In the Liaison Committee yesterday morning I questioned the Prime Minister about the impact of the recession on the public sector. One main point of my questioning was to establish whether the Government’s current spending, and future spending plans, were sustainable in the midst of a recession, with government borrowing now at the same level (8 per cent of GDP) as it was in 1976, when Denis Healey went as a supplicant to the IMF.
As reported on one website Mr Brown did his usual stolid stonewalling. He even accused me of wanting to scrap the NHS’ IT Programme; something I have never proposed! As I said (as with most things) I just want to make it work efficiently and cost-effectively – something that is very far from happening at the moment.
You can find an overview of the Committee’s session this morning on the Guardian online.
Below is the transcript of my encounter with Mr Brown.
Q53 Mr Leigh: Good morning, Prime Minister. With the recession deepening by the day and with interest rates at an historic low and deficits at an historic high, what more can you do now to boost the economy without ruining it so that it really does become Crash rather than Flash Gordon?
Mr Brown: I do not agree with you. I think the action we are taking is absolutely essential and I hope that you would agree it was the right action to be taken.
Q54 Mr Leigh: No; I am not arguing with the past. I am just saying what more can you now do with interest rates at such a low and deficits at such a high?
Mr Brown: If you take what is happening, for example, the VAT cut, you have seen two months of the VAT cuts. It has got another ten months where it is going to raise the amount of money that consumers have in their pockets. You will see a number of measures that are coming in in the next few weeks and months that are dealing with the problems, as we have said, of loan finance for small businesses. The measures we have put in place will start to have their effect, and, of course, the Governor of the Bank of England has stated his policy to make sure that inflation gets to two per cent.
Q55 Mr Leigh: So you have shot the arrows and that is it?
Mr Brown: No, I did not say that at all. What I said was that a number of measures that we have announced will be coming in in the next few weeks.
Q56 Mr Leigh: But there are no more arrows you think we can afford?
Mr Brown: I am not going to get into predicting what is in the Budget at all.
Q57 Mr Leigh: We have seen that if we rush public spending, and there have been numerous PAC reports into the Rural Payments Agency, the NHS computer, we often get waste. As you bring forward your spending plans to boost public spending which was originally planned for 2011 how are you going to avoid waste?
Mr Brown: Because we have already, first of all, implemented the Gershon plans and we are going further than Gershon. Gershon, you may remember, wanted to achieve efficiency savings of £25 billion. At that point we decided also to reduce Civil Service numbers by a net 80,000, and I believe that has now been achieved. The Civil Service numbers are at their lowest for many years. Now we are embarking on the next set of efficiency savings after Gershon and that is a matter for the different departments to meet their commitments to meet these efficiency targets.
Q58 Mr Leigh: Actually, you are finding it fairly difficult already under current spending plans to meet your efficiency gains. The independent National Audit Office report in 2007 found that of the efficiency gains reported at that time one quarter fairly represented efficiency gains, so as you dramatically increase spending how are you going to ensure that you maintain the pressure on efficiency gains?
Mr Brown: What happened with Gershon was that he identified £25 billion of efficiency savings. That was a very big decision that we made a few years ago, to cut the number of civil servants as well as to cut the amount of leeway that departments had without assuring us that they had made efficiency savings. Since achieving Gershon we have pushed up the amounts.
Q59 Mr Leigh: No; that is precisely my question, Prime Minister. You have not achieved Gershon. The independent National Audit Office said that only one quarter fairly represented efficiency gains. We all know that achieving efficiency gains is the most difficult thing in Whitehall. Now you are dramatically increasing spending and we want to know how you are going to ensure that you meet your present targets.
Mr Brown: I do not accept that we have not met Gershon. We have met Gershon. I think it is generally recognised that what we set out to do with Gershon was achieved. It was £25 billion of savings. We achieved them before the time that we had set for achieving them. We reduced Civil Service numbers by a net 75,000 or 80,000; I cannot remember the exact figure, but that is what we managed to do, and we are embarked on a further round of efficiency savings. I think your question may be about what we are going to do in the next stage and I am quite happy to explain that to you, but I do not think you should doubt what we achieved in the last stage.
Q60 Mr Leigh: So how are you going to maintain the pressure now on efficiency?
Mr Brown: Because departments now have very tough targets that they have to meet in relation to efficiency for the future. You chose a number of high profile projects. I disagree with you about the NHS computer. I think it is a necessary project. I think the fact that it is a difficult project does not mean to say that it is not –
Q61 Mr Leigh: £12 billion spend, four years late, Fujitsu having pulled out, Lorenzo only working in one ward in primary care trusts. Do you think that is a great achievement, Prime Minister?
Mr Brown: And patients are getting electronic prescriptions now, people are being able to book their hospital appointments from their computer. You cannot say that that is not an advance, for all the huge problems that a huge project like that has created. You want to abolish it. I say that that is a necessary —–
Q62 Mr Leigh: I do not want to abolish it. I want it efficiently.
Mr Brown: No, you do want to abolish it, and I think that is a necessary —–
Q63 Mr Leigh: When have I said that?
Mr Brown: Your party has. I am glad we have now found that he disagrees with his party.
Q64 Mr Leigh: My last question is that you are going to rely —–
Mr Brown: I just say that with something like the NHS computer it is easy to say it is of no use to anybody, but actually it is providing the electronic prescriptions, doctors’ records are being kept, at the same time as providing a means by which people can book hospital appointments.
Q65 Mr Leigh: You are going to rely very much on the private sector as you boost investment. How are you going to ensure that projects like PFI do not suffer with a lack of private capital investment or that the burden falls on the taxpayer as they pull out?
Mr Brown: We have been looking, obviously, at the Private Finance Initiative and we have been looking at it in relation to the problems that private investors have. Many projects are still going ahead as planned, I just have to say to you, and many of the projects that we are looking at we believe we can find a way forward for, and I think you will find that the Treasury will announce what it plans to do in the next few days.