAO is accurate?

I would need to check the date of the figure that was published by the NAO. The basic point is that, at a time when we are trying to drive standards up and the deficit down, in some parts of Government we will have to make difficult decisions about whether programmes that are in place are contributing enough to front-line care or whether they can be put off. There will often be difficult decisions. The decisions that we have set out in the Command Paper are difficult but doable.

Will not the smarter state end up looking very stupid if we outsource, sell off or transfer to the private sector and then are ripped off down the line? Are there any functions from which the Government intend to withdraw entirely? Does my right hon. Friend worry, as I do, about the morale of those working in a public sector that is constantly denigrated and told that it is useless?

I do not have quite the same apoplectic vision of public service reform as my hon. Friend. Sometimes there are efficiencies to be had through outsourcing certain services, particularly in finance, IT and so on. I make no apology for that. The prospectus that we set out this afternoon will be enthusiastically received by front-line public servants, not least because of its promise of greater freedom to innovate and do things in a different way locally.

I do not know whether the Chief Secretary has been watching too much of “Bargain Hunt”, but it is clear that the Government are keen on selling off the family silver. His listed a raft of things that would be sold off, but he did not mention Urenco. Will that still be sold off?

We will certainly explore options for commercialising our stakeholding in Urenco, yes.

I welcome my right hon. Friend’s statement, but I urge him to go a little further in respect of quangos. He suggests saving only £500 million by abolishing or rationalising 123 of them. May I ask him to give me an early Christmas present—less quango for Marris?

I think I can promise that. The final report from the review of arm’s length bodies will be published at the Budget next year. The 123 arm’s length bodies that I set out this afternoon are merely an interim step.

On a point of order, Mr. Speaker. During his remarks in response to me earlier, the Chief Secretary referred to the Opposition hiring certain former Government advisers to advise them. Would the right hon. Gentleman like to take this opportunity to make it clear that he understands that no money is changing hands in any of these transactions, and that anyone who has made the decision to advise the Opposition has done so because he believes that that is in the best interests of this country?

The Chief Secretary may offer a brief reply if he wishes, but he is not under any obligation.

I am happy to offer the clarification that that is my understanding. I spoke to Dr. Read last night and he made that point to me very clearly.

I am grateful.

I beg to move, That the Bill be now read a Second time.

Today is an appropriate day to discuss the Energy Bill—at the opening of the Copenhagen conference and before the ministerial meetings that will take place in its second week. Those talks are an essential part of the context of the Bill that we are debating, and in the past two weeks we have seen signs of progress from China, India and the United States. They have all put targets on the table, and we are determined to use our influence to get the best agreement that we can, consistent with the science. We are determined also to show the maximum ambition in our own plans, and that explains the Bill that we have brought before the House.

Given recent events, I should also like to say that we are here to debate a Bill that is driven in large part by the science of climate change. It is important to take this opportunity to restate briefly the case on the science, because it underlies today’s debate. The science is not from politicians, but from scientists: the Intergovernmental Panel on Climate Change, whose work is based on 4,000 experts; the national academies of science of the G8 developed countries and the five leading developing countries; and, here at home, the Met Office, the Natural Environment Research Council and the Royal Society. All those organisations are clear that the science is unambiguous—that climate change is real and man-made.

Of course the science is not static, but we must not somehow suggest that robust and near universally accepted science is merely of equal validity to the views of a very small minority of people, many of whom are not scientists. Importantly, one chain of e-mails does not undo decades of climate science, and particular responsibility lies with Members of this House and, indeed, of the other place not to seek to sow doubt or to replace the view of the science with their prejudices.

Does the Minister share my concern that the media—some of the tabloid press, in particular—choose deliberately to misrepresent the science just to sell a few more papers?

I actually think that, by and large, members of the press, including the tabloid press, have during this year embraced the idea of climate change and the need to tackle it. However, the hon. Gentleman makes an important point: in this process, we rely partly on the press to make clear the burden of evidence and views and where they lie, and, indeed, the balance of views and where they lie. Anything that the press can do to help us to make that case is very important, because we are debating difficult decisions—and nobody should be under any illusion that they are not difficult. If people come away with the impression that the science is somehow not settled, or that there is an easy way out, we will face difficulties.

Does my right hon. Friend accept that the validity of the arguments and the scientific case for the existence of climate change is completely undermined by people such as Lord Lawson and the Conservative MEP Richard Helmer; and, that the Conservatives must do more to ensure that they align themselves with our policies and the policies that the British public want?

The truth is that we need as much of a consensus as we can get on these issues—from all parts of the House. That is very important, and that is why I emphasise the importance of us all showing responsibility, rather than setting ourselves up as scientists and somehow substituting for the views of the science. It is important that politicians act on the basis of the science, and that is what we seek to do.

The right hon. Gentleman talks about acting on the evidence of the science, but he knows that in the case of Heathrow airport, involving an important decision that will affect the environment, the only costed emissions were those of outgoing flights, not of incoming ones. How can he be serious about taking good decisions if his own Department does not get its maths right?

The hon. Lady has a long history of campaigning on this issue. I agree with her about the need to make decisions such as that on the third runway at Heathrow in the proper context. That is why we are the first Government in the world to say that we will stabilise aviation emissions at 2050 levels. Indeed, there will soon be a report from the independent Committee on Climate Change on that precise point.

The Select Committee on Science and Technology was in absolutely no doubt about the validity and strength of the case that climate change is happening and that it is the result of man’s activity since the industrial revolution. Even if some of the science can be questioned, the consequences for the planet and mankind are so dire that the precautionary principle should be observed, and I congratulate the Government on taking that line.