Orders of the Day — National Health Service Contributions Bill

– in the House of Commons at 12:00 am on 15th February 1961.

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Order for Second Reading read.

3.50 p.m.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I beg to move, That the Bill be now read a Second time.

As the House is aware, the proposals announced by my right hon. Friend the Minister of Health on 1st February fell into two parts. There were, first, the increases in certain charges for the use of the Health Service and, secondly, the increase of Is. in the National Health Service contribution. I think that it is fair to say that when, a week ago, we debated the Opposition's Motion of censure on my right hon. Friend's statement, right hon. and hon. Gentlemen opposite devoted not the whole but a great part of their attention to the Health Service charges. I want to make it clear, at the outset of my remarks, that the Bill whose Second Reading we are discussing today is concerned purely with the increase in the contribution. I welcome this opportunity to explain and justify the Government's proposals.

The benefits of the National Health Service are available to everyone in this country; and I am sure that the House will not have forgotten the exposition by my right hon. Friend the Minister of Health last week of the good state of the Service. None of the benefits of the Health Service is in any way conditional on any insurance qualification, but it is not in dispute that the weekly payments made by insured persons under the National Insurance Scheme should make some contribution towards the cost of the Service.

Ever since the inception of the National Health Service, under the Labour Government, in July, 1948, part of the gross cost has been met in that way, even though by far the major part is met, and will continue to be met, from the proceeds of general taxation. It is quite true that in terms of strict legality the Health Service contribution has had a separate existence only since the passage of the National Health Service Contributions Act, 1957. But throughout the whole period between 1948 and 1957 an element of the weekly insurance contribution was notionally set aside, and the yield from it was actually paid over towards the cost of the Health Service.

While I entirely accept what right hon. and hon. Gentlemen opposite have said during this past fortnight about their strong and sincere feelings in these debates, it seems pointless to exaggerate the difference between the parties on an issue of this sort. Right hon. and hon. Gentlemen opposite were responsible for both the National Insurance and the National Health Service Acts of 1946, and they accepted, just as we do, that a flat-rate contribution was an appropriate way of financing part of the Health Service.

Just how big that part should be—in other words, just what should be the balance between the proportion of Health Service expenditure financed out of the proceeds of general taxation and the proportion financed by contributions—therefore cannot be regarded as a matter of major political principle. We on this side think that there is nothing unfair or unreasonable about the balance which we propose to achieve in the forthcoming financial year.

The net yield of the proposed flat-rate contribution for the financial year 1961–62, as a result of the Government's proposals, will be £148 million. But, even after taking into account the increased charges and contributions, the cost to the Exchequer of the Health Service in 1961–62 will still be £600 million. I do not see how it can possibly be claimed that the Government's proposals are relieving the generality of taxpayers of paying their fair share of Health Service expenditure. When all is said and done, £600 million is a sizeable fraction of a total estimated civil expenditure of £3,530 million. Hon. Members will see both these figures in the Vote on Account, published today.

The case which I have been making is considerably strengthened by the fact, as I said when winding up in the censure debate last week, that we are here dealing with a problem which has faced all Governments in their turn."—[OFFICIAL REPORT, 8th February, 1961; Vol. 634, c. 5201 I know that it is widely believed on the benches opposite, and last Wednesday I got the impression that it was believed even by the right hon. Gentleman the Leader of the Opposition, that the ceiling on Health Service expenditure announced by Sir Stafford Cripps was imposed only because of the economic difficulties caused by the Korean War. That is just not true, and I am returning to this matter only because it is important, in view of our present controversies, that the record on this matter should be put straight. Sir Stafford Cripps announced in his Budget speech of April, 1950, nearly three months before the outbreak of the Korean War: … it is not possible in existing circumstances to permit any overall increase in the expenditure on the Health Services.

Photo of Mr Percy Collick Mr Percy Collick , Birkenhead

In existing circumstances.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I am only pointing out that it had nothing to do with Korea, but with the perfectly normal financial circumstances of that time.

Photo of Mr Percy Collick Mr Percy Collick , Birkenhead

Surely the important words are "in the then existing economic circumstances".

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I shall be developing this point in my speech. I am grateful for that intervention.

I am saying that in the present economic circumstances, following a year in which Government expenditure rose by £ 340 million on the Estimates, and then this year, when, but for these measures, Government expenditure would have risen by another £ 330 million, in the same way there is nothing in principle wrong with the Government exercising their judgment in the way that they intend to do This year.

Sir Stafford Cripps went on, after the passage I have quoted, and expressed a view on the financing of the Health Service which went far beyond anything which my right hon. Friend the Minister of Health or I myself said last week. He said: Any expansion in one part of the Service must in future be met by economies or, if necessary, by contraction in others."—[OFFICIAL REPORT, 18th April, 1950; Vol. 474, c. 59–60.] I simply do not believe that any unprejudiced observer, looking at the facts and not merely at speeches or interjections in this House, could possibly agree, in the words of the right hon. Member for Belper (Mr. G. Brown), that there was "a great, fundamental and deep gulf" between the parties on the issue of financing the National Health Service. On the contrary, each party has been faced by very similar problems and successive Chancellors of the Exchequer have had to exercise their judgment as to what was a fair division between the part of the Service financed by contributions and that financed by general taxation, in the light of the economic and financial circumstances of the time.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

. Would not the hon. Gentleman agree that the difference between what Sir Stafford Cripps did and what the Government are now doing is that Sir Stafford Cripps wished to curb the overall cost of the Health Service in terms of resources, whereas the Government's present proposals are not to curb the overall cost of the Service but to redistribute the expenditure as between the budgetary cost and other sources of revenue, contributions, prescription charges, and so on?

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

Of course, the Government's proposals are intended to affect the overall cost to the Exchequer, and I do not altogether disagree with the hon. Member for Sowerby (Mr. Houghton). As I said, Sir Stafford Cripps's proposal to impose an overall ceiling on the Health Service was a much more severe measure than anything that the Government proposed, and that point was powerfully and rightly put by my right hon. Friend the Minister of Health in answering questions after he had made his statement.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

Will not the Financial Secretary go a little further, because he is taking those remarks out of context? Does he not recall what Sir Stafford Cripps said about existing circumstances?

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

When Sir Stafford Cripps spoke about the existing circumstances, he was referring to the economic and financial circumstances prevailing at the time. The present Government are concerned with economic and financial circumstances in exactly the same way. This is what I think the hon. Gentleman forgets. There was no more a crisis in April, 1950, than there is a crisis today. The crisis came after the Korean War, and not before. That is what the hon. Gentleman is overlooking.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I cannot give way again.

I come now to the details of the Bill. Here, I shall to some extent have to repeat what I said to the Committee of Ways and Means in moving the Resolution at the start of our now somewhat notorious debate last Wednesday. In view of what the right hon. Gentleman the Leader of the Opposition said on Monday, may I take this opportunity of apologising if, on that occasion, my description of the proposals and the Resolution were spoken rather too quickly and perfunctorily to be intelligible to some hon. Gentlemen opposite. I will try on this occasion not to speak too fast about the proposals.

As the House will have observed, this is a short and simple Bill consisting of two Clauses, one Schedule of new rates of contribution, and another Schedule covering certain minor amendments to the 1957 Act, on which the arrangements for collecting the contributions are based.

Clause 1, the only main Clause, substitutes the new rates of contribution in the First Schedule for the rates which were originally in the 1957 Act and which were amended in the 1958 Act. These rates will come into effect from an appointed day which, if Parliament enacts these proposals, we propose should be 3rd July. I can tell the House that this is the first available and convenient date.

The 1958 Act is repealed by this Bill, and the reason for the repeal of that Act is because it did no more than change the rates of contribution, which we now propose to change again. The main provisions governing the contribution remain as they were drafted in the 1957 Act. Clause 1 also applies certain provisions of the 1957 Act to the Government's present proposals. In particular, it continues the provision by which the Crown is "bound"—to use the technical term—so that the new rates of contribution are payable by Crown servants and members of Her Majesty's Forces.

Clause 1 also applies the provisions of the 1957 Act which removed those marginal restrictions that would otherwise prevent the Northern Ireland Government from passing legislation similar to our own. I should like to make it clear at this stage—because I think that there was some discussion on this during the passage of the 1957 Act, that, in general, the Northern Ireland Government are fully competent to pass legislation to increase rates of contribution as in this Bill; and I understand that the Northern Ireland Government have announced their intention of so doing. But, in respect of certain very limited classes of contributors, notably Crown servants, the Northern Ireland Government might be thought to be prevented by the Government of Ireland Act, 1920, from legislating in respect of these limited classes. All we are doing as regards Northern Ireland is to get rid of these minor restrictions.

I think that I have made the point about the Northern Ireland Government's case. When the 1957 Act was going through the House, there was a lively discussion in Committee on trade and employment in Northern Ireland, but in view of the relatively narrow scope of our discussion today it is possible that such a discussion might not be ruled in order this time.

There is only one other point I should like to mention in connection with Clause 1. Hon. Members may have noticed that the power to appoint the day on which the increased contributions become effective is placed on the Treasury. Here, I should like to refer also to the second paragraph of the Second Schedule to the Bill which transfers to the Treasury from the Minister of Health and the Secretary of State for Scotland jointly the power to make certain regulations about the payment of contribution by the employers of foreign-going seamen. During the debate on the Ways and Means Resolution hon. Members asked to what extent the Secretary of State for Scotland was divesting himself of his responsibility in this respect.

As the House will recall, during the discussion on the Ways and Means Resolution, while I achieved quite a markedly high level of success in catching the Chairman's eye during that debate, I was not so successful in gaining the ear of the Committee. I should, therefore, like to deal with that point now.

Photo of Mr William Ross Mr William Ross , Kilmarnock

The hon. Gentleman will remember that the point about Scottish responsibility was made by way of a point of order and not by way of discussion.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

However it was made, it was rather a curious point of order, if it was a point of order, like many raised that evening, but I will try to make the point now.

The position of the Secretary of State for Scotland in this matter, as of the Minister of Health, is virtually unchanged by the Bill. That is to say, the two Health Ministers will continue to receive and apply the net yield of this contribution. The only difference is that on earlier occasions the Health Ministers jointly appointed the day on which the increase in contribution came into effect; and they dealt with this matter about seamen. Now these powers are to lie with the Treasury. I think that the reason for the change will be clear to the House.

I do not, at this stage—though we may perhaps debate it later—want to enter into a prolonged controversy with the hon. Member for Sowerby about whether the National Health contribution can properly be called a tax. I think that there is a good deal to be said for confining this term to those revenue operations which are a means of general financing of the Exchequer. But the Government have felt, and, I think, rightly, that the proposal which we are discussing in the Bill is sufficiently significant in relation to general Government policy with regard to the raising of revenue that it was only fair to the House that Treasury Ministers should move the Second Reading. I am moving the Second Reading, and my right hon. Friend the Chancellor of the Exchequer will wind up the debate.

I now turn to the First Schedule, which is the most important part of the Bill, because it sets out the new rates of contribution. I think that the House is fairly well aware of the history of these rates, but perhaps I might remind hon. Members of the course of events since the National Insurance Act, 1946. passed into law.

The element of the original contribution under the 1946 Act which was allocated to the Health Service was 10d. for a man. This was raised to 1s. 8d. in 1957, to 2s. 4d. in 1958, and is now to be raised to 3s. 4d., a 10d. increase for the employed man and 2d. on the contribution from his employer. The increase is to be 8d. for an employed woman, and 6d. for a boy or girl. For the self-employed and non-employed the increase will be 8d., 6d. and 4d. respectively.

As a result of these proposals the payment in respect of an employed woman will be 2s. 8d., of which she will pay 2s. 0½d. The other night the hon. Lady the Member for Flint, East (Mrs. White) asked why we had chosen to increase the contribution for the employed woman by 8d. The answer is that we have kept the same ratio between the contribution for a man and for a woman as has been in effect, with only very slight variations as I shall show in a moment, since 1948. Under the proposals in the Bill, the ratio will be 75 per cent. It is true that at present the ratio is only 73 per cent., but in 1948 it was 76 per cent., and it became 75 per cent. in 1957. Of course, these percentage points represent only a fraction of ld., so one is justified in claiming that the ratio has remained virtually constant since 1948.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

I am grateful to the hon. Gentleman for taking notice of the point that I made, but I would be more grateful if he would explain the real basis for this, shall we call it, 75 per cent. three-quarters—contribution for a woman?

Is it based on earnings? These are employed women, and, whatever one might have thought in 1948 as to the course of women's earnings in relation to those of men, what has happened is that the earnings of women in relation to those of men are roughly a half. Therefore, it seems to me that these contributions, if based on employment wages, are completely out of proportion. Will he explain the present basis for them?

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

As the hon. Lady says, the decision was taken at the time when the original insurance scheme came into operation to make the ratio about 75 per cent., and we have thought that what was considered a fair ratio in 1948 should continue today. We have certainly not closed our minds on this for all time.

When the hon. Lady speaks about earnings, it is relevant to recall the fact that, certainly in the realm of salary movement, with the advance of equal pay in many cases, women have tended to do better during the last ten years. But I am quite prepared to agree with the hon. Lady that whereas we have maintained a constant ratio up to now, that does not mean that the ratio will always have to stand in the future.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

These comparisons between the ratios existing for men and women are very interesting and probably capable of debate, as the hon. Gentleman said. What is even more interesting from the figures quoted is the comparison between the original charge for Health Service purposes and the present one proposed by the Minister which, according to my reading, represents a 400 per cent, increase over the years during which the present Adminitration have been in power. This is the serious sticking point between us—not only the frigging about with marginal differences in contribution between men and women, but the tremendous difference between the original charge and the 400 per cent. increase.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

The hon. Gentleman raises a much wider point. I hope that he will remember that the net average earnings in industry have doubled during the period. This is a context in which percentages can be very misleading. The really important point to consider is whether the contribution as a whole today is reasonable in relation to average earnings and to our level of taxation. After all, the House will have many opportunities in the coming months to discuss the distribution of the national income generally.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

Will my hon. Friend direct his argument to the position of those on low earnings, whose wages and salaries have not doubled, rather than those whose salaries and wages have gone much higher than double? It is in relation to people with low wages and salaries that I should like to hear an argument advanced.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

At the moment, I am dealing with the Bill, but I shall be putting a more general case later. My short answer to my hon. Friend is that there is, of course, a level of flat-rate contribution which would be socially unjust.

But I say that we have not reached a socially unjust level by the increase in the fiat-rate contribution proposed in the Bill.

I wish to say a word about the self-employed man, who will pay 2s. 10d. It is very easy—I am sure that on this point I shall carry with me my hon. Friend the Member for Tynemouth (Dame Irene Ward)—to under-rate the importance of the self-employed man in our society. I hope, therefore, that the House will forgive me if I go over again the reasons I gave when moving the Ways and Means Resolution for adopting this figure. At this level the self-employed man will be paying a little more—it is 1½d. more, in fact—than the man in employment has to pay, but rather less than the total contribution for the employed man taking into account the employer's contribution as well.

The Government have given some thought to this matter and they feel that they have got the relativities about right. In the view of the Government there is a case for affording some marginal relief to the self-employed man, but it should not be such that his level of contribution is reduced to that borne by the employed man personally, because we do not want to get too far away from the original concept of the 1946 Act.

I come now to the Second Schedule. which is brought into effect by Clause 1 (3) of the Bill. Like many Schedules, it may appear complicated at first sight, but what we are trying to do is quite simple. The first paragraph of the Second Schedule substitutes an up-to-date definition of liability to pay National Health Service contributions—which, as the House will probably be aware, is exactly the same as liability to pay National Insurance contributions—for a definition which the passage of events has rendered obsolete. In effect, what this paragraph does is to extend the reference made in the 1957 Health Contributions Act to the 1946–56 Insurance Act. It extends that reference to cover the five further National Insurance Acts which have been passed since the National Insurance Act, 1956.

The second paragraph transfers to the Treasury the power to make regulations about the employers' contribution for foreign-going seamen. Perhaps I may explain the purpose of this power. It is used to reduce the contribution paid for medical treatment for seafarers during periods of incapacity abroad. So far as employer liability is concerned, this is the only relief or concession throughout the whole of our legislation regarding insurance and health contributions.

Paragraph 3 of the Second Schedule—which 1 recognise is the most important—deals with the way in which expenses incurred in collecting the contribution shall be assessed. It makes sure that the assessment is made on the same basis as that used for the National Insurance contribution, of which paragraph it was a part until 1957. I think that it is generally accepted that the income from the health contributions should be paid over on behalf of the Health Service net of the cost of collecting them. But there have been some doubts as to whether the words in the principal Act cover all the deductions which have properly been made. They certainly cover some,. and probably most, but I am advised not all; and it is the purpose of this paragraph to put the situation right.

The hon. Member for Islington, East (Mr. Fletcher), the other evening, during the speech I was allowed to make, was perfectly right when he suggested that what we are here proposing is, in fact, retrospective legislation. But it is the sort of retrospective legislation to which the Government do not see any objection in principle, because it is designed to make clear that the law really is as people have hitherto thought it to be.

So much for the Bill. I know that a number of hon. Members opposite, including the hon. Member for Sowerby, feel that we ought to have waited to introduce the Bill until the time of the Budget, so that this proposal could be viewed in the context of the one occasion in the year when all the various forms of taxation come under review. All 1 can say about that to the House is that the Government felt strongly the weight of this consideration, but eventually decided to legislate in advance of the Budget for two reasons.

First, as a matter of practical administration any change in the rate of contribution requires several months of preparation; and I think that here it is relevant to point out that the yield of even two months collection of the increased contribution corresponds to about £ 8 million. Secondly, and just as important, the Government felt that it was right to announce this proposal to the House and to the country at approximately the same time as the publication of the Vote on Account.

As I pointed out in this House last week, the original Estimates presented last year showed an increase of about £ 342 million and, but for the measures we have recently been debating, the Estimates for the forthcoming financial year would have shown an increase of slightly over £ 330 million.

These are by any standard massive figures. and I am sure that the Government have been right to show at the earliest possible moment that they were fully prepared, without delay, to take unpopular measures in order to leave room in our economy for those other demands on our national resources—expolts, capital investment, and so on—which are so vital to our national wellbeing.

Furthermore, as I pointed out in a debate last Wednesday, hon. Members will have ample opportunity during the debates on the Budget and the Finance Bill to discuss the distribution of the national income, and, obviously, it would be an absolutely proper and highly important subject for the House to discuss.

We do not fear any calculations or comparisons which hon. Members opposite may make, because, however much we may disagree over some details of the sort of society we wish to see, the fact cannot be contradicted that ordinary wage-earning families have advanced their standard of living more rapidly during the last ten years than in any earlier decade of our national history. If the Health Service is to grow and develop in the way in which my right hon. Friend the Minister of Health outlined last week, it is essential to get its financing established on a firm basis. There is no truth whatever in the claim of hon. Members opposite that we are making attacks on the Service.

That really is an absurd charge to make at a time when, as my right hon. Friend pointed out last week, to quote his own words: The last few years have seen a steady and, in some respects, a quite dramatic increase in the staffing of the hospital service."—[OFFICIAL REPORT, 8th February, 1961; Vol. 634, c. 427.] Of course, the hospital service, as my right hon. Friend pointed out, is not only the largest single element in the Health Service, but is the key to further medical progress in almost every direction.

It is also absurd to talk about the Government attacking the Health Service at a time when the cost of the Service is increasing more rapidly than the gross national income. It is quite true, as hon. Members opposite pointed out last week, that the proportion of the national income taken by the Health Service is not greater today than it was in 1950. But—and I say this to hon. Members opposite—think of the expansion which we have achieved in other directions since then, and particularly in productive capital investment, social investment, housing, and education.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

Office building is absolutely minute, compared with capital investment as a whole, or housing, or education. Obviously, it is more difficult for any service to maintain its percentage share of the national income at a time when other services, as a matter of deliberate Government policy, are being expanded also.

In my view, it is only necessary to look at the way in which the gross cost of the Health Service has risen in order to refute the charge that we are attacking this Service. Let me remind the House again that the Government are not setting any arbitrary limit to the cost of the Health Service, thereby cutting out some benefits which it conveys to the community. There is nothing of that in the proposal which we are discussing today, nor indeed, in the other Health Service proposals which my right hon. Friend announced last week. What we are debating today is a financial adjustment and not an economy cut. Furthermore, this arrangement cannot, in my view, be represented as an unfair attack on the contributor to the advantage of the taxpayer. I do not think that it makes sense to try to divide the community sharply into contributors and taxpayers, as if they were completely separate categories.

If we want to measure the effect of the Government's proposals, we have to consider the position of the ordinary citizen in three aspects—as taxpayer, as contributor, and, and by no means least, as a recipient of the benefits of the social services. If we consider the main recipients of the social service benefits, that is to say, the ordinary wage earners, one fact emerges which cannot really be disputed. Not only have they increased their standard of living more rapidly in the 1950's than ever before, but they have also enjoyed a higher rate of social benefits than ever before. This applies to the lower-paid workers as well.

I do not want to get out of order, but when we are thinking of the range of social benefits, we have to remember that the agricultural workers, who are among the lower paid workers, have all gained from the very great increase in number of county secondary schools and the expansion in other social services besides the Health Service.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

That is absolutely right. I am not saying that they should not. I am only saying that the ordinary wage earner has increased his living standard and has also his enjoyment of the benefits of the social services.

