Sir Edward Leigh Addresses the Balance in Public Spending During the May Adjournment Debate.

I am glad that I am following my hon. Friend Bob Stewart. He spoke about pressure on one part of the public service sector and, in particular, about the cuts in legal aid. He made the very fair point that the criminal justice system relies crucially on talented young people wanting to enter it and receiving appropriate remuneration. I want to make a similar point about the whole public sector.

I shall argue that spending is overstressed in large parts of the public sector. I shall talk about defence for a short time, and then about transport and police funding in my own constituency. This will not—I hope—be just one of a series of speeches in which Members ask for more and more public spending, because I am also committed to lower public spending. I am going to take it on the chin and argue that we cannot devote an ever-increasing part of public sector spending to overseas aid, health and social security.

Let me start with defence. I am going to make some political points. They may not be points with which everyone will agree, but I feel that they need to be made. The fact is that the Ministry of Defence is underfunded. During the cold war, we were spending 5% of our national wealth on defence; even after the peace dividend, following the collapse of the Soviet Union, we were still spending 3%; and we continued to do so until the advent of the Labour Government in 1997. We are now hovering around 2%, and there is a general consensus that we must increase that percentage. That will, of course, involve difficult decisions.

We cannot increase spending on defence unless we are prepared not to spend as much as we would like in other areas, such as health. I understand that certain senior people in the Government may well question whether that is politically possible—whether we could argue the case before a general election. I would argue that not only is spending more on defence in an increasingly dangerous world the right thing to do, but it is a politically sensible and popular thing to do.

Some senior people in the Government might argue that, while increasing defence spending was probably the right thing to do because defence was underfunded, it might not be politically sustainable. I am reminded, sitting next to my right hon. Friend Dr Lewis, that in the early 1980s there seemed to be an unstoppable campaign in favour of unilateral nuclear disarmament. We worked very closely with Lord Heseltine, who was then Mr Michael Heseltine, in the Coalition for Peace through Security. He is a first-rate politician and made excellent arguments, calling it one-sided disarmament. That 1983 election hinged very substantially on defence, and the Conservative party won it. Political parties have to major on, and argue on, the areas in which they are strongest, and every public opinion poll suggests that the Conservatives are trusted most on defence, so this is one of our strong areas and it is not an area that we should feel that we are continually criticised because we are not doing enough.

I am also reminded by my right hon. Friend the Member for New Forest East that these arguments have raged back and forth for many years. In the early 1930s, the Conservative party lost a by-election in Fulham, and there was a peace candidate—a Labour candidate, I think—standing for the Opposition. George Lansbury was leader of the Labour party; he famously in the 1930s wanted to abolish the RAF entirely. There was an understandable, almost universal, desire for peace in the 1930s—part of the Oxford Union debates and many other factors, with people remembering the carnage of the first world war—and rearmament was not considered to be a popular policy, although clearly after 1933 when the Nazis came to power in Germany it was necessary; and I am thinking now of what is going on in Russia.

So it was necessary to rearm but that was perhaps unpopular, and Baldwin, who was a very successful Conservative Prime Minister, gave the “appalling frankness” speech in the late 1930s when he was criticised for not rearming early enough. We only started rearming in 1936 or thereabouts and almost left it too late; we only won the battle of Britain by a whisker. When Baldwin was criticised, he gave the “appalling frankness” speech. He said, “Look at what happened in that Fulham by-election. What would have happened to the Conservative party if we had advocated increased defence spending when it was so unpopular?”

I am not saying we are in as dangerous a position now as we were in the 1930s, but defence spending is an insurance policy. This is all about the value of deterrence, and we cannot know what the threats of the future will be. What we do know, however, is that Russia is increasingly proactive and is probably run by a criminal mafia regime. We know that there is an existential threat to the Baltic states, too, and one lesson of history from the 1930s, particularly from our pledge to Poland in the late 1930s, is that there is no point in giving pledges to defend a country in eastern Europe unless we have the means and will to carry them out.

I would argue in terms of our commitment to the Baltic states that, while admirable in every respect and while underpinned by the NATO alliance—treaties and article 5 and everything else—unless we are prepared now to commit real hardware to their defence, we could be in an extraordinarily dangerous situation in which Russia would believe she could intervene and undermine those states and could even intervene militarily, because by the time she achieved a successful military intervention it would be too late and our only recourse would be to nuclear weapons.

We clearly cannot rely entirely on nuclear weapons, therefore. There must be a whole range of deterrents at all levels. That is why at the moment the armed forces are struggling: the Royal Navy is struggling, and there are threats to various regiments. I will leave it there, but I earnestly implore the Government to take heed when even the former Defence Secretary, my right hon. Friend Sir Michael Fallon, who has just left his post and who was a very careful pair of hands who honestly defended the Government while he was Secretary of State, argues that we need to spend at least 2.5% of our national wealth on defence and we are simply not spending enough.

That is one area where we have to make difficult decisions. We have already talked about legal aid, and we are talking about the difficult decisions we have to make on defence, and now we have to take difficult decisions in our own constituencies. Earlier this week, Lincolnshire Members of Parliament held a meeting with the Policing Minister. Lincolnshire is one of the lowest funded police authorities in the country—it is in the bottom three or four—and for 35 years we have been having meetings with Policing Ministers and begging for more resources. I understand the pressure that the Minister is under. He tells us that, officially, austerity is now finished with regard to policing. All our constituents want more policing, but we have to provide the funds. We have already heard mention of the security threats in London, and it is difficult for a Policing Minister to transfer resources from the capital city to a rural county such as Lincolnshire, even though there is plenty of crime in Lincolnshire that I could talk about. I could even talk about my own personal experience of crime. It is a real issue. We clearly have to increase the resources for police funding.

