Examination of Witnesses(Questions 340-345)|
MP, MR ED
THURSDAY 18 JULY 2002
340. Yes, you did. When you did the 2000 CSR
announcement you also did not stick to those firm totals you announced
that day. You actually added more money on, did you not?
(Mr Brown) We were able to put more money into schools
and into the Health Service which I think was universally welcomed.
341. So on those two precedents this CSR that
you have announced this month, it is quite likely on your past
formyou have got a bit of previous on this, have you not?that
you will not stick to those fixed spending totals? You might within
the lifetime of this Spending Review allocate more money so that
the figure could be higher, could it not?
(Mr Brown) We have got to beat our fiscal rules. We
have got to meet the rules that I set down, which means that there
has got to be a current balance and also debt has got to be at
a sustainable level. The spending plans I have set down are affordable
and they are affordable on the basis of the revenues which we
342. But they could be increased? That is what
you did in the last two CSRs.
(Mr Brown) The spending plans could only be increased
if it was affordable to do so.
343. But you might do it?
(Mr Brown) We would have to base that on the meeting
of our fiscal rules. As I say to you, Mr Ruffley, and I said earlier
to you, we have set down our plans to 2006 and they are based
on the revenues that we have also set down that are likely to
be raised as a result of the measures that we have taken. The
key question on this is, can you meet your fiscal rules? We have
been fortunate enough to have done so over the last few years.
I believe that it is a test of this Government that we will continue
to meet the fiscal rules that we have set down over the next few
344. Chancellor, on page 167 of the Spending
Review document it shows real spending by department over the
Spending Review period. That shows that in every year of the Spending
Review in real terms defence spending would have been lower than
it was last year in 2001-02. Does that mean that you have pulled
a fast one in relation to the perception of the settlement and
do you know if there is enough money in this Budget if we have
to fight a war in Iraq?
(Mr Brown) Again, I do think the Committee must look
at how these things work in practice. Where the settlement is
drawn on the Ministry of Defence, it is for the full spending
round on the basis of the capability that they need to have, but
where there is an exercise entered into, in other words where
troops are sent to Afghanistan or alternatively to Sierra Leone,
as happened, or to Kosovo or to Macedonia, then there will be
money available from the reserve to meet the costs of this exercise
that was not foreseen and was not previously planned. What we
are setting out to 2006 is the spending plans to maintain and
in some cases increase the capability of our armed forces with
new equipment, with the proper staffing levels, with the investment
in the supply services to them, and that is absolutely right to
do, but we have also got to recognise that the spending figures
will be affected by the contingencies that arise where you have
got to finance the one-off or the decisions to have exercises
in particular areas, and that is how defence spending has worked
for quite a long period of time and it is a sensible way of doing
it. We have got to have them capable of taking action where it
is necessary, but equally where there is action we have got to
be willing to make provision from the reserve.
Mr Laws: I will take that as a yes.
345. Chancellor, a last question. On the 1998
PSA targets and this issue of productivity, and I know it is very
dear to you and indeed this Committee will be looking at the issue
of productivity as we go round different parts of the United Kingdom,
the target that was set down then was to put in place policies
to narrow the productivity gap relative to other industrialised
countries over the cycle, and the outturn is partially met. If
it is partially met did it partially fail as well? What input
has the fact that the Treasury only partially met this target
had on departmental funding and performance?
(Mr Brown) I think this is a very important question.
Our productivity target is essentially one for the years to 2010.
That is actually what we have said publicly. It would be wrong
to fail the Department of Trade and Industry because their target
is for the years to 2010. What we are doing in practical policies
is setting in place a regime for monitoring fiscal stability,
which is absolutely crucial to productivity, and then setting
in placeand this is the DTI's version of the Enterprise
Bill, as I say,the best competitive environment and that
is the reforms in the Competition Bill. We have tried to create
an environment that is inducive to investment and that is why
we have reduced corporation tax and capital gains tax and small
business corporate taxation. Equally, however, we know that the
reforms that are necessary to increase productivity in skills
and education will take some time and that is why the investment
is going into education. Infrastructure is important to this and
so too is the encouragement of enterprise. One of the things that
we did do in this Spending Review in addition to the extra funding
for education (important for productivity) was the extra funding
for science. The science budget is going up I think by 10 per
cent in real terms, a very substantial additional investment in
school, college and university science, because we believe that
that is going to be a very big driver of productivity in the future.
Yes, we have put in place a number of major reforms that are necessary
if you are going to be able to have the stability and the competitive
environment and the right environment for investment in place
to get productivity and growth and to achieve our aims by 2010.
Yes, in this review education is better funded, science is better
funded, services to small business and therefore to enterprise
are better funded. One thing I should emphasise is that enterprise,
education and schools are better funded. No-one will say that
what we did in 2001 or 2002 was going to yield a result in enterprise
education for schools in 2003, but the measures are in place for
the long term boost in productivity that we want to see.
Chairman: Can I say, Chancellor, that
as a Member of Parliament with a constituency adjacent to Glasgow,
the Fresh Fruit Initiative has been working well and I would like
to see it open out just as well into the fruit yielded this afternoon.
Thanks very much for your attendance. We look forward to meeting
you again in the autumn.