Photo of Mr Percy Collick Mr Percy Collick , Birkenhead

Surely, the Financial Secretary understands clearly what is the attitude of the Opposition. He is trying to justify increased contributions, apparently, on the basis of relative increases in wages, but why does he only compare the working people in this matter? He must understand quite well that remissions of taxation to the wealthy classes since the Tory Party has been in power are much more substantial than anything that the working people have had.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

If the hon. Gentleman will listen to my speech for a few minutes longer, he will find that I shall be able to tell him—what is the fact—that progressive direct taxation in this country contributes today a larger share of our total tax revenue, and not a smaller share, than when we came into office in 1951.

What I say is that the social service benefits are now something which most—not all supporters of the party opposite genuinely did not expect when they were defeated in 1951. Many of them and the increased enjoyment of social service benefits by the ordinary wage earners, under a Conservative Government, a genuinely uncomfortable fact to face, but it is a definite fact and there can be no doubt about it. I would remind right hon. and hon. Members opposite of the wise words of one of the most sensible British thinkers in the eighteenth century—Bishop Butler—who said: Things and actions are what they are, and the consequences of them will be what they will be: why should we then desire to be deceived? I cannot quite understand why right hon. and hon. Members opposite want to go on being deceived in this manner

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

While this is very entertaining, is it not really irrelevant'? Is not this a question, as this Service must be paid for, of what is the fairest way of paying for it? The question of relative incomes is dealt with by the Income Tax authorities, who tax people according to their ability to pay.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I do not believe that what I have been saying is at all irrelevant to the question whether the Government's proposals are fair. I pointed out last week: Since 1957, the proportion of public expenditure to the gross national product has been rising again. In virtually every part of the public sector today there is a strong expansion in expenditure."—[OFFICIAL REPORT, 8th February, 1961; Vol. 634, c. 519.] Government expenditure on civil account, as is quite clear from today's Vote on Account, continues to rise, and it is likely that the Government will be taking at least as big a proportion of the national income in the coming year as they have taken in the last two or three years. A large part of this increased expenditure arises from increases in civil expenditure, of which social service expenditure is itself a major constituent. So there can really be no doubt that the citizen, in his role of recipient of social benefits, has improved his position in relation to the citizen in his rôle of taxpayer and contributor.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I have given way to the hon. Gentleman twice.

I do not think that when hon. Members study the Vote on Account, which is published today, they will feel that it gives much support to their claim that the Government are engaged on an all-out war against the Welfare State. Whatever criticisms right hon. and hon. Members opposite may wish to make of our fiscal and financial policies—and we shall have plenty of opportunities of returning to this subject during the coming months—I simply do not believe that our tax system as a whole can be stigmatised as unfairly redressive.

When we are considering the Government's proposal for an increased Health Service contribution, we ought also to remember that our highly progressive system of Income Tax and Surtax yields a higher proportion of total tax revenue today than it yielded when the party opposite was in office-441 per cent. as compared with 43 per cent. for the financial year 1951–52—and it just is not true to suggest that, in relation to our social services, the direct taxpayers are not pulling their weight.

I come back, in conclusion, to what I said earlier in my speech. What we are debating this afternoon is not a matter of principle, but rather a matter of judgment. Of course, it is the duty of the Government to satisfy themselves that the total burden they place on the contributor is not too heavy. All I can say is that I believe that the extra scale of contributions which we propose in the Bill is not unreasonable, bearing in mind three considerations: first, the increase in average earnings since the Health Service came into operation; secondly, the fact that for the last four years social expenditure generally, including expenditure on the Health Service, has been rising more rapidly than the national income; and, thirdly, the fact that the Government have shown their intention to effect a real and nation-wide improvement in the standard of the Health Service through their large and imaginative plans for new hospital building.

I ask the House to support us, tonight, not because we want to dismantle the Welfare State, nor because we are planning a desertion or betrayal of those ordinary families who have rightly put their trust in the Conservative Government, but because we believe that the people will respond to a Government who are not afraid to exercise their judgment, nor to make difficult decisions because they are unpopular.

4.30 p.m.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

The first thing that I should do, I think, is to congratulate the Financial Secretary on making this afternoon a speech which the Patronage Secretary prevented him from making in the early hours of last Thursday morning. I am sure that we all judge from his speech how much enlightenment the Committee missed during those turbulent hours. I should also like to say that I am very glad indeed to see the right hon. and learned Gentleman the Chancellor of the Exchequer present this afternoon. I understand that he has been indisposed. I am sure that it is significant that the Chancellor and the Financial Secretary are sponsoring the Bill before the House today. It is, as the hon. Gentleman said, a Treasury Bill.

What does the Bill do? It raises another £ 49 million from the contributors to the National Health Service, bringing the grand total of Health Service contributions to £ 161 million. That is a tax and I think that it can be proved to be a tax, too, when I draw the attention of the House to the fact that it is not based on actual benefits received. It is levied universally and indiscriminately on all persons who are contributors to the National Insurance Scheme. There can be no doubt that an imposition of these dimensions, even for a special service, constitutes part of our comprehensive system of taxation.

Speaking on 1st February, the right hon. Gentleman the Minister of Health referred to this matter. He alluded to the fact that the contribution had been called a poll tax, and he went on to say: It falls, of course, to be considered in the context of the whole economic position of the country, of the earnings of those who will pay it and of the tax system as a whole … That concedes, I think, that it is part of the system of taxation. The right hon. Gentleman went on to say, somewhat by way of excusing the present proposals: … but the proportion of average earnings which will, in future, be collected by way of the stamp, is not appreciably greater, in the nearest practicable comparison, than it was in 1948."-[OFFICIAL REPORT, 1st February, 1961: Vol. 633, c. 990.] I submit to the House that a tax is no less of a tax merely because it is in the same proportion today as it was before to the level of average earnings.

I think that the Government are asking all the time, and the hon. Gentleman has stressed this several times this afternoon, that this tax should be judged in relative rather than in absolute terms. The hon. Gentleman said that the Government had considered whether it was appropriate to introduce this Measure in advance of the Budget. Presumably, they have considered this same point on three occasions, because they have done exactly the same thing each time. They did it in 1957 and in 1958 and they have done it again in 1961.

As I pointed out in the speech which I was allowed to make on the Money Resolution, in 1957, very shortly after announcing the first imposition of National Health Service contributions, an amount of tax relief equal to one-half of the new burden of Health Service contributions was given in additional earned income relief to the general taxpayer. I mink that we shall, perhaps, approach the forthcoming Budget with deeper suspicions than right hon. and hon. Members opposite realise.

We have got it very firmly fixed in our minds that the Chancellor intends to make some concessions of direct taxation which will be an affront to those upon whom he is now imposing additional Health Service contributions. That is what makes us more alert and somewhat more alarmed this time—because of the order of business which the Government have chosen

I concede that with the announcement of the Vote on Account for the National Health Service the rise in the total cost of the Service would be noticed and that questions would occur to people in the country concerning how this additional cost was being financed. The same, of course, applies to other factors in the general budgetary situation, but nobody asks how the additional Vote on Account for defence is to be paid for. They know that it is coming out of taxation, but because of the existence of National Health Service contributions there is admittedly a doubt of what would be in the minds of the Government on the financing of additional expenditure.

Now that we know what the Bill does, and now that I have, I think, established to the satisfaction of the House that it really is a tax and should really be part of the general Budget survey of the economic and financial condition of the country, I want to leave that and go on to deal with another point with which the hon. Gentleman dealt in some detail. namely, the history of the matter.

In earlier debates there has been a good deal of disputation thrown across the Floor of the House and the Committee as to who started what and who was responsible for the National Health Service contribution. The hon. Gentleman has given some of the facts. I was rather surprised that he did not quote the paragraph from the Beveridge Report which has been prayed in aid on each previous occasion when National Health Service contributions or increases in them have been under discussion. In paragraph 430, Sir William Beveridge, as he then was, said: There is no obvious reason, apart from a desire to keep the insurance contribution as low as possible, why insured persons should be relieved of the burden wholly, in order that they may bear it as tax-payers. If importance attaches to preserving the contributory principle for cash benefit, it attaches also to contributions for medical treatment. That was the eleventh commandment or basic faith which was imported into the discussions in 1957, and again in 1958, in support of the Government's proposals.

In a debate on the National Health Service the other day in another place, Lord Beveridge made some remarks very much along these lines. But I think that we have to bear in mind in this connection that Beveridge laid down no principles for financing the Health Ser vice. He explicitly said so and, indeed, in another place the other day said that the Service had really nothing to do with him. He had not started it at all. All he did was to accept it as one of the assumptions in the general pattern of social security which he took into account, along with family allowances and full employment, in devising his scheme of social insurance.

We should also remember that before the new scheme came into operation as a result of the Beveridge Report we had a National Health Insurance Scheme which combined money benefits and medical benefits. We remember that contributors under that scheme were entitled to a doctor and medicine as well as money payments during periods of sickness. On the introduction of the new scheme of National Insurance and the National Health Service, the two things were divided. The National Insurance Scheme dealt with money benefits only and the National Health Service dealt with medical benefits only, or benefits of a medical kind.

It was natural, therefore, that when the two schemes were separated some provision should be made for part of the cost of the new National Health Service to be borne by a grant in aid—that is the term used by the Beveridge Report—from the National Insurance Scheme to the National Health Service. We notice that in paragraph 170 the Coalition Government's White Paper of 1944, Cmd. 6550, there is a reference to what the Financial Secretary described as the National Health Service element in the National Insurance contribution. Then, as the hon. Gentleman said, it was fixed at 10d. for men and 8d. for women. It said: Of this, the employer … pays 1½d. It went on to say: This figure of 1½d. represents approximately the amount which the employer at present contributes towards the cost of medical benefit and has been adopted for that reason. I draw the attention of the House, in particular, to the cross-reference between the old and the new schemes when defining the contribution to be made by the employer. Nothing was said there, or anywhere else as far as I can discover, about the future financing of the National Health Service, but that same National Health Service element, incorporated in the National Insurance contribution in 1946, remained there, and remained unchanged from 1946 to 1957.

Even when Sir Stafford Cripps proposed to introduce charges for appliances, teeth and spectacles, and when power was taken by a Labour Government to introduce prescription charges—which, in fact, were never introduced by a Labour Government—no suggestion was made at that time by Sir Stafford Cripps about increased contributions, no proposed increase in the National Health Service element in the National Insurance contribution. It was a Conservative Government, in 1957, that plucked out the National Health Service element from the National Insurance contribution which previously had been built into it, separated it and increased it. They increased it in 1957, again in 1958 and are now proposing a further increase in 1961.

In passing, it is worth noting that in 1946 the proportion of the National Health Service element to the total contribution was 14½ per cent. and now, I think, it is 20½ per cent. under the proposals made by the Government.

Photo of Lord  Balniel Lord Balniel , Hertford

The hon. Member is quite right in saying that the Beveridge Committee did not make a recommendation about what proportion should be financially made by contributions. Of course, it was not the responsibility of the Beveridge Committee to make a recommendation concerning the Health Service, but it took a figure and used it as a basis for discussion. I think that the figure it took as a basis for discussion was 19 per cent., so our proposals are not very different from that percentage.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

I have devoted some time to this matter in recent days and there is nothing in the Beveridge Report

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

I have another quotation from the Report—

Photo of Lord  Balniel Lord Balniel , Hertford

Will the hon. Member allow me to read it to him? The Beveridge Report takes as "a fair basis …"

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

On what page is this?

Photo of Lord  Balniel Lord Balniel , Hertford

On page 116, paragraph 287. It takes as "a fair basis for discussion" the following: If the total contribution by insured persons of all classes is compared with the total Security Budget, it represents about 22 per cent. If their contribution for cash insurance benefits is compared with the total of these benefits it amounts to 29 per cent. If their contribution for medical treatment and rehabilitation is compared with the estimated total cost of these services it amounts to about 19 per cent.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

I am very grateful to the noble Lord. It seems that Lord Beveridge was stating the facts of the matter in presenting the Report, but he did not go on to say, "and that is about right", "that seems fair enough ", or "this may well be the basis for the future financing of the services." He did not say any of those things.

Photo of Lord  Balniel Lord Balniel , Hertford

I am sorry to interrupt the hon. Member again, but Lord Beveridge did say that it was a fair basis for discussion although it was not his responsibility to recommend about the future of the Health Service.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

The discussion presumably took place, although it is quite extraordinary that it did not take place on any of the White Papers, or debates on the National Insurance Bill or in Committee on the National Insurance Bill, nor at any other time, so far as I can find, was that taken as a basis for discussion. It was written into the financial structure of the National Insurance Scheme and left at that.

I repeat, it is significant that although, during the time of Sir Stafford Cripps, one might have thought that this would again come under discussion, it did not, in fact, come under discussion, but was left alone from 1946 to 1957 until the Conservative Government discovered a new gold mine, a new source of taxation, and decided to exploit it. That is what we are discussing this afternoon.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

I wonder whether we can get this quite clear from the hon. Member for Hertford (Lord Balniel). Does the figure he gave include industrial injuries? He used the word "rehabilitation".

Photo of Lord  Balniel Lord Balniel , Hertford

I am speaking rather "off the cuff". It includes the words medical treatment and rehabilitation ", but I would not like to define it closer than that.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

I have so many quotations from the Beveridge Report and elsewhere that it is not easy to lay my hands on the right one at the right moment. I am relying on my memory, but I think that in another paragraph—I believe it is No. 437—no, that was a description of the ideal of the plan; I shall have to leave it—Lord Beveridge said that it was not within the scope of his work to lay down the future financial basis of the National Health Service.

I think that something of what we have been dealing with in these exchanges will emerge in the next part of the history of the matter, namely, the ratio between budgetary cost and National Health Service revenue from other sources. In 1946, the Exchequer cost was envisaged to be 72·4 per cent., although, of course, we realised that the estimates of the cost of the Health Service were very tentative indeed at that time and they proved very quickly to be wide of the mark.

I stress that there was no suggestion that the ratio of total cost to be borne by the Budget of 72·4 per cent. was envisaged for the future, or even for a stated period. It was envisaged to be the position in 1946 or in the first full year of the National Health Service, which was 1949–50. In the first full year it was actually 76·3 per cent. By 1950–51, it had risen to 80·9 per cent. and, by the time the 1957 Bill was brought in, I think that it was just over 80 per cent.

In the debate on the 1957 Bill, on 8th May, 1957, relating to the rising cost of the National Health Service and the rising ratio of the budgetary cost to total expenditure, the right hon. Member for Runcorn (Mr. Vosper) said: The Government, therefore, have decided that this heavy and growing burden is more than the taxpayer can reasonably be expected to bear."—[OFFICIAL REPORT, 8th May, 1957: Vol. 569, c. 989.] That was in 1957 and by 1958 the Exchequer's share of total cost had been pulled down to 75 per cent.

The Minister of Health has referred in earlier debates to the rising cost of the Health Service again now. But the present Bill and other charges connected with it will bring the Exchequer contribution to the total cost of the Health Service to 70–7 per cent., which will be the lowest Exchequer contribution to the total cost of the National Health Service since it began in 1948. Having regard to the varied ratios right from the beginning, and this new low level—though, admittedly high enough in terms of total expenditure to merit very serious consideration—of budgetary cost of the total cost of the Health Service, we are entitled to ask what the Government's policy is in this matter.

The Financial Secretary has said that it is not a matter of major political principle. We contend that it is a matter of major political importance. Although a noble Lord, in another place, said that the argument is not about "whether", but about "how much", "how much" is very important, especially when we are dealing with a flat-rate tax levied on all incomes, on all types of family responsibility, without regard to relative ability to pay. I have already said that as far as I can discover there has been no discussion on this question, although it was taken, or put forward, by the Beveridge Report as a basis for discussion. It never seems to have been settled, nor, indeed, has there been any substantial consideration given to it, in relation to the broad conspectus of budgetary responsibility, as to whether the ratio should be 70, 75, 65. 80, or whatever it should be.

It appears as though the Government wish to keep that ratio as low as possible and are prepared to levy contributions as high as possible to achieve it. On all matters of restrictions on the expansion of the expenditure of the Health Service right hon. and hon. Gentlemen opposite lean very heavily indeed on Sir Stafford Cripps. In an intervention which I made when the Financial Secretary was speaking I drew the distinction between what Sir Stafford Cripps was attempting to do and what the Government are doing now. Sir Stafford Cripps was curbing the demand of the Health Service on total resources which were so desperately needed in other essential directions when we were trying to lay the foundations of our postwar economy. It was a switch in expenditure that Sir Stafford Cripps was trying to get. The hon. Gentleman has admitted that there was no such attempt to get a switch of expenditure under the proposals that are before us this afternoon.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

I recall clearly that Sir Stafford Cripps was very much concerned with the increased expenditure and capital expenditure on such items as electricity at the time and felt bound to keep a curb on Government expenditure for that reason. Today, as the hon. Gentleman well knows, we are embarking on an increased programme of hospitals, schools and university building. I do not think that there is so much difference between the economic situation of 1960 and 1951 as the hon Member is asserting.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

All I can say, in reply to that, is if that is the view of hon. Gentlemen the Government are behaving in a very strange fashion. After all, Sir Stafford Cripps, in that situation, put a limit on the demand which the Health Service should make on the resources of the nation. The hon. Gentleman has put no such limit on the demand which the Service should make on the resources of the nation. This afternoon, in fact, he said this was not a ceiling on the expenditure of the Service so much as a financial operation as to how to finance it.

I come now to the third of my four points. What are the short-term aims of the Bill? Here I address myself to the right hon. Gentleman the Chancellor of the Exchequer. This is a shift from direct and progressive taxation to regressive taxation by contributions. That is the way we view it. Progressive taxation, unless it is being constantly reduced is said to be a disincentive to those higher up, while lower down the regressive taxation by contributions is, apparently, regarded as nothing of the kind. It is no hardship to them; it is said that they can afford it. It will be morally and socially good for them to pay. That is the argument used in defence of these increased contributions.

I ask this question: why do not right hon. and hon. Gentlemen opposite say that about the Income Tax payer and the Surtax payer? Instead, they say these taxpayers dislike it so much that they cannot put their heart into their work and it is necessary to reduce the burden of taxation to give them some kind of psychological fillip which, in turn, will be converted into higher productivity, greater efficiency, and will be a boon to the nation. The great mass of the workers can take it. That is the view expressed on the other side.

Photo of Mr Arthur Tiley Mr Arthur Tiley , Bradford West

About a year ago the hon. Member for Sowerby (Mr. Houghton) was reported in the Yorkshire Post as making a speech in Sowerby—and I will send a cutting to him after the debate—in which he recommended that in the forthcoming Finance Bill, last year, the Surtax level should be immediately increased to £ 3,000. What does he think about that now, in view of what he has just said about Surtax payers?

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

I think that the hon. Gentleman has misquoted me. I remember writing an article on the administration side of Surtax which had an entirely different context from that which the hon. Gentleman has put forward. However, if he says that he will send me the cutting I shall be glad to look at it.

I ask the Chancellor of the Exchequer what is the immediate aim of this transfer from general taxation to taxation by contributions? In fiscal terms, is it to avoid an increase in general taxation or is it to pave the way to a reduction in general taxation? Is it aimed at the redistributive effect of increasing social services out of general taxation whereby income, goods and services are transferred from the better off to the less well off and the poor? Those are the three questions I ask the Chancellor about these proposals in the fiscal term.

I have some questions in economic terms, but it seems to me from what the hon. Gentleman has said that there is no need to ask whether the Bill is intended to make room in a static economy and place a curb on the demand on the additional resources that the expansion of the Health Service would make, because he has denied that that is so.

I see that the Minister of Health is in his place. I ask him what is meant by the use of a particularly important word in the announcement he made on 1st February, 1961, where he says: I should have been betraying my trust if I had agreed to an increase in the budgetary cost of this Service, for it would inevitably have resulted in the development of the Service itself having to be curtailed or limited if these steps had not been taken."—[OFFICIAL REPORT, 1st February, 1961; Vol. 633; c. 990.] Why "inevitably"? What was inevitable about a reduction or curtailment of expansion of the Health Service if this switch from direct to contributory taxation was not made? The inference is that the Government had put a ceiling on the budgetary cost of the National Health Service and had told the Minister of Health, "That is it and not a penny more. Unless you agree to the increase in contributions, an increase in prescription charges and other charges, the expansion of the Health Service will have to be curtailed." If a ceiling has been put upon the budgetary cost of the National Health Service we should know what it is.

It seems that the proposed new contributions are not designed to limit public expenditure on the Service, but to adjust the manner of meeting the cost. It is desirable for the whole country to have a firmer basis for future financing of the Service than the judgment or caprice of the Government of the day.

Viscount Amory said recently, in another place, that there are three things not worth running after a woman, a bus and a new principle of taxation. He said that if one waits a little while another one is bound to turn up. Is this the new principle of taxation which has turned up—flat-rate taxation to be pushed higher and higher? Defined as a principle, I would put it as taxation by relative inability to pay.

Judging from debates so far, both in the House of Commons and in another place, the whole operation seems to hinge on two factors—the ratio between contributions and average gross earnings, and the ratio between budgetary cost and combined Health Service contributions and revenue from other sources. To find a basis for both of these criteria the Government go back to 1946. We want to know whether the Government will maintain these two factors—the ratio of contributions to average gross earnings, and the ratio between budgetary cost and revenue of the Health Service from contributions, prescription charges and other sources.

