Shrink the state, Patten urges

One-nation Tories join calls for cuts in public spending share

DONALD MACINTYRE

Political Editor

Chris Patten, the Governor of Hong Kong, last night warned that Britain needs radically to "shrink" the state to compete with "booming" Asian economies where only 16 to 25 per cent of national income goes on public spending.

The former Conservative chairman became the most authoritative figure on the one-nation left of the party to back a massive reduction in state spending as a proportion of Gross Domestic Product. The British percentage currently is 43 per cent.

Mr Patten's conversion mirrors that of his friend, William Waldegrave, the Chief Secretary to the Treasury, who earlier this month said the further that spending, as a percentage of national income, could be driven below 40 per cent the better.

Some Tory MPs will see it as a sign of the reunification of left and right in the run-up to the general election, as it coincided with an endorsement by Douglas Hurd, former foreign secretary, of what is seen as the more Eurosceptic stance of his successor, Malcolm Rifkind.

Kenneth Clarke, the Chancellor, said last weekend in a BBC interview that it was desirable to work towards ensuring that the state "really should never take more than 40 per cent of GDP". However, Mr Clarke also repeated his commitment to a "high quality" health service, higher standards of education and the welfare state.

While insisting that he did not advocate a "slash-and-burn" approach to public spending, Mr Patten used a comparison with Hong Kong and other vibrant Asian economies to stress that "we shall only be able to restore the authority of states by shrinking what they do".

Mr Patten said he was not calling for "an ideological assault on the public service". Nor did he suggest in his speech to the Conservative Political Centre to what level expenditure should be cut. But he said that the big European states were "muscle-bound but weak, ambitious but derided. To do much better they must do less."

Mr Patten's speech came as Mr Waldegrave warned the Tory backbench finance committee that tough spending cuts would be needed in the current round.

In Hong Kong, Mr Patten's intervention will be seen as the start of his re-entry into British politics. Nevertheless, much of Mr Patten's trip has been devoted to Hong Kong affairs. In meetings with Mr Rifkind, the governor is pressing for holders of Hong Kong British passports to be given rights of British residence.

He is especially pressing the case of 7,000 residents of Indian origin who could become stateless.

In a speech to the Conservative Group for Europe last night Mr Hurd dispelled any notion that he was at odds with Mr Rifkind over his Chatham House speech, in which he said Britain should not subordinate its own interests to maintain international influence. Mr Hurd urged "all Conservatives to support the European policy now being carried forward by the Prime Minister and the Foreign Secretary". His plea not to disrupt the "truce" in the party on Europe will be seen as a warning to Cabinet right-wingers campaigning to persuade Mr Major to rule out a single currency in the next Parliament.

Although Mr Major is understood to have listened sympathetically to a group of ministers, including Lord Cranborne, leader of the Lords, for a manifesto commitment not to join a single currency, Mr Clarke and Michael Heseltine, the Deputy Prime Minister, are thought to be resistant to a change in the stance of neither ruling EMU membership in or out. Mr Clarke in the same weekend interview stressed his enthusiastic support for the "policy we have all agreed".

Patten's speech, page 19