Examination of Witnesses(Questions 320-339)|
MP, MR ED
THURSDAY 18 JULY 2002
320. We are looking for clarity. The issue of
the dividing line between the Minister, the department, the people
who deliver on the ground and the integrity of the targets, that
is the issue.
(Mr Brown) That is exactly the point I was trying
to make earlier on. Again, this is part of the debate between
us and the Committee that in the same way as we made the Bank
of England independent, the Government set the objective that
those people who were charged with making the decisions were allowed
to get on with the job and you built around that an open system
of accountability where information flowed freely to the public.
That is in a sense the model on which we are working with public
service agreements. We set the objectives but it is up to the
individual organisations, particularly now with local service
providers, to get on with the job.
321. One of your partners, on the matter we
have discussed earlier, child poverty, your only other partner,
has stated in the book that Works and Pensions underspent (we
got the figures a day late but we got them) £440 million
on child poverty issues. Could you tell us what conversations
Mr Macpherson and his colleagues had with Works and Pensions?
That is a key one that you feel deeply about, child poverty.
(Mr Brown) Mr Mudie is actually referring to the New
Deal and it is actually because more people got back to work without
having to use the New Deal. If the New Deal underspends it is
a good thing because more people are getting back to work.
322. Chancellor, you should not listen to these
siren voices in your ear. You allocated the department much sought
after public resources, so they saved on one thing, New Deal,
but they have a 20-year target and we think they are well behind
on their target. I would take a dim view if I were Chancellor
of a department which was my partner in such a sensitive area
underspending £440 million.
(Mr Brown) I do not think that is a fair criticism,
Mr Mudie, if I may say so, because the New Deal is financed by
the windfall tax. It is in a sense a separate fund. It depends
on the demand for it and we have been quite happy to put in resources
to enable people to get the training to get back into work, but
obviously, because of the condition of the economy being in a
good state, it has been possible to get people back to work in
many instances without having to use the New Deal or only to use
the New Deal sparingly because they were quickly offered jobs.
If we underspend on the New Deal that is money available in future
for other employment projects, but to make decisions about child
benefit and about child tax credits and about income for families,
these are decisions that are made principally in the Budget in
relation to child tax credits and in relation to child benefit
by the reforms that we are making in the approach to children's
benefits as a whole. I would regard that £400 million less
as a failure and more as a success in getting people back to work
more easily than we had expected.
323. I would have regarded it as an opportunity
to move it across to the Sure Start part of the programme to get
more kids in nurseries.
(Mr Brown) I am happy to talk about Sure Start.
324. They underspent as well, Chancellor, if
you want me to give you the figures.
(Mr Brown) The important thing about Sure Start is
that while it is working well and all the experiments and pilots
in different areas have been successful, we are anxious as quickly
as possible to extend it nationwide.
Mr Mudie: We were also very united in
our disappointment about the so-called new audit and inspection
arrangements. We examined these and discovered that there were
probably no new arrangements; there was a bit of rationalisation.
This is the new people that you set up as part of the statement,
the new audit and inspection arrangements. When we went into them
in your Spending Review document, none of them is new. We are
just wondering why it got such a big place in the announcement.
325. There was an extensive exchange with Mr
(Mr Brown) We commissioned a health care audit and
326. That was the one that worried us.
(Mr Brown) It is bringing together in one single organisation
the work that is done by a number of organisations at the moment,
in particular the Commission for Health Improvement and the value
for money work being carried out in the Audit Commission for the
NHS. There was a very good reason for that, that as long as the
work was carried out by these different institutions it was not
properly co-ordinated and it was not yielding the scrutiny that
was necessary. I hope that you can support that, although I am
sure that there are very legitimate questions about how it is
going to operate. It is a good idea in my view to have this inspectorate
which brings together the existing functions of others.
327. Mr Macpherson on your right, a very sound
fellow, described the Audit Commission's work in health as very
effective as of yesterday. Today we are talking about taking this
work from a very effective (Mr Macpherson's word) organisation
and setting up a new body. The first thing is, have you told the
Audit Commission? Have you consulted with the Audit Commission?
(Mr Brown) This was announced in the Budget. There
was consultation with the Audit Commission and the work on this
is proceeding well and it has been legislated for in the National
Health Service Reform Bill, so these are measures that have been
thought out in detail and are moving ahead as a result of parliamentary
legislation, but it is to bring together the existing auditing
work that is done by at least two institutions at the moment into
328. Chancellor, we failed to get an answer,
despite some gentle questioning on the cost of this, the additional
cost. Do you have an additional cost? We agree that they have
been costed but we were not going to be privy to the costs. Are
you prepared to tell us? Was Mr Macpherson prepared to tell you
to tell us?