The Minister of Health and the Financial Secretary have both referred to the fact that the contributions proposed in the Bill are, broadly, the same in percentage terms as the Health Service element in the original Health Service contribution. This must be looked at in absolute terms as well as in relative terms. There is no doubt that with this additional charge the total sum will bear harshly on many people of below average earnings. Ten shillings and sevenpence a week, which will be the new flat-rate contribution for men after July, will be more than 4 per cent. of the earnings of many people. It will be 5 per cent., 6 per cent. and even over 7 per cent. of the earnings of many people earning below average wages.

What about people on short-time working? They will have to pay the flat-rate tax just the same as those on full-time working. What about those who have lost substantial additions to their normal pay by the cessation of overtime? They will have to pay the same flat-rate contribution as if they were on overtime and earning more money.

The iniquity of this form of taxation is that it takes no account of these things. Pay As You Earn is by far the fairest direct taxation on the pay packet. It can be adjusted to family circumstances. If pay goes down, the tax goes down. If the pay goes up, the tax goes up. If a new baby arrives, the tax goes down, and so on. Hon. Gentlemen are familiar with the system. Even those paying the graduated contribution will find considerable difficulty in paying the new maximum contribution of 15s. 8d. a week.

These considerations have reflected themselves in Press comments on the Goverment's proposals. The Observer, on 5th February, and The Times, on 2nd February, both commented on the undesirable tendency of transferring the financial burden from progressive taxation to flat-rate taxation. The Observer said: If the Government finds it necessary to take steps to increase its total revenue in order to finance all its operations, including the Health Service, it should take steps to share the burden more equitably. This brings me to my final point. This is the question I want to ask and try to answer. How does the Bill fit into the Government's lamentable strategy for the future of the welfare services? Here I think we come upon the most serious aspect of the whole affair. The Bill must be seen as part of a stealthy and piecemeal process of changing the face and financial structure of the Welfare State. I say publicly that if the Conservative Government remain in office very much longer the main burden of the cost of the social services will have been shifted from the shoulders of those who can fairly bear it to the shoulders of those who cannot.

The Guardian, on 2nd February, and the Sunday Times, on 5th February, both had comments to make on this tendency, but I will not trouble the House with the quotations.

This matter does not stand alone. Looking back, the food subsidies, the housing subsidies, the new edition of which we saw yesterday, and the National Insurance Scheme all tell the same story of a shift from public to personal expenditure. This is widening the tax base with a vengeance, on the principle of relative inability to pay.

We look for the Conservative inspiration on this matter in Peter Goldman, the Director of the Conservative Political Centre, who said in an article in Time and Tide, on 13th January, writing as a private individual: For some time a growing school of thought within the Conservative Party has advocated changes in the financing of the social services. Provided there is full employment for the working population, special aid for the big family and a safety net for the genuinely needy, I can certainly see no reason why the bulk of the population should not become more and more self-providing and less and less dependent on rates and taxes. Mr. Henry Fairlie, another notable Conservative writer, said in an article he wrote in Time and Tide on the same date: Almost everyone agrees … that a huge waste of money, or misappropriation of resources, is going on in the National Health Service. Much of this could be overcome, if it were recognised that today the primary object of the Health Service is not the provision of general services free, but making available to everybody the specialised benefits of modern medicine, which can be provided only by a universal authority such as the State. The same thread runs through all these things.

Professor Alan Peacock, who writes for the "Unservile State Group", has a more rabid view on the same theme. That presumably is the social doctrine of modern liberalism. He says: The true object of the Welfare State is to teach people how to do without it. What the Conservative Government say is that the true object of the Welfare State is to teach people by stopping them having it. That will be the tendency during the period of office of the Conservative Government.

While every other country is mobilising its social conscience and translating it into expanding social services, we in this country appear to be dismantling the Welfare State which was, at one time, a model for the world. There is a nobler concept of the Welfare State, and I ask the indulgence of the House whilst I read it. The Welfare State is democracy's highest attempt to develop a society in which there shall be a true and fruitful reconciliation between the rightful claims of individual freedom, enterprise, ambition on the one side and corporate order, co-operation, mutual concern on the other. It is the most difficult thing that any society has ever attempted. It demands a more deliberate wisdom, a higher level of detached and unselfish thought, a greater degree of true citizenship from the ordinary citizen than has ever been asked of men before. That is a much nobler basis on which to construct even the financial arrangements of the National Health Service.

The Government are chipping away at the foundation stone of the Welfare State with chisels made of self-interest, unfairness, false doctrine and—I must say it in all seriousness—a distinct streak of humbug and hypocrisy. If we can do anything to stop it, this Bill shall not pass.

5.11 p.m.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

I would have been glad to follow the hon. Member for Sowerby (Mr. Houghton) in crystal-gazing into the future, and perhaps I shall end by doing so, but first I have to tell the House that I agree with my hon. Friend the Financial Secretary when he says that this Bill is entirely a matter of percentages and not of principles. To put it in its simplest form, without this Bill the Exchequer would contribute 76·3 per cent. and the small shift now proposed brings that figure dawn to 70·2 per cent.

It is one of these adjustments that have been made before—there was a similar one four years ago—and which will have to continue to be made if the Exchequer contribution—the cost to the taxpayer—to the rising costs of the Service is to be kept within limits. The trend is clearly shown in the table contained in my right hon. Friend's Written Answer to the hon. Member for Stoke-on-Trent, Central (Dr. Stross), published in the OFFICIAL REPORT of 8th February, 1961, in column 65, in which figures for a period covering the last twelve years have been set out as a continuation of the Guillebaud Report.

The National Health Service debate last week, and this one today, reveal a very strange situation. Last week was the first occasion since the General Election when we have had a full day's debate on the general principles of this Service. During the whole of the last Session only two hon. Members commented on that, and sought a debate—the hon. Member for Willesden, West (Mr. Pavitt) and myself. As a contrast to that, at one o'clock or two o'clock on Wednesday morning last no less than forty people wanted to speak on the Service—

Photo of Mr Laurie Pavitt Mr Laurie Pavitt , Willesden West

The hon. Member for Carlisle (Dr. D. Johnson) will also be aware that daring the whole period from 1951 we have had only sixteen debates on the Service.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

I have no doubt that that is so. I have not made such a careful count, but I have no doubt that the hon. Gentleman is right, and he reinforces what I say. That is the extraordinary situation.

Of the various comments on this situation, I think that the most cogent was that appearing in The Spectator last Friday which said, in effect, that the present situation is the pay-off from the Guillebaud Report. We are reminded that the Guillebaud Committee was appointed to advise … how, in view of the burdens of the Exchequer, a rising charge upon it can be avoided, while providing the maintenance of an adequate service. We are also reminded that the answer in the Guillebaud Report was … delightfully simple … the charge of the Service … was not rising … there was no evidence of extravagance, and no need for any major change in the administrative structure … We all remember that everyone in this House took that as a pat on the back, and there was an atmosphere of complacency.

I may be pardoned, perhaps, if I refer to some of my own remarks on the Guillebaud Report at that time. In a debate similar to this in July, 1957, I stated quite clearly: The effect of this increased contribution is not only to make people pay more … but in a more direct fashion. One only hopes that it will lead to an increasing interest and informed public opinion concernng the economies in the Service. I am glad to have this opportunity to express my sense of disappointment with the Guillebaud Report."—[OFFICIAL REPORT, 8th May, 1957; Vol. 569, c. 1081]. On 15th July, 1959, I said: I regard the Guillebaud Report—I think I am repeating what I have said before—as a generally unhappy document, in that it encouraged a mood of complacency towards the structure and organisation of the Service."—[OFFICIAL REPORT, 15th July, 1959; Vol. 609, c. 507.] I am glad to be able to repeat that a third time.

For the last five years we have taken soporifics over the National Health Service, and we now wake up with a bad headache. This is the morning after the night before. I have no hesitation in stating again that I regard the Guillebaud Report as one of the most disastrous social documents of modern times.

This Bill does not alter the principle of contributions, but I agree with the hon. Member for Bolton, West (Mr. Holt) who said last week that we should not regard this Service as a sort of sacred cow—as we have been doing for the last ten or fifteen years. He said that, in the present circumstances, we should examine all sorts of different principles. We shall go through this sort of thing over and over again unless the Service is examined quite fundamentally and on a radical basis—

Photo of Mr Walter Monslow Mr Walter Monslow , Barrow-in-Furness

If, as a nation, we expended less on non-productive and destructive services, we could meet this present situation without any increase in contributions at all.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

I would agree with the hon. Gentleman in so far as there is immense waste in the nation at the present time. Figures of teen-age expenditure were recently published. They showed that out of earnings said to amount to £ 900 million a year, no less than £ 600 million or £ 700 million went on wasteful expenditure. Such a sum would be enough to finance the whole of my right hon. Friend's hospital programme for the next ten years. Matters like that should be included in our examination. I will give the example of a health service elsewhere to show how it can operate. The health service in Australia illustrates how quite different principles can be applied to the matter.

Last Wednesday night, the hon. Member for Greenock (Dr. Dickson Mabon) reminded me of far-off days when my right hon. Friend who is now the Chancellor of the Duchy of Lancaster was secretary of the B.M.A. and I was merely an ex-defeated political candidate, and we went round the country on behalf of the doctors putting the doctors' point of view before the inception of the Health Service. In his speech, the hon. Member for Greenock accused us of opposing the Health Service—[HON. MEMBERS: "Hear, hear."]—but we were not opposing the Health Service.

Photo of Mr Laurie Pavitt Mr Laurie Pavitt , Willesden West

Does the hon. Member recall the referendum of the B.M.A. and the results of the referendum?

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

We were opposing the Health Service in the way it affected the doctors. This brings me to the point I wish to make about Australia.

Photo of Mr Laurie Pavitt Mr Laurie Pavitt , Willesden West

The hon. Member and his friends fought it, but they lost.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

The hon. Member says that we last. Of course, we lost. In Australia, on the other hand, there was a quite different course of events. There was an almost identical situation at the time, but it had a different outcome. In Australia, the doctors, with the assistance of certain of the State Governments, tested the matter constitutionally in the Federal Supreme Court. The result was that it was ruled that a health service on lines similar to the one brought in here was unconstitutional for the interesting reason that it was said to involve the conscription of civilian personnel in peace time. Subsequently, the Labour Government in Australia tried to amend the Constitution, but they did not succeed.

Photo of Mr Gordon Touche Mr Gordon Touche , Dorking

The hon. Member is going rather far from the subject under discussion.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

I am just coming back to the point, Mr. Deputy-Speaker. There was a change of Government in Australia. The Coalition Government which came in introduced a health service on an entirely different contributory basis. The Australian health service was founded on voluntary insurance contributions—it is so today, and it has given satisfaction since that time—made up on a fifty-fifty basis by the Government. There are certain specified fixed charges for medical services towards which the voluntary insurance contributions make half, with an equal amount coming from Exchequer funds. That arrangement relates to general practice. The hospital service is on a slightly different basis, with the Government paying 40 per cent. to start with and then making up the 50 per cent. So the Exchequer contributions in the Australian service probably come to between 50 and 60 per cent. of the total. There are fixed fees for the doctors, but they do not in all cases cover the doctors' fees. They cover about 80 per cent., with the patient paying the other 20 per cent.

It has been suggested by hon. Members, for instance, by my hon. Friend the Member for Plymouth, Devonport (Miss Vickers) when she spoke the other night, that that service is not quite so comprehensive as our Service. In some ways it is more comprehensive than ours. It is more comprehensive certainly in two ways. One is that 111 pensioners have free drugs, and the other is that life-saving drugs on a certain list are free to everyone. It has the happy effect that there is not in it the feature that bedevils our Service at the moment, that is to say, the difference between private patients and National Health Service patients. In the Australian service there is no occasion for any division; everyone is on the same basis, and everyone has the same drugs. Any question of drugs as between private patients and National Health Service patients just does not arise.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

Now will the hon. Member tell us about New Zealand?

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

That service in Australia has obviously worked satisfactorily during the past ten years, because the Government have been re-elected after establishing it. I suggest that it has many points in its operation and structure which merit our attention.

We must look at all these things in the National Health Service for the future, things which we have, perhaps, ignored, things which it has not been convenient to examine, things which we may have thought would be vote-losing if we talked about them. All these factors we must boldly and courageously consider with a view to building a proper and dynamic Health Service for the people of this country.

5.26 p.m.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I felt a sense of shame that a doctor could rise in the House and suggest that a patient who is ill should be treated differently depending on whether he has money or whether he has not.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

I am sorry to challenge the right hon. Gentleman so soon, but will he explain why he says that? I said no such thing.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

The hon. Member suggested that if people have doctors privately and pay for their drugs privately they will receive better treatment than if they were treated within the National Health Service where everyone is treated alike.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

I said nothing of the kind. I referred merely to the fact that there is this agitation which reaches the Floor of the House, and we recognise the fact that it is taking place. That is what I said.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

The hon. Member in his speech was trying to justify people in other countries receiving medical services according to whether they paid partly on their means.

I had the honour of being one of the Ministers who introduced the National Health Service. Nye Bevan was the Minister in England and I was the Minister in Scotland. The principle governing the Service was that all people who became sick should be treated according to their disease and not according to their income. I am ashamed that any doctor should suggest that there should be a different approach to sickness in this country. The principle I have enunciated is the principle behind the National Health Service. How it is to be paid for is another matter. The principle is that people should be treated according to their illness and not according to their income, and that is a fundamental principle for which we shall fight. I shall certainly fight as hard as I can, with all the energy at my command.

The hon. Member described to us the campaign he conducted before the National Health Service was introduced. He did a great disservice both to the doctors and to the Health Service. Instead of the doctors of the country sitting down with the Ministers responsible before the Service came in and discussing what was the best thing to do and how best the Service could be managed, their minds were concentrated on all manner of irrelevant and stupid issues which really did not affect them at all. For months, we had an argument with the doctors about whether, if some doctor were dismissed, he had a right of appeal to the courts. This was one of the great issues, although the fact was that, under the old National Insurance Scheme, on the average, one doctor was dismissed in thirteen years.

Photo of Dr Donald Johnson Dr Donald Johnson , Carlisle

Does the right hon. Gentleman suggest that professional freedom is entirely meaningless?

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I was responsible for blowing the campaign into smithereens by the simple question that a doctor, like everybody else, was entitled to be tried by his peers and had a right of appeal to a lawyer on all legal points. The last thing that any sensible doctor would want to have decided was whether he was a good doctor. The whole thing was so nonsensical that when the point was put to them, the doctors dropped it.

The point was that time was wasted by the doctors. I am glad to say that in Scotland, although they were loyal to the B.M.A. in not coming out in opposition to it, they played the game behind the scenes and tried to discuss the best way to have the Service. The hon. Member and the Chancellor of the Duchy of Lancaster did a great disservice in their campaign at that time by diverting the attention of the doctors from their real duty and campaigning for a great many irrelevant demands which had no basis.

The chairman of the B.M.A. Committee at that time, whose name I forget—it was not Dr. Wand—has since confessed that he was completely wrong with the campaign and he has paid tribute to the National Health Service as being one of the greatest achievements of the modern age. It should, therefore, be realised that the campaign was a great mistake and that it should not now be carried on, because the Service has been established and is the envy of the world.

The matter was discussed in the House of Commons both on the Scottish Bill and on the English Bill, and I have read the debates. Nobody, not one person on the Conservative benches, raised the question of destroying the principle of the free treatment of disease. Not one person even raised the question of whether payment should be made from taxes or anywhere else. We assumed that it would be paid for as a medical service by the nation for the nation. These questions have come about only in recent times, not because of any criticism of the Health Service, but because of the idea that the Health Service is making a demand upon the taxpayer which in all the circumstances is not justifiable. There might be an argument on that basis, but it has nothing to do with the Health Service.

I agree that treatment has to be paid for. It is an embarrassment if it has to be paid for in an awkward way. The one thing that is wrong, however—and this accorded with the demands even of Conservatives during those debates—is that there should be any interference in a doctor's right to prescribe what a patient needs. The patient should be given what he needs for his illness. What the Conservative Government are doing today is to prevent patients getting medicines to which they are entitled. Even if the contributions and the taxes had risen still further, they would have been justified in maintaining a free service of drugs, because during that campaign the hon. Member for Carlisle (Dr. D. Johnson), as a member of the medical profession, demanded that the State should never interfere between a doctor and his patient. Tomorrow night, however, he will go into the Lobby to support the opposite principle. He is saying that a poor person can walk out of a chemist's shop because he does not have the money to lay down on the counter to get his medicine. I challenge the hon. Member that tomorrow night he will go into the Lobby and vote for preventing a doctor to be free to prescribe medicine.

Photo of Mr Gordon Touche Mr Gordon Touche , Dorking

I am sorry to interrupt the right hon. Gentleman, but, as he himself has pointed out, this subject would be more appropriate for tomorrow night.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I quite agree, Mr. Deputy-Speaker. I have pointed out that to maintain the principle of free medicine, there should be a greater charge, if necessary, upon the public. My knowledge of the public leads me to say that this is one service for which they would gladly pay. I am satisfied that the general public want the Service to be a complete service in giving people the treatment they require when they are ill. It is a mean thing if, when we economise, it is always at the expense of women and children, the poor and those who cannot hit back. It is not the Surtax payers who will get into difficulty.

The question is how the increased cost would be paid for if the additional charges were not imposed. I was disappointed in the speech today of the Financial Secretary, who knows a great deal about economics and usually has a clear mind. I am not clear about the principle that increased wages are a justification for higher contributions. If a man gets increased wages, he pays increased taxation. The important thing is that he pays according to his ability.

In the old days, the doctors used to charge people according to their ability to pay. I remember Dr. Chalmers Watson coming to me long before the Service was thought of and discussing the question of medicine. I told him that I never understood why doctors, in addition to being doctors, wanted to be tax collectors and why their wives had to sit down and send our accounts every week to bring in taxes to pay for the doctor. I could not understand how a doctor had to go round estimating how much a patient could afford to pay. Very often a doctor could be misled, because a person who wore poor clothes might have plenty of money but the doctor would let him off. On the other hand, a decent, respectable person trying to keep up a front, but who did not have money, was levied a higher payment by the doctor because the doctor estimated him to have a bigger income.

Therefore, I pointed out to Dr. Chalmers Watson that the much more sensible thing to do was to leave the Income Tax collector, who could better estimate people's income, to collect the taxes and to allow the doctor to get on with his medicine. I gather that the hon. Member for Carlisle wants to go back to making tax collectors of the doctors. I have a wealthy doctor friend in North America, who has a wonderful practice but cannot collect half his fees. Until the coming of National Insurance, many doctors had to act as benefactors to the general public, because they did not have the heart to charge some of the people fees even for prescriptions. It requires a Conservative Government to charge the people fees for prescriptions. The doctors would not have done it if left to themselves. I am sure that, even now, doctors will try to avoid all this penalising of these poor people by prescribing far more than they need.

The claim that extravagance in the medical service requires these contributions has not been proved. As the hon. Member for Carlisle pointed out, the Guillebaud Committee was appointed to find out the extravagances. As the hon. Member himself pointed out, that Committee did not find the extravagances.

Photo of Mr William Ross Mr William Ross , Kilmarnock

The hon. Member was disappointed.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

Everybody knows that when the Service came in, far from there being extravagance, the first thing we had to do was to raise the standard of nursing. That put up the costs. We had to improve the conditions of doctors. Does the hon. Member object to that? That is what is putting up the cost today. I am sure that the hon. Member does not object to an improvement in the doctors' standards. Therefore, the cost of the Service increases.

Does anybody maintain that the cost of the Service, even today, is as high as it ought to be? There are many things which should be done as soon as we can afford to do them. The question that we are discussing today is not the deficiencies of the Service, the benefits of the Service or whether it is good or bad. It has not been proved to be extravagant. We are discussing how we are to pay for it.

As a citizen I would say that the first thing we must realise is that the Service must be paid for and that the people of the country must pay for it. They could pay for it privately, by paying their doctor so much and the State paying the doctor so much. They could have a sort of double deal with the doctor. They could pay half of their prescriptions and the doctor could pay half. There could be all sorts of complementary payments. Any sensible person would realise, however, that the simpler it can be, the better it is. If the State does it in a simple and clear fashion, we know what it costs, but if we have all this round-about parade, as one hon. Member opposite has called it, with bits being collected here and there, nobody knows what the Service costs.

Therefore, we should be straightforward about it and say that the State will pay for the Service and raise the money in the best and fairest possible way. The fairest way is that people should pay according to their ability. The Financial Secretary to the Treasury has given the justification for the contributions today that they should be made on a poll tax basis, because some people have had increases in wages. But everybody knows that that is not the fairest way. He could not possibly justify it as being the fairest. The same person who pays the extra money per week will also pay any extra taxation that is imposed. The point is that the person who has too low an income to pay at all will be penalised and the person who can afford to pay more will escape.

The relief that will be given in Income Tax is just ridiculous when one thinks of what is necessary. I remember that when the food subsidies were abolished the average worker was given a relief in Income Tax of a few sixpences a week. He had to pay 5s. more for his food, and at the end of the week he had 1s. off his Income Tax.

Photo of Mrs Harriet Slater Mrs Harriet Slater , Stoke-on-Trent North

Would not my right hon. Friend agree that the poorer people are further victimised, because under the Tory Government the value of the £ has gone down to 15s.?

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

The Financial Secretary was arguing that the general standard of wages had gone up, and therefore we should have to go into all sorts of figures on that argument. All sorts of justifications are made for these increased contributions charges. The pharmaceutical chemists are supposed to be the blackguards. They are supposed to be responsible. I hope that the hon. Member for Putney (Sir H. Linstead) will take the opportunity of saying something about that in the course of the debate.

I am prepared to vote the money for this Service, but I want the money collected from the public in a fair way. I know the Chancellor's difficulty, because people do not like direct taxation even if it is the fairest taxation. They prefer to have a great deal of the taxation on cigarettes and beer and in other indirect forms. But even that would be better than a poll tax, because indirect taxation leaves a certain voluntary element in taxation. People are not bound to pay. They can avoid doing so by not buying beer or cigarettes. That form of indirect taxation is unfair in many ways but nevertheless it is a way of raising money.

There is a well-known gentleman who is engaged in the public Press who says that being given a licence to produce television is equivalent to having a licence to print pound notes. Great fortunes have been made out of television advertising. If the Government want to find a way of raising this £ 49 million, why does not the Chancellor collect some of the profits from these television advertisements instead of starting to lump this cost on to a cumbersome form of poll tax on the worker?

This method is silly from another point of view. Everybody knows that when increased sums were taken out of the workers' wages by the application of food subsidies, equalling 5s. a week, the engineers immediately had a rise in wages to cover them. All these things lead to industrial demands, and they go the full circle because the costs of industry go up and the value of money is reduced further by inflation. This tax, therefore, is not good from the point of view of recovering money from the public. It is a direct stimulus to demands for increased wages which cause a great deal of upset in industry. I am surprised that industrialists have not brought this to the Minister's attention.

Whether the cost of the Service is paid privately or not, the fact remains that it must be paid. Today we face the question whether this is the right way to raise the money from the public. It is my view and that of my hon. Friends, and I am sure that of any sensible economist on the other side of the House, that this proposed method is an unfair way to collect it. I hope that, even at this late stage, the Chancellor will get on to capital profits or to the wonderful profits of the television advertisers, or even to taxation on the advertisements themselves. If, for a start, drug advertisements were taxed it might reduce the cost of drugs and help to reduce the cost of the Health Service.

We maintain that people should be treated according to their needs and not according to their ability to pay. It would be a scandal if the medical service accepted the view that doctors should give better treatment to one person who has the money to pay than to another person who is suffering from a similar illness but who has not the money to pay. I hope that we shall fight for as long as we can for the principle that people should be treated according to their needs.

5.45 p.m.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

On 8th February the right hon. Member for Be1per (Mr. G. Brown) said: … I believe that the policy we seek to censure today is indeed a monstrous one. It is a monstrous policy which has offended many far beyond the ranks of those who normally support my party."—[OFFICE. REPORT, 8th February. 1961; Vol. 634, c. 406.] which suggested that he thought we were introducing a new principle by what it is proposed to do in the Bill. I am glad that the hon. Member for Sowerby (Mr. Houghton) did not agree with his right hon. Friend.

The hon. Member for Sowerby, with the normal clarity of thought to which we are accustomed when he addresses the House, recognised that we are not embarking on a new principle, but he stressed the political importance of what we propose to do. I would agree with him that it is of great political importance. Hon. Members opposite have suggested that we are trying to undermine the Health Service. Nothing could be further from the truth. It is because we are determined that the Health Service, and particularly the hospital side of it. goes from strength to strength that we are seeking to place its financial structure on a firm foundation.

No new principle is involved. There is no intention to undermine the Health Service. The real argument between us today is that many hon. Members opposite have never accepted the decision of their own Government, a decision stoutly defended by two of their Chancellors of the Exchequer when they were in power. that there should be a strict upper limit to the charges for the Health Service which fall on the Revenue. We on this side of the House take the view that the greatest service that any Government can render to the social services, and particularly to the poor and those least able to look after themselves, is that we should maintain the value of the pound. This Bill is an important contribution towards that end.

There is no new principle, because the Labour Party itself introduced health contributions and prescription charges when it was in power. Under the present proposals the proportionate demand for the Health Service that is being made on the gross national product is approximately the same as it was when the Health Service was originally introduced. Since the real purchasing power of the weekly wage-earner is going up as compared with the real purchasing power of those in the high-income brackets, the weekly wage-earner will not contribute proportionately so much to the National Health Service as was the case when the Service was initiated. Those at the lower end of the income scale are relatively better off. [HON. MEMBERS: "Oh."] Yes in real terms they are better off than they were at the inception of the National Health Service. The proportion of direct contributions in stamp and charges—

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

Who wrote the hon. Member's notes?

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

Does the hon. Lady wish to intervene?

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

The hon. Member seems to be paying extraordinarily close attention to his notes, and I was wondering whether perhaps he was unable to read somebody else's writing.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

The hon. Lady's sedentary interventions are not funny.

The proportion of the direct contribution made in stamp and charges, as compared with the indirect contribution by the Revenue, is also very roughly the same as it was when the party opposite introduced the Health Service.

If I thought that the Bill would make the poor suffer, I should not be in favour of its proposals, but nothing could be further from the truth. The propaganda of the party opposite very often associates together the retired, the old and the young as being synonymous with the poor. But the old and the young do not contribute to these contributions.

Photo of Mr John McKay Mr John McKay , Wallsend

The hon. Gentleman seems to imply that the Government are not introducing any special payment for the poor. Who does he think are the poor? Does he think that only those who are old or young—those not having an income—are poor? There are 7,440,000 persons whose wage, after making insurance contributions and paying tax, is £ 6 5s. a week. Does not the hon. Gentleman think that poor? I think that it is very poor. Including the wives and children of those men, there are 9,500,000 people in that group.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

I challenge the hon. Member on the source of his figures. They cannot conceivably be correct.

Photo of Mr John McKay Mr John McKay , Wallsend

Would the hon. Gentleman like me to give him the figures?

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

Give me the source of them only.

Photo of Mr John McKay Mr John McKay , Wallsend

They are out of the Blue Book on National Income and Expenditure, 1960.

Photo of Mr John McKay Mr John McKay , Wallsend

It shows that there are 7,440,000 people in the income group £ 250 to £ 500 a year. After tax the figure in the book is £ 2,648,000. The average over the year is £ 354·7.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

He has a lot more yet. Settle down.

Photo of Mr John McKay Mr John McKay , Wallsend

Does the hon. Gentleman want the figures?

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

They are too bad for him.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

Not at all. I asked the hon. Member for Wallsend (Mr. McKay) to give me the source of the figures. He proceeded to try to read out a number of figures but those include all the immediate school leavers, as he knows perfectly well. Perhaps I may now be allowed to get on with my speech.

During the course of the debates related to the Government's present proposals, it has been charged that much of the responsibility for the increase in costs lies at the door of the high profits in the pharmaceutical industry. That charge was levelled again today by the hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn).

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I made no such charge. I suggested that the charge had been made and that the hon. Member for Putney (Sir H. Linstead) had not so far risen to defend the industry against it.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

The right hon. Gentleman was repeating the charge which he had heard from other people. I want to deal with some of the points arising out of that charge.

If it is being suggested that this industry has been responsible largely for the increase in costs we should recognise the sources of revenue of the industry. In approximate figures, one-third of its products only is sold to the National Health Service; one-third is sold over the counter, and one-third goes to exports. Thus, it makes a substantial contribution to our export trade, and anything that we might say in this House that would do harm to that industry would be a disservice to our export trade.

Let us put into proper perspective the cost of drugs, and the proportion they bear to the total charges of the Health Service. The cost of drugs amounts to only between 6 per cent. and 7 per cent. of the total National Health Service bill. Patent drugs are largely in the hands of foreign companies, and this is largely because tile amount of research conducted in this country is nothing like as great as in other countries, particularly the United States.

The Public Accounts Committee, of which I am a member, has some probing things to say about the cost of drugs, and we should clearly understand what the remit of the Committee is. It is not necessarily to reduce the cost of the drugs, though that might well be the effect of the probing. The remit is to give an assurance to Parliament—and I quote from paragraph 18 of the second Report of the Committee for 1959–60— … that The prices charged to the Health Service are no more than fair and reasonable This year the Committee was unable to give that assurance, since the information available to the Ministry of Health was insufficient. There has not been sufficient confidence between the Ministry of Health and the industry to allow a full exchange of information to take place.

The industry has been unduly secretive and has made the Ministry suspicious that it has been making excessive overall profits. The Ministry, on the other hand, has given the impression to the industry that if it is given detailed figures for individual products it will attempt to screw down the profit on each individual item, rather than take into account the profitability of the firm as a whole, including research and losses on items which do not come to fruition.

The industry takes the view that the export criterion, whereby the prices charged to the National Health Service will be not more than the average price charged in the six main export markets, indicates a competitive price and, therefore, a fair and reasonable one. The question that has been still unanswered is whether, when such a large proportion of these drugs are patented, the export criterion is necessarily an effective one.

If we are to have some hope of stabilising the cost of the Health Service at somewhere around the present figure, on which the charges in this Bill are based, the Ministry and the pharmaceutical industry must get together. The Ministry must convince the industry that it will treat the industry fairly, taking into account its overall profitability rather than pursuing isolated individual items. The industry must cease behaving like a clam and provide the Ministry with all the detailed information necessary to convince the Public Accounts Committee and Parliament that the charges for pharmaceuticals are no more than fair and reasonable.

Photo of Mr James Hoy Mr James Hoy , Edinburgh Leith

The hon. Member will remember that the Public Accounts Committee carried on this investigation for a number of years, and he will probably remember that in 1957, or 1958, the Ministry of Health approached three of the drug firms with the result that the three firms had to reduce their prices, resulting in an annual saving to the Health Service in respect of those three firms alone of £ 850,000.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

I am not suggesting for a moment that all the firms are without blemish, as the hon. Member for Edinburgh, Leith (Mr. Hoy) knows full well from some of the questions which both he and I asked in the Public Accounts Committee. What I am suggesting is that the Ministry, as well as the firms, could make a contribution to a greater understanding. If the Ministry makes a contribution by giving the firms confidence, and they make a corresponding contribution by being less secretive, then the members of the Public Accounts Committee will be able to assure Parliament that the prices of the drugs are no more than fair and reasonable. One hopes to see a stabilisation of prices to the Health Service, which will mean that we shall have no more need to increase charges and introduce Bills of this kind.

In that connection, I welcome the action which has been taken in the new negotiated price agreement which will enable the Minister to investigate the cost of drugs supplied to the Health Service in large quantities. When a firm is supplying considerable quantities to the Health Service it is reasonable that prices should come down as a result.

Photo of Mr Norman Dodds Mr Norman Dodds , Erith and Crayford

The hon. Member's argument seemed to be that if the Ministry of Health had been more alive to the public interest, there would have been no need for a Bill of this sort. Is he saying that the Ministry of Health has not been doing its job and that it would have been better if the Ministry had looked into the cost of drugs before it started putting up charges?

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

I did not say that at all. What I said was that the public relations between the industry and the Ministry left much to be desired and that there were faults on both sides.

6.4 p.m.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

The fascinating part of the last few remarks of the hon. Member for Dover (Mr. Arbuthnot) was when he spent a great deal of time informing us that he thought that there was something radically wrong with the drug industry and that he felt quite strongly that the industry should be kind enough to let Her Majesty's Government know the basis upon which the present £ 90 million worth of expenditure in the drug industry was compiled.

The hon. Member's words showed the significant difference of attitude adopted by hon. Members opposite when they talk about the £ 90 million spent on drugs and profits for the drug industry and that which they display when they talk about the cost to the patient in the National Health Service. That is one of the significant things which we have had throughout these debates on the Health Service.

The hon. Member for Carlisle (Dr. D. Johnson) was asked about wastage, and whether savings could have been made in defence expenditure to enable the Government not to have increased the charges. I do not agree with some of my hon. Friends about what changes could be made, or how far they should be made, but when an hon. Member opposite mumbles something about teen-age expenditure being very high, he is missing one of the major points. He should have read some of the Reports of the Public Accounts Committee. The amount which the Government wasted on Blue Streak alone would have paid for these contributions for about ten years. If the Government needed to find this increased money for the Health Service, they should have paid more attention to the bookkeeping on Fire Streak, Seaslug, and the Swift fighter. On guided missiles alone they wasted about £ 300 million quite recently.

It is humbug for them to mumble something about teen-age expenditure when the Government have wasted more money than any time since Charles I met Nell Gwynne—[HON. MEMBERS: "Second."] Charles II—it is reassuring to know that hon. Members opposite have a greater knowledge of history than of economics.

The Financial Secretary clearly tried to drown the controversy in a speech which had the bubbling effervescence of a cup of cold cocoa. He gave a long recital of facts and figures and assured us that there was nothing fundamental about the Bill and that the Minister was just tying up a few odd ends and that the principle was very much the same as it had always been. [HON. MEMBERS: "Hear hear."]

I am glad to hear hon. Members opposite agreeing with such alacrity, because it gives me the impression that they think that the Minister might be correct.

Photo of Mr John Arbuthnot Mr John Arbuthnot , Dover

The hon. Member for Sowerby (Mr. Houghton) believed that and said so.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

One of the most significant things which my hon. Friend the Member for Sowerby (Mr. Houghton) said was that much of the speeches of hon. Members opposite was sheer pious humbug. There are one or two babes in the wood, but the overwhelming majority of them do not believe, any more than we do, that this series of Bills represents anything other than a major, blatant attack on the fundamental basis of the Service.

I remember when the Health Service was being introduced in 1948. As an outsider—I was not then in the House—.I wondered why it was that if hon. Members opposite were as enthusiastic about the Health Service as they appeared, there was so much difficulty about getting the Bill through. I remember that in 1948 the then Member for Oxford, Quintin Hogg as he then was, spoke to the Oxford Union. I took two American friends to hear him and the noble Lord, as he now is, made a long speech in which he attempted to prove conclusively that the Conservative Party had not only supported the National Health Service, but had thought of it first. He never quite succeeded in telling us whom his party was fighting, but he explained his argument at great length. At the end, one of the Americans turned to be in absolute horror and said, "Gee, that guy is a Commie".

It is an indication of how far we have come that in 1948 hon. Members opposite did not dare to attack the Health Service openly after ordinary people had come to understand what it meant. There are only a few who do. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) is completely sincere. He has always believed that too much expenditure on the social services is bad. Hon. Gentlemen who get up on public platforms just before a General Election and pour out their hearts in support of the social services and then, immediately after the election, introduce Bills of this nature, act to the detriment of those services.

There has been a lot of talk today about the increase in average earnings. Indeed, after listening to some hon. Gentlemen opposite one would expect to find the car parks of industrial areas chock-a-block full of Rolls Royces and Bentleys. It is true that average earnings have increased, but they are still in the region of only £ 14 per week and many people receive less than that.

Photo of Mr Percy Wells Mr Percy Wells , Faversham

I hope that my hon. Friend will not overlook the 600,000 agricultural workers who receive only £ 8 9s. per week.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I hope later to make a point to show that that is true not only in the case of agricultural workers.

We have heard a great deal about the increase in the cost of the Health Service, but the point is that although earnings have increased taxation has increased with them. I have no objection to a man who earns more paying more towards the social services. We have heard about Surtax payers. I am a good Socialist and I openly make the offer to any hon. Gentleman who is worried about paying Surtax that I will change incomes with him and pay his Surtax for him.

This is not just a tying-up of little ends. This is a fundamental attack on the National Health Service. It proves conclusively, as it has done on many occasions when we have talked about the Health Service, that the suggestion which has been made from time to time in this country that the two great parties are moving closer together is complete nonsense. The gulf which divides hon. Members on this side from hon. Gentlemen opposite is quite insurmountable, because what divides us is not an argument about the details of legislation, or an argument about weapons, but an argument about the fundamental approach to the way in which we should look after our people.

My right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) said the other evening that he could not understand how it was that hon. Gentlemen opposite, many of whom he had known for many years, could, in their personal private lives, be such generous and pleasant people—they keep cats and tip waitresses—

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock

Sometimes the other way about.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

—yet when it came to a Bill, and a series of Bills, dealing with the living standards of the ordinary people their attitude was so different.

I say that there is nothing new and surprising about that, because theirs is the Poor Law mentality. They believe that the social services exist purely for the alleviation of poverty. Theirs is the attitude which was prepared to accept with great sincerity the idea of the workhouse. They do not believe in people being allowed to starve in the streets—it is untidy and it lowers the rateable value. They have always regarded the social services as something which should be kept down to a minimum and used merely to alleviate dire poverty.

When the Beveridge Report was introduced, it was not just a series of suggestions about new legislation. It marked a fundamental change of approach to our people. It marked a change which hon. Gentlemen opposite have tried to overturn ever since the early 1940s.

What is happening in this Bill is that we are gradually moving back to a situation where the Health Service is not a Service which is intended for all according to need. It is a Service which one is gradually trying to cheesepare so that it looks after only the very poorest in the land.

This is not an isolated instance. This is not an isolated Bill. It is not a coincidence that just as the Bill arrives we hear suggestions from the Bow Group and from hon. Gentlemen opposite that we ought to introduce charges for education as well. It is completely logical. If one introduces this type of attitude to the National Health Service, it is sensible to apply the same sort of attitude and the same sort of mentality to the education service.

Photo of Mrs Harriet Slater Mrs Harriet Slater , Stoke-on-Trent North

And the White Paper on Housing in England and Wales.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Yes. We expected that. That has always been the attitude of hon. Gentlemen opposite. I hope it will be made clear in the course of the debate that what we are talking about is whether the Health Service, and every other social service, should be financed according to ability to pay and should be used by people according to their need to use it.

We have heard a good deal about the state of the Health Service. Is it in financial difficulties? Do we have to introduce charges of this kind? No one denies that the cost of the Service is increasing. It would be foolish to deny it. Few on this side would deny that the cost of the Health Service ought to be higher than it is at the present, because too little is being spent on the Service. We have heard a lot about how this money is needed to improve the Service and to allow it to continue to improve, almost day by day.

What sort of situation is the Health Service in now? We heard that one of the main reasons for the rise in the cost was the increase in staff salaries. Because of these increases in wages, more money is needed to pay the staff. We heard a lot about wages in other industries, but in the Health Service the basic rate for some employees enables them to take home less than £ 8 a week. These are the people to whom the Minister has been so generous.

I think that one of the most glaring examples of the state into which this Service has got, the answer to all the eyewash that we have heard about the strong feeling for the Service, is these leaflets that I have. They are trade union recruiting leaflets issued by the National Union of Public Employees. The blue leaflet is printed in Spanish; the yellow one in Polish; the green one in Italian; the orange one in Hungarian; and the red one in German.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

No. This Union has found that the National Health Service is being run with staff who cannot speak English because conditions are so deplorable that they cannot get our own people to do the work.

In case any hon. Member wonders whether that matters, I remember going to an inquest at Epsom a couple of years ago. It was on a patient who was killed in a mental hospital. He was put in a bath of water that was far too hot. As hon. Members may know, there is only one tap to a bath in a mental hospital, and a key has to be used to set it going.

Because there was an Italian boy there, an untrained nurse—the sort of people we use to push up the nursing figures—who could not speak English, he thought that as there was only one tap it must produce water at the right temperature.

When this mental patient complained, the boy could not understand what he was saying and the old man died. That happened because in recent years in many mental hospitals we have employed people who cannot speak the language of the country in which they are employed. That illustrates the state to which the Health Service has got in recent years.

We hear a great deal of talk about the drug firms. Not only do they get a big profit out of the Health Service, but they take the cream of the technical staff of the Service because they can pay them better salaries.

In the Health Service we pay a trained radiographer, a qualified professional person, something less than £ 10 a week and we wonder why these people go out to get jobs in private industry. We pay a physiotherapist £ 500 per annum and a laboratory technician £ 595, and the Minister has the audacity to tell us that he needs more money because he is to build up the Service into a bigger and better Service than ever before. When my hon. Friend the Member for Sowerby said that there was a lot of hypocrisy and bunk being spoken from the other side of the House he was, to some extent, playing it down.

What has been happening, what is the key to the whole thing, is that the Government are not raising any more money at all. The purpose of the exercise is not to raise more money, but to redistribute the cost of the Health Service. It is a very simple exercise. It is believed by hon. Members opposite that we should take some of the charge for the Health Service away from the taxpayer and place it on the sick, on the ordinary person, people whose income often absolves them from paying Income Tax at all. We say to them that they do not have to pay Income Tax, but will be paying more money in National Health Service contributions. This system is not only unjust, but it is completely immoral.

Where can the money come from? Hon. Gentlemen opposite are entitled to ask that, if there is an increase in the cost of the Service, and this is a redistribution and is not meant to meet the cost. If hon. Members on this side of the House say that more money ought to be spent on the Health Service, hon. Members opposite are entitled to ask where it shall come from. Hon. Members opposite often ask that question, but they never listen to the answer. The country would be much healthier if they did.

During the last ten years the Government of the party opposite have given away £ 1,000 million in tax concessions. We believe—and this is where hon. Members on this side differ from hon. Members opposite—that if the choice is between £ 1,000 million to be given away in tax concessions and the spending of a few millions on people who do not pay tax at all, the people who have had tax concessions ought to pay their share. I do not think that any Government has a right to reduce taxation and, at the same time, on the basis of a poll tax, impose taxation on the sick and on other people.

I could discuss the question of denationalisation which, I think, is relevant in this connection—[Laughter.] Hon. Members opposite may laugh, but the only way that they can raise this money of which they are in such need is by going to the poorest section of the community. I am saying that a Government which can cheerfully give away about £ 70 million from the steel industry should have found a better way to raise this money. Before starting to give away the taxpayers' money to their friends and supporters they might have shown some concern for the Health Service and made sure that the Service had the first choice.

There has been much propaganda in favour of shifting away from direct to indirect taxation. It is all part of a campaign. It is quite simple just a 5 per cent. sales tax. If one wants to buy a Bentley, one pays the 5 per cent. tax; if one wants to buy a loaf of bread, one pays the 5 per cent. tax. All men are equal, but some manage to be more equal than others. Since the end of the war, there have been nine people who have been able, under this Administration, to make over £ 40 million in tax-free capital gains.

Are the Government trying to persuade us that they cannot raise this money in any other fashion? Surely the answer is simple When we get down to the fundamental issue it is simply a question of whether the people shall be entitled, as of right, to certain basic needs, to a decent standard of education regardless of ability and the status of their parents; to a decent retirement pension regardless of their earnings and to the best health that science and modern progress can provide. That is the simple argument between the two sides of the House: do we want that to be paid for according to the ability which people have to pay, or are we proposing cynically to continue to watch this burden of payment being shifted from the shoulders of those most capable of bearing it on to the shoulders of those least capable of bearing it?

Hon. Members opposite are very clever. They always bring in these proposals after a General Election. There was no suggestion during the election campaign that this might be necessary. At present, we see posters telling us that the Conservatives care—

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I agree that the party opposite won three in succession, but I am sure that there must be many hon. Members opposite—if one assumes that some of them have consciences—who must feel rather concerned about the measures which were adopted to win those three elections.

I hope that during this debate we shall make clear that this is not an argument about figures nor is it a mass of technicalities. This is an attack on the social services, an attempt to take them back to the pre-1948 standard, and that is why hon. Members on this side of the House will do everything they can to oppose it.

6.26 p.m.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I am glad to have the opportunity of speaking after the hon. Member for Greenwich (Mr. Marsh). Although I like the way in which the hon. Member speaks in the House, I must say that he always makes a speech—as do so many of his hon. Friends—as if he were representing a country which was nothing less than a soup kitchen—

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

That is what you want to make it.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

It is because we do not want to have that mentality, because we want to move away from that mentality, that we are bringing in these measures.

Perhaps hon. Members opposite might think about getting up to date. In 1945, the greatest electoral advantage which they had at the hustings and on the platforms was that their party was known as the Labour Party. Do they realise that in 1959 their biggest disadvantage was that their party was known as the Labour Party—because people today like to look upon themselves as a middle-class society—[Laughter.] It is true—

Photo of Mr Percy Collick Mr Percy Collick , Birkenhead

The hon. Member thinks it is.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

Yes, the standard of living has risen during the last fifteen years, since the end of the war, until, broadly speaking, we are today dealing with the attitude of mind of a middle-class society.

When my hon. Friend the Member for Dover (Mr. Arbuthnot) was speaking the hon. Member for Wallsend (Mr. McKay) made great play with the fact that there are 7 million people in the Blue Book on National Income and Expenditure whose net disposable income, after paying these contributions and their taxation, was about £ 6 a week. What the hon. Gentleman did not take into account is that in this 7 million we have all the school leavers from the age of 15 to 20 and that there are over 100,000 school leavers a year. We have in that group alone 2½ million school leavers and at least 2 million people who are in part-time occupation.

As the average earnings are £ 15 a week, and if we take it that 5 million of those people are school leavers and people with small responsibilities—and, therefore, it is perfectly right and proper that they should pay a reasonable contribution towards the Health Service charges—it means that the great mass of the people who are paying the contribution have an income very much over £ 15 a week. The average is £ 15 a week.

Photo of Mr John McKay Mr John McKay , Wallsend

I think it is only fair that the hon. Gentleman should allow me to explain that many school leavers get 5s. a week. These figures are in the group starting at £ 5 a week to about £ 9 15s. There are few school leavers in that group.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I did not say that they all left school at 15 to go to their first job at £ 5 a week. But it is only a very short period before they do get jobs at £ 5 a week. That is because of the state of the labour market. When we hear all these questions about staff difficulties, we have to remember that it is because there is a great demand on the services of the population that the problems which the hon. Member for Greenwich mentioned arise. That is why there are foreigners in this country doing the less pleasant jobs because, in fact, by and large, for the average intelligent person there are a great many jobs which are paid for today at what I would call a middle-class remuneration.

There is a mental attitude among the great mass of the population. I am quite certain, realising as they do—and we had a great deal of this argument during the General Election campaign—that any service has to be paid for, whether we meet it out of taxation as a general charge on the people it falls on exactly the same people. Indeed, by and large, it is the same people who are concerned. When there is a service given, it is not a bad thing that people should make some direct contribution, so that they can see that they are paying for it and realise for themselves the expensive nature of that service to the national economy.

Photo of Mr Percy Collick Mr Percy Collick , Birkenhead

I am trying to follow the hon. Gentleman's argument. He started off by saying, in effect, that it was wrong of us to call ourselves the Labour Party, because we now have a middle-class population and everybody is so much better off. If that is the argument. perhaps the hon. Gentleman will tell me this. If everybody is so much better off, as he is asking us to believe, it follows again that they must be paying more in taxation. If, therefore, they are paying more in taxation, why do the Government find it necessary, as the Financial Secretary to the Treasury told us when he opened the debate, to say that we cannot afford to spend so much on our Health Service today as we did in 1950?

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

According to the Estimates this year, we are spending £ 867 million, and if we ask any ordinary reasonable persons who make up the population, I think that they would say that that was a rather substantial sum to find.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

What do we spend on armaments?

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I admit that the first duty of a Government is to protect the State, and I also admit that the burden of armaments is very heavy.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Health is essential to the protection of the State, too.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

Yes, it is, but very few people, even on the hon. Gentleman's side of the House, would question in great detail a great deal of that expenditure. They make cheap "cracks" about the progress of the research that is going on, when they know very well that some of the research going on will never come to fruition.

I do not want to get out of order, but want to deal with the Health Service contribution. Some of the speeches from the other side of the House seem to me to have been speeches on the Finance Bill, or the Budget, and on the general picture of taxation in our society.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

Perhaps the hon. Gentleman will allow me to continue. He has already made three contributions without getting up, and perhaps he will make an official one later.

I do not want to detain the House, but I am sure that, in a society in which there is a good standard of living and in which there is a definite service and benefit, it is not a had thing that people should be able to realise what a burden it is and should pay some direct contribution so that they may see what the Service costs. The Labour Party

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

No, I will not give way again. I have been very good, and have given way about five times already. I lose the thread of my argument if I give way too much.

In 1948, when the Labour Party brought in the National Health Service Bill, it accepted the view that a direct contribution on a weekly basis from the individual who was to be a beneficiary was, in fact, a good thing. [HON. MEMBERS: "No."] Oh, yes, the Labour Party thought that it was a good thing for the individual to realise that the service was not something for nothing. In view of the standard of living that we now have, with the average level of wages at about £ 15 a week—and that figure is affected by all the young people with no commitments, who certainly ought to pay contributions, because they have no other direct responsibility themselves—I have no difficulty whatever in saying that in my honest opinion—it may be a cleavage of view, as the hon. Member just said I believe that we are doing something which is not only justified, but which will, in the long run, be for the good of the Health Service,

I am not paying lip-service to the Health Service, because I think that it is a very necessary edifice in the national life, but it is not a free one—[HON. MEMBERS: "It should be."]—whichever way we look at it. It cannot be a free one, although hon. Gentlemen opposite have already said that it is very largely. I accept that there is a great difference between us, but, in fact, people pay for it through taxation, or a stamp, or in other ways. It does not come out of a hat, and it is just as well that the thinking of the hon. Gentleman opposite, if widely held, should be reinforced by my argument that a contribution from the individual is necessary to make him realise that it is not free service, as the hon. Member seems to think it is.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I cannot give way.

It is for that reason that I have no hesitation whatever in warmly supporting the Second Reading of this Bill.

6.37 p.m.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

It was indeed curious to me that the hon. Member for Ormskirk (Sir D. Glover) should open his speech with a reference to soup kitchens. May I tell him two things about them? In 1931, when we proposed that secondary education should be free for all, it was turned down by the then Government, and the President of the Board of Education said that it would mean that if everybody had secondary education we should be making education an "intellectual soup kitchen."

May I also tell him, too, that the words "soup kitchen" have a very deep connotation for people on this side of the House, that in hard times our own parents fed from soup kitchens that were to be found in the industrial areas when the Labour Party and trade union movement was beginning that organisation of the workers which has ended for all time both soup kitchens and the soup kitchen mentality.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

The hon. Member is always very courteous. I am glad that he has raised this point. I should like to assure him that I did not use that expression in a cheap way, but to emphasise in one expression the change that there has been in our society, and that today we are dealing with a middle-class society. Nobody is more delighted than I am that time has brought an end to soup kitchens.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I think that the hon. Gentleman has now moved away from the position which he had already taken up.

May I say a word or two about the earlier speech of the hon. Member for Dover (Mr. Arbuthnot), who has left the Chamber? He seemed to suggest that there was a difference in attitude between my hon. Friend the Member for Sowerby (Mr. Houghton), who opened the debate from this side of the House, and my right hon. Friend the Member for Belper (Mr. G. Brown), who spoke on this subject earlier, in that my right hon. Friend the Member for Belper said that there was a matter of principle and my hon. Friend the Member for Sowerby seemed to have suggested that there was not.

May I say to the benches opposite two things about that? It is a simple fact of philosophy and of life that quantitative changes in time become qualitative changes, and to some of us, if we change a poll tax, as has been done in the lifetime of the Tory Government, from 81d. to 2s. 8d., the quantitative change has become almost one of principle.

Already in this debate, however, there has emerged in the speech of the hon. Member for Dover and in the speeches from this side of the House a real difference of principle. The hon. Member for Dover said that there ought to be a "strict upper limit" to Treasury expenditure on the Health Service. I emphasise the Treasury expenditure, not the Health Service. We are not debating the Health Service this afternoon, for both sides agree that its cost must increase.

The debate was opened by the Treasury and not the Minister of Health, because we are debating a distribution as between the graduated tax and the flat-rate tax levied by the Treasury. Hon. Members opposite believe that there should be a strict upper limit to Treasury expenditure on the Health Service. We on this side, on the other hand, believe that there should be a strict upper limit to the poll tax element in taxation, and I believe that that strict upper limit had been reached long before this new 10d. increase was introduced.

I had not intended to speak in this debate, because I regard tomorrow's subject for debate as one in which the Government reveal themselves as even more mean than in this Bill. What decided me to speak today was the speech of the Financial Secretary, who showed how clearly he understands the issue which divides us. Incidentally, he complained at not being allowed to address the Committee the other evening, although he had caught the eye of the Chairman. I thought that a strange complaint, coming from him. I do not know whether he expected sympathy from those of us who failed even to have an opportunity to catch the eye of the Chair, those of us who sat throughout the debate, and, indeed, throughout the whole day, trying to voice the views of our constituents. If he has a complaint at all it is one against the Patronage Secretary. We have no sympathy for the Financial Secretary, who could himself have helped alleviate the tension of that unfortunate evening had he given way and allowed more back benchers to speak.

The Financial Secretary said that he believed that this new poll tax element was not unfair, and he amazed me by saying that during the period of office of the Conservative Government the proportion of the graduated tax element in our revenue had risen. Indeed, if I remember him rightly, he said that it had risen to 47 per cent. It is for that reason that I return to the figures which I mentioned briefly in a debate last week, figures in the national income expenditure table for 1960. I hope that the Treasury Front Bench will take note of them. In 1950, the graduated taxes produced £ 1,811 million. In 1959, they produced £ 2,758 million. The graduated taxes had risen by 50 per cent.

In 1950, the flat-rate tax, the so-called contribution element—what I call the poll tax element—stood at £ 440 million and in 1959 it stood at £ 898 million—not, incidentally, the figure that is given in my speech in HANSARD where, owing to a misprint, it appears as £ 998 million. It rose from £ 440 million to £ 898 million, an increase of over 100 per cent., so that in the ten years of Tory Government, while the graduated tax had risen by just under 50 per cent. the poll tax element had risen by over 100 per cent.

That is the first figure. Putting it another way—and this is where I challenge the statement made by the Financial Secretary in the course of his speech—in 1950—and the figures are all from the Government's own tables—graduated taxation represented £ 1,811 million out of £ 4,380 million, or 41½ per cent. In 1959, it represented £ 2,758 million out of £ 6,834 million, or 40 per cent. The proportion of the national revenue levied by graduated taxation, far from having increased under the Tory Government, has declined from 41½ per cent. to 40 per cent.

On the other hand, in the same period, the poll tax element, the contribution element, which stood at £ 440 million out of £ 4,380 million-10 per cent. of the revenue levied by the Government in 1950—is now £ 898 million out of £ 6,834 million, or 13 per cent. This is then a matter of pure simple fact, that during the lifetime of the Tory Government that percentage of the national income which was used by the Government and levied from the citizens of England according to their capacity to pay has been reduced and that part which is levied as a flat rate on all citizens has been increased.

The figures that I have given do not take into account the savage increase in the flat rate which will be made in April in the National Insurance contribution and this new penal increase in the poll tax as proposed under the Bill. I assume that this charge, plus the other charge, will raise the poll tax element of our national taxation to nearly £ 1,000 million a year. That is why I said at the beginning of my speech that I am one of those who believe that the upper limit of the poll tax has long since been reached.

I agree with the Financial Secretary on one point. He was right in saying that this Bill should not be introduced by the Minister of Health, that it has nothing to do with the Health Service, that it should be introduced by a Treasury Minister and that the debate should be wound up by the Chancellor. For this is a minor Budget; it is an anticipatory Budget. It has to do with the redistribution of national income, and with nothing else. We on this side of the House believe in narrowing the gap between the richest and the poorest in the country. We believe that the flat-rate element in taxation, far from narrowing the gap between the richest and the poorest, widens it, whereas hon. Members opposite believe that it is their duty to widen that gap.

One justification for what it is proposed to do, according to the Financial Secretary is that wages have risen since 1950 and that the fact that they have risen is, to him, a reason why we must increase the poll tax element in the National Health Service charges. As the hon. Gentleman pointed out, however, by the Bill we shall raise the flat-rate contribution from 10d. as it was when we set up the Health Service to 3s. 4d., or the workers' part of it from 8½d. to 2s. 8½d., an increase of 400 per cent.

Is any hon. Member opposite prepared to claim that wages have risen by 400 per cent. since the Health Service was introduced? I know of no profession and no industry in which wages have risen by four times as will the flat-rate contribution under the Bill have risen.

Moreover, while it is true that some wages have risen and the Financial Secretary's own figure was an increase in wages of 200 per cent., while it is true that the average wage may be £ 14 a week, there are millions of people who are getting under the average wage. There are millions whose incomes have risen very slightly indeed in the last few years. While wages have increased, profits and dividends have also increased and, as has been pointed out, graduated taxation takes care of that. The sort of classic justification of graduated taxation is that it takes account of what the Minister wants to have taken into account and if there is a rise in a person's income he pays more under a graduated scheme. It ensures that those who pay most are those whose wages, or profits, or dividends have risen most. I believe that we ought to be moving away from the conception of flat-rate taxation altogether, from contributions, prescription charges and indirect taxation. All indirect taxation is in itself on a flat rate.

We ought to be moving steadily as a civilised community towards the principle of levying the bulk of our national, Government expenditure on the basis that he who has most should pay most. I believe that this is an iniquitous Bill. It is iniquitous because it imposes the same charge on men of whom an hon. Friend spoke, who have made recently £ 40 million each in capital gains, the same 10d. a week on them as on pensioners, low-paid wage earners, those with large families and those on low, fixed incomes.

I was very surprised to hear the hon. Member for Dover challenge the figures given by my hon. Friend the Member for Wallsend (Mr. McKay). Those of us who know my hon. Friend will know from his speeches in the House, and from the fact that day after day we see him working in the Library. how hard he words in this field and that when he gives figures to the House they are figures that can be relied upon. From the Government's own statement on National Income and Expenditure, 1960, we find that in 1959 there were 5 million people earning under £ 5 a week and 8 million receiving between £ 5 and £ 10 a week. So 13 million people have incomes, after tax, of under £ 10 a week. I refuse to believe, with the hon. Member for Ormskirk, that those are all school leavers.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I mentioned school leaving and part-time working. The hon. Member spoke about two people making capital gains of £ 40 million each and the pensioner paying the same increased contribution as they would pay. I am sure that he will agree that retired pensioners will not pay any contribution.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

There are pensioners who are under the age of 65. I know that this charge will be a tax only on people up to the age of 65, but there are people under 65 who have to retire earlier, there are widows, and those who receive breakdown pensions. There is quite a group of people under 65 living on fixed incomes. Hon. Members on both sides of the House protest that they are really caring about those who live on fixed incomes. I am worried about the burden which the Bill will impose on them.

It is a matter of quite simple fact, and not even of political argument, that for the well-off people the 10d. which is being imposed will mean nothing at all. Some richer sections of the community have benefited so considerably from previous legislation brought in by this Government that they will be very willing to pay 10d. a week as a thank offering. But for millions of other people the new poll tax means both hardship and injustice. I am fortified in what I say by the fact that in this debate I speak for the whole trade union movement in my constituency. Every trade union in my constituency has written expressing its protest against this new Bill.

The poll tax element has long ago ceased to be fair to the bulk of British people. Of all the new health charges this Bill is the most significant in that it imposes the largest amount of poll tax element. I can only say to the Minister and hon. Members opposite that the Bill, like the proposal that we shall be discussing tomorrow, has roused the anger of hon. Members on this side of the House. Our fight will continue outside this House. In the country we shall expose to the best of our ability what we know of the motives which have led the Government to add new and unjust flat-rate taxes to help pay for our great National Health Service.

6.57 p.m.

Photo of Mr Richard Hornby Mr Richard Hornby , Tonbridge

We all listen with interest, as I have on many occasions in other debates, to the hon. Member for Southampton, Itchen (Dr. King). Before he spoke I felt that we were discussing, not principles, but percentages In one particular respect I would modify that view after listening to the hon. Member, notably in his argument that the whole shift of revenue-raising from direct to indirect taxation. or to contributions and poll tax from other forms of taxation, constitutes something which in itself is a principle.

I start on the particular and fairly narrow point of this Bill, which, we may remind ourselves, is quite simply proposing an increase of 1s. in weekly contributions, Is. on all the stamp books. That will produce £ 49 million in a full year; and, added to what the Health Service already gets from that source, it is a total contribution of £ 161 million to a bill of between £ 800 million and £ 900 million. The contribution factor amounts to about 16 per cent., or 17 per cent. of the total bill as against the Treasury factor of about 70 per cent. That factor has tended to grow under successive Chancellors of the Exchequer and periodically, as in 1957, it has had to be checked.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I think that the hon. Member will agree that the people he is talking about also pay part of the Exchequer costs. They do not escape tax.

Photo of Mr Richard Hornby Mr Richard Hornby , Tonbridge

The majority pay through direct taxation, but almost every one of us pays through some form of indirect taxation.

I come to the two main criticisms which have been made of the Bill, that it is an unfair method of taxation and that it represents an attack on the Service. Those are the two main points made by hon. Members opposite. Dealing with the second criticism first, I wish to quote almost the final words of a speech made in another place the other day in relation to that point. These words were used by someone aged 82, whom hon. Members know well and who recently was a patient in the hospital across the river: I suppose that St. Thomas's, which has a big building scheme, can be made even better than it is, but, personally, I am more than content with it as it is, and I think institutions like that reflect great credit on all successive Governments who introduced the Health Service and carried it out."—[OFFICIAL REPORT, House of Lords, 13th February, 1961; Vol. 228, c. 616.] I expect many hon. Members will recognise those words as being those of Lord Beveridge, speaking in another place, the architect of the Service. It is a tribute to both sides of the House who have had any contact with the Health Service that is worth mentioning. It should carry some weight among those who have criticised Conservative Governments for attempting to run down the Service. It carries more weight, perhaps, than some of the figures that have already been quoted; figures about the total amount of expenditure which has gone up year by year, figures about the proportion of national income which. broadly speaking, has remained the same since the introduction of the Service This tribute is one which should carry some respect.

Why do we need the money which this Bill proposes to raise? We know that we need it for a variety of reasons. I do not think that anyone questions the need for the hospital modernisation programme, which will cost on an average about £ 50 million a year. I do not think that anyone questions the need for expenditure on a great many of the local authority Services, or the need, as one hon. Gentleman opposite quite rightly said, for higher salaries and wages in a great many of these services in order to recruit the calibre of person needed. It is a perennial problem of which we on both sides of the House are aware.

The problem of recruiting people to a public service in a society in which wage negotiation is traditionally free and in which employers who are short of labour put up their offers and unions, when bargaining, can also argue for a higher price for their labour. In those conditions the tendency in all the social services for the wage or salary element to become a substantially increasing cost is one we cannot overlook.