In traditional Conservative counties, there are other things that people feel are underfunded. When they look at Scotland, at Northern Ireland and even at some of the big urban areas, they see fantastic internet connections, good roads and good police funding in their terms, and they wonder why the rural counties are so underfunded. My plea to those on the Treasury Bench is that they should not forget the rural counties and the real pressures that we face. Yes, there is crime, but also our roads in Lincolnshire are full of potholes. This is an important point, because people are driving at 50 or 60 mph in the middle of the road to avoid potholes, and 500 people are being killed or are injured in some form on our roads locally. These are really important issues, and the Government must address them. They must not forget the pressures that people face in rural counties.

I understand that the Government are now looking closely at a significant increase in real-terms spending on the NHS. I am of an age at which the NHS is terribly important to me and my family. I have no private health insurance. Indeed, earlier this week, I had a small procedure on my face under the NHS, which was beautifully carried out. I have no complaints against the staff, but I am very worried about this proposal, which Ministers are apparently considering, to dramatically increase the amount of money spent on the NHS in real terms.

I remember what happened during the period of the Labour Government. Of course such measures are popular in the short term, but the more we increase spending on the NHS in real terms, the lower the productivity becomes. I have spent quite a lot of time talking to consultants and doctors—I am at the age where I do that—and they all, to a man and a woman, bewail the level of bureaucracy and incompetence in the NHS. They are not arguing for more public funding in real terms, although it has to increase by a certain amount in real terms every year because we are an ageing population and we understand all the pressures. They all say that what drives them mad is the level of bureaucracy in the NHS, and it worries me that if we substantially increase NHS spending in real terms, we will simply add to that level of bureaucracy, even though Ministers assure us that that is not their aim.

I wonder why our Government are not prepared to bite the bullet and consider alternative funding for the NHS. With an ageing population, we must encourage people to put more of their own resources into their health. How are we going to do that? We could do it through general taxation and increase overall spending, but I have argued against that, or we could do what previous Conservative Governments have done. The Major Government and the Thatcher Government—I do not think the Major Government were particularly right wing—gave tax relief for people of pensionable age towards private health insurance. That is anathema to the Labour party, but it would actually put more resources into health. Most people of retirement age simply cannot afford private health insurance, because they pay for it from their taxed income. However, if we gave tax relief for private health insurance, as previous Conservative Governments have done, we would not be saying that we are against the NHS or devaluing it; we would be trying to encourage the people who are going to use healthcare more often to put more of their own resources into healthcare.

I am worried that if this massive real-terms increase in healthcare spending happens, we will be approaching the levels of health spending per head that we see in Germany or France. The fact is—let us be honest about this—that if we are going to be ill, we would much rather be ill in Germany or France. I know that the NHS is a kind of religion for many people, but the health services under the social insurance systems of France and Germany do work better. They cost more, but the people feel that they have real control over their healthcare. They pay large amounts of tax, but they feel that they have some kind of ownership of their healthcare—some kind of right. When something goes wrong, they are not just enmeshed in a vast bureaucratic machine; they believe that they have some right to treatment through social insurance. Indeed, in Germany, they do get that.

The Government have to be honest in addressing how we will meet the needs of an ever-ageing population and the desire of that ageing population for ever-new levels of treatment. We have to devise new systems to encourage people to put more of their own resources into healthcare, as I do not believe we can do that out of general taxation.

Before I sit down, I promised to make a point about DFID. Nobody values the work of DFID more than I do. DFID is doing tremendous work throughout the world, but its budget—I say this as a former Chairman of the Public Accounts Committee—is under strain, not from underfunding but from an arbitrary link in legislation to a particular proportion of national wealth. The link simply does not work, and it creates all sorts of stresses and strains.

I am not suggesting to Thangam Debbonaire that we cut overseas aid spending; what I am suggesting is that we get rid of this arbitrary link in legislation and have the best, the most high quality, the most free from corruption and the best-targeted overseas aid budget in the world, which I am sure is our aim and what we are achieving in large areas. Imposing such an arbitrary device on spending, which must result in a splurge of spending towards the back end of the year, cannot be right.

We all know about the wonderful work being done on malaria, and we all know about the work of the Bill & Melinda Gates Foundation. It is terribly important that we do not have people on one side of this debate arguing that overseas aid is wrong, corrupt and does not work and people on the other side saying, “We believe in it so much, and we are so worried there is some threat to it, that we need an arbitrary device to ensure that the budget increases, sometimes massively, every year.” Equally, if there were a recession, the budget might go down. It simply does not work. Anyway, I have made that point.

My last point is about social security. What worries me about my own Conservative Government is that an ever-increasing share of public spending is taken up by the NHS, social security and overseas aid, which is producing massive distortions and difficulties in other areas of spending that are absolutely vital—we have talked about defence, the police and the criminal justice system, and there are many others. The system is becoming skewed.

As a loyal Conservative and as someone who believes in Conservative values, if the Government are going down this path of giving an ever-larger part of the national cake to those three areas—the NHS, social security and overseas aid—I have to ask how they will pay for it. It is no longer possible to borrow, so they will have to pay for it with higher taxation. If it is indeed true that we will have this massive increase in real-terms NHS spending, we will need an increase in taxation, which would be lethal to the Conservative movement.

People vote Conservative because they want for low taxes, and this is why I will be going off in a moment to vote Conservative in Westminster. People are voting for strong defence, strong law and order, low taxes and a pro-business environment. If we continue to increase spending on the NHS, social security and overseas aid, we will simply pave the way for a Corbyn Government. That is what I do not want to do, at all costs. Let us be true to ourselves, let us take the difficult decisions and let us be Conservative.