(Mr Brown) What I know is that by rationalising the
operational processes of two institutions into one there is an
expectation, indeed there is an understanding, that the administrative
burdens will reduce and therefore there will be savings.
Mr Mudie: So you are saved.
329. For much of the last hour my colleagues
have been trying to elicit an example of a department which you
punished as without a PSA process and I am not sure how realistic
an expectation that was. I just want to put an alternative view
to you. It would be a pity to leave the Committee with the impression
that the PSA process is divorced from the allocations. Would you
agree, Chancellor, that if a department consistently failed to
meet its PSA targets it would have a credibility problem when
it came to making bids for new allocations, that this would be
one way in which the PSA process would affect the next spending
(Mr Brown) This is exactly why reform is brought in.
If you are not satisfied with the way things are going and you
think things can be done better, that is precisely why a reform
agenda is agreed. I do not think anybody can say about this public
spending exercise that there is an absence of reform. The inspection
and auditing is one aspect of how departments are brought under
greater scrutiny, but equally I described in relation to schools
the process by which now departments are dealing with failing
organisations at a local levelschools, hospitals, how they
are dealing with prisons, how they are dealing with the Probation
Service, how they are dealing with local authority housing departments,
how they are dealing with social services departments. That is
an example of how reform is being brought in to deal with the
need for greater efficiency and value for money in the delivery
of the health services. I have said, and I repeat, that as far
as the departments themselves are concerned there has been a reorganisation
of one department, the Department of Agriculture, because it was
felt that it was too closely identified simply with farming and
it ought to be for the wider countryside. These are matters for
the Prime Minister, not for me. The Permanent Secretaries are
now on performance related pay and these are changes that have
been brought in.
330. Chancellor, in your spending plans you
have slightly increased the reserve that you hold back, very slightly,
as a proportion of total spending plans. By and large there is
nothing left. You have not held much back. Are you comfortable
with that, if something should go wrong?
(Mr Brown) The new system of three year budgeting
is basically that each individual department is supposed to take
far more care of contingencies as they arise than they used to
do when there was an annual spending round. You would expect a
department, and I gave you the example of health, to have provision
in case something was going to happen during the course of the
year. Obviously, foot and mouth, Afghanistan and other problems
that arise, that cause difficulties that cannot be foreseen, are
to be dealt with by the reserve.
331. Are you sure you have got a reserve that
is high enough to deal with it?
(Mr Brown) That is obviously an issue that you have
to look at from time to time but, as I say, the new system is
that departments themselves have got to plan for the provision
of the services for any contingency that arises and that is why
I was raising with you the question of an underspend, because
sometimes a department is expected to make provision for things
but that emergency does not arise.
332. Chancellor, Peter Mandelson not long ago
said that in an economic sense we are all Thatcherites now. Are
you a Thatcherite now in the economic sense?
(Mr Brown) I must say I thought this discussion was
to look at the public spending White Paper. We are spending more
money, not less. We are investing more substantially in improving
our public services because we believe that in Health and Education
the public services would do well. I think the policy pursued
by her Government is not the policy that we are pursuing. As far
as the expansion of enterprise is concerned, I believe that the
fault in the past was perhaps that enterprise was felt to be only
for a few and we are trying to open up the opportunities for enterprise,
small business creation, the chance to be self-employed, to a
far wider group of people so that the entrepreneurial economy
that was talked about in the eighties we are trying to make more
widely accessible to more people.
333. So the answer was no really?
(Mr Brown) I think the answer in terms of investment
of public expenditure is that we are expanding it whereas here
Government would like to have cut it. We are doing that because
we believe in a free Health Service and we believe in education
open to all.
334. So if I can just turn the question on its
head, does this mean that we can take it that this Spending Review
is a Socialist Spending Review?
(Mr Brown) It is a Labour Government Spending Review
based on the principles we set down in our manifesto and it is
based on enterprise and it is based on fairness, and that is the
Government's political philosophy that I am putting across and
that is opportunity for all.
335. Are you a Socialist, Chancellor?
(Mr Brown) I am a person who believes in fairness.
336. Are you a Socialist, Chancellor?
(Mr Brown) You have your own definition, I suspect.
337. You are an expert on it. You have written
books on it, Chancellor. I am a mere amateur.
(Mr Brown) I believe in policies that advance fairness
and equality of opportunity and some people would describe that
as social democracy; some people describe it in different ways.
338. Are you embarrassed that we never got to
(Mr Brown) I would be very pleased if the whole of
the Committee unanimously were to be able to say that, but I somehow
suspect that that is not the case.
Chairman: I do not think so, Chancellor,
and I will hand over to David Ruffley.
339. Chancellor, when you announced the 1998
CSR did you increase the spending totals during the lifetime of
that CSR? You added extra money on, did you not, after the original
(Mr Brown) Yes.