I come now to the point whether the increased contribution is or is not a fair method of taxation; a method which is, in fact, a poll tax, which demands of everyone who is at work and is not sick that they should contribute something to the cost of provision against ill-Health. I am bound to say that although hon. Members opposite rightly make a very good case for graduated taxation being the fairest system of taxation, I do not think that it means that one should push the argument the whole way through. I accept that graduated taxation seems the fairest form of taxation. I do not accept, because of that, that it should, therefore, bear the whole burden of revenue-raising for a number of reasons.

First, it seems to me that it is a responsibility of everyone to try to set some of his income aside for the essentials of life, the essential insurances, as well as to provide for the things in his home and the extra luxuries. To take a very small part of the increased earnings for this particular purpose does not constitute an immoral or unfair action. All hon. Members want to see earnings at all levels rise—from the £ 7 levels to high up in executive salaries, and so on; but I do not see that if is immoral for some part of those increased earnings to be set aside for the purpose of insurance against ill-health.

Secondly, I believe that it is not a bad thing for the Health Service that some part of the money which goes into that Service should be exempt from the annual Budget balancing and Budget forecasting that emerges from the Treasury on Budget day.

Photo of Mr Percy Collick Mr Percy Collick , Birkenhead

I should be interested to hear the hon. Member direct his argument to why a man who has been making enormous capital gains in recent years should pay the same amount in this matter as an agricultural worker.

Photo of Mr Richard Hornby Mr Richard Hornby , Tonbridge

The hon. Member is quite wrong in saying "the same amount" of taxation. Of course, in this particular contributory element he pays the same amount and I tried to argue my previous point that some element—not the major element or the whole element—of poll tax—some contribution toward the possibilities of ill-health while in work—represents a fair principle to follow.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

It seems a very good argument to say that at least a percentage of ones' income should be used for the purpose of insurance of one kind or another, but could the hon. Member tell me how people in the lower wage groups, such as agricultural workers, shop assistants, laundry workers—I shall not give a list—who are at present "on their beam ends", whether they like it or not, arrive at the percentage which they can put away in insurance?

Mr. Hamby:

I am not quite certain if I follow the particular point. The hon. Member says, "How do they arrive at the percentage"?

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

If they have not saved they cannot put it away.

Photo of Mr Richard Hornby Mr Richard Hornby , Tonbridge

The hon. Gentleman has made a perfectly fair observation. If they have not got it they cannot put it away, but the principle I am trying to make is that some part—and it is a matter of judgment what is and what is not a fair amount of earnings—should be put away for the prevention of ill-health.

It is certainly attractive to hon. Members opposite to put the full burden of revenue raising on a graduated scale of direct taxation as opposed to indirect taxation, and other taxes. Hon. Members should consider not only the attractions of that in terms of individual justice—which is one point we have always to consider in these matters—but also the effect of doing so on the total earning power of the nation. This is important because if, by pressing the argument of justice, as hon. Members opposite would call it, too far, and thereby damaging the total earning power of the nation, the net result of that action will not be that one has seemed to be just to individuals, but by damaging the total earning power one would have done all of them, and all of us, a grave injustice by reducing our capacity to pay for the type of Health Service and the type of services we need.

Although, in every speech, hon. Members opposite have made it clear that they do not want to see the Health Service reduced, a view which I totally share, a result of their policy, as seen in their attitude towards this Bill, would be to do precisely that.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Would the hon. Member explain how taking this £ 50 million on a graduated basis from the people of England will somehow jeopardise the economy, whereas taking it in tenpences from millionaires and poor persons does not have that effect?

Photo of Mr Richard Hornby Mr Richard Hornby , Tonbridge

All I was trying to say was that if one presses the weight of direct taxation too hard the result will be, I believe, damaging to the economy as a whole. I do not want to press my side of that argument too hard. I raised it because I suggest that in arguing for total revenue raising from this source the hon. Gentleman opposite pressed his side of the argument too hard.

7.10 p.m.

Photo of Miss Jennie Lee Miss Jennie Lee , Cannock

I listened very carefully to the argument advanced by the hon. Member for Tonbridge (Mr. Hornby). I thought that I detected genuine intellectual doubt. I thought I saw the hon. Gentleman genuinely hesitate when the point was pressed from this side that, if it was right that the insured worker should have another 10d. taken from his pay packet each week, it must be right that people who overnight find themselves in possession not of a few shillings extra, but often of vast sums that they have not worked for, should also pay proportionately. The people who find themselves in that position sometimes make the money by capital gains, sometimes by simply owning land. But the point is that they do nothing at all to earn it.

As I understand it, hon. Members opposite think that it is demoralising for anyone to receive something for nothing. They do not like the "soup kitchen mentality". When looking at our national resources and the possibilities of raising revenue, it is common sense to recognise that the people who are really getting something for nothing, and could, without any hardship to themselves, their children, their aged dependants or sick relatives, contribute more to the Exchequer, are precisely those who, in the past ten years in particular, have added many millions to their private resources without paying a comparable share of taxes. I repeat that I thought that the hon. Member for Tonbridge showed genuine doubts about his own case. He did not try too hard, because he knew that he had no answer.

But I have more to say about the soup kitchen mentality and the claim of hon. Members opposite that we are all middle class nowadays. During today's debate I thought with some sadness of war-time memories, of particular occasions when we were all fighting the same enemy. Some of us, incidentally, were fighting before the political fighting ever started. However, there was a period when we were all fighting him and were all subjected to the same dangers. We even submitted, at least to a limited extent, to the same rationing and hardships. There were wonderful moments in these years when we felt that the entire community was rising to a new level of social morality. We were beginning to under- stand the deep joy of belonging to a family—the sense of family which lies so deeply behind all that is best in religion. It is the sense that we are all one together. It is the impulse that makes us want to get away from the crudity, the vulgarity, and the life-destroying elements which abound in any society when there are ugly class distinctions.

I agree with Bernard Shaw that there is only one thing to do with the poor, and that is to abolish them. I also agree with arguments he advanced at other times when he wrote of the enormous enrichment of life when everyone had the opportunity of selecting friends and of all manner of social opportunities, when life in a thousand different facets is opened up to us without the narrowing and crippling barricades which we inherited from the past. People cannot be blamed for what their ancestors did. But we certainly can be judged by the extent that we try to establish a sense of genuine family among us. One of the gravest indictments against hon. Gentlemen opposite is that they have been revelling in re-establishing snobberies and class distinctions of every kind. They do not hesitate to re-establish them where they can least be justified, in our schools, in our housing projects, and, most contemptible of all, they are now doing so with the sick.

We are discussing this afternoon specifically whether it is right that the wage packet should be lightened by 10d. a week no matter how small the wage may be. I say this with the utmost emphasis. We tell a lie if we pretend that anyone in this community, however poor, is totally exempted from paying for the Health Service. Hon. Gentlemen opposite have said, "If you are on National Assistance, if you are an old-age pensioner or on limited means, if you fall into a certain category of poverty or indigence, we splendid, generous, big brothers and sisters will look after you and you will not have to pay".

That is a lie. It is very important for everyone to understand the truth. The truth is that the poorest old-age pensioner is paying for the Health Service if he buys a pillow to put under his head, or a chair to sit on, or a pair of boots to put on his feet. It is a cheat if hon. Gentlemen opposite say that they make no contribution to the Health Service.

In these days we hear a great plea in many quarters on behalf of the Surtax payer. Surtax payers contribute only about one-third of what Purchase Tax produces. After these debates we shall have to look very carefully at the revenue being raised by Purchase Tax. If the opinion of hon. Members opposite is that below a certain level one should not contribute to the Health Service—I gather that this is their case—we must ask why people, no matter how limited their resources, have to pay 1s. in the £ if they buy a chair and sometimes as much as 10s. in the £ when buying simple items like soap or other equipment needed in private homes and hospitals. Indeed, there is not a bed in a hospital. nor a piece of wallpaper, nor a curtain. on which Purchase Tax has not been paid. Let us stop this nonsense of saying that everything is paid for in this country by the poor rich or, as someone put it the other day from the benches opposite, the rich and the vicious. It simply is not true.

I do not care much for beer. It does not appeal to me. I know that is heresy to many people, but I just do not like beer. In my constituency, however. which is a typical Midlands industrial constituency, men who have been working hard all day gather together in clubs for companionship. They are all paying for the Health Service. They make their contribution to the Exchequer every time they have a glass of beer. The old-age pensioner who likes his smoke cannot fill his pipe even once without contribution to the Exchequer. Indeed, he pays more than Is. 6d. in the £ of Exchequer resources. About 14 per cent, of Exchequer revenue comes from the Tobacco Duty alone. Contributions are made when tobacco and beer are purchased. Hon. Gentlemen opposite can include wine and champagne if they wish, but many more people make their modest contributions by buying cheaper drink. Let them all be included. My case is that it is a lie to pretend that people are not paying according to their means and will not continue to do so, even though not one penny piece is extracted in the form of insurance contribution or a direct charge.

The Chancellor collects less than 10s. in the £ of his revenue from Income Tax and Surtax. The Chancellor collects a very substantial part of his revenue from indirect taxes particularly Purchase Tax. Purchase Tax can mean nothing at all to people with substantial incomes, but it is a very serious imposition on people living on small incomes.

I hope that we shall win through to a sense of family, instead of having on the part of hon. Members opposite this artful dodging that has as its objective altering the incidence of taxation so that the rich pay less and the poor pay more. Let us have a sense of community instead of, I repeat, the artful dodging which is what is now being resorted to. I ask hon. Members, "Do you really like the ugliness, the vulgarity, the snobbery of a class society? Do you really like to think that you are being good to the poor? Do you like to think"—

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

Order. It is my misfortune that I have again to remind the hon. Lady that she must address the Chair.

Photo of Miss Jennie Lee Miss Jennie Lee , Cannock

I beg your pardon, Mr. Speaker, but I feel very strongly, especially when we are considering the needs of sick people in hospitals, that they at least should be treated as one family. We on this side deeply deplore not only all the cheapjack financial tricks that the Government are up to in trying to alter the burden of taxation, but the trends in British society that are taking us away from certain moments in our history when we seemed to be getting nearer to being one family, one people. Hon. Members apposite are once again introducing ugly and unnecessary aspects into our national life.

7.23 p.m.

Photo of Mr Anthony Bourne-Arton Mr Anthony Bourne-Arton , Darlington

I have listened with sincere enjoyment to the hon. Lady the Member for Cannock (Miss Lee) in her most moving advocacy of a social revolution that has already taken place. If I may say so without impertinence, other parts of her speech gave me personal pleasure, because it occurred to me that they were a little wide of the subject of our debate, and that if I, as a much more junior Member, were allowed that same licence I might remain in order.

I warmly welcome the Bill, and I have a constituency reason for doing so. We have waited overlong for our hospitals.

We are reasonable people but as year has followed year—and I hope that I may be forgiven for saying this because it must apply elsewhere—and we have seen deferred these great projects that will mean so much to the people's health and to the efficient and economic running of the Service, so has our hope been deferred. Our hope is deferred as we see the mounting cost of the Service. Therefore, anything that can produce something more on the income side to balance the ever-growing expenditure gives us hope that the day will come sooner when these projects in which so many of us are interested will be brought to fruition.

We have had today an argument, not as to whether the income is necessary but as to where it should come from. The hon. Member for Sowerby (Mr. Houghton) favours direct taxation, as does the hon. Member for Cannock—who, indeed, very strongly attacked the principle of indirect taxation so warmly advocated by her right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn). Opinions vary but, as my hon. Friend the Member for Tonbridge (Mr Hornby) asked: is it not beset to have many sources of income?

My own view is that this Bill, in itself, is not enough, nor indeed are the other measures that we discussed a few days ago and will discuss again tomorrow. I do not believe that the income accruing from them will be enough to bring soon enough these real major advances in the National Health Service which is what is important—

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

What does the hon. Gentleman suggest?

Photo of Mr Anthony Bourne-Arton Mr Anthony Bourne-Arton , Darlington

I will go on, if I may, to make some humble suggestions.

I hope that my right hon. Friend the Minister of Health will have success, in co-operation with the medical profession, in trying to persuade those busy and overworked men, mostly medical practitioners, who so often nowadays are prescribing for the dustbin. I do not criticise the devotion and hard work of the vast run of the medical profession, but they are subject to strong pressures.

There is the pressure of professional curiosity. New and exciting drugs are produced which, in a very limited field, are life savers when nothing else will avail. Newer and more expensive ways of tackling the same sort of condition are being produced constantly. Professional curiosity must lead to a strong pressure to experiment with these new drugs.

I am sure, though, that our medical practitioners are keener than anyone else that the things that matter should be provided; that hospitals should be built, should be modernised—

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

Order. I think that the hon. Gentleman is in some difficulty. He must relate what he is saying to this Bill, which deals with increased contributions.

Photo of Mr Anthony Bourne-Arton Mr Anthony Bourne-Arton , Darlington

I am very much obliged, Mr. Speaker

Photo of Lord  Balniel Lord Balniel , Hertford

Is it not a fact, Mr. Speaker, that the Bill has been introduced because of the rising cost of the Health Service? Is it not, therefore, in order to talk about one of the main causes of that rising cost, namely, the drug bill?

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

The hon. Member can talk about rising costs, but not of a cause of it in such a degree of detail. It is a matter of degree, and I thought that the hon. Member was going too far.

Photo of Mr Anthony Bourne-Arton Mr Anthony Bourne-Arton , Darlington

I would urge that not only in quality but in quantity, what might be called an "Operation Dustbin" might be undertaken for the good of all, and that busy and overworked practitioners might be encouraged to do that extra bit of mental arithmetic which can work out quickly at the bedside a little sum about two pills twice a day for three days and making it a dozen, or whatever it is. If that were more widely done, some of these millions of pounds that are thrown into our dustbins could be saved—

Photo of Mr William Warbey Mr William Warbey , Ashfield

The hon. Member has referred to "Operation Dustbin". Was he suggesting that the dustbin would be an appropriate receptacle for the Government's White Papers?

7.29 p.m.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I shall not follow the hon. Member for Darlington (Mr. Bourne-Arton) in all he said because, frankly, I thought a great deal of it was not relevant to this Bill. I want to allude to some remarks made by the hon Member for Ormskirk (Sir D. Glover). He spoke about the people now in the wage range of £ 14 a week being the new middle class. Before I came 'here, as a skilled worker in Birmingham, I was in that range—

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

I have listened to this kind of thing all day and I have stood it just about long enough. I am not attributing responsibility for it to my hon. Friend, but some people claim to be correct in their use of terms, and T want now to put the facts on record. The fact is that the average wage in this country is £ 10 8s. a week.

Photo of Mr David Webster Mr David Webster , Weston-Super-Mare

Average earnings are £ 14 10s.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

The average wage in this country is £ 10 8s. The average wage among the most highly skilled section of industry, the engineers, is £ 10 8s. As a result of forty years of pleading by the employers with the trade unions, piecework 'has been accepted. As a result of extra effort which is put in by no one else outside industry, as a result of hard work, working on Sundays and working overtime, the average earnings of workers are £ 14 10s., as the hon. Member says.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I am very grateful to my hon. Friend for that interjection. It was a very useful contribution which has helped me considerably. I wish to point out to title hon. Member for Ormskirk that £ 14 in 1961 which puts a skilled man like myself into what he calls the middle class is worth no more in purchasing power than £ 4 10s. in 1936. In 1936, when I worked as a tool maker in a motor plant in the Midlands, my wife and I never regarded ourselves as middle class for a moment. I say to any working man on £ 14 a week that. if he thinks he is middle class, he should look again at how he has to spin his money out and compare his capacity to do and enjoy things with what the so-called middle classes could do and enjoyed in pre-war years. Any working man who thinks like that is miles out in his reckoning.

Another thing I am sick of hearing in the House of Commons is this. Whenever we have a debate when the Treasury is levying another charge on the workers in some way or other, we always hear these income figures quoted. When they think of welfare foods, the Government say that wages have gone up to this level and that therefore the workers can pay extra for welfare foods out of their new wages. Again, let us not forget that the real value of £ 14 a week is only equal to £ 4 10s. in 1936.

This charge, the 10d., is to come out of the same wage as well. If all hon. Members opposite succeed in persuading their Government, in regard to all these matters that the workers, because of these so-called high wages, can as individuals pay all these charges, there will be no wages left according to my reckoning. The workers will have to spend more in Purchase Tax, and this is to come out of the same wage It is like a man telling his wife, "I have saved £ 1". She tells the children, "Your father has saved £ 1 ". Then they all want a pound's worth out of it. That is what is happening in the House of Commons. Out of the same wage every Department of State seems to be requiring more and more, and each Department makes its demand without considering that another Department has made its demand in another direction.

This week, the Treasury introduced a Bill to give a subsidy to enable ships to go out to the banks off Newfoundland or wherever it may be to catch cod.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

This is out of order.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

No, this is a subsidy. It is the taxpayer's money. The Treasury wishes to pay the money out. The trawlers will bring the cod back. The drug industry will get hold of it and turn it into cod liver oil. Then the Treasury will come to the sick people who need it and make them pay for it. So it is the sick people paying extra prescription charges on cod liver oil to pay the subsidy to the owners of the trawlers to catch cod and all the rest of the people who are being codded.

This sort of thing happens time and time again. A Treasury Minister comes to the Dispatch Box and tells us that he is handing out millions of pounds to all sorts of people to do all sorts of things. A little later, we have before us proposals to take millions out of the pockets of the poorest in the country. As my hon. Friend the Member for Cannock (Miss Lee) asked, who subsidises whom and who is paying for what?

Then there is this nonsense about taxing the consumers and not the savers. I cannot see a man with three or four children on about £ 8 10s. a week saving anything so that he will not be taxed. His answer straight away is that he will have to pay tax. He cannot get any tax relief because he cannot save a thing. It is all nonsense. Even when it is applied to people with incomes of £ 14 a week, it is still nonsense. In modern society, unless a man wants to be practically destitute he could not avoid tax under any system like that. He would be destitute if he tried to save £ 4 a week out of £ 14. Moreover, out of the same income the Minister of Housing now wants people to pay more rates.

Photo of Mr Walter Monslow Mr Walter Monslow , Barrow-in-Furness

My hon. Friend keeps referring to £ 14 a week. Does he know that an express train driver receives no more than 260s. a week, which is £ 13?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I am obliged to my hon. Friend. That only shows that I am not exaggerating. I am putting a modest case, and I do not want to hit too hard. In the trade union movement we have a reputation for generosity, integrity and honesty, and I do not wish to overstress the case.

One of the principal items in the National Health Service is the cost of drugs and medicines. I should like to know something about Lucozade. What sort of stuff is it? Is it worth the money? I remember a debate long ago in this House when someone raised the question of the specific gravity of beer and its quality. As a result of the exposure of that product, Mr. Jimmy Hudson said that he had been wasting his time all his life protesting against the drinking of alcohol if that was the sort of stuff that people were buying.

I should like to know what Lucozade is. Whenever one goes into a hospital one sees bottles of it about. How much are the hospital authorities paying for it? Who manufactures it? What is in it? Is it a valuable thing? Does anyone know? Does the Financial Secretary know whether it is any good? In half the drugs which are being sent to the doctors, one is pink and one is white. What sort of value have they? sometimes wonder, when I see prescriptions costing 2s., whether that sum is far greater than the prescription is worth. Does the Treasury know?

If the Treasury is really worried about the cost of the Health Service, why go to the industrial worker without any inquiry into the cost and say, "That is the cost and you must pay"? Apparently, because private enterprise supplies all these things, nobody must say a word. Private enterprise has the power, the Government have the majority, and they can levy the tax on the workers.

Every time we raise these contributions, we increase the cost of industrial production. Let there be no mistake about that. Industries vary in the element of labour cost in their products. I have no doubt that the drug industry can well recover the cost that this extra contribution per worker imposes upon their work. The drug firms are almost in a monopoly position. They have one wonderful customer who makes no inquiries and who is not even prepared to set up a competitive department of his own to check what they are charging. In the shipbuilding and heavy engineering industries in Scotland, however, the wage cost content of the product is very high. In shipbuilding, in the construction of marine turbines and hulls, it is anything between 24 and 30 per cent. I believe that in the construction of big propulsion engines it is above 30 per cent.

Therefore, when the Government put this charge on industry they are putting an unfair burden of cost on those great industries which have a high labour content and a lesser charge on those which have a smaller labour content. [An HON. MEMBER "What about the brewers?"' Yes, and the drug industry, too, and many others, and some of the packed food industries, like Kellogg's. When I see the beautiful boxes and the lovely toys that the children get out of them, I wonder which costs more to produce, the box or the product that it contains. As I say, this is an unjust charge as between different industrial units.

In Germany, Italy and France there is a gradual movement to transfer the cost of the social wage from an individual charge upon industries to a charge upon the Exchequer. This is happening in Italy and in France, and in Germany it has gone a long way. Those countries have realised that this is a social service enjoyed by the whole of society, a social service determined by the whole of society, and that it should not be a charge upon individual production units.

This is extremely important because in modern engineering costing fractions of pennies can result in the loss of contracts. Small fractions can price a company out of a contract. Any imposition which this House puts upon industrial production units in this way can frustrate our competitive power in world markets. It may be said that it is only a small charge, but the Government have pursued the policy of shifting the charge from the Exchequer, which gets its resources from the whole community, on to the production units.

