Business secretary’s statement follows Tory claims that Labour is trying to hide future cuts from voters
The government will not set out a fresh set of public spending plans before the next general election, Lord Mandelson confirmed today, as Gordon Brown prepares to launch the government’s programme for the year ahead.
The business secretary said future spending would depend on economic recovery but there would be a “reprioritising of expenditure both within and between departments”.
But pressed on whether it was correct that the government would not be setting out new spending plans before the election, Mandelson replied: “I believe that the chancellor has made that judgment, yes.”
The question, put to him on BBC Radio 4′s Today programme, follows Tory claims that Labour was trying to hide future cuts from voters.
“The spending period currently operating in government stretches beyond the next election and therefore it is reasonable to review public spending at that time,” Mandelson said.
A boost in social and affordable housing would be part-funded by money switched from the Home Office and Department for Transport budgets, he said.
Mandelson said it was impossible to predict how the economy would perform over the next two years.
“We are not in a position, in June 2009, to be able to forecast what growth will be and what the performance of the economy will be in 2011. That is why we have to wait.”
Any spending review now “would be based on entirely speculative projections of what economic growth will be”, he suggested.
“Therefore, what we have decided to do is to link our spending plans to reality rather than to speculation.”
Asked how the government could afford its new pledges, Mandelson said: “We have to live within our means as a government, and being fiscally responsible is an important principle of New Labour.
“So the new policies that are being unveiled today by the prime minister reflect a reprioritising of expenditure both within and between departments.
“To give you one example: he will be announcing a major boost in the provision of social and affordable housing over the next two years. That reflects a switch in spending both within the relevant department but also between the Home Office and the Department for Transport to the other department.
“So there are things that can and should be done and, although future spending will be conditioned … by the need to rebalance public finances, to pay down borrowing, our ambition to sustain higher levels of spending will be linked to the performance of the economy on growth and our ability to generate employment.
“And the prime minister will be explaining how we believe we can generate both growth and employment in order to pay for the public spending and investment we want to sustain.”
Asked if the government planned to trim spending in real terms, he said: “The spending review that will take place after the next election when the current review period has ended will take account of the state of the economy at the time.”
He accused the opposition of being committed to cut “come what may” to pay for tax cuts for the rich.
And he said the Tories were selling their soul to the private sector.
“The Tories, in my view, have entered into a sort of Faustian pact with producer interests in the public services; they are saying they will spend less on public services and they are also saying they will require less of them.”
The business secretary made the comments ahead of the prime minister’s unveiling of what is expected to be a series of policy shifts designed to give people more power over public services.
Among the most radical moves being put forward by the prime minister will be giving patients cash to go private if NHS Trusts cannot meet the 18-week target between GP referral and treatment.
Cancer sufferers would be able to take their funding elsewhere if they are not given a specialist appointment within two weeks.
Similar “entitlements” are being considered for accessing an NHS dentist, late opening hours for GPs at weekends, and getting palliative care at home.
The amount of money would be equivalent to the cost of the treatment on the NHS, and trusts that fail to meet their obligations could also face other financial penalties.
The changes are likely to be portrayed as a climbdown by Brown, who battled against less drastic Blairite efforts to involve the private sector in public services.
There are similarities to the “patient’s passport” policy dropped by the Tories after the last general election. Currently, only elective surgery such as hip replacements and cataract surgery is provided through private treatment.
However, after a series of dire poll results and leadership speculation, aides hope that a new policy platform can counter criticism that the government is “drifting” and get Brown back on track.
The prime minister will attend a series of events today to launch the Building Britain’s Future document.
Other pledges are expected to include freeing up local authorities on housing allocation so priority can be given to people with ties to the community. The BNP exploited anger over the perception that immigrants are pushed to the top of housing lists during recent local and euro elections.
There will also be a “significant” expansion of funding for social housing, and the scrapping of “top-down” targets across services, according to government sources.
The currency of high office
The prime minister’s big payday will come after No 10. So it is futile to use his salary as a public sector yardstick
Where’s the new benchmark for pecuniary excess? At Ronaldo’s prospective £560,000 a week as he races towards £18m a year in Madrid? At Stephen Hester’s Royal Bank of Scotland rescue level, £1.2m heading for £15m? But no: apparently no such giddy limits apply. The line in the financial sand, now drawn by David Cameron and Fleet Street alike, is just £196,250 a year. The benchmark is Gordon Brown.
“Up to 47 BBC top executives are paid more than the prime minister,” gasps the Mail in fury. A suddenly ubiquitous cry. Cameron wants all public servants paid more than Brown to appear before a star chamber of worth-assessment interrogators. And yet, on examination, it’s a figure that tells you very little.
Brown, on behalf of his groaning ministers, has ordered a pay freeze this difficult year. Well, he would, wouldn’t he? Margaret Thatcher, feeling the chill of 1979, did the same. Tony Blair, triumphant in 1997, exercised parallel restraint for a while. No 10 traditionally believes that you ease the pain by sharing it. Yet watch those mirrors glint and glide …
If you’re an ex-minister with expertise in the bank, you make your money when you’ve lost office, not when you’re struggling to cope with a department. Observe Patricia Hewitt, David Blunkett and friends as they accumulate directorships and consultancies in the £150,000 league (pending Brown’s supposed clean sweep of MPs taking second, third and fourth jobs). But if you’re a prime minister, then the really big paydays come once you’re not just out of power but out of parliament, once you’re a celebrity with reflected lustre to sell.
The easiest target here is Tony Blair. No one can cite speculation-free figures, but let’s say £12m or so in the first flush of leaving office: £4m for penning his memoirs, £2m from JPMorgan Chase, the odd £500,000 from Zurich Financial Services, upwards of $100,000 a pop for lecturing America’s very rich, plus £140,000 per annum in everlasting pension and office dues from a grateful nation. You don’t get that at the BBC.
And before we get lost in another bout of mere Blair-bashing, just look at John Major’s array of directorships and chairmanships over the years. They don’t call the Carlyle investment group the masters of the world (semi-retired) for nothing. Just look, too, at the Thatcher Foundation in its first halcyon phase of total opacity. Brown, when his moment to walk away comes, won’t really be playing Mr Chips on a teacher’s wage. He’ll be sitting on multinational boards, joining old statesmen’s clubs, flogging his life story to the Sunday Times, and generally making sure the manse roof is proofed for many decades to come.
Hypocritical? Not particularly, when you study the ways of these globalised times. Barack Obama rates $400,000 a year plus allowances at the White House, a sum neither Goldman nor Sachs would get out of bed for: he’ll make as many millions as he wants later, when there are presidential libraries to be built and children’s inheritances to be secured. Why does <a href=”http://en.wikipedia.org/wiki/Francisco_Pinto_Balsem%C3%A3o” title=”Francisco Pinto Balsemão”>Francisco Pinto Balsemão sit on the Daily Mail board? In part, because he was once PM of Portugal. And Brian Mulroney on the Independent board? In part, because he was twice PM of Canada. There’s an international currency here, an unstated bargain that says “keep me in homes, food and security now, and I’ll make up for it when the arc lights dim”.
You can easily spot public servants topping Brown’s £196,000. Try a Metropolitan police commissioner on £235,000, dozens of university vice-chancellors leaving Gordon behind, even your local GP grossing over £200,000 a year when the practice is perfect. Benchmark Brown is bargain basement stuff – or would be if it reflected anything remotely real.