While other nations are moving the other way and thereby reducing their cost of production, we are facing higher charges. The social wage received by the shipbuilding worker in Germany is higher than that of the shipbuilding worker in Britain, but as a result of the social wage the cost in the German shipyard is lower than the cost to the shipyard in Britain. Any hon. Member can obtain the Common Market figures.

Does not the Financial Secretary regard this as a serious matter? The Common Market is very successful. It is already eating into our markets in our own country and all over the world. The Common Market countries are pursuing a fiscal policy for their industries which is the direct reverse of what the Government here are doing.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

We are in competition with them.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Yes, we are in competition with them. I have said all my life, and nothing will shake me from my belief, that when a social service is devised for workpeople, their wives and their children, the cost of that service should be a charge upon those who draw incomes, and incomes whether from dividends or profits, and not a charge upon the man who is working in the industry and producing the wealth, or upon the managers or the company organising the production. It should not be a charge upon them as an individual company or people working in it. It should be a social charge on the whole community. If we keep on in the way we are going, with rising costs, and if the Common Market goes on in the direction of making the charge a national, social one and not an individual charge, the gap will become wider and our competitive power will become less.

There is another point on which I want an answer. In two of the technical engineering journals which I take, not only from this country but from elsewhere, a certain trend has been suggested. In pursuing the movement from a Treasury charge to a charge upon labour employed by companies, is it the policy of the Government to force companies to reduce their labour force?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Seen against the huge Budget total of £ 6,000 million, does anyone suggest that the trivial sum involved is vital either to the National Health Service or to the economy of the country? There are motives behind this. I want to know whether one of those motives is to encourage large institutions, employing large numbers of workpeople, to get rid of some of their labour.

We hear a great deal about British industry and its backwardness. We have had reports of its high costs, which can defeat us in world markets. In all the speeches by the Government, from people like the President of the Board of Trade, the Chancellor of the Exchequer and the Prime Minister, they plead with industrialists and workpeople that if we are to hold our own in the world we can do so only by lowering our cost of production. There is some truth in that. I do not believe that this country can hold its own in the world, or, indeed, that we can survive as a great industrial nation, unless we face the fact that a larger percentage of our people must sacrifice a great deal of the traditional rewards of an economy such as ours is and has been. The Chancellor of the Exchequer must force people to do that, and there will have to be greater encouragement to that strata of our society which has traditionally produced the goods, the wealth and the services that have made the country great. There is no doubt of that.

It may be that in the nineteenth century it was possible for our economy to carry a hundred millionaires with claims upon the products of the nation. It was true that between the wars we could carry a million unemployed and pay them for doing nothing. I always looked upon unemployment pay between the wars as a sop by a capitalist system of society to prevent people from producing more goods and services in a world in which it appeared to owners of capital that there was too much. The dole was a bribe to stop people producing goods and services. We might get that pattern again.

When the Treasury brings in measures like this it should consider what it has been doing in the past and what it is doing now. We get the Treasury now not financing the common people but taxing them with a poll tax to take a little more from them, and with that extra taxation the Treasury is enabling rationalisation of many units of production to be undertaken in order to produce less. This is a topsy-turvy economy that we are living in. We are going on and on piling up the National Debt and increasing taxation and paying millions of pounds to the manufacturers of Lucozade and the drug industry in general. Then the Treasury asks the House to find more and more money for these people without any inquiry into whether we are justified in paying it out.

There is the example also of the Air Estimates, under which we are to pay about £ 600 million to the aircraft industry. I should like to know in the name of fortune what that industry is doing with it. The Treasury seems always extraordinarily willing to pay an awful lot of money to big units of production with very little investigation compared with what happens when they pay 1s. to somebody who is unemployed.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The Government always look after the rich.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

In my industrial life I always found that when we were offered a Government contract it was much easier to obtain a high price for the product than it was when the contract was offered by somebody else.

Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth

The hon. Member has been addressing the House for some time. Surely discussion of that point would be more appropriate on an occasion when we are discussing the findings of the Public Accounts Committee or something of that kind. We are discussing the Health Service contribution. I suggest that the hon. Member is going rather wide.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I am bound to say that I was wondering about that from time to time during the speech of the hon. Member for Dunbartonshire, East (Mr. Bence), but each time when I was on the point of rising to intervene he came back clearly into order. I hope that the hon. Member will try to relate what he is now saying to the Bill that we are discussing.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I shall do my best, as always, to be on the best of terms with Mr. Deputy-Speaker or Mr. Speaker, but I am not always so particular with Ministers on the Front Bench opposite. I have great respect for the Financial Secretary to the Treasury but he knows as well as I do that the way the present Government are going is completely at variance with the economic interests of the country.

I am sorry, Mr. Deputy-Speaker, but I have forgotten where I was before the Financial Secretary interrupted.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

If I can help the hon. Member at all, we are discussing the National Health Service Contributions Bill.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Thank you, Sir. I was aware of that, of course.

I believe that I was making the point that I am worried about the fact that in these measures which are brought before the House we seem to be quite willing, and the Treasury seems to be quite willing, without doing any thinking about the matter, to pile on some more taxation, direct or indirect, which adds to the cost of industry. Yet when one is working in industry and the Government come to that industry and ask that it should manufacture machinery for the National Health Service—

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Oh, yes, for instance, weighing machines to weigh babies. They cost money. The Service uses all sorts of instruments. I know that when I was in industry and we had an inquiry from a Government Department we regarded it as glorious. We could always make a little more out of the contract because it was for a Government Department.

Photo of Mr David Webster Mr David Webster , Weston-Super-Mare

Has the hon. Member an interest to declare?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Certainly. I am a taxpayer. I pay Purchase Tax, and far too much of it.

Photo of Mr Eustace Willis Mr Eustace Willis , Edinburgh East

And National Health contributions.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Yes, as a self-employed person. I have a terrific interest in all this.

Apart from that, I am sick and tired of people in the country and my constituents who shout at me as if I were the Government and as if it were my fault. I tell them, "It is not my fault. It is the fault of that lot over there." When the manager of a company tells me how his weekly bill will be increased as a result of this policy I say to him, "Why don't you write and tell them?" He says, "No, I don't want to fall out with the Government because we get a lot of contracts from them."

The whole economy is going rotten. What sort of society are we building? Nobody believes in working today—only at the working-class level. My hon. Friends on the other side of the House—

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Yes, I have friends over there.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Shame on my hon. Friend.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Yes, my friends over there give me a lot of tips on how I can make some money for nothing. They should give the tips to the Chancellor of the Exchequer. I would advise the Financial Secretary that if he wants to relieve himself of some of the costs of the National Health Service he should get cracking and make a take-over bid for the drug industry. We on this side of the House will not oppose it. We think that it is a good thing. It would save the Health Service millions of pounds.

Photo of Sir Barnett Stross Sir Barnett Stross , Stoke-on-Trent Central

There is really no need to go as far as that. It would be enough if the Financial Secretary established one pilot plant at the cost of a few million pounds so that he could set a pattern.

Then prices would fall. If the hon. Gentleman does not take over the whole of the industry he might take over a small portion of it.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

That is a very interesting suggestion, but we want to watch this. That idea of putting up a pilot plant as a competitor with these big institutions is very useful. I was once sent by a company to a Government shadow factory. It was a sort of pilot plant, but I and others who were sent there worked for the company and in our respective fields we stuck to the pattern of the company that sent us there. We had to or we would have been fired.

If the Government set up a pilot plant and had experts to go into it they probably would find those experts only among the private companies, and I am always frightened of a pilot plant where the personnel is drawn from people who are employed elsewhere. These people do wonderful things but, as they never lose their association with the old company that employed them, we know very well how long they last in a pilot plant. If it was done when Labour was in power, they said, "The Tories will come back and close it down".

Photo of Mrs Harriet Slater Mrs Harriet Slater , Stoke-on-Trent North

Could not the industries that were taken over also be handed back again as has been the case with steel?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Certainly.

If I were in charge of this matter I should look at what we are paying the drug companies and find out what they are producing and should say, "We have had enough of this. You are finished. You are being paid too much". In my life as an industrial worker I have known directors who would say, "There are 20,000 working here. The product is too dear. We cannot sell it. You are all fired".

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Does not my hon. Friend understand that the directors and the top people in these big drug companies are Tories and have vested interests, and, therefore, this Government would never do what he is asking? It is Tories who control these companies

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I did not know that, of course, but I have the impression, having been in the House for nearly ten years. that many of them—

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I hope that the hon. Member for Dunbartonshire, East (Mr. Bence) will remember to address the Chair and try to keep his remarks more closely connected. He is straying very far from the Question.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

This matter of the cost of the National Health Service is very important. It is a frightful situation that the Service is almost entirely dependent upon trade associations covering spectacles, hearing aids, drugs and teeth. The whole country is covered by a network of trade associations, amalgamations and mergers, and it is because of this factor, in the main, I believe, that we have the high cost of the Health Service and the low remuneration to those who work in it. I have heard no one dispute that fact.

Friends of mine who hold shares in drug houses have confirmed to me that it is a very profitable investment. They have done very well. That is why they support the Health Service, for they are afraid that if it failed their shares would go down.

One hon. Member opposite has talked about working people and how they should save for their old-age. He said that they should put aside some of their income to save for insurance and for this and that. I started an endowment policy in 1920. Bless my soul! It is worth coppers to me now. It is not worth the paper it is written on. It is like my poor old post-war credits. The money involved in those credits was a fortune to me during the war, but now it has been whittled away and there is no capital gain on it. If the Treasury would give me two for one I would not mind. The working folk who save their money in the Post Office are not offered two for one.

If he subscribes to the view of some of his hon. Friends that working people should save for these charges, the Financial Secretary to the Treasury should ask himself how working people can put aside money for all the things which he and his hon. Friends want them to save for. Indeed, when the Minister of Housing and Local Government has finished with them I do not know what they will do.

I do not want to keep the House too long. I have given way so many times so that hon. Members could question me on the propositions I am making.

Photo of Sir Barnett Stross Sir Barnett Stross , Stoke-on-Trent Central

I do not think that my hon. Friend should be allowed to sit down without withdrawing his statement that the cost of the Health Service was gross and extravagant. After its first full year, 1949–1950, quite steadily for years, as a percentage of the total productivity of the country, the cost of the Service fell. For the first time this year only has it reached what it was when Sir Stafford Cripps said, "That is enough".

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I admit that when related to national expenditure and income the cost of the Service has fallen. I fully recognise that. Nevertheless, having been brought up in an artisan working-class family to be thrifty and careful with the coppers, when I see money being poured out to these drug houses I must say that the cost is far too high and could be considerably reduced.

I do not want to go out of order, but I have a friend who is a professional optician. Thirty of the most wealthy residents who live around him have their names down—

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

Order. The hon. Member will appreciate that it is impossible to hear what he is saying if he turns his back on the Chair.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I am sorry, Mr. Deputy-Speaker. I got over-enthusiastic. I was saying that since this Bill was published there has been a rush of people who have read the newspapers, and who keep in touch, to put down their names for spectacles and teeth. They will defeat the immediate charges.

Photo of Lord  Balniel Lord Balniel , Hertford

It is the wrong Bill.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I know. But these people regard the Government's proposals as being linked together as an attack on the Health Service. It is an attack on the Health Service and on industry, and it is an unfair attack. The Treasury should have gone for the drug houses in trying to reduce costs. It should have tackled private enterprise first.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The Government would not do that. It is their Tory friends who are involved.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I wish that I had worked out the figure before speaking in the debate, but it is obvious that many industries are receiving money from the Treasury, including the motor, cotton. steel, fishing and forestry industries, and the drug houses. Admittedly, the drug houses do not get their money as a gift, but by their power to exploit the National Health Service. They are getting as much money as these other industries, however, and they seem to be getting it legitimately.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

All these big concerns mentioned by my hon. Friend are directed and controlled by very wealthy and prominent Tories. They have made big fat capital gains.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

On a point of order, Mr. Deputy-Speaker. I was trying to explain to my hon. Friend that among the reasons why there is to be a bigger charge for these drugs is because the drug companies are interested in making bigger profits at the expense of the Exchequer, and because they are big contributors to Tory funds. As the Tory Party

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

Order. What the hon. Member is now saying confirms me that I was right in stopping him from leading the hon. Member for Dunbartonshire, East (Mr. Bence), who has the Floor of the House, further astray in his speech.

Photo of Mr Eustace Willis Mr Eustace Willis , Edinburgh East

Further to that point of order, Mr. Deputy-Speaker. Surely it is in order to discuss reasons why these charges are being imposed. As I understand my hon. Friend the Member for Dunbartonshire, East (Mr. Bence), he is arguing that these additional charges are being imposed now because of the high profits made by drug houses. Surely it is in order to suggest ways by which these high charges can be reduced.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

The trouble was that other industries were mentioned in addition to those concerned with the manufacture of drugs. That was getting out of order.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

My hon. Friend the Member for Dunbartonshire, East men- tioned other industries, such as engineering. He pointed out that they made such things as X-ray equipment and surgical tables, and are thus making big profits from the Health Service. Was that not the point he was trying to explain?

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I did not hear X-ray equipment referred to, but I am sure that the hon. Member for Dunbartonshir, East wants to continue his speech on the Bill.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I mentioned not X-ray equipment, but weighing machines for weighing babies.

The figures of average earnings have been quoted. I represent a Scottish constituency and there are several Scotsmen in the Chamber tonight who will want to enlarge on what I wish to say about this levy of the extra 10d. Unfortunately, the attitude of hon. Members towards earnings, remunerations, and wages is based upon the levels in London and the Midlands. The life they see around them is the life of London and the Midlands and, compared with the salaries and wages in those areas, the 10d. does not seem very much. But in Scotland a man walking out of the factory gate with £ 12 a week is a millionaire. Wages in Scotland are much lower than they are down here and I know many working men to whom 10d. is a lot.

When other things are added to that impost—higher rents, and higher rates and so on—then the burden can be seen in its true perspective. This extra 10d. will be a major burden for many working men of Scotland, unless the Government can suddenly bring down the cost of living or sanction an increase in wages.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

Many men are on a flat rate.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

That is true, and many are on short time, working only three days a week, but they will still have to pay the 10d.

I remember the day when 2d. was a lot. I remember the day when I could smoke one fag before nine o'clock and one just before dinner and one just afterwards, and that was my ration for the day.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Smoking is dangerous.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I am still here, anyway. People with low incomes and without security do not regard 10d. as being not very much. I am not being facetious and I know many working-class wives in Scotland, who are used to working out their husband's pay to "tanners". They cannot afford an extra 6d. I do not say that that is true of every household, but it is true for many.

The Minister is forcing the pace and, in conjunction with the Minister of Housing and Local Government, and no doubt later with the Secretary of State for Scotland, is pushing up wage costs. I wish that the Government would reconsider their proposals. It may sound over-optimistic to ask them to withdraw the Bill and its principle, but I believe that it is completely faulty.

Photo of Mrs Harriet Slater Mrs Harriet Slater , Stoke-on-Trent North

My hon. Friend is talking about this imposition of 10d. and the effect that it will have on the small wage-earner. Does he not agree that to women, particularly to widowed mothers who have homes to keep going, the increase of 8d. will be a major imposition, especially as most women earn less than men do?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I agree.

I am worried about another effect which I believe the Bill will have. I believe that these charges will mean that the Health Service will be less used by the people who need it and increasingly used by hypochondriacs as more resources are made available. I believe that the psychological effect of the Bill will be to drive more and more working-class folk away from the Service. Many men who are now working only three days a week will take the view that they cannot afford the heavy burden of 10d. and we may get a greatly increased sickness rate in industry.

For the old-age pensioners and the sick who have to pay 2s. every time they get a prescription, the increase will he not 10d. but 2s. 10d. This is piling it on twice on the lowest income group of the country. How can the Government justify the imposition of this extra 10d. on every working man in industry, irrespective of whether he is working a full week or only three days a week? It is not the case that those working only three days a week will pay only 5d.—and some men working only three days a week get only £ 3 15s.

There are few hon. Members opposite who have worked for long periods at these wage rates.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

My hon. Friend should have left it at "work".

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Some of them work very hard.

Photo of Mr Charles Pannell Mr Charles Pannell , Leeds West

Does not my hon. Friend appreciate that when he and I served our apprenticeships, we worked night shifts, whereas hon. Members opposite serve their apprenticeships in night clubs?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I do not know anything about night clubs. I do not know what they are, but from what I know of hon. Members opposite, I should not think that many are habitués of night clubs.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Before my hon. Friend rushes his speech to a hurried conclusion, would he say whether he has considered the fact that far more money than is involved by the Bill was given away for each of the nationalised industries which was denationalised? I am thinking particularly of the steel industry, about which he may well wish to say something, and the road transport industry.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Naturally, the imposition of this charge will be felt in the steel industry. However, I will not go into that now. I will leave it to my hon. Friends to deal with the possible rise in costs in the steel industry, because I believe that the workers in that industry have a national agreement whereby wages are automatically raised when the cost of living rises. I believe that that applies also to the building trades. The workers in many industries will automatically get an increase because this extra 10d. will constitute a higher charge on their wages.

Photo of Mr Percy Wells Mr Percy Wells , Faversham

Not the farm workers.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I did not mention them, but this extra charge is unfair. I am grateful to my hon. Friend for mentioning that farm workers will not get their remuneration increased because of the new charge, but I believe that other workers will. I am certain that the workers in the shipyards will have their wages increased. This extra charge will considerably increase the costs of the shipbuilding industry.

I hope that the Financial Secretary will think again about this Bill. I feel sure that when my hon. Friends have made their contributions, perhaps in more detail than I have done, and have covered a wider field than I have and have finished exploring the dangers of the Bill, we shall vote against the Government, and, I hope, reject the Bill.

8.22 p.m.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

It is customary in this House for a speaker to try to sum up the theme of his predecessor's speech, but I think that the House will be ready to excuse me this seemingly impossible task. I do not know what the object of the hon. Member for Dunbartonshire, East (Mr. Bence) was in treating the House in this way. If I may say it without sounding pompous, I do not think that it does this assembly any good to have speeches delivered in that manner and in that vein.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The hon. Gentleman ought to tell that to the Patronage Secretary.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

It may be that the hon. Member for West Ham, North (Mr. A. Lewis) has some grievance against the Patronage Secretary.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

And against the Government.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

In my view, that is no reason why there should be this sort of attempt to denigrate the standing of this assembly.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Is the hon. Gentleman aware that during the last hour only four hon. Gentlemen of his party have been present? There cannot have been much interest in the debate, or they would have been in the Chamber. They ought to be here.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

The hon. Gentleman must not mistake denigration of the Front Bench and the party opposite for denigration of this House.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I do not think that I misunderstood what I heard. I do not mind criticism of my right hon. Friends on the Front Bench. I merely say that that kind of speech is damaging to the prestige of this assembly. I hope that we shall not hear speeches of that kind again for a long time.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The hon. Gentleman ought to have told the Government not to bring in the Bill.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I have listened to every speech in this debate, and I confess that most of them have been of interest, except, perhaps, the speech of the hon. Member for Greenwich (Mr. Marsh), who made a violent attack on the whole social purpose of my party. In a somewhat similar vein, if a little more restrained, and in a more able way, the hon. Member for Cannock (Miss Lee) said much the same.

Before I deal with the issues that really concern us this evening, I should like to put to the House the view that I take of the kind of society and social order we want to see in this community. Many hon. Gentlemen think that we are opposed to the kind of society that has evolved in the post-war era. The hon. Lady the Member for Cannock went so far as to say that we were anxious to encourage a class society. Let me say at once that that is a complete misconception of our purpose.

There is a difference between hon. Gentlemen and ourselves about the kind of society we want to see. We want a more independent and self-reliant society. We want to evolve towards a state of affairs where people pay for the things they can afford to pay for—

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

—but that in no way diminishes our purpose and intention to see a society where there is complete equality of opportunity, where there is assistance for all those who are in need of it, and where there is a steadily diminishing effect of class.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Free drugs for private patients.

Photo of Mr Charles Pannell Mr Charles Pannell , Leeds West

On a point of order, Mr. Deputy-Speaker. With respect, I would like you to indicate the width of this debate. I hope that my hon. Friends who succeed in catching the eye of the Chair will not be limited in the issues which they can raise, because the hon. Gentleman is raising considerations which go far beyond the Bill.

Photo of Mr Percy Browne Mr Percy Browne , Torrington

Mr. Deputy-Speaker, the hon. Member for Leeds, West (Mr. C. Pannell) has not been present, as I have, throughout the debate. I assure him that the debate ranged a good deal further on the other side of the House than it did on this side. If I may borrow a phrase from the hon. Member for Cardiff, West (Mr. G. Thomas), there have been a great many well padded speeches from that side of the House.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Further to that point of order, Mr. Deputy-Speaker. May I submit to you, on behalf of those of us who have not caught the eye of the Chair, that it ought surely to be in order for us to relate the whole policy of increasing these charges to our attitude to the Welfare State? If it is in order, and if I catch the eye of the Chair, I propose to develop that argument, and I submit that, because of what I have heard during the debate, it would be most unfair on those who wish to speak if we were not now allowed to pursue that argument.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

It has been my experience in the last hour that there has been a tendency for the debate to range very wide. But, replying to what was said by the hon. Member for Cardiff, West (Mr. G. Thomas), and further to the speech of the hon. Member for Cheadle (Mr. Shepherd), I think that it is perfectly in order to base one's consideration of the Bill on the rather wider aspects of it.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I want to content myself in my reference to the speech of the hon. Member for Cannock with those rather limited remarks, although it is a matter which, on other occasions, I hope to deploy at greater length. I want to come directly to the issue before us, which is a Bill to increase certain charges.

I have been somewhat disappointed with the debate in the sense that there has been no search for any departure from what everyone in the House has apparently accepted for the past fifteen years. I wonder whether we ought not to turn our minds to some concepts rather different from those which apparently we now accept. Indeed, my hon. Friend was trying to prove that he was seeking the concept of 1946 and the hon. Gentleman opposite tried to prove to some extent that he was moving away from it.

It is an extraordinary thing that there is this desire on the part of the House slavishly to follow what was established so many years ago, because two very material differences have evolved since 1946. One is that society has become a much more affluent society for a great many people and, secondly, that a Health Service which costs £ 175 million in 1948 is now pushing on to the £ 900 million mark. To suggest that we ought to take it all from millionaires is rather inadequate in view of those changes. It is because—

Photo of Sir Barnett Stross Sir Barnett Stross , Stoke-on-Trent Central

I wish to question the figure given by the hon. Gentleman. Did he say that it was 1938 or 1948 that the cost of the Health Service was £ 200 million?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I said 1948.

I want to suggest to the House that these changes make it necessary to consider the matter more seriously than it has been considered up to now. I do not for one moment accept the view that too much money is being spent on health in this country. I take the view that too little is being spent.

It may well be that some of the expenditure is misdirected. I am talking of expenditure on health. If we could get people to eat more sensibly, we should reduce very materially the volume of ill-health. I do not accept for a moment the view that we are spending too much; I accept the view that it may well be we are spending too little.

I am concerned about the methods by which this expenditure is met. It is no use right hon. and hon. Gentlemen opposite saying, "Get it out of the millionaires," because £ 900 million is a great deal of money. Although some of my hon. Friends may exaggerate the disincentive effect of high direct taxation, nevertheless it is true that in the broad interests of the country it is not desirable to have a high level of direct taxation. Therefore, I do not want to see taxation bearing anything like the proportion which it bears today. I think that the figure of about 80 per cent. of the cost of the National Health Service borne by direct taxation is an entirely faulty concept.

Photo of Mr Eustace Willis Mr Eustace Willis , Edinburgh East

But this is direct taxation.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

In putting forward this view I am not trying to pretend that the average man is not paying quite substantially in respect of the social services. In fact, the case is even more than the hon. Member for Cannock says.

I imagine, although I have not checked this up for accuracy, that if one were to make an assessment of the total amount of social services received by the ordinary weekly wage earner, and, on the other hand, were to put the total amount of payment in direct and indirect taxation made by the same group of persons, it would be quite plainly shown that the wage-earner was paying as much in direct taxation as he was getting in social benefits.

My assessment would be—it is only an assessment—that he was probably paying considerably more. But, despite that, I must reiterate that to have a high level of direct taxation is, on the whole, damaging to the economy and to the incentive within the economy. If there were a mote intelligent way of dealing with the problem of financing a Health Service, which has gone up from a figure of £ 168 million to £ 900 million—

Photo of Mr George Thomas Mr George Thomas , Cardiff West

We had a figure of £ 178 million.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

Yes. £ 168 million; that was an estimated figure, and it has gone up to a figure of nearly £ 900 million, and we ought to try to find some means of doing it. [Interruption.] I have already said that it was an estimated figure of £ 178 million.

May I now direct the attention of the House to the fact that we are almost alone among the nations of the world in dealing with the Health Service in the manner in which we do? It may well be that the rest of the world are a lot of fools and that we are the wise people, though I do not know whether that is really true. Is it really the case that all these other nations in the world have a different method because they do not grasp the problem?

I should like to remind the House of what happens in one or two countries. In Austria, 3·5 per cent. of the earnings comes from the workers and 3·5 per cent. from the employers, and the Government pay nothing to the bill. In Belgium, the workers pay 3·5 per cent. of their earnings and the employers 2·5 per cent. of the total wage bill and 18 per cent. of the total cost is borne by the State. In Bolivia, the insured person pays 2–5 per cent. of earnings, the employers, 5.5 per cent. and the Government again make very little contribution to the cost of the Health Service.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

Give us the Congo now.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

In France, the insured person pays 6 per cent., the employers 10 per cent. and the Government again pay nothing towards the cost of the Health Service. In Mexico, a very similar situation arises. In the Netherlands, the insured person—[Laughter.] Hon Gentlemen opposite may laugh, but the people in Mexico do have a health service.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I do not really know, but if the hon. Gentleman's thirst for knowledge is so great, he can hie himself off to the Library and get the information.

In the Netherlands, the insured person pays 2·5 per cent. and the employer 4·5 per cent. In New Zealand, the employers pay 7·5 per cent, and the employees also 7·5 per cent. These are examples from many countries of the world to show how a health service is normally financed, and I suggest to the House that, though we might not wish to repeat exactly these particular arrangements, they have a great deal to be said for them.

Since we have been running a Health Service, we have studiously avoided varying very much the percentage contributed by the Government, and we have, in my view, been guilty of keeping the contribution by the employers very much below the level at which it ought to be. Had I the responsibility, I would have no hesitation in these present circumstances in raising the employer's contribution at least to the level of that of the employee. At the moment, we have a figure for male workers over 18 of 2s. 8½d. per week, and the employers are to pay only 7½d. If the employer's contribution had been brought up to the level of that of the employee, we should have had an income of something over £ 100 million to offset—

Photo of Mr Herbert Butler Mr Herbert Butler , Hackney Central

On a number of occasions the hon. Member has made proposals to the House which he knows very well his party will never accept. He now appears to be giving us some information and ideas which I think he knows his own panty will never put into operation. When he says that the employer's contribution should be raised, what detriment would that be to the employer? Surely, he would pass it all on to the consumer, as he does with every other thing.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I cannot help it if the Government do not always accept my ideas. In three, four or five years they usually do and I accept the time lag. The hon. Member was rather naive in that reflection. He was pointing out something I was coming to—what will be the social and economic consequences of transferring some of the charge now being borne upon the revenue and the taxpayer to the cost of production?

Photo of Sir John Morris Sir John Morris , Aberavon

The hon. Member suggested that my hon. Friend was rather naïve. Is not the hon. Member for Cheadle (Mr. Shepherd) rather naive when he makes a whole series of comparisons with health services in other countries without saying what those services provide and, when asked what they provide, he says he does not know, but suggests that hon. Members should go to the Library to discover what health services exist in those countries? If he comes to the House to make a speech and prays in aid a whole series of comparisons with other countries, he should inform himself before he does so.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I hope that that intervention did not sound as silly to the hon. Member as it did to me. I have acquainted myself with the health services of some countries, particularly that of France, because it happens to be interesting, but what I am concerned about today is not the kind of health service—the mechanics of the health service—in those countries, but the method by which it is financed.

To return to the point I was making, I said that I wanted to see a larger part of the Health Service cost borne directly by contributions and, in substance, borne more substantially by employers' contributions. It may well be argued that we could finance by contribution some- thing like two-thirds of the Health Service. I know this would be a fairly substantial step forward. I could not imagine the Government doing it all at once, because it would mean, roughly, about 10s. a week being found. Health Service costs are about 15s. a week in respect of every employed person. I see no basic reason why, in the long term, or the medium long term, there should not, for example, be a worker's contribution of 3s. and an employer's contribution of 7s. a week. [HON. MEMBERS: "Oh."] Hon. Members may say, "Oh", but I shall give reasons why I think this ought to be.

In my view, it is undesirable to charge items which are properly a charge upon industry, upon tax. This charge for the Health Service ought, I believe, to come as directly as possible upon industrial production. An hon. Member said that the reason for this is to encourage people not to employ so many workers as otherwise they would.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

What would the hon. Member do?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

Do not get too excited; I shall not give too much away.

It is perfectly true that I should expect this idea, in some measure, to have this effect. I reiterate that to make labour in some senses more expensive is to encourage the kind of industrial development we want. I should not hesitate to increase substantially the employer's contribution, because I know that, on the whole. that would be to the benefit of the industrial health of the country.

Photo of Mr William Ross Mr William Ross , Kilmarnock

Would the hon. Member say whether this is to be set against the employer's liability for Income Tax?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

Yes. I do not think that we can beat them on the head twice.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Will it be set against the workers' Income Tax, also?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

May I give an additional reason why I should be pleased to see progress towards two-thirds of the charge being carried by contributions? Within a relatively short time I hope that we shall be associated with the Common Market. If we are to associate with it is perfectly obvious that Common Market countries—

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I think that the hon. Member has reached the limit of what is properly in order on the Bill.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I was not intending to go very far along that line, but I think that it is arguable, surely, that there must be a harmonising of social policies under that arrangement and that this would be consistent with that harmony. I will not pursue that any further, Mr. Deputy-Speaker.

Photo of Mr Charles Pannell Mr Charles Pannell , Leeds West

On a point of order. I apprehended that this difficulty would arise during the debate. I called your attention, Mr. Deputy-Speaker, some minutes ago, to how wide the debate was getting. You allowed the hon. Member for Cheadle (Mr. Shepherd) to give an exposition of health services the details of which we were not acquainted with, and he advised us to go into the Library to learn the details. When he began to discuss a harmonious balance of our indigenous economy you ruled the hon. Gentleman out of order. I am bound in say, with great respect to you, Mr. Deputy-Speaker, that we find the Rulings of the Chair rather complexing.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I hope that the hon. Member will not criticise Rulings of the Chair, because that causes difficulties. I heard what the hon. Member for Cheadle (Mr. Shepherd) was saying about some foreign countries and I understood that he was making comparisons with what is proposed in the Bill, which I thought was fair and in order.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I sum up by saying that on this side of the House we are anxious not only to maintain, but to improve, the Health Service as part of a comprehensive range of social services; but, while we want to encourage the highest possible level of self-improvement and self-reliance, we are determined to take care of those who need our care.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I will not slavishly follow the misconceptions of 1946. We will address our minds more particularly to the problems of financing the social services and endeavour to find better means of trying to shift some of the present enormous burden of direct taxa- tion to other methods which will have a less disincentive effect upon the community.

8.49 p.m.

Photo of Mr John McKay Mr John McKay , Wallsend

An hon. Member scarcely knows what facet of the problem to select in a debate of this character, which has spread itself so widely. Most people support the contention that there are certain services which should be maintained on a free basis. Self-reliance is all right for those with plenty of the where with all with which to be self-reliant. Certain sections of the community do not have the means with which to be self-reliant. Other sections are a little better off, but it still should not be said that they should be completely self-reliant.

Certain services have been developed in this country, and it is abhorrent to the minds of many sincere people to suggest that we should start charging fees for these services. At one time one had to pay fees in respect of education. It would be a bad job if we had to pay fees again. The Health Service was started with the intention that it would be free, like the education service. It was thought at the time that the Health Service should be devoted to helping the people using the Service.

When it is desired to expand the Service and there is financial difficulty, the question then arises how the expansion should be paid for. It does not matter how the country is conducted. Some things must be paid for by taxation. Other things are paid for individually. Certain services affect the citizens very closely, particularly those who are unfortunate—in this case unfortunate in health, requiring medical services, hospitals, doctors and nurses. What should be our attitude as regards paying for the expansion of such services? Modernisation can be carried out in all kinds of ways, but we are often influenced in our decisions by our individual position.

Some hon. Gentlemen opposite have tried to show that we are comparatively well-off. It has been said that we have improved our position tremendously and that the extra 10d. will be a small imposition if spread over the whole population.

I do not want to talk generalities, because it is always possible to do that without getting anywhere. It is true that some sections may be very much improved. Indeed some sections within the working-class movement may have improved their lot very much. However, we still have to analyse the extent to which there has been social improvement as a whole. Government publications provide a fairly clear analysis of the position of certain sections. The figures they contain are not ambiguous.

The tax returns show a group of people who have from £ 250 to £ 500 a year. From the point of view of money that is a small section, but in it there are nearly 71 million people—workers, not people. If we include their dependants, it comprises nearly 10 million people. We are given the impression that we are doing so well as a nation that there is scarcely anyone who cannot afford to pay this extra contribution. Of course, it is astonishing what one can do when pressed, but should we press a group of people who are really badly off?

After taxation, those people have an average weekly amount of £ 6 16s. 4d. They then have to pay their insurance contribution of 10s. 7d., which leaves them with an average of £ 6 6s. 9d. to take home. It may be said that in that group there are a few school leavers at one end, and others at the higher end with perhaps £ 9 a week. Nevertheless, when considering these matters we have to take the general position.

Here we have 7½ million workers who take home £ 6 6s. or £ 6 5s. a week. I do not think that, with the present cost of living, any hon. Member would want to live on £ 6 odd, nor would he like his relations to live on it. When one includes wives and children there are about 91 million people in this group—nearly one-fifth of our population. In the face of that, we are told that everything is fairly favourable for the country as a whole, and people who have probably thought these things out say that the working people are now becoming the middle class.

The next group consists of those with from £ 500 to £ 800, and in it there are 8,383,000 people. It represents a large section of the ordinary workers. After taxation, they have an average of £ 11 12s. a week. When they have paid their insurance contribution they have an average of £ 11 Os. 6d. to take home. What a great "middle class", indeed—with a weekly net income of £ 11. In that "middle class" there are going on for 20 million people, 10 million of whom have to live on an average income of £ 6 6s., and the remainder on an average of about £ 11. That is the "middle class" into which the workers are supposed to be merging—with £ 11 to take home.

When all is said and done, there comes a time to call a halt. We are here dealing with our medical services and with what is a fundamental need for unfortunate people in our country. Surely, we have sufficient conscience and sufficient national morality to say that, although it is a pity that we are hard pressed, we will not put the burden on them.

Those who earn £ 3,000, £ 4,000 or £ 5,000 a year want Income Tax reduced. But who are the people who pay most of the taxation? Is it the middle class, the people with £ 2,000 or £ 5,000 a year? Does the Surtax payer pay the amount of money which really matters to the country which carries the country on? I have not looked closely into the figures, but it is plain from a perusal of the Revenue returns that the people who are paying the substantial and fundamental part of our taxation, that part which really matters to the country, are the ordinary workers. The men making about £ 9 a week are the taxpayers who matter.

Hon. and right hon. Members opposite could almost make one believe, if one did not have other knowledge, that they and their friends individually—in their comparatively small numbers—and not the workers are the ones who are paying the important part of taxation which matters to provide our hospitals and medical services. One would almost imagine from what is said that it was the middle class and the rich who were really keeping the country going with the taxation that they pay.

The section of the population which makes the greatest noise about taxation is not those on small incomes, not the workers. It is certainly not the working class. I do not hear much about taxation from the ordinary workers. A few years ago, they never paid any taxation.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

Order. I am very reluctant to interrupt the hon. Gentleman, but I hope that he will, as soon as may be, relate his remarks more closely to the Bill.

Photo of Mr John McKay Mr John McKay , Wallsend

I beg your pardon, Mr. Deputy-Speaker.

A burden is being put upon the people. To my mind, we ought to place the burden where it can most easily be borne. There is no question of where it ought to be or how it could be done. It should be done by taxation.

9.3 p.m.

Photo of Mr Percy Browne Mr Percy Browne , Torrington

I will not continue the long argument which we have had all day about the political dogmas of the Socialist and Conservative Parties. I have listened to nearly all the debates that we have had on the Health Service during the last ten days. At times, when listening to some hon. Members opposite, I have been reminded of Francis Brett Young's poem in which, speaking of sentimental tunes, he said that they were dripped from the mealy mouths of sickly saxophones. At other times in listening to the speeches from the benches opposite, particularly the one to which I listened this evening which lasted nearly an hour, I have been reminded of the remark made by the hon. Member for Cardiff, West (Mr. G. Thomas) when he spoke of the well-padded gentlemen on this side of the House. I think that the same phrase could apply to some of the speeches we hear from them.

The Opposition are absolutely wrong when they say that we are trying to cut back the Health Service. The figures simply do not prove that. I exonerate hon. Members who either have always taken the same line or have changed their minds, because only a fool does not on occasion change his mind. The fact remains, however, that in 1950 hon. Members opposite said that they would put a ceiling on the Health Service. It seems to me to be common sense that if one tries to put a ceiling on the expenditure on a service it means that one does not wish that service to expand. I may be wrong, but that is how it seems to me.

We expanded that service by over twice as much and, in real terms, by getting on for as much again in the past ten years. The real argument between us is whether the money should come from direct or indirect taxation. Perhaps, however, I can address myself to some particular points on the Health Service in general. To me, one of the difficulties of the past ten days is that we have been taking this matter piecemeal. I should have liked to have taken it as a whole. Various charges are being made by way of contributions, prescription charges, and so on, and their merits argued individually. If one could put them together it would be a great deal easier, but I must attempt to keep within the bounds of order. My short experience of the House is that normally it is the other way round and one has a press of different subjects all on the same day.

Photo of Sir Barnett Stross Sir Barnett Stross , Stoke-on-Trent Central

Will the hon. Member, to whom we have been listening carefully, enlighten us by explaining what he means by the phrase that since the Conservative Government came into power the Service has been expanded in real terms by as much again? What did the hon. Member mean?

Photo of Mr Percy Browne Mr Percy Browne , Torrington

I said, "nearly as much again". What I meant was that if an attempt were made to impose a ceiling—which, I agree, did not happen—on the Health Service expenditure of approximately £ 400 million, and if in today's terms the Service is costing nearly £ 900 million, in real terms it is between £ 700 million and £ 800 million.

Photo of Sir Barnett Stross Sir Barnett Stross , Stoke-on-Trent Central

The hon. Member must not make these foolish statements. In real terms—that means, in terms of 1949–50 prices—the cost was £ 381 million in that year, the first full year of the Service, and for the last accounting year, I believe, it was £ 501 million. Therefore, it is not as much again.

Photo of Mr Percy Browne Mr Percy Browne , Torrington

I am quite prepared to withdraw if I am wrong. I do not have the figures with me, but will check them in the Library.

If this money has to be raised—and I fully accept that it has to be—I would rather have seen it raised by way of contribution than in the other ways suggested. Taking a purely parochial view, I hope it means that I shall get a hospital in the North Devon area a good deal earlier than seems apparent.

I wonder whether it is really necessary to raise more than the figure of £ 49 million which my right hon. Friend the Minister of Health is raising by way of the increase in contributions. In the First Schedule to the Bill, to which I am only the second hon. Member today to refer, I find a figure of 2s. 8½d. as the employee's contribution. There are other ways in which my right hon. Friend could have saved money. I calculate that if he were to take id. off the employee's contribution he would find that he was missing £ 2,600,000, but I am certain that if he really attacked the problem of the drug firms he would save a great deal more.

In his opening speech last week on the Motion of censure, the right hon. Member for Belper (Mr. G. Brown) paid me a pretty compliment. He said that I was wide awake. But there was a sting in the tail, because he then said that I wished to nationalise the drug firms. What I thought I had said was that I wanted to see a national dispensary for drugs.

I will be perfectly candid and say that in a half-hour speech I may well have said what I was said to have said. I will now make it perfectly clear and say that I would like to see a clinical sieve through which every drug produced by every manufacturer had to go and where it was experimented on and, on its merits, a report was made and sent to doctors so that only that drug was used.

Photo of Mr Laurie Pavitt Mr Laurie Pavitt , Willesden West

I do not follow that point. because the only way in which drugs can be tested is on people.

Photo of Mr Percy Browne Mr Percy Browne , Torrington

That is perfectly true. As the hon. Member knows, many drug firms send out heir drugs to doctors for field trials and those doctors report upon them. But often when the field trial is being done, another firm produces a similar type of drug, and before that field trial is finished that firm puts its drug on the market because it does not want to miss the profits that are involved. I do not suggest that field trials should not be carried out, but that they could be carried out under some central control rather than by the individual drug firms concerned.

I have also made other calculations and I have discovered that if my right hon. Friend gave way to certain pressure, which I hope he will not, it would cost another ld. on the contribution. That pressure is that he should give free drugs to private patients. I know that I shall be outside the rules of order if I say more on that subject, but I hope I have made my point.

The Bill raises the contributions by £ 49 million in a full year or approximately four-fifths of the total proposed increases in all the Measures involved. I am certain that we have reached the limit of contributions that we can expect employees to pay. We have heard a great deal in the debate about average earnings and average wages. All I can say is that in my part of the country the average wage is certainly under £ 9 a week.

We now come back to where we started. While I am perfectly convinced that it would be a good thing for people to see what they are paying for and therefore a contribution that is split is better than a blanket contribution, I am convinced that we have now reached just about the level to which we can go. But this Bill at least has the beauty of being perfectly simple and it can be understood by everyone. This is why I suggested earlier that it was a pity that the Minister should have considered it necessary to raise more money than the £ 49 million by other means. There can be only one justification for the other ways by which this money is to be raised, and that was well put by an ex-Chancellor of the Exchequer speaking on Monday in another place. He said: The real justification, to my mind, for imposing a charge on the individual to cover part of the cost of prescriptions is if it discourages waste and abuse."—[OFFICIAL REPORT, House of Lords, I3th February, 1961; Vol. 228, c. 638.]

Photo of Mr George Thomas Mr George Thomas , Cardiff West

On a point of order. Is it in order for the hon. Member to quote from somebody who is not a member of the Government in a current speech in another place in order that it may be